J L Morison International Ltd v Nair [1994] UKEAT 796_92_2103

EAT
J L Morison International Ltd v Nair
[1994] UKEAT 796_92_2103 · 1994-03-21

JUDGE PEPPITT QC :

On 7 September 1992 the London North Tribunal decided unanimously that the Respondent, Mr Nair, had been unfairly dismissed by the Appellants, J L Morison International Ltd. On 18 November 1992 the Tribunal awarded the Appellant £10,000 by way of compensatory award for that dismissal. The Appellants appeal from both decisions.The Appellants are importers and exporters of steel and chemicals. The Respondent joined them as the director in charge of the steel department in November 1987. He had known the Chairman of the Company, Mr Manji, from the time when both of them worked for a company known as Meridian Trade Corporation Ltd. The appeal from the finding of unfair dismissal raises one simple, though by no means straightforward, issue. The Appellants contend that the Respondent was not dismissed. He either resigned or his employment was terminated by mutual consent. In those circumstances the only issue this Tribunal has to decide is to whether that contention has been made out because neither before the Tribunal nor of course, before us, has it been sought to argue that if there was a dismissal, that dismissal was justifiable upon any of the grounds appearing in section 57 of the Act.The story begins in January 1991, after the Respondent had taken a Monday off to attend the wedding of the daughter of a friend in France. On his return he found awaiting him a letter from Mr Manji dated 9 December, complaining of what he had done and ending with this paragraph:
"I find this sort of thing unacceptable, discourteous and lacking consideration. It would be best if you give me an explanation in writing, as I know that if we discuss this verbally, one of us is going to say words that may only worsen the situation."
The Respondent was upset to find the matter dealt with by a letter of this sort and on the following day, 10 December, wrote Mr Manji a long letter, the effect of which was to justify what he had done but included in it was a sentence which read:

"This has never happened before and it will never happen again."

However, the letter ended with these two paragraphs:
"I can only surmise from all these developments that somehow you want to get rid of me and your only intention was to use my loyal attitude, innocence, expertise and knowledge till such time business is established. If I am correct in my thinking and there is no other reason to think otherwise, I am prepared to breakaway our partnership as soon as possible and before I do so, please arrange for an immediate settlement of all my legitimate dues on the basis of our partnership arrangements.
In view of the above developments, I do not think, I can sincerely cooperate with you any more and I am sure, with a view to avoiding unnecessary disagreements, quarrels, long established personal friendship and legal actions, you will arrange for an immediate solution."Before the Industrial Tribunal it was argued that this letter constituted a resignation by the Respondent. Mr Cutting has not sought before us to place that interpretation on the letter and in our judgment rightly so. We are unanimously of the view that that letter constituted no more than an offer to resign if a financial package satisfactory to both parties could be arrived at. However, Mr Manji took a different view as to the effect of the letter because on 12 December he wrote to the Respsondent in these terms:
"Thank you for your letter of Tuesday, 10 December, 1991.
It is quite apparent from your reply that the trust and confidence that previously existed has now broken down.I do not think that it will serve any purpose in commenting in detail your letter of the 10th.I have taken note of your last two paragraphs and confirm my acceptance of your resignation with immediate effect from the Board and employment of JLMIL and to the profit sharing arrangements that have existed to date.Pursuant to my acceptance of your resignation from this firm, I shall be obliged if you could please liaise with Al-Noor and myself for the orderly handing over of all matters presently being dealt by you.There are, of course, matters connected with the return of company property that will need to be settled as well as your termination emoluments that will require to be computed. Can you please, therefore, during the period while I am away from the office, prepare a statement of the termination arrangements for my consideration on my return so that we can, in accordance with your wishes set down in the last paragraph of your letter, have a mutually acceptable, speedy and friendly resolution of all the matters.For the sake of good order, it would be best for all parties concerned, for you to immediately hand over your office keys but you have my assurance of access to the office during normal office hours in order to wind up your affairs."That letter was followed by a meeting on the following day between the Respondent and Mr Manji but before the meeting took place the Respondent replied in a letter bearing the same date, 12 December, in which he made it clear that so far as he was concerned, his letter of 10 December was not intended to be, nor could be construed as, his resignation from his employment.The second paragraph of that letter read:"At the outset let me make it very clear here that my letter of the 10th Dec., 91 did not mention anywhere that I have resigned. Therefore, the question of your accepting my resignation does not arise. However, what I am prepared to accept is to confirm once again that I am prepared to resign the day you arrange full and final settlement of all my dues pertaining to our partnership/profit sharing arrangements and also all dues with regard to and employment of JLMIL"...Till such time all my legitimate dues are properly, amicably and satisfactorily settled, I continue to be the Director of J.L. Morison Int. Ltd. and in the employment."The meeting of the 13th December involved a discussion between the Respondent and Mr Manji about the manner in which the Respondent's departure could be provided for with the least possible disruption to the company's customers. Referring to two matters discussed at that meeting, paragraph 2 of the Minutes appearing at page 39 of the bundle records:
"Both parties agree that VKN resignation should be aimed at becoming final on 15.1.92, by which time a computation of what is due to VKN will have been prepared."
The Tribunal found that this paragraph did not accurately reflect what was discussed, still less agreed, at the meeting. In particular the Tribunal did not find that the Respondent then or at any other time resigned. Their findings are set out at paragraph 9 of the decision:
"9 It appears from the evidence that they [Mr Manji and the respondent] also discussed how the separation could be achieved without damaging the business and we conclude from the evidence that the minutes of that meeting which were presented in evidence represent what was discussed to facilitate the separation. In those minutes it is stated that Mr Nair had resigned and in the letter to the bank customers it was stating [stated] that Mr Nair would be leaving by mutual agreement and starting his own business in India. We find that these minutes did not represent the true position but what was discussed and partially agreed between the parties as to what the staff and clients would be told."
What evidently was agreed however, at the meeting, was that there would be a meeting on 15 January of the following year at which Mr Manji and the Respondent would consider the financial package which the Respondent had insisted upon as a pre-condition to his resignation.Between 13th December 1991 and 15 January 1992 the Respondent was attending his office regularly, concerned in the orderly hand-over of his responsibilities to his successor. He evidently anticipated that a satisfactory outcome would be obtained from the meeting of 15 January because on or about that date he acquired a company through which after his (to use a neutral word) departure from the Appellants, he carried on business. Mr Manji, throughout this period was on holiday and although he was expected back on 15 January he did not in fact return until 20 January. There followed on the day after Mr Manji's return, a meeting between him and the Respondent which proved not only to be entirely unsuccessful as a vehicle for agreeing Mr Nair's resignation package but also resulted in angry words between the two men. The Tribunal's findings as to that meeting appear in paragraph 12 of the decision as follows:
"On 22 January [it is clear from the evidence the correct date was 21 January] the day after Mr Firoz Manji returned, the Applicant met Mr Manji to discuss basically the financial arrangements on the separation and they both became angry and it is obvious from their evidence that they had an argument. In the course of the argument the Applicant stated that he had not resigned and he refused to leave until the financial matters had been settled and Mr Firoz Manji mentioned that it might be necessary to call the police. The exact details are not important as far as our decision is concerned."
The meeting was followed by the Appellant's final letter written by Mr Manji on the same date. It reads as follows:
"I refer to my letter to you dated 12 December 1991. In that letter I accepted your resignation from the Company and requested you to arrange an orderly handover of the company business and properties to Al-Noor, while I was away overseas.
On my return to the office yesterday, we arranged a meeting for this morning to finalise your termination package. Verbally, I offered you an ex-gratia payment of £7,173.00 as full and final settlement of all your dues as at 31 January 1992. This you have rejected.In accepting your resignation, I require you to forthwith vacate the offices and immediately return company properties in your possession. If you do not return the company car, together with any other property belonging to the company, within 5 days of the date hereof, we have instructed our solicitors, Messrs. Meer Care & Desai, of 97-99 Park Street, London W1Y 3HA to institute proceedings against you for the recovery thereof. We also request you to correspond with our solicitors from now onwards on any matters connected herewith."The Respondent gave a detailed reply to the allegations contained in that letter which we do not propose to read but will shortly refer to the Respondent's account of the meeting on page 2:
"I am owed a figure of £91,686 and you asked me to show how I arrived at this figure, which I did immediately. On production of my figures, you got upset and started abusing me of greed, and that we have no agreement and I can take you to court and so on, to which I kept very calm and quiet. You also told me to get out of my office and JLMIL premises immediately or else you will call the police. I told you that threatening behaviour of yours is tantamount to sacking me to which you said `SO BE IT'.
Following the meeting on 21 January the Respondent left the Company premises.Against that background, the Tribunal held firstly that the Respondent's letter of 10 December 1991 did not constitute a resignation from his employment. The Tribunal found that employment was terminated by the Appellants' letter of 12 December 1992 in which they purported to accept the resignation which the Tribunal found had not been offered. No doubt the Tribunal's view as to the contents of that letter were reinforced by Mr Manji's subsequent letter of 21 January 1992 in which notwithstanding the Respondent's repeated denial that his letter of 10 December contained or could be construed as containing a resignation, nevertheless purported once again to accept that resignation.The Tribunal further found that at the meeting on 13 December the Respondent did not resign but agreed that in order to assist in the orderly handover of his responsibilities, the date of termination of his employment should be 15 January 1992. That was the date of course when it was originally intended that he and Mr Manji would discuss the financial terms of his departure from the Company. Finally, the Tribunal found that the employment had been terminated by 21 January 1992 being the date of the final explosive meeting between the Respondent and Mr Manji and the date of Mr Manji's final letter.In the light of those findings Mr Cutting, on behalf of the Appellants, makes a number of submissions. First of all he accepts now that the Respondent's letter of 10 December did not, as had previously been alleged, constitute a resignation by the Respondent. In our judgment that concession was wisely made because it seemed to us that to contend otherwise would verge upon the unarguable. But he says that the purported acceptance of that resignation contained in the Appellants' letter of 12 December did not and could not have had the effect which the Tribunal found it had for the best of all reasons that the Respondent did not act upon it but instead continued in the employment of the Appellants.When pressed as to precisely when and in what manner the Respondent's employment did come to an end, Mr Cutting first argued, and if I use the word faintly it is not intended as a disparagement of his advocacy but rather an appreciation of his common sense, that there was a resignation which took effect on 15 January 1992. Searching as we have through the evidence, we can find nothing to suggest that there was a resignation by the Respondent which took effect on 15 January 1992 and to be fair to Mr Cutting he was not able to point us to any piece of evidence which suggested that that had been the position.Finally, Mr Cutting was driven to concede that in the absence of any determination by the Respondent of his employment, he must be regarded as having remained in the employ of the Appellants on 21 January 1992. If, and he made no concessions, a proper view of the situation was that on that date the Respondent's employment was terminated by Mr Manji on the Company's behalf, that was not what the Tribunal found. There was no evidence to support it and if we thought that a proper interpretation of the events of December and January we should remit the case to the Tribunal to make express findings on the matter.We have come to the conclusion that there was evidence upon which the Tribunal could find that the combined effect of the Appellants' letter of 12 December 1991 and the meeting between the Respondent and Mr Manji on the following day, constituted a termination by the Appellants of the Respondent's employment on 15 January 1992. We reached that conclusion because having found that the Respondent's letter of 12 December had determinative effect the Tribunal went on to find that at the meeting of 13 December, which was only to finalise the separation arrangements on the termination of the Respondent's employment, it was agreed that his employment would terminate on 15 January.Mr Cutting argued that such a finding could not live with the Tribunal's findings on the effect of the Appellants' letter of 12 December which in effect terminated the Respondent's employment as they found with immediate effect. But in the circumstances we do not consider that these two findings by the Tribunal are necessarily inconsistent with each other. On 12 December 1991, as the Tribunal found, the Appellants terminated the Respondent's employment with immediate effect but at the same time called upon his co-operation to facilitate the handing over of all matters presently being dealt with by him. For this purpose, in the last paragraph of Mr Manji's letter, it was indicated that he would be assured of access during normal office hours in order to wind up his affairs. There followed within 24 hours of that letter a meeting between the two men in which the handover from the Respondent to his successor was discussed in more detail and at that meeting it was agreed that the precise date of the termination of the Respondent's employment should be 15 January 1992.The letter of 12 December did two things. First of all it terminated the Respondent's employment and secondly it provided that termination should take immediate effect. We see no reason why, for practical and sensible reasons the timing of that termination should not by agreement between the parties, be delayed so as to facilitate an orderly handover of the Respondent's responsibilities without in any way depriving the letter of its significance as a medium for terminating the Respondent's contract of employment. That, it seems to us, was a finding which the Tribunal was entitled to come to on the evidence before it. If the Tribunal was wrong, it seems to us that the evidence is overwhelming that if the Respondent's contract of employment had not been terminated by 21 January 1992, it was terminated on that date, either in the course of the meeting between the Respondent and Mr Manji on that date or by the letter sent to the Respondent by Mr Manji immediately following the meeting. So far as the letter is concerned, that speaks for itself and it seems to us permits of no other construction than a termination forthwith of the Respondent's contract of employment.Insofar as that contract was or might have been terminated in the course of the meeting between the Respondent and Mr Manji on the 21 January, it seems to us that the findings of the Tribunal in paragraph 12 amply justify a conclusion, that the Respondent's contract of employment, if it had not been terminated before, was terminated on that occasion. We refer in particular to the penultimate sentence in paragraph 12 of the decision:
"In the course of the argument the Applicant stated that he had not resigned and he refused to leave until the financial matters had been settled and Mr Firoz Manji mentioned that it might be necessary to call the police."
For those reasons therefore, the first of the appeals advanced by the Appellants must be rejected.We turn now to the question of quantum. There was before the Tribunal uncontested evidence that at the date of his dismissal the Respondent's net salary was £1,527.91 per month. In addition to that he had been entitled to receive benefits of £173 per month being the value to him of the car which he had and £180 per month in respect of pension contributions. The total was a little under £19,000. The compensation hearing was almost exactly 10 months after the dismissal and the Tribunal found that over that period there had been a total loss of earnings of approximately £19,000. However, the Respondent did not seek to obtain alternative employment upon his dismissal but instead, set up a company of his own carrying on broadly the same business as that which he had superintended whilst working with the Appellants. Understandably, and predictably, over the first 10 months of that company's life, no profits were made. In the light of that it was submitted, on the Appellants' behalf, firstly that the Respondent was under a duty by way of mitigation to minimise the amount of his claim against the employers who had dismissed him and he could best have done that by looking for and obtaining alternative employment in a field in which he was admittedly an expert. Secondly it was suggested, that if the Respondent had elected not to do that but instead to embark upon a business of his own, he should not be permitted to build that business up on the back of his erstwhile employers. Accordingly, the Tribunal, it was submitted, should not be thinking in terms of the total loss of earnings between the date of the dismissal and the date of the hearing.The Tribunal rejected the first of those submissions but accepted the second. Their findings appear in paragraph 4 of the compensation decision. The Respondents' Counsel argued that as the Applicant had chosen to be self employed, then we should take into account his possible earnings if he had chosen to look for employment in the field in which he was experienced. Counsel argued that it would not be just and equitable therefore for this Tribunal to award compensation for his total loss of wages bearing in mind that during the time he was not earning any money, he was building up goodwill and income for the future.We reject the argument that this Applicant should have been looking for other employment and his earnings should be taken into account but we accept the argument that during the period to 18 November, he was trying to expand his business and the reward for this work would be received in the future. We think that the Tribunal not only had evidence for the first of its conclusions but was incontrovertibly right. For a 57 year old to find himself on the labour market, no matter what his experience, is not an attractive proposition and we would have been surprised if he had been able, in the short term, to find alternative employment commensurate to that from which he had been dismissed. We think that he was justified in doing what he did but we agree with the Tribunal that in those circumstances it would be right and proper for some discount to be made from his material loss to take account of the fact that the company that he had formed might well, in the medium or long term, make significant profits. But that is precisely what the Tribunal did. From a total loss of £19,000 the Tribunal discounted some £8,000 to produce a figure of £11,000 which was capped by the ceiling of £10,000. It seems to us therefore that the Tribunal was doing exactly what Mr Cutting was then submitting they ought to do.It occurs to us that when pressed, Mr Cutting's real point was that in order to mount a compensatory claim of this nature the Respondent should have had available to call before the Tribunal, expert evidence to provide an informed assessment of the future of the company. No doubt in an ideal world such evidence would have been highly desirable but industrial tribunals have to reach assessments on the information and evidence available before them. The Respondent was called, gave his evidence and cross-examined. It seems to us that the Tribunal were perfectly entitled as they did, to accept his evidence and reflect it in the award which they made.It is interesting that perhaps by way of a check on the figure that they arrived at, the Tribunal in paragraph 7 of its decision said:
"We find, in these circumstances, that the Applicant is entitled to compensation for at least six months and we calculate that this comes to an excess of £11,000.00 including his wages, pension and car benefit and we therefore make the maximum award of £10,000.00."
If, as has been submitted, the Respondent instead of starting up his own business had sought employment, it may very well be that he would have taken at least 6 months to obtain employment suitable to his abilities and experience and it may not be without significance that had that occurred, the sum which the Tribunal would have awarded would have been not a million miles away from the sum which he was in fact awarded under a somewhat different head.Cases are rare when this Tribunal will interfere with the decision of an Industrial Tribunal on quantum. We are unanimously of the opinion that this is not one of those cases and accordingly that appeal too must stand dismissed.Costs refused.