Appeal No. UKEAT/0240/06/LA 

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 19 October 2006
Judgment delivered on 14 December 2006

Before
HIS HONOUR JUDGE PETER CLARK
DR K MOHANTY JP
MISS S M WILSON CBE

MR A BALDWIN	APPELLANT

BRIGHTON & HOVE CITY COUNCIL	RESPONDENT

Transcript of Proceedings

JUDGMENT

	APPEARANCES

For the Appellant	MR S HARDING
(of Counsel)
Instructed by:
Messrs Martin Searle Solicitors
9 Marlborough Place
Brighton
East Sussex
BN1 4GB	
For the Respondent	MR J SWIFT
(of Counsel)
Instructed by:
Brighton & Hove City Council
King’s House
Grand Avenue
Hove
BN3 2LS	

SUMMARY
Sex Discrimination – Transsexualism
Unfair Dismissal – Constructive dismissal

Gender reassignment.  Employer’s lack of knowledge.  Meaning of “treats” (SDA s2A(1)(a).
Constructive dismissal – proper formulation of implied term of mutual trust and confidence; see Woods (EAT); cf. BCCI (per Lord Steyn).

HIS HONOUR JUDGE PETER CLARK

1.	This is an appeal by Andy Baldwin, the Claimant before the Brighton Employment Tribunal, against that Tribunal’s undated Judgment, promulgated with reasons following a 10 day hearing in November 2005 and two further days’ deliberation by the Tribunal panel on 1 and 20 December 2005, dismissing his complaints of (1) unlawful sex discrimination and (2) constructive unfair dismissal, brought against his former employer, the Respondent Brighton & Hove City Council.  We shall describe the parties as they appeared below. 

Background
2.	The Claimant was born a female and named Andrea Michelle Baldwin.  We shall, in this judgment, refer to him by the male pronoun.  

3.	By letter dated 11 January 2001 he was appointed by the Respondent to the temporary post of Lesbian Gay and Bisexual Community Safety Development Officer.  The post was temporary due to its funding being limited.  The appointment was thereafter extended and finally, on 12 December 2002, his line manager Linda Beanlands wrote to him offering a further extension to the end of January 2003 in order to allow him to apply for an alternative post with the Respondent.  In the event, he resigned by letter dated 24 January 2003.

4.	The principal purpose of the Claimant’s job was to work closely with the Chair and members of the Brighton & Hove Lesbian and Gay Community Safety Forum (the Forum), the Community Safety Team and the Anti-Victimisation Unit.  The Forum was a representative group which participated in the Anti-Victimisation Initiative (AVI), a Home Office-funded project.

5.	The Claimant began, in April 2002, to identify as transsexual and used the new name of Andy, but not at work.  Having consulted a psychiatrist in November and been diagnosed as a transsexual man, he underwent tests for medical treatment on 4 December 2002 and on that date arranged a change of name by way of statutory declaration.  On 12 December he collected a new passport showing a male gender.  The Tribunal found that as from April 2002 he intended to undergo gender reassignment and subsequently underwent gender reassignment.  At that time his partner was a transsexual (male to female).  

6.	An issue arose before the Tribunal as to whether the Respondent, particularly through Ms Beanlands, knew of the Claimant’s gender re-assignment.  They found that the Respondent had no such knowledge prior to 24 January 2003.

7.	On 23 April 2003, the Claimant presented an Originating Application to the Tribunal complaining of sex discrimination and constructive dismissal.  Further and Better Particulars of Claim dated 23 May 2004 identified seven complaints which were relied on in support of both claims.  The sex discrimination claim was based on s2A of the Sex Discrimination Act 1975 (SDA); that section, inserted by regulation 2(1) of the Sex Discrimination/Gender Regulations 1999, provides:
“(1)	A person (“A”) discriminates against another person (“B”) in any circumstances relevant for the purposes of —
(a)	any provision of Part II,
…
if he treats B less favourably than he treats or would treat other persons, and does so on the ground that B intends to undergo, is undergoing or has undergone gender reassignment.”

In Part II SDA: 
By s6(1):
“It is unlawful for a person, in relation to employment by him at an establishment in Great Britain, to discriminate against a woman—
(a)	in the arrangements he makes for the purpose of determining who should be offered that employment…”

And by s6(2), it is similarly unlawful to discriminate against her:
“(b)	by dismissing her, or subjecting her to any other detriment.”

8.	As to the claim of constructive (unfair) dismissal, the fundamental breach relied on was that of the term of mutual trust and confidence to be implied into the contract of employment made between the Claimant and Respondent.  

9.	In short, having found that the Respondent did not have the necessary knowledge of the Claimant’s gender reassignment as stated in s2A SDA, the sex discrimination claim failed on that basis alone, with one exception.  As the Tribunal put the matter at paragraph 13.5 of their Reasons:

“13.5.	By the time the Parties came to make their submissions both parties agreed as does the Tribunal that knowledge of gender reassignment was a necessary precondition to establishing discrimination except in relation to the claim concerning Mr Miller and the arrangements for appointing to a new post (see paragraph 30.7) below.”

At paragraph 30.7 the Tribunal found:

“(1)	Rev David Miller was at the relevant times the Chair of the Safety Forum.
(2)	In December 2002 a tenant of Mr Miller complained he was transphobic and the Claimant assisted the tenant in writing a letter of complaint which was passed to Miss Beanlands.
(3)	Miss Beanlands took legal advice as to what the respondent could do bearing in mind the tenant did not wish to formally pursue her complaint.  She was advised the respondent could at that stage take no action.
(4)	Miss Beanlands had arranged for Mr Miller to sit on the Interview Panel and before the Panel held any interviews knew at the very least there were substantial grounds for concern that Mr Miller was transphobic.
(5)	Miss Beanlands who was also on the Interview Panel would have taken some action if during the interview process she believed Mr Miller had as a result of any transphobic attitudes marked any candidate adversely.”

10.	The Interview panel, consisting of Ms Beanlands and Mr Miller, was set up to interview and assess candidates for a new post relevant to the Claimant’s experience on 24 January 2003, the day of the Claimant’s resignation.  By that time, the Safety Forum had been expanded to include the Lesbian Gay Bisexual and Transgender (LGBT) Community.

Sex Discrimination
11.	Following the preliminary hearing in this appeal before Mr Recorder Luba QC and members, held on 19 June 2006, the claimant lodged Amended Grounds of Appeal.  The first ground is headed ‘The Miller Incident’.

12.	The Tribunal found that the Miller incident did not amount to unlawful discrimination contrary to s2A SDA, read with s6, for four reasons:

(1)	Insofar as Ms Beanlands appointed Mr Miller, an alleged transphobe, to the interview panel, that did not amount to unlawful discrimination contrary to s2A and s6(1)(a) because, on their finding, she did not know that the Claimant was a transsexual as defined in S2A;

(2)	Mr Miller was not, as a member of the panel, acting as the agent of the Respondent;

(3)	Mr Miller did not discriminate against the Claimant.  He did not ‘treat’ him in any way at all; at most his being selected and agreeing to be on the panel amounted to no more than “an intention to be discriminatory”;

(4)	In any event, as a matter of fact, it was not the presence of Mr Miller on the panel which caused the claimant not to attend for interview, it was, based on his detailed resignation letter so the Tribunal found, that the alternative post was an inferior position to his then current post. 

13.	We take that analysis from the Tribunal’s findings at paragraph 30.9 of their reasons, coupled with their finding as to the Respondent’s lack of knowledge.

14.	In ground 1 of the appeal, the Claimant challenges the 2nd, 3rd and 4th bases for the Tribunal’s rejection of the sex discrimination claim based on the Miller incident.

15.	In our judgment Mr Swift is correct in submitting that, as a matter of statutory construction, the ET was entitled to find that Mr Miller did not discriminate against the Claimant on grounds of his transsexualism.   Merely by agreeing to be on the panel he was not treating the Claimant less favourably than an actual or hypothetical comparator.  The wording of s2A SDA is important.  A person (A) discriminates against another person (B) if he treats (B) less favourably than he treats or would treat a relevant comparator on the prohibited grounds.  It is not enough that (A) would treat (B) less favourably.  That is how the statutory provision must be read down if the agency argument is to succeed.  It follows that it is unnecessary for us to consider whether Mr Miller, in being selected to sit on the interview panel, was the agent of the Respondent within the meaning of s41(2) SDA.

16.	What Mr Harding has sought to argue in this appeal, we think impermissibly, is that the unlawful discrimination consists of the Claimant’s perception that if he attended the interview he would be less favourably treated by Mr Miller, whom he believed to be a transphobe, and thus did not do so.  Leaving aside the fourth finding of the Tribunal - that as a matter of fact that did not influence the Claimant’s decision not to attend the interview - that argument could only succeed in our view if Ms Beanland was aware of the Claimant’s gender reassignment and nevertheless selected Mr Miller to be on the panel.  Without that knowledge she and, through her as its employee, the Respondent, could not be said to have created what Mr Harding characterises as an unfair working environment for the Claimant.

17.	For these reasons we reject the first ground of appeal.

Constructive Dismissal
18.	Before considering the facts and circumstances of this case we should deal with an interesting question of general importance on the proper formulation of the implied term of mutual trust and confidence raised by Mr Harding during the oral argument.

19.	The starting point is the formulation set out in Harvey on Industrial Relations and Employment Law, volume 1, Section D1, paragraph 430, where it is said:
“After a series of cases had gradually moved towards a recognition of this implied duty [trust and confidence], the House of Lords finally affirmed its existence in Mahmud v Bank of Credit and Commerce International S.A. [1997] ICR 606, [1997] IRLR 462.  The term was held to be as follows:
‘the employer shall not without reasonable and proper cause, conduct itself in a manner calculated and likely to destroy or seriously damage the relationship of confidence and trust between employer and employee.’
This follows the formulation that had been adopted in a series of cases by lower courts, eg, Woods v W. M. Car Services (Peterborough) Ltd [1981] ICR 666 per Browne-Wilkinson J, approved by the Court of Appeal in Lewis v Motorworld Garages Ltd [1986] ICR 157.”

20.	The passage cited from BCCI is taken from the speech of Lord Steyn [1997] ICR 606, 621 C-D.  The relevant passage reads:
“… For convenience I shall set out the [implied] term again.  It is expressed to impose an obligation that the employer shall not:
‘without reasonable and proper cause, conduct itself in a manner calculated and likely to destroy or seriously damage the relationship of confidence and trust between employer and employee.’
see Woods v W. M. Car Services (Peterborough) Ltd [1981] I.C.R 666, 670 (Browne-Wilkinson J)  approved in Lewis v Motorworld Garages Ltd [1986] I.C.R 157 and Imperial Group Pension Trust Ltd. v Imperial Tobacco Ltd. [1991] I.C.R. 524.”

21.	We have checked the wording contained in 1997 IRLR 462, paragraph 54.  It is in identical terms.  The important word is “and” in the phrase “calculated and likely to destroy…”.
22.	On a literal reading, the phrase imports a twofold, conjunctive test: is the employer’s conduct (a) calculated and (b) likely to destroy trust and confidence in the employment relationship?

23.	The question raised by Mr Harding is whether Lord Steyn in fact intended to state the test in this way, or whether he intended to formulate the implied term disjunctively; that is to say, was the conduct calculated or likely to destroy trust and confidence?  It will be immediately apparent that the literal wording imposes a higher hurdle for a Claimant relying on breach of the implied term in order to establish constructive dismissal.  He must not only show that the employer’s conduct was likely to destroy confidence but also that it was calculated (intended) by the employer to do so.

24.	In answering that question, we have tracked the line of authority cited with apparent approval by Lord Steyn at 621 D.  We have not required full argument from counsel on the point because, in the event, it matters not (on Mr Swift’s case) which formulation applies in the present case, as we shall later explain.

25.	We begin with the judgment of Browne-Wilkinson P, on behalf of the EAT, in Woods v W. M. Car Services (Peterborough) Ltd [1981] ICR 666.  At p670 G – 671 A, the then President said this:
“In our view it is clearly established that there is implied in a contract of employment a term that the employers will not, without reasonable and proper cause, conduct themselves in a manner calculated or likely to destroy or seriously damage the relationship of confidence and trust between employer and employee:  Courtaulds Northern Textiles Ltd. v. Andrew [1979] I.R.L.R. 84.  To constitute a breach of this implied term it is not necessary to show that the employer intended any repudiation of the contract: the tribunal’s function is to look at the employer’s conduct as a whole and determine whether it is such that its effect, judged reasonably and sensibly, is such that the employee cannot be expected to put up with it: see British Aircraft Corporation Ltd. v. Austin [1978] I.R.L.R. 332 and Post Office v. Roberts [1980] I.R.L.R 347.    The conduct of the parties has to be looked at as a whole and its cumulative impact assessed: Post Office v. Roberts.”

26.	Pausing there, Browne-Wilkinson P uses the disjunctive “or” in the phrase “calculated or likely to destroy…”.  He goes on to emphasise that it is not necessary to show that the employer intended any repudiation of the contract.  That, we interpose, is our understanding of the general Common Law approach to the concept of repudiatory breach of contract.

27.	Courtaulds Northern Textiles Ltd v Andrew [1979] IRLR 84, again a judgment of the EAT, was decided shortly after the Court of Appeal had resolved the question as to whether the test for constructive dismissal was contractual or one of reasonableness, in the seminal case of Western Excavating (ECC) Ltd v Sharp [1978] IRLR 27; it was contractual.  At para 10, Arnold J approved the formulation of the implied term on behalf of the Claimant in this way:
“it was an implied term of the contract that the employers would not, without reasonable and proper cause, conduct themselves in a manner calculated or likely to destroy or seriously damage the relationship of confidence and trust between the parties.”

28.	The case of Woods went to the Court of Appeal [1982] ICR 693.  The Court of Appeal’s approach is more usually cited in connection with the parameters of the appellate Tribunal’s or Court’s jurisdiction to interfere with ET conclusions.  However, we note that Lord Denning M R (who gave the leading judgment in Sharp) referred to Courtaulds at 698 D.  He said:

“It is the duty of the employer to be good and considerate to his servants.  Sometimes it is formulated as an implied term not to do anything likely to destroy the relationship of confidence between them.  See Courtaulds…”

29.	It is correct that Lording Denning went on to express his preference to look at it in this way; the employer must be good and considerate to his servants; but we do not understand that approach to conflict with the Courtaulds formulation adopted by the EAT in Woods.

30.	Lewis v Motorworld Garages Ltd [1986] ICR 157 is the case in which the Court of Appeal established the ‘last straw’ doctrine in cases of constructive dismissal.  However, we note that Neill L J  (167 C-D) regarded it as “now established” that the repudiatory conduct by the employer may consists of a series of acts or incidents which:
“… cumulatively amount to a repudiatory breach of the implied term of the contract of employment that the employer will not, without reasonable and proper cause, conduct themselves in a manner calculated or likely to destroy or seriously damage the relationship of confidence and trust between employer and employee: see Woods… in the Employment Appeal Tribunal.”

31.	Glidewell LJ, in summarising the principles to be found in the relevant authorities, appears to us to have similarly approved the formulation of the implied term by Browne-Wilkinson P in Woods [1981] ICR 666, 670, at p169 E-F of Lewis.

32.	Finally, in the Imperial case, to which Lord Steyn also referred in BCCI, Sir Nicholas Browne-Wilkinson, then Vice-Chancellor, returned to his judgment in Woods, when considering an employer’s duty of good faith owed to employee members of the Company pension fund, observing (533 C) that his formulation of the implied term in Woods had been approved by the Court of Appeal in Lewis.  

33.	That brings us back to the BCCI case, at which time the Woods formulation appears to have been well-settled.  Highly experienced employment law counsel on both sides agreed the formulation of the implied term of mutual trust and confidence.  At 609 F-G Lord Nicholls of Birkenhead recorded:
“In the Court of Appeal and in your Lordship’s House the parties were agreed that the contracts of employment of these two former employees each contained an implied term to the effect that the bank would not, without reasonable and proper cause, conduct itself in a manner likely to destroy or seriously damage the relationship of confidence and trust between employer and employee.  Argument proceeded on this footing…”

34.	It is perhaps unfortunate that the formulation agreed between counsel, as recorded by Lord Nicholls, truncates the Woods formulation by omission of the words “calculated or” in the passage cited above from his Lordship’s speech.  However, it is clear that the case proceeded on the agreed basis that it was not necessary, in establishing a breach of the implied term, for the employee to show that the employer’s conduct was calculated to destroy trust and confidence; it is enough if it is likely to do so.

35.	Did Lord Steyn intend his formulation of the implied term at p621 C-D in BCCI to include the conjunctive “and” (calculated and likely) as opposed to the disjunctive “or” to be found in the Woods formulation?  With considerable diffidence we conclude that he did not.  First, because he cited the Woods formulation with apparent approval, by reference also to the later endorsement by the Court of Appeal in Lewis and Lord Browne-Wilkinson’s own adoption of his original words in Imperial.  Secondly, and we think conclusively, it is clear from the remainder of Lord Steyn’s speech in BCCI that he did intend to adopt the Woods formulation.  Thus, under the heading “Breach of the Implied Obligation”, Lord Steyn said this (623 B-D):
“The implied obligation extends to any conduct by the employer likely to destroy or seriously damage the relationship of trust and confidence between employer and employee.  It may well be, as the Court of Appeal observes, that the decided cases involve instances of conduct which might be described ‘as conduct involving rather more direct treatment of employees:’ (1996) ICR 406, 412.  So be it.  But Morritt LJ held, at p411, that the obligation:
‘may be broken not only by an act directed at a particular employee but also by conduct which, when viewed objectively, is likely seriously to damage the relationship of employer and employee.’
That is correct approach.  The motives of the employer cannot be determinative, or even relevant, in judging the employee’s claims for damages for breach of the implied obligation.  If conduct objectively considered is likely to cause serious damage to the relationship between employer and employee, a breach of the implied obligation may arise.” 

36.	In our respectful view, that is the true expression of Lord Steyn’s opinion, itself wholly consistent with his approval of the Woods formulation.  The use of the conjunctive “and” between “calculated” and “likely” at 621 C should be regarded as a simple error in transcription by his Lordship, or those reporting his words.

37.	Nevertheless, the apparent error appears to have been perpetuated in the House of Lords’ later consideration of the BCCI case in Johnson v Unisys Ltd [2001] ICR 480, to which Lord Steyn was a party.  At para 32 (494 E) Lord Hoffmann referred to the Claimant’s pleaded case that his dismissal was in breach of various implied terms of his contract of employment.  He continued:
“The main one was that the employer would not without reasonable cause conduct itself in a manner calculated and likely to destroy or seriously damage the relationship of trust and confidence between itself and the employee.  The existence of this implied term in a contract of employment has recently been affirmed by the House of Lords in  Mahmud v Bank of Credit and Commerce International S.A. [1997] ICR 606.”

38.	Although Lord Steyn referred to the BCCI case (see particularly 488 H–489 F) he did not find it necessary, in considering the issue in Johnson, to revisit his formulation of the implied term in BCCI at 621 C.  However, we note his reference to what is described as “the seminal judgment” of Sir Nicholas Browne-Wilkinson V-C in the Imperial case (Johnson p492 C) and his unqualified approval of the Vice Chancellor’s approach in that case, itself consistent with his earlier formulation of the implied term in Woods.  Since Johnson was concerned with a question left over in BCCI, whether an employee’s claim for damages for wrongful dismissal at Common Law could include compensation for the consequences of his dismissal over and above the statutory cap imposed on the statutory claim for unfair dismissal (it could not), it was unnecessary for their Lordships to focus on the precise formulation of the implied term.  Its breach was assumed for the purposes of the strike-out application in that case.  

39.	We could find no further illumination on the proper formulation of the implied term in the House of Lord’s consideration of Johnson in Dunnachie v Kingston upon Hull City Council [2004] ICR 1052.  However, it seems to us that in Meikle v Nottinghamshire County Council [2005] ICR 1, the Court of Appeal accepted the EAT’s formulation of the implied term following BCCI as including the question whether, objectively speaking, the employer’s conduct is likely to destroy or seriously damage trust and confidence (see Keene LJ, para 25: p9 E).  That approach is, we think, consistent with the Woods formulation; indeed Keene LJ referred to Woods and Lewis (on a separate point) at para 36.

40.	The upshot of our researches therefore indicates to us, as stated earlier, that the use by Lord Steyn of the word “and” instead of “or” in his formulation of the implied term is an example of Homer nodding.   We therefore direct ourselves in accordance with Browne-Wilkinson P’s formulation in Woods; it was sufficient, as Mr Harding submits, for the Claimant to show in this case conduct by the Respondent which, objectively considered, is likely to seriously undermine the necessary trust and confidence in the employment relationship in order to establish a breach of the implied term.  That, however, is not the end of the constructive dismissal enquiry (see Sharp).  

41.	The difficulty for the Claimant lies in the Tribunal’s findings of fact.  As to the claim of constructive dismissal, they rejected each of his seven complaints of conduct undermining trust and confidence (set out at para 6 of their Reasons), said to amount to a breach of the implied term.

42.	For the purposes of establishing breach of the implied term, Mr Harding focuses, in this appeal, on the Miller incident.  Mr Swift submits that this aspect of the matter was not relied upon below as part of the Claimant’s case on constructive dismissal.  It is not pleaded in the Further and Better Particulars of Claim and no application to amend was made below.  Mr Harding points to para 150 of the Further and Better Particulars, where it is contended that the Claimant was forced out his employment by, among other things, the appointment of Mr Miller (a transphobe) to the selection panel for the new post.  However, that contention relies upon the Respondent having knowledge of the Claimant being a transsexual.  Otherwise their conduct, through Ms Beanlands, in appointing Mr Miller cannot be said to be conduct which objectively considered is likely to undermine trust and confidence.  The Tribunal found the Respondent did not have the necessary knowledge.  What Mr Harding seeks to do, in our view impermissibly (see Meikle), is to rely on the Claimant’s subjective view that such appointment undermined trust and confidence.  That is the effect of para 42 of his written closing submissions below (EAT bundle p206).

43.	However, even if the breach contended for is made out, the Claimant has a further difficulty.  The Tribunal (Reasons para 28.17) were not satisfied that the reason for the Claimant’s resignation was because of the Respondent’s treatment of him.  Further, at para 30.9.2, they found that even if Mr Miller had not been on the interview panel the Claimant would not have applied for the new post because he saw it as a demotion.  According to his resignation letter he would not, as he put it, collaborate in the reduction, downsizing, downgrading and devaluing of the crucial work on which he had been engaged.  

44.	We have taken into account the EAT’s approach in Jones v Sirl [1997] IRLR 493 para 10, that the relevant breach must be an effective cause, not necessarily the sole cause, of the employee’s termination of the contract.  However, on the Tribunal’s findings, we accept Mr Swift’s submission that the Miller incident was not an effective cause of the Claimant’s resignation and thus he failed to establish that he resigned in response, if breach there was.

Appeal on fact
45.	The third broad ground of appeal concerns the Tribunal’s approach to the Claimant’s witnesses and their evidence.  At paragraphs 70-101 of Mr Harding’s skeleton argument, which we all of us carefully pre-read before the hearing, he seeks to argue that the Tribunal’s wrong approach to parts of evidence given by the Claimant’s witnesses resulted in their conclusions on certain of the complaints relied on as showing breach of the implied term of mutual trust and confidence.  
46.	We did not encourage Mr Harding to enlarge on that part of his appeal in oral submissions.  We formed the clear view that here he was asking us to retry the facts, as Mr Swift submits.  The principle is well-established, see British Telecommunications plc v Sheridan [1990] IRLR 27.  That is not our function as an appellate Tribunal, whose jurisdiction is limited to correcting errors of law.  We shall not embark on that exercise.

Conclusion
47.	Having considered each of the ways in which Mr Harding puts this appeal, we are not persuaded that any error of law such as to obviate the Tribunal’s conclusions is made out.  Consequently, the appeal fails and is dismissed.