VFG PLC v MRS M BARNES [2001] UKEAT 1322_00_2603

EMPLOYMENT APPEAL TRIBUNAL
BAILII case number: [2001] UKEAT 1322_00_2603Case No Appeal No. EAT/1322/00Venue 58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS
Between
VFG PLCAPPELLANTMRS M BARNESRESPONDENT
Before
Mr Recorder LangstaffDate 26 March 2001
[1]APPEARANCES For the Appellant MR ADRIAN LYNCH (One of Her Majesty's Counsel) Instructed by: Messrs Greenwoods Solicitors Monkstone House City Road Peterborugh PE1 1JE MR RECORDER LANGSTAFF QC We have before us a Preliminary Hearing in an appeal by the employer from a decision of the Employment Tribunal sitting at London Central, which was promulgated on 14 September 2000. They had heard a case over some four days and went to 19 pages in delivering those Extended Reasons, which seem to us on the whole to be carefully, closely and comprehensively argued.[2]We have two separate groups of grounds of appeal. The first are in respect of liability. It is said that the Employment Tribunal had no proper basis for concluding as they did at page 18, paragraph 33(a) that the employer had not made out the ground for dismissal. The essence of Mr Lynch's point is that in using the words in the middle of paragraph 33(a): "The work of the department in which Mrs Barnes was employed had not ceased or diminished nor was expected to cease or diminish." is insufficient a recitation of the appropriate test. We have been very conscious throughout his submissions of the need to treat an Employment Tribunal decision as a whole and not to focus over much upon particular phrases. Suffice it to say that we have, with considerable hesitation, eventually been persuaded that there may be an arguable ground of appeal here but we express no view as to its prospects of success.[3]We note however that there is no appeal against the apparent finding of the Employment Tribunal at the foot of the page to the effect that the dismissal was unfair not only substantively in the view of the Employment Tribunal but also procedurally for reasons which they have developed.[4]The second set of grounds of appeal relate to compensation. Here, Mr Lynch makes a number of points and has applied in addition for leave to amend the notice of appeal. The points that he makes in essence are these. That the Employment Tribunal come to a surprising conclusion in determining that the employee should be entitled to no less than 5 years loss of earnings at a rate which he equates to something in the region of £16,000 per annum gross. He criticises this in particular taking into account the facts that she appears to have accepted a job. This is paragraph 43, page 18 of the Decision - (b) - because it was more congenial and essentially he says she took a job because she was happy with it. He draws our attention to the way in which the duty to mitigate loss is set out in the McGregor on Damages at page 189 citing the words of Lord Wrenbury:
"It is undoubted law that a plaintiff who sues for damages owes the duty of taking all reasonable steps to mitigate the loss consequent upon the breach and cannot claim as damages any sum that is due to his own neglect. But the loss to be ascertained is the loss at the date of the breach. If at that date the plaintiff could do something or did something which mitigated the damaged, the defendant is entitled to the benefit of it."
And he draws our attention also to the words of Pearson LJ from Darbishire v Warren which appear in the text about that footnote on the same page.[5]Essentially, he says the Tribunal here are perverse. The "My goodness, that looks wrong" test can be applied. He suggests the Tribunal has not approached the question of mitigation of loss in the right manner. We have no hesitation in rejecting those submissions. It seems to us that taken as a whole, and not focussing over much on any particular phrase to the exclusion of the sense, what the Tribunal did at page 17 from (ii) onward that was to consider the question of future loss.[6]They say in terms:
"We find that Mrs Barnes acted reasonably in relation to the mitigation of her loss."
That, we think, is rendering albeit in compressed language the test to which Lord Wrenbury gave voice. Moreover, whether an employee has mitigated loss is for the employer to prove. He has to show that an employee has acted unreasonably in failing to mitigate loss. Taken as a whole what we think what the Employment Tribunal were saying from (a) – (e) in paragraph 43 was that Mrs Barnes obtained alternative employment. She did so in a company which was smaller and therefore would pay her less but that the job was secure and had prospects of improvement and both security and prospect were important to her given her recent experience of peremptory dismissal from the Appellants.[7]We think that it is plain that the Employment Tribunal had in mind the arguments that might be made in respect of the extent of the loss in having concluded that it was not unreasonable for, or shall I say, it had not been shown to be unreasonable by the Appellant for the employee to take and to remain in that employment, such that they could calculate loss upon the basis that she was earning substantially less per year at least at the start.[8]Mr Lynch, in an interesting argument submitted that (a) the Employment Tribunal in focussing upon the words "the fact that Mrs Barnes was dismissed without warning, and that this was a traumatic event for her," may have been awarding damages for the manner of dismissal. This, he says would on present authority probably be impermissible because that is the effect of existing authority in this Tribunal or at least in its predecessor the Industrial Relations Court. He drew our attention to the case of Vaughan v Weighpack [1974] ICR 261. He quite properly has noted that in this speech of Lord Hoffman is an obiter dictum dealing with the question of compensation for unfair dismissal which was not before the Court.[9]He observed that in paragraph 55 he could see no reason why in an appropriate case compensation which was just and equitable within the statute could not include compensation for distress, humiliation, damages to reputation in the community or to family life. But that he submitted, and we think entirely correctly, is obiter and though obiter of high and recent authority would found an interesting argument rather than be a conclusive point.[10]He submits that in order to argue the point the case could usefully be allowed to pass to a full Inter Partes hearing. We think however, that if one looks at paragraph (a) in the context to which it comes, taken as a whole one never gets to that argument. It is in a section which deals with future loss specifically. It does not therefore purport to award damages for the manner of dismissal.[11]Moreover, the computation of the damages is set out arithmetically at the foot of page 18 of the Reasons. There is nothing in those to suggest that any different element or additional element was applied in respect of the manner of dismissal. We think that one has to take that sub paragraph with the next in order to make sense of what the Employment Tribunal was saying. We reject the submission that the Tribunal here have been so vague as to fall foul of the well known principal in Meek v City of Birmingham. Taken as a whole the parties know perfectly well why they have won, why they have lost and why as much as was being awarded was being awarded.[12]Accordingly, although interested in the argument we think it is not worthy of pursuit further. There were, however, two aspects of the award in respect of compensation which prompted Mr Lynch to seek leave to amend to add a further ground in these terms. That the Employment Tribunal erred in law in the method by which it calculated loss without reduction over a five year period and in being unduly generous in its reduction for accelerated payment. There are two points there. First, it appears, taking the same approach of looking at the judgment as a whole that at the bottom of page 17, in the last paragraph on that page, the Tribunal were considering evidence given and submissions made in the light of Mrs Barnes' view that in her employment with her new employer she would gradually catch up to the employment level which she had enjoyed with the Appellant. The Employment Tribunal were considering what appear to have been rival submissions as to whether that might take three years as the Appellants were submitting or seven years.[13]Turning then to paragraph 44, one again has the sense that the Employment Tribunal may well be describing a process in which a salary which begins by being £11,050 less than that which the employee would have enjoyed had she remained in the service of the Appellant reduces to nothing less. If that is the proper way of so reading this decision then there would be a tapering loss in respect of which the average over the five year period would, if the taper were arithmetical, be exactly half of the net annual loss calculated by the Employment Tribunal. We think that there may be force in so regarding the way in which the Employment Tribunal calculated the loss.[14]The second point which Mr Lynch makes is that the discount for accelerated payment is at 10 per cent out of step with the discount which would be given had this case arisen in the personal injury context, in which very considerable effort and brain power has been devoted to deciding what assumptions should be made as to the real rate of return on investment after allowing for inflation in any year.[15]It should be noted that the conventionally accepted discount rate in such cases which has the approval of the House of Lords in Wells v Wells is 3 per cent. If it is appropriate to adopt that and if it was something to which the Employment Tribunal should have had regard - those propositions which will need to be argued fully - then the effect would be to make a reduction of 14 per cent rather than 10 per cent. Ten per cent allows for an interest rate in real terms of just over 2 per cent per annum.[16]We think both that there is an arguable point here which the Appellant should be entitled to pursue and secondly that the Employment Appeal Tribunal considering this matter may wish to consider whether and if so to what extent an Employment Tribunal should have regard to the practice in other jurisdictions dealing with cases of a very similar nature, particularly bearing in mind the extent to which the jurisdictions may, given recent developments, overlap more than they used to.[17]We accordingly give permission for this case to go to a full hearing upon the limited basis which we have outlined both in respect of liability and in respect of quantum. But in other respects we dismiss the Appeal so far as it relates to the grounds of appeal, which we have considered and rejected in this decision and it is for that reason that this decision is rather longer than it might otherwise have been.[18]We would suggest that we should order that this matter be set down for three hours. Skeleton arguments fourteen days beforehand, please. Bundle of Authorities to be relied on copied seven days before the case – Category B.