APPEARANCES
| For the Appellant |
MR J FALKENSTEIN
(of Counsel)
Instructed by:
Messrs T F Greenshields
19 John Street
Sunderland SR1 1JG |
| For the Respondent |
MR R DOWNEY
(of Counsel)
Instructed by:
Messrs Rayner de Wolfe Solicitors
31 Southampton Row
London WC1B 5NA |
HIS HONOUR JUDGE J BURKE QC
The Issues in the Appeal
- The Honourable Company of Master Mariners ("the Company") is a livery company which has as its headquarters the ship "HQS Wellington", moored at Temple Stairs, Victoria Embankment, London, only a short distance from the Employment Appeal Tribunal. A large reception area on board is available for private hire; at the material time the Company contracted out operations in the reception area to resident caterers.
- From January 1996 Mr & Mrs Armstrong were both employed by the Company as Ship Keepers; their duties were primarily but not only those of caretakers; they lived on board.
- There was a lengthy history of difficulty between Mr & Mrs Armstrong and the caterers. The Company sided with the caterers and did not support their employees; in May 2000 Mr & Mrs Armstrong were called into a meeting with the Company which suddenly turned into a disciplinary hearing, at which Mr Armstrong was accused of gross misconduct and given a final written warning. The warning was quashed on appeal; but the Company immediately reinstated the same complaints. On 19 July 2000 Mr & Mrs Armstrong resigned and subsequently claimed that they had been constructively and unfairly dismissed.
- The Company denied any or any fundamental breach of Mr & Mrs Armstrong's contracts of employment and made numerous criticisms of Mr & Mrs Armstrong.
- The unfair dismissal claims were heard by the Employment Tribunal sitting at London (Central) and chaired by Mr D H Roose on 19 & 20 March 2001. The Tribunal found that Mr & Mrs Armstrong had been constructively dismissed. The Company had not put forward any case that, if there was a constructive dismissal, it was for a potentially fair reason; and accordingly the Tribunal found that the dismissal was unfair.
- The Company has not appealed against those conclusions of the Tribunal.
- The Tribunal went on, however, to find that Mr Armstrong had contributed to his dismissal to the extent of 40%; in their Extended Reasons they did not make any finding of contribution on the part of Mrs Armstrong.
- The Tribunal hearing occurred 8 months after the dismissals. Neither Mr nor Mrs Armstrong, who were at the time of the hearing 61 and 50 years old respectively, had obtained employment. The Tribunal found that they had failed to mitigate their loss by making proper effort to seek work and that Mr Armstrong should have found work within 9 months and Mrs Armstrong within 3 months of their dismissal. Their compensatory awards were limited on that basis.
- Mr Armstrong appeals against the Tribunal's decision that he had contributed to his dismissal. Mr & Mrs Armstrong appeal against the Tribunal's decision that they had each failed properly to mitigate their loss.
The Contribution Appeal
- The Tribunal's decision on the issue of contribution was expressed in these bold terms, in paragraph 17 of their Extended Reasons: -
17 "We find that the first Applicant contributed to his dismissal. He could be difficult, loud and confrontational. There were reasons to explain why he should be so but he cannot be excused on that account. We find that he has contributed to his own dismissal to the extent of 40%."
- Section 123 (6) of the Employment Rights Act provides that:
(6) Where the Tribunal finds that the dismissal was to any extent caused or contributed to by any action of the complainant, it shall reduce the amount of the compensatory award by such proportion as it considers just and equitable having regard to that finding.
The words of this sub-section make it clear and it is uncontroversial that the Tribunal may not reduce the amount of a compensatory award on the basis of the conduct of the employee unless that conduct has to some extent caused or contributed to the dismissal; or, in a constructive dismissal case, has caused or contributed to the repudiatory conduct on the part of the employer which has given to the employee the right to bring the contract of employment to an end. See, for example, the decision of the Employment Appeal Tribunal in Hutchinson v Enfield Rolling Mills Ltd [1981] IRLR 318.
- While section 122 (2) of the Employment Rights Act, which provides for a reduction in the basic award if the Tribunal considers that any conduct of the complainant before the dismissal was such that it would be just and equitable to reduce the amount of the basic award, does not in terms require a causal connection between the conduct of the complainant and the dismissal or, in the case of a constructive dismissal, repudiatory conduct on the part of the employer, it is equally uncontroversial that such a causal connection must be established if there is to be any reduction of the basic award under that sub-section.
- It is also well-established law and was, after initial hesitation, accepted by Mr Downey on behalf of the Company, that no reduction can be made under either sub-section unless the conduct on the part of the employee which is relied upon is culpable or blameworthy; see, for example, Nelson v BBC (No. 2) [1979] IRLR 346.
- The Tribunal's decision, expressed only in the terms which we have set out above, does not identify what Mr Armstrong had done or indeed that he had done anything towards either the caterers or the Company which constituted difficult, loud or confrontational behaviour on his part. In paragraphs 2 to 12 of their decision, in which the Tribunal set out the facts, they did not make any criticism of Mr Armstrong's conduct at any stage of the history. There is nothing in those findings of fact which amounts to any conduct which could justify the characterisation of Mr Armstrong set out in paragraph 17.
- Mr Downey referred to a number of findings of fact, such as the finding in paragraph 2 of the decision, that Mr & Mrs Armstrong "enjoyed a difficult relationship" with the caterers and the finding in paragraph 6 that the position between Mr & Mrs Armstrong and the caterers deteriorated when a new Site Manager took over in December 1998 as findings which demonstrated the Tribunal's view that the breakdown of relationships between the caterers and Mr & Mrs Armstrong was evidence of and caused by the characteristics of Mr Armstrong, described in paragraph 17. However, in the case of none of the findings to which Mr Downey referred did the Tribunal express any conclusion that the difficulties were caused by Mr Armstrong as opposed to the caterers; and there is no indication that they were caused by Mr Armstrong and not Mrs Armstrong, if derived from either of them. Further the Tribunal did not in paragraph 17 make any finding that any conduct on the part of Mr Armstrong was causally linked to the repudiatory conduct of the Company; nor is any such causal link expressed or properly to be implied from their detailed findings of fact in paragraphs 2 to 12 of the decision.
- Finally, the Tribunal did not find that, whatever conduct they had in mind as amounting to Mr Armstrong's being difficult, loud and confrontational, that conduct was, in the circumstances of the Company's conduct towards him and his wife or of the caterers' conduct, culpable or blameworthy. It is simply not possible from paragraph 17, or from the findings of fact, to imply or infer any conclusion on the Tribunal's part that any conduct of Mr Armstrong was culpable or blameworthy. There is, quite simply, no finding that he was culpable or blameworthy at all.
- It follows that, quite apart from the failure to identify the specific conduct on which they were relying, the Tribunal's decision that Mr Armstrong contributed to his dismissal cannot stand in the light of the absence of any finding either that such conduct was causally linked to the dismissal or that it was culpable or blameworthy.
- The parties agreed that, if we reached the conclusion which we have just expressed, the appropriate course was for the Employment Appeal Tribunal to quash the Tribunal's decision that Mr Armstrong had contributed to his dismissal. Accordingly we allow Mr Armstrong's appeal against the decision of the Tribunal that he contributed to his dismissal and quash their decision that he had so contributed; and he thus succeeds in full in his unfair dismissal claim, as did his wife.
The Mitigation Issue
- Mr Downey, on behalf of the Company, accepted that, while of course the burden of proving loss attributable to the dismissal lies on the employee, the burden of proving that an employee has failed to mitigate his loss lies on the employer. Where the employer alleges that an employee has so failed in relation to the search for alternative employment after unfair dismissal, the employer has to prove that the employee has failed to take steps which he ought reasonably to have taken in seeking or obtaining such employment.
- It was not in dispute that, by the date of the Tribunal hearing, neither Mr Armstrong nor Mrs Armstrong had obtained any employment. No evidence was adduced by either side on any mitigation issue during the hearing proper, at the end of which, after a retirement, the Chairman informed the parties briefly of the Tribunal's conclusions that Mr & Mrs Armstrong had been unfairly dismissed and that Mr Armstrong had contributed to his dismissal to the extent of 40%. Because criticisms were made of the Tribunal's conduct, thereafter, pursuant to the Employment Appeal Tribunal's procedures, affidavits were obtained from Ms Cutting, the solicitor who appeared on behalf of Mr & Mrs Armstrong and Mr Finlay, the solicitor who appeared on behalf of the Company; and the Chairman in a letter dated 24 May 2002, provided his comments upon Ms Cutting's affidavit. From these documents it is clear that, after a break for negotiations which were not successful, the Tribunal then proceeded to consider compensation, there being no request for re-instatement or re-engagement. Mr & Mrs Armstrong's earnings in their employment with the Company were not in dispute; the value of the accommodation provided with their jobs was assessed by the Tribunal informally and without evidence but at a figure which is not the subject of complaint.
- The Chairman then asked Ms Cutting what attempts Mr & Mrs Armstrong had made to obtain employment; Ms Cutting informed the Tribunal that Mr & Mrs Armstrong had returned to their native Sunderland where they had retained a home; and she handed in a small bundle of documents as to jobs which they had sought. It is common ground that the Chairman made a comment to the effect that the documents did not show that Mr & Mrs Armstrong had sought vigorously to find work in Sunderland. He then said, according to Ms Cutting, that there was no longer any unemployment and that the Prime Minister was on the television every night saying that there were only 1 million people unemployed; Mr Finlay agrees broadly that this or something like it was said; and the Chairman agrees that he observed that it was the claim of the government that unemployment, if not a thing of the past, was now much reduced. Ms Cutting, and again Mr Finlay broadly agrees, says that she suggested that the figures were wrong and many unemployed were in Sunderland. Mr Armstrong then tried from his seat to speak, saying that in Sunderland there was only the Nissan factory as an employer and that one had to be under 30 to get a job there. The Chairman does not comment on this part of Ms Cutting's affidavit.
- Ms Cutting, again with Mr Finlay's broad agreement, says that, when Mr Armstrong tried to speak the Chairman told him to be quiet in his court. The Chairman does not agree that he used such words. Ms Cutting and Mr Finlay agree that the Chairman then referred to someone he knew who was a solicitor who had obtained alternative employment as a taxi driver; the Chairman agrees that he asked whether Mr Armstrong had considered driving a mini-cab which acquaintances of the Chairman had done when unemployed.
- Ms Cutting recalls that, after these exchanges, she then suggested that Mr Armstrong could give evidence, saying something like "perhaps my clients can speak to that, Sir". Mr Finlay says that neither he nor his clients recall any attempt by Ms Cutting to introduce oral evidence from Mr or Mrs Armstrong. The Chairman says that the matter was dealt with in an informal manner and that, if Mr & Mrs Armstrong had evidence to show that they had mitigated their loss, they were invited to put it forward but they did not do so; but neither Ms Cutting nor Mr Finlay contend that the Chairman made any suggestion that Mr & Mrs Armstrong should give oral evidence; and we note from the conditional way in which the Chairman puts it in his comments that he does not assert positively that he did so.
- We cannot resolve the issue between Ms Cutting and Mr Finlay as to whether Ms Cutting suggested that Mr Armstrong should give evidence on the mitigation issue; but we need not resolve that issue because, in our judgment, what happened is sufficiently clear for present purposes. The Chairman's comments, at paragraph 5, state that the Tribunal would have expected some evidence from the Appellants of their having made some attempts to find work in Sunderland; but, whether or not Ms Cutting expressly proffered Mr or Mrs Armstrong, no invitation was made by the Tribunal that evidence should be given, despite Mr Armstrong's apparent keenness to provide it.
- The Tribunal plainly took the view that the issue of mitigation could properly be dealt with and decided against Mr & Mrs Armstrong:
(a) in a wholly informal way;
(b) without any evidence at all from the Company as to job availability in Sunderland, although the burden of proof lay on them;
(c) on the basis of an expectation that evidence would be given by Mr & Mrs Armstrong if they had made attempts to find work without any invitation to them from the Tribunal that they should give evidence; and
(d) on the basis of assumptions made by the Tribunal as to the availability of work in the Sunderland area, about which it is highly unlikely that the Tribunal, despite their undoubted experience, had any personal local knowledge.
- In Fougère v Phoenix Motor Co. Ltd [1976] ICR 495 the EAT, presided over by Philips J, said, at page 497 (B) to (D):
"Where it can be established that the Industrial Tribunal has misdirected itself in assessing compensation, that, no doubt, will or may constitute an arguable point of law. Nonetheless, having said that, and as a matter of practice, it needs to be known that the Appeal Tribunal will not interfere with awards of compensation, unless the error is shown to be something which could be described as more than trifling. The reason for that is a practical one: industrial tribunals have to work in practical conditions, and they are obliged to assess the amount of compensation quickly – and fairly of course – but they are bound of necessity to operate in a somewhat rough and ready way, and to paint the picture with a broad brush. It is in everybody's interest that that should be the case. It may mean that sometimes an employee will get a bit less than he might have expected; it may mean that sometimes an employer will have to pay a little more than he had expected. But, if the compensation were to be worked out accurately to the very last halfpenny, it would require prolonged hearings, elaborate interlocutory procedures and all sorts of refinements which would be wholly out of place in a procedure which is meant to be quick, open to the unrepresented, and simple. Of course, if there is a serious error and that can be shown, then the appeal tribunal will interfere. But it will not do so in respect of trifling amounts or unimportant errors."
The context of these comments was, self-evidently, that of an expression by the Employment Appeal Tribunal of its reluctance to encourage appeals on compensation issues where there has been or is alleged to have been an error of no real substance. We entirely accept the correctness and the importance of these comments which were wisely made, close to the beginning of the EAT's history. However, in this case, the amounts at stake are unlikely to be trifling and can be seen not to have been trifling in the case of Mrs Armstrong who was unemployed at the date of the hearing, 8 months after the dismissal, yet was awarded only 3 months loss of earnings by way of compensation; and in our judgment the need for a 'rough and ready' approach to the calculation of loss does not justify the making by a Tribunal of a finding that an Applicant has failed to mitigate his loss, in other words that the employers have discharged the onus establishing that the Applicant has failed to take reasonable steps to obtain other employment, without the Applicant being invited to give evidence so that he can explain what he has done or not done and why he has not done what the employers or the Tribunal wish to suggest that he should have done.
- Of course, if an Applicant or his representative is invited to adduce evidence and he or his representative declines to do so, or agrees that he should not do so, the position may be different; but it was, in our judgment, in the situation which arose here, a fundamental element of fairness and justice that Mr & Mrs Armstrong should have been specifically invited, through Ms Cutting, to give evidence on the issue of mitigation of loss once it arose and before the Tribunal made any conclusion on that issue against them.
- We are satisfied that they were not so invited, that if invited to do so they would have chosen to do so, and that in failing so to invite them the Tribunal erred in law.
- We do not take the view in the circumstances of this case that Ms Cutting was obliged to make an application for her clients to give evidence; without their evidence and in the absence of any agreement that there should be no evidence from them, it was not open to the Tribunal to make a finding that they had acted unreasonably in failing to obtain work earlier.
- Further, while we do not seek to set out a proposition of law that in every case in which the mitigation of loss of earnings is raised the employer must establish evidence of the availability of suitable work, either by adducing evidence themselves or by cross-examination of the employee – for there will be many cases in which the age, skills and location of the employee are such that no such evidence is required and the Tribunal are entitled to bring to bear in a straightforward case their knowledge of the local employment situation – the circumstances of this case were such that the Tribunal could not fairly and properly make assumptions as to the availability of work in the Sunderland area, beyond the assumption, which they did not make or at least did not express, that the employment situation in the North East of England is, as is well-known, generally less favourable than in the South East of England. The undoubted facts were that Mr Armstrong was 61, his wife was 10 years or so younger; they had worked for the Company since January 1996; there was, so far as we are aware, no evidence as to how long it was since they had last worked or sought work in the North East or when they had, after the dismissal, moved back there; there was no evidence as to the availability to Mrs Armstrong of clerical work or other work appropriate to the unidentified skills which the Tribunal found at paragraph 18 that she had or of the earnings which such work might have produced. The Tribunal did not identify what Mr Armstrong could do and had no evidence as to the availability of work suitable for his age and whatever skills he had or of the earnings which he could have obtained from any such work. The importance of looking at the individual circumstances is underlined by the fact that Mr Armstrong, in addition to being 61 years old, had only one eye; whether he could have undertaken taxi driving or mini-cabbing, as the Chairman apparently had in mind, or any other driving job with such a handicap must have been a matter of some doubt; there was no evidence that any employer would take him on in such work with such a handicap. Furthermore, in his case as in his wife's case there does not seem to have been any evidence as to the earnings which he could have obtained from any work which the Tribunal thought he might have had.
- In these circumstances, even on the basis that the Tribunal had, contrary to our view, not been in error in failing expressly to give Mr & Mrs Armstrong an opportunity to give evidence, it was in our judgment simply not open for the Tribunal on the material before them to conclude that Mr & Mrs Armstrong had failed to take reasonable steps to mitigate their loss and that their compensation for loss of earnings should stop after a period of 9 months and 3 months respectively.
- Mr Downey submitted that the Tribunal had reached, or at least were entitled to reach, a conclusion on the issue on the material before them, namely the letters which were put in and their own knowledge; but the letters (which we have not seen) show that Mr & Mrs Armstrong had made some although unsuccessful efforts to seek work; they could not have justified without more the conclusion that the efforts made were less than what was reasonably to be expected; and the Tribunal's own knowledge in the circumstances of this case could not have been sufficient to enable them to be satisfied that those efforts were indeed less than what was reasonably to be expected.
- Accordingly the Tribunal's finding as to compensation for loss of earnings in the case of both Mr & Mrs Armstrong must be set aside; and the assessment of such compensation, using as a starting point the figures established by the Tribunal as the earnings, including the value of accommodation provided to them, of Mr & Mrs Armstrong in their employment by the Company, will have to be remitted to a fresh Tribunal.
Conclusion
- The appeals against the Tribunal's decision in Mr Armstrong's case as to contributory conduct and in Mr & Mrs Armstrong's cases as to the assessment of compensation for loss of earnings are allowed. We have dealt above with the effect of our decision as to contribution.
- As to loss of earnings, it was not in dispute that if we accepted the submissions made by Mr Falkenstein on behalf of Mr & Mrs Armstrong the assessment of compensation for loss of earnings would have to be remitted for rehearing. Mr Falkenstein asked us to remit this issue not to the London (Central) Tribunal but to the Newcastle-upon-Tyne Tribunal, on the grounds that Mr & Mrs Armstrong now live in the area of that Tribunal which could, as the London (Central) Tribunal could not in our judgment, bring local knowledge to bear on the issue of alternative employment. The circumstances of this case are such that a remission to the same Tribunal would not be appropriate; and in any event Mr Roose, the Chairman, has retired.
- We agree that a remission to the same Tribunal cannot now be made. There will be travel and expense involved for one side or the other, wherever the remitted hearing takes place. On balance the availability of local knowledge provides an important advantage in this case in favour of a remission to the Newcastle-upon-Tyne Tribunal; and we therefore direct that the assessment of compensation for loss of earnings be remitted for redetermination by that Tribunal.
