MR M MORTIMER v BLACK HORSE AGENCIES LTD [1999] UKEAT 696_98_0103

EMPLOYMENT APPEAL TRIBUNAL

BAILII case number: [1999] UKEAT 696_98_0103

Case No Appeal No. EAT/696/98

Venue 58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

Between

MR M MORTIMERAPPELLANT

BLACK HORSE AGENCIES LTDRESPONDENT

Before

Mr Justice Morison

Date 1 March 1999

[1]APPEARANCES For the Appellant Mr M Mortimer (In Person) For the Respondent Andrew Nicol (of Counsel) for Mr J Starkie Messrs Harrison Drury & Co 3 Fleet Street Preston PR1 2TA MR JUSTICE MORISON (PRESIDENT): This is an appeal against the unanimous decision of an Employment Tribunal held on 4th February and 18th March 1998. The decision was promulgated on 8th April 1998. The conclusion of the Tribunal which comprised the Chairman and one single lay member, was that the Applicant was not constructively dismissed and therefore, his complaint of unfair dismissal brought against him by his former employers, Black Horse Agencies Ltd was dismissed. The circumstances in which the Employment Tribunal came to sit with one lay member was that it was intended that there would be two lay members in the normal way. One of them had some travel difficulties and with the agreement of the parties, the Tribunal was composed as I have indicated. No point is taken on this Appeal in relation to the composition of the Employment Tribunal nor could there be in the light of the express acceptance by both parties' representatives as to the way it was composed. But we would simply caution Employment Tribunals from sitting as a two-person court because of the obvious risk that the two members of the court might disagree, one with another. But as we say, nothing turns on it for the purposes of this Appeal.

[2]Mr Mortimer, the Applicant Appellant, had been employed by Black Horse Agencies Ltd or its predecessors, from April 1993 to September 1997. The effective date of termination of his contract being the end of September. He resigned. The question at issue was whether, in the circumstances, his resignation was brought about by fundamental breaches of contract committed by his then employers. Up until the time when Black Horse Agencies Ltd took over the business in which Mr Mortimer was engaged, which was as from 1st August 1997, the Applicant had been employed in the Southampton office of an estate agency practice called Morris Dibben. He held the title of Associate Director and had management responsibilities for the surveyors who operated out of the Southampton, Romsey and Winchester offices of that firm. There were protracted negotiations, as we understand it, between Black Horse Agencies Ltd and TSB, the estate agency arm of TSB, which led to the Respondents taking over the business in which the Applicant was engaged.

[3]Before the transfer was completed, the Respondents wished to rationalise the business which was being acquired. It was their judgment that the Southampton office in which Mr Mortimer was engaged should be closed down and that the bulk of the business should be transferred to relatively adjacent premises in Southampton. But so far as the Applicant was concerned, they wanted to exploit his talents at an office in Portsmouth.

[4]The proposal that he should transfer, albeit on a temporary basis, to Portsmouth was put to the Applicant, initially at a meeting on 25th June 1997. That was, as we understand the position, the first time that this proposal had been presented to the Appellant and he initially appeared willing to help out in the way suggested. But he came to review his position and wanted to obtain, as one might put it in law, some "further and better particulars" as to the terms in which he was going to take up his employment with Black Horse Agencies Ltd. He was concerned about his job title and whether he was being demoted. He was concerned about the payment that he was to receive. Whilst employed at the Southampton office in his position as Associate Director, he had not only been entitled to some commission based on his own work but was entitled to an overriding commission based on the success of the office itself. What was to happen to that after the transfer to Portsmouth? And for how long was the transfer to take effect? Was it, as it was being represented, purely temporarily, and if so, what was going to happen when the 3 months period had expired?

[5]There was then correspondence between the parties; with the Applicant/Appellant seeking to ascertain more fully what his position was to be. It is plain to us from reading that correspondence, which was put before the Employment Tribunal that some form of negotiation was taking place between the parties. The Appellant was making his own demands for what he expected to happen and the employers, for their part, were relying upon what they regarded as a mobility clause in the Contract of Employment which they had inherited and regarded it as their perogative effectively to direct the Applicant to work at the Portsmouth office. They were unable, initially, to tell him what his job title and payments would be and the Applicant was dissatisfied with the way that his employers had responded to his requests for clarification. Accordingly, he gave notice that he was intending to resign and he gave, as the date for leaving 30th September 1997. Between the date when he wrote to the Employers telling them of this and the date of his leaving, the Employers sent a letter to him dated 26th September 1997 making it plain that his position would be Senior Surveyor, no longer an Associate Director; that his existing salary would be maintained but that the commission arrangements would change in that he would "revert" (I put the word in quotations because this was not a reversion at all) to the Black Horse Surveying Services variable pay scheme. The pay scheme was referred to in this letter and indicates the basis on which it would be calculated. He was told that they would pay for the extra travelling costs per day and he was told that he would not be able to carry out other private work without written permission of the Director. That was a clause which was being inserted because Mr Mortimer has apparently, developed a useful computer programme which is of value to people who carry out surveying duties in connection with mortgage arrangements in connection either with the purchase of property or the re-mortgaging of property.

[6]The Employment Tribunal's decision can be summarised in this way. They noted that there was to be a change in status. They said this:

"We note the Respondents' letter of 26th September deals with the question of the Applicant's status by indicating that he would be a Senior Surveyor and not an Associate Director as he previously had been. The Employers' representative gave evidence that the career structure in the Respondent company was different from that which had been and they indicated to the Tribunal that they had also heard evidence that although the title was that of Associate Director he was not in fact, Company Director, although he did have respondibility for day-to-day management in connection with the three survey offices."

They went of as follows:

"We can see that as well as there being a difference in job title there would have been a difference in job content for Mr Mortimer as compared with his role under the old Morris Dibben regime. However, we note that this would have been, at least initially, only for the period of 3 months until the matter was due to be reviewed and we also consider that whilst technically, there may have been an anticipatory breach of contract in relation to that matter, we do not think it would be sufficiently fundamental at that stage, such as to entitle the Applicant to resign. As to the other matter upon which he relied, namely the difference in salary, he has already indicated that the Tribunal considers that the letter of 26th September from the Respondent put him on notice that a further enquiry should be made of the Respondent to ascertain the position."

[7]In a succinct and able submission Mr Mortimer submitted to us effectively that the Industrial Tribunal has not correctly approached the case in law. He said that what was occurring was a change to his existing contractual obligations; that his employers were effectively tearing up his old contract and seeking to impose on him a new contract, with unspecific financial terms, without a guarantee in relation to what he had previously received under his old contract, reducing his status, not just his job title but also, his management role, as it was plain that in the post at Portsmouth he would be entirely concerned with managing himself. He drew attention to two authorities. One, where the Employment Appeal Tribunal, on the facts of that case, held that the method of calculating the commission was a fundamental term of the contract and that if the method of calculation was changed, that could constitute a fundamental breach as also could the absence of a firm assurance that the commission payments would not reduce [the second case].

[8]He criticised the Tribunal's conclusion and said that quite apart from the lack of proper approach to the context in which the dispute arose, the Tribunal's decision was also manifestly unfair to him and was therefore perverse.

[9]On the other side, we have a conspicuously able submission from Mr Nicol of Counsel who said, in effect, that the Employment Tribunal was called upon to decide the issues as they were presented to them. Mr Mortimer had the benefit of an extremely experienced solicitor representing his interests at the Employment Tribunal. This wasn't a case of an unrepresented Applicant failing to take a point where the Tribunal's investigatory or inquisitorial role might arise. This was a case where both parties were legally represented and were asking the Tribunal to consider the cases as they presented them and not on the basis of anything the Tribunal itself might have thought should be investigated. He submitted that there was material on which the Industrial Tribunal was entitled to arrive at the conclusion that it did; that this was a purely factual question involving the exercise of good industrial jury judgment as to whether there had been or had not been a repudiatory breach.

[10]During the course of argument when points relating to the transfer of undertakings were put to him, he submitted to us that those issues were not raised, nor was the case run on the basis that the job at Southampton had become redundant. It was purely a question as to whether the Applicant/Appellant was entitled to resign in the circumstances that he did. Thus he said it would not be appropriate for us to effectively grant the Appellant another shot at the case. He was not entitled to another bite at the cherry, merely because the case could have been presented in a way which might have led to success but was not.

[11]We have found this a very difficult case to reach a conclusion on, but at the end of the day, we were quite satisfied that the only just course for us to take is to hold that the Appeal succeeds. It seems to us that this was a decision which caused each one of us to say, with astonishment, how was it that the Applicant failed?

[12]The reasoning process of the Industrial Tribunal seems to us to be defective. In the first place, it seems to us that they have not specified or attempted to deal with the context in which the dispute between the parties arose. There is, in this case, the feature which was never referred to which is that the new Employers were seeking to change the contract under which the Applicant was entitled to continue to work. That is a significant fact in the context of the dispute between the parties and should have been taken into account by the Employment Tribunal and should have featured in their decision. Furthermore, the Tribunal should have, in our judgment, set out properly, the contractual duties which the Applicant had undertaken under his old contract and precisely what changes there were in those contractual duties. That was an issue which was before them, as was the issue of status, as was the issue of payment. To suggest as they did as the reason for holding that the application failed, that the Applicant was under some kind of duty having received the letter of 26th September to make further enquiry of his employers to ascertain what he was due to be paid under the transfer, seems to us not to accord with commonsense. If the Employers wished to transfer his employment, using the mobility clause in the contract and to change other terms and conditions of his employment, it seems to us clear that before the Employee was faced with the alternative of accepting the transfer or leaving the company, the terms should have been spelt out properly and fairly so that he could see precisely what was on offer. It was not his responsibility to chase his Employers to find out what he was to be paid; it was their responsibility to tell him in terms whether his pay was going to be reduced as he contended or not and if they intended that his pay should not be reduced in any way, then it was their duty to make that plain. Furthermore, they appear to have accepted, first of all that there was a change in job title, secondly, that there was a change in job content, by which we assume them to mean a change in his management responsibilities and it seems to us that to use the word "technically" in describing those changes as being an anticipatory breach of contract, shows a misunderstanding on the Tribunal's part of the nature of a repudiatory breach. These weren't technical matters at all. These were matters of substance and the Employee, the Applicant/Appellant was entitled, as it seems to us, to have that part of his case carefully and properly dealt with by the Employment Tribunal who should have recognised that these are matters of substance and not form.

[13]Accordingly, unusual though it is, we are prepared to say that in this case, the decision of the Industrial Tribunal is plainly wrong. At this time, the question then arises as to what course the Employment Tribunal should take. The choices are: to allow the Appeal and remit the matter back to another Employment Tribunal for them to approach the matter properly, or alternatively, for us to substitute our own decision for that of the Employment Tribunal. Which course we take is, to some extent, dependent on whether the parties believe that there is further material which the Employment Tribunal should be asked to look at. If so, that might be a good reason for remitting the matter to be heard by a newly constituted Employment Tribunal.

[14]In the course of his submission, Mr Nicol quite rightly, drew to our attention the age of this case and also the fact that because Mr Mortimer has many talents he was able to obtain alternative employment which makes his losses in the region of £7,000 odd overall. It may be that the parties would wish a little time this afternoon, to reflect on the terms of this judgment and to come back to us and ask either that we substitute our own decision or alternatively, that the matter goes to another Tribunal. I would express this hope that Black Horse Agencies Ltd would fully take up the opportunity which there is, to conciliate at this time.

[15]One of the unfortunate things in this case is, as so frequently happens in disputes of this sort, that there has been a lack of proper and full communication between the parties prior to the dispute occurring. It was quite wrong, we have to say, that employees were not informed of the transfer and the date when it was to take effect and were not provided with a pack of information explaining to them what their rights are and what was happening. In this case, Mr Mortimer did not know when Black Horse Agencies Ltd became his Employer. Nobody told him when that had occurred and that seems to us to be quite undesirable with an organisation which is as large and as reputable as this. It seems to us that there is much to learn from the nature of this dispute between the parties and we wonder, perhaps in the light of these comments, whether the Respondents might not think it appropriate to take a little time with the Applicant to see whether a sensible resolution can now be arrived at. We fully understand Mr Nicol's point of proportionality, having regard to the costs that would be incurred in a further hearing before the Employment Tribunal, so we will give you half an hour.