Appeal No.	 EAT/0341/00

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 25 July 2001

Before
THE HONOURABLE MR JUSTICE DOUGLAS BROWN
MR J R CROSBY
MR P R A JACQUES CBE

MR SIMON PAUL CLARKE	APPELLANT

ARRIVA KENT THAMESIDE LTD	RESPONDENT

Transcript of Proceedings

JUDGMENT

Revised

	APPEARANCES

For the Appellant	MR D CRAIG 
(of Counsel)
Church Bruce Hawkes Brasington & Phillips
51-54 Windmill Street
Gravesend
Kent 
DA12 1ED	
For the Respondent	MR M WEST
(Advocacy Manager)
Peninsula Business Services Ltd
Riverside
New Bailey Street
Manchester
M3 5PB	

MR JUSTICE DOUGLAS BROWN

1	Mr Simon Clarke appeals a decision of the Employment Tribunal at Ashford, Mrs V Cooney, sitting alone as Chairman, the Extended Reasons being given on 2 February 2000 and the Respondent to the appeal being Arriva Kent Thameside Ltd.  The decision of the Tribunal was that Mr Clarke’s claim for contractual sick pay failed.  

2	There are two Grounds of Appeal.  The first is that the Employment Tribunal was not properly constituted.  The application, it is said, should have been heard by a Chairman and two members.  The second is that under the terms of the contract of employment the General Manager had a discretion to decide whether sick pay should be paid, either as a matter of construction of the contract or as an implied term.  That discretion had to be exercised reasonably and it was not.  

3	Consideration of the first ground can only follow reference to the statutory provisions themselves.  Section 4(1) of the Employment Tribunal Act 1996 is in these terms:

“(1)	Subject to the following provisions of this section [and to section 7(3A)], proceedings before an [employment tribunal] shall be heard by –
(a)	the person who, in accordance with regulations made under section 1(1), is the chairman, and 
(b)	two other members, or (with the consent of the parties) one other member, selected as the other members (or member) in accordance with regulations so made.
(2)	Subject to subsection (5), the proceedings specified in subsection (3) shall be heard by the person mentioned in subsection (1)(a) alone.”

Subsection 3 then sets out at (a) to (d) a number of proceedings by reference to different sections of different Acts of Parliament.  They include section 23 of the Employment Rights Act under which the present application was made.  It is only necessary to refer in addition to one other part of that subsection, subsection 4(3)(e):

“Proceedings in which the parties have given their written consent to the proceedings being heard in accordance with subsection (2) (whether or not they have subsequently withdrawn it).”

Then subsection (5):

“Proceedings specified in subsection (3) shall be heard in accordance with subsection (1) if a person who, in accordance with regulations made under section 1(1), may be the chairman of an [employment tribunal], having regard to –
(a)	whether there is a likelihood of a dispute arising on the facts which makes it desirable for the proceedings to be heard in accordance with subsection (1), 
(b)	whether there is a likelihood of an issue of law arising which would make it desirable for the proceedings to be heard in accordance with subsection (20,
(c)	any views of any of the parties as to whether or not the proceedings ought to be heard in accordance with either of those subsections, and
(d)	{which is not material] whether there are other proceedings which might be heard concurrently but which are not proceedings specified in subsection (3),
decides at any stage of the proceedings that the proceedings are to be heard in accordance with subsection (1).”

4	Before coming to the circumstances of this case it is necessary to consider two decisions of the Employment Appeal Tribunals which are concerned with Section 4.  The first of those is the case of Sogbetun v London Borough of Hackney [1998] IRLR 676, a decision of this Appeal Tribunal, the Judgment being given by the then President, Mr Justice Morison.  That was a case of unfair dismissal.  It qualified under Section 4 subsection 3 because the parties in that case, on being requested to respond by the Tribunal, had given their written consent to the proceedings being heard by a Chairman sitting alone.  Accordingly, the proceedings were heard by a Chairman sitting alone.  On appeal this was challenged, and Mr Justice Morison in giving the Judgment of the Appeal Tribunal allowing the appeal, made a number of significant remarks which form the clearest guidance as to how Chairmen should approach the task that they are given under Section 4.  Having set out the Act, as we have done, Mr Justice Morison said this:

“Subsection (2) requires the proceedings (‘the qualifying proceedings’) identified in subsection (3) to be heard by a chairman sitting alone.  That requirement is ‘subject to subsection (5)’.  Subsection (5) confers a discretion on a chairman not to sit on his own in relation to such proceedings having regard to the various statutory criteria.  Because of the words ‘subject to subsection (5)’ it is our view that if a chairman sits on his own that is because he had declined to exercise his discretion to refer the matter to a full tribunal.  Therefore, whenever a chairman sits on his own he must have exercised his discretion under subsection (5), albeit negatively.  A case cannot be heard by a chairman alone without the matters referred to in subsection (5) having been evaluated.  There is, thus, a two stage process: first the proceedings must be identified as qualifying proceedings; and, second, they must be proceedings in which a chairman has exercised his discretion and has not decided that it would be desirable for them to be heard by a full tribunal.  The consent of the parties is not determinative as to how the discretion should be exercised both because of the two stage process and because of the provisions of subsection (5)(c).  The matters specified in subsection (5) must be considered whichever subparagraphs of subsection (4) apply, including subsection (4)(e).”

Mr Justice Morison then went on to give the rationale behind the views expressed by this Appeal Tribunal.

“It seems to us clear that, having regard to the issues of fact in this case, no reasonable tribunal chairman properly exercising his discretion could have concluded otherwise than it was desirable, and necessary, for the case to be heard by a full tribunal in accordance with subsection (1).  The industrial tribunals were set up to provide an industrial jury, whose function is to make judgements, subject to legal direction, about employers’ conduct, based upon experience of the workplace.  As we have said in another case, the respect for industrial tribunal decisions comes from a number of circumstances, including importantly, from the fact that cases are not tried by a judge or other legally qualified person alone but by a panel of three who can bring their collective wisdom to resolving the matters in issue.  Each side of industry is represented on the panel, and the parties before them can be confident that their respective positions have been well understood and fairly assessed by people who have workplace experience.  The tribunal brings a collective good sense to the determination of employment issues.”

We do not think it necessary to quote further from the decision except in this regard, at paragraph 16, the Judge said:

“Further, we are of the view that the parties and the appellate courts are entitled to know why an unidentified or an identified chairman has exercised his discretion under subsection (5).  A short statement of the reasons for his conclusions is all that is required.  These will show what particular factors he took into account when deciding as he did.  The need to give reasons will, we think, be of assistance to Chairmen called upon to exercise their discretion because it will help them to focus their attention on the factors which Parliament require them to take into account.”

5	The other decision is the case of Post Office v Howell [2000] IRLR 224, again a decision of this Appeal Tribunal, the Judgment being given by Mr Justice Charles.  It is not necessary to refer in detail to that case.  It is a case which has similarities to the instant case.  It was involving a complaint under Section 23 of the Employment Rights Act.  In this case, although a Tribunal Chairman directed that the matter be heard by a Chairman sitting alone, there was no evidence that he had exercised the discretion under Section 4(5) at all.  Accordingly it was not difficult in those circumstances for this Appeal Tribunal, particularly having regard to the case of Sogbetun, in comity with that decision, to send the case back for a re-hearing.  One difference between the two decisions is that in Sogbetun Mr Justice Morison regarded a failure to exercise discretion under Section 4(5) as being so fundamental that the proceedings were a nullity, whereas Mr Justice Charles and the Appeal Tribunal with him took a different view, that it was not a nullity but an irregularity, but it does seem to us that in terms of the result that this is a distinction of no materiality.  This has, as will be seen, relevance to the instant case.  The Judge said this, at paragraph 31:

“31	In our judgment without the benefit of hindsight this is a case in which the contribution of the members of the tribunal would be, or would be likely to be, of real assistance in the decision-making process both as to:
	(a)	the resolution of the factual disputes, and
(b)	the construction of the collective agreement and its effect on individual contracts.
32	These views are confirmed by hindsight, which demonstrates that there were factual disputes.  These disputes may have been greater than expected but in our judgment the very fact that both sides attended with two witnesses shows that there was always a real potential that factual dispute would arise as to which the contribution of the members of the tribunal would be helpful.”

6	Turning to the facts we are concerned with, the matter was put first of all before a Chairman, Mr de Saxe, for him to give listing direction.  He did so, and allocated the case to a Chairman sitting alone.  He gave no reasons at the time, or none were communicated to the parties.  The parties were not invited to say whether they had any view on the manner of trial.  After the event, and after the appeal was lodged, Mr de Saxe wrote to the Registrar and said this:

“It seemed to me to be a perfectly straightforward claim of unlawful deductions from wages, brought by virtue of section 23 of the Employment Rights Act 1996.  I saw no reason to depart from the rule laid down by section 4(2) of the Employment Tribunals Act 196 that such a case should be heard by a Chairman sitting alone: it did not seem to me that there was a sufficient likelihood of a dispute on the facts to direct that it should be heard by a full Tribunal.”

When the matter came before the Chairman who heard the matter, Mrs Cooney, the Appellant was represented by a Union representative and the Respondent by Counsel.  Neither raised any objection to the fact that the matter was being heard by a Chairman alone.  Both parties attended with witnesses and oral evidence was given.  The Chairman made no comment at all about the manner of trial.  It is however apparent from a letter she wrote in similar circumstances to Mr de Saxe’s, after the appeal was lodged, that she did exercise her discretion under Section 4(5) and considered the matter set out at 4(5)(a), (b) and (d) and said that there was nothing on the face of the pleadings which led her to consider that it should be heard by a full Tribunal.  So far as Section 4(5)(c) was concerned the parties did not express any views about the matter despite the fact that they had been informed in advance that the case was going to be heard by a Chairman alone.

7	In fact the pleadings showed that there was a stark factual conflict between the parties.  Mr Clarke, or a Union official on his behalf, set out the details of his injury to his back whilst he was carrying out his duties as a bus driver.  He had been injured in February as a result of a fall from a bus.  The matter he was complaining of for which he did not receive sick pay arose when he was driving a bus in May.  The IT3 showed that sick pay was withheld because the General Manager was not satisfied that:

“….the Applicant’s current sickness is due to an accident at work.”

That was ambiguous but it put in issue the happening of the accident or causation or both.  Nobody cited to the Tribunal the case of Sogbetun or indeed the case of The Post Office v Howell.  The Chairman was therefore not reminded of what, on the face of the decision in Sogbetun, were mandatory duties in respect of Section 4 subsection (5).  As Mr Justice Morison said in Sogbetun v London Borough of Hackney, the need to give reasons would have helped the Chairman focus her attention on the factors which Parliament required her to take into account.  

8	Mr West, the Respondent’s advocate, sought to distinguish Sogbetun v London Borough of Hackney on the ground that it was an unfair dismissal case and that it was a case where, as he put it, ‘the track was changed’.  That the normal ‘track’ for hearing for an unfair dismissal case would be a three member Tribunal and this was changed to a single Chairman.  He also argued that there was no need for the Chairman in a case which did not change track, in other words, which was a case which fell under Section 4(3) to be determined by a Chairman sitting alone unless the 4(5) considerations required otherwise, that there was no need in those circumstances for any reasons to be given at all.  This is a submission which we are bound to say we do not find easy to understand in the face of Mr Justice Morison’s clear guidance which covered all exercise of discretion under Section 4 subsection (5).

9	In our view it matters not whether the decision to sit alone rendered the proceedings a nullity or whether it was a serious irregularity, the effect is the same.  In our view both Mr de Saxe, and in her turn, Mrs Cooney, fell into error in not announcing or making known the reasons for their decision, and indeed for not seeking the views of the parties as Mr Justice Morison said they should.  An interesting and short debate arose at the instance of myself as to whether in fact the first Tribunal Chairman who dealt with the matter, dealt with the statutory requirements so that there was nothing left for the second Chairman to do.  Although the statute is not crystal clear in this regard, we think that the better view is that the Listing Chairman exercises discretion on the material before him, then when the matter comes before the Chairman who is going to hear the matter, there is continuing duty reflected in the words ‘at any stage of the proceedings’ to review that decision, and where the parties turn up with a number of witnesses, that, as Mr Justice Charles said in Post Office v Howell, ought to be a clear indication that this is a case where the full advantage of a full Tribunal should be heard.  In our Judgment both Chairmen were wrong, in the face of increasingly obvious material so far as Mrs Cooney was concerned, in adhering to Chairman alone mode of trial.  On that ground this appeal succeeds.

10	We turn to the second ground.  It was accepted by Mr West that the General Manager has a discretion under contract which must not be exercised capriciously or without any material at all.  It was also accepted by the Chairman in her reasons that the General Manager has a discretion.  The words of the relevant paragraph in the Respondent’s sickness injury payment conditions can be found at paragraph 1(b)viii:

“Sick pay will be payable regardless of service and without waiting days being applied, when the General Manager is satisfied that absence is caused by a properly recorded accident occurring whilst on duty and not adjudged to be the fault of the employee.”

Accordingly this paragraph falls to be analysed in this way.  Before sick pay is payable the General Manager has to be satisfied of a number of matters.  First of all, was there an accident?  Secondly, did it occur whilst the employee was on duty?  Thirdly, was it properly recorded?  Fourthly, was the accident not adjudged to be the fault of the employee?  And finally, was the absence caused by the accident?  To carry out this duty under the contractual term the General Manager has to consider these factors.  He does not have, of course, to consider all of them.  For example, if he was not satisfied there was an accident, then he need go no further.  If there was an accident and it was not whilst he was on duty again he need go no further.  Similarly with the other factors, if he has been satisfied that all those are answered favourably so far as the employee is concerned then there is no discretion under the paragraph of the conditions, sick pay will be paid.  

11	One of the problems in this appeal is that it is very difficult to spell out from the reasons of the Chairman exactly how she approached her task.  What she said was this, at paragraph 7:

“There is a discretion in the General Manager.  He has to be satisfied that an employee was involved in a properly-recorded accident occurring whilst on duty.  I find as a fact in this case that the General Manager was not so satisfied.  The Applicant’s claim must, therefore, fail on that finding of fact.  I have not had to decide whether or not Mr Clarke was involved in an accident at work.”

A curious feature of these reasons, as Mr Craig, Counsel for the Appellant, pointed out, is that apparently in paragraphs 2 and 3 the Chairman did make findings of fact; findings of fact entirely in favour of the Appellant.  In February 1999 the Applicant suffered an injury to his back when he slipped on the step of his bus and fell to the floor.  He reported this in the accident book and had three days off sick for which sick pay was paid to him.  On 17 May 1999 the Applicant turned round to look at fighting school children on the bus he was driving and twisted his back.  He again reported the accident in the accident book and he went off sick.  It is not easy to reconcile what appear to be findings of fact with the Chairman’s statement that it was not for her to decide whether he had been involved in an accident at work.

12	The difficulty we face is that there is no means of knowing from the Chairman’s short statement of findings what evidence she was satisfied about and what indeed the General Manager’s approach to this was.  There is no indication for example, as to which stage of the investigation process the Appellant failed.  It may be, from some clues that we have given by Mr West, that he succeeded at every stage until the causation stage.  Then the General Manager, or his assistant, decided the matter on a dubious approach, that because he had suffered pre-existing injury, and in some way this particular injury was not the cause of his absence from work.  That is a proposition which does not find support in any consideration of personal injuries claims where aggravation of previously existing injuries is a common source of legitimate complaint.  Be that as it may, we have no means of knowing from these laconic reasons how the Chairman found.  Mr Craig submitted that he did not have to amend his Notice of Appeal to allege imperfect and flawed reasons because he said the reasons as recorded were imperfect and flawed and showed that the Chairman whilst recognising there was a discretion, accepted the assertion on behalf of the General Manager that he was not satisfied, uncritically and without any assessment of any of the background facts.  

13	Whichever way this matter is approached these findings are so unsatisfactory that they cannot stand and for this reason also this matter must go back to be reheard, and reheard before a Full Tribunal of Chairman and two members.  In the result this appeal succeeds.  

14	Mr West, the advocate for the Respondent has asked for permission for this appeal to go to the Court of Appeal.  There were two grounds of appeal and Mr West, as we understand it, asked for permission in respect of both grounds, although his primary ground is in relation to the jurisdiction point, as it has been called.  Dealing with that first, he is obviously encouraged by the remarks of Mr Justice Charles giving the Judgment of this Tribunal in Post Office v Howell at paragraph 34, where Mr Justice Charles said this:

“In view of the arguments relating to, and the potentially far-reaching effect of the Sogbetun decision, we give leave to appeal and express the hope that if there is an appeal the issues as to the constitution of an employment tribunal, jurisdiction and generally the approach that should be taken in respect of the qualifying proceedings defined in S.4(3) Industrial Tribunals Act 1996 should be heard and determined by the Court of Appeal as soon as possible.”

It is the understanding of those appearing before us today that there has been no appeal in Post Office v Howell.  We have considered this application and there is undoubtedly a difference of view between Mr Justice Morison, who favoured nullity as the label which should be put on what had gone wrong in Sogbetun, and irregularity, which was Mr Justice Charles’ label.  It does seem to us, certainly in the circumstances of this case, whether it be nullity or irregularity, the failure to exercise discretion under Section 4(5) has exactly the same result, remission to a fresh Industrial Tribunal.  That was the result in both Sogbetun and Post Office v Howell and we can see no useful purpose being served in this matter going to the Court of Appeal.  In fact the Judgment of the President of this Appeal Tribunal, as he then was, is in the clearest of terms and deserves to be more widely known than it apparently is.

15	So far as the second ground is concerned there were really two rolled up reasons why the matter has to go back in any event to be heard again.  Firstly, the Chairman arrived at a reason without providing any of the reasoned explanation that one has come to expect of Employment Tribunal Chairmen and alternatively she failed, certainly to make clear, that she regarded the Chairman’s discretion as being one that had to be exercised reasonably and not capriciously but based on proper material.  That is a decision which in our view does not give rise to any real prospect of success on an appeal to the Court of Appeal.  We refuse leave on that ground as well.