Appeal No. UKEAT/0449/07/MAA

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 30 October 2007

Before
THE HONOURABLE MR JUSTICE NELSON
(SITTING ALONE)

MRS A JOHNS	APPELLANT

SOLENT SD LIMITED	RESPONDENT

Transcript of Proceedings

JUDGMENT

	APPEARANCES

For the Appellant	MR ADAM SOLOMON
(of Counsel)
Appearing via the Bar Pro Bono Unit
Instructed by:
Age Concern Hampshire
1 St Cross Road
Winchester
Hampshire SO23 9JA
	
For the Respondent	MRS ALISON RUSSELL
(of Counsel)
Instructed by:
Messrs Vizards Wyeth Solicitors
Asia House 
31-33 Lime Street
London EC3M 7TH	

SUMMARY

Practice and Procedure: Postponement or stay
Age Discrimination
Stay of proceedings where age discrimination is alleged.  There is no basis for a valid claim in current UK law, but a case (Heyday) has been referred to the ECJ, which if successful would provide the Claimant with a valid claim.  Should the claim be stayed pending the ECJ decision (the result of which should not be prejudged by the English Courts) or should the claim be struck out.  Appeal allowed.  Stay granted.

THE HONOURABLE MR JUSTICE NELSON
1.	This is an appeal against the decision of the Chairman of Southampton Employment Tribunal sitting alone on 19 June 2007 when he struck out the Appellant’s claims for unfair dismissal and unlawful age discrimination.  It was conceded at that the hearing that under United Kingdom law the claims were bound to fail because of s98ZG of the Employment Rights Act 1996 and Regulation 30 of the Employment Equality Age Regulations 1996 which effectively permit enforced retirement at the age of 65.  But it was submitted that the European Court of Justice has before it the case of Age Concern v Secretary of State [CO/5485/2006], known as “Heyday”, referred by the High Court in the UK in 2007, in which the European Court of Justice will have to determine whether Regulation 30 is ultra vires because it fails to give effect to the Council Directive 2000/78 of the EC of 27 November 2000 prohibiting discrimination on the grounds of age.  If that case does declare Regulation 30 ultra vires then the Appellant’s claim, it is submitted, is likely to succeed.  Certainly, the High Court considered the matter in Heyday to be arguable otherwise it would not have referred questions which give rise to similar issues as those in this particular appeal.  

2.	The Respondent sought to strike out the claim as having no reasonable prospects of success.  It was submitted that it was bound to fail under English law, and as Heyday was highly likely to follow the European Court of Justice’s earlier decision in Palacious de La Villa v Cortefiel Servicios SA C-411/05, decision 16 October 2007, and rule that Regulation 30 was not ultra vires, the Claimant had no reasonable prospect of success in European law either, as the national provision re retirement age would survive the assault from the European Directive.  In any event, the Respondent submitted, granting a stay was a discretionary decision and the Employment Tribunal’s decision was not perverse.  And, further, any amendment to national legislation or regulations held to be incompatible with the Directive would not be retrospective.

3.	The brief background facts, because as the parties have submitted to me today there is really very little in dispute between them, are that the Appellant was born on 6 February 1936.  She was employed by the Respondent until her sixty-fifth birthday on 2001.  She duly retired.  On 2 December 2002 she recommenced employment at the Respondent’s, having been asked to return to work by the Respondent’s Operations Manager.  On 27 September 2006 the Respondent gave the Appellant six months’ notice of termination and despite her request to continue working she was dismissed and subjected to compulsory retirement against her will.  

4.	Before the Employment Tribunal, in the application brought by the Respondent to strike out the claims as they had no reasonable prospects of success, it was submitted, as I have already indicated, that the case of Heyday was very likely to fail and as a consequence the claims were bound to fail in English law and highly likely to fail in European law.  The Chairman of the Employment Tribunal was persuaded by the powerful advocacy of Mrs Russell to make a determination on the issue of the likelihood of Heyday succeeding or failing because it was argued then by her, and as it has before me today, that if you are assessing reasonable prospects you have to have some idea as to what the prospects are of Heyday in the European Court of Justice, otherwise the prospects cannot properly be determined.  The Chairman, having heard those arguments, and having had before him the Advocate General’s opinion in the Palacious matter rather than the final decision of the European Court of Justice, which was not delivered until 16 October 2007, decided that he could form an opinion as to the likelihood of success, and expressed it as follows in paragraphs 12 and 13 of the decision:
“I am mindful of the fact that the European Court does not have to follow and in some cases does not follow the opinion of the relevant Advocate General, however, the Advocate General’s opinion in this case is lengthy and well argued.
Whilst the outcome of that case does not necessarily determine the reference of the judicial review proceedings commenced by the National Council on Ageing, the issues are sufficiently close in both cases for the outcome is likely to be the same.”

The Chairman then continued in paragraph 14 with his final conclusion:
“After taking into account the various submissions made by the parties representatives, I decided that the prejudice to the Respondent in these proceedings being held in abeyance for a considerable period of time whilst the cases proceed through the European Court of Justice outweigh the prejudice to the Claimant in having struck out a claim which has only a remote chance of success.  That chance of success hangs on a favourable decision from the European Court of Justice.  Without that, the claim has (on Mr Perry’s proper concession) no chance of success.  With that it is by no means certain that the Claimant’s claim will succeed.”

Accordingly, the Chairman struck out the claims.

5.	The submissions that are made, both in the very helpful skeletons which each party has put before the Court and in the equally helpful oral submissions made to me today by both Counsel, are as follows.

6.	As far as the Appellant is concerned, it is submitted that Heyday may succeed.  The High Court has ordered that it be referred.  It has posed similar questions to those which arise in this case and that is sufficient.  It is quite wrong for the Southampton Employment Tribunal to have sought to prejudge the decision of the European Court.  Secondly, it is said that there has been an incorrect assessment of prejudice by the Chairman.  And thirdly, (this is in effect an addition to the grounds as stated and would need a formal amendment) that the Chairman applied the wrong test when striking out the claims, in that he appeared to refer not only to the correct test of reasonable prospects but also to a test which involved assessing certainty.  

7.	These points were further advanced to me upon the basis that where one has a matter sent to the European Court and therefore considered as arguable by the High Court of England, that where that decision is one that has not been appealed, that where leave is also given on the justification issue, and that where Palacios refers to different matters, in particular, collective agreements and not the wording of Regulation 30, then, those circumstances make it quite impermissible for the Chairman to prejudge the European Court decision.  This is, in itself, sufficient to enable this appeal to succeed.  

8.	In so far as prejudice is concerned, Mr Solomon submits that there is much greater prejudice to the Claimant, whose claim will be lost for ever if it is struck out now.  Even if the decision in Heyday proved to be favourable to her and those in her situation, she would still not be able to claim if this is struck out.  Whereas the position of the Respondent is much less prejudicial:  there is no finality as far as its position is concerned.  

9.	As to the wrong test, then Mr Solomon submits that the use of the words “With that it is by no means certain that the Claimant’s claim will succeed” referring to the decision of the European Court of Justice in Heyday, shows that the wrong test has been applied.  It is not a reasonable prospects test, it appears to be some weighing of the prospects of each side’s arguments, but more particularly no test of certainty is one which should be applied.  Furthermore, if it be right that the Chairman invoked the issue of prejudice in reaching his conclusion on reasonable prospects, that was also wrong. 

10.	The Respondent’s submissions are that, firstly, this is in essence a perversity appeal and ought to be treated as such, save for the addition of the error of law in paragraph 14 as to the test under Rule 18(7) - namely reasonable prospects of success not being correctly applied by the Chairman.  That has not been pleaded.  It has not been dealt with in the written material except in the skeleton.  It is right, however, that Mrs Russell thought it appropriate in the circumstances of this case to deal with that argument fully on its merits so she has been apprised of it since the skeleton argument and was aware that it was going to be put.  

11.	I think that was the appropriate and sensible attitude on the facts and in the circumstances of this case, and I grant leave to the Appellant to add an additional ground asserting error of law in relation to the test under 18(7) to follow the lines of that ground as set out in his skeleton argument.

12.	On the merits of that particular point, with which Mrs Russell dealt with first, she submitted that if one looks at the decision, it is quite clear from the references to the correct test that the Chairman had the correct test firmly in mind throughout.  Paragraph 3 refers to ‘reasonable prospect of success’ as indeed did the initial application:   so he was aware of that.  Further, he refers to it in paragraph 9 and again sets out ‘no reasonable prospect of success’, and again in paragraph 10.  So the fact that he may in one reference in paragraph 14 have appeared to have referred to something which was the wrong test cannot possibly make that an error of law because it appear taking the judgment as a whole, which one has to do, that he had in mind the right test.

13.	As to prejudice which, she submits, is relevant in assessing reasonable prospects, Mrs Russell suggests that there are serious problems for this employer and indeed for employers generally in not knowing whether they can dismiss for age reasons or whether a claim might be brought against them in as late as 2009 for which it turns out they have no defence even though they clearly would have won now.  In those circumstances, Mrs Russell submits, substantial prejudice can be seen to lay upon employers in the Respondent’s situation.

14.	The third matter that she submitted was that there is simply no reasonable prospect of success here.  There is no chance on current law in the UK and the ECJ is highly likely to follow Palacious and very likely to find that justification has been made out.  This must be taken into account, she submits, in assessing reasonable prospects in order to decide whether the prospects are reasonable.  The Chairman was therefore obliged to consider the respective merits and weights of arguments likely to be made in the Heyday referral.  It cannot be said that the decision was perverse.  

15.	As to retrospectivity, which she raises in her skeleton and submitted before me., it is said that if Regulation 30 was held to be ultra vires then it would be void ab initio:   the Claimant’s claims would still stand.  If, however, the decision was not in exactly that form, any new regulations short of that would not have any retrospective effect if the normal procedures were followed and would therefore not apply to protect the Claimant.  For example, Mrs Russell pointed out to me, that the Employment Protection (Part-time Employees) Regulations of 1995, where similar arguments were raised, were not made retrospective.  

16.	She also submits that, in so far as Palacios is concerned, the collective agreement reference in the question itself does not determine the matter.  Plainly, the case considered national legislation on a much wider front than simply as related to collective agreements;  and in the final answering of the question on the last page of the decision in Palacios of the European Court of Justice, one can see that by the use of the words ‘such as’ when relating to collective agreements, that it is a wider decision, and one which properly can be said to refer to a situation such as Regulation 30.  

17.	It is also, she submitted, very likely that the justification decision will be found in favour of the Secretary of State if that is pursued to argument, whether either in general before the ECJ, and in detail as to the facts before the High Court on referral back.  

18.	As I have indicated, I am very grateful to both Counsel for having presented their arguments so succinctly and ably.  I have come to a clear conclusion on the facts of this case that the Tribunal Chairman should not have been tempted down the path of pre-judging the decision in Heyday as he clearly did in paragraph 13 of his decision.  This sort of exercise is one which is fraught with speculation and should not have been embarked upon by him.  No court can at present envisage the precise arguments to be made in Heyday or their effect upon the Court.  The Chairman was, therefore, in error, in my judgment, in accepting the Respondent’s invitation so to speculate.  Even if it is likely, or very likely, or highly likely that Palacios is followed, the task of assessing the exact degree of likelihood and the comparison between the two cases and hence what the Claimant’s prospects of success are, based upon considering Heyday, is fraught with difficulty.  

19.	What are the facts that we do know as opposed to the facts about which we can only speculate.  Firstly, that Heyday has been considered arguable by the High Court, otherwise it would not have been referred.  The questions that have been referred and the referral itself have not been appealed by the Secretary of State.  Those are the certain facts which are before any Court which has to deal with a matter such as this.  The differences between Palacios and Heyday have not been the subject of detailed argument before either the Employment Tribunal Chairman or indeed before me.  There clearly are differences, for example in the relevance of collective agreement to the final decision in Palacios, as opposed to a regulation such as Regulation 30 and the means by which and the mode in which such a regulation operates.  Also, with the defence of justification there is no certainty as to how justification would be presented in Heyday and it is simply not known how that would impact.  How the differences between Palacios and Heyday will impact on detailed argument simply cannot at present be known.  What a Court must do is stick to the facts which are established before it and not speculate.  All that can be said is that Heyday may be favourable to the Claimant;  and if it is, the Claimant is likely to succeed in her claim or at very best has a reasonable prospect of success.

20.	The difficulty the Chairman found in applying his pre-judgment in Heyday to the facts is clear from the confusion between the tests in paragraph 14.  If, as is first stated there, there is only a remote chance of success, then there is clearly no reasonable prospect.  That albeit using other words, would be a reasonable application of the proper test.  “No chance”, also clearly satisfies it, but “by no means certain that the Claimant’s claim will succeed” is not the correct test and may carry within it the fact that reasonable prospects exist.  

21.	The submissions of Mrs Russell that the Chairman plainly had the correct test in mind throughout the judgment are attractive but not persuasive to me because although he has set out the correct test in some parts of his decision and did have them in mind, when he actually made his decision his reference to “by no means certain that the Claimant’s claim will succeed” was a misapplication of the test.  There, too, it seems to me, it can properly be said that the Chairman fell into error.  The 18(7) test should not have been applied to the question of relative prejudice, though I am unclear that it was, but if it was it should not have been applied as the Chairman did.  It might be relevant to take into account the respective merits of the case, as part of the process of assessing the Claimant’s reasonable prospects of success.  That per se would involve not only taking into account one side’s arguments but the other side’s arguments, but again that applies to known arguments, known facts.  In other words, the referral, the absence of appeal, rather than speculating as to what the European Court of Justice might ultimately decide.

22.	As to the issue of prejudice, it seems to me that there is very substantial prejudice to the Claimant.  If her claim is struck out she will lose her claim for ever, even if it turned out that Heyday was in her favour.  She would have then lost a right which if Heyday decided Regulation 30 was void ab initio she would in fact have always had.

23.	I also credit the fact that there is prejudice to employers in this situation.  There is not any on the facts of this case vis-à-vis this particular employer and this particular Claimant.  The facts are known and established.  The situation is known and is established.  But there is, or may be, genuine prejudice in the future in relation to other employees.  I accept Mrs Russell’s submission that an employer, such as the Respondent, may, depending on what happens in the near future, find it difficult to know for certain whether or not it is appropriate to apply the 65 year limit and it certainly may have claims potentially hanging over its head.  These are matters of general prejudice, but they do not, however, arise from any order which is made in this case.  They arise from the fact that a reference has been made in the case of Heyday and that that case may take some two years to decide until 2009.  The uncertainty exists for that reason not because of anything that might happen in this particular case, or in other similar cases to the Claimant’s, many of which, I am told, have in fact been stayed.

24.	The decision of the Employment Tribunal cannot, therefore, in my judgment, stand.  It must be set aside for the reasons I have given, for the errors of law that are contained within it.  I would propose, unless the parties request me not to do so, to consider making the decision myself and exercising my discretion as to what course should be taken.  It seems to me that it would be wholly inappropriate to send a case such as this back to a committee chairman for him to make a decision.  It is a straight forward exercise of discretion in all the circumstances;  I have taken all relevant matters into account.  I see no one dissenting or no one putting forward any arguments to dissuade me.  

25.	Having expressed my judgment as I have, there is really only one way in which this discretion can be properly exercised and that is by staying the matter.

26.	I am satisfied that the parties accept that in the circumstances of my judgment the right order for this Court to make is that the claims are stayed.  The appeal is allowed, the claims are stayed.