Soros & Anor v Davison & Anor [1994] UKEAT 22_92_2401

EAT
Soros & Anor v Davison & Anor
[1994] UKEAT 22_92_2401 · 1994-01-24
MR. JUSTICE TUDOR EVANS : On the 7th May 1991, an Industrial Tribunal sitting at London South held that the Appellants had, in September 1990, unfairly dismissed the Respondents, Mr. and Mrs. Davison, who were employed by them as butler and chauffeur and cook and housekeeper respectively. The Respondents were found not to have contributed to their dismissals.After the finding of unfair dismissal, the Appellants sold information about their employment to the Sun newspaper which was published in the issues of the 13th and 14th May 1991. The Appellants then began proceedings in the High Court seeking to restrain the Respondents from disclosing confidential information about the Appellants' lives in breach of an alleged implied term in their contracts of employment and of an alleged duty of confidence arising from the relationship of employer and employee. On the 10th June 1991, the Appellants obtained an injunction ex parte from Mummery J. restraining the Respondents from disclosing confidential information and, on the 17th June, Mummery J. continued the order until trial at an inter partes hearing.The Appellants then applied for a review on the issue of unfair dismissal on the basis of a claim of fresh evidence and on the further ground that the interests of justice demanded a review since the Respondents had disclosed confidential information to the newspaper in breach of contract and of their duty of confidentiality. On the 16th September 1991, the Tribunal dismissed the application for a review.Next, the Appellants applied to the Tribunal for a stay on the hearing of the issue of the remedy for unfair dismissal on the ground that the Respondents, in breach of their duties, had sold their story to the newspaper, that the determination of the issue of breach of duty was essential both in the High Court proceedings and in those before the Tribunal and that the law relating to the confidentiality was more appropriately considered in the Chancery Division.The approach adopted by the Tribunal, as is indicated in paragraph 3 of the decision of the 14th November 1991, was that the Tribunal should decide the relevance of the Appellants' contentions to the issue of remedy because, if they were not relevant on that issue, a stay ought not be granted. For this purpose, the Tribunal assumed, without deciding, that the Appellants' contention of breach of an implied term and breach of duty was true. The issue which the Tribunal had to decide was whether the breach of duty alleged by the Appellants, having occurred after the finding of unfair dismissal, was relevant to the determination of the question of remedy. This turned upon the proper construction of the language of Section 74 (1) of the Employment Protection (Consolidation) Act, 1978. The Tribunal concluded that the post dismissal conduct upon which the Appellants relied was not relevant to the issue of remedy and refused to stay the proceedings. In paragraph 10 of the decision, the Tribunal added an alternative ground for refusing a stay:
"The employers' claim is based on a cause of action outside the statutory jurisdiction of Industrial Tribunals and is connected with the dismissal only insofar as the dismissal and resulting Tribunal proceedings provided the Applicants with the opportunity for the commission of the actions of which the Respondents claim."
On behalf of the Appellants, Mr. Wallington submitted that the Tribunal erred in law when it ruled that the conduct of the Respondents was not relevant to the issue of remedy. He also submitted that the Tribunal was wrong in law in holding, as it did in the passage from paragraph 10 which we have just quoted, that the claim in the Chancery Division was outside the jurisdiction of Industrial Tribunals.Section 74 (1) of the Act of 1978 provides, insofar as the language is material:
". . . . . the amount of the compensatory award shall be such amount as the tribunal considers just and equitable in all the circumstances having regard to the loss sustained by the complainant in consequence of the dismissal insofar as that loss is attributable to action taken by the employer."
Mr. Wallington submitted that the over-riding consideration which is to be derived from a proper construction of the language of the sub-section is that an award must be made which is "just and equitable in all the circumstances" . The words which follow in the sub-section indicate that regard must be had to the employee's loss which is the result of the dismissal but these words cannot prevail over that which, in all the circumstances, is just and equitable. In order to decide what is just and equitable, it is necessary to look at what had happened: here, there was a continuing duty under the implied term and arising from the relationship between the parties and the acts of the Respondents amounted to breaches of contract and of duty which must be brought into account. Mr. Wallington advanced two propositions: first, conduct post-dismissal but prior to the determination of remedy, relevant to the contract or the relationship inter partes, may be taken into account by an industrial tribunal in determining what award is just and equitable. This approach would encompass matters not involving breach of contract but it would encompass acts in breach of the equitable duty of confidentiality or other conduct by the employee intended to damage the interests of the employer and it would give full range to the statutory words "in all the circumstances" . The alternative and narrower approach to which Mr. Wallington referred is that an industrial tribunal should take into account, when determining what is just and equitable, events which have occurred subsequent to the determination of the contract of employment and which involve a breach or breaches of it.Counsel contended that the conclusion that the over-riding consideration must be what is "just and equitable" follows from the plain wording of the sub-section and that such a construction is consistent with statutory policy: for example, the language of Section 57 (3) of the Act which requires a tribunal to decide the reasonableness of the dismissal in accordance with equity and the substantial merits of the case. Moreover, the construction for which the Appellants contend, is said to be supported by two authorities, W. Devis and Sons Ltd v. Atkins (1977) ICR 662 and Courage Take Home Trade Ltd v. Keys (1986) I.C.R. 874.It is first convenient to consider these authorities. In W. Devis and Sons Ltd v. Atkins , the employers dismissed the employee and made an ex gratia offer in lieu of notice. Before the employee could accept the offer, it was withdrawn because the appellants discovered that the employee had been guilty of gross misconduct. The misconduct had occurred before the employee was dismissed but the employers were unaware of it until after dismissal. In subsequent proceedings for unfair dismissal, in support of their contention that the dismissal was not unfair, the employers sought to rely on the information which had come to their knowledge after the dismissal. The industrial tribunal refused to admit the evidence, concluding that facts discovered after dismissal were not relevant to the question whether the dismissal was unfair. In the House of Lords it was held that, under the relevant statutory provisions, the determination of the question whether or not a dismissal was unfair depended on the reason for dismissal shown by the employer and that matters of which the employer was unaware at the time of dismissal could not form part of that reason. A tribunal was concerned with the conduct of the employer and not with the question whether the employee had suffered any injustice by being dismissed. If, in the Tribunal's view, the employer had failed to satisfy it that he acted reasonably in treating the reason shown as a sufficient reason for dismissal, then it was unfair. Subsequent knowledge could not be relevant to that question. However, the House of Lords also concluded that, when assessing the amounts of compensation to be awarded to the employee for his unfair dismissal under paragraph 19 (1) of Schedule I to the Trade Union and Labour Relations Act , 1974 (the equivalent of Section 74 (1) of the Act of 1978), evidence of misconduct committed before dismissal but discovered subsequently by the employer was relevant because compensation should be of such an amount as was "just and equitable in all circumstances" and it could not be just and equitable for the employee to be compensated when, in view of his subsequently discovered conduct, he had suffered no injustice by being dismissed.The passage upon which Mr. Wallington relied is contained in the speech of Viscount Dilhorne at page 679 of the report where he said:"Paragraph 19 (1) requires the compensation to be "such amount as the tribunal considers just and equitable in all the circumstances having regard to the loss sustained" by the employee in consequence of the matters to which the complaint relates in so far as that loss was attributable to the action taken by or on behalf of the employer. The paragraph does not . . . . . provide that regard should be had only to the loss resulting from the dismissal being unfair. Regard must be had to that but the award must be just and equitable in all the circumstances and it cannot be just and equitable that a sum should be awarded when in fact the employee suffered no injustice by being dismissed".Three other members of the House of Lords agreed with this construction. Lord Simon of Glaisdale (at pages 683 - 684 of the report) said that he considered that the natural meaning of the words of paragraph 19 (1) was that the words "having regard to the loss sustained . . . . ." governed the words "just and equitable in the circumstances" but that he did accept the construction which the majority regarded as the natural way of reading the words.In our opinion, the House of Lords in W. Devis and Sons Ltd v. Atkins (supra), in the passage upon which reliance is placed, held that when assessing compensation for unfair dismissal, a tribunal should have regard to the loss sustained in consequence of the dismissal but then it should ask itself whether it is just and equitable that the employee should be compensated, fully or at all, for that loss bearing in mind all the circumstances, including the fact, if it be so, that during his employment, the employee had been guilty of such misconduct as would have justified his dismissal had the employer been aware of it. We do not consider that the House of Lords intended to lay down the far reaching proposition that any misconduct, even if committed after the employee had been dismissed, should be brought into the scales of assessment. In our view, Section 74 (1) of the Act is concerned with events which have existed during and not subsequent to the contract of employment. That is the plain meaning of the language of the sub-section and the contrary construction is not supported by taking a single sentence from the speech of Viscount Dilhorne out of its context. A contrary construction could lead to unacceptable results. A term, such as is said to have been implied in these contracts of employment must be a continuing term: it does not come to an end with the dismissal of the employees. The obligation of confidentiality must continue thereafter to be given proper effect. If the argument for the Appellants is well founded, it would mean that, perhaps many years after an award of compensation for unfair dismissal, the disclosure of confidential information by a former employee, in breach of the implied term, would justify an application for a review of the award of compensation.In our opinion, the construction of Section 74 (1) advanced on behalf of the Appellants is not supported by Courage Take Home Trade Ltd v. Keys (supra). In that case, an Industrial Tribunal had held that the employee had been unfairly dismissed and that he had not contributed to his dismissal. The question of remedy was adjourned. Before the matter came back to the Tribunal, the employer had paid to the employee £9,500 which, it was said, was paid and accepted in full and final settlement of the claim. When the hearing was resumed, the employee argued that his loss exceeded the amount he had received and that it was just and equitable for him to receive an additional payment. The Tribunal held that the agreement between the employer and the employee pursuant to which £9,500 had been paid was void under the provisions of Section 140 of the Act of 1978 but that it would not be fair to order a further sum to the employee. It held that it would be unfair. The employee appealed. In the Employment Appeal Tribunal, Popplewell J. said at page 881 of the report:"We have come to the clearest possible conclusion that it would be unjust and inequitable in all the circumstances if this employee were allowed to take advantage of the employers".Mr. Wallington relies upon the facts in Courage Take Home Trade Ltd v. Keys as showing that an act subsequent to the dismissal was taken into account and held to fall for consideration within the general words "just and equitable in "all the circumstances." But the facts were wholly different from the present case. We do not consider that the Employment Appeal Tribunal in Courage Take Home Trade Ltd v. Keys was intending to lay down the broad proposition for which the Appellants contend. Popplewell J. expressed the opinion of the Employment Appeal Tribunal quoting the language of Lord Reid in Post Office v. Crouch (1974) I.C.R. 378, at page 399 where he said:". . . . . The Act must be construed in a broad and sensible way so that legal technicalities shall not prevail against industrial realities and common sense".Mr. Wallington submitted that post-dismissal events are relevant on remedy as is shown in the cases on re-instatement. He referred to Nothman v. London Borough of Barnet (No. 2) (1980) I.R.L.R. 65 where matters which had occurred subsequent to an unfair dismissal fell to be considered when deciding whether re-instatement was an appropriate remedy. But, in our view, Section 69 (5) (b) which provides that an industrial tribunal shall take into account "whether it is practicable for the employer to comply with an order for re-instatement" , clearly envisages taking account of post-dismissal events and provides provision for doing so.For the reasons we have given, the conclusion to which the Industrial Tribunal came that the post-dismissal conduct was not relevant was correct in law and this ground of appeal must failIt is not necessary therefore for us to consider whether the Industrial Tribunal was right to hold that the Appellants' claim was based on a cause of action outside the statutory jurisdiction of industrial tribunals. We simply record that Mr. Wildsmith, on behalf of the Respondents, accepted that the Industrial Tribunal was wrong.