BSB Developments (Barnsley) Limited v McManis [1991] UKEAT 604_89_0511

EAT

BSB Developments (Barnsley) Limited v McManis

[1991] UKEAT 604_89_0511 · 1991-11-05

MR JUSTICE WOOD (PRESIDENT) : By an Originating Application dated 16 August 1989, Mr McManis alleged that he had been unfairly constructively dismissed by BSB Developments (Barnsley) Ltd trading as John Smith Engineers, his employers.

An Industrial Tribunal sitting at Sheffield under the Chairmanship of Mr Altman, heard the case on 16 October 1989 and found in favour of Mr McManis. They ordered the Respondents to pay £3,746 by way of compensation and made a further order for £542.88 for unlawful deduction of holiday pay under the Wages Act. The company now appeal.

Mr McManis had been employed by the company since 1961 and he remained in that employment until July 1989. His final position was as work's foreman. The company were steel fabricators but it was a small company with some eight to fourteen employers under the supervision of the Applicant. It was a family company and had operated in this field for many years, but in July 1988 it was taken over. There was a new general manager, a Mr White, and beneath him was a Mr Lawrence and he was the line manager of the Applicant.

The objective for the new management was to increase the volume of work, improve the efficiency and to make the company more profitable. The incident which in fact amounted to the end of the period of employment, took place on 14 July and the Tribunal, quite rightly, looked to see whether on that occasion there had been a dismissal. The background of the whole matter was important and it was somewhat complicated.

The Tribunal were rather critical of the company. It felt that there had been a reduction in overtime rates, that there had been no written terms of employment and there had been reductions in benefits which had been imposed without consultation or discussion. It seems to us therefore that the Tribunal were prepared, and indeed justified, in looking at the way management conducted itself with some care.

One of the issues of fact was whether two letters which alleged to have been written to the Applicant dated respectively 7 November 1988 and 20 April 1989, were in fact sent to him. He denied receiving them but the evidence was found against him and the Tribunal were quite satisfied that those letters were sent. The other document to which reference was made when referring to the background in the case, was a memorandum dated December 1988. The letter of 7 November made complaint about a single incidence of absence during a day. It was delivered as a final warning with a three month period attached to it. That seemed to have passed by. There was the memorandum of December 1988 about a number of individual matters and in respect of that memorandum the complaint of the management was that there had been no response to it.

The letter of April 1989 enumerated a number of points, again set a three month period and that particular matter is related to quality of workmanship, improvement of control and that type of issue. There were also four other incidents to which the Tribunal referred: complaint about an expense account and the Tribunal felt that that was being aired by Mr White really for the first time, in front of the Tribunal; then there was a complaint about the dirt in the canteen for which the Applicant's men were using. There again the Tribunal felt these matters were being dragged up by Mr White. Then there was a point which was raised by Mr White and then retracted, and fourthly there was a criticism about the way in which orders were taken. The Tribunal coming to the conclusion at the end of their summary of this background in this way where they say:

"..Be that as it may it is quite clear from the evidence that we have heard (a) that Mr White had come to a conclusion in July that he did not see the applicant as being with him as a foreman for any substantial length of time and (b) that there had never been the sort of sustained discussion that one would expect in a small

company such as this to deal with these specific items one by one so as to draw the applicant's attention to them."

That was all background and was so stated to be background by the Tribunal because they find that what gave rise to the ending of the employment was a letter of 11 July from the district engineer of the Barnsley Health Authority who complained about two matters in connection with work carried out for the Health Authority by the company. It was the Applicant who was responsible; first of all that the actual workmanship on some of the stainless steel work was below standard but secondly, that when the district engineer had asked the Applicant about progress, that he had been met with sarcasm and abuse which he said was quite unwarranted and all the more unacceptable since the scheme was already running behind programme.

The question of workmanship could not be laid at the Applicant's door, but Mr White saw the Applicant about this letter received from the district engineer. The Applicant denied the accusations saying he was only joking, but agreed that his attitude was not always as required when talking to the customers. Then there was a note which was accepted as accurate by the Applicant, and it was made by Mr White from which the Tribunal quote verbatim. It is in paragraph 14 of the judgment and it reads:

"When told that after careful consideration, taking into account his performance over the past year, that though I had no wish to lose his experience I could no longer tolerate the performance levels attributed to Bill's position as workshop foreman. I then informed him that it was my decision to remove him from his position of workshop foreman whereupon he immediately left my office saying he was leaving."

The applicant did in fact leave and did not return. He just got up and left. When asked by Mr White in front of the Tribunal he said

"He told me I was not going to be foreman but was not going to be dismissed so I assumed I was going to the shop floor."

And he asserted that a temporary foreman "Clive" was to go in his place. Thus the picture was a background of complaints, some of which were valid, many of which the Tribunal felt were not valid, and a view taken by the Tribunal that Mr White had felt that it was not to be a very long time before the Applicant was likely to have to go.

They looked at the attitute of Mr White. They looked at his conduct on 14 July and they found that this was a constructive dismissal. They found that the termination was a fundamental and unilateral alteration of the conditions of his employment. They say:

"We cannot see how it can be viewed in any other way."

The Applicant was being told that a large part of his job description was going to cease to exist and therefore there was a dismissal. That was the view of the Tribunal, a finding which Mr Lodge does not challenge. So that there one has a constructive dismissal against that background. As Mr Lodge accepts, it is not always easy to justify a constructive dismissal. There were two possible reasons here which could be found by the Tribunal. The first was capability, the second was conduct. They looked at the evidence and they found the principal reason was that of conduct. It was open for them to do so and it is difficult to criticise them for so doing.

The Tribunal then went on to apply the provisions of section 57(3). They do it at considerable length and with great care. In paragraphs 18 and 19 they set out the balance of the decision which they must reach. They take into account the long service of 26 years, the whole of the background, the way in which each little problem was dealt with and looking at that and reading it as a whole it seems to us that the Tribunal dealt with the matter admirably. They then considered compensation and there is no appeal about that.

Mr Lodge, in his helpful submissions, has made his case succinctly and we are grateful to him. His first and his main point relates to the finding of fact in connection with the memorandum. The importance to his argument in this is that he relies upon a passage in the judgment in the Court of Appeal of Lord Justice Ralph Gibson in the recent case of BRITISH TELECOMMUNICATIONS PLC V SHERIDAN

[1990] IRLR 27

CA where the Court of Appeal are dealing with a basis upon which the jurisdiction of this Court rests. Reference had been made to the well-known case of WATLING v WILLIAM BIRD & SONS CONTRACTORS LTD [1976] 1 ITR 70 in which Mr Justice Phillips had sub- divided into three the basis of jurisdiction and he says this and I am quoting from the judgment of Mr Justice Philips:

"There is only an appeal to this court on a point of law and that is the difficulty in his way. The authorities on what is a point of law are endless, and they express the matter in all sorts of different ways, but it all in the end comes down to the same thing. An appellant who claims that there is an error of law must establish one of three things: he must establish either that the Tribunal misdirected itself in law or misunderstood the law, or misapplied the law; or, secondly, that the Tribunal misunderstood the facts, or misapplied the facts; or thirdly - and this again was put in all sorts of different ways - that although they apparently directed themselves properly in law, and did not mis-state, or misunderstand, or misapply the facts, the decision was "perverse", to use a word which to modern ears sounds harsh, or (which is another way of saying the same thing) that there was no evidence to justify the conclusion which they reached."

The Court of Appeal in that case the other two members being the Learned Master of the Rolls and Lord Justice McCowan, found no difficulty with the first and third of those propositions but found some difficulty with the second, which was that the Tribunal misunderstood the facts or misapplied the facts. Lord Justice Ralph Gibson dealt with that second proposition in paragraph 31 of the Report where he says this in his judgment:

"Misunderstanding or misapplying the facts may, in my view, amount to an error of law where the Tribunal has got a relevant undisputed or indisputable fact wrong and has then proceeded to consider the evidence and reach further conclusions of fact based upon that demonstrable initial error. Such may be an error of law because the Tribunal is required by law to consider the case in accordance with agreed or undisputed facts. Where, however, the alleged misunderstanding of fact depends upon a decision of fact open to the Tribunal to make, and which it did make, then an attack on that finding cannot be converted into an error of law unless it can be shown that there was no evidence to support it, or that the conclusion was perverse."

That last phrase clearly refers to the third approach set out by Mr Justice Phillips.

The essential fact which Mr Lodge submits was found in error by this Tribunal, relates to the memorandum of December 1988. The Tribunal deal with that in paragraph 8 of its judgment. As we have already indicated, the complaint that was being made as understood by the Tribunal, is that the Applicant had not responded to that memorandum. It said this in paragraph 8:

"..The complaint today is that the applicant failed to respond to it. That was document 2 in the second respondent's bundle. We have looked at that memorandum. It does not call for a response. It ends with the rhetorical question "What are you doing about it?" but it arose from a single incident .."

and then they go on to consider the single incident. At the end of that paragraph they add this:

"..Whatever the truth or otherwise of that memorandum it is not really the content of it of which complaint is made - it is only related to a single occasion in any event - but rather that it was not responded to. As I have already stated we cannot see that it actually called for a response."

Mr Lodge has drawn our attention to the fact that in the Learned Chairman's Notes of Evidence he sets out the contents of that document and after the memorandum is addressed to Mr McManis from Mr Batty who is the managing director, he continues:

"SUBJECT: 7.45 am VISIT TODAY'S DATE (BACK ON MY DESK FRIDAY 2 DECEMBER PLEASE)

and it is emphasised that the Tribunal wholly ignored that part of the memorandum and therefore that it was in error to have found that there was no request for a response. Therefore there is a fundamental error on the face of the evidence and that error was considered to be of importance when considering the memorandum. The memorandum is, of course, part of the background only. It is one of the three documents being considered but nevertheless it is clearly an important document.

We have been shown today the original of a carbon copy of the memorandum sent. This was seen by the Industrial Tribunal and was marked "R5". The original has been produced to us and it is quite clear that the passage to which we have referred under the title "SUBJECT", is quite illegible, even if one knows what is meant to be there the second part of that is wholly illegible on the copy of the original document shown to the Industrial Tribunal. It seems to us therefore that the content of the Learned Chairman's note must have come from the evidence given at the hearing and that therefore it was perfectly open to the Tribunal to take the view, although they have not expressed it precisely in this way, that there was no call for a response and that the statement at the end, after which there is in fact no question mark, was a rhetorical remark based upon the earlier contents of that document, together with the indication of what the managing director required to be done on that occasion.

Also, it is to be noted that as far as we read the Notes of Evidence and although Mr White was conducting the case for the company, the question of that phrase "under the Subject" was not specifically raised otherwise we feel sure that the Learned Chairman would have dealt with it. Perhaps the last point on this memorandum and the request for a response was raised during submissions by Mr Scouller sitting on this Court, namely that if there had been a response sought then, in a very small company like this, one would have expected Mr Batty to have sought a reply himself and that it would have been sound management so to do. It follows therefore that despite his submissions we are unable to accept the criticism made by Mr Lodge of the finding of the Tribunal.

The second point made is this, that the Tribunal failed to look at the question of capability and the whole background of these incidents. First of all it is not only open to the Tribunal, but it was the duty of the Tribunal, to find the principal reason and it was clearly open to them on the evidence to find that it was conduct. Once they took that view then they looked at the incident of the letter from the district engineer but they also looked at the background. The background is set out at great length over some four or five pages of the Reasons and no-one could suggest that the greatest care had not been taken to examine the details of it. We find ourselves quite unable to accept that the Tribunal ignored that background when looking to see whether, under section 57(3), it was reasonable for the Respondent employer to act as it did. This was a constructive dismissal. The Tribunal were clearly critical of the way that this company was handling its personnel and in our judgment here there was no error of law in this decision. It was really a question of fact. They saw the witnesses, they found the facts and in our judgment this Appeal must be dismissed.