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Cite as: [1999] AC 428, [1998] UKHL 33, [1998] IRLR 593, [1998] NI 240, [1999] 1 AC 428, [1998] ICR 828, [1998] 3 WLR 735

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Kelly v. Northern Ireland Housing Executive [1998] UKHL 33; [1999] 1 AC 428; [1998] ICR 828; [1998] 3 WLR 735 (29th July, 1998)

HOUSE OF LORDS

Lord Slynn of Hadley Lord Griffiths Lord Lloyd of Berwick Lord Steyn Lord Clyde

OPINIONS OF THE LORDS OF APPEAL FOR JUDGMENT IN THE CAUSE

KELLY
(APPELLANT)

NORTHERN IRELAND HOUSING EXECUTIVE
(RESPONDENTS)

LOUGHRAN
(RESPONDENT)

NORTHERN IRELAND HOUSING EXECUTIVE
(APPELLANTS)

(NORTHERN IRELAND) (CONJOINED APPEALS)

ON 29 JULY 1998

LORD SLYNN OF HADLEY

My Lords,

These two appeals raise important questions as to the application of sections 17 and 23 of the Fair Employment (Northern Ireland) Act 1976. Those sections fall in part III of the Act "Unlawful Discrimination" and provide:

Acts of unlawful discrimination

(a) where that person is seeking employment-

(i) in the arrangements the employer makes for the purpose of determining who should be offered employment, or

(ii) by refusing or deliberately omitting to offer that person employment for which he applies, or

(iii) in the terms on which he offers him employment; . . ."

"23. It shall be unlawful for a person who has power to confer on another a qualification which is needed for, or facilitates, his engagement in employment in any capacity, or in a particular employment or occupation, in Northern Ireland to discriminate against him-

By section 16 of the Act:

'discrimination' means-

(a) discrimination on the ground of religious belief or political opinion; or

(b) discrimination by way of victimisation;"

A person discriminates against another person on the ground of religious belief or political opinion if, on either of these grounds, "he treats that other person less favourably in any circumstances than he treats or would treat another person in those circumstances." By section 57 of the Act, unless the context otherwise requires:

'employer' means-

. . . and 'employee,' correspondingly, means such a person as is first mentioned in paragraph (a), [or] (b) . . . of this definition; . . .

'employment' means employment under a contract of service or apprenticeship or a contract personally to execute any work or labour, and, without prejudice to the definitions of 'employer' and 'employee' above, related expressions shall be construed accordingly;"

"'qualification' includes authorisation, recognition, registration, enrolment, approval and certification;"

As to the meaning of "person" it is to be borne in mind that by section 5 and Schedule 1 to the Interpretation Act 1978, unless the contrary intention appears, "person" includes a body of persons corporate or unincorporate.

At all relevant times Mr. Loughran, a solicitor, practised in Omagh Co. Tyrone as "Oliver M. Loughran & Co." This was not a partnership; he was the sole proprietor and principal though he employed one assistant solicitor. Mrs. Kelly, also a solicitor, practised in partnership with Mr. Hugh Finnegan as "John Hoy, Son & Murphy" in Dungannon Co. Tyrone.

The Northern Ireland Housing Executive, appellant in the first ("Loughran") appeal and respondent in the second ("Kelly") appeal is a non-departmental body set up by statute as the housing authority for Northern Ireland. It has its own legal department but, in addition, since 1980, it has engaged solicitors in private practice to defend public liability claims against it. Solicitors so appointed constituted members of a Panel to do such work for a particular area in Northern Ireland. The method of appointing solicitors so to act has varied from time to time. In 1988, however, it was decided that Panel members should be appointed for three years and that at the end of each appointment there should be an open competition. In November 1990 all firms of solicitors in Northern Ireland were notified that three year appointments were to be made and applications were invited. For the "West Panel" a firm, Orr & Roundtree was appointed eventually until 30 June 1994.

In May 1994 all "firms" of solicitors in Northern Ireland were again invited to apply for a new three year period of appointment. Nine "firms" of solicitors applied of whom one Millar, Shearer & Black of Cookstown Co. Tyrone was appointed. Included in the nine applicants were "John Hoy, Son & Murphy" and "Oliver M. Loughran & Co." They not having been appointed, Bernadette Kelly and Oliver Loughran applied to the Fair Employment Tribunal constituted under the Fair Employment (Northern Ireland) Act 1989, each contending that they believed that they had appropriate qualifications and experience for the work and that they had been discriminated against on the grounds of religious belief and/or political opinion contrary to sections 17 and 23 of the Act.

It should be said at once that the Executive denies that there was any such discrimination but it took the points that the Tribunal had no jurisdiction since the Act did not apply in that (1) the applicants had not sought employment under "a contract personally to execute any work or labour" and (2) that a refusal or omission to appoint to a Panel was not a refusal or omission to confer a qualification.

The Tribunal ordered these points to be dealt with as preliminary issues and decided on 18 April 1996 that neither Mr. Loughran nor Mrs. Kelly had shown that the Executive was an "employer" within the meaning of section 17 of the Act; nor was the Executive refusing to confer a qualification on them within the meaning of section 23 of the Act. Accordingly the Tribunal rejected their applications.

The Court of Appeal on 22 May 1997 agreed with the Tribunal that no claim could be made under section 23 of the Act; they also agreed that Mrs. Kelly, as a partner in her firm, could not pursue her claim since she was not seeking to be employed under a "contract personally to execute" work. Her appeal was dismissed. On the other hand they held that Mr. Loughran, as a sole practitioner (i.e. sole principal and proprietor) could claim that he was seeking to be employed. His appeal was accordingly allowed.

Before your Lordships Mr. Long Q.C. on behalf of the Executive has contended that the Tribunal was right that neither claimant sought "a contract personally to execute any work or labour." Mr. Loughran and Mrs. Kelly contend that their case should go forward to be heard on the merits.

Mr. Long Q.C. showed your Lordships that the phrase "a contract personally to execute any work or labour" is not new or confined to the Act of 1975. It appears in section 10 of the Employers and Workmen Act 1875, in section 8 of the Industrial Courts Act 1919, section 1(6) of the Equal Pay Act 1970, section 82 of the Sex Discrimination Act 1975 and in section 78 of the Race Relations Act 1976. Moreover in section 29(6) of the Trade Union and Labour Relations Act 1974 "employment" includes "any relationship whereby one person personally does work or performs services for another." In other statutes an employee is defined as "an individual who has entered into or works under a contract" with an employer or of employment (e.g. section 8 of the Contracts of Employment Act 1963, the Redundancy Payments Act 1965, section 167 of the Industrial Relations Act 1971).

He also referred your Lordships to a number of cases under the Truck Act (1 and 2 W4 c37) to the effect that a person who undertakes work and employs several or many men to do, or to assist in doing, the work is not an artificer or workman for the purposes of the Truck Act which prohibited payment other than in the currency of the realm (e.g. Ryder v. Warde [1848] 154 E.R. 405; Sharman v. Sanders [1853] 138 E.R. 116.) He referred also to Tanna v. Post Office [1981] I.C.R. 374 where the appellant applied to be appointed as a sub-postmaster. He was required only to provide premises and to ensure that services were provided without being obliged personally to do anything. In a case brought under section 4 of the Race Relations Act 1976, the Employment Appeal Tribunal held that he was not seeking to be employed "under a contract personally to execute any work or labour." The Employment Appeal Tribunal held that these words required "that the person entering into a contract shall himself be under an obligation personally to do work or labour." It may well be that some of what he undertakes to do he may delegate; but in our judgment it is essential, for there to be "employment," that the person making the contract shall himself undertake to do, at any rate, some of the work or labour.

Two other cases have been referred to in detail by both sides. The first is Mirror Group Newspapers v. Gunning [1986] 1 W.L.R. 546. In that case an application was made by a woman to have transferred to her her father's agency for the wholesale distribution of Sunday newspapers. She said that this application was refused in breach of section 6 of the Sex Discrimination Act 1976. The Industrial Tribunal and the Employment Appeal Tribunal by a majority held that there was here employment in the sense of "a contract personally to execute any work or labour" since the agent had to be directly involved in the supervision of the work. It was accepted by both parties and by the Court of Appeal that this statutory definition of employment went beyond the relationship of master and servant. Oliver L.J. ruled that "what is contemplated by the legislature in this extended definition is a contract the dominant purpose of which is the execution of personal work or labour," (p. 551H). In that case it was not since "here the dominant purpose was simply the regular and efficient distribution of newspapers" (ibid). There was moreover no evidence that the agent was required personally to carry out the work though his personality was important and his personal involvement might be regarded as desirable. The dominant purpose of the contract was to ensure that newspapers were efficiently distributed. Balcombe L.J. and Sir David Cairns agreed that the relevant question was whether the dominant purpose was that the person contracting to provide the services under the contract "performs personally the work or labour which forms the subject matter of the contract" (p. 556H).

That case does not answer directly the question as to who may personally or mainly perform work or labour although it does make it clear that the definition of employment is wide enough to include work done by an independent contractor.

In In re Northern Ireland Electricity Services Application [1987] N.I. 271 a company complained that it had been refused a tender for work because of discrimination on the ground of religious belief or political opinion since the unions on the site refused to work with the company's employees, the unions believing the company to have IRA sympathies. Nicholson J. held that "person" in section 16 of the Fair Employment Act 1976 included a body corporate. He based this in part on the provisions of the Interpretation Act 1978 that "person" includes a body corporate but he also found a number of indications in the 1976 Act that a body corporate is included in the statutory provisions dealing with "person," though on occasion the word "individual" is used or intended in a narrower sense than "person." As to the former group of provisions he referred by way of example to section 8(4) which provides that "where, on an appeal under this section, the question arises whether a person has acted in a manner inconsistent with adhering to the Declaration of Principle and Intent." He took the view that in light of the provisions of section 7(3) and section 10(2), the latter referring both to an individual and a body corporate, it was "inescapable that 'person' in section 8 includes a body corporate." He further pointed to section 55 of the Act by which

"Any notice or other document which is required or permitted by this Act to be served on a person may--

He did not find it necessary to decide whether a body corporate could have a religious belief since it was enough that it should be discriminated against on the ground of the religious belief of its employees.

In the present case the Court of Appeal did not "find it necessary to give a definitive ruling on the question whether a partnership or a limited company can bring a complaint under the Act of 1976 on the ground of discrimination or whether only an individual can be classed as an employee for the purposes of the legislation" (p. 130) though "we do, however, see some substance in the contention that the Act of 1976 contemplates only individual employees as complainants."

The Court of Appeal considered that Mr. Loughran, though he described his business as a firm, was still a sole practitioner. "In substance he was therefore seeking to have himself appointed to the Panel. He designated himself as the solicitor who would be mainly concerned with the work to be done for the Executive." Accordingly the definition of employment in section 57 was satisfied and he could pursue his complaint. As far as Mrs. Kelly was concerned they found that they applicant for appointment was not Mrs. Kelly but the firm. "When a partnership firm is engaged under a contract to execute legal work we do not consider that an individual partner in that firm, even if he or she will be the person mainly responsible for carrying out the work can be said to have been employed under 'a contract personally to execute any work or labour' so as to bring the partner within the terms of section 57." Mrs. Kelly had failed as she was one of two partners in the firm though Carswell L.C.J. added "we cannot regard it as a desirable state of the law that the existence of a remedy should turn on such a distinction. It is nevertheless an inescapable conclusion in our opinion from the way in which the definition of 'employment' in section 57 has been drafted."

In considering the issues raised on the appeal it is to be noted that the letter of 24 May 1994, giving notice of the intention to appoint panels stipulated that the principal or one of the principals in the firm should have been in practice on his/her own account for three years and that the solicitor(s) who would actually carry out the panel work has/have at least three years' post qualification experience. In the information sheet accompanying the letter which was to be filled in by the applicant the firm was told that it must designate "either one or two solicitors who would be mainly responsible for carrying out Panel work." Oliver M. Loughran & Co. designated Oliver M. Loughran; John Hoy, Son & Murphy designated Mrs. P.B.M Kelly. The question was then asked "if the firm is a partnership which partner would accept overall responsibility for the service to be provided to the Executive." Oliver M. Loughran & Co. replied "N/A"; John Hoy, Son & Murphy replied "as at 5 above" i.e. Mrs. Kelly.

Your Lordships have been shown the contract of appointment of the firm actually selected for the West Panel dated 9 June 1994. That provides inter alia that "the firm will be offered and will accept all work within the scope of the Panel"; "no term or condition of this appointment is intended to diminish any legal duties which the firm would owe to the Executive in the absence of any such term or condition." By paragraph 12 "the Designated Solicitor(s) (as named in the Information Sheet completed by the Firm) will give priority to Panel work."

The need to deal with the problem of religious and political discrimination in Northern Ireland had been underlined by the "Report and Recommendations on the Working Party on Discrimination in the Private Sector of Employment" in 1973. The long title to the Act of 1976 spells out that its object was "to establish an agency with the duties of promoting equality of opportunity in employments and occupations in Northern Ireland between the people of different religious beliefs and of working for the elimination of discrimination which is unworkable by virtue of the Act; to render unlawful in connection with such employments and occupations certain kinds of discrimination on the ground of religious belief or political opinion."

My Lords, having considered all these matters I have no doubt that the Court of Appeal were right in respect of Mr. Loughran. The definition of employment is clearly wide enough to cover the provision of services by a professional man, as was held in Mirror Group Newspapers v. Gunning (supra). Whatever he called himself he was the individual seeking employment in the sense of someone offering to enter into a "contract personally to execute any work or labour." He was the person undertaking to do the work and he would be liable for any breach of the contract that was made. On the form he was said to be "mainly responsible for carrying out the Panel work." So far as "responsible" means legally responsible he was solely responsible. In so far as it means "would mainly in fact carry out the work" he was such person even if he was entitled to delegate some part of it to his assistant. Plainly it does not cease to be a contract "personally to execute any work" because his secretary types and posts the Executive's defence to any claim or that his assistant solicitor goes along to file such a defence. The dominant purpose is that he will do the essential part of the work.

Mrs. Kelly's case raises different issues. The first as I see it, is whether there can ever be discrimination against a firm seeking employment in the sense of seeking to make a contract "personally to execute any work or labour." Two constructions are advanced. The first is that personally means individually by an natural person. The alternative is that, if the Interpretation Act is given effect, "personally" can include activity undertaken by a firm. Mr. Long Q.C. contends for the former and Mr. Gillan Q.C. for the latter.

I have come to the conclusion that the second interpretation is the correct one. I start with the provision of the Interpretation Act 1978 that "unless the contrary intention appears" "person" includes a body of persons unincorporate. I do not think that any such contrary intention is to be deduced from the Act. The intention of the statute it seems to me is in favour of the wider definition applying for two reasons in particular. In the first place the intention of the Act of 1976 is clearly to outlaw discrimination on the grounds of religious or political opinion in the employment sphere. It would be wrong to ignore the object and purpose of the Act as seen in the long title to, and in Part III of, the Act. It is factually possible to discriminate against the partners of a firm or against the firm itself as it is against a sole practitioner. Prime facie one would expect the Act to outlaw both.

In the second place the Act of 1976 clearly and deliberately adopts a wide definition of employment so as to include a contract to provide services and a firm can contract to provide services. If the definition had included only "workman" or "artificer" or "a contract of service" the position might well be different but with the extended definition of employment I consider that a contract by a firm to provide services is capable of being a contract "personally to execute any work or labour." Is it such a contract here? In my view it is. The contract is for the firm itself, i.e. personally, to execute work. The firm as such will be legally responsible for the doing of the work and will be liable for breach of the contract. The firm which contracts and is legally responsible consists of all the partners but clearly all the partners do not have to do all the work. It is sufficient that one or more of the partners is intended to and does execute the work subject to delegation of some activities by the firm in the same way as a sole practitioner can delegate. What is required is that the dominant purpose of the contract is that the firm undertakes to do, and by one of its partners is responsible for and does, the work undertaken to be done.

The other construction, it seems to me, fails to give effect to the plain intention in its context of the Fair Employment (Northern Ireland) Act 1976. This, as I read it, was really the opinion of the Court of Appeal but they felt compelled to dismiss a claim brought by one of the partners in a firm.

When an action is brought on a contract made by a firm all the partners should normally be made parties to the proceedings. Here we are not concerned with enforcing a contract but with a complaint of discrimination made by Bernadette Kelly who gave her address as John Hoy, Son & Murphy, William Street, Dungannon. Her complaint is that "in June 1994 I applied to undertake defence work. . . I was unsuccessful. I believe that I have appropriate qualifications and experience for the work and that I have been discriminated against on the ground of religious beliefs and/or political opinion." In fact it was the firm (i.e. both the partners) not she, which applied. She was the solicitor designated to be mainly responsible for carrying out the Panel work and whose experience was relied on to justify appointment. She was the partner who would accept overall responsibility for the services to be provided.

Although the complaint could have been made, and perhaps would have been better made in the name of the firm or of both the partners, I consider that under the Fair Employment (Northern Ireland) Act 1976 it was open to one partner in the firm to complain that she, as a partner in the firm, as well as the firm itself, was subjected to discrimination when the firm was refused appointment. This is particularly so in this case where the firm's application was based entirely on her experience and on her acceptance of responsibility for the service to be provided. If, and in so far as there is discrimination against the firm or its constituent partners, there is discrimination against her of which she can individually complain under the statutory provisions. She is not prevented from complaining of discrimination under this Act by rules applying to the enforcement of contracts.

I would therefore hold that the Fair Employment Tribunal had jurisdiction to hear her appeal under section 17 of the Act. It is not necessary in this case to consider the position of a limited company.

There remains the question as to whether either Mr. Loughran or Mrs. Kelly can complain of discrimination under section 23 of the Act. The Tribunal referred to the decision in Department of the Environment for Northern Ireland v. Patrick Bone (unreported but dated 15 September 1993). In that case the court said:

"It is our view that the word 'qualification' itself and the other words in the definition viz 'authority, recognition, registration, enrolment, approval and certification' convey with reasonable clarity the idea of (a) some sort of status conferred on an employee or self-employed person in relation to his work, or the work which he proposes to do; and as respects a self-employed person, in relation to his trade, profession or calling or to what he proposes to be his trade, profession or calling; (b) a status which relates only to a person carrying on that work or trade, profession or calling; and (c) is either necessary for the lawful carrying on thereof or making that carrying on more advantageous."

In McLoughlin v. Queen's University of Belfast [1995] N.I. 82 the Court of Appeal said "the words 'registration' and 'enrolment' refer in our opinion to variants of conferment of qualifications upon persons who thereby achieve some status in relation to their work or the work which they propose to do."

The Tribunal found that what was in issue here was the appointment of a solicitor to create a solicitor/client relationship "The respondent was not conferring any variant or qualification on the successful firm but that it would use their services, in particular types of work. . . it would not have increased their status had they been successful." The Court of Appeal agreed that neither appointment to the Panel, nor short listing an applicant, conferred any type of status on him. The claim therefore, they held, failed under section 23. Mr Gillan Q.C. forcefully argued that appointment to the Panel amounts to an "authorisation," "recognition" or "approval" which facilitates employment. He referred to the Reg. v. Department of Health, Ex parte Ghandi [1991] 1 W.L.R. 1053 where a claim was brought under section 12(1) of the Race Relations Act 1996 where it is provided that it is unlawful "for an Authority or Body which can confer an authorisation for, or facilitates, engagement in a particular profession or trade to discriminate." It was claimed that there had been a breach of the section in respect of the failure to appoint a doctor to a vacancy or inclusion on a medical list of a locality.

He argues that section 23 of the Act of 1976 is wider since it does not refer to the grant of a qualification for the purpose of practising a profession but to the authorisation of a firm to engage in employment in a prestigious and much sought-after work, appointment which is a recognition of professional excellence and experience.

I agree that the wording of the Act of 1976 is wider than that of the Act of 1996 and that the emphasis on "status" in Bone may be subject to further argument though the word "status" may give some indication of the essence of a "qualification." I am however satisfied that "qualification" as defined does not cover the appointment of a duly qualified professional man to carry out remunerated work on behalf of a client, however prestigious the client. If it were otherwise the appointment of a City firm of solicitors by a large United Kingdom company or a multi-national would amount to the grant of a qualification just as it would to appointment of a firm by a non-governmental public authority.

I would accordingly reject the argument of the applicants on the basis of section 23 of the Act of 1976. The Court of Appeal and the Tribunal were clearly right in the result. I would dismiss the Executive's appeal in the case of Mr. Loughran and allow Mrs. Kelly's appeal under section 17 of the Act.

LORD GRIFFITHS

My Lords,

The Northern Ireland Housing Executive wished to appoint solicitors in various areas of Northern Ireland to act on behalf of the Executive in public liability claims. One area was known as the West Panel and to this area the Executive wished to appoint one firm of solicitors for a period of three years.

There were two important terms in the appointment. The first was that if the firm was a partnership it would nominate the partner who would have overall responsibility for the work and the other was that the firm would designate one or two solicitors "who would be mainly responsible for carrying out Panel work . . . and will give priority to Panel work."

Nine firms of solicitors applied for the appointment to the West Panel. Among the unsuccessful applicants were the firms of John Hoy, Son & Murphy and Oliver M. Loughran & Co. Bernadette Kelly is one of two partners in the firm of John Hoy, Son & Murphy; Oliver Loughran had no partners and was practising on his own account under the firm name of Oliver M. Loughran & Co.

In the application of John Hoy, Son & Murphy, Bernadette Kelly was named as the partner who would accept overall responsibility for the service to be provided to the Executive, and was also named as the designated solicitor who would be mainly responsible for carrying out panel work. In the application of Oliver M. Loughran & Co. Oliver Loughran was named as the designated solicitor and as he was practising on his own account without a partner he did not have to specify a partner who would have overall responsibility, he would naturally be responsible himself.

Both Bernadette Kelly and Oliver Loughran complained to the Fair Employment Tribunal that the Executive had discriminated against them on the grounds of religious belief and/or political opinion, contrary to sections 17 and 23 of the Fair Employment (Northern Ireland) Act 1976. The Executive denied any discrimination and also took the points that the Tribunal had no jurisdiction to hear the issue of discrimination as (1) the applicant had not sought employment under "a contract personally to execute any work or labour" and (2) that a refusal to appoint to a panel was not a refusal or omission to confer a qualification.

The Executive succeeded on both issues before the Tribunal. In the Court of Appeal, Oliver Loughran succeeded on the first point but Bernadette Kelly failed. Both failed on the second point. The relevant sections of the statute are:

Section 17

(ii) by refusing or deliberately omitting to offer that person employment . . .

Section 23

Section 57

(1) In this Act, unless the context otherwise requires, . . . 'employer' means -

. . . and 'employee' correspondingly, means such a person as is first mentioned in (a) (b) and (c) of this definition.

I agree with your Lordships that section 23 has no application to an appointment of a solicitor to the West Panel, and that the appeals fail on that ground.

I find the question under section 17 more difficult. Neither Bernadette Kelly nor Oliver Loughran were seeking employment as employees or apprentices, but were they seeking employment "personally to execute any work?" The Tribunal held that they were not: they held that the dominant purpose of the contract was not that a contracting party would personally execute the work or labour but that a designated solicitor would do so, and the fact that the contracting party and the designated solicitor might be one and the same person they regarded as fortuitous rather than purposeful and unrelated to the contract. Whilst I see the force of this argument I cannot accept it.

It was of the first importance to the Executive that their work should be personally carried out by an identified solicitor of not less than three years' qualification. No doubt it was also of importance that the firm should be of good standing with a partner who would assume overall responsibility for the work, but if one is looking for a dominant purpose of the contract I would say it was to secure the services of a particular solicitor personally to defend their cases.

The importance of this legislation has been stressed in your Lordships speeches and I would not wish to adopt an approach to its construction or application that cut down the protection it was intended to afford. In the case of Oliver Loughran he had applied to be appointed to the Panel and undertook personally, as the designated solicitor, to defend the cases against the Executive. If he had been successful, the terms of his retainer for each case in which he was instructed by the executive would have required him personally to carry out the work necessary for the defence of the claim. No doubt others would give assistance, such as secretarial, but the solicitor's work he would do himself. This seems to me to be a clear example of a contract personally to execute work. Oliver Loughran is the contracting party and he personally is to execute the work. The fact that he practices under the firm name of Oliver M. Loughran and Co. cannot stand in the way of his claim. Accordingly in agreement with the Court of Appeal and Lord Slynn of Hadley I would dismiss the appeal of the Executive in the case of Mr. Loughran.

I turn now to the case of Bernadette Kelly. The wording of section 57 confines the remedy for unlawful discrimination to the party who contracts to provide the personal services. So if a firm of solicitors had designated an assistant solicitor, to defend the claims of the Executive, that assistant solicitor would have no claim for unlawful discrimination, as he would not be a contracting party, nor in my view would the firm have any claim. This may be considered unfortunate, but is the inevitable consequence of the drafting of the statute. But Bernadette Kelly, as a partner in the firm of "John Hoy, Son & Murphy," was a contracting party. A firm of solicitors has no legal existence, independent of the partners of the firm. The contract between the Executive and John Hoy, Son & Murphy, if it had come into existence, would have been a contract between the Executive and both partners of the firm. That being so Bernadette Kelly was seeking to enter into a contract personally to execute work within the meaning of section 57, and is entitled to pursue her claim for discrimination. For this reason I would allow her appeal.

I cannot, however, agree that the Interpretation Act 1978 should be applied to achieve the same result. It seems to me that the language of the statute is aimed at giving protection to individuals and not to companies or unincorporated corporations. The protection is afforded to those who enter into a contract of service or apprenticeship; these are clearly references to individuals; it is extended to those who contract personally to execute work or labour, which I read again as referring to individuals. It would be a wholly unnatural use of language to say a company or corporation had personally agreed to carry out work. Furthermore I foresee that the most formidable difficulties in the practical application of the Act would be likely to arise if Tribunals were called upon to decide on the religious beliefs or political opinions of companies or corporations. I am satisfied that the context in which the phrase "contract personally to execute any work or labour" appears in the Act precludes the application of section 5 and Schedule 1 to the Interpretation Act 1978.

LORD LLOYD OF BERWICK

My Lords,

I do not repeat the facts which are set out in the speech of my noble and learned friend, Lord Slynn. The first question is whether the applicants have brought themselves within the terms of section 17 of the Fair Employment (Northern Ireland) Act 1976. The Fair Employment Tribunal have answered this question in favour of the Northern Ireland Housing Executive, for reasons set out fully and clearly in their unanimous decision dated 18 April 1996.

There is an appeal from a decision of the tribunal to the Court of Appeal on a question of law. The Court of Appeal upheld the decision of the tribunal in the case of Mrs. Kelly, but reversed the tribunal's decision in the case of Mr. Loughran. Unfortunately the judgment does not spell out the error of law which the Court of Appeal must have identified. But it would seem likely that the Court of Appeal disagreed with the tribunal in its application of the law to the facts in Mr. Loughran's case, on the ground that he was a sole practitioner, and would have been the designated solicitor if his firm had been appointed to the panel.

For my part I can find no error of law in the tribunal's reasoning, nor in its application of the law to the facts of these cases. I would therefore restore the decision of the tribunal.

The tribunal started with section 17 itself, and pointed out, correctly in my view, that the Northern Ireland Housing Executive could only be guilty of unlawful discrimination if the Executive is an "employer," and the two applicants were "employees," that is to say, persons seeking employment within the meaning of section 57(1)(a) of the Act. It is the person entering into the contract of employment who is entitled to be protected under section 17 of the Act. This is obvious in relation to contracts of service and contracts of apprenticeship. It is equally obvious in relation to an employee seeking employment under a contract for personal services within the extended definition of section 57.

Similarly it is the person who is seeking employment under the contract for personal services who is contemplated as performing those services as "employee." This again is obvious in the case of a contract of service or apprenticeship. In my view it is equally obvious in the case of a contract for personal services. There is nothing in section 57 which suggests that section 17 extends to a contract made by A for the performance of personal services by B.

So much would, I should have thought, be uncontroversial. It is well set out in the following passage from the decision of the tribunal at paragraph 4:

"It seems to us to follow from that definition [section 57] that the person who was personally to execute the work or labour must be the person employed under the contract by which the employer was entitled to benefit. It does not suffice for the applicant to show that this contract would be performed 'personally' by someone else if that someone was not a party to the contract."

I agree. In support of their view the tribunal quoted the following passage from the judgment of Balcombe L.J. in Mirror Group Newspapers v. Gunning [1986] 1 W.L.R. 546, 556:

"However I do accept Mr. Irvine's alternative submission that the phrase in its context contemplates a contract whose dominant purpose is that the party contracting to provide services under the contract performs personally the work or labour which forms the subject matter of the contract."

So the only question is whether the contracts which would have been made in these cases were made with the persons who would have performed the personal services covered by the contracts. In the case of Mrs. Kelly the answer must surely be no. The application form draws a clear distinction between the firm and the designated solicitor. It is the firm which takes overall responsibility. But it is the designated solicitor who is responsible for carrying out the work. That is why the qualifications and relevant experience of the designated solicitor are as important as the qualifications of the firm.

The distinction between the firm and the designated solicitor is even more apparent in the covering letter dated 24 May 1994 sent to potential applicants. It provides:

Eligibility

The same distinction also runs through the form of contract between the Executive and the successful applicant, from which it is clear that it is the firm which is appointed to the panel and agrees to abide by the Executive's Standard Conditions of Retainer, but it is the designated solicitor who is to give priority to panel work.

Had Mrs. Kelly's firm been successful in the application for appointment to the panel, the contract would have been with the firm, but the actual work would have been performed by Mrs. Kelly as the designated solicitor. If one assumes for a moment that Mrs. Kelly had been an assistant solicitor, and not a partner, it seems clear enough that she could not have complained. The contract would not have been with her. Nor could the firm have complained, since a firm (as distinct from an individual) cannot agree to execute work personally.

My noble and learned friend Lord Slynn of Hadley considers that a firm can complain, and he relies in that connection on the definition of "person" contained in section 5 and schedule 1 of the Interpretation Act 1978. But the definition makes no sense in the context of sections 17 and 57 of the Act of 1976. A company, like an individual, can undertake to execute work or perform services. But a company cannot execute work personally. Nor can a partnership, or other unincorporated body of persons. The attempt to read in the definition from the Interpretation Act gives no effect to the word "personally"; yet the inclusion of that word in the definition cannot be ignored, or given less than its full force. Thus far I find myself in complete agreement with my noble and learned friend Lord Griffiths.

Does it then make any difference that Mrs. Kelly was not an assistant solicitor, as I have assumed, but a partner? In my view this makes no difference. I accept, of course, that in England (though not in Scotland) a firm is not a legal entity distinct from its partners, and that in the eye of the law a contract made with the firm is a contract made with the existing partners individually. But Parliament cannot have intended that section 17 should apply to some partnerships but not others, according to whether the person actually carrying out the work is a partner or not. In many cases a potential employer would not even know (unless he inquired) whether the person carrying out the work was a full partner, a salaried partner, or an employee. Moreover the status of the person carrying out the work might change. Thus if in the present case Mrs. Kelly had been an assistant solicitor at the time of the contract she could not have complained, even though she was due to become a partner within a month or a week. The liability of a potential employer for unlawful discrimination should not depend on such chances as these. In her complaint Mrs. Kelly describes herself as having applied for the job in question. But except in the most technical and refined sense this was not the case. It was the firm who applied, and not Mrs. Kelly, as indeed my noble and learned friend Lord Slynn acknowledges.

So far as Mrs. Kelly is concerned, therefore, I agree with the Court of Appeal, and respectively disagree with the majority of your Lordships. Mrs. Kelly falls outside the protection afforded by section 17. I cannot put it better than it was put by the tribunal in the following passages:

"We have studied the agreed facts in the case together with the documentation attached to those facts and the oral evidence adduced. In our opinion there is an irresistible inference that the dominant purpose of the contract was not that a contracting party would personally execute the work or labour but that a designated solicitor would do so. It may well be that in some cases there would be no difference between the designated solicitor and the contracting party. Indeed clearly the applicant, Oliver Loughran, would fall within that category as also would the applicant Bernadette Kelly. We see that as fortuitous rather than purposeful and unrelated to the dominant purpose of the contract. The same contract--terms and conditions--cannot have a different 'dominant purpose' because of the identity of the contracting party--at least not without some clear reference."

The second passage is as follows at paragraph 7:

"We have no doubt that the dominant purpose of the contracts was that one or two designated solicitors would have primary responsibility for carrying out the work. It was not the dominant purpose that this work would be carried out by principals or parties. The fact that some firms may have chosen to make principals or parties 'primarily responsible for carrying out the work' - or even indeed that some firms may not have had an alternative--is not to the point. Accordingly we unanimously believe that the applicants have not shown that the respondent was 'an employer' within the meaning of section 17 of the Fair Employment (Northern Ireland) Act 1976."

As I have already said, I can find no error of law in the tribunal's reasons, nor in the conclusions set out in paragraphs 7(j) and (k) of the Case Stated for the Opinion of the Court.

As for Mr. Loughran, the Court of Appeal drew a distinction between his case, and that of Mrs. Kelly on the ground that Mr. Loughran was "in substance" seeking to have himself appointed to the panel. The Court of Appeal did not regard this as a desirable distinction, and nor do I. But whereas the Court of Appeal felt constrained to reach an undesirable conclusion by the language of section 57, I do not myself feel the same constraint. Parliament cannot have intended the application of section 17 to depend on the number of partners in the firm.

On the second question, I agree with my noble and learned friend Lord Slynn that appointment to the panel is not a "qualification" for the purposes of section 23 of the Act.

For the reasons I have given I would dismiss the appeal in the case of Mrs. Kelly, but allow the appeal in the case of Mr. Loughran.

LORD STEYN

My Lords,

I have had the advantage of reading in draft the speech of my noble and learned friend, Lord Slynn of Hadley. For the reasons he gives I would also make the order he proposes.

LORD CLYDE

My Lords,

These two appeals concern the proper application of section 17 of the Fair Employment (Northern Ireland) Act 1976. The purpose of that Act is serious and important, seeking as it does to check the evils of discrimination on religious or political grounds. But the language of legislation may be incapable of achieving a complete solution to a problem which perhaps can only be truly resolved by changes in personal attitudes and the development of a wider vision; and while the intention of the legislator may in its generality be clear the language should not be subjected to violence or strain in order to extend the application of the statute to cases which are beyond its scope.

The Act sought to establish an Agency with a view to promoting among other things, to use the language of the long title, "equality of opportunity in employments and occupations in Northern Ireland between people of different religious beliefs." The provisions of the Act are directed in particular to employment and it seeks to check discrimination by employers. Thus in particular Section 17 details the acts in which in relation to employment in Northern Ireland it is unlawful for an employer to discriminate against a person. The person may be (a) seeking employment or he may be (b) employed by the employer. So the section is dealing with a potential or an actual employment and it then becomes critical to ascertain what is meant by employment.

The word is defined in section 57. Clearly from that section employment involves a contract. The contract may be of service or it may be a contract of apprenticeship or it may be a contract "personally to execute any work or labour." Neither of the first two possibilities apply in the present appeals.

The language used to describe the third case is language which has been used elsewhere in legislation and should presumably be taken to carry with it the interpretation which it receives in the other contexts in which it appears. In the context of the Equal Pay Act 1970 and the Sex Discrimination Act 1975 it was recognised in Quinnen v. Hovells [1984] I.C.R. 525 that "the concept of a contract for the engagement of personal work or labour lying outside the scope of the master-servant relationship is a wide and flexible one" and so extended to one who was self-employed. In Tanna v. Post Office [1981] I.C.R. 374 in the context of the Race Relations Act 1976 the work of a sub-postmaster was held not to fall within the definition of "employment", which was in the same terms as in the Act before us, because while a sub-postmaster required to provide premises and ensure that services were provided by the Post Office to the public, there was no provision requiring him to do anything personally. The appeal tribunal in its judgment said (at p. 377) of the third head in the definition:

"It is a contract personally to execute any work or labour. That, it seems to us, quite plainly requires that the person entering into a contract shall himself be under an obligation personally to do work or labour. It may well be that some of what he undertakes to do he may delegate, but in our judgment it is essential, for there to be 'employment', that the person making the contract shall himself undertake to do, at any rate some of the work or labour."

This critical part of the definition then relates to a contract with someone under which that person is to do at least some of the work himself. It may not be intended that he should do every bit of the work personally. But it is a contract which seeks to secure his particular individual participation as the principal and major contribution to its performance. This point has been expressed in terms of a dominant purpose. In Mirror Group Newspapers Ltd. v. Gunning [1986] 1 W.L.R. 546 it was recognised that the kind of contract which was contemplated under the Sex Discrimination Act 1975 was not only one where the sole purpose was that the party contracting to provide services under the contract would personally perform the work or labour in question but one where that was at least the dominant purpose. Thus the agency for the distribution of newspapers in the circumstances of that case fell outwith the scope of such a contract. The engagement of a portrait painter personally to paint a portrait would fall within the definition even if it was contemplated that some minor work would be carried out by an assistant in his studio. The work need not be intended to be performed exclusively by the contracting party. But an arrangement with the painter that the portrait would be painted by one of assistants would not be a contract with the painter personally to paint a portrait.

The proposed contract in the present appeals was not such a contract. What it sought to do was to secure the appointment of a particular solicitor's business enterprise with a view to the giving of instructions in the future for the conduct of litigation in which the Executive would be involved. The Executive was also concerned to identify individual practitioners in the solicitor's business. It was not concerned to see that the party with whom it made the contract was the individual who would himself or herself predominantly do the work. As the tribunal described it, it would be fortuitous if the same person was both the contracting party and the person who was principally to do the work. The proposed appointment was not one under which the appointee was personally to execute work, but only one under which the appointee would be able to make arrangements for the personal execution of work by one of the solicitor members of the business. Under the construction which has been given to the critical phrase the offer of appointment which was made in the present case does not seem to me to fall within the scope of the definition.

The question has arisen whether the word "person" in the definition of "employee" may include not only individual people but bodies corporate, such as limited companies and partnerships. The question does not in my view require to be determined in this case but it must depend upon a construction of the statute and in particular the terms of the definitions. I would only observe that while the employer may readily include a person which is a body corporate, it is less easy to see that a corporate body was intended to be included as an employee. Even if it could carry out employment under a contract of service it would not readily rank as an employee under a contract of apprenticeship. And so far as the third head is concerned, even if in this context "personally to execute" can be construed as meaning a corporate performance, what was proposed in the present case was not a performance by the firm which entered into the contract but mainly by a designated solicitor who might or might not be the representative of the firm who entered into the contract.

The alternative approach which was adopted by the two applicants in the present appeals depended upon section 23 of the Act. That section relates to situations where someone has a power to confer a qualification. The word "qualification" is defined in section 57 by examples, largely reflecting the forms in which a qualification may be conferred. The qualification must be something which is needed for or facilitates a person's engagement in employment in any capacity. Plainly the section covers such matters the registration of architects or doctors, and the enrolment of solicitors. Admission into membership of a recognised authority in the field in which the person is working which carries with it the stamp of that authority's approval may also be covered, as in Department of the Environment for Northern Ireland v. Bone (unreported, 15 September 1993) to which we were referred. But the reference made by the Court in that case to the conferring of some sort of status may be dangerous as distracting one from the statutory requirement. A professional qualification within the section may give status, but the fact that status may follow upon an appointment does not necessarily mean that the appointment is one to which the section relates.

Section 23 is concerned with the exercise or non-exercise of a power to confer a qualification such as is envisaged in the section. That is something more than a decision to demand a particular qualification before accepting someone as a recognised practitioner for the purposes of particular operations (Tattari v. Private Patients Plan Ltd. [1998] I.C.R. 106). It is also something more than selecting someone to provide for oneself the professional services which that person is already qualified to perform. The executive was not here exercising a power to grant qualifications and their selection of and retaining of particular firms to do their litigation work did not fall within the scope of section 23.

In the circumstances I do not consider that the offers of appointment with which these two appeals are concerned fall within the scope of the Act. I would accordingly allow the appeal by the Executive in the case of Oliver Loughran and refuse the appeal by Bernadette Kelly.