The Employment Appeal Tribunal considered the circumstances in which negotiations leading up to a COT3 agreement may lose without prejudice protection following allegations of misrepresentation.
Cole v Elders Voice  UKEAT 0251_19_2611
In this case, Mrs Cole (the Claimant) brought proceedings against the Respondent for direct discrimination and/or harassment pursuant to the Equality Act 2010. This was despite the fact that she had entered into a COT3 agreement with the Respondent in December 2017, being a form used to record the terms of settlement of an Employment Tribunal (ET) claim (or potential claim) agreed following conciliation by a conciliation officer employed by Acas.
The Claimant argued that she had a proper basis for challenging the validity of the COT3 as the Respondent had made misrepresentations to her within the without prejudice correspondence which preceded it. In particular, her original claim had been against two respondents. During the negotiations leading up to the COT3, the Claimant had queried with the Respondent in this matter whether the agreement would also prevent her pursuing a complaint against the second respondent. It was made clear to the Claimant that the two respondent companies had no association with each other.
On the understanding that the COT3 would not settle her whole claim against both respondents, the Claimant agreed to enter into the COT3 with the Respondent in this case. It later transpired that the COT3 was deemed to settle the claim against both of the respondent companies. As a result, the Claimant alleged that the COT3 was void.
The Respondent argued that the ET had no jurisdiction to hear the claim because it had been settled.
When is something protected by without prejudice correspondence?
The without prejudice rule will generally prevent statements that are made in a genuine attempt to settle an existing dispute, whether made in writing or orally, from being put before the court as evidence of admissions against the interest of the party which made them.
However, there are numerous occasions on which, despite the existence of without prejudice negotiations, the without prejudice rule does not prevent the admission into evidence of what one or both of the parties said or wrote. For example:
- Where evidence of the negotiations is admissible to show that an agreement apparently concluded between the parties during the negotiations should be set aside on the ground of misrepresentation, fraud or undue influence.
- Even if there is no concluded compromise, a clear statement which is made by one party to negotiations, and on which the other party is intended to act and does in fact act, may be admissible as giving rise to an estoppel.
What did the ET decide?
The Respondent objected to consideration of any without prejudice correspondence as it was protected due to public policy. The ET subsequently agreed that “what matters is the COT3” and, as a result, the judge refused to look behind what was written in the COT3 agreement.
As such, there was no jurisdiction to hear the Claimant’s complaints and the COT3 was held to be valid.
The Claimant made an application for reconsideration of this decision and requested that the without prejudice rule be waived in order for a fair hearing to take place. The request was rejected on the basis that there was no reasonable prospect of the original decision being varied or revoked because of the valid COT3 agreement. The ET could “find no basis to go behind the agreement”.
The Claimant appealed on the basis that the ET had erred in law in failing to grant her request and that it should look at the without prejudice material before deciding whether the COT3 was valid. She argued that she had a proper basis for challenging the validity of the COT3.
What did the Employment Appeal Tribunal (EAT) decide?
The EAT held that, once the Claimant had raised misrepresentation and estoppel, the without prejudice exceptions would have come into play. This meant that she should have been allowed to refer the judge to the without prejudice material, as she had requested. The EAT held that a COT3 agreement can be challenged on the same basis as any other agreement and, as such, the ET could investigate the circumstances in which it is alleged that a COT3 is liable to be avoided. Thus, misrepresentation can form the basis on which an ET can set aside a COT3 and the appeal was allowed.
The claim was remitted to an ET for a rehearing.
What should employers take from this?
It is important to remember that, where without prejudice correspondence is being used for the wrong reasons, such as to unduly influence an individual or mislead them in anyway, such correspondence will be at risk of losing its without prejudice protection. It is therefore important to take care when entering into without prejudice correspondence, particularly when dealing with an unrepresented employee, and ensure that “false promises” are not made to try to speed up an agreement being reached.
This article is for information purposes only and is not a substitute for legal advice and should not be relied upon as such. Please contact Siobhan Murphy to discuss any issues you are facing.