Garage Equipment Maintenance Co Ltd v Holloway [1994] UKEAT 582_94_1011

EAT
Garage Equipment Maintenance Co Ltd v Holloway
[1994] UKEAT 582_94_1011 · 1994-11-10

JUDGE HULL QC:

In this case, Garage Equipment Maintenance Co Ltd appeal to us from a Decision of the Industrial Tribunal sitting at Birmingham under the chairmanship of Mr Arrowsmith, with two industrial members. Mr Holloway, the employee of the Appellants, is a gentleman of 41 who was Managing Director of part of their business and there came a time when he was dismissed. He was dismissed on 1 October 1992, having been in the employment about six years. He earned £30,000 a year and he had a car and certain other advantages from his employment.Fortunately for him, he obtained new employment in roughly the same field which was the motor industry, manufacturing signs. His employment by the Appellants was in manufacturing signs for garages and selling them and he obtained other employment with a firm called Hawes at a reduced salary of £27,000 a year on 21 October 1992, but he complained on 23 November 1992, to the Industrial Tribunal, that he had been unfairly dismissed.The Appellants resisted that, and the next date to note in the story is this. On 1 April 1993, in circumstances which are not at all clear to us, and which the Industrial Tribunal did not investigate at all, his salary was reduced to £19,000 per annum.The Industrial Tribunal sat to hear the question of liability (if I can call it that), fairness or unfairness of the dismissal, on 1 July 1993 and they held, indeed, the contrary was not persisted in, that the dismissal had been unfair. It was necessary for them, therefore, to consider the question of compensation. They adjourned the matter and during the adjournment Mr Holloway left his job, at the end of August 1993, and he went into employment in a quite unrelated field. We know no details of that. He apparently then lost that employment too.Then there was the Remedies Hearing when the Tribunal sat on 17 March 1994 to consider remedies. They had to calculate compensation. They decided that they would award compensation in respect of net earnings loss under the Compensatory Award up to the end of August 1993, when as I say this second job with Hawes ceased to exist and they thought that was the fair time to take it, and they applied the "broad-brush" approach, the conventional approach (if we can call it that). They deducted from what he would have earned, had he remained in the employment of the Appellants, what he had succeeded in earning with Hawes; and they had to take into account other matters. In particular, they had to take into account, and failed at first properly to take into account, an ex gratia payment. They reviewed their decision on that and they achieved a net result of the order of seven thousand odd pounds.The point about all that is this. They took into account the fact that his salary had been dramatically reduced from £27,000 a year, as it was from October 1992. It was reduced on 1 April 1993, to £19,000 a year and so until August, a period of five months, they were compensating him in respect of a loss of salary of £8,000. That had to be (so to speak) net; they had to take into account income tax and, of course, they had to allow it only for five months. But that is the subject of the appeal today.Mr Nicholls, on behalf of the Appellants, says that that reduction in salary was not the result of anything done by the Appellants. He says that on any view, if you look at the provisions for compensation and in particular Section 74 of the Employment Protection (Consolidation) Act 1978 you will see that it is intended that, however broadly it is put, compensation shall be in respect of matters caused by the act of the employer. I will read Section 74(1):".... 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".Pausing there, if you look at that subsection it is clearly in very general terms. It speaks not of loss caused by, but loss "attributable to" action taken by the employer. It speaks of the amount being "such as the tribunal considers", not "as the tribunal finds". It speaks of the amount being "just and equitable". Plainly there the word "equitable" is not used in the sense in which lawyers use it, as having reference to the Court of Chancery and its rules.Then it says, "in all the circumstances" which are words intended to have a very wide meaning, "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". It might be said by a strict logician that it was impossible to give an exact meaning to those words. It is not necessary for us to go into strict logic, but the dismissal is ex facie the act of the employer and therefore, if one has to analyse the action taken by the employer which is spoken of, it may be that one has to take into account other matters.Those are all questions which could be debated almost endlessly. The fact is that Industrial Tribunals have been enjoined, not merely by the language of the Act, but by the decisions of this Employment Appeal Tribunal and the Court of Appeal and by their own practice which is adopted, in our experience, continually, to use a very broad brush approach. The sort of precision which is applied in, say, personal injury cases in assessing lost earnings and future lost earnings is considered entirely out of place in tribunals which are intended to be (so to speak) tribunals of summary jurisdiction.Such tribunals do not expect to hear, as the High Court and indeed the Country Court do when trying very serious cases of personal injury, evidence from experts in the employment field to talk about future prospects of employment; evidence from accountants about the taxation problems which will arise; or evidence from actuaries about the imponderables of the future.Quite clearly, all that is out of place and probably the fundamental reason is one which we mooted to some extent in argument, that Industrial Tribunals are dealing in very much smaller sums than are dealt with by the courts in serious personal injury actions (and I take them only as an example). Whatever the cause, Industrial Tribunals in general take a broad brush approach and their approach to loss of earnings has customarily been this: that you look to see what the person concerned would have earned had their employment not been terminated, usually a fairly straightforward calculation. You may give some discount for imponderables. And then look and see what the person, the claimant, has earned. Then take it up to a date which you think just; by convention, awards for a period of longer than a year or so are not made, perhaps because, in practice, they result in awards so high that they fall to be cut down anyhow under the statutory limit.That is what one would call the conventional or normal approach. No doubt there are a great many things that can be said to its disadvantage, but it does have the advantage that it is relatively simple and straightforward and that approach has been upheld in many cases. We were referred to the case of Ging v Ellward Lancs Ltd , it is a 1978 case which is reported as a note in the Industrial Cases Reports for 1991 at page 222. I do not propose to go through these cases in detail, but the importance of the Ging case was that it had further to be considered in the case on which the Appellants particularly rely, Courtaulds Northern Spinning Mills v Moosa [1984] ICR 218. In that case, I read from the head note:
"In June 1979, as part of industrial action taken in the course of a dispute with the employers, the applicant and some other employees refused to work through their meal breaks in breach of their contracts of employment and were dismissed for taking part in a strike. Although a number of the dismissed employees were offered and accepted re-engagement, no such offer was made to the applicant. In October 1979 the applicant obtained new employment, but after 18 months he was made redundant. In September 1980 an industrial tribunal upheld his complaint of unfair dismissal on the ground that there had been selective re-engagement within the meaning of section 62(2)(b) of the Employment Protection (Consolidation) Act 1978. In January 1983 following a number of hearings and appeals, the industrial tribunal assessed compensation. They awarded him loss of wages from his dismissal in June 1979 up to the compensation hearing in January 1983, plus a further 26 weeks' future loss of wages, less the agreed earnings from his 18 months' employment. [In other words they were applying the broad brush approach].
On the employers' appeal against the amount of compensation on the grounds that the award should have been reduced under sections 73(7) and 74(6) of the Act of 1978 since the applicant had contributed to his own dismissal by his breach of contract, [that point does not concern us] and that the employers' liability to pay compensation had ceased when the applicant found new employment:-Held, (1) .... [then they deal with the taking of industrial action, as I say, that is not part of our consideration].(2) But that since it was impossible to say that the applicant's loss of wages following his dismissal for redundancy from his new employment was attributable to action taken by the employers, as required by section 74(1) of the Act, the industrial tribunal had erred in awarding the applicant compensation between October 1979 when he started his new employment; and that, accordingly, the appeal would be allowed and the case remitted to the industrial tribunal for the award of compensation to be reduced".And the reasoning of this Tribunal under the chairmanship of Mr Justice Browne-Wilkinson, as he then was, is well shown at page 226 (A-F) where they set out their reasons in detail:
"In the ordinary case where there has been no inordinate delay in assessing compensation such as has occurred in this case, such questions cannot arise. In practice, industrial tribunals assess the loss down to the date of assessment by treating the employer as liable for loss of wages down to that date but setting against that amount any earnings which the employee has received from alternative employment. If at the date of assessment the employee is in apparently permanent employment on comparable terms, the industrial tribunal does not award any compensation for future loss of earnings. If the employee is not then in such employment, the industrial tribunal forms a view as to how long it will be before the employee gets such employment and compensates in respect of that period. In practice it is assumed as to the future that the original employer's liability ceases once equivalent permanent employment is obtained.
As to the past loss, the basis of assessment is not in our judgment strictly logical. If before the date of assessment the employee has obtained an equivalent permanent employment, in principle the original employer's liability to compensate has come to an end. In wrongful dismissal cases at common law the loss caused by the breach of the contract of employment is treated as coming to an end when alternative permanent employment is obtained: see McGregor .... [they cite the passage there from McGregor on Damages]. But in practice in the ordinary case it makes little financial difference whether the loss is treated as coming to an end when new permanent employment is obtained or is treated as continuing down to the date of assessment, the employee being required to bring into account his earnings from the new employment.On the other hand, when a long period has elapsed between dismissal and the date of assessment, as in the present case, the two approaches can produce dramatically different results. In our judgment, on the facts of this case it is impossible to say as section 74(1) of the Act requires [that of course, is the Employment Protection (Consolidation) Act] that the applicant's loss of wages after his dismissal by Fashion Flow [that being the company with which he had obtained employment for 18 months] `is attributable to action taken by' the employers. It is attributable to the action taken by Fashion Flow in dismissing the applicant: that latter dismissal is the cause of the loss. Therefore, apart from authority we would hold that the employers were not liable for any loss of wages after the applicant obtained his employment with Fashion Flow".So, on the facts of that case, there having elapsed a very long period between the original dismissal and the assessment, this Tribunal held that it was not appropriate to apply the ordinary everyday rough and ready, or broad brush, approach in Ging and that it was appropriate to look at causation and so once permanent employment has been obtained, then the period of assessment should come to an end. One should draw the line there.Of course, it does somewhat beg the question of what is meant by "permanent employment". In the present case, as I say, there was little, if any, enquiry apparently into the cause of the reduction of salary from £27,000 to £19,000 per annum during this five months. We are told by Mr Mead that in fact Mr Holloway is a "whistle-blower" and he exposed some sort of improper behaviour, indeed criminal behaviour, in connection with his previous employment. We were not concerned to go into the details. It was in those circumstances that some publicity arose and his new employers thought it right to reduce his salary in that way. "Very well", says Mr Nicholls, "but that is not due to any conduct by his former employers within section 74(1) or `any action taken by his employers'". If the matter had been looked into one can imagine all sorts of enquiries would have had to be made, perhaps very delicate enquiries, perhaps impossible to pursue to a satisfactory conclusion. What would have happened if Mr Holloway had remained in employment with the Appellants?When these matters all came to light would his employment have continued and if so on what terms? What would have been the likely result there? And to what extent were the Appellants responsible for these matters which led to the reduction in salary or the publicity about them which led to the reduction in salary?One only has to state those matters to see that the Industrial Tribunal, whose primary concern was to see whether there had been unfairness in the dismissal, and to assess compensation in a general way, might very well have spent days longer and have finished up with a thoroughly unsatisfactory result.We do not believe that an Industrial Tribunal can reasonably be expected to embark on precise enquiries of that sort particularly as neither of the parties appears to have invited it to do so or taken points on those sorts of matters. Mr Mead has invited our attention to further passages which are to be found in the case of Courtaulds Northern Spinning Mills v Moosa . He refers us to what is said at page 227 by this Tribunal, when they had referred to the case of Ging; this Tribunal said:"That decision is apparently in conflict with our view [of course that is the view in the case they are talking about]. However, in the judgment there is no reference to any argument based on lack of causation which in our view is the critical point. On the facts of the Ging case that is not very surprising: the allegedly `permanent' employment obtained in September 1976 in fact only lasted for one month as was known at the date of assessment. It is undoubtedly correct to assess past loss in the light of true facts known at the date of assessment and therefore to characterise such employment as being in fact permanent would have been wrong. We do not regard Ging as deciding that in all cases, irrespective of causation, loss of wages is to be awarded down to the date of assessment".And then they finish up at letter G on page 227:"This decision [referring to their own decision] should not be taken as requiring industrial tribunals in the ordinary case to change their normal method of assessing compensation which follows the Ging practice. The assessment of compensation in industrial tribunals cannot be as scrupulously accurate as, say, in an action for personal injuries in the High Court. The present practice has the merit of simplicity and produces a broadly just and equitable result. But if (which we profoundly hope is never the case) another case occurs in which the delay is so great that at the time of assessment it is clear that the new employment has endured long enough to be protected by the unfair dismissal legislation, the industrial tribunal should treat the loss flowing from the original dismissal as coming to an end at the start of the new employment".And so, says Mr Mead, that is the extent of the exception to the general broad brush Ging approach which is made by the Courtaulds Northern Spinning Mills case. Here, he says, look and see what happened. The new employment from 21 October 1992 certainly did not last long. It was not permanent employment in the sense that it gave rise to the statutory protection. Moreover, he says, there has been no such delay and, of course, that is self evident. There was no such delay in this case as was found in the Courtaulds Northern Spinning Mills case. And he might have said, but I do not think he did, "that the assessment of compensation is a matter for discretion". He certainly pointed out to us the inconvenience of adopting a precise approach.If it is right for Mr Nicholls to point to causation in reliance on section 74(1), in relation to this deduction of £8,000 per annum from pay, then of course one would have to look at causation with regard to all elements here, including the dismissal. We have already tried to point out the inconvenience which might very well follow, indeed the impossibility which might occur, if a strict view of causation was adopted as the criterion for setting compensation.Having regard to all that, we have come to the conclusion that it is impossible to find any error of law in the decision of this Industrial Tribunal. It was an everyday sort of case with this one curious, and very obscure, feature of police enquiries, and some sort of scandal or newspaper publicity which had led to a reduction in earnings. One way of looking at it, and it follows logically from the way in which the Tribunal went about it, is to say "to what extent did Mr Holloway succeed in mitigating his loss up to the date which we think is a reasonable one to carry the calculation up to, in this case the end of August 1993?". He went out to work.He is not criticised for accepting employment at £3,000 a year less, in present economic conditions. He was doing his best. They might say:
"do we think that this was in any way his fault, or something for which he should accept responsibility, that his salary was reduced? That is not shown to us and therefore we say that the best he was able to do was to earn the earnings which he did in this new employment for the period which he did"
. And it seems to us that that in the everyday case is precisely the sort of intellectual process which the Tribunal will engage in, no more and no less.What has the unfairly dismissed person been able to do to mitigate his loss? After all, mitigation is something which is spoken of expressly in the section. And if they are satisfied that he was, in a general way, doing his best and not behaving unreasonably, why should they not take that as the other side of the equation in calculating his loss? They then have the imponderable of how long they should go on for. They took the figure there at the end of August, there is no criticism of that.We think that in exercising a discretion in a jurisdiction like this and adopting an approach which has repeatedly been approved by this Tribunal and adopted by Industrial Tribunals everywhere, the mere fact that it may be possible to point (on a strict doctrine of causation) to anomalies or illogicalities in the way that Mr Nicholls does, should not mean an Industrial Tribunal is to be deflected from approaching the matter in its normal way.That normal approach will inevitably mean that a great many imponderables, or matters which could perhaps be investigated at length, are put on one side and a very general view is taken. We do not think it right to ask or to expect Industrial Tribunals to adopt any other approach than that, when common sense shows them that it is broadly speaking a just approach. Whatever one says about the logic of Mr Nicholls' submission - we certainly say nothing intended to be derogatory of it - nonetheless it is not appropriate in the average case and we think that this is a perfectly ordinary case in which the Industrial Tribunal were well entitled to proceed in the way in which they did. Since that is the only criticism of the calculations this appeal falls to be dismissed.