Kemeh v Ministry of Defence [2014] EWCA Civ 91

Appeal against an EAT decision which overturned an ET ruling that an employee was acting as an agent of the respondent and therefore the claimant could make a claim of race discrimination against the respondent. Second appeal against the EAT’s reduction in the injury to feelings award made by the ET. Both appeals dismissed.

Read the full background to the case [here](). The issue was whether an employee of a company which was contracted to provide services for the respondent was acting as agent for the respondent. The ET said she was, the EAT said she wasn't. The claimant therefore lost this particular claim for discrimination. He also complained that an employee of the respondent had discriminated against him which the ET ruled was well founded – they awarded him £12,000 for injury to feelings which the EAT reduced to £6,000. The claimant appealed both EAT decisions.

The Court of Appeal dismissed both appeals. First the court ruled that no question of agency arose in this case because it could not be appropriate to describe as an agent someone who was employed by a contractor simply on the grounds that he or she performed work for the benefit of a third party employer. She was no more acting on behalf of the employer than his own employees were, and they would not typically be treated as agents. Secondly, the EAT was right to say that the award given by the Tribunal was manifestly excessive. It was important that awards should not be too low, thereby trivialising the harm; but it was equally important that they should not be too high, since that risked creating the impression that victims of discrimination were over-compensated and being given unfairly generous treatment when compared with victims of personal injury, for example.

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Case No: A2/2013/0886/EATRF

Neutral Citation Number: [2014] EWCA Civ 91

IN THE COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM the EMPLOYMENT APPEAL TRIBUNAL

HIS HONOUR JUDGE PETER CLARK

UKEAT/0249/12/SM

Royal Courts of Justice

Strand, London, WC2A 2LL

Date: 11/02/2014

Before :

LORD JUSTICE ELIAS

LORD JUSTICE LEWISON

and

LORD JUSTICE KITCHIN

Between :

MR KEMEH (Appellant)

- and -

MINISTRY OF DEFENCE (Respondent)

Ms Daphne Romney QC and Ms Schona Jolly (instructed by Islington Law Centre) for the Appellant

Mr Matthew Purchase (instructed by The Treasury Solicitor) for the Respondent

Hearing date : 27 January 2014

Judgment

Lord Justice Elias :

The facts

  1. This appeal raises two quite distinct issues arising out of two separate acts of racial discrimination. Each involved a racially offensive comment.
  1. The background can be shortly stated. The appellant is black and was born in Ghana. He joined the British Army as a cook in November 2004 and became a British National in 2009. In June 2010 he was stationed in the Falklands where he was subjected to two episodes of race discrimination.
  1. In the first, he was racially abused by Ms Ausher who was a civilian employed by Sodexo as a butcher. Both she and the appellant were working in the Four Seasons Mess, the main catering facility for the Falklands Garrison. Sodexo was a sub-contractor of Serco, which in turn had entered into a commercial contract with the MoD to provide facilities management services in the South Atlantic. That contract provided that those working in the butchery would provide assistance to the NCO in charge of the butchery and carry out such tasks as directed by that officer.
  1. The appellant asked Ms Ausher for some chicken pieces to make fresh soup for a large number of soldiers. She gave him just two pieces and when he asked for more she replied, "Why should I trust you? First you are a Private in the British Army and then you are black". The appellant was upset; the implication of the comment was that because he was black he was not to be trusted.
  1. In the second incident, a week later, the appellant was told to "shut up you dumb black bastard" by his immediate line manager, Sergeant Simmons, a senior NCO, during the course of a conversation about a football match. The appellant complained and the incident was dealt with informally by Captain Lindsay with the agreement of the appellant. It led to Sergeant Simmons apologising to the appellant and promising that there would be no repetition of such conduct. The appellant at the time accepted this as appropriate redress. Later the case was taken up by the Equality and Diversity Advisor for the Falklands, Flight Lieutenant Hamilton. The appellant confirmed to her that he did not wish to take the complaint further, although he told the Tribunal that in fact it was always his intention to pursue the matter on his return to the UK.
  1. This is what he did. On his return the appellant commenced proceedings in the Employment Tribunal against the MoD on the grounds that they were liable for these two discriminatory acts under the Race Relations Act 1976 ("the 1976 Act"). (The Equality Act 2010 The Employment Tribunal heard the two cases together. It was accepted that the abusive comments were made and that they constituted acts of direct racial discrimination.
  1. The claims were brought under section 4 of the Act which renders it unlawful for "a person ... in the case of a person employed by him ... to discriminate against that employee … by subjecting him to a detriment." Legally, there was a potentially relevant difference between the two cases. Sergeant Simmons was in the employment of the MoD because military personnel in Crown Service were expressly treated as being in employment by section 75 of the Act. Ms Ausher, however, was not. The MoD accepted before the Employment Tribunal that it was liable for the discriminatory act of the sergeant by virtue of section 32(1) of the Act; the only point now in issue on that aspect of the case is whether the Tribunal award of £12,000 for injury to feelings was too high, as the EAT subsequently found. However, the MoD denied any liability for the act of Ms Ausher since she was not in its employment. The appellant submitted that it was liable nonetheless on the grounds that Ms Ausher was an agent carrying out tasks for the MoD, and the MoD was therefore liable for her discriminatory act as the principal pursuant to section 32(2) of the 1976 Act. The Employment Tribunal accepted this submission but its decision was overturned on appeal by the EAT (HH Judge Peter Clark presiding). The appellant seeks to restore the original decision.
  1. Since the two issues are entirely discrete, I will consider them separately.

The agency issue

  1. Section 32 of the 1976 Act in certain circumstances fixes liability on persons other than, and in addition to, the actual discriminator. It is as follows:

"Liability of employers and principals

(1) Anything done by a person in the course of his employment shall be treated for the purposes of this Act as done by his employer as well as by him, whether or not it was done with the employer's knowledge or approval.

(2) Anything done by a person as agent for another person with the authority (whether express or implied, and whether precedent or subsequent) of that other person shall be treated for the purposes of this Act as done by that other person as well as by him.

(3) In proceedings brought under this Act against any person in respect of an act alleged to have been done by an employee of his it shall be a defence for that person to prove that he took such steps as were reasonably practicable to prevent the employee from doing that act, or from doing in the course of his employment acts of that description."

  1. Subsection (1) applies a principle whose effect is similar to the common law concept of vicarious liability; in each case the employer is held liable for the acts of a person in his employment. But the method of imposing liability is different, as Peter Gibson LJ pointed out in Bedfordshire Police v Liversidge [2002] ICR 1135, 1143. True vicarious liability makes the employer liable for the acts of his employees committed in the course of their employment. By contrast, section 32(1) imposes a form of constructive liability by deeming the employer himself to have committed the act of discrimination as well as the employed person. (Indeed the actual discriminator is treated as aiding the wrong of the employer or principal, as the case may be, and is personally liable accordingly: see section 33(1) and (2).)
  1. Read literally, subsection (2) might suggest that the principal must authorise the act of discrimination itself before liability arises. But I agree with the EAT in Lana v Positive Action in Training (Housing) Limited [2001] IRLR 501 para 32 (Mr Recorder Langstaff presiding) that this would virtually render the provision a dead letter. In my judgment, Parliament must have intended that the principal will be liable wherever the agent discriminates in the course of carrying out the functions he is authorised to do. It is a moot point whether the common law would in any event impose liability in these circumstances. The scope of the principal's liability for an agent at common law is not entirely clear, although it seems likely that he will be liable for certain tortious acts of the agent, such as misrepresentations, provided they are sufficiently closely related to the agent's actual or apparent authority: see Bowstead and Reynolds on Agency, 19th edition, para 8-182. Whether racial abuse would fall within that principle is problematic, but section 32(2) removes the uncertainty which might otherwise exist.
  1. If that analysis is right and the principal can be liable even though he has not authorised the act of discrimination itself, it follows that the act itself may be - and no doubt usually will be - without the principal's knowledge or approval. It is perhaps surprising that the draftsman did not make this plain in sub-section (2) as he did in subsection (1). It might be argued that the omission indicates a conscious decision by Parliament that in the case of a principal he should only be liable if he knows or approves of the discriminatory act itself, but I am not persuaded that this is a legitimate inference to draw from the difference in wording of the two subsections. Indeed, in the Equality Act 2010 section 109(3) expressly states that the principal will be liable irrespective of whether he knew or approved of the act of discrimination.
  1. It is to be noted that whilst there is a defence in subsection (3) for liability arising by virtue of the acts of those in employment, it does not apply to the liability of a principal for his agent.

The decision of the Employment Tribunal

  1. The issue in relation to the remark of Ms Ausher was whether she was properly to be treated as an agent of the MoD. The Employment Tribunal referred to the fact that neither side was able to point to any relevant authority on section 32 (2). The Tribunal was referred to a passage in Halsbury's Laws of England dealing with the concept of agency but it considered that:

"... common law principles concerning agency are not necessarily applicable when dealing with the statutory provisions relating to discrimination."

  1. It later briefly summarised its reasons for concluding that an agency relationship arose in this case. First, the Tribunal explained the concept of agency it was applying in the following way (para 32):

"It seemed to the Tribunal that section 32(2) essentially follows on from the concept of vicarious liability contained in section 32(1) so as to establish liability on the part of a principal for acts committed not only by employees but also by someone who acts on the principal's behalf in relation to a particular matter or more generally."

Then after noting that the MoD had not authorised or encouraged the relevant act, it continued (paras 34-36):

"34. Nevertheless, in the Tribunal's judgment, by reason of the contract for the provision of services between the respondent and Serco Limited (and through Serco Limited to Sodexo) the respondent had delegated to those organisations the responsibility for carrying out duties which would otherwise have been performed by service personnel.

  1. Furthermore, from the evidence presented to the Tribunal and also from the terms of the contract itself, it was clear that civilian workers, including Ms Ausher, were subject to day-to-day control by the military, including NCOs in charge of the butchery section in which Ms Ausher worked.
  1. In those circumstances, in the unanimous judgment of the Tribunal Ms Ausher fell within the definition of an agent of the respondent for the purposes of section 32(2) of the Act. The respondent is therefore responsible for the admitted discriminatory act of Ms Ausher which occurred on or about 15 June 2010."
  1. This is a very broad analysis. It seems to rest on the premise that if a contractor is carrying out functions for the benefit of an employer which that employer would otherwise need to do for himself, then he can be said to be acting on the employer's behalf, thereby creating an agency relationship. It would seem to be a further stage in the Tribunal's analysis that all staff provided by the contractor, even though employed directly by the contractor, would at the same time be agents of the employer for which he would be liable as principal. Moreover, the liability of the employer would be greater than for his own employees since the employer acting in his capacity as principal would not have the benefit of the defence conferred by subsection (3).

The decision before the EAT

  1. The MoD appealed to the EAT. At that stage it was appreciated for the first time that there are in fact numerous cases which have concluded that common law agency principles are to be applied when construing section 32(2). The leading authority is Yearwood v Metropolitan Police Commissioner [2004] ICR 16560 (HH Judge McMullen QC presiding) and later courts have purported to follow it (although there was some dispute before us as to whether they have always in fact done so): see, e.g. May and Baker Ltd v Okerago [2010] IRLR 394 (HHJ Birtles presiding) and Bungay v Saini UEAT/0331/10/CEA; (2011) EqLR 1130 (Silber J presiding). Mr Reed, who did not appear before the Employment Tribunal but was representing the appellant on behalf of the Free Representation Unit, conceded in the light of this line of authority that the decision of the Employment Tribunal could not stand. That was a realistic concession in the circumstances. He sought to argue that even adopting the common law concept of agency, it would have been open to the Employment Tribunal to find an agency relationship and that accordingly the case should be remitted for that question to be determined afresh. However, the EAT rejected that submission and it has not been renewed on appeal. The basis of its analysis was that there was simply no evidence that either Sodexo or Ms Ausher were agents of the MoD. She was acting as an employee of Sodexo, not an agent of the MoD. The outcome of the appeal, therefore, was that the decision of the Employment Tribunal was set aside.

The grounds of appeal

  1. The appellant seeks to challenge the Yearwood line of authority. He submits that Parliament did not intend the concept of agency in section 32(2) to be limited to the common law notion and that the Employment Tribunal was right to apply a more general concept.
  1. Initially the MoD submitted that the appellant ought not to be permitted to argue this point because it involved re-opening the concession made to the EAT. But it seems highly likely that the concession was only ever to the effect that the law was clear and binding so far as the EAT was concerned. In any event the MoD was not prejudiced by the concession since the EAT would plainly have reached the same decision without it. Mr Purchase, counsel for the MoD, sensibly did not seek to press this argument at the hearing.

The grounds of appeal

  1. The appellant now seeks to reinstate the decision of the Employment Tribunal. Ms Romney QC, his counsel, submits that the Tribunal applied the right principles and that Yearwood should not be followed. Her argument had to some extent been foreshadowed by certain reservations which HH Judge Peter Clark QC expressed about the Yearwood decision when upholding the appeal in this case. He noted that in the case of Jones v Tower Boot [1997] IRLR 168 the Court of Appeal had concluded that the common law concept of vicarious liability should not be applied when determining the meaning of the phrase "in the course of employment" in section 32(1); rather the phrase should be construed in the layman's sense, as a question of fact. HH Judge Peter Clark noted that this case had not been cited to the court in Yearwood; and he implicitly raised the question whether section 32(2) might be construed in a similar way. More specifically, he was referred to the definition of agency in Bowstead and Reynolds which was adopted in Yearwood; he noted that it includes a requirement that the agent should have the power to affect the principal's legal relations with third parties. The judge commented "whether or not that is an appropriate prerequisite for the establishment of an agency relationship for the purposes of section 32(2) … is not for us to question in this appeal."
  1. Ms Romney has developed submissions based on these reservations. She submits that there is no justification for applying different tests in section 32(1) and 32(2). In Jones v Tower Boot the Court of Appeal eschewed a technical legal approach in favour of a purposive approach when applying section 32(1) and we should do the same when applying section 32(2).
  1. In Jones a young employee was subjected to a campaign of physical and verbal abuse on racial grounds. He resigned from his employment and made a claim for race discrimination. He succeeded before the Industrial Tribunal (as it was then called) but its decision was overturned in the EAT. That court held that section 32(1) had to be construed so as to give effect to common law principles of vicarious liability. At the time the conventional view was that an employer could only be liable for the acts of his employee if either he had authorised them or if they were a method, albeit an improper method, of doing an authorised act. Applying these principles, the EAT held that the employer was not liable. (The concept of vicarious liability has since undergone a sea change and much broader principles are now applied, as cases such as Lister v Hesley Hall [2002] 1 A.C. 215 and Various Appellants v Catholic Welfare Society
  1. The employee successfully appealed to the Court of Appeal. Waite LJ set out the principles which he thought should inform the construction of the phrase "in the course of employment" (261H):

"Two principles are, in my view, involved. The first is that a statute is to be construed according to its legislative purpose, with due regard to the result which it is the stated or presumed intention of Parliament to achieve and the means provided for achieving it ('the purposive construction'); and the second is that words in a statute are to be given their normal meaning according to general use in the English language unless the context indicates that such words have to be given a special or technical meaning as a term of art ('the linguistic construction')."

  1. As to the first principle, Waite LJ emphasised the particular justification for a purposive construction in discrimination cases, citing Templeman LJ (as he was) in Savjani v Inland Revenue Commissioners[1981] Q.B. 458, 466-467:

"The Act was brought in to remedy a very great evil. It is expressed in very wide terms, and I should be slow to find that the effect of something which is humiliatingly discriminatory in racial matters falls outside the ambit of the Act."

  1. As to the second principle, Waite LJ noted that there were a number of pointers in the section which suggested that the linguistic meaning advanced on behalf of the employee was to be preferred. For example, liability under the section could arise even if the employer had not approved the act, whereas the act itself had to be authorised for the principle of vicarious liability to apply; and there is the defence in section 32(3) which has no counterpart at common law. This limits the potential liability for the conscientious employer who has taken all reasonably practicable steps to try to eradicate racially discriminatory conduct. In addition, Waite LJ noted that if the common law concept were adopted, it would have anomalous consequences: the more heinous the discriminatory act, the less likely it is that the employer would be liable for it. This could not, he thought, have been Parliament's intention.
  1. Ms Romney, in a tenacious argument, has submitted that a similar principle should be adopted here. She says that there is no proper basis for adopting the legal concept of agency; it is capable of being given a more general meaning, and following the Tower Boot approach, that is what the court should do in order to give proper effect to the purposes of the Act. If this is not done, she submits that the appellant will fall outwith the protection of the Act altogether with respect to Ms Ausher's discriminatory act.
  1. Ms Romney suggested that the following would constitute a satisfactory definition of the agency relationship in a case such as this. It is a relationship, other than an employment relationship, where the agent is (1) subject to a degree of direction from the principal; (2) where there is a degree of integration with the principal's employees; and (3) where there is a degree of proximity between the agent and principal. On this analysis, the concept would include those regularly working with the principal's employees, but it would exclude contractors who are engaged to carry out a specific task, such as electricians or plumbers called to deal with a particular emergency.
  1. This analysis is far removed from Yearwood, but Ms Romney submits that the EAT adopted the wrong test and the court may well have adopted a different analysis if Tower Boot had been drawn to its attention.
  1. In Yearwood the court heard five unrelated appeals together in which the applicants had made allegations of race and sex discrimination against a number of Chief Constables. They were said to be liable for the actions of police officers who had allegedly committed discriminatory acts in the course of carrying out investigative and disciplinary functions. These officers had been chosen to undertake these tasks by the Chief Constables but they were acting under two sets of Police regulations which made it clear that the officers were exercising their powers personally. The purpose of the regulations was to remove these decisions from the Chief Constable. It was nonetheless alleged that the officers were in an agency relationship with their Chief Constable.
  1. The EAT held that they were not; they were exercising their powers in their own right. Since the chief officer could not perform the act, he could not delegate it to an agent. The only exception was a case where a complaint was made about a civilian employee where the regulations did not apply, and it was accepted that he could be an agent of the Chief Constable.
  1. In order to establish the existence of the agency relationship in this unusual context, the appellants suggested that a purposive construction should be adopted and that the concept of agency should be given its every day meaning which they alleged was "a person who acts on behalf of another person with their authority." It would be a question of fact whether this test was satisfied. This was described by the court as "agency in general terms" rather than agency at common law. The argument was in fact analogous to that advanced by the appellants in Tower Boot, albeit that the case was not directly relied upon.
  1. The EAT rejected this submission. It first considered the legal definition of agency, citing copiously from Bowstead and Reynolds, and then explained why it considered that Parliament must have intended to adopt this definition in section 32(2):

"36. The authors [of Bowstead and Reynolds] recognise that there are limits on the above definition, for they say as follows (at 1-003):

"The word "agency", to a common lawyer, refers in general to a branch of the law under which one person, the agent, may directly affect the legal relations of another person, the principal, as regards yet other persons, called third parties, by acts which the agent is said to have the principal's authority to perform on his behalf and which when done are in some respects treated as the principal's acts."

  1. The justification for the agent's power is a unilateral manifestation by the principal of his or her willingness to have their legal position changed by the actions of an agent. The result of this manifestation is that the agent has the power to affect the principal's legal relations. The authors also deal with the meaning of "agent" in the abstract, for they say as follows (at 1-022)

"And where the term agent is used in a statute or formal document, it has been said that it may be presumed that the word is used in this, its proper legal connotation, unless there are strong contrary indications."

  1. An important incident of the relationship is that an agent may be appointed to do any act on behalf of the principal, which the principal might do himself or herself: paragraph 2-017. A phenomenon of the common law of agency is that when the agent acts on behalf of a disclosed principal, the agent is not liable to the third party, nor can the third party sue the agent upon it. Yet in the field of discrimination, both are liable by statute.
  1. It is next appropriate to consider the application of those principles to the two statutes. In our judgment, the use of the term "principal" and "agent" in these statutes connotes the description of the agency relationship described above. The only change from the common law position is, as we have indicated, that both the principal and the agent are liable in discrimination. Otherwise we see no justification for a departure from the established and well understood context in which the term "agent" is used. It is a far more reliable proposition than the unspecific recruitment of ordinary language asserted on behalf of the Applicants. We are attempting to apply a statute which invokes a legal context in which the actors are instantly recognisable as principal and agent, and in which their relationship to each other and to the third parties are defined by long established doctrine. By invoking those terms, there is no need for a lengthy exposition of what Parliament intended to achieve. On the contrary, if a more general expression were used, it would require a more general definition to be given."
  1. In fact the EAT was wrong to say that an agent is not liable at common law for the torts he commits; he is, and as I have indicated above (para 11) so in all likelihood is the principal where the tort is sufficiently linked to the scope of the agent's authority. So in fact section 32(2) does not involve a significant departure - if a departure at all - from established principles. But this error does not undermine the EAT's reasoning; indeed, it confirms and reinforces its conclusion that Parliament must have intended to adopt the common law concept of agency.
  1. I would respectfully agree with the conclusion of the EAT in Yearwood that on the facts of those cases there was no agency relationship between the Chief Constable and the disciplining and investigating officers. But I do not think that this conclusion turned on the particular concept of agency employed. The result would, in my view, have been the same even if the appellants' concept had been adopted. The officers were independently exercising an authority conferred by the regulations. The Chief Constable chose them for the task but he was not thereafter the source of their authority. It could not sensibly be inferred, in the face of the regulations, that the disciplining officers were exercising their powers by virtue of any authority conferred by the Chief Constable. No implied authority from the Chief Constable was needed to explain why they had the power they did.

Discussion

  1. We are concerned with the construction of a statute. The aim must be to give effect to Parliament's intentions as evidenced by the language of the provision having regard to the statutory and social context. I do not find it helpful to talk in the abstract about the need to adopt a purposive construction. It is not permissible to expand the meaning of a statutory concept beyond its legitimate reach because it is thought that the broad objective of the statute would be better effected thereby. The point was put with characteristic clarity by Peter Gibson LJ in another case involving the potential liability of a Chief Constable for the acts of his officers, Bedfordshire Police v Liversidge. One of the arguments in that case was that a purposive construction of, inter alia, section 32 should be adopted to achieve that objective; and Tower Boot was cited to support that proposition. His Lordship said this (para 39):

"I have no difficulty in accepting that a statute like the 1976 Act should be construed purposively, provided that it is understood what that properly means. The function of the court in construing a statute is to give effect to the intention of Parliament. Normally that involves ascertaining the intention from the words used in the Act. It is often easy to say what the general thrust of legislation is. Discrimination Acts are intended to deter and combat discrimination. But it is important not to lose sight of the fact that such Acts are not intended to be completely comprehensive, in the sense of making all discrimination unlawful. Thus, the 1975 Act preamble states that it is an Act to render unlawful certain kinds of sex discrimination. Provisions within Discrimination Acts often contain limitations and conditions, and it is impermissible to rely on the general purpose of the Act to construe the Act in a way that eliminates those qualifications, even though so to eliminate the qualifications would leave the Acts with a wider reach. What a purposive construction does allow the court to do is to construe a provision which permits of two possible meanings in a way which gives effect to the identified purpose. The Jones case is a good example of that. Often it will be difficult to find a clear indication of the purpose of a specific provision."

  1. Like Peter Gibson LJ, I readily accept that a broader rather than a narrower meaning should be adopted where two constructions are equally plausible and the broader meaning better achieves the statutory purpose. As he said, that was the approach of the court in the Tower Boot case. But I do not consider that Tower Boot provides any further assistance in seeking to determine the proper meaning of section 32(2). The particular features which enabled the court to adopt a non-technical approach in that case are not present here. Moreover, Tower Boot was concerned with the question for what acts the employer should be liable, whereas here the issue is for whose acts the employer should be liable.
  1. The question is whether there are genuinely competing constructions of the concept of agency properly available to the court. Mr Purchase submitted that Yearwood was plainly right and no other general concept of agency could have been intended, essentially for the reasons given by HH Judge McMullen QC. Section 32(2) uses terms which the law employs when defining the scope of common law agency; there is no readily available, consistently understood broader meaning in the public domain which Parliament can reasonably be taken to have intended. Furthermore, none of the subsequent discrimination legislation, including the Equality Act itself, has sought to reformulate the principle in the light of the case law. Tower Boot was different because the phrase "in the course of employment" was an everyday term, and in any event section 32(1) does not strictly apply principles of vicarious liability at all.
  1. I am not sure how significant are the differences between the two concepts of agency advanced by the parties in Yearwood. The concept of agency at common law is not one which can be readily encapsulated in a simple definition. As the editors of Bowstead and Reynolds point out, "no-one has the correct use of this or any term". Moreover, HH Judge Peter Clark appears to have had reservations about the requirement, considered to be an essential part of the definition by the EAT in Yearwood, that an agent must have power to affect the principal's legal relations with third parties. In fact the authors of Bowstead and Reynolds (see para 1-04) recognise that someone might quite properly be described as an agent even where this feature is missing. An example is someone who merely introduces or canvasses custom on behalf of the principal without in fact having the power to bind the principal contractually. An estate agent is a typical example. This is not, therefore, an essential element in a common law definition of agency.
  1. Even in the so-called "general concept of agency" advanced in Yearwood, it would be necessary to show that a person (the agent) is acting on behalf of another (the principal) and with that principal's authority. Once it is recognised that the legal concept does not necessarily involve an obligation to affect the legal relations with third parties, I doubt whether the concepts are materially different.
  1. But ultimately it is not necessary for the purposes of appeal to resolve that question. Whatever the precise scope of the legal concept of agency, and whatever difficulties there may be of applying it in marginal cases, I am satisfied that no question of agency arises in this case. In my view, it cannot be appropriate to describe as an agent someone who is employed by a contractor simply on the grounds that he or she performs work for the benefit of a third party employer. She is no more acting on behalf of the employer than his own employees are, and they would not typically be treated as agents. (That is not, of course, to say that employees can never be agents; they might well be, depending upon the obligations cast upon them, such as where a senior manager is authorised to contract with third parties. He will be an employee but will also act as an agent when exercising the authority to deal with third parties.)
  1. In my judgment, Ms Ausher's contract with Sodexo is the source of any authority she has to make decisions relating to the butcher's department in the Mess. It may be, as Ms Romney asserts, that ultimately the MoD would have the right to veto her presence, at least for good reason. But that limited degree of control comes nowhere near constituting an authorisation by the MoD to allow Ms Ausher to act on its behalf with respect to third parties.
  1. Indeed, there is some authority for the proposition that "a man cannot be the servant of A and the agent of B in performing the same piece of work. He is either the servant of A or the servant of B": per Lord Goddard CJ in Sykes v Millington [1953] 1 QB 770,775. Arden LJ tentatively approved that dictum in Interlink Express Parcels Ltd v Night Trunkers Ltd [2001] EWCA Civ 360; [2001] R.T.R. 38. However, in Man Nutzfahrzeuge AG v Ernst and Young [2005] EWHC 2347 (Comm) para. 99 Moore Bick LJ, sitting as a judge in the Commercial Court, expressed the view that whilst that principle might hold in the particular statutory context in which the point arose (concerning the licensing of road haulage vehicles), there was in principle no reason why an employee of A could not be an agent of B, even in relation to the same transaction. In that case company A was seeking to sell company B which it owned, and it asked the financial controller of company B to explain the accounts to the potential purchaser in the course of negotiating the sale. He made fraudulent misrepresentations and the judge held that in so doing he was acting as the agent of company A, notwithstanding that he was employed by B, and so company A was potentially vicariously liable for his actions.
  1. I would respectfully agree that the fact that someone is employed by A would not automatically prevent him from being an agent of B, and I would not discount the possibility that the two relationships can co-exist even in relation to the same transaction. But in my judgment there would, particularly in the latter case, need to be very cogent evidence to show that the duties which an employee was obliged to do as the employee of A were also being performed as an agent of B. It is in general difficult to see why B would either want or need to enter into the agency relationship. That is so whichever concept of agency is employed. There is a complete lack of such cogent evidence here.
  1. In my judgment, therefore, the argument of Ms Romney is unsustainable. Indeed, unlike the appellants in Yearwood, who at least asserted a concept of agency which recognised the need for the agent to be authorised to act on behalf of the principal, she relies upon the concept of an agency relationship involving three criteria or characteristics which does not focus on the concept of authority as such at all. In my view, these criteria fail to reflect the statutory language. Her concept has the merit of sustaining her case, but I see no conceivable warrant in the language of the section for adopting it. Ms Ausher may be said in a general sense to be working for the benefit of the MoD, but she is in not acting on its behalf. She is not, as it were, standing in the shoes of the MoD in relation to independent third parties.
  1. Furthermore, I do not see how the three characteristics on which Ms Romney relies have any bearing on the question whether she is an agent. There is no obvious reason, for example, why authority should be implied only where the contract worker is integrated into the employer's own workforce. Why should that impact upon her relationship with the MoD? Nor do I see why the implication of authority should depend upon the fact that some direction over her activities is exercised by MoD staff. On the contrary, the fact that she is subject to the employer's delegated authority would suggest that she can not sensibly be said to have been authorised to act on his behalf. Finally, I find no assistance in the criterion that there must be a degree of proximity between principal and agent. There always will be by the very nature of the relationship.
  1. For these reasons, therefore, this appeal must fail. Whatever the precise scope of the agency concept in section 32 - and in my view it must at least reflect the essence of the legal concept - Ms Ausher does not fall within it. Accordingly, the MoD cannot be liable for her act of discrimination.
  1. In reaching this conclusion I fully recognise the force of what, in policy terms at least, was Ms Romney's most powerful argument. If the appellant cannot bring a claim against the MoD, there is a real risk that he has no remedy at all for Ms Ausher's discriminatory act. Sodexo is not liable because although they would in principle be responsible under section 32(1) for her acts, the appellant could only bring proceedings if he were in their employment, and he does not fall even within the wide definition of that term adopted for the purposes of the Act. So he can bring no proceedings against them.
  1. The result is that because of the different sets of rules relating to contract workers and employees, the appellant falls in a gap in the statutory protection. Section 7 confers rights upon contract workers like Ms Ausher to bring a claim against the employer for whose ultimate benefit they provide services (the MoD here) but the Act does not impose liabilities on that person for the acts of the contract worker. Parliament may wish to consider this lacuna, although if it provides a remedy, it will have to decide whether it is the immediate employer rather than the end user of the services who should bear the legal responsibility.
  1. It is not in fact entirely clear that the appellant would in principle have been without a remedy (leaving aside any jurisdictional problems which might have arisen due to the fact that the incident occurred in the Falklands). There is one claim which the appellant could possibly have brought. Under Part 3 of the Act, someone providing services to the public or a section of the public owes duties to the recipients of those services not to discriminate in various ways. It may be - I put it no higher than that, and we heard no argument about it - that the services provided by Sodexo could fall into that category. If so, the appellant would have a remedy for the discriminatory act, albeit in the county court rather than the employment tribunal.
  1. But even if he has no remedy, that is not in my judgment a legitimate reason for distorting the language of section 32(2) to provide one. It is also necessary to bear in mind that any extension of the principles of agency will not only impact on claims brought in the work context under Part 2 of the Act, but also to claims brought in the other areas where the Act imposes liability for discriminatory acts.
  1. I would therefore dismiss this ground of appeal.

The second issue: compensation for injured feelings

  1. I turn to the second issue. The Employment Tribunal held that the compensation for injury to feelings should be £12,000. The EAT upheld the MoD's contention that this was outside the legitimate band open to the Tribunal and substituted a figure of £6,000. The appellant contends that the Employment Tribunal did not misdirect itself in law and that the EAT failed to pay due regard to the fact that the Tribunal is best placed to determine the effect of the discriminatory act on the employee.
  1. The starting point for determining compensation for injured feelings in discrimination cases is the judgment of the Court of Appeal in Vento v Chief Constable of West Yorkshire Police [2003] ICR 318. Mummery LJ laid down the following general guidance (paras 65-66):

"Employment Tribunals and those who practise in them might find it helpful if this Court were to identify three broad bands of compensation for injury to feelings, as distinct from compensation for psychiatric or similar personal injury:

i) The top band should normally be between £15,000 and £25,000. Sums in this range should be awarded in the most serious cases, such as where there has been a lengthy campaign of discriminatory harassment on the ground of sex or race. This case falls within that band. Only in the most exceptional case should an award of compensation for injury to feelings exceed £25,000.

ii) The middle band of between £5,000 and £15,000 should be used for serious cases, which do not merit an award in the highest band.

iii) Awards of between £500 and £5,000 are appropriate for less serious cases, such as where the act of discrimination is an isolated or one off occurrence. In general, awards of less than £500 are to be avoided altogether, as they risk being regarded as so low as not to be a proper recognition of injury to feelings.

There is, of course, within each band considerable flexibility, allowing tribunals to fix what is considered to be fair, reasonable and just compensation in the particular circumstances of the case."

The figures have been updated to reflect inflation: Da'Bell v NSPCC [2010] IRLR 19. The middle band is now £6,000 to £18,000. So the Tribunal placed the award in the middle of the middle band and the EAT at the top of the lower band.

  1. These are not rigid rules as Mummery LJ emphasised, and they allow for flexibility. But they are designed to ensure a measure of consistency and fairness in the way in which tribunals approach their task. Tribunals must remember that the aim is to compensate for genuinely injured feelings, not to punish an employer for bad management or poor personnel practice. The amounts were stipulated having regard to the compensation typically awarded for non-pecuniary loss in other fields, such as general damages in personal injury cases.
  1. In this case the MoD has always admitted that the comment was made and that it constituted direct discrimination. Indeed there was some sort of apology by the sergeant at the time. Nonetheless, the Employment Tribunal considered that this was a serious act of discrimination which fell within the middle of the second band in Vento. It summarised its reasons for reaching that conclusion (paras 38-40):

"38. Not only was Sgt Simmons someone to whom the appellant reported in a normal line managerial sense, he was of course a superior officer to him in a military sense and was entitled to issue the appellant with orders which the appellant was constrained to obey. With such a position of authority, there came with it a high degree of responsibility on the part of Sgt Simmons for the wellbeing of the appellant and a responsibility to ensure that he was not subjected to less favourable treatment on the grounds of his race. The words used by Sgt Simmons undoubtedly caused the appellant considerable distress and, although for understandable reasons he indicated that he did not wish to take the matter further whilst in the Falkland Islands, the fact that he pursued it later showed that the injury to his feelings were continuing following his return to the United Kingdom.

  1. The middle band for compensation under the Vento guidelines, now between £6,000 to £18,000 is to be used for serious cases, but not so serious as to merit an award in the highest band. This was, in the Tribunal's judgment, a serious case and not one which could properly fall within the concept of less serious cases covered by the lower band of £500 to £6,000.
  1. Although Sgt Simmons did express apology for his actions including one in the presence of the appellant, the Tribunal accepts the appellant's evidence that the apology did not seem to be as remorseful as it could have been and, of course, it only came about following the intervention of Captain Lindsay."
  1. The Tribunal added that Captain Lindsay did not take appropriate action to investigate the allegations properly, and that this would have exacerbated the injury to feelings. Ms Romney has added in the mix the observation that a full and complete apology from the MoD was only given at the Employment Tribunal itself, after the appellant had given evidence.
  1. The EAT properly directed itself that it could only interfere if the award was manifestly excessive or wrong in principle. Both the judge and the lay members, all of whom are very experienced members of the court, thought that it was. They had regard to other awards drawn to their attention in a range of cases. HH Judge Clark considered that the figure stipulated "would be appropriate for a course of discriminatory conduct" but was too much for a one-off comment.
  1. In my judgment, the EAT was right to say that the award given by the Tribunal was manifestly excessive. It is important that awards should not be too low, thereby trivialising the harm; but it is equally important that they should not be too high, since that risks creating the impression that victims of discrimination are over-compensated and being given unfairly generous treatment when compared with victims of personal injury, for example.
  1. This was not a discriminatory act resulting in dismissal or refusing a job application. It was an offensive comment. I see no justification for a one-off incident of this nature being placed within the middle category. There were some aggravating features identified by the Employment Tribunal (but also some mitigating ones), but in my view the EAT gave ample credit for those when placing the figure at the top of the lower band. In cases of this kind, where the proper and consistent application of the guidelines is important, the EAT is particularly well placed, with its overview of a range of cases, to ensure that the objectives of consistency and fairness are properly maintained.
  1. I would therefore dismiss this ground of appeal also.

Lord Justice Lewison:

  1. I agree and add some observations on the first of the two points argued on this appeal.
  1. At common law an agent is liable in tort for any tort that he personally commits. The principle is stated in Halsbury's Laws of England 5th ed vol 1 para 164 as follows:

"Any agent, including a public agent, who commits a wrongful act in the course of his employment, is personally liable to any third person who suffers loss or damage thereby, notwithstanding that the act was expressly authorised or ratified by the principal, unless it was thereby deprived of its wrongful character."

  1. If the wrongful act is expressly authorised by the principal then the principal is also liable: Ibid para 150. But the principal may also be liable even if he has not expressly authorised the wrongful act. Halsbury explains at para 151:

"Where the act complained of is not expressly authorised by the principal, the principal is, while the agent is acting within the scope of his implied authority or within the scope of his apparent or ostensible authority, jointly and severally responsible with the agent, however improper or imperfect the manner in which the authority is carried out. It is immaterial that actual malice is an essential ingredient of the wrongful act, that the wrongful act is also a crime, or that the act in question has been expressly prohibited by the principal.

Where the act done by the agent falls entirely outside the scope of his authority, the principal will not be responsible."

  1. By contrast, as a general rule a person is not responsible at common law for torts committed by his independent contractor or his independent contractor's employees. There may be cases, involving what are called non-delegable duties, where there is an apparent exception to the rule. I say "apparent" because in reality the person who has engaged the independent contractor is answerable for his own breach of duty, rather than for someone else's: Woodland v Essex County Council [2013] UKSC 66; [2013] 3 WLR 1227.
  1. There are also other cases in which a person is responsible at common law for torts committed by one who is not his employee. However, the technique that the common law employed was to inquire whether the relationship between the person who committed the tort and the person sought to be made liable was sufficiently akin to an employment relationship as to make it just for liability to be shifted from (or shared with) the tortfeasor to that other person. At the time when the Race Relations Act was passed the leading authority on that topic was the decision of the House of Lords in Mersey Docks & Harbour Board v Coggins & Griffiths (Liverpool) Ltd [1947] AC 1. The test laid down by that case has subsequently been described as "so stringent as to render a transfer of vicarious liability almost impossible in practice." See Various Appellants v Catholic Child Welfare Society ; [2013] 2 AC 1 at [37]. Since then it has been relaxed. But the relaxation has not been accomplished through the means of agency. It has been accomplished by an expansion of vicarious liability to cases in which the relationship in question was sufficiently analogous to an employment relationship as to make it just to impose liability. The test approved by the Supreme Court in the Catholic Child Welfare Society case was whether there was:

"a situation where the employee in question, at any rate for relevant purposes, is so much a part of the work, business or organisation of both employers that it is just to make both employers answer for his negligence."

  1. However, that is the common law. We are concerned with the interpretation of an Act of Parliament which, at least as regards the liability of an employer for the torts of an employee has chosen not to mirror the common law. That much is clear from the decision of this court in Jones v Tower Boot Co Ltd [1997] ICR 254.
  1. Section 32 of the Race Relations Act 1976 provides:

"(1) 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.

(2) Anything done by a person as agent for another person with the authority (whether express or implied, and whether precedent or subsequent) of that other person shall be treated for the purposes of this Act (except as regards offences thereunder) as done by that other person as well as by him.

(3) In proceedings brought under this Act against any person in respect of an act alleged to have been done by an employee of his it shall be a defence for that person to prove that he took such steps as were reasonably practicable to prevent the employee from doing that act, or from doing in the course of his employment acts of that description."

  1. The expression "employment" is defined by section 78 (1):

""employment" means employment under a contract of service or of apprenticeship or a contract personally to execute any work or labour, and related expressions shall be construed accordingly."

  1. It is at once apparent that this definition is wider than the common law definition of what amounts to a contract of employment. Moreover, section 32 (3) of the Act provides an employer with a defence that would not be available to him at common law. So the development of the common law of vicarious liability in situations analogous to employment does not affect the correct interpretation of sections 32(1) or (3). Moreover, since those developments have not been made by developing the law of agency, I reject the argument that they bear on the correct interpretation of section 32(2).
  1. Under section 32(2) Parliament has chosen to attribute liability by reference to well established legal concepts. It must, therefore, be taken to have intended those legal concepts to be interpreted in accordance with ordinary legal parlance. This was the conclusion of the EAT in Yearwood v Commissioner of Police of the Metropolis [2004] ICR 1660. I agree with it and the many cases that have followed it in the EAT. There is, however, in my judgment one error in the reasoning. At [38] the EAT said that it was a "phenomenon of the common law of agency … that when the agent acts on behalf of a disclosed principal, the agent is not liable to the third party, nor can the third party sue the agent upon it." If that observation is restricted to liability in contract it may well be correct. But in that event it is irrelevant to the question whether the imposition by section 32(2) of liability for a statutory tort was intended to mirror the common law. But if it was intended as a more general proposition encompassing an agent's liability in tort, then it is wrong. However, if there is an error, then correction of that error strengthens rather than weakens the argument that section 32(2) uses its terminology in the same way as that terminology would be understood in the common law of agency.
  1. The final point is this. The test that Ms Romney QC eventually proposed was that section 32(2) would apply to a relationship (other than an employment relationship) such that:

i) There was a degree of direction by the putative principal;

ii) There was a degree of integration with the principal's employees and

iii) There was a degree of proximity.

  1. She said that what degree is sufficient under each of these heads is a question of fact and degree for the fact finding tribunal. In the first place this seems to me to be rewriting, rather that interpreting the statute. Second, Ms Romney disclaimed the submission that the court could simply do what appeared to it to be just and fair (whereas that is exactly what the court has done in making incremental enlargements to the scope of vicarious liability at common law). Third, the ET was never asked these questions and thus never gave answers to them. So the necessary factual findings to support the argument are not found in the decision.

Lord Justice Kitchin:

  1. I agree with both judgments.

Published: 12/02/2014 18:32

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