House of Lords

Session 2005 - 06 Publications on the Internet Judgments PDF Print Version

Judgments - Percy (AP) (Apellant) v. Church of Scotland Board of National Mission (Respondent) (Scotland)

HOUSE OF LORDS SESSION 2005-06 [2005] UKHL 73 on appeal from: 2001 SC 757   OPINIONS OF THE LORDS OF APPEAL for judgment IN THE CAUSE     Percy (AP) (Appellant) v. Church of Scotland Board of National Mission (Respondent) (Scotland)         Appellate Committee   Lord Nicholls of Birkenhead Lord Hoffmann Lord Hope of Craighead Lord Scott of Foscote Baroness Hale of Richmond     Counsel Appellants: Susan O'Brien QC Brian Napier QC (Instructed by Drummond Miller WS)   Respondents: Laura Dunlop QC Simon Collins (Instructed by Bircham Dyson Bell, London agents for Church of Scotland Law Department) Hearing dates: 24, 25 and 26 October 2005   on Thursday 15 DECEMBER 2005   HOUSE OF LORDS OPINIONS OF THE LORDS OF APPEAL FOR JUDGMENT IN THE CAUSE Percy (AP) (Appellant) v. Church of Scotland Board of National Mission (Respondent) (Scotland) [2005] UKHL 73 LORD NICHOLLS OF BIRKENHEAD My Lords,     1.  These proceedings concern a sex discrimination claim brought against the Church of Scotland by a former minister of the church, Ms Helen Percy. The question is whether, as a matter of law, such a claim lies on the facts of this case. This raises two main issues. The first is whether Ms Percy's relationship with the church constitutes 'employment' as defined in section 82(1) of the Sex Discrimination Act 1975. The second issue is whether Ms Percy's discrimination claim constitutes a spiritual matter within section 3 of the Church of Scotland Act 1921 and, as such, it is within the exclusive cognisance of the Church of Scotland and its own courts.     2.  Ms Percy, a single woman, was ordained a minister of the Church of Scotland on 12 December 1991. In June 1994 she was appointed to the position of associate minister in a Church of Scotland parish in Angus. In June 1997 an allegation of misconduct was made against her. She was said to have had an affair with a married elder in the parish. The presbytery of Angus set up a committee of enquiry to investigate the allegation. Ms Percy was suspended from her duties. The committee found there was a case to answer, and the presbytery began making preparations for holding a trial by libel, that is, trying a formal disciplinary charge against Ms Percy. At a mediation meeting arranged by the church Ms Percy was counselled to resign and demit status as a minister. In December 1997 she demitted status, that is, she resigned as an ordained minister of the church. The presbytery accepted this. Necessarily that brought to an end her appointment as associate minister. The proceedings     3.  Ms Percy initiated these proceedings in an employment tribunal, then known as an industrial tribunal, in February 1998. She named as respondent the Church of Scotland. She alleged unfair dismissal and unlawful sex discrimination. The essence of her discrimination claim was that in similar circumstances the church had not taken similar action against male ministers known to have had extra-marital sexual relationships. Notice of appearance was given by the 'Church of Scotland Board of National Mission'.     4.  In December 1998 the employment tribunal dismissed Ms Percy's application for want of jurisdiction. Both complaints comprised 'matters spiritual' and fell within the exclusive jurisdiction of the courts of the Church of Scotland as provided by the Church of Scotland Act 1921. The employment tribunal added that, although there was a contract in existence, having regard to the essentially religious nature of Ms Percy's duties it was not a contract of employment as defined in the unfair dismissal legislation or as defined in section 82(1) of the Sex Discrimination Act 1975.     5.  Ms Percy appealed against that decision so far as it related to her claim for sex discrimination. The Employment Appeal Tribunal, presided over by Lord Johnston, dismissed the appeal in March 1999. The appeal tribunal held that the case concerned the disciplining of a minister with regard to her living and that was a matter spiritual governed by article IV in the Schedule to the 1921 Act. On matters spiritual Parliament has allowed the Church of Scotland an exclusive jurisdiction. The appeal tribunal added that 'with some hesitation' it had concluded that the arrangement between Ms Percy and the National Board of Mission was not a contract for work and labour within section 82(1) of the 1975 Act.     6.  Ms Percy appealed again. In March 2001 the First Division of the Court of Session, comprising the Lord President, Lord Cameron of Lochbroom and Lord Caplan, dismissed the appeal: 2001 SC 757. The leading judgment was given by the Lord President, Lord Rodger of Earlsferry. He considered first whether Ms Percy was employed by the Board of National Mission in terms of a 'contract personally to execute any work or labour'. After reviewing the authorities the Lord President enunciated a principle that where an appointment was made to a recognised form of ministry within the Church of Scotland, and where the duties of that ministry were essentially spiritual, it was to be presumed there was no intention that the arrangements made with the minister would give rise to obligations enforceable in the civil law. The presumption was rebuttable. In the present case the Lord President was not persuaded the parties intended to create relations enforceable in the civil courts. Contracts of service and the clergy     7.  The existence of a contract of service between a minister of religion and his church is a question courts have considered on several occasions. In Re Employment of Church of England Curates [1912] 2 Ch 563, 568, 569, Parker J held that a curate in the Church of England was not employed under a 'contract of service' within Part I (a) of the First Schedule to the National Insurance Act 1911: 'the position of a curate is the position of a person who holds an ecclesiastical office, and not the position of a person whose rights and duties are defined by contract at all'. Thus Parker J contrasted the position of an office holder and a person whose functions are defined by contract.     8.  In Scottish Insurance Commissioners v Church of Scotland 1914 SC 16 the Court of Session reached the same conclusion regarding assistants to ministers, not to be confused with associate ministers, of the Church of Scotland. Applying the 'control' test used in identifying a contract of employment, an assistant to a minister was not subject to the control and direction of any particular master. An assistant holds an ecclesiastical office and performs his duties subject to the laws of the church: Lord Kinnear, at page 23. Lord Kinnear added that in any event there was difficulty in identifying exactly who was the assistant's employer. Lord Johnstone noted that employment must be under a contract of service. A contract of service assumes an employer and a servant. It assumes the power of appointment and dismissal in the employer, the right of control over the servant in the employer, and the duty of service to the employer in the servant. There was no one who occupied that position. The contract in which the assistant was engaged was more a contract for services than a contract of service: pages 26-27.     9.  The Court of Appeal decision in President of the Methodist Conference v Parfitt [1984] ICR 176 concerned an unfair dismissal claim brought by a Methodist minister. The issue was whether the parties had entered into a contract of service. The court held that having regard to all the circumstances it was impossible to conclude that any contract, let alone a contract of service, came into being between a newly ordained minister and the Methodist Church when the minister was received into full connection.     10.  The same question arose for decision by your Lordships' House in Davies v Presbyterian Church of Wales [1986] ICR 280. The case concerned an unfair dismissal claim by a minister of the Presbyterian Church of Wales who had been inducted pastor of a united pastorate in Wales. Lord Templeman delivered the leading speech. He held that the claimant could not point to any contract between himself and the church. The book of rules did not contain terms of employment capable of being offered and accepted in the course of a religious ceremony.     11.  The same issue arose again in Diocese of Southwark v Coker [1998] ICR 140, this time in the context of an unfair dismissal claim by an assistant curate of the Church of England. Again the claimant failed. Mummery LJ analysed the reason underlying the absence of a contract between a church and a minister of religion in these cases as lack of intention to create a contractual relationship. He said that special features surrounding the appointment and removal of a Church of England priest as an assistant curate, and surrounding the source and scope of his duties, preclude the creation of a contract 'unless a clear intention to the contrary is expressed': page 147. Mummery LJ noted that under the employment protection legislation the relevant right of an employee is not to be dismissed by his employer. He then considered and rejected one by one the possible candidates for the role of employer in that case. The Diocese of Southwark was not a legal person with whom a contract could be concluded. The Church Commissioners paid Dr Coker's stipend and the Diocesan Board of Finance made the necessary arrangements for the payment. But neither of them appointed him, removed him or had power to control the performance of his services. It was not contended that either of Dr Coker's vicars had a contract with him. That left only the bishop of the diocese. The bishop had legal responsibility for licensing the appointment of assistant curates and the termination of their appointments. But that relationship was 'governed by the law of the established church, which is part of the public law of England, and not by a negotiated, contractual arrangement': page 148. A contract for services     12.  As will be apparent from this brief summary, there are several different strands in the reasoning of these leading authorities. Some of them call for comment before turning to the facts of the instant case. But it should be noted at the outset that in each of these cases the issue was whether a contract of service existed. In particular, in the unfair dismissal cases a statutory prerequisite is that the claimant is an employee. An employee is an individual who has entered into or works under a contract of employment, that is, a 'contract of service': see now sections 94 and 230 of the Employment Rights Act 1996.     13.  That is not the issue in the present case. Ms Percy's claim is based on sex discrimination. The statutory prerequisite for a sex discrimination claim is expressed in wider terms. The Sex Discrimination Act 1975 prohibits discrimination as defined in section 1 'in relation to employment' in the respects set out in section 6. Employment means employment under a contract of service or 'a contract personally to execute any work or labour': section 82(1). Ms Percy accepts she did not enter into a contract of service. That is why she did not pursue her claim for wrongful dismissal by way of appeal from the adverse decision of the industrial tribunal. Her case is that she was employed under a contract personally to execute certain work, that is, a contract for services as distinct from a contract of service. Thus in her case questions about the degree of control exercised over her work by her employer are of little, if any, relevance. Office holders and employees     14.  The first point to note about the authorities arises perhaps most distinctly from the insurance case of Re Employment of Church of England Curates [1912] 2 Ch 563. In that case one element in the court's reasoning was that the claimant was appointed to an ecclesiastical office as distinct from entering into a contract of service. This contrast is capable of misleading. It needs to be handled with care in the present context.     15.  The distinction between holding an office and being an employee is well established in English law. An important part of the background to this distinction is that in the past an employer could dismiss a servant without notice, leaving the servant with any claim he might have for damages for breach of contract. Speaking in the 1960s, Lord Reid famously declared that a master could terminate the contract with his servant at any time and for any reason or for none: Ridge v Baldwin [1964] AC 40, 65-68. By way of contrast, some office holders could be dismissed only for good cause. Thereby they were insulated against improper pressures. So the focus in master and servant cases was often on the question whether, to adopt the words of Lord Wilberforce, there was an element of public employment or service, or anything in the nature of an office or status capable of protection: Malloch v Aberdeen Corporation [1971] 1 WLR 1578, 1595.     16.  In 1971 this focus was changed by the Industrial Relations Act 1971. Employees acquired a right not to be dismissed unfairly. In 102 Social Club and Institute Ltd v Bickerton [1977] ICR 911, 917, Phillips J drew attention to one of the practical consequences of this radical change in the law: 'Before 1971 there was perhaps a tendency to find in contracts of employment elements of a public character which would enable the court to extend to the employee the protection flowing from "the right to be heard" enjoyed by the holders of an office. Since the fundamental change of the law brought about by the Industrial Relations Act 1971, which for the first time created the right of an employee not to be unfairly dismissed, the problem has arisen, which previously was not of much importance, of defining the circumstances in which an office-holder was said to be employed. Previously, it was a case of defendants seeking to deny an office-holder a right of complaint on the ground that he was party to a "pure contract of service"; now it is a question of defendants seeking to deny employees the right not to be unfairly dismissed on the ground that in reality they are not employees but "pure office-holders".'     17.  So the purpose for which the distinction is relevant has changed. There is a further complication. The distinction between holding an office and being an employee has long suffered from the major weakness that the concept of an 'office' is of uncertain ambit. The criteria to be applied when distinguishing those who hold an office from those who do not are imprecise. In McMillan v Guest [1942] AC 561, 566, Lord Wright observed that the word 'office' is of indefinite content. Lord Atkin suggested, at page 564, that 'office' implies a subsisting, permanent, substantive position having an existence independent of the person who fills it, and which goes on and is filled in succession by successive holders. As Lord Atkin indicated, this is a generally sufficient statement of the meaning of the word. It is useful as a broad description of the ingredients normally present with any office.     18.  I am sure Lord Atkin would have been the first to recognise that a difficulty with this general description is that it is wide enough to embrace cases where the relationship between the parties is essentially contractual. In the McMillan case the context was liability to tax under Schedule E in respect of a public 'office'. The issue was whether a taxpayer held a (public) office. So the question whether the taxpayer was also an employee was not directly in point. In the present case the nature of the issue is quite different. The question is not whether Ms Percy held an office. The issue is whether she had entered into a contract under which she agreed to provide defined services. Holding an office, even an ecclesiastical office, and the existence of a contract to provide services are not necessarily mutually exclusive.     19.  This requires elaboration. Sometimes the existence of an office is clear. An office may be of ancient common law origin, such as the office of constable. Indeed some offices were regarded by the common law as incorporeal hereditaments, belonging to the current office holder. A benefice in the Church of England is regarded as a freehold office belonging to the incumbent for the time being. Or an office may be created by statute, with attendant statutory functions. A superintendent registrar of births, deaths and marriages is an example: Miles v Wakefield Metropolitan District Council [1987] AC 539.     20.  Less clear cut are cases where an organisation, ranging from the local golf club to a huge multi-national conglomerate, makes provision in its constitution for particular posts or appointments such as chairman or vice-president. In a broad sense these appointments may well be regarded as 'offices'. But caution needs to be exercised here, lest the use of this term in this context lead to a false dichotomy: a person either holds an office or is an employee. He cannot be both at the same time. This is not so. If 'office' is given a broad meaning, holding an office and being an employee are not inconsistent. A person may hold an 'office' on the terms of, and pursuant to, a contract of employment. Or like a director of a company, a person may hold an office and concurrently have a service contract. Whether there is a contract in a particular case, and if so what is its nature and what are its terms, depends upon an application of familiar general principles. That the appointment in question is or may be described as an 'office' is a matter to be taken into account. The weight of this feature will depend upon all the circumstances. But this feature does not of itself pre-empt the answer to the question whether the holder of the 'office' is an employee. This feature does not necessarily preclude the existence of a parallel contract for carrying out the duties of the office even where they are statutory: cf. Lord Oliver of Aylmerton in Miles v Wakefield Metropolitan District Council [1987] AC 539, 567.     21.  This approach is sound in principle. It has been adopted in practice in reported decisions. For instance, in Barthope v Exeter Diocesan Board of Finance [1979] ICR 900, an unfair dismissal case, the Employment Appeal Tribunal considered whether a stipendiary lay reader was employed under a contract of service. Slynn J, giving the judgment of the tribunal, rejected a submission that the claimant was an office holder and, as such, it followed he was not employed under a contract of service. He said, at page 904: 'Merely to say that someone holds an office does not seem to us to decide the question which has to be decided under [the Trade Union and Labour Relations Act 1974]. Some office holders may well not be employed under a contract of service. It does not follow that an office holder cannot be employed under a contract of service. The question … is whether the office he holds is one the appointment to which is made by, or is co-existent with, a contract of service. If it is, then he is entitled to the protection of the Act of 1974.'

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