Appeal No. EAT/7/90

	EMPLOYMENT APPEAL TRIBUNAL
	4, ST. JAMES'S SQUARE, LONDON SW1Y 4JU

		At the Tribunal
		On 13th April 1992
	Judgment delivered 16 June 1992

	Before

	THE HONOURABLE MR JUSTICE KNOX

	MR J A SCOULLER

	MR G H WRIGHT MBE

MR & MRS WARNES	APPELLANTS

THE TRUSTEES OF THE CHERITON ODDFELLOWS	RESPONDENTS
 SOCIAL CLUB

	Transcript of Proceedings

	JUDGMENT

Revised

	APPEARANCES

For the Appellants	MR J EVAN-JONES
(Of Counsel)
Messrs Kingsford Flower &           Pain
Solicitors
7 Bank Street
Ashford
Kent
TN23 1BZ

For the Respondents	MR N SANDERS
(Of Counsel)
Messrs Rootes & Alliott
Solicitors
27 Cheriton Gardens
Folkestone
Kent
CT20 2AR

	MR JUSTICE KNOX:   The appellants are Mr Colin Peter John Warnes and his wife Mrs Ann Warnes, the respondents are the Trustees of the Cheriton Oddfellows Social Club ("the Club").  They are Mr Piper, Mr Bennett and Mr Chandler.  Mr and Mrs Warnes were employed as Steward and Stewardess of the Club with effect from 23 March 1978 but Mr Warnes had also carried out the duties of Club Secretary from the autumn of 1986.  Mr and Mrs Warnes wrote letters dated 25th April 1989 claiming constructive dismissal as a result of the passing of a resolution at the Club's Annual General Meeting the previous day.  That resolution was passed by 35 votes to 18 and was recorded in the Minutes as follows:

"It was therefore noted that Bro. C. Warnes be returned to being a Steward."

The Industrial Tribunal sitting at Ashford on the 2nd 3rd and 10th October 1989 decided unanimously that Mr and Mrs Warnes' applications for relief in respect of unfair dismissal failed.  The decision was sent to the parties on the 20th October 1989.  It was common ground before us that the result of Mrs Warnes' appeal would be governed by the result of Mr Warnes' appeal and we deal therefore with the latter.

	The primary ground upon which the Industrial Tribunal reached its decision was that the resolution thus passed at the Annual General Meeting ("the Resolution") was out of order and ineffective to remove from Mr Warnes his functions as Secretary of the Club.  The Industrial Tribunal specifically found that, if Mr Warnes had had his secretarial duties taken away from him, there would have been a change in his primary function and that would have constituted a fundamental breach of contract entitling Mr Warnes to regard his contract of employment as repudiated and to treat himself as constructively dismissed.  The only thing that prevented that state of affairs from obtaining was the invalidity of the Resolution.  This appeal raises the question whether the Club can successfully resist a claim for unfair dismissal on the basis that the act complained of was invalid under its constitution.

	The rules relevant to the dispute are set out in the Industrial Tribunal's decision.  Some are more relevant to the background of the dispute than to the invalidity of the Resolution.  That background was principally composed of a dispute between the Trustees of the Club and other members of the Committee of the Club.  It had its origins in a difference of opinion regarding a proposed switch from one brewer to another but it is not necessary to go further into the details of that than to say that there was left some bad feeling between the Trustees and Mr Warnes.  Rule 16 entrusts the management of the Club to a Committee consisting of the Trustees, the Chairman, the Secretary and six elected committee members.  Rule 17 prevented any member of the staff being eligible to be elected on the committee whilst employed by the Club.  Rule 18 required the Committee at their first meeting after the Annual General Meeting to appoint a Chairman, Secretary and Assistant Secretary if they so desired.  The Rule which establishes the invalidity of the Resolution is Rule 24.  It reads:

"Rule 24 - The Annual General Meeting of the Social Club shall be held in April or May for the following purposes:

(i)	to receive a report and statement of accounts for the preceding year,

(ii)	to elect two full members of the Committee for three years and

(iii)	to decide upon any proposal or matter and transact any other business which shall be duly submitted fourteen days prior to the meeting."

	No prior submission at all was made of the Resolution, let alone the required fourteen days notice, hence the invalidity of the Resolution.

	We can at this stage dispose of one ground of appeal, namely that the Resolution was not invalid because the provisions of the Club Rules were like the rules of any unincorporated association the terms of a contract between the members inter se which the members were free to alter or waive and in the circumstances did so by allowing an irregular motion to be taken in the Annual General Meeting with the intent and effect of giving such motion force and effect.  That argument is based on a misapprehension of the law governing unincorporated associations whose rules can only be altered either by an alteration in accordance with the relevant rule, if there is one governing alterations, or by unanimous decision of the members.  The Club did have a Rule permitting an alteration of the Rules but it required due notice to be given so that avenue was closed.  There clearly was no unanimity among the members regarding the Resolution.  As between the members therefore there is no doubt that the Industrial Tribunal was justified in finding the Resolution ineffective.

	However the issue raised by Mr and Mrs Warnes' applications was not primarily whether the Resolution was valid as between the members but what effect, if any, it had as between the Club on the one hand and Mr Warnes on the other.   Upon this aspect the Industrial Tribunal held that the Resolution did not have the effect of taking away Mr Warnes' secretarial functions.  It is clear that the Industrial Tribunal concentrated entirely on the efficacy of the Resolution under the Rules.  It observed that, although Rule 18 entitles the Committee to remove the Secretary from office at any time and that all members of the Committee were present and voted at the Annual General Meeting, the Committee must act as a committee in so doing and on this occasion Club members were voting in addition to Committee members so that it could not be said that the Committee met or acted as a Committee.  The conclusion is therefore drawn that Mr Warnes remained as Secretary and the Resolution did not remove him from that office.

	In our view this is too narrow a view of the effect of the Resolution upon the contractual relationship between the Club and Mr Warnes.  An employer is not entitled to rely upon the lack of power under its constitution of an officer or organ of the employer in acting in a way which if valid would constitute a dismissal.  We exclude any case where it is appreciated on both sides that what is done is of no practical effect or significance.  Although Mr Warnes did take legal advice before writing his letter on the 25th April 1989 claiming that he had been constructively dismissed, and although in that letter he referred to "the alleged valid resolution", there is no finding by the Industrial Tribunal that he knew the Resolution had no practical effect or significance.  We know from the Industrial Tribunal's own decision what the quality of the act contained in the Resolution was, namely that it purported to be what amounted to a fundamental breach of Mr Warnes's contract with the Club which included his right and duty to perform the functions of the Secretary.  There are doubtless occasions when a superior officer of an employer organisation dismisses his inferior where, so far as that superior officer's powers as a matter of contract between him and the employer are concerned, he is not entitled to dismiss.  It is not in general open to the employer to rely on that abuse of power.  Regard has to be had to the nature of the act of dismissal on the contract between the employer and the employee thus dismissed in breach of contract by the dismissing officer.

	The Industrial Tribunal distinguished the decision in Courtaulds Northern Textiles Ltd v. Andrew [1979] I.R.L.R. 84 which was cited for the proposition that there is an implied term in any contract of employment that the employer will not without reasonable and proper cause conduct himself in a manner calculated or likely to destroy or seriously damage the relationship of confidence and trust between the parties.  The proposition was in terms accepted, indeed it is clear law, but it was held not to be applicable because although the Industrial Tribunal found that members of the Committee acted unreasonably at the Annual General Meeting in allowing the vote on the Resolution to be taken there was no criticism of Mr Warnes' performance as Secretary and it was only economic and financial considerations that prompted the discussion whether Mr Warnes' duties as Secretary should be terminated.  On that basis the Industrial Tribunal expressly declined to make a finding upon the issue, upon which witnesses' evidence conflicted, whether or not Mr Piper, one of the Trustees, packed the Annual General Meeting with supporters to vote Mr Warnes out as Secretary.  We agree that that latter issue is not relevant to the questions which arise between the Club and Mr Warnes.  But on the question whether the relationship of trust and confidence between the Club and Mr Warnes was seriously damaged we consider that there is an internal contradiction between two findings of the Industrial Tribunal.  The first is that if Mr Warnes had had his secretarial duties taken away, his contract of employment would have been fundamentally breached, and that is just what the Resolution purported, albeit invalidly under the Club Rules, to do.  The second is that the Committee, although behaving at the Annual General Meeting in the way which the Industrial Tribunal criticised as mentioned above, did not act in a manner calculated to destroy mutual trust and confidence.  In our view those two conclusions cannot stand together.

	Since on the view we take of the matter the Industrial Tribunal's findings only permit of one result namely that there was an unfair dismissal these appeals will be allowed and a finding to that effect substituted.  There will be a Legal Aid Taxation of Mr and Mrs Warnes' costs.