Perkin v St Georges Healthcare NHS Trust [2005] EWCA Civ 1174

[2005] EWCA Civ 1174Case No A2/2004/1811
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM Employment Appeal Tribunal
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 12/10/2005
Before
LORD JUSTICE TUCKEYLORD JUSTICE MANCELORD JUSTICE WALL
Between
IAN KEITH PERKINAppellantST GEORGES HEALTHCARE NHS TRUSTRespondent
Brian Langstaff QC and Lachlan Wilson (instructed by Messrs Lyons Davidson - Solicitors) for AppellantChristopher Jeans QC and Simon Devonshire (instructed by Messrs Bevan Ashford - Solicitors) for RespondentHearing Hearing dates : 28th July 2005
JudgmentLord Justice Wall :Introduction
[1]In a decision promulgated on 27 January 2004, and after a hearing lasting in total 15 days, inclusive of two days taken for consideration in chambers, the Employment Tribunal held at London South, in a constitution chaired by Mr. John Warren, (the Tribunal) unanimously decided that Mr. I.K. Perkin (the applicant before it and the appellant before us) had been unfairly dismissed by his employer, St. George’s Heathcare NHS Trust (the Respondent both in the Tribunal and to this appeal). However, the Tribunal went on to hold that had the dismissal been procedurally fair, there was a 100% chance that Mr. Perkin would have been dismissed fairly. The Tribunal also found that Mr. Perkin had contributed to his dismissal to the extent of 100%. The Tribunal, accordingly, declined to grant Mr. Perkin any relief.[2]I shall throughout this judgment, including citations from the Tribunal’s reasons and the Employment Appeal Tribunal’s judgment refer to the appellant as “Mr. Perkin”, and to the Respondent to this appeal as “the Trust”.[3]On 29 July 2004, the Employment Appeal Tribunal (EAT) in a constitution chaired by Mitting J dismissed Mr. Perkin’s appeal against the Tribunal’s decision and refused him permission to appeal. Mr. Perkin applied to this court for permission to appeal. Permission was refused on the papers by Sedley LJ on 9 December 2004, but granted at on oral hearing on 14 January 2005 by Mummery and Neuberger LJJ. On 28 July 2005, we heard argument from leading counsel on both sides (Mr. Brian Langstaff QC for Mr. Perkin and Mr. Christopher Jeans QC for the Trust) and reserved judgment.

The essential facts

[4]The Tribunal’s reasons extend to some 66 pages. Of those, pages 4 to 55 are taken up with the Tribunal’s findings of fact, which run to some 217 sub-paragraphs. Whilst I will need in due course to identify a number of these findings, I can, for the time being, take the essential facts from a succinct summary contained in the judgment of the EAT . “2. …. Mr Perkin was employed by the Trust from September 1986 until his employment was summarily terminated on 4 December 2002. His job was Director of Finance, evidently a responsible job that required him both to manage a group of employees underneath him and to co-operate with senior colleagues at the same level and above. The chief executive was Mr Hamilton and since October 1999 the Chairman was Ms McLoughlin. It was throughout clear that no criticism whatever could be made or was made of Mr Perkin’s technical competence or of his integrity. In a nutshell the difficulties that gave rise to the matters which led to his dismissal were those of personality and inter-relation with colleagues and of management style. Things came to a head in July 2002 when Mr Perkin was on holiday. On the day that he returned from holiday, Monday 29 July 2002, Ms McLoughlin held a meeting with KPMG during which it was noted that she informed KPMG that “she wanted an exit strategy in place for Mr Perkin by the end of July 2002”. On the same day according to the findings of the Employment Tribunal which are not in dispute the Chief Executive Mr Hamilton summoned Mr. Perkin to a meeting without prior warning and asked him to resign with immediate effect. He declined to do so. He responded by presenting a formal grievance under the Grievance Procedure on 5 August 2002. The Trust set in motion their own disciplinary procedures. That required first of all an investigation that was initiated by Mr Hamilton who held an investigatory meeting on 8 August……. 3. Following upon that investigatory meeting Mr. Perkin was suspended on 9 August. During the meeting he had made an accusation about the Chief Executive’s conduct to which reference was extensively made in both the disciplinary hearing to which we will refer in due course and in the Employment Tribunal itself….. 4. A disciplinary hearing was to be convened. For its purpose the Trust prepared and submitted for Mr. Perkin’s consideration a statement of case dated 6 September 2002. As noted by the Tribunal its case in brief was:
“serious concerns have arisen over the conduct and performance of Ian Perkin as the Director of Finance and as a consequent breakdown in confidence in his ability to carry out the requirements of his role to the satisfaction of myself as the Chief Executive and the Senior Executive team. The issues relate primarily to: (i) your management style and ability to represent and advise the Trust in a positive and supportive manner; and (ii) your ability to form the necessary quality of relationships with external advisors, stakeholders and other external agencies to ensure the Trust interests are best preserved and advanced”. 5. The disciplinary hearing was initially convened on 12 September 2002. In fact it extended over four further days, 7 and 8 October and 4 and 5 November. It was chaired by Ms McLoughlin assisted by a Mrs Mark. Objection was taken to her chairing the meeting. The fact that she chaired it was in due course as we shall demonstrate to lead the Employment Tribunal to conclude that the disciplinary procedure was unfair. Evidence was presented on behalf of the Trust to the disciplinary hearing including evidence from Ms Grant, the Director of Operations and Nursing whose evidence was to the effect that she had no confidence in being able to work with Mr Perkin as an Executive colleague. Evidence was given by Professor Jones, the Professor of Respiratory Medicine and the Medical Director of the Trust to the effect that Mr Perkin was intimidating during meetings, would refuse to discuss things, would adopt the attitude that “that is my position and I am not moving from it” and would refuse to discuss matters that the medical staff had problems with. Professor Jones reported that it was the general consensus among managers of Service Centre Chairs that Mr Perkin should leave. In a document Professor Jones summed up the concerns of himself and colleagues as follows: “I have major concerns about the attitude of the Director of Finance within the Executive team. He appears to be aloof, stubborn and at times intimidating in his frank refusal to listen to other’s request. There is a continual sense of “won’t do” as opposed to “I am not sure but I’ll see what can be done.” 6. During the hearing Mr. Perkin either personally or through his representative suggested that a fellow Finance Director of another Trust a Mr Esterman was lying. Of greater significance, he pursued the accusation about the Chief Executive that he had foreshadowed at the investigatory meeting. The Tribunal noted: “The Chief Executive, Mr Hamilton was then questioned about his integrity and in particular his holding out that he held CIPFA (Chartered Institute of Public Finance and Accountancy) membership on his application form for Chief Executive, when it was not true. The reality was that Mr Hamilton had the qualification but was no longer a member. Mr. Perkin actually raised the matter with CIPFA who accepted that Mr Hamilton had not been dishonest.” 7. In his statement of case presented, we are told, after the first day of the disciplinary hearing but before the second he made the following statement: “The Chief Executive is not a man of integrity, he is in fact a bully who is prepared to lie or bend the truth whenever it suits his purpose.”
He went on to allege at the hearing as the Tribunal found that:
“….. these events (this was a reference to events in November 1999 concerning the reimbursement of payment of £540.00 to pay for dinner to mark the retirement from office of a former chairman) demonstrate that the Chief Executive is an individual of low integrity making him unfit to hold such a senior position and also shows ‘why he is seeking to remove me as Finance Director’.” 8. In summary Mr Perkin responded to the accusations against him of being a difficult colleague with whom to work by launching an attack upon the honesty and integrity of his immediate superior. Ms McLoughlin with Mrs Mark’s assistance took just under a month to reach and formulate their decision. By a letter dated 4 December 2002 they set out their conclusions which resulted in their decision that Mr Perkin should be dismissed from his post as Director of Finance with immediate effect but with pay in lieu of notice of six months. The reasons they gave were as follows: “We concluded from the evidence we heard .… that you have failed to engage the Service Centre Chairs and other clinicians and this resulted in a loss of confidence in you as the Director of Finance for the Trust. We would expect you as a senior financial executive within the organisation to contribute constructively to finding a solution to the problem but instead your disabling and negative approach has led us to conclude that your relationship with the executive team has broken down.”
It was noted that he was held in high regard by staff within his own department. It went on to state:
“In relation to your relationships with external advisers, stakeholders and other external agencies, we also found that you had failed to establish the quality of relationships necessary to preserve and advance the Trust’s interests.”
Its conclusion was:
“In the circumstances, therefore, we have reached the view that your conduct and behaviour has been such that you are not able to discharge effectively the role of Financial Director with the Trust.”
Ms McLoughlin went on to reject the submission that had been made at the disciplinary hearing that they were brought to penalise Mr Perkin for expressing his views about the Trust’s financial affairs and the need to cancel operations in a previous year. The letter went on to note two further matters:
“First, at several points during the hearing you were asked if you had tape recorded conversation with Ian Hamilton and Simon Sharp and you refused to answer the question. We concluded that you did tape these conversations. To do so with an internal colleague is in our view highly questionable conduct, to do so with an external adviser (that was a reference to Mr Sharp of Price Waterhouse Cooper) is wholly unacceptable. Second, during the disciplinary process we became increasingly concerned about the effect your conduct during the hearing was having on your relationships with the Chief Executive and others. Whilst you are of course entitled to defend yourself against allegations made against you, to have done so by engaging in personal attacks, extending on occasions to abuse, against Ian Hamilton and other witnesses with whose evidence you disagreed has resulted in the situation where we do not see you could ever work together again. Even if, therefore, we had decided that the allegations had not been made out, your conduct would still have led us to the conclusion that you cannot return to a senior position within the Trust.”
On a natural reading of that letter Ms McLoughlin and Mrs Mark were stating on behalf of the Trust that the principal reason for dismissal was, to use neutral words, the events and difficulties in relationships before the disciplinary hearing; but that Mr Perkin’s conduct at the disciplinary hearing would in any event have led to his dismissal. “serious concerns have arisen over the conduct and performance of Ian Perkin as the Director of Finance and as a consequent breakdown in confidence in his ability to carry out the requirements of his role to the satisfaction of myself as the Chief Executive and the Senior Executive team. The issues relate primarily to: (i) your management style and ability to represent and advise the Trust in a positive and supportive manner; and (ii) your ability to form the necessary quality of relationships with external advisors, stakeholders and other external agencies to ensure the Trust interests are best preserved and advanced”. “I have major concerns about the attitude of the Director of Finance within the Executive team. He appears to be aloof, stubborn and at times intimidating in his frank refusal to listen to other’s request. There is a continual sense of “won’t do” as opposed to “I am not sure but I’ll see what can be done.” “The Chief Executive, Mr Hamilton was then questioned about his integrity and in particular his holding out that he held CIPFA (Chartered Institute of Public Finance and Accountancy) membership on his application form for Chief Executive, when it was not true. The reality was that Mr Hamilton had the qualification but was no longer a member. Mr. Perkin actually raised the matter with CIPFA who accepted that Mr Hamilton had not been dishonest.” “The Chief Executive is not a man of integrity, he is in fact a bully who is prepared to lie or bend the truth whenever it suits his purpose.” “….. these events (this was a reference to events in November 1999 concerning the reimbursement of payment of £540.00 to pay for dinner to mark the retirement from office of a former chairman) demonstrate that the Chief Executive is an individual of low integrity making him unfit to hold such a senior position and also shows ‘why he is seeking to remove me as Finance Director’.” “We concluded from the evidence we heard .… that you have failed to engage the Service Centre Chairs and other clinicians and this resulted in a loss of confidence in you as the Director of Finance for the Trust. We would expect you as a senior financial executive within the organisation to contribute constructively to finding a solution to the problem but instead your disabling and negative approach has led us to conclude that your relationship with the executive team has broken down.” “In relation to your relationships with external advisers, stakeholders and other external agencies, we also found that you had failed to establish the quality of relationships necessary to preserve and advance the Trust’s interests.” “In the circumstances, therefore, we have reached the view that your conduct and behaviour has been such that you are not able to discharge effectively the role of Financial Director with the Trust.” “First, at several points during the hearing you were asked if you had tape recorded conversation with Ian Hamilton and Simon Sharp and you refused to answer the question. We concluded that you did tape these conversations. To do so with an internal colleague is in our view highly questionable conduct, to do so with an external adviser (that was a reference to Mr Sharp of Price Waterhouse Cooper) is wholly unacceptable. Second, during the disciplinary process we became increasingly concerned about the effect your conduct during the hearing was having on your relationships with the Chief Executive and others. Whilst you are of course entitled to defend yourself against allegations made against you, to have done so by engaging in personal attacks, extending on occasions to abuse, against Ian Hamilton and other witnesses with whose evidence you disagreed has resulted in the situation where we do not see you could ever work together again. Even if, therefore, we had decided that the allegations had not been made out, your conduct would still have led us to the conclusion that you cannot return to a senior position within the Trust.”[5]The EAT also records, when outlining the history, that Mr Perkinhad accused the Director of Human Resources, Mr. Watts, of doctoring the notes of the investigatory meeting held on 8 August 2002. The Tribunal rejected that allegation, finding that the notes taken by Mr. Watts did not differ in substance from those taken by Mr. Perkin’s representative.

Mr Perkin’s case as formulated in his Form IT1

[6]Mr. Perkin’s complaint, as formulated in an attachment to his Form IT1 runs to 189 paragraphs. Apart from a claim for interim relief, his case was stated on two bases: firstly, that his dismissal was automatically unfair under the provisions of Part IVA and section103A of the Employment Rights Act 1996 (ERA 1996) since the reason for it was the fact that he had made protected disclosures (commonly known as “whistle-blowing); and secondly that it was unfair under ERA 1996 section 98.[7]As to the former, the three protected disclosures alleged were(i) in respect of cancelled operations in October / November 2001;(ii) in respect of the financial probity of the Chief Executive, Mr. I.L. Hamilton; and(iii) by virtue of discussions over the accounts (and his concern about the Trust’s ability to break even) which he had with Simon Sharp (of the Trust’s auditors), in particular in July 2002.

The Trust’s response

[8]In its Form IT3, the Trust accepted that the cancelled operations issue that Mr Perkin had raised in an e-mail to the Chief Executive on 12 October 2001 was a “protected disclosure” within ERA 1996 sections 43A and 43B. However, it denied(1) that either of the other two disclosures were “protected disclosures”; and(2) that any of the alleged disclosures had been the reason for Mr Perkin’s dismissal.[9]The Trust asserted that the reason for Mr Perkin’s dismissal was as set out in the letter from the Ms McLoughlin to Mr. Perkin on 4 December 2002, subsequently summarised by the Tribunal in paragraph 14 of its reasons as follows: - Mr. Perkin’s relationship with a wide variety of senior staff had broken down and Mr Perkin failed to engage with other managers and with clinicians (including Service Centre Chairs and general managers) beyond the presentation of financial information, identifying problems but not contributing to the provision of solutions and that he failed to form the necessary quality of relationships with stake holders and external advisers and PCTS and Ms McLoughlin and Mrs Mark concluded that Mr. Perkin’s manner and style did not engage with other managers and clinicians beyond presenting information and not being proactive in assisting in the solving of problems had led to serious consequences which meant that it was no longer appropriate for the proper and effective running of the Trust to continue to employ Mr. Perkin as Finance Director.”[10]The Trust’s pleaded case was that Mr. Perkin was dismissed “for a reason related to his conduct and / or ‘for some other substantial reason’ (SOSR) (the irretrievable breakdown in relationships to which his behaviour had given rise) within the meaning of ERA 1996 section 98”.

The relevant statutory provisions

[11]It is unnecessary to set out the provisions of Part IVA of ERA 1996 (Protected Disclosures) in relation to Mr. Perkin’s case for automatic unfair dismissal under ERA section 103A (or the issues in relation to it as identified by the Tribunal) since the Tribunal rejected Mr. Perkin’s case under this head, and there was no appeal in relation to it either to the EAT or to this court. Its relevance, accordingly, goes only to the effect which the Tribunal’s findings of fact on the section 103A issues had on the substantive dispute.[12]As to the question of unfair dismissal under ERA 1996, section 98, the relevant statutory provisions are, of course, well known. It is, I think, however, necessary to set them out. Part X of ERA 1996 is entitled “UNFAIR DISMISSAL”. Chapter 1 of Part X is entitled “RIGHT NOT TO BE UNFAIRLY DISMISSED”. Section 98 of ERA 1996 reads, where relevant to this case, as follows: - Fairness 98 General(1) In determining for the purposes of this Part whether the dismissal of an employee is fair or unfair, it is for the employer to show – (a) the reason (or, if more than one, the principal reason) for the dismissal, and (b) that it is either a reason falling within subsection (2) or some other substantial reason of a kind such as to justify the dismissal of an employee holding the position which the employee held.(2) A reason falls within this sub-section if it - (a) relates to the capability or qualifications of the employee for performing work of the kind which he was employed by the employer to do, (c) relates to the conduct of the employee, ……..(3) In sub-section 2(a) – (a) “capability”, in relation to an employee, means his capability assessed by reference to skill, aptitude, health or any other physical or mental quality, and (b) “qualifications”, in relation to an employee, means any degree, diploma or other academic, technical or professional qualification relevant to the position which he held.(4) Where the employer has fulfilled the requirements of subsection (1), the determination of the question whether the dismissal is fair or unfair (having regard to the reason shown by the employer) - (a) depends on whether in the circumstances (including the size and administrative resources of the employer’s undertaking) the employer acted reasonably or unreasonably in treating it as a sufficient reason for dismissing the employee, and (b) shall be determined in accordance with equity and the substantial merits of the case.

The issues as formulated by the Tribunal

[13]At the outset of its reasons, the Tribunal identified the issues for determination relating to the question of unfair dismissal. These had been agreed between the parties as follows: - 1. If Mr Perkin was not automatically unfairly dismissed contrary to Section 103A ERA 1996 – what was the reason or principal reason for dismissal – i.e. the set of facts known to the Trust or the set of beliefs held by it that caused it to dismiss – and was it a potentially fair reason? (Conduct / SOSR is the reason relied upon by the Trust). 2 Was dismissal for that reason fair and reasonable in all the circumstances, having regard to the Trust’s size and administrative resources, and in particular:-(1) did the Trust have reasonable grounds for the beliefs that caused it to dismiss?(2) Were those beliefs formed after a reasonable/sufficient investigation?(3) Was a fair disciplinary procedure followed, in particular having regard to (i) Mr. Perkin’s suspension, (ii) Mr. Perkin’s pending grievance, (iii) the fact that Ms McLoughlin was the officer who took the disciplinary hearing, (iv) the Code of Conduct for NHS Managers published on 9 October 2002, and (v) the absence of an appeal?(4) Did Ms McLoughlin take into account irrelevant matters in determining the issues at the disciplinary hearing (in particular that Mr. Perkin had challenged the credibility of Mr Hamilton as part of his defence);?(5) Was dismissal within the range of reasonable responses? If Mr. Perkin’s dismissal was unfair (whether automatically or otherwise) 3 Did Mr. Perkin by his blameworthy conduct cause or contribute to his dismissal? 4. What was Mr. Perkin’s percentage (Polkey) chance of retaining a job had a different (fair) procedure been followed? 5. How long could Mr. Perkin have reasonably expected to retain his job, but for his unfair dismissal?” what was the reason or principal reason for dismissal – i.e. the set of facts known to the Trust or the set of beliefs held by it that caused it to dismiss – and was it a potentially fair reason? (Conduct / SOSR is the reason relied upon by the Trust). 2 Was dismissal for that reason fair and reasonable in all the circumstances, having regard to the Trust’s size and administrative resources, and in particular:- (1) did the Trust have reasonable grounds for the beliefs that caused it to dismiss? (2) Were those beliefs formed after a reasonable/sufficient investigation? (3) Was a fair disciplinary procedure followed, in particular having regard to (i) Mr. Perkin’s suspension, (ii) Mr. Perkin’s pending grievance, (iii) the fact that Ms McLoughlin was the officer who took the disciplinary hearing, (iv) the Code of Conduct for NHS Managers published on 9 October 2002, and (v) the absence of an appeal? (4) Did Ms McLoughlin take into account irrelevant matters in determining the issues at the disciplinary hearing (in particular that Mr. Perkin had challenged the credibility of Mr Hamilton as part of his defence);? (5) Was dismissal within the range of reasonable responses? If Mr. Perkin’s dismissal was unfair (whether automatically or otherwise)

The Tribunal’s decision

[14]Using the same numbering as that which I have used for the issues which the Tribunal identified as requiring resolution, the Tribunal, in relation to issue 1 (reason or principal reason for dismissal) accepted the reason for dismissal given by the Trust, which I have already set out. It found (paragraph 36 of its reasons) that “the reasons for dismissal was conduct some other substantial reason” (sic) and added: (paragraph 37) “Both are potentially fair reasons within the meaning of section 98”.[15]In relation to issue 2 it answered points 2(1), 2(2), 2(4) and 2(5) in the Trust’s favour. As to point 2(3), however, it found that the disciplinary procedure had been unfair. It expressed its conclusion on this point as follows: -40. The Tribunal has however to look at the procedure that was followed. We make no criticism of the Trust for suspending Mr. Perkin, we are however critical of the Respondent’s decision that Ms McLoughlin should chair the disciplinary hearing.41. Ms McLoughlin was not the appropriate person. Ms McLoughlin had expressed views to the KPMG interview that an exit package strategy would be in place by the end of July. Ms McLoughlin had clearly discussed that matter with the Chief Executive, as at about the same time the Chief Executive was informing Mr. Perkin “out of the blue” on 29 July that the Trust wanted him out.42. We do not consider that Ms McLoughlin was impartial and the Trust’s attempt to square things by appointing Mrs Mark to sit with Ms McLoughlin, did not in our opinion remedy that difficulty.43. The NHS Code of Conduct itself published on 9 October after the disciplinary proceedings was underway envisages the possibility of using external persons to deal with disciplinary matters with senior staff. The Trust are part of the NHS it would have been very easy for them to have arranged for an independent neighbouring authority or someone nominated by the NHS, that was not done. Mr. Perkin had no right of appeal, that again was unfair and unjust and whilst accepting that in the circumstances the decision was made by the most senior individual within the Trusts the appeal could have been to an outside individual.44. The Trust failed to observe the ACAS Code of Practice for dealing with dismissals and it was arguable that the concerns relate to capability – there had been no warning as such that if no improvement then it may lead to dismissal. At Mr. Perkin’s level of employment the request to go down such a path is not in our view strictly required we are satisfied that Mr. Perkin knew the concerns and did nothing to address them. We find that the raising of the grievance on 5 August 2002 was used by Mr. Perkin to deflect criticism away from him – it was evident throughout the proceedings that rather than actually deal with criticism Mr. Perkin would accuse his complainant in some way. It was appropriate to continue with the disciplinary process and not to await resolutions of the grievance and we are satisfied that all matters were looked at.”[16]As to the remaining three issues, the Tribunal found that Mr.Perkin had contributed 100% towards his dismissal, and that there was no prospect of Mr. Perkin retaining his job had a different (fair) procedure been followed. Those findings effectively disposed of issue 5.

The Tribunal’s reasons

[17]The Tribunal’s reasons for their decision run from paragraph 11 to paragraph 50. The Tribunal throughout does not distinguish between a case founded on Mr. Perkin’s “conduct”, and a case founded on SOSR. It refers throughout to “conduct some other substantial reason”, save when identifying the issue at the outset, where the reference is to “conduct / SOSR”. ERA 1996 section 98(1) distinguishes between them, and treats them as alternatives. The reason for dismissing an employee must either be a reason within section 98(2) (which includes conduct) or it must be SOSR “of a kind such as to justify the dismissal of an employee holding the position which the employee held”.[18]The point is not, I think, fully addressed by paragraph 15 of the Tribunal’s reasons, which reads: - “We remind ourselves that the principal reason put forward by the Trust is for the dismissal is (sic) Mr. Perkin’s style of working, his manner of dealing with the requests for information and his style of working which resulted in his not only being perceived as not being a corporate/team player but actually not playing a proactive part in effectively assisting the managers to suggest and implement a cost saving programme. We accept as put forward by the Trust’s counsel the problems of personality approach and trust and confidence do not always lend themselves to detailed and specific particularisation. Nevertheless such problems can present difficulties in the work place which need to be addressed and that making findings about the existence and seriousness of such problems would often be informed by nuance and impression a proposition which was generally accepted by Mr. Perkin.”[19]In paragraph 34 of its reasons, the Tribunal summarises the evidence available to the Trust when making the decision to dismiss Mr. Perkin. 34. On the evidence before it there was ample evidence to lead Ms McLoughlin and Mrs Mark to the conclusion that Mr. Perkin did not engage with managers and clinicians beyond presenting financial information and that Mr. Perkin’s style had resulted in the loss of confidence in Mr. Perkin as a Director of Finance for the Trust. That Mr. Perkin was the Director of Finance had a responsibility as a member of the Executive Team to contribute to the decisions and action planning which involved more than giving an accurate uncoloured picture of the Trust’s financial affairs. That Mr. Perkin should also be party to finding solutions to the identified problems that Mr. Perkin had not and instead rather than contribute constructively to finding a solution to the problem Mr. Perkin had a disabling and negative approach. This finding led Ms McLoughlin and Mrs Mark to conclude that Mr. Perkin’s relationship with the Executive Team had broken down and matter had been raised with Mr. Perkin over a period, the concerns had been pointed out to Mr. Perkin there had been no change after problems had been identified. ”[20]Having decided that the “reasons” for Mr. Perkin’s dismissal were potentially fair, the Tribunal then applied the British Home Stores v Burchell [1978] IRLR 379, Post Office v Foley; HSBC v Madden [2000] IRLR 827 tests and concluded as follows: 39. We are satisfied that the Trust had a reasonable belief that Mr. Perkin’s style of management was such that it was seriously adversely effecting the proper running of the Trust and it was that belief that caused it to dismiss Mr. Perkin, and that those beliefs were formed after a reasonable investigation, at the disciplinary hearing. The investigation was not the work done by Mr Hamilton leading up to the disciplinary hearing but there was a full hearing of all the evidence at the disciplinary hearing. Was dismissal within the range of reasonable responses? We remind ourselves that it is not for us to substitute our view for that of the reasonable employer. There was ample evidence that Mr. Perkin’s style was adversely affecting the operation of the Respondent Trust at a most senior level and adversely reflected on the Trust both internally and externally.”[21]The Tribunal then examined the procedure adopted by the Trust, and found it wanting (see paragraphs 40 to 44 set out above in paragraph 15 of this judgment). It then dealt with the Polkey / contribution point. It is, I think, necessary to set out this part of the Tribunal’s reasoning in its entirety: -45. The Tribunal went on to consider whether or not had a fair procedure been adopted what is the percentage chance that Mr. Perkin would not have been dismissed.46. This Tribunal has been able to look at matters as an independent panel. We are satisfied that the disciplinary process itself was not flawed to the extent that Mr. Perkin knew the allegations against him, had an opportunity to bring witnesses and documentation to support his case and to contest the allegations against him. The fact that he was not able to tape record the proceedings does not in our view make them unfair.47. This Tribunal concludes that had Mr. Perkin’s disciplinary proceedings have been conducted by an independent person and that the evidence which was before Ms McLoughlin and Mrs Mark was before that independent panel that there is a 100% chance that Mr. Perkin’s employment would have been terminated, i.e. a nil percentage chance he would have remained in post.48. Operating at the senior level at which Mr. Perkin was and being a member of an Executive Team requires an individual to operate as an integral and effective part of that team. It is clear, for whatever reason that Mr. Perkin was unable to function that way and it is clear that in the way in which he operated in the organisation the way in which he conducted himself at the disciplinary hearing which was illustrative of the concerns and complaints that had been raised by colleagues and others. Indeed at the hearing before the Tribunal Mr. Perkin often made unfounded allegations against colleagues and others of fraud and lack of integrity which itself was conduct which on its own seriously adversely affects Mr. Perkin’s relationship working with those he unjustly criticises. Conduct which would distance Mr. Perkin from others and prevent a positive working relationship.49. Mr. Perkin’s conduct and his representative’s conduct during the disciplinary process and especially his attacks on the Chief Executive and the HR Director, Mr Watts would have so seriously damaged the relationship between those three at that level that that too would have made it not possible for Mr. Perkin to work as part of the team.50. We also would find Mr. Perkin by his conduct contributed to his dismissal to the extent of 100%. ”

The appeal to the EAT

[22]In a carefully crafted introduction to their grounds of appeal to the EAT, Mr. Langstaff and Mr. Wilson relied heavily on the fact that no allegations of specific misconduct, personal, professional or financial had been levied against Mr. Perkin. They argued that he had been dismissed on account of his personality only, and that personality, as a reason for dismissal, was incapable of constituting “conduct” within ERA 1996, section 98(2)(b) . They pointed out that the Trust had not argued that Mr. Perkin’s dismissal related to his “capability” within section 98(2)(a). They pointed to the length of his service, and to the fact that complaints against Mr. Perkin had been found by the Tribunal to have been first made to the Chief Executive in October 2001. He had not, however, communicated those complaints to Mr. Perkin, and although in April 2002, during the course of a performance review conducted by the Chief Executive mention had been made of concerns expressed about Mr. Perkin’s style, no steps were taken by the Chief Executive to address the issue, and Mr. Perkin had been commended for his work as Finance Director.[23]That, counsel argued was the actual background to the abrupt decision to request Mr. Perkin’s resignation on 29 July 2002. The decision of the Chair of the Trust to conduct the disciplinary hearing when she had made it clear to the Trust’s external reviewers that she wanted Mr. Perkin out of the organisation rendered his dismissal manifestly unfair, and his eventual dismissal was supposedly not just for “conduct” but for the robust manner in which Mr. Perkin had defended himself, something for which, of course, he had not been charged, and which, counsel submitted, could not properly be conduct within section 98(2)(b).[24]In these circumstances, counsel argued that the Tribunal had erred in law in relation to both limbs of its decision relating to Mr. Perkin’s responsibility for his dismissal. In addition, it had erred in finding that there was a potentially fair reason for Mr. Perkin’s dismissal.[25]As to the first limb (the finding that there was a 100% chance that Mr. Perkin’s employment would have been terminated even if the disciplinary proceedings had been chaired by an independent person) this conclusion had been erroneously reached on the basis that the Trust was entitled to dismiss Mr. Perkin for his conduct. The reasons given by the Trust could not properly amount to a case of conduct. The only ground open to the Trust was capability: had that ground been alleged, fairness would have required a stepped approach towards establishing it: - warning or mentoring, followed by targets, objective review and close management. Had that occurred, it would not have been possible to argue that there would have been a 100% chance of failure. The Trust’s written disciplinary procedures stated clearly that summary dismissal would only be used in exceptional circumstances for extremely serious cases treated as gross misconduct. Mr. Perkin was not, and could not have been accused of gross misconduct.[26]Further, the Tribunal’s view had been based on the proposition that an independent disciplinary tribunal would have come to the view that the appropriate sanction for Mr. Perkin’s behaviour was dismissal. This was unsound and gave insufficient weight to the fact that the disciplinary tribunal was manifestly biased: - see the false evidence given by the Chair of the Trust to the Tribunal. Having reached the conclusion that the Chair had not been impartial, the Tribunal had failed to acknowledge the extent to which the fact of her bias had affected the course of the disciplinary process. No reason had been given for the Tribunal’s conclusion that an independent person would have reached the same conclusion: alternatively, such a conclusion was perverse.[27]Insofar as the Tribunal had relied on Mr. Perkin’s robust conduct of his defence within the disciplinary hearing itself, this is something with which he should have been charged. He was not. Further, Mr. Perkin had not been adequately warned that the continuation of his management style would lead to his dismissal. In so far as the Tribunal had found to the contrary, it had been wrong.[28]As to the conclusion that Mr. Perkin had contributed 100% to his dismissal, counsel argued that no reasonable Tribunal could have reached it. There were no details of the conduct relied upon, nor any explanation as to why it was causative of dismissal. Insofar as reliance was placed on Mr. Perkin’s conduct during the disciplinary hearing, the Tribunal had failed to take into account the fact that the hearing was manifestly unfair, and the Chair’s unacceptable behaviour, which was known to Mr. Perkin.[29]As to the conclusion that there was a potentially fair reason for Mr. Perkin’s dismissal (conduct or SOSR), this finding, counsel argued was perverse. Neither personality, nor style was capable of constituting misconduct or SOSR warranting dismissal. The decision to dismiss was effectively taken on 29 July 2002 without warning or any opportunity given to Mr. Perkin to change his behaviour. The subsequent attempt to label his qualities as misconduct or SOSR was adventitious. Furthermore, the Tribunal had not considered why the decision to dismiss had been taken at this point.

The decision of the EAT

[30]The EAT accepted that there was some limited force in Mr. Langstaff’s submission that the Tribunal had not made a clear finding as to the reason or, if more than one, the principal reason for Mr. Perkin’s dismissal, and that the phraseology it used in paragraph 36 of its (“conduct some other substantial reason”) demonstrated the point. It rejected a submission made on behalf of the Trust that all that was necessary was that a general affirmative answer should be given to the question whether or not the reason thus described falls within one or more of the reasons set out in ERA 1996 section 98(2) or 98(1)(b). It went on: - 17….. It is the duty of the Tribunal to identify the set of facts known to the employer or beliefs held by him if appropriate, and then to go on to state into which single category that reason falls. If unable to identify a relevant category within those in ss 98(2) then the Tribunal should say so. It should then go on to ask whether it amounts to “some other substantial reason of a kind such as to justify the dismissal of an employee holding the position which the employee held.”[31]However, the EAT went on to say: - 18. There are not uncommonly cases in which it is not possible to pigeon hole the employer’s reason into one of the sub-section 2 categories. In such eventuality it is necessary to look to some other substantial reason to see whether or not the reason is one which falls within Section 98. In this case the Tribunal did compendiously set out the reason or reasons why the Trust had decided to dismiss Mr. Perkin. They identified them in paragraph 36 as those set out in the letter of dismissal to which we have already referred. Any ordinary construction of the letter of dismissal as we have already indicated leads to the conclusion that it was the actions and in a non-technical sense behaviour and management style of Mr. Perkin before the disciplinary proceedings which led to his dismissal. 19. Having thus identified the Trust’s reason for dismissal the Tribunal had then gone on to ask itself into which category that reason fell would in our view inevitably have come to the conclusion that it fell into the category of some other substantial reason. The fact that the Tribunal did not thus categorise the reason is not in our view fatal to its reasoning or to the safety of its decision. It is trite law that having reached the conclusion that the dismissal was unfair procedurally the Tribunal was entitled to go on to consider whether or not, notwithstanding that fact, the Trust could have and would have dismissed Mr. Perkin fairly had it followed a fair procedure. Mr Langstaff criticises the Tribunal for focussing upon the partiality of the chair person of the disciplinary Tribunal Ms McLoughlin and not of examining the disciplinary procedure up to but including that fact. In our view that criticism is misplaced. There is nothing in the decision of the Tribunal to indicate that there was any other element of unfairness in the procedure apart from the lack of impartiality of Ms McLoughlin. The Tribunal were perfectly entitled to pose the question, ‘Would the conduct of the disciplinary proceeding by an independent chair person have arrived at the same result by focussing simply upon that question?’ The test was that approved by the House of Lords in Polkey v A E Dayton Services [1988] AC 344 first propounded by Browne-Wilkinson J as he then was in Sillifant v PowellDuffryn Timber Ltd [1983] IRLR 91 in which he observed:
“Where, in the circumstances known at the time of dismissal, it was not reasonable for the employer to dismiss without giving an opportunity to explain but facts subsequently discovered or proved before the Industrial Tribunal showed that dismissal was in fact merited, compensation would be reduced to nil”
. Lord MacKay adopted the longer passage from which a short extract was taken and Lord Bridge approved another passage at page 96 of Browne-Wilson son J’s judgment:
“There is no need for an ‘all or nothing’ decision. If the Industrial Tribunal thinks there is a doubt whether or not the employee would have been dismissed, this element can be reflected by reducing the normal amount of compensation by a percentage representing the chance that the employee would still have lost his employment.” 20. The reasoning of the Tribunal in this case is in our view adequately set out in paragraphs 47, 48 and 49 of its decision. The conclusion which the Tribunal reaches namely that Mr. Perkin was unable to function in the way required by membership of the senior management team to permit that team to function effectively in our view is beyond criticism. It is clear that in paragraph 48 the Employment Tribunal treated the conduct of Mr. Perkin before the disciplinary hearing as illustrative of the difficulties that his colleagues had experienced before that hearing for this purpose. 21. Mr Langstaff submits that given that on a proper analysis up to the disciplinary hearing this was not strictly defined a conduct case means that a different outcome might have been possible had Mr. Perkin been treated differently. The answer to that proposition is as the Tribunal found to be given by his conduct at the disciplinary hearing. In essence he demonstrated by his conduct at the hearing that there was no possibility that if he had been given a chance he would have mended his ways because he either was incapable of recognising or unwilling to recognise that there was anything wrong in his own actions or anything that made it difficult for his colleagues to work as part of a team with him. “Where, in the circumstances known at the time of dismissal, it was not reasonable for the employer to dismiss without giving an opportunity to explain but facts subsequently discovered or proved before the Industrial Tribunal showed that dismissal was in fact merited, compensation would be reduced to nil”. “There is no need for an ‘all or nothing’ decision. If the Industrial Tribunal thinks there is a doubt whether or not the employee would have been dismissed, this element can be reflected by reducing the normal amount of compensation by a percentage representing the chance that the employee would still have lost his employment.”
[32]The EAT was thus of the opinion that the Tribunal was entitled to take Mr. Perkin’s behaviour at the disciplinary hearing into account when reaching its judgment that a fair hearing would, inevitably, have produced the same result. It rejected Mr. Langstaff’s submission that Mr. Perkin might not have made the same accusations had the hearing been conducted by an impartial chairman: - 22. …… The answer to that is two-fold. First, as regards the allegation of lack of integrity on the part of the Chief Executive he had already made it at the investigatory hearing and secondly he did not know that Ms McLoughlin had reached the view that an exit strategy was needed for him before the hearing. He made his accusations against the Chief Executive and for that matter others regardless. The Tribunal concluded, as in our view it was plainly entitled to, that his conduct during the disciplinary hearing would have so seriously damaged the relationship between Mr. Perkin and Mr Hamilton and Mr Watts that it would not have been possible for him to work with them as part of the management team. It seems to us to be utterly self evident that that was so: for a Finance Director to accuse his Chief Executive of personal dishonesty and/or his fellow Human Resources Director of preparing false notes of a meeting which he has attended, in other words of lying, would make it impossible for them to work ever again with them.[33]The EAT deal finally with the question of the Tribunal’s finding that Mr. Perkin had contributed 100% to his dismissal. Unfortunately, the Tribunal’s finding appears in the final paragraph (paragraph 50) of its reasons, in the simple sentence:
“We also would find Mr. Perkin by his conduct contributed to his dismissal to the extent of 100%”
. It is thus unclear whether the reasoning in the preceding paragraphs, which deal principally with the Polkey 100% reduction, was also intended to apply also to paragraph 50.[34]The EAT dealt with this point by reference to the judgment of Brandon LJ in Nelson v BBC (No 2) [1980] ICR 110 at 120 and 121, where he identified the three factors which had to be established before an order for contribution could be made. These were (1) conduct on the part of the employee which was culpable or blameworthy in the sense that it was foolish or perverse or unreasonable in the circumstances; secondly, that the conduct contributed to the dismissal; and thirdly that it was just and equitable to reduce the assessment of the employee’s loss. The EAT then continued: -24. Mr Langstaff submits that it is not at all clear to what the Tribunal were referring in its short sentence by which it made it reach the conclusion (sic) that he had contributed to his dismissal to the extent of 100%. He draws attention to the fact as is self evident that the Tribunal has not gone through the process identified by Brandon LJ in Nelson at least expressly. Mr Cavanagh submits that the omission could be rectified by putting the words such as ‘in the light of our conclusions above’ or some similar in front of the sentence then sense can be made of it. That in our view is not a wholly sufficient answer. It is not in fact clear whether the Tribunal were referring to the totality of the behaviour of Mr. Perkin before and including the disciplinary hearing or his conduct properly so described at the disciplinary hearing itself. Applying Brandon LJ’s observations it would in our view be difficult to describe difficulty in getting on with colleagues or management style as conduct in the sense in which that word is used in Sections 123(6) and 122(2) of the 1966 Act. Conduct in that context means deliberate actions of a kind identified by Brandon LJ which would be capable of falling within the definition of conduct in Section 98(2).25. In our view the only conduct to which the conclusion could properly have related was the conduct of Mr. Perkin at the disciplinary hearing. That as we have indicated was undoubtedly conduct: to make as the Tribunal found an accusation of fraudulent conduct on the part of the Chief Executive otherwise than in good faith was clearly a deliberate action. It was conduct which as the Tribunal held would have made it impossible for Mr. Perkin to work with Mr Hamilton again. Likewise the accusation against Mr Watts – found expressly by the Tribunal to be wholly unfounded – that he had produced false notes of the investigative meeting was likewise a deliberate action, properly categorised as conduct, which would have made it impossible for Mr Watts to work with Mr. Perkin again.26. If, therefore, the conclusion of the Tribunal that Mr. Perkin by his conduct contributed to his dismissal to the extent of 100% had been confined to conduct at the disciplinary hearing it would have been a conclusion which it was undoubtedly entitled to reach. Indeed in our view any other conclusion would at least arguably have been perverse. If contrary to our view of what the Tribunal had in mind, it did have in mind Mr. Perkin’s behaviour before the disciplinary hearing then that would have amounted to an error of law but it is an error of the law for the reasons which we have given would be entirely immaterial. For those reasons the two aspects of the Employment Tribunal’s decision which are criticised in this appeal are on proper analysis unjustly criticised and for the reasons which we have given this appeal is dismissed.

The argument for Mr. Perkin in this court

[35]Although there was an initial anxiety on behalf of the Trust that Mr. Langstaff was seeking to advance in this court arguments not deployed below, that was not the case, and Mr. Langstaff, in effect, sought skilfully to revisit the grounds of appeal argued before the EAT and to rebuild the edifice which it had knocked down. His argument ran along the following lines. The simple fact of the matter was that Mr. Perkin had been dismissed on account of his personality. Personality, as a reason for dismissal, was not capable of constituting “conduct” within ERA section 98(2)(b). Insofar as Mr. Perkin’s personality was capable of constituting “capability”;(a) that had not been alleged; and(b) even if it had been, it would have been bound to fail because the Trust could not have established fairness within ERA 1996 section 98(4). Mr. Langstaff placed considerable weight on the chronology, and the undisputed facts of Mr Perkin’s long service and qualities as head of the Finance Department and as a line manager. He had done nothing wrong, and nothing he had done had damaged the Trust in any way.[36]Mr Langstaff relied on the decision of this court in Wilson v Post Office [2000] IRLR 834 for the proposition that an error of characterisation by an Employment Tribunal of the reason for dismissal was an error of law. Accordingly, if the Tribunal had been wrong to characterise the dismissal as being for conduct or SOSR they had made an error of law. In its final submission to the Tribunal, the Trust had relied on a “personality clash” or the consequence of a breakdown in trust and confidence between colleagues. As the Trust had itself accepted, this was not “conduct” within ERA 1996 section 98(2)(b). The letter of dismissal had referred to Mr. Perkin’s management style and his (in)abilty (inter alia) to form the necessary quality of relationships with various third parties. The focus throughout had been on Mr. Perkin’s “inability” to behave in a particular way. However, section 98(2)(a) had not been invoked, nor had he ever been accused of gross misconduct. Mr. Langstaff neatly summarised his case on this point with the phrase: being a square peg in a round hole is not appropriately to be called “conduct” so as to justify dismissal, whatever other ground it may come under, particularly when its effect is classed in terms of the repeated use of the word “ability”.[37]Mr. Langstaff took us to Harvey on Industrial Relations and Employment Law, section D1 paragraphs 1554 to 1566, where examples of gross misconduct were given. He took us to the Trust’s own disciplinary rules, as incorporated into Mr. Perkin’s contract where, once again, examples of what would and what would not constitute conduct meriting summary dismissal were given. He also took us to the ACAS Code of Practice on Disciplinary and Grievance Procedures. He relied on the decision of this court in Dietmann v Brent [1987] ICR 842 (in which an allegation of gross negligence in the performance of a social worker’s responsibilities was held not to constitute gross misconduct so as to warrant summary dismissal) in support of the proposition that “management style” and “ability to interact” were to be excluded from the list of matters which could properly be classed as conduct justifying summary dismissal.[38]In relation to the dismissal being for SOSR, Mr. Langstaff submitted that the Tribunal had provided no argued basis for its decision. Here, even more, given the breadth of the concept, definition of the factual basis underlying the finding wasimportant. Moreover, both SOSR and capability as grounds for a fair dismissal required as a necessary precondition an attempt by the employer to address the concerns in a meaningful way. That had not occurred.[39]The Tribunal was furthermore wrong, Mr. Langstaff submitted, when it expressed the view (in paragraph 44 of its reasons) that at Mr. Perkin’s level of employment, a warning of dismissal if there is no improvement was unnecessary. He relied again on Dietman v Brent [1987] ICR 842 at 851, where Balcombe LJ, giving the leading judgment in this court had adopted Hodgson J’s comment in the court below in relation to the local authority’s submission that no disciplinary meeting was necessary where the charge was one of gross misconduct. Hodgson J had said:
“Such a construction would mean that the more serious the offence …. the less procedural protection the employee charged with misconduct would have”
. It was perverse to suggest that the further a senior executive had to fall, the less procedural protection he should have. To endorse the Tribunal’s views on this point would be to endorse an approach in which all that was necessary for a fair dismissal was for colleagues to raise unspecified complaints relating to the employee’s personality and “approach” and for senior management to give credence to them.[40]Mr. Langstaff further submitted that the Tribunal’s approach to section 98 was flawed because it treated the reason for dismissal as conduct, which it could not possibly be. If it had concluded that the reason for dismissal was SOSR, the Tribunal would probably have approached the determination of fairness differently. The Tribunal should not have followed the British Home Stores v Burchell [1978] IRLR 379 approach. That was a case under section 98(2)(b). The Tribunal should have focused on the reasons in the mind of the Trust on 29 July 2002. The flawed procedure that followed added nothing. If the reality was that the decision to dismiss had been taken on 29 July, it was on the reasons for that decision which the Tribunal should have directed its primary focus.[41]On the Tribunal’s conclusion that there was a 100% chance of dismissal, Mr. Langstaff’s argument was similar to that which he had advanced before the EAT. He criticised the EAT’s conclusion that the Tribunal had adequately set out its reasoning in paragraphs 47 to 49 of the decision. No sufficient reason had been provided by the Tribunal for the 100% finding, which was unsustainable on the facts as found.[42]As to the failure to follow a proper procedure, Mr Langstaff divided his criticisms into two parts. The first related to the process up to the disciplinary hearing: the second related to the Tribunal’s failure to consider the effect of Ms McLoughlin’s bias. As to the latter, the Tribunal had failed to consider the extent to which the fact of her bias had affected the course of the disciplinary process. It had also failed to give adequate reasons for its conclusion that an independent person would have reached the same conclusion.

The Trust’s case in this court

[43]For the Trust, Mr. Christopher Jeans QC and Mr. Simon Devonshire did not seek to go behind the Tribunal’s finding that the dismissal was procedurally unfair. They submitted, however, that the unanimous conclusion of the Tribunal had been based on fact and industrial judgment. The EAT had found no error of law and had been right not to do so. They described the appeal as a misconceived attempt to re-litigate disputes of fact already decided against Mr Perkin, by dressing them up as (supposed) errors of law. They made the conventional point that issues of fact are exclusively matters for the Tribunal, and invited us not to forget that;(i) the Tribunal had the benefit of seeing all of the witnesses give evidence; and(ii) a Tribunal’s Reasons will “always [be] surrounded by a penumbra of imprecision as to emphasis, relative weight, minor qualification and nuance ... of which time and language do not permit exact expression, but which may play a part in the ... overall evaluation”: - see the speech of Lord Hoffman in Piglowska -v- Piglowski [1999] 1 WLR 1360 at 1372 E to F.[44]Counsel argued that the Trust’s case against Mr Perkin was wholly corroborated by the way in which Mr Perkin gave his evidence to the Tribunal, as appeared from its findings, including references to unjust criticisms made by Mr. Perkin of fraud and lack of integrity, and in particular to unsustainable allegations of dishonourable and fraudulent conduct by Mr. Watts. Even at the Tribunal, they pointed out, Mr Perkin persisted in allegations of dishonesty and impropriety against senior colleagues which were “wholly unsustainable” (see paragraph 24 of the Reasons in respect of Colin Watts) and in which Mr. Perkin had no “reasonable belief” (paragraph 33 of the Reasons, in respect of Ian Hamilton). The Tribunal had concluded that Mr Perkin “would not or could not accept that he could possibly be at fault in even the slightest way” (Reasons, paragraph 7 (lv)).[45]All these findings (which, counsel submitted, were plainly unappealable);(i) supported the Tribunal’s acceptance that the Trust’s witnesses gave genuine evidence about the reason for Mr Perkin’s dismissal, and(ii) ran counter to one of the general themes in the Appellant’s Notice, namely that Mr Perkin’s behaviour at the disciplinary hearing was explained by the fact that the hearing was chaired by Ms McLoughlin, whom he believed was biased, and/or that he would have behaved differently before an “independent disciplinary panel”.[46]Mr Jeans submitted that the Trust’s reasons for dismissing Mr. Perkin were(a) clear;(b) were contained in the dismissal letter; and(c) were accepted by the Tribunal: that is to say, the Tribunal was “satisfied that the Trust had a reasonable belief that Mr Perkin’s style of management was such that it was seriously adversely affecting the proper running of the Trust and that it was this belief that caused it to dismiss Mr Perkin”. These conclusions were reached, counsel argued, following the Tribunal’s extensive review and consideration of the evidence before the disciplinary panel. The Tribunal had found in terms that it was this evidence which had led to the disciplinary panel’s conclusions - “[f]or all those reasons Ms McLoughlin and Ms Mark concluded that the conduct and behaviour of Mr Perkin had meant that he had not been able to discharge effectively his role as Finance Director and that he should be dismissed” (see paragraph 35 of the Tribunal’s reasons ).[47]As to the legal challenge, Mr. Jeans and Mr Devonshire argued that an employer must have the right to take action to address problems of personality, approach and trust and confidence (even if those problems do not lend themselves to detailed and specific particularisation) that are seriously adversely affecting the proper operation of its business at a senior level, and adversely reflecting upon the Trust both internally and externally (even if no-one was to blame for those problems, which was not the case here). There are, they submitted, many “potentially fair reasons” which can be categorised under more than one of the Section 98 labels. In such circumstances, the identification of the proper label is a matter for the tribunal, and the EAT can only interfere in the event of perversity.[48]Counsel identified a number of cases in which more than one label could be apposite, but a label nonetheless has to be picked. They cited Lynock -v- Cereal Packaging Ltd [1988] IRLR 510 at 511, paragraph 5 (a case of persistent absenteeism, which could have been classified as conduct or capability); Sutton & Gates (Luton) Ltd -v- Boxall [1979] ICR 67 at 70B to 71C (on the fine line between capability and conduct where the shortfall in performance is not due to an “inherent incapacity to function”, but involves some degree of fault on the part of the employee); and Slaughter -v- Brewer [1990] ICR 730, which they relied upon for the proposition that there are other categories under the capability heading which involve very different concepts – such as obstructive behaviour which might in some cases border on ‘conduct’. Counsel also referred us to Harvey Vol 1 para D1/1125, making the point that since the distinction between conduct and capability is often difficult to draw, the general concepts of fair play in disciplinary dismissals are also applicable in many capability dismissals.[49]In the present case, counsel submitted that whether the Trust had a genuine belief in the reason given for dismissal was a question of fact for the Tribunal (and the Tribunal accepted the Trust’s evidence); Furthermore, the “reason” given by the Trust was plainly capable in law of being characterised as a reason related to Mr Perkin’s conduct (the way he conducted himself in his dealings with colleagues and peers both internally and externally to the Trust), or as SOSR (the serious and disabling breakdown of trust and confidence between him and those persons). There was nothing perverse in the Tribunal’s choice of “label” (or acceptance of the Trust’s choice of label). In any event, the Tribunal in fact considered whether the dismissal would have been unfair had the dismissal been characterised as being for “capability”, and concluded that even if the case had been treated as a capability one, the same result would have followed: see paragraph 44 of the Tribunal’s Reasons, set out at paragraph 15 above.[50]For the avoidance of doubt, counsel argued that in determining whether an employee has shown a “potentially fair reason for dismissal”, it was not necessary or relevant to ask whether the reason relied upon would as a matter of contractual analysis have justified the summary termination of employment. It was well established that a wrongful dismissal can be fair, just as a dismissal with contractual notice can be unfair. The issue of contractual notice did not bear on whether the employer had shown a potentially fair reason for dismissal. In any event, it is to be noted here that Mr Perkin received a full payment in lieu of his contractual notice entitlement.[51]In relation to the Polkey chance appeal, Mr. Jeans argued that there was no error of law in the Tribunal’s conclusion in paragraph 47 (set out at paragraph 22 above). It was an issue of fact for the Tribunal, who were able to look at matters as an “independent” panel (Reasons, paragraph 46). In particular, the Tribunal was able to listen to the evidence of Mr Perkin, and had found as a fact (as it was entitled to) that the way in which Mr Perkin operated at the disciplinary hearing (and the Tribunal) “was illustrative of the concerns and complaints that had been raised by colleagues and others” (Reasons, paragraph 48).[52]In a case where trust and confidence had broken down, and which was concerned with the maintenance of working relationships, counsel argued that it was perfectly proper to consider Mr Perkin’s conduct at the Disciplinary Hearing in deciding upon the proper disposal of the charges. Furthermore, Mr Perkin’s behaviour at the Tribunal (e.g. making extravagant but unfounded allegations of bad faith, some of which he did not even believe) amply demonstrated that his behaviour before an independent panel would have been no different (as the Tribunal found at Reasons paragraph 48).[53]To the extent that the Tribunal relied upon Mr Perkin’s attacks on Mr Hamilton and Mr Watts at the disciplinary hearing, counsel argued that these attacks were not simply part of a “robust defence”, but were unfounded and unjust, and Mr Perkin did not genuinely believe them. It was not said that it was per se an error of law for the Tribunal to have made a 100% Polkey chance deduction, nor could it be: see Chaplin -v- Rawlinson [1991] ICR 553.[54]Whether another disciplinary panel would have decided that the Trust must continue to engage a Finance Director whose attitude and intransigence had produced such a widespread breakdown in key relationships (within and without the Trust) was, Mr. Jeans submitted, a paradigm “industrial jury” issue on which Employment Tribunals (with their experienced lay membership) were especially well qualified to adjudicate.[55]The thrust of this ground of appeal, counsel argued, proceeded from the erroneous hypothesis that the Tribunal would have come to a different conclusion on the Polkey chance of Mr Perkin retaining his job, had the dismissal been treated as being for capability, not conduct. Thus it had been argued for Mr. Perkin that if it had been genuinely perceived that he was not capable of carrying out his role as Finance Director in the manner required by management, a stepped approach towards establishing incapability (warning, or mentoring, followed by targets, objective review, and close management) would have been an essential pre-requisite of fairness. However, the Tribunal had in terms considered this contingency, and had concluded that at Mr Perkin’s level of seniority the “stepped approach” to addressing capability would not have been “strictly required” (a conclusion wholly consistent with authority). Furthermore, Mr Perkin knew of the concerns and did nothing to address them.[56]As to the contributory fault appeal, counsel submitted that questions of contributory fault are quintessentially questions of judgment for the Tribunal, and the EAT has very limited scope for interference. They relied on Hollier -v- Plysu [1983] IRLR 260, in which this court had restored a 75% finding of contribution which the EAT had reduced to 25%. Conduct which is “perverse, foolish or ... bloody-minded” can suffice. Equally, they argued, it was plainly the case that a deduction for contribution can be appropriate in a capability case, or in a case of the conduct/capability borderline.[57]The finding of 100% contributory fault was, counsel submitted, fully justified. The Tribunal made numerous (unappealable) criticisms of Mr Perkin’s conduct both during his employment and at the disciplinary hearing. The Reasons provided overwhelming support for the conclusion that Mr Perkin was guilty of 100% contributory fault. The Tribunal’s Reasons were not deficient merely because the Tribunal had not repeated in expressing its conclusion on the contributory fault question each and every criticism it has made of Mr Perkin’s conduct. To the extent that it was claimed that Mr Perkin’s conduct at the disciplinary hearing was excused by his belief that Ms McLoughlin was “biased” (and thus should not have been relied upon in support of a finding of contributory fault), he would, for the reasons already given, have behaved no differently before a different panel

Discussion

[58]Mr. Langstaff commented during the course of his submissions that the Tribunal’s reasons were long on fact and short on analysis. That was, I think, an accurate statement. I also agree with Sedley LJ that in the course of the 65 pages of its Reasons, the Tribunal does, from time to time, lose sight of the wood for the trees. But in my judgment, Mr. Langstaff’s criticism does not ultimately help him, since this is a case which depends critically upon its unusual facts, and in which the Tribunal’s findings of fact (assuming it was entitled to make them) are effectively determinative of the outcome. It is, accordingly, a case in relation to which generalisations, or statements of general principle, are likely to prove unhelpful. What is required is a careful application of ERA 1996 section 98 to the particular facts.[59]That said, I agree with Mr. Langstaff that personality, of itself, cannot be a ground for dismissal within ERA 1996 section 98. For there to be a potentially fair reason for dismissal, an employee’s personality must, it seems to me, manifest itself in such a way as to bring the actions of the employee, one way or another, within the section. Whether, on the facts of a particular case, the manifestations of an individual’s personality result in conduct which can fairly give rise to the employee’s dismissal; or whether they give rise to SOSR of a kind such as to justify the dismissal of an employee holding the position which the employee held, the employer has to establish the facts which justify the reason or principal reason for the dismissal. Provided the employer can do so, section 98(4) then kicks in. So much is, I think, obvious.[60]I did not understand Mr. Langstaff to argue that in a given case a breakdown in confidence between an employer and one of its senior executives;(a) for which the latter was responsible; and(b) which actually or potentially damaged the operations of the employer’s organisation (or which rendered it impossible for the senior executives to work together as a team) was outwith section 98 as SOSR and therefore could not result in an employer fairly dismissing the employee whom the employer deemed responsible for that state of affairs. Indeed, I think Mr. Langstaff was minded to accept that the facts found by the Tribunal could have amounted to SOSR. In my judgment, that concession was both correct, and realistic. Standing outside the case for a moment, it seems to me that it must be possible for an employer fairly to dismiss an employee in the circumstances set out in the earlier part of this paragraph, provided always the terms of section 98(4) are satisfied.[61]The real thrust of Mr. Langstaff’s argument, as I understood it, was that the Tribunal erred fundamentally by treating the case as being one of conduct within section 98(2)(b). Mr. Perkin had been summarily dismissed, when his behaviour manifestly was not capable of being described as gross misconduct. Secondly, the Tribunal’s treatment of the case as one of conduct had led it to adopt the wrong approach to fairness, and into error both on the issue of the Polkeyreduction and contributory fault.[62]The success of the first limb of Mr. Langstaff’s argument seems to me to depend critically on whether Tribunal was wrong to categorise the reason for dismissal as conduct as opposed to SOSR. Whilst it is, of course, important that an employee should know clearly why he or she has been dismissed, and whilst I see the force of Mr. Langstaff’s criticism of the “conduct” analysis, particularly in relation to the question of what constitutes gross misconduct or otherwise warrants summary dismissal, I find myself on this part of the case in complete agreement with the reasons given by Sedley LJ when refusing permission to appeal on paper, and do not think I can better his succinct way of expressing them: It is a fair criticism of the ET that in the course of 65 pages of reasons they appear in certain respects to have lost sight of the wood for the trees. But their findings seem to me to make the Polkey answer ineluctable. Although capability might have been an appropriate statutory category for their findings, it was not the only one. Before the proceedings were initiated, Mr. Perkin had conducted himself unacceptably towards colleagues and others. I accept that if all that was at issue was his aggressive reaction to the proceedings, the decision might be unsustainable. But the reaction amounted to corroboration of the accusation that he had already shown himself near-impossible to work with (rather than for). For my part, however, I would think this was an “other substantial reason” case: an employee in a senior position who could not or would not work harmoniously with colleagues and outsiders with whom a harmonious relationship was essential. While the absence of a warning and guidance is relied on only, as I understand it, on the premise that this was a conduct case, I would have thought it capable of having a bearing on both of the two grounds founded on by the ET. But their view, and that of the EAT, was evidently that Mr. Perkin was too entrenched in his attitude to respond positively…...[63]In my judgment, as Mr. Jeans argued, the essential and determinative facts were for the Tribunal to find. If there was properly material on which they could make such findings (and there was) the Tribunal was entitled to come to the conclusion that the Trust had a potentially fair reason to dismiss Mr. Perkin. Like Sedley LJ, I see this, speaking for myself, as a case as falling within SOSR rather than conduct, and it would have been preferable, in my judgment, if the Tribunal had so analysed it. However, like the EAT in paragraphs 18 and 19 of its judgment (set out at paragraph 31 above) I do not see the Tribunal’s failure to categorise the reason as fatal to its reasoning or to the safety of its decision.[64]The critical question which follows is whether Mr. Langstaff was right in his submission that the Tribunal’s erroneous insistence in treating the case as one of conduct within section 98(2)(b) led it to apply the wrong test of fairness under section 98(4). This can be summarised as the British Home Stores Ltd v Burchell [1978] IRLR 379 point.[65]There are, I think, two principal answers to Mr. Langstaff’s argument on this point. The first, perhaps less persuasive, is that it is difficult to criticise the Tribunal for applying the Burchell test when the second issue identified by consent for its determination (see paragraph 13 above) was essentially couched in Burchell terms. Secondly, however, whilst Burchell is itself a “conduct” case, I see no reason why the principles it sets out relating to fairness should be limited to cases under ERA 1996 section 98(2)(b). For my part, therefore, I do not think that the Tribunal directed itself erroneously on the fairness issue by following the Burchell approach.

Polkey Deduction and Contributory Fault

[66]The uncontroversial status of the principle established by Polkey v AE Dayton Services Ltd [1988] AC 344 was demonstrated by the absence of the case from both parties’ lists of authorities. Mr. Langstaff, moreover, did not challenge the capacity of a Tribunal to find a 100% contribution, as in the case of Chaplin v Rawlinson on which Mr. Jeans had relied. The 100% Polkey reduction is thus, in my judgment, an assessment which depends critically on the facts.[67]The point which I have found most difficult in this part of the case is that which relates to the conduct of Ms McLoughlin. There is no dispute that this plainly rendered the dismissal procedurally unfair. The question is whether it goes further, and whether the Tribunal was right to find;(1) that had Mr. Perkin’s disciplinary proceedings been conducted before a properly constituted and unbiased tribunal there was a 100% chance that he would have been fairly dismissed; and(2) that Mr. Perkin “by his conduct Mr. Perkin contributed to his dismissal to the extent of 100%” .[68]I have to say that I find it quite extraordinary that a person in Ms McLoughlin’s position could think it right to chair an internal disciplinary procedure when she herself, only days before, had made it clear beyond peradventure that she wanted Mr. Perkin dismissed. The overwhelming and irresistible inference is that she not only wanted him out, but was of the view that this was the speediest and most effective way of achieving her objective, since there was plainly no prospect, with her in the chair, that the disciplinary procedure would result in anything other than confirmation of Mr. Perkin’s dismissal. Against that background, it must, at first blush, be reasonable to think that a fair procedure, and a genuinely independent investigation would – or at the very lowest might - have produced a different result – and certainly not a result which placed the entire responsibility for his dismissal on Mr. Perkin itself.[69]That, I have to say, was my initial reaction on reading the papers. Mr. Jeans was, however, able to take us through the Tribunal’s factual findings, and it must be said that they are very powerful indeed, both in so far as they precede the disciplinary hearing and in so far as they relate to the manner of Mr Perkin’s defence of the case against him.[70]Mr. Perkin was, of course, entitled to defend himself, but the manner of his defence, and in particular his attacks on the honesty, financial probity and integrity of his colleagues (and in particular his dogged insistence on maintaining his stance in relation to those attacks when they were manifestly ill-founded – see, as an example, the notes taken by Mr. Watts referred to in paragraph 4 of this judgment) opened the door, in my judgment, to the Tribunal being able to find that any other disciplinary process would have ended with exactly the same result. In my judgment, the Tribunal was plainly entitled to reach the conclusion that it would have been quite impossible for Mr Perkin to work again with, for example, Mr. Hamilton, after the former had called the latter a bully and a liar. Mr. Jeans was also entitled to make the point that Mr. Perkin behaved in this way, even though he was not at the outset aware of Ms McLoughlin’s unprincipled conduct.[71]I remind myself of the obvious. It is for the Tribunal to find the facts. The test is whether it was open on the facts for the Tribunal to reach a conclusion that this was a 100% Polkey reduction case. I have come to the conclusion that the submissions made by Mr. Jeans are to be preferred, and that in Sedley LJ’s phrase the Tribunal’s findings “make the Polkey answer ineluctable”. I have thus come to the conclusion that it was open to the Tribunal to find a 100% Polkeyreduction, and that its reasons for doing so are compliant with the standard identified in the decision of this court in Meek v Birmingham City Council [1987] IRLR 250.[72]As to the question of 100% contribution, I find myself, once again, in agreement with Sedley LJ’s written reasons. He said: - I accept that the EAT’s reasons for upholding the finding of 100% contributory conduct are shaky; but I see no realistic prospect that this court will second-guess two specialist tribunals on the finding that a dismissal was inevitable even before an impartially chaired body.[73]If the Polkey100% reduction is not properly capable of challenge, the concept of 100% contributory fault is perhaps of lesser significance. Whether I, had I been a member of the Tribunal, would have said Mr. Perkin was 100% responsible for his own misfortune I do not know, and of course that is not the test. Mr. Perkin was plainly operating in a difficult world, where the standards set by Ms McLoughlin, to take the obvious example, left a great deal to be desired and where his desire to protect his back was understandable. The terseness of the Tribunal’s final paragraph is unfortunate. At the same time, I am conscious of the warnings contained in Meek v Birmingham City Council against reading the Tribunal’s decision too analytically. For my part, therefore, I am content to take the view that the reasoning which informs paragraphs 45 to 49 also informs paragraph 50, and, like Sedley LJ, do not think it appropriate for this court to second guess the Tribunal’s decision.

Conclusion

[74]For all these reasons, I would dismiss this appeal.

Footnote

[75]I would not wish it to be thought that I had overlooked the reasons given by Mummery and Neuberger LJJ in giving permission to appeal. In his judgment, Mummery LJ stated: - It is unusual to hold that there was a hundred percent chance that employment would have been terminated, even if the procedure had been fair. It is also unusual, but legally possible, to find a conclusion that an applicant who succeeds in establishing that there was procedural unfair dismissal has contributed to his dismissal to the extent of a hundred per cent. Even more unusual, in my experience, is the situation which existed in this case, in which, when no misconduct was alleged against him, Mr. Perkin was, following the disciplinary tribunal, summarily dismissed. There must be a real question as to whether there was here a potentially fair reason for his dismissal, quite apart from the findings in his favour by the Employment Tribunal about the procedural unfairness of the dismissal process.[76]As I stated in paragraph 58 of this judgment, the facts of this case are highly unusual. I have, I hope, covered the points which troubled Mummery LJ, and remain of the view that, for the reasons I have attempted to give, the conclusions reached by the Tribunal on the facts of the case were warranted.

Lord Justice Mance: I agree.

Lord Justice Tuckey: I also agree.

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