Midland Bank Plc v Whittington & Anor [1995] UKEAT 453_94_1302

EAT
Midland Bank Plc v Whittington & Anor
[1995] UKEAT 453_94_1302 · 1995-02-13
MR JUSTICE MUMMERY (PRESIDENT) : This is an appeal by the Midland Bank against the decision of the Industrial Tribunal held at London (North) on 26 August 1993 and 2/3 February and 10 March 1994. The Tribunal heard applications for unfair dismissal brought by two former employees, Mrs Shah and Miss Whittington. For reasons in extended form running to 19 pages and 78 paragraphs, the Tribunal unanimously decided to dismiss Mrs Shah's application and to grant Miss Whittington a declaration that she was unfairly dismissed and ordered that she be reinstated to the position she held at the time of her dismissal.The extended reasons were sent to the parties on 21 March 1994. The Bank was dissatisfied with the result and appealed by a Notice of Appeal served on 3 May 1994. Mrs Shah did not appeal against the decision to dismiss her claim.On the appeal Mr Birtles has represented the Bank and Mr Hughes has represented Miss Whittington. The appeal hearing has taken a rather unusual course for this reason. By the end of the hearing this morning the Tribunal had formed provisional views as to the proper way to determine the appeal. Mr Birtles had outlined 3 areas relevant to his appeal; the first relating to the reason for dismissal; the second relating to the unfairness of dismissal, in particular the question of investigation carried out by the Bank, and the third, an area concerned with the Order for reinstatement.We had read all the papers before sitting this morning, including the two full and helpful Skeleton Arguments. Having heard Mr Birtles arguments this morning and studied the decision in detail with him, we formed the provisional view that(a) there was a misdirection by the Tribunal in paragraph 17 of the decision relating to the reason for dismissal and(b) that there was a further error of the Tribunal in failing to address all the considerations relevant to the fairness of the dismissal under section 57(3) of the Employment Protection (Consolidation) Act 1978 . We also formed the provisional view, contrary to the submissions Mr Birtles initially made, that, if we were right in the views we had formed, the correct course was to remit the matter to an Industrial Tribunal for a re-hearing. Mr Birtles had initially submitted that if we allowed the appeal the proper course was to find that the dismissal had been fair and dismiss the complaint.We informed the parties of those provisional views so that they could re-assess their position on this appeal. When the Tribunal reconvened after the midday adjournment we heard the rest of the arguments relating to the reason for dismissal point dealt with in paragraph 17 of the decision. Mr Hughes advanced arguments for Miss Whittington as to why there was no error of law in that paragraph and in support of his overall submission that we should dismiss the appeal.At the end of all the arguments on the first point we withdrew to consider the arguments. We have come unanimously to the conclusion that this appeal should be allowed on the ground that paragraph 17 contains an error of law which makes it necessary to remit the case to an Industrial Tribunal for re-hearing. In those circumstances it has not been necessary for us to hear argument or make any decision on any other aspect of the Bank's appeal.Before justifying that course we would say this. We think it is a matter of regret that we feel compelled to remit this matter to the Industrial Tribunal over 2 1 / 2 years after the events which gave rise to the claim. This course means that more time and money will have to be spent on the case. Perhaps more important it means more anxiety and stress for the individuals involved. We hope that the parties will reconsider the position and that the matter will not proceed before the Industrial Tribunal for a re-hearing until there have been discussions between the parties to see if there is not a way of resolving this dispute. We do not often make such observations because it is not our function to effect settlements of cases; it is to decide the cases that cannot be settled. But occasionally there are cases which are unsatisfactory whichever way they are decided. In this case we have sympathy both with the position of the Bank and with Miss Whittington who believes she has been unfairly dismissed.We now wish to justify the course we have taken. We shall not discuss detail since, if this matter does go back to another Industrial Tribunal, it must not feel constrained by comments about the merits of the case.The background to the dispute is this. Miss Whittington worked as a cashier at the Temple Fortune branch of the Midland Bank. She had been an employee of the Bank since August 1985. She presented a complaint of unfair dismissal against the Bank on 27 January 1993 arising out of the circumstances in which she was dismissed from her employment. The circumstances were these. On 19 June 1992 it was discovered that the automatic cash machine at the Temple Fortune branch was £5,040 short. £40 was traced to an error and corrected. The remaining £5,000 was traced to a discrepancy on 12 June 1992 when the amount shown on the cash machine account as having been added to it was £40,000 whereas only £35,000 was shown to have been added to the machine by the cash machine's own note counter.Mr Murphy was called in to investigate. He interviewed members of the Temple Fortune branch staff, including Mrs Shah and Miss Whittington. In his report he stated that it was established by the admissions of those two women that only they had had the opportunity to take the missing £5,000. He reported that there had been a failure by both of them to comply with correct bank procedures in relation to the events which occurred on 12 June 1985.As a result of Mr Murphy's report both Mrs Shah and Miss Whittington were suspended. There was a disciplinary hearing on 17 and 18 November. In consequence of the disciplinary hearing a decision was made to dismiss them both. Subsequent appeals against that decision in December 1992 were dismissed. It is important to examine at the letter of dismissal sent to Miss Whittington. That was dated 23 November 1992 and it read:
"I refer to your interview of 17th November held under Stage 2 of the disciplinary procedure for Gross Misconduct.
I write to confirm that you are dismissed by reason of your conduct in failing to follow procedures, resulting in a breakdown of trust between yourself and the Bank, concerning your involvement in an A.T.M. difference of £5000 at Temple Fortune branch. Your dismissal from the Bank is without pay in lieu of notice and will be effective from 18th November 1992.

You are reminded that you have the right of appeal against this decision..."

In the Bank's procedure for gross misconduct there are a non-exhaustive list of matters which may be dealt with under that procedure. They include, first, when an employee seriously contravenes or knowingly fails to report any serious contravention of the Bank's established procedures. They also include when an employee acts dishonestly or knowingly aids and/or abets another employee acting dishonestly, such as misappropriating or withholding money or other property.It will be noted that the reason that the Bank gave in the letter of dismissal was failure to follow procedures resulting in the loss of trust and of £5,000. Miss Whittington was aggrieved by the decision to dismiss her and in her Originating Application she set out her account of the events of 12 June 1992 and the subsequent suspension and disciplinary procedures. She said:
"In view of these matters and having worked at the Bank for 7 years with a clean record, I submit that their action is a blot on my character and grossly unfair to my standing as a honest person."
The Tribunal clearly had sympathy with that complaint. Having set out the relevant dates, the facts concerning Miss Whittington's employment and the events leading up to her dismissal the Tribunal, in paragraph 17, dealt with the question of the reason for Miss Whittington's dismissal. On that paragraph Mr Birtles, for the Bank, rests his first submission, that the Tribunal misdirected itself in law:
"Under section 57(1) of the Employment Protection (Consolidation) Act 1978 ("the Act"), it is for the Respondent to show the reason for the dismissal of each of the Applicants. Here, ostensibly, the reason advanced is gross misconduct on the part of both. We note, however, the extremely woolly way in which the gross misconduct is alleged. Essentially it is alleged to consist of failing to follow procedures. Mr Poulter, however, [he heard the appeal] told us that dismissal would have been unlikely to follow a mere failure to follow a procedure (unless previous warnings had been given, which was not the case in respect of either of the Applicants). We were also told that Mr Lydon, the manager of the Temple Fortune Branch in June 1992, had not been made the subject of formal disciplinary proceedings but had merely been given an oral reproof for failing to have insisted more rigorously on the relevant procedures being followed. Furthermore, in November 1992, five months after the incident at Temple Fortune, the Respondent found it necessary to issue a circular to staff drawing their attention to the procedure for transferring cash between cashiers and then again the following month thought it expedient to issue a further circular to staff specifically pointing out that the procedure had to be followed in relation to the loading of automatic cash machines. Having considered all the evidence before us, we find that the true reason for the dismissals was not that the Applicants had failed to follow one or more of the Respondent's procedures but that it suspected that each of them, either alone or in collusion with the other, had stolen the missing £5,000."
The Tribunal dealt with other details of the case. They made it clear that there was no complaint of procedural unfairness. The issue in both cases was whether the dismissals were fair or unfair in substance. The Tribunal set out an extensive consideration of the relevant case law and of the course of the Bank's investigations. This is dealt with in great detail. The conclusion reached by the Tribunal was, in paragraph 70:
"that, before deciding to dismiss either of the Applicants [Mrs Shah and Miss Whittington] Mr Bradbury had a duty to compare and contrast the evidence against each of them. In our view, section 57(3) of the Act requires that to be done..."
They refer to the cases cited on that point. They held that:
"In the light of those cases we consider it was not enough for Mr Bradbury to dismiss both Applicants merely because he could not prove the guilt of either Applicant beyond reasonable doubt. In our view he was applying the wrong test. By applying the test of reasonable doubt, he was invoking the one normally to be satisfied in Criminal Law cases. In effect, he was saying to each of them that she would be dismissed unless she could satisfy him of the guilt of the other (for it is well-recognised that a person is never called upon to establish her innocence). His duty, however, was to consider the evidence according to the Civil Law, he should therefore have looked to see whether on the balance of probabilities first Mrs Shah and then Miss Whittington, both cases being considered separately, could reasonably be considered to have taken the money. The cases quoted then establish that he should have compared and contrasted the various points of evidence in favour and against each of them and considered whether there were solid and sensible grounds (not necessarily related to the loss of the £5,000) for differentiating between the two.
Had Mr Bradbury done as we consider he should, ie had he made such a study of the evidence as we have outlined in the preceding paragraphs, then we consider that he would have found that a very strong case indeed could be made out that it was Mrs Shah who had taken the money and practically no case at all that it was Miss Whittington who had done so.Mr Bradbury should, in our view, also have borne in mind that a clever thief usually endeavours to ensure that he or she takes the money at a time when suspicion will not fall on him or her or does so at one at which suspicion will fall on a number of other people as well as himself or herself."The Tribunal set out the matters which Mr Bradbury should have considered in relation to Mrs Shah and the matters that he should have contrasted with the position of Miss Whittington.The Tribunal considered that, while it was reasonable to decide to dismiss Mrs Shah, it was unreasonable to decide to dismiss Miss Whittington. They said in paragraph 75:
"we hold that the Respondent's dismissal of Mrs Shah was fair within the test set out in Section 57(3) of the Act but that that of Miss Whittington was unfair within that test."
Finally they dealt with the question of Miss Whittington's reinstatement.That is the shape of the decision as a whole. It is unnecessary to deal with all the areas which Mr Birtles has covered in his Skeleton Argument because he has satisfied us, notwithstanding strenuous submissions to the contrary by Mr Hughes on behalf of Miss Whittington, that paragraph 17 contains a fatal error of law. The fatal error is contained in the last sentence of the paragraph. It is preceded by a number of observations irrelevant to the issues in the case. The error is in the sentence in which the Tribunal substituted for the reason given by the Bank, what they considered to be the true reason for the dismissals.In the dismissal letter the Bank, having conducted interviews, disciplinary hearings and an appeal from the disciplinary hearings, refrained from dismissing Miss Whittington for suspected dishonesty. It was made clear in the second paragraph of the letter that the reason for the dismissal was that her conduct was that of failing to follow procedures. That failure had two results: first, a breakdown of trust between herself and the Bank and, secondly, the consequential loss of £5,000.The Tribunal thought that was not the true reason for the dismissal. They said expressly:"we find that the true reason for the dismissals was not that the Applicants had failed to follow one or more of the Respondent's procedures".The Tribunal thought that the true reason was the suspicion that each of them, either alone or in collusion with each other, had stolen the missing £5,000.In our view, that was a course which the Tribunal were not entitled to take. The evidence, (we have the Chairman's Notes of Evidence), shows that the Bank, before deciding whether to dismiss or not, instigated the most thorough of investigations by interviews, disciplinary hearings and appeals. The purpose of the investigations was to establish how £5,000 had gone missing.After the conclusion of those investigations the Bank came to the conclusion that it was not able to prove satisfactorily against either Mrs Shah or Miss Whittington the dishonesty which it was suspected had occurred in relation to the missing £5,000. The Bank therefore did not dismiss for reasons of gross misconduct in the form of dishonesty. They dismissed for a lesser but genuine reason, the uncontradicted fact of failure to follow procedures. What the Tribunal did, in saying that the true reason was suspicion of dishonesty, was incorrectly to substitute a different reason for dismissal for the reason which the Bank gave and which was supported by the evidence given by them. In our view, there was no justification for the Industrial Tribunal's conclusion. As Mr Birtles pointed out, they did not spell out the primary findings of fact on which they based their conclusions as to the true reason. They simply referred, in an omnibus way, to having considered all the evidence. When one examines the Notes of Evidence and the documentary evidence there was ample material to substantiate the reason given by the Bank for the dismissal as stated on 23 November 1992. Other statements relating to suspicion of dishonesty when taken out of context might lead to a contrary conclusion but in our view, on the totality of the evidence the reason given by the Bank can be reasonably regarded as the genuine reason.Having misdirected itself in paragraph 17 it was almost inevitable that the Industrial Tribunal would then proceed to consider the case in an impermissible way. In the circumstances it is not necessary to discuss other individual points.Mr Hughes, in his submissions, strongly urged us not to allow the appeal. The substance of his case was that, whatever the letter of 23 November 1992 said relating to procedures, the real reason for the dismissal was the breakdown of trust between the Bank and Miss Whittington. The reason for the breakdown of trust was not the failure to follow procedures, but the suspected dishonesty in the loss of the £5,000.We are unable to agree. It seems to us that there was sufficient material on which a reasonable employer in the position of the Bank could form the genuine view that failure to follow procedures resulted in a breakdown of trust, particularly if failure to follow the procedures had, as here, led to the loss of money. Mr Hughes referred us in some detail through passages in the Notes of Evidence, but, at the end of the day he has not made out a case to support the approach of the Tribunal in paragraph 17.For those reasons the Tribunal erred in law. The matter must be remitted to the Industrial Tribunal. The Tribunal has never fully addressed the test in section 57(3). In section 57(3) it was the duty of the Tribunal, in considering whether the dismissal was fair or unfair, to have regard to the reasons shown by the employer and to all the circumstances relevant to whether the employer had acted reasonably or unreasonably in treating that as a sufficient reason for dismissing the employee. The Tribunal is under a duty to determine that in accordance with the equity and substantial merits of the case. The Tribunal cannot have properly addressed itself to these provisions if it took the view, as we think it did wrongly, that the true reason for dismissal was the suspicion of dishonesty. That coloured the rest of the decision.This matter must be remitted to an Industrial Tribunal to consider, in the light of the reason given in the letter of 23 November 1992, whether the Bank acted reasonably in dismissing Miss Whittington. It is for those reasons that we felt it impossible to accede to Mr Birtles' submission that, if we allowed the appeal, we should declare that Miss Whittington had been fairly dismissed.The appeal is allowed for an error of law in paragraph 17 of the decision. The matter is now to be remitted to an Industrial Tribunal to re-hear. They will re-hear it on the basis that the reason for dismissal was that given in the letter of 23 November and then consider all the matters which they are bound to consider under section 57(3) - whether it was reasonable to dismiss Miss Whittington for the failure to follow the procedures in relation to the automatic telling machine.