United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MR ANDREW MARSDEN (Of Counsel) Messrs Greene & Greene Solicitors 80 Guildhall Street Bury St Edmunds Suffolk IP33 1QB
For the Respondents	MS CHERIE BOOTH (Of Counsel) Messrs Norton Rose Solicitors Kempson House PO Box 570 Camomile Street London, EC3A 7AN


 


MR JUSTICE WOOD (PRESIDENT) Present statistics show that of all the originating applications registered before Industrial Tribunals only approximately one-third come to a hearing; the others are settled. The Conciliation Officers are available and probably involved in almost every set of proceedings - certainly in those involving settlement; see Rule 17(7) of the Industrial Tribunals'(Rules of Procedure) Regulations 1985, and Sections 133 and 134 of the Employment Protection (Consolidation) Act 1978. Because of the provisions of S.140(2)(e) of that Act, an Industrial Tribunal Chairman will wish to be satisfied that an agreement to settle has come about through the Conciliation Officer having taken action under S.134. This is frequently, if not always, achieved by production of Form COT3 which sets out the terms of agreement and is signed by the parties or their representatives.

This happened in the present case, but the Applicant, Mrs Freeman, alleges that her representative acted without actual or ostensible authority and therefore she seeks to go behind the apparent agreement. Her representative was Dr Byford of the Bury St Edmunds Citizen Advice Bureau. An Industrial Tribunal sitting at Bury St Edmunds under the Chairmanship of Mr James Freeman in July and August 1989 decided against her and she now appeals. Before the Industrial Tribunal she appeared in person but before us is represented by Mr Marsden of counsel. He has raised a point of law which was not before the Industrial Tribunal but no objection has been taken, and properly, to his raising it before us.

This case is therefore of considerable interest to those involved in proceedings before Industrial Tribunals.

By an Originating Application dated 26th January 1989 (the January application) Mrs Freeman alleged unfair dismissal. By a second Originating Application dated 20th April 1989 (the April application) she claimed first, "reasonableness of the manner in which redundancy was handled" and secondly, "the award of redundancy payments".

The COT3 gives the Tribunal case number as 1882/89, the January application, it gives the names and address of the Applicant and the Respondents and then continues -

"Settlement reached as a result of conciliation action.

We the undersigned have agreed:

"The respondent agrees to pay the applicant the ex gratia sum of £382.50 (three hundred and eighty two pounds & 50) in full and final settlement of all claims arising out of the applicant's employment with the respondent and the termination thereof or otherwise howsoever. The applicant understands that the acceptance of this agreement prevents her from making any claim to an Industrial Tribunal or any other Court.""

The COT3 Form is then signed by Dr Byford for the Applicant on 22nd March 1989 and by solicitors, Messrs Norton Rose for the Respondents on 31st March of that year.

On 24th May 1989 a Chairman of Tribunals gave the following decision

"The Tribunal has been notified by the Conciliation Officer that the Applicant and Respondent have agreed to settle this claim on the terms set out in the schedule below. The Tribunal therefore orders that all further proceedings on the claim be adjourned generally until further order."

It then refers in the schedule to the terms of the COT3. By its Notice of Appearance to the April Application the Respondent employers set up the agreement set forth in the COT3. Thereupon the Applicant sent a letter to the Industrial Tribunal alleging that the agreement had been entered into without her authority and at the hearing in July her letter was treated as an application to restore the January proceedings. The unanimous decision of the Tribunal on that occasion was that "all further proceedings in case no.7933/89 be stayed, and that the applicant's application to restore case no.1882/89 for further hearing is refused."

The first point taken for the Respondents by Miss Booth before the Industrial Tribunal was that it could not go behind the COT3 agreement and that production of that form, which was regular on its face provided a complete defence to both Originating Applications and that the January application should not be restored. She argued that even if the agreement was voidable it might be possible to have it set aside but only in an action begun for that purpose in another court. She relied upon:-

Eden v. Humphries and Glasgow Ltd [1981] ICR 183

Times Newspapers v. Fitt [1981] ICR 637

Larkfield of Chepstow Ltd v. Milne [1988] ICR 1

Before turning to examine these cases it is convenient to see why a COT3 form is used. The 1978 Act contains restrictions on contracting out. These are in S.140(1) which reads -

"140 Restrictions on contracting out

(1) Except as provided by the following provisions of this section, any provision in an agreement (whether a contract of employment or not) shall be void in so far as it purports -

(a) to exclude or limit the operation of any this Act or;

(b) to preclude any person from presenting a complaint to, or bringing any proceedings under this Act before, an industrial tribunal."

The exceptions are to be found in S.140(2) and the relevant one is (e)

"2(1) shall not apply ...

(e) to any agreement to refrain from proceeding with a complaint presented under section 67 where a conciliation officer has taken action in accordance with section 134(1) and (2)"

This, like subsection (2)(d) contains provisions relating to actions taken by the Conciliation Officer.

It is clear that an Industrial Tribunal has the right and indeed the duty to investigate whether an agreement purported to be made under the provisions of S.133 of the 1978 Act has indeed been so made - at least where there has been no consent order drawn up by the Industrial Tribunal itself. This is apparent from a decision in the House of Lords in MOORE V. DUPORT FURNITURE PRODUCTS LTD & ANR [1982] ICR 84; in that case the appellant employee was suspended by his employers on suspicion of theft. After some discussion and the intervention of the Conciliation Officer an agreement was signed on Form COT3 by which the employers agreed to pay the appellant £300 in full and final settlement of all claims arising from the termination of his employment over which an Industrial Tribunal might have jurisdiction. He subsequently applied to an Industrial Tribunal for compensation for unfair dismissal. He was met by the defence that an agreement had already been reached precluding him from so doing.

Two of the relevant cases are reported in 1981 - EDEN v. HUMPHRIES and GLASGOW LTD [1981] ICR 183 and TIMES NEWSPAPERS v. FITT [1981] ICR 637. In the EDEN case an employee who had been unfairly dismissed appealed against the amount of compensation awarded to him by an Industrial Tribunal. As his appeal was due to be heard before this Court an agreement was reached on the basis that the employers would pay him an additional sum of money and give him a testimonial. This Court gave leave for the application to be withdrawn but later that day the appellant changed his mind and wrote to the Registrar of this Court stating that he wanted the settlement set aside and the appeal argued. There was in this case a perfectly valid agreement and the issue was whether the Employment Appeal Tribunal had jurisdiction to set aside a consent order properly made. In an extempore judgment Mr Justice Slynn referred to the general principles thus -

"Now, as we understand the position in the High Court, from looking at The Supreme Court Practice (1979), vol. 2, paras. 2015 and 2016 under the heading "Compromise," if an action is compromised then the compromise can only be set aside by a separate action and on certain limited grounds. The question is whether the appeal tribunal has jurisdiction to set aside an agreement which has been made, even if application is made on grounds which would justify the matter being set aside in the High Court. We have to remember that we are a body set up by statute with only the powers which the statute gives us. It does not seem to us that those powers do include jurisdiction to set aside an agreement which has been arrived at between the parties to compromise an appeal to this tribunal. Nor can the provisions of the notes which the employee relies on, to the effect that we can regulate our own procedure, possibly give us the jurisdiction which he suggests that those notes do give to us.

Accordingly, it seems to us clear that if we cannot set aside the agreement which has been made by the parties, then the interests of justice cannot require that we should review the order which we made giving leave to withdraw the appeal."

EDEN was considered in TIMES NEWSPAPERS where an employee was one of a large number who presented complaints of unfair dismissal to an Industrial Tribunal. Following an agreement with the employers under which most of the employees were reinstated, solicitors acting for the majority of the reinstated employees wrote to the Industrial Tribunal applying for an order dismissing the complaints of those men whose names appeared on an enclosed schedule. Mr Fitt's name was included in the schedule. The employers consented to the order being made and the complaints were dismissed. Over a year later Mr Fitt realised that his name had been included and that he had not authorised his solicitors to withdraw. Application was therefore made to the Industrial Tribunal to correct the previous order by deleting his name. The learned Chairman did so without giving the employers the opportunity of being heard or notifying them of his decision. The employers appealed.

In the reserved judgment of Mr Justice Browne-Wilkinson, p.642 he refers to the same principle in the Supreme Court Practice as that referred to by Mr Justice Slynn. He summarises the principle in EDEN as follows -

"It is therefore established that where there has been a consent decision the appeal tribunal, being unable to set aside the underlying agreement, has no jurisdiction to set aside the consent decision made pursuant to it. Apart from the point which we have yet to come to, the same principle would obviously apply to consent decisions of the industrial tribunal".

After considering and rejecting that further point Mr Justice Browne-Wilkinson continues -

"... In our view the same considerations apply to a consent decision made in the industrial tribunal as to any other consent order. On analysis, the position seems to us to be this. Once an order has been made and perfected, a party seeking to alter it must show that he has some right to have it altered. If the order was made by consent pursuant to an agreement, neither party can have such right so long as that agreement is valid and binding: hence the need to set aside the agreement. But it does not follow that because a consent order was made pursuant to a void agreement, the parties have an automatic right to have the order amended. In our judgment, when a consent decision has been made by an industrial tribunal with the consent of a party's solicitor, that party has no right to have that order altered. He is bound by the acts done by his agent within the ostensible authority of the agent and has no equity to have the consent decision amended.

To decide otherwise would be to strike at the roots of finality in these cases. In very many cases which are compromised before industrial tribunals, the conciliation officer plays no part. Once a decision has been properly made by the industrial tribunal on the information before it at the time, in the absence of fraud or misrepresentation that should be the end of the matter. Section 140 is designed to protect employees from entering into perhaps misguided bargains before their claim is heard by the industrial tribunal. But once the case has come before the industrial tribunal and been disposed of, the purpose of section 140 is exhausted."

This area of the law was next considered in HENNESSY V. CRAIGMYLEN [1986] ICR 461. In this case the agreement was made prior to the institution of proceedings and the Court of Appeal did not consider that there was any error in an Industrial Tribunal examining the provisions of S.134 to see if that agreement was void under S.140. However there was a second point namely, the allegation that the agreement should be avoided on the grounds of economic duress. The Court of Appeal considered this and rejected that submission. It was therefore considering the basis or a possible basis in common law upon which an agreement could be avoided. However, it is to be noted that this agreement as in the MOORE case was one which arose prior to the institution of proceedings and there was no consent order of an Industrial Tribunal or of this Court which it was sought to set aside. The Court of Appeal in HENNESSY was not referred to MOORE nor to EDEN nor to TIMES NEWSPAPERS.

The most recent case is LARKFIELD OF CHEPSTOW LTD v. MILNE [1988] ICR 1. At the conclusion of the arguments in an unfair dismissal claim the Chairman announced that the Tribunal would reserve its decision and invited the parties to reach settlement. The parties did so and recorded it in a COT3 Form. That settlement was subsequently approved by a different Chairman and the originating application stayed by consent. Some months later as a result of communication from an Industrial Tribunal the parties were informed that the Industrial Tribunal at the close of argument had been minded to reach a decision in the applicant's favour whereas the agreement reached was for equal apportionment of liability. Application was made to set aside the consent order made by the second Chairman. This Court decided that there had been no decision by the second Chairman and therefore there was no order or award to be set aside and that there was no misrepresentation or grounds for setting aside the agreement reached. This Court followed the judgment of Slynn J in EDEN and referred to the passage to which we have already referred. The Court was referred to HENNESSY but was not prepared to accept it as authority for the proposition that there is jurisdiction to set aside an agreement at common law or in equity, rather than on the ground that the conciliation officer had not conducted himself in negotiations strictly in accordance with the relevant provisions of the 1978 Act. As we have indicated HENNESSY is distinguishable in that the agreement was made prior to the institute of proceedings.

In the present case however Mrs Freeman is not seeking to set up any other normal common law bars. She is saying that any agreement reached was not her agreement and thus, as far as we can see, the issue of authority is raised for the first time. It was referred to by Mr Justice Browne-Wilkinson in TIMES NEWSPAPERS case in the passage to which we have referred.

The following principles can be drawn from these cases:-

1. The practice in the Employment Appeal Tribunal and the Industrial Tribunals is similar - TIMES NEWSPAPERS.

2. Where an agreement is or is alleged to have been entered into prior to the issue of proceedings, it is open to an Industrial Tribunal to investigate facts relevant to Ss.133, 134 and 140; DUPORT and HENNESSY.

3. Once an order of the Court has been made by consent, such an investigation as envisaged in 2. above is no longer relevant, TIMES NEWSPAPERS.

4. Once made, an order of the Court can only be set side if the agreement upon which it was based is set aside also and this can only be done on common law or equitable grounds by separate action in the High Court or a County Court, EDEN and TIMES NEWSPAPERS.

5. Neither before the Employment Appeal Tribunal nor in the Court of Appeal in HENNESSY were the cases of EDEN and TIMES NEWSPAPERS cited nor was the point ever argued that the correct procedure was by way of separate action.

6. It was found in TIMES NEWSPAPERS that there was ostensible authority and the only issue not as yet specifically decided in the cases, is whether or not an Industrial Tribunal is entitled to investigate the authority of the agent signing a COT3 on behalf of a party.

This Industrial Tribunal decided that it was not precluded from doing so as the question of authority went to the basis of the issue whether or not any agreement existed. We agree, but would only add that as indicated by Mr Justice Browne-Wilkinson in TIMES NEWSPAPERS it is of vital importance that there should be an end to litigation and that where a barrister or solicitor is involved the likelihood of disproving ostensible authority is slim indeed. It follows therefore that Miss Booth's first point fails.

Those who practice before Industrial Tribunals know that the whole tenure of the statutory provisions and the presence and help of conciliation offered by ACAS, engenders an invaluable atmosphere in which to seek to achieve a resolution of the issues between the parties arising out of the employment relationship which is under scrutiny. There may be claims or threats of claims for unfair dismissal, redundancy payments, holiday or sick pay, arrears of pay and allegations or threats of allegations of discrimination. The object of any attempts at settlement will be to dispense with all such issues by agreement which may or may not include the payment of money. Some or all of these issues may be the subject of discussion between the parties and those representing them.

As we have commented on other occasions, delay in bringing issues or complaints is contrary to the best interests of good industrial relations and it would be unfortunate if one or other party (more likely the applicant) could, as a matter of tactics, bring and settle one claim and then follow it with another. The very threat or existence of proceedings before Industrial Tribunals can be time consuming and financially onerous.

By so saying we in no way intend to diminish the invaluable contribution to sound industrial relationships which has been made by the Industrial Tribunals and the jurisdiction which they exercise, but it is clearly in the interests of all that settlements reached in accordance with the provisions of the statute should be capable of including a "sweeping up" clause as is so often done in practice.

We therefore agree completely with the reasoning of the Industrial Tribunal as succinctly expressed in paragraphs 41 - 45.

"41 A solicitor acting for Mrs Freeman would certainly have had such authority, but it does not follow that any lay representative has it. In the present case we think that the question must be decided on first principles, and we confine ourselves to the case of representation by a CAB adviser. In the case of representation by other lay advisers, the position may not necessarily be the same.

42 As far as the CAB is concerned we think that the matter must be looked at in an historical context. CABs up and down the country have for many years provided a service for parties who have felt incapable by themselves of doing justice to their cases before the tribunals, and that service has normally extended to handling the case in its interlocutory stages as well as actually appearing in the Tribunal. The CABs are a recognised and respected source of tribunal representation and CAB advisers have habitually signed COT3s for their clients, which have been accepted without demur by ACAS.

43 There may be cases where a CAB adviser's authority to compromise proceedings has been specifically excluded or restricted by the client, and in such cases, if the advisers purpose to act in excess of their authority, they may be liable to the client. But it seems to us that where CAB advisers, named as representatives by a party to the proceedings, hold themselves out as having authority to negotiate, and to reach a settlement, on behalf of a client, the other party to the proceedings is entitled, in the absence of any notice to the contrary, to assume that the CAB adviser does in fact have such authority, and to enter into an agreement with the CAB adviser on that basis. That is what it meant by ostensible authority.

44 Where in such circumstances an agreement is reached between the CAB adviser and the other party, or the other party's authorised representative, under the auspices of a Conciliation Officer, the agreement will be binding on the CAB's client as against the other party, whether or not in fact the CAB adviser had any authority to enter into it. If the CAB adviser entered into the agreement without actual authority, the client may have a cause of action against the adviser, but that is of no concern to the other party.

45 In the circumstances of the present case we find that Sovereign had no reason to question Dr Byford's authority and, as far as Sovereign was concerned, the COT3 was properly agreed to and signed by him on behalf of Mrs Freeman, under the auspices of the Conciliation Officer. In the result Mrs Freeman is bound by the COT3 as far as the January application is concerned.

The main submission of Mr Marsden is that when one looks at the wording of the agreement it seems to fall into two halves. The first half fell within the ostensible authority of Dr Byford but not the last sentence. Those words read "The applicant understands that the acceptance of this agreement prevents her from making any claim to an Industrial Tribunal or any other court."

He supports his submission by reference to a number of cases which established the well known common law principle that in litigation the ostensible authority of counsel or solicitor to settle only extends to the issues on the pleadings and not for instance after judgment has been given. See -

Re A Debtor [1914] 2 KB 758

Matthews v. Munster (1888) 20 QBD 141

Waugh & Ors v. H B Clifford and Sons Ltd & Anr [1982] 1 Ch. 374

As was pointed out in FREEMAN & LOCKYER V. BUCKHURST PARK PROPERTIES (MANGAL) LTD [1964] 2 QB 482 by Diplock LJ at p.502A the basis of implied authority is that of holding out or representation, and although as indicated by the cases above the strict common law position may be as Mr Marsden submits it to be, for the reasons which we have given above it seems to us that the ostensible or implied authority in cases such as the present must be somewhat wider and include all actual and potential issues between the parties arising out of the employment relationship and which are or should be known to the parties at the time. (We use those words so as to exclude some future claim for personal injuries, for example pneumoconiosis, which might not be known to the parties at the time). The spirit and intention of parties must be to "wipe the slate clean".

Whilst the present agreement might have been differently drafted, we are unable to read it in the way urged upon us by Mr Marsden. It seems to us that the clear intention was to exclude only those claims arising out of the employment relationship. The reference to any other court would apply to such claims as holiday or sick pay. There is at present no common law jurisdiction in Industrial Tribunals. Another way of reading that last sentence is merely to clarify the full import of what went before.

The facts of the present case show that Dr Byford was named in the Applicant's Originating Application as her representative, that he was the person who had approached and communicated with the Industrial Tribunal on her behalf and engaged in correspondence on her behalf. He also signed the COT3 as her representative.

The Respondents and the Industrial Tribunal were clearly entitled to rely upon his ostensible authority.

As one of her submissions in support of her argument that no party should be allowed to go behind a COT3 which was apparently properly completed, Miss Booth submitted that she was caused considerable embarrassment in the present case by having to call Dr Byford and the Conciliation Officer. It seems to us that if the ostensible authority is clear there is no need to investigate further and this is supported by that passage cited from TIMES NEWSPAPERS.

It is however clear that where it is at all possible, and it may not always be so, all those representing parties before or after proceedings had been initiated in an Industrial Tribunal should ensure that "the client" has seen and approved the wording of a proposed settlement. This can be achieved by initialling a letter or by asking that the COT3 itself is initialled or signed by the party and then countersigned by the representative.

Mr Marsden has conceded - and we think rightly - that no distinction can be drawn in those cases before Industrial Tribunals between representation by counsel or solicitor or by a member of the Citizens' Advice Bureau or indeed by a member of some Law Centre.

For the reasons which we have given therefore this appeal must be dismissed.