PENDRAGON PLC v MR S S NOTA [2002] UKEAT 0031_00_1803

EMPLOYMENT APPEAL TRIBUNAL
BAILII case number: [2002] UKEAT 0031_00_1803Case No Appeal No. EAT/0031/00Venue 58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS
Between
PENDRAGON PLCAPPELLANTMR S S NOTARESPONDENT
Before
His Honour Judge Peter Clark Ms S R Corby Mr T C ThomasDate 18 March 2002
[1]APPEARANCES For the Appellant MR T KEMPSTER (of Counsel) Represented By: Mr S Isgar Retail Motor Industry Federation Legal Department 201 Great Portland Street London WIN 6AB For the Respondent MS S PAUL Millennium Solicitors Chambers 91 Belmont Hill London SE13 5AX JUDGE PETER CLARK This is an appeal by Pendragon Plc, the Respondent to claims brought by their former employee Mr Nota in the London (North) Employment Tribunal. The case was heard over 3 days on the 31 st March, 1 st April and 4 th June 1999. Following a day's deliberation by the Tribunal on the 26 th July, a remedies hearing was held on 1 st October 1999 and the Tribunal's reserved decision was promulgated on the 29 th October 1999. The Tribunal was chaired by Mr P R K Menon.[2]Background The Applicant, who is of asian racial origin, joined Pendragon as a motor vehicle technician on 13 th October 1997. He had some 24 years previous experience in the trade. He worked at their Brewery Road site. He was summarily dismissed on 25 th September 1998. He then presented an Originating Application to the Tribunal complaining of: 1) Direct racial discrimination 2) Victimisation 3) Unfair dismissal 4) Breach of contract 5) Unlawful deductions from wages[3]The Employment Tribunal Decision By letter dated 5 th February 1999, the Tribunal's secretariat informed the parties that the unfair dismissal application, given that the Applicant had less than 2 years continuous service for the purposes of section 108(1) Employment Right Act 1996 as it then was, would be stayed pending the outcome of the Seymour - Smith litigation. That order was affirmed by Mr Menon's Tribunal. As to the remaining complaints, the Tribunal found: 1) that Pendragon had discriminated against the Applicant on grounds of his race. They awarded compensation under this head of £25,000 (to include aggravated damages of £5,000) together with past and future loss of earnings and interest 2) they dismissed his claim for post-employment victimisation 3) they found that Pendragon was in breach of contract in summarily dismissing him 4) they upheld the claim of unlawful deductions from wages and awarded him the sum of £72.50 in respect of unpaid overtime for the month of August 1998. Finally, they ordered Pendragon to pay one day's cost incurred by the Applicant under rule 12(1) of the then Employment Tribunal Rules 1993 .[4]The Appeal Pendragon appealed against that decision and the matter came on for an ex parte Preliminary Hearing before a decision presided over by His Honour Judge Wilson on 16 th November 2000. The substantive appeal against both the finding of direct racial discrimination and the compensation therefor was dismissed. However, the appeal was permitted to proceed to this full hearing on 3 grounds, namely: 1) Whether the Tribunal was wrong to adjourn the Applicant's unfair dismissal claim rather than dismiss it. 2) Whether in upholding the unlawful deductions claim, the Tribunal failed to take into account statistical evidence for August 1998 3) Whether the Tribunal erred in law in the timing of and context for their cost warning early in the proceedings and if so whether that error invalidated the order for costs eventually made and/or tainted the rest of the proceedings. In this context reference was made to the judgment of Morison in Tsontzos v. Hilton Hotel Group (No1) (EAT 348/97. 2 nd December 1997. unreported).[5]The Grounds of Appeal 1) In the light of the eventual House of Lords decision in Seymour - Smith [2000] IRLR 263 , Ms Paul has sensibly withdrawn the unfair dismissal complaint. We shall dismiss it on withdrawal and that renders the first ground of appeal moot. 2) Unlawful deductions Mr Kempster submits that there was evidence before the Tribunal, on which manufactured findings were made, to show that in fact the Applicant received his contractual entitlement to wages for August 1998. Although he did not receive the contractual overtime pay to which he was entitled, the premium rate of pay was unilaterally increased by Pendragon, thus off-setting any shortfall due on the overtime work. He relies particularly on the wording of section 13(3) of the Employment Rights Act , which provides:
"Where the total amount of wages paid on any occasion by an employer to a worker employed by him is less than the total amount of the wages properly payable by him to the worker on that occasion (after deductions), the amount of the deficiency shall be treated for the purposes of this Part as a deduction made by the employer from the worker's wages on that occasion."
We think the answer to that submission lies in the definition of wages in section 27(1)(a) of the act which provides: (1) In this Part "wages", in relation to a worker, means any sums payable to the worker in connection with his employment, including- (a) any fee, bonus, commission, holiday pay or other emolument referable to his employment, whether payable under his contract or otherwise" In our judgment the words "any… emolument" includes overtime pay, which may be isolated from other contractual terms as to pay. In any event, it is not suggested that the Applicant agreed to this quid pro quo arrangement. On the contrary, he protested and in due course the contractual overtime rate was reinstated without alteration to the new premium rate, but without back overtime pay. It is precisely that back pay which constituted the unlawful deduction. Accordingly we reject this ground of appeal. (3) Procedural Irregularity The factual position is as follows. On the first day of hearing before the Tribunal the Applicant gave evidence. The Respondent then called Mr Morice, the foremen. On the morning of the second day there was a break in proceedings during Mr Morice's evidence whilst the members of the Tribunal conferred. It seems that the parties' representatives were then called into the Tribunal room. At that stage neither representative asked whether or not their clients could also come in. At that meeting the Chairman expressed concern about the way the evidence was going. In the words of Mr Prichard, Counsel for Pendragon below in his witness statement in these appeal proceedings. "It was at this point that the Tribunal mentioned the possibility that the employer was wasting the time of the Tribunal by adducing this evidence of shoddy workmanship and that all that really mattered was what was in the mind of Mr Butler (the dismissing manager). Costs might be ordered. The Chairman was strongly of the view that this evidence was doomed to failure because it had not been put to Mr Nota, I wrote no note of this regrettably" Ms Paul's recollection contained in her witness statement in these proceedings at paragraph 10, is as follows:
"The Chairman advised us that he was not happy with the way that things were going and that what he needed to establish was whether the dismissal was an act of discrimination. He pointed out to Mr Pritchard that it appeared that 3 out of 4 incidents had not been put to Mr Nota at the relevant time and that all sorts of new things were being brought up in evidence which did not appear to be relevant to the act of dismissal as they had never been put to Mr Nota prior to his dismissal."
Ms Paul has produced her notes on that part of discussion before the Tribunal, they make no reference to the expression, "doomed to failure", which she does not recall being used by the Chairman. The Chairman similarly has no recollection of making such an observation. We think it likely that that was Mr Pritchard's perception rather than words actually used by the Chairman. The Chairman himself explains why the meeting was held with the advocates only. He states in a letter to the EAT that the Tribunal did not wish the witnesses to be present during the informal discussions in order to ensure that they were neither influenced nor inhibited by what they heard during those discussions when they gave their evidence in due course. Case management was not a matter for witnesses. Thereafter, the Tribunal reconvened; Mr Pritchard was not inhibited from calling all the evidence he wanted on the "shoddy workmanship" point. The proceedings went on to a third day. In their decision the Tribunal ordered Pendragon to pay one day's cost for the reasons which they give at paragraph 21 of their extended reasons:
"The Applicant asked for a costs order against the Respondent on the basis that the hearings had been unnecessarily prolonged by the Respondent calling detailed evidence on the Applicant's alleged shoddy workmanship from several witnesses when none of the matters except example 3 had been taken up with the Applicant while he had been employed by the Respondent. The Respondent opposed the cost application on the basis that it was necessary to call all those witnesses to show that the Respondent had held a genuine belief in the Applicant's shoddy workmanship and that that was one of the reasons for his dismissal. It was therefore necessary to call all those witnesses in order to show the Tribunal that there were genuine grounds for that genuine belief. Mr Pritchard, Respondent's Counsel, in his final submissions has misstated the Tribunal's comments. It is true that the Respondent was given a costs warning during the hearing which was ignored. Mr Pritchard, an experienced Counsel, was perfectly aware that what the Tribunal was questioning was the need to call all those witnesses when, as he himself had conceded, the Tribunal did not have the tools or the expertise to decide whether the Applicant had correctly serviced the vehicles concerned in examples 1 to 4; the Tribunal was only concerned with the genuineness of the reasons advanced by Mr Butler, the dismissing officer, against the background that none of the examples save example 3 had been discussed with the Applicant prior to his dismissal, that the Applicant had not been given any warnings, there was nothing in the documents to support the Respondent's assertions, and the detailed examination of the four examples would, and did take up a lot of the Tribunal's time. In the Tribunal's opinion, the Respondent, in the conduct of the proceedings, unnecessarily prolonged the proceedings by at least one day, and their conduct was unreasonable within the meaning of Rule 12(1) of schedule 1 to the Employment Tribunals (Constitution and Rules of Procedure) Regulations, 1993. Accordingly, it is the Tribunal's unanimous decision that the Respondent pay to the Applicant the costs incurred by the Applicant in relation to the hearing on one day, the costs to be taxed in the County Court if not agreed by the parties."
On this aspect of the appeal Mr Kempster's primary submission is that by giving a cost warning in relation to the calling of evidence as to the Applicant's standard of workmanship the Tribunal, through the Chairman, was expressing a concluded view that Pendragon would be unable to provide a satisfactory explanation for the apparent difference in treatment between the Applicant and his comparator, a white employee called Noriss, who was involved in a health and safety incident with the Applicant on the 24 th September 1998. Thereafter the Applicant was dismissed, Noriss received a final written warning. Mr Kempster relies on the observation of Mr Justice Peter Gibson, as he then was, in Peter Simper and Co Ltd v. Cook [1986] IRLR 19 , where he said:
"By the appearance of a closed mind against a party on a matter which calls for decision by the Tribunal, when that party has not yet presented all his evidence relevant to the point or had the opportunity of addressing the Tribunal on that evidence, that is what is meant by the appearance of bias."
In these circumstances he submits, the Tribunal's eventual conclusion on the direct racial discrimination complaint is fatally flawed by this procedural irregularity which vitiates the result. That is not how we see the matter. It seems to us that the Chairman was saying no more than this; in circumstances where 3 out of 4 examples of alleged bad workmanship put forward by Pendragon were not even raised by them with the Applicant during his employment, direct evidence as to the quality or lack of quality of his work is unlikely to advance the employer's explanation for the alleged disparate treatment, what matters is what was in the dismissing managers mind. If you persist in calling evidence, which turns out to be of no real value and thereby unnecessarily extend the hearing beyond the 2 days allocated for it, you may face a cost order. Viewed in that way we can see nothing objectionable about the Chairman's approach, unlike the facts in Anthony v. Hillcrest School (EAT 1193/00 28 November 2001) His Honour Judge Reid and Tsontzos itself. This is not a case on its facts where it can be said that the Tribunal exhibited a closed mind on the principal issue during the hearing. Nor do we think that any objection can properly be taken to the relevant exchange taking place with just the advocates present. The chairman advances a compelling reason for this course, that is to ensure that the witnesses still to give evidence were not inhibited or influenced by the discussion as to costs. That seems to us to be a perfectly acceptable form of case management, and an exception to the general principle provided for at paragraph 12 of Mr Justice Morison is judgment in Tsontzos . As to the fact of the costs warning, Mr Kempster accepts that such a warning may be given during the course of the substantive hearing; it is not simply limited to an order made at a pre-hearing review. Finally, the costs order itself in our judgment plainly fell within the exercise of the Tribunal's wide discretion under Rule 12 of the 1993 Rules.[6]Conclusion In these circumstances we are unable to discern any error of law in this Tribunal's decision or conduct of the proceedings and accordingly the Appeal must be dismissed.