Appeal No. EAT/227/92

	EMPLOYMENT APPEAL TRIBUNAL
	58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

		At the Tribunal
		On 15 July 1993

	Before

	THE HONOURABLE MR JUSTICE TUCKEY

	MRS E HART

	MR R H PHIPPS

JOHN COTTON (MIRFIELDS) LTD	APPELLANTS

(1) MR G UPPAL (2) MR M ISHAQ	RESPONDENTS

	Transcript of Proceedings

	JUDGMENT

Revised

	APPEARANCES

For the Appellants	MR T PITT-PAYNE
	(OF COUNSEL)
Messrs Simpson Curtis
41 Park Square
Leeds
LS1 2NS

For the Respondents	MR W PANTON
(OF COUNSEL)
Commission for Racial
Equality
Elliott House
10/12 Allington Street
London SW1E 5EH

	MR JUSTICE TUCKEY:  Following a hearing over three days in November and December 1991 an Industrial Tribunal sitting in Leeds reached a unanimous decision that Mr Uppal and Mr Ishaq were both discriminated against on racial grounds by their employers John Cotton (Mirfield) Ltd.  The employers appeal against that decision.  The allegation was that the two Respondents had been selected for re-deployment and/or redundancy in February 1991 because of their Asian origins.  The Tribunal heard the two cases together because they had many common features.  The facts were as follows.

	The Appellants at their factory in Mirfield in West Yorkshire manufacture fillers which we understand are used for insulation, for filling mattresses and the like.  It was in the filling department that the two Respondents were employed.  The Appellants employ over 300 people and have a good record for employing substantial numbers of people of Asian and Afro-Caribbean origin.  

	Mr Uppal, who is now over 50, was born in India.  He was first employed by the Appellants in 1959.  In 1980 he was promoted to shift foreman and remained in the Appellants' employment in that capacity until the events which we will come to in a moment.  Mr Ishaq is somewhat older.  He was born in Pakistan and he had worked for the Appellants since 1962 with a short break at the end of the '70s when he went back to Pakistan.  From 1980 he also had been a shift foreman.  Between 1980 and 1987 there were two shifts in the filling department.  Mr Uppal was the foreman in charge of one shift.  Mr Ishaq was in charge of the other.  

	In 1987 as a result of a re-organisation both these shifts were divided into two and two further foremen were employed to be in charge of the additional two shifts.  They were Mr Thompson and Mr Bowness.  Mr Thompson had been with the Company for a number of years as had Mr Bowness but they were not foremen until 1987.  When these changes came about the Respondents were put in charge of the older machines, Mr Thompson and Mr Bowness in charge of the newer machines.  

	The Tribunal in their decision record:

"Over the years the processes had become more sophisticated and the machinery correspondingly more complicated with the introduction of computer controls and other refinements and improvements."

	However, at the end of 1990, as a result of the recession the Appellants decided they had to make economies and that they would revert to a two shift system in the filling department.  A direct consequence of that decision was that two of the now four foremen would have to be made redundant or relocated.  The decision was made at board level but its implementation was delegated down the line to a Mr Knapper, who was the production manager in charge of the filling department.  He knew all four foremen well because he had worked in the department for a number of years.  He it was who had to decide which two out of the four should be the unlucky ones.

	On or about 20 February 1991 he decided that Mr Thompson and Mr Bowness, both of whom were white, should be offered the jobs and that the two Asian foremen, should either be re-deployed or made redundant.  Having established that Mr Thompson and Mr Bowness were willing to continue in this capacity Mr Knapper saw the two Respondents on 26 February.  He saw Mr Uppal first and told him that the reason for the decision was that the other two foremen knew more about the new machinery than he did.  Mr Uppal was shocked and upset by the decision.  He went to see Mr Cotton who was the managing director of the Appellants who arranged for him to be given a job as a fork lift truck driver.  Mr Uppal tried this for a day but decided that he did not like it, that he had been treated unfairly because of his race and stopped working for the Appellants.  Mr Ishaq was simply told that he had been made redundant.  He was furious at the decision.  Both men then made their applications to the Industrial Tribunal.

	The Industrial Tribunal having set out the facts to which we have referred proceeded to consider the matter in the light of a number of decisions which deal with the proper approach to complaints of this kind, notably the decision of the Court of Appeal in King v Great Britain-China Centre [1992] ICR 516 where at pages 528F/529C Lord Justice Neill sets out a number of principles for the guidance of Tribunals.  The Tribunal do not set out those principles in their decision but criticism is made of the way in which they did approach the matter and of the fact that they did not follow those principles.  It is therefore appropriate for us to state before considering those criticisms what those principles are so far as they are material to this appeal.

	The first principle is that:
"It is for the applicant who complains of racial discrimination to make out his or her case..."

	The fourth of those principles and the one around which most of the criticism in this case centres is:
"Though there will be some cases where, for example, the non-selection of the applicant for a post or for promotion is clearly not on racial grounds, a finding of discrimination and a finding of a difference in race will often point to the possibility of racial discrimination.  In such circumstances the tribunal will look to the employer for an explanation.  If no explanation is put forward or if the tribunal considers the explanation to be inadequate or unsatisfactory it will be legitimate for the tribunal to infer that the discrimination was on racial grounds.  This is not a matter of law but, as May LJ put it in [Noone], "almost common sense."

and fifthly that:
"It is unnecessary and unhelpful to introduce the concept of a shifting evidential burden of proof.  At the conclusion of all the evidence the tribunal should make findings as to the primary facts and draw such inferences as they consider proper from those facts.  They should then reach a conclusion on the balance of probabilities, bearing in mind both the difficulties which face a person who complains of unlawful discrimination and the fact that it is for the complainant to prove his or her case."

	In their reasoning the Tribunal say:

"The applicants have to show that on racial grounds they were treated less favourably than their two white colleagues.  It is for the applicants to prove their case but we must bear in mind the practical difficulties facing them."

Thus far it is obvious that they are following precisely the guidelines laid down in King.  

	They then refer to the fact that the decisions complained of were taken by Mr Knapper, that he kept no significant contemporaneous notes so there was no documentary evidence to that Mr Knapper had said that he had chosen Mr Thompson and Mr Bowness because they had greater experience on the modern machines and that he had denied being racially motivated in the decision which he made.  They go on to say:

"Faced with this situation the applicants are entitled as a matter of commonsense to rely on the fact that out of a "pool" of 4 they, the only 2 Asians, were rejected.  They ask us to infer that the decision was racially discriminatory... 

In our view it is proper to draw such an inference in the present circumstances.  The result is that it is incumbent on the respondents to provide a cogent explanation for their decision.  Without such an explanation the applicants must be entitled to succeed in their application."   

We will return to that paragraph and the criticisms made of it in a moment but it is clear from the following paragraphs which start in paragraph 11 with the words:

"The respondents in making their explanation have to rely almost exclusively on the evidence of Mr Knapper..."

that the Tribunal then proceeded, in accordance with the guidelines laid down in King, to consider the explanation which was put forward by the Appellants for choosing the two white foremen in preference to the two Respondents.

	In paragraph 12 of their decision they record the fact that Mr Knapper had a difficult decision to make and that they found it surprising in the circumstances that he did not approach his task in any sort of systematic manner.  They refer to a note of his decision which he had made and say it was unsatisfactory for a number of reasons.  Those reasons included the fact that it bore no relation to the system for making such decisions laid down in the agreement with the trade union.  We were told that that agreement included among other things, a principle of first in last out.  The Tribunal refer also to the fact that Mr Knapper's criteria did not include reference to length of service, nor to, what by any standards must have been important, namely literacy and they refer to the fact that Mr Thompson apparently had difficulty understanding written instructions.  The Tribunal also refer to the fact that no consideration had been given to the fact that only 12 months earlier Mr Uppal had been offered the job as manager of the whole department.  They also say that they were not impressed by the emphasis placed on the differences between the new and old machinery.  They accepted the Applicants' evidence that they could have very quickly adapted to the new machinery and become competent to supervise its use.

	They go on to say that they were not able to accept everything that Mr Knapper had told them and in the following paragraph of their Decision they say:

"We are left with the impression that we have not been told the whole truth about this decision.  We think there must have been more to it than is disclosed in the limited criteria recorded in Mr Knapper's document.  We accept that Mr Knapper did not deliberately and consciously set out to eliminate the 2 Asian foremen.  Nevertheless we think that he decided that the 2 white foremen fitted in better with his plans for the future and that he would prefer to work with them.  Having reached that decision he justified it by reference to the relative experience each man had of the newer machinery."

	They conclude by saying:
"It follows that we think that the respondents' explanation for the selection procedure is both inadequate and unsatisfactory.  In the circumstances we think that it is right to infer that the discrimination in this case was on racial grounds."

	Three points are taken by the Appellants on this appeal.  The first point is that in paragraph 10 to which we have already referred, when applying the fourth of the principles set out in King the Tribunal erred in their approach.  They, to put it in the way their Counsel Mr Pitt-Payne put it "jumped too quickly to the stage where they felt that the case merited an explanation from the Appellants".  What is said is that in the sentence "Faced with this situation the applicants are entitled as a matter of common sense to rely on the fact that out of a "pool" of 4 they, the only 2 Asians, were rejected" the Tribunal were not going through the process which the fourth principle in King contemplates, that is to say first of all considering whether the non-selection of the Respondents was clearly not on racial grounds and then considering whether there was discrimination and a finding of a difference in race which would point to the possibility of racial discrimination which called for an explanation.

	Here it is said the Tribunal are simply saying - Well there was a racial difference because there was between those selected to remain and those selected for redundancy and there was a less favourable outcome in the case of the two Respondents.  Ergo that was a situation which called for an explanation from the employers.  That approach cannot be right, says Mr Pitt-Payne, because something more than merely a less favourable outcome is required as discrimination before one turns to an employer for an explanation in circumstances such as these.  The submission is that to find discrimination of a kind which calls for an explanation one must be looking for a situation where A has been less favourably treated than B in circumstances where A would have a reasonable expectation of being treated no less favourably than B; and so Mr Pitt-Payne argues:

"The tribunal ought to have asked itself whether, bearing in mind the qualifications and experience of the applicants, as compared with the qualifications and experience of Mr Thompson and Mr Bowness, the applicants had a reasonable expectation of being treated no less favourably that Mr Thompson and Mr Bowness."

	We accept Mr Pitt-Payne's submissions as to the correct approach, that is to say to show discrimination it is not enough merely to show that there has been a less favourable outcome in the Applicant's case.  That less favourable outcome must be accompanied by a reasonable expectation that the applicant would be treated in a different way.

	The point is illustrated by Mr Pitt-Payne by reference to an unsuccessful job applicant whose ethnic group might be different from that of the successful candidate.  Could such a job applicant simply say "here is evidence pointing to the possibility of racial discrimination" merely because he was the unsuccessful candidate.  We do not think he could.  Something more is required.  If he were equally qualified and experienced or more qualified and experienced then obviously he would have a reasonable explanation of success and that would, if he were unsuccessful, amount to discrimination.  But without those ingredients one cannot say that there is discrimination.

	Here then the question is - is one to read the sentence in the Tribunal's Decision (to which we have already referred) as the only material upon which they relied to show that the case called for an explanation from the applicants.  We do not think, reading the Decision as a whole, that any such conclusion is justified.  The Tribunal had set out fully the employment history of the Respondents and that of Mr Thompson and Mr Bowness from which it is self-evident that the Respondents were more qualified in terms of experience and could have had a reasonable expectation of being the ones selected to stay rather than the ones to go.  In those circumstances the Respondents did establish a possibility of racial discrimination for the purpose of the fourth of the principles to which we have referred.

	If there is any doubt about the Tribunal's approach it is dispelled by the fact that they go on after the passage criticised to make a number of points which underline the fact that these Respondents had strong grounds to believe that they had been discriminated against.  We refer to the failure to comply with the union agreement, the failure to consider length of service, and the fact as the Tribunal found, that there was no real obstacle to these two familiarising themselves with the new machinery which they had not hitherto been supervising.  So there was adequate material before the Tribunal which they no doubt took into account in deciding whether the circumstances called for an explanation from the Appellants.

	The second ground of appeal relates to what the Tribunal say at the end of paragraph 10 where they say:
"The result is that it is incumbent on the respondents to provide a cogent explanation for their decision.  Without such an explanation the applicants must be entitled to succeed in their application."

What is said is that those two sentences demonstrate that the Tribunal reversed the onus of proof:  that is to say they failed to have regard to the fact (which they had already reminded themselves of about five sentences before) that the onus was throughout upon the Respondents to establish their case and cast the onus upon the Appellants to disprove racial discrimination. 

	The second part of the fourth principle in King simply says:

"If no explanation is put forward or if the tribunal considers the explanation to be inadequate or unsatisfactory it will be legitimate for the tribunal to infer that the discrimination was on racial grounds."

Mr Pitt-Payne says the Tribunal were saying it is incumbent on the Appellants to provide a cogent explanation and without such an explanation the Respondents must be entitled to succeed.  That is not right.  It puts the matter too high, apart from anything else, as well as reversing the burden of proof.

	We have given careful thought to those submissions but we reject them.  It seems to us that from the way in which they approached the question and from the way in which they concluded their decision, by saying - "we think that the Respondents' explanation is both inadequate and unsatisfactory" - that the Tribunal did approach the matter in the right way.  It has often been said that one should not construe too closely the wording that a Tribunal uses to explain its conclusions.  The most objectionable part of the sentences which we have quoted is the reference to "must be entitled to succeed where there is no such explanation".  This was not however a case where the employers put forward no explanation.  There is nothing in the reasoning which follows which demonstrates that the Tribunal required the employers to discharge some onus before they could be acquitted of the allegation of racial discrimination.  What they did was to make a very clear finding of fact that Mr Knapper, whose evidence they did not accept, had unconsciously decided that the two white foremen fitted in better with his plans for the future and that he would prefer to work with them and he justified that decision by reference to the experience of these two on the newer machinery.  Having rejected the Respondents' reasons for the selection a conclusion that their explanation was both inadequate and unsatisfactory was inevitable and so no question of onus arose.  So, although we think this part of the paragraph 10 of the Decision is unfortunately expressed, it did not in the event lead the Tribunal into error in the conclusion which they reached.

	The third ground of appeal is that the decision which the Tribunal reached was perverse.  The assertion is that there was insufficient material to justify a reasonable Tribunal in rejecting the Appellants' innocent explanation of the selection decision and in finding that the decision was racially discriminatory.

	It seems to us that this is simply an assertion in disguise that the Tribunal should not have rejected Mr Knapper's evidence.  Any Appellant who seeks to establish perversity has a very high hurdle to jump.  We have been reminded of the very helpful passage in East Berkshire Health Authority v Matadeen [1992] ICR 723 at page 738 where the various ways in which the perversity may be shown are set out.  Having considered that passage we are quite unable to say that this decision is in any way perverse, mainly because it was for the Tribunal to decide whether they accepted Mr Knapper's evidence or not.  They did not accept it and concluded that he had not made the decision for the reason that he gave.  That being the case it is not necessary to consider further the other criticisms of the Tribunal's findings which Mr Pitt-Payne has ably sought to advance.  Essentially they consist of saying -well the Tribunal had made findings that Mr Uppal and Mr Ishaq were working on the older machines, that Mr Knapper had consistently said that it was their lack of experience on the new machines and the other two's experience on those machines which caused his decision and that in the face of those findings the Tribunal could not have reached the decision they did.  Mr Pitt-Payne also points to the commendable record of the Appellants.  Finally he says on the question of whether in fact the Respondents would have been able to adapt to the new machinery the Tribunal asked itself the wrong question.  What they should have been concerned to discover was whether Mr Knapper believed that the two men would be able to adapt not whether in fact they would have been able to do so.  We have considered each of the submissions.  None of them persuade us in any way that this Decision is perverse.

	It must follow that none of the grounds of appeal advanced by the Appellants succeed and the appeal must be dismissed.