Thompson v Norwich Union Life & Pensions Ltd [1998] UKEAT 117_98_1606

EAT
Thompson v Norwich Union Life & Pensions Ltd
[1998] UKEAT 117_98_1606 · 1998-06-16

JUDGE J HULL QC :

This is an appeal to us by Mr Thompson against a decision of the Industrial Tribunal sitting at Sheffield under the Chairmanship of Mr Rostant with two members on 13 and 14 November 1997. Mr Thompson had applied to the Tribunal complaining of unfair dismissal by the Respondents, Norwich Union Life & Pensions Ltd, and claiming compensation for that unfair dismissal. In their answer the Respondents had said that he was guilty of gross misconduct.The matters arise out of the payment of mortgage allowance by Norwich Union to certain of their employees in accordance with conditions which they lay down. That allowance is intended to help with the payment of mortgages by the employees.Mr Thompson's employment as a pensions administrator began on 10 October 1988 and he lived at that time in Norwich at an address called 4 Guelph Road where he had a mortgage and from 1 August 1991 the Norwich paid him a mortgage allowance based on the fact that his house was in mortgage and he was living nearby.In 1993 Mr Thompson was asked to move to Sheffield. He duly did so and apparently lived in lodgings there whilst keeping his house in Norwich. That was permitted. Mortgage allowance could still continue to be paid in such circumstances if the Norwich were satisfied that active steps were being taken to market the house. The idea is quite plain that if an employee is moved it would not be just immediately to say "well you are no longer living in the house therefore you cannot have a mortgage allowance paid to you." But of course it is expected that if an employee moves a considerable distance, to new premises, he will be looking for a new house there and he must, if he wants to continue drawing the mortgage allowance, show that he is actively marketing the house, or to put in plain English, actively engaged in selling the house or trying to sell the house.Another condition of payment of mortgage allowance is that the Norwich is entitled to call on any employee in receipt to show them the account of the mortgage because it is not the practice to pay a mortgage allowance, apparently, if the mortgage falls into arrears. The idea, again, is obvious, because the mortgage allowance is paid to enable the employee to keep up with his mortgage and if he is not keeping up with his mortgage then the basis of the payment vanishes.The house in Norwich was not sold for a substantial period. Indeed it was not sold even by 1997, four years later. In 1995 it appeared that the house had been put into the hands of local estate agents with instructions to sell it but it also appears that in that year too it might have been withdrawn, or at any rate, the agents may have been instructed not to continue actively selling it.The employers became suspicious that the house was not being actively marketed and they also asked repeatedly for the mortgage account and there was a long history of what appears to have been prevarication with regard to those matters. It was alleged that the house was still in the hands of the agents, that it was being actively marketed and, with regard to the request for the mortgage account; the account had been lost, a duplicate was to be sent, letters, or memoranda from the employers had not been received, the matter was in hand and so on, and so on. One excuse after another seems to have been made, at any rate looking at it from the employers' point of view.Eventually matters came to a head. One of the managers visited Mr Thompson and it was suggested that the house was not being actively marketed and it was also said that there were arrears. So there was a disciplinary hearing to look into the matter.The notice of the disciplinary hearing was given to Mr Thompson and the letter, at page 44, the second letter on the subject, said, as the first letter had,
"The issues to be considered at the meeting are as follows:
1. That you have deliberately falsified records to enable you to continue to receive Mortgage allowance.2. That you have deliberately misrepresented your current state of health so you continue to receive sickness benefit from the company."That second charge was not found to be established at the employers' inquiry and no more turns on that.That letter was accompanied by a 'summary of the issues' as it was called. With regard to the mortgage allowance, with which alone, of course, we are concerned, the summary said as follows:
"On 3/7/95 confirmation was issued to you that you could continue to receive mortgage allowance on your property in Norwich, subject to you confirming:

a. The property was not being let

b. The property was actively being marketed for sale"

Then a copy of the estate agent's letter was requested and received on 23 August 1995 after numerous reminders - they had asked for confirmation from the estate agents.Then the summary of issues goes on:
"On 26 February 1996 you completed and signed the Mortgage Allowance Scheme - Annual Audit proforma."
Then there were references to the reminders, the requests for information, and at 6:
"6 You have been reminded that failure to provide the information required would result in the removal of the mortgage allowance from 1 January 1997.
7 Subsequently, evidence has been received on 3 March 1997 that confirms the property was withdrawn from the market by you in early September 1995.8 When you removed the property from the market you knew that this would break the terms of the agreement.9 On this basis you were knowingly claiming mortgage allowance under false pretences from September 1995 to January 1997.10 Due to falsifying office records this amounts to a potential act of gross misconduct."That was what was said in the summary of issues. Then there was a disciplinary hearing on 26 March which is minuted and is recorded, (pages 50 onwards in our bundle), there was an appeal to Mr Peak from the decision of that disciplinary meeting, which was that Mr Thompson had behave dishonestly and deliberately defrauded the employers.Before I come to the decision of the Industrial Tribunal, there is one matter that I would refer to. It is said that the estate agents wrote contradictory letters and, eventually, it was certainly not the position that the employers could be satisfied that the house had actually been withdrawn from the estate agents. That appears to be correct and, at any rate for present purposes, that is to be accepted. But that is a very different matter from saying that it was being actively marketed and it appears now, to us, that it cannot be said by any stretch of the imagination that this house was being actively marketed. When we look at the top of page 4 in our bundle, part of the Notice of Appeal, what is said on behalf of the Appellant is this:
"that a very sound reason for the Appellant being unable to market his house in Norwich actively at the material time was that the likely price at which the house could have been sold would have resulted in a negative equity and that it was not unreasonable for the Appellant to have waited until the house market improved so that such a situation could be avoided."
A proposition which, says Mr Coles on behalf of the Appellant, was one with which the employers actually agreed. One can certainly see that there is a proposition, it is an excellent proposition, nobody wishes to sell when there is negative equity and a very rational response, though possibly an imprudent one but this must be up to each individual, is to say "I will wait till the market moves up before I sell the house." So be it. That may be very sensible and the Norwich themselves, the Respondents, may think that it is very sensible but what it does not amount to is actively marketing the house. It is the very opposite of actively marketing a house, it is saying, "I will not market the house for the moment, I will wait. Perhaps for a year, perhaps for two years, till the market turns up." One is not on any conceivable view of language at that time actively marketing the house.So, as I say, he was dismissed by the employers on the basis that having heard all the evidence the employers formed the view first, that he had attempted and indeed succeeded in defrauding the employers in the matter of mortgage allowance and secondly, that it was reasonable in the circumstances to dismiss him. That was the issue which was laid before the Industrial Tribunal.The Industrial Tribunal appears, if we may say so, to have carried out a very careful inquiry. They took two days for the hearing. The first complaint which arises is one which in our view should not arise. At the end of the first day the Chairman and the members saw Counsel for the parties in the Tribunal's room. As Mr Coles rightly says, what was said then, Counsel were quite entitled and indeed obliged to pass on to their respective clients. It was a conversation which it was hoped, obviously, by the Tribunal might lead to a settlement of the issues between the parties.The Chairman indicated to Counsel what his view was at that stage, his provisional view of the likely result of the case. Of course he could not say that it was the likely result because he had not heard all the evidence. That was relayed to the parties and led to negotiations or helped to lead to negotiations which, happily or unhappily, were not successfully concluded. So the parties continued on the second day.It is now said that the decision of the Industrial Tribunal is inconsistent and illogical when you look at the way in which the proceedings went, compared with what the Chairman said was the provisional view of the Tribunal at that stage, and reference is made to what evidence was called, and when, as showing that that might be so. As we indicated very strongly in the course of argument, it seems to us first of all that it may well be said, and has been said often by the Court of Appeal, to be most unwise for any Court of Law or Tribunal to see Counsel in such circumstances even with (as was here quite clearly) the only motive of helping the parties if the Tribunal could. Secondly, that such conversations, which are intended to lead to without prejudice results, which are intended to be honest and frank explanations by the Tribunal of their then state of mind, must not be relied upon later to criticise the ultimate decision. They are not Judicial remarks, they are made privately, they most certainly do not and must not bar the Tribunal, after having made them, from thinking about the matter on all the evidence and, if necessary, reversing their preliminary view, because preliminary views so often turn out to be mistaken not merely in the light of different evidence but in the light of submissions which are made and further reflection. Anybody who has ever sat as a judge in any capacity knows how often his mind changes after he has had time to think further about the matter. So that ground of appeal we cannot give any effect to.What is said secondly is that this decision is in any event perverse. Various parts of the decision are pointed to. Mr Coles tells us that "in the circumstances, the employers were not entitled to conclude that Mr Thompson was dishonest and the Tribunal were not entitled to conclude that the employers were acting reasonably in reaching that conclusion." First of all, Mr Coles refers us to the charge of falsifying documents, which was the basis on which the case proceeded in front of the employer, after the other matter had been dismissed, and in front of the Tribunal."There is no evidence whatever," he says, "that Mr Thompson falsified any documents." That is replied to by Mr Sutton by saying:
"The matter was made sufficiently clear, however inept the wording of the letter, by the summary of issues which was set out. In those circumstances not merely was the matter made perfectly plain to Mr Thompson but there was, at the hearing before the employer, no protest, such as "
We are not prepared for this case to be made. We think that it is not in accordance with what is said in the letter. We must insist, if we are to be disciplined, that a charge must be laid which actually reflects what is being said by the employer and then we must have a proper opportunity to consider this, to us, novel, way of putting a case against us."" Nothing like that was said and on the contrary, when one looks at the record, it is clear that Mr Thompson and his union representative were dealing with these matters and addressing arguments to the employers' representative who was holding the inquiry and to the personnel manager who was there, and that these matters were duly considered.It is of course for the employer to say what conclusions he reaches and to act fairly and it is for the Tribunal to say whether they think, first of all, that the employer did act fairly in all the circumstances and whether the penalty imposed by the employer, if the employer does find that there has been misconduct, is such that it is within the band of reasonable responses of a reasonable employer.We now must turn to the decision of the Industrial Tribunal. That starts at page 25 of our bundle and it was given after a two day hearing. The Tribunal said, in paragraph 9, amongst other matters, that the applicant was concerned about a conversation with Mr Cooke, that was at the estate agents in September 1995:
"The applicant's representative made the point that it appeared as if Mr Cooke had ended that conversation by making the assumption that Mr Thompson had effectively removed his instructions from City and County, (the estate agents). Mr Thompson throughout has denied that this was his intention and has denied that he ever thought that City and County had stopped trying to market the property. It was also apparent as a result of evidence given by Mr Thompson at the meeting that he had not, in fact taken any steps to contact City and County for some 15 months..."
Another indication which to our minds makes it inevitable that it must be said he was not actively marketing the property quite apart from what he himself has stated elsewhere.
"When asked by Ms Halloran why he had failed to do that he replied that he had just not got round to it. When Mr Marshall, (the employers' representative) , asked him whether he had not been somewhat concerned with the lack of contact from the estate agent if he believed they were still marketing the property Mr Thompson said that he probably had been but that he had done nothing about it."
Then the Tribunal went on:
"10. As a result of the evidence in front of him at the meeting Mr Craske (the officer holding the disciplinary meeting) adjourned overnight to consider his position. He reached certain conclusions. Firstly he took the view that there had been a failure by Mr Marshall to make out his case on the issue of sickness and he dismissed that as a charge against the applicant. However, he took a different view on the question of the mortgage allowance. He concluded that the evidence showed that Mr Thompson had effectively dis-instructed the estate agents and in the absence of further instructions to another set of estate agents could not in any way shape or form be said to be actively marketing the house in Norwich. This of course was a requirement of his continued receipt of mortgage allowance. Mr Craske then went on to consider the failures by the applicant to respond to repeated requests by the mortgage allowance unit for confirmation from the estate agents about the state of play regarding the sale. It was Mr Craske's view that those repeated failures could now only be explained in terms of a concerted effort by the applicant to pull the wool over the respondent's eyes and to cover up the fact that he was receiving mortgage allowance which he was not in fact entitled to."
That was Mr Craske's view and also the view of Mr Peet who considered and dismissed an appeal.In paragraph 12 there is a passage to which our attention was particularly invited by Mr Coles. The Tribunal record:
"...the tribunal in their deliberations were much concerned with the failure by management to get a grip of matters at a much earlier stage than they did. It appeared to the tribunal that Mr Marshall had manifestly failed in his duty as a line manager to take notice of the significance of Mr Thompson's repeated failures to respond to the mortgage allowance unit and there appeared to have been little or no effective communication between Mr Marshall and Mr Madden (Mr Madden was the officer at Norwich responsible for paying mortgage allowance) over the course of approximately 18 months. Mr Madden appears to have been content to treat Mr Thompson's failure to answer his repeated requests as a matter which would eventually only result in the withdrawing of the mortgage allowance. The tribunal find that surprising. The applicant had clearly been put on notice at an early stage that he was required to supply confirmation as to these matters as a condition of his receipt of the mortgage allowance. The tribunal would have expected Mr Marshall and Mr Madden to take a very dim view indeed of the failure of the applicant to supply that information and to warn the applicant that repeated failures to supply such information would result in potential disciplinary procedure. Mr Marshall and Mr Madden, for reasons best known to themselves let the matter drift."
Well there are at least two comments to be made on that. First of all, we think that that comment by the Industrial Tribunal was entirely justified, so far as we can see. The Tribunal, of course, are the judges of fact, we are not. But certainly if they found such slackness by management representatives they were well entitled and quite right to comment on that, particularly in view of the everyday observation that it is often slackness that allows dishonesty to take place, a very important consideration.What is said to us by Mr Coles is "if that was the attitude of management, how could the employers, in due course, decide that Mr Thompson was guilty of dishonesty in his conduct? How could they in due course invite the Tribunal to say and how could the Tribunal in due course conclude that the employers were justified in reaching that conclusion?" That is a comment which we have to consider from Mr Coles.There is a third comment which can be made, that whatever can be said about this it was a matter well in the minds of the Industrial Tribunal when they came to discharge their essential task. They say in paragraph 13:
"The issue for the tribunal is simply this. Given that the case had arrived in front of Mr Craske as a question of 2 accusations was Mr Craske in a position to decide if one or other of those accusations had been made out and that if so it amounted to sufficient grounds to justify dismissal. The tribunal find that Mr Craske was reasonably entitled to conclude that the applicant had indeed deliberately set out to obtain money by way of a mortgage allowance from the respondent building society when he must have known he was not entitled to it."
They deal with various matters, going on to say:
"However, and most importantly, Mr Craske was swayed by the applicant's own admission that he had taken no steps at all to contact the estate agent after the September 1995 telephone call. In tribunal the applicant has advanced an explanation for his failure to take those steps, namely that in the situation of a housing slump the only reasonable steps available to him to improve the chances of sale were to drop the price and that he was not in a position financially to do so because that would have put him into a position of negative equity. That being so there was no point in him contacting the estate agent. The tribunal makes 2 comments about that: First of all, whilst dropping the price may have been the most effective way of improving chances of a sale it was not the only thing that the applicant could have done. He could and should, if he was interested in selling the house, have contacted the estate agent on a regular basis to enquire what steps they were taking to make his property a marketable proposition, what advertising they had done, what advertising they were proposing to do and so forth. The other comment that we make is simply this. Mr Thompson's explanation to us was not advanced to Mr Craske who was the dismissing officer. Indeed far from it. As has already been noted above the applicant answered questions as to why he had not made contact with the estate agent by saying that he had not got round to it and that if he had been concerned about lack of contact from them he had merely done nothing about it. These were not explanations in the view of the tribunal calculated to impress Mr Craske that the applicant was seriously doing anything about trying to sell his house. Mr Craske, reasonably in the view of the tribunal concluded that the applicant was not making any such attempts."
In other words they held that Mr Craske was well justified in reaching the conclusion that Mr Thompson had attempted to mislead him.
"14 Mr Craske then went on to consider in the light of that what construction could best or most reasonably be placed upon the repeated failures of the applicant to respond to the mortgage allowance unit. He took the view that those failures could now be construed as a deliberate attempt at fraud, a calculated stalling activity designed to hide from the respondents the fact that he was in fact not making any serious attempts to sell the house. Mr Craske put those together and concluded that Mr Thompson had entered into a deliberate course of activity designed to not to put too fine a point on it defraud the respondents. We conclude that that was a line of reasoning which he was entitled, on the evidence, to accept."
The Tribunal, they said eventually:
"15 ...agree that dismissal was within the range of responses open to a reasonable employer. This was a case which effectively involved the applicant claiming money from the respondent to which he knew or ought to have known he was not entitled. As such the respondents, once satisfied that that was the case, were entitled to view the matter as one of considerable gravity, going to the heart of their relationship of trust with the applicant."
What is said to us, as I say, is that that is a perverse conclusion, one which no reasonable Industrial Tribunal should have reached, bearing in mind what Mr Coles has said to us about the attitude of the employers as recorded by the Tribunal themselves. In view of the misleading way, as Mr Coles puts it, in which the charge was phrased the Tribunal should not and indeed could not have reached such a conclusion. We can only say that having thought about it as carefully as we can and having looked to see what justification there is for the points made quite properly by Mr Coles, we have come to the conclusion that this was, as a matter of law, well within the competence of the Industrial Tribunal who plainly devoted a good deal of care and a good deal of anxiety to deciding the case.We of course are not concerned in any way with questions of fact, those are the sole province of the Tribunal and when, this morning, we allowed Mr Coles to go into a number of questions of fact, at the particular request of his client, we had to do so reminding ourselves that these were not matters for us but for the Industrial Tribunal. But having had those matters ventilated we cannot see that there is anything perverse, anything illogical about the decision of the Tribunal. We cannot see that there is any error of law in the conclusion which they reached. In those circumstances the appeal falls to be dismissed. Those are the reasons of us all.