James Bowman & Sons Ltd v Norman [1995] UKEAT 456_94_0806

EAT
James Bowman & Sons Ltd v Norman
[1995] UKEAT 456_94_0806 · 1995-06-08

JUDGE HULL QC:

This is an appeal to us by James Bowman & Sons Ltd ("the employers") against a decision of an Industrial Tribunal sitting at Reading under the chairmanship of Mr Jenkinson, with two industrial members, on 10 February 1994.Mr Norman had made a complaint to them that he had been unfairly dismissed. He said that the nature of his complaint was that there had been unfair selection for redundancy, which of course would be the same thing as unfair dismissal and he asked for compensation. In their Notice of Appearance, the IT3 as it is called, of 7 October 1993, the employers said that he had, indeed, been dismissed for redundancy.The short history of the matter is that from 1978 to 1984 Mr Norman was employed as a salesman by the employers. Then he left. Nothing turns on that. Then he returned to their employment as a sales executive (I think it is properly described) on 1 July 1987. Very shortly before his departure from the company on the second occasion, which was on 28 May 1993, another salesman with very different qualifications and dealing in a different type of business, a Mr Harwood, joined the company and then there came the events with which we are directly concerned. I can, I hope, most usefully deal with it by reading from the decision of the Industrial Tribunal on the facts. They say:
"7 In the Spring of 1993 the board decided that they had too many eggs in one basket; their supplies to one particular customer exceeded 25% of total volume. They determined to limit that volume .... . "
Then there is evidence:
"8 At a further meeting of the board in April 1993 Mr Knight who was a member of it was given forceful instructions to make whatever choices were necessary to retrieve the situation [Mr Knight was the Commercial Director of the Company]. He had been in post only since February 1993 when the preparation of budgets for the year 1993/1994 had already begun."
Then they refer to various documents, and go through certain documents which were laid before them relating to reorganisation. They refer to the actual sales figures. In paragraph 13 they refer to the merging of sales territories, which had been considered by the employers, and Mr Knight concluded that since they had it in mind to make Mr Norman redundant, they could achieve that
"13 .... by transferring a third of the applicant's trade to ... Mr Warren. A large number of Mr Norman's customers did not appear to be giving the respondents a sufficiently high proportion of the respondents trade - in fact they did not justify the time and trouble spent in visiting them; of those some could be apportioned to tele-sales [I take it that means calling them on the telephone] while contacts with others could be dispensed with; in turn his few larger customers could be transferred to Mr Harwood [that was the new sales executive or salesman or whatever the right name is who, as I say, is a highly qualified and specialist gentleman] for the purpose of development while others could be handed over to the Northern sales team."
Then they refer to the way in which matters were to be distributed, the accounts, as they call them. They say in paragraph 20 of their decision that since the matter was urgent:
"20 On 10 May 1993 Mr Knight called Mr Norman by telephone and asked him to a meeting at 4.00 pm on Wednesday 12 May. .... ."
He had a discussion and the meeting ended with him telling Mr Norman that he was tobe made redundant.
"Mr Norman, not surprisingly was very distressed and upset. Told that he was to be made redundant he asked why him.
21 Mr Knight reiterated what he had said. Mr Norman asked for time to think and Mr Knight agreed. However, he gave Mr Norman a letter dated 12 May which confirmed his redundancy with effect from Friday 14 May ..... . He wrote .... `we have concluded that the principle business can be assimilated within the resources existing elsewhere in the sales team. Consequently, I have to advise you that your position will be redundant with effect from Friday 14 May ....' and he went on to outline the termination payments which the company would make, which including an ex-gratia payment totals ...." [and they set it out].They then refer to several matters in connection with this reorganisation. At paragraphs 26-28 they say:
"26 The respondents had set up a new sector within the company in February 1993. Mr Knight discussed with Mr Bowman the possibility of Mr Norman's transfer to this set-up a week before the termination of his employment.
27 Mr Norman had previously been employed by the respondents [that is the previous employment to which I have referred] from August 1978 until October 1984 before rejoining in August 1987. .... .28 The company has, subsequent to Mr Norman's dismissal, with effect from mid-November 1993, taken on a new sales representative to cover the West Country as far east as Dorset, South Wales and Hereford and Worcester. This covers a part of Mr Norman's former territory. As regards the new sector [and they are referring there back to the passage I have just read] set up in February the respondents employed a second salesman whose application was considered in February and who actually joined them in June 1993."That information was ostensibly only relevant to enquiries as to whether there was indeed a redundancy situation. It was apparently given in cross-examination of the employers' second witness; the employers of course began at the hearing because they had to justify the dismissal and that evidence was given in response to questions put by the Tribunal to the second witness. Then they went on, quite correctly:
"29 It is for the respondents to demonstrate to the Tribunal the reason for the dismissal and that it was a reason falling within Section 57(2) of the Employment Protection (Consolidation) Act 1978. The respondents resisted the claim on the grounds that Mr Norman was dismissed by reason of redundancy .... [and they correctly set out the second main head of redundancy]:
`(2) For the purposes of this Act an employee who is dismissed shall be taken to be dismissed by reason of redundancy if the dismissal is attributable wholly or mainly to:-(b) the fact that the requirements of that business for employees to carry out work of a particular kind, or for employees to carry out work of a particular kind in the place where he was so employed, have ceased or diminished or are expected to cease or diminish.'"Then they say this:
"30 The respondents have not fulfilled their obligation under Section 57(1) of the 1978 Act. They took on Mr Harwood as a new employee in March, dismissed Mr Norman in May and six months later took on another sales member of staff. While management are entitled to make a decision to reapportion the work of a member of their workforce among the other members and then to dismiss the one thereby reducing the number of the workforce, we do not consider in the circumstances of this particular case that their decision arose from a redundancy situation.
31 The respondents laboured under a disadvantage in that while they were able to produce documentation relating to sales, they did not produce a single minute or note relating to their decision making process, save for the minute of the board meeting on 18 March 1993 which describes a discussion of the company's situation only in the most general terms. The requirement of a business for employees to carry out work of a particular kind can diminish in two different ways: the work itself may cease or diminish, alternatively a reorganisation may enable the same work to be done by fewer employees; [and they cite a case] ....32 We do not find that in the present case the work itself ceased or diminished; alternatively if there was a reorganisation, it was put into operation after the engagement of Mr Harwood. There was no contemporaneous documentation to support the existence of a planned re-organisation and after Mr Norman's dismissal the workforce was within months brought up to the same strength again. We do not consider that this dismissal resulted from a re-organisation. The actions of the respondents look very near to a manoeuvre to secure the departure of Mr Norman. Taking those facts into account, we do not conclude that this dismissal is one arising from some other substantial reason, as defined in Section 57(1)(b) of the 1978 Act. To be fair to the respondents they never suggested that this was a reason and to that extent the Tribunal agree with them.33 As the respondents have not shown what was the reason for the dismissal, they have failed to fulfil the requirements of Section 57(1) and the application succeeds."And they then add in paragraph 34:
"34 .... if we had found that the respondents had established a reason falling within the provisions of Section 57(1) and (2) we should have found this dismissal to be unfair on procedural grounds at least because he was virtually dismissed on the nod."
And they refer to the necessity for a future hearing on the question of remedy.The central attack on this decision which is made by Mr Ray, who appeared for the employers before the Industrial Tribunal, is as follows. He says here, if you look at the application form, the IT1, it was put by Mr Norman that his complaint was "unfair selection for redundancy". He did not dispute that there was a redundancy situation; that he was being dismissed for redundancy. The Respondents resisted his claim that he was unfairly selected for redundancy on various grounds which they set out in their IT3, the Notice of Appearance. And so, says Mr Ray, what the Tribunal have done is to make a finding which had nothing to do with the submissions which were made to them.They were considering a case in which both sides agreed that the question before the Tribunal was "unfair selection". He had been chosen when somebody else should have gone and that was not in dispute, says Mr Ray. He developed that in his skeleton argument. He says they did not raise the question of the obligation under Section 57(1) of the Employment Protection (Consolidation) Act 1978. That is unfair he says, and he says in paragraph 2 of his skeleton argument that:
"2. The Respondent's evidence in chief and cross examination confirmed [that of course, is Mr Norman] his claim was one of unfair selection for redundancy and confirmed his agreement that the reason for his dismissal was not in question, therefore, the issue of the reason for dismissal was not raised or ventilated. It is contended that the Industrial Tribunal should have invited submissions from the Applicants on the question of the reason for dismissal if the Tribunal were subsequently going to decide that this question was dispositive of the case. It is contended that, because the parties agreed the reason for dismissal was redundancy, it was necessary for the Industrial Tribunal to warn the parties before the closing speeches were concluded that the Tribunal was troubled on this aspect."
And he cites authority for the undoubted proposition which we should, I think, accept without any authority because it is so well established: that if a judicial Tribunal, of any description, is minded to make a finding or minded to consider making a finding against any party, and it is not obvious that that is a matter which is in issue, they must tell the person concerned, who is likely to be adversely affected, what is in their minds, at any rate as a possibility, to give that party a chance to deal with the matter.There is no doubt that that is a correct proposition and one of the requirements of natural justice. It is pointed out that natural justice is not expressly referred to in the Notice of Appeal, but Mr Segal who appears for the Respondent to this appeal, Mr Norman, very fairly says that if we were of opinion that natural justice had not been observed then he, for his part, would not oppose the raising of the point or our decision on that ground.Then, he says, there was confusion over the true construction of Section 81(2)(b) quoted by the Industrial Tribunal. He says that they had sufficient facts before them to show on balance of probabilities a prima facie case of redundancy. He repeatedly refers to the evidence and he says paragraph 32 is perverse"in that they had already determined their written reasons that the work performed by the Respondent had not only diminished but what remained had been reallocated to other employees resulting in a reduction from three salesmen to two".So he finally suggests, in paragraph 6 that:"they substituted their own view which was not supported by any evidence or allegations made before the Industrial Tribunal that the actions of the Respondents look very near to a manoeuvre to secure the departure of Mr Norman ....".And he says:
"In support of this submission it was never suggested by any party that the Applicants had any reason for dismissing the Respondent other than for redundancy and on the balance of probabilities the great weight of evidence and facts contained within the Industrial Tribunal's written findings support the view that the Applicants had fulfilled their obligations under Section 57(1) of the Employment Protection (Consolidation) Act 1978."
The first thing to notice is that the references to evidence there are unhappy. We have not obtained, or been asked to obtain, the Chairman's notes of evidence, and in so far as it is suggested that a finding is perverse, unless it is quite obvious on its face that it is illogical and irrational, the nature of perversity is that something is unsupported by evidence, or that it is contrary to the evidence. In both cases we must have the evidence.We are also told that, contrary to the assertions made in this skeleton argument, which is (if I may say so) a carefully drafted one, it was, says Mr Segal on instructions from his client, most certainly suggested that there was not a redundancy situation. It most certainly was suggested that there was no genuine redundancy here. Those are the instructions which Mr Segal has.It is somewhat idle for us to go into that question without the notes of evidence, but we observe that there are indications, throughout these reasons, not only that the Tribunal had very much in mind throughout that they wanted to know what the reason was and were not satisfied as to the reason for the dismissal, but also that questions were being put, if only by the Tribunal, during the hearing at a time when (so to speak) "the ball was in the employer's court", questions were being put which were relevant to this question and we think that it would have been sufficiently obvious, so far as we can judge at a distance like this, that this was a matter which the Tribunal had in mind. Had the employer succeeded in showing the reason for dismissal?It is, of course, true that the employers might have entered into the hearing on the false assumption that this was not a matter which was in dispute, but it looks very much as if they were quickly disabused because of the amount of detail which was given to the Tribunal; the way in which they most carefully considered the re-distribution of work and so on; and the documents which were put before them. That makes it look very much as though the employers were minded to discharge this burden of proof. And if they were not, they most certainly should have been because, under Section 57(1), it is for the employers to show what the reason is for the dismissal.It is true that if the employee starts off by saying "I accept that the reason for my dismissal was redundancy", which would be going a good deal further than the IT1 here, then it may very well be that the employers will say "Well can we act on that and not call any evidence, are you content with that?" And if the employee says "Yes, I am entirely content that there was a redundancy here and that is why I was dismissed," the employers may then say to the Tribunal "The burden is on us. Do you, in the circumstances, want to investigate that or are you too satisfied, from this agreement between the parties, that this is not a live issue and we can go on to the questions of selection for redundancy and consultation and any other procedural matters which arise?" The Tribunal may or may not be. If they see Counsel on both sides and, in particular, if Counsel practise in this field, they may say "Well the Tribunal is content, seeing the agreement of both parties, to proceed without any enquiry about that". They may not. It is their duty to enquire and it is for the employers to prove. The employers must always be ready to prove what is the reason for the dismissal.In those circumstances, to suggest that there is here some sort of misleading of the employers; some sort of estoppel maybe; some sort of waiver of the point, is wrong. The burden remains on the employers and it could only be said that there is unfairness or a breach of the rules of natural justice, or something like that, if it can be said that throughout the employee encouraged the employers to regard that as a dead issue and throughout agreed that this was a genuine redundancy situation.On the contrary, that was put in issue and so far from Mr Norman being represented by experienced Counsel he was, in fact, just there with a friend. So that it behoved the employers to say "Here we have in effect a litigant in person and clearly we must prove our case". There may come a point at which the Tribunal says "Well we have heard enough of that for the moment. It does appear to us that there was a redundancy here and subject to anything which the employee says in due course, we are content with the evidence which we have heard so far". Clearly, that was not the situation here and clearly, this Tribunal never said anything of the sort.There is a criticism of the way in which the Tribunal expressed themselves, in paragraph 31. In particular they say:
"31 .... The requirements of a business for employees to carry out work of a particular kind can diminish in two different ways: the work itself may cease or diminish, alternatively a reorganisation may enable the same work to be done by fewer employees; ...."
That is certainly, in many cases, an over-simplification. There may be other ways in which their requirements may cease or diminish, or at any rate diminish. For example, they may show the employees a way to work more efficiently so that five men may do the work of six. They may encourage the workers to work harder and tell them that it is a desperate situation that the company is in. They have got to part with, say, one man out of six so that the other five must do his work too. They may reorganise or not reorganise at all and simply say "We want you to work longer hours" or they may introduce, of course, a new machine.There are many other examples one can think of in which the requirement for employees to carry out the work diminishes. But nonetheless, we do not think that that is, in fact, a substantial criticism. They say "We do not find that in the present case the work itself ceased or diminished; alternatively if there was a reorganisation, it was put into operation after the engagement of Mr Harwood". And then they make the comment about the lack of contemporaneous documentation. They were entitled to make that comment. The reorganisation papers are dated after the decision, a week or so after the decision to dismiss had been taken or, at any rate, after it was communicated to Mr Norman.They say "after Mr Norman's dismissal the workforce was within months brought up to the same strength again. We do not consider that this dismissal resulted from a re-organisation. The actions of the respondents look very near to a manoeuvre to secure the departure of Mr Norman". One could (if we may say so) have wished that they had not put it like that. If they meant to find that this was not put forward in good faith, then they should have said so. If it was merely suspicion in their minds, they would have done well not to voice it. It was enough for them to say they did not accept the evidence which was put before them by the employers, but they voiced this suspicion and that seems to us a rather unfortunate and unnecessary thing to do, unless they were going to make a finding to that effect.Going on they say "Taking those facts into account, we do not conclude that this dismissal is one arising from some other substantial reason, as defined in Section 57(1)(b) of the 1978 Act. To be fair to the respondents they never suggested that this was a reason and to that extent the Tribunal agree with them".About this Mr Segal says, and we accept his submission, that in this case any infelicities, any unhappiness in the way they put their decision, are corrected by the way they explain it. They say in terms in the next paragraph "As the respondents have not shown what was the reason for the dismissal, they have failed to fulfil the requirements of Section 57(1) and the application succeeds".No Tribunal is bound to accept evidence which is put before it. They are perfectly entitled to say which evidence they accept and which they reject. Here evidence was given before them, we are told, by the Commercial Director, Mr Peter Knight and by the Managing Director, Mr Guy Bowman. They did not accept that the cause of this dismissal was redundancy. The burden was on the employers to establish that and they were perfectly entitled (unless they made some mistake of law) to say just that.It seems to us that they were entitled to do that and that the unhappy situation, which Mr Ray puts to us, that the case was fought on an entirely false basis, with the employers assuming throughout that there was no issue as to redundancy, is not made out. It seems to us that although Mr Ray may have started out with that in his mind, enough occurred to make it very plain indeed that that was a matter which he had to address his mind to and certainly his witnesses' evidence, at any rate, and the documents which he put in, were addressed to that very point.It follows, in our belief, that there is no valid criticism in law that can be made of this decision. The Tribunal has found that the reason for dismissal was not shown and in those circumstances, the finding of unfair dismissal was inevitable and the Tribunal must next, of course, proceed to consider the question of compensation, as they themselves say in their decision.So for those reasons and without considering the second point which was raised in argument and in the Notice of Appeal, we find that this appeal falls to be dismissed.We have jurisdiction to give costs, as of course everybody realises, under our Rule 34
"34(1) Where it appears that the Appeal Tribunal that any proceedings were unnecessary, improper or vexatious or that there has been unreasonable delay or other unreasonable conduct in bringing or conducting the proceedings the Tribunal may order the party at fault to pay any other party the whole or such part as it thinks fit of the costs or expenses incurred by that other party in connection with the proceedings."
Here, it does appear, on analysis, that the entire apparatus which supports this appeal (I mean by apparatus, of course, the logical and rhetorical apparatus), the body of argument which we have heard, rests on assertions about what happened before the Industrial Tribunal which, it turns out, are in dispute.It seems to us that this appeal was without its essential foundation which was either the Chairman's notes of evidence or preferably those notes of evidence supplemented by agreement as to exactly what was said or not said about any contentions at the Industrial Tribunal.The serious allegations which are made about the basis on which the case was conducted throughout are strongly controverted by Mr Segal on instructions, and that puts this Tribunal in an embarrassing situation; we have been somewhat embarrassed in hearing this appeal by the fact that we have been given different accounts of what happened before the Industrial Tribunal.In those circumstances, it does seem to us, having done our best on the basis of what we are told and, of course, making inferences from the way in which the Tribunal put it in their decision, that this is an appeal which could not, without that essential basis, at any rate, really have been put forward and bearing in mind that; bearing in mind what is said by Mr Segal now about the other ground of appeal which has not been proceeded with in front of us because it does not arise on the basis of our finding; that this is a case where this can be said to be an unreasonable appeal.We then consider whether it is right to make an order for costs. This is a case of an employee who has been very summarily dismissed. He was certainly by no means a short-term employee. He had been twice with these employers. He was given very short notice on any view and treated in a way which must be a source of regret to anybody who had his interests genuinely at heart. He had to be dismissed, in effect, on two days' notice and then time was extended for other purposes.In all the circumstances, we do think it is right to make an order for part of the costs, at any rate, incurred by Mr Norman on this (in our view, unreasonable) appeal. A figure of £650 is mentioned to us.It seems to us that that is a just and proper assessment of the order that we would have arrived at on our own initiative, and we are content to adopt that figure of £650 and say that Mr Norman should have his costs assessed in the sum of £650.