THE INDUSTRIAL TRIBUNALS
CASE REF: 2166/02
CLAIMANT: Linda Penton
RESPONDENT: Northern Ireland Court Service
DECISION ON A PRE-HEARING REVIEW
The decision is that the Industrial Tribunal has jurisdiction to entertain the claimant's complaint as the parties had not concluded a valid compromise agreement under the provisions of Section 9 of the Disability Discrimination Act 1995 (as amended).
Constitution of Tribunal:
Chairman (Sitting Alone): Miss E McCaffrey
Appearances:
The claimant was represented by Mr K Denvir, Barrister-at-Law, instructed by Campbell Stafford, Solicitors.
The respondent was represented by Mr M Wolfe, Barrister-at-Law, instructed by the Crown Solicitor's Office.
THE ISSUE
- The issue to be decided in this case was whether an Industrial Tribunal has jurisdiction to entertain the claimant's complaint in light of the provisions of section 9 (1) and section 9 (3) (c) of the Disability Discrimination Act 1995 (as amended) .
FACTS
- .1 I received witness statements from the claimant, Linda Penton and from Stephen Tumelty Solicitor and also heard oral evidence from both. I also had the opportunity to consider documents, in particular the settlement terms produced by the respondent, another copy of the settlement terms annotated by the claimant and the claimant's diary notes. The evidence which they gave was quite detailed but I rehearse here only the facts which are relevant in the context of this decision.
- .2. The claimant brought a claim of disability discrimination against the respondent (her employer). The case was due to be heard on Thursday, 23rd November 2006 and the claimant had instructed Stephen Tumelty Solicitor to act on her behalf. Mr Tumelty, in accordance with the claimant's instructions, proceeded to brief Counsel for the hearing. He advised the claimant that the Barrister he had instructed, Mr Bready BL, would not be available to deal with the case on the opening day and also that Mr Bready had advised him that he had a potential conflict of interest in that he was related to one of the respondent's witnesses. The claimant was made aware of this but made no objection to this, other than to be concerned about Mr Bready's non-availability on the first day of the case. Her diary note for that day comments, "Told Stephen who won't know someone in my case." She subsequently attended a consultation with Mr Tumelty and Mr Bready on the Monday morning before her case was due to run.
- .3 There was a conflict of evidence on the exact course of this meeting. Mr Tumelty was clear in his evidence that at the consultation Mr Bready had discussed the strengths and weaknesses of the claimant's case and the likely costs of running the case as against the likely award of compensation if she were successful in her claim. There was already an award of costs against the claimant in the amount of £4,300, and there had been some suggestion of an offer to settle the case in the sum of £5,000 in the claimant's evidence, but no formal offer was forthcoming. Mr Tumelty confirmed that the proposed terms of settlement, which were subsequently reduced to writing and are attached to this decision and marked "A", were discussed in detail with the claimant and that each clause of the settlement was explained to her. In particular, the first clause of the settlement, which is in effect a waiver by the respondent of its right to enforce an order for costs in the sum of £4,300, was discussed. The claimant subsequently seems to have been under the impression that the respondent would pay her this sum and she would repay it to the respondent, but this is not borne out by her diary note for 20th November 2006, which says: "…….Settle for costs and confidentiality agreement…..I've done the best I can – BL others would have crumpled pressure too much." I find as a fact that the claimant agreed that she would forgo a claim for damages on the basis that the respondent would not enforce its order for costs against her and this is reflected in the settlement terms prepared for signature.
- .4 Mr Tumelty confirmed that the claimant was advised that settlement would be on the basis that her claim would be withdrawn from the Industrial Tribunals and the case would be adjourned pending implementation of terms of settlement. This is at variance with the notes added to the settlement terms by the claimant when she received them for signature, to the effect that she would be at liberty to apply to reinstate her proceedings against the respondent if there were any actions by the respondent which could be construed as victimisation or harassment. This is not referred to in the claimant's diary for 20 November, although she refers to a telephone conversation with Mr Tumelty where she said "I told Stephen I would only sign if everything to my satisfaction." There is a note of a second phone conversation with Mr Tumelty on the same day when the note reads "…..BL says confidentiality agreement standard ok still want to read it and insert own clauses if necessary." The diary note does not make it clear if the claimant expressed this to Mr Tumelty, or his response. However his evidence did not refer to any clause being agreed by parties which would allow the claimant to reinstate her proceedings. On the contrary, his evidence was that the gist of clause 4 of the draft agreement was discussed with the claimant, and that Mr Bready had explained to the claimant at the consultation that if she gave authority to settle on these terms, that would be the end of the matter as far as her complaint went. I find as a fact that the claimant had been advised that the settlement terms had to be in writing and that she would see them and be invited to sign them when they were written up, but not that she had told her advisors she might want to amend them.
Mr Bready also explained that he and Mr Tumelty were advising her as legal advisers. The claimant's evidence was contradictory on this point: she initially said that she was aware that she thought she would be able to continue with her complaint if the case was settled but then subsequently conceded that if she came to an agreement with the respondent and everything was "okay" then that would "be the end of it". She conceded that Mr Bready may well have explained that to her at the time but she said that she had been very emotional on that day. I find as a matter of fact that the claimant was well aware of the impact of settling the case on her ability to pursue her claim.
- .5 The claimant also disputed that she had agreed that the case would be settled without admission of liability and that she would not have agreed to this. Mr Tumelty was clear that this had been discussed and indeed that Mr Bready had given examples of cases being settled on this basis. He said the claimant had agreed that she had seen this in the course of her work as a court clerk and was aware of what it meant. I find as a fact that the claimant agreed to the case being settled without admission of liability. Both witnesses agreed that the confidentiality clause was significant in this case and that it would be in the final agreement.
- .6 As a result of that discussion, settlement negotiations ensued between the parties and terms of settlement were subsequently drafted by the respondent, signed on behalf of the respondent and forwarded to the claimant's solicitor for signature by the claimant. The case was adjourned for six weeks pending implementation of terms of settlement, as is normal practice in the Industrial Tribunals.
- .7 When the claimant saw the terms of settlement, which was not until early December 2006, she was not content with them and proceeded to instruct her solicitors that she wished to make amendments to the terms of settlement, which were not acceptable to the respondents. The terms of settlement were not signed by the claimant.
- .8 I am satisfied on the basis of the evidence that I have heard that the claimant was properly advised that Mr Bready would be unable to deal with her case on the opening day and also that she was properly advised of the potential conflict of interest. She at that stage did not see any difficulty in this: from her work within Court Service, she said was aware that resident magistrates could hear cases involving people they knew without any difficulty, as they were able to "set aside" their personal knowledge of the individuals concerned. I am satisfied at this stage that Mr Bready made a proper disclosure of his potential conflict of interest and that the claimant saw no difficulty with it. I will consider below whether or not this had any impact on Mr Bready's position as an independent advisor for the purposes of reaching terms of settlement in this case.
- THE RELEVANT LAW AND DECISION
- .1 The relevant law in relation to this matter is to be found in section 9 of the Disability Discrimination Act 1995 (as amended). Due to the technical nature of this legislation, I set it out in some detail below.
"s. 9 (1) Any term in a contract of employment or other agreement is void so far as it purports to –
(a) require a person to do anything which would contravene any provision of, or made under, this Part;
(b) exclude or limit the operation in any provision of this Part; or
(c) prevent any person from presenting a complaint to the industrial tribunal under this Part.
(2) Paragraphs (b) and (c) of subsection (1) do not apply to an agreement not to institute proceedings under section 8(1), or to an agreement not to continue such proceedings, if
(a) a conciliation officer has acted under paragraph 1 of schedule 3 in relation to the matter; or
(b) the conditions set out in sub-section (3) are satisfied.
(3) The conditions are that-
(a) the complainant must have received advice from a relevant independent advisor as to the terms and effect of the proposed agreement (and in particular its effect on his ability to pursue his complaint before an industrial tribunal);
(b) when the adviser gave the advice there must have been in force a contract of insurance, or an indemnity provided for members of a profession or professional body, covering the risk of a claim by the claimant in respect of loss arising in consequence on the advice;
(c) the agreement must be in writing, relate to the particular complaint, identify the advisor and state that the conditions are satisfied.
(4) A person is a relevant independent advisor for the purposes of subsection (3) (a) –
(a) if he is a qualified lawyer….
(4A) But a person is not a relevant independent advisor for the purposes of subsection (3) (a) in relation to the complainant
(a) if he is, is employed by or is acting in the matter for the other party or a person who is connected with the other party, …
(4B) in subsection 4 (a) "qualified lawyer" means a barrister (whether in practice as such or employed to give legal advice), or a solicitor who holds a practising certificate…
(5) For the purposes of subsection (4A), any two persons are to be treated as connected –
(a) if one is a company of which the other (directly or indirectly) has control or (b) if both are company of which a third person (directly or indirectly) has control."
- .2 I have searched for relevant cases and authorities on this point, but there appear to be virtually no decided cases on the issue of whether or not a person is "an independent advisor" under section 9(3), except to refer to the statute itself. It is suggested in some employment law texts that section 9 (4A) (a) has its origins in the situation where an employer is keen to resolve a claim covered by the rules on compromise agreements, but the employee has no lawyer. Occasionally the employer would refer an employee to a lawyer or lawyers to obtain advice in relation to employment matters or terms of settlement and it is suggested that the purpose of the provision at s. 9 (4A)(a) was to make sure that the lawyer concerned was completely independent in the matter. For example, a lawyer already retained by the employer, or a subsidiary of the employer company would not qualify as independent. The definition in the legislation seems narrow and this is perhaps understandable if its purpose is that suggested in the texts. It does not resolve the issue of whether a lawyer is "independent" if he or she has a potential conflict in relation to a case. None of the case law relates to any potential conflicts of interest and whether this would render an advisor "non-independent". I am conscious that I did not hear any evidence from Mr Bready in this case, but I am satisfied that nothing in the evidence before me leads me to the view that either Mr Tumelty or Mr Bready was not independent in his conduct of this matter within the meaning of s.9 (4A) (a) of the Disability Discrimination Act 1995 (as amended).
- .3 It was submitted on behalf of the respondent that in this case the terms of settlement which had been negotiated and agreed between legal advisors were binding on the claimant because she had initially agreed them and the respondent's submission was, in effect, that the claimant was not entitled to change her mind. In this regard I was referred to "The Law and Practice of Compromise" (6th Edition) by David Foskett QC which is instructive on the matter. The argument of the respondent was that, once the claimant's lawyer had represented that he had ostensible authority to settle the case on her behalf on certain terms, that both he and the claimant were bound by this and could not resile from it. However Foskett comments in paragraph 29-15 "If the legal representative agreeing to the settlement is doing so on behalf of a party which needs to execute certain formal procedures before even it can be bound by the settlement, then the ostensible authority of the legal representative will not be sufficient to make good that deficiency if it exists."
- .4 The extract from Foskett quoted to me related to civil matters in general. However in the same book, there is a specific chapter on employment contracts and compromise where the author states the following:
"In regard to the compromise of claims arising from disputes in the employment setting, important differences exist between the compromise of contractual and common law claims, on the one hand, and the compromise of statutory claims, on the other. In essence, contractual claims (including those which can be heard by employment tribunals) are subject to the same general principles would apply to compromise agreements and other civil disputes. This is in sharp contrast to the compromise of statutory claims. With regard to the latter, stringent limitations on the ability to compromise such claims are designed to protect employees from entering into ill-advised settlement agreements."
- .5 In this regard I was referred by Counsel to the leading case of Hinton v The University of East London [2005] IRLR 552. In this case the Court of Appeal, with the leading judgement given by Mummery LJ, gave helpful guidance on the conditions regulating compromise agreements and emphasising that the purpose of compromise agreements was to protect employees when agreeing to relinquish their claim to bring proceedings under the Employment Rights Act in the employment tribunal. That particular case related to a compromise agreement under the Employment Rights Act (i.e. an unfair dismissal claim), but the legislation is substantially the same as the provisions of section 9 of the Disability Discrimination Act1995 (as amended).
- .6 I was also referred to the decision of the Industrial Tribunal in Northern Ireland in the case of John Crilly v Silent Night Ireland Ltd (case ref 490/06) which was a decision relating to the validity of a compromise agreement made under the Employment Rights (NI) Order 1996. In that case, the Chairman analysed the evidence before him in the light of the requirements of Article 245 (3) of the Employment Rights (NI) Order 1996 and found that the legal requirements had not been complied with, in that the claimant had not received independent advice in relation to the content and effect of the agreement. As the claimant refused to sign the agreement when it was sent to him for signature and did not have it signed on his behalf by his solicitors, he never made the acknowledgements required by the legislation.
- .7 I quote from the decision in Crilly, at paragraph 17 of the decision: "My function, as I see it, is to determine, on the evidence, whether a valid compromise agreement was entered into. I consider this to be a reference to the statutory provisions contained in Article 245 of the Order, the purpose of which is as stated by Mummery LJ in Hinton, to protect claimants when there is a settlement proposal that will lead to relinquishment of a right to bring (and I would add "or to continue") proceedings in the tribunal. To fulfil that purpose I think that a claimant must know what he/she is agreeing to and that a claimant's representative, in order that the relevant statutory provisions are complied with, cannot, in my view, agree a compromise agreement without his/her client first agreeing the details of all that is proposed and being informed of their effect; if it were otherwise, it seems to me that the provisions of Article 245 would be defeated."
- .8 I respectfully concur with the comments made by Mr Palmer, the Chairman in Crilly. I believe that the statutory regime put in place by the provisions of section 9 of the Disability Discrimination Act 1995 (as amended) place more stringent requirements on parties settling employment law claims than are required in ordinary civil claims. A settlement must comply with the requirements of s.9 to be valid and therefore binding. So I do not accept that the ostensible authority of Counsel to resolve this case overrides the provisions of the statute. It cannot in my view be so, otherwise the statute could be robbed of its effect.
- .9 The parties had asked me to consider in particular whether terms of settlement needed to be signed by the parties or on their behalf in order to effect a valid compromise agreement. I am conscious that the legislation is silent on this point. However the legislation does say, at paragraph 9 (3) (c),
"the agreement must be in writing, relate to the particular complaint, identify the advisor and state that the conditions are satisfied."
- .10 The conditions are the conditions set out at paragraph 9 (3)(a) and (b),namely that the complainant has received advice from an independent advisor on the terms and effect of the proposed agreement and in particular its effect on his ability to pursue his complaint before an industrial tribunal and secondly, that when the advisor gave the advice, there was in force a contract of insurance or professional indemnity insurance covering the risk of a claim by the complainant in respect of loss arising and consequence of the advice. The legislation does not specifically say that the agreement must be signed by or on behalf of each party, but it is difficult to see how the acknowledgments required by the legislation are fulfilled unless the agreement is signed by or behalf each party. Crilly specifically refers to this point. Both parties' representatives agreed that is good practice for the agreement to be signed by both parties and I have no doubt that this is the case. Indeed, the draft settlement terms prepared by the respondent say in the opening paragraph:
"The parties to these proceedings as signified by their respective signatures hereby agree to enter into a Compromise Agreement on the following terms and each of the complaints before the Industrial Tribunal shall be deemed to be settled as and from the date of assignment hereof:-"
This indicates that the respondent did not expect to be bound by the Compromise Agreement until the terms had been signed by both parties.
There is a paucity of case law in relation to this particular issue. However in Blackstone's Employment Law and Practice 2007, at paragraph 5.71, there is a reference to the case of CPS v Bamieh, EAT (309)/99. The parties had apparently concluded a compromise agreement (but not signed it) one working day before the tribunal hearing should have commenced. The extract from Blackstone reads as follows:-
"When the case was about to begin, however, the claimant indicated that she was not prepared to continue with the agreement. The tribunal found that it was in the interests of justice of the case to proceed and the EAT rejected an appeal on the basis that, it was necessary to conduct a trial within a trial to determine whether the agreement was reached, the power to strike out should not be exercised."
- .11 The comment is made in Blackstone that the claimant changed his/her mind about the compromise before the proceedings were disposed of, and that the position would be different if in fact the proceedings had been dismissed. In this case, the case was adjourned pending implementation of terms of settlement, which were never implemented, so the case was not withdrawn or dismissed. I accept that terms of settlement were negotiated between the respective parties by their lawyers on their behalf. I believe that Ms Penton was fully advised of the impact of those terms of settlement and that she agreed them at the time. However when she was given the written terms of settlement for signature, she had clearly changed her mind and was not content to agree the terms presented to her. This is unfortunate for all concerned and does not reflect well on the claimant. However, as a result, the settlement terms do not embody the requirements of a valid compromise agreement as set out in the Disability Discrimination Act 1995 (as amended). A valid compromise agreement has not been concluded within the requirements of section 9 of the Disability Discrimination Act 1995 as amended and accordingly I find that the Industrial Tribunal has jurisdiction to deal with this claim.
Chairman:
Date and Place of Hearing: 10 December 2007 and 29 January 2008.
Date decision entered in the register and issued to the parties:
