READ VALE MANUFACTURING COMPANY LTD v (1) MR JOHN MCCORMACK (2) MR IAN MCCARTHY [2001] UKEAT 349_00_1903

EMPLOYMENT APPEAL TRIBUNAL

BAILII case number: [2001] UKEAT 349_00_1903

Case No Appeal No. EAT/349/00

Venue 58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

Between

READ VALE MANUFACTURING COMPANY LTDAPPELLANT

(1) MR JOHN MCCORMACK (2) MR IAN MCCARTHYRESPONDENT

Before

Mr Justice Hooper Ms G Mills Mr J C Shrigley

Date 19 March 2001

[1]APPEARANCES For the Appellant MR CARLO BREEN (of Counsel) Messrs Shammah Nicholls Solicitors St John's Court 78 Gartside Street Manchester M3 3EL MR JUSTICE HOOPER We are grateful to Mr Breen for the succinct and persuasive way that he has put the matters to us today but nonetheless we are unanimously of the view that there is no arguable ground of appeal and accordingly the appeal is dismissed.

[2]The Appellant, Read Vale Manufacturing Company Ltd appeals against the decision of the Employment Tribunal sitting at Manchester in September and November 1999. The extended reasons for that decision were sent to the parties on 17 January 2000 and will be found set out starting at page 13 of the bundle. There is also an appeal against the refusal on the part of the Tribunal to review the decision, the extended reasons for that can be found set at page 21 of the bundle.

[3]Before us today, Mr Breen has sensibly reduced his attack on these decisions to two grounds, the first of which is the more substantial. The Appellant was represented by a solicitor, Mr Shammah. He has not made a statement. It is the Appellant's case that Mr Shammah was severely restricted in the cross-examination of the two Respondents. Paragraph 2 of the skeleton argument reads as follows:

"The Appellant avers that it was severely restricted in its cross-examination of the Respondents on the issue of the apparent theft that had taken place. In particular the Learned Chair Person refused to permit the Appellants' representative to cross-examine either Respondents on this issue or to lead evidence on behalf of the Respondents on this issue insofar as the entire sequence of events is concerned from the 13 th November to the 30 th November 1998 concerning the allegations of theft made by third parties against the Respondents. That determination was causative of the Employment Tribunal being unable to form knowledge of the circumstances by which allegations of a most serious nature were made and which were considered as serious by the police, they having arrested both Respondents."

The effect of this is that Mr Shammah ought to have been allowed to cross-examine on the issue whether the theft had in fact taken place and also about the entire sequence of events.

[4]In paragraph 3, the skeleton argument reads as follows:

"Pursuant to the Chair Person's comments insofar as this appeal is concerned she admits at Paragraph 6 that "

During the course of cross-examination of the first witness of the Applicant Mr McCarthy, Mr Shammah began to ask questions clearly relevant to the issue as to whether Mr McCarthy had in fact stolen stock from the company. I ruled that the Tribunal was not going to try the innocence or guilt of the Applicants concerning the allegation of theft or stock. That was not a relevant issue". Paragraph 3 goes on to state, that the refusal to allow the Appellant to lead evidence on:

"this issue" was an error: "this evidence was crucial and pointed to the dishonesty of both respondents"

[5]Before us today Mr Breen rightly accepted that the Chair of the Tribunal was right to rule that Mr Shammah not be permitted to ask questions about whether or not the employee Respondents were guilty of theft. Nonetheless he submits that Mr Shammah ought to have been allowed to investigate more fully:

"the whole sequence of events"

[6]To understand that submission we turn to the facts as set out in the extended reasons of the first decision:

"9 Having considered all the evidence, including the documentary evidence we have made the following findings of fact. Where a conflict of evidence arose we resolved the same in accordance with the following findings:- 9.1 At the beginning of November 1998 each of the applicants, Ian McCarthy and John McCormack, was employed by the respondent company as Warehouse Supervisor and Warehousemen respectively. They had been so employed for a number of years. (There is a conflict as to the date of commencement of employment, yet to be resolved). 9.2 In early November 1998 information was received by the respondent to the effect that they were suffering from theft of stock and that each of the applicants may be involved. 9.3 In the week commencing Monday 23 November 1998 an investigation was carried out by the respondent into stock losses. At lunchtime on Thursday 26 November 1998 one of the company's officers, Mr Cazaly, told the applicants jointly to seek legal advice. He did not say why. Therefore each of the applicants obtained permission from Mr Horwich, the Managing Director of the respondent company, to seek legal advice over the lunchtime period, to begin lunchtime half an hour earlier, and to return at 2 pm. Neither of the applicants returned to work at 2 pm. The applicant, Mr McCarthy, telephoned Mr Horwich later in the afternoon of Thursday 26 November 1998 and told Mr Horwich that he would not be coming back to work. Mr Horwich asked him Mr McCormack's intentions. Mr McCarthy replied that he could not speak for Mr McComack, but he, Mr McCarthy, did not think that John (Mr McCormack) would be coming back either. ( There is some conflict of evidence as to the exact words used by Mr McCarthy. On balance we find that Mr McCarthy used the words to the effect that he was not coming back to work. He did not elaborate on that, he did not add "at all" or "this afternoon"

. No time was mentioned). 9.4 On Friday 26 November 1998 neither of the applicants reported for work. They both went to a funeral. Mr McCormack rang work on the morning of Friday 26 November 1998 at approximately 11.30am, spoke to Mr Cressy and told him that he and Mr McCarthy were at a wake, and asked if there wages could be given to one of their colleagues. Mr Cressy said that this was not possible because Mr Horwich was not there to authorise this. (There was a conflict of evidence as to the exact words used by Mr McCormack. On balance we find that the conversation was restricted to the whereabouts of the applicants and a query about payment of wages. No conversation took place about the applicants' employment. In particular we reject Mr Cressy's evidence before the Tribunal that he, Mr Cressy, spoke with Mr McCormack about, in particular, the telephone call from Mr McCarthy to Mr Horwich the day before and about the applicants' intentions regarding return to work. No mention of any such conversation is made in Mr Cressy's written note of that telephone conversation, written within 2 days thereafter. Mr Cressy never told Mr Horwih of any such conversation. It was raised for the first time before this Tribunal.) 9.5 On Monday 30 November 1998 each of the applicants reported to work late to find that the locks to the workplace had been changed and they could not gain access. They went to a different company premises to speak to Mr Horwich. Mr Horwich spoke to each of the applicants in the car park of the company's premises while the applicants remained seated together in one car. The applicants asked about their wages. Mr Horwich informed them that their wages would be withheld while the company investigated the missing stock. The applicants asked what was happening. Mr Horwich replied "You're not getting them while the investigation is going on". At this, the applicants drove off in their car. No express words of dismissal, resignation or suspension were used during that conversation. There was no acceptance by Mr Horwich of any resignation by the applicants. The respondent did not invite the applicants to remain at work. The applicants could not gain access to work because they were locked out and were not invited in. They did not specifically ask to be let in. 9.6 Each of the applicants received a letter dated 3 December 1998 from the respondent's solicitors. That letter contained no words of dismissal, no words accepting any resignation. 9.7 By that letter dated 3 December 1998 the respondent's solicitors, on behalf of the respondent, requested each of the applicants to attend a disciplinary hearing to deal with two matters, firstly the investigation of stock losses and secondly to give a detailed explanation of their absence from work for the period commencing Thursday 26 November 1998 "to date". That letter contained no words of dismissal, no acceptance of any alleged resignation by the applicants prior to that date. 9.8 A disciplinary meeting was held on 7 December 1999. Neither of the applicants spoke any express words of resignation during the course of that meeting. They asked "How do we stand? Are we suspended?" Mr Horwich replied "You walked out, you will hear". Mr McCormack then asked "What about our P45s?" Mr Horwich replied "Use your lawyer." Mr McCormack continued "If we want to work somewhere else we need a P45". Mr Horwich replied "You will hear shortly through a letter either from us or from the solicitor". 9.9 After the disciplinary hearing each of the applicants signed on and made application for Jobseeker's Allowance. Both applicants stated in their application for Jobseeker's Allowance that they had been suspended from work. 9.10 The applicants never received a P45 from the respondents. 9.11 Each of the applicants began looking for alternative employment in December 1998.

[7]The thrust of the appeal relates to the manner in which the Tribunal is said to have approached what was said by Mr McCarthy on the afternoon of 26 November as set out in paragraph 9.3. It seems clear to us that the case that was being put to the two employees was that they had not returned to work because they had been arrested and charged and in effect knew that there would be no further work for them. The words used showed an intention to resign, so it is submitted.

[8]We pressed Mr Breen on what precisely Mr Shammah was not allowed to ask. We have already cited from the skeleton argument paragraph 6 of the Chairman's comments. We ought also to refer to paragraphs 7 and 8: "7 It is therefore correct to say that I ruled that the innocence or guilt of the applicants, in relation to the allegations of theft or [of] stock, to be irrelevant. Evidence and cross-examination to that extent only was restricted. 8 I would not agree that the respondent's representative was not allowed to cross-examine the applicants or lead evidence on behalf of the respondent in relation to the entire sequence of events from 13 November 1998 concerning the allegations of theft. In particular, the events from Friday 20 November 1998 to 30 November 1998 were on the subject of detailed cross-examination of both applicants in relation to the central issue of whether the applicants had been suspended or had resigned. Each of the applicants were asked in cross-examination about their role in the investigation of stock losses, including their role in a stock reconciliation. Further, the relevant aspects of the disciplinary hearing on 7 December 1998 was the subject of evidence-in-chief, cross-examination and questions from the panel. It will be noted that contrary to what is said in the skeleton argument, the events of those few days were the subject of detailed cross-examination of both applicants in relation to the central issue of whether the Appellants had been suspended or had resigned. Again they were asked detailed questions about their role in the investigation of stock losses. Although we pressed Mr Breen who was not present before the Industrial Tribunal, he was unable to tell us precisely what it was about which Mr Shammah is now making complaint. What was it that he was forbidden to ask, other than questions as to their guilt or innocence? Having heard him we find no material upon which we can say that Mr Shammah was wrongly prevented from asking questions which he ought properly have been allowed to ask.

[9]Mr Breen then took the point that the Tribunal did not properly take into account the events surrounding the theft in determining whether or not the words used indicated resignation or not. This being a central issue in the case, the Tribunal devoted some considerable amount of time in their extended reasons to considering it. We set out here the whole of paragraph 10 and the whole of paragraph 11 which can be found at pages 18 and 19 of the bundle : "10 We have considered all the circumstances of the case to determine whether the words and conduct of each of the applicants, at any time or over a period of time, amounted to a resignation by one or both of them. We remind ourselves that unambiguous words of resignation may be taken at their face value without the need for any analysis of the surrounding circumstances, unless special circumstances arise. We further remind ourselves that the test as to whether ostensibly ambiguous words and/or conduct amount to a resignation is objective. All the surrounding circumstances must be considered. If the words are still ambiguous, the question is how a reasonable employer or employee would have understood them. When considering ambiguous words in their proper context, Tribunals will look at events both preceding and subsequent to the words in question. 11 Taking into account all the circumstances we find:11.1 The words used by Mr McCarthy on Thursday 26 November 1998 did not amount to express unambiguous words of resignation. Those words were ambiguous. The failure of each of the applicants to attend work on Friday 26 November 1998 did not amount to unambiguous words or conduct amounting to resignation. Mr McCormack's telephone conversation of that morning did not amount to unambiguous words of resignation. His words were ambiguous. The words and conduct of the applicants on Monday 30 November did not amount to unambiguous words or conduct amounting to a resignation. Their words and conduct were ambiguous. It is clear to us and we find that each of the applicants was merely making enquiries about their employment position. No reasonable employer would understand the words and actions of either of the applicants between 26 and 30 November 1998 to amount to resignation.

11.2 It is clear, and we find, that the respondent, at the time, did not genuinely regard the applicants' words and conduct as amounting to resignation. The calling of each of the applicants to an internal disciplinary hearing is inconsistent with the respondent treating the applicant's words and conduct as resignation. We reject the respondent's assertion that it was Mr Horwich's genuine belief that a disciplinary hearing was to get to the truth only and was appropriate action to take for former employees. That is not credible. We bear in mind that the respondent was in receipt of legal advice at the time and that the letter of 3 December 1998 was written by solicitors. It is clear and we find that each of the applicants was employed on 3 December 1998 and on 7 December 1998 when they arrived at the disciplinary hearing. During the course of that disciplinary hearing neither of the applicants used express unambiguous words of resignation. They did not obtain it. No reasonable employer would understand the words and actions of either of the applicants at the disciplinary hearing to amount to resignation.

11.3 At no time did either the respondent or its solicitors indicate to the applicants that they, the applicants, had resigned and that the respondents were either accepting their resignation or that the respondents were treating their conduct as gross misconduct entitling the respondents to dismiss them. The respondents, through their solicitors, expressly stated that neither of the applicants had been dismissed.

[10]It will be seen from that quotation that in paragraph 11.1 the Tribunal asked precisely the right question. All that Mr Breen can now say is that in asking that question the Tribunal ought to have also referred to the ongoing investigation into the stock losses. We take the view that it is inconceivable that the Tribunal did not have that in mind when they reached the conclusion that the words used did not amount to a resignation. In any event the conclusion of the Tribunal is amply supported by what happened on 30 November when the two employees turned up for work and what happened thereafter with the disciplinary hearing. As the Tribunal concluded, the holding of a disciplinary Tribunal was inconsistent with treating what had been said on the 26 November and thereafter as resignation. We find no merit in that ground at all.

[11]Mr Breen then turned to his second point, which can be found set out in paragraph 8 of the skeleton argument. This relates to the refusal to review. During the remedies hearing, Mr McCarthy acknowledged that he had always understood that he would not be going back to work for the respondents. It is said that that answer was sufficient to cast doubt upon the conclusions in the earlier decision as to what Mr McCarthy meant when he used the words that he did. The Tribunal dealt with this point at paragraph 23.5.3 at page 36. The Tribunal specifically considered that answer, weighed it against the whole of the evidence and reached the conclusion that there was nothing to suggest that the evidence of Mr McCarthy was unreliable or inconsistent with the evidence he had given earlier. We see nothing that could arguably be said to be perverse about that conclusion. Secondly, it is said that the fact that the Respondents took up a Jobseekers Allowance and the existence of a "contract" which each of the Respondents was asked to sign at the Benefits Agency, was inconsistent with the continuation of the Respondent's contract of employment with the Appellants. The Tribunal dealt with this matter in paragraph 23 at page 33. The Tribunal found no inconsistency with the evidence given by the Respondents. That conclusion cannot arguably be said to be perverse and this ground also fails.