United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MR KERRY UNDERWOOD Solicitor Under ELAAS Instructed by: Messrs Underwoods Solicitors 79 & 83/85 Marlowes Hemel Hempstead Hertfordshire HP1 1LF
For the Respondent	MR RICHARDSON LEIPER (Of Counsel) Instructed by: City of Bradford Metropolitan Council Legal Services City Hall Bradford West Yorkshire BD1 1HY


 


HIS HONOUR JUDGE RICHARDSON

1. This is an appeal against a decision of the Employment Tribunal sitting in Leeds promulgated on 12 May 2003. The Appellant, Mr Saeed Akhtar Butt, had presented complaints of race discrimination and victimisation against his employer, the City of Bradford Metropolitan District Council hereafter ("the Council"). The Employment Tribunal had held a pre-hearing review on 1 May 2003. It dismissed the claims as having no reasonable prospect of success. Mr Butt appeals against that decision.

The Background

2. In about the year 2000 the Council obtained funding for a project in Bradford to help young people between the age of 16 and 25 to find employment training and education. Employment advisors were required. In May 2000 the Council advertised. Mr Butt, along with 95 others, applied. He was short- listed and interviewed, but he was seventh in the scoring process. So he was not initially offered a post. Then, however, it became clear that one of those offered a job, Ms Scaife, wanted to work part-time. As the next most successful candidate Mr Butt was offered the job. In July 2000 he accepted it.
3. On 12 September 2001 he commenced proceedings against the Council. He made wide ranging complaints about his treatment. An Employment Tribunal heard those complaints over a period of three days in May 2002. That Employment Tribunal was chaired by Mr D P Burton. We will call it "the Burton Tribunal". On 30 May 2002 extended reasons were promulgated. All the complaints were dismissed. The Burton had clarified Mr Butt's complaints, considered them all and dismissed them in turn. They related to the failure to offer him full time employment when recruiting further advisors to the project in May 2001; appointing others to the project without using the same procedures applicable to him; advertising a post as advisor for the project specifically for a woman; not consulting him about decisions as other advisors were consulted; not offering him training opportunities; not making overtime opportunities available to him; employing him at a less busy office; placing funding restrictions on him. All these complaints were answered by evidence from the Council and after hearing evidence rejected by the Burton Tribunal with reasons.
4. Meanwhile Mr Butt had continued in employment with the Council. In January 2002 Ms Scaife, his job share partner, became a Senior Employment Advisor. So her part of the job share became vacant. In due course she became his line manager. In August 2002, but not before, Mr Butt was offered the chance to go full-time. When he was given a letter making that offer he had just a couple of days to accept it. He declined it. On 22 November 2002 Ms Scaife wrote a letter to him, criticising him for his behaviour in the workplace, for failing to comply with instructions and for making unacceptable accusations of harassment. She said that if there was not a marked improvement in attitude and performance she would be left with no option but to institute formal disciplinary procedures against him. Following receipt of that letter Mr Butt went off work with stress. On 20 February 2002 he presented his second application, making allegations of race discrimination and victimisation. This is the application with which we are concerned. On 14 March 2003 the Council entered a Notice of Appearance and at the same time applied for a pre-hearing review on the grounds that the application had no reasonable prospects of success.

The Employment Tribunal's Powers

5. If one party contends, at an interlocutory stage, that the other party's contentions have no reasonable prospect of success, the procedure to be followed is governed by rules 7 and 15 of the Employment Tribunal Rules of Procedure (Schedule 1 to the Employment Tribunals (Constitution and Rules of Procedure Regulations 2001).
6. At an interlocutory stage there are three potential sanctions which may be applied to a party whose contentions in relation to a matter to be determined by the Employment Tribunal have no reasonable prospect of success. The first is the payment of a deposit: rule 7(4). The second is to strike out the Originating Application wholly or in part: rule 15(2)(c). The third is to require an amendment of the Originating Application or Notice of Appearance: rule 15(2)(c) again.
7. Rule 7 provides for a pre-hearing review. The Employment Tribunal may hold such a review of its own motion, or upon application: rule 7(1). An opportunity must be given to the parties to submit representations in writing and to advance oral argument if they so wish: rule 7(3). Then the Employment Tribunal may

"conduct a pre-hearing review, consisting of a consideration of -

(a) the contents of the originating application and notice of appearance

(b) any representations in writing; and

(c) any oral argument by or on behalf of a party." (rule 7(1)."

8. If, upon a pre-hearing review, the Employment Tribunal considers that the contentions put forward by a party in relation to a matter required to be determined by the tribunal have no reasonable prospect of success, the tribunal may make an order requiring that party to pay a deposit of up to £500 as a condition of continuing to take part in the proceedings relating to that matter: rule 7(4). Before doing so it must enquire into the ability of the party to comply with the order, which in practical terms involves making an inquiry as to the party's means and available resources. It must take into account what it finds in determining the amount of the deposit: rule 7(5). It must warn the party that he may have to pay costs and may lose his deposit if he goes ahead in relation to that matter: rule 7(6). It must give him summary reasons: rule 7(6). And if the party does not pay the deposit in due time, it may strike out the Originating Application or Notice of Appearance in so far as it relates to the matter which has been found to have no reasonable prospect of success: rule 7(7).
9. Rule 7 does not say that the Employment Tribunal must warn any party before the pre-hearing review that an order for payment of a deposit may be made. However, the guidance notes sent to the parties (Form IT4 E&W 8198) make this clear.
10. Rule 15(2)(c) provides that an Employment Tribunal may at any stage of the proceedings, order to be struck out or amended any Originating Application or Notice of Appearance, or anything in such application or Notice of Appearance, on the grounds that it is misconceived. It is expressly provided by Regulation 2(2) of the 2001 Regulations that "misconceived" includes having no reasonable prospect of success.
11. There is a pre-condition to use of the power under Rule 15(2)(c). We mention this because of a submission made on behalf of Mr Butt by Mr Underwood. Rule 15(3) provides:

"Before making an order under sub-paragraph (c) of paragraph (2) the tribunal shall send notice to the party against whom it is proposed that the order should be made, giving him an opportunity to show cause why the order should not be made; but this paragraph shall not be taken to require the tribunal to send such notice to that party if the party has been given an opportunity to show cause orally why the order should not be made"

12. The guidance notes sent out by the Employment Tribunal for a pre-hearing also refer to this power, and warn the parties that on a pre-hearing review the Tribunal has three options: to allow the case to proceed unconditionally, or to order the payment of a deposit, or strike out all or part of the Originating Application or Notice of Appearance. We have the following observations concerning these powers.

First, both powers are in terms discretionary. In HM Prison Service v Doble [2003] IRLR 694 at para 15 this Appeal Tribunal advocated a two stage process: first, consider whether it is established that there is no reasonable prospect of success in respect of a matter; then consider whether it is just as a matter of discretion to strike out, amend, order a deposit, or take no action. We would observe that the second stage of this process is not an unfettered discretion. It is a discretion to be exercised judicially having regard to the fact that there has been a conclusion that the matter has no reasonable prospect of success. The discretion must be exercised in furtherance of the overriding objective: see regulation 10(3) of the 2001 Regulations. Generally speaking, where an Employment Tribunal has reached the conclusion that a matter has no reasonable prospect of success it will deal with the case justly if it takes some step to give effect to its decision.

13. Secondly, the question whether a matter has reasonable prospects of success generally involves an assessment on paper and argument. There is no power to hear evidence under rule 7. Although an Employment Tribunal may hear evidence under rule 15 (and may indeed require evidence for the hearing of an application under rule 15(2)(d) and (e)) it would be rare to do so on an application under rule 15(2)(c). Therefore, the greater the extent to which a matter is sensitive to findings of fact after the hearing of evidence, the more care an Employment Tribunal will need to exercise before concluding that there is no reasonable prospect of success.
14. In Anyanwu v South Bank Student Union [2001] ICR 391 the House of Lords considered the exercise of the power to strike out in the context of discrimination claims. Lord Steyn emphasised:

"the importance of not striking out such claims except in the most obvious and plainest cases"

He observed:

"Discrimination cases are generally fact-sensitive, and their proper determination is always vital in our pluralistic society. In this field perhaps more than any other the bias in favour of a claim being examined on the merits or demerits of its particular facts is a matter of high public interest."

Lord Hope said:

"..Discrimination issues of the kind which had been raised in this case should as a general rule be decided only after hearing the evidence. The questions of law that have to be determined are often highly fact-sensitive. The risk of justice is minimised if the answers to those questions are deferred until all the facts are out. The tribunal can then base its decision on its findings of fact rather than on assumptions as to what a claimant may be able to establish if given an opportunity to lead evidence."

Lord Hope later observed that if a discrimination case was "bound to fail" it would be appropriate to strike it out. He said:

"the time and resources of the employment tribunals ought not to be taken up by having to hear evidence in cases that are bound to fail"

15. The need for caution which is emphasised by the speeches of Lord Hope and Lord Steyn operates both when an Employment Tribunal decides whether there are reasonable prospects of success in relation to a matter, and when it decides what if any sanction to apply.
16. At the first stage - whether there are reasonable prospects of success - caution is required because discrimination cases are fact-sensitive. An assessment which involves no findings of fact or hearing of witnesses is particularly difficult. It has been said on many occasions in the courts that those who discriminate or victimise do not advertise the fact. These cases therefore generally call for careful assessment of witnesses, careful findings of primary fact, and careful consideration of what inferences may be drawn. Action may be taken on grounds of race, or by reason of a protected act, unconsciously as well as consciously: see Nagarajan v London Regional Transport [1999] IRLR 572. In all but the clearest cases it is essential to see and hear the relevant witnesses.
17. At the second stage - whether a sanction should be applied and if so what sanction - caution is required because of the high public interest in determining discrimination claims on their merits.

Was rule 15(3) complied with?

18. It was submitted on Mr Butt's behalf that rule 15(3) was not complied with. It was submitted that the letter sent to him did not tell him he had to show cause why the case should not be struck out that it did not sufficiently comply with the rule. In our judgment there is nothing in this point. The precise wording of the notice does not matter, as long as the recipient has an opportunity to address the Tribunal on the question whether a striking out order should be made. The notice together with the guidance notes plainly gave him this opportunity, and he availed himself of that opportunity at the hearing. The first paragraph of his lengthy written submissions (41) makes it plain that he appreciated there was an application to strike out his case which he has to address.

The Employment Tribunal's Decision

19. The Employment Tribunal directed itself that it had to determine whether Mr Butt's application had a reasonable prospect of success. It said that, if the application did not there were two available remedies - payment of a deposit or striking out the claim altogether. It did not expressly direct its mind to the possibility of striking out part of the claim though (as we shall see) it went through the claim element by element.
20. After dealing with a limitation point, which does not concern this appeal, the Employment Tribunal turned to consider individually the complaints which were made. We shall adopt the same procedure. Having done so the Employment Tribunal concluded that there was no reasonable prospect of success in respect of any of the allegations. It continued:

"We have noted the words of caution in that case that we should be more reluctant to strike out discrimination cases as abuse of process except in the most obvious and plainest of cases as often they are fact sensitive. However, we also noted that in that case their Lordships recognised that if they had genuinely believed there were no reasonable prospect of success from Mr Anyanwu then they would have struck the case out. Following that logic we think it is appropriate to strike this case out. It is not an appropriate use of public funds to allow a discrimination case which may take several days to be heard if genuinely there was no hope of it succeeding. Nor would it be in the Applicant's best interests to make an order for a deposit, and to raise his hopes that the case may succeed and put him at risk of costs at the end of the day, if we genuinely believe that it could not."

21. Our powers as an appellate body hearing an appeal against an interlocutory decision are well known. We have been reminded about them and about the limit of our jurisdiction by Mr Leiper in his able submission on behalf of the Council. An appeal lies against an Employment Tribunal's decision only on a question of a law. An interlocutory decision will only be challengeable where the Employment Tribunal exercised its discretion under a mistake of law or in disregard principle or under a misapprehension of the facts; where they took into account irrelevant matters, failed to take into account relevant matters or where their conclusion was outside the generous ambit within which a reasonable disagreement is possible. If such a mistake of law is made the Employment Tribunal's discretionary decision will be set aside. If the case is plain enough on the material before the Appeal Tribunal it can itself exercise the discretion that would otherwise have fallen for exercise by the Tribunal below. Otherwise it must remit the matter for further or fresh consideration by the Employment Tribunal.
22. The Employment Tribunal considered Mr Butt's allegations individually. We will consider three principal allegations that he made. We will return briefly to others at the conclusion of this judgment.
23. First, Mr Butt alleged that he could have been offered a full-time job in January (when Ms Scaife was promoted). He complained that he was not offered the full-time job until August, and then given only two days to say yes or no. The day by which he had to say yes or no was the day when the Burton Tribunal was considering a costs application. This, he said, was no coincidence. He contended that the delay in offering him the job would not have occurred if he was white. He concluded that the delay was by reason of the fact that he was making a claim of racial discrimination - in other words, it was victimisation under section 2 of the Race Relations Act 1976. The Council, in its Notice of Appearance, denied discrimination and victimisation. The Council said it was discretionary whether it filled the remainder of a job share post when it became vacant. The Council did not however give any specific reason in its Notice of Appearance for the delay of 7 months. The Council said that the offer was first made orally to Mr Butt in mid August. It did not say why, when the offer was made in writing on 28 August, a reply was required in 2 days.
24. The Employment Tribunal dealt with this issue in paragraph 6 of its decision:

"We find that firstly the fact that he was eventually offered the full time job renders it highly improbable that a Tribunal could conclude that the delay had been deliberate on racial or victimisation grounds and secondly the fact that he rejected the offer tends to (and then the word 'would' appears) show that any delay in making that offer did not subject the Applicant to a detriment within the meaning of the Act and could not be less favourable treatment."

25. While this passage may correctly express difficulties which Mr Butt will have in his case, we do not see how it can be said that his case has no reasonable prospect of success when the Council has not explained why it took 7 months to offer Mr Butt the full time job and why it required an answer to its letter in 2 days. The Tribunal refers to the question whether the delay was "deliberate" on racial or victimisation grounds. This however is only part of the question - see Nagarajan v London Regional Transport. The Employment Tribunal would also have to consider the question whether there was unconscious influence. Nor does the fact that he was eventually offered the full time job make it plain and obvious that the 7 months delay was not on racial or victimisation grounds. Any decision on this point was in our judgment a fact-sensitive one and the Employment Tribunal does not recognise that in this passage of its decision.
26. Given the meaning of "detriment" applied by the House of Lords in Shamoon v Chief Constable of RUC [2003] ICR 337, we do not think it can be said that this part of his case has no prospect of success on the second ground given by the Employment Tribunal. The phrase "tends to" in that sentence again demonstrates that the Employment Tribunal is not giving sufficient attention to the important consideration that any decision on this point is fact-sensitive. Although in August Mr Butt did not take the full time job we do not regard that as a knock down point at an interlocutory stage.
27. Secondly, Mr Butt was alleging that the Council delayed in dealing with an internal complaint for a year. He had made the complaint in 2001. Not until 1 November 2002 did the Council write to him to tell him the complaint had been investigated. In its Notice of Appearance the Council gave no explanation for the delay. It asserted that the complaint was out of time.
28. The Employment Tribunal deals with this allegation as follows:

"The Applicant's next point is that there was delay in dealing with his grievance. He says that his comparator, a notional white person, would have had their grievance against the person issuing him with a warning dealt with within 5 working days. Using our collective experience we find it very difficult to accept that the Applicant would have any chance of success in persuading a Tribunal that any local Council or major public organisation would deal with such a grievance within 5 working days. Whilst that might be desirable, in practice it hardly ever happens, if at all."

This passage in the Employment Tribunal's decision takes Mr Butt's case at its highest but does not do justice to Mr Butt's case as a whole. The Employment Tribunal appears to have restricted itself to considering a submission that a notional white person would have had his grievance dealt with in 5 days. But the uncontested fact was that Mr Butt's grievance took a year to deal with. The Employment Tribunal does not seem to have considered whether there was a reasonable prospect of success in arguing that a notional white comparator's grievance would be dealt with much more quickly than that, and it does not seem to have considered at all whether the delay of a year might arguably be less favourable treatment by reason of Mr Butt's protected acts in bringing the first set of proceedings. In our judgment, the Employment Tribunal erred in law in approaching the matter as it did. Again in our judgment the matter was fact-sensitive - not susceptible to an argument that there were no reasonable prospect of success.

29. Thirdly, Mr Butt was alleging that he was given the letter dated 22 November 2002, an informal warning, by Miss Scaife because he had complained that she was discriminating against him and victimising him. The letter indeed refers to and criticises Mr Butt for "accusations of harassment". The Notice of Appearance admits the letter, denies discrimination and does not deal with victimisation. The Employment Tribunal dealt with this complaint as follows:

"11 The Applicant refers to the written note of the verbal warning and argues that he ought not to have been disciplined for making allegations of discrimination. As we have already said the disciplining has to do with the tone of the allegations which is a different issue."

30. At this point the Employment Tribunal in our judgment departs from simple test whether there were reasonable prospects of success in an allegation. The question which it had to consider was whether the giving of the warning was by reason of protected acts. The terms of the letter are not conclusive of this question - it depends on evidence, not likely to be common ground, as to why the letter was sent. It is also fair to point out that the letter does not in terms draw any distinction between the making of allegations of harassment and the manner of their making. Again at this point the Employment Tribunal erred in law in its approach.

Conclusions

31. For these reasons we have concluded that the Employment Tribunal erred in law in considering that the application should be struck out. These three allegations in our view plainly should have gone to a hearing where evidence was taken and the matter considered on its merits. It follows that this appeal must be allowed and the case remitted to the Employment Tribunal. It also follows in our judgment that the case should go to a full hearing in respect of the three principal allegations we have discussed.
32. There were in this case lesser points at issue. Two of them are expressly mentioned in the Employment Tribunal's decision. There was a complaint that Mr Piergies should not have dealt with the grievance because of his previous involvement. The Employment Tribunal observed that there was nothing which tended to show that the selection of Mr Piergies to deal with the grievance was on racial grounds and therefore that this allegation had no reasonable prospect of success and then there was an allegation relating to the completion of a skills audit sheet. The Employment Tribunal observed that all Mr Butt's colleagues were made to complete a skills audit sheet and they could find no detriment or less favourable treatment. There was also an allegation not dealt with in terms by the Employment Tribunal which it must have rejected along the same lines concerned with a Mr Murgatroyd. On these lesser points an Employment Tribunal was entitled to conclude that there was no reasonable prospect of success. On a pre-hearing assessment it could have exercised sanctions in respect of those items. It could have said that if they were to be pursued there was to be a deposit in relation to them. It could have struck out those allegations in part. The Employment Tribunal could not however by reason of those allegations have struck the Originating Application out altogether.
33. The case will be remitted to be dealt with by a fresh differently constituted Employment Tribunal and on the 3 main allegations which we have identified the case should go ahead to a hearing. The fresh Employment Tribunal will be entitled to hold a pre-hearing again at which no doubt it will also consider the question of directions. It may in relation to those minor allegations if it considers it appropriate in accordance with the overriding objective and in accordance with Rule 7 or 15 to do so cut down or make a cost order in relation to those allegations. Because that is a permissible option it is not for us as the Appellate Tribunal to exercise it.