HEARING DATES 25, 26, 27 February & 1 April 1985
Education - Students' fees - Overseas students - Cypriot resident in England for education purposes only - Acceptance by college as overseas student not "ordinarily resident" in E.E.C. - Subsequent court ruling that "ordinarily resident" includes residence for education purposes only - Whether student entitled to rebate of difference between overseas students' rate paid and home students' rate Discrimination, Race - Racial group - Non-E.E.C. nationals - College charging higher fees for non-residents of E.E.C. for reasons of economy - Whether policy "justifiable irrespective of... national origins" - Whether student able to recover overpayment of fees - Race Relations Act 1976 (c. 74), ss. 1(1)(b), 17, 57(3), 72
HEADNOTE
The plaintiff, a citizen of Cyprus, had been resident in the United Kingdom for the purposes of education since 1978. In September 1982 he was accepted by the defendant college for a three year degree course starting in October 1982. For the session 1982-83 the fees were £480 for home students and £3,600 for overseas students. The college informed the plaintiff that to be classified as a home student for fee purposes he had to show that he had been ordinarily resident within the European Economic Community for the three years prior to 1 September 1982 and since he had not established that, he would be classed as an overseas student liable to pay fees at the overseas rate. They explained that living in the E.E.C. solely for the purposes of education did not constitute ordinary residence. On 14 October 1982 he paid the college £1,800 as the first instalment of the overseas fee. On 16 December 1982 the House of Lords held in Reg. v. Barnet London Borough Council, Ex parte Shah [1983] 2 A.C. 309 that "ordinary residence" included residence for the purposes of education. The college thereafter informed the plaintiff that they would not require him to pay the second instalment of the overseas fee for the year 1982-83 but that they would not reimburse him any part of the fee which he had already paid.
The plaintiff commenced proceedings in the county court for £1,320, the difference between the amount he had paid the college and the home student fee of £480 and sought, inter alia, a declaration that by charging him at the overseas student rate the college had unlawfully discriminated against him on racial grounds contrary to sections 1(1)(b) and 17 of the Race Relations Act 1976 (s.1(1): see post, pp.769G-770A; s.17: see post, p.770D-E). The college admitted for the purposes of the action that the proportion of persons of the plaintiff's racial group, whether Cypriot, non-British, or non-E.E.C. nationals, who could comply with an ordinary residence requirement was considerably smaller than the persons not of that racial group who could comply with it but relied on the justification that the residence requirement had been introduced for reasons of economy and did not involve discrimination on racial grounds in that it was justifiable irrespective of the colour, race, nationality or ethnic or national origins of the plaintiff. The judge dismissed the plaintiff's claim and the Court of Appeal dismissed his appeal.
On appeal by the plaintiff:-
Held, dismissing the appeal, (1) that by the terms of the contract between the plaintiff and the college it had been agreed that "ordinarily resident" did not include residence for purely educational purposes and the fact that it had been later established that the ordinary meaning of that phrase was to contrary effect did not affect the construction of the contract and accordingly, since the college accepted the plaintiff as an overseas student and he had joined the college on that basis, the plaintiff had been liable to pay fees at the overseas students' rate (post, p. 769A-C, D-E).
(2) That by imposing a requirement of three years' residence in the E.E.C. to qualify for classification as a home student, the college indirectly discriminated against the plaintiff within the meaning of section 1(1)(b), whether as a non-British or non-E.E.C. national, because the number of persons of those groups who could comply with the residence requirement would be substantially smaller than persons of British or E.E.C. nationality; that as residence was so closely related to nationality the discrimination could not be justified irrespective of nationality and, accordingly, the college did discriminate against the plaintiff on racial grounds (post, pp. 771C-D, H - 772A, F - 773B).
But (3) that although the college had so discriminated against the plaintiff, and the term of the contract relating to the higher fee was therefore unenforceable under section 72 of the Act that section did not extend to a claim for restitution of the excess amount paid; that since the college had proved that the residence requirement had not been applied with the intention of treating the plaintiff unfairly on racial grounds, section 57(3) precluded the plaintiff from obtaining an award of damages for the amount overcharged (post, pp. 773E, G - 774B, 775D-F).
Per curiam. The concession that the college's residence requirement fell within the meaning of section 1(1)(b)(i) of the Act of 1976 should not have been made with regard to persons of Cypriot nationality. No sensible comparison can be made between the numbers of Cypriots and non-Cypriots seeking admission to the college (post, pp. 770F-G, 771E-H).
Decision of the Court of Appeal affirmed.
INTRODUCTION
APPEAL from the Court of Appeal
This was an appeal by the plaintiff, Charalambos Orphanos, by leave of the Court of Appeal (Griffiths and May L.JJ.) from their order of 14 September 1984 dismissing the plaintiff's appeal from the decision of Judge McDonnell in the Westminster County Court on 13 June 1984 giving judgment for the defendants, Queen Mary College, in respect of the plaintiff's claim for a refund of oe1,320 being the amount paid by him at an overseas students' rate in excess of the fee payable by home students; and holding, that the college in charging the plaintiff the higher fee on the ground that he did not satisfy their residence requirement for entitlement to pay home students' fees, had not unlawfully discriminated against him contrary to sections 17 and 1(1)(b) of the Race Relations Act 1976.
The facts are set out in the opinion of Lord Fraser of Tullybelton.
COUNSEL
Michael Beloff Q.C., Judith Beale and David Pannick for the plaintiff:
(1) On the true construction of the contract the student was only obliged to pay fees at the home student rate for the full three years of the course, because he satisfied a criterion of the contract itself establishing that his liability was so limited. The relevant term of the agreement between the college and student relating to the basis on which students were to pay fees provided that "ordinary residence" was to be given its ordinary and natural meaning (the one attributed to it in Reg. v. Barnet London Borough Council, Ex parte Nilish Shah [1982] Q.B. 688) and insofar as the college persisted in regarding the student as an overseas student they were misinterpreting their own contract. Alternatively, the student would have been entitled to be treated as a home student inasmuch as he was able to show that he would be in receipt of an award from the Inner London Education Authority.
(2) If, contrary to proposition (1), the student was liable to pay fees at the overseas student rate, the inclusion of such a term in the contract for the academic year 1982-83 was a breach of the Race Relations Act 1976. It is conceded that the college can show that their residence requirement was justifiable, but justifiability can fail to satisfy the test in section 1(1)(b)(ii) of the Act of 1976 of being "irrespective of the... nationality or... national origins of the person to whom it is applied", irrespective of any racial prejudice; and it is clearly contemplated by the Act that a condition can fail that test notwithstanding that it is "neutral" in form between different racial groups. In Mandla (Sewa Singh) v. Dowell Lee [1983] 2 A.C. 548, 567 it was stated by Lord Fraser of Tullybelton that "irrespective of" in the context of section 1(1)(b)(ii) of the Act of 1976 means "without regard to." That case also highlights that bona fides is of itself no defence; neither is the fact that one may be sympathetic to the reasoning advanced to justify the condition if, objectively speaking, the justification fails the test in the subsection. If the college had sought to implement its economies by restricting student numbers by, say, the number of A levels necessary for entry, that would have been a discrimination irrespective of national origins - to make a requirement intended to restrict the entry of non-British nationals plainly is not.
If the contract obliged the student to pay overseas fees and the imposition of such an obligation constituted a breach of the Act of 1976, the student is entitled to relief in respect of the amount he paid the college in 1982 in excess of the home fee either by way of damages or by way of recovery of money had and received, under section 72 of the Act of 1976. In respect of the damages claim, the college cannot escape liability by reliance on section 57(3) of the Act of 1976. They cannot discharge the onus of proving that the requirement was not applied with the intention of treating him (among others) unfavourably on grounds of nationality or national origin: the very purpose of framing the requirement in the way in which the college did was to render most persons of other than British nationality or national origins ineligible for home fees. In respect of the restitution claim, section 72(6) of the Act of 1976 provides that an order under section 72(5) as the court "thinks just for removing or modifying any term made unenforceable by section 72(2)" may include "provision as respects any period before the making of the order." On its proper construction, this subsection gives to the court a wide discretion to make provision for restitution of any sums paid under an unenforceable term. [Reference was made to Ealing London Borough Council v. Race Relations Board [1972] A.C. 342.]
Anthony Scrivener Q.C. and Heather Hallett for the defendants: On the contract point, it was agreed by the terms of the contract that "ordinary residence" did not include residence for purely educational purposes and in any event the college retained the right to decide for itself whether a student was to be classified as home or overseas. With regard to the effect of the Shah decision [1982] Q.B. 688, it is not always correct to say that ignorance of the law is no defence: Henderson v. Folkestone Waterworks Co. (1885) 1 T.L.R. 329.
It is conceded that as a matter of law prima facie a differentiation with respect to different fees paid by home and overseas students amounted to unlawful indirect discrimination and therefore the sole issue is whether the same is justifiable irrespective of the colour, race, nationality, or ethnic or national origins of the student. Any discrimination there had been was without regard to racial grounds since it was done in accordance with Government policy which was based on economic factors and not racial grounds. The word "justifiable" in section 1(1)(b)(ii) of the Act of 1976 should not be given a restricted meaning but its ordinary and natural meaning in the context of the legislation. It does not mean "necessary" or "unconnected with."
As to remedies available to the student in the event of the college being guilty of indirect discrimination within the Race Relations Act 1976 this would only give rise to the remedies specifically provided by the Act since it constitutes an exclusive code on racial matters. It is a self-contained statutory code and when the draftsman wishes to use the word "compensation" he does so - he doesn't vaguely call it "provision" as the appellant has argued. If the requirement that the student should pay a higher fee was an unlawful act, it is, therefore, nothing to do with section 72 of the Act of 1976 - it is to be treated as a claim for damages under section 57(3). Any such claim, however, would fail, because the word "intention" in that subsection is to be read as "motive." There would need to be a knowledge or intention to commit the forbidden act. Those elements are clearly lacking in the present case and therefore the college can rely on section 57(3).
Beloff Q.C. in reply: The word "irrespective" in section 1(1)(b)(ii) of the Act of 1976 should be read as untainted by any racial consideration. The imposition of the requirement need not have been animated by a hostile motive, but if the effect is nevertheless racial in its effect, indirect discrimination will have occurred. In section 57(3) the legislature clearly had the provisions of section 1(1)(b) in mind and the student is not precluded therefore by section 57(3) from an award of damages. [Reference was made to Reg. v. Commission for Racial Equality., Ex parte Westminster City Council [1984] I.C.R. 770.]
Their Lordships took time for consideration.
PANEL: Lord Fraser of Tullybelton, Lord Diplock,Lord Keith of Kinkel, Lord Roskilland Lord Bridge of Harwich
JUDGMENT BY LORD FRASER OF TULLYBELTON, 1 April 1985
My Lords, the appellant ("Mr. Orphanos") is a citizen of Cyprus, of Greek nationality, who has been a student at the respondent college ("the college") since October 1982, when he entered on a three years' course in mechanical engineering. He came to the United Kingdom in December 1978 and since then he has been resident in the United Kingdom for the purposeof education. The first issue in the appeal is whether he was liable to pay fees to the college for the academic year 1982-1983 as an overseas student, for whom the appropriate rate was £3,600, or as a home student for whom the appropriate rate in that year was only £480. The solution of that issue depends on the true construction of the contract between Mr. Orphanos and the college. Both the judge in the county court (Judge McDonnell) and the Court of Appeal (Griffiths and May L.JJ.) decided this issue in favour of the college, and held that Mr. Orphanos was liable as an overseas student.
The second issue is whether, if Mr. Orphanos is liable to pay fees at the overseas students' rate, the college, by charging him at that rate, has unlawfully discriminated against him on racial grounds, contrary to the Race Relations Act 1976. The solution of that issue depends on the construction of the Act, particularly of section 1(1)(b). On this issue the judge in the county court decided that the college had not discriminated against him on racial grounds. Griffiths L.J. in the Court of Appeal agreed with the judge, but May L.J. held that it had discriminated. The third issue, or group of issues, is whether, if Mr. Orphanos is successful on either of the first two issues, he is entitled to repayment from the college of the difference between the sum of £1,800 which he paid in respect of the first half year's fee at the overseas rate, and £480, being one year's fee at the home rate. The difference is £1,320. May L.J. held that, although there had been unlawful discrimination on racial grounds against Mr. Orphanos, there were provisions in the Act which resulted in his having no remedy against the college.
The facts of this case are typical of those which apply to many students at the college and at other colleges and universities in the United Kingdom, and it is being treated as a test case. Very substantial amounts of money are at stake, amounting in the case of the respondent college alone to about £250,000.
The history of government grants to universities and colleges in this country since the war of 1939 to 1945 is admirably summarised in the judgment of the circuit judge, to which I gratefully refer for a statement of the background out of which this appeal has arisen. All I need say here is that by the academic year 1982-1983 the college, like other colleges and universities in the United Kingdom, was financed largely by a substantial government subsidy in repect of each home student up to its "target number," but it received no such subsidy for overseas students. The consequence was that, in accordance with government policy, it was forced in practice, though not by any legal compulsion, to charge overseas students fees sufficient to cover the full cost of their education.
For the purposes of university fees, a home student was defined in arrangements approved and issued by the government as one who had been "ordinarily resident" in the United Kingdom, or in another E.E.C. country, for at least three years before 1 September 1982, and it was generally accepted in 1982 that "ordinarily resident" meant having his "real home" in the area - that is residing here for all ordinary purposes of living - and that residing here solely for the purpose of education did not constitute ordinary residence. That understanding was upheld by the High Court and by the Court of Appeal in Reg. v. Barnet London Borough Council, Ex parte Shah [1982] Q.B. 688, but on appeal to this House, the House decided that the understanding was wrong and that residence for the purpose of education alone was enough to constitute ordinary residence: see [1983] 2 A.C. 309. As a result of that decision of the House, the question arose whether many students, including Mr. Orphanos, who had previously been classified as overseas students were entitled to be reclassified as home students and to have their fees reduced accordingly. If so, the further question arose whether those who like Mr. Orphanos had paid fees at the overseas rate were entitled to repayment of the excess over the amount properly due by home students.
The contract issue
Counsel for the parties agree, rightly in my view, that the relationship between Mr. Orphanos and the college was contractual. Griffiths L.J. considered in some detail the various documents from which the terms of the contract between them have to be collected, and I need not repeat what he has said. I agree with him that, as the college conceded, the contract was not concluded until Mr. Orphanos enrolled at the college in October 1982 for the first session of his three year course. I agree with Griffiths L.J. also that the terms of the contract relating to the basis on which Mr. Orphanos' fees would be charged are to be found in two documents which were enclosed in a letter to him from the college dated 3 March 1982. The first of these documents was a circular letter ("document B") which is in the following terms:
"Dear Sir/Madam,Overseas Students Fees
To be classified as a 'home' student and therefore to be eligible to pay fees at the home student rate, you must show that you have been ordinarily resident in the area comprising the European Community for at least three years immediately preceding 1 September 1982. The area comprising the European Community is:... In your case we have not been able to establish that you will have been ordinarily resident in the area of the European Community for the three years immediately preceding 1 September 1982. If you join this college in October 1982 you will therefore be classed as an overseas student and will be liable to pay fees at the overseas rate. The note overleaf attempts to give some guidance on what does and what does not, constitute ordinary residence. If you feel that you have a case for being classified as a 'home' student do not hesitate to write and tell us and we will consider what you have to say."
The second document is the "note overleaf" which appears on the back of that circular letter and is in the following terms:
"Ordinary Residence - Notes for GuidancePlease understand that these notes are for your guidance only and do not provide authoritative definitions. Each case will be considered on its merits.
1. A student is likely to be regarded as being ordinarily resident if he or she can show that he/she has a right to remain in this country, or in any other country within the European
Community area, without restriction on stay. (To be classified as a 'home' student for fees purposes he or she must have had this right for at least three years prior to 1 September 1982.)
2. Living in this country or another country in the area of the European Community solely for the purposes of education and without the right to permanent stay does not constitute ordinary residence...
5. If a student can show that an award will be made by a local education authority in England or Wales..., then the student will be treated as a home student."
After receiving these documents Mr. Orphanos made representations that he should be classified as a home student, but the college did not accept that view. In the event he enrolled in October 1982 and paid the first half-year's fees at the appropriate rate for an overseas student, namely oe1,800 for the half-year. The guidance as to the meaning of the expression "ordinarily resident " given in these documents was in accordance with the accepted view when the documents were sent out in March 1982, and indeed until December 1982, when the decision of this House in Reg. v. Barnet London Borough Council, Ex parte Shah [1983] 2 A.C. 309 showed that it was erroneous. The argument for Mr. Orphanos was that he was entitled, in accordance with document B, to be classified as a "home" student if he could show that he had been "ordinarily resident" in the area of the E.E.C. for at least three years before 1 September 1982, that "ordinarily resident" should be construed according to the ordinary and natural meaning of those words, and that that meaning had been determined by this House in Shah's case as including residence for the purposes of education alone. Counsel for Mr. Orphanos relied on the speech of my noble and learned friend Lord Scarman in Shah's case who said, at p. 340:
"Ordinary residence is not a term of art in English law. But it embodies an idea of which Parliament has made increasing use in the statute law of the United Kingdom since the beginning of the 19th century. The words have been a feature of the Income Tax Acts since 1806."
And at p. 343:
"Unless, therefore, it can be shown that the statutory framework or the legal context in which the words are used requires a different meaning, I unhesitatingly subscribe to the view that 'ordinarily resident' refers to a man 's abode in a particular place or country which he has adopted voluntarily and for settled purposes as part of the regular order of his life for the time being, whether of short or of long duration."
And at p. 344:
"An attempt has been made in this case to suggest that education cannot be a settled purpose. I have no doubt it can be. A man's settled purpose will be different at different ages. Education in adolescence or early adulthood can be as settled a purpose as a profession or business in later years."
Mr. Beloff argued that there was nothing in the legal context of the contract between Mr. Orphanos and the college which required a different meaning to be given to the words "ordinarily resident" and therefore that, as Mr. Orphanos had admittedly lived in England for more than three years before 1 September 1982 (in fact since December 1978), he was entitled to be classified as a home student notwithstanding that his residence had been only for the purpose of education. I was at first impressed by this argument but I have eventually reached the conclusion that it is not well founded, and that it cannot stand in the face of the sentence which I have emphasised in the penultimate paragraph of document B, which unambiguously informed Mr. Orphanos that if he joined the college in October 1982 he would "therefore be classed as an overseas student and will be liable to pay fees at the overseas rate." He did join the college in October 1982, and I have no doubt that, as both the courts below have held, he then became liable to pay fees at the overseas rate.
A separate argument was presented, based on paragraph 5 of the "notes for guidance" on the reverse side of document B. The argument was based on the fact that in July 1983 the Inner London Education Authority (in whose area Mr. Orphanos had resided for the three years immediately before 1 September 1982) informed him and the college that following the judgment of this House in the Shah case [1983] 2 A.C. 309 they were bestowing on him an award. In fact they paid Mr. Orphanos the sum of £480 in repect of his fees for the academic year 1982-1983, which must have been on the basis that they were treating him as a home student. In my opinion this argument also fails. The contract was concluded in October 1982, when Mr. Orphanos enrolled at the college, and after that it was too late for him to alter it by showing that the local education authority were giving him a grant.
Accordingly the arguments for Mr. Orphanos based on the construction of the contract fail.
The race relations issue
The next question is whether, if Mr. Orphanos was liable, on the true construction of the contract, to pay fees at the rate applicable to an overseas student for the year 1982-83, the charging by the college to him of such fees constituted discrimination within section 1(1)(b) of the Race Relations Act 1976. If it did, such discrimination would clearly be unlawful because of the provisions of section 17(a) of the Act. Before considering this question it will be convenient to set out the relevant sections of the Act. Section 1(1) provides:
"A person discriminates against another in any circumstances relevant for the purposes of any provision of this Act if - (a) on racial grounds he treats that other less favourably than he treats or would treat other persons; or (b) he applies to that other a requirement or condition which he applies or would apply equally to persons not of the same racial group as that other but - (i) which is such that the proportion of persons of the same racial group as that other who can comply with it is considerably smaller than the proportion of persons not of that racial group who can comply with it; and (ii) which he cannot show to be justifiable irrespective of the colour, race, nationality or ethnic or national origins of the person to whom it is applied; and (iii) which is to the detriment of that other because he cannot comply with it."
Section 3 so far as here relevant, provides:
"(1) In this Act, unless the context otherwise requires - 'racial grounds' means any of the following grounds, namely colour, race, nationality or ethnic or national origins; 'racial group' means a group of persons defined by reference to colour, race, nationality or ethnic or national origins, and references to a person's racial group refer to any racial group into which he falls. (2) The fact that a racial group comprises two or more distinct racial groups does not prevent it from constituting a particular racial group for the purposes of this Act.... (4) A comparison of the case of a person of a particular racial group with that of a person not of that group under section 1(1) must be such that the relevant circumstances in the one case are the same, or not materially different, in the other."
Section 17, which deals with discrimination in the field of education provides, so far as here relevant:
"It is unlawful, in relation to an educational establishment falling within column 1 of the following table, for a person indicated in relation to the establishment in column 2 (the 'responsible body') to discriminate against a person - (a) in the terms on which it offers to admit him to the establishment as a pupil; ..."
The table in section 17 includes "university." By section 78 of the Act it is provided that "'university' includes a university college and the college, school or hall of a university." There is therefore no doubt that the respondent college is an educational establishment within section 17.
It is not contended on behalf of Mr. Orphanos that the college discriminated against him directly, under paragraph (a) of section 1(1). The contention is that it discriminated against him indirectly under paragraph (b) by applying to him the requirement of three years' ordinary residence in the E.E.C. area. That requirement will only be discriminatory within the meaning of paragraph (b) if it falls within all three sub-paragraphs (i), (ii), (iii). Clearly it does fall within sub-paragraph (iii) because Mr. Orphanos, not having been "ordinarily resident" in the area of the E.E.C. for three years before 1 September 1982, cannot now comply with that requirement. Sub-paragraph (i) is more doubtful, but the college has conceded that it also applies. This concession was made in a notice of admission in the following terms:
"take notice that for the purposes of this action only, [the college] admits the following: that the proportion of persons of [Mr. Orphanos'] racial group, namely, of Cypriot or non British or non E.E.C. nationality or national origins, who can comply with (a) a permanent residence requirement and or (b) an ordinary residence requirement is considerably smaller than the proportion of persons not of that racial group who can comply with it."
Griffiths L.J. admitted to "private doubts" as to the correctness of that concession. I share his doubts, so far as they apply to Cypriots (or Greek Cypriots). Strictly speaking the House could proceed simply on the basis of the admission without considering whether it had been made correctly, but as this is a test case, and as the point does not seem to be covered by any authority, I think it is right to attempt to clarify a somewhat obscure provision. The draftsman of the notice of admission evidently had in mind section 3(2) of the Act of 1976 (quoted above) which provides in effect that a racial group may comprise two or more distinct racial groups.
The admission seems to be made on the footing that Mr. Orphanos belongs to three racial groups (Cypriot, non-British, and non-E.E.C.) and that it makes no difference which of these groups is chosen for the comparison required by section 1(1)(b)(i). I agree that Mr. Orphanos belongs to each of these groups, and that each is a "racial group" as defined by section 3(1) as extended by section 3(2). But I do not agree that it makes no difference which of these groups is used for the comparison under section 1(1)(b)(i). The comparison must be between the case of a person of the same racial group as Mr. Orphanos and the case of a person not of that racial group, but it must be such that "the relevant circumstances in the one case are the same, or not materially different, in the other": see section 3(4).
The "relevant circumstances" in the present case are, in my view, that Mr. Orphanos wished to be admitted as a pupil at the college, so the comparison must be between persons of the same racial group as him who wish to be admitted to the college, and persons not of that racial group who so wish. Consider first the two largest groups - namely persons of non-British and non-E.E.C. nationality (omitting the reference to national origins brevitatis causa.) I have no doubt that the proportion of persons of non-British and non-E.E.C. nationality who wish to attend the college and who can comply with the requirement of having ordinarily resided in the E.E.C. area for three years immediately before 1 September 1982 is substantially smaller than the proportion of persons not of that group (i.e., persons who wereBritish or E.E.C. nationals) who wish to attend the college and who can comply with it. That seems obvious and causes no difficulty. But consider now the group consisting of persons of Cypriot (or Greek Cypriot) nationality and compare it with the group consisting of persons not of Cypriot (or Greek Cypriot) nationality, i.e., consisting of all persons (except Cypriots) of every nationality from Chinese to Peruvian inclusive. If the comparison is between persons of those groups who wish to be admitted to the college as pupils I do not see how any sensible comparison can be made because it would be impracticable to ascertain the numbers of persons so wishing. On the other hand if it is limited to persons who actually apply to the college for admission it would omit all those who may have been deterred from applying because they knew that they would not comply with the residence qualification. A comparison limited to applicants would, in my view, be entirely unsatisfactory.
I am accordingly of opinion that the concession should not have been made with regard to persons of Cypriot nationality. But the omission of that part of the concession would make no difference to the result because in terms of section 3(1), references to a person's racial group refer to any racial group into which he falls. As Mr. Orphanos falls into two racial groups, both of which are caught by. section 1(1)(b)(i), that is enough to make that paragraph apply to his case.
On the assumption that the residence qualification is therefore caught by section 1(1)(b)(i), it is necessary to consider under 1(1)(b)(ii) whether the requirement is "justifiable irrespective of the colour, race, nationality or ethnic or national origins of the [student] to whom it is applied." Nationality is the only one of these grounds which is in question in this appeal. "Justifiable" means, in my opinion, "capable of being justified." "Irrespective of" in that subsection means "without regard to," as I said in Mandla (Sewa Singh) v. Dowell Lee [1983] 2 A.C. 548, 566, and I see no reason to alter that opinion. No doubt the main reason for introducing the residence requirement was, as Mr. Scrivener said, to curtail public expenditure on education in the interest of economy. That reason itself did not involve discrimination on racial grounds. But the particular method of curtailment may have done so. Various methods of curtailing the expenditure were possible; grants to all students could have been cut by an equal percentage, and their fees could have been correspondingly increased, or grants could have been restricted by reference to the academic qualifications of applicants. No doubt many other methods were possible. The method chosen was to concentrate grants on home students, and to cease subsidising foreign students. The justification relied on by the college is set out in more detail in the further and better particulars of their defence which includes statements to the following effect:
"3. The fees of home students are subsidised. There is no good reason why the fees of overseas students should be subsidised from public funds... 4. The government cannot afford to subsidise overseas students. 6. The use of fees is a legitimate means of regulating the admission of overseas students and has the advantage of reducing public expense... 7. The previous system had resulted in a large increase in numbers and a large increase in the cost to the British taxpayers with little relationship between the pattern of those large student numbers and Britain's own long-term priorities."
These statements show that the main motive for introducing the residence requirement was economy. But the economy was to be effected at the expense of foreign students. That may have been a perfectly reasonable and justifiable policy for the British Government to adopt but in my opinion the college, on whom the onus lies under section 1(1)(b)(ii), has not been able to justify the requirement without having regard to the nationality of the applicants at whose expense the policy was carried into effect. The typical example of a requirement which was caught by section 1(1)(b)(i) but which was nevertheless justifiable irrespective of racial grounds was Panesar v. Nestle Co. Ltd. (Note) [1980] I.C.R. 144 (mentioned in Mandla (Sewa Singh) v. Dowell Lee [1983] 2 A.C. 548, 567) where it was held that a rule forbidding the wearing of beards in the respondent's chocolate factory was justifiable
on hygienic grounds notwithstanding that the proportion of Sikhs who could conscientiously comply with it was considerably smaller than the proportion of non-Sikhs who could comply with it. The justification there was purely a matter of public health and nothing whatever to do with racial grounds. But in the present case the discrimination is in accordance with a policy directed against persons who are not ordinarily resident in the E.E.C. area, and ordinary residence is in my view so closely related to their nationality that the discrimination cannot be justified irrespective of nationality.
For these reasons I agree with May L.J. that the college did discriminate on racial grounds against Mr. Orphanos.
Remedies - restitution or damages
On behalf of Mr. Orphanos it is claimed that, if he has established a breach by the college of section 1(1)(b) and section 17 of the Act of 1976, as I hold that he has, he is entitled either to restitution of the excess of oe1,320 which he paid for the first half-year's fees, or to damages. The claim for restitution is founded on section 72, which, so far as relevant, provides:
"(1) A term of a contract is void where - (a) its inclusion renders the making of the contract unlawful by virtue of this Act; (2) Subsection (1) does not apply to a term the inclusion of which constitutes, or is in furtherance of, or provides for, unlawful discrimination against a party to the contract, but the term shall be unenforceable against that party."
Subsection (2) applies to this case as the objectionable term constitutes unlawful discrimination against Mr. Orphanos who is a party to the contract. So the term is unenforceable against him, but that is not itself enough to entitle him to restitution of the amount overpaid. For that he relies on section 72(6) which has to be read along with subsection (5). These subsections provide:
"(5) On the application of any person interested in a contract to which subsection (2) applies, a designated county court... may make such order as it thinks just for removing or modifying any term made unenforceable by that subsection;... (6) An order under subsection (5) may include provision as respects any period before the making of the order."
The argument for Mr. Orphanos is that the word "provision" in section 72(6) is wide enough to include an order, or a term in an order, for repayment of a sum overpaid. Mr. Beloff invited us to remit the matter to the county court for the judge to make such order for repayment as, in his discretion, he might think just. In my opinion this argument involves reading into the word "provision" in section 72(6) far more than it can properly stand. Section 72(5) empowers the court to make an order for removing or modifying an unenforceable term, and the power given by section 72(6) to include a retrospective provision must in my opinion be limited to provisions which are ancillary to or consequential upon the main part of the order. An order for repayment would not be of that character. Moreover, claims by a person against whom discrimination has been committed have as a rule to be made under section 57 of the Act of 1976, and are subject to short limitation periods fixed by section 68(1) and (2). But if a claim for restitution could be pursued under section 72(6) it would not be subject to those limitation periods, and it seems very unlikely that that can have been intended.
Accordingly I reject the argument based on section 72(6).
Damages
A claim for damages would be made on the basis that Mr. Orphanos has suffered damage to the extent to which he has been overcharged for the first year's fees, namely £1,320, perhaps with the addition of a further sum for loss of interest on that sum or for the cost of borrowing it. I shall assume, without deciding, that a claim for damages could be properly mounted on that basis. The question then arises whether it would be excluded by section 57(3) of the Act of 1976.
Before turning to the terms of that subsection I draw attention to the fact that it occurs in Part VIII of the Act of 1976 which deals with enforcement. The first section in Part VIII is section 53 which provides, so far as relevant:
"(1) Except as provided by this Act no proceedings, whether civil or criminal, shall lie against any person in respect of an act by reason that the act is unlawful by virtue of a provision of this Act. (2) Subsection (1) does not preclude the making of an order of certiorari, mandamus or prohibition."
The effect of that section is that, apart from judicial review and the equivalent procedure in Scotland under subsection (3), any proceedings to enforce the Act are prohibited except such as fall within the separate code authorised by the Act itself. Sections 54, 55 and 56 provide an elaborate code for enforcement of remedies in the field of employment. Section 57 makes provision for enforcement of claims under Part III of the Act which is the part that includes section 17 relating to discrimination in the field of education, being the field to which this appeal relates. Section 57(1) so far as relevant provides:
"A claim by any person ('the claimant') that another person ('the respondent') - (a) has committed an act of discrimination against the claimant which is unlawful by virtue of Part III;... may be made the subject of civil proceedings in like manner as any other claim in tort or (in Scotland) in reparation for breach of statutory duty."
The reference to any "other" claim in tort or in reparation shows that it is only claims of those types which are permitted under the Act of 1976. Consequently a claim for money had and received in England, or under the condictio indebiti in Scotland, is not admissible. Subsection 57(3) provides:
"As respects an unlawful act of discrimination falling within section 1(1)(b), no award of damages shall be made if the respondent proves that the requirement or condition in question was not applied with the intention of treating the claimant unfavourably on racial grounds."
May L.J. in the Court of Appeal had no difficulty in holding that although the college had, in his view, discriminated against Mr. Orphanos on racial grounds, it had done so unintentionally. I have reached the same conclusion, though with rather more difficulty. I approach the consideration of section 57(3) with two points in mind. First, the subsection applies only to an unlawful act of discrimination under section 1(1)(b), that is to acts of indirect discrimination, and it does not apply to acts of direct discrimination under section 1(1)(a). No doubt the reason is that an act of direct discrimination falling within section 1(1)(a) would necessarily be done with the intention of treating the claimant unfairly on racial grounds.
Secondly, the subsection evidently assumes that not all acts of indirect discrimination falling within section 1(1)(b) need be done with that intent; without that assumption the subsection would be useless.
So it is not right to say that any discrimination on racial grounds which (like the college's residence requirement) cannot be justified under section 1(1)(b)(ii) irrespective of the nationality of the claimant, must necessarily have been applied with the intention of treating him unfairly on racial grounds. Section 57(3) is looking at the subjective intention of the discriminator. Subsection 1(1)(b)(ii), on the other hand, is looking at the objective possibility of justifying the discrimination without reference to any of the racial grounds. When the college applied the residence test to Mr. Orphanos their intention was to discriminate against persons who did not reside in the E.E.C. area but there is, in my opinion, no ground for suggesting that they were intending to discriminate against them on the ground of their nationality or on any other racial grounds. Unfortunately, the discrimination on the grounds of residence cannot be justified irrespective of nationality, and it is therefore unlawful under the Act of 1976, but its unlawfulness is unintentional and accidental. I would therefore hold that, the requirement in question not having been applied with the intention of treating Mr. Orphanos unfavourably on racial grounds, he is precluded by the provisions of section 57(3) from obtaining an award of damages.
For these reasons I would refuse the appeal. The college should have its costs against the legal aid fund subject to the normal right of The Law Society to be heard against the making of such an order.
JUDGMENT BY LORD DIPLOCK
My Lords, I have had the advantage of reading in draft the speech of my noble and learned friend, Lord Fraser of Tullybelton. I agree with it and for the reasons which he gives I would dismiss the appeal.
JUDGMENT BY LORD KEITH OF KINKEL
My Lords, I agree that this appeal should be dismissed for the reasons set out in the speech of my noble and learned friend, Lord Fraser of Tullybelton.
JUDGMENT BY LORD ROSKILL
My Lords, I have had the advantage of reading in draft the speech delivered by my noble and learned friend, Lord Fraser of Tullybelton. I agree with it, and for the reasons which he gives I would dismiss the appeal.
JUDGMENT BY LORD BRIDGE OF HARWICH
My Lords, for the reasons given in the speech of my noble and learned friend Lord Fraser of Tullybelton, with which I agree, I would dismiss this appeal.
DISPOSITION
Appeal dismissed.
SOLICITORS
Solicitors: Bindman & Partners; Stanleys & Simpson North.
C. T. B.