England and Wales Court of Appeal (Civil Division) Decisions

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

		Royal Courts of Justice Strand, London, WC2A 2LL
		31/05/2006

Lady Justice Smith :This is the judgment of the court.

Introduction

1. In this appeal, the appellant, OCS Group Limited (OCS) appeals against the decision of the Employment Appeal Tribunal (EAT) given on 23 May 2005 dismissing OCS's appeal against the decision of an employment tribunal (ET) dated 16 August 2004. The ET found in favour of the claimant (Mr A.J. Taylor) on his claims for unfair dismissal under the Employment Rights Act 1996 (ERA 1996) and for discrimination under the Disability Discrimination Act 1995 (DDA 1995). OCS also appeals against the EAT's decision to allow Mr Taylor's cross-appeal against one of his claims under DDA 1995.
2. Dyson and Smith LJJ gave permission to OCS to appeal on limited grounds set out in their order of 27 October 2005, permission having been refused by Wall LJ in his order of 1 August 2005.

The Facts

3. OCS is part of a large group of companies. It provides cleaning services to industrial and commercial businesses. Its information base is, as is usual nowadays, available on an internal computer system or intranet. Mr Taylor was first employed by OCS as a payroll programmer/analyst in 1999 and in 2003 was redeployed as a database developer/analyst. In that capacity, he worked as one of the intranet team on the development of web-based pages and files including databases and the interfacing between them. His role was to modify and maintain bespoke database systems for the use of various departments within the group. He also provided assistance to members of staff who were experiencing problems with the operation of the databases. He reported to Ms Linda Hellens, the intranet/extranetmanager.
4. Mr Taylor is profoundly and pre-lingually deaf. His deafness amounted to a disability for the purposes of the DDA 1995. He can lip read quite well, particularly with people with whom he is familiar. Otherwise, he is dependent upon sign language for which an interpreter is required. He was accustomed to working with Ms Hellens and could usually understand her by lip reading, supplemented by signing. Sometimes, they communicated in writing. Mr Taylor often had difficulty in understanding other members of staff, with whom he was less familiar, and OSC's Human Resources department was aware of this.
5. On 22 September 2003, Mr Taylor received an e-mail from an employee, Ms Campbell, asking for his assistance with the operation of a database which he had previously designed. Ms Campbell gave him permission to gain remote access to her terminal for the purpose of remedying the problems she was experiencing. While carrying out this work, Mr Taylor forwarded 3 e-mails from Ms Campbell's terminal to his own. One of the e-mails was personal; another had attached to it a report relating to fuel usage by many members of staff. It contained confidential information including staff salary levels and was not relevant to the task that Mr Taylor had to perform. For him to send this material to himself was a breach of the company's policy on access to the terminals of other members of staff. The policy was that IT staff were to use their privileged access to others' computers for work purposes only. When Ms Campbell found out what Mr Taylor had done, she reported his actions to Ms Hellens.
6. On 26 September 2003, Ms Hellens suspended Mr Taylor from duty and, on 29 September, she held an investigatory meeting with Mr Taylor. Mr Taylor mistakenly understood that Ms Hellens was representing him at that meeting so that, when asked, he said that he did not wish to be accompanied. Ms Hellens had prepared a written list of questions which Mr Taylor answered in writing. He did not dispute that he had forwarded the e-mails to his own terminal. In respect of the personal e-mail, he initially said that he had forwarded it to himself by mistake. Then, on further questioning, he appeared to retract that and to say that what he had done was 'out of character'. In respect of the fuel usage database, he said that he was interested in that because he had previously worked on the project. Ms Hellens decided that there was a case to answer of misconduct.
7. A disciplinary meeting was held that afternoon. This was conducted by the Communications Manager, Mr John Baccolini. Mr Taylor found Mr Baccolini particularly difficult to lip-read. No interpreter was provided. Mr Taylor did not fully understand what was happening during that meeting, which lasted about 15 to 30 minutes. At the end of the meeting, which we will call 'the first hearing', Mr Baccolini formed the view that Mr Taylor was guilty of misconduct in e-mailing to himself files for which he had no need and no business to see. Mr Taylor was told that he was dismissed but it was apparent (from the notes of the meeting) that he had not understood what had happened.
8. Mr Taylor appealed, and the appeal hearing took place on 17 November 2003. It was conducted by Ms Jenny Sener, a senior member of OCS's staff. An interpreter attended, although she was unable to stay throughout. Mr Taylor was represented by his sister, Ms Katherine Davies, who is a qualified teacher of the deaf and can communicate well with her brother. When the interpreter had to leave, Ms Davies took over as interpreter and representative. The hearing lasted for about four hours. Once again, a good note was kept as a record of what had occurred although we understand that Mr Taylor challenges aspects of it. We shall return later to what was said at that hearing. The decision to dismiss Mr Taylor was affirmed.

The Proceedings before the Employment Tribunal

9. Mr Taylor applied to the ET alleging that he had been unfairly dismissed and that he had been discriminated against on the grounds of disability.
10. As to the claim for unfair dismissal, it is convenient at this stage to set out the relevant statutory provisions. Section 98(1) of the ERA 1996 provides that in determining whether the dismissal of an employee has been fair, it is for the employer to show the reason (or if more than one, the principal reason) for the dismissal and that it is a potentially fair reason (such as, for example, misconduct).
11. 11. Section 98(4) provides:

"Where the employer has fulfilled the requirements of subsection (l), the determination of the question whether the dismissal is fair or unfair (having regard to the reason shown by the employer) -

(a) depends on whether in the circumstances (including the size and administrative resources of the employer's undertaking) the employer acted reasonably or unreasonably in treating it as a sufficient reason for dismissing the employee and

(b) shall be determined in accordance with equity and the substantial merits of the case."

12. The ET found that the reason for the dismissal was misconduct, a potentially fair reason. They also made it plain that they regarded the misconduct as a serious matter. However, on considering section 98(4), they concluded that the dismissal had been unfair. Mr Taylor had been unable to participate effectively in the disciplinary process leading to his dismissal, particularly as regards the first hearing. The procedure on that occasion had been fundamentally and hopelessly flawed. As to the appeal hearing, the effect of the ET's decision was that this had not rectified the defects of the first hearing.
13. In respect of the appeal hearing, the ET's decision included the following elements. At paragraph 12, the ET recorded the submission on behalf of Mr Taylor that the appeal had been restricted to a review and was not a rehearing and could not therefore remedy the defects of the original hearing. Reliance was placed on the decision of the EAT in Whitbread v Mills [1988] ICR 776. At paragraph 9, the ET recorded the employer's submission that, although Ms Sener had said that the appeal was a review and not a rehearing, the minutes of the proceedings would contradict such a conclusion. The ET had been invited to examine the minutes very carefully. At paragraph 5.17 of their decision the tribunal found as a fact that:

"The appeal was by way of a review, rather than a rehearing and Ms Sener neither heard nor read any matter that caused her to doubt the dismissal decision."

14. Finally, at paragraph 17, immediately after a passage in which the ET explained its conclusions about the fundamental inadequacy of the first hearing which had led to the dismissal, the ET reached its conclusions in respect of the appeal hearing. It said:

"We further find that the appeal hearing was not a rehearing but was a review. Ms Sener explains in her statement (see paragraph 8) that she agreed to hear the appeal to see if any new grounds might be stated during the process. Although we accept that her review was thorough, it did not constitute a rehearing and it is also confirmed in paragraph 30 of her statement where she concludes that Mr Taylor had brought no new explanation or information forward that would change the conclusions of the investigatory hearing or the disciplinary hearing and she considered therefore that she had no choice other than to uphold the decision to dismiss in accordance with the disciplinary procedure. The disciplinary procedure does not provide any detail as to how an appeal should be conducted

(p.152). However, the premise of Ms Sener's appeal was to review and to not rehear the original dismissal decision."

15. It appears from that passage that the ET had accepted the submission for Mr Taylor that, because the appeal hearing had been a review and not a rehearing, it could not cure the defects of the first hearing. At paragraph 18, the ET found that the dismissal was procedurally unfair and any questions of reduction or extinction of compensation for contributory fault or under the principle in Polkey v A.E. Dayton Services [1988] ICR 142 would be left for consideration at the remedies hearing. For the sake of completeness, we mention that, following the hearing at the EAT, the ET conducted a remedies hearing and held that Mr Taylor's compensation for unfair dismissal should be reduced by 70% to reflect the likelihood that he would have been dismissed if the procedures had been fair. They also reduced his compensation by a further 60% to reflect the gravity of his misconduct.
16. Under the DDA 1995, Mr Taylor had advanced two distinct claims. He alleged that the employer had discriminated against him by dismissing him for a reason related to his disability. The relevant statutory provisions of DDA 1995 were at the material time:

4(2) It is unlawful for an employer to discriminate against a disabled person whom he employs -

….

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

5(1) For the purposes of this Part, an employer discriminates against a disabled person if -

(a) for a reason which relates to the disabled person's disability, he treats him less favourably than he treats or would treat others to whom that reason does not or would not apply; and

(b) he cannot show that the treatment in question is justified.

17. The ET dismissed this claim, holding that the reason for the dismissal was misconduct and was not for a reason related to Mr Taylor's disability. At paragraph 27, they said:

"Turning first to section 5(1) we conclude that the material reason for the Applicant's dismissal was his conduct. We accept that it is a very serious matter for an employee, particularly one based in the IT department, with access to other staff members' computers, to forward e-mails from colleagues' terminals to their own, without permission, that are not related to the job in hand. We agree with Mr Barr (OCS's representative) that the material reason is not related to the Applicant's disability and the S. 5(1) DDA claim must fail."

18. The tribunal found in Mr Taylor's favour in respect of his claim that the employer had discriminated against him by subjecting him to a detriment. The discrimination had consisted of a failure to provide him with an interpreter at the first disciplinary hearing. In so doing, they had failed to make a reasonable adjustment (pursuant to section 6 of the Act) to the arrangements for the disciplinary hearing such as would prevent Mr Taylor's deafness putting him at a serious disadvantage.

The Appeal to the EAT

19. OCS appealed to the EAT against the finding of unfair dismissal and the finding of discrimination by failing to make a reasonable adjustment. Mr Taylor cross-appealed against the decision under sections 4 and 5(1) of DDA 1995.
20. Before the EAT, on unfair dismissal, OCS advanced four grounds of appeal but we shall deal only with the one that is relevant to the appeal before this court. It was submitted that the ET had failed to appreciate that the appeal hearing was capable of correcting, and indeed did correct, the defects in the first hearing. The ET had misdirected itself in saying that a hearing found to be by way of review was incapable of curing defects, relying on Whitbread (supra). The ET should have followed Adivihalli v Exports Credits Guarantee Department (unreported, EAT/917/97) which makes clear that a second hearing by way of review might be sufficient to remedy the defects of an earlier hearing. It was submitted that the ET should have looked primarily at the language of the unfair dismissal provisions in section 98(4) of the ERA 1996. There was nothing to suggest that, in order to cure any defects in a first hearing, there necessarily had to be a rehearing of it, as opposed to a review.
21. For Mr Taylor, it was submitted that the ET's approach had been correct. The EAT held that the issue presented to the ET was whether what occurred at the appeal hearing was capable of curing, and did cure, the serious procedural defect found at the first hearing. The tribunal had examined the facts relating to both hearings. They had used the expressions 'rehearing' and a 'mere review' as convenient shorthand labels to describe on the one hand an appeal hearing which was curative and one which was not. Moreover, there was no real conflict between Whitbread and Adivihalli. Whitbread had been followed in a number of cases and had never been disapproved. Adivihalli required the ET to look at the whole of the disciplinary process and said that the issue as to whether any defects could be cured was one of fact. That case emphasised the need for the tribunal to keep well in mind the words of section 98(4) of ERA 1996 when considering whether the dismissal had been fair. Adivihalli did not differ significantly from Whitbread nor did it express any disapproval of it. The process was not one of labelling a second hearing as a 'review' or 'rehearing' but of assessing the circumstances in the two hearings.
22. The EAT noted that, in this case, Ms Sener had said that she regarded her role as a review with fresh representations. They held that the ET could not be faulted in its depiction of the circumstances of the appeal hearing as a mere review falling short of what was required to correct the earlier defect.
23. As to Mr Taylor's cross-appeal, the submission was that one of the reasons why Mr Taylor had been dismissed was on account of his disability. His disability had resulted in him failing to give a proper explanation for his actions and that had had a significant influence on the decision to dismiss him. The EAT accepted Mr Taylor's submission and the cross-appeal succeeded.
24. Permission to appeal was refused by the EAT.

Permission to Appeal

25. OCS was permitted to appeal to the Court of Appeal against the finding of unfair dismissal on the ground that it was arguable that the ET had wrongly understood Whitbread as authority for the supposed proposition of law that an appeal hearing can cure the procedural defects of a first hearing only if it is a rehearing. The ET had found that the appeal hearing was only a review and, as such, could not cure the earlier defects. In Adivihalli, the EAT had made it plain that the duty of the tribunal was to apply the statutory test of fairness to the individual circumstances of each case as a whole, and not to restrict the statutory test. The ET had arguably fallen into an error of law which the EAT had not corrected.
26. In relation to the cross-appeal, permission to appeal was given on the basis that it was arguable that the ET had been right on this issue and the EAT's reversal of that decision was an error of law. It was arguable that the reason for the dismissal was simply Mr Taylor's misconduct and the fact that Mr Taylor had not been able to respond to the allegations, due to his disability, had not had any effect on the decision to dismiss him.

The Appeal on Unfair Dismissal

27. The submissions advanced to this Court were very similar to those advanced to the EAT which we have already set out. Mr Lynch QC, on behalf of OCS, contended that the ET had erred in law in focussing on the question of whether the appeal hearing had been a review or a rehearing. They should have asked the question whether, in all the circumstances, including what had occurred at the first and second hearings, the dismissal was fair. He submitted that either Whitbread contained an erroneous statement of the law or that the ET had misunderstood what the EAT was actually saying in Whitbread. Adivihalli contained a correct statement of the law. Had the ET applied that case, they would have reached the conclusion that the appeal hearing was entirely fair and so thorough that, looked at overall and bearing in mind the serious nature of the misconduct, the dismissal was fair.
28. For Mr Taylor, Ms Gill contended that the EAT had been right to say that the ET had examined all the circumstances, had not misdirected itself and had reached a conclusion that was open to it on the facts. If she were wrong about that and this Court were to hold that the ET had misdirected itself, she invited us to find that the decision of the ET was unarguably right on the facts. We should substitute our own decision and dismiss the appeal.
29. In considering this issue, it is necessary first to examine what proposition of law (if any) can be derived from the case of Whitbread. In that case, the EAT (Wood J, President of the EAT presiding) considered the effect of a decision to dismiss which had been reached at the end of an employer's internal appeal process. The meeting at which the employee had been dismissed had been manifestly unfair. The ET found the dismissal unfair. The employer appealed on the ground that the appeal hearing had rectified the defects of the first meeting.
30. The judgment of the EAT contains a lengthy and careful appraisal of the relevant authorities on the whole question of the operation of internal disciplinary processes. In particular, it quoted the words of Lord Bridge of Harwich in West Midlands Co-operative Society v Tipton [1986]ICR 192, where, at page 202, he said:

"Both the original and the appellate decision by the employer, in any case where the contract of employment provides for an appeal and the right of appeal is invoked by the employee, are necessary elements in the overall process of terminating the contract of employment. To separate them and consider only one half of the process... is to introduce an unnecessary artificiality….."

31. The EAT also considered the case of Calvin v Carr [1980] AC 574, where the Privy Council considered the effect of an appeal from the decision of a steward's inquiry within the Australian Jockey Club. The Privy Council considered whether there was a general rule that internal appellate proceedings could cure a defect caused by a failure of natural justice in the original proceedings. At page 592C, Lord Wilberforce said:

".....their Lordships recognise and indeed assert that no clear and absolute rule can be laid down on the question whether defects in natural justice appearing at the original hearing, whether administrative or quasi-judicial, can be 'cured' through appeal proceedings. The situations in which this issue arises are too diverse, and the rules by which they are governed so various, that this must be so."

32. Lord Wilberforce described situations in which general principles could be postulated. First, there were cases where the rules provided for a rehearing. He said that, in such cases, it would not be difficult to reach the conclusion that the first hearing was superseded by the second. At the other extreme were cases where the complainant has the right to 'nothing less than a fair hearing both at the original and at the appeal stage'. Lord Wilberforce placed in this category the case of Leary v National Union of Vehicle Builders [1971] Ch 34 which was concerned with trade union membership. Megarry J had held that, as a general rule, a failure of natural justice could not be cured by a sufficiency of natural justice on appeal. However, Lord Wilberforce considered that Megarry J had elevated his conclusion in that case to a rule of general application. Lord Wilberforce said at page 593A:

"In their Lordships' opinion this is too broadly stated. It affirms a principle which may be found correct in a category of cases. ... But to seek to apply it generally overlooks ... both the existence of the first category, and the possibility that, intermediately, the conclusion to be reached … is that those who have joined in an organisation, or contract, should be taken to have agreed to accept what, in the end, is a fair decision, notwithstanding some initial defect."

33. Lord Wilberforce then considered the 'intermediate' kind of case and concluded, at page 593C:

"In their Lordships' judgment, such intermediate cases exist. In them, it is for the court, …. to decide whether at the end of the day, there has been a fair result reached by fair methods..... Naturally there may be instances when the defect is so flagrant, the consequences so severe, that the most perfect appeals or rehearings will not be sufficient to produce a just result. ….There may also be cases when the appeal process itself is less than perfect: it may be vitiated by the same defect as the original proceedings: or short of that there may be doubts whether the appeal body embarked on its task without predisposition or whether it had the means to make a full and fair enquiry, for example where it has no material but a transcript of what was before the original body. In such cases it would no doubt be right to quash the original decision."

And at G, he continued:

"What is important is the recognition that such cases exist, and that it is undesirable in many cases of domestic disputes, particularly in which an inquiry and appeal process has been established, to introduce too great a measure of formal judicialisation."

34. The EAT in Whitbread, having considered Calvin, said at page 794E:

"Ultimately, an industrial tribunal has to answer the question whether the dismissal is fair, bearing in mind the wording of section 57(3) [of the Employment Protection (Consolidation) Act 1978, the predecessor of section 98(4) of ERA [1996] and all the circumstances of the case including the equity and substantial merits. The issue is often posed in the form -has the employer, on the facts of the case as found by the Tribunal, and in all the circumstances, reached a decision which an employer could reasonably have reached? …. It follows that the fairness issue must be decided after the appeal process has been completed."

35. The EAT considered that, in conducting the exercise under section 57, the principles to be applied in considering fairness were close to the intermediate cases envisaged by Lord Wilberforce, adding at page 795B that:

"It would follow therefore that not every formality of legal or quasi-legal process is required during the disciplinary and appeal procedures. Each set of circumstances must be examined to see whether the act or omission has brought about an unfair hearing.

If it has, then whether or not an appeal procedure has rectified the situation must depend upon the degree of unfairness at the initial hearing. If there is a rehearing de novo at first instance, the omission may be corrected, but it seems to us that if there is to be a correction by the appeal then such an appeal must be of a comprehensive nature, in essence a rehearing and not a mere review."

36. Applying that statement of law to the facts of Whitbread, at page 795C, the EAT concluded:

"This was not a rehearing in any sense of the word. It was simply a review of what had already occurred with further opportunity to making representations. It follows therefore, in our judgment, that the errors at the earlier hearing were not rectified."

37. It seems to us that, in the passage starting at page 793B, the EAT was not saying that the question of whether the defects of a first hearing had been cured at a second hearing depended on whether the second hearing could be categorised as a rehearing or a review. The tribunal was careful to say that the appeal must be of a comprehensive nature 'in essence a rehearing and not a mere review'. Properly understood, the EAT was saying only that, if the first hearing had been defective, the appeal would have to be comprehensive if the whole process (and the dismissal) were to be found to be fair.
38. Having said that, the use of the words 'review' and 'rehearing' in Whitbread do in our view create a temptation for a tribunal to fall into the error of deciding whether the appeal hearing cured the earlier defects by categorising the appeal hearing either as a review or a rehearing rather than looking at its thoroughness and the open-mindedness of the decision-maker and considering whether the disciplinary process as a whole was fair. If the ET's description of the submissions made on Mr Taylor's behalf in this case was accurate, the ET was encouraged to categorise the appeal as either a rehearing or a review. Examination of other reported cases shows that Whitbread has not always been properly understood and that ET's have attempted to categorise appeal hearings either as rehearings or reviews. In Clark v Civil Aviation Authority [1991] IRLR 412, the EAT seemed to suggest that the appeal hearing had to be capable of being categorised or described as a rehearing. At paragraph 22, it said:

"Although the procedure at the initial stages was clearly faulty and unfair, nevertheless, the situation, when looked at in the round, can be rectified if there is in effect a full and proper hearing on appeal, a rehearing. In the present case it was important for the Industrial Tribunal to look at the appeal …. to see whether it could properly be so described, and looking at fairness in the round, to describe whether the early unfairness had been rectified."

39. The use of the 'review' and 'rehearing' terminology can also be discerned in such cases as Post Office v Foley [2000] IRLR 827; Wise v Filbert Realisations (unreported, UKEAT/0660/03/RN); and Whitbread plc v Hall [2001] ICR 699, although in none of those cases was it suggested that there was a rule of law that a rehearing could cure earlier defects whereas a review could not. However, the online edition of Halsbury's Laws cites Whitbread and Clark as authority for the proposition that:

"a fair appeal will, however, cure an unfair initial disciplinary hearing only if it takes the form of a complete rehearing of the case against the employee, and not just a review of the initial hearing."

40. We turn to consider the approach taken to this question in Adivihalli, in which the issue was, once again, whether an appeal could correct and had corrected the defects of an earlier hearing. After outlining the submission that had been made, that only a rehearing could achieve that and a review could not, the EAT (Morison J President of the EAT presiding) said at page 10G:

"With great respect, it seems to us that we are in danger of losing sight of the statutory test for unfair dismissal."

The EAT then set out s. 98(4) ERA 1996 and at page 11C continued:

"It will be quite obvious to all lawyers that the words of this part of the statute could not be in wider terms according to the Industrial Tribunal, the fact finding body, a very wide margin of appreciation. It would be somewhat surprising if Industrial Tribunals were to be invited to become bogged down in difficult issues as to whether an appellate process in a particular case fell within the definition of a rehearing or within the definition of a review' ."

41. The EAT then reviewed the authorities cited in Whitbread, including Tipton (supra). They concluded:

"What we take from this decision (Whitbread) is simply this. Where an Industrial Tribunal is considering a complaint of unfair dismissal and where an employee under his contract of employment has the right to appeal and exercises that right, in considering whether the employee has been fairly or unfairly dismissed, the Industrial Tribunal should have regard to the overall process of the termination of the contract of employment, or, in other words, the dismissal.

In some circumstances unfairness at the original dismissal stage may be corrected or cured as a result of what happens at the appellate process: that will depend on all the circumstances of the case. It will depend upon the nature of the unfairness at the first stage; the nature of the hearing of the appeal at the second stage; and the equity and substantial merits of the case.

Whether or not an appeal cures a procedural defect is not a matter to be determined by reference to the precise category into which the appeal process falls. We are confident that that is the position because in many cases it will be difficult to categorise an appellate process as being either a rehearing on the one hand or a review of what had already occurred on the other. They may be a mixture of the two….. Whether the procedural defect which had been identified by the Industrial Tribunal was corrected by that process or not, is purely a question of fact and judgment for the Industrial Tribunal."

42. The Court of Appeal has not considered this issue in recent years, certainly not since Adivihalli. OCS submitted that, in Sartor v P & O European Ferries [1992] IRLR 27 1, decided before Adivihalli, the Court's approach was similar to that in Adivihalli. Purchas LJ considered that all that section 57 required was "that the employer should have a reason falling within the provisions and that, in reaching that reason, he acted reasonably". Purchas LJ could not accept a submission that procedural defects at the first hearing could not be cured at the appeal stage. Ralph Gibson LJ agreed, but added at page 277 that: "The appeal was by rehearing and there was on that occasion no significant defect in the proceedings. Any defects in what had gone before were cured by the opportunity to appeal". That was suggestive of an approach akin to that in Whitbread.
43. It seems to us that there is no real difference between what the EAT said in Whitbread and what it said in Adivihalli. Both were consistent with Sartor. In both cases, the EAT recognised that the ET must focus on the statutory test and that, in considering whether the dismissal was fair, they must look at the substance of what had happened throughout the disciplinary process. To that extent, in our view, the EAT in the present case was right. However, in Whitbread, the EAT used the words 'review' and 'rehearing' to illustrate the kind of hearing that would be thorough enough to cure earlier defects and one which would not. Unfortunately, this illustration has been understood by some to propound a rule of law that only a rehearing is capable of curing earlier defects and a mere review never is. There is no such rule of law.
44. There are at least two good reasons why there should not be any such rule of law. First, as the EAT recognised in Adivihalli, such a rule would place a fetter on the discretion of the ET when considering section 98(4). The second is that the distinction between a review and a rehearing is hard to define in the abstract and even harder to apply in practice. The distinction between the two was discussed in the judgment of May LJ in E I Du Pont de Nemours & Co v S T Du Pont [2003] EWCA Civ 1368. The context was the application of CPR 52.1 1 to an appeal under the Trademarks Act 1938. May LJ drew attention to the way in which the scope of a review may vary according to the circumstances of the case. At paragraph 96, he said:

"Submissions to the effect that an appeal hearing should be a rehearing are often motivated by the belief that only thus can sufficient reconsideration be given to elements of the decision of the lower court. In my judgment, this is largely unnecessary given the scope of a hearing by way of review."

45. After seeking to identify the essence of a rehearing, May LJ concluded at paragraph 98:

"Thus, in so far as 'rehearing' in r.52.11(l)(b) may have something of a range of meaning, at the lesser end of the range it merges with that of 'review'. At this margin, attributing one label or the other is a semantic exercise which does not answer such questions of substance as arise in any appeal."

46. Although the context of these observations is far removed from that of a claim for unfair dismissal before an ET, these observations do serve to underline the pointlessness of seeking to determine whether an internal appeal process was a rehearing or a review. In our view, it would be quite inappropriate for an ET to attempt such categorisation. What matters is not whether the internal appeal was technically a rehearing or a review but whether the disciplinary process as a whole was fair.
47. Although, as we have said, both Whitbread and Adivihalli contain a correct statement of the law, it would be advisable for Whitbread not to be cited in future. The use of the words 'rehearing' and 'review', albeit only intended by way of illustration, does create a risk that ET's will fall into the trap of deciding whether the dismissal procedure was fair or unfair by reference to their view of whether an appeal hearing was a rehearing or a mere review. This error is avoided if ET's realise that their task is to apply the statutory test. In doing that, they should consider the fairness of the whole of the disciplinary process. If they find that an early stage of the process was defective and unfair in some way, they will want to examine any subsequent proceeding with particular care. But their purpose in so doing will not be to determine whether it amounted to a rehearing or a review but to determine whether, due to the fairness or unfairness of the procedures adopted, the thoroughness or lack of it of the process and the open-mindedness (or not) of the decision-maker, the overall process was fair, notwithstanding any deficiencies at the early stage.
48. In saying this, it may appear that we are suggesting that ET's should consider procedural fairness separately from other issues arising. We are not; indeed, it is trite law that section 98(4) requires the ET to approach their task broadly as an industrial jury. That means that they should consider the procedural issues together with the reason for the dismissal, as they have found it to be. The two impact upon each other and the ET's task is to decide whether, in all the circumstances of the case, the employer acted reasonably in treating the reason they have found as a sufficient reason to dismiss. So for example, where the misconduct which founds the reason for the dismissal is serious, an ET might well decide (after considering equity and the substantial merits of the case) that, notwithstanding some procedural imperfections, the employer acted reasonably in treating the reason as a sufficient reason to dismiss the employee. Where the misconduct was of a less serious nature, so that the decision to dismiss was nearer to the borderline, the ET might well conclude that a procedural deficiency had such impact that the employer did not act reasonably in dismissing the employee. The dicta of Donaldson LJ in Union of Construction, Allied Trades and Technicians v Brain [1981] IRLR 224 at page 227 are worth repetition:

"Whether someone acted reasonably is always a pure question of fact. Where parliament has directed a tribunal to have regard to equity -and that, of course, means common fairness and not a particular branch of the law -and to the substantial merits of the case, the tribunal's duty is really very plain. It has to look at the question in the round and without regard to a lawyer's technicalities. It has to look at it in an employment and industrial relations context and not in the context of the Temple and Chancery Lane."

Application to the Present Case

49. We have said that, in our judgment, the EAT was correct in holding that there was no real difference between Whitbread and Adivihalli. However, the EAT also said that the ET had applied the law correctly and in holding that the dismissal was unfair had reached a conclusion that was properly open to it. We cannot agree. It appears plain to us from the passages of the ET's decision cited in paragraphs 13 and 14 above, that the ET fell into the very trap which Whitbread had left for them. Instead of applying the statutory test, the ET asked itself whether the appeal hearing had been a review or a rehearing. It was plainly influenced by the fact that Ms Sener herself described it as a review. That, in our judgment, was an obvious error. Given that it is difficult even for lawyers to tell a review from a rehearing, the opinion of a lay person on the subject cannot in our view be of much significance.
50. Having found that the appeal hearing was a review, the ET held that the decision was unfair without assessing the fairness of the disciplinary process as a whole. They do not appear to have examined the appeal hearing, its procedural fairness, its thoroughness, or the open-mindedness of the decision-maker. In the decision there is no reference to the fairness of the appeal hearing. The ET does not express any view as to whether Mr Taylor had a full opportunity to explain his actions. The ET made a passing reference to the thoroughness of the appeal hearing but then said only that it was a review, as if adequate thoroughness could not be consistent with a review. Nowhere in its decision does the ET describe what happened at the review; or mention anything that was said. The only description is that given at paragraph 5.17 which we set out above. The ET implied that it had found that Ms Sener's mind had not been open to the possibility of reaching a different conclusion by reference to her statement where she had said that Mr Taylor had brought forward no new explanation or information that would change the conclusions of the investigatory hearing. As a result she had had no choice but to uphold the decision to dismiss. The ET seems to have taken that as meaning that Ms Sener's mind was not open. However, it concerns us that the ET should have reached that conclusion without apparently considering Ms Sener's oral evidence before them or the written notes which showed what she had said during the appeal hearing. After the passage in paragraph 17, where the ET said that the premise of Ms Sener's appeal hearing was to review and not rehear the original dismissal decision, they said only this:

"18. The Tribunal is aware that some of the answers that the applicant gave at the investigatory hearing were damaging to his case and we note that the allegations against him were serious. However, the applicant's lack of understanding and informed participation at the disciplinary hearing was such as to render his dismissal unfair and these matters are relevant only for remedy not liability."

51. It seems to us that in reaching their decision, the ET focused almost entirely on their conclusion that the appeal hearing had been a review. Nowhere do we see any overall assessment of the fairness of the procedures as a whole. Nor do we see any attempt to answer the statutory question by reference to the sufficiency of the employer's reason for the dismissal, namely Mr Taylor's misconduct. In our view, the ET has separated procedural unfairness from the misconduct instead of looking at the statutory test in the round.
52. For those reasons we conclude that the decision of the ET on unfair dismissal cannot stand. It is well established that, where the EAT or Court of Appeal finds that the ET has misdirected itself in law, it should remit the case for rehearing unless it is satisfied that, notwithstanding the error, the conclusion of the ET was unarguably right: see Dobie v Burns International Security Services (UK) Ltd [1984]ICR 812. Ms Gill was confident that, if we were to conclude that there had been an error, we would be able to conclude that the ET had reached the right decision on the facts. Mr Lynch submitted that we would have to remit the case for rehearing.
53. In order to reach a conclusion on this issue, it is necessary to examine the written material which was available to the ET although not referred to in the decision. This comprised various items of correspondence and the records of both hearings.
54. We observe that when he was suspended from duty on 26th September 2003, Mr Taylor received a letter in which the allegations against him were set out. In that letter, he was told that there was to be an investigatory meeting on the following Monday and that if it was felt after that that further action was justified, there would be a disciplinary meeting later that morning. At that meeting, he had the right to be accompanied. He was warned that the allegations were regarded as serious and could, if proved, lead to his dismissal.
55. The notes of the investigatory meeting show that Mr Taylor was asked in writing about his understanding of the company's policy on access to other peoples' computers. He was asked for his account of what had happened and he provided a long written explanation. In essence, he admitted that he had forwarded the 3 e-mails to his own terminal and that one was personal and one was unrelated to the task in hand. His explanation was that he was making a genuine effort to get to the bottom of Ms Campbell's database problems.
56. The notes of the first disciplinary hearing show that the meeting was short and Mr Taylor said very little. There was no further discussion about the allegations themselves. After he had been told that he had been dismissed, Mr Taylor began to explain that he had been under stress and that losing his job would put him in a very difficult position because of his disability. This led to a brief discussion about whether he had mitigating factors to advance and if so, they should be advanced at the appeal.
57. Mr Taylor wrote a letter setting out the basis of his appeal. His first complaint was that there had been no interpreter at the first hearing. He reiterated that he had acted at all times in good faith in an attempt to solve Ms Campbell's difficulties. He followed up this letter with another in which he made proposals for the practical arrangements for representation and the presence of an interpreter at the appeal hearing.
58. Before the appeal hearing, a written submission was put in by or on behalf of Mr Taylor.
59. The appeal hearing began at about 10am with a discussion of the difficulties that Mr Taylor had had in understanding what had been going on during the early stages of the disciplinary process. Ms Davies spoke on Mr Taylor's behalf. The meeting then turned to the allegations themselves and Mr Taylor's explanation for his actions. Again Ms Davies spoke for him but he also spoke for himself at times. Ms Sener asked Mr Taylor a number of questions about the detail of what he had done and why. At times she appeared to be challenging the feasibility of his explanations. At one stage, Ms Sener expressed the view that what Mr Taylor had done amounted to a breach of trust. The submission was then made that Mr Taylor had been under pressure; he had been stupid but had acted with good intentions. He had learned his lesson. There was reference to an occasion in 2002 when Mr Taylor had received a warning for accessing the e-mails of another member of staff without authority. Although the correct disciplinary procedure had not been followed and the warning given on that occasion had apparently expired, the point was being made that Mr Taylor should have learned his lesson on the first occasion.
60. The discussion then moved to the investigatory meeting. Ms Davies said that Mr Taylor's written answers had not properly expressed what he had wanted to say. Ms Sener observed that what he had said in writing correlated with what had just been put forward on the appeal and Ms Davies agreed. Further discussion of the issues followed. There was then a short adjournment apparently for the benefit of the interpreter after which there was a detailed discussion about Mr Taylor's reasons for accessing the fuel database. At 12.30pm, the interpreter had to leave. There was discussion about whether the hearing should be adjourned until the interpreter could attend again or whether it should continue with Ms Davies acting as interpreter as well as representative. Mr Taylor asserted that he wished to continue. Ms Sener then suggested that they should go through in turn every written answer given at the investigatory meeting so that Mr Taylor could explain what it was he had not then said that he wished he had said. That was done and eventually Mr Taylor confirmed that he had now explained everything that he wished to explain. The meeting closed at 14.05.
61. In the light of this summary, it could not, in our view, possibly be said that the ET's conclusion was plainly right on the facts, notwithstanding their error of law. An ET considering the whole of this procedure might well have come to the conclusion that, in the light of the serious nature of the misconduct, the employer had acted reasonably in treating the misconduct as a sufficient reason to dismiss. It follows that, in our view, this case will have to be remitted for rehearing on the issue of unfair dismissal.
62. In a letter to the Court written after the hearing, Mr Lynch submitted that, if the appeal on unfair dismissal were to be allowed, remission should be to a differently constituted tribunal. He did not give reasons for so submitting but it seems to us that his reasons are obvious. The ET's findings of fact demonstrate that they have reached the firm conclusion that the dismissal was unfair. Ms Gill responded to Mr Lynch's letter by submitting that, if we were minded to remit the case, it should go back to the same tribunal. All the evidence had been given. The ET would be able to reach fresh conclusions without hearing further evidence. To remit to another tribunal would lead to unwarranted expense. The expense in this case is greater than usual because of the facilities which have to be provided in order that Mr Taylor can follow the proceedings.
63. We entirely accept that it would be desirable if a second hearing of this claim could be avoided. However, we do not think that justice could be seen to be done if this matter were to be remitted to the same tribunal. Where an ET has reached such a clear conclusion, it is expecting too much of them to ask them to go back and to reconsider that conclusion with an open mind. With regret, we would direct that the case should be remitted to a differently constituted tribunal.

Ground Two: The Reason for the Dismissal (The Cross-Appeal)

64. As we have already said, the ET found that the claim under DDA section 5(1) failed because the material reason for the dismissal was his misconduct and was not related to Mr Taylor's disability. The EAT reversed this decision, saying that the finding that the dismissal was for misconduct under the ERA 1996 was not inconsistent with a finding that the dismissal was for a reason 'which related to' Mr Taylor's disability. They accepted that his dismissal had been for misconduct but said that the decision to dismiss was partly based on his failure to give an adequate explanation. That, in the view of the EAT, was a reason which related to Mr Taylor's disability. The issue for this court is which of the tribunals was right.
65. The statutory question posed by section 5(1) of DDA 1995 must be asked against the background of the statutory provision that it is unlawful for an employer to discriminate against a disabled employee by dismissing him. Section 5(1) defines discrimination by providing that an employer discriminates against a disabled person if, for a reason which relates to that person's disability, he treats him differently than he treats or would treat others to whom that reason does not or would not apply and he cannot show that the treatment in question was justified. So the first question that the ET had to answer was: did the employer dismiss Mr Taylor for a reason related to his disability? If the answer were 'yes', a second question would have to be answered, namely: in so doing did the employer treat Mr Taylor differently from the way in which he treated non-disabled employees or would treat a non-disabled employee? If the answer to that question were yes, a third question would arise, namely: can the employer justify such different treatment? However, if the first question were to be answered in the negative, that would be the end of the matter.
66. Mr Lynch submitted that the ET had approached this issue correctly. They had focussed on the reason for the dismissal which was present in the employer's mind. That reason was misconduct. Mr Lynch drew our attention to the decision of the EAT in London Clubs Management v Hood [2001] IRLR 719. In that case, Mr Hood was absent from work due to his disability. His employer refused to pay sick pay. He alleged that he had been treated less favourably than other employees for a reason related to his disability. The EAT held that he had not been treated less favourably; but had been treated in the same way as other employees. The employer had introduced a policy not to pay sick pay. That policy had been applied in the same way across the board. The fact that the reason underlying the applicant's absence was his disability did not mean that his sick pay had been stopped for a reason related to his disability. His sick pay had been stopped because of the employer's policy. Mr Lynch submitted that this case was analogous to the present case.
67. Ms Gill submitted that the words 'for a reason related to his disability' were intended to be widely construed. She submitted that the leading authority on the interpretation of s. 5(1) is Clark v TDG Ltd t/a Novacold [1999] IRLR 318. Mr Clark suffered an injury at work. He was paid sick pay for 16 weeks, and then his employer obtained a medical report stating that it was not possible to say when he would be able to return. The employer dismissed him because, in view of his medical condition, he would be unable to resume work within a reasonable time. He was 'no longer capable of performing the main functions of his job'. The tribunal found that Mr Clark had been dismissed 'for a reason which related to his disability' but that he was not treated less favourably than the employer would treat others absent from work for the same period of time but for non-disablement reasons. There was therefore no liability under section 5(1).
68. The EAT allowed the appeal and remitted the case for rehearing and the matter then went to the Court of Appeal. The issue before the court was not whether Mr Clark had been dismissed for a reason related to his disability; he plainly had been. The issue was whether the employer had discriminated against him. In our view, helpful though the judgment of Mummery LJ is on questions of interpretation of the then sections 4, 5 and 6 of the DDA 1995, it does not (save in one small respect) give any assistance on the issue before this court. The one small respect is that Mummery LJ observed that the first question posed by the statutory provisions under section 4 and section 5(1) (Was the applicant dismissed for a reason which relates to his disability?) was a question of fact. In the case then before the court, the answer to that question was obviously and indisputably in the affirmative. The rest of the judgment related to the more difficult questions arising as a consequence.
69. Ms Gill also submitted that the argument advanced by Mr Lynch, that the ET had correctly focussed on the question of what reasons were present in the employer's mind, was a new point of law which had not been addressed below, and that we ought not to permit Mr Lynch to argue this point. We cannot accept this. This Court cannot shut out consideration of what is the right approach to a question of statutory construction. Ms Gill submitted that, in any event, Mr Lynch's argument was wrong. An employer could dismiss an employee for a reason related to his disability without knowing that he had a disability. She submitted that H. J. Heinz Co Ltd v Kenrick [2000] IRLR 144 EAT was authority for this proposition.
70. However, examination of that case shows that, at the time of the dismissal, the employer knew that the employee had been off sick for nearly a year and that he believed that his condition was chronic fatigue syndrome. The employer dismissed the employee because he had been off work so long and no date could be given when he would be fit to return. After the dismissal, the diagnosis was confirmed. When the employee claimed that he had been dismissed for a reason related to his disability, the employer sought to defend the claim on the basis that it did not know that the employee's condition was a disability within Schedule 1 to the DDA 1995. That did not matter, said the ET and the EAT. The employer knew about the condition and the absence it caused. That was the reason for the dismissal. Once the diagnosis had been confirmed, it was realised that the employee's condition was a disability within the Act. The employer had dismissed the employee for a reason related to his disability and it mattered not that the employee had not known at the time of the dismissal that the illness amounted to a disability within the Act. Far from supporting Ms Gill's submission, it seems to us that this case supports Mr Lynch's argument that the disability-related reason must be present in the employer's mind. In Heinz v Kenrick, the employer certainly did have in mind a reason related to the employee's disability, namely his long term sickness absence.
71. In support of her submission that in order to demonstrate that he had been dismissed for a reason related to his disability, it was not necessary to show that the disability-related reason was present in the employer's mind, Ms Gill sought to rely on the case of R v Birmingham City Council, ex parte EOC [1989] AC 1155. That case is authority for the proposition that, in order to show discrimination on the ground of gender under the Sex Discrimination Act 1975, it is not necessary to show an intention to discriminate. The Council had provided more grammar school places for boys than for girls, and plainly it knew that it had done so. It had not intended to discriminate against the girls but in fact it had done so. Ms Gill submitted that to have something in mind 'erred towards requiring an element of intention'. We cannot agree. Intention and knowledge are different, as the Birmingham case shows. Intention and 'having in mind' are also different.
72. In our view, the argument accepted by the EAT and advanced before us by Ms Gill is fallacious. These provisions of the DDA are concerned with discrimination by an employer. Discrimination requires that the employer should have a certain state of mind. In the context of the DDA, an employer cannot discriminate against the employee unless he treats the disabled employee differently for a reason (present in his, the employer's mind) which is related to the employee's disability. It may be that in some cases an employer might have more than one reason for dismissing an employee; one reason might be misconduct and there might also be present in the employer's mind another reason which does relate to his disability such as the fact that the employee took a lot of time off work or had a lower productivity than other employees. The employer might decide to dismiss the employee for those combined reasons. In such a case, we would say that, if the disability-related reason had a significant influence on the employer's decision, that would be enough to found the conclusion that the dismissal was for a reason related to the employee's disability. We would add that it would be open to an ET to find that the employer's decision had been affected by the disability-related reason even though the employer had not consciously allowed that reason to affect his thinking. We would certainly accept that an employer could have an innate prejudice against disabled people just as some are prejudiced on the grounds of race or gender. What is important is that the disability-related reason must affect the employer's mind, whether consciously or subconsciously. Unless that reason has affected his mind, he cannot discriminate.
73. Here, the contributory reason relied on by Mr Taylor is not said to have affected the employer's mind. It is said that Mr Taylor's inability (on account of his deafness) to explain his conduct, contributed to his dismissal. So it may have done, as a matter of causation. It may be that, if Mr Taylor had not been deaf or had had an interpreter present at the first disciplinary hearing, he might not have been dismissed. But that is not the issue under section 5(1). The issue is whether the employer had a disability- related reason in his mind when he dismissed the employee. There was no evidence that this employer had; indeed that was never suggested.
74. We would hold that the ET was right to dismiss Mr Taylor's claim that he had been dismissed for a reason related to his disability. It follows that the EAT erred in overturning the ET's decision. We would allow the appeal against the EAT's finding on the cross-appeal and restore the order of the ET.

Conclusion

75. For the reasons we have set out we allow OCS's appeal in relation both to the finding of unfair dismissal and in respect of the issue of disability discrimination under s. 5(1) of the 1995 Act. In respect of the claim for unfair dismissal, we direct that the case be remitted to a differently constituted employment tribunal.