Appeal No. EAT/214/94

	EMPLOYMENT APPEAL TRIBUNAL
	58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

		At the Tribunal
		On 15 May 1995

	Before

	HIS HONOUR JUDGE SMITH QC

	MR J H GALBRAITH CB

	MRS E HART

MR VINCENT GALLAGHER	APPELLANT

NORTHUMBRIAN WATER LTD	RESPONDENTS

	Transcript of Proceedings

	JUDGMENT

Revised

	APPEARANCES

For the Appellant	MR WILLIAM EDIS
(of Counsel)
Messrs Crutes
PO Box 47
93 Borough Road
Middlesbrough
Cleveland TS1 3YS

For the Respondents	MS SARAH MOOR
(of Counsel)
Ms Lorraine Smith
Messrs Dickinson Dees
Cross House
Westgate Road
Newcastle upon Tyne
NE99 1SB

	JUDGE SMITH QC:  This is an appeal by the Applicant employee, Mr Gallagher, against a decision of an Industrial Tribunal sitting at Middlesbrough on 21 December 1993 that Mr Gallagher had been fairly dismissed by the employers, Northumbrian Water Ltd, for gross misconduct on 21 June 1993.

	The matter has been very well argued before us by Counsel appearing for the Appellant, Mr Edis and by Ms Moor, appearing on behalf of the Respondent employers and we have been greatly assisted by their submissions.

	The background to the matter and the whole circumstances relating to it are very carefully and fully and comprehensively set out by the Industrial Tribunal in its extended reasons and, therefore, all I am going to do is summarize the main points and reference should be made, should this matter ever go beyond this Court, for the precise details of the matter to the Industrial Tribunal's extended reasons.

	In outline, and it is only an outline, the Applicant was employed as a ganger/main layer by the Respondent water authority in what was regarded by the authority as an important position, involving a considerable degree of manual work but in an unsupervised capacity, with access to important company property by means of an identification card, an ID card, and keys to certain premises, up to a certain level, as we understand the evidence.  His position was considered by the water authority to be a position of trust and, indeed, the Applicant accepted that he was employed in such a position.  He had been employed in that position since 1986.  He had a perfectly good work record and had had no warnings or anything of that kind relating to conduct.

	On 19 May 1993 he was arrested at work by the Police - the Teeside Police - and it was a fact that he was away from work, in consequence, on 19 and 20 May 1993.  As is clear from the Tribunal's extended reasons, he was then arrested for and, indeed, charged with conspiring to damage property, a serious criminal offence, and he had appeared, in fact, before the Teeside Magistrates on 20 May and was then released on bail and was able, therefore, to return to work on 21 May.

	As a matter of record, it is right to say that later in May he was re-arrested by the Police in relation to a very serious allegation of arson, involving a motor vehicle but, ultimately, he was not further charged with any further criminal offence and on 15 July he was told that no further charges would be laid against him and with regard to the charge that had been laid against him, that that would not be further pursued against him.  All matters of criminal prosecution were discontinued.

	Meanwhile, as is explained in detail by the Industrial Tribunal and as the evidence before them showed, the matter was being taken up by the employers and, in consequence of that, the Appellant attended what was described as a counselling session on 21 May, that session being held by the responsible representative of the employer, Miss Womersley.  During the course of that counselling session the Appellant was specifically asked whether he had been charged with any criminal offence and it is accepted that he told a lie by saying that he had not been charged.  It is agreed and accepted that he told a lie to Miss Womersley about that and obviously that involved, in addition, concealing from his employers, through her, that he had appeared before the Magistrates, although he did say that he had been arrested and questioned by the Police in relation to matters which he regarded as harassment by the Police and which he totally denied, but he lied by saying to her that he not been charged when the truth was that he had.

	The employers then, of course, made enquiries of the Police and discovered, no doubt, that he had been charged and had appeared before the Magistrates.  As a result of that it was decided by the employers to suspend the Appellant on full pay, pending a disciplinary hearing to be held in accordance with the terms of his contract.  The contract is to be found in the bundle of documents.  There is no need for me to refer to that in any more detail at this stage.

	He was then asked, in being suspended on full pay, to hand over his identity card and he then stated that he had lost it and that he had reported to the appropriate person that he had lost it.  Enquiries were made about that matter by the employers as well, as is obvious from the Tribunal's decision, and that was denied by the relevant employee of the Respondents,  Once that employee had returned from holiday and had been asked about it he said that the Appellant had not reported it to him as having been stolen.

	By now the matter had been taken up by Mr Howarth, the Respondent's distribution manager, and after successive seven-day extensions of the suspension, Mr Howarth arranged for a holding of a disciplinary hearing on 21 June.  Prior to that he had written to the Appellant on 18 June notifying him that the charge against him was to the effect that he had been involved in serious criminal activity.  However, apparently on the same date as the letter was sent, either immediately before it was sent or about the time it was sent, there was a decision taken by Mr Howarth, having consulted with others, it appears, that the charge should be for breach of trust, not the original charge that the Appellant had been involved in serious criminal activity.  That was a complete change as far as the position of the employers were concerned.  They were embarking on disciplinary proceedings on the basis of breach of trust and no longer seeking to try and establish criminal activity.  As is clear from the way the matter is set out in the extended reasons, the Appellant was not notified of this change in the charge which he had to face until the very beginning of the hearing itself which took place on 21 June, as I say, the disciplinary hearing which took place before a Mr Turner, who presided at this hearing, who was the area manager of Teeside.

	There then followed the disciplinary hearing.  Mr Howarth presented the case, so to speak, for the employers at that particular hearing and what he did, and this was found as a fact by the Tribunal, was that, amongst other evidence he presented to Mr Turner, he presented evidence which included a very damaging statement repeating, in effect, the Police allegation against the Appellant alleging serious criminal misconduct against him in relation to the motor car, the arson incident.  In addition, he properly presented evidence to the effect that the Appellant had lied about reporting the identification card as being stolen, that he had told the Police falsely that he had been suspended without pay, whereas the truth was that he had been suspended on full pay, and, finally, and most importantly as far as the Tribunal were concerned, that he had not been frank with Miss Womersley and, in particular, had lied to her in relation to the matter of whether or not he had been charged or had appeared before the Magistrates.

	At the end of that hearing, Mr Turner concluded that the Appellant should be summarily dismissed on the grounds that he had been guilty of gross misconduct, namely, breach of trust.  The Industrial Tribunal found that Mr Howarth had tried to prejudice the hearing by wrongly introducing the criminal allegations against the Appellant but they specifically found that Mr Turner had disregarded those matters in arriving at his decision.  They also found that Mr Turner should have adjourned the hearing to enable the Appellant to meet the new charge against him but they found that this had been cured by the appeal procedure.  

	There was then an appeal to Mr MacMillan, the director of customer services, which was heard on 5 July.  At that hearing, Mr MacMillan upheld Mr Turner's decision and disallowed the appeal, disbelieving the Appellant when he said that he had reported the loss of his identification card and when he said that he had not told the Police that he had been suspended without pay.  It was admitted, of course, by the Appellant that he had lied in denying to Miss Womersley that he had been charged or that he had appeared in front of the Magistrates Court.

	The Industrial Tribunal found that the reason for the dismissal was a serious breach of trust, firstly, arising out of the Appellant lying in relation to the fact that he had been charged with a criminal offence and concealing that had appeared before the Magistrates Court in that regard, secondly in lying in relation to his claim that he had reported the loss of the identification card and lying in informing the Police that he was suspended without pay.

	The Industrial Tribunal then had to consider and did consider s.57(3) of the 1978 Act and although they found two defects in the procedure, having considered the evidence and made their findings of fact and having considered the case of Whitbread & Co Plc v Mills [1988] ICR 776 they decided that the dismissal was fair in all the circumstances and that the employers had acted reasonably in accordance with the requirements of s.57(3).  They then went on to consider in paragraph 18 of their reasons whether the penalty of dismissal was one which could be imposed by a reasonable employer in all the circumstances and they concluded in that regard in this way that:

		"... the majority of reasonable employers would not have invoked so severe a penalty as dismissal but we cannot say that no reasonable employers would have dismissed the applicant in these circumstances."

Accordingly, they found the dismissal unfair.

	There were two points taken on the appeal by Mr Edis on behalf of the Appellant.  The first point was that the Tribunal made a perverse decision, in particular, in finding that the appeal procedure here had cured or rectified the defect which the Tribunal itself had found to exist in relation to the original hearing.  The point was taken that under the contract of employment the appeal is expressed to be an appeal by way of review and reliance was placed upon the fact that at the hearing before the Industrial Tribunal Mr MacMillan himself had described the hearing before him as amounting to a review and not a rehearing and reliance was placed, of course, upon the two defects in relation to the original disciplinary hearing.  The first defect being that Mr Howarth had introduced prejudicial evidence wrongfully and unfairly and the second defect being the procedural one, the important one, to the effect that the Appellant had not been given sufficient time to prepare his case for the first disciplinary hearing in relation to the substituted charge.

	By way of answer to that submission, Counsel for the Respondents said in summary that the Industrial Tribunal had dealt with both these matters of defect in the original hearing perfectly properly and correctly in law, applying the correct legal test laid down with regard to the procedural defect, as laid down in the case of Whitbread v Mills.

	With regard to this first ground of appeal, relating to the prejudicial introduction by Mr Howarth of the allegations brought by the Police against Mr Gallagher, in our judgment it is clear that the Industrial Tribunal specifically and properly addressed its mind to that point on the evidence and concluded, as a matter of fact, that neither Mr Turner's decision nor, indeed, Mr MacMillan's decision, was influenced in any way adversely to the Appellant by the introduction of the prejudicial matter.  That was a finding of fact in our judgment, which the Industrial Tribunal was perfectly entitled to make and so to conclude in the light of the evidence in front of it and, accordingly, we agree with Miss Moor's submission that that is a matter about which the Appellant cannot complain.

	With regard to the second defect in the procedure at the original disciplinary hearing, the Industrial Tribunal accepted fully that there was prejudice to the Appellant in the late notification of the revised charge but, as I have already said, they held that it was cured by the appeal hearing on the evidence before them.  Once again, in our judgment, this was a question of fact and a decision of fact which they were fully entitled to make in the light of the evidence before them.  In concluding on fact and deciding as they did that it had been rectified, the Industrial Tribunal expressly considered the leading case of Whitbread v Mills and, indeed, in their extended reasons, actually cited the crucial paragraph in the judgment of the then President of the Employment Appeal Tribunal, Mr Justice Wood, at page 795 at B.  This was cited by the Tribunal and is to this effect:

		"... whether or not an appeal procedure has rectified the situation must depend upon the degree of unfairness at the initial hearing.  If there is a re-hearing de novo at first instance, the omission may be corrected, but it seems to us that if there is to be a correction by the appeal then such an appeal must be of a comprehensive nature, in essence a rehearing and not a mere review."

	That was the test which the Industrial Tribunal rightly applied to the evidence before them and in our judgment they were fully justified in concluding that the appeal in this particular case had cured the defect.  Although it is right to say that under the contract the employee was only entitled to a review by way of an appeal and although it is also right to say that Mr MacMillan described the hearing before him as a review and not as a rehearing, in our judgment, those are only one or two factors out of a number of factors which the Industrial Tribunal was entitled to take into account.

	Looking at the decision of the Industrial Tribunal, it is clear that the Industrial Tribunal looked very carefully at the nature of the appeal and the reality of how it was, in fact, conducted and, in particular, in paragraph 17 of their extended reasons, immediately after the citation from Mr Justice Wood's decision in Whitbread v Mills they proceed in this way:

		"Although the appeal was not a re-hearing it was of a comprehensive nature.  The applicant presented his case very much in the same way as he had at the disciplinary hearing.  We find that the appeal hearing corrected the defect of the failure to give the applicant an opportunity to seek an adjournment."

Indeed, earlier on in paragraph 17, in the third line of the paragraph the Industrial Tribunal looked at the matter in this way:

		"The appeal hearing, although it was not a rehearing of the complaint, was a very full hearing and the applicant had every opportunity with his representative to make representations."

	It is clear to us that the Industrial Tribunal looked at the matter very carefully in order to make their assessment of the nature of the appeal hearing and in our judgment they were entitled to conclude in all the circumstances of this particular matter that the appeal hearing had cured the defect.  They noted that there were many questions asked by Mr MacMillan, who was the director presiding on the appeal hearing.  It is a fact that the Appellant gave evidence at the appeal hearing and it is plain that he could have called a witness had he decided so to do in relation to the question of the reporting of the loss of the identification card.  With regard to the lie that he told as to whether or not he had been charged or appeared at the Magistrates Court, there was in relation to that matter, the most serious matter that he had faced, an admission on his part that that is what had happened.  There were, therefore, no disputed questions of fact which arose on the appeal hearing which were not dealt with and that, in our judgment, does sharply differentiate the position in the instant case which we have to determine from the case of Whitbread v Mills itself, where it is plain from the judgment of Mr Justice Wood that there were disputed questions of fact which arose on the appeal hearing and which were unresolved.  That is apparent from the way in which the appeal is described in the judgment at page 783 at E and that, in our judgment, sharply differentiates the position in Whitbread v Mills from the position in the present case.  We consider that it is not a question of looking at labels on bottles and deciding whether a bottle  is labelled "review" or whether a bottle is labelled "rehearing", it is a matter of looking at actually what happened on the appeal hearing fairly on the evidence and concluding whether or not on a fair and commonsense view it rectified the defect that had occurred at the original hearing.

	We remind ourselves, of course, that the Tribunal were only concerned, although it was a very important matter, with the very late notification of the charge.  They were not concerned with the prejudicial matter that had been laid before the original hearing by Mr Howarth since they had concluded, as they were fully entitled to do, that that particular defect had not resulted in any operative prejudice to the Appellant since they held, as they were entitled to do, on the facts. that neither Mr Turner nor Mr MacMillan had in any way been affected or influenced by that improper statement by Mr Howarth.

	In our judgment, we are satisfied that the Industrial Tribunal reached a perfectly reasonable conclusion of fact in finding that the other defect, the defect relating to late notification, had in all the circumstances been rectified by the appeal hearing in accordance with the principle laid down in Whitbread v Mills.  Accordingly, we reject that ground of appeal.

	The second separate ground of appeal was to the effect that the Industrial Tribunal had reached a perverse decision or wholly unreasonable and impermissible decision in finding that the employers here had acted reasonably in imposing the penalty of summary dismissal in all the circumstances.  The way the matter was put was that the particular allegations that the employers had found proved against the Appellant were simply not sufficiently serious enough even arguably to amount to gross misconduct but, in our judgment, the Industrial Tribunal in paragraph 18 approached the matter in a model and exemplary way.  We consider  that the effect of their decision in paragraph 18, although they do not actually cite the case by name, was really to follow very precisely the correct way of looking at this matter in the light of the principles laid down in the EAT decision of Iceland Frozen Foods Ltd v Jones [1982] IRLR 439.  They very fairly stated that they would not, had they themselves been in the Respondent's position, have imposed that penalty.  They even went on to say that they concluded that the majority of reasonable employers would not have invoked so severe a penalty as dismissal but then they went on in this way:  

		"... but we cannot say that no reasonable employer would have dismissed the applicant in these circumstances."

	In our judgment, they approached the matter in a perfectly correct manner and their decision cannot be criticised in any way as being perverse or an option which they were not permitted to take.  We should say, of course, that in the case of a Water Company like this, it is correct to say that there is very valuable property under the control of the Company and it was, in our judgment, perfectly reasonable for the employers to expect and to set high standards of honesty from those who were in a position of trust and clearly for an employee to tell lies is a matter which very much goes to the honesty and integrity of an employee who is in a position of trust and who accepts that he was in a position of trust.

	As far as we are concerned, we take the view that the Industrial Tribunal reached a correct decision of fact, applying the law correctly.  Accordingly, the second ground of appeal is also rejected so that, for the reasons I have stated, we dismiss the appeal.