Employment Judge CowenMs Musgrave- Cohen (instructed by counsel) for respondentDate 19 June 2024
JUDGMENT
[1]The Claimant must pay the Respondent £10,100 towards the costs of the Preliminary Hearing.
REASONS
[1]The parties attended a public preliminary hearing at which a number of preliminary applications were made by the Claimant and dealt with in a case management order.[2]The substantive reason for the hearing was to consider a preliminary issue of whether there was a breach of contract claim[3]Having considered all of these applications and issues and having dismissed all of them, the Respondent made an application for costs under r.76(1)(a) & (b) at the end of the hearing. Evidence was taken under oath from both the Claimant and QR’s husband with regards to their means. The judgment on costs was reserved due to a lack of time.[4]There was no agreed bundle for this hearing. A bundle was provided by each party. Witness statements on behalf of the Claimant and her representative Mr Alexandrou were provided. Witness statements were also provided by Mr Pantelias and Mrs Pantelias on behalf of the Respondent. Submissions were heard from both parties.[5]In order to understand the context in which this decision was made please read this in conjunction with the written reasons judgment and case management order arising from the same hearing. Costs submissions[6]Ms Musgrave- Cohen submitted on behalf of the Respondent that the Claimant’s actions during the course of the hearing amounted to unreasonable conduct and that the Claimant’s application for strike out/postponement and the claim for breach of contract had no reasonable prospect of success. She also submitted that costs are the exception to the rule and referred to Yerrakalva v Barnsley Metropolitan Borough Council [2012] ICR 420, CA.[7]The Respondent relied on the fact that the strike out application was unsuccessful, as the failure to disclose, which the Claimant relied upon, was found not to be relevant to the issues. She also relied on the fact that it was found to be untrue that the Claimant was in the dark about the Respondent’s evidence, as the Claimant asserted, and that the Claimant’s representative was an experienced representative in the Tribunals who knew, or ought to have known that a signature on a witness statement is not a critical requirement.[8]The Respondent relied on the correspondence which had passed between the parties on this point, where the Claimant had asserted that as the statements were unsigned and ‘written on scraps of paper’ they were prejudiced. This had been addressed in correspondence by the Respondent who sought to correct the Claimant’s position and indicated that the Claimant’s strike out application on that basis had no prospect of success.[9]Miss Musgrave- Cohen also referred to the Claimant’s application to postpone and the fact that the Claimant made the application less than 7 days prior to the hearing, although they had been aware for some time of the basis that they relied upon. The decision not to postpone was said to be a fishing expedition by the Tribunal when it was dismissed. Miss Musgrave-Cohen described the application as a waste of both time and money.[10]The third application which Miss Musgrave- Cohen relied upon was the Claimant’s application for an anonymity order under r.50. This application was also made shortly before the hearing. The Claimant had provided no case law or legal argument for the order and had failed to explain to the Tribunal why the order would be necessary within the legal considerations in such an application.[11]The Respondent pointed out that all these unsuccessful applications had taken a whole day of Tribunal time to resolve and amounted to unreasonable conduct of unmeritorious applications.[12]Finally the Respondent submitted that the breach of contract claim had no reasonable prospect of success and that the Respondent had warned the Claimant of this on four occasions in April 2024.[13]The Respondent had served a Schedule of Costs on the Claimant on 8 May 2024 and provided it to the Tribunal.[14]Mr Alexandrou on behalf of the Claimant in response to the application offered the evidence of the Claimant and QR’s husband, with regard to their means and ability to pay. The Claimant and her husband appeared to be taken by surprise that this would be necessary, but gave their evidence nevertheless. Mr Alexandrou as an experienced representative had been aware of the Respondent’s application for a few weeks in advance. He made no application to postpone the hearing of the costs application.[15]The Claimant acknowledged that the Breach of Contract claim was ‘not our strongest claim’. She also continued to assert that she was not bound to treat the statements as served and that they were not valid until the parties gave evidence. Mr Alexandrou submitted that the main point for the preliminary hearing had been whether items of without prejudice correspondence could be disclosed at the final hearing. This was a matter which the parties had agreed themselves at the Tribunal and upon which I did not make any determination.[16]Mr Alexandrou asserted that the conduct on the part of the Respondent had been unreasonable and disproportionate. He submitted that the Claimant’s actions had not been unreasonable as they had a strong belief that there had been a breach of the rules on disclosure and the manner of the exchange of witness statements. He acknowledged that the content of the statement he had received was not altered between two versions of the statements.[17]Mr Alexandrou stated that it was necessary to request a postponement as the reconsideration application had not yet been dealt with by EJ Quill. He considered that the strike out application had been appropriate. He also asserted that his client could not afford to pay a costs order.[18]Evidence was heard from the Claimant with regard to her means. She said she was unemployed but actively looking for work and had registered with a number of recruitment agencies. She had received Employment Support Benefit for 6 months, but that had stopped. The only benefit she now received is National Insurance Credit. She said she was financially dependent on her husband.[19]QR’s husband also gave evidence to say that he was employed in purchasing components for gaming machines and has a disposable income of approximately £250-300 per month. Law[20]The Tribunal is obliged to consider under r76(1)(a) whether to make an order for costs, but only once the proposed paying party have had an opportunity to make representations under r.77. I must then use my discretion to consider whether it is right and proper to award costs, having regard to all the relevant factors and taking into account the fact that costs are the exception and not the rule. I may also consider the Claimant’s ability to pay, both at this stage and if awarding costs.[21]If a costs award is to be made, I must ensure that costs are limited to those which are reasonably and necessarily incurred.[22]In considering whether it is appropriate to make an order I have taken into account the fact that I have dealt with all the issues of the applications in detail and therefore do not intend to spell out here, once again, all the reasons given for the dismissal of the various applications made by the Claimant. It is sufficient to say that the Claimant failed in all of them.[23]It was clear that neither the strike out, nor the postponement were likely to succeed, as the Claimant had been provided with the content of the Respondent’s statements sufficiently in advance of the hearing. The application for anonymity was inappropriate. The Claimant offered no specific risk of harm, no evidence to base her application upon and provided no submission on the balance of prejudice to be considered. The application should not have been made in this form and showed a lack of understanding of the legal principles to be applied in such an application.[24]Furthermore, the breach of contract claim had little prospect of success when on the Claimant’s own evidence she knew that a written agreement was not settled on the day and that she would need to take further steps to obtain legal advice in order to reach a binding agreement. Equally the Claimant’s suggestion that there were two separate agreements was flawed from the outset.[25]Dealing with these applications had taken a whole day of Tribunal time and a considerable amount of extra work by the Respondent to respond to these. None of these applications had any reasonable prospect of success and the Respondent had pointed this out by way of correspondence in respect of the Breach of contract claim.[26]I therefore have concluded that it would be appropriate to make an award of costs in this case, due to the misuse of the Tribunal time and the inevitable dismissal of these applications.[27]Taking into account the joint income of the Claimant and her husband and taking into account the cost of the Respondent’s time in relation to the various applications as set out on their Schedule of costs, I have concluded that a sum of £10,100 should be paid by the Claimant to the Respondent.[28]On 23 January Mr Alexandrou wrote to Miss Rhodes saying he hadn’t heard from her since his email on 22 December. Thus indicating that he had not seen the deadline sent on 3 January. He noted that the Claimant had been paid in December saying “despite the absence of the written agreement”. He went on to say that as long as payments are made “ my principal is nonplussed over the agreement”.[29]On 1 February Miss Rhodes replied saying that she had been ill and pointed out that she had emailed on 3 January but clearly Mr Alexandrou didn’t receive it. She pointed out that given the Claimant was pushing to amend the draft agreement, she clearly was bothered about it.[30]On 6 February Mr Alexandrou said that payments had been made to the Claimant and she was not clear what they represented. He said “ My last email made the point that if a written agreement cannot be agreed, then so be it, as it makes no difference to my principal if she had been paid her outstanding remuneration and package as agreed”.[31]On 7 February Miss Rhodes pointed out that the restrictive covenant was a sticking point for the Respondent. She asked Mr Alexandrou to “confirm why your client objects to the inclusion of something she has already agreed to and would continue to [be] bound by regardless of the agreement”. Mr Alexandrou did not reply to this.[32]On 10 February Miss Rhodes wrote saying, as they had received no response the Respondent was withdrawing the offer in full.[33]After that Mrs Pantelias contacted the Claimant on 21 February to set up a grievance meeting. She indicated that The Claimant would have paid leave until 21 February but then she wanted the Claimant to return to work. She also offered unpaid leave or holiday until the grievance is completed.[34]A grievance process was then carried out by an independent company instructed by the Respondent. That report was sent to the Claimant on 3 March. At that point the Claimant was invited to return to work and to put in place the suggested mediation.[35]The Claimant replied to this on 10 March by handing in her resignation. The Law Contracts
The Law
[36]The following principles of contract law were taken into account by the Tribunal; In order for there to be a contract the parties must show that there has been offer and acceptance of terms. The terms must be complete and operable and unconditional. The parties must have implied at least an intention to create legal relations. There must then by some consideration by the parties to show intent to be bound.[37]It is not a legal requirement that a contract be reduced to writing. However, if it is not written down it is hard to prove it existed. The fact that it is not written down is a lack of proof, not a lack of agreement. 38. the test to be applied to identify a contract is an objective one. I note that what was said by the parties is just one aspect of the evidence and that the documentary evidence is more weighty. Settlement Agreements[39]A settlement agreement is a specific type of contract and is outlined in legislation. There are criteria which must be fulfilled for a contract to be a binding settlement agreement. S.203(3) ERA sets out the requirements. This is mirrored by s.147(3) EqA. These set out that an agreement will not be binding unless it is a) Set out in writing b) relates to the particular proceedings/issues c)only made where the employee has received advice form a relevant independent adviser as to the terms and its effect on their ability to pursue their rights before an ET. That adviser must have a valid insurance d) the adviser must be named on the agreement and must sign to say that they have complied with the requirement.[40]It is notable that IDS Handbook on settlement terms refers to “employers may wish to insert restrictive covenants” under the heading “common terms of settlement agreements”.[41]The ACAS code of Practice gives practical advice that a ‘reasonable period of time’ should be given to a party to consider the terms proposed. It is said that reasonable is a minimum of 10 days.[42]A situation arose on 6 December 2022 where it became clear to both sides that what had previously been a good working/friendly relationship was now so strained that a return to work looked unlikely. It was clear to both sides that a way out of this situation would be to enter into a settlement agreement. They therefore agreed to engage in discussions. These negotiations led to heads of agreement being made at the meeting.[43]However, neither party asserted that a written agreement was completed and signed that day. The Claimant asserted that there was a verbal agreement to pay £40,000 and to end the Claimant’s employment by way of dismissal on 31 December 2022. She asserted that there was then a separate agreement which was not finalised, to enter into a settlement agreement that the Claimant would not pursue her legal rights.[44]The Claimant has not explained to me herself, nor shown evidence of, the Respondent’s agreement to two separate agreements. Nor have I been able to find any evidence from which I can infer that the Respondent agreed to two separate agreements. It makes no sense for the Respondent to have agreed to pay the Claimant £40,000 if they were not going to receive the assurance in response that the Claimant would be prevented from bringing claims to the Tribunal.[45]Nor do I find it plausible that the Claimant would agree to enter into an agreement to give up her legal rights in return for nothing at all. These two sides were part of the same agreement.[46]I also do not accept that Mr Alexandrou’s emails to Miss Rhodes are indicative of him only trying to reinforce terms agreed on 6 December. They clearly go beyond what was discussed on the day. At no point does Mr Alexandrou say in the emails that a complete agreement had been reached and that this communication is in relation to a separate point.[47]I therefore do not accept that the Claimant’s contention of two agreements withstands scrutiny.[48]Turning then to whether there was a single complete, operable and unconditional agreement on 6 December; I find that many of the points which are required to be contained in a settlement agreement were agreed in principle between Mr Alexandrou and Miss Rhodes on 6 December, but that nothing was reduced to writing and therefore no formal agreement was made.[49]The principle terms of an agreement were agreed between the parties; the sum, the payments, the end of the employment, the return of equipment and the non-derogatory clause. However, the point which both sides understood at the end of 6 December was that this needed to be reduced to writing and that the Claimant would need to see a solicitor in order to make this into a binding settlement agreement. That did not happen.[50]The evidence of the emails between the representatives show that the negotiations continued after 6 December, about the remaining terms of the contract. I’m reminded by case law to look at the documentary evidence and I have taken account of the emails between Mr Alexandrou and Miss Rhodes during December, January and February 2023. They show a back and forth of compromise and dispute over various points, but significantly over restrictive covenants. This is not a point which was discussed on 6 December, but became a point of contention between the parties.[51]When Mr Alexandrou wrote to Miss Rhodes on 13 December saying that the Claimant did not want to enter into restrictive covenants, he missed the point, as the Claimant had already agreed to them in 2013 and had continued to work with the Respondent without complaint about them since. This was therefore not a new point and therefore the inclusion of them in the draft settlement agreement was merely a reminder of the status quo.[52]Unfortunately the Claimant either did not see it this way, or wanted to try to remove the existing restrict covenants, and so refused to agree to their inclusion. Equally this was the Respondent’s greatest comfort, as Mrs Pantelias was worried about the Claimant using their information to assist a competitor, or to bring negative publicity to the company.[53]Ultimately, this became the sticking point of the negotiation. There were one or two periods of delay due to the Christmas break and Miss Rhodes being ill, but it became clear in February 2023 that neither side would move their position and therefore the Respondent brought the negotiation to an end.[54]I do not accept the Claimant’s submission that there was an agreement and that the Respondent moved away from it. I find that there were elements of agreement, but not a complete agreement.[55]It is also clear that the payment made in December 2022 was not a sum which had been agreed by way of the negotiation. It was a sum more akin to a monthly pay. I do not find that the Respondent made a payment under any agreement other than the contract of employment.[56]The Claimant’s evidence that she was aware that to have a concluded agreement she would need to receive legal advice and that she did not visit a solicitor and did not sign an agreement, shows that she knew herself that no legally binding complete agreement was created.[57]There was therefore no concluded contract and therefore no breach of contract.