Mr A Carabin v Calypso Technology Ltd: 2207736/2020
EMPLOYMENT TRIBUNALS
Case No 2207736/2020
Between
Mr A CarabinClaimantCalypso Technology LtdRespondent
Before
Employment Judge P Klimov, sitting aloneDate 29 June 2021
JUDGMENT
[1]The Claimant’s claim for the sum of £120 representing his expenses is dismissed on withdrawal.[2]The Claimant’s claims for breach of contract (notice pay) fails and is dismissed.
REASONS
[1]By a claim form dated 21 December 2020, the Claimant brought a claim for breach of contract in respect to his notice pay and expenses. He claims that the Respondent was in breach of contract by dismissing him on two weeks’ notice where under the terms of his contract of employment he was entitled to three months’ notice. He also claims £120 for incurred but unpaid expenses.[2]The Respondent denies that the Claimant was entitled to three months’ notice because at the time of the Respondent dismissing the Claimant, he was still on his probationary period1 during which the Respondent was entitled to dismiss the Claimant on two weeks’ notice, and it gave the Claimant two weeks’ notice of dismissal.[3]Before the hearing, the Respondent had paid the Claimant £80 with respect to his expense claim. At the hearing, the Respondent agreed to pay the remaining £40, and on that basis the Claimant withdrew his claim for expenses.[4]Mr Stephenson appeared for the Claimant and Miss Berry for the Respondent. I am grateful to them for their assistance to the Tribunal. The Claimant gave sworn evidence and was cross-examined. Mr Darren Ali, Global Head of HR & Talent of the Respondent, gave sworn evidence for the Respondent and was cross-examined.[5]I was referred to documents in a bundle of documents of 45 pages. There were further documents appended to the witness statements, which I was referred to by the parties. The was also a supplemental bundle of interparty correspondence. The documents in the supplemental bundle did not appear immediately relevant to the issues I needed to decide, and I had not read them before the hearing. At the start of the hearing, Miss Berry told me that there were some without prejudice correspondence in the interparty correspondence bundle. I said that I had not read those documents and the parties confirmed that I did not need to read them for the hearing. The parties did not refer me to the documents in the supplemental bundle during the hearing.[6]The following list of issues was agreed by the parties. Breach of Contract Claim - Notice Pay 1. It is agreed between the Parties that the Claimant was paid two (2) weeks’ notice for the period between 16 and 30 November 2020 (para. 9 GOR). 1 In this judgment I use the terms “probationary period” and “probation period” interchangeably. 2. Was the Claimant entitled to three (3) months’ notice pursuant to clause 17.1 of his contract of employment dated 26 June 2020 (sic – the correct date 23 April 2020)? The questions the Tribunal will need to determine in respect of this issue are: i. On what date did the Claimant “join the Company”? The Respondent contends that the Claimant joined on 29 June. 3. If so, is the Claimant entitled to damages totalling £31,731?[7]As the hearing was listed for 3 hours, I agreed with the parties that I should first determine the second issue and deal with the third issue, if remained relevant, at a separate remedy hearing. In any event, the Claimant did not present any mitigation evidence, which would have been necessary for me to determine the third issue.[8]The Claimant contends that his employment with the Respondent started on 26 June 2020, and in the alternative, that even if his employment started on 29 June 2020, he was still entitled to three months’ notice on construction of clause 7.1 of his contract of employment.[9]Further, in his particulars of claim the Claimant avers that “the Respondent unreasonably exercised such a right by extending his probation and without reasonable justification. As such, it is contended that the extension of the Claimant’s probationary period was unlawful.” At the start of the hearing, I confirmed with Mr Stephenson that this contention was being advanced as a point of legal construction of clause 7.1 and not as a factual dispute whether there was a breach of implied term of trust and confidence by the Respondent in extending the Claimant’s probationary period.[10]After the hearing, on 4 May 2021, I received emails from the Respondent’s solicitors, which they had sent to the Tribunal on 29 and 30 April 2021 and the Claimant’s solicitors’ response of 30 April 2021. By those emails the Respondent applied to introduce further documentary evidence on the issue of the Claimant’s employment commencement date.[11]In its application the Respondent said that these additional documents were crucial evidence as they contradicted the Claimant’s oral evidence to the Tribunal that he never wished or had not agreed to change the start date of his employment with the Respondent. The Respondent said that the reason these documents had come to light only after the hearing was because the Claimant had failed to disclose them and because the allegation of the Respondent unilaterally changing the Claimant’s start date only became apparent from the Claimant’s witness statement which had been exchanged only on the eve of the hearing, and that was the Claimant who had unreasonably delayed the exchange. The Respondent’s solicitors said that for these reasons they had not had an opportunity to take instructions on that allegation before the hearing and the Respondent had not been able to search for relevant documents.[12]The Claimant’s solicitors opposed the application on the ground that the hearing had been concluded, evidence had been given, and legal submissions had been made. Therefore, they submitted, no additional evidence could be considered by the Tribunal.[13]While when I received the Respondent’s application on 4 May 2021, my judgment had not been “perfected”, as I was still finalising my reasons, I had already made my substantive decision on all the issues in the case. I decided that it would not be in accordance with the overriding objective under Rule 2 of the Employment Tribunals Rules of Procedure, which requires me to deal with the case fairly and justly, for me to review and admit the additional documents without those documents being put to the Claimant in the context of his oral evidence to the Tribunal and for the parties to make further submissions to the Tribunal. That would have required recalling the parties for a further hearing.[14]I decided that, while such documents might potentially assist the Tribunal, I had sufficient evidence to make my judgment, which by then I had already made, and recalling the parties to deal with the additional documentary evidence would be disproportionate and not in the interest of justice.[15]Accordingly, I decided that I must not review the submitted documents before finalising my reasons and I did not do that.
Findings of Fact
[16]The Claimant was offered by the Respondent and accepted employment in the role of Group Financial Controller on 23 April 2020. The Claimant’s employment contract dated 23 April 2020 contained the following relevant terms: 1. Date of Commencement 1.1 Your employment with the Company will commence on June 26, 2020 and will continue until terminated in accordance with the section entitled “Termination of Employment” below. 7. Probationary Period 7.1 Your probation period will be for a period of three (3) months from the date of joining the Company or such further period as may be communicated to you in writing. During the three (3) months probationary period, we reserve the right to terminate your employment at anytime without the obligation to pay out the remainder of the three (3) months. Termination of employment will be given with a two (2) week notice period. Your probation period will conclude at the end of three (3) months, unless you are specifically notified in writing that your probation will be extended.”[17]Termination of Employment 17.1 This Agreement may be terminated by you or by the Company upon giving three (3) months written notice, or such other longer period as may be required by law. 24.4 Paragraph headings are inserted for convenience only and will not affect the construction of this letter. 17. Shortly before the Claimant was due to start his employment with the Respondent he spoke on the telephone with Mr Ali and was advised that he should start on Monday 29 June 2020, instead of Friday, 26 June 2020.[18]The Claimant’s first day at work with the Respondent was 29 June 2020. There were various internal announcements about the Claimant starting on 29 June 2020. The Claimant saw those announcements. The Claimant was paid his salary from 29 June 2020.[19]The Claimant was given various tasks by his manager, Ms Helene Koutsoudakis, including to complete reconciliation of the revenue accounting within three months of starting in the job. The Claimant did not complete that task within three months.[20]On 20 September 2020, the Claimant was told that his probationary period would be reviewed by Ms Koutsoudakis at a meeting on 28 September 2020.[21]On 28 September 2020, Ms Koutsoudakis informed the Claimant that his probation would be extended because he had failed to complete the reconciliation task within three months. That was confirmed by a letter sent to the Claimant by email on 29 September 2020. The letter said that the probationary period had been extended for another three months and that with that extension it was scheduled to end on 25 December 2020. The covering email from Ms Joelle Jouan, of the Respondent’s HR, stated: “attached letter confirms that the probation period has been extended for another three months i.e. December 25, 2020.”[22]The Claimant did not raise any formal objections to the extension of his probationary period.[23]On 16 November 2020, the Respondent, having decided that the Claimant’s performance was not at the level required, terminated the Claimant’s employment by giving two weeks’ notice of the termination, with the effective date of termination of 30 November 2020.
The Law
[24]For the present purposes, the law on construction of contractual terms and on implied terms can be summarised as follows:a. Construing the words used in a contract and implying additional words are different processes governed by different rules. Only after the process of construing the express words is complete, the issue of an implied term falls to be considered. (Marks and Spencer plc v BNP Paribas Securities Services Trust Co (Jersey) Ltd and anor 2016 AC 742, SC)b. When interpreting express terms of a contract, the aim is to give effect to what the parties intended. In ascertaining that intention, the words of the contract should be interpreted in their grammatical and ordinary sense, assessed in the light of any other relevant provisions of the contract, the overall purpose of the clause and the contract, the facts and circumstances known or assumed by the parties at the time that the document was executed, and commercial common sense, but disregarding subjective evidence of any party’s intentions. (Chartbrook Ltd and anor v Persimmon Homes Ltd and anor 2009 1 AC 1101, HL)c. Implied terms can supplement the express terms of a contract but cannot contradict them (Johnson v Unisys Ltd 2001 ICR 480, HL). However, in certain circumstances, implied terms may be used to qualify express terms, or at least restrict the way in which they are applied in practice (Johnstone v Bloomsbury Health Authority 1991 ICR 269, CA).d. A term could only be implied if, without the term, the contract would lack commercial or practical coherence. A term should not be implied into a contract merely because it appeared fair or because the parties would have agreed it if it had been suggested to them. (Marks and Spencer plc v BNP Paribas Securities Services Trust Co (Jersey) Ltd and anor 2016 AC 742, SC)[25]It is a well-established rule of construction in contract law that any ambiguity shall be resolved against the party who seeks to rely on it to avoid obligations under the contract (the ‘contra proferentem rule’).[26]An agreement to vary the terms of a contract is not required to be in writing to have legal effect. Regardless of whether an employee’s statutory statement of terms and conditions is altered to reflect the change, whether there has been a consensual variation of the terms of the employment depends on the evidence in the particular case (see Simmonds v Dowty Seals Ltd 1978 IRLR 211, EAT).[27]Continuing to work in the face of a variation which has immediate effect may be taken as an implied acceptance of the variation. However, the inference must arise unequivocally, if the employee’s conduct in continuing to work is reasonably capable of a different explanation, it cannot be treated as constituting acceptance of the new terms (see Abrahall and ors v Nottingham City Council and anor 2018 ICR 1425, CA). In Abrahall (109, 110) Sir Patrick Elias said (my emphasis): I do not see why in an appropriate case the employee should not be taken to have accepted the variation in order to avoid the risk of redundancy. If the fear of redundancy can only be avoided by accepting the new terms, it is wholly artificial to treat these as separate and distinct reasons for failing to complain. It may be said that the employee should never be held to have accepted a variation simply by working without protest under the new terms without more. After all, a party can bring a claim for breach of contract within the limitation period without having to notify the other party that he objects to the breach, and why should this be different? I think that the answer lies in the fact that the employment relationship is typically a continuing relationship based on good faith, and exceptionally in that context it might be appropriate to infer that a failure to complain about a proposed variation of the contract for the future may be taken as agreement to that variation which prevents it constituting a breach. It might also be said that an employer can always put the position beyond doubt by lawfully terminating the contract on notice and introducing the varied contract which includes the new disadvantageous term or terms. No doubt the employer's reluctance to do that is in part motivated by a desire to avoid potential unfair dismissal claims. But there are also less selfish reasons. In the context of a continuing relationship based on good faith, dismissing and reemploying might appear to be an unnecessarily hostile stance, only to be adopted as a last resort. Attempts to secure agreement should not be discouraged and exceptionally the circumstances may justify the inference that the employee has agreed to the new terms even where he has been reluctant to do so formally.
Discussion and Conclusions
[28]The first issue I need to determine is one of construction of the Claimant’s contract and in particular clause 7.1. In constructing the contract, I applied the principles outlined in paragraphs 24 and 25 above.[29]There were several areas of disagreement on construction between the parties. These were:a. The meaning of the phrase “the date of joining the Company”,b. Whether the probationary period could only be validly extended before the expiry of the initial three months’ period (first and fourth sentences),c. Whether the third sentence shall be construed to mean that the Respondent was entitled to terminate the Claimant’s contract on two weeks’ notice only during the first three months of the probationary period, but not during its extension, andd. Whether a term should be implied to the effect that the Respondent is not entitled to extend the probationary period “unreasonably” or “without reasonable justification”. “date of joining the Company”[30]The Claimant submits that “the date of joining the Company” shall have the same meaning as the date of commencement in clause 1.1 of the contract - “Your employment with the Company will commence on June 26, 2020”, i.e. 26 June 2020, irrespective of the fact that the Claimant first day at work was 29 June 2020.[31]The Respondent argues that the date of 26 June 2020 was merely an anticipated date agreed between the parties on 23 April 2020, and there were various factors that could have caused that date to change, including the Claimant not being able to start on that date due to his contractual commitments to his previous employer, the Claimant wanting to take some time off, or the Respondent’s background checks still not being completed.[32]The Respondent further argues that the purpose of the probationary period is to check whether the employee has the necessary skills and aptitude to do the job and that can only be done when the employee starts performing the job. Therefore, the term “the date of joining the Company” should have the meaning as the date the employee actually commences the performance of his duties.[33]In my judgment, the correct meaning of the words “the date of joining the Company” must be the date when the Claimant actually commenced working for the Respodent, and that was on 29 June 2020. The fact that the contract in clause 1 stated that his employment would commence on an earlier date, in my judgement, is irrelevant, because as a matter of fact it did not. He did not start performing his duties for the Respondent until 29 June 2020 and therefore, in my judgment, he did not “join” the Respondent until 29 June 2020.[34]Even if the Claimant not joining the Respondent on 26 June 2020 was because of a breach of contract by the Respondent in it unilaterally changing the Claimant’s employment commencement date (and I will deal with this issue later in my judgment), in my view, this does not mean that the words of “the date of joining the Company” should be interpreted as the date that the Claimant would have joined the Respondent but for the Respondent’s breach. This, in my judgment, would be an impermissible departure from the ordinary sense of the words, considering the overall purpose of the clause and the facts and circumstances known or assumed by the parties at the time that the contract was agreed, i.e. on 23 April 2020.[35]I accept the Respondent’s evidence that the date of 26 June 2020 was not “set in stone”, and there were various factors, internal and external that could have changed that date. The fact that they did not occur in relation to the Claimant (other than delaying his start date from Friday to the following Monday) does not mean that at the time of the conclusion of the contract on 23 April 2020 those factors could not have been reasonably contemplated by the parties as possible events that might impact on the Claimant’s employment commencement date. Could the Respondent extend the Claimant’s probationary period after the expiry of the initial three months’ period?[36]The Respondent contends that the clause should be interpreted as allowing the Respondent to extend the probationary period even after the expiry of the initial three months within a “reasonable period” thereafter. Miss Berry argued that there should be some “leeway” allowing the Respondent to do that.[37]I disagree. Firstly, such “late extension” will not be “extending” but “renewing” the probationary period. Secondly, it will introduce unnecessary ambiguity in the operation of the contract. It would not be clear to the parties how long that “leeway” could be and therefore whether the Claimant would still be on probation at the end of the initial three months if he had not been informed of the extension before the expiry of three months. Miss Berry could not give me any clear indication on where such “leeway” line should be drawn. Finally, implying such a term would effectively mean amending the first sentence to read something along the lines: “Your probation period will be for a period of three (3) months from the date of joining the Company or such further period as may be communicated to you in writing, during the first three months of the probation period of within a reasonable period thereafter.” and the fourth sentence to read: “Your probation period will conclude at the end of three (3) months, unless you are specifically notified (during or within a reasonable period after the end of the first three months of the probation period) in writing that your probation will be extended.” That, in my judgment, would amount to re-writing the contract terms which would require the parties’ agreement. The clause, as written, does not lack commercial or practical coherence without such additional words and I see no reason to imply them.[38]Therefore, I find that under the terms in clause 7.1, to extend the Claimant’s probationary period the Respondent had to notify the Claimant in writing before the expiry of the initial three months’ probationary period. How much notice the Claimant was entitled to receive during the extended period of probation?[39]Mr Stephenson submits that irrespective of whether the Respondent was entitled to extend the probation period, as it did, it could only terminate the Claimant’s contract on two weeks’ notice during the initial three months of his probationary period. He says, the second sentence clearly states: (my emphasis) “During the three (3) month probationary period, we reserve the right to terminate employment at any time..” and the following sentence “Termination of employment will be given with a two (2) week notice period” envisages that the two weeks’ notice period applies only during the initial three months of the probation period.[40]I disagree. Although far from being a masterpiece of legal drafting, in my judgment, read as a whole, clause 7.1 has the meaning that the two weeks’ notice period to terminate the contract applies during the entire probationary period, whether the initial three months or any extension thereof. I find that for the following reasons.[41]The third sentence, which stipulates two weeks’ notice, is a stand-alone sentence and as such shall be read in the context of the entire clause 7.1, which provides for the possibility of extending the probationary period.[42]The purpose of the probationary period clause is precisely to give the Respondent the option to terminate the Claimant’s employment on a shorter notice than three months’ notice under clause 17.1. There appear to be no other contractual differences with respect to salary, benefits or working conditions during and after the probationary period. Therefore, if the Respondent were only entitled to terminate the Claimant’s employment on two weeks’ notice during the initial three months, the provisions, which allow the Respondent to extend the probationary period beyond the initial three months would seem to be devote of any practical effect. That, in my judgment, could not have been the parties’ intention at the time the contract was executed.[43]Finally, while I accept that although the second sentence does not have the word “initial” (as “During the initial three (3) months…) the “the” in “the three (3) months” should be read as referring to “three (3) months from the date of joining the Company” in the preceding sentence. Nevertheless, the second sentence, when read as a whole, simply states the Respondent can terminate the Claimant’s employment at any time during the initial three months “without obligation to pay out the remainder of the three (3) months.” In other words, this provision tells the Claimant that being on probation for the first three months of his employment does not guarantee him employment or salary for at least three months. That, in my judgment, is a different matter to how much notice he is entitled to during his probationary period, which is dealt with in the third sentence.[44]For the sake of completeness, I wish to add a further observation on construction of the notice provisions. Mr Stephenson did not argue that clause 1.1 of the contract should be interpreted as allowing the Respondent to terminate the Claimant’s contract only in accordance with clause 17.1 (“Your employment with the Company …. will continue until terminated in accordance with the section entitled “Termination of Employment” below”), that is on three months’ notice, irrespective of whether the Claimant was on probation or not.[45]While I can see that on the strict reading of clause 1.1 such argument could have been run, reading the contract as a whole, in my judgment, that provision should be read as subject to clause 7.1, namely that during the Claimant’s probationary period his employment can be terminated on two weeks’ notice. Should a term be implied to the effect that the Respondent is not entitled to extend the probationary period “without reasonable justification”?[46]Mr Stephenson submits that “insofar as, clause 7.1 permitted [the Respondent] to terminate [the Claimant’s] contract on two weeks’ notice, [the Claimant] maintains that the tasks set were excessive, and [the Respondent] unreasonably exercised its discretion to extend his probationary period and terminate his employment without reasonable justification”.[47]At the start of the hearing and again during his closing submissions Mr Stephenson confirmed to me that this argument was advanced on the basis of contractual construction of clause 7.1, and not as a claim for breach of the implied duty of trust and confidence or implied term not to treat employees “arbitrary, capriciously or inequitably”.[48]He argued that the express terms in clause 7.1 allowing the Respondent to extend the Claimant’s probation period should be read as being subject to an implied term that the Respondent can only extend the probation period beyond three months if it was “reasonable”, and the Respondent had “reasonable justification” for extending the probation period.[49]I see no legal basis for implying such a term, and Mr Stephenson did not refer me to any legal authority in support of his argument. On the contrary, applying the principles articulated in Marks & Spencer case (see paragraph 24.d) in my judgment it would be an error of law on my part to allow such term to be implied into the contract. Therefore, I reject that such term should be implied into clause 7.1[50]For the sake of completeness, even if the Claimant’s case were advanced as a breach of the implied duty of trust and confidence, taking it at its highest, that is the Respondent extending the Claimant’s probationary period due to the Claimant failing to complete the task of reconciling the revenue accounting within the three months’ period, where on the Claimant’s view that was because him having too much work and that him not completing the task within three months had no adverse consequences, in my judgment, it still falls well below the threshold of “Wednesbury unreasonable” exercise of discretionary power (see IBM United Kingdom Holdings Ltd and anor v Dalgleish and ors 2018 ICR 1681, CA).[51]In any event, Mr Stephenson did not argue the Claimant’s case on that basis, nor did he refer me to any authority for the proposition that a term not to treat employees “arbitrary, capriciously or inequitably” implied by the courts in relation to employers’ exercise of discretionary powers in awarding pay increases or bonus (see FC Gardner Ltd v Beresford 1978 IRLR 63, EAT) should equally apply to employers’ express right to extend their employees’ probation period. Computing relevant dates[52]At the start of the hearing, I discussed with the parties how the relevant period should be computed, as there was some confusion with the dates. It was accepted by the parties that if the Claimant’s probationary period commenced on 26 June 2020, its expiry date would be 26 September 2020 and if it commenced on 29 June 2020, the expiry date would be 29 September 2020.[53]That must be correct, as clause 7.1 reads: (my emphasis) “from the date of joining the Company” and therefore applying the “corresponding date” rule (see Dodds v Walker 1981 1 WLR 1027, HL), the relevant period will expire on the corresponding date in that month.[54]Therefore, based on my construction of clause 7.1, I find that the Claimant’s probationary period commenced on 29 June 2020 (“the date of joining the Company”). The initial three months period expired on 29 September 2020.[55]The Respondent extended the Claimant’s probationary period in writing on 29 September 2020, before the expiry of the initial three months’ period of his probation. Therefore, the extension of the Claimant’s probationary was done in accordance with clause 7.1, and the Respondent was not in breach of contract by extending the Claimant’s probationary period.[56]The fact that in the extension letter and the covering email of 29 September 2020 the Respondent wrote that the probationary period had been extended for a further three months’ period but stated the end date of 25 December 2020 as opposed to 29 December 2020, in my judgment, is irrelevant for the purposes of determining whether the Respondent was within its rights to extend the Claimant’s probation on 29 September 2020.[57]It follows that when the Respondent terminated the Claimant’s contract on 16 November 2020, the Claimant was still on probation and was only entitled to receive two weeks’ notice of the termination. The Respondent terminated the Claimant’s contract by giving him two weeks’ notice and therefore was not in breach of contract. Variation of Contract[58]Finally, if I am wrong on construing “the date of joining the Company” as the date when the Claimant actually commenced working for the Respondent, i.e. 29 June 2020, and it should be construed as meaning the same date as stated in clause 1.1, I find that the date of 26 June 2020 stipulated in clause 1.1 was varied to 29 June 2020, because that was the actual date when the Claimant’s employment commenced with the Respondent.[59]The fact that the Claimant’s written contract was not amended to change the date in clause 1.1, in my judgment, does not mean that there was no valid variation of his employment commencement date.[60]The Claimant accepted in his evidence that he was told to start on Monday, 29 June 2020. He accepted on cross-examination that he had not raised any objection to the change to his start date. He did not start working for the Respondent until 29 June 2020. He was paid only from 29 June 2020. He saw internal announcements stating that he joined the Respondent on 29 June 2020. Until starting these proceedings in December 2020 he never raised any issues with his start date being 29 June 2020. He also did not raise any objection to the Respondent extending his probation on 29 September 2020, which on his case would have been out of time.[61]For all intents and purposes, he was treated by the Respondent as having commenced his employment with the Respondent on 29 June 2020 and he never objected to that.[62]The fact that the Claimant might not have noticed that he had been paid from 29 June 2020 or that during his telephone conversation with Mr Ali no specific reference was made to amending clause 1.1 of his contract, in my judgment, cannot be taken as showing that he had not agreed to change his start date to 29 June 2020.[63]In my judgment, the Claimant’s conduct cannot be reasonably explained other than by his acceptance that his employment with the Respondent commenced on 29 June 2020.[64]Therefore, I find that he either expressly verbally agreed to vary his employment commencement date during the telephone conversation with Mr Ali or such agreement must be implied from his conduct, namely the Claimant presenting himself for work on 29 June 2020 and thereafter treating that date as the commencement date of his employment.[65]I do not accept Mr Stephenson submission that the Claimant not raising any objection when his probationary period was extended by the Respondent because he was a senior executive and because he did not wish to create further problems for himself, should be taken as any agreement resulting from such conduct not being valid.[66]To the extent clause 1.1 of his contract had to be varied for the Respondent to validly extend the Claimant’s probation on 29 September 2020 (and on my primary findings that was not necessary), it was the Claimant’s choice whether to accept the variation or not, and the fact that his acceptance was motivated by him not wishing to invite further trouble for himself does not mean that it was not freely given.[67]Finally, Mr Stephenson says that the Respondent did not plead in its Grounds of Resistance that there had been a variation of the Claimant’s commencement date. I find that the reason for that is because in his Particulars of Claim the Claimant did not say that he had been told to start on 29 June 2020 instead of 26 June 2020. On the contrary, he states that his employment commenced on 26 June 2020. The Respondent’s Grounds or Resistance are clear that the date of 26 June 2020 as the Claimant’s start date was not accepted by the Respondent and the correct start date was 29 June 2020.[68]The fact that the Claimant accepts that there was a telephone conversation with Mr Ali in which he was told to start on 29 June 2020, but disputes that this had the effect of changing his employment commencement date, only became apparent from his witness statement, which he had delayed exchanging with the Respondent until the day before the hearing. Therefore, having raised that issue in his evidence for the first time, the Claimant cannot then rely on the technicality of the Respondent’s submission on that issue not being specifically pleaded in the Respondent’s ET3. Overall Conclusion[69]For these reasons, I find that the Respondent was not in breach of contract by dismissing the Claimant on two weeks’ notice. It follows that the Claimant’s claim for breach of contract fails and is dismissed.
Background
[1]The relevant background to this claim and my findings and conclusions are set out in my Reserved Judgment dated 10 May 2021 (the “Reserved Judgment”). In this judgment I will be referring to some paragraphs in the Reserved Judgment, where necessary.[2]On 4 June 2021, the Respondent applied for a costs order against the Claimant on the grounds that:(i) the Claimant’s claim for breach of contract had no reasonable prospect of success; and/or(ii) the Claimant acted disruptively or otherwise unreasonably in the manner in which he conducted the proceedings[3]The Respondent argues that the Claimant‘s claim for breach of contract had no reasonable prospect of success because the Claimant’s interpretation of the probation clause in his contract of employment (clause 7.1) was wrong and the Claimant knew or should have known that by 12 April 2021, at the latest, because by that date he was in receipt of the Respondent’s evidence showing that he had commenced employment on 29 June 2020 and not 26 June 2020 (the date stated in clause 1 of his contract). His probation was extended on 29 September 2020, within the initial three months’ probation period, and therefore he was entitled only to two weeks’ and not three months’ notice of termination.[4]The Respondent further submits that the Claimant has acted unreasonably in rejecting the Respondent’s settlement offers, the highest of which was £375 short of the maximum sum that the Claimant could have been awarded by the tribunal if he had succeeded in his breach of contract claim. The Claimant sought a much higher settlement figure, in addition to the Respondent covering his legal costs and providing a tax indemnity. His lowest settlement offer was greater than what he would have been able to recover if he had succeeded in his claim. The Respondent submits that it was an entirely unreasonable stance for the Claimant to take.[5]The Respondent further submits that it gave several costs warnings to the Claimant, pointing out that he could not recover more than £16,000 and that any tribunal’s award would be calculated on a net basis.[6]Finally, the Respondent argues that the Claimant has acted unreasonably in refusing to concede that his start date was 29 June 2020, which necessitated the Respondent to call Mr Darren Ali to give evidence to the tribunal on this issue, which caused the Respondent to incur further legal costs of £1,198.80, plus VAT. The Respondent warned the Claimant that his stance on this issue was unreasonable, and a costs sanction might be attached to it.[7]The Respondents seeks an award in respect of its costs from 12 April 2021 in the total sum of £12,935.67, plus VAT. In the alternative, the Respondent asks the tribunal to award costs of preparing Mr Ali’s witness statement in the amount £1,198.80, plus VAT.[8]The Claimant opposes the application. He contends that there was always an arguable claim for breach of contract. He argues that the length of the Reserved Judgment and detailed analysis of legal arguments by itself shows that the Claimant’s claim had reasonable prospects of success. He relies on paragraphs 29, 36, 37, 42, 43 and 52 to 57 of the Reserved Judgment, which deal with legal issues, the parties’ arguments and the tribunal’s interpretation of the contractual provisions.[9]The Claimant further argues that the Respondent’s settlement offers made before he commenced the proceedings show that the Respondent itself did not believe that the Claimant’s claim had no reasonable prospect of success.[10]The Claimant contends that advancing the argument that the commencement date of his contract of employment and/or joining date was 26 June 2020 cannot be said to have had no reasonable prospects. He says it was the starting position, as recorded in his contract of employment, and it was for the Respondent to have proved otherwise. He argues, it was open for interpretation when three months elapsed for the purposes of the commencement of his contract of employment or him joining the Respondent, and the tribunal’s findings at paragraph 30 to 35 of the Reserved Judgment demonstrate that there was legal argument with regard to his start date. The finding by the Tribunal that the joining date was 29 June 2020 does not, he argues, mean that his argument had no reasonable prospects of success.[11]With respect to the Respondent’s second ground, the Claimant argues that his conduct in rejecting the Respondent’s settlement offers was not unreasonable. In support of his contention, he refers to a chronology of the settlement negotiations between the parties, arguing that it demonstrates:(i) the Respondent’s initial settlement offer was not reasonable because it failed to take into account tax on the offered settlement sum, he would have had to pay,(ii) his initial counteroffer was reasonable in the circumstances, and he then further reduced it,(iii) when he said that he would be prepared to accept the Respondent’s offer, the Respondent reduced it, which caused him to revert to his previous offer,(iv) It was the Respondent who broke the settlement negotiations causing him to issue the proceedings,(v) the Respondent failed to properly engage in settlement negotiations after the claim had been issued.
The Law
[12]Rule 76 provides: 76 (1) A Tribunal may make a costs order or a preparation time order, and shall consider whether to do so, where it considers that— (a) a party (or that party’s representative) has acted vexatiously, abusively, disruptively or otherwise unreasonably in either the bringing of the proceedings (or part) or the way that the proceedings (or part) have been conducted; or (b) any claim or response had no reasonable prospect of success.[13]The following key principles relevant to costs orders may be derived from the case law.[14]There is a two-stage exercise to making a costs order. The first question is whether a paying party has acted unreasonably or has in some other way invoked the jurisdiction to make a costs order. The second question is whether the discretion should be exercised to make an order. Only if the tribunal decides to exercise its discretion to make an award of costs the question of the amount to be awarded comes to be considered (Haydar v Pennine Acute NHS Trust UKEAT/0141/17).[15]While the threshold tests for making a costs order are the same whether or not a party is represented, in the application of the tests it is appropriate to take account of whether a litigant is professionally represented or not. Litigants in person should not be judged by the standards of a professional representative (AQ Ltd v Holden [2012] IRLR 648).[16]A refusal of a settlement offer did not by itself inevitably mean that an order for costs should be made against the refusing party. However, such an offer is a factor which a tribunal could take into account when considering whether there was unreasonable conduct by that party (Kopel v Safeway Stores plc [2003] IRLR 753).[17]For term “vexation” shall have the meaning given by by Lord Bingham LCJ in AG v Barker [2000] 1 FLR 759: “[T]he hallmark of a vexatious proceeding is … that it has little or no basis in law (or at least no discernible basis); that whatever the intention of the proceedings may be , its effect is to subject the defendant to inconvenience, harassment and expense out of all proportion to any gain likely to accrue to the claimant, and that it involves an abuse of the process of the court, meaning by that a use of the court process for a purpose or in a way which is significantly different from the ordinary and proper use of the court process.” (Scott v Russell 2013 EWCA Civ 1432, CA)[18]‘Unreasonable’ has its ordinary English meaning and is not to be interpreted as if it means something similar to ‘vexatious’ (Dyer v Secretary of State for Employment EAT 183/83).[19]In determining whether to make a costs order for unreasonable conduct, a tribunal should take into account the ‘nature, gravity and effect’ of a party’s unreasonable conduct — (McPherson v BNP Paribas (London Branch) 2004 ICR 1398, CA)[20]While a precise causal link between unreasonable conduct and specific costs is not required, it is not the case that causation is irrelevant. However, the tribunal must look at the entire matter in all its circumstances. Yerrakalva v Barnley MBC [2012] ICR 420 Mummery LJ gave the following guidance on the correct approach: “41. The vital point in exercising the discretion to order costs is to look at the whole picture of what happened in the case and to ask whether there has been unreasonable conduct by the Claimant in bringing and conducting the case and, in doing so, to identify the conduct, what was unreasonable about it and what effects it had. The main thrust of the passages cited above from my judgment in McPherson's case was to reject as erroneous the submission to the court that, in deciding whether to make a costs order, the employment Tribunal had to determine whether or not there was a precise causal link between the unreasonable conduct in question and the specific costs being claimed. In rejecting that submission I had no intention of giving birth to erroneous notions, such as that causation was irrelevant or that the circumstances had to be separated into sections and each section to be analysed separately so as to lose sight of the totality of the relevant circumstances”.[21]Where a tribunal is considering a costs application at the end of a trial, it must decide whether the claims had no reasonable prospect of success on the basis of the information that was reasonably available at the start, and considering how, at that earlier point, the prospects of success in a future trial would have looked (Radia v Jefferies International Ltd EAT 0007/18). Conclusions Did the Claimant’s claim have no reasonable prospect of success?
Conclusions
[22]Dealing with the “no reasonable prospect of success” ground first, I do not agree with the Respondent’s submissions that the Claimant’s claim for breach of contract had no reasonable prospect of success.[23]The Claimant’s breach of contract claim was not solely based on his start date being 26 June 2020. As apparent from my Reserved Judgment (see paragraphs 26 – 49), his principal case was one of legal construction and interpretation of clause 7.1, and in more than one respect. Therefore, even if the Claimant had conceded that his employment with the Respondent commenced on 29 June 2020, that would not have automatically resolved all other construction and interpretation in favour of the Respondent.[24]Although I found against the Claimant on the key construction and interpretation issues, in my judgment, his case was far from being doomed to fail from the start. Clause 7.1, as drafted, was ambiguous and open to alternative interpretations. It also contained terms which were potentially in conflict with other terms in the contract (e.g. clauses 1.1 and 17.1)[25]Further, the Claimant also argued, albeit only by way of construction of clause 7.1, that the Respondent was not entitled to extend the probation period without “reasonable justification”, and for that argument his actual commencement date was irrelevant.[26]Finally, until it was clarified at the start of the hearing (see paragraphs 52 – 55 of the Reserved Judgment), it appears that the Respondent case was that the Claimant’s initial probation period ended on 28 September 2020 (see paragraph 12 of the Grounds of Resistance), which would have meant that even on the Respondent’s case as to the correct start date, the Respondent was a day late in extending the Claimant’s probation in writing on 29 September 2020. Also, the Respondent’s letter and the covering email extending the Claimant’s probation by three months stated the new end date as 25 December 2020, which counting backwards would have meant that the initial probation period had expired before 29 September 2020.[27]For these reasons, I do not accept that the Claimant’s claim had no reasonable prospect of success. It follows that the Respondent’s application under Rule 76(1)(b) fails. Has the Respondent acted unreasonably?[28]Turning to the alternative ground under Rule 76(1)(a). The Respondent’s submission states it is “on the basis that the Claimant acted disruptively or otherwise unreasonably in the manner in which he conducted the proceedings.”[29]The Respondent’s arguments on this ground are based on the Claimant’s refusal to accept settlement offers, making unwarranted settlement demands and refusing to concede the factual issue of the correct commencement date. None of these, in my judgment, could be described as the Claimant acting “disruptively”, and he certainly did not act in any way which I would consider disruptive during the hearing.[30]Dealing with the issue of refusing to accept settlement offers and making settlement demands substantially higher than the maximum value of his claim. While I accept that it would have been unreasonable for the Claimant to refuse to settle for an amount equal to the maximum sum the tribunal would have been able to award him if he had been successful in his claim, the Respondent never made such an offer to the Claimant. The Respondent’s offer was close, but still, as admitted by the Respondent in its submissions, £375 short of the maximum sum.[31]In my judgment, it was not unreasonable for the Claimant to refuse to settle his claim for an amount which was less than what he believed he was entitled to under his contract. The fact that his settlement offers were higher than the maximum sum, is not sufficient for me to conclude that he would not have settled for the maximum sum if it had been offered by the Respondent. In fact, it appears that he was open to accept the Respondent’s “375 short of the maximum sum” offer, however the Respondent withdrew it.[32]The Claimant was under no duty to make any settlement offers to the Respondent, and therefore him making offers, which were higher than what he would have been able to recover if he had succeeded at the tribunal, in my judgment, cannot be said to be unreasonable conduct. In any event, it appears that he dropped his demands quite substantially, and it was the Respondent who declined to settle for sums, which were below the maximum value of his claim.[33]Looking at the chronology of the settlement negotiations, it seems to me the parties were engaged in the usual “horse trading” one would expect to see in such circumstances, especially with legal costs escalating as the case progresses to the final hearing. Therefore, if there is a blame to be attached to the failure of the settlement negotiations, I find, it should be shared in equal proportions between the parties.[34]For these reasons, I reject the Respondent’s contention that the Claimant has acted unreasonably in not accepting the Respondent’s settlement offers or making his settlement demands.[35]Finally, turning to the question of the Claimant’s refusal to concede that his actual start date was 29 June 2020. I find that paragraph 4 of the Claimant’s witness statement, where he says: “As far as I am aware, my start date with the Respondent was 26th June 2020”, considering evidence which came to light at the hearing, misrepresents the true situation. The Claimant knew that his actual start date was 29 June 2020. He admitted that on crossexamination. Also, see my findings of fact in paragraphs 17 and 18 of the Reserved Judgment. Therefore, in my judgment, maintaining the position that his start date was 26 June 2020 was unreasonable.[36]I do not accept the Claimant’s argument that it “was the starting point and it was for the Respondent to have proved otherwise”. While the phrase “from the date of joining the Company” in clause 7.1 of the Claimant’s employment contract was certainly a matter for legal interpretation, the date when he actually started his work for the Respondent (that date being 29 June and not 26 June 2020) was well known to him, and there was nothing about that fact that was “open for interpretation”.[37]Having found that the Claimant’s conduct in refusing to concede the start date point (as a matter of fact and not legal interpretation of clause 7.1) was unreasonable, I must step back and look at all the circumstance of the case to decide whether I should exercise my discretion and make a costs award against the Claimant.[38]I do not accept the Respondent’s submission that Mr Ali’s witness evidence was only required to deal with the start date issue. Mr Ali was the only witness called by the Respondent. He gave evidence on various matters, and not only on the start date of the Claimant’s employment. I find it hard to imagine that even if the Claimant had conceded the start date point, given the issues in the case, the Respondent would have run its defence without calling any witnesses.[39]Further and more importantly, the case turned on my interpretation of clause 7.1, which, as I stated in my Reserved Judgment, was far from being a masterpiece of legal drafting (see paragraph 40). As I stated above in this judgment (see paragraph 23) even if the Claimant had conceded that his start date was 29 June 2020, that would not have resolved all the issues in the case, and would not have materially, if at all, shorten the length of the hearing.[40]Therefore, and considering the nature, gravity and effect of the Claimant’s unreasonable conduct, I am not prepared to exercise my discretion and make a costs award against the Claimant.[41]It follows, that the Respondent’s application for a costs order against the Claimant fails and is dismissed.