Legal Services Commission v Patterson Rev 2

The question which arises under section 4 can be restated as follows: was the alleged discrimination “in relation to employment” of Ms Patterson by the Commission within the meaning of section 4 of the Act. The ET held that the General Civil Contract is not a “contract personally to execute any work or labour” within the meaning of the extended definition of “employment” in section 78 of the Act. The EAT, on the other hand, held that it was. It is plain, therefore, that an answer to the question involves a consideration of the terms of the contract, which must of course be construed in its context, which in turn includes both its statutory and its factual context. We have already referred to the relevant provisions of the 1999 Act and the scheme set up by the Commission under it. We should however first say a word about the facts as they pertain to Ms Patterson and about the relevant legal principles.

Ms Patterson is of black Afro-Caribbean origin. She is the sole principal in a firm of solicitors called Patterson Sebastian & Co. Since she is the sole principal, Patterson Sebastian & Co is not, unlike many solicitors’ firms, a partnership, but is nevertheless commonly referred to as a firm. Ms Patterson established the firm in a deprived area of Wembley in 1997 in order to provide legal aid advice. Ninety eight per cent of the firm’s work was publicly funded. In 1999 all the staff were of black Afro-Caribbean or Asian origin, including the administrative staff and volunteers. The firm consisted of Ms Patterson as sole practitioner and principal, five qualified fee earners, two trainee/paralegals and two administrative staff.

The EAT described the position in this way in paragraphs 11 and 12 of its reasons:

“11.

.… Without a general civil contract, the Applicant told the Tribunal that her firm would no longer be able to do publicly funded work, which would result in the closure of the firm. A firm without a franchise is not attractive because potential staff want continuity of employment and the opportunity for development and enhancement of their careers, which would not be obtainable from a small non-franchised firm. The Tribunal found that not having a franchise is detrimental to individual professional standing, in other words as a solicitor. The Tribunal found that the firm was suffering from the “irregular limbo position” of not having a franchise, and was having recruitment problems.

12.

The Tribunal pointed out the public policy considerations behind the application. It noted that the [Commission’s] own findings showed that the success rate amongst applicants for a franchise with an ethnic origin was low, and that the success rate was particularly low among Afro-Caribbean organisations. Approximately £1.2 billion was spent by the [Commission] in 2000-2001 on services provided through the CLS and CDS.”

We should perhaps add that the ET put the position in this way:

“Patterson Sebastian is currently in an irregular limbo position because it was failed on its Pre-Franchise Audit and appealed that decision. The appeal was not however heard on the basis that the firm should instead be re-audited. That has not yet happened. The one year General Civil Contract is currently being extended pending re-audit. The firm is suffering from the lack of a franchise, it has lost staff and is having recruitment problems. If it fails to get a franchise it may well have to close.”

In summary, at the time to which these proceedings relate Patterson Sebastian & Co was a Provisional Franchisee in the areas of family, welfare benefits, housing and immigration. A Pre-Franchise Audit had been carried out on 23 March 2000 but Ms Patterson had subsequently been informed that she and her firm would not be given a franchise. It followed that she would not be given a three-year contract. These proceedings are concerned with that state of affairs. For some time after that the firm was in a state of limbo and, as we understand it, still operating under the one-year contract. We were told during the hearing of the appeal that the firm has since been awarded a franchise and a three-year contract in two disciplines.

Before considering the terms of the contract, it is convenient to set out the relevant legal principles.

The relevant legal principles are not in dispute. As already stated, the question is whether a sole practitioner who makes a three-year contract with the Commission is employed by the Commission or is in its employment within the meaning of sections 4 and 78 of the Act. We have already set out section 78 but it is convenient to do so again. It provides:

““ employment” means employment under a contract of service or of apprenticeship or a contract personally to execute any work or labour, and related expressions shall be construed accordingly.”

There have now been a number of cases which have considered that definition, notably Tanna v Post Office [1981] ICR 374, a decision of the EAT presided over by Slynn P, Mirror Group Newspapers Ltd [1986] 1 WLR 546, a decision of this court, and Kelly v Northern Ireland Housing Executive [1999] AC 428, a decision of the House of Lords.

The principles for which the Mirror Group Newspapers case is authority can be seen in these two sentences from the judgment of Balcombe LJ at pp 556-7, referring to the submissions of Mr Alexander Irvine QC for the Mirror Group:

“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. … In my judgment, one has to look at the agreement as a whole, and provided that there is some obligation by one contracting party personally to execute any work or labour, one has then to decide whether that is the dominant purpose of the contract, or whether the contract is properly to be regarded in essence as a contract for the personal execution of work and labour, which seems to me to be the same thing in other words.”

Oliver LJ gave a judgment to the same effect and Sir David Cairns agreed with both judgments.

In these circumstances Mirror Group v Gunning is authority for the proposition that, under section 4, the questions to be determined are these:

In the course of the appeal we examined in some detail the decision of the House of Lords in Kelly v Northern Ireland Housing Executive, which involved the construction of section 57 of the Fair Employment (Northern Ireland) Act 1976, which is in similar terms to section 78 of the Act. The question arose in the context of section 17 of the Northern Irish Act, which is in similar terms to section 4 of the Act. As we read the speeches in that case, no doubt was cast upon the principles established by Mirror Group v Gunning.

The House of Lords was considering appeals in two cases. The facts were briefly these. The Northern Ireland Housing Executive is the public housing authority for Northern Ireland. It sought applications from solicitors to go on a panel of solicitors who would be appointed to defend the Executive in claims brought against it in respect of alleged public liability. In one appeal the facts were that Mr Loughran practised as Oliver M Loughran & Co, where he was the sole proprietor and principal, although he employed an assistant solicitor. In the other appeal Mrs Kelly practised as one of two partners in the firm of John Hoy, Son & Murphy. Both firms applied to join the panel and were refused.

Both Mr Loughran and Mrs Kelly alleged discrimination on the ground of religious belief. The issue in each case was whether the solicitor concerned was seeking “employment” within the meaning of section 57. The Court of Appeal in Northern Ireland held that Mr Loughran was but that Mrs Kelly was not. In the House of Lords it was held by a majority that both Mr Loughran and Mrs Kelly were seeking “employment”. The majority comprised Lord Slynn, Lord Steyn and Lord Griffiths, although their reasoning was not identical. Lord Steyn agreed with Lord Slynn, whereas Lord Griffiths made a concurring speech. Lord Lloyd and Lord Clyde dissented. They would have held that neither Mr Laughran nor Mrs Kelly was seeking “employment”.

There was some debate as to the precise terms of the proposed contract in that case. They are most clearly summarised by Lord Griffiths (at p 441) as follows:

“There were two important terms of 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 the panel work … and will give priority to panel work.”

Thus, as we understand the contractual position, the designated solicitor or solicitors was or were to be mainly responsible for carrying out the work and would give priority to it. There is no suggestion that the contracting party was contractually entitled to change the designated solicitor or solicitors during the currency of the contract.

In each case the application was made in the name of the firm, although it was accepted by the House of Lords that, since the firm was not a legal entity, the contracting party was Mr Loughran in the case of Oliver M Loughran & Co and Mrs Kelly and her partner in the case of John Hoy, Son & Murphy. In the Loughran case Mr Loughran was designated as the solicitor who would be mainly responsible for carrying out panel work and in the Kelly case Mrs Kelly was so designated. In those circumstances the House of Lords held that, if the contracts had been made, Mr Loughran and Mrs Kelly would each have been in the “employment” of the Housing Executive.

In Mr Loughran’s case, that can clearly be seen from the conclusions of Lord Slynn at pp 437-8:

“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 was clearly wide enough to cover the provision of services by a professional man, as was held in Mirror Newspapers Ltd v Gunning [1986] 1 WLR 546. 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 said he was “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 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.”

Lord Steyn agreed with Lord Slynn and we do not detect any difference between the approach of Lord Griffiths and that of Lord Slynn and Lord Steyn so far as Mr Loughran as a sole practitioner was concerned. It follows that the questions to be addressed in the case of Ms Patterson are those identified above, namely:

It is only necessary to refer to one other case in this regard. It is the comparatively recent case of Commissioners of Inland Revenue v Post Office [2003] IRLR 199, which was a decision of the EAT presided over by Burton P and which was (in our view correctly) accepted as correct by both parties to this appeal. One of the questions addressed was whether a sub-postmaster was an “employee” within the meaning of section 78 of the Act. The EAT upheld the determination of the ET that the answer was no because, although a sub-postmaster was entitled to elect to work personally, he or she was not contractually required to do so. An option to carry out work personally did not make the personal carrying out of work the dominant purpose of the contract, even though the parties might have expected the person concerned to perform the work personally.

In this appeal we are not concerned with the position of a partnership so that it is not necessary to consider such differences as there were in that regard between the approach of Lord Slynn and Lord Steyn on the one hand and Lord Griffiths on the other. It is perhaps sufficient to note that they all thought that Mrs Kelly was a party to the contract as a partner in her firm and that she was an employee because the dominant purpose of the contract was that she should carry out the work. The difference between them was as to the application of section 5 and Schedule 1 of the Interpretation Act 1978, which is not relevant to the case of a sole practitioner such as Mr Loughran or Ms Patterson.

The contractual documents are very extensive indeed. They include the following documents in the following order of priority: the One-Year or Three-Year Contract, the Schedule, the Contract Standard Terms, the Specification, LAFQAS and any Bid Documents. In the form in which they were shown to us they run to no less than 359 pages.

The first question identified above is whether Ms Patterson was a party to the One-Year contract and thus would have been a party to a Three-Year Contract if the Commission had been willing to offer her one. It is common ground that the answer to that question is plainly yes. The issue between the parties is whether Mr Patterson was under any contractual obligations personally to carry out work and, if so, whether the dominant purpose of the contract was that she should personally carry out such work. We have reached the clear conclusion, in agreement with the ET not the EAT, that the answer to both those questions is no. In order to explain our reasons it is necessary to refer to some of the terms of the constituent parts of the contract. It is necessary to be selective because there are a very large number of contractual terms.

The legend on the One-Year Contract (and presumably on the Three-Year Contract) provides as follows:

“This Contract must be signed for you by a person who can bind you to this Contract. If you are a partnership, a partner must sign. If you are a sole practitioner solicitor, the sole practitioner (principal) must sign. If you are a company, a Director must sign.”

The One-Year Contract was signed by an authorised person on behalf of the Commission and by Ms Patterson on behalf of Patterson Sebastian & Co. It is common ground that, since Patterson & Sebastian is not a legal entity, the contract was between the Commission and Ms Patterson.

Clause 1.2 is an extensive definitions clause. It includes the following:

““Approved Representative” means any person, firm or company approved by you to supply services to you in accordance with LAFQAS;

“Contract Work” is all the work you may perform under this Contract. It is either Controlled Work or Licensed Work. … ;

“Devolved Powers” means the powers and functions listed in the Specification that we have authorised you to exercise and discharge under this Contract (and which you must exercise and discharge unless we have directed you otherwise and which we may modify, suspend or terminate on notice to you);

“Franchisee” means, in respect of a Schedule Office, an organisation which has passed a Pre-Franchise Audit and which holds a Franchise Certificate and such an office is a Franchise Office;

“Key Personnel” means all franchise representatives and supervisors under LAFQAS;

“LAFQAS” means our quality assurance standard which is currently the Legal Aid Franchise Quality Assurance Standard;

“the Logo” means our logo for use by Franchisees;

“you” means “the contractor which has entered into this contract with us … ;”.

Clauses 1.15 is important. It provides, so far as relevant::

“15.

Where this Contract imposes an obligation upon you, you must comply with it and must use reasonable endeavours to ensure that your personnel and contractors comply with it. …”

The EAT describes the language of the contract as demotic in that the terms “you” and “us” are frequently used. Clause 2, which is entitled “Relationship”, includes clause 2.6 under the heading “Do You Have to Perform This Contract Yourself?”. It provides:

“This Contract is personal to you. You must not give, bargain, sell, assign (or otherwise dispose of) the benefit of any of its rights, or sub-contract (or otherwise delegate) any of your obligations under this Contract. The Contract does not prevent you from instructing Approved Representatives in accordance with normal practice and in compliance with this Contract and with the Act and Regulations.”

Clause 3 is entitled “Your Main Rights and Obligations” and includes the following:

“What work may you perform?

1.

You may perform, for Eligible Persons, the Contract Work specified in your Schedule, while it is in force.

How must you perform the Contract Work?

2.

You must perform all Contract Work and exercise your Devolved Powers in a timely manner and with all reasonable skill, care, diligence and accuracy.

3.

In performing Contract Work, in exercising your Devolved Powers and in complying with LAFQAS you must achieve such level of performance, as measured by the Performance Indicators, as we may require.

What must you comply with?

4.

You must comply with all relevant legislation, including all Access to Justice Legislation, with all relevant Points of Principle of General Importance and with the following documents:

(a)

the One-Year or Three-Year Contract;

(b)

the Schedule;

(c)

the Contract Standard Terms;

(d)

the Specification;

(e)

LAFQAS; and

(f)

so far as Licensed within the scope of a Certificate is concerned, if it is a Contract Document: … (ii) the Certificate issued to the Client.

…

Do you have to tell us of any change in your capacity to perform Contract Work?

12.

You must notify us of any significant changes in your personnel deployed in Contract Work and of any other changes affecting you such as might reasonably be expected to affect your ability to perform Contract Work.

…

What material changes do you have to tell us about?

19.

Without prejudice to Clause 18, you must notify us of any material alteration:

(a)

to any information you have provided to us …;

(b)

to the manner in which you perform the Contract Work (including alterations to your management systems).”

Clause 4 contains detailed provisions about Franchisees and Provisional Franchisees including clause 4.3, which provides:

“If you are a Provisional Franchisee, you must not:

(a)

use the Logo; or

(b)

hold yourself out as a Franchisee;

unless we agree in writing that you may.”

Clause 6 is entitled LAFQAS and includes the following:

“What is LAFQAS?

1.

LAFQAS is one of the Contract Documents. It contains the current quality assurance standard.

2.

LAFQAS includes requirements with which you must demonstrate compliance before we will issue a Franchise Certificate for an office and with which you must continue to comply, and demonstrate compliance, as required by this Contract.”

It should be noted that, while the Franchise Certificate is issued for an office, it is the contractor’s obligation under the contract to comply with it. The Franchise Certificate includes a statement of the Devolved Powers which “you” (ie the contractor) are approved to exercise from the office in question. By clause 9.1, the Devolved Powers that “we have granted to you are specified in your Franchise Certificate”. Section 9 also contains provisions relating to the amendment of Devolved Powers.

The copy of LAFQAS which we have runs to 125 pages and contains very detailed provisions setting out the Commission’s franchising quality assurance scheme. In short it sets out the standards which franchisees must attain. We refer to only a few paragraphs. Paragraph 2.4 makes it clear that the Commission’s role is to seek confirmation by a process of auditing and monitoring that the systems and controls set out in the quality assurance standard are in place. In paragraph 2.7 it identifies the Franchise Logo and a new Quality Mark for the new quality assurance standard in civil work. Section 3 sets out the franchise process, which we summarised earlier, in great detail. We return to it below, with particular reference to the roles of the Franchise Representative and of the supervisors.

Clause 10 makes provisions for the Schedules, which are what are used to authorise the franchisee to perform Contract Work. They are signed by both parties, so that the Schedule would have been signed by Ms Patterson on behalf of Patterson & Sebastian and thus in law on her own behalf. The Schedule specifies the categories of work which the contractor is entitled to undertake. It also includes the number of “Matter Starts” to which it relates and the figures representing the Schedule Payment Limit and the Standard Monthly Payment.

Clause 10.8 provides that the Commission have no obligation to issue a further Schedule for a Provisionally Franchised Office, which underlines the importance of satisfying LAFQAS and obtained a full franchise. Clause 10.10 provides:

“What if your capacity to perform Controlled Work changes?

10.

If there is:

(a)

any significant change in the number of your Key Personnel; or

(b)

any other significant change which we consider might affect your ability or capacity to perform the volume of work authorised by the Schedule;

we may make such amendment in the numbers of Matter Starts, the Schedule Payment Limit, the Standard Monthly Payment and Outreach Work set out in a Schedule as we consider reasonable in the circumstances.”

Clause 11 provides that the Specification is one of the Contract Documents and that it contains rules and guidance. It is a very substantial document setting out rules and guidance for work to be carried out for the franchisee’s clients. It runs to some 193 pages.

Mr Daly submitted that Ms Patterson owed personal obligations under the contract because of the emphasis upon “you” and, in particular because of the appointment of Ms Patterson as the Franchise Representative and supervisor under LAFQAS, which are defined in clause 1.2 as “Key Personnel”. It is not absolutely clear whether the EAT accepted a submission that all the obligations under the contract were personal to Ms Patterson. It seems to us that it probably did not, although it is clear from its reasons that it was struck by the demotic language and by the express provision in the first sentence of clause 2.6 that “This Contract is personal to you”.

In our opinion the contract as a whole does not impose personal obligations upon Ms Patterson as the contractor personally to carry out the work. The purpose of the first sentence of clause 2.6 is to emphasise that Ms Patterson alone is the contractor and that she cannot sell or assign any of its rights or sub-contract any of the contractor’s obligations under the contract. That is made clear by a number of provisions in the contract, including in particular the last sentence of clause 2.6, which was not quoted by the EAT and provides as follows:

“This Contract does not prevent you from instructing Approved Representatives in accordance with normal practice and in compliance with this Contract and with the Act and Regulations.”

We set out in paragraph 34 above the definition of “Approved Representative” as it appears in clause 1.2 of the contract. We also set out clause 1.15 in paragraph 35. Those clauses make it clear that the contractor can engage both personnel and “Approved Representatives” to carry out the work. As Burton J put it in the course of the argument, there is nothing in the contract to prevent the contractor being a solicitor without experience of litigation, provided that he or she has staff who have the relevant experience and expertise to meet LAFQAS and perform the Contract Work. Indeed, in a practice of any size, given the extensive nature of the work contemplated by the detailed terms of the Specification, it would be quite impossible for the contractor personally to carry out all the work.

Under this contract Ms Patterson was, as Lord Slynn put it in the passage from Kelly quoted in paragraph 27 above, wholly responsible legally for the work but she was not obliged to carry it out personally. Unless she chose to do some of the work or was obliged under a particular term of the contract to do so, Ms Patterson could leave the work to be carried out by others. Were there then contractual obligations imposed upon Ms Patterson to carry out any of the work personally?

Mr Daly submitted that there were under the Devolved Powers provisions in the contract. However, there is no distinction between those powers and any other contractual power in this regard. In reaching its conclusion, the EAT did not, as we read the judgment, rely upon the exercise of Devolved Powers but upon the obligations of Ms Patterson as Franchise Representative and supervisor.

The facts were that Ms Patterson put herself forward as both Franchise Representative and supervisor for the purposes of LAFQAS. Paragraph 2.1 of LAFQAS as contained in the contract documents identifies four essential elements of the scheme:

“(a)

the specification of standards of quality assurance that the Commission expects suppliers to meet;

(b)

audits by the Commission to ensure that standards are being achieved and maintained;

(c)

continuous improvement in the service offered by suppliers of legal services to their clients and reduction of their administrative costs;

(d)

the control of case costs.”

The provisions of LAFQAS are a very important part of the scheme operated by the Commission and we accept the submission that supervision of the systems operated by any particular solicitor’s office is a crucial part of it in order to ensure that the standards laid down by the scheme are in place at the outset and are maintained thereafter. To that end we also accept the submission that the role of the supervisor as provided for in LAFQAS is of considerable importance. So too is the role of Franchise Representative.

Section 6 of LAFQAS sets out the role of the Franchise Representative. It includes the following:

“A1.1 Organisations must appoint a named individual as a “Franchise Representative”, who will act as principal contact for the … Commission auditor. Organisations with more than one office must nominate a Franchise Representative for each office. Although this could be the same individual, that may be impracticable in some circumstances.

A1.2 The Franchise Representative must be available during any audits conducted by the … Commission and must have sufficient standing within the organisation to ensure that any corrective action arising out of the franchise audits is carried out.

A1.3 Organisations must notify their LSC auditor immediately when there is any change of Franchise Representative.”

It is plain from those provisions that an organisation may have more than one Franchise Representative. It may have several offices in circumstances in which it would not be practical to have only one Franchise Representative. It follows that it cannot have been a term of a contract of which LAFQAS is part that the contractor, here Ms Patterson, was or would be required to be the Franchise Representative. Moreover, it is clear from paragraph A1.3 that it is open to an organisation to change its Franchise Representative provided only that it notifies its LSC auditor. In these circumstances, while we accept that it may well have been expected in Ms Patterson’s case that she would in fact be the Franchise Representative, there is no requirement in either LAFQAS or the contract to that effect.

What then of the supervisor or supervisors? Again, we accept that it may well have been expected that Ms Patterson would act as supervisor. The question is whether she was required under the contract to be a supervisor. LAFQAS contains detailed provisions both as to the management structure and supervision. For example paragraph J1.1 emphasises that organisations must have a written description of their management structure and designate the responsibilities of individuals within it, including partners.

Section L sets out detailed provisions for “supervision of work-qualifying standards” and makes it clear that the competence of the supervisor will be assessed against each of the standards at each audit. It contains very detailed provisions as to the experience required of supervisors. It is sufficient to refer to the following extracts from section L:

“L1.1 Named Supervisor

There must be a named supervisor or supervisors for each category of work or contract type for which an application for a franchise/contract has been made or granted.

L1.2 Attendance at the Office

A named supervisor or supervisors must be appointed at all times and must be available for the supervision of staff. Where a supervisor leaves, or is absent for an extended period, alternative arrangements for supervision must be made and the Commission must be advised of the arrangements made for the appointment of a permanent qualified supervisor. …

L1.3 Training in Legal Work Principles and Practice

…. A non-solicitor supervisor must have completed, as appropriate, training on ethics and best practice or be a Fellow or Member of the Institute of Legal Executives.

…

L2.1 Cases Conducted by the Supervisor

Supervisors must either maintain a caseload of their own relevant to the areas in which they supervise or be able to demonstrate their experience in the subject in the preceding 12 months by reference to direct supervision and involvement in cases. Experience must relate to the scope of the work being supervised.”

There are many other provisions relating to supervision which are of some relevance but those extracts seem to us to make it plain that it is not an obligation of the proposed contractor or the contractor that he or she should be a supervisor. There can be more than one supervisor and, if a supervisor leaves, he or she must be replaced and the Commission advised. We can see no provision in the contract which obliged or would have obliged Ms Patterson to act as a supervisor herself. She chose to be a supervisor, as was no doubt expected of her, but she could at any time have replaced herself with someone else, who would not even have had to be a qualified solicitor, provided that he or she had the relevant experience and training under LAFQAS.

The EAT seems to have reached a different conclusion based on the way the argument proceeded before it. In paragraph 16 of its reasons it said:

“Ms Monaghan [who was counsel for Ms Patterson] submitted, without objection from Mr Croxford for the [Commission], that the supervisor in the contract is required actually to perform certain duties, for which there is remuneration. Since this appears before us to be common ground, we will adopt it in preference to the Tribunal’s finding that the Applicant:

“… is not required to participate in any way in the operation of the franchise.”

However it came about, it is now clear that, although the supervisor is required to perform certain work under LAFQAS and thus under the contract, no separate remuneration is paid for the work. It is remunerated as part of the contractor’s overheads. The position is clear from paragraph 1.10 of the Specification, which provides:

“Administrative Work

Subject to any exceptions allowed in Guidance, payment will not be made under this Contract for the time you spend on purely administrative matters.

1.

You will only be paid under the contract for work directly involved in the provision of contracted legal services to the client. Thus you will not be paid for time spent in opening or setting up files, the maintenance of time/costing records or in meeting the administrative requirements of your contract such as the information return and the claim of costs required by the Work Schedule. Solicitors may charge for work done in the exercise of Devolved Powers and recording of such exercise.”

In these circumstances, it follows that Ms Monaghan’s submission was not correct, even if (as appears to have been the case) Mr Croxford did not object to it at the time. Moreover, the ET was correct to conclude that Ms Patterson was not required to participate in the operation of the franchise because, although she was the Franchise Representative and supervisor, she could at any time appoint new ones in her place without the consent of the Commission.

In paragraph 27 of its reasons the EAT said this:

“In our judgment, the majority judgment in Loughran’s case is directly applicable to our case, once it is recognised (a) that the reality of the situation is that Patterson Sebastian & Co is the alter ego of Ms Patterson and (b) that she had to perform functions for which she was remunerated at least as the franchise supervisor.”

For the reasons already given, we are unable to agree either that Ms Patterson had to perform any functions or that she was remunerated for them as the franchise supervisor.

We are also unable to agree with these conclusions at the end of paragraph 28:

“But as to this particular contract, the dominant purpose was to ensure that the person who signed the contract, Ms Patterson, nominating herself as the supervisor and franchise representative, carried out the duties attached to those particular functions herself, and saw to it that legal services were provided in the name of her firm by those persons employed by her. She was, as the contract describes her, a member of the “Key Personnel” and could not change that status without consultation and agreement with the Commission.”

No-one has been able to show us a provision in the contract which required Ms Patterson to continue to act as either Franchise Representative or as a supervisor without the agreement of the Commission. On the contrary the contract provides that she could have substituted herself as either or both at any time and that her sole obligation would have been to notify the Commission. Moreover, there is no need for recourse to the ‘entire agreement’ clause in the contract (clause 16.1) in this regard because there is no suggestion of any agreement or understanding outside its written terms.

For the reasons we have given we answer the questions posed in paragraph 28 above as follows:

It follows that we allow the Commission’s appeal with regard to section 4 of the Act and hold that the ET has no jurisdiction to entertain Ms Patterson’s claim in so far as it is based on the allegation that she was in the employment of the Commission, as defined in section 78 of the Act.

Ms Patterson’s case under section 12 may be summarised in this way. In granting a franchise, and thus the right to display its logo and, in effect, the right to do publicly funded work on behalf of her clients, the Commission confers an authorisation on an applicant such as Ms Patterson which facilitates her engagement in the solicitor’s profession, as those expressions are used in the section. It is accordingly unlawful to discriminate against her on racial grounds: under section 12(1)(a) in the terms on which the Commission is prepared to confer that authorisation upon her and under section 12(1)(b) by refusing or deliberately omitting to grant her application for the franchise.

Untrammelled by authority, we would hold that, whether section 12 is analysed phrase by phrase or, as it should be, as a whole and in its context having regard to its purpose, Ms Patterson’s case is correct. The EAT so held and the ET would have so held but for its ultimate conclusion that LAFQAS and the award of a franchise were not sufficiently personal in character to come within section 12. The EAT held, by contrast, that given the reality that Ms Patterson was a sole practitioner, the LAFQAS standard and franchise did indeed facilitate her practice as a solicitor.

There have been many cases, including Kelly v Northern Ireland Housing Executive, in which the courts have stressed the importance of the Act or in which they have referred to this dictum of Templeman LJ in Savjani v Inland Revenue Commissioners [1981] QB 458 at pp 466-6:

“the 1976 Act was brought in to remedy a very great evil. It is expressed in very wide terms, and I should be very slow to find that the effect of something which is humiliatingly discriminatory in racial matters falls outside the Act.”

That is an important general principle to have in mind, although the application of it does not automatically mean that the Act must be construed in favour of the claimant.

That can be seen, for example, in Ali v McDonagh [2002] ICR 1026, where this court held that the Labour Party, in selecting a candidate for local government elections or allowing a person to be nominated to the pool from which prospective candidates were to be selected, was not a body which “ can confer an authorisation or qualification which is needed for, or facilitates, engagement in a particular profession” and was not the type of body to which the section was intended to apply, since the party’s activities were for its own political purposes.

In reaching that conclusion the court followed an earlier decision of this court in Tattari v Private Patients Plan Ltd [1998] ICR 106, where it was held that PPP was not an authority or body within the meaning of section 12. A doctor with Greek qualifications and an EEC certificate in plastic and reconstructive surgery was not recognised as a specialist by PPP, which is an insurance company specialising in medical insurance and which required the specialists on its list to have held a substantive NHS consultant post or a certificate of higher specialist training given by the Royal College of Surgeons.

It was argued in that case that PPP was a body which was capable of conferring recognition or approval, and hence an authorisation or qualification, which would facilitate the doctor’s engagement in her profession because it would give her access to a significant number of patients in the private medical field of reconstructive plastic surgery. Beldam LJ, with whom Roch LJ and Sir John Balcombe agreed, rejected that argument. He said (at page 111) that the section must be construed as a whole and not piecemeal and that the kind of bodies referred to are those similar to authorities which are empowered to grant qualifications or recognition “for the purpose of practising a profession, calling, trade or activity”.

Beldam LJ expressed his conclusion thus (also at page 111):

“Thus I consider that section 12 of the 1976 Act, referring as it does to an authority or body which confers recognition or approval, refers to a body which has the power or authority to confer on a person a professional qualification or other approval needed to enable him to exercise a calling or take part in some other activity. It does not refer to a body which is not authorised to or empowered to confer such qualification or permission but which stipulates that for the purpose of its commercial agreements a particular qualification is required.”

This court followed that approach in Ali v McDonagh. After expressing doubts as to whether being a local government councillor is being engaged in a profession or trade within the meaning of section 12, it held that even if it is it could not see that the Labour Party in selecting a candidate or accepting a nomination for such candidacy is conferring an authorisation or qualification within the meaning of the section. Peter Gibson LJ, giving the judgement of the court, added in paragraph 35:

“It is not the type of qualifying body to which the section is intended to apply, its activities being for its own political purposes just as the activities Private Patients Plan Ltd were for its commercial purposes. In the present case we cannot accept that there was any conferment of approval by the Labour Party when a member who has nominated himself or been nominated as a local government candidate has his name go forward to the pool available for selection. No status in any meaningful sense is thereby conferred. We have to say that it seems to us to be wholly artificial to treat section 12 as applying to such a case.”

The reference to status in that passage is a reference to a passage in the speech of Lord Slynn in Kelly v Northern Ireland Housing Executive at page 440, where he commented upon the following passage from the judgment of Murray LJ, giving the judgment of the Court of Appeal in Northern Ireland (comprising himself and Lord Hutton CJ), in Department of the Environment for Northern Ireland v Bone [1993] 8 NIJB 41 at 46:

“It is our view that the word ‘qualification’ itself and the other words of definition, viz ‘authority, 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 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.”

We think ‘authority’ should read ‘authorisation’. Lord Slynn commented that the emphasis on ‘status’ in Bone may be subjectto further argument but added that “the word ‘status’ may give some indication of the essence of ‘qualification’”.

The Commission is a very different type of body from either PPP or the Labour Party. It is a public body charged with public functions as set out in section 4 of the 1999 Act quoted in paragraph 3 above. It is charged with maintaining and developing the Community Legal Service and had an express power in section 4(8) to accredit persons or bodies providing legal services at public expense. It is neither a commercial company like PPP nor a political party like the Labour Party.

Moreover, when it grants a franchise to a solicitor on the ground that LAFQAS has been satisfied and thus enables a franchisee to display the logo, it seems to us to grant an authorisation to do so. Further, since the grant of the franchise is an essential pre-condition to the making of a three-year contract it can in our opinion again fairly be said to be conferring on the franchisee an authorisation to perform publicly funded legal services for its clients.

The EAT pointed to a significant statement emanating from the Commission which seems to us to support that view. In its Notice of Appearance before the ET it described the position thus:

“The General Civil Contract merely permits a firm of solicitors holding it to perform publicly funded work. It does not require the firm to perform any quantity of work at all. It operates as a form of licence (by the Legal Services Commission) to perform publicly funded work.

As the EAT observed, the OED defines a licence as a formal permission from a constituted authority to do something. It is thus a form of authorisation.

Clause 4 of the Contract quoted above makes it clear that a Provisional Franchisee must not use the logo or hold himself out as a Franchisee. It seems to us that in these circumstances the conferring of a franchise confers a form of status on the franchisee. Moreover its value to the franchisee is that it enables him or her to perform publicly funded work.

The question then arises whether the franchise, in the words of the statute, “is needed for, or facilitates, engagement in” the profession of solicitor. It is to be noted that the expressions ‘is needed for’ and ‘facilitates’ are disjunctive. It is thus sufficient if the authorisation ‘facilitates engagement in’ the profession. In our opinion it does. To facilitate is to make easier or less difficult. Engagement in a profession includes carrying on the profession. In British Judo Association v Petty [1981] ICR 660 Browne-Wilkinson P, giving the judgment of the EAT, said at page 664, with regard to the similar provision in section 13 of the Sex Discrimination Act 1975, that the section covers all cases where the qualification in fact facilitates the woman’s employment. As we see it, the franchise here in fact facilitates the carrying out of the profession of solicitor because it makes the carrying on the profession by the franchisee easier. Given the importance of publicly funded work in some areas, it makes it much easier. Indeed there is evidence that without a franchise Patterson & Sebastian would have had to close.

That conclusion seems to us to be consistent with the authorities to which we have referred. The grant of a franchise is a form of recognition “for the purposes of practising a profession”, as Beldam LJ put it in Tattari. Moreover it seems to us that the Commission is the type of body to which the section is intended to apply and which the court had in mind in Ali. The conclusion we have reached satisfies the criteria suggested in Bone because (a) the franchise confers some sort of status on the applicant solicitor in relation to his work, (b) the status relates only to work as a solicitor and (c) it makes the carrying on of that work more advantageous. On the facts of Bone the court distinguished between the registration of a self-employed builder with the National House Building Council, which (as we read the judgment) was thought to be within the similar section in Northern Ireland, and planning permission obtained by a builder, which was held to be outside it.

In Kelly v Northern Ireland Housing Executive the House of Lords unanimously held that ‘qualification’ did not cover the appointment of a duly qualified professional man to carry out remunerated work on behalf of a client. Lord Slynn said at page 440:

“If it were otherwise the appointment of a City firm of solicitors by a large United Kingdom company or multinational would amount to the grant of a qualification just as would the appointment of a firm by a non-governmental public authority.”

The facts of this case are distinguishable from those in Kelly. Lord Clyde said at page 449 that the exercise of a power to confer a qualification on a person is something more than providing for oneself the professional services which that person is already qualified to perform. In granting a franchise the Commission is not simply selecting a solicitor to perform services which he or she is already qualified to perform but satisfying itself that the applicant meets the LAFQAS standard in order to ensure that the services which he or she will perform for his or her clients will meet that standard.

The point that has troubled us most under this head is the point which troubled the ET, namely whether the award of the franchise and the logo was sufficiently personal to Ms Patterson. Mr Croxford submitted that the ET was correct to hold that it was not. He pointed out that the franchise is given to an office and not to a person. However, although there is some force in that submission because the focus is in some respects on the organisation, it is part of a whole scheme which includes a contract. Thus, as set out in paragraph 39 above, clause 6.1 of the Contract provides that LAFQAS is one of the Contract documents and clause 6.2 puts the position very clearly:

“LAFQAS includes requirements with which you must demonstrate compliance before we will issue a Franchise Certificate for an office and with which you must continue to comply, and demonstrate compliance, as required by this Contract.”

Thus, while the Franchise Certificate will be issued for an office, the requirements are those with which “you” must demonstrate compliance and continue to comply. Equally, the Franchise Certificate includes a statement of the Devolved Powers which “you” are approved to exercise. “You” is of course the contractor and applicant, who in this case was Ms Patterson. In these circumstances we have reached the clear conclusion that the franchise was conferred upon Ms Patterson as the applicant and that it follows that the authorisation was conferred on him (ie her) within the meaning of section 12(1)(a) and that it was his (ie her) application within the meaning of section 12(1)(b).

There was some discussion during the oral argument as to how this approach can work in the case of an application by a partnership, or even a company. It is not necessary to reach a concluded view on this question in order to determine this appeal but we recognise that the Act should be construed in such a way that it will work in the common case of an application for a franchise, logo and contract by a partnership. In the course of argument, in order to test the point, Burton J asked how it would work if the applicant was a large firm of city solicitors which happened to want to open an office in a deprived part of London to do publicly funded work. It is of course possible that that might happen, although it is perhaps more likely that such an application would be made by a much smaller partnership.

The position of the partners in such a firm is no different in principle from that of Ms Patterson. Take the position of Mrs Kelly and her firm. As we see it, the application would be in the name of the firm but, for the reasons explained in Kelly v Northern Ireland Housing Executive, it would in law be the applications of each of the partners of the firm. The application would be to confer the authorisation on the partners jointly and severally and it would be their application. Section 6 of the Interpretation Act 1978 provides that, unless the contrary intention appears, the singular includes the plural, just as it provides that that the masculine includes the feminine. In our opinion no contrary intention appears; so that ‘him’ in section 12(1)(a) includes them and ‘his’ in section 12(1)(b) include them. Or put another way, the effect of the section is to makes it unlawful to discriminate against each applicant in such a case.

It seems to us that such an approach is consistent with the purpose of the Act and we can see no reason in principle why it should not be adopted whatever the size of the partnership. In circumstances in which the ordinary and natural meaning of the language in section 12 supports the construction set out above, we would not narrow that meaning of section 12 to exclude a claim by an applicant, whether he or she be a sole practitioner like Ms Patterson or a partner in a firm of solicitors of whatever size.

There was some discussion in argument as to what the position would be if the applicant were a limited company. As to that it is sufficient to say here, as Lord Slynn did in Kelly v Northern Ireland Housing Executive, that it is not necessary to consider the position of a limited company in this case.

There was a suggestion in the course of the argument that it would be odd to construe section 12 in this way in the event of a conclusion reached under section 4 that Ms Patterson was not in the employment of the Commission, even in the wide sense of employment set out in section 78. We do not see it in that way. Part II of the Act relates to “discrimination in the employment field”. The discrimination alleged by Ms Patterson, which we should again stress is denied by the Commission, seems to us to fall well within that wide expression.

In conclusion, for the reasons which we have given, we agree with the EAT that the ET has jurisdiction to consider Ms Patterson’s claim that she has been discriminated against contrary to section 12(1) of the Act. We note that in the penultimate paragraph of its reasons the ET said this:

“The Tribunal were concerned that the issues of race discrimination raised by Ms Patterson’s case are significant and of public importance.”

We agree. The effect of the conclusion reached above will be to enable those issues to be decided on the facts.

For the reasons we have given we allow the Commission’s appeal under section 4 and hold that the ET has no jurisdiction to consider Ms Patterson’s claim under section 4 but dismiss the appeal under section 12 and hold that the ET does have jurisdiction to consider her claim under section 12.