MR TARIQ SAMI v MR ABEL AVELLAN and Ors.

This appeal is brought by Mr Tariq Sami against a judgment of Employment Judge Bartlett (the “EJ”), sitting alone in the Watford employment tribunal at a hearing via CVP on 25 August 2020. Written reasons were sent to the parties on 16 September 2020. The claim was brought against four respondents. The EJ held, among other matters, that the claims against the Second Respondent, Nanoavionika UAB, and the Fourth Respondent, Mr A Avellan, had little reasonable prospect of success and she ordered the payment of a deposit in the amount of £150 in respect of each claim. The appeal is against those deposit orders and not against other aspects of the judgment.

I shall refer to the parties as the Claimant and, collectively, as the Respondents, as they were before the Tribunal.

Before me, the Claimant was represented by Mr Horan of counsel and the Respondents to this appeal were represented by Ms Tutin of counsel. I am grateful to both for their submissions.

The Claimant presented his first claim on 27 August 2019. In it he complained of direct and indirect race discrimination and harassment contrary to the Equality Act 2020 (“EqA”). The claim was brought against the three corporate Respondents set out below:

In a very detailed rider to his claim form the Claimant set out his allegations of discrimination. These included allegations that he was treated less favourably in various ways because his race was non-Lithuanian, such as being dismissed for failing to achieve targets, being given less support, having his target changed at short notice and being abruptly dismissed. He also claimed he was subject to indirect race discrimination, referring to the application of various provisions, criteria or practices, such as sales targets, which it was said operated to the particular disadvantage of non-Lithuanians. His complaint of harassment relating to race under section 26 EqA is, I was informed at the hearing, no longer being pursued.

While his primary claim was against the First Respondent, the Claimant contended in addition, that (i) the Second and/or Third Respondent were also his employers because they were in control of him and were referred to in the contractual documentation (it was said the Second Respondent had in fact signed a contract with him); (ii) both the Second and Third Respondents were potentially liable as agents under section 110 EqA and for aiding contraventions of the Act under sections 112 of the EqA; and (iii) the Second Respondent was also liable for inducing contraventions of the Act, contrary to section 111 : see paragraphs 259-60 of the rider to the claim form.

In the responses from all three Respondents, the claims were denied. The Respondents accepted that the Claimant was employed by the First Respondent but contended he had no contractual relationship with the Second or Third Respondent and was dismissed on 24 May owing to his poor performance.

In the grounds of resistance attached to the responses, it was asserted that the Claimant had failed to particularise how the Second or Third Respondents were agents of the First Respondent or had induced or knowingly helped discrimination by the First Respondent, and a request was made for a deposit order in relation to these complaints (paragraphs 9-10). The grounds explained that the Second Respondent was a satellite manufacturer, satellite launch broker and satellite operator, employing approximately 80 scientists and space engineers. It received funding, according to the grounds, from the Third Respondent, which owned the majority of the shares in the Second Respondent. In order to expand its presence in the UK market, the Second Respondent had established the First Respondent in 2018. It is based in the science park at Harwell Campus, Oxfordshire and is a wholly-owned subsidiary of the Second Respondent. It was said that the Claimant was employed by the First Respondent in order to expand its market presence and growth in the UK.

As already foreshadowed in his original grounds of complaint, the Claimant subsequently presented a second claim against Mr Abel Avellan, the Fourth Respondent, on 19 September 2019. In it he claimed that the Fourth Respondent, who is the chief executive of the Third Respondent and chairman of the Second Respondent, had aided the acts of race discrimination against the Claimant within the meaning of section 112 EqA. In particular, it was alleged that the Fourth Respondent had approved of the discriminatory dismissal of the Claimant and had failed to conduct an appeal sought by the Claimant (see paragraph 17 of the rider to the claim form).

In the response served on behalf of the Fourth Respondent the claims were denied. It was stated that it was inherently implausible that the Fourth Respondent, who is also non-Lithuanian, would discriminate against the Claimant and a request was made for a deposit order.

The matter was listed for a preliminary hearing (“PH”) to consider if the claims against the Second, Third or Fourth Respondents should be struck out or the Claimant should pay a deposit order. There was an agreed list of issues and both parties provided written submissions. The Claimant also presented additional documents the night before the hearing, relevant to the process of his dismissal. I refer to some of these below.

The written judgment of the EJ set out the background to the claim and cited rules 37 and 39 of the Employment Tribunal (Constitution and Rules of Procedure) Regulations 2013 (the “Rules”), on strike out and deposit orders respectively.

After summarising the arguments of the parties, the EJ found that the Claimant’s contract of employment was with the First Respondent alone and not with the Second or Third Respondents. She struck out the part of the claim alleging the Claimant was employed by them (paragraph 19), and there is no appeal against that ruling. The EJ turned to consider the whether the Second or Third Respondents could be the agents of the First Respondent or liable for helping discrimination under section 112 EqA. She said this:

There is no appeal against the EJ’s decision striking out the claim against the Third Respondent. The EJ did not consider the claim that the Second Respondent was liable under section 111.

As regards the claim against the Fourth Respondent under section 112, the EJ said the following.

The Claimant did not pay the deposits made in respect of his claims against the Second and Fourth Respondents, with the result that those claims were struck out.

Claims under Part 5 of the EqA, relating to the work sphere, are brought under section 39 against the employer. In addition, by section 40 an employee must not harass one of its employees.

The Act sets out some careful provisions for the ascription of liability, similar to those in the earlier anti-discrimination legislation. First, under the title “Liability of employers and principals”, section 109 states:

Section 111 of the Act imposes additional liability for instructing, causing or inducing contraventions, replacing the analogue provisions in the predecessor legislation, such as sections 30-31 of the Race Relations Act 1976. That section states:

Liability is also imposed for helping contraventions by section 112 EqA, replacing the provisions referring to aiding unlawful acts as were formerly found in, for example, section 42 of the Sex Discrimination Act 1975. Section 112 states:

Guidance on the meaning of section 112 is given by the Code of Practice on Employment issued by the Equality and Human Rights Commission (the “Code”) and which tribunals must take into account where it appears relevant: see section 15(4) of the Equality Act 2006. The Code says that “help” should be given its ordinary meaning, and in relation to “knowingly” says at [9.28] that:

Rule 39 of the Tribunal Rules deals with deposit orders. Rule 39(1) states:

Where a tribunal makes a deposit order and the paying party fails to pay the sum ordered, the relevant allegation or argument is struck out: see rule 39(4). If the deposit is paid, and the tribunal later decides against the paying party for “substantially the reasons given in the deposit order”, that party is treated as having acted unreasonably for the purpose of a costs order in rule 76 unless the contrary is shown and the deposit is paid to the other parties: see rule 39(5).

On the approach to rule 39, Mr Horan referred me to Sharma v New College Nottingham, UKEAT/0287/11/LA in which Wilkie J indicated that a similar approach applied to making deposit orders as applies to strike outs, where it is only in an “exceptional case” that the courts will strike out a claim where the core facts are in dispute, such as where the alleged facts are totally and inexplicably inconsistent with the undisputed contemporaneous documentation: see Ezsias v North Glamorgan NHS Trust [2007] ICR 1126 per Maurice Kay LJ at[29], cited in Sharma at [26]. He argued that unless a case with disputed facts fell into the “exceptional” category, no deposit order could be made.

I do not consider, however, that the similarity between strike outs and deposit orders can have the effect of overriding the different wording of the two rules. As much is clear from Ezsias itself, in which the Court of Appeal, having held that the claim should not have been struck out, left open the possibility of a deposit order being made: see Maurice Kay LJ at [33]. The lower threshold for making a deposit order than a strike out gives a tribunal greater leeway to make a preliminary assessment of the strength of a case, including of the factual credibility of allegations: see Elias P (as he then was) in Van Rensburg v Royal Borough of Kensington-Upon-Thames, UKEAT0096/07/MAA at [26]-[27].

Nonetheless, the practical effect of a deposit order on the right of access to justice - probably due more to the costs warning if the case is pursued than to the deposit sum itself - means that there must be a proper basis for making such an order. As it was put by Simler P (as she then was) in Hemdan v Ishmail [2017] IRLR 228 at [12] in comparing deposit orders with strike outs:

Following a preliminary hearing before Jason Coppel QC, sitting as a Deputy High Court Judge, the appeal grounds were amended so as to provide three focused grounds of appeal: see the amended Notice of Appeal dated 10 November 2011. Below I deal with each ground, referring to the numbering used in the revised grounds of appeal.

Ground (2): section 112, Fourth Respondent. This ground, as revised, is that in ordering the Claimant to pay a deposit in respect of his claim against the Fourth Respondent based on section 112 of the EqA, the EJ gave insufficient reasons, based herself on erroneous reasons and/or applied an inappropriately high, and incorrect, standard.

It is common ground that a claim based on section 112 is not necessarily parasitic on an existing claim against another respondent. In other words, a claim may be brought on the basis that A helped B to commit a “basic contravention” even though no claim is actually brought against B. Here, the pleaded claim was that the Fourth Respondent aided contraventions by approving of the dismissal of the Claimant or by failing to process his appeal. The matter could be analysed as the Fourth Respondent having helped a discriminatory dismissal within the meaning of section 39 of the EqA, the relevant “basic contravention”. Alternatively, to the extent that the dismissal had already taken place and so could not be “helped” after the event (see May & Baker v Okergo [2010] IRLR 394 at [34]), the claim could properly be analysed as an allegation that the Fourth Respondent helped an act of discrimination closely connected to a relationship which had ended - namely that the Claimant, as a former employee, was not given the same opportunity to appeal as would have applied to a Lithuanian employee - so that the “basic contravention” would then be a breach of section 108 EqA. I consider the rider to the claim brought against the Fourth Respondent, when properly analysed, provided a sufficient basis for either of these two types of claim, both of which potentially engaged section 112.

In support of his pleaded claim against the Fourth Respondent, the Claimant provided some supporting documentary evidence to the tribunal. He said he was informed of the decision to dismiss him on 24 May 2019 by Mr Linus Sargautis, the Chief Commercial Officer of the Second Respondent. In what the Claimant said was a hand-written contemporaneous note he took of the discussion, he recorded Mr Sarguautis as saying that the matter had been discussed with lawyers and “with Abel”, a reference to the Fourth Respondent. The same note also referred to “maybe culture” as one of the reasons for his dismissal. Text messages sent on the same day by the Claimant to Chris Ivory, an employee of the Third Respondent, and which were also before the tribunal, provided some further support for that allegation because they referred to the Claimant’s having been told that the he had been dismissed on “Abel’s authorisation”.

Miss Tutin also reminded me that a tribunal decision must be read fairly and as a whole, without being hyper-critical of the reasoning, and that reasons for making a deposit order may be short. But she rightly accepted that a tribunal decision to make a deposit order can properly be challenged if the tribunal has failed to consider relevant considerations or took into account irrelevant considerations: see, for example, Medallion Holidays v Birch [1985] IRLR 408.

At paragraph 24.3 the EJ initially said that she did not consider the claim against the Fourth Respondent stood no or little reasonable prospect of success; but I accept Miss Tutin’s submission that, when the decision is read fairly, the EJ was only addressing in this paragraph whether the Fourth Respondent knew about the Claimant’s dismissal. Here, the EJ accepted the threshold for making a deposit order was not crossed.

In that light, the EJ’s only reasons for making a deposit order were set out in paragraph 24.4, said to be the “wider circumstances” of the claim, referring specifically to (i) a dispute surrounding a short period of employment and (ii) a dismissal which is alleged to be for “poor performance/discriminatory”. For the Fourth Respondent, it is accepted that the only “wider circumstances” were factors (i) and (ii).

It is hard to see how either of these two reasons is relevant to strength of the claim for the purpose of the threshold in rule 39. That the dispute concerned a short period of employment is, I consider, neutral. Discrimination can occur in short-term or long-term employment, and the EqA is intended to proscribe discrimination before, during and even after employment, regardless of its length. The short period of employment might support the Claimant’s case - that the Respondents wanted quickly to engineer his dismissal because he was non-Lithuanian - or the Respondents’ case that he did not perform well enough in his probationary period. But in itself the short period of employment says nothing about the strength or weakness of the case.

Nor does the second reason, that the “dismissal was alleged to be for poor performance/discriminatory”, point towards a claim having little reasonable prospect of success. It does no more than recite the issue before the ET at a full hearing, set out by the EJ earlier in paragraph 5 of her judgment. The fact that the dismissal was alleged by the Respondents to be for poor performance is unsurprising because it is a truism that people do not generally admit to discrimination, and the addition of the word “discriminatory” only serves to highlight that the reason why the Claimant was dismissed was in dispute.

I accept that tribunal reasons in a context such as this may be terse and should not be read too closely. But the reasons given, I consider, were not relevant to the proper application of the words “little reasonable prospect of success” in rule 39 and provided no proper basis for doubting the Claimant’s allegations. In the alternative, the EJ failed to give adequate reasons for her conclusion because no other sufficient reason was given for making a deposit order. The provisions of rule 39(5) reinforce my conclusion. If the deposit had been paid, it is difficult to see how the two reasons given by the EJ could be relevant to deciding the claim against the Fourth Respondent at a full hearing. The reasons would not, therefore, permit a later tribunal properly to assess whether under rule 39(5) the Claimant should be treated as having acted unreasonably for the purpose of a costs order or payment of the deposit to the Fourth Respondent.

Miss Tutin sought to uphold the conclusion of the Tribunal based on the EJ’s noting earlier in paragraph 24.4 that the Fourth Respondent was a non-Lithuanian. It was inherently implausible, she argues, that the Fourth Respondent would knowingly help others to dismiss the Claimant because he was not Lithuanian. The difficulties with that argument are, first, that it does not correct the two reasons given by the EJ in paragraph 24.4, which are expressly given as the reasons for making the deposit order. Secondly, I consider that reason alone would not be sufficient to provide a proper basis to meet the threshold for a deposit order - especially given there was some documentary evidence, albeit from the Claimant’s note, to suggest that “culture” may have been stated to be a reason for the dismissal. Thirdly, once the two “bad” reasons are stripped out, I do not consider the fact the Fourth Respondent is also a non-Lithuanian is a sufficient basis to conclude that the error was immaterial to the result or that I can conclude that a deposit order would inevitably have been made: see Jafri v Lincoln College [2014] ICR 920 at [21]. The question of “knowingly helps” is very much a question based on the primary facts found by the tribunal and not one for an appellate court, as illustrated by the speech of Lord Bingham in Hallam.

The appeal on this ground is therefore allowed.

Ground (4): section 111 and Second Respondent. This ground is that the EJ failed to consider the potential application of section 111 against the Second Respondent. In the absence of any reasons explaining why such a claim stood little prospect of success, it is argued that the Claimant does not know why a deposit order was made against him in relation to this part of his claim.

Nowhere in her judgment did the EJ refer to a claim against the Second Respondent based on section 111 EqA, even though such a claim was raised in Claimant’s pleaded claim in relation to the Second Respondent, was in the agreed list of issues before the PH and was referred to in the Claimant’s written submissions for the PH. This appears to amount to an error of law.

However, there is a fundamental problem with such a claim, although this was not raised before the EJ or by either party to the appeal. To get such a claim off the ground, the Claimant would need to show that the Second Respondent was in a position to commit a “basic contravention” in relation to the First Respondent: see section 111(7). A “basic contravention” means an act which contravenes Parts 3-7 of the EqA, section 108 (relationships that have ended) or section 112(1). Section 112(1) in turn refers to knowingly helping another to contravene Parts 3-7, section 108 or section 111. Not only must A instruct, cause or induce B to discriminate against C, the third party; the relationship between A and B must entail that A is in a position to discriminate against B under the Act.

According to the Explanatory Notes to section 111(7), which are a legitimate aid to interpretation, “the section only applies where the person giving the instruction is in a relationship with the recipient of the instruction in which discrimination, harassment or victimsation is prohibited”. An obvious example is where A, the person giving the instructions or inducing the contravention fo the Act, is the employer of B. The purpose of the provision is, presumably, only to impose liability on A where A has some sort of authority, influence or power over B, exemplified by circumstances in which B is an employee of A’s (contrast section 112, which contains no such restriction). (Footnote: ¹) Reinforcing that interpretation is the fact that B, and not only the third party who is the victim of the contravention (C), may potentially bring proceedings under section 111(5) if he or she is subject to a detriment.

But here the relationship between the First and Second Respondents, both of whom are corporate bodies, was not such that the Second Respondent was in a position to discriminate against the First Respondent under Parts 3-7 or section 108. Nor does it appear that the Second Respondent was in a position to breach section 112(1), on helping discrimination, in relation to the First Respondent.

In light of section 111(7) and after taking instructions, Mr Horan accepted that the Second Respondent could not be liable under section 111 and it would serve no practical purpose for the matter to be remitted even if there were an error of law in the Tribunal’s approach because the inevitable result would be that the claim would fail. In that light, he sensibly decided not to pursue the second ground of appeal, which is therefore dismissed.

Ground (9) - sections 110, 111 and 112 against Second Respondent. In this final ground of appeal, the Claimant argues that the EJ erred in her approach to the deposit order made in relation to all three claims against the Second Respondent.

The claim based on section 111 is resolved in the same way as ground (4) above owing to the condition in section 111(7) not being met, and so this element of the appeal is dismissed. But the Claimant maintains that the EJ erred in her approach to deciding that he had little reasonable prospect of establishing that the Second Respondent (i) was the agent of the Respondent within the meaning of section 110 and (ii) helped the First Respondent discriminate for the purpose of section 112.

In his amended skeleton argument, Mr Horan sought to argue that the EJ misdirected and misapplied the law of agency. By reliance on cases such as Yearwood v Metropolitan Police [2004] ICR 660 and UBS AG v Kommunale Wasserwerke Leipzig GmBH [2017] EWCA Civ 1567, he submitted that the EJ misdirected herself at paragraph 20 of her judgment. Miss Tutin objects to this point being raised because, she says, it goes beyond the scope of the Notice of Appeal. She points out that in the amended Notice of Appeal the Appellant deleted original ground (6), in which it was stated that the EJ had misdirected herself on agency and in which express reference was made to Yearwood and UBS. I agree. I do not consider this point can be pursued on appeal in circumstances where no application was made to amend the Notice of Appeal, revised ground (9) did not refer to a misdirection in relation to agency and, given the express deletion of original ground (6), it was clear no such point was being pursued on appeal.

What remains of the agency appeal, therefore, is whether the EJ erred in paragraph 22 in ordering a deposit. The EJ acknowledged that there was a written power of attorney granted to Mr Sargautis, described in it as a representative of the Second Respondent, to sign the contractual termination documents with the Claimant, and the EJ took this into account in concluding that it could not be said the agency argument stood no reasonable prospects of success. But she ordered a deposit for two reasons: first, she said the claim was based on “mere assertions” and, second, it ignored the employment relationship with the First Respondent.

I consider these reasons do not provide a sufficient basis for ordering a deposit. In his written submissions on agency for the PH, the Claimant relied on three matters as supporting an agency relationship between the First and Second Respondent: the written power of attorney under which Mr Sagautis in fact acted by signing the document terminating the Claimant’s employment; that in practice the First Respondent only had one employee so that management and employment functions, such as HR, were delivered by means of persons within the Second Respondent, acting as agents for the First Respondent; and that he was told the dismissal had been approved by Mr Avellan, the chairman of the Second Respondent (as confirmed by the Claimant’s handwritten notes of his meeting on 24 May). Some of these facts, such as the existence of the power of attorney, do not appear to be in dispute and others were supported by documents. Even if other factual matters necessary to show an agency relationship were in dispute, the matters put forward provided a foundation more secure than “mere assertions” to support the existence of an agency relationship.

In addition, that the Claimant was employed by the First Respondent did not provide a proper basis for doubting that he would be able to establish the facts he asserted to support an agency relationship between the First and Second Respondent. On the contrary, his employment by the First Respondent was entirely consistent with the Second Respondent acting as its agent when, for example, the Claimant was dismissed by Mr Sagautis pursuant to the power of attorney.

Ms Tutin sought to uphold the EJ’s reason by arguing that because the Claimant was employed by the First Respondent, he had a valid claim against it for discrimination and so would suffer little prejudice if his claim against the Second Respondent were dismissed. Her argument was that the EJ took into account the fact of employment by the First Respondent not in considering whether the threshold of little reasonable prospect was crossed but, rather, at the second stage in exercising the discretion to order a deposit. The principal difficulty is that this is not what the EJ said in paragraph 22. She treated the existence of an employment relationship with the First Respondent as one of the two reasons why, as she said, there was “little reasonable prospect of the claimant establishing agency”.

The remaining element of ground (9) relates to section 112 of the EqA, and the claim that Second Respondent knowingly helped the First Respondent to commit a “basic contravention” against the Claimant. In support of this aspect of his claim, the Claimant relied on similar factors in his written submissions for the PH as he relied on in relation to agency. The EJ dealt with this matter briefly at paragraph 22, saying she relied on the “same findings” in ordering a deposit in relation to section 112 as she had reached in relation to the agency relationship. By this, she presumably meant the claim was based on “mere assertions” and was undermined by the fact the Claimant was employed by the First Respondent.

Once again, I consider that the reasons expressed by the EJ at paragraph 22 do not amount to a sufficient basis for concluding the claim had little reasonable prospect of success. The Claimant had put forward facts, some of which were supported by documents, to show why Mr Sargautis or Mr Avellan, both of whom were employees or agents of the Second Respondent, may have “helped” his dismissal from employment with the First Respondent. The requisite knowledge element of section 112 received some support from the reference in the Claimant’s contemporary handwritten note to “maybe culture” as one of the reasons he was told at the time for his dismissal. Just as I have held in relation to the agency relationship, the existence of his employment relationship with the First Respondent did not undermine the contention that the Second Respondent knowingly helped in discrimination against the Claimant and the matters he proposed to support that claim went beyond mere assertions.

The upshot of my judgment is that the appeal succeeds in relation to ground (2) above and, save in respect of the argument based on section 111 EqA, ground (9) above. The appeal fails on ground (4) because the Claimant accepts that claims based on section 111 EqA will ultimately fail. The deposit orders made in relation to both the Second and Fourth Respondent cannot, therefore, stand and as a consequence the strike out orders based on the Claimant’s failure to pay the sums ordered must fall away.

I understand from the parties that a full hearing is due to take place in respect of the claim against the First Respondent between 25 and 28 July 2022. It is to be hoped that this judgment does not put that timetable at risk. While the claims against the Second and Fourth Respondents are now resurrected, the factual matters they raise will, no doubt, mostly to be explored anyway in the claim against the First Respondent. Nonetheless, it would be prudent for the parties to seek early case management directions from the tribunal in the light of this judgment, in order to clarify the issues, evidence and timetable for the full hearing.