MR L C LOVELL v FRANCES CLARKE LTD [2000] UKEAT 285_99_1212

EMPLOYMENT APPEAL TRIBUNAL
BAILII case number: [2000] UKEAT 285_99_1212Case No Appeal No. EAT/285/99Venue 58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS
Between
MR L C LOVELLAPPELLANTFRANCES CLARKE LTDRESPONDENT
Before
Mr Justice Bell Ms J Drake Mrs R A VickersDate 12 December 2000
[1]APPEARANCES For the Appellant MR MARTIN GRIFFITHS (of Counsel) Messrs Gadwah Solicitors 245-249 Whitechapel Road London E1 1DB For the Respondents NO APPEARANCE BY OR ON BEHALF OF THE RESPONDENTS MR JUSTICE BELL : This is an appeal by Mr Lovell against the decision of the Employment Tribunal, the Chairman sitting alone, at Stratford on 10th September and 26th October 1998. The decision was originally promulgated with summary reasons on 25th November 1998; extended reasons followed on 11th January 1999. The respondents have not attended this Appeal Tribunal hearing this morning. They have written a letter indicating that they do not propose to oppose the appeal. But as we propose to allow the appeal it is only right that we should give reasons for our decision in the form of a judgment so that the tribunal whose decision we are overruling may appreciate what the reasons for the course we take are and in case our judgment may assist the fresh tribunal which must reconsider the matter. The position is this. Mr Lovell began work as a security guard for the respondent security company on 25th June 1996. His contract of employment consisting in part of the clauses in the respondent's staff handbook provided that he should be given at least one week's notice of termination of his contract. See Clause 21. He was entitled to at least one week's notice by virtue of section 86(1)(a) of the Employment Rights Acts 1996 , having been in continuous employment for less than two years. As long as the respondent did not acquire the right "to treat the contract as terminable without notice by reason of the conduct of the applicant" as provided by section 86(6) of the 1996 Act, that subsection preserves the common law so far as summary dismissal is concerned. Clause 26 d. of the respondent's staff handbook provided in respect of "Gross Misconduct" that:
"The following on the part of an employee will be regarded as Gross Misconduct …"
Then appear a number of bullet point items such as convictions for theft, offences of dishonesty, offences of a sexual nature, fighting or assault and other serious matters and then:
"( Any action that is contrary to the best interests of the Company (ie, a number of false arrests). ( Any action that may jeopardise the Company's relationship with a customer."
Clause 27 provides in part:
"… If on completion of the investigation and full disciplinary procedure, the Company is satisfied that gross misconduct has occurred, the result will normally be summary dismissal without notice or payment in lieu of notice."
Mr Lovell was summarily dismissed without notice or payment in lieu of notice on 3rd April 1998.[2]Mr Lovell's Originating Application alleged firstly, breach of contract/wrongful dismissal; secondly, breach of contract/unlawful deduction of wages and thirdly, unfair dismissal. Since Mr Lovell had less than the necessary two years' continuous employment to allow him to complain of unfair dismissal, see sections 94 and 108 of the 1996 Act, that part of his complaint was stayed pending the final determination by the House of Lords of the case of Seymour-Smith . As a result of the final decision in that case, there is no prospect of it going ahead. There is no challenge to that first part of the tribunal's decision. That left the questions of alleged wrongful dismissal in alleged breach of contract; breach of contract leading to the unlawful deduction of wages and generally the final consequences of any wrongful dismissal or breach of contract.[3]Those claims were based, firstly, upon the fact that Mr Lovell was dismissed without notice and, secondly, upon a contention that the complaint against him was not properly investigated in accordance with the terms of his contract as set out in the respondent's staff handbook.[4]The decision of the tribunal was that Mr Lovell had not been wrongly dismissed and that there had been no unauthorised deduction from his wages. It is that second part of the decision which is challenged by this appeal.[5]At the time of his dismissal Mr Lovell was 57 years of age and he was working at the Woolworth's store in Forest Gate as he regularly did. Woolworth was a valued client of the respondent. The store at Forest Gate was a priority store with a categorisation which arises if there are frequent incidents of dishonesty or violence of both. On 28th March 1998 a Mrs Russ was shopping in the store accompanied by two small children. She indicated to Mr Lovell that she had seen a man, "the suspect", attempting to steal a toy. Mr Lovell spoke to her to confirm her identification of the suspect. According to Mrs Russ the suspect then approached her and with Mr Lovell standing nearby sprayed her in the face with a can of weed killer. The main thrust of the complaint which she later made was that Mr Lovell did not arrest the suspect. There was no issue about use of the weed killer, but Mr Lovell's account of the matter was that he did not see it used on Mrs Russ. Mrs Russ had spoken to him about the theft of a toy and he had kept a watch on the suspect. A little later Mrs Russ screamed words to the effect that the suspect had sprayed something in her eye. But he, Mr Lovell, did not see that. Mr Lovell stopped the suspect and asked him to see inside his bag which was empty. That was a breach of the respondent's instructions to its staff to the effect that security guards should not search property with or without consent. Mr Lovell then allowed the suspect to leave. It was part of his case that the respondent's instructions to security guards were to arrest only in certain very limited closely defined circumstances. The tribunal preferred Mrs Russ' account of events to that of Mr Lovell. It found that Mr Lovell was a short way from Mrs Russ when she was attacked and did nothing to prevent the attack. It found that the search which Mr Lovell carried out of the suspect's carrier bag for a stolen toy was irregular. It found that Mr Lovell then allowed the suspect to leave. It found that in the course of the bag inspection another customer was remonstrating with the suspect who did not deny the offence of spraying noxious liquid into the face of Mrs Russ.[6]Mr Lovell was under an obligation to report an incident such as that which occurred to the respondent at the earliest opportunity. He did not do so. He drafted a report by letter which he sent to his line manager on 30th March 1998, but the first information which the respondent received was a telephone call from the manager of the Woolworth's store to Mr Middlebrook, the respondent's Southern Regional Support Manager. Mr Middlebrook carried out various enquiries. He suspended Mr Lovell. A disciplinary hearing was held on 3rd April 1998, during which Mr Lovell took issue with whether he had seen the suspect spray Mrs Russ in the face but did admit that when he stopped the suspect in order to search his bag he knew that he was the man who had by then sprayed a noxious substance into the face of Mrs Russ[7]The tribunal made a number of findings in respect of the disciplinary hearing. On 9th April 1998 the respondent wrote to Mr Lovell saying that he had been summarily dismissed, as in fact he had been told on 3rd April, for gross misconduct. Mr Lovell appealed in accordance with the respondent's disciplinary procedures. That appeal was heard by a Mr Jansen. Mr Lovell did not call any further evidence himself, but by the time of the appeal hearing he had received Mrs Russ' letter of complaint and Mr Lovell indicated that Mrs Russ' account was not the truth as he had not seen the actual attack. He asked for Mrs Russ to be interviewed, but so far as we are aware that never happened. In the event, on 5th May 1998 the respondent confirmed that the decision of Mr Middlebrook dismissing Mr Lovell was upheld.[8]The first and most fundamental ground of appeal put forward by Mr Griffiths on behalf of Mr Lovell is that in judging Mr Lovell's complaint of breach of contract/wrongful dismissal, the tribunal erred in law in adopting an approach which was appropriate to an allegation of unfair dismissal, which was not in issue for jurisdictional reasons, rather than the approach which is appropriate to an allegation of wrongful dismissal in breach of contract, which was the matter in issue before the tribunal. It is trite law that where the issue is wrongful dismissal in breach of contract for failure to give appropriate notice or pay in lieu of notice, but entitlement to summary dismissal is claimed by the employer, the question is whether the employee's conduct complained of amounted to so serious a breach of contract as to justify summary dismissal without notice or, to put the matter more technically, whether the conduct complained of was such as to show that the employee had disregarded the essential conditions of his contract of employment. That is the well-established common law. The respondent's definition of gross misconduct or the parts of it to which we have expressly referred and quoted, was very wide and general and might well include matters which did not in fact justify summary dismissal by the test which we have related. Unfair dismissal, however, is the creature of statute and subject to special provisions relating to particular circumstances, the tribunal must ask the questions raised by section 98 of the 1996 Act and examine the reason for dismissal: whether it is one which falls within section 98(2) and, if so, whether the dismissal is fair or unfair, having regard to whether the employer acted reasonably or unreasonably in treating the reason as sufficient for dismissal and in accordance with equity and the substantial merits of the case[9]Mr Griffiths contends that the tribunal confused the two tests in Mr Lovell's case. In paragraph 6 of the tribunal's extended reasons it described the issues in contention between the parties as follows:
"(i) Were the Respondent's procedures breached in the course of dismissing Mr Lovell? (ii) Was the decision to dismiss an unreasonable one based upon insufficient evidence gathered in the course of an inadequate investigation? (iii) As a consequence, was the dismissal a wrongful one which resulted in the loss of monies which would have been payable to the Applicant whilst he was investigated in a thorough way, outstanding holiday pay and loss of notice money? (iv) In the alternative, was the failure to pay the aforementioned monies and an unauthorised deduction from Mr Lovell's wages?"
[10]In our view, the first two of those questions were questions which would have been relevant to an issue of unfair dismissal rather than wrongful dismissal. At paragraph 7 the tribunal said:
"In this case the Tribunal heard from Mr Lovell who bore the burden of proving on the balance of probabilities that the Respondent company had wrongfully dismissed him in breach of his contract of employment. …"
That shows the tribunal focussing on the question of wrongful dismissal. At paragraph 9 the tribunal referred to receiving the testimony of Mrs Russ and continued:
"It should be made clear at this juncture that the issues concerning the truthfulness of events that took place on 28 March 1998 is not the direct concern of this Tribunal. The Tribunal is more concerned to resolve the issue as to whether or not contractually fair and proper procedures were carried out in the course of an investigation which could justify the summary dismissal of Mr Lovell."
The tribunal went on to give reasons for preferring the accuracy of Mrs Russ' evidence to that of Mr Lovell, but the point is, in our view, that if the tribunal was asking itself the right question about wrongful dismissal, the facts of the events on 28th March were of the utmost potential importance. Procedures during the investigation would have been more relevant if the tribunal had been considering questions of unfair dismissal, although they were also relevant to Mr Lovell's allegations of breach of contract by the respondent in not following its own procedures. It is true that towards the end of the extended reasons there are indications that the tribunal did consider the question of alleged gross misconduct on Mr Lovell's part and there are indications that it was actually answering the right question so far as wrongful dismissal is concerned, but the matters to which we have already referred including, in our view, the posing of the wrong test so far as wrongful dismissal is concerned, leave us with the firm view that the decision of the tribunal cannot stand. Having posed the wrong questions initially, we can have no confidence in the ultimate conclusion which the tribunal came to.[11]The second ground of appeal put forward by Mr Griffiths is that the tribunal wrongly reversed the burden of proof in the circumstances of this case. Overall of course the burden of proving wrongful dismissal lay on Mr Lovell, but it was accepted that he had been dismissed without being given the notice to which he was contractually entitled or being paid wages in lieu of notice. In those circumstances, if the position had rested there, Mr Lovell would succeed on his claim for wrongful dismissal. So, it effectively fell to the respondent to prove that he was in fundamental breach of contract if it was to justify his summary dismissal.[12]We have already referred to part of paragraph 7 of the tribunal's extended reasons, where it spoke of Mr Lovell bearing the burden of proving that the respondent company had wrongfully dismissed him in breach of his contract. In the final paragraph of its extended reasons, paragraph 19, the tribunal concluded:
"Subsequently, reasons for the dismissal of the appeal were given and on the evidence before the Tribunal it has concluded that Mr Lovell has not succeeded in discharging the burden of proving that he was wrongfully dismissed. …"
Those statements in both those paragraphs seem to us to have left the burden with Mr Lovell in a way which was not justified by the circumstances of this particular case, certainly so far as a wrongful dismissal without notice was concerned. Of course the burden lay upon him if he was to succeed in his claim of breach of contract for failure to follow the respondent's disciplinary procedures to prove that they had failed to follow them, a contention in which he failed in the eyes of the tribunal, but in our view the tribunal misstated the effective burden of proof in relation to the main allegation of wrongful dismissal in this case. For that reason also, it seems to us that this appeal must be allowed.[13]We bear in mind the cases of Dobie and Brache which invite the Appeal Tribunal to consider whether, even if there has been a misdirection of law or a procedural irregularity, there is any purpose in sending the matter back to an Employment Tribunal, if, despite the misdirection of law or procedural irregularity, it is plain that the result would be just the same, but this is not such a case. We therefore remit the matter to a fresh tribunal for a complete rehearing.[14]The question then arises of whether the fresh tribunal should be a Chairman alone or a full tribunal of three members. In the present case, as we have already indicated, the original tribunal consisted of a Chairman alone. On 2nd July 1998 the Employment Tribunal by letter stated that a Chairman of the Tribunals had directed:
"… that a Chairman sitting alone shall hear and determine the contract deductions claim." and that at the same hearing the Chairman would consider any arguments as to the appellant's entitlement not to be unfairly dismissed "having regard to the provisions of Section 108(1) of the Employment Rights Act 1996"
. No opportunity was given to Mr Lovell or his legal representatives to argue that the wrongful dismissal and breach of contract and unlawful deductions claims should be held by a full tribunal. Section 4(1) of the Employment Tribunals Act 1996 provides:
"Subject to the following provisions of this section proceedings before an employment tribunal shall be heard by- (a) a person whom in accordance with regulations made under section 1(1), is the chairman, and (b) two other members, or (with the consent of the parties) one other member selected as the other members (or member) in accordance with regulations so made."
Subsection (2) provides:
"Subject to subsection (5), the proceedings specified in subsection (3) shall be heard by the person mentioned in subsection (1)(a) alone."
That is a Chairman alone. The proceedings in respect of wrongful dismissal, breach of contract and unlawful deductions were proceedings which fell within subsection (3), but subsection (2) says that adjudication by a Chairman alone in such proceedings is subject to the provisions of subsection (5). Subsection (5) provides that in deciding whether a Chairman alone may hear particular complaints which could be heard by him in accordance with the earlier provisions of section 4, regard must be had to a number of factors, for instance whether there is a likelihood of a dispute arising on the facts which makes it desirable for the proceedings to be heard in accordance with subsection (1); whether there is a likelihood of questions of law arising which would make it desirable for the proceedings to be heard in accordance with subsection (2); any views of any of the parties as to whether or not the proceedings ought to be heard in accordance with either of those subsection, and, finally, whether there are other proceedings which might be heard concurrently which are not proceedings specified in subsection (3).[15]In this case, as we have already said, Mr Lovell was not consulted as to the constitution of the tribunal. It appears to us that the nature of the issue of fact which he took with the evidence of Mrs Russ, as well as the question of whether any breach of contract by him was sufficient to justify summary dismissal, called for adjudication by a full tribunal of three members. Moreover, there is no evidence before us that when the decision was made that the matter should be adjudicated upon by a Chairman alone the factors in subsection (5) were considered. The decision that the matter should be tried by a Chairman alone was made before authorities of this Appeal Tribunal made it clear that real consideration should be given to the factors in subsection (5) before any decision on the constitution of a tribunal is made. We are entirely convinced that the tribunal which rehears Mr Lovell's complaints upon remission by us, should be a full tribunal of three members and it is to such a tribunal that we remit the matter.[16]Mr Griffiths set out a ground of appeal alleging that the decision of the tribunal was perverse on the facts. We say nothing more about that, lest anything we say should be interpreted as a hint as to the course which the new tribunal should take on the facts. That is a matter entirely for the fresh tribunal. But for the reasons which we have given, this appeal is allowed.