Queens Moat Houses Plc v Blake [1995] UKEAT 502_95_0307

EAT
Queens Moat Houses Plc v Blake
[1995] UKEAT 502_95_0307 · 1995-07-03
MR JUSTICE TUCKEY: This appeal has been listed for a Preliminary Hearing to enable the Appellant, Queens Moat Houses Plc to argue that its appeal should go forward for a full hearing. The appeal is from the Industrial Tribunal sitting in Manchester, who after a two-day hearing gave reasons for their decision on 5 April 1995. The unanimous decision of the Tribunal was that Mr Blake had been unfairly dismissed.In this judgment it is not necessary to set out in any detail the facts giving rise to the dispute. Suffice it to say that they were very fully considered in the Tribunal's reserved decision, which runs to seventy-one paragraphs over thirty pages. In short, the Tribunal's conclusions were that the reason for the Applicant's dismissal was not one which fell within the provisions of Sections 57(1) and (2) of the 1978 Act ; that even if it was "some other reason" within those provisions, it was not "substantial"; and if they were wrong about that, under the provisions of Section 57(3) , the employer had acted unreasonably in treating the reason as a sufficient reason for dismissing Mr Blake. Finally, they concluded that Mr Blake had not contributed to his dismissal in terms of Section 76 of the Act . So it can be seen at the outset that the Appellants lost on every conceivable front and that any one of the first three conclusions would have been sufficient to enable Mr Blake's case against the Appellants to succeed.The reason given to the Applicant for his dismissal is set out in a letter sent to him on 19 September 1994 as follows:"... The reason for the termination of your employment was, in the circumstances of a dispute between your incentive company and QMH, your failure to agree that the disputed monies, or any part of them, be held in an escrow account."...What had happened was that for many years Mr Blake had worked as a Manager for one of the Queens Moat hotels. With effect from 31 October 1988, the arrangement between Queens Moat House and Mr Blake changed. It was formalised in what was called an incentive agreement. That agreement was entered into by a company in which Mr Blake was the majority shareholder and an associated company of Queens Moat. Essentially what this agreement did was to require the Blake company to pay a guaranteed fee to Queens Moat, so they received a guaranteed income from the running of the hotel and put the risk of the operation upon the Blake company. So it saddled him with the risk of loss and gave him the prospect of profit if he managed the hotel successfully.That agreement ran for four years until 2 October 1992 when Mr Blake then reverted to being employed as a Manager by Queens Moat. The dispute which is referred to in the letter dismissing Mr Blake arose because in the period covered by the incentive agreement, there was an argrument between the hotel and the local rating authority as to what business rates should be paid. In 1994, but relating to the period covered by the incentive agreement, the local authority agreed to make a repayment of business rates overpaid. Queens Moat contended that the money was theirs. Mr Blake said it was his: it was something which accrued to his benefit during the period when he was taking the risk of this commercial operation. There was a certain amount of correspondence about whether the money should be paid to Queens Moat or not, in the course of which it became clear that the dispute would have to be resolved by litigation. Queens Moat were not happy with just that. They wished to secure their claim. That is to say, they wanted Mr Blake to put the money in an escrow account, so that it was available for them in the event that their claim to it prevailed. Mr Blake made various offers to deal with the money, which were not acceptable to Queens Moat.In the course of the negotiations Queens Moat started to say that if Mr Blake was not prepared to secure their claim in the way they wanted, his employment was in jeopardy. He would not agree to their proposals and in the end they dismissed him summarily by the letter to which we have referred.The Tribunal's decision is attacked on a number of grounds. Firstly it is argued in the Notice of Appeal and by Mr Dyer, who has appeared on behalf of Queens Moat, that the Tribunal's conclusion that the reason for dismissal was not one which came within the terms of Section 57(1) or(2) was wrong in law. The Tribunal's decision on this point can be found in paragraphs 47 and 48 of their Reasons. They considered the terms of 57(1)(a) and decided that this was not some other reason within the meaning of that subsection because the reason related to the earlier commercial dispute about the rates and did not relate to the relationship of employer and employee. A link has to be made between the reason and the employment. This obviously raises a point of law. However, Mr Dyer in his submissions said that what qualifies is conduct, which reflects in some way upon the employer/employee relationship. We do see that the Tribunal applied a different test so we do not detect an error of law. However, on the basis that this may at least raise an arguable point of law, we proceed to the next stage of the argument.Here on the question as to whether the reason was a substantial reason - the Tribunal concluded at paragraph 55 of their Reasons:
"Looking at this matter in the round, the Tribunal cannot accept that the actual reason for the dismissal, as set out above, was "some other substantial reason of a kind such as to justify the dismissal of an employee holding the position which that employee held"."
Mr Dyer submits that the Tribunal mis-directed themselves because they appeared to have imposed some unnecessary straight-jacket upon themselves, when considering what was or was not a substantial reason, pointing out that the categories of what are or are not substantial reasons are never closed.We do not see any mis-direction of this kind from the way in which the Tribunal decided this point. At the end of the day, the question of whether this was or was not a substantial reason, was a question of fact for the Tribunal. They found that it was not substantial and unless this finding can be attacked on the grounds that it was perverse, that is the end of this appeal. The Tribunal went on to say that assuming that another substantial reason did exist in the shape of this commercial dispute, and the failure of Mr Blake to secure their claim, did the employer act reasonably or unreasonably as treating that as a reason for dismissal? The Tribunal's third conclusion that the Appellant's acted unreasonably is to be found at paragraph 76 of their Reasons, they say that:"... these employers sought to use a weapon which would not be available to the vast majority of prospective plaintiffs, namely the threat to dismiss its employee, if he would not agree appropriate terms in an entirely separate dispute . That threat was made on numerous occasions and repeated immediately prior to the dismissal taking effect. The applicant was entitled to say, as he did say, that he had a certain position and that he would not move from it. The respondent was entitled to say that it would not move from its position. Both of those positions related to the terms on which money would be paid into escrow and so held. They did not relate to the applicant's employment. By confusing the two entirely separate issues as to whether the applicant was acting reasonably in connection with negotiations for securing the money on the one hand and as to whether he was acting reasonably in relation to his employment on the other, the respondent itself acted unreasonably in treating its reason for dismissal as a sufficient reason for dismissing this applicant."...That again, was a finding of fact which was fatal to the Appellant's case and again, unless it can be shown to be perverse, this appeal does not get off the ground.Those then are the principal points of law which Mr Dyer advanced before us. Lest it should be thought that we have overlooked them though, his Notice of Appeal refers to the Tribunal mis-applying a decision of this Tribunal in W Devis and Sons Ltd v Atkins [1977] IRLR314 in its reasoning at paragraph 71 of the decision. We are unable to accept that contention. All the Tribunal were saying was that what it had to look at was what was in the minds of those involved in the period leading up to the dismissal and that it was not to the point to look at the way in which the Queens Moat had sought to justify their legal position in subsequent pleadings in the High Court. The fact was, as the Tribunal noted, although invited to do so in very clear terms, Queens Moat never actually spelt out in any intelligible way, the legal basis for their claim to this money. The Tribunal did not err in dealing with this point in that way.That brings us to the question of perversity. This is always a high hurdle to jump. In our view the Appellant has come nowhere near to doing so. There is no arguable basis for saying that this decision was perverse. The points are set out in the Applicant's Notice of Appeal. There are nine of them. Mr Dyer has helpfully taken us through most of them. We can say in summary, that despite the eloquence and reasonableness with which he put the submission, we are unimpressed with the points made. In essence the complaint appears to be that the Tribunal misinterpreted the terms of the incentive agreement by referring to an indemnity clause, which actually had nothing to do with entitlement to this rate rebate and secondly, and apparently disbelieved the principal witness called on behalf of the Appellants.The misinterpretation point is in our view, not well-founded. The essence of this agreement was to place the risk of the venture upon Mr Blake during the period covered by the incentive agreement. All the Tribunal were doing was pointing out clauses which underlined that essential commercial purpose. As to disbelieving the witness, that was obviously something as the Tribunal of fact, that this Industrial Tribunal was entitled to do. We think that it may be going a little far to say that they actually disbelieved him. The reason for the dismissal of the Applicant was set out in the letter which we have quoted. It was that reason which this Tribunal examined with very great care, first to determine whether it fell within the provisions of Section 57 and if so, whether the Appellants acted reasonably in relying on it. Two of their conclusions fatal to the Appellants case were entirely conclusions of fact. There was ample material in our view upon which this Tribunal could reach those conclusions. The decision was not in our judgement, even arguably, perverse.Accordingly this appeal must be dismissed.