The Court of Appeal has now handed down its decision in the long-running case of London Borough of Hackney v Sivanandan & Ors, finding that liability for discrimination cases is "joint and several". Further, it found that an employment tribunal cannot normally apportion liability between joint respondents.
This means that a claimant is entitled to recover 100% of the award from any one of the respondents. If a claimant recovers all their compensation from one respondent, then that respondent would need to pursue the others for a contribution through a separate court claim.
The court also held that damages arising from a discrimination claim are usually "indivisible". As such, the employment tribunal has no power to apportion liability for damages arising out of the same facts or circumstances. It would take exceptional circumstances for a particular respondent to be able to isolate the consequences of their specific acts.
This should concern all respondents named personally in discrimination proceedings. It is true that the claimant is likely to seek payment from the respondent with the deepest pocket, but...
- An employee jointly and severally liable might find themselves liable for 100% of an award where the employer has become insolvent.
- Members and officers of local authorities, health trusts and other public authorities should also be concerned. Even where an indemnity is granted by the authority, it may not cover the liability. Worse, the authority may be under an obligation to pursue them for a contribution to any award (and any legal costs).
Described by the Court of Appeal as a "Dicensian narrative", the proceedings began in 1999 after Ms Sivanandan applied for two posts at Hackney Race Equality Council (HARE), an agency that worked closely with and was partly funded by Hackney Council. Prior to making the job applications, the claimant had been a member of HARE's executive committee and had brought a successful claim against it for race discrimination. She had also pursued other claims against both Hackney and Enfield borough councils.
Ms Sivanandan failed in her job applications and claimed that her non-appointment was the result of victimisation under the Sex Discrimination Act 1975 and Race Relations Act 1976 (the events in this case preceded the Equality Act 2010 coming into force).
Her claims included the local authority as a respondent because one of its employees, Ms White, had participated in the interview panels. She claimed that Hackney Council was vicariously liable for the actions of Ms White. Ms White, a middle ranking officer employed by Hackney Council, was also added as a respondent, as were the individual members of HARE's executive committee.
During the long course of the proceedings, HARE was disbanded and the Hackney Race Equality Council wound-up. Due to failing to observe procedural orders of the Tribunal, Hackney Council was debarred from defending the claim, leaving only Ms White (and the other individuals) to attend the eventual remedies hearings.
At a succession of hearings the employment tribunal made separate awards against the local authority and the other respondents for £421,415 and against Ms White for £1,905. Hackney Council appealed.
The decision of the EAT
In the EAT, the council appealed against the award being made "joint and several" on the grounds that the tribunal had erred in failing to assess the actions of each respondent to the claim and their respective contribution to the award. Surprisingly, it did not appeal the amount of award itself.
The EAT dismissed the appeal stating the respondents were "jointly and severally liable" for the total award. Where "indivisible" damage is done to a claimant by discriminators who are liable for the same act, or who contribute to damage by different acts, each could be liable for the whole of that damage. The council further appealed to the Court of Appeal.
The decision of the Court of Appeal
This time, the appeal was made on the basis that the council's contribution should not reasonably exceed that of Ms White, the employee for whose acts of discrimination the local authority was vicariously liable.
The Court of Appeal upheld the decision by the EAT. Where there are multiple respondents and a particular loss cannot be attributed to one party, tribunals must award compensation on a joint and several basis. There is no power in the Civil Liability (Contributions) Act 1978 for the tribunal to apportion liability.
The tribunal had been wrong to assess Ms White's contribution separately. It had no power to do so. The 'indivisible' nature of the damages for which the council was "jointly and severally" liable was not altered by the earlier mistake of the employment tribunal when erroneously apportioning damages in respect of Ms White.
What impact will this have for respondents?
It is increasingly common for a disgruntled employee to include a claim for discrimination on one of the protected grounds. This removes the statutory cap on compensation and allows the claimant to name an individual respondent. If nothing else, this increases the pressure on respondents and often gives an added incentive to settle.
As can now be seen, a person who is added to the claim in this way faces very real personal liability. In this case, a joint and several liability for £421,415.
Why is this more serious for members and officers of local authorities?
Individual members and officers of local authorities are not generally liable for the authority's acts or omissions. Section 265 of the Public Health Act 1875 provides councillors and local authority officers, when acting in the course of their duties and in good faith, with statutory immunity for the actions they take.
Section 39 of the Local Government (Miscellaneous Provisions) Act 1976 provides further statutory immunity from personal liability for members and officers, providing they are acting within the authority's powers. This Act prevents any action being brought against members and officers (in contrast with an indemnity, which seeks to compensate the beneficiary against any loss resulting from a successful claim).
In addition, the Local Authorities (Indemnities for Members and Officers) Order 2004 gives a specific power to authorities to grant indemnities and/or take out insurance to cover potential liabilities of its members and officers. However, those powers are limited. An authority may not indemnify a member or officer in relation to any act or failure to act which constitutes a criminal offence (including matters which may give rise to a civil claim which also constitutes a criminal offence) or which arises as a result of fraud or other deliberate wrongdoing or recklessness on part of the member or officer (Article 6(1)).
Indeed, if the member or officer is liable for such criminality, deliberate or reckless wrong-doing, the indemnity or insurance must contain a claw-back for sums paid out by the authority or insurer. Such sums must be recoverable as a debt (Regulation 8).
Are local authorities required to claw-back sums where one of its members is found culpable?
It is well known that if the wilful misconduct of a councillor is found to have caused loss to a local authority, the councillor may be held liable to make good such loss to the council (section 161(4) of the Local Government Act 1972). While the power of the District Auditor (DA) to issue a surcharge has been restricted, the current provisions, set out in Part II of the Audit Commission Act 1998, still allow the DA to apply to the court for an assessment order.
So where the authority is found to be vicariously liable for the acts or omissions of an employee or member, the authority arguably has a duty to pursue a contribution from that employee or member. The infamous case of Porter v Magill  UKHL 67 held that the then leader of Westminster City Council was found to have used powers for the sale of council houses for unlawful purposes, and had known this was unlawful. It was ultra vires and she was ordered to pay back £37 million. There followed a long battle to trace her fortune, and more case law on what was a reasonable level of settlement.
What these cases show is that the authority is under an obligation to consider carefully whether to grant an indemnity, whether to operate the claw-back, or otherwise seek a contribution from the individual respondent(s). The local authority itself is in a fiduciary position to the taxpayer and must consider whether it ought to pursue a co-named respondent, weighing carefully all the material factors and likelihood of success.