England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE EATRF 96/0921/B

Royal Courts of Justice

Strand

London WC2

Friday 11 July 1997

B e f o r e:

LORD JUSTICE STAUGHTON

LORD JUSTICE WARD

LORD JUSTICE MUMMERY

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THE REVEREND DOCTOR A B COKER

Appellant

-v-

1. DIOCESE OF SOUTHWARK

2. BISHOP OF SOUTHWARK

3. DIOCESAN BOARD OF FINANCE

Respondents

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(Computer Aided Transcript of the Palantype Notes of

Smith Bernal Reporting Limited, 180 Fleet Street,

London EC4A 2HD

Tel: 0171 831 3183

Official Shorthand Writers to the Court)

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MR J HAGE (Mr M Rollason 11.7.97) (Instructed by Lawford & Co, Richmond, Surrey TW9 1UF) appeared on behalf of the Appellant

MR P GOULDING and MISS E DIXON (Instructed by Winckworth & Pemberton, London SW1P 3LR) appeared on behalf of the Respondent

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J U D G M E N T

(As approved by the Court)

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©Crown Copyright

JUDGMENT

LORD JUSTICE STAUGHTON: I will ask Lord Justice Mummery to give

the first judgment.

LORD JUSTICE MUMMERY: The question on this appeal is whether the Reverend Dr A B Coker, a priest in the Church of England, was, whilst an assistant curate, first at St Luke's, Woodside and then at St Philip's, Cheam Common, during 1 September 1990 and 31 May 1994, an "employee" within the Employment Protection (Consolidation) Act 1978, now re-enacted in the Employment Rights Act 1976. If he was, he had a right not to be unfairly dismissed by his employer (Section 54(1)), and the Industrial Tribunal had jurisdiction to hear his claim of unfair dismissal. If he was not, the Industrial Tribunal had no jurisdiction to hear his claim for unfair dismissal, and the claim for re-engagement made by Dr Coker in his originating application presented to the Central Office of the Industrial Tribunals on 15 September 1994.

There has been a sharp difference of judicial opinion in this case on its way to this court. On 24 February 1995 the Chairman of the Industrial Tribunal, sitting alone at London South, issued a decision on a preliminary issue that there was jurisdiction to hear Dr Coker's claim against the Diocese of Southwark. The Chairman held that a contract of employment had been created by the oral acceptance of an offer contained in a letter dated 12 November l990 written by Reverend Peter Evans, Vicar of St Luke's, to Dr Coker.

On 25 March 1996 the Employment Appeal Tribunal, His Honour Judge Hull QC presiding, with jurisdiction to hear an appeal only on a question of law, handed down a 20-page judgment in support of its unanimous opinion that:

"The Industrial Tribunal had no jurisdiction to entertain this case since Dr Coker was not employed, whether by the Bishop or either of the vicars to whom we have referred, or by anyone else, under a contract of service."

The reference to "the Bishop" stems from the order of the Employment Appeal Tribunal that the Bishop of Southwark and the Diocesan Board of Finance, whom the EAT believed paid Dr Coker's stipend, should be respondents.

The Diocese of Southwark, initially named as sole respondent, is the relevant district under the jurisdiction of the Bishop, but it has no legal personality and it is unable to sue or be sued. No application was made to the Employment Appeal Tribunal or to this court to add either of the two vicars, or anyone else, as a respondent.

The Appeal

By a notice dated 4 July 1996, Dr Coker appealed by leave of a single Lord Justice, seeking to have the order of the Employment Appeal Tribunal set aside, and the order of Industrial Tribunal Chairman reinstated. The appeal to this court, like the appeal to the Employment Appeal Tribunal, can only be on a question of law. The appeal has been ably argued by Mr Hage from the Free Representation Unit, on behalf of Dr Coker, and by Mr Goulding, on behalf of the respondents.

Their submissions focused on three questions:

1. Did Dr Coker have a contract at all in respect of his post as assistant curate?

2. If so, was it a contract of service?

3. If so, who was Dr Coker's employer?

The relevant provisions of the l978 Act conferred a right on an employee not to be unfairly dismissed "by his employer" (Section 54(1)). Employee is defined in Section 153(1) as:

"an individual who has entered into or works under.... a contract of employment"

which is defined in the same subsection as:

"a contract of service or apprenticeship, whether express or implied, and (if it is express) whether it is oral or in writing."

The Factual Background .

In June 1986 Dr Coker was ordained by the Bishop of London to a non-stipendiary position at St Peter's, Belsize Park, as assistant curate. He remained there for 4½ years. Doctor Coker wished to secure a stipendiary appointment. The process was set in motion by which he became an assistant curate at St Luke's in the episcopal area of Croydon. By letter of 9 November 1989, the Bishop of Southwark informed Dr Coker that a panel of advisers had recommended that he be given permission to transfer to a stipendiary ministry. The Bishop accepted the recommendation.

By letter dated 12 November 1989, the Vicar of St Luke's wrote to Dr Coker as follows:

"I have been in touch with our Archdeacon, Ven F Hazell, today and am glad to say he has told me to go ahead with your appointment as curate here to commence on Advent Sunday 2nd December 1990.

I also rang Simon Parton at the Diocesan Office to tell him and he is waiting for you to get in touch. You will be put on the Diocesan payroll with effect from 1st December 1990.

This letter is our official offer to you of the appointment as Assistant Curate to this parish with effect from 1st December 1990. I would be glad to receive your reply as soon as possible, as it is necessary to have it in writing for record purposes. Also I would like to hold it before I announce your coming on Sunday next.

You have already intimated that you would like to come and I look forward to a good ministry together."

On the following day a letter was sent to Dr Coker from the Diocesan Board of Finance asking him for the basic information needed to make arrangements for the Church Commissioners to pay his stipend. He was provided with details of payment of his removal costs by the diocese and of a resettlement grant. The Bishop of Southwark, in accordance with The Canons of the Church of England, then licensed Dr Coker, described as "Clerk in Holy Orders as an Assistant Curate in the Parish". The standard form of licence provided for "a stipend in accordance with the Diocesan Scale", first, in reimbursement of certain costs of the official residence occupied by him, and, "secondly as stipend for serving the said cure". The licence concluded:

"We direct that you shall reside in the said Parish unless otherwise agreed by us."

On 20 May 1993 the vicar of St Luke's was sent a letter by the Bishop of Croydon giving the consent required for the termination of Dr Coker's curate's appointment on giving him not less than six months written notice. That notice was given by the vicar in a letter dated 23 May 1993.

On 24 February 1994, the Bishop of Southwark licensed Dr Coker as an assistant curate at St Philip's, where the Reverend Martin Goodlad was vicar. Dr Coker had been assisting there for some time after his departure from St Luke's. In October 1993 Dr Coker and the Reverend Martin Goodlad had agreed a written job description for Dr Coker. It is not suggested, however, that that document either was, or created, a contract. It was accepted by Mr Hage that, even if there was a contract of employment created in St Philip's when Dr Coker became assistant curate there, it does not assist him in this case, as he ceased to be assistant curate at the end of May 1994. In order to qualify for employment protection under the l978 Act, he needed to establish continuing service for a period of not less than two years. It was, therefore, necessary for him to identify a contract dating from the earlier period when Dr Coker became assistant curate at St Luke's.

The reasons for the decision of the Industrial Tribunal may be summarised as follows:

1. Dr Coker was not an office holder in respect of the assistant curacy at either church, as the post of curate in the Anglican church is personal to the holder of it.

2. A contract was created by the acceptance of the offer in letter dated 12 November l990. After reviewing the authorities and the rival contentions, the Chairman of the Tribunal concluded at paragraph 35 of his extended reasons:

"In my view, therefore, a contractually enforceable agreement should be assumed, in the absence of evidence to the contrary, in the case of curate of the Church of England."

He did not find, in the evidence that he heard from the Bishop, and from Dr Coker, facts to contradict the assumption stated by him.

3. That contract was a contract of employment. There was personal service by Dr Coker which he could not delegate to another; there was a high degree of control by the vicar on behalf of the diocese; Dr Coker was not economically independent; and the element of spirituality in the curacy was not sufficient to outweigh the element of personal service (see paragraph 38 of the extended reasons).

This summary probably does not do justice to the detailed consideration of the authorities and arguments given by the Chairman in his decision but, in my judgment, it is unnecessary for the purposes of determining this appeal to examine in the same detail as either the Industrial Tribunal or the Employment Appeal Tribunal the authorities and submissions on the issue whether there was, or was not, a contract of service. It became clear in the course of argument in this court that the critical question is whether there is any kind of contract at all between an assistant curate and a putative employer. If there is not, the "contract of service" point does not arise. It would also follow that the Industrial Tribunal would have no jurisdiction to consider the additional points taken in the Notice of Appearance, served on behalf of the respondents, that Dr Coker had a fixed term contract which expired and was not renewed and that, if there was a deemed dismissal, it was justified by some other substantial reason and was fair (see Section 57 of the 1978 Act).

In his submissions on behalf of Dr Coker, Mr Hage made four important general points in support of a fundamentalist appeal to principle and policy:

1. If, as the Employment Appeal Tribunal held, in reversing the Industrial Tribunal's decision, Dr Coker was not an employee, then he was without statutory rights under the 1978 Act in relation to unfair dismissal, and also without certain rights under other statutes enacted for the protection of employees: the Sex Discrimination Act 1975; the Race Relations Act 1976; the Wages Act 1986; the Disability Discrimination Act 1995; and all the rights now consolidated in the Employment Rights Act 1996, as well as the rights contained in the Health and Safety legislation.

Mr Hage asks, rhetorically, why should this be so? He submitted that there was no satisfactory answer to this question either in precedent or principle.

2. As far as earlier decisions were concerned, they invoked justificatory labels and catch phrases, but identified only two possible difficulties in the way of holding that a curate was an employee. Neither of the difficulties was convincing. The first was that a curate holds an ecclesiastical office; the second was that his duties were spiritual. As to the former, the Chairman of the Industrial Tribunal was correct in holding that an assistant curate was not an office holder. Even if he was, that did not preclude the making of a service contract (see Barthorpe v Exeter Diocesan Board of Finance [1979] ICR 900 at 904D-F and 906B).

As to the second reason, it has been recognised at the highest level that this was not a conclusive argument against the existence of a contract of service. In Davies v Presbyterian Church of Wales [1986] ICR 280 at 289C, Lord Templeman, with whom the other members of the Appellate Committee agreed, said:

"It is possible for a man to be employed as a servant or as an independent contractor to carry out duties which are exclusively spiritual."

(see also President of the Methodist Conference v Parfitt [1984] ICR 176).

3. The respondents' position was indefensible in principle and on policy grounds. It was conceded that the church authorities do have employees; for example, administrators, accountants, secretaries, cleaners. It was accepted that it is possible for a priest to be employed; for example, as a teacher or as a chaplain. Why not here? All the elements of a contract were present: offer and acceptance, coupled with personal service, for which payment was made, coupled with the exercise of control by an employer.

4. Mr Hage invited this court to distinguish the earlier cases, as most of them were concerned with Ministers claiming to be employees of non-conformist churches in their capacity as Minister. He also said that we should not follow them, because the reasoning on which they were based was unsatisfactory.

The following authorities were cited and discussed by counsel in the skeleton arguments and in the oral submissions before us:

Re National Insurance Act, 1911 ; Re Employment of Church of England Curates [1912] 2 Ch 563; Barthorpe v Exeter Diocesan Board of Finance [1979] ICR 900 (a stipendiary lay reader); President of the Methodist Conference v Parfitt [1984] ICR 176 (a Methodist minister); Davies v Presbyterian Church of Wales (supra) (an ordained minister of the Presbyterian Church); Santokh Singh v Guru Nanak Gurdwara [1990] ICR 309 (a priest at a Sikh Temple); Birmingham Mosque Trust Ltd v Alavi [1992] ICR 435 (an Islamic academic serving as a director of a Mosque).

We were also referred to the Court of Session decision on the relationship between an assistant Minister and the kirk-session in the Church of Scotland and United Free Church of Scotland in the Scottish Insurance Commissioners v Rev David Paul & Anor [1914] SC 16.

Mr Hage's overall submission was that precedent did not preclude this court from holding that there was jurisdiction to entertain Dr Coker's complaint of unfair dismissal. This was the first case in which this court had had to consider the position of an assistant curate in the context of statutory employment rights. In enacting those rights, Parliament had not expressly excluded Ministers of religion from protection, compare the excluded classes of employment in Part IX of the 1978 Act, sections 141 et seq. Mr Hage submitted that a modern approach should be taken to determining whether Dr Coker enjoyed employment status in contemporary conditions.

In my judgment, the Industrial Tribunal was legally wrong in holding that there was jurisdiction to hear Dr Coker's claim. The error was in adopting an incorrect approach to the fundamental question whether there was a contractual relationship at all. The Chairman started from the position, stated in the passage in paragraph 35 of the extended reasons already quoted, that an assumption should be made that there was a contractually enforceable agreement, in the absence of evidence to the contrary. That is certainly true in the case of "ordinary commercial transactions". It is not, however, the case in the relationship between a church and a minister of religion.

In President of the Methodist Conference v Parfitt (supra), Dillon LJ said at page 183G-H:

"The courts have repeatedly recognised what is and what is not a contract of service and I have no hesitation in concluding that the relationship between a church and a minister of religion is not apt, in the absence of clear indications of a contrary intention in the document, to be regulated by a contract of service."

Earlier in his judgment at page 183A Dillon LJ stated that in some circumstances it was not right to say that any contract, let alone a contract of service, comes into being between the church and the minister. At page 183G he recognised that:

"....it is not practicable to lay down a hard and fast list of what is required to constitute a contract of service. There are too many variants."

That approach was approved by the House of Lords in Davies v Presbyterian Church of Wales (supra), where it was stated that the applicant "cannot point to any contract between himself and the church" (page 289C), and that "the duties owed by the church to the pastor are not contractual" (page 289E-F and 290C-E).

Although not explicitly analysed in these terms in the authorities, the simple reason, in my view, for the absence of a contract between the church and a minister of religion is the lack of an intention to create a contractual relationship. If that is so, then it is unnecessary to ask whether the contract is one of service or some other kind of contract?

I agree with the Employment Appeal Tribunal that the Chairman of the Industrial Tribunal misinterpreted the law, which has been settled by a long line of authority. In my judgment, the legal position is as follows:

1. Not every agreement constitutes a binding contract. Offer, acceptance and consideration must be accompanied by an intention to create a contractual relationship giving rise to legally enforceable obligations.

2. That intention is to be to be objectively ascertained. In the case of an ordinary commercial transaction, it will be for the person who contends that there was no contract to establish that the intention to create a binding contract has been negatived.

3. In some cases, however, there is no contract, unless it is positively established by the person contending for a contract that there was an intention to create a binding contractual relationship. This is such a case. Special features of the appointment and the removal of a Church of England priest as an assistant curate and the source and scope of his duties, preclude the creation of a contract, unless a clear intention to the contrary is expressed.

The critical point in this case is that an assistant curate is an ordained priest. The legal effect of the ordination of a person admitted to the order of priesthood is that he is called to an office, recognised by law and charged with functions designated by law in the Ordinal, as set out in the Book of Common Prayer. The Ordinal governs the form and manner for ordaining priests according to the Order of the Church of England. Those functions are also contained in the Canons of the Church of England and are discharged by a priest as assistant curate. It is unnecessary for him to enter into a contract for the creation, definition, execution or enforcement of those functions. Those functions embrace spiritual, liturgical and doctrinal matters, as well as matters of ritual and ceremony, which make what might otherwise be regarded as an employment relationship in the secular and civil courts and tribunals as more appropriate for the special jurisdiction of ecclesiastical courts.

The legal implications of the appointment of an assistant curate must be considered in the context of that historic and special pre-existing legal framework of a church, and an ecclesiastical hierarchy established by law, of spiritual duties defined by public law rather than by private contract, and of ecclesiastical courts with jurisdiction over the discipline of clergy. In that context, the law requires clear evidence of an intention to create a contractual relationship in addition to the pre-existing legal framework. That intention is not present, either generally on the appointment of an assistant curate, or in the particular case of Dr Coker. I would add that it has never been held, and it is not suggested by Mr Hage in this case, that the incumbent of the parish, holding its church and its benefice, is under a contract with the Bishop or with anyone else in respect of his cure of souls in the parish.

It is difficult to see why an ordained priest, licensed by his Bishop to assist the incumbent in his cure of souls, is under contract with the Bishop, by whom he is licensed, or with the incumbent he is assisting, or with anyone else, in the absence of a clear expression to create a contract.

I respectfully agree with Parker J in Re National Insurance Act 1911 (supra) at pages 568 and 569, that the position of an assistant curate is:

"....not the position of a person whose duties and rights are defined by contract. It appears to me that there can be no pretence in reality for arguing that the relation between him and his vicar, or between him and his bishop, or between him and anyone else, is the relation of employer and servant."

4. The legal position stated my Parker J has not been changed by the 1978 Act, or by any other employment protection legislation. It should be noted that the rights of an employee under Section 54(1) of the 1978 Act are not to be unfairly dismissed by his employer. Mr Coker had no employer while he was assistant curate, because there was no intention that he should have a contract, let alone a contract of service, with anyone for the discharge of the functions of his priestly office.

The Diocese of Southwark was not his employer; it is the district under the supervision of the Bishop and is not a legal person with whom a contract can be concluded. The Church Commissioners paid Dr Coker's stipend and the Diocesan Board of Finance made the necessary arrangements for that payment. Neither of them appointed him, removed him, controlled the performance of his functions, or had any contract with him. It was not contended that either of the vicars had a contract with Dr Coker. That leaves only the Bishop, chief pastor of the diocese, who has legal responsibility for licensing the appointment of assistant curates, on the nomination of the incumbent, and the termination of such appointment, or revocation of it. But that relationship, cemented by the Oath of Canonical Obedience, is governed by the law of the established church, which is part of the public law of England, and not by a negotiated, contractual arrangement. Vis a vis the Bishop, Dr Coker had a legal status stemming from his priestly office, but he had no private law contract transforming him into an "employee" for the purposes of the 1978 Act. For all those reasons, I would dismiss Dr Coker's appeal.

I would add the following brief note for the record. Before the hearing in this court, there was raised with counsel possible grounds of objection to my sitting on this appeal. I have been a member of the Legal Advisory Commission for the General Synod of the Church of England for many years, and I was President of the Employment Appeal Tribunal from 1993 - 1996. Mr Hage expressly stated that these matters were known to him and Dr Coker and had been considered by them. He stated that Dr Coker had no objection to my sitting in this court to hear the appeal.

LORD JUSTICE STAUGHTON: It has been received wisdom for most of this century that an assistant curate of the Church of England is not an employee under a contract of service. But the reasons which have been held to justify that conclusion have varied from time to time and are not always both clear and convincing. Mr Hage, from the Free Representation Unit, has analysed the cases and demonstrated that there is still room for argument.

The basic facts, as I understand them, are that the curate is normally appointed by the rector or vicar of a parish, but this can be done only with the Bishop's licence. Likewise the incumbent has power to dismiss, but again the Bishop's consent is required. The stipend is paid by the Church Commissioners. It is said that the stipend is not wages or a salary, but simply a payment for the expenses which the curate will incur in housing and providing sustenance and clothing for himself. Whilst I readily acknowledge that the amount is small enough in all conscience, and will not cover much else, I would reject the notion that it is thereby disqualified from being considered a salary or wages. But the point is not of critical importance.

Orders as to what the curate shall do, and how he must do it, are, I suspect, given, if at all, by the incumbent. Some activities, I would have thought, are such as an incumbent will be regarded as entitled to direct. Others the curate must regulate for himself with divine guidance.

In the case of In Re National Insurance Act 1911 [1912] 2 Ch 563 at 568, Parker J held that:

"....the position of a curate is the position of a person who holds an ecclesiastical office, and not the position of a person whose duties and rights are defined by contract at all."

The duty owed to the vicar was not owed because of contract, but was one which the curate owed to an ecclesiastical superior. The liabilities of a master to his servant were very serious, from which in all common sense the vicar ought to be exempt.

As to those reasons, the suggestion that an office holder cannot be an employee has been challenged ( Barthorpe v Exeter Diocesan Board of Finance [1979] ICR 900). In my opinion, it is not to be regarded as an absolute rule. I would acknowledge that in some respects the duty owed by a curate to the incumbent may be the creature of ecclesiastical law, but not necessarily in all its aspects. I question whether "common sense" still requires the incumbent to be free from the obligations as to health and safety, for example, which a master owes to his servant.

There is also President of the Methodist Conference v Parfitt [1984] ICR 176. The first, and perhaps main, argument was that a contract of service between a Methodist minister and the Conference of the Methodist Church came into existence on his ordination. That was rejected. The alternative argument, which is more significant for present purposes, appears in the judgment of Dillon LJ at 183, where he said:

"Equally I do not think it is right to say that any contract, let alone a contract of service, comes into being between the church and the minister when the minister accepts an invitation from a circuit steward to become a minister on a particular circuit and the invitation and acceptance are approved by the stationing committee of the conference. Despite the elaborate detail of the standing orders in relation to the manse and the furniture and fittings to be provided by the circuit for the newly appointed minister on the circuit, it seems to me that it follows, from a correct appreciation of the spiritual nature of the minister's position and relationship with the church, that the arrangements between the minister and the church in relation to his stationing throughout his ministry and the spiritual discipline which the church is entitled to exercise over the minister in relation to his career remain non-contractual."

So the spiritual nature of the minister's position shows that the arrangements remain non contractual. Dillon LJ said further, at page 184:

"I do not doubt that there probably are binding contracts between the Methodist Church and its ministers in relation to some ancillary matters, such as the compulsory superannuation scheme and the obligation, of which Mr Parfitt told us, on trainees to repay a proportion of the expense of their training if they do not remain in the ministry for at least 10 years. These however are no part of the contract of service, either on reception into full connection or on appointment to a circuit, which Mr Parfitt seeks to set up."

May LJ said at page 185:

"On the question whether there ever was any contract between Mr Parfitt and the Methodist Church, I think that in the particular circumstances of this case, the important consideration is whether the parties intended to create legal relations between them so as to make the agreement between Mr Parfitt and his church enforceable in the courts."

One can say that a minister of religion serves God and serves his congregation, but does not serve an employer. That seems to me accurate in general terms. But it is accepted that an ordained priest may take employment, for example (to quote from Mr Hage's outline argument) with a school, or a Duke, or an airport authority. Yet he will perform spiritual duties in that employment for a congregation, selected or self-selecting.

I agree with the analysis of Lord Justice Mummery and his conclusion, that in general the duties of a minister of religion are inconsistent with an intention to create contractual relations. There may be some subsidiary contract as to a pension, or the occupation of a house; but there is not a contract that he will serve a terrestrial employer in the performance of his duties. The absence of contractual intention is regarded by Chitty on Contracts , 27th Ed para 2.117 as the basis of the Methodist Conference case. It seems to me to be the most appropriate explanation.

I can see nothing in that conclusion inconsistent with Section 140(1) of the Employment Protection Consolidation Act 1978 which states:

"Except as provided by the following provisions of this section, any provision in an agreement (whether a contract of employment or not) shall be void in so far as it purports-

(a) to exclude or limit the operation of any provision of this Act or;

(b) to preclude any person from presenting a complaint to, or bringing any proceedings under this Act before, an industrial tribunal."

If a curate and his bishop, or incumbent, intend to create legal relations, then there will be a contract between them. If it is a contract of service, the Act will apply. But if, as I would hold in the ordinary way, no intention to create legal relations is to be inferred, there is no contract of employment between them within Section 153(1) and nothing in this Act to be excluded. I would dismiss the appeal.

Order: Appeal dismissed. Section 18 costs to be paid by Legal Aid Board. Nil liability. Legal aid taxation of appellant's costs.