Appeal No. EATS/0071/03

EMPLOYMENT APPEAL TRIBUNAL
52 MELVILLE STREET, EDINBURGH EH3 7HF

	At the Tribunal
	On 24 March 2004

 
Before
THE HONOURABLE LORD JOHNSTON
MR M R SIBBALD
DR W M SPEIRS

 

JAMES DAVIDSON 	APPELLANT

 

INDUSTRIAL & MARINE ENGINEERING 
SERVICES LTD	RESPONDENTS

 
 
Transcript of Proceedings
 
JUDGMENT

 

 

 

 

	APPEARANCES

 

For the Appellant	Mr P Sharp, Solicitor
Of-
Messrs Ledingham Chalmers
Solicitors
Johnstone House
52-54 Rose Street
ABERDEEN   AB10 1HA

 
For the Respondents

 

 

 	 
Ms L Marsh, Counsel
Instructed by-
Messrs Raeburn Christie
Solicitors
16 Albyn Place
ABERDEEN   AB10 1PS

 

LORD JOHNSTON:
 
1.	This is an appeal from a decision of the Employment Tribunal sitting in Aberdeen which made a finding of unfair dismissal and assessed a compensatory award which it then reduced by 40% following the approach discussed by this Tribunal in Fisher v California Cake & Cookie Ltd [1997) IRLR 212, which, in turn, was based on a decision of the House of Lords in Polkey v A E Dayton Services Ltd [1988] ICR 142.  The appeal is taken by the appellant against that finding.  The hearing before us was restricted to that matter.
 
2.	The reasoning of the Tribunal in this respect, which was divided, is as follows:-
 
“However, as we decided that the dismissal was unfair for procedural reasons we were required to consider the so-called “hypothetical question” namely whether if a fair procedure had been adopted in the present case it would have achieved the same result.  In giving his judgement in Polkey Lord Bridge quoted with approval on page 508, para 30, a passage from Browne-Wilkinson J in Sillifant –v- Powell Duffryn Timber Ltd [1983] IRLR 91:-
 
“There is no need for an “all or nothing decision.”  If the Industrial Tribunal thinks there is a doubt whether or not the employee would have been dismissed, this element can be reflected by reducing the normal amount of compensation by a percentage representing the chance that the employee would still have lost his employment”.
 
The question of how an employee would have been treated had a fair procedure been adopted, therefore, is not wholly relevant. Whilst it is immaterial to the question of whether the dismissal was fair or not, it is highly relevant to the question of the appropriate remedy and, in particular, what, if any, compensation should be awarded. Again, an important passage from Lord Bridge’s judgement in Polkey makes that point (page 508, para 30):- 
 
“If it is held that taking the appropriate steps that the employer failed to take before dismissing the employee would not have affected the outcome, this will often lead to the result that the employee, though unfairly dismissed, will recover no compensation, or, in the case of redundancy, no compensation in excess of his redundancy payment”. 
 
This issue and the “hypothetical question” was considered by the EAT Fisher –v- California Cake & Cookie Ltd [1997] IRLR 212.   Lord Johnston said this in his judgement at Page 213, para 7):-
 
“In seeking to resolve this matter, it is necessary to make two observations of a general nature. In the first place, when an Industrial Tribunal is addressing the question in the context of remedy, against a background of procedural unfairness, whether a fair procedure if it had been adopted would have achieved the same result, the Tribunal is always addressing itself to a hypothetical question since dismissal has in fact occurred.  The role of the tribunal in this narrow context does not bear upon its general role to determine the reasonableness of dismissal, where it has been frequently said that the Tribunal should not conduct what amounts to an independent investigation and reach its own conclusion. In this context, it must conduct an investigation by acceptable evidence to achieve an answer to the hypothetical question, and the only decision can be that of its own.  Secondly, it is necessary in addressing this issue, assuming the Tribunal determines the evidence at least supports the position the dismissal would have incurred in any event, that the Tribunal thereafter address that question as a matter of probability, to be assessed in percentage terms.  In many cases, failure to address the secondary question of assessment of probable risk will render a tribunal’s approach flawed.     However, if it does make an assessment upon the evidence, that is a question of fact which would rarely be interfered with by this Tribunal”.  
 
Although unanimous in its decision that the applicant had been unfairly dismissed, the Tribunal was divided on this issue (one member dissenting).   The majority view was that even if there had been fair and proper consultation with Mr Davidson it was improbable that he would have been retained in the new structure in preference to the two other Sector Managers, David Wren and Jeremy Addison. This was because they had specialist knowledge, contacts and experience which Mr Davidson did not possess. In the case of Mr Wren it was in relation to the MOD work which was valuable and important business for IMES. In the case of Mr Addison it was in relation to “Process Industries” and, in particular steel work which they were keen to retain and develop.   They were both made redundant at the same time as Mr Davidson as there were no Sector Managers in the new structure (JI13) but, unlike Mr Davidson, they were redeployed into new positions which still allowed them to deal with their MOD and “Process Industries” work.  Further, as we recorded above, we accepted the respondent’s evidence that, so far as the development of the oil and gas side of the business was concerned (the sector for which Mr Davidson was responsible), their view was the it was “growing organically”: it was the employees with technical expertise, rather than salesmen, who were growing the business through their existing contacts.
 
However, Mr Davidson was the only employee who was made redundant at the time.  He was in a senior management position and his dismissal was inconsistent with Mr Maxwell’s goal of growing the business, very substantially indeed.  He was well qualified and had considerable experience.  Further until Mr Maxwell’s arrival he had been progressing well with IMES and his work had not been criticized.  What was significant in this context was our finding that IMES, and Mr Maxwell in particular, had failed properly to explore redeployment for him in the new structure in the manner which he had done for Mr Wren and Mr Addison.  In particular, Mr Maxwell did not look into the possibility of Mr Davidson working for “PUMA” and developing its side of the business and he did not consider any business development role for Mr Davidson as he asked him to do.  It was clear that Mr Maxwell had decided, without reference to Mr Davidson, that he had no future with IMES.  That was why he was not told about the strategy meeting at the end of April.  Nor did IMES consider the implications of Sarah Williams’ arrival, only shortly after Mr Davidson’s dismissal, to fulfil a business development type role.  Moreover, if his redundancy had not been sprung upon him in the manner it was , Mr Davidson would have been afforded the opportunity of considering the new structure and he would have had time to suggest how he might be accommodated within it.  Indeed, he said that he would have been prepared to consider a demoted position rather than losing his job.  However, given the majority’s view that he probably would not have been retained in preference to either of the two other Sector Managers, the majority was of the view that there was a 60% chance that Mr Davidson would still have been dismissed had the respondent followed a fair procedure.
 
The dissenting member did not agree.  Mindful of the decision in King –v- Eaton Ltd (No 2)[1998] IRLR 686 the dissenting member was of the view that “the procedures” which the respondent followed (such as they were) were so fundamentally flawed that it was impossible to assess the percentage chance of the applicant still being dismissed had a fair procedure been followed: it was impossible to envisage what would have happened in the hypothetical situation of the unfairness not having occurred.  There was the possibility of him being retained not only in preference to either Mr Wren or Mr Addison but also in preference to some other employee if the “pool” had been widened.  There were also a number of other possibilities which could have been explored with him which might have avoided his dismissal, not least of which was the possibility of him working for “PUMA” or performing some business development role in the new structure.  There was also the possibility of Mr Davidson being retained in a demoted position, which he said he would have been prepared to consider, rather than being dismissed.  The dissenting member was of the view that the procedural flaws were so fundamental and the possibilities of redeployment so varied that it was impossible to answer the hypothetical question by determining the percentage chance the applicant would still have lost his employment had a fair procedure been followed.
 
However, the majority view prevails.  This means that the compensatory award falls to be reduced by 60% to £15,238.
 
Finally, the applicant’s solicitor made a request for an award of expenses against the respondent in terms of Rule 14 of the Employment Tribunals (Constitution and Rules of Procedure) (Scotland) Regulations 2001 (“the Rules”).  Her written submission in this regard and the response from the respondent’s solicitor are referred to for their terms.
 
At a Hearing on Directions on 10 January 2003 the applicant’s solicitor made a request for an award of expenses to that date.  However, the Chairman took the view that while the respondent and its solicitors, in particular, could be criticised for their conduct of the proceedings there was no basis for an award in terms of the Rules.  Accordingly, her request was refused.  In view of this we decided that we should only consider the respondent’s conduct of the case thereafter.  In this regard there were two aspects which we considered to be relevant.  The first was that it was not until 13 February 2003 that the respondent’s solicitor conceded that there had been “a procedural failure to consult the applicant”.  This was almost six months after the Notice of Appearance had been lodged. On the basis of our clear findings concerning the significant procedural defects in this case, we were of the view having regard to the terms of Rule 14, that this was unreasonable.  This was a concession which could, and should, have been made much earlier. Indeed, given Ms McPherson’s advice to Mr Maxwell before the dismissal there was no reason why this concession could not have been made in the Notice of Appearance.  As a consequence of the delay in making this concession the applicant incurred unnecessary expense as his solicitors had to prepare for a fuller case, on a different premise, until the concession was made.
 
The other aspect was the failure by the respondent’s solicitor to appear for the start of the Hearing at 10am on 23 April 2003.  He did not appear until 11am.  While we were mindful of his explanation in his written submission, in our view he acted unreasonably.  He was aware that the Tribunal Hearing was due to commence at 10am that day.  He knew that such Hearings normally commence timeously.  Yet, apparently he failed to arrange any cover in Court for the Jury Trial in which he was instructed, that very day.  Further, he took no steps whatever, prior to the Hearing, to advise the Tribunal office that he had been detained in Court.  As a consequence of the late start the Hearing was not concluded on 23 April as had been anticipated.  It was necessary to continue the case for written submissions which meant that the applicant incurred further unnecessary expense in the form of legal expenses.
 
We decided in these circumstances to make an award of expenses in terms of Rule 14(3)(a) and considered that £1,000 would be an appropriate sum.
 
The respondent’s solicitor also made a request for an award of expenses against the applicant in his written response.  We had no difficulty refusing this request.  In view of our findings above, there is no basis for such an award in terms of the Rules.”
 
3.	Mr Sharp’s argument for the appellant was short and to the point.  He maintained that the majority had misdirected themselves in assessing the figure of 60% as the relevant percentage having regard to the evidence.  He submitted they appeared to have proceeded on some form of understanding of a selection process which was not in fact effected by the employer in any way.  There was no consultation and there was a finding within the Tribunal’s decision that such a consultation might have had some effect (page 8 line 20).
 
4.	He referred us also to a finding of the Tribunal at page 7 line 44, that the employer seemed anxious or determined to get rid of the services of the appellant as soon as possible.
 
5.	Miss Marsh, appearing for the respondents, referred us to our own decision of Wincanton Trans European Ltd v Whiteford EATS/0022/03, 28 August 2003, in order to remind us that this Tribunal must not interfere with issues of assessment of contribution in this context, or, in the context of conduct, unless the decision reached by the Tribunal was one which no reasonable Tribunal could have achieved.  We accept this test at once.
 
6.	She also submitted against the background of King v Eaton Ltd (No 2) [1998] IRLR 686 that the process involved the construction of a hypothetical question as discussed in California Cookie and thereafter an answer based on the evidence had to be struck.  She submitted that the hypothetical question could be constructed in the present case against the background of the evidence that the Tribunal assessed, and, that thereafter, the apportionment was a matter for the Tribunal which should not be interfered with at this level.  Her submissions were powerful and to the point and we mean them no disservice by summarising them in this short manner but this is the nub of the case.
 
7.	We have no hesitation in holding in this case that the view of the majority reflects a misdirection of the evidence to the test that had to be formulated.  We furthermore consider that the view of the minority points to the fact, for the reasons that he gives, that the question cannot properly be formulated.  Properly understood, the issue here was simply that the employer determined to terminate the employment, apparently on grounds of redundancy, at least to the satisfaction of the Tribunal in that respect.  But the process which was adopted was so unfair that the hypothetical question cannot be formulated.
 
8.	This seems to us to be the correct approach and we agree with it.
 
9.	It follows that the test in Wincanton is met in this case inasmuch that no reasonable Tribunal could have achieved the result of the majority view.
 
10.	In these circumstances this appeal will be allowed, the decision of the Tribunal in relation to the monetary order will be quashed and the figure of £38,096 will be substituted.