Appeal No. UKEAT/0315/08/LA

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 16 September 2008

Before
HIS HONOUR JUDGE McMULLEN QC
(SITTING ALONE)

MR L COUTINHO	APPELLANT

RANK NEMO (DMS) LIMITED	RESPONDENT

Transcript of Proceedings

JUDGMENT

	APPEARANCES

For the Appellant	MR L COUTHINO
(The Appellant in Person)
	
For the Respondent	MR N DILWORTH
(of Counsel)
Instructed by:
Messrs Goodman Derrick LLP Solicitors
90 Fetter Lane
London EC4A 1PT	

SUMMARY

PRACTICE AND PROCEDURE:  Striking-out/dismissal
VICTIMISATION DISCRIMINATION:  Other forms of victimisation

The Employment Judge wrongly struck out the Claimant’s claim of victimisation under the Race Relations Act 1976 when, post-termination of employment, the Claimant contended the Respondent took steps to avoid paying a sum awarded by the Employment Tribunal and ordered by the County Court.

HIS HONOUR JUDGE McMULLEN QC

1.	In this case I will refer to the parties as follows: Mr Coutinho is the Claimant and Rank Nemo (DMS) Limited is the Respondent.  Vision Information Services (UK) Ltd (“Vision”) was the Claimant’s first employer. There are five individual Respondents whose circumstances I need not deal with in any detail.  

Introduction
2.	This appeal is the third brought by the parties in a dispute over redundancy.  I hope in the circumstances I will be forgiven for preying upon the work already done by the EAT, first in a Judgment of Underhill J and members on 20 August 2007 (UKEAT/0466/06) and then by HHJ Judge Serota QC, sitting alone on 31 October 2007 (UKEAT/0469/07).

3.	Underhill J set the stage in the following way,
1. The Claimant, the respondent to this appeal, is an IT specialist.  He describes himself as British Asian.  In January 1997 he commenced employment with the appellant company, Vision Information Services (UK) Ltd (“Vision”), which is a subsidiary of a US company providing stock management software to major entertainment corporations which sell products in the UK market.  From about 2002 the business began to do badly.  In November 2002 negotiations began to sell it to a subsidiary of the Rank Corporation called Deluxe Media Services Ltd (“Deluxe”).  The negotiations proceeded patchily and appeared to have fallen through altogether in May 2003; but they resumed in late 2003.  On 22 March 2004 the Claimant was dismissed, ostensibly for redundancy, with effect from 31 March.  Vision’s business was sold to Deluxe some four months later, on 31 July 2004.
2. On 28 June 2004 the Claimant brought proceedings in the Employment Tribunal against Vision claiming:
(a) that he had been unfairly dismissed and 
(b) that Vision had discriminated against him on racial grounds, both by reference to a long sequence of problems which he claims to have suffered during his employment and by his eventual dismissal.
(In fact the claim was originally brought not against Vision itself but against its U.S. parent; but that error was soon rectified.)  
3. In May 2005 the Claimant raised a claim that there had been a relevant transfer of Vision’s undertaking to Deluxe within the meaning of reg 3 of the Transfer of Undertakings (Protection of Employment) Regulations 1981 (“TUPE”), and that his dismissal had been for a reason related to that transfer, with the result that all Vision’s liabilities arising out of the employment relationship transferred to Deluxe by virtue of reg 5 of TUPE (as applied in the decision of the House of Lords in Litster v. Forth Dry Dock & Engineering Co Ltd [1990] 1 AC 546).  Deluxe resisted being joined but by order of the Tribunal dated 28 November 2005 it was joined as Second Respondent.  
4. The claim came before a Tribunal sitting at Watford on 25/26 April and 2 May 2006.  In a reserved judgment sent to the parties on 26 June 2006 (“the liability judgment”) the Tribunal found that there had indeed been a “TUPE transfer” to Deluxe and that the Claimant’s dismissal had been for a reason related to that transfer.  It held that the dismissal was not for an “economic, technical or organisational [“ETO”] reason” within the meaning of reg 8 (2) of TUPE and that accordingly the dismissal was automatically unfair within the meaning of reg 8 (1).  It also found for the Claimant as regards some, but not most, of his claims of racial discrimination.  
5. On the basis adumbrated above, liability in relation to both the unfair dismissal and the discrimination claim passed to Deluxe.  For reasons which will appear, it is necessary that we set out the precise form which the liability judgment took.  It was expressed as follows:
‘1.	The Claimant’s claim for unfair dismissal is upheld.
 2.	The Claimant’s claim of race discrimination is upheld.
 3.	It is determined that there was a relevant transfer from [Vision] to [Deluxe] within the meaning of regulation 3 of the Transfer of Undertakings (Protection of Employment) Regulations 1981 and that the transfer was the principal reason for the Claimant’s dismissal.’
6. There was a remedies hearing on 18/19 July 2006.  By a reserved judgment sent to the parties on 5 October 2006 (“the remedies judgment”) the Tribunal made the following order
‘1.	The Claimant is awarded compensation for unfair dismissal in the total sum of £57,025, which is payable to the Claimant by [Deluxe].
2.	It is declared that [Vision] discriminated against the Claimant on the grounds of race.
3.	Compensation for race discrimination is awarded to the Claimant in the sum of £12,500, together with interest in the sum of £2,781.25, which is payable by [Deluxe].’
It is unnecessary to set out the Tribunal’s detailed reasoning which led to those figures, but we should note that the award of compensation for racial discrimination contained no element for aggravated damages.  It will be seen that the pecuniary remedies were, correctly, awarded only against Deluxe; but that the declaration named Vision as the discriminator. 
7. At both hearings the Claimant, who is evidently both intelligent and articulate, represented himself.  At the liability hearing Vision was represented by Mr Pasha of Aaron and Partners LLP and Deluxe by its Human Resources manager, Mr Wright.  At the remedies hearing Mr Pasha appeared for both Vision and Deluxe.  (On the face of it, their interests might not appear identical; but we were told that, as is common, there were indemnity arrangements in place between the two companies.)”

4.	The appeal by Vision to the EAT was dismissed and so was the Claimant’s appeal against the assessment of compensation.  

5.	Before Judge Serota; the issue was whether a post-employment reference should be provided by Rank Nemo, rather than by Vision.  He upheld the Employment Tribunal and dismissed the Claimant’s appeal, on the basis that he had never been employed by Rank Nemo, and so could not complain that it had not given him a reference.

6.	Things moved on.  The Employment Tribunal awarded very substantial sums to the Claimant which were not paid.  Enforcement of Tribunal Orders for compensation, there being no claim for reinstatement or re-engagement here, is by section 15 of the Employment Tribunals Act 1996 which provides: 

“15 (1) Any sum payable in pursuance of a decision of an industrial tribunal in England and Wales which has been registered in accordance with industrial tribunal procedure regulations shall, if a county court so orders, be recoverable by execution issued from the county court or otherwise as if it were payable under an order of that court.” 

7.	Legal proceedings were commenced in Slough County Court resulting in an Order on 15 December 2006 in favour of the Claimant against the Respondent in the sum of £72,473.25.  That Judgment debt remains unpaid.

The appeal
8.	The Claimant launched fresh proceedings and was met by a determination of the Employment Judge on 2 May 2008 in the following terms,

“There is no jurisdiction for the Tribunal to hear Claimant’s Claim.  It is a question of enforcement which is not a matter which the employment tribunal has power to interfere with.  Any potential victimisation claim would have to flow on link between the bringing of the claim and the less favourable treatment.”
‘A Chairman, Ms Manley, has therefore decided that it cannot be accepted.’

9.	The Claimant was dissatisfied and sought a review.  The opportunity to review is provided specifically against a refusal to accept a claim, see Employment Tribunal (Constitution and Rules of Procedure) Regulations 2004 rule 34(1)(a), and the procedure for dealing with non-acceptance is set out in rule 3, which provides initially an administrative determination by the Secretary and then a judicial determination by an Employment Judge. The Employment Judge refused and affirmed her earlier decision.

10.	The Judge held there should be a link between the claim brought, the subject of the previous awards, and less favourable treatment, although the syntax of the passage is not correct.  So it is necessary to look at what the Claimant contended and he said this,

“6.2.22  I contend that the following behaviour of Rank Nemo constitutes Victimisation as per S2(1) RRA 1976:
-Disposal of Assets without regard to debt owed to me.  To make the ET award unenforceable.  (From 30/6/2006 to mid 2007)
-Offering a ‘settlement’ of £20,000 as a take it or leave it.  (1/2/2008)
-Declining to enforce an indemnity with my ex-employers.  (1/2/2008)
-Misrepresenting the financial situation of the company.  (17/10/2008 to 1/2/2008)
-Withholding payment & preferential treatment of other creditors/employees.  (1/2/2008)
Rank Nemo have treated me differently and to my detriment when compared to how others (creditors ex-employees & a hypothetical comparator) have or would have been treated, and I believe that the reason for the difference in treatment is my previous proceedings against them.  (a protected act).”

11.	‘Protected act’ is not a statutory term but is useful industry shorthand for actions under the Race Relations Act 1976 s2(1), being a constituent part of the tort of race discrimination by way of victimisation.  Although the claim is expressly under s2(1), it is not being contended before me that the bringing of proceedings for race discrimination was a protected act in this case.

12.	The application of the statutory torts in the field of employment is provided for by section 4 and the Claimant relies upon these two particular models:

“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.”

13.	Thus he puts his case that the acts set out in paragraph 6.2.22 of the claim constituted discrimination in the way in which benefits were afforded or refused to be afforded to him and that he was subjected to a detriment.  It has to be said that these are post‑termination and there was a stage in the life of the Race Relations Act when post-termination discrimination was thought to be outside its scope, but in Rhys-Harper v Relaxion Group plc [2003] ICR 867, the House of Lords considered a suite of six appeals dealing with one form of post-termination discrimination or another.  The leading case for the purposes of the argument addressed to me is one of those six D’Souza v London Borough of Lambeth [1997] IRLR 677.  Here a successful claimant in discrimination proceedings was the subject of an order for reinstatement and it was not complied with by his employer.  He brought proceedings on the grounds that that was itself victimisation.  The House of Lords declined to accept that his claim fell within section 4(2) of the Race Relations Act.

14.	Two cases have been determined in the EAT seeking to apply the judgments in those six cases and it is at once apparent that not all of the cases and the speeches are to precisely the same effect.  In Metropolitan Police Service v Shoebridge [2004] ICR 1690 Burton P and members dealt with a case where undisclosed detrimental statements were made by an employee’s former employer to a new employer. The question was whether or not the jurisprudence in Rhys-Harper could be utilised by the claimant.  An Employment Tribunal consisting of three members at a full hearing determined that it had jurisdiction to hear the claim and that was upheld by the EAT.

15.	The EAT analysed with care each of the speeches in Rhys-Harper (see paragraph 25 of Shoebridge) and in an astringent approach said the following,

“34. It is clear to us, if one is looking, with Lord Nicholls, at examples of the kind of non‑contractual expectation which an employee will have, that this is not limited simply to an expectation that a requested reference will assist him in obtaining a new job, which was the example by Lord Nicholls in paragraph 36.  It is the combined experience of this Tribunal that that is not the sole occasion when an employee’s expectation will arise.  An employee will have a similar expectation of assistance, at any rate of non-discriminatory conduct on the part of an employer, whenever there may be contact or communication with a subsequent employer or would-be employer, in relation to the performance or conduct of the ex-employee; and there is in our judgment no qualitative difference between the act of an employer in spoiling a subsequent employment on an unsolicited basis and the act of an employer in giving or refusing a formal reference.  Of course, on the facts, as we have indicated, victimisation may not arise or proximity may not arise, as we shall discuss in a moment, but we see no distinction by way of applying the facts of this case to the examples given by Lord Nicholls between his analysis of incidents of an employment relationship and what occurred here.  
35. Secondly, we are entirely satisfied that Lord Nicholls was looking at incidents of an employment relationship, as he describes them in paragraphs 36, 37, 44 and not necessarily the continuation of the employment relationship as a whole.  When he said in paragraph 44 ‘the obligation not to discriminate applies to all the incidents of the employment relationship, whenever precisely they arise’ he was referring to the kind of incidents of such a relationship such as the discriminatory non-provision of a reference, or, as here, if proved, possibly discriminatory statements made about an ex-employee in an employment context, and certainly those with a view to spoiling the subsequent employment of the employee, if such be found; both could be incidents of an employment relationship and they could, as indeed Lord Nicholls himself foresees in paragraphs 41 and 42, arise years after the employment relationship itself had ended.  In those circumstances, we are satisfied that Lord Nicholls stands on the side of the line together with Lord Rodger and Lord Hobhouse, and that the facts alleged here, if proved, would amount to discriminatory conduct of an incident of employment relationship.  
36. On the other hand, a much simpler test is set out, in our judgment, and one which the Employment Tribunal may well find it far easier to adopt, applying the commonsense of an industrial jury, namely the tests set out by Lord Hobhouse and Lord Rodger:  whether there is a substantial connection with the employment relationship, or a sufficiently close connection with the employment, or whether the employer was here discriminating qua employer, or whether the facts alleged are sufficiently proximate to, or not remote from, the employment of the employment relationship.  We are satisfied that that is a matter which this Employment Tribunal can resolve and might resolve against the Applicant; that is a matter for the Employment Tribunal when it fully hears the facts.  But it appears to us that if it be proved that an employer deliberately set out to spoil a subsequent employment, however long after its own employment had ceased, or so acted, knowing of the likely consequences of its actions, it would be acting qua former employer, to quote Lord Rodgers’ words.  That is not to say, of course, that it would necessarily be victimising, because it may have other motivations for its act, but that if such were proved, there would be, in our judgment, sufficient proximity and a sufficiently close connection with the employment.”

16.	The balance of opinions in the House of Lords, as determined by the EAT, is that what one is looking for is a close connection between the act complained of and the employment relationship (see the alternative ways of putting it cited in paragraph 36 above).  

17.	That approach was adopted in Baynton v South West Trains Limited [2005] ICR 1730, a Judgment of HHJ Burke QC and members in which a three-person tribunal held there was no jurisdiction and an appeal was dismissed. The issue was whether or not it was an act of victimisation in a disability discrimination case, for an employer to refuse to reopen an unsuccessful appeal by the claimant against his dismissal upon new evidence being found.  The EAT considered, of course, Rhys-Harper and the application of Rhys-Harper in Shoebridge and said this: 

“28. 	It is, however, clear in our judgment that the House of Lords in Rhys-Harper intended to lay down boundaries to the jurisdiction to entertain complaints of post-termination discrimination so as to protect ex employers against a massive new exposure to claims which would or might arise if ex-employees had “open house” to make such claims. The nature and extent of those boundaries were considered in detail in the Employment Appeal Tribunal in Metropolitan Police Service v Shoebridge [2004] ICR 1690; in giving the judgment of the Employment Appeal Tribunal in that case, the President, Burton J, analysed the differing formulations of those boundaries to be found in the speeches of the House of Lords in Rhys‑Harper (which, it must be remembered, were addressing direct discrimination by subjecting the ex-employee to detriment and not by failure to make adjustments). We gratefully accept and adopt the conclusions in the EAT’s judgment, at paragraphs 25 and 34-36, that the majority of their Lordships did not set the boundaries at the point at which the employment relationship ceased to continue but the point at which the subject matter of the complaint against the ex-employer was no longer an incident of the employment relationship and a benefit which the ex-employee was entitled to expect would be provided post-employment-which is the same boundary as that set by Lord Hobhouse and Lord Rodger i.e. whether the facts alleged are sufficiently proximate to and are not too remote from the employment relationship-and that on which side of the boundaries the facts fall in any individual case is a matter for the Employment Tribunal to resolve on the evidence.
29.	But how should those principles be applied in this case?  Miss Newton submits that the Employment Tribunal alone can determine on the facts whether the request made on Mr Baynton’s behalf by his union on 17 January 2004 was sufficiently proximate; Miss Seymour submits that the relevant facts are not in dispute and point unerringly to the correctness of the Tribunal’s decision. There was no contractual right in Mr Baynton to any further reconsideration of the dismissal; he had exhausted all appeal procedures. There was no evidence or allegation of any custom or practice in South West Trains whereby such reconsideration could be expected of them by the union or by Mr Baynton. In contrast to a reference case, a post-termination appeal case or a case such as Shoebridge-in which the employee could expect a proper or accurate assessment of the issue raised-no such expectation could exist at all in this case; and therefore there could not be sufficient proximity to give the Tribunal jurisdiction.
33.	 For these reasons we are persuaded that the decision in the Employment Tribunal on this issue was correct and that there was no jurisdiction in the Employment Tribunal to hear a complaint by Mr Baynton based solely on the rejection of his request to South West Trains for a rescission of the dismissal.”

18.	I have stressed that in the two EAT cases and what appear to be all six of the cases in Rhys-Harper there were full hearings where facts were determined.  The stage reached in the present case is that the claim has not been accepted.  The Respondent has not been called upon to provide a response and no direction is given for any preliminary point to be heard or for the onward transmission of a case to a full hearing.

19.	I would call this a proto-strikeout without elementary safeguards. Nevertheless the approach to strikeout at a rule 18 PHR may be instructive.  I take it to be the following:  the overriding objective requires a case which the Tribunal has no power to deal with can be rejected under rule 3.  That means taking at face value what the Claimant says in his claim form.  The Respondent contends that what the Claimant is doing is to enforce the Order of Slough County Court.  On the other hand, the Claimant draws a distance from that and says that new statutory torts have been committed by the actors in this drama in the ways set out in paragraph 6.2.22.

20.	Using the language informally adopted by the Employment Judge in this case of whether there is a link between the acts of which the Claimant complains and the claim, it seems to me on the face of his claim that he does assert that.  Whether he can prove it ought to be determined at a hearing.  Broadly speaking, I agree that the Claimant has to do that. It was not at the acceptance stage for this decision to be made but after a Respondent’s answer, and at, in my view, a rule 26 Hearing.  

21.	 So, the central issue is:  is the Claimant enforcing the Judgment debt?  In my view he is not.  Of course the background is that he has not recovered the debt.  He has been put to the trouble of going to the County Court.  An Order was made which Rank Nemo has disobeyed.  No explanation has been given to me why this Respondent, who seeks justice in Employment Tribunal and EAT proceedings, is not doing justice in accordance with the Orders of the Court.  I indicated to Mr Dilworth, Counsel for the Respondent, that if this were a matter of discretion it would be one I would wish to take into account.  It is not a matter of discretion.  It is a matter of construction of the claim form and the Employment Judge’s reason, set against the jurisprudence, beginning with Rhys-Harper.

22.	In my judgment it cannot be said that there is no link between the acts said to be committed and to be wrongful in the Claimant’s claim form, and the bringing of proceedings.  There is an expectation, not just that people will obey the Orders of the Court or a Tribunal but that a person engaged in litigation against his employer in which he is vindicated can expect that Orders will be observed.  The Order for payment of compensation is inextricably linked to the employment relationship.  The award is just and equitable, in the light of the statutory torts of race discrimination and unfair dismissal.  

23.	Looking at the claim form, it cannot be said that there is no such link so as to cause the Secretary and Employment Judge to refuse to accept the claim.  It is not necessary for me to say more, for this case should now proceed along its ordinary route.   Since the Claimant has proved an error, the matter is now in my hands. I direct the claim be accepted. 

24.	I have heard no separate argument in respect of the additional five Respondents but it seems to me that the criticisms made of Rank Nemo are in similar form to those made of the human actors who are responsible for Rank Nemo’s conduct.  In the absence of any targeted response, they should stay in. I take the view that this being equivalent to a strike-out, it is an interim appeal, and the view given by Maurice Kay LJ in Ezsias v North Glamorgan NHS Trust [2007] IRLR 603 CA requiring a more exacting approach is one which I will adopt.  I was referred to the speech of Lord Steyn in Anyanwu v South Bank Student Union [2001] ICR 391 HL, and I hold that this case cries out for determination on the facts rather than for it to be stopped even before a strike-out is reached.

25.	The appeal is allowed.