England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF ADJUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE EMPLOYMENT APPEAL TRIBUNAL

		Royal Courts of Justice Strand London WC2 2LL
		9 February 2004

Monday, 9 February 2004

1. LORD JUSTICE BUXTON: I will ask Lord Justice Maurice Kay to give the first judgment.
2. LORD JUSTICE MAURICE KAY: John Mingeley is a private hire taxi driver in Leeds. For about four years prior to 8 November 2001 he had a contract with Mr Pennock and Mr Ivory, proprietors of a business known as Amber Cars. Upon the termination of that contract Mr Mingeley commenced proceedings in the Employment Tribunal alleging that he had been the subject of unlawful discrimination on the grounds of his race. He is of black African racial origin. The response of Amber Cars to the application in the Tribunal was to contend that the Tribunal lacked jurisdiction because the relationship between Mr Mingeley and the firm was not one of "employment" within the meaning of section 78 of the Race Relations Act 1976. Section 78(1) of the 1976 Act defines employment as:

"Employment under a contract of service or of apprenticeship or a contract personally to execute any work or labour."

It has never been suggested that the relationship between Mr Mingeley and Amber Cars was pursuant to a contract of service or apprenticeship. It is his case that the relationship was pursuant to a contract personally to execute any work or labour. That issue, which goes to jurisdiction in the circumstances of this case, was determined as a preliminary issue by the Employment Tribunal. It decided that the contract between Mr Mingeley and Amber Cars was not one personally to execute any work or labour. Mr Mingeley appealed to the Employment Appeal Tribunal and in a judgment delivered on 9 June 2003 the Employment Appeal Tribunal, with His Honour Judge Peter Clark presiding, came to the same conclusion as had the Employment Tribunal. On 29 August 2003 Kennedy and Peter Gibson LJJ granted Mr Mingeley permission to appeal to this court. Peter Gibson LJ observed that "the issues raised are of some general importance."

3. The contractual relationship between the parties was never the subject of a written agreement. It was a type of arrangement which is commonly found in the private hire industry. Mr Mingeley owned the vehicle and he was required to obtain the relevant licence from Leeds City Council showing the name of Amber Cars as the vehicle operator. He was also required to have a standard driving licence and evidence of compulsory third-party insurance. Amber Cars made available to him initially a radio and later a computer system which, according to the finding of the Employment Tribunal, allocated calls to drivers from Amber Cars' customers. In return Mr Mingeley was obliged to pay Amber Cars £75 per week. Other aspects of the arrangements are apparent from the following findings of the Employment Tribunal (in which Mr Mingeley is referred to as "the Applicant" and Amber Cars as "the Respondent"):

"He expressed a wish to work on the Respondent's nightshift, that is from 5.00pm until 1.00am Sunday/Thursday and from 5.00pm until 3.00am Friday/Saturday. It was, however, a matter entirely for the Applicant as to whether he actually worked those hours and the Respondent did not operate any monitoring system, either via its radio/computer system or otherwise,whereby it checked the actual times that the drivers, including the Applicant, made themselves available for allocation to particular customers. The Applicant was free to work seven days per week if he wished or he could work any lesser number of days. That was entirely a decision for him... If the Applicant failed to pay £75 in any given week, then the system was disabled. The Applicant was not required to and did not give notice to the [Respondent] if he took a period of time off work for holiday or if there was any illness. If he chose not to work on any particular day, for whatever reason, he simply did not use his vehicle and did not notify the [Respondent] either that he was or was not available. The Respondent had no concern either way as to that. Overall, the Respondent's only concern was that a sufficient number of its substantial fleet of drivers, some 225 in all, were available for allocation of calls at any particular time... The Applicant did not make any further payment to the Respondent in respect of the fares that he collected from customers allocated to him. The Respondent had no interest in the amount that the Applicant so collected. Equally, the Applicant had no interest in the number of customers who sought the services of the Respondent and its various drivers or, save as to the matters which form the substance of the Applicant's substantive complaint, no interest in the allocation of calls to particular drivers. The Applicant was not entitled to allow any other person to drive his vehicle during any part of the working week unless a further sum of £75 was paid by that person (or the Applicant) to the Respondent... The Applicant was required to wear the Respondent's uniform... The Respondent enforced that uniform code. The Respondent similarly enforced a scale of charges. Those charges were set by the Respondent and the Applicant was not at liberty to amend them. The Respondent did... seek to impose a proper code of conduct on its drivers and, if there was any complaint from a member of the public, that was investigated in some form of hearing and the Respondent had power to order a refund of the fare to the customer."

The decision of the Employment Tribunal

4. The Employment Tribunal identified two issues and resolved them both in favour of Amber Cars. In relation to both issues it based its decision on Mirror Group Newspapers Ltd v Gunning [1986] IRLR 27. The first issue is dealt with in the following passage in the decision of the Employment Tribunal at paragraph 13:

"... what falls to be determined, looking at the contract as a whole, is firstly whether there is some obligation by one contracting party personally to execute any work or labour... We note the word 'obligation'. We are concerned as to whether there is some obligation by one party personally to execute work or labour ... we cannot accept that there was any obligation on the part of the Applicant to execute any work or labour. The Applicant was entirely free, whatever he actually did, to work whenever it suited him or not to work whenever it suited him. That was the case whether or not he paid £75.00 per week to the Respondent. We accept that, in the real world, if the Applicant did make that payment, he would make himself available to work, both so that he could recoup the fee and so that he could earn a living. The test... is not the commercial reality but the strict contractual position. It is inconsistent with an obligation to execute work or labour that a party is free to work or not work as he wishes, free to take holidays as and when he wishes without notification to any other party, free to decide that he is sick on any particular day without notification and free to work whatever hours he wishes on any particular day that he does work, without sanction of any sort on the part of the 'employer'."

The Tribunal then turned to the second issue, identifying and resolving it in this passage at paragraph 15:

"As Gunning indicates, the Tribunal is required to determine whether that, ie, the obligation, if any, by one contracting party personally to execute any work or labour, is the dominant purpose of the contract... In our view, that is not the case. The dominant purpose of the contract between the parties was the efficient provision of a private hire service to customers of the Respondent. The parties made the contractual arrangements between them, to their mutual benefit, so that the Applicant could earn his living from the fares that he received from third parties and the Respondent could run its business from the profit on the rentals it received from its various drivers. It would be stretching the reality of that position far beyond that which this Tribunal can accept to say that the dominant purpose was the execution of personal work or labour by the Applicant. That was an incidental feature of the overall arrangement but some substantial distance from the dominant purpose."

The Employment Tribunal concluded with this comment:

"It is by no means clear whether it was the original intention of Parliament that persons in this position should be excluded from the provisions of the 1978 Act. Insofar as it is a matter for us, we would welcome clarification by the Employment Appeal Tribunal on this issue."

The decision of the Employment Appeal Tribunal

5. The Employment Appeal Tribunal identified and addressed the two issues which had arisen in the Employment Tribunal but considered them in the reverse order. First, it found in favour of Amber Cars on the dominant purpose issue in the light of Gunning. Secondly, the Employment Appeal Tribunal concluded at paragraph 32:

"... there must be some mutuality of obligation, the employer to provide work and the employee to do the work when offered, where the extended definition is relied upon...

33. On the facts of the present case there was, as the Employment Tribunal found, no requirement at all for the Applicant to accept any of the fares offered by the Respondent, that is to provide his work or labour to the Respondent. Thus on this basis also we uphold the Employment Tribunal's decision."

The authorities

6. In the course of submissions there have been copious references to three authorities in particular, namely: Mirror Group Newspapers v Gunning (to which I have already referred), Kelly v Northern Ireland Housing Executive [1999] 1 AC 428 and the recent decision of the Court of Appeal in Legal Services Commission v Patterson [2003] EWCA Civ 1558. It is appropriate to summarise these three cases before addressing the submissions of counsel in the present case.

1. Mirror Group Newspapers v Gunning

In addressing the corresponding provision in section 82(1) of the Sex Discrimination Act 1975 Oliver LJ said at page 151B:

"In my judgment, what is contemplated by the legislature in this extended definition is a contract the dominant purpose of which is the execution of personal work or labour, and I would allow the appeal on this ground, for quite clearly here the dominant purpose was simply the regular and efficient distribution of newspapers."

He added at page 151C that even if he were wrong in that formulation there was no material upon which the Employment Tribunal could have properly concluded that there was a term of the contract amounting to an obligation personally to engage in the operation of the agreement, "although no doubt the expectation was that he would do so". Balcombe LJ also held (at page 156C to F) that the phrase "contract personally to execute any work or labour' contemplates a contract whose dominant purpose is that the party contracting to provide the services under the contract performs personally the work or labour which forms the subject matter of the contract.

He added:

"In my judgment, one has to look at the agreement as a whole, and provided that there is some obligation by one contracting party personally to execute any work or labour, one then has to decide whether that is the dominant purpose of the contract, or whether the contract is properly to be regarded in essence as a contract for the personal execution of work or labour, which seems to me to be the same thing in other words."

He came to the same conclusion as Oliver LJ, and Sir David cairns agreed with both judgments.

2. Kelly v Northern Ireland Housing Executive

In Kelly Lord Slynn of Hadley, having cited Gunning, adopted the "dominant purpose" test at page 438A. So, too, did Lord Griffiths (page 442E). Lord Steyn agreed with Lord Slynn of Hadley (page 447A). Although Lord Lloyd of Berwick and Lord Clyde dissented in the result, they too adopted the "dominant purpose" test. In none of the speeches is there to be found any criticism or disapproval of Gunning. Quite the contrary.

3. Legal Services Commission v Patterson

Giving the judgment of the Court of Appeal in this most recent consideration of the extended definition of "employment" in section 78, Clarke LJ stated in paragraph 21:

"... Mirror Group v Gunning is authority for the proposition that ... the questions to be determined are these:

(i) Who was the contracting party or who were the contracting parties?

(ii) Was any obligation imposed under the contract upon a contracting party personally to carry out work or labour?

(iii) If so, was that obligation personally to carry out work and labour the dominant purpose of the contract?"

Having also considered Kelly, Clarke LJ went on to formulate the relevant questions in the case before the court in terms conditioned by the reasoning in Gunning and Kelly.

7. I now turn to the present appeal in the light of these authorities. In doing so, I keep in mind the need to avoid an approach to section 78 which would "cut down the protection it was intended to afford" (see Lord Griffiths in Kelly at page 3442F). However, where the words of the section and the principles developed in the authorities have that effect, the result may be unavoidable.
8. On behalf of Mr Mingeley Mr Thacker in his skeleton argument identified two issues in these terms: (1) whether for someone to be employed under a contract personally to execute any work or labour there has to be a mutual obligation between the parties to offer and accept work; (2) the relevance and application of the dominant purpose test in Gunning. He summarised the case for Mr Mingeley in this way. A contract personally to execute any work or labour may exist even if there is no mutual obligation to offer or accept work. Insofar as the dominant purpose test is relevant, once there is an obligation personally to execute the work, which is the subject matter of the contract, the dominant purpose of the contract will be the personal execution of work or labour.
9. It is obvious that those submissions receive no help from Gunning, Kelly or Patterson. Mr Thacker seeks to confine Gunning and Kelly to his interpretation of their facts and contends that the concepts of "mutual obligation" and "dominant purpose" were, in effect, unnecessary for the decisions in those cases and inappropriate glosses on the words of section 78 which have the undesirable consequence of limiting the protection that Parliament intended to provide.
10. Moreover, he takes issue with the way in which the three-stage test was formulated by this court in Patterson, maintaining that the third limb - that of dominant purpose - was simply wrong. He seeks to say that in that regard Patterson was decided per incuriam, and attempts to make that good by the contention that the court in Patterson, whilst it was shown section 78, Gunning and Kelly, it was not shown certain other statutory provisions in related areas such as the Employment Rights Act 1996, section 230(3); the National Minimum Wage Act 1998, section 54(3); the Working Time Regulations 1998 or the Employment Equality Religion or Belief Regulations 2003. The first three of those deploy a different definition from that in section 78 by limiting the performance of relevant work or services to work or services:

"... for another party to the contract whose status is not by virtue of the contract that of a client or customer of any profession or business undertaking carried on by the individual."

11. I am unable to accept the submission that Patterson was decided per incuriam. The court focussed on the words of the section and the previous decisions of the Court of Appeal and the House of Lords which have considered them. I find it a novel and untenable proposition to suggest that an earlier statutory provision, which is the subject of detailed consideration in previous authorities and which has continued unamended, must now be revisited by reference to later statutory provisions in different terms.
12. Mr Thacker also submits, albeit somewhat late in the day, that we should take our cue from the provisions of two recent EC Council Directives - 2000/43 and 2000/78. He submits that we should infer that because Parliament has not seen fit to amend section 78 it must be satisfied that section 78 is consistent with the Directives, which it would not be if our anti-discrimination legislation excluded, for example, conditions for access to self-employment and to occupation, or employment and working conditions.
13. I find this to be an unsustainable argument. That which a Directive has recently imposed on Member States as a legislative requirement cannot provide a useful aid to construction of a provision of domestic legislation which has been in existence for more than a quarter of a century and which has received authoritative interpretation in the Court of Appeal and the House of Lords. Moreover, Parliament must be assumed to be aware of that authoritative interpretation but it has chosen not to amend section 78.
14. I return to the central issues which Mr Thacker correctly identified in his skeleton argument. In my judgment, on the plain words of section 78 and the authorities to which I have referred, the Employment Tribunal was correct to conclude that, in order to bring himself within section 78 Mr Mingeley had to establish that his contract with Amber Cars placed him under an obligation "personally to execute any work or labour". As the Tribunal found, there was no evidence that he was ever under such an obligation. He was free to work or not to work at his own whim or fancy. His obligation was to pay Amber Cars £75 per week and if he chose to work then to do so within the requirements of the arrangement. However, the absence from the contract of an obligation to work places him beyond the reach of section 78.
15. Secondly, I am satisfied that the Employment Tribunal did not err by considering the test of "dominant purpose". For better or worse it is a test which has been read into section 78 by a consistent and strong line of authority which is binding on this court. I tend to agree with Mr Thacker that it has its difficulties because the search for dominant purpose can be elusive and does not always result in clear or incontrovertible conclusions. However the test is now well-established.
16. For my part I would dismiss this appeal because the law is clear and the Employment Tribunal properly identified and applied it, as did the Employment Appeal Tribunal.
17. Having said that, I do question whether Parliament had intended to exclude arrangements such as this from the operation of the Act. However, their inclusion could only now be achieved by legislation.
18. LORD JUSTICE NOURSE: I agree, and do not wish to add anything of my own.
19. LORD JUSTICE BUXTON: I agree with everything that has fallen from my Lord. This case illustrates again the difficulties potentially caused in discrimination law by the fact that in 1976 Parliament decided not to impose a general obligation not to discriminate against persons on grounds of race (and subsequently on other grounds), but rather, to create such obligations only in certain specific areas: of which the most conspicuous is the area of employment with which we are concerned here. By doing that, Parliament had to describe what it understood to be "employment" for that purpose. That description is to be found in section 78(1) of the 1976 Act. We are therefore concerned with employment under a contract personally to execute any work or labour.
20. The first thing that the applicant must point to is a relevant contract. The contract which he relies on is, and has to be, the contract, such as it was, between Mr Mingeley and Amber Cars. That is because it is Amber Cars who are said to have discriminated against him in the context of that employment.
21. It was agreed in argument, and indeed found by the Tribunal, that Mr Mingeley's only contractual obligation to Amber Cars was to pay the £75 weekly fee for access to Amber Cars' computer system. He does nothing else contractually for Amber Cars: and therefore, on the plain meaning of the words, his contract with them cannot be a contract personally to execute any work or labour. For that reason I think that in this case the facts never approached the issue of dominant purpose which, I would agree with my Lord, poses difficulties of its own.
22. That the facts in this case did not need to be considered under that heading is shown by some words of Balcombe LJ in Mirror Group v Gunning, which my Lord has already quoted and which I will repeat, at page 156F of the report:

"In my judgment, one has to look at the agreement as a whole, and provided that there is some obligation by one contracting party personally to execute any work or labour, one then has to decide whether that is the dominant purpose of the contract..."

Thus, before one even gets to "dominant purpose" one has to consider whether under the contract there is some obligation by one contracting party personally to execute any work or labour. That is not this case. Under the contract Mr Mingeley has no such obligation.

23. It was suggested by Mr Thacker that that requirement was met in this case because Mr Mingeley had obligations to the passengers to whom he might be directed by Amber Cars, to execute work in respect of them. Mr Thacker illuminatingly described such contracts as collateral contracts. That was a correct way of describing them, not only as a matter of fact, but also as a convenient legal expression. That work was indeed collateral to the contract between Mr Mingeley and Amber Cars. It was not work under the contract such as the statute requires. Mr Mingeley's contract with Amber Cars was therefore simply not a contract of the type that falls under the definition in section 78.
24. Like my Lord, I suspect that that may not have been what Parliament intended, but it is undoubtedly what Parliament said, and it is undoubtedly what this court has on a number of occasions interpreted Parliament as saying.
25. This appeal must therefore fail.

(Appeal dismissed; Appellant do pay Respondent's costs of the appeal, such costs to be the subject of a detailed assessment; application for permission to appeal to the House of Lords refused).