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In the case of Mrs G Coles v. Elders’ Voice UKEAT/0251/19/VP the Employment Appeal Tribunal held that an Employment Tribunal erred in law by not inspecting “without prejudice” material when considering a question of misrepresentation and estoppel relating to a settlement agreement.

The Employment Appeal Tribunal (“EAT”) allowed the Claimant’s appeal and remitted the case to a differently constituted Employment Tribunal.

Factual background

Mrs Coles was originally employed by Brent Floating Support Services Sanctuary Group (“Sanctuary”). In September 2017, the services Sanctuary had provided to the local authority were successfully tendered by Elders’ Voice (“EV”), under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (“TUPE”). This means that EV took on all of Sanctuary’s rights and liabilities in law.

Mrs Coles brought a claim for unfair dismissal and race discrimination against Sanctuary in October 2017. She went to early conciliation through ACAS, and as a result of this, signed a settlement agreement (“COT3”). The employer listed in the COT3 settlement agreement was EV, and they agreed to pay Mrs Coles certain sums of money.

The hearing

Mrs Coles, in the Tribunal hearing, asked the Employment Judge to find the COT3 settlement agreement void, as, she asserted, it was based on misrepresentation. The issue with this, as argued by EV, was that the misrepresentation she alluded to was contained within documents which were marked “without prejudice”. This broadly means that they are negotiating tools, and aren’t to be relied on in the course of any proceedings.

The judge agreed with EV, and gave an oral judgment, which essentially indicated that the COT3 settlement agreement was final, and he could not look behind it to the without prejudice documents, even if the Claimant was misrepresented to. Mrs Coles submitted a Request for Reconsideration, which the judge rejected on the basis that there was no reasonable prospect of varying the valid settlement agreement.

The appeal

Mrs Coles appealed to the EAT, along with a request for full written reasons for the original judgment. The appeal was heard by Mr Justice Griffiths in November 2020, and in his judgment, he addressed the issues of misrepresentation and without prejudice documents. He highlighted, through looking at the case law on the matter, that there are three relevant exceptions to the without prejudice rule:

  1. Cases where it is argued that the settlement agreement was reached through misrepresentation;
  2. Cases where it is argued without prejudice material gives rise to an estoppel; and
  3. Cases in which the without prejudice material is relied on to understand the circumstances or true meaning of the settlement agreement.

The misrepresentation in this case was that EV had told Mrs Coles that they took on “no liability” for any claims against Sanctuary. As mentioned above, this is not the case under TUPE.

The Employment Appeal Tribunal’s judgment

Griffiths J made it clear that, although there was no way that the judge in the Tribunal should have known this, it nonetheless meant that his decision had been incorrect, and that he should have looked at the without prejudice material. He made it clear that it didn’t matter that Mrs Coles had advice from a former barrister, the fact that there was misrepresentation relating to the COT3 settlement agreement still allowed the inspection of the without prejudice material.

The appeal was allowed, but as the EAT cannot make findings of fact without consent of both parties, the case was remitted to the Employment Tribunal, under a different judge.

Link to judgment: https://assets.publishing.service.gov.uk/media/5fbfc3e3e90e077edc501d63/Mrs_G_Cole_v_Elders_Voice_UKEAT_0251_19_VP.pdf

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