Holvey [1996] UKEAT 917_95_0207

EAT
Holvey
[1996] UKEAT 917_95_0207 · 1996-07-02

JUDGE HULL QC :

This is an appeal to us by Mr Philip Holvey who, at the relevant time, was manager of one of the other party's shops. The other party I am referring to is Bacons Shoes Ltd. He was manager of the Leicester premises. They apparently are a company which has a number of shops in various places and employed at that shop was Miss Zaineb Sabur, a lady who is now aged 30. Her employment began as an assistant on 16 October 1989 and she rose through merit and became a senior, then a supervisor, but after some unhappy events in which her employers, through Mr Holvey very largely, sought to discipline her, she felt that she was being discriminated against on the ground of her race and she complained that she had been constructively dismissed and that there had been discrimination against her. She made Respondents to her complaint to the Industrial Tribunal not only the employers Bacons Shoes Ltd, but also Mr Philip Holvey.What appears to have happened - we go in part on what Mr Holvey has told us, in part on what the Tribunal themselves say - is that the Company, as one would expect, with their solicitors, took over the conduct of the reference to the Tribunal and Mr Holvey was informed that they would be conducting the matter on his behalf as well as on theirs. It might be thought to be unnecessary to add Mr Holvey and certainly a little unusual to add him as a Respondent to the reference but the Applicant was, on the face of it, fully entitled to do so on the basis of the allegations that she was making, which were that Mr Holvey was the first person and perhaps the most important, for all we know, to discriminate against her in seeking to discipline her. She noticed various matters about his attitude. I am not going to go into the details.When we look at the Race Relations Act 1976, section 4 says that:
"(1) It is unlawful for a person, in relation to employment by him at an establishment in Great Britain, to discriminate against another -"
and that means racial discrimination. I will not go into all the ways of committing discrimination. Subsection (2) creates further acts of discrimination, which are made unlawful and then there are remedies provided in section 54 but before I come to that I must refer to the position of employees. Managers and people of that sort who, it is alleged, are the prime movers or parties to the discrimination. Of course, a company has no hands, no voice, except those of its directors, its managers, its administrators and, of course, the company will be liable in respect of their acts. To avoid that very large body of law in which the Courts and Parliament have, over the years, defined the extent to which an employer is liable for the acts of various officers, Parliament has provided expressly for the matter. In section 32 of the Race Relations Act, Parliament has said:
"(1) Anything done by a person in the course of his employment shall be treated for the purposes of this Act ... as done by his employer as well as by him, whether or not it was done with the employer's knowledge or approval."
That is a fairly strict form of vicarious liability, in other words, for the acts of employees, including, of course, managers and senior employees.Section 33 puts in rather indirect language a duty on the employees, too, not to discriminate on behalf of their employers. It goes like this:
"(1) A person who knowingly aids another person to do an act made unlawful by this Act shall be treated for the purposes of this Act as himself doing an unlawful act of the like description."
In other words, the person who helps is, from the point of view of liability, as guilty as the person who does the act. Subsection (2) makes it plain what this is getting at, or one of the examples:
"For the purpose of subsection (1) an employee or agent for whose act the employer or principal is liable under section 32 ... shall be deemed to aid the doing of the act by the employer or principal."
So if the manager is guilty of discrimination then the employer will be vicariously liable and because the employer is vicariously liable, so the manager, too, will be liable. That is the scheme of the Act - a slightly oblique way of doing it but that is the way Parliament chose to do it and then we look to see what the remedies are:
"54. A complaint by any person (`the complainant') that another person (`the respondent') - (a) has committed an act of discrimination against the complainant which is unlawful by virtue of Part II; or (b) is by virtue of section 32 or 33 to be treated as having committed such an act of discrimination against the complainant,

may be presented to an industrial tribunal"

So there it was. Miss Sabur, as she was entitled to, was complaining against both Bacons Shoes Limited and Mr Philip Holvey that they were both guilty of discrimination, bearing in mind the statutory provisions to which I have referred.I should say that Miss Sabur's employment ended when, as she said, she was constructively dismissed on 21 March 1994. Mr Holvey himself lost his employment in December 1994 and at about that time the Company went into receivership. The Industrial Tribunal, after certain mishaps, sat to hear the matter on 21 March, 11 April and 26 May 1995, under the chairmanship of Mr Goodchild at Leicester.We must turn, of course, to their decision. Before them appeared Mr Stevenson of the Leicester Rights Centre on behalf of Miss Sabur to prosecute the complaint against both Respondents. The employers, who were then said to be in liquidation, it may have been in receivership, it does not matter, took no part, did not appear. Mr Holvey was not there, either. He had heard nothing officially of the hearing. That is probably because he understood the employers' solicitors were continuing to act for him. He had not been disabused of that. No doubt the solicitors had originally said to the Industrial Tribunal, "Please communicate with both Respondents through us" and it would appear that the receivers or liquidators had not become alive to that or taken any action over it, had not notified Mr Holvey, "We have revoked the authority of the solicitors. The solicitors are no longer acting for you. You must get in touch with the Tribunal now and either make arrangements for your representation or act in person." None of that had been done but Mr Stevenson, for reasons which we have not gone into but very prudently, though it right to write to Mr Holvey three days before the hearing. So Mr Holvey heard that the hearing was on. He, in the light of what had passed before receiving this letter from Mr Stevenson, apparently though it right or sensible not to attend, perhaps supposing - we do not know - that the employers would do all that was necessary to protect his interest. He understood they were acting in common.In those circumstances all that happened at the hearing was that the Industrial Tribunal heard what Miss Sabur had to say, looked at the documents which were before them, which included a note that in one of the disciplinary hearings by Mr Holvey she had complained that she was being discriminated against, and they then reached their conclusion.To do justice to the conclusion, I must read substantial parts of the Industrial Tribunal's judgment. The Chairman said:
"2. I am informed and satisfied by what my staff tell me that the proper procedures in serving Mr Holvey had occurred."
That, of course, in the light of what we have been told was a thoroughly ambiguous thing to say because the staff may very well have felt that to serve the solicitors for the Company was the right way to serve Mr Holvey with notice of the proceedings, but there it is. The Chairman goes on:
"There may be some importance in this because the award which we will be making at the end of the day, having described the facts is against both respondents."
That is to say, of course, Bacons and Mr Holvey.He then refers to the severe financial difficulties of the employers and the administrative receivership which followed and then the Tribunal refer to the Company being in liquidation. They did not wish to appear before this Tribunal. Earlier they had had, apparently, solicitors who were well used to contesting this type of case.They go into the facts and they say that Miss Sabur, the complainant, had been born in East Africa and they refer to her promotion and her ability of which they formed a high view and they say that at about this time, that is to say after she had risen to a supervising function:
"... she noticed that Mr Holvey appeared to favour his white juniors as opposed to his Asian or black juniors. (There seems to be a relatively equal mix within the shop as to the ethnic background.) She told us that `I could never put my finger on it. A joint Supervisor was never criticised but dealt with on a friendly basis when I was a few minutes late, there were occasions when I was, I was dealt with in a different manner and formally disciplined.
6. There were also occasions when visiting trades people made racist comments which were laughed at by the manager. The `feeling' that Ms Sabur had got that she was certainly being treated differently from the white people within the shop.7. Eventually she was disciplined because of complaints about her competence to do her job. She accepts that there were probably minor criticisms that could have been made of her work, but not in the way that it was being done. By the time she had got to her second stage of a disciplinary hearing she had enough. She made it quite clear to a Senior Manager that she thought that she was being `done down' not by reason of her competence but by reason of her colour. She made a complaint. That complaint is noted in the disciplinary hearing notes. This was an equal opportunities employer, who it is right to say, in their original defence represented by Harvey Ingram [her solicitors] ... made a point of being equal opportunities employers. In other words saying `Look we have the ring of protection around us. We hold ourselves out to be equal opportunities employers and not only that half of our workforce is from the ethnic minority'. That appeared in part to be their defence. But on what we have heard they did nothing to investigate the complaints. That is the reality of it. They accepted what their Manager said without any apparent proper investigation.8. The applicant was demoted from Supervisor down to Assistant and down to part timer. She obviously suffered. She decided that she had had enough and resigned. She then brought to the matter to the Tribunal.9. We find as a fact that she was disciplined more unfavourably than her white colleagues because of her race. She was directly discriminated against.10. She is a capable young lady."They accept her evidence, they rely on her sworn evidence and her written statement and then they have to consider compensation. They say:
"11. We have to then consider compensation. In our view she has had her feelings hurt. She spent the first 20 odd years of her life in this country without realising that there was an ugly side to our community. She has experienced it. That must have hurt her. But equally on the other side we must not go over the top on the basis she is a pleasant, presentable young lady who is in short not one of those who whinges. So we treat her as we do anyone who has had their feelings hurt. On the other side we have Bacon Shoes which at the time of this application was not a small company who proudly presented itself as an equal opportunities employer who did not do a thing about it. There was no formal investigation. Criticisms are due. We approach them the way we would with a company of medium size. We balance out those two sides and come we hope to a just decision of hurt feelings award in this case of £4,000 ."
In this appeal there is no appeal against the quantum of the award but it is right to say that this is a substantial award and that therefore it must be properly, of course, justified; rather more than if they were giving a nominal sum. They go on to say:
"10. We deal with this case as if it was an unfair dismissal. We hold, of course, that this woman was entirely right in leaving when she did. She had been forced out. In our view she had been unfairly dismissed."
They give a basic award and what, in substance, is a compensatory award of loss to date and future loss and loss of her statutory rights and that all came to £3,362. Both against the employers and against Mr Holvey:11. Loss relating to her unfair dismissal and caused by the discrimination comes to £3,362 which comes to [they mean, of course, in total] £7,362 [with the £4,000 which they have already awarded]. "Concerning this decision, there are certain obvious criticisms which are made on behalf of Mr Holvey. The basis of the decision was first of all some matters which Miss Sabur found it very difficult to put her finger on, but then they find solid discrimination, as they say, in the way she, and apparently another or others, were disciplined. They should have set out, in our view, the way in which the differences occurred, the way in which they thought that the cases were properly comparable and the reasons which drove them to the conclusion that the only explanation which was reasonable for what had occurred was that there had been racial discrimination. That is something which both employers and, indeed, a person in the position of Mr Holvey are entitled to expect, the basis on which they have been convicted of the undoubtedly serious and unpleasant charge of racial discrimination, to which the Tribunal felt driven to come. The Tribunal should have told both the employers and Mr Holvey how they had reached that conclusion and we do not think that they gave enough detail of their findings. They did clearly found their decision on the basis not of the imponderable matters but on solid discrimination in matters of discipline and they do not say exactly how they found it.Next, one says, "What discrimination exactly?" It was discrimination evidently connected with discipline but how did they feel that responsibility lay for this? Mr Stevenson seeks to say, "Well, it was all one. It was the employers who were liable for everything that Mr Holvey did and everything that everybody else did." We think that, with respect, will not do. The charge against Mr Holvey under s.32 was of aiding the discrimination of his employers and we think that it behoved the Industrial Tribunal to look at the respective responsibility of the parties and the compensation which they though it appropriate to award against each. It said that Mr Holvey was the first protagonist to discriminate against her. So be it. What was the appropriate compensation if, as appears to be the case, the Tribunal found that he was guilty of discrimination which had led to the employers to dismiss the lady? They would bear in mind, no doubt, what support he had, what instructions he received, what training he had received, what supervision he had in assessing his level of responsibility and also it would be appropriate for them to consider his general means in deciding what was the appropriate compensation to award against him.But then they would have to look at the employers, against whom they took a severe view. The employers were, in their view, insincere. They said that they were equal opportunities employers. They took no steps to make sure that there had been no discrimination even when a complaint was made of it. What instructions, what education, what supervision had they given their managers? Why had they taken no steps to look into it when the complaint was made to a senior manager? To what extent did the the Tribunal think the employers more blameworthy or less blameworthy than Mr Holvey? And how did they think, having regard to the employer's resources and so forth, how did they think that responsibility should lie? Did they think that part of the award should be joint, that is to say, that the employers were being made liable for something for which Mr Holvey was liable? Did they think part of the award should be several against the employers only? Because the employers were separately liable for not looking into the matter and not taking the steps which had been mentioned.If, as was clearly the case, the Applicant said "both Mr Holvey and the employers are liable" and the Tribunal agreed about that, then they should, in our view, have apportioned liability between them; not, of course, in any precise way; but formed a broad and just view of the extent to which they should award compensation separately, if at all, against Mr Holvey and then they should have gone on to consider the extent to which they should award compensation against the employers. What they appear to have done was simply to say, "This is a joint award against both of them."And then they go on to say in terms that they are dealing with the complaint relating to dismissal and loss flowing from that, as a case of unfair dismissal but, nonetheless, they made a joint award in respect of that. It appears to us that that again is not right, it is the employer who dismisses not the manager, though the manager may act on behalf of the employer, and it seems to us that they should, at any rate if they were going to say that on some basis or other, Mr Holvey was liable for that, make quite plain the basis on which they were making that award.Mr Holvey, having learned of the award, applied to the Tribunal for a review. It is said (wrongly, we think), by Mr Stevenson that the Tribunal conducted a review. They decided not to hold a review and by a majority. They recite matters which have now come to light, namely, that Mr Holvey only heard about the hearing three days before. He made a remark which was perhaps not terribly sensible about how he though it right not to attend the hearing and then the Tribunal says that the majority decision is that Mr Holvey knew of the application. He discussed it with the directors and he knew a reply to the originating application should be made on his behalf and the majority say that they were satisfied he knew of the date of the hearing, which he received by recorded delivery at his address. That was Mr Stevenson's courteous and proper notification three days before the hearing. It seems to us that that is another ground for criticism.It seems to us that in all the circumstances Mr Holvey had, in effect, been placed in a very difficult if not an impossible position. To learn of the hearing only three days before is something coming very close to a complete denial of justice. He was entitled to have proper notice of the hearing from the Tribunal and through the mishaps which had occurred he had not had that and it appears to us that we should agree with the view of the minority which was the Chairman, himself, who thought that there should have been a rehearing. We think that in those circumstances the Tribunal should have granted a new hearing, at any rate so far as Mr Holvey was concerned. These points are made by the solicitors who sent in a very helpful skeleton argument on behalf of Mr Holvey.We view the matter like this. The employers, being represented, of course, by liquidators who would have had very much in mind their own interests, not only took no part in the hearing but did not seek to appeal or to seek a review and we think it would be quite unjust that the award which has been obtained by Miss Sabur against the employers should be in any way interfered with. That was a justly and regularly obtained award. She elected to proceed separately against Mr Holvey. He, for the reasons which we have set out, has suffered an injustice. He has suffered an injustice in that he has not had a proper opportunity to defend himself on what, as I say, we regard as the serious and unpleasant charges against him of racial discrimination. In those circumstances we think that the proper course is to sever the two parts of the case and to say that that part of the case which relates to Mr Holvey and the complaint made against him is to be separately considered. We remit it to another industrial tribunal, differently constituted, so that they can try Miss Sabur's case, if she wishes to proceed with it as, of course, she very well may, against Mr Holvey alone, resting on her award which she perfectly regularly obtained against Bacons Shoes Ltd and proceeding against Mr Holvey. That tribunal will, of course, say how they are going to proceed. We would expect them to give a proper opportunity to Miss Sabur to be heard, to hear the evidence because, of course, they will be hearing the matter anew, to hear Mr Holvey and any evidence which he chooses to call and, of course, look at any documents he wishes to put in. They will say whether the charges made out against Mr Holvey are proved and then say what, if any, compensation they think it right to award. In so far as the award made by the Industrial Tribunal is against Mr Holvey, it is set aside by us and the matter is to be tried anew. We say nothing about the merits and the Tribunal is to proceed without paying any regard to such comments as I have felt obliged to make on our behalf in the course of the hearing. It is to be simply a new hearing of the application.