Cold Drawn Tubes Ltd v Middleton [1991] UKEAT 615_90_1712

EAT

Cold Drawn Tubes Ltd v Middleton

[1991] UKEAT 615_90_1712 · 1991-11-21

MR JUSTICE TUCKER: These are Employers' appeals against the decision of the Industrial Tribunal held at Leicester on 10 September and 19 October 1990. There were in fact four hearings relating to this case. At the first, held on 15 June and 2 July 1990, the Tribunal held that the Applicant (Respondent in these appeals) had been unfairly dismissed. There is no appeal against this decision. At the second hearing held on 23 July, to consider the appropriate remedy, it was decided that the Appellants should reinstate the Respondent on the terms and conditions set out. There is no appeal against that part of the decision either. But the Appellants got into difficulties, in that there was no work for the Respondent to do. So a third hearing took place on 10 September. The Industrial Tribunal then held that the Appellants had failed to satisfy the Tribunal that it was impracticable to comply with the order for reinstatement. At the fourth and final hearing on 19 October to decide on the amount of additional award, and on compensation, the Tribunal awarded the Respondent total compensation of £11,062 in respect of his unfair dismissal and the Appellants' failure to comply with the order for reinstatement. This included a decision to make an award on the basis of the maximum 26 weeks pay.

The first appeal is brought against the decision given at the third hearing, namely the finding that the Appellants had failed to satisfy Tribunal that it was not practicable to comply with an order for reinstatement. The grounds of that appeal are that the Tribunal misdirected itself in law in a number of respects, and that it reached a conclusion which no reasonable Tribunal properly directed in law could have reached. The Respondent's answer to that is to rely on the grounds relied upon by the Industrial Tribunal.

The second appeal is brought against the final decision - the award of compensation. The grounds of that appeal are also that the Tribunal misdirected itself in law, and that it reached a conclusion which no reasonable Tribunal properly directing itself could reach.

In view of the time allocated for the hearing of these appeals, it was agreed by the parties that we should confine ourselves to hearing only the first appeal, leaving the second appeal to be dealt with at some future date.

The Respondent was employed in the Appellants' Planning Department. He was dismissed from that employment on 11 December 1989 for fighting a fellow employee. As has been stated, the Tribunal found that that dismissal was unfair. This was because the Tribunal found that it was a scuffle rather than a fight and that the Appellants had not fully investigated the matter. The next step was to consider the appropriate remedy. The Respondent wanted to be reinstated. That is a course which is open to an Industrial Tribunal to order under the provisions of Section 69 of the Employment Protection (Consolidation) Act 1978 (The Act). It is the order which the Tribunal did make, despite objections from the Appellants. These were based on the provisions of Section 70 of the Act relating to the engagement of a permanent replacement for a dismissed employee. The Tribunal found that Section 70 did not apply. They did not accept that the person whom the Appellants put forward (Miss Evans) was a permanent replacement for the Respondent. It is clear from Section 69(5) of the Act that the Tribunal had a discretion to exercise, and that in considering whether to make an order for reinstatement they had to take into account whether it was practicable for the Appellants to comply with such an order. The Tribunal believed that it was practicable, and they accordingly made the order for reinstatement. As has been said, there is no appeal against the making of that order.

But the Appellants did not comply with the order, because they say that they found they could not do so.

There are penalties for non-compliance, and they are contained in Section 71 of the Act. Section 71(2) enables the Tribunal in cases such as the present to make an award of compensation for unfair dismissal and except where the employer satisfies the Tribunal that it was not practicable to comply with the order, to make an additional award of compensation of between 13 and 26 weeks pay. Following the hearing held on 13 September 1990 the Tribunal decided that the Appellants had failed to satisfy the Tribunal that it was not practicable to comply with the order, and by their subsequent decision they made an additional award of the maximum amount.

So the word "practicable" occurs both in Section 69(5) and Section 71(2)(b) of the Act, that is to say at each stage of the two stage approach which has to be adopted. The first stage is the decision whether or not to make the order, and the second stage is the decision as to the penalty for non-compliance. At the first stage the Tribunal has to look forward and simply has to "take into account" whether it is practicable to make the order. At the second stage the Tribunal is looking back, and the onus is then on the employer to satisfy the Tribunal that it was not practicable for them to comply with the order which the Tribunal made.

Lest we were unaware of it, Counsel helpfully provided us with the Oxford English Dictionary definition of "practicable", which is "capable of being put into practice, carried out in action, effected, accomplished, or done; feasible."

We have been very carefully referred by both Counsel to the reasons given by the Tribunal for their decision. The Tribunal correctly accepted that the burden of proof is on the employer (the Appellants). They identified the reason advanced by the Appellants for their inability to comply with the order, ie that there was insufficient work for the Respondent to do if he was reinstated. They found matters to be relevant which they set out at Paragraphs 7 and 8 of the Reasons. They accepted that if the Appellants did reinstate the Respondent it would cause them a problem. They then said this:-

"but what the Company could do, and in our view should do, is to reinstate the applicant, which is an order that this Tribunal has already made, and then if necessary depending on conditions in the Company, implement the company procedures that would arise in a redundancy situation and then the applicant would take his chance with the others as to the effect that that would have on him."

We are to say the least, doubtful at the outset about whether that would be an appropriate course for the Appellants to take. Counsel for the Appellants submits that in suggesting it, the Tribunal misunderstood the law, and did not pay attention to, or perhaps were unmindful of, three cases bearing on the topic. These are Meridian Ltd v. Gomersall

[1977] ICR 597

, Tayside Regional Council v. McIntosh

[1982] IRLR 272

and Freemans plc v. Flynn

[1984] ICR 874

In Meridian there is a very helpful passage in the judgment of Kilner Brown J at p.601H to 602E:-

"It seems to us that very useful guidance in this case (and maybe in other cases) for industrial tribunals is to be obtained from the masterly analysis of the word `practicable' to be found in the judgment of Scarman LJ in Dedman v. British Building & Engineering Appliances Ltd. [1974] ICR 53, 64. This is what Scarman LJ said:

`The word `practicable' is an ordinary English word of great flexibility: it takes its meaning from its context. But, whenever used, it is a call for the exercise of common sense, a warning that sound judgement will be impossible without compromise. Sometimes the context contemplates a situation rarely to be achieved, though much to be desired ... Sometimes ... what the context requires may have been possible, but may not for some reason have been `practicable'. Whatever its context, the quality of the word is that there are circumstances in which we must be content with less than 100 per cent: and it calls for judgment to determine how much less'.

He then went on to analyse, in the circumstances of that case, how the word `practicable' should be interpreted and applied. Put another way, as one of our members in the course of submissions indicated to the advocates, it looks as if it is being regarded by the Court of Appeal as a word which, once it is imported into this legislation in a wide field, ought to be looked at in a subjective sense, in a pragmatic sense, bearing in mind the particular circumstances of the case. It is obvious that an industrial tribunal may fall into error, if it approaches the question of reinstatement on the basis of general objective rules, guidelines and principles. What we are saying in effect is that an industrial tribunal ought to look at the circumstances of the case where reinstatement is being considered, and not try to analyse in too much detail the application of the word `practicable', but to take a broad common sense view.

In a later passage, Kilner Brown J said this, at p.602G:-

"The industrial tribunal then unhappily got themselves involved in a looking-forward situation as to whether or not the real reason would not be, strictly speaking, that as there was a redundancy situation, and as the employers acted wrongly on an unfair dismissal, therefore, because there had been no redundancy process (and even if they were ordered and accepted back, there would then be a redundancy in due course), the proper thing to do would be to take the two employees back and then formally dismiss them on the ground of redundancy. It seems to us that this is a hopelessly artificial concept."

The passage relied upon by Counsel in Tayside is to be found at p.474, para.7.

"The other matter concerning which we would comment is the decision to order reinstatement which is of course no longer applicable. Such an order was apparently relisted by the appellants on the ground that if implemented the respondent would not be sufficiently employed. For some reason the Tribunal did not consider that to be a relevant consideration. Having regard to the fact that the appellants required the possession of a driving licence and had attempted, without success, to find suitable alternative employment for the respondent we do not consider that an order for reinstatement was a reasonable or a practicable course to follow in this particular case".

In Freemans , the passage to which our attention is invited is at p.879G to p.880B.

"It has secondly been submitted to us on behalf of the employee that the industrial tribunal misdirected themselves in law in a further proposition which emerges from the language of their decision. Again Mr Pearson, supporting the conclusion, does not dispute that this is a proper inference from the language used. What the tribunal said was that the effect of a re-engagement order was to make it the duty of the employers to search for and find a place in their ranks for the employee, irrespective of vacancies that came up. It is not, they said, just a question of the employers considering vacancies which arise from time to time within the organisation but, as they put it, of fulfilling a duty to fit the employee in somewhere. Merely considering official vacancies which arose in the ordinary course of events, they said, was simply not good enough. We think this states the duty of an employer against whom a re-engagement order is made far too highly. If that duty is carried to such extremes there would be no logical answer to the argument that it becomes the employer's duty to dismiss other employees in order to create the necessary space for he or she who is to be re-engaged."

Basing himself upon this trilogy of cases, Mr Jeans on the Appellants' behalf submits that it cannot have been the intention of the industrial legislation to create redundancy, or to introduce new uncertainty in industrial relations. It cannot be right, he submits, for an employee who has been dismissed for misconduct to be taken back, with the risk of someone else who has not misconducted himself or herself being dismissed in order to make way for him.

In our view there is considerable force in these submissions. Mr Millar for the Respondent has attempted to distinguish each of the three cases, and he is able to point to some distinguishing features. He submits that they are decisions on their own facts and that there are no helpful principles to be derived from them.

However, in our opinion those cases and the submissions based on them, show a commonsense approach to the problem, which we are minded to adopt. There are principles to be derived from these cases, but the tribunal did not adhere to them.

In our opinion the Tribunal's reasons set out in Paragraph 8 do reveal a misunderstanding of the law and cannot stand.

In addition there is, we regret to say, a very clear misdirection on the law set out in Paragraph 9 of the Reasons, which is in these terms:-

"We do not believe that it can be the purpose of the Employment Protection (Consolidation) Act 1978 to enable the employer of somebody who has been unfairly dismissed to be able to say at the time when it comes to reinstatement we can no longer offer him a job because there is no work for him to do. Despite the fact that he has been unfairly dismissed, he has for different reasons and in effect at the end of the day been made redundant."

In this passage the Industrial Tribunal are saying, in effect, that an argument on the basis of impracticability is ruled out by the Act, and that employers are not permitted to put forward such an argument based on the fact that there is no available work for the employee to do. This is the clear effect of Paragraph 9, and it is in our view confirmed by what the Tribunal went on to say in Paragraph 10:-

"We believe having considered the matter in some detail that the respondents' argument runs counter and contrary to the purpose and spirit of the Employment Protection Act 1978 which if accepted would give insufficient protection to an applicant such as this applicant in these circumstances."

Mr Millar is driven to accept that these two paragraphs standing on their own, are wrong and misguided. But, he submits, it was not necessary for the Tribunal to mention these matters, and they do not form part of the ratio decidendi of the case. He describes these paragraphs as an afterthought, after the ratio, and after the facts had been found. We do not find this explanation acceptable. We believe that the Tribunal intended these passages to form an integral and important part of their decision, and to be regarded as the justification for their reasoning. We agree with Mr Jeans that they cannot be regarded as an academic frolic or diversion, or as obiter dicta. We take the view that these paragraphs do amount to a material misdirection as to the law.

For the reasons which we have given, we find that the Tribunal's reasoning was based on a misunderstanding of the law, and that the Tribunal did misdirect itself in a material way. The only reasonable inference, in our view, is that it was not practicable for the Appellants to reinstate the Respondent. It is very difficult to see how reinstatement could become a practicable option, because it would result either in a redundancy process or in significant overmanning. It would be contrary to the spirit of the legislation to compel redundancies, and it would be contrary to commonsense and to justice to enforce overmanning.

Accordingly we allow this appeal. We do not consider this to be an appropriate case for remission for reconsideration. We quash the decision reached by the Industrial Tribunal on 10 September that the Appellants failed to satisfy them that it was impracticable to comply with the Order of Reinstatement. The financial consequences of our decision will be considered at the hearing of the second appeal. It is clear that any award made on the basis of the Appellants' failure to comply with the order for reinstatement, cannot stand.