The New Testament Church of God v Rev Stewart [2007] EWCA Civ 1004

[2007] EWCA Civ 1004Case No A2/2006/2448
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE EMPLOYMENT APPEAL TRIBUNAL
UKEAT029306DA
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 19/10/2007
Before
LORD JUSTICE PILLLADY JUSTICE ARDENLORD JUSTICE LAWRENCE COLLINS
Between
The New Testament Church of GodAppellantRev. Sylvester StewartRespondent
Antony Sendall (instructed by Messrs Geoffrey Leaver) for AppellantDaniel Barnett (instructed by Messrs Stone King) for RespondentHearing Hearing dates : 27 & 28 June 2007
JudgmentLord Justice Pill :
[1]This is an appeal against a judgment of the Employment Appeal Tribunal (“EAT”), His Honour Judge Ansell presiding, handed down on 27 October 2006. The EAT dismissed an appeal by The New Testament Church of God (“the appellant”) from a decision of an Employment Tribunal held at Watford, a Chairman, Ms Manley, sitting alone, dated 30 March 2006. On consideration of a preliminary point, the Chairman held that Rev. Sylvester Stewart (“the respondent”) was an employee of the appellant within the meaning of Section 230 of the Employment Rights Act 1996 (“the 1996 Act”).[2]The Chairman found that the respondent is a minister of religion and that his pastorhood at the appellant’s church in Harrow was terminated on 15 June 2005. (I will use the more commonly used word ‘pastorate’ in this judgment.) The respondent was suspended from his duties at Harrow on 1 February 2005 following an audit which appeared to show financial irregularities and in June 2005 what was described as a “trial board” convened by the appellant found the respondent guilty of unbecoming conduct and of misappropriating a sum of almost £60,000 from the appellant. An internal appeal is pending but that is agreed not to be relevant to the issue now before the court. A claim for unfair dismissal was presented to the Employment Tribunal on 1 September 2005 claiming reinstatement and compensation. Following her finding that the respondent was an employee of the appellant, the Chairman directed that the claim for unfair dismissal should proceed.[3]The status, in employment terms, of ministers of religion, to use a neutral and omnibus expression, has frequently been considered in the courts, which have been reluctant to find that a contract of employment exists. Section 230 of the 1996 Act provides:
“(1) In this Act ‘employee’ means an individual who has entered into or works under (or, where the employment has ceased, worked under) a contract of employment. (2) In this Act ‘contract of employment’ means a contract of service or apprenticeship, whether express or implied, and (if it is express) whether oral or in writing”
. The appellant relies on earlier authorities; on behalf of the respondent it is submitted that the decision of the House of Lords in Percy v Church of Scotland Board of National Mission [2005] UKHL 73 involves a sea change and resolves the issue in the respondent’s favour. Before considering the authorities, and because of its relevance to the outcome of the appeal, it is necessary to consider the structure under which the appellant operates and the respondent’s position and duties within that structure. The appellant submits that the circumstances did not permit a finding that a contract of employment existed. First, the circumstances were not capable of giving rise to a contract and, secondly, if there was a contract, it was not a contract of employment.[4]The Employment Tribunal described the appellant:
“4.1 The NTCG is a Christian church, the aim of which is the propagation of the gospel according to the acts and teachings of the Church of God based in USA. It is represented in 170 countries. In some of those countries the church is known as the Church of God and in others, including the UK, it is known as the New Testament Church of God. In the UK it is a company limited by guarantee and a registered charity. It has around 108 churches in the United Kingdom. Within the UK there are 295 ordained ministers but only about 88 of them are based in churches where they receive payment for any services that they render, sometimes referred to as a “salary” and sometimes a “stipend”
. A number of different titles attach to these ministers and that depends upon the level of credentials they have achieved. The NTCG’s affiliation to the Church of God means that it is that institution which determines and awards the various levels of ordination. 4.2 The Church of God in USA has a general assembly and the Minutes of that assembly set out the background and rules as to how affiliate churches in the international community should be run. The Claimant has been a member of the NTCG for most of his life. He worked as a driving instructor between 1971 and 1999 and during that time was involved in different levels in the church in Harrow. There are a number of levels of ordination held by ministers within the Church of God and NTCG. The Claimant first became an “Exhorter”, then a “licensed minister” and finally, in 1984 became an “ordained minister”. He is also able to use the title “Bishop”. Over this period, he was involved in carrying out duties as a minister of religion at the Harrow NTCG”. [In reciting the findings of the Employment Tribunal, I have retained the nomenclature there used; the respondent as “Claimant” and the appellant as “Respondent”].[5]The appellant’s national office in Northampton carries out a number of administrative functions and a payroll function. It arranges meetings and seminars for minsters and is involved with discussions on increases on ministers’ salaries and audits of local churches (4.3). There is an Executive Council of 10 Bishops.[6]“4.4 The Claimant did [in 1999] cease working as a driving instructor and [began] to receive a salary paid through the payroll at Northampton. He also was entitled to join a pension scheme which had been arranged by the NTCG. There was therefore an agreement, which was not reduced in writing, between the Claimant and those representing the Respondent that he would perform certain work including administrative tasks and spiritual duties and that he would receive payment for it and be accountable, in part at least, to the national office. The Respondent did not supply a contract of employment or anything analogous to it. Their position was and is that the ministers of religion who carry out work for the church, including those at the Northampton office (Bishops McLeod and Brown) are not employees.”[7]The Chairman found that the appellant’s ministers who were responsible for churches as pastors were required to fill in a monthly report form for the Northampton office describing the work they had done. Collections were taken at the local church and a proportion forwarded to Northampton and paid into a “Ministers’ Stipend Account.” The Chairman held, at paragraph 4.6:
“The money collected from the local churches, including that from Harrow amounting to the sum to cover their minister’s salary and “on costs”, is paid into that account. The relevant minister is then paid from that account after tax and National Insurance have been deducted. If the local branch does not send in sufficient funds, the Respondent may give one month’s grace but no more than that. In the case of the Harrow church there has always been sufficient funds to pay the Claimant but there have been other churches where payment has been suspended or the minister has himself acknowledged that there is insufficient funding to cover his payment.”
[8]The Chairman found that the minister was expected to abide by the doctrine, policy and resolutions of the minutes, to which I will refer. The Chairman held:
“4.8 The way in which the Claimant carried out his work is that he was expected to address any spiritual needs of his local church and its members. Although there were no fixed hours, he was expected and carried out a number of services including two services on Sundays and a prayer meeting and a service on Mondays. He also ran matters such as choir practice and youth club, visited members in hospital or prison, provided pastoral care such as debt counselling and dealt with a number of administrative matters, in particular the completion of the forms referred to. With respect to the local church, he collected monthly mortgage payments and took it to the bank. He also officiated at weddings and other such functions.”
[9]Having referred to the authorities, and to the submissions of the parties, the Chairman concluded:
“7.2 In my view there was an agreement between the Claimant and the Respondent that he should carry out work of a spiritual and administrative nature at the NTCG church in Harrow. Whilst he was free to arrange much of the work as he saw fit, he was also required to do so within the rules of the Church of God and in accordance with the procedures of the Respondent through its national office. Bearing in mind that there had been a previous incident where the Claimant was reprimanded and then told that he would be supervised, it is clear to me that both parties were under the impression that there was a connection between them which amounted to a legal agreement. Furthermore, the facts which led to this claim suggest that the Respondent does understand itself to be able to regulate and discipline its ministers. I accept that there was an intention to create legal relations, though the precise nature of those legal relations may not have been clear to all at the time of the agreement. 7.3 Once I have formed the view that there was an intention to create legal relations I must then look at other matters to consider whether, in this case, there was a contract of service. I am satisfied that there was a degree of control exercised over the Claimant by the Respondent, particularly in administrative matters such as reporting to the national office. I am also satisfied that ministers were central to the running of the organisation and therefore well integrated into it. For tax and national insurance purposes and in relation to disciplinary matters the Claimant was treated in a similar way to an employee. As for mutuality of obligation, there was clearly sufficient work for the Claimant to carry out and the expected level of services as reflected in the forms he was required to complete and return to the national office, supports the view that there was such an obligation on both parties. Whilst I accept that the Claimant exercised a high degree of autonomy and his salary was dependent in part on funds raised through his own local church, I am bound to consider matters as a whole and do find that this was indeed a contract of service. For these reasons, I find that the Tribunal has jurisdiction to hear the Claimant’s claims which will proceed to a Hearing.”
[10]An important part of Mr Sendall’s submissions on behalf of the appellant is the alleged failure of the Chairman to distinguish between the respondent’s position as minister, which he continues to hold, and that of pastor at Harrow. The pastorate was merely a “bolt on” to the respondent’s position as minister, it is submitted. Before the Chairman could reach the conclusion she stated, such an analysis was required, it is submitted, in order to identify obligations which were exclusive to the pastorate. Only such obligations could form the basis for the putative contract of employment.[11]In addition to the argument of substance, the point is taken that the claim was made by the appellant in form ET1 as “bishop/minister of religion” and it was not open to the Tribunal to find a contract based on a pastorate at Harrow. The word pastor is used only once in the lengthy grounds of claim. I say now that I reject the submission that the Chairman’s conclusion should be rejected on that formal ground. In its response to the claim, the appellant referred expressly to the respondent’s “work as pastor” and to his being “pastor of the church” and to “Harrow church where he was pastor”. The case has been argued on the basis that it was the pastorate which formed the basis for the contract of employment.[12]As to the distinction between minister and pastor, it is in my judgment clear that the Chairman based her conclusion that there was a contract of employment on the pastoral duties of the respondent at the church in Harrow. She set out the respondent’s duties there in detail at paragraph 4.8. The agreement found at paragraph 7.2 was to carry out work of a spiritual and administrative nature at that local church. The respondent’s status, and continued status, as an ordained minister of the appellant does not affect the soundness of that conclusion. It was the pastorate the Chairman had in mind, notwithstanding her use of the word “ministers” in paragraph 7.3. The continued status of the respondent as minister or Bishop of the appellant does not, on the Chairman’s reasoning, in itself preclude a finding that there was a contract of employment in relation to the work at Harrow.[13]Further, provisions in the appellant’s minutes, under the heading Local Church, support the view that duties at a local church were capable of founding a free standing contract:
“The Church of God recognizes the local church as the foundation of all ministry activities and will renew efforts to acknowledge, affirm, strengthen, and support the central importance of the ministry of the local church.”
[14]I have considered that issue first because of the prominence given to it in both written and oral submissions on behalf of the appellant. There remains the more fundamental question as to whether there was an intention to create legal relations. The relationship between the parties must be considered in its ecclesiological context, it is submitted. The work was done pursuant to a spiritual vocational calling and not under a contract of employment. It is submitted that, while mentioning the issue, the Chairman did not confront it in her reasoning.[15]The appellant’s members, along with their Bishops and ministers, operated under provisions contained in a very detailed document, described as “minutes”, entitled “Living the Vision,” and set out as a supplement to the minutes of the appellant’s 70th General Assembly in 2004. The minutes include a detailed Declaration of Faith and a series of Doctrinal Commitments, all 22 of which being supported by references to the scriptures. There follows a series of Practical Commitments: Spiritual Example, Moral Purity, Personal Integrity, Family Responsibility, Behavioural Temperance, Modest Appearance and Social Obligation. Detailed explanatory notes, exploring the implications of those commitments, follow the propositions. I regard the whole as a most serious and carefully reasoned theological statement.[16]Under the heading Local Church, the church recommends “Strengthening the pastor in his role as spiritual shepherd with first responsibility for prayer and ministry of the Word (Acts 6:4; 2 Timothy 2:15)”. Under the heading Clergy, it is stated:
“The Church of God believes that from within the priesthood of all believers God specifically selects, calls, anoints, and commissions certain individuals for extraordinary service and leadership and that this special (clergy) calling is of God’s sovereign will, characterized by individuals with spiritual passion, love for the lost, total involvement, lifelong sacrifice, and servant leadership rather than by those seeking position or personal honor.”
Under the heading Laity, it is stated:
“The Church of God will further emphasize the doctrinal position of the priesthood of all believers and will encourage laity to assume a rightful Biblical role as full partners in ministry throughout every area of the church.”
Consistent with that approach, it is stated, under the heading Applicants for Ministry:
“All applicants for the Ministry should be actively engaged, either in evangelical or pastoral work, before being recommended for the Ministry.”
[17]In his ministerial application, a candidate states:
“In applying for advancement to ordination in the Church of God, I reaffirm my personal belief in the doctrine contained in the Declaration of Faith and elsewhere in the current Supplement to the Minutes of the General Assembly of the Church of God. I believe that the practical commitments of the Church of God are biblical exhortations of the life of holiness. I reaffirm my personal belief in, and practice of, the tithing system as recommended by the General Assembly. I have prayerfully considered the above questions and statements and I have answered them honestly and conscientiously, to the best of my understanding and ability. I hereby pledge allegiance to the Church of God and dedicate my ministry to the gospel of Jesus Christ.”
Members of a local church are entitled to “express themselves regarding their desire for pastor of their choice” before an appointment is made.[18]As “spiritual shepherd”, selected from all believers who are full partners in the Ministry (1 Peter 2:5, 9), the pastor is not, it is submitted, in a legal relationship with the church. In that context, there can be no intention, on either side, to create legal relations.[19]In addition to the theological factors described in the minutes, a detailed section, headed “Church Government – Personnel”, provides for practical matters normally considered in a contract of employment: levels of stipend, described as “compensation for pastors”, a ministers’ retirement plan, an aged ministers’ pensioning plan and a group life insurance policy. It is necessary, however, to add that the guidelines for basic compensation are stated to be “ecclesiastical in application and are not a basis for any involvement outside the process of the Church of God”. The minutes also specify an internal disciplinary procedure for “offending ministers”. It specifies “trial procedures” and provides grounds on which an appeal may be sought from a decision of the trial board.[20]I accept that the Chairman’s finding that there was an intention to create legal relations is not supported by reasoning as to why the submission that the work was of a spiritual nature, and was done by virtue of vocation and not by virtue of legal obligation, was rejected. The Chairman, did, however, refer to and cite the relevant authorities and I do not doubt that she had this issue in mind in reaching her conclusion.[21]Mr Sendall submits that the court is bound to reject the Tribunal’s findings by the decisions of this court in President of the Methodist Conference v Parfitt [1984] ICR 176 and Diocese of Southwark and Others v Coker [1998] ICR 140. Neither case has been overruled, and neither has Davies v Presbyterian Church of Wales [1986] ICR 280, by the decision of the House of Lords in Percy, it is submitted.[22]In Parfitt, the issue was whether there was a binding contract “under the doctrinal standards of the Methodist church.” Dillon LJ, at page 183D, accepted that:
“the spiritual nature of the work to be done by a person and the spiritual discipline to which that person is subject may not necessarily, in an appropriate context, exclude a contractual relationship under which work which is of a spiritual nature is to be done for others by a person who is subject to spiritual discipline. On any view the spiritual nature of the work and the spiritual discipline under which it is performed must be very relevant considerations when it has to be decided whether or not there is a contractual relationship.”
However, Dillon LJ concluded, at page 183H:
“Nonetheless the courts have repeatedly recognised what is and what is not a contract of service and I have no hesitation in concluding that the relationship between a church and a minister of religion is not apt, in the absence of clear indications of a contrary intention in the document, to be regulated by a contract of service.”
[23]May LJ, at page 186F, adopted the reasoning of Waterhouse J in the EAT in that case:
“I consider that the starting point of any consideration of the relationship between the Methodist Church and its ministers must be an examination of the faith and doctrine to which they subscribe and they seek to further. The concept of a minister as a person called by God, a servant of God and the pastor of His local church members seems to me to be central to the relationship. [Waterhouse J cited earlier authorities] . . . I am unable to accept that either party to the present proceedings intended to create a contractual relationship.”
Sir John Donaldson MR agreed with both judgments.[24]In Davies, Lord Templeman, with whom the other members of the Committee of the House agreed, accepted, at page 289C that “it is possible for a man to be employed as a servant or as an independent contractor to carry out duties which are exclusively spiritual.” However, having considered the terms and conditions specified in the church’s “book of rules”, Lord Templeman concluded:
“My Lords, it is possible for a man to be employed as a servant or as an independent contractor to carry out duties which are exclusively spiritual. But in the present case the applicant cannot point to any contract between himself and the church. The book of rules does not contain terms of employment capable of being offered and accepted in the course of a religious ceremony. The duties owed by the pastor to the church are not contractual or enforceable. A pastor is called and accepts the call. He does not devote his working life but his whole life to the church and his religion. His duties are defined and his activities are dictated not by contract but by conscience. He is the servant of God. If his manner of serving God is not acceptable to the church, then his pastorate can be brought to an end by the church in accordance with the rules. The law will ensure that a pastor is not deprived of his salaried pastorate save in accordance with the provisions of the book of rules but an industrial tribunal cannot determine whether a reasonable church would sever the link between minister and congregation.”
[25]Coker concerned the position of an assistant curate in a Church of England parish within the diocese of Southwark. Mummery LJ, with whom Staughton LJ and Ward LJ agreed, having considered the authorities, stated at page 147A:
“The simple reason, in my view, for the absence of a contract between the church and a minister of religion is the lack of an intention to create a contractual relationship.”
Mummery LJ added, at page 148B:
“It is difficult to see why an ordained priest, licensed by his bishop to assist the incumbent in his cure of souls, is under contract with the bishop, by whom he is licensed, or with the incumbent he is assisting, or with anyone else, in the absence of a clear intention to create a contract.”
Mummery LJ went on to consider the possible candidates as employer; the diocese, the church commissioners and the bishop and rejected each possibility. He stated that “there was no intention that he should have a contract, let alone a contract of service, with anyone for the discharge of the functions of his priestly office.” In his concurring judgment, Staughton LJ, agreed, at page 150G, with Mummery LJ’s conclusion that “in general the duties of a minister of religion are inconsistent with an intention to create contractual relations.”[26]In Santokh Singh v Guru Nanak Gurdwara [1990] ICR 209, this court upheld an Industrial Tribunal’s finding that a Granthi (priest) at a Sikh temple was not employed under a contract of service.[27]Percy involved an associate minister in a Church of Scotland parish. The complaint was under the Sex Discrimination Act 1975 (“the 1975 Act”) but the decision of the House of Lords involved construing the word “employment” and the opinions expressed appear to me to be relevant notwithstanding that breach of a contract of employment was not alleged. It is likely that the claimant considered herself on better ground under the 1975 Act and did not need to pursue a claim for unfair dismissal where the degree of control exercised by the church would have been a relevant consideration (Percy, paragraph 13).[28]Lord Nicholls of Birkenhead, before considering the facts of the particular case, stated, at paragraph 26:
“The context in which these issues normally arise today is statutory protection for employees. Given this context, in my view it is time to recognise that employment arrangements between a church and its ministers should not lightly be taken as intended to have no legal effect and, in consequence, its ministers denied this protection.”
At paragraph 28, Lord Nicholls referred to Coker and stated:
“Then the fragmentation of functions within such an ‘umbrella’ organisation may make it difficult to pin the role of employer on any particular board or committee. But this internal fragmentation ought not to stand in the way of otherwise well-founded claims.”
Lord Nicholls concluded, at paragraph 42, that Ms Percy was employed by the Board of National Mission under a contract personally to execute work within the meaning of Section 82(1) of the 1975 Act.[29]Lord Hoffmann dissented on the ground that the claimant’s appointment was to an office and her duties were not contractual at all. Lord Hoffmann accepted, at paragraph 62, that “there was plainly an intention to create legal relations.”[30]Lord Scott of Foscote stated, at paragraph 137, that it seemed to him clear “that the agreement was one which created a legally binding relationship between the parties to it.”[31]Baroness Hale of Richmond, at paragraph 151, mentioned the cases already cited and the difference between the claim under the 1975 Act and the earlier claims under what is now the 1996 Act:
“That in itself is sufficient to distinguish those authorities. In any event, all of these cases depend upon their own particular facts. But in so far as those authorities may be explained by a presumed lack of intent to create legal relations between the clergy and their Church, I cannot accept that there is any general presumption to that effect. The nature of many professions’ duties these days is such that they must serve higher principles and values than those determined by their employers. But usually there is no conflict between them, because their employers have engaged them in order that they should serve those very principles and values. I find it difficult to discern any difference in principle between the duties of the clergy appointed to minister to our spiritual needs, of the doctors appointed to minister to our bodily needs, and of the judges appointed to administer the law, in this respect.”
I do, respectfully, comment on that paragraph later in this judgment.[32]The appellant seeks to distinguish Percy on the facts. In Percy, unlike the present case, “terms and conditions” were supplied setting out the length of the appointment, the minimum salary payable, a commitment to provide a manse and meet travelling expenses. In the present case, a level of salary was not assured and depended on collections taken at the local church. The arrangements, it is submitted, were more akin to those in the earlier cases cited.[33]Mr Sendall submits that Percy has not overruled those cases on their facts. On an analysis of the speeches, there is no majority for overruling any of them. Indeed, Lord Nicholls, at paragraph 23, stated:
“A further strand in the authorities, most notably in the judgment of Mummery LJ in Diocese of Southwark v Coker [1998] ICR 140, concerns the absence of an intention to create legal relations. There are indeed many arrangements or happenings in church matters where, viewed objectively on ordinary principles, the parties cannot be taken to have intended to enter into a legally-binding contract. The matters relied upon by Mr Parfitt in President of the Methodist Conference v Parfitt [1984] IRLR 141 are a good example of this. The nature of the lifelong relationship between the Methodist Church and a minister, the fact that he could not unilaterally resign from the ministry, the nature of his stipend, and so forth, all these matters made it impossible to suppose that any legally-binding contract came into being between a newly-ordained minister and the Methodist Church when he was received into full connection. Similarly with the church’s book of rules relied on by the Reverend Colin Davies in Davies v Presbyterian Church of Wales [1986] IRLR 194. Then the rebuttable presumption enunciated by the Lord President in the present case, following Mummery LJ’s statements of principle in Diocese of Southwark v Coker [1998] ICR 140, 147, may have a place. Without more, the nature of the mutual obligations, their breadth and looseness, and the circumstances in which they were undertaken, point away from a legally binding relationship.”

Lord Nicholls added:

“24. But this principle should not be carried too far. It cannot be carried into arrangements which on their face are to be expected to give rise to legally-binding obligations. The offer and acceptance of a church post for a specific period, with specific provision for the appointee’s duties and remuneration and travelling expenses and holidays and accommodation, seems to me to fall firmly within this latter category. 25. Further, in this regard there seems to be no cogent reason today to draw a distinction between a post whose duties are primarily religious and a post within the church where this is not so. In President of the Methodist Conference v Parfitt [1984] IRLR 141, 144 Dillon LJ noted that a binding contract of service can be made between a minister and his church. This was echoed by Lord Templeman in your Lordships’ House in Davies v Presbyterian Church of Wales [1986] IRLR 194, 196. Lord Templeman said it is possible for a man to be employed as a servant or as an independent contractor to carry out duties which are exclusively spiritual.”
I have already cited the general proposition then stated by Lord Nicholls at paragraph 26.[35]Lord Nicholls’ reasoning, at paragraph 23, is not that of overruling the earlier cases and Davies would not in any case be overruled unless expressly. What Percy does, however, establish is that the fact finding Tribunal is no longer required to approach its consideration of the nature of the relationship between a minister and his church with the presumption that there was no intention to create legal relations. The earlier cases, as explained, do not exclude that possibility; strong statements in Percy leave it open to Employment Tribunals to find, provided of course a careful and conscientious scrutiny of the evidence justifies such a finding, that there is an intention to create legal relations between a church and one of its ministers (Lord Nicholls paragraph 26, Lord Hoffmann paragraph 63, Lord Scott paragraph 137 and Baroness Hale paragraph 151). The Chairman was not bound by authority to reach a different conclusion. It is recognised that a spiritual motivation in working for a church does not necessarily preclude an intention to create legal relations.[36]The guidance to be followed is, in my view, that stated by Lord Nicholls at paragraphs 23 to 26 of his speech in Percy. It was found that there was in Percy an intention to create a legally binding relationship but the earlier authorities were not overruled. As Dillon LJ stated in Parfitt, “the spiritual nature of the work and the spiritual discipline under which it is performed must be very relevant considerations when it has to be decided whether or not there is a contractual relationship.” That remains, in my view, a principle of the law of England and Wales. It is a reflection of the principles stated in Article 9 of the European Convention on Human Rights (“the Convention”). Article 9 provides:
“1. Everyone has the right to freedom of thought, conscience and religion, this right includes freedom to change his religion or belief and freedom, either alone or in community with others and in public or private, to manifest his religion or belief, in worship, teaching, practice and observance. 2. Freedom to manifest one's religion or beliefs shall be subject only to such limitations as are prescribed by law and are necessary in a democratic society in the interests of public safety, for the protection of public order, health or morals, or for the protection of the rights and freedoms of others.”
[37]The importance of Article 9 in domestic law is underlined by section 13(1) of the Human Rights Act 1998 which provides:
“If a court’s determination of any question arising under this Act might affect the exercise by a religious organisation (itself or its members collectively) of the Convention right to freedom of thought, conscience and religion, it must have particular regard to the importance of that right.”
[38]The scope and effect of Article 9 was considered by the ECtHR in Kokkinakis v Greece (1993) (17 EHRR 397). The defendant was convicted for proselytism contrary to Greek law. He claimed (amongst other things) a breach of Article 9 and the court held, by a majority of 6 to 3, that there had been a breach.[39]The court stated, at paragraph 31:
“As enshrined in Article 9, freedom of thought, conscience and religion is one of the foundations of a ‘democratic society’ within the meaning of the Convention. It is, in its religious dimension, one of the most vital elements that go to make up the identity of believers and of their conception of life, but it is also a precious asset for atheists, agnostics, sceptics and the unconcerned. The pluralism indissociable from a democratic society, which has been dearly won over the centuries, depends on it. While religious freedom is primarily a matter of individual conscience, it also implies, inter alia, freedom to ‘manifest [one’s] religion.’ Bearing witness in words and deeds is bound up with the existence of religious conventions.”
At paragraph 36, the court held that the sentence of the Greek court:
“Amounts to an interference with the exercise of Mr. Kokkinakis’ right to ‘freedom to manifest’ [his religion or belief].”
Such interference was held to be contrary to Article 9 unless it was ‘prescribed by law’, directed at one or more of the legitimate aims in paragraph 2 of Article 9, and necessary in a democratic society for achieving them. The majority held that the measure complained of was ‘prescribed by law’ within the meaning of Article 9(2) and was in pursuit of a legitimate aim under the article, namely the protection of the rights and freedom of others. As to whether it was ‘necessary in a democratic society’, the majority held, at paragraph 48:
“Scrutiny of section of the Act 1363/1938 shows that the relevant criteria adopted by the Greek legislature are reconcilable with the foregoing if and in so far as they are designed only to punish improper proselytism, which the court does not have to define in the abstract in the present case.”
[40]The court concluded, at paragraph 49, that there was a breach of Article 9:
“The Court notes, however, that in their reasoning the Greek courts established the applicant's liability by merely reproducing the wording of section 4 and did not sufficiently specify in what way the accused had attempted to convince his neighbour by improper means. None of the facts they set out warrants that finding. That being so, it has not been shown that the applicant's conviction was justified in the circumstances of the case by a pressing social need. The contested measure therefore does not appear to have been proportionate to the legitimate aim pursued or, consequently, 'necessary in a democratic society ... for the protection of the rights and freedoms of others’.”
[41]Judge Martens agreed that there had been a breach of Article 9 but “for reasons other than those relied on by the Court”.

Judge Martens stated, at his paragraph 14:

“The basic principle in human rights is respect for human dignity and human freedom. Essential for that dignity and that freedom are the freedoms of thought, conscience and religion enshrined in Article 9(1). Accordingly, they are absolute. The Convention leaves no room whatsoever for interference by the State. These absolute freedoms explicitly include freedom to change one's religion and beliefs. Whether or not somebody intends to change religion is no concern of the State's and, consequently, neither in principle should it be the State's concern if somebody attempts to induce another to change his religion. 15. There were good reasons for laying down in Article 9 that freedom of religion includes freedom to teach one's religion: many religious faiths count teaching the faith amongst the principal duties of believers. Admittedly, such teaching may gradually shade off into proselytising. It is true, furthermore, that proselytising creates a possible 'conflict' between two subjects of the right to freedom of religion: it sets the rights of those whose religious faith encourages or requires such activity against the rights of those targeted to maintain their beliefs. In principle, however, it is not within the province of the State to interfere in this 'conflict' between proselytiser and proselytised. First, because - since respect for human dignity and human freedom implies that the State is bound to accept that in principle everybody is capable of determining his fate in the way that he deems best - there is no justification for the State to use its power 'to protect' the proselytised (it may be otherwise in very special situations in which the State has a particular duty of care, but such situations fall outside the present issue).”
In principle, however, it is not within the province of the State to interfere in this 'conflict' between proselytiser and proselytised. First, because - since respect for human dignity and human freedom implies that the State is bound to accept that in principle everybody is capable of determining his fate in the way that he deems best - there is no justification for the State to use its power 'to protect' the proselytised (it may be otherwise in very special situations in which the State has a particular duty of care, but such situations fall outside the present issue).” 42. Having stated that freedom of religion includes freedom to teach one’s religion,

Judge Martens added:

“To allow States to interfere in the 'conflict' implied in proselytising by making proselytising a criminal offence would not only run counter to the strict neutrality which the State is required to maintain in this field but also create the danger of discrimination when there is one dominant religion. The latter point is tellingly illustrated by the file that was before the Court.”
[42]In justifying that conclusion, Judge Martens stated, at paragraph 16, that the State was “bound to restrict neutrality in religious matters”. He also stated that “the rising tide of religious intolerance makes it imperative to keep the State’s powers in this field within the strictest possible boundaries”.[43]Thus freedom of religion is one of the foundations of a democratic society, a vital element in a believer’s conception of life, and implies freedom to manifest one’s religion. Judge Martens developed the point and stressed the need to restrict the State’s powers to interfere with the manifestation of religious beliefs and practices.[44]The present case is concerned not with proselytising but the principles stated apply equally in my view to a consideration of the relationship between a church and its ministers and whether it may be enforced in the courts of the State. The theme running through the earlier cases reflects the underlying principle stated in Article 9(1).[45]As Waterhouse J put in Parfitt (adopted by May LJ in this court), at page 186G:
“The starting point of any consideration of the relationship between the Methodist Church and its ministers must be an examination of the faith and doctrine to which they subscribe and they seek to further. The concept of a minister as a person called by God, a servant of God and the pastor of His local church members seems to me to be central to the relationship.”
[46]For those reasons, the principle stated in Article 9 does require a fact finding Tribunal to adopt a different approach to the evidence from that in a context in which religious practices and observance are not present. Article 9, which does not appear to have been cited in Percy, requires that respect be given to the “faith and doctrine” (as Waterhouse J put it) of the particular church, which may run counter to there being a relationship enforceable at law between the priest, curate or minister and the church. (Considerations under Article 9(2) and Section 203 of the 1996 Act may arise, but there is no need to consider them in this appeal).[47]The religious beliefs of a community may be such that their manifestation does not involve the creation of a relationship enforceable at law between members of the religious community and one of their number appointed to minister to the others, whether the appointment is by the local congregation or under an episcopal form of government. The law should not readily impose a legal relationship on members of a religious community which would be contrary to their religious beliefs. These beliefs and practices may be such, in the context of a particular church, that no intention to create legal relations is present. To take them into account does not involve any departure from ordinary contractual principles, especially in the light of Article 9.[48]I accept, of course, that the ministry of religion is not the only profession in which higher principles and values are served (Baroness Hale in Percy at paragraph 151). Moreover, the serving of higher principles does not, as the earlier cases and Percy demonstrate, (see paragraph 35 above), of itself prevent the formation of a contract of employment. However, the relationship within which those principles are served may vary from profession to profession. (Indeed the relationship between a judge and his paymaster is normally different from that between a doctor and his paymaster). The religious beliefs held in a church may throw light on the nature of the relationship between it and its ministers.[49]Further, the contents of the church’s “book of rules”, to adopt Lord Templeman’s phrase in Davies may, as in Davies and Parfitt, first reflect the general principle already stated and throw light on whether there was an intention to create legal relations. Secondly, they may also throw light on whether the relationship is “capable of formulation in terms of a contract between identifiable parties” (Waterhouse J in Parfitt).

Conclusion

[50]The Chairman was the fact finding Tribunal and her findings of fact are clearly and carefully set out. On these findings the Chairman was, in my judgment, entitled to reach the conclusions she did, first that there was an intention to create legal relations, though I acknowledge that the treatment of the spiritual dimension was sparse, and, secondly, that the contract was a contract of employment. I agree with the conclusion of the EAT. The Chairman was not precluded in this case by the nature or contents of the minutes, or the absence of a formal contract, from reaching those conclusions.[51]The duties as pastor at Harrow were found to be substantial, although a discretion in the manner of performance was present, as would be expected. The standards to be expected of a pastor, and guidelines as to what the pastor was expected to do, are set out in the minutes. There was an obligation to report regularly to the national office. Salary was paid from that office; the respondent was described as an employee on the pay advice slips and income tax and national insurance contributions were deducted. The Chairman was entitled to conclude that the contract found to exist was a contract of employment.[52]Further, a ministers’ seminar was held in March 2003 and a document (cited by the Chairman) entitled ‘Legal Requirements and Church Accounting’, signed by Bishop McLeod, emerged from it. While it provided that ministers were office holders and not employees and “technically they do not receive a salary, they receive a stipend,” it was recognised, at paragraph 4.8.2, that “currently the government is reviewing the employment status of ministers and I suspect in the near future there will be some modification to minister’s employment status, but until then Ministers remain office holders as opposed to employees.” It is significant that the possibility is viewed with apparent equanimity and without reference to it being contrary to the appellant’s religious tenets.[53]I do not consider that the dependence of salary on local collections, in the context of a prosperous local church such as Harrow, negatives the existence of a contract of employment. It was a factor the Chairman had in mind, but not a decisive factor, as alleged by the appellant. Obligations are placed on church members to contribute substantially to their local church.[54]It was a ground of appeal that it was not established that the appellant, rather than either the local church or the Church of God in the USA, was the employer. On the evidence and the Chairman’s findings, I do not consider either proposition to be tenable.[55]It will be clear from my earlier statements that upholding the Employment Tribunal’s conclusions and decision in this case does not involve a general finding that ministers of religion are employees. Employment Tribunals should carefully analyse the particular facts, which will vary from church to church, and probably from religion to religion, before reaching a conclusion.[56]For the reasons I have given, and while upholding the relevance of religious beliefs when the present issues are being considered, I would dismiss this appeal.

Lady Justice Arden :

[57]I agree with the judgment of Pill LJ that for the reasons given by him in paragraphs 50 to 55 of his judgment the tribunal's decision that there was on the facts an intention to create legal relations and that the contract was one of employment cannot be successfully challenged on appeal. I further agree that by reason of the submission of the appellant, summarised at [18] of his judgment, art 9 of the European Convention on Human Rights (the Convention) is engaged in this case, that is to say, I accept for the reasons given below that part of the appellant’s contentions on appeal fell within the scope of the right guaranteed by art 9. The application of art 9 is a novel point which, for the reasons which I explain below, did not arise in Percy v Church of Scotland [2006] 2 AC 28. Likewise art 9 was referred to only briefly in submissions before us.

Article 9 of the European Convention on Human Rights

[58]As Pill LJ has explained, art 9 is an important article in the Convention because it guarantees freedom of conscience and freedom to manifest one's religion. Protection of this freedom is essential for the continued existence of a plural and democratic society governed by the rule of law. The Convention seeks to uphold such a society by means of the guarantees contained in it. The right to freedom of religion can be exercised in private or in public. It can be exercised alone or in common with others and accordingly a religious organisation can claim to the right to manifest religion on behalf of its adherents.[59]The question with which I am concerned on this appeal is the extent to which, if at all, art 9 is engaged in an employment dispute between a religious body and one of its ministers. I have myself derived little assistance from asking whether art 9 is reflected in our domestic law. Accordingly, I prefer to concentrate on the question whether art 9 is engaged and it is to that issue, which in turn.[60]One aspect of freedom of religion is the freedom of a religious organisation to be allowed to function peacefully and free from arbitrary state intervention. This aspect of the freedom has been said to derive from article 9, interpreted in the light of article 11, but it is properly described as derived from art 9: Hasan and Chaush v Bulgaria (2002) 34 EHHR 55 at [62] and [64]. I will set out the first of those paragraphs from the Hasan case:
“[62] The Court recalls that religious communities traditionally and universally exist in the form of organised structures. They abide by rules which are often seen by followers as being of a divine origin. Religious ceremonies have their meaning and sacred value for the believers if they have been conducted by ministers empowered for that purpose in compliance with these rules. The personality of the religious ministers is undoubtedly of importance to every member of the community. Participation in the life of the community is thus a manifestation of one’s religion, protected by Article 9 of the Convention. Where the organisation of the religious community is at issue, Article 9 must be interpreted in the light of Article 11 of the Convention which safeguards associative life against unjustified State interference. Seen in this perspective, the believer’s right to freedom of religion encompasses the expectation that the community will be allowed to function peacefully free from arbitrary State intervention. Indeed, the autonomous existence of religious communities is indispensable for pluralism in a democratic society and is thus an issue at the very heart of the protection which Article 9 affords. It directly concerns not only the organisation of the community as such but also the effective enjoyment of the right to freedom of religion by all its active members. Were the organisational life of the community not protected by Article 9 of the Convention, all other aspects of the individual’s freedom of religion would become vulnerable.”
[61]A religious organisation may, as one of its beliefs, consider that ministers should not have contracts of employment or that the state should not interfere in the way they conduct their organisation. If the state interferes with that belief, there may be an interference with the group’s article 9 right (though the interference will not constitute a violation of art 9 if the conditions in art 9(2) are satisfied). The decisions of this court in Rogers v Booth [1937] 2 All ER 751 and more recently in Koeller v ColegElidyr (Camphill Communities Wales) Ltd [2005] BCLC 379 provide examples of cases where it was part of the beliefs of a particular group that there should be no contractual relations between those who work for the religious organisation and the organisation itself. (The same might also apply to any question of the existence of contractual relationships between the members of the organisation). In the Koeller case, for instance, the evidence showed that the communities in question considered that the contractual relationship between them and their co-workers would be inconsistent with the philosophy underpinning the way that they were run. Thus I agree with Pill LJ when he says that “The religious beliefs held in a church may throw light on the relationship between it and its ministers.” ([48])[62]In my judgment, as Pill LJ indicates in [44] of his judgment, art 9 is engaged if one of the beliefs of a religious organisation is that, for instance, all adherents are equal and participate in the church’s affairs as such, provided that this belief is in the context of all the factual background inconsistent with the implication of an employment relationship. Mr Barnett, for Rev. Stewart, submitted that for art 9 to be engaged it had to be an express tenet of the religion that no contract is formed between the minister and the religious body or some part of it. I would not accept that submission. It is sufficient that the beliefs are found to be inconsistent with the implication of any contract or alternatively any contract of employment. However, in this particular case, the tribunal came to a different conclusion looking at the evidence as a whole. In my judgment, for the reasons given by Pill LJ, it was entitled so to do. But the fact that in an employment dispute one party to the litigation is a religious body or that the other party is a minister of religion does not of itself engage art 9. There must be religious beliefs that are contrary to or inconsistent with the implication of the contract or a contract of employment. It follows that the implication of a contract of employment is not automatically an interference with religious beliefs. The question of what are the religious beliefs of a particular group is within the law fact-finding function of the court or tribunal. As with any question of fact, the tribunal must consider all the relevant considerations carefully and conscientiously.

Contractual principles

[63]The appellants also relied on the spiritual duties owed by a minister. In some of the earlier authorities, including President of the Methodist Conference v Parfitt [1984] ICR 176, at 183H, there are statements suggesting that there is a presumption against holding that a minister and the religious organisation to which he belongs intend to enter a legally binding contract of employment. Although Lord Nicholls does not exclude the possibility that in some circumstances such a presumption might be appropriate, Lord Hope, with whom Lord Scott agreed, and Baroness Hale reject such a presumption [121], [137] and [1513]. In so doing, Baroness Hale seeks to reverse the trend demonstrated by those decisions, which had the effect of excluding ministers of religion from increasingly important legislation in the employment field: see eg Davies v Presbyterian Church of Wales [1986] 1 WLR 323, which by implication was decided on the basis of lack of intention to enter into contractual relations. The fact that religious communities like those in Koeller exist is one of the reasons why it will continue to be necessary under domestic law to decide the question whether by virtue of that belief there was no intention to create legal relations in some cases involving ministers of religion.[64]In some of the earlier authorities it is said that the existence of spiritual duties is "very relevant" or "central". In my judgment, the existence of spiritual duties is certainly a matter to be taken into account but the weight to be given to them must depend on the overall assessment of the evidence. (I illustrate this with an example below). As Baroness Hale explains in Percy, the mere fact that a minister performs spiritual duties does not mean that he does not have a contract of employment with the organisation to which he ministers. Rather more is required. The same point is made by Lord Hoffmann, in his (dissenting) judgment at [61]. Lord Nicholls and Baroness Hale in particular, with whom Lord Scott agrees, consider that ministers of religion should in appropriate cases have the benefit of modern employment legislation: see per Lord Nicholls at [26] and per Baroness Hale at [148]. In this respect the decision in Percy is an instance of the courts fulfilling their time-honoured role of updating the common law and making it more suitable for modern circumstances. But neither Lord Hoffmann nor Baroness Hale, in my judgment, is addressing the exceptional situation in which the finding of a contract (or of a contract of employment) would offend a religious belief. No such belief was asserted in Percy. That case turned principally on the questions whether there was any presumption against the existence of a contract in the case of ministers of religion, and whether the dispute was a spiritual matter assigned by statute to the courts of the Church of Scotland. I can illustrate my point that the weight to be given to spiritual duties must depend on the circumstances by taking the following example. In Percy, the appellant was an associate minister appointed by the central governing body of the Church of Scotland. Her principal role was to assist the minister of certain linked parishes. (I leave out of account her additional role as a prison chaplain). It would, as it seems to me, have been easier to imply a contract of employment in Percy if the appellant had, instead of being an associate minister, been on the staff of a school, holding services in the school chapel and providing support for students and so on. This would be so even though in both cases she owed spiritual duties. As a school chaplain, the inference of an employment relationship would have been stronger because of the evidence that she was on the school staff and so on.

Conclusion

[65]Save as appears above, I agree with the judgment of Pill LJ and with the order he proposes.

Lord Justice Lawrence Collins :

[66]I agree with Pill LJ that the appeal should be dismissed. I agree with Pill and Arden LJ that religious beliefs may throw light on the relationship between a religious institution and its ministers. If there is a religious belief that there is no enforceable contractual relationship, then that is a factor in determining whether the parties must be taken to have intended into a legally binding contract. If, contrary to the belief of one of the parties that there is, or should be, no contract, the court gives the other party contractual or statutory remedies, I am doubtful whether that could be regarded as a limitation on, or interference with, the right to freedom of thought, conscience and religion under Article 9.

Cited in 4 later judgments