Stonham Housing Association Ltd v Short [1998] UKEAT 328_98_0911

EAT
Stonham Housing Association Ltd v Short
[1998] UKEAT 328_98_0911 · 1998-11-09
MR JUSTICE MORISON (PRESIDENT) : This is an appeal against the decision of an Industrial Tribunal Chairman sitting on his own at London (South) on 9th December 1997. He upheld that applicant's complaint which he brought against his employers, Stonham Housing Association Ltd, that they had unlawfully deducted monies from his wages.The short point that arises on this appeal can be summarised in this way. In early 1995 the applicant's pay was £7,212 per annum plus a London Weighting Allowance. His pay was based on his position on a spinal column which was part of a National Joint Council pay scale. The National Joint Council as it name implies is a body which determined rates of pay and what pay was to be attributable to which point on the spinal column.On 16th March 1995 the applicant was sent a document by the employers enclosing a contract of employment for his signature. It was a standard form of contract with blanks which had been completed and already had been signed on behalf of the employers. His salary was stated to be as follows:
"Your salary will be £8,420 per annum within ..., spinal points 18-23 on Stonham salary scales. In addition you will get a London Weighting Allowance of £1,146 per annum."
The applicant was a part-time worker. He was at the relevant time working 20 hours per week, whereas the standard working week was either 36 or 37½ hours per week. The rates of pay for people in his category were negotiated at NJC level through his union, UNISON. If he was at point 23, which is the highest point referred to in the contract, then his salary would not have been £8,420 per annum but would have been substantially less than that. What had happened, according to the employers, was that an error had been made in converting the annual salary for point 23 into a salary for a part-time worker working the number of hours which the applicant did. Furthermore, the London Weighting Allowance of £1,146 per annum was also, according to the employers, a mistake. That was the amount which a full-time employee would receive, but had to be scaled down proportionally to reflect the fact that the applicant was a part-time worker. Thus, although the applicant was paid less than the figure of £8,420 per annum, the employers' contention was that a mistake had been made, that there was an inconsistency between the amount stated in the contract and the position on the spinal column. Accordingly, the contract was either void, or, alternatively, the contract should be construed in a way which gave sense to the agreement between the parties, namely, that he was to be given the appropriate salary scale for someone on point 23, scaled down to reflect the fact that he was a part-time worker.The case came before the learned Chairman and the applicant was represented by a union representative and by Counsel instructed on the individual's behalf. The conclusion of the Industrial Tribunal Chairman was that first of all there was nothing on the face of the document which indicated "any error, ambiguity, mistake or otherwise". He says:
"5. ... There is a stated figure for salary. There is a reference to spinal column points 18-23."
The Chairman went on to conclude that:
"8. The error in the amount stated as salary in the contract of 16th March 1995 is not of sufficient magnitude to alert the Applicant to the figure being an error, and indeed that was not part of the case put forward in argument by the Respondent."
The Chairman said:
"9. ... There was no evidence from which I can find that the Applicant knew either: (i) That £1,146 was the allowance for full-time staff.

(ii) That the Weighting Allowance was also paid on a pro-rata basis."

Accordingly, in paragraph 10 and 11 of the decision the Chairman said this:
"10. I am not satisfied from the evidence that the Applicant knew, suspected or ought to have known that the contract contained an error.
11. In my opinion it is a matter of unilateral mistake. The Respondent has made a mistake by failing to exercise care in preparing the contract. As I am not satisfied that the mistake was or should have been known by the Applicant, the result in my opinion is that the Respondent is bound by the contract as drawn."It is to be observed that this decision is expressed to be in summary reason form and out of time an application was made by the employers for a decision in extended reason form. That was refused on the basis that the application for extended reasons was made out of time.The matter came before the Employment Appeal Tribunal on 27th April 1998 when the matter was allowed to proceed for a full hearing. The Employment Appeal Tribunal noted that although it was a lengthy decision, it was described as being a decision in summary reason form, and invited the learned Chairman to provide us with the Notes of Evidence and indicated that although this was only summary reasons, it was a case where we could deal with the appeal.The learned Chairman produced his comments in accordance with the invitation extended to him. In the course of doing so, he said this:
"... Because it was a reserved decision I gave fuller reasons than basic summary reasons. Those reasons did not deal with all of the matters raised at the hearing, whether during the evidence or during submissions. However, I consider that I sufficiently explained the reasoning for my decision."
The Chairman then indicated that it was not his recollection that the respondents' case was that the applicant must have known from the magnitude of the salary increase that his contract was in error when he signed it, and that the employer's case was principally that the contract was in error and that such error was apparent on the face of the document because the rate of pay stipulated is not the rate of pay from the scale quoted in the contract.We have not found this an easy appeal to deal with. On the one hand Mr Soor invites us to the conclusion that the Industrial Tribunal have arrived at a conclusion which was frankly, as he would submit, perverse. He says that the Industrial Tribunal Chairman was without the assistance of his lay members who would have been able to contribute their understanding in the employment field of what employees would know or could be taken to have known. He also submitted that the Industrial Tribunal's conclusion expressed in paragraph 5 of the decision namely, there was nothing on the face of the document which indicated any error, ambiguity, mistake or otherwise, was a finding which showed, with respect, that the learned Chairman had not fully understood the force of the submission which was made to it, namely that there was an inconsistency between the figures which were written down and the position as it was on the scale. Therefore, it was said, that his conclusion in paragraph 11, namely:
"I am not satisfied that the mistake was or should have been known by the Applicant, the result in my opinion is that the Respondent is bound by the contract as drawn."
was simply perpetuating the obvious confusing which was apparent on the face of the document.On behalf of the applicant, Mr Kibling in a succinct and able argument said firstly that the Industrial Tribunal were right to approach the matter on the basis that the contract of employment should be construed contra proferentum ; secondly, that as this decision was expressed in summary reason form it was quite inappropriate for the Employment Appeal Tribunal to look carefully or in minute detail at the precise wording of the Industrial Tribunal's decision; and, thirdly, that having regard to the fact that this was sophisticated collective pay agreements, the computation was bound not to be straightforward, but that there was no suggestion that the tribunal had in any way approached this question wrongly. He submitted that the legal test which the Chairman has applied was correct and that we should not and could not interfere with the decision.It seems to us that there is force in both Counsel's submissions. In the first place, as it seems to us, we should approach with even more caution than usual, criticising the decision of the Industrial Tribunal where it is expressed to be in summary reason form, even though, as in this case, the summary reasons are extensive as some Chairman give when giving extended reasons. Secondly, we remind ourselves as is obvious, that it is not for the Employment Appeal Tribunal to substitute its own judgment for that of the Industrial Tribunal which is a fact-finding body. Thirdly, although critical, and I will deal with this more fully in a moment, of the decision of the learned Chairman to hear this case without the benefit of lay members, that is not a point on which we would have felt able to have interfered with this decision had it stood on its own.But it does seem to us even taking into account those preliminary observations, that the tribunal has erred in law. It seems to us that the learned Chairman has failed to grapple with what is obviously a conflict on the face of the document between the position on the spinal column, and the figures in writing.The applicant's explanation, according to the notes of evidence, that he advanced to the Industrial Tribunal as to his state of mind, was that he believed that he had got a pay rise on 1st April 1995 as a result of some kind of special arrangement or deal being made between his union and his employers. Of course the applicant was represented by a representative of his trade union and nowhere in this decision has the Industrial Tribunal directed itself to the question as to whether such a special deal could have been done without the union being aware of it. It seems to us that there is much force in the submission made that the decision of the Industrial Tribunal Chairman sitting alone was perverse when dealing with the question of whether the applicant knew that a mistake had been made. The question perhaps should have been expanded for the Industrial Tribunal to ask itself whether the applicant himself of his union was aware that a mistake had been made. It appears from the evidence which was produced, that the applicant signed the contract having taken advice from his union. It will be a matter for another tribunal to decide, but it would be pertinent to enquire how it was that the union was unaware, if it was, of the mistake which had been made.We also see force in the submission made by Mr Kibling that the employers themselves had some difficulty in the Industrial Tribunal in doing the necessary calculation to say precisely what the salary would have been, but it is clear in this particular case the amount that the applicant was to receive after signing that document on the basis of the figures as set out there, represented something of a 14% increase on what he had been paid the year before. It is not surprising, therefore, that he said that he thought that he had been given an increase. It seems to us that the Industrial Tribunal might well have wished to ask itself how it came about that the applicant was entitled to such an increase. The applicant gave some evidence that previously he had been allowed to do two part-time jobs and now he was only allowed to do one, but it does seem to us that that does not answer completely the point which was made, as we see it, in the examination and cross-examination of the applicant, having looked at the Notes of Evidence.Because we have taken the view overall that there is force in the submissions made on behalf of the appellants and that the respondent is simply trying to take advantage of an obvious mistake in the written document, and therefore the matter should be remitted to a new Industrial Tribunal. It would be inappropriate for us to give any indication to that body as to how the decision should ultimately be given. But we can say that this was a case where it would have been better had the Chairman not been sitting on his own.The President can say that when this matter first came before the Employment Appeal Tribunal his lay members made an important and significant contribution to the determination of the preliminary hearing. Whilst a lawyer might find it easy to accept that an employee did not know on what pay scale he was or what the result would be for his own pocket, the lay members have considerable experience in the workplace and their wisdom and experience will be of assistance to the new tribunal.We wish to make it plain that even though no submissions had been made to the Industrial Tribunal Chairman at the hearing, it was open to him in the exercise of his discretion under the Industrial Tribunals Act to decide that in the light of the extensive nature of the enquiry that he was having to make as to the attitude of the parties in putting forward this contract, that it would have been better to have stopped the proceedings and organised a hearing where he could have had the benefit of the advice from his lay members.As I say, we do not wish to criticise the Industrial Tribunal Chairman, we quite understand how this came about, but we are satisfied that it would be better if the new tribunal had the benefit of the lay members.Accordingly, the appeal will be allowed, and the questions at issue between the parties be remitted back to a new tribunal for fresh determination.