THE POST OFFICE v MR J S SANHOTRA [1999] UKEAT 1374_98_0111

EMPLOYMENT APPEAL TRIBUNAL
BAILII case number: [1999] UKEAT 1374_98_0111Case No Appeal No EAT/1374/98Venue 58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS
Between
THE POST OFFICEAPPELLANTMR J S SANHOTRARESPONDENT
Before
Mr Justice Charles Mrs T A Marsland Mr P A L ParkerDate 1 November 1999
[1]APPEARANCES For the Appellants MR D CRAIG (of Counsel) Instructed By: Mr G Turner Messrs E Edwards Son & Noice Solicitors 292-294 Plashet Grove East Ham London E6 1DQ For the Respondent MR D McCARTHY (of Counsel) Instructed By: Mr B H Foley Solicitor The Post Office Legal Services Impact House 2 Edridge Road Croydon CR9 1PJ MR JUSTICE CHARLES : The parties to this appeal are the Post Office (the Appellant) and Mr J.S. Sanhotra (the Respondent to the appeal and the Applicant in the proceedings before the Employment Tribunal). The appeal is against the decision of an Employment Tribunal sitting at London (North), the Extended Reasons for which were sent to the parties on 13 October 1998.[2]The decision of that Employment Tribunal was that it had jurisdiction to hear Mr Sanhotra's claim for unfair dismissal, notwithstanding the fact that it was not brought within the three month time limit set out in section 111(2)(a) of the Employment Rights Act 1996.[3]It is common ground that in reaching that decision the Employment Tribunal correctly directed themselves to sections 111(2)(a) and (b) of the Employment Rights Act 1996.[4]The Employment Tribunal only heard evidence from Mr Sanhotra.[5]This appeal was well argued by Counsel who appeared on behalf of the Post Office in the face of some hostility from us to the stance being adopted by his clients because that stance would, if successful, have the result that the serious allegations of fact being made by Mr Sanhotra would not be determined.[6]At the end of the submissions made by Counsel on behalf of the Post Office we indicated to Counsel for Mr Sanhotra that although we were unconvinced by the main arguments advanced on behalf of the Post Office, we had reached the provisional conclusion that:(a) in only hearing evidence from Mr Sanhotra the Employment Tribunal had erred in law, and(b) we should remit the issue of jurisdiction to a differently constituted Employment Tribunal on the basis that, if possible, it should list the case so that if that Employment Tribunal concluded that they had jurisdiction they would be able to go on and deal with the case. This was the alternative position adopted by Counsel for the Post Office at the end of his submissions.[7]Counsel for Mr Sanhotra acknowledged the pragmatic force of that result but he sought to persuade us that the Employment Tribunal had not erred in law in only hearing evidence from Mr Sanhotra on the issue going to jurisdiction. We shall return to this point but, at this stage, we record that we have decided that we should remit the issue as to jurisdiction to a differently constituted Employment Tribunal on the above basis as to listing. Mr Sanhotra's Position[8]This is shown by the findings made by the Employment Tribunal on the basis of hearing evidence only from Mr Sanhotra. We were told that at the preliminary hearing before this Tribunal it expressed the view that these findings do not give rise to any estoppels and thus that in hearing the substantive case the Employment Tribunal could reach different findings of fact. We can however understand the concern of the Post Office on this aspect of the case before that view was expressed by this Tribunal. We also pause to comment that this conclusion has the consequence that it is possible that on hearing the claim the Employment Tribunal might find that the facts upon which it found it had jurisdiction to hear the claim are not made out and the facts as found support an argument, or a conclusion, that the time for bringing the claim should not have been extended.[9]The findings made by the Employment Tribunal as to Mr Sanhotra's allegations and position are contained in paragraph 2(i) to (vii) and paragraph 6 of the Extended Reasons which are in the following terms:
"2 We heard evidence from Mr Sanhotra and these are the facts on which we base our decision. (i) Mr Sanhotra was employed by the Respondents from 1988 until the termination of his employment on 7 January 1998. At the time of the termination of his employment he had a good working record and had no warnings or disciplinary matters against him. The problem arose some time in 1997 when there was an investigation into his purchase of two sovereigns from a jeweller and the police were notified but the police took no further action. The Post Office informed its own internal investigation unit and he was interviewed by a Mr Gavin Fisher in the presence of his union representative. (ii) The Applicant who is of Indian origin and from his evidence it was clear that he did not fully comprehend the significance of the points that were being raised. He said that he was told by Mr Gavin Fisher that if he did not resign within 24 hours he would be dismissed and would not get a reference. He was apparently told that if he did resign he would be given a reference and as he needed to get another job he thought that he had better resign. The letter of resignation was typed out by his union representative and he signed it. (iii) His last day of service was 7 January 1998. His date of birth is 11 January 1946. (iv) He had some difficulty finding further employment but eventually on 22 June 1998 he obtained employment at Heathrow Airport subject to a satisfactory reference. The new employees Gate Gourmet took up references with the personnel department and also had a conversation with Mr Gavin Fisher whom he had given as a personal referee and who had been his line manager. (v) On 21 July there was a meeting between the Applicant and his operation controller and he was told that the offer of employment was being withdrawn because they had not received the satisfactory reference. (vi) The reference provided by the personnel department of the Post Office was dated 4 August and solely confirmed that 'Mr Sanhotra was employed by Royal Mail London as a postman at the CCS Mount Pleasant office from 21 November 1988 until 6 January 1998 when he resigned'. It was clear from the Applicant's evidence that the new employees somehow had learned that the police had been involved in an investigation into him and therefore they were unable to confirm his employment. (vii) The Applicant immediately went to solicitors on 24 July who wrote to the Respondents asking for a copy of the reference and the application was submitted on 4 August 1998 claiming unfair dismissal. 6 It is clear to this Tribunal that the Applicant believed that if he resigned he would get a satisfactory reference from the Respondents to enable him to obtain further employment. That was the basis of the bargain that he had made with the Respondents and therefore at the time of the termination he did not believe that he had been unfairly dismissed and therefore did not believe he had a right to bring a claim to this Tribunal."
The Position of the Post Office[10]The Post Office dispute Mr Sanhotra's account of events. As we understand it, it is their case that no promise or representation was made to Mr Sanhotra that if he resigned he would get a satisfactory reference, or a reference. The Nature of the Factual Dispute between the Parties[11]This involves, or potentially involves, allegations of dishonesty.[12]Mr Sanhotra asserts that at the time he agreed to resign the representation made to him to the effect that he would receive a satisfactory reference was a dishonest representation of fact because at that time the person making it did not intend to give him such a reference.[13]The Post Office deny that any such representation was made and therefore their position is that, in making the allegation that such representation was made, Mr Sanhotra is not telling the truth, or misunderstood what he was told. The Main Arguments Advanced on Behalf of the Post Office[14]These were founded on the following propositions:(a) As a matter of law Mr Sanhotra either resigned or was dismissed on 7 January 1998 and the issue as to whether, as a matter of law, he resigned or was dismissed has to be assessed as at that date, and(b) On Mr Sanhotra's case, namely that his resignation was induced by a promise of a satisfactory reference, he has his remedy at common law either in an action for damages for deceit, or for breach of that bargain.[15]The Post Office then rely on the case of Machine Tool Industry Research Association v Simpson [1988] IRLR 212 and, in particular, on the passage in the judgment of Purchas LJ at paragraphs 19 and 20 of which are in the following terms:
"19 In my judgment, the submissions made by Mr Ouseley are correct. They not only reflect the ordinary meaning of the section, to which I have just referred, but are supported by such authority as is available to this court. Mr Ouseley submitted that the expression 'reasonably practicable' imports three stages, the proof of which rests on the applicant. The first proposition relevant to this case is that it was reasonable for the applicant not to be aware of the factual basis upon which she could bring an application to the Tribunal during the currency of the three-month limitation period. Mr Ouseley argues with some force that if that is established it cannot be reasonably practicable to expect an applicant to bring a case based upon facts of which she is ignorant. Secondly, the applicant must establish that the knowledge which she gains has, in the circumstances, been reasonably gained by her, and that that knowledge is either crucial, fundamental or important - it matters not which particular epithet, if any, is applied - to her change of belief from one in which she does not believe that she has grounds for an application, to a belief which she reasonably and genuinely holds, that she has a ground for making such an application. I am grateful to adopt the summary of that concept in the words that Mr Ouseley used, that it is an objective qualification of reasonableness, in the circumstances, to a subjective test of the applicant's state of mind. 20 The third ground, which Mr Ouseley accepts is really a restatement of the first two, is that the acquisition of this knowledge had to be crucial to the decision to bring the claim in any event."
The Law[16]In their argument the Post Office sought to apply the three stages set out by Purchas LJ in the Machine Tool case rigidly. As appears below we do not accept that an application of these three stages on the facts of this case leads to a conclusion that the Employment Tribunal erred. Further, in our judgment, although it is naturally correct, helpful and instructive to have regard to this three-stage approach in applying section 111, it is wrong to apply it rigidly or as a substitute for the words of the statute. We are of this view for the following reasons:(a) As is pointed out in the citation at paragraph 12 of the judgment in the Machine Tool case, section 111 has to be interpreted in a common-sense way and the Employment Tribunal have to apply their discretion in doing so. In our judgment this approach (which Counsel for the Post Office accepted was the correct one) indicates that the three stages referred to by Purchas LJ should not be applied rigidly in substitution for the statutory phrase but that they are only words of guidance as to the correct application of the statutory test.(b) As appears from paragraph 19 of the judgment in the Machine Tool case, in describing the first stage it is introduced by the words:
"The first proposition relevant to this case is that ..." this indicates that, as one would expect, Purchas LJ was focusing on the facts of the case before him. (c) At paragraph 23 of his judgment in the Machine Tool case, Purchas LJ says this: "23 With respect and gratitude, for my part I would accept those two passages from that judgment as fully and succinctly setting out the true position in law, which should direct the approach of the court considering under s.67(2) whether it should or should not be satisfied on the facts that it was not reasonably practicable for the complaint to be presented in circumstances such as those prevailing in this case. By that I mean that during the period of the three-month limitation there were crucial or important facts unknown, and reasonably unknown, to the applicant which then became known as facts to her such as to give her a belief, and a genuine belief, that she had a claim to be brought before the Industrial Tribunal."
This is a different statement of the approach to be adopted which accords with, but does not necessarily require, an application of the three-stage approach that Purchas LJ has referred to earlier. This comment also applies to the general statement of approach contained in the citation from the judgment of Browne-Wilkinson J in Churchill v A Yates & Son t/a Yates Catering Equipment [1983] IRLR 187, which is quoted by Purchas LJ in the Machine Tool case at paragraph 22 and which includes the following statement:
" ... the question is whether he can demonstrate to the Industrial Tribunal that until he was aware of the possibility of challenging the reason for dismissal given by the employers, he reasonably took the view that he had no reasonable grounds to complain of unfair dismissal. If that could be established on the facts, then it would be open to an Industrial Tribunal to hold that it was not reasonably practicable for him to have brought that complaint until he discovered the crucial fact." (d) In our judgment the overall approach in the Machine Tool case is that the court had regard to the words of the statute and applied them to the facts of the case before it, having regard to the guidance from earlier authority. In our judgment the statutory language uses ordinary words and the following passage from the judgment of Dillon LJ in In re Sevenoaks Stationers Ltd [1991] Chancery 164 at 176 B to G applies by analogy: "
These are ordinary words of the English language and they should be simple to apply in most cases. It is important to hold to those words in each case. The judges of the Chancery Division have, understandably, attempted in certain cases to give guidance as to what does or does not make a person unfit to be concerned in the management of a company. Thus in In re Lo-Line Electric Motors Ltd [1988] Ch. 477, 486, Sir Nicolas Browne-Wilkinson V.-C. said: ' .... ' Such statements may be helpful in identifying certain circumstances in which a person would clearly be unfit. But there seems to have been a tendency, which I deplore, on the part of the Bar, and possibly also on the part of the official receiver's department, to treat the statements as judicial paraphrases of the words of the statute, which fall to be construed as a matter of law in lieu of the words of the statute. The result is to obscure that the true question to be tried is a question of fact - what used to be pejoratively described in the Chancery Division as 'a jury question'." (e) An approach which concentrates on the statutory test by reference to the guidance in earlier cases rather than one which treats the earlier guidance as a test in itself is also in line with the approach of the House of Lords in Murray and Another v Foyle Meats Ltd (which was reported in the Times on 9 July 1999 and thus after the hearing before us).[17]Another case that was reported after the hearing before us is Noel v London Underground Ltd (Times 7 July 1999). Counsel for the Post Office helpfully and properly drew our attention to this case and has provided us with a copy of the approved judgment of the Court of Appeal in it. At our invitation he, and Counsel for Mr Sanhotra, have also made submissions in writing relating to this case for which we are grateful.[18]The Noel case refers to and relies upon earlier authorities, and in particular Walls Meat Co Ltd v Khan [1979] ICR 52 and Gibson LJ (in particular) accepts and applies the first limb of the approach of Purchas LJ in the Machine Tool case namely that the term "reasonably practicable" requires the Applicant first to establish that it was not reasonable for her to be aware of "the factual basis upon which she could bring an application to the Tribunal during the currency of the three month limitation period". However, in our judgment, in the Noel case the Court of Appeal does not take an approach that elevates that part of (or all of the three stage approach of Purchas LJ) into a test in substitution for the statutory test. Rather the Court of Appeal refer to and apply the statutory test and thus the phrase "reasonably practicable" in the light of the earlier guidance as to its meaning contained in the earlier authorities. Part of that guidance is that the statutory test of reasonable practicability(i) does not equate to a test of reasonableness,(ii) is essentially an issue of fact provided that the decision maker takes the right approach and therefore asks himself the right question, namely whether the statutory test of reasonable practicability has been satisfied, and(iii) has the consequence that the matters about which the Applicant is in ignorance, or is mistaken, must relate to the right to bring the claim (but as to this see paragraph 19 of this judgment).[19]As the Noel case shows this approach involves a consideration of the relevant facts. There the Court of Appeal concluded that the facts found by the Employment Tribunal did not satisfy the statutory test of reasonable practicability. We note that the Court of Appeal reached its conclusion with reluctance. Also we note that both Judge LJ and Waller LJ make the point that if the job offered to Mrs Noel in that case had for practical purposes been identical to her earlier job it would have been open to a Tribunal to conclude that it was not reasonably practicable for her to have proceeded within the statutory time limit. In our judgment, this view shows that in those circumstances they would not have been prepared to rigidly apply the guidance in the earlier cases (summarised by Waller LJ) that the matters about which the complainant is mistaken, or ignorant, must relate to the right to bring the claim rather than its quality, or to the advisability of bringing it. We respectfully agree that such guidance should not be applied rigidly to the facts of a given case in place of the statutory phrase.[20]In any event it is clear that the effect of the facts in the Noel case, and in particular the effect of the fact that the offer of a new job was on terms that represented a demotion, mean that it is distinguishable from the present case. Our Approach[21]We therefore take the approach that we should apply the statutory test of "reasonable practicability" and in doing so should have regard to the guidance given in the earlier cases and in particular to the point that the test is one of reasonable practicabilty and not one of reasonableness. Application of the test to this case[22]We now return to the submission made on behalf of the Post Office that the Employment Tribunal in this case misapplied the three-stage approach or test set out in the Machine Tool case.[23]As to that it was accepted by Counsel for the Post Office (in our judgment correctly) that it was reasonable for Mr Sanhotra to be ignorant of the fact that the reference that was given was unsatisfactory and that he gained this knowledge outside the three month time limit. However, it was asserted:(a) that as at 7 January 1998 Mr Sanhotra had knowledge of all the facts upon which he could assert that he had been dismissed and further, or alternatively:(b) the acquisition of knowledge that the Post Office had not given him a satisfactory reference was not crucial to Mr Sanhotra's decision to bring a claim or a change in his belief that he could do so. We do not agree with these assertions because they leave out of account Mr Sanhotra's contention that a misrepresentation was made to him on 6 January 1998. It is this contention rather than the fact that the Post Office did not give him a good reference that Mr Sanhotra seeks to rely on to found his claim that he was dismissed. Mr Sanhotra relies on the lack of a good reference as a matter which supports his contention that a fraudulent misrepresentation was made to him on 6 January 1998.[24]In our judgment, on the disputed hypothesis that the Post Office promised and represented that they would give Mr Sanhotra a good reference, the acceptance by the Post Office that it was reasonable for Mr Sanhotra to be ignorant of the fact that he was not given a good reference until after the expiration of the three month time limit, carries with it an acceptance that it was reasonable for Mr Sanhotra to be ignorant of the fact that triggers, and is crucial to him proving, his contention that the Post Office made a fraudulent representation to him.[25]The question therefore arises as to what is the effect of such a fraudulent misrepresentation.[26]We accept that the issue whether or not Mr Sanhotra was dismissed or resigned falls to be decided as at 7 January 1998. However if a representation that Mr Sanhotra would be given a good reference was made on 6 January 1998 in our judgment the question whether it was made honestly or dishonestly, and its effect, also fall to be decided on 6/7 January 1998. In reaching decisions on those issues as at 7 January 1998 matters which occurred after that date (e.g. the fact that Mr Sanhotra was not given a good reference) can be taken into account.[27]The issue whether an employee has been dismissed or has resigned is decided by taking a practical and common sense approach. The question to be asked is "Who really terminated the contract of employment?" (see for example Martin v Glynwed Distribution Ltd [1993] ICR 511 at 519 G/H). Further, in this context (and in the context of whether it was reasonably practicable to bring a claim for unfair dismissal within the statutory time limit) the good faith of the employer and the employee are relevant (see Birmingham Optical Group v Johnson [1995] ICR 459 at 464 A/C).[28]In some circumstances when a fraudulent misrepresentation has been made the person to whom the representation has been made may be limited to claiming rescission or damages. However, in our judgment this is not the case when the fraudulent representation alleged is relevant to the question whether on a practical and common sense approach, in all the circumstances of a given case, an employee has been dismissed or has resigned. In our judgment this is because the representation is central to the relevant question, namely "Who really terminated the contract of employment?".[29]In our judgment if an employee is induced to agree to resign, or leave voluntarily, by a fraudulent misrepresentation made by a representative of the employer it is the employer who has really terminated the contract of employment, or at least this is an arguable (and thus a possible) result at law.[30]In our judgment it would be remarkable if an employee who agreed to resign, on the basis of a representation, which he believed to be true and to have been made honestly, discovered during the three month time limit that the representation was false and did not represent the intention of the representative of the employer who made it, was restricted to claiming rescission or damages for breach of the relevant promise and could not claim that the fact that a fraudulent misrepresentation had been made had the effect that it was the employer who really terminated the employment and that he was dismissed. If that is right, the statutory time limit does not affect the legal basis for making the claim that in all the circumstances now known to the employee he was dismissed and did not resign, all it does is introduce a possible bar to the employee issuing, and pursuing, a claim on that basis.[31]It follows in our view that on his account of events:(a) it was reasonable for Mr Sanhotra to be ignorant during the three month time limit of a fact, namely that he was not given a good reference, that triggers, and is crucial to him proving, his contention that the Post Office made a fraudulent misrepresentation to him, and(b) the contention that there was a fraudulent misrepresentation, and thus the fact that Mr Sanhotra was not given a good reference, relate to, and indeed are crucial to, his right to bring his claim that in all the circumstances he was dismissed and did not resign.[32]Accordingly in our judgment, on Mr Sanhotra's account of events, it was well within the range of decision open to the Employment Tribunal on a correct application of the statutory test to conclude that it was not reasonably practicable for Mr Sanhotra to present his claim within the statutory three month time limit.[33]Indeed in our view that is the right conclusion even if, contrary to our view, it was correct to apply the rigid approach to the three stage approach set out by Purchas LJ in the Machine Tool case. Further in our judgment this conclusion accords with the actual decision in the Machine Tool case on the basis that by analogy (or parity of reasoning) until Mr Sanhotra discovered that he had not been given a good reference he had no reason to think that the representation he alleges was made was a fraudulent misrepresentation. Should the Employment Tribunal have decided the jurisdiction issue on the basis of Mr Sanhotra's evidence alone?[34]As appears above in our judgment the answer to this question is "No", and by doing so the Employment Tribunal erred in law.[35]In reaching this conclusion we have had careful regard to:(a) the point, which we accept, that normally the issue of jurisdiction based on compliance with the time limit in s 111 ERA should be decided without going into the detail of the case and therefore should often be decided on the evidence of the applicant alone, and(b) paragraphs 9, and 15 to 17 of the judgment of Purchas LJ in the Machine Tool case, and the conclusion of the Court of Appeal contained therein, that there is no need for an applicant to be relieved of the strict time limit in s 111 ERA to establish, as facts, those facts which have caused a genuine frame of mind, and reasonably so caused it, to form a decision to present a complaint to the Employment Tribunal out of time.[36]In the Machine Tool case it was not disputed that the employee was told that she was dismissed on the basis of redundancy and the facts she discovered related to her belief, and assertion, that someone else had been employed to do her job. It was the proof of the employment of someone else to do the dismissed employee's job that was under consideration in the Machine Tool case. Here the situation is very different because here the fact that Mr Sanhotra discovered after the three month period (i.e. that he was not given a good reference) is not disputed and what is disputed is that the representation Mr Sanhotra relies on was made. Additionally, as we have said, that dispute involves, or potentially involves, allegations of dishonesty.[37]An essential element of Mr Sanhotra's argument that it was not reasonably practicable for him to bring his claim in time is that he was told that he would be given a good reference if he resigned and he relied on that representation. This flows both from the statutory test itself and the point made in the Machine Tool case that the claimant needs to show that he has a genuine belief that he has a claim which he reasonably did not have prior to the expiry of the time limit.[38]As is confirmed in the Noel case by reference to the Wall's Meat what is, or is not, reasonably practicable is in essence a question of fact.[39]In our judgment, in the circumstances of this case, to properly decide whether it was, or was not, reasonably practicable for Mr Sanhotra to bring his claim within the three month time limit it is necessary to determine whether or not the representation he relies on was made and if it was whether he relied on it. We are of the view that the Machine Tool case is not authority for the proposition that those disputed issues of fact should be left to the substantive hearing of the claim because in our judgment there is a possibility that the Employment Tribunal would decide on hearing the rival accounts that Mr Sanhotra is not telling the truth and cannot have, or ever have had, a genuine belief that he has a claim that he was dismissed on the basis he now asserts.[40]This is a very different situation to that which existed in the Machine Tool case where the jurisdictional issue could be decided and the case could then proceed on the basis that the employee had a genuine belief that someone else had been employed to do her job. If that was found to be wrong this would not necessarily affect the genuineness of the employee's belief at the time the proceedings were issued that it was correct because she was not a party to the relevant events. Here Mr Sanhotra was a party to the relevant events and there is a stark dispute of fact between him and the Post Office. Also the views of Mr Davis, who we understand was Mr Sanhotra's union representative and who Mr Sanhotra says in his statement was present when the representation he relies on was made, are not known. Mr Davis' evidence is relevant to, and potentially very important to, the question whether a representation was made to Mr Sanhotra that he would be given a good reference if he resigned.[41]We accept that a finding that no such representation was made to Mr Sanhotra would be decisive of the claim Mr Sanhotra is presently asserting and would, or might, render academic the distinction between a dismissal of the claim on the basis of the time limit or the merits.[42]Such a finding could be made on the basis that Mr Sanhotra is not telling the truth, or on the basis that although Mr Sanhotra now genuinely believes that such a representation was made, and he relied on it, he is mistaken. In our judgment, this possibility that Mr Sanhotra now holds a genuine but mistaken belief does not mean that Mr Sanhotra's account of events should be accepted in the determination of the jurisdictional issue because another possible finding is that he is not telling the truth and therefore does not have a genuine belief that the representation he relies on was made to him.[43]Further, and as mentioned in paragraph 8 above, if the jurisdictional issue is determined on the basis of Mr Sanhotra's evidence alone this course could have the result that on hearing the claim the Employment Tribunal might find that the facts upon which it concluded it had jurisdiction to hear the claim are not made out and the facts as found support an argument, or a conclusion, that the time for bringing the claim should not have been extended. This would be the case if after hearing both sides the conclusion of the Employment Tribunal was that Mr Sanhotra has a genuine but mistaken belief that the representation he relies on was made to him.[44]The overlap in the factual issues involved in the jurisdictional issue and the substantive hearing has caused us to remit to a differently constituted Employment Tribunal on the basis set out in paragraphs 6 and 7 above.