ADDEY & STANHOPE SCHOOL & OTHERS [2003] UKEAT 0565_03_2511

EMPLOYMENT APPEAL TRIBUNAL
BAILII case number: [2003] UKEAT 0565_03_2511Case No Appeal No. UKEAT/0565/03Venue 58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS
Between
ADDEY & STANHOPE SCHOOL & OTHERSRESPONDENT
Before
Mr Justice BurtonDate 25 November 2003
[1]APPEARANCES For the Appellant MR JEREMY GORDON (of Counsel) Instructed by: Messrs R C Hall Solicitors Gibson House Tottenham London N17 0DH For the Respondent MR KEITH BRYANT (of Counsel) Instructed by: London Borough of Lewisham Legal Services Lewisham Town Hall London SE4 4RU THE HONOURABLE MR JUSTICE BURTON (PRESIDENT) This is the hearing of an appeal by Mr V, who is of Croatian origin, against the unanimous Decision of the Employment Tribunal at London (South) handed down on 30 May 2003, that all of his allegations in respect of his claim for race discrimination under the Race Relations Act 1976 , fell within what the Tribunal called the " Hall v Woolston Hall formula" and that the Applicant was thereby prevented from pursuing them before the Employment Tribunal, and that his Originating Application complaining of race discrimination was dismissed.[2]The facts of the case were found by the Tribunal (in circumstances which we will relate in a moment) in a Decision sent to the parties on 18 February 2002, after a hearing on 29 November and 21 December 2001, which we shall call 'the Second Hearing'. Those facts are set out in that decision at paragraph 5 as follows: 5(a) "The Applicant is a Croatian national born on 18 January 1965. He left secondary school in 1983 with GCSE equivalents in 15 subjects, including English.(b) In June 1992, two months after his visitors' leave expired, the Applicant applied for asylum in the United Kingdom. He received a Standard Acknowledgement Letter (SAL) from the Home Officer which says in terms - "The above named has applied for asylum in the United Kingdom, and this is under consideration. The Applicant may not take employment paid or unpaid. Permission to take employment may be granted if the application for asylum has not been resolved within a period of six months. Any application to take employment should be accompanied by this acknowledgement, which will be endorsed accordingly."(c) The Applicant never made any such application and the letter was never so endorsed. The Applicant does speak and read English, and the letter is perfectly clear. Further, the Applicant's own instructions to his solicitors, recorded in open correspondence, given not long before the hearing, conflicted with his account at the hearing on this point.(d) In August 1999, the Applicant made a graduate training teacher application under a new scheme which made it possible for those with overseas qualifications to train as United Kingdom teachers. The teaching experience relied upon is not supported by any documentary evidence and seems likely to have been a fabrication. He incorrectly ticked the box which indicated that he had right of abode in the United Kingdom, and did not tick a box indicating that he needed a work permit. The Applicant still did not seek to have his SAL stamped.(e) On 4 November 1999, the Applicant applied to Addey and Stanhope School [whose Governors are the Respondents in these proceedings] for a post as a graduate trainee teacher. He again indicated that he did not need a work permit, though the final decision on his asylum appeal was pending. The form stated that a check would be made on his work permit status, but the Governors relied on TimePlan [who we assume were the head-hunters] to make that check, and it was never made.(f) On 8 November 1999, the Applicant began paid employment at Addey and Stanhope School. He continued to claim State benefits throughout his employment and to make fraudulent statements as to his employment status to enable those claims to continue.(g) In July 2000, the Applicant was dismissed from the Respondent's employment. He was still claiming benefit…"[3]The Tribunal records, in paragraph 6, that the circumstances of the contract were such that had the Respondent discovered them it might well have been entitled to void the contract for illegality. It seems to us that that is an understatement. It is quite plain that the Respondent would have been entitled to avoid the contract for fraudulent misrepresentation; and indeed that the contract was void ab initio . The Tribunal continued, in paragraph 6:
"The Tribunal was not greatly impressed by the Applicant's attempt to claim that the Respondent's own lack of double checking absolved him from the falsehoods on his application forms."
[4]The litigation history of the proceedings can be shortly described as follows: On 17 and 18 September 2001 ("the First Hearing") the original Employment Tribunal hearing on the merits took place in relation to the dismissal which had, as indicated, occurred in July 2000. It apparently became clear in the course of the hearing to the Tribunal that the question of illegality of the Appellant's conduct and of the contract arose, and the Tribunal was adjourned to the Second Hearing, which occurred on 29 November and 21 December 2001, as we have already described.[5]The Tribunal's decision at that stage was that the Appellant could pursue all its claims, because he was not prevented by any illegality in the employment contract from claiming discrimination under the Race Relations Act 1976 .[6]It is apparent that the Tribunal, at that stage, had in mind, because it referred to it, the decision in the Court of Appeal, of Hall v Woolston Hall Leisure Ltd [2000] IRLR 578 . The Respondents took the view that the Employment Tribunal had misunderstood, or misconstrued, or not followed Hall v Woolston Hall and appealed to the Employment Appeal Tribunal.[7]The matter came before the Employment Appeal Tribunal, chaired by HH Judge Serota QC, on 15 August 2002. The whole issue before Judge Serota QC revolved around whether the central dictum in Hall v Woolston Hall in particular, and the case in general, had been complied with by the Employment Tribunal. The Employment Appeal Tribunal's decision is now reported at [2003] ICR 290 and, not surprisingly, the Employment Appeal Tribunal applied the dicta in Hall v Woolston Hall by which it was, as we are, bound.[8]The central conclusion in Hall v Woolston Hall is represented by one paragraph of Peter Gibson LJ's judgment, although of course there were illuminating passages both in the balance of his judgment and in the judgment of Mance LJ, who agreed with him, and with whom, and with Peter Gibson LJ, the third judge, Moore-Bick J, also agreed.[9]That passage reads as follows (it is important to appreciate that the Hall case was a sex discrimination case, although it is accepted, subject to what we shall note, that the principles of sex discrimination and race discrimination are identical, and that the operation and effect of the relevant acts are materially the same): 42 "As ss.65 and 66 of the 1975 Act indicate, sex discrimination which is unlawful under the 1975 Act is a statutory tort, to which the tortious measure of damages is applicable if the remedy in s.65(1)(b) is that chosen by the tribunal as being the just and equitable remedy…It therefore follows that the correct approach of the tribunal in a sex discrimination case should be to consider whether the applicant's claim arises out of or is so clearly connected or inextricably bound up or linked with the illegal conduct of the applicant that the court could not permit the applicant to recover compensation without appearing to condone that conduct."[10]Both Hall and the earlier case of Leighton v Michael [1995] ICR 1091 were cases in which the facts were very different from those before us. The illegality there, in both those two cases, was by the employer in failing to deduct tax and National Insurance, so that the employment of the employee was thereby rendered illegal; an illegality which was, in both cases, known about, and therefore participated in, by the employee, in receiving tax-free sums. Although, therefore, in each case, the employee was plainly implicated in the illegality, the illegality was one for which the employer was primarily responsible, or, put another way, certainly not illegality for which the employee was wholly or primarily responsible.[11]The facts in this case, of course, are very different. On the findings of the Employment Tribunal, this was a contract which should never have been entered into at all, and could never have been entered into at all but for the fraudulent misrepresentations by the Applicant. The illegal conduct was therefore entirely that of the Applicant and it was the employer who was the innocent participant in what was in fact an illegal contract. Section 8 of the Asylum and Immigration Act 1996 , together with section 24 of the Immigration Act 1971 , makes it a criminal offence for both parties to the contract because the Applicant was simply not entitled to enter into employment at all, unknown to the Respondent.[12]Thus, the result in Hall was that in the circumstances the Court of Appeal concluded that the claim for discrimination was not affected on the facts of that case by the illegal conduct of the employer, participated in by the employee.[13]What was before Judge Serota QC was whether the contract in this case had been appropriately approached by the Employment Tribunal, when it permitted all the Applicant's claims to proceed. The arguments before Judge Serota QC plainly ranged round Leighton v Michael and Hall ; but central to his consideration were the conclusions of Peter Gibson LJ, which were recited by Judge Serota QC.[14]The central conclusions of the EAT per

Judge Serota QC are set out at paragraph 36 onwards:

"36 It seems to us that the Employment Tribunal must apply the test set out by Peter Gibson LJ at paragraph 42 of Hall v Woolston Hall Leisure Ltd . It seems to us prima [ facie ] that if a claim falls within section 4 (2) (b) [of the Race Relations Act 1976] it will be so closely or clearly connected or inextricably bound up or linked with illegal conduct that no claim should lie. 37 It may well be, because it is by no means clear to us, that some of the claims made by the Applicant in this case, relating to the manner and extent of his classroom supervision and other supervision, would fall within section 4 (2) (b). On the other hand, the dismissal and possibly detriment caused by abuse might not. 38 In those circumstances, it seems to us, that this appeal must be allowed to the extent that this case should be sent back for a further hearing by the Employment Tribunal to determine the relevant facts and whether the allegations made by the Applicant do, or do not, fall within the formula, to which we have referred, set out by Peter Gibson LJ."
[15]The reference to the two sections of the Race Relations Act 1976 are as follows: 4 (2) "It is unlawful for a person, in the case of a person employed by him at an establishment in Great Britain, to discriminate against that employee- … (b) in the way he affords him access to opportunities for promotion, transfer or training, or to any other benefits, facilities or services, or by refusing or deliberately omitting to afford him access to them; or (c) by dismissing him, or subjecting him to any other detriment. "[16]It is plain there that, in giving limited guidance to the Employment Tribunal under the overall umbrella guidance that the Tribunal must on remission apply the test laid down by Peter Gibson LJ, Judge Serota QC was suggesting that prima facie a claim within the former sub-paragraph was likely to be "so closely or clearly connected or inextricably bound up or linked with illegal conduct" that no claim should lie; whereas, a claim under section 4 (2) (c), which either involved dismissal or other detriment such as racial abuse or harassment, might not fall foul of Peter Gibson LJ's test.[17]Fortified with that guidance, the matter adjourned to the third hearing before the Employment Tribunal on 4 February 2003 ("the Third Hearing"). As we have indicated, that Tribunal considered the matter in the light of the guidance of Peter Gibson LJ and Judge Serota QC, deciding whether any or all of the claims before them were, or were not, so closely connected with what they described in paragraph 25 of its Decision as the "deliberate illegality" of the contract on the Applicant's part, as to render the claim unpursuable.[18]Extremely helpfully, if we may say so, Judge Serota QC had ordered steps to be taken which would clarify what Judge Serota QC referred to as the then uncertainty as to what the claims were by the Applicant, by way of an order for further and better particulars of each and every allegation of racial discrimination.[19]The particulars were set out in what were described as "Outline Submissions" on behalf of the Applicant in the Employment Tribunal, which expressly summarised a rather longer document which had been originally produced by the Appellant in handwriting, but subsequently typed up: 12 "Summarising those Further and Better Particulars, the Applicant makes the following allegations:(a) The Respondent failed to provide the Applicant with the satisfactory level of quality training and support as they did for his colleague, Mr John Anderson (FBP para. 2, 4);(b) The Respondent provided a negative reference to the Greater London Tutorial Agency (FBP para. 3);(c) Ms Lennon made many insulting and hurtful references to the Applicant in relation to his professional background and his country of origin (FBP para. 6, 7, 8);(d) Ms Lennon humiliated the Applicant in front of pupils and other members of staff (FBP para. 9);(e) The displaying of a note on the staff room notice board (FBP para. 10);(f) Ms Lennon fabricated observation forms, trainee/mentor meeting notes, needs identification forms, minutes of meetings and invented events that never occurred (FBP para. 11 );(g) Ms Lennon encouraged others to make negative comments about the Applicant (FBP para. 12);(h) Mr Whyte fu1ly supported Ms Lennon's actions in relation to the Applicant's dismissal and ignored the Applicant's complaints about Ms Lennon (FBP para. 13);(i) Mr Whyte refused to sign the Applicant's Declaration (FBP para. 14);(j) The Respondent failed to provide the Applicant with a written contract of employment until after his dismissal (FBP para. 15)(k) The Applicant's terms of engagement were less favourable than those of his colleague (FBP para. 16);(l) The Respondent deleted the Equal opportunities declaration in his contract of employment (FBP para. 17);(m) The Respondent refused to postpone the Applicant's disciplinary hearing (FBP para. 18);(n) The Respondent took no action to investigate the Applicant's complaints that he was being discriminated against (FBP para. 19, 24);(o) The Respondent dismissed the Applicant on grounds of his race (FBP para. 21, 22, 23);(p) The Respondent victimised the Applicant because he complained to his union representative about the race discrimination (FBP para. 25);(q) Members of the Respondent's staff conspired against the Applicant, which led to his dismissal (FBP para. 25)."[20]Three of those sub-paragraphs, namely the allegations (b), (e) and (p), were abandoned by the Applicant, who had Counsel, Mr Hodge, acting for him, who had in fact prepared those submissions (and although in his Skeleton Argument Mr Jeremy Gordon, Counsel now instructed before us, had suggested he might seek to revive the abandoned claims on some unexplained basis, he has disavowed doing so). But the balance of those particulars remained before the Employment Tribunal. The Employment Tribunal considered all of them and, as we indicated at the outset of this judgment, concluded that all of those allegations fell foul of what they called the " Hall v Woolston Hall formula"; and they consequently dismissed the Applicant's application.[21]The Applicant appealed back to the Employment Appeal Tribunal (now for the second time) by a Notice of Appeal which was dated 7 July 2003. There are five grounds in that Notice of Appeal under paragraph 6 ((a) simply being an introductory paragraph), set out at (b) through to (f), and we shall in due course be dealing with those submissions. They were settled by Mr Gordon, the new Counsel instructed for the Appellant.[22]The Notice of Appeal came before His Honour Judge Levy QC in chambers on 14 July 2003 when he sent it forward for a full hearing under the new system whereby he considered it unnecessary to have a Preliminary Hearing. That appeal was of course ready for argument on the basis of the Notice of Appeal, as so permitted through.[23]Subsequent, however, to Judge Levy QC's Order, and for the purpose of the hearing of the appeal today, Mr Gordon settled a Skeleton Argument on 4 September 2003. That Skeleton Argument fleshed out the grounds of appeal to which we have referred, all of which consisted of challenges, as one would expect, to the decision of the Employment Tribunal on the basis that it had not, for various reasons, adequately complied with the direction and guidance of the Employment Appeal Tribunal, and the direction and guidance of the Court of Appeal in Hall , and in particular Peter Gibson LJ's test set out in paragraph 42 of his judgment. The New Ground of Appeal[24]However, in that same Skeleton Argument Mr Gordon included additional matter, and it reads as follows, under the heading " C4. The European Dimension " "On 29 th June 2000 the Council of the European Union made the Council Directive implementing the principle of equal treatment between persons irrespective of racial or ethnic origin of 29 th June 2000 (Council Directive No. 2000/43/EC)." We shall call this "the Race Directive", as opposed to "the Equal Treatment Directive", which has of course been in force for many years, and formed the basis of discussion before the Court of Appeal in Hall which was, as we have indicated, a sex discrimination case, to which we will further refer. The Skeleton Argument continues:
"This is effective as from 19 th July 2003 (Article 16). By Article 249 of the Treaty of Rome (as amended) a directive is binding as to the result to be achieved on Member States, "but shall leave to the national authorities the choice of form and methods". … C5. It seems to have been fully argued in Hall's case that it would be inconsistent with the Equal Treatment Directive to permit any case of sex discrimination to be defeated on the grounds of illegality. Both counsel appearing (for the Applicant and as amicus) agreed on this. The Court of Appeal was attracted by these arguments but found it unnecessary to reach a conclusion on them because the appeal could be allowed under domestic law. See in particular Peter Gibson LJ para 26, Mance LJ para 65 and Moore-Bick para 84. It is submitted that: - A member state (and its courts) may not derogate from the requirements of the Directive 2000/43/EC, other than as provided by the Directive itself. Therefore illegality of the contract of employment cannot defeat a discrimination claim."
[25]This of course is a wholly new point which was not made when the matter came before the Employment Tribunal at either the First or Second Hearing, not made either in a Notice of Appeal to the Employment Appeal Tribunal per Judge Serota QC, or in the course of that hearing when he directed the matter to return to be adjudicated on at what became the Third Hearing in accordance with the dictum of Peter Gibson LJ in Hall , not raised (insofar as it could have been, which we doubt) at the Third Hearing, and consequently when the matter was also not raised in the Notice of Appeal not surprising because in fact it had not been dealt with at any of those earlier stages. It surfaced, therefore, for the first time in the Skeleton Argument.[26]It is wholly inconsistent with what has been going on over the last two years, namely a question as to what parts, if any, of the claim being made by the Applicant, could survive the doctrine of illegality, because it is now an assertion that illegality is wholly irrelevant and that no claim for race discrimination can ever fail on the grounds of illegality.[27]An example was put to Mr Gordon in the course of argument this morning, which he did not shy away from; namely that in the event that a lady was employed, having been illegally smuggled into this country and illegally remaining here, as a prostitute in illegal circumstances under a plainly illegal contract, she would be entitled to complain that her employer, a pimp, was running her sexual services on a discriminatory basis, because he was charging or causing to be charged a lesser sum for her services than for another prostitute of a different race or ethnic origin. He asserted that even such a case would fall within the argument that he would wish to make, that under the Directive (as it now is) no claim for discrimination could be ousted by the illegality of the employment contract in relation to which it is said to operate.[28]It was apparent, when the matter came on this morning that this case could not be sought to be argued without the Notice of Appeal being amended to add this ground, which is of course, as we have indicated, a ground which has not previously been argued.[29]Two matters were urged by Mr Gordon for the purpose of securing such an amendment. First, that technically (he accepted it was technical) the Directive had not come into force until 19 July 2003 which is a date subsequent to the Notice of Appeal in this case. Secondly, because he had included it in his Skeleton Argument served on 4 September, it could not be said that his opponent, Mr Bryant who appeared below and appears before us for the Respondent, could be prejudiced or taken by surprise.[30]There were three options which were canvassed in the course of Mr Gordon's submissions before us, responded to by Mr Bryant. The first was that we should refuse the permission to amend in those circumstances. The second was that we should permit the amendment, but in short form dismiss the ground. The third was that we should permit the amendment and then hear full argument on the European point.[31]The advantage, so far as Mr Gordon is concerned, of the second choice over the first, was that if (and we would give obviously no encouragement to him) the matter of a potential appeal to the Court of Appeal hereafter arose, it would be the more difficult for him to persuade the Court of Appeal to be interested in this case if we had refused permission to amend; as opposed to if we had granted permission but refused the appeal on that ground.[32]We are persuaded by that argument coupled with the fact that as Mr Bryant freely conceded he could not be said to be taken by surprise by the new point; he had the opportunity of answering the Respondent's Skeleton Argument, which to an extent he took. The course that we propose is to grant permission to amend. However, we do not propose (for the reasons that we are about to give) to hear any more argument over and above what we have heard today on the European point, because we are satisfied that the matter should be dismissed now, subject to any further application that Mr Gordon may be advised to take to get the matter before the Court of Appeal hereafter, once we have dealt with the balance of the appeal.[33]Our reasons are as follows:(1) The History of the Case It is quite apparent from what we have stated that the case has proceeded at all times up to now on the basis that at any rate some of the claims of the Applicant might be unpursuable because of the doctrine of illegality, and all the hearings have been dedicated towards that end. At no stage has it been suggested that the concept of illegality is wholly irrelevant and has no part to play at all. This is a very late introduction into a case which has proceeded so far on that basis. Of course it is right that strictly speaking the Directive only came into force on 19 July 2003, but it has been in draft since 2000 and it is plain (and has always been accepted) that the analogy between sex discrimination and race discrimination is complete and, as we shall indicate, the sex discrimination aspect was considered from a European point of view in Hall . If this history stood alone, that would not have been a reason for dismissing the ground because of the technical point that it would appear that Mr Gordon could not argue the matter as he has done until the regulation in fact came into force, but it is an important context.(2) The European Dimension Much more important is what we would do, or be able to do, with the European point now that the Race Directive is plainly in force. Mr Gordon submitted in the Skeleton Argument, which we have read out, that the Court of Appeal in Hall was attracted by arguments that it would be inconsistent with the Equal Treatment Directive to permit any case of sex discrimination to be defeated on the grounds of illegality. It is difficult to know what he means by 'attracted'. It is right to say that the argument that illegality should have no place in relation to a claim for sex discrimination was firmly put before the Court of Appeal in Hall both by Mr Hochhauser QC for the Applicant and Ms Carss-Frisk for the amicus curiae . There was no appearance for the Respondents. But it is quite plain that the Court of Appeal did not adopt those arguments. In the paragraphs of the judgment of the Court of Appeal to which Mr Gordon referred in his Skeleton Argument (which we have set out) the learned judges addressed the question of the Equal Treatment Directive. Mance LJ said at paragraph 65 inter alia as follows: 65 "I do not consider that one can go straight from the proposition that the Directive admits no general reservation or qualification to a conclusion that it is axiomatically irrelevant if a particular employment is tainted by illegality under domestic law…In none of the cases before the European Court of Justice was the nature of the prospective employment, vocational training or working conditions in any way tainted by illegality…The draftsmen of the Convention are unlikely to have set out to confer protection in respect of – indeed are probably are unlikely even to have contemplated – employment, vocational training or working conditions the essence of which was illegal, for example employment, training or working conditions as part of a hit-squad of by a company known to have been established to carry out bank robberies or to launder stolen money." It is plain that those are much more extreme examples than the example before us. On the other hand, the case that he was addressing was one in which the employee was all but innocent; whereas in our case the employee is wholly the cause of the illegal contract. He continued:
"It would seem improbable, therefore, that a national court called upon to shape its national law as far as possible 'in the light of the wording and purpose of the Directive in order to achieve the result pursued by the latter' would be expected to afford a remedy even for sex discrimination in such a context. But any limitation of this nature in the protection in respect of sex discrimination afforded by the Directive must be derived from the wording and purpose of the Directive."
Mance LJ returned to this question at paragraph 80C. He began the relevant passage by pointing out that the salient facts were that the fraud was not Mrs Hall's; she was in effect simply confronted with it. She would have had little real choice but to submit. He then continued:
"This is not an extreme case, coming near any of the examples of employment as a member of a hit-squad, or by a company known to have been set up for the purpose of committing robberies or washing stolen money which I have given earlier in this judgment. The language of the English statute should, as far as possible, be read as offering the same scope of protection as the Directive. The statutory conception of employment under a contract should, if possible, be interpreted consistently with the Directive. In my judgment, it can be by treating it as referring to any actual employment which (a) falls within the objectives and aims of the Directive where (b) the relevant contract is one which would be enforceable under domestic law disregarding any personal disability flowing from the claimant's participation in illegality."
We refer to the passage in Peter Gibson LJ's judgment, in which he also dealt with the matter, at paragraph 26. At paragraph 84 Moore-Bick J, who agrees with the judgments of the other two judges, says as follows: 84 "As far as the effect of the Equal Treatment Directive…is concerned, I can see force in the submissions made by both Miss Carss-Frisk and Mr Hochhauser QC that there can never be any room in relation to a claim under the Sex Discrimination Act 1975 for the operation of the rules of domestic public policy reflected in the established law relating to illegality. However, I share the reservations expressed by Peter Gibson LJ and Mance LJ and in common with them prefer not to express any final view on this aspect of the argument." That last passage from Moore-Bick J carries two implications. First, that it cannot necessarily be said that the Court of Appeal was "attracted" by the arguments, as Mr Gordon puts it, when both the judges who dealt with this at any length, and characterised as having reservations, which are indeed plain from the passages to which we have referred. Secondly, it would seem, from the way Moore-Bick J puts it, that he at any rate would have regarded their words as obiter, because of their not expressing any final view on this aspect of the argument. However, it appears to us clear that whether or not the views of Peter Gibson LJ and Mance LJ in this regard are strictly obiter, the crucial question is that Hall is now the leading case in the area. The test which was laid down by Peter Gibson LJ in paragraph 42 not only enabled the Court of Appeal in that case to conclude that on the facts before them in the case of Hall , and on the facts before the Employment Appeal Tribunal in Leighton v Michael , such a case would not fall foul of the principle, but would also enable, and has enabled, rightly or wrongly, the Tribunal in this case, to decide the same question by reference to the same test in relation to the facts of a wholly different contract, and, subject to appeal before us, to come to a different conclusion. What the Court of Appeal did, therefore, was to lay down a very helpful test, in the words of Peter Gibson LJ, which indeed has now become known, at any rate in this Employment Tribunal below, as the " Hall v Woolston Hall formula". What the Court of Appeal did not do was to say that there can never be any assertion of illegality in a contract raised in relation to a claim for sex discrimination in an employment context. That would have been a binding conclusion on us.[34]As it is, it appears clear to us that the test laid down by Peter Gibson LJ formed the ratio of the case and is what is binding on us and is what this Employment Tribunal was bindingly ordered to do by Judge Serota QC in the case which he decided.[35]We are, in our judgment, bound by the Court of Appeal's guidance and ratio in Hall to apply the formula in paragraph 42 of Peter Gibson LJ's judgment and we are also, in our judgment, bound by the decision in this very case by Judge Serota QC. Whereas in the ordinary situation an Employment Appeal Tribunal is merely persuaded by an earlier decision of the same Appeal Tribunal, we are, in our judgment, bound by a decision of the Employment Appeal Tribunal in the very same case unless some very unusual circumstance were to arise. Whereas in the Court of Appeal there is exceptional power to reopen a decision (see Taylor v Lawrence [2002] 3 WLR 640 ), such jurisdiction to reopen does not apply in this Appeal Tribunal, as was made clear in Asda Stores v Thompson (Unreported EAT/0063/03) at paragraphs 36 to 46, not least because the existence of the Court of Appeal to put right errors by the Employment Appeal Tribunal excludes any right of the Employment Appeal Tribunal itself to reconsider an earlier decision in the same case.[36]We are satisfied, therefore, that we are bound by the Court of Appeal and by Judge Serota QC and that it is not appropriate for us to hear argument that contradicts and undermines both those two decisions. It may be that the Court of Appeal might be persuaded, on the basis that, notwithstanding that the new Race Directive is almost on all fours with, and is not suggested to be materially different from, the Equal Treatment Directive, the coming into force of the Race Directive in July 2003 is a new factor, to reconsider the matter. But whether or not a Court of Appeal permits the reopening of its conclusions or replaces the formula of Peter Gibson LJ, it is our judgment that it is not open to us to do so, nor in the particular circumstances of this case, given the task that we have, to see whether the Employment Tribunal below complied with the binding conclusion of the Employment Appeal Tribunal per Judge Serota QC, do we think it appropriate that we should set out on that exercise.[37]There are, however, two further reasons why we are also of the same view; but we need only mention them briefly. First, we are by no means persuaded that the fact that the new Race Directive came into force on 19 July 2003 is of any relevance in any event. The facts here occurred, of course, in 2000, long before that date. There have been three hearings at first instance before the Employment Tribunal, also long before that date. We are by no means satisfied, and no authority has been produced by either side before us which could resolve the question one way or the other without considerable further consideration, that the effect of the new Directive would be retrospective so far as this case is concerned, certainly in the light of the litigation history which we have described.[38]The second point is one that has been raised by Mr Bryant – and again in the light of what we have said it is not appropriate for us to make a decision, but it plainly further colours the picture – by virtue of the fact that Mr Gordon hangs his entire case on the coming into force of the new Race Directive as having an impact on this case.[39]The new Race Directive, by Article 3 (2) expressly says:
"This Directive does not cover difference of treatment based on nationality"
. The way that the case has been put in evidence and argued up to now has been that the Applicant was discriminated against, and racially abused, because he was a Croatian. That would, of course, bring him within the protection of the Race Relations Act 1976 , which gives him protection where the discrimination is inter alia on grounds of nationality, and allows for the definition of 'racial grounds' and 'racial group' under section 3 (1) of the 1976 Act to include reference to nationality or national origins; but on the face of what we have quoted from the Race Directive, that would not be given protection by the Directive, and thus the Directive would not be available for Mr Gordon's use in the argument that he would wish to put forward.[40]Mr Gordon's answer would be that he would wish to recast the way his client's case is put in the light of the evidence – and we are not in any way saying that that would not be possible – by asserting that the discrimination against his client was on the basis that he was an East European.[41]Whether that would be sufficient to bring him within the protection of the Race Directive is not a matter on which we propose to express any view but it is another difficulty which stands in Mr Gordon's way; another matter which would require to be resolved, coupled with the question of retrospectivity, if we were to consider this point at any length at all.[42]For the reasons we have given, while granting permission to amend, we dismiss the appeal on this new ground on the basis that we do not conclude that it is either open to the Applicant at this level, or appropriate in the light of the history, for that point to be run at this level and at this stage. We consequently dismiss the European ground. The Five Original Grounds of Appeal[43]The Notice of Appeal, to which we referred, has five grounds, with which we will deal in a moment, but all of them arise out of the assertion by the Applicant through Mr Gordon that the Employment Tribunal failed to comply with the directions of Judge Serota QC by virtue of the failure to comply with the Hall test.[44]Mr Gordon refers to the fact that paragraph 42 of Hall should be seen in its context, namely arising out of the citation, in paragraph 41, from the judgment of Beldam LJ in Cross v Kirkby (unreported, 18 February 2000).[45]We shall, for ease, read at this stage the relevant paragraphs of Peter Gibson LJ's judgment in full: 41 "In Markesinis and Deacon: Tort Law 4th edn (1998) p.710 it is said that for the defence to apply it is necessary to show that there was a causal link between the illegality in which the claimant was implicated and the loss of which he is now complaining. That is supported by the decision of this court in Cross v Kirkby .... Beldam LJ, with whom Otton LJ agreed, said (at paragraph 76) that for the ex turpi causa principle to operate, the claim made by the claimant must arise out of criminal or illegal conduct on his part, a causal connection between the illegal conduct and the claim being necessary. He continued:
'In my view the principle applies when the claimant's claim is so closely connected or inextricably bound up with his own criminal or illegal conduct that the court could not permit him to recover without appearing to condone that conduct.'
In a similar vein Judge LJ (at paragraph 103) said: 'In my judgment, where the claimant is behaving unlawfully, or criminally, on the occasion when the cause of action in tort arises, his claim is not liable to be defeated ex turpi causa unless it is also established that the facts which give rise to it are inextricably linked with his criminal conduct'." 42 As ss.65 and 66 of the 1975 Act indicate, sex discrimination which is unlawful under the 1975 Act is a statutory tort, to which the tortious measure of damages is applicable if the remedy in s.65(1)(b) is that chosen by the tribunal as being the just and equitable remedy…It therefore follows that the correct approach of the tribunal in a sex discrimination case should be to consider whether the applicant's claim arises out of or is so clearly connected or inextricably bound up or linked with the illegal conduct of the applicant that the court could not permit the applicant to recover compensation without appearing to condone that conduct. 46 It is undoubtedly correct that where the complaint is of sex discrimination by dismissing an employee, the employee must establish that she was employed and was dismissed from that employment, so that to that extent reliance must be placed on the contract of employment. But in my judgment it could not properly be said that the complaint of sex discrimination by dismissal was based on the contract of employment, still less that her claim of such discrimination was so closely connected with or inextricably bound up or linked with the acquiescence by the employee in the unlawful failure by the employer to deduct PAYE and NIC that the court would be seen to be condoning unlawful conduct by the employee. It is the sex discrimination that is the core of the complaint, the fact of employment and the dismissal being the particular factual circumstances which Parliament has prescribed for the sex discrimination complaint to be capable of being made. The illegality consists only of the employer's mode of paying wages [that, of course, was a reference to the fact of Hall ]. In my judgment Leighton v Michael was rightly decided and the awareness of the employee that the employer was failing to deduct tax and NIC and to account to the Revenue does not of itself constitute a valid ground for refusing jurisdiction. 47 In the present case, the employment contract of Mrs Hall at its inception and on its variation when she successfully bargained for increased wages on her promotion was entirely lawful. It did not incorporate a term that adopted the subsequent illegality. When on performance of the varied contract by the employer the illegality appeared in the form of the false payslip, Mrs Hall queried it. The obligation to pay PAYE and NIC rested on the employer…There was no active participation by her in the illegality. With the aid of counsel we have considered whether Mrs Hall herself was guilty of any illegality under the fiscal legislation, or at common law by reason of the offence of cheating the public revenue, but I have seen nothing that shows that she herself was guilty of any unlawful conduct. No benefit is shown to have been received by her from the employer's failure to deduct tax and NIC and to account for the same to the Revenue. Her acquiescence in the employer's conduct, which is the highest her involvement in the illegality can be put, no doubt reflects the reality that she could not compel the employer to change its conduct. That acquiescence is in no way causally linked with her sex discrimination claim."[46]The background, therefore, to the matters before us, include the litigation history (to which we referred earlier) and the passages in Judge Serota QC's judgment (which we also quoted earlier).[47]The facts, as set out by Peter Gibson LJ, are plainly peculiarly apt to the Leighton v Michael case (which Peter Gibson LJ concluded to have been rightly decided) and to the case before him; and, as is plain from our recitation of those facts, none of the facts which weighed in favour of Mrs Hall in that case and in favour of decoupling the illegality from the discrimination apply in this case.[48]It is plain that, when considering the question which Peter Gibson LJ has set out to be answered in paragraph 42, it is necessary therefore to consider:(i) the kind of factors which were considered by Peter Gibson LJ in that case;(ii) the inextricability of the conduct with the contract. In that case there was no illegal conduct by Mrs Hall. In this case there was illegal conduct by the Applicant, and that illegal conduct led to an illegal contract and to the creation of an unlawful employment relationship.[49]It is plain that we are concerned that the concept which has been referred to us by Mr Gordon, by reference to Judge LJ's speech in Cross of outlawry should not in any way infiltrate English law, or re-infiltrate it, if in fact the change in the approach of the courts to illegality in the last few years, culminating in Hall , has removed such concept. It is not the case that anyone who commits illegal conduct is thereby prevented from making any claim of any kind. Ex turpi causa non oritur actio is now a very limited concept.[50]What the Employment Tribunal had here to apply (and we have to consider whether it has correctly applied) is the test of Peter Gibson LJ, which creates a very different approach.[51]The grounds of appeal seek to establish that the Employment Tribunal erred in its approach. The first suggestion by Mr Gordon in his first ground is that the Tribunal regarded, and should not have regarded, conduct falling within section 4 (1) (b) of the Act (to which we have referred) as an absolute bar to recovery by the Applicant.[52]We do not conclude that the Tribunal fell into that error. At paragraph 7 of the Tribunal's Decision it recited (accurately) the approach that it had been directed to take by Judge Serota QC: 7 "The Employment Appeal Tribunal indicated that the mere fact of dismissal would not be regarded as being so closely connected or inextricably bound up or linked with illegal conduct as to exclude the Applicant from proceeding further if the dismissal was on grounds which would amount to race discrimination. However, prima facie, if a claim fell within section 4 (2) (b), it would be so closely or clearly connected or inextricably bound up or linked with illegal conduct that no claim should lie. Dismissal and possibly any detriment caused by abuse might not be so bound up.

(c) "

[53]It is quite plain in those circumstances that the Tribunal was reciting, correctly, that if it found that the kind of discrimination complained of fell within 4 (2) (b), the probability would be that it would find it was inextricably linked to the illegal conduct and the illegal contract, whereas, if it found that it was conduct which fell within 4 (2) (c) it might not do so. That of course is entirely correct, and follows the guidance of the Employment Appeal Tribunal. At paragraph 16 the Tribunal refers again to its task: 16 "The Employment [Appeal] Tribunal was clearly seised of the question and chose to subdivide it between sub-paragraphs 4 (2) (b) and (c), so that the clear ruling on 4 (2) (b) binds the Tribunal." And that is plainly a reference back to the passage in paragraph 7.[54]The Tribunal then addressed the facts before it. It is important at this stage to indicate, or to remind ourselves, that this was the same Tribunal which had heard the matter at least into a second day at the time of the First Hearing, with some evidence being given by the Applicant, and had heard evidence on the question of illegality at the Second Hearing. It was a fully-educated Tribunal in relation to the case before it.[55]In addition it had the benefit of the submissions of Mr A Hodge of Counsel, of the further and better particulars which had been drawn from the lengthy statements, which were also before them, from the Applicant and of course the list of particulars (a) to (q) which had been listed by Mr Hodge based on all that material.[56]They considered all that, and then in paragraph 22 concluded as follows: 22 "Virtually all of these complaints refer to the manner in which this employer afforded the applicant access to his training opportunity under his contract as a trainee teacher, and to the benefits, facilities and services attached to that contract. Paragraphs 12 (a), (c), (d), (f), (i), (k)-(n) and (q) clearly fall within sub-paragraph 4 (2) (b) and in that respect we agree with and are bound by the Employment Appeal Tribunal's finding that they are so closely or clearly connected or inextricably bound up or linked with illegal conduct that no claim should lie."[57]In our judgment, although they omit the words ' prima facie ' in that paragraph, which had been plainly in their minds in the earlier paragraph in the judgment, it is manifest that by that stage they had reached the conclusion, which they set out at paragraph 22, by reference to the particulars, that in fact not only prima facie but actually all those matters within section 4 (1) (b) fell within the Peter Gibson LJ test. We do not consider that they erred in their approach or indeed in their conclusion to which we will return.[58]The second ground relates to the question of dismissal. The complaint is that the Tribunal included in paragraph 23 (to which we will refer) the claim of discrimination by virtue of dismissal which was sub-paragraph (o) of the further and better particulars. The Tribunal said this in paragraph 23: 23 "The exceptions are paragraphs 12 (h), (o) and (j). 12 (j) is a purely contractual point and this is an illegal contract. The Employment Rights Act 1996 is not engaged. In relation to 12 (h) and 12 (o), the Tribunal must consider whether the applicant's claim of discrimination in his dismissal and its investigation by Mr White is so closely connected with or inextricably bound up or linked with the illegality of the contract that in allowing it to go forward the Tribunal would be seen to be condoning that conduct. We have regard to the overriding principle in all torts, including the statutory tort of discrimination that the complainant must come to the court or Tribunal with clean hands (the principle, ex turpi causa non oritur actio) and we therefore consider the degree of turpitude of this applicant's cause. 24 The Tribunal has already found as a fact that the applicant knowingly entered into a contract to work while claiming benefits as unemployed and restricted from working by the terms of his leave to enter. He falsified a number of forms to achieve this and put the respondent in a position where it too was unwittingly committing a criminal offence. He, and the respondent, were in that position throughout his employment as a trainee teacher. 25 The Tribunal finds unanimously that the Applicant's complaints of failure to investigate discrimination allegations, although they sound in discrimination rather than in contract, are indeed so closely connected with the deliberate illegality of that contract on the Applicant's part, inducing a criminal offence by the respondent to which the only statutory defence is unavailable, that were we to allow this originating application to go forward to a hearing, the Tribunal would appear to be endorsing the illegal actions of the complainant." They did, thereby, include the claim for discrimination by dismissal together with the other sub-paragraphs about which they were reaching that conclusion.[59]It is right, in paragraph 46 of Peter Gibson LJ's judgment (which we have read), in the context of his discussion of the case before him of Hall , and the case of Leighton v Michael , that, in relation to that case, he said:
"…in my judgment it could not properly be said that the complaint of sex discrimination by dismissal was based on the contract of employment, still less that her claim of such discrimination was so closely connected with or inextricably bound up or linked with the acquiescence by the employee in the unlawful failure by the employer to deduct PAYE and NIC that the court would be seen to be condoning unlawful conduct by the employee."
[60]With respect, we entirely agree with that proposition. But that is of course in no way binding on a situation such as this, in which the conduct of the employee was not only not limited as there set out, but totally causative of the illegality and the creation of the employment relationship. It was plainly open to the Tribunal to find that on the facts of this case the discrimination by dismissal did fall the wrong side of Peter Gibson LJ's test, and that is what Judge Serota QC told them in paragraph 37 of his judgment (to which we have referred): 37 "On the other hand, the dismissal and possibly detriment caused by abuse might not." The Tribunal followed that guidance and concluded that it might, and that it did. We do not conclude that it erred in its approach to the test.[61]The third ground which was put forward by Mr Gordon complained that there was reference (as we have read) to the concept of ex turpi causa in the course of the judgment, and the way that Mr Gordon puts it in his third ground is that:
"Further, in deciding to dismiss these claims in paragraph 23 of its decision, the tribunal misdirected itself in seemingly applying the principle that a "complainant must come to the court or Tribunal with clean hands"…"
[62]It is quite plain that paragraph 23 of the decision does not stand alone. What it does is it emphasises the conclusion that the Tribunal reaches, in paragraph 25, of the closeness of the connection between the Applicant's illegal conduct and the unlawful employment relationship. This comes to very much the same as the fifth ground (to which we will refer).[63]It is plain, as we have earlier indicated, that just at Peter Gibson LJ was entitled, and obliged, to have regard in his judgment to the factors which went to minimise both the conduct of Mrs Hall and her connection with the contract, and thus the connection of the unlawful conduct with the discrimination, so here it was inevitable and right that the Tribunal should emphasise the closeness of the connection, not least because, as Mr Bryant submitted to us, the test that Peter Gibson LJ puts forward is an inclusive one, and the inextricability of the binding up or linking of the conduct complained of by the employer with the illegal conduct of the Applicant is to be such that the court could not permit the Applicant to recover compensation without appearing to condone that conduct. That is a question which this Tribunal was entitled to look at.[64]We therefore deal, without separate consideration, with the fifth ground of appeal which is to that effect, namely:
"…the employment tribunal appears to have misdirected itself by placing too great a weight upon the Applicant's illegal conduct."
[65]It was, in our judgment, necessary and essential for the Tribunal to do so if it was, unlike the cases of Hall and Leighton , to conclude that, because it was the employee who was entirely responsible for the creation of the employment relationship, the incidents which then arose out of that employment relationship, of which the Applicant complained, were inextricably bound up with that conduct.[66]The last of the five grounds that were put forward is the fourth ground of appeal, namely that:
"Having found in paragraph 25 of its decision that the Applicant's complaints of failure to investigate discrimination allegations "sound in discrimination rather than in contract" the employment tribunal was wrong to dismiss these complaints bearing in mind the test which had to be applied."
[67]We are unable to be persuaded that there is anything in that at all. It is quite plain from the very fact that the Tribunal positively said, as indeed is quoted in that Notice of Appeal, that they reached the conclusion they did although the allegations sounded in discrimination rather than contract, that they had well in mind the difficult and careful task that they had to carry out.[68]We do not, however, limit ourselves to rejecting the five grounds of appeal which have been put forward by Mr Gordon, because this appears to us to be an important question to be considered; namely, how to comply with Peter Gibson LJ's test, with which we conclude that this Tribunal have wrestled successfully.[69]There has been, so far as we know, no case (at any rate none reported) in this area in which, as here, it is the Applicant who was entirely responsible for the illegality, and indeed the contract was obtained by his fraud. This is such a case.[70]It appears to us that in those circumstances it was open to the Tribunal to find (and it did find) that the illegal contract infected the entirety of the contract and indeed created an employment relationship which would not otherwise have been created, which was not entitled to exist at all because the Applicant was not entitled to be in employment, and which could and would and should have been terminated during every day that it operated.[71]In those circumstances, in our judgment, all the ordinary events of such a contract would be likely to be found to be inextricably linked up with the illegal conduct. We conclude that there is a possible way of differentiating so that any concept of outlawry can be firmly eschewed.[72]In our judgment, where a contract is caused and continued, when it would not otherwise be, by the criminal and fraudulent conduct of the employee, then he or she would have no complaint about acts of discrimination if they consist of an alleged discriminatory manner of operating that contract.[73]Thus here, if one looks at the vast bulk of the particulars, as articulated, and indeed the documents from which they are drawn, they relate to exactly that. We pick some of them by way of example: (a) "The Respondent failed to provide the Applicant with the satisfactory level of quality training and support as they did for his colleague, Mr John Anderson (FBP para. 2, 4); (j) The Respondent failed to provide the Applicant with a written contract of employment until after his dismissal (FBP para. 15) (k) The Applicant's terms of engagement were less favourable than those of his colleague (FBP para. 16); (n) The Respondent took no action to investigate the Applicant's complaints that he was being discriminated against (FBP para. 19, 24)" All those are plainly examples of incidents arising out of the employment relationship which should not have existed.[74]Mr Gordon has submitted that by looking at a contract in that way one is in danger of construing the discrimination claim as some kind of contractual claim rather than the tortious claim it is. We do not agree. We are entirely conscious that the claim for discrimination is, or is to be equated with, a statutory tort, and that the conduct of the employer is to be measured in that context, and that the fact of employment is, as Peter Gibson LJ has indicated, simply the context in which the claim arises. But if the complaint of discrimination relates to the way in which such contract was operated, then in our judgment, in a case such as this, it is inextricably linked with the illegal contract which achieved the unlawful employment relationship.[75]So far as a dismissal is concerned, and investigation or other matters leading to dismissal, it appears to us that in such a case there is no distinction to be drawn between the discriminatory operation of that contract, and the alleged discriminatory termination of that contract.[76]There is, in our judgment, to be contrasted a situation in which the claim is one of conduct, for example conduct by a fellow employee, for whom the employer would be vicariously liable, which is extrinsic to the operation of the contract. Thus, if there is discrimination complained of which cannot be explained as being an alleged discriminatory operation of the contract, but is, as we have put it, extrinsic to the operation of the contract, then there would, in our judgment, be a situation which Peter Gibson LJ's test might lead to a finding by a Tribunal that such a claim was not inextricably linked to the illegal contract which founded the unlawful employment relationship. Such it would be, for example, if there were gratuitous racial abuse which had nothing to do with the employment relationship, committed during the contract of employment, or on the employer's premises.[77]We were concerned as to whether such alternative conclusion could apply to two of the particulars referred to. They are: (c) Ms Lennon made many insulting and hurtful references to the Applicant in relation to his professional background and his country of origin (FBP para. 6, 7, 8); (d) Ms Lennon humiliated the Applicant in front of pupils and other members of staff (FBP para. 9); There are cross-references to the fuller further and better particulars (paragraph 6-9) and of course there were statements from which those further and better particulars were themselves derived.[78]We have considered whether those allegations, on the facts of this case, so plainly fall within what one might call the extrinsic matter, the unexpected event outside something that would be an ordinary incident of the unlawful employment relationship, that to preclude a claim in that regard would offend against ordinary principles, rather than fall within the concept, which Peter Gibson LJ enunciated, of offending the court by positively enforcing them.[79]We are satisfied that they are not such. Mrs Lennon was the Applicant's supervisor and mentor. The complaint that the Applicant makes is that both in terms of her written reports and of the way that she addressed and spoke to him, she so conducted herself as to make hurtful and insulting remarks, and thus to amount to a detriment within the Act.[80]These are not, on the face of the allegations themselves, extrinsic to the teacher trainee employment contract into which this Applicant caused himself fraudulently to enter. It would not be perhaps fair to say he took the risk of this kind of event, but they are not events which go outside the ordinary incidents of a teacher training contract subject to supervision and mentorship, such as to fall within the concept of being extrinsic to the contract of employment. The Employment Tribunal, applying the correct approach, found that they did not.[81]We are unable and unwilling to interfere with the conclusion of the Employment Tribunal that all the particulars of claim in this case fell within the Hall test as enunciated by Peter Gibson LJ.[82]There was no appeal (whether there could have been one is quite another matter) against the decision of the Employment Appeal Tribunal given by Judge Serota QC. In our judgment, pursuant to that decision, the Employment Tribunal, having obtained the further and better particulars, pursuant to Judge Serota QC's Order, acted properly and appropriately. There is no ground for our interfering with their decision.[83]We consequently dismiss the appeal.