D'Souza v London Borough Of Lambeth [1997] UKEAT 1206_95_0910

EAT
D'Souza v London Borough Of Lambeth
[1997] UKEAT 1206_95_0910 · 1997-02-04
MR JUSTICE MORISON (PRESIDENT) : Mr D'Souza is of Asian ethnic origin. He joined the GLC in November 1984 and, following its abolition, became employed by the London Borough of Lambeth from 3rd March 1986. He remained in employment until January 1990 when he was dismissed by Lambeth, unfairly and unlawfully on grounds of his race. The facts to which we shall briefly refer in this judgment reveal that Mr D'Souza was discriminated against on numerous occasions during the course of his employment by Lambeth. In the experience of this Court, this is the worst case of unlawful race discrimination that it has ever had to consider. Furthermore, there is no reported case which shows such persistent discrimination against one individual. The personnel at the London Borough of Lambeth who were responsible for these unlawful acts are, we understand, no longer employed by the Borough. The Chief Executive of the Borough, who took up her post on 3rd April 1995, well after the events complained of occurred, has provided this Court with a comprehensive statement. In addition, on behalf of the London Borough of Lambeth she has unreservedly apologised in writing to Mr D'Souza for the mistreatment which occurred. It goes without saying that it is most regrettable that a public authority, such as the London Borough of Lambeth, should have permitted persistent acts of discrimination on grounds of race against a relatively senior member of their staff. But for the intervention of the Chief Executive, following this Court's request to Mr Jeffrey Burke QC on behalf of Lambeth that her assistance be sought, we would have requested a formal investigation of Lambeth's policies and practices so as to minimise the risk of a similar occurrence in the future..Mr D'Souza made a series of five complaints of racial discrimination or victimisation to the Industrial Tribunal. In the first, he complained that his employers were victimising him by bringing disciplinary proceedings against him because he had complained of race discrimination. That complaint was upheld by the Industrial Tribunal. His second complaint was that the London Borough of Lambeth had failed to short list him for an appointment on grounds of his race. That complaint was also upheld. Mr D'Souza had submitted a questionnaire under the statutory provisions; the respondents failed to provide any answer to the questions raised. His requests for discovery of documents were ignored or refused. The London Borough of Lambeth relied on a written representation but did not make an appearance before the tribunal. The Industrial Tribunal concluded as follows:
"6. In the absence of any evidence from the Respondent, we doubt the accuracy of the reason for not shortlisting the Applicant stated in the subcommittee's minutes, given that the application was for substantially the same job as for the one for which he had previously been shortlisted. Quite apart from that doubt however we note that paragraph 5 of the written representations gives a different reason namely the background i.e. the Applicant's employment history. The two reasons are inconsistent and we doubt if either of them is the correct one."
By way of remedy, the Industrial Tribunal made a declaration that Mr D'Souza had been discriminated against on racial grounds and they ordered the London Borough of Lambeth to pay him £500 compensation for injury to his feelings. They observed that the applicant did not contend that he would have been given the appointment even if he had been short-listed and, therefore, they were not prepared to award him any financial compensation through loss of the opportunity to obtain promotion.The third complaint he made was dismissed by the Industrial Tribunal.The fourth complaint was that he had been victimised by the London Borough of Lambeth. His complaint related to the Borough placing Mr D'Souza on special leave with a view to terminating his employment. On 21st September 1989, after his lunch break, Mr D'Souza found a letter addressed to him which told him that he was being placed on special leave and that he was not to report for work. He was told that his employment would be terminated and terms of severance would be discussed. He questioned a Mr Williams about the letter and was told that he, Mr D'Souza, was a "trouble maker" as he had gone to the Industrial Tribunals and that he was lucky that they were willing to negotiate a termination package for him. He was required to leave at once and take only his personal belongings but not including his papers relating to his Industrial Tribunal complaints.He arranged to take a holiday, and, on his return, found that he had not been paid for the month of October. He submitted a statutory questionnaire. The Borough did not respond to it. His union representative was told that Mr D'Souza had to go because an Industrial Tribunal case had cost a lot of money. The Industrial Tribunal's conclusion was as follows:
"7 On the evidence we are clear that the only inference to be drawn from the fact that the Applicant had raised his continuing complaints of racial discrimination and victimisation with Mr Williams and had been suspended the very next day is that this was a deliberate act of victimisation, contrary to Section 2 of the Race Relations Act 1976. We also take note of the fact that the Respondent failed to reply to the Applicant's questionnaire and we draw the obvious inference from that. Despite the Respondent's denial, we find that the Applicant was indeed victimised or punished for having lodged complaints with the Industrial Tribunal."
The Industrial Tribunal concluded that Mr D'Souza was entitled to compensation for injury to his feelings caused by the "unjustified and unlawful suspension". They described such action as "severe in the extreme", and awarded aggravated damages which they assessed at £3,000.The fifth complaint related to his dismissal in January 1990. This case was heard by a tribunal sitting at London (South) on 16th November 1992. The London Borough of Lambeth did not appear. They relied on written representations. In their Notice of Appearance the Borough accepted that Mr D'Souza was unfairly dismissed and they said this:
"He was paid the sum of £12,565 as compensation for this. The Council intends to resist Mr D'Souza's claim of racial discrimination and victimisation. Mr D'Souza was dismissed by the Council in circumstances which were unusual but not unique. Mr D'Souza's race was not a factor in reaching this decision."
The Industrial Tribunal concluded that Mr D'Souza was unfairly dismissed as had been admitted. They referred to the detailed justification of the Council's action which was contained in a document called "urgency procedure dismissal report". In that document it was stated that Mr D'Souza was a vexatious litigant. It said that that was evidenced by his various tribunal applications and, it continued:
"The previous attempt to take disciplinary action against him produced a complaint of harassment and victimisation to the Industrial Tribunal. Clearly, any fresh attempt to discipline him would only lead to further litigation. Disciplinary procedures are only workable with the co-operation of all parties."
The report indicated that Counsel had advised that Mr D'Souza be dealt with through disciplinary procedures. However, Lambeth's Employee Relations Department were adamant that the Council should adopt the least costly approach and recommended the payment of £12,000 odd. The Industrial Tribunal said this:
"7. We fail to see any real justification for the adoption of the Council's urgency procedure in the present case. The blame for the position in which the Respondent found itself cannot simply be placed on the Applicant. Grievances should have been dealt with as they arose and disciplinary action, if appropriate, taken without delay. To say that the Applicant was a vexatious litigant entirely begs the question."
The tribunal noted that there was no evidence supplied to show that reinstatement was impracticable even by way of written representations. They continued:
"8. ... In the circumstances, there is no material on which we could find that it is. We appreciate that the Respondent has stated that all trust and confidence has been lost, but this is no more than an assertion unsupported by any evidence."
Accordingly, in the circumstances, they concluded that the right order to make was that Mr D'Souza be reinstated in his former employment, such reinstatement to take effect from 16th January 1993, being the third anniversary of the termination of his employment, and that he should be put into the same position financially as he would have been in had he not been dismissed which would involve him being paid three years back pay plus any increases which would have been payable had be not been dismissed. They also indicated that all rights and privileges including seniority and pension rights must be restored to Mr D'Souza.In relation to his complaint that his dismissal was also unlawful, the Industrial Tribunal upheld this complaint as well. In paragraph 12 of their decision the tribunal said this:
"12. Section 76 of the Employment Protection (Consolidation) Act does not apply where reinstatement is ordered. Accordingly it is open to us to award up to the maximum statutory amount for racial discrimination and victimisation. We have heard some evidence on the Applicant's history of unemployment but we do not consider that it would be right to make a separate award in respect of financial loss over and above the order for reinstatement we have made for the unfair dismissal. That said, the Applicant is clearly entitled to damages for hurt feelings. Obviously dismissal is the most traumatic treatment an employee can suffer and the circumstances of the present case in our view justify an award of £3,000, which include aggravated damages. In addition we agree with Counsel that an award of exemplary damages is appropriate in the present case. We feel that the Respondent, a local authority, has acted in an oppressive manner and also with a view to profit in that a proper procedure would have led to a further delay and this was deliberately obviated by the expedient of summary dismissal. It has also noted that the Respondent is under a statutory duty under section 71 of the Race Relations Act 1976 to ensure that it does not act in a racially discriminatory way. We do not consider our award of £3,000 is adequate to deal with this case and we accordingly award a further £2,000 exemplary damages, making a total of £5,000."
In the light of their previous behaviour it was no surprise that the London Borough of Lambeth elected not to comply with the order for reinstatement which had been made. Accordingly, a further remedies hearing was required. Eventually the case came before an Industrial Tribunal held at London (South) on 10th and 11th July 1995. Before us, different explanations were put forward by the parties as to why there was so much delay in bringing the matter back before the Industrial Tribunal. It is not necessary for us to make any findings on that question. But we simply note that the London Borough of Lambeth did not pay the compensation to which Mr D'Souza was entitled. It is also clear that the London Borough of Lambeth were slow to provide the relevant documentary material to support their contention that, due to a reorganisation, there was no longer a position available to Mr D'Souza. As the Chief Executive put it in her statement "This was regrettable and should not have occurred".The Industrial Tribunal's decision was first that it was not practicable to reinstate the applicant in the post which he had formally held in November to January 1990. Second, therefore, the tribunal made no additional award in respect of the failure to reinstate. The tribunal indicated that it had reached that conclusion "reluctantly". They said:
"9. It is clear that the Respondent acted unreasonably in failing to provide information on which the Tribunal could have made a fair decision in 1992. The Tribunal believes that if its predecessor had knowledge of the evidence presented to this Tribunal, its order might have been different and it seems to this tribunal that there is a loophole in the Act, if an order for reinstatement is made in accordance with sections 68 and 69 of the 1978 Act, for the Tribunal only to be told at a later date that it made the wrong decision in the light of the full facts. With hindsight an order for re-engagement would have been more appropriate, but that was not made."
The Industrial Tribunal did not accept the argument that the alleged breakdown of trust and confidence made it not practicable for him to be reinstated. It said this:
"10. It notes that in a series of applications against the Respondent over a period of time, each of the Applicant's complaints was upheld. It accepts that on a number of occasions the Respondent failed to attend the hearing, but the Respondent knew that there were to be hearings and it takes the consequences of such failure to attend. The Tribunal also notes that on the occasion that the Respondent did attend and defend the proceedings, its witnesses were considered to be uncreditworthy. In those circumstances, where on a number of occasions a Tribunal has found the Respondent to be at fault, the Respondent cannot then rely upon a breakdown of the relationship of trust and confidence between employer and employee as justification for not reinstating."
They adjourned the case to 14th September at which the total amount of compensation due to Mr D'Souza would be calculated; and indicated that the £5,000 award made for injury to his feelings in November 1992 would be disregarded when calculating his loss for unfair dismissal and applying the statutory maximum under s.75(1) of the 1978 Act. They also refused Mr D'Souza's application that they should review the award of £5,000 which was made on 16th November 1992.When the matter came on for hearing on 14th September 1995, the tribunal were presented with conflicting figures and arrived at a total compensatory award of £377,546.42, but then applied the statutory maximum which resulted in his loss being capped at £8,925. It was that smaller sum which was awarded to Mr D'Souza.Prior to 3rd July 1994, the amount of compensation awarded to a person by an Industrial Tribunal which found that a complaint presented to it of unlawful discrimination on grounds of race was well-founded "shall not exceed the limit for the time being imposed" by the relevant provision of the Employment Protection (Consolidation) Act 1978 . Following the decision of the European Court of Justice in Marshall No.2 , the cap on awards for compensation for complaints of unlawful discrimination on grounds of race or sex was abolished. In the case of race discrimination the cap was lifted by virtue of the Race Relations (Remedies) Act 1994 s.1(1):
"In section 56 of the Race Relations Act 1976 (remedies on complaint to industrial tribunal in respect of acts of racial discrimination,) subsection (2) (limit on the amount of compensation) shall cease to have effect."
S.3(3) of the Act provided:
"This Act shall come into force at the end of the period of two months beginning with the date on which it is passed."
The Act came into force as from 3rd July 1994.In Harvey v The Institute of the Motor Industry [1995] IRLR 416 , the EAT held that the lifting of the cap in sex discrimination cases applied to awards which were made after the date when the cap was removed, regardless of the date of the dismissal. The London Borough of Lambeth wished to reserve their right to argue that the 1994 Act did not lift the cap in relation to awards of compensation in respect of acts of discrimination occurring before 3rd July 1994. We can see no legal foundation for Lambeth's position. We are simply content to adopt the reasoning of this Court in the Harvey case. It follows, therefore, that as at 14th September 1995, it was open to the Industrial Tribunal to make an uncapped award of compensation for unlawful discrimination, subject to Lambeth's further arguments, which found favour with the Industrial Tribunal.The Industrial Tribunal noted the previous decision in November 1992 and referred to paragraph 12 of it. They continued:
"4. ... In those circumstances, this Tribunal considers itself bound by the decision of the previous Tribunal not to award compensation for loss of earnings under the 1976 Act, but to confine the remedies under the 1978 Act to reinstatement. Following this Tribunal's decision in July that reinstatement was not practicable, the compensation being assessed this morning is under the 1978 Act only and therefore the statutory maximum applicable in January 1990 of £8950 applies."
The first question that is raised on this appeal, which is of considerable financial consequence, is whether the Industrial Tribunal erred in law in their conclusion on this point. Despite Mr Burke's cogent submissions it seems to us quite clear that the Industrial Tribunal in November 1992 did not make an award for financial loss stemming from the dismissal because they had made an order for reinstatement which would have the effect of putting him back into the position he would have been in had he not been dismissed. As every tribunal appreciates, an order for reinstatement is a two stage process. The first order is "provisional" and all questions of compensation and special awards are left over. It was Mr Burke's submission that the Industrial Tribunal, at the November 1992 hearing, considered what compensation to give under s.56 of the 1976 Act; it did so; accordingly, the Industrial Tribunal was functus officio as regards any compensatory award under s.56 of the 1976 Act. The Industrial Tribunal had not made a recommendation under s.56(1)(c) of the Act and therefore it was not open to the tribunal to consider the making of an increased award of compensation under s.56(4) of the Act.On behalf of Mr D'Souza, Mr Whitmore submitted that it was clear that the Industrial Tribunal in November 1992 had deferred all questions of compensation as the order for reinstatement had been made, and compensation could not be assessed until Lambeth were willing to comply with it. All that they had decided, at that stage, was that there should be no separate award in respect of financial loss over and above the order for reinstatement which they had made. He accepted that had the matter come back speedily before the Industrial Tribunal, as the law then stood, it would have made no difference if compensation was then awarded under the employment protection legislation or under the Race Relations Act, since the amount recoverable was the same.It seems to us quite clear that Mr Whitmore's submissions are to be preferred to those of Mr Burke. The question of compensation for losses flowing from the dismissal did not arise at the stage at which the tribunal was considering the matter. Having made an order for reinstatement there was no need for any order for compensation to be made, since, if the order was complied with, Mr D'Souza would have sustained no loss. But if Lambeth did not, as they did not, comply with the order for reinstatement then it seems to us manifestly clear that the tribunal were reserving to themselves the right to consider what compensatory award should be made. We cannot therefore agree with the statement made by the Industrial Tribunal that the November 1992 tribunal had decided "not to award compensation for loss of earnings under the 1976 Act". That question did not arise for consideration by the 1992 tribunal. We agree with Mr Whitmore that it is unlikely that as the law stood in 1992, it would have mattered under which legislation a compensatory award was made. However, once the cap had been lifted, it seems to us that an industrial tribunal should, where the claim is for unlawful unfair dismissal make the award under the 1976 Act to give the employee his full compensation. It seems to us quite clear that in an analogous case where an unfair dismissal occurred which was also unlawful under the Sex Discrimination Act 1975 , a tribunal which failed to make an uncapped award to the complainant would thereby fail to give effect to the European Court's decision in the case Marshall No.2 . The effect of that decision was that compensation must enable the loss actually sustained to be made good in full. Had Mr D'Souza's complaint been under the Sex Discrimination Act 1975 rather than the Race Relations Act 1976 , there could be no doubt as to the proper course to be taken by the Industrial Tribunal.We see no good reason for reaching a different conclusion merely because the complaint in this case is of unlawful race discrimination. In our view it is clear, firstly, that the Industrial Tribunal in November 1992 had not completed its task in relation to the assessment of compensation for loss of employment, whether under the employment legislation or the race relations legislation. It was therefore not functus officio . Second, it was open to the Industrial Tribunal in 1995 therefore to have made an uncapped award of compensation arising from the termination of Mr D'Souza's employment having regard to the provisions of the Race Relations Act 1976 . Third, therefore, it is our judgment that Mr D'Souza is entitled to an uncapped award.The second issue to which we must turn, therefore, is the calculation of that compensatory award. There are two short points at issue. The first relates to the calculation of the loss of pension rights from the date of his dismissal namely 16th January 1990 to the date of the hearing, namely 14th September 1995. The Industrial Tribunal used what is colloquially called the 'contribution method' to assess the pension loss. They were persuaded by Counsel for Lambeth when applying that method to make a discount from the sums they would have otherwise awarded, because during part of that period Lambeth were enjoying what is known as a 'pensions' holiday'. Lambeth accepted that in respect of any period during which Lambeth were not required to make any employers' contribution the 10% figure should be applied; but contended that in respect of any period during which there was a pensions' half holiday (that is, when some contributions were made, but less than 10%) Mr D'Souza was only entitled to receive by way of compensation the amount which Lambeth actually put in. The tribunal when giving its decision said this:
"4. ... With regard to his pension loss, the Tribunal followed the directions and recommendations of the Industrial Tribunals: Compensation for Loss of Pension Rights (HMSO 1991) as a guideline to calculation. It is clear from that publication that the Applicant is entitled to have taken into account contributions from an employer during a pensions holiday and the suggested figure is 10%. The Tribunal has therefore calculated the Applicant's loss in pension terms between 16 January 1990 and April 1993 at 10%. It is also calculated as pension loss of future earnings at 10% but has allowed a deduction of 7% for accelerated payment. ..."
As we understand the reasoning of the Industrial Tribunal, they accepted Lambeth's contention that where there was not a complete holiday, (Lambeth were paying in the relevant years 3%, 6% and then 9% before resuming contributions at 10%,) the pension loss should be reduced accordingly. The figure they arrived at (up to the date of the hearing) was £14,431.76. If they had calculated the loss of pension rights by taking the 10% figure throughout, the figure would have been £18,269.07. It seems to us quite clear that the Industrial Tribunal erred in law in the conclusion that they arrived at. A pensions holiday does not mean merely a holiday from making any contributions at all. It means a holiday from making full contributions to the scheme. The contribution method is a notional method for calculating the pension loss. It is unhelpful when applying this notional method to make the deductions of the sort that Lambeth contended for in the Industrial Tribunal, and which partially succeeded. There is no justification for reducing an employee's entitlement to an award for a loss of pension rights merely because a fund might at any one particular moment happen to have sufficient money in it according to an actuarial review which has been carried out. Accordingly, we allow the appeal, and increase the compensatory award for loss of pension rights from 16th January 1990 to 14th September 1995 to the larger of the two figures. It is to be noted that in relation to the future loss of pension rights, the tribunal have correctly used the 10% figure.The second criticism of the Industrial Tribunal's award was made by Lambeth. It was their contention that the tribunal have improperly assessed Mr D'Souza's future loss of earnings during the remainder of his working life, namely four years and 10 months. The figure which they arrived at was £174,000 less £12,180, which gives a figure of £161,820. That figure implies a multiplier of 4.5 or thereabouts, for a period of four years and 10 months. We agree with Mr Burke that that multiplier cannot be justified. Applying the Ogden tables, it seems to us that a fair multiplier would be of the order of 4.16 which would produce a total figure (in round terms) of £150,000. We therefore substitute that figure for the figure of £161,820. With those adjustments, the total award which, in our judgment, the Industrial Tribunal should have made in this case, is in the sum of £358,288.73. That is the net figure taking into account the sum of £11,275 which had been paid already by way of compensation to Mr D'Souza.We turn therefore to the third and final issue between the parties, which related to Mr D'Souza's contention that he should have been either reinstated or an order for re-engagement made in his favour. In a conspicuously able argument, courteously presented to us, Mr D'Souza submitted that the London Borough of Lambeth had, effectively, by their conduct deprived him of the opportunity of having an appropriate order made in his favour in this case.It was Mr Burke's submission that an Industrial Tribunal when considering whether to make an order for reinstatement or re-engagement must choose between the two remedies. It must start by considering whether to make an order for reinstatement. If it decides that an order for reinstatement should not be made for one reason or another, then and only then, will they go on and consider the question for an order for re-engagement.Mr Burke submitted that in this case the tribunal in November 1992 made an order for reinstatement. Having made such an order, it was not open to the Industrial Tribunal, even if that order was not complied with, then to consider making an order for re-engagement. It was this submission which was made by junior Counsel to the Industrial Tribunal which caused the Industrial Tribunal to say that there was a loophole in the Act. By not appearing before the Industrial Tribunal in response to an application by Mr D'Souza that he should be reinstated, Lambeth had deprived the Industrial Tribunal of the opportunity of receiving evidence to the effect that it was not practicable to make an order for reinstatement because a reorganisation had taken place within the Computer Services department in Lambeth. Had the Industrial Tribunal in 1992 appreciated that there had been such a reorganisation, then they unquestionably would have wished to have considered whether it was practicable to make an order for re-engagement. But because they made an order for reinstatement, under the terms of the statute it was no longer open to them to make an order for re-engagement.We consider that Mr Burke's submissions on this point is correct. It follows therefore that Industrial Tribunals should be wary of making an order for reinstatement in the absence of the respondent. It cannot, we think, be said that by not appearing on the first occasion Lambeth were estopped from denying that it was not practicable to comply with the tribunal's order. In many cases, as a matter of common sense, an Industrial Tribunal will be able to conclude on the material before them that if an employer fails to resist the making of a reinstatement order it is unlikely that they are going to be able to show in due course that compliance with such an order was not reasonably practicable. On the particular facts of this case, the Industrial Tribunal were unable to take that robust view. Because of the passage of time it must have been well in the tribunal's mind that by 1995 it was not sensible to consider the question of reinstatement or re-engagement. Too much water had flowed under the bridge between Mr D'Souza's dismissal and the date when the tribunal were considering the practicability of compliance with an order which had been made three years previously.We are unable to conclude that the findings made by the tribunal in 1995, that on the evidence, it was not practicable for Mr D'Souza to be reinstated could properly be described as perverse. Mr D'Souza had not asked for re-engagement, although no doubt he would have done so had Lambeth participated in 1992 hearing. But whatever the merits of his position, and we see considerable force in what he says, it does not seem to us that this would be now an appropriate case to consider the question of re-engagement. In these circumstances we do not need to address the detailed arguments which were presented to us on either side on this issue. In our judgment, generous and full compensation to Mr D'Souza will adequately provide him with reparation for the undoubted injury which he has sustained.As we said at the beginning of this judgment, Mr D'Souza has been the victim of shameful treatment by a local authority. He has been deprived of a job which he enjoyed doing as a result of a campaign of racial discrimination and victimisation against him. So far as money can do it, he has been put into the position he would have been in had he remained in Lambeth's employment throughout the rest of his working life.The new Chief Executive of Lambeth says, and we accept:
"I am appalled by the course of treatment that the Industrial Tribunal has found that Mr D'Souza was subjected to."
Her state of mind is shared by all the members of this tribunal. We would like to place on record our admiration for the way Mr D'Souza has conducted himself on every occasion that he has appeared before us. He is a man of undoubted ability and talent. We suspect that he has many skills which can be used to good advantage in the next four years or so.