English and Welsh Courts - Miscellaneous

IN THE LEEDS COUNTY COURT

		3 April 2009

1 Introduction

1. This is an action for damages for a psychiatric injury allegedly caused to Mrs Campbell in the course of her employment with Leeds United AFC Limited ("Leeds United") by the negligence and/or breach of statutory duty of Leeds United. In this application Leeds United acting by its insurers seeks to strike out the Particulars of Claim as an abuse of process on grounds of res judicata or cause of action estoppel. In a nutshell Leeds United contend that the claim is an attempt to relitigate matters already determined or which ought to be determined by another Court of competent jurisdiction, that is to say the Leeds Employment Tribunal ("the Tribunal").

2 Representation

2. Mrs Campbell has been represented before me, as she was in both of the Tribunal hearings by Miss Ceri Widett instructed by Blacks of Wade House, The Merrion Centre Leeds LS2 8NG. Leeds United (or its insurers) has been represented by Mr Richard Swain instructed by Forbes of Marsden House, 28 – 32 Wellington Street, Blackburn BB1 8DA.
3. Both Counsel have provided me with detailed and helpful skeleton arguments. They have also referred me to quite extensive authority in a by no means straightforward corner of English jurisprudence. I am most grateful to them.

3 The Facts

4. There is very little (if any) dispute as to the facts relevant to the application. Mrs Campbell, who is black, was born on 9^th January 1962. She started work with Leeds United in September 1992 as a waitress or supervisor. In December 2000 she was promoted to Assistant Conference and Banqueting Manager.
5. In the course of her employment with Leeds United Mrs Campbell made two successful applications to the Tribunal. In each application she claimed direct discrimination on the grounds of race, sex and victimisation. In the second application there was in addition a successful claim based on harassment.
6. The first hearing followed a complaint made in February 2005. The hearing lasted for 3 days in October 2005 and resulted in a written decision made on 7^th November 2005. It is plain from the decision that claims of direct discrimination and victimisation on the grounds of race and sex succeeded. The Tribunal directed a remedy hearing on 21^st November 2005. The written reasons for the decision extend to some 25 closely typed pages. The findings of fact occupy some 19 pages of the judgment.
7. On 21^st November 2005 Mrs Campbell was awarded a sum of £5,000. It is common ground that at this stage there was no claim for and no award for any psychiatric injury.
8. On 2^nd or 3^rd February 2006 Mrs Campbell returned to work for Leeds United. She remained at work for a period of 12 days until 14^th February 2006 when she left. She alleges that she was then suffering from work related stress. On 31^st July 2006 Mrs Campbell issued the second claim to the Tribunal. That claim related to events that occurred during the 12 day period of employment and the grievance procedure that followed. The second claim was heard for 3 days between 29^th and 31^st January 2007. Judgment was delivered on 16^th March 2007. The decision of the Tribunal was that Mrs Campbell's claims of victimisation, harassment and discrimination on the grounds of sex and race succeeded. Accordingly the Tribunal again directed that a Remedy Hearing be convened but did not, on this occasion, fix a date for the hearing. The written reasons for the decision extend to some 30 closely typed pages. The findings of fact, which are set out between paragraphs 2 and 67 of the judgment occupy some 18 pages.
9. Mrs Campbell duly prepared a remedy statement dated 25^th April 2007. A Schedule of Loss was prepared on her behalf. It is undated but it can be inferred that it was prepared on or about 3^rd May 2007. The Schedule of Loss included a head of claim for psychiatric damage and a claim for loss of earnings. The sum claimed for psychiatric damage was £21,000. Reference was made in the Schedule of Loss to guidance in the JSB guidelines and to two cases reported in Kemp & Kemp. The loss of earnings claim was in the sum of £15,921.84 up to the 3^rd May 2007. In addition there was a claim for two years future earnings in the sum of £26,177.80. In support of the claim for a psychiatric injury Mrs Campbell relied on a psychological report prepared on 16^th January 2007 by Dr Ford a Consultant Clinical Psychologist based at Pinderfields General hospital in Wakefield. The Schedule of Loss included a number of other claims including a claim for Sex/Race Discrimination/Injury to feelings valued at £27,250, Victimisation valued at £10,000, Aggravated Damages valued at £10,000 and an uplift of 50% as a result of the failure by Leeds United to complete the statutory grievance procedure.
10. The Remedy hearing has not taken place. Leeds United is insolvent. In May 2007 very shortly before the end of the 2006/2007 football season it went into Administration. It is now in creditor's voluntary liquidation. Any judgment obtained against Leeds United will not be satisfied. No return is expected for unsecured creditors. Leeds United was not insured against successful claims made to the Tribunal. There is thus no practical point in Mrs Campbell pursuing the Remedy hearing. It has, however, not been withdrawn or struck out. It remains undetermined.
11. Leeds United was, however, insured against claims by employees for personal injuries caused by its negligence and/or breach of statutory duty. Hence in November 2008 Mrs Campbell issued these proceedings. It is common ground that there is significant overlap between the claim in these proceedings and the second claim before the Tribunal. It is common ground that the allegations of complaint made by Mrs Campbell are the same or virtually the same as she made before the Tribunal. In the History Section^[1] of the Particulars of Claim Mrs Campbell expressly refers to and relies on the detailed findings made by the Tribunal. In paragraph 33 of the Particulars of Claim Mrs Campbell contends that the doctrine of issue estoppel applies in relation to the findings of the Tribunal and that Leeds United is barred from challenging the findings in these proceedings.
12. In paragraphs 34 and 35 of the Particulars of Claim Mrs Campbell relies on the findings of fact by the Tribunal as evidence of breach of statutory duty and/or negligence by Leeds United. She contends that there are breaches of regulations 3(1), 3(3), 3(6)(a), 4, 5(1), 5(2), 6, 7, 10, and 13(1) of the Management of Health and Safety at Work Regulations1999. She contends that the findings of the first tribunal are also relevant to the issue of whether she was exposed to a foreseeable risk of injury to health attributable to stress.
13. In paragraph 36 of the Particulars of Claim Mrs Campbell alleges she suffered a psychiatric injury. She relies on the same medical report from Dr Ford dated 16^th January 2007 as updated by 2 later reports dated 4^th June 2008 and 22^nd September 2008. It is plain therefore that the psychiatric injury complained of is the same psychiatric injury for which compensation was sought before the Tribunal.
14. In the Schedule of Loss Mrs Campbell has included a claim for loss of earnings in the sum of £40,387 up to 14^th November 2008, a claim for future loss of earnings in the sum of £23,095.80 and a claim for loss of earning capacity in the sum of £46,191.60. She also includes a number of other claims including a claim for future treatment which was not included in the Schedule of Loss submitted for the Remedy Hearing. She has not, however, claimed damages for victimisation, or aggravated damages.

4 Estoppel

15. The starting point in any discussion in this area of the law is often taken as the judgment of Diplock LJ (as he then was) in Thoday v Thoday^[2].

The particular type of estoppel relied on by the husband is estoppel per rem judicatam. This is a generic term which in modern law includes two species. The first species, which I will call "cause of action estoppel", is that which prevents a party to an action from asserting or denying, as against the other party, the existence of a particular cause of action, the non-existence or existence of which has been determined by a court of competent jurisdiction in previous litigation between the same parties. If the cause of action was determined to exist, ie, judgment was given on it, it is said to be merged in the judgment, or, for those who prefer Latin, transit in rem judicatam. If it was determined not to exist, the unsuccessful plaintiff can no longer assert that it does; he is estopped per rem judicatam. This is simply an application of the rule of public policy expressed in the Latin maxim, "nemo debet bis vexari pro una et eadem causa". In this application of the maxim, causa bears its literal Latin meaning. The second species, which I will call "issue estoppel", is an extension of the same rule of public policy. There are many causes of action which can only be established by proving that two or more different conditions are fulfilled. Such causes of action involve as many separate issues between the parties as there are conditions to be fulfilled by the plaintiff in order to establish his cause of action; and there may be cases where the fulfilment of an identical condition is a requirement common to two or more different causes of action. If in litigation on one such cause of action any of such separate issues whether a particular condition has been fulfilled is determined by a court of competent jurisdiction, either on evidence or on admission by a party to the litigation, neither party can, in subsequent litigation between them on any cause of action which depends on the fulfilment of the identical condition, assert that the condition was fulfilled if the court has in the first litigation determined that it was not, or deny that it was fulfilled if the court in the first litigation determined that it was.

16. It will be seen that Diplock LJ distinguished between two types of estoppels. Cause of action estoppel and issue estoppel. Cause of action estoppel prevents a party from raising in a second action a cause of action which has been adjudicated on by a court of competent jurisdiction. Issue estoppel on the other hand prevents a party from seeking to dispute in subsequent proceedings a condition that was established or admitted in previous proceedings in so far as that condition was necessary to any cause of action in issue in the previous proceedings.
17. Mr Swain has submitted that the facts of this case give rise to a cause of action estoppel. He relies on the case of Fraser v HMLAD Ltd^[3] The facts are important and can be taken from the judgment of Mummery LJ:

The circumstances in which Mr Fraser was dismissed from his position as Chief Executive by the Administrative Receivers of HLM Design International (Holdings) Limited on 17 March 2004 led him to present an application to the employment tribunal on 28 May 2004. He claimed unfair dismissal, a statutory cause of action which an employment tribunal has exclusive jurisdiction to consider and determine (sections 94 and 111(1) Employment Rights Act 1996), and wrongful dismissal, an action for breach of a contract of employment, which can be brought concurrently in the ordinary civil courts and in the employment tribunal, subject, however, in the latter case to a statutory limit of £25,000 on the amount of the payment to be ordered: article 10 of the Employment Tribunals Extension of Jurisdiction (England and Wales) Order 1994, SI 1994/1623 (the 1994 Order) and sections 3 and 44 of the Employment Tribunals Act 1996.

In paragraph 11 of Section 11 of his ET1 Mr Fraser left HLMAD in no doubt that, although he was pursuing his claims in the employment tribunal, he also intended to keep open the possibility of bringing proceedings in the High Court in order to recover damages for wrongful dismissal in excess of £25,000-

" 11. I claim damages for wrongful dismissal and compensation for unfair dismissal. Insofar as my claim for damages for wrongful dismissal exceeds the Tribunal's jurisdiction of £25,000, I expressly reserve the right to pursue an action in the High Court."

…his advisers took the precaution of starting an action for wrongful dismissal in the High Court on 23 December 2004 with a view to recovering the excess of any award that he received in the employment tribunal. The amount claimed was £261,146 together with interest. They did not, however, take the additional precaution of withdrawing his wrongful dismissal claim from the employment tribunal proceedings. Instead, they pressed on with the proceedings in the employment tribunal for both unfair dismissal and wrongful dismissal.

In its judgment registered on 31 March 2005 the employment tribunal found that Mr Fraser had been unfairly and wrongfully dismissed. In an amended remedies decision registered on 16 June 2005 the tribunal determined his damages for breach of contract in the sum of £80,090.62, but limited its award to the capped amount of £25,000 damages in addition to the compensatory award of £16,034.88 for unfair dismissal, making a total of £41,034.88. On these figures Mr Fraser's net shortfall is £55,090.62.

18. Mr Fraser's High Court Claim for wrongful dismissal was struck out by Master Eyre. Master Eyre's decision was upheld by the Court of Appeal comprising Mummery LJ and Moore-Bick LJ. Mummery LJ's conclusion was expressed in paragraph 29 of the judgment:

29 In my judgment, this was clearly a case of merger of Mr Fraser's cause of action for wrongful dismissal in the final judgment of the tribunal on the claim for wrongful dismissal as between the same parties as in the High Court proceedings. Merger was not prevented from taking place by the express statement in the ET1 that Mr Fraser expressly reserved his rights to bring High Court proceedings for the excess. The merger arose from the fact that the cause of action had been the subject of a final judgment of the tribunal. Once it had merged Mr Fraser no longer had any cause of action which he could pursue in the High Court, even for the excess over £25,000. The claim for the excess is not a separate cause of action. The cause of action for wrongful dismissal could not be split into two causes of action, one for damages up to £25,000 and another for the balance. A claim in the High Court for the balance of the loss determined in the tribunal would have to be based on a single indivisible cause of action for wrongful dismissal.

19. Moore-Bick LJ decided the case on the basis of cause of action estoppel. After citing a number of authorities including the passage from Thoday v Thoday referred to above his conclusion is to be found in paragraph 55 of the judgment:

55 The Employment Tribunal has a statutory jurisdiction to determine claims for wrongful dismissal and, although its jurisdiction to grant relief is subject to a financial limit, its judgment may be enforced in accordance with its terms through the County Court procedure. The judgment creates a new and independent obligation which is in substance of the same character as a judgment of the court. Since, as the authorities show, a judgment of the Employment Tribunal gives rise to cause of action estoppel, I think it must follow that the doctrine of merger as described by Diplock L.J. in Thoday v Thoday and Lord Goff in The 'Indian Grace' also applies in cases where the claimant is successful and obtains judgment on his claim. Accordingly, I can see no escape from the conclusion that when judgment has been entered in favour of the claimant the cause of action merges in the judgment and is extinguished. The result in this case is that once the tribunal's judgment had been entered on the register Mr. Fraser no longer had any cause of action for wrongful dismissal and his reservation of the right to pursue an action in the High Court was wholly ineffective.

20. I have set out the decision in Fraser v HMLAD in some detail for two reasons. First it is at the heart of Mr Swain's submissions in this case. Second because in my view it is plainly distinguishable from Mrs Campbell's case.
21. In that the case the cause of action in both the Tribunal and the High Court was the same. It was a claim for wrongful dismissal. As Mummery LJ pointed out the cause of action for wrongful dismissal could not be split into two causes of action, one for damages up to £25,000 and another for the balance. A claim in the High Court for the balance of the loss determined in the tribunal would have to be based on a single indivisible cause of action for wrongful dismissal.
22. The causes of action by Mrs Campbell in the Tribunal are not the same as her causes of action in the County Court proceedings. As is clear from the judgments in the Tribunal the causes of action in the Tribunal were based on the statutory torts under the Race Relations Act 1976 and the Sex Discrimination Act 1975. As already noted the causes of action in these proceedings are based on negligence and breach of statutory duty. Whilst there is no doubt an overlap in the issues to be determined they are not identical. The most important difference, as was acknowledged by Mr Swain in the course of argument, is that in order to succeed Mrs Campbell must establish that it was reasonably foreseeable to a reasonable employer that she would suffer a psychiatric injury.
23. Support for the view that the causes of action are different can be seen from paragraph 23 of the judgment of Stuart-Smith LJ in Sheriff v Klyne Tugs^[4].
24. The second important difference between this case and Fraser lies in the fact that there has not been a Remedy Hearing in this case. There has been no determination by the Tribunal of the amount of compensation payable to Mrs Campbell. Thus there is no judgment into which the cause of action has merged. In my view the fact that there is a finding of discrimination and victimisation does not give rise to such a merger.
25. It follows that I agree with Miss Widett that this is not a case of cause of action estoppel in the sense set out by Diplock LJ in Thoday.

5 Henderson v Henderson

26. The matter does not end there because under what is commonly referred to as the rule in Henderson v Henderson^[5] the principle of res judicata can apply to matters which could have been raised in previous proceedings but were not. The relevant principle is taken from Sir James Wigram's judgment at p 114 where he said:

"In trying this question I believe I state the rule of the Court correctly when I say that, where 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 matter which might have been brought forward as part of the subject in contest, but which was not 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 a 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."

27. An example of this can be seen from the decision in Sheriff v Klyne Tugs already referred to. In that case the Claimant also made a complaint to an industrial tribunal of unlawful racial discrimination. He had suffered a nervous breakdown and was certified as unfit for work due to stress. It is plain from the judgment of Stuart-Smith LJ that the Tribunal could have awarded damages for the personal injury (the psychiatric damage) suffered by the Claimant^[6]. In fact however the application was compromised without admission of liability. A sum of £4,000 was accepted "in full and final settlement of all claims which he has or may have against his employers arising out of his employment or the termination thereof being claims in respect of which an [employment] tribunal has jurisdiction". Like Mrs Campbell he subsequently brought an action in the County Court for psychiatric injury caused by negligence relying on the same allegations as had been raised in the tribunal proceedings. The Claim was struck out both by the Recorder and the Court of Appeal.
28. In paragraph 22 of his judgment Stuart-Smith LJ accepted that the requirements of negligence and the statutory tort were not the same and that in the negligence action the Claimant would have to establish that it was reasonably foreseeable to a reasonable employer that the offensive conduct might cause a psychiatric injury. However he made the point that the claim fell within the compromise agreement in that it was a claim for compensation for injury sustained by the Claimant arising out of the employment and in respect of which the employment tribunal had jurisdiction.
29. He also held, as an alternative ground for his decision that the principle in Henderson v Henderson applied. The same issue of the conduct of the employer's servants lay at the heart of both proceedings. In his view the employee could have brought forward the whole claim for compensation in the tribunal but did not do so.
30. Mrs Campbell's case is, of course, readily distinguishable from Sheriff v Klyne Tugs. In her case there has been no compromise and no compromise agreement and no determination of the assessment of her compensation in satisfaction of her claim. Equally there has been no payment of any sum to Mrs Campbell. Thus the first and main ground of the decision has no application. It must also be questionable whether the principle can apply to a situation where there is no final adjudication of the first set of proceedings. In any event the law has moved on since the decision.
31. The most significant development in this area of law since Sheriff v Klyne Tugs is the decision of the House of Lords in Johnson v Gore-Wood^[7]. The judgment of Lord Bingham contains a full review of recent authorities (although the decision in Sheriff does not appear to have been cited). I shall not lengthen this judgment by referring to them in detail. He did, however, cite with apparent approval an observation in the Privy Council decision in Brisbane City Council v A-G for Queensland^[8]:

"This is the true basis of the doctrine and it ought only to be applied when the facts are such as to amount to an abuse: otherwise there is a danger of a party being shut out from bringing forward a genuine subject of litigation."

32. He also referred to a passage in the judgment of Lord Keith of Kinkel in Arnold v National Westminster Bank^[9] (a case concerning issue estoppel in relation to the construction of a rent review clause that had the subject of previous proceedings):

"In my opinion your Lordships should affirm it to be the law that there may an exception to issue estoppel in the special circumstance that there has become available to a party further material relevant to the correct determination of a point involved in the earlier proceedings, whether or not that point was specifically raised and decided, being material which could not by reasonable diligence have been adduced in those proceedings. One of the purposes of estoppel being to work justice between the parties, it is open to courts to recognise that in special circumstances inflexible application of it may have the opposite result, as was observed by Lord Upjohn in the passage which I have quoted above from his speech in the Carl Zeiss case [1967] 1 A.C. 853, 947."

33. At the end of the review of the authorities Lord Bingham set out his understanding of the principle:

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. As one cannot comprehensively list all possible forms of abuse, so one cannot formulate any hard and fast rule to determine whether, on given facts, abuse is to be found or not. Thus while I would accept that lack of funds would not ordinarily excuse a failure to raise in earlier proceedings an issue which could and should have been raised then, I would not regard it as necessarily irrelevant, particularly if it appears that the lack of funds has been caused by the party against whom it is sought to claim. While the result may often be the same, it is in my view preferable to ask whether in all the circumstances a party's conduct is an abuse than to ask whether the conduct is an abuse and then, if it is, to ask whether the abuse is excused or justified by special circumstances. Properly applied, and whatever the legitimacy of its descent, the rule has in my view a valuable part to play in protecting the interests of justice.

34. It will be seen that Lord Bingham advocates a broad merits based approach. I am required to take account of all the facts of the case, the public and private interests involved and ask myself whether Mrs Campbell is misusing the process of the court by seeking to raise in the County Court the assessment of damages for her psychiatric injury when it could be determined in the Tribunal.
35. In the very recent case of Seele v Tokio^[10] Coulson J cited the passage in Lord Bingham's judgment set out above. In paragraph 23 of his judgment he expressed the view there would rarely be a finding of abuse without the court deeming the subsequent claim to amount to unjust harassment or oppression.
36. The following matters seem to me to be relevant to the broad based assessment advocated by Lord Bingham:

1. Mrs Campbell chose to bring proceedings for racial and sexual abuse. Those proceedings had to be brought in the Tribunal.

2. The compensation payable for such abuse includes damages for psychiatric injury such as Mrs Campbell alleges she suffered from in February 2006.

3. There has been a determination on the question of liability in respect of the February 2006 discrimination. Mrs Campbell was wholly successful.

4. There has been no determination of the assessment of Mrs Campbell's compensation. Indeed the insolvency of Leeds United took place shortly after judgment on liability was handed down in March 2007 and very shortly after the Schedule of Loss was served. There is no evidence before me that the Schedule of loss was even considered by Leeds United. In those circumstances it is difficult to see that Leeds United are in fact being harassed at all by now being faced with a County Court Claim involving the assessment of damages for the psychiatric injury.

5. The insolvency of Leeds United means that there are sound commercial reasons for Mrs Campbell pursuing the claim in the County Court. Leeds United is insured against employer's liability claims but not against racial and sexual discrimination claims. If therefore Mrs Campbell is compelled to pursue her claim in the Tribunal she will receive nothing for the serious discrimination she has suffered. On the other hand if she can establish a valid employer's liability claim (and she will be able to rely on issue estoppel for many of the issues that arise) she will be fully compensated for her loss.

6. It was not possible for Mrs Campbell to bring the negligence claim before the Tribunal. It had no jurisdiction to determine such a claim. Thus if Leeds United are right once Mrs Campbell had commenced her complaint to the Tribunal it was not and is not possible for her to bring a claim before any Tribunal or Court for employer's liability in respect of which Leeds United were insured.

37. Those factors lead me to the very clear conclusion that there is no unjust harassment of Leeds United in permitting Mrs Campbell to bring these proceedings. Equally in all the circumstances I am not satisfied that Mrs Campbell's conduct amounts to an abuse of the process of the Court. On the contrary it seems to me that it would amount to a denial of justice to Mrs Campbell to strike out the claim.
38. Accordingly the application is dismissed.

JOHN BEHRENS

Friday 3 April 2009

Note 1   Paragraphs 4 – 32.    [Back]

Note 2   [1964] 1 AER 341 at 352    [Back]

Note 3   [2006] EWCA Civ 738    [Back]

Note 4   [1999] ICR 1170    [Back]

Note 5   [1843] 3 Hare 100    [Back]

Note 6   See paragraphs 17 – 21 of the judgment.    [Back]

Note 7   [2002] 2 AC 1    [Back]

Note 8   [1979] AC 411    [Back]

Note 9   [1991] 2AC 93    [Back]

Note 10   [2009] EWHC 255 (TCC)    [Back]