MR PAUL MICHAELS v SBS WORLDWIDE LTD [2001] UKEAT 793_00_2311

EMPLOYMENT APPEAL TRIBUNAL

BAILII case number: [2001] UKEAT 793_00_2311

Case No Appeal No. EAT/793/00

Venue 58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

Between

MR PAUL MICHAELSAPPELLANT

SBS WORLDWIDE LTDRESPONDENT

Before

Mr Recorder Underhill

Date 23 November 2001

[1]APPEARANCES For the Appellant IN PERSON For the Respondent MR M PAGET (of Counsel) Instructed By: Messrs Irwin Mitchell Solicitors Imperial House 31 Temple Street Birmingham B2 5BB MR RECORDER UNDERHILL QC: This is an appeal from the decision of an Employment Tribunal sitting in Ashford, promulgated on 9 May 2000. The Tribunal dismissed the Appellant's claims for unfair dismissal and for damages for wrongful dismissal. The Appellant has appeared in person. The Respondents have been represented by Mr Paget of counsel. The Tribunal's Extended Reasons are not very full; and the following summary of the facts at several points goes beyond the Tribunal's findings; but to the extent that it does so it derives directly from the contemporary documents and is not, we believe, controversial.(1) In November 1996 the Appellant was employed by the Respondent to be the Development Manager of its newly established Courier Division. He reported both to the Managing Director, Mr Nicholas Walker, and to the General Sales Manager, Ms Sara Hutchinson. There were various problems with his working relationships with his colleagues, which Mr Walker attempted to take up with him informally; but matters did not come to a head until June 1999.

(2) On 10 June 1999 Ms Hutchinson rang Ms Maloney, the Office Services Manager. She told her that she had been contacted by various employees in the Courier Division about problems which they had encountered with the Appellant, and that she had told them to put their complaints in writing for her to refer to the appropriate person. Such a statement had been put together – it appears by Ms Hutchinson herself collating the various complaints made – and she sent it to Ms Maloney. A copy of that document was put in evidence before the Tribunal, where it was referred to as R2: it was not part of the original bundle and was produced only in the course of the hearing. Apparently no copy was made for, or retained by, the Appellant, and at the preliminary hearing this Tribunal accordingly ordered that the Respondent supply a copy. The Respondents' solicitors, Messrs Irwin Mitchell, supplied under cover of a letter dated 20 December 2000 what they said was a copy of R2, which appears at pp. 28-32 of the bundle before us. The Appellant claims however that that document is not what was shown to the Tribunal, and he adduces in support of that contention a letter from Mr West, an Advocacy Manager with Peninsula Business Services Ltd, who represented him at the Tribunal. The main point made is that they both claim that R2 was only one or two pages long.

(3) We are satisfied that the document supplied by Irwin Mitchell is indeed what was seen by the Tribunal and marked R2. Mr Paget, who also appeared below, assures us that it was from his own recollection. That is supported by (a) the cover sheet accompanying Ms Hutchinson's original fax to Ms Maloney, which shows that her compilation was five pages long; and (b) another copy of the five-page document which we were shown which carries a fax header demonstrating that it was in existence prior to the hearing before the Tribunal – that does not of course necessarily mean that it was the document submitted as R2, but it does mean that it is not a later forgery.

(4) R2 consists of five pages of single spaced typescript. It begins:

"Over the last six months, the Courier Department as a whole feel that they have been subjected to unacceptable forms of behaviour by Paul Michaels, the Courier Development Manager. As the Directors are aware, this has been going on for some time but in light of recent events we feel that we are at breaking point and that the situation has become impossible. Paul's need for total control in all areas and the subsequent interference in all working areas and even in parts of our private lives has now reached epidemic proportions. He is suspicious of all motives within the entire company but in particular his own staff and Sara Hutchinson."

There follow a long series of complaints, both general and particular. It is neither necessary nor practicable to give a fully detailed summary. The essence of the allegations is that the Appellant sought to control his department by a mixture of aggression, duplicity and manipulation. In particular, it is alleged that he constantly spread rumours and misinformation about particular employees in order to undermine their independence and security. The last two paragraphs read as follows:

"Most of us have been dragged into the meeting room on numerous occasions. Usually for no other reason than to discuss other people's inadequacies. This damages team spirit. We have all said to him that we do not want to discuss the others and cannot afford to waste time doing so. We have said he should talk to the individual concerned, rather than behind their back. He criticises our work all of the time, suggests any small mistake could cost an account and says that our salaries justify the highest standard of work. We are made to feel guilty if we make a mistake, he never encourages his staff or tries to develop them. We are called at home no matter what the reason, what time of day or what day. Most of us either don't answer the phone or have our partner pretend we are out. Some of us have left our phones switched off or off the hook. This is potentially dangerous if other people need to get hold of us. He asks us to betray friendships with people from other companies not understanding a code of ethics that stops any of us talking about work when in that situation. Everything and everybody is expendable to him and we are at SBS for one purpose alone, to further his career. We are told that the only way we can be successful at SBS is to support him no matter what. Unanimously, we feel that we have taken enough of what we all believe amounts to harassment." (5) That was a very serious complaint for the Respondents to receive. It may of course have misrepresented or at least exaggerated the true state of feeling about the Appellant among his staff: it may represent malice or "office politics"

. But, at the very least, it revealed a disquieting state of affairs that such complaints were circulating about the Appellant and must to a considerable extent have reflected on his management skills that he had allowed such a situation to develop. (6) Ms Maloney forwarded the document at once to Mr Walker. He decided that the Appellant should be suspended forthwith, pending a proper investigation. A letter was sent to the Appellant on 11 June 1999 confirming that he was being suspended pending the investigation of allegations made against him by other staff. He was informed that there would be a disciplinary interview in due course. Mr Walker asked for individual statements to be obtained from all the employees associated with the original complaint. Nine such statements were obtained by Ms Maloney: all were signed by the employee in question. They are lengthy and detailed: in total they amount to 15 pages. In broad terms, they confirm the picture presented by R2. For example, the statement of Theresa Palin, Mr Walker's PA, starts as follows:

"Over the last month the situation within the Courier Department has deteriorated considerably and morale is very low. It reached the stage where no-one from the Courier/Admin Department would want to be on their own with Paul and several of us would meet downstairs to ensure that we did not have to be. There was a very bad atmosphere every time Paul was in the office. He was constantly taking one or other of the Courier Department into the Meeting Room."

There are repeated allegations of bullying, lying, harassment and attempts to play employees off against one another. There are some specific incidents mentioned which had not appeared in R2. Although they are slightly peripheral to the main theme of the statements, there are three such incidents which need to be mentioned because they are explicitly referred to in what followed: (a) Ms Palin described an incident when the Appellant picked her up on a mistake she had made and said (in front of other staff) that she "had obviously not had a shag last night". (b) Mr Wells, the Accounts Supervisor of the Courier Division, gave evidence of an incident in which the Appellant had referred to an Asian candidate for employment with the Respondents and had said that there would be difficulties in recruiting him because "Nick Walker had a problem with Asian staff". (c) Ms Smoker, the Business Development Manager for the Courier Division, gave evidence of an incident in which he had made a coarse and sexist joke at her expense at a meeting with customers (later referred to as "the aeroplane joke"); and that he made it clear to her and others that all or a major part of her value to the business was that she was sexually attractive and customers liked dealing with her. (7) Mr Walker gave evidence, which the Tribunal expressly accepted, that following receipt of the statements he spoke to the individual employees in order to be sure that they reflected their true views. (8) Copies of the statements were sent to the Appellant under cover of a letter dated 17 June 1999 in the following terms:

"Further to your suspension last week, we confirm that we have been investigating allegations made by other members of staff. These allegations include:- Sexual harassment Racist comments Deliberately causing trouble between staff Aggressive behaviour towards staff Full details are contained in the attached statements. Nick Walker will contact you on Monday, 21 June 1999 in order to agree a date for the disciplinary interview. You will be given the opportunity at the interview to state your case and you may be accompanied by an employee of your own choosing." (9) A hearing was fixed for 25 June 1999 in front of Mr Nicholas Walker. At the hearing the Appellant was accompanied by a fellow employee called Meg Ryan. He had prepared a four-page "submission" setting out his overall position and a series of comments on the individual employees' statements, responding to the detailed allegations in them. Again, it is neither practicable nor necessary to analyse the Appellant's response in full. Overall, he denied the allegations of aggressive and manipulative behaviour and blamed them on "petty office politics" which had their origin in the unsatisfactory division of roles between himself and Ms Hutchinson. As regards the various specific incidents alleged against him, some were denied; others were admitted but said to have been exaggerated or given an unjustified "spin"

. As regards the particular incidents referred to above: (a) He admitted saying to Ms Palin "you obviously didn't get laid last night" but said that it was in response to an observation from her "once a dickhead always a dickhead". (b) He denied that he had ever said anything to Stephen Wells about Nick Walker not liking Asian employees. (c) While he could not recall the particular incident alleged by Ms Smoker, he accepted that he might well have made the coarse joke which she alleged but said that she would certainly not have been offended by it since she was herself always making jokes about sex. He accepted that he did tell clients that Ms Smoker was attractive but described this as "just guys' talk". He accepted that he used her attractiveness but said that he neither believed nor told Ms Smoker that that was the main reason why she was employed. (10) The Appellant read both his submission and his comments to Mr Walker and it is clear from the minutes that the key points in them were discussed and debated. In connection with point (b) above, the minutes show that Mr Walker reminded the Appellant of an incident two years previously at which he had been given a written warning for making similar remark relating to an Asian former employee: the Appellant said that he had made no such remark and had only accepted the disciplinary decision at the time because he had been new to the company. (11) Following the hearing Mr Walker decided that the Appellant should be dismissed. A file note dated 28 June 1999 reads as follows:

"Paul Michaels attended the disciplinary interview and read out typed responses to each of the allegations from various members of staff. Minutes of the meeting are shown separately. The decision to dismiss Paul Michaels was made on the following basis:- 1. A number of unacceptable sexual comments had been made the female staff concerned have been offended. 2. I believe that the racist remark against myself was made and was intended as such. This also ties in with a previous disciplinary when PM was warned about making such comments. 3. All the staff in the courier department have been upset at some stage by PM. He was not managing the staff in the department well and causing quite a rift between them. The decision to dismiss was made on the basis of statements by staff and whilst PM disputed each of the comments, I believe the staff rather than PM based on my experience of working with Paul over the years although previously the lying has only been on minor issues. He has appeared to constantly make trouble with staff in his department and, on occasions, used bullying methods." (12) On 30 June 1999 Mr Walker wrote to the Appellant notifying him that he was being dismissed with immediate effect for gross misconduct…. "for the following reasons: (a) Sexual Harassment towards Zora Smoker and Theresa Palin (b) Intimation to staff that Nick Walker, Managing Director of SBS, has racist recruitment policies. (c) Inciting problems between staff by comments you made to them about each other to cause difficulties in their working relationships. (d) In addition to the above, it has become clear during the course of our investigations that relationships between members of staff, who you are supposed to be managing, fall far below what they should be and this amounts to incompetence. It is clear that your relationship with staff has almost completely broken down and it is therefore not to be possible for you to continue working for SBS." (13) The Appellant exercised his right of appeal. (There appears to have been some intervening correspondence between the Respondents and the Appellant's then solicitors: we have not seen this, but nothing turns on it.) The appeal was heard by Stephen Walker, the Respondents' Chairman, on 31 August 1999. It appears from the minutes that the hearing took a similar course to the original hearing: the Appellant went in detail through the individual statements, with Mr Walker raising queries at various points. (14) Mr Stephen Walker decided to uphold the original dismissal. A file note of his reasons dated 1 September 1999 contains a number of points. It is unnecessary to set it out in full, but it is clear that Mr Walker believed the principal allegations made against the Appellant by the staff. He stated "

I do not believe that all staff concerned have lied and the company stand by their version of the truth as set out in their statements". He also attached importance to the offence caused to Ms Smoker and Ms Palin by the sexual remarks directed at them and to the comment reported by Mr Wells about Mr Nicholas Walker's alleged racism, which Mr Stephen Walker referred to as "consistent with a previous racist comment made by PM which was the subject of disciplinary action". He observed that "PM has developed extremely hostile feelings for Nick Walker. Blaming him for collusion and creating a smoke screen to get rid of him". On 13 September 1999 Mr Walker wrote to the Appellant stating:

"The points raised at the appeal hearing which was held at our office on Tuesday 31 August 1999 have been considered. I confirm the decision to dismiss you from the employment of SBS Worldwide as I cannot find any reason to overturn the original decision made by Nick Walker."

[2]The Appellant brought proceedings for unfair dismissal and for damages for wrongful dismissal. Although the "full details of complaint" which he lodged extend to six pages, the grounds on which he alleged that his dismissal was unfair were only shortly identified, namely that "there were no substantive reasons for his dismissal and the dismissal process was fundamentally flawed". The reference to the procedure being flawed appears to be to an allegation that the Appellant was denied the opportunity to cross-examine the employees from whom the statements had been taken. It is also alleged that the decision to dismiss the Appellant had been made as long ago as February/March 1999. The Respondents' IT3 merely stated that "numerous allegations" had been made against the Appellant and set out the procedural steps taken.

[3]The Tribunal hearing was split over two days, on 26 January and 27 March 2000. The Tribunal's decision with Summary Reasons was sent to the parties on 25 April 2000. It is convenient to set out the Reasons in full:

"1 In this case, the Applicant makes two claims, one for breach of contract and one for unfair dismissal. 2. The Applicant was employed as a Courier Development Manager from 11 November 1996 to 30 June 1999, which was the effective date of termination. 3. The Applicant was dismissed with effect from 30 June 1999 and the reason, pursuant to section 98(2)(b) of the Employment Rights Act 1996 was conduct. More particularly, it was the misconduct set out in the letter dated 30 June 1999. 4. The Applicant claims that he was unfairly dismissed because:- (a) There was insufficient investigation into the complaints; (b) There was insufficient evidence to found a belief of misconduct; (c) The decision was outside the range of reasonable responses. 5. The Applicant accepted that Mr Nicholas Walker gave truthful evidence. 6. We find that the Respondent did have a belief in the misconduct. There was sufficient investigation. The Applicant knew the allegations against him and he had every opportunity to respond and did so. Therefore, the Respondents' belief was based on reasonable grounds. The Applicant's own staff did not want to work with him and, in the circumstances, dismissal was an appropriate sanction. In all the circumstances, we find that the dismissal was fair and the Applicant's claim for unfair dismissal is dismissed. 7. So far as the breach of contract claim is concerned, we find that the reasons for which the Applicant was dismissed were sufficient to justify summary dismissal. In the circumstances, the Applicant's claim for breach of contract is dismissed."

[4]Extended Reasons were supplied on 9 May 2000. These incorporated, virtually verbatim, paragraphs 2 to 7 of the Summary Reasons, as set out above; but paragraph 1 was expanded so as to give an account of the Tribunal's findings of fact.

[5]The Tribunal's reasoning, which is essentially contained in paragraphs 6 and 7 of the Reasons, is, to say the least, economical. The Appellant does not advance as a general ground of appeal that the Reasons do not satisfy the Tribunal's obligations to explain why he lost. However, the inadequacy of the Reasons is relevant to the particular grounds of appeal which we consider below.

[6]The Appellant's original Notice of Appeal was considered by this Tribunal, chaired by Judge Wilson, at a preliminary hearing on 22 November 2000. The Appeal was allowed to proceed on three questions, which Judge Wilson defined as follows:(1) Whether the Employment Tribunal erred in failing to consider whether the Respondents' procedures were flawed and/or unfair;

(2) Whether the evidence before the Employment Tribunal indicated that there was predetermination because of the procedural irregularities;

(3) Whether, in any event, on the matters found proved dismissal was a sanction which was within the reasonable range of responses from a reasonable employer. It should be noted that the Tribunal on that occasion did not have access to any of the significant contemporary documents. Specifically, it had seen neither R2 nor the subsequent individually signed complaints. There was a direction for the Chairman's notes to be produced. It should also be noted that each of the three grounds on which the appeal was permitted to proceed can only relate to the Appellant's claim for unfair dismissal, as opposed to wrongful dismissal: the claim for wrongful dismissal was of course comparatively much the less significant of the two claims in financial terms.

[7]We turn to consider the three grounds in respect of which the Appeal was permitted to proceed. "I was never given the opportunity to cross-examine any witnesses. Neither Nick or Steve Walker went back to the people making the allegations to question their statements during any point of the disciplinary procedure." We approach the allegation on the basis that it relates to the entire process. "What the Tribunal appears to be suggesting is that in certain circumstances it is incumbent on a reasonable employer to carry out a quasi-judicial investigation with a confrontation of witnesses, and cross-examination of witnesses. While some employers might consider this to be necessary or desirable, to suggest as the Tribunal did, that an employer who failed to do it in a case such as this was acting unreasonably, or in the words of Lord Denning, acting outside "… a band of reasonableness, within which one employer might reasonably take one view, another quite reasonably take a different view," is in my view insupportable." "We did not want to get into mud slinging, that's why the witnesses were not present at the disciplinary. You could never keep going back. You call them all in and never quite get to the truth. The whole staff would not work with him. We took statements individually. They all came forward with similar views, but they were individual." In our view that was a reasonable approach. "My representative told the Tribunal that the decision to remove me was made prior to the Hearing. Nicholas Walker confirmed this. He said that he thought about it but had too many statements against me. The Tribunal also heard that Mr Walker had requested SBS Staff to produce statements regarding myself. Some people refused and some people subsequently left the company. My representative told the Tribunal that the format of the allegations and the pattern of events leading up to and during the dismissal were conducive with a conspiracy to remove a person from a company without any regard for the individual's career or future prospects." In his skeleton argument the Appellant put the point this way: "Quite clearly the evidence heard by the Tribunal indicated predetermination. The incidents concerning visiting my clients and personal contacts and making derogatory comments and stating that I no longer work for the company was proof of this. Florentino Izzo a Senior Sales Manager at SBS Worldwide actually told Giselle Leishman that the decision to get rid of me had been made some time ago. This was a mistake because Giselle was a personal friend for eight years, and she told me immediately. Nick Walker's own admission that they had not revisited the allegations following the denial of them was in itself proof of predetermination."(1) The Tribunal's recitation of the facts in paragraph 1 is, it seems to us, quite inconsistent with a finding that the Respondents had already made up their mind to dismiss the Appellant in advance of the hearing or indeed in advance of the receipt of the complaint from the employees. The Tribunal refers to the discussion at dinner with the Appellant and his wife in March 1999, clearly on the basis that it represented a genuine attempt to resolve the problems – whereas, on the Appellant's case, it would have been in effect a sham. Likewise the account of the gathering of the evidence of the employees seems to us wholly inconsistent with any suggestion that it was a "put-up job".

(2) The Tribunal's express finding that the Respondents carried out a sufficient investigation and had a genuine belief that the Appellant was guilty of the misconduct set out in the dismissal letter is impossible to reconcile with the possibility that they had already made up their minds to dismiss him for other reasons. While it would have been much better if the Tribunal had dealt expressly with this aspect of the Appellant's case, we do not in these circumstances find that its failure to do so amounted to an error of law.