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United Kingdom Employment Appeal Tribunal |
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You are here: BAILII >> Databases >> United Kingdom Employment Appeal Tribunal >> Bingham v Hobourn Engineering Ltd [1992] UKEAT 444_90_1703 (17 March 1992) URL: http://www.bailii.org/uk/cases/UKEAT/1992/444_90_1703.html Cite as: [2005] OPLR 335, [2005] IRLR 92, [1992] UKEAT 444_90_1703 |
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At the Tribunal
Before
THE HONOURABLE MR JUSTICE KNOX
MR A FERRY MBE
MRS M E SUNDERLAND JP
Transcript of Proceedings
JUDGMENT
Revised
APPEARANCES
For the Appellant MR J LOADES
(Of Counsel)
Messrs W Douglas Clark Brookes & Co
Solicitors
2 Lombard Street West
West Bromwich
West Midlands
B70 8EH
For the Respondents MR C GIBSON
(Of Counsel)
Messrs Argyles & Court
Solicitors
12 Mill Street
Maidstone
Kent
ME15 6XU
MR JUSTICE KNOX: This is an Appeal from the Industrial Tribunal sitting at Ashford on 19 July 1990. The Decision was sent to the parties on 25 July. It concerns a fairly narrow point on the award that was given to Mr Bingham in respect of unfair dismissal by his employers Hobourn Engineering Ltd. The fact of unfair dismissal had been established at an earlier hearing on 1 May 1990.
We have a preliminary point which arises from an application on Mr Bingham's behalf to be allowed to adduce in evidence before this Tribunal, evidence which certainly includes, if it does not consist entirely of, a letter that was written substantially after the date of the hearing from which the Appeal is brought namely on 27 November 1990.
Mr Bingham was dismissed on 9 January 1990. He was informed by his employers on 10 April of his entitlement to deferred benefits and in particular a deferred pension of £8,485.97. By a covering letter of the same date, he was informed that it might be possible to transfer his benefits to a pension scheme of another employer or to an approved individual pension arrangement and that if he was interested in that option he should ask the administrator of his new employer's scheme or insurance company to contact Spa Pension Services Ltd who were the people who ran his Hobourn Group Pension Scheme.
Mr Bingham fortunately did obtain new employment with BAA on 4 June 1990. Correspondence ensued between solicitors for each side before the hearing of 11 July 1990, each side seeking information from the other. One of the issues that was specifically raised by the Respondent employer's solicitors was the possibility of new pension provisions being relevant to the issue before the Industrial Tribunal. In particular on 12 June by which time Mr Bingham had obtained his new employment and his solicitors had informed the employer's solicitor of that fact, the employer's solicitors wrote saying inter alia:
"You will no doubt be aware that the application has been restored for hearing before the Industrial Tribunal on the 19 July. It follows that the pension arrangements made by Heathrow Airport Ltd. are relevant to the issue of quantum and must be submitted to our Clients actuaries in good time for the hearing."
Similarly the employer's solicitors wrote a little later on 26 June, having been told that Mr Bingham confirmed that he had commenced his employment with BAA and that full details were being obtained, and said:
"Clearly it would be relevant to have details of your client's pension with B.A.A. PLC and we await these together with other details of his new employment. We also note that it may be possible for your client to transfer his Hobourn Engineering pension to the pension scheme of his current employer and no doubt you will let us know whether or not he intends to do this."
The reply to that letter contained the following paragraph. It was dated 29 June, that is to say rather less than 3 weeks before the Industrial Tribunal hearing:
"In calculating our clients pensions loss our calculations are based on the guide lines published in "Industrial Tribunals: Compensation for Loss of Pension Right" (1990). Mr Bingham is claiming in respect of loss of enhancement of accrued pension rights and loss of pension rights from a date of dismissal to the date of the commencement of his new employment. Mr Bingham will not be claiming in respect of loss of pension contributions and their value as from 4th June, 1990 and so the B.A.A. pension scheme is not necessary for the calculations."
That was a pretty clear statement that the employee was taking the line that the new employer's pension scheme was unnecessary for the calculations and neither side shifted from their previous positions before the hearing before the Industrial Tribunal. For example the employer's solicitors said in a letter of 13 July:
"We cannot agree your calculation in respect of loss of enhancement because it seems to us that if your client enters the BAA Pension Fund no loss will occur."
It was in that state of the parties' attitudes with regards to their entitlement that the hearing took place before the Industrial Tribunal and at that stage the case for the employee was that the arrangements with BAA were irrelevant and therefore they were not put in evidence.
A week before the hearing before the Industrial Tribunal, there was a letter written by BAA's pension administrator with a copy for Mr Bingham to Spa Pension Services Ltd asking for the sort of information that was needed by the BAA pension scheme to be able to formulate Mr Bingham's entitlement if he transferred to the BAA scheme his entitlement under the Hobourn Group Pension Scheme and the answer to those questions which were in fact not exactly the same information as had been given to Mr Bingham in the letter that I mentioned earlier of 10 April, came back a month and 2 days later, that is to say on 14 August 1990.
There was then an interval which remains unexplained before us until the letter of 27 November 1990 which the applicant now wishes to get in evidence, was written and which contained a paragraph which reads as follows:
"If you were to proceed with the transfer of pension rights the total benefit payable from the BAA Scheme at age 60 would be a pension of approximately £6,423.00 per annum with the right to commute part of that pension to provide a tax free lump sum at normal pension age. If you decide not to proceed with the transfer your pension would be approximately £3,433.00 per annum.
As you know, the benefits payable from the BAA Scheme are protected against inflation."
It is on that evidence that the issue that we have to decide at this stage has to be decided, namely should this additional evidence, which obviously was not available physically at the hearing before the Industrial Tribunal, be admitted at this Appeal. The parties were agreed that the test to be applied on such questions was stated by Mr Justice Popplewell in WILEMAN v MINILEC ENGINEERING LTD [1988] IRLR 144 correctly in the following terms: the parties seeking to introduce the new evidence must show (1) that the evidence could not have been obtained with reasonable diligence for use at the Tribunal, (2) that it would probably have an important influence on the result of the case and (3) that it is apparently credible.
We assume that the second and third requirements are established in this case because the letter of 27 November 1990 does seem at any rate arguably, to have considerable significance in assessing the validity of the point in respect of which the Appeal is directed contained in the Industrial Tribunal's decision.
It is with regard to the question whether the evidence could not have been obtained with reasonable diligence for use at the Industrial Tribunal that the argument before us was principally concerned. On behalf of the employers it was submitted that this is not really a case of failing to show reasonable diligence so much as a case of a deliberate choice. In taking the attitude that the BAA pension scheme arrangements in general and in particular the rights that would be granted on a transfer from the Hobourn Group Pension Fund were not to be relied upon by the Applicant before the Industrial Tribunal there was, it was argued, a deliberate choice not to use a particular category of evidence, that choice was binding on the Applicant and subsequent material that came into his hands should not be admitted at an appellate stage.
Against that the employee pointed to the fact that it did in fact take a month and two days for the information that was sought by BAA on 12 July 1990 to be obtained from the operators of the Hobourn Group Pension Fund and that therefore assuming that the greatest possible diligence in that respect had been shown on Mr Bingham's part when he started his employment with BAA the indications are that the information would not have been forthcoming for in time for the Industrial Tribunal hearing.
We are satisfied that the employer's submissions are correct because if there had not been the deliberate choice that the BAA scheme was not relevant to the Applicant's case, one must suppose that due diligence would have produced a situation at the hearing before the Industrial Tribunal where the employee would have been attempting unsuccessfully to obtain this additional evidence and in those circumstances it must have been at least possible that an application for an adjournment or some other means would have been sought on behalf of the employee to enable him to obtain this type of evidence.
But that was quite contrary to the case that was put forward on behalf of the employee which was that the BAA pension scheme had no relevance to the way in which his case was put and in our judgment, when there is a deliberate choice not to use a particular category of evidence, it is of no avail to show that had a different choice been made some parts of that evidence could not have been obtained with due diligence because by definition, there has been no diligence whatever used to obtain that particular category of evidence. The matter is not a question of whether enough trouble had been taken but a question of a deliberate choice not to use this particular type of evidence and in those circumstances it seems to us that that choice, be it right or wrong, is one which is binding and should not be allowed to be gone back on. Accordingly we do not allow this additional evidence to be adduced before us.
We have now to deal with the substance of the Appeal by Mr Bingham against the decision of the Industrial Tribunal at Ashford on 19 July 1990 which is only attacked on one point, although it is an important one, and that is the Industrial Tribunal came to the conclusion that it could not make an award under the heading of "Loss of Pension Rights".
There were other findings which are not the subject of Appeal, in relation to loss of such matters as wages and the like. Without going into the figures in detail the overall result, taking into account a substantial ex-gratia payment of £9,107 was in the view of the Industrial Tribunal, that there was a credit of £5,758.25 meaning that Mr Bingham, far from being the victim of a loss, was in fact better off by that figure, but that of course assumes a "nil" figure for the possible loss of enhancement of pension benefits, that is the subject matter of this Appeal.
The Industrial Tribunal dealt with this matter in three short paragraphs which it will be convenient to read:
"3. We have heard the arguments and considered the evidence in order to ascertain whether the applicant suffered any loss of pension rights on dismissal. The contractual provisions of the applicant's new employment entitle him to transfer his pension rights from the respondent in such a way as to preserve the existing value of his years of service. We understand that in his new employment there is a compulsory retirement age of 60 as opposed to that of 65 for employees of the respondent, that the contribution rate in the new scheme is 7% and that the new scheme has provisions for taking account of inflation.
4. We have no evidence before us about the detailed effects of the transfer provisions. We accepted Mr Sessions's submission however, [Mr Sessions appeared for the employer] that we are comparing the possible loss of enhancement of benefits to the applicant against the fact that having regard to paragraphs 3 and 6 of our earlier decision the applicant could only have remained in the respondents' employment as a purchasing agent. His salary in the new position is better than the salary he would have received as purchasing agent and we understand that the position of purchasing agent with the respondent carries limited promotion prospects."
Pausing there for a moment paragraphs 3 and 6 of the Industrial Tribunal's earlier decision contain a statement that the Applicant, Mr Bingham, was not offered the position of purchasing agent because that would have meant a loss of status and salary to him but the Industrial Tribunal accepted Mr Bingham's evidence that if he had been offered that position he would have accepted it.
The final paragraph on this subject in the Industrial Tribunal Decision reads as follows:
"5. Unless and until we are satisfied that there will be some loss accruing to the applicant, we cannot make an award under the heading of loss of pension rights. Having regard to the existence of an option to transfer his existing benefits to a new scheme, the applicant has failed to satisfy us that there is any loss other than for the period of unemployment. We have accepted his figure of the employer contributions during that period which is £1,025.00. That is therefore the pension loss figure which we award."
There is no dispute with regard to that latter figure which has been taken into account in the Industrial Tribunal's decision. The only issue before us is the loss of possible enhancement of benefits to Mr Bingham.
The Notice of Appeal puts forward three grounds:
"(1)The Industrial Tribunal calculated the compensation incorrectly by failing to award compensation to the Appellant for the loss of enhancement of his accrued pension rights as a result of the dismissal."
That is no more than a statement that the Industrial Tribunal was wrong in its ultimate conclusion and that does not in any way reveal an error of law.
"(2)That when considering the Appellant's loss of enhancement of accrued pension rights the Industrial Tribunal failed to accord proper weight to the guidelines laid down in the booklet "Industrial Tribunals Compensation for Loss of Pension Rights" published by Her Majesty's Stationery Office in 1990."
That booklet was before the Industrial Tribunal and it has been before us. It is indeed a valuable guide to Industrial Tribunals who frequently are faced with the invidious task of grappling with what are difficult and complex questions raising problems of actuarial calculation without the benefit of actuarial evidence. In those circumstances it is indeed very helpful to Industrial Tribunals to have some actuarial guidance, necessarily of a generalised and therefore somewhat rough and ready form, to guide them through the thickets without having an actuary as a witness to guide them through.
But there is no doubt that the booklet is not a bible which has to be followed in every detail. Indeed the booklet itself takes pains to point out that this is indeed so and recognises that it is not an infallible guide. For example, in paragraph 11.2 of the booklet one finds:
"These recommendations are only guidelines. They will become trip-wires if they are blindly applied without considering the facts of each case. Any party is free to canvass any method of assessment which he considers appropriate. We hope that this paper will be found useful as a starting point."
Once one finds a ground of Appeal which is that an Industrial Tribunal failed to accord proper weight to guidelines laid down in a booklet, it seems to us that there is there an admission that what has been done, is at worst, a failure to give effect to considerations of fact in how to solve the difficult actuarial problems that are posed. In this case, it is in our view abundantly clear, that in relation to this particular case the actuarial assumptions which are set out in Appendix 3 to the booklet were in fact in several important respects shown to be inaccurate. That of course is not a criticism of the booklet which for reasons I have mentioned earlier, has necessarily to be generalised.
The most serious assumption which does not square with this case is that regarding future salary increases. I have read the passage in the Industrial Tribunal's Decision, which records the fact that the position that Mr Bingham would have had he not been unfairly dismissed was one which carried limited promotion prospects, and that we think, vitiates any assumption such as that which is found in Appendix 3 - "Salaries are assumed to increase at 7% pa."
Secondly, and equally seriously, what happened when Mr Bingham lost his first employment was that fortunately he obtained a higher paid job elsewhere and it necessarily follows that the comparison is one the other way in that as a result of his change of employment his current salary took a jump upwards whereas had he continued in his existing employment it would, due to circumstances which are no fault of his, have taken a downward step and that again is something which is quite inconsistent with the actuarial assumptions upon which the booklet is based.
In our view it is not part of the duty of an Industrial Tribunal to follow the guidelines laid down in the booklet. Indeed it was not argued that their duty went so far, but once one accepts that there is no error of law in not giving precise effect to the scheme recommended in the booklet, one has necessarily in our view, got into the realm of fact and degree and one has a situation where it is a question of evaluating the factors on either side to see what adjustment should be made or whether the guidelines in the booklet are a safe guide at all.
It is common ground between the parties that if the guidelines in the booklet had been followed without any qualification or adjustment, the result would have been to show a loss which was identified as being £20,366 attributable to the loss of enhancement of pension benefits. That is not in issue. What is in issue is whether or not the Industrial Tribunal committed an error of law in not applying that formula. We see no such duty upon them. We see grounds upon which they could see clearly that the formula would produce an incorrect answer and we see a balancing exercise attempted on no doubt scanty material, in paragraph 4 in particular (the second of the paragraphs I quoted) between the loss of enhancement of benefits prima facie established and the benefits from the increased salary and a better position including promotion prospects.
That brings me to the third and last ground of Appeal which is that the sentence which I read:
"The contractual provisions of the applicant's new employment entitle him to transfer his pension rights from the respondent in such a way as to preserve the existing value of his years of service."
is one for which there was no evidence and that that constitutes an error of law. This latter proposition we accept in that, if there is no evidence to support a conclusion, which is one of materiality, an error of law is established.
The next following sentence in the Industrial Tribunal Decision points to three features which I have read and need not repeat which it is possible were intended to justify the preceding sentence, although it is not entirely clear why that should be so, but the decision of the Industrial Tribunal has, we are satisfied, to be read as a whole and we bear in mind the undesirability of our wielding what has been described in the Court of Appeal as a fine toothcomb in going through the individual sentences that the Industrial Tribunal Chairman used in giving the decision and as Mr Gibson for the Respondent pointed out to us, one has to have regard to the first sentence in the following paragraph which is:
"We had no evidence before us about the detailed effects of the transfer provisions."
If one bears that in mind, one has the overall effect that the Industrial Tribunal was cognizant of the fact that there was a possibility of transfer into another scheme and that undoubtedly was the situation. They had no evidence as to what those detailed affects would be but they undoubtedly thought that it was capable of being something that they should bear in mind in making their overall assessment.
Necessarily, the Industrial Tribunal painted with a broad brush. They did not have the actuarial evidence upon which a detailed evaluation of loss and gain could even approximately have been made. What they had was some guidelines based on actuarial assumptions, some of which were falsified, and they had also very general evidence of the possibility of a transfer to a new scheme. In those circumstances they resorted to the basic situation that unless and until they were satisfied that there would be some loss accruing to the Applicant, they could not make an award under the heading of Loss of Pension Rights.
That in our judgment is a decision on facts. Whether it was factually correct is not a matter with which we are directly concerned. It may be, we cannot say that it would be, but it may be that other Tribunals might have reached a different conclusion. Our jurisdiction is limited to questions of law arising on the decision below and we are not satisfied that it was wrong for the Industrial Tribunal to treat as something susceptible of making a difference that there was a possibility of a transfer from one scheme to the other and in those circumstances this Appeal falls to be dismissed.
