Fox v Anago Ltd [1995] UKEAT 32_92_2711

EAT

Fox v Anago Ltd

[1995] UKEAT 32_92_2711 · 1995-11-27

MR JUSTICE MUMMERY (PRESIDENT): This case has a long history. The issue is whether there is any point of law on the appeal. The appeal has a long history.

In order to understand the lengthy arguments, it is necessary to return to the beginning. The case was started as long ago as 12th June 1991. Mr Stephen Fox applied to the Industrial Tribunal for constructive dismissal from his position as managing director/company secretary and vice-president of international operations with a company in Sheffield called Anago Limited, by whom he claimed to have been employed since August 1986 until his employment was terminated on 29th April 1991.

He gave particulars of his employment and the circumstances in which that employment was terminated. The essence of them was that he found himself in a situation in April 1991 where he had no alternative but to resign. Having originally been appointed to the position of managing director/company secretary and vice-president, he was informed that he was to become the European sales manager, a situation which he could not accept in view of the effect it would have on his personal credibility. He claimed that he had been unfairly dismissed.

The claim was contested by Anago Limited on multiple grounds. They denied that he was dismissed. They said he had resigned. They said that, if he had been dismissed or constructively dismissed, he had caused or contributed to it by his conduct. His dismissal was fair. It was denied that the contract of employment was repudiated. It was asserted that the respondent company had acted reasonably. It was not even admitted that the respondent company was Mr Fox's employer.

With so many issues, it is hardly surprising that the Tribunal sat for four days on 14th, 15th, 16th and 17th October 1991 before arriving at a unanimous conclusion notified to the parties on 21st November 1991, that the application should be dismissed.

There was an appeal. The appeal has in total lasted almost as long the Tribunal hearing. It first came before the Appeal Tribunal as long ago as 29th November 1993, almost two years ago to the day. On that occasion we heard Mr McParland argue the grounds on which there was an error of law in the full reasons. Unfortunately, there was no one representing the company. It has been dissolved. We explained in a judgment which recorded the various points made by Mr McParland, that we found difficulty in reaching a decision on the appeal in the absence of the respondent.

We adjourned the hearing of the appeal to be re-fixed at a later date. We directed that a transcript of the judgment, recording Mr McParland's arguments should be sent to the solicitors who had acted for Anago Limited and others interested in the affairs of Anago Limited. They would have liberty to give notice of intention to attend on the adjourned hearing of the appeal to make representations on the appeal, and also on the cross-appeal brought by the company.

Directions were given for the restoration of the matter for hearing. On the restoration Mr Fox would be able to make submissions as to why the appeal should be allowed. The right to make submissions on the cross-appeal was also preserved. Directions were given for skeleton arguments. On that basis the appeal was adjourned.

When the matter next came back, there were Notes of Evidence available relevant to the grounds of appeal. No further progress was made. We had to give another judgment without deciding anything.

The position this time was that Anago Limited appeared, so far as it was able to, because it had ceased to exist, by Mr Shalom, the solicitor who had represented them at the Industrial Tribunal. The restored hearing took place on 11th March 1994. It appeared from the facts supplied on the restored hearing, that a problem still existed as Anago Limited had been struck off the Register and dissolved. The problem was that there was no respondent in existence who could resist the appeal or pursue the cross-appeal. No progress had been made towards restoring the company to the Register.

We recorded in that judgment that we now had available the Chairman's notes of Mr Brown's evidence. For reasons which will appear shortly, that crucial part of the Notes of Evidence was required to argue the appeal. Mr Shalom explained the difficulties in making any progress about the restoration of Anago Limited to the Register. The position, as left then, was that Mr Shalom gave a solicitor's undertaking to apply for the restoration of Anago Limited to the Register. He needed an adjournment to do that. Mr McParland, on behalf of Mr Fox, opposed that. He said we ought to allow the appeal and remit it to a different Industrial Tribunal and dismiss the cross-appeal. We were not willing to do that. The course we took was that it was better to wait until effective steps had been taken to restore Anago Limited to the Register.

We thought it was premature to dispose of the appeal before all appropriate steps had been taken to restore Anago Limited to the Register. We therefore adjourned the hearing for three months on Mr Shalom's undertaking to make an application within 14 days for restoration to the Register.

The matter was next due to be heard on 19th December 1994. That date had to be vacated because Anago Limited had still not been restored to the Register. It was not possible to make progress with the appeal. We were informed that the application was well advanced, though it had not been decided.

The position now is that Anago Limited has been restored to the Register of Companies. This is third-time lucky as far as the hearing of this appeal is concerned. We have made clear to the parties, that we would in the course of today, insist that all the arguments were put before us so that we could reach a decision finally on this case today. It really does no credit to a system, meant to be informal, expeditious and inexpensive, that we were unable to resolve the appeal until four years after the decision reached by the Industrial Tribunal.

Is there anything in this appeal? We have heard the arguments on both sides and read the full reasons in the light of the Notes of Evidence. We have the Chairman's Notes of Evidence not only of Mr Brown but also of Mr Fox's testimony.

It is well known that this Tribunal only has jurisdiction to hear appeals on points of law. This is not an Industrial Tribunal which can re-hear, in the absence of evidence, the rights and wrongs of the dispute. All we can do is to examine the decision and the way it has been reached to see if there is a legal error in it.

In this case the Notice of Appeal says there was a procedural error in this decision. In order to understand that, it is necessary to summarise briefly the way in which the Industrial Tribunal decided the case. As already mentioned they dismissed Mr Fox's claim for constructive dismissal.

They summarise the findings of fact and highlighted the issue between the parties. They said that Mr Fox's claim was that he had been dismissed. Anago's response was that they had not employed him. They denied that they were in breach of contract if they had employed him. He was not entitled to terminate his contract without notice. Alternatively, they had acted fairly and reasonably throughout, so that, if he was dismissed, it was fair.

Evidence was given by Mr Fox and also by a former employee of the company and his secretary, Miss Jane Cocking. Evidence was given on behalf of Anago Limited by the president of the American parent company, and a director of Anago Limited, Mr Tim McKibben. Evidence was also given by a former employee of Anago Limited, Mr Stephen Brown. The Tribunal was shown various documents which we have also been shown.

The Tribunal traced the employment history. They concluded, for reasons which we need not detail, that Mr Fox was employed by Anago Limited and that that company was properly joined as a respondent to the application.

They recounted the facts relating to the termination of Mr Fox's employment. In paragraph 7 and succeeding paragraphs, they traced the relationship, which had deteriorated in April 1991, between Mr Fox and Mr McKibben. They gave an account of the circumstances in which Mr Fox told Mr McKibben that the best thing for him to do would be to resign. That was said on 29th April 1991. There was a further meeting between them on the following morning on 30th April 1991. Mr McKibben asked Mr Fox if he still intended to resign? Mr Fox said he did. Mr McKibben said that, in such circumstances, there was no liability on Anago Limited to make any payment to him, but they would do so on an ex-gratia basis. Mr Fox indicated that the offer was generous. He asked Mr McKibben to write to distributors for the company telling them he was leaving and indicating that he was starting a new venture of his own. Mr McKibben agreed to do that. They parted. On the same day Mr Fox wrote to Mr McKibben in the terms of a letter set out in paragraph 11.

The crucial parts of the decision, for the purposes of the argument today, are paragraphs 12, 13 and 14. The Tribunal said this in paragraph 12:

"12. The events after the applicant's resignation would normally be of little importance in a case of this sort. However, there has been a great deal of evidence which throws light on the applicant's decision to resign and helps us in deciding on who to believe when considering the factual issues in the case. We heard from Mr Brown a former employee of the respondents who had been a salesman working under the applicant's control. His evidence which we accept was that in March 1990 he, the applicant, and Dr Garabaway had discussed setting up their own business to sell disposable veterinary products similar to those medical product sold by Anago. They decided to call that firm "BFG Ltd" taking their own initials as the basis of the name. Mr Garabaway dropped out of the plans but Mr Brown and the applicant actively pursued them while they were both employed by Anago. On the day of his resignation the applicant had a meeting with Mr Brown and Miss Cocking his secretary. The plans for the new business were activated, On 2 May advertisements were placed for salesmen and instructions given to a solicitor for the registration of the company BFG Ltd. The applicant was cross-examined about these matters. He told us that he had no discussions with anyone about veterinary products before he left Anago. He said "BFG" was named after a character in a children's book called the "Big Friendly Giant" and that he had no plans to sell veterinary products before he resigned. We note that on Mr McKibben's agenda this matter appeared as an item for discussion but it was not reached by the time the applicant resigned."

"13. Having considered all the evidence [ and by that we understand them to refer not only to the evidence given by Mr Brown, which is referred to in the previous paragraph, but referring to the evidence given by Mr McKibben which is set out in the earlier paragraphs starting from paragraph 7 ] we are of the unanimous view that we prefer the evidence of Mr McKibben to that of the applicant. Where there are differences we accept Mr McKibben's version. We also prefer the evidence of Mr Brown to that of the applicant's. Again where there are differences we accept Mr Brown's version."

"14. On these facts [ so that is on the facts they found in the preceding paragraphs ] we have to decide whether or not the applicant has shown that he was dismissed. [ That has not been criticised as a misdirection and that the issue for the Tribunal was whether he had been constructively dismissed or whether he had voluntarily resigned. ] His case rests on Section 55(2)(c) of the Employment Protection (Consolidation) Act 1978 and he says that he was entitled to terminate his contract without notice by reason of the respondent's conduct. We remind ourselves even if the applicant had made preparations for his departure this must not affect our consideration of the essential facts. A constructive dismissal could have arisen fortuitously at a time when the applicant had already planned to leave. In evidence the applicant told us of the incessant nit picking at Dusseldorf, the fact that Mr McKibben had returned to the United Kingdom without telling him in advance, the fact that his in-tray had been gone through, the fact that Mr McKibben came into the office on 29 April before he said he was going to, the fact that the issues discussed on that morning were more important than the de-briefing following the Dusseldorf conference, the fact that Mr McKibben had openly accused him of having an affair with his secretary, the fact that Mr McKibben wanted to take over the job of Managing Director and make him effectively European sales manager. In addition the applicant says his status in the eyes of his friends and family and the staff of Anago Limited would have been diminished by the proposed alteration in the managerial arrangements.[ Pausing there, having considered all those matters which had been put in evidence by Mr Fox, the Tribunal concluded: ] We do not think that these complaints taken either individually or in their totality amount to justification for a resignation. We do not think that any of them are breaches of the contract of employment. Furthermore we do not think that the proposal that the applicant should concentrate on European sales amounts to a significant change in his pre-existing work.

There has been no criticism from Mr McParland about those directions or those conclusions.

The Tribunal concluded in the final paragraph of the decision with statements that disclose no legal misdirection or error. They said it was for Mr Fox to show that he was dismissed. It was for him to satisfy them that, on the balance of probabilities, that there was a breach of contract by the respondents entitling him to terminate his contract without notice. The Tribunal unanimously concluded that that burden had not been discharged. He was not dismissed and therefore his application failed.

It is a straightforward decision. The claim was for dismissal. The response to the claim was that there had been a voluntary resignation and no dismissal. The Tribunal found on all the evidence that there had been no breach of contract by the employer, and therefore no constructive dismissal. Nothing had happened which would entitle the employee to terminate his contract by reason of the employer's conduct.

Where then is the error?

Mr McParland, in a thorough submission, pinpointed the error as one of procedure. A procedural error can amount to an error of law. A complainant and a respondent are entitled to a fair hearing of their case on each side. If they are not given a fair hearing there may be an error of law which will lead to an appeal being successfully brought against the decision, even though there is no misdirection in relation to the substantive law applied to reach the result.

It is important to bear in mind that the Tribunal's have informal procedures. They have wide powers. They have powers to regulate their own procedure under Rule 13 of the present rules. They substantially repeat the previous rules. They are not obliged to conduct the proceedings with the formality of a court of law, either in matters of evidence or procedure. Their general duty is to make sure that both sides have a fair hearing.

In this case, Mr Fox's complaint is that he did not have a full and fair hearing, and that the appeal should be allowed and the matter remitted to a different Industrial Tribunal. It is argued that the Tribunal have not heard all the evidence which Mr Fox wished to have before the Tribunal. The particular complaints are set out in the grounds of appeal.

The first complaint is that the Tribunal erred in law in denying Mr McParland, who appeared for Mr Fox at the Tribunal as he did here, the right to cross-examination in full of Mr Stephen Brown, one of Anago's witnesses, as to any financial consideration or other inducement he had received or been promised by Mr Tim McKibben in order to testify against Mr Fox. Mr Brown had previously signed a statement, which he believed was an affidavit. Its contents directly contradicted the evidence he gave under oath to the Tribunal. He also indicated to Mr Fox that he would cancel his affidavit if he did not receive sums which he alleged were due to him from Mr Fox. Mr Brown accepted this, and gave evidence to the Tribunal that he had decided to give evidence on the company's behalf after discussions with Mr McKibben shortly before the Tribunal hearing. In the circumstances, it is argued that Mr McParland should have been permitted to cross-examine Mr Brown fully on inducements and so on offered to Mr Brown to secure his evidence, and to consider, where appropriate, the calling of evidence for rebuttal. The Tribunal's refusal of that right was an improper exercise of the Chairman's discretion under the then Rules (Rule 8 of the 1985 Rules of Procedure). Rule 8 provided that:

"(1) The tribunal shall conduct the hearing in such manner as it considers most suitable to the clarification of the issues before it and generally to the just handling of the proceedings; it shall so far as appears to it appropriate seek to avoid formality in its proceedings and it shall not be bound by any enactment or rule of law relating to admissibility of evidence in proceedings before the courts of law."

It was also argued that there was perversity in the decision in finding that the allegations contained in Mr Brown's evidence and summarised in paragraph 12 of the Tribunal's decision, were allegations which Mr Fox had been specifically cross-examined about. It was said that Mr Fox had not been cross-examined on the matters identified in paragraph 12. They relied on the fact that the Tribunal Chairman agreed with Mr Fox's counsel on this fact, on the latter's objecting during Mr Brown's evidence-in-chief that this evidence had not been put to Mr Fox in cross-examination. The Tribunal Chairman stated this opinion to the solicitor for the company at that time. If the Tribunal Chairman had indicated otherwise, an application by counsel for Mr Fox could have been made to recall him to allow him to rebut the allegations made. In the light of the Tribunal Chairman's agreement with counsel for Mr Fox and no application by the company to recall Mr Fox to put these matters to him, Mr Fox and his counsel were entitled to proceed on the basis that the allegations contained in paragraph 12 of the Tribunal's decision had not been put in cross-examination and would be treated by the Tribunal appropriately. The Tribunal's decision to rely on the evidence of Mr Brown, as set out in paragraphs 12 and 13 decision, without any further explanation or discussion in the light of the evidence produced to the Tribunal indicating the unreliability of the witness, was, in all the circumstances of the case, perverse and/or an error of law. For those reasons the matter should be re-heard by a differently constituted Industrial Tribunal.

The points were fully argued by Mr McParland. He gave an outline of the factual background to the procedure adopted at the Tribunal: how Mr Brown was called as a surprise witness for the company, and of the cross-examination of Mr Brown. These matters are dealt with in detail. We have taken them into consideration.

Mr McParland made detailed submissions about limitations on the exercise of a tribunal's discretion in relation to evidence and procedure. None of these propositions is disputed. They are set out in our first judgment need not be repeated. It was argued that, on the basis of the law which is summarised in those submissions, the Tribunal erred in law in refusing to permit the full cross-examination of Mr Brown. It was specifically argued that his evidence was crucial to the issue in the case whether Mr Fox resigned for ulterior motives or whether he had been constructively dismissed. Mr Brown's credit was an issue. A clear foundation was laid as a basis for believing that Mr Brown would be prepared to tell lies under oath before the Industrial Tribunal, if he thought it was in his financial interest to do so. A clear foundation had been laid as to the basis for Mr Brown threatening to nullify his affidavit and contact Mr McKibben, unless he received money or other benefits from Mr Fox. Cross-examination on the lines proposed by Mr McParland was permissible. It was an error of law on the part of the Chairman to prevent the line of questioning which Mr McParland wished to pursue.

He submitted that there was no proper basis in law for the Chairman refusing to allow him to cross-examine on this aspect of the case. The evidence which he sought to adduce in cross-examination was admissible and relevant. The decision was reached by an error in the exercise of the discretion as to procedure. The only way in which this could be remedied was by ordering a new hearing by a different Tribunal.

Mr McParland explained more briefly the objection to the evidence given by Mr Brown but not put to Mr Fox in cross-examination. He advanced legal proposition, which was not disputed, that, as a rule, a party should put to each of his opponent's witnesses in turn so much of his own case as concerns that particular witness. If he asked no questions he will generally be taken to accept the witness's account and will not be allowed to attack it in his closing speech. Nor will he be allowed in that speech to put forward explanations when he has failed to cross-examine relevant witnesses on the point. In this case there was a failure to observe that rule. That appeared to be accepted by the Industrial Tribunal Chairman. Matters were given in evidence by Mr Brown which had not been put to Mr Fox in cross-examination. The Tribunal should either have refused to consider this evidence by Mr Brown without these points being put to Mr Fox, or at least have indicated to Mr McParland, as Counsel for Mr Fox, that he should decide whether or not he wanted to recall Mr Fox to deal with the matters in question. This was a further error of law or perversity in the Tribunal's decision which justified the matter being remitted to a fresh Tribunal. Those in outline are the arguments. We have to consider whether they amount to an error of law such as to lead to this case being remitted for a re-hearing some four or five years after the original hearing.

We have reached the conclusion that there was not an error of law by the Tribunal in the procedure in this case. Our reasons for that conclusion can be briefly stated.

It appears from the Notes of Evidence, which we did not have before us when this matter was first dealt with by this Tribunal in November 1993, that there was cross-examination of Mr Brown. It was elicited in that cross-examination that Mr Brown admitted he had told lies in the statement. It also appears from the cross-examination on page 52 that he had been asked to come to the Tribunal to give evidence shortly before the hearing. It was put to him that he had been offered sums of money to come to give evidence and was asked, if so, what sums there were. It appears from the notes that an answer was given by Mr Brown "No, I was not.". Then the Chairman made a notes in his Notes of Evidence, "No further questions were allowed on this line of questioning." Mr Brown went on to say "I was not assured that no action would be taken against me if I gave evidence today." Cross-examination followed on other points. The narrow focus of this appeal is on the point that no further questions were allowed on the aspect of financial inducements to Mr Brown to give evidence.

It was within the discretion of the Chairman to decide that as that question had been put in general terms and received a negative answer, it was not necessary for it to be pursued in further detail. Even if the Chairman was wrong on that, however, it appears to us that Mr Brown's evidence was not crucial to the critical point in the case. It appears to us that the Tribunal did not think that it was. In his submissions, Mr McParland made much of the fact that in the Tribunal decision paragraph 12, some detail was set out of Mr Brown's evidence. In paragraph 13 the Tribunal expressly preferred Mr Brown's evidence to that of Mr Fox. Therefore their findings on Mr Brown's evidence had an operative effect on their decision to reject Mr Fox's claim that he had been constructively dismissed. We think that, on a fair reading of the decision as a whole, the evidence of Mr Brown was not critical to the question of constructive dismissal. Having regard to the detailed evidence and findings of facts on the basis of that evidence given by Mr McKibben from paragraph 7 onwards, the Tribunal reached a conclusion that they accepted Mr McKIbben's evidence where it conflicted with that of Mr Fox. This is made clear in the first two sentences of paragraph 13. On that finding alone, the Tribunal were entitled to come to conclusion that Mr Fox had failed to prove that the company, Anago Limited, had acted in breach of contract and therefore failed to prove that this was a case of constructive dismissal. No doubt the evidence of Mr Brown was relevant to a possible reason or motive that Mr Fox might have for resigning his position, but it was not critical to the question whether the company had acted in breach of contract. The clear reasoning of the Tribunal was that the matters relied upon by Mr Fox as constituting a breach of contract and summarised in paragraph 14 did not amount to a breach of contract. Therefore there could be no case of constructive dismissal. Their finding on this point is, we agree with Mr Shalom a finding of fact, not a finding of law. There can be no appeal against that.

We agree with Mr Shalom that, even if there was some error of law, which we do not think there was in the Tribunal stopping the cross-examination of Mr Brown on the question of financial inducements, there has been no such error as would vitiate the decision. It was possible for the Tribunal to come to a conclusion on the evidence they heard from Mr McKibben that there was no discharge of the burden of proof on Mr Fox that there was a breach of contract by the company.

Our reasoning along those lines also leads us to reject as an error of law the argument that the Tribunal should not have acted on the evidence of Mr Brown which had not been put to Mr Fox in cross-examination.

In brief, we dismiss this appeal as there is no case established that there is any error of law in the decision that Mr Fox failed to prove that he had been constructively dismissed. There was no error of law in the exercise of the Tribunal's discretion in relation to evidence and procedure. Even if there was, it did not effect the result of the case.

We have heard argument on a number of other details set out in the skeleton arguments of Mr McParland and Mr Shalom. It is not necessary to examine the details of those in order to justify the dismissal of this appeal.

For all those reasons the appeal is dismissed.