Maclay & Co Ltd v. Clark. First Division. IH (1 Div) Lord McCluskey. OPINION OF THE COURT--The appellants in this appeal under sec 37 of the Industrial Tribunals Act 1996 against a judgment of the Employment Appeal Tribunal were the employers of the respondent: in this opinion the appellants may be referred to as "the employers" and the respondent as "the employee". To state the facts, it is sufficient to borrow with some paraphrasing from the summary by Lord Johnston who delivered the judgment of the Employment Appeal Tribunal and from the extended reasons given by the industrial tribunal in support of its decision, dated 18 April 1996. The employers employed the employee as a drayman for a considerable number of years. They became concerned over a period of time that there were unexplained shortages in beer deliveries to certain of their managed public houses. After certain investigations and discussions, Mr Keith Clark, the manager of one such public house, the City Hotel in Alloa, put chalk identification marks on certain kegs in his cellar before a delivery was due to be made by one of the employers' lorries driven by a Mr Penman on which the employee, Myles Clark, was the drayman. The drayman's task was to wheel empty kegs out of the premises and to wheel in full kegs off-loaded from the lorry. Some little time after the lorry had arrived, Mr Keith Clark observed the employee wheeling one of the marked kegs back into the cellar of the City Hotel, the obvious inference being that a little earlier, while unobserved, the employee had removed the marked keg instead of an empty keg and was returning it as if it was a full keg off-loaded from the lorry as part of the expected delivery. If that inference was correct the result would inevitably be that there would be left on the lorry at the end of the delivery an extra full keg; and, assuming the lorry's paperwork to be accurately compiled, there would be on the lorry one more full keg than the paperwork indicated. If the employee intended to sell or *295 otherwise dispose of the extra keg that would presumably have to be done elsewhere and possibly with the active co-operation of the lorry driver. After the delivery had been ostensibly completed and the lorry had left the premises Mr Keith Clark reported to the employers' Retail Manager, Mr McLeod, what had happened and stated that the delivery was one keg of Tennents lager short. Mr McLeod ascertained that Mr Penman and the employee were due to make a delivery at the Old Hotel at Carnock; so he asked the warehouse manager there, Mr Grove, to hold the two men and the lorry until Mr McLeod could arrive. On arrival, he and Mr Grove counted the kegs remaining on the delivery vehicle and found that there was one more keg of Tennents lager on the lorry than there should have been according to the documentation. The driver, Mr Penman, was asked about this and he replied that the applicant had informed him that only 18 kegs were due to be delivered to the City Hotel, not the 19 kegs expected by Mr Keith Clark or shown on the documentation. The employee, however, contradicted Penman, and said that he had explained to Penman that the delivery was indeed for 19 kegs to the City Hotel; he also explained to those investigating the matter that he had made a mistake and the mistake resulted in there being an extra keg on the delivery vehicle. Following that Mr McLeod interviewed Mr Keith Clark and obtained the full story from him. Mr Clark explained that he had put a chalk mark 'L8' on the full keg. After he had
observed the employee purporting to deliver the same marked keg and after the lorry had departed he had counted the kegs and found that he was one full keg short in his cellar. The employee was called to a disciplinary meeting and was confronted with the evidence pointing to his having pretended to deliver from the lorry to the cellar a marked keg which he had previously taken out of the cellar. He maintained that the whole thing was a mistake. He pointed to many other previous occasions when he had returned extra kegs to the warehouse. He contradicted Mr Penman's account of what had passed between him and Mr Penman. He also insisted that Mr Keith Clark was lying. The industrial tribunal's extended reasons narrate that, after further investigations, including a further interview of Mr Keith Clark at which he denied the possibility that he had been mistaken, 'Mr McLeod and Mr Grove then considered the evidence. They took into account the applicant's service. They did not however find his explanation satisfactory. They preferred to believe Mr Clark. It was clear to the tribunal that they believed that the applicant had rolled out a full keg with the empties, had concealed it outside the cellar and had then rolled it in as part of the delivery thus leaving one extra keg on the delivery vehicle. This could have been sold on by the applicant.' The applicant was then dismissed for gross misconduct and Mr Penman, the driver, was disciplined by being given a final warning for negligence. The applicant appealed internally and the appeal was considered by the employers' Retail Director and their Commercial Director. That appeal was dismissed. The applicant then complained to the industrial tribunal on the ground that he had been unfairly dismissed. The tribunal summarises the submissions in these words: 'The only issue for the tribunal to decide was whether the respondents (the employers) had reasonable grounds for their belief in the misconduct. There was no dispute that the investigations had been reasonable in all the circumstances ... Mr McDonald for the applicant, submitted that the decision to dismiss was unreasonable. In view of the applicant's long service he should have been given the benefit of the doubt and his explanation *296 of the events should have been believed. Secondly there was inconsistency of treatment between the applicant and Mr Penman.' The tribunal were satisfied that the reason for dismissal related to the employee's conduct and that that was a qualifying reason in terms of sec 57(1) and (2) of the Employment Protection (Consolidation) Act 1978. They then had to consider whether in terms of sec 57(3) of the Act the employers had acted reasonably or unreasonably in treating the reason for dismissal as sufficient reason, and they say 'that had to be considered in accordance with the equity and the substantial merits of the case'. It is important to note that the tribunal were satisfied that the employers genuinely believed that their employee had been guilty of the misconduct of which he was accused, based upon the evidence of Mr Clark and upon other evidence in support of the inference he made from what he had seen. The debate before this court simplified the matter which this court has to decide because counsel were largely agreed about the general approach that the court had to adopt on the question of law before it. In particular, counsel for the employee accepted that he could not dispute that if the industrial tribunal was wrong on the question as to whether or not the employers had reasonable grounds for their belief that their employee had committed the misconduct alleged then it could not be argued that the employers were not entitled to dismiss. In our opinion, that concession could not have been withheld. If, after investigations which no one criticised for lack of fairness or thoroughness, the employers had reasonable grounds for the belief that their employee deliberately and clandestinely appropriated to his
own purposes a full keg of Tennents lager at the expense of the City Hotel, then there could be no room for doubt that the dismissal of the employee on that basis was an action which lay within the range of reasonable responses open to his employers. Both parties before this court accepted that that was the appropriate test. It is appropriate therefore merely to summarise in outline the submissions of parties in relation to the correct approach for the court. Counsel for the employers referred to British Home Stores v. Burchell at p 304D, as indicating that the true issue in circumstances such as the present was whether or not the employers 'had reasonable grounds upon which to sustain [that] belief'. Reference was also made to the Scottish Daily Record and Sunday Mail (1986) v. Laird per Lord President Hope at p 408. The response of the employers was within the range of reasonable responses open to employers: Boys & Girls Welfare Society v. McDonald. The tribunal in the present case had erred by substituting its own view of the facts: Linfood Cash and Carry Ltd v. Thomson. In reply, counsel for the employee submitted that the duty of the industrial tribunal was to act as an 'industrial jury'. They had committed no error of law in concluding that, upon the evidence, it was not reasonable for the employer to hold that the evidence pointed to proof of circumstances in which it was appropriate to dismiss the employee. The industrial tribunal had not ignored the evidence of Mr Keith Clark and they had properly directed themselves as to the law. It was not for this court to re-weigh the evidence: Eclipse Blinds Ltd v. Wright. There was a sound basis in evidence for the conclusion in fact which the tribunal had reached: Melon v. Hector Powe Limited, per Lord Fraser of Tullybelton at p 8. Furthermore the tribunal were entitled to hold that, if there was dishonesty on the part of the employee, then Penman must have been involved with him in the dishonest scheme. The differential treatment of the two men pointed to unfairness on the part of the employers. *297 In these circumstances, it is clear that the industrial tribunal correctly stated the issue when they summarised the arguments presented to them for the employers by saying that the only issue to be decided was 'whether the respondents had reasonable grounds for their belief'. As was, of course, accepted in the argument before us, it is trite that in considering the reasonableness of an employer's actings an industrial tribunal must not substitute its decision as to what was the right course to adopt for that of the employer. One particular application of that general rule is that an industrial tribunal may not substitute its own evaluation of a witness for that of the employer. The approach which an industrial tribunal should adopt was explained by Wood J in Linfood Cash and Carry Ltd v. Thomson. He put the matter in this way: 'If a Tribunal is to say that this employer could not reasonably have accepted a witness as truthful, it seems to us that the decision must be based upon logical and substantial grounds--good reasons. Instances might be--that the witness was a bare-faced liar, who must have given that impression to the employer at the relevant time; that the witness was clearly biased--provided that such a bias should have been clear at the relevant time, that documents available at the relevant time clearly showed the witness to be inaccurate and that such documentary evidence was ignored by the employer. However, there could be other less obvious situations where mere vagueness and uncertainty would not be sufficient, and it should never be forgotten that cross-examination by experienced advocates may produce a picture not made evident during the disciplinary procedure. For the Tribunal merely to prefer one witness to another might well not be sufficient as this could be to substitute their own view. The employers have the peculiar advantage over the Tribunal of having
an intimate knowledge of the geography, the nature and workings of the business, and the various members of the staff.' In this case the employers believed what Mr Keith Clark told them. In doing so they took into account the fact that he had no apparent reason to lie and that his evidence was consistent with the finding of an extra keg on the lorry. The conclusion of the majority of the tribunal on the crucial matter of whether it was reasonable for the employers to believe Mr Clark is this: 'The members of the tribunal were not satisfied that the respondents had reasonable grounds for dismissal. They noted that there was no evidence that the applicant had sold or was intending to sell the extra keg found on his lorry. They took into account that the applicant had in the past returned undelivered kegs at the end of his rounds. In particular, they took into account the applicant's very long employment with the company and his impeccable record. In their view, weighing all this against the statement by the manager of the City Hotel, they were satisfied that a reasonable employer would have given the applicant the benefit of the doubt and believed his explanation that the non-delivery of the keg was a mistake.' Applying the approach set out by Wood J we ask ourselves whether the majority of the tribunal had good grounds for holding that the employers could not reasonably have accepted Mr Clark as truthful. It is plain that in Linfood Cash and Carry Wood J presupposes that the tribunal have seen and heard the witness in question giving evidence. In the present case, however, while the employee gave evidence before the tribunal, Mr Clark did not. The tribunal were therefore in effect holding, without having heard any evidence from Mr Clark, that the employers, who had taken evidence from both Mr Clark and the *298 employee and who had preferred the evidence of the former, could not reasonably have accepted Mr Clark's evidence. In our opinion it would be only in exceptional circumstances that a tribunal who had not heard the evidence of a witness could properly conclude that an employer who had heard his evidence could not reasonably have accepted that witness as truthful. This is not such a case. The only factors to which the majority of the tribunal point are, first, the fact that there was no evidence that the employee had sold or was intending to sell the extra keg and that he had in the past returned undelivered kegs at the end of his round and, secondly, the employee's long employment and impeccable record. Counsel for the employee accepted that these factors are not of the same quality as those given by Wood J as examples of the kind of thing which would justify the tribunal holding that an employer could not reasonably have accepted a witness as truthful. Even if it is assumed that the factors mentioned by the majority would have been relevant in assessing the employee's credibility, they could not in themselves justify the tribunal in concluding that the employers could not reasonably have preferred Mr Clark's evidence-- evidence which the tribunal had not heard and whose quality they were therefore in no position to judge. The majority said that they were weighing the factors which they mentioned against 'the statement by the manager of the City Hotel'. What the majority did was in effect to substitute their own evaluation of the employee's evidence for the employers'. Having done so, they used that evaluation to justify holding that the employers did not have reasonable grounds for dismissal. In our view, in proceeding in this way, the tribunal failed to apply the approach in Linfood Cash and Carry and so erred in law.
We shall accordingly allow the appeal. Having regard to all the circumstances, we consider that no reasonable tribunal, applying the correct approach, could do other than conclude on the evidence before the tribunal that the employers could reasonably accept Mr Clark as truthful and that accordingly they had reasonable grounds for believing that the employee had been guilty of misconduct at the relevant time. That being so, we do not require to remit the case to the industrial tribunal but shall decide that the employee was not unfairly dismissed.
The Court allowed the reclaiming motion.