MR M KRELLE v MR C RANSOM TRADETEAM LTD [2006] UKEAT 0568_05_2701

EMPLOYMENT APPEAL TRIBUNAL
BAILII case number: [2006] UKEAT 0568_05_2701Case No Appeal No. UKEAT/0568/05Venue 58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS
Between
MR M KRELLEAPPELLANTMR C RANSOM TRADETEAM LTDRESPONDENT
Before
Mr Justice Langstaff Mr P GammonDate 27 January 2006
[1]SUMMARY Unfair Dismissal: Reason for Dismissal including Substantial Other Reason; Practice & Procedure: Appellate Jurisdiction/Reasons/Burns-Barke ET did not state what acts or omissions constituted the misconduct in which they held the employer to have had a genuine belief based on reasonable grounds after a reasonable investigation. In the absence of this, the EAT could not know what the ET were evaluating, and the matter had to be remitted. An ET should always indicate the substance of that which the employer believed. THE HONOURABLE MR JUSTICE LANGSTAFF This is an appeal from an Employment Tribunal at Brighton whose extended reasons were promulgated on 15 April 2005. It dismissed Mr Krelle's complaint that he had been unfairly dismissed. The Background Facts[2]The background facts derived from the Tribunal decision are these. Mr Krelle was a drayman employed at the Lancing Depot of the Respondent employer from 16 November 1998 until 13 January 2004 when he was dismissed. Shortly prior to his dismissal, the Respondent had become concerned about excess payments apparently made to Lion Manpower, an employment agency, who supplied staff for their purposes. They asked Mr Lloyd of a security investigation company to investigate. He uncovered four things:(1) A shortfall of nearly £32,000, as he thought, between advice slips and invoices;(2) That procurement cards had been used to pay Lion bills despite the use of such cards being discouraged by the Respondents;(3) That there was no proper record of payments made to a particular cleaner nor for gutter cleaning work invoiced by Lion; and(4) There was an inconsistency between advice notes and invoices in relation to two specific workers.[3]Mr Krelle was interviewed on 2 December 2003 in relation to these matters. He was thereafter found to be the Company Secretary of Lion and his wife to be a director. Lion, it appeared, had no established place of business. Accordingly, he was re-interviewed on 15 December 2003. At that interview he was found to have been in the words of the Tribunal "extremely evasive". Thereafter he was asked to attend a disciplinary hearing.[4]At the Tribunal he made a number of complaints about that hearing. He complained about the late handover of documents, for instance. However, thereafter there was an appeal (internal to the Respondent employer) which was by way of re-hearing. There is no tenable suggestion that the complaint which he made about the first disciplinary hearing could have had force in respect of the second. At the conclusion, he was dismissed and his dismissal was confirmed upon internal appeal. The Employment Tribunal Decision[5]The Employment Tribunal in its decision first recited the facts. Secondly, it took into account the complaints which had been made by Mr Krelle about the disciplinary hearing and, to some extent, upheld them particularly in respect of the late submission of documentation to him prior to that hearing. It found that the employer had a genuine belief in the misconduct of Mr Krelle. It found that the employer had reasonable grounds for that belief and it found that those grounds and that belief followed a reasonable investigation. It concluded that dismissal fell within the range of reasonable responses. The appeal hearing, it concluded, cured any defects which there may have been in the procedure leading up to the disciplinary hearing.[6]At the same time as the employer was concerned with the activities of Mr Krelle, it was also apparently concerned with the activities of Mr Ransom who was the manager at the depot. When it came before the Employment Tribunal, Mr Ransom's case was heard together with that of Mr Krelle. The critical question that anyone might wish to know was: what was Mr Krelle's involvement and was it such as to amount to dishonesty?[7]In the course of argument, Mr Solomon (appearing for the Respondent employer) was asked whether a lay person without knowledge of the background documents, but looking at the Employment Tribunal decision, would know precisely what it was that Mr Krelle had done that constituted the misconduct in which his employers was said to have had a genuine and reasonable belief based on reasonable grounds and for which they dismissed him. Mr Solomon, it was plain, had no satisfactory answer to give to that which would assist the hypothetical lay reader. This, as we shall explain, is our problem too.[8]Mr Solomon suggests that the facts, as found by the Employment Tribunal, amounted to these. First, there was a shortfall as between documents showing payments to Lion and documents coming from Lion. Secondly, there was evidence that Mr Krelle had been intimately, as Mr Solomon put it, involved with Lion. Thirdly, he had been extremely evasive when asked about Lion. Those three matters put together were capable of amounting to proof of dishonesty or possibly amounting to the misconduct for which the employer dismissed him (whose decision fell for review by the Employment Tribunal and on appeal, by us).[9]The difficulty that any reader of the Tribunal decision might have is not, we should say, in determining that the employer had, in the view of the Employment Tribunal, formed a view that Mr Krelle was guilty of misconduct; plainly, the employer did take that view. It is suggested that he was fraudulent. The allegation which the employer accepted was one of dishonesty.[10]It was that determination which the Employment Tribunal had, therefore, to review. Upon reaching its decision, an Employment Tribunal is required to set out its reasons. This is for three essential purposes. First, it must indicate to the parties why they have won and why they have lost. That has both a practical purpose and a general purpose in ensuring justice. Secondly, it is necessary because it acts as a form of discipline to the Tribunal itself so that the Tribunal is focusing upon the matters which are truly central to its decision and is not sidetracked by some irrelevant consideration. It reminds itself of the important matters to which it must have regard. Thirdly, and importantly for us, it enables an Appellate Tribunal to see and to understand how the Tribunal reached its decision.[11]Where a Tribunal is dealing with an issue of misconduct which the employer has accepted as a sufficient reason for dismissal, there may possibly be circumstances in which the Tribunal need say no more about it than that there was misconduct. We consider that such circumstances must be very rare. The allegation of misconduct, dishonesty and fraud calls out for some understanding of what, as a matter of fact, the employee is said to have done. Although the Tribunal cannot be expected to set out in clear and absolute detail what the employer considered the employee to have done, it is necessary for a Tribunal at least sufficiently to indicate in its decision what particular acts the employer focused upon as constituting the misconduct for which the employer then dismissed the employee. Unless the Tribunal has this focus, there is no point from which the consideration of whether a belief in that misconduct was genuine can proceed, let alone whether it was based on reasonable grounds: instead, the question would be: reasonable grounds for believing what? Still less would there be grounds for holding that that belief followed from a reasonable investigation because the reasonableness of an investigation must integrally depend upon what is being investigated. Nor is it sufficient, as the case of Tran v The Greenwich Vietnam Community [2002] IRLR 735 , C.A. shows us for a Tribunal simply to assume that the parties will know what the misconduct is about from the debate which is raging before it.[12]In our view, in short, it is in the circumstances of this case, insufficient for the Tribunal simply to have said, as it did, that Mr Krelle had been guilty of misconduct or fraud or dishonesty without knowing quite what the Tribunal had in mind. If, for instance, the dishonesty had been simply the evasive responses to being questioned about Mr Krelle's involvement with Lion, one could understand the Tribunal coming to the conclusion that the employer had a belief in the evasive response, that there were reasonable grounds for it and because the response was to the employer's own question, it would require no further investigation. But to dismiss for it might very well be said not to be within the range of reasonable responses for an employer, without more. Again, if Mr Krelle had himself pocketed money and there was cogent evidence before the employer to suggest that he pocketed money, arising out of the mismatch between documents coming from the employer and documents from Lion, and the employer dismissed for that reason, one could well imagine that any dismissal would be thoroughly justified. But the enquiry as to what were reasonable grounds for believing that and the extent of any reasonable investigation would be entirely different and it would be a matter of importance for this Tribunal, on appeal, to be able to see and understand how the Employment Tribunal had applied the law to what the employer had decided so that we could be satisfied that there was no error of law in its approach.[13]In the course of his submissions, Mr Solomon drew particular attention to paragraph 25 of the Tribunal decision. That provides as follows:
"Mr Lloyd also interviewed a number of employees and we have seen all their statements. They disclosed many very unsatisfactory practices. A good example is the statement of Mr Evans who recounted problems with his P45 (Lion had said they did not want it, which surprised Mr Evans) and as for payment, he said he was asked to complete a 'blurry' copy of a standing order sheet. He said that he had no real contact with them. Mr Evans did not push his enquiries like other people making statements. He hoped to get permanent employment with the trade team - they were the Respondents- and did not want to prejudice his chances"
. He indicated that this evidence was clear evidence of wrong doing on the part of Mr Krelle. That would, he submitted, in effect, follow from a reading of the expression "no real contact with them" as relating to Mr Krelle and to Mr Ransom. Quite apart from the fact that "them" may just as well, if not better, be read as relating to Lion (in the sense which the paragraphs gives as a whole) the suggestion that a witness had no real contact with either Lion or Mr Krelle or Mr Ransom does not, on the face of it, appear capable of proving anything apart from the absence of contact. The unsatisfactory practices may well be the fault of Mr Krelle or Mr Ransom for all we know. They may equally well be the fault of others. We do not know therefore from this paragraph where these facts will lead. The problem is, once again, the lack of focus upon that which was truly in issue, or should have been, and that is the particular facts which the employer thought constituted dishonesty, fraud, misconduct on the part of Mr Krelle.[14]It may be said that this is to take an approach to the Tribunal's reasons which suggests that the decision cannot stand because of the inadequacy of the reasons: a " Meek point" following on from the decision in Meek v City of Birmingham District Council [1987] IRLR 250 (CA). Indeed, Mr Solomons complained that such a point had not been taken by the Appellant in his grounds of appeal. We reject that submission for these reasons. First, it is implicit in the point of appeal which was taken quite clearly that the Tribunal did not clearly and properly distinguish between the cases of Mr Ransom on the one hand and Mr Krelle on the other, but lumped them together as "the Claimants" as though they were equal partners in committing the dishonest acts which, presumably, the employer thought underlay the circumstances which it had to consider. Secondly, if one considers the revised Skeleton following the Rule 3(10) hearing as a result of which this matter was remitted to a full hearing, a specific complaint was made about the failure of the Tribunal to give reasons.[15]The principal thrust of the complaint about the failure to consider cases separately was that there were significant differences between the cases of Mr Krelle and Mr Ransom. They had different functions to perform in the service of their employer. That much is apparent from the Employment Tribunal's own decision in which Mr Krelle was described as a "drayman" but Mr Ransom as the "depot manager". It is not clear why, as a drayman, Mr Krelle would have been involved, if he was, in the activities of Mr Ransom who, as manager, one might expect to handle or to be aware of invoices passing between the Respondent company and Lion. One might expect that he, Mr Ransom, would have authority to make payments which a drayman would not.[16]Accordingly, it was implicit in, and necessary for, the development of the argument on appeal that the Tribunal dealt with the Claimants as though they were indistinguishable expect where they made specific reference to points of evidence raised on behalf of one or the other; that the Tribunal had not clearly identified the role played by each in the short-fall which occurred and which prompted the investigation in the first place. Identification of that role and the different roles which might have been played by Mr Krelle and Mr Ransom was thus a matter of importance for the Tribunal to consider. There is no dispute so far as Mr Solomon is concerned to the principle that each case requires a separate consideration. We think he was right to concede that. His argument, that that is what the Tribunal did (i.e. give proper separate consideration) leads naturally to asking what the Tribunal considered the employer to have thought was the role of each in what occurred. Whereas something might be said by implication as to role of Mr Ransom who, it should be noted, has raised no appeal and with whose case we are not concerned, and whose case will not stand or fall by this decision, it could not be said, without more, in respect of Mr Krelle. There remains a possibility that the Tribunal might have lumped the two together rather than properly distinguishing them.[17]On behalf of both the Appellant and Respondent, we were invited to look at a number of paragraphs in the decision in which, so far as the Appellant would have it, the word "Claimants" appears and it looks as though the Claimants are being treated together and so far as the Respondent would have it, where the words "Mr Krelle" and "Mr Ransom" appear separately, and therefore it is said that separate consideration was being given. We are not much assisted by an approach of this sort. What matters is a proper overview of the decision taken as a whole to see whether we can be satisfied that the Tribunal did give proper consideration to the cases of the two men, albeit that they were being heard together and albeit that there were great similarities in the way in which they presented their case to the Tribunal and albeit that their dismissals arose out of the same general background facts.[18]Taking that approach, it is of course necessary to identify that which each was said to have done or, if it be the case, that each has done exactly the same so far as the employer is concerned. But, as we have already indicated, the Tribunal decision simply does not assist in showing that. We suspect that the Tribunal may very well have simply assumed that anyone with knowledge of the background material leading to the Tribunal, anyone seeing the documents before the Tribunal and anyone looking at the witness statements to the Tribunal would have known full well what the Tribunal had in mind. However, in our view, that is not good enough because it does not enable us or the parties nor does it assist the Tribunal in its self-discipline to know and to appreciate quite how the process of reasoning has gone from those background facts to the conclusions which the Tribunal has finally delivered.[19]It follows that on that ground, the appeal must be allowed.[20]A second ground of appeal was taken. It is academic since we have determined this appeal by accepting the first ground. However, we shall deal shortly with it since it has been argued fully before us. The argument is that the Tribunal was in error of law in refusing permission to Mr Krelle to call Mrs Krelle in support of his case to produce and explain a number of documents. Those documents related to the accounts which were of central relevance so far as is establishing the total amount of the short-fall was concerned.[21]Before us, the way in which the argument was put was that if the Tribunal had to assess, as it did, whether or not an investigation had been reasonable, it would have been informed properly by knowing what would have been uncovered if such an investigation had taken place. What would have been uncovered would have been shown to the Tribunal if it had only admitted Mrs Krelle's evidence and the documents. The Appellant argues before us that there is an indefeasible right to require a Tribunal to admit any evidence which is relevant. For this he relies upon the case before this Tribunal of Rosedale Mouldings v Sibley [1980] IRLR 387 (now of some antiquity).[22]In that decision, this Tribunal (Talbot J presiding) determined that a Tribunal was right to admit evidence and commented [and therefore commented obiter ] that it would not have been a proper exercise of the Tribunal's discretion, if it had any, to exclude a document which might be highly relevant to some of the cases before it. The correctness of that decision was plainly argued before an Employment Appeal Tribunal determining the case some seven years later of Snowball v Gardner Merchant Ltd [1987] IRLR 397. Kilner-Brown J for the Tribunal said at paragraph 11 in respect of a submission to him that a Tribunal did not have power to exclude evidence which was admissible, that reference had been made to the case of Rosedale Mouldings v Sibley . He then commented:
"We have doubts about the validity of this proposition, because as we have said earlier in this judgment, our opinion is that the power extends in some cases to the exclusion of evidence which strictly may be admissible. In Rosedale Mouldings [1980] IRLR 387 the wrongly excluded evidence was highly probative and there was no room for balancing prejudice against probative value."
It went on to indicate that those remarks were truly obiter , though obviously critical of the earlier expression of view in Rosedale .[23]When pressed about this, in argument before us, Mr Burgher who appears for the Appellants, was constrained to accept that the overriding objective now applies to the Employment Tribunal Rules. It may well be that by consideration of the overriding objective, a Tribunal might indeed wish to exclude evidence which technically would be admissible, though perhaps of only peripheral relevance. One can think that proportionality for instance may play a part in this and it is difficult to see how case management powers such as time-tabling a hearing can properly be exercised if a party is simply entitled to insist that evidence is relevant and is entitled to parade it before the Tribunal even though the relevance of it is not central but peripheral.[24]We are therefore inclined to think that there is no indefeasible right of a party appearing before an Employment Tribunal to require the Tribunal to listen to and to examine evidence which is of relevance, but that there may well be a discretion to exclude it. We do not have to resolve this point finally. Our observations here, too, are plainly obiter in the circumstances of this case. But it would follow that we have no sympathy with the essential point of law which Mr Burgher puts forward. We think, rather, that the answer is to be found not in exclusionary or inclusionary rules applied absolutely, but in a proper exercise of the discretion in a judicial manner capable of review by which a Tribunal will include any evidence which is relevant but may, in exercise of the overriding objective, exclude evidence which is of peripheral relevance only or which, for instance, is repetitive.[25]The particular circumstances in this case concerned evidence which was at best peripheral. The argument was that the material which Mr Krelle sought to produce before the Tribunal would have been relevant to the reasonableness of the investigation. We cannot think that it could have had any central relevance. It is not for a Tribunal to re-hear and re-try issues which an employer has itself heard and come to a decision about. The Tribunal simply has to review what the employer has done, bearing in mind the statutory background set by s98 of the Employment Rights Act 1996 .[26]Moreover, in this particular case, the substance of that which Mrs Krelle wished to produce could have been dealt with easily by a few focused questions in cross-examination as again, Mr Burgher was constrained to accept in the course of his submissions. It did not need her evidence or a trawl through documents. Further, the reason for the investigation does not, in our view, depend upon whether or not there was evidence which might have been uncovered by an employer if an employer had pursued the turning over of every last stone. Part of a reasonable investigation is permitting an employee a reasonable opportunity to produce material in his own defence. Given that Mr Krelle had been dismissed by the disciplinary panel but had an appeal, we understand entirely why the Tribunal should, in paragraph 46, have expressed concern as to why the material which his wife wished to introduce on his behalf to the Tribunal had not been produced on appeal. It is implicit in that that they considered that there was a reasonable opportunity for him to produce such material to his employer - and the reasonableness of the investigation which includes any hearings and they way in which they were conducted is a matter of overall judgment and assessment. The Tribunal would have come to the conclusion that there was a reasonable investigation of that misconduct which presumably it had in mind (though did not express). We simply cannot say whether the Tribunal was entitled to come to that view without knowing what, within reasonable precision, that misconduct was which, as we have indicated in respect of the first ground of the appeal, is knowledge we simply do not have.[27]Accordingly, even if we had been persuaded that the law was otherwise than we have decided in response to Mr Burgher's initial submission to us, we would not have been attracted by this ground of appeal. As we have said, however, that decision academic.[28]Accordingly, it is clear that this appeal must be allowed and the matter remitted to an Employment Tribunal for re-hearing. Mr Burgher has argued that remission should be to a fresh Tribunal. Mr Solomon has argued that it should be to the same Tribunal. The principles which we have to apply are those which have helpfully been identified by this Tribunal in the case of Sinclair Roche & Temperley & Ors v Heard & Another [2004] IRLR 763 . There, at paragraph 46, six considerations are set out: proportionality, the passage of time, bias or partiality, whether there has been a totally flawed decision of the Tribunal whose decision is under appeal, whether it is right to give the same Tribunal a second "bite at the same cherry", all balanced by the sixth factor, the professionalism which Tribunals must be expected to have and to show.[29]We have no doubt that there is here no question at all of any bias or partiality in the Tribunal which heard the case. None has been suggested. The decision is not totally flawed in our view. Rather, the Tribunal may have assumed the fact that everyone knew what misconduct precisely it was talking about. We have no doubt that the Tribunal was, and would be, thoroughly professional in its approach. We do have, however, concern about two matters. One is the passage of time. The Tribunal here first heard evidence in October 2004. That is now over a year and a quarter ago. Secondly, we are conscious that the misconduct alleged here is dishonesty of a serious kind. The Tribunal has dealt with two employees in a way in which it was said with some force, as we have indicated, that there may not have been a proper distinction in the roles played between one and the other.[30]On balance, having regard to in particular what is said at paragraph 46.5, of Sinclair Roche (though conscious, as we are, of the professionalism of this, typical of all, Tribunals) we think that it is right in this case that the matter should be remitted to another Tribunal. Accordingly, that is what we shall order on this appeal.