Swithland Motors Plc v Clarke & Ors [1993] UKEAT 329_92_1407

BAILII case number: [1993] UKEAT 329_92_1407

Case No Appeal No.EAT/329/92

Venue 58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

Between

Swithland Motors Plc

Clarke & Ors

Date 14 July 1993

HIS HONOUR JUDGE HULL QC This is an appeal by Swithland Motors Plc ("Swithland") against the decision, on a preliminary issue, of the Industrial Tribunal sitting at Birmingham on 7th April 1992. By its Decision dated 13th April 1992 the Industrial Tribunal held that it had jurisdiction to entertain the complaints of sex discrimination made by Mr Johnson, Mr Smith, Mr Clarke and Mr Tudor, car salesmen formerly employed by Colmore Depot Ltd ("Colmore").

Colmore went into Receivership on 20th December 1990, when the Midland Bank appointed Receivers. The Receivers wished to sell Colmore's assets and entered into negotiations with Swithland and, we were told, another company or companies. These negotiations bore fruit on 5th March 1991 when a formal agreement was signed. On the next day, 6th March, the four Applicants were informed that they were dismissed by Colmore and were not to be employed by Swithland.

This preliminary issue was one of a number of preliminary issues considered by the Industrial Tribunal in connection with the sale of Colmore's assets, and there was a lengthy hearing from 9th March to 20th March 1992 in which the Industrial Tribunal apparently considered the question of whether the undertaking had been transferred. At that hearing evidence was received from one of the Applicants, Mr Johnson, and other witnesses. One of the many complaints made by Swithland on the present appeal is that the Industrial Tribunal relied on evidence adduced on that occasion in deciding the preliminary issue with which we are concerned.

On 7th April 1992 the Industrial Tribunal heard the evidence of Mr Sharratt, finance director of Swithland, and, apparently, indicated that it did not need to hear any evidence from the four Applicants. As a result none of the four gave evidence.

The Industrial Tribunal's findings of fact were as follows:

"(a) Negotiations by Swithland for the acquisition of what we have held to be mere assets of Colmore were well in hand by mid-February 1991. The Receivers of Colmore were anxious for obvious reasons that Swithland would take under its wing the entirety of Colmore's staff employed in the depots which they were intent on acquiring. For reasons which we will not dwell on at this preliminary stage Swithland were reluctant to do so in the case of perhaps a dozen. (b) Interviews were arranged. Messrs Clarke, Johnson and Smith were interviewed on 14th February and Mr Tudor on 21st February. It is common ground that the Receivers had imposed an embargo on Swithland which prevented them communicating with the employees at any time after the interview had taken place until the actual acquisition. For that reason none of the Applicants were told of the outcome of their interviews either on the day of the interview or subsequently. They did not know until the day of the takeover, 6th March, that they were not to be taken into Swithland's employment. Mr Clarke presented his complaint on 23rd May; Mr Johnson on 18th May; Mr Smith on 17th May; Mr Tudor on 4th June 1991. (c) There is one other matter to which we should refer, a letter dated 22nd February 1991 from Swithland to their solicitors listing those employees who were to be offered employment which letter was copied to Edge & Ellison, the solicitors to the Receivers. It is not known whether the Receivers were informed in person but Mr Goulding does not rely upon that for the purposes of his submission."

Mr Sharratt's evidence was that the interviews were conducted in good faith to see whether the Applicants should be employed by Swithland; it was decided, however, on the days of their respective interviews, that none of them should be employed. As found by the Industrial Tribunal, none of them learned of the fact that they were to be dismissed by Colmore, and not employed by Swithland, until 6th March. That finding is complained of by Mr Goulding, counsel for Swithland, as being unsupported by evidence.

Under S.6(1) of the Sex Discrimination Act 1975, it is unlawful for a person, in relation to employment by him at an establishment in Great Britain, to discriminate against a man by, inter alia, refusing or deliberately omitting to offer him employment. Under S.63(1) of the Act, a complaint that a person has committed such an act of unlawful discrimination may be presented to an Industrial Tribunal.

Under S.76 of the Act:

"(1) An Industrial Tribunal shall not consider a complaint under S.63 unless it is presented to the tribunal before the end of the period of three months beginning when the act complained of was done ...

(5) A ... tribunal may nevertheless consider any such complaint which is out of time if, in all the circumstances of the case, it considers that it is just and equitable to do so.

(6) ...

(c) a deliberate omission shall be treated as done when the person in question decided upon it, and in the absence of evidence establishing the contrary a person shall be taken for the purposes of this section to decide upon an omission when he does an act inconsistent with the omitted act or, if he has done no such inconsistent act, when the period expires within which he might be reasonably have been expected to do the omitted act if it was to be done."

The Industrial Tribunal's decision deals with these matters as follows:

"5. Mr Goulding's first submission is that the date from which the time prescribed by section 76(1) began to run, was the date of the interviews of Messrs Smith, Clarke and Johnson, being the date when, according to Mr Sharratt, whose evidence has not been contradicted, it was decided not to employ them. In the case of Mr Tudor it was the 22nd February, the date after his interview being the day the decision not to employ him was finally taken. If that is right then in the case of Smith, Clarke and Johnson the time limit expired on 13th May and in the case of Mr Tudor on 21st May and all of the applications are out of time.

6. In the judgment of this tribunal, much as we feel inclined to say that commonsense dictates that it cannot be right, we are satisfied that Mr Goulding's submission is correct on the strict interpretation of section 76(6)(c). The wording of that subsection is, to say the least, unhelpful and obscure. It might be supposed that an omission is deemed to have occurred when an action contrary to that omission is taken. That would certainly be sensible because until an inconsistent or contrary action is taken there is nothing to tell the person affected by the omission that he has something of which to complain. However section 76(6) says that such is only to be the moment from which time begins to run "in the absence of evidence establishing the contrary". We have such evidence from Mr Sharratt, which Miss Norman has not, and certainly could not, challenge, that the decisions were taken on 14th or 22nd February. Therefore although there is no way that the applicants could have known it, time began to run against Clarke, Johnson and Smith on the 14th and Tudor on the 22nd of February. These applications are therefore out of time."

The Tribunal went on to hold that it would nonetheless be just and equitable to consider the complaints under S.76(5) of the Act, a matter with which we deal later in this decision.

Mr Tudor was not represented at the Industrial Tribunal hearing, but further grounds for resisting Swithland's appeal were settled for him by Miss Norman and received by us on 29th June 1992 (p.19 of our bundle). In this document Mr Tudor averred that a decision not to offer employment in the circumstances of the present case could not be said to be reached until circumstances arose which made it possible to offer that employment, in this case upon the signing of the asset sale agreement; until then there was merely a conditional decision predicate upon the successful conclusion of negotiations between the Receivers and Swithland.

It appeared to us that we should decide this issue of law at the outset of the appeal, since it might dispose of the matter.

Mr Goulding conceded that the decision by Colmore not to offer employment to the Applicants was conditional on the take-over proceeding; but even if it did not proceed, the Applicants could still have made a complaint under S.63, for the cause of action crystallised when the decision was made. It was not essential for the decision to be known to the complainants; indeed they might never know of such a decision, and the cause of action might arise and become time-barred long before the take-over actually occurred. On the other hand, the cause of action might become immediately apparent; thus Swithland's representatives might have said to each of the Applicants at their respective interviews:

"We shall never employ you because we employ only women salespersons"

. Why, in such circumstances should a complaint not be made immediately? Mr Goulding referred to Clarke v. Hampshire Electroplating Co Ltd

[1992] ICR 312

, and pointed out that the question of when the cause of action arose was not actually decided in that case.

Miss Norman appeared before us only for Mr Johnson. She adopted on his behalf the averment made for Mr Tudor. She submitted that a number of extraordinary results would follow if Swithland's alleged intention to discriminate unlawfully were to found a cause of action before the take-over, when Swithland were in no position to give effect to their unlawful intention and might never be. Such an intention might be formed by several potential purchasers, only one of whom could succeed in acquiring the undertaking; would causes of action come into existence and survive against the unsuccessful bidders as well as the successful?

We reject Mr Goulding's submissions. Section 76 of the Act is concerned with limitation, not with the creating or definition of a cause of action. The cause of action is created by S.6. In our judgment the unlawful act of discriminating against a man or woman by omitting to offer him or her employment could not be committed until Swithland was in a position to offer such employment, ie on the completion of the take-over on 5th March 1991. The suggestion that there was a cause of action before that date, created simply by operation of S.76(6), appears to us to be fanciful. Whoever was responsible for deciding on the deliberate omission might, before 5th March 1991, have had one or more changes of mind. This, to us, underlines the absurdity of supposing that a cause of action could arise before that date.

We therefore turn to the construction of S.76(6) itself. If our decision on the moment when the cause of action arises is correct, then it appears to us that the only sensible construction of S.76(6) is that "decides" means "decides at a time and in circumstances when he is in a position to implement that decision" and not "decides on the hypothetical basis that he will implement the decision when and if circumstances arise in which he is able to do so".

We therefore hold that the Industrial Tribunal was mistaken in law. The Applicant's cause of action arose at the earliest on 5th March 1991 and their applications, made variously on 17th, 18th and 23rd May and 4th June are all within the time limited by S.76 of the Act.

Mr Goulding submitted that only Mr Tudor and Mr Johnson should be permitted to take advantage of this point. Since Mr Clarke and Mr Smith had not joined in the cross-appeal, the findings that their claims were presented out of time should stand. We find this submission to be misconceived. Now that we have construed S.76(6), we must deal with the date for each of the salesmen on the true meaning of the subsection, as we find it to be.

Having (as we have held) misconstrued the subsection, the Industrial Tribunal proceeded to consider whether it should under S.76(5) entertain the applications notwithstanding that they were out of time. In view of the way in which we have construed S.76 the question whether the Industrial Tribunal's exercise of its discretion can be attacked is not material to the decision of this appeal; but Mr Goulding informed us that it was Swithland's intention to appeal and he asked us to consider this part of the case as well.

The Industrial Tribunal dealt with the question of extending time as follows:

"7. Is it however, just and equitable that the time limit should be extended to accommodate them? Mr Goulding takes three separate points, one of which he directed, as we understand it, to the question of from when time runs but in our judgment it is more happily in context in considering whether it is just and equitable to extend the time limit. The first limb of his submission was that from their own pleadings it is clear that the applicants take the view that the interviews were more or less a charade, that there is material in each of the originating applications derived both from the interviews and from press publicity emanating from Swithland which predated the interviews, which demonstrate that from the date of the interview each applicant knew that it was likely that he would not be appointed because of his sex. They cannot therefore claim to have had notice of Swithland's decision only on the 6th March.

8. In our judgment what Mr Goulding has drawn to our attention amounts to no more than evidence upon which the applicants could subsequently rely in support of their complaints of discrimination. They do not amount to causes of action and it is causes of action with which we are concerned. A complaint of sex discrimination based solely upon the interviews, commenced before the decision had been communicated to the complainant would unquestionably have been condemned by the respondents as disclosing no cause of action. Moreover Mr Sharratt has emphasised in evidence today that these interviews were not a sham. The precise question which he was asked by Miss Norman and his answer are worth noting. Miss Norman said "Well, there really never was a question of offering employment to Clarke and Johnson was there". Mr Sharratt assured her that there was. As we know from the evidence given in the previous hearing this was not a case of these men simply being interviewed to see if they could be taken on as sales persons. All the staff interviewed by Swithland were interviewed, to see if they could be fitted anywhere into Swithland's organisation.

9. Alternatively, Mr Goulding submits, on the assumption that the tribunal will find that the date from which time runs was the 14th and 22nd February, but that the applicants were not told until 6th March, the tribunal should not automatically give the applicants three months from the 6th March within which to commence these proceedings. He submits that it must have been plain that the decision of which the applicants complain was not one which was taken on the 6th March but on a previous occasion and was merely being communicated to them on the 6th March. Time runs not from the date of communication but from the date of decision and the applicants were therefore on notice that they were seeking to complain of a decision which predated, by a factor which they could not possibly know, the 6th March. They should therefore have acted with expedition. The onus is upon them to demonstrate that it is just and equitable for the tribunal to extend the time limit.

10. The third limb of his submission was that at the very latest the applicants knew by the 22nd February that the decision had been taken and therefore whatever view the tribunal take of how much additional time to permit the applicants that time must be based on the 22nd February as its starting date and not the 6th March. In taking the 22nd February as the starting point for the effluxion of time Mr Goulding relies on the letter between firstly Swithland and its solicitor and the onward transmission of that letter to the solicitors to the receivers. Mr Goulding submits that the communication to the solicitors as agents for the receivers fixes not merely the receivers with notice but also the applicants with notice because the receivers were acting as the applicants agents for the purposes of attempting to secure employment with Swithland.

11. The Tribunal are not satisfied that the receivers were acting as any such thing vis a vis the applicants. There is no evidence of any express or implied appointment of the Receivers as agents for the applicants for the purpose of obtaining employment. The highest at which the evidence can be put is that the Receivers merely facilitated the interviews with Swithland. Even if the Receivers were their agents, it seems to us to be a most unattractive argument, in the context of the mischief at which the Sex Discrimination Act is aimed, to say that notice to an agent binds the principle when there is no evidence that the principle ever became aware of that notice. It is doubly unattractive in this case because the unchallenged evidence is that the receivers had intimated to Swithland that the applicants should not be informed of any decision. It was therefore known to both Swithland and the Receivers that the information contained in the letter would not be communicated to the applicants. It is not therefore open to the respondents to rely upon notice to an agent which they knew in advance would not be communicated to the principle. There is in our judgment therefore no substance in the 22nd February argument, either as to the date from which time runs for the purposes of S.76(1) or on the question of justice and equitability. [sic]

12. It would, in our judgment, be quite wrong to take any view other than that the applicants were entitled to regard the 6th March as the date from which time was running against them, even if, as a matter of strict law, that was incorrect. Because of the decision of the receivers that they should know nothing of their fate until that day, a decision of which Swithland were fully aware, the 6th March, in our judgment, must be the date from which we begin to judge the applicants actions. It is an absolute common-place in all claim of sex or race discrimination that the date from which time is regarded as running where the complaint is of non-employment is the date of the communication of the decision to the unsuccessful candidate. That date frequently post-dates the decision. It may, as a matter of strict law, be incorrect but it is the date which any adviser, ACAS, Race Relations Board, Equal Opportunity Commissions, Solicitors or whoever is likely to give the person aggrieved.

13. It seems to us therefore that as an absolute minimum, it must be just and equitable to allow these applicants three months from the date upon which this decision was communicated to them. That date was the 6th March. We do not doubt for one moment (although we have not felt it necessary to hear evidence as the matter seems to us to be self-evident) that had they sought advice that is the advice they would have been given. We really do not see what other advice they could have been given. The only one who knew the date on which this decision was taken was the respondents. They did not tell anybody at the time nor subsequently until these proceedings commenced as far as we know. The argument that the applicants and their advisers should have been on notice that time was running from a date prior to the 6th March, which they could not possibly determine and they should therefore have acted with greater expedition, is singularly lacking in attraction.

14. We are therefore satisfied firstly, that each of these complaints is out of time. Secondly, that as all them were presented within the three month period commencing with the 6th March, for the reasons which we have given it is just and equitable that they should proceed."

Mr Goulding made a number of submissions.

First, he submitted to us that there was evidence that the Applicants had been told at their interviews, or before, that Swithland only employed female sales persons, and that they concluded that the interviews were a sham. Accordingly, they were aware from the date of their interviews that they were being discriminated against and could have begun proceedings at once. Mr Goulding said that it would not be just and equitable to extend time in these circumstances.

He pointed to the contents of Johnson's complaint at p.30, of Smith's complaint at p.34, of Clarke's complaint at p.40 and of Tudor's complaint at p.42.

As we have said, none of these Applicants gave evidence at the hearing of this preliminary issue, apparently because the Chairman told them that it would not be necessary. Accordingly, the evidence of Mr Sharratt, that the the interviews were not a sham, was uncontradicted by any other evidence. We therefore asked Mr Goulding why the Industrial Tribunal should not have accepted Mr Sharratt's evidence on the matter. He replied that the Applicants could, on this topic, rely only on their own evidence and, none having been adduced by them, the Industrial Tribunal was not entitled to have regard to Mr Sharratt's evidence or, apparently, even rely on the ordinary presumption of honesty in holding that the interviews were not a sham. We find Mr Goulding's submission, which is quite unsupported by any authority cited to us, to be misconceived and we reject it.

Then Mr Goulding said that there was no evidence to support the Industrial Tribunal's observations that:

" It was common ground that the receivers had imposed an embargo on Swithland which prevented them from communicating with the employees at any time after the interview had taken place until the actual acquisition. For that reason none of the applicants were told of the outcome of their interviews either on the day of the interview of subsequently. They did not know until the day of the take-over, 6th March, that they were not to be taken into Swithland's employment."

and

"... the unchallenged evidence is that the receivers had intimated to Swithland that the applicants should not be informed of any decision. It was therefore known to both Swithland and the receivers that the information contained in the letter would not be communicated to the applicants."

and boldly asserted that Swithland were not aware of the decision not to tell the Applicants of their fate. He referred to the evidence of Mr Sharratt (p.62) that Swithland were specifically asked by the Receivers not to contact Colmore's employees about their future employment until the deal was complete; which request Swithland evidently accepted and acted on. Mr Goulding submitted that it did not follow that the Receivers were not to tell the employees the position until the deal was completed.

This appears to us to be a question for the Industrial Tribunal which heard Mr Sharratt's evidence; the true view and proper inference might well be that this was a request for confidentiality, on the basis that all the employees were to be kept in the dark not only by Swithland but also by the Receivers. The Industrial Tribunal were, in our judgment, fully entitled to take that view of the evidence.

Mr Goulding contends that the Industrial Tribunal made use of the evidence given during the earlier hearings instead of confining itself to the evidence adduced on 7th April 1992. It is clear from the Chairman's Notes that this did in fact happen. We are, however, not clear about the basis of the complaint. An Industrial Tribunal is expected to proceed in an informal and commonsense way. If, in connected proceedings between the same parties, it has already received certain evidence, we cannot see why it should not made use of that evidence on the second hearing, particularly if no request was made for it to exclude that evidence from its deliberations.

Mr Goulding made further submissions as follows:

The burden of proof was on the Applicants to persuade the Industrial Tribunal that it was just and equitable to extend time. In view of the express language of S.76(5), empowering the Industrial Tribunal to consider an application if in all the circumstances of the case it considers it just and equitable to do so, we are not sure that this submission is correct, but in any event it appears to us to have little importance where the facts have been put in evidence, whether by the respondent or by the applicants.

Time-limits should be construed strictly, since they provide certainty in transactions. We hold that the ordinary rule of construction applies, namely that the words of the statute should if possible be given their ordinary and natural meaning.

The Industrial Tribunal must consider possible injustice to the respondent as well as possible injustice to the applicant. We accept this submission as being self-evident, but note that Mr Goulding was not able to indicate any injustice to Swithland, apart from the matters with which we are now dealing.

Mr Goulding then told us that an Industrial Tribunal should inquire into what professional advice was given to applicants before their applications became time-barred. If the advice were correct, then the applicant had no excuse for failing to observe the time-limit. If it were incorrect, then equally the respondent should not be prejudiced by the applicant acting on it. When it was pointed out that this logic would, on the face of it, make the Industrial Tribunal's inquiry entirely otiose, Mr Goulding said that at any rate the Industrial Tribunal should inquire when the advice was given, as late advice might possibly provide an excuse for a late application. Mr Goulding cited no authority for this inquisitorial duty which his submission would place on the Industrial Tribunal, and we reject the submission. We have no doubt however that an Industrial Tribunal may, in a proper case, take into consideration the fact that advice has, or has not, been available to the applicant; and that an applicant may choose to waive privilege and, if he thinks it right to do so, tell the Tribunal what that advice was.

Mr Goulding then referred to the evidence of Mr Poole, another Colmore employee and of the Applicant, Mr Johnson, both given at the previous hearing and recorded in the Chairman's Notes at pages 58, 59 and 60. He complained that in the case of Mr Poole the Chairman took a note that it had not been put to Mr Poole that he might have known earlier than 6th March that he would be dismissed. It was not put because it was not relevant to the matter into which Tribunal was then inquiring, said Mr Goulding. We think there is justice in this complaint but in view of the unchallenged evidence of Mr Sharratt to which we have referred and in view of the conclusions of the Industrial Tribunal about the embargo on giving information to the employees, it appears to us that this comment of the Chairman has caused no injustice.

Mr Goulding then said that since Swithland had informed the Receivers on 22nd February 1991, in the letter to which we have referred, that none of the Applicants would be employed, this was good notice to the Applicants since the Receivers should be taken to be their agents. When we asked Mr Goulding why the Receivers should accept appointment as agents in a manner which would apparently conflict with their duties both to the bank and to Colmore, he pointed out that the Receivers had arranged for the Applicants to have meetings with Swithland. He was unable to indicate any other matters, or any surrounding circumstances, which might possibly give rise to an inference that the Receivers were the Applicants' agent; and again we have to reject this submission as being unsupported by authority, contrary to all probability and unsupported also by any evidence. Perhaps the strangest part of the submission was Mr Goulding's averment that the Receivers were agents without realising it.

Finally, Mr Goulding complained that the latter part of the Industrial Tribunal's decision assumed that anybody advising the Applicants would have told them that they had three months from the act of discrimination, thus attributing ignorance of the law to ACAS, the Race Relations Board, the Equal Opportunities Commission and the entire profession of solicitors. It appears to us that for the purpose of exercising a wise discretion an Industrial Tribunal is fully entitled to have regard to the maxim "communis error facit jus".

After Miss Norman had dealt with certain of these submissions Mr Goulding, in reply, told us that the failure of the Applicants to give evidence to the Industrial Tribunal should have weighed against them. The Industrial Tribunal was perfectly entitled, having told the Applicants that it did not wish to hear from them, to conclude that their failure gave rise to an adverse inference; this was because the Industrial Tribunal was wrong to say what it did and to indicate that it did not wish to hear the Applicants. We reject this submission also.

In our view the Industrial Tribunal was fully entitled to exercise its discretion in the way which it did. We should all of us have been astonished had it exercised its discretion to insist on strict observance of the time-limits in the circumstances of the present case. Such a decision might well have been attacked as wholly irrational. As it is, we are content to say that on the basis (which as we have said we think is incorrect) that any of the Applicants were out of time, the Tribunal was fully justified in extending time to 5th June.

In the event this appeal is dismissed on the basis of the averment made by Mr Tudor's cross notice.