Appeal No. EAT/1023/02 DA

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 19 November 2002

Before
HIS HONOUR JUDGE J BURKE QC
MS K BILGAN
MR J C SHRIGLEY

HFC BANK LTD	APPELLANT

MR V SMITH	RESPONDENT

Transcript of Proceedings

JUDGMENT

PRELIMINARY HEARING

Revised

	APPEARANCES

For the Appellant	Mr P Key
(of Counsel)
Instructed by:
Messrs DMH Solicitors
40 High Street
Crawley
West Sussex RH10 1BW	

HIS HONOUR JUDGE J BURKE QC

1	This is the Preliminary Hearing of an appeal by HFC Bank Ltd (“the Bank”) against the decision of the Employment Tribunal sitting at Leeds, chaired by Mrs C Lee and sent to the parties with Extended Reasons on 19 August 2002.

2	The employers are a bank.  Mr Vernon Smith was employed by them as a Branch Manager at their Leeds Office.  His claim to the Tribunal was that he had been the victim of disability discrimination.  The acts of discrimination on which he relied are set out, so far as we know correctly, in paragraph 1 of the Tribunal’s Extended Reasons.

3	He went off work suffering from illness in February 2000; the illness was depression.  Under his contract of employment he was entitled to 20 days of sick pay; that period was of course quickly exhausted.  Sick pay was in fact paid until July 2000.  Thereafter, Mr Smith sought payment of benefit under a long-term health disability insurance scheme, taken out by the employers with an insurance company called Unum Ltd.  He first sought such benefit as soon as he became, at least in theory, entitled to it: i.e. 26 weeks after he first went off work, at the end of August 2000.

4	A long history followed, set out in detail by the Tribunal, in which the insurance company sought to proceed on the basis of a lump sum settlement with Mr Smith, in effect buying out his rights under the policy in respect of future as well as past disability.  At one stage the employers were seeking to add some money to the insurer’s offer on the basis that Mr Smith would leave his employment and would sign a disclaimer as to all claims arising out of his employment.  This did not happen and no payment was made under the insurance policy until at least the beginning of 2002.
5	Mr Smith presented his proceedings to the Tribunal in March 2002.  The Tribunal found that in several areas of his claim, but not all, he succeeded.  We do not need to go into details.

6	Mr Key, who has appeared on behalf of the Bank today, and who appeared for them before the Tribunal, has in an extremely useful Skeleton Argument divided the Bank’s criticisms of the Tribunal’s decision into 9 sections.

7	In the first section he criticises the Tribunal on the basis that the Tribunal failed to consider whether any of the claims were brought out of time; a point which had been taken by the Bank.

8	In the second section he criticises the basis on which the Tribunal approached the issue as to whether the Bank’s treatment of Mr Smith related to his disability;

9	In the third section he attacks the decision in its approach to the issue as to whether Mr Smith was less favourably treated.

10	In the fourth section the approach as to discrimination in relation to the “failure to post payslips and so on” is attacked.

11	In the fifth section there is specific criticism of a finding which the Tribunal made, in paragraph 19 of their decision, that there was an implied term in Mr Smith’s contract of employment that the Bank would use their best endeavours to satisfy the insurers of the facts relating to Mr Smith’s claim, to obtain payment from the insurers and to make that payment to Mr Smith by way of sickness benefit.

12	In the sixth section there are criticisms of a series of inferences which the Tribunal drew in what may be, and certainly are alleged to be, important areas.

13	We take the view, and there is no need to go into any detail, that in respect of all of the grounds set out in the Notice of Appeal, which cover those six areas, there is an arguable case that the Tribunal erred in law and thus the relevant paragraphs of the Notice of Appeal, which we think are 7-14, should all go through to a full hearing.  That is a fairly comprehensive attack on the decision of the Tribunal (we use the word “attack” in no pejorative sense).

14	We turn to sections 7, 8 & 9 of the Skeleton Argument.

15	Section 7 relates to paragraphs 15-18 of the grounds of appeal.  Under those grounds in the Notice of Appeal 4 findings of fact, where it is said there was no evidence to support such a finding or the finding was perverse, are set out.  So far as the first is concerned it is conceded or has been conceded on Mr Smith’s behalf in the course of interlocutory proceedings before the Tribunal with a view to arranging for a remedies hearing that the Tribunal had made the mistake which is addressed in paragraph 15 of the grounds of appeal.  It would seem that, at a full hearing of the appeal, there need be very little argument about that point, if any; but we record that position because we have been told about it.  Plainly that ground must go through to a full hearing.

16	We have heard argument about the second limb of section 7 (the perversity section).  Having heard the argument we think that there is just about an arguable point there too.  So that means that ground 16 will go through to a full hearing.

17	However, we take a different view about the remaining two allegations of perversity or findings unsupported by any evidence.  The first is that set out in ground 17, which is that the Tribunal’s finding that the Bank considered that it might have a problem managing Mr Smith’s effectiveness of work when he returned was unsupported by evidence or perverse, we do not regard this as a finding which was one which it was not open to the Tribunal to make.  It is a secondary conclusion or an inference that in our judgment they were entitled to draw from the primary facts which they found.  We are told that this was not a matter specifically addressed by way of cross-examination of the Bank’s witness or in submissions; but in the course of a 1-day hearing when far more important points were in play, it is not at all surprising that that is so.  The reality is, it seems to us, that this was a perfectly standard inference which was there to be drawn from the primary facts.

18	Lastly in this section ground 18 of the Notice of Appeal attacks the finding in paragraph 17 of the Decision, that by August 2001 Unum had already accepted part of Mr Smith’s claim.  Mr Key points out that from after August 2001, and in particular in October, Unum were looking for further medical evidence and were at that stage not indicating that they were accepting anything.  But if one goes back to an earlier passage in the Tribunal’s decision, at paragraph 3 (16) where they found the facts, we will see that the insurers had written to the brokers on 12 March saying:

“At the commencement date of the claim we are satisfied that Mr Smith would not have been able to perform the material and substantial duties of his insured occupation.”

19	There is nothing to indicate that they ever went back on that.  When they were asking for medical evidence in October they were asking for such medical evidence to enable them to consider the claim further; and one can well understand that because, by that time, a further six months had gone past and they were exposed to further liability, which no doubt looked as if it was going to extend longer into the future.  Their risk was therefore greater and they may not have been accepting that the continuing symptoms were such as to give rise to a continued right to benefit.  But it seems clear to us that the Tribunal were entitled to find as they did that, prior to August, there had been an acceptance of the claim, at least to the extent set out in the letter of 12 March, which is set out in the Tribunal’s decision and which Mr Key tells us he has quoted so far as it is necessary or relevant to quote.  Thus we see nothing arguable there either.  

20	We turn to section 8, paragraph 19 of the grounds of appeal.  There Mr Key focuses the attention on a finding of fact made by the Tribunal at the very end of paragraph 20 of their reasons where they say that three acts, namely failure to send payslips, a P60 and to notify Mr Smith of the end of statutory sick pay, amount to a course of conduct which show that the Bank did not endeavour to fulfil their statutory duties to provide Mr Smith with salary documents whilst he was off sick.

21	The criticism is that it was not a course of conduct because it occurred by accident, by a mistake, or a series of mistakes, inside the Bank’s offices.  We do not regard this as arguable either.  We do not see any inconsistency between a course of conduct and a mistake.  A course of conduct in the sense that it was conduct which was not “one-off” but continued can exist not only despite a mistake but because of a mistake.  It can be a mistake which initiates it and a mistake which enables it to continue until the mistake is spotted and the position is rectified.  Thus we do not regard this finding as perverse or unsupported by evidence or unattackable in law otherwise.  
22	It is only fair to say that we do not see this finding as a finding that there was a course of conduct which was deliberately embarked upon by the Bank; that is not what the Decision says.  Further, we do not read the sentence which is under the microscope in paragraph 19 of the grounds of appeal as having any relationship to the time point with which the Tribunal had not dealt elsewhere; at least on the basis of hearing arguments on one side only, we have, of course, not determined that; but it does not look to us as though the Tribunal were seeking to address the time point; and if they had they might have had to consider what had happened in relation to pay slips, an omission which was repeated, differently from the way they had looked at the P60 and the notification of the end of statutory sick pay; or at least they might have wanted to look at them separately.

23	Therefore in rejecting this ground of appeal we are rejecting it on the basis of what it states and not rejecting it on the basis of what other interpretations might be put upon the finding, which interpretations we do not believe would be correct.

24	Finally, in paragraph 20 of the grounds of appeal, Mr Key focuses upon paragraph 23 of the Decision, at the very end of the Decision, in which the Tribunal say this:

“We do not need to decide whether or not Section 6 (11) of the Disability Discrimination Act applies, although we rather thought it would not, due to our finding that the Applicant’s right to future payments is a contractual right to sick pay rather than a benefit paid to him by Unum.”

We do not think that an arguable ground of appeal arises out of that because that is not a part of the Decision which constitutes a decision against the Bank.

25	Therefore we do not allow paragraph 20 to go through to a full hearing; but again in fairness it is right to say this.  We, perhaps having had insufficient time to go through the decision in the way in which one would at a full hearing, have not noticed that the Tribunal had earlier made any finding that the right to future payments from the insurance company was a contractual right to sick pay rather than to a contractual right to benefit payable by Unum, and if such a finding had been made as part of the Tribunal; reasoning which led them to a decision against the Bank, or in favour of Mr Smith, then we would have said that there was an arguable ground of appeal because it is difficult to see how the right which emanated from the insurance company could be regarded as a contractual right to sick pay, as opposed to a contractual right to insurance benefits.

26	This appeal will go through to a full hearing on paragraphs 7 to 16 of the grounds of appeal but not otherwise.