Appeal No. UKEAT/0646/03/ILB

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS
Sitting at: Cardiff Civil Justice Centre, 2 Park Street, Cardiff CF10 1ET

	At the Tribunal
	On 18 February 2004

Before
THE HONOURABLE MR JUSTICE BURTON (PRESIDENT)
MRS R A VICKERS
MR G H WRIGHT MBE

CANADON LTD	APPELLANT

MRS J L PHILLIPS	RESPONDENT

Transcript of Proceedings

JUDGMENT

Revised

	APPEARANCES

For the Appellant	MR D HUGHES
(in Person)	
For the Respondent	MR S JONES
(Solicitor)
Messrs Smith Llewelyn Partnership
18 Princes Way
Swansea SA1 3LW	

SUMMARY

Sex Discrimination / Unfair Dismissal

Issue as to effect of fraudulent misrepresentation rendering the contract voidable on availability of claim for unfair dismissal and sex discrimination, and on recovery of any compensation if contract could have been avoided.

THE HONOURABLE MR JUSTICE BURTON (PRESIDENT)

1.	This has been the hearing of an appeal by Canadon Ltd (the Respondent below) against a unanimous decision of the Employment Tribunal at Cardiff in favour of the Applicant, Mrs Phillips (who was for some reason also referred to in the course of the Tribunal decision as Mrs Kerr).

2.	The decision, which was handed down on 25 June 2003 after a hearing on 3 June 2003, was that the Applicant was unfairly dismissed and was entitled to £2,117.10 compensation, that sex discrimination was established and she was entitled to £1,000 for injury to feelings, and that there were small sums payable in respect of arrears wages and holiday pay.

3.	The brief facts were that the Applicant, who does in fact have other qualifications which would have entitled her to work in other jobs than a kitchen assistant, which is what she applied to be at the Taibach Nursing Home, which belonged to the Respondent, near Port Talbot, was employed by them in such capacity, namely as a kitchen assistant/cook.  Her employment began on 22 May 2002 and terminated by dismissal on 21 October 2002.

4.	The facts are summarised by the Tribunal in paragraph 3 as follows:

“3.	The evidence was that five and a half weeks after starting work Mrs Phillips discovered she was pregnant.  She informed the Respondents and by agreement her hours were reduced from 22 to 18 per weeks.  She then suffered a threatened miscarriage and was on sick leave for 9 weeks.  She was signed off by the doctor and notified the Respondent she would be able to return to work on 24 September 2002.  The Respondents were not satisfied with the doctor’s note.  They expressed concerns about the lifting of heavy pans in the kitchen and required Mrs Phillips to produce a medical certificate addressing these concerns before they would let her return to work.
4.	Her doctor wrote on [9] October [2002] “In my opinion Jan is fit to return to work as certified on 23 September 2002.  However, due to her condition it may be inadvisable to be alone in a kitchen environment”.”

5.	The Applicant was, on the Respondent’s evidence, on a 13-week trial period, and by that time she had worked seven and a half weeks and then been off after that.

6.	Mr Hughes wrote a letter on 21 October 2002 terminating the employment which inter alia said as follows:

“I now refer to your comment about being offered lighter work as a cleaner.  Obviously, with your long absence, alternative arrangements have had to be made to cover our requirements for the cleaning of the nursing home.  I am sure you will agree that it is absolutely imperative that the cleanliness of the home is maintained to a high standard on a daily basis.  I regret to advise you, therefore, that we are unable to offer you a position as a cleaner at the Taibach Nursing Home in lieu of your previous position as kitchen assistant.
We now come on to your signing-off certificate, dated 23rd September, 2002, in which you are signed off as being fit to work.  We were not happy that your doctor was aware of the precise nature of your kitchen duties, and requested you obtain a certificate from your doctor stating that you are fit enough to work in a kitchen environment.
We have now received a copy of your doctor’s considered opinion…”

and then that is referred to.  The conclusion of the letter is that Mr Hughes had regrettably to advise that her employment with the company had ceased, wished her well and indicated that once her pregnancy was over they would be happy for her to reapply to Taibach for a position in the kitchen, and were prepared to consider her previous employment of 7 weeks to be part of the standard 13 week trial period.

7.	The Applicant had signed a job application form on 13 May 2002, and that contained questions under the heading “HEALTH”, including those following:

“Have you been admitted to Hospital within the last three years?”

To which the Applicant answered “Yes”.

“If yes, give details:”

To which the Applicant answered “Miscarriage” without giving a date.
There was a question:

“Have you visited a doctor within the last three years, for reasons other than colds, flu, routine check-up”

To which the answer was “No”.

“Are you receiving any Treatment or Medication at present?”

The answer was given “No”.  Had the answer been “Yes” there would have been a requirement to give details of it.

“Have you ever suffered from depression, anxiety or nervous disorder?”

The answer was “No”.

“Are there any disabilities or complaints which may affect your employment?”

Answer “No”.

8.	Under “PREVIOUS EMPLOYMENT” three employers were listed.  The first of them was Lakeside Country Inn (2000-2001), and the third was a Mr D Johal of Murco Service Station Sandfields, and the employment was recorded as being from December 2001 to date as a cashier.  “To date”, of course, was 13 May 2002, as was made quite plain by the following page in which the Applicant both signed and so dated the document.

9.	Had she not stated “to date”, but had stated an earlier date, then there would have been a need for her to complete what she in fact left blank, namely the column saying “reason for leaving”.  But, on the basis of the representation that she was still employed by Murco, there was no cause for her to complete that space.
10.	Subsequent to the termination of her employment, the Respondent has discovered the following information.  First, there has been a letter sent by a personnel manager at James Lovelock Ltd, which was before the Tribunal, recording that the Applicant had not been employed at Lakeside Country Inn at any time between July 2000 and January 2001 (the dates listed by her for her employment there as a part-time kitchen assistant in her job application form).  That may or may not be material for consideration.

11.	But what we have also considered, which is plainly, on the Respondent’s case, very material for consideration, if it be accurate, was contained in a letter from Mr Johal of Murco Service station, which was again before the Tribunal, dated 27 May 2003 (“the Murco letter”).  That letter, addressed to Mr Hughes at Taibach Nursing Home, stated the following:

“Mrs Phillips was employed by us from 27th December, 2001 to 27th April 2002, a period of only four months.

and then the concluding paragraph read as follows:

“I know that Mrs Phillips was pregnant when she worked with us, and had a miscarriage.  When she handed in her notice, she gave as her reason for leaving the fact that she was finding it increasingly hard, and she was suffering from stress following her miscarriage.  She gave a week’s notice on or about 20th April 2002, and left us on 27th April 2002.”

12.	In the weeks leading up to the Employment Tribunal in which, as we have indicated, the Applicant’s claim, which was subsequently upheld, was for sex discrimination and unfair dismissal on grounds of pregnancy, the Respondent, which was unrepresented, sought to obtain information from the solicitors instructed on behalf of the Applicant.  By a letter dated 30 May 2003 the solicitors wrote as follows:

“…we can confirm that our client gave birth to her daughter on the 2nd December 2002 at the Prince of Wales Hospital Bridgend and that the date of miscarriage in respect to the previous pregnancy was the 26th April 2002.  Our client never received a P45 from her previous employers to you, the filling station in Port Talbot.”

13.	Those answers, as we will indicate, remained uncorroborated and, it seems, we are told by Mr Jones for the Applicant, who has appeared before us today, although he did not appear on behalf of his client below, may have been confirmed orally by his client in the witness box, but without any documentation.  The materiality of it was that first the Respondent had, it seems, just received the Murco letter and a P45 in those circumstances would be material; and also that if the Applicant gave birth to her daughter after nine months full term then that would have meant a conception date of approximately 2 March 2002, which might have meant that she knew about the pregnancy when she filled out the form on 13 May 2002; and further that the date of the miscarriage was said to have been on 26 April 2002; and, if that was so, then that would have made it wholly impossible for there to have been a conception earlier than 26 April 2002, and unlikely that there would have been a pregnancy on 13 May 2002, certainly not one known to the Applicant – but on the other hand, it would be completely inconsistent with the information given by Murco in the Murco letter. 

14.	All that was before the Tribunal on 3 June, albeit that Mr Hughes represented himself, and did not seek to call Mr Johal as a witness.  The central part of the Tribunal’s conclusion is very short.  After reciting the authorities, and having stated in paragraph 8 that the doctor’s note did not say that she was not fit, but merely suggests “she may need help now and then” (although this is not quite what the doctor did say in his notes) the Tribunal sets out in paragraph 13:

“The unavoidable conclusion is that Mrs Phillips was unfairly dismissed and that she had been subjected to sex discrimination by the Respondents.”

15.	The Tribunal does not in terms address the argument, which was plainly put before it by the Respondent, that the nursing home would not have been able, or entitled, for health and safety reasons, to employ the Applicant in the kitchen, either unattended or at all, and that there was no alternative job available.

16.	But this appeal has not been put forward on the basis of a perverse decision by the Tribunal.  The basis of this appeal is that the Tribunal did not adequately or at all address the question of fraudulent misrepresentation by the Applicant.  The Respondent’s case is that had the truth been told in the job application, if truth it was, then they would not have employed the Applicant at all; indeed, as Mr Hughes put it in argument, could not have employed her.

17.	On the Respondent’s case, if the Murco letter is right and if the gestation period of the nine months back from December were right, then there were, on any basis, misrepresentations in the job application form.  The position might be different if indeed the Applicant suffered the miscarriage on 26 April so far as the pregnancy is concerned, but that would still have meant that at the time that she filled out the form, if Murco is right, she was not employed, and the reason she was not employed was a recent miscarriage, on the basis of the 26 April a very recent miscarriage, coupled with stress, which is of course “anxiety”.  If that were right then the representations as to being employed “to date” by Murco, and therefore not needing to complete her reasons for leaving, would be a misrepresentation, as might be the answers to the questions as to visiting a doctor and receiving treatment or medication, and as would appear to be the answer as to not suffering from depression or anxiety.

18.	In the correspondence leading up to the Tribunal hearing (to which we have referred), the Respondent had sought to obtain, initially by a letter dated 28 May 2003, the gestation period as reflected in the hospital records, the date of the miscarriage and the dates of admission and release, quite apart from the P45 (to which we have referred).

19.	Other than the response which we have quoted, no such information was supplied, notwithstanding follow up letters from the Respondent dated 30 May and 2 June, and indeed there was a confirmation letter from the solicitors to the Applicant dated 2 June that no further information would be forthcoming.

20.	We turn against that background to deal with the paragraphs which follow on from paragraph 13 and the Tribunal’s “unavoidable conclusion”, to which we have referred.

“14.	Mr Hughes, on several occasions, in his evidence said that Mrs Phillips was dismissed because of her pregnancy.  He said that had the Deputy Matron, Mrs Chivers, known that she was pregnant she would not have been taken on in the first place.  He asserted that Mrs Phillips “inveigled” Mrs Chivers into giving her the job and was dishonest in that she was already pregnant at the onset of her employment.  He said that she was dishonest also in that she did not tell Mrs Chivers she had previously had a miscarriage.
15.	These allegations are rejected.  First, the evidence of Mrs Kerr, and of her husband, was that she was not pregnant when she started working for the Respondents, and they did not know she was pregnant until five and a half weeks later.  We accept this evidence on the ground that Mrs Kerr was in hospital suffering a miscarriage on 26 April and it highly improbable in our view that she would have been pregnant less than a month later when she started employment, and even more improbably that she would have known of any pregnancy at that time.  Second, Mrs Phillips filled in an application for the post when she was interviewed.  Under “Health” she notified the Respondents that she had been in hospital “within the past three years”, and she notified them of the reason, namely “miscarriage”.”

21.	We are not satisfied as a result of those paragraphs that the question of misrepresentation, fraudulent misrepresentation, and its consequences was adequately or at all addressed by the Tribunal, for a number of reasons.

22.	First, they follow the unavoidable conclusion of unfair dismissal and sex discrimination which suggests that the Tribunal did not consider the matters as material to those decisions.
23.	They are followed by an important paragraph, namely paragraph 16, which appears to indicate the context in which the Tribunal was considering those matters, namely:

“We are satisfied that Mr Hughes’s allegations are unfounded and constitute an attempt to undermine Mrs Phillips’ credibility with the Tribunal.  We reject them in their entirety.”

They do not appear to have been considered or understood as going to the substance of the Respondent’s liability and the Applicant’s entitlement.  On any basis, the question of misrepresentation was brought firmly before the Tribunal.  By virtue of the word “dishonest” – Mr Hughes did not mince his words, it appears – of course any misrepresentations would fall to be considered as fraudulent misrepresentations.  Mr Jones accepted in the course of argument that, if misrepresentation there was, it plainly must have been fraudulent misrepresentation; although he had sought to suggest negligent misrepresentation as an alternative, plainly if the Applicant was no longer employed by Murco, if she was pregnant and knew it, and if she had very recently had a miscarriage, and was suffering from stress as a result, such that if the Respondents be right she would have been inappropriate to have been employed in a kitchen, then any misrepresentations in relation to those matters must have been knowing, and consequently fraudulent, rather than negligent.

24.	So far as the misrepresentations are concerned, if the Applicant was pregnant then there was the plainest of misrepresentations, not simply, as Mr Jones would submit, by reference to non-disclosure, but by virtue of what would plainly have been fallen to be inferred from the positive answers that she gave in the job application form.  If, on the other hand, the answer is, as the Tribunal concluded, that she was not pregnant, and the reason for her not being pregnant was that she was in fact in the immediate throes of a miscarriage, then that too would or might have constituted a similar misrepresentation, by virtue of the combination of her fragility by virtue of a miscarriage and the existence of the stress which, if the Murco letter be right, was a substantial factor in her leaving that employment, and would need to have been disclosed in the “reason for leaving” column, had she disclosed that she had in fact left Mr Johal before 13 May 2002.

25.	The way in which the Tribunal dealt with the evidence is surprising, given what we have recorded.  The Tribunal finds, and it is perfectly possible that such was the case, that Mrs Phillips (as of course is meant, rather than Mrs Kerr) was in hospital suffering a miscarriage on 26 April; although, as we have indicated, it did not go on to consider the consequence of that fact, namely as to there being a different misrepresentation, i.e. the second of the two misrepresentations which Mr Hughes was recorded as asserting in paragraph 14, as opposed to the misrepresentation of pregnancy.  However, it is surprising, as we have indicated, that the Tribunal felt able to make the finding or assertion that the miscarriage took place on 26 April, without at least considering and rejecting the contrary evidence, at any rate so far as the Murco letter constituted evidence, that would have rendered it impossible for such to be the case, given the statement in that letter that the miscarriage was earlier than 20 April, and that indeed she gave notice on 20 April and left him on 27 April.

26.	Given that the Tribunal did not address, in our judgment, substantively or at all the question of the existence of misrepresentations, it is not therefore surprising that there was no consideration of the legal effect, if any, if such fraudulent misrepresentations were proved.  We sought in advance of this hearing submissions from both sides on a question which we formulated as follows:

“Whether a pre-contractual deception or misrepresentation by an employee rendering a contract voidable is/is not an answer to a claim for unfair dismissal (including unfair dismissal on grounds of pregnancy) and/or sex discrimination.”

Mr Hughes did not seek to answer that question.  He had not had, but plainly ought to have had, legal advice in this case.  A very speedy and helpful response was forthcoming at length from Mr Jones on behalf of the Applicant.  It is apparent from that that there are legal questions to be considered, dependent of course upon analysis of the evidence, which the Tribunal did not consider.

27.	The first such question is whether, if the contract was voidable for fraudulent misrepresentation but not avoided by the date of the actual termination of the contract, that has any effect on the right to recover, either in respect of a claim of unfair dismissal or sex discrimination.  Mr Jones has referred us, as being the nearest available analogy, to contracts which are found to be unenforceable for illegality: Leighton v Michael [1995] ICR 1091 and Hall v Woolston Hall Leisure Ltd [2001] ICR 99.  See also Vakante v Governing Body of Addey & Stanhope School (UKEAT/0565/03 25 November 2003 unreported).  The questions that are posed in relation to an illegality claim include those as to whether the illegality which renders the contract enforceable is or is not inextricably bound up with the conduct by the employer which is said to found the unfair dismissal or the discrimination.  The questions may or may not be the same in relation to a contract which was voidable for fraud but not avoided.  There are further questions as to whether the position is affected by the fact that the employer was not in a position to avoid the contract on 21 October, because it did not at that stage know the facts which have subsequently caused it to conclude that there were fraudulent misrepresentations, by reference to the alleged miscarriage and/or the alleged pregnancy and the alleged earlier termination of employment with Murco: or whether the knowledge that the Applicant may or may not have had at that stage would be sufficient.  Given that there has not been consideration either at all before the Tribunal or fully before us, we would be concerned in any event not to resolve this point of law today without full argument, although we can see the force of Mr Jones’ case.
28.	However, irrespective of the provision as to whether there could still be a claim for sex discrimination and/or for unfair dismissal notwithstanding the voidability of the contract for fraud, the point does appear to us to be a very serious matter for consideration, and Mr Jones really found it very difficult to argue to the contrary, that, even if an Applicant is still entitled, in such circumstances, to claim unfair dismissal or sex discrimination, the voidability of the contract for fraud would be relevant to the question of the quantification of any compensation; whether, for example, such questions as Polkey deduction, or indeed an assertion of no loss, would arise.  As we put to Mr Jones, one can well see certain circumstances in which, even if a claim for sex discrimination ran, it would be arguable that no compensation would be payable; if, for example, someone who knows she is pregnant makes a fraudulent misrepresentation in that regard, and then, after she obtained employment on that basis, the misrepresentation is discovered and the contract either is or could be avoided, there seems no reason why it should not be arguable, and found, in those circumstances, even if sex discrimination or indeed unfair dismissal by virtue of pregnancy ran, that even if there were liability there could be no compensation, either for injury to feelings or otherwise.

29.	These questions, which are plainly acute, were not addressed at all by the Tribunal.  We entirely understand the difficulty a tribunal faces where, at any rate the respondent, upon whom the burden of establishing fraudulent misrepresentation plainly lay, is unrepresented; but it does appear to us that here the issues, albeit not at all clear from the IT3, were quite manifestly forcibly and vigorously raised by Mr Hughes, as appears from paragraphs 14 and 15; and having been raised, it appears to us that the Tribunal was obliged to consider the issues as a matter of law, and did not do so.

30.	In those circumstances, we conclude that the only possible course here, reluctant though we are to cause these parties to have to spend further time on this matter and no doubt further cost, is to remit the case to the Employment Tribunal.  When that is done, the Tribunal will consider whether there is liability at all for unfair dismissal or sex discrimination and, if so, whether there should be any compensation.  At that stage, then if there were compensation, the question of quantum can be further considered.

31.	We raised a point which is no longer now relevant in the light of our remission to the Employment Tribunal; that it is wholly unclear from the Tribunal’s reasons how it arrived at the compensatory award of 16 weeks or a purported future loss of 10 weeks, or indeed £20 worth of expenses, which are listed in the calculation of compensation but, unlike some of the other matters, not addressed in the body of the Tribunal’s reasons.  We asked the parties whether this was the subject matter of agreement and we are told that it was not.  We note that there was a schedule of loss sent by the Respondent prior to the hearing to the Tribunal, which is not with our papers, and it may be that the explanation for the figures can be drawn from that schedule; but certainly without any reasons we fail to understand how the calculations are arrived at.  That was not the subject matter of the Notice of Appeal before us; it was a matter we noted for ourselves.  But now that we are remitting the matter, no doubt that too will be considered by the fresh Tribunal.

32.	We invite discussion, because there has been no argument before us, as to whether there should be remission in relation to the arrears of wages or holiday pay claims.

[Discussion]

33.	In the light of our further discussion, in those circumstances those sums are to be remitted also.

34.	On that basis the matter should be remitted to a different Tribunal and there will be a transcript.