Council loses Court of Appeal bid in case of £420k+ award for discrimination

A local authority has lost a case before the Court of Appeal relating to an employment tribunal award of more than £420,000 after the council was found vicariously liable for discrimination.

The dispute in London Borough of Hackney v Sivanandan & Ors [2013] EWCA Civ 22 was described by one of the judges as “a 21st century version of a 19th century Chancery saga”.

It centred on remedy hearings. Hackney had not been represented before the Employment Tribunal, because it had been disbarred by order from taking part. Ms Sivanandan, a former race equality adviser who was called to the Bar in 2006, acted in person. The tribunal made its decisions on remedy without any input from Hackney.

According to Lord Justice Mummery, who gave the judgment in the Court of Appeal, “as the council was not debarred from appealing, it was apparently able to advance arguments on the appeal as to why the decision below was wrong in law.”

The Employment Appeal Tribunal rejected the council’s arguments, and so Hackney took the case to the Court of Appeal.

Lord Justice Mummery said the core question was whether, in its assessment of compensation, the ET acted on a fundamentally flawed view of the juristic nature of the council's vicarious liability for acts of discrimination committed by its employee and the legal consequences flowing from that liability.

Counsel for Hackney, Robin Allen QC, argued that the award of compensation against the council, when compared with the small amount (£1,905.41) awarded against its employee, was “inconsistent”, “incoherent” and “disproportionate”.

He went on to question on what principled basis, the ET could properly award more compensation against the employer than it had already awarded against the employee for whose acts of discrimination the employer was vicariously liable.

The awards against Hackney (£421,415) and against the employee were assessed by the tribunal at different points in a succession of ongoing remedy hearings. They related to discrimination in the handling of two job applications. An award was also made against other individuals involved in the discrimination.

The principle point of law, advanced by the council’s (different) barrister in the EAT, was whether the ET had the power, which it evidently thought it had and which it purported to exercise to a limited extent in the case of the employee, to apportion, as between the council and the employee, liability to the claimant.

Hackney argued before the EAT hat the tribunal should have awarded different amounts of compensation according to the relative degrees of responsibility for the loss suffered by the claimant in consequence of the discrimination.

But the EAT concluded that there was no question of apportionment arising as the damage suffered by Sivanandan was indivisible. Each tortfeasor, it ruled, was – whether the liability was personal or vicarious – liable to the claimant for the full amount of that damage.

At the Court of Appeal, the council raised the same objection to the ET’s error. However, there was a shift in emphasis.

Robin Allen QC abstained from challenging the correctness of the EAT ruling that there was no power to apportion liability to the claimant. He instead sought to confine Hackney’s maximum financial exposure to the sum awarded against its employee.

He drew the Court of Appeal’s attention to two key aspects of the case. The first related to the apportionment, manifested in the "irreconcilable inconsistency" of the ET's treatment of the employee, in purporting to apportion her liability to the claimant by assessing the compensation to be paid by her as confined to injury to the claimant's feelings, and of Hackney, in refusing to apportion, as between it and other individuals involved in the discrimination, their liability to the claimant for full compensation.

The second aspect highlighted by Hackney’s QC was the vicarious character of the council's tortious liability to the claimant, combined with the legal consequence that the liability of the council and the employee to the claimant was joint along with all that that implied.

The Court of Appeal this week rejected the council’s challenge. Lord Justice Mummery concluded that:

• The sum of £421,415 “seems to be a great deal of money to compensate the claimant for acts of discrimination in two unsuccessful job interviews, but that impression is an irrelevant observation in this case: no appeal has been brought by the council against the quantum of compensation, save for the criticism of the £25,000 award for aggravated damages”.
• The ET did err in law in making the award against the employee. “It purported to exercise a power to apportion her liability to the claimant, which it did not have. However, that error of law is irrelevant to this appeal, because no appeal has been brought against the award against [the employee]: this appeal is from the award against the council.”
• It was plain that there was no intention on the part of the claimant, the employee or the ET at the first remedy hearing to make any determination of any remedy issue as between, on the one hand, the claimant and, on the other hand, the remaining tortfeasors, including the council, who did not take part in that hearing. “As between them and the claimant the assessment of damages remained at large. The only issue which the ET was asked to decide at the first remedy hearing was the award against [the employee] personally and even that was to be limited to injury to feelings for race discrimination. The apportionment, which was made in error of law in any event, was not intended to determine any other issues of the liability of other parties to the claimant.”
• The claimant certainly did not intend to forgo any claims for damages that she had against the other joint tortfeasors. “In my judgment, the ET's error in making an apportionment as regards the liability of [the employee] to the claimant did not prevent her from pursuing her claims against other joint tortfeasors. Those claims were simply adjourned by the ET to be determined at a later hearing. If Mr Allen is right the claims against the council for vicarious liability were determined at the hearing that dealt only with the claim against [the employee]. I do not believe that that accords with the intentions of all concerned including the ET. Nor do I regard it as correct in law.”
• In this case the damage suffered by the claimant in consequence of victimisation in the treatment of her two job applications was indivisible, “which means that, as against the claimant, no single tortfeasor is liable only for consequences peculiar to his acts. Each is jointly liable to the claimant for the full amount of the damage suffered by her. The indivisible character of the damage for which the council and other respondents were jointly liable was not altered by the ET's error of law in purporting to apportion the liability of [the employee] to the claimant.”
• There was no error of law in the ET remedies decision awarding compensation, including aggravated damages, against the council in excess of the amount of compensation that it had awarded to the claimant as against the employee as part of an erroneous apportionment exercise.

Lord Justice Mummery opened his judgment by saying: “It is 12 years since this discrimination dispute began. It arose out of two unsuccessful job applications at the end of the 20th century. The case is now a 21st century version of a 19th century Chancery saga. And it is not over yet.”

He added: “The reader of this judgment will be spared what Underhill J (the President) described in the Employment Appeal Tribunal (EAT) as the ‘complex and extraordinarily long history’.

“It is a Dickensian narrative of allegations and counter-allegations, applications and cross-applications, misunderstandings, objections, complaints, hearings, adjournments, reviews, appeals and cross-appeals and repeated wrangling about procedure, case management matters, schedules, and even about the bundling and delivery of documents. On this appeal the parties continued, at the request of the court, to make additional written submissions after the hearing in order to clarify the evolving legal arguments.”

A spokeswoman for Hackney said: "We are disappointed with the outcome and are studying the judgment to decide our next step."