Appeal No.UKEAT/0530/05/CK

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 9 February 2006

Before
HIS HONOUR JUDGE PETER CLARK
              MR D CHADWICK

MS P TATLOW

MR G READ	APPELLANT

THE MEMBERS OF THE LLANYRAFON COMMUNITYASSOCIATION	RESPONDENT

Transcript of Proceedings

JUDGMENT

		
	APPEARANCES

For the Appellant	MR NIGEL BROCKLEY
(Of Counsel)
Instructed by:
Messrs Leo Abse & Cohen
40 Churchill Way
Cardiff
CF10 2SS	
For the Respondent	MR RALPH WYNNE-GRIFFITHS
(Of Counsel)
Instructed by:
Messrs Keith Smart & Co Solicitors
Powys House
South Walk
Cwmbran
Torfaen
NP44 1PB

SUMMARY
Practice and Procedure – bias, misconduct and procedural irregularity; striking-out/dismissal

Lay member asked to recuse himself because he sat on PH in this case.  Application refused.  No appearance of bias.  ET strike out order – no reasonable prospect of success.  Misdirection as to test for instructive Unfair Dismissal.  Strike-out inappropriate.  Appeal allowed.

HIS HONOUR JUDGE PETER CLARK

1.	This is an appeal by Mr Read, the Claimant before the Cardiff Employment Tribunal, against the Judgment of a full Tribunal chaired by Dr Rachel Davies, sitting on 13 July 2005 at a Pre-Hearing Review, striking out his claim of constructive Unfair Dismissal brought against his former employer, the Respondent Association, under Rule 18(7)(b) of the Employment Tribunal Rules of Procedure 2004, on the ground that the claim had no reasonable prospect of success.  That Judgment, with Reasons, was promulgated on 25 July.  Permission to proceed to this Full Hearing was granted by Lady Smith and members including Mr Chadwick sitting at a Preliminary Hearing held on 16 November 2005.  At the outset Mr Wynne-Griffiths, on behalf of the Respondent objected to Mr Chadwick sitting on this Full Hearing.  We rejected that application for the reasons given earlier today.  

Background
2.	The Claimant was employed by the Respondent as steward of its club premises from 1997 until his resignation effective on 31 December 2004.  Mr Fred Phillips, originally named as Respondent to the claim, was at all relevant times the Chairman of the Association’s Committee.  The Tribunal found that the Association was the employer and proper Respondent and an order was made by the Tribunal to that effect.

3.	The nature of the Claimant’s case as to Constructive Dismissal  was set out in Particular’s attached to the claim form and in a skeleton argument prepared by counsel then appearing on his behalf at the PHR.  In essence, he relied on a sequence of events involving Mr Phillips, said to undermine the necessary mutual trust and confidence to be implied into every contract of employment, culminating in an incident in early September 2004 which resulted in the Claimant being arrested by police following a report by Mr Phillips.  The allegation related to what was said to be cash deficiencies in stocktaking at the club and that was said by the Claimant to be the final straw.  He went off sick following his arrest, never to return to work.  On 25 October 2004 he wrote to the committee a letter which the Tribunal was prepared to treat as a grievance letter for the purpose of the statutory grievance procedure about the action taken against him, and raising three specific questions.  He asked for a formal response within 14 days.  None was received, the Respondent says because the officer of the committee tasked to respond resigned, and on 25 November the Claimant gave written notice of resignation.  That resignation was accepted by the Respondent, to take effect on 31 December.

The Tribunal decision
4.	 The Tribunal took into account the pleadings, documentation and argument presented to them.  They heard no oral evidence.  They noted the Claimant’s case that his being reported to the police by Mr Phillips was said to be the final straw in a continuing course of conduct by the Respondent.  As a matter of law the Tribunal ruled (Reasons, paragraph 8) that the letter of 25 October could not constitute a grievance in relation to events post-dating it, that is the Respondent’s failure to respond to that letter, or the posting of a notice by Mr Phillips.  Mr Brockley did not challenge that ruling in this appeal.

5.	At paragraphs 10 and 12 of their Reasons the Tribunal expressed the view that no reasonable Tribunal would conclude that (a) reporting suspicion of criminal activity to the police and (b) the earlier incidents relied on by the Claimant, were capable of amounting to a fundamental breach of contract entitling the Claimant to treat himself as discharged.  The claim had no reasonable prospect of success and should be struck out.

The Appeal
6.	A number of grounds of appeal were advanced in the original Notice of Appeal and in the argument presented by Mr Brockley.  However, we think that the nub of the appeal comes to this; striking out a claim without hearing evidence is a draconian step, as Mr Wynne-Griffiths accepts.  The question for the Employment Tribunal is whether the claim has no reasonable prospect of success, not, as this Tribunal directed themselves whether no reasonable tribunal would find that the Claimant had established a fundamental breach of contract such as to found his claim of Constructive Unfair Dismissal.

7.	Claims of constructive dismissal relying on a breach of the implied term of trust and confidence are, it seems to us, often highly fact-sensitive.  First, at a full hearing, the Tribunal must find the primary facts and then determine whether objectively, the employers conduct, without reasonable and proper cause, undermined the necessary trust and confidence which an employee is reasonably entitled to have in his employer.  

8.	In order to determine whether this claim had no reasonable prospect of success it was necessary in the first place for the Tribunal to analyse precisely what the claim was.  That is to be found in the form ET1 Particulars of Claim, supplemented by the Claimant’s skeleton argument before the Tribunal.

9.	Mr Wynne-Griffiths submitted that those documents did not disclose a complaint that the Respondent had knowingly made a false allegation of theft against the Claimant to the police, the ‘last straw’ relied on by the Claimant.  We are unable to accept that submission.  The background to the police complaint in September 2004, outlined at paragraph 16 of the skeleton argument, included a complaint that in summer 2001 Mr Phillips had alleged, without supporting evidence, that the Claimant had stolen £1,000.  That allegation, he claimed was later dropped and the police were not then involved.  Further, it is said that an unfounded allegation was made by Mr Phillips that the Claimant was watering down the beer at the club.  Again, it is said there was no evidence to support that allegation.  

10.	Turning to the final matter.  It is contended in the Particulars of claim:

“3.	On the 2nd September 2004, the Claimant was called in to a monthly committee meeting of the Respondent organisation and asked to provide his comment in relation to alleged discrepancies with stock results. It is maintained the Claimant responded to these requests and provided a response which did not place any blame on the Claimant in relation to the stock discrepancies and this was accepted by the committee.	It is further maintained the committee indicated that there were no accusations against the Claimant and that a mistake had been made and it was nothing to do with the Claimant.
4.	It is maintained on the 6th September 2004, the Claimant was visited at his home address by two uniformed Police Officers who informed the Claimant that a report had been made relating to deficiencies by Llanyrafon Community Association. It is maintained the Claimant was subsequently cautioned and arrested at his home address and taken in custody to Cwmbran Police Station.
5.	It is maintained the substance of the caution was alleged theft of Club funds that had been made against the Claimant by the Respondent…
12.	It is maintained the Respondent did not have any reason for the involvement of the Police and the sole purpose was to cause anxiety and stress to the Claimant.”

11.	It is pellucidly clear to us that what the Claimant is alleging is that following previous false complaints made against him by Mr Phillips the final straw came in September 2004 when, on his case, he was asked about stock discrepancies, gave an answer accepted by the Committee, but nonetheless found himself arrested and taken into custody by police following a report of alleged deficiencies made to them by Mr Phillips.

12.	It is equally clear that it is the Respondent’s case that discrepancies in the stock accounts were found, and accounting documents were placed before the Tribunal, justifying the view of the Association’s officers that the matter ought to be referred to the police.

13.	Against that background we turn to the Tribunal’s reasoning.  At paragraph 10 they say:

“In our view no reasonable Tribunal would find that reporting suspicion of criminal activity to the police constituted breach of any fundamental term by the employer.” 

14.	 In our judgment that was a material misdirection in law.  Applying the test for breach of the implied term, endorsed by the House of Lords in Mahmud v BCCI [1977] ICR 606, did this employer, without reasonable and proper cause, conduct itself in a manner calculated and likely to destroy or seriously damage the relationship of confidence and trust between employer and employee?

15.	Looking at the rival contentions in the present case it comes to this.  Did the Respondent, through Mr Phillips, report the alleged discrepancies to the police out of a genuine concern that they existed and were the responsibility of the Claimant, such that he had acted honestly, in which case reasonable and proper cause for their conduct may well be made out; or was the matter reported to police as part of an alleged campaign of false accusations against the Claimant, designed to cause him anxiety and stress, as he would have it?  That the making of a false accusation of theft to police against an employee may amount to breach of the implied term is clear from the old case cited to us by Mr Brockley of Robinson v Crompton Parkinson Ltd [1978] IRLR 61 (EAT). 

16.	That issue, it seems to us, was simply not addressed by the Tribunal.  The conclusion expressed at paragraph 10 of their reasons represents only half the story.  It is not the simple fact of the Respondent reporting the matter to police, leading to the Claimant’s arrest, it is why they did so.  That crucial question, in our judgment, must be tried on evidence as must the previous incidents relied on by the Claimant as forming part of the conduct complained of.  
17.	It follows in our judgment, that having asked itself the wrong question, this Tribunal arrived at the wrong answer.  We shall allow this appeal, set aside the strike-out order and remit the matter to a fresh Employment Tribunal for a hearing on its merits.

18.	Following our judgment in this case, Mr Brockley made application for costs in the appeal.  He puts his application fairly and squarely under Rule 34A of the EAT Rules 1993 As Amended; that the Respondent has been guilty of unreasonable conduct in the conduct of these proceedings.  The basis for that proposition is an e-mail which was sent to the Claimant’s solicitors from those acting for the Respondent which included this passage:

“Upon reading your skeleton argument, counsel has asked us to write to you inviting you to withdraw the appeal, failing which we will be applying for costs at the hearing…”

19.	A similar point was made at the end of Mr Wynne-Griffiths’ skeleton argument for the purpose of this appeal hearing.  We are quite unable to accept this submission.  It seems to us that it is commonplace for parties to adopt the posture that their case is incontrovertible and, that if the opponent proceeds to trial, then there will be an application for costs, whether it has very much affect I doubt.  It certainly did not in this case because Mr Brockley pursued the appeal on behalf of Mr Read to a successful conclusion in this Court.  

20.	In our judgment the expression “unreasonable conduct” does not begin to envisage the sort of comment that appeared in that e-mail communication.  Accordingly, we shall dismiss this application.