Khan v Trident Safeguards Ltd. & Ors

On bankruptcy, a statutory discrimination claim seeking financial compensation is ordinarily a hybrid chose in action which vests as a whole in the trustee. The public importance of discrimination claims does not displace that rule. A claimant may, with permission, amend the claim to seek only a declaration and compensation for injury to feelings. Those remedies are personal and do not refer immediately to property. An unfair dismissal claim is different because its primary object is restoration of the employment relationship. Such a claim remains with the claimant, following [2003] EWCA Civ 527.

Arfan Khan brought proceedings before Employment Tribunals alleging race discrimination, victimisation and unfair dismissal by Trident Safeguards Ltd and others. The Employment Tribunals dismissed the claims. The Employment Appeal Tribunal dismissed three appeals on the basis that Mr Khan’s bankruptcy deprived him of status to continue them.

The Court of Appeal had to determine whether the causes of action vested in the trustee in bankruptcy and, if so, whether the appeals could continue after Mr Khan limited the relief sought to personal remedies. The unfair dismissal appeal also raised the effect of the earlier decision in Grady.

All three appeals were allowed by a majority. The unfair dismissal appeal was remitted to the Employment Appeal Tribunal. The race discrimination and victimisation appeals could continue subject to amendment and compliance with specified conditions.

1. Under sections 283(1)(a), 306(1) and 436 of the Insolvency Act 1986, things in action forming part of the bankrupt’s property vest in the trustee. Personal causes of action remain outside the estate where damages refer immediately to injury to the bankrupt’s body, mind or character rather than property.
2. Following Ord v Upton [2000] Ch 352, a single cause of action containing both personal elements and a claim for distinct financial loss is hybrid. The whole chose in action vests in the trustee, although the trustee may hold personal damages for the bankrupt.
3. Following Grady v HM Prison Service [2003] EWCA Civ 527, an unfair dismissal claim is exceptional. Its primary object is restoration of the employment relationship through reinstatement or re-engagement, with compensation operating as a substitute or corollary.
4. Race discrimination and victimisation claims under the Race Relations Act 1976 are discrete statutory claims, not tort actions. Where financial compensation is sought, they are hybrid claims. Their public-interest character does not prevent vesting in the trustee.
5. Arden LJ and Buxton LJ held that Mr Khan could limit the claims to a declaration and compensation for injury to feelings. The claims would then cease to be hybrid. Permission to amend was discretionary, but was justified by the implicit personal claims, the trustee’s lack of interest, the public importance of examining discrimination complaints and the fact that the bankruptcy had initially been prompted by Trident’s costs demand. The amendments and outstanding document orders had to be completed within 21 days.
6. Buxton LJ observed, without deciding the issue, that Article 6 might be engaged by differential access to an appellate structure and that proportionality was relevant. Wall LJ dissented, considering that the race discrimination and victimisation claims remained hybrid and should be dismissed for want of jurisdiction.

• Court of Appeal (Civil Division): In [2004] EWCA Civ 624, by majority, allowed all three appeals. The unfair dismissal appeal was remitted, and the race discrimination and victimisation appeals were permitted to continue on limited personal relief subject to conditions.
• Employment Appeal Tribunal: On 25 February 2003 dismissed the three appeals, holding that Mr Khan’s bankruptcy deprived him of status to prosecute them, but granted permission to appeal.
• Employment Tribunals: Dismissed Mr Khan’s race discrimination, victimisation and unfair dismissal claims.