Capstaff v ITNET Ltd [1998] UKEAT 1121_96_0202

EAT
Capstaff v ITNET Ltd
[1998] UKEAT 1121_96_0202 · 1998-02-02

JUDGE C SMITH QC :

In this appeal the Appellant, Mr Norman Capstaff, appeals against the decision of an Industrial Tribunal held in Newcastle in July 1996, of which extended reasons were given on 2 August 1996, when the Industrial Tribunal held unanimously that the Appellant had not been dismissed so that his application for unfair dismissal was dismissed.The case was one where the Appellant alleged that he had been constructively dismissed. Put very shortly and we shall amplify it in a moment, the Industrial Tribunal held that he had not established that he had been dismissed because of the breach of his employment contract when he resigned on 29 January 1996, but that he had left his employment because of an offer of another job starting the next day on 30 January 1996.Thus, the Industrial Tribunal held that they were not satisfied that the breach of contract, which they found to have taken place, caused the resignation. It is submitted to us by Counsel for the Appellant, that in so finding the Industrial Tribunal erred in law since it is submitted that in considering whether the Appellant had resigned because of the breach, the Industrial Tribunal were posing to themselves an admissible question.It is submitted that the only questions which should be posed in a case of constructive dismissal are, was there a breach, was it a repudiatory breach and whether the employee had accepted the breach and thereby discharged the contract or whether he had affirmed the contract by waiving the breach. Thus, it is submitted that the issue of whether the employee resigned in response to, or because of the breach, is not a relevant or admissible enquiry.It is submitted by Counsel for the Respondent, on the other hand, that in the field of employment law it is well established that the question as to whether the employee left in response to the breach, ie because of the breach, is well established on authority as being a necessary, but not a sufficient, question, which requires to be answered in the affirmative before an employee can establish that he has been dismissed by way of a constructive dismissal.As a second string to his bow, should he need it, Counsel for the Appellant submits that if causation is relevant it was not open to the Industrial Tribunal to find that the breach was not the operative cause of the resignation, in the light of its finding that the Appellant would not have sought alternative employment but for the Respondent's breach. Counsel for the Respondent, on the other hand, submits that this is to confuse a historical fact which triggers a course of conduct which leads to a result from facts which are actually causative of that result. She submits the two are not the same and it was for the Industrial Tribunal to decide, so it is submitted, as a question of fact, what the effective cause of the resignation was which is precisely what they did.Before we deal with those able submissions made to us, we must rehearse, at least in summary, the findings of the Industrial Tribunal. We repeat that this is no more than a summary because the Industrial Tribunal set out the facts that they found proved, on the balance of probabilities at considerable length, over a number of pages, at paragraph 6 of the extended reasons and what we say about those is no more than a summary. Reference should be made to the full facts as found by the Industrial Tribunal, should this matter go any further.It appears from those findings of facts and by way of summary that by September 1994, the Appellant was employed at the Newcastle Regional Office of the Respondents as Finance and Administration Manager responsible to the Site Manager, Mr Chapman, at a salary increased to £25,402 per annum. He was the only qualified Accountant at the Respondent's Regional Office.The Industrial Tribunal found that the bulk of the Appellant's duties comprised administrative duties, but that there were some accountancy duties, namely the production of monthly financial statements and the preparation of the Office's annual budget. The Industrial Tribunal held that he was over-qualified for the post he held and spent only a small amount of time on accountancy matters.The Industrial Tribunal found that, as part of an overall survey of its Regional Offices which resulted in substantial redundancies or re-deployments to Head Office, a Ms Curley, a Head Office Accountant, had recommended in July 1995, that Head Office should undertake responsibility for the management accounts, thus absorbing into Head Office the Appellant's accountancy function.The Industrial Tribunal found in paragraph 6 (i) that by November 1995, Mr Chapman had decided that the Appellant's job should cease to exist and that a new post of Administration Manager at a substantially reduced salary and without accountancy function, should be created. The Industrial Tribunal found that Mr Chapman realised that this might lead to the Appellant's redundancy, but that Mr Chapman was determined to avoid that by offering the Appellant the new post and, if he would not accept it, by finding him temporary employment at his existing salary in order to see if a permanent employment could be found for him. The Appellant was, on the findings of the Industrial Tribunal, informed of the position by Mr Chapman in November 1995. He rejected the new post and was told that he would be made redundant, but not before Christmas 1995 whilst the possibility of alternative employment was fully explored.There followed very detailed findings by the Industrial Tribunal at sub-paragraph 6 (k) - (q) inclusive of the course of events leading up to the Appellant's departure from his employment on 29 January 1996. It appears from those findings that the Industrial Tribunal found that right up to that date very considerable and sustained efforts were being made by Mr Chapman to find alternative employment for the Appellant within the Respondent Company. Meanwhile, the Appellant was applying for various jobs and, concurrently, by letter of 15 December 1995, and with effect from 8 January 1996 a Mrs Wiles was appointed to the new post of Administration Manager at a gross salary of £16,000 and the Appellant was given the task of introducing her to the job.By mid-January 1996 the Appellant had seemingly accepted a secondment to Head Office until March or April 1996 but he returned to the Newcastle office after only three days. The Industrial Tribunal found that by then he was telling Mr Chapman that he wanted to leave his job sooner rather than later and that the reason for that was that he had received an alternative job offer which he hoped to be permanent.The Industrial Tribunal found as a fact that he was hoping to be dismissed, but that did not happen in the event. Instead, on 29 January 1996, the Appellant told Mr Chapman that he wished to leave at once, ie that day, to take up his alternative employment to which Mr Chapman reluctantly agreed on behalf of the Respondents.The Appellant took up a post the next day with the Newcastle Health Authority but unfortunately, it did not become permanent. Proceedings followed, after a letter had been sent by Mr Kumur from Personnel which the Industrial Tribunal found did not, in any way, accurately reflect what had taken place and which was not relied on by either side before the Industrial Tribunal, but which did result in a redundancy payment being made to the Appellant.It was against those findings of fact that the Industrial Tribunal made the following findings.(1) That the Respondents were in fundamental breach of contract by decreasing the status of the Appellant's post and varying the salary of the post.(2) That the Respondents were not in breach of the implied duty of trust and confidence since Mr Chapman warned the Appellant of his decision at an early stage, repeatedly consulted with the Appellant and took extensive steps to find him alternative work prior to his leaving employment.(3) That it was necessary for the Appellant to establish, in the view of the Industrial Tribunal, that he had resigned in response to the breach and because of the breach and the Industrial Tribunal was not satisfied that this was the case since they held that the Appellant resigned because he had found another job.The Industrial Tribunal found as a fact that the Appellant chose to remain in employment, drawing his full salary, and looking for other jobs in the hope that he would be able to obtain another job before the Respondents ran out of permanent or temporary work for him.The Industrial Tribunal found as follows, in paragraph 11 of their findings, which is necessary for us to read into this judgment in extenso:
"11 Nevertheless, as we have already said, the unilateral demotion in pay and status was a breach of contract. However, that is not an end of the matter. For his resignation to amount to a dismissal, the applicant must have tendered it in response to the breach and the breach must have caused the resignation. We were not satisfied that this had been the case. We took the view that the applicant resigned his employment because he had found another job. We accepted that he would not have been looking for the other job if the breach had not occurred. However, it seemed to us that this did not necessarily establish causation. The applicant could have tendered his resignation in November 1995 when Mr Chapman first told him that his job was to be downgraded. He could have done so in December 1995 when Mr Chapman told him of the appointment of Mrs Wiles. He could have done so on 8 January 1996, when Mrs Wiles took up her post. He did not do that. He chose to remain in his employment, drawing his salary and looking for other jobs, in the hope that he would be able to obtain another job before the respondent ran out of offers of permanent or temporary work. In the event, in our view, that is what happened. having obtained such a job, which (bearing in mind the sort of comments that Mr Chapman had been making to him about secondment within the respondent) he thought might become permanent, he hoped that the respondent would dismiss him and resigned when it did not. However, it seemed to us that, if the applicant had not obtained that alternative employment, he would not have resigned when he did but would have remained in employment by the respondent for so long as he chose and the respondent allowed. On that basis, we were driven to the conclusion that the cause of the applicant's resignation had not been the breach of contract but had been the offer of another job commencing 30 January 1996."
So that it was in those circumstances, against those findings of fact, and those conclusions of law, that the Industrial Tribunal found that the Applicant had not been dismissed within the meaning of Section 55(2)(c) of the 1978 Act, which was the relevant legislation in force at that time.We turn to consider the submissions made to us and on which we reach the following conclusions. In our judgment, having considered what we regard to be the relevant authorities, namely Western Excavating (ECC) Ltd v Sharpe [1978] ICR 221 and the seminal passage from Lord Denning's judgment in that case, W.E. Cox Toner (International) Ltd v Crook [1981] IRLR 443, Walker v Josiah Wedgwood & Sons Ltd [1978] ICR 744, O'Grady v F.P. Financial Management CP Services Ltd EAT/1161/94, Waltons & Morse v Dorrington [1997] IRLR 488 and Jones v F. Sirl & Son (Furnishers) Ltd [1997] IRLR 493 , we are satisfied that, as a matter of law, the Industrial Tribunal did not err in considering the issue causation in the manner they did, as being a prerequisite to a successful claim for constructive dismissal.In our judgment Arnold J was, with respect, correct in giving the judgment of the EAT in Walker when he made the statement which is to be found at page 751 at H, in the course of giving the judgment in that case:
"We think for our part that it is at least requisite that the employee should leave because of the breach of the employer's relevant duty to him, and that this should demonstrably be the case. It is not sufficient, we think, if he merely leaves - at any rate in any circumstances at all similar to the present. And secondly, we think it is not sufficient if he leaves in circumstances which indicate some ground for his leaving other than the breach of the employer's obligations to him."
This approach, which in our judgment is the correct approach, was followed by Balcombe J, as he then was, in Norwest Holst Group Administration Ltd v Harrison [1984] IRLR 419 at paragraph 20 of that judgment. In this respect, in addition, we adopt the reasoning of the Employment Appeal Tribunal in the case of O'Grady , particularly at page 6 at F of the transcript.Nothing we say or hold should in any way derogate from the important principle that an employee cannot be expected to make an immediate decision when faced with a repudiatory breach by his employer. We respectfully accept and adopt the wise words of Browne-Wilkinson J, as he then was, in Toner at paragraph 15 of that judgment, as echoed by the President recently in Waltons & Morse at paragraphs 35 and 36 of that judgment, "An employee is of course fully entitled to wait and look around for another job."However, in our judgment, there may be some circumstances of which the present case is an example where, although there may have been no affirmation, it is clear that the real reason for the employee leaving is not in any way a response to the breach, but is rather because he has left to take another job and not in response to the breach.We accept that it may well be a difficult line to draw in any given case, but in our judgment an Industrial Tribunal, as an industrial jury, is well able to reach an appropriate finding as they did in this case. Here they found as a fact that the employee, the Appellant, had made a choice to remain in his employment, drawing his salary, in the hope that he would find another job before the employers ran out of office of permanent or temporary work. They found he then found a job, which he expected to be permanent and then, on the findings of the Industrial Tribunal hoped, in vain, to be dismissed, but was not. He then resigned in the circumstances found by the Industrial Tribunal in sub-paragraph 8 (p) of its decision, ie at less than a day's notice without any reference to the conduct of the Respondents as being the reason for his resignation. In our judgment, in those circumstances, it is both good sense and we hold, good law on the state of the authorities, that the Industrial Tribunal should legitimately investigate causation and be entitled to find that the real cause of the resignation was not the breach but the offers of a new job.In our judgment the Industrial Tribunal were entitled to make this finding of fact, despite their finding that, but for the breach, the Appellant would not have been looking for another job. We accept Counsel for the Respondent's argument that, at the end of the day, this must be a question of fact for the Industrial Tribunal sitting as an industrial jury to determine.Accordingly, for those reasons, this appeal must be dismissed.