Odu-Obi v Interserve Fm Ltd & Anor

A compromise agreement is construed narrowly where it restricts access to legal remedies. A term settling claims arising before the agreement does not, without clear words, prevent a party from relying on relevant past facts as context for a later claim or to rebut the other party’s explanation.

Finality and estoppel remain important. However, in an interlocutory setting they must yield where necessary to secure a fair trial. Evidence concerning settled matters must be confined to what is necessary and proportionate, and robust case management may require advance notice.

The Claimant had settled earlier employment claims under a COT3 agreement. She later brought claims for race and disability discrimination and constructive dismissal. The Respondents relied on events before the settlement to explain later treatment by reference to performance and ill-health.

At successive pre-hearing reviews, Employment Judge Hyde ruled that the Respondents could rely on that history but that the Claimant could not criticise the Respondents in relation to it. The Claimant appealed the later ruling. The central issues were the proper construction of the settlement agreement and whether the earlier unappealed rulings prevented reconsideration of that construction.

1. Appeal allowed. The Employment Judge erred by construing the COT3 agreement as preventing the Claimant from criticising the Respondents in respect of pre-settlement events.

2. An agreement restricting a party’s ability to litigate must be construed narrowly. This agreement barred claims for compensation or relief arising from matters before its signing. It did not bar reliance on historical facts. The references to non-derogatory and non-disparaging comments did not alter that conclusion. In context, they concerned comments akin to defamation rather than the use of evidence in proceedings.

3. The Claimant could therefore rely on earlier matters as broad context for her current claims where necessary and proportionate. If the Respondents relied on her past performance or ill-health as the true explanation for their later conduct, she had to be able to challenge that explanation by cross-examination or evidence. The current hearing was nevertheless not a retrial of the settled claims.

4. The failure to appeal the earlier pre-hearing ruling did not bar the appeal. The later decision was a fresh interlocutory consideration of a matter affecting the forthcoming trial. Further, estoppel serves justice as well as finality. It should not operate inflexibly where its effect would be to exclude otherwise admissible evidence and impede a fair trial.

5. Case management should rigorously confine the evidence to relevant matters and protect the Respondents from ambush. The Employment Tribunal could require proper advance notice, including through witness statements, before permitting such evidence.

• Employment Appeal Tribunal: Allowed the Claimant’s appeal and held that the COT3 settlement did not preclude relevant contextual or rebuttal evidence concerning pre-settlement events.
• Employment Tribunal: At pre-hearing reviews, Employment Judge Hyde had ruled that the Claimant could not criticise the Respondents in respect of events before the COT3 settlement, while allowing the Respondents to rely on such matters in their defence.