Monday, June 19, 2006
Ms D Williams tribunal judgement
The red and blue highlights in certain passages have been added by myself. These highlights are not an attempt to précis the document just show passages more relevant to R&CBC:
Case Number 2504420/03 & Others
THE EMPLOYMENT TRIBUNALS
BETWEEN
Claimants Respondent
Ms D Williams & Others AND
JUDGMENT OF THE EMPLOYMENT TRIBUNAL
HELD AT Thomaby on
2005
13 AprU 2005
and Deliberations
15 & 18
CHAIRMAN
Mr J J L Hargrove
MEMBERS
Mrs M Jackson
MR B C Willey
RESERVED JUDGMENT
The unanimous judgment of the Tribunal is that
I The COT3 agreements signed by the sample. claimants were valid applying section 77(4) of the Sex Discrimination Act and/or section 18 of the Employment Tribunals Act to settle the equal pay claims in respect of the period leading up to the date when each claimant signed and returned the COT3, but not in respect of the period thereafter up to
2 The COT3 agreements were not void or voidable for unconscionable conduct on the part of the respondent.
3 Even if there has been conduct which is to be interpreted as being unconscionable, the claimants affirmed the C013 agreements by election by receiving and cashing the settlement cheques, or are estopped from asserting that the COT3 applications are void by that act, which was to the respondent’s detriment.
4 The parties have liberty to apply to clarify any points as to the extent of this ‘judgment.
REASONS
This is the fourth Hearing of substantive issues in this equal pay multiple. The respondent applies to strike out claims made by claimants who have, in advance of presenting their claims to the Tribunal, signed COT3 forms and received payments by cheque in accordance with the agreement contained ‘ the COT3. Five sample claimants have given evidence.
2 In each case they, banked cheques received in accordance with the agreement into accounts but have not, we are told, drawn out any money. We do not know whether this applies to all of the 250 claimants who have signed COT3 agreements and in respect of whom there is an application to strike out.
3 It is necessary to set out some of the history of this litigation in order to place this application to strike out in context. Originating applications were filed from
an applicant shows that a male comparator has been in receipt of (a) attendance allowance and (b) bonuses and the applicant has herself not received such payments then the applicant will be entitled to payments in respect of arrears subject to proof of loss and the limitation period set out in the Equal Pay Act 1970 Amendment Regulations 2003.”
Following a further hearing for directions on
4 This application to strike out is confined to those claimants who presented claims to the Tribunal after
(i) White Book JES claims under section 1(2)(b);
(ii) Equal value claims under section 1(2)(c) whereby White Book and Purple Book claimants seek to rely upon Red Book comparators;
(iii) New Green Book claims. In the case of this local authority, a new pay system came into effect as from
(iv) It should also be observed for the sake of completeness that two other distinct types of claim forms have been presented: First, claims which assert that the 2004 agreement contravenes section 77(3) of the Sex Discrimination Act 1977 (“A term in a contract which purports to exclude or limit any provision of ... the Equal Pay Act 1970 is unenforceable by any person in whose favour the term would operate apart from this subsection”) and section 6(1) of the Sex Discrimination Act 1986 (‘Without prejudice to the generality of section 77 of the 1975 Act ... that section shall apply, as it applies in relation to the term of the contract to the following, namely (a) any term of a collective agreement, including an agreement which was not intended, or is presumed not to have been intended, to be a legal enforceable contract ...“.) Both the employer and the trade unions are respondents as are certain individuals. Secondly, victimisation claims whereby the claimants complain of certain public announcements allegedly made by the respondent and its chief executive said to constitute a breach of section 4 of the Sex Discrimination Act on the authority of St Helens Metropolitan Borough Council v Derbyshire f2004] IRLR
851. As stated above, it is only the post
5 At this point it is convenient to set out the precise terms of the common COT3 agreements signed by these claimants and the covering letter sent out on or shortly after 28 January 2004, signed by Mr Cohn Moore, the respondent’s chief executive and Mr John McCormack, the secretary of the joint trade unions, Unison, GMB and TGWU.
The COT3 reads as follows:
Headed “Advisory Conciliation and Arbitration Service,” with an ACAS individual case number, the employee’s name and address, the name and address of the respondent and then “Agreement following conciliation on a claim made by the employee to the Advisory Conciliation and Arbitration Service (no application made to Tribunal at that time of agreement) that action had been taken by the employer in respect of which a complaint of equal pay could be made to an Employment Tribunal”.
“Settlement reached as a result of conciliation action.
We the undersigned have agreed:-
That the employer will pay and the employee agrees to accept the sum of £ . This is an ex gratia payment of compensation for hurt feelings for perceived sex discrimination and is in full and final settlement of all claims the employee has brought or could bring against the employer in connection with the term of their contract of employment.
This settlement does not affect any 1 the employee may have in relation to personal injury claims or accrued rights to the company pension scheme.
The parties believe this payment is not subject to tax or national insurance deductions.
The parties agree to keep the terms of this settlement confidential and not disclose them to any third party save as may be required to be disclosed by law or to a professional advisor.
Payment of the above sum will be made to the employee by cheque, within ten working days of the employer receiving this agreement form signed by the employee.”
There is then a space for the employee and the employer to sign and for the date of signature. At the bottom appear the words “COT3 (non ITI )“. This indicates that it is a standard form used by ACAS in cases where no ITI has yet been filed. The wording of the body of the COT3 is in common form, but was drafted by agreement between the partie.
The’ common form letter which accompanied that blank COT3 form was headed with the address of the Council Chief Executive’s Department and reads as follows:
“Dear
Equal Pay - Compensation
As you may be aware the Council have been in discussions with the trade unions on the implementation of the Job Evaluation Scheme, which forms part of the Single Statement Agreement 1997. All such discussions have been facilitated by ACAS (Advisory Conciliation Arbitration Service), the Independent Government Advice Service.
Part of the implementation of job evaluation requires a new pay model to be developed. The Council and trade unions have agreed a new pay model which they believe will eradicate any form of discrimination. You should have thoved on to the new pay system on
Other discussions that have been taking place have explored how th€ Council might address the issue of any perceived discrimination which may have occurred in the past. In reaching an agreement to compensate those staff that may have suffered past discrimination, the Council and trade unions have sought advice from ACAS.
Attached is a COT3 agreement drawn up by ACAS which outlines what compensation the Council are offering to you. The amount of compensation offered depends upon the Jength of time you have worked for the Council and the number of hours per week you were contracted to work as at
Unison John McCormack (01642444270)
GMB Maxine Bartholomew (01642247332)
TGWU Tim Bush — 01642242314
Those staff who are not a trade union members (sic) can seek advice from Jim Holmes ACAS advisor on 01912696048.
We should stress that this offer of compensation is not negotiable and forms part of an agreement reached by the Council and trade unions. No further offers of compensation will be made.
Should you decide to accept the Council’s offer of compensation and you have taken advice then you should sign the attached document and return it in the envelope provided. Payment will be made within ten days of the Counc.U eceMng the v a No payments will be made until a signed agreement is received.
“yours sincerely
There then appears the signatures of Mr Moore and Mr McCormack.
6 At the Hearing the claimants were represented by Ms 0 Romney of counsel, instructed by Mr S Cross. The respondent was represented by Mr Cavanagh QC, instructed by Mr M Winthrop of Short,
7 The parties were in agreement at the conclusion of the evidence, but prior to. the closing submissions, that the following questions arose:
(I) Did the actions of the ACAS conciliation office(s) comply with the
requirements of section 77(4) of the Sex Discrimination Act and/or section 18
of the Employment Tribunals Act 1996?
(ii) Is the form of the COT3 and of the covering letter to be interpreted as expressly excluding the signatory from bringing claims:-
(a) Under section 1(2)(b) and 1(2)(c) of the Equal Pay Act in respect of the period up to
(b) Under the Sex Discrimination Act 1975?
(c) For unlawful deductions from wages in respect of breach of the equality clause?
(d) Article 141 of the Treaty of
(iii) Is the agreement set out in the COT3 void or voidable as being unconscionable?
(iv) What is the effect of the receipt of and banking of the settlement cheque by any claimant?
8 Relevant legal provisions
8.1 The Tribunal’s jurisdiction to strike out Rule 18(7) in Schedule I to the
Employment Tribunals (Constitution and Rules of Procedure) Regulations
2004 provides that
“A tribunal may make a judgment or order
(a) as to the entitlement of any party to bring or contest particular proceedings:
(b) striking out or amending all or part of any claim ... on the grounds that it is scandalous, or vexatious or has no reasonable prospect of success . . .“
8.2 Section 77 of the Sex Discrimination Act 1975 prescribes the validity of exclusionary contracts. Section 77(3) provides
“A term in a contract which purports to exclude or limit 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.”
Section 77(4) provides
“Subsection (3) does not apply —
(a) to a contract settling a complaint to which ... section 2 of the Equal Pay Act 1970 applies where the contract is made with the assistance of a conciliation officer;
(aa) to a contract settling a complaint to which section 2 of the Equal pay Act applies if the conditions regulating compromise agreements under this Act are satisfied in relation to the contract.”
Section 77(4)A sets out the conditions regulating compromise contracts under the Act which the Tribunal will summarise although they are not directly relevant to the present proceedings. The contract must be in writing and must relate to a particular complaint; the complainant must have received independent legal advice from an advisor who is insured and the contract must identify the advisor and must state that the conditions regulating compromise contracts are satisfied.
8.3 There are similar provisions in section 203 of the Employment Rights
Act 1996 prohibiting contracting out from the provisions of that Act. Section
203(2)(e) provides that the exclusionary provision
“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.
There is also a provision relating to compromise agreements in almost identical terms as that in the Sex Discrimination Act.
8.4 The material part of section 18 of the Employment Tribunals Act 1996 reads as follows
“(I) This section applies in the case of employment tribunals and
claims which could be the subject of employment tribunal proceedings
(a) under
(i) Section 2(1) of the Equal Pat Act 1970,
(ii) Section 63 of the Sex Discrimination Act 1975 . . Section 18(2) provides
‘Where an application has been presented to an employment tribunal and a copy of it has been sent to a conciliation officer, it is the duty of the conciliation officer — 7
Case Number 2504420/03 & Others
(a) if he is requested to do so by the person by whom and
the person against whom the proceedings are brought, or
(b) if, in the absence of any such request, the concfliation officer considers that he could act under this subsection with a reasonable prospect of success, to endeavour to promote a settlement of the proceedings without there being determined by an employment tribunal.”
Section 18(3) provides
‘Where at any time —
(a) a person claims that action has been taken in respect of which proceedings could be brought by him before an employment tribunal, but
(b) before any application relating to that action has been presented by him a request is made to a conciliation officer (whether by that person or by the person against whom the proceedings could be instituted) to make his services available to them, the conciliation officer shall act in accordance with subsection (2) as if an application had been presented to an employment tribunal.”
The functions of ACAS derive from the Employment Protection Act 1975 section 1 and are now dealt with in Chapter 4 of the Trade Union and Labour Relations (Consolidation) Act 1992. It seems to this Tribunal that the material parts are:
(I) section 211 dealing with conciliation officers. That section provides that ACAS shall “designate some of its officers to perform the functions of conciliation officers under any enactment whenever passed relating to matters which are or could be the subject of proceedings before an Employment Tribunal and references in any such enactment to a conciliation officer are to an officer designated under this section”.
(ii) Section 213 empowers ACAS to give advice. It provides that ACAS may, on request or otherwise, give employers, employer associations, workers and trade unions such advice as it thinks appropriate on matters concerned with or affecting or likely to affect industrial relations.
9The parties referred us to the following authorities:
9.1 On the Trade Union’s authority to act. on behalf of members, and non members
(1) Edwards v Skyways [ page 349
8
Case Number 2504420/03 & Others
(ii) Heaton Transport (
(iv) Burton Group — v—Smith [ IRLR 351.
9 On the powers of ACAS to conciliate COT3 Settlements
(v)
(vi) Slack v Greenham Plant Hire [ ICR 617
(vii) Hennessey v Craigmyle & Co [ ICR 461
(viii) Courage Take Home Trade v Keys [ IRLR 427
(ix) Lunt v Merseyside TEC [ ICR 17
(x) BCCI v All [ ICR 337 (House of Lords); and in the Court of Appeal on the “unconscionability” point 2000 IRLR page 398
(xi) Byrnell v British Telecom Plc EAT No 0383/04 Judgment delivered on
9.3 On the construction of COT3 agreements
(xii) Investors Compensation Scheme — v — West Bromwich BS [ IRLR page 896.
(xiii)
9.4 On affirmation, acquiescence and estoppel:
Peyman — v — Lanjani [ 1 Ch.page 457
10 The Tribunal now sets out the relevant background material so far as practicable in chronological order. Save where otherwise stated, there is no dispute. The Tribunal will deal with material disputes of fact later in this Judgment.
10.1 The history of local authority pay systems for manual and other workers relevant to this case has been set out in earlier decisions of this Tribunal to which reference may be made if necessary. The parties are well aware of those facts.
10.2 In May 2003, local authority elections took place. In those elections a coalition of liberal democrat and independent councillors won control of the Respondent Council from labour.
10.3 Mr Cohn Moore told us, and we accept, that the parties in control of the council after the elections were in agreement that the new pay model under the Green Book should be introduced, if possible, by the beginning of the next financial year, namely
10.3 At the beginning of July, Mr Moore became aware of the existence of a leaflet from the now claimants’ solicitor, Mr Cross, which had been circulated in a school, seeking clients to take equal pay claims to a Tribunal. It is necessary at this stage to make some observations about the position of Mr Cross because it is relevant to the Tribunal’s considerations. Mr Cross is a solicitor with an extensive equal pay practice based in the North East of England. He has presented claims to the Tribunal on behalf of local authority employees throughout the North East of England. He was previously a partner in Thompsons, solicitors, who have had as clients trade unions such as the GMB and Unison. Those unions represent a large number of local authority employees. Many of Mr Cross’s clients are current members of those unions. Some are not members of any
10.4 There is a diary entry for
10.5 On
10.6 In the meantime, the pre 27 January2004 equal pay claims were continuing in the Ttibunal towards a Hearing, following the admissions made by the respondent to the initial claims submitted by Mr Cross, initially fixed for 19 January 2004. At this Hearing it was envisaged that specific orders of compensation would be made. A reference to this fact appears in meeting notes for
- “Income Tax, contact Inland Revenue — agree list of jobs to receive compensation — need a draft compensation scheme — agreed in principle compensation: fact system length of service and hours and who is going to get it — Cohn’s letter to staff — draft COT3.”
On 16 December Mr Cohn Moore specifically raised the issue of the looming Tribunal Hearing and whether that the other group would “stop members going to a Tribunal”. The threat of job cuts was also raised. On 17 December there was a reference to the fact that the agreement for compensation could not be “tied up” until Price Waterhouse have given an answer on the Tax Issues. This was a reference to whether or not the payments to be made to employees under the proposed compromise agreements would be free of income tax in the hands of the employees, or subject to tax which would be payable by the respondent.
10.7 The meeting on
“On how ACAS would draw up an agreement for the compensation package. If Stefan Cross ié the representative for employees ACAS would deal with him direct. ACAS could broker the deal between Stefan Cross and RCBC. If an employee decides not to proceed with Stefan Cross they will need to advise the Tribunal in writing, this may incur a cost from Stefan Cross.”
The notes continued:
“It was agreed that unions and RCBC are to issue a joint letter to staff advising that we are here to help, Stefan Cross will take his fees from the compensation, if the e are querying his bill they can contact the Law Society.
It was also suggested a second letter be issued with a tear-off slip advising if the employee chooses for the union to act on their behalf. Members of staff, which are not with the union, are able to contract ACAS for independent advice. ACAS could also meet with RCBC staff in groups to speed up the agreement signing process.
The group agreed all compensation is to be paid direct into the employee’s bank accounts by the end of March.”
10.8 (See page R34). At the next meeting on
“ACAS distributed copies of the compromise agreements. One for staff who were going to the Tribunal and one for those who are not”.
The notes also record that Ms Fairfax advised that the agreement was a legally binding document and that there were “no room for errors on the agreement”. They also record that ACAS offered to meet and consult with staff who were not members of a union to provide independent advice. As the Tribunal understands the position, the actual terms of the COT3 agreement were agreed between the unions and respondent. As were the terms of the joint letter which accompanied the COT3. However, in relation to the latter, we accepted Ms Fairfax’s evidence that she requested that the following sentence should be added to the letter “If you accept this offer, you will give up any statutory right to challenge any equal pay claim you think you have against
10.9 ACAS had arranged, instead of group meetings, for the setting up of a telephone hotline to ACAS which it was anticipated would be used by non- trade union members. This was mentioned in the joint letter from the respondent and the Trade Unions which accompanied the COT3. Members of staff of ACAS received some training. A substantial number of telephone enquiries (145 in all) were subsequently handled (which are recorded on rough worksheets) between 1st and
10.10 Publicity It should be stated that from July 2003, the topic of the discussions between the unions and the Council on the equal pay issue had been mentioned in the monthly newsletter produced by Unison. In particular, in the July issue there was a reference to
“Manual low paid predominantly women within the homecare, catering and cleaning sections being targeted by individuals offering to put equal pay claims in on your behalf in return for a percentage of the money they believe you will win. If you are approached in any way, Unison’s advice is to say and allow your local branch of Unison to conduct negotiations. If you sign up with these people and subsequently wish to withdraw from the contract and allow your union to claim 100% of your compensation for you, you may be liable to pay costs incurred at £160.00 an hour plus letters, emails and telephone calls charged at £16.00 each plus VAT”.
This was clearly a reference to the intervention of Mr Cross. Further references were made in the October 2003 and November 2003 issues and, towards the end of November a joint document headed “Job Evaluation News” was issued signed by the Councils Chief Executive and Mr McCormack. See page R146. In the penultimate paragraph the following is stated:
‘We have started to assemble the information for a compensation scheme for women who have not had equal pay. We are looking not at back pay but at compensation that would be free of deductions like tax, insurance and lawyer’s fees. So for every thousand pounds of compensation from the Council a claimant would need to win over £3,000.00 of back pay from a Tribunal to receive the same money in their hands”.
A similar point was graphically made in Unison’s viewpoint newsletter of December2003 at page R147.
10.11 Mr Moore had been conducting general roadshows with members of staff from the time that he became chief executive in January 2000. Following the Agreement of
10.12 The Tribunal now turns to the facts relevant to each sample claimant.
10.12.1 Lorraine Connor signed her COT3 on
10.12.2 Edith Clark signed her and returned her COT3 on
10.12.3 Dianne Halliday signed and returned her C013 on
10.12.4 Marie Sinclair signed two COT3’s and returned them on or about
10.12.5 Valerie Thwaites signed and returned her COT3 dated
10.12.6 The Tribunal will revert to the facts individual and relevant to these sample cláimànts later in the this judgment. it is to be noted however that they are sampie claimants and not test claimants agreed to be representative of all the claimants who have signed COT3 agreements.
11 Summary of the parties submissions
11.1 The claimants submitted
(I) that it was an irreducible minimum that ACAS should have direct contact with the claimants, which could be done via a solicitor or other directly accredited representative.
(ii) The Trade Unions had authority under the contract of employment to negotiate terms and conditions of employment, but no authority, actual or ostensible, to negotiate concerning individual statutory rights which were to be the subject of a COT3 settlement. None of the cases cited by the respondent supported the proposition the Trade Unions did have any such authority. She cited
(iii) Ms Romney then turned to the principles in section 18 of the Employment Tribunals Act 1996. The first requirement to initiate ACAS involvement, in the absence of an actual claim to a Tribunal under section 18(2)(a), was an intimation of a claim which might lead to proceedings before an Employment Tribunal. There was no evidence that any individual was anticipating taking proceedings. She referred to Freeman — v — Sovereign Chickens [ IRLR page 408. Each claimant who subsequently signed a COT3 should have intimated a claim. Although ACAS had been invited to facilitate a collective agreement, that did not trigger its statutory powers in relation to COT3 settlements.
(iv) ACAS could only act in accordance with section 18 of the Employment Tribunals Act and this included acting under section 77 of the Sex Discrimination Act 1975. The 1975 Act (chapter 65) predated the predecessor to section 18 of the Employment Tribunals Act contained in the Employment Protection Act 1975 (chapter 71) ACAS could only act under the authority of section 18 of the 1996 Act. It was insufficient to infer an intimation of a claim from the fact that a claimant may have signed a COT3. The power to give advice on matters concerned with or effecting or likely to effect industrial relations under section 213 of the Trade Union and Labour Relations (Consolidation) Act did not give power to circumvent section 18 of the Employment Tribunals Act 1996.
(v) Ms Romney made detailed reference to the cases of
— Duport Furniture, Slack — v - Greenham and Hennessy — v — Craigmyfe
(vi) She made detailed criticisms of the absence of action taken by Ms Fairfax as the consultation officer, as compared with action taken by other conciliation officers in subsequent local authority cases in this area including the Stockton Borough Council case. Apart from the absence of contact with individuals, there was no attempt to give a brief description to an employee of the relevant framework of his statutory rights as quoted in the judgment in Slack The nature of the potential claims was never set out in the joint letter or the COT3. It was described as compensation for perceived discrimination. ACAS had backed down on holding meetings to explain the terms of the agreement. Trade Union members were only informed of their right to contact their Trade Union for advice and had not been referred to
ACAS.
(vii) In any event it was claimed that the terms of the COT3 were not effective to exclude the claimants’ white book claims or, even if they were effective to exclude past claims, they were not effective to exclude claims arising after the COT3 was agreed. Reference was made to future claims in passages in the judgment in BCCI — v — Au Nor was it effective to exclude claims made for unlawful deduction from wages or sex discrimination not related to equal pay.
(viii) Ms Romney submitted that even if the COT3 agreements accorded with the statutory requirements, they should be set aside as being unconscionable. She relied upon observations made by the Court of Appeal in BCCI — v - All in particular by Sir Richard Scott VC at paragraph 33. Alternatively she claimed that the agreement should be set aside because claimants were operating under a mistake concerning their rights. The fact that they had earlier cashed cheques received in accordance with the COT3s did not validate a contract which was otherwise invalid.
This is only a brief summary of the extremely lengthy opening and closing written arguments accompanied by two hours of closing oral submissions.
11.2 The Respondent’s Submissions
(i) Mr Cavanagh started with an overview. He pointed to the absence of any reported case in the last 20 years of which he was aware where a claimant had signed a COT3 and then started proceedings otherwise excluded by the COT3. Three out of five of the present sample claimants had paid in cheques after COT3s and then started proceedings. He said that if it be right that a COT3 could be ignored in this case, it was indeed a revolutionary case. The present case raised the following issues
(I) what ACAS has to do to conciliate a binding settlement;
(ii) what advice has to be given to prevent a COT3 being invalid and
(iii) can a person who signed the COT3 voluntarily avoid the consequences of their acts.
He referred to the final paragraph of the joint letter sent out at the end of January 2004. Three out of the five sample claimants had agreed in cross-examination that they knew what it meant. Two out of five did not accept that proposition. The facts provided no support for unconscionability. If the claimants were correct in their interpretation on the claim point under section 18(3) of the Employment Tribunals Act 1996, the much more carefully prepared agreements in the Stockton Borough Council case would also inevitably be invalid.
(ii) Mr Cavanagh compared the different statutory provisions under which ACAS conciliation officers could become involved in conciliating a valid COT3.. He compared the similar provisions in section 77(4) of the Sex Discrimination Act and section 72(4) of the Race Relations Act, with the provisions in section 203(1). It is of some interest that section 9 of the Disability Discrimination Act 1995 follows the Employment Rights Act route and also invokes section 18 of the 1996 Act. On the one hand the provisions in the Sex Discrimination Act and the Race Relations Act state that “subsection 3 does not apply to a contract settling a complaint to which section 63(1) of this Act or section 2 of the Equal Pay Act apply ‘ the contract s made with the assistance of a conciliation officer”
On the other hand the relevant part of section 203(2)(e) provides that “subsection I does not apply to any agreement to refrain from instituting or continuing proceedings when a conciliation officer has taken action under section 18 of the Employment Tribunals Act ri 9961
(iii) He submitted that section 18 of the Employment Tribunals Act was not engaged in the present case at all. All that was required was the assistance of a conciliation officer in settling a complaint, whether it be of sex discrimination or a breach of the Equal Pay Act. He referred to the fact that the predecessor to section 18 of the Employment Tribunals Act predated the Sex Discrimination Act. This is made clear from the judgment of the Court of Appeal in Slack [ 1983] page 617 The immediate predecessor to section 18 was section 140(2) of the Employment Protection (Consolidation) Act 1978. This is in turn derived from identical terms (save for the section numbers) contained in the Trade Union and Labour Relations Act 1974 (see per Tudor Evans J at page 624F).
(iv) ACAS officers have powers to “assist” in contracts for the settlement of a complaint which derives from section 210 of the Trade Union and Labour Relations Consolidation Act 1992. This gives a power to conciliate to bring about a settlement where a trade dispute exists or is apprehended, as defined in section 218(1)(a) — “a dispute connected with terms and conditions of employment”; and section 211 which contains ACAS powers tO designate conciliation officers “undei any enactment (whenever passed) relating to matters which are or could be the subject of proceedings before an Employment Tribunal”.
(v) When asked by the Tribunal why such a distinction should exist, Mr Cavanagh pointed to the facts that time limits for SDA and EPA claims were different (but, we noted, the same as in the Disability Discrimination Act). Secondly, he asserted that Parliament must have thought the powers in section 77(4)(a) of the Sex Discrimination Act were adequate. He asserted that the only answer which the Tribunal could give to the question whether the COT3 settlements were achieved “with the assistance of a conciliation officer” was “of course”.
(vi) In any event, Mr Cavanagh presented a fallback argument. He said that even if section 18 of the Employment Tribunals Act was engaged, it was in any event complied with. He started by analysing the precise requirements of section 1 8(3)(a) and (b). These required “a person” to claim’ that action has been taken in respect of, which proceedings could be brought by him before an Employment Tribunal. We will refer to this as the “personal claim point”.
Next these required: “A request to a conciliation officer by that person or by a potential respondent, to make his services available. If those two conditions were satisfied, the officer was then under a j to act, referring back to section 18(2), “to endeavour to promote a settlement of the proceedings without there being determined by an Employment Tribunal”.
(vii) In the latter connection, he submitted that there was no obligation upon Mrs Fairfax, or Mr Moore, if he was acting as a designated conciliation officer,’ to act in any particular way, or for example to speak to each separate indMdua! potential claimant. It was not within the Tribunal’s remit to decide how the conciliation officers should act (the actions test). As to the requirements of section 18(3)(b) that was clearly satisfied when the respondent’s Chief Executive called in ACAS. As to the requirements of section 18(2)(a), in summary he presented three distinct arguments. First, by reference to distinct passages from the judgments in
(viii) The Tribunal will quote in detail from the’ passages in those judgements in its conclusions.
Secondly, and in any event, he argued that for this limited purpose the Trade Unions were authorised to act on behalf of members and non members in making “personal claims”. He claimed that Trade UrUons bad impIIed authority at lea to ‘hegotiate settlement by reference to’ Gioystarne & Co — v— Martin [ RLR page 14.
Heaton’s Transport (St Helen’s) Ltd — v — TGWU [ A.C. page 50
Chappell — v — Times Newspapers Ltd [ IWLR page 682 anc Edwards — v — Sk referred to above,
(ix) There was ample evidence of “personal claims” being notified for example in UNISON’s July 2003 Newsletter.
Union members gave express authority to the union by reference to the UNISON rule book which was part of the contract between the Trade Union and its members, which was to be found at page R128 paragraphs I — 4. There was a reference there to the power to negotiate pay and conditions.
As for non-union members and union members alike, their individual contracts of employment provided authority for the Unions to negotiate with the employer “local collective agreements”, which included the single status agreement of
Thirdly, he submitted that in any event, by engaging with and signing COT3s the claimants had ratified the agency of the Trade Unions.
(x) As to the issue as to what claims subsequently made the COT3 agreements covered, Mr Cavanagh claimed that it covered all prior claims of equal pay and of sex discrimination made in respect of the period up to the change in the pay structure affected by the single status agreement which came into force on 1 April 2004. It therefore covered a period of about six weeks after the COT3s had been signed.
(xi) Unconscionability Mr Cavanagh dealt with this issue at length in paragraphs 26 to 42 of his closing skeleton argument, so far as the legal submissions based upon the Court of Appeal judgment in L— v — Ali was concerned. He also referred to Clarion Ltd — v — The National Provident Institution [ WLR at page 1,888 and specifically at pages 1,905 C to E. He responded to the claimant’s alternative claim that the agreement was initiated by mistake. He made detailed factual submissions in his closing skeleton argument as to the conduct of the Council, of the Trade Union and of Mr Cross and as to the state of knowledge of the claimants when they signed the COT3s and whether they were misled. See paragraphs 72 to 154.
(xii) Finally he asserted that, even if there had been unconscionable conduct or a unilateral mistake such as to vitiate the agreement, all the claimants had affirmed the COT3 contract by accepting and paying in the cheques without any assertion that the validity of the contract was disputed, and in three cases ( Connor and HalIi paid the cheques into their bank accounts after commencing Tribunal proceedings.
We now pass on to our conclusions.
12.1 Did the actions of the ACAS conciliation officer(s) comply with the requirements of section 77(4) of the Sex Discrimination Act 119751 and/or section 18 of the Employment Tribunals Act 1996
12.2 It was necessary to split the question into two parts;
(I) what are the powers or duties of the designated conciliation officers to conciliate COT3 agreements?
(ii) did the actions of the officer satisfy the statutory requirements?
12.3 As to the first point we have come to the firm conclusion that there was only one possible regime under which the conciliation officer could act and not two. It is correct that under section 77(4) of the Sex Discrimination Act the requirement is that the “contract is made with the assistance of a conciliation officer, It is also true that there is a power, as opposed to a duty, to act in that manner which is granted by sections 211, 213 and 218 of the Trade Union and Labour Relations (Consolidation Act) 1992 which sections derive from the Employment Protection Act 1975. The matter is put slightly differently under section 18 of the Employment Tribunals Act 1996, the relevant parts of which derive from section 64 of the Sex Discrimination Act 1975, the requirement being that contained in section 18(2) “to endeavour to promote a settlement of the proceedings without there being determined by a Tribunal”. Under this provision, conciliation officers have a positive duty to act, as opposed to a power to act. The duty to act, in a case where no application has actually been presented to a Tribunal, arises where a “personal claim” is made under section 18(3)(a) and either the personal claimant the potential respondent
- makes a request to a conciliation officer under section 18(3)(b). In our view, however, Mr Cavanagh’s submission that a conciliation officer has different powers under section 77(4) of the Sex Discrimination Act 1975 is not correct. The key to the point is in our view section 64 of the Sex Discrimination Act 1975 referred to above. The old section 64 of the Sex Discrimination Act is in almost identical terms as section 18(1 )(2)(3) save that it refers only to section 63 of the 1975 Act and section 2(1) of the Equal Pay Act. The notes in Butterworth indicate that that section was repealed and re-enacted in sections 18 (2) and (3) of the 1996 Act. Thus at the time section 77(4) was passed the words “assistance of a conciliation officer” must have referred back to the old section 64; indeed Haisbury’s Statutes Fourth Edition (volume 6) at page 753 so states.
12.4 However, since the point is by no means unarguable and in the light of likely appeals on this and other points, we thought it appropriate to test the validity of the COT3s by applying the requirements contained in both section 77(4) (“where the contract is made with the assistant of conciliation officer)” and section 18(2) (“endeavour to promote a settlement”). In fact we do not think there is any material difference.
12.5 We now pass on to consider the second point applying those tests First we consider the cases of
12.6 In Moore [ ICR page 85 a longstanding employee was arrested on suspicion of theft from his employer and on the same day was suspended without pay. The claimant was totally deaf and had difficulty speaking. The claimant had a meeting which was attended by an interpreter with Mr Hope, the employer’s plant manager. The claimant asked for the suspension to be lifted. Mr Hope told the claimant that he was suspended without pay until the police report was given. Mr Moore told Mr Hope repeatedly that he wished to have his job back and that his suspension should be lifted, The question of the employer dismissing the appellant was not raised, but the suggestion was put forward of his resigning and receiving £300 by way of compensation. Mr Hope said that he Would contact “a man from the Council of Conciliation” to come at a later date. Mr Moore’s suspension then continued without pay. Mr Hope arranged for the conciliation officer to attend the factory three weeks later. Mr Hope told the conciliation officer that he believed or suspected that the appellant had been guilty of stealing from the respondents and wished to dismiss him, or to obtain his resignation, but to be protected from the then Trade Union and Labour Relations Act 1974. The conciliation officer realised from Mr Hope’s attitude that there was no possibility of Mr Moore’s suspension being lifted and his being allowed to go back to work. He learnt that the respondents had no disciplinary procedure and, in the light of this, advised Mr Hope that, unless the respondents were able to establish the appellants guilt with hard and fast proof, it would be very dangerous for them to dismiss him, and that compensation, if the appellant succeeded in a claim for unfair dismissal, would be substantial. The amount of compensation which might be payable was not discussed. The conciliation officer went on to advise that it would be better if there was a meeting with all parties. At this stage there had been no contact whatsoever between the conciliation officer and Mr Moore. However a meeting took place that day in the factory at which both sides were present. Mr Moore insisted repeatedly on ten or more occasions that he wished to have his job back. He said that he was in severe financial difficulties and asked whether anything could be done to alleviate them. He was given the clear impression by what Mr Hope said that, whatever the outcome of the police enquiries then pending, he would not get his job back. It was suggested to Mr Moore that if he were to resign he would be paid £300. His reaction was to insist once again that he wished to have his job back Mr Hope said that, as he had already said before, there was no guarantee of that. He was adamant that he wished Mr Moore to resign and would not dismiss him. Eventually Mr Moore agreed to resign in return for his receiving £300. He did so because to use his own expression “it was the only offer they made”. He not only agreed to resign, but went further and actually did so. The conciliation officer was not present in the room at the time of this meeting but was informed as to what had happened by Mr Hope. The conciliation officer’s understanding was that Mr Moore had ceased to be employed at that stage. He then went to the room and introduced himself. After a conversation the conciliation officer said that he understood that Mr Moore had resigned and had agreed to accept £300 in full settlement of all claims against the company. The interpreter and Mr Hope agreed that that was so. At the conciliation officer’s suggestion, Mr Moore then wrote out a resignation letter while the conciliation officer filled a COT3 form. The format of the COT3 form was very similar to that in the present case but the body of it, composed by the conciliation officer, said “that the respondent shall pay the applicant the sum of £300 in full and final settlement of all claims arising from the termination of his employment on June 17 1977 over which an lndustrial Tribunal has jurisdiction”. In making such payment the respondent denied dismissing the applicant unfairly or at all. The conciliation officer then took the party, with the interpreter acting as such for Mr Moore, through the COT3 form sentence by sentence asking if it was agreed and explaining the effect of the agreement with particular care because of Mr Moore’s deafness. The conciliation officer considered taking Mr Moore aside and speaking to him separately in accordance with what was described as the usual practise of conciliation officers to see and speak to both sides separately. However he decided not to do so. At no time did the conciliation officer give any advice to Mr Moore about his legal rights. Mr Moore ceased to be employed as from that date,
The first argument raised on the claimant’s behalf in the House of Lords was that the claimant had not made a “personal claim” under the predecessor to section 1 8(3)(a), and in particular the ACAS conciliation officer was called in by the employer and not at the claimant’s instigation. That argument was dealt with shortly by Lord Brandon at page 95F.
“Dealing now with the four propositions advanced by Mr irvine for the appellant (Mr Moore), I am of opinion, with regard to the first of such propositions that the expression “where the employee claims” in paragraph 26(4A) should be construed as not referring only to some express or formal claim but as including also in its meaning an implied claim to be inferred from the overt acts or attitudes of the employee concerned in the particular circumstances of the case. This construction of the expression concerned is supported by the obvious contrast between the two words “complaint” and “claim” in sub paragraph (b) of 26(4). With regard to the second proposition, I have already indicated my view that paragraphs 11 and 12 of the Industrial Tribunal’s decision contain an implied finding that the appellant was at the material time claiming that he had been unfairly dismissed. With regard to the third and fourth propositions, 1 am of the opinion that on the construction of expression “where the employee claims” which I have said that I regard as correct, there was ample evidence upon which the Industrial Tribunal could find, as I infer for the reasons which I have given that they did find, that the appellant was at the material time claiming that he had been unfairly dismissed. The evidence shows that, before the appellant agreed to resign, he stated repeatedly that he wished to have his job back; when he ultimately agreed to resign, he did so under protest because it appeared to him to be the only alternative to end this indefinite suspension without pay which was available to him . .
Lord Russell agreed with the judgment as did
“The use of the word “claims” in paragraph (a) of section 134(3) of the Act has to be contrasted with the reference to “presenting a complaint in relation thereto in paragraph (b)”. All that is required is that the potential claimant should be alleging action which would enable him to present a complaint under section 67, whether successfully or otherwise. It is not necessary that he should have got to the stage of even considering presenting such a complaint. The applicant was quite clearly alleging, and complaining about, the fact that he was to be dismissed on 18 November and this was action which would have enabled him to present a complaint to an Industrial Tribunal under section 67”.
It is of course true in the present cases that there has been no individual meetings between any of the claimants and the conciliation officer or officers. However that was also the position in the only multiple COT3 case: BCCJ — v— Ali although mass meetings were organised by ACAS.
12.9 Conclusions
First we considered whether the Trade Union had authority to make a personal claim complying with section 1 8(3)(a). Here we were convinced by Mr Cavanagh’s argument. We are satisfied factually that the Trade Union had express authority under the terms of the Trade Union rule book to negotiate collective agreements for the benefit of members. We were referred to UNISON rules of 2004 under the paragraph headed Aims and Objectives and in particular to paragraph 4 “Improve the Pay and Conditions of Members and Promote their Interests” and under paragraph 1 “Union Democracy”: “To promote safeguard and improve the interests and status of members and the
“shop stewards have a general implied authority to act on behalf of all their members to defend and improve their rates of pay and working conditions and they do so by negotiation or industrial action”.
We do not regard that the case cited by Ms Romney upsets that proposition.
In Burton Group — v — Smith none of the above authorities were cited to the EAT and the point there was a very narrow one; whether or not the union had authority to receive notice of termination of the claimant’s employment as agent for the claimant and it was held that the union did not have such authority in the circumstances of the case.
12.10 Alternatively, and in any event, we were satisfied by Mr Cavanagh’s further argument that by engaging with the COT3s and signing them the individuals were themselves satisfying the requirements of section 18(3)(a). We considered, following the judgment of Lord Brandon in Moore that it is possible to infer from the circumstances that negotiations were taking place, of which we are satisfied the claimants were aware from their knowledge acquired from the UNISON newsletters, dealing with possible back claims for inequality of pay and that the claimants must have given individual attention to the COT3s when they received them and signed them, that they were impliedly making a claim at that time under section 18(3)(a). It is noteworthy that section 1 8(3)(a) does not specify that the personal claim must be made to any particular person, not even the ACAS conciliation officer. Finally, we accepted the yet further alternative argument by Mr Cavanagh that by signing the COT3s the claimants ratified the authority of the unions to have negotiated the terms which were contained within the COT3.
13 We next considered what actions, if any, were required by ACAS to “endeavour to promote a settlement of proceedings” or to assist in the making of a contract under section 77(4)(a) of the Sex Discrimination Act. We return to the assistance provided in the judgments in Moore S and Hennessy the facts of which we have already summarised.
13.1 We have already cited a relevant part of the judgment of Lord Russell at page 87(d) to (e) “it is not contended that the conciliation officer has any responsibility to see that the terms of the settlement are fair on the employee”. At page 96(f) in the judgment of Lord Brandon the claimant’s arguments were summarised “whereas sub, sub-paragraph (b) of sub-paragraph 3 required (the conciliation officer), where reinstatement or re-engagement proved to be impracticable, to seek to promote agreement between the parties as to a sum by way of compensation to be paid by the respondents to the appellant. The (conciliation officer) never sought to promote an agreement of that kind but, on the. contrary, only accepted an agreement about such a sum which had already been made by the parties before he came on the scene as a conciliation officer”. The third proposition was that, in any event, the expressions “seek to promote” and “act in accordance with” where they occur in (the statutory provisions) should be construed as involving the taking of a positive initiative by the conciliation officer concerned and that the conciliation officer never whether in accordance with (the statutory provisions) taken any such positive initiative”.
At page 98A Lord Brandon dealt with the latter argument as follows: ‘There remains for consideration what is the proper construction of the expression “endeavour to promote” in the penultimate line of (the statutory provision). What has to be considered in this connection is whether, in making the interventions which the conciliation officer did make, and in doing thereafter the acts which he did do, he was “endeavouring to promote a settlement of the complaint without it being determined by an Industrial Tribunal” .. .here again it seems to me that the expression “promote a settlement”, as used in that sub-paragraph must be given a liberal construction Oapable of covering whatever action by way of such promotion is applicable in the circumstances of the particular case ...“
in the judgment of Tudor Evans J in Slack at page 625C the following appears “The question which we have to decide on the first issue which arises on this
appeal is whether there is a statutory obligation upon a conciliation officer acting under section 134 of the Act to advise or to inform an employee of his rights to claim future loss of earnings, and whether, more generally, he is obliged to go through the framework of the relevant legislation and explain the employees rights to him. We do not think that the Act of 1978 places upon a conciliation officer any specific obligation other than to endeavour to promote a settlement or, where appropriate, to seek to promote agreement as to a sum by way of compensation. Parliament has not prescribed the methods which a conciliation officer must adopt. It is significant that his function is described in the statute as “conciliatory”; it is not described as “advisory”.
The Judge then repeated the passage from Lord Brandon’s judgment in
“We are of the opinion that this approach militates against a rigid obligation to follow a particular course. It seems to us that the observations of Lord Brandon should apply equally to section 142(d) of the present Act. The nature of a conciliation officers function in what is very often, if not always a highly sensitive and difficult area, must depend on the particular circumstances of each individual case. There may well be many cases in which he deems it necessary, in his attempt to promote agreement of the payment of compensation, to give a brief description to an employee of the relevant framework of his statutory rights including, where appropriate, the liability of an employee to suffer a reduction of compensation for contributory fault. Plainly, he must never advise as to the merits of the case, as is pointed out in the ACAS booklet. It would, in our opinion, be quite wrong to hold that he was obliged to go through (inevitably, if he is to be impartial, with both sides) the framework of the legislation, as Mr Hurne has contended ....“
There is then a passage in Sir John Donaldson’s judgment in Hennessy at page 467(f)
“Mr Tyrrell (counsel for the claimant) then submits that more is required before section 140(2)(d) can neutralise the effects of section 140(1). It must be shown that the conciliation officer in fact took action in accordance with subsection 3 of section 134 and thus by reference, in accordance with subsections (1) and (2). These are the same provisions as in sections 18(2) and (3)). Let me say straightaway that I reject any suggestion that where an issue arises under section 140(2)(d) it is for the Tribunal or Court to consider whether the conciliation officer correctly interpreted his duties under section
134. It is sufficient that he intended and purported to act under that section and that (the conciliation officer) quite clearly did”.
Finally we considered further a passage from the judgment in Slack at page 626(d) “we have heard argument on behalf of all parties as to the circumstances in which an agreement made under the auspices of ACAS can be impugned. We entirely agree with counsel representing the employers and ACAS, that if a conciliation officer were to act in bad faith or adopt unfair methods when promoting a settlement, the agreement might be set aside and might no operate as a bar to proceedings. There is no suggestion that such conduct is present in this case. We do not find it necessary to consider in what other circumstances an agreement reached with assistance of a conciliation officer might be impugned save, that it follows from what we have already said, that a failure to advise or inform an employee of the framework of his rights under the relevant legislation is not such a ground, since there is no obligation so to advise or inform. As we have already mentioned Mr Hum has submitted that (the conciliation o.fficer) did not act impartially. He submits that (the conciliation officer) advised the employers as to the heads of compensation in cases of unfair dismissal but did not so advise the employee. If a conciliation officer acts unfairly or is not impartial, any agreement resulting from such methods ought clearly not to be a bar to subsequent proceedings”.
13.2 We next considered in the light of these observations what actions had been taken by ACAS. The principal conciliation officer assigned was Ms Pat Fairfax. She had been a conciliation officer since 1977. She was designated under section 211 of the 1992 Act prior to
13.3 We now identify the steps which Ms Fairfax took. First she brought to the meeting on 6 January a number of past drafts of C013 and COT4 settlements. The terms of the body of the COT3 were agreed between the parties but it is clear that they used parts of the drafts supplied by Ms Fairfax. She says in her witness statement at paragraph 12 ‘We setup a small subgroup to look at 0013 wordings. I had brought along a few of the standard 0013 wordings that I had used, both set out in terms that related to those cases where a trade union would be entering into the agreement on behalf of the .workforce, and those that simply involved COT3s that were entered into by individuals”. She continues: “I wanted to give potential drafts to both sides. I did not want there to be any perception that this was a document emanating solely from management. I wanted both sides to look at the draft that I had given and tb come back with any proposed amendments, to ensure that the final version reflected the needs of both parties. We had discussions about when the payment date to be specified in the COT3 should be, whether or not the agreement could be signed on behalf of the Trade Union for the workforce as a whole or only for Trade Union employees, and whether payment would be by way of bank transfer or by cheque”.
13.4 We are satisfied that she was actively involved in her official capacity in the negotiations to settle the precise terms of the COT3. Secondly she clearly intervened in the drafting of the accompanying letter by insisting upon the addition of what we regard as an important sentence. “If you accept this offer you will give up any statutory right to challenge any equal pay claim you think you have against
13.5 Notwithstanding the above, we have some significant criticisms of the participation of ACAS. There were other steps which ACAS could have taken which were reasonably practicable. First, we think it would have been better if public meetings had been set up attended by ACAS offices to explain the terms on offer and to answer questions in a case involving so many potential Tribunal claimants. This is what happened in BCCI — v — Au as is clear from the judgment of Lightman J at first instance, This was particularly so since Ms Fairfax has indicated that she did not consider it to be her duty to speak to each individual claimants or potential claimants and we accept that there is no positive obligation to do so. In any case it would have been wholly impracticable to have identified all the potential claimants and contacted each one. Ms Fairfax withdrew her evidence that lack of resources prevented ACAS from arranging public meetings. Secondly, in a case of this complexity it would have been appropriate to include a recommendation that recipients of the COT3 offer should seek legal advice if unclear as to their legal rights. We note that these steps were taken in later local authority cases in this region where the COT3 is a great deal more detailed and the accompanying letter even more so. There is an unusual aspect to this case. That is that the Trade Unions and the respondent had a common interest in reaching agreement to settle the potential equal pay claims as economically as possible which was in stark contrast to the stance subsequently adopted by Mr Cross. We will return to this point later in this judgment.
13.6 However our firm conclusion is that the actions of ACAS in the present case were such as to produce effective COT3 settlements. It is manifestly not the duty of ACAS on the authorities to provide legal advice. There is no check list of actions which an ACAS officer must take in any particular circumstance. It is not for the Tribunal to judge the performance of ACAS except, as is suggested by Tudor Evans J in slack if there is a suggestion that a conciliation officer is acting in bad faith or adopting unfair methods when promoting a settlement or has not acted impartially. We have considered carefully the complaints by Ms Romney in her closing submissions as to the conduct of ACAS in this case. We do not think that any of her criticisms amount to an allegation of bad faith. Indeed she expressly stated that she did not claim that the conciliation officers were acting in bad faith. We do not think that their actions could be described as “unfair methods” in promoting a settlement. There is no evidence that they acted other than impartially. Ms Romney did not assert that there was a duty upon ACAS to provide legal advice. We agree that that must be so. It is clear that designated conciliation officers do not have legal training other than as part of a four week introductory training course, although there must be facilities for conciliation officers to obtain legal advice in appropriate circumstances. To require ACAS to provide legal advice would have significant resource implications in cases such as the present one. lt is clear from the terms in which chapter four of the 1992 Act is drafted that Parliament intended that ACAS should have a role in significant industrial disputes and to facilitate collective bargaining, but if Parliament had intended that ACAS should provide legal advice to parties to individual disputes we think it would have said so clearly. In any event, it is difficult to see how ACAS could provide independent legal advice to both parties to a dispute. Their role is to be essentially impartial. We find that they remained impartial in this dispute. As to the conflict of interest point, we recognise that it is not for the Tribunal to make a value judgment as to the merits of the stance of the Trade Unions and respondent ot, the one hand and of Mr Cross on behalf of his clients or potential clients on the other. We recognise the realities. The respondent had concerns that the potential claims of its employees could, as Mr Moore put it at Road Shows, “bankrupt” the Council. These claims had and have the potential for politically unacceptable increases in Council Tax or substantial redundancies amongst the Council’s employees in order to balance the books. The latter factor was clearly a concern of the Trade Unions and to that eKtent the interests of the respondent and the Trade Unions were common. Equally, if, as Mr Cross has vociferously claimed in Press Releases and Leaflets, there has been a blatant breach of Equal Pay Act lasting over 20 years which has disadvantaged women local authority employees, then that is a matter which should be remedied as soon as possible. This is a point which is also relevant to the issue of unconscionability. At this stage we are only concerned with the issues whether the actions of ACAS were sufficient to promote agreements complying with section 18(2) of the Employment Tribunals Act and/or section 77(4) of the Sex Discrimination Act. We unanimously find that they were.
14 Is the form of the COT3 and of the covering letter to be interpreted as expressly excluding the signator from bringing claims in respect of certain breaches of the Equal Pay Act and/or of Sex Discrimination
14.1 The Tribunal starting point for consideration of this issue was BCCI — v
— All in the House of Lords. [ ICR 337. We take the liberty for the sake
of shortness of reading the head note.
“In 1990 the defendant employees were made compulsory redundant by the plaintiff Bank. In consideration of a payment by the Bank, they signed an agreement by which they accepted the terms set out “in full and final settlement of all or any claims whether under statute, common law or in equity of whatsoever nature that exists or may exist and, in particular, all or any claims rights or applications of whatsoever nature that the applicant has or may have or has made or could make in or to the Industrial Tribunal, except the applicant’s rights under the Bank’s Pension Scheme”. in 1991 the Bank went into insolvent liquidation, and wide publicity was given to the corrupt and dishonest manner in which its business had been conducted. In the course of the liquidation the liquidator sought to recover loans made to the employees, who counter-claimed damages for misrepresentation and breach of their employment contracts as a result of which, they alleged, they were at a disadvantage on the labour market. The Bank contended that the agreement signed by the employees were binding comprise agreements precluding their claims. The Judge so held, but the Court of Appeal allowed an appeal by the employee. On appeal by the Bank Held dismissing the appeal (Lord Hoffman dissenting), that there were no special rules of interpretation applicable to a general release, “... which was to be construed in the same way as any other contract, the question being the intention of the parties ascertained objectively in the context of the circumstances in which the release had been entered into; that when the employees’ agreements had been entered into, neither party could realistically have supposed that a claim for damages in respect of disadvantage on the labour market was a possibility; and that, accordingly the parties could not be held to have intended the releases to have applied to such claims”.
At paragraph 8 of his judgment page 342 Lord Bingham said
“I consider first the proper construction of this release. In construinç this provision, as any other contractual provision, the object of thE Court is to give effect to what the contracting parties intended. Ic ascertain the intention of the parties the Court reads the terms of the contract as a whole, giving the words used their natural ordinary meaning in the context of the agreement, the party’s relationship and all the relevant facts surrounding the transaction so far as known to the parties. To ascertain the parties’ intention the Court does not of course inquire into the parties’ subjective states of mind but makes an objective judgment based on the materials already identified. The general principles summarised by Lord Hoffman in Investors Compensation Scheme Ltd — v — West Bromwich Building Society 111998] 1WLR 8896, pages 912 to 913, apply in a case such as this.”
At paragraph 10 Lord Bingham said
“But a long and in my view salutary line of authority shows that, in the absence of clear language, the Court will be very slow to infer that a party intended to surrender rights and claims of which he was unaware and could not have been aware”.
At paragraph 19 he said
“On a fair construction of this document I cannot conclude that the parties intended to provide for the release of rights and the surrender of claims which they could never have had in contemplation at all. If the parties had sought to achieve so extravagant a result they should in my opinion have used language which left no room for doubt and which might at least have alerted Mr Naeem to the true effect of what (on that hypothesis), he was agreeing”.
It was clear that the relevant claimants in that case had no knowledge of the bank’s nefarious practices which gave rise to the claimants’ future claims for stigma damages.
14.2 Passages from the judgment in 1J were considered by the EAT in Royal National Orthopaedic Hospital Trust — v — Howard [ IRLR page
849. The facts in that case were that Mrs Howard, who had been employed by the Hospital for 18 years, left in 1998 and presented a complaint to an Employment Tribunal alleging sex discrimination, discrimination on grounds of marriage status and constructive dismissal. Following action by an ACAS conciliation officer, that claim was compromised on the basis that the Hospital would pay Mrs Howard the sum of £12,000 “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 on 19 November 1998, or arising under the Employment Rights Act 1996, the Sex Discrimination Act 1975 or under European Community Law’.
A C013 form was signed in those terms. When two years later Mrs HowarL was asked to assist for one day at an operation at the Hospital which was to be performed privately the Hospital refused to allow her to do so. Mrs Howard then brought a claim for victimisation under the Sex Discrimination Act alleging that the refusal was because she had brought her previous sex discrimination complaint against the Hospital. The Employment Tribunal held that such a claim was not barred by the terms of the COT3. On appeal to the EAT Judge Reed QC said this at paragraph 9 on page 850
“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 or 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 intention 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 at which they have or can have no knowledge, whether those claims have already come into 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 course of action. But we take the view that it would require extremely clear words for such an intention to be found.”
In that case the EAT had no difficulty in finding that the exclusion in the COT3 related only to existing rights and did not deal with the future claims.
14.3 What falls to be interpreted in the present case is the contents of the COT3 taken in conjunction with the accompanying letter signed by Mr Cohn Moore and Mr McCormick, the secretary of the joint Trade Unions. Our unanimous judgment is that, notwithstanding the description of the ex gratia “payment as being payment of compensation for hurt feelings for perceived sex discrimination”, when taken with the contents of the accompanying letter, it was or should have been objectively clear that the effect of accepting the offer was to give up any right to bring an equal pay claim against the Council but only in respect of the past, which we interpret as being claims up to the date when the COT3 was signed. The phrase in the COT3 “in full and final settlement of all claims the employee has brought or could bring against the employer in connection with the terms of their contract of employment” clearly includes a claim arising from a breach of the equality clause in the contract of employment. in those circumstances having regard in particular to the observations of Judge Reed in the Howard case we can see no basis on which the agreement can be construed as covering events arising between the date of signature of the C013 and 1 April 2004 when the new pay model came into force, nor for the same reason, can it cover, a fortiori claims arising after that date. In addition we do not feel able to interpret the agreement as excluding any claims for sex discrimination other than equal pay since such a claim would not be a claim in connection with the terms of the claimant’s contract of employment.
15 Unconscionability
15.1 Again we started with the leading authority which is BCCI — v — Ali in the Court of Appeal [2000] IRLR page 398. It is to be noted that the Court of Appeal was overruled by the House of Lords on the construction of the compromise agreement point. Accordingly the House of Lords did not need to consider directly the second point decided by the Court of Appeal which was that it would be unconscionable to allow the employers to rely upon the strict legal construction of the compromise agreement. In the Court of Appeal the Vice-Chancellor said the following at paragraph 23 on page 401
“The role of equity can be no more than, in certain circumstances, to intervene where it would be unconscionable to allow one of the parties to rely on the strict legal construction of the document. An example where this might happen would be where one of the parties had consistently represented to the other that the document had a particular affect, inconsistent with the strict construction and the latter had relied on that representation. The Taylor Fashions Ltd case raised considerations of that character. I have already cited passages from the Judgment of Oliver J in which he indicated the approach he thought the Court should follow. In the event, on the facts of the case, Oliver J concluded that the plaintiffs had not discharged the burden on them of showing that the defendant’s reliance on the strict legal position was “dishonest or unconscionable”.
Chadwick L J at paragraph 81 on page 409 said: (the paragraph has been amended by the Tribunal to identify the claimants and the respondent in the present case)
“I would add that, where
(i) the releasee (the Council), knows of facts which give rise to a claim, whether or not it believes that claim to be well founded as a matter of law,
(ii) the Council deliberately conceals those facts from the claimant in circumstances where the Council knows or believes that the claimant cannot discover them for himself, and
(iii) the claimant does not know of those facts, then the Council cannot rely on a general release from the claimant as a defence to a claim based on those facts, notwithstanding that, as a matter of construction the words of the release would include all unidentified claims. The Council cannot rely on the general release because, in the circumstances described it would be unconscionable for him to do so. On the basis of the assumptions of fact which we have been invited to make, these circumstance exist in the present case”.
Two of the judges in the House of Lords touched on the issue Lord Nicholls at paragraphs 32 to 33 where he said
“I prefer to leave discussion of the route by which the law provides a remedy where there has been sharp practise to a case where that issue arises for decision”
see also Lord Hoffman in his dissenting judgment at paragraph 69 to 71. At paragraph 70 Lord Hoffman appears to have agreed with what the Vice- Chancellor and Chadwick U said in the Court of Appeal.
15.2 The Tribunal’s analysis of the facts The Tribunal refers first to the closing skeleton argument of Ms Romney and in particular paragraphs 5 to 33. In our view the fact there was a delay by this Council in attempting to negotiate with the Trade Unions a new Green Book JES between 1997 and July 2003 is not relevant to this issue nor is the fact that the Council had set aside “only” £3.5 million for the purposes of settling equal pay claims. As to paragraph 7, we agree with Ms Romney’s submission that Mr Colin Moore, Chief Executive, was less than frank with the Tribunal when he said that he had not initially calculated the potential cost of a large number of women employees succeeding on equal pay claims at least until short before the Hearing scheduled for 19 January. This defies commonsense. The value of the bonuses paid to the male dominated occupations was easily calculated because it was based on percentages. That calculation must have been considered by senior officers of the Council and it makes no sense that Mr Colin Moore should not have been informed. However again that is not relevant to the issues of unconscionabihity. We also found it difficult to accept that Mr Moore cannot have known until early January that admissions had been made at least in respect of the earlier claims brought by Mr Cross and had therefore not known, as he said, until he returned from his vacation in January 2004 that a hearing was to take place in January which would fix the entitlements of those claimants in respect of whom the admission had been made. The Hearing for 19 January had been fixed at a case management discussion on
That reference to the 19 January 2004 is clearly a reference to the Tribunal Hearing which was scheduled, based on directions made for the disclosure of figures relating to the bonus, to deal with the issue of calculating and approving awards of compensation. At the next ACAS working party on 18 November the subject of the Tribunal Hearing was mentioned again as being scheduled to take place either on 17 or 19 January. Ms Romney developed an argument in paragraphs 8 and 9 of her skeleton that the Council had deliberately failed to comply with the orders for disclosure so as to delay the hearing, in order to enable the Council’s offer to be agreed and sent out before that date and in order to prevent the women from knowing that they were entitled to substantially greater sums than those on offer. The Tribunal will revert to this in due course but in the meantime continues with the findings in relation to the factual points raised by Ms Romney in that closing submission. Paragraph 10 contains an assertion that the Council was maintaining a strategy of denigrating Mr Cross in public and of attempting to portray him as both dishonest and disreputable. We have considered the varous press releases Union Newsletters and leaflets which are contained with the bundles of documents. We accept that some of the communications were intemperate and highly critical of the other side, but this applies to both parties. Some of the intemperate observations were made solely by the Unions against Mr Cross and we do not think that that is relevant to the issue we are now considering. What is required is some form of deliberate misrepresentation or concealment of facts to the knowledge of one party which is unknown to the other party and to their detriment. The Unions were not a party for this purpose. We do not accept that any of the communications satisfy that test. We consider as an example the job evaluation newsletter which was issued by Mr Moore and Mr McCormick sometime in November (prior to the 24 November because the document refers to a future meeting to take place on that date). In the penultimate paragraph it states ‘ have started to assemble the information for a compensation scheme for women who have not had equal pay. We are looking not at back pay but at compensation that would be free of deductions like tax, insurance and lawyers fees. So for every £1,000 of compensation from the Council a claimant, would need to win over £3,000 of back pay from a Tribunal to receive the same money in their hands. That statement was mirrored and enlarged upon by UNISON in the Viewpoint newsletter issued in December 2003. The reference to lawyers is clearly a reference to Mr Cross. The basis of that calculation was touched upon by Mr Cohn Moore during his evidence. As to the taxation point, at that stage the Council was taking advice from Price Waterhouse Cooper which led them to believe that upon the basis on which the compensation scheme was calculated the sums payable to the women under it would not attract tax because they were described as compensation for hurt feelings for perceived sex discrimination. We were told by Mr Moore that subsequently the Inland Revenue approved the scheme as not being subject to income tax. It is correct that compensation for past breaches of an equality clause in respect of pay is subject to tax although, if the sum is paid as a lump sum in one year the calculation may require adjustment. The reference to “lawyers fees” is a reference to the fact that was well known namely that Mr Cross had entered into contingency fee arrangements with his clients under which he was entitled to a success fee of approximately 25%. We do not regard that communication as being deceitful or seriously inaccurate. In any event it ignores a most important feature of this case, which is that the compromise agreement proposed by the Council provided the claimants with a certainty of receiving not insubstantial sums. As against that, if the potential claimants did not accept the offer, the alternative was to go to Mr Cross and, as Mr Cohn Moore told people who attended the Road Shows, Mr Cross’ claims would be defended. The claims would take “years and years” to go through the Courts at the end of which those claimants might not receive anything at all. Again we do not regard that as misleading. As events have proved so far, these cases are likely to take years before completion. The admissions of liability do not apply to Mr Cross’ claimants in this case but only to those who submitted claims before
15.3 Next we turn to the position of the sample claimants. The core submissions relating to the claimants and whether or not they were misled are contained at paragraphs 26 to 29 these maybe summarised as follows:
First it was said that Ms Connor, Thwaites and Halliday had no idea that they were signing away their rights; secondly whilst it was conceded that Ms Clarke and Ms Sinclair did understand that they were signing away their rights they had no understanding of how much they were giving up or how it was calculated; thirdly it was said that all the women had been “tricked out of their entitlement and had no idea of the disparity between themselves and their comparators.
15.4 We start with our findings in relation to Ms Clarke and Ms Sinclair which are similar. Ms Clarke was a grade 5 school cook at
15.5 The evidence in relation to Ms Sinclair was very similar to that relating to Mr Clarke she had attended the same meeting in late 2003 addressed by Mr Moore and Mr McCormick at which Mr Moore had said that the claims could bankrupt the Council and that claims issued by Mr Cross couJd take up to many years in the Tribunal. She also was aware of the possibility of making an equal pay claim. She had been among the
15.6 Ms Connor, Halliday and Thwaites were all employed at Wheatacres. They had all been members of the
15.7 Ms Halliday’s evidence was similar to that of Ms Connor. She claimed that when she signed the COT3 she had not understood that she was giving up her rights to go to a Tribunal. She had not taken legal advice nor had she gone to the Trade Union. However she had spoke to Ms Gaffney a few days before the offer was .made and Ms Gaffney had told her to take the offer. When asked about her knowledge of Ms Olds making her equal pay claim in Middlesbrough she started by saying that she did not know much about that but she later agreed that she had known that Ms Olds had made a claim. We accept that she received advice about the validity of the COT3 agreement from Mr Cross’ agent Ms Goodenough but, she did not say as was claimed by the respondents that she had gone to Ms Goodenough for advice because she knew that her signature on the COT3 was a problem in her case. We find that she had read the letter and the COT3 before signing the COT3 although we are minded to accept that she was not aware of what her precise rights were in connection with making a claim to a Tribunal in respect of past inequality of pay, having read the letter in the COT3 she certainly ought to have been aware of that possibility. She was unaware, we accept, of the possibility that she could receive a higher sum if she did go to the Tribunal. We accept therefore that she was unaware of precisely what she was signing away by accepting the money. We do not accept that letter could reasonably be interpreted that the amount on offer from the Council represented the full amount that she could have obtained in respect of back pay. She significantly accepted that she had seen a copy of the Job Evaluation News and she agreed that she was aware from that document that she could go to Mr Cross or accept the Council offer. This was the document which referred to lawyer’s fees.
15.8 Finally Ms Thwaites She had not attended any of the Road Shows because the rotas had not been organised to permit her to attend at the times when they occurred. She too signed the COT3 having been advised by Ms Gaffney she said that she had not contacted ACAS on reading the COT3 letter because the letter only referred to non-union members taking that step. She had not however taken advice from the Trade Union other than speaking to Ms Gaffney. Prior to receiving the offer she had seen articles in newspapers indicating that the women were to get 30 to 40% pay rises back dated she said in evidence “I signed to accept the money because I thought that was what I was entitled to at the time and that the Trade Union had agreed with it and new what they were doing”. In cross-examination she said that the only time that she knew that she could go to a Tribunal was when she read the letter accompanying the COT3. She claimed that she did not understand that by signing the agreement she was giving up her rights to go to a Tribunal. She had then attended the meeting with Ms Goodenough at Ms Connor’s home. She had explained at that meeting that her cheque had not arrived because she had changed her address. She said that Ms Goodenough told her that she would get in touch with Mr Cross to try to get the cheque stopped. This was a significant observation because no attempt was ever made to stop the cheque being sent out. The cheque had subsequently arrived and she had then telephone Ms Goodenough, who had told her to put into a bank account to keep it safe. She had seen some of the UNISON Newsletters and remembered talk in the Home about going to a solicitor but Ms Gaffney had said that she should not go to the solicitor who would take 60% of the money. She said that she had not seen any of Mr Cross’s flyers nor had she attended any of the Road Shows. She claimed that she had not thought there was a problem about making a Tribunal claim a week or two after signing the COT3.
15.9 Conclusions
Our conclusions concerning the first two claimants whose evidence has been described above is that they were well aware of the consequences of signing the COT3. In relation to the other three sample claimants we accept that they were not fully aware of the consequences of what they were signing but we cannot accept that they were unaware that they were giving up something by way of rights to go to a Tribunal. We think that was made abundantly clear from the passage which Ms Fairfax insisted should be in the letter accompanying the COT3. We do not accept, having reviewed the evidence, that the actions of the respondent constituted unconscionable conduct in the sense set out in paragraph 23 of the Court of Appeal judgment of Sir Richard Scott or paragraph 81 of the Judgment of Lord Justice Chadwick, namely that there was a deliberate concealment of facts from the Council in circumstances where the Council knew or believed that the employee could not discover the facts for themselves. There was in our view no misrepresentation of fundamental facts in the present case which might give rise to a claim. We reach a similar conclusion on the claimants’ argument as to unilateral mistake. Even if it be right that some of these claimants were unaware that they were signing away rights we do not accept that the respondent’s Iett& accompanying the COT3 in any way contributed to such mistake. The letter clearly sets out what the effect of accepting the offer was. Any such mistake was not caused by the actions of the CounciL The Tribunal gave consideration in particular to the case of OT Africa Line — v — Vickers Plc referred to in Foskett, The Law and Practice of Compromise.
15.10 We turn now however to one point which did cause concern to the Tribunal. That is the circumstances in which the anticipated hearing of 19 January, which was to fix the basis of compensation for the pre 27 January claimants in respect of whom admissions had been made, came to be delayed until 27 and 28 January. In this connection the Tribunal reviewed the contents of the Tribunal correspondence file and orders made by the Tribunal for the relevant period. This Chairman made all the interlocutory orders and regularly reviewed the file. As we have referred to above, we conclude that Mr Moore must have been aware of the significance of 19 January Hearing before he returned from leave at the beginning of January 2004, not least because the date of that hearing had been specifically mentioned at the joint meeting which took place after the directions hearing at which the main hearing had been fixed. We further conclude that Mr Moore’s evidence to the Tribunal that he did not at first think the 19 January Hearing had any significance, but was merely a further directions hearing, was disingenuous. We do not accept that he was unaware that any orders were to be made for the payment of compensation on 19 January until after his return from leave and saw a copy of the Tribunal’s letter of 31 December (document 52 on the Tribunal file). He says that he had earlier had conversations with Mr Franklyn, the head of the legal services, and Ms Kavanagh, head of HR, but was reassured that no payments would be made on 19 January, even though there had been a press announcement in November from Mr Cross to the effect that he had won the case and awards would be made on 19 January. In our- view it must have been abundantly clear that even if no specific amounts were calculated and publicly announced at the hearing on 19 January, sufficient information was to be provided to have enabled the amounts to be simply calculated. On
15.11 We regard this as being a sharp practice on the part of the respondent. Which came very close to being an abuse of the process. We wish to make it clear however that we absolve Mr Winthrop, the respondent’s external solicitor, from participation in this sharp practice. He was not a party to the negotiations and was acting on limited and misleading instructions. We next considered what would have occurred if we had started the hearing on 19 January as anticipated. Clearly in the light of what actually happened on 27 and 28 January we would not have finished .on 19 January but probably on 27 January or early on 28 January, giving the possibility of deliberations taking place on that day instead of on 2 February. We regard it as unlikely however that we would have announced our decision, even if pressed to do so, more than a day or so before we did give our judgment on 4 February. We announced our judgment early because of information conveyed to the Tribunal by Mr Cross that COT3s were being sent out to at least one of the pre 27 January claimants although we accept that this was a mistake on the part of the respondent because of the difficulty of identifying and separating out from its workforce those who had made claims before the 27 January. On careful reflection we did not regard that sharp practice as falling within the definition in the judgments cited above from the Court of Appeal. The expression “sharp practice” is one used in paragraphs 32 and 33 of Lord Nicholls judgment in BCCI — v — All in the House of Lords but with no precision. We are not satisfied that it applies to the limited circumstances found by the Tribunal in the present case. The claimants’ primary contention that they were deliberately misled as to their rights into signing the COT3s does not succeed.
16 The legal Consequences of the receipt of and banking of the cheques In the light of the high probability of an appeal in the present case we thought it right to go on to consider whether, if the conduct of the respondent were to be found to be unconscionable either in the sense used by the Court of Appeal in BCCI — v — All or in some wider sense of sharp practice unspecified in the authorities to which we have been referred, nonetheless the claimants should be found to have affirmed their COT3s by receiving and banking the cheques. We note that three of the sample claimants, Ms Thwaites, Halliday and Connor presented their cheques for payment after their ETI claims to the Tribunal had been submitted, as we find, on their behalf and with their authority, by Mr Cross. Ms Sinclair and Clarke presented their c1aim in 2005 tong after they had banked their cheques in February 2004. At no stage during this period did Mr Cross inform the respondent that the cheques were to be returned or assert that the COT3 terms were not binding. Indeed, it is the uncontradicted evidence of the claimants that they were advised by one of Mr Cross’ representatives first to retain, and then to bank the cheque albeit not to spend the money. We specifically asked Ms Romney whether any letter had been written by Mr Cross to the Council on behalf of the claimants challenging the validity of the COT3s. No such letter was produced to us. We regard the actions of all the claimants who banked their cheques and then made Tribunal claims as being an example of “having ones cake and eating it”, but that is manifestly not a statement of legal principle. The legal principle which is engaged is that of affirmation, acquiescence, and estoppel.
16.1 We were referred to Foskett on the Law and Practise of Compromise in particular at paragraph 4.55:
‘The principal equitable relief in respect of any form of misrepresentation (whether fraudulent, negligent, or innocent) is that of rescission. Provided that the party misled has not affirmed the compromise, or been guilty of undue delay, or that third party rights have not intervened, or that a substantial restoration of the status quo has not become impossible, the Court will be prepared to set it aside together with any consent order or judgment based upon it.”
We were also referred to Snell’s Equity 31 Edition paragraph 13.16 under the heading Loss Right of Rescission
‘Where a right of rescission exists, it will be lost if the person entitled to rescind has elected to waive rescission and affirm the contract after the facts conferring the right have come to his notice, e.g., with full knowledge of a fraud upon him he nevertheless takes the benefit under the contract. Both the facts which give rise to the right of rescission and the existence of that right must be fully known to the party misled before he can be considered to have waived the right”.
The authority for that proposition is an authority to which we have been specifically referred by the parties, Peyman — v — Lanjani and Others [1985] I Chancery page 457. The facts of that case are complex and so far away from the facts of the present case that it is not helpful to repeat them in detail, it was a case of a fraudulent misrepresentation made by various defendants by impersonation of the identity of an assignee of a lease The issue was whether a proposed purchaser from the assignee had affirmed the contract by reason of knowledge of some of the circumstances of fraud. The principle and most lengthy judgment was that of Lord Justice Stephenson. However, a relatively short and helpful summary of the principle is contained in the judgment of Lord Justice May between pages 493F and 496B the Tribunal quotes from the relevant parts:
“Clearly therefore as Stephenson LJ has said, the first question which arises in connection with the plaintiff’s appeal is what are the necessary conditions or the operation of what has been described as the doctrine of election. Such doctrine in the context of the instant case has of course no connection with the doctrine of the same name which arises in equity in a testamentary context. Further, in my opinion one must be careful not to blur the same simple principles of the basic common law doctrine of election with which we are first concerned by considerations which more correctly lie in the field of estoppel. The doctrine of election is no doubt based upon foundations similar to those which in general terms support estoppels, and for that matter waivers, but in the first instance it must be considered on its own. Cases in which on the facts it is held that there has been no true election frequently thereafter raise questions of possible estoppel, as indeed does the present case, but I think that for the correct sequential analysis of the legal position the two concepts, the two doctrines of election on the one hand and the estoppel on the other, must not be confused.
As Stephenson U has shown the doctrine of election comes into play when at a particular stage of a relationship or transaction between two parties the conduct of one is held as a matter of law to entitle the other to a choice between two mutually inconsistent causes of action. We are concerned with the choice which arose as a result of the first offendant’s breach of contract resulting from his inability to provide a good title to his leasehold interest in the restaurant. A similar choice arises in law when a party to a contract becomes entitled to rescind it by reason of the discovery of fraud on the part of the other party
The next feature of the doctrine of election in these cases which in my opinion is important is that when the person entitled to make the choice does so one way or the other, and this has been communicated to the other party to the contract, then the choice becomes irrevocable even though, if and when the first person seeks to change his mind, the second cannot show that he has altered his position in any way.
This being so, I do not think that a party to a contract can realistically or sensibly be held to have made this irrevocable choice between rescission and affirmation unless he has actual knowledge not only of the facts of the serious breach of the contract by the other party which is the precondition of his right to chose, but also of the fact that in the circumstances which exist he does have that right to make that choice which the law gives him. To hold otherwise, subject to considerations to which I will refer in a moment, would in my opinion not only be unjust, it will be contrary to the principles of law which one can extract from the cited cases. (He then reviews some of the authorities).
in my opinion, in the passages in his speech upon which counsel principally relied and which Stephenson LJ had quoted, Lord Pearson was neither dealing nor intending to deal with basic common law election at all: he was concerned with the less clearly defined concept of waiver or estoppel by conduct, for the operation of which knowledge of the relevant facts is enough, a party does not have be aware of the legal rights to which those facts may give rise.
Nevertheless, even though in a particular case, such indeed as the present one, the party may not have had sufficient knowledge of his legal rights to bring into operation the doctrine of election, in this field there is understandably considerable scope for the creation of an estoppel. In this connection I respectfully adopt and agree with the following passage from thL. judgment of Sholl J In Coastal Estates PTY Ltd — v — Melevende [ VR 433 atpage 443
“If the defrauded party does not know that he has a legal right to rescind, he is not bound by acts which on the face of them are referable only to an intention to affirm the contract, unless those acts are adverse to the opposite party, i.e., unless they involve something to the other party’s prejudice or detriment, as, e.g., if the defrauded party goes into possession of a property sold to him by the contract, or accepts some other benefit there under. This a form of estoppel, for the other party has in such a case acted to his prejudice upon a representation, made by the defrauded parties conduct, that the latter is going on with the contract. The law does not require the representor in such a case to enquire of the representee whether he knows his legal rights”.
16.2 Applying those principles to the present case:
(1) the Tribunal accepts that when the claimants signed their COT3s they were not aware of the existence of the sharp practice identified above, nor, obviously, were they aware of their legal right to rescind.
(ii) The evidence indicates in the cases of Thwaites, Halliday and Connor that they soon afterwards consulted Mr Cross’ firm. Whether this was before or after the cheques were received is not entirely clear, but we assume that it was afterwards because the cheques were received within a week or two of the signature on and return of the COT3s and the claimants sought advice as to what to do about the cheques.
(iii) Mr Cross was then instructed to act for these three claimants. Mr Cross was clearly aware of the sharp practice because he had been raising the matter with the Tribunal since 29 January or earlier and had sought to have the respondent struck out.
(iv) In our view, this knowledge should be imputed to those claimants, who sought advice from Ms Goodenough as to what they should do with the cheques. Initially they were advised to keep them safe but they were then advised to pay them into a bank account under their control. Ms Thwaite did so on
(v) At the time that this act was done no step was taken to inform the respondent that the COT3 contract was being rescinded, or to return the cheques, or to indicate for example that the cheques were being received and banked in part payment of what was due to the claimants in respect of an equal pay claim.
We conclude from the above facts that these claimants made an “irrevocable choice” to affirm with knowledge of the facts when they paid the cheques into their accounts. Alternatively, even it can be argued that imputed knowledge is not sufficient, an estoppel was created because the payment of the cheques into accounts was an act “adverse to” the respondent i.e., involving something to the respondent’s detriment. The money represented by the cheques (totalling some £3.5 million in total) left the respondent’s bank account. It would clearly be a detriment if the respondent were now required to recover payments to each of the 250 claimants who have banked the cheques. The position of the sample claimants Sinclair and Clark is different because they banked their cheques almost immediately upon receipt and did not go to Mr Cross until January 2005. However they admitted that when they signed their COT3s they were well aware that they were giving up their rights to make a Tribunal claim. They were not misled by any sharp practice. Their change of mind was for reasons entirely extraneous to the case, namely their dissatisfaction with the way the respondent subsequently retreated them, but which was unconnected with anything to do with negotiations on the single status agreement.
J J L Hargrove
Chairman
RESERVED JUDGMENT
Judgment entered in Register
and copies sent to parties on
for Secretary of the Tribunals
