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	England and Wales Court of Appeal (Civil Division) Decisions
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> British Gas PLC v McCarrick [1991] EWCA Civ 17 (20 February 1991) URL: http://www.bailii.org/ew/cases/EWCA/Civ/1991/17.html Cite as: [1991] EWCA Civ 17, [1991] IRLR 305

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IN THE SUPREME COURT OF JUDICATURE
(Civil Division)
ON APPEAL FROM THE EMPLOYMENT APPEAL TRIBUNAL

		Royal Courts of Justice,
		20th February 1991

1. THE VICE-CHANCELLOR: This is an appeal against a decision of the Employment Appeal Tribunal delivered on 22nd March of last year. The Employment Appeal Tribunal allowed an appeal against a decision of an Industrial Tribunal held at Liverpool on 2nd September 1988. The Industrial Tribunal had held that the applicant, a Mr McCarrick, had been unfairly dismissed by his employers, British Gas Plc. The Employment Appeal Tribunal allowed the appeal and substituted a finding that the dismissal was fair.
2. The facts as found by the Industrial Tribunal can be summarised as follows. Mr McCarrick had been employed for 13 years with British Gas as a distribution craftsman. In August 1987 he was accused by his employers of stealing petrol from one of their petrol pumps. That petrol was found in a van which Mr McCarrick had been driving. Mr McCarrick was also accused of breach of safety regulations in that the petrol was stored inside the van in plastic containers.
3. On 3rd September 1987 there was a disciplinary hearing. Mr McCarrick denied the charges. The employers found that a complaint of theft had not been proved, but found a breach of safety regulations proved. He received a written warning in respect of the breach of safety regulations.
4. At much the same time the police had been investigating the theft of petrol, which led to Mr McCarrick being charged with the offence of stealing the petrol. He appeared on many occasions before the local magistrates court, each time pleading not guilty. He elected for trial and came before Liverpool Crown Court on 24th February 1988. Before that he had seen counsel for a short conference. On the date of the hearing he was at first advised by counsel that because of the small value of the petrol involved, some £35, counsel might be able to procure that the charge be dropped. Thereafter when counsel could not procure the charges to be dropped, he advised Mr McCarrick that he should plead guilty because there was a 95 per cent chance of a prison sentence if he did not plead.
5. There was substantial discussion, to put it mildly, between Mr McCarrick and his counsel and between his counsel, the prosecution counsel and the police, at the end of which, at the very last moment, Mr McCarrick decided to plead guilty, so he said, because of his concern that his wife and children would be adversely affected if he were to be sent to prison. He accordingly pleaded guilty and was convicted and fined for the theft.
6. The employers heard of the conviction and started fresh disciplinary proceedings against Mr McCarrick. On 28th March 1988 there was a disciplinary hearing. Mr McCarrick admitted that he had pleaded guilty to the charge of theft, but put forward the case that he had been pressured into so doing because he had been told by counsel that he could go to jail if he persisted in pleading not guilty, and, so he said, he had been told by counsel that he could plead guilty even though he was not guilty. He gave evidence of outbursts by counsel and pressure brought to bear on him to plead guilty. He called witnesses, all of whom were other employees of British Gas, who had been present at the Crown Court. They to an extent confirmed Mr McCarrick's version of what had occurred between himself and counsel, to the effect that substantial pressure had been put on him to plead guilty.
7. After the hearing on 28th March the disciplinary body, which consisted of two executives of British Gas, found that Mr McCarrick was guilty of the charge of stealing the petrol and concluded that there had been gross misconduct and he should be dismissed. In the course of their summing-up they say this:

"We have heard all the evidence about what happened in the Court and accept there was pressure brought to bear.

That pressure was brought by Mr McCarrick's own Barrister. As we do not have knowledge of the evidence that caused him to give the advice to plead guilty, we cannot comment on its strength.

However, if the Barrister felt that a custodial sentence was possible, he must have felt that a guilty verdict was a likely outcome.

As a panel, we cannot judge why the advice was given or why it was ultimately accepted.

Mr McCarrick pleaded guilty.

If a Crown Court accepts that a guilty plea means he stole the petrol is it unreasonable for us to agree and take the same view?

We feel that the only reasonable response we can make to a guilty plea is to believe it".

8. Mr McCarrick, as was his right under the employers' disciplinary code, appealed against that decision. The appeal was heard on 15th June 1988 before two other executives, Mr McColl and Mr Harrison. Again evidence was given before the appeal body by Mr McCarrick himself and by the witnesses, including Mr Williams who had been heard at the original hearing. Again the evidence was of pressure being brought to bear on Mr McCarrick by his counsel to plead guilty.
9. Having heard the evidence, the appeal body adjourned the matter for their consideration and approximately a fortnight later gave their decision in these terms:

"We have given a great deal of consideration to the evidence that was presented to us at the Appeal Hearing on 15th June, 1988.

We know that Mr McCarrick has pleaded guilty to the Offence of theft in the Crown Court and we believe that innocent people do not admit guilt if they are innocent of the allegation. We have been informed that the reason why he pleaded guilty in the Crown Court was because he was intimidated and pressurised into giving a guilty plea. Whilst we have given cognisance to that reason we do not accept it. We are satisfied that Mr McCarrick [was] guilty of the offence of stealing petrol to the value of £35.00 from his employer, British Gas North Western."

Then they go on to say that dismissal is the appropriate sanction.

10. That decision of the appeal body was further communicated in writing in a letter of 30th June to Mr McCarrick, which contains the following passage:

"The hearing was reconvened on Monday 27th June 1988 and you were informed of the outcome of our consideration. That was, we do not accept your explanation of why you pleaded guilty to theft in the Crown Court. We were, therefore, satisfied that you were guilty of the offence of theft from your employers".

11. It was in those circumstances that Mr McCarrick started proceedings in the Industrial Tribunal claiming unfair dismissal. The Industrial Tribunal in their decision set out the rights under section 54 of the 1978 Employment Protection (Consolidation) Act to complain of unfair dismissal and correctly summarised the effect of section 57 of that Act. Then in paragraphs 6, 7 and 8 they direct themselves on the law as follows:

"6. The question for this Tribunal is can it be said that the response of the respondents in dismissing the applicant fell within that band of reasonable responses having regard to the above facts.

7. In cases of conduct it is sufficient if we are satisfied that the respondents honestly believed upon reasonable grounds after full investigation that the conduct complained about had been [established].

8. The Tribunal has directed itself that it must not substitute its own views with that of a reasonable employer".

12. Having so directed themselves, they go on in paragraph 9 to give their conclusions. I will read paragraph 9 as modified by the Employment Appeal Tribunal by inserting numbered sub-paragraphs:

"The unanimous decision of the Tribunal is that whilst the respondents honestly believed that the applicant committed the offence there were no reasonable grounds to support that belief and no full investigation.


1. There was no further evidence of theft before the respondents than at the previous disciplinary hearing on 3 September 1987 (wrongly referred to in Summary Decision as having taken place on 3 December 1987) other than evidence of a plea of guilty.
2. But there was strong evidence that the applicant had bowed to pressure to plead guilty having previously been told that he had a good case.
3. Such evidence as there was before the respondents at the dismissal and appeal hearings would have caused a reasonable employer to question whether the applicant's plea of guilty had been freely given.
4. A reasonable employer would have taken the view that the change of plea to guilty was made because of his concern for his family following the advice of the likelihood of a prison sentence.
5. There was a failure to fully investigate; a reasonable employer would have made enquiries from the respondents' legal advisers regarding his unwillingness to plead guilty until the very last moment.
6. Furthermore we are unanimous that no reasonable employer would take the view that innocent people do not admit guilt if innocent".

13. On those grounds they unanimously reached the view that the employers' response in dismissing Mr McCarrick "did not fall within that band of reasonable responses available to a reasonable employer having regard to the above facts" .
14. The employers appealed to the Employment Appeal Tribunal. In the notice of appeal to the Employment Appeal Tribunal they said that they were appealing inter alia on the following questions of law:

"(c) At paragraph 9 of their Reasons, the Industrial Tribunal substituted their own opinion for that of the Appellants as to the continuing evidential significance of the extant conviction (upon Mr McCarrick's plea of guilty at the Crown Court) of theft of petrol from the Appellants;

(d) at Paragraph 9 of their Reasons, having directed themselves as set out in Paragraph 8 thereof, the Industrial Tribunal substituted their own acceptance of Mr McCarrick's explanation for his plea of guilty for the Appellants' acknowledgement consideration, but rejection of that explanation."

15. The Employment Appeal Tribunal in a reserved decision, having set out the facts in substantially greater detail than was capable of being derived from the Industrial Tribunal decision alone, and having set out paragraph 9 on the tribunal decisions, formulated the issue before the appeal tribunal as follows:

"1. What were the facts and circumstances as known to the employer at the date of the decision to dismiss in March 1988?

2. Did any further relevant evidence come to light at the appeal hearing on 15th June?

3. Was this employer acting reasonably, and with those facts before it, was it entitled to take the view that the plea was genuine or was that a view which, in the circumstances, it was not open for the employer to take?

4. If it was entitled and did accept that the plea of guilty was a genuine plea then upon the whole of the evidence before it, was the finding that the Applicant was guilty of misconduct one which a reasonable employer could in all the circumstances, take?"

16. They then go on to consider the sub-paragraphs of paragraph 9. In substance they agreed with sub-paragraphs 9(1) and 9(2), namely, that at the further disciplinary hearing there was no further evidence other than the plea of guilty and that there was strong evidence of pressure having been applied to Mr McCarrick to plead guilty. As to sub-paragraph 3, they also agreed that it was reasonable for an employer in the circumstances to question whether the applicant's plea of guilty had been freely given. As to paragraph 9(4) (where the tribunal expressed the view that a reasonable employer would have taken the view that the change of plea to guilty was made because of his concern for his family following the advice of the likelihood of a prison sentence) the Employment Appeal Tribunal expressed the view that the Industrial Tribunal was coming "dangerously close to substituting its own view for that of the employer" ; but they did not in terms decide the case on that ground, because they go on to say:

"Even if that was the motive for pleading guilty, such motive does not undermine the [genuineness] of the plea."

17. As I understand it, that means that even though there was some ulterior purpose in pleading guilty, that would not decide the question whether the plea of guilty was a truthful admission of guilt or an untruthful admission of guilt.
18. Then they deal with sub-paragraph 5 and criticise the Industrial Tribunal's decision on the grounds that the Industrial Tribunal did not disclose what they thought might have emerged if the employers had indulged in further investigations with the legal advisers to Mr McCarrick. They then speculate as to what the likely outcome of such further investigation would have been and reach the view that such further information as might have been obtained would have been unlikely to assist Mr McCarrick.
19. Then they turn to paragraph 9(6), where the Industrial Tribunal had expressed the view that no reasonable employer would take the view that innocent people do not admit guilt when innocent. The Employment Appeal Tribunal point out the ambiguities in that phrase. It is capable of meaning that no reasonable employer would take the view that people ever admit guilt if innocent, or of meaning that no reasonable employer would take the view that people in the ordinary course do not admit guilt if innocent. They read the tribunal's reasons as referring to the second meaning. The Employment Appeal Tribunal expressed the view that any reasonable employer was perfectly entitled to hold that in the ordinary course of events a person does not plead guilty if he is not guilty. Having surveyed the reasons given by the Industrial Tribunal, they then sum up by saying:

"For each or any or all of the reasons which we have given, this Court feels driven to the clear conclusion that the reasoning of this Tribunal in paragraph 9 was flawed."

20. Mr Allfrey, in his attractive submissions on behalf of Mr McCarrick, submits with very substantial force that it is impossible to derive from the reasons given by the Employment Appeal Tribunal on what point of law they were holding that the Industrial Tribunal was in error. Appeal from the Industrial Tribunal to the Employment Appeal Tribunal lies only on a question of law. I accept Mr Allfrey's submission that the Employment Appeal Tribunal have not expressly identified what the point of law was. It seems to me, at the lowest, a most desirable feature of an Employment Appeal Tribunal decision that it should identify clearly what is the error of law which it is finding in the decision of the Industrial Tribunal. That was not done in the present case.
21. However, bearing in mind the grounds of appeal which were put before the Employment Appeal Tribunal, and on which they were reaching a decision, it is, in my judgment, just legitimate to extract from the Employment Appeal Tribunal's reasons two points of law which are, in my judgment, correctly decided against Mr McCarrick and in favour of the employer.
22. The first relates to paragraph 9(4) of the Industrial Tribunal's reasons. I will repeat that paragraph.

"A reasonable employer would have taken the view that the change of plea to guilty was made because of his concern for his family following the advice of the likelihood of a prison sentence".

23. Despite the warning as to the appropriate approach in law which the Tribunal had given to itself in paragraph 8 that it is not its function to substitute its own views for that of a reasonable employer, in my judgment the Industrial Tribunal fell into that very error in reaching its conclusion. The decision for the Industrial Tribunal was whether, on the facts which were known or should have been known to the employers, they genuinely believed, on reasonable grounds, that the employee was guilty of the conduct of which he was charged. Both internal domestic hearings were concerned with the question whether the plea of guilty was a truthful admission of guilt, or was not truly an admission of guilt in the real sense but merely a false admission of guilt for the purpose of avoiding a prison sentence. On that issue the domestic tribunals had before them, first, the admission of guilt, second the circumstances which had been established at the earlier disciplinary proceedings, showing that Mr McCarrick had been found with petrol in his van and had been seen in the area in which the petrol was stolen at approximately the right time. On the other hand they had the evidence as to the pressure put on Mr McCarrick to plead guilty. It was for those internal domestic tribunals to reach a conclusion on that evidence as to whether or not the plea was a genuine plea in the sense of being a truthful admission of guilt. That was a decision for the internal disciplinary body to take. They took it and they expressed their conclusion, saying that, notwithstanding the pressure exerted, the admission of guilt was a true admission of guilt. They reached the view that he was guilty.
24. In my judgment it was an error of law for the Industrial Tribunal to seek to re-open the factual issues on the basis of which the domestic tribunal had reached its conclusion. If the procedure had been faulty, that would have been a failure by the employer to act reasonably. But on the evidence before the internal domestic body it was for that body to reach the decision of fact whether or not they were satisfied of the guilt of the charge of theft. In my judgment, therefore, there was a genuine error of law by the Industrial Tribunal.
25. Moreover, in the suggestion that a reasonable employer would have made inquiries of the respondent's legal advisers regarding the circumstances in which he was unwilling to plead guilty, I agree with the Employment Appeal Tribunal, though for rather different reasons, that that was to impose far too high a burden on employers. In this case there was the most meticulous disciplinary proceeding. The accused employee was given the right to appear with his trade union representative and four witnesses. He was given a right to appeal against the first decision. He availed himself of those facilities. He deployed the evidence that he wished to before the employers for the purpose of establishing whether or not the pressure that had been brought to bear on him cast doubt on the genuineness of his admission. He did not adduce evidence from those who had been his legal advisers in the Crown Court. In my judgment it is perverse to suggest that where an employee is given full facilities himself to bring forward information which is under his control the employer has failed to make proper inquiries in not pursuing such inquiries himself.
26. Therefore, though I believe the grounds on which I have proceeded are only touched upon in the course of the Employment Appeal Tribunal decision, in my judgment, for the reasons that I have given the Industrial Tribunal decision was wrong in law, the Employment Appeal Tribunal decision was correct and I would dismiss the appeal.
27. LORD JUSTICE STOCKER: I agree that this appeal should be dismissed for the reasons given by my Lord and there is nothing that I wish to add on my own part.
28. LORD JUSTICE BELDAM: I agree. The tribunal prefaced its reasons by saying that whilst the respondents, the employers, honestly believed that the applicant committed the offence there were no reasonable grounds to support that belief and no full investigation. Having regard to the circumstantial evidence before the employers of the finding of the 20 cans of petrol in the vehicle which was being driven by their employee, and the unequivocal, albeit unwilling, plea by the employee of guilty to theft in the Crown Court, I can only regard it as irrational to say that there were no reasonable grounds to support the belief honestly held by the employers that their employee had in fact stolen the petrol. Nor was it reasonable, in my view, to say that the procedure which was followed in the disciplinary procedures and inquiries was unfair because it was less than full.
29. For the reasons given by my Lords I agree that this appeal is dismissed.