June 2008

Case 1 (Employment)

The claimant was a business manager employed by a large national motor retailer for over two years.

He complained to the employment tribunal of unfair dismissal, though his employers asserted he had been fairly dismissed by reason of gross misconduct.

The reason for dismissal related to the employee abandoning his company car, which had broken down, on the hard shoulder of a motorway and leaving his car keys at the bottom of a nearby gate post which, the company asserted, was a gross breach of its procedures.

The issues for the Tribunal were to establish the genuine reason for dismissal and to assess whether the reason asserted by the dealer, amounting to gross misconduct, entitled them to terminate the claimant’s employment. The Tribunal also had to be satisfied that the company followed a fair and reasonable procedure pursuant to section 98(4) of the Employment Rights Act 1996.

The employee asserted he had contacted his general manager on the day of the breakdown to explain the events. He also attended an investigatory meeting two days later, pursuant to the company’s disciplinary procedure. The employee was then sent a letter inviting him to attend a later disciplinary meeting. In the letter, the company made it clear the allegations amounted to gross misconduct as they related to a serious breach of the company’s rules and procedures, and it viewed the employee’s behaviour as negligent as he had failed to maintain the security of the company vehicle and the keys.

The company handbook made it clear that all employees must ensure company vehicle security was maintained at all times and that keys must always be kept secure, with failure to follow these guidelines possibly amounting to gross misconduct.

Further, the company’s conclusion of gross misconduct was supported by their view that the employee had not been honest in his explanation of the circumstances of the matter, particularly regarding his claim that he had arranged to have the car collected on the day of the breakdown.

The Tribunal came to the unanimous conclusion that the employer had adhered to statutory procedures relating to the dismissal, that they could not see any reasonable explanation for the employees conduct and that the penalty imposed, namely summary dismissal for gross misconduct, fell within a band of reasonable penalties open to a reasonable employer.

The Tribunal was satisfied the employee was dismissed fairly and his claim was therefore dismissed

Case 2 (Commercial)

A dealer was joined by a finance company in defending a long-standing action in the County Court.

The dealer was challenging a substantial costs bill awarded against them as result of many years of litigation, relating to a vehicle valued at substantially less than the customer’s final costs bill.

In February 2005 a customer entered negotiations with a dealer (acting as agent for the finance company) for the purchase of a car, and agreed a hire-purchase for the vehicle. The customer paid a deposit and was given a part exchange allowance in respect of her existing car with the balance raised by way of credit under the hire-purchase agreement.

The next day, the customer returned to the dealer and said that the car was unsuitable for her requirements, and entered into new negotiations for the exchange of the first car for an alternative vehicle. During the course of this negotiation, a discussion took place as to the extent of credit that should be given for the cash deposit and part exchange allowance, which had been paid the previous day and/or for the value of the first car.

The customer claimed the dealer represented to her that in calculating the sums due under any further hire-purchase agreement, it would allow full credit for the same and supply any alternative car on the same terms as under the first hire-purchase agreement. In reliance on these terms, the customer alleged she and the dealer entered into a hire-purchase agreement for a new vehicle.

Since the showroom price of the second car was considerably cheaper than the first, the customer was given credit and the balance was raised under a second hire-purchase agreement, but at a substantially higher interest rate.

The customer claimed the representations were false as the dealer had not allowed full credit for the deposit and part exchange allowance, paid the previous day, and/or for the value of the first car.

She maintained she was allowed only a partial (and substantially reduced) credit for the same, with a far higher interest rate (+2.8%).

Despite the fact the second car was significantly cheaper than the first car, the total repayment balance the customer was liable to pay had actually increased.

The customer claimed she was entitled to rescission of the second hire-purchase agreement for misrepresentation and that the second hire-purchase agreement constituted an unconscionable bargain and/or was procured by undue influence.

By reason of alleged defects in the second car, the customer then rejected the vehicle and sought a refund of all sums paid. The finance house refused to accept the rejection of the second car and entered into further litigation. The dealer argued the customer’s new claims were invalid as she was bound by the terms of the further finance agreement she had signed.

The case was settled out of court.