NCP SERVICES LTD v MR G TOPLISS [2010] UKEAT 0147_09_1501

EMPLOYMENT APPEAL TRIBUNAL
BAILII case number: [2010] UKEAT 0147_09_1501Case No Appeal No. UKEAT/0147/09Venue 58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS
Between
NCP SERVICES LTDAPPELLANTMR G TOPLISSRESPONDENT
Before
Mr Justice Langstaff Mr R Lyons Mr T MottureDate 15 January 2010
[1]APPEARANCES For the Appellant MR O SEGAL (of Counsel) Instructed by: Collinson Grant Ltd Ryecroft Aviary Road Worsley Manchester Lancashire M28 2WF For the Respondent MR A BERTIN (Solicitor) Employment Relations Solicitors Yewgate Barn Old Road Elham Canterbury Kent CT4 6UH SUMMARY PRACTICE & PROCEDURE: APPELLATE JURISDICTION/REASONS/BURNS-BARKE UNFAIR DISMISSAL: COMPENSATION PRACTICE & PROCEDURE: COSTS Appeal in respect of the award by the Tribunal of £3,000 costs, and cross-appeal in respect of the calculation of future loss of £35,700 both allowed, because the Tribunal had failed to give any adequate explanation of these awards, and in particular how the figures were arrived at. A further point arose during the hearing before the Appeal Tribunal, as to which there appeared to be no authority – that is whether on remission to a Tribunal to reconsider the award in respect of future loss it should have regard to circumstances as they were at the time of making the decision appealed from, or whether it should have regard to circumstances as they will be on the date the remitted case is determined by it. It was held that the latter is the appropriate course. THE HONOURABLE MR JUSTICE LANGSTAFF This case concerns an appeal and a cross-appeal from a decision of an Employment Tribunal at London Central made on 11 December 2008, reasons for which were sent to the parties on 27 January 2009. In each case the argument suggests that the Tribunal has insufficiently explained the rationale behind its conclusions. The underlying facts[2]What gives rise to both appeal and cross-appeal was the dismissal from his senior and national post as the National Operations Manager DVLA for NCP Services Ltd, whom we shall call "the employer", of the Claimant, whom we shall call "the employee". That dismissal was effective on 30 April 2008. In essence, the employee alleged that he had been dismissed from his post because he had raised certain concerns which required protection under those parts of the Employment Rights Act which derive from the Public Interest Disclosure Act. The fact that they were protected disclosures was accepted.[3]The employer averred that the employee had been dismissed for some other substantial reason. That reason was said to be that the client, with whom the employee liaised in his post, had expressed the view that the employee should be removed from so doing. The Tribunal concluded that the reason for dismissal was that the employee had made protected disclosures. It rejected the employer's case as to the reason for dismissal. Further, it noted that there had been problems with the notification of the impending dismissal.[4]In conclusion, the Tribunal found that the Claimant had been unfairly dismissed, contrary to section 103A of the Employment Rights Act 1996 . They concluded that the dismissal was automatically unfair. That was because of the breach of the statutory disciplinary procedure. It awarded an uplift of 20 per cent on the compensatory award. It determined that a claim of detriment contrary to section 47(b) of the 1996 Act failed because the Tribunal did not have jurisdiction to hear it and it awarded total compensation of £162,042. It also made a decision as to costs. That decision formed the basis of the appeal by the employer.[5]The reasoning is set out at paragraph 66 of the decision. It says:
"We now go on to costs. The Claimant sought an order for his costs to be assessed by a County Court Judge on the grounds that the Respondents acted unreasonably in resisting this claim. The Tribunal do consider that the Respondents have in some ways in resisting this claim behaved unreasonably and orders that the Respondents do pay a contribution towards the Claimant's legal costs of £3,000."
[6]As to this Mr Segal, who appears for the employer, argues that the reasons given are simply insufficient to understand first why the order was made at all, and second, why the amount of £3,000 was selected as it was.[7]In this criticism he was joined, so far as paragraph 66 is concerned, by Mr Bertin who as a solicitor appears for the employee. When the matter came before this Tribunal for consideration on the papers Silber J directed that an opportunity should be given to the Tribunal to expand upon its reasoning, which was accepted to be insufficient. In a letter dated 7 July 2009 the Tribunal did so. It said this:
"The Tribunal found that the Respondents had failed to comply with the statutory disciplinary procedure yet had still resisted the claim of ordinary unfair dismissal and had stated and persisted in arguing that the DVLA had requested the Claimant be removed from the contract, where that quite clearly was not the case. It was unreasonable to resist the claim and to proceed in that way - that added to the Claimant's costs. The Tribunal felt a contribution towards the legal costs of £3,000 was appropriate. It was because the DVLA had not asked for the Claimant's removal we believed the Claimant was dismissed for making the protected disclosures."
[8]The jurisdiction to award costs derives from schedule 1 of the Employment Tribunals (Constitution and Rules of Procedure) Regulations 2004 . That provides, so far as material here, that a Tribunal shall consider making a costs order against a paying party where, and I go to paragraph 40, sub-paragraph 3:
"... the paying party has in bringing the proceedings, or he or his representative has in conducting the proceedings, acted vexatiously, abusively, disruptively or otherwise unreasonably, or the bringing or conducting of the proceedings by the paying party has been misconceived."
[9]Here Mr Bertin frankly accepts that the additional reasons given by the Employment Judge do not materially assist to understand why it was that the figure of £3,000 was adopted. It appears to be an entirely arbitrary figure. Moreover, insofar as there is any ground for awarding any costs at all this appears to have two bases: the first is that the employer should have recognised that it had failed to comply with the statutory disciplinary procedure and therefore not have resisted the claim of ordinary, unfair dismissal. That was one of the two factors; the second being to persist in arguing that the DVLA had requested the Claimant to be removed from the contract, where that was not the case. As for the Tribunal concluding that there had been an addition to the Claimant's costs Mr Bertin, in frank and open submissions before us, accepted that in the course of a hearing which took one day no additional time had been spent in dealing with the "ordinary unfair dismissal", as the Tribunal called it, beyond that which would have spent in any event. In other words, there had been no obvious addition at all on this basis to the costs.[10]Secondly, Mr Segal points out in his submissions that the Employment Tribunal made an uplift of 20 per cent to the damages figure which was not disputed in respect of the employer's failure to comply with the statutory procedures. To order that on these grounds a sum should be paid by the employer was to require the employer to pay twice for the same default. We consider this point to be well justified and it has not specifically been rebutted by Mr Bertin.[11]In short, there is, as it seems to us, no proper basis for suggesting that any addition to the actual costs was a consequence of the first of the two matters to which the tribunal now says it had regard.[12]As to the second, that the employer argued that the DVLA had requested that the Claimant be removed from the contract where that was not the case Mr Segal rightly observed that the flavour of the judgment was not to the effect that there had been any cynical attempt to mislead the Tribunal. Indeed, without adverse comment it mentioned that there was evidence before it that there had been an oral request to that effect by a robust and forthright individual acting on behalf of the DVLA. It seems clear (see paragraph 24 of the Employment Tribunal decision) that the DVLA had issues with the way in which the employer was managing its relationship with the DVLA. This was not therefore obviously a case in which the employer was abusing the procedure of the Tribunal by resisting a claim which was obvious.[13]In applying the statutory language, there is no obvious basis arising from the papers to suggest that the employer had acted vexatiously, abusively, disruptively or otherwise unreasonably, or that its conduct of the proceedings had been misconceived. We observe simply that these proceedings were proceedings which ultimately might lead to a very significant award against the employer and indeed did so: where it is not obvious that the employer would lose, it is entirely understandable and reasonable that he would choose to resist such a claim.[14]There is, further, no obvious justification of the figure of £3,000 which appears to have been plucked from the air.[15]Mr Bertin did not in effect resist the appeal with any vigour. His submission to us was that there was no obvious basis for the figure of £3,000. More disturbingly he told us that the basis upon which the Tribunal appears to have made the award was not a basis which was ever argued before it. He had invited the Tribunal to make an award of costs, but not upon the basis which the Tribunal set out, and it thus appears that the Tribunal made a decision upon a basis which has simply never been put to the parties before it.[16]For all those reasons we consider that the appeal in respect of costs must succeed. There is more than one error of law in the determination by the Tribunal. It cannot stand. We simply dismiss it. We do not remit this part of the appeal for any further consideration.[17]We turn to the appeal, which has more financial substance. That is the employee's appeal as to the way in which this Tribunal assessed compensation. The background needs to be briefly stated. The employee earned as near as makes no difference to £70,000 gross salary per year at the date of dismissal. He had not by the time of the Tribunal, some eight months after his dismissal, yet secured any further employment. He was then 49. In his witness statement before the Tribunal he gave evidence of his attempts to find further employment which was supported by a number of letters which he had written and copies of advertisements which he had answered in his attempts to find substitute employment. No adverse comment appears to have been made at the Tribunal about his attempts, although we are told that there was some cross-examination about those advertisements.[18]Further, he produced for consideration by the Tribunal a report from an employment consultant, a Mr Nicoll of Keith Carter & Co. That report set out various matters of fact which informed the expert conclusion of the expert. Insofar as it did so, we are told that those matters of fact were accepted and adopted by both parties. The Tribunal itself recorded, and we take it to be a reference to this agreement at paragraph 60, that whilst the Respondents accepted the findings they did not agree with the conclusions of the report.[19]Those findings, or alternatively put, matters of fact, included a table at paragraph 60, internal page 17 of the report, setting out the annual gross pay for male full time employees across the United Kingdom for jobs which came within the description "transport and distribution managers". It showed that the range was such that the half way point in the earnings scale, in terms of the number of individuals within it - the median point - was set at a gross salary of £32,950 per year, and the mean or average at £43,902. Both were significantly less than the pay which the employee had been receiving, albeit he was located in the south east and enjoying a job which had a national rather than a regional scope as presumably many of the transport and distribution managers tabulated did.[20]In his report Mr Nicoll expressed the view that it would be unlikely that the employee would return to employment earning as much as he had been earning with the employer. There would thus be a period of time before he obtained employment at all and thereafter a period of time in which his earnings were less. In Mr Nicoll's view that period would probably extend for the rest of his working life.[21]No contrary evidence from any expert was filed by the employer. However, it must be recognised that an Employment Tribunal is composed as it is, including lay members, as it does, so that it can apply its own knowledge of the employment position in its locality. An Employment Tribunal consists in effect of experts who are entitled to evaluate the evidence before them in the light of their own knowledge and experience generally of the jobs market. Moreover, it is trite law that even if evidence is given by an expert and is unchallenged it does not have to be accepted insofar as it consists of evidence of opinion. It was thus open to this Tribunal, should it wish to do so, to depart from the views expressed by Mr Nicoll.[22]What the Tribunal did was set out that its jurisdiction to make an award derived from section 123 of the Employment Rights Act 1996 . It noted that figures had been agreed as to a basic award. It might have added that the uplift of 20 per cent was not in dispute. The only matter which was in dispute was that of future loss. As to that at paragraph 63 it said this: "The future loss is a matter for the Tribunal on the one hand the Claimant is asking for compensation looking some considerable time ahead and the Respondents obviously urging the Tribunal to find for a shorter period. This is a difficult task for any Tribunal we have to look into the crystal ball but in reality what we have to do is to make an award such as the Tribunal considers just and equitable having regard to all the circumstances an award just and equitable to compensate for loss arising from the unfair dismissal." (sic)[23]Paragraph 64:
"The Claimant was a high earner. On the one hand it will take him some time to get back into the job market earning at that rate although we notice from his past history he has an impressive and full employment history never having been out of work since the 1980s."
[24]Paragraph 65:
"Doing the best we can we make an award for future loss which includes the health care element we make an award of £35,700."
[25]It then dealt with various other awards which are not the subject of any dispute before us, applied the uplift of 20 per cent and conducted a grossing up exercise in respect of the impact of taxation. It came to a total of £162,042, as we have already indicated.[26]When this came before HHJ Peter Clark, on a preliminary hearing in which he sat with lay members, he noticed (see paragraphs 16 to 19 of his judgment) that Mr Nicoll had divided his assessment of loss into three periods: the first period was one of past loss. So far as future loss was concerned, the second was a period of complete loss of earnings until any employment was reached; the third period was one in which there was a claim for future partial loss. HHJ Peter Clark observed this at paragraph 18:
"The difficulty we have is that the Tribunal provides no reasons for effectively rejecting the whole of the stage 3 claim for future partial loss. That lacuna necessarily requires that this part of the cross-appeal also proceeds to a full hearing. We do not think it appropriate given the guidance of Dyson LJ in the case Barke to return the question of the third stage loss to this Tribunal for further reasons under the Burns/Barke Procedure. Such a course may be perceived on the part of the Claimant as giving the Tribunal an opportunity to fill a gap with ex- post facto reasoning rather than simply articulating those reasons which were inchoate at the time their judgment was delivered."
[27]The employee accepts that if the figure of £35,700 had been explained that there might have been a proper basis from which it could be reached. It could fall within the range available to the Employment Tribunal. It was, after all, entitled to come to its own conclusion and reject, as implicitly it did, the conclusions which the expert, Mr Nicoll, had produced.[28]Equally, the £35,700 might be the product of a calculation taking a weekly loss for the balance of the period which Mr Nicoll had identified in his report as extending until July 2009 which rounded would produce the figure of £35,700, but in that case it would simply reject the case that the employee would obtain any employment earning anything at all less than the highly-paid job he had previously enjoyed. This might be thought surprising. Equally, it might have been a generally broad assessment taking into account the prospects of obtaining some employment early and graduating from that to a "full rate" job - full rate in the sense that that was the rate he had enjoyed in his job as national manager from which he had been dismissed.[29]It is equally possible that the award might have been arbitrary, just as the figure in respect of costs appears to have been arbitrarily plucked from the air. Some support for that may be gained by the reference in paragraph 63 to the Tribunal looking into a crystal ball. The process is not one of looking into a crystal ball, without more. It is a process of assessment which necessarily has to comprehend that it may not be accurate as to the events which it anticipates will probably occur, but must nonetheless be based upon such facts as are available at the time, giving them appropriate weight. It is not pure guesswork.[30]Here the facts identified by the Tribunal were that the Claimant was a high earner - but that might suggest that any alternative employment was likely to be at a lower rate, at least if the expression "high earner" is to be regarded as a reference to his position amongst people doing the sort of work he did as opposed to being a reflection of his earnings by contrast to the earnings of the general populous. It is not clear. When the Tribunal say it will take him "some time" to get back into the job market it is unclear what period of time is meant.[31]The Tribunal balance those matters which might tend to a higher award by the consideration that the Claimant had had an impressive and full employment history, never having been out of work since the 1980s. That is undoubtedly the case and would argue for a lower award, although the Claimant had, at the date of the Tribunal, been out of work by then for some seven or eight months without adverse criticism from the employer.[32]There is simply no way of knowing how the £35,700 figure comes to be justified. It has the appearance of a calculated figure but it might equally be arbitrary. It may be, as we have indicated, that it is a figure reached without the Tribunal reminding itself that it needed to add a figure for continuing partial loss (if that is what it thought).[33]Mr Segal reminds us that the basis primarily adopted for the appeal by the employee was that there were inadequate reasons. A Tribunal, he urges, may often express a conclusion as to future loss in a very brief passage. He gave in his example that it might often conclude, without adverse comment, such as, "The employee will get another job at the same rate within X weeks". We simply observe that in this case, even that simple formula, if it had been appropriate, was not adopted. We have no means of knowing how the figure was calculated.[34]It is well-established that it is an error of law to give insufficient reasons for a decision. There are several reasons for that. The first is that the parties are entitled to know respectively why one has succeeded and the other has lost, but secondly giving reasons operates to remind a decision-making body such as a Tribunal of the factors which must weigh in its determination on one side and the other, and thirdly the giving of reasons entitles a court on review, such as this Tribunal, to understand the basis for the award and thus to detect whether there has or has not been an error of law in its composition.[35]Where there have been reasons as inadequate as are these, we are simply left in the position of having to say with regret that no proper decision has been reached upon the claim insofar as it relates to a claim for future loss. We therefore have to consider what the consequence should be. Mr Bertin asks us to decide ourselves upon the claim for future loss. We decline his invitation. Mr Segal suggests that rather, and we agree, the matter must be remitted to a Tribunal for reconsideration. Here too there is a divergence of view. Mr Bertin argued that we should remit this part of the claim to a Tribunal distinct from that which gave the original decision. His basis for so doing was twofold. First, because this Tribunal had not produced any satisfactory reasoning, and secondly because of the fear expressed by His Honour Judge Peter Clark in the passage which we have already quoted from his earlier judgment.[36]When pressed, however, he observed that he did not strongly maintain his submissions. He acknowledged that if the principal complaint was that the Tribunal had insufficiently expressed reasoning which might be, though not necessarily was, proper and adequate, that there was no basis for supposing that that Tribunal would be biased against either party. Indeed it would be surprising if he were able to claim that, having succeeded upon the basis he did before this particular Tribunal.[37]Mr Segal invites us to remit the matter to the same Tribunal. We agree with him that there is no basis properly here for thinking that this Tribunal cannot, in the light of our guidance which we shall give, produce an entirely appropriate determination. That determination must, in our view, set out something of the calculation which the Tribunal has adopted and the assumptions which it inevitably makes when doing so. Such assumptions will be assessments in the light of the experience of the employment judge and the lay members.[38]A Tribunal is entitled to reach its own conclusion but here it must say what that conclusion is as to the period of time that it expects the employee to be without a job in consequence of the wrong for which they are compensating him. Where an issue is raised as a matter of importance before a Tribunal – that once the employee returns to work he may return in a less well-paid capacity, at least for a period of time - we consider that the Tribunal should deal with that. It may say that it rejects it because it considers that the employee will have little difficulty in returning to a post at least as well-paid as that from which he was dismissed. That is open to it but it may, if that is its judgment, conclude that there will be a period of time in which it may be difficult for someone who was (relatively speaking) a high earner to return to the giddy heights of such earnings. It may be that it comes to the conclusion that the employee never will climb to those peaks again - although we note that in paragraph 64 in the second sentence this Tribunal appears to have come to the view, as it was well entitled to do, that at some stage, though we do not know when, this employee would indeed return to the earnings at the level he would have enjoyed had he remained in employment with the employer.[39]It is not necessary, in our view, for much space to be taken up with those observations but they need to be made to a sufficient degree to tell the parties why one has won, why the other has lost and so far as compensation is concerned therefore, how the award is calculated and upon what assumptions it has been made. Anything less is insufficient. We emphasise that this guidance is specific to the facts of this case. There may be many cases before Tribunals in which a Tribunal is entitled, because of the nature of the facts in dispute before it, to express its decision simply and shortly. Where serious issues are, however, raised as to computation and future loss in the way in which they have been in this particular case, more is required, as we have indicated. Inevitably any judgment has to be responsive to the particular facts and circumstances of the particular case, as does this.[40]In our view, when the Tribunal on remission is seized of the case again it must take as a given the sums already agreed in respect of past loss. It must accept the uplift of 20 per cent and it must acknowledge that whatever determination it makes a grossing up exercise will have to be undertaken of the same sort as was referred to in paragraph 65 of the previous decision. The only issue for it to consider is future loss in the sense of loss arising after the date of the Tribunal decision.[41]Here an interesting question arose which the parties might have but did not anticipate in advance of this hearing. That is if there is to be a remission to determine future loss which the Tribunal itself had recognised was necessarily uncertain in its estimation at the date of the original hearing, is the Tribunal on remission to consider the position in the light of what is now known? The passage of time will inevitably have shone light as a matter of fact upon what has in truth been the real loss after 11 December 2008. It may be, for instance, that the position is that the employee will have obtained a better paid job within a few months. It may be that he has obtained a less well-paid job in which he is still employed. It may be that he is still unemployed.[42]All these are matters of fact just as there will be a factual basis for an assessment of whether the employee has taken appropriate steps to mitigate his loss. We have to ask whether the Tribunal should conduct an exercise which has an element of unreality about it, in putting itself back into the position it was in December and reconsidering the evidence then before it in order to determine what the loss has been since 11 December. One view might suggest that is what it should do. We do not agree. We consider that the starting point here is that no proper decision has yet been made upon the claim insofar as it concerns future loss. It is as if the claim for future loss had simply been adjourned until the date it will be reconsidered.[43]It follows that for an award properly to be made in respect of the losses from 11 December, the Tribunal will be entitled to consider what has been the factual position since. It seems to us this has three main benefits: First, and generally, the purpose of an award is to compensate for a wrong which has been done. The figure to be awarded is one which is just and equitable in respect of that loss. Where part of the loss is better known than by a process of estimation conducted at the time, even though aspects of it still remain uncertain it is, in our view, fairer, or to use the words just and equitable, to take that situation into account. It has the result of substituting certainty for that which was uncertain though estimated on the best available evidence.[44]Secondly, we see no proper reason why a court knowing, as it would, what the present position is should ignore it and substitute instead a hypothetical situation which does not bear any direct relation to current reality.[45]Thirdly, we consider that if a Tribunal's decision as at any given date is to be made as to the future that the law should assume that a proper decision will get the calculation right. Where it is known what the right calculation would have been -because time has simply shown it - then the law should assume that that would be the calculation which a court would have made. Thus, on this third approach any proper judgment as at December 2008 as to what would be the future losses would have identified as losses those which now appear to have been losses. One should not assume that the law would produce an unreal and inaccurate answer if one knows what the real and accurate answer is.[46]We appreciate that those reasons and that approach has not been subject to detailed argument before us because, as we say, the point was not foreseen by either advocate in advance. Mr Segal, frankly for his part, just as Mr Bertin was frank in his earlier submissions as we have already noted, confesses that he can see arguments both for that approach and for the converse which would restrict the Employment Tribunal to the material available to it at the time it made its original decision.[47]We have not thought it right to adjourn the giving of this judgment so that further argument might take place in the interim because the substance of the judgment was a matter about which we were entirely clear. We have indicated a strong preference and strong view as to what the correct answer is, and Mr Segal's response, though he is more likely than Mr Bertin to be affected by it, is equivocal. But we do think that in these circumstances it is right that we should invite any further submissions within a period of three weeks from today, should either party become aware of any authority which has not been cited to us which would form the basis for a review of this part of our decision.[48]Accordingly, and perhaps unusually, we extend time for such a review for that purpose, emphasising that it would be necessary not to have a priori argument but arguments supported by authority, if that were to be the case. Plainly, if we had adopted an approach which is unconsciously in error we would wish to be told about it. If there is no authority which establishes the contrary then our judgment stands as it is. We should add, we are not aware of any and have not been told of any.[49]We should, finally, indicate that the first step that the Tribunal should take should be a hearing for directions, because the Tribunal will wish to consider what evidence it should hear. We, for our part, consider that they are not restricted, for the reasons we have given, to the evidence which was available before the original Tribunal.[50]We therefore allow the appeals of both parties, overturn the award of costs, and remit the question of future loss to the same tribunal to be determined in accordance with this judgment.