The background to the case can be found [here](). The claimant was awarded 82 weeks of loss and the respondent was arguing that the claimant had failed to mitigate his loss by setting up in business which was a wholly different one from that of his previous role with the respondent, and one in which, on his own admission, he had previously had no direct, and indeed little indirect, involvement prior to setting up his new business. The EAT dismissed his appeal and he was refused permission to appeal to the Court of Appeal. This was a renewed application.

The application was refused again. The assessment that the ET had to make was essentially a matter of judgment for the ET. In doing so, it was fully cognisant of the contrary argument that had been advanced. It took due account of it, but it nevertheless came to the conclusion that it did, and gave perfectly adequate reasons for explaining how it came to that conclusion. There was no real prospect that the Court of Appeal on the hearing of an appeal against the order of the EAT was going to hold that the ET's conclusions in the relevant respect were either insufficiently reasoned or were perverse.

____________________

A2/2013/1435

Neutral Citation Number: [2013] EWCA Civ 1487

IN THE COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE EMPLOYMENT APPEAL TRIBUNAL

HHJ Richardson, Dr B.V. Fitzgerald MBE, LLD, FRSA and Mrs L.S. Tinsley

Appeal No: UKEAT/0502/12/LA

Royal Courts of Justice

Strand

London, WC2

Thursday, 24 October 2013

B E F O R E:

LORD JUSTICE RIMER

• - - - - - -

PRAXIS REAL ESTATE MANAGEMENT LIMITED (Appellant)

-v-

JAMES NICHOLS  (Respondent)

(DAR Transcript of

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MR JAMES BOYD (instructed by Woodcocks) appeared on behalf of the Appellant

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J U D G M E N T

(As approved by the Court)

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LORD JUSTICE RIMER: This is a renewed application for permission to appeal. Lewison LJ refused permission on the papers on 12 July 2013. The applicant is Praxis Real Estate Management Ltd, which was the respondent to a claim in the Manchester Employment Tribunal ("the ET") by its former employee, Mr James Nichols. Mr Nichols' claim was for compensation for unfair dismissal. The claim succeeded on liability following a five-day hearing between September 2011 and February 2012 and, following a remedy hearing on 10 May 2012, the ET assessed Mr Nichols' compensation at £27,577.75. That award reflected a 50% reduction to his claim that had been imposed to reflect the chance that he might in any event have been dismissed fairly if Praxis had acted reasonably. That represented an award of losses in respect of a total of 57 weeks from the date of termination to the date of the hearing, and future losses for a subsequent period of 25 weeks, a total, therefore, of 82 weeks.

Praxis carries on business in the management, development and investment of business and development properties, and Mr Nichols had been employed by Praxis from 8 September 2009 to manage commercial properties across the United Kingdom. He was an asset manager in the property field. His dismissal on 7 April 2011 was on the ground of incapability. Following his dismissal, he sought alternative employment in the same field and locality but was unsuccessful, finding that there were limited opportunities, and so he instead set up business on his own account as a property investment agent.

One issue before the ET at the remedy hearing was whether Mr Nichols had failed to mitigate his loss and, in so far as Praxis was asserting that he had, the burden was on Praxis to prove it. The ET correctly directed itself that Praxis had to show that it was unreasonable for Mr Nichols not to have taken the steps that it proposed. Praxis's case at the remedy hearing was that Mr Nichols' new role as a property investment agent was a wholly different one from that of an asset manager, and one in which, on his own admission, he had previously had no direct, and indeed little indirect, involvement prior to setting up his new business. The case advanced by Praxis was that it was therefore unreasonable for Mr Nichols in the proposed mitigation of his loss to set up a business carrying out such a different type of work. Mr Nichols, it was said, provided no evidence of substance to show that the new venture had yet made any money for him, and it was only during the hearing that he sought to prove two contracts which he said would come to fruition within the following six months. Praxis's case was that even they were speculative.

Following the outcome of the remedy hearing, Praxis appealed to the EAT against the award. The first ground of its appeal was that the ET had been wrong to conclude that for Mr Nichols to engage in the new venture was not an unreasonable mitigation of his loss. Praxis contended that the ET's finding in that respect failed properly to explain why it was not an unreasonable risk for Mr Nichols to take on. In particular, Praxis asserted, the ET had not explained what skills Mr Nichols had to carry out property investment agency work, when the primary evidence was that he had no such skills, and did not explain what contacts he had to make the venture viable. The basis upon which the ET was satisfied that contacts in the asset management field would assist Mr Nichols in his new venture was said not to be adequately explained, nor did the ET explain how it was satisfied that those contacts he had would entrust him with property investment work. It was said to the EAT that it was an error of law for the ET not to have explained these matters when they were central to the remedy issue.

The second ground of appeal to the EAT was that the ET's decision in this respect was perverse. It was asserted that no reasonable tribunal could conclude what the ET did conclude, when the primary evidence was that Mr Nichols did not hold the skills he needed or have any necessary "infrastructure" in place to exploit the esoteric area of work in which he had chosen to engage.

The EAT, in meeting those arguments, set out the whole of the ET's reasoning. In rejecting the first ground of appeal, His Honour Judge Richardson, in delivering the judgment of the EAT, and after referring to the familiar observations of Bingham LJ in Meek v City of Birmingham District Council [1987] IRLR 250, said as follows:

"13. In our judgment, the Tribunal's reasons meet this test. It was not necessary for the Tribunal to be more detailed. It found that, given Mr Nichols' limited options, it was not an unreasonable risk for him to start a business. It found, in effect, that there was some prospect of crossover between property asset management and property investment. There was at least a chance that clients and skills relative to one would assist in the other. It placed weight upon the fact that Mr Nichols was working alongside his father's property business and was able to utilise his father's contacts, experience and resources. It accepted evidence that his efforts were beginning to bear fruit and found that he would build the business to the point where he would not suffer continuing loss over a total period of 18 months. These are proper and adequate reasons for its conclusions."

The EAT also rejected the perversity argument, saying that the ET had given tenable reasons for concluding, as it had, that it was reasonable for Mr Nichols to set up in business in the way he had. The EAT rightly pointed out the high hurdle that a perversity appeal must surmount, and said that in the present case the appeal did not surmount it.

Lewison LJ, in this court, in refusing permission on the papers was also of the view that the ET had given adequate reasons for its decision. He said that there was no difficulty in understanding why the ET had reached the conclusion that it did, and that the perversity challenge does not, or did not, come close to surmounting the high hurdle in its way.

Mr Boyd, on this renewed application, has repeated the same arguments that failed to impress the EAT and Lewison LJ. That does not by itself mean that the arguments are wrong and that it automatically follows that a further appeal to this court would have no real prospect of success. For my part, however, I am of the clear view that both the EAT and Lewison LJ were right to conclude as they did. The ET gave perfectly clear reasons for its conclusion that Mr Nichols' steps in mitigation of his loss were reasonable ones for him to take. It found in paragraph 8 of its remedy reasons that Mr Nichols had applied for an alternative position shortly after his dismissal, but that two interviews he had for such a role were unsuccessful. The ET appears to have accepted his evidence that there were limited opportunities in the field of his particular expertise. It recorded the point made by Praxis that Mr Nichols ought reasonably to have searched more widely in the geographical sense for an alternative asset manager role, and also that he ought to have been more flexible in the type and seniority of alternative roles for which he had applied.

The ET held, however, that it was not unreasonable for Mr Nichols to limit himself to the North West, given his family arrangements and that his home was there. Nor did the ET regard it as unreasonable for him initially to seek roles at a similar level of seniority. The ET pointed out that Praxis itself accepted that Mr Nichols had been operating with them in a very specialised field and that in the whole of the north of England only 12 asset manager positions became available during the 12 months following Mr Nichols' dismissal; and Praxis's own view was that Mr Nichols would not have gained a good reference from it given that his dismissal was on performance grounds. It seems, therefore, highly unlikely that Mr Nichols had any real prospect of obtaining employment in the alternative positions that might have come up.

In these circumstances, the ET was, in my view, fully entitled, as it said, to regard Mr Nichols' options as limited. Despite that, the case advanced by Praxis was that it was nevertheless unreasonable for Mr Nichols to set up in business as an investment agent and that it was unrealistic and unreasonable for him to expect that he would succeed in it given its specialised nature and his lack of experience in it. The evidence adduced by Praxis was that a large volume of clients was necessary in order to generate profitability in such a business. The ET recognised that Mr Nichols was, at any rate to date, operating on a much smaller scale and recognised also that there was a significant risk involved in establishing a business in a field in which he had limited familiarity. Nevertheless, having obviously had regard to the points advanced by Praxis, the ET assessed that:

"... it was not an unreasonable risk given his skills and the contacts he had developed in the field in which he was [operating]. Further, by working alongside his father's property business, [Mr Nichols] was able to utilise his father's contacts, experience and resources."

The ET said that Mr Nichols gave evidence that his efforts were beginning to make a return. They explained that in paragraph 12, and said that Mr Nichols expected in all probability to have mitigated his losses by November 2012.

In my judgment, the propositions that the ET did not properly reason its conclusion that Mr Nichols' steps in mitigation of his losses were not unreasonable ones, and that its conclusion to that effect was perverse, appear to me to be based on the flimsiest of foundations. Praxis, of course, profoundly disagrees with the ET's conclusion, and is no doubt convinced in its own mind that it is unanswerably right. But the assessment that the ET had to make was essentially a matter of judgment for the ET, and the judgment it made was as I have explained. In doing so, it was fully cognisant of the contrary argument that had been advanced. It took due account of it, but it nevertheless came to the conclusion that it did, and gave, in my view, perfectly adequate reasons for explaining how it came to that conclusion.

There is, in my view, no real prospect that the Court of Appeal on the hearing of an appeal against the order of the EAT is going to hold that the ET's conclusions in the relevant respect were either insufficiently reasoned or were perverse. In my judgment, the ET was right for the reasons it gave to dismiss Praxis's appeal, and Lewison LJ was right for the reasons he gave on the papers to refuse permission to appeal to this court. I would also refuse this renewed application for permission to appeal.