England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM EMPLOYMENT APPEAL TRIBUNAL
HIS HONOUR JUDGE McMULLEN QC
UKEAT/0589/06/DM

		Royal Courts of Justice Strand, London, WC2A 2LL
		17/01/2008

COURT RULING

Lord Justice Pill :

1. This is an appeal against the judgment of the Employment Appeal Tribunal ("EAT"), His Honour Judge McMullen QC presiding, allowing an appeal from a decision of an Employment Tribunal held at London (South) registered on 27 June 2006. The case turns upon the construction of paragraph 2(2) of Schedule 1 to the Disability Discrimination Act 1995 ("the 1995 Act").

2. Ms Elizabeth McDougall, the respondent to the present appeal, applied for a position as a database assistant at Richmond Adult Community College ("the appellants"). She was offered and accepted the position, subject to satisfactory medical clearance and references. Having received a medical report, the appellants purported to withdraw the offer on the ground that medical clearances had not been obtained. No challenge is made to the finding of the Employment Tribunal that there was a binding contract of employment which the appellants breached "when they renounced her offer of employment". The respondent was held entitled to damages limited to one month's notice pay.

3. The contentious issue is the other finding of the Employment Tribunal, reversed by the EAT, that the respondent "was not disabled and her claims for disability discrimination fail and are dismissed". The Employment Tribunal held that the respondent's health problems did not amount to a disability within the meaning of the 1995 Act.

4. Section 1(1) of the 1995 Act provides:

   "Subject to the provisions of Schedule 1, a person has a disability for the purposes of this Act if he has a physical or mental impairment which has a substantial and long term adverse effect on his ability to carry out normal day-to-day activities".

   Paragraph 2 of Schedule 1 provides:

   "(1) The effect of an impairment is a long-term effect if –

   (a) It has lasted at least 12 months;

   (b) The period for which it lasts is likely to be at least 12 months; or

   (c) It is likely to last for the rest of the life of the person affected.

   (2) Where an impairment ceases to have a substantial adverse effect on a person's ability to carry out normal day-to-day activities, it is to be treated as continuing to have that effect if that effect is likely to recur".

5. Section 4(2)(d) of the 1995 Act provides that it is unlawful for an employer to discriminate against a disabled person by dismissing him, or subjecting him to any other detriment. Section 17A of the Act provides a remedy against a person who has discriminated against him in a way which is unlawful under the Act. That is by way of a complaint to an Employment Tribunal, whose powers include making a declaration as to the rights of the complainant and ordering the employer to pay compensation to the complainant.

6. The Employment Tribunal found that the respondent suffered from a mental impairment; persistent delusional disorder, with a differential diagnosis of schizo-affective disorder. In their opinion, it did not have a substantial adverse effect on her ability to carry out normal day-to-day activities within the meaning of Section 1 of the 1995 Act. That finding was reversed by the EAT and there is no appeal to this court against the decision of the EAT on that point. The effect of paragraph 2(2) above on the present facts remains in issue.

7. Between 1 November 2001 and 25 February 2002, the respondent had been admitted to hospital for treatment under section 3 of the Mental Health Act 1983. She was then discharged into the care of Dr Megan Roberts, consultant psychiatrist.

8. The Employment Tribunal held [I have retained their description of the respondent as the claimant]:

   "52. Even if we are wrong on the issue of normal day-to-day activities, in our view the mental impairment did not have a substantial long effect as defined by Schedule 1 para 2 of the DDA, 1995.

   53. The evidence before us demonstrated that the Claimant had no recurrence of the schizo-affective disorder after her discharge in February 2002, the episode having lasted at most for eight months. The Claimant could not point to any evidence (medical or otherwise) to demonstrate that between February to June 2005 she was likely to suffer a recurrence. [The Tribunal must mean a disabling recurrence]. The persistent delusional disorder is said to be long standing and may be life long by the medical experts. However, this is not the same as saying that it is likely to reoccur. There being no likelihood of a recurrence as at the date of the acts complained of the Claimant has not shown that there it was more probable than not that any mental impairment which produced a substantial adverse effect was likely to last for 12 months. In addition, Dr Roberts' evidence (p 82) makes it clear that a recurrence was unlikely".

   The reference to Dr Roberts is to a letter dated 23 May 2005 from Dr Megan Roberts, the respondent's treating consultant psychiatrist. Dr Roberts stated:

   "It is my opinion that Mrs McDougall is fully able to return to work and I have no concerns about her mental health relating to this".

   In the event, there was what the EAT described as recrudescence of the condition in August 2005 and a readmission to hospital under the Mental Health Act in December 2005.

9. I am not entirely comfortable with the inter-relation of the several findings in this case, but the parties are agreed that the single point for determination by this court is the meaning to be given to the expression "if that effect is likely to recur" in paragraph 2(2) of Schedule 1 to the 1995 Act. In reversing the finding of the Employment Tribunal, the EAT stated, at paragraph 29:

   "The question is: what is the likelihood at the time of the statutory tort of a recurrence of the illness, given what is known at the time of the hearing".

   The EAT put the point in their Summary of the decision:

   "In determining whether or not a condition is likely to recur for the purposes of the assessment of disability under the 1995 Act, it is relevant to consider not only those matters extant at the date the tort was committed, but those occurring up to the date of the hearing . . . On the issue of whether the [respondent's] mental impairment would be likely to recur at the date of her rejection for a job in 2005, it was relevant to consider that it had in fact recurred when she was recommitted under the Mental Health Act . . ."

   At paragraph 33, the EAT added:

   "What is being assessed is the mental impairment as at the date of the statutory tort seen in the light of subsequent events . . . It is unattractive and possibly inoperable for them [Employment Tribunals] to be expected to ignore the reality of what has occurred so as to found a judgment on what might have occurred".

10. The EAT also stated, at paragraph 35, that "the very nature of the diagnosis makes it logical to regard the condition as likely to recur" and that "in April 2005 it was a feature of this persistent condition that it was highly likely to recur". However, no challenge is made to the finding of fact of the Employment Tribunal, as the fact finding tribunal, in paragraph 53 of their determination set out above. I repeat that it is the single issue of construction that the court is asked to determine.

11. On behalf of the appellants, Mr Ohringer submits that the wording of paragraph 2(2) of Schedule 1 to the 1995 Act is clear. Where a person formerly had an impairment which had a substantial adverse effect on that person's ability to carry out normal day-to-day activities but is now able to carry out those activities so that there is no current adverse effect, the decision maker, the employer, has to decide whether that effect is likely to recur. The likelihood has to be considered on the basis of circumstances existing at the date of that decision, which is the date of the alleged discriminatory act on which the claim is based, it is submitted. The employer is required to make his assessment on that date, an assessment based on what is likely in the future. What happens after that date cannot be relevant to the merits of the decision based on that assessment. The duty of the Employment Tribunal is to consider whether the employer, by his decision, has committed a discriminatory act and can do so only on the basis of material available at the time the act was performed.

12. On behalf of the respondent, Mr Petts submits that the only true construction of the paragraph consistent with the purpose of the 1995 Act is for the Employment Tribunal to consider all relevant evidence about the impairment which emerges up to the date of the hearing before them and to assess what was likely to occur in the light of what has occurred. If there has been a recurrence, that must be taken into account regardless of whether or not at some earlier time the position appeared, falsely in so far as the Tribunal can now discern, to have been different.

13. The respondent relies, as did the EAT, on the principle in Bwllfa and Merthyr v Pontypridd Waterworks Company [1903] AC 426. Lord Macnaghten stated, at page 431:

    "In order to enable the arbitrator to come to a just and true construction it is his duty I think to avail himself of all information at hand at the time of making his award which may be laid before him. Why should he listen to conjecture on a matter which has become an accomplished fact? Why should he guess when he can calculate? With the light before him why should he shut his eyes and grope in the dark?"

14. In the context of the assessment of damages, that principle has frequently been applied (Golden Strait Corporation v Nippon Yusen [2007] UKHL 12, Curwen v James [1963] 1 WLR 748, both cited by the EAT). In Golden Strait, Lord Bingham of Cornhill, while in a minority on its application, described the principle in this way, at paragraph 12:

    "It is that where the court making an assessment of damages has knowledge of what actually happened it need not speculate about what might have happened but should base itself on the known facts. In non-judicial discourse the point has been made that you need not gaze into a crystal ball when you can read the book."

15. The present issue has been considered in several cases in the EAT, with differing outcomes. The EAT in the present case followed the decision in Greenwood v British Airways Plc [1999] ICR 969, His Honour Judge Peter Clark presiding. The Tribunal stated:

    "In our judgment the tribunal fell into error by considering the question of disability only as at the date of the alleged discriminatory act. We are quite satisfied, as the Guidance makes clear, that the tribunal should consider the adverse effects of the applicant's condition up to and including the industrial tribunal hearing. By disregarding its findings of fact as to the actual recurrence of the adverse effects of the applicant's condition which led him to go off work by reason of depression on 16 August 1997 and to continue off work until the date of the tribunal hearing the tribunal's approach was fatally flawed."

    In Barker v Westbridge International Limited (unreported 8 June 2000), Judge Peter Clark again presiding, the Tribunal, by a majority, adopted the same approach to the word "likely" in paragraph 2(1)(b) of Schedule 1.

16. On the other hand, in Latchman v Reed Business Information Limited [2002] ICR 1453, the EAT, Lindsay J (President) presiding, considered the expression "likely to last" in paragraph 2(1)(b) and stated, at paragraph 17:

    "It is always tempting to accord, and is often appropriate, when it is charged with finding out what at some earlier date the future would then have seem to hold, to have regard to what the future in fact came to pass to be, as, by the date of the hearing, will have sometimes come to be the case".

    Lindsay J referred to the Bwllfa principle and continued:

    "But both the terms of Schedule 1, paragraph 2(1)(b), and the opening words of paragraph B8 of the Guidance emphasise that here what has to be examined is the existence or not of a likelihood. The question is not whether the impairment in fact lasted at least 12 months (as would very often, given inescapable delays in arranging hearings, be capable of being easily seen by looking backwards from the date of the hearing) but whether the "period for which it lasts is likely to be at least 12 months". Although the latter part of the first sentence of paragraph B8 is unhelpful as guidance, it is not, in our view, intended to displace the otherwise proper construction of paragraph 2(1)(b), which the present tense "is likely" assists towards, namely that the likelihood falls to be judged as it currently was, or would have seemed to have been, at the point when the discriminatory behaviour occurred. The latter part of paragraph B8 (taking account of the typical length rather than the actual length of an effect as it has transpired to be) emphasises that it is not what has actually later occurred but what could earlier have been expected to occur which is to be judged.

    Mr Harris has sought to persuade us that Greenwood v British Airways plc [1999] ICR 969 is to the contrary, in particular at p 977E—F. It is clear that in some respects that paragraph is not to the contrary, but to the extent that it is we must respectfully differ from it".

17. In Swift v Chief Constable of Wiltshire Constabulary [2004] IRLR 540, His Honour Judge Richardson presiding, the EAT upheld the decision of an Employment Tribunal that the claimant had not shown that her disability was likely to recur. However, at paragraph 30 His Honour Judge Richardson stated:

    "In considering whether during a particular period in the past, a substantial adverse effect was likely to recur a tribunal is of course entitled to look at the evidence of what occurred during that period. In particular, if it is said that an effect was likely to recur because certain circumstances would be likely to trigger it, a tribunal is entitled to consider whether those circumstances occurred during the period and whether the substantial adverse effect did recur. Such evidence is not necessarily conclusive. It is for the tribunal to assess".

    I have some difficulty in deciding upon the impact of that statement in present circumstances. The emphasis appears to be on events which occurred during a particular period in the past and not events between that period and the date of the hearing.

18. In Spence v Intype Libra Limited, unreported 27 April 2007, the decision of the EAT turned on whether the claimant was disabled. The EAT did, however, express its views on the present issue, in the context of paragraph 2(1)(b) of Schedule 1, while acknowledging that it was not strictly necessary to do so. Having referred to the Secretary of State's Guidance ("the Guidance"), to which I will refer later, Elias J stated:

    "We recognise that in practice it may be difficult for a tribunal to disregard evidence which shows how the medical position did in fact progress. But it is important that they should do so. Logically, subsequent events cannot be material. If an employer dismisses someone who has a disability likely to last 12 months it cannot alter the position if the employee shortly thereafter makes an unexpected recovery before the 12 months has elapsed; similarly, an employee who was not disabled when the alleged unlawful conduct occurred cannot retrospectively be found to have been disabled at that time because he takes an unexpected turn for the worse. If, contrary to our view, subsequent evidence has any materiality at all, it can only be to confirm or reinforce a conclusion about disability which the tribunal has already reached by relying on the evidence which would have been available at the relevant date".

19. Mr Petts relies on paragraph B8 of the Guidance referred to in Greenwood and in Latchman. Tribunals must, by virtue of Section 3(3) of the 1995 Act, have regard to it. Paragraph B8, as operative in April 2005, provided:

    "In assessing the likelihood of an effect lasting for a period, account should be taken of the total period for which the effect exists. This includes any time before the discriminatory behaviour occurred as well as time afterwards. Account should also be taken of both the typical length of such an effect on an individual, and any relevant factors specific to this individual (for example, general state of health, age)."

    In considering paragraph 2(1)(b) of Schedule 1, the Guidance may appear to provide that account be taken of events after the discriminatory behaviour occurred. In Latchman, Lindsay J stated that the Guidance is not intended to displace the otherwise proper construction of the paragraph. Lindsay J also referred to the expression "typical length" in paragraph B8, an expression relevant if what is involved is a prediction. In Latchman, Elias J agreed, at paragraph 28, with Lindsay J:

    "We respectfully agree; the Guidance was wrong in this respect. Whilst there is a duty to take it into account, as s3 of the Act makes clear, it must not be followed where it is inconsistent with the Act itself. We note that the guidance has been altered in a new version of the Guidance which took effect as from 2006 (which was therefore not in force at the date of this dismissal); the crucial words "as well as time afterwards" found in the original B8 have been omitted: see para C3. No doubt this was intended to reflect the decision in the Latchman case".

20. Both parties have sought to argue that the construction favoured by the other is unfair to one or other party, or is unworkable. I do not consider that the examples given help to resolve what in my judgment is a question of statutory construction.

21. The statute plainly contemplates that, for a disability within the meaning of the Act to exist, an impairment having a "long-term adverse effect" must be established (Section 1 of the 1995 Act). The starting point is to ask whether the effect of the impairment has lasted at least 12 months (Schedule 1, paragraph 2.1(a)). Sub-paragraphs (b) and (c) of paragraph 1(2) introduce a predictive element. It is not necessary to establish that the effect has lasted for 12 months if it is established that it is likely to last for at least 12 months or for the rest of the life of the person affected (no doubt to deal with terminal conditions).

22. Paragraph 2(2) provides a further opportunity to establish a long-term effect. Where the effect of the impairment has ceased, it may still be treated as having a long-term effect if the effect is "likely to recur". By the use of the word "likely" in each of those situations a predictive element is introduced into the test of whether the effect of an impairment is a long-term effect. The word should bear the same meaning in paragraph 2(2) as in paragraph 2(1)(b).

23. The 1995 Act makes unlawful discriminatory acts of employers when making decisions about employees. Employers must not discriminate against employees who are disabled within the meaning of the Act. If they are to avoid the sanctions which may result from such discrimination, they must not discriminate against disabled people. They must first decide whether the employee is disabled within the meaning of the Act. They do that by applying a series of tests which, in an appropriate case, includes that in paragraph 2(2) of Schedule 1. That involves a prediction on the available evidence as would, in a different situation, a decision under paragraph 2(1)(b) or (c). Other decisions which employers are required to take to avoid falling foul of the Act, for example, the duty to make adjustments under Section 4A of the Act, do not arise for decision in the present case.

24. The decision, which may later form the basis for a complaint to an Employment Tribunal for unlawful discrimination, is inevitably taken on the basis of the evidence available at that time. In my judgment, it is on the basis of evidence as to circumstances prevailing at the time of that decision that the Employment Tribunal should make its judgment as to whether unlawful discrimination by the employer has been established. The central purpose of the Act is to prevent discriminatory decisions and to provide sanctions if such decisions are made. Whether an employer has committed such a wrong must, in my judgment, be judged on the basis of the evidence available at the time of the decision complained of. In reaching that conclusion, I have had regard to the Guidance. I agree with the conclusion of Lindsay J and Elias J and with their analysis of the Guidance.

25. The situation is quite different from an assessment of damages when a wrong has been established. The Tribunal assessing the extent of the victim's loss and damage should do so on the basis of the evidence available at the time of assessment. Whether a wrong has been committed must be judged on the basis of the evidence available at the time of the act alleged to constitute the wrong. The predictive exercise may be a difficult one. Predictive exercises usually are.

26. Mr Petts makes the point that it is necessary to make provision for the possibility of recurring episodes of the effect of an impairment. That is so and what paragraph 2(2) does under a procedure which is, in my view, plain. Mr Ohringer accepts that, where a recurrence has occurred, paragraph 2(1) read with paragraph 2(2), has the effect of "back-filling" the period since the last occurrence for the purposes of paragraph 2(1) so that the entire period counts towards the relevant period. That does not, in my judgment, bear upon the date at which the likelihood of recurrence is to be assessed for the purposes of paragraph 2(2). It is fundamental that the question whether a wrong has been committed be judged by the circumstances existing at the date of the act or acts alleged to constitute the wrong.

27. For the reasons given, I would allow this appeal.

    Lord Justice Sedley :

28. I agree.

    Lord Justice Rimer :

29. I have read in draft and agree with Pill LJ's judgment. I too would allow the appeal.

30. The question before the employment tribunal was whether, at the time of the commission of the allegedly discriminatory act, the respondent was a "disabled person" for the purposes of section 1 of the 1995 Act. On the facts, she was only such a person if at that time her impairment was "likely to recur" within the meaning paragraph 2(2) of Schedule 1. I will call that time "the relevant time".

31. Whether her impairment was so "likely to recur" required an assessment of the evidence available as at the relevant time. That was the only evidence to which the employer could have regard in determining whether the respondent was a disabled person who might require special consideration. It was also that evidence to which the employment tribunal had to have regard in considering the same question. The judgment of the employment tribunal shows, at [53], that they correctly directed themselves to have regard to the likelihood of recurrence as at the relevant time. Their conclusion was that, as at that date, there was no such likelihood. It followed that the respondent was not a disabled person.

32. The EAT reversed that conclusion because the employment tribunal did not, in considering the likelihood of recurrence as at the relevant time, also take into account the recrudescence of the respondent's condition in August 2005 and her re-admission into hospital in December 2005, both events post-dating the relevant time but pre-dating the hearing before the employment tribunal. The EAT's view was that the employment tribunal ought to have had regard not just to the evidence as at the relevant time but also to subsequent events that had occurred by the time of the hearing. They explained why in [33] of their judgment as follows:

    "We do not consider that to do so [that is, taking account of subsequent events] would visit a Respondent with retrospective liability. What is being assessed is the mental impairment as at the date of the statutory tort seen in the light of subsequent events. The House of Lords has now conclusively determined that the Bwllfa principle is capable of application in a range of circumstances outside commercial contracts. We are happy to import into the DDA Lord Bingham's 'sound approach in law as in life'. It directly applies to the Guidance, is not inconsistent with the statute and follows one EAT precedent. Employment Tribunals have to take a practical approach to the assessment of disability. It is unattractive and possibly inoperable for them to be expected to ignore the reality of what has occurred so as to found a judgment on what might have occurred."

33. I respectfully disagree with that reasoning. There is, first, no basis for the suggestion in the second sentence. Paragraph 2(2) is unambiguous in its language and is plainly focusing on the likelihood of recurrence as at the relevant time, a point not in dispute before us. It therefore requires a focus to be placed exclusively on evidence relating to the then likelihood of recurrence; and it provides no support for the suggestion that it is legitimate to answer the inquiry by taking subsequent events into account. There is, moreover, no justification for the suggestion that, in the context of that inquiry, reference can usefully be made to such events. The evidence relating to the relevant time either will, or will not, prove the likelihood of recurrence. If it does prove it, evidence of subsequent events is unnecessary and irrelevant. If it does not prove it, evidence of those events cannot fill the gap. That is because it is fallacious to assume that the occurrence of an event in month 6 proves that, viewing the matter exclusively as at month 1, that occurrence was likely. It does not. It merely proves that the event happened, but by itself leaves unanswered whether, looking at the matter six months earlier, it was likely to happen, a question which has to be answered exclusively by reference to the evidence then available. Whilst I agree with the EAT that employment tribunals have to take a practical approach to the assessment of disability, that does not entitle them to take account of irrelevant evidence; and the suggestion that in practice they will be unable to ignore the evidence of what has happened since the relevant time is unfounded. Tribunals often have to put out of consideration evidence that is irrelevant to their inquiry; it is the chairman's job to ensure that they do. If they answer the paragraph 2(2) question by reference to the evidence of subsequent events, they will be doing so by reference to irrelevant material; and unless only they would reach the same answer by considering only the evidence as at the relevant time, they will (contrary to the first sentence of the quoted paragraph) retrospectively be visiting the employer with a liability for disability discrimination for which he should not be held liable at all.

34. The EAT justified their approach by reference to the so-called Bwllfa principle, one deriving from the decision of the House of Lords in The Bwllfa and Merthyr Dare Steam Collieries (1891), Limited v. The Pontypridd Waterworks Company [1903] AC 426. The principle is a well-known one that applies in the field of the assessment of damages or compensation and is essentially to the effect that "where facts are available they are to be preferred to prophecies" (In re Bradberry, National Provincial Bank, Limited v. Bradberry [1943] 1 Ch 35, at 45, per Uthwatt J). Thus, although damages may formally fall to be assessed as at the date when the cause of action arose, the courts also have regard to events subsequently occurring which throw light on the realities of the assessment exercise. If, for example, the claimant widow in a fatal accident claim dies before the trial, the court will take account of that in assessing the damages. It will not work on the artificial basis, contrary to the reality, that they should be assessed by reference to her expectation of life at the date of the accident. The point of the principle is to ensure that awards of compensation are, so far as practicable, assessed in the light of known realities, with the objective of avoiding over-compensation or under-compensation Examples of its application are: Williamson v. John I. Thorneycroft & Co., Ld [1940] 2 KB 648; In re Bradberry, National Provincial Bank v. Bradberry [1943] 1 Ch 35; Curwen v. James and Others [1963] 1 WLR 748; Baker v. Willoughby [1970] AC 467, at 490H to 491B, per Lord Reid; Golden Strait Corporation v. Nippon Yusen Kubisha Kaisha [2007] UKHL 12.

35. The Bwllfa principle has no application to the question before the employment tribunal. It has no application in relation to issues of liability. Liability in this case turned on whether the respondent was a disabled person at the relevant time. That required a determination of the question whether, as at that date, her impairment was "likely to recur". That had to be answered exclusively by reference to evidence relating to the then likelihood of such recurrence. In short, the statute requires a prophecy to be made. It does not permit recourse to evidence as to subsequent events.

36. For these reasons I too would allow the appeal.
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    COURT RULING - Date: 31/01/2008
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37. The judgments of the court have been handed down. The successful appellants do not seek costs and there will be no order as to costs. The remaining issue is to whether the court should, as the respondent submits, remit the case for consideration by a differently constituted Employment Tribunal.
38. For the respondent, Mr Petts submits that the court, having found that the Employment Tribunal should make its judgment as to whether unlawful discrimination by the employer has been established on the basis of evidence as to circumstances prevailing at the time of the employers decision (paragraphs 24, 28 and 35), a remittal is required because in paragraph 53 of their decision (paragraph 8 of the judgment) the Tribunal referred to a letter from Dr. Roberts dated 23 May 2005, that is after 22 April 2005 when the employers made their decision.
39. This point should have been taken at the hearing but we are prepared to consider it. We are not prepared to order remittal. The Employment Tribunal's conclusion is stated in the last but one sentence of its paragraph 53. The subsequent reference to Dr Roberts, preceded by the expression "in addition", did not, in our view, qualify and was not intended to qualify the conclusion stated. The letter was, in our view, treated as no more than supportive of the conclusion just expressed.
40. It follows that the Order would be in the form submitted by the appellant:

(a) That the Appeal from the Employment Appeal Tribunal be allowed and the Judgment of the Employment Tribunal (London South), entered in the Register on the 27th day of June 2006, be reinstated.

(b) There be no Order as to costs.