![]() |
[Home] [Databases] [World Law] [Multidatabase Search] [Help] [Feedback] [DONATE] | |||||||||
United Kingdom Employment Appeal Tribunal |
||||||||||
PLEASE SUPPORT BAILII & FREE ACCESS TO LAW
To maintain its current level of service, BAILII urgently needs the support of its users.
Since you use the site, please consider making a donation to celebrate BAILII's 25 years of providing free access to law. No contribution is too small. If every visitor this month gives just £5, it will have a significant impact on BAILII's ability to continue providing this vital service.
Thank you for your support! | ||||||||||
You are here: BAILII >> Databases >> United Kingdom Employment Appeal Tribunal >> Mitchell v St Joseph’s School (Unfair Dismissal : Reasonableness of dismissal) [2013] UKEAT 0506_12_2604 (26 April 2013) URL: https://www.bailii.org/uk/cases/UKEAT/2013/0506_12_2604.html Cite as: [2013] UKEAT 0506_12_2604, [2013] UKEAT 506_12_2604 |
[New search] [View without highlighting] [Printable RTF version] [Help]
At the Tribunal | |
Before
HIS HONOUR JUDGE McMULLEN QC
(SITTING ALONE)
APPELLANT | |
RESPONDENT |
Transcript of Proceedings
JUDGMENT
For the Appellant | MR GRAHAM WATSON (of Counsel) Instructed by: Macmillans Solicitors Manor House Bridgend Wadebridge PL27 6BS |
For the Respondent | MR LLOYD MAYNARD (of counsel) Instructed by: Lyons Davison Solicitors Westbury House 701-705 Warwick Road Solihull B91 3DA |
SUMMARY
UNFAIR DISMISSAL – Reasonableness of dismissal
PRACTICE AND PROCEDURE – Chairman alone
The Employment Judge did not err when he decided the Claimant, a school bursar, was fairly dismissed when he did not disclose the parlous state of its finances to the board of governors. Applying the company law on attribution set out in Meridian and Orr, disclosure to two members of the board did not mean the board had knowledge of the finances.
Observed:
There was a danger in this case heard by a judge alone of a subjective approach to misconduct. The law remains as it was before judge-alone became the norm for unfair dismissal cases.
HIS HONOUR JUDGE McMULLEN QC
Introduction
The facts
"1 There has been irrevocable breach of mutual trust and confidence in the employment relationship between you and the School.
2 There has been gross neglect in your duty as Bursar to the School.
3 There has been gross negligence by you which has, on the balance of probabilities, caused financial losses to the School."
"1. Failed to ensure proper books of accounts (including income and expenditure accounts and balance sheets) were kept in accordance with clause 3.25.3 of Appendix 2 to the Contract […] We accept that you were not responsible for authorising the planning permission costs for the proposed development. We further accept that you were verbally reporting the levels of expenditure to the Chairman of Governors, Mr John Marshall. However, you failed to report, or detail at all, the planning permission costs of the development in the accounting records and therefore report these to the Governing Board. This resulted in the Governing Board not being aware of the financial cost of obtaining planning permission for the proposed development. Although we do not hold you responsible for Mr John Marshall failing to report matters to the Governors, we do hold you responsible for not correctly recording in the accounts, and cash flow projections, the development costs […].
2. Failed to produce reports of the material and financial affairs of the School to the Governors in accordance with their requirements and with the requirements of the law in accordance with clause 3.2.3 of Appendix 2 to the Contract.
We reasonably believe that you have failed to produce reports of the material and financial affairs of the School as a result of serious errors and omissions by you. These errors occurred in the bank reconciliations and general accounting which resulted in the cash flow projections being grossly inaccurate. As stated above, because the financial reports to the Governors, i.e. the cash flow projections, were not accurate the Governors were prevented from taking steps to minimise those losses and prevent further losses from being incurred.
3. Failed to monitor the income and expenditure in relation to the budget and failed to present regular management reports in accordance with clause 3.3.4 of Appendix 2 to the Contract.
We have reasonable belief that you have failed to monitor the income and expenditure correctly. We appreciate that you were told by Mr Graham Garrett "not to worry" about additional staffing costs due to the increase in pupil numbers. However, it was your responsibility to ensure that as the additional fees being generated were discounted, enough income was being generated to justify the additional staffing costs. You failed to do this and that has resulted in the School incurring financial losses.
4. Failed to scrutinise payment of all invoices and statements of account in accordance with clause 3.3.8 of Appendix 2 to the Contract."
"2.15 I have been provided with a cash flow objection for 2000/2011 with monthly budget forecasts the effect of which has been substantially disputed in evidence. The Governors and in particular Mr Heard who carried out the discipline believed that on 10 January 2011 cash flow showed a £26,000 overspend at the end of the school year (August 2011) 28 days later on the 7th February the cash flow projection showed a £334,000 overspend with the figure increasing over the following weeks. The School was in a disastrous situation with the Bank threatening to close the School. It would appear that such conversations as the claimant had with Mr Marshall and Mr Meeson which in any way dealt with the claimant's concerns about the escalating expenditure were never reported to the full Board or to the Finance Committee as a whole. It is self-evident that if they had been that different decisions might have been made. An obvious example is that parents could have been called in to help and instead of paying decorators that they could have done some of the work themselves. What happened was that the Governors were deprived of the opportunity to make choices.
8. I am satisfied that the respondent genuinely believed the claimant to be guilty of gross misconduct following a reasonable investigation in respect of which any lack of information or mitigation is largely the fault of the claimant himself and that the grounds set out in the reasons for dismissal were made out. There has been a dispute about whether report to Mr Marshall and Mr Meeson amounted to reporting to the Board. I cannot accept that with the claimant's knowledge of what had been going on that there was not a failure to communicate with the Board as a whole in breach of his contract. The claimant knew that Mr Marshall had gone off on a frolic of his own in relation to the expansion without any funding in place -- that Mr Marshall had a curious view of the accounting and appeared to be saying to the claimant that the expenditure could be concealed because it would not have to be reported to the Board as part of profit and loss calculations -- and the claimant said that the Board appeared to be ignorant of the precarious financial position. In those circumstances I cannot see how the claimant can suggest it was not his duty to report to the whole Board or at the very least the Finance Committee. The partial explanation that he was excluded from some meetings has not merit. The claimant could perfectly well have said that he needed to address the meeting -- suggest his report was taken first -- and then he could leave the meeting. I regard the information given the Headmaster in a different light. The Headmaster was responsible for recruitment and if the Headmaster tells the claimant that additional staffing costs are being funded by the additional pupils the claimant is entitled to believe that. The additional staff costs whilst not insignificant would at least have been covered in part and the claimant had no knowledge of the discounts the Headmaster was offering without the knowledge of the Finance Committee. This is very different from the ongoing horrendous expenditure which was very substantially increasing the overdraft.
9. I now have to consider whether dismissal fell within the band of reasonable responses. I am quite satisfied that all trust and confidence had been lost. I would have lost all trust and confidence at the time of the Francis Clark letter. Nothing the claimant would have been able to say would have given me confidence that I could reply on any figures or forecasts he produced and maybe the decision should have been taken then. Given the claimant's responses during the investigation and the information the disciplinary panel and the appeal panel had including admissions which the claimant now says were not justified or misunderstood I find the claimant's position was totally untenable and that dismissal was within the band of reasonable responses. Not only is it within the band but I would consider it unlikely that any private company or public authority would have acted differently this."
The Claimant's case
The Respondent's case
Legal principles and conclusions
"'The company's primary rules of attribution together with the general principles of agency, vicarious liability and so forth are usually sufficient to enable one to determine its rights and obligations. In exceptional cases, however, they will not provide an answer. This will be the case when a rule of law, either expressly or by implication, excludes attribution on the basis of the general principles of agency or vicarious liability. For example, a rule may be stated in language primarily applicable to a natural person and require some act or state of mind on the part of that person "himself;" as opposed to his servants or agents. This is generally true of rules of the criminal law, which ordinarily impose liability only for the actus reus and mens rea of the defendant himself. How is such a rule to be applied to a company?
One possibility is that the court may come to the conclusion that the rule was not intended to apply to companies at all; for example, a law which created an offence for which the only penalty was community service. Another possibility is that the court might interpret the law as meaning that it could apply to a company only on the basis of its primary rules of attribution, ie if the act giving rise to liability was specifically authorised by a resolution of the board or an unanimous agreement of the shareholders. But there will be many cases in which neither of these solutions is satisfactory; in which the court considers that the law was intended to apply to companies and that, although it excludes ordinary vicarious liability, insistence on the primary rules of attribution would in practice defeat that intention. In such a case, the court must fashion a special rule of attribution for the particular substantive rule. This is always a matter of interpretation: given that it was intended to apply to a company, how was it intended to apply? Whose act (or knowledge, or state of mind) was for this purpose intended to count as the act etc of the company? One finds the answer to this question by applying the usual canons of interpretation, taking into account the language of the rule (if it is a statute) and its content and policy."
57. A similar question arises in relation to s.98. Parliament clearly intended that Part X of the 1996 Act should apply to corporate employers as well as public bodies such as the council. The authorities to which I have referred establish that s.98 requires the tribunal when determining whether the dismissal is fair to consider whether the employer believed that the employee was guilty of conduct justifying dismissal and whether he had reasonable ground for holding that belief. Since belief involves a state of mind, it is necessary, as Lord Hoffmann said, to determine whose state of mind was for this purpose intended to count as the state of mind of the employing company or organisation.
58. For reasons given earlier Parliament cannot have assumed that in a large organisation every allegation of misconduct or other grounds of dismissal against any employee would be investigated by the person or body that represents it at the highest level, who would himself then decide whether to exercise the power of dismissal. The very fact that in order to be reasonable a belief in the guilt of the employee must proceed on the basis of a reasonable investigation supports the conclusion that the employer may delegate that investigation and the subsequent decision on dismissal to a person within the organisation who has sufficient skill and experience to carry it out effectively, having regard to the nature of the allegations and the position of the employee against whom they are made. The answer to the question 'Whose knowledge .. or state of mind was for this purpose intended to count as the knowledge or state of mind of the employer?' will be 'The person who was deputed to carry out the employer's functions under s.98.'"
An observation
"To my mind the balance in favour of this going to full hearing was tipped by the rather extraordinary degree of subjectivity that emerges in the Judgment. The judge seems to offer a running commentary as to what he would have done and what he thinks could or should have happened."
71 For a good many years it has been a source of distress to unfair dismissal claimants that, with rare exceptions, they cannot recanvass the merits of their case before an employment tribunal. In spite of the requirement in s.98(4)(b) that the fairness of a dismissal is to be determined in accordance with equity and the substantial merits of the case, a tribunal which was once regarded as an industrial jury is today a forum of review, albeit not bound to the Wednesbury mast. Other claims – for example discrimination claims – based on the same or related facts, do attract a full merits hearing. But in relation to unfair dismissal the law is unequivocally what Lord Justice Elias has set out in paragraphs 16 to 22 above.
"2.13 In my view the governors would have been justified in dismissing the claimant at this stage for some other substantial reason, on the basis that all trust and confidence had been lost ... I found it quite astonishing that in the evidence the claimant was not prepared to accept the degree of fault ...
9. I now have to consider whether dismissal fell within the band of reasonable responses. I am quite satisfied that all trust and confidence had been lost. I would have lost all trust and confidence at the time of the Francis Clark letter. Nothing the claimant would have been able to say would have given me confidence that I could reply on any figures or forecasts he produced and maybe the decision should have been taken then. … I find the claimant's position was totally untenable and that dismissal was within the band of reasonable responses. Not only is it within the band but I would consider it unlikely that any private company or public authority would have acted differently this."
"If I had to advise the school with the information now available I would have advised the dismissal for some other substantial reason, namely that all trust and confidence had been lost and the claimant's position was untenable."