THE EQUALITY TRIBUNAL
EQUAL STATUS ACTS 2000-2008
Decision DEC-S2009-083
PARTIES
Paddy Fitzgerald
and
Dairygold Co-Operative Society Limited
(represented by Ms. Rosemary Mallon B.L.
File Reference: ES/2007/0076
Date of Issue: 1st December, 2009
Equal Status Act 2000-2008
Equality Officer Decision
DEC-S2009-083
Paddy Fitzgerald
-v-
Dairygold Co-Operative Society Limited
(Represented by Ms. Rosemary Mallon B.L.
on the instructions of Arthur Cox Solicitors)
Keywords
Equal Status Acts 2000-2008 - Direct discrimination, Section 3(1)(a) - Indirect Discrimination, Section 3(1)(c) - Age Ground, Section 3(2)(f) - Victimisation Ground, Section 3(2)(j) - Disposal of Goods and Services, Section 5(1)
Delegation under the Equal Status Acts, 2000-2008
This complaint was referred to the Director of the Equality Tribunal on 16th July, 2007 under the Equal Status Acts, 2000 to 2004. On 11th December, 2008, in accordance with her powers under Section 75 of the Employment Equality Acts, 1998 to 2008 and under the Equal Status Acts 2000 to 2008, the Director delegated the complaint to me, Enda Murphy, an Equality Officer, for investigation, hearing and decision and for the exercise of other relevant functions of the Director under Part III of the Equal Status Acts, 2000 to 2008 on which date my investigation commenced. As required by Section 25(1) and as part of my investigation, I proceeded to hearing on 11th November, 2009.
1. Dispute
1.1 This dispute concerns a claim by the complainant, Mr. Paddy Fitzgerald, that he was discriminated against by the respondent, Dairygold Co-Operative Society Limited, on the grounds of his age in terms of Sections 3(1), 3(2)(f) and 3(2)(j) of the Equal Status Acts, 2000 to 2008 in not being provided with a service which is generally available to the public contrary to Section 5(1) of the Equal Status Acts, 2000 to 2008.
2. Background to the Complaint
2.1 The respondent is a society registered under the Industrial and Provident Societies Acts, 1893 to 1978. It was formed upon the amalgamation of Ballyclough Co-Operative Creamery Limited and Mitchelstown Co-Operative Agricultural Society Limited in 1990. It's business includes the manufacture of dairy based food ingredients and the provision of farm inputs to its customers through its Agri-Trading division. The respondent currently has over 9,000 members (shareholders) who are divided into four categories, namely A1 members, A2 members, A3 members and A4 members. For the purposes of the present complaint it is the A1 and A3 categories which are relevant and they may be described as follows: an A1 member shall be inter alia (a) a milk supplier to the respondent, or (b) a purchaser of feed, fertilizer and qualify farm requisites and an A3 member shall be a member of the respondent who has not supplied milk to the respondent nor purchased feed, fertilizer or qualifying farm requisites from the respondent for five or more calendar years.
2.2 The rules which govern the respondent provide that the net surplus available for allocation shall each year be applied in such manner as the members at the Annual General Meeting may decide but may not exceed the allocations as may be recommended by the Board. The rules also provide that the members, upon recommendation of the Board, may apply any part of the annual surplus, or any amount standing to the credit of a reserve account of the respondent, to the allocation of fully paid up bonus shares in the respondent to members of the respondent, including the allocation of bonus shares related to trade. A resolution to allocate bonus shares to members of the respondent in consideration for their trade with the respondent during the previous year has been considered and approved at each AGM since the formation of the respondent. Accordingly, these bonus shares have been issued to members based on their trade with the respondent during the previous year. The rationale for the issue of bonus shares is to recognize the fact that the annual surplus/reserves of the respondent has been generated by trade conducted by the respondent with it's members and others and to incentivise A1 members to continue to trade with the respondent.
3. Summary of the Complainant's Case
3.1 The complainant, who is aged 71 years, is a retired farmer and he has been a member and shareholder in the respondent company since it's formation in 1990. The complainant ceased to trade with the respondent in 1996 and as a result the category of membership which he held has been re-classified from A1 to A3 in accordance with the rules of the Society.
3.2 The complainant stated that this re-classification of his membership means that he is no longer entitled to receive bonus shares and consequently, it has resulted in a dilution of his shareholding in the respondent on each occasion that the respondent makes an allocation of bonus shares to the A1 members. The complainant submitted that farming is a physical occupation and that as a farmer progresses in age his level of farming activity reduces which means that he is not is a position to conduct the same volume of trade with the respondent as a younger farmer. He submitted that an older farmer (such as himself) is therefore more likely than a younger farmer to be categorised as an A3 member of the Society. The complainant claims that he is being discriminated against by the respondent on the grounds of his age on the basis that as an A3 member he no longer trades with the respondent and is therefore not entitled to be allocated bonus shares. The complainant also stated that his voting rights, as an A3 member, on issues concerning the Society are restricted and he claims that he is not allowed to vote on issues such as the allocation of bonus shares. He submitted that the main purpose of the rules which restrict the voting rights of A3 members is to prevent older people from voting to protect their interests in the Society. The complainant also claims that he has been subjected to victimisation by the respondent.
4. Summary of the Respondent's Case
4.1 The facts of the case as outlined in paragraphs 2.1, 2.2 and 3.1 above were not disputed by the respondent.
Issue of jurisdiction
4.2 The respondent raised an issue of jurisdiction that the alleged discrimination in this case i.e. the issue of bonus shares by the respondent to it's members clearly does not come within the definition of a "service" within the meaning of section 2(1) of the Equal Status Acts. The respondent stated that the complainant would appear to be claiming that shares come within the definition of "goods" as defined in section 2(1) of the Acts i.e. "any article of moveable property". However, the respondent also submitted that this definition of "goods" within the Acts does not include shares. It was therefore submitted that the Tribunal does not have the jurisdiction to investigate the present complaint.
4.3 Without prejudice to the foregoing, the respondent submitted that while section 5 of the Equal Status Acts prohibits discrimination on the age ground in relation to the disposal of goods, it explicitly provides that those selling goods may require that consideration be provided in return for the goods. It was submitted that the respondent requires trade with it in order to qualify for the issue of bonus shares and accordingly, trade with the respondent is the consideration required by it for the issue of bonus shares. It was submitted that there has therefore been no discrimination contrary to section 5 of the Acts, since the complainant, as an A3 member or non-trading member is not in a comparable situation to members, who provide to the respondent, consideration by way of trade which, in turn, contributes to the respondent's surplus and reserves out of which the bonus shares are allocated. The respondent submitted that the age of a member is not a qualification criterion for the categorisation of members or the receipt of bonus shares. The respondent therefore rejects the allegation that it has directly discriminated against the complainant.
4.4 The respondent also rejects that it has indirectly discriminated against the complainant on the grounds of his age. It denied that the requirement to trade with the respondent is a requirement which an older person would find more difficult to satisfy than a younger person. The respondent submitted that it has a number of members who are older than the complainant and who are actively seeking to buy milk quotas in order to extend their milk supplies to, and trading levels with the respondent. The respondent also submitted that in the event the Tribunal were to decide that the requirement to trade with the respondent constitutes a requirement which an older person would find more difficult to satisfy than a younger person that such a requirement may be objectively justified by a legitimate aim where the means of achieving that aim are appropriate and necessary. The respondent stated that the aim of its requirement for trade with its members in return for the issue of bonus shares is to provide a reward to A1 members for their trade with it during the previous year and to provide an incentive to A1 members to continue to trade with it. The respondent submitted that the allocation of bonus shares to members is an appropriate and necessary means of achieving that aim. The respondent stated that the complainant is not in a comparable situation to the active members, as he as an A3 member is not providing consideration for the issue of these bonus shares by trading with the respondent. The respondent also denied that it has subjected the complainant to victimisation within the meaning of section 3(2)(j) of the Equal Status Acts.
5. Conclusions of the Equality Officer in relation to the issue of jurisdiction raised by the respondent
5.1 I will first consider the issue of jurisdiction that have been raised by the respondent because, if I find in favour of the respondent on these issue, I am therefore precluded from considering the substantive complaint. The respondent has submitted in the course of it's arguments that the alleged discrimination in this case i.e. the issue of bonus shares by the respondent to it's members clearly does not come within the definition of a "service" or "goods" within the meaning of section 2(1) of the Equal Status Acts.
5.2 In considering this issue, I note that a "service" is defined in section 2(1) of the Acts as "a service or facility of any nature which is available to the public generally or a section of the public, and without prejudice to the generality of the foregoing, includes ...... ". There follows an illustrative list of examples among which are a professional or trade service. The respondent in the present case is a society registered under the Industrial and Provident Societies Acts, 1893 to 1978. The definition of an entity which may be registered as a society under these Acts is outlined at section 4 of the 1893 Act i.e. "A society which may be registered under this Act (herein called an industrial and provident society) is a society for carrying on any industries, businesses, or trade specified in or authorised by its rules, whether wholesale or retail, and including dealings of any description with land". Having regard to this definition, I am satisfied that a society which is registered under this legislation is an entity that engages in trade and/or provides facilities for trading on behalf of and for the benefit of it's members.
5.3 It is clear from the "Objects of the of the Society" which are contained at page 9 of the Rules of Dairygold Co-operative Society Limited that the respondent is such an entity which provides the aforementioned facilities for and on behalf of its members. It is the case that the members of the respondent are shareholders and the rules of the society make provision for the distribution of a net surplus or reserves at the end of a trading year among its members (in the form of an allocation of bonus shares). The aim of this allocation of bonus shares is to provide a reward to members (albeit those in the A1 category) for their trade with the respondent and to provide an incentive for these members to continue trading with the respondent. I am of the view that the relationship which exists between the members of the society and the respondent (which includes the distribution of profits in the form of an allocation of bonus shares), in the circumstances of the present case, is covered by the broad definition of "service" contained within the Equal Status Acts. Having regard to the foregoing, I am satisfied that the Tribunal has the jurisdiction to investigate the substantive allegations of discrimination that have been made by the complainant in the present case.
6. Conclusions of the Equality Officer in relation to the substantive issue
6.1 The Equality Officer must first consider whether the existence of a prima facie case has been established by the Complainant. Section 38A of the Equal Status Acts sets out the burden of proof which applies in a claim of discrimination. It requires the complainant to establish, in the first instance, facts upon which he can rely in asserting that prohibited conduct has occurred in relation to him. It is only where such a prima facie case has been established that the onus shifts to the respondent to rebut the inference of discrimination raised. In making my decision, I have taken into account all of the evidence, both written and oral, made to me by the parties to the case.
Direct or Indirect Discrimination
6.2 The question arises in the present case as to whether the alleged discrimination should be considered under the provisions of the Equal Status Acts that deal with direct or indirect discrimination. In considering this issue, I note that the complainant claims that he has been subjected to discrimination on the grounds of his age on the basis that, as an A3 member of the society, he is no longer entitled to receive bonus shares which the respondent allocates to A1 members from it's net surplus and reserves as a reward for their trade during the previous trading year. The complainant claims that the allocation of bonus shares to A1 members in consideration for their trade has the effect of diluting the value of his shareholding in the respondent society. The complainant further claims that an older farmer (such as himself) is less likely to be in a position to conduct trade with the respondent than a younger farmer due to the physically demanding nature of the trade. He, therefore, submits that he is being placed at a disadvantage as compared to the A1 members in terms of the allocation of bonus shares which he claims has the effect of diluting the value of his overall shareholding in the respondent society.
6.3 In considering this issue, I note that it is only the A1 category of members who are entitled to benefit from an allocation of bonus shares out of the respondent's net surplus or reserves. The rules that govern the respondent provide that in order to qualify as an A1 member a person must be a milk supplier to the respondent or a purchaser of feed, fertiliser and qualifying farm requisites. The rules also provide that an A3 member shall be a member of the respondent who has not supplied milk nor purchased feed, fertiliser or qualifying farm requisites for five or more calendar years. It is therefore clear that in order to be categorised as an A1 member there is a requirement to conduct a certain minimum level of trade with the respondent. Given the physically demanding nature of farming as an occupation, I am satisfied that as a farmer progresses in age it becomes increasingly difficult for him/her to engage in the required level of trade with the respondent which would preserve his/her status as an A1 category member. I accept that the respondent has a number of members in the A1 category who are over the age of 65 years (there are 4,300 members in the A1 category and the respondent could only provide information of the age in relation to 800 of these members of which 109 members were aged 65 years or over). Having regard to the statistical evidence presented by the respondent it would appear that the vast majority of farmers in the A1 category are under the age of 65 years (i.e. 13% are aged 65 or over whereas 87% are under the age of 65 years). Section 3(1)(c) of the Equal Status Acts makes provision for indirect discrimination in the following terms:
"where an apparently neutral provision puts a person referred to in any paragraph of section 3(2) at a particular disadvantage compared with other persons, unless the provision is objectively justified by a legitimate aim and the means of achieving that aim are appropriate and necessary"
Having regard to the foregoing, I am satisfied that the requirement to conduct trade with the respondent in order to attain and preserve A1 category membership (and therefore be entitled to receive an allocation of bonus shares) constitutes an apparently neutral provision which places an older farmer at a particular disadvantage compared to a younger farmer within the meaning of section 3(1)(c) of the Acts. I therefore find that the complainant has succeeded in raising an inference of indirect discrimination (rather than direct discrimination) on the age ground under the Equal Status Acts.
Objective Justification
6.4 In order to successfully rebut an inference of indirect discrimination under the Equal Status Acts, it is necessary for the respondent to demonstrate that the provision is objectively justified by a legitimate aim and that the means of achieving that aim are appropriate and necessary. In considering this issue, I note that the respondent has argued that the aim of it's requirement for trade with it in return for the issue of bonus shares is as follows:
- to provide a reward to A1 members for their trade with the respondent in the previous year, and
- to provide an incentive to A1 members to continue trading with the respondent.
The respondent is a profit orientated entity and therefore its commercial success or failure is largely dependent on the levels of trade which it conducts with its members. I am of the view that the aim of rewarding shareholders and providing them with an incentive to continue trading constitutes a legitimate aim for a commercial entity such as the respondent. I am therefore satisfied that respondent has succeeded in establishing that the requirement to trade with it in return for the allocation of bonus shares can be objectively justified by a legitimate aim.
6.5 However, in accordance with the provisions of section 3(1)(c) of the Acts, I am also obliged to consider whether the means of achieving that aim are appropriate and necessary. In the present case, the means by which the respondent achieves the aim of rewarding members for their trade and of providing an incentive to continue to trade with it is by way of distributing its net surplus and reserves among shareholders at the end of a trading year (which manifests itself through the issue of bonus shares to A1 members). It is only the members in the A1 category that contribute towards the generation of the net surplus and reserves through the trade which they have conducted with the respondent in the previous trading year. I am therefore satisfied that it is entirely appropriate and totally legitimate for an industrial and provident society such as the respondent to reward these members (in accordance with the rules of the society) by distributing any net surplus by means of an allocation of bonus shares.
6.6 I also note that the complainant has argued that the allocation of bonus shares to only the A1 category members has the effect of diluting his shareholding in the respondent. In considering this issue, I have taken cognisance of the judgement of the Supreme Court in the case of Kerry Co-Operative Creameries Ltd. and Patrick O'Connell -v- An Bord Bainne where it was held that "assets acquired by an industrial and provident society are the property of the society and no shareholder has a legal right to any specific portion thereof. Such a society is also free to issue shares to new members or to allot new shares to existing members even though the effect is to reduce the fractional interest of existing members in the capital of the society. There is no implied term in the contract between a shareholder and the society of which he is a member that the fractional interest he has in the society's share capital will remain constant". I accept that the judgement in this case was not delivered in the context of a dispute under the equality legislation or equality related issues. However, I am of the view that the conclusions reached in the foregoing part of the judgement are persuasive in terms of my reaching a decision in the present case that the respondent has established that the aforementioned means of achieving the aim were appropriate and necessary. Based on the foregoing, I am satisfied that the respondent has established that the provision in question i.e. the requirement to trade with it in return for the allocation of bonus shares is objectively justified by a legitimate aim and that the means of achieving that aim are appropriate and necessary. Accordingly, I find that the respondent has succeeded in rebutting the inference of indirect discrimination on the age ground within the meaning of the Equal Status Acts.
7. Victimisation
7.1 The complainant has also claimed that he was subjected to victimisation by the respondent. However, having regard to the evidence adduced, I find that I have not been presented with any evidence from which I conclude that either the complainant in the present case has been subjected to victimisation within the meaning of Section 3(2)(j) of the Equal Status Acts, 2000 to 2008. Accordingly, I find that the complainant has failed to establish a prima facie case of discrimination on the victimisation ground.
8. Decision
8.1 In accordance with Section 25(4) of the Equal Status Acts, 2000 to 2008, I conclude this investigation and issue the following decision. I find that the complainant has established a prima case of indirect discrimination on the age ground in terms of Sections 3(1)(c), 3(2)(f) of the Equal Status Acts, 2000 to 2008 and that the respondent has succeeded in rebutting the inference of indirect discrimination. Accordingly, I find in favour of the respondent in this case.
Enda Murphy
Equality Officer
1st December, 2009