Martin Boston & Co v John [1993] UKEAT 166_92_1905

EAT
Martin Boston & Co v John
[1993] UKEAT 166_92_1905 · 1993-05-19

JUDGE HAGUE QC :

This is an appeal by employers from a finding of unfair dismissal made by an Industrial Tribunal sitting at London (South) by its decision which was registered on 17 January 1992.The facts of the case are very unusual. The employee, Miss Johns, was for a little over four years up to the date of her dismissal secretary to Mr Alec Jose, the junior of two partners in a small firm of London solicitors. Miss Johns developed what the Industrial Tribunal described as a "deep emotional attachment" to Mr Jose and hoped that he would respond. The Tribunal heard evidence not only from Miss Johns and Mr Jose but also from other persons in the solicitors' office. They rejected her evidence that Mr Jose did respond and rejected her suggestion that there had in fact been a close relationship between them.Matters between Mr Jose and Miss Johns came to a head on 28 June 1991. On the previous evening Miss Johns had asked Mr Jose to look at a mortgage application which she had made and she left with him some documents in an envelope. He subsequently looked at those documents and the next day talked to Miss Johns about them. What he found in the envelope greatly surprised him. There was first a mortgage application form made out in the joint names of Miss Johns and himself, which of course contained particulars about his date of birth, home address and so on. There was also in the envelope an application form for an endowment assurance policy in their joint names, and there were illustrations of low cost mortgage endowments, the illustrations being in her name and that of a client who from the date of birth was obviously intended as Mr Jose. The Tribunal found that Mr Jose knew nothing of all this until he received the forms. They said that he was therefore entitled to be angered and distressed by Miss Johns' conduct.There was a dispute as to whether on that occasion, when undoubtedly Miss Johns' employment was terminated, she had in fact terminated it or whether she had been dismissed. On that particular issue the Tribunal found in her favour and found that she had been dismissed and indeed dismissed summarily.Having come to those conclusions the Tribunal then addressed themselves to the law. Their findings are to be found in paragraphs 11 and 12 of the Reasons for their decision. In paragraph 11 they find that Miss Johns was dismissed for her conduct in completing a mortgage application form and other documentation in the joint names of her employer and herself. They add that the reason for her dismissal was conduct, which is one of the reasons falling within section 57(2) of the Employers Protection (Consolidation) Act 1978. They then go on to consider the fairness of the dismissal in accordance with the provisions of section 57(3) of the 1978 Act. Up to that point, apart from one sentence to which we will return in a moment, it seems to us that the Tribunal have clearly not in any way misdirected themselves, and indeed that their findings up to that point were all matters of fact which could not possibly be challenged.When they come to consider the matters in section 57(3) however, the Tribunal say this:
"In the special circumstances of this case where Mr Jose was aware of Miss Johns' emotional feelings for him, and where she had taken the form to him, and therefore an application was not processed, we do not find it was just and equitable for Mr Jose to treat this as a matter deserving summary dismissal. A reasonable employer would have given Miss Johns notice and under her contract she was entitled to a month's notice. By reason of the statutory provisions in the Act she is entitled to 4 weeks notice.

We find the dismissal to be unfair."

In paragraph 12 they go on to consider the question of compensation and say:
"..and as we have stated in the paragraph 10 [which is a misprint for 11] the proper course for Mr Jose to have taken was to have given her a month's notice. It was not possible for Mr Jose to continue to employ Miss Johns after the mortgage incident for any length of time."
They then go on to award the compensation and after making the basic award under the compensatory award, they award loss of earnings for one month. That is the period of notice which they find she should have been given.Earlier on in paragraph 11 the Tribunal directed themselves as follows:
"We then have to consider if the respondents satisfy us on that matter whether in all the circumstances it was just and equitable to treat the reason as sufficient for summary dismissal."
We think it is quite plain from those paragraphs that what the Tribunal was essentially saying was that it was reasonable to dismiss Miss Johns, because they say that it was not possible for Mr Jose to continue to employ her, and that is clearly a finding which they were perfectly entitled to come to. But they go on to say it was unfair because, but only because, Miss Johns had been summarily dismissed. In dealing with the matter in that way we are of the view that the Tribunal fell into an error of law.TREGANOWAN v ROBERT KNEE & CO LTD [1975] ICR 405, was decided under paragraph 6(8) of Schedule 1 of the Trade Union & Labour Relations Act 1974, which was the forerunner of section 57(3) of the 1978 Act and there are no material differences between them. The Industrial Tribunal in that case had decided that the dismissal of the employee was fair but had expressed the view that she should not have been summarily dismissed and although they had no power to make an award they expressed the view that the employee would be entitled to pay in lieu of notice. Before this Appeal Tribunal, Counsel for the employee argued that because the Industrial Tribunal expressed the view that she should not have been summarily dismissed, they ought to have held that there was an unfair dismissal. At page 410 Mr

Justice Phillips said this:

"Mr Bennett first argued that the fact of dismissal without notice was itself a circumstance within sub-paragraph (8). This cannot, I think, be right. The circumstances are the background against which the dismissal must be judged and so cannot include the fact of the dismissal."
A little later on he goes on to consider the background of the Act and points out, as it had been pointed out in NORTON TOOL CO LTD v TEWSON [1972] ICR 501 , that the common law remedy of wrongful dismissal was still in existence, and had not been replaced. He pointed out that if Counsel for the employee was right in his submissions, it would follow that an Industrial Tribunal would have jurisdiction in a case where the only ground on which the dismissal was said to be unfair was that the period of notice was too short. In other words in a simple case of dismissal with insufficient notice the aggrieved party could choose whether to sue in the Courts for damages or to apply to a Tribunal for compensation. Mr

Justice Phillips continues at p.412 as follows:

"In my judgment, a tribunal has to say to itself, "This man was dismissed in such-and-such circumstances. The reason was so-and-so. Have the employers satisfied us that they acted reasonably in treating that reason, in those circumstances, as a sufficient reason for dismissing him?" If "No": unfair dismissal, and the complaint succeeds. If "Yes": the complaint fails. They are not concerned for this purpose with whether the dismissal was summary , or whether the notice was long enough. That would be relevant for a court to consider in determining whether the dismissal, whether unfair or not, was wrongful. Of course, the fact that the dismissal was summary, or the notice was short, may be a fact that the tribunal would want to take into account in determining other questions of fact, for example, what was the real reason for the dismissal, who is to be believed, and so on."
That case was followed and applied in BSC SPORTS & SOCIAL CLUB v MORGAN [1987] IRLR 391, the facts of which are we think in essence no different from those in the present case. Mr Morgan had been employed as a club steward and was dismissed by reason of his conduct and he was dismissed instantly. The Industrial Tribunal found that the employers were fully justified in dismissing Mr Morgan by reason of his conduct but found that the instant dismissal made the dismissal unfair within the meaning of section 57(3). This Appeal Tribunal considered the Treganowan case, the Norton Tool case and another case, and at paragraph 6 said this:
"It seems to us that the factor of summary dismissal can only be considered in the context of whether or not it was reasonable to dismiss at all. In other words a summary dismissal may be evidence of a failure to show that the dismissal itself was a reasonable response. No doubt there have been many occasions when Industrial Tribunals have relied on a summary dismissal as a material consideration when assessing the reasonableness of the act of dismissal. If this Industrial Tribunal had approached the case in that way we should not have been able to interfere. However, it seems to us that applying what was said in all three of the cases to which reference has been made it was an error in point of law to say that it was reasonable to terminate the employment and that the fact of instant dismissal made it unfair dismissal. Once a decision to dismiss has been reached on reasonable grounds, it is for the employer to decide whether or not to dismiss with notice or summarily. If he does so without notice the employer may be open to an action for wrongful dismissal. It seems to us that in preserving the remedy of wrongful dismissal the legislature recognises that there are cases in which instant dismissal, though not unfair, is nevertheless wrongful."
In our judgment, those two cases make it clear that the approach of the Industrial Tribunal in this case is flawed and that this appeal must as a result be allowed.Mr Nelson, on behalf of the employers, submitts that in the circumstances we should simply say that the Tribunal came to a wrong decision and dismiss the claim, holding in effect that the dismissal was fair. He says there is material from which we can do that, because in paragraph 12 of their Reasons the Tribunal had expressly found that it was not possible for the employment to continue. We do not think we can take that course and we think the matter will have to be remitted to the Tribunal, for these reasons. It has become clear, particularly after the decision of the House of Lords in POLKEY vAE DAYTON SERVICES LTD [1988] ICR 142 , that in applying section 57(3) of the 1978 Act an Industrial Tribunal must look at two separate factors: first of all the substantial merits relating to the dismissal and secondly the procedural fairness of the dismissal. Success on the first alone is not enough. It is not possible to say that the want of procedural fairness would not have made any difference and renders the dismissal, which was justified on the substantial merits, a fair one. There are two well known passages from the speeches in the House of Lords which merit repetition. First Lord Mackay of Clashfern L.C., said at page 153D this:
"Where there is no issue raised by sections 58 to 62 [and I interpose that that is the position in this case] the subject matter for the tribunal's consideration is the employer's action in treating the reason as a sufficient reason for dismissing the employee. It is that action and that action only that the tribunal is required to characterise as reasonable or unreasonable. That leaves no scope for the tribunal considering whether, if the employer had acted differently, he might have dismissed the employee. It is what the employer did that is to be judged, not what he might have done. On the other hand, in judging whether what the employer did was reasonable it is right to consider what a reasonable employer would have had in mind at the time he decided to dismiss as the consequence of not consulting or not warning.
If the employer could reasonably have concluded in the light of the circumstances known to him at the time of dismissal that consultation or warning would be utterly useless he might well act reasonably even if he did not observe the provisions of the code. Failure to observe the requirement of the code relating to consultation or warning will not necessarily render a dismissal unfair. Whether in any particular case it did so is a matter for the industrial tribunal to consider in the light of the circumstances known to the employer at the time he dismissed the employee."Lord Bridge of Harwich, at page 162F said this:
"Employers contesting a claim of unfair dismissal will commonly advance as their reason for dismissal one of the reasons specifically recognised as valid by section 57(2)(a), (b) and (c) of the Employment Protection (Consolidation) Act 1978. These, put shortly are: (a) that the employee could not do his job properly; (b) that he had been guilty of misconduct; (c) that he was redundant. But an employer having prima facie grounds to dismiss for one of these reasons will in the great majority of cases not act reasonably in treating the reason as a sufficient reason for dismissal unless and until he has taken the steps, conveniently classified in most of the authorities as "procedural," which are necessary in the circumstances of the case to justify that course of action."
He then deals with three particular instances and continues:
"If an employer has failed to take the appropriate procedural steps in any particular case, the one question the industrial tribunal is not permitted to ask in applying the test of reasonableness posed by section 57(3) is the hypothetical question whether it would have made any difference to the outcome if the appropriate procedural steps had been taken. On the true construction of section 57(3) this question is simply irrelevant. It is quite a different matter if the tribunal is able to conclude that the employer himself, at the time of dismissal acted reasonably in taking the view that, in the exceptional circumstances of the particular case, the procedural steps normally appropriate would have been futile, could not have altered the decision to dismiss and therefore could be dispensed with. In such a case the test of reasonableness under section 57(3) may be satisfied."
In the present case the Industrial Tribunal, on the face of their decision at all events, did not consider these matters in any way, no doubt because as in any event they were making a finding of unfair dismissal, it was perhaps unnecessary for them to do so. However, we feel that these considerations will have to be faced at some time.What we consider must happen is that this case must be remitted to the same Tribunal which heard the case (assuming that is practicable) to reconsider the matter in the light of this Judgment. They must not reconsider the whole matter but only the question raised under section 57(3), that is to say the reasonableness of the employers' response. That is a matter which may require further evidence. It would be open for the Tribunal to decide that there should have been some form of consultation or other procedural steps taken before the dismissal, particularly having regard to the circumstances which the Tribunal expressly refer to, the special circumstances the Tribunal refer to in paragraph 11 of their decision and also to the question that they refer to of the holiday pay. On the other hand it would be open to them to decide that in the special circumstances of this case nothing further than what Mr Jose did on the morning of that day was required. The matter is entirely open and is entirely a matter for them to consider.As we are remitting the case for reconsideration in that way, Mr Meeran has rightly accepted that it is not necessary for him to press his application for leave to file a cross appeal out of time. In essence the matters which he seeks to raise will, as it seems to us, have to be considered by the Industrial Tribunal upon their reconsideration. We therefore make no order on that aspect of the matter.