Appeal No. UKEAT/0369/07/JOJ

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 18 January 2008

Before
HIS HONOUR JUDGE PETER CLARK
(SITTING ALONE)

MR T R DRAKES	APPELLANT

ABBEY PLC	RESPONDENT

Transcript of Proceedings

JUDGMENT

	APPEARANCES

For the Appellant	MR C QUINN
(of Counsel)
Instructed by:
Messrs Russell Jones & Walker Solicitors
Swinton House
324 Grays Inn Road
London WC1X 8DH	
For the Respondent	MISS L CHUDLEIGH
(of Counsel)
Instructed by:
Messrs DLA Piper UK LLP
Victoria Square House
Victoria House
Birmingham B2 4DL	

SUMMARY

Unfair Dismissal:  Reasonableness of dismissal
Unfair Dismissal by reason of conduct - whether Employment Tribunal entitled to find that it was unfair.
HIS HONOUR JUDGE PETER CLARK
1.	This is an appeal by Mr Drake, Claimant before the London (Central) Employment Tribunal against a judgment of a Tribunal chaired by Mr T P Ryan, promulgated with reasons on 3 April 2007, dismissing his various complaints against his former employer, the Respondent, Abbey plc.  We are concerned in this appeal only with the Tribunal’s finding that the Claimant was not unfairly dismissed.

Background
2.	The Claimant was at all relevant times employed by the Respondent as Manager of their Notting Hill branch.  His then partner, now wife, Kathy Fordham, managed their South Kensington branch.  The Respondent is a well-known provider of mortgage products.  The financial services industry is subject to outside regulation by the FSA.  It is required to have in place anti-money laundering (AML) procedures.  

3.	The Tribunal found (Reasons, paragraph 8.8);  
“That the Respondent’s AML procedures required that mortgage applications should not be accepted until original documents such as a passport, to verify identity, and a current bank statement to verify an address, were seen by the person processing the application.”  

4.	That process, the Tribunal found, included the “four eye check” whereby two separate employees of the bank were required to signify that each had seen the relevant original documents.  Only branch managers and mortgage advisors could process such applications.  The mortgage application must be signed by the applicant him/herself. 

5.	Summarising the Tribunal’s detailed and careful account of the facts as they found them, an investigation was carried out by a principal investigator, Ms Lloyd, into a number of possibly fraudulent mortgage applications introduced by a non-regulated individual, a Mr Baduge.  As a result of that investigation Ms Lloyd concluded that the Claimant had (a) failed to follow the Respondent’s AML procedures, in that he had processed mortgage applications on the basis of photocopied documents supplied by Mr Baduge, in some cases via the South Kensington branch managed by Mrs Drakes, as she now is; and (b) had, contrary to the Respondent’s password security procedure, used the password of a junior member of his branch staff, Ms Smyth.  Disciplinary proceedings followed and the Claimant was dismissed for gross misconduct by Bradley Fordham, the regional manager.  

6.	It is material to this appeal to set out the relevant part of Mr Fordham’s letter of dismissal to the Claimant dated 10 July 2006:
“I have decided to end your employment without notice with effect from 7th July 2006 because of your gross misconduct.  I’ve decided this after hearing your own and the management case because, it is my belief that: based on the content of the investigation there are two key areas where you have been negligent.  (1) Failure to follow Anti Money Laundering procedure - in that you did not seek clarification of whether original ID had been seen and directly accepted photocopied ID on at least one or two occasions from an Introduced Mortgage Broker and you knowingly allowed applications to be processed without the customer present.  This is a very serious breach of AML procedures and potentially exposed the company to financial and regulatory risk.  (2) Failure to comply with Password Security in that it has been proven that Lorraine Smyth gave you her password and on December 14th and 15th she confirmed that she was not working in the evening and we have clear evidence that her password was used whilst you were in the branch on those dates.  You failed to offer me a reasonable explanation for this and it is my reasonable belief that you used her password and system.”

7.	A subsequent internal appeal chaired by Mr Davis, a divisional director, was dismissed on 9 August 2006.

The Tribunal Decision
8.	Mr Quinn, appearing for the Claimant, as he does today, drew the Employment Tribunal’s attention to the decision of the EAT in Abbey National plc v Kaur [2005] UKEAT/0271/05/TM 3 August 2005, HHJ McMullen QC presiding.  In that case the Claimant, Ms Kaur, was employed by this Respondent, or its predecessor, as a cashier.  She made a mistake, as the EAT described it at paragraphs 8 and 9 of their judgment, in opening a new account for a customer who was Ghanaian.  First she falsified the record to show that she had seen a British passport when she had been shown a Ghanaian one.  Secondly, she failed to consult the bank’s helpline, as she ought to have done, and thirdly, she wrongly accepted an unreceipted utility bill as evidence of the customer’s address.  

9.	Disciplinary proceedings ensued, the charge being that she had seriously breached the AML regulations by accepting a foreign passport as a UK passport and in accepting the unreceipted utility bill.  Abbey’s then disciplinary procedure provided a definition of gross misconduct as follows:
“Misconduct is any deliberate act committed which is or is potentially severely detrimental to the conduct of the business ...”

10.	A non-exhaustive list of types of gross misconduct included “serious breaches of regulatory, e.g. Financial Service Authority, company, or departmental rules, codes of conduct, policies and procedures”.  

11.	The Tribunal in that case held that each example required deliberate misconduct on the part of the employee and that the employer was not satisfied that Ms Kaur’s conduct was deliberate.  Indeed the dismissing officer accepted that her actions may have been due to inadvertence.  On this basis they found the dismissal unfair.  On appeal the EAT declined to interfere with that decision.

12.	In the present case it was submitted on behalf of the Claimant that negligence, referred to in Mr Fordham’s letter of dismissal, was not enough.  Deliberate misconduct had to be found before dismissal for gross misconduct could properly and fairly take place.

13.	The Tribunal accepted that the conduct must be deliberate in the present case but on reading Mr Fordham’s letter as a whole concluded (see reasons, paragraph 12.2) that his findings included findings of deliberate acts by the Claimant in respect of both disciplinary charges such as to render the Claimant guilty of gross misconduct under the Respondent’s procedures.  

14.	The Tribunal further considered within paragraph 12 of their reasons certain procedural points taken by Mr Quinn in the context of fairness under section 98(4) of the Employment Rights Act 1996 and rejected them.  We note also that the Tribunal considered steps one and two of the Statutory Dismissal and Disciplinary Procedure and found no breach by the Respondent (see paragraph 12.17).  Accordingly there was no automatically unfair dismissal under section 98A of the Act.  

The Appeal
15.	Mr Quinn advances four grounds of appeal: (1) That the Tribunal was wrong having found that gross misconduct under the Respondent’s procedures required a deliberate act to find that the charges upheld by Mr Fordham constituted deliberate acts on the part of the Claimant when he, Mr Fordham, described those matters as “areas where the Claimant had been negligent” in his letter of dismissal.

16.	We reject that submission, as did the Tribunal below, on the basis of the Tribunal’s findings as to the acts of the Claimant which constituted the employer’s reason for dismissal.  The letter of dismissal had to be read as a whole in the context in Mr Fordham’s oral evidence.  The Tribunal was entitled to conclude, on the wording of the letter alone, that in finding that the Claimant accepted photocopied ID, and knowingly allowed applications to be processed without the customer present, and in using another staff member’s password, Mr Fordham was finding that the Claimant was guilty of deliberate acts amounting in his judgment to gross misconduct.  

17.	In these circumstances it is unnecessary for us to consider Ms Chudleigh’s alternative submission based on an amendment to the wording of the Respondent’s disciplinary procedures as they existed at the time of Ms Kaur’s dismissal.  

18.	(2) That the Respondent did not establish what was its AML procedure.  Mr Quinn has taken us to certain parts of the evidence in order to make good this proposition, we are not persuaded.  The Tribunal found (paragraph 8.8) what that procedure was and, at paragraph 12.4 of their reasons, that the Claimant admitted breach of the procedure.  They reached those conclusions on the whole of the evidence.  We cannot say that those findings were wholly unsupported by or contrary to the evidence given, such as to found a perversity ground of appeal as explained by the Court of Appeal in Piggott Brothers & Co Limited v Jackson [1992] ICR 85 at 92D, per Lord Donaldson MR.

19.	(3) That it was not open to the Tribunal to uphold the Respondent’s decision to dismiss on the password security ground when the Claimant was not cross-examined on this issue before the Tribunal.  Ms Chudleigh raised a challenge to the absence of material cross‑examination, but we shall proceed on the basis of Mr Quinn’s recollection that there was not.

20.	In our view, such cross-examination directed to the issue before Mr Fordham as to whether or not Ms Smyth had supplied her password to the Claimant, and he had used it to log on to the Respondent’s system, is strictly irrelevant to the Burchell question in this case.  (cf. the direct credibility issue raised in relation to evidence given by a witness before an Employment Tribunal but not by the parties, in the case of Lewis v HSBC Bank plc UKEAT/0364/06/RN).  The question for the Employment Tribunal was not whether, in fact, the Claimant had used another’s password but whether Mr Fordham reasonably believed that he had.  The Tribunal was, in our judgment, entitled to answer that question in the affirmative.

21.	(4) Procedural points in relation to taped investigatory interviews, and the opportunity or lack of it given to the Claimant and his representative to consider additional evidence prior to the disciplinary hearing are raised in this last ground of appeal.  They were not actively pursued by Mr Quinn in oral submissions but we do not understand him to have abandoned them.  Having heard Ms Chudleigh on these points we are satisfied on the Tribunal’s findings of fact that they were entitled to conclude that there was here no procedural unfairness.

Conclusion
22.	It follows that we can discern no error of law in the Tribunal’s approach.  Consequently this appeal fails and is dismissed.