United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MR ASHLEY UNDERWOOD (One of Her Majesty's Counsel) Instructed by: The Treasury Solicitor (Employment Team) Queen Anne's Chambers 28 Broadway London SW1H 9JS
For the Respondent	MR ANTONY WHITE (One of Her Majesty's Counsel) and MR JAMES LADDIE (Of Counsel) Instructed by: Disability Rights Commission 2nd Floor Arndale House The Arndale Centre Manchester M4 3AQ

SUMMARY

Disability Discrimination

Compensation for disability discrimination – is chain of causation broken by later unfair dismissal? Offer of fresh employment from another Government department. Duty to mitigate.


 


HIS HONOUR JUDGE ANSELL

1. In this case the Appellant HM Prison Service appeal certain findings and conclusions contained within a Remedies Decision promulgated on 16 October 2003 following a hearing at Ashford, Kent in September 2003. The Tribunal also gave clarification of that Decision in a further written decision on 26 February 2004. There was also a cross-appeal in relation to a clarification within the further decision of another finding within the Remedies Decision, although by the conclusion of the hearing before us it appeared that there was no longer a dispute between the parties as to whether the cross-appeal should be allowed and we shall refer to that matter briefly below.
2. The Remedies Decision had followed a decision on merits sent to the parties on 27 March 2001 when the Tribunal had held that the Respondent had been unfairly dismissed and had been unlawfully discriminated against on the grounds of her disability.
3. The Respondent was employed by the Prison Service from April 1990 in an administrative capacity at HM Prison, Swaleside on the Isle of Sheppey. By 1997 she had reached the rank of temporary Executive Officer. On 10 September 1997 after an altercation at work with her immediate superior she went on sick leave, suffering from depression, and she never returned to her work. Having received some reports which excited its suspicion the Appellant enquired as to whether whilst claiming sick pay she was engaged in a business activity and in April 1998 the Appellant engaged private investigators to enquire as to whether the Respondent was working at a shop which she owned. On 6 May 1998 the Medical Adviser to the Prison Service, BMI Health Services, through Dr Susan Harvey, an Occupational Health Physician, reported upon the Respondent's condition and concluded that she was still too ill to work but suggested that:

"… suitable redeployment may be the only answer to this situation."

4. The investigators reported on 9 June 1998. They had observed the Respondent opening the shop on two occasions and that she had sold items to them. They also alleged that she had told them amongst other things that she had given up her full-time employment.
5. On 11 June 1998 the Governor of the Prison instructed a member of staff to carry out an investigation into whether the Respondent had undertaken an outside occupation whilst on long term sick leave, knowing that any previous permission to do so had been revoked. That investigation recommended that disciplinary charges should be brought. As a result two charges were laid against the Respondent, the first being that between April and June 1998 she had undertaken outside work contrary to a formal written instruction, and the second that she undertook outside work whilst claiming sick pay.
6. A hearing was convened on 15 December 1998 at which the Respondent initially attended but she left after failing to obtain summary dismissal of the charges. The hearing was conducted by the governor of another prison, Mrs West, who having considered the charges found them proved and she wrote to the Respondent seeking mitigation. On 6 January 1999 the Respondent's solicitors wrote saying that mitigation would be submitted but on 28 January the Respondent herself wrote to the Governor submitting her resignation in an attempt to pre-empt her dismissal. The Prison Service, however, took the view that the resignation did not take immediate effect and on 11 February 1999 Mrs West wrote to the Respondent notifying her that she had decided the finding of guilt both charges should result in dismissal.
7. The IT1 was presented on 10 May 1999 claiming wrongful dismissal, unfair dismissal and compensation under the Disability Discrimination Act 1995. The disability alleged was that the Respondent had suffered from clinical depression. She had complained that the Prison Service had made "no genuine attempt to assist her in her efforts to recover her health or to reintegrate her into her job" and twelve particulars of disability discrimination were alleged spending a period of seventeen months prior to dismissal. The unfair dismissal claim was put primarily on the basis of constructive dismissal. The Tribunal heard the case in February 2001 over a period of seven days. Prior to the hearing the Appellant had admitted that they had dismissed the Respondent and that she was disabled within the Act.
8. The Tribunal held that the Respondent had been unfairly dismissed and in particular that the investigation into whether she was engaged in a business activity whilst off sick was "woefully inadequate" and that when questions came to be put to her in the course of the disciplinary investigation they were superficial and inadequate. The Tribunal so found substantial procedural defects within the disciplinary investigation. In conclusion the Tribunal had held that the Appellant did have a genuine belief in her guilt on the charge of misconduct put to her, but there had not been an adequate investigation of the facts, coupled with substantial procedural flaws in the conduct of the disciplinary hearing. The Tribunal had found that the first charge of acting contrary to instructions had not been properly laid and the second charge lacked supporting evidence, and in conclusion found that dismissal did not come within the band of reasonable responses.
9. So far as disability discrimination was concerned, the only ground found by the Tribunal was the omission to relocate the Respondent in response to the BMI Report which constituted a failure to make a reasonable adjustment, and they concluded that there was:

"A substantial possibility that, if that adjustment had been made, Mrs Beart would probably still had been employed by the Prison Service, and this case would not have been brought."

The Tribunal found no discrimination within the dismissal procedure. The original Tribunal Decision did not make any findings as to the appropriate date for relocation, but within the Remedies Decision there was a finding that this would have been 1 November 1998 i.e. only a few months before the date of dismissal in February 1999.

10. The Appellant appealed to this Tribunal with leave against both the disability discrimination and unfair dismissal findings. That appeal was dismissed in a judgment delivered on 21 May 2002, given by the then President Lindsay J. There was a further appeal to the Court of Appeal on both issues, again with the permission of that Court. That appeal was dismissed in judgments given on 23 January 2003, together with an Order that the Appellant pay the Respondent's costs.
11. The substantial compensation awarded under the subsequent Remedies Decision was in respect of disability discrimination where of course there is no statutory cap. The only award under unfair dismissal was a basic award of £3,300. The Tribunal awarded damages for personal injuries of £22,000, damages for injury to feelings of £10,000 and aggravated damages of £5,000. There are no appeals against those findings.
12. The Tribunal then made a series of findings in respect of future loss of earnings. Firstly in respect of her previous employment:

(i) The Appellant should have relocated the Respondent by 1 November 1998

(ii) If she had been relocated she would more probably than not have continued in the Appellant's employment.

(iii) It is more likely than not that she would have been promoted to the substantive grade of Executive Officer by 1 January 2000.

(iv) She would have continued such an employment to the age of 62.

13. In respect of her future job prospects the Tribunal made the following finding:

(a) The Respondent has a 20% chance of not returning to work at all.

(b) If she does return to work then the likely date that she would start seeking employment is from 1 January 2004 and she is likely to take twelve months to find that work.

(c) The first six months of such work would involve her working part-time and for half pay and that would probably give her the benefit of a pension scheme but probably not a final salary scheme.

(d) Her part time work was likely to start on 1 January 2005, with full-time work on 1 July 2005 with a starting salary of £11,650 per year.

(e) Any future loss of earnings, whether partial or total, is more likely than not to be a career-long loss.

14. The Tribunal also ordered that the Appellant pay the costs of both hearings before the Employment Tribunal, excluding the costs attributable to the issue of unfair dismissal in the first hearing. With that background we now turn to deal with the grounds of appeal.

Effect of Unfair Dismissal on Discrimination Compensation

15. The first ground we consider is that the Tribunal erred in law in "failing to conclude that the unfair dismissal acted as the operative cause of any loss after it took effect, alternatively in reaching a perverse conclusion but it did not and in failing to give reasons for that conclusion".
16. The essence of the Appellant's argument, both before the Tribunal and before us, is that the fact of dismissal, albeit unfair, terminates its liability for the earlier wrong of disability discrimination and that all further losses have to be assessed under the unfair dismissal regime with its restrictive statutory cap, as opposed to the substantial sums (in excess of six figures) recoverable under disability discrimination compensation.
17. It is agreed that the original Remedies Decision did not really address this issue. In paragraph 27 of their decision the Tribunal had found that the act of discrimination was a material contributory factor to the Respondent's subsequent illness and that was sufficient to found a liability in tort, and also accepted the medical evidence that the discrimination at the hands of the Prison Service and her dismissal have made a material contribution to her recurrent depressive episodes and to psychiatric ill health up to September 2003.
18. As we have mentioned above, there was also a finding that the Respondent would have remained in employment with the Appellant if she had been relocated. As a result of that deficiency in their reasons His Honour Judge McMullen in a chambers order invited the Chairman of the Tribunal to consider this particular ground of appeal and if necessary to record any findings made by the Tribunal on this issue.
19. Paragraph two of the clarification determination deals with the issue as follows:

"2. We dealt first with the argument in paragraph 10 of the Notice of Appeal that we forgot to deal with the submission that, had Mrs Beart been relocated, she would still have been dismissed. We accept that paragraph 13 of our Remedy Decision does not deal with that issue in terms, but it is, we submit, implicit in our decision that Mrs Beart would have remained in employment, and that we did not accept the Respondent's submissions on that point. We take the opportunity of making it expressly clear that we reject their submissions for the following reasons:-

(i) If relocation had taken place, it would have meant that the Respondents would have been adopting a different, and more reasonable, mindset towards Mrs Beart and, indeed would not have been discriminating against her. With that difference in background, we are not prepared to assume that the result of the disciplinary hearing would necessarily have been dismissal, let alone the unfair dismissal which occurred.

(ii) But if that charitable view is wrong, and the Respondents would still have unfairly dismissed Mrs Beart even if she had been relocated, then we accept the Applicant's argument put forward at the hearing that the Respondents should not be allowed to profit from what would have been their own unlawful conduct. In our view it would be unconscionable if they were allowed to do so. In the Respondents were, by unfairly dismissing Mrs Beart, to escape or partly escape the consequences of having discriminated against her, it would, in our view, severely damage the protection given to employees by the Disability Discrimination Act, or, for that matter, other provisions against, e.g. race or sex discrimination.

(iii) We refer to the comment in paragraph 9 of the Notice of Appeal that the dismissal was made "in the genuine belief" that Mrs Beart was guilty of misconduct. It is true that in paragraph 79 of our original decision we did indeed say that Mrs West had such a genuine belief, but we went on to find the dismissal unfair for, among other reasons, lack of evidence and lack of a proper investigation. It is clear from paragraph 71 of the decision of the Court of Appeal that they accepted the arguments of the Applicant's Counsel that Mrs West's belief was, in the circumstances, unreasonable."

20. Mr Underwood firstly submits that the conclusion in paragraph 2 (i) is perverse to the extent that all of the Appellant's witnesses called on the Remedy Hearing emphasised that the disciplinary process would have taken place even if relocation had been under active consideration and moreover they were not challenged on that evidence. However, we do not read that paragraph as suggesting otherwise but rather suggesting that dismissal would not have been the inevitable result, although we accept that the Tribunal made no specific finding that the outcome of the process would necessarily had been different.
21. He then submits that the Tribunal were in error in holding that the Appellant could not argue that the unfair dismissal brought to an end any losses arising from the discrimination.
22. Both Counsel referred us to Coudert Brothers v Normans Bay Ltd [2004] EWCA Civ 215 Court of Appeal (unreported 27 February 2004), a decision reported after the Remedies Hearing, which followed the earlier decision in Bolitho v City & Hackney Health Authority [1998] AC 232.
23. In Bolitho a doctor negligently failed to attend a sick child in hospital having been summoned on several occasions by a nurse. The child suffered respiratory and cardiac failure resulting in severe brain damage. The issue in the case was as to whether, even if the doctor had attended, she would or would not have intubated the child. There was discussion in the case as to the position if the doctor had attended but had administered negligent treatment. Lord Browne-Wilkinson stated obiter as follows at page 240:

"However in the present case the answer to the question "What would have happened?" is not determinative of the issue of causation. At the trial the defendants accepted that if the professional standard of care required any doctor who attended to intubate Patrick, Patrick's claim must succeed. Dr Horn could not escape liability by proving that she would have failed to take the course which any competent doctor would have adopted. A defendant cannot escape liability by saying that the damage would have occurred if any event because he would have committed some other breach of duty thereafter."

24. In Coudert Brothers, the issue concerned alleged negligent advice given by Coudert Brothers in respect of a company tendering for shares in a Russian suit manufacturer being offered for sale under the Russian Government's privatisation programme. That advice it is led to a defective tender in two respects. First, that they offered investment over five years, whereas, the privatisation programme had stipulated three years; and secondly because the company tendering had failed to obtain approval from the Federal Anti-Monopoly Committee of Russia.
25. The allegation of negligence was only pursued in relation the 3/5 year point since the limitation period in respect of the other allegation had expired. However, Coudert then pleaded that the Anti-Monopoly permission would have been necessary and that on that independent ground the transaction would have been declared invalid, and therefore they asserted that broke the chain of causation. The response was that Coudert could not rely on its own fault as breaking the chain of causation.
26. The issue was examined by Waller LJ from paragraph 42 onwards:

"42. Can Coudert rely on the anti-monopoly point at all? If the limitation period had not expired, this point would not arise. There cannot be any doubt that in any ordinary case, where there are competing causes of damage to a plaintiff, a defendant will gain nothing from relying on a factor which would provide a separate cause of the damage, if that cause is due to the defendant's own negligence. In such a case, the claimant could have made the separate cause part of the claim against the defendant. In this case, IML could have relied on the 3-5 year point, and the failure to obtain permission, although the net effect of so doing would not be to increase their damages. The case would still remain that Coudert failed to provide the chance by amending the agreements, and that chance is still the same chance that they would have failed to provide by not obtaining anti-monopoly permission.

43. IML deliberately claimed on the basis of the loss of a chance simply by reference to the 3-5 year point. They did not want to continue with the claim based on the failure to obtain anti-monopoly permission, and since their Russian law experts were going to say that the permission was not in fact required, that may be the reason.

44. The question is whether, if IML can establish that Coudert should have provided them with the chance by reference to the 3 to 5 year point, Coudert can say in relation to the assessment of that chance, that it should be reduced by virtue of an "intervening" act of negligence by Coudert, because the "intervening act" gives rise to a separate cause of action in respect of which the limitation period has expired.

45. There is very little authority which assists. It is of interest that when one , examines the index of Mayne & McGregor 17th Edition on Causation whether in Contract or in tort, there are constant references to "intervening acts of the claimant" or "intervening acts of third parties" but no reference at all to . "intervening acts of defendants". Mr Leggatt was however able to point to a passage in the speech of Lord Browne- Wilkinson in Bolitho where he said at 240:-

"However in the present case the answer to the question "What would have happened?" is not determinative of the issue of causation. At the trial the defendants accepted that if the professional standard of care required any doctor who attended to intubate Patrick, Patrick's claim must succeed. Dr. Horn could not escape liability by proving that she would have failed to take the course which any competent doctor would have adopted. A defendant cannot escape liability by saying that the, damage would have occurred in any event because he would have committed some other breach of duty thereafter. I have t no doubt that this concession was rightly made by defendants. But there is some difficulty in analysing why it was correct. I adopt the analysis of Hobhouse LJ in Joyce v. Merton, Sutton and Wandsworth Health Authority [1966] 7 Med LR I. In commenting on the decision of the Court of Appeal in the present case, he said, at p. 20:

Thus a plaintiff can discharge the burden of proof on causation by satisfying the court either that the relevant person would in fact have taken the requisite action (although she would not have been at fault if she had not) or that the proper discharge of the relevant person's duty towards the plaintiff required that she take that action. The former alternative calls for no explanation since it is simply the factual proof of the causative effect of the original fault. The latter is slightly more sophisticated: it involves the factual situation that the original fault did not itself cause the injury but that this was because there would have been some further fault t; on the part of the defendants; the plaintiff proves his case by proving that his injuries would have been avoided if proper care had continued to be taken. In the Bolitho case the plaintiff had to prove that the continuing exercise of proper care would have resulted in his being intubated."

46. The Bolitho case could be said to be rather different from the instant case. I have quoted the passage to include the quotation from Hobhouse LJ because it would appear that what was being said in that case was, the plaintiff can prove the injury, if the plaintiff established, either that the baby would have been intubated as a fact, or (if he cannot show that) that it would have been negligent not to intubate. It would thus seem to have been part of the .plaintiff s case to prove causation, that it would have been negligent not to .intubate. In the loss of a chance case, such as the one we are dealing with, the failure to produce the agreements relating to the 3-5 year point has caused a loss of a chance. IML does not need to rely, and indeed does not seek to rely, on the failure to obtain permission, to establish the chain of causation of that loss of a chance. It is Coudert who want to reduce the value of the chance, by asserting they failed to do something which would have lowered the chance. Is there a principle which disallows a defendant from relying on a wrong which he has committed in order to reduce the damages that would otherwise flow from a tort or breach of contract? It seems to me that there should be such a principle, and that is what Lord Brown Wilkinson was recognising. It is quite difficult to say why it should be so, other than that it flows from public policy where it is a principle that a person should not be entitled to rely on their own wrong in order to secure a benefit. It is furthermore not unfair to apply such a principle. Damages would flow from the original act of negligence; why should Coudert be allowed to rely on a further act of negligence to reduce that damage?"

27. Later in the judgment Laws LJ dealt with the issue thus:

"64. First, although I entertained considerable doubts about the matter while the case was being argued, I have reached the clear conclusion that in principle a defendant should not be allowed to rely on a wrong perpetrated by himself in order (in whole or part) to break the chain of causation put forward by the claimant to establish and quantify the damage sustained by him by reason of the defendant's breach of contract or tort. This may be seen (as Waller LJ expresses it: paragraph 46) as an application of the general rule of the common law that a party may not rely on his own wrong to secure a benefit, and I agree that some support is to be found for that approach in the speech of Lord Browne-Wilkinson in Bolitho. But I think it is also consonant with modem ideas of causation now being developed in the cases. Authority supports the , proposition that the resolution of causation issues, certainly in the law of tort, is by no means merely a fact-finding exercise; in many instances it is an evaluative judgment, concerned to establish the extent to which a defendant should justly be held responsible for what has befallen the claimant. This seems to me to be vouchsafed in particular by the opinions of Lord Bingham and Lord Hoffmann in Fairchild [2002] 3 WLR 89 at paragraphs 10- 12 and 52 -54 respectively; to which may be compared, in the context of damages for loss of a chance, the observations of Kirby J in the High Court of Australia in Chappel v Hart [1999] Lloyd's Law Reports: Med 223 at 245,246, cited by Latham LJ in this court in Gregg v Scott [2002] EWCA Civ 1471."

28. Mr Underwood sought to distinguish the situation in this case from the facts of the Coudert decision and in particular relies on the words of Waller LJ namely:

" … It is Coudert who want to reduce the value of the chance, by asserting they failed to do something which would have lowered the chance. Is there a principle which disallows a defendant from relying on a wrong?"

He contended that the Prison Service had not asserted its own wrong, namely unfair dismissal, since it was Mrs Beart who raised the issue of unfair dismissal as part of her claim, and indeed sought compensation for that wrong independently of her allegation of disability discrimination. He argued that since she has sought compensation under both heads it is therefore appropriate for the Tribunal to split the compensation, awarding compensation for loss of earnings under the head of disability discrimination up to the date of the dismissal and thereafter compensation arising from the dismissal. In other words it is appropriate since Mrs Beart had raised the two wrongs of discrimination and unfair dismissal for the compensation to be split between those two wrongs. He therefore contended that the Tribunal's approach set out in paragraph (2) of their clarification was a misdirection of law.

29. Mr White argued that it is irrelevant as to how the issue of unfair dismissal was introduced into the case. The fact remains that the Prison Service are seeking to use their own second wrong as a means of limiting the compensation payable under the first wrong, and that whilst the Tribunal did not have the benefit of the Coudert decision, their comments concerning the respondent not being allowed to profit from their own unlawful conduct has indeed the important public policy concept that lay behind the Coudert decision that was referred to by Waller LJ.
30. He argued that it was not a matter of looking at the quality of the second wrong e.g. how unfair was the dismissal, or indeed the motive behind it, the fact of the second wrong is in itself sufficient to disentitle a tort feasor from relying upon it. Thus he submitted that the Prison Service could set up any wrongful act subsequently committed by them to argue that the chain of causation had been broken.
31. Mr White also submitted that the public policy reasons enunciated by Waller LJ are particularly appropriate in a discrimination case. He submitted that the statutory torts of discrimination had a public and social element absent from other torts whether statutory or common law. For example in Savjani v Inland Revenue Commissioners [1981] QB 458 Templeman LJ held at pages 466-467 that the Race Relations Act 1976 was "brought into remedy a very great evil". Similar sentiments can be seen in the cases of McConnell v Police Authority for Northern Ireland [1997] IRLR 625 and BNP Paribas v Mezzotero [2004] IRLR 508. He submitted that the principle that a defendant should not be able to rely on his own wrong was particularly appropriate to a statutory discrimination tort where there was an added social imperative inhibiting the Court or Tribunal from permitting the tortfeasor to escape the consequences of his conduct.
32. For his part Mr Underwood conceded discriminators should not be able to seek to limit their losses by deliberately, unfairly dismissing employees who had suffered substantial discrimination. However, as Mr White pointed out that would leave the tribunals with the unenviable task of having to enquire into the motives of the discriminator and/or the level of unfairness of any dismissal. He submits that the Coudert principle is a far more basic concept, being based on public policy preventing a tortfeasor from relying on any second wrong. For example, in Coudert itself it was simply a further act of negligence that could not be relied upon.
33. Mr White further submitted that the chain of causation was not really broken at all by the second act. The losses flowing from the act of discrimination were continuing losses, i.e. as the Tribunal found in paragraph 28, the discrimination at the hands of the Prison Service made a material contribution to her recurring depressive episodes and that was sufficient to find a liability in tort – see Hotson v East Berkshire Area Health Authority [1987] AC 750. He submitted that the unfair dismissal did not cause those initial losses to come to an end but rather a new and separate head of loss was created flowing from the unfair dismissal. That loss only continued for a short period of time owing to the existence of the statutory cap, but for that relatively short period of time, in fact only months in this case, there were two overlapping or parallel losses. He submitted that the loss flowing from the unfair dismissal was finite but could not affect the continuing losses flowing from discrimination. He submitted that this is consistent with the approach of Laws LJ in Coudert where he referred to "modern ideas of causation".
34. Mr White also submitted that since the primary remedy for unfair dismissal was not compensation but reinstatement (Grady v HM Prison Service [2003] IRLR 474), the discrimination prevented Mrs Beart from benefiting from such an order. Had she been able so to benefit, the cap on compensation would not have affected her case and he therefore argues the discrimination was clearly the causative source of her continuing loss.
35. In response to the reinstatement argument Mr Underwood submitted that the Tribunal were not asked and did not make a finding that she would have been reinstated had she been relocated, and in any event the thrust of her case was that because of the initial incident in September 1997 she could not work for the Service again. Further, he argued that the Prison Service would have contended, if it was necessary, that she had caused or contributed to the impossibility of reinstatement by her own actions after dismissal.
36. As regards the argument that the two causes of action can co-exist and that the second does not put an end to the losses deriving from the first, Mr Underwood submitted that as of February 1999 Mrs Beart was losing income not because the Prison Service has failed to relocate her but because she was dismissed. But for the discrimination she would nonetheless have become unemployed in February 1999 and had her dismissal been fair she would not have been able to recover her lost income accruing after it.
37. On this issue we accept Mr White's arguments. Whilst the Tribunal did not have the benefit of the two authorities now referred to us, the general principle that a tort feasor should not benefit from his second wrong set out by the Tribunal clearly and succinctly is indeed the principle behind the Coudert decision and it seems to us that principle based on sound public policy is a particularly important principle to be taken into account when dealing with losses in the discrimination field.
38. Cases such as Vento v Chief Constable of West Yorkshire Police [2003] IRLR 102 and Rhys-Harper v Relaxion Group plc [2003] ICR 867 (HL) make it clear that there should be no significant distinction between different anti-discrimination statutes and in particular compensation awarded thereunder. The pernicious evils sought to be remedied by sex and race discrimination legislation apply equally to the protection of disabled persons who by their very nature constitute a disadvantaged group, historically subjected to enormous social and economic difficulties.
39. We therefore accept the policy considerations set out by the Court of Appeal in Coudert should be applied with even greater vigour to the statutory torts of discrimination. In so doing we remind ourselves that Section 8 (3) of the Disability Discrimination Act 1995 makes it clear that the principles applicable to the calculation of damages and claims in tort should be applied to compensation sought under the Disability Discrimination Act 1995.
40. There was the clearest evidence in this case that the psychiatric harm caused by the act of discrimination and its impact upon the Respondent's ability to work continued far beyond the date of the unfair dismissal and in the absence of a fair dismissal we see no reason why the chain of compensation should be broken at that date.
41. The second ground of appeal relates to the conclusions that the Tribunal drew in respect of the Respondent's very late undertaking to make a future offer of employment to Mrs Beart and the Tribunal's particular conclusions that it could not speculate as to whether or not she would accept any offer which may or may not be made since the undertaking was in vague and unspecific terms and in particular that the Prison Service would not be able to definitely secure an offer from the Home Office.
42. An initial offer of employment was set out in a letter from the Treasury Solicitors dated 11 September 2003, eleven days before the Remedies Hearing and some 4½ years after the date of dismissal. The offer was of "Employment on behalf of the Home Office" although the Home Office was not a party to the litigation nor did it sign the letter. The post on offer was undefined, save that it would be outside the Prison Service, of a general and elusive nature, and at the level of EO. The offer was conditional upon the availability of a suitable vacancy with a suggestion that the work should commence in January 2004 with some time allowed thereafter for her to be working part-time.
43. In the light of the medical evidence produced at the Remedies Hearing, the Prison Service withdrew the job offer and it was replaced with an undertaking that was contained in the Appellant's Counsel's closing submissions, a copy of which had been served on Mrs Beart's Counsel immediately before the Appellant's Counsel was due to commence his oral closing submissions. The terms of the undertaking were:

(a) The Prison Office could secure that the Home Office should make at least one offer of employment in administrative work as an AO in one of its offices within reasonable working distance of Shearness in the first three months of 2004.

(b) The post offered would be part-time initially and would be available full-time when Mrs Beart was fit for such work.

(c) On taking up the post Mrs Beart's pension entitlement could be reinstated as if she had not been dismissed.

(d) No offer would be made if the Tribunal instead awards compensation on the premises Mrs Beart would not reasonably be able to take up such an offer.

44. The grounds of appeal contend that the Tribunal erred in failing to conclude that the offer of Home Office employment was likely to be taken up, alternatively in failing to make a finding on the issue and on the further issue what affect the job would have on future loss.
45. The Tribunal dealt with the issue in paragraphs 21 and 22 of the Remedies Decision as follows:

"21. It follows that there is an 80% chance that she will return to work. We accept the suggestion made by Mrs Beart herself, and supported by Dr Feeney, that, if these proceedings are not prolonged by appeal (we do not say this with any intention of putting pressure on the Respondent!) that she would be likely to seek employment from 1 January 2004. We accept the evidence of Mr Cheesman that the Applicant is likely to take a year to find any employment. In saying that, we do not ignore the undertaking given to Mrs Beart and the Tribunal by leading Counsel for the Respondents that the Respondent would procure the Home Office to offer Mrs Beart an administrative officer's post in the Civil Service elsewhere that in the Prison Service, but no details of the job were, or could be, provided, so that this is an offer in principle only. We also note that this was an offer made at the very last minute – during leading Counsel's closing submissions – to replace an offer made at, in effect, the last-but-one minute, on 11 September (tab H 1 and 2) before the hearing on 22 September. We think that it is likely, and is in accordance with the medical evidence, that the first six months of any such employment will be part-time, and therefore at half pay, or pay pro rata.

22. We do not think that it was disputed that the Applicant will probably have a pension scheme, although probably not one based on final salary. If the offer of a post in the Civil Service pension would be reinstated as if contributions had continued without interruption. But since the offer is only an offer in principle to offer an unspecified job of which no details at all were available, we do not feel that we can usefully speculate on whether or not Mrs Beart is likely to accept the offer. But it follows from what we have been saying that the Applicant is likely to commence part-time employment on 1 January 2005, and full-time employment on 1 July 2005."

and provided further clarification in paragraph 3 of the Clarification Decision:

"3. We now turn to the argument in paragraph 15 of the Notice of Appeal that we were bound to find that the offer contained in the Respondent's undertaking, set out in paragraph 12 of the Notice of Appeal, would have been accepted, and that our failure to make that or any finding on that matter was perverse. The Respondents have since argued that it is now too late for us to make a finding. It seems to us that it is the Respondent's argument that it is perverse, because we manifestly did make the finding, in paragraph 22 of our decision on remedy, that we were unable to decide whether or not Mrs Beart would have accepted such offer (if any) as would eventually have been made. While we remain of the opinion that we clearly explained in paragraph 22 why we reached our view (if the Respondents still insist that what we said in that paragraph did not amount to a finding), we now take the opportunity to expand our reasoning as follows:-

(i) It is manifest that this is not an offer of a specified position with a specified job content in a specified place. Even if it were, there would be no compulsion on the Applicant to accept such an offer, though we can see that there might be an argument about whether her refusal, if she did refuse, to accept it would be reasonable or not – as is known to happen not infrequently in redundancy cases where the employers make an offer of what they argue to be reasonable alternative employment. But the Applicant might reasonably refuse a job for various reasons, e.g. because there was something in the job content which made the offer unsuitable, or because the geographical location of the job would have involved her in excessive travelling.

(ii) The undertaking, which was given only at the latest possible stage in the remedy hearing (which itself took place after the case had been proceeding for some four and a half years) is not that the Respondents themselves will offer Mrs Beart a job. It is put in the terms that "the Prison Service will secure that the Home Office shall make at least one offer of employment …", but there was no evidence before us from either the Prison Service or the Home Office that the Prison Service could secure the Home Office to make such an offer. The offer was thus doubly theoretical because although the Prison Service were bound by the undertaking to use their best endeavours to seek to procure the Home Office to make an offer, we cannot say with any certainty that they would have been successful in their efforts.

(iii) In all the circumstances, the Tribunal can only repeat its conclusion that it cannot usefully speculate on whether or not the Applicant will accept any offer which may or may not be made, when the undertaking is in such totally vague and unspecific terms."

46. Mr Underwood made four brief submissions with regard to the Tribunal's approach and his submission that they were wrong in law. Those submissions were:

(a) The offer made was in the terms of a written undertaking given by leading Counsel on the instructions of an arm of central government and it was therefore perverse not to regard it as likely to eventuate and in particular the Tribunal were wrong to require evidence.

(b) The Tribunal misdirected itself as to the terms of the offer and in particular were an error in coming to the conclusion that they could not say with any certainty that the Prison Service would have been successful in their efforts. He argued that the Tribunal should have placed much greater weight on an undertaking given by one arm of government offering to use its best endeavours to secure another arm of government offered employment.

(c) The offer was reasonable.

(d) The lack of specificity of the job was no adequate reason for disregarding the offer.

47. Mr White in reply firstly submitted that it was extremely difficult for the Appellant to succeed in arguing that the Employment Tribunal decision was perverse in that they are unable to satisfy the test that the decision under appeal was not a "permissible option" – see Piggott Brothers & Co Ltd v Jackson [1992] ICR 85 (CA).
48. He then argues that in order for the Tribunal to rely on the undertaking in the manner contended for by the Appellant he would have to satisfy two elements:

(a) First that the offer would certainly be made; and

(b) That the Respondent would certainly accept it.

49. He argues that since Clause (d) of the undertaking established that the offer would be withdrawn if the Tribunal awards compensation on the premise that Mrs Beart would not reasonably be able to take up such offer, and that in fact the Tribunal found as a fact that there was a 20% chance of her never being able to take up employment in the future and a further 20% chance of her only be able to return to casual or other low paid employment, the Tribunal had indeed awarded compensation on the basis that she would not be reasonably able to take such an offer and the offer must have been therefore regarded as withdrawn automatically. Thus the Tribunal could not take the offer into account in the light of the findings that it had made, thus causing it to come to conclusion that they could not speculate on whether or not she would accept any offer "which may or may not be made".
50. He further argued that the Tribunal could not conclude that the offer was bound to have been accepted. Firstly, there was the medical evidence that Mrs Beart might well be incapable of taking up the offer either because she would not be able to return to any employment or because she was limited to casual or other low paid employment. Indeed before the Tribunal the Prison Service had only argued that there was a probability that she would be able to take up such employment.
51. Secondly, the offer was highly unspecific and because of the lateness of the undertaking there was not the opportunity to comment in evidence as to the likelihood of her accepting it. Nor could any of the Prison Service witnesses be cross-examined about the job's parameters.
52. Finally, Mr White argued that even if the Tribunal were not prepared to take into account the specific offer put forward in the undertaking they did accept the submission that Mrs Beart had a 60% chance of returning to work and achieving income equivalent to a civil service administrative officer and thus took into account the possibility of alternative employment.
53. Referring back to the caveat Mr Underwood responded that the Tribunal could have concluded that there was a 60% or 80% probability that she would reasonably be able to take up the offer and have awarded a sum based on the 20% possibility that she may not take up the offer. He argued that this would not have brought the caveat into effect as it would only have been triggered by an award based on the conclusion that she would not take it up.
54. We cannot find any perversity in the Tribunal's approach on this issue. There was a lack of certainty as to the offer that was made, compounded by an inability to test the offer by cross-examination since it was only made in Counsel's final submissions. There was an additional uncertainty insofar as the Prison Service was seeking to offer the job on behalf of the Home Office with the inherent uncertainty as to those proposals.
55. Finally, there was the uncertainty as to whether the offer would ever actually be made in the light of the caveat contained in clause (d). We also accept that the Tribunal could not have concluded that Mrs Beart would have been bound to have accepted the offer, caused partly by the inability to examine and test the proposals through evidence and cross-examination.
56. The third ground of appeal relates to costs. The Tribunal's conclusions were contained in paragraphs 41 – 43 of their decision as follows:

41. Undoubtedly, the Respondents had a right to defend the proceedings, as they had a right to pursue appeals, for both of which they obtained permission to appeal. There were arguable points available to them, even though they were not, in the end, successful. But it seems to us that the Respondents sought to defend the claim of disability discrimination in respect of the failure to make a reasonable adjustment in a way which was misconceived, because they did not produce any evidence as to whether the adjustment was reasonable nor as to whether it was justified. The conduct of the Respondents at the time of the discrimination betokened, as we have said, either an ignorance of, or a complete insouciance about, their obligations under the Disability Discrimination Act. We accept that the conduct of the defence to the claim of disability discrimination had no realistic chance of success: we therefore conclude that it was misconceived.

42. The Applicant argues that the defence to the claim of unfair dismissal was also misconceived. They remind us that the defence relied on evidence obtained effectively by entrapment; that Mr Podmore gave untrue reasons for refusing to supply critical documents (the enquiry agent's schedule of charges); that the charges themselves were improperly laid, and could not support a finding of gross misconduct and that the Respondents drew an indefensible conclusion that the Applicant was guilty of gross misconduct. On the other hand, we bear in mind that both the Employment Appeal Tribunal and the Court of Appeal indicated that although there was adequate evidence on which we could properly reach that conclusion, it would have been open to a different Tribunal to have reached a different conclusion on the same evidence. Having regard to the expression of opinion of the Higher Courts, we do not feel that we can properly say that the Respondents' defence of the unfair dismissal issue as misconceived. We therefore do not order them to pay the costs attributable to that issue.

43. In respect of the remedies hearing before us, we accept the Applicant's submission that the Respondents behaved unreasonably and/or abusively. The statements of Mr Podmore and Mr Smith certainly appeared to seek to reopen our findings on the previous occasion, and it is clear that the Applicant's Counsel felt it necessary to address those matters in the skeleton argument, though it is true that at the beginning of this hearing, Mr Underwood made it clear that he was not seeking to reopen these matters. And undoubtedly, time was taken up in these proceedings in discussing the very belated offer of re-engagement which was made very shortly indeed before the hearing before us started on 22 September 2003; which proved to be inappropriate in the light of the evidence, and which was amended (but still left entirely inchoate) in the course of the Respondents' final submissions. By any standards, we think that the Respondents' conduct of and relating to the remedy hearing, has been unreasonable."

57. Mr Underwood submitted that the defence of the discrimination claim could not be properly described as misconceived. He argued that the IT1, apart from including a general complaint that the Prison Service had failed to make any genuine attempts to assist Mrs Beart in her efforts to recover her health or to reintegrate into her job, had made twelve specific allegations of disability discrimination stretching over a seventeen-month period from September 1997 and that only one allegation succeeded, namely the failure to implement the BMI report which was not one of the twelve specific allegations.
58. He also argued that by of the time of the Remedies Hearing the Tribunal had a witness statement from Mr Podmore, the governing Governor. He had been off work with illness at the date of the liability hearing and the Prison Service had sought adjournments of that hearing both in advance and during it because it wished to call him. These adjournments were refused, although, as the Tribunal recognised at the Remedies Hearing, he had evidence which "might have been helpful had he put it before us at the last hearing." Mr Underwood argued that his evidence demonstrated specifically why relocation was not appropriate in 1998.
59. He also argued that it was wrong for the Tribunal to penalise the Prison Service in respect of the whole cost of the Remedies Hearing because of the time taken up in dealing with two specific areas namely the statements of Mr Podmore and Mr Smith and the late offer of re-engagement. If it was appropriate to penalise the Prison Service for these actions it could have been done through a limited costs order directed to the actual costs wasted in dealing with these specific issues and in the event Mr Underwood argued that the Podmore evidence was put in not to try and reopen areas that already been determined within the merits decision but to answer the suggestion that there should be an aggravated damages award.
60. For the Respondent Mr White again argued that the perversity test was a high hurdle to overcome and that the two areas covered by the Tribunal's costs order were well within their discretion which they had exercised with care, particularly since they had considered also making an order in respect of the unfair dismissal aspects of the case but had decided against making such order.
61. He argued that the primary element of the claim for disability discrimination had always been the failure to redeploy her and other aspects of the case on disability discrimination mirrored the criticisms in the disciplinary process successfully advanced as part of the case of unfair dismissal. He argued that the Prison Service did not adduce any evidence as to whether redeployment was a reasonable adjustment in Mrs Beart's case, nor did they advance any case as to justification. As the Court of Appeal said at paragraph 47 "the difficulty in this case is that while the onus was on the employer to show justification, there was no evidence from the employer as to the reason for the failure to relocate".
62. With regard to Mr Podmore's later statement, Mr White pointed out that not only was Mr Podmore ill at the time of the hearing but that no witness statement had been taken from him at that time, which might have provided some material for the Tribunal to consider. He further argued that the suggestion in Mr Podmore's witness statement that it would be reasonable to hold off implementing the disability report because of the possibility of disciplinary proceedings was described by the Court of Appeal in paragraph 44 as "astonishing".
63. As regards the Remedies Hearing, Mr White submitted that the Tribunal's costs jurisdiction is unlike that of the High Court and there is no requirement that costs ordered should be issue based i.e. referable only to the time taken to deal with particular points (Employment Tribunals (Constitution etc) Regulations 2001, Schedule 1, reg. 14 (1)). Indeed he submitted the costs jurisdiction was primarily punitive in nature and not compensatory, costs being awarded to mark their disapproval of the parties' conduct of litigation. He submitted that the Tribunal were entitled to consider the two factors they mentioned, taken singly and together, amounted to unreasonable conduct, namely the attempted reopening of issues determined at the merits hearing and the very late re-engagement proposal.
64. We are quite satisfied that the Tribunal considered these issues carefully. Both they and the Court of Appeal considered that there was no real defence to the discrimination claim, and that the conduct of the Remedies Hearing clearly required the disapproval be marked by an Order for Costs.
65. Finally we deal with the cross-appeal briefly since there now appears to be agreement in relation to the issue raised in the cross-appeal. The issue raised was whether the Tribunal's notional future rate of pay of £11,650 was a calculation that in any way incorporated the 20% probability of no return to work.
66. The Tribunal had dealt in paragraph 20 with the chances of Mrs Beart returning to work at all and had agreed with Dr Feeney's evidence that there was a 20% chance for not returning to work at all. In paragraph 23 they then dealt with the pay that she was likely to receive in any such job as she may take assuming she did return to work and concluded in this way:

"23. We accept the suggestion, put forward by the Applicant's Counsel, that we should fix a national rate of pay based on the average of all the lowest decile and quartile figures in Table D, but that we should add in two figures, each of £5,000 a year to reflect what Dr Feeney described as the 20% chance of Mrs Beart being able to return only to casual, or other very low paid employment. So to the ten figures for the lowest decile or quartile in Table D, we add the two further figures each of £5,000, which totals £139,881, and divide by 12. The consequent average is £11,656.76, but we accept the invitation of the Applicant's Counsel to round this figure down to £11,650 a year."

67. The parties asked the Tribunal for clarification as to whether the figure of £11,650 per annum took account of the 20% chance that Mrs Beart would never return to work again and in their clarification decision said that in fixing the figure they had taken into account the 20% chance that she would not in fact return to work.
68. This comment did appear to be somewhat at variance with the separate conclusions reached in paragraphs 20 and 23 of the Remedies Decision, but it is now agreed that the proper approach should be for a calculation to be made firstly on the basis that there is a 20% chance that Mrs Beart will never return to work and thus there will be a calculation of 20% of the earnings that she would have received remaining in her employment with the Prison Service based on the facts set out in paragraph 24 of the Tribunal's conclusions. The effect of the Prison Service's agreement that this is the correct calculation is that the cross-appeal against the clarification decision succeeds.
69. With regard to the remaining 80% of the sum that she would have been expected to receive had she remained in her Prison Service employment, there must be deducted from that sum an amount to reflect the sums that she would have received if she returned to work based on the new job facts, set out in paragraph 25 e.g. at a starting salary for such work at £11,650 per year.
70. The Tribunal in the course of the hearing did point out there appears to be an arithmetical error in paragraph 23 in that the starting salary should be composed of a 75%/25% mixture of Table D and £5,000 a year to reflect properly the 20% chance of her only being able to return to casual or low paid employment. However, there is no actual appeal against that arithmetical calculation. According to our calculations it would produce a slightly lower starting salary of £10,991.08.
71. Therefore, our overall conclusions are that the appeal be dismissed and the cross-appeal allowed.