The Court of Appeal has held that an email containing advice from an in-house lawyer on redundancy was not, as the EAT had found, a cloak for dismissal on the basis of discrimination (Curless v Shell International Limited  EWCA Civ 1710).
The Court of Appeal agreed with the Employment Tribunal that the advice given “was the sort of advice which employment lawyers give ‘day in, day out’ in cases where an employer wishes to consider for redundancy an employee who (rightly or wrongly) is regarded by the employer as underperforming.” This was, therefore, not advice to act in an underhand or iniquitous way.
The decision leaves open the question whether the iniquity principle, which prevents privilege from applying in some circumstances, is confined to situations involving dishonesty, or extends more widely to other circumstances which are contrary to public policy, and whether that includes the tort of discrimination.
The differing interpretations of the key email in this case demonstrate the importance of employment law advice being drafted clearly, so that there is no doubt that the advice being given is as to the options available to an employer (along with the associated risks) and cannot be misinterpreted as advice on how to “cloak” a dismissal on a discriminatory basis as something else. This is particularly so given the current uncertainty over the scope of the iniquity principle.
The case is also of interest in the Court of Appeal refusing to grant an anonymity order, even though the hearing before the Employment Tribunal was a closed hearing and an anonymity order was made by the EAT. The Court of Appeal also quoted from the email in issue, rejecting suggestions that the judge hearing the substantive dispute might be tainted by knowledge of it, commenting that Judges are well used to having to exclude from their minds evidence which is inadmissible. It is not clear, however, whether the court was aware that two lay members will also hear the case and they may be less experienced in doing so.
This is the latest in a number of recent decisions emphasising the importance of open justice and the limited scope for derogations from it, and suggests anonymity orders, at Court of Appeal stage at least, will be difficult to obtain in most cases.
The claimant (C) was employed by Shell International Limited (S) as a lawyer until he was dismissed on 31 January 2017. During his employment, C made allegations of disability discrimination against S, including by bringing a claim in the employment tribunal in August 2015. From April 2016 S conducted a programme of redundancy.
On or about 19 May 2016 C overheard a conversation in a pub in which, as the Employment Tribunal found, a woman mentioned that a lawyer at S had brought a disability discrimination complaint and that there was a good opportunity to manage him out by severance or redundancy as part of an ongoing reorganisation.
In October 2016 C was sent, anonymously, a print out of an email dated 29 April 2016, which was marked “Legally Privileged and Confidential” and was sent from one in-house lawyer at S to another. C alleged that the email contained advice on how to commit victimisation by seeking to use (and ultimately using) the redundancy / restructuring programme as a cloak to dismiss him.
The email said the sender had spoken to S’s General counsel. It then went on to say:
“It looks as though there are both opportunities for SVS conversations (as parts of the wider UK announcements and done consistently with others) and opportunities for potential compulsory redundancies. On a strictly confidential basis they are looking at reducing the overall number of senior C & P lawyer roles they have, both as part of the integration and generally.
I told him this is their best opportunity to consider carefully how such processes could be applies [sic] across the board to the UK legal population including [C]. If done with appropriate safeguards and in the right circumstances, while there is always the risk he would argue unfairness/discrimination, there is at least a wider reorganisation and process at play that we could put this into the context of. I felt in the circumstances this is definitely worth considering even if there is the inevitable degree of legal risk which we would try to mitigate. Otherwise we risk impasse and proceedings with ongoing employment with no obvious resolution. Happy to discuss next week.”
In November 2016 S terminated C’s employment by three months’ notice, allegedly by reason of redundancy. In March 2017, C brought a second claim in the employment tribunal alleging further disability discrimination, victimisation and unfair dismissal. In broad terms, C alleged that S relied on a planned re-organisation of its in-house legal department as a pretext by which to terminate his employment by way of redundancy. He sought to rely on both the email and the conversation on the basis that any privilege in the communications was displaced by the iniquity principle.
Decision of Employment Tribunal
The employment judge found that privilege in the April email had not been displaced by the iniquity principle. He rejected C’s argument that, on its proper interpretation, the email recorded advice about how to dismiss C dishonestly or because of discrimination / victimisation. In any event, in the judge’s view, advice on the commission of the tort of discrimination would be insufficient to engage the iniquity principle. The Judge also considered that the conversation in the pub was protected by privilege.
Decision of the EAT
Slade J (sitting alone) allowed the appeal, finding there was a ‘strong prima facie case’ that the advice fell within the iniquity principle. In her judgment, the April email went beyond pointing out the risk of claims if C were selected for redundancy. It should be interpreted as recording legal advice that the genuine redundancy exercise could be used as a cloak to dismiss C to avoid his continuing complaints and difficulties with his employment which he alleged were related to his disability.
Slade J set out various categories of conduct with her views on whether they would or would not fall within the iniquity principle. She considered that advice to commit the tort of discrimination “may be different in degree” from advice on how to commit fraud or breach of fiduciary duty. However, depending on the facts, the discrimination advised “may be so unconscionable as to bring it into the category of conduct which is entirely contrary to public policy”.
She also considered that no privilege could be claimed in respect of the overheard conversation in the pub.
For further consideration of the EAT decision see our post.
Decision of the Court of Appeal
At the heart of the appeal was the meaning of the April email. The Court of Appeal rejected the interpretation placed on it by the EAT, agreeing instead with the interpretation of the Employment Tribunal.
The advice given was, it considered “the sort of advice which employment lawyers give ‘day in, day out’ in cases where an employer wishes to consider for redundancy an employee who (rightly or wrongly) is regarded by the employer as underperforming”. This was not therefore advice to act in an underhand or iniquitous way.
The court observed that a significant reorganisation of S’s legal department was underway in 2016 involving the loss of some jobs. S was seeking legal advice on whether and if so how C might be either offered voluntary severance or dismissed on the grounds of redundancy in the course of that reorganisation, these being the two “processes” mentioned in the email.
Legal advice was being given on how such processes could be applied to C “with appropriate safeguards and in the right circumstances”. The email left open what such safeguards or circumstances might be but there was nothing in the email to suggest that if further elucidation was sought and given it would have consisted of anything other than entirely conventional advice. The writer was considering two alternative risks. If the processes led to C being selected for redundancy, there was a risk that he would argue that the dismissal was unfair and discriminatory. On the other hand, if C was not considered for redundancy and remained in employment the tribunal claim made in 2015 would continue anyway and there was a risk of an impasse.
So far as the conversation in the pub was concerned, it could not be used, as C sought, as an aid to interpreting the email. It was some two weeks later and there was no evidence that the woman making the comments concerned had seen the email. As the court put it ‘”the advice in the email cannot be tainted by a conversation involving gossip from someone else after the event.”
Given the Court of Appeal’s view on the meaning of the April email, the scope of the iniquity principle did not arise for decision. The court stated that it was common ground between counsel that if the email had the meaning ascribed to it by the Employment Tribunal the iniquity exception had no application, whereas if it had the meaning ascribed to it by the EAT it was part of a dishonest plan. S had, however, sought to argue that the iniquity exception was confined to dishonesty and did not extend to other circumstances which are contrary to public policy, so the court set out the bare bones of the argument. S’s case was that whether or not privilege attaches to a communication must be clear at the time it is made. It cannot depend on a retrospective evaluative judgment by the court on whether the purpose of seeking advice is sufficiently iniquitous to prevent privilege from attaching to the communication. The Court of Appeal decision in Barclays Bank v Eustice  EWCA Civ 29, which decided the iniquity principle was not confined to cases of dishonesty, was not binding on the court as it was inconsistent with the later decision in the House of Lords in R v Derby Magistrates Court ex parte B  1 AC 487.
The court said this was an important argument which would no doubt have to be decided one day, but not in this case.
A final point of interest is that while the hearing before the Employment Tribunal was a closed hearing and the EAT made an anonymity order in respect of its proceedings (the case being referred to as X v Y) the Court of Appeal refused to make an anonymity order in respect of the appeal. The court pointed out that the general rule is that a hearing is in public and it will usually only be in an exceptional case that derogation from the principle of open justice will be justified. There was no such justification here. S argued that if it won the appeal (which it did) and the email was excluded from evidence, the mind of the judge hearing the substantive dispute in the Employment Tribunal might be tainted by knowledge of the email through learning about the hearing and determination of this appeal. The Court of Appeal considered this a plainly inadequate ground for qualifying the operation of the principle of open justice. Judges were well used to having to exclude evidence which is inadmissible from their consideration of the merits and their reasoning. It is not clear whether the Court of Appeal were aware that two lay members of the tribunal will also hear the case and they may not be as experienced as a judge in excluding inadmissible evidence from their minds.