Amba Lamps Ltd v Donnelly [1995] UKEAT 1005_93_1505

EAT

Amba Lamps Ltd v Donnelly

[1995] UKEAT 1005_93_1505 · 1995-05-15

JUDGE BULL Q.C. :

This is an appeal by Amba Lamps Limited against the decision of the Industrial Tribunal sitting at Reading on 12th February, 21st April and 29th September 1993, by which it made a basic award of £247.50 and a compensatory award of £6,987.61 to Mr Brian Donnelly as compensation for unfair dismissal.

Having heard this appeal on 15th November 1994, the appellants subsequently sought to adduce before us the decision of another division of the Employment Appeal Tribunal presided over by Mr Justice Tucker in the case of Derwent Coachworks v Kirby , in which judgment had been delivered on 7th September 1994, but which had not, it seems, been reported prior to the initial hearing of this case. In the circumstances we agreed to reconvene and reconsider this matter before we gave our judgment.

The facts in this case may be summarised shortly. In 1980 Mr Yates and the respondent, Mr Donnelly, set up in partnership as Amba Lamps, which business was incorporated in July 1982 and the board of directors subsequently enlarged. The relationship between the respondent and the other directors deteriorated from about 1990, and the respondent was dismissed on 26th March 1992.

The Industrial Tribunal found that there had been a complete breakdown of the necessary trust and confidence between the parties which should be present in any contract of employment. The Tribunal further found that in the circumstances of this particular case that the decision to dismiss did not fall within the band of reasonable responses of a reasonable employer.

In the full reasons for the decision on 21st April 1993 sent to the parties on 12th May 1993 the Industrial Tribunal assessed contributory fault at 75% and adjourned so that the parties might seek to agree a figure for compensation. The parties did not agree and the Tribunal reconvened on 29th September 1993; the full reasons for their decision on that date being sent to the parties on 19th October 1993.

At that hearing the Tribunal heard evidence from Mr Donnelly but when Mr Colvin sought to recall three of his witnesses, objection was raised by Counsel then appearing, which objection the Tribunal upheld in these terms:

"... we decided unanimously that we would not take any further evidence from the respondents' witnesses. We felt that it would be tainted and therefore would not assist us."

We are unsure what is meant in this context by the word "tainted". If in the first hearing, employers have been given every opportunity to advance all the evidence in relation both to liability and compensation, then it may well be that an Industrial Tribunal would not be assisted by further evidence as opposed to the submissions of Counsel. However, if there has been what is commonly known as "split" hearing, so that issues of compensation remain upon which either side may seek to call evidence, then we are confident that the Tribunal would permit parties to call all relevant evidence. The weight to be attached to such evidence is of course solely a matter for the Tribunal itself.

The substantial question raised on this appeal however relates to the compensatory award. Mr Donnelly had issued a writ in the High Court seeking damages for wrongful dismissal. The defendants to that action, Amba Lamps Ltd, had paid into court the sum of £18,000.00 and that payment into court had been accepted by Mr Donnelly pursuant to the rules of the Supreme Court. The question therefore arose of the point in the calculation at which the deduction of 75% should be made. The appellant complained that by deducting £18,000.00 from the compensatory award before reducing that award by 75%, the Industrial Tribunal have effectively deprived the employers the benefit of 75% of such payment into court. It is contended on behalf of the employers that the loss should be ascertained first then reduced by 75% and only after that has been completed should the £18,000.00 be deducted.

Section 74(1) of Employment Protection (Consolidation) Act 1978 , provides that:

"(1) Subject to ... [subsection (8) and section 76], 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."

Section 74(4) provides:

"(4) In ascertaining the said loss the tribunal shall apply the same rule concerning the duty of a person to mitigate his loss as applies to damages recoverable under the common law of England and Wales or of Scotland, as the case be."

There are however a number of authorities which are difficult to reconcile. The approach of this Industrial Appeal was to follow respectable authority which was, at the time they made their award, binding upon them. There can therefore be no criticism of the approach which they took in following such authority.

This matter has been considered in the case of Derwent Coachworks v Kirby to which earlier reference has been made, and which is now reported in

[1994] IRLR 639

. The respondent did not appear before us upon the adjourned hearing, but courteously sent a letter agreeing that the authority of Derwent Coachworks v Kirby should be drawn to our attention but leaving to us the question of whether or not we should follow it.

We have carefully considered all the cases which were drawn to our attention and follow, with respect, both the reasoning and the conclusion reached by Tucker, J, and the division of the Employment Appeal Tribunal over which he presided. We respectfully adopt the approach that this problem should be solved both upon logic and principle in the way it was considered bt Tucker J, namely:

"1. Logic Since the purpose of the exercise is to assess the loss attributable to the employer's conduct, (Sec 74(1)) we should when considering the loss incurred, as a matter of logic deduct the element of contributory fault at that stage, before taking account of the payments made, because the fault was not caused by the employer's conduct.

2. Principle . The Statute itself (Sec 74(1)) instructs the Industrial Tribunal to award by way of compensation an amount which is considered just and equitable. That means just and equitable to each party. It would not be just nor equitable to an employer if the value of any payment he had made were to be reduced, not because of his conduct, but by reason of the employee's conduct.

The general principle is that the purpose of the exercise should be to award full compensation, but not to award a bonus. So if an approach has the effect of awarding a bonus, that must be inconsistent with the general principle."

The conclusion in Derwent Coachworks v Kirby was this:

"We say, with the utmost respect to the Judges and members who presided and sat in the previous cases, that in our opinion they were mistaken. We prefer the view expressed by Kilner Brown J in the case of Clement-Clarke Int. v Manley . In our view, where a payment has been made by employers in lieu of notice, as in the present case, full credit should be given for it when calculating the sum to be paid as compensation. Such a payment should not be reduced by the proportion of the employee's contributory action. In other words, the contributory action percentage should be deducted before any reduction is made for any payments made by the employer, and not afterwards."

We respectfully agree with this statement of the law.

For these reasons we allow this appeal in so far as it relates to the assessment of compensation. No doubt the Industrial Tribunal will be willing to consider all evidence called upon either side which may be relevant to the issue of compensation, and thereafter apply the principles of Derwent Coachworks v Kirby in calculating the appropriate sum.

We thus remit this case to the Industrial Tribunal which heard it, or if this is not possible, to such other Tribunal as the Regional Chairman shall nominate.