A former chief executive of a firm specialising in armed forces claims has failed in his employment claim for unfair dismissal weeks after alleging potential breaches of accounts rules.
Peter Watson, who had invested £100,000 in north west firm Hilary Meredith Solicitors, made a series of disclosures to the firm and the Solicitors Regulation Authority about unpaid disbursements and other financial issues before he was dismissed in the autumn of 2017, an employment tribunal in Manchester heard.
Firm founder Hilary Meredith told the tribunal that she took no issue with Watson's disclosures and had notified the SRA once she was aware of the matters. She had sought to engage with the issues and felt let down by Watson’s actions.
Watson submitted that Meredith could not truly believe he had committed misconduct justifying summary dismissal. He told the tribunal that she had made a decision to remove him and was looking to rely on any grounds she could.
Employment Judge Slater ruled that Meredith’s reasons for dismissal were not ‘materially influenced by the disclosures'. The complaint of unfair dismissal was judged to be not well founded.
Watson, formerly with national firm Simpson Millar, joined Hilary Meredith Solicitors in April 2017 in what the firm described as a ‘transformational appointment’. His basic annual salary was stated to be £180,000.
After three months, during which Meredith and Watson had a positive relationship, Watson was alerted by the firm’s finance director to a loan wrongly recorded as profit costs, and then about disbursements being transferred to the firm’s office account. The total unpaid disbursements were estimated by the finance director at £1m, and discussions were immediately sought with Meredith.
There was no suggestion that Meredith was aware of these problems prior to being alerted by Watson, or that she was involved in any failure to pay disbursements. The tribunal heard it was clear from early email exchanges that Meredith was keen to get to the bottom of the problem, and there was no indication she was angry or upset with Watson. Meredith reported to the SRA immediately after issues were first raised, notifying the regulator of what Watson said was a 'material failure' to comply with accounts rules.
Within two days, Watson and the finance director decided to resign with immediate effect. The following day their resignations were accepted following a brief board meeting.
Initially sent on gardening leave while efforts were made to persuade him to reconsider, Watson was told by Meredith the firm's outstanding debt, including the unpaid disbursements, could be reduced. He replied that the firm could not sustain Meredith’s drawings and his income in the long term without growth.
The tribunal heard that some weeks later an ‘unpleasant’ meeting between the parties took place in which Watson was accused of over-reacting. In a letter to her lawyers, Meredith described how Watson ‘ran for the hills based on inaccurate information’. She later accused him of forcing the resignation of other directors and destabilising the company, and cited this breach of his duties as director for terminating his contract.
Employment Judge Slater said elements of Meredith’s evidence were shown ‘not to be entirely reliable’. But the tribunal noted she had made no attempt to hide the problems at the firm. Even after disclosures were made, Meredith had wanted Watson to return to the firm, it was found.
The judge added: ‘After reflection, [Meredith] took issue with the way that [Watson] resigned so quickly, without staying to see the real extent of the problem and working to see if it could be resolved. She decided to dismiss [him] once it became apparent that settlement terms were not going to be reached.
‘Can [Watson’s] actions following the making of the protected disclosures be severed from the protected disclosures themselves? We conclude that they can.’
The SRA has said it is aware of the disclosures made.