MR S M WATERS v BANKSIDE LEISURE LTD [2006] UKEAT 0175_06_0106

EMPLOYMENT APPEAL TRIBUNAL
BAILII case number: [2006] UKEAT 0175_06_0106Case No Appeal No. UKEAT/0175/06Venue 58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS
Between
MR S M WATERSAPPELLANTBANKSIDE LEISURE LTDRESPONDENT
Before
His Honour Judge ReidDate 1 June 2006
[1]APPEARANCES For the Appellant MR D LAWSON (of Counsel) Instructed by: Messrs Gersten & Nixon Solicitors National House 60-66 Wardour Street London W1F 0TA For the Respondent No appearance or representation by or on behalf of the Respondent SUMMARY Practice and Procedure – Bias, misconduct and procedural irregularity Unfair Dismissal – Reason for dismissal including substantial other reason; Polkey deduction Appellant was dismissed by Company, in which he was 1 / 3 shareholder, by the other 2 / 3 shareholders following a disciplinary hearing which had been pre-determined. Employment Tribunal (ET) held this was a procedural error, that he would have been dismissed anyway, and section 98(A) applied. Respondent had not relied on s.98(A), but on assertion disciplinary procedure was not pre-judged. ET had heard no argument or submissions on s.98(A) or Polkey . Case remitted to new Tribunal. HIS HONOUR JUDGE REID QC This is an appeal from a decision from a Tribunal held at London South on 12 December of last year. The Tribunal dealing with the matter which remained an issue held that the Appellant had not been unfairly dismissed. The Tribunal found from the initial short reasons that it gave:
"3. The Claimant was not unfairly dismissed. The Respondent had complied with the statutory disciplinary and dismissal procedure and had shown to the Tribunal a potentially fair reason for dismissal, namely the Claimant's failure to obtain a public entertainment licence contrary to express instructions which is a reason relating to the conduct of the Claimant. Whilst we accepted that the Respondent had somewhat prejudged the dismissal decision on discovery that their public entertainment licence had expired, which rendered the dismissal procedurally flawed, we conclude, pursuant to section 98A(2) Employment Rights Act 1996 that the failure by the Respondent to follow a fair procedure did not make the Respondent's action unreasonable since the Respondent showed that it would have decided to dismiss the Claimant if it had followed a fair procedure. The Claimant's claim for unfair dismissal accordingly fails."
[2]On this appeal we have not had the advantage of any representation on behalf of the Respondent Company. The Company appears to be dormant. Whether or not it has any assets, and whether or not it would ever be worth pursuing this matter further - as opposed, for example, to pursuing section 459 proceedings under The Companies Act against the other shareholders - may be a moot point, but the position today is that we have not had the advantage of any representation to seek to uphold the decision.[3]The factual background to the matter was that the Claimant, and two others, a Mr Dindol and a Mr Ames, were the three directors and three shareholders of the Company, which had a leasehold at that time of a property in Southwark called The Arches. From those premises, a nightclub was run. Mr Dindol and Mr Ames also had another Company called F and S Promotions which, amongst other things, ran a club night called XXL and that promotion used to take place at The Arches. The split of the money coming in from these promotions was that F and S would have the door takings for XXL club nights at The Arches, whereas the Respondent Company had the income from the bar and the cloakroom takings, and was of course responsible for having the appropriate licences and for hiring the bar and the cloakroom staff and running the premises.[4]The domestic relationship which existed between Mr Dindol and Mr Ames broke up and Mr Dindol departed to Birmingham. However, apparently unbeknown to the Claimant, he continued to receive a salary from the Respondent Company.[5]At the end of March 2005, on the findings of the Tribunal, the Claimant failed to renew the public entertainment licence which was vital for the club's ability to stay open. Happily, from the Respondent Company's point of view, Mr Ames discovered that this lapse had occurred and he and Mr Dindol between them managed to get the licence renewed.[6]There was also an issue about various electrical works which, it is said, the Claimant should have got done but did not.[7]Then there was a hiatus of some time, during which I think it can be inferred Mr Ames and Mr Dindol considered what to do, and (on the Tribunal's findings) what they decided to do was to fire the Claimant from his employment with the Company. Having made the decision, on the Tribunal's findings, they then went through what were, in their view, the necessary hoops for the dismissal to be procedurally fair. The result of that was the inevitable dismissal of the Claimant and his launching of these proceedings.[8]There is a side issue, as to which no proper findings exist, in which it is suggested that he was also removed improperly from his directorship of the Company by a Company meeting which had not been properly called and of which he did not have proper notice but that, if it is relevant to anything, will be relevant to other proceedings in another court.[9]Before the ET the Claimant said that – even assuming it was his job to get the public entertainment licence renewed – the failure to renew it was not a matter of conduct and it was certainly not gross misconduct. Therefore, as a single isolated lapse, it could not properly have been found to be a ground for immediate dismissal. The ET disagreed with that, but as I have indicated, found that the decision to dismiss, whilst one which was open to the company, had been inappropriately taken, in that the issue was prejudged.[10]The Tribunal then, as I have indicated from reading the short paragraph 3 of the summary reasons, went on to conclude that this was a procedural mishap which could be ignored in effect by reliance on s.98A(2) of the 1996 Act. For present purposes I think it suffices that we should say that we have the gravest doubts as to whether that was a correct interpretation of s.98A(2). Approaching a disciplinary procedure with the decision already made is not something which, in any ordinary language, could be described as a procedural failing. It is something deeper and more substantive than mere procedure. But the problem that we are confronted with is that nowhere in argument before the ET was the question of s.98A(2) ever raised. Nobody amongst the advocates appears to have addressed their mind to this. No doubt this was because the battle lines as they were drawn included a simple contention on behalf of the company that no, it had not prejudged the matter, and the fallback position was not considered.[11]Similarly, no consideration was given to whether any Polkey deduction or just and equitable type reduction should be made. The onus of course under s.98A(2) is on the employer to bring itself within the sub-section, and the Tribunal simply assumed that that onus had been discharged without, we think, really having addressed the matter properly.[12]But the fundamental flaw is that this was a decision which was reached on a point which was never raised in argument, never - so far as one can tell - addressed by either side and specifically, a point on which the Claimant (who lost on the point) was not in a position to have addressed any argument to the Tribunal.[13]It may be that in due course precisely the same result will be reached a second time round if this case is re-fought. It may be that the identical conclusion is reached by some other route, for example, some form of 100% reduction. But it does not seem to us that this decision can stand. We take the view that the appropriate course of action in this unhappy case is to send it back to be re-heard by a fresh and differently constituted Tribunal.[14]A variety of other points were raised in the Notice of Appeal and in the helpful skeleton argument which we have had from Counsel who have appeared today on behalf of the Appellant. But it does not seem to us, in having formed the view on that short point that the matter has to go back, that it is necessary for us to explore any of those points any further. This is not a case in which it was ever suggested that this Tribunal might substitute its own decision for the decision of the ET, and indeed we could not have done so.[15]The conclusion, therefore, is that the matter will be remitted for re-hearing by a differently constituted Tribunal and on the further hearing, all points will be open to all sides, so it may well be that next time round the hearing will take a rather different form to that which it took last time around. The appeal is therefore allowed.