1/ Parr v Moore Stephens: CA finds exercise of a discretion to de-equitise a partner on reaching normal retirement age a 1-off act rather than continuing conduct.
bailii.org/ew/cases/EWCA/…
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2/ Mr Parr was a longstanding equity partner at MS accountancy firm. The firm's LLP Members' Agreement set a normal retirement date of the accounts date following a 60th birthday and then set out what followed from reaching that milestone.
3/ In basic terms, the whilst cl29.2 set a normal retirement date, cl29.4 allowed for discretion to extend membership of the LLP for a specified period on a valid business case being presented, & also discretion to employ the member instead of continuing as a LLP member.
4/ P reached normal retirement age and it was agreed under cl29.4 that he would remain a LLP member for 2 more years but not as an equity partner. The MD didn't think there was a business case for him to remain in equity. A De-Equitisation Agreement was drafted & signed.
5/ Unfortunately for P, losing equity led to a substantial loss a year or so later when MS merged with BDO. Had he been an equity partner still, he'd have made about £3m from the merger & sales of parts of the business. Ouch!
6/ It's important to understand that whilst discretion had been exercised to de-equitise P but allow him to remain a member, there had been other cases where discretion had been exercised to allow the member to remain an equity partner after reaching 60.
7/ Following the painful loss, P brought an age discrimination claim in the ET, but this was outside of the prima facie time limits for bringing a claim if it crystallised on the decision to de-equitise or signing that agreement.
8/ The ET characterised the de-equitisation as a demotion to fixed share partner & considered the rule governing normal retirement date to be a continuing act with time only running from abrogation of the rule. P was only (& only remained) a fixed share partner due to the rule.
9/ The EAT disagreed, finding the change of status to be a 1-off act. The EAT relied heavily on the existence of the discretion (one that had been applied to others) as showing P's complaint to be about a case-by-case basis application of the rules.
10/ The EAT thus distinguished this case from those cases (such as Amies, Calder & Kapur) in which a rule has a continuing discriminatory effect (i.e. the difference b/w a rule saying only men would be appointed & a 1-off decision not to appoint someone because she was female)
11/ Hence the EAT had found that here there was not a rule preventing equity partners from continuing in equity after the age of 60, but the one-off application to P of a discretion under an allegedly discriminatory rule under which members could be so prevented on reaching 60.
12/ P appealed, relying heavily on the HL approval in Kapur of Amies & Calder. Amies concerned an art teacher whose claim concerned her non-appointment to a job a man was given. The HL approved the EAT making the distinction I set out in tweet 10.
13/ In Calder the employer restricted a mortgage subsidy to male employees over 25, thus the HL in Kapur approved the EAT holding that there was continuing discrimination against C once over 25 & still in this employment.
14/ P sought to rely on these cases as showing that a change of status is a 1-off act unless the omission arises from a rule or policy, & that his case fell into that exception, relying on Seldon to show a mandatory retirement age is a rule even if there's discretion to extend.
15/ P also sought to assert that given the EqA explanatory note said s.123 was intended to reproduce previous legislation, it should be interpreted as if s.68(7)(a) RRA was still in effect, as per the terms set out below:
16/ The CA gave that proposition should shrift as a 'startling' one as it would suggest that including a mandatory retirement age clause rendered the making of the contract an unlawful act - a proposition with startling consequences.
17/ MS's position was that this was a straightforward 1-off act in which the de-equitisation agreement had the effect of terminating the partnership once & for all & emphasising that resulted from exercising the contractual discretion rather than an inevitable outcome.
18/ MS also relied on Tyagi v BBC (where T complained a year after his employment ended that over a year earlier he'd been victim to a continuing policy of not appointing those of Asian origin). The CA held the continuing act provisions don't bite when not in action vis-a-vis T.
19/ The CA agreed with MS. Kapur distinguished between a 1-off decision & a continuing state of affairs. The former was shown well by Sougrin & Amies where a decision not to appoint the claimant was an alleged act of discretionary discrimination rather than application of a rule.
20/ P's de-equitisation was a 1-off decision. Cl.29.2 could only be applied once. Also, viewing it with Cl.29.4 it was exercise of a discretion, & the case law distinguished between rules with inevitable discriminatory outcomes as against discretions without that inevitability.
21/ Moreover, relying on Tyagi, once the de-equitisation decision was made & effected re P, the relevant LLP agreement clauses were no longer "in action" for him. They couldn't be applied to him again, they were in the past as much as if he'd been dismissed.
22/ Finally, the CA considered there force in MS's policy concern that if P was right LLPs would be more ruthless in putting retirement clauses into effect to end the relationship lest demotion exposes them to a claim for as long as the contractual relationship remains in force.
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