Case No: A2/2010/3036

Neutral Citation Number: [2011] EWCA Civ 1516
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE EMPLOYMENT APPEAL TRIBUNAL
EAT (THREE JUDGES)
REF: UKEAT024210DM
Royal Courts of Justice
Strand, London, WC2A 2LL

Date: 08/12/2011
Before:

LORD JUSTICE MAURICE KAY, 
Vice President of the Court of Appeal, Civil Division

LORD JUSTICE RIX
and
LORD JUSTICE RIMER
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Between:

	MINISTRY OF DEFENCE	Appellant	
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	JACQUELINE CARTNER	Respondent	

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(Transcript of the Handed Down Judgment of
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Mr Richard Coleman (instructed by Treasury Solicitor) for the Appellant
Ms Amanda Hart (instructed by Leigh Day & Co) for the Respondent

Hearing date : 24-25 October 2011
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Judgment
Lord Justice Maurice Kay  : 
1.	Mrs Jacqueline Cartner joined the Women’s Royal Naval Service in 1988.  Following the disbanding of the WRNS and its incorporation into the Royal Navy in 1990 she had a long and successful career in the Royal Navy.  In April 2001 she became a Chief Petty Officer (CPO).  In January 2008, she was one of thirty four CPOs considered by the General Service Warfare Promotion Board (the Board) for promotion to the rank of Warrant Officer.  She had recently completed one period covering as a Warrant Officer and was part way through a second such period.  The Board placed Mrs Cartner seventh of the thirty four.  One candidate was soon promoted and three were placed on a reserve list from which they were promoted.  Those ranked fifth or below were not promoted.  Those appointed were all male.  Mrs Cartner pursued a claim in the Employment Tribunal (ET) alleging direct and indirect sex discrimination.  The ET found in her favour in relation to both direct and indirect sex discrimination.  The Ministry of Defence (MoD) appealed to the Employment Appeal Tribunal (EAT) and, in a decision promulgated on 31 January 2011 (UKEAT 0242/10/DM), the EAT (Langstaff J, Mr A Harris and Mr S Yeboah) allowed the appeal in part.  It set aside the decision of the ET insofar as it had found direct discrimination and remitted that part of the case to the ET for rehearing.  However, it dismissed the appeal against the finding of indirect discrimination.
2.	The MoD now appeals to this Court.  On the issue of direct discrimination its case is that the EAT erred in law by remitting the matter to the ET for rehearing.  It should have decided the issue itself, once and for all, by substituting a dismissal of the direct discrimination claim.  On the issue of indirect discrimination its case is more complicated.  Essentially, it is that the ET erred in law by finding that the Board had applied to Mrs Cartner a provision, criterion or practice (PCP) that a successful candidate had to be seagoing (which she was not).  It is suggested that the EAT found legal error in the decision of the ET on this issue and that, having done so, it ought to have dismissed the indirect discrimination claim or, at the very least, it ought to have remitted it to the ET for redetermination rather than uphold the decision of the ET for reasons substituted by the EAT.
3.	Although Mrs Cartner was still a CPO at the time of the hearings before the ET and the EAT, we are told that she left the Royal Navy earlier this year.
The statutory provisions
4.	The relevant provisions on direct and indirect discrimination applicable in this case are to be found in section 1 of the Sex Discrimination Act 1975, as amended and prior to its repeal by the Equality Act 2010.  Section 1(2) provided:
“… a person discriminates against a woman if – 
(a)	on the ground of her sex, he treats her less favourably than he treats or would treat a man, or 
(b)	he applies to her a provision, criterion or practice which he applies or would apply equally to a man, but –
(i)	which puts or would put women at a particular disadvantage when compared with men, 
(ii)	which puts her at that disadvantage, and
(iii)	which he cannot show to be a proportionate means of achieving a legitimate aim.”
5.	Thus, subsection (2)(a) defines direct discrimination and subsection (2)(b) defines indirect discrimination.  In the present case the central issue on indirect discrimination was whether or not there was a “seagoing” PCP.  If there was, it is common ground that it was discriminatory and not justifiable.
Direct discrimination
6.	It is common ground that the EAT was correct to set aside the finding of direct discrimination.  Perhaps the central criticism of the decision of the ET was in this passage of the judgment of the EAT (at paragraph 55):
“There was an explanation put forward by the Navy as to why it was that the decision had been made as it was.  That was essentially that great weight was given to the references, or the reports, written by the commanding officers of the respective candidates.  There was no criticism advanced in this case about any direct discrimination by those officers.  Accordingly, the evidence given that the members of the board had looked at and come to a conclusion reasonably open to them on review of what those reports showed, was one which commanded at least sufficient respect to require the Tribunal to say why it did not accept it as a sufficient answer if indeed it was not a sufficient answer.”
It later added (at paragraph 57):
“This is a case … which cried out for an analysis which is singularly absent.”
The appeal to this Court in relation to direct discrimination is limited to a complaint that the EAT ought not to have remitted the issue to the ET but should have dismissed the claim.
7.	In rejecting the submission on behalf of the MoD that remittal was inappropriate, the EAT said (at paragraph 72) that it could not conclude that dismissal of the direct discrimination claim was “the only decision to which a Tribunal could properly have come” and that “this is not a case where the decision it reached to hold the officers guilty of discrimination was so wholly unreasonable as to be necessarily perverse”.
8.	It is easy to appreciate why the MoD is anxious to rid itself and senior naval officers of a finding of direct discrimination but, as Mr Coleman concedes, it is a difficult task to identify legal error in a decision of the EAT to remit.  It would need to be established that there was no evidence upon which the ET could make a finding of direct discrimination.
9.	In her careful written and oral submissions, Ms Amanda Hart refers to a number of areas of evidence in support of her submission that the EAT was right to remit the issue to the ET.  First, there were factors in relation to which Mrs Cartner could be said to have had the edge over the comparator Mr C (who was ranked third) – her promotion through the ranks had been faster; her annual gradings for “effectiveness” had been as good as or better than his in all but one of the previous eight years and in the four most recent years she had four As to his three As and a B; she had obtained her educational warrant officer qualification (QEWO) upon recruitment in 1988, whereas he had obtained his in 2004/5; in 2000 she was awarded NATO Headquarters Military Member of the Year and in 2001 she was awarded the MBE, whereas he had been awarded a ship-based Captain’s Efficiency Prize in 2005/6.  Secondly, she alone among the candidates had been acting up as a warrant officer for two years in both of which she had received A grades with complimentary reports.  Thirdly, the ET considered that the MoD witnesses had been selective and inconsistent in their references to the material relating to Mrs Cartner and Mr C (and for that matter Mr D who was ranked fourth).  It is not necessary for me to go into detail.  Suffice it to say that there are examples where positive evidence in relation to Mr C was relied upon but comparable evidence in relation to Mrs Cartner was not mentioned or was downplayed.  Fourthly, the ET was critical of the procedure deployed by the MoD which it characterised as having “an almost total exclusion of fact”, with a corresponding reliance on subjectivity.  Fifthly, there was statistical evidence which was susceptible to the interpretation that women in the Navy fared less well than men at this level of promotion.  
10.	It is well established that an Employment Tribunal is entitled to take account of all the surrounding circumstances and the totality of the facts when considering a claim of direct discrimination.  The approach was explained by Sedley LJ, giving the judgment of the Court in Anya v University of Oxford [2001] ICR 847, at paragraph 11:
“Very little direct discrimination is today overt or even deliberate.  What King and Qureshi tell tribunals and courts to look for, in order to give effect to the legislation, are indications from a time before or after the particular decision which may demonstrate that an ostensibly fair-minded decision was or equally was not, affected by racial bias.”
He later added (at paragraph 21):
“The choice between two comparably well-qualified candidates depended entirely on how the panel viewed their professional and personal qualities.  Such a judgment is notoriously capable of being influenced, often not consciously, by idiosyncratic factors, especially where proper equality of opportunity procedures have not been followed.  If these are to any significant extent racial factors, it will in general be only from the surrounding circumstances and the previous history, not from the act of discrimination itself, that they will emerge.”
The approach is, of course, the same when the allegation is one of sex discrimination.  In addition, statistical evidence may have a part to play: West Midlands Transport Executive v Singh [1988] ICR 614.
11.	In my judgment, there was evidence in this case upon the basis of which the ET could reasonably conclude that direct discrimination had occurred.  Essentially, it comprised the material to which I have referred when summarising Ms Hart’s submissions.  I am unable to say that such a conclusion would be perverse.  At one point in his skeleton argument, Mr Coleman referred to the members of the Board as “senior officers of unquestioned integrity”.  No one suggests otherwise.  However, direct discrimination does not have to be, and is usually not, intentional or deliberate.  I make no comment on the likelihood of this direct discrimination claim succeeding before the ET at the remitted hearing.  Having concluded that it could succeed, it follows that I find no error of law in the EAT having remitted it.
Indirect discrimination
12.	The central issue in the case on indirect discrimination is whether there was a PCP which advantaged seagoing over shore-based CPOs.  To understand this issue, it is necessary to recount some more of the factual history.  At the time of the incorporation of WRNS members into the Royal Navy in 1990, they were all required to sign a declaration as to whether or not they were prepared to go to sea.  They were assured that, whatever their individual decision, it would not affect their promotion prospects.  Mrs Cartner elected to remain shore-based.  By a letter dated 10 July 2007, the Director Naval Personnel wrote to her in these terms:
“The strategic role of the Naval Service has evolved since 1990.  The declarations you made then may not be relevant today, and could be denying you the opportunity to be considered for certain attractive and beneficial assignments.  In particular, the requirement for shore-based operational tours (Op Tours) has greatly increased since 1990, when the only Op Tour was service in the Falkland Islands.”
The letter offered “the opportunity to reconsider the declarations” that had been made in 1990.  Mrs Cartner chose to remain shore-based.
13.	When the Board was established, its members were instructed:
“Boards must not discriminate by gender, age, colour, creed or seagoing/non-seagoing status.”
In the light of that instruction, it was not possible for Mrs Cartner to point to a “provision” relating to seagoing.  Her case was seen as one of a “criterion” or, more likely, a “practice”.  At the material time, all male Naval personnel were seagoing but some women were not.
14.	The conclusions of the ET on indirect discrimination are to be found in these passages (at paragraphs 41-42):
“The Tribunal must draw the conclusion that sea service, in particular certain kinds of sea service were considered to be yardsticks by which a candidate’s success could be measured and that this priority is reflected regularly in the reports written by commanding officers who clearly take the view that sea-time is a necessary pre-requisite to promotion.
Whether the individual members of the Board either directly took the view that seagoing was an essential criterion and condition for promotion or whether it was inherent in the way they exercised their professional judgment is to the Tribunal immaterial.”
As I stated earlier, the MoD did not attempt to justify the PCP or to argue that, if it existed, it was not discriminatory.
15.	Although the EAT was critical of these and other passages, it upheld the finding of indirect discrimination.  As the case for the MoD is that it fell into legal error by so doing, it is necessary to set out a lengthy extract from the judgment of the EAT (paragraphs 63-67):
“The question for us … was whether the Tribunal was entitled to come to the conclusion of fact that there was a practice … which at least gave preference to those who were seagoing as opposed to those who were not.  Although it is argued that the Tribunal took what was to any observer an overstated view … ‘that sea time was a necessary pre-requisite’ and … ‘that seagoing was an essential criterion and condition for promotion’ that is, in our view, beside the point if in fact there was a preference for such”.
The view had been “overstated” because of undisputed evidence that, between 2004 and 2007, five female non-seagoers had been promoted to Warrant Officer ahead of seagoing male candidates.  The EAT continued:
“We do not consider that that overstatement … (assuming it to be such) necessarily falsifies the conclusion to which it came on the other evidence available to it.  The letter of 10 July 2007 within its terms was capable of being read, and the Tribunal appear to have read it, as suggesting to [Mrs Cartner] that if she opted to become seagoing as opposed to non-seagoing then her promotion opportunities would be better.  The Tribunal … recited that they heard oral evidence effectively to that end … In shore jobs it is more difficult to obtain relevant experience.
We looked at the criteria which were relied upon by the Navy before the Tribunal which emphasised the breadth of experience which a candidate should have, the preference for adaptability and the potential of candidates in a broad range of appointments.  The references to adaptability and to breadth are capable of suggesting that the promotion system necessarily favoured those who were able to display such a breadth which, this Tribunal was entitled to conclude, therefore, tended to favour the seagoing members of the Navy who would have both the opportunity of land-based and sea-based service, to the disadvantage of someone whose horizons were necessarily more limited.
We have, therefore, come to the conclusion that the Tribunal here has addressed the relevant questions and it has here set out its reasons for coming to the conclusion it did.  Although the judgment as a whole is open to criticism in that it displays much drafting which is inelegant and much which does not pose centrally the relevant questions … , here these objections have much less force.  We have come, therefore, to the conclusion that the Tribunal was entitled to come to the view it did applying the relevant law that it did.”
16.	It is also necessary to refer to the oral evidence before the ET, mentioned by the EAT in the above passage, and set out in paragraph 39 of the judgment of the ET:
“The general picture with regard to Op tours … does appear to be something of a contradiction to this argument [sc that male and female candidates were treated equally and that no posting was given greater weight than another] because not only was the Navy itself in its letter of 10 July 2007 seeking to persuade [Mrs Cartner] to change her mind with regard to Op tours but Captain Powell [chairman of the Board] in his wash-up report was making the point that ‘Op tour reports will have increasing weight for promotion boards and must be included in the packs’.  This was also reflected in his evidence when he pointed out that such opportunities were available to [Mrs Cartner] and would improve her promotion prospects.
‘It is not a question of valuing sea service over shore service – it is what people do that is important.  It would not be right to presume some establishments are stronger.  We do not favour a particular establishment’.
This evidence was somewhat contradicted by Commander Carter [another member of the Board] who stated that 
‘… Flag Officer Sea Training is a tough assignment.  Very detailed knowledge of an Ops room of all types of ship, Commonwealth and allied.  Candidates are identified while undergoing sea training.  It is a huge professional challenge.  There would have been about 6 CPOs at a time all hand-picked.’
He went on to say that
‘while at sea there was 24 hour contact, failings became obvious very quickly and good things were more likely to show.  Therefore in shore jobs the candidate must be careful to be in the eye of the line manager so that what he or she does is noted and recorded.’
It was noticeable that in the assessment of [Mrs Cartner’s record] a lengthy spell spent at Headquarters Northwood was regarded as of less value than sea-time on different ships.”
The ET referred to further points but I shall not burden this judgment with any more citation.
17.	Against this background, Mr Coleman seeks to raise two grounds of appeal against the EAT’s decision to uphold the finding of indirect discrimination.  First, he submits that it was perverse for the ET to have found that the Board had applied a PCP to the effect that seagoing candidates were preferred or advantaged.  Secondly, he complains that the EAT, having found the reasoning of the ET to have been flawed, should have remitted the indirect discrimination claim to the ET, rather than uphold the conclusion with substituted reasoning.
(1) Perversity
18.	A perversity challenge has to be seen in the context of the stringent test expounded by Mummery LJ in Yeboah v Crofton [2002]  IRLR 634, at paragraph 93, which requires an 
“overwhelming case … that the employment tribunal reached a decision which no reasonable tribunal, on a proper appreciation of the evidence and the law, would have reached.”
I am satisfied that the MoD cannot satisfy this test.
19.	I have set out in paragraphs 18-22 above some of the passages in the judgments of the ET and the EAT which refer to the evidential foundation for the PCP.  They are sufficient in themselves to dispose of this ground of appeal.  However, Ms Hart also points to the following:
i)	In an earlier passage of its judgment (paragraph 26), the ET said this of the letter of 10 July 2007:
“It is not a large step from this letter to appreciate that [Mrs Cartner] may have become an anomaly in Royal Navy terms, which anomaly would have been translated to conformity had she decided to opt for a seagoing path.”
ii)	As regards Mrs Cartner’s time at Headquarters Northwood, the ET found that the Board witnesses were “really quite denigrating about the challenges” (at paragraph 40).
iii)	In an agreed note of some of the evidence, Commander Carter is recorded as having said that sea service provides “a much broader spectrum of activities”, that it was “much harder to find chances to shine if you don’t go to sea”, that it was “entirely possible” that a good report from sea would carry more weight and that “it can form a compelling picture of that person to get them promoted”.
iv)	In his witness statement, Commander Carter stated:
“I advised her that Op tours did present an opportunity for people in the home command to add aspects of performance and behaviour to their appraisal reports.  With so many of her contemporaries opting to demonstrate their flexibility and commitment to their service in this way … she might need to find increasing ‘punch’ in her own portfolio if she was to mitigate the Op tour effect.”
And:
“… with regard to the issue of Op tours, these do add weight to a candidate in certain circumstances.”
v)	The statistics which lend some support to there having been a preference for male seagoing candidates.
All this adds to correctness of the rejection of the perversity challenge.
(2) Failure to remit
20.	The error of law in the judgment of the ET identified by the EAT was the “overstatement” of the evidence in the form of “sea time was a necessary prerequisite” or “an essential condition for promotion” when recent history showed that between 2004 and 2007 5 female non-seagoers had been promoted to Warrant Officer ahead of seagoing male colleagues.  The error was to have misunderstood the evidence in that way and to have made an apparent finding of fact that was unsupported by the evidence.  The EAT concluded (at paragraph 67) that the ET nevertheless were “entitled to come to the view that it did, applying the relevant law as it did”.  It therefore saw no need to remit the issue of indirect discrimination.  As I have set out in paragraph 21, the EAT set out its interpretation of the evidence, absent the overstatement.  It was on this basis that it reached its “entitled to” conclusion.
21.	Whenever the EAT finds an error of law in the judgment of an ET, it will consider whether it is necessary to remit the case to the ET (as originally constituted or not).  The test was set by Sir John Donaldson MR in Dobie v Burns International Security Services (UK) Ltd [1984] ICR 812, at page 818G:
“Once you detect that there has been a misdirection, and particularly that there has been an express misdirection of law, the next question to be asked is not whether the conclusion of the tribunal is plainly wrong, but whether it is plainly and unarguably right notwithstanding that misdirection.  It is only if it is plainly and unarguably right notwithstanding the misdirection that the decision can stand.  If the conclusion was wrong, then it is for an appellate tribunal to remit the case to the only tribunal which is charged with the making of findings of fact.”
22.	In Hellyer Brothers Ltd v McLeod [1987] ICR 526, the following gloss was placed on that by Slade LJ (at page 547D):
“This statement, however, must, in our judgment, be read subject to an implicit qualification correctly stated by Waite J in the present case:
‘If we are satisfied that a conclusion reached as a result of a misdirection is plainly and unarguably wrong upon facts found by the industrial tribunal and those facts do not require further amplification or reinvestigation, then we are entitled and bound to substitute our own conclusion as to what those findings require in law.’ ”
It has to be said that, in the present case, the EAT did not refer to the “plainly and unarguably right” (or “wrong”) test.  It expressed itself on the basis that the ET “was entitled to come to the view it did”.
23.	In her skeleton argument, Ms Hart stated that there was “ample supporting evidence” to sustain the finding of indirect discrimination.  I do not disagree with that.  It is what underwrites my rejection of the perversity challenge.  However, her next submission – that it is “inconceivable that, if remitted, the ET would find that the PCP did not exist” – is more difficult.  Regrettably, I find it impossible to say that the outcome on remission would inevitably be favourable to Mrs Cartner.  Such an outcome would, as the EAT suggested (when applying the wrong test), be a permissible one.  However, and notwithstanding the powerful submissions made by Ms Hart, I do not feel able to surmount the “plainly and unarguably right” test.  To do so here would involve this Court overstretching itself in a difficult and important case in which the hearing in the ET lasted some five days.  We would be committing a similar error to that committed by the EAT.
Conclusion
24.	It follows from what I have said that I would dismiss the appeal save in relation to the failure of the EAT to remit the indirect discrimination claim to the ET.  It will have to be remitted, to be heard with the already remitted direct discrimination claim.  Unfortunately, this means that the parties are back at square one.  That is why I used the word “regrettably” in the previous paragraph.  After three substantive hearings, nothing has reached finality.  No doubt very substantial costs have been incurred on both sides.  The circumstances are no doubt stressful for Mrs Cartner (who is no longer in the Royal Navy) and unwelcome to the Board members and others.  I would urge the parties to explore every avenue, including mediation, to see if further expensive and uncertain litigation may be avoided.
Lord Justice Rix:
25.	I agree.
Lord Justice Rimer:
26.	I also agree.