England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM ORDER OF HIS HONOUR JUDGE
GUY ANTHONY
(Brighton County Court)

		Royal Courts of Justice Strand London WC2 Tuesday, 2nd October 2001

1. LORD JUSTICE MUMMERY: This is an appeal with the permission of a single Lord Justice against the decision of His Honour Judge Anthony, sitting in Brighton County Court, on 15th June 2000. He made an order, on the hearing of a preliminary issue in proceedings for damages for breach of contract, striking out from the defence the first two paragraphs, in which it was pleaded that the whole of the claimant's claim was an abuse of process and/or barred by principles of res judicata and/or issue estoppel.
2. The factual background to the dispute, which has given rise to the appeal, can be briefly stated. The claimant is Dr Sajid. The defendant is the Sussex Muslim Society. Under a written contract dated 30th October 1981 Dr Sajid was employed by the Sussex Muslim Society ("the Society") as both its director and as the imam of the mosque.
3. A dispute arose when on 16th January 1998 the society dismissed Dr Sajid. The society's case was that he was dismissed on the ground of redundancy. Dr Sajid took a different view, which led him to start proceedings in what was then called the Industrial Tribunal, now known as the Employment Tribunal ("the Employment Tribunal"). In the IT1 form submitted to the tribunal by Dr Sajid on 25th March 1998 he made claims for breach of contract, redundancy payment and unfair dismissal. In box 10 of the form, in which the claimant is invited to give details of his complaint, Dr Sajid explained the circumstances in which he had been employed and in which he had been dismissed. He set out the relevant provisions of his contract of employment and alleged that he was entitled to damages for breach of contract, as well as to remedies for unfair dismissal. He stated that his claim for damages for breach of contract totalled £72,053.12. This was added at the bottom of the claim, which was broken down into various components of payment in lieu of holiday entitlement, six months' notice of termination, one months' pay for each year of service, consultation period of 60 days and two months' pay for each year worked in respect of redundancy payment. He added:

"This claim is made recognising that the Industrial Tribunal has jurisdiction up to a claim of £25,000 in relation to breach of contract claims and I, therefore, reserve the right to rely upon the findings of the Tribunal as res judicata in proceedings in another Court to recover the balance."

4. I pause to comment at this early stage that Dr Sajid put the society on notice that he recognised that he was making a claim for damages at common law in excess of the limited jurisdiction conferred on Employment Tribunals in respect of common law claims.
5. The next event was that a writ was issued in the High Court on 30th October 1998. The claim, as set out in more detail in the statement of claim served on 2nd November 1998, was for breach of contract. It was alleged that Dr Sajid had suffered loss totalling £65,074 under paragraph 11 of the statement of claim and a further £8,343 under paragraph 13 of the statement of claim. Interest and general damages were also claimed. On 22nd April 1999 Dr Sajid's solicitors wrote the following letter to the regional secretary of the Employment Tribunal at Southampton:

"We write further to your letter of 13th April regarding the listing of tribunal proceedings. We have no hesitation about the tribunal re-listing the Applicant's claim for unfair dismissal and statutory redundancy payment. However, in the light of the fact that a High Court Writ has now been issued in respect of the breach of contract claim we formally request that the breach of contract claim in the tribunal is now withdrawn if you agree to this request this may assist with the re-listing purposes."

6. Shortly afterwards, on 6th May 1999, the chairman of the Employment Tribunal at Southampton signed a one sentence decision:

"The breach of contract claim is dismissed on withdrawal by the applicant."

7. On 22nd July 1999 the claims of Dr Sajid in the Employment Tribunal were settled on terms recorded in a unanimous decision signed by the chairman on 23rd July. Under those terms the society agreed to pay a sum of £6,500 to Dr Sajid in full and final settlement of all the claims and matters before the Employment Tribunal. An order was made that the remaining claims contained within the originating application of the tribunal be dismissed upon withdrawal by the applicant.
8. The decision of the County Court judge in the present case came about as a result of what was pleaded in the defence served by the society on 9th September 1999, following the settlement of the Employment Tribunal proceedings. It was the contents of paragraph 1 and paragraph 2 of that defence that gave rise to the preliminary issue on which His Honour Judge Guy Anthony ruled. The paragraphs read as follows:

"1. As to the whole of the claimant's claim herein the defendants will aver that the same is an abuse of process and/or is barred by the principles of res judicata and/or issue estoppel.

Particulars

(a) On 25th March 1998 the claimant issued a claim for damages of `breach of contract, redundancy payment, unfair dismissal' under claim number 3101204/98 in the Employment Tribunal.

(b) On 16th July 1998 the Industrial Tribunal recorded that the issues in the case were as follows:

(i) Whether the claimant's dismissal was by reason of redundancy;

(ii) If not, was the claimant's dismissal for a reason falling within the Employment Rights Act 1996 Section 98 (1) (b);

(iii) In either case, whether the dismissal was nonetheless unfair;

(iv) What (if any) were the terms of the claimant's contract of employment relating to the matters set out in paragraph 11 (i)-(iv) of the originating application.

(c) On 5th October 1998 the Industrial Tribunal ordered that `on the application of the applicant all three claims contained in the Originating Application presented to the Tribunal on 1st April are stayed'. This was as a result of the claimant's application for stay pending the issue of the High Court proceedings currently before this Honourable Court and set out in the written statement of claim to which the Defendants answer herein.

(d) On 30th October 1998 the writ within these proceedings was issued.

(e) On 22nd April 1999 the solicitors acting for the Claimant, namely Messrs Burstows, wrote to the Employment Tribunal stating `We have no hesitation about the Tribunal re-listing the applicant's claim for unfair dismissal and statutory redundancy payments. However, in light of the fact that a High Court writ has now been issued in respect of the breach of contract claim we formally request that the breach of contract claim in the Tribunal is now withdrawn. If you agree to this request this may assist with the re-listing purposes'.

(f) As a consequence of this letter on 6th May 1999 the claimant's claim for breach of contract was dismissed upon withdrawal by the Employment Tribunal.

(g) On 22nd July 1999 before the Employment Tribunal sitting at Brighton, the claimant compromised his claim for unfair dismissal and redundancy payment for the sum of £6,500. Upon reciting the terms of the agreement and the claimant withdrawing his claims for unfair dismissal and redundancy these were dismissed by the Tribunal.

2. In the circumstances the defendants say that all the claimant's claims, including the claim for breach of contract contained herein have been concluded by the orders and compromise hereinbefore set out. In the circumstances the claimant cannot [now] seek to litigate the matters which have been concluded before the Employment Tribunal as the facts and matters that would have to have been decided by the Tribunal are substantially the same as those which are before this Honourable Court and, in any event, all such claims are now dismissed."

9. On the preliminary issue whether those two paragraphs contained an effective plea of res judicata, the County Court judge made the order under appeal. By paragraph 1 of that order he ordered that paragraphs 1 and 2 of the defence be struck out and he refused permission to appeal, which was subsequently granted by this court. The judge came to his decision in a careful and clear judgment. A number of cases were cited to him of which the most pertinent was the decision of this court in Staffordshire County Council v Barber [1996] ICR 379. It concerned the application of the doctrine of cause of action estoppel to decisions of Employment Tribunals which had been made without hearing evidence or argument for the determination of the merits of a claim. That was a claim for redundancy payments. The judge distinguished the case of Staffordshire County Council v Barber and a number of others asbeing cases of express abandonment of claims, or part of claims on the basis that they could not be successfully pursued in the tribunal or court in which the proceedings had been commenced. The judge said that that was not the case here. The position of the claimant had been expressly reserved. The claim in the Employment Tribunal had been withdrawn because the Employment Tribunal did not have sufficient jurisdiction to award the full amount that Dr Sajid was claiming.
10. On this appeal Mr Rogers, on behalf of the society, submits that the principle of cause of action estoppel does apply so as to prevent Dr Sajid asserting in these proceedings a cause of action for breach of contract against the society. He says there were earlier proceedings in the Employment Tribunal between the same parties and involving the same subject matter. Authority has made it clear that the principle of cause of action estoppel applies to decisions in Employment Tribunal proceedings. He points to the order made in this case on 6th May 1999, submitting that the effect of that order was to create an estoppel because the claim, after consideration by the tribunal, had been dismissed on Dr Sajid withdrawing it. That, he points out, is similar to the order made in Staffordshire County Council v Barber and held by the Court of Appeal to create an estoppel, which prevented the claimant from making a fresh application for redundancy payments to the Employment Tribunal, having previously had the claim dismissed.
11. Mr Rogers submits that the order of the chairman was a judicial determination. So it attracts the doctrine, even though there was no evidence or argument on the legal and factual merits of the case before the chairman made the order. He says that Dr Sajid could have prevented this situation arising by asking for a stay of the proceedings in the Employment Tribunal instead of a dismissal of them on withdrawal. He did not ask for a stay. Having asked for a dismissal on withdrawal, he was faced with the principle applied by the Court of Appeal in Barber. The effect was that the cause of action he may have had for breach of contract merged in the order made by the chairman of the Tribunal. That cause of action cannot be re-asserted by fresh proceedings in the High Court or the County Court.
12. He submits, finally, by reference to Barber that this case is indistinguishable from that case, which is binding on this court. Although these submissions have been clearly and concisely advanced, I have no hesitation in reaching the conclusion that this appeal should be dismissed.
13. I agree with the judge, essentially for the reasons given by him, that paragraphs 1 and 2 of the defence should be struck out. I first approach this matter on the basis of principle. The underlying policy of cause of action estoppel and related doctrines, which are usually classified under the heading res judicata, is that of finality in litigation and the avoidance of the multiplicity of proceedings. Save in special circumstances, it is contrary to public policy and may be an abuse of the process of the court to attempt to re-open in new proceedings a case which has already been litigated and finally determined by a court or tribunal in proceedings between the same parties or issues which could have been litigated properly between the parties in relation to the subject matter of the earlier litigation. This doctrine embodies, in my view, a principle of justice, not just policy. In the absence of special circumstances it is unjust for a party who spent time and money in obtaining a final determination of a claim or an issue in a claim to be faced with fresh proceedings from the other party seeking to re-litigate the same cause of action or the same issue.
14. It does not seem to me that that is what Dr Sajid seeks to inflict on the society in this case. What he is seeking does not, in my view, either offend the policy or breach the principle of justice. It is true that Dr Sajid made a claim for damages for breach of contract against the society in the proceedings in the Employment Tribunal, that that claim was dismissed by the Employment Tribunal and that he is now making the same claim against the society in these proceedings. At first sight those features may be thought to attract the doctrine of cause of action estoppel. But it is necessary to examine in more detail the circumstances of, and the purposes for which, the order of 6th May 1996 was made. The legal effect of any event must be considered in its particular factual context. I refer to the passage that I have already quoted from the IT1 showing that it was always contemplated by Dr Sajid that there may have to be other proceedings in another forum, because of the amount of damages he was claiming and the limited nature of the Employment Tribunal's jurisdiction.
15. The Employment Tribunal is a creature of statute exercising exclusive jurisdiction over causes of action, such as unfair dismissal and sex, race and disability discrimination. It has only recently acquired a limited jurisdiction over common law claims, such as breach of contract or wrongful dismissal brought by an employee against a former employer. Claims in excess of the limit of £25,000 in the Employment Tribunal must still be brought in the ordinary courts. There is, so far as counsel have been able to ascertain, no procedure in the Civil Procedure Rules or the Employment Tribunal Regulations providing for the transfer of claims from the Employment Tribunal to the ordinary courts or vice versa. There is no option but to start a fresh case or to make a fresh application in order to ensure that proceedings are brought for determination in the appropriate forum. The order of 5th May 1999 was made in this context.
16. Far from abandoning his claim for breach of contract, Dr Sajid was, in view of the quantum of his claim, seeking to preserve his full rights, having started proceedings in the High Court for same cause of action. He did so because of the limited nature of the jurisdiction of the Employment Tribunal over such claims. The order was made for the purposes of avoiding duality or multiplicity of proceedings, which would have been open to the objection of embarrassing duplicity, if they had not been determined in the way that they were by the Employment Tribunal. The order of 6th May was not, and could not have been, intended either by the parties or by the tribunal to constitute a final and binding determination dismissing Dr Sajid's claim. Its purpose was to enable his claim to be pursued and determined in a court which had the jurisdiction which the Employment Tribunal lacked.
17. The claim was removed from the Employment Tribunal to the High Court. That was a different forum. It was not re-litigation of a cause of action, which had been litigated and finally determined in the Employment Tribunal.
18. The consequence of upholding the pleas in paragraphs 1 and 2 of the defence would be unjust. It would not expose the society to any injustice but it would inflict injustice on Dr Sajid, because it would prevent him having his claim determined on its merits, which it had not been in the Employment Tribunal. The consequence of this appeal succeeding would be that Dr Sajid could not pursue his claim in the Employment Tribunal, because of the order of 6th May 1999, and he could not pursue his claim in the High Court or the County Court because - Mr Rogers say - of the effect of the order made on 6th May. So by a neat, technical swipe the society would have eliminated a substantial claim without any tribunal or court having heard any evidence or argument about it. That seems to be a decision to which this court is not driven by any principle of cause of action estoppel.
19. So far as authority is concerned, I have no doubt that the position is this. There is no authority binding on this court which prevents it reaching the decision that the judge was correct in his judgment. The best case that Mr Rogers cited was Staffordshire County Council v Barber. That case is distinguishable from the present. In that case the applicant withdrew her application for redundancy payments in the Employment Tribunal. The reason why she withdrew it was that at that time it was considered that she was unable to satisfy the qualifying criteria for bringing such a claim. That was the state of law as it was then understood to be in relation to part time workers, that she had no locus to bring it and the tribunal had no jurisdiction to entertain it. It was only after the later decision of the House of Lords in the Equal Opportunities case that the rights of part-time workers were realised to be different than they had previously thought to be. It was in those circumstances that Mrs Barber sought to bring fresh proceedings in the Employment Tribunal. They were the same proceedings she had brought previously, relying on the same facts and making the same claim against the same former employer. The position was that she had abandoned the previous proceedings on the basis that she did not think they could succeed. There was no intention on her part at that time to bring any fresh proceedings, either in another court or in the Employment Tribunal. They were abandoned because of the view taken as to the legal sustainability of them. That seems to be a different set of background circumstances to the order of the Employment Tribunal than existed in this case.
20. As I have said, the order was made on 6th May because it was intended to pursue the common law claims in a court with a jurisdiction which the Employment Tribunal lacked in relation to the amount. There are no other authorities which bear on this point.
21. The County Court judge was correct to strike out these two paragraphs. I would dismiss the appeal.
22. LORD JUSTICE LAWS: I entirely agree. As my Lord has said, the policy which justifies the doctrine of cause of action estoppel is the need to prevent multiplicity of legal proceedings being raised upon the same issue. If this court were to allow this appeal, far from supporting that policy we should undermine it. The respondent's common law claim in the tribunal (being withdrawn) was, on 6th May 1999, dismissed upon the very premise and for the very reason that it should not be litigated there but in another forum. That dismissal thus supported the policy underlying the cause of action estoppel to which I have referred.
23. Mr Rogers' argument, if accepted, would entail the conclusion that a party acting as the respondent did here would find himself trapped by the very doctrine to which he had himself been loyal, forever barred from having his claim for damages over £25,000 litigated at all. If the law produced such a result we should be ashamed of it. But it does not. We do not allow salutary principles to be corrupted into instruments of injustice.
24. LORD JUSTICE MUMMERY: The appeal is dismissed.
Order: Appeal dismissed with detailed assessment of costs.