Gough v Beechwood Music Ltd [1998] UKEAT 813_97_0610

EAT
Gough v Beechwood Music Ltd
[1998] UKEAT 813_97_0610 · 1998-10-06

JUDGE J HICKS QC :

Mrs Gough, the Appellant, was employed by the Respondent, Beechwood Music Ltd, from 31 August 1993 until she was summarily dismissed on 27 February 1997. She had what was plainly a responsible position in that company and one in which she was in a position to canvass or repel custom and some two years after her employment began, and therefore in the second half of 1995, the company was in some financial difficulties and the Directors frankly disclosed that to the staff and it was apparent to everybody that the employment of some members of the staff at least, including Mrs Gough, was in peril.At that stage she did two things. She, with a fellow employee, Mr Yori, set up a limited company called Premium Music or some title very like that, which would have been trading in direct competition with the employers and in the same field and, secondly, she formally at some stage in that process handed in her own resignation. The employers, however, persuaded her to withdraw that resignation and business looked up and at that stage Mrs Gough decided not to proceed with the alternative venture, Premium Music, and after May 1996, as the Tribunal found, that new company did not trade.The employers knew nothing of this until February 1997 when adventitiously, in a sense, it came to their notice in the course of a dispute between Mrs Gough and Mr Yori, in which Mrs Gough made accusations against Mr Yori and in the process of pursuing that matter in a memorandum of 16 February 1997, perhaps incautiously as it turned out, disclosed that she and Mr Yori had been involved in a business venture and in due course, indeed within the next few days, the employers became aware of the nature of that and that was the reason why on 27 February 1997 they dismissed her.The nature of the activities which the new company Premium Music had been carrying on before it ceased to trade is exemplified by a letter written on 24 November 1995 by Mrs Gough to H. H & S Limited, one of the major customers of the employers, in which she says:
"Following on from our discussion on Tuesday 21st November, I am now in a position to give you the information you require to submit to your client. I would like to express how unfortunate it is that you have had some difficulties with your existing supplier and to reassure you that you have our undeniable attention and that we will endeavour to provide with a service second to none."
The reference to "your existing supplier" must presumably be to Mrs Gough's then employer, Beechwood Music, and a clearer breach of the duty of trust and confidence it is difficult to imagine.The Tribunal which heard Mrs Gough's complaint of unfair dismissal found unappealably, and without appeal to us, that the reason for the dismissal was her conduct and they then addressed the question whether the employers acted reasonably in regarding that as a ground for dismissal and indeed, in this case, of summary dismissal.The Tribunal came to the conclusion that the employers did satisfy that requirement and therefore dismissed the application and on this appeal Mr Coppel, for Mrs Gough, submits that that decision of the Tribunal was wrong in law and that we should allow the appeal. He puts that in two ways.The first is that he says there was no inquiry by the employers at all and there must be what he calls at least "a modest inquiry" into what the activities were, when they occurred and what was the current state of affairs. As to what the activities were, as we understand it, there is no real dispute (I have given an example) and the employers were plainly, as the Tribunal found, justified in taking the view that they involved a serious breach of the duty of trust and confidence.As to when, though, and what was the current state of affairs Mr Coppel submits that the employer made no inquiry at all or perhaps, to put it more precisely, because it is the Tribunal he must attack, not the employers, that the Tribunal erred in law in the way they dealt with that matter.The way in which the Tribunal did deal with that matter, as appears from the Extended Reasons, is as follows. They recite in paragraph 9 of their Extended Reasons that
"9. On 27 February 1997 the Respondent management confronted the two venturers by explaining to them that the fact that new company had been set up to compete with the Respondent's business amounted to gross misconduct in respect of which they made the decision to dismiss."
And in paragraph 10 they say:
"10. The Tribunal accepts that the Respondent had made investigation, principally on the admission of the venturers, of the state of affairs that existed up to May 1996 and the Tribunal accepts the Respondent's evidence that the reason for its decision to dismiss lay in those earlier actions."
The Tribunal then recites the submissions made, from which it is apparent that Mr Coppel, who appeared for Mrs Gough then as well as before us, made similar submissions to them as he has done to us about the need for investigation and the significance of the lapse of time between the date of the events and the date of dismissal. He does not, of course, and cannot submit that there was a lapse of time between the employer's discovery of the facts and the dismissal, but he says that even though there was no lapse of time then, the lapse of time since the events themselves is significant and he puts as an example the situation of an employee who commits some dishonesty at the age of 15 which is not discovered until he is 55, and indeed we accept that a lapse of time of such a length as that must be relevant, but here we are dealing (and the Tribunal understood perfectly well that they were dealing) with a lapse from May of one year until the February of the next year, ten months.So he made that submission to the Tribunal, and he also made the submission that there had not been an adequate inquiry by the employers, particularly bearing in mind the fact that there had been nil or virtually nil trading of the new company and that the Respondent failed to establish what was the damage to its business. So the Tribunal had those submissions before it. They then recite the law on the subject, Section 98 of the Act and in particular Section 98 (4), providing how the Tribunal is to determine the question whether the dismissal is fair or unfair having regard to the reason shown by the employer. There is not and cannot be any criticism of their directing themselves that that was the question which they had to consider, having established uncontroversially that the reason for dismissal was conduct.They then say in paragraph 16, and this equally is not criticised and cannot be criticised:
"It is well established law that the Tribunal is not entitled to substitute its own judgment for that of the employer and to ask itself what it would have done in the circumstances. The Tribunal must consider whether what the employer did was within the band of reasonable responses for the employer to make to the misconduct charged."
And that is, as I have said, an impeccable direction to themselves as to the way in which they should approach this question.Then, under "Conclusions", having repeated their finding that the reason for the dismissal was loss of trust and confidence and that was within the head of conduct and a potentially fair reason within Section 98, the Tribunal go on in paragraph 18:
"18. The Tribunal has then considered whether or not the Respondent acted reasonably in dismissing the Applicant. The Tribunal concludes that it did. ..."
Then it goes on to deal with what one might call the gravity of the offence, and Mr Coppel does not suggest that the employer was not entitled to treat the offence as a grave one and as potentially amounting to gross misconduct.But then in paragraph 19 comes the passage in which the Tribunal deals with investigation, which is the main thrust of Mr Coppel's criticism of its approach, and as to that the Tribunal says this:
"19. The Tribunal has considered whether or not the Respondent acted unreasonably in not making further investigation of the new company in relation to the period since May 1996. The Tribunal has concluded that this was not to the core of this case and its decision, and that therefore it did not in all the circumstances, including the relatively small size of the Respondent, so act unreasonably."
The Tribunal has concluded that "this was not to the core of this case and its decision", the 'its' referring apparently to the Respondent and that therefore it (the Respondent) did not in all the circumstances, including the relatively small size of the Respondent, act unreasonably.Having directed itself correctly we see no ground for finding that the Tribunal then disregarded its own direction when dealing with the matter of investigation, and we therefore find no error of law in its decision in that regard.The second and subsidiary point which Mr Coppel made was that in coming to a decision the employer must also take into account that at the time of the conduct on which it relies redundancies were imminent or likely, but that again is a part of the history which the Tribunal plainly had in mind and we see no error of law in the way in which the Tribunal deals with that aspect of the matter. Indeed, the fact that redundancies may have been imminent or likely at the time was undoubtedly, as the employer must have realised, the background to these events, but the gravamen of the offence, or at least one of the important elements in the offence, was not merely the canvassing of business among potential customers who were existing customers of the employer but the fact that when the Appellant, Mrs Gough, was asked to withdraw her resignation she did not take the opportunity, as she perfectly legitimately could, of then explaining to the employers what preparation she had made against the apparently imminent possibility of redundancy and of coming to an agreement with them, as part of an overall settlement under which she withdrew her resignation, that that activity should instantly be wound up and steps taken to make sure that no resulting damage ensued to the employers' business.There is therefore no ground, in our view, advanced on behalf of the Appellant which arguably could establish that the Tribunal erred in law and we conclude that the appeal must be dismissed at this stage.