Pump Court Chambers

Wilsons Solicitors LLP & Ors v Roberts [2018] EWCA Civ 52

Blog 12th February 2018
Ezra MacDonald

Did the EAT err in law in finding that a member of an LLP who acts “reasonably” in withdrawing his labour will not, as a matter of law, act wrongfully or in repudiatory breach of the LLP members’ agreement, and accordingly may be awarded losses flowing from a subsequent expulsion pursuant to the terms of the members’ agreement on grounds that the member withdrew his labour?

Did the EAT err in allowing an appeal against the ET’s decision to strike out the Claimant’s claim for post-termination losses when those losses were suffered as a result of an expulsion from the LLP which was not the subject of any plea of unlawfulness?

No and no, held the Court of Appeal in Wilsons Solicitors LLP & Ors v Roberts [2018] EWCA Civ 52.

The Claimant, a solicitor, had brought a claim for whistleblowing against the Limited Liability Partnership of which he had been a member, and had claimed in part that there had been victimisation (during employment) and then a constructive termination of his membership of the Respondent LLP. The part of the claim relating to constructive termination was struck out by the ET as having no reasonable prospect of success in light of the judgment in Flanagan v Lion Trust Investment Partners LLP and others [2015] EWHC 2171 (Ch) – which established, in short, that the common law doctrine of repudiatory breach is implicitly excluded by the way in which the mutual rights and duties of the members of LLPs are governed.

The EAT allowed the Claimant’s appeal, holding that the Claimant could claim compensation for post-termination financial losses even if lawfully expelled as a member, providing he could demonstrate that such losses were attributable to pre-termination unlawful detrimental treatment, and that this was a question of fact and judgment, and hence that the ET was not entitled to strike out that part of the claim.

The Court of Appeal agreed with the EAT. The fundamental basis of the exercise of the ET’s jurisdiction under s 49 ERA 1996 is that the compensation be “just and equitable”. The ET is “not in fact bound to apply principles of causation which are familiar to lawyers who are steeped in the common law.” (para 56). If the unlawful “victimisation” of the Claimant made his position untenable and led him to withdraw his labour, then it was at least arguable that the consequent likelihood of expulsion could attract compensation. Moreover, this was a question of fact, not of law. And although an unlawful act of unfair dismissal would not break the chain of causation in e.g. a discrimination case, the converse was not always true. Nor was the EAT’s decision inconsistent with Western Excavating v Sharp.

The Limited Liability Partnership’s appeal was therefore dismissed.

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