Allma Construction Ltd v Bonner UKEATS/0060/09/BI
Appeal against decision of an Employment Judge who held that no binding settlement had been reached after an offer to settle had been made and accepted, partly because ACAS did not believe that was the case. Appeal upheld and claim dismissed.
The claimant had been dismissed on grounds of gross misconduct and brought a claim. The Friday before the case was listed the respondent's solicitor offered £1,000 to settle during a call with the claimant's solicitor. The claimant was contacted and he instructed his solicitor to accept the offer, who then left a message with an ACAS officer (though not the one handling the case who was on holiday) that the offer had been made and accepted. The ACAS officer emailed his colleague with the news and also left a phone message with the respondent's solicitor indicating acceptance. Over the weekend the client changed his mind and on the Monday his solicitor called ACAS and the respondent's solicitor to retract the acceptance, at the same time sending a schedule that the respondent's solicitor acknowledged. The matter came before an Employment Judge at a pre-hearing review.
The Employment Judge concluded that the offer to settle was merely an invitation to treat as i) settlement would normally involve negotiation on other terms in addition to the amount; ii) the communications after the change of heart were inconsistent with a binding settlement and iii) there had been "no binding agreement under the auspices of ACAS". The respondents appealed, and in this judgment, Lady Smith reviews the relevant law on contract offer and acceptance, concluding that the only option open to the judge was to find that a settlement was agreed on the Friday. She also comments, on the ACAS point, that all that was required of ACAS was that they had "taken action" under section 18 of the Employment Tribunals Act 1996, and "in some way, endeavoured to promote settlement of the claim". It did not matter that a COT3 agreement might be arranged at a later date with their help, and the views of the officers, though no binding agreement had been reached, were irrelevant to the issue of law before the judge.
Appeal No. UKEATS/0060/09/BI
EMPLOYMENT APPEAL TRIBUNAL 52 MELVILLE STREET, EDINBURGH, EH3 7HF
At the Tribunal On 12 May 2010
Before THE HONOURABLE LADY SMITH (SITTING ALONE)
**ALLMA CONSTRUCTION LTD (APPELLANT)
MR J A BONNER (RESPONDENT)**
Transcript of Proceedings
For the Appellant: MR DAVID HAY (Advocate)
Instructed by: The Work Ethic Limited Glebe End 23 Cramond Glebe Road Cramond Village Edinburgh EH4 6NT
For the Respondent MR ALEXANDER McBURNEY (Solicitor) Alexander McBurney Solicitors 338 Dumbarton Road Glasgow G11 6TG
**SUMMARY **Whether or not claim settled. Employment Tribunal held to have erred in holding that no binding settlement reached where found as fact that employers' agent had offered to settle the claim at £1,000 and that offer had been accepted by the claimant's solicitor. The belief of the ACAS officer involved to the effect that the settlement was not binding because he had not spoken directly to both parties was irrelevant, as was the finding that a COT3 settlement would "normally" contain other provisions as well, as were the findings in fact about what passed between the Claimant's solicitor and the employers' agent subsequently, after the Claimant had changed his mind as to the acceptability of the offer. Appeal upheld and claim dismissed.
**THE HONOURABLE LADY SMITH Introduction **1. This is an appeal from a judgment of the Employment Tribunal sitting at Glasgow, Employment Judge June Cape, registered on 14 October 2009, determining that:
"There being no agreement to settle the proceedings binding on the claimant by virtue of the combined effect of Sections 18(2) of the Employment Tribunals Act 1996 and Section 203(2)(e) of the Employment Rights Act 1996, the claimant is not precluded from further pursuing his complaints against the respondent."
- I will continue referring to parties as Claimant and Respondents. The Claimant was employed as a plant operator by the Respondents, who are a construction company. He was dismissed on 12 September 2008 and he presented a claim to the Employment Tribunal in which he alleged that his dismissal was unfair. The dismissal was said by the Respondents to be on grounds of misconduct, the Claimant having been caught siphoning fuel from one of their machines; they also draw attention to his not having appealed the decision to dismiss. The Claimant sought, in addition, to claim in respect of a failure to give a statement of written terms and conditions and breach of contract.
- The Claimant was represented by Mr McBurney, solicitor, before the Employment Tribunal and before me. The respondents were represented by Mr Kennedy, solicitor, before the Tribunal and by Mr Hay, advocate, before me.
- The above judgment followed a pre hearing review on 18 September 2009. The background to that hearing was, according to the Tribunal's findings in fact, as follows.
- The Claimant's case was originally listed for a hearing on Wednesday 25 and Thursday 26 February 2009. At that time, the Claimant was represented by Mr A McBurney, solicitor and the Respondents were represented by Mr Reilly, Employment Consultant.
- On Friday 20 February 2009, Mr McBurney telephoned Mr Reilly. In the course of that telephone call, Mr Reilly made an offer of £1,000 to settle the Claimant's claim. Mr McBurney contacted the Claimant that day. The Claimant's instructions were that the offer of £1,000 was acceptable.
- Also on Friday 20 February 2009, Mr McBurney informed an ACAS officer, Mr Bottomley, that he had received an offer of £1,000 from Mr Reilly and that that was acceptable to the Claimant. The ACAS officer principally responsible for the case was Mr David Graham. He was on leave as at 20 February so Mr Bottomley emailed him in the following terms:
"Hi Davy, Sandy McBurney phoned ……to say an offer of £1,000 was made and it is acceptable. The hearing date is Wednesday. I phoned John Reilly ….and left a message advising of acceptance and that he should email the wording to you on Monday."
- He had, as he reported, left a message for Mr Reilly intimating acceptance of the offer of £1,000. Mr Reilly picked up that message on Friday 20 February.
- Mr Graham was due to return to work on Monday 23 February.
- On Saturday 21 February 2009, Mr Reilly met with his client and found that he had changed his mind about accepting the offer of £1,000.
- On the morning of Monday 23 February 2009, Mr McBurney telephoned Mr Reilly and ACAS to advise that the Claimant had changed his mind and did not wish to accept £1,000 in settlement.
- Unsurprisingly in the circumstances, a heated discussion took place between Mr Reilly and Mr McBurney. They agreed that the hearing set down for later that week should be postponed to enable further negotiations to take place with a view to reaching a settlement. Mr Kennedy had been instructed by Mr Reilly for the hearing. Mr Kennedy wrote to the Employment Tribunal seeking a discharge of the hearing and for the case to be sisted for settlement, an application which was said to be "In light of discussions between the parties and through ACAS". Mr McBurney wrote to the Tribunal agreeing to that request "to allow settlement to be agreed". I observe, in passing, that the wording used by Mr Kennedy was entirely consistent with the Respondents' position being that the case had settled, albeit that they were faced with the Claimant, through his solicitor, not accepting that that was so.
- Mr McBurney thereafter intimated a schedule of loss and indicated that the Claimant would settle the case for £5,000. When he received the schedule, Mr Reilly's response was that the case had been settled for £1,000 and that he would be raising that with the Employment Tribunal. Whilst Mr Reilly, having been made aware that Mr McBurney was proposing to send a schedule of loss, wrote saying that he looked forward to receiving it, that observation is, in my view, a neutral one in the circumstances and, again, in no way indicated that he was departing from the position of the Respondents being that the case had already settled.
- The Tribunal make no findings in fact regarding the nature of the involvement of ACAS. In particular, they do not indicate whether it was on the basis that an ACAS officer had been requested by the parties to become involved (Employment Tribunals Act s.18(2)(a)) or whether it was a case that he had done so of his own volition (Employment Tribunals Act s.18(2)(b)).
The Tribunal's Reasons
- The Tribunal Judge accepted, correctly, that when determining whether or not parties have reached an agreement, normal contractual rules apply. She went on to refer to a decision of this Tribunal sitting in London, in the case of Duru v Granada Retail Catering Limited EAT281/00 where Sir Christopher Bellamy QC stated:
" …an offer in the contractual sense is an expression of willingness to contract made with the intention that it is to become binding on the person making it as soon as it is accepted by the person to whom it is addressed……and communication not made with the intention that it shall be immediately binding as soon as the person to whom it is addressed signifies his unconditional assent may be better analysed as an "invitation to treat" rather than as an offer in the contractual sense."
- She also referred to a passage in Chitty on Contracts where it is said that the distinction between offer and invitation to treat is often hard to draw. She makes no reference to any Scottish authority.
- In a shortly stated conclusion, the Employment Judge held that on 20 February 2009 Mr Reilly made a "proposal to settle" that was an invitation to treat. There seem to have been two, possibly three, reasons for her reaching that view. The first flows from parties both accepting that settlement of a claim would normally involve agreement to other terms in addition to the amount of the settlement sum such as exclusions of any claims for personal injury or pension, a confidentiality provision, terms about the provision of a reference, a statement that payment was in full and final settlement and so on. That finding is transposed, at the conclusion section of the judgment into a finding that "other terms had still to be agreed". The second reason is that after the Claimant's change of heart, there were communications between parties with a view to trying to settle the case; those were, she states, inconsistent with a binding settlement having been achieved.
- The third matter is that the Employment Judge refers to there having been "no binding agreement under the auspices of ACAS" but it is not entirely clear what she has in mind in that regard.
- Where one party makes an offer to another that is sufficiently definite to indicate an intention to be bound which covers the essentials of the contract in question and it is accepted, a contract is concluded. Whether or not a contract has been concluded falls to be determined by an objective assessment. It does not matter that additional matters could be included in the contract at a later date by way of further agreement being entered into; as Professor McBryde comments parties "are not rationed to one contract" (The Law of Contract in Scotland by William McBryde, at para 5-10). As to what are the essentials, that will vary from case to case (May and Butcher Limited v The King (1929)) noted at  2 KB 17 per Viscount Dunedin at p.21). In some cases, such as contracts relating to land, for instance, the law requires that they be in writing and in others, a contract of lease for example, the law requires that certain minima (parties, subjects, ish and rent) be agreed. There are, however, many contracts where the law does not prescribe their content and then it is a matter of assessing what, in the circumstances, parties intended their contract to cover. Where a contract to settle litigation is concerned, it may be that the essentials of the particular agreement amount to nothing more than that a certain sum of money is to be paid by the defending party to the pursuing party as the price of bringing the litigation to an end.
- A distinction can be drawn between a communication that constitutes an offer which, if accepted, will result in a concluded contract and a communication that is an indication of a willingness to negotiate. The latter may be referred to as an invitation to treat. An example of an invitation to treat would be the advertisement of the holding of an exhibition to which admission will be by ticket at a certain price (McAskill v Scottish Exhibition of National History, Art and Industry, Glasgow (1912) 28 Sh. Ct Rep. 176) or the invitation of bids by an auctioneer (British Car Auctions Ltd v Wright  1 WLR 1519).
- As to the effect, if any, of a change of mind by one party, it can only alter the contract or prevent it being concluded, if it is communicated to the other party before offer and acceptance have taken place (Thomson v James (1855) 18D 1).
- Given the factual background to this case, the case of Gilbert v Kembridge Fibres Ltd  ICR 188 is also of some interest. There, via an ACAS officer, the employee offered to settle his claim for £500 plus an undertaking that the employers repay the sum of £42 which he contended he was owed. The employers' solicitor intimated to ACAS that the employers were agreeable to settling on that basis. Form COT3 was then sent to the employee to complete and having signed it, he changed his mind, deleted his signature and returned the form to ACAS. The EAT upheld a finding by the Employment Tribunal that an enforceable agreement to settle had been reached before the processing of the COT3; the agreement did not require to be in writing and offers and acceptances could be communicated through ACAS. The Tribunal's conclusion was said to be "unimpeachable". Plainly, the employee's change of heart made no difference; the deal was done and he was bound to it even although it was not, it seems the deal which, ultimately, he wanted. Interestingly, whilst, at an earlier stage, the employers had specified as part of their proposals for settlement that they would provide a reference for the employee, that condition not having been part of the last offer and acceptance, it did not feature as part of the settlement agreement which the EAT agreed was enforceable.
- The decision of this Tribunal (Sir Christopher Bellamy QC) in the case of Duru was referred to and relied on by both the Tribunal and the claimant. There the EAT found that no binding settlement agreement had been reached; the offer that had been made was not intended to be binding if accepted but was held to be an invitation to treat. It so concluded in circumstances where, on the facts, whilst there had been an oral exchange of offer and acceptance, it was evident that it was subject to and conditional upon terms being agreed in writing between the parties and that had not taken place.
- Finally, section 18 of the Employment Tribunals Act 1996 applied since the Claimant's claim was for unfair dismissal and its provisions insofar as relevant are:
"(2) Where an application has been presented to an employment tribunal and a copy of has been sent to a conciliation officer, it is the duty of the conciliation officer - ………… ………… to endeavour to promote a settlement of the proceedings without their being determined by an employment tribunal."
- Section 203 of the Employment Rights Act 1996 is also relevant and its provisions include:
"(1) Any provision in an agreement (whether a contract of employment or not) is void insofar as it purports – ……….. to preclude a person from bringing any proceedings under the Act before an employment tribunal .
(2) Subsection (1) – ……….
(e) does not apply to any agreement to refrain from instituting or continuing proceedings where a conciliation officer has taken action under section 18 of the Employment Tribunals Act 1996."
- Thus, if parties agree to settle a claim in circumstances where an ACAS officer has "taken action", the jurisdiction of the Employment Tribunal is ousted. Taking action is not further defined and so must be given its ordinary meaning so as to cover any action taken by an ACAS officer in relation to the claim. He does not require to broker the settlement nor does he require to record it. His statutory duty goes no further than that he is to endeavour to promote a settlement of the proceedings. How he does that will be a matter for him and will vary from case to case according to its particular circumstances. Whilst there is a practice of ACAS being involved in the recording of settlements in standard paperwork (Forms COT3), that practice does not need to have been followed for the Tribunal's jurisdiction to be ousted in a case which falls under s.18(2) of the Employment Tribunals Act 1996.
**The Appeal **27. Mr Hay submitted that the Tribunal had erred in characterising Mr Reilly's offer to settle at £1,000 as an invitation to treat. That conclusion was at odds with the Tribunal's findings in fact, particularly at paragraph 25. On the basis of the facts found, the only conclusion open to the Tribunal was that the parties had agreed to settle at £1,000 and that the agreement fell within the provisions of s.203 (2) (e) of the Employment Rights Act 1996.
- The Tribunal had, Mr Hay submitted, erred in placing emphasis on its finding that normally, such a settlement would involve additional terms such as those to which I have referred. There did not need to be any other terms than those agreed in this case for there to be a binding settlement. Further, the Tribunal had erred in relying on what passed between Mr McBurney and Mr Reilly and Mr McBurney and Mr Kennedy, on and after 23 February. None of those matters could displace the agreement that had been reached on 20 February. There was no question of a subsequent contract between the parties. The conduct on the part of Mr Reilly and Mr Kennedy simply related to protecting their clients' position vis à vis the Tribunal. Mr Reilly could not know in advance what the schedule of loss that Mr McBurney referred to was going to say and his position in response to it was clear; a deal had been reached on 20 February and that, so far as the Respondents were concerned, was an end of matters. Nothing Mr Reilly did or said was inconsistent with that being his position. The Tribunal had not found that there was an ambiguous agreement so this was not a case where it was appropriate to look at the surrounding facts and circumstances. Nor should they have found that the agreement was ambiguous because it was not; it was clear.
- The reality that was plain from the Tribunal's findings was, submitted Mr Hay, that Mr Reilly had made an offer which he intended would create a binding contract if it was accepted, that the Claimant had accepted that offer, intending his case to settle on that basis but he, the Claimant, had subsequently, as the Tribunal found, "changed his mind". That finding alone showed that on Friday 20 February the Claimant had had the opposite state of mind, namely to agree to settle on the basis offered.
- Mr Hay referred to the authorities discussed in the "Relevant Law" section, in support of his submissions.
- For the Claimant, Mr McBurney submitted that the Tribunal was entitled to reach the conclusion set out in its judgment. He believed the Tribunal was entitled to find that Mr Reilly's offer was but an invitation to treat. That was consistent with his, Mr McBurney's, evidence.
- I pause to note that, Mr McBurney did not withdraw from acting for the Claimant when he, the Claimant, told him on 21 February, that he had changed his mind about accepting the £1,000. Mr McBurney indicated that he did not do so as the Claimant could not afford another solicitor and also that his view was that since no COT3 had been completed, Friday's acceptance could be withdrawn. I also note that Mr McBurney was a witness for the Claimant at the pre hearing review and gave evidence, in addition to representing the Claimant at that hearing, questioning other witnesses and making submissions on his behalf. These circumstances are unusual to say the least and I was surprised not only that Mr McBurney had thought it appropriate to carry on acting for the Claimant but that he did not appear to appreciate that there could be difficulties in him doing so.
- Mr McBurney said that he thought the findings about the subsequent actings of the solicitors and Mr Reilly were important. It had, he said, been open to the Respondents' representative to contact the Employment Tribunal on the Monday and ask them to sist the proceedings for settlement. He did not seem to accept that that was what Mr Kennedy had done notwithstanding the wording of his request to the Tribunal to which I have already referred. Mr McBurney submitted that the correspondence of 23 February was very important in showing that Mr Reilly had not intended to be bound by his offer on the Friday.
- Mr McBurney added that all the terms that would go into an ACAS brokered agreement needed to be agreed for s.203 (2)(e) to apply though he accepted that they did not need to be incorporated into a form COT3. It was, he said, highly relevant that the ACAS officers who gave evidence did not think that a binding agreement had been reached. They were very experienced in handling settlements like this and their views should be adhered to. It would be an injustice to bar the Claimant from his claim.
**Discussion and Decision **35. At paragraph 25 the Employment Judge made a clear finding that Mr Reilly made an offer of £1,000 directly to Mr McBurney. At paragraphs 19 and 25, she found that Mr McBurney asked the ACAS officer, Mr Bottomley, to relay the Claimant's acceptance of the offer to Mr Reilly, which he did. Whilst he did so by leaving a message on his answering machine rather than speaking to him directly, that does not matter. Mr Reilly picked up the message on Friday 20 February; communication of the Claimant's acceptance was, accordingly, complete that day.
- In these circumstances, I am firmly of the view that there was only one conclusion open to the Employment Judge and it was that a contract to settle the Claimant's claim was concluded on 20 February. The offer made by Mr Reilly on that date was straightforward and clear. His client was offering to pay £1000 to bring the litigation to an end. There was no basis for interpreting it as nothing more than a willingness to negotiate which is what the Employment Judge did by finding that it was but an invitation to treat. I do not consider that there was, on the facts found, any room for interpreting his position as being other than that he intended its content to be binding on his client if it was accepted. I would add that the terms in which it was made were such as to give rise to the obvious implication that payment of £1,000 was to be in full and final settlement of the Claimant's claim.
- As commented above, a contract to bring an end to litigation may require nothing more than that a payment to be made by one party to the other is agreed upon. The Claimant's claim for unfair dismissal was such a claim. What he was looking to get out of the claim was payment of compensation and compensation was offered and agreed on. The essentials of the requisite settlement contract were met.
- The Tribunal appear to have fallen into error in the three respects identified above. I take first the conclusion at paragraph 51 that "other terms still had to be agreed before the agreement would be binding." At its highest for the Claimant, the evidence demonstrated that there was an expectation on Mr Reilly's part that additional terms would be agreed. Reference is made, at paragraph 22 to the possibility of specification of a timescale for payment, and that payment would be in full and final settlement "with exclusions for personal injury claims and pension rights." That is, there might have been a further agreement between parties about these matters. I would, however, observe that since payment within a reasonable time would be implied as would payment being in full and final settlement of the Claimant's claims and it is difficult to see that there was any question of personal injury or pension loss claims featuring in this particular claim, these matters did not obviously require to be the subject of separate agreement or recorded in a document. More importantly though, the possibility of a further agreement about these matters does not in any way detract from the fact that a clear agreement to settle at £1,000 had been reached on Friday 20 February. As discussed above, parties are not limited to a single contract and the fact that they could have entered into further agreements does not mean that they did not enter into an initial agreement regarding the essentials. This was not a case where the employer's offer was met with a qualified acceptance nor was it the case that Mr Reilly had made his offer conditional upon agreement to any other matters such as the possible terms referred to above.
- The Tribunal's first error is therefore, in summary, that it allowed the possibility of a further agreement about other matters to mislead it into thinking that there could not have been any agreement at all on Friday 20 February, notwithstanding the clarity of its findings at paragraphs 19 and 25.
- The Tribunal's second error was to regard the communications between parties on and after 23 February as somehow destructive of the agreement that was reached on Friday 20 February. There was, however, nothing in those communications that amounted to an agreement to vary or depart from that core agreement to settle the claim for £1,000. The most that could be said of them, from the Claimant's perspective, is that it looked as though it was possible that the Respondents might agree to vary that agreement given that Mr Reilly asked to see Mr McBurney's schedule of loss. That was entirely understandable. He was faced with Mr McBurney having told him that the Claimant was reneging on what had been agreed on the Friday. For all he knew, the Respondents might have been prepared to take a pragmatic view and enter into a new agreement about settling the claim. Far, however, from that being the response, the Respondents' position as intimated by Mr Reilly, was that the case had settled at £1,000. The Tribunal Judge should have recognised that once she had decided that Mr Reilly's evidence was to be believed and she had reached the clear conclusion about offer and acceptance that is set out in paragraphs 19 and 25, the matter was not open for revisitation. Mr Reilly had been accorded a certificate of credibility. There was no need to look at what happened in the ensuing weeks to see if he could be believed. Nor was the agreement reached other than perfectly clear. There was no question of ambiguity in the contract requiring to be resolved by a consideration of the surrounding factual circumstances. In short, the events of 23 February and thereafter were irrelevant.
- Finally, I turn to the Tribunal's conclusion in paragraph 52 that there was "no agreement under the auspices of ACAS". The Tribunal Judge thus appears to have approached matters on the basis that her jurisdiction would only be ousted if the settlement agreement had been brokered by ACAS. It is possibly a reference back to the ACAS officers who gave evidence that they thought no binding agreement had been reached because Mr Bottomley had not spoken directly to both parties. The Tribunal Judge appears to have overstated the statutory requirements. All that was required was that an ACAS officer had "taken action" under section 18 of the Employment Tribunals Act 1996, namely, that he had, in some way, endeavoured to promote settlement of the claim. The Tribunal's finding that Mr Bottomley had communicated the Claimant's acceptance was enough to satisfy that requirement. It mattered not that a COT3 agreement might also, thereafter, have been entered into with the assistance of ACAS. Mr Bottomley's views were, in all the circumstances, whilst no doubt held in good faith, irrelevant to the issue of law that the Tribunal Judge had to determine.
- In summary, I am satisfied that the submissions advanced on behalf of the Respondents were well founded. This case settled on 20 February 2009. The terms of that settlement were that the Respondents would pay to the Claimant the sum of £1,000 in full and final settlement of his claim. A reasonable time having now elapsed for payment, that sum is now due and payable.
**Disposal **43. For the reasons explained above, I will pronounce an order upholding the appeal and substituting for the judgment of the Employment Tribunal a finding that the Claimant's claim having settled, the claim is dismissed.
Published: 08/10/2010 10:09