United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellants	MR JEREMY McMULLEN QC Instructed by: Messrs Norton Rose Solicitors Kempson House Camomile Street London EC3A 7AN
For the Respondent	MR CLAYTON (of Counsel) Instructed by: Messrs Fox Williams Solicitors Citygate House 39-45 Finsbury Square London EC2A 1UU


 


MR JUSTICE MAURICE KAY: By a reserved decision dated 21st December 1998 an Employment Tribunal sitting at London (South) decided that Saga Petroleum (UK) Ltd ['Saga'] had unlawfully discriminated against Mr Bourgeois on racial grounds and had unfairly dismissed him.

1. This appeal to the Employment Appeal Tribunal seeks to challenge the finding of unlawful discrimination but not the finding of unfair dismissal. We shall set out the background by reference to a list of findings of fact which appears early in the Decision of the Employment Tribunal:

"(i) In May 1974 [Mr Bourgeois] entered the employment of the parent company of Santa Fe Exploration (UK) Ltd ("SFX") and in May 1975 he moved to SFX's London Office as Project Engineering Manager.

(ii) In 1981, SFX was bought by the Kuwait Petroleum Corporation and SFX remained in that ownership until 1996.

(iii) In 1990 [Mr Bourgeois] became a Director of SFX and he was appointed the Acting Managing Director in December 1994

(iv) In November 1995, [Mr Bourgeois] was confirmed as the Managing Director of SFX. A new contract of employment was drawn up. The contract provided for 12 weeks' notice by either party to terminate the contract. There was a contractual severance policy which provided for six weeks actual pay for each year of service up to a maximum of 104 weeks' pay.

(v) [Mr Bourgeois] was informed that SFX was for sale in June 1996. An auction took place and the company was purchased by Saga Petroleum ASA ("Saga ASA") a Norwegian company.

(vi) On 3 December 1996 [Mr Bourgeois] met Mr Lars Bjerke the Executive Vice President of Saga ASA and the person who was to take control of SFX after the purchase of SFX. The purchase was completed the following day, the 4 December 1996 when the name of SFX was changed to Saga Petroleum (UK) Ltd. Mr Bjerke was appointed as Chairman of [Saga]. At the time in addition to [Mr Bourgeois] as Managing Director, Mr John Bright was the Director of Finance and Mr Graham Rollinson the Director of Exploration. There were 43 staff at the time, none of whom was Norwegian.

(vii) At the time of the take-over by Saga ASA [SFX] was not an operating company but Saga ASA intended that it should become such a company but to do so [Saga] needed a licence from the Department of Trade and Industry. This entailed [Saga] taking on more staff with relevant expertise and accordingly Saga ASA had no intentions of reducing the number of staff.

(viii) On the 4 December 1996, Mr Bjerke had three meetings at [Saga's] offices. The first was with [Mr Bourgeois], the second with the management team and the third with all staff. In attendance also at the staff meeting were three executives from Saga ASA. At the staff meeting [Mr Bourgeois] introduced Mr Bjerke to the staff and the staff were informed that no staff would be made redundant and an outline was given of the intentions of Saga ASA for the future of [Saga]. The staff were told that it was intended to recruit more people and therefore no one should be concerned that their job was at risk.

(ix) [Mr Bourgeois] attended a meeting of the Executive Committee of Saga ASA on the 11 December 1996 in Norway. On the following day he was told that he would be retained as Managing Director of [Saga] on his existing terms and conditions of employment for a period of one year and that during that year his performance would be evaluated.

(x) Mr Bjerke attended [Saga's] London office approximately monthly from then on until late 1997 and he spoke with [Mr Bourgeois] at least weekly. [Mr Bourgeois] attended meetings in Norway about once a month but complained that some meetings were conducted in Norwegian and that all important documents were in Norwegian with insufficient translations. There were no appraisal meetings or any other appraisal procedure whereby Mr Bjerke communicated to [Mr Bourgeois] how he was performing. Mr Bjerke may have told [Mr Bourgeois] on occasions following Board Meetings that he considered the meeting or aspects of it could have been handled better by [Mr Bourgeois]. [Mr Bourgeois] was left with the understanding that his performance was not criticised by Mr Bjerke.

(xi) In January 1997, [Mr Bourgeois] was told that he should dismiss Mr Bright. [Mr Bourgeois] met with Mr Bright and wrote him a letter of the 10 January 1997 in which he set out the terms for early retirement. Mr Bright, who was approaching retirement age, accepted those terms. Mr Bright was replaced as Head of Finance by Jan Peter Sunde a Norwegian from Saga ASA.

(xii) At [Saga's] board meeting on the 12 February 1997 it was reported that the integration of [Saga] within the Saga Group was proceeding well and that three key positions with [Saga] had been filled although a number of vacancies remained.

(xiii) Throughout 1997 and into 1998 a number of management staff from Saga ASA joined [Saga] including Fridtjof Jebson, General Manager Business Development, (in March 1997); Aksel Arnecke (June 1997), General Manager, Quality Management; Einar Dahl, Gas Marketing Manager; Kjell Thorbjensen, Environmental Supervisor; Jan Peter Sunde, General Manager Finance; Terje Rudshaug, Engineering Manager; Vider Danielsen, IT Adviser; Ellen Hansen, Documentation and Data Co-ordinator; Sven Askedal, Drilling Manager and Torstein Olberg, Operations Manager. All are Norwegian and none of the posts was advertised in the UK.

(xiv) At a Board Meeting in May 1997 [Mr Bourgeois] presented staffing proposals for [Saga] to become an operating company and stated that [Saga] was looking to recruit explorationists and reservoir engineers urgently. It was suggested at the meeting that some more staff might be brought over from Norway.

(xv) In mid-1997 [Mr Bourgeois] was informed he should make Graham Rollinson redundant. [Mr Bourgeois] objected and Mr Rollinson was retained and eventually became one of three Business Unit leaders.

(xvi) At a meeting of [Saga's] Board in August 1997 it was reported that [Saga] was having difficulty in recruiting reservoir engineers.

(xvii) Also in August 1997, Saga ASA held its annual conference in Norway. Mr Bjerke attended that meeting and he reported that he considered [Mr Bourgeois] was not the right person to be the Managing Director of [Saga]. By this time [Saga] had a management team of nine of whom four were Norwegian.

(xviii) Mr Bjerke told [Mr Bourgeois] on the 1 October 1997 that the latter would be replaced in a year's time as Managing Director. A letter of the same date was given to [Mr Bourgeois] offering him the position of Managing Director from the 1 January 1998 until his "retirement" on the 1 September 1998. [Mr Bourgeois] found the offer surprising as he was already Managing Director but he considered there was no option but to sign accepting the offer.

(xix) On the 3 October 1997, Mr Asbjorn Larsen, the Chief Executive Officer of Saga ASA visited London and had an early morning meeting with [Mr Bourgeois] in a London hotel. Mr Larsen confirmed to [Mr Bourgeois] that he was to be replaced. There was some discussion during which [Mr Bourgeois] asked for confirmation that his contract would be honoured, by which he meant the provisions as to severance terms. Mr Larsen confirmed that the contract would be honoured. Mr Larsen considered that [Mr Bourgeois] was satisfied with the situation. [Mr Bourgeois] accepted the situation but came away from that meeting under the impression that he would be paid severance pay as per the severance policy in his contract.

(xx) At this time [Mr Bourgeois] was concerned as to his pension arrangements. He was in dispute with the former American owners of [Saga] as to his pension arrangements and on occasions [Mr Bourgeois] mentioned those problems to Mr Bjerke.

(xxi) In late 1997, Mr Bjerke considered that he should take a more hands-on approach to the management of [Saga] and from December 1997 he commenced chairing all management team meetings as well as the Board Meetings of [Saga]. This involved meetings at least twice a month.

(xxii) By December 1997, [Saga] had made an application to the Department of Trade and Industry for an exploration operator's licence and on the 10 December 1997 [Saga] wrote to the Department of Trade and Industry in support of that application. The situation was reviewed at [Saga's] Board Meeting on the 12 December when it was reported that new positions had been created for heads of three Business Unit areas. The three positions had been advertised and many well qualified candidates had applied. It was then hoped that the new appointments could be announced on the 1 February 1998.

(xxiii) On the 28 January 1998, Saga ASA issued an internal memorandum announcing that Mr Werner Karlsson a Norwegian would take over as leader of [Saga]. At a Board Meeting of [Saga] on the following day, 29 January 1998, [Mr Bourgeois] reported that the Business Unit leaders had been appointed including Mr Graham Rollinson. It was also reported that a new Operations Manager had been appointed, namely Torstein Olberg, a Norwegian, to be in charge of planning the well on the new Saga operated licence.

(xxiv) On the 1 February 1998, [Mr Bourgeois] was told by Mr Bjerke that Mr Werner Karlsson had been appointed as replacement Managing Director earlier than expected and that he would be taking up office from March 1998. Mr Karlsson had been employed by Saga ASA since 1978 following Norwegian compulsory service and he had held various senior positions but had not been a managing director of a company. The position of replacement Managing Director had not been advertised. There has been no interviews and only Mr Karlsson had been considered for the position.

(xxv) On 27 February 1998, Saga ASA issued a press release stating that Mr Karlsson would be taking over on the 1 March as Managing Director of [Saga]. By that time [Saga] had grown to 63 staff of whom 19 were Norwegian.

(xxvi) On the 3 March 1998, [Mr Bourgeois] was given a letter by Mr Halvor Bjerke, Head of Saga ASA legal department. The letter was signed by Mr Lars Bjerke and it gave [Mr Bourgeois] 12 weeks' notice of termination of employment. There was no mention in the letter of any severance package. [Mr Bourgeois] was told he was not to be paid any severance package. [Mr Bourgeois] was put on immediate garden leave.

(xxvii) The same day [Mr Bourgeois] wrote to Mr Asbjorn Larsen a letter expressing [Mr Bourgeois'] complaint at his treatment and in particular as to the lack of any severance payment. Mr Larsen did not reply to that letter.

(xxviii) In response to a letter from [Mr Bourgeois'] solicitors [Saga's] solicitors sent a letter of the 18 March 1998 setting out the reasons for dismissal. Those reasons were stated to be that [Mr Bourgeois] was dismissed because it was apparent that his management style did not fit in to that of [Saga].

(xxix) Not having heard from Mr Larsen in reply to his letter of the 3 March [Mr Bourgeois] wrote again on the 31 May expressing disappointment at his treatment and on the 8 July 1998 [Mr Bourgeois] issued Employment Tribunal proceedings.

(xxx) On the 31 August 1998, [Mr Bourgeois'] employment terminated.

(xxxi) Of 10 senior positions within [Saga] eight of those positions are now filled by Norwegians and all but one of [Saga's] Board of Directors are Norwegians."

2. The Employment Tribunal went on to draw a number inferences from their primary factual findings before concluding that Saga had subjected Mr Bourgeois to discrimination on grounds of his nationality and that he had been unlawfully discriminated against on racial grounds. The Tribunal also rejected Saga's case that the reason for the dismissal related to Mr Bourgeois' capability. It found that the reason was unlawful race discrimination. Moreover, it would have concluded that the dismissal was procedurally unfair in any event as there had been no procedure leading to the termination of employment.

The Legal Framework

3. By s.1(1) of the Race Relations Act 1976:

"A person discriminates against another in any circumstances relevant for the purposes of any provision of this Act if-

(a) on racial grounds he treats that other less favourably than he treats or would treat other persons; …"

For this purpose, "racial grounds" means:

"Any of the following grounds, namely colour, race, nationality or ethnic or national origins."[S.3(1)].

4. The approach to the drawing of inferences in discrimination cases was reduced to a number of principles and guidance by Neill LJ in King v Great Britain China Centre [1992] ICR 516, 528-529:

"(1) It is for the applicant who complains of racial discrimination to make out his or her case. Thus if the applicant does not prove the case on the balance of probabilities he or she will fail. (2) It is important to bear in mind that it is unusual to find direct evidence of racial discrimination. Few employers will be prepared to admit such discrimination even to themselves. In some case the discrimination will not be ill-intentioned but merely based on an assumption that "he or she would not have fitted in." (3) The outcome of the case will therefore usually depend on what inferences it is proper to draw from the primary facts found by the tribunal. These inferences can include, in appropriate cases, any inferences that it is just and equitable to draw in accordance with section 65(2)(b) of the Act of 1976 from an evasive or equivocal reply to a questionnaire. (4) Thought there will be some cases where, for example, the non-selection of the applicant for a post or for promotion is clearly not on racial grounds, a finding of discrimination and a finding of a difference in race will often point to the possibility of racial discrimination. In such circumstances the tribunal will look to the employer for an explanation. If no explanation is then put forward or if the tribunal considers the explanation to be inadequate or unsatisfactory it will be legitimate for the tribunal to infer that the discrimination was on racial grounds. This is not a matter of law but, as May LJ put it in North West Thames Regional Health Authority v Noone [1988] ICR 813, 822, "almost common sense." (5) It is unnecessary and unhelpful to introduce the concept of a shifting evidential burden of proof. At the conclusion of all the evidence the tribunal should make findings as to the primary facts and draw such inferences as they consider proper on those facts. They should then reach a conclusion on the balance of probabilities, bearing in mind both the difficulties which face a person who complains of unlawful discrimination and the fact that it is for the complainant to prove his or her case."

This approach was expressly approved by the House of Lords in Glasgow City Council v Zafar [1998] ICR 120. In that case it was also emphasised that, in the absence of a satisfactory explanation from the employer of differential treatment, a tribunal is not bound to draw an inference that such less favourable treatment is on the grounds of race. The inference must only be drawn if the tribunal considers it proper in all the circumstances. Moreover, the inference cannot be drawn simply from the fact that an alleged discriminator has acted unreasonably towards the complainant.

The Decision of the Employment Tribunal

5. The Employment Tribunal considered the complaint of unlawful race discrimination under three headings. First, it considered whether there was a difference of treatment and a racial difference. Secondly, it examined the explanation put forward on behalf of Saga. And thirdly, it addressed the issue of causation.
6. On the first issue, it stated:

"11. … The tribunal had to decide whether there was the coincidence of a difference of treatment and a difference of race. The situation in this case is that there were two men, one North American and one Norwegian; there was one post namely the post of Managing Director of the Respondent; the incumbent namely the Applicant lost the post; the Norwegian, namely Mr Werner Karlsson won the post. In those circumstances the tribunal concludes that there was a difference of treatment and a difference of race."

Turning to the explanation put forward on behalf of Saga, the tribunal stated:

"12. … The explanation that was forthcoming was that the Respondent's Chairman, Mr Bjerke, came to the view that the Applicant was not performing adequately in the role of Managing Director and he also came to the view that Mr Karlsson was an appropriate person to take the Respondent forward. The tribunal does not consider that explanation to be adequate or satisfactory …"

There then followed an account of the reasons behind that conclusion. There was no contemporaneous evidence of any concerns having been raised with Mr Bourgeois as to his performance apart from possibly some comments as to his performance at Board Meetings. The letter of 18th March 1998 had not mentioned poor performance but merely management style. Indeed:

"Poor performance as a reason for the dismissal was put forward subsequently and appears to have changed its character and gathered more strength as it went along."

Moreover:

"13. The tribunal is satisfied that there were no or insubstantial concerns as to the Applicant's performance during his Managing Directorship … and that the allegations of poor performance have been raised subsequently to justify the dismissal …"

7. The tribunal then proceeded to set out its findings on causation. In view of the criticisms to which they were subjected in the course of this appeal, it is necessary for us to quote the relevant passage at length.

"14. The Tribunal then considered whether the Applicant's race/nationality was the cause for him having been dismissed as Managing Director. The tribunal considered carefully all of the evidence. The tribunal noted that there was no direct evidence that race/nationality was the cause of the Applicant's dismissal apart from evidence given by the Applicant to the effect that he was told by Mr Bjerke that he was to replaced by a Norwegian. However, that statement was in fact correct and the tribunal does not consider that that statement by itself takes the matter further. Accordingly, the tribunal considered all the evidence to see whether it would be proper for the tribunal to draw an inference that race/nationality was the reason for the Applicant's dismissal. The tribunal does draw that inference in particular from the following evidence:-

(i) The evidence establishes that Saga ASA had a policy of putting Norwegian staff into the Respondent and into senior management positions possibly as part of its policy of integrating the Respondent within the group. The number of Norwegian staff and the seniority of those staff compels the tribunal to the view that there was a policy of Norwegianisation of the Respondent.

(ii) Many of the UK staff left the Respondent including Mr Bright who was dismissed and replaced by a Norwegian and initially is was proposed to dismiss Mr Rollinson but instead he was retained but effectively demoted.

(iii) The Applicant was replaced by Mr Werner Karlsson. Mr Karlsson was considerably less experienced than the Applicant. If the Respondent and Saga ASA had wished to replace the Applicant with the best person of whatever nationality then the post would have been advertised. Mr Karlsson was chosen without any competition or outside advertisement and the tribunal is satisfied that he was chosen because he was Norwegian."

8. The tribunal therefore concluded:

"15. Accordingly, the tribunal is satisfied that the Applicant was subjected to discrimination by the Respondent and is further satisfied that it is appropriate to infer from the evidence that such discrimination was on grounds of nationality. In those circumstances tribunal concludes that the Respondent unlawfully discriminated against the Applicant on racial grounds."

9. On behalf of Saga, Mr McMullen QC submitted that the central issue in the appeal is the question whether Mr Bourgeois' dismissal was a part of a policy of Norwegianisation. Before turning to the substance of the appeal it is necessary for us to give reasons for a ruling which we made on a preliminary issue.
10. Preliminary issue: Chairman's Notes

When this appeal came before the Employment Appeal Tribunal for a preliminary hearing on 18th June 1999 and the EAT ordered that the appeal be allowed to proceed to a full hearing there was a direction that the Chairman of the Employment Tribunal provide his Notes of Evidence. The Chairman duly obliged and a transcript of his Notes was received in the EAT on 6th September 1999. Copies were made available to the parties within a few days thereafter. The present appeal was originally listed to be heard in March 2000 but in February 2000 that hearing was vacated and was refixed for 19th June 2000. On 23rd May 2000 Norton Rose, solicitors for Saga, wrote to Fox Williams, solicitors for Mr Bourgeois, expressing concern about the adequacy of the Chairman's Notes of Evidence. Norton Rose's own notes of the hearing in the Employment Tribunal included parts which were absent from the Chairman's Notes and other parts which did not correspond in quantity or detail with the Chairman's Notes. Norton Rose were seeking to obtain the agreement of Fox Williams to add to or replace the Chairman's Notes with an agreed note provided by the two solicitors. On 30th May 2000 Fox Williams replied stating that they considered the Chairman's Notes to be adequate and that they did not accept that Norton Rose's notes represented an accurate record of the evidence. These were the first stages in a course of adversarial correspondence which continued up until the day of the hearing. On 2nd June 2000 Norton Rose wrote to the Employment Tribunal enclosing their own notes of evidence and asking if the Chairman:

"could let us know whether he agrees that our note is an accurate record of the evidence."

On 7th June 2000 the Employment Tribunal replied reporting the view of the Chairman that he had provided his Notes of Evidence as ordered by the EAT and was not prepared to comment upon notes taken by either of the parties. By this time it was of course about 20 months after the hearing in the Employment Tribunal. When the appeal began Mr Clayton, on behalf of Mr Bourgeois, expressed his agreement to supplementing the Chairman's Notes of Evidence in a number of areas where the notes kept by Fox Williams matched those kept by Norton Rose. However, where the two did not correspond, he maintained the position that the Chairman's Notes of Evidence must prevail. Norton Rose produced affidavit evidence deposing to belief in the accuracy of their notes. Mr McMullen then invited the EAT to receive the Norton Rose notes and to consider the appeal on the basis of them.

11. Of the various areas of discrepancy, the most important related to answers given by Mr Bourgeois in cross-examination. At one stage, when he was being cross-examined by reference to some minutes of Board Meetings, and the words "three key positions filled", the Chairman's Notes attribute the following to Mr Bourgeois:

"I was suggesting short term filling posts from Norway. …

Not Saga ASA's policy. …

I did accept that expedient to get staff over from Norway in the short term. …

It was my hope to have recruited enough UK staff to replace Norwegian expatriate staff.

Not Saga ASA policy.

…"

12. In the notes of this passage of evidence produced by Norton Rose an equivalent part of this passage reads as follows:

"Counsel: when looking at a post for UK company – not their policy to recruit Norwegian nationals?

Bourgeois: no."

13. The transcript of the notes kept by Fox Williams are different again and include this passage:

"Q: Never any part of Saga ASA policy to recruit individuals just because Norwegian.

A: Did not talk about recruiting.

Q: Wasn't there a position available for a geophysicist?

A: I believe so.

Q: So it was not part of Saga ASA policy to recruit Norwegians to that job.

A: That's correct, in the UK."

A comparison of the three records therefore reveals that, whilst the Norton Rose notes are consistent with an admission that there was no policy to recruit Norwegian nationals, the Fox Williams notes confine that answer to a particular post for a geophysicist, whilst the Chairman's Notes at this point and elsewhere are more laconic.

14. We were referred by Counsel to a number of authorities. The earliest from this jurisdiction was Dexine Rubber Co Ltd v Alker [1977] ICR 434 which referred to Hayman v Rowlands [1957] 1 WLR 317 where a similar problem in connection with appeals from County Courts arose. In the Dexine Rubber case, Cumming-Bruce J, giving the judgment of the EAT, said ( at pages 438 to 439):

"The situation in the instant case is, of course, different: there is a note by the chairman who was under a judicial duty to take it, and there is a difference of recollection between the chairman and counsel and solicitor for the employers in this court as to whether the chairman's note was accurate. The chairman, having considered the question, was satisfied that his own recollection was correct and the recollection of counsel and solicitor for the employers was imperfect. All we would say is this: that where a party to proceedings in the industrial tribunal has received a chairman's note which he challenges as inaccurate, it is his duty, as was done here, to send the criticisms he wishes to make to the chairman for his observations. If the chairman replies that, having considered the criticisms, he is satisfied that his (the chairman's) recollection was accurate and that his note is the correct material for use in the appeal tribunal, the party who is criticising the chairman's note must accept the chairman's conclusion, unless, after submitting his criticisms to the advocate on behalf of the opposite party, there is confirmation from both sides that the chairman's note and recollection is incomplete or imperfect. That was not done in this case, and in that situation this appeal tribunal refused to admit any material other than that before them by the chairman's note of proceedings. We would suggest for the future that where such a criticism is going to be made by one party, that party should submit the criticism to the advocate for the opposite party before submitting the criticism for the comments of the chairman of the tribunal. This is likely to make it easier for the chairman of the tribunal to appreciate whether there is a risk recognised by both parties that his note is incomplete or inaccurate, and that is the procedure that should be followed in future if such a situation arises again."

In Owen and Briggs v James [1981] ICR 377 Slynn J, giving the judgment of the EAT, said (at pages 385 to 386):

"… we were asked to look at notes of evidence and argument taken by counsel and by the solicitors for the respondents to the application. It was said that they were fuller and cast, perhaps, a different light on some of the findings of fact. Those notes were not agreed by the applicant's advisers. It seemed to us that, in the absence of agreement, it was wrong for us to look at those notes of evidence, unless there were specific passages which were accepted to be accurate. Appeals to this appeal tribunal on matters of law are intended to be conducted principally on the findings of fact of the industrial tribunal as set out in their decision and reasons. … In cases where the [chairman's] notes of evidence are not to form a substantial part of the argument, they should not be asked for. It seems to us that there is even less justification for adding extra sets of notes made by the parties. It is only in the exceptional case where the point really turns on the precise evidence which was given, and were both sides can agree that a note is inaccurate or incomplete, that we should properly look at additional notes. …"

In Aberdeen Steak Houses Group plc v Ibrahim [1988] ICR 550 Wood J, having referred to the above passage from the Dexine Rubber case, added (at page 556):

"It is clearly right that where the parties cannot agree between themselves upon the accuracy or inaccuracy of the notes of the court that the version given by the court should remain supreme. In the absence of some such rule it would be impossible to keep any control over the number of continuing issues on the subject. However, there is a proviso as we read Dexine Rubber Co Ltd v Alker, and that is where it is common ground between the parties that there is an error in the chairman's records. "

15. We do not doubt that the solicitors who took and transcribed Norton Rose notes believe in their accuracy. Moreover, although we have not seen the original Fox Williams notes or copies of them, we accept that the transcript of them which is before us has been compiled in good faith. The two sets of notes are significantly different and there is no agreement between the parties as to the correct version. It is hardly surprising that, so long after the event, the Chairman of the Employment Tribunal feels unable to comment on the notes taken by either of the parties.
16. In these circumstances, we do not accept the submission of Mr McMullen to the effect that it would be in the interests of justice for us to receive the Norton Rose notes. To do so would go substantially further than the authorities envisage. In the circumstances of the present case, that would be neither desirable nor permissible. Moreover, it would be a development which could have unwelcome consequences in future appeals.
17. We now turn to the substantive grounds of appeal.
18. The inference of discrimination

The finding of discrimination in this case was based on the drawing of inferences which, as recognised by the authorities, especially King v Great Britain Chin Centre Ltd [1992] ICR 516 CA and Glasgow City Council v Zafar [1998] ICR 120 HL, is not unusual. In order to draw an inference there must be a finding of primary fact justifying the inference. Moreover, as Balcombe LJ said in Chapman v Simon [1994] IRLR 124, at paragraph 33:

"If there are no such findings, there can be no inference: what is done can at best be speculation."

To which Peter Gibson LJ added (at paragraph 43):

"A mere intuitive hunch, for example, that there has been unlawful discrimination, is insufficient without facts being found to support that conclusion."

In the present case, the Employment Tribunal drew the inference, having considered "all the evidence" and "in particular" from the those findings to which we have referred. In making his submissions, Mr McMullen was critical of each of those findings and it is necessary for us to consider them.

(1) Norwegianisation.

At the point in the Decision where the inference is drawn, the finding of fact is expressed as follows:

"The evidence establishes that Saga ASA had a policy of putting Norwegian staff into the Respondent and into senior positions possibly as part of its policy of integrating the Respondent within the group. The number of Norwegian staff and the seniority of those staff compels the tribunal to the view that there was a policy of Norwegianisation of the Respondent."

This finding cannot be viewed in isolation from the evidence which gave rise to it and which had been recited in the findings of fact to which we have already referred. These included the facts that immediately prior to the involvement of Saga ASA there were no Norwegians employed by Saga; during 1997 and 1998 ten Norwegian management staff from Saga ASA were transferred; none of those posts was advertised in this country; and, as at the date of the Decision, of ten senior positions in Saga, eight were filled by Norwegians and all but one of its board of directors was Norwegian.

In the face of these findings, Mr McMullen submitted that an inference of Norwegianisation of senior management positions was inappropriate. He suggested that the Employment Tribunal had become confused about the policy, having referred in different parts of the Decision to "a policy of preferring Norwegians and replacing the Applicant as part of that policy"; "a policy of putting Norwegian staff into … senior management position possibly as part of its policy of integrating the Respondent within the group"; and "replacement by a Norwegian" of staff who left. In our judgment there was no confusion on the part of the Employment Tribunal. It found, unequivocally, that there was a policy of putting Norwegians into senior management positions and, on the evidence, it was entitled so to find.

Mr McMullen's skeleton argument included a submission that the finding of such a policy was inappropriate having regard to some of Mr Bourgeois' answers in cross-examination. However, the main weight of this submission depended upon our receiving the Norton Rose notes of evidence and this we have declined to do. Moreover we do not consider the fact that one of those senior management identified by the Employment Tribunal as Norwegian was in truth a Dane living in Norway and working for Saga ASA undermines the inference.

The inference was next challenged by references to some contemporaneous documents from the time between the Saga takeover and the departure of Mr Bourgeois which associate him with various decisions and pronouncements. These documents included a letter from Mr Bourgeois to the Department of Trade and Industry dated 10th December 1997 and various minutes of board meetings. We are satisfied that they were properly considered by the Employment Tribunal. They are referred to in the findings of fact which we have recited. We do not consider that, as a matter of law, they render the inference invalid. Nor does the recruitment of a number of non-Norwegians to replace staff who left. The Employment Tribunal rightly concentrated on senior management level.

Mr McMullen then drew attention to the recognition by the Employment Tribunal of the possibility that putting Norwegians into senior management positions was part of a policy of integrating Saga into the Saga ASA group. He submitted that, having identified the possibility, it was incumbent upon the Tribunal then to determine whether this was in fact the reason for the transfer of Norwegian senior managers. In our judgment it is apparent from the Decision, when read as a whole, that the Tribunal felt unable to put this higher than a possibility which fell short, on the totality of the evidence, of being a probability and therefore a positive finding of fact. The difficulty faced by Saga with this, as with a number of evidential matters, is that their primary case and their evidence sought to establish that Mr Bourgeois was fairly dismissed because of his shortcomings, a case that was roundly rejected by the Tribunal. In effect, when the Tribunal looked to Saga for an explanation of difference of treatment, they did not receive a credible one. Whilst it was still necessary to have regard to all the evidence when considering the drawing of an inference, the reality is that, the Tribunal having rejected Saga's explanation, it is not surprising that Saga's case on policy – "internationalisation rather than Norwegianisation" – did not find favour with the Tribunal.

Mr McMullen's other submission on this point was that the Employment Tribunal did not properly consider whether the policy which it found was the reason for the dismissal of Mr Bourgeois and his replacement by a Norwegian. We of course accept that in order to find that his dismissal amounted to unlawful discrimination the Tribunal had to find that the fact that he was not Norwegian was the "substantial and effective cause" of his dismissal. It is abundantly clear to us that they did so. The lengthy passage in which the adverse inference was drawn begins with the words:

"The Tribunal then considered whether the Applicant's race/nationality was the cause of him having been dismissed as Managing Director."

(2) Departure of UK Staff

The second "particular" matter upon which the Employment Tribunal relied when drawing the inference was:

"Many of the UK staff left the respondent including Mr Bright who was dismissed and replaced by a Norwegian and initially it was proposed to dismiss Mr Rollinson but instead he was retained but effectively demoted."

Mr McMullen submitted that the departure of "many of the UK staff" was not a basis for an inference because there were no findings as to why most them left. It is true that there were no such findings in most cases but the Employment Tribunal concentrated on Mr Bright and Mr Rollinson who held senior positions. In January 1997 Mr Bourgeois was told to dismiss Mr Bright. As a result Mr Bright was offered terms for early retirement which he accepted, whereupon he was replaced as Head of Finance by a Norwegian. Mr Bourgeois was also told to make Mr Rollinson redundant. Mr Bourgeois refused. In the event, Mr Rollinson was retained and eventually became one of those Business Unit Leaders. Whilst it is true that, having been retained, Mr Rollinson is not, literally, one of the departed UK staff, the fact is that there had been an instruction to dismiss him and his retention only ensued on the basis of an effective demotion. Mr McMullen took issue with this latter finding and referred us to diagrams of management structure to support a submission that there had been no effective demotion. However, the evidence of Mr Bourgeois to the Employment Tribunal had been to the effect that, in reality, Mr Rollinson's new position was a demotion and the Tribunal was entitled to accept that evidence. In all the circumstances we detect no legal error in the Tribunal having attached some significance to these matters when considering whether or not to draw an inference.

(3) Mr Karlsson

Of the replacement of Mr Bourgeois by Mr Karlsson, the Employment Tribunal said:

"Mr Karlsson was considerably less experienced that the Applicant. If the Respondent and Saga ASA had wished to replace the Applicant with the best person possible of whatever nationality then the post would have been advertised. Mr Karlsson was chosen without any competition or outside advertisement and the Tribunal is satisfied that he was chosen because he was Norwegian."

The complaint of Mr McMullen is that this passage contains no reference to parts of the evidence of Mr Bjerke in which he had spoken of Mr Karlsson's strong points and compared him favourably with Mr Bourgeois, not least is that Mr Karlsson's experience had included management in an operating project, whereas Mr Bourgeois had not. However, to the extent that Mr Bjerke sought to compare the two men, his evidence was flawed by the finding that his criticisms of Mr Bourgeois' performance were found to be untrue.

In our judgment, the passage in the Decision which we have set out is based soundly on the evidence and contains nothing to which objection can be properly taken. The lack of advertisement and competition was clearly relevant.

We have not referred to every piece of evidence, one way or the other, which counsel urged upon us as supporting or undermining the inference. We have attempted to deal with what seems to us to be the main points. We have come to the conclusion that the Employment Tribunal was entitled to draw the inference that it did, that it was soundly based on findings of fact which arose from a proper consideration of the evidence and that Saga can have no complaint about the process.

19. The comparator

The next ground of appeal is in the form of a criticism of the following passage in the Decision of the Employment Tribunal:

"The tribunal had to decide whether there was the coincidence of a difference of treatment and a difference of race. The situation is this case is that there were two men, one North American and one Norwegian; there was one post namely the post of Managing Director …; the incumbent … lost the post; the Norwegian … won the post. In those circumstances the tribunal concludes that there was a difference of treatment and a difference of race."

Mr McMullen submitted that the Tribunal there asked itself the wrong question. The correct question was: did Saga treat Mr Bourgeois less favourably than it would have treated a Norwegian Managing Director, aged 55, with the same experience, qualifications and management style, in the same circumstances? Instead of asking this question the Tribunal compared Mr Bourgeois with his successor. There were several differences between the two men, one of which was nationality. This approach, submitted Mr McMullen, was a fundamental error and it is further highlighted by the failure of the Tribunal to set out the provisions of section 1(1)(a) of the 1976 Act or even a précis of them.

The omission to set out the provisions of the Act does not give rise to a sustainable ground of appeal: Chief Constable of the Thames Valley Police v Kellaway [2000] IRLR 170. Moreover, we have the benefit of having seen the way in which both sides put their final submissions to the Employment Tribunal, sequentially, in lengthy written form. The case for Mr Bourgeois was put in this way:

"The Applicant complains that he was dismissed on grounds of race because of the decision to appoint Werner Karlsson, a Norwegian, to be Managing Director. The Applicant is therefore able to point to (i) a difference of treatment and (ii) a difference of race."

In response, counsel for Saga did not take issue with this formulation but concentrated on evidential matters which were said to negate the drawing of an inference.

Before us, Mr Clayton submitted that the approach of the Employment Tribunal was consistent with common sense and was an appropriate way of dealing with the issues in the case. It was inevitable that there would be a comparison between the two men because the issue at the heart of the case was whether one had been replaced by the other on grounds of race. We find these submissions to be persuasive in the circumstances of this case. What is more, even if the Employment Tribunal had been obliged to ask itself the question posed by Mr McMullen, we do not doubt that it would have answered it, permissibly, in the affirmative. We do not find it necessary to make express reference to a comment upon the authorities which were referred to in this context. We are satisfied that there is nothing on this ground of appeal.

20. Reasons.

This is yet another appeal in which an appellant seeks to criticise the Decision of an Employment Tribunal for an alleged insufficiency of reasoning. It is not necessary for us to set out again the authorities from Meek v City of Birmingham District Council [1987] IRLR 250 to Martins v Marks & Spencer PLC [1998] IRLR 326. In our judgment the Decision in the present case was well presented in a form which enabled Mr Bourgeois to know why he won and Saga to know why they lost enabled both parties to know and understand the conclusions of the Tribunal on the principal and important points in issue. It also enabled the Employment Appeal Tribunal to scrutinise the Decision for any error of law.

Conclusion

21. For the reasons set out in this judgment, this appeal is dismissed. Those reasons and the Decision of the Employment Tribunal are not the result of any xenophobic protectionism. It seems to us that there will be very many cases in which the senior management of a company, whether or not the subject of recent takeover, may be replaced in whole or in part by managers of a different nationality without any risk of a finding of unlawful discrimination.