Dacombe v Medway [1994] UKEAT 569_92_0407

EAT
Dacombe v Medway
[1994] UKEAT 569_92_0407 · 1994-07-04

JUDGE HULL QC :

This is an appeal to us from the Industrial Tribunal sitting at Southampton on 6 July 1992 under the Chairmanship of Mr Gorst. To that Tribunal Mr Medway had complained of unfair dismissal by Mrs Dacombe, the proprietor of Woodhill School, Botley in Hampshire, where he was employed as headmaster. He is a man now aged about 45 and of course an experienced schoolmaster.In January 1989 he, with his wife, had an interview with Mr and Mrs Dacombe and terms were discussed for the employment. Mr Medway said that he expected to be paid on Burnham Scale 2. He said what he was being paid at the moment. Mrs Dacombe said we can match that. It was agreed, according to Mr Medway, whose evidence generally was accepted by the Tribunal, that what would happen would be that when the number of pupils increased as was expected, to the point at which Burnham Scale 2 would become operative, then that sum would be paid. On that basis Mr Medway began work as headmaster on 3 April 1989, the beginning of that term. He also said, and again his evidence was broadly accepted by the Industrial Tribunal, that he had made enquiries about the qualifications of some of the teachers there, obviously a matter of interest to a headmaster, and had been given to understand that various people had qualifications as teachers.There was some unhappiness. There was an inspection by a voluntary body called ISIS concerned with independent schools. That was invited by Mrs Dacombe with a view to obtaining their assessment of the school and as a result of that visit Mr Medway became aware that the excuse which had been given to him, as he said, for not paying him on Burnham Scale 2, namely that there was not enough money, was false and that there was plenty of money; and he also became aware that teachers whom he understood were qualified, were not qualified, so he felt he had been deceived and according to him this led him to feel he should not go on at the school.There was a meeting on 8 July 1991 and after that Mr Medway gave notice to expire at the end of the winter term, that is to say in December. Matters continued unhappy between the parties and eventually he said he would rather go at half-term, the middle of October, and that apparently was agreed between him and Mrs Dacombe. He then complained to the Industrial Tribunal. I should say that it was common ground that in addition to his salary he was entitled to have his two children, a son and daughter, educated free of charge in the sense that, as Mrs Dacombe put it "we forget to send the bills to members of staff". That was of course something of a perk, quite what the revenue treatment of it should be we do not know. We were referred to Pepper v Hart [1993] ICR 291 , a case in which certain school masters at a famous school had paid only the marginal cost of the education of their sons at the school and the House of Lords held that they were entitled to be assessed merely on the marginal cost.That was part of his claim for unfair dismissal and the Industrial Tribunal heard the evidence. They heard Mr Medway and his wife. They also heard Mrs Dacombe. These matters were considerably disputed, and in particular Mrs Dacombe denied that she had so to speak "cheated" over pay, and she denied that she had said anything false with regard to teachers' qualifications. The Tribunal having heard the parties had to say what they thought about that and they held, broadly speaking, that it was Mr Medway who was telling the truth. He was supported by his wife and they preferred his evidence to that of Mrs Dacombe. They said of her:"...if [she was] not actually telling us untruths [she] was seemingly at best defective in recollection".They had to deal with the events and the effects of these events, which I have already described in outline, on the rights of the parties.It was said that dismissal (and it was of unfair dismissal that Mr Medway complained) takes place, among other things, if there is a repudiation by the employer and if the employee elects to accept that repudiation as terminating the contract and does so whether by leaving immediately or on notice. With regard to repudiation for the future, that is to say anticipatory breach, that is a mere threat of repudiation or promise that a repudiation is coming. One party says for the future - I will not be bound by the contract. It is then, of course, established by the authorities that it is essential for the other party to say, if he wishes to do so, that he accepts that as terminating the contract.In the case of breaches which have actually taken place (and that was the position here) it appears to us that the position is not so clear. A breach may take so unpleasant and obvious a form that there really is no need for acceptance. For example the behaviour of one party may be so appalling in the personal relationship of a contract of service that the other party walks out and does not come back; it might be thought in those circumstances that any explanation is out of place. But Mr Dineen, on behalf of Mrs Dacombe, takes as his first point that it is the duty of the innocent party, where the other party is guilty of a breach which goes to the root of the contract, to say - "I am terminating the contract on that ground". Mr Dineen could have cited, but I do not think actually did cite, from the authority which said "that a breach which is not accepted is a thing writ in water". Mr Dineen says that there was no material on which the Tribunal could have found that on 8 July Mr Medway said why he was ending the contract. On the contrary, says Mr Dineen, what he in fact did was very shortly thereafter to tender his notice, ending the contract at the end of December and to do such a thing, so far from being an acceptance of a breach as terminating the contract, is on the face of it an affirmation of the contract because it is saying the contract is to continue and I will end it in accordance with its terms.It is true Mr Dineen has to contend with what is said in section 55 of the Employment Protection (Consolidation) Act itself where it is provided that subject to an immaterial exception:
"...an employee shall be treated as dismissed by his employer if, but only if, - (a) the contract under which he is employed by the employer is terminated by the employer, whether it is so terminated by notice or without notice, or (b)... (c) the employee terminates that contract, with or without notice, in circumstances such that he is entitled to terminate it without notice by reason of the employer's conduct."
Even so, says Mr Dineen, it must be made plain to the employer that this is a termination on the ground that the employee is entitled to do it in those circumstances, or otherwise it would be quite impossible for the employer to know how to proceed at all. It is all very well for Parliament to say that the employee can terminate with notice but he must, in addition, say in effect "you were guilty of a breach which goes to the root of the contract and I accept that breach as terminating the contract". Mr Dineen refers first of all to those two passages in the Tribunal's decision in which they deal with this matter. They say at paragraph 7:
"On 8.7.91 the applicant approached the respondent and suggested that the inspectors' verbal recommendations be implemented but she declined. He told her that he was resigning because of her breach of contract, but did not discuss the breaches with her. He said that he had been content to continue on the low salary because the respondent had led him to believe that there was no money available to implement an increase and resigned because he had been deceived and lied to by the respondent over that and the lack of qualifications of the staff working under him and of the respondent."
We read towards the end of paragraph 9:
"We find that at the meeting on 8.7.91 the applicant told the respondent why he was resigning."
In other words that he had been lied to and underpaid and deceived and they preferred his evidence to that of Mrs Dacombe's.To make good his submission Mr Dineen took us to the Notes of Evidence and at page 34 there is a note that whilst Mr Medway was being cross-examined he said:
"On 8.7.91 I approached Mrs Dacombe with ISIS Inspectors spoken report & suggested to her their recommendations should be implemented but she wouldn't agree. I didn't discuss breaches of contract"
"and that", says Mr Dineen, "was precisely the answer I was seeking to extract". He never did tell Mrs Dacombe, as indeed she said in her evidence, and it is all very well to prefer the evidence of Mr Medway to that of Mrs Dacombe but here was Mr Medway himself confirming it.If one is to look at that one says to oneself - well, the Tribunal seems to have had a quite different recollection, all three of them, from that and so one looks to see whether indeed that is the position and that is the only evidence on the topic and immediately above one sees this:
"I did not write telling her that I was tendering resignation because she was in breach. I had discussed it with her at an earlier meeting on 8.7.91."
and I suppose it is not being too imaginative to insert where that fullstop is the word "because", because he is accounting for an answer he gives in cross-examination. It seems to us that he is saying there that he did not write to her saying why he was tendering his resignation because he had discussed it with her.He says a little further in his cross-examination:
"The resignation was because I'd been deceived. The original agreement had not been implemented. I'd been deceived.."
He also said:
"At meeting on 8.7.91 there was no meeting of minds...
I went to the meeting on 8.7.91 in knowledge that I had no intention but to resign.and then the Tribunal asked him about it and he replied:
"At meeting on 8.7.91 I told Mrs Dacombe that Inspectors had indicated that there were in fact sufficient funds available - she said more money wouldn't make a better school or see that we could employ better staff."
That of course was precisely part of one of his complaints, that she had deceived him. The money was there. She could pay him what she had promised to pay and he raised that, he said, at that meeting.We have to remind ourselves that the Tribunal heard the evidence and we did not. The Chairman's Note in the nature of things is not a shorthand note and it does not purport to be an accurate transcript of every word that was said.We do not feel that we can say that there was no evidence here entitling the Tribunal to make the findings of fact which they did, namely that he told Mrs Dacombe on 8 July that he was resigning because of her breach of contract and that he told the Respondent why he was resigning. It was because of her breaches of contract. We think that notwithstanding the answer which Mr Dineen extracted and which is recorded by the Chairman there was material here on which the Industrial Tribunal were entitled to reach the conclusion which they did. There was material which shows that he did say why he was resigning and he then resigned on notice precisely as the Act says he is entitled to do and in those circumstances he is entitled to say "I was dismissed". That is the principal point in the appeal and we think that it falls to be dismissed for the reasons which we have stated, simply looking fairly at the evidence and the decision of the Tribunal.There were other points put forward by Mr Dineen. He says that in assessing the compensatory award they wrongly awarded to the Applicant the value of his two childrens' education at Woodhill School for the autumn term of 1991, since the Tribunal found that free schooling to the value of £600 per child per term was part of the Applicant's remuneration package; that the Applicant gave notice to expire on 31 December 1991 and elected therefore to continue receiving his remuneration package until that date and the Applicant could have continued to have his children educated at Woodhill School until 31 December 1991 but waived that entitlement.Mr Dineen puts his points simply contractually. He says very possibly, if the Tribunal was right in finding that there had been here a constructive dismissal, Mr Medway would be well entitled to take his children and himself away there and then, but he did not. He said, perhaps out of consideration for the pupils, perhaps for all sorts of reasons - "I will stay on for a bit, I will not leave at once". Having done that and said he would stay on until the end of December then as a matter of contract he elected to continue the contract, being entitled to do so at his election until the end of the winter term. Therefore he was entitled to have his children educated at the school during that period, free of charge. Therefore his act in withdrawing them was a waiver of that right and as a matter of elementary contract law he is claiming as compensation something to which he was not entitled, having waived the right to have his children educated free. He was not in a position to claim it, or the value of it.We can certainly see the force of that argument if Mr Medway had been claiming damages for breach of contract, but he was not. He was claiming compensation for unfair dismissal. The Tribunal dealt with this point by saying:
"We find that it was reasonable for him in the circumstances not to return his children to the respondent's school."
After all, it might be alright for him to continue for another term but from the children's point of view it would be much more desirable for them to start at the beginning of the academic year by going to the new schools to which they would have to go anyway.It has been said that in assessing compensation the Tribunal is not reduced to a precise calculation. There is an element of discretion. They must look broadly at the picture and say what compensation is right and proper in all the circumstances. Here they were in our view entitled to take the view that even if Mr Medway said (for various reasons we are not concerned with) "I will go on myself" it was yet reasonable for him, in view of the breach which had occurred, to say "but my children will not stay there. I will remove the children in September and start them at their new schools now". That was assessing compensation, with regard to this element, on a different basis from that, perhaps, on which contract damages would be assessed. The Tribunal having taken that view said it was reasonable for him to remove the children from a school where there was much to criticise, as the Tribunal of course had found, because of the lack of qualifications of teachers and the lack of honesty of the proprietor. We ask ourselves why should they not, taking a broad view of the loss which was suffered, take that view? We think that this is a point which, analysed like that and treating the Industrial Tribunal as entitled to take a broad view of the matter, is one which is not a point of law which we can interfere with, nor do we think there is any injustice involved in the decision of the Tribunal on this point.Then the third point which is taken on appeal is this. In assessing the compensatory award the Tribunal wrongly awarded to the Applicant the value of two years' education which his son would have received had it not been for the Applicant's dismissal since the Respondent did not enter his son for a fee-paying school after the summer term of 1991 and the Respondent's son's education continued at a state school without the Applicant being required to pay fees therefore.Accepting that statement, as of course we do, it appear to us that what the Tribunal were first and foremost concerned to do was to compensate the Applicant for what he had lost and what he had lost, among other things, as part of his remuneration package, was the right to have his son educated free of charge at the private establishment at which he was headmaster. It appears to us therefore that it was open to the Tribunal, as a matter of law, to say - notwithstanding that the son was entered in a state school and that there were therefore no fees to pay for him, nonetheless what the applicant had lost was, as part of his package, the right to have the son educated free of charge at a private school and that should be valued and made the subject of a compensation award. To make this a little more comprehensible I would add that the daughter was educated free of charge at the school of which Mr Medway then became headmaster, so no claim arose for her apart for the one winter term when she was away from the school. So we do not think, again, any point of law arises there.The fourth point on the appeal is that in assessing that part of the compensatory award relating to school fees, the Tribunal wrongly awarded the Applicant sums without deductions in respect of(a) the benefit of accelerated receipt or(b) the incidence of taxation. Again, this appears not to have been a point which was discussed in detail and when Mr Saunders was addressing us on this point he was unable to tell us how the taxation should have been calculated, what allowance should be made for certain sums which apparently Mr Medway himself put in or anything of that sort. We noticed that the Tribunal were making no allowance for the possible incidence of taxation and no discount for accelerated receipt. Equally they took no account of inflation and at that time of course inflation was much greater than it is now. So it appears to us that again there they were taking a very broad approach to this. They did not hear submissions about tax or acceleration, or if they did they thought it right, in view of the very short period and the fact that the value indeed had been given without, apparently, the inspector taking the view that it was taxable, that having heard little about it they were not going to make any discounts on that account.So we do not think, looking at it in a very general way, that any point of law is disclosed here. Authority was cited to us that a Tribunal is not obliged to make a discount for acceleration. We accept that authority. They may think it right to do so or they may not and we think the same applies to income tax. They are basically arriving at a broad assessment. If they were calculating these matters as a Court of law has to do they would have to consider many further principles of law and they would have to consider accountants' evidence and it is not the practice for Industrial Tribunals to assess loss and compensation in that way. We think they were entitled to adopt a "broad brush approach" in the way that they did, so we find no points of law arising in the appeal.With regard to the cross-appeal which is pursued by Mr Saunders on behalf of Mr Medway, that raises the following point. The Tribunal found that Mrs Dacombe had said that as soon as the number of pupils justified it she would raise the pay to Burnham Scale 2 and indeed he apparently has sued on that basis for arrears of salary which should have been paid and were not during his period as headmaster up to the end of 1991. Now, says Mr Saunders, in assessing future loss, the Tribunal should have said - well we must assess that on the basis that Mr Medway has been deprived of Burnham 2 earnings and therefore he is continuing to suffer a substantial loss of earnings in his new appointment. That certainly is a possible point of view but it is not one which was urged upon the Tribunal. Indeed what Mr Saunders has said to us today is this - when the Tribunal said: well it looks as though pay increases which were not paid should be the subject of a civil action, that is not a matter which we have to do with, Mr Saunders should have said: - well that may be so with regard to past losses but with regard to the future you must take this into account. Mr Saunders said to us today: - I admit that I should have said that future compensation was to be based on Burnham 2 but I did not.There is a general principle of course that as we are here to correct errors of law by the Industrial Tribunal, if a matter is not put to them we have no jurisdiction; because they have in effect made no error. A matter which is not put to them cannot be relied on, but it goes a great deal further than that.If the Tribunal had said they were going to approach it from that point of view, they would have had to ask themselves all sorts of questions. If Mrs Dacombe had been paying Burnham 2 - which was over £21,000 per year as opposed to the £15,000 odd a year which she was paying - would she have allowed Mr Medway to stay on? Would she have cut his employment short? Would he, perhaps, have been criticised for accepting a salary in his new employment so very much below what his market value evidently was in the job market? How long would it have taken him to find employment at Burnham 2? Would he have found such employment at all? What was the value of his daughter's right to free education in the new school? Perhaps it might be a great deal more than it was at Mrs Dacombe's. All those questions would have to be considered and assessed by the Industrial Tribunal. Instead they adopted the simple straightforward and commonplace method of saying - well we will take what he has been earning, and look to see whether he is earning any less in his new employment, and so they did not consider any of the questions which we have mentioned.It seems to us that in all the circumstances, the point not having been taken before them and urged upon them and since it would require reassessment, possibly very much to the disadvantage of Mr Medway, we ought not to fasten upon that point. It was a possible view which the Tribunal could have taken. We do not think as a matter of law they were obliged to approach it in that way. In every other way it seems to us they approached the matter both in regard to school fees and with regard to the period for which they allowed them on a basis very favourable to Mr Medway.The thing has to be weighed as a whole. It was not put to them and therefore cannot be insisted upon as a ground of appeal and we think, looking at it as fairly as we can, we ought not to interfere with an assessment of compensation which was eminently a matter for the commonsense and experience of the Industrial Tribunal with their two individual members experienced in commercial and local matters. The Tribunal had to do the best they could in the circumstances and we find no error of law in their assessment of the compensation.Therefore for the reasons which I have endeavoured to express we find that both the appeal and the cross-appeal should be dismissed.In March last year the Appellant, Mrs Dacombe, said "I will withdraw my appeal if you withdraw your cross-appeal". Mr Medway through his representative said "No. We are not prepared to do that" and so the matter has gone on. We think that that was a very reasonable suggestion by the Appellant and we think that to go on after that justifies the description unreasonable and unnecessary, particularly when we consider, what we have said in our Judgment, that the sole point that was pursued in front of us was a point which could have been and should have been put to the Tribunal and which was not, being a matter which was very much a matter of discretion for them and where we felt quite unable to interfere.In all the circumstances we think that Mr Medway should pay one half of the costs since 1 April 1993 to be taxed if not agreed.