Church v Silicon Graphics Ltd [1995] UKEAT 941_94_2710

EAT

Church v Silicon Graphics Ltd

[1995] UKEAT 941_94_2710 · 1995-10-27

JUDGE HULL QC :

This is an appeal to us by Mr Church from a decision of the Industrial Tribunal sitting at Manchester on 6 July 1994. Mr Church had complained to the Industrial Tribunal that he had been unfairly dismissed by his employers, Silicon Graphics Limited. Mr Church has appeared before us today. Silicon Graphics have written to us, saying they do not wish to appear and wish simply to rely on what was said by the learned Chairman.

Mr Church was first employed by the Respondents as a sales executive in their computer business on 21 October 1991. His employment ended when he was dismissed on 11 November 1993 and, fortunately, he was able to get fresh employment the same month, on 24 November 1993, in a similar business. Again, as a sales executive. He claimed that he had been unfairly dismissed.

Although the employers put in a circumstantial answer, "the IT3", as it is called, on 28 February 1994, in which they set out that he had been guilty of misconduct, they did not persist in those allegations and admitted that the dismissal had indeed been unfair and it was, therefore, the duty of the Industrial Tribunal, accepting that the dismissal was unfair, to assess the compensation if any to which Mr Church was entitled.

The Tribunal consisted of Mr Beaumont, the Chairman, sitting by himself by consent; and Mr Church addressed him.

To do justice to the Tribunal's decision, we have to look at what the Chairman said. The Chairman set out some of the facts, the basic facts of the case and he said, quite rightly, that Mr Church has not caused or contributed to his dismissal by his conduct and he went on:

"In assessing compensation for unfair dismissal, the award of the Tribunal falls into two parts, namely (i) a basic award which is calculated by reference to the applicant's gross pay (subject to a statutory maximum of £205 per week) and on the basis of the applicant's age and number of completed years of service with the respondent, and (ii) a compensatory award which is intended to reflect the applicant's actual economic loss to the date of hearing, together with any estimate of future loss of earnings directly resulting from the unfair dismissal if the Tribunal is justified by the evidence in making such an award."

The Chairman says that he has heard the evidence of Mr Church and read the documents supplied by him and in paragraph 10 he says:

"Having heard the oral evidence of the applicant, and having observed the demeanour of the applicant in giving that evidence, I found him to be a glib and unconvincing witness. It was clear that he had spent a good deal of time in setting out details of the claim which represented a largely speculative estimate of his maximum potential loss, and I was satisfied that his true loss was far less than he sought to contend and that his new employment was in broad terms comparable in remuneration and benefits to that which he had lost."

That is a very unfavourable finding, of course, to Mr Church. If the Chairman or indeed a judge in any Court is forced to reject the evidence which is laid before him by a witness, it means that he is left in a very unsatisfactory position with regard to the assessment of loss. He can still accept documentary evidence which is not challenged, which is laid in front of him, but in all matters of judgment and assessment of probabilities, this Chairman was, in effect, having said that he could not accept what Mr Church had told him about the loss, obliged to say that he was driven back essentially to his own resources, his own concepts.

The other matter on which, of course, he would have to direct himself and we have no doubt did, was that the burden is on the Applicant to prove his loss and the Chairman is not, in any circumstances, entitled to be generous with the Respondents' money or to take views favourable to the Applicant, if the Applicant has not proved his case. That is the undoubted principle on which this Chairman had to proceed, like any other Judge or Chairman in the circumstances.

He started to deal with the figures. The Chairman said that:

"(i) The applicant ... was employed ... at a gross basic wage of £32,000 per annum plus commission. At the date of dismissal, his gross weekly wage was far in excess of the statutory maximum sum of £205 per week for the purpose of calculating his basic award; and his net weekly wage was £627.22. [That, I think, means gross and is a slip of the tongue.]

(ii) The level of commission was extremely variable and based on a complex structure (which was not fully explained to the Tribunal) but in the last 3 full months of employment (namely August to October 1993) the average level of commission was in the region of £55 per week."

There the Chairman was left, again, in a very unsatisfactory position. Nothing could be more variable or imponderable than commission. It depends on the efforts and the talent and the good fortune of the salesman or whoever is earning the commission. To show what the Chairman is talking about, Mr Church has sent us by post so that we could see them, in my case yesterday, documents which were laid before the Tribunal. A1, as it is called, which has a number 27 on it, is a summary of his earnings during his employment with Silicon Graphics. During the last three months, September, October and November, he earned respectively £237.62, nothing and then £475.34 by way of commission. Of course, that was the figure which the Chairman had mentioned.

If you go back another month there is a commission of £44. If you go back another month, there is the very remarkable figure, compared with these, of £6,794. In the month before that £683 and Mr Church complains that to take the last three months was unrepresentative. That prompts the immediate question, how could the Chairman have proceeded in the circumstances? He had to form some view, some approach to it which he thought was a just one, not being able, as he felt, to accept the evidence which he had been given orally. I must go on before we decide that contention but that is the first contention which is made to us by Mr Church.

Then the Chairman said:

"(iii) The applicant obtained new employment on 24 November 1993 (only 13 days after his dismissal and within the period for which he was paid money in lieu of notice) as a computer sales executive in a position which was broadly comparable with that which he held in the employment of the respondent, but at a lower basic wage of £25,000 per annum plus commission.

(iv) Having seen and heard the applicant, the Tribunal was left in no doubt that he was an effective and experienced salesman, and since his new job was in the same specialised field as his employment by the respondent, it was clear that after allowing time to build up contacts for his new employment, the applicant would be able to earn a potentially substantial level of commission, which would provide him with a comparable level of earnings to that which he formerly enjoyed with the respondent."

The Chairman could have gone further, he could have said, "He might, of course, earn less, if he did not work so hard or if he was not so fortunate or did not display such skill or he could earn more". The Chairman left that in silence but that, clearly, he might have said if he had been spelling it all out. He went on:

"(v) Since the applicant's income was heavily dependent on a commission element, and on sales performance generally, and the applicant seemed unable to assess his probable future level of commission with his new employer (although he had been in the employment for some 7 months at the date of hearing) it was not altogether easy to make any reliable comparison of earnings to assess his loss of income (if any). However, the Tribunal did not accept the applicant's contention that his earnings would be at a significantly lower level in the new employment once he had established himself with the new employer."

There the Chairman is spelling out expressly that the only guidance which he could get so far as the evidence was concerned would be evidence from Mr Church himself; and there he felt he had had no help. He said that Mr Church, whose evidence he had already said he regarded as unreliable, seemed unable to assist him by giving reliable projections.

Then he said:

"(vi) Doing the best I could with this information and allowing the applicant time to build up contacts within the new business, I considered that a reasonable period for compensation for loss of earnings was 6 months from the date of dismissal."

There is the other matter of complaint raised in the notice of appeal. Why six months? The Chairman does not explain it, says the notice of appeal. It would be more logical, bearing in mind that he had already been in employment for seven or eight months at the hearing, for the Tribunal to take seven or eight months. Again, we will deal with that when we come to the end of the matter but the Chairman did take six months.

In his evidence, the Applicant claimed a loss of pension contributions from the Respondent in the sum of £3,162 per annum but it transpired that he was not, in fact, a member of the Respondents' pensions scheme, which was voluntary at the date of his dismissal.

The Chairman then goes through a number of relatively small claims, in which he allows some, others he finds quite unreliable or unfounded and he records that there was pay in lieu of notice and an ex-gratia payment and then at page 15 we can see his calculation. He gives the basic award. There is no complaint about that. Then he gives the compensatory award. He takes the loss of the earnings that the Applicant would have enjoyed if he had continued with the Respondents; and he deducts from that pay in lieu of notice and the net earnings from the new employment; all this over six months, which, as I say, is the subject matter of complaint. Then he says that if you deduct one from the other, you get a net loss of earnings as nil. Indeed, you get a minus figure, according to my arithmetic, of £2,820.01. So there, the Applicant was doing, on the calculations of the Chairman, very well. He was, so to speak, over-compensated by £2,820.

Then he went on to other items. There was the loss of the life insurance annual premium which he allowed; a full year's premium. There was loss resulting from increased premium on private medical insurance, and he gave that again. There was a loss of statutory industrial rights, which came to the relatively small figure of £698.26. Against that he allowed the ex gratia payment. It is not quite clear to us why the Chairman allowed these sums in two separate tranches like that. So there is again a net over-compensation of the order of £1,969.41, nearly £2,000, bringing up the total, of course, to something of the order of just under £5,000, in which he had been, in effect, over-compensated on the basis of the Chairman's calculations.

So, if that was the effect of the calculations, there was therefore nothing to pay except the basic award on the Chairman's view.

I will now look at the amended notice of appeal. It was on the basis, as we understand it, of this amended notice of appeal, that leave was given for this appeal to proceed. There are two grounds given in the notice of appeal:

"(i) The Industrial Tribunal decided to award compensation for the period of six months from the date of dismissal. This decision was insufficiently reasoned to allow the parties to know why the period of six months was selected. The decision is especially surprising given that the hearing was taking place almost eight months after the date of dismissal."

We think, having considered it as carefully as we can, that that contention is not to be supported. When you look at the reasons of the learned Chairman, it is quite plain that he was having here to proceed on the basis, as best he could, of very little evidence and a good deal of evidence which he could not accept, he said. It is, of course, entirely for the Chairman to say what he accepts and what he does not accept, but he had rejected the Applicant's evidence and on the very important matter of the commission and the ways in which it was calculated, it had not been properly explained to him at all. Therefore, at page 3, in sub-paragraph (iv) he says:

"... after allowing time to build up contacts for his new employment, the applicant would be able to earn a potentially substantial level of commission, which would provide him with a comparable level of earnings to that which he formerly enjoyed with the respondent.

...

(vi) Doing the best I could with this information and allowing the applicant time to build up contacts within the new business, I considered that a reasonable period for compensation for loss of earnings was 6 months from the date of dismissal."

It seems to us that, of course, there is an element there of plucking a figure from the air but it is by no means a wholly unjustified attempt to do so or an unreasonable one. Some people would say that the Chairman, bearing in mind that he rejected Mr Church's evidence, was being extremely generous to him there. Some people would say that, in that respect, the Chairman might have gone further and might have said, "Well, it might be logical, it might be possible to say `I'll take it right up to the date of the hearing'". But the Chairman was confronted with all manner of difficulties in looking at the true nature of the loss. In particular, with commission. Was the commission going to be paid in the month that it was earned? To what extent was the Applicant doing well, expecting to do better? This is a task which is familiar to Courts, of course, and no doubt to Industrial Tribunal Chairmen, too, when claims for personal injuries or loss of earnings and loss of commission are made. Sometimes, of course, the Court could be assisted by reliable evidence, projections by accountants or actuaries; or reliable evidence from the Applicant himself; but here the Chairman did not feel able to say so.

We think that for the Chairman to take six months in those circumstances is, as a decision of fact, unchallengeable. We cannot think that it is perverse or that it is unreasonable in any way, nor do we think that the criticism that the Chairman has insufficiently explained his reasons is justified. We think that, reading the reasons as a whole, which is what we have to do, not just picking on a particular sentence or paragraph, he has amply justified his choice of the period of six months and that, looking at it at a safe distance, as we do, so far from saying there is anything obviously wrong about that, the immediate impulse might be to say, well, that was rather favourable to the Applicant in the circumstances which the Chairman has stated as his findings of fact.

The second point in the amended notice of appeal is this:

"The decision that the commission earned by the Appellant as an employee of the Respondent was £55 per week was perverse in that the figure was based upon commission earned over the very limited period of September, October and November 1993, and did not include prior months so as to allow a proper picture of commission earnings to be obtained. All other calculations relating to basic salary or commission earnings for compensation purposes made by the Industrial Tribunal were each made over a period of six months. Alternatively, in settling upon a figure of £55 per week the Industrial Tribunal failed to give reasons so that the parties do not know why this figure was chosen."

We think that that is a point which is, to say the least of it, arguable. On the face of it, if the Chairman decided to take a period of six months for his other calculations, and to rely on that as inevitably a compromise figure, an imponderable, then one would expect him to apply that to all his calculations. He might or might not do so. There might be reasons why he should depart from that. We have looked at the summary of earnings to date with Compel, which is the second document sent to us by Mr Church. We look there to see the commission which he is earning. Clearly that is an artificial figure. For the first six months, it appears that Mr Church was being paid a fixed sum on account of commission generally.

If one does the sum there again to see what he earned in the first six months, one gets a rather higher figure than the Chairman got for his calculations at page 15, if you simply take the first six months and that appears to be, so to speak, favourably calculated to Mr Church because somebody has written in there, and we assume this is the way in which it was arrived at, that he took only half of the May figures. If you look back to the previous page, exhibit A1, and look at the figures there, as I have already said for July there is an extraordinary and anomalous figure of £6,794 for commission in that month. We do not know and certainly the Chairman does not explain in his judgment how that very high figure was arrived at. Indeed, since he felt obliged to reject Mr Church's evidence as unreliable, it probably would have been impossible for him to say. It may have represented commission earned over a number of months. It may have represented a single transaction of a quite exceptional sort because there is no other figure as high as that in the whole of that list of monthly commissions. It may have been that the Chairman felt, in all the circumstances, that that was a figure so anomalous and extraordinary that he should simply put it out of the way and that it would only be safe to take as more realistic the last few months. None of that is explained by the Chairman and, as I say, we accept as (at any rate on the face of it) inconsistent the fact that he took three months there, rather than six months. If there was some reason to depart from the six months and say, "Well, I think that three months is the proper figure to take as the average for commission", then one would have expected, as I think Mr Church said at some stage, one would expect him to explain that.

To that extent we think that Mr Church is correct as a matter of law. Questions of fact, of course, we cannot go into. We have done a little calculation ourselves and this I have to accept the primary responsibility for, just to see in practical terms what this might mean. According to the calculations for which, as I say, I accept responsibility, if one were to include that figure and take commission for 26 weeks, it would be at an average of no less than £358 a week in round figures, as opposed to £55 a week, a very substantial difference and it would be possible, of course, by looking at other months, to arrive at lower figures, but that would be the result of that last six months, including that very high figure.

It might very well be, we do not know, that the Chairman, if he thinks on reflection that a longer period than three months should be allowed, six months perhaps, will say that "I must exclude, at any rate, part of this figure. It relates probably to previous months or it is an anomalous figure because, in calculating loss of commission, the Chairman has to take a broad view. But, if one takes - and this is really a calculation for interest only - that figure of £358 per week as the lost commission for 26 weeks, looking forward, and if one reworks the Chairman's calculations, the loss of earnings for 26 weeks, this is bare earnings, before Mr Church got his commission in his previous employment, it appears to us that the loss of earnings would be £609 per week or thereabouts. The loss of commission at £358 per week would be, therefore, £9,308 and the loss of earnings, £15,834. If you add on the loss of life insurance, this is following the pattern of the calculations at page 15, one gets a gross figure of nearly £26,000 - £25,840. If you then take the figures which must be credited against that, there are the two payments of £2,668 and the earnings from the new employment which the Chairman took as £17,426 (lower than seems to us to result from the right way of calculating them) but you get a figure of £22,762 to be deducted and you get then a figure, making every assumption in favour of Mr Church and, in particular, that that is the right way to calculate his loss of commission, of just over £3,000.

On the other hand, if you take his earnings for the first six months in his new employment and rework the calculation in that way, it appears to us that the correct figure would be £19,100 for the first six months and the consequential subtraction would lend to a result of the order of £1,400 that he might well have been awarded for compensation.

As I say, we have done that calculation simply for interest because, on the basis of the Chairman's conclusions as to what was right and proper for compensation, of course there was an overpayment, over-compensation of the order of £5,000, by reason of course of the ex gratia payments and the difference between what the Chairman thought would be the earnings in the new employment and in the old one. It is not up to us to do calculations like that, as I say, I accept responsibility for that calculation; but we are not allowed to be the judges of fact.

We think that the right thing to do, since there is this apparent anomaly or inconsistency in the Chairman's taking of three months rather than six months, is to remit the matter to the learned Chairman and request him to reconsider that part of his decision. The other parts of his decision appear to us to be entirely justifiable and beyond criticism, as a matter of law. But with regard to the three months if, on reflection, he considers that that is the correct way to take it then we ask him, please, to give reasons so that Mr Church and indeed anybody else - including the Respondents, who will wish to look at the decision - will see how he has arrived at that figure of three months.

If, on the other hand, on reflection, having thought about it again as, of course, he is fully entitled to do, the Chairman comes to the conclusion that he is mistaken, that he should take some other period, then of course, he will have to rework his calculations. He may say that it is fairer to take a different period. He may say that he arrives at lost commission in a particular way by doing certain calculations and that he does or does not accept the whole of the £6,794 for inclusion in those calculations. That is entirely a matter for him. He chose, in arriving at his decision, which as I say is otherwise admirably set out and detailed, to incorporate in it what appears to us to be an anomaly and it is that which should, in justice, be dealt with: first of all, by spelling out his reasons for that if he thinks that he was correct to do that.

If, on reflection, he thinks he ought to take a different period or rework his calculations with regard to loss in respect of commission, then we ask him please to do that. To that extent, we allow the appeal.