Appeal No.	EAT/1288/99

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 17 November 2000

Before
THE HONOURABLE MR JUSTICE BELL
MRS A GALLICO
MS G MILLS

MS LETITIA STENNING	APPELLANT

(1) MR NICHOLAS JARMAN (2) LONDON BOROUGH OF HACKNEY	RESPONDENTS

Transcript of Proceedings

JUDGMENT

	APPEARANCES

For the Appellant	MR MOHINDERPAL SETHI
(of Counsel)
Messrs Jones & Saggar
Solicitors
193-195 Kentish Town Road
London
NW5 2JU	
For the First Respondent

For the Second Respondent	MR KEITH BRYANT
(of Counsel)
Messrs Thomas Eggar Church Adams
Solicitors
5 East Pallant
Chichester
West Sussex
PO19 1TS

MR JAMES TAYLER
(of Counsel)
The London Borough of Hackney
The Office to the Solicitor
183-187 Stoke Newington High Street
London
N16 0LH	

	MR JUSTICE BELL:	This is an appeal by Ms Stenning against the decision of the Employment Tribunal held at London (North) on 20th July 1999 and promulgated on 22nd September 1999, dismissing her complaint of racial discrimination by Mr Jarman, the Director of Education, in her employment by the London Borough of Hackney, their employer. Mr Jarman was first respondent and the London Borough of Hackney was second respondent to her application.

1.	The appellant is black. After various posts as a teacher and an Education Officer, she began her employment with Hackney as Directorate Personnel Officer in the Education Authority at the end of 1990. She was assessed and considered for advancement but by 1997 the Education Authority in Hackney was in disarray. In October 1997 Mr Jarman was appointed as Director of Education. He took on a formidable task and as the tribunal found he was “fire fighting” most of the time. He delegated the task of creating an Education Development Plan to the appellant. She performed that task satisfactorily. There was great uncertainty about her position, however, and as to how much longer she could be employed in the conditions which prevailed. 

2.	Other employees were in the same position. On 28th January 1998 Mr Jarman extended the contract of Mr Gorst, a white person who was in charge of the department’s computer systems, indefinitely. On 12th February, Mr Jarman arranged for Mr Mahoney, a white person who was in charge of the building, to be assimilated into a job. In the tribunal’s own words:

“No such indulgence was shown to the Applicant.”

It was common ground that he advised her to seek employment elsewhere. She applied for a job which she had seen advertised as Assistant Director – Schools Services and Support for the Birmingham Local Education Authority. She told the tribunal that she told Mr Jarman that she intended to apply for the job and that he offered to provide her with a reference and said nothing to discourage her from applying. Mr Jarman disputed that, but the tribunal preferred the evidence of the appellant. 

3.	The appellant got through the short-listing process for the Birmingham position and she was called for an interview on 23rd and 24th April 1998. The tribunal accepted the evidence of a senior officer from Birmingham that the interviewing panel decided to appoint the appellant. Their policy was to arrive at such decisions before looking at the references which had been submitted. 

4.	On 16th April 1998 Birmingham had written to Mr Jarman asking him to provide a reference for the appellant. He did so. Upon reading it Birmingham changed its mind and decided to appoint another candidate. The appellant was perplexed. She thought she had done well. 

5.	The appellant told the tribunal that on her return to Hackney Mr Jarman asked how she had got on. She asked him to provide her with a copy of the reference he had submitted and he agreed to do so. He denied that before the tribunal but the tribunal accepted the appellant’s evidence. Mr Jarman had telephoned Birmingham to confirm that it would not release a copy of his reference to the appellant.

6.	Mr Jarman was about to leave Hackney and the tribunal had no doubt that he was procrastinating in the knowledge that within a few days he would have left and he hoped that the reference would never fall into the appellant’s hands.

7.	Eventually, through the new Director of Education at Hackney, the appellant obtained a copy of the reference that Mr Jarman had provided to Birmingham. As the tribunal found it was very easy to understand why the appellant had not been given the position in Birmingham. The reference made some favourable comments about the appellant but it doubted that she had the necessary experience for the Birmingham position and it concluded:

“I cannot, with a good conscience recommend Letitia for this post.”

8.	The appellant’s employment with Hackney came to an end on 31st July 1998.

9.	When the tribunal came to its conclusions it referred first of all to potential comparators in the following terms:

“24	The evidence as to the actual comparitor appears in various and other references produced by the Respondents on discovery relating to Mrs Jordan (white), Mrs Griffin (black), Mrs Babano (white), Mr Frethy (white) and Miss Sharma (black). Mr Wiltshire is content to rely on Mrs Jordan as being the closer comparitor to the Applicant in that she was of a similar grade, applying for a similar promotion. It is however in our view impossible to say that there are no material differences between the circumstances surrounding Mrs Jordan and those surrounding the Applicant. Mrs Jordan had a different background, her experience must have differed from the Applicant, she was applying for a different job. Those matters alone are material differences. There will be, no doubt, many others. She does not, therefore, meet the section 3(3) criteria.”

	Mrs Jordan was a white person for whom Mr Jarman had provided a good reference in December 1997. The reference should be to section 3(4) of the Race Relations Act 1976.

10.	The tribunal continued with its conclusions as follows:

“25   So the Applicant has to resort to establishing that as against a notional comparitor, she had been treated less favourably. We are in no doubt that she has been treated unfairly. The reference given by Mr Jarman is, in our view, wholly misleading and irresponsibly delivered and was designed to ensure that she was unsuccessful in her application. We accept that when an adverse reference is to be given in these circumstances, fairness would demand that at least the referee should qualify the reference to show that it is based on very limited knowledge of the Applicant particularly when on his own admission, Mr Jarman had not even read her file before preparing the reference. On analysis it was clear that she comfortably met the required person specification and although obviously there were limitations upon the breadth of her experience, those were much overstated. It was wholly unreasonable to allow the Applicant to go to that interview knowing that such a damning reference had been given without at least telling her or seeking her comments upon the proposed reference and to give, as an excuse, that he was too busy is frankly wholly unpalatable bearing in mind, for example, the lengths that he went to to protect the position of Mr Mahoney. That behaviour is then compounded by him trying to ensure that the offending reference would not pass into her possession and lying to her about his intentions to give her a copy of it.”

11.	The majority of the tribunal went on to conclude:

“26	Nonetheless, we are bound by the observation of Lord Browne-Wilkinson in Zafar and accept that “the fact that, for the purposes of the law of unfair dismissal, an employer has acted unreasonably casts not light whatsoever on the question of whether he has treated the employee “less favourably” for the purposes of the Act of 1976.”
27	What other evidence then is there? It may be argued that the differential treatment to Mr Gorst and Mr Mahoney, both white, is an indicator of a racist approach. It may also be said that the wholly different phraseology used in the other references referred to create the same impression, but then having rejected Mrs Jordan as a direct comparitor, we must note that some very glowing references have been given for black candidates. Perhaps the strongest thread of evidence lies in the argument that the reference to the Applicant’s experience in equal opportunities demonstrates a mind set that equates that experience with a person that comes from an ethnic minority and therefore indicates a racist approach. It might. Equally however, it could be simply explained by the Applicant’s previous personnel experience that would have involved her closely with equal opportunity issues.
28	We may have suspicions that Mr Jarman was racially motivated, we may find that there are straws in the wind that would fuel those suspicions, but that is not enough. We have to be satisfied that it is more probable than not, that that was the case. The majority cannot so find.”

12.	So the appellant’s application was dismissed.

13.	The relevant statutory provisions are as follows: section 1(1) of the 1976 Act provides:

“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.”

	Section 3(1) of the 1976 Act provides:

“In this Act, unless the context otherwise requires-
“racial grounds” means any of the following grounds, namely colour, race, nationality or ethnic or national origins.”

	Section 3(4) provides:

“A comparison of the case of a person of a particular racial group with that of a person not of that group under section 1(1) must be such that the relevant circumstances in the one case are the same, or not materially different, in the other.”

	Section 4(2) provides:

“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.”

	Section 32(1) provides:

“Anything done by a person in the course of his employment shall be treated for the purposes of this Act (except as regards offences thereunder) as done by his employer as well as by him, whether or not it was done with the employer’s knowledge or approval.”

	Section 33(1) provides:

“A person who knowingly aids another person to do an act made unlawful by this Act shall be treated for the purposes of this Act as himself doing an unlawful act of the like description.”

	It was section 33(1) which brought Mr Jarman into the proceedings as a separate respondent. There is a defence provided by section 32(3) for the employer who takes such steps as are reasonably practicable to prevent discrimination, but the second respondent did not seek to avail itself of that provision in this case.

14.	The tribunal set out its approach to the law as follows:

“19	We have been much assisted by able legal submissions as to the way that we should approach this case. We are assisted by the guidelines set out in King as clarified in Zafar and the Martins case. We approach the matter in the following way.
We accept the guidance that the burden of proof is upon the Applicant on the balance of probabilities and we also acknowledge the difficulty that she will have in discharging that burden. We then look to see if we can find discrimination, that is less favourable treatment and if we do we then need to see whether there is a difference in race between the Applicant and the person against whom the comparison is made. We recognise the obligation to seek out a comparitor. Section 1(a) of the Race Relations Act 1976 raises, in our view, two possibilities. It tells us that a person discriminates against another if “on racial grounds he treats that other less favourably than he treats or would treat other persons”. That raises the two possibilities of either an actual comparitor (“he treats”) or a notional comparitor (“would treat”).
20	On either basis, the comparitor must meet the test of section 3(4) that is that “the relevant circumstances in the one case are the same, or not materially different, in the other”.
21	The Respondents urged the Tribunal to find that this Applicant has put her case in such a way that we are only concerned with an actual comparitor, Mrs Luola Jordan, to whom we will refer in due course and so she is bound to that proposition. We do not agree. We find that the Applicant’s case is put, and is permissibly put, in the alternative. Either Mrs Jordan (or perhaps others) may be regarded as a direct comparitor or alternatively she argues that the reference to which objection is taken was only phrased in that way because she was black and because Mr Jarman had a conscious or unconscious resistance to a black person achieving the advancement that would have been involved had she succeeded in her application. In that event, the notional comparitor is simply the Applicant had she been white.
22	If we find that as against a direct comparitor there has been discrimination advanced by Mr Jarman as to why he composed the reference in the way that he did and if his explanation is not accepted by us, consider whether it is proper to draw an inference of unlawful discrimination.
23	If, however, we reject the proposed actual comparitor as not meeting the test set out in section 3(4) we are not, it seems to us, involved in the exercise in finding primary facts and then drawing inferences. Our task will be to seek to determine whether, on the balance of probabilities, there is direct evidence to show that had the Applicant been white, a different reference would have been given. If we find that to be the case, no inferences need to be drawn. That will, as King makes clear, be a difficult matter for the Applicant to show, but it is nevertheless, in our view, the task before her if a notional comparitor is her only option.”

15.	The cases of King and Zafar to which the tribunal referred are: King v Great Britain China Centre [1991] IRLR 513 and Zafar v Glasgow City Council [1998] IRLR 36. Since Lord Browne-Wilkinson who gave the leading speech in Zafar quoted with approval the relevant references in King we will go straight to Zafar, where Lord Browne-Wilkinson said:

“10	Although, at the end of the day, s.1(1) of the Act of 1976 requires an answer to be given to a single question (viz has the complainant been treated less favourably than others on racial grounds?), in the present case it is convenient for the purposes of analysis to split that question into two parts – (a) less favourable treatment, and (b) racial grounds – as did the Second Division.

11	Less favourable treatment
	The reasoning of the industrial tribunal on this issue is wholly defective. The Act of 1976 requires it to be shown that the claimant has been treated by the person against whom the discrimination is alleged less favourably than that person treats or would have treated another. In deciding that issue, the conduct of a hypothetical reasonable employer is irrelevant. The alleged discriminator may or may not be a reasonable employer. If he is not a reasonable employer, he might well have treated another employee in just the same unsatisfactory way as he treated the complainant, in which  case he would not have treated the complainant ‘less favourably’ for the purposes of the Act of 1976. The fact that, for the purposes of the law of unfair dismissal, an employer has acted unreasonable casts no light whatsoever on the question whether he has treated the employee ‘less favourably’ for the purposes of the Act of 1976
12	I cannot improve on the reasoning of Lord Morison who expressed the position as follows:
‘The requirement necessary to establish less favourable treatment which is laid down by s.1(1) of the Act of 1976 is not one of less favourable treatment than that which would have been accorded by a reasonable employer in the same circumstances, but of less favourable treatment than that which had been or would have been accorded by the same employer in the same circumstances. It cannot be inferred, let alone presumed, only from the fact that an employer has acted unreasonably towards one employee, that he would have acted reasonably if he had been dealing with another in the same circumstances.’
…
14	‘On racial grounds’
	The industrial tribunal, having wrongly drawn the inference of less favourable treatment, then held that, in the absence of any satisfactory non-racial explanation for such treatment, they were bound by authority to draw the inference that such less favourable treatment was on the grounds of the appellant’s race.
…
15	[Counsel] did not attempt to justify the process whereby the industrial tribunal held itself to be bound in law to draw the inference of racial prejudice as being the ground for the discriminatory treatment alleged to have been accorded to the appellant. However, since the authorities are in a state of some confusion (due in part to some words of mine), it is desirable that your Lordships should seek to clarify how the law stands on this matter at the present time.
16	Claims brought under the Act of 1976, and the Sex Discrimination Act 1975 present special problems of proof for complainants, since those who discriminate on the grounds of race or gender do not in general advertise their prejudices: indeed, they may not even be aware of them. Over the years since 1975, the courts have sought to give guidance to industrial tribunals as to how inferences of fact can properly be drawn in this context. The best guidance is that given by Neill LJ in King [1991] IRLR 513 at 518. After reviewing the relevant authorities, he said this:
‘From these several authorities it is possible, I think, to extract the following principles and guidance:
(1) It is for the applicant who complains of racial discrimination to make out his or her case. Thus, if the applicant does not prove the case on the balance of probabilities, he or she will fail.
(2) It is important to bear in mind that it is unusual to find direct evidence of racial discrimination. Few employers would be prepared to admit such discrimination even to themselves. In some cases the discrimination will not be ill-intentioned but merely based on an assumption [that] “he or she  would not have fitted in.”
(3) The outcome of the case will therefore usually depend on what inferences it is proper to draw from the primary facts found by the tribunal. These inferences can include, in appropriate cases, any inferences that it is just and equitable to draw in accordance with s.65(2)(b) of the Act of 1976 from an evasive or equivocal reply to a questionnaire.
(4) Though there will be some cases where, for example, the non-selection of the applicant for a post or for promotion is clearly not on racial grounds, a finding of discrimination and a finding of a difference in race will often point to the possibility of racial discrimination. In such circumstances, the tribunal will look to the employer for an explanation. If no explanation is then put forward, or if the tribunal considers the explanation to be inadequate or unsatisfactory, it will be legitimate for the tribunal to infer that the discrimination was on racial grounds. This is not a matter of law but, as May LJ put it in Noone, “almost common sense”.
(5) It is unnecessary and unhelpful to introduce the concept of a shifting evidential burden of proof. At the conclusion of all the evidence, the tribunal should make findings as to the primary facts and draw such inferences as they consider proper from those facts. They should then reach a conclusion on the balance of probabilities, bearing in mind the difficulties which face a person who complains of unlawful discrimination and the fact that it is for the complainant to prove his or her case.’
17	In my judgment, that is the guidance which should in future be applied in these cases. In particular, certain remarks of mine in the Employment Appeal Tribunal in Khanna v Ministry of Defence [1981] IRLR 331 and Chattopadhay v Headmaster of Holloway School [1981] IRLR 487, to the effect that such inference ‘should’ be drawn, put the matter too high, are inconsistent with later Court of Appeal authority and should not be followed.”

16.	It follows from Zafar in our view that in order to be confident of covering the essential issues in a case such as the present, the Employment Tribunal should embark on a three-stage enquiry. First, was there any difference in treatment unfavourable to the applicant between the respondent’s treatment of the applicant of one colour, race, nationality or ethnic or national origins and an actual or hypothetical comparator of another colour, race, nationality or ethnic or national origins? Secondly, if so, has the respondent provided an adequate explanation for that difference in treatment which is innocent in the sense of not involving racial considerations? Third, if not, should the tribunal draw an adverse inference of unlawful discrimination on racial grounds against the respondent? See Jiad v British Broadcasting Corporation and McLellan EAT, 3rd February 2000, at paragraphs 58 to 63.

17.	The three most substantial grounds of appeal taken by Mr Sethi, who did not appear for the appellant before the Employment Tribunal, were, firstly, that the tribunal was wrong to reject Mrs Jordan as an actual comparator. He argues that the paramount, relevant circumstance and similarity for the purposes of section 3(4) of the 1976 Act was that both Mrs Jordan and the appellant were employees who merited a good reference from Mr Jarman at broadly the same time. The differences upon which the tribunal fixed in paragraph 24 of its decision, namely ‘background’, ‘experience’ and ‘job application’ were insignificant by comparison especially when one looks at the other similarities namely, ‘grade’ and ‘promotion’. 

18.	In our view those are powerful points. It must often be difficult to find an actual comparator whose relevant circumstances are the same, save in respect of race or colour as those of the complainant. But all the factors which we have just mentioned are relevant circumstances, in our view, for the purposes of section 3(4), and the tribunal was entitled to come to the conclusion which it reached that the relevant circumstances were not the same but to some real extent were materially different. So this first ground fails.

19.	Secondly, however, Mr Sethi contends that once the Employment Tribunal had rejected the actual comparator, it had to look at a notional comparator. In this case, the parties accepted and the tribunal agreed that the notional comparator was simply the applicant had she been white. Then Mr Sethi contends the tribunal must ask itself the first stage question, in effect, was there a difference in treatment between the appellant and such a notional comparator. 

20.	That exercise may not be easy, as it may be in the case of an actual comparator, but the tribunal did have surrounding circumstances to draw on: in particular, Mr Jarman’s treatment of Mrs Jordan, Mr Mahoney and Mr Gorst. 

21.	Mr Bryant for the first respondent accepts that rejection of a person such as Mrs Jordan as direct comparator does not mean that her circumstances fall out of the picture for the purposes of notional comparison. Yet, Mr Sethi contends, the Employment Tribunal did not take any account of the circumstances relating to Mrs Jordan, or any proper account of the circumstances relating to Mr Mahoney or Mr Gorst. Although the tribunal may be said to have, in effect, rehearsed the need to look to see if there was less favourable treatment, see paragraphs 19 and 22 and the first sentence of paragraph 25 of its decision, it, in effect, went on to consideration of fairness of the treatment of the appellant rather than to any true analysis of her treatment compared with that of Mrs Jordan, Mr Mahoney and Mr Gorst. Indeed, it referred at paragraph 26 to Lord Browne-Wilkinson’s statement in Zafar saying that it was bound by his observations as already narrated in paragraph 26 of the decision, when in fact Zafar was a different case factually in the material respect that there were no other employees like Mrs Jordan, Mr Mahoney and Mr Gorst, from whose treatment the tribunal could infer what the treatment of the notional comparator would have been. The basis of the tribunal’s findings of less favourable treatment in Zafar was simply that the Council had acted unreasonably in its treatment of Mr Zafar. It is true that Mr Mahoney and Mr Gorst were referred to in the tribunal’s conclusion, but only shortly, and Mrs Jordan’s treatment was not considered at all once she had been rejected as an actual comparator. Yet the rejection of Mrs Jordan as an actual comparator did not mean that the circumstances of her treatment had to be removed from the picture altogether, as we have already said.

22.	In our view this is a sound criticism of the tribunal’s approach. It does not appear from its reasons that the tribunal carried out the first stage of the necessary enquiry. It does appear that tribunal took no account of the circumstances relating to Mrs Jordan in any exercise which it did carry out. Mr Bryant, for the first respondent, argued that it is clear from paragraphs 25 and 27 and particularly from the conclusion at paragraph 28, that the tribunal did consider the question of less favourable treatment of the appellant than of a notional comparator. We are unable to glean that from those paragraphs. Certainly it cannot be done with the necessary confidence in our view. 

23.	Thirdly, there was real material in Mr Jarman’s treatment of Mrs Jordan, Mr Mahoney and Mr Gorst, and the lack of “indulgence” in respect of the appellant, indeed her positively unfavourable treatment, for the inference that she was less favourably treated than her notional comparator would have been. Paragraphs 25, 27 and 28 of its reasons show that the tribunal was troubled by Mr Jarman’s treatment of the appellant and saw the possibility of racial discrimination. In those circumstances, in our view, the appellant is entitled to complain that the tribunal did not go on as it should have done to evaluate the respondent’s explanation and decide what inference, if any, to draw if it judged his explanation to be inadequate or unsatisfactory. 

24.	In our view, this is a valid and important criticism. It is true that in paragraph 25 the tribunal described Mr Jarman’s “excuse” that he was too busy as “frankly wholly unpalatable”. But this was equivocal as to whether his explanation was untrue or simply distasteful. Furthermore, it seems to us that paragraphs 22 and 23 of the decision indicate that the tribunal thought that once a direct comparator was eliminated, consideration of whether the first respondent’s explanation as to why he composed the reference in the way that he did was acceptable and, if not, consideration of what inference was to be drawn from that conclusion, fell away as relevant considerations. The tribunal seems to us to have gone straight to the question of whether there was direct evidence of unlawful discrimination, referring to, but giving insufficient weight to the spirit of the second principle in King as approved in Zafar. 

25.	For all these reasons, in our view, this appeal must be allowed and the matter remitted for a rehearing before another tribunal differently constituted, with such guidance as appears in this judgment.

26.	Mr Bryant and Mr Tayler for the respondents applied for leave to appeal to the Court of Appeal. An appeal to the Court of Appeal would be a second tier appeal. The practices which apply in other jurisdictions do not apply to this jurisdiction, but we must nevertheless ask ourselves whether there is reasonably arguable. It is always unattractive for a court to say that its own decision is not reasonably appealable, but that is the view we take and so we refuse the application. This of course leaves the opportunity to persuade the Court of Appeal otherwise.