ALLARBURN FARM DAIRY LTD v FORBES JOHNSTON [2006] UKEAT 0083_05_0404

EMPLOYMENT APPEAL TRIBUNAL
BAILII case number: [2006] UKEAT 0083_05_0404Case No Appeal No. UKEATS/0083/05Venue 52 MELVILLE STREET, EDINBURGH, EH3 7HF
Between
ALLARBURN FARM DAIRY LTDAPPELLANTFORBES JOHNSTONRESPONDENT
Before
Lady Smith Miss J Gaskell Dr W SpeirsDate 4 April 2006
[1]APPEARANCES For the Appellant Mr Jaap, Solicitor Messrs Gillespie Macandrew Solicitors 25 George IV Bridge Edinburgh EH1 1EP For the Respondent Mr Hardman, Advocate Messrs Grigor & Young Solicitors 1 North Street Elgin IV30 1UA SUMMARY Claimant had been dismissed by the respondents, a milk and farm produce retailing business. The tribunal found that his dismissal was unfair and awarded compensation. It was accepted that the claimant had been unfairly dismissed but it had been open to the claimant to return to his old job and the respondents submitted that the tribunal should, in those circumstances, have considered whether he had failed to mitigate his loss by not doing so. It was submitted on behalf of the claimant that the tribunal were bound but had failed to do so and that the Employment Appeal Tribunal should determine the issue. The Employment Appeal Tribunal were satisfied that the tribunal had failed to consider the question of mitigation of loss but did not consider that it was open to them to make the relevant findings. THE HONOURABLE LADY SMITH Introduction This case concerns a claim for unfair dismissal that was heard by an Employment Tribunal sitting at Inverness, Chairman Miss FCC Carmichael, whose decision was registered with extended reasons on 25 August 2005. They held that the claimant had been dismissed, unfairly dismissed and found him entitled to an award of £20,236.91.[2]The claimant was represented by Mr Cunningham, consultant, before the tribunal and by Mr Hardman, advocate, before us. The respondent was represented by Mr Jaap, solicitor both before the tribunal and before us.[3]We will refer to the parties as claimant and respondents. Facts[4]The case is somewhat unusual in that although the claimant was dismissed, it was, on the tribunal's findings, open to him to return to his old job. He did not do so. He took up less well paid employment within three weeks of his dismissal instead.[5]The background was that the claimant's job dated back to 1976 and he had worked for the respondents since 1995 since they took over the business. The claimant worked as depot manager. The respondents' managing director, Mr Anderson, was a farmer. His farm produced eggs. On 22 December 2004, a very busy day, Mr Anderson found that a case of eggs had disappeared and when the claimant told him he did not know where they had gone told him:
"You are no bloody use to me, you are sacked." to which the claimant said to a colleague: "
You heard him Alastair; I have been sacked. I am away this time."[6]From that latter comment and from a reference by the tribunal to the claimant and Mr Anderson having had disagreements in the past and to the claimant not returning to work not being the response that Mr Anderson had come to expect (paragraph 16), we have the impression that it was not that unusual for there to be an altercation between the two men.[7]Mr Anderson's daughter tried to dissuade the claimant from leaving that day. His colleague, Mr Williamson, telephoned him that evening and sought to persuade him to return to work. Mr Anderson telephoned him on 27 December and asked him why he was not back at work. He did not return. The Relevant Law[8]Section 123(1) and (4) of the Employment Rights Act 1996 provides:
"(1) subject to the provisions of this section and sections 124 [, 12A and 126] the amount of the compensatory award shall be such amount as the tribunal considers just and equitable in all the circumstances having regard to the loss sustained by the complainant in consequence of the dismissal in so far as that loss is attributable to action taken by the employer. … (4) In ascertaining the loss referred to in subsection (1) the tribunal shall apply the same rule concerning the duty of a person to mitigate his loss as applies to damages recoverable under the common law of England and Wales or (as the case may be) Scotland."
[9]Submissions had been made by Mr Jaap, on the matter of compensation, that if the claimant had heeded the respondents' pleas, he could still have been working for them and that account ought to be taken of the fact that the claimant had chosen to accept a less well paid job.[10]It was, however, very properly accepted by Mr Hardman that in determining what amount was just and equitable to award as compensation, the tribunal were, irrespective of that submission, bound to consider the question of whether or not the claimant had mitigated his loss. He referred to the case of Morganite Electrical Carbon Ltd v Donne [1987] IRLR 363 and the following passage at paragraphs 8 and 9 of Mr

Justice Hutchison's judgment:

"Turning now to the authority on which Miss Booth relies, is Scottish and Newcastle Breweries v Halliday [1986] IRLR 291. She relies in particular on a passage in the judgment of this Tribunal delivered by Sir Ralph Kilner-Brown at p.292 to the following effect: 'We recognise that I s.74(4) of the Act of 1976, the reference to common law may create some difficulty. In an adversarial situation between litigating parties in the civil courts, and this is no doubt what Lord Justice Roskill had in mind in a case where he had cited a failure of the duty to mitigate loss has to be alleged by the party seeking to benefit from such failure, but compensation for unfair dismissal is a different type of process. Industrial Tribunals have generally and we believe rightly, operated upon the principle that the Tribunal has to investigate whether or not the applicant has satisfied them that the duty to mitigate loss has fully or partially met. The duty is created by statute and without bothering unduly about the burden of proof, the Tribunal has to ascertain the facts and to determine whether or not the duty has been discharged.' Now we are going to go an and read another passage because of the reliance Miss Booth placed upon it for her argument about the tariff. But just pausing there, that appears to us to be a plain statement, and one if we may respectfully say so which we regard as being plainly correct, to the effect that since the statute lays down that question of mitigation must be taken into account, it is incumbent on the Tribunal to address its mind to those questions and to determine whether or not there has been a failure on the part of the applicant to mitigate."
[11]Following that approach, which we consider to be as correct in the context of the 1996 Act as it was in the context of the earlier legislation, we conclude that the Tribunal in this case were bound to consider and determine the issue of whether or not the claimant had failed to mitigate his loss by choosing not to return to his old job and choosing to accept a less well paid job some three weeks after his dismissal. The Tribunal's Judgment and Reasons[12]Apart from recording Mr Jaap's submissions to which we have already referred, the tribunal make no mention of the issue of mitigation of loss. They deal, appropriately, with the question of whether or not the claimant could be said to have contributed to his dismissal by refusing to return to his old job but that is one which is different and distinct from the mitigation of loss question. Conclusions[13]Accordingly, the situation is that the question of whether or not the claimant failed to take reasonable steps to mitigate his loss remains to be asked and answered. Mr Hardman submitted that we should carry out that task using the findings in fact that have been made by the tribunal and referred us to the guidance set out in the case of Wilding v British Telecommunications pl [2002] IRLR 524 for the basis on which we should do so.[14]We do not consider that it would be appropriate for us to embark upon the task of deciding whether or not the claimant failed to act reasonably as regards mitigation of loss. Firstly, the tribunal having clearly completely overlooked the matter, we cannot be confident that they have made all the findings in fact that would be relevant to the issue. Secondly, the question of whether an employee has failed to act reasonably in mitigation of his loss is essentially a question of fact ( Bessenden Properties Ltd v Corness [1974] IRLR 338 ). All the circumstances require to be considered. If a claimant rejects an offer of work, the reason for his rejection requires to be considered in the context of the circumstances of the case and a judgment made as to whether he was acting reasonably or not. Then, if it is determined that he was acting unreasonably, a view has to be reached, bearing in mind the duty to award only such compensation as is just and equitable, as to what effect the failure to mitigate should have on the monetary award. In this case, these tasks have not been addressed by the tribunal and the circumstances are not, in our view, such that we could properly say that they could only be productive of one answer.[15]We conclude therefore that there is only one course open to us, namely to remit the case to the same Tribunal for it to consider and determine the issue of whether or not the claimant took reasonable steps to mitigate his loss and, in the event of their determining that he did not do so, to reconsider the award of compensation made by them in the light thereof. We shall, accordingly, allow the appeal and pronounce an order in those terms.[16]For the avoidance of doubt, our order will leave untouched the finding of dismissal and unfair dismissal, of entitlement to payment of a basic award, and of entitlement to an uplift under s.31(3) of the Employment Act 2002, of 25%.