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Judgments - St Helens Borough Council (Respondents) v. Derbyshire and others (Appellants)

    HOUSE OF LORDS

    SESSION 2006-07

    [2007] UKHL 16

    on appeal from: [2005] EWCA Civ 977

    

    OPINIONS

    OF THE LORDS OF APPEAL

    FOR JUDGMENT IN THE CAUSE

    St Helens Borough Council (Respondents)

v.

    Derbyshire and others (Appellants)

    

    Appellate Committee

    Lord Bingham of Cornhill

    Lord Hope of Craighead

    Baroness Hale of Richmond

    Lord Carswell

    Lord Neuberger of Abbotsbury

    

    Counsel

    Appellants:

    John Hendy QC

    Damian Brown

    (Instructed by Michelle Cronin, Solicitor, Thompsons Solicitors, Liverpool)

    Respondents:

    Christopher Jeans QC

    Simon Gorton

    (Instructed by Peter Blackburn, Solicitor to

    St Helens Borough Council, St Helens)

    Interveners

    Ms Tess Gill

    Miss Nadia Motraghi

    (Instructed by Mrs Sarah Lowe, Solicitor, Equal Opportunities Commission, Manchester)

    Hearing dates:

    28 February and 1 March

ON

    WEDNESDAY 25 APRIL 2007

HOUSE OF LORDS

OPINIONS OF THE LORDS OF APPEAL FOR JUDGMENT

IN THE CAUSE

St Helens Borough Council (Respondents) v. Derbyshire and others (Appellants)

[2007] UKHL 16

LORD BINGHAM OF CORNHILL

My Lords,

    1.  The Universal Declaration of Human Rights 1948 provided in article 2 that "Everyone is entitled to all the rights and freedoms set forth in this Declaration, without distinction of any kind, such as race, colour, sex, language, religion, political or other opinion, national or social origin, property, birth or other status". Since 1948 steps have been taken, in this country and the European Community, to give legal effect, in part, to this general objective of non-discriminatory treatment. As explained by my noble and learned friend Lord Neuberger of Abbotsbury, whose account of the facts, the proceedings and the legislative background I gratefully adopt, Mrs Derbyshire and 38 other women, the appellants, brought proceedings against their employer, the St Helens Borough Council, complaining under section 2 of the Equal Pay Act 1970 that they were less well paid than men doing comparable work. Their claims succeeded, but it is not those proceedings which give rise to this appeal. For the appellants also complained, in separate proceedings, that while pursuing their claim for equal pay they were subjected to adverse treatment by the Council because they had persisted in pursuing that claim. It is that complaint, upheld by the Employment Tribunal, the Employment Appeal Tribunal and a minority of the Court of Appeal but remitted to the Employment Tribunal for fresh determination by a majority of the Court of Appeal, which now comes before the House.

    2.  A number of statutes have been passed in this country, and a number of orders made, to proscribe various kinds of discriminatory treatment. Immediately relevant in this case is section 6(2)(b) of the Sex Discrimination Act 1975, which makes it unlawful for an employer to discriminate against a woman employed by him at an establishment in Great Britain by dismissing her or subjecting her to any other detriment. Section 6 appears in Part II of the Act, which is directed to discrimination in the employment field, and applies not only to employers but also trade unions, qualifying bodies, vocational training bodies, employment agencies and others. Part III covers sexual discrimination in education and the provision of certain goods, facilities, services and premises. A similar proscription of discriminatory conduct on grounds of race is found in section 4(2)(c) of the Race Relations Act 1976, on grounds of disability in section 4(2)(d) of the Disability Discrimination Act 1995, on grounds of religious belief in regulation 6(2)(d) of the Employment Equality (Religion or Belief) Regulations 2003 (SI 2003/1660), on grounds of sexual orientation in regulation 6(2)(d) of the Employment Equality (Sexual Orientation) Regulations 2003 (SI 2003/1661) and on grounds of age in regulation 7(2)(d) of the Employment Equality (Age) Regulations 2006 (SI 2006/1031). Part of this ground has been covered in legislation of the European Community, although the legislative technique employed has been somewhat different. Instead of proscribing specified forms of discriminatory conduct as unlawful, European directives have imposed an obligation on member states to secure non-discriminatory treatment in the specified field. Examples are found in articles 1, 3 and 4 of the Equal Pay Directive (Council Directive 75/117/EEC), articles 1-5 of the Equal Treatment Directive (Council Directive 76/207/EEC) and Chapter 1 of the Race Directive (Council Directive 2000/43/EC).

    3.  The right not to be discriminated against on one of the grounds proscribed by domestic law would be of little value if a victim of proscribed conduct, or a person claiming to be the victim of proscribed conduct, could not have recourse to a judicial body competent to rule on the merits of the claim and, if it is held to be made out, give redress. Such a right is found in section 63 of the Sex Discrimination Act 1975, section 54 of the Race Relations Act 1976, section 17A of the Disability Discrimination Act 1995, regulation 28 of the Religion or Belief Regulations, regulation 28 of the Sexual Orientation Regulations and regulation 36 of the Age Regulations. The Community instruments mentioned above have direct effect, and oblige member states to give victims of proscribed discrimination a domestic remedy: see article 6 of the Equal Pay Directive, article 6 of the Equal Treatment Directive and article 7 of the Race Directive.

    4.  The right to seek effective legal redress conferred on a person who is or claims to be the victim of proscribed discriminatory conduct would itself be of limited value and perhaps no value if the alleged discriminator were free, otherwise than by defeating the claim on its merits, to frustrate or interfere with the conduct of the proceedings in a way that undermined the integrity of the judicial process to which the claim had given rise. This has been recognised in domestic and also Community legislation. Thus by section 4(1)(a) of the Sex Discrimination Act 1975 it is unlawful discrimination for A to treat B less favourably (in any circumstances relevant for the purposes of any provision of the Act, including but not limited to employment) than he treats or would treat other persons in those circumstances if he does so because ("by reason that") B has brought proceedings against A or any other person under the Act or the Equal Pay Act 1970. The object of section 4 is not in doubt. If the Act was to be effective, there had to be protection for those who sought to rely on it (Cornelius v University College of Swansea [1987] IRLR 141, para 31). As Lord Nicholls of Birkenhead put it in Chief Constable of the West Yorkshire Police v Khan [2001] UKHL 48, [2001] ICR 1065, para 16, "The primary object of the victimisation provisions in section 2 [of the Race Relations Act 1976] is to ensure that persons are not penalised or prejudiced because they have taken steps to exercise their statutory rights or are intending to do so".

    5.  Provisions analogous to section 4 of the 1975 Act are found in section 2 of the Race Relations Act 1976, section 55 of the Disability Discrimination Act 1995 and regulation 4 of each of the Religion or Belief, the Sexual Orientation and the Age Regulations. They are matched by article 5 of the Equal Pay Directive, article 7 (as amended) of the Equal Treatment Directive and article 9 of the Race Directive.

    6.  Addressing the House on behalf of the Equal Opportunities Commission, the Commission for Racial Equality and the Disability Rights Commission, who had been given leave to intervene, Ms Gill submitted that our domestic provisions relating to discrimination should be interpreted and applied in a broadly similar manner, and in a manner consistent with European Community legislation in areas to which such legislation applies. I would accept that submission. It may well be that there are differences (other than as to their subject matter) between one domestic provision and another, but none is said to be significant in this case and the provisions have a very similar purpose. It was not suggested in argument that there is, in a respect relevant to this case, any disharmony between the European directives referred to and our domestic legislation. The object is to protect those seeking to assert what they claim to be their rights.

The present case

    7.  If sections 4(1)(a) and 6(2)(b) of the 1975 Act are read together, the question in the present case becomes: did the Council, in circumstances relevant for any provision of the Act, discriminate against the appellants by treating them less favourably than in such circumstances it treats or would treat other persons because ("by reason that") the appellants had brought proceedings against the Council under the Equal Pay Act 1970, such less favourable treatment subjecting the appellants to a detriment?

    8.  Certain elements of this omnibus question are uncontentious. Thus the Employment Tribunal held (para 4(b) of their Reasons) the relevant circumstances to be the employment relationship between the parties, and that ruling has not been challenged. The Employment Tribunal held (Reasons, para 4(c)) that the treatment of the appellants was to be compared with the treatment of employees who had not brought and continued equal pay proceedings. This conclusion was not disputed in the Employment Appeal Tribunal (judgment, para 29) and was accepted by all members of the Court of Appeal (judgments, paras 22, 44-45, 68). The Employment Tribunal found (para 4(d)) that the sending of the letters of which the appellants complained, in particular the more widely disseminated letter, treated the appellants less favourably than those employees who had not brought and continued equal pay proceedings, and that each of them as a result suffered a detriment. The Employment Appeal Tribunal (para 26) accepted the finding of less favourable treatment. In the Court of Appeal, a majority upheld the finding of less favourable treatment and detriment: [2005] EWCA Civ 977, [2006] ICR 90, per Mummery LJ, paras 25-29, per Jonathan Parker LJ, para 46. It was on the Council's reason for treating the appellants less favourably than other employees ("by reason that the person victimised has - (a) … brought proceedings against the discriminator … under this Act or the Equal Pay Act 1970") that opinion in the Court of Appeal was divided.

    9.  In Khan, above, para 29, Lord Nicholls propounded a simple, common sense approach to this question. It is to ask why the alleged discriminator acted as he did. What matters is the discriminator's subjective intention: what was he seeking to achieve by treating the alleged victim as he did? The decisions in Cornelius and Khan, above, are, I think, consistent with this approach. In Cornelius, the appellant complained that the College had not transferred her or given her access to the College's internal grievance procedure pending tribunal decisions on her complaints of sexual discrimination. There was no finding that she had been the victim of less favourable treatment or detriment or that, if she had, it had had anything to do with her pending proceedings. It appeared (para 33) that the College authorities wished to defer internal steps until the proceedings were over, to avoid acting in a way which might embarrass the handling or be inconsistent with the outcome of the tribunal proceedings. Similarly, in Khan the Chief Constable declined to give the applicant a reference for appointment to another force pending the determination of a racial discrimination complaint not because he wished to obstruct the conduct of those proceedings but because he believed, on advice, that any reference he gave would weaken his defence in those proceedings or aggravate the damages recoverable against him. The contrast with the present case is striking and obvious, for the object of sending the letters was to put pressure on the appellants to drop their claims. The Council may very well have had compelling reasons for wanting the claims to be dropped. It cannot possibly be criticised for advancing a bona fide defence to the claims. It was fully entitled to seek to settle them. But the letters which it sent were found by the tribunal to treat the appellants less favourably than employees who had not brought and continued Equal Pay claims. The letters caused the appellants a detriment. The letters were sent because the appellants had persisted in their claims and the Council wished to put pressure on them to settle. On the findings made, the tribunal were fully entitled to uphold the appellants' victimisation claims. For the detailed reasons given by my noble and learned friends, I cannot accept that the tribunal misdirected itself as held by the Court of Appeal majority and would fully endorse the succinct and accurate reasoning of Mummery LJ.

    10.  For these reasons I would allow the appeal, restore the decision of the Employment Tribunal and award the appellants their costs in the Court of Appeal and this House.

LORD HOPE OF CRAIGHEAD

My Lords,

    11.  Litigation between employers and employees about a matter which affects large sections of the work force such as an equal pay claim arouses strong feelings on either side. Increases in pay, especially where there is back pay to be made up too, must be matched by increases in income or a reduction in costs if the business is not to suffer financially. For local government employers who have not yet been able to meet them, conceding these claims will mean hard choices - redundancies, cuts in wages, cuts in public services or increases in rates and in council tax. The problem is made worse by a deadline to meet all claims for equal pay by 1 April 2007 which was negotiated between local government employers and recognised trade unions under the single status agreement for establishing pay equality which they entered into ten years ago. Moreover, claims for back pay (in this case the unions started asked for an equivalent bonus scheme in 1998) can now go back six years before the proceedings were instituted instead of two: Equal Pay Act 1970, section 2ZB, inserted by the Equal Pay Act 1970 (Amendment) Regulations 2003 (SI 2003/1656). Employers who have reached the stage of litigating will only have done so because negotiations have failed to achieve what, from their point of view, is the only possible outcome. Employees who insist on their claims will be conscious of the risk that success for them may prejudice others due to the consequential cost-saving measures that their employers say will be unavoidable.

    12.  It is only to be expected that in this situation employers will try to convince their employees that the claims ought not to be pressed. It is only to be expected that the employees who are at the receiving end of such overtures will feel that they are being pressurised into a settlement. This is the highly charged field of competing emotions in which the statutory provisions which protect employees against victimisation must operate. For employers who must meet a successful equal pay claim, to be subjected to a claim for victimisation as well is an additional penalty. It is like being penalised a second time for being rude to the referee. As in sport, over-reaction - for what to the employer may seem the best of reasons - can have very unwelcome consequences.

The proceedings

    13.  The protection which the appellants invoke in this case is to be found in section 4(1) and section 6(2)(b) of the Sex Discrimination Act 1975 ("SDA 1975"). Provisions virtually identical to those of section 4 of SDA 1975, which defines discrimination by way of victimisation in the area of sex discrimination, are contained in the legislation which prohibits discrimination in other fields which my noble and learned friend Lord Bingham of Cornhill has mentioned. Among the acts which are protected by section 4 of SDA 1975 is the bringing of proceedings against the discriminator or any other person under the Equal Pay Act 1970. It is unlawful for an employer to discriminate against a woman by reason that she has brought such proceedings by, among other things, subjecting her "to any other detriment": section 6(2)(b). That is discrimination by way of victimisation within the meaning of section 4(1). It is an unlawful act for which Part VII of the Act provides a remedy.

    14.  The letters which gave rise to the complaint of victimisation by the employees in this case were said by the employment tribunal to have been carefully written. The tribunal thought that their tone was rational and that they contained much that was sensible. Nevertheless the employees' reaction was of distress in at least some cases and the letter which their colleagues received, in which the impact the claims could have was spelt out, incurred for the employees some odium. Some people feared that, if the equality claim succeeded, they would not be able to afford school meals for their children. Others feared for the loss of their bonus. The tribunal found that in these circumstances the employees did suffer a detriment. In the Court of Appeal Parker LJ agreed with Mummery LJ that its findings as to detriment were findings that it was entitled to make and were unchallengeable in that court: [2006] ICR 90, para 46.

    15.  But there was a difference of opinion in the Court of Appeal on the question whether the employees suffered that detriment "by reason of" their having brought proceedings against the respondents under the Equal Pay Act 1970. The majority (Jonathan Parker and Lloyd LJJ) said that the tribunal erred in law because the reasoning in paragraph 4(e) of its extended reasons failed to follow the guidance in Cornelius v University College of Swansea [1987] IRLR 141 and Chief Constable of the West Yorkshire Police v Khan [2001] 1 CR 1065. Mummery LJ, on the other hand, said that the tribunal's reasons had to be read as a whole, that its findings under the various aspects of victimisation were interconnected and that, on a fair reading of the reasons as a whole, they contained no error of law. On one level, therefore, the issue in this appeal is simply whether the majority in the Court of Appeal misconstrued paragraph 4(e) of the tribunal's reasons when they held that the tribunal misdirected itself. But there is a more important point, which is one of general public importance. It is whether the majority were themselves in error as to the effect of the dicta in Cornelius and Khan on which they based their criticisms of the tribunal's reasoning. This in turn makes in necessary to consider what was said in those cases, and especially the reasoning in Khan.

The tribunal's reasoning

    16.  As to the first point, I agree with Mummery LJ and with my noble and learned friend Lord Neuberger, whose speech I have had the opportunity of reading in draft, that the majority in the Court of Appeal did indeed misconstrue paragraph 4(e) of the tribunal's reasons. It has been said many times that a generous interpretation ought to be given to an employment tribunal's reasoning, and that it should not be subjected to an unduly critical analysis. No such latitude is needed in this case, however. Paragraph 4(e) has to be read in the light of the admirably clear findings that preceded it. The point to which the tribunal was addressing itself was whether it had been shown that the detrimental treatment suffered by the appellants was "by reason that" they were insisting on their equal pay claims. It was necessary for it to cross the bridge between finding that there was a detriment within the meaning of section 6(2)(b) of SDA 1975 and the requirement in section 4(1) that the detriment was by reason of the employees having committed one of the protected acts.

    17.  In the crucially important fifth sentence of paragraph 4(e), which both Jonathan Parker and Lloyd LJJ omitted to include in their quotations from this paragraph, the tribunal informs the reader that it had observed the distinction between the respondents' right to protect themselves in litigation on the one hand and detrimental treatment as a response to the commencement of proceedings on the other. The reference to the distinction that was made in Chief Constable of the West Yorkshire Police v Khan indicates that it had in mind the test mentioned by Lord Hoffmann in para 60, although it did not use precisely the same language. The tribunal does not say, in so many words, that it addressed itself to the further question whether the steps which the respondents took were steps which, as Lord Nicholls of Birkenhead put it in Khan, para 31, employers "acting honestly and reasonably" ought to be able to take to preserve their position without laying themselves open to a charge of victimisation. But that, in essence, is the point which the tribunal was making when it referred in the fifth sentence to the respondents' right to protect themselves in litigation. When the reasons are read as a whole, it is plain that the tribunal was of the opinion that the respondents' conduct, while no doubt honest, could not be said to have been reasonable. As Mummery LJ said in para 39 of the Court of Appeal's judgment, the effect of the tribunal's findings was that the respondents went further than was reasonable as a means of protecting their interests in the existing litigation.

"By reason that": the guidance in Khan

    18.  The more troublesome aspect of this case is to be found in the way the guidance which was given in Cornelius and Khan was analysed in the Court of Appeal by the majority. I think that there are two points that need to be addressed.

    19.  First, Jonathan Parker LJ said that the tribunal made an error of law when it said in para 4(e) that the respondents were reacting "if not to the commencement of proceedings, certainly to their continuance". He said that the tribunal overlooked the distinction drawn in Cornelius and Khan between the commencement of proceedings and the continuance of proceedings, once commenced: para 53. Lloyd LJ acknowledged that this distinction was not easy to apply in a case such as this, where the act in question related directly to the conduct of proceedings: para 72. It seemed to him that the fact that the "by reason that" test focuses attention on the question whether the employee has been treated as she has by reason that she has brought proceedings under the Equal Pay Act did not fit well with the last sentence of para 60 of Lord Hoffmann's speech in Khan. Nevertheless Jonathan Parker LJ held that the distinction which the tribunal drew between "merely seeking to avoid prejudicing their position in the litigation" and "wanting the applicants to abandon their claims" was not a relevant distinction: para 51.

    20.  Second, Jonathan Parker LJ said that he agreed with Lloyd LJ that the question at issue was whether the conduct complained of fell within the description of an "honest and reasonable" attempt to compromise the proceedings: para 54. Lloyd LJ said that he had some difficulty in seeing how, applying the "honest and reasonable" test mentioned by Lord Nicholls in Khan, a finding that an employer could act in that way with impunity in resisting equal pay claims could be reconciled with the terms of the legislation. But he thought that it would be absurd if employers were not able to act in that way, and that this was the test by which the respondents' conduct should be judged: para 74. So the tribunal was wrong in law to hold in para 4(e) that it was not open to an employee to try to persuade one or more employees who had brought equal pay proceedings against it to settle those proceedings, so as to avoid an adjudication altogether: para 75. The fact that this was the employer's objective could not, by itself, take the conduct outside the scope of the freedom permitted to the employer to conduct its defence to the proceedings in an honest and reasonable manner.

"Bringing proceedings"

    21.  As to the first point, in Cornelius v University College of Swansea, para 33, Bingham LJ contrasted a decision by an employer that was influenced merely by "the existence of proceedings" with a decision that was influenced by "the appellant's conduct in bringing proceedings under the Act". It would only be if the second alternative was made out on the facts that it could be held that the appellant had succeeded in showing that the College did what it did because the appellant had brought proceedings against the College under the Act. Building on this distinction in Chief Constable of the West Yorkshire Police v Khan, para 60, Lord Hoffmann said:

    "A test which is likely in most cases to give the right answer is to ask whether the employer would have refused the request if the litigation had been concluded, whatever the outcome. If the answer is no, it will usually follow that the reason for refusal was the existence of the proceedings and not the fact that the employee had commenced them. On the other hand, if the fact that the employee had commenced proceedings under the Act was a real reason why he received less favourable treatment, it is no answer that the employer would have behaved in the same way to an employee who had done some non-protected act, such as commencing proceedings otherwise than under the Act."

 
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