Elias v Scott [1997] UKEAT 580_96_0904

EAT
Elias v Scott
[1997] UKEAT 580_96_0904 · 1997-04-09
MR JUSTICE LINDSAY : We have before us an appeal against the decision of the Industrial Tribunal on 5th March 1996 in the matter between Mrs Scott, as applicant, and a firm it seems called Elias on the other. The tribunal under the Chairmanship of Professor Upex promulgated its decision on 17th April 1996.Elias is a relatively small firm of dry cleaners with three branches in London. Mrs Frances Scott worked at one of the branches. She effectively ran the shop although she preferred not to have the title and responsibilities of manager.The decision of the tribunal was that the applicant, Mrs Scott, had been unfairly dismissed. The tribunal order that Elias should pay Mrs Scott the sum of £10,912 as compensation for her unfair dismissal; an associated claim for damages for breach of contract was dismissed.One of the chief matters that vexed the Industrial Tribunal was the question of what was the effect of a written notice of resignation that had been handed in by Mrs Scott during the disciplinary process. There was a disciplinary interview on 19th July, and, in their full conclusions, the Industrial Tribunal say this:
"... As we have found, at the start of the disciplinary interview on 19 July, the Applicant wrote out her resignation which Mr Elias refused to accept."
We have actually been handed this morning a copy of that notice and we have also been handed a copy of a letter written by Mrs Scott's husband dated 24th July. The letter of 24th July suggests that Mrs Scott had first given an oral notice for one month which Mr Elias had then asked to be put in writing. The letter from Mrs Scott, seeming to act upon that request says this:

"Mr Elias

As from 19.7-95 I would like you to take this letter giving you one months notice to leave your employment."The letter written by Mr Scott on 24th July says, in part, this:
"Please find enclosed certificate in respect of wife from 4 weeks. [ That is relative to a medical certificate, a point which has not concerned us. ]
Frances [ Mrs Scott ] gave you her months Notice verbally you asked her to put it in writing which she did and as far as we are concerned that is the end of it. ..."The reason found by the Industrial Tribunal for Mrs Scott's dismissal as shown by the employer was that she had falsely claimed that personal laundry being processed in the Elias firm's machines at the premises at which she was effectively manager was a customer's laundry rather than her own, and that she had put in her waxed jacket through the cleaning process on a "no charge" ticket, thus defrauding the respondents of revenue. In other words, it was an allegation of conduct that was dishonest.I have mentioned that at the hearing of 19th July this written notice of resignation was handed over, and the Industrial Tribunal said this:
"The fact that the disciplinary interview continued leads us to the conclusion that both parties treated the resignation as having been effectively withdrawn."
That mode of expressing the matter seems to indicate that there was no evidence of parties who gave evidence to the Industrial Tribunal directly relating to what was said and done in relation to the effect of the handing over of the resignation. We have asked the advocates before us whether any evidence was in fact given on the subject. The matter is a little unclear but there were certainly no indications of any express evidence having been given as to what the parties did and said in relation to the effect of the handing over of the notice.What concerns us is that the treatment of this central issue by the Industrial Tribunal seems to move from a view that a finding that the fact that the disciplinary interview continued should necessarily lead to the conclusion that both parties treated the resignation as effectively withdrawn. That, it seems to us, is not a proper conclusion of law. It is a point which could have been concluded on evidence, had there been evidence given on the subject, but is far from axiomatic that because a disciplinary interview continues then a notice must be treated as withdrawn. This, it must be remembered, and as Mr West has emphasised, was not a notice of immediate resignation by Mrs Scott, but one which indicated she would work for another month. In principle, there is no reason why, during that further month she should not be subjected to summary dismissal. It thus cannot be said to follow that the fact that the interview continued is an indication of resignation of having been withdrawn. So here, as it seems to us, there was a point that has very important consequences in relation to the conclusion and to the reasoning of the Industrial Tribunal that is based on an error of law. As far as one can tell the Industrial Tribunal simply assumed that because the disciplinary interview continued it must have been the case that the resignation was treated as withdrawn. That, it seems to us, is an error of law which puts the matter into our province.That is one very serious point, because, of course, it leads to the fact or the argument that in any event Mrs Scott would have been leaving employment with Elias at the end of the month. If one has that in mind then the compensation at the level that was awarded, which contemplated her employment well beyond that, is based upon a fallacy. That is an important point but it is by far from being the only point.The Industrial Tribunal was satisfied that the respondents, Elias, genuinely believed that the applicant had committed acts of dishonesty. They say this:
"We do not however think the Respondents had reasonable grounds upon which to sustain their belief because they had not carried out a reasonable investigation into the circumstances of the case. We consider the investigation to have been insufficient because they relied ..."
and then begins a catalogue of matters which the Industrial Tribunal set out as supporting their conclusion that the respondents did not have reasonable ground on which to sustain their belief that the applicant, Mrs Scott, had committed acts of dishonesty.Well, what had been done in the matter? The employer, Elias, must, it seems, have had some doubts about the way the particular dry cleaning branch was being conducted, because they put into the office or shop a Miss Agius. They had a telephone report from Miss Agius. They had a written statement from Miss Agius. That written statement from Miss Agius indicated that Mrs Scott accepted that she had lied to a manager, Mr Solomon, when she had said to him that the clothing in the machine was not her own but was that of a customer. That written statement was not only in the hands of Elias, the employer, but was handed over to Mrs Scott at the disciplinary hearing. The tribunal said this:
"He [ Mr Elias ] presented the Applicant with a written statement prepared by Miss Agius. The Applicant first refused to read the statement but then agreed to read it through. Having read it she handed it back to Mr Elias and said that it was time she went and she asked for a copy of the statement."
In terms of a reasonable investigation or grounds for belief, as to Mrs Scott's misconduct, the employer had the written statement of an employee and they had the fact that the applicant had been given a copy or had been handed a copy of that written statement, and that, rather than refuting it there and then, she handed it back saying only, as it seems, that it was time that she went. Moreover, it is plain from the reasoning of the Industrial Tribunal that a Mr Solomon, the manager, had been to the relevant branch and had spent something of the order of ½ an hour there. There is no apparent reason in the conclusions of the Industrial Tribunal why it is that the employer should not have been able to accept Miss Agius's written statement that Mrs Scott had lied about the clothing. It is said that she had only been at the premises for four days, but it is hard to see what the significance of that is. The Industrial Tribunal says:
"We consider the investigation to have been insufficient because they relied upon a new employee who had been there four days before she called in Mr Solomon to pay a visit to the branch ..."
We have some difficulty with that. Is it being said that four days is too short or too long.? If there is blatant dishonesty being conducted at a branch, then one would expect a short period only to be necessary before it would be proper to report it. Indeed, had a long period elapsed one could see that there would be an argument that surely the dishonesty was not blatant because had it been so it would have been reported earlier.The question which the Industrial Tribunal seems to have been addressing was not whether Elias had been reasonable to accept Miss Agius's evidence as justifying a dismissal, but whether it, the Industrial Tribunal, ought to accept Miss Agius's evidence as a foundation for a dismissal. Miss Agius was not called at the Industrial Tribunal and so the Industrial Tribunal was labouring under the undoubted difficulty that they could not form a view of Miss Agius's credibility, but there is no ground apparent why the employer, Elias, should not have been able to rely upon the written statement of an employee, especially given that the written statement had been put to Mrs Scott and had excited only the comment that I have indicated. What the Industrial Tribunal says is this:
"Since however Miss Agius was not here to give evidence to us and since those allegations do not appear to have been put in any detail to the Applicant at the disciplinary interviews, we do not think it is possible to place any reliance upon them at all."
Well, properly the tribunal should not have been considering whether they felt it was possible to place any reliance for their own purposes upon Miss Agius's written statement but whether the employer could have properly done so. They seem, in other words, to have been addressing the wrong question. Moreover, when it is said that it appears that Miss Agius's allegations had not been put in any detail to the applicant at the disciplinary interviews, that seems to overlook that the written statement had been handed to Mrs Scott. She first refused to read the statement, but then agreed to read it through, and having read it through, she handed it back; and, as I have indicated earlier, said only that it was time that she went. Mrs Scott was plainly given an opportunity to answer in such detail as she saw fit the content of Miss Agius's written statement.It is to be remembered that Miss Agius's written statement itself says that Mrs Scott had admitted lying to Mr Solomon and one would not unreasonably expect that, upon reading that, Mrs Scott should at least have said to the hearing which was then in progress that it was a pack of lies, if that, indeed, was her view.It is said by the Industrial Tribunal that the visit of Mr Solomon to the particular shop was cursory. They say that they were satisfied that it lasted no longer than ½ an hour. But it is not explained and is certainly not obvious to us, why it is that a ½ an hour visit should not have sufficed. Nor is it said anywhere in the conclusions of the Industrial Tribunal what might have been gleaned by Mr Solomon had only his visit been longer.In summary, the Industrial Tribunal's conclusion that Elias did not have reasonable grounds upon which to sustain its belief that the applicant had committed acts of dishonesty is itself not supported by the specific reasons given for it. Put another way, no reasonable Industrial Tribunal properly instructing itself could have come to the conclusion that Elias had no reasonable grounds to sustain its belief upon the grounds that this particular Industrial Tribunal came to that conclusion.So far we have been addressing the point of whether the respondents had reasonable grounds on which to sustain their belief, but then one moves on to the second aspect, namely "because they had not carried a reasonable investigation into the circumstances of the case". Well, one has to remember the type of company one is dealing with. It is relatively speaking "small fry". What did the investigation consist of? First of all Miss Agius had reported by telephone; then there had been a visit by Mr Solomon; then there had been a proposed hearing for 17th July; then there was an actual meeting on 18th July and that was a meeting as to which evidence was received by the Industrial Tribunal. What they say is this:
"Mr Elias, Mr Solomon and the Applicant were present and Mr Elias put the allegations to the Applicant which were fully discussed by them. Although Mr Elias said in his evidence that the Applicant stormed out of the meeting, we prefer the Applicant's evidence that the meeting lasted some two hours."
So there one has a full discussion of some two hours duration.There was then to be a further meeting on 19th July, and it seems that in the meantime the written statement of Miss Agius had been handed to the employer. Then, in the manner that I have indicated earlier, at the meeting on 19th July the written statement of Miss Agius was handed to Mrs Scott in the way that I have indicated, and it elicited the response, after a first refusal to read it, and after it was then read through and was handed back, namely that it was time that she went.There was then notice of a hearing for 21st July and ultimately dismissal on 25th July.The Industrial Tribunal say:

"We consider the investigation to have been insufficient because ..."

and then they set out the reasons. The first, as I have mentioned earlier, was because Miss Agius was a new employee who had been there four days before she called in Mr Solomon. As I hinted before, it is difficult to see what the significance of the four day point is. It could be that someone coming in afresh was completely untainted by previous corrupt practice. It cannot, of itself, indicate that Miss Agius's report is not to be relied upon simply because she had only been there four days. She was put into the premises to make a report and it is not said anywhere that she was without any experience whatsoever in the industry. The fact that she was a new employee is not, it seems to us, of any material significance in supporting the view that the investigation had been insufficient; and, equally, the fact that she had only been there four days, is, of itself, of no weight. I have mentioned already the fact that the conclusion that Mr Solomon's visit was cursory, only ½ an hour in length, carries no weight in relation to the adequacy of the investigation. Is ½ an hour too short, and if so, why? What is it that he should have persisted in for longer and what would have transpired had he done so? There is no clue to indicate why ½ an hour's visit should not have sufficed. Then it is said, and rightly, that the employer, Elias relied very heavily on what had been said by Miss Agius. So be it. But why is that improper? Nothing is found to suggest that the employer was not entitled to rely upon Miss Agius and what she had said. The fact that the Industrial Tribunal was not itself in a position to test whether Miss Agius had been telling the truth or not is no reflection necessarily at all on whether the employer had been entitled to rely upon her report.I have mentioned also that amongst the reasons for the investigation being insufficient in the eyes of the Industrial Tribunal was the fact that it was said that Miss Agius's conclusions had not been put in any detail to the applicant. But it is plain that she was handed the report, first refused, then read it, and then made only the comment that I have indicated.In summary on this point, it seems to us that the Industrial Tribunal's view that there had not been a reasonable investigation is not supported by the reasons that were given for it. Had the Industrial Tribunal merely said that they had received evidence that led them to that conclusion, that might have been one thing. We would then have had to assume (subject to a request for an examination of the Chairman's Notes) that they did indeed have such evidence. But when specific reasons are given and fail to support the conclusion which they are said to support, one then moves from a question of fact into a question of law. Here, as it seems to us, no reasonable Industrial Tribunal properly instructing itself could have come to the conclusion that there had been no reasonable investigation simply upon the grounds which this one gave for that conclusion.Then there is a question as to procedural unfairness. On this topic the Industrial Tribunal says this:
"Apart from the fact that we consider the investigation in all the circumstances to be inadequate, we also take the view that the disciplinary hearing was inherently flawed because of the fact that the person who was in charge of the hearing and who decided to dismiss the Applicant was also the same person who would have dealt with any appeal which the Applicant might have chosen to make but which she did not choose to make in the circumstances. Our view is therefore that that hearing could never have been fair."
That is a ground that we have found some difficulty with. It seems to advance the strange notion that the original disciplinary hearing was inherently flawed because any appeal from it would have been to someone who had already been in charge of the initial hearing. We can see force in a submission that the appeal would have been unfair, being to a person who had been concerned in the disciplinary hearing. We do not say that that is always and necessarily the case; one has to have regard to the small nature of the employer here concerned. But, on any footing, the fact that the appeal mechanism was flawed would not itself lead to any inherent flaw in the original hearing. Indeed, it is far from obvious that the appeal would have been heard by Mr Elias. What the letter on the subject says, as quoted by the Industrial Tribunal is this:
"Should you not feel that dismissal is appropriate disciplinary action of the matter concerned you may appeal against it within seven working days using the disciplinary appeals procedure by applying to Mr H Elias stating why you feel the penalty imposed as too severe or inappropriate."
The fact that one had to apply to Mr Elias to initiate the appeal does not of itself necessarily suggest that it was Mr Elias either alone or with others that would actually conduct the appeal. It seems to us that this is another error of law that forms a not unimportant part of their reasoning. The view that the hearing could never have been fair is followed by this sentence:

"The third and final circumstance which we take into account ..."

so, obviously, what had immediately preceded that was taken to be a second circumstance that had been taken into account. It seems to us an error of law to conclude that the hearing was inherently flawed simply because the appeal mechanism was inherently flawed, even assuming that indeed the appeal mechanism was inherently flawed.Now, what then to do with a case in which there have been, as we see it, important errors of law?We cannot speculate what the position would have been had the Industrial Tribunal properly instructed itself. What conclusion would it then have come to is a matter of speculation. It seems to us, therefore, that a necessary consequence is that the Industrial Tribunal's conclusion should be set aside as to unfair dismissal and also in relation to the consequences of the unfair dismissal in terms of the nature of the award and that we should remit the whole matter afresh to a new tribunal.It is not for us to give directions to that new tribunal but we do make this comment, that it cannot be improper for them to conduct a closer examination than did the present Industrial Tribunal's case into some particular factors. Why was it and on what basis was it that the disciplinary hearing continued after the handing in of the notice? Was, it in point of fact, on the basis that Mrs Scott remained in employment or was it not? Was anything done or said on the subject of the consequences to the disciplinary process of the handing over of the written one months notice? That is a subject that will need to be more thoroughly investigated, rather than having been, as it seems to us, treated as axiomatic in the decision which we are considering.Another question which might seem appropriate to be gone into is why is it, if at all, that it would be proper for the employer not to rely upon the written statement of Miss Agius? If it is to be said that Mr Solomon's visit was cursory when he went to the premises for only ½ an hour, it needs to be investigated, in point of fact rather than simply by bland assertion, that that was inadequate. What is it that he did in the ½ an hour? What is it more that he should have done? What more might have come to his knowledge had only he stayed longer or looked further?As to Miss Agius's statement and Mrs Scott's reaction to it, was it that Mrs Scott had, so to speak, taken it on board and simply handed it back without comment except that she said it was time that she went? Or was that she had failed to comprehend its import and was for the moment lost and wished to leave?These are areas of fact which we just illustrate as indications that there are areas which, in our view, will need not to be treated as matters almost of assumption, or as of going without saying but which will need to be investigated in relation to the particular surrounding circumstances. But, having said that, of course, as I have indicated earlier, we give no directions on the point; it is simply that these are areas which seem to us proper to be explored.We set aside the decision as to unfair dismissal and the consequences thereof, and remit the matter to a new tribunal.