Hill Samuel Investment Services Group Ltd v Nwauzu [1994] UKEAT 582_93_2204

EAT

Hill Samuel Investment Services Group Ltd v Nwauzu

[1994] UKEAT 582_93_2204 · 1994-04-22

MR JUSTICE MORISON : This is an ex temporare judgment which I am giving on behalf of the Tribunal and accordingly, in accordance with what has become my practice, I like to say at the beginning that I reserve the right to add to, alter, vary or otherwise generally try and improve the language with which I seek to express this our decision.

In a reserved Decision entered in the register on 21 June 1993, an Industrial Tribunal sitting at Liverpool decided that(a) Mr Nwauzu who I will call in this judgment "the Applicant" was a person in the employment of Hill Samuel Investment Services Group Ltd who I will call "the Company" within the definition of employment "in section 78(1) of the Race Relations Act 1976 as amended ("the Act" and that therefore they had jurisdiction to rule on his complaint of unlawful racial discrimination in the employment field under section 4 of the Act,

(b) he had been unlawfully discriminated against by the Company within the meaning of the Act.

By a Notice of Appeal dated 30 July 1993 the Company challenged both the finding on jurisdiction and the Tribunal's subsequent determination of the complaint on the merits. The Company alleged that the Tribunal erred in law and its decision was perverse. Subsequently, at a further hearing, the same Industrial Tribunal awarded the applicant the sum of £3,300 compensation in respect of his unlawful treatment made up of an award of £1,300 for injury to feelings and £2,000 for general damages for loss of earnings. By a Notice of Appeal dated 21 January 1994 the Company contended that the award of £1,300 for injury to feelings was manifestly too high and perverse and the decision to award £2,000 for potential loss of earnings was also perverse and took into account irrelevant matters.

By a Notice of Appeal dated 25 January 1994 the applicant complained that the sum of £2,000 was derisory and the Tribunal had erred in its approach to compensation. Thus there are three appeals before us, two which relate to compensation and one which relates to the Tribunal's first decision on liability. We heard all the appeals together.

The factual background to these appeals may be shortly stated. The applicant is black, a Nigerian by birth who came to this country and pursued studies in banking and achieved the qualification of Associate of the Chartered Institute of Banking, an achievement of which he is justly proud. By a written agreement called "The Company Representative Agreement" the applicant was appointed a representative "for the sole purpose of representing the Company and seeking written applications for or introductions to companies within the Hill Samuel Investment Services Group". In other words, the applicant's job was to persuade members of the public to enter into agreements with the Company under which the member of the public acquired one or more of the various financial products which the Company marketed such as life policies or pension arrangements. He was not allowed to seek from the public applications for products marketed by any other company. He was tied exclusively to the Company's products.

For his services the applicant was entitled to be paid commission. The agreement expressly incorporated provisions of the Company's compliance manual which was not provided to the Industrial Tribunal or to us. Following his appointment the applicant worked from the Company's Liverpool office which serves an area where there is high unemployment. There were originally 34 representatives or "advisers" as the Company prefers to call them but the number was drastically reduced and at the date of the first hearing there were apparently only 10. The applicant's position was terminated as from 20 July 1992, ostensibly because of the applicant's lack of production of business and was confirmed by letter dated 23 July 1992. On the day of the termination the applicant saw a Mr Russell in order to persuade him that his contract should not be terminated and that the previous decision of a Mr Edwards should be overturned.

It appears that the procedure for termination was that the divisional manager, Mr Russell, would fill in an adviser termination recommendation and submit it to head office. We infer that until the recommendation had been accepted, the termination was, so to speak, "in escrow". At all events this was an important interview because it enabled the applicant to make representations to Mr Russell to seek to persuade him not to make the formal recommendation. In the course of that interview, accepted by the Tribunal as an important interview, Mr Russell said to the applicant that in his view this business is not for you and that the applicant should return to the banking industry. Later in the interview Mr Russell made a comment to the effect that "because of your ethnic background and origins you are a massive disadvantage in the industry". There was a dispute as to whether the word "at" was said before the words "a massive disadvantage". The Tribunal noted that the Company did not call Mr Russell to give evidence to deny what the applicant said in his evidence, although Mr Edwards who was there, did give evidence.

Against that background we must consider the points raised on this appeal.

(a) Employment

The relevant findings of the Tribunal are that the definition in the Act goes further than the definition of employment under Employment Protection (Consolidation) Act:

"by "including self-employed people as long as they work under a personal contract for services" [paragraph 5].

On the basis of the wording of the Company Representative Agreement, the Tribunal were satisfied that the definition was wide enough to catch the applicant:

"on the basis that a self-employed person working under a contract for personal services can come within the definition provided that he is not a professional man or genuinely running his own business."

The Company make the following points.(1) the applicant was a genuinely self-employed person and the termination provision permitting immediate termination on either side is only consistent with self-employed status.

(2) He was not required to do any work under the contract.

(3) He was entitled to no salary but only commission and

(4) On the Tribunal's own test, the applicant was a professional man running his own business.

It seems to us that we should follow and adopt the approach to the proper construction of the equivalent provision in Section 82(1) of the Sex Discrimination Act 1975 laid down in Mirror Group Newspapers v Gunning

[1986] ICR page 145

at pages 149F to 151B per Oliver LJ as he then was and pages 155F to 156F per Balcombe LJ. We extract from that authority the proposition that what is contemplated by the legislature is for the Tribunal to look at the agreement and ask itself whether the applicant and the Company have a contract which when looked at as a whole, amounts to a contract, the dominant purpose of which is the execution of personal work or labour, or, which is the same thing, the dominant purpose of which is the personal execution of work or labour.

It seems to us that the Industrial Tribunal adopted the correct approach. We reject the submission that the applicant was not required to do any work. He was set targets for production which he had to achieve else his agreement would be terminated; he was required to attend training sessions if he fell below target and was required to attend mortgage courses and required to complete various documentation. It is artificial and unrealistic to say that there was no obligation on the applicant to work when the reason given for the termination of his agreement was his alleged shortfall in production. Where payment is solely by commission one might not expect there to be an express obligation to work. However, in the circumstances, in order to give business efficacy to it we consider that a term which required the applicant to achieve targets and attend such training courses as the Company might reasonably require, could readily be implied assuming that these matters are not dealt with in the commission schedules, rate book or compliance manual, none of which we have seen.

The Company sells its wares through "agents" who introduce to it business. It could not carry out its business unless their agents were active on their behalf. The Company would not itself be able to satisfy LAUTRO, we think, that it was fulfilling its responsibilities without having the necessary powers to require compliance from those whom it engaged to introduce business to it. The purpose of extending the statutory definition of employment was to avoid technical arguments as to whether someone was self-employed or employed. The intention of the Act is to apply protection against discrimination to situations where persons could equally well have been employees or freelance agents. The fact that the representatives of the Company are treated as self-employed may (but that is an open question) take them out of the provisions of EPCA, but in our view the Industrial Tribunal was entitled to conclude when looking at the contract as a whole, that the applicant was employed under a contract personally to execute work. The arrangements between the parties in this case is the archetype in our judgment of the contract which the wider definition in section 78(1) of the act was designed to embrace.

(b) Unlawful Discrimination

Having concluded that a racial remark was made by Mr Russell the Tribunal had to consider whether the treatment by the Company was unlawful. Accordingly, in paragraph 8 of their decision they correctly addressed themselves to the relevant issue. They reminded themselves of the provisions of the Act and continued:

"After that we have, of course, to be satisfied that the applicant was treated less favourably than other persons, and that if there was such less favourable treatment, that it was on racial grounds."

Having considered the question of jurisdiction the Industrial Tribunal continued:

"Returning to the claim itself we have already indicated that we consider that the crux of the matter is the meeting on 20 July 1992 and the comments of Mr Russell at that meeting. The applicant's performance was, unfortunately, by no means inspiring. However, even though that performance might have been such as to justify dismissal, clearly the respondent must not be seen to be influenced by the employee's race when dismissing. The comment made, in our view, clearly demonstrates that the factor of ethnic origin was a factor which operated upon Mr Russell's mind at the time when he ratified the decision to dismiss. The issue of ethnic origin was raised specifically in the context of disadvantage which is, of course, what is to be looked for under the Act. Our concluded view, and finding, is therefore that the applicant was discriminated against contrary to the provisions of the Act."

As we read the decision, the Industrial Tribunal accepted the contention on the evidence that the applicant was discriminated against contrary to the provisions of the Act in that he had been treated less favourably than others would have been treated. In other words they concluded that although performance might, we emphasise, have been such as to justify dismissal, the applicant's agreement had been terminated because he was black when a white person's contract would not have been.

The argument for the Company was that the Industrial Tribunal should have decided whether the word "at" had been said because, it was submitted, it made a significant difference to the sense. We do not agree and nor did the Tribunal. What was said showed clearly that the person ultimately responsible for the termination had the colour of the applicant firmly in mind when he made his decision. Discrimination on grounds of race is seldom overt and often difficult to prove. It is an evil which the Act is designed to combat. An Industrial Tribunal should be astute to ensure that they do not place undue weight on the lack of direct evidence of it.

Here, it seems to us, the Tribunal were fully entitled on the evidence which they heard to reach the conclusion which they did. The fact that other agents had their arrangements terminated for lack of production at about the same time is not a conclusive answer to the complaint in this case. There may be a host of reasons why one set of production figures cannot legitimately be compared with another. It was evidence which the Tribunal had to consider and we are of the view that there are no grounds for believing that the Tribunal failed to take them into account. Accordingly, we move on to the third point, compensation.

(c) Compensation

We can quickly dispose of the appeal in relation to injury to feelings. The applicant was justifiably affronted and hurt by the way he had been treated. Having obtained a professional qualification he rightly felt that he did not deserve to be discriminated against on racial grounds. The Industrial Tribunal had to assess the degree of hurt and injury to feelings which the Company's conduct had caused. They valued that item at £1,300. From authorities we have been shown, the range of compensation for injury to feeling varies between £500, which may be said to be at the bottom of the range, and £3,000 which is the highest recorded award under this head. Of course every Tribunal is entitled to decide for itself what the proper amount should be. The bracket is not immutable. That said, in our judgment there are no grounds for interfering with the award of £1,300. They saw and heard the applicant. The amount awarded was well within the existing bracket.

We turn finally therefore to the compensatory award of £2,000. The Industrial Tribunal had a difficult judgment to perform. They had to have regard to the level of earnings the applicant had achieved in the past but they were entitled to take into account that that level may have been unrepresentative for the future for a number of different reasons, such as the applicant's developing skills, the greater attention that he was now able to devote to the business, the absence of good leads and finally the opportunity to develop the good connection with a particular group of people.

Compensation for future loss is necessarily speculative, especially where the question of converting leads into hard business is concerned and where account has to be taken in a general sense, of the state of the economy which presumably would affect the opportunities the applicant would have had if he had not been discriminated against.

We can see no reason to think that the Tribunal erred in its approach to this matter. They said that the question of potential loss of earnings presents great difficulties. They set out the arguments on behalf of the Respondent including the suggestion that there had been a failure by the applicant to mitigate his loss and then they went on:

"The very real difficulties in properly assessing Mr Nwauzu's progress, whilst with the Respondent, have already been referred to in detail in paragraph 7(5) of the Tribunal's earlier decision. Moreover, we are satisfied that Mr Nwauzu was assured that "leads" would be put his way, by the organisation, but they were not. Had they been, his overall performance could well have been better. From a further examination of the exhibits before the Tribunal at the previous hearing, and from a final consideration of the further evidence and submissions made at this hearing, we conclude that the applicant should be awarded, by way of general damage, a further £2,000.00. His award, in total, is therefore £3,300.00 and that is our finding."

We have read with interest the submissions made by the applicant on this matter. We have to say that we are not persuaded by them, nor by the Company's submission that this matter was dealt with otherwise than in accordance with the Tribunal's duty. It was a difficult decision and we are not minded to interfere with it.

Accordingly, the result is that the appeals and cross-appeal will be dismissed. That is the end of our formal decision.

Before leaving this matter and not as part of our decision, we would like to add this:

We are sure that the Company will recognise that racial discrimination is quite unacceptable and we hope, contrary to the Company's philosophy. Discrimination against the applicant having been established, the Company may well feel that it could emphasise its role as an equal opportunity employer, by making to the applicant the formal apology which he seeks. Such apology would, we think, go a long way towards redressing the sense of grievance which he justifiably feels and to emphasising the Company's own commitment to equality of treatment of all its agents and employees.