Bone v London Borough of Newham

This appeal from the Employment Appeal Tribunal (EAT) arises in highly unusual circumstances and it is therefore necessary to set out the background in somewhat greater detail than would otherwise be the case. Its unusual feature is that the issues (which essentially go to liability) arose only during the course of a remedies hearing in the Stratford Employment Tribunal (the Tribunal) on 11 and 12 December 2006, following an earlier liability hearing which had been spread over some 10 days between 25 January and 16 March 2006, followed by 5 days in May and June 2006 spent in chambers, and a decision promulgated on 26 June 2006.

The appellant in this court is Caroline Elizabeth Bone, who was the claimant in the Tribunal. The respondent before us, and before the Tribunal, is the appellant’s former employer, the Mayor and Burgesses of the London Borough of Newham (Newham), although there were other respondents (all employees of Newham) before the Tribunal.

The appellant made three separate applications to the Tribunal alleging sex discrimination, victimisation and unfair dismissal. The three applications were consolidated and heard together. In relation to direct sex discrimination, the Tribunal identified some 30 incidents spread over the three applications in which the appellant alleged she had suffered discrimination. In the alternative, the appellant invited the Tribunal to treat all 30 incidents as acts of victimisation. She also alleged that she had been constructively unfairly dismissed and that Newham had acted in breach of contract. Most importantly for our purposes, the Tribunal recorded, under the preliminary heading Breach of Contract:-

The appellant appeared in person both before the Tribunal and in the EAT. Newham has throughout been represented by counsel, Miss Jude Shepherd, who also appeared before us.

In the liability hearing, the appellant achieved a measure of success. However, as the EAT pointed out, it was clear to anyone reading the Tribunal’s initial decision promulgated on 26 June 2006 that the summary of the conclusions in respect of victimisation failed to accord with the decisions recorded. There were, in particular, two issues (numbered by the Tribunal (xx) and (xxii)) which, in the decision, the Tribunal found proved as instances of victimisation but which failed to find their way into the Tribunal’s summary as having been proved.

The appellant pointed out this deficiency to the Tribunal and, on 8 September 2006, the Chairman, uncontroversially, issued a Certificate of Correction under the provisions of rule 37(1) of Schedule 1 to the Employment Tribunals (Constitution and Rules of Procedure) Regulations 2004 (the Regulations). I will call this “the first certificate”. The Tribunal then sent its revised judgment and reasons to the parties on 8 September 2006.

The unanimous judgment of the Tribunal as contained in the version of the decision sent to the parties on 8 September 2006 was in the following terms:-

The details of the allegations found to be proved do not, for present purposes, matter. What does matter, and what will immediately be observed, is that the judgment does not say that the claimant’s dismissal was an act of direct sex discrimination and victimisation.

A remedies hearing was indeed required and, as I have already stated, began on 11 December 2006. At this hearing, it emerged that there was what the Tribunal Chairman subsequently described as “a fundamental misinterpretation” of its judgment on Newham’s part, in that Newham had prepared for the remedies hearing on the “misunderstanding …. that the Tribunal had not found the (appellant’s) dismissal was sex discrimination”. The Tribunal decided to adjourn the remedies hearing to allow Miss Shepherd “to take detailed instructions from her client and revise her instructions”.

In what is described as a “Judgment on Remedy” (and from which the quotations in the previous paragraph are taken) the Tribunal added the following two paragraphs:-

I will call the document attached to the Tribunal’s Judgment on Remedy “the second certificate”. It is dated 5 January 2007 and it purports to amend the terms of the judgment which I have set out in paragraph 7 above. It amends paragraph (3) by adding the words “save as is set out under paragraph (4) below” to the beginning of (3), and to paragraph (4) it adds the words “Her dismissal was direct sex discrimination and victimisation by (Newham)”. It adds identical words to paragraph 136 of the judgment sent to the parties on 8 September 2006, which, without those words, read as follows:-

Newham’s reaction to the receipt of the second certificate and the amended judgment was to appeal to the EAT on the grounds that the Tribunal had erred in law in issuing the second certificate “that made fundamental changes in the Tribunal’s judgment and reasons” as originally promulgated. Other grounds were that the Tribunal had erred in law in finding that the appellant’s constructive dismissal was an act of either direct discrimination or victimisation; there were also reasons challenges and an allegation that the Tribunal had not identified the protected act relied upon by the claimant for the purpose of the finding that her constructive dismissal was an act of victimisation. Only the first ground succeeded. The EAT held that, in amending its decision as it had in the second certificate, the Tribunal had gone well beyond what was permitted by paragraph 37 of the Regulations. The EAT allowed the appeal but made no consequential directions.

The appellant filed a cross-appeal relating to her attempts to return to work (issue (xxvi)). In this respect, she was partially successful. The EAT recorded that the Tribunal had made “a detailed series of findings in respect of the comprehensive failure” on the part of the head of human resources in Newham’s environmental department “to take any remotely interested steps in attempting to find the appellant alternative work”. The Tribunal had, however, gone on to dismiss the complaint of either victimisation or sex discrimination on the basis that the facts found by the Tribunal did not show a prima facie case of less favourable treatment, although they did show a “depressingly low level of effort put into finding a way back into work for a claimant who made it clear she wanted to get back to work and who was signed off fit to return”.

The appellant asserted that the Tribunal’s conclusion that there was no prima facie case was itself both “breathtaking” and perverse. The EAT agreed. It allowed the appellant’s cross-appeal, overturned the finding of no prima facie case and remitted the issue to the Tribunal “to receive further evidence and submissions if so advised and to make its findings in respect of victimisation or sex discrimination in respect of issue number (xxvi) having regard to our finding that there was a case of less favourable treatment”.

For reasons which will, I think, once again become apparent as this judgment progresses, the EAT was at pains to limit its remission of the appellant’s case to issue (xxvi) as a discrete issue and not as one designed to lead to a reopening of the question of whether or not the appellant’s dismissal was itself an act of direct victimisation.

The appeal and the cross appeal were the subject of a judgment by the EAT which is dated 21 June 2007. The EAT allowed Newham’s appeal and the appellant’s cross-appeal As to the latter, it substituted a finding in relation to issue (xxvi) that there was a prima facie case of less favourable treatment of the appellant and remitted the limited issue arising on the cross-appeal to the Tribunal.

Thus it comes about that, with permission granted by Smith LJ on paper on 27 November 2007, the appellant appeals against the order of the EAT dated 21 June 2007.

It is, of course, trite law that the function of this court, when hearing an appeal from the EAT, is to decide whether or not the Employment Tribunal has made an error of law which the EAT has failed to correct. In the instant case, I am in no doubt at all that the Tribunal’s use of paragraph 37 in Schedule 1 of the Regulations to amend its previous judgment was impermissible and an error of law. I am equally clear that the EAT was right, as it did, so to hold. The critical question raised by this appeal, to my mind, is whether or not the EAT was right simply to allow Newham’s appeal, thereby, as I understand it, leaving the Tribunal’s original and unamended judgment in place.

For ease of reference, I will refer to paragraph 37 in Schedule 1 of the Regulations as the Employment Tribunal equivalent of CPR 40.12 – that is to say “the slip rule”. Paragraph 37 is headed Correction of judgments, decision or reasons and sub-paragraph (1) reads:-

There appears to be a dearth of authority specifically related to paragraph 37, and authorities under CPR 40.12 were relied upon by analogy. In the EAT, Miss Shepherd relied on the commentary to CPR 40.12 in Civil Procedure (The White Book) and to the decisions of Lewison J in Smithline Beecham plc v Apotex Ltd [2002] EWHC 1655 (Ch) and of this court in Markos v Goodfellow [2002] EWCA Civ 1542. In the current edition of the White Book, the first paragraph of the commentary reads as follows:-

I am in no doubt at all that, whatever the proper confines of the “slip rule” are, the second certificate is outside them. In my judgment, therefore, the EAT was correct in coming to the conclusion, as it did, that the Tribunal had committed an error of law in attempting to use Rule 37 in Schedule 1 of the Regulations to insert into its judgment a specific finding that the appellant’s constructive dismissal was direct sex discrimination and victimisation by Newham.

That, however, in my judgment, is by no means the end of the matter, because it is self-evidently the case that the Tribunal had undoubtedly intended to find that the appellant’s constructive dismissal was indeed direct sex discrimination and victimisation by Newham. This is clear not only from the second certificate itself but also from the judgment of the EAT. In paragraph 15 of its judgment, the EAT said in terms:-

In paragraph 16, however, the EAT went on to say: -

In my judgment, the EAT has itself fallen into error in this latter paragraph. Whilst I do not doubt for a moment that it was right to reject the argument that the Tribunal’s judgment could be corrected under the slip rule, it by no means follows that the EAT was “constrained” to conclude that the original decision had to stand.

I start from the premise that, on the findings set out in paragraph 15 of the extract from the EAT judgment which I have cited; (1) the Tribunal manifestly intended to find that the appellant’s constructive dismissal was an act of direct discrimination / victimisation on Newham’s part; and (2) that such a conclusion was, as a matter of law, one which was properly open to it. It follows, in my judgment, that by deciding that the Tribunal’s original judgment must stand, the EAT was perpetuating an injustice. On the EAT’s findings, the appellant can only recover in the remedies hearing on the basis of unfair dismissal. Her compensation will thus be limited to, and capped by, the statutory amount payable under this head. In fact, the Tribunal meant to find – and it would have been a proper finding in law - that her dismissal was an act of sex discrimination / victimisation. The question, therefore, is whether or not, having identified the error of law in the Tribunal’s judgment, the EAT has corrected it. In my judgment, it has not.

What should the EAT have done? And what should this court do? These two questions are not, in my judgment, free from procedural difficulty. The Tribunal’s error cannot, I am satisfied, be corrected by way of a review, either on the application of either party or by the Tribunal acting of its own accord. Irrespective of the fact that neither party has sought a review and irrespective of whether or not a review would be the proper mechanism for such a correction (as to which I express no opinion), paragraph 36(2)(b) of Schedule 1 to the Regulations makes it clear that, in a review of the Tribunal’s own motion, notice of any such review must be sent to the parties “before the expiry of 14 days from the date on which the original decision was sent to the parties”. Such a review would thus be substantially out of time and excluded. Similar time limits apply under rule 35(1), and even though there is power in the Chairman to extend the time, I do not think that it would a proper exercise of the Chairman’s discretion to do so on the facts of this case. So the questions posed at the beginning of this paragraph abide.

Although a great deal of erudition was on display both in the submissions made to the EAT and in this court, neither we nor, we think, the EAT was referred to the decision of this court in Barke or to the decision of the former President of the EAT, Burton J in Burns v Consignia (No 2) [2004] IRLR 425, (also reported as Burns v Royal Mail Group [2004] ICR 425) or to the Employment Appeal Tribunal Practice Direction and Practice Statement made under the Practice Direction (Employment Appeal Tribunal – Procedure) 2004 which came into effect on 9 December 2004.

Barke was concerned essentially with the application in the EAT of the decision of this court in English v Emery Reimbold & Strick Ltd [2002] 1 WLR 2409 (English). The question arose because of the terms of section 35(1) of the Employment Tribunals Act 1996 (the 1996 Act) and the majority decision of this court in Tran v Greenwich Community Project [2002] EWCA Civ 553, [2003] IRLR 735, which had decided that the EAT could only exercise the wide powers given to it by section 35(1)(a) of the 1996 Act when finally disposing of an appeal, and at no other stage.

Dyson LJ, who gave the judgment of this court, began his judgment with these words:-

In essence, this court decided that the Burns procedure was lawful, not because it fell within section 35 of the 1996 Act, but because of the Overriding Objective in the CPR, and in the light of the decision of this court in English. Two further passages from the judgment of this court in Barke will, I think, be sufficient to make the point.

And as Dyson LJ put it in paragraph 42 of his judgment:-

I am therefore in no doubt that the EAT had the jurisdiction under the Burns procedure, before disposing finally of the appeal, to invite the Tribunal to clarify its reasoning and its findings. Alternatively, on the highly unusual facts of this case, and because the issue arose only in the remedies hearing, I am of the view that, given its own analysis, the EAT would have had the jurisdiction to dispose finally of the appeal by remitting it to the Tribunal with a direction to it to continue its remedies hearing on the basis that the appellant’s dismissal was direct sex discrimination and victimisation by Newham.

I reach this conclusion by an application of the Overriding Objective in the light of this court’s observations in paragraph 42 of its judgment in Barke. The Tribunal clearly found that the appellant’s dismissal was an act of direct sex discrimination and victimisation by Newham. It did not articulate that finding properly in its reasons. It could, therefore, lawfully be given the opportunity to reconsider. But the reconsideration would be a foregone conclusion. The Tribunal would undoubtedly reach the same result.

It follows that if the EAT had strictly applied the Burns procedure it is highly likely that there would have had to be a further hearing before the EAT, unless Newham had bowed to the inevitable and abandoned its appeal. However, I do not think that any injustice would be done to Newham if what I might loosely call the Burns stage were omitted on the facts of this case. Newham has had its appeal. It has had the opportunity to argue, and did argue before the EAT that the finding of direct discrimination and victimisation did not impact on the question of the appellant’s constructive dismissal – see its notice of appeal to the EAT summarised in paragraph 12 above. It has argued those issues and lost – as indeed, it has lost on the waiver point.

The alternative would have been for the EAT to have ordered a rehearing before a different Tribunal. Given the length of the substantive hearing in this case, such a course would be wholly disproportionate. More than that, I think it would be unjust. The parties have had their hearing, and the Tribunal has reached its conclusions on the facts. What has happened is that it has not expressed its findings properly, but – as I have already stated – those findings were properly open to it and, of themselves, are free from legal error.

Speaking for myself, therefore, I would remit the appellant’s application in its entirety to the same Tribunal with the following directions: (1) that the Tribunal should formally announce and give in writing its reasons for concluding that the appellant’s constructive dismissal was an act of direct sex discrimination and victimisation. On this point I see no need for any further evidence; (2) that unless Newham abandons its defence to issue (xxvi) there should be a liability hearing in which that issue is decided by the Tribunal and a judgment given by the Tribunal in relation to it. On this question it will be a matter for the Tribunal what further evidence, if any, it hears; and (3) that the Tribunal should conclude its remedies hearing on the basis of (1) and whatever findings it makes in relation to (2). Since any findings in relation to (2) can, in my judgment, only go to the question of injury to feelings, I do not see why there needs to be any adjournment between the hearing of (2) and (3).

These directions apart, quite how the Tribunal goes about the process described in the preceding paragraph and precisely what evidence it hears in doing so are, in my judgment, case management issues which I am prepared to leave to the Tribunal. No doubt it would be sensible to have a hearing for directions as soon as possible, and it will, of course, be open to Newham, if so advised, to challenge the Tribunal’s ultimate conclusions on (2) and (3) in the EAT.

It follows that I would remove the restriction which the EAT imposed on the remission of the issue identified in the appellant’s cross-appeal.

I would, accordingly, allow the appeal, set aside the EAT’s determination and substitute the orders identified in paragraphs 36 and 38 above, the precise terms of which should be agreed between the parties.

I agree

I also agree.