England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE EATRF 97/1635/3

Royal Courts of Justice

Strand

London WC2

Thursday, 10 December 1998

B e f o r e:

LORD JUSTICE BELDAM

LORD JUSTICE SWINTON THOMAS

LORD JUSTICE PILL

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WEATHERSFIELD LTD (T/a Van & Truck Rentals )

APPELLANT

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SARGENT

RESPONDENT

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(Transcript of the handed down judgment of

Smith Bernal Reporting Limited, 180 Fleet Street,

London EC4A 2HD

Tel: 0171 421 4040

Official Shorthand Writers to the Court)

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MR D READE (Instructed by Messrs Beachcroft Stanleys, London EC4A 1BN, London Agents for: Robert Davies Partnership, Gwent, NP5 1LU) appeared on behalf of the Appellant

MR M PANESAR [Ms Y Adedeji - for judgment ] (Instructed by Commission for Racial Equality, Birmingham B1 1TT) 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

Thursday, 10 December 1998

J U D G M E N T

LORD JUSTICE PILL:

Weathersfield Ltd (“the employers”) appeal against a decision of the Employment Appeal Tribunal made on 6 June 1997 whereby the employers’ appeal from the decision of an industrial tribunal was dismissed. The Industrial Tribunal sitting at Cardiff held that Mrs Sargent had suffered unlawful discrimination within the provisions of the Race Discrimination Act 1976 (“the 1976 Act”). The sum to be paid in the event of such a finding had been agreed at £5,000.

The employers run a car and van rental business. Mrs Sargent responded to an advertisement in a local job centre and began work for them on 11 April 1996 as a receptionist. She was briefed by Mrs Clewer as to the work she was required to do and there was an issue of fact as to what she was told.

The Industrial Tribunal accepted, without reservation, the evidence of Mrs Sargent. She said that she was told: “We do have a special policy regarding coloured and Asians. We have got to be careful who we hire the vehicles to. If you get a telephone call from any coloured or Asians you can usually tell them by the sound of their voice. You have to tell them that there are no vehicles available”. An appropriate excuse, if she had to think of one quickly, was suggested to her.

The applicant was stunned but made no protest at that stage. On the following day, a Friday, Mrs Sargent met Mr Paul Cavalli, a director, who asked whether “the policy” had been explained to Mrs Sargent. Mrs Clewer agreed that it had and added that she had been informed about taking calls from coloured and Asians.

Mrs Sargent remained in work that day but was so upset by the policy she was required to apply that she decided over the weekend that she could not continue in the job. On the following Monday she telephoned Mr Cavalli and told him, without at that stage giving the reason. She felt a little guilty about resigning so soon without making a go of it. Following a visit to the job centre and taking advice, she wrote to the employers on 18 April explaining in full why she had resigned. The letter is not with the papers but it is common ground that the employers’ racialist policy was given as the reason. The employers did not reply to the letter.

The Tribunal found that in the course of her employment Mrs Sargent was asked to carry out a policy which involved unlawful discrimination against blacks and Asians. She was instructed so to do and as a result of that instruction she felt unable to continue with the work and resigned. Though the expression is not used, that appears to me, as it did to the Employment Appeal Tribunal, to be a finding of constructive dismissal.

The Tribunal found racial discrimination under section 1(1)(a) of the 1976 Act. That provides:

“(1) A person discriminates against another in any circumstances relevant for the purposes of any provision of this Act if —

(a) on racial grounds he treats that other less favourably than he treats or would treat other persons.”

Section 4(2)(c) of the Act provides:

“(2) It is unlawful for a person, in the case of a person employed by him at an establishment in Great Britain, to discriminate against that employee —

(c) by dismissing or subjecting him to any other detriment.”

That finding was upheld by the Employment Appeal Tribunal.

The central submissions of Mr Reade, on behalf of the employers, are first that Mrs Sargent was not dismissed within the meaning of section 4(2)(c) and second that, if there was less favourable treatment, it was not an “racial grounds” within the meaning of section 1(1)(a). Like Mr Reade, I deal with the second point first so that the alleged dismissal can be considered in its proper context. It is submitted that for the treatment to be on racial grounds it must be related to the race of the complainant and not the race of a third party, such as the prospective customers in this case. In support of that submission, Mr Reade relies upon the equivalent section in the Sex Discrimination Act 1975, section 1(1)(a), where the language is very similar save that instead of the expression “on racial grounds”, there appears the expression “on the ground of her sex”. It is beyond doubt that it is the sex of the complainant which is the material consideration and, it is submitted, section 1(1)(a) of the 1976 Act should be construed in the same way.

Reliance is also placed upon section 1(1)(b) of the 1976 Act. That deals with indirect discrimination and provides that a person discriminates against another if “he applies to that other a requirement or condition which he applies or would apply equally to persons not of the same racial group as that other but” - and the criteria are set out. Section 1(1)(b) is concerned with the racial group of “that other” and, it is submitted, section 1(1)(a) should be construed in the same way.

I do not consider either of those submissions to be decisive. The expression “on racial grounds” must be construed on its own merits in the context of the statute. The mischief with which section 1(1)(b) deals is of a different nature. Moreover, Mr Reade concedes, and rightly concedes in my view, that a white person refused entry to a restaurant on the ground that he has a black spouse with him, or a black person because he has a white spouse, would be refused entry on “racial grounds” notwithstanding that it is the colour of the third party which led to the decision (see, in a different context, Race Relations Board v Applin [1975] AC 259 at 289). Mr Reade submits that, if there was less favourable treatment of Mrs Sargent, that treatment could be said to be no more than connected or associated with race. It arose out of instructions to her concerning the race of third parties with whom the employers were unwilling to deal. To hold that treatment of her was on “racial grounds” was to attribute to the expression a meaning it was not capable of bearing.

Mr Reade also relies on the fact that the public would not be without remedy for racialist instructions such as these. Section 30 of the 1976 Act provides inter alia that it is unlawful for a person who has authority over another person to instruct him to do any act which is unlawful by virtue of Parts II or III of the Act. (Part II deals with discrimination in the employment field and Part III with other unlawful acts). That section does not however give an individual a right of complaint to an industrial tribunal. Mr Reade also raises the possibility of a victimisation claim under section 2 of the 1976 Act if Mrs Sargent had been dismissed for failing to carry out an unlawful instruction.

Submissions were made as to whether section 1 or section 4 should be read first. I see no value in giving one priority over the other. Mrs Sargent had to establish that by the dismissal (if there was one) the employer discriminated against her (section 4(2)). She also had to establish that such discrimination was on racial grounds under section 1(1)(a). Mrs Sargent claimed that she was constructively dismissed, that she was less favourably treated than an employee who would have carried out the unlawful instruction and that such less favourable treatment was “on racial grounds”. This leads back to the meaning of “racial grounds”, upon which this part of the case turns.

In Showboat Entertainment Centre Ltd v Owens [1984] ICR 65 a white manager of an entertainment centre was dismissed for refusing to obey an instruction to exclude all black customers from the centre. Reliance was placed upon the same paragraphs in the 1976 Act as the Tribunal applied in the present case. Giving the judgment of the EAT, Browne-Wilkinson J, as he then was, stated, p 70B, that “the words ‘on racial grounds’ are perfectly capable in their ordinary sense of covering any reason or action based on race, whether it be the race of the person affected by the action or others”. He added, p 71C: “We therefore see nothing in the wording of the Act which makes it clear that the words ‘on racial grounds’ cover only the race of the complainant. ... We find it impossible to believe that Parliament intended that a person dismissed for refusing to obey an unlawful discriminatory instruction should be without a remedy. It places an employee in an impossible position if he has to choose between being party to an illegality and losing his job. It seems to us that Parliament must have intended such an employee to be protected so far as possible from the consequences of doing his lawful duty by refusing to obey such an instruction ... Nor do we think the existence of the Commission for Racial Equality’s right to enforce section 30 affects our view: there is no reason why the individual’s right to complain of the wrong done to him and the Commission’s right to stop unlawful acts generally by injunction should not co-exist. We therefore conclude that section 1(1)(a) covers all cases of discrimination on racial grounds whether the racial characteristics in question are those of the person treated less favourably or of some other person. The only question in this case is whether the unfavourable treatment afforded to the claimant was caused by racial considerations”. Browne-Wilkinson J also held that: “The correct comparison in this case would be between the applicant and another manager who did not choose to obey the unlawful racial instructions”.

Mr Reade submits that Showboat should be overruled or, alternatively, distinguished on the ground that Mrs Sargent was not dismissed. I respectfully agree with the reasoning in Showboat. In the context of the 1976 Act unfavourable treatment of an employee, if it requires the employee to carry out a racially discriminatory trading policy in circumstances such as the present, is treatment on racial grounds. That conclusion does involve giving a broad meaning to the expression racial grounds but it is one which in my view is justified and appropriate.

Constructive dismissal

The question whether Mrs Sargent was constructively dismissed can now be considered in the context of the statute. A difficulty faced by Mr Reade is that he challenges what I regard as a finding of fact of the Industrial Tribunal (as confirmed by the EAT). Mr Reade relies upon the fact that Mrs Sargent did not tell the employers at the time she left the employment that she did so because of the racialist instructions she had received. If there was a repudiatory breach, there was no acceptance by her and nothing to link the discriminatory treatment with her leaving the employment. (It has been assumed that acceptance by the employee is a necessary element in terminating the contract of employment). Mr Reade refers to the decision of the EAT in Holland v Glendale Industries Ltd [1998] ICR 493 where the need to notify the employers of the acceptance of a repudiation was emphasised. Judge Butter QC cited the judgment of Arnold J in Walker v Josiah Wedgewood & Sons Ltd [1978] ICR 744 at 751H:

“We think for our part that it is at least requisite that the employee should leave because of the breach of the employer’s relevant duty to him and that this should demonstrably be the case. It is not sufficient, we think, if he merely leaves - at any rate in any circumstances at all similar to the present. And secondly, we think it is not sufficient if he leaves in circumstances which indicate some ground for his leaving other than the breach of the employer’s obvious obligations to him”.

Judge Butter rejected the submission that the effect of Walker was that if there is a conflict of evidence as to what the real reason for the employee’s departure was, the tribunal is entitled to look at what was said to the employer as an indicator and then to make a finding as to whether the employee did in fact leave because of the employer’s conduct.

Having referred also to Logabax Ltd v Titherley [1977] ICR 369, Judge Butter expressed this general principle: “Where one party by his conduct repudiates the contract and the other wishes to rely upon such repudiation, the latter party must by words and/or conduct make it plain that he is accepting the repudiation. Acceptance of a repudiation must be clear and unqualified: see for example the Court of Appeal decision ... in Norwest Holst Group Administration Ltd v Harrison [1985] ICR 668 in particular Neill LJ at p 682”. Judge Butter continued:

“In rare cases this principle might lead to injustice, as in the case discussed in argument on the hearing of this appeal. A young employee is bullied by his or her employer in circumstances which clearly entitle the employee to treat such conduct as amounting to constructive dismissal. The employee does not have the necessary courage to inform the employer of the reason for leaving but gives an untrue explanation such as, ‘I am leaving to look after my mother who is ill.’ The reality in that situation is that the industrial tribunal would probably be astute to conclude that the manner and circumstances in which the employee left, coupled with knowledge by the employer as to the true reason for this, were sufficient to bring home to the employer why the contract was being terminated. We can also imagine circumstances in which it would be manifestly unjust for an employer to face an allegation of constructive dismissal when the employee had parted on apparently amicable terms giving a plausible reason. In any event, we cannot allow policy considerations of this kind to affect what we regard as being the correct interpretation of the law in relation to constructive dismissal.”

Mr Reade submits, with justification in my view, that the EAT were propounding a principle of law that the true reason for leaving the employment must be communicated at the time to the employer or otherwise be known to him. Constructive dismissal cannot be established unless it is made clear to the employer that the employee is leaving because of the employer’s repudiatory conduct towards him.

The Tribunal in Holland found that the real reason for the employee leaving the contract was in response to a repudiatory breach of contract by the employer but because the employee was “a proud man and did not wish to state he had been forced out of his job, he gave a wholly incorrect reason for leaving”. The claim of constructive dismissal failed. The EAT appear to have approved the following statement of the Industrial Tribunal:

“If the law requires the applicant to establish the real cause of his leaving and to show that he did, in fact, leave for that reason the applicant in this case would have proved a constructive dismissal. If there was a constructive dismissal the tribunal would regard it as unfair. With great regret, however, the tribunal is convinced that the law also requires that the applicant should make clear to his employer a reason for leaving which is consistent with constructive dismissal. There is no doubt that the applicant did not do so in the present case and, on that ground alone, the tribunal find that he is unable to establish a claim for constructive dismissal.”

I reject as a proposition of law the notion that there can be no acceptance of a repudiation unless the employee tells the employer, at the time, that he is leaving because of the employer’s repudiatory conduct. Each case will turn on its own facts and, where no reason is communicated to the employer at the time, the fact finding tribunal may more readily conclude that the repudiatory conduct was not the reason for the employee leaving. In each case it will, however, be for the fact finding tribunal, considering all the evidence, to decide whether there has been an acceptance. In Harrison, Neill LJ was doing no more than concluding, on the facts of that case, that there was no unconditional acceptance of the repudiation before the repudiation was withdrawn and no longer remained open for acceptance by the employee. There is no mention in the analysis of the law of repudiation in the employment field by Buckley LJ in Gunton v Richmond-upon-Thames LBC [1980] ICR 755, on which the Court in Harrison relied, of a requirement to communicate the true reason for leaving.

In Heyman v Darwins Ltd [1942] AC 356, Viscount Simon LC stated at p 361-2:

“But repudiation by one party standing alone does not terminate the contract. It takes two to end it, by repudiation, on the one side, and acceptance of the repudiation, on the other. Thus, in General Billposting Company Ltd v Atkinson [1909] AC 118, ... Lord Collins (with whose judgment Lord Halsbury expressly concurred) said (p 122): ‘I think the true test applicable to the facts of this case is that which was laid down by Lord Coleridge CJ in Freeth v Burr (1874) LR 9 CP 208, and approved in Mersey Steel and Iron Company Ltd v Naylor (1884) 9 App Cas, 434 in the House of Lords, that the true question is whether ‘the acts and conduct of the party evince an intention no longer to be bound by the contract.’ ”

Acceptance of a repudiation of a contract of employment will usually take the form of the employee leaving and saying why he is leaving but it is not necessary in law for the reason to be given at the time of leaving. The fact-finding tribunal is entitled to reach its own conclusion, based on the “acts and conduct of the party”, as to the true reason. If the EAT in Holland were stating as a proposition of law that there can be no constructive dismissal unless the employer is told the true reason for leaving, they were in my respectful view in error.

In the present case, the Industrial Tribunal were amply justified in holding that there was a constructive dismissal. In the first days of her employment, the employers had put Mrs Sargent in an outrageous and embarrassing position. It was understandable that she did not want immediately to confront the employers with her reason for leaving. In the event, and having taken advice, she did so within a matter of days. No other reason why she may have left the employment became apparent in the evidence.

For many employees, the more outrageous or embarrassing are the instructions given to them, or suggestions made to them, the less likely they may be to argue the point there and then. They may reasonably wish to remove themselves at the first opportunity and with a minimum of discussion. Leaving the employment without notifying the reason does not preclude a finding of constructive dismissal, though it will usually make it more difficult to obtain such a finding. I agree with the EAT that the Industrial Tribunal were entitled to find Mrs Sargent’s conduct consistent with her having left because of the unlawful instruction. Moreover, there is no suggestion in this case that the employers would have changed their policy had she asked them to do so. Industrial tribunals will, on the other hand, be astute to discover the true reason for the employee leaving and reject those claims in which alleged conduct by the employer is no more than a pretext or cover for leaving on other grounds.

I would dismiss this appeal.

LORD JUSTICE SWINTON THOMAS:

On the 11th April, 1996, the Respondent, Mrs. Sargent, who was a young woman, entered the employment of the Appellants as a Receptionist. She was given an instruction that cars and vans should not be rented out to Asian or coloured people. She was given a further similar instruction on the 12th April, a Friday. She made no immediate protest, but, over the following weekend she decided that she could not comply with the instructions that she had been given and on Monday, 15th April, she telephoned the employers and told them that she could not do the job. The employers were informed of the reason why she left by letter on the 18th April, 1996. Her complaint is made under the provisions of the Race Relations Act, 1976. The relevant provisions are these:

(1) A person discriminates against another in any circumstances relevant for the purposes of any provision of this Act if:

(a) on racial grounds he treats that other less favourably than he treats or would treat other persons; or

(b) he applies to that other a requirement or condition which he applies or would apply equally to persons not of the same racial group as that other but........

(1) It is unlawful for a person, in relation to employment by him at an establishment in Great Britain, to discriminate against another:

(a) in the arrangements he makes for the purpose of determining who should be offered that employment; or

(b) in the terms on which he offers him that employment; or

(c) by refusing or deliberately omitting to offer him that employment.

(2) It is unlawful for a person in the case of a person employed by him at an establishment in Great Britain, to discriminate against that employee:

(a) in the terms of employment which he affords him; or

(b) in the way he affords him access to opportunities for promotion, transfer or training, or to any other benefits, facilities or services, or by refusing or deliberately omitting to afford him access to them; or

(c) by dismissing him or subjecting him to any other detriment.

Mr. Reade submits that the proper interpretation of Section 1(1)(a) is that the discrimination must be by reason of the person’s own membership of a particular racial group, for example that a black person is discriminated against on the grounds that he is black. The section, on a proper interpretation, cannot, Mr. Reade submits, apply to a white woman such as this applicant who is given an instruction that she should discriminate against black and Asian persons. There are, he says, other legislative provisions which can deal with constructive dismissal by means of an unlawful order.

Mr. Reade then submits that the use of the phrase “that other” in Section 1(1)(b) which deals with indirect discrimination must refer back to the phrase “that other” in Section 1(1)(a) which deals with direct discrimination and he submits that “that other” in Section 1(1)(b) relates in terms to the same racial group. He then submits further that the wording of Section 4 in its totality supports his submissions in relation to interpretation.

There is no doubt that there is strength in Mr. Reade’s submission. I do not think that it is helpful in a case such as this to try and ascertain the intention of the draftsman of the Act, or the intention of Parliament, because it seems to me to be unlikely that the circumstances that arise in this case were considered either by the draftsman or by Parliament. In my judgment it is more helpful to focus on the intention underlying the Act itself and the words used. The intent of the Act is to deter racial discrimination. There is a clear distinction between the words “on racial grounds” in Section 1(1)(a) and “the same racial group” in Section 1(1)(b). In considering this point in Showboat Centre v. Owens [1984] ICR 65 Browne-Wilkinson, J as he then was, said in relation to this point:

“Certainly the main thrust of the legislation is to give protection to those discriminated against on the grounds of their own racial characteristics. But the words ‘on racial grounds’ are perfectly capable in their ordinary sense of covering any reason for an action based on race, whether it be the race of the person affected by the action or of others.”

I agree with that approach. In my judgment, using ordinary language, Mrs. Sargent was discriminated against “on racial grounds” albeit that the unlawful instruction in relation to race concerned others of a different racial group to her. Giving full weight to the points made by Mr. Reade, which are well made, I have come to the conclusion that the wording of Section 1(a) is apt to cover the facts of this case, and the conduct of the Appellants as employer towards the Respondent as employee, and was unlawful discrimination on racial grounds.

Mr. Reade’s second main submission is that, even if racial discrimination is shown under Section 1(1)(a) Mrs. Sargent is not a person who falls within the provisions of Section 4(2)(c) because, in order to do so, she must show that she has been subjected to differential treatment on the grounds of race. No doubt there were some employees who did, and other prospective employees who would, comply with the unlawful instruction. Such a person is the hypothetical comparator for the purposes of Section 4, and Mrs. Sargent was subjected to detriment by reason of the discrimination against her.

Mr. Reade submitted that Mrs. Sargent was not dismissed either directly or constructively. Mr. Reade submits that there was no acceptance of any repudiatory breach of the contract of employment. Mrs. Sargent merely left. I do not accept that submission.

Mrs. Sargent wanted the job as a Receptionist with the Appellants and wanted to keep it. Obviously, if she had not been given the unlawful instruction, she would have remained in her employment. It is quite unrealistic, in the circumstances of this case, to expect that she should return to the employers’ place of business and state the grounds on which she felt unable to continue in their employment. The action of the employers in giving the instruction that they did in the context of the provisions of the Race Relations Act, 1976, amounted to constructive dismissal. I agree with Pill, L.J. that there is no requirement as a matter of law that an employee must state his reason for leaving although a failure to do so may make it more difficult to establish constructive dismissal.

For the reasons given by Pill, L.J. with which I agree, and for the reasons set out above, I would also dismiss this appeal.

LORD JUSTICE BELDAM: I agree.

ORDER: Appeal dismissed with costs; leave to appeal to the House of Lords refused.