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Cite as: [1992] UKEAT 387_92_1310

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BAILII case number: [1992] UKEAT 387_92_1310

Appeal No. EAT/387/92

EMPOLYMENT APPEAL TRIBUNAL

58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

At the Tribunal

On 13 October 1992

Before

THE HONOURABLE MR JUSTICE KNOX

MR A FERRY MBE

MISS A P VALE

AVDEL SYSTEMS LTD APPELLANTS

MRS J FORTUNE & OTHERS RESPONDENTS

Transcript of Proceedings

JUDGMENT

Revised

APPEARANCES

For the Appellants MR D PANNICK QC

Engineering Employers

Federation

Broadway House

Tothill Street

London SW1H 9NQ

For the Respondents MR C LEWIS

Of Counsel

Equal Opportunities

Commission

Overseas House

Quay Street

Manchester M3 3HN

MR JUSTICE KNOX: This is an appeal by Avdel Systems Ltd which I will call "the Company" from a decision of a Chairman of the Industrial Tribunal at Bedford that the hearing of this application should not be postponed pending the decision of the European Court of Justice in the case which I will call for brevity's sake - "Coloroll".

That decision was reached by a letter of 24 April 1992 which gave no specific reasons for the decision - so far as relevant it merely said:

"In the light of the comments made by the Equal Opportunities Commission in their letter dated 15 April 1992, the Chairman has refused your request to have these cases held out of the lists..."

and then it went on to give consequential directions.

The Chairman had in fact had before him arguments by letter from both sides. On behalf of the Company, the Engineering Employers London Association had written on 26 March 1992 a letter which asked for a stay:

"In light of the facts that:

- the majority of the facts on which the Applicants' claims in these cases are based are agreed between the parties;

- the central issues, namely whether the employer is permitted to achieve equality by removing rights previously available to one sex only and the temporal effect of the Barber decision, are at present the subject of a reference to the European Court of Justice in the case of Coloroll Pension Trustees Ltd v Russell;

- the EAT in the case of Hick Hargreaves & Co Ltd v Roscoe has decided that it is inappropriate for the EAT to rule on the application of Community law to occupational pensions pending the giving of answers by the European Court to the questions referred to it in, inter alia, the Coloroll case;.."

The Applicants had, as the letter inspired by the Chairman indicates, made submissions in the shape of a letter from the Equal Opportunities Commission dated 15 April 1992 - that said that they were strongly opposed to a postponement of the hearing and went on:

"We consider that our clients are entitled to pursue their claim to equal treatment in respect of their pension rights without delay.

Pausing there for a moment, that in our view is no doubt a harmless piece of rhetoric but it is, in our view, rhetoric because nobody in this tribunal or indeed elsewhere doubts that proposition. The issue that was before the Chairman and is before us concerns the most sensible way of deciding the issues that arise in this case in as expeditious and inexpensive way as practicable. Sadly, neither great speed, nor economy, can on any view realistically be hoped for and the choice that presented itself to the Chairman was one effectively of choosing between evils, because no-one doubts that it is undesirable that the delays that are unfortunately endemic in some parts of the legal system, and I am sorry to say that this tribunal is one of them, do not produce satisfactory and sufficiently expeditious solutions viewed in any objective way. However one has to look at the facts in the face and decide what is the practicable and least unattractive course to follow in the light of what is known about current court positions.

More importantly the Equal Opportunities Commission went on to say that the factual and legal issues raised in the present case - that is the one before this tribunal - differ considerably from those raised in inter alia the Coloroll case and they drew the conclusion from that, that that case was therefore unlikely to resolve the disputes that arose in the present case and there would be no point in delaying the Hearing before the Industrial Tribunal. The propositions are elaborated and answers are put forward to the letter that was written on behalf of the Company to which I have already referred.

The first point of principle that arises for us is what our attitude should be to a decision by an Industrial Tribunal to stay proceedings. The power to do so is both undoubted and in quite general terms. It is at present in Rule 12(2) of the current edition of the Rules of Procedure which govern Industrial Tribunals, the 1985 rules, and so far as relevant it reads:

"A tribunal may, if it thinks fit,-

(a)..

(b) postpone the day or time fixed for, or adjourn any hearing"

There is a passage in brackets that does not impinge on the issues before us.

In the light of an exercise of such a wide general discretion, the role of this tribunal is on the authorities, limited. We were referred to a well known authority on that proposition in relation to the grant or refusal of an adjournment - CARTER v CREDIT CHANGE LTD [1979] IRLR 361 which was concerned with the fairly frequently occurring problem of there being litigation in the courts contemporaneously with applications for unfair dismissal in an Industrial Tribunal about a single set of facts, and the desirability or otherwise of granting a stay of the Industrial Tribunal proceedings to enable the court proceedings to produce definitive findings of fact.

In that context the Court of Appeal in a Judgment delivered by Lord Justice Stephenson, with which Lord Justices Bridge and Cumming-Bruce agreed, contains this in para 17, page 363:

"For my part I regard the statements of the principle on which the Employment Appeal Tribunal acts by Mr Justice Phillips in the Jacobs case and the Griffiths case and by Mr Justice Arnold in the Bastick case as correct statements of the law, correctly interpreting the law as giving to the Chairman of Industrial Tribunals a complete and wide discretion to postpone or not as they think best in the interest of justice."

and a little later on on the next page and in the next paragraph the Learned Lord Justice said:

"All the Employment Appeal Tribunal has to do is to see whether there is an error in law, and they can only do that, it seems to me, in accordance with the guidance given by the precedents of the Employment Appeal Tribunal in other cases: they must look to see whether there is anything wrong in law with the decision, and whether it is so surprising that something must have gone wrong with it and that it could be characterised as perverse or a decision which no reasonable Tribunal could have come to."

Mr Pannick who appeared for the Company before us, did not shrink from the relevance of that authority and his submission was that the decision in this case not to grant an adjournment, was indeed perverse.

The issues that arise in this case are to be found of course from the Originating Application on the one hand and the Company's answer on Form IT.3 and the annexures thereto on the other. The first issue arises in that in para 2 of the Grounds of Complaint it is averred on behalf of the Applicant - in this case a Mrs Fortune, but there were numerous other Applicants - that she had been a member of a contracted out occupational pension scheme which is referred to in the Originating Application as "the Plan", provided by the Company under the terms of her Contract of Employment and there is an issue in that it is denied in the Notice of Appearance that it is part of the Applicant's Contract of Employment that the rules of the Plan should operate.

More central to the issues is the admitted fact that whereas before July 1991 the Plan, as I will call it in line with the way the Originating Application is drawn, provided for a normal pension date at age 65 for a man and age 60 for a woman, with effect from 1 July 1991 the Company introduced amendments to the Scheme that altered the normal pension date for female members from age 60 to age 65. That, not surprisingly, carried with it repercussions elsewhere, notably that if there was a retirement before 65, and after or at 60, there would be a reduction in the pension which in this case was fixed at 4% for each year under the age of 65 at which the member retired, and again the commutation factors applicable if there was a commutation as very commonly happens, of part of the pension for a cash sum, were altered by eliminating the differences that had theretofore naturally applied in that the men were attaining pension age at 5 years later in their lives than the women, to provide a standard rate of commutation.

There is no issue between the parties in relation to what actually the notices were that gave notice of the change that was being introduced to the Plan. The issues that arise in relation to the effect of such changes that appear in the Originating Application and the Respondents' Notice are as follows.

First of all in relation to the claim that if an applicant retired at 60 her pension would be reduced by 4% a year, the Notice of Appearance, while not challenging that fact directly, says that that allegation fails to take into account:

"the guarantee provided by the Plan that the aggregate value of the Applicant's retirement benefits in respect of contributions received prior to 1 July 1991 will not be reduced."

There is therefore an issue there concerning the aggregate value of retirement benefits in respect of pre-alteration contributions and that applies to the other features I have already mentioned - notably the commutation for cash of part of the pension.

The next significant difference is that, and this is the central issue in the case, that there is an issue between the parties as to the permissibility of the process, which was called in argument "levelling down", of altering the normal pension date by increasing the womens' age for that to 65. The Applicant claims in each case that she is entitled to a normal pension date of 60 and that she is therefore under Article 119 of the EEC Treaty and Directive 75/117, and/or S.1 of the Equal Pay Act 1970 entitled to receive a full pension at age 60 without any reduction. Similarly there are claims made with regard to the consequential alterations with regard to commutation for cash and transferring to another pension fund on retirement under normal pension age.

The general point is made in the Originating Application in para 11(c) that:

"it is not permissible for an employer to provide for equality between male and female employees by removing a right or benefit previously available to employees of one sex only.... The employer is not permitted to achieve equality by removing the rights and benefits previously made available to female employees only."

and the conclusion from that is that the purported changes introduced by the Respondents, the Company, were therefore of no effect.

That is disputed by the Company on a variety of grounds. The important ones being:

"the applicant has, by virtue of the decision of the European Court of Justice in Barber v Guardian Royal Exchange [for which the reference is given in the Weekly Law Reports rather eccentrically but the case is well known and reported at 1990 ICR 616] taken together with the Maastricht Protocol (when approved), no cause of action under Art 119 or Directive 75/117 in respect of that element of her rights under the Plan which was "earned" by service prior to the 17th May 1990"

and the general proposition that I have read from the Originating Application with regard to the impermissibility of what I call "levelling down" is put in the opposite sense in the Notice of Appearance in para 11(f):

"the Respondent's modification of the Plan did not itself contravene Community law in that there is no principle that an employer may not bring about equality between the sexes by removing from one sex a benefit not enjoyed by the other sex".

There was also this plea in the next paragraph 11(g):

"if there is such a principle, it is subject to an exception where, as in the instant case, the form of harmonisation chosen is objectively justifiable by reference to the needs of the undertaking and/or the Plan."

and the remainder of the Notice of Appearance effectively summarises what has gone before.

The background to the problems that arise is of course BARBER's case itself. It is hardly necessary to go into the details of it but we will mention from the headnote the following findings at page 617 in the ICR report:

"That, although social security schemes or benefits governed by legislation without any agreement within the undertaking and which were compulsorily applicable to general categories of workers did not come within article 119 of the Treaty, a private occupational scheme, which resulted from an agreement between employees and employer or by a unilateral decision of the employer and which was a scheme governed by its own rules, did come within the article; and that, therefore, since it was immaterial that those rules conformed with national legislation and consequently satisfied the statutory conditions to be met before the scheme was recognised as a contracted-out scheme and since it was also immaterial whether the employee received the benefits directly from the employer or indirectly through trustees, a contracted-out private occupational pension scheme came within the provisions of article 119.

That article 119 of the Treaty prohibited discrimination as regards pay between men and women and therefore it was contrary to the article for a man made compulsorily redundant to be entitled to a deferred retirement pension when a woman in the same position was entitled to an immediate retirement pension as the result of the application of an age condition that varied in the same way as provided for by the national statutory pension scheme."

"That it was for the national courts to safeguard the rights which article 119 of the Treaty conferred on individuals so that a man of the same age as a woman did not receive unequal pay by his pension being deferred; but that, in the circumstances, the direct effect of article 119 could not be relied upon to claim entitlement to a pension with effect from a date prior to the present judgment except in a case of worker who had already initiated legal proceedings."

That last proviso, or qualification, is a condensation of paragraph 44 of the European Court of Justice's decision which is set out at page 672 of the report that I am using, the ICR Report; that paragraph reads as follows:

"In those circumstances, overriding considerations of legal certainty preclude legal situations which have exhausted all their effects in the past from being called in question where that might upset retroactively the financial balance of many contracted-out pension schemes."

Then there is a passage that preserves the rights of those who had started to take action to safeguard their rights and finally there is the delphic sentence that has, I think it is fair to say, raised more questions than it answered:

"Finally, it must be pointed out that no restriction on the effects of the aforesaid interpretation can be permitted as regards the acquisition of entitlement to a pension as from the date of this judgment."

Before us it was not suggested that the meaning of that word "entitlement" was not rather less than entirely clear in all the many circumstances that can arise in the context of occupational pension schemes.

The next issue that needs addressing is what is before the European Court of Justice in what I am calling the Coloroll case. That was a case in which originally an application was made to the Chancery Division for directions regarding the situation that obtained, when an employer was in liquidation and pension fund trustees were in some doubts as to how to apply the effect of the Barber decision and by an Order of the Vice Chancellor, then Sir Nicolas Browne-Wilkinson, of the 25 July 1991, a reference was made for a Preliminary Ruling to the European Court of Justice.

The significant questions for present purposes are first of all one which is in the following terms. It is question 1(2)(iii) and it reads:

"Does the principle of equality require the benefits of the disadvantaged sex to be increased in all cases, or is it consistent with Article 119 for the benefits of the other sex to be reduced?"

It is true that that question was prefaced by the condition - "if the answer to questions (i) and (ii) above is yes", so that if the answer to those questions was "No", the European Court of Justice would not be required to deal with (iii). However, that is not a relevant consideration because Mr Lewis, who appeared for the Applicants before us, rightly as it seems to us accepted, that if the answers to (i) and (ii) were indeed "No", that would effectively mean that there were no enforceable rights available to his clients so the condition that prefaces the question in (iii) can, for practical purposes, be ignored in this case. But, as Mr Lewis pointed out, that question in (iii) is put in a very wide manner.

The Coloroll case also in the questions submitted to the European Court of Justice goes into the possible effects of the qualification on retrospectivity in that passage in para 44 of the Barber case in some considerable detail and it is not necessary to set all that out but undoubtedly it is the case that the retrospectivity aspect of the matter is raised in the Coloroll questions to the European Court of Justice. On the other hand, there is nothing that directly and specifically raises the point that arises in this case which is in a sense a converse of Barber in that in Barber's case the complaint was brought by a man who sought successfully to have a benefit that he would have enjoyed had he been a woman thereby throwing a burden on the pension fund of dealing with him on that footing, whereas in this case the issue concerns the removal from women of the status of entitlement to a pension at the age of 60 so that whereas in Barber there was a man successfully claiming a benefit previously and currently enjoyed by women, here there is a complaint by women complaining at the removal of a benefit previously enjoyed by them, but not of course, by men. In those circumstances there is an element of difference in the retroactivity issue.

The issues in this case can perhaps conveniently be summarised as follows. There are, in our view, two central issues, one is - Is it legitimate to level down? (I use the shorthand that was used in argument) -

"Is it permissible for an employer to provide for equality between male and female employees by removing a right or benefit previously available to employees of one sex only?"

is the fuller way of putting it taken from the Originating Application.

The second central issue is - How far is there retroactivity in the context of the removal of benefits previously enjoyed? - the converse of the Barber case. There are various relatively peripheral issues of fact. First - Did the Plan form part of the terms of employment of the Applicants? Secondly, - What exactly is the effect of the reference in para 8(a) of the Notice of Appearance to the aggregate value of the Applicant's retirement benefits in respect of contributions received prior to 1 July 1991? - which are it is said, the subject of a guarantee and thirdly, there is an issue which arises from para 11(g) of the Notice of Appearance which I read earlier:

That raises the question whether there can be an objective justification of the measure that was introduced by the Company in this case.

So far as the central issues are concerned, it does seem to us that Mr Pannick was right in submitting that the issue whether one can level down is raised in the Coloroll decision. It is raised in general terms but it does seem to us to be very likely to be addressed by the European Court of Justice and if it is not addressed at all it seems to us that the employees would not have a case anyway. On the other hand, it is not certain that the European Court of Justice will, in terms, in its decision, deal with the particular state of affairs that obtains here, namely the removal of a benefit previously enjoyed rather than the conferment of a benefit not previous enjoyed as in Barber and that spills into the retrospectivity issue.

There is no prospect of the Coloroll decision of course impinging on issues as regards the terms of employment, the aggregate value of benefits subject to the guarantee or so far as this particular case is concerned, objective justification of the alteration to the Plan. There is as we see it, a possibility that the European Court of Justice's decision will contain matter that impinges on the question of objective justification for alterations but in our view it is no more than a possibility.

Next we turn to look at the timescale that faces us and faced the Chairman of the Industrial Tribunal. The Hearing in the Industrial Tribunal for the substance of the Originating Application is early next month. Both sides before us today accepted that an Appeal was very likely, whichever way the decision went, and that means that the matter is very likely to come before this Tribunal which is, of course, the next step up the line. Sadly the lists in this Tribunal are extremely congested and a 2 year interval between the time of a final decision by an Industrial Tribunal and a Full Appeal in this Tribunal, is I am sorry to say, not uncommon. There is therefore the prospect of a deplorable but substantial delay at that stage and it is a very lively prospect indeed.

So far as the Coloroll decision is concerned, it is anticipated that the oral hearing before the European Court of Justice will occur either at the end of this year or very early next year. The expectation is that the Advocate General would give his opinion within, say, two months thereafter, and that the Court itself would deliver its decision in say, two months after that. It would seem to us to be realistic to look at June of next year as being a probable, though far from certain, date when one could expect to have the European Court of Justice's view in the Coloroll case.

It seems to us that given that the central issues, both of levelling down and retrospectivity, are likely to be dealt with to a significant extent by the European Court of Justice, the arguments for and against the grant of a stay in the Industrial Tribunal, can be summarised as follows:

If the stay is granted, there will be a postponement of the time when the Appeal to this Tribunal starts entering the lists and awaiting disposal. If the stay is granted that foreseeably will happen after the Coloroll decision is given in or about June of next year. If a stay is not granted then the probability is that round about Christmas the Industrial Tribunal would produce its decision and an Appeal could and would be lodged.

If, on the other hand, one looks at the disadvantages of the refusal to stay, one finds first of all the risk that if the Industrial Tribunal goes on to dispose of the matter before having the benefit of the Court of Justice's decision in Coloroll the Appeal to this Tribunal might result in a remission to the Industrial Tribunal because the questions that the Industrial Tribunal asked itself, and answered, turned out in the end not to be the appropriate questions. That is, we think, a risk. The likelihood of it materialising is a very difficult matter to assess.

Secondly, there clearly in our view, is a risk of there being wasted costs if, after the Industrial Tribunal's decision in favour, we assume for present purposes, of the Applicants, the European Court of Justice in the Coloroll case defeats their claims by a holding that is adverse to their case. That again must be a possibility, but again the risk is a very difficult one to assess. There is, we accept, a possibility that questions addressed by the Industrial Tribunal would at the end of the day, prove to be the wrong questions and different from those that would have been formulated if the Industrial Tribunal had had the benefit of the Coloroll decision.

Overall our conclusion is this, that there are quite significant arguments in both directions and although we appreciate that the central issues in this case are likely to be the subject matter of the decision in the European Court of Justice, we do not see that the answer is so obvious that there should be a stay that we would be justified in interfering with the exercise of the Chairman's discretion. We appreciate that there is no statement in terms of exactly what those reasons are, but it is clear enough from the written submissions that were made that they bore considerable relation to the arguments that were adduced on behalf of the Applicants and it would, in our view, not be justifiable to treat the exercise of discretion as not having been given for any discernible reason at all.

Before parting with the case we should say that we are not satisfied that the decision of HICK HARGREAVES & CO LTD v ROSCOE which was given in this Tribunal on 16 October last year, is anything like authority for the very wide proposition for which it was cited in the letter from which I have read extracts from the Engineering Employers London Associaton namely that it is inappropriate for the EAT to rule on the application of Community Law to occupational pensions pending the giving of answers by the European Court to the questions in Coloroll.

Mr Pannick accepted, very properly, more especially because he appeared in the case himself, that Hick Hargreaves & Co Ltd did not have the feature of levelling down that this case has, and more significantly, that the issue that did arise in the Hick Hargreaves & Co Ltd case was not distinguishable from the issue that had been submitted to the Court or was in the process of being submitted in the Coloroll case and therefore although we would not for a moment suggest that Hick Hargreaves & Co Ltd v Roscoe was not correctly decided, it does not seem to us to be a useful guide on the question that we have to address. For those reasons this Appeal will be dismissed.