MIDDLESBROUGH CONSERVATIVE CLUB LTD v MR G C HARRIS [1999] UKEAT 753_99_0710

EMPLOYMENT APPEAL TRIBUNAL

BAILII case number: [1999] UKEAT 753_99_0710

Case No Appeal No. EAT/753/99

Venue 58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

Between

MIDDLESBROUGH CONSERVATIVE CLUB LTDAPPELLANT

MR G C HARRISRESPONDENT

Before

Mr Justice Lindsay

Date 7 October 1999

[1]APPEARANCES For the Appellants MR NICHOLAS ROBSON (of Counsel) Instructed By Messrs Outhwaite Sutcliffe & Howard Solicitors 50 Albert Road Middlesbrough TS1 1PF MR JUSTICE LINDSAY (PRESIDENT): We have before us, by way of preliminary appeal, the appeal of Middlesbrough Conservative Club Ltd against the decision of the Employment Tribunal at Middlesbrough. There was a hearing on 25 March 1999 and the extended reasons were given on 22 April 1999. A steward of the Club, Mr Geoffrey Charles Harris, had claimed to have been unfairly dismissed. He had a contractual claim against the Club and the Club had a proprietary claim for loss against him. It also had a further claim against him, a monetary claim. The unanimous decision of the Tribunal was as follows:

"1) that leave to amend the employer's claim in respect of loss of lager to the sum of £604.96 be granted; 2) that the Applicant was unfairly dismissed; 3) that the Applicant was dismissed in breach of contract without payment in lieu of notice; 4) that the Respondent's employer's claim in respect of lost beer succeeds to the extent of £218.89; 5) the Respondent's employer's claim in respect of monetary loss fails and 6) that a remedies hearing should now be held."

In fact, there has been since then, a remedies hearing on 2 August 1999. The Tribunal ordered Mr Harris to receive £12,660 in all. That remedies hearing had proceeded quite properly (if it was to proceed at all before this appeal) on the basis that the decision of 22 April was correct.

[2]On 27 May 1999 a well-drafted Notice of Appeal was signed by the Club solicitors, Messrs Outhwaite Sutcliffe and Howard. Because it is well drafted and because we have had representation from Mr Robson today we shall treat the matter perhaps more fully than is usual on a preliminary hearing. There is no appeal, as we have understood it, as to heads 1, 3, 4 and 5 of the reserved decision but the Notice of Appeal raises three complaints that relate to whether and to what extent the compensation payable to Mr Harris should, as to both the basic and the compensatory awards, have been reduced under the relevant statutory provisions.

[3]The £12,660 has been quantified, of course, without any reduction having been applied. If the Club is right and a full hearing is held and they succeed, then some reduction would have to be applied and the EAT presumably would have pro tanto to set aside the £12,660 and the award of 22 April 1999. But all that, of course, lies in the future. The immediate question is whether the Club is able to identify any error of law in the case and that is the question to which the Skeleton Argument is directed. But, before we turn to the matter in any detail, it would be as well to see what the statutory provisions are in this area.

[4]So far as concerns the basic award, which is not very great in this case, we will look first to section 122 of the 1996 Act which is headed, "Basic Awards; Reductions". Section 122(1) is not relevant. Section 122(2) provides:

"Where the Tribunal considers that any conduct of the complainant before the dismissal or where the dismissal was with notice before the notice was given was such that it would be just and equitable to reduce or further reduce the amount of the basic award to any extent, the Tribunal shall reduce or further reduce that amount accordingly."

[5]It is to be noted that only conduct before the dismissal, or, if notice was given, before notice was given, is material . Secondly, that the test is justice and equity and that the reduction is to be where the Tribunal considers it to be appropriate, as the Section provides. As a formula, it is a very broad discretion indeed which is conferred on the Tribunal. It is fettered only by the considerations of justice and equity in the case and by the inescapable implied requirement that the discretion should be exercised judicially. It is difficult to overemphasise the obstacles thus presented to a challenge to an exercise of such a discretion where, as is the case with the EAT, any appeal is only on a point of law. The Appellant has to show that the Employment Tribunal took into account a factor which it should not have done, failed to take into account some factor which it should have done, or otherwise show that it can be seen to have exercised the discretion upon some wrong principle. It is quite irrelevant that we would have exercised the discretion differently, even were that to be the case, it is equally irrelevant that most Employment Tribunals would or might have exercised it differently.

[6]The question becomes whether any Tribunal properly instructing itself could have concluded as this one had and that is, needless to say, a test which is very far from easy for an Appellant to pass. So much for the statutory provisions as to the basic award. As to the compensatory award, it is to be quantified, in the first place, as is provided in section 123 of the 1996 Act and again there is a statutory provision as to reduction. That is 123(6):- "Where the Tribunal finds that the dismissal was to any extent caused or contributed to by any action of the complainant, it shall reduce the amount of the compensatory award by such proportion as it considers just and equitable having regard to that finding." And again therefore, the discretion conferred is of the broadest kind. It is by reference to the Tribunal's view of what is just and equitable but it only comes into play if the Tribunal finds the dismissal was to any extent caused or contributed to by any action of the complainant.

[7]Although in distinction to 122(2), there is no express reference in section 123(6)to the complainant's actions having to be before the dismissal, it is difficult to see how a dismissal could be caused or contributed to by some action which should not by then have occurred or which should not, by then, directly or indirectly have come to the mind of whoever dismisses.

[8]It is against that legislative background that the Club raises three arguments. The first is summarised in its opening as follows:

"On the facts found and conclusions made by the Tribunal, there were sufficient findings of misconduct on the part of the Respondent to justify a reduction in the basic and compensatory award."

In fact, that ground has to be put the other way around, namely it should have said "Upon the facts found by the Tribunal, no Tribunal properly directing itself could have done other than to have reduced the basic and compensatory awards". We will treat the argument as if that had been the way the case had been put. One needs to look at the two awards, basic and compensatory, separately.

[9]Turning first to the basic award, we have to remember that for 122(2) the relevant conduct is only that before the dismissal or the notice was given and, so far as concerns the basic award, the Tribunal dealt with it at our page 14(i):

"That in relation to the basic award two matters discovered after the dismissal have to be considered. First of all the removal of money from the area behind the bar to the residential flat. On the balance of probabilities this occurred after dismissal and therefore cannot be taken into consideration. The second discovery was the loss of the Carling Black Label and the obliteration of the labels. The latter action probably was to try and hide the fact that the sell by date had been exceeded. However, the Respondent had in part contributed to this situation by failing to stop the over ordering of product. On balance the Tribunal considers the Applicant's conduct was such as to justify a warning but not dismissal without notice. The Tribunal therefore concludes it would not be just and equitable to order a reduction in the compensation."

[10]So the removal of the money was after dismissal and so does not fall to be considered within this particular provision. On the loss of the Carling Black Label and the obliteration of labels neither is explicitly held to have been the responsibility of Mr Harris. But, even assuming there were by him, it was for the Tribunal, as the industrial jury, to draw on their experience to decide whether such shortcomings were such that it was just and equitable to reduce the basic award. They held that no reduction was appropriate. It does not avail the Club to say that the Tribunal could have reduced the award on those grounds or even that, as I have said, most Tribunals might have done. The question is rather, as we have said, as to whether no Tribunal properly instructing itself could have failed to reduce the compensation.

[11]There is a little confusion in the reasoning, as we have to accept, because the Tribunal found that there had been a failure by Mr Harris duly to manage the cellar.

(k) :

"The Tribunal finds that this loss was primarily as a result of the failure of the Applicant to manage the cellar and the employer's claim succeeds to that extent."

It is not entirely clear that the Tribunal had in mind, when considering the reduction of the basic award, that failure to manage the cellar properly, but one should not go through these awards with a fine or, indeed, any other toothcomb! The failure to manage the cellar as mentioned in paragraph 14(k) seems to have consisted only of causing a loss of Carling Black Label and that had been mentioned in the Tribunal's paragraph 14(i). So, on balance, it does seem that that failure was borne in mind by the Tribunal when assessing whether or not there should be a reduction in the basic award. What it comes to is that, so far as concerns the basic award, we are unable to say that there is any arguable error of law.

[12]Turning, however, to the compensatory award (which, of course, is ultimately much greater in financial terms) one sees at paragraph 14(h) as follows:

"… in relation to the compensatory award the Tribunal does not make any finding of contributory fault. There was insufficient evidence at the time of dismissal to justify the decision to dismiss and in consequence to justify a reduction in the award."

And then they say in (j):

"That in relation to ordering a reduction pursuant to Section 123(1) of the ERA 1996 the Tribunal does not consider that the Respondent has made out a sufficient case to justify dismissing the Applicant. It does not consider that dismissal without notice for the mismanagement of the cellar would be within the reasonable range of responses in relation to an employee who had worked satisfactorily for more than two years and where the Club also had failed to exercise proper control over stock. The Tribunal also takes the view that even if a fair procedure had been adopted these deficiencies would not have been remedied. The Tribunal therefore does not consider it just and equitable to order a reduction in compensation."

[13]Now the question under Section 123(6) should have been whether there was any action of the complainant - impliedly any blameworthy or culpable action of the complainant - which to any extent contributed to or caused the dismissal, and if there was, what reduction in the compensatory award was accordingly just and equitable. Paragraph 14(h), as we have quoted it, seems to say that as there was no sufficient reason for a dismissal, there can have been no sufficient reason for a reduction. Paragraph 14(j) does nothing to remedy that, as we would see it, incorrect approach. Indeed, in 14(j) the last sentence which begins "The Tribunal therefore does not consider…" refers back to the position that it would have been if there had been a correct procedure in the dismissal, simply deepens the possible confusion. As Mr Robson has drawn to our attention, there is also real doubt about whether paragraph 13 is correct in law.

[14]There is thus an arguable case that there has been an error in law in the Tribunal's approach to failing to reduce the compensatory award. This aspect we see right to go forward to a full hearing. So much for the Club's argument 1. Argument 2 is in reference to what is called the 'rogue keg'. The conclusion which the Club argues for is in its skeleton as follows:

"A reasonable Tribunal, properly directing itself, ought to have concluded the keg originated from a source other than Newcastle Brewery, and gone on to consider whether its presence was due to any misconduct on the part of the Respondent."

[15]The story is as follows. There was a keg of poor beer. It was detected as such on 24 June 1998 in the absence of Mr Harris. On 25 June, Mr Harris thought, on testing it, that there was nothing wrong with it and he then went on holiday. On 26 June the keg was found, again in Mr Harris' absence, to have had its label either obliterated or to be missing. There was an internal conflict in the evidence on the Club's own side as to whether the labels had been obliterated or were missing. Then an expert identified it, on 26 June, as a keg that had not originated from the Newcastle Brewery, which was the brewery from which it should have originated if the beer within it was as it was thought to have been. On this subject the Tribunal said:

"(g) Mr Hunter [he is the expert to whom I have referred] then apparently identified the offending keg as not originating from the Newcastle Brewery. No evidence was given as to how this so-called 'rogue' keg was identified by Mr Hunter in the absence of labels. Equally, no evidence was given regarding the source of the contents as opposed to the ownership of the keg. Despite saying that the 'rogue' keg was not one of theirs the Newcastle Brewery nevertheless 'uplifted' the keg, that is took it away. As a consequence neither the Applicant nor the Committee of the Club had an opportunity to inspect the keg or trace its origins."

And a little later they say:

"No enquiries were made of the Applicant or other members of staff. The 'rogue' keg was disposed of. The purchase and stock records were not checked and no attempt was made to eliminate other possibilities or persons which would have either absolved the Applicant or established the nature of his misconduct."

[16]Now the Club is urging that the Tribunal should have held that the keg was a 'rogue' keg, but there were basic internal conflicts in the Club's evidence. Was the label entirely missing, or was it obliterated? If it was missing, how was the relevant keg reliably to be identified? If Newcastle Brewery concluded the keg had not come from Newcastle Brewery, why did it nonetheless take it away? On that view it was not its property to take away. There is no suggestion in the evidence that it had come to some arrangement in the Club that notwithstanding that it was not its property, it could nonetheless take it away. Moreover once it was taken away, how could the Club's case be fairly responded to by Mr Harris when he returned from holiday; the keg had been taken away and there was, it seems, no way of identifying it if it had either obliterated labels or missing labels and certainly not if it had missing labels. There were, in other words, a number of real doubts that presented themselves when the Tribunal came to look at the evidence. The Tribunal is the master of fact. It is said that it applied too high a standard of proof in testing this question. We find no indication of that having been the case. Whether it believed everything Mr Phillipson, the Club Secretary, said in his evidence was essentially a matter for the Tribunal in its overall view of the evidence as a whole. We cannot conclude that the Tribunal should necessarily have concluded that the keg came from some source other than the Newcastle Brewery. Argument 2, in other words, as it seems to us, discloses no error of law. That leaves argument 3.

[17]Before we turn to that we need to read some quotations from the decision of the Tribunal as follows:

"(k) On 17 July at about 10.30 am the Applicant was preparing the takings for banking later that day. He had already counted out £2,858 in notes and cheques and secured these with a rubber band preparatory to banking. Whilst he was in the process of counting the money he was summoned to the sub-committee, however, there was an uncounted sum of money in notes and cheques left over which the Applicant said he stuffed into his pocket. Neither the Applicant nor the Club witnesses could say if the cellar area had been locked or the safe closed and locked when they left. At the sub-committee the Applicant was advised that his job was at an end, that he had to vacate the flat within seven days and that he and his family must not enter the club."

And a little later they say:

"(m) Miss Nightingale stated that as the Applicant left with his personal papers she saw him carrying a bundle of notes behind the papers. The Applicant denies that he took any money at that point but admits that later that day after he had returned to his flat and changing his clothes he became aware of the money he had stuffed into his pocket. In a state of anger about his dismissal he did not take any steps to return to money but left it in the bedroom where he found it. The money did not therefore leave the employer's premises."

And lastly at these quotations:

"(o) On Saturday the 18 July Miss Nightingale told Mr Phillipson about seeing the Applicant with the money. Mr Phillipson called the Police. The Police entered the flat with Mr Phillipson who asked the Applicant if he had any money, he immediately replied yes and went to the bedroom and produced a bundle of notes and cheques. The Applicant was arrested. The Police conducted a thorough search and found no other money. The Police later decided not to take any action and handed the Club the money the Applicant had handed to them, namely, £750.00 in cash, plus a cheque for £20.00."

[18]It is sought by the Club in their argument before us, presented by Mr Robson, to say this:

"No reasonable Tribunal, properly directing itself, could conclude the money was taken after dismissal having initially made those findings of fact."

The Club's argument seems to us to assume that the stuffing of cash into Mr Harris's pockets by Mr Harris represented a taking by him for his own purposes and they say that the Tribunal's findings come to that conclusion. The Club Skeleton Argument says:

"From the Tribunal's own findings Respondent has stuffed an uncounted amount of money in his pockets prior to his dismissal which he has taken to his flat and made a conscious decision not to return it."

[19]We respectfully beg to differ. He was counting out Club money; the process was interrupted. It is unclear whether the area he was doing the counting was safe in terms of being an appropriate area for leaving out loose money. He stuffs the money into his pocket; he does not leave the premises but goes to the Club Committee hotfoot. This is, so far, consistent with an intent, before the later dismissal (which, of course, he did not know then was going to happen) to return later to complete the counting process. But in fact he is dismissed. Accordingly, as the Tribunal held, in a state of anger about his dismissal he did not take any steps to return the money but left it in the bedroom. The money therefore did not leave the employer's premises. When challenged, as we have read from the citations, he immediately produced the money from where he had put it, so there seems to have been no attempt to have hidden it. There was no prevaricating; he had not left the Club premises with it, nor had the money left the Club premises. There was no finding, in fact, of a conscious decision not to return it but rather that he did not take steps to return it but left it in the bedroom. Moreover, the dumping of the money in the bedroom was manifestly after the giving of notice or the event of dismissal.

[20]Returning to the Club's Skeleton, the allegation it makes is this:

"No reasonable Tribunal, properly directing itself, could conclude the money was taken after dismissal having initially made those findings of fact."

That, as we see it, not a justified conclusion. We cannot find that to be the case. In other words we find, on this argument 3, no error of law and we do not allow that argument to go forward to a full hearing. Accordingly, we shall allow only the question of whether there should have been any, and if so, what reduction in the compensatory award to go forward to a full hearing.