Lawson Mardon Ltd v Cotterill [1997] UKEAT 1452_96_0605

EAT
Lawson Mardon Ltd v Cotterill
[1997] UKEAT 1452_96_0605 · 1997-05-06

JUDGE D M LEVY QC :

Mr Stephen John Cotterill worked for Lawson Mardon Ltd ("the Company") from June 1979 until 31 May 1996. At all material times he was employed as a can line engineer.The Company manufactured sheets of tin plate containing advertisements. Defective or surplus sheets were put to one side for sale to a customer in India. The Company had a long standing culture of allowing staff to take scrap materials off site with the permission of the shift manager. The parameters of the policy were that small quantities of low value items for personal use could be removed.On four occasions in January 1996 Mr Cotterill removed a quantity of sheets from the hundreds thrown ready for discard which he sold to a friend for £400. He removed them openly, having told a superior, Mr Jackson, when permission to remove them was sought, that they were for his own use.A complaint about the removal surfaced in April 1996, when a customer rang the Company to say that one of his copyrighted designs was being sold at an Antiques Fair in England. The Company launched an investigation into the matter. Mr Cotterill admitted removing the sheets and selling them, but argued he had done nothing wrong because of the authorisation he had obtained to do so.There was a disciplinary hearing, after which Mr Cotterill was dismissed for gross misconduct. We have been shown a copy of the letter dated 24 May 1996 where the facts at an investigatory meeting are set out. Mr Cotterill was given the right to a disciplinary hearing, at which he was unsuccessful in resisting dismissal. Afterwards, by an Originating Application to the Industrial Tribunal dated 12 July 1996 and received on 15 July 1996, he complained of unfair dismissal with victimisation. The details of his complaint read as follows:
"I was unfairly dismissed for breach of trust. The Company claim I had sold materials from the Company that I had no right to do. I had written permission from the Company to take the materials and there was no Company rule written or verbal which stated that any material taken from the Company could not be later sold.
The reason I may have been dismissed with victimisation is because of my relationship with shift manager, refusal to do overtime when ill, my claim for an industrial accident, and the fact that other people removed the materials and sold them but only me was sacked."The answer put in by the Company stated:
"The Applicant [Mr Cotterill] was dismissed for removing a large quantity of scrap tinplate from the Company premises and selling it to a third party for £400.00.
The dismissal was preceded by an investigation and a disciplinary hearing.The Applicant admitted removing the scrap and selling it, but he denied having done anything wrong.The Applicant appealed against the decision but the dismissal was confirmed at Appeal.

In the circumstances, the dismissal was a fair one."

The complaint was heard by an Industrial Tribunal sitting at Nottingham on Friday 25 October 1996, when the Applicant appeared in person and a legal officer represented the Company. The unanimous decision of the Tribunal was that the Applicant was unfairly dismissed, but contributed to his own dismissal by one third. The matter was adjourned for a remedy hearing to be fixed. There is an appeal from that decision by Notice of Appeal dated 17 December 1996. As amended, there are three points taken by the Company on appeal.The first (and the major one) is that the Tribunal substituted its view of whether it would have dismissed the employee, rather than considering if dismissal was within the range of reasonable responses. Secondly, it is alleged that the Tribunal reached a series of contradictory and/or irrelevant findings and thirdly, that the Tribunal reached a perverse conclusion. Mr Chronias, who appears for the Company on the appeal, contends that the Industrial Tribunal substituted its own assessment of the fairness of dismissal, instead of considering where there was a reasonable sanction, which a reasonable employer could have adopted in these circumstances.Mr Chronias has taken us carefully through the judgment and the facts found by the Tribunal and submitted that although, in paragraph 51 of the decision, the Tribunal purported to find the dismissal was not a reasonable sanction, on a proper and natural reading of the decision, the basis for that had been taken away. He submitted that there were a number of irrelevant or contradictory findings which had an erroneous influence on the finding of unfairness.He pointed to paragraphs 26 and 47 where the Industrial Tribunal found that the Company disavowed any allegation of theft, but the Tribunal went on to direct themselves by reference to the criminal law definition of theft to find there was no criminality or other dishonesty on the Respondent's part.He pointed to paragraph 45 of the decision where the Tribunal concluded that the Company was entitled to take the view that the conduct of Mr Cotterill amounted to gross misconduct, and that the Company was entitled to take the view that Mr Cotterill's actions meant that the trust and confidence necessary had been fundamentally breached, but it then concluded at paragraph 51 that it was unreasonable for Mr Cotterill to have been dismissed. He contended that, having regard to the finding in paragraph 45, the inevitable conclusion was that dismissal was a reasonable sanction open to a reasonable employer. Paragraph 45 reads:
"The respondent was entitled to take the view that the conduct of the applicant amounted to gross misconduct; that the tin plate had been sold by him for personal profit (£400); that he had at no time acknowledged that he had done wrong (let alone paid that sum to the respondent or offered to contribute to the respondent's cost of recovery of the tin plate purchased back by them); the respondent was entitled to take the view that the applicant's actions taken as a whole have meant that the trust and confidence necessary for an employment relationship have been fundamentally breached and damaged."
For the third submission Mr Chronias submitted that it was perverse for the Tribunal to reach the decision it did, given the findings that Mr Cotterill knew there were parameters to the policy of allowing staff to remove scraps off site; that in breach of this policy Mr Cotterill admitting removing at least 400 sheets of tin which he sold for personal profit of £400; that the Company had to buy back the sheets of tin wrongly sold at a cost of some £1,200; that the Company sold such sheets to a customer in India so it lost out twice, both by not being able to sell the sheets taken back when scrapped and by having subsequently to re-purchase them; that Mr Cotterill admitted that he was guilty of the conduct alleged, yet at no time did he acknowledge he had done anything wrong, let alone offer to repay the £400 profit he had made or to contribute to the Company's costs of recovering the tin plate; that the Company took into account, before making its decision, Mr Cotterill's good and long service and that this was a first disciplinary offence. This is set out in paragraph 48 of the Reasons. Mr Chronias also pointed to the findings that the Company's process was just and fair and that the Tribunal found it was reasonable for the Company to accept the evidence, despite Mr Cotterill's protestations, that on removing the sheets Mr Cotterill said these were for his own use only, and that the sheets which he sold were copyrighted items of a client of the Company. In selling them Mr Cotterill jeopardised the customer relationship of the Company with a customer when the customer found them at an Antique Fair.In cogent and able submissions on behalf of the Respondent, Mr Dee submitted that ground 6.1 of the appeal was plainly wrong. The ground, he submitted, went beyond the express wording of the judgment in paragraphs 50 to 52 and in those paragraphs the wording used is totally consistent with the correct test in law and does not imply, in any way, that the Tribunal is substituting its own subjective views of the facts for that of the Appellant.On ground 6.2 Mr Dee submitted that the finding of dishonesty was not irrelevant and was an important finding in deciding how serious Mr Cotterill's conduct was. It was imperative that the Tribunal decided this before deciding whether other factors, when balanced against the conduct, would place the decision to dismiss within the reasonable bands of responses of an employer. Mr Dee submitted that if conduct is labelled as "gross misconduct" then any consequent dismissal is automatically unfair. He submitted that this is what was the effect of paragraph 6.2 sub-paragraph (b) of the Notice of Appeal. That clearly was not right. As to perversity, Mr Dee submitted that the Tribunal was legally obliged by Section 98 of the 1996 Act, to take into account all considerations, not just those which supported the decision to dismiss and this is what it did. He pointed to the whole of the Decision to justify it.In our judgment, the submissions of Mr Chronias are to be preferred to those of Mr Dee. In particular, in our judgment, the fact that an employee has quite contumaciously told a lie to an employee in order to remove the Company's goods from its premises, must be something which is very serious, notwithstanding that the employee is in a comparatively humble position in the Company.In paragraph 51 of the Extended Reasons the Tribunal said this:
"But the applicant is a 'line' engineer not involved in management or financial matters."
In our judgment, this sentence is something which has influenced the Industrial Tribunal to substitute its own views over those of the management, and in a way which is impermissible. In our judgment, the first ground of appeal is made out, as indeed are the second and third. We are reluctant to find the decision of the Industrial Tribunal perverse, particularly one where they have asked themselves the right question but, in our view, they have clearly come up with the wrong answer.In paragraph 52 the Tribunal says:
"We have therefore finally, but in the end, firmly concluded that it was not within the band of reasonable responses of a reasonable employer to dismiss the applicant, an employee of 16 years unblemished service, for this conduct, a first offence."
We are mindful of Mr Dee's admonition to us that we must be careful not to substitute our views for that of an Industrial Tribunal but, with respect, that where the Industrial Tribunal is wrong in law, that is something which we have to do.In our judgment therefore, this appeal succeeds and we shall hear submissions from Mr Chronias and Mr Dee as to what should now happen.Whilst we accept Mr Dee's correct submission that it does not follow from all gross misconduct that there must be dismissal, on the facts as found by the Industrial Tribunal in this case, we think that the dismissal was within the band of reasonable responses of a reasonable employer in the circumstances of this case. We will therefore substitute that for the decision made below.