Appeal No.EAT/502/96	 

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 4 December 1996

Before
THE HONOURABLE MR JUSTICE LINDSAY
MR D G DAVIES CBE
MISS C HOLROYD

TOWER HAMLETS RACIAL EQUALITY COUNCIL	APPELLANTS

MR V CLEMENTS	RESPONDENT

Transcript of Proceedings

JUDGMENT

Revised

	APPEARANCES

For the Appellants	MR M S GILL
(Of Counsel)
Commission for Racial Equality
Elliot House
10/12 Allington Street
London
SW1E  5EH	
For the Respondent	MR B UDUJE
(Of Counsel)
Brixton Law Centre
506 Brixton Road
London
SW9  8EG	

			MR JUSTICE LINDSAY:   We have before us an appeal by Tower Hamlets Racial Equality Council against the decision given in a matter Mr V L Clements against Tower Hamlets Racial Equality Council, where the decision of the Industrial Tribunal was promulgated on 1 April 1996.  The “IT1” that set the process in being was a claim by Mr Clements in respect of unfair dismissal and race discrimination.  At that stage the case had two Respondents, Tower Hamlets Racial Equality Council (“THREC”) and The Commission for Racial Equality.

	As time passed, as will later appear, the Commission for Racial Equality sought to cease to be a Respondent.  That was agreed to, and at an earlier Industrial Tribunal hearing there was some ruling that gave effect to that. 

	Mr Clements therefore having made his case for unfair dismissal and race discrimination, it was responded to by THREC.  So far as the dismissal side of things was concerned, THREC’s answer was that the Applicant, Mr Clements, was dismissed for “some other substantial reason”.  That is a reference to Section 57(1)(b) of the Employment Protection (Consolidation) Act 1978:
“.... (2) or some other substantial reason of a kind such as to justify the dismissal of an employee holding the position which that employee held.”

It was denied in THREC’s “IT3” that the dismissal was based on racial grounds.  

	The decision of the Tribunal was unanimous and shortly, as put at its beginning was as follows:
“(i)  the Applicant’s dismissal by the Respondent was unfair;
(ii)  the Respondent discriminated against the Applicant contrary to Section (1)(1)(a) and 4 (2)(c) of the Race Relations Act 1976.”

	The Extended Reasons contained the following matters: Mr Clements was employed by THREC.  THREC was a body that succeeded an earlier body, Tower Hamlets Association for Racial Equality.  He was in office from 4 August 1991 to 31 December 1993.  Although the Reasons say that he was employed as Housing Director, that is mistaken; he was Director of THREC.  It was on 11 November 1994, at a hearing for directions, that Mr Clements agreed to withdraw his claim against the Commission for Racial Equality.  They, as I have explained earlier, had been a second Respondent, and the reason for that withdrawal was that it was then accepted, although it had earlier been perhaps in doubt, that it was THREC that employed Mr Clements.

	The Decision indicates as a finding that THREC and, indeed, their predecessor Tower Hamlets Association for Racial Equality, was funded by Tower Hamlets London Borough, but that Mr Clements’ post itself was funded by the Commission for Racial Equality (“CRE”).  The CRE had rules which it imposed or was capable of imposing upon those who depended upon its funding.  Those rules were set out in a document called the ‘Red Book’.  The Industrial Tribunal found that in effect the CRE can dictate conditions of service of the posts funded by that organisation, who are referred to as Racial Equality Officers.  The form of dictation as will later appear is that unless the terms of the ‘Red Book’ are complied with, the CRE can simply say “we will not fund that particular post”.  Obviously that is likely to have a powerful effect upon bodies such as THREC.  

	Mr Clements was a man of considerable experience in the Race Relations field and he was invited by the CRE to take up a locum post with either THREC or its forebear THARE, because of his skills in the field of race and community relations.  As I have indicated he was appointed by THREC as a director, but on a locum basis.  It was a post that had not been advertised but it was a post for one year only, to 31 July 1992.  During that first year Mr Clements was responsible for setting up THREC.  At the end of that year his contract was not renewed, but in a slightly ragged way, as it seems to us, he continued to remain in post until his employment was terminated.  Firstly, it seems to have been terminated as of 30 September 1993, but then there was an extension of a further three months to 31 December 1993, and that was when it finally finished.  Before that final termination on 31 December 1993, (and the Extended Reasons go into this) Mr Clements came to learn that the post of Director of THREC was to become a permanent post and that THREC was making arrangements to advertise that post and set up a job description and so on.  

	On 20 August 1993 Mr Hoe, who was Vice Chairman of the Executive Committee of THREC, told Mr Clements that his locum contract was to end on 30 September.  He wrote a warm letter to Mr Clements saying that the Executive Committee was grateful for the hard work and determination that he had exhibited, and that no doubt he was aware the CRE had decided to make the post a permanent one.  Therefore, regretfully, said Mr Hoe, he had to inform Mr Clements that the locum contract with THREC was to come to an end.  That “warm” letter told Mr Clements in terms that he was welcome to apply for the permanent post.

	The response that that attracted from Mr Clements was one of unease to say the least.  He wrote a letter back (I am quoting here from the Industrial Tribunal’s reasons) saying:
“... I can only say that the decision to terminate my contract on the 30th September 1993, whatever may be the motive, (‘motives are always more powerful than overt actions’) is ill-conceived, ill-timed, ill-advised, unsafe and certainly not in the best interests of race and community relations in Tower Hamlets.”

	The Tribunal found that the forces which were referred to in that letter by Mr Clements were those of persons who represented the Bangladeshi community.  After setting out a number of matters the Industrial Tribunal said: we find that that community (the Bangladeshi community) brought great pressure to bear on the London Borough of Tower Hamlets and the CRE.  It is to be noted there that there is no finding that pressure was brought to bear on THREC nor on its forebear THARE.  That was the position in August.  

	Another feature of the events in August was that THREC’s Chairman, Mrs Warsama, wrote to Mr Ouseley, a member of the CRE, protesting at a decision to terminate Mr Clements’ appointment.  She wrote:
“We have therefore been forced to give Mr Clements notice, although this is much against our wishes and better judgment.
.....
I regret that your organisation has taken this hard line, and would ask you to reconsider:”

It is not entirely clear from the passages quoted by the Industrial Tribunal what the earlier understanding that Mrs Warsama had was but she is clearly seeking to protect and enhance, if possible, Mr Clements’ position, and that she understood the CRE to be taking a line against Mr Clement’s appointment being made into a full-time one, but the particular reasons at that stage had not, it seems, completely emerged.

	It was not only an officer of THREC that sought to protect Mr Clements’ position.  On 26 August Mr Golding, the General Manager (Policy and Strategy) of the London Borough of Tower Hamlets, wrote to Mr Sharma, the acting Chief Executive of the CRE.  He asked that Mr Clements’ employment should be extended for three months.  Mr Sharma replied and that three month first extension was granted, but subject to the condition that there should be a meeting with the CRE’s Principal Officer to determine the functions undertaken by Mr Clements.  The Tribunal found, as will have been apparent from the earlier letter, that THREC and this time also by its Vice Chairman Mr Hoe, had invited Mr Clements to apply for the permanent post.  Mr Clements was short-listed and the Tribunal held that he was undoubtedly the best qualified candidate for the permanent post but he was not appointed to the job.  A member of the Asian community was appointed to Mr Clements’ post as the permanent director.

	Mr Hoe did not at the time of his intervention know of the ‘Red Book’ rule which said as follows:
“No person aged 60 or over may be appointed to any post except locum posts.”

	It is plainly the case and has earlier been ruled that the ‘Red Book’ which included that rule did not form any part of Mr Clements’ contract.  Still the position was that THREC was doing its best to try to ensure Mr Clements’ appointment to the permanent office.  

	On 20 December Mrs Warsama wrote to the Chairman of the CRE asking that there should be an urgent meeting in regard to the post of a Director at THREC.  She wrote this:
“At the short-listing one of the candidates that we wished to short-list is over 60.  [This was Mr Clements].  We were advised that the rules of the CRE preclude him being short-listed; but as an equal opportunities point we consider it essential that we are allowed to short-list him.
We reached an impasse, and the members of the Appointments Panel would like to meet you soon to discuss this.”

so that THREC was doing its best as I have indicated.  

	The Chairman of the CRE, Mr Ouseley replied:
“... There is no need for a meeting...
As an independent organisation you are able to make your own appointments.  However, the CRE will not provide grant-aid for any new appointee aged 60 or over and this has been made absolutely clear and is a condition of grant aid.”

	Against that background the Industrial Tribunal at paragraph 11 of their Reasons found as follows:
“We find that the Respondent dismissed Mr Clements because of the CRE’s threat to withdraw finance.”...

At paragraph 14 of their Reasons the Industrial Tribunal held: 
“... They [THREC] are a small body dependent on the London Borough and the CRE for finance.”

	The finding of the Industrial Tribunal at paragraph 11 continued:
“... We find that they [THREC] wished to appoint him and that he was the best-qualified person for the position.”

That suffices for the moment for the background of fact.

	As will become apparent when we go further, there was a degree of attribution by the Industrial Tribunal of racial discriminatory actions or motives, to the CRE.  The CRE was not a party, of course, and had been ruled upon not to be a party, having earlier started as one.  It is plainly unattractive for a party to find itself attacked when it is not present to defend itself and it is prudent when that threatens that a Tribunal should be cautious and thoughtful in its remarks.  We do not however need to go out of our way to protect the CRE in the approach that we take to the case.  Plainly positions can arise in which a party has to be criticised, even though it is not before the Court or Tribunal concerned.  We say nothing further about whether the accusations as against the CRE are truly justified or not.  It need form no part of our decision.  That is one point to get out of the way.  The second point is this that we have had a body of Affidavit evidence put in front of us with exhibits.  We allowed them to be referred to de bene esse.  In fact quite a number of the papers contain matter which was in any event before the Industrial Tribunal.  In the out-turn we need make no ruling as to the admissibility of the Affidavit evidence as a body; what we do is treat the matter in it which was before the Industrial Tribunal as properly before us, but otherwise do not allow the evidence into our consideration.  Insofar as they have come into our minds at all, we now put them out of mind, except to the extent that they were already before the Industrial Tribunal.

	We now turn to the two chief issues of racial discrimination and unfair dismissal.  In the Tribunal’s decision only two sections of the Race Relations Act 1976 are referred to and I should briefly mention them.  Section 1(1) of the 1976 Act says this, so far as material for present purposes:
“A person discriminates against another in any circumstances relevant for the purposes of any provision of this Act if--
(a)  on racial grounds he treats that other less favourably than he treats or would treat other persons;”...

The other Section referred to is Section 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--
(c)  by dismissing him, or subjecting him to any other detriment.” 

	There is very little authority on what it seems to us an essential point.  We have had cited to us the case of Nagarajan v Agnew [1994] IRLR 61, a case before the E.A.T. under the Chairmanship of Mr Justice Knox and we have had also a passage cited to us from Harvey. We also have had mentioned to us the case which, whatever its proper title, might be referred to as the “Bernard Manning” case.  But none of those cases deals with the position that seems here needing to be dealt with.  In some way under Section 1(1)(a) or 4(2)(c) one needs to find a way in which racial grounds can properly be attributed to the person who is treating the complainant, as it usually will be, less favourably than he treats or would treat other persons.  That is easy enough where it is the person who does the treating who himself has the racial grounds in mind.  But what is the case if the racial grounds are in one person’s mind but the person who does the treating is another person?  One can imagine a situation, for example, where the treater is the agent acting on the instructions of a principal, where the principal has racial grounds in mind, albeit that the treater is ignorant of them.  It may or may not be the law in such a case that one can afflict the agent with the principal’s bad state of mind, so that the agent himself would be regarded properly as guilty of racial discrimination under the provisions of the Section of 32 and Section 33 that deal with that and similar positions.  There is an analogous very difficult area of the law in fraud where one can have a principal with guilty knowledge but an innocent agent or a guilty agent who is acting on the instructions of an innocent principal.  This is not, by any means, an easy part of the law.  It is not our case that we are dealing with agency but I just cite that to indicate the difficulties that can arise in this sort of area.

	Coming to our case, there is no suggestion in the evidence so far as one can tell, because we have not got the Chairman’s notes, that THREC was but an agent of the CRE.  That does not seem to be asserted at any point in the decision of the Industrial Tribunal.  There is no finding of the Industrial Tribunal, and so far as we can see no evidence, that THREC itself had racial grounds in mind, either racial grounds that were of its own creation or volition, or, indeed, racial grounds that it knew to be racial grounds that were derived from anyone else and, in particular, were derived from the CRE.  There is no evidence or finding that THREC deliberately shut its eyes so as to avoid knowledge of the CRE’s guilty state of mind, even assuming that the CRE had a guilty state of mind.  There is no finding or evidence, so far as one can tell, that would justify a finding that THREC ought to have known that the CRE had in mind racial grounds.

	The difficulties in the case arise from the findings in the later parts of the Industrial Tribunal’s findings where, after setting out at length Section 1(1)(a), Section 4(2)(c) and Section 31 of the Act, they say this at paragraph 15, and this is an important passage:
“...In this case it was the CRE who was bringing the pressure.  We find that the CRE, because of the pressure brought by the Bangladeshi group, did not wish an Afro-Caribbean to remain in the post.  We can draw no other inference.  There was no criticism of his [Mr Clements] work and behaviour from either the Respondent or the London Borough of Tower Hamlets, only from the Bangladeshi group.  The Respondent bowed to the CRE.  The question we have asked and answer in the negative is this, can the Respondent escape liability if there is racial discrimination because the act of discrimination was done as a result of pressure from an outside body, in this case the CRE.  We are satisfied that a major factor in bringing about Mr Clements’ dismissal was the fact that he was Afro-Caribbean and an Asian candidate had to be preferred.  We have come to the conclusion that because an employer bows to pressure from a third party who have threatened to withdraw funding for the post, cannot exonerate them from their liability under the Race Relations Act if in fact there has been discrimination.  We have found that there has been discrimination.  Therefore the Respondents are in breach of Section 1(1)(a) and Section 4(2)(c) of the Race Relations Act 1976.  Mr Clements undoubtedly was dismissed because of his racial origin.  The fact that he was over 60 had not stopped him being appointed as a locum in 1991 and we can find no economic or other convincing reason for not allowing him to remain in his post until he was 65.”

	That finding that Mr Clements was undoubtedly dismissed because of his racial origin has to be squared with paragraph 11 which says:
“We find that the Respondent dismissed Mr Clements because of the CRE’s threat to withdraw finance.”

So far as THREC is concerned, the Respondent appears to have dismissed Mr Clements because of the CRE’s threat to withdraw finance.

	There are a number of criticisms that can be made of the long passage which I have just cited, but the essential question that they there ask and which they there answered is this:- if there is racial discrimination because the act of discrimination was done as a result of pressure from an outside body, what is the position in such a case?  It must in law be the case that if one is going to attribute the racial ground in a third party’s mind to the actor, then the actor must at least either know or suspect or deliberately close his eyes to a suspicion that the third party has in mind a racial ground, but here, so far as one can tell from the findings, THREC did its best to preserve Mr Clements’ appointment and to secure to him the full-time post.  It was met with a clear response from the CRE that full-time officers over 60 were not encouraged and that if a full-time officer over 60 was appointed, then no grant aid would be paid and that for that reason, and quoting again from paragraph 11 of the Industrial Tribunal’s findings:
“We find that the Respondent dismissed Mr Clements because of the CRE’s threat to withdraw finance.  

	There is no finding whatsoever in the whole of the decision from beginning to end that THREC disbelieved the CRE’s assertion of the 60-year rule as being a ground for their preferring not to have Mr Clement.  There is no reason either to indicate that they had any suspicion that the CRE’s apparent insistence on the 60-year rule was motivated by any racial considerations.  THREC was told that the 60-year rule was the reason why the CRE was acting as it did, and there was no indication in the Tribunal’s finding that that was not believed by THREC.  THREC itself not only wished to appoint him but had, as the Tribunal found, protested vigorously on his behalf.  

	This, it seems to us, represents a major error of law.  There is no finding that THREC itself, which after all is the body that dismissed Mr Clements, had in mind racial considerations of its own creation or volition, and, even if assuming in Mr Clements’ favour that the CRE did have racial grounds in mind, there is no connection sufficiently shown that THREC can be taken as having those in mind or even a suspicion of their existence in mind when it acted as it did.  Leaving aside the point that there should be caution in attacking the CRE when it was not there as a party to defend itself, it seems to us that there is here an error of law in relation to the racial discrimination side of things.

	Turning to the unfair dismissal side, the Tribunal said at paragraph 14:
“The onus is upon the Respondent [THREC] to satisfy us that the dismissal was for some other substantial reason [that being a reference as I earlier referred to, to Section 57.]  Undoubtedly through the Chair, Mrs Warsama, and with help from the London Borough, the Respondent protested vigorously at the CRE’s decision.  They are a small body dependent on the London Borough and the CRE for finance.  However, even though they acted because of the fear of withdrawal of funds, we find that there were three courses that could have been taken before deciding that dismissal was inevitable.  They were not.  The first is that they [THREC] could have appointed Mr Clements, as they clearly wished to do, and seen whether the CRE carried out its threat.  Secondly, they could have tried to persuade the CRE to extend his contract until he was 65, which was only seven months from 31 December 1993.  There is a third possibility and that is they could have endeavoured to see whether the London Borough of Tower Hamlets or some other body would have funded Mr Clements’ post for that period of time.  In the circumstances of this case we find that the Respondents bowed to the pressure brought by the CRE before exploring other viable alternatives.  We find his dismissal to be unfair.  Further, there were procedural defects in that he was not consulted.  However, they alone in this case might not make the dismissal unfair.”

	The criticism that is inevitable there is that the Tribunal did not ask itself whether, given the stand that the CRE had taken on the withdrawal of finance should Mr Clements be appointed to a permanent office notwithstanding that he was above the age of 60 as formulated in their rules, his dismissal was within the range of responses open to a reasonable employer.  The CRE had been quite clear in its view as earlier cited.  It had indicated that the CRE would not provide grant aid for any new appointee aged 60 or over.  That had been made absolutely clear and was a condition of grant aid.  

	It is not necessary in our view to examine each of the three possibilities that the Tribunal suggested should have been investigated and see whether or not they make sense, because the Tribunal did not ask whether what was done by THREC was reasonable, as it should have done, but simply laid out a table of other possibilities which it thought were even more reasonable.  One does not disprove the reasonableness of “Action A” by pointing out that “Actions B”, “C” and “D” might also have been reasonable or, indeed, more reasonable.  The failure to ask the question whether what was done was within the range of reasonable responses open to a reasonable employer, is, in our view, an error of law, inescapable from the way in which the Industrial Tribunal here approached the question.  

	There was also a reference to procedural defects by the Tribunal but it need not be taken further because the Tribunal pointed out if those matters were left alone, they might not themselves make dismissal unfair.  So in each of the two main headings - racial discrimination and unfair dismissal, we find that there is an error of law.  

	It would be speculation on our part if we were to try to establish in our minds whether, had the Tribunal asked itself the right questions, it would necessarily have come to a conclusion in THREC’s favour.  We are not prepared to speculate in that way.  It seems to us that once one cannot be confident that, properly approached, the answer would necessarily have been in THREC’s favour, one gets to a position in which the matter needs to be remitted.  There are complaints here of a procedural nature which we do not need to go into, but we can quite see that they lead to the position in which it would be right that upon remission it should go to a wholly new Tribunal.  Accordingly, our decision on this appeal is that we set aside the decision of the Industrial Tribunal and remit the matter wholly afresh to a new Tribunal.