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	United Kingdom Employment Appeal Tribunal
You are here: BAILII >> Databases >> United Kingdom Employment Appeal Tribunal >> Royal National Orthopaedic Hospital Trust v. Howard [2002] UKEAT 861_01_1408 (14 August 2002) URL: http://www.bailii.org/uk/cases/UKEAT/2002/861_01_1408.html Cite as: [2002] UKEAT 861_01_1408, [2002] IRLR 849, [2002] UKEAT 861_1_1408

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APPEARANCES

 

For the Appellant	MR D STILITZ (of Counsel) Instructed By: Mrs Leslie Millin Messrs Capsticks Solicitors 77-83 Upper Richmond Road London SW15 2TT
For the Respondent	MISS J EADY (of Counsel) Instructed By: Ms J Wade Messrs Palmer Wade Solicitors 5th Floor 45 Beech Street London EC2P 2LX


 


JUDGE J R REID QC:

1. This is an appeal on a preliminary point. An Employment Tribunal held at Watford on 15 May 2001 made a decision sent to the parties on 8 June 2001 in the following terms:

"The unanimous decision of the Tribunal is that the Agreement headed 'Settlement of Claim C.O.T. 3' under Case No. 6603404 – 1998 between the Applicant and the Respondent signed by the Respondent on 28 June and the Applicant on 30 June 1999 and exhibited at page 23 of the agreed document bundle does not operate to prevent the Applicant from succeeding in this complaint against the Respondent."

The Respondent Appellant is Royal National Orthopaedic Hospital Trust ("the hospital"). The Applicant Respondent is Mrs Linda Howard.

2. The facts leading to this decision are as follows. Mrs Howard was employed by the hospital for 18 years. She left in 1998 and made allegations of sex discrimination, marital discrimination and constructive dismissal. That claim was compromised. It was dismissed on the following terms:

"1 That the Respondent will pay to the Applicant within 28 days the sum of £12,000 in full and final settlement of these proceedings and of all claims which the Applicant has or may have against the Respondent (save for claims for personal injury and in respect of occupational pension rights) whether arising under her contract of employment or out of the termination thereof on 29 November 1998, or arising under the Employment Rights Act 1996, the Sex Discrimination Act 1975 or under European Community Law. This payment is with no admission of liability.

2 That the proceedings be dismissed."

The settlement was expressed to be as a result of conciliation action and was set out in a COT 3 form.

3. In the year 2000 Mrs Howard was asked by a Consultant Surgeon to assist him at an operation, as a technician undertaking spinal cord monitoring. The operation was to be performed privately at the hospital. According to paragraph 4 of the Employment Tribunal's findings:

"The system, which is rather confused, appears to be this. The Applicant is taken on to a temporary contract – just for that day – to assist the Surgeon and the payment to her is made to her via the Respondent who are then, to all intents and purposes, either her employer or a person using her services under a contract of services. The Applicant wrote to the Respondent asking whether this would be in order. For the purposes of today's decision, and we emphasise for this purpose alone, we assume that the Respondent declined to allow the Applicant to work in the hospital under the supervision of the Surgeon concerned because she had made an earlier complaint against them which had resulted in the Agreement. The earlier complaint was, inter alia, of Sex Discrimination."

4. Mrs Howard then commenced the present proceedings. She complained of discrimination by victimisation pursuant to section 4 and section 6 of the Sex Discrimination Act 1975. Her case is that she was refused permission to work at the hospital in a private capacity because of her previous sex discrimination complaint against the hospital. She asserts that the decision treats her less favourably than others and was due to her previous allegations. The hospital, it is only fair to say, refutes this suggestion and says that she was not permitted to work for the Surgeon on this particular occasion because it has its own internal arrangements for the provision of technicians to do spinal cord monitoring. On receipt of the application the hospital applied to have her claim dismissed on the grounds that the Agreement precluded Mrs Howard's further claim for victimisation.
5. The hospital asserts three grounds of appeal. The first is that the Tribunal misconstrued the Agreement. The second is that in doing so it impermissibly relied on Mrs Howard's evidence as to her subjective understanding of the Agreement and the third is that the Tribunal misconstrued the powers of the Conciliation Officer under section 18 of the Employment Tribunals Act 1996. This last point relates to a holding by the Tribunal that a COT 3 Agreement is not capable of compromising a future cause of action.
6. Mr Stilitz, on behalf of the Hospital, submitted that in construing the Agreement it was incumbent on the Employment Tribunal to determine "the meaning which the document would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract": see ICS Ltd v West Bromwich BS [1998] 1 WLR 896 at page 912H. It is common ground between the parties that ordinary rules of construction apply to COT 3 Settlement Agreements: see BCCI SA v Ali [2001] ICR 337, especially at page 341 D – F. Mr Stilitz submitted that the Tribunal should have held that the Agreement construed objectively against the relevant background was intended to provide a full, final and clean break between the parties. This, he submitted, plainly precluded any claims arising from the allegations made in the compromised proceedings. He pointed to the use of the words "has or may have". He said these words were designed to preclude potential future claims, not yet brought, which Mrs Howard might seek to assert. He also pointed to the exclusion of personal injury and occupational pension right claims from the ambit of the Agreement. He suggested that the reference to these particular types of claim indicated that no other future type of claim could be included. He submitted that the claim was based on section 62 of the 1975 Act, and was founded on Mrs Howard's previous employment: see Coote v Granada Hospitality Ltd [1999] IRLR 452. He suggested that the claim was referable to the previous employment relationship and that the Agreement expressly precluded any claim arising under Mrs Howard's contract of employment or out of the termination of her employment. He went on to say that as a matter of commercial reality the parties to an acrimonious dispute such as that between Mrs Howard and the hospital would wish to draw a line under their relationship and go their separate ways. He submitted that the hospital would have been horrified by the suggestion that the Agreement would permit Mrs Howard to bring a victimisation claim on the back of the discrimination claim which she had compromised at some expense to the hospital.
7. He went on to criticise the fact that the Employment Tribunal held at paragraph 8 of its decision that "The Applicant's written evidence, which we accepted, was that she had no … intention" of compromising future claims. He pointed out that if the Tribunal were construing the Agreement on the basis of Mrs Howard's evidence as to her subjective intention on entering into the Agreement, it was adopting a wholly impermissible approach to the construction of the contract. He submitted that Mrs Howard's declaration of subjective intent was irrelevant. In his submission the Tribunal could only ascertain the intention of the parties from the objective perceptible facts. In his submission the objective facts indicated that the hospital wished to protect themselves against any future claim.
8. Ms Eady, on behalf of Mrs Howard, submitted that as a matter of public policy it was impossible for a party to contract out of their right to bring claims which had not yet come into existence. She referred to BCCI v Ali, in particular passages in the speech of Lord Bingham, particularly at page 341, paragraph 8 to 342, paragraph 10 and 346, paragraph 19. She submitted that the Employment Tribunal had merely noted in passing Mrs Howard's subjective view of the Agreement. It did not take that view into account in arriving at its construction. She went on to point out that the object of the form of release entered into by the parties in the Agreement was merely to enable a line to be drawn under complaints (whether made or not) that Mrs Howard might have had against the hospital at the date of termination of her employment. She submitted that that is why the words "has or may have" rather than "has or may have now or in the future" were used. She noted also that there was express reference to claims "arising under her contract of employment or out of the termination thereof on 29 November 1998" but no reference to the position "after the termination of that employment".
9. In our judgment the law as to contracts for release is pretty straightforward. The law does not decline to allow parties to contract that all and any claims, whether known or not, shall be released. The question in each case is whether, objectively looking at the compromise Agreement, that was the intention of the parties, or whether in order to correspond with their intentions some restriction has to be placed on the scope of the release. If the parties seek to achieve such an extravagant result that they release claims of which they have and can have no knowledge, whether those claims have already come in existence or not, they must do so in language which is absolutely clear and leaves no room for doubt as to what it is they are contracting for. We can see no reason why as a matter of public policy a party should not contract out of some future cause of action. But we take the view that it would require extremely clear words for such an intention to be found.
10. In the present case there is nothing to indicate any intention to contract out of future claims. The expression "have or may have" is apt to cover existing claims whether known to the potential claimant or not. The express exclusion of personal injury claims and occupational pension rights claims is a regular occurrence in agreements such as the Agreement. The exception has arisen in part to deal with the possibility of as yet undiscovered personal injury claims (eg asbestosis claims) and in part because of the nervousness that lawyers have about the difficulties surrounding the law relating to occupational pension rights. The exclusion relates only to existing rights. It does not deal with future claims: the words are not apt to do so. Such claims are not barred by the terms of the Agreement.
11. So far as Mrs Howard's claim in the present proceedings is concerned, that arose out of the alleged conduct of the hospital after the date of the Agreement. That conduct was actionable, if at all, only by reason of what had occurred earlier. If there had been no earlier sex discrimination claim, then the alleged actions of the hospital would not have given rise to the cause of action. But it was not the earlier actions of the hospital or anything which occurred in the course of Mrs Howard's employment or in the events leading up to the making of the Agreement which gave her her claim. What gave her her claim was the alleged conduct of the hospital in refusing to allow her to act as a technician in the late summer of 2000. In our judgment the true construction of the Agreement does not preclude her from bringing these proceedings.
12. As to the second point canvassed, we take the view that the Tribunal's construction was not affected by Mr Howard's evidence as to her subjective intention in entering into the COT 3. It recorded her evidence on the point and accepted it, but the Tribunal's construction was not based upon that finding of fact. Despite Mr Stilitz's admirable submissions there is no substance in this point.
13. In the light of this decision the third point canvassed before us, based on the construction of section 18 of the Employment Tribunals Act 1996, does not arise. In these circumstances we do not think it desirable to express any concluded view on the point. However we should say that we all have some doubts as to the correctness of the Employment Tribunal's decision on this particular point.
14. In the circumstances the appeal will be dismissed.