Don Hoyland Ltd v Hoyland [1996] UKEAT 950_95_0507

EAT

Don Hoyland Ltd v Hoyland

[1996] UKEAT 950_95_0507 · 1996-07-05

JUDGE ALTMAN:

This is an appeal from the decision of the Industrial Tribunal sitting in Nottingham on 10 May 1995, in which it was found that the Applicant was unfairly dismissed and an assessment of compensation was made. There is no appeal from the finding of unfair dismissal. There is however an appeal from the assessment of the compensatory award, in that, by a Notice of Appeal, ground 6 is in the following terms:

"The grounds upon which this Appeal is brought is that the Industrial Tribunal erred in law in that the Industrial Tribunal failed to take any account of the Appellant's allegation that the Respondent had been guilty of conduct which, if it had been known at the time, would have justified his summary dismissal. The Industrial Tribunal were informed that the Respondent's alleged conduct was the subject of proceedings in the Mansfield County Court commenced against the Respondent by the Appellant. The Industrial Tribunal should have adjourned making any decision in relation to the compensatory award until after the Mansfield County Court had made a finding in relation to the Respondent's alleged conduct. Alternatively, the Industrial Tribunal should have investigated the conduct itself and made its own finding. The Industrial Tribunal ignored the principles enunciated by the House of Lords in the case of W. Devis and Sons Limited v Atkins."

The dispute between the parties in this case was one aspect of what we understand is a bitter dispute, between the people behind the Respondent company and the Applicant (I refer to the capacity in which the parties appeared before the Industrial Tribunal in this judgment) arising out of the fact that the Respondents were a small family company. The Applicant was the son of the founding father, and had very recently inherited shares from his mother; it appears that he was at odds with his father, the other shareholder and main director, and that shortly after the death of the Applicant's mother, the matters which gave rise to this dismissal took place.

The issue before the Industrial Tribunal in relation to whether or not the dismissal was fair, and indeed whether or not there had been a dismissal, related to a contest between the parties as to whether the reason for dismissal was, as the Respondent said, the refusal of the Applicant to disclose a password in relation to the use of the computer, or whether it was in fact, as the Applicant said, a false allegation that he had received money. That formed no part of the assessment of compensation. However, it was, in some form, the Respondent's case, that there should be no compensation, because of what is often called after acquired knowledge, under the Devis v Atkins principle. This relates to acts committed by the employee before the termination of his employment, but not coming to the notice of the employer until after termination, and yet being of such character that had they been known at the time of termination, they would have led to summary dismissal; with the consequence that, when they became known, they lead to a conclusion that in spite of the unfairness, there was no loss as a result of the dismissal, because of the other ground having been discovered. The measure of compensation flows from the dismissal and not the unfairness, and therefore the principle has developed.

We have concerned ourselves to some extent with the way in which this aspect of the matter developed before the Industrial Tribunal. In the Notice of Appearance at page 18 of our bundle, the Respondents asserted in paragraph 6:

"If (which it is denied) the Applicant was dismissed rather than resigned and if (which is further denied) his dismissal was unfair in the light of the Respondent's knowledge of his conduct at the time, the Respondents will nevertheless say that he has suffered no damage or loss because the Applicant's conduct would in any event have justified his dismissal. [It then goes on to deal with some matters of detail relating to his income.] ... but it is admitted and averred that by his plundering of the Company he very probably managed to extract that amount [reference to £2,000] each month in the months immediately before the termination of his employment. Investigations by the Respondent Company's auditors (which are still continuing) have shown a considerable cash deficiency."

That matter was then followed before the Tribunal by the presenting of a witness statement by Frederick Donald Hoyland, which was accepted in evidence, where in paragraph 17 he said this by way of alternative reference to the factual issues:

"... I would say that any loss which he has suffered has got to be minimal and within days I discovered numerous matters which would have justified his dismissal - in particular his making off with Company property which is the subject of the proceedings in the Mansfield County Court. I would add that the Company's affairs are still being investigated by the Company Secretary, Linda Bromley and the Auditors, Pannell Kerr, Forster. It appears that there could be a large cash deficiency but the investigations are still not complete. When a final Accountants report can be obtained there will probably be an amendment of the County Court proceedings. I would accordingly submit that if there is any finding of unfair dismissal the question of compensation should be adjourned until after the determination of the County Court proceedings. However, if the Tribunal makes a finding of wrongful dismissal then I would like the damages to be dealt with as this will inevitably require an Enquiry by the Tribunal [and other matters which are then referred to]."

To some extent what happened in the Tribunal is referred to in the decision of that Tribunal. In relation to the question of the reason behind what happened, in paragraph 4 the Tribunal refer to the fact that there was conflicting evidence, because on the one hand on behalf of the Respondents, Donald Hoyland said the suspension was not on the grounds alleged by the Applicant, but on the grounds that he had supported Donald's wife Anita, who had refused to give Donald the company password to the computer.

The Tribunal preferred the evidence of the Applicant, that the suspension which was found by the Tribunal to have constituted in due course the dismissal, because of the way it was subsequently treated, was related to the missing £6,000. That was all evidence that was before the employer before the dismissal, as it was found to be, took place. Accordingly, in his submissions to us, Mr Napier has concentrated and confined his submissions to the allegation of the taking of company property, which it is asserted as information coming to the notice of the employers after termination. There may have been an argument in relation to that, because we understand that that related to, at least in part, computer disks. In the light of the arguments about the company passwords, there may have been some question as to when in fact the Respondents acquired knowledge. But for the purpose of this appeal, we accept that they did not know at the time of the dismissal. In their decision, the Industrial Tribunal go on to deal with that part, and they say that the Respondent claims that he suspended the Applicant because he supported his wife, who had refused to give to the Respondent the password to the computer, and that conduct was such that would merit dismissal on the grounds of gross misconduct for breach of fidelity. The dismissal letter is ambiguous and the Industrial Tribunal asserted their rejection of it.

As has been pointed out, if there is a theft of company property, even if it be company records which could have led to loss to the company, then it goes well beyond the question simply of fidelity.

There was some discussion before the Tribunal when it came to the assessment of compensation, as to what should happen and the way it should be approached. This is not referred to in the decision itself, which perhaps is a great shame and we suspect the primary reason why this matter is in fact before us. In his submissions to us, Mr Napier has suggested, in effect, that the course open to the Tribunal was one of three: first to adjudicate upon the Devis v Atkins principle, in relation to the evidence already before it. In addition to the matters I have referred to, it is understood there was some cross-examination of the Applicant upon that point, he simply denying that he had taken anything. Secondly, they could have permitted evidence to be called there and then, before going on to assess compensation, or thirdly, they could have adjourned for evidence to be produced. In the event, it seems to us, that was not the way, as far as we can judge, that the matter was dealt with before the Tribunal.

Having looked at the documents to which I have referred, including the Notice of Appeal, it does seem to us that, although there were the references to which I have referred to other matters of complaint, discovered afterwards by the Respondents, that was largely incidental to the issues that were before the Tribunal. The Employment Appeal Tribunal which considered this case by way of preliminary review, requested the Chairman to submit some comments on the Notice of Appeal, and he did this at page 22 of the bundle. He refers to the proposition that they should have adjourned the making of a compensatory award until after a finding in the Mansfield County Court. At the time, in relation to the matters of complaint which the Respondents now say the Tribunal should have considered in relation to the assessment of compensation, proceedings had already begun by the Respondents acting as Plaintiffs in the Mansfield County Court. Having pointed out that this was part of a family dispute which delayed the start of proceedings, the note from the Chairman is in the following terms:

"As to the compensation, we further rejected the appellant's view that we should either deal with the allegations referred to in the pleadings in the County Court case or defer our decision on compensation until the County Court case had been heard. We took the view that if the appellant wished to bring further proceedings in the County Court on matters which had not been before the Tribunal, then that was for him to decide."

Having considered that, and the fact that the Notice of Appeal really puts the claims in the alternative of receiving evidence in relation to compensation or adjourning, we are bound to conclude that this is not a case, it seems to us, in which it can be said there was before the Tribunal evidence in relation to the compensation which they should have adjudicated upon in order to consider the Devis v Atkins point. Everything, so far as we can judge, and it is slightly unsatisfactory because of the way in which it has been dealt with by subsequent notes, points to the conclusion that all sides seem to be agreed that such reference as there may have been to other proceedings was never treated by any party as central, at that time, to the question of compensation, and ready for adjudication. It was simply that the Respondents wanted an opportunity to call evidence on the issue of compensation, or to adjourn.

We have therefore considered the fact that the Tribunal appear deliberately to have shut out from their consideration the evidence, alleged to be necessary for the calculation of compensation, on issues which were to form the basis of proceedings in another court, which were clearly to be contested, about which the Tribunal had not at that point received evidence, and which would have been directed by the Respondents towards the argument that there should be no compensation, because of the after acquired knowledge of the alleged misconduct during employment.

We have considered the arguments very carefully in support of this proposition. We have particularly borne in mind the reference both in the Respondent's Skeleton Argument in support of this appeal and indeed in argument, to the case of Moran and another v Kloezeman in the Employment Appeal Tribunal, in which Mr

Justice Mummery said that:

"The Tribunal prima facie has a legal duty to receive admissible evidence. Having received it, it is then to decide how relevant it is, what weight it should have and to what issue it goes."

Of course, we would not seek in any respect to divert from that statement of principle, and would draw attention to the use of the words "prima facie".

We also direct ourselves to Rule 9 of The Industrial Tribunals (Constitution and Rules of Procedure Regulations 1993 :

"(1) The tribunal shall, so far as it appears to it appropriate, seek to avoid formality in its proceedings and shall not be bound by any enactment or rule of law relating to the admissibility of evidence in proceedings before the courts of law. The tribunal shall make such enquiries of persons appearing before it and witnesses as it considers appropriate and shall otherwise conduct the hearing in such manner as it considers most appropriate for the clarification of the issues before it and generally to the just handling of the proceedings."

It is important to go on to sub-paragraph 2 and its opening words:

"(2) Subject to paragraph (1), at the hearing of the originating application a party shall be entitled to give evidence, to call witnesses, to question any witnesses and to address the tribunal."

It is perhaps unnecessary to say that the Industrial Tribunals are designed to approach their hearings in accordance with the principles set out. This is not a Court of Law in which there is strict entitlement, necessarily, in all circumstances, to call evidence simply because it is relevant to an issue. It is interesting that what appears to be a procedural requirement, embraces the approach to the actual evidence that is to be called and implies within it a discretion, not only as to the procedural niceties, but as to such evidence as is to be receivable. Of course, it follows therefore, as is shown in the extract from the Moran v Kloezeman case to which we have been referred, Mr Justice Mummery used the words "prima facie".

What was the Tribunal to do at the time it was faced with the question as to the steps to be taken in assessing compensation? They had no doubt to consider all the facts which are set out, in particular the fact that there were proceedings in the County Court where issues could be adjudicated upon in the ordinary way, which were thought at least to refer to issues in these proceedings. Whilst of course that would not be done on the same principles, it would at least enable those issues to be explored. Nothing as we understand it was placed before the Tribunal as to the time within which the County Court proceedings would be concluded. Nothing was put before the Tribunal in relation to any procedural prejudice, although the inability to argue the point as a " Devis v Atkins " point, can be said to be prejudicial in itself. It has been urged before us on behalf of the Applicant, that we should take a view that this evidence was, in any event, so tenuous as to be incredible. Tempting though that may be, we have eschewed that approach. It does not seem to be a matter that we should consider an appeal in this case.

It seems to us that in a case of this kind, in which the Tribunal were very conscious of involved family disputes, all of which to some extent were inter-related, that they took a view in the exercise of their discretion that they would resolve the issue of compensation, balancing all the different factors, on the evidence which was already before them, rather than re-opening and hearing further evidence on the one hand, or adjourning in a rather open-ended way as it would inevitably have been on the other, to either await the outcome of County Court proceedings or to enable further evidence thereafter to be called.

Whilst we can sympathise with the Appellants in their feeling that this matter could have been dealt with at that time, it seems to us, having looked at it, that the decision of the Tribunal was well within the discretion that they are set-up to exercise. We have no doubt that it is appropriate for an Industrial Tribunal to be left free to exercise its discretion, so long as it does so on proper principles, in relation to the evidence that is adduced as to the issues fall before it. If, of course, there is evidence there waiting to be called, which is central and which should be called then, depending upon the facts of the case, it may at some later stage be arguable, that a particular Tribunal discharged its discretion in such a way as to offend legal principles and call for the intervention of this Appeal Tribunal. But we do not consider that this matter occurred in that way in this case.

However, before departing from the case, we wish to make one assertion. It does not affect our ability, happily, to assess this case, because all the evidence before us suggests that the issues fell to the Tribunal in a particular way, at the time of the assessment of compensation. But where a semi-procedural issue is raised during the course of a hearing, it does seem to us preferable, so that the parties really know what the reasoning is, and it can be seen and judged by them and anyone else at a later stage, for a Tribunal which comes to assess compensation, to include in its descision a description of the reason why the Tribunal has proceeded to make its adjudication and has not granted an application for an adjournment. To an extent, it is unsatisfactory, in many respects, for a Chairman to be asked at a later stage to provide a note, giving supplementary reasons for particular actions.

In this particular case we are satisfied that the note simply clarified, and did not contradict, anything else that we know about. But we suspect that such notes are written in the absence of the lay Members and it is a matter that is bound, with the best will in the world, to be possibly affected by the time that passes between the decision and the time when the note is written. It really does form part and parcel of the decision and reasons of the Tribunal and that is its proper place. As I have already said, that does not really affect the issues in this case and the way they have been presented. Having considered them and been sympathetic with the feelings of the Respondents, we are driven to the conclusion that the exercise of discretion by the Tribunal in this case in the conduct of the proceedings before it, was unexceptional and this appeal is dismissed. No order for costs.