Appeal No. UKEAT/0429/08/LA
UKEAT/0430/08/LA

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 5 December 2008

Before
THE HONOURABLE MRS JUSTICE SLADE
(SITTING ALONE)

MISS M McLEAN	APPELLANT

(1) TLC MARKETING PLC
(2) MR N TRUE
(3) MR R PAUL
(4) MR B MILLION	RESPONDENTS

Transcript of Proceedings

JUDGMENT

	APPEARANCES

For the Appellant	Written representations	
For the Respondents	MR S SANTOCKI
(Solicitor)
Messrs Cawdery Kayer Fireman &
Taylor Solicitors
25-26 Hampstead High Street
London  NW3 1QA

SUMMARY
PRACTICE AND PROCEDURE:  Compromise
Clear language is needed for an agreement in a COT3 to preclude claims arising from events after it is entered into. Dicta in Royal National Orthopaedic Hospital Trust v Howard [2002] IRLR 849 applied. 

THE HONOURABLE MRS JUSTICE SLADE

1.	Ms McLean appeals from the decision of an Employment Judge not to hear her claim for victimisation, and of the Regional Employment Judge not to permit a review of that decision. Mr Santocki appears for the Respondents. Ms McLean does not appear and her representative is unable to be present today on her appeal. However I have considered his skeleton argument and the Notice of Appeal.

2.	I have before me two appeals by Ms McLean. She appeals from the decision of an Employment Tribunal Judge on 30 June 2008 declining jurisdiction to hear her claim of victimisation, relying on sections 4 and 20A of the Sex Discrimination Act 1975 and from the decision of the Regional Chairman declining to review that decision.  Ms McLean’s ET1 was returned because the Employment Judge decided that an Advisory, Conciliation and Arbitration Service (ACAS) COT3 agreement signed by her removed the Tribunal’s jurisdiction. An application dated 9 July 2008, for a review of the decision of the Employment Judge was rejected by the Regional Employment Judge on 24 July 2008.  She stated:

“The claim has no reasonable prospect of success.  
First, the COT3 compromised all claims arising out of or connected with the employment and its consequences, thus effectively removing the jurisdiction of the Tribunal.  
Secondly, the factual allegations made (under payment/non‑provision of testimonial) are allegations of breach of contract and as such capable of being litigated in the county court.  So the agreement is not unenforceable as you suggest.”

The COT3
3.	The COT3 form was signed by Ms McLean on 25 April 2008, and by TLC, the First Respondent, on 29 April 2008.  It settled equal pay, sex discrimination and victimisation claims 

which had been brought against the Respondents by Ms McLean.  The terms of the COT3 agreement were as follows:
“1) Without any admission of liability the Respondents will pay the total sum of £28,000 to the Claimant who will accept it in full and final settlement of her Employment Tribunal claims against the Respondents and of any other claim whatsoever arising out of or connected with her employment with the Respondents and its termination.
2) By 25 April 2008, following receipt of the COT3 duly signed by the Claimant or her representative the Respondents will pay the above settlement sum to the Claimant by cheque for £28,000 payable to the Claimant and sent to the Claimant’s representative.
3) [A confidentiality clause.]
4) The 1st Respondent, TLC Marketing Plc, will on its headed note paper immediately furnish to the Claimant directly an open testimonial addressed ‘To whom it may concern’ with wording as set out in the accompanying schedule.
5) The 1st Respondent, its employees, officers and agents will respond to enquiries about the Claimant from any prospective or actual employer of the Claimant in a manner consistent with the wording of the above agreed testimonial and not otherwise.”

The issue
4.	The issue in this appeal is whether a fresh claim of post‑termination and post‑COT3 victimisation, brought under sections 4 and 20A of the Sex Discrimination Act 1975, was precluded by the terms of the COT3 compromise agreement.  The merits of such a claim are not relevant to the issues on these appeals.

5.	The factual background to these appeals is as follows.  The Claimant, Ms McLean, was employed in a senior managerial post by the first Respondent until her resignation on 19 May 2007.  She then brought Employment Tribunal proceedings against all four Respondents, her employer and three named individuals, alleging breaches of the Equal Pay Act 1970, unlawful sex discrimination and victimisation. These proceedings ended when the parties entered into a settlement with the assistance of ACAS shortly before 25 April 2008.  The terms of the COT3 form are set out above.

6.	The Respondents failed to pay the full amount agreed and the Claimant, Ms McLean, issued proceedings in the County Court for the balance of the monies due under the COT3 agreement.  She obtained judgment on 23 June 2008 and payment of the judgment debt was made.  I also understand that the agreed reference has now been provided, albeit after a delay.

7.	On 27 June 2008 Ms McLean submitted an ET1 to the Employment Tribunal, claiming victimisation. She alleged that she had been subjected to a detriment by the Respondents by their failure to pay in full the settlement sum before she obtained judgment for the sum and to provide the reference as agreed.  It was alleged by the Ms McLean that the Respondents failed to comply with the terms of the agreement because she had brought proceedings under the Sex Discrimination Act 1975 against them.  This ET1 was not accepted by the Employment Tribunal for the reasons set out in the letter rejecting the application by Ms McLean for a review of the decision of the Employment Judge.

The appeals
8.	Ms McLean contends that the terms of the agreement recorded in COT3 did not settle her fresh claim of victimisation, because they did not preclude future claims which were not in the contemplation of the parties at the time of entering into the agreement.  It is said that the Employment Judge erred in constructing the agreement and that the rejection of her ET1 was contrary to the decision in Royal National Orthopaedic Hospital Trust v Howard [2002] IRLR 849 (EAT). Reliance was placed in particular on Paragraph 9 of the Judgment in that case. It is said that the COT3 signed by Ms McLean does not refer to future claims.  The only reasonable interpretation of that document is that the parties are settling any claims, whether they are aware of them or not, which existed, or could have existed, at the time of the agreement. Ms McLean asserts that no reasonable Employment Tribunal Judge could have concluded that the COT3 agreement deprived the Tribunal of jurisdiction to consider a claim of victimisation arising from events after it had been entered into. 

9. 	In the appeal against the refusal of a review of the decision of the Employment Judge Ms McLean repeats the contentions outlined in support of the main appeal.  She also refers to the case of Bank of Credit and Commerce International SA v Munwar Ali and Others [2001] IRLR 292 pp 293-4 (HL).  

10.	The Respondents outlined their resistance to the appeal in a letter dated 24 November 2008.  They contend:

“(1) That the Tribunal has no jurisdiction to hear this appeal as it is merely a contractual matter further to the agreement of the COT3.
(2) and (3) [Not material to this appeal.]
(4) That the Claimant has no basis on which to appeal as all the terms of the COT3 have now been complied with by the Respondents.
[Then there is a reference to no evidence in support of the victimisation claim, again not relevant to this appeal.]
(6) That, in the light of all the above grounds, the claim has no reasonable prospects of success.”

11.	The substance and merits of the victimisation claim are not material to the current appeal. The appeal is concerned with the Employment Judge’s decision to decline jurisdiction on the basis that the COT3 agreement precluded the victimisation claim being lodged based on events after the conclusion of the agreement and the refusal of a review of that decision.

12.	The Respondents contend that Royal National Orthopaedic Hospital Trust v Howard is to be distinguished.  First it is said that the victimisation alleged by Ms McLean relates solely to delay in complying with the terms of the COT3, the provision of an agreed form of testimonial, and the payment of the balance of £28,000, £14,000.  It is said that fulfilment of these terms must have been in the express contemplation of the parties when the COT3 was agreed. Thus it was the objective intention of the parties to release claims relating to the fulfilment of the terms of the agreement from the jurisdiction of the Employment Tribunal.  Second, the wording of the COT3 in this case is wider than in the Howard case, as it provides for:
“… full and final settlement of [Employment Tribunal claims against the Respondents] those proceedings and of all claims … whether [and that word is emphasised and relied upon] arising under her contract of employment or out of the termination thereof ….”

Third, the victimisation in the Howard case did not relate to fulfilment of the terms of the COT3.  Fourth, the victimisation in the Howard case took place some two years after the original claim which was compromised by the COT3.

13.	In oral submissions, Mr Santocki, who has said everything that could be said on behalf of the Respondents, repeats the contentions which are in the Respondent’s Answer and in the letter of 24 November 2008.  He says that on its proper construction the relevant clause in the COT3 form:
“full and final settlement of her Employment Tribunal claims against the Respondents and of any other claim whatsoever arising out of or in connection with her employment with the Respondents and its termination.”

settles any claim arising out of events after as well as before the date of the COT3 agreement.  If that is not a correct construction, then he contends that the clause at the very least must include the compromise of any claim arising out of the bargain recorded in the COT3 agreement to pay the sum of £28,000, and to provide a testimonial in agreed terms.

14.	Mr Santocki submits that while the clause is certain as to its minimum effect and provision, it is not certain as to its total ambit. He contends that, whatever the clause means, it must apply so as to preclude a claim based on the contractual bargain set out in the agreement. However there may be some uncertainty as to whether the agreement also precludes claims based on events occurring after the agreement was entered into.  For example these may be libel proceedings brought against the Respondents by Ms McLean, arising out of communications to others, including potential employers after the date of the COT3 agreement.  

15.	Mr Santocki submits that a claim based on failure to comply with the terms of the contract in the COT3 would not be precluded on a proper construction of the relevant provision in the COT3 agreement. He seeks to distinguish that exception on the footing that it must have been in the contemplation of the parties that proceedings could be pursued to enforce the contractual bargain in the COT3.  So, notwithstanding that the victimisation claim is based on the very same facts as would found a breach of contract claim, Mr Santocki submits it is precluded by the terms of the agreement.

The relevant statutory provisions
16.	The Employment Rights Act 1996, section 203(1) provides:
“Any provision in an agreement (whether a contract of employment or not) is void insofar as it purports – 
(b) to preclude a person from bringing any proceedings under this Act before an [employment tribunal].”

Section 203(2)(e) provides that:
“Subsection (1) does not apply to any agreement to refrain from instituting or continuing proceedings where a Conciliation Officer has taken action under section 18 of the Employment Tribunals Act 1996.”

17.	Section 18 of the Employment Tribunals Act 1996 applies to claims which could be brought, or could be the subject of Employment Tribunal proceedings under a number of statutory provisions, which include the Equal Pay Act 1970 and the Sex Discrimination Act 1975.  Where an application has been presented to an Employment Tribunal Section 18(2) obliges a Conciliation Officer to endeavour to promote a settlement if he is requested to do so by the person by whom and the person against whom the proceedings are brought. 

18.	 Sex Discrimination Act 1975, Section 77(1) provides:
“(1) A term of a contract is void where – 
(a)	 its inclusion renders the making of a contract unlawful by virtue of this Act, or
(b)	 it is included in furtherance of an act rendered unlawful by this Act. or
(c)	 it provides for the doing of an act which would be rendered unlawful by this Act.”

19.	Section 77 subsection (3) and (4) provide:
“(3) A term in a contract which purports to exclude any provision of this Act or the Equal Pay Act 1970 is unenforceable by any person in whose favour the term would operate, apart from this subsection.
(4) Subsection (3) does not apply – 
(a) to a contract settling a complaint to which section 63(1) of this Act or section 2 of the Equal Pay Act 1970 applies where the contract is made with the assistance of a conciliation officer.”

20.	The COT3 agreement entered into by Ms McLean was made with the assistance of a Conciliation Officer and is not rendered void by the provisions of section 77 of the Sex Discrimination Act. The issue is therefore the proper construction of Clause 1 of the COT3 agreement.

21.	The Employment Appeal Tribunal in Royal National Orthopaedic Hospital Trust v Howard [2002] IRLR 849 was concerned with an agreement settling an Applicant’s complaint of unlawful sex discrimination, which was said to: 
“be in full and final settlement of these proceedings, and of all claims which the Applicant has, or may have, against the Respondent, (save for claims for personal injury and in respect of occupational pension rights), whether arising under her contract of employment or out of the termination thereof….”

It held that the Employment Tribunal had not erred in concluding that agreement did not preclude the Claimant from bringing a claim for victimisation under the Sex Discrimination Act 1975 when some time after the agreement, she was refused permission to work for one day in a private capacity at the Royal National Orthopaedic Hospital. Having considered the various authorities, including Bank of Credit and Commerce International SA v Ali and Others [2001] IRLR 292, the Employment Appeal Tribunal held at paragraph 9:

“In our judgment the law as to contracts for release is pretty straightforward.  The law does not decline to allow parties to contract that all and any claims, whether known or not, shall be released.  The question in each case is whether, objectively looking at the compromise agreement, that was the intention of the parties, or whether in order to correspond with their intentions some restriction has to be placed on the scope of the release.  If the parties seek to achieve such an extravagant result that they release claims of which they have and can have no knowledge, whether those claims have already come in existence or not, they must do so in language which is absolutely clear and leaves no room for doubt as to what it is they are contracting for.  We can see no reason why as a matter of public policy a party should not contract out of some future cause of action. But we take the view that it would require extremely clear words for such an intention to be found.”

22.	Mr Santocki’s primary contention is that Clause 1 of the COT3 precludes all claims whenever arising. It therefore precludes claims arising after the conclusion of the agreement.  He places particular reliance on the word “whatsoever” in the phrase “In full and final settlement of her Employment Tribunal claims against the Respondents, and of any other claim whatsoever”. He contends that the word “whatsoever” evidences the intention of the parties to preclude any claim arising from events in the future as well as events in the past.  Mr Santocki contends that by Clause 1 of the COT3 Ms McLean has contracted out of bringing claims of whatever nature and whenever arising, whether before or after entering the agreement, which are connected with, or arising out of, her employment with the Respondents and its termination.

23.	Applying Royal National Orthopaedic Hospital Trust v Howard, clear words are needed in a COT3 to preclude claims in respect of which an agreement to contract out is otherwise rendered void by statute. In my judgment, the construction contended for by the Respondents does not accord with what objectively would be regarded as being in the reasonable contemplation of the parties.  If the parties are taken to be bound so that a Claimant would be precluded from pursuing any claim arising from facts which had not arisen at the date of the agreement, but which may arise at any time thereafter, applying the expression used in Howard, such a result would be extravagant. Clear words would be required in a COT3 to achieve such a result. In my judgment the language of the clause does not lend itself to such a construction.  Further, Mr Santocki’s construction would mean that no claim in contract can be brought to enforce the terms of the agreement.

24.	If his primary construction of Clause 1 of the COT3 is not accepted, Mr Santocki submits that the COT3 permits contract claims based on breach of the agreement but precludes other claims based on the same facts. The basis for this distinction is that proceedings to enforce the agreement would have been within the contemplation of the parties.

25.	I confess that I have some difficulty in understanding why, in the absence of express provision to that effect, all claims based on future events would be precluded with the exception of contract claims for breach of the agreement.  I do not accept that such a term is to be implied on the basis that it must have been within the contemplation of the parties that they should be free to pursue claims to enforce the terms of the agreement but not to pursue other claims based on its breach.

26.	Further, in my judgment, to urge a construction of the clause which permits a contract claim based on failure to fulfil the terms of the COT3, but precludes a victimisation claim based on the very same facts, is inconsistent and, in my judgment, not warranted by the language of the COT3. Clause 1 of the COT3 does not include words “precluding claims, save for proceedings for the enforcement of the terms of the agreement”, which would be required if such a result were to be achieved. 

27.	I allow the appeal against the refusal of the Employment Judge to accept the Employment Tribunal claim based on alleged victimisation occurring by reason of the failure of the Respondents to adhere to the terms of the agreement in the COT3.  The claim is remitted for consideration on its merits by an Employment Tribunal.

28.	So far as the appeal against the refusal of a review is concerned, the Appellant has not shown any ground within the Employment Tribunal (Constitution and Rules of Procedure) Regulations 2004, Rule 34(3), which would enable the Employment Tribunal to review its decision.  Accordingly, I dismiss the appeal against the refusal to review the decision of the Employment Judge. In any event the appeal against the refusal to review is rendered academic in the light of the success of the appeal from the decision of the Employment Judge.