Appeal No.	 EAT/652/00

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 12 July 2001
Judgment delivered on 3 August 2001

Before
THE HONOURABLE MR JUSTICE DOUGLAS BROWN
MRS A GALLICO
MR P R A JACQUES CBE

MR C WILLIE	APPELLANT

COMPANIES HOUSE	RESPONDENT

Transcript of Proceedings

JUDGMENT

Revised

	APPEARANCES

For the Appellant	KARON MONAGHAN 
(of Counsel)
Instructed By:
Messrs Thompsons
Solicitors
18 Lawford Street
Bristol
BS2 0DZ	
For the Respondent	THOMAS KIBLING
(of Counsel)
Instructed By:
Eversheds
Solicitors
Fitzalan House
Fitzalan Road
Cardiff
CF2 1XZ	

MR JUSTICE DOUGLAS BROWN:

1.	The appellant, Mr Charles Willie, appeals from a decision of the Employment Tribunal in Cardiff, (Chairman Doctor Rachel Davies) of which the extended reasons were sent on 12 April 2000.  At all material times, Mr Willie was employed by Companies House as a computer expert.  He appeals the unanimous decision of the Tribunal on preliminary issues arising out of his originating application complaining of racial discrimination and victimisation.  

2.	This matter has, as will be seen from our summary of the background, a long history.  The originating application was received as long ago as 8 August 1997 and the application has been considered already by the Employment Appeal Tribunal.  

3.	Mr Willie was, and maybe still is, employed by Companies House in Cardiff as a computer expert at the grade of Senior Executive Officer.  In 1997 Companies House was asked by the Foreign and Commonwealth Office if they could assist the Governor of Anguilla in finding a Registrar of Companies.  The post was to be funded by the Department of International Development (DFID) which is part of the Foreign and Commonwealth Office.  It was agreed that Companies House would assist with this and entered into a Consultancy contract with DFID which, although it was signed off on 4 September 1997, provided for the carrying out of the contract between 13 June 1997 for a period of 2 years.  The main objective of the contract was for Companies House to be engaged as a consultant for a 2 year period to provide a Registrar of Companies for Anguilla.  As a result of discussions between an official of the Foreign and Commonwealth Office, Mr Walke, the Assistant Director of Companies House and Mr Carpenter, who is Director of Financial Services in Anguilla, it was agreed that the post would be advertised internally in Companies House.  The successful applicant would be seconded to work in Anguilla for 2 years at a salary equivalent to Grade 7

4.	Two candidates responded to the advertisement, namely Mr Willie and Mr Jones who is white.  

5.	It was agreed between Mr Walke and Mr Carpenter that these 2 candidates were to be interviewed.  DFID did not wish to take part in the interview process.  It was further agreed that the interview should take place in London and the interview panel consisted of Mr Carpenter, Mr Gallagher, the Foreign Office Official who had initiated the process, and Miss Katherine Elliot, a Senior Officer with the Department of Trade and Industry as an independent member of the panel and Chairman.  

6.	The oral evidence at the preliminary hearing accepted by the Tribunal of Mr Walke and Mr Holden, the Chief Executive of Companies House, together with the affidavit evidence of Mr Carpenter, was to the effect that the final decision as to who should be selected for the post was to be taken, and was in fact taken, by the Governor of Anguilla.

7.	The interviews took place on 1 May 1997.  The following day Mr Carpenter told Mr Walke that Mr Jones was the panel’s preferred candidate.  Mr Carpenter telephoned the Governor and informed him and the Governor accepted the panel’s recommendation.

8.	On 9 May Mr Willie was informed that he had been unsuccessful.  

9.	That is the date chosen by Mr Willie’s advisors as the date when the matter he is complaining about took place.

10.	The IT1 named two respondents, Companies House as first respondent, DFID as the second respondent.

11.	At a hearing on a preliminary issue as to jurisdiction of 6 January 1998, an Industrial Tribunal struck out the complaint as against DFID upon Mr Willie withdrawing against them.  There was a decision following that hearing sent to the parties on 6 February 1998 when the Tribunal determined it had no jurisdiction to hear Mr Willie’s complaint as to:
(i) the failure to select him for secondment to Anguilla because a person posted abroad would be no longer working in Great Britain and would not be someone employed at an establishment in Great Britain. 
(ii)  the failure to select him for secondment to Anguilla and/or in the interview process undertaken to determine who should be selected because the interview panel were not employees or agents of Companies House, accordingly Companies House could not be vicariously liable.  

12.	Mr Willie appealed that decision and, by consent at the appeal, his complaints were remitted for a fresh preliminary hearing: to determine whether the decision not to select the appellant for the position of Registrar of Companies in Anguilla was a matter which:
(a)  is properly before the Employment Tribunal (in other words properly pleaded) and
(b)  was the treatment by Companies House within the Race Relations Act 1976.

13.	That hearing took place on two days in February 2000 and the extended reasons were sent on 12 April 2000.

14.	The Tribunal decided that the decision not to select Mr Willie for the position of Registrar was not properly pleaded before the Employment Tribunal, was not treatment by Companies House within the Race Relations Act 1976, but if it was the jurisdiction issue was decided in favour of Mr Willie.  There is no cross appeal in respect of the last finding.

15.	Mr Willie was represented before the Tribunal by Miss Monaghan of counsel and Companies House by Mr Kibling of counsel.  Both counsel provided skeleton arguments and supplemented them with oral arguments.  We have seen the skeleton arguments.  

16.	We summarise the relevant arguments addressed to the Tribunal by Miss Monaghan.  On direct liability she submitted that where a benefit in the form of secondment is afforded to an employee by an employer, that employer will be liable for refusing such benefit on racial ground by reason of section 4(2) Race Relations Act 1976.  An employer cannot avoid the reach of section 4 by outsourcing its decision making.  She submitted that the fact that a racial antipathy may have come from an external source is not by itself material because it causes the decision not to offer the applicant secondment and that is enough to prove less favourable treatment “on racial grounds”.  The cases cited were:
R v. Commission for Racial Equality ex parte Westminster CC 1985 ICI 27:
James v. Eastleigh BC 1990 1 IRLR 288:  
Smyth v. Crofts Inns 1996 IRLR 84.

17.	Her argument continued, that such approach was consistent with construing the Race Relations Act purposefully and construing its scope broadly.  It is consistent with the broad duties imposed on employers by the Race Relations Act even for the acts of third parties.  She relied on 
Jones v. Tower Boot Company Ltd 1997 IRLR 168:
Burton v. De Vere Hotels 1997 ICR 1.
She submitted that any different construction would mean an employer could absolve himself from any duty under the Race Relations Act in respect of promotion opportunities or other benefits by ensuring that an external panel made any decision in respect of those benefits.  In such circumstances an employee would, subject to section 32(2) of the Act, be left without a remedy if any such decision was discriminatory.  

18.	Alternatively, she submitted, the interview panel were acting as the agents for Companies House during the selection process.  Section 32(2) of the Act provides:
“Anything done by a person as agent for another person with the authority (whether express or implied and whether precedent or subsequent) of that other person shall be treated to the purposes of this Act (except as regard offences there under) as done by that other person as well as by him”.

Miss Monaghan’s argument ran that Companies House were responsible for selecting a suitable person for the secondment.  Accordingly, while they discharged this obligation through the establishment of an appointment panel, that panel were acting as agent for Companies House and Companies House were liable by reason of section 4(2) read together with section 32(2) of the Race Relations Act.

19.	Mr Kibling, in his arguments, made appropriate and relevant responses to those submissions.

20.	The Employment Tribunal in its extended reasons, made detailed findings of fact as to how the suitable person for secondment was selected.  They came to the conclusion that the Companies House were not responsible for selecting.  Their role was confined to providing nominees for secondment.  
	“Providing was not the same as ‘Selecting’”.
They could identify no evidence whatsoever to suggest that Companies House took part in the selection decision itself.  The evidence was to the contrary, namely that the selection was by the Governor of Anguilla on the recommendation of the panel who had no connection with Companies House.  Companies House had had an opportunity to be represented on the panel and had declined.  

21.	That is the extent of the Tribunal’s reasons justifying the decision, that the decision not to select Mr Willie was not treatment by the respondent within the Act.

22.	Nowhere therefore in the reasons, was there any consideration of the arguments of counsel, particularly Miss Monaghan’s detailed arguments supported by authority on the issues of vicarious liability, liability for the acts of third parties or agency.  In the course of these submissions to us, Mr Kibling accepted that these were fundamental issues that needed to be addressed, and the Appeal Tribunal and the parties were left to assume what their decision was on these matters.  

23.	Mr Kibling referred us to Meek v. City of Birmingham District Council 1987 IRLR 250 where Lord Justice Bingham, giving the judgment of the Court of Appeal said:
“It has on a number of occasions been made plain that the decision of an Industrial Tribunal is not required to be an elaborate formalistic product of refined legal draftsmanship, but it must contain an outline of the story which has given rise to the complaint and a summary of the Tribunal’s basic factual conclusions and a statement of the reasons which have led them to reach the conclusion which they do on those basic facts.  The parties are entitled to be told why they have won or lost.  There should be sufficient account of the facts and of the reasoning to enable the EAT or, on further appeal, this court to see whether any question of law arises; and it is highly desirable that the decision of an Industrial Tribunal should give guidance both to employers and trade unions as to practices which should or should not be adopted”.

Looking at the reasons of the Employment Tribunal with Lord Justice Bingham’s guidance that the parties are entitled to be told why they have won or lost in mind, we have to say that it is not possible to tell from the reasons what view the Tribunal formed with Miss Monaghan’s arguments on vicarious responsibility, liability for the acts of third parties and in particular, for agency.  They were persuasive and substantial arguments which call for a clear judgment.  With great reluctance because of the time and effort that has already been spent on this litigation we have come to the conclusion that the failure to grapple with Miss Monaghan’s arguments represents a serious flaw in the decision making process and the decision of this aspect of the case cannot stand.

24.	In the light of our decision, it is not necessary to consider the other matters raised in this appeal.

25.	Mr Kibling asked us to return the matter to the original Tribunal to consider and rule  upon Miss Monaghan’s submissions.  This had the advantage of avoiding re-calling witnesses.  Some of the respondent’s witnesses had retired or were abroad.

26.	Miss Monaghan asked that now the whole matter should go back for decision and the attempt to decide the preliminary issue should be abandoned.  It was now four years since the proceedings began.  If the matter went back as Mr Kibling suggested the matter could well be returned to the Employment Appeal Tribunal on the preliminary issue.  The delay could become inordinate.

27.	We agree with Miss Monaghan.  This application has now become very stale.  If the preliminary issue is heard again, a final resolution of this application would be two or three years away.  There is going to be a full hearing on victimisation in any event.  In the long run the most expeditious method of dealing with the application is of all matters to be dealt with at the one hearing, and the case will be remitted accordingly to a freshly constituted Tribunal.