Appeal No. UKEAT/0363/08/CEA

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 11 February 2009
Judgment handed down on 24 June 2009

Before
HIS HONOUR JUDGE RICHARDSON
MRS R CHAPMAN
MR P M SMITH

THE ROYAL BANK OF SCOTLAND GROUP PLC	APPELLANT

MR P WILSON	RESPONDENT

Transcript of Proceedings

JUDGMENT

	APPEARANCES

For the Appellant	MR TARIQ SADIQ
(of Counsel)
Instructed by:
Messrs Brodies LLP
2 Blythswood Square
Glasgow
G2 4AD	
For the Respondent	MR OLIVER ISAACS
(of Counsel)
Instructed by:
Working Law Solicitors
The Garden House
Cromer Road
Siderstrand
Norfolk
NR27 0LT	

SUMMARY
PRACTICE AND PROCEDURE:  Bias, misconduct and procedural irregularity
UNFAIR DISMISSAL:  Reasonableness of dismissal

Appeal allowed.  The Tribunal erred in law in its approach to the questions to be determined for the purposes of section 98(4) of the Employment Rights Act 1996, effectively substituting its own views.  The Tribunal did not, however, evince apparent bias.

HIS HONOUR JUDGE RICHARDSON

1.	This is an appeal by Royal Bank of Scotland PLC (“the Bank”) against a judgment of the Employment Tribunal sitting in Norwich chaired by Employment Judge Ash dated 29 May 2008.  By its judgment the Tribunal held that Mr Paul Wilson was unfairly dismissed from his employment by the Bank and that he had made no contribution to his dismissal.

2.	The Bank’s appeal has three aspects.  Firstly, it is argued that the hearing of the claim was vitiated by apparent bias.  Secondly, it is argued that the Tribunal erred in law in its application of section 98(4), in effect substituting its own view for that of the Bank as to the seriousness of Mr Wilson’s conduct.   Finally, it is argued that the Tribunal erred in law in its finding that Mr Wilson, whose chosen remedy was compensation, did not contribute to his own dismissal.
The background facts

3.	Mr Wilson was employed by the Bank as a personal mortgage advisor.  His employment commenced on 10 August 1998.  He was dismissed by the Bank on the grounds of gross misconduct with effect from 5 September 2007.

4.	The circumstances of his dismissal may be summarised briefly.  On 23 May 2007 a lady came into the Bank wishing to arrange a mortgage on behalf of her daughter and son-in-law.  She was known to Mr Wilson.  She brought relevant details with her – the earnings of her son‑in-law, the particulars of the house, details of the applicant’s bank account and the like.  She knew the type of mortgage required – a mortgage of some £98,000 over 35 years.  For this product there was a fee for arranging the application in the sum of £499.  The Bank would take this fee at the outset.

5.	Mr Wilson took details of the mortgage.  He did not, however, either see the prospective mortgagors or obtain their signature consenting to an application.  He completed an electronic form and sent the details of the mortgage application to the Bank’s mortgage department.    

6.	It was the practice and procedure of the Bank’s mortgage department on receipt of the electronic form to deduct the application fee from the bank account of the applicant.  The Tribunal found that on the day he submitted the application form Mr Wilson contacted the mortgage department to inform them that no money should be taken from the account of the applicants in question.  Nevertheless the mortgage department followed its normal practice and took the fee from the account.  

7.	Subsequently the couple in whose name Mr Wilson had put forward the application decided not to go ahead with the application.  They found out that the sum of £499 had been deducted from their bank account.  They complained that it had been done without their consent.  Mr Wilson was suspended.  He was made the subject of disciplinary proceedings and dismissed.
The Bank’s case

8.	The reasons for dismissal are not recorded in any detail by the Tribunal.  It is, however, important for the purposes of this appeal to summarise the Bank’s case.  It appears from a witness statement by Mr Koziupa, who was then a Regional Sales Manager.  He was the manager who took the decision to dismiss Mr Wilson.

9.	Mr Koziupa’s account may be summarised as follows.

(1) 	It had for many years been the Bank’s procedure that a mortgage application form should be submitted by a mortgage advisor electronically only when the customer’s written consent had been obtained.  Mr Wilson would have been trained in this way on numerous occasions.

(2) 	The Bank’s mortgage business became regulated by the Financial Services Authority in October 2004.  From that time onwards it was specifically laid down in a Training and Competence Scheme that persons authorised by the Bank to do business, such as mortgage advisors, must be competent and fit and proper for their role.  It was a requirement of the FSA that authorised persons must be fit and proper persons to perform their role.

(3) 	Mortgage advisors such as Mr Wilson had access to a Mortgage Sales Guide.  The Guide explicitly stated that it was a mandatory area of the sales process that the customer must be asked to sign and date a mortgage application.  

(4) 	Mr Wilson had been specifically trained in products with arrangement fees.  He was therefore well aware that if a mortgage application for such a product was submitted the fee would immediately be debited to the customer’s mortgage account.

(5) 	Mr Wilson had also noted on the application form that he was providing the customer with advice, but he had not even met the customer, still less gone through the scripted questions which were required in such circumstances.

(6) 	By submitting a mortgage application without obtaining a customer’s express consent and without ever having met or spoken to the customer Mr Wilson, in the view of Mr Koziupa, acted without the honesty and integrity required of him and also without due skill, care and diligence.  He was therefore not a fit and proper person to be authorised.  

(7) 	Mr Koziupa considered that to submit a mortgage application without obtaining the customer’s written consent and without meeting the customer was extremely serious, taking into account Mr Wilson’s length of service, experience, training, and the FSA Regulations.  If staff failed to properly follow the procedures and processes of the Bank there was a risk to its reputation – evidenced by the complaint in this case.

(8) 	Mr Koziupa considered, as an alternative to dismissal, moving Mr Wilson to a role where he was not authorised for FSA purposes.  Given the magnitude (as Mr Koziupa saw it) of Mr Wilson’s actions, he did not consider this course appropriate.  He consulted other areas of the Bank’s business which were also FSA regulated.  He felt, like them, that instant dismissal was an appropriate sanction.

10.	An appeal from Mr Wilson’s decision was heard by Mrs O’Brien and rejected.  
The Tribunal’s reasons

11.	The Tribunal’s reasons contain an introduction, a section entitled “the facts”, and a section entitled “law and conclusions”.  They are, however, not as easy to summarise or analyse as might be expected.  Where we quote from the Tribunal’s reasons we have corrected obvious errors of spelling and punctuation, of which there are a number.

12.	Within the introduction the Tribunal summarised the facts briefly, and then summarised the Bank’s case against Mr Wilson in the following way (paragraph 1) –

“In due course the Bank blamed the Claimant for everything.  They said he was in breach of the FSA Regulations and guilty of gross misconduct and dismissed.”

13.	The Tribunal later said in its introduction (within paragraph 2) –
“The Bank, through its senior management, have accused him of being dishonest and not a fit and proper person to be employed in the financial industry on the basis of this incident.  They say the FSA Rules are there to be obeyed and their brand would suffer if they allowed matters of this ilk to go unpunished, so to speak.  They admit they have, effectively, a scorched earth policy and indeed Mrs O’Brien who heard the appeal has said that breaches of the FSA Regulations lead to dismissal as a matter of course.”

14.	The Tribunal recorded in its introduction the identities of the witnesses from whom it heard.  It made no express findings as to the honesty or reliability of the Bank’s witnesses, which included Mr Koziupa and Mrs O’Brien.  It accepted Mr Wilson’s factual account, though “not necessarily his opinions”.

15.	The Tribunal, still within its introduction, then said (within paragraph 3) –
“We point out that we have seen no documents to support the contention that an electronic submission to another part of the Bank, which is only part and can only be part in law of a mortgage application, is itself a breach of a requirement to have the customer’s signature.  It may or may not be an internal rule of the Bank but we are far from convinced that it is an FSA Rule for a very good reason that the Bank or no financial institution should be acting without that signature, which is exactly what the Respondents did in this case”.

16.	The Tribunal proceeded to set out the facts in broad terms.  It said that the mother of the prospective mortgagors was “clearly and obviously their agent”.  The Tribunal recorded that Mr Wilson filled in an electronic form and sent it to the Bank’s mortgage department, which began to investigate.  The Tribunal then found (within paragraph 7) –
“He should not have done that.  He should have waited until he got the signatures of the proposed mortgagors on the relevant forms.”

17.	The Tribunal observed, within paragraph 8, although we do not think that this was a finding of fact so much as an expression of the Tribunal’s opinion –

“What is more the embarrassment in this case arose for the Bank because they chose to take £499 on the basis of an electronic communication to them when the FSA Regulations say that the completed application should have a signature.  It defeats the whole object of having a signature if the Bank acts without that signature on the belief that someone else has obtained it.  The Bank has only itself to blame as far as we are concerned.  We have little sympathy for them”
(The underlining in the passage above appears in the Tribunal’s reasons)

18.	The Tribunal did not set out (and did not criticise) the Bank’s disciplinary procedure.  The following passage then appears within the findings of fact (paragraphs 9-11) -
“  …  The only matter we wish to point out really is fatal to the Bank’s case, is that Mrs O’Brien in a very frank piece of evidence (which we thought might be the case but nonetheless she confirmed it) stated that for a breach of the FSA Regulations dismissal is inevitable and, what is more, it is gross misconduct in their rules and procedures.
10. 	Two points arise.  If dismissal follows automatically for breach of the FSA procedures there is very little point in having Employment Tribunals in the first place; another authority is deciding whether dismissal is fair or unfair.  That is our task.  We look at each case on its merits.
11. 	Secondly, if breach of the FSA Regulations leads to dismissal what happens to other employees in the Bank?  Is the Bank entitled to go ahead with its underwriting on the basis of an electronic communication without a signature?  The Royal Bank of Scotland must make up its mind… .”

19.	The Tribunal then said –
“12. Thus we are satisfied that the Claimant was dismissed for doing his best, albeit he may have broken an internal rule.  There is no question of fraud.  There was no question of anyone being misled.  He was speeding the process up because the Bank wanted the process speeded up by having electronic communication.  No mortgage could have been granted without the rest of the application going through, which it did not, and the only embarrassment was caused by the Bank’s own system of taking £499 out of the account without further ado.”

20.	These passages, as we have said, appear within the Tribunal’s findings of fact.  The Tribunal then proceeded to set out what it described as law and conclusions.

21.	The Tribunal noted that it was for the employer to establish a potentially fair reason for dismissal.  Although expressing some hesitancy, the Tribunal found that the Bank had established a reason which related to the conduct of Mr Wilson saying, within paragraph 14 –

“In this case the employee was dismissed because the employer believed that his conduct in not obtaining the mortgagor’s signature before sending the electronic communication was sufficiently serious to justify dismissal and indeed that it was gross misconduct.  Whatever the merits of that belief we are satisfied that was what the employer believed ….”

22.	The Tribunal then went on to consider whether it was reasonable to dismiss – section 98(4) of the Employment Rights Act 1996, which the Tribunal quoted.  The Tribunal’s essential conclusions are found in paragraphs 17 – 19 of the reasons.  The Tribunal said –

“17. This we are satisfied is a case where there was a gross over-reaction to an error of a technical nature by an employee, with no suggestion that there were any attempts to defraud, or that anyone was at risk, or that he had done anything other than use his commonsense and cut a bureaucratic corner, and not to any great extent at that.  It must be borne in mind that at the time of the electronic communication, the signatures were to be obtained very shortly afterwards.  Further it beggars belief that a reasonable employer would not give its own employee the benefit of the doubt in the circumstances of this case where the mother has come in with all the relevant details and there is no risk at all of anyone being deprived of any money, unless of course, the Bank chooses to debit the client’s account before the full and necessary form is completed.
18. 	There may well be cases where employees in the position of Mr Wilson play fast and loose with the Bank’s internal rules and in such circumstances it may well be fair to dismiss them.  But in our view the facts of this case do not get anywhere near amounting to conduct where dismissal as a sanction falls within the band of reasonable responses open to the reasonable employer.  We make it quite clear that in our view it is well outside that band.
19. 	Tribunals are often accused of substituting their own decisions for that of the employer.  Banks are experts on financial matters, we are not.  The FSA have some draconian rules and procedures to protect the public and there can be severe consequences for banks that do not have rigorous procedures in place.  We take all that into account.  What we do not accept and cannot accept on the evidence, because it is a nonsense, is that the employee by his actions in this case, put the Bank at risk.  He did not.  The Bank put itself at risk in their desire to sell mortgages as quickly as possible and to speed up the process electronically.”

23.	Having found the dismissal unfair for these reasons and “without the band of reasonable responses” (paragraph 20), the Tribunal then proceeded to deal with the question of contribution.  It expressed its conclusions as follows.
21. … We think that with the benefit of hindsight the Claimant would be well advised in future always to make sure he has a signature before he puts in an electronic communication because otherwise those with a “tick box” mentality will come down on him like a ton of bricks and he might lose his job again.  This is the first point.  So to comply 100% with the Bank’s own procedures nothing should happen until the people concerned have given a signature, even if it is blindingly obvious that a perfectly proper agency is acting on their behalf because those who interpret the FSA Rules and the internal rules seem to have no sense of discretion; no sense of proportion and act purely with tunnel vision ….
23 	Is there any contribution in this case?  No there is not.  The dismissal is so far outside the band of responses open to a reasonable employer that we cannot for one moment think there is any contribution… .”

(A) 	The Tribunal’s findings of unfair dismissal and contributory fault

24.	Although we will return to deal in some detail with the allegations of bias which relate to conduct of the hearing itself, we think is convenient, having set out the Tribunal’s reasons in some detail, to begin with the arguments relating to the Tribunal’s reasoning. 
(1)  	The submissions of the parties

25.	On behalf of the Bank, Mr Sadiq pointed to the language of the Tribunal’s reasoning as itself indicative of bias.  He pointed to the robust and colourful language in which the Tribunal expressed itself, particularly he submitted, in paragraphs 1, 2, 8, 10, 13 and 21.  

26.	Mr Sadiq further submitted that the Tribunal’s reasoning demonstrated that, in important respects, the Tribunal had substituted its own view for that of the employer, failing to apply guidance laid down in Iceland Frozen Foods v Jones [1982] IRLR 439 as confirmed and approved by the Court of Appeal in HSBC v Madden [2000] ICR 1283.  It was not the function of the Tribunal to substitute its view for that of the employer.  He submitted that the reasoning of the Tribunal demonstrated that it had done so.

27.	Mr Sadiq further submitted that the Tribunal had no evidential basis for rejecting the Bank’s conclusion that Mr Wilson’s conduct had put the Bank at risk.  He submitted that there was ample evidence that Mr Wilson’s actions had done so.  They had resulted in a complaint to the Bank from the customer.  Mr Koziupa and Mrs O’Brien had both given evidence to the Tribunal that the FSA could impose severe sanctions for breaches of procedure.  The Tribunal’s conclusion that the Bank was not at risk not only substituted the Tribunal’s conclusion for that of the Bank but was a perverse conclusion.   

28.	Finally, Mr Sadiq criticised the Tribunal’s approach to the question of contributory fault.  There were two questions for the Tribunal to answer.  The first was whether there was any culpable or blameworthy conduct on the part of Mr Wilson which contributed to his dismissal.  The second was whether and to what extent it was just and equitable to reduce the award.  

29.	On behalf of Mr Wilson, Mr Isaacs submitted that the Tribunal was entitled, when expressing its conclusions, to be critical of the Bank.  To do so was not indicative of bias.   The Tribunal was entitled, having reached the conclusion that the Bank had treated Mr Wilson shabbily (a view expressed by the Employment Judge in his response to the Appeal Tribunal), to set out that conclusion in its reasoning.

30.	Mr Isaacs further submitted that the Tribunal plainly had in mind that it was its task to review the employer’s reasoning rather than substitute its own decision.  This was plain from the Tribunal’s language in paragraphs 16, 19 and 20, which we have quoted above.  He submitted that the Tribunal did not fall into any error of law in this respect.

31.	On the question of risk, Mr Isaacs submitted that the Tribunal’s reasoning demonstrated no error, and certainly could not be characterised as perverse: he relied on the guidance given in respect of perversity arguments by the Court of Appeal in Yeboah v Crofton [2002] IRLR 634.  Once granted the Tribunal’s conclusion that Mr Wilson committed no more than “an error of a technical nature” which did not engage any breach of any requirement of the FSA, the Tribunal was fully entitled to conclude that no risk to the Bank was involved.

32.	On the question of contribution, Mr Isaacs submitted that the Tribunal had, by necessary implication, decided that even if Mr Wilson was culpable to some extent it was not just and equitable for there to be any finding of contributory fault.  Read in this way, the Tribunal’s reasons applied the law correctly.  It did not follow that merely because Mr Wilson was culpable in some respect it would necessarily be just and equitable to reduce his compensatory award.
(2) 	Our conclusions

33.	There can be no doubt that the Tribunal has adopted unusually robust language in the way it has expressed its conclusions.   There are references to “a scorched earth policy” (paragraph 3), the Bank having “only itself to blame as far as we are concerned” (paragraph 8), the Claimant being “dismissed for doing his best” (paragraph 12), to those with a “tick box mentality” who “will come down on him like a ton of bricks”, and to people who have “no sense of proportion and act purely with tunnel vision” (paragraph 21).  This is not the language of analysis or even the language of normal criticism.  It is emotive language.

34.	We do not accept Mr Sadiq’s submission that the language is indicative of apparent bias.  As we shall see, the type of apparent bias which is alleged in this case is the demonstration of a closed mind during the hearing.  There is no suggestion that the Tribunal evinced any bias towards the Bank by reason of its identity or by reason of its business as a bank.  A Tribunal is expected to keep an open mind while it conducts a hearing and to avoid giving the appearance of a closed mind.  But when a Tribunal reaches its conclusions, it is entitled – and indeed may be bound – to express its findings and reasons in a manner which is critical of one or even both parties.  To do so does not of itself demonstrate that a Tribunal evinced a closed mind during the hearing.

35.	We observe, however, that a Tribunal is always wise to look with particular care at its reasoning and findings of fact before it expresses criticism in emotive language.  Expressions of indignation are not a substitute for, and are often inimical to, careful findings of fact and application of the law.

36.	We have reached the conclusion in this case that the Tribunal has, in important respects, reasoned in a way which substitutes its own views for those of the Bank, and has not performed the essential task required by section 98(4) of the Employment Rights Act 1996.

37.	The correct legal approach to section 98(4) is now well known.  Almost every Tribunal judgment on the question of unfair dismissal will contain a statement of it.  In many cases there will be room for disagreement in respect of an employer’s actions or conclusions leading up to a dismissal.  Where there is room for disagreement the question is whether the employer acted reasonably, that is to say whether the employer’s approach fell within the range of responses open to a reasonable employer.

38.	The approach was endorsed by the Court of Appeal in HSBC v Madden [2000] ICR 1233.  In that case Mummery LJ also observed that it was implicit in section 98(4) that a Tribunal must not substitute their decision for that of the employer.  He said –

“It was also made clear in  Iceland Frozen Foods Ltd, at pp. 24g -25b , that the members of the tribunal must not simply consider whether they personally think that the dismissal is fair and they must not substitute their decision as to what was the right course to adopt for that of the employer. Their proper function is to determine whether the decision to dismiss the employee fell within the band of reasonable responses "which a reasonable employer might have adopted."
In one sense it is true that, if the application of that approach leads the members of the tribunal to conclude that the dismissal was unfair, they are in effect substituting their judgment for that of the employer. But that process must always be conducted by reference to the objective standards of the hypothetical reasonable employer which are imported by the statutory references to "reasonably or unreasonably" and not by reference to their own subjective views of what they would in fact have done as an employer in the same circumstances. In other words, although the members of the tribunal can substitute their decision for that of the employer, that decision must not be reached by a process of substituting themselves for the employer and forming an opinion of what they would have done had they been the employer, which they were not.”

39.	 In our judgment a number of passages in the Tribunal’s reasoning demonstrate that the Tribunal, while endorsing the “range of reasonable responses” test, in reality substituted its own views.

40.	A convenient starting point is the underlined passage in paragraph 8 of the Tribunal’s reasons.  The Tribunal stated that (1) the Bank was embarrassed because it took £499 on the basis of an electronic communication and (2) it defeated the object of having a signature if the Bank acted without that signature in the belief that somebody else has obtained it.  But this is, with respect, to start from the Tribunal’s view of how business should be conducted, not from the view of the employer.  

41.	The Bank’s case was that it was the task of the mortgage advisor to obtain the signature; the mortgage advisor should not submit the application electronically unless he had the signature.  The mortgage advisor was not “somebody else”; he was the Bank’s representative charged with obtaining the signature and submitting an electronic application before the Bank took the fee up front and processed the application.

42.	The Tribunal, if it was to avoid substituting its own judgment for that of the Bank, ought not to have questioned the Bank’s business practice in the way it did.  The Tribunal’s task was to make findings as to whether this was the business practice adopted by the Bank and if so whether the Bank had by its procedures and training brought home to Mr Wilson his role in respect of it.  If the Bank had done so then the Tribunal was not correct to say that the Bank had only itself to blame.

43.	This fundamental error of approach carries through, in our judgment, to a number of further findings made by the Tribunal.   The Tribunal expressed the view that Mr Wilson was dismissed “for doing his best”.  This to our mind demonstrates the danger of using emotive language in place of careful findings and analysis.  Mr Wilson was not, on any view, dismissed for doing his best.  He was dismissed for doing something which on the Tribunal’s own findings he ought not to have done. 

44.	The Tribunal’s view is probably more correctly expressed in paragraph 17 of its reasons, where it described Mr Wilson’s conduct as “an error of a technical nature” and stated that he did no more than “cut a bureaucratic corner”.  But that is the Tribunal’s conclusion; it is plainly not how the Bank viewed the matter.  The question for the Tribunal was whether it was reasonable for the Bank to take the view that it was a serious and not a technical matter: and this depended, in part at least, on whether the Bank had brought home to Mr Wilson what his role was by its training and procedures and why the Bank placed importance on the training and procedures it had implemented.  As we have sought to demonstrate, Mr Koziupa had set out in his witness statement in some detail what the procedures were and why they were important, given the regulatory background against which the Bank worked.  The Tribunal did not in any meaningful way review these considerations.

45.	The Tribunal considered it “nonsense” that Mr Wilson put the Bank at risk and said that the Bank put itself at risk.  This approach replicates the approach set out in paragraph 8 of its reasons, which we have already criticised; it was, on the Bank’s case, Mr Wilson’s task to ensure that the signature was obtained.  On the question of risk, the position was in any event not so straightforward.  On any view the Bank had received a complaint from customers requiring a refund of £499 – a complaint which would not have occurred if Mr Wilson had followed the procedure he was required to follow.  Again the Tribunal’s language and approach is redolent of substitution.  The reasoning does not set out why the Bank considered that Mr Wilson put it at risk and ask whether the Bank’s view was reasonable.  

46.	We find it particularly difficult to understand the last sentence of paragraph 19.  It is now extremely common for electronic processes to be used in financial services.   The Bank did not put itself at risk in the way the Tribunal asserted if, as was the Bank’s case, it brought home to Mr Wilson the importance of his duty as mortgage advisor to obtain the customer’s signature before submitting the application electronically.

47.	The Tribunal criticised the Bank for what it described as a “scorched earth” policy.  If by this the Tribunal meant that the Bank would dismiss an employee for any and every technical breach of a procedure, regardless of seriousness, it would indeed be a serious criticism of the Bank.  But there is no clear finding to this effect, and the Bank’s position as explained in Mr Koziupa’s witness statement was that FSA Regulations forbade the employment as an authorised advisor of someone who was not a fit and proper person to hold that post.  

48.	To our mind the approach of the Tribunal to the question of contribution is also flawed.  It has approached that question on the basis that the requirement upon a mortgage advisor to make sure that he has a signature before submitting an electronic communication is the product of a “tick box” mentality.  But this depends on careful findings as to the reasons why the Bank required such a signature, and whether the Bank’s requirements were brought home to Mr Wilson.  The questions for the Tribunal were the following.  Was Mr Wilson’s conduct culpable or blameworthy?  Did it contribute to his dismissal?  Was it just and equitable to reduce his award, and if so by what proportion?  The invective contained in paragraph 21 of the Tribunal’s reasons is not a substitute for asking and answering the correct legal questions.

49.	It follows that on these grounds alone the judgment of the Tribunal must be set aside.  Mr Wilson’s claim of unfair dismissal must be remitted to be heard by a different Tribunal which will consider the claim entirely afresh. 

(B)  	The appeal in respect of apparent bias
50.	Although we have already indicated that the appeal must be allowed it is incumbent upon us also to deal with the Bank’s submission that the hearing was vitiated by apparent bias.

(1)    	Procedural aspects
51.	The approach of the Appeal Tribunal to an allegation of bias by a Tribunal is the same as that of any appellate court, and is derived in modern times from the decision of the Court of Appeal in In re Medicaments and Related Classes of Goods (No 2) [2001] 1 WLR 700 at 726–727, as approved by the House of Lords in Porter v Magill  [2002] 2 AC 357 at para 103.

52.	The Appeal Tribunal must first ascertain all the circumstances which have a bearing on the suggestion that the Tribunal was biased. It must then ask whether those circumstances would lead a fair-minded and informed observer to conclude that there was a real possibility that the Tribunal was biased. 

53.	The Appeal Tribunal will enquire into an allegation of bias.  It will give directions at an early stage requiring an appellant to depose on affidavit as to the circumstances; and it will then seek the comments of the Tribunal and the opposite party.  Further directions may be given at a preliminary hearing or on paper: see paragraph 11.5 of the current EAT Practice Direction (2008).  Sometimes the circumstances bearing on the suggestion that the Tribunal was biased will be in dispute.  If necessary the Appeal Tribunal will resolve disputes of fact: see Facey v Midas Retail Security [2000] IRLR 812, where the Appeal Tribunal gave detailed guidance as to the procedures to be followed.

54.	In this case the Bank set out in its Notice of Appeal the particular allegations on which it relied.  It is an essential pre-requisite of an appeal on the grounds of apparent bias that the allegations should be clearly identified, with full details, in the Notice of Appeal.

55.	By order dated 26 August 2008 the Bank was ordered to serve evidence.  Affidavits were served by Mr Koziupa, Mrs O’Brien and Mrs Locke all dated 8 September 2008.  In some respects these affidavits raised allegations going beyond the Notice of Appeal; but no application was made to amend the Notice of Appeal, and the only allegations upon which it would be proper to act are those which are properly detailed within the Notice of Appeal.

56.	These affidavits and the Notice of Appeal were all shown to the Employment Judge and members.  The Employment Judge provided a response dated 8 October 2008.  His response neither confirms nor denies the words which are attributed to him in the affidavit evidence.  Mrs Trudgill provided a response dated 18 September.  Her response again does not deal with the specifics of the affidavits.  Mr Youngman deals specifically and helpfully from his notes with certain of the points raised in the affidavits.   It would, however, have been very much more helpful to the Appeal Tribunal if the Employment Judge had dealt precisely with the allegations made in the Notice of Appeal and affidavits.  

57.	The Appeal Tribunal’s order dated 26 August 2008 made provision for Mr Wilson, if so advised, to file an affidavit in response to those of the Bank within 28 days of receipt of the Bank’s affidavits.  He did not do so.   

58.	Following these steps a preliminary hearing took place on 28 November 2008.  The Appeal Tribunal directed that the appeal be set down for a full hearing.  Half a day was allowed; this time estimate plainly did not envisage the attendance of any witnesses or cross examination.  There was no order for any deponent to attend for cross examination, nor any order for any further evidence (such as evidence from Mr Wilson) to be served.  At a late stage, shortly before the hearing, he applied to adduce affidavit evidence.  The Registrar refused his application to do so.

59.	The Appeal Tribunal made its usual order for the parties to agree a statement or note of any relevant evidence given: see paragraph 5 of the Order made on the Preliminary Hearing.  In this case, however, what was really in point was not so much the evidence given as the remarks of the Tribunal Chairman from time to time during the hearing.   While, therefore, we had a note of key passages in the evidence, agreed subject to reservations by Mr Wilson, it has not played any significant part in our reasoning.

60.	At the final hearing before us the parties made submissions on the written material which we have identified. 

(2) 	Apparent bias – the appellate approach
61.	We have already stated the essential test which an appellate court applies.  The question is whether the circumstances which the appellate court has found would lead a fair-minded and informed observer to conclude that there was a real possibility that the Tribunal was biased. 

62.	Valuable guidance on the application of that test is found in the decision of the Court of Appeal in Southwark Borough Council v Jiminez [2003] ICR 1176 at paragraphs 25-36.

63.	On the one hand, the premature expression of a concluded view or the manifesting of a closed mind by the tribunal may amount to the appearance of bias.  On the other hand, a Judge is entitled to point out to a party inherent difficulties in its case.  Thus in Arab Monetary Fund v Hashim [1993] 6 Adm LR 348 at 356 A-C Sir Thomas Bingham said –

“.. a Judge does not act amiss if, in relation to some feature of a party’s case which strikes him as inherently improbable he indicates the need for unusually compelling evidence to persuade him of the fact.  An expression of scepticism is not suggestive of bias unless the Judge conveys an unwillingness to be persuaded of a factual proposition whatever the evidence may be.”

64.	Further in Harada Ltd v Turner (2002) EWCA Civ 599 Pill LJ with the agreement of the other members of the court said –
“ ...  Provided a closed mind is not shown, a judge may put to counsel that, in the view of the judge, the counsel will have difficulty in making good a certain point.  Indeed, such comments from the bench are at the very heart of the adversarial procedure by way of oral evidence which is so important to the jurisprudence of England and Wales.  It enables the party to focus on the point and to make such submissions as he properly can.” 

65.	Moreover there is no impropriety in a tribunal encouraging the settlement of proceedings and for this purpose discussing with the parties potential difficulties which a party may have, so long as the tribunal does not express a concluded view or manifest a closed mind.  It will often be unnecessary for a tribunal to express views of its own for this purpose.  It may be sufficient simply to point out the contrasting arguments of the parties, or the potential significance of evidence which has been heard.  But when a tribunal expresses views for this purpose, it must avoid expressing views or opinions which a reasonably informed observer might consider to be final.  The wise course is to make it clear that any views expressed are provisional.  

66.	The submission of Mr Sadiq, contested by Mr Isaacs, was that the Employment Judge by his comments during the evidence and in the course of encouraging settlement expressed concluded views which demonstrated a mind closed to further argument.  

(3) 	The specific complaints
67.	Against this background we turn to the specific complaints made in the Notice of Appeal, by virtue of which it is said that the hearing is vitiated by apparent bias.  It will be important to return, at the end of this part of our judgment, to consider the complaint of apparent bias in the round.  

68.	The first complaint relates to a comment made during the evidence of Mr Koziupa.  It is said that Mr Koziupa gave evidence to state that he spoke to Bancassurance and the Business Compliance Unit to check the consistency of the decision to dismiss in the circumstances.   It is complained that the Employment Judge then commented “This evidence is not in front of us, so we will not be taking these comments into account”.   

69.	We accept that this comment was made: there is evidence from Miss Locke to this effect, and no evidence to the contrary.  But we do not think that a fair minded and informed observer would regard this as evidence of a closed mind or of bias.  It is important to bear in mind the context.  If a piece of evidence is relied on by the Bank and is of importance, it should be in the Bank’s witness statements.  Assuming that an order for exchange of witness statements has been made a Tribunal is fully entitled to decline to receive evidence which is not in the witness statement, subject of course to the right of a party to apply to adduce it.  There were references in Mr Koziupa’s long statement to the matter in question, but the Employment Judge may not have been aware of them.  The Employment Judge’s remark was peremptory, but it brought the issue to light so that the Bank’s advocate could point to the witness statement in so far as the matter was in evidence, or if so advised make an application to adduce the evidence.

70.	The second complaint relates to a comment made during the evidence of Mrs O’Brien.  It is said that while she was giving evidence as to the risk to the Bank entailed by breaches of procedure, he said the following (which is deposed to by Mrs Locke) –
“I take with a very large pinch of salt that the Bank were in jeopardy.  We are not concerned with the minutiae of dates and whether the application was sent or pending.  We might decide as a matter of common sense that the Claimant is not dishonest but dealt with matters following the normal procedures.  We might also decide that the fact that the Bank did not take this into account weakens their case and means that it is not one of gross misconduct.”

71.	We accept that a comment along these lines was made by the Employment Judge.  It was made towards the end of the evidence of the third and final witness for the Bank: see the statement of Mrs O’Brien at paragraph 7.  Read as a whole, we do not think it is indicative of a closed mind.  It is noteworthy that it was made during the evidence of the third and last of the Bank’s witnesses and towards the close of the first day of the hearing.  It identifies a point on which the Bank was potentially in difficulty and refers to conclusions which the Tribunal might reach.  It does not shut out further evidence (for example re-examination of Mrs O’Brien) nor argument.

72.	The third complaint also relates to a comment during the evidence of Mrs O’Brien.  It is said that the Employment Judge commented –
“..It would be a very silly Bank who would go ahead with a mortgage application without a customer’s signature.  I am surprised they would process the application without the signature of the mortgagor.  I would also be very surprised if this was an FSA rule.”

73.	Again, we accept, having no evidence to the contrary, that this is what the Employment Judge said.  To our mind, while it may not have been a very focussed or helpful interjection, it does not indicate a closed mind.  The first two sentences rather miss the point; the Bank’s case was indeed that it would not process an application without the signature of the mortgagor; the Bank however was asserting that it was the specific task of the mortgage advisor to obtain that signature before he submitted the application electronically to be processed.  The third sentence indicates a point which seems to have been troubling the Tribunal, to judge from the comments of a lay member, Mr Youngman, in particular; they did not have any evidence that obtaining a signature on a mortgage application was an FSA rule.  (The matter was, however, dealt with in some detail in Mr Koziupa’s statement, which we have already summarised.  It was the Bank’s own mandatory procedure that a signature had to be obtained.  The FSA’s rule was that a mortgage advisor had to be a fit and proper person).  

74.	The fourth complaint also relates to an interjection made during the evidence of Mrs O’Brien.  It is said that she explained that she had found out details of a comparable case after she made the decision on the appeal.  The Judge is said to have interjected “I am not interested then”.

75.	Again, we accept that this comment was made, there being no evidence to the contrary.  But we do not think it is indicative of a closed mind or of any kind of bias.  In determining whether it was reasonable to dismiss, a Tribunal’s focus is on what the person dismissing (and hearing the appeal) knew when they heard the appeal.  This is the context in which the comment was made.  Mr Sadiq submitted to us that the comment might be relevant to compensation; but even if this were the case, the Tribunal was not dealing with the issue of compensation when the Employment Judge made the comment.

76.	The fifth complaint relates to a short remark made by the Employment Judge in the course of Miss O’Brien’s evidence.  She had evidently stated that she felt she had “no alternative” but to dismiss.  The Employment Judge remarked “This makes employment law redundant!”.  Again there is no reason to doubt that the Employment Judge made this remark.  It is an unfortunate remark; it will often be the case that an employer will feel, or say, that he has no alternative but to dismiss, and it does not follow that employment law is redundant.  But in itself we do not think it is indicative to the informed observer of a closed mind.

77.	The sixth complaint relates to an attempt made by the Employment Judge at the close of business on the first day to see whether the parties could reach a settlement.  We will not set out in full the (quite lengthy) note of Mrs Locke, the Bank’s advocate, as to what the Employment Judge said.  It is, however, plain from this note that he set out various views which the Tribunal might take at the end of the evidence, including views adverse to the Bank, but also a view that “any employee who is over 21 years and has worked in the Bank for more than 5 minutes would not behave in this way”.   We think it is reasonably plain from the note made by Mrs Locke that an informed observer would not conclude that the Tribunal was evincing a closed mind or a final view.

78.	Standing back and looking at the first day as a whole, we do not think the informed observer would consider that the Employment Judge had evinced a closed mind.  There are, indeed, no particularised complaints of significance relating to the first two witnesses.  As the end of the day approached, the Employment Judge expressed views, but we do not consider them to have been concluded views, and some at least were expressed with the laudable aim of encouraging the parties to settle.  

79.	When looking at the complaints made by the Bank concerning the second day of the hearing we have found the matter much more finely balanced.

80.	The second day of the hearing was about 5 weeks after the first.  The Bank’s case having finished on the first day, Mr Wilson gave his evidence on the second.  

81.	The seventh complaint relates to a comment by the Employment Judge during Mr Wilson’s evidence.  Mrs Locke has noted the Employment Judge as saying the following:
“The Bank are saying they take money out of the customer’s account as soon as their processing team gets the application through.  We will certainly have something to say about that.   Is this the case or do they take it out when you say the application is pending?  The first is greedy.  The second is worse as you are effectively saying that the application is not going through yet.”

82.	The eighth complaint is similar.  Mrs Locke has noted the Employment Judge as saying, when Mr Wilson gave evidence that the fee was non refundable‑

“So, regardless of the amount of work done, the Bank takes £499.  This is extraordinary!”

83.	The Employment Judge would have been well advised to have kept to himself his opinion of the question whether it was or was not extraordinary or greedy for the Bank to take a fee when it first received an electronic application via a mortgage advisor.  It was not a matter which the Tribunal had to decide or was entitled to decide.   The informed observer would to our mind consider these remarks inappropriate; but they are passing remarks which do not in themselves pre-judge the issues the Tribunal had to decide.  

84.	The remaining complaints relate to what we take to be a further attempt by the Employment Judge to encourage the parties to consider settlement.  This attempt (as is plain from Mrs Locke’s full note of evidence, which is within our bundle) took place firstly at the end of cross examination of Mr Wilson and then either side of the luncheon adjournment.  Again Mrs Locke’s note is lengthy, and we will not set it out in full.  We have no reason to doubt that it is broadly accurate.

85.	The first remark, made at the end of cross examination of Mr Wilson, emphasised that the incident leading to dismissal was a one-off, and pointed out the difficulty the Bank potentially had in establishing gross misconduct.  The Employment Judge said that the Tribunal was “very surprised” that he was dismissed for gross misconduct without notice.

86.	The note of what the Employment Judge said prior to lunch is to our mind unexceptionable.  The Employment Judge set out the issues which the Tribunal would have to decide.  He encouraged the parties “to rescue the matter, without something else happening and before any more blood is shed”.  

87.	Mrs Locke had attended the Tribunal on that day without any representative of the Bank who could give her instructions.  After lunch she informed the Tribunal that she had been unable to take instructions.  Her note of the Employment Judge’s response is as follows.
“We do not take kindly to the fact that the Respondent is not here today.  It is discourteous and counterproductive.  What image does it create?  If the Claimant is not a fit and proper person then he was aided and abetted by the Bank.  The process of the mortgage application was speeded up by the Bank.  They have hardly got clean hands here.  We do not accept that the matter is less important than if we were dealing with a guarantor mortgage.  We do not accept that the guarantor situation was not a breach of the FSA regulations.  From the evidence of your witnesses, Mrs Locke, they had no choice but to dismiss the Claimant.”

88.	We have some sympathy with the Tribunal’s evident displeasure that Mrs Locke was not in a position to take instructions.  A large company ought to be in a position to ensure that its representative has a line of communications open to take instructions and will usually be well advised to do so.   

89.	The balance of the Employment Judge’s remarks as noted by Mrs Locke appear to address disparate issues – the responsibility of the Bank for the incident leading to dismissal, the significance of the FSA Regulations in the context of a guarantor mortgage, the stance of the witnesses on the question whether dismissal was an appropriate sanction.  We think the context of these remarks is important.  The point had been reached at which submissions were about to be made.  We think it is probable that the Employment Judge, expecting to hear submissions, set out points on which the Tribunal had formed views and which he wished to be covered by submissions.  On the whole, not without hesitation, we do not think an informed observer would take them as indicative of a closed mind.  

90.	Standing back and looking at the allegation of apparent bias as a whole, we consider that it is not established.  

(4) 	Conclusions

91.	For the reasons we have given, the appeal is allowed, and the claim is remitted to be heard afresh by a differently constituted Tribunal.