EAT: email was not covered by legal professional advice privilege because of the principle of iniquity (X v Y Ltd [UKEAT/0261/17])
In the case of X v Y Ltd [UKEAT/0261/17], the Claimant (who had made claims of disability discrimination and victimisation in the Employment Tribunal) won his appeal at the Employment Appeal Tribunal when they held that an e-mail describing how a redundancy process could be used to dismiss him was not covered by legal professional privilege because of the principle of iniquity.
The facts in X v Y Ltd
X (the ‘Claimant’) was employed by the Y Ltd (the ‘Respondent’) as a solicitor from 30 January 1990 until his dismissal on 31 January 2017. The Claimant suffered from Type 2 Diabetes and Obstructive Sleep Apnoea. From 2011 there were ongoing concerns about the Claimant’s performance at work. The Claimant claimed that measures taken by the Respondent amounted to disability discrimination and/or a failure to make reasonable adjustments. The Claimant submitted his first claim to the Employment Tribunal (the ‘ET’) on 14 August 2015. On 2 January 2016 he raised a grievance. In both he asserted that he had been subjected to disability discrimination. A grievance hearing took place on 8 March 2016 and an outcome letter was received on 15 June 2016.
From April 2016 onwards the Respondent announced a program of voluntary redundancy. Having been unsuccessful in applying for certain roles, the Claimant was placed in a “redundancy consultation process”. On or about 19 May 2016 the Claimant overheard a conversation in the Old Bank of England public house on Fleet Street. The conversation was the subject of a claim of legal professional privilege. The Claimant gave evidence that a group of professionally dressed people including two women in their 30s or 40s came into the pub. One of the women mentioned dealing with a complaint by a senior lawyer at the Respondent. The woman had mentioned that a lawyer at the Respondent had brought a disability discrimination complaint. The woman said that there was a good opportunity to manage the Claimant out by severance or redundancy as there was a big reorganisation underway as a result of the Respondent’s acquisition of another company.
The overheard conversation in the Old Bank of England pub was relied upon by the Claimant to interpret an email which he was sent anonymously in the last week to ten days of October 2016. The Claimant was sent a print out of the email in the post. The email was marked “Legally Privileged and Confidential”. The anonymous sender had added a handwritten note to the Claimant at the bottom of the email. The email was sent on 29 April 2016 by A, a senior lawyer, to B, a lawyer assigned to the Respondent. The Claimant claimed that the e-mail contained advice on how to commit unlawful victimisation by seeking to use (and ultimately using) the redundancy/restructuring programme as a cloak to dismiss the Claimant. As such, the Claimant submitted it was not protected because it fell foul of what is called the iniquity principle. Pursaunt to the iniquity principle legal professional privilege may be disapplied where it is intended to act as a cloak for a crime or fraud. The Respondent’s position was that even if this interpretation of the e-mail was true, which it denied, it did not fall within the ambit of iniquity and was therefore privileged. The Respondent terminated the employment of the Claimant allegedly by reason of redundancy by three months’ notice ending on 31 January 2017. The Claimant submitted his second claim to the ET on 3 March 2017 alleging further disability discrimination, victimisation and unfair dismissal.
The decision of the Employment Tribunal
The ET held that the e-mail dated 29 April 2016 contained legal advice aimed at avoiding, not evading possible legal action and was therefore privileged. They went on the hold that that the e-mail did not disclose a prima facie case of iniquity. With regards to the conversation in the pub, the ET held that to qualify as an iniquity, the conduct must be akin to fraud. Whilst discrimination needed to be considered seriously, it was a tort and was therefore not excepted by the iniquity principle.
The decision of the Employment Appeal Tribunal
The Claimant appealed to the Employment Appeal Tribunal (the ‘EAT’) on two grounds. Firstly, he claimed that the ET had erred by failing to rule that there was a strong prima facie case that the e-mail recorded advice for the purpose of victimising or discriminating against him. He argued that the e-mail contained advice on how to seize the opportunity of a redundancy exercise to dismiss the Claimant. The redundancy exercise, if done carefully, could be used as a cloak to achieve this. The Claimant submitted that the Respondent had already formed a wish to terminate his employment and pointed out that he had lodged his first ET1 claiming disability discrimination. The advice recounted in the email gave advice that it was worth considering making the Claimant redundant in the wider exercise or face an impasse and proceedings with no obvious resolution. He also submitted that the email did not record genuine advice on redundancy. There were two other lawyers at the level of the Claimant and there was no mention of them but only of “the individual”, obviously referring to the Claimant. If advice had been given on a genuine redundancy selection exercise it was curious that no mention was made of others who may be selected.
The EAT agreed with the Claimant and held that the e-mail could be interpreted as recording legal advice that the genuine redundancy exercise could be used as a cloak to dismiss the Claimant to avoid his continuing complaints and difficulties with his employment which were said by him to be related to his disability.
The Claimant’s second ground of appeal was that the ET had erred in holding that victimising or discriminating against him by dismissing him was insufficiently serious to be covered by the iniquity principle.
The Respondent’s argued that there was a difference between disguising a breach of a fiduciary duty (which would be covered by the iniquity principle) and a breach of mutual trust and confidence in an employment relationship (which, they argued, was a lesser category of wrong). The EAT disagreed. They held that if the advice in the email of 29 April 2016 had gone no further than “you may select the Claimant, an employee with a disability, for redundancy, but you run the risk of a claim by him” it would not have reached the high threshold required to disapply legal advice privilege. However, the email of 29 April 2016 recorded advice on how to cloak a dismissal for redundancy dismissal of the Claimant for making complaints of disability discrimination and for asking for reasonable adjustments which will continue if there is “ongoing employment”. A strong prima facie case had been established that what was advised was not only an attempted deception of the Claimant but also, if persisted in, deception of an Employment Tribunal in likely and anticipated legal proceedings. The email did not record any advice on neutral selection criteria for redundancy. It concentrated exclusively on how the redundancy could be used to rid the Respondent of ongoing allegations of discrimination by the Claimant and of underperformance which he stated are related to his disability and failure to make reasonable adjustments.
Both aspects of the Claimant’s appeal were upheld.
Our solicitors’ views on the case of X v Y Ltd
Sacha Barrett, a Senior Associate in the employment department at Redmans, made the following comment on the case: “This case potentially widens the scope of the iniquity exception which is worrying for solicitors and their clients. However, it should be remembered that normally the employee will not have seen the relevant legal advice and without it, it remains incredibly hard for a claimant to establish a strong prima facie case of iniquity. So, whilst the hurdle of establishing iniquity in employment claims, even if lowered as a result of this decision, is unlikely often to be cleared.’
The decision of the Employment Appeal Tribunal in UKEAT/0261/17 can be found here.