United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MR ROBIN WHITE (of Counsel) Instructed by: Messrs Eversheds LLP Solicitors One Wood Street London EC2V 7WS
For Respondent	MS REBECCA THOMAS (of Counsel) Instructed by: Messrs Palmers Solicitors 19 Town Square Basildon Essex SS14 1BD


 


SUMMARY

RACE DISCRIMINATION – Other losses

After an oral judgment awarding certain sums and giving the parties the opportunity for calculating others, such as loss of earnings etc, and awarding an uplift of 45%, both counsel met on the following day to agree the figures, and just prior to returning to the Tribunal the Appellant made an express bank transfer of the sum (apart from the uplift) which had thus been agreed, and relied on Arrow v Onley [2009] UKEAT 0527_08_0406 to seek to avoid the uplift. Held: (i) the oral judgment was an award (ii) in any event Arrow did not apply to a payment in such circumstances (iii) payment in such circumstances was required to be accepted, not unilaterally made.


 


THE HONOURABLE MR JUSTICE BURTON

Introduction

1. This has been the hearing of an appeal by the Respondent, the University of the Arts, London, against the decision of the Employment Tribunal at London Central in September 2009, whereby it awarded a total sum of £163,725.39 to the Claimant in respect of its previous conclusion, on the basis of the Respondent's admission, that the Respondent had unlawfully discriminated against the Claimant on the grounds of his sexual orientation, contrary to the 2003 Regulations, and on the grounds of race, contrary to the Race Relations Act 1976.

The Legislation

2. Those underlying claims need not concern us today (although they certainly trouble us), because the issue relates only to the financial consequences. But it should be stated that the facts as appear from the ET1 - which show that the Claimant, a white man, was vilely discriminated against by a fellow black employee in circumstances in which the Respondent was wholly inadequate in its response - justifiably led to the comments of the Tribunal, in paragraph 7 of its Reasons, as to their seriousness. There is no challenge to the 45 per cent uplift which has been awarded by the Tribunal after the remedies hearing, by reference to section 31(3) of the Employment Act 2002, which reads as follows:

"(3) If, in the case of proceedings to which this section applies, it appears to the employment tribunal that—

(i) the claim to which the proceedings relate concerns a matter to which one of the statutory procedures applies,

(ii) the statutory procedure was not completed before the proceedings were begun, and

(iii) the non-completion of the statutory procedure was wholly or mainly attributable to failure by the employer to comply with a requirement of the procedure,

it must, subject to subsection (4), increase any award which it makes to the employee by 10 per cent and may, if it considers it just and equitable in all the circumstances to do so, increase it by a further amount, but not so as to make a total increase of more than 50 per cent."

3. Although the provision has been repealed with effect from 6 April 2009 by the Employment Act 2008, there is an equivalent but slightly different provision now inserted as new section 207A of the Trade Union and Labour Relations Consolidation Act 1992, which provides for an uplift of up to 25 per cent.

Arrow v Onley

4. The appeal involves consideration of the impact on the particular facts of this case of the decision of this Appeal Tribunal in Tim Arrow & Sons v Onley [2009] UKEAT 0527_08_0406 , a decision given by a Tribunal chaired by HHJ Reid QC, but on which Mr Mallender, who forms part of this Tribunal, also sat. That was a case in which there was to be an uplift in accordance with the provisions of section 31(3). On the facts of that case, there had been a payment prior to the hearing in full of the totality of the compensation claimed, and such interim payment had been accepted by the Claimant. The case had proceeded, nevertheless, to a hearing, as was the Claimant's entitlement. The conclusion of the Tribunal in that case was that, because of the wording of section 31(3), whereby the power was to increase an 'award', and because there was no 'award' made, because the totality of the compensation claimed had been paid and accepted in advance, there was no sum on which the uplift could be ordered, and so no uplift was ordered. Two impacts can be seen from this decision, which has not been further considered as far as we know by any court and is persuasive upon us, although of course not binding:

(i) It is clear that the Tribunal did not necessarily consider that the conclusion that it was coming to was a just conclusion, but felt driven to it because there was no award in respect of which the uplift could bite. HHJ Reid QC said, "It goes against all instinct to allow a party to get away from the statutory uplift merely by its paying the sum due at the last possible moment before the award was made". But

(ii) insofar as there was a justification, it was plainly the justification of encouraging (or at any rate not discouraging) the making of interim payments - or even better, as in that case, the paying, in advance of the hearing, of the full amount of compensation due - in order, if possible, to alleviate the suffering or irritation of a Claimant, and if possible, to avoid the costs and expense of a hearing. So much for Arrow v Onley, to which we shall we return.

The Facts

5. The process in this case was as follows. An interim payment was made by the Respondent under cover of a letter of 17 March 2009 in the sum of £45,000. That was described by the Deputy Director of Human Resources in this way:

"This payment is made up of £30,000 for loss of earnings and a further £15,000 in respect of injury to feelings. We propose to pay this into the bank account into which your salary was paid, prior to the ending of your employment at the University, such that the payment reaches your account by 31 March 2009. If your bank details have changed please can you let me know the new details as soon as possible."

6. They did so pay, and that was paid, as we have indicated, some six months before the hearing. The remedy hearing - as we have indicated, in the absence of any dispute about liability - was fixed to come on, and did come on, on 15 September 2009. After a day's hearing the case was adjourned, or the second day's hearing was vacated, in order to allow the parties to negotiate, and it appears they did. During that day of 16 September - what would otherwise have been the second day of the hearing - a further interim payment was made by the Respondent, under cover of a letter of 16 September 2009 in which the following words were included:

"The University is … willing to compensate you for loss of earnings for the period until 31 December 2009. To this end a cheque for £20,000 is being prepared to give to your solicitors today."

7. That cheque was given. That increased the total amount of the interim payments made to £65,000. It seems that the case was not settled in the course of 16 September. We have no information as to how far things had got, or as to whether there had been a breakdown of communication, but certainly there was no compromise sufficient to prevent the next day's hearing proceeding, which it did. The Employment Judge gave an oral judgment at the conclusion of the hearing on 17 September. An oral judgment is of course permitted, if not encouraged, by rule 28 of the Employment Tribunal Rules, and rules 29 and 30 then deal with the form and content of judgments and with the giving of reasons.
8. The oral judgment, it is common ground, was reflected in at least a substantial part of the written judgment which was subsequently sent to the parties on 10 February 2010, insofar as the content of that judgment takes us up to and includes the 17 September itself. But, as will appear, the events of 18 September were incorporated into the written judgment, after the further hearing which took place on the afternoon of that day.
9. So far as the oral judgment is concerned, as accurately recorded in the early part of the written judgment, the Tribunal - at the moment we do not use the word "awarded", because we will return to that - specified sums on which the Tribunal had reached, and was in the position to reach, a concluded view, in the light of having all the information before it, in relation to the following items:

(i) £2,970 by way of the basic award, which was always agreed between the parties as a figure:

(ii) £350 for loss of statutory rights (that too was always agreed):

(iii) £23,500 in respect of injury to feelings; this appears from paragraph 13 of the judgment which concluded, "We award injury to feelings in the sum of £23,500":

(iv) As for personal injury, that was dealt with in paragraph 14 of the judgment and following, and in paragraph 17 the conclusion was, "We award £12,500":

(v) Aggravated damages was dealt with in paragraphs 18-20 and it concluded, "We make an award for aggravated damages in the sum of £4,750":

(vi) There was an order in respect of treatment which the Claimant was required to have in order to remedy the disastrously damaging effect upon him of the conduct complained of. There was no doubt about the fact that each session was charged at £110. The conclusion by the Tribunal was, "We make an award of a sum for treatment ... sufficient to cover 48 sessions of such therapy": 48 x 110 was £5,280.

The total, therefore, of those specified sums was £49,350.

10. In addition, the Employment Tribunal dealt with those sums in respect of which, at that stage, the Tribunal did not, but the parties did, have the full figures by way of salaries, adjustments, tax and such like.

(i) In paragraphs 30-31 of the judgment, they reached a conclusion about loss of earnings and the Tribunal said this at paragraph 31: "The Tribunal then gave an indication that the Tribunal considered future loss should be for a period of 2 ¼ years."

(ii) As for pension loss, the conclusion of the Tribunal was as follows, as set out in paragraph 31: "The Tribunal indicated that the loss of pension should be calculated on the substantial loss basis with a 40 per cent withdrawal factor and ending as at 31 December 2012.":

(iii) The Tribunal said, not having to hand the relevant figures, "The parties acknowledged that interest would arise on the injury to feelings, and informed the Tribunal that those figures would be calculated by them".

11. The Tribunal then turned to deal with uplift in paragraph 33. Their judgment as written down (but, as we have indicated, no doubt also given orally) reads as follows: "The Tribunal awarded a 45 per cent uplift by reason of the Respondent's breach of the statutory procedures.
12. There was thus, as the Tribunal said, an "award" of a 45 per cent uplift: a very substantial award, and just less than the maximum permitted under the then legislation, taking into account the serious approach that the Tribunal rightly took to this conduct in question.
13. The following then took place on 18 September. There was a meeting between counsel to resolve the figures, in the light of what the Tribunal had said orally in its judgment the previous day. Those figures were, it seemed by lunchtime, agreed: £84,513.04 for loss of earnings, £25,590 for pension loss, £9,242.67 by way of interest and, by way of grossing up the earnings to allow for the tax consequences (a figure of course which it is conventional at the end of a Tribunal hearing to include as part of the award, but which will in fact lead to the employee being put into those funds in order to pass the sums on to the Inland Revenue in satisfaction of the employee's liability on the loss of earnings element of the compensation) the sum of £13,007.76. It was made quite clear by counsel for the Respondent, who was then as now Mr Robin White, to counsel for the Claimant with whom he was meeting, then as now, Ms Rebecca Thomas, that he did not agree that the uplift should apply to the grossing up.
14. That was the content of the agreement that was reached. What then happened is that the Tribunal was to be reconvened at 2.00pm, to notify them no doubt as to that agreement. Between the conclusion of the meeting in the morning when the figures were arrived at upon which the Tribunal could bite, and the start of the Tribunal hearing, a CHAPS payment was effected by the Respondent's solicitors, in the full amount of the sum that had been agreed in the course of the morning, without the uplift, but including the grossing-up figure. This was done without any notification to the solicitors or counsel for the Claimant. The fact that it had been done was then announced at the outset of the hearing in the afternoon or, it seems, as counsel went into the courtroom for that purpose. The assertion was then made by Mr White on behalf of the Respondent that, as the full sum had now been paid, there could be no award, and was to be no award on the basis of which there could be any uplift; certainly not the uplift of 45 per cent that had been provided for on the previous day.
15. The position for the Claimant was that Ms Thomas, then as now, was willing to give credit in respect of the whole of the £65,000 by way of an Arrow v Onley payment, although it may be that she was over-generous in giving credit for the sum of £20,000 payable on the 16 September on the view that could be taken of Arrow v Onley, to which we will return. But the Respondent submitted that in the light of the payment that it had just made, there was, in the light of Arrow v Onley, nothing further that could be awarded.
16. The Claimant effectively asserts in paragraphs 8-10 of Ms Thomas's skeleton, that this amounted to bad faith by the Respondent. The paragraphs of her skeleton read as follows:

"Armed with the oral judgment of the Tribunal Counsel for both parties met on the morning of 18^th September to undertake the mathematical calculations. Those calculations included a calculation of the uplift and discussion as to a tax indemnity in respect of that uplift. However, as subsequently transpired this meeting was not, as presented, an attempt on behalf of the Respondent to agree the figures for the benefit of the Tribunal, instead it was an attempt to enable it to establish the base figures and then make a transfer so as to avoid the uplift.

A telephone CMD was held between the parties and the Judge following the meeting and a further hearing fixed for that afternoon at which no mention of the transfer was made.

Shortly before the resumed hearing Counsel for the Respondent visited Counsel for the Claimant's Chambers and handed a copy of a document showing a CHAPS transfer had been made in the sum of £116,704.20 being the figure that Counsel had arrived at less the uplift figure."

17. So the Respondent submitted before the Tribunal that there should be no award. The Employment Tribunal rejected that argument and applied the uplift to the total compensation, less the £65,000 paid in advance being £41,167.69. This left a balance due of £157,871.19 (without reference to the CHAPS transfer). The balance of the Tribunal's judgment filled out the story as to what had occurred, and, as we have indicated, was handed down on 10 February 2010. The Tribunal said:

"35 The uplift attaches to the award. In the summary of the Arrow Case, paragraph 3 it is recorded, 'The uplift could only be applied to awards; the employer could successfully avoid the uplift by paying sums due shortly before the Tribunal hearing'. With respect we consider the uplift attaches to the award made by the Tribunal: a part-payment of compensation during a hearing and before the award would escape the uplift but not a payment made after the Tribunal made its decision.

35.1 In this case there was a payment sometime before and one further payment during the hearing and one today after the Tribunal had given judgment yesterday and after the Tribunal had given its decision on the amount of compensation to be paid under various heads and a formula for calculating the other heads of award."

18. Mr White has criticised the use by the Tribunal of the words, "A formula for calculating the other heads of award." We conclude that, if anything, that understates what the Tribunal had in fact done on the previous day, but we certainly see no basis whatever for the criticism by Mr White of the use of those words by the Tribunal. The Tribunal had delivered a judgment whose intention was to facilitate the parties simply to agree the figures and slot them into the decision that the Tribunal had made as to the length of the loss of earnings and as to the nature of the pension loss conclusions to which it had come.

Conclusion

19. We consider that for three reasons the Tribunal was correct and Ms Thomas's submissions in support of them are correct. Nothing we say should lead to a conclusion that Arrow v Onley requires to be reconsidered. We indicate, as we have already done that it is not binding upon us, but nothing we now say needs to undermine Arrow v Onley; insofar as what we say clarifies it then so much the better.
20. Our first conclusion is that the decision on the 17 September 2009 was, or amounted to, an award in an oral judgment. The figures were not at that stage specified. They were required to be specified before the judgment was put in writing, and that itself required a meeting between the parties, which did in fact take place. It may be that the Tribunal used the word, "Awarding an uplift of 45 per cent" in paragraph 33 too loosely. What it is quite plain they were saying is that they would award 45 per cent on such figures as were specified once those sums were specified. The requirements under rules 29 and 30 are such that, where the judgments are subsequently sent out in writing, then by the time they are specified in writing, paragraph 30(6)(f) requires that, "Where the judgment includes an award of compensation or a determination that one party make a payment to the other, a table showing how the amount or sum has been calculated or a description of the manner in which it has been calculated" must be included. This was done. The sum that was determined by the Tribunal was the sum which would have to be paid. It appears to us that Arrow does not deal with that situation at all.
21. If we were wrong as to that, and that the award was not made until it was set out in the written judgment, then on any basis we are satisfied that Arrow, or the decision in Arrow, does not apply to the circumstances of this case:

(i) In our judgment it is significant that the sum in Arrow was paid in full, and that there was nothing left by the time of the hearing; non constat that if only a part of the sum had been paid in Arrow the result would have been the same. It is possible that the result would have been an award for the full amount less the sums earlier paid before arriving at the uplift. Equally it is possible, it seems to us, that the decision might have been for an uplift on the full amount of the sum. The fact is that on the facts of Arrow there was nothing left to award.

(ii) In Arrow the sums were paid in advance of the hearing. Here, £20,000 was paid in the middle of the hearing although Ms Thomas has taken no point in respect of that sum. What is in our conclusion totally different from Arrow is that the sums paid on 18 September were paid in the light of and pursuant to the oral judgment that had been given the previous day. If the decision on 17 September was not an award, stricto sensu, it is plainly a decision that an award of £45,000 would be made in respect of the sums which remain; both those that had been ordered and those which were to be calculated and agreed. When the sum was paid the following day by way of CHAPS transfer it was paid to satisfy the judgment that had already been given. It was not paid by way of an interim payment in respect of a hearing which had not yet taken place.

22. We interpose that, even on the case for Mr White, there should not have been no uplift, because we have already read the terms of the two letters by which the payments were made, and the interim payments were made substantially in respect of loss of earnings. If Mr White were right that the only award there could be said to be is that where a sum was specifically specified by the Tribunal on 17 September, the sums that were specified were not for loss of earnings; so that the only sum against which any of the specified sums could be set was the £15,000 by way of interim payment for injury to feelings, which would have meant there was still a sum of £34,300 upon which the uplift could, should and would have been made.
23. However, for the reasons we have given we are satisfied that there was not an Arrow v Onley payment of the sum contained in the CHAPS transaction.
24. Thirdly and for a further reason we are satisfied that the transfer of the £116,000-odd on 18 September did not qualify as an Onley payment, or did not qualify in particular to be knocked off the award otherwise made, as having been previously paid. An interim payment, particularly one paid many months before the hearing, is understandably regarded as a diminution in the sum that is due, because it has been accepted on account of the liability of the respondent. We have already indicated that it may be that the making of such a payment may avoid a hearing, which is to be applauded.
25. No doubt there are circumstances in which an interim payment could be refused by a Claimant if it is going to affect his right to the uplift. That seems to us unlikely to happen very often or at all, because if it is a genuine Arrow v Onley payment, months before the hearing, the Claimant will not yet know whether he or she is going to win and receive an uplift, and so it may well be that the temptation to take the money and carry on to trial, even if it means that the uplift on that part of the sum that has been paid is thereby forfeited, will be too much. In the event that the interim payment is refused and sent back, it seems to us - subject always to the discretion of the Tribunal in dealing with either matters of costs or of the quantum of the uplift - that is a course which can be taken by a Claimant and his advisers.
26. In relation to the £65,000 in this case, no such point is made; even though, of course, in relation to the £25,000 there was not much opportunity for a rejection, it was accepted. With regard to the CHAPS payment of £116,000, notified by counsel to the other counsel momentarily before the hearing, there was no opportunity at all to accept or reject. It was, as was said in argument, almost as if the cash had been slipped into the counsel's pocket by the other counsel as they walked into court. There was no question here of this money being accepted as an interim payment, or even been known to exist so that some kind of deemed acceptance could be inferred.
27. Mr White has submitted that there is no technical structure for an interim payment such as there could be said to be if there is a payment of a pre-existing debt under a contract where, for example, there may be a facility for making payments, or an agreed procedure. An interim payment is one, he submits, which is simply sent, and there is no need for acceptance or for any deemed delivery to an agent, such as the bank, such as has been considered in the authorities to which Ms Thomas has referred, as a result of a note by the President to the order of 30 May 2010 when he sifted this case through. It is not perhaps surprising that the President should have drawn the attention of the parties to the cases, given that he was leading counsel in the first of them, TSB Bank of Scotland plc v Welwyn Hatfield District Council [1993] 2 Bank L.R. 267; the other case is a recent decision of Christopher Clarke J in the Commercial Court, PT Berlian Laju Tanker TBK and Anor v Nuse Shipping Ltd [2008] EWHC 1330 (Comm). In TSB, Hobhouse J said, "To discharge a debt there must have been an accepted payment of that debt, not a mere receipt by the creditor in the sum of money", referring to the late Dr Francis Mann in The Legal Aspect of Money. In Berlian at paragraph 67, Christopher Clarke J said:

"Payment under a contract cannot be made without the consent of the creditor. Even if payment is to be in cash, i.e. legal tender, the creditor may not necessarily accept it. If payment is made through the banking system, a bank may have authority to receive payment; but it will not be able to accept payment in discharge of the debt without the authority of the creditor".

28. He refers to Mann and the TSB Bank of Scotland case. Mr White submits that there is no need for acceptance, except in contract. It seems to us that, if anything, the case of an interim payment which is going to have the affect of depriving a party of an uplift, otherwise ordered, the case is actually a fortiori. There must be a conscious acceptance of an interim payment before it can be effective to deprive the receiving party of an uplift to which it will otherwise be entitled on an award. As we have indicated, in most cases, if not every case, that will follow. Where, as here, the payment is unknown to the Claimant and the money sent over by CHAPS payment, in our judgment that cannot begin to qualify as an Arrow v Onley payment such as to fall to be deducted from the award to made at 2pm that afternoon, or in the written Reasons which were to follow.
29. For those three reasons we are entirely satisfied that the Employment Tribunal was correct in this regard. There is one, what Mr White calls small point, which is the question of whether the uplift should be awarded, or should have been awarded, on the grossed-up figure. This is put forward by Mr White as a matter of principle, not by reference to the facts of this case - because, as we have indicated, there is no appeal against the 45 per cent uplift in general. He submits that, given that part of the award, the grossing-up figure in this case of £13,000-odd, is not compensatory, is not going to be kept for long by the Claimant, but is going to be passed onto the Revenue, it is not just or equitable that the uplift be calculated on that basis of an award which includes that sum.
30. This uplift is not, of course, compensatory, it is penal. It reflects the Tribunal's view as to the lamentable failures by the Respondent in this case. The statutory provision which we have read relates to the uplift being on the award, not on part of the award. Indeed it would appear that the suggestion that it could be on part of the award was dealt with, only to be dismissed succinctly in Chagger v Abbey National plc [2010] IRLR 47, to which Counsel has drawn our attention. There is, in our judgment, no mechanism whereby there can be an uplift on anything other than the whole award. That is what occurred here. The uplift was part of the award, just as, for example, the rather notional figure for loss of statutory rights was part of the award. The legislation does not say that there is an uplift on the injury to feelings or the personal injury or the aggravated damages part of the compensation.
31. Insofar as there may be in a given case an injustice, that is perfectly capable of being remedied by the Tribunal, if the point is argued, which it was not in this case. One possibility is, and this of course becomes the more significant, as Mr White points out, as and when a Claimant might be someone earning substantial sums of money and in a higher tax bracket, that there could be, at the application of the Respondent, a special order by the Tribunal for there to be a tax indemnity in order to avoid the payment of the uplift. In this case there was discussion and agreement of a tax indemnity being offered by the Respondent in respect of any possible taxing of the loss of earnings part of the uplift. That is a different point. The fact that tax indemnities were capable of being agreed or ordered is illustrated by that fact. No such suggestion seems to have been made - certainly if any were made it did not reach the point of argument before, or conclusion by, the Tribunal - that the grossing-up part of the award should be omitted and replaced itself by a tax indemnity. In an appropriate case, either by agreement or, in the absence of agreement, by resolution by the Tribunal, that might be an appropriate course.
32. The second possibility might be for the Tribunal to be persuaded to make some separate order excluding the grossed-up figure from the award. If and insofar as any such argument was addressed in this case, it did not result in any conclusion by the Tribunal, and we see no ground for interfering with the conclusions that the Tribunal reached.
33. Much more significant, if there be any unjust and inequitable over-compensation of the Claimant by virtue of applying a 45 per cent (in this case) uplift to the totality of the compensation, including the grossing-up, that is remediable not by removing the grossing-up from the compensation - particularly if that cannot be done - but by reducing, if appropriate, the factor of the grossing-up. In Chagger v Abbey National plc, to which we have referred, the uplift was reduced below the 10 per cent minimum (otherwise provided for by the statute) to 2 per cent by the exercise of the special discretion available to the Tribunal pursuant to section 31(4) of the 2002 Act.

"The duty under subsection (2) or (3) to make a reduction or increase of 10 per cent does not apply if there are exceptional circumstances which would make a reduction or increase of that percentage unjust or inequitable, in which case the tribunal may make no reduction or increase or a reduction or increase of such lesser percentage as it considers just and equitable in all the circumstances."

34. There was no argument here that the 45 per cent should be reduced some way because it included the £13,000. It is apparent that there was some argument before the Tribunal as to the percentage of the uplift by reference to the totality of the amount, because in paragraph 28 of the judgment the Tribunal said, "We award uplift and we take into account in assessing the percentage that the loss will be substantial". There would have been nothing to prevent the Claimant's counsel arguing that a ground for reducing the percentage below 45 per cent was that it would include £13,000 (or whatever sum might be the case, because the figure had not at that stage been agreed for grossing-up). Of course it may be however that the Tribunal would have taken the view that the conduct of the Appellant was such that even if it meant a percentage uplift on the grossing-up, nevertheless the penal consequences should be such as to leave the 45 per cent as appropriate. That would be a matter for the Tribunal.
35. In our judgment there is nothing unjust or inequitable per se in having the operation of the statutory requirement for an uplift on the totality of the award, because there are ways whereby, if there is an injustice, it can be avoided. Not least because the matter was not argued below in this case, and because there is no challenge on appeal to the figure of 45 per cent, the argument today is foreclosed. In those circumstances this appeal is dismissed.