Babula v Waltham Forest College,  EWCA Civ 174 (07 March) (Court of Appeal 2007)
Neutral Citation Number:  EWCA Civ 174
Case No: A2/2006/1200
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM HIS HONOUR JUDGE PETER CLARK
THE EMPLOYMENT APPEAL TRIBUNAL
Royal Courts of Justice
07 March 2007
B e f o r e :
LORD JUSTICE THORPE
LORD JUSTICE THOMAS
LORD JUSTICE WALL
- and -
WALTHAM FOREST COLLEGE
(Transcript of the Handed Down Judgment of
WordWave International Ltd
A Merrill Communications Company
190 Fleet Street, London EC4A 2AG
Tel No: 020 7421 4040 Fax No: 020 7831 8838
Official Shorthand Writers to the Court)
Rabinder Singh QC and Ms Catherine Rayner (instructed by Luqmani Thompson & Partners - Solicitors) for the Appellant
Nicholas Hinchliffe QC (instructed by Eversheds - Solicitors) for the Respondent
Hearing date : 7th February 2007
HTML VERSION OF JUDGMENT
Crown Copyright ©
Lord Justice Wall:
This appeal from the Employment Appeal Tribunal (EAT) raises a short but important point of construction in relation to what have become known colloquially as the "whistle-blowing" provisions contained in Part IVA of the Employment Rights Act 1996 (ERA 1996).
The central issue in the appeal can, I think, be formulated in the following way. An employee makes a claim for unfair dismissal in the Employment Tribunal. He asserts that his dismissal must be regarded as automatically unfair under ERA 1996 section 103A because the reason for it (or the main reason) was that he had made a protected disclosure within the provisions of ERA 1996, section 43A and 43B(1)(a) and (b). In these circumstances (1) must he be able to point to an actual criminal offence which could have been committed on the basis of the facts and matters upon which he relies (ERA 1996 section 43B(1)(a)), or to an actual legal obligation which is applicable on the facts (section 43B(1)(b))? Alternatively; (2) is it sufficient that he reasonably believes that the matters he relies upon amount to the criminal act, or found the legal obligation?
For the appellant, Mr Rabinder Singh QC and Ms Catherine Rayner invite us to answer question (1) in the negative, and the second (2) in the affirmative. They also invite us to say that a decision of the EAT which takes the opposite view, Kraus v Penna plc and another  IRLR 260 (Kraus v Penna), is wrong in law, albeit that it may have been correctly decided on its facts.
Mr. P N Hinchliffe QC, for the respondent to this appeal, advocates the opposite point of view. He invites us to hold that Kraus v. Penna was correctly decided, and that the reasoning both of the Employment Tribunal Chairman and the EAT, which followed it, was correct.
It will be immediately apparent that the appeal raises a pure point of law, which goes to the jurisdiction of an Employment Tribunal to entertain the appellant's claim, and which assumes that the facts are as the appellant asserts them to be. Accordingly, I wish to emphasise at the outset of this judgment that the resolution of this appeal in the appellant's favour would not mean that he is entitled to succeed in his claim that he was unfairly dismissed. To put the same point a different way: this judgment is not addressed to the merits of the appellant's claim, and expresses no opinion on them.
Furthermore, although the point is a short one, it inevitably requires some elucidation and investigation. Any reader of this judgment who does not wish to join me in that process is invited to proceed at once to paragraphs 71 to 85 of this judgment, where I set out the view I have formed, under the heading Discussion and conclusion.
With permission granted at an oral hearing on 21 July 2006 by Buxton and Maurice Kay LJJ, Michael Babula (whom I will call either "the appellant" or "the claimant" as the context requires) appeals against the reserved decision of His Honour Judge Peter Clark sitting alone in the EAT, and delivered on 17 May 2006. The EAT had dismissed the appellant's appeal against the decision of an Employment Tribunal Chairman Mr. J Scannell, also sitting alone (the Chairman) in the Stratford Employment Tribunal on 5 July 2005. Pursuant to paragraph 18(7)(b) of Schedule 1 to the Employment Tribunals (Constitution and Rules of Procedure) Regulations 2004, the Chairman had struck out the appellant's claim for unfair constructive dismissal on the ground that it had no reasonable prospect of success.
The statutory provisions
I begin with the statute. Section 43A of ERA 1996 defines a "protected disclosure" as a "qualifying disclosure (as defined by section 43B) which is made by a worker in accordance with any of sections 43C to 43H."
Section 43B is headed Disclosures qualifying for protection and, where material to this appeal, reads as follows: -
(1) In this Part a "qualifying disclosure" means any disclosure of information which, in the reasonable belief of the worker making the disclosure, tends to show one or more of the following –
(a) that a criminal offence has been committed, is being committed or is likely to be committed,
(b) that a person has failed, is failing or is likely to fail to comply with any legal obligation to which he is subject.
This appeal is concerned with the construction of the words which I have italicised, and in particular with the effect of the words "in the reasonable belief of the worker making the disclosure".
The remaining sub-sections (c) to (f) of section 43B(1) are not material for present purposes, although Mr Singh and Ms Rayner invited us to note the nature of the matters which Parliament had decided should form the subject of protected disclosures. These are actual or likely miscarriages of justice (section 43B(1)(c)); actual or likely endangerment of the health or safety of an individual (section 43B(1)(d)); actual or likely environmental damage (section 43B(1)(e)); and information tending to show actual or likely deliberate concealment of any of the matters set out in any of the preceding paragraphs. These were all, Mr. Singh and Ms Rayner submitted matters of substance.
Section 43B(2) and (3) provide that: -
(2) For the purposes of subsection (1), it is immaterial whether the relevant failure occurred, occurs or would occur in the United Kingdom or elsewhere, and whether the law applying to it is that of the United Kingdom or any other country or territory.
(3) A disclosure of information is not a qualifying disclosure if the person making the disclosure commits an offence by making it.
Section 43B(4) deals with disclosures to which legal professional privilege applies, and is immaterial for present purposes. Section 43B(5) provides that "the relevant failure" in section 43B(1)(b) and (2) "in relation to a qualifying disclosure, means the matter falling within paragraphs (a) to (f) of subsection 1."
Section 43C is headed Disclosure to employer or other responsible person and reads: -
(1) A qualifying disclosure is made in accordance with this section if the worker makes the disclosure in good faith –
(a) to his employer, or
(b) where the worker reasonably believes that the relevant failure relates solely or mainly to -
(i) the conduct of a person other than his employer, or
(ii) any other matter for which a person other than his employer has legal responsibility,
to that other person.
(2) a worker who, in accordance with a procedure whose use by him is authorised by his employer, makes a qualifying disclosure to a person other than his employer, is to be treated for the purposes of this Part as making the qualifying disclosure to his employer.
(For the purposes of this appeal, it is to be assumed that the appellant made
the disclosure(s) in question in good faith.)
The remaining sections of ERA 1996 Part IVA (sections 43D to 43L) are not material for the purposes of this appeal, although I note in passing that pursuant to powers given to him by section 43F(1)(a) (Disclosure to prescribed person) the Secretary of State has made the Public Interest Disclosure (Prescribed Persons) Order 1999, the Schedule to which (subsequently substituted in its entirety by the Public Interest Disclosure (Prescribed Persons) (Amendment) Order 2003)) identifies in two columns; (1) the persons to whom qualifying disclosures may be made; and (2) the matters which may be disclosed.
We were also invited by Mr. Singh and Ms Rayner to note the various safeguards against abuse of the protection provided by the disclosure provisions built into each of the sections. I have already set out sections 43B and C. Section 43D relates to disclosure to a legal adviser, and is unqualified. Section 43E(b) (Disclosure to a Minister of the Crown) requires the disclosure to be made "in good faith". Section 43F(1) (Disclosure to a prescribed person) also requires good faith, but in addition requires a reasonable belief both that "the relevant failure" falls within one of the prescribed categories; and that "the information disclosed, and any allegation contained in it, are substantially true". In other cases (section 43G) a number of additional safeguards are added, including the requirement that the disclosure is not made for purposes of personal gain (section 43G(1)(c)) and that in all the circumstances of the case it is reasonable for the whistle-blower to make the disclosure. Similar safeguards are built into section 43H (Disclosure of exceptionally serious failure).
For completeness, I set out ERA 1996, section 103A, which reads as follows: -
An employee who is dismissed shall be regarded for the purposes of this Part as unfairly dismissed if the reason (or, if more than one, the principal reason) for the dismissal is that the employee made a protected disclosure.
For present purposes the facts are to be taken as asserted by the appellant, and fall into a moderately narrow compass. The appellant is an American citizen He was employed by the respondent to this appeal, Waltham Forest College, (the college) between 8 January and 29 August 2004 as a lecturer, assigned in May 2004 to teach the remainder of a GNVQ Access to Business Course. One of the appellant's predecessors in teaching the course was a Mr. Ali Abd Jalil, who had taught the course up to March 2004, but who was no longer employed by the college.
The appellant was advised by his line manager that the students were behind with their work. The appellant set them a particular task, which none of them completed in time. He then enquired why this was. In his application to the Employment Tribunal (the ET1) the appellant stated what then happened in the following way: -
The claimant was informed by the students that their previous lecturer, Mr. Jalil had not taught them the curriculum from September 2003 to January 2004 because he had used the lesson time to teach religious studies. Moreover, the students reported that when they asked Mr. Jalil questions concerning their work, they would not be answered or they would be discouraged from asking such questions by being put down or told to "make it up". The claimant's concern heightened significantly when the students informed him that Mr. Jalil had informed the Muslim students that he wished that a September 11 incident would occur in London and had indicated an acceptance and happiness at the events in New York on September 11 2001.
The appellant also states that one particular student had informed him that she had reported her dissatisfaction with Mr. Jalil to her personal tutor, and then, when the latter took no action, to the head of school, Mrs Maureen Lambert. When Mrs Lambert had given the impression of not being interested, the student had met the Vice-Principal. The only response, the appellant learned, had been a memorandum from Ms Lambert urging the students to "stay calm and focused at this traditionally difficult and pressurised time of year" and expressing confidence that they would reach their "academic goal".
The appellant says he raised the matter with Mr. Jalil's previous supervisor, who likewise took the view that no action was required. The ET1 states:
In the circumstances, the claimant was concerned that urgent action was required in view of the possibility of a threat to national security based on Mr. Jalil's comments regarding a September 11 incident in London and having evidence that there was also a distinct possibility that at the least a criminal offence of incitement to racial hatred had been committed. In view of Mr. Jamil's actions and comments, the claimant reasonably believed that it was too great a risk that Mr. Jalil could incite racial hatred in a different educational establishment or even commit or conspire to commit an act of terrorism.
Consequently, the following day on 26 May 2004 the claimant considered that he had no option other than to report this matter to a police authority. The claimant was unsure as to how this should be reported and so as an American citizen, he contacted the CIA and FBI and informed the college in writing immediately that he had done so.
It was this disclosure which, the appellant asserts, led directly to a series of actions by the college which left him with no alternative but to resign, and which formed the basis of his claim for unfair, constructive dismissal.
In its amended response to the Form ET1, the college denied that the appellant's actions constituted a protected disclosure within ERA 1996, section 43A, "in that none of the criterion set out in section 43B were satisfied" (sic). In particular, the college denied that the appellant's actions "disclosed a reasonable belief that a criminal offence had been committed was being committed or was likely to be committed".
In paragraph 28 of his form ET1, the appellant put his case in the following way: -
(b) the Claimant made a qualifying disclosure under (ERA 1996, section 43B) as
(i) the claimant reasonably believed that a criminal offence of incitement to racial hatred under the Public Order Act 1986 (POA 1986) had been committed and was likely to be committed again in the future by Mr. Jalil; and
(ii) the claimant reasonably believed that Mrs. Lambert as Head of School for (the college), with her previous knowledge of the situation was unlikely to report the commission of the aforesaid criminal offence to the authorities and had failed therefore to comply with a legal obligation to report such an offence; and
(iii) the claimant reasonably believed that the health or safety of individuals would be likely to be endangered by the actions intended by Mr Jalil's comments that he wished to see a 9/11 type incident in London; and
(iv) the claimant reasonably believed that in view of Mrs. Lambert's lack of action or response to the information provided by students of (the college) and from other members of staff and the claimant in respect of the aforementioned, that all of the above had been or was likely to be deliberately concealed.
The appellant then argued that his qualifying disclosure had become a protected disclosure by virtue of the fact that it had been made in good faith to Mr. Jalil's supervisor and to the Head of School in the first instance under ERA 1996, section 43C.
At a case management discussion which took place in the Employment Tribunal on 21 April 2005, the Chair (Ms V.K. Gay) directed the appellant to provide additional information, and in particular to answer the following questions :
1.1 What offence is it asserted that the claimant reasonably thought had been or was likely to be committed?
1.2 Where or how was the offence made unlawful?
1.3 What are the components of the offence and how are they made out?
1.4 What legal obligation is relied upon in respect of Mrs. Lambert?
1.5 Upon what matters does the claimant rely in asserting that there is such a legal obligation? What is the essence of the legal obligation set out?
1.6 How had Mrs. Lambert failed or how was she likely to fail to comply with that legal obligation?
1.7 How and when had the health and safety of any individual been or been likely to be endangered?
1.8 By whom and when had it been endangered?
1.9 What are the facts relied upon in support of the last two assertions?
1.10 For the purposes of section 43G(3) set out the facts upon which the claimant relies in respect of the matters identified at (a) to (f) of the subsection.
The appellant's response, prepared by his then solicitors, and which is dated 6 May 2005 asserted that the offence relied on was POA 1986, section 18 which states: -
It is an offence for a person to use threatening, abusive or insulting words or behaviour or to display any written material which is threatening, abusive or insulting if
(a) he intends to stir up racial hatred, or
(b) having regard to all the circumstances racial hatred is likely to be stirred up thereby.
The response added: -
The claimant will submit that the actions of Mr Jalil in dividing up his class into Muslim and non-Muslim groups and turning his back on and ignoring the non-Muslim students, whilst teaching religion in a business class to the Muslim students, evidences Mr Jalil's intentions to divide and differentiate between racial groups …. The group of students against whom the words would have stirred up racial hatred consisted of Jews and white Europeans.
The appellant identified the legal obligation (questions 1.4 to 1.7 above) in the following terms: -
…… The claimant submits that such legal obligation relates to Mrs. Lambert's failure to implement (the college's) equal opportunities policy and race equality policy statement, which is incorporated into her contract of employment by virtue of clause 7.2:
"7.2 The Principal
It is the responsibility of the Principal to: -
Give a consistent and high profile lead on race equality issues
Promote the race equality policy inside and outside the institution
Ensure that disciplinary action is taken against staff and students who racially discriminate or harass others.
At the time of his disclosure, the claimant understood that a student, Nora Papp, had communicated her concerns with regard to Mr. Jalil's comments and segregation of the class to her tutor, Nadia McMahon in November and December 2003 and January 2004. The claimant further understood that Ms McMahon had relayed this information to Mrs. Lambert however, no action at that point had been taken by Mrs. Lambert to investigate the matter.
In answer to other questions, the claimant abandoned his reliance on section 43B(1)(d) (health and safety) (questions 1.6 to 1.9 above) but asserted that his complaints to the FBI / CIA on 26 May 2004, and his disclosure to the local police on 2 June 2004 were made in accordance with section 43G.
It will be immediately apparent, and was a point made forcefully by Mr. Hinchliffe, that the answers given by the claimant to the questions posed in the Tribunal's order of 21 April 2005 in relation to the legal obligation to which the college was subject under ERA 1996, section 43B(1)(b) represented a radical change in the claimant's case from that pleaded in his form ET1.
The hearing before the Tribunal Chairman
On 5 July 2005, there was a pre-hearing review before the Chairman, at which the claimant appeared in person, and the college was represented by a solicitor. The claimant made an application to amend his form ET1 to include the fresh allegations which he made in answer to the Tribunal's questions, and which I have set out at paragraph 26 above. That application was opposed by the college, but allowed by the Chairman. That exercise formed the subject of a cross-appeal by the college to the EAT, which regarded it as academic in view of the fact that it had dismissed the claimant's appeal. Mr Hinchliffe did not, however, raise the matter in this court, and I say no more about it. The College sought to have the claim struck out on the basis that the facts asserted by the appellant were not capable of amounting to an offence under s.18 POA.
In his reserved judgment sent to the parties on 22 September 2005, the Chairman gave his reasons for striking out the appellant's claim. The Chairman took the view that he was bound by the decision of the EAT in Kraus v Penna, and in particular by the statement of principle contained in paragraph 29 of the EAT's judgment in that case, where the following was said: -
However, we agree with the submissions of (counsel) that the worker's reasonable belief in s.43B(1) relates to the information which he is disclosing and not to the existence of a legal obligation which does not actually exist. In other words if the employers are under no legal obligation, as a matter of law, a worker cannot claim the protection of this legislation by claiming that he reasonably believed that they were. His belief and the reasonableness of it in our view relates to the factual information in his possession, namely what he perceives to be the facts and the basis on which he considers it reasonable to rely upon them. This can only properly be tested against the background of the legal obligation, 'to which [the employer or other person] is subject'. If there is no obligation to which they actually are subject the worker's suggestion that he reasonably believed they were cannot render the disclosure a protected one within sections 43A and B. The tribunal's failure to refer expressly to 'reasonable belief' on the facts of this case therefore does not in our view constitute an error of law. It simply did not arise for consideration in this case.
Applying that decision, the Chairman reasoned the point in paragraph 16 of his judgment as follows:-
It is necessary to consider carefully what it was alleged was said by Mr. Jalil and the circumstances in which it was said….. In my judgment, the worst that could be said against Mr. Jalil is that his dividing the class into Islamic and non-Islamic groups and his saying what he is alleged to have said was that he was inciting to religious hatred and not racial hatred. At the time of these matters there was no offence of incitement to religious hatred. In the light of the decision in Kraus v Penna I find that the claimant did not make a qualifying disclosure under section 43B(1)(a).
In paragraph 17 of his judgment, the Chairman considered the appellant's case under section 43B(1)(b):-
I turn to look at (the college) "Equal Opportunities Policy" and "Race Equality Policy Statement". I make the assumption that Mrs. Lambert (and indeed the college) was under a legal obligation to comply with these policies. However, it is clear to me that neither of the policies has anything to say about religion or religious discrimination. In my judgment the claimant has failed to demonstrate that Mrs. Lambert (or (the college)) was under any legal obligation, as opposed to showing merely that he believed Mrs. Lambert to have been so. It follows that the claimant did not make a qualifying disclosure under section 43B(1)(b).
By parity of reasoning, the Chairman held that the claimant had not made a qualifying disclosure under section 43B(1)(f) and struck out the whole claim as having no reasonable prospect of success.
In fairness to the Chairman, it is, I think, right to record that he reached this conclusion with reluctance, a word he uses in paragraph 20 of his reasons, at a point where he also makes reference to the academic criticism which has been directed to the decision of the EAT in Kraus vPenna. It is plain from his reasons that the Chairman was satisfied the claimant had "the reasonable belief" required by section 43B(1), and that his good faith was not in issue at that stage. In paragraph 26 of his reasons, the Chairman states in terms that had he not been prevented byKraus v Penna from finding that there was a qualifying disclosure, he would have found that the seriousness of the "relevant failures" identified in section 43B(5) was, in his words "very great". Furthermore, in the final two paragraphs of his judgment, he said this:-
28. In determining for the purposes of sub-section [43G] (1)(e) whether it is reasonable for the claimant to make the disclosures, I have had particular regard to the identity of the persons to whom the claimant made the external disclosures. It was reasonable for him, an American citizen, with the events of 11 September in mind, to inform the CIA and FBI and then when so advised by them, to make the disclosure to the Metropolitan Police at Walthamstow Police Station.
29. It will be clear that had I found that there was a qualifying disclosure I would have found that the disclosure to the FBI / CIA were protected disclosures. The only reason why I have found that the three relevant failures were not qualifying disclosures was because I consider that I am bound by the case of Kraus v Penna to hold that they were not qualifying disclosures.
The appeal to the EAT
In the EAT, Judge Peter Clark acknowledged that it was open to him not to follow Kraus v Penna, but for understandable policy reasons, he declined Ms Rayner's invitation to hold that the case was wrongly decided. His reasoning for dismissing the appellant's appeal appears in paragraphs 26 to 31 of his reserved judgment, where he said: -
26. Returning to the present case, there is no doubt that, for the purposes of section 43B(1)(a), section 18 POA gives rise to a criminal offence. The question, following the approach of Elias P in Bolton School v Evans (UKEAT / 0648 / 05 / SM: 7 February 2006) is not whether Mr. Jalil may have some defence to a criminal charge under section 18 which may not have occurred to this claimant, but whether the set of facts which he reasonably believed existed could possibly constitute the offence. Only if there is no reasonable prospect of his establishing that the facts could constitute the offence can this part of his claim properly be struck out as misconceived under rule 18(7)(b).
27. That, it seems to me, involves a careful analysis of the facts pleaded and relied on by the claimant, in particular his additional information. I accept that the comment that he wished to see on (sic) 9/11 incident in the UK is capable of amounting to threatening words. The real question, identified by the Chairman, is whether such words are capable of evincing an intention to stir up racial hatred that is hatred against a racial group.
28. It is here, in my judgment that the (appellant's) pleaded case falls down. The racial group against whom the 9/11 remark was directed is simply not identified. It is not British citizens, but the group of students consisting of Jews and white Europeans. However, that group emerges from the division of the class into Islamic and non-Islamic students, a division based on religion, not race.
29. In short, I have concluded that the Chairman was entitled to find that the words relied on were, on the claimant's pleaded case, not directed to any racial group so as to found a reasonable belief that a section 18 offence had been, was or was likely to be committed. The claim based on a section 43B(1)(a) qualifying disclosure had no reasonable prospect of success.
30. Again, assuming that Mrs. Lambert as a Manager and Staff Member of the College was under a legal obligation to be found in the incorporation of the (College's) Equal Opportunities Policy into her contract of employment to comply with the Policy, on the facts relied on by the claimant there was no racial inequality practised by Mr. Jalil, rather religious discrimination between Islamic and non-Islamic students. There was no basis for the claimant to believe otherwise. Thus again, his bid to establish a qualifying disclosure under section 43B(1)(b) foundered on the distinction between racial and religious discrimination, as the Chairman found.
31. For completeness, a section 43B(1)(f) qualifying disclosure can only arise where information tending to show a matter falling within (a) or (b) is within the claimant's reasonable belief. It was not.
32. In these circumstances I am not persuaded that any error of law is made out in this appeal on the pleaded facts in this case.
The relevant authorities
Before turning to the arguments addressed to this court, I think it sensible to look at some of the cases to which we have been referred. I propose to consider them in chronological order, starting with the decision of the EAT (Judge Serota QC presiding) in Darnton v University of Surrey  IRLR 133 (Darnton). In that case, a lecturer claimed he was unfairly dismissed by the university because of a letter he had written to the Vice-Chancellor. He claimed that the disclosures in the letter fell within ERA 1996, section 43B(1)(a). The Employment Tribunal had approached the case by looking at the various allegations in the letter with a view to determining whether or not they were factually correct. It had come to the conclusion that they were not, and as a consequence held the claimant had not made a protected disclosure. The EAT allowed the lecturer's appeal and remitted the claim to a differently constituted Employment Tribunal for reconsideration.
At paragraph 29 of its judgment, the EAT discussed the relevance of the factual accuracy of the disclosure. This is what it said: -
In our opinion, the determination of the factual accuracy of the disclosure by the Tribunal will, in many cases, be an important tool in determining whether the worker held the reasonable belief that the disclosure tended to show a relevant failure. Thus if an Employment Tribunal finds that an employee's factual allegation of something he claims to have seen himself is false, that will be highly relevant to the question of the worker's reasonable belief. It is extremely difficult to see how a worker can reasonably believe that an allegation tends to show that there has been a relevant failure if he knew or believed that the factual basis was false. We cannot accept Mr. Kallipetis's submission that reasonable belief applies only to the question of whether the alleged facts tend to disclose a relevant failure. We consider that as a matter of both law and common sense all circumstances must be considered together in determining whether the worker holds the reasonable belief. The circumstances will include his belief in the factual basis of the information disclosed as well as what those facts tend to show. The more the worker claims to have direct knowledge of the matters which are the subject of the disclosure, the more relevant will be his belief in the truth of what he says in determining whether he holds that reasonable belief.
At paragraph 30 of its judgment in Darnton, the EAT said:
Parliament has not sought to import into section 43B a requirement that the worker must hold the belief that the information and allegations disclosed are substantially true. Parliament has distinguished between sections 43F, 43G and 43H in which there is such a requirement, and section 43B in which there is not. There is no justification, in our opinion, for importing words which Parliament chose not to enact, into section 43B.
The EAT in Darnton found support for the proposition set out in paragraph 30 of its judgment in a citation from Whistle-blowing: the new law by John Bowyers QC, Jeremy Lewis and Jack Mitchell (Bowers, Lewis and Mitchell), a lengthy extract from which it cited in paragraph 31 of its judgment. That extract contained the following sentence: -
"To achieve protection under any of the several parts of the Act, the worker must have a "reasonable belief" in the truth of the information as tending to show one or more of the six matters listed which he has disclosed, although that belief need not be correct."
Darnton seems to me clear authority for the proposition that whilst an employee claiming the protection of ERA 1996, section 43(1) must have a reasonable belief that the information he is disclosing tends to show one of more of the matters listed in section 43B(1)(a) to (f), there is no requirement upon him to demonstrate that his belief is factually correct; or, to put the matter slightly differently, his belief may still be reasonable even though it turns out to be wrong. Furthermore, whether or not the employee's belief was reasonably held is a matter for the Tribunal to determine.
Kraus v Penna was a case under ERA 1996, section 43B(1)(b). Mr Kraus had entered into a consultancy agreement with Penna plc to provide services as a human resources professional to a company called Syltone plc in connection with the latter company's re-organisation and redundancy programme. Within a very short time, Mr. Kraus was informed that Syltone no longer required his services, and his consultancy agreement was terminated. He brought proceedings in the Employment Tribunal against both Penna and Syltone claiming that his consultancy agreement had been terminated because he had made a protected disclosure, namely advising one of Syltone's directors that the programme of redundancies proposed by the company could breach employment legislation and make the company vulnerable to claims for unfair dismissal.
The Employment Tribunal struck out Mr Kraus's application on the grounds that it had no reasonable prospect of success and, therefore, was misconceived. The EAT dismissed his appeal. It did so, as I read its judgment, on two main bases. Firstly, it was necessary, the EAT found, to distinguish between Penna and Syltone on the accepted facts. As against Penna, and assuming Penna to be Mr. Kraus' employer, he had not at any stage alleged that he had made a protected disclosure to Penna, or that Penna knew of his disclosure to Syltone before Penna terminated his consultancy agreement. Furthermore, Mr. Kraus had not sought to argue that his contract had been terminated by Penna on the ground that he had made a protected disclosure. The EAT found, accordingly, that the claim against Penna failed on causation grounds.
Secondly and as against Syltone, the EAT found that Mr Kraus could not, on the facts, establish that Syltone was "likely to fail to comply" with its obligations, within ERA 1996, section 43B(1)(b). It did so on the basis of Mr. Kraus' pleaded case, in which he had asserted that he had advised one of Syltone's directors that their redundancy proposals "could breach employment legislation and would be vulnerable to claims for unfair dismissal". The EAT held in paragraph 21 of its judgment that: -
At its highest, therefore, Mr. Kraus's belief was limited at this early stage to the possibility or the risk of a breach of employment legislation, depending on what eventually took place. In our judgment this did not meet the statutory test of "likely to fail to comply.
Later in the same paragraph, the EAT said: -
In our view, therefore, the Tribunal did not err in finding, on the accepted facts, that the information disclosed could not be said to tend to show that Syltone was likely to fail to comply with its legal obligations. Whilst we accept that (the Tribunal) made no express reference to Mr. Kraus's reasonable belief, in considering this matter, it was obvious on the accepted facts that the question of reasonableness did not arise. Mr. Kraus did not himself believe that the information he disclosed to (Syltone) tended to show that a fairly to comply with a legal obligation was "likely" in the sense of more probable than not.
The EAT then spent some time discussing the meaning of the word "likely" in section 43B(1)(b), and came to the conclusion in paragraph 24 of its judgment that it meant more than a possibility or a risk. In so doing, it expressed its disagreement with the sentence in the series of propositions advanced by Bowers, Lewis and Mantell, which I have set out at paragraph 40 above, and which was accepted as helpful by the EAT in Darnton, namely "that it would be a qualifying disclosure if the worker reasonably but mistakenly believed that a specific malpractice is or was occurring or may occur". The EAT in Kraus v Penna commented : -
we respectfully disagree that the words "may occur" accurately reflect the statutory provisions in section 43B(1). The word "may" we consider, connotes something different from "likely" used throughout the subsection.
The judgment in Kraus v Penna then went on to consider the question of whether or not there was an identified or identifiable legal obligation on the part of Syltone within section 43B(1)(b) and came to the conclusion there was not. It is in this part of its judgment that the EAT made the statement of principle which I have set out in paragraph 31 of this judgment.
The third case to which we were referred was the judgment of the EAT in Bolton School v Evans (Elias J. President, presiding). In that case, Darnton was cited for the following proposition:-
The basic scheme is tolerably clear. If the employee makes a disclosure in good faith to his employer of relevant qualifying information, then provided he is not committing a criminal offence in making the disclosure he is protected from dismissal and detrimental action short of dismissal. The information may in fact be inaccurate or wrong that does not move the protection (sic) provided the employee has a reasonable belief that the information tends to show one or more of the matters set out in section 43(1)(b) (sic). (See the observations of this Tribunal in Darnton).
In Bolton School v Evans, an employee deliberately broke into his employer's computer system in order to demonstrate that information was capable of being obtained in breach of the Data Protection Act 1998. He was disciplined for doing so, and resigned in protest. He then took proceedings in the Employment Tribunal claiming that he had been unfairly constructively dismissed within ERA 1996, section 103A for having made a protected disclosure. The Tribunal upheld his complaint on liability, and went on to hold that even if the dismissal was not automatically unfair under section 103A it was nevertheless unfair under the general law relating to unfair dismissal.
The EAT set aside the Tribunal's findings that the claimant's dismissal was automatically unfair under section 103A and that the claimant had suffered a detriment by reason of making a protected disclosure. It remitted the matter to a fresh Tribunal on a limited basis, namely whether or not the claimant, on the facts, had been constructively dismissed.
In paragraphs 42 to 56 of the EAT's judgment in Bolton School v Evans, under the heading "Did the claimant have a reasonable belief?" there is a discussion of ERA 1996, section 43B in which a reference is made to Kraus v Penna. Having set out the facts of the case, and cited from the EAT's judgment, Elias J continues: -
51. We do not think that the protection is lost merely because the employer may be able to show that, for reasons not immediately apparent to the employee, the duty will not apply or that he has some defence to it. The information will still, it seems to us, tend to show the likelihood of breach. It is potentially powerful and material evidence pointing in that direction even although there may be other factors which ultimately would demonstrate that no breach is likely to occur.
52. There may indeed be cases where a relatively detailed appreciation of the relevant legal obligation is required before an employee can establish that he reasonably believed that the information tended to show that a breach of a legal obligation was likely. But it would undermine the protection of this valuable legislation if employees were expected to anticipate and evaluate all potential defences, whether within the scope of their own knowledge or not, when deciding whether or not to make that disclosure.
The arguments in this court
The arguments on each side were deployed with both skill and economy. In a divergence from their skeleton argument, Mr Singh and Ms Rayner identified as their essential submission the proposition that the phrase "the reasonable belief of the worker" in section 43B(1) plainly applied in the same way to both sections 43B(1)(a) and 43B(1)(b). They argued, however, that the "reasonable belief" identified in section 43(1) applied to both the facts which formed the basis of the disclosure, and the relevant failure which the worker relied upon. In other words, a worker made a qualifying disclosure if he disclosed facts, which in his reasonable belief tended to show that a criminal offence had been committed, or that a legal obligation existed which bound the college. He did not lose his protection, simply because he was wrong about the criminal offence or legal obligation, or because he named a criminal offence or legal obligation which either did not exist or which, whilst in existence, might not be made out on the facts.
Mr Singh invited us to look critically at Kraus v Penna. Whilst a number of issues arose from that case, his essential submission, as I understood it, was that whilst the case may well have been correctly decided on its particular facts, the EAT's statement of the law set out at paragraph 29 of its judgment (cited at paragraph 31 of this judgment) was incorrect. We should, accordingly, rule that the basis upon which Kraus v Penna had been decided was wrong in law, and should no longer be followed.
In the instant case, Mr. Singh acknowledged that the appellant had identified an extant criminal offence. He had also identified an existing legal obligation in the form of the college's equal opportunity policy, which placed obligations on various specified individuals. However, the only question which the Chairman and the EAT should have asked themselves was whether or not the appellant had a reasonable belief that the criminal offence he relied upon had been or was going to be committed; or whether or not he had a reasonable belief that the legal obligation he referred to had been or was likely to be breached by the college. This was, Mr. Singh submitted, in part a subjective question (the claimant's actual belief) and in part an objective one (whether that belief was reasonable).
Basing himself on Darnton, Mr. Singh submitted that a worker will only lose the protection of section 43B if was unreasonable for him to form the relevant belief, for example if, as stated in Darnton, he did not believe that the facts tended to show what he alleged.
Mr. Singh submitted that the construction of ERA section 43B for which he argued did no violence to the language of the statute – rather, it flowed from the ordinary meaning of the words used by Parliament. Moreover, it promoted the purpose of the legislation, which was to encourage employees to come forward and make disclosures in the public interest. Such an interpretation would not licence the foolish or the vindictive, not least because the statute itself imported a number of safeguards against abuse.
Parliament, Mr. Singh submitted, had created a carefully crafted code designed to govern a wide range of different situations, and imposing a number of different safeguards depending on the nature of the disclosure and the person or body to whom it was made. In particular, Mr Singh argued that the requirement of reasonableness in section 43A(1) provided a sufficient safeguard to prevent any abuse of the relevant provisions of section 43A(1)(a) to (f). There was no reason in legal policy why there should be an additional requirement that what a person reasonably believed should as a matter of law amount to an offence. To have such a requirement, he argued, would tend to impede the purpose of the legislation. If there was such an overriding requirement, potential whistle-blowers would tend in practice to be deterred from making disclosures, for fear of getting the law wrong. This would not be in the public interest.
In support of this latter proposition, Mr Singh argued that a whistle-blower making a particular assertion was unlikely to be a lawyer or employed in the criminal justice system. On the facts of the particular case, the distinction between what was in law a matter of religious discrimination and what was a matter of racial discrimination had taxed experts in the field for many years, and was far from straightforward. A requirement of the sort imposed in this case by the Chairman and the EAT would require that the worker was expert enough to ensure that he was right both in the labelling of the offence he considered had been committed, and in the selection of the criminal offence, prior to making disclosure. That, Mr. Singh submitted was simply wrong and contrary to the intention and purpose of the legislation. The honest mistake made by the appellant in the instant case was entirely reasonable and understandable. He should not, and does not lose protection because of it.
Mr. Singh submitted, accordingly, that both the Chairman and the EAT had asked the wrong question. They had asked whether or not the facts relied upon were capable of amounting to this particular crime, or were capable of giving rise to a breach of the legal obligation named. In summary, each had erred in law in that they had both substituted an entirely objective test for what was, on analysis, a combined subjective (the belief)/objective (was the belief reasonable?) test.
Mr. Singh pointed out that there was an additional safeguard in the instant case, namely that the appellant must have acted in good faith. Since this was an application to strike out, it had to be accepted that the appellant had so acted. Since that was so, it could not be right, Mr Singh submitted, that he could lose his protection simply because he was wrong about whether there was an infringement of an actual criminal provision, or whether the legal obligation had been breached. There was no suggestion, that the appellant was not sincere in his belief, nor had the college ever suggested that his belief was other than reasonable. Clearly, on the assumed facts, both the CIA and the FBI had considered there was sufficient concern to ask him to alert the local police immediately.
Broadening the argument, Mr. Singh submitted that the appeal raised a clear issue of public policy. There was increasingly an expectation that individuals will inform the police if they have concerns which may put the safety of the wider public at risk, particularly in connection with potential terrorist threats. Such information may well be information which is discovered during the course of working life, and individuals should not be deterred from disclosing to the proper authorities because of fear that they may be victimised or lose their livelihoods.
It must also be right, he argued, that the police and security services would want to encourage individuals to provide information to them first and without delay, so that investigations could be made quickly, rather than delaying whilst an individual took advice to work out the proper description and phrasing of a particular potential criminal offence or legal obligation that may be breached.
The combined subjective/objective nature of the test was, however, Mr. Singh, submitted, of importance on the facts of this case. What is reasonable for an American citizen working in the United Kingdom, post September 11th might well include the belief that the behaviour of Mr Jalil was or could be a criminal offence. A purposive reading of the legislation should lead to the conclusion that the protection of workers extends to those who make honest and reasonable disclosure in good faith, but who are not technically correct in the identification of legal or criminal provisions. The balance to be struck between the need to protect workers who make disclosures in the public interest from dismissal, and the needs of an employer not to be subject to unreasonable or malicious disclosures were, Mr Singh submitted, adequately met by the requirements of good faith, and an overall requirement of reasonableness. It could not be right that Parliament intended to exclude workers on such technical grounds from protection.
The argument for the college
In equally clear and concise submissions, Mr Hinchliffe submitted that Kraus v Penna was correctly decided, and that reasonable belief on its own was not enough. It was clear, he argued, that the phrase "reasonable belief" in section 43B(1) referred to the information being disclosed The phrase "reasonable belief" must, moreover, as a matter of construction, apply to each of the sub-sections of section 43B(1)(a) to (f) in the same way. It followed, as a matter of law, that if a legal obligation did not exist, the fact that a person reasonably believed it did will not afford a gateway to protected disclosure under section 43B(1).
Mr. Hinchliffe pointed out that the appellant had changed the legal obligation relied upon after the case management conference in April 2005, nearly a year after the events had occurred. Mr Hinchliffe posed the rhetorical question: If the appellant could not identify the legal obligation by April 2005, how could he say he reasonably believed the facts tended to show a failure to comply with a legal obligation the existence of which was unknown to him?
Whilst Mr Hinchliffe acknowledged that the legislation provided quite wide ranging protection for whistle-blowers, there were, he argued, constraints. Thus a disclosure was only protected if it was (i) a qualifying disclosure under S.43B and (his emphasis) (ii) made by the worker in accordance with the provisions of any of sections 43C to H. This supported his argument that if there was no legal obligation to which a person was subject, the fact that a person reasonably believed there was did not create a gateway to a protected disclosure. Either a legal obligation exists or it does not. In order for there to be a protected disclosure the person making the disclosure must prove, on the balance of probabilities that a legal obligation exists. He then only obtains protection if it can be shown that he had a reasonable belief that the information he disclosed tended to show a breach of that obligation. That, Mr Hinchliffe submitted, was the ratio decidendi of Kraus v Penna and was correct in law.
Given the way in which S.43(B)(1) was drafted, and his submission (apparently accepted by Mr. Singh) that the same approach must be followed in respect of section 43B(1)(a) as in respect of section 43B(1)(b) both the Chairman and the EAT had correctly found; (1) that the appellant had identified a criminal offence (section 18 of the Public Order Act 1986); and (2) that the factual matrix could not amount to the commission of such an offence. It followed that the appellant could not claim the protection of the statute.
Mr Hinchliffe argued that there must be some nexus between the factual matrix and the offence alleged. For example, if the appellant had identified murder as the criminal offence, was his belief that a murder was likely to be committed sufficient to allow the application to proceed? Suppose the criminal offence had been dangerous driving? Mr Hinchliffe accepted that these were extreme examples, but the point was made that a reasonable belief in the factual matrix or in the information being disclosed must have some relationship or nexus with the offence relied upon. That was not the same as being able to exclude a potential defence, as in Bolton School v Watson. Paragraph 52 of the EAT's judgment in that case (which I have set out at paragraph 51 above) supported the proposition that the reasonableness of the belief goes to the facts relied upon and not the existence of the legal obligation or criminal offence.
Mr Hinchliffe submitted that on the appellant's construction of the statute, any disclosure of information would pass through the first gateway. That, he argued, would be a remarkable construction. If it was clear that the factual matrix could not give rise to the criminal offence identified it must be open to an Employment Tribunal to strike out a case on the grounds that the claim had no reasonable prospect of success. In such a case, there simply could be no information which tended to show the commission of an offence.
Mr Hinchliffe acknowledged that the words attributed to Mr Jalil would be condemned by most people, but the appellant was straining to fit a square peg into a round hole. In the first place, he was not aware of the legal obligation he now relies upon at the time he made the disclosure. Secondly, he had identified an offence which could not have been committed. The Chairman had been right to strike the case out. His reasoning was sound, and no error of law was established.
Discussion and conclusion
I have come to the clear conclusion that I prefer the construction of the statute for which Mr. Singh and Ms Rayner contend, and that as a consequence this appeal should be allowed.
In my judgment, the EAT in Kraus v Penna was right to come to the conclusion that the facts of that case did not come within ERA 1996, section 43(1)(b). It was, accordingly, right to dismiss Mr. Kraus' appeal. In short, the EAT was entitled to hold that, on the agreed facts; (1) there had been no protected disclosure to Penna; and (2) Mr Kraus was unable to show that he had a reasonable belief that the information he disclosed demonstrated that Syltone was likely to fail to comply with any legal obligation it might have.
However, whilst I take the view that Kraus v Penna was correctly decided on its facts, the construction of ERA section 43B(1)(b) set out in paragraph 29 of its judgment, which both the Chairman and Judge Clark followed, is not, in my judgment a correct statement of the law, and should not be followed.
I agree with Mr Hinchliffe (indeed, this appeared to be common ground) that it is not permissible, as a matter of construction, to adopt a different interpretation of what is meant by "reasonable belief" when applying that phrase to any of the situations in section 43B(1)(a) to (f). It seems to me that in each of the instances identified in the six subsections, the whistle-blower has to establish a reasonable belief that the information being disclosed "tends to show" one or more of the situations identified in section 43B(1)(a) to (f).
However, I agree with the EAT in Darnton that a belief may be reasonably held and yet be wrong. I am reminded, in a different context, of the well-known speech of Lord Hailsham of St. Marylebone LC in the adoption case of Re W (an infant)  AC 682 at 700D when discussing whether or not a parent could be said to be unreasonable in withholding consent to adoption. He said: - "Two reasonable parents can perfectly reasonably come to opposite conclusions without either of them forfeiting their title to be regarded as reasonable." In my judgment, the position is the same if a whistle-blower reasonably believes that a criminal offence has been committed, is being committed or is likely to be committed. Provided his belief (which is inevitably subjective) is held by the Tribunal to be objectively reasonable, neither (1) the fact that the belief turns out to be wrong – nor, (2) the fact that the information which the claimant believed to be true (and may indeed be true) does not in law amount to a criminal offence - is, in my judgment, sufficient, of itself, to render the belief unreasonable and thus deprive the whistle blower of the protection afforded by the statute.
I have pointed out that in Kraus v Penna, the EAT spends some time discussing the meaning of the word "likely to fail" in section 43B(1)(b), and that it disagrees with Bowers, Lewis and Mantell in their use of the word "may" in the proposition which I have cited in paragraph 40 above. The same word - "likely" appears, of course, in section 43B(1)(a) and must, I think, have the same meaning in both subsections.
The EAT's emphasis on the word "likely" in section 43B(1)(b) does not affect my conclusion that what the whistle-blower must show is a "reasonable belief" that the disclosure tends to show that a criminal offence is likely to be committed, or that a person is likely to fail to comply with any legal obligation. In other words, what remains relevant is the whistle-blower's reasonable belief, and not whether or not it turns out to be wrong. The use in the statute of the word "likely" does not, in my judgment, import an implication that the whistle-blower must be right, or that, objectively, the facts must disclose a likely criminal offence or an identified legal obligation.
In Kraus v Penna, the Tribunal – as indicated in the passage from paragraph 21 of the EAT's judgment which I have set out in paragraph 44 above, found that Mr. Penna did not have a reasonable belief that the information he disclosed tended to show that a failure on the part of Syltone to comply with its legal obligations was likely. On that basis, section 43B(1)(b) was plainly not satisfied. In the instant case, the appellant's belief that the information he was disclosing met the criteria in section 43B(1)(a) was, in my judgment, plainly reasonable, even though it turned out to be wrong.
It is also, I think, significant that section 43B(1) uses the phrase "tends to show" not "shows". There is, in short, nothing in section 43B(1) which requires the whistle-blower to be right. At its highest in relation to section 43B(1)(a) he must have a reasonable belief that the information in his possession "tends to show" that a criminal offence has been committed: at its lowest he must have a reasonable belief that the information in his possession tends to show that a criminal offence is likely to be committed. The fact that he may be wrong is not relevant, provided his belief is reasonable, and the disclosure to his employer made in good faith (section 43C(1)(a)).
I also agree with Mr. Singh and Ms Rayner on the policy arguments which they advance. The purpose of the statute, as I read it, is to encourage responsible whistle-blowing. To expect employees on the factory floor or in shops and offices to have a detailed knowledge of the criminal law sufficient to enable them to determine whether or not particular facts which they reasonably believe to be true are capable, as a matter of law, of constituting a particular criminal offence seems to me both unrealistic and to work against the policy of the statute.
In my judgment, the key to the tension between the authorities in the EAT to which I have referred lies in the misapplication in Kraus v Penna of what a different constitution of the EAT was saying in paragraph 29 of its judgment in Darnton. An Employment Tribunal hearing a claim for automatic unfair dismissal has to make three key findings. The first is whether or not the employee believes that the information he is disclosing meets the criteria set out in one or more of the subsections in ERA 1996, section 43B(1)(a) to (f). The second is to decide, objectively, whether or not that belief is reasonable. The third is to decide whether or not the disclosure is made in good faith.
In this context, in my judgment, the word "belief" in section 43B(1) is plainly subjective. It is the particular belief held by the particular worker. Equally, however, the "belief" must be "reasonable". That is an objective test. Furthermore, like the EAT in Darnton, I find it difficult to see how a worker can reasonably believe that an allegation tends to show that there has been a relevant failure if he knows or believes that the factual basis for the belief is false. In any event, these are all matters for the Employment Tribunal to determine on the facts.
In my judgment, the decision of this court in Street v Derbyshire Unemployed Workers' Centre  EWCA Civ 964,  IRLR 687 supports the construction for which Mr. Singh and Ms Rayner contend. That case decided that the concept of "good faith" (required in that case by ERA 1996 section 43G(1)(a), but equally applicable to ERA section 43C(1)(a)) was not surplusage, but added an important element: see the judgment of Auld LJ at paragraph 44. This is the additional element of protection for the employer in a case such as the present. As construed in Street v Derbyshire, it means that a disclosure will not be protected if an ulterior motive is the predominant or a dominant purpose of the employee in making it.
It follows, in my judgment, that Kraus v Penna imposes a gloss on the statute which is not there. Paragraph 29 of the EAT's judgment in that case does not accurately set out the law. In this respect, therefore, the case was wrongly decided, and should not be followed.
Lord Justice Thomas
Lord Justice Thorpe