Supreme Court clarifies (and simplifies) law on indirect discrimination

The recent decision in Essop v Home Office and Naeem v Secretary of State for Justice [2017] UKSC 27 brings some much-needed clarity and simplicity to the law on indirect discrimination.

Employment law is a classic example of law which should be simple and accessible, in particular to laypeople, but which is, in practice, horrendously complex. Discrimination law is no exception.

In Essop, Lady Hale started out by noting that “discrimination ought to be an easy concept, although proving it may be harder. But we do not live in an ideal world and the concepts are not easy . . .”

Indirect discrimination requires that a provision, criterion or practice places persons with whom the alleged victim shares their protected characteristic at a particular disadvantage when compared with persons with whom they do not share that characteristic.

The principal issue of law raised in Essop was whether proving indirect discrimination requires that the reason for the disadvantage suffered by the group be established. The similar issue raised in Naeem was whether the reason for the disadvantage suffered by Mr Naeem had to be related to his protected characteristic of religion or race.

The judgment in Essop provides an interesting discussion of how discrimination law has evolved (significantly, protections have become wider over time, rather than narrower), and contrasts direct discrimination (which expressly requires a casual link between the characteristic and the treatment) with indirect discrimination (which requires a causal link between the PCP and the particular disadvantage). The discussion of course goes further (paras 23 – 34, if anyone is interested).

But the take-home message is at para 33:

“In order to succeed in an indirect discrimination claim, it is not necessary to establish the reason for the particular disadvantage to which the group is put. The essential element is a causal connection between the PCP and the disadvantage suffered, not only by the group, but also by the individual.”

That, thought Lady Hale, did not unduly disadvantage the Respondent, who could always (in principle) rely on objective justification.

A helpful decision, and a useful reference point for indirect discrimination claims in future.

(As a postscript:

Naeem doesn’t really change anything. In so far as it is relevant, a summary is as follows:

In Naeem, the reason why the PCP (related to a specific pay scale) put the group (Muslim chaplains) at a disadvantage was known: it depended on length of service and Muslim chaplains had, on average, shorter lengths of service than Christian chaplains. So the PCP put the group at a particular disadvantage; Mr Naeem suffered that particular disadvantage and so the question became whether the PCP (specifically, whether the steps being taken to move towards a new pay system) could be justified as “a proportionate means of achieving a legitimate aim”. But that was a factual question: “. . . if it was not fully explored before the Employment Tribunal it is not for the EAT or [the Supreme Court] to do so.”)

Workers, employers, and whistleblowing: s 43K Employment Rights Act 1996 and Dr Day

The case of Day v Health Education England [2017] EWCA Civ 329 (available on Bailii here) has attracted a fair bit of media attention.

Dr Day’s case was that he had been subjected to a number of significant detriments by Health Education England (“HEE”) as a result of having made protected disclosures – specifically (it was alleged) relating to staffing problems which impacted the safety of patients. His claim was struck out at a preliminary hearing, because HEE argued – successfully – that they could not (as a matter of law) be liable to him under whistleblowing legislation. If that argument is correct, then – in principle – a junior doctor (i.e. any doctor below the level of consultant) has no recourse for whistleblowing detriment against HEE. That is, obviously, significant.

The case in some more detail is as follows. Although Dr Day was not directly employed by HEE, he claimed that he was covered by s 43K ERA 1996. s 43K(1)(a) provides that

“For the purposes of this Part “worker” includes an individual who is not a worker as defined by section 230(3) but who— ”
(a) works or worked for a person in circumstances in which—
(i) he is or was introduced or supplied to do that work by a third person, and
(ii) the terms on which he is or was engaged to do the work are or were in practice substantially determined not by him but by the person for whom he works or worked, by the third person or by both of them…..

(s 230(3) gives a general definition of “worker” – it was common ground that Dr Day’s employer, under s 230(3), was Lewisham and Greenwich NHS Trust)

and there is an extended definition of “employer” in s 43K(2)(a)

“For the purposes of this Part “employer” includes—

(a) in relation to a worker falling within paragraph (a) of subsection (1), the person who substantially determines or determined the terms on which he is or was engaged . . .

At first instance, HEE took the preliminary point that they were not caught by s 43K. The ET sided with HEE: they looked at the relationship between Dr Day and the Trust, on the one hand, and Dr Day and HEE, on the other, and took the view that Dr Day’s relationship with HEE was a training relationship which ran parallel to the employment relationship (with the Trust) but did not materially determine its terms. The EAT thought that this was a conclusion which the ET was entitled to reach, and which displayed no error of law. There was a further point raised in the EAT, being that (in terms) a s 230(3) worker could not also be a s 43K worker.

There were two issues on appeal. First: is someone who is a s 230(3) worker thereby precluded from being a s 43K worker (in Dr Day’s case: whether his employment with the Trust prevented him from being a worker for HEE)? Second: if the answer to that question is “no”, then can HEE be said to be substantially determining “the terms on which he is or was engaged to do the work” so as to engage s 43K? Counsel for Dr Day, James Laddie QC, argued that the ET approached this question wrongly: the ET had asked itself which of the two bodies (HEE or the Trust) played the greater role in determining the terms of engagement, and therefore failed to appreciate that both might have substantially determined those terms.

The Court of Appeal noted that someone who is a s 230(3) worker cannot be excluded from also being a s 43K worker simply on that basis, despite what the EAT had said, because one might be a s 230(3) worker in one job (e.g. as a florist during the daytime) but a s 43K worker in another (e.g. as a delivery driver contracted by an agency during the evenings). So words had to be “read in” to the statute. The Court of Appeal observed that

“. . . where, as here, some words need to be read into the provision because a literal construction cannot be what Parliament intended, then in my view the court should read in such words as maximise the protection whilst remaining true to the language of the statute. In my judgment the words which both the appellant and intervener suggest should be inserted better achieve that objective.”

those words being as follows:

“”worker ” includes an individual who as against a given respondent is not a worker as defined by section 230(3).”

So on the first ground of appeal, Dr Day succeeded: he could, in principle, be a s 43K worker for HEE notwithstanding that he was a s 230(3) worker for the Trust.

Moreover, Dr Day also succeeded in arguing that the Tribunal had asked the wrong question in relation to s 43K: it had asked itself, for instance, about “the body” which substantially determined the terms of engagement (and had therefore assumed that there could be only one body which met this test).

Dr Day further argued that the ET would have been bound to find in his favour on the s 43K point – i.e. that it would have been bound to find that HEE did substantially determine his terms of engagement. But the Court of Appeal did not accept this argument, and the matter has been remitted to the ET.

Whether or not the ET will find in his favour is another matter. The judgment is not precedent for any point of principle about the relationship between junior doctors and Health Education England. There is an open question as to whether junior doctors have (any or any adequate) whistleblowing protection as against HEE. That is an unhappy state of affairs. HEE has now generated a document which purports to confer equivalent protection on whistleblowers to that afforded by the ERA 1996, albeit this time by a contractual route. As James Laddie QC somewhat puckishly notes, “[w]hy HEE is simultaneously contesting the question of whether it falls within s 43K in Dr Day’s case yet purporting to confer effective protection via another route is not a matter upon which I am able to comment.” And whether or not the protection is effective is open to debate.

For further reading: the collated judgments in Dr Day’s case can be found here; James Laddie QC’s opinion on the state of whistleblowing protection in relation to junior doctors is here; the BMA / HEE opinion can be found here, with the BMA’s overall view and guidance here.

Applying to vary or set aside a Court order: CPR r 3.1(7)

In some cases, if a party is unhappy with an order or decision, the correct route is to appeal the decision.

In others, there needs to be an application made to set aside or vary the order. The most common instance is where an order is made without a hearing (and so without the parties present): in such cases the order will give the parties liberty to apply, normally within 7 days.

In these cases, and where the order is silent on liberty to apply, the relevant provision is CPR r 3.1(7) which provides that:

“A power of the court under these Rules to make an order includes a power to vary or revoke the order.”

However, the application of r 3.1(7) is constrained by the guidance set out in Tibbles v SIG (trading as Asphaltic Roofing Supplies) [2012] EWCA Civ 518, [2012] 1 WLR 2591 (Bailii link here). As a rule, the discretion can only be exercised where there has been a material change of circumstances since the original order was made; where the facts on which the original decision had been made were (innocently or otherwise) misstated; or where there had been a manifest mistake on the part of the judge in the formulation of the order. Where liberty to apply is expressly provided, of course, the discretion will not be so fettered.

The logic underpinning the decision in Tibbles is straightforward: there is a public interest in the finality of litigation, and it is undesirable to allow litigants the opportunity to have two bites of the cherry. By a similar token, it is important not to undermine the concept of appeal: the jurisdiction afforded by CPR r 3.1(7) therefore needs to be restricted so that it does not overlap with appeals.

In Tibbles Rix LJ set out some more guidance at para 39. It ought, he commented, “normally to take something out of the ordinary to lead to variation or revocation of an order, especially in the absence of a change of circumstances in an interlocutory situation.”

Plausibly, the manner in which r 3.1(7) should be applies will vary according to context. So, for instance, when dealing with interim injunctions it will be relevant that the interim injunction is a “non-procedural but continuing order which may call for revocation or variation as it continue[s]” – Roult v North West Strategic Health Authority [2010] 1 WLR 487 at [15] per Hughes LJ, obiter, cited in Tibbles at [34].

We know that orders can be set aside on the grounds that they were made on a mistaken basis – Edwards v Golding [2007] EWCA Civ 416 per Buxton LJ. But it appears that the jurisdiction under r 3.1(7) can arise even if the grounds which are relied upon could have been known to the applicant before the order in dispute was made or agreed (although there will likely be a consequential order in costs) – c.f. W L Gore & Associates GmBH v Geox Space [2008] EWCA Civ 622 per Lord Neuberger at [12]. And, it would seem, even in context of “pure” legal argument – i.e. where one party has missed a fundamental legal point (Edwards again).

What of the need for promptness? Well, there is high authority suggesting that any application under r 3.1(7) must be made promptly: Thevarajah (Respondent) v Riordan and ors (Appellants) [2015] UKSC 78 (available on the UKSC website here), citing Tibbles at para 39(ii).

I am inclined to think that the reference to “prompt[ness]” in Tibbles at [42] may be directed at the situation where there is an error “on the materials already before the court” – and there is some support for this from the Court of Appeal (Michael Wilson & Partners Ltd v Sinclair [2015] EWCA Civ 774, [2015] C P Rep 45 per Richards LJ at [45], where Richards LJ states that it is “in that context [i.e. the context of an application back to a court to deal with a matter which ought to have been dealt with but which in genuine error was overlooked] that he [Rix LJ in Tibbles] emphasised the word “prompt” . . .]”

But this isn’t an altogether attractive argument, and I would anticipate that any court will take Riordan at face value on this point – particularly since r 3.1(7) is so close (physically and metaphorically) to r 3.9. Promptness, therefore, is important.

In short, where a party is unhappy with an order, they should bear in mind that the general power to revoke and/or vary orders under r 3.1(7) is fairly well circumscribed: if an appeal is available, then appeal is likely the correct route; the party will need to show a material change in circumstance since the order was made, or misstatement of the factual basis for the order, or “manifest error” in the making of the order; and any application to court must be made promptly.

(parenthetically – the Supreme Court in Riordan emphasised that, where a court has made an interlocutory order, it isn’t normally open to a party subsequently to ask for relief which requires that order to be varied or rescinded, save if there has been a material change in circumstances since the order was made (or if, in terms, new facts have come to light); where a party is fixed with an interim injunction, and not happy with it, the best route might be to apply for directions for an expedited trial, rather than for variation and/or discharge of the order, absent any material change in circumstance).

Postponing the sale of a bankrupt’s (family) home

When a bankrupt shares a home with his spouse and/or family, there is an inevitable conflict between the family’s interests and those of the bankrupt’s creditors.

In (1) Grant (2) Cork (as joint trustees in bankruptcy of Ronald Charles Henry Baker) v Ronald Charles Henry Baker [2016] EWHC 1782 (Ch), the Court’s approach is neatly illustrated.

Mr Baker was a self-employed taxi-driver, married for some 30 years to Mrs Baker, who was – until shortly before the hearing – working as a carer for elderly people (on an income of c. £15K, gross). Mr Baker employed an accountant to deal with his tax affairs. Unfortunately, the accountant failed to take into account the private use by Mr Baker of his taxi and fuel. HMRC then reopened his accounts going back some five years, and issued a bill for £25,000. Unsurprisingly, Mr Baker did not have this money to hand, particularly given the downturn in business brought about by Uber.

In due course, Mr Baker was made bankrupt. A year later, the Trustees noted a shortfall in the sum which was by then owed to HMRC (c. £51K); the Official Receiver recorded an estimated deficiency of c. £26K; the Trustees (unsurprisingly) sought to recover the shortfall by applying for sale of Mr & Mrs Baker’s home. By this time Mr Baker had been discharged from bankruptcy; he had co-operated fully throughout. Sale of the home was expected to yield around £30K for Mrs Baker, the remainder being used to discharge Mr Baker’s debt to HMRC.

Mr & Mrs Baker had an adult daughter who lived with them; she suffered from global developmental delay and dyxpraxia, together with OCD. Her needs were (I paraphrase) best met by the family home. The application for an order for sale was opposed.

However, the Court noted the impact of s 335(A) Insolvency Act 1986:

“(3)Where [an application for an order for sale] is made after the end of the period of one year beginning with the first vesting . . . of the bankrupt’s estate in a trustee, the court shall assume, unless the circumstances of the case are exceptional, that the interests of the bankrupt’s creditors outweigh all other considerations.”

The question of whether the circumstances are “exceptional” are, in case you are interested, set out in Dean v Stout [2005] EWHC 3315 (Ch). Of particular significance are the principles set out by Lawrence Collins J at [9] – “exceptional or special circumstances [must be] outside the usual ‘melancholy consequences of debt and improvidence’ . . .” and at [11] ” . . . the creditors have an interest in the order for sale being made, even if the whole or the net proceeds will go towards the expenses of the bankruptcy, and the fact that they will be swallowed up in paying those expenses is not an exceptional circumstances justifying the displacement of the presumption that the interests of the creditors outweigh all other considerations.”

The first instance decision in Grant was to postpone the order for sale indefinitely, until the daughter was “no longer residing in [the] property or no longer requires that property as a home”. But that, said the High Court, was an impermissible exercise of the judge’s discretion: the District Judge had been “unduly influenced” by the perceived lack of security for the daughter if she had to move into private rented accommodation; was wrong to dismiss as “quite short term thinking” the suggestion that MRs Baker’s share of equity could be used to make up a shortfall in paying rent for suitable replacement accommodation; was wrong to dismiss as unreasonable the prospect of inflicting a further move on the daughter; and was wrong not to consider any alternative to indefinite postponement. The High Court, exercising its discretion afresh, thought that the appropriate further period of postponement would be one of approximately 12 months, allowing time for a replacement property to be found and for the move to be prepared, and to contemplate bringing a claim against the accountant (who, you will recall, was clearly in the picture in relation to the Bakers’ unfortunate predicament).

It is important to note that the overall postponement ran from the date of the first instance hearing – 8 October 2015 – until the end of July 2017 (see para [52] of the High Court decision). That is almost two years. But the relevant period, properly understood, is still only 12 months: until the High Court decision, Mr & Mrs Baker would not have been preparing for sale. The 12 month period is the period of grace afforded to the Bakers to prepare for sale, and to find alternative accommodation. So in a case where the relevant interests include those of a bankrupt’s family who need to care for an adult (largely, it would seem, dependant) daughter, we are still only looking at a postponement of sale of 12 months.

Further, the reminder that the creditors’ interest in an order for sale will dominate even when the proceeds go towards the expenses of the bankruptcy is salutory, and should be borne in mind. The statutory scheme is, in this respect, very clear.