Reebok International Ltd v Crompton [1995] UKEAT 1225_95_2012

EAT
Reebok International Ltd v Crompton
[1995] UKEAT 1225_95_2012 · 1995-12-20
On 18 May 1995 Mrs Deborah Crompton presented an Originating Application to the Industrial Tribunal complaining of sex discrimination by Reebok International Ltd ("Reebok") in about 1985-1986 in relation to employment which ended in 1989.

Her case is that

(1) From 1982 to 1989 she was employed by Reebok.(2) In 1985/86, when Reebok went public, she was employed as International Design Director (Apparel Division).(3) At that time there were ten employees at the Reebok Bolton office. She and two men at management level reported directly to the founder and President of the International Division, Mr Joe Foster.(4) In April 1995 Mr Foster, who is still employed by Reebok, informed Mrs Crompton that she was overlooked when shares were given to employees of Reebok in 1985/86. The reason he gave to her was "because I was a woman". Her two male colleagues were given shares at that time, now alleged to have "substantial worth".

B Reebok's Response

Reebok's response in correspondence and in the Notice of Appearance dated 27 July 1995 was that(1) The claim is time barred and should be struck out on a preliminary hearing.(2) Mrs Crompton was not in fact employed by Reebok between about February 1985, when she left her employment as Secretary to the Managing Director to have a baby, and 1986, when she rejoined Reebok to manage its apparel business. Share options were first granted to certain employees of Reebok in mid-1985.(3) Mrs Crompton was not "on managerial level" or on the same level as the two male colleagues to whom she said shares had been given.(4) Mr Foster had not made the remarks attributed to him by Mrs Crompton in her Originating Application. She was not "overlooked" when the share options were awarded "because she was a woman", or for any other reason.The Industrial Tribunal listed the case for a preliminary hearing to determine whether the application was presented within the three months time limit.

The Industrial Tribunal's Decision

On the hearing of the preliminary hearing in Manchester on 4 September 1995 the Industrial Tribunal unanimously held that the application was not presented within the period specified by Section 76(1) of The Sex Discrimination Act 1975 ("the 1975 Act"), but nevertheless,
"The Tribunal considers that, in all the circumstances of the case, it is just and equitable for the applicant's complaint to be considered ..."
The Tribunal heard evidence from Mrs Crompton, read relevant documents in a bundle and heard submissions from Counsel for Mrs Crompton and for Reebok. No oral evidence was called by Reebok.The Tribunal found certain facts to be proved: that Mrs Crompton was employed by Reebok for a period from early 1983 until 1989; that in 1985 and 1986 four male employees were offered stock options in the company, but Mrs Crompton was not; and that she did not know of those stock options until April 1995 at which time she understood that the fact that she was a female might have had a bearing upon her not being offered stock options.The Tribunal, in full reasons notified to the parties on 18 October 1995, summarised the submissions of the parties. On behalf of Reebok, it was argued that they would be seriously prejudiced in attempting to explain, "in view of the time scale", the alleged inconsistencies of treatment. No personnel files could be found. No documentary evidence was available. The persons involved no longer worked as a team. Many were no longer employed within Reebok's organisation.For Mrs Crompton, it was submitted that she could not have brought the claim earlier, because she did not know the facts of the case.The Tribunal summarised the rival positions as follows in paragraphs 13 and 14 of the full reasons:
"13. In this case the respondent argues that the prejudice to the respondent is so substantial that in the scales as to what is just and equitable the balance must tip in favour of the respondent. The respondent argues that this is all the more important in a sex discrimination case where the Tribunal will be looking to the respondent for explanation of any inconsistencies of treatment and in view of the considerable delay in this case the respondent may only be able to speculate rather than establish any explanation.
14. The applicant however says that she was completely unaware of circumstances which she claims amount to unlawful discrimination and could not have brought her claim earlier. If the Tribunal decides the claim is time barred it means that she is prejudiced by never having had the opportunity of having a Tribunal adjudicate upon her complaint."The Tribunal's conclusion in paragraph 15 was that:
"15. The Tribunal was faced with an impossible decision, one party was bound to feel aggrieved whatever the Tribunal's decision. However after long and careful consideration of all the circumstances of the case the Tribunal considered that it would be just and equitable to consider the applicant's complaint of unlawful sex discrimination. The Tribunal considered that the prejudice alleged by the respondent namely that with the passing of time it may have difficulties rebutting any inferences drawn by the Tribunal was something that a Tribunal could take into account at the hearing of the complaint. Accordingly the Tribunal concluded that the complaint should proceed to a full hearing."

The Appeal

Reebok appealed against the decision by Notice of Appeal served on 18 November 1995.

The main grounds of appeal were that

(1) The Industrial Tribunal misdirected themselves in law in holding that Reebok's arguments that they would suffer serious prejudice, if Mrs Crompton's claim were to proceed out of time, could be taken into account at the hearing of her claim of sex discrimination. Those arguments could not be taken into account at the hearing, as prejudice would be wholly irrelevant to the determination of the issues between the parties. The Tribunal therefore took into account a factor irrelevant in the exercise of their discretion.(2) The Tribunal had exercised their discretion perversely having regard to the shortness of the time limits in the 1975 Act, to the length of time which had elapsed before the application was presented, to the substantial risk of prejudice to Reebok and to what was just and equitable in all the circumstances of the case.

Mrs Crompton's submissions

Mr Elleray QC, on behalf of Mrs Crompton, mounted a spirited attack on the grounds of appeal and defended the Tribunal's decision. His main points were that:-(1) The Tribunal's discretion under Section 76(5) of the 1975 Act is a very wide one. It entitles the Tribunal to take into account anything which it judges to be relevant. The discretion is wider than the "reasonable practicability" test for extension of time in cases of unfair dismissal, even liberally construed as in, for example, the Court of Appeal's decision Dedman v British Building Ltd [1974] ICR 53.(2) The discretion was not limited by any express requirement, such as proof of exceptional circumstances. The provision simply states
"A court or tribunal may nevertheless consider any such complaint, claim or application which is out of time if, in all the circumstances of the case, it considers that it is just and equitable to do so."
(3) The exercise of that discretion is a matter for the Industrial Tribunal, not for the Appeal Tribunal. As observed in Hutchison v Westward Television Ltd [1977] ICR 279 at 282 E - F
" ... the task which an appellant has in such a case is a heavy one. Really he must show, if he is to succeed upon appeal, that the industrial tribunal demonstrably took a wrong approach to the matter, or that they took into account facts which they ought not to have done, or that they failed to take into account facts which they should have done, or, as a last resort which is always open upon an appeal, that the decision was so unreasonable in all the circumstances that no reasonably instructed tribunal could have reached it."
(4) The Industrial Tribunal were entitled to consider that it was just and equitable to extend the time because it found, as a fact, that Mrs Crompton did not know of the acts of discrimination complained of until a month or so before she presented her application. The inference to be drawn from that finding was that she could not have discovered the acts complained of by the use of reasonable diligence any earlier. In general, time will not run against a person where that person did not know, and could not reasonably have been expected to know, the existence of the remedy. See, for example, the provisions in Sections 14, 14A, and 32 of The Limitation Act 1980 .(5) As for the prejudice complained of by Reebok if the time were extended, the position was that Reebok called no evidence at all about the risk of prejudice to a fair trial of the issues. It was insufficient for Reebok to make a bland assertion of prejudice. Relying on the analogy of applications to strike out proceedings for want of prosecution, Mr Elleray argued that it was for Reebok to adduce some evidence on the issues in dispute, the evidence that they wished, or would have wished, to adduce in respect of those issues and the way or ways in which they were now prevented from adducing such evidence: see Hornagold v Fairclough Engineering [1993] PIQR 400 at 409, 414 (a case on striking out for want of prosecution).(6) As no blame could be attached to Mrs Crompton who had a good prima facie claim the burden was on Reebok to adduce evidence to show that a fair hearing would not now be possible. For this argument analogies of criminal trials were relied on: see Attorney-General's Reference (No 1 of 1990) [1992] 3 All ER 169. In such cases, before an application is made, attempts should be made to gather evidence. There was no evidence from Reebok before the hearing as to what attempts they had made on this point.(7) There was evidence before the Industrial Tribunal from Mrs Crompton to support their conclusion that it was just and equitable for the matter to proceed to a hearing. On the other hand, there was no evidence from Reebok to support a contrary conclusion. They had not proved any relevant prejudice.(8) There was no error of law in the Industrial Tribunal's decision that, at the hearing of the complaint, the Tribunal could take into account the prejudice alleged by Reebok in that, with the passing of time, it might have difficulties in rebutting any inference drawn by the Tribunal. The case of King v Great Britain-China Centre [1992] ICR 516 was cited as identifying considerations relevant to inferences in both sex and race discrimination cases. At page 529 A-B Neill L.J. said:
" ... a finding of discrimination and a finding of a difference in race will often point to the possibility of racial discrimination. In such circumstances the tribunal will look to the employer for an explanation. If no explanation is then put forward or if the tribunal considers the explanation to be inadequate or unsatisfactory it will be legitimate for the tribunal to infer that the discrimination was on racial grounds. ..."
The comments are applicable to a complaint of sex discrimination. Mr Elleray asserted that, in deciding whether or not Reebok's explanations were inadequate or unsatisfactory and in deciding whether or not to infer that discrimination was on the grounds of sex, the Industrial Tribunal would be entitled to take into account the evidential difficulties which Reebok might have by reason of the passage of time between the alleged acts of discrimination in 1985 and 1986 and the commencement of the proceedings in May 1995.The comments of the Industrial Tribunal in paragraph 15 of their full reasons were in relation to inferences that might be drawn as to the grounds of disparate treatment. They were not referring to decisions of primary fact. Mr Elleray accepted that such prejudice would not be relevant to the proof of the primary facts i.e. of employment, comparability and less favourable treatment. He argued that difficulties of proof would be relevant to a decision whether or not to make an inference from primary facts on the question of discrimination. Further, this case did not turn only on inference. Reliance was placed on the remarks of Mr Foster alleged to have been made in April 1995.(9) On the primary facts, it appeared that Reebok were able to plead a positive case, disputing Mrs Crompton's employment at the relevant time and denying the comparability of her case with that of male colleagues who were alleged to be on a different level of management.For all those reasons, it was submitted that there was no error of law in the exercise of discretion by the Industrial Tribunal and that the appeal should be dismissed.

Conclusion

We have given careful consideration to the Tribunal's full reasons for their decision and to Mr Elleray's detailed arguments for Mrs Crompton. As an appeal lies to this Tribunal only on a point of law, we approach an appeal against the exercise of the discretion vested in the Industrial Tribunal with special caution: the statutory discretion is entrusted to the Industrial Tribunal, not to the Appeal Tribunal; it is cast in wide words; a broad approach should be taken to an appeal against such a discretion. The fine tooth comb should not be used in examining the reasons. It would be exceptional to find perversity in such a case.Nevertheless, we have reached the clear conclusion that, in the unusual circumstances of this case, the appeal should be allowed for error of law. The case should be remitted for hearing by a different Industrial Tribunal. We reject Reebok's primary submission that we should substitute our own decision by refusing an extension of time and dismissing the Originating Application. On the material before this Tribunal it is impossible to say that no reasonable Tribunal could come to the conclusion that it was just and equitable in all the circumstances to extend the time.Our reasons for allowing this appeal are that the Industrial Tribunal erred in law in the way in which it dealt with (or failed to deal with) the question of potential prejudice to Reebok in the exercise of its discretion.(1) The discretion conferred by Section 76(5) of the 1975 Act must be exercised on a consideration of "all the circumstances of the case."(2) The risk of prejudice to a fair hearing of the issues raised by the complaint, as a result of the lapse of nearly nine years between the alleged acts of discrimination and the presentation of the application, is a relevant circumstance. The Tribunal should take it into account in the exercise of the discretion.(3) This Industrial Tribunal failed to take into account the risk of prejudice to the fair hearing. Reebok made submissions about the risk of prejudice in various ways: for example, the lack of personnel files and other documentary evidence to rebut the possible inference of sex discrimination and the changes in the workforce. Although the Tribunal heard no evidence from Reebok of specific prejudice, they did not reject the submission of prejudice as unfounded nor did they find that there was no risk of prejudice. The Tribunal appear to have assumed, even accepted, in paragraph 15 of the decision that there was some risk of prejudice to Reebok, but concluded that that was something which could be taken into account at the hearing of the complaint.(4) The Tribunal, faced with what they described as "an impossible decision" on the rival submissions, appear to have adopted the course of avoiding a decision on the question of prejudice by extending the time in favour of a blameless applicant and postponing consideration of the risk of prejudice to Reebok to a later date i.e. the hearing of the complaint.(5) The risk of prejudice to Reebok could not, as Mr Elleray accepted, be relevant to the resolution of primary facts on the hearing of the complaint. The burden of proving employment at the relevant time and of establishing disparate treatment of relevant comparators, would be on Mrs Crompton. She would either be able to prove those facts or not. As for the rebuttal of inferences discrimination to be drawn from those facts, it is arguable that the Industrial Tribunal could take account of difficulties that Reebok might encounter with the lapse of time in providing satisfactory or adequate explanations of the disparate treatment of the male and female employees. But that matter alone would not justify the Industrial Tribunal in postponing consideration of the risk of prejudice to the full hearing where there is no evidential discretion. It is essential that they should assess that risk and reach conclusions about it in relation to the exercise of their discretion. The risk of prejudice is relevant to the exercise of the discretion, not to the resolution of issues of fact relevant to liability at the hearing. In brief, the Tribunal, faced with what they regarded as an "impossible decision", deferred, instead of deciding, the important question of potential prejudice to the fair hearing on the issues. They did not make a decision on the exercise of discretion under Section 76(5) by consideration of all the circumstances and by balancing the various factors against one another.It will be for the Industrial Tribunal, to whom the case is remitted, to consider all the circumstances, including the risk of prejudice, on the evidence before it and answer the simple question whether it "considers in all the circumstances that it is just and equitable to extend the time".That Tribunal may, or may not, reach the same conclusion as the Tribunal held at Manchester in September 1995. That is a matter for them, not for us.The appeal is allowed and the case is remitted to a different Industrial Tribunal to consider the application for extension of time under Section 76(5) of the 1975 Act.