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United Kingdom Employment Appeal Tribunal
You are here: BAILII >> Databases >> United Kingdom Employment Appeal Tribunal >> NRG Victory Reinsurance Ltd v Alexander [1992] UKEAT 35_92_1205 (12 May 1992)
URL: http://www.bailii.org/uk/cases/UKEAT/1992/35_92_1205.html
Cite as: [1992] UKEAT 35_92_1205
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At the Tribunal
Before
THE HONOURABLE MR JUSTICE WOOD MC (P)
MR A D SCOTT
MR G H WRIGHT MBE
Transcript of Proceedings
JUDGMENT
Revised
APPEARANCES
For the Appellants MR A HOCHHAUSER
(Of Counsel)
Messrs Simmons &
Simmons
14 Dominion Street
London EC2M 2RJ
For the Respondent NO APPEARANCE OR REPRESENTATION BY OR ON BEHALF OF THE
RESPONDENT
MR JUSTICE WOOD (PRESIDENT): By an Interlocutory Order dated 6 December 1991 a Chairman of Industrial Tribunals sitting at London South refused an application by the Respondent employers, NRG Victory Reinsurance Ltd to strike out an Originating Application made by Mr Alexander, the Applicant.
The Application was made under Rule 12(2)(e) of the Industrial Tribunals (Rules of Procedure) 1985. Rule 12(2)(e) reads:
"A Tribunal may, if it thinks fit, -
...
(e) subject to the Proviso below, at any stage of the proceedings order to be struck out or amended any originating application or notice of appearance of anything in such application or notice of appearance [and these are the important words] on the grounds that it is scandalous, frivolous or vexatious"
and the proviso says:
"Provided that before making any order under (e) or (f) above the tribunal shall send notice to the party against whom it is proposed that any such order should be made giving him an opportunity to show cause why such an order should not be made."
The hearing of the matter was on 26 November; that was a date which had been appointed for directions. The issue was raised by the employer's solicitors Messrs Simmons & Simmons in a letter of 22 November 1991. The letter in fact indicated that a stay was going to be sought but there was no point taken that in fact the correct procedure on this occasion was under Rule 12(2)(e). The Learned Chairman refused to strike out the Originating Application and he gave his reasons.
The history of the matter is somewhat complicated. The Applicant had been working for the Respondents from January 1967 and his employment, it is agreed, was ended on 31 May 1991. He was sent a letter dated 10 June 1991 indicating detailed terms which he was encouraged to accept and a provision that he was to receive a substantial sum which was calculated in that letter and set out as £36,750. There is a space at the end of that letter for the Applicant's signature and a date.
We are told that he accepted the terms of the letter although there is no signed copy of that document in the possession of the employers. Of course discovery has not taken place so we do not know whether it was in fact signed, but what is clear is that the sum of £36,750 by way of cheque was accepted and paid in by the Applicant so that he has received that sum. Subsequently the Originating Application was issued. That is dated 29 August 1991. It alleges unfair dismissal. It indicates that Taylor Joynson Garrett are acting for Mr Alexander and it sets out his version of what occurred.
Now in the letter of 10 June there is a clause No. 9 which is an extensive clause indicating as follows:-
"You agree that the arrangements set out in this letter are accepted by you in full and final settlement of all costs, claims, expenses or rights or action of any kind whatsoever and however arising (whether arising under common law statute or otherwise and whether arising in the United Kingdom or in any other country in the world and including but not limited to any claims under the Wages Act 1986 or in respect of which a conciliation officer is authorised to act, and any claims for payment in lieu of notice, expenses, holiday pay or other employee benefits or remuneration accrued during your employment by the Company (or against any company in the Group of Companies of which the Company is a member) and whether arising directly or indirectly out of or in connection with your contract of employment with the Company, its termination or otherwise."
No-one could criticise that for not being comprehensive.
The Originating Application in its particulars contains the following description of what occurred on 31 May. Paragraphs 2 - 4 read:
"On 31 May 1991 the Applicant was called in to see Mr John Butcher, the Chief Executive of the Respondents. He was told that the company intended to terminate his employment with immediate effect, but told that he might resign if he preferred to do so.
He was told that if he intended to resign, he would not be given an opportunity to seek legal advice; such opportunity would only be given to him if he elected to be dismissed. After some discussion he was given permission to seek advice over the telephone from his solicitors, but he was not allowed to meet them or involve them in the dismissal by, for example, having them at the meeting.
The Applicant requested an opportunity to take full advice and was told again that if he did not immediately elect to resign on the terms then offered to him, he would be dismissed."
It is, we are told by Mr Hochhauser, that the allegations of duress are no longer to be pursued by the Applicant but there it is on the pleadings which were before the Industrial Tribunal that that allegation was made. He relies on the terms of a letter, but we do not regard that letter as being absolutely clear. A Tribunal could well wish to hear the Applicant.
The Learned Chairman in his reasons considered the documentation and the submission made by Mr Hochhauser and also by the solicitor for the Applicant. He pointed out that the Agreement was void under Section 140 insofar as it purported to exclude or limit the operation of any provisions of the 1978 Act and he therefore looked to see whether, in the exercise of his discretion, and applying the appropriate principles of the law, the appropriate order was to strike it out on the basis that it was "frivolous or vexatious".
He took the view that he should not strike it out and the nub of his reasoning is that set out in paragraph 6 of his judgment. He refers to Section 75(3) of the 1978 Act, that is the section dealing with the limitation on the award of compensation which can be given, and then says this in paragraph 6:
"Sub-section 3 is in the widest possible terms, and the practice in Industrial Tribunals for very many years has been to calculate the amount of the compensatory award, to deduct from that sum any other payment by the Respondent and any excess of the redundancy payment over the basic award, to apply (if appropriate) a percentage reduction for contributory fault or conduct before dismissal to the result, and then, if necessary, apply the statutory limit."
He then indicates the authorities upon which he relies. No-one has suggested that that approach is in error in any way and so what the Learned Chairman seems to be saying there is that this Applicant, who it is conceded was receiving an income of approximately £3,100 net per month, might have a compensatory award calculated under Section 74 which exceeded the sum he had received of £36,900 by more than the statutory limit of the award which could be granted by an Industrial Tribunal and which in round figures we will take as £10,000. He therefore took the view that in all the circumstances of the case that it was right to allow the application to go forward so that the Applicant could argue that he was entitled to a greater sum than would be reduced by that £36,750. Of course argument would be heard by the Tribunal on contribution. The point might also be taken in all the circumstances of this case -there are a number of allegations which are in the correspondence about which we need not make any comment whatsoever - but it might be that it was not just or equitable to award him a penny. That would be a matter for the Tribunal but the Learned Chairman took the view that the Originating Application should not be struck out at this juncture.
Mr Hochhauser has argued strenuously, and we are grateful to him, that the Learned Chairman was wrong. He submits that he was wrong first because the amount which had been received even if, and he does not concede this for a point that I will take later, even if only £15,000 is the appropriate figure to be deducted. That exceeds the amount of the award which can be made by the Industrial Tribunal. He relies in particular on a decision of this Court presided over on that occasion by Mr Justice Tucker called TELEPHONE INFORMATION SERVICES LTD v WILKINSON [1991] IRLR 148. In that case the Applicant had been offered a sum of £9,699 which was the maximum which could be awarded by a Tribunal for his claim if it succeeded and they made no admission of unfair dismissal. The offer was refused because Mr Wilkinson, the Applicant, wanted to obtain a declaration that he had been unfairly dismissed. The Tribunal held that he was entitled to seek that finding and the Appeal against that decision was dismissed. Mr Hochhauser on that occasion appeared for the Applicant.
This Court took the view that because there had been no concession on the unfair dismissal the Applicant was entitled to go ahead. No reference that I can see in that decision was made to Section 75(3) and that point was not really before the Court in that case. A passage from the judgment in the Court of Appeal Lord Justice Stuart-Smith is there cited from ASHMORE v BRITISH COAL CORPORATION [1990] IRLR 283. That gives a very wide definition to what could be held to be "frivolous, vexatious or an abuse of the process" and indicates thus:
"What may constitute such conduct must depend on all the circumstances of the case; the categories are not closed and considerations of public policy and the interests of justice may be very material".
What is argued here by Mr Hochhauser is that the interests of justice demand that an employer should be able to reach an agreement with his employee and that he should not thereafter be subjected to proceedings in an Industrial Tribunal where it is quite clear that an employee has accepted a sum of money which is intended to cover the compensation which he could be awarded.
The procedure and wording under the 1978 Act is highly technical. It has been constructed so as to protect employees of all standings, not only those earning huge salaries but those on weekly wage packets and Section 140 is there so that before a binding agreement is reached the Applicants should know exactly what their rights are, where they stand and the result of their entering into an agreement. If they are not legally advised and even if they are, even if they have the assistance of experienced trade union officials, nevertheless, the existence of ACAS and the Form COT3 referred to colloquially as a Cot 3, is not followed and the procedure is not followed, the agreement will not be binding; the Tribunal will be entitled and indeed some would say should, look into the matter to satisfy themselves that the agreement is a valid one in the sense that it should be given effect.
So the argument that employers are prevented from reaching agreement unless in cases like this the Originating Application is struck out, does not seem to us to be a valid one. It may be desirable that agreement is reached before the Originating Application is issued. We can see no reason why an agreement should not be reached between both sides and then ACAS involved. We are told that ACAS will not become involved unless an Originating Application has been issued. We would have thought that a special request from both Solicitors to meet and agree the matter would be met with sympathy. On the other hand it may be possible if the position is quite clear that the IT1 is issued and a meeting arranged immediately after. Whatever the situation there may be it is the intent of the act that in the absence of the COT3 procedure an agreement is not intended to be binding so as to prevent an Applicant approaching an Industrial Tribunal and having his case heard. So we find ourselves unable to accept that in this case the mere fact that that letter has been written, that the money has been paid in of itself prevents the case being heard.
Mr Hochhauser goes on from there to say that it will be unjust and inequitable as a matter of public policy to allow this matter to go forward. That is the second limb as I understand it of his submission.
It may very well be that at a later stage all these factors will become relevant but what has happened here is this. Although it is not pressed, you have a pleading indicating that the Agreement was entered into in particular circumstances and there is going to be some evidence about the whole matter, we know not, but from our own experience of seeing Appeals here the way in which cases develop, is not always identical with the pleadings. Issues arise and pleadings need amending as they progress. We find ourselves unable to say that the Learned Chairman erred in law in the principles applied in the exercise of a very wide discretion to refuse this application.
A second case was relied upon by Mr Hochhauser namely COURAGE TAKE HOME TRADE LTD v KEYS [1986] IRLR 874. That was a case where the proceedings had already started in front of an Industrial Tribunal. It is therefore distinguishable from the present and indeed the matter was adjourned. During the adjournment the employee accepted the sum of £9,500 in full and final settlement of his claim. They had failed to go through the COT3 procedure and therefore of course the Agreement was void, but when the Tribunal and this Court presided over by the Learned President at the time Mr Justice Popplewell, came to look at the matter of course they were entitled to apply the provisions of Section 74 of the Act of 1978. That was an application of the statutory provision at a much later stage. That was at the stage at which the Industrial Tribunal would have been considering whether or not to make any award of compensation, and in that connection of course they would be looking at what was just and equitable and they would be looking at any question of contribution, but that is a different stage from the one which we are considering in the present case.
This is a question of striking out. This is not a situation where if he felt that it was not just and equitable to make any award for compensation that factor is binding on the Learned Chairman. It may very well be that the Tribunal hearing the matter will so decide. I would merely add also that they might very well decide that the whole claim is so unmeritorious that out of his £36,750 Mr Alexander should pay some costs. All those matters are for the Tribunal at the time. Those matters are not therefore a criticism of this Learned Chairman for the way in which he exercised his discretion.
There is a last point taken by Mr Hochhauser and it arises under paragraph 7 of the decision of the Learned Chairman. He indicates there that the deduction that should be made would be £15,000. That was referred to in the letter as being on account of "your statutory rights". Mr Hochhauser did not cite to him certain authorities which he has cited to us, in particular ADDISON v BABCOCK FATA LTD [1987] ICR 805 and the Learned Chairman did not have the advantage of authority and submission on whether that is the appropriate figure for deduction. He therefore cannot be held to have bound himself and indeed it would not be his decision it would be the decision of the Tribunal including the two lay members at the time but it does seem to us that Mr Hochhauser may wish to argue and indeed may validly argue that some other figure may be the relevant figure for deduction.