An employment tribunal had erred in concluding that a claimant's refusal of an offer of settlement was so unreasonable that it broke the chain of causation.
The appellant (K) appealed against an award of compensation and a decision that she had waived privilege in relation to without prejudice settlement negotiations.
K had successfully brought proceedings against the respondent (B) for unfair dismissal, sex discrimination and disability discrimination. She complained that B's medical expert had acted unprofessionally by referring to B's offer of settlement during his meeting with her, and in his medical report. B's solicitor sent a redacted version of the report to K, but K included the full report and a note of her meeting with the expert in the bundle of documents lodged at the tribunal. An employment judge concluded that she had waived privilege in relation to settlement negotiations, and therefore reference could be made to them during the remedy hearing. The tribunal found that K should have accepted B's offer of £75,000. It concluded that her refusal of the offer amounted to a failure to mitigate her loss, and no loss of earnings was awarded after the date of the offer. K was awarded approximately £45,000. Her own expert had concluded that her medical symptoms would resolve two to three years after resolution of the case.
HELD: (1) K's purpose in seeking to put the note before the tribunal at the remedy hearing was to advance her case that B's expert had behaved unprofessionally in his dealings with her. In seeking to rely on his comments on B's offer, K had deliberately waived the privilege which attached to the offer. B was entitled to accept that waiver and to rely on the whole of the negotiations insofar as they were relevant to the question of remedy, Somatra Ltd v Sinclair Roche & Temperley (No.1)  1 W.L.R. 2453 applied. The judge had been entitled to conclude that K's disclosure of the full note was not a mistake, particularly when the point had been clearly flagged up by B's solicitor when she sent K the redacted report (see paras 14-19 of judgment). (2) The tribunal had not explained why it reached the conclusion that K acted so unreasonably in refusing B's offer that the chain of causation was thereby broken, which was a high hurdle to overcome, McKew v Holland & Hannen & Cubitts (Scotland) Ltd  3 All E.R. 1621 considered. The offer had to be seen in context. K had put a counter-offer of £85,000 which was not accepted, but further negotiations culminated in B's highest offer of £200,000 in the week prior to the remedy hearing. Against the background of a schedule of loss, settled by counsel, totalling over £489,000 it seemed legally impermissible for any tribunal to find that refusal of the offer of £75,000 was so unreasonable as to terminate the loss otherwise flowing from B's act of dismissal. Even if it was unreasonable to reject the offer, termination of the proceedings at that date would not have brought about K's instant recovery, given the prognosis of her own expert. The tribunal had also been critical of K's single-minded devotion to litigation as a block to her recovery. In the absence of a wholly unreasonable refusal to countenance settlement, K was perfectly entitled to pursue her remedy for the unfair and discriminatory treatment she had received at B's hands. It was well-documented in ordinary personal injury cases that litigation might contribute to the prolongation and possible exacerbation of a claimant's medical condition. Provided the condition was genuine, the respondent had to take its victim as it found her. The issue of remedy was remitted to a fresh tribunal for determination, Sinclair Roche & Temperley v Heard (No.1)  I.R.L.R. 763 considered (paras 21, 25, 29).
Appeal allowed in part