Appeal No. UKEAT/0392/08/MAA

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 26 November 2008

Before
HIS HONOUR JUDGE BIRTLES
DR K MOHANTY JP
MR S YEBOAH

(1) COUNTRYWIDE ESTATE AGENTS (UNLIMITED)	APPELLANTS
(2) COUNTRYWIDE FINANCIAL SERVICES LIMITED

MR R RICE	RESPONDENT

Transcript of Proceedings

JUDGMENT

	APPEARANCES

For the Appellants	MR ALASTAIR HODGE
(of Counsel)
Instructed by:
Countrywide Estate Agents (Group Legal Department
Perry Way
Witham
Essex  CH8 3SX	
For the Respondent	MR JAMES BOYD
(of Counsel)
Instructed by:
Brabners Chaffe Street Solicitors
1 Dale Street
Liverpool
Merseyside  L2 2ET

SUMMARY
DISABILITY DISCRIMINATION
Disability related discrimination
Direct disability discrimination
The Employment Tribunal confused the relevant tests for disability discrimination under s.3A of the Disability Discrimination Act 1995 as amended.  Case remitted to the Employment Tribunal to consider the issue of disability discrimination in the light of the judgment and London Borough of Lewisham v Malcolm [2008] IRLR 700 (HL).

HIS HONOUR JUDGE BIRTLES

1.	We are going to dismiss the appeal on grounds 1-3 and allow the appeal in respect of ground 4 and remit the case to the same Employment Tribunal for them to consider in the light of our judgment and the decision in London Borough of Lewisham v Malcolm [2008] IRLR 700 (HL).  I will give a judgment.

Introduction
2.	This is an appeal from the decision of an Employment Tribunal sitting in Liverpool in November 2007, January and February 2008.  The reserved judgment was sent to the parties and entered in the register on 10 March 2008.  The Employment Tribunal decided a substantial number of issues which are set out at the beginning of the judgment.

3.	It made a variation in respect of the identity of the parties and found (1) that the Claimant was unfairly dismissed by the First and Second Respondent, (2) that the Claimant’s claim of harassment was withdrawn and dismissed on withdrawal, (3) that the Claimant was unlawfully discriminated against on the grounds of his disability by the two Respondents, (4) that he was not victimised by the two Respondents and that claim was dismissed and (5) the claims of unpaid wages, holiday pay and other contractual benefits were dismissed.

4.	Against certain of those findings and, in particular, in relation to disability discrimination, the two Respondents appealed to this Tribunal and I shall hereafter refer to them as the Appellants.  The Appellants are being represented by Mr Alastair Hodge of Counsel and the Respondent, Mr Ronald Rice, by Mr James Boyd of Counsel.  We are grateful to both of them for their succinct oral and written submissions.

The Material Facts
5.	These are set out in the Employment Tribunal judgment paragraphs 12-79: EAT bundle pages 7-18.  It is not necessary for the purposes of this appeal to go into the factual matrix in any great detail.

6.	Suffice it to say that the Claimant was employed by the two Respondents who run an estate agency and financial service business in North Wales, Wirral and Cheshire.  The Respondent was originally employed as a branch manager in January 1980 and became a partner in 1982.  He was, and remains, a chartered surveyor and practised as a general estate agent.  Following a transfer of ownership he became an area sales director in 1990 and, subsequently, a regional sales director covering Cheshire and West Midlands.  He was described by the Tribunal as Mr Philip Turner’s right-hand man.  He was responsible, as a regional director, for a number of offices within his region.

7.	Unfortunately, in 2001, the Claimant was admitted to hospital suffering from a heart attack for which he was subsequently prescribed medication.  He returned to work.  In August 2004 he suffered a second heart attack which again required hospitalisation and a further prescription of drugs.  He was required to take those drugs for the rest of his natural life.

8.	He also suffered from mechanical back pain and sciatica in January 2006 at the time of his dismissal.  There was an agreed medical report and the Tribunal found that the Respondent was disabled by virtue of his heart condition but not his back condition.  There were quite clearly potential limitations on what work the Respondent could do on his return to work.
	
9.	Simultaneously, there was a reorganisation within the Appellants’ regions and the result was a redundancy exercise whereby there would only be three regional directors instead of the existing five.  One, in fact, left of his own accord meaning that there had to be a selection of three from a pool of four.

10.	The Tribunal set out in considerable detail, for which we are grateful, the redundancy process and made a number of criticisms of it.  The result of the redundancy process was that the Respondent was made redundant.  He subsequently brought a claim for unfair dismissal and discrimination and victimisation.

The Employment Tribunal Judgment
11.	The judgment follows a conventional form.  In structure it first sets out the decisions it made: EAT bundle pages 1-2.  It then sets out a preamble which is in effect the history of the claim: paragraphs 1-10 EAT bundle pages 2-3.  It sets out the issues at paragraph 11 which then (through an error of numbering) appear as 9.1-9.23): EAT bundle pages 3-6.  It sets out the facts at paragraphs 12-79: EAT bundle pages 7-18.  It then turns to setting out the law at paragraphs 80-98: EAT bundle pages 18-21. Finally it reaches its conclusions at paragraphs 99‑27: EAT bundle pages 21-28.

12.	Having heard submissions from both Counsel who were present at the hearing, it seems to us that what went wrong in this case was this.  There was a discussion, as is inevitable and desirable at the beginning of the hearing, as to what the issues were between the parties and what the Tribunal had to decide.  The hearing concluded on 28 November and the Tribunal met again in chambers on 9 January and 8 February.

13.	As I have indicated, the Tribunal listed in paragraph 11 (as paragraphs 9.1 - 9.23) the issues it actually had to decide.  They went beyond the issues which had been canvassed before it by Counsel.  Indeed, although there are 23 paragraphs each of those paragraphs is subdivided into a number of sub-issues.  We think that the Tribunal over-complicated the issues it had to decide in this case.

The Amended Notice of Appeal
14.	This appears in the EAT bundle pages 30-34.  It has been supplemented by Mr Hodge’s admirably concise oral submissions as well as his skeleton argument.  We take the grounds of appeal in turn.  Ground 1 is contained in paragraph 6.1 of the amended Notice of Appeal.  It says this:
“It [The Tribunal] substituted its own judgment that it was procedurally unfair for the Appellants not to meet (or offer to meet) the Respondent at his home on 30th January 2006 as part of the redundancy consultation process rather than ask whether this was within the bound of reasonable responses of a reasonable employer (Reasons, paragraph 100).”

15.	We can take grounds 2 and 3 together with ground 1.  Ground 2 is contained in paragraph 6.2 of the amended Notice of Appeal.  It says this:
“It [The Tribunal] substituted its own judgment in relation to the Appellants’ formulation of the selection criteria rather than ask whether the said formulation was within the band of reasonable responses of a reasonable employer (Reasons, paragraph 102).”

16.	Ground 3 is contained in paragraph 6.3 of the amended Notice of Appeal.  It says this:
“It [The Tribunal] substituted its own judgment in relation to the importance of the Respondent’s RICS membership and REAPIT knowledge rather than ask whether the Appellants’ approach to those issues was within the bound of reasonable responses of a reasonable employer (Reasons, paragraph 106).”

17.	Before turning to the Employment Tribunal’s reasoning in those paragraphs, it is useful to remind ourselves of the law.  There is no dispute about the principles set out in Mr Hodge’s skeleton argument.  The decision in Iceland Frozen Food v Jones [1982] IRLR 439 was
approved by the Court of Appeal in Foley v Post Office [2000] IRLR 827:
“(a) the starting point should always be the words of section 98(4) themselves;  
(b) in applying the section an employment tribunal must consider the reasonableness of the employer’s conduct, not simply whether they (the members of the employment tribunal) consider the dismissal to be fair;  
(c) in judging the reasonableness of the employer’s conduct an employment tribunal must not substitute its own decision as to what was the right course to adopt for that of the employer;”  

In other words, the case law prohibits the Employment Tribunal substituting its view for that of the employer.

18.	Taking each of those in turn we turn to ground 1 and paragraph 100 of the judgment.  The Tribunal say this:
“However, the Tribunal was concerned that the respondent had not considered meeting the claimant in his home to discuss the matters raised in the 30 January meeting, given the fact that it was expressed to be a ‘very important meeting’ which would have enabled the claimant to ask questions face-to-face about the redundancy process rather than via email.  This failure on the part of the respondent did not amount to a breach of the statutory procedure but does add to the general unfairness by virtue of section 98(4) of the 1996 Act of this redundancy, which was both procedurally and substantively unfairly carried out for the reasons set out below.”

19.	In our judgment this is a throwaway remark by the Employment Tribunal.  It is not substituting its view for that of the employer.  It specifically finds that the failure, as they term it, did not amount to a breach of the statutory procedure but did add to the general unfairness by virtue of section 98(4) of the 1996 Act.  However, the paragraph goes on to say that the dismissal, by reason of redundancy, was both procedurally and substantively unfairly carried out for the reasons set out below.  In our judgment that does not incorporate a finding by the Tribunal that a failure to consider meeting the Claimant at his home was outwith the band of reasonable responses of a reasonable employer.

20.	The actual reasons found for finding that there was an unfair dismissal under section 98(4) of the 1996 Act are set out in the paragraphs which follow paragraph 100 and the point is not referred to again in those reasons.  Paragraph 102 says this:
“With reference to issue number 9.3, namely did Mr Turner predict a redundancy situation in April 2005 between regional managers in January 2006, the Tribunal decided that he had and that both the selection criteria and interview scores were designed to ensure the claimant’s selection for redundancy.  The respondent had not established objectively fair selection criteria, and had made very little amendments when a number were suggested by the claimant, who clearly did not agree with them all.  The respondent did not properly take into account the claimant’s absences and the impact of his disability on the running of some offices, especially Chester.”

21.	Ground 3 takes issue with paragraph 106.  That says this:
“The Guide warned against failing to follow previous historic matrixes without good reason.  The Tribunal concluded that the matrix used for selecting the claimant was not wholly based on objective and verifiable grounds but also included the personal opinion of the assessors, which was wholly subjective.  There was no adverse effect to the claimant when the respondent failed to take into account the entire continuity of his employment because the claimant, on his own admission during the appeal process, agreed that the respondent should follow its own guidelines which provided a cut off point of 10 years or more to the maximum mark.  As the claimant and all his colleagues in the pool for selection possessed in excess of ten years of continuity of service then they were entitled to be equally scored on this, which they were.”

22.	That, of course, is a point in favour of the Appellant.  Paragraph 106 goes on:

“However, the respondent’s failure to take into account the claimant’s qualification as a chartered surveyor and his expertise in the REAPIT computer system was a procedural and substantive failure.  Mr Scarff confirmed that the claimant’s RICS qualifications were of “marginal benefit” and that his expertise in REAPIT, was above average of his colleagues “and therefore this would have been of value”.”

23.	Mr Hodge, for the Appellant, submits that paragraphs 102 and 106 show that the Employment Tribunal was substituting its views for that of the Appellant as to whether or not the matters complained of were outside the bound of reasonable responses of a reasonable employer.

24.	We agree with Mr Boyd that this criticism misses the critical point.  It was a central plank of the Respondent’s case that the whole redundancy exercise was deliberately geared to engineering his dismissal.  The Employment Tribunal heard the witnesses, including Mr Turner, who was the person against whom the Respondent had pointed the finger as the key player in his engineered dismissal.

25.	The Tribunal in other parts of its judgment did refer to the relevant test in law.  At paragraph 83 the Tribunal said this:
“The question for the Tribunal is the reasonableness of the decision to dismiss in the circumstances of the case, having regard to equity and the substantial merits of the case.  The Tribunal will not substitute its own view for that of the respondent.  In order for the dismissal to be fair, all that is required is that it falls within the band of reasonable responses open to employer.  It is necessary to apply the objective standards of the reasonable employer - the “band of reasonable responses” test - to all aspects of the question of whether the employee had been fairly dismissed.”

26.	It goes on to refer, in paragraph 84, to the well-known decision of William & Ors v Compair Maxam Ltd [1982] IRLR 83 and refers to the reasonable employer in that paragraph on at least two further occasions.  It seems to us that paragraphs 102 and 106 are not substitutions by the Tribunal for its views for those of the employer.

27.	To hold otherwise would be to require employment tribunals to recite as a mantra, in every relevant paragraph, the phraseology of band of reasonable responses.  We do not think that employment tribunals, particularly in lengthy judgments, should be required to do that.  We, find no substance in grounds 1, 2 and 3 of the Amended Notice of Appeal.

28.	We turn to ground 4.  This is contained in paragraph 6.4 of the Amended Notice of Appeal which says this:
“It [The Tribunal] failed to apply the proper test for direct disability discrimination in section 3A(5) of the Disability Discrimination Act 1995, which led to the perverse conclusion that the Appellant had directly discriminated against the Respondent on the grounds of his disability.”

29.	The reference is to paragraphs 119 and 120 of the judgment.  Before referring to those paragraphs it is useful to remind ourselves of section 3A(5) of the Disability Discrimination Act 1995 as amended.  That provision says this:
“A person directly discriminates against a disabled person if, on the ground of the disabled persons disability, he treats the disabled person less favourably than he treats or would treat a person not having that particular disability whose relevant circumstances, including his abilities, are the same as, or not materially different from, those of the disabled person.”

30.	Paragraphs 119 and 120 say this:

“119.	With reference to issues 9.16 and 9.17, namely, had the respondent directly discriminated against the claimant and on the grounds of his disability selected him for redundancy, on the balance of probabilities, the Tribunal was satisfied that it had, having applied the burden of proof set out in section 17A(1)(c) and in accordance with the decision in Igen v Wong [2005] IRLR 258 (CA).  The claimant had referred to the Disability Rights Commission and by this reference, he obliquely raised the issue of disability discrimination in the meeting with Mr Turner on the 6 April 2005.  As a result of this reference, Mr Turner took legal advice, changed his tact [sic] and waited until January 2006 before carrying out a redundancy procedure that assured the claimant’s termination.  The claimant was put at a substantial disadvantage in comparison with those colleagues in the same pool for comparison who were not disabled and who had not been absent for lengthy periods of time for whatever reason.  Given the less than transparent redundancy process and subjective assessment of those employees in the pool for selection, the Tribunal was satisfied that the claimant had been treated less favourable, and the reason for the less favourable treatment related to the claimant’s disability.
120.	Mr Turner’s decision in respect of the hamper incentive and 25 year service award was not an indicator of his “true attitude” to the claimant, and adverse inferences cannot be drawn from this, nor from the respondent’s failure to pay the claimant’s RICS membership.  The Tribunal was satisfied that the RICS membership was not within the control of Mr Turner and the hamper was a genuine mistake that was put right following representations by the claimant.”

31.	There is a mis-numbering of the issues.  Paragraphs 119 and 120 do not deal with issues 9.16 and 9.17: they deal with issues 9.15 and 9.16.  Paragraph 120 does not really come into play here because the findings by the Tribunal were in the Appellants’ favour and against the Respondent.  Mr Hodge submits that the Tribunal confused two, if not three, tests relating to different aspects of disability discrimination law.  It dealt with the failure to make reasonable adjustments and with the separate issue of whether there was disability related discrimination.

32.	The words “substantial disadvantage” used in paragraph 120 do not appear in section 3A(5) of the Disability Discrimination Act 1995 as amended.  Mr Hodge also refers us to the decision of this Tribunal in High Quality Lifestyles Ltd v Watts [2006] IRLR 850 and to the House of Lords decision in Malcolm.

33.	As I have indicated, the decision of this Tribunal was sent to the parties on 10 March 2008.  The decision in the Malcolm case was handed down in late April 2008.  The Employment Tribunal were not referred to it and, of course, would not have known of the decision of the House of Lords at the time it sent out its reserved decision.

34.	The Malcolm case throws up two points.  The first is, despite the fact that it was a housing discrimination case, it is clear that it applies to employment matters as well.  There is no dispute about that between Counsel and that is quite clearly the case.  The remarks of the members of the House of Lords in the Malcolm case are equally applicable to employment law cases.

35.	The second concerns the substance of Malcolm.  Each of the law lords gave a separate opinion.  Lady Hale dissented in part.  The effect of Malcolm, as is well known, is to limit the range of comparators in disability discrimination cases.  Suffice it to say that we are not able to find that paragraph 119 of the judgment either sets out the law accurately in relation to the appropriate comparator or indeed internally.  It is confused.

36.	In his frank submissions Mr Boyd effectively conceded this but asked us to say that if one looked at other parts of the Employment Tribunal judgment we should find or infer that the thrust of the judgment is that the Tribunal found that the Appellant had engineered the dismissal of Mr Rice on the grounds of his disability and that that was clearly a finding of direct disability discrimination.

37.	We do not think that it is the function of the Employment Appeal Tribunal to reconstruct passages in judgments of Employment Tribunals which are wrong in law.  It may well be when this matter is remitted to the Employment Tribunal that they will agree with Mr Boyd’s submissions to it but as it stands today paragraph 119 is quite clearly wrong in its analysis of the law and simply does not make sense.

38.	We therefore allow the appeal on ground 4 and remit the matter to the Employment Tribunal to consider this issue and this issue alone again in the light of this judgment and the decision of the House of Lords in the Malcolm case.

39.	We have considered the submissions of Counsel as to the correct hypothetical or real comparator in this case.  We do not think that we should attempt to construct the appropriate comparator.  That is a matter for the Employment Tribunal which has heard the evidence in this case.

40.	To that limited extent the appeal is, therefore, allowed.  We emphasise that we do not expect the Employment Tribunal to consider any other aspect other than the one that we are specifically remitting to it.

41.	The procedure that the Tribunal will follow is a matter for it.  We would expect that the Tribunal would invite representations from the parties on the issue.  We do not expect the Employment Tribunal to hear any further evidence.