Donald R Macleod QC

In an expectantly-awaited but decidedly controversial ruling, the House of Lords has, by a 4-1 majority, overturned the decision of the Court of Appeal in Clark v. Novacold [1999] ICR 951. The decision, in the case of London Borough of Lewisham v. Malcolm [2008] UKHL 43, issued on 25th June 2008, will in the trenchant words of the dissenting Law Lady, Baroness Hale of Richmond, disturb “the settled understanding of employment lawyers and tribunals”. The decision, as she points out in para. 81, “has stood unchallenged for nine years and has not, so far as we are aware, caused difficulty in practice.” As she further points out, under reference to the definition of discrimination in the new section 3A of the Disability Discrimination Act 1995 [“DDA”] (inserted by amending regulations of 2003), “Parliament has since legislated on the basis that (Clark) is correct”.

Clark, it will be recalled, was a case of remarkable factual simplicity. The applicant and appellant apparently suffered injury in the course of his manual employment at a plant in Hull operated by the respondents. He was given an uncertain prognosis by his orthopaedic surgeon, which the respondents interpreted as meaning that it would be unlikely that he could return to work within twelve months. Accordingly, they decided to terminate his employment. Having not been in employment for the requisite period of two years, he accordingly was not entitled to complain of unfair dismissal under the Employment Rights Act 1996.

His application to the IT was, unsurprisingly, submitted in terms of a complaint that he had been discriminated against because of his disability. There was no doubt that, in terms of section 1 of DDA, he was a disabled person, and the IT had little difficulty in holding that the reason for his dismissal related to his disability. The appellate process, involving the EAT, assumed a degree of complexity which need not be re-visited for present purposes. There were three questions which the Court of Appeal had to consider namely

(1) Did the IT err in law in holding that the applicant was not subject to discrimination within the meaning of section 5(1) of DDA? The applicant contended that the tribunal had erred in the construction it gave to that provision.
(2) Did the IT err in law in holding that there was no failure of duty on the part of the respondents to make adjustments in respect of Mr. Clark, pursuant to ss. 5(2) and 6(1) of DDA?
(3) Did the IT err in law in holding that, had there been discrimination, it was not justified within the meaning of ss. 5(1)(b) and 5(2)(b) and (3)?

The decision of the Court of Appeal was quite complex and it would be self-defeating to rehearse it in full in this article, the primary purpose of which is to bring to the urgent attention of practitioners the decision in Malcolm. Nonetheless it can be said that, despite the case history, it was common ground before the Court of Appeal that the dismissal had been caught by s. 5(1) as it was quite clear that Mr. Clark had been dismissed for a reason relating to his disability. The question at issue was whether he had been treated less favourably than the respondents would have treated others to whom “that reason” would not apply.
The relevant provision reads:

“5(1) For the purposes of this Part, an employer discriminates against a disabled person if –
(a) for a reason which relates to the disabled person’s disability, he treats him less favourably than he treats or would treat others to whom that reason does not or would not apply; and
(b) he cannot show that the treatment in question is justified.

Justification, it will be recollected, is dealt with in subsections (3)-(5). In the Court of Appeal it was argued on behalf of Novacold that the phrase “that reason” referred to the whole of the first clause of the paragraph, whereas the argument for Mr. Clark was that these words referred to the opening three words of s. 5(1)(a). What the IT and the EAT had done was to interpret the words “that reason” so as to achieve a comparison between the disabled person and an able-bodied person; the comparison was to be such that the relevant circumstances were to be the same, or at least not materially different, in each case. In the result, the Court of Appeal resolved the ambiguity by holding that it was

“more probable that Parliament meant ‘that reason’ to refer only to the facts causing constituting the reason for the treatment and not to include within that reason the added requirement of a causal link with disability: that is more properly regarded as the cause of the reason for the treatment than as in itself a reason for the treatment.”

“This interpretation” it was said, “avoids the difficulties which would be encountered in many cases in seeking to identify what the (EAT) had referred to as ‘the characteristics of the hypothetical
comparator’ ”.

This decision was, at the time of its delivery, hailed as sensible by many commentators, a consequence which understandably seems to have weighed with Baroness Hale.

That approach has now been effectively disavowed by the majority of the Law Lords in their reversal of the decision of the Court of Appeal in Malcolm. In that case, which concerned the re-acquisition of possession by the local authority of a flat leased to a schizophrenic tenant who had sought to buy it, but had jumped the gun by sub-letting it before the conveyancing formalities of his purchase had been completed, their Lordships had to consider the terms of ss. 22(3)(c) and 24(1) of DDA which appropriates precisely the wording of section 5 (dealing with employment) to the context of the management of premises vis-à-vis an occupier (i.e. the tenant), hence the relevance of Clark v. Novacold. It seemed to Lord Bingham of Cornhill [at para. 9] that “the task of the court is to ascertain the real reason for the treatment, the reason which operates on the mind of the alleged discriminator…the test is an objective one”. His Lordship thought [at para. 10] that the draftsman of section 24(1)(a) had “deliberately eschewed the conventional language of causation in favour of the broader and less precise expression ‘relates to’, His Lordship’s point apparently being that there had to be “some connection, not necessarily close” between the reason for the dismissal of Mr. Clark and his disability. Thus far, Lord Bingham’s position seems on all fours with the decision of the Court of Appeal in Clark. Where he departs from the approach of the Court of Appeal in both Clark and Malcolm is in his identification of the correct comparator. In this connection, he “found it hard to accept that Novacold was rightly decided [para. 15].”

As His Lordship understood the judgment in Clark v. Novacold, the correct comparison was said to be with tenants of flats in Lewisham who had not sublet and gone to live elsewhere. A more natural comparison, he suggested, was with “persons without a mental disability who have sublet a Lewisham flat and gone to live elsewhere” [paras. 13-15], citing what Toulson LJ had said in para. 155 of Clark:

“the complainant is logically bound to be able to satisfy the requirement of showing that his treatment is less favourable than would be accorded to others to whom the reason for his treatment did not apply. For without the reason there would not be the treatment.”

The truth of that observation was illustrated by Malcolm: if a tenant had not sublet and gone to live elsewhere, Lewisham would not, in the absence of other grounds, have contemplated seeking possession. It was clear that Lewisham would have claimed possession against any non-disabled tenant who had sublet and gone to live elsewhere.

In a more intensely-concentrated analysis of s. 24(1)(a), Lord Scott of Foscote [at para.26] asked two questions. Was it necessary, in order for the alleged discriminator’s “reason” to “relate to” the disability for s. 24(1)(a) purposes, for the fact of the disability to have played at least some motivating part in the mind of the alleged discriminator in leading him to subject the disabled person to the treatment complained of? And who are to be the comparators, the “others” referred to in the provision, and what characteristics should be attributed to them? His answer to the first question [at para.29] was that if the physical or mental condition constituting the disability had played no motivating part in the decision of the alleged discriminator to inflict the treatment complained of, the alleged discriminator’s reason cannot, for section 24(1)(a) purposes, relate to the disability.

In answering his second question, His Lordship observed that it is not enough for the disabled person to show that the reason for the treatment related to his disability; he had also to show that he had been treated less favourably than the alleged discriminator “treat(ed) or would treat others to whom that reason (did) not or would not apply,” He thought that the common sense answer in Malcolm would be that the comparators should be tenants of the council who have sub-let but whose sub-letting had no connection with schizophrenia or perhaps any mental condition causally responsible for the sub-letting. Turning to consider a lengthy passage in the judgement of Mummery LJ in Clark v. Novacold [at page 962] wherein the others to whom “that reason” would not apply were finally identified as “persons who would be capable of carrying out the main functions of their job.”

Lord Scott disagreed with that approach. “What is the point”, he asked at para. 32, “of asking whether a person has been treated ‘less favourably than others’ if the ‘others’ are those to whom the reason why the disabled person was subjected to the complained of treatment cannot apply?” His view, as expressed at para. 34, was that that case had been wrongly decided. The remaining Law Lords, Lord Brown of Eaton-under-Heywood and Lord Neuberger of Abbotsbury, delivered lengthy speeches broadly concurring on the comparator point, that is to say, they favoured the narrow interpretation rejected in Clark v. Novacold.

These speeches are argued in an impressive and scholarly manner and no disservice to the insights they contain is intended by this necessarily brief paraphrase of their contents; the urgency of the need to draw attention to the decision in Malcolm unfortunately precludes further exploration for the moment. All of their Lordships expressed reservations to a greater or lesser degree about some or all of their views in regard to the several issues raised in this case, and all impliedly recognise the unique language of DDA, distinguishing it from other statutes seeking to deal with other forms of discrimination.

It now remains to be seen whether their Lordships’ strict approach to the construction of section 5(1)(a) will, in time, engender more controversy in what was thought to be an area of settled law, leading perhaps to statutory amendment; for the moment though, employment lawyers have to recognise a new reality, that the appropriate comparators are “persons to whom the reason (for the treatment) does not or would not apply” (per Richards LJ in Williams v. Richmond Court (Swansea) Ltd. [2006] EWCA Civ 1719 at para 41) for that is the class of comparator approved specifically by Lord Bingham and the remainder of the majority in Malcolm.