Co-OP Wholesale Society Ltd v Wrigley [1996] UKEAT 197_96_2210

EAT
Co-OP Wholesale Society Ltd v Wrigley
[1996] UKEAT 197_96_2210 · 1996-10-22
MRS JUSTICE SMITH : This is an appeal from the decision of an Industrial Tribunal sitting at Manchester following a three day hearing in September and December 1995. The tribunal reserved their decision which was sent to the parties on 11th January 1996.The tribunal found that the appellants, the Co-operative Wholesale Society Ltd ["CWS"] had dismissed the respondent unfairly, but held that he had contributed to his dismissal to the extent of 50%. His compensation was to be reduced accordingly.The respondent had been employed by the appellants as a joiner at their Manchester premises for about 12... years at the time of his dismissal in January 1995. By that time he had become a charge-hand joiner responsible for two other joiners, who together worked on the maintenance of the building. They had a workshop in the basement. The respondent was a valued employee. Indeed the Industrial Tribunal recorded that prior to events leading to his dismissal, the employer and employee held each other in high regard.In early December 1994, somebody reported to the respondent's manager, Mr Blundell, that the respondent was building a boat in the basement of the appellants' premises, and was doing so using CWS material and in CWS time. Mr Blundell called the respondent in to talk about it. The respondent admitted that he was building a boat. It was a rowing boat intended for his daughter. He said that he was only using scraps and off-cuts of timber and was working on the boat only during lunchtime. He accepted that he did not have his manager's permission for this activity. He agreed that the materials were the property of CWS, but he maintained that it was material that he had been told to scrap when a partition had been demolished. He had thought the material was too good to scrap and had cleaned it up and kept it. He also agreed, when asked, that he had changed the lock on the door of the joiners' workshop, where the boat was kept. He said that he had done that because there had been an unauthorised entry to the workshop some time earlier and tools and equipment had been taken. The suggestion was made to him that the boat was being concealed there. The respondent also told Mr Blundell that he had been thinking of entering the boat into the appellants' Arts and Crafts competition.Mr Blundell decided that he was not satisfied with the explanations offered by the respondent. He suspended him and began an investigation. First, he spoke to Mr Pearson, one of the two joiners who worked under the respondent. He confirmed the respondent's account that he only worked on the boat at lunchtimes, but he also said that the company had no use for the marine plywood, the material extensively used on the outer structure of the boat. He also confirmed that the workshop lock had been changed. The other joiner, Mr Flanagan, said that the lock had been changed, but this had been done following unauthorised entry. He said that he was unaware of any loss of any tools. He knew about the respondent working on the boat. He said he knew that timber had been concealed within the workshop.Mr Blundell had some photographs taken, which we have seen. He also searched through the company records for invoices which might relate to materials for the boat. He found an invoice from a timber supplier showing the purchase of six sheets of marine plywood. The tribunal noted that the cost of this timber was in excess of £100. He considered that these sheets must have been the source of the plywood used on the boat. He also found an invoice for one litre of waterproof glue, which he thought had probably been used on the boat. These invoices had been paid by the company.Mr Blundell then convened a disciplinary hearing at which the respondent attended with a friend. He was not a member of a trade union. The allegations were put to him. He repeated his claim that he had only worked on the boat in his own time, and that all the materials had been scrap or off-cuts. He said that the scrap had been salvaged from the demolition of a partition. He denied using any new materials at all. He was shown two substantial pieces of mahogany which were tied together, and marked "thwart". He agreed that they were for the boat, but said that they were part of the old partition. As for the marine plywood, he denied that this was the material covered by the invoice produced. He said that he had been given the marine plywood by the sales representative of the timber suppliers, 'free of charge'. It had been sent as cover sheets for other material. He said that it was damaged timber and unsaleable by the supplier. He disagreed with Mr Pearson's suggestion that the company had no use for marine plywood. He said he had purchased some marine plywood for use in covering drains and also erecting partitions in a toilet block. He repeated that it was his intention to exhibit the boat at the Arts and Crafts Competition. He agreed that he had used CWS machinery, but said he had bought all the screws. As for the change on the lock of the workshop, he repeated his reason for doing this, but he agreed that he had not supplied his superior with a new key. He was asked if he had sought permission to build the boat; he said that he had not because he felt it would be refused. He was asked who knew about the boat, and he said that he could not say.Mr Blundell considered the evidence, and decided that the respondent should be dismissed summarily.He wrote a letter confirming his decision, and giving the reason:
"The reason for your dismissal is the unauthorised use of the Society's materials and resources which you admitted at the interview. These materials and resources were utilised in the construction of a rowing boat (approx 10' by 4') for your personal use, which again you admitted."
The letter advised him of his right to appeal, which the respondent duly exercised.The appeal came on before Mr Dilkes, the appellants' personnel officer, on 9th January 1995. The respondent attended but chose not to be accompanied on this occasion. The hearing lasted about 45 minutes, and a note was kept which the Industrial Tribunal saw. On this occasion some new arguments were advanced by the respondent. First, he said that it was common practice for managers to ask for 'foreigners' to be done in the company workshops. He gave eight examples of work which he knew had been done for managers, for which he said no charge had been made so far as he knew. Some of these jobs had been for Mr Blundell, although that had been some years before. In addition to that new argument, he repeated that the hardwood used in the boat had been either scrap or off-cuts, and that the marine plywood had been acquired free of charge via the sales representative of the timber suppliers. He provided a name, Mr Maloney, as being the person at the timber suppliers. He also asserted that the work had been carried out at lunchtimes.According to the letter which Mr Dilkes was subsequently to write, those were the only matters advanced by the respondent at the appeal hearing. Mr Dilkes's letter, written two days later, does not contain any reference to an issue which was to loom large before the Industrial Tribunal, namely whether the respondent had claimed at the appeal hearing that his former supervisor, Mr Holt, who was by then retired, had known all about the boat and had given him implied permission to build it on company premises.Mr Dilkes did not reach an immediate decision after the appeal hearing, but adjourned to make further enquiries. First, he enquired of some of the managers named by the respondent as having had 'foreigners' done. Each agreed that this kind of work had been done in the past, but claimed to have paid for the work on a sundries invoice. Mr Dilkes made a perfunctory search, as the tribunal found, but failed to find any invoices relative to the work described by the respondent. He then abandoned the attempt. He told the Industrial Tribunal that he had regarded the task as too onerous.Second, Mr Dilkes arranged to meet the salesman from the timber supplier, in an attempt to check the respondent's claim that the timber had been supplied to him free of charge. Mr Maloney came to see Mr Dilkes. That was the name which the respondent had given Mr Dilkes at the appeal hearing. However, it soon transpired as the two men began to talk, that Mr Maloney was not a salesman, but rather was the sales manager of the company. He denied that any marine plywood had been supplied free of charge. He said that in no circumstances would the company supply such expensive material as cover sheets for other material.At that stage, Mr Dilkes decided that his investigation had gone far enough. He was satisfied that the appeal should be dismissed. He communicated his decision in a letter to which we have already referred, in which he set out the detailed reasons for dismissing the appeal. As this letter figured conspicuously in the tribunal's decision, it is convenient at this stage if we read the conclusions set out in that letter. Mr Dilkes said:

"I have now fully investigated your appeal and have concluded:-

(I) The "foreigners" to which you referred were all given prior approval by senior management and where materials and/or your time could be charged, this has been covered on a sundry sales invoice and paid for by the individual concerned. Where the job was of an internal nature, the department concerned has been charged via the internal accounting procedures.(ii) You agreed that you had not sought approval from any of your supervisors or Mr Blundell to use CWS materials or resources for the construction of the boat because "you knew you would not be given permission". Despite this you decided to build the boat using CWS materials and resources.(iii) On examination of the boat, it is clear that the hardwood used on the boat was either from virgin stock or re-cycled from CWS buildings and was not off-cuts or scrap.(iv) The marine plywood was not supplied by a representative from George Hill (Oldham) Ltd, free of charge. This wood was order by yourself on 9 March 1994 on purchase order M3187 and invoiced to CWS on 14 March 1994. The stamp on this marine plywood matches the plywood on the boat and cannot therefore be scrap plywood or off-cuts from any other source.Following an interview with the Sales Manager from George Hill (Oldham) Ltd, no marine plywood has been supplied to CWS Ltd free of charge either by himself or other members of his sales force.(v) The CWS would not have any use for marine plywood at any of its establishments in the Manchester complex."He then conveyed his conclusion that the summary dismissal was fair and that the procedures had been carried out correctly. The appeal was dismissed.The respondent then lodged his application with the Industrial Tribunal. As we have indicated there was a three-day hearing spread over some three months. In their decision the Industrial Tribunal first declared that they were satisfied that the reason for the dismissal was that the employers believed the respondent to be guilty of misconduct the unauthorised use of the CWS material and resources in the construction of the boat for himself on company premises.The tribunal then turned to consider section 57(3) of the Employment Protection (Consolidation) Act 1978 . They approached their task by examining each of the paragraphs of Mr Dilkes's letter to which we have referred and analysing the evidence in relation to each of the five topics upon which Mr Dilkes had reached a conclusion. This section of the decision is crucial, because the tribunal were critical of Mr Dilkes's conclusions, and in particular critical of the investigation upon which he and Mr Blundell had reached their conclusions. The basis upon which the Industrial Tribunal were eventually to find that this dismissal was unfair, was that the employers had reached their conclusions without having carried out a sufficiently thorough investigation.The tribunal had referred themselves to the case of British Homes Stores v Burchell [1980] ICR 303 . In particular they had referred to the well-known passage just below 304C:
"... What the tribunal have to decide every time is, broadly expressed, whether the employer who discharged the employee on the ground of misconduct in question (usually, thought not necessarily dishonest conduct) entertained a reasonable suspicion amounting to a belief in the guilt of the employee of misconduct at that time. That is really stating shortly and compendiously what is in fact more than one element. First of all, there must be established by the employer the fact of that belief; that the employer did believe it. Secondly, that the employer had in his mind reasonable grounds upon which to sustain that belief. And thirdly, we think, that the employer, at the stage at which he formed that belief on those grounds, at any rate at the final stage at which he formed that belief on those grounds, had carried out an much investigation into the matter as was reasonable in all the circumstances of the case. It is the employer who manages to discharge the onus of demonstrating those three matters, we think, who must not be examined further."
The tribunal then declared themselves satisfied that the employers honestly believed that the employee was guilty of serious misconduct, but they, the tribunal, considered that the investigation had not been sufficiently thorough.Mr Parkin who appeared for the appellants, submitted that the Industrial Tribunal had imposed too high a burden on the employers in their criticism of the investigations, and that one could see from the language of the decision that they had done so. He pointed in particular to paragraph 10 of the decision where the tribunal said this:
"10. As will be apparent ... the Tribunal took the view that the investigation carried out by the employers in this matter was inadequate, and seriously inadequate, in that had it been more fully carried out, facts could well have been revealed, that would have resolved the principal charge against the applicant that he had ordered wood for his own use on the company's account. As it was, in the Tribunal's view, this important point was never resolved by the investigation carried out by Mr Dilks, any more than was the question as to whether his immediate supervisor, Mr Holt, was aware and tacitly approved, or at least did not disapprove, of what was going on. These shortcomings, always important, are particularly important in the case of a long-serving employee with a good employment record and who had been promoted to a position of trust and responsibility by the company. They owed it to him to go into the explanations he gave fully to ascertain whether he was in fact guilty of gross misconduct complained of, and in the Tribunal's view they did not do that adequately and therefore never arrived at sufficient certainty on the facts to enable them to come to the conclusion they did. It follows, therefore, that in the Tribunal's view the dismissal of the applicant by the respondents was unfair."
Mr Parkin submits that that passage and the tribunal's use of the expression "sufficient certainty" show that they have adopted almost a criminal standard of proof which would, as he has submitted, be quite wrong. We are a little concerned at their use of language in that passage and elsewhere, but we remind ourselves that we must not pick over the language of the decision. We note that at an earlier stage of their decision, the tribunal had set out the Burchell test quite properly. Taken in the round, we do not think that the tribunal have misdirected themselves in their general approach to the standard of proof which properly lies upon the employer in conducting his investigations.Mr Parkin also submitted that some of the conclusions which the Industrial Tribunal reached were plainly wrong. We have therefore found it necessary to examine their conclusions in some detail, and in particular the criticisms made of the employers' investigation. We remind ourselves that these findings are all findings of fact and that we must be very slow to interfere with any decision based upon a finding of fact unless there is either no evidence to support it or it is plainly wrong.The first issue concerned the question of "foreigners" carried out by craftsmen for managers within the company. The Industrial Tribunal were critical of Mr Dilkes for accepting the word of the senior managers that they had paid for the work that had been done for them. During the Industrial Tribunal hearing, an order was made for the production of invoices by the company, but it was found that the relevant invoices could not be produced. The tribunal considered that Mr Dilkes had not pursued his enquiry into the invoices as energetically as he should have done, and they suspected that this may have been because he might have turned up something to the disadvantage and embarrassment of a senior manager.We note the positive way in which Mr Dilkes expressed his conclusion on this aspect of the case. He certainly made it appear to the respondent that he had formed a concluded view that the managers had indeed paid for any work which had been done for them, and on the evidence, he could not properly say that.The tribunal said this in conclusion on this issue:
"9 ... The investigation as to whether all foreigners were satisfactorily accounted for was also, in the Tribunal's view, inadequately done. The company simply relied on the word of the manager in question, notably Mr Blundell, although in fact had they endeavoured to ascertain there was documentary evidence in support of this, they would have been unable to find any. Having said that it seemed to the Tribunal that this was not a central point in their consideration of the matter. Whether or not other senior managers did foreigners which had been authorised by them did not seem to have any direct relevance to whether the applicant, a more junior employee who, in the Tribunal's view, never had specific permission, was in order in carrying out this substantial work himself."
We would agree and endorse the Industrial Tribunal's observations that the question of "foreigners" was not and could not be central to the determination by the employers. Also we accept Mr Andrew's submission on behalf of the respondent, that the criticism made of the employers in this regard was a conclusion which was plainly open to the Industrial Tribunal on the facts, and could not be described as perverse.The second issue to which we turn, concerns the question of whether permission had been granted to the respondent to carry out the work. The Industrial Tribunal were critical of the employer for their enquiry into this issue. Before the Industrial Tribunal the respondent first claimed that he had been given actual permission by Mr Holt, his former supervisor. However, the Industrial Tribunal rejected that, because as they observed, no such claim had been made at any stage of the disciplinary procedure. Nor indeed, had the point been raised in a lengthy written statement submitted by the respondent at the commencement of the tribunal hearing. The respondent also denied to the tribunal that he had admitted at the disciplinary hearings that he had not asked his supervisor for permission to build the boat and that he had not done so because he thought it would be refused. We have been told, and it is plainly agreed, that the supervisor in question was a Mr Cafferty who had succeeded to some of Mr Holt's functions, following Mr Holt's retirement. The Industrial Tribunal rejected this denial from the respondent, because they accepted that an accurate note had been kept of all the disciplinary meetings.The Industrial Tribunal then went on to say in respect of implied permission:
"6. (ii) ... His [the respondent's] main case, however, on this aspect of the matter, was that he had done the work in the workshop, mostly at lunchtimes and Mr Holt, his supervisor for most of the relevant time, namely about 4... years, had his lunch in the workshop and was well-aware of what was taking place. His evidence was that Mr Holt had seen the original drawings, was very interested in them, took an interest in the work, saw what was going on, advised as to the way in which the construction should proceed, and even found bits of timber from time to time for the applicant to use. The case therefore, on behalf of the applicant, was that he certainly had implied permission as his supervisor was aware of what was going on and raised no objection to it. It was unfortunate that neither side chose to call Mr Holt, although apparently he was available, the applicant's solicitor having been informed in correspondence before the hearing that the respondents did not propose to call him, and the applicant himself, for reasons which were not explained, did not call him either. The Tribunal considered it highly unlikely that, as his boat had taken some five years to complete, Mr Holt was not aware of what was going on, and accepted the applicant's evidence that Mr Holt was aware of it and since, as the applicant's supervisor, he raised no objection to it, he had in fact implied permission."
Mr Parkin was highly critical of this finding, and also of the criticism of the employers which arises from that passage. In respect of that, the tribunal said this:
"9. ... It did not seem to the Tribunal that the respondents had properly investigated the applicant's claim that his supervisor, Mr Holt, knew all about the construction of the boat. A letter obtained merely said that Mr Holt had never given permission and the Tribunal was satisfied that this was so. The question as to whether Mr Holt was aware of the boat being constructed over a period of years, which the Tribunal felt was undoubtedly the case, does not seem to have been investigated by the respondents in any satisfactory manner and yet, had it been so, it must have made a difference to the conclusion of any reasonable employer that the individual's immediate superior was aware of what was going on and raised no objection to it. ..."
Mr Parkin submitted that this conclusion is perverse. He submitted that the passage to which we have just referred begins with an implied finding that the respondent had raised the issue of Mr Holt's implied permission at one of the disciplinary hearings, and yet, submitted Mr Parkin there is no evidence that he did so. Certainly there is no express finding of fact that he did so, which may be regarded as surprising given the long passage in which the respondent's evidence in relation to Mr Holt was recounted. Moreover, the reference to the letter from Mr Holt (which was not obtained by the appellants' solicitors until shortly before the Industrial Tribunal hearing,) suggests that the Industrial Tribunal thought that the employer had carried out some pre-dismissal investigation into what Mr Holt knew, but had not looked into it adequately.Mr Andrew submitted that the Industrial Tribunal made an implied finding of fact that the issue was raised at the appeal, and that they were entitled so to do and must not be criticised for not having made that finding expressly. He has told us that his recollection, he having appeared below, was, that Mr Wrigley, the respondent, told the Industrial Tribunal that the question of Mr Holt's implied permission had been raised at the appeal hearing. Mr Andrew did not have his notebook available; nor was his solicitor present and able to produce his note of the proceedings. We have not seen the Chairman's Notes of Evidence. No request was made for them, as the importance of this point does not appear to have been appreciated until today.Mr Andrew's recollection of the hearing is that Mr Dilkes did not accept that the issue had been raised at the appeal hearing. That is certainly what one would expect from Mr Dilkes' letter to the respondent, to which we have already referred. It is a very full letter. Before giving the reasons for rejecting the appeal, it sets out the contentions and submissions raised by the respondent. It contains no reference to Mr Holt's knowledge that the boat was being built. While we would not doubt Counsel's word, we do feel that Mr Andrew's recollection is not very clear on this point. In any event, even if the matter was raised in evidence as Mr Andrew recalls that it was, it is most unsatisfactory that the tribunal should make only an implied finding of fact in respect of something highly contentious and which was subsequently to form a major plank in their decision. It is clear to us that if Mr Wrigley did not raise the point at the appeal hearing, the employers could not have been criticised for not pursuing the point of their own volition. We reject Mr Andrew's submission that it would have been open to the tribunal to criticise the employer for not contacting Mr Holt of their own motion, even if the respondent had not raised the issue at the appeal.Our conclusion on this point is that the Industrial Tribunal decision leaves us in great doubt as to the validity of their finding on this point. We cannot see what they have found or why on this important matter. As we shall see, their conclusion criticising the appellants in this regard was central to their decision, and we are unable to say that their conclusion was supported by evidence. If that were the only issue in the case, we would either have to dismiss this appeal or send for the Chairman's Notes so that the point could be resolved. However, other points arise from which we have been able to reach a conclusion.The tribunal's third criticism of the investigation was that the employer had accepted the evidence of Mr Pearson, to the effect that the company had no use for marine plywood; whereas the respondent had said from the start that they did have a use for it, and that he had bought some and used it in the construction of a toilet block. The tribunal found that the employer had done nothing to resolve that conflict, and should have done so. It was conceded by Mr Parkin, that that was a criticism of the investigation which the tribunal were entitled on the evidence to make.The fourth criticism related to the employers' investigation of the allegation that the respondent had ordered marine plywood specifically for the boat and that the company had paid for it. The explanation which had been put forward by the respondent was that the sales representative of the timber firm had given it to him. As we have indicated, at the appeal hearing the respondent gave Mr Dilkes the name of Mr Maloney. There is no specific finding by the tribunal that the respondent told Mr Dilkes that Mr Maloney was the sales representative concerned, but the tribunal record the effect of what happened in the following way.
"6. (f) ... Mr Dilks asked Mr Blundell to arrange for him to see the salesman mentioned by the applicant, whose name he understood was Mr Maloney, to ascertain the position."
The tribunal considered that when Mr Dilkes discovered that Mr Maloney was the sales manager and not the representative, he should have made a further enquiry as to who was the sales representative concerned. They criticised him for accepting Mr Maloney's denial that such valuable material would ever be given to a customer in this way. The Industrial Tribunal thought that Mr Dilkes should have been more sceptical of Mr Maloney that he was. They themselves were very sceptical. They said in effect "Well Mr Maloney would say that wouldn't he".Mr Parkin submitted that this approach of the Industrial Tribunal is plainly wrong. Mr Andrew submits that it is a conclusion and a criticism which the Industrial Tribunal were entitled to make. We accept Mr Parkin's submission on this point. We consider that the Industrial Tribunal's reaction shows that they were substituting their own reaction to Mr Maloney's stout denial for the employers' reaction. Mr Dilkes plainly accepted Mr Maloney's denial, and did not regard it as simply being the sort of thing that a sales manager would say regardless of whether it was true. We also think that Mr Dilkes was entitled, as any manager would be, having made an enquiry of the very person named by the employee, to limit his enquiries to that person. Accordingly we considered that this conclusion of the Industrial Tribunal was seriously flawed.Finally, the Industrial Tribunal criticised the employer in a further respect not related to the investigation. They said this:
"9. ... They [the employers] thought that changing the lock on the door was a suspicious feature. The applicant claimed that it had been done for security reasons. They considered it was being done to conceal the boat. It seemed to the Tribunal this was a conclusion that did not stand up to examination since the workshop was unlocked anyway, all day every day, and therefore changing the lock which was a padlock really made no contribution to concealing the boat whatsoever. ..."
Here, as it seems to us, the Industrial Tribunal have plainly put themselves in the position of the employer, and have substituted their own view for that of the employer.Mr Andrew has very realistically accepted that that was so. He accepts that that is a weakness in this decision, but he submits that standing alone, it should not be regarded as sufficiently important to undermine the decision as a whole. If it did stand alone, we would perhaps agree, but it does not.We consider that there are at least three significant flaws in this decision. Two of them were said by the Industrial Tribunal to be central to their decision. We have already referred to paragraph 10 where the tribunal summarised their view of the investigation before concluding that the dismissal was unfair. In that paragraph, the two particular matters they pick out as being important are first, whether the respondent had ordered the wood specifically for use on the boat, and second, whether Mr Holt had given his implied permission to build the boat. As those two matters were central to the tribunal's decision, and as we consider that both of them are unsatisfactory, we conclude that this decision cannot stand.In those circumstances, it is unnecessary for us to deal with Mr Parkin's final submission in relation to the general approach of the tribunal to their task under section 57(3). Very briefly, he submitted that the tribunal had concentrated so closely on the requirements of the employer to carry out an adequate investigation, that they had failed on finding flaws in that investigation to stand back and ask themselves the statutory question under section 57(3). We do not consider it necessary to reach a conclusion on that.In the event, we direct that this matter must be remitted for re-hearing, and that that re-hearing must take place before a freshly constituted tribunal.