Allmakes Ltd v Boorman [1993] UKEAT 695_92_2603

EAT
Allmakes Ltd v Boorman
[1993] UKEAT 695_92_2603 · 1993-03-26
HIS HONOUR JUDGE PEPPITT This is an appeal from a decision of the Reading Industrial Tribunal dated 26th June 1992 awarding the Applicant, Mr R S Boorman, compensation of £12,079 for unfair dismissal. This was the third hearing by the Tribunal in relation to Mr Boorman's application. At the first hearing on 6th November 1991 the Tribunal found that Mr Boorman had been dismissed by his employers, Allmakes Ltd and at the second on 16th and 17th March 1992, that this dismissal was unfair. At the second hearing the Tribunal also considered and rejected an application by Mr Boorman under S.53 of the Employment Protection (Consolidation) Act 1978.Allmakes Ltd now appeal against the Tribunal's decision of 26th June 1993 on the grounds that the Tribunal misdirected itself in its assessment of Mr Boorman's compensation by:(i)failing to take account in its assessment of Mr Boorman's basic award a sum paid to him by the Appellants on account of his statutory redundancy entitlement;(ii) In assessing Mr Boorman's compensatory award failed to have regard to the possibility that his employment would have been terminated in any event.Mr Boorman in his turn cross-appealed against the Tribunal's rejection of his complaint under S.53 of the Act and further contended that the Appellants' Notice of Appeal was out of time. At the hearing before us however he did not pursue either of these matters but contended himself with resisting the Appellants' two grounds of appeal. We think that he was wise to do so.

THE FIRST GROUND OF APPEAL

The Tribunal assessed Mr Boorman's basic award at £ 2079. No complaint is made of the manner in which this figure was computed. But Mr West of Peninsula Business Services who appeared before us on behalf of the Appellants submitted that in awarding this sum the Tribunal failed to take into account a sum paid to the Respondent on account of his statutory redundancy entitlement under a written agreement contained in a letter dated 31st May 1991 addressed to and signed by Mr Boorman. Instead the Tribunal gave credit for this sum against Mr Boorman's compensatory award which it assessed at £17,658 [ie £31,158 less £13,500 paid to him on the termination of his employment]. The £17,658 was reduced to the statutory maximum of £10,000 with the result, said Mr West, that the Appellants derived no benefit from the redundancy payment which they had made.The relevant parts of the Appellants' letter of 31st May 1991 read as follows:
"We confirm that we have to make you redundant, and your contract of employment with Allmakes Ltd is terminated with effect from 10th May 1991.
...3 You will receive, by 30th June 1991, a further ex gratia payment of £5,000 incorporating your statutory redundancy entitlement and recognising the bonus to which you would have been entitled if you had still been employed by Allmakes Ltd at the end of May.The offer of this payment was part of a package providing for the termination of Mr Boorman's employment. The letter concluded:
"Please confirm your acceptance of this package by signing below and returning one copy to us. We will then ensure that the necessary arrangements are made."
Mr Boorman appended his signature at the foot of the letter immediately beneath the words "I accept this package in full." The payment of £5,000 was subsequently made.Section 73(9) of the 1978 Act provides that:The amount of the basic award shall be reduced or, as the case may be, further reduced by the amount of any redundancy payment awarded by the Tribunal under Part VI in respect of the same dismissal or of any payment made by the same employer to the employee on the ground that the dismissal was by reason of redundancy, whether in pursuance of Part VI or otherwise."The question therefore which the Tribunal had to decide was whether the Appellants' payment to Mr Boorman of £5,000, which was expressed to incorporate his statutory redundancy entitlement and was accepted as such, constituted 'a payment made by the employer to the employee on the ground that the dismissal was by reason of redundancy'.There is nothing in the decision to suggest that the Tribunal directed its mind to the mandatory provisions of this subsection. In our judgment the Appellants by their letter of 31st May 1991 clearly indicated that an appropriate part of their offer of £5,000 was made on the ground that the dismissal was by reason of redundancy. The fact that the offer and the subsequent payment was made ex gratia does not affect the position. In these circumstances we are unanimously of the view that on this issue the Tribunal misdirected itself. Mr Boorman's redundancy entitlement was £2,079. We accordingly allow this part of the appeal and reduce the basic award to nil.

THE SECOND GROUND OF APPEAL

Mr West's submissions under this head were two-fold. Firstly, he submitted that the case should be remitted to the Tribunal because there was nothing in the decision which indicated that the Tribunal had applied its mind to the question of a reduction in Mr Boorman's compensatory award on the ground that on the evidence called before it Mr Boorman could or might have lost his job in any event. We were told and accept that a good deal of the argument at the Remedies hearing was devoted to this issue. Secondly, said Mr West, no reasonable Tribunal properly directing itself could, in the circumstances of this case, have come to the conclusion that no such deduction should be made. In support of these submissions Mr West referred us to the well-known cases of Red Bank Manufacturing Co Ltd v. Meadows [1992] 209 and Polkey v. A E Dayton Services Ltd [1988] ICR 142 respectively.In summary form the facts found by the Tribunal at the hearing on 16th and 17th March 1992 were that Mr Boorman had been employed by the Appellants as company accountant for some seven years prior to his dismissal in May 1991. Until the end of 1990 he had reported to Mr Chipperfield, one of the Appellants' directors with whom he had a good relationship. From early 1991 however his immediate superior was Mr Smith and the mutual antipathy of the two led directly or indirectly to Mr Boorman's dismissal. Mr Smith was not impressed with Mr Boorman's work and said so. This upset Mr Boorman who on the 16th April 1991 went on sick leave from which he never returned. He was a voluntary patient in hospital between 2nd and 8th May 1991 and on 10th May 1991 Mr Chipperfield visited him at home and told him that he was to be dismissed forthwith on grounds of redundancy. The Tribunal held that the principal reason for Mr Boorman's dismissal was:
"... one falling within subsection (2) of section 57, it is one relating to capability ... in this case capability ... arising from Mr Boorman's state of health."

[Decision of 17th March 1992, para 23]

The dismissal was found to be unfair for lack of consultation. The Tribunal said in paragraph 27 of the same decision:"There was no element of consultation in this case. Mr Boorman was clearly unwell as a result of pressure of work, arising both from the amount of his work and the prospect of having to work in the future with Mr Smith. He had spent a period in hospital where he was frequently in touch with Mr Chipperfield. With all respect to Mr Chipperfield, who was clearly a member of management upon whom Mr Boorman looked as an ally, his reaction on the evening of 10 May when Mr Boorman told him that he was contemplating a return to work the next week was, in the circumstances, the wrong one.".No medical evidence was called by Mr Boorman at the Remedies hearing and none was before the Tribunal, but Mr Boorman gave evidence that he had not seen his doctor since 28th May 1991. Since then, as the Tribunal found, he had been active and diligent in his efforts to find alternative employment and had undertaken short-term work [see paragraphs 4(j) - 4(m) of the decision]. There was thus no evidence before the Tribunal that Mr Boorman had been unfit for work during that period.Against this background Mr West submitted to us that had the Appellants been able to investigate more fully Mr Boorman's state of health in May 1991 it is very likely that he would have been dismissed. On this issue Mr West also relies upon the evidence of Mr Smith which at paragraph 6 of the Remedies decision the Tribunal appears to have accepted:"Mr Smith was himself not sure how much longer he could have continued to accept Mr Boorman's attitude. He added that they were not happy with various aspects of Mr Boorman's control of the company accounts and said that he had found it possible to express in a much simpler form the figures which Mr Boorman used to produce".In the light of all this evidence, said Mr West, the Tribunal should have dealt specifically with the suggestion that Mr Boorman would probably have been dismissed in any event; if the Tribunal had done so it could not have arrived at a decision on compensation which discounted the possibility altogether.It is settled law that a failure to consult is a procedural omission. In Polkey (supra) Lord Bridge said at p.163D:
"If it is held that taking the appropriate steps which the employer failed to take before dismissing the employee would not have affected the outcome, this will often lead to the result that the employee, though unfairly dismissed, will recover no compensation or, in the case of redundancy, no compensation in excess of his redundancy payment."
And in Sillifant v. Powell Duffryn Timber Ltd [1983] IRLR 91 , Browne-Wilkinson J said at p.96:
"... 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."
It was the investigation suggested by these two authorities, said Mr West, that the Tribunal failed to undertake notwithstanding that a full argument was addressed to them.We have considered these submissions with some anxiety because we agree with Mr West that there is nothing on the face of the decision to suggest that the Tribunal considered whether they should reduce Mr Boorman's compensatory award on the ground that he might have been dismissed in any event. On the other hand we must not assume that the Tribunal failed to consider the matter merely because no reference was made in the decision. Furthermore, there was in our view evidence upon which the Tribunal could reasonably have found that no discount from Mr Boorman's compensatory award should be made. He was a senior employee of some years standing. For the first 6 1 / 2 of those years he worked happily and without complaint from his employers. It was only the advent of Mr Smith which disrupted Mr Boorman's previously untroubled career. There was no evidence before the Tribunal that Mr Boorman was other than perfectly fit at all times after 28th May 1991. In these circumstances it seems to us that the Tribunal would have been fully entitled to find that if the Appellants had behaved with a little more sympathy and waited a little longer before deciding upon Mr Boorman's future they would have found a way of accommodating both him and Mr Smith in their organisation. We therefore reject the submission that the Tribunal's decision was perverse.We have found more difficult Mr West's submission that we should remit the case on the principles expressed in Red Bank Manufacturing Co Ltd v. Meadows (supra). In that case Mr Justice Tucker delivering a reserved judgment of the Employment Appeal Tribunal said at paragraph 12 and 13 on p.211:
"12 It is not clear from the second decision whether or not the Tribunal did apply the Polkey principles to their consideration of the question of calculation of quantum. While of course Tribunals are not required when giving the reason for their decisions to deal with all the arguments put before them, we feel in view of the appellants' counsel's submissions that it is unsatisfactory in the circumstances of the present case that a fundamental question such as this should not have been seen to be expressly addressed.
13 Furthermore, we think that the Industrial Tribunal should have made it clear whether or not they considered making a percentage reduction in the award to reflect the chances that the outcome might have been the same even if consultation had taken place."We respectfully agree with those expressions of principles and we find it regrettable that the Tribunal wholly failed to deal expressly with the Appellants' submission that the Polkey principle should be applied. But for one reason, and one reason only, we have decided that this is not a case which we should remit. The Tribunal assessed Mr Boorman's gross loss at £31,158 being the salary and fringe benefits he would have received over the 59 weeks between his dismissal and the date of the Remedies hearing. Even after the deduction of the sum of £13,500 paid to him by the Appellants the resultant figure would significantly have exceeded the statutory maximum of £10,000.In fact only £11,421 should be deducted from the gross loss, £2,079 of the £13,500 being properly attributable in diminution of the statutory award [see S.74(7) of the 1978 Act]. Accordingly the Tribunal's nett compensation award, but for the statutory maximum, should have been £19,737. The effect of the statutory maximum was thus to discount the nett award by approximately 50%. If the Tribunal had itself applied the same discount the result would have been broadly the same. The Appellants would have paid, and Mr Boorman would have received substantially the same figure.It is not for us to speculate whether, if this case were remitted, the Tribunal would make any discount from its compensation award. Nor do we offer any opinion of our own. But the views expressed by the Tribunal in paragraphs 27 - 29 of its decision of 17th March give a clear indication that a discount of more than 50% would be unlikely in the extreme. We have come to the conclusion therefore that no useful purpose would be served by our remitting the case.For these reasons we reject Mr West's second submission. The appeal will be allowed only to the extent that Mr Boorman's basic award is reduced to nil.