Cuspo 2000 Ltd v McLachlan [1995] UKEAT 918_95_2911

EAT

Cuspo 2000 Ltd v McLachlan

[1995] UKEAT 918_95_2911 · 1995-11-29

JUDGE CLARK :

This is an appeal by the employer against a decision of the Newcastle Industrial Tribunal following a hearing held on 23rd March 1995, that the respondent was unfairly dismissed. Compensation was assessed at £11,992.50. The Industrial Tribunal's extended reasons for their decision are dated 19th July 1995.

The respondent had commenced employment with the appellants' predecessor Cuspo Ltd on 1st January 1991 as a technical sales representative. Cuspo Ltd went into receivership and on 26th October 1992 the business was transferred to the appellant Cuspo 2000 Ltd. The respondent was retained by the new owners and following a re-organisation by the new managing director, Mr Peattie, the respondent was promoted to contracts manager, and so remained until he resigned from the employment on 25th November 1994.

Before the Industrial Tribunal an issue arose as to whether or not the respondent was dismissed within the meaning of Section 55(2) of the Employment Protection (Consolidation) Act 1978 . Having set out its findings of fact, the Tribunal concluded that the appellant was in repudiatory breach of the implied term of mutual trust and confidence, that the repudiation had been accepted by the respondent in handing in his resignation on 25th November 1994 and that accordingly he had been constructively dismissed by the appellant within the meaning of Section 55(2)(c) of the 1978 Act.

Against that finding, the appellant appeals. Mr Garland takes a number of points in support of that ground of appeal. The Tribunal expressed their conclusions on this aspect of the matter at paragraph 18 in these terms:

"18 Although the applicant had accepted his reduction in wages he had only done so on condition that it was to be reviewed after a short time. That was not done. The failure to implement a review of salary breached the implied duty of trust and confidence between employer and employee which a reasonable employer would not have done. The advertising and interview of someone to replace the applicant in his job whilst he was on holiday was a clear breach of the implied term of trust and confidence between an employer and employee as was the ultimatum given by the managing director to the applicant that he had a choice of either resigning or being sacked. The Tribunal is unanimous in the decision that there was a breach of the implied term in the applicant's contract of trust and confidence and that breach was significantly important to justify the applicant resigning. The Tribunal is satisfied that the applicant had, to use his own words, "had enough" by that time and chose to alternative offered by the managing director, that of resignation, in preference to being dismissed. The meeting on 25th November 1994 was the last straw in the relationship which had clearly broken down between the managing director and the applicant justifying the applicant in immediately resigning. The Tribunal is unanimously of the decision that the applicant was constructively dismissed in that the respondent was guilty of conduct amounting to a significant breach going to the root of the applicant's contract of employment. The effective date of termination of the employment was 25 November 1994."

Mr Garnon attacks each of the three findings contained within paragraph 18. First, he says, that at paragraph 6, 7 and 15 the Tribunal misdirected itself in law by equating a pay review with a pay increase. We cannot accept that proposition. What the Industrial Tribunal were finding in those paragraphs was first, that the respondent's overall remuneration package had been reduced due to the abolition of commission to be replaced by a lower salary increase. Thereafter, they find that the respondent was promised a review but despite reminders it was not carried out by Mr Peattie, save for a single payment of £500.00.

Second, it is submitted that in relation to the findings at paragraphs 8 and 16 the Tribunal failed to consider and record the evidence given by Mr Peattie, as to the full circumstances in which he came to advertise the respondent's post whilst he was on holiday, and then withdraw the advertisement, and that this offended the principles set out by Bingham LJ in Meek v City of Birmingham

[1987] IRLR 250

, page 251, that the tribunal should set out the basic facts which led them to the conclusions which they reached. Again, we are unable to accept that submission. The Tribunal found that advertising the respondent's job whilst he was on holiday and interviewing a candidate on the day he returned, even though no appointment was made, undermined the necessary trust and confidence which the respondent had in the appellant.

Thirdly, he complains of the finding by the Tribunal that at meeting between the respondent and Mr Peattie held on 25th November 1994 the respondent was faced with a choice, `resign or be dismissed'. We have considered the Tribunal's findings at paragraphs 9, 17 and 18 of the reasons on this aspect of the case. The relevant findings were:

(a) that the respondent was threatened with dismissal if further errors occurred;

(b) that the respondent then challenged Mr Peattie to sack him straight away;

(d) that Mr Peattie then insisted that the respondent resigned.

Against that background, the respondent did resign. It may be better described as a forced resignation, although the threat of dismissal in the future did exist.

However, the real question is whether the Tribunal misdirected itself in law in paragraph 18. In considering the law to be applied at paragraph 14 of its reasons, the Tribunal referred to Woods vWM Car Services

[1981] ICR 666

. In giving the judgment of this Appeal Tribunal, Browne-Wilkinson J said this at 670G - 671A:

" In our view it is clearly established that there is implied in a contract of employment a term that the employers will not, without reasonable and proper cause, conduct themselves in a manner calculated or likely to destroy or seriously damage the relationship of confidence and trust between employer and employee: Courtaulds Northern Textiles Ltd. v. Andrew [1979] I.R.L.R. 84. To constitute a breach of this implied term it is not necessary to show that the employer intended any repudiation of the contract: the tribunal's function is to look at the employer's conduct as a whole and determine whether it is such that its effect judged reasonably and sensibly, is such that the employee cannot be expected to put up with it: British Aircraft Corporation Ltd. v. Austin [1978] I.R.L.R. 332 and Post Office v. Roberts [1980] I.R.L.R. 347. The conduct of the parties had to be looked at as a whole and its cumulative impact assessed: Post Office v. Roberts ."

Applying that approach to the Industrial Tribunal's findings expressed at paragraph 18, we can find no misdirection. Further the question of who terminated the employment being essentially one of fact, we cannot say that the Tribunal's conclusion was perverse, as Mr Garnon has submitted, in the sense identified by Mummery J in Stewart v Cleveland Guest

[1994] IRLR 440

. Accordingly, we are unable to detect any error of law in the Industrial Tribunal's finding that the respondent was dismissed.

At paragraph 19 of the extended reasons, the Tribunal observe:

"19 There was no alternative defence put to the Tribunal but if there was a finding of constructive dismissal then that dismissal was for a reason within section 57 of the Employment Protection (Consolidation) Act 1978 and was a fair reason within section 57(3) of the Act. Accordingly the Tribunal finds that the dismissal was unfair."

Mr Garnon raised a point in relation to that finding by reference to the Industrial Tribunal's summary reasons. However he accepted, rightly in our view, that where extended reasons had been given these take precedence over summary reasons. We have therefore disregarded what was said in the summary reasons, the final position of the Industrial Tribunal having been expressed in its extended reasons, and nothing further need be said about that point.

Finally, Mr Garnon draws our attention to the Industrial Tribunal's summary of his submissions to the Tribunal at paragraph 11 of the extended reasons. It is clear from those submissions that he raised the question of whether the respondent had contributed to his dismissal within the meaning of Section 74(6) of 1978 Act. However, no finding on this question is expressed in the extended reasons. We think that this omission does breach Rule 10 of the 1993 Rules of Procedure: See Portsea Island Mutual Co-op Society v Rees

[1980] ICR 260

, and this amounts to an error of law. Accordingly we shall allow this appeal to the limited extent that this case must remitted to the same Industrial Tribunal for a finding as to whether or not the respondent contributed to his dismissal and if so to what extent and the reasons for whatever finding is made in this regard.