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Cite as: [1992] UKEAT 101_92_707, [1992] UKEAT 101_92_0707

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BAILII case number: [1992] UKEAT 101_92_0707

Appeal No. EAT/101/92

EMPOLYMENT APPEAL TRIBUNAL

58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

At the Tribunal

On 7 July 1992

Before

THE HONOURABLE MR JUSTICE HUTCHISON

MS S CORBY

MR J A SCOULLER

MISS A WRIGHT APPELLANT

(1) DAVID DAVIS ASSOCIATES

(2) TRUST HOUSE FORTE PLC RESPONDENTS

Transcript of Proceedings

JUDGMENT

Revised

APPEARANCES

For the Appellant MR I WALKER

(Solicitor)

5c Frognal Mansions

97 Frognal

London NW3 6XT

For the 1st Respondents NEITHER PRESENT NOR REPRESENTED

For the 2nd Respondents MR P ROSE

(Of Counsel)

Paisner & Co

Bouverie House

154 Fleet Street

London EC4A 2DQ

MR JUSTICE HUTCHISON: The decision that I am about to give is the unanimous decision of this Tribunal. This is an Appeal by Miss Wright from a decision of an Industrial Tribunal of the 22 January of this year sent to the parties on 4 February refusing leave to amend her Originating Application.

The Original Application which she sought to pursue is dated 2 April 1991 and claims unfair dismissal linked to sexual discrimination from her post as a project manager. It alleges dismissal from her employment by the lst Respondents David Davis Associates as project manager on the Grosvenor House refurbishment scheme which David Davies Associates were carrying out for the 2nd Respondents Trust House Forte Plc. In a sentence the basis of her complaint is that an employee of Trust House Forte, Mr Dedman, because of his disinclination to work with or antipathy towards women, made her conduct of her work extremely difficult. The upshot was that she was, by her own employers, taken off the task that she was doing and very shortly afterwards was said to be redundant. Her case is that redundancy was the ostensible reason for her dismissal but the real reason was what I call the "Dedman problem".

She alleged unfair dismissal and breach of certain provisions of the Sex Discrimination Act 1975 and she sought reinstatement.

Now that is the case which essentially she brought against the 1st Respondents, her employers. So far as the 2nd Respondents are concerned, what one found in the Notice of Application was a single paragraph in the following terms:

"In so far as the case against the Second Respondents, Trusthouse Forte, is concerned, it is alleged that contrary to Section 40 of the Sex Discrimination Act 1975, they unlawfully induced the First Respondents to dismiss the Applicant in the circumstances set out above.

In due course on 17 May 1991, the solicitors acting for the 1st Respondents wrote to Mr Walker the solicitor acting for, and who has today presented the case on behalf of, the Applicant Appellant, requesting certain Further and Better Particulars. The request was under 4 paragraphs and was complied with with quite lengthy further and better particulars, undated, of which we have this morning received a copy.

The important part of those Particulars is the second part of paragraph 1 where there are allegations that between March and October Mr Dedman took various actions amounting to sexual harassment of the Applicant. Elsewhere in paragraph 1 are allegations that he behaved towards women in a generally boorish, embarrassing and provocative manner. There are further allegations to the like effect in the Particulars under paragraph 2.

There is then in paragraph 3 quite a lengthy account of the genesis of the Applicant's removal from the project and her subsequent dismissal and the Particulars conclude with paragraph 4 saying the Respondents, meaning in the context the 1st Respondents, unlawfully discriminated against the Applicant by taking her off the work for which she was admirably suited and about which no complaint had been made, and that they took such action only by reason of the Applicant's sex under pressure from Mr Dedman.

Well now the difficulty about the case as originally framed, which it is now accepted by Mr Walker was an insuperable difficulty, was that by virtue of the provisions of s.72 of the Sex Discrimination Act 1975, proceedings in respect of a contravention of inter alia section 40, may be brought only by the Equal Opportunities Commission and not by an individual. Accordingly the sole claim which was advanced at that stage by the Applicant against the 2nd Respondents was inevitably doomed to failure. Confronted with and sensible of that difficulty, Mr Walker on behalf of the Applicant sought to amend. Unfortunately the form of the amendment for which leave was sought, different from that which is pursued today, did not greatly improve the case. If one refers to the decision of the Tribunal whose decision is before us on appeal, one finds in paragraph 6 this formulation:

"..Mr Walker also applied to add Section 9(2)(b) of the Act to the amendment so that the amendment would have read "to substitute Section 41(2), 42(1) and Section 9(2)(b) and (a) for Section 40."

Section 41(2) provides:

"Liability of employers and principals

(2)Anything done by a person as agent for another person with the authority (whether express or implied, and whether precedent or subsequent) of that other person shall be treated for the purposes of this Act as done by that other person as well as by him."

It will be seen at once therefore that that subsection and indeed section 41 as a whole, are laying down in effect mechanics, and dealing with the question of vicarious liability of persons employed by an employer who is asserted to be at fault under the Act. Section 42(1) provides:

"A person who knowingly aids another person to do an act made unlawful by this Act shall be treated for the purpose of this Act as himself doing an unlawful act of the like description."

Pausing there, whatever that subsection means, it certainly does not create any offence in respect of which a free standing complaint under the Act could be made by the Applicant against anyone.

While I am on the provisions of Section 42, I should read, because it has become material, subsection 2 of Section 42 which provides:

"For the purposes of subsection (1) an employee or agent for whose act the employer or principal is liable under section 41 (or would be so liable but for section 41(3)) shall be deemed to aid the doing of the act by the employer or principal."

When the matter came before us this morning, we raised as it were by way of a preliminary difficulty, the problem that as it seemed to us, none of these sections which were sought to be introduced by the amendment for which leave had been refused and in respect of which refusal this appeal is brought, advanced the case at all because none of them introduced an arguable cause of action, if I may use that phrase, against the 2nd Respondents Trust House Forte. I should say in parenthesis that at the outset of the Appeal Mr Walker had, in our judgment, rightly and inevitably, abandoned any contention that he could rely on section 9 of the Act. Accordingly the comments I have made apply really to the contention that a substantive case could be put under Section 41(2) or 42(1).

Mr Walker grappled manfully with that difficulty and received some assistance from Mr Rose who formulated a possible line of argument which Mr Walker has adopted and in respect of which he seeks to advance the claim to amend. I shall come back to the way it is put when I have dealt with the way in which the Industrial Tribunal dealt with the application, because they did not as we have done, take any point about the futility of the amendment. They sought to deal with the amendment on what they perceived to be its merits. What they said in that regard was this:

"Section 76(1) provides:-

"An industrial tribunal shall not consider a complaint under Section 63 unless it is presented to the Tribunal before the end of the period of three months beginning when the act complained of was done."

But by reasons of the provisions of sub-Section 5 we may consider such a complaint, which is out of time if in all the circumstances of the case it is just and equitable to do so. We have an unfettered discretion to extend the time in which an application may be made or amendments to an application may be made."

Pausing there they were not of course dealing with an application to bring a complaint out of time, they were dealing with an application to amend a subsisting, although plainly rather insubstantial, complaint which had been brought in time. They went on:

"Mr Walker on behalf of the applicant submitted that the second respondents knew from the moment the Originating Application was served upon them the case they had to meet and that certainly by the time they received the further particulars which have been requested by the 1st respondents on 4 July 1991, they would be in no doubt of the case against Mr Dedman."

That is a reference to the fact that somehow or other (the precise route is not clear) the Particulars which we have referred to and which had been served on the 1st Respondents, had found their way into the possession of the advisors for the 2nd Respondents, we infer relatively soon after they were first delivered. The Tribunal continue:

"It is quite correct that those particulars set out in great detail, the allegations against Mr Dedman who was employed by the second respondents, who it is alleged does not like working with women. He is also alleged to have sexually harassed Miss Wright. Mr Nicholls on behalf of the second respondents submits with considerable force that the Notice of Appearance is dated 25 May 1991 and in Section 8 the first paragraph brings to the attention of the applicant the fact that the Tribunal does not have jurisdiction to hear the claim which was then pleaded under Section 40 as that can only be enforced by the Equal Opportunities Commission."

That as one might infer is a reference to the fact that the Respondents, in their reasons

for objecting to the claim, had made it clear that they took the point on jurisdiction. In fact

whether they took it or not is beside the point but they had raised the point on jurisdiction.

The Tribunal continue:

"Therefore as of 29 May or at least two or three days later, the applicant's advisers knew the case that was put against them in law. The first time an application to amend is made is in a letter to the Secretary of the Tribunals dated 21 August 1991, that is nearly three months after the Notice of Appearance has been served. That application was made in response to a letter from the Assistant Secretary of the Tribunals in which the lack of jurisdiction to hear a case under Section 40 was again brought to the attention of the applicant."

We then come to the crucial paragraph in the Decision:

"We must be just and equitable to both parties. We appreciate that certainly by the early part of July the second respondents had a copy of the further and better particulars, and therefore, Mr Walker argues, as from that date they have not been prejudiced. That may be so but this is not an applicant who is in person. She has been advised throughout and one cannot with impunity extend the period which has been set by the Legislature for presenting an application. The applicant through her adviser should have made an application to amend promptly. Delay is a matter we can take into consideration because delay is prejudicial to both parties. We bear in mind very much the difference between the wording of Section 76(5) and the wording of Section 67(2) in the Employment Protection (Consolidation) Act 1978.

In fact the reference to section 76(5) is a reference to that provision in the Sex Discrimination Act which deals with bringing proceedings out of time and it provides as follows:

"A court or tribunal may nevertheless consider any such complaint, claim or application which is out of time if, in all the circumstances of the case, it considers that it is just and equitable to do so."

That is where the phrase "just and equitable" comes from but one notes and emphasises that what is being taken as the guiding provision is a section which deals not with amendments but with the late bringing of a claim. The Tribunal continue:

"We are not considering whether it was reasonably practicable as one would have to under that Act. [That is the Employment Protection (Consolidation) Act 1978] We are considering what is just and equitable. In this case due to the unnecessary delay to apply for an amendment on the part of the applicant it would not be just and equitable for the respondents to have to deal with very late amendments certainly not an amendment under Section 9 which applies to the liability of principals and contract workers. Therefore we are refusing the application to amend."

It is not necessary I think to read the rest.

If one wants to formulate the approach which should have informed the Industrial Tribunal when considering that application to amend, one can go straight to the case of COCKING v SANDHURST (STATIONERS) LIMITED & ANOTHER [1974] ICR 650. That is a case which received express approval from the Court of Appeal in the case of BRITISH NEWSPAPERS PRINTING CORPORATION (NORTH) LTD v KELLY AND OTHERS [1989] IRLR 222 where the Master of the Rolls Lord Donaldson, made it clear that his view was that that was a case which laid down the appropriate test for considering an application to amend.

The approach which is laid down in COCKING is to be found at the end of the judgment of Sir John Donaldson at page 656 where he says this:

"In every case in which a tribunal is asked to amend a complaint by changing the basis of the claim or by adding or substituting respondents it should proceed as follows:"

and he lays out 7 tests, the first 6 of which we consider it unnecessary to make specific reference, though we have read them all, but No 7 which is plainly the most important and over-riding consideration is in the following terms:

"In deciding whether or not to exercise its discretion to allow an amendment, the tribunal should in every case have regard to all the circumstances of the case. In particular it should consider any injustice or hardship which may be caused to any of the parties, including those proposed to be added, if the proposed amendment were allowed or, as the case may be, refused. Rule 13 of the rules of procedure provides that a tribunal shall not normally award costs. If, however, the tribunal considered that the defect in the originating application had caused any party to incur unnecessary expense, it could properly conclude that leave to amend should only be given if the party seeking to amend agreed to make some payment in respect of that expense and could order accordingly."

The crucial thing therefore is that the Tribunal should have regard to all the circumstances of the case and in particular consider injustice or hardship which may be caused to either party including those proposed to be added if the proposed amendment were allowed, or as the case may be, refused. The case of BRITISH NEWSPAPER PRINTING CORPORATION (NORTH) LTD v KELLY and others to which reference has already been made, as well as approving COCKING made it clear that it is inappropriate in the case of an application to amend simply to approach the problem on the basis that the question is the same as would arise where the application is to bring proceedings out of time.

So the first question we have to consider is whether the Employment Appeal Tribunal in this case, on the basis on which the claim to amend was put to them, addressed themselves to the correct legal test when deciding to refuse to allow it. It seems to us that plainly they did not. It must be remembered, as I have already endeavoured to emphasise, that they were not taking, as we did at the outset this morning, any point to the effect that the proposed amendment was a pointless one because it was bound to fail. They were considering the amendment as though it involved the introduction of an arguable cause of action against the 2nd Respondents. They did not refer to COCKING; they referred to an inappropriate section, s.76(5), and to a test whether it was just and equitable to both parties.

Mr Rose, for whose extremely helpful and fair arguments we are much indebted, sought to contend that in putting the test in that way the Tribunal were in effect asking the very question which COCKING suggests they should ask and were indeed imposing if anything a more favourable requirement so far as the Applicant is concerned. He argued that the Tribunal, albeit from an incorrect standpoint, were approaching the question in precisely the way in which COCKING decrees they should approach it. They were balancing prejudice on one side or the other and they plainly reached a conclusion that the prejudice to the Respondents was great and that to the Applicant was less great and that as a matter of discretion they should refuse the amendment. Mr Rose contends, as it were as the second limb of that submission, that the exercise of their discretion was in the circumstances unimpeachable.

Now that submission must be tested by a careful consideration of the language which the Tribunal used in what we have ventured to describe as the vital paragraph of their decision. There are three crucial sentences, two of which fall to be taken together:

"The applicant through her adviser should have made an application to amend promptly. Delay is a matter we can take into consideration because delay is prejudicial to both parties."

They were there addressing in some way the question of prejudice and they were making the general observation that delay is prejudicial to both parties. We interpret that reference as being a reflection of the often expressed view that where time has passed in cases where recollections are important, delay prejudices recollection; recollections dim and each side may be unable to give as cogent evidence as it would have given had matters proceeded more expeditiously.

But we have to say that that sentence does appear to us to be one which is hardly apt to the circumstances of the present case. As Mr Walker pointed out and as our recitation of the facts has shown, the 2nd Respondents, at an early stage, had not only been joined but had received the Further and Better Particulars which informed them of the factual basis of the complaints that the Applicant was advancing. They therefore knew exactly what it was that was asserted against Mr Dedman, their employee, and it can hardly be said that they have been taken by surprise or would be taken by surprise by an amendment which introduced into the proceedings a legal framework for pursuing those factual allegations.

The third crucial passage, again from paragraph 9, is where the Tribunal state:

"We are not considering whether it was reasonably practicable as one would have to under that Act. We are considering what is just and equitable. In this case due to the unnecessary delay to apply for an amendment on the part of the applicant it would not be just and equitable for the respondents to have to deal with very late amendments certainly not an amendment under Section 9 which applies to the liability of principals and contract workers."

We can forget about section 9; but the earlier part of that citation appears to us not to be a balancing act at all. The Tribunal are not addressing their minds to what COCKING says they must do; the consideration of the prejudice on the one hand to the Applicant if not permitted to amend and on the other to the Respondents if they had to resist the amendment. They are not considering what would be the disadvantage or detriment if the amendment were on the one hand allowed, or on the other hand refused. They are simply saying that there has been unnecessary delay. I confess that it has occurred at any rate to me, that underlying the reasoning of the Tribunal in this paragraph is the implicit thought that the Applicant, being culpable in the failure to proceed more promptly and in the failure to plead a viable case at the outset, is to be punished for not having sought to amend sooner than she did and that the lapse of 3 months is for that reason fatal.

One then asks what would have been the result of a proper balancing act had the Tribunal directed itself in accordance with the guidance in COCKING. They by then knew that the 1st Respondents, the employers of the Applicant, had gone into liquidation or receivership or some form of insolvency. The consequence is that the Applicant, if there is validity in her factual claim as to the way she was treated, would effectively be without remedy. They would have reflected that the Respondents had been informed of the factual basis of the claim against them some considerable time before and certainly before the relevant delay occurred, and that in truth the only real "prejudice" to them (and I say prejudice in inverted commas because it does not qualify as prejudice in the context we are considering) would be having to face the possibility of being liable in a claim at the suite of the Applicant. They would, we think, have concluded inevitably that whereas the result of the refusal of leave to amend to the Applicant was very grave, the results of granting leave to amend so far as the 2nd Respondents were concerned could not in truth be said significantly to prejudice them at all.

Accordingly, on the basis of the reasoning set out in the Tribunal's decision, the conclusion at which we have arrived is that this appeal should succeed on the basis that there was a misdirection; the wrong test was applied and this Court should interfere.

I can now return to the matter which we raised at the outset because we have to say without any hesitation that notwithstanding the conclusion that there was a misdirection such as we have described, we should now have been disposed to allow this appeal had we remained of the view that it was plain that the amendments sought did not introduce an arguable basis for a claim against the 2nd Respondents. There can be no doubt that as originally formulated, that is to say on the basis that what was being contended for was a free standing claim based on s.41(2) or s.42(1), that is the position. Those subsections do not found substantive claims.

However, the argument which is relied upon is to this effect. It is suggested that it is at any rate arguable that subsection (1) of s.42 is a section the avowed purpose of which is to make liable persons who are not employees of the employer of the Applicant, but who have, if I may borrow a phrase from the criminal law "aided and abetted" the employers in perpetrating an offence under the Act; and in this case it is suggested that the substantive provision on which reliance can be placed is s.6(2)(b):

"It is unlawful for a person, in the case of a woman employed by him at an establishment in Great Britain, to discriminate against her -

(a)...

(b) by dismissing her, or subjecting her to any other detriment"

The contention is that it is arguable on the facts that Mr Dedman aided the 2nd Respondents in dismissing the Applicant in circumstances offending against the provisions of s.6(2)(b).

In answer to that Mr Rose has contended that, particularly when read with subsection (2) of s.42, it is plain that s.42 is not dealing with third parties but is dealing with employees of the Applicant's employer, that is to say employees of the 1st Respondents only, and is imposing primary liability on such employees. The purpose of the section, he contends, is to enable an aggrieved person who has suffered dismissal say, because of the activities of a particular individual fellow employee, to advance a claim not only against her employers by reason of their vicarious liability under s.41 for that employee's actions, but also against the employee in his own right. Mr Rose submits that subsection (2) with its reference back to s.41 is only sensibly explicable on that basis because otherwise it is unnecessary that it should be there at all.

As to those arguments the conclusion we have reached is that, while the matter is by no means free from difficulty, it is certainly arguable that what these two subsections are doing is something along the following lines.

Subsection (1) of s.42 is saying that anyone, employee of the Applicant's employer or otherwise, who aids the employer in a breach of the Act may himself be liable for such a breach. What is more (subsection (2)) there is a chain of vicarious responsibility so that the employer of such a person may also be liable in respect of that person's aiding of the Applicant's employer's breach of the Act. We hasten to say that this interlocutory decision should not be regarded by anybody as being authority on the meaning of this particular section. We are not giving a substantive decision, we are dealing with the question of whether the proposed amendment raises an arguable point.

In the circumstances we have concluded that had the matter been put in that way before the Tribunal, they would properly directing themselves in the manner we consider they should have done, have granted leave to amend. I was about to say to amend in the terms which are sought - to amend in the terms which I anticipate Mr Walker will shortly place before us as embodying the amendment which he desires to make.

Now for those perhaps overlong and inelegantly expressed reasons, we have concluded that we should allow the appeal of the Applicant against the Tribunal's refusal of an amendment. With the agreement of both parties and having the power to do so by virtue of paragraph 21(1) of Schedule 11 of the 1978 Act, we propose to deal with this matter ourselves by granting leave to amend rather than by sending it back to the Industrial Tribunal for further consideration and argument. Accordingly once we have the proposed amendment we will pronounce formally upon it.