Lewis v Motorworld Garages Ltd
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE ACKNER,LORD JUSTICE NEILL,LORD JUSTICE GLIDEWELL |
| Judgment Date | 01 August 1985 |
| Judgment citation (vLex) | [1985] EWCA Civ J0801-1 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | 85/0506 |
| Date | 01 August 1985 |
[1985] EWCA Civ J0801-1
Lord Justice Ackner
Lord Justice Neill
and
Lord Justice Glidewell
85/0506
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL
ON APPEAL FROM THE EMPLOYMENT APPEAL TRIBUNAL
Royal Courts of Justice
MR. TIMOTHY PAUL BARNES (instructed by Messrs Cole & Cole, Oxon) appeared on behalf of the Appellant/Appellant.
MR. DAVID FOSKETT (instructed by Messrs Thomas, Mallam, Grimsdale, Oxford) appeared on behalf of the Respondent/Respondent.
This is an appeal from the decision of the Employment Appeal Tribunal presided over by Mr. Justice Balcombe (as he then was), given on 23rd March 1984, dismissing an appeal from the Industrial Tribunal's decision given on 13th June 1983.
Mr. Lewis, the appellant, has spent all his life in the motor car business. From September 1979 until September 1981 he was employed as an after-sales manager of Motorworld Garages Ltd. (the respondents to this appeal). He carried out his duties satisfactorily, but in the late autumn of 1981 there was a reshuffle of managerial and director posts, with the result that Mr. Lewis, without any warning, was demoted to the position of Service Manager. He thus lost the use of an office to himself, he was given a smaller car for business use, his responsibilities were reduced, his salary structure was changed and he did not receive the increase in salary which other people received at the beginning of 1982. The Industrial Tribunal held, and the Employment Appeal accepted, that this unilateral demotion was a breach by the respondents of a fundamental term of Mr. Lewis's contract of employment which would have entitled him, had he so desired, to accept that wrongful repudiation, and treat his contract as at an end. That he did not do so and thereby elected to affirm his altered contract of employment is not disputed on his behalf by Mr. Barnes.
On 22nd December 1981, that is the month following the demotion, Mr. Nochar, a director of the respondents, who had himself been, prior to Mr. Lewis's appointment, the after-sales manager, wrote a four page memoranda setting out a number of criticisms of Mr. Lewis, concluding with a paragraph which read:
"The complaints I have listed show major failings in your ability to perform as a service manager. I must now ask you to give me your assurance that you will correct the matter immediately as I cannot permit this unsatisfactory situation to continue."
On 30th December Mr. Vickers signed a memorandum that Mr. Lewis' salary from 1st January 1982 would be £7,224 per annum plus 2 1/2% on the service and self-drive departments. This represented a reduction, because Mr. Lewis had previously had commission on the sales of parts as well. As a result of this being explained, a further memorandum was issued that Mr. Lewis's salary would be £8,051 plus 2 1/2% on service and self-drive departments. At that time, as I previously indicated, almost all the staff received a rise, but Mr. Lewis did not.
Mr. Lewis replied by return of post, in considerable detail.
On 16th April 1982 Mr. Nochar again wrote to Mr. Lewis, in general complaining about his paperwork and concluded with the words:
"These problems are serious and immediate action by you must take place and unless this happens your continued employment with the company must be questioned."
On 30th June 1982 Mr. Nochar wrote yet another memorandum referring to his previous memoranda of 16th April 1982 and 22nd December 1981 referred to above, and saying:
"I have to record my further dissatisfaction with your management of the service department."
He recognised an improvement in the warranty claims, but complained about Mr. Lewis' handling of the case of Mrs. White's Porsche. He said that there had been misleading information about Mr. Mayhew's Audi, and that there had been a failure to progress the paper work for servicing Mr. Muir's car. There were four other complaints, and Mr. Nochar ended:
"Whilst you have endeavoured to correct some of the previous problems and you personally work hard, you are not managing your department as a professional service manager described in your job description. I must advise you that unless an immediate improvement is shown in your work then your employment will be terminated."
Mr. Lewis replied on 6th July, saying that he was puzzled that none of the occurrences referred to by Mr. Nochar had been the subject of discussion beforehand. He gave detailed explanations of the matters which Mr. Nochar had complained about, and concluded:
"As I am now working under some form of duress, I must ask that you let me have in writing exactly what improvements you wish to see and over what time span and, if possible, interim reports so that I know whether I am improving and approaching the standard you set. I shall regard this as a challenge with serious consequences in the event of failure.
25. Mr. Nochar wrote another memorandum on 2 August, commenting on the applicant's memorandum of 6 July. He went on to say that there were several instances which had given him further doubts about Mr. Lewis' capability. There were 4 instances as to which Mr. Nochar was dissatisfied, and he ended his letter with the words:
'I now regret to inform you that having discussed your various failures as a service manager with my fellow directors, they have instructed me to give you a final warning and unless you can show in the next few weeks that you are capable of controlling your staff and looking after the company's customers in a proper manner befitting a service manager we shall have no alternative than to terminate your employment.'"
On 3rd August Mr. Lewis wrote to the directors as follows:
"Further to your memorandum of the 2nd August, I would like to record that I entirely refute all the allegations contained in it.
I very much regret that since your memorandum in February this year, I have been obliged to consider my position with the Company very carefully and I am forced to the conclusion that in view of your lack of confidence in me that my future must lie elsewhere. I am, therefore, tendering my resignation, which should bring my termination of employment on Tuesday 31st August.
The demotion and exclusion from wage consideration imposed upon me at the beginning of this year were matters of great significance, which I consider entirely unjustified, and I would point to the decision regarding the promotion of others whose quality of management has subsequently proved to be less than desirable.
The demotion was dictated to me and presented without opportunity for discussion. I have since discovered that it was finalised and confirmed with other members of staff, some of them my subordinates, before I was informed.
"It seems to me that for reasons unknown the Company is bent on victimising me and I obviously do not enjoy the force and support of senior management of the Company.
I do not accept the validity or truth of the criticisms in your recent memorandums, upon which I have frequently sought clarification and guidance. I am particularly concerned that the memorandums do not record the facts accurately.
In the circumstances, I have no alternative but to resign and to seek such action as my Solicitors advise. I thank the Directors of Motorworld Garages for the experience, if not the opportunity, to further my career in the motor trade."
Mr. Lewis subsequently applied to the Industrial Tribunal alleging that he had been constructively dismissed by the respondents. It is common ground that the relevant section is section 55, subsection (2) of the Employment Protection Consolidation Act 1978, the material parts of which read as follows:
"….. an employee shall be treated as dismissed by his employer if, but only if: (c) the employee terminates the contract, with or without notice, in circumstances such that he is entitled to terminate it without notice by reason of the employer's conduct."
It is further common ground that the onus was on Mr. Lewis to establish that the conduct of the respondents was sufficiently serious to entitle him to leave.
Mr. Lewis's case, both before the Industrial Tribunal and the Employment Appeal Tribunal, was that the respondents had breached the implied term of his contract of employment that they should not undermine the relationship of trust and confidence which ought to subsist between employer and employee, and because of that breach he resigned. The reason for his leaving was the conduct of the respondents between November 1981 and 2nd August 1982, the letter of 2nd August 1982 being "the last straw". The demotion, the loss of the use of an office, the reduction in pay, the absence of proper consultation all showed loss of confidence. The criticisms of Mr. Lewis were not justified: they were nitpicking. Mr. Lewis should have had the support of the respondents in his different job and he did not get that support. The criticisms made of Mr. Lewis were not sufficient to justify the threat of dismissal.
In the first 43 paragraphs of their detailed reasons for dismissing the application, the Industrial Tribunal most helpfully set out all the relevant facts, the case for the respondents and the respondents' arguments, and then the applicant's arguments, all with great clarity. The Tribunal's conclusions begin at paragraph 44, in which paragraph they record what is now accepted that the demotion in November 1981 was a breach of contract entitling Mr. Lewis then and there to resign and his subsequent election to continue his employment. In paragraph 45 the Tribunal refers to the change in the...
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