Rosser v South Wales Motor Factors Ltd [1994] UKEAT 867_92_0107

EAT
Rosser v South Wales Motor Factors Ltd
[1994] UKEAT 867_92_0107 · 1994-07-01

JUDGE HULL QC:

This is an appeal to us by Mr Rosser. He was general manager and car paint salesman employed in the paint department of the Respondents at Newport in Gwent. He had been with them for some time. He is a man in middle years and his employment began on the 2 May 1980: I think in a rather less senior position as a salesman. He became general manager of the paint department in 1987.On the 1 February 1992 there was a takeover of the Company. Apparently the Company had been losing money and there had been a serious loss the previous year and the new owners came in. They embarked on what could be called retrenchment. That included making savings of all sorts; it involved making changes which from the staff point of view were unfavourable to them, calling on them to work longer hours and do more jobs and that included Mr Rosser.He complained that he was being humiliated, that his title of manager was being withdrawn from him, that he was being asked to do jobs which were very humble and were humiliating to him, complaints of that sort. He complained that he was constructively dismissed and unfairly dismissed by the new management of the Company.We are not concerned with the merits, for reasons which will become apparent. Those were the nature of the complaints which he made and the nature of the response by the Company under its new management was that he, like the other members of the staff, was being asked to buckle to and treat the matter as an emergency, as indeed it was from the Company's point of view, it was life or death from the point of view of the Company. The new owners had mortgaged their homes, so it was said, to raise the money to keep the Company going.That was the general nature of the contentions which were raised. The complaint was heard by the Industrial Tribunal sitting at Cardiff under Mr Delgado as Chairman, with two Industrial Members, starting on the 12 August 1992, with an adjourned hearing at which further evidence and argument were heard on the 5 October. That of course is all recorded with our papers. On the first occasion Mr Rosser himself gave evidence. His evidence is recorded at page 20 onwards in our bundle, because the Notes of Evidence of the learned Chairman were requested and he has provided them. It appears, if I may respectfully say so, to be an excellent Note of Evidence, most carefully and fully taken as one would expect. At page 24 there is part of the cross-examination of Mr Rosser by Mr Williams, Counsel for the Respondents. I should explain that Mr Rosser was represented throughout by Mr Blayney, Solicitor, an experienced advocate.Whilst he was cross-examined he was asked about various matters. They were under the regime of the previous Company. There had been paid to him various sums of money. It was clear that the Respondents were minded to suggest to Mr Rosser that some of this amounted, so to speak, to fiddles of various sorts, with a view particularly to defeating the Revenue's legitimate charge for tax. That allegation was made among other things in respect of pension payments. To go forward I would say that the Industrial Tribunal was not satisfied there was any irregularity of any serious sort in relation to the pension payments and certainly no intent to defraud there.However, when he was giving evidence, Mr Rosser referred to an allowance which was paid to him. This was an allowance of £60.00, or as it was artistically put, £59.99, which was paid to him monthly apparently. He said:

"Allowance - paid to me - put down as income tax refund."

Of course, it was nothing of the sort.
"A1, £59.00. It was not a refund. It was a device so I did not pay tax. Not a fraud on Revenue on my part. I accept it was done for my benefit. Drake" [that was the previous owner] "asked what it was for. I said it was for entertainment. He said I would be reimbursed for what I spent."
and that reflects other evidence which was that the new management had said "well if you incur expenses in entertaining customers, you must produce the receipts and they will be paid direct."
"Referred to as money going "into back pocket". I do not argue with that charge but it was part of a pay rise taken away from me."
Two pages later he is still being cross-examined. He referred in connection with other matters to falsifying claims. He said:
"I did falsify claims .... Producing false documents to claim rebate we were not entitled to."
That was in respect of a supplier apparently. That was the evidence which the Industrial Tribunal had to consider and they did so.On the second day of the hearing, on the 5 October 1992, further evidence was called. But at the outset of that day, Mr Williams, Counsel, quite rightly said that this was a matter which he was entitled to raise, and proposed to raise, as a contention; namely, that this contract of employment was tainted with illegality. That warning was given to Mr Blayney who considered it. The matter was raised with the Tribunal. The Tribunal asked Mr Blayney whether he wanted an adjournment to consider the matter and Mr Blayney said that he did not.Mr Williams addressed the Tribunal, as we understand it, on the basis of the evidence which they had heard from Mr Rosser. It was the only evidence of illegality which they had before them. They observed, quite correctly, that the matter having been raised, at whatever stage, it was their duty to look into it. No Court is entitled to ignore evidence or allegations of illegality in a contract. The Tribunal are under a duty to look into them as best they can and decide whether there has been any illegality.They proceeded to hear the submissions. Mr Blayney had not asked for an adjournment. However, what he did do apparently, was to address the Tribunal along the following lines. He said that the Tribunal had very little evidence before it. If there was any evidence, it was that of the Applicant himself, Mr Rosser. He suggested to the Tribunal, as of course he was entitled to, that that did not show illegality within the knowledge of Mr Rosser. There might of course possibly be illegality elsewhere, but Mr Rosser himself was not aware of any illegality and in particular was not guilty of taking part in a fraud on the Revenue.Now that, of course, was a matter for the Tribunal, what they made of the evidence. But this underlined the point which Mr Blayney has made to us. He said to the Tribunal, "now it would be quite wrong for you to decide such a point without hearing further evidence which may, or will be, available. You should consider the position of Mr Ireland, the previous proprietor and those of his staff who were responsible for this matter. You should not decide such a matter without hearing them."The Tribunal, in spite of that, did proceed to decide it. Mr Blayney did not apply for an adjournment. Mr Lloyd Williams did not apply for an adjournment. Mr Lloyd Williams was content to make his submissions on the basis of the evidence which they had heard. Mr Blayney, although explaining to the Tribunal that they should hear other evidence, did not himself apply for an adjournment. He did not apply for an adjournment even for the purpose of argument, because he was content to deal with the legal aspects and the argumentative aspects of it there and then.He has told us today, as a matter of principle, that the Industrial Tribunal should not hear such a matter without hearing all the evidence available; in particular, the evidence of those not parties to the case, not witnesses there at the time, who might be seriously affected by such a finding. Well that by itself, if expressed so to speak a doctrine of law, as a principle on which Tribunals should conduct themselves, would have halted half the trials and hearings before Industrial Tribunals in the country.It is the most commonplace thing in the world for Courts, Juries and Tribunals to hear grave reflections on third parties who are not there to defend themselves and if they were to say then "we must not go into this or hear anything about this without allowing this unrepresented party to appear before us and give such evidence and make such submissions as he wants to"; trials would go on a staccato fashion with frequent adjournments and inconclusive deliberations.In our view, it is not a point which avails Mr Blayney at all. If he had wished to call further evidence, he should have applied for an adjournment. As it was, he had as an advocate the very great advantage of being able to say to the Tribunal "here you have heard only one witness, my client, his evidence might be taken one way, or might be taken another. Certainly it is not sufficient, in a serious matter like this, for you to find that he was a party to a fraud and I will make the point that these witnesses are not here and should be here, but I am not asking for an adjournment."As I said to Mr Blayney, I hope not too cynically, it was rather an agreeable position for an advocate to be in. Serious charges are made. Little evidence is available to support them and they are made at a late stage and it can be said truthfully that the matter is doubtful and difficult. I would add that Mr Blayney, being in this situation, and saying that the evidence was really quite insufficient to support such a serious charge, did not apply, apparently, to recall his client to go into it in more detail. He says to us, today (and really perhaps this is not open to him) that, the description of these payments, which was a totally false description as "refunds of income tax", was simply on the brown envelopes. Indeed, some of the brown envelopes had it scratched out; the brown envelopes were the pay packets.The answer to that is, or may be, but this was purely a matter for the Tribunal. But the submission prompts the comment that what is written on the envelopes may well be taken to be a reflection of what is written in the books of account, and people in business do not write down falsehoods simply for a pantomime, or for fun, or as a joke. They write them down in order to deceive somebody, otherwise there is no point in writing them down at all.Those may have been the thoughts which passed through the mind of this Industrial Tribunal. What they had to do, of course, was to say whether in their view this contract of employment was at the material times, and until very shortly before their hearing, tainted by illegality in the sense that there was a fraud on the Revenue to which Mr Rosser was knowingly a party. They dealt with that point. They said at paragraph 11,
"Mr Blayney in his submission said the tribunal were being invited to throw out the claim because the contract was tainted with illegality both as to the payment in relation to expenses and the pension contribution."
As I say, they decided that in favour of Mr Rosser.
"He said fraud was a terrible charge to bring and a heavy burden of proof was required. He criticised the respondents for not making any criticism in this respect although proceedings had begun sometime ago. He said lack of knowledge of the respondent's objection made it difficult to produce detailed evidence in relation to those important matters including calling evidence from Mr Ireland the then managing director."
As I say, making a virtue of his difficulties, which every advocate does and one does not think any the worse of Mr Blayney for doing that; but expressly not asking for an adjournment, which might very well have led to a disastrous sequence in which Mr Ireland might have been obliged to confess, or other executives might have been obliged to confess, what had happened and so Mr Blayney could not call them at the adjourned hearing. Whatever was going through Mr Blayney's mind, he did not ask for an adjournment, but made the best of matters that he could.Then he went on about the pension claim, very reasonably. As to the £60.00 expense allowance, according to the Tribunal, Mr Blayney said this:
"... it was allowed to him for entertaining customers. One had to consider how the respondent treated that sum for fiscal purposes and there was no evidence as to how this was done to suggest a fraud on the Revenue."
Then he referred to legal authorities.
"He submitted the allegations of illegality were unfounded and the applicant was entitled to enforce his claim.
12.In giving our decision the tribunal appreciate Mr Blayney's point that no reference to illegality was made earlier and did not arise until the conclusion of the evidence. This may be unfortunate but we have to say that this is not unusual since it may be necessary to hear all the evidence before deciding on the facts and in reaching conclusions as a result. However meritorious a claim may be where the question of illegality is raised we must rule on this. If we conclude the facts point to illegality the lateness of the respondents objection cannot avail the applicant. In turning to the evidence we find the applicant's evidence reveals he was receiving a payment referred to as £60 which in fact amount to £59.99." [As I said an artistic variation because tax refunds are not usually a round sum like £60] "We find that was negotiated as a pay rise as an inducement for him to remain with the former respondents. We find it was received by the applicant tax free and was put in as an item showing an alleged refund of income tax. Certainly on his evidence it was not a refund of income tax. It was a payment received by way of remuneration which we find was not subject to tax as was the remainder of his income. The evidence given by him in chief and in cross examination leads us to conclude there was an attempt to defraud the Revenue in relation to the payment he referred to as expenses and which was denoted as a refund of income tax. We do not accept it was arranged to give him a net sum free of tax. We find it was a device to avoid payment of income tax. As such it was a fraud on the Revenue."So there out of his own mouth, and really using just the same language as Mr Rosser had used, they convicted him of taking part in a fraud on the Revenue. Over the page they say again:

"We find the expenses payment amounted to a fraud on the Revenue."

On those findings, which quite plainly having looked at the evidence they were entitled to reach, they were bound to hold that the claim was vitiated by fraud. That is to say, to use the Latin expression ex turpi casusa non oritur actio, contract being tainted by fraud, the party concerned could not take advantage of it, for the purpose of asserting of his claim before the Industrial Tribunal, or of course before any other Court of law. They were most certainly entitled, as a matter of law, to reach that finding.Now Mr Blayney says that there was an irregularity: they should not have reached their conclusion without hearing Mr Ireland. Were they obliged to grant an adjournment without one being asked for? That appears to be an entirely insupportable contention, certainly as a matter of law.If the position were that the evidence was so unsatisfactory that the Tribunal felt unable to reach any conclusion on it, then of course that would be to the advantage of Mr Rosser. The Tribunal would say "this contention was raised: we are not able on the evidence we have heard to reach a sound conclusion on it and we therefore reach no such conclusion". Were they, to take the alternative contention of Mr Blayney, obliged to say "we are incapable of reaching a conclusion without hearing all those involved"?That in our belief is contrary to law and there is no such proposition maintainable in any Court operating under our system. To reach such a conclusion would make an absolute mockery of the system of adversarial litigation. It is up to each party to choose what witnesses he calls. Each party may for tactical reasons decide not to call a witness and it may well be the principal witness.Text books on evidence are replete with examples of such a tactical approach which is open to any party. It may be too dangerous for either party to call a particular witness. We do not of course suggest that about any witness in this case, but we do say that there is no principle whatever that a Court or Tribunal is debarred from reaching a conclusion (if it is able to do so) on such evidence as is called before it, bearing in mind the presumptions and the burden of proof and of course, in this case, the presumption must be against illegality. They would have to be satisfied of illegality before they made such a serious finding, as Mr Blayney rightly describes it.Having heard that Mr Rosser, out of his own mouth they did reach such a finding. We cannot find, despite Mr Blayney's submissions to us, and having carefully considered his arguments, any impropriety, either in the way in which the Tribunal proceeded, or in the finding which they reached. In particular, we reject the submission that the Tribunal is obliged to grant an adjournment to a party who has not applied for it.In those circumstances, there being no point of law disclosed which we can conclude in favour of the Appellant, the appeal is bound to be dismissed.