Adrian Arvunescu v Quick Release (Automotive) Limited

The Court of Appeal interpreted a confidential COT3 settlement to determine whether it precluded a later claim of victimisation under the Equality Act 2010 (notably section 112), brought after termination of short-term employment. The court applied the objective approach to contractual construction, adopting the principles in Investors Compensation Scheme and BCCI v Ali, and gave words their natural and ordinary meaning in context. The relevant clause released "all or any" claims "arising directly or indirectly out of or in connection with" the employment and was held wide enough to include an allegation that the former employer assisted a related company to victimise the claimant because of a protected act arising from his employment. The Court rejected arguments that authorities on causation or the decision in Howard compelled a narrower construction limited to direct post-employment acts or to conduct giving rise to causes of action completed after the settlement.

Background and facts:

• The appellant was employed by the respondent from 4 May to 6 June 2014. On termination he brought race discrimination proceedings. On 1 March 2018 the parties entered into a confidential COT3 settlement. The COT3 provided for full and final settlement of "all or any" claims arising "directly or indirectly out of or in connection with" the claimant's employment, and expressly referred to claims under the Equality Act 2010 and other employment statutes.
• In May 2018 the appellant issued a fresh claim alleging victimisation: he said he had applied in January 2018 for a post with QRG, a German subsidiary of the respondent, was refused on 19 February 2018, and that the respondent had knowingly assisted QRG to victimise him because he had previously brought a discrimination claim.

Procedural history:

• The employment tribunal struck out the victimisation claim as within the scope of the COT3 and having no reasonable prospect of success in any event.
• The Employment Appeal Tribunal allowed the appellant's challenge to the no-real-prospect finding but upheld the tribunal's construction of the COT3, concluding the victimisation claim fell within the settlement. Appeal to the Court of Appeal followed.

Issues for decision:

1. Whether, on objective construction, the COT3 settled the appellant's later claim that the respondent had helped a third party to victimise him (a claim under section 112 of the Equality Act 2010).
2. Whether the agreement was ambiguous or should be interpreted narrowly in favour of the weaker party; and whether authorities on causation or Howard required a different outcome.

Court's reasoning and conclusion:

• The court applied the objective approach to contractual construction and considered the clause as a whole in its factual context. The words used were wide, expressly covering claims "arising indirectly" and claims of which the claimant might be unaware at the date of the agreement.
• The court held that the victimisation claim was connected to the previous employment because the protected act (bringing the discrimination claim) derived from the appellant's treatment while employed. That factual link meant the later refusal by QRG (allegedly engineered or assisted by the respondent) arose indirectly in connection with the employment and therefore fell within the COT3 wording.
• The court rejected reliance on causation authorities and on Howard as forcing a narrower construction: Howard dealt with claims arising from conduct occurring after the settlement and was concerned with whether the settlement was meant to cover future causes of action, which was not this case. The court concluded the settlement was intended to resolve existing claims as at 1 March 2018.

Result: The appeal was dismissed; the COT3 was construed to encompass the victimisation claim.

The appeal is dismissed. The Court of Appeal held that, on objective construction of the COT3 settlement, its wide wording covered claims "arising indirectly or in connection with" the claimant's employment and therefore included the appellant's section 112 victimisation claim based on an alleged refusal of a post by the respondent's subsidiary. Authorities relied upon by the appellant (including causation cases and Royal National Orthopaedic Hospital Trust v Howard) did not require a narrower construction.

Appeal from the Employment Appeal Tribunal (Mr Michael Ford KC sitting as a deputy High Court judge) EA-2019-000698-RN (formerly UKEAT/0770/19/RN), which itself arose from a preliminary decision of the Employment Tribunal striking out the victimisation claim as within the scope of the COT3. This Court ([2022] EWCA Civ 1600) dismissed the appellant's appeal.