Henry Cooke, Lumsden Plc v Towler

On an appeal from the Employment Appeal Tribunal, the question of the employer’s principal reason for dismissal is one of fact for the Employment Tribunal. The Employment Appeal Tribunal must respect its limited jurisdiction and cannot substitute its assessment of the evidence or interfere with a finding that was open to the Employment Tribunal.

An employer may rely on a reason assembled from the matters investigated and discussed during the disciplinary process, even where those matters were not expressed in one single formulation. Employment Tribunal reasons need not be elaborate, but they must state the essential facts and reasoning sufficiently to explain the result and identify any question of law.

Mr Towler, a senior investment executive employed by Henry Cooke, Lumsden plc, was dismissed after clients were permitted extended credit and continuing transactions involving Magnum Power shares. The Employment Tribunal found that he had acted recklessly in permitting clients to incur substantial losses and that dismissal fell within the range of reasonable responses.

The Employment Appeal Tribunal allowed his appeal and remitted the case for rehearing. It considered that the Employment Tribunal had identified a reason based on actual losses which did not match the employer’s stated concerns about competence, diligence and knowledge of clients’ financial circumstances. Henry Cooke, Lumsden appealed to the Court of Appeal. The central issue was whether the Employment Appeal Tribunal had exceeded its jurisdiction by interfering with the Employment Tribunal’s factual finding as to the reason for dismissal.

1. Appeal allowed. The decision of the Employment Tribunal stood, and Mr Towler’s unfair-dismissal claim remained dismissed. His application for permission to appeal against refusal of a review was refused.
2. The Employment Appeal Tribunal’s jurisdiction under section 21 of the Employment Tribunals Act 1996 was limited to questions of law, including misdirection, absence of evidence, or perversity. It was not entitled to rehear the evidence or substitute its view of the facts.
3. The Employment Tribunal was entitled to find that the principal reason for dismissal was Mr Towler’s permitting clients to undertake transactions without ensuring that they could bear the resulting losses and without adequately protecting the employer against the associated financial risk. Those matters were supported by the disciplinary documents and hearings.
4. The employer had not introduced a new or additional reason at the tribunal. The reason found by the Employment Tribunal could properly be drawn from the matters considered during the disciplinary process, although they had not been expressed in one consolidated statement.
5. The requirements of section 98 of the Employment Rights Act 1996 were therefore met. The Employment Tribunal had made a factual finding as to the reason for dismissal which was open to it and had properly concluded that dismissal was within the range of reasonable responses.
6. Lady Justice Hale considered that the Employment Tribunal’s reasons satisfied the standard stated in Meek v Birmingham District Council [1987] IRLR 250, despite their brevity. The tribunal had sufficiently stated the factual basis and reasoning for its conclusion.

• Court of Appeal (Civil Division): Appeal allowed. The Employment Tribunal’s decision dismissing the unfair-dismissal claim was restored. Permission to appeal against the Employment Appeal Tribunal’s refusal of a review was refused.
• Employment Appeal Tribunal: Appeal allowed and the matter remitted to a differently constituted Employment Tribunal.
• Employment Tribunal: Unfair-dismissal claim dismissed.