England and Wales Court of Appeal (Civil Division) Decisions

IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE EMPLOYMENT APPEAL TRIBUNAL
THE HONOURABLE MR JUSTICE SILBER (SITTING ALONE)
UKEAT/0382/10/SM

		Royal Courts of Justice Strand, London, WC2A 2LL
		13/03/2012

Lord Justice Elias :

1. This is an appeal against the judgment of the Employment Appeal Tribunal, Silber J presiding, in which he allowed an appeal against the judgment of the Employment Judge, Mrs Seymour, who had struck out certain of the claims of Mr Foster, the respondent to this appeal. The claims were struck out on two bases. With respect to some of the claims, she considered that they were res judicata, having been effectively determined by Employment Judge Salter in an earlier application. As to certain other claims, she considered that they amounted to an abuse of process within the principle enunciated in Henderson v Henderson (1843) 3 Hare 100.
2. Employment Judge Seymour had refused to strike out a claim for guaranteed pay under part III of the Employment Rights Act 1996. That was the subject of a cross appeal before the EAT, which was unsuccessful. There are also other claims pursued by Mr Foster which the employer accepts will have to be heard by the Employment Tribunal.
3. The employer, Bon Groundwork Limited, now appeals to this court against the determination of the EAT and seeks to restore the judgment of Employment Judge Seymour, save with respect to her ruling that the claim for guaranteed pay should be allowed to go ahead.

The relevant legal principles.

4. Since the relevant legal principles are not in dispute, I will set them out briefly. The principle of res judicata can be summarised as follows: where an issue has been litigated before a judicial body and determined as between the parties, it cannot be re-opened. It is binding as between them and the parties are estopped from re-opening it. The issue may be one of fact or of law. However, the parties are only bound by an issue which it was necessary for the court to determine in the earlier claim. In Arnold v. National Westminster Bank plc [1991] 2 AC 93 Lord Keith of Kinkel observed that the principle applies where:

"... a necessary ingredient in a cause of action has been litigated and decided and in subsequent proceedings between the same parties involving a different cause of action to which the same issue is relevant one of the parties seeks to reopen that issue."

5. It follows, therefore, that a finding of fact by an earlier court which is not a "necessary ingredient" in the earlier cause of action will not give rise to a 'fact estoppel'. Moreover, a finding cannot be a necessary ingredient of a cause of action if the earlier court or tribunal did not have jurisdiction to decide the matter at all: see the observations of Sir Nicholas Browne-Wilkinson, as he was, in O'Laoire v Jackel Ltd [1991] ICR 718 when he said:

"It is well established that there can be no estoppels arising out of an order or judgment given in excess of jurisdiction."

6. An exception to this principle is where a court makes an express finding as to jurisdiction which is not appealed. Any such finding is binding on the parties, even if it is subsequently shown to be wrong: see the observations of Lord Hoffmann in Watt v Ahsan [2007] UKHL 51; [2008] 1 AC 696, para 31.
7. The well-known principle enunciated in Henderson v Henderson was expressed in that case by Wigram VC in the following terms:

"[W]here a given matter becomes the subject of litigation in, and of adjudication by, a court of competent jurisdiction, the court requires the parties to that litigation to bring forward their whole case, and will not (except under special circumstances) permit the same parties to open the same subject of litigation in respect of matters which might have been brought forward, only because they have, from negligence, inadvertence, or even accident, omitted part of their case. The plea of res judicata applies, except in special cases, not only to points upon which the court was actually required by the parties to form an opinion and pronounce judgment but to every point which properly belonged to the subject of litigation, and which the parties, exercising reasonable diligence, might have brought forward at the time."

8. The principle has frequently been considered by the courts. The only passage in any of the later decisions to which it is necessary to refer is the judgment of Lord Bingham of Cornhill in Johnson v Gore-Wood [2000] UKHL 65; [2002] 2 A C 1 where his Lordship identified the close inter-relationship between this doctrine and the principle of res judicata itself:

"But Henderson v Henderson abuse of process, as now understood, although separate and distinct from cause of action estoppel and issue estoppel, has much in common with them. The underlying public interest is the same: that there should be finality in litigation and that a party should not be twice vexed in the same matter. This public interest is reinforced by the current emphasis on efficiency and economy in the conduct of litigation, in the interests of the parties and the public as a whole. The bringing of a claim or the raising of a defence in later proceedings may, without more, amount to abuse if the court is satisfied (the onus being on the party alleging abuse) that the claim or defence should have been raised in the earlier proceedings if it was to be raised at all. I would not accept that it is necessary, before abuse may be found, to identify any additional element such as a collateral attack on a previous decision or some dishonesty, but where those elements are present the later proceedings will be much more obviously abusive, and there will rarely be a finding of abuse unless the later proceeding involves what the court regards as unjust harassment of a party. It is, however, wrong to hold that because a matter could have been raised in early proceedings it should have been, so as to render the raising of it in later proceedings necessarily abusive. That is to adopt too dogmatic an approach to what should in my opinion be a broad, merits-based judgment which takes account of the public and private interests involved and also takes account of all the facts of the case, focusing attention on the crucial question whether, in all the circumstances, a party is misusing or abusing the process of the court by seeking to raise before it the issue which could have been raised before."

9. The central question for the court is, therefore, whether the later proceeding involves the unjust harassment of a party; but that condition is not satisfied merely because a claim could have been brought in the earlier proceedings but was not.

The background.

10. Mr Foster is a 78 year old man who was employed as a carpenter by the appellant company. His employment commenced in August 1997. He was laid off without pay by the company on 15 April 2009. On 27 April he wrote to his line manager, Mr Nagle, and stated that the company was not entitled to lay him off and that he should have been paid for the period since 15 April. He requested that he be returned to full employment and be provided with a written copy of his terms and conditions of employment.
11. Two days later, on 29 April, Mr Nagle (on behalf of the company) decided to dismiss Mr Foster. The dismissal was said to be by reason of retirement. By letter dated 21 May the company confirmed that Mr Foster was to be dismissed with effect from 31 July. Mr Foster has never received any payment of any description with respect to any period after 15 April, when he was laid off.
12. Mr Foster submitted a claim form to the Tribunal (an ET1) being assisted in drafting it by his local Citizens Advice Bureau. He sought, amongst other matters, a redundancy payment. This claim was lodged with the Tribunal on 10 June 2009 which was before his dismissal took effect on 31 July. In the ET1 Mr Foster confirmed that at the date of lodging the claim he was still employed and the details of his claim for redundancy pay were put in the following way:

"I have been laid off from my employment since Wednesday 15 April 2009. I have not worked for my employer since this date. My lay off has now exceeded four consecutive weeks or a total of six weeks in the last thirteen week period.

I wrote to my employer on 27 April 2009 but I have not been provided by work by my employer who has taken away from me a van that is essential for me to carry out my employment."

13. In the section headed "What compensation or remedy are you seeking?" Mr Foster identified the sums which he was seeking to recover and these included, as a head of compensation for redundancy, the sum of £10,500. This was premised on the assumption that he would be entitled to 30 weeks' pay. Mr Foster had claimed in his ET1, erroneously it seems, that his employment began in 1982. On that assumption the calculation would have been correct.
14. Section 135 of the Employment Rights Act 1996 provides that a redundancy claim can be made either as a result of the employee being dismissed by reason of redundancy or in certain circumstances where he is laid off or kept on short time:

(1) An employer shall pay a redundancy payment to any employee of his if the employee—

(a) is dismissed by the employer by reason of redundancy, or

(b) is eligible for a redundancy payment by reason of being laid off or kept on short-time.

The provisions relating to lay-off and short time are extremely complex but need not be analysed for the purposes of this appeal. However, a point of relevance to note is that the compensation is precisely the same by whichever route the right to a redundancy payment is established. It does not differ as between lay-off redundancies and dismissal-related redundancies.

15. Employment Judge Salter heard the case on 10 August 2009, which was after the dismissal notice had taken effect. Mr Foster appeared in person. The written reasons were sent to the parties on 4 September. In the course of his judgment, Employment Judge Salter dealt with the redundancy claim and rejected it. However, the following paragraphs indicate that he was treating the redundancy claim as one based not only on the lay-off provisions, but also as a claim arising out of the dismissal (paras 15-16):

"The Tribunal considered the claim for a declaration in relation to redundancy. Entitlement to redundancy pay is dependent upon a finding that the employee has been dismissed by reason of redundancy as defined in s.139 Employment Rights Act 1996 ("the Act") or whether pursuant to s. 148 of the Act the Claimant has given notice in accordance with the provisions of s. 148(1). There was no suggestion on the part of the Claimant that he had given any such notice. The provisions relating to redundancy during a lay off do not apply.

At the time of the presentation of the ET1 the Claimant had been given notice that his employment was to end on 31 July 2009 but there was no evidence that there was no (sic) redundancy situation within the Company. The Claimant was dismissed not by reason of redundancy but by reason of retirement and no other reason. His claim for a redundancy payment fails."

16. Accordingly the judge rejected the lay-off redundancy claim because the employee had failed to serve a notice as required by section 148. He rejected the dismissal-related redundancy claim on the grounds that the reason for dismissal was not redundancy but was retirement. The judge did not, therefore, simply conclude that the reason for dismissal was not redundancy, which would have been sufficient to determine this aspect of the redundancy claim. He went further and made a positive finding that the reason for dismissal was retirement.

The Seymour hearing.

17. Following the rejection of his first claim, Mr Foster brought new proceedings. He lodged a fresh ET1 which was presented to the Employment Tribunal on 15 October. This made claims under the following heads:

(1) Ordinary unfair dismissal contrary to sections 94 and 98 of the Employment Rights Act 1996;

(2) Unfair dismissal contrary to section 103A on the basis that the principal reason for Mr Foster's dismissal was that he had made protected disclosures (by complaining about being laid off and not being paid wages, and the failure to provide him with terms and conditions of employment) by his letter of 27 April 2009;

(3) Unfair dismissal contrary to section 104 of the Employment Rights Act 1996 on the basis that he was dismissed for having asserted a statutory right, again arising out of the letter of 27 April 2009;

(4) Unfair dismissal on grounds of age contrary to the Employment Equality (Age) Regulations 2006 and/or contrary to sections 98Z(A) to 98Z(G) of the 1996 Act on the basis that the company had failed to follow the statutory retirement process set out in Schedule 6 to the 2006 Regulations;

(5) Failure to make a guaranteed payment pursuant to Part III of the 1996 Act;

(6) Failure to pay compensation pursuant to the Working Time Regulations;

(7) Failure to pay Notice pay, and

(8) Failure to provide Mr Foster with a statement of terms and conditions of employment, as required by Section 1 of the Employment Rights Act 1996.

18. The employer accepted that the Tribunal had jurisdiction to deal with claims (6) to (8) inclusive. (Indeed some of them had been raised before the Salter Tribunal but they had not been considered because the Tribunal accepted that they were premature.) However, the employer sought to have the first five claims struck out. Grounds (2) and (3) involved the Tribunal being satisfied that the principal reason for dismissal was for a particular reason other than retirement, namely – to put it broadly - that Mr Foster was dismissed for raising various issues in his letter of 27 April. Employment Judge Seymour held that in view of the conclusion of Employment Judge Salter that the reason for dismissal was retirement, Mr Foster was estopped from alleging otherwise: these claims were res judicata by reason of the Salter judgment. The judge then held that although the other dismissal-related claims were not res judicata since they did not rely upon establishing a reason for dismissal inconsistent with Employment Judge Salter's finding that it was retirement (indeed, claim (4) positively asserts it), nonetheless they were an abuse of process in the Henderson v Henderson sense. The judge's conclusion on this aspect of the case was summarised as follows:

"In fact the Claimant did not raise any of these matters [raised in grounds (2) and (3)] during the first proceedings, but rather maintained his claim for a redundancy payment throughout a contested hearing. Having lost that claim he now seeks to bring fresh claims relating to his dismissal arguing that it was unfair for a variety of different reasons. The Company therefore now faces a second hearing on the question of the reason for the Claimant's dismissal, brought on wholly different grounds. In all the circumstances of this particular case, the Tribunal finds that this is a misuse of the Tribunal system applying the tests laid down in Johnson and Thomas (supra)."

19. Although all the dismissal-related claims were stopped in their tracks, the claim for guaranteed pay was allowed to go ahead on the basis that unlike the dismissal claims, it would not constitute an unjust harassment of the company to allow it to be heard. This was so notwithstanding that Employment Judge Seymour accepted that the claim could have been advanced before the Salter Tribunal.

The hearing before the EAT.

20. Mr Foster appealed to the EAT and the employer cross appealed with regard to the guaranteed payment. The EAT upheld the appeal and dismissed the cross-appeal.
21. As to the finding of issue estoppel, the EAT held that it did not arise for each of the two reasons relied upon Mr Forshaw, counsel for Mr Foster.
22. First, as I have noted above, an issue estoppel only arises where the judicial determination which is alleged to be binding was one which the relevant court had the jurisdiction to make. The EAT held that Judge Salter did not have jurisdiction to deal with any redundancy claim arising out of dismissal because that was not a claim being advanced by Mr Foster. The Employment Tribunal has no power to consider a claim not properly before it: see Chapman v Simon [1999] IRLR 124. Here the only redundancy claim properly before Employment Judge Salter was one arising out of a lay-off, and the finding that the dismissal was by reason of retirement was not a necessary ingredient of that claim.
23. Second, the EAT held that the Employment Tribunal had no jurisdiction to hear this particular redundancy claim for a quite separate and distinct reason. Under Section 164 of the Employment Rights Act any claim for redundancy payment must be made within a period of six months "beginning with the relevant date". That date is defined by Section 145(2)(a) as the date of dismissal. Here the claim was lodged in June, which was before the dismissal took effect at the end of July. Therefore, if and to the extent that it could be said that there was a claim for redundancy arising out of a dismissal, the application to the Employment Tribunal was premature and so the claim was not properly before it. In reaching this conclusion the EAT followed the decision of another division of the EAT in Watts v Rubery Owen Conveyancer Limited [1977] 2 All E R 1. The EAT in this case had been referred to various arguments set out in Harvey on Industrial Relations and Employment Law vol. 1 paras 2086-2090, suggesting that Watts was no longer good law and should not be followed. The EAT was not persuaded by these arguments.
24. The EAT then turned to the abuse of process issue and held that Employment Judge Seymour had also been wrong to apply the Henderson v Henderson principle. Mr Justice Silber analysed various authorities and in particular relied upon the passage from the speech of Lord Bingham in Johnson v Gore Wood, set out above. He concluded that Judge Seymour had erroneously found that there was an abuse of process merely because these dismissal claims could have been raised in the earlier proceedings. That was not the correct approach; it was necessary to show that bringing the later proceedings was abusive.
25. In addition, the EAT found that the judge had failed to have regard to the fact that there was going to be a second hearing in any event to deal with a number of issues which the employer accepted were properly before the tribunal and would have to be determined.
26. Finally, the judge had in any event acted on the false assumption that the new complaints were inconsistent with those advanced before the Salter Tribunal. This was not so, given the finding that no dismissal-related redundancy claim was ever properly before the Salter Tribunal.
27. In the circumstances, adopting a broad merits assessment and bearing in mind that the onus was on the person alleging abuse of process to establish it, the EAT held that the conclusion of Employment Judge Seymour could not stand. The cross appeal was also dismissed on the grounds that Judge Seymour was entitled to hold that to pursue the guaranteed payment claim would not be an abuse of process.

The grounds of appeal.

28. The arguments on appeal broadly reflect those which were advanced unsuccessfully before Mr Justice Silber.
29. Mr Bryden, counsel for the employer, contends that the judgment of Employment Judge Salter, and in particular the finding that the dismissal was by reason of retirement, was binding upon Mr Foster. He does not dispute the legal principles summarised above, but he contends that in this case, given that the claim was lodged after notice of the dismissal had been given and that the hearing of the claim was after the dismissal had taken effect, it was open to the judge to consider a redundancy claim based on dismissal. The judge had been entitled to analyse, as an alternative to the lay-off claim, the possibility that Mr Foster might have a redundancy claim arising out of his dismissal.
30. In the context of this argument, Mr Bryden laid emphasis on the amount claimed by Mr Foster by way of redundancy compensation. That might have given some colour to an inference that he must have been intending to run a redundancy claim arising out of his dismissal if the payment claimed was only referable to a dismissal-related redundancy. In fact, as I have noted above, Mr Foster would have been entitled to precisely the same sum if his lay-off claim had succeeded. So this fact was not referable only to a dismissal-related claim and does not assist Mr Bryden's submissions.
31. Mr Bryden's principal submission was that employment judges are encouraged to act informally and to assist litigants in person. Here it was plainly desirable that all relevant claims should be heard together, and accordingly the EAT ought not to have interfered with the sensible and permissible approach of the judge to decide a claim which at some stage Mr Foster might well wish to advance.
32. Employment Judge Salter heard evidence about the reason why notice of dismissal had been given, and he was entitled to make a finding, on the evidence he had heard, that it was by reason of retirement. That finding should not be re-opened. In any event, it was not legitimate for the EAT to impugn a determination of the Employment Tribunal, given that it had not been the subject of any appeal. For this last proposition Mr Bryden relied upon the speech of Lord Hoffmann in the case of Watt v Ahsan, referred to above.
33. As to the contention that the Tribunal had no jurisdiction because the claim was lodged prior to dismissal taking effect, counsel submitted that the leading case which establishes that principle, namely Watts v Rubery Owen Conveyancer Limited [1977] 2 All E R 1, should be regarded as wrongly decided, essentially for the reasons set out in the passage in Harvey to which I have made reference.
34. In my judgment, this aspect of the appeal fails on the first ground. The claim that the dismissal was by reason of redundancy was never properly before the Salter Tribunal and there was no basis for assuming that it was. Quite apart from the way in which he framed his claim in the ET1, focusing on lay-off alone, there were other documents which were wholly inconsistent with the assumption that Mr Foster was pursuing a dismissal-related redundancy claim. His witness statement before Employment Judge Salter at the first hearing expressly stated that he had been advised that he could claim redundancy payment following his lay off, and he confirmed that he had not been dismissed. Moreover, the company in its written submissions to the Employment Judge asserted that Mr Foster could not be entitled to redundancy payment by reason of dismissal since no dismissal had occurred as at the date3 when the ET1 was issued. This therefore appeared to be common ground.
35. In my view, there was no proper basis from which the Salter Tribunal could infer that the claim for a dismissal-related redundancy was properly before it. I recognise that Employment Judge Salter was doing his best to assist a litigant in person and no doubt felt that it would be desirable to have all potential claims heard together. But there was no formal amendment introducing this claim, and nor was Mr Foster specifically asked whether he wanted this aspect of his case determined. As Mr Bryden fairly conceded, it was the judge who thought it appropriate to determine this aspect of the case without expressly raising the issue with the parties at all. I do not think that a litigant in person should be prejudiced by a ruling made in that context. I have no doubt that Mr Foster would have had no idea what the potential implications might be of a finding as to the true reason of dismissal. Nor in my judgment does the principle enunciated by Lord Hoffmann in the Watt v Ahsan case assist the appellant. Employment Judge Salter did not determine that the Tribunal had jurisdiction following legal argument on the point, as in the Watt case; he merely made the assumption that the Tribunal could properly hear the case.
36. It follows that the conclusion reached by the judge about the reason for dismissal was not a conclusion which he was empowered to make because the issue was not properly before him. Accordingly, the principle of res judicata is not engaged.
37. I would add that in my opinion even if, contrary to my view, it could be said that the issue of dismissal-related redundancy was properly before the Salter Tribunal, the finding that the dismissal was by reason of retirement would still not have been a necessary ingredient in the decision to reject that claim. The only necessary finding was that the reason for dismissal was not redundancy; it was not necessary in order to reach that conclusion for the judge to make a positive finding as to what was the true reason for dismissal. Whilst the ruling would have prevented Mr Foster from asserting that the dismissal was by reason of redundancy, he would not in my view have been estopped from asserting that it was for some other specific reason.
38. In view of these conclusions it is not necessary for me to determine whether the case of Watts v Rubery Owen Conveyancer remains good law. Having given the parties an indication of our views on the first issue, we did not in the event hear argument about it, and I would leave that interesting question for another day.
39. This conclusion on res judicata necessarily bears heavily on the related finding by Employment Judge Seymour that it was an abuse of process for Mr Foster to advance the other dismissal claims. Mr Bryden submits that Employment Judge Seymour's decision on this point merits considerable respect and that an appellant court should not lightly interfere with it. I would not dissent from that principle. However, the abuse of process finding was linked to the erroneous assumption that a claim arising out of dismissal was properly before the Salter Tribunal. It was in that context that the judge considered that all the other potential claims arising out of the dismissal should have been raised by Mr Foster so that they could be heard together. If the premise goes, because there was in fact no claim arising out of the dismissal properly before the Salter Tribunal, then the conclusion goes also.
40. Even if the dismissal by reason of redundancy had been before the Salter Tribunal, I would in any event have concluded that it was not an abuse of process in this case to pursue the other dismissal claims in the later proceedings. I bear in mind in particular that we are dealing with a litigant in person and that certain claims have to be heard by the Tribunal in any event. Indeed, I consider that there could be a real injustice to Mr Foster if he were not permitted to pursue the general unfair dismissal claims. He wishes to contend, for example, that if the dismissal was by reason of retirement, there was an unfair dismissal because relevant statutory procedures were not complied with. It is surely not an abuse of process to allow him to pursue that claim, particularly since on any view the question whether dismissal was by reason of retirement was never the central question before the Salter Tribunal and there was no reason why he should have assumed that there would be a finding of that nature.
41. Mr Bryden realistically accepted that if his appeal in relation to the dismissal claims failed, his contention that Mr Foster should not be allowed to pursue the guaranteed pay claim could not succeed.

Disposal.

42. In my judgment, the appeal should be dismissed for the reasons given in this judgment.

Lady Justice Arden:

43. I agree.

Lord Justice Pill:

44. I agree with the conclusions of Elias LJ and for the reasons he gives. Employment Judge Salter decided what Elias LJ has described at paragraph 16 as the dismissal-related redundancy claim and decided that there was no redundancy situation within the company and that the claim failed. The claim had been lodged on 10 June 2009, that is after the company had decided on dismissal on 27 April 2009 but before dismissal took effect on 31 July. In his claim form, the claimant confirmed that he had not been dismissed and in their response the company also said that dismissal had not occurred. The judge's additional statement, at his paragraph 16, that dismissal was by reason of retirement was not necessary to his decision and in any case could not appropriately be made on the material before him.
45. A fresh claim was lodged with the Employment Tribunal on 15 October 2009, that is after the dismissal had taken effect. The claims now disputed by the employer were included. Employment Judge Seymour was not in my view entitled to prevent the claimant from advancing those claims. I agree with Elias LJ that the principle of res judicata is not engaged. Still less is there an abuse of process by bringing the present claims in a second action.
46. Tribunals are understandably concerned, in the public interest as well as that of the parties, to ensure that all claims are, if possible, brought together. As the present case demonstrates, however, careful analysis of the particular situation is required, first, when deciding what claims need to be resolved at a hearing and what needs to be said to resolve them. Secondly, care is required, when a second claim is brought, in deciding whether claims made at the second hearing were resolved at the first hearing and, if not, whether they should have been brought on that occasion. Care is particularly required when a litigant in person is involved. On Elias LJ's analysis, with which I agree, there would be real injustice to the claimant if he was not permitted to bring the present claims.
47. I agree that the appeal should be dismissed and also that it is unnecessary to decide whether Watts v Rubery Owen Conveyancer Limited [1977] 2 All ER 1 remains good law.