Appeal No. EAT/1140/01/ILB

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 30 October 2002

Before
HIS HONOUR JUDGE PETER CLARK
MR D CHADWICK
MR G MILLS

THE DOLBY HOTEL LIVERPOOL LTD	APPELLANT

MR K F FARLEY	RESPONDENT

Transcript of Proceedings

JUDGMENT

Revised

	APPEARANCES

For the Appellant	MR RODERICK MOORE
(Of Counsel)
Instructed by:
Messrs Cobbetts 
Solicitors
Ship Canal House
King Street
Manchester
M2 4WB

For the Respondent	THE RESPONDENT WAS OBSERVING AS HE WAS DE-BARRED FROM RESPONDING	

JUDGE PETER CLARK
 
1.	This an appeal by the Respondent employer before the Liverpool Employment Tribunal chaired by Mr M D Homfray-Davies against so much of that Employment Tribunal’s decision promulgated with Extended Reasons on 9 August 2001, as found that the Respondent had unfairly and constructively dismissed the Applicant Mr Farley.  Permission to proceed to a full appeal hearing was granted by a division presided over by Lindsay P at a Preliminary Hearing held on 14 March 2002.  Thereafter the Applicant failed to file an Answer and on 6 August 2002 the Registrar ordered that he be debarred from taking further part in the appeal.  Consequently today we have heard only from Mr Moore on behalf of the Respondent below although Mr Farley has been in attendance and observed the proceedings.  In this judgment we shall described the parties as they appeared below.
 
2.	By way of background the Employment Tribunal found that the Applicant commenced employment with the Respondent in October 1998 and was promoted to Training Manager in January 2000.

3.	On 21 December 2000 the office Christmas party took place.  On that occasion Mr Warrior, the General Manager, formed the suspicion that the Applicant and a junior manager may have been involved with illicit drugs.

4.	Mr Warrier consulted 2 managers, Messrs Waring and McLoughlin and decided to ask the Applicant to take a drug test.  We note that under the Respondent’s disciplinary procedure the taking or using of drugs which are prohibited by law, unless prescribed, is categorised as gross misconduct.

5.	On 27 December 2000 Mr McLoughlin informed the Applicant that Mr Warrior intended to ask him to take a drug test.  The Applicant was upset and angry that his character was put in question.  He telephoned Mr Warrior later that day and the latter confirmed that he wanted the Applicant to take a drug test.  He declined to discuss the matter but invited the Applicant to a meeting on 29 December 2000 to do so.

6.	Having ascertained that work would be available at another hotel the Applicant went to the meeting on 29 December with a letter of resignation, which he handed to Mr Warrior without further discussion taking place.  He then left the employment.

7.	Neither party was professionally represented before the Employment Tribunal.  As to whether the Applicant had been constructively dismissed the Employment Tribunal directed themselves as to the law in these terms:

“In order to constitute a breach of the implied term of mutual trust and confidence it is not necessary for the applicant to show that the employer intended any repudiation of the contract: the tribunal’s function is to look at the employer’s conduct as a whole and determine whether it is such that its effect, judged reasonably and sensibly, is such that the employee cannot be expected to put up with it; or put another way the vital question is whether the impact of the employer’s conduct on the employee was such that, viewed objectively, the employee could properly conclude that the employers were repudiating the contract.”

8.	Their conclusion in this issue is then expressed, at paragraph 4 of the reasons, thus:

“In the light of our findings of fact we are satisfied it was reasonable for the applicant to conclude that the information from Mr McCloughlin, which was subsequently confirmed by Mr Warrior that he was to be requested to take a drug test, without any prior discussion or explanation of the reason, was conduct by the employer which entitled him to conclude that they were repudiating the contract.”

9.	Having found a repudiatary breach of the implied terms of mutual trust and confidence, which breach the Applicant did not affirm, the Employment Tribunal held that he had been dismissed on 29 December 2000.  They record that the Respondent did not advance any potentially fair reason for dismissal, nor could they in the Employment Tribunal’s view, and thus found the dismissal unfair.  They went on to award compensation totalling £1,428 for the unfair dismissal.

10.	In support of the appeal Mr Moore advances 5 separate grounds.  In order to explain our conclusion in the case it is convenient to deal with those points in a slightly different order.

11.	We deal firs with the perversity ground, the second ground of appeal.  Mr Moore advances a number of submissions designed to show that this is a case in which it can properly be said that the finding of repudiatary breach of the implied terms of mutual trust and confidence is perverse, in one or more of the senses described by Mummery P in Stewart v Cleveland Guest Engineering Ltd [1994] IRLR 440, 443.  It evokes May LJ’s famous response, ‘My Goodness that must be wrong’.

12.	We find ourselves quite unable to reach that conclusion.  Even had we thought, for the reasons which Mr Moore has advanced, that we should ourselves have reached a different view sitting as an Employment Tribunal that is not the test for perversity.  See particularly Woods v WM Car Services (Peterbrough) Ltd [1982] ICR 693, and the recent guidance to be found in the Court of Appeal judgments in Yeboah v Crofton [2002] IRLR 634.

13.	In Woods the Court of Appeal dismissed that appeal on the grounds that there was evidence to support the Employment Tribunal’s finding on constructive dismissal and the Employment Tribunal had correctly applied the relevant legal principles to the facts.  The question as to whether the contract had been breached and whether that breach was fundamental was essentially a question of fact for the Employment Tribunal.  However, what is equally clear is that the question what is the relevant term of the contract is a question of law.  See Pedersen v London Borough of Camden [1981] ICR 674.

14.	That brings us to Mr Moore’s third ground of appeal.  He submits that in formulating the relevant implied term of mutual trust and confidence the Employment Tribunal omitted an element, particularly material in the present case, to be found in the formulation expressly approved by the House of Lords in Malik v BCCI [1997] IRLR 462.  The formulation is expressed in the speech of Lord Nicholls, paragraph 8, thus:

“There is an implied term to the effect that the employer will not without reasonable and proper cause, conduct itself in a manner likely to destroy or seriously damage the relationship of confidence and trust between employer and employee.’”

15.	The critical element is that the employer’s conduct must be “without reasonable and proper cause.”  Here, for all the reasons advanced by Mr Moore, it is arguable that this Respondent had reasonable and proper cause for requiring the Applicant to take a drug test.  Whether or not they did is a question which we, as an Appellate Court, cannot resolve and which was not raised or answered by the Employment Tribunal below.  We bear in mind that neither party was represented below; nevertheless it seems to us that the Employment Tribunal fell into error in their formulation of the implied term by omitting this material element from the House of Lords formulation in Malik.  On this ground we would allow the appeal and remit the case for rehearing.

16.	It follows that it is strictly unnecessary to consider the first ground of appeal, which attacks the Employment Tribunal’s finding at paragraph 4 of their reasons that the Applicant was requested to take a drug test without any prior discussion or explanation of the reason, on the ground that it was unsupported by, indeed contrary to the evidence and the Employment Tribunal’s own finding of fact at paragraph 3.5 of their reasons.  Since the case must in any event be reheard it is undesirable for us to rule on that ground since, had we upheld it, the result, remission, would be the same, as Mr Moore accepts.

17.	Two grounds of appeal remain.  First, that the Employment Tribunal was wrong not to consider the course of conduct complained of by the Applicant culminating in the request for a drug test on the part of the Respondent.  On reflection, Mr Moore abandons that ground.  We think it is a point more for the Applicant, and then only if the Employment Tribunal had found that the final incident, the drug test request, was other than a repudiatary breach of contract such that the last straw doctrine was invoked.

18.	Mr Moore’s final ground is directed to paragraph 4.5 of the Employment Tribunal’s reasons.  He submits that the Employment Tribunal ought to have gone on to consider whether, if there was a dismissal, it was fair.

19.	We have invited Mr Moore’s attention to the Court of Appeal decision in Aparau v Iceland Foods Plc (No 2) [2000] ICR 341.  Although resisted by Mr Moore we consider ourselves bound by the reasoning in that case, first to conclude that, having failed to pursue the alternative case that if there was a dismissal it was fair before the Employment Tribunal, that point cannot now be raised before us.  Secondly, that in remitting the case to a fresh Employment Tribunal for rehearing on the constructive dismissal issue only, it will not then be open to the Respondent to advance the alternative case that if there was a dismissal, that dismissal was fair.

20.	On this basis we shall allow the appeal.