Appeal No. EAT/16/90

	EMPLOYMENT APPEAL TRIBUNAL
	4 ST. JAMES'S SQUARE, LONDON, SW1 4JU

		At the Tribunal
		On 20th November 1991 
	Judgment delivered 9th January 1992

	Before

	THE HONOURABLE MR JUSTICE TUCKER

	MR T S BATHO

	MRS M L BOYLE

EMIRATES	APPELLANTS

W PROSSER	RESPONDENT

	Transcript of Proceedings

	JUDGMENT

Revised

	APPEARANCES

For the Appellants	MR I GATT (of Counsel)
Messrs Allen & Overy
Solicitors
9 Cheapside
London EC2V 6AD

For the Respondent	Mr W Prosser in person

	MR JUSTICE TUCKER:  This is an employers' appeal from a decision of the Industrial Tribunal held at London (South) on 26 May and 11 and 12 September 1989, whereby the Tribunal decided that the Applicant (Respondent to the appeal) was unfairly dismissed, but that by reason of his conduct it was just and equitable to deduct 25% from his awards.  The Appellants were accordingly ordered to pay to the Respondent the sum of £6,819.

	The appeal is brought on three questions of law.  First that having made certain findings of fact, the Tribunal misdirected itself in law in failing to consider whether the Appellants would have been entitled summarily to dismiss the Respondent on grounds of gross misconduct.  Secondly, the Tribunal failed to take into account evidence of misconduct discovered subsequent to dismissal.  	Thirdly, alternatively the Tribunal reached a decision which no reasonable Tribunal properly directing itself could have reached.  ie that the decision was perverse.

	The appeal relates only to the issue of compensation.  There is no appeal against the finding of unfair dismissal.

	The Respondent's Answer as originally drafted by Counsel seeks simply to support the Tribunal's decision.  But during the course of argument the Respondent (appearing in person) sought leave which we granted without objection from the Appellants so as to Cross Appeal on grounds that the total of compensation based upon the Respondent's losses should have been calculated, and then the 25% deducted, and that figure assessed to determine if it was the maximum allowed by the Tribunal.  We will deal with that matter straight away.  Mr Gatt, for the Appellants frankly and properly concedes that the Respondent is correct, having regard to the decision in Walter Braund (London) Ltd v. Murray.  "The Times" 29 August 1990.

	Now we return to the substantive appeal.

	The Respondent was aged 32 at the relevant time.  He was employed as a Passenger Sales Manager at the London office of the Appellants' airline business.  He was dismissed on 17 November 1988 for two reasons:
	(1)Dishonestly issuing discounted tickets to a number of people.
	(2)Being in breach of company policy, and revealing commercially sensitive information.

	The reason upon which the Tribunal found the dismissal to be unfair was that the Appellants failed to carry out proper investigations or a proper final hearing, and that those grounds in themselves were not reasonable grounds for dismissal.

	There was another matter, which as the Tribunal found and as Mr Gatt submits, was the only real issue before Tribunal, and is the only real issue before us.  It relates to misconduct by the Respondent which was only discovered subsequent to his dismissal.

	The Tribunal helpfully summarised the matter in this way:-
"In August 1986 the applicant was buying a new family home.  He was at the last minute short of cash to complete the purchase.  His bank probably would not have provided him with a bridging loan and he hit upon the idea of inventing a fictitious transaction to be entered through his personal account.  This transaction is recorded in the document at page 127 which purports to be a ticket requisition document in relation to an alleged package holiday by the appellant and eight of his friends in a ski chalet.  The appellant is of course familiar with generating many such documents and used his expertise to create a document which looked like a genuine travel arrangement for himself and a personal/family ski party.  The box which normally would contain the name of the travel agent or other organisation involved contains the names "Hatton Asplin" which is the name of his solicitors involved in the house purchase.  The applicant accepts that this was a highly irregular method of obtaining this loan.  He has claimed in evidence that he had earlier applied to Mr Hill, one of his superiors for a salary advance in a letter.  This letter has never been referred to in any correspondence between solicitors and has not been the subject of a notice to produce at any formal machinery.  Furthermore when the applicant stated that he discussed the problem with Mr Hill, Mr Hill "suggested" that he employ the device which he in fact used of creating a fictitious personal travel arrangement.  We consider that the applicant was of sufficient seniority to take his own decision on a question of this kind and that he cannot escape a significant degree of personal culpability for adopting this very underhand and irregular method of obtaining an unauthorised loan from his company."

	We have been shown a copy of the document which Respondent prepared.  It is totally bogus, and we agree with Mr Gatt that it was prepared in a sophisticated and underhand manner.  There can be no doubt that it was brought into being for a dishonest purpose ie to obtain money from the Appellants for a purpose for which, if they had known the true facts, they would not have been prepared to advance it.  If the Respondent had behaved honestly, why dress up the document in this way?  It was at least doubtful whether that money has ever been repaid.

	It is said, perfectly correctly, by the Respondent, that the Appellants were fully aware of the fact that he owed money to them on this requisition document, but that is not the point.  What they were unaware of, and what the Respondent kept them in ignorance about was the method by which he had obtained that money, and in particular the fact that he had practised a deception upon them.  Even now it seems that the Respondent is unable to recognise or to concede that this was dishonest.  In our view he was extremely fortunate that the Tribunal were persuaded to take the view of it which they did.  The Tribunal stated that they took into account the fact that the Appellants allowed considerable flexibility and freedom in the operation of these accounts.  But they clearly cannot have intended that to be interpreted as a finding that the Appellants would countenance the fabrication of false documents in order to obtain money for undisclosed and wholly unauthorised purposes.  Otherwise, we ask again, why should the Respondent have taken such elaborate steps to disguise what he was doing, and why did he not reveal the truth to the Appellants on any subsequent occasion when they were pressing him for repayment of this and other liabilities?

	The Appellants' submission to us was that having discovered the extent of the Respondent's misconduct after his dismissal, it was not just or equitable that he should receive any compensation at all.  Had they known of it, the Appellants would have been fully justified in dismissing the Respondent summarily.   That would have been fair in all the circumstances, and accordingly no question of compensation would fall to be considered.  But, it is argued, that the Tribunal failed to consider that question at all, or to direct themselves upon it.  It is submitted that the Tribunal omitted to take this step at all, which is one that has to be considered under Section 74(1) of the Employment Protection (Consolidation) Act 1978, but went straight on to consider the question of contributory fault under Section 74(6).  We think that this is what the Tribunal did, and we are fortified in this view by the contents of the Chairman's letter of 6 July 1990, written to the Registrar of EAT in response to a request for his Notes of the hearing.  In referring to the Appellants' Counsel, the Chairman spoke of his submission on the question of contribution, and quoted passages from his Notes.  But this reveals a misunderstanding of Counsel's submission, which was not about contribution, but about summary dismissal. Counsel for the Appellants was submitting that had the Appellants been aware of the truth, the dismissal would have been summary, that that would have been fair, and that no question of contribution arose, because the Tribunal would not get as far as that in their considerations.

	There is no doubt, on the authorities, that in considering what is just and equitable compensation under Section 74(1), a Tribunal must not only have regard to the loss resulting from the dismissal, but also to the fact that the award must be just and equitable in all the circumstances, and that it cannot be just and equitable that a sum should be awarded in compensation when in fact the employee has suffered no injustice in being dismissed.  In assessing what, if any, compensation should be awarded, a Tribunal is entitled to take into account evidence of misconduct which came to light after the dismissal.  (See W Devis & Sons Ltd v. Atkins [1977] ICR 662 and the speech of Viscount Dilhorne at p.679).

	The test is whether the Respondent's conduct, if known, would have justified dismissal?

	The law is stated succinctly by Neil LJ in TeleTrading Ltd v. Jenkins [1990] IRLR 430 at p.433 para. 25:
"Section 74(1) applies in cases such as W Devis & Sons Ltd v. Atkins, where the circumstances, including the conduct of the complainant, on which the employer seeks to rely to reduce the compensation were not known to him at the time of dismissal.  This conduct could not have caused or contributed to the dismissal, but can be taken into account when the Industrial Tribunal considers what is just and equitable having regard to the loss."

	In our opinion the Tribunal in the present case failed to ask itself this important question ie whether, had the Appellants known about the Respondent's conduct at the time of his dismissal they would have been entitled to dismiss him summarily, and would have done so?

	The further question for the Tribunal to decide is whether, in those circumstances, it would have been just or equitable for the Respondent to receive any compensation at all?

		We are of the view that having failed to direct itself on those questions, the decision reached by the Industrial Tribunal is flawed, and cannot stand.  We accordingly remit the case to the same Tribunal if possible, for reconsideration in the light of our ruling.  It may be that the Tribunal will consider it desirable and helpful to hear evidence from Mr Hill if possible.