Adivihalli v Export Credits Guarantee Department [1998] UKEAT 917_97_2703

EAT
Adivihalli v Export Credits Guarantee Department
[1998] UKEAT 917_97_2703 · 1998-03-27
MR JUSTICE MORISON (PRESIDENT) : This is an appeal against a decision of an Industrial Tribunal which was held at Stratford on four days at the end of April and beginning of May 1997. The Industrial Tribunal unanimously dismissed the applicant's complaint of unfair dismissal and his complaint of discrimination on racial grounds. The terms of their decision are contained in extended written reasons which were sent to the parties on 5th June 1997. There is no appeal in relation to the dismissal of the discrimination complaint. This appeal is concerned, and only concerned, with the important question as to whether the Industrial Tribunal have erred in law in their conclusion on the unfair dismissal complaint.The facts relating to the complaint are essentially agreed between the parties. Mr Adivihalli had been employed in the Civil Service in the Export Credits Guarantee Department, the respondents to his application and to this appeal, for some 30 years prior to the events in question. He was dismissed with effect from 24th March 1995.In 1988 he had taken advantage of a familiar scheme whereby employers advance to their employees money to buy travel tickets. It is cheaper to buy an annual season ticket than to buy a ticket on a daily or monthly basis, but the cost can be substantial, and the Civil Service, as other employers do, have a scheme whereby employees could be advanced against their salary the sum necessary to purchase an annual season ticket.The scheme required that the applicant for such a ticket should complete an application form. In his case, and in fact in the case of some 20% of those who had obtained similar advances, they had not in fact used the money for the purpose for which it had been provided and this was discovered in 1988, and he and the others, were required to repay the advance, and it was pointed out to them and to him by letter, that the actions constituted both a fraud against the Department and a disciplinary offence. It will of course be appreciated that by saying it was a fraud against the Department, it was also a fraud against the general public, since these are public monies.Thereafter, Mr Adivihalli did not seek to take advantage of the scheme again until 27th July 1994 when he applied for an advance of £1,080 so that he might purchase an annual season ticket. In his application form he said that he required the advance to be paid with his salary which was paid at the end of each month, and he said that he needed it at the end of August 1994, so as to permit him to purchase a ticket with a commencement date of 5th September 1994. The application form points out that the Department reserve the right to request sight at any time of the season ticket so purchased. The tribunal made this finding:
"6. ... The advance was expressly made for the sole purpose of purchasing a season ticket and was repayable on demand. It was specified that any outstanding balance would immediately become repayable without demand and would be set off against any pay or allowances in the event that the Applicant ceased to be Civil Servant or - "the season ticket is surrendered for any reason"."
There was then a routine check by the employers by letter on 15th September. He was invited to produce his ticket for inspection by the Pay Section. There was no response to that letter, so a reminder was sent. Mr Adivihalli replied on 28th September saying this:
"As I was on leave I delayed the purchase of my season ticket. I have ordered my ticket and will forward the photocopies to you on Friday 30 September."
That was, of course, an admitted breach of the rules of the scheme, since he had applied for the monies at the end of August with a view to the ticket commencing on 5th September.On 30th September Mr Adivihalli provided proof of purchase of a season ticket on 30th September, and provided a photocopy of the ticket, but because of the breach that I have indicated, he was required to attend a disciplinary interview on 3rd November.He attended that disciplinary interview. Mrs Harris, who conducted it, said that Mr Adivihalli having purchased his ticket, would not be required to refund the advance, but he was not to be allowed in the future the opportunity to apply for an advance, and he was to be required to show the original ticket every two months to a member of staff in the Pay Section commencing as from 30th November.The response of the applicant was to write to her protesting her decision, and asking her to change her mind. He said that he had been in the Civil Service for very many years and that he did not think it appropriate that he should have "to accept a regime - "of marching up every two months to show my ticket to [to a person in the Pay Section] or anyone for that matter". He then appealed her decision to the Director in overall charge of the Division.The decision was eventually that the appeal should be dismissed. On 10th January 1995 he was so informed. The writer of that minute asked him to let her have a sight of the ticket as soon as possible. His response was that he did not wish to be bound by the new conditions, as he saw it, attaching to his season ticket, and he announced his wish to repay the outstanding balance by deduction from the next salary. That was the sum of £540, and in due course that was recovered from his February salary. It was, however, so the tribunal found:
"17 ... determined that the request should be complied with and, by minute dated 25 January 1995, Mr Adivihalli was reminded that the ticket was due for inspection. By minute dated 26 January 1995 Mr Adivihalli informed Mrs May that he had decided to go back to a monthly/weekly ticket and that he had surrendered his annual ticket. As a consequence, he said that he would be unable to comply with the request. He was asked when the surrender had taken place and, by minute dated 30 January 1995, Mr Adivihalli said that he had surrendered the ticket on 22 January 1995."
The employers made enquiries of London Transport, and discovered that in fact Mr Adivihalli had bought the ticket on 30th September and had subsequently surrendered it on the very same date, thus obtaining a refund of the monies which had been advanced to him. He was invited to an interview on 15th February when the salient facts were acknowledged by him to be true.It is obviously a case where an individual has acted in a fraudulent manner as the employers were right to conclude. The real question at issue was what should happen when someone senior had got into this position.A disciplinary hearing took place on 28th February and was conducted by a Mr Malby and Mr Willis. The applicant was present and was accompanied by his trade union representative. He was repentant. He admitted that he had acted improperly and he had obviously been under enormous financial pressure. He referred to his impeccable service record and asked for leniency.At that disciplinary hearing, the tribunal note that the applicant apparently sought to limit the extent of his concession of impropriety and denied disloyalty or deceit.Contact was made with the Welfare Officer to see what assistance might have been available to an employee in the sad circumstances which were facing the applicant in this case.Mr Willis was an experienced man in personnel matters, although he had very little experience of dealing with an allegation of gross misconduct, and sought advice. But neither he nor Mr Malby had authority to dismiss, so they prepared a detailed report and a recommendation to the gentleman who had that authority.That paper considered a number of alternatives to dismissal, including demotion, but concluded that none was appropriate. That report and recommendation was considered by Mr Malby, who indicated his agreement to the recommendation, and it was then passed to Mr Callaghan, whose decision it would be.The tribunal made this finding:
"25 ... With that report went all the material documents including the interview notes, details of the further enquiries, Mr Adivihalli's letters and a summary of his oral representations. Whilst it was a reasonable and balanced account, it was nonetheless a powerful indictment. Mr Adivihalli was not provided with a copy, he was not informed of its existence nor that it would form a statement of the case for the manager whose decision it would be."
The officer concerned received and considered the report. He did not invite Mr Adivihalli to attend before him. He did not give him any other opportunity to make any representations to him. He considered the papers and concluded that summary dismissal was appropriate, setting out his reasons for that conclusion. He took note of what Mr Adivihalli had been recorded as saying as his explanation, and his plea in mitigation and he took account of his long service record. But he concluded, on the admitted facts, that the conduct was so serious that there was no realistic alternative to dismissal.Mr Adivihalli was called to a meeting on 24th March 1995 to be informed of this decision and of his right to appeal to the Chief Executive, a Mr Willott. He exercised his right of appeal to Mr Willott. Mr Willott received more information from Mr Adivihalli of his financial circumstances and those showed that he was very seriously in debt.Mr Willott did not come to the appeal without any previous knowledge. According to the Industrial Tribunal:
"29 ... He was aware, in general terms, of the investigation and he had discussed the matter with Mr Callaghan before Mr Callaghan had come to a decision. He did give some consideration to the appropriateness of dismissal as a penalty in that he was determined to intervene had he considered that such a step was wholly inappropriate. The appeal was heard on 25 April 1995 and Mr Adivihalli was present and represented. He was given every opportunity to present his case and, at the conclusion of the hearing, Mr Willott indicated that he would reflect upon his decision before announcing it. Mr Callaghan had been present at the appeal hearing but, although given the opportunity to ask questions, he had chosen not to do so. However, at the conclusion of the formal part of the appeal, Mr Callaghan remained behind with Mr Willott when Mr Adivihalli and his representative left. No objection to his so remaining was raised at the time and, upon hearing both Mr Willott and Mr Callaghan on the matter, we are satisfied there was no actual unfairness to Mr Adivihalli in his so doing and that Mr Callaghan took no part in the decision on the appeal."
The Industrial Tribunal heard evidence that Mr Willott decided to reject the appeal having weighed all the relevant matters.Under his contract of employment the applicant was entitled, as a member of the Civil Service, to the final right of appeal to the Civil Service Appeals Board. This is a body which is independent of the respondent Department "with authority to consider appeals but without the power to make a decision binding upon the parties". The Board consists of a Chairman sitting with representatives from either side. In this case, both parties took the opportunity to make written submissions in advance of the hearing. An oral hearing took place on 1st November 1995, both parties were given every opportunity to present their cases. Ultimately, the Board reached its findings in a 10 page document dated 24th January 1996 in which, after a meticulous examination of the issues, it was determined that the appeal should be dismissed.The Industrial Tribunal concluded that Mr Adivihalli was dismissed for a reason relating to his conduct. There of course is no appeal against that part of their finding. They then directed themselves that it was now well established that a procedural defect leading to the decision to dismiss can be cured at a subsequent appeal. They said that:
"36 No sustainable criticism can be made of the investigation. Given that the salient facts were admitted, the investigation was more painstaking and thorough than was strictly necessary. ..."
But they did consider the key issues as to fairness, as a denial of an opportunity of Mr Adivihalli to address Mr Callaghan or to see the report of the investigation that had been presented to him; and secondly, Mr Willott's prior involvement in the process by which Mr Callaghan reached his decision.So having identified those matters of potential unfairness, they then said this:
"37 ... Rules of Procedure should not be over rigid in their application and that the proper approach should be to consider the overall fairness of the procedure. In considering this aspect of the matter, we consider that the Respondents did act unfairly. It was not simply that Mr Callaghan did not afford an opportunity to Mr Adivihalli to make representations directly to him (although that would have been the simplest matter to arrange) but also that Mr Adivihalli was denied access to the key document considered by Mr Callaghan, namely Mr Willis's report and recommendation. Taking those together, we consider that this represented a material breach of the duty to afford a fair opportunity to the employee to present his case. Had the matter remained there, we would have concluded that the decision to dismiss was unfair. However, the matter did not rest there but Mr Adivihalli pursued both avenues of appeal."
They then turned to consider whether either of those appeals were sufficient to cure the injustice in the original decision. In relation to the appeal to Mr Willott the Industrial Tribunal said this:
"38 ... On balance we are satisfied that Mr Willott did fairly and properly consider the issues before him and that he had not pre-judged the issue. Not only did Mr Adivihalli have a full opportunity to present his case to Mr Willott but he took advantage of that opportunity to present information which had not been available to Mr Callaghan. We are satisfied that that opportunity corrected the defect in Mr Callaghan's approach to the matter."
Technically speaking, at that stage that was sufficient to enable them to dismiss the complaint of unfair dismissal, but they went on to consider the effect of the right of appeal to the Civil Service Appeals Board. They reminded themselves that that was a contractual right which Mr Adivihalli had. They noted that it was an independent body, and they said:
"39 ... it conducted a full and fair re-hearing. Mr Adivihalli was then afforded the opportunity, of which he took full advantage, to present all matters relevant to his appeal and to the decision to dismiss. Had it been necessary to do so, we would have concluded that the appeal to the Civil Service Appeals Board was such as to cure any defects in the previous process."
The appeal which has been presented ably on the appellant's behalf, is effectively directed to the question as to whether the Industrial Tribunal were entitled, as a matter of law, to reach the conclusion that the procedural defects identified in the decision of the Industrial Tribunal had been cured as a result of the first or second stage appeals.Our attention was drawn to the information which was made available to Mr Callaghan who was the dismissing officer, which had not been provided to the appellant, and on which he had no opportunity to comment. The document which was regarded as the key document in the eyes of the Industrial Tribunal, was a report prepared on 8th March 1995 and was submitted by Mr Willis to Mr Malby, and thereon to Mr Callaghan who took the decision to dismiss. It was the paper on which Mr Callaghan took his decision. It contained a recommendation for dismissal. It set out the background and all the relevant facts. It also canvassed with him what remedies or penalties could be imposed, including reprimand, suspension without pay, promotion bar, and down-grading. In relation to those options, the report from Personnel concluded:
"The first three of the above options seem inappropriate for this case because they would not reflect the seriousness of the offence. The only realistic options are either downgrading or dismissal. Downgrading might be appropriate if it was felt the individual had learnt their lesson and could be trusted in the future. I believe that is not the case with Mr Adivihalli. After considering the facts, Mr Adivihalli's explanation and plea of mitigation, I conclude his actions were a deliberate act of dishonesty and his financial problems do not excuse or mitigate his behaviour. This was a second offence and there is every possibility that he could be dishonest in the future. I believe he had made it impossible for us to trust him in future. Thus the penalty should be dismissal but with notice (13 weeks in his case). He should not be required to attend work during the notice period."
Behind that document was a note for the file which had been written by Mr Willis in which he had canvassed the question of demotion. He says this:
"Finally I mentioned that if is was decided that disciplinary action was appropriate, the penalty could range from dismissal, through downgrading to lesser penalties. In reply Mr West said that Mr Adivihalli's possible departure would cause problems, perhaps for 3-4 months while they trained for a replacement, but that should not influence our decision making. Mr West also said that in the interview if Adivihalli were downgraded he would be impossible to deal with and very difficult to manage."
What is said on the appellant's behalf is that he never had the opportunity of dealing with those matters, either at the first stage, that is when Mr Callaghan took his decision to dismiss; nor, effectively, at the second stage in relation, at least, to the hand-written file note. Accordingly, it is said that the Industrial Tribunal did not really deal with the documentary problem which they had identified in their decision when they came to consider whether the first stage of the appeal had cured the defect. What is said on the appellant's behalf is that he never really had an opportunity to deal with the suggestion that he was going to be unmanageable if he were to be down-graded. Thus, although he had the right to make oral representations as to why he should not be dismissed at the first stage of appeal, that did not fully deal with the alleged unfairness.It was said, in any event, that the first stage of the appeal was not really a rehearing as such, but was more by way of a review of the previous decision, and that as a matter of law, a procedural defect could not be cured by such an appellate process.In relation to the appeal to the Civil Service Appeals Board, what is said is not that the Appeal Board considered anything which the appellant had not seen, but rather that the Appeal Board should have been provided with all the background material, including the file note to which I have referred, and that it was wrong of the employers not to have made this material available to it. It is said that because it was not made available to the Appeal Board, there has been no curing of the procedural defect to which I have referred.I shall start by dealing with what I perceive to be the premise behind the submission that there is an arguable point of law in this case. It turns on the question as to whether an appellate process is a rehearing or is simply a review of what has already occurred, with further opportunities to make representations. It is said that there is a distinction between the two types of appellate process; that the second is not capable of curing a procedural defect, and therefore, the tribunal should have directed its attention to whether this was a genuine rehearing or was in the nature of a review, either at the first or second appeal stages.With great respect, it seems to us that we are in danger of losing sight of the statutory test for unfair dismissal. The provisions relating to unfair dismissal are now contained in the Employment Rights Act 1996 which reproduce the statutory provisions which have been in operation for a very long period of time. The right not to be unfairly dismissed is conferred by s.94 and in s.98(4) it provides:
"(4) Where the employer has fulfilled the requirements of subsection (1) [ that is the employer has established a reason which falls within subsection (2) ], the determination of the question whether the dismissal is fair or unfair (having regard to the reason shown by the employer)- (a) depends on whether in the circumstances (including the size and administrative resources of the employer's undertaking) the employer acted reasonably or unreasonably in treating it as a sufficient reason for dismissing the employee, and (c) shall be determined in accordance with equity and the substantial merits of the case."
It will be quite obvious to all lawyers that the words of this part of the statute could not be in wider terms, according to the Industrial Tribunal, the fact-finding body, a very wide margin of appreciation. It would be somewhat surprising if Industrial Tribunals were to be invited to become bogged down in difficult issues as to whether an appellate process in a particular case fell within the definition of a rehearing or within the definition of a review.It seems to us that the time has come for the Employment Appeal Tribunal to reassert the need for Industrial Tribunals to have regard to the statutory language in every case.In Whitbread & Co Plc v Mills [1988] ICR 776 , a decision of the Employment Appeal Tribunal, there was a review of a large number of authorities on the issue as to the effect of an appellate process. That case cited a passage from a speech of Lord Bridge in West Midland Co-operative Society Ltd v Tipton [1986] ICR 192 , at page 202:
"Adopting the analysis which found favour in J. Sainsbury Ltd v. Savage [1981] ICR1, if the domestic appeal succeeds the employee is reinstated with retrospective effect; if it fails the summary dismissal takes effect from the original date. Thus, in so far as the original dismissal and the decision on the domestic appeal are governed by the same consideration, sc. the real reason for dismissal, there is no reason to treat the effective date of termination as a watershed which separates the one process from the other. Both the original and the appellate decision by the employer, in any case where the contract of employment provides for an appeal and the right of appeal is invoked by the employee, are necessary elements in the overall process of terminating the contract of employment. To separate them and to consider only one half of the process in determining whether the employer acted reasonably or unreasonably in treating his real reason for dismissal as sufficient is to introduce an unnecessary artificiality into proceedings on a claim of unfair dismissal calculated to defeat, rather than accord with, the 'equity and substantial merits of the case' and for which the language of the statute affords no warrant."
In the judgment of the Employment Appeal Tribunal in that case, after a reference to other authorities on this point, the Employment Appeal Tribunal said at page 794G:
"It follows that the fairness issue must be decided after the appeal process has been completed."
What we take from this decision is simply this. Where an Industrial Tribunal is considering a complaint of unfair dismissal and where an employee under his contract of employment has the right to appeal and exercises that right, in considering whether the employee has been fairly or unfairly dismissed, the Industrial Tribunal should have regard to the overall process of the termination of the contract of employment, or, in other words, the dismissal.In some circumstances unfairness at the original dismissal stage may be corrected or cured as a result of what happens at the appellate process: that will depend on all the circumstances of the case. It will depend upon the nature of the unfairness at the first stage; the nature of the hearing of the appeal at the second stage; and the equity and substantial merits of the case. Whether or not an appeal cures a procedural defect is not a matter to be determined by reference to the precise category into which appeal process falls. We are confident that that is the position because in many cases it will be difficult to categorise an appellate process as being either a rehearing on the one hand, or a review of what had already occurred on the other. They may be a mixture of the two, as here. It seems to us clear that the Civil Service Appeals Board in one sense conducted a rehearing in the sense that it considered matters afresh having regard to the written submissions of the parties, their oral representations and documentary material which is was accepted by all parties was common to them and to the parties. But in another sense it could be said that it was carrying out a review, because it appears that the Board expressed the view in its conclusion that the decision of the employers had been correctly taken. Whether the procedural defect which had been identified by the Industrial Tribunal was corrected by that process or not, is purely a question of fact and judgment for the Industrial Tribunal as it seems to us.Equally, with great respect to the argument which was put to us, namely that because, under the procedure involving the Civil Service Appeals Board, the Board did not have the power to require the employer to give effect to its decision that there should be reinstatement, it ceased to be an appellate process within the meaning of what was said by Lord Bridge, a contention which goes much too far. It is true that the Appeal Board was entitled to allow an appeal or dismiss an appeal. If it allowed an appeal then it obviously had power to make recommendations. But it was an independent body and it was unlikely, therefore, that the various departments would wish to confer on such an independent body the right to compel it to take back employees in whom they had lost trust and confidence. But it does not follow from that that the appeal to the Civil Service Appeals Board was incapable thereby of curing a procedural defect, it would depend.Accordingly, it seems to us on a proper consideration of the law, that the question then arises as to whether the decision of the Industrial Tribunal in this case can be sustained. In our judgment, it plainly can be. The Industrial Tribunal had the benefit of hearing evidence from the people involved. They were in a position to judge whether the unfairness which they had identified had been put right by the time that Mr Willott came to conduct the appeal. Having heard that evidence, and having heard what had occurred at that stage, they had expressed themselves as satisfied that he had fairly and properly considered the issues, that he had not pre-judged them, and that Mr Adivihalli had a full opportunity to present his case to Mr Willott, and that he took advantage of that opportunity to present information which had not been available to the original decision maker. Their finding that that opportunity corrected the defect in Mr Callaghan's approach to the matter, was, it seems to us, a judgment which they were entitled to arrive at on the facts before them. We have only the barest knowledge of the underlying papers in this case, we are here to review decisions on points of law only, and we cannot say that the Industrial Tribunal have acted perversely, or indeed, misdirected themselves in law. It seems to us that it was open to them to say that the procedural unfairness they had previously identified had been cured.Furthermore, in relation to the further step of an appeal to the independent appeal body, it seems to us that it is obvious that the independent body had conducted a full and fair rehearing in the sense that it had given the appellant a full opportunity to test before an independent body the wisdom of the decision that he should be dismissed for what was a first offence, effectively, in the context of a long history of faithful service. It was obviously a very difficult question for all concerned, and the Civil Service Appeals Board is, we imagine, there to set the standard so as to maintain consistency throughout the whole of Civil Service. They were very well placed to confirm or otherwise, the justice of the decision, given the facts were really not in dispute.Accordingly, we are of the view that the Industrial Tribunal were manifestly entitled to conclude, as they would have done had it been necessary to their decision, that the appeal to the Board was such as to cure any defects in the previous process.Accordingly, despite the able argument which has been presented to us, we are not persuaded that there is any reason to believe that the Industrial Tribunal have erred in law. On the contrary, we would pay tribute to the care with which they have approached this case. We suspect that there are many tribunals who would have simply reached the conclusion that having regard to the whole of the dismissal process, including the initial decision and the appellate process, that the decision to dismiss was fair, having regard to equity and the substantial merits of the case. In these circumstances, we have no hesitation in dismissing the appeal.