REALITY GROUP LIMITED v MR D A CATO [2003] UKEAT 0167_03_2005

EMPLOYMENT APPEAL TRIBUNAL
BAILII case number: [2003] UKEAT 0167_03_2005Case No Appeal No. EAT/0167/03Venue 58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS
Between
REALITY GROUP LIMITEDAPPELLANTMR D A CATORESPONDENT
Before
His Honour Judge Birtles Mr K EdmondsonDate 20 May 2003
[1]APPEARANCES For the Appellant MR ALEX LOCK (Of Counsel) Instructed by: Messrs Beachcroft Wansbroughs Solicitors 10-22 Victoria Street Bristol BS99 7UD For the Respondent MR SHAUN WALLACE (Of Counsel) JUDGE BIRTLES This is an appeal from the decision of an Employment Tribunal sitting at Watford on 27 September 2002. The Chairman was Mr R Cassel. The decision was sent to the parties and entered in the Register on 15 October 2002. It was a reserved decision. The Tribunal unanimously decided that the Respondent unfairly dismissed the Applicant.[2]At a subsequent remedies hearing on 16 December 2002 the Tribunal made an order that the Respondent pay the Applicant a sum of £8132.35 comprising a basic and compensatory award. That decision was sent to the parties and entered in the Register on 31 December 2002. There is an appeal by the Appellant, Reality Group Ltd against what I will call the liability decision. That is the first decision. There was a Respondent's Answer filed to that on behalf of Mr Cato and it also had as part of it a cross appeal against the calculation arrived at the remedies hearing.[3]Mr Wallace who appears today for Mr Cato accepts that that cannot be a proper cross appeal. The right procedural way of dealing with any appeal on the remedies hearing was to have appealed the remedies hearing decision itself and for that reason we dismiss the cross appeal.[4]The material facts set are set out in the Employment Tribunal's decision at paragraph 4. In essence, the Respondent delivers parcels and packages and Mr Cato was employed by it as one of the number of delivery drivers. The Tribunal found as a fact that at the depot there were approximately 160 staff including some 100 delivery drivers where there were some 70-75 vehicles as well as external hire vehicles. There were security guards in attendance at the one gate of the site which was permanently manned.[5]On 30 November 2001 the van driven by Mr Cato was stopped at the gate. The van was searched and placed on top of other items and in open view was found what was described by the witnesses as a 'hanging garment shroud'. This was to be delivered on the Applicant's delivery round. On opening it a further garment shroud was found in which there was a leather coat destined for elsewhere. A second garment shroud which was placed below the first was also removed. This contained a further leather jacket in a shroud also destined for an address on a round other than the Applicant's. A Dyson vacuum cleaner was also removed from the Applicant's delivery van and it was found not to have been scanned on to the manifest, albeit that it was for the round covered by the Applicant.[6]Mr Cato was then interviewed later that day and he was accompanied at that interview by his trade union representative. The Tribunal found that having given an explanation Mr Cato was suspended and required to attend a disciplinary hearing on 11 December 2001. At that investigatory interview Mr Cato explained that he scanned all the items but the scanning guns were not accurate. He was unable to offer an explanation for the concealed garments. He did acknowledge that the garments were heavy but explained in his words: ""But it's not my job to check them, I just want to get out"."[7]The disciplinary hearing on 11 December 2001 was conducted by Mr J Phillips, the Depot Manager. Unfortunately Mr Phillips did not give evidence before the Employment Tribunal but the Employment Tribunal did have a record of the disciplinary hearing.

(x) :

"During the hearing the Applicant, in effect, maintained his position as at the investigatory hearing, that the Dyson had been scanned but had not come up on the manifest and that he had no idea how the two garments were concealed in the garment shrouds. During the hearing, Mr Phillips concluded, "
I can accept the Dyson hoover was a mistake on the back of the van but the garments I can't grasp." He went on to say, "I have to say to myself is Del [the Applicant] telling the truth. Did someone else put the coats inside the garments?" The Applicant responded in the following way, "You must put the Dyson with this when you work it out". The meeting was then adjourned for some fifteen minutes and Mr Phillips then announced as follows, "I have weighed up the arguments in your defence but the facts as I see them suggest you were attempting to steal the leather coats." The Applicant was summarily dismissed."[8]There were two further appeals but they need not concern us. The Employment Tribunal set out in its decision section 98 of the Employment Rights Act 1996 and referred themselves to the case of British Home Stores Ltd v Burchell [1978] IRLR 379 . The Tribunal went on to find that:
"We were satisfied that the Applicant was dismissed on 11 December 2001 and that the reason for his dismissal related to his conduct."
See paragraph 8.[9]In paragraph 9 of its decision the Tribunal reminded itself that it should not speculate on what might or might not have happened but was to restrict itself to considering the evidence that was presented to us. It went on to say the question to be asked is whether a reasonable employer could have drawn those conclusions from the evidence and investigation. The Tribunal went onto reach its decision. I propose to read paragraph 10:
"10 The evidence available to Mr Phillips when he reached the decision that the Applicant was guilty of gross misconduct on the face of the evidence presented to us, included the statement of Nigel Moffat and the interview with Mr Sultan to which we have already referred. (I pause just to say that those were the security officers involved to search Mr Cato's van) In addition, the notes of the investigative interview were available to him and these documents, along with an illustration, were referred to and the Applicant was invited to comment on these items. The hearing was specifically to consider what on the face of it was theft or attempted theft of a Dyson vacuum cleaner and of two concealed garments. As we have already referred to, the Applicant told Mr Phillips that he had not stolen the Dyson vacuum cleaner and that it was a fault of the scanning equipment, but that he had no idea as to how the two concealed items were within the handing garments. Where there was an explanation, Mr Phillips accepted the Applicant's account, but where there was no explanation, Mr Phillips found against the Applicant. We simply cannot understand his reasoning and find it wholly illogical. In effect, without any further investigation as to the Applicant's explanation, Mr Phillips accepted the Applicant's account. It seems to us that, in the face of what amounted to or might amount to an act of dishonesty, Mr Phillips concluded, without apparent reasoning or explanation, that the Applicant was telling the truth but that, in effect, in the same circumstances it was dishonest. On the evidence available to us, we were unable to ascertain with any degree or certainty what Mr Phillips belief was or whether, assuming that was capable of clarification, whether it was genuinely held. It is conceivable that had we heard from Mr Phillips, this fundamental issue would have been resolved."
[10]Before us today Mr Lock appearing for the Appellant has challenged the decision of the Employment Tribunal and in particular paragraph 10. He makes two submissions. First, that that paragraph announces the conclusion but does not tell the reader or indeed this Tribunal what the reasoning of the Employment Tribunal was. Second, he says that the Employment Tribunal substituted its decision on the evidence for that of the employer. Something which it is expressly not permitted to do.[11]Mr Wallace who appears for Mr Cato argued that the reasoning of the Tribunal was clear from the decision and secondly that there was no substitution. We are unable to agree with the submissions made by Mr Wallace. It seems to us that this Tribunal fell into error in not following through the proper consideration of the decision of British Home Stores Ltd v Burchell . The material part of that decision says this:
"What the Tribunal have to decide every time, is broadly expressed, whether the employer who discharged the employee on the ground of the misconduct in question (usually, though not necessarily, dishonest conduct) entertained a reasonable suspicion amounting to a belief in the guilt of the employee of that misconduct at that time. That is really stating shortly and compendiously what is in fact than one element. First of all, there must be established by the employer the fact of that belief; that the employer did believe it. Secondly, that the employer had in his mind reasonable grounds upon which to sustain that belief. And thirdly, we think, that the employer, at the state at which he formed that belief on those grounds, at any rate at the final state at which he formed that belief on those grounds, had carried out as much investigation into the matter as was reasonable in all the circumstances of the case. It is the employer who manages to discharge the onus of demonstrating those three matters, we think, who must not be examined further."
[12]I pause of course, to add that there is no longer that onus on the employer in terms of burden of proof. Had the Employment Tribunal set out those three questions and then looked at the facts and reached conclusions on each of them then this decision would have been easy to understand. However, in our view the Employment Tribunal did not do this. The question it asked itself at the end of paragraph 9 is not the correct question. Second, there is a conflict between the Tribunal's conclusion in paragraph 8 that the reason for the dismissal related to conduct with its conclusion at the end of paragraph 10 that they were unable to ascertain with any degree of certainty what Mr Phillips' belief was or assuming that it was capable of clarification whether it was genuinely held.[13]This failure to follow through Burchell in any logical way had two consequences. First, that the Employment Tribunal did not give adequate reasoning as to why it reached the conclusion that it could not understand Mr Phillips' decision. The locus classicus is of course the case of Meek v City of Birmingham District Council [1987] IRLR 250 - see more recently Tran v Greenwich Vietnam Community [2002] IRLR 735 . Both cases make it crystal clear that an Employment Tribunal is under a duty to set out its reasoning in support of any conclusions it comes to. That simply did not happen in this case and there was therefore an error of law.[14]Second, we think that the Employment Tribunal did substitute its decision on the facts for that of the Employment Tribunal. The Employment Tribunal appear to have taken the view that the employer must treat the facts as found by it in relation to the Dyson vacuum cleaner and the facts as found by it in relation to the hanging garment shroud as reaching the same result. Either the Tribunal is saying Mr Cato is guilty of theft of both or attempted theft of both or he is not guilty of theft or attempted theft of both. That is not the way in which employer approached the matter. It accepted Mr Cato's explanation in relation to the Dyson vacuum cleaner. It did not accept his explanation in relation to the garment shrouds. In our view a reasonable employer could quite properly have come to the conclusion which this employer did and paragraph 10 of the Employment Tribunal decision makes it clear that the Employment Tribunal took a different view: that it cannot do. It substituted its decision for that of the employer and it also therefore fell into error in that respect as well. For these two reasons the appeal will be allowed.[15]I should comment that there was further part of the appeal relating to paragraph 11 of the Employment Tribunal's decision. Because of the decision we have reached in respect of paragraph 10 it is not necessary for us to hear any further submissions in relation to paragraph 11. NOTES FOR THE FILE That leaves the question of disposal. We propose to send this back to a fresh Employment Tribunal. We do not think that on the evidence that we can make a decision on the facts. The whole matter will have to go back to a fresh Employment Tribunal and we cannot direct that Mr Phillips give evidence but we would think that it would be very helpful to a fresh Employment Tribunal if it heard evidence from Mr Phillips. That also leaves the question of the remedies hearing. Would I be right in assuming that no money has actually been paid? Is the proper thing for us to do to stay the payment? We will stay the decision of the Employment Tribunal on the remedies hearing. I will expedite this decision because obviously it is important that the new Tribunal have copies of it as indeed you should before the hearing takes place. But obviously the sooner we can get it to you the sooner you can fix the date for a fresh hearing.