MALCOLM B. DAVIS AND A ADENLE T/A SAMUEL DAVIS (A FIRM) v MS C A DERBYSHIRE [2004] UKEAT 0099_03_0903

EMPLOYMENT APPEAL TRIBUNAL
BAILII case number: [2004] UKEAT 0099_03_0903Case No Appeal No. UKEAT/0099/03/DA & UKEAT/0703/03Venue 58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS
Between
MALCOLM B. DAVIS AND A ADENLE T/A SAMUEL DAVIS (A FIRM)APPELLANTMS C A DERBYSHIRERESPONDENTMS C A DERBYSHIREAPPELLANTMALCOLM B. DAVIS AND A ADENLE T/A SAMUEL DAVISRESPONDENT
Before
Her Honour Judge Wakefield Mr D A C Lambert Mr F MottureDate 9 March 2004
[1]APPEARANCES For the Appellant / Respondent MR J SWIRSKY (of Counsel) Instructed by: Messrs Sinclairs Solicitors 20 Watford Way London NW4 3AD For the Respondent / Appellant MS C A DERBYSHIRE (in Person) SUMMARY Unfair Dismissal Automatically unfair dismissal by reason of employee having asserted statutory rights. Issues as to proper bases for compensation (net or gross pay in lieu) and mitigation of loss. HER HONOUR JUDGE WAKEFIELD There are before us today two appeals and two cross-appeals. These arise out of two decisions of an Employment Tribunal sitting at Watford, those decisions determining respectively the merits of and the compensation to be awarded to Ms Carol Anne Derbyshire upon her Originating Application claiming that she had been unfairly dismissed by Mr Malcolm D Davis and Mr A Adenle trading as Samuel Davis (a firm). For convenience I shall refer in this decision to the parties as Ms Derbyshire and Mr Davis.[2]The decision of the Watford Employment Tribunal on the merits of Ms Derbyshire's application was given with Extended Reasons on 11 December 2002, following a hearing over three days in the previous October and a decision meeting in November.[3]The finding of the Employment Tribunal, which is the subject of an appeal number 0099/03 by Mr Davis, is that Ms Derbyshire was unfairly dismissed for asserting her statutory rights. Ms Derbyshire cross-appeals in respect of the finding in that decision that payment to her by Mr Davis of a sum of money in respect of the period 26 November 2001 to 30 November 2001 was correctly paid net of notional tax and national insurance liabilities. She claims to have been entitled to a grossed-up payment.[4]Following the decision on the merits of Ms Derbyshire's Originating Application, the Employment Tribunal at Watford held a remedy hearing on 16 July 2003. The award and the Extended Reasons for making it are set out in a decision promulgated on 23 July 2003. Against that decision Ms Derbyshire appeals (and this is EAT/0703/03) on the grounds that the Employment Tribunal wrongly reduced the overall compensation awarded to her by 25% for a failure to mitigate; this consisting in not properly taking into account, according to Ms Derbyshire, the allegedly damaging effect on her employment prospects of the contents of the letter of dismissal.[5]She also appeals on the basis that the Tribunal wrongly failed to award her compensation for expenses incurred in seeking new employment and compensation for loss of pension rights. Mr Davis cross-appeals as regards that part of the compensatory award which dealt with loss of statutory rights. It is argued that in the circumstances no such award should have been made.[6]The brief background history of the dispute between the parties, as relevant to these appeals and cross-appeals, is the following. Commencing on 11 December 2000 Ms Derbyshire was employed by a firm of solicitors, Messrs Graham Harvey, of which Mr Davis was then a partner, as a legal secretary to work for Mr Davis at an office in Hendon. During most of the relevant period she was the only member of staff working for Mr Davis at that office.[7]In the summer of 2001 the relationship between Mr Davis and Graham Harvey had broken down and he ceased to be a partner, thereafter forming the new partnership known as Samuel Davis.[8]In September and October 2001 issues arose between Ms Derbyshire and Mr Davis as to payment of her monthly salary and her non-receipt of wage slips for those months. On 26 November 2001, a Monday morning, Ms Derbyshire was summarily dismissed by Mr Davis and was paid to the end of December 2001, gross in respect of December but net of notional tax and national insurance as regards the week beginning 26 November.[9]In her application to the Employment Tribunal Ms Derbyshire claimed to have been unfairly dismissed for having asserted her statutory rights, she having had on 23 November (the Friday evening) a conversation with Mr Davis, during which she again referred to the absence of wage slips and indicated that she was considering legal action against him and the firm Graham Harvey.[10]Just prior to the hearing at the Employment Tribunal Ms Derbyshire reached a settlement of her application against Graham Harvey which also had alleged unfair dismissal. The hearing therefore concerned only the liability of Mr Davis and the new partnership.[11]In the Extended Reasons the Employment Tribunal set out in some detail the evidence before it as to the events prior to and, as relevant, subsequent to 26 November. It had been Mr Davis' contention that the dismissal was in part because he was dissatisfied with Ms Derbyshire's standards and mode of working; in part because he wished to avoid her having a year's continuous employment so as to qualify for certain employment rights, in part because he needed different skills in the office (a paralegal and a part-time secretary) and in part because the diminishing workload in his conveyancing practice no longer justified a full-time legal secretary. He denied that Ms Derbyshire's assertion of her statutory rights in the conversation on 23 November was relevant to the decision to dismiss.[12]The Employment Tribunal, having considered all the reasons put forward by Mr Davis, concluded in its paragraph 39 as follows:
"Having regard to all the facts found and reminding ourselves that the burden of proof is on the Applicant because she has not attained the one year qualifying period, we are satisfied and find that the reason the Respondent dismissed the Applicant was because of the conversation between the Applicant and Mr Davis before the end of Friday 23 November 2001, during which conversation, the Applicant forcefully and clearly alleged that the First Respondent had infringed relevant statutory rights relating to itemised pay statements and deductions from wages which she had or believed to have had. We find that the Respondent unfairly dismissed the Applicant."
[13]Against that finding Mr Davis appeals. It is argued that the decision was perverse and/or was a finding that no reasonable Tribunal could have reached. In support, Counsel for Mr Davis has pointed to the following in particular:(i) Ms Derbyshire's acceptance that Mr Davis did not consider that he could be legally responsible for the failure to provide Ms Derbyshire with payslips;(ii) Ms Derbyshire's belief that Mr Davis had contacted a potential alternative secretary prior to dismissing Ms Derbyshire and employed that person part-time from shortly after the dismissal;(iii) that Mr Davis had, in the week prior to the dismissal, sought Counsel's advice as to the relevant qualifying period for an employee to claim unfair dismissal;(iv) that in May 2001 Mr Davis had expressed to his then partner a dissatisfaction with the work of Ms Derbyshire; and(v) that subsequent to the dismissal, at least from 10 December, Mr Davis did employ a paralegal.[14]Counsel for Mr Davis also contends that his client did not receive a fair hearing in that certain extraneous matters, such as the health and safety of the office and the personal behaviour of Mr Davis, were let into evidence and recited in the decision thereby, it is argued, tainting the view of the Employment Tribunal as to the overall merits of Mr Davis as an employer.[15]It is also argued that despite reciting in the decision that the burden of proving that the principal reason for the dismissal was the assertion of statutory rights lay on Ms Derbyshire, the Employment Tribunal in fact approached the matter by determining whether or not they accepted the explanations put forward by Mr Davis and, when they did not, found the case proved.[16]We have carefully considered all these criticisms, together with the tests for perversity set out in the case of Stewart v Cleveland Guest (Engineering) Ltd [1996] ICR 535 , a case in the Employment Appeal Tribunal, and, most recently, by the Court of Appeal in Yeboah v Crofton [2002] IRLR 634 . In this latter case Mummery LJ said, starting at paragraph 92, the following in relation to perversity:
"92. A ground of appeal based on perversity should always be fully particularised, so that the respondent can be fully prepared to meet it and in order to deter attempts to pursue hopeless and impermissible appeals on factual points."
He then refers to a point of procedure. He goes on:
"93. Such an appeal ought only to succeed where an overwhelming case is made out that the employment tribunal reached a decision which no reasonable tribunal, on a proper appreciation of the evidence and the law, would have reached. Even in cases where the Appeal Tribunal has 'grave doubts' about the decision of the Employment Tribunal, it must proceed with 'great care': British Telecommunications plc v Sheridan [1990] IRLR 27 at paragraph 34. 94. Over the years there have been frequent attempts, consistently resisted by the Employment Appeal Tribunal, to present appeals on fact as questions of law. The technique sometimes employed is to trawl through the extended reasons of an employment tribunal, selecting adverse findings of fact on specific issues on which there was a conflict of oral evidence and alleging, without adequate particulars, supporting material or even proper grounds, that these particular findings of fact are perverse and that therefore the overall decision is perverse. An application is often made to obtain the notes of evidence made by the chairman in the hope of demonstrating that the notes are silent or incomplete on factual points, that the findings of fact were not therefore supported by the evidence and that a question of law accordingly arises for the determination of the Employment Appeal Tribunal. 95. Inevitably, there will from time to time be cases in which an employment tribunal has unfortunately erred by misunderstanding the evidence, leading it to make a crucial finding of fact unsupported by evidence or contrary to uncontradicted evidence. In such cases the appeal will usually succeed. But no appeal on a question of law should be allowed to be turned into a rehearing of parts of the evidence by the Employment Appeal Tribunal. I am, of course, well aware that this is easier said than done, especially when, as here, neither side was legally represented on the first level of appeal. As the Employment Appeal Tribunal was well aware, unrepresented litigants have understandable problems in separating questions of law from proof of facts and in distinguishing the making of legal submissions from submissions of fact, even giving evidence in the course of submissions. 96. In my judgment, the mass of detail in which the unrepresented parties advanced their written and oral arguments on the appeals over a 12-day hearing led the Employment Appeal Tribunal to reach the unjustified conclusion that specific decisions on fact, and therefore ultimate decisions on liability, were perverse, following a consideration of only part of the vast expanse of evidence available to the employment tribunal."
[17]In this case we find that none of the alleged defects in the Employment Tribunal decision on the merits of the claim for unfair dismissal is made out so as to amount in totality to a perverse finding as to the principal reason for the dismissal.[18]In paragraphs in the Extended Reasons, preceding the conclusion I have already read, the Employment Tribunal referred to the many aspects of Mr Davis' asserted reasons for dismissing Ms Derbyshire when he did, and the Tribunal rejected them. The Employment Tribunal heard the witnesses and assessed them. We are satisfied that the conclusion reached was one which, on their view of the evidence and the witnesses, they were entitled to reach.[19]Inevitably, since the only assertions or alternate reasons that the Tribunal had other than that put forward by Ms Derbyshire, were those given by Mr Davis, they had to reach a view as to their veracity. This was not to reverse the burden of proof.[20]The finding as to unfair dismissal therefore, in our view, cannot properly be impugned and the appeal of Mr Davis on that aspect fails.[21]As to Ms Derbyshire's cross-appeal, the Employment Tribunal had said, in its paragraph 42, the following:
"In respect of the Applicant's complaint for the sums of money relating to income tax and national insurance alleged to be erroneously deducted for the five day period commencing 26 November 2001 the Applicant is entitled to be compensated for the money she was entitled to receive as if the contract had been fulfilled. The Applicant was entitled to receive the net amount which she has received. We therefore find that part of the Applicant's complaint not well founded."
[22]Ms Derbyshire has been unable today to refer us to any provision whereby an employer is required to pay compensation for loss of earnings gross rather than net. The Employment Tribunal decision on this aspect was clearly correct and the cross-appeal fails.[23]We now turn to the appeal and the cross-appeal as regards the remedy decision. The first aspect is the 25% reduction by the Employment Tribunal of the overall award for loss of earnings over the 15 month period of the award by reason of their finding that Ms Derbyshire failed, fully, to mitigate her loss.[24]Having set out the evidence before them and the submissions of the parties, the Employment Tribunal concluded, in paragraph 11 of their Extended Reasons as follows:
"We considered a compensatory award to be payable to the Applicant. The Respondent submitted that this should be limited to a period of one year loss of income. Having regard to the facts found however, we consider that the Applicant has made a considerable attempt to gain employment, albeit she has set herself against certain categories of employment or salary levels. It is impossible to say what the outcome would have been if the Applicant had pursued temporary work, registered with Agencies for temporary work, pursued work at a lower salary. If she had pursued such options we consider that she would have obtained some work earning some financial reward. We consider that it would have been likely that she would have gained permanent employment on a salary comparable to her previous salary within a period of 15 months from her dismissal. As she however has not mitigated her loss throughout that period we will reduce any compensatory award to reflect the earnings the Applicant, we consider she ought to have earned, we do this by a factor of 25% to reflect as best we can estimate that failure to mitigate."
[25]Ms Derbyshire argues on this appeal that the Employment Tribunal failed properly to take into account the unfavourable terms of the dismissal letter which, she asserted, gave to potential employers the impression that she had been guilty of gross misconduct, thereby disabling her from gaining new employment.[26]She also argued that the Employment Tribunal failed to understand the area of London in which she could reasonably have been expected to search for a job and the fact of her age (56) as an inhibiting factor for potential employers.[27]We find no substance in these criticisms. The Employment Tribunal in its paragraphs 2 to 8 fully address the efforts made by Ms Derbyshire and in paragraph 5, while not specifically referring to the dismissal letter, refer to the effect on interviewers of the information as to the summary dismissal, having been the sole employee of a conveyancing solicitor. We are satisfied that the Employment Tribunal had fully taken into account all relevant matters and were justified in making the reduction which they did.[28]Finally, Ms Derbyshire appeals against the failure of the Employment Tribunal to make any awards in respect of expenses incurred in seeking new employment and for loss of pension rights. She referred us to the positive duty laid on an Employment Tribunal to enquire into certain heads of loss: see Tidman v Aveling Marshall Ltd [1977] ICR 506.[29]Having explored the background to this ground of appeal we are satisfied that before the Employment Tribunal Ms Derbyshire did not raise any claim to expenses, nor put forward any documentation to substantiate any such special damage. The documents she showed the Employment Tribunal regarding efforts to obtain employment were purely directed to the mitigation of loss issue. For the first time today, before this Employment Appeal Tribunal, she has quantified a claim for expenses in the sum of £450, not having even raised this claim before the Employment Tribunal, let alone having put forward any basis for quantifying it. We find that the Employment Tribunal could not in those circumstances have made any such award.[30]As to loss of pension rights, Ms Derbyshire argues that because she was unemployed for the 15-month period, the subject of the Employment Tribunal overall award, and therefore made no national insurance contributions in that period, she has suffered a reduction in her earnings-related pension to be paid when she reaches 60. We accept her argument that the Employment Tribunal needed to address this head of potential loss. Before them she did not, however, put forward any basis for quantification of this loss. The Employment Tribunal said, in its paragraph 13 the following:
"13 The Applicant applied for her pension loss. She was not in a contracted out scheme but sought loss of her benefit from the State Earnings Related Pension Scheme. No figures were provided as to what this loss might be. Having regard to the guidance provided in "
Industrial Tribunals Compensation for Loss of Pension Rights". "3.4 In line with our general conclusions set out below we recommend that the assumption is made there is no loss of pension rights in respect of a dismissed employee who is not in an Occupational Scheme." We will make no award in that regard."[31]Again today, for the first time, Ms Derbyshire has produced a document purporting to show a loss under this head of some £1,455.98 on the 75% basis of the overall award. It is for an Applicant to prove any loss before the Employment Tribunal. Ms Derbyshire made no attempt to do so there and in those circumstances the Employment Tribunal had no basis upon which to act. Their decision on this point was, in the circumstances, wholly correct.[32]Finally, we turn to the cross-appeal of Mr Davis concerning an award to Ms Derbyshire of £225 for loss of statutory rights. The Employment Tribunal said of this head the following: "14 In respect of the Applicant's loss of Statutory Employment Rights, these are in respect of notice period and right not to be unfairly dismissed. Mr Swirsky submitted to us that as the Applicant would have to work for [a] year before she acquired her right not to have been dismissed, that the Applicant had not acquired the right not to have been dismissed by the date of her dismissal, and, that having regard to the guidance in Harvey … if any award was made it should be less than a week's net wages." 15. We consider that as the Applicant had acquired the right to statutory notice period, albeit not the right to present a complaint in respect of an ordinary unfair dismissal, the Applicant should be compensated for the loss of her statutory employment rights. Having regard to the guidance to which we referred, we assess this at £300, being a little under a net week's wages. This divided by 75% produces a sum of £225 pounds.[33]As to this, Counsel for Mr Davis argues in the Skeleton Argument the following:
"54. [Ms Derbyshire's] only accrued statutory right in respect of notice was to have 1 week's notice pursuant to ERA s86. She would acquire this after working for 1 month with a new employer. An award in respect for loss of a statutory notice period is dependent upon a double contingency, namely that an applicant obtain a new job and will then be dismissed from it for building up an equivalent notice entitlement to the job from which they were dismissed, see S H Muffett Ltd v Head [1987] ICR 1. 55. It is submitted that in a case such as Ms Derbyshire's where the entitlement to statutory notice is only 1 week, the possibility that there will be such a loss is too remote and no award should be made."
[34]This is an aspect which the Employment Tribunal clearly approached having heard the respective arguments. It is impossible for us to say that their conclusion was, in all the circumstances, not one which was permissible. This cross-appeal also fails.[35]In the event, therefore, all appeals and all cross-appeals are dismissed.