Le Marechal v WSS (Western) Ltd [1994] UKEAT 264_92_1805

EAT
Le Marechal v WSS (Western) Ltd
[1994] UKEAT 264_92_1805 · 1994-05-18

JUDGE HULL QC :

The Judgment which I am about to give is the Judgment of us all. Mr Le Marechal is aged 44 and he became the managing director of a family company, which had been founded by his grandfather in 1948. On 1 April 1977 he became managing director of this Company, the Respondents in this case, and by 1984 he was the sole shareholder. In January 1988 the business was sold and there was a rearrangement of shareholdings; the plaintiff retained a 25% interest. At that date he was given a 5 year contract as managing director.In 1988 the Company made a move of a few miles, no doubt at the behest of its new owners, and on 30 January 1989 there was a new contract of employment which was to continue until 13 January 1993. 1989 became an unhappy year from the point of view of the Company. The business of the Company, supplying stationery and printing, was one in which there was a good deal of competition and a good deal of spare capacity and the new owners of the Company (I go into no details at all), treated Mr Le Marechal in a very unsatisfactory way. He decided, after some very complicated comings and goings which we have all read about but which we certainly do not need to go into, to treat his contract of employment as being at an end. He said, and said rightly, that the circumstances were such that he was entitled to terminate his contract of employment. There were breaches which went to the root of the contract.Among other things he had been bullied and harassed and threatened by those in charge of the Company and he had been humiliated; those matters well justified him in terminating his contract, indeed eventually that was admitted. His contract was terminated on 23 September 1989 by his own act when he accepted those breaches as terminating the contract.He applied very shortly afterwards to the Industrial Tribunal complaining that he had been unfairly dismissed and those proceedings were held in suspense while he brought common law proceedings for damages for wrongful dismissal in the High Court. The action was tried eventually in the Mayor's and City of London Court by Judge Oddie. We have all read Judge Oddie's Judgment. It is a very long document in which he deals with immense care with the events which had occurred and concluded that there had been a dismissal; that is to say there had been repudiation by the employers. He went into a great deal of detail about all the circumstances. Paragraph 17 of his Judgment considers the question of damages.It is said that there are certain errors in the learned Judge's conclusions; one of which apparently founded an appeal to the Court of Appeal which was unsuccessful. Amongst the things which one's eye lights upon in looking at this Judgment is the fact that the Plaintiff's salary was put by the learned Judge at £16,000 whereas he says he was receiving a good deal more than that. £16,000 apparently was the minimum contractual amount. Then the learned Judge for certain purposes was invited to assume and did assume a regular increase in the retail price index of 9% a year. That of course would be favourable to the plaintiff. Then the Judge made what is said to be an important error in calculating tax for the purpose of "grossing up" before taking into account tax considerations, a complicated calculation which has to be done in cases like this. It is said he made an error there which was favourable to the plaintiff. He then made a deduction for sums which the plaintiff would earn during the period of the contract and also made a very substantial deduction to allow for acceleration of receipt and he arrived at a total of £64,324 which he said was the damages which the plaintiff had suffered at common law through the wrongful breach of contract of the employers in terminating his contract on 23 September 1989 when it should have continued until 13 January 1993 as a matter of contract.Mr Le Marechal had tried, after losing this employment in the family firm, to set up another business along the same lines. In spite of his talent and experience he had not made a success of that and had not made any net profits and he felt obliged to stop. All these matters are set out in Judge Oddie's Judgment. Mr Le Marechal had taken the decision to make a real change of career. He decided that he would train as a teacher. He had a degree in engineering and found that he could train as a teacher in a one year course at Bath University and at the end of that time would expect to be employable as a teacher of physics and other subjects.At that time he had hopes that his earnings would amount to £18,000 - £22,000 p.a. as a teacher, although by the time he appeared in front of the Tribunal his expectations were lower and he said he thought that he would earn £15,000 or thereabouts.This case came before the Industrial Tribunal at Bristol, sitting under Mr Woods as Chairman, with his two Industrial Members, and the Industrial Tribunal addressed themselves to the question of the compensatory award which should be made under section 74, for it was admitted that there had been a dismissal and that it was unfair. There was no doubt that the Applicant was entitled on any view to his basic award, which was a substantial one, and under the compensatory award to something for his loss of statutory rights, the nominal sum of £100; and so they considered the question of a compensatory award. They set out the facts which we have mentioned and they alluded to the Applicant's prospects of starting in employment as a teacher. In paragraph 3 (they had rightly directed themselves that they were dealing with loss for the future from 13 January 1993 onwards) they said:
"3 Every compensation case is different and has to be considered on its own facts. We have been referred to a number of authorities by the parties solicitors. Whilst they are helpful insofar as they lay down points of principle we must deal with the matter according to the wording of the statute. In relation to a compensatory award of compensation Section 74 says:
"... 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 in so far as that loss is attributable to action taken by the employer."
In this case the applicant has received damages from the Court which, in effect, compensated him for his losses for the whole of the remainder of the term of his fixed term contract. Therefore the respondents have, in effect, discharged in monetary terms their full contractual liabilities under that agreement. The applicant has now chosen to leave the business in which he was employed by the respondents and to enter the teaching profession. We make no criticism of him in that respect. We could not do so. He has in our view taken sensible steps in that respect. It will, however, at least initially, produce lower earnings than he would have earned under this contract of employment.4 The question of whether this contract would have continued beyond 13 January 1993 is one of speculation to such an extent that it is, we find, impossible to speculate about it one way or the other. It is also impossible to speculate as to whether it would have been fairly brought to an end. Trading conditions in the respondents' industry are tough and uncertain. This is shown by the fact that the applicant set up a business in that industry called Professional Stationery Ltd after he was dismissed which he had to close down at the end of August 1991 having sustained considerable losses.5 The applicant's position in the teaching profession is clearly going to be such that the amount that he will earn initially in that profession is less than the amount that he would have earned with the respondents if his contract with them had continued. It is a matter of pure speculation as to how matters will ultimately turn out. There can be no certainty as to what will happen in the future. It is quite possible that ultimately the applicant's new chosen profession will provide him with a better standard of living than he would have had if he had continued in this employment."Pausing there, the Industrial Tribunal had of course to carry out an exercise as best they could looking first of all at what would have happened if the applicant had not been treated unfairly - that is one matter which may contain many imponderables - and, secondly, what was likely to happen in the future in the circumstances in which he had been treated unfairly and was doing his best to mitigate his loss. That, too, in these circumstances particularly, involved imponderables. It may be a relatively simple task in the case of a man who is unfairly dismissed from secure employment in which he has been employed for a number of years where it is clear that that employment would have been expected to continue, and has gone to other secure employment where there is every reason to suppose that that employment as well will continue for a substantial period. In those circumstances what the Tribunal has to do is to look at the net loss over such period as it thinks that that loss is likely to continue. For example the man may have suffered a net loss of earnings of, say, £10 per week and the Tribunal may conclude that that is likely to continue for a period of perhaps 6 months or a year, that will depend on the evidence and their knowledge of industrial conditions. Of course the man who is dismissed may not have found work. The Tribunal will then have to put their minds to the future and say how long they think it is likely to be before he obtains new work and again they are dealing in imponderables. At the end of the calculation, having worked out what his position would have been as best they can and what it is going to be in the circumstances as best they can, they of course carry out a subtraction sum. Having arrived at that loss they must decide what is just and equitable having regard to other matters, possibly, than the ones we have mentioned.In effect Mr Dalgarno, on behalf of the applicant, has told us that this Tribunal should have done exactly that in this case. There was, he says, no evidence whatever that this contract, having gone its proper length, would not have continued for a substantial period: the Tribunal should therefore have worked out the earnings which were likely to be received under the contract and they should have done the sum which we have mentioned, having regard to the finding that if the contract of employment had continued then in those circumstances the earnings would have been higher than they would have been, initially at any rate, in the case of a teacher starting on a beginner's wage in the teaching profession. He says the Tribunal failed to do that and in those circumstances they failed to do their duty in a proper way and failed to exercise their discretion properly.We cannot accept this criticism of the Industrial Tribunal's decision. They, of course, had two Industrial Members as well as their legal Chairman and were well qualified to say what they thought the prospects were of the continuation of this contract after the last date to which it was bound to continue, that is to say 13 January 1993. They said that they regarded the prospect of its continuation as entirely speculative. "The question of whether this contract would have continued beyond 13 January 1993 is one of speculation to such an extent that it is, we find, impossible to speculate it one way or the other". They had seen the judgment about the very unsatisfactory way in which the applicant was treated by the new owners of the business. One of those gentlemen had said he would "rather wind-up the business" than continue with the Applicant. This was one of the threats he made. In those circumstances it was indeed, one would have thought, and as this Tribunal found, speculative to say that this contract of employment was likely to extend beyond the bare minimum, to 13 January 1993.The Tribunal were also looking at the other side of the equation, which was very speculative too. The applicant would receive lower earnings than he would under the old contract at first, but he was not a complete beginner. He was a man with long experience in business. He was a man who was well qualified. How many teachers have a degree in engineering? The answer must be relatively few. He had conscientiously applied himself to qualify for the teachers profession in the one year course. Both the learned Judge and the Tribunal accepted without any hesitation or difficulty that that was an entirely reasonable course. So here was an exceptionally well-qualified teacher with experience outside the teachers' profession which would probably be very valuable to him; so it might well be, as a speculative matter, that his earnings would quickly climb and that he would be entrusted with responsibilities in the teaching profession which would result in his receiving substantially higher earnings, perhaps responsibilities of an administrative sort or as head of a department, something of that sort. Those were all matters which were speculative.This case appeared to the Tribunal and appears to us to be completely different from the ordinary case of a man who is dismissed from secure employment unfairly and who then finds other employment where his earnings are quite clear. It is different in every way. The two authorities which have been referred to, though entirely correct in their context, have little if anything to do as a practical matter, with the decision in this case. The Tribunal were entitled to say that they were quite unable to find that there was any loss from 13 January 1993 onwards and they were therefore not able, even weighing imponderables as best they could, to say that there was any loss and to quantify it. Whether there was to be loss or profit from these unhappy events after that date was a matter which they could not assess. In our view they were well entitled to take that view.Finally, there are criticisms by the applicant of paragraph 6. In that paragraph the Industrial Tribunal said:
"In all the circumstances having regard:- (a)to the above-mentioned provisions of Section 74 of the Act: (b)to the amount which the applicant has received by way of damages from Court: (c)to the fact that part of those damages have been paid in advance of the date that it would have been paid under the contract: (d)to the fact that the respondents' contractual liabilities under the contract of employment have, in effect, been discharged by the payment of those damages,
that it would not be just and equitable to award any sum in respect of continuing loss of earnings. We shall not therefore make any award for continuing loss of earnings."They are criticised for having taken those matters into account. It seems to us that all they were doing was saying "we have regard to all that we have said above, and section 74, and to the fact that this applicant has been perfectly compensated by the Court in respect of the period up to 13 January 1993: we do not think it right to make any award for continuing loss of earnings". They then went on to calculate the basic award and to assess the loss of statutory rights.It does not appear to us that there is any error of law in the way in which this Tribunal exercised its discretion, or endeavoured to arrive at conclusions on matters which were essentially imponderables. They asked themselves the correct questions and have correctly distinguished between what can be weighed, albeit as an approximation or matter of probability, and what is completely speculative; and having decided that future lost earnings if any, were a matter entirely of speculation, they said "we do not propose to make any compensatory award in that respect".In those circumstances the appeal has to be dismissed.