Atkinson & Ors v St Michael's School [1999] UKEAT 142_98_1102

EAT
Atkinson & Ors v St Michael's School
[1999] UKEAT 142_98_1102 · 1998-11-17

JUDGE D PUGSLEY :

This is a case which arises out of the closure of St Michael's School, Limpsfield. It was an independent school run by a company limited by guarantee and supported by a well known charity.Declining pupil rolls meant that the school was not generating enough income to meet its outgoings. On 22 April 1996 the governors of the school decided that the school should close. Summer term began on 24 April 1996. At this point in time neither the pupils or staff had been informed of the decision to close the school, but closure was eventually announced on 3 May 1996 and on that day the Appellants were given notice that their contracts would terminate at the end of that term on 31 August 1996 and they would be paid until that date.The issue for the Employment Tribunal's consideration was the correct period of the notice. A subsidiary issue arose before the Employment Tribunal as to whether the action was compromised by the acceptance of certain of the teachers of cheques sent to them. The Employment Tribunal decided that issue in favour of the Applicants and no appeal has been entered in respect of that decision.The issue which arises for our consideration is whether the Employment Tribunal was correct in deciding that the appropriate period of notice was the period that expired on 31 August. It is appropriate that we should see the matters that we are considering in a wider context. Some of the actions have been settled. Ms Gill who appears for the Respondents to this appeal has produced a chronology as to the terms of appointment. That chronology shows that from 30 October 1978 up until 11 July 1988 - in broad terms for a period of ten years with one exception to which we will advert later - all employees were appointed on what was known as the "Joint Four Contract". The exception to this overall pattern was that Mr Buckle was appointed on 1 September 1987 by a letter of appointment which made no reference to the Joint Four Contract and no reference to the period of notice.On 1 September none of the appointments were by reference to the Joint Four Contract and the letters of appointment varied in their terms. Before us there are effectively three categories:(a) Miss Atkinson was appointed on 1 January 1995. Her letter of appointment refers to "one full term's notice".(b) Mrs Topliss was appointed on 1 September 1994. Her letter of appointment states, subject to a standard AMMA contract which will be offered which will state that she had to give the school one full term's notice, but the letter of appointment is silent as to the notice that the school had to give her.(c) The other Appellants were given letters of appointment which were silent as to the notice required on either side, though in one case that of Miss Hickman, the letter of appointment was scrapped.Although all these cases were heard together, it is trite law to say that different considerations apply depending on the terms of their individual letter of appointment. The Employment Tribunal set out their findings of fact as to these issues starting with paragraph 6 of their Decision:
"6. It is obvious from the documents before me that the governors based that notice upon a contract which had been issued to a number of other teachers over the years, though not to these Applicants. It was on a standard form for teachers in Independent schools called The Joint Four, those four being the four teaching unions in Independent schools. It was clear to me that this contract was of wide, if not universal application. Clause 8 of that agreement reads as follows:
7. Except in the case of dismissal for misconduct or other good and urgent cause, this agreement may be determined at the end of any school term by the employer or by the teacher upon notice in writing to that effect being given by either to the other party hereto, not less than one week after the beginning of the said term. For the purpose of this clause the term shall be deemed to commence on 1st September, 1st January or 1st May as the case may be.8. At the meeting of the 3rd May the teachers asked how the contract could come to an end in August and they were told that the 3rd May was within 7 days of the 1st May, albeit it was more than 7 days from the 24th April when the term started.9. The Applicants gave evidence to the effect that they understood that they were entitled to one full terms notice, meaning that, if they were to be dismissed notice had to be given by the last day before the beginning of any term in order they should leave by the end of that term. If this deadline were missed then they had the rest of that term, plus another full term to find another job. They explained and I accepted that the nature of the market for jobs in teaching is that save in emergencies most jobs will begin at the beginning of the school year in September and some others at the beginning of terms, but not during terms. Because of that there is a peak of advertisement at certain times of year and if, through circumstances such as in this case they missed that peak they are unlikely to get a job for some time, and by the middle of May they had missed the peak of advertisements for posts beginning in September."Having heard the contentions of Mr Harrison and Ms Gill the Chairman summarised the position thus. In paragraphs 16, 17 and 18:
"16. This is a case where I have to imply a clause which did not exist. Clearly both parties contemplated that had they applied their minds to it they would have agreed a clause which covered the ending of employment. The question for me is what was that clause.
17. Quite clearly the joint four contract was one which was very common in the profession, and of the choices I have it seems to me that it was that agreement which the parties would have adopted at the outset of employment if they had applied their minds to it. It was an agreement which was clearly common in the profession, it allowed a teacher to resign in the first week of the term as well as an employer to end the contract, it provided in this case for some 17 weeks notice, and whilst in the event, a number of these teachers could not get jobs in the September I cannot say it was oppressive and unreasonable and that the Applicants would undoubtedly have rejected this. It is for the Applicants to prove their case on the balance of probabilities and they have not convinced me that they have discharged that burden in this case.18. I therefore hold that so far as it is possible to ascertain, the contract which covers the termination of their employment was clause 8 of the Joint Four agreement. The Respondents dismissed according to that and therefore these applications are dismissed."Mr Harrison on behalf of the Appellants has mounted a formidable attack on the Chairman's decision. He points out, and we accept, that three categories of employee could be identified. Those who had a reference to an employer's notice in their appointment letters (in the context of this case Miss Atkinson); those who had a reference only to the employee's notice period in their appointment (in the context of this appeal Mrs Topliss); those who had no reference at all into their letters of appointment. Mr Harrison says, in our view with considerable force, the Chairman has subsumed the differences that arise and has treated all these cases as a matter where it is a duty to imply a term. Mr Harrison concedes that in the third category that is the case but in the other two categories different considerations apply. We agree with that broad submission.The position of Miss Atkinson. Miss Atkinson's letter of appointment stated:
"A contract (standard AMMA apart from the length of notice which at St Michael's is one full term on either side) will be offered to you."
We accept Mr Harrison's submission that there was effectively no dispute as to that - that the term applied - the only question for the Tribunal was what was meant by the phrase "one full term's notice". This was an issue of construction, not a matter of implying a clause. In that the original letter to Miss Atkinson dated 26 May the words were used, "A contract (standard AMMA apart from the length of notice which at St Michael's is one full term on either side) will be offered to you". In a subsequent letter of 29 August, just before the start of term on 1 September 1995, the words appear:
"A contract is offered at the end of the first term. This is standard AMMA with the change to the period of notice which is one full term either side. ..."
In her skeleton argument Ms Gill argues that there is a lack of contractual intent in that the letter of 26 May 1995 states that a contract "will be offered to you" and in the subsequent letter of 29 August 1995 it is said, "A contract is offered at the end of the first term". Ms Gill says that on their true construction these letters were not making offers as to conditions of employment, but were qualified according to a future agreement. At most these were a statement of intent not a complete and binding agreement.That contention does not sit well with the words in the letter of 26 May, "I would ask that you accept this offer in writing". Further, there is no suggestion in the Decision at all that there was any amendment or variation of the suggestion as to notice set out in those two letters. In paragraph 9 of its Decision the Tribunal Chairman accepted that the nature of the market for jobs from teaching is such that save in emergencies those jobs will begin at the beginning of the school year in September and that other jobs will be at the commencement of terms but not during terms. Although the language used in paragraph 7 is not completely clear, it would seem that the Chairman was also accepting that if, as in this case it did not get noticed until May, they had missed the peak of advertisements for post beginning in September. The Applicants had all given notice to the effect that they understood they were entitled to a full term's notice, ie that they had to receive their notice on the last day before the beginning of any term and that if that deadline was missed, they had the rest of that term plus another term to find another job.Mrs Topliss' position was different, as had already been noted, in that her letter of appointment stated, "A contract will be offered to you (standard AMMA format) at the end of the first term which will state that you should give me one full term's notice of your intention to leave the position".This case, of course, differs from that of Miss Atkinson since that letter of appointment is silent as to the length of notice that the school should give to the teacher. Nevertheless, Mr Harrison's argument is that it clearly should be implied into that contract that if the teacher had to give the school one full term's notice, then there should be a reciprocity of obligation as far as the school was concerned.Ms Gill makes a point that the letter only refers to a fact that "a contract will be offered to you at the end of the first term" and then sets out what it will state.We suspect that some of the difficulties that have arisen in this case have arisen because there was a misunderstanding by the Chairman as to the basis of M Harrison's submission. At paragraph 11 of the Decision the Chairman says this:
"11. Whatever each individual contract said, and it was the Applicants' submission that in effect they all had the same contract, and I accepted this. ..."
We consider in seeking to summarise Mr Harrison's argument the Chairman has distorted it. Mr Harrison's argument is before this Tribunal and as we understand always has been, that as far as Miss Atkinson and Mrs Topliss are concerned, having letters of appointment, the issue was one of construction. His argument in respect of those whose letters of appointment were silent about the matter or, in the one case had no letter of appointment, was that they were entitled to a full term's notice and that is a term which should be implied into the contract. In the event Mr Harrison was contending that all the Applicants were entitled to a full term's notice but the basis on which he was putting that proposition was rather different. In Miss Atkinson's case it was a case of construction alone; in the case of Mrs Topliss it was a matter of implying a reciprocal term to that which governed the notice that Mrs Topliss had to give to the school and in the case of the other Applicants it was a question of implying a term that there should be a full term's notice on the basis that the test was that set out in Courtaulds Northern Spinning Ltd v Sibson [1988] ICR 451, 460, it stated a court should imply such term which in the context of the parties relationships "the parties would probably have agreed if they were being reasonable."The Appellants' case is that the Tribunal confused implying a term with incorporating a term or, in the alternative, sought to speculate as to what express contract the parties might have entered into rather than implying straightforward obvious and reasonable terms that both parties would have accepted. The point is made the Joint Four Clause already set out was a somewhat esoteric term to imply and it is clearly inconsistent with the letter of appointment to both Miss Atkinson and Mrs Topliss.Ms Gill's contention is that the Tribunal made sufficient findings of fact to imply the Joint Four term. She points out that the question of whether a term is to be implied is a mixed question of fact and law: see Carmichael v National Power [1998] IRLR 301 per Ward LJ at p307, Ms Gill points out that primary findings of fact were made from which the terms can, as a matter of law, be inferred. She points out that the Tribunal made findings of fact based on evidence before him, namely that the Joint Four Contract was the common practice in the profession, and that the parties would have agreed to it if they had addressed their minds to it. She reminds us of the finding by the Tribunal that the Joint Four agreement was of wide if not universal application. She points out that it is not necessary that each individual knew the precise terms of the standard form contract: see Sagar v Ridehalg [1931] Ch 310 per Lawrence LJ at p336. Ms Gill reminds us that in the chronology which has already been set out there was common usage in this school to apply the Joint Four contract. Ms Gill, with a robust grasp of realities, said if a member of staff had wanted to leave and had asked round in the common room, the probability is that those with longer service would have said that their contracts contained the Joint Four clause which deemed certain days as the start of term and allowed the latitude which is contained in the Joint Four contract.

Conclusions

We accept Mr Harrison's submission that although he contended that all of the Applicants should be entitled to a full term's contract, nevertheless the position of the Applicants was different in that there were three categories to which we have adverted. We do not consider, as Ms Gill has suggested, that we can ignore the letters of appointment and decide this case on the basis that this was merely a stage on the way to negotiation.We consider it is an error of law for the Chairman to say, as he did at paragraph 16, "This is a case where I have to imply a clause which did not exist". In the case of Miss Atkinson we consider that was simply wrong and in the case of Mrs Topliss we consider that, although there was no term as to the notice that the school should give her, it was a significant matter that she was required under the terms of which she was appointed to give the school a term's notice.We consider that the construction of the letter to Miss Atkinson was such that it was a contractual term of her contract that she had a full term's notice. In Mrs Topliss' case we consider that bearing in mind that the school was requiring from her a full term's notice, the proper course is to imply a term that she too should receive from the school a full term's notice and that there should be a reciprocity of obligation on both sides.It is unusual for an Employment Appeal Tribunal to substitute its own finding for that of the Tribunal, but this is a case where Ms Gill has accepted (if we may say so, very realistically) that this is not a case where, as far as these two Appellants are concerned, there is any point in remitting the matter to a Tribunal. We consider that, as a matter of construction and in the case of Mrs Topliss construction and inference, the clear finding of this Tribunal is that both these Appellants were entitled to a full term's notice, namely notice that expired at the end of the Autumn term.The terms of paragraph 17 are this:
"17. Quite clearly the joint four contract was one which was very common in the profession, and of the choices I have it seems to me that it was that agreement which the parties would have adopted at the outset of employment if they had applied their minds to it. It was an agreement which was clearly common in the profession, it allowed a teacher to resign in the first week of the term as well as an employer to end the contract, it provided in this case for some 17 weeks notice, and whilst in the event, a number of these teachers could not get jobs in the September I cannot say it was oppressive and unreasonable and that the Applicants would undoubtedly have rejected this. It is for the Applicants to prove their case on the balance of probabilities and they have not convinced me that they have discharged that burden in this case."
We consider there is considerable force in Mr Harrison's submission that this passage seems to suggest that the Chairman accepted the so-called Joint Four contract as his starting point, even though on the evidence it had not been used since 1988 and required the Appellants to prove this contract was so oppressive and unreasonable that they would have undoubtedly have rejected it. The only evidence the Chairman had in respect of the terms of the Appellants' contract was their own evidence and he does not make it clear whether he was accepting or rejecting that evidence. If he was rejecting their evidence as to what they believed the contractual term he should have made appropriate findings of fact about that matter. We accept the force of Mr Harrison's contention that there is at least a danger that the Chairman was confusing the implication of a term with an incorporation of a term and that he was seeking to speculate as to what express contract the parties might have entered rather than implying a straightforward, and reasonable term that both parties would have accepted. If he rejected the Appellant's evidence as to their understanding that they were entitled to a full term's notice then he should have made a finding of fact as to that. Instead he notes that evidence without making it clear whether he accepts or rejects it.We do not consider it as open to us in the case of the other Appellants to substitute our own decision as we have done in the case of Miss Atkinson and Mrs Topliss. In the case of the other Appellants we consider that the case should be remitted to a freshly constituted Tribunal so they can reconsider the whole of the case in the light of this decision.Whilst we appreciate the Chairman do have powers to hear cases of this sort on their own, nevertheless we consider it would be advantageous for the Regional Chairman to give directions. This is a case that should be tried with lay Members as well as a Chairman since we consider the practical knowledge of Industrial members would be of great assistance.