United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MRROLLINS-ELLIOTT (Representative)
For the First Respondent For the Second Respondent	MRS JROOPROY (The First Respondent in person) No appearance or representation by or on behalf of the Second Respondent.

SUMMARY

Race Discrimination

Employment Tribunal erred in law in (a) holding that it had no power to apportion an award of compensation in a race discrimination case when it made a joint and several award of compensation (b) taking account of a party's financial ability to satisfy a judgment in making such an award.


 


HIS HONOUR JUDGE BIRTLES

Introduction

1. This is an appeal from the Decision of an Employment Tribunal sitting at London Central on 30 May 2003 and 23 June 2003. The Chairman was Ms K Markus and the members were Mr M Howe and Mr P Syson. This was remedies hearing, and the unanimous Decision of the Tribunal was that the Respondents should pay to the Applicant a total monetary award of £5,653.51.

Case history

1. This appeal has an unfortunate history. The matter first came before an Employment Tribunal in 1999 The original decision was sent to the parties and entered in the Register on
   12 October 1999. MrsRooproy was unsuccessful in her claims of race discrimination. She appealed to the Employment Appeal Tribunal and by a judgment delivered on 6 July 2001,
   Mr Commissioner Howell QC allowed her appeal and substituted a finding of race discrimination by way of victimisation. The reference to that hearing is EAT/1486/99 (unreported). The matter went back to an Employment Tribunal for determination of compensation and on 26 April 2002 the Employment Tribunal made an award of compensation in favour of MrsRooproy against both Mrs M Rollins–Elliott and Manor House Hospitals Ltd. MrsRollins-Elliott appealed to the Employment Appeal Tribunal and there was a Preliminary Hearing before a panel of the Employment Appeal Tribunal on 15 November 2002. However, that appeal was overtaken by the fact that by a decision sent to the parties on 16 December 2002, the Employment Tribunal reviewed its original decision and set it aside on the grounds that MrsRollins-Elliott did not receive notice of the original proceedings leading to that decision, and that it was made in her absence. The appeal therefore became nugatory. The matter was re-listed for a hearing on compensation and, as we have indicated above, that was heard on 30 May 2003 and 23 June 2003 before a different Employment Tribunal. An appeal was lodged against that Decision, but the Preliminary Hearing did not take place until 24 November 2004. It is not clear to us why the hearing of the full appeal has taken so long. We regret the delay in the light of the history.

The material facts

2. The Employment Tribunal made findings about the financial loss suffered by the Claimant, MrsRooproy: Decision paragraphs11-20. Suffice it to say they made the following findings:

(i) One month's net pay, together with interest - £1,795.92

(ii) Injury to feelings - £3,000

(iii) Interest on injury to feelings - £857.59

TOTAL - £5,653.51

3. The Employment Tribunal then went on to consider the question of apportionment and did so in the following terms:

"21. We come therefore to consider the question of apportionment or otherwise between the Respondents. We have considered carefully the views, albeit obiter, expressed by the Employment Appeal Tribunal as set out earlier in this decision and we have considered whether it is open to the Tribunal to order an apportionment between the Respondents in a case of this sort. The conclusions that we reach are as follows.

22. Section 56 of the Race Relations Act 1976 requires the Tribunal to make such of the orders set out at paragraphs (a) to (c) of subsection (1) as the Tribunal considers just and equitable and paragraph (b) includes "an order for compensation of an amount corresponding to any damages he could have been ordered by a county court… to pay to the complainant if the complaint had fallen to be dealt with under section 57". Section 57 provides for claims under Part III (discrimination in non-employment fields). It provides at section 51(1)(b) for such claims to be "made the subject of civil proceedings in the like manner as any other claim in tort…"

23. The effect of these provisions is as follows: We must decide whether or not to make any of the orders in section 56 (a) to (c) on the basis of what we consider to be just and equitable. It is open to us to conclude that it is not just and equitable to make an award of compensation against either or both respondents. However, having decided to make an order for compensation against either or both of them, we are bound by the limits of our statutory functions set out in section 57. We have to make such order of compensation as could be made by a County Court in a tort claim. In civil proceedings in the county court, where persons are responsible for the same tort, whether by means of agency, vicarious liability or common action, they are jointly and severally liable. They are each liable for the whole extent of the damage, regardless of the extent of their participation. In a case such as the present, where the two Respondents are both liable in respect of the very same act of discrimination, they are jointly and severally liable. In proceedings such as the present, where the First Respondent has aided the Second Respondent in discriminating, and the Second Respondent is vicariously liable for the First Respondent's discrimination, there is a clear basis for joint and several liability. In those circumstances, it is not open to the Tribunal to apportion damages between the Respondents.

24. We have considered the decision of the Employment Appeal Tribunal in Deane v London Borough of Ealing [1993] IRLR 209. This decision reinforces our conclusion that it is open to a Tribunal not to make an award of compensation at all against an individual Respondent but it says nothing as to apportionment between Respondents when a Tribunal does decide to make an award of compensation against both.

25. Thus, if we were to decide to make an award of compensation against both Respondents, the Tribunal is not entitled to apportion the awards. The only discretion for the Tribunal is whether we should indeed make an award of compensation against MrsRollins-Elliott at all. We take into account the views expressed by the Employment Appeal Tribunal in the case of Armitage Marsden and HM Prison Service v Johnson [1997] IRLR 169 which made clear that the awards of compensation have to do justice both to the Applicant and to the Respondents.

26. We take into account in these proceedings that the Second Respondent appears to be in liquidation. Unless an award of compensation is made against both Respondents the Applicant will be left effectively without any remedy at all.

27. We fully take into account that the First Respondent in these proceedings has already been found to have committed the act of discrimination without any intention to discriminate and without and racist motive against the Applicant. The fact is that the First Respondent was responsible for providing the references for this Applicant as all as all the other nurses who were made redundant in March 1999. She cannot abdicate all responsibility for producing a reference in a way that amounted to victimisation because of her lack of intent to discriminate. The House of Lords has already decided that lack of motive connected with race discrimination is not a defence to a claim of discrimination by way of victimisation. It would in our view be unfair if, nonetheless, the same lack of intent or motive could of itself constitute a ground for not making an award of compensation against that same Respondent. In all the circumstances, we consider it right and just that we should make an award of compensation against both Respondents.

28. We note that, if it was open to us to apportion, we would reflect the lesser culpability of MrsRollins-Elliott by apportioning the compensation so that she was only liable to pay 20% of the total award. We are unable to order this but it may be a matter to be taken into account in any enforcement proceedings. That is, however, not a matter for us."

The Notice of Appeal

4. Although there was a lengthy Notice of Appeal drafted by MrsM Rollins-Elliott on her own behalf, it was reduced to four separate questions at the preliminary hearing of this appeal, before a different panel of the Employment Appeal Tribunal, chaired by His Honour Judge Prophet. Those four questions were as follows:

"a) Was there an error by the Employment Tribunal in awarding compensation against a Respondent who no longer existed at the time of the award i.e Mannor House Hospitals Ltd in that the company had been dissolved on the 7^th day of December 2001?

b) If so, did that affect the proper awarding of compensation against MrsRollins-Elliott as a second Respondent?

c) In any event, was it wrong for the Employment Tribunal to decide that it could not apportion the award and therefore they had to award compensation jointly and severally so that MrsRollins-Elliott became liable for the full award?

d) If so should the Employment Tribunal have apportioned compensation and made the award against MrsRollins-Elliott at a lower figure?"

5. The Second Respondent in the Employment Tribunal was Manor House Hospitals Ltd. We have tried to the best of our ability to ascertain what its precise legal status is. At the hearing of this appeal MrRollins-Elliott represented his wife and MrsRooproy represented herself. Because of various changes in her home address, we were told by MrRollins-Elliott that he did not have ready access to all the papers originating from the case and about his wife's employment by Manor House Hospitals Ltd. The position appears to be that in 2002 Hospital Saving Association Ltd (HAS) acquired the assets, rights and liabilities of Manor House Friendly Society Ltd (trading as "SimplyHealth") pursuant to an Instrument of Transfer of Engagements dated 27 May 2002, made under the Friendly Societies Act 1992 (Transfer). The Transfer was confirmed by the Financial Services Authority on 27 September 2002. The Second Respondent, Manor House Hospitals Ltd, was formerly a subsidiary of Manor House Friendly Society Ltd. Manor House Hospitals Ltd was placed into voluntary liquidation in November 1998 by the Liquidator, Buchler Phillips. When the Liquidator had finished winding up the affairs of Manor House Hospitals Ltd it was dissolved on 7 December 2001 as the ultimate stage of its winding up pursuant to the provisions of section 652(5) of the Companies Act 1985. This information comes from a letter dated 16 January 2004 from
   Messrs Addleshaw Goddard Solicitors to the Registrar of the Employment Appeal Tribunal. Addleshaw Goddard are the solicitors acting for the Hospital Saving Association Ltd. For the purposes of this appeal, we take these to be the facts because MrRollins-Elliott, on behalf of his wife, could not gainsay them and no-one appeared on behalf of Manor House Hospitals Ltd. Neither had any Notice of Appeal been lodged on its behalf, which is not surprising if it was dissolved on 7 December 2001. It has not in fact taken part in any of the proceedings before the Employment Tribunal or the Employment Appeal Tribunal.
6. We therefore turn to the four questions set out by Judge Prophet at the Preliminary Hearing on 24 November 2004.

Ground 1

7. "Was there an error by the Employment Tribunal in awarding compensation against a Respondent who no longer existed at the time of the award i.e Manor House Hospital Ltd in that the company had been dissolved on the 7^th day of December 2001?"
8. We have carefully read the Decision of the Employment Tribunal and listened to what both MrRollins-Elliott and MrsRooproy have said to us. We can find no evidence that the Employment Tribunal was aware that Manor House Hospitals Ltd had been dissolved on the 7^th day of December 2001. Its Decision pre-dated the letter to the Registrar from Addleshaw Goddard, dated 16 January 2004, and neither MrRollins-Elliott nor MrsRooproy could recall that either of them had said to the Employment Tribunal that Manor House Hospitals Ltd did not exist. We still have nothing which categorically shows that that is the correct position, other than the letter from Addleshaw Goddard, which was in fact found for us on the Employment Appeal Tribunal file by the Associate in court at the time. Neither MrsRollins-Elliott nor MrsRooproy have any knowledge of the matters set out in the letter of Addleshaw Goddard. In those circumstances we do not see that we can treat it as an application for fresh evidence and neither party made that application. We find ourselves, therefore, in difficulty. Clearly as a matter of law an Employment Tribunal cannot in law award compensation against a limited company which has no legal existence at the time of making an award. However in this case, the Employment Tribunal did not know that this was the true situation. However, because we now know that Manor House Hospitals Ltd did not exist at the date of the Employment Tribunal's Decision, any award which this Tribunal made against it was an error of law and insofar as it is relevant we set it aside.

Ground 2

9. "If so, did that affect the proper awarding of compensation against MrsRollins-Elliott as a second Respondent?"
10. For the reasons we have already given, there was no error of law on the part of the Employment Tribunal on the particular facts of this case.

Ground 3

11. "In any event, was it wrong for the Employment Tribunal to decide that it could not apportion the award and therefore they had to award compensation jointly and severally so that MrsRollins-Elliott became liable for the full award?"
12. In the same week that the present appeal was heard, a separate panel of the Employment Appeal Tribunal, also chaired by Judge Birtles, heard the case of (1) Mr Peter Way (2) Intro-Cate Chemicals v Miss Angela Mary Crouch (EAT/0614/04). Judgment was given on 3 June 2005. In that case we had the benefit of extensive submissions by Mr Peter Wallington and Mr Daniel Barnett, of Counsel, who are both highly experienced employment law practitioners. One of the issues in that case was whether or not an employment tribunal has the legal power to make an award of compensation in a discrimination case (in that case sex discrimination) on a joint and several basis. For the reasons given in that judgment, and which are incorporated into this judgment, we decided that an employment tribunal did, in exceptional cases, have the legal power to make such an award. What that judgment does point out is that the effect of section 2(1) of the Joint Tortfeasors (Liability) Act 1978 does not permit an employment tribunal to make an award of compensation in a discrimination case on a joint and several basis because one of the parties is insolvent. Section 2(1) of the 1978 Act focuses the attention of the employment tribunal on conduct and culpability of each tortfeasor. Financial ability to pay is an irrelevant consideration and if an employment tribunal took it into account that would amount to an error of law.
13. In this case it is quite clear that the Employment Tribunal did make two errors of law. First, it held that a tribunal is not entitled to apportion the awards: Decision paragraph 25. Second, it took into account the financial circumstances of the Second Respondent, which "appears to be in liquidation": Decision paragraph 26. It follows that the appeal must be allowed on this ground.

Ground 4

14. "If so should the Employment Tribunal have apportioned compensation and made the award against MrsRollins-Elliott at a lower figure?"
15. The Employment Tribunal went on to say that if it was open to them to apportion liability it would reflect the lesser culpability of MrsRollins-Elliott by apportioning the compensation so that she was only liable to pay 20% of the total award: Decision paragraph 28. In view of the errors of law identified above, we allow the appeal and substitute a finding that MrsRollins-Elliott is liable to pay 20% of the total award of £5,653.51. For ease of calculation, we have reduced that total award by one pence. 20% of £5,653.50 is £1,130.70. The remaining 80% of £5,653.50 is £4,522.80 and will remain as an award against Manor House
    Hospitals Ltd. If (as appears to be the case) Manor House Hospitals Ltd has been dissolved, then that award cannot be enforced. However, we make this award in this form because we have no conclusive proof before us that it has indeed been dissolved.

Conclusion

16. This case points out only too clearly the dangers involved in an employment tribunal making a joint and several award. In the case of (1) Mr Peter Way (2) Intro-Cate Chemicals v Miss Angela Mary Crouch, referred to above, we have attempted to set out some guidance to employment tribunals in making awards of compensation in a discrimination on a joint and several basis. It is important that employment tribunals do justice to both responsibility and culpability in making an award. The traditional method of apportioning compensation seems to us much the best way in making awards in discrimination cases.