Konczak v BAE Systems (Operations) Ltd – Employment Tribunals, without prejudice and breaking the chain of causation

The facts in Konczak v BAE Systems (Operations) Ltd

Ms Konczak (“the Claimant”) commenced employment with BAE Systems (Operations Ltd) (“the Respondent”) as a secretary in November 1998. Her employment with the Respondent terminated on 23 July 2007. The Claimant subsequently submitted claims in the Employment Tribunal relating to sex discrimination, disability discrimination and unfair dismissal.

The Employment Tribunal commenced on 14 July 2008 and the Claimant succeeded in part (she succeeded in her sex discrimination claim but not in her disability discrimination or unfair dismissal claims). The matter therefore proceeded to a remedy hearing. During the period between the “liability hearing” and “remedy hearing” the parties engaged in correspondence to attempt to settle the claim. This correspondence was on a without prejudice basis. The Respondent made an offer of £75,000 in July 2008 which the Claimant rejected. However, although the correspondence was on a without prejudice basis the Claimant included in the trial bundle for the remedy hearing the notes of a meeting with Dr Jarman (the Respondent’s medical expert) referring to the offer of £75,000. The Employment Tribunal therefore held at the remedy hearing in April 2011that the Claimant had waived the protection of without prejudice and judged that the Claimant had failed to mitigate her loss by accepting a reasonable settlement offer, thereby breaking the chain of causation.

The Claimant appealed the Employment Tribunal’s decision on 2 points, namely:

1. That the Employment Tribunal had erred in holding that she had waived her without prejudice protection; and
2. That the Employment Tribunal had erred in holding that she had unreasonably refused an offer of settlement, thereby breaking the chain of causation in July 2008

The law relating to without prejudice communications and remedy

If parties are attempting to genuinely settle an existing dispute then the without prejudice rule will generally protect any correspondence relating to that attempt to settle from being put before the Employment Tribunal as evidence. As stated above, this is generally the case unless both parties jointly waive their right to have the correspondence withheld. The important word here is “jointly”. One party cannot waive their right and submit without prejudice correspondence as evidence – both parties must waive their rights. There are other exceptions (for example, as evidence in cases which involve fraud or misrepresentation, among others).

On the issue of the breaking of the chain of causation, the bar set to break the chain of causation is set out in McKew v Holland [1969] 3 AER 1621. The Claimant’s conduct must be so unreasonable in refusing the offer that it was unforeseeable to the Respondent that they would undertake such an action.

The Employment Appeal Tribunal’s decision in Konczak v BAE Systems (Operations) Ltd

The Employment Appeal Tribunal dismissed the Claimant’s appeal on the first ground (that she had waived her without prejudice protection). It was held that the Claimant had deliberately included the note that referred to the £75,000 offer as she wished to plead a point relating to another issue. There was therefore no mistake on the Claimant’s part and she had waived her right to without prejudice protection. On the second point of appeal (that of the breaking of causation) the Claimant succeeded. The Employment Appeal Tribunal found that the Employment Tribunal had failed to give reasons for its finding that the Claimant had acted in an unforeseeable manner and that, further, the refusal of the offer of £75,000 was not unreasonable considering that the Claimant’s Schedule of Loss claimed over £400,000 in damages and a settlement offer of £200,000 had subsequently been made by the Respondent. The matter was therefore remitted to a fresh Employment Tribunal to determine the value of the Claimant’s remedy.

Our specialist employment lawyers’ thoughts on Konczak v BAE Systems (Operations) Ltd

This is clearly an unfortunate circumstance in which a party has made a simple error that has resulted in adverse legal consequences. Although the Claimant succeeded in her appeal the process to gain the remedy for sexual discrimination was delayed by a further year.