Appeal No.	 EAT/987/97 	                & EAT/1241/97

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 17 February 1998

Before
HIS HONOUR JUDGE C SMITH QC
MR K M HACK JP
MRS M T PROSSER

CHINGFORD LIGHTING CONTRACTORS LTD	APPELLANTS

MR M WOOLNER	RESPONDENT

Transcript of Proceedings

JUDGMENT

Revised

	APPEARANCES

For the Appellants	MR F LARGE
(Personnel Adviser)
PAS Management Services
59 Ardmore Lane
Buckhurst Hill
Essex
IG9 5SB	
For the Respondent	MR R HERMER
(of Counsel)
Messrs Tyrer Roxburgh & Co
Solicitors
3/4 Wellington Terrace
Turnpike Lane
London 
N8 0PX	

	JUDGE SMITH QC:	This is an appeal by the respondents before the Industrial Tribunal, Chingford Lighting Contractors Ltd, against the decision of an Industrial Tribunal held at Stratford on 27th June 1997, when the Industrial Tribunal held unanimously that the applicant before the Industrial Tribunal, Mr Woolner, had been unfairly dismissed by reason of his conduct by the appellants, Chingford Lighting Contractors Ltd; that there should be a 15% reduction due to contributory fault; and when they adjourned the issue of remedy over until 29th September 1997. Extended reasons for the decision were sent to the parties on 11th July 1997.

	There is a separate appeal against the quantum of the compensation, and we will have to consider that later. But firstly we will consider the appeal against the finding of unfair dismissal.

EAT/987/97
We have had the benefit of hearing argument addressed to us by Mr Large, the Personnel Adviser, who in fact appeared at the Industrial Tribunal hearing. 

	Put shortly, the points that he raises on appeal are:-

(1)	That the Industrial Tribunal misdirected themselves by substituting their own view on the facts and circumstances relating to the dismissal, instead of considering whether the employer’s decision was a reasonable decision.

(2)	That the Industrial Tribunal failed to appreciate that the conduct alleged against the respondent, Mr Woolner, was not denied, so it is submitted. Reliance was placed in that regard on the authority of the case of Croucher to which we were referred. (Royal Society for the Protection of Birds v Croucher [1984] ICR 604]

(3)	That the finding by way of criticism that was made by the Industrial Tribunal relating to the conduct of the appeal hearing ignored the authority structure of the appellant company.

(4)	That the Industrial Tribunal misdirected themselves in relation to contribution. 

(5)	That the Industrial Tribunal, looking at their decision as a whole, had failed to remind themselves or apply properly the proposition that the burden of proof is neutral in relation to whether or not a dismissal is fair or unfair with regard to s.98(4) of the Employment Rights Act 1996.

Those in outline, were the submissions that were made to us by Mr Large on behalf of the appellants.

	We next consider the Industrial Tribunal’s decision. We notice that the Industrial Tribunal found that the respondent, Mr Woolner, had been employed as a Contracts Director from September 1992 until he was dismissed on 15th January 1997. The Industrial Tribunal went on to make findings of fact, carefully, in our judgment between paragraphs 2 to 16 of their decision. The Industrial Tribunal recorded in paragraph 3 that employees of the respondent before them, the appellants before us, had been sent to undertake work at the two addresses there mentioned, 36 St Peter’s Avenue and 9 Castell Road, and that the work done had been costed to PPM Leisure and that that job, the PPM Leisure job, was one of the biggest jobs the appellants were involved in. The Industrial Tribunal went on to say that there had been a query on those matters by Mr Powell, and that Mr Powell had been instructed to investigate the work that had been done at 36 St Peter’s Avenue and 9 Castell Road. They found that 36 St Peter’s Avenue was the home of Marsha Heed, who was the girlfriend of the respondent before us, Mr Woolner; and that 9 Castell Road was the home of her brother-in-law. Then, they made a finding relating to the sum of £130 which had been received by the respondent from Marsha Heed in respect of work done on her premises, that that money had been placed in a fund for a secretary of the respondent who had recently been bereaved. They noted in paragraph 6 that the investigation had been concluded by November 1996. Then there had been a substantial gap and it was only on 6th January 1997 that the Industrial Tribunal found that the Managing Director had called Mr Woolner to a meeting at which Mr Powell was present, Mr Powell being the accountant who had investigated the above-mentioned matters. At that meeting Mr Woolner had been told that he was suspended on full pay on suspicion of gross misconduct pending further investigations in connection with the works that had been carried out at these two addresses. According to the findings of the Industrial Tribunal, Mr Meekcoms then told the respondent that he would receive details of the allegations in writing and he was then asked to leave the building.

	There followed a letter that was written by Mr Meekcoms to Mr Woolner on 6th January 1997, which according to the findings of the Industrial Tribunal, led to a response by Mr Woolner asking for specific allegations against him, to which the response was, according to the findings of the Industrial Tribunal, that he knew the addresses. 

	The next thing that happened in the sequence of events according to the Industrial Tribunal’s findings of fact, was that a disciplinary hearing took place on 13th January and, at that meeting, the Industrial Tribunal found as a fact that Mr Woolner, apart from disagreeing with the minutes of what had taken place on 6th January, read out a letter which he had written, which we have seen, dated 13th January 1997, which included a statement to this effect:

“I have not received specific allegations as to what I have, or have not, done.”

There then followed a disciplinary hearing of a kind, as referred to by the Industrial Tribunal at paragraph 11. Then there was the letter referred to by the Industrial Tribunal at paragraph 12 which was the letter of dismissal which, in effect, stated that the Company had found that there was a breach of trust and fidelity on the part of the respondent, which left them with no option but to terminate his employment with immediate effect for gross misconduct. It is quite plain from that letter and from the findings of the Industrial Tribunal that, in effect, the appellants were dismissing the respondent for dishonesty, that is the clear import of that letter.

	There followed an appeal. The appeal took place, according to the findings of the Industrial Tribunal, on 31st January 1997. The Industrial Tribunal found that, although it was chaired by Mr Powell, the reality was that Mr Meekcoms, the Managing Director, questioned the respondent and in his evidence before the Industrial Tribunal, Mr Powell agreed that Mr Meekcoms made the decision at the end of the appeal hearing.

	The Industrial Tribunal then found in paragraph 15 that Mr Meekcoms had explained to them in evidence that it was his belief that there were other incidents in addition to those which were mentioned in the disciplinary hearing and the appeal hearing, and he had told the tribunal that the respondent was going to be sent documentation following his appeal. Mr Meekcoms apparently told the tribunal that any information that Mr Woolner gained would be useful to him in concocting a separate story and he conceded in cross-examination that this basically prevented Mr Woolner from defending himself. In due course, as the Industrial Tribunal found, on 4th February 1997, the decision to dismiss was upheld and the appeal denied.

	The Industrial Tribunal then went on, correctly in our judgment, at paragraph 17 and 18 to set out the law which they had to apply by reference to s.98(2)(b) and s.98(4) of the Employment Rights Act 1996. 

	They then set out a whole list of matters in paragraph 19 which led them to conclude that the procedure followed by the appellants had been grossly unfair. They did not use the expression “grossly” unfair, but it is quite apparent from the matters which they set out that such was the effect of their findings. 

	In our judgment there is nothing in the Industrial Tribunal’s approach that in any way supports a submission that they in any way substituted their own decision for that of the employers. On the contrary, in our judgment, it is quite clear that the Industrial Tribunal were indeed correctly looking to see whether the employers had acted reasonably or unreasonably in the procedure that they had followed in relation to this matter, and everything that is set out in paragraph 19 of the Industrial Tribunal’s decision is, in our judgment, only consistent with that correct approach being taken by the Industrial Tribunal. Nor, in our judgment, is there any indication whatsoever that the Industrial Tribunal were in any way misapplying the burden of proof. We notice that the Industrial Tribunal do say at the end of paragraph 19 that the appellants had not satisfied the requirements of s.98(4). But, in our judgment, that does not indicate that the Industrial Tribunal were placing any burden of proof on the appellants. That is simply a statement by way of conclusion after the Industrial Tribunal had set out in paragraph 19 the very many respects in which they found the procedure followed to be grossly defective. So, in our judgment, there is no reason at all here for impugning the Industrial Tribunal’s decision on the basis either that the substituted their own view of the matter or that they misapplied the burden of proof or in any way failed to apply the neutral burden of proof as properly laid down in the decision in the recent Boys & Girls case, i.e., Boys and Girls Welfare Society v McDonald [1996] IRLR 129.

	In our judgment, further, if one looks carefully at the findings of the Industrial Tribunal, the Industrial Tribunal were not dealing with this case on the basis that the respondent had made any admissions at all of any serious misconduct involving dishonesty. The Industrial Tribunal had before them in evidence documents, which have been placed before us on the hearing of this appeal, from which it is quite clear that at all times, contemporaneously with these disciplinary proceedings against him, the respondent was denying that he had been guilty of any dishonesty. 

	It is right to say that the Industrial Tribunal did find in paragraph 20 that the respondent had admitted that he had arranged for work to be done at St Peter’s Avenue and Castell Road without authority, and that he had collected a sum of money in respect of a certificate for work done for the secretary that is named in paragraph 20; and had utilised that against his expenses contrary to the normal procedures of the appellants. But, in our judgment, that degree of wrong-doing is completely different in scale from any admission at all that the respondent was in any way guilty of dishonesty. So for that reason, in our judgment, the Industrial Tribunal were correct in law in applying the British Homes Stores v Burchell criteria in order to judge whether the dismissal was or was not fair as a matter of procedure. It is only where, as in the case of Croucher, there is a clear admission of dishonesty on the part of an employee, that such important  procedural safeguards can be dispensed with. In our judgment, therefore, there are no grounds for criticising the Industrial Tribunal’s approach on this basis.

	Indeed, in our judgment, it is clear, looking at the findings of the Industrial Tribunal, that they were amply justified, for the reasons they set out in detail in paragraph 19, in reaching the conclusion that they did, that the dismissal was unfair.

	With regard the appeal hearing, the submission was made to us that there was absolutely no choice, having regard to the structure of the appellant Company, other than for Mr Meekcoms to be involved in the appeal procedure, since he was the Managing Director of the Company, and although he had been involved in the original disciplinary hearing. But, in our judgment, the Industrial Tribunal were entitled to reach the conclusion that they did that the appeal hearing had been unfair, because the Industrial Tribunal had found that Mr Powell had chaired the appeal hearing, but that despite the fact that he had chaired the appeal hearing, the decision had in fact been taken by Mr Meekcoms, and Mr Powell had agreed that it was Mr Meekcoms who had made the decision at the end of the appeal hearing. In our judgment, amongst the many other matters which the Industrial Tribunal rightly held to amount to defects in the procedure followed by the appellants, there was this failure to give Mr Woolner a fair appeal hearing by the standards which the appellants had themselves set for that appeal hearing.

	With regard to the appeal against the finding of contribution in our judgment it was entirely within the remit of the Industrial Tribunal as a finding of fact to conclude that it was just and equitable that only a small deduction of 15% should be made in respect of contributory conduct.

	In our judgment, for those reasons, all the grounds relied upon fail. In our judgment this was a case where no doubt the Managing Director had suspicions that the respondent had been guilty of serious wrongdoing; but, in our judgment, those suspicions never crystallised into proper allegations that were in any way specified against the respondent. In those circumstances, for the reasons they gave, the Industrial Tribunal were right to conclude that the dismissal was unfair. Accordingly, for those reasons, the first appeal will have to be dismissed.

EAT/1241/97
This is an appeal by the appellant Company, Chingford Lighting Contractors Ltd, against a decision by the Industrial Tribunal held at Stratford on 29th September 1997 when the Industrial Tribunal held that the applicant before them, Mr Woolner, was entitled to £4,306.77 by way of damages for wrongful dismissal, together with a sum of £10,096.33 by way compensation for unfair dismissal, and that would make a total sum, disregarding the effect of the recoupment regulations of course, of about £14,400. 

	There has been an appeal against that finding by the Industrial Tribunal of which extended reasons were sent to parties on 8th October 1997. As a result of the arguments that have been addressed on appeal, it is quite clear and accepted that on all sides, that unfortunately the Industrial Tribunal went about the matter erroneously and did not calculate the matter properly, regrettably on this occasion, and in particular, did not properly understand, in the way they expressed themselves in this particular decision, the interaction of damages for wrongful dismissal on the one hand, and the compensatory award on the other. In particular, unfortunately, the Industrial Tribunal in particular failed to take into account the alternative employment which Mr Woolner had been able to obtain when they came to calculate the compensatory award as they do in paragraph 11 of the decision.

	The result is that the submission now made on behalf of the appellants is that the proper award should total £8,129.18 whereas the respondent submits that the proper figure is a sum of approximately £8,578.

	The position is that having heard the submission made to us, we are satisfied that on this occasion, unfortunately, the Industrial Tribunal did not correctly calculate the overall award that was due to Mr Woolner. The difference between the parties in the arguments which they have addressed to us today, relates to the question as to what sum should be allowed for in the overall award in relation to the three month notice period. 

	The submission of Counsel for the respondent is that following the decision of the Court of Appeal in Addison v Babcock FATA Ltd [1987] 2 AER 784, there should be no deduction in respect of the award for that period of notice in respect of earnings that were received by the respondent from alternative employment during that period. Accordingly, he submits that the full loss of salary should be awarded in respect of that three month period. 

	The submission of Mr Large on behalf of the appellants, is the following. He does not dispute the impact of the decision of Addison v Babcock, or the rightness of that decision, but his submission is that since on this appeal he has only criticised a specific part of the Industrial Tribunal’s decision, and makes no criticism of the way in which they have calculated the amount due in respect of the three month period, namely a figure of £4,306.77, and since his complaint on appeal is entirely related to the period after that three month period, it would be wrong for us, sitting as the Employment Appeal Tribunal, to allow the respondent to rely upon the decision in Addison v Babcock in the way in which the final figure is arrived at. 

	We have considered this point carefully. In the judgment of the majority of the Employment Appeal Tribunal, in circumstances where the Employment Appeal Tribunal should properly substitute its own decision for that of the Industrial Tribunal, it is the view of the majority of this Employment Appeal Tribunal that in circumstances where the decision of the Industrial Tribunal is plainly wrong, which this decision was with regard to the amount of the compensation, and in circumstances where the facts upon which the decision was based do not require any amplification or re-investigation, then it is the view of the majority of the Employment Appeal Tribunal that the Employment Appeal Tribunal is entitled and indeed bound to substitute its own conclusion based upon a correct application of the law to the facts. The majority of the Employment Appeal Tribunal take the view that the correct approach for the Employment Appeal Tribunal to take to the decision they have to make by way of substitution of their own decision for that of the Industrial Tribunal is to look at the facts as found by the Industrial Tribunal and then to substitute the conclusion of the Employment Appeal Tribunal based on the correct application of the law to the facts. In the course of arriving at that conclusion, the majority of the Employment Appeal Tribunal take the view that it follows from that that in arriving at the correct amount for the three month loss period we should follow the reasoning of the Court of Appeal in Addison v Babcock with the result that the figure contended for by Counsel for the respondent should be the figure which is allowed in respect of that particular part of the calculation, so that the majority of the Employment Appeal Tribunal would conclude that the proper figure by way of compensation is the figure of £8,578.

	The dissenting member does not dispute that the proper approach is for the Employment Appeal Tribunal here to substitute its own conclusion, that is fully accepted by the minority member. But the view of the minority member is that in circumstances where there is an appeal made that does not relate to the three month period, but only relates to the way in which the amount of compensation has been calculated by reference to a contention that the way the Industrial Tribunal has approached the matter in paragraph 11 of its decision is wrong, then in those circumstances, in the absence of a cross-appeal on the part of the respondent, it is not correct for the Employment Appeal Tribunal in substituting its own decision to take into account an argument that was not put forward by way of cross-appeal and is in relation to a part of the award where there is no challenge by the appellants to the reasoning of the Industrial Tribunal. Thus the minority member would have upheld the argument on this part of the appeal put forward by Mr Large on behalf of the appellants, that the figure for the three month loss should remain that originally calculated by the Industrial Tribunal with the result that he would have substituted an award by way of compensation of £8,129.18. 

	However, since the majority take the view that, in substituting its decision, the Employment Appeal Tribunal should look at the whole picture and is bound indeed to substitute its conclusion based on a correct application of the law to the facts, the net result is that the appeal is allowed, and a substituted award is made in the sum of £8,733.10 including the interest calculations. 

	JUDGE SMITH QC:  	We have carefully considered this application in respect of costs. We have reached the conclusion here that we cannot find that the appeal which was lodged on the liability hearing was a groundless appeal. We do not put it in that category. There were arguable points, in our judgment. The matter had been considered at a preliminary hearing and it had been allowed to proceed to a full hearing. There were points to be argued and we do not consider that the appellants acted unreasonably in conducting that appeal. Accordingly, in relation to that appeal we do not accede to the application for Mr Woolner’s costs.

	With regard to the remedies appeal, there were very strong grounds clearly for that appeal being brought and it has been to a considerable extent successful. Of course we notice that very recently there was an offer made of 9th February in the form of a letter, sometimes known in ordinary litigation as a Calderbank letter to settle it on terms; and at the end of the day, by a majority, the Employment Appeal Tribunal has upheld that figure as being the correct figure. But here again, in our judgment, it is not right that we should follow the principles that might apply in High Court litigation, since we are sitting as the Employment Appeal Tribunal exercising a different kind of discretion with regard to costs. In substance, in our judgment, really the position is that the appellants have succeeded on the remedies appeal. We certainly cannot regard their conduct as being unreasonable when they have taken the matter forward and succeeded on that appeal. Even taking into account the recent offer that was made to settle the matter. In all the circumstances, exercising our discretion we hope fairly in the light of the limited jurisdiction we have to award costs, we must reject the application for costs.

	The application by the appellants for leave to appeal to the Court of Appeal is refused.