The claimant had won her claims of unfair dismissal and race discrimination and despite being awarded a 6 figure compensation package, appealed against the remedy judgment. Her first complaint was in relation to the calculation of future loss, which the ET had calculated as 1 year from the date of the hearing, concluding that her qualifications, experience, knowledge and the size of her former employer, the NHS, meant that she would more likely than not secure a position within the NHS at a level at least equivalent to that which she enjoyed before she was unfairly dismissed. The ET rejected her claim for exemplary damages, saying that it was not satisfied that the compensation for loss of earnings and injury to feelings did not represent adequate compensation to the claimant. On the costs issue, the claimant claimed that the respondent had run a dishonest case. The ET disagreed, saying that it was not satisfied that one side had acted more vexatiously or unreasonably than the other.

On the loss of earnings issue the EAT rejected the grounds that; 1) the ET’s calculation of loss of future earnings was based on a number of factors which were irrelevant to the question it had to answer; 2) the ET was not entitled to use its knowledge of the local labour market; 3)  it did not pay proper regard to some of the material before it; and 4) it had not considered the question to which the claimant’s claim to have been blacklisted as a result of her Tribunal action could be regarded as justified. However, it agreed that the ET had erred by considering that exemplary damages were compensatory when in fact they were penal and could not say that this was necessarily a case in which exemplary damages may not be awarded. In terms of costs, the EAT concluded that the ET was best placed to evaluate whether the usual rules should apply or whether, exceptionally, cost should be awarded – there was no error.

____________________

Appeal No. UKEAT/0325/10/CEA

EMPLOYMENT APPEAL TRIBUNAL

58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

At the Tribunal

On 14 December 2010

Before

THE HONOURABLE MR JUSTICE LANGSTAFF

MR K EDMONDSON JP

MR I EZEKIEL

DR S SAIGER (APPELLANT)

NORTH CUMBRIA ACUTE HOSPITALS NHS TRUST (RESPONDENT)

Transcript of Proceedings

JUDGMENT

For the Appellant
MR H MENON (of Counsel)

Instructed by:
Messrs Hewitts Solicitors
207 Newgate Street
Bishop Auckland
Co Durham
DL14 7EL

For the Respondent
MR A CHOUDHURY (of Counsel)

Instructed by:
Messrs Ward Hadaway Solicitors
Sandgate House
102 Quayside
Newcastle upon Tyne
Northumberland
NE1 3DX

RACE DISCRIMINATION – Other losses

UNFAIR DISMISSAL – Compensation

PRACTICE AND PROCEDURE - Costs

The Claimant's appeal against the assessment of future loss rejected.

The Employment Tribunal had not explained why it rejected the claim for exemplary damages in a case in which the facts could (possibly) have merited it, and had appeared to think such an award was compensatory rather than punitive.

An argument that having found the case a suitable one for the award of aggravated damages, a costs order in the Claimant's favour should follow, was rejected. The ET had a discretion whether to order costs or not and had not misdirected itself.

1. This appeal is concerned entirely with financial remedies. It arises as a result of a remedies hearing before the Newcastle upon Tyne Employment Tribunal on 1 March 2010, which was corrected in minor respects on 10 May 2010.

1. At an earlier liability hearing, concluded on 20 March 2009, the Employment Tribunal had found that the complaints made by the Claimant, that she had been unlawfully discriminated against on the grounds of race, were well founded in a number of respects. They found that she had been unfairly dismissed. Part of the reason for that was racial discrimination against her. Other complaints made by her were dismissed, and as will prove to be relevant when we come to deal with one of the heads of appeal, a number of claims made by her prior to the hearing were withdrawn, both as to substance and against 14 of the 15 Respondents whom she had originally named in her proceedings.

1. Three points are taken in respect of the conclusions of the Tribunal: (1) that the Tribunal was in error in its calculation of the future loss of earnings consequent upon the unfair dismissal; (2) that the Tribunal should have, but did not, make an award of exemplary damages; and (3) the Tribunal wrongly exercised its discretion as to costs by refusing to make a costs order when, on the facts of the case, it should have done so. These particular points need to be understood against the background of fact taken as a whole.

1. The Claimant was employed until 2 May 2008 when she was dismissed as an assistant director of nursing by the Defendant NHS Trust. She made a complaint initially that: (1) she was not provided with office space within which to do her work, whereas three white assistant directors of nursing were; (2) that subsequently those white assistant directors of Nursing Services were invited to act up as Director of Nursing Services. This was supposed to be done in rotation; it did not happen in her case. (3) She alleged that her immediate line manager from 2007 onward said to her that she did not fit in with the culture of the Trust and, indeed, (4) when she complained about that meeting, those in senior positions in the Trust including the Chief Executive had expressed concerns that she might "throw the race card", although their position adopted before the Tribunal was that they had not understood that there was any element of racial discrimination behind her complaints at all.

1. Next, no attempt was made to carry out an investigation into the allegations that she made. She was not invited to meet with external consultants as others, not of her race, were. (6) There was an allegation, which the Tribunal on balance accepted, that she had been physically assaulted by her line manager to the extent that there was bruising and swelling on her arm; an act which the Tribunal concluded was done by him to her because she had made allegations against him on racial grounds in the past. That having happened, however, (7) instead of the aggressor being subject to disciplinary proceedings, she - the victim - was.

1. She was off for a while on sick leave and thereafter was prevented by the Chief Executive from returning to work without, according to the Chief Executive, a return-to-work interview first being completed. The Tribunal was satisfied on the evidence before it that the reason was not that, but was that not long before then the Claimant had served further and better particulars of her various then claims which had included a number of allegations against the Respondent, both founded and unfounded, and a number of allegations which later the Tribunal was to appear to accept had been unsubstantiated, unwarranted, vitriolic and irrelevant to her claim, involving as they did in some cases, irrelevant allegations against senior personnel of sexual misconduct. They also contained matters which were not of that ilk, and the Tribunal formed the view that she had been discriminated against by victimisation for bringing those claims.

1. Finally, an incident occurred when, by reason again of discrimination against her, she was accompanied by police officers from her position at the Respondent's premises and was dismissed purportedly subject to her comments, but as the Tribunal found, as a charade because effectively her comments would have made no difference.

1. There has been no active appeal against those findings. A consequence plainly was that she left the Defendant's service on 2 May 2008. The remedies hearing took place on 19 January 2010.

1. By the time of the remedies hearing some 19 months after dismissal the Claimant had, remarkably perhaps, managed to obtain such work as meant that her loss of earnings throughout that period from dismissal until the remedies hearing came to only £1,744, which this Tribunal observed in the course of argument was a little less than an average of £100 per month.

1. Mr Menon, who appeared for her on this appeal as he did below, first wished to attack the findings made in respect of the future loss of earnings against that background. The losses as a whole were established by the Tribunal in the following figures:

(1) loss of earnings from the date of dismissal to the date of hearing: £1,744. That was an agreed figure;

(2) future loss of earnings being one year's net salary at the grade of Assistant Director of Nursing Services: £42,048. That is a net figure;

(3) future loss of earnings being the difference between the net salary of an assistant director of Nursing Services and a director of Nursing Services for the period of two years: £33,648.

(4) Interest on past loss of earnings: £103.

(5) Injury to feelings: £25,000 plus £5,000 by way of aggravated damages.

That, together with interest on the award in respect of injury to feelings, came to a grand total of £114,581. Mr Menon submits that the awards in respect of future loss of earnings, being the sums of £42,048 and £33,648, a total therefore of £75,696, was simply too low.

1. The way in which the Tribunal dealt with those matters was as follows. First, it set out its findings having read the Claimant's witness statement and listened to her being cross-examined. The Respondent did not call evidence, but we have not been shown nor asked to look at any notes of evidence which the Tribunal may have made. We therefore accept the findings which the Tribunal made, insofar as they are findings of fact on their face, as justified by the evidence which they heard not just from the witness statement, but as a consequence of cross-examination.

1. The Claimant had, from the date of her dismissal, remained in almost continuous employment. She had been offered a permanent post in Hertfordshire, which we understand to have been at the level of Assistant Director of Nursing Services, but had not accepted it because of her family commitments in the north of England and due to the cost of relocation to the south of England. She had been shortlisted for a post in London with the South London and Maudesley NHS Foundation Trust, but again did not take up the offer of an interview for similar reasons.

1. Then the Tribunal said this in the central paragraphs of its reasons:

12 "The Tribunal had found in the Main Hearing that the Claimant was very well qualified, extremely ambitious and highly motivated. The Tribunal found that it was to her credit that she had managed to obtain almost continuous employment since the date of her dismissal up to or shortly before the remedies Hearing. The Tribunal was not persuaded by the Claimant's arguments that she would effectively find it impossible to obtain any kind of work from now up until her normal retirement age. Bearing in mind her age, qualifications, ambition and motivation the Tribunal was satisfied that it was more likely than not that the Claimant would obtain a position within the National Health Service at a level at least equivalent to that which she enjoyed before she was unfairly dismissed.

13 The Tribunal noted that the Claimant was to some extent tied to the north of England whilst her son remains of secondary school age. The Tribunal noted the Claimant's preference to remain in the north of England for family reasons. Taking all of these factors into account, the Tribunal (using its experience and knowledge of the local labour market) including the size of the National Health Service and the likely availability of positions suitable to the Claimant, found that the Claimant should be able to obtain employment by not later than 12 months from the date of this Hearing. The Tribunal considers it just and equitable to award the Claimant future loss of earnings at the rate of one year's net salary in the sum of £42,048.

14 The Claimant alleged that, had she not been unfairly dismissed, she would have continued in employment within the National Health Service and would have been promoted to the role of Director of Nursing Services. The Claimant accordingly claimed a loss equivalent to the increase in salary she would have enjoyed had she been promoted. Bearing in mind its previous comments about the Claimant's qualifications, ambition and drive, the Tribunal was satisfied that the Claimant would have obtained such a position at some time in the foreseeable future had she not been unfairly dismissed. The Tribunal considered that the extent to which the Claimant's prospect of promotion had been adversely affected by her treatment and unfair dismissal [sic]. The Tribunal was satisfied that the Claimant is still likely to obtain a Director of Nursing Services post at some time in the future. The Tribunal found that the Claimant would have been promoted once within the 12 year period up to the age of 55, when she would normally have retired. The Claimant now only has nine years in which to achieve that status. The Tribunal found that it would probably take two years longer for the Claimant to obtain such a post than it would have done had she not been unfairly dismissed. The Tribunal was satisfied that compensation should be awarded to the Claimant at the rate of two years difference between the net salary of an Assistant Director of Nursing Services and the net salary of a Director of Nursing Services. The parties' representatives agreed that this figure amounts to £33,648."

1. Since the grounds of appeal are relatively discrete, it is convenient to deal with the challenges made to this part of the decision now and deal with that which the Tribunal said in respect of the other two matters in dispute at a later stage in this judgment.

1. Mr Menon argues that the level of the award is so low as to be perverse. The decision is not sufficiently expressed for the Claimant to know why she has not succeeded on her claim, i.e. it is not, as he put it, "Meek-compliant", that being a reference to Meek v City of Birmingham District Council [1987] IRLR 250, and it is in error in any event.

1. He emphasised, however, that there was no challenge to the arithmetic. For our part, we observe that there was no specific challenge to the approach which the Tribunal took in the final sentence of paragraph 13, when it "considers it as just and equitable to award" future loss of earnings. We say that because there was here not just compensation for unfair dismissal to be determined, but also compensation for an act of race discrimination. The former is subject to section 123 of the Employment Rights Act 1996, the latter is subject to the provisions of section 56 of the Race Relations Act 1976.

1. If there are subtle differences in the approach, they arise from the wording in that for a complaint made under the 1976 Act, section 56 provides that:

56 "Remedies on complaint under s.54

(1) … a Tribunal shall make such of the following as it considers just and equitable –

…

(b) .. an order requiring the Respondent to pay to the complainant compensation of an amount corresponding to any damages he could have been ordered by a County Court … to pay if the complaint had fallen to be dealt with under section 57."

That, effectively, is damages on a tort basis.

1. Before dealing with the specific complaints that Mr Menon makes, we would make these general observations. First, when a Tribunal is concerned with future loss, it is concerned to establish what financially the Claimant has lost in consequence of the wrong which has been done her. Because those losses have yet to occur, they cannot be regarded as certain, nor indeed capable of being established on the balance of probabilities. They are estimates to be made as best can be made on the available material. The exercise is a predictive one. A Tribunal estimates as best it can, just as would a court, what the situation is likely to be in the future and the extent to which it is likely so to be. Thus it is conventional that a Tribunal in any issue of disputed future job pattern or promotion will, for instance, have regard not to the probability but to the chance of that occurring, that is the percentage chance if the matter is a matter of dispute. The choice is not between two alternatives, seeking to establish which on balance is more likely, thus awarding no future loss if the claimed job or promotion is less likely than not, but the full losses if it is more likely than not: it is as to what level at which to assess the chances, and of what job or promotion, whether above or below 50%. This is well established following, in particular, those cases which arose when pregnant servicewomen claimed compensation for discrimination on the grounds of sex against the Ministry of Defence, as to which there are a number of reports which we need not more closely identify for this purpose.

1. The point however expressed by the Tribunal is essentially one about which there are inevitably considerable uncertainties. It has to be the best estimate which the Tribunal can make. It has to factor into its conclusion a number of features. Dealing with compensation, in an endeavour to be precise as to the figure which results, a number of specific matters may need to be paid regard to. There may be considerable argument as to what they are and a penumbra of uncertainty around each of them. Thus, for instance, a Tribunal may not be able to say specifically what particular job a dismissed Claimant may yet be able to achieve, or where, or when she will do so, or if so, with what precise salary or with what precise perks.

1. Further, it may not be able to say, and almost certainly will not able to say with certainty, what the costs to the Claimant will be of accepting any such job. There may be travel expenses, there may be relocation expenses, there may be consequential expenses where family and friends need to be catered for. Every decision is necessarily likely to be specific to its circumstances.

1. The layers of detail, therefore, which apply to the calculation of compensation are many and various. A decision of a Tribunal which attempted to pay regard to each and every one of those factors in detail would almost inevitably miss one or other, or appear to give some too much weight. What matters in a calculation such as this, where precision cannot be guaranteed with pinpoint accuracy but what is required is a best estimate, is an overall assessment by a Tribunal. This has on occasions been called a broad-brush assessment. It is none the worse for that, provided that the essential elements of it are clear and provided that the Tribunal demonstrates that it has taken into account the principal matters which it has been required to have regard to by the parties in their arguments.

1. Thus helpfully, the Court of Appeal, for whom Elias LJ gave the judgment in the case of Chagger v Abbey National plc [2009] EWCA Civ 1202, said at paragraph 69:

69 "Should the financial loss be limited to the loss of remuneration with Abbey?

…

The task is to put the employee in the position he would have been in had there been no discrimination; that is not necessarily the same as asking what would have happened to the particular employment relationship had there been no discrimination. The reason is that the features of the labour market are not necessarily equivalent in the two cases. The fact that there has been a discriminatory dismissal means that the employee is on the labour market at a time and in circumstances which are not of his own choosing. It does not follow therefore that his prospects of obtaining a new job are the same as they would have been had he stayed at [the old employer]. For a start, it is generally easier to obtain employment from a current job than from the status of being unemployed. Further, it may be that the labour market is more difficult in one case compared with another. For example, jobs may be particularly difficult to obtain at the time of dismissal and yet by the time they become more plentiful, when in the usual course of events Mr Chagger might have been expected to have changed jobs had he remained with [the original employer], he will have been out of a job and out of the industry for such a period that potential employers will be reluctant to employ him. In addition, he may have been stigmatised by taking proceedings, and that may have some effect on his chances of obtaining future employment."

In conclusion, having had regard to such features:

97 "Determining the stigma loss

…

A Tribunal should take a sensible and robust approach to the question of compensation."

1. Similarly, though these words were said when considering the Tribunal's proper approach to the quantification of damages for injury to feelings, and that is a slightly different context from the one with which we are here concerned, it was said at paragraph 36 of the decision of the Employment Appeal Tribunal in Gbaja-Biamila v DHL International (UK) Limited and others [2000] ICR 730 EAT, that:

36 "C. The proper approach to quantification of damages for injury to feelings

An appellate court, when reviewing the quantification of compensation by an ET, should not act as it would when reviewing an award of damages by a jury. In contrast to a jury, the Tribunal is expected to give reasons and hence can be judged by those reasons – Skyrail Oceanic Ltd v Coleman [1981] ICR 864 at 872. That is not to say that the ET's sovereignty as to facts is here in question. Only, firstly, if a Tribunal's given reasons expressly indicate that it has adopted a wrong principle of assessment or, secondly, (that not appearing by reason of its either correctly stating the principles or stating none) where it has arrived at a figure at which no Tribunal properly directing itself by reference to the applicable principles could have arrived, will the assessment demonstrate an error of law, the only class of error which this Appeal Tribunal can correct. That second category may fairly be described as one where the award has been perverse, an award so high or low as to prompt in those aware of the relevant facts found and the applicable principles a reaction that the award was wholly erroneous, even outrageous … ."

1. What Mr Menon says is that when the Tribunal came to consider future loss in paragraphs 12 and 13, it directed itself wrongly by reference to a number of matters which were irrelevant to the question it had to consider.

1. Secondly, he maintains that the Tribunal was not entitled, as it claimed to do, to use its knowledge of the local labour market. Thirdly, the Tribunal did not pay proper regard to some of the material before it, such as the material which it had as to serious medical condition which the Claimant's son had developed and hence her need to remain in the north. Fourthly, it had not considered the question to which her claim to have been blacklisted as a result of her Tribunal action could be regarded as justified. That latter arose because she had accepted a permanent post in Manchester; she had held that post for six weeks and had then been dismissed. She maintained that when dismissed, she was told by the Chief Executive of her employer that this had some relationship to her Tribunal proceedings against these Respondents. That Trust denied those contentions completely, by email; she had taken no action against that employer on that basis. She maintained that it indicated the extent to which word went round, at least in the north of England, amongst potential employers in the NHS.

1. As to irrelevant matters, the argument that Mr Menon made was that the ambition and motivation of the Claimant should not be specific factors which the Tribunal took into account. They might be relevant if one was considering a question of mitigation of loss, but if one were satisfied that a Claimant had done sufficient to defeat any argument by the would-be employer that he or she had failed to mitigate loss, there was no further relevance to be had in "ambition" and "motivation".

1. Next, he argued that the Tribunal in paragraph 13 had relied upon knowledge of the local labour market although it appeared to have contemplated job opportunities which were wider than those in the locality. He argued that in mentioning knowledge of the local labour market, there was here private knowledge within the Tribunal which it was its duty to put to the Claimant if it was properly to discharge its function and to provide her with knowledge of those matters which might be held against her. For this contention, he relied upon the case of Potter v North Cumbria Acute Hospitals NHS Trust [2009] IRLR 900, a case about equal pay in which it was of central relevance to a central argument whether or not the NHS Agenda for Change represented a fundamental change of terms and conditions from those that applied under the Whitley Council predecessor provisions, so as to mean that any contract entered into under Agenda for Change was an entirely new contract rather than a variation of the original one. In its Reasons, the Tribunal in that case had mentioned the experience of one of its members of working within the NHS system under the Whitley Council and what was described as her firm view that the Agenda for Change was indeed such a fundamental change of terms and conditions. No reasons had been given for why it was that she had formed that view. Therefore, the parties had no opportunity of dealing with it. On appeal, it was made clear that the central principles were as set out in Hammington v Berker Sportscraft Ltd [1980] ICR 248 EAT which, as Mr Choudhury submitted, make it plain that a Tribunal is entitled to take into account as its background knowledge matters of which as an industrial jury it might be expected to have knowledge, but where there were specific complaints touching upon the specific facts, a specific case, they would of course naturally have to be put to the litigant.

1. Mr. Menon maintained that the size of the National Health Service was irrelevant. The likely availability of positions suitable to the Claimant was irrelevant, and he maintained that it was irrelevant to take into the account, as the Tribunal appeared to do, that the Claimant had been in almost constant employment since the date of her dismissal. That was irrelevant because the Tribunal had failed to qualify it by noting that all the jobs that she had had were agency posts except for that full-time appointment which lasted for six weeks in Manchester. The positions which she occupied were not positions in the National Health Service and could not be equated with the position from which the Claimant was dismissed.

1. He concluded on this point by arguing that the Tribunal had left the particular points we have mentioned unanswered and therefore the ET had not told the parties what the answer was. He reminded us that in ET Regulation 30(6), it is provided that:

30 "Orders, Judgments and Reasons

(6) Written reasons for a judgment shall include the following information:-

…

(c) findings of fact relevant to the issues which have been determined;

…

(e) how the relevant findings of fact and applicable law have been applied in order to determine the issues."

1. As to these points, we are satisfied that the answer which Mr Choudhury gives is to be preferred. He maintains that the task upon which the Tribunal was engaged was an assessment of future loss. The starting point is necessarily the salary as it would have been in the job which, as a result of the wrongs done to her, the Claimant may no longer occupy.

1. He posited four logical possibilities; we do not for ourselves necessarily accept that this constitutes the full range of possibilities, but they are a useful guide to thinking. The first is where the ET finds that the Claimant will never work again, in which case until the Claimant would have lost the original job by retirement, redundancy, termination or whatever, the loss will be a complete and continuing loss at the rate at which the Claimant enjoyed salary at the date of her dismissal. Secondly, it is possible that the Claimant may never work again at the same level. That contemplates that the Claimant will work at some lesser level in respect of which a lesser level of income will be forthcoming. The loss is the difference between the earnings as would have been and the earnings as are and will be. Thirdly, that the Claimant will work again at the same level but will take some time to achieve that level. Here, the Tribunal must make an assessment of the amount which it is appropriate to pay in compensation for the Claimant during the period that she may be working, but not working at the same level of remuneration as she would have been had she kept her original post. In Chagger Abbey National at paragraph 72, on the facts of that case the Court of Appeal said:

72. "Should the financial loss be limited to the loss of remuneration with Abbey?

…

… the proper assessment of loss is therefore to be determined by asking when [the Claimant] might expect to obtain another job on an equivalent salary to his [old] salary. His loss is fixed by that period."

That is not, in our view, to be taken as meaning that to obtain such equivalence requires payment of a sum equal to the full loss of earnings for that period at the old rate, but merely that once that period has passed, there can be no claim for continuing loss because by definition the Claimant is back in employment at the same level. This, too, of course has to be qualified where the Claimant would have had prospects of promotion which have been denied her as a result of the dismissal, in which case the new job on an "equivalent" salary to the old job is one in which the equivalent salary is that which would have been paid for the promoted post. Those observations, by way of qualification to what was appropriate upon the facts of Chagger, demonstrate, if demonstration be needed, the complications there are in assessing future loss, which advisedly make it an assessment which needs to be expressed sufficiently fully, though no more than that and in relatively broad-brush terms.

1. The fourth possibility that he posited was that the Claimant might already at the date of the hearing for remedies be working at a level at least as high, if not higher, in terms of remuneration than that she occupied with the Respondent. In such a case, there is no future loss. We would qualify that by observing save as to any lost prospects of promotion. All these matters are of course necessarily dependent on findings of fact.

1. He observes against that background that the Tribunal was right to take into account first of all the track record of the Claimant since dismissal. An employment record is a useful, and it may be the best, guide as to that which a particular employee is likely to be able to achieve in terms of remuneration in the labour market of the future. That track record here demonstrated that with her qualifications, her experience and the way in which she presented herself, she had proved capable of obtaining the offer of a permanent post and had been shortlisted, no doubt against other competitors, for another senior post. Mr Choudhury pointed to the Claimant's contentions expressed in the skeleton argument of Mr Menon that there had been some 11 posts on offer in the north of England in the NHS since her dismissal. There were thus job opportunities which were likely to occur, if the past was any guide – and it was the best the Tribunal had.

1. Taking that track record of the Claimant and in the light of those facts, if they be accepted as facts, it might be thought that there were opportunities available to the Claimant, and it was in this light that the size of the National Health Service was relevant. It is known to be a very large employer. That is relevant because of the number of job opportunities in various respects to which it then gives rise. It is axiomatic that a large employer, particularly one which is, if not the largest, one of the largest in western Europe, is likely to have many more job opportunities at every level than is a very small employer.

1. He argued that the qualifications of the Claimant were relevant. We agree. A potential employee with good qualifications, here a doctorate, would be likely to succeed in competition for the highest posts to a greater extent than those without such qualifications. Motivation is important in driving an individual both for a job and within the job with a view to promotion. In short, it is not for us to make a determination, but the factors to which the Tribunal had regard do not seem to us to be in the least irrelevant. We would have been surprised if the Tribunal had not had regard to track record, qualifications, personality and the state of the market.

1. Mention of the state of the market brings us to the particular objection made about the Tribunal's using experience and knowledge of the local labour market. What the Tribunal said it had done reflects wording which anticipates that that is exactly what a Tribunal should in general do. In Bentwood Brothers (Manchester) Ltd v Shepherd [2003] ICR 1000 CA, EWCA Civ 380, Gibson LJ commented that the courts would:

11 "(1) Pension Loss

…

… interfere with such assessments [of compensation by an ET] with reluctance, given that the Tribunal as the industrial jury can be expected to make broad brush assessments which reflect the Tribunal's local knowledge and experience."

Although the sentence itself has infelicities linguistically, what it means is entirely clear. The Tribunal took into account the facts it has singled out as in particular driving it to a conclusion as to the period within which the Tribunal thought it likely that the Claimant would become employed again within the National Health Service. It had already said in paragraph 12 that it was more likely than not that she would do so at a level "at least equivalent" to that which she had had up until which she was dismissed.

1. The Tribunal therefore focussed upon the National Health Service and positions within that service. In the context of this particular case, we cannot conclude that the Tribunal were wrong to do so. It might have had regard to other opportunities available in other walks of life to someone so highly qualified and motivated as was the Claimant. If it had, then it might have concluded less generously toward her, just as they might have concluded less generously toward her had they intended the calculation of one year's net salary indeed to reflect her actually being out of senior work for a year for they did not specifically consider what earnings she might have had during that period to offset the prima facie loss. These are points to which the Tribunal could have but did not have to pay regard. Its job was to assess a fair sum to represent as best it could what it really thought that the loss would be, bearing in mind all the necessary uncertainties that surrounded it.

1. As to the issue of blacklisting, it is true that the Tribunal might have addressed the claim made by the Claimant, but did not do so. First, the decision it came to was in our view clear as to the basis upon which it thought the best estimate was that the Claimant's career would progress. It plainly did not have accept an argument made by the employer that as a result of her dismissal from the Manchester post, loss then stopped and did not run thereafter, such that compensation should be time-limited until her dismissal from that post, and there would be no future loss at all. More significantly in paragraph 97 of Chagger, to which we have already made some reference, the Court of Appeal made it plain that:

97 "Determining the stigma loss

…

… it would be wrong for [a Tribunal] to infer that the employee will in future suffer from widespread stigma [for which we would observe blacklisting is effectively a synonym] simply from his assertion to that effect, or because he is suspicious that this might be the case. If he is unwilling to make good his suspicions by taking proceedings against the alleged wrongdoing employers – notwithstanding that it may be understandable why he is reluctant to do so – he cannot expect the Tribunal to put much weight on what is little more than conjecture. This is particularly so given that it will in practice be impossible for the employer effectively to counter that evidence."

We do not think that the Tribunal was here obliged to deal with the blacklisting allegation, as to which those remarks are apposite.

1. The Tribunal dealt with a claim for exemplary damages as well as aggravated and compensatory future loss, and rejected it in these terms at paragraphs 19 and 20:

19 "The Tribunal was not persuaded by Mr Menon's submissions on behalf of the Claimant that a further award should be made in respect of exemplary damages. The Tribunal was not satisfied that the compensation set out above for loss of earnings and injury to feelings did not represent adequate compensation to the Claimant.

20 Considering all of the authorities to which it was referred the Tribunal found that this was not a case where an award of exemplary damages was appropriate or necessary."

Mr Menon argued that that was wrong in principle because it appeared to suggest that exemplary damages were compensatory. They are not.

1. Exemplary damages are recognised as potentially available in cases where there has been oppressive, arbitrary or unconstitutional action or it may be outrageous use of executive power by the servants of government, see Devlin LJ in Rookes v Barnard [1964] AC 1129 at 1223. The damages are thus assessed on a basis which is designed to punish the wrongdoer; they are not designed to compensate the victim.

1. The relationship between exemplary damages and compensatory damages is expressed in more than one case, but it is appropriate here to go to the case of Kuddas (AP) v Chief Constable of Leicestershire Constabulary [2001] UKHL 29, in which Slynn LJ in his speech quoted with approval that which Devlin LJ had said in Rookes:

6 "'In a case in which exemplary damages are appropriate, a jury should be directed that if, and only if, the sum which they have in mind to award as compensation (which may, of course, be a sum aggravated by the way in which the Defendant has behaved to the plaintiff ) is inadequate to punish him for his outrageous conduct, to mark their disapproval of such conduct and to deter him from repeating it, then it can award some larger sum'."

1. Mr Menon argues that such were the findings of the Tribunal here, which we have already set out at the start of this judgment, that there was the very worst kind of abuse of executive power. The reaction of the Respondent was orchestrated at the very highest level. It made the Claimant a victim when the true aggressor went unpunished. It extended to the maintenance by the Respondent of allegations against the Claimant when she gave evidence that she had deliberately brought an entirely false claim to have been assaulted, when she was fully justified. There was, he maintained, a cover-up of what the employer knew well to have happened. Therefore, he says that even if the Tribunal had not erred in appearing in paragraph 19 to think that the exemplary damages were to be awarded on a compensatory basis, it would have been perverse not to award such a sum.

1. For his part, Mr Choudhury argues that although, at first brush, the words in paragraph 19 may suggest that the Tribunal had in mind compensation, they plainly wrote those words in the knowledge of what had gone before. It is trite that a Tribunal's decision should not be read too closely as though it were a statute or trust deed, but broadly having regard to its entirety bearing in mind the authorship to whom it is addressed, and that a Tribunal's judgment should not be held in error because of what are truly infelicities where the meaning overall is clear. He reminds us of what Farquharson LJ said in Bradford City Metropolitan Council v Arora [1991] ICR 226, CA at 236F to 237A, where he emphasised the exceptional nature of awards of exemplary damages:

"They only arise where the damages awarded to the plaintiff as compensation for the injury he has suffered are deemed to be inadequate."

That is:

"' … inadequate to punish [the wrongdoer] for his outrageous conduct, to mark their disapproval of such conduct and to deter [the tortfeaser] from repeating it'."

Farquharson LJ observed that if:

"' … the fact that the Defendant has behaved in a high-handed, malicious or insulting manner is properly taken into account when fixing the level of compensatory damages',"

then there was not necessarily any additional room for an award of exemplary damages:

"'Before making [such] an award … , an industrial Tribunal should remind itself of the exceptional nature of such an award',"

It would only need to consider it if the compensatory damage award was:

"' … inadequate to punish the Defendant for his … conduct'."

1. Here, he took us to some details of the case which were capable of demonstrating that this was not one in which matters went all one way. A case where they had, that of Fletcher v Ministry of Defence [2010] IRLR 25, had been relied upon by Mr Menon. He pointed out that in this case, Mr Menon overstated some of the findings to which the Tribunal had come. Thus, the Tribunal had not here accepted that the employer had acted in a contumelious way, or that it had acted in a way in which there was active and knowing concealment of what had taken place. Its concern was rather the disparity of treatment as between the claimant and her comparators. Indeed when it came to the question of dismissal, the main reason for that was the content of the Further and Better Particulars as to which the Tribunal had found that they included disgraceful allegations made by the Appellant against her employer which were irrelevant, malicious and, in Mr Choudhury's own summation, "scurrilous", a word which accurately reflected the way in which the Tribunal thought of some of the content. Thus, he argued, that there was no basis here for an award of exemplary damages and it would be perverse to award them.

1. The Tribunal's decision is terse. Paragraph 20 says nothing more than, for instance, would a comment such as: "Having regard to the law, X wins." That is insufficient as reasoning. What the Tribunal do say is that they were not persuaded by the submissions. They do not say what those submissions were, or why they were rejected. However, they do go on in the next sentence to link those submissions with compensation, and appear to be of the view (read literally) that compensation was the purpose of exemplary damages. That is the only way in which we can read what is actually said in paragraph 19. It may well be that what the Tribunal had had it in mind to say was not that the compensation awarded thus far did not represent adequate compensation to the Claimant, but rather that it did not represent adequate punishment for the Defendant (phraseology deriving from some of the authorities to which we have been referred), but they did not say it.

1. This is not a case in which the context within which the words arise is such that we can interpret what is said in any way other than as the words actually appear. Thus regarded, Mr Menon is right that there is here an error of law. The Tribunal has failed to realise that an award of exemplary damages is intended to punish, not to compensate. We have then to consider whether the award notwithstanding this error is plainly and obviously right as Mr Choudhury contends. There is much to be said for his point of view. The emphasis upon the exceptional nature of such awards is the starting point. There is no rule that such awards must be made.

1. The nature of the conduct is not of the worst kind, but we have to remind ourselves here that we did not hear the evidence. We did not listen to the witnesses. It is plain that in general, the Tribunal had a preference for the Claimant's evidence, notwithstanding some of its faults, to the evidence which was arrayed on behalf of the Respondent. It came to a view which was highly critical of many of the aspects of the way in which the employer dealt with the Claimant. It seems to us that we cannot for ourselves say that this is necessarily a case in which exemplary damages may not be awarded, however difficult the argument might be. Since the Tribunal has approached this on the wrong basis, it seems to us that in this respect, this appeal must be allowed.

1. The Tribunal, between paragraphs 23 and 24, dealt with an application for costs made on behalf of the Claimant. The Claimant argued that the Respondent had acted vexatiously and unreasonably in its conduct of the defence. Rule 40 of the Tribunal Rules provides that:

40 "Cost Orders and Orders for Expenses

…

(2) … a Tribunal … shall consider making a costs order against a paying party where, in the opinion of the Tribunal … , any of the circumstances in paragraph (3) apply. Having so considered, [it] may make a costs order against the paying party if it considers it appropriate to do so."

The circumstances identified in paragraph 3 are that

40 "Cost Orders and Orders for Expenses

…

(3) " … a paying party, has in bringing the proceedings or he or his representative has in conducting the proceedings acted vexatiously, abusively, disruptively or otherwise unreasonably or the bringing or conducting of the proceedings of the paying party has been misconceived."

The focus here is on the word "unreasonably". That has to be understood in the context of its companion words, "vexatiously", "abusively" and "disruptively".

1. What the Claimant says is that the Respondent had run a dishonest case. Mr Menon drew our attention to Daleside Nursing Home Limited v Mathew [2009] UKEAT/0519/08/RN, where at paragraph 20, Wilkie J for the Tribunal observed that:

20 " … where there is such a clear-cut finding that the central allegation of racial abuse was a lie, it is perverse for the Tribunal to fail to conclude that the making of such a false allegation at the heart of the claim does not constitute a person acting unreasonably."

Therefore, he submits, by parity of reasoning where the defence was a lie and has been found to be so, the Claimant should be entitled to her costs. It has to be observed that this is taking the case at its highest against the Respondent, and it has to be observed that in paragraph 3 of Daleside, Wilkie J expressly made it clear that that case gave no rise to:

3 " … issue of legal principle of general application, [and was] specifically approached … on the basis of the particular [and] clear-cut facts of [that] case."

1. It is plain that there was much to be said here on both sides. We have dealt with what might be said for the Claimant. The Respondent relied upon the fact that at the outset of the hhearing, the Claimant had desisted in claims which had originally been brought against 14 more Respondents. She had withdrawn 40 specific allegations. This point was used, it would appear, in robust rebuttal of the claim for costs.

1. The Tribunal appreciated that costs are not normally awarded in ET litigation, and then said this:

23 "The Tribunal spent some considerable time considering this issue. The Tribunal reviewed its findings of fact in the main Hearing and considered the submissions of both parties' representatives. In simple terms, the Tribunal was not satisfied that one side had acted more vexatiously or unreasonably than the other in the manner in which it had conducted these proceedings. The Tribunal was not satisfied that it was necessary or appropriate for it to exercise its discretion to award costs in favour of either party. Accordingly each side's claim for costs against the other is dismissed."

We were told that the Respondent had, in fact, made no claim for costs against the Claimant despite what the last sentence there says, but it seems to us that this again is one of those cases in which we have to recognise that the Tribunal had heard and seen the parties. It had experienced at first hand the conduct of the litigation. It was best placed to evaluate whether the usual rules should be applied or whether, exceptionally, costs should be awarded.

1. Whereas it might have been entitled to conclude that there had here been conduct of the nature that Mr Menon describes, and we could not have regarded the exercise of the discretion in that way as being in any way wrong in law, so too we are bound to conclude that we cannot take the view that the Tribunal's approach to the decision it actually made was in any respect flawed. The legal principles are correct, a discretion was exercised, no wrong basis is apparent. There is no error.

1. It follows that in the result, we have dismissed the appeal in respect of grounds (1) and (3) and upheld it respect of ground (2). We should recognise further that the hearing as to pension is to follow.