England and Wales Court of Appeal (Civil Division) Decisions

IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM The Employment Appeal Tribunal
The Hon. Mrs Justice Simler, President

		Royal Courts of Justice Strand, London, WC2A 2LL
		14 December 2017

Lord Justice Underhill :

INTRODUCTION

1. This is an appeal against the decision of the Employment Appeal Tribunal (Simler P) allowing an appeal against the decision of an Employment Tribunal (Employment Judge Forrest) to strike out a claim of unlawful discrimination on the basis that it had no reasonable prospect of success. To avoid confusion, I will refer to the Appellants before us as "the Respondents", as they were in the original proceedings. The Respondents have been represented by Mr Thomas Cordrey of counsel, who appeared in both the ET and the EAT. The Claimant was represented at both stages below by Mr Nesar Rafiq of the Employment and Advocacy Project in Wakefield, and we allowed him to address us on the Claimant's behalf.
2. As the argument developed it became clear that the issues between the parties were rather different, and narrower, than had appeared from the papers. But they can only sensibly be identified after I have given a very short summary of the factual background and a rather fuller summary of the procedural history.

THE FACTS

3. At the times material to this claim the Claimant, who is of Pakistani origin and is a Muslim, was an employee of Xerox (UK) Ltd, the First Respondent. (He has since been the subject of a TUPE transfer to an associated company and dismissed, in circumstances which have generated separate proceedings; but that is irrelevant for our purposes.) He was employed as a "commercial executive" in its finance accounting team, based in Leeds and Wakefield.
4. Sometime in 2013 the Second Respondent, Mr Whitworth, became manager of the team. In September 2013 he implemented a reorganisation, one element of which was that the Claimant would cease to be responsible for the particular customer contract on which he had been working, which was for Lloyds Bank/HBOS; responsibility for that contract would pass to another member of the team, Dawn James. Although he was nominally given a new role, relating to "project work", it is his case that it soon transpired that that was not a real job and that he had nothing worthwhile to do. He complained to a more senior manager, the Third Respondent, Mr Robinson; but he got no satisfaction. On 31 January 2014 he went off work with stress and depression.
5. On 22 April 2014 Xerox announced a proposal to "bestshore" (an ugly euphemism for "offshore") the work being done by most of the team, including the Claimant and Ms James, to Romania and the Philippines, and the employees affected were notified that that was likely to place them at risk of redundancy. In May the Claimant received a further communication confirming that he was now at risk of redundancy.

THE TRIBUNAL PROCEEDINGS

6. On 23 May 2014 the Claimant brought proceedings in the Employment Tribunal, claiming for racial, religious and sex discrimination. The Respondents were Xerox itself and the two individual managers, Mr Whitworth and Mr Robinson, who he said were responsible for the discrimination complained of.
7. The "details of claim" attached to the ET1 are not professionally drafted. They consist essentially of a narrative of the Claimant's treatment in connection with the reorganisation in September 2013 and its aftermath, and the identification of the aspects of that treatment which he alleges to be discriminatory is not very precise. However, the antepenultimate paragraph contains what appears to be intended a broad summary of the claim as follows:

"The Claimant believes that he has been treated differently by Respondent 2 due to his race, sex and religion and therefore been subjected to unlawful direct discrimination in the way that the restructuring of the team was handled, the way that the Claimant wasn't given a job to do and just left as a spare part. The Claimant wasn't given an opportunity to apply for the new job given to Dawn James which involved managing staff. The Claimant believed that this treatment started during the period September 2013 and still containing [sic] until this date because the Claimant still doesn't have a specific job i.e. duties that he does as his job."

"Containing" is obviously a slip for "continuing". I should also, for reasons which will appear, set out the final paragraph, which reads as follows:

"The Claimant has now been issued with letters informing him that he is at the risk of redundancy. If the Claimant had not had his job changed, not been made promise of a false job, been returned back to his old job, or been given an opportunity to apply for the new job created that Dawn James got then he would not be at risk of redundancy. The Claimant was informed on 15^th April 2014 that he was at risk redundancy [sic] and on Thursday 22 May 2014 received a formal letter of risk of redundancy. The claimant believes this all that has happened to him due to reasons of his race, ethnicity, religion and sex. He believes that he has suffered direct discrimination."

That might in isolation be read as alleging a further discriminatory act, but if one takes into account both where it appears in the grounds and its wording it is reasonably clear that the Claimant is referring to his being put at risk of redundancy as being a consequence of the discrimination complained of and not as discrimination in its own right; and, as will appear, that was subsequently confirmed.

8. The Respondents lodged an ET3, with detailed grounds of response attached.
9. There was a telephone preliminary hearing on 12 August 2014 before Employment Judge Shulman. At para. 4.1 of the Case Management Summary issued following the hearing the Judge identifies the acts complained of as follows:

"The Claimant says that the First Respondent restructured and the Claimant was asked to train someone else to do his job. He was promised another job but ended up with nothing. He asked for his old job back but could not have it."

(That summary is in relation to the race discrimination claim, but it is made clear that the same acts were complained of in relation to the religion and sex discrimination claims.) It will be noted that there is no reference to being put at risk of redundancy. The Judge then identifies three particular issues arising out of the Respondents' response which should be heard at a preliminary hearing. One is irrelevant for our purposes. The other two are:

(a) an application that the claims be struck out in their entirety, under rule 37 of the Employment Tribunal Rules, on the basis that they had no reasonable prospect of success, alternatively that a deposit order should be made under rule 39 on the basis that they had little reasonable prospect of success; and

(b) an issue as to whether the claims were out of time.

10. I need say nothing more at this stage about the first of those two issues, but I should say something more about the time issue. Section 123 (1) of the Equality Act 2010 provides that claims of the kind with which we are concerned:

"may not be brought after the end of –

(a) the period of 3 months starting with the date of the act to which the complaint relates, or

(b) such other period as the employment tribunal thinks just and equitable."

Section 123 (3) (a) provides that "conduct extending over a period is to be treated as done at the end of the period". The three-month primary limitation period provided for by section 123 (1) (a) is extended by one month by section 140B, to facilitate ACAS conciliation. Accordingly any claim would be caught by that limit if it related to an act done prior to 24 January 2014. The Respondents contended that the claims pleaded in the ET1 were out of time because "they all arose out of an incident towards the end of September 2013 with the act of the Respondent taking the Claimant's job away" (Case Management Summary para. 9.1). The Claimant's response, as recorded in the Summary, was twofold, namely:

(a) that "there were acts which were continuous right up to 31 January 2014" – in other words that the acts complained of constituted "conduct extending over a period" within the meaning of section 123 (3) (a) and were accordingly within the primary time limit; and

(b) that "should the claims turn out to be out of time then they should be allowed to proceed because of the state of his health" – in other words that it would, for that reason, be just and equitable to extend time under section 123 (1) (b).

11. Judge Shulman gave directions for the purpose of the preliminary hearing, including a direction that the Claimant provide a witness statement setting out "all the facts about which [he] intends to tell the Tribunal relevant to the question of time".
12. In accordance with Judge Shulman's direction the Claimant served a witness statement. It essentially consisted of a further rehearsal, with some more detail, of the facts already pleaded. It is common ground before us that it contains nothing about the Claimant's health sufficient to found a claim for an extension of the primary time limits. The Claimant did, however, repeat his claim that the treatment of which he complained had extended over a period. He said, at para. 5:

"My complaint to the employment tribunal isn't just about one specific allegation of discrimination but about a detrimental treatment that I have been subjected to over a considerable period of time from the one-to-one meeting I had with Respondent 2 at which he told me my job would change to the last day I worked prior to going off sick on Friday 31^st January 2014."

It will be noted that the end date given is 31 January 2014 and not the date in April when he learnt he might be at risk of redundancy.

THE DECISION OF THE EMPLOYMENT TRIBUNAL

13. The preliminary hearing directed by Judge Shulman occurred before Judge Forrest at Leeds on 13 October 2014. The Claimant attended and was cross-examined on his witness statement, and the Judge heard submissions from Mr Cordrey and Mr Rafiq.
14. The Judge gave his decision and oral reasons at the conclusion of the hearing but the formal Judgment and written Reasons were not sent to the parties until 24 November 2014. The Judgment reads:

"Mr Zeb's claims of discrimination on racial grounds, discrimination on grounds of religious belief and discrimination on grounds of his sex are dismissed as they have no reasonable prospect of success."

As for the Reasons, there was some dispute before us as to exactly how the Judge reached his decision, and I shall have to go through them in a little detail.

15. The Reasons fall into two parts. Paras. 1-6 are essentially introductory. After identifying the issues directed by Judge Shulman, the Judge says, at para. 4, that he had found hearing the Claimant's evidence helpful on the strike-out issue even though it formally went only to the time issue. He then proceeds, at para. 5, to identify what he describes as "three principal acts of less favourable treatment that Mr Zeb relies on for his claim of discrimination", as follows:

"Firstly he was removed from his current post in September 2013 as part of a restructuring exercise; secondly he was then deprived of the alternative project work that he had been promised; thirdly he was then put at risk of redundancy in May."

I will, as the parties did, refer to these as Acts 1, 2 and 3.

16. In the same paragraph the Judge applies that analysis to the time issue as follows:

"[The Claimant] argues that [the three acts] are all part of a plan to treat him badly and ultimately force him out of his job, and that therefore they constitute an act extending over a period. If that argument is accepted, then the complaints are in time since it is clear from his ET1 that the third act of which he complains, placing him at risk of redundancy, occurred in April and May of 2014. That claim was therefore clearly submitted within the three month time limit. To bring the other two acts into time, he argues that, although on the face of it separate and distinct, they were necessary steps in the plan to force him out."

17. Finally, at para. 6 he says:

"To decide whether the 3 acts are in fact linked in that way would require extensive evidence from the Respondents to explain the context and reasons for the 3 actions. That can only be done in practice at a full hearing. It would not therefore be right to strike the claims out as out of time, without considering them in full, which cannot be done at this preliminary hearing."

18. The second part of the Reasons is headed "Prospects of Success ?". At para. 7 the Judge directs himself as to the principles applicable to striking out by reference to the well-known cases of Anyanwu v South Bank Students Union [2001] UKHL 2014, [2001] 1 WLR 638 and Ezsias v North Glamorgan NHS Trust [2007] EWCA Civ 330, [2007] ICR 1126. He proceeds in the following paragraphs to consider what facts were alleged to support the claim of discrimination prior to the Claimant going off sick at the end of January and concludes that there were none. At para. 12 he turns to the Claimant being put at risk of redundancy. He says:

"Mr Zeb accepts that the redundancy exercise of which he was first notified in April, and formally put at risk in May, involved the whole of his section being transferred to the Philippines, involving over a dozen staff. Given that there is no positive case of discrimination put forward by him, it seems to me that to assert that that redundancy exercise was put forward, if only in part, in order to get rid of him on grounds of sex, religion or race, strains credibility."

19. The Judge then refers to the burden of proof and to the decision of this Court in Madarassy v Nomura International plc [2007] EWCA Civ 33, [2007] ICR 567. He enumerates certain "additional factors beyond mere difference of race and treatment" on which the Claimant relied, and continues, at para. 15:

"Those additional factors might be sufficient to shift the burden of proof, but that is not something I have to decide at this prior stage of consideration under Rule 37. The key point for me is that none of those factors are substantially disputed by the Respondent's explanation. He accepts there had been accounting errors during the period when he had been in charge of preparing that work. Indeed at one stage he apologised for an error. Against that background, and noting the lack of any history of racist or sexist or religious hostility towards him or other employees alleged, it seems to me that his claim has no reasonable prospect of success. Accepting the Claimant's factual propositions, I still find that his claims have no reasonable prospect of success. In particular, the most recent claim relating to the redundancy, which is crucial to put the other claims in time, seems to me simply incredible: to argue that the redundancy exercise was in effect a sham designed to force him out on grounds of race, religion or sex when the entire department is being moved."

(The italicisation is mine, for reasons which will appear.)

20. The Judge's conclusion, at para. 16, is:

"The Claimant is left with nothing more than a belief, arrived at with hindsight, that his race, religion or sex may have contributed, to what has been, (from his point of view), not just an unfortunate but an eventually disastrous chain of events, culminating in dismissal, and unemployment for the first time in his working life. But none of that establishes any sort of reasonable case that the subsequent events were planned, or had any connection in any way to each other, let alone, the crucial factor for me, had any causal connection to his race, religion or sex."

21. In my view it is clear that the Judge dismissed the claims because, and only because, he believed them to be hopeless on the merits. That is the only issue discussed in detail, and in the second part of the Reasons. He deliberately did not address the time issue at all. Para. 6, at the end of the first part of the Reasons, makes it clear that the Judge is not prepared to decide the "continuing act" issue, essentially because it is too bound up with the substantive issues.  (He also says nothing about the "just and equitable" issue.  But, as already noted, before us Mr Rafiq acknowledged – clearly correctly – that the Claimant's witness statement had provided no material on the basis of which the ET could extend time under section 123 (1) (b), and it may be that he made the same concession in the ET.) 
22. Mr Cordrey points out that in para. 15 the Judge refers to the claim in relation to the Claimant being put at risk of redundancy as being "crucial to put the other claims in time", which evidently reflects the analysis in para. 5 of the judgment (see para. 15 above). Mr Cordrey says that that constitutes a positive decision by the Judge that the Claimant's answer to the time point could only succeed on that basis.  I cannot accept that submission.  It would be inconsistent with the Judge's clear statement in para. 6 that he would not decide the time point. 
23. The origin of the Judge's threefold analysis of how the Claimant put his case, with "Act 3" being the notice of being put at risk of redundancy, is a puzzle. It does not correspond to anything in the Claimant's pleading: as I say at para. 7 above, being put at risk of redundancy was referred to only as an alleged consequence of the earlier discrimination. Nor does it derive from the Case Management Summary: although Judge Shulman's summary of the acts complained of, quoted in para. 9 above, can be read as identifying three acts, they are different from Judge Forrest's, and they do not cover putting the Claimant at risk of redundancy. That also appears to be the approach taken in the Claimant's witness statement see para. 12 above. Mr Cordrey disavowed being the author of the analysis, and it would clearly not have been in his interest to advance it, since it brought part of the claim within the primary time limit.
24. In those circumstances the natural conclusion might seem to be that the Judge's analysis must derive from oral submissions made by Mr Rafiq at the hearing, and that is also suggested by his reference to the three acts "that Mr Zeb relies on". However, in his submissions before us Mr Rafiq disavowed having put the case this way. Indeed he emphatically repudiated it. In particular, he denied in terms that the Claimant was relying on being placed at risk of redundancy as a separate act of discrimination.  He acknowledged that such a claim would make no sense, for the reasons given at the end of para. 15 of the Reasons, and he was concerned that the Judge's belief that it was part of the Claimant's case had tainted the view that he took of the whole.  This cannot be said to be a new stance on Mr Rafiq's part.  It not only, as already pointed out, reflects the pleadings and the Claimant's position in the run-up to the hearing; it was also his stance in both his original and his amended grounds of appeal to the EAT (see para. 26 below) and in his brief skeleton argument in this Court (confusingly headed "Revised Grounds of Appeal").
25. Having said all that, it is hard to believe that Judge Forrest got the wrong end of the stick all by himself, particularly since his Reasons appear clear and competent. I think the likelihood must be that something must have been said in discussion between him and Mr Rafiq that led him to believe that the case was being put the way that he summarised.  I mean no disrespect to Mr Rafiq if I say that it is far from implausible that some misunderstanding arose. In the end, however, we are not required to solve the puzzle. The crucial question is whether Mr Rafiq unequivocally abandoned his contention, recorded in the Case Management Summary, that there was a continuing act up to 31 January 2014. There is no evidence that he did so, nor did Mr Cordrey so suggest.

THE APPEAL TO THE EMPLOYMENT APPEAL TRIBUNAL

26. The Claimant appealed to the EAT. His original grounds refer to the final sentence of para. 15 of the Reasons (see para. 19 above) and say:

"At no time during the preliminary hearing or in any documents submitted to the employment tribunal have I stated this. This is a theory that the judge has for reasons unknown come up with. In my witness statement for the preliminary hearing which is attached I clearly mention what the period of discrimination I am complaining about is (Paragraph 5)."

(I have silently corrected the punctuation.) I have quoted para. 5 of the witness statement at para. 12 above: as there noted, it complains of discrimination only up to 31 January 2014. His appeal was allowed to proceed on amended grounds. These included (as head 3) an objection to the way the Employment Judge

"was perverse to characterise his case as he did in the last sentence of paragraph 15 of his reasons. The Claimant's case was set out in his ET1."

That is less explicit than the original pleading but appears to be intended to make the same point. I need not summarise the other two grounds. We have not seen the Respondents' Answer, but Mr Cordrey confirmed that the EAT was not asked to uphold the ET's decision on different grounds.

27. The hearing before Simler P took place on 24 February 2016, together with a related appeal between (essentially) the same parties of which I need give no details. She gave judgment orally at the conclusion of the hearing. For reasons which will appear, I can summarise her judgment fairly briefly. She adopted Judge Forrest's threefold analysis of the acts complained of. It is not clear whether Mr Rafiq repeated the objection to it which appeared in his grounds of appeal to the EAT; but if he did he evidently did not get his message across since there is nothing in the judgment to suggest that Simler P understood it to be contentious. In broad outline, she held that the "additional factors" identified by Judge Forrest at para. 14 of his Reasons were sufficient to raise a case to answer that the treatment complained of was at least to some extent affected by the protected factors in question, and that the "key point" identified by the Judge at the beginning of para. 15 of his Reasons did not justify any contrary conclusion: see para. 23 of her judgment. As regards what she understood to be the third act complained of, i.e. putting the Claimant at risk of redundancy, she said that the Judge had been wrong in paras. 12 and 15 of the Reasons to characterise the Claimant's case as depending on a sham. She said, at para. 27:

"The fact that the Claimant challenged as unlawfully discriminatory the decision to place him at risk of redundancy at the same time as other members of his team does not entail that he was arguing that the whole exercise was a sham.  Indeed, the contrary appears from his ET1.  His argument was more nuanced than that.  It centred on the fact that having had a previously good relationship with his former manager and worked well without fault, when the Second Respondent took over as his manager, Ms James was appointed to his post, his manager was less than frank in explaining the reasons for that change, the Respondents behaved in breach of equal opportunities policies and unreasonably in relation to promises of alternative work that did not materialise, and ultimately he was placed at risk of redundancy.  I am persuaded in those circumstances that the Employment Tribunal erred in law in characterising the Claimant's case in the extreme way it did absent a strong factual basis for doing so."

THIS APPEAL

28. In their Appellants' Notice and grounds the Respondents do not challenge Simler P's reversal of the decision of the ET as regards Acts 1 and 2. They challenge only her decision to allow the claim to proceed also on the basis of Act 3, i.e. putting the Claimant at risk of redundancy. They do so on two grounds, namely (reversing their pleaded order):

(1) that Act 3 was only a consequence of the pleaded acts complained of (i.e. Acts 1 and 2) and not a head of claim in its own right; and

(2) that, even if it fell to be treated as a separate head of claim, it had no reasonable prospect of success.

29. Those who have followed this tortuous tale attentively to this point will appreciate that neither of those grounds is in fact contentious. Mr Rafiq himself is emphatic that the Claimant never pleaded his being put at risk of redundancy as a discrete discriminatory act and does not wish to do so, and he accepts that such a claim would be hopeless: see para. 24 above. It is possible, though certainly not established, that he departed from that position at the ET hearing, and possibly also in the EAT. But, even if he did, it is not our business to hold him to a case that he does not seek to maintain, still less when it is clear that it does not correspond to the original pleaded case.
30. I think I should also say, with all respect to Simler P, that I do not follow the reasoning in para. 27 of her judgment. It does not seem to me to answer the straightforward point made by Judge Forrest that it was impossible to see how putting the Claimant at risk of redundancy could be by reason of any of the protected factors in circumstances where everyone else in the department was affected equally.
31. It follows that I believe we should allow the appeal and strike out the (supposed) claim that putting the Claimant at risk of redundancy – Act 3 – was unlawfully discriminatory.
32. However, the contentious question is what that means for the claim as a whole. Mr Cordrey's case was that, since Act 3 was, in Judge Forrest's phrase, "crucial to put the other claims in time", if it was struck out the other claims, being out of time, must fall with it: as he said, the appeal was only worth pursuing on that basis. However, for the reasons given above I do not believe we can treat Judge Forrest's observation as a correct statement of the position. Act 3 has never been relied on by the Claimant in his pleadings or any written statement of his case as being his answer to the time point. On the contrary, he has always relied on the alleged continuing nature of Act 1 and 2: see paras. 10 and 12 above. In my view therefore the case must be remitted to the Employment Tribunal on the basis that the issues emerging from the pleadings, as summarised by Judge Shulman, should be determined. Those issues of course include the time point raised by the Respondent, although as Judge Forrest observed it will not be possible to determine that issue without hearing evidence of the substance of the claims.
33. This is, I readily accept, a particularly unfortunate outcome for the Respondent, for whom it only made sense to pursue this appeal if a viable claim in respect of Act 3 was necessary to bring the other two Acts within time, and who apparently accepted Judge Forrest's observation that that was the case. But unless the Claimant can be shown to have been responsible for the misunderstanding of his pleaded case that has arisen, which he cannot, it would not be just to visit its consequences on him.

Lord Justice Flaux:

34. I agree.

Lord Justice McCombe:

35. I also agree.