In X v Y Ltd, the EAT has held that legal advice privilege should be disapplied in relation to an e-mail sent by a lawyer to an employer client in which the lawyer advised how to ‘cloak’ an employee’s dismissal for making complaints of disability discrimination and asking for reasonable adjustments as a redundancy dismissal. In the EAT’s view, the advice crossed the high bar for establishing a strong prima facie case of iniquity capable of excluding the privilege that would normally apply to legal advice communications.
X was employed by Y Ltd from 30 January 1990 until his dismissal on 31 January 2017. He suffers from Type 2 Diabetes and Obstructive Sleep Apnoea. From 2011 there were concerns about his performance but X claimed that Y Ltd had subjected him to disability discrimination and/or failed to make reasonable adjustments. He submitted a claim to an employment tribunal on 14 August 2015 and raised a grievance on 2 January 2016, complaining of disability discrimination. A grievance hearing took place on 8 March 2016 and an outcome letter was received on 15 June 2016. In April 2016, Y Ltd announced a program of voluntary redundancy and at the end of October 2016 X was given three months’ notice of redundancy dismissal. However, around this time, an anonymous person sent X a print-out of an e-mail sent by A, a senior lawyer, to B, a lawyer assigned to Y Ltd. X’s interpretation of the e-mail was that it gave advice to Y Ltd on how to commit unlawful victimisation by using the redundancy programme as a cloak for dismissing him. Following the termination of his employment, X brought a second claim, alleging further disability discrimination, victimisation and unfair dismissal. As part of that claim, the employment tribunal had to decide whether X could rely on the e-mail or whether it was subject to legal advice privilege.
At a closed preliminary hearing an employment judge found that the e-mail was subject to legal advice privilege. The judge rejected X’s argument that the e-mail disclosed a ‘strong prima facie case of iniquity’ such as to exclude the privilege, relying on Barclays Bank plc v Eustice 1995 1 WLR 1238 and BBGP Managing General Partner Ltd v Babcock and Brown Global Partners 2011 Ch 296. The judge accepted Y Ltd’s characterisation of the e-mail as advising on how to handle a possible redundancy dismissal as part of a UK-wide process, acknowledging the risk that X might take legal action but pointing to the wider context as justification. Although the e-mail referred to ‘opportunities’, this was about reorganising the whole structure; in so far as it referred to X, it did no more than record advice that consideration could be given to applying the redundancy process to him, given the concern about his performance; and although it referred to ‘proceedings’ it was not clear that this was a reference to extant proceedings. The judge did not accept that giving advice about possible grounds for dismissal equated to advice on how to dismiss dishonestly or because of discrimination. The employment judge went on to find that, even if he was wrong on the interpretation of the e-mail, an allegation of discrimination was not enough to reach the high bar for iniquity capable of excluding legal advice privilege. X appealed to the EAT.
The EAT allowed the appeal. It disagreed with the employment judge on the proper interpretation of the e-mail. The key question was whether the advice simply pointed out the risk of claims if X were selected for redundancy or whether it went further and advised that redundancy could be used as a cloak for dismissing an employee who was troublesome because of his continuing allegations of disability discrimination. In the EAT’s view, if X were to be dismissed by proper application of a redundancy selection procedure, there would have been no need to write that ‘there is at least a wider reorganisation and process at play that we could put this into the context of’. Furthermore, there would have been no need to say ‘otherwise we risk impasse and proceedings with ongoing employment with no obvious resolution’. The EAT considered that these passages recorded advice that the redundancy situation could be used as a cloak for dismissing X to avoid his continuing complaints.
As for whether this established a ‘strong prima case of iniquity’, the EAT stated that, whereas advising a client how to commit fraud or breach of fiduciary duty would clearly be an iniquity, advising how to commit the tort of discrimination may be different in degree. 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’. In the EAT’s view, if the advice in the e-mail had gone no further than saying that X may be selected for redundancy but that Y Ltd would run the risk of a claim, that would not have reached the high threshold required to disapply legal advice privilege. However, properly interpreted, the e-mail recorded advice on how to cloak a discriminatory dismissal as dismissal for redundancy. There was thus a strong prima facie case that what was advised was not only an attempted deception of X but also, if persisted in, a deception of an employment tribunal in likely and anticipated legal proceedings. The advice therefore crossed the high bar of a strong prima facie case of iniquity. The EAT accordingly set aside the employment judge’s decision that the parts of X’s claim form that relied on the e-mail should be struck out.
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