Ministry Of Defence v Joslyn & Ors [1996] UKEAT 533_95_2802

EAT
Ministry Of Defence v Joslyn & Ors
[1996] UKEAT 533_95_2802 · 1996-02-28
MR JUSTICE MORISON: This Employment Appeal Tribunal is concerned with three complaints of unlawful discrimination on the grounds of sex brought against the MOD who terminated the complainants' service in the armed forces by reason of their pregnancy.

JOSLYN

The question which arises in this case has been called by the MOD `the Derwent Coaches ' point, after a case called Derwent Coaches v Kirby [1994] IRLR page 639. In that case, the EAT held that, having assessed compensation, the Industrial Tribunal should calculate the compensatory award and deduct from it the percentage they had estimated for contributory fault, and then make a further deduction in respect of monies which had been paid by the employer after the dismissal.In relation to these pregnancy dismissal cases, the MOD's point is illustrated by a hypothetical example:
"If an Industrial Tribunal has decided, when assessing compensation in respect of the MOD's unlawful discrimination, that had the complainant been offered maternity leave there was only a 40% chance that she would have returned to the services, and that had she done so she would have earned £500, but, instead, either earned, or reasonably could have earned, £250, the applicant recovers nothing. The argument is based on the proposition that, first, the applicant is entitled only to 40% of £500, namely £200 from which should then be deducted the monies actually earned, namely £250. The contrary argument is that on those facts the applicant recovers £100, namely 40% x [£500 - £250]."
The ` Derwent Coaches ' point was not argued in the Industrial Tribunal in Mrs Joslyn's case. The appeal in this case is entirely contingent on us giving the MOD leave to argue it here. Further, the MOD has persuaded one panel of the EAT to adopt its Derwent Coaches argument, whereas, a different panel has refused to accept it. An application for leave to appeal the second panel's decision is currently before the Court of Appeal. So, the MOD contend that we should give them leave to argue the point and then immediately adjourn the appeal to await the outcome of the decision of the Court of Appeal. Thus Mrs Joslyn's case will remain on `the books' as a pending appeal.If we had thought that the Derwent Coaches point was reasonably arguable we would have been prepared to allow it to be argued here even though it had not been argued below. With great respect to the members of the first panel, who were persuaded to follow the MOD's contention, we cannot think that their decision can be sustained and we would say that the second panel were unquestionably correct, and we note that though they were departing from another EAT decision they refused the MOD leave to appeal.The flaw in the reasoning of the MOD is apparent. The question at issue is what has Mrs Joslyn lost as a result of the unlawful discrimination. If she had been given the chance to return to service life after the birth of her child she might or might not have taken that chance. Had she taken the chance she would, hypothetically, have received £500 as opposed to the £250 which she did receive. Her loss is only £250 - namely the difference between what she has received and what she would have received had she taken the chance of going back to work, had it been open to her. Because there was a 60% chance that Mrs Joslyn would not have gone back to work, and therefore, would have been entitled to no compensation the amount of her loss is to be reduced to reflect the fact that she was not bound to sustain it, but only had a 40% chance of doing so. Thus, her loss is 40% of £250, or £100. The fallacy in the MOD's approach is to make a deduction from what she might have earned rather than from her loss. She lost the chance to be better off by £250. She had a 40% chance of getting that money, so the law gives her 40% of her loss, which, conversely, reflects the fact that she had a 60% chance of being no better off as a result of her wrongful treatment.As to the cross-appeal, Mrs Joslyn says that the Industrial Tribunal were wrong to treat a period of 6 months after the birth of each child as `void' for the purpose of calculating compensation. The Industrial Tribunal does not spell out the reasons why they have decided to treat these periods as void. Complaint is made that they ought to have given reasons; that they gave her representative no indication that such was in their mind, and, thus, she was deprived of the opportunity of addressing any argument on the point. We see the force of this submission, but, on balance, are not prepared to accede to it. It seems to us that in a complicated exercise such as the Tribunal were obliged to undertake, it is not practical to suggest that separate reasons should be given for each part of the award. Indeed, to some extent, in the decision making process the Tribunal will want to `stand back' and look at the total figures, so as to ensure that, overall, the complainant is awarded full and fair compensation, on a consistent basis, case by case. Such a process may well involve adjustments being made to some of the component parts of a calculation. Numbers might be rounded up or down; more given for one element and less to another. It seems to us that what has happened here is that the Industrial Tribunal have properly carried out the exercise required of them, and have taken the view, having heard all the evidence, that on a balance of probabilities Mrs Joslyn would not have returned to work for a short period after the birth of each child, assuming she had been offered the opportunity to return to service life. They are, as we have said before, assessing the chances by reference to hypothetical facts. What the applicant says she would have done is not determinative of the issue; if only because it is speculative as to what would have happened had the facts been different. A tribunal is quite entitled to `feed into the calculations' its best assessment of the probabilities as to what would have happened. To avoid any element of surprise, it seems to us that in a case which may involve substantial sums by way of compensation, it would be sensible if both parties put forward a schedule of loss, in a form similar to that required of parties in cases involving damages for personal injury. Such schedules would, clearly, be subject to the way the evidence was given at the hearing, but would, in this case, have identified the MOD's position as to when they contended Mrs Joslyn would have returned to work after her confinement, assuming she had a right to do so.Accordingly, we refuse the MOD leave to make the proposed amendment and dismiss the appeal and cross-appeal.

NIXON

In this case, the Industrial Tribunal held that the chances of Mrs Nixon availing herself of maternity leave was 100%; her chances of exercising a right to return to service life after the birth of her child as 60%; and the chances of her serving through to the end of her enlistment as 40%. They assessed her future loss by applying a discount of 3.5% to allow for accelerated payment in respect of the period from 11 July 1994 [the date of calculation] to 27 June 1997, the date when her period of enlistment would have come to an end.The way these percentages bear on the Tribunal's calculations has been referred to in argument as the `cumulative percentage point'.The MOD's contention is that the woman's loss on the percentage figures referred to above should be calculated by multiplying the earnings she would have received in the services by 60% and 40% and deducting from that figure the amount she actually earned during the same period. Thus, if the period of `lost' service was from 1 January 1990 to 1 January 1995, and if she would have earned £100,000 in that period, but actually earned £20,000 in civilian life in the same period, the MOD's method of calculation would produce this result:

£100,000 x 60% x 40% = £24,000 less the money earned namely £20,000 = £4,000

Miss Rose, on behalf of the applicant, submitted that this was incorrect. She said that the calculation should be done as follows:

£100,000 - £20,000 = £80,000 x 60% x 40% = £19,200

It seems to us clear that Miss Rose's contention is correct. The MOD have, we think, lost sight of the true function of the percentages. The 60% figure represents the chance that Mrs Nixon would have suffered loss of earnings due to the discrimination. If she would not have returned to the services even had she been given an opportunity to do so, she would have suffered no such loss due to the unlawful discrimination. If she had been entitled to return to work and inevitably would have returned, then she is entitled to be compensated for the full amount of her loss. Therefore, before applying this percentage, the loss must be ascertained. The loss is the difference between what she would have earned and what she did earn and to that figure must be applied 60%, which will then represent the loss to her of the chance she should have been given of returning to the armed services after her confinement. Thus, if her total loss of earnings was £1,000 she will receive £600 as her recoverable loss, to reflect the fact that there was a chance that she would have suffered no loss of earnings at all.The 40% fulfils a different function. Forty per cent is to be applied to the period of time over which the loss would have continued. Thus, if her annual recoverable loss was £1,000 and there was 10 years of her service still to run, her total recoverable loss would be £1,000 x 10 x 40% = £4,000.We can see no basis in law for applying the percentage chances to what she would have received from the services and deducting the actual earnings in full. The complainant will not receive full or fair compensation if the MOD's method was to be adopted. In our judgment the method is wrong in principle and must not be adopted in future.Miss Rose also argued that the Industrial Tribunal should have specified the period during which Mrs Nixon had a 60% chance of continuing to serve. She submitted that part of her loss of earnings and pension rights should have been assessed at 60 and part at 40%. We do not agree. Throughout the period of notional service of which she was deprived, there was a 40% chance (100% - 60%) that she would not have been working at all; and only a 40% chance she would have been with the services at that time. It seems to us that the Industrial Tribunal were entirely correct to use the multipliers in the way they did. As to the multiplier of 3.5 for future loss, it seems to us clear that the Industrial Tribunal must have treated this multiplier as a discount for accelerated payment; in other words, as the time value of money. As such it was a fair figure. In our view the Industrial Tribunal have approached the matter correctly: we read paragraph 24 of their Decision as reducing the recoverable loss for the future period by using an appropriate rate of discount. Nor do we consider that the Industrial Tribunal have misdirected themselves as to the calculation of the loss of pension. As the figures are yet to be finally calculated we need say nothing more at this stage.

THOMPSON

In this case, the Industrial Tribunal held that had she had the opportunity to continue in service life after the birth of her baby, Mrs Thompson would as "an almost racing certainty" have completed 12 years in the services. They assessed that chance as 90%. The period between 12 years and 22 years they thought was "more of a problem". They assessed the chance of her serving until 15 August 2002 as 65%. For future loss, a period of 7½ years, the Tribunal used a multiplier of 4.5.The MOD correctly point out that the chance of Mrs Thompson serving for the period between 12 and 22 years is not 65% but 90% of 65%. However, at paragraph 16 of their Decision the Industrial Tribunal said this:
"16 ... The assessment required the tribunal to deliberate at length at each stage of its percentage chance considerations, and to pay due regard to its findings of percentage chances at the preceding stage. It is appreciated that there is a school of thought that would calculate each chance after the first as a percentage of a percentage. Had we adopted such a method we would have failed to reach a just and sensible award, and when `standing back' and looking at the case in the round would have to reappraise our chance findings."
We take this to mean that the Industrial Tribunal would have increased the 65% figure if they had applied a percentage to a percentage. On this basis, whilst it would have been more accurate had they done so, in our view the Tribunal cannot be criticised for taking the percentages separately.The MOD criticise the multiplier, but we see nothing wrong with it. 4.5 is quite sensible, we think.The MOD also criticise the Tribunal for the figure awarded for injury to feelings. The criticism is of the passage where the Tribunal said:
"12 The applicant incurred the usual injury but in this particular case it may have been exacerbated because of her deep commitment. ..."
The award of £2,000 could not be described as excessive. The MOD criticise the word "may" in the quotation. They say the Tribunal was speculating, it ought to have found, one way or the other, whether her injury was exacerbated. We reject this criticism: the Tribunal were entitled to take account of the possibility that her injury was unusually aggravated, and to reflect that fact in the award.On the two important issues [ Derwent Coaches and cumulative percentages] which these appeals raised, we reject the MOD's arguments.