Fraser v HLMAD Ltd

JurisdictionEngland & Wales
CourtCourt of Appeal (Civil Division)
JudgeLord Justice Mummery,Lord Justice Moore-Bick
Judgment Date15 June 2006
Neutral Citation[2006] EWCA Civ 738
Docket NumberCase No: A2/2005/1698
Date15 June 2006

[2006] EWCA Civ 738

IN THE SUPREME COURT OF JUDICATURE

COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

MASTER EYRE

Royal Courts of Justice

Strand, London, WC2A 2LL

Before:

Lord Justice Mummery and

Lord Justice Moore-Bick

Case No: A2/2005/1698

HQ04X04156

Between:
Roderick Fraser
Appellant
and
Hlmad Limited
Respondent

MR SIMON CHEETHAM (instructed by Stone Rowe Brewer) for the Appellant

MR RAOUL DOWNEY (instructed by DLA Piper Rudnick Gray Cary UK LLP) for the Respondent

Lord Justice Mummery

Introduction

1

This is an appeal from an order of Master Eyre dated 15 July 2005. He struck out the claim form and the particulars of claim and dismissed with costs (summarily assessed at £9,500) a wrongful dismissal action brought by Mr Roderick Fraser against HLMAD Limited. The Master granted permission to appeal.

2

The issue between the parties is of a sort that rarely crops up in employment cases. It is concerned with the application of the doctrines of merger of causes of action, res judicata and related forms of estoppel and abuse of process to judgments in the employment tribunal for unfair dismissal and wrongful dismissal, so as to bar civil proceedings for a subsequent judgment for wrongful dismissal in the ordinary courts. Merger of causes of action, res judicata, estoppel and abuse of process are all common law pleas. They are not mentioned in the employment legislation or in the rules of procedure governing claims in the employment tribunals. It may be news to some tribunal users that they apply to judgments of tribunals equally as they apply to ordinary courts for the purpose of bringing finality to legal disputes in the interests of the parties and of the public.

Proceedings for unfair and wrongful dismissal

3

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. As for enforcement of a judgment for compensation and damages obtained in the employment tribunal, any sum payable in pursuance of a decision of an employment tribunal in England and Wales which has been duly registered is recoverable, if a county court so orders, by execution issued from the county court: section 15(1) Employment Tribunals Act 1996.

4

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."

5

Originally the industrial tribunal (later to be re-named the employment tribunal) had no jurisdiction to consider a common law contract claim, even if, as would usually be the case, it arose out of the very same facts as the unfair dismissal claim, which only the tribunal could hear and determine. Since the 1994 Order came into force proceedings may be brought before an employment tribunal in respect of a contract claim by an employee for the recovery of damages for wrongful dismissal up to a maximum of £25,000. Counsel have been unable to assist the court about the reasons for the limit on the amount of damages recoverable in the tribunal or why it has not been increased since 1994. There were no debates in Parliament, as the jurisdiction was extended and the limit on compensation was set by the Minister acting under delegated powers.

6

Although the statutory cap on the amount of compensation recoverable for unfair dismissal has been substantially increased since 1994, the £25,000 limit for wrongful dismissal has remained at the same significantly lower amount. I do not know the reason for this. It cannot be that employment tribunals lack relevant experience in handling large claims or difficult cases. There is, for example, no upper limit to the amounts of compensation that can be awarded by tribunals in discrimination cases. Very large sums of compensation have been awarded to claimants in discrimination proceedings as factually complex and as legally challenging as any that can be brought in a court of law.

7

I mention these matters because, as will be explained later in the judgment, the facts of this case reveal a nasty potential trap for the litigant who decides to add a wrongful dismissal claim to his unfair dismissal claim in the employment tribunal and to pursue both claims to judgment in the tribunal. As is well known, many litigants in the tribunals act without the benefit of legal advice or representation. Mr Fraser was professionally advised and represented throughout, but he is now faced with the prospect of his successful claim for wrongful dismissal in the employment tribunal operating as a bar to recovery of more than £25,000 for breach of contract, even though the loss which the employment tribunal found that he had in fact suffered as a result of the breach far exceeds that amount.

8

I have little doubt that this comes as an unpleasant surprise to Mr Fraser, even though 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. There were some advantages in doing so: proceedings in the employment tribunal would, in general, be decided quicker and cheaper than in the ordinary courts, though public funding, which is unavailable in the tribunal, may be available in the ordinary courts; they would be without the same risk as to costs, if unsuccessful; and success in the tribunal on an unfair dismissal claim would normally shorten substantially the length of any subsequent proceedings in the High Court for wrongful dismissal. But, as I shall explain, there were also disadvantages in pursuing the claim for wrongful dismissal in the tribunal.

9

The principal area of dispute in the employment tribunal proceedings was application to the claims of the Transfer of Undertakings (Protection of Employment) Regulations 1981 (TUPE) , which are not relevant to the issues on this appeal. There was no real dispute that, if TUPE applied and HLMAD was liable to Mr Fraser for unfair dismissal, it was also liable to him for wrongful dismissal.

10

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.

11

The employment tribunal had thus adjudicated on issues of liability and remedy relating to both the statutory and common law causes of action. This feature of the tribunal's judgments was seized on by HLMAD's advisers to halt the progress of Mr Fraser's High Court proceedings.

Strike out applications

12

On 26 May 2005 HLMAD applied to strike out the High Court action as "res judicata and [an] abuse of the court's process", contending that the wrongful dismissal claim had already been litigated in the employment tribunal and that Mr Fraser could not litigate the matter further in the ordinary courts.

13

On 16 June 2005 Mr Fraser responded by a cross application for summary judgment under Part 24 against HLMAD for £96,125.50 total net damages for loss of employment or that its defence be struck out because

"the matter of liability and quantum in respect of wrongful dismissal has been adjudicated upon at the South London Employment Tribunal and it is an abuse of the Court's process for the Defendant to defend these proceedings."

14

It is an unusual feature of the case that both sides invoked the doctrines of estoppel and abuse of process in the High Court action. HLMAD relied on merger and cause of action estoppel to prevent Mr Fraser from suing them for wrongful dismissal in the High Court after the conclusion of the employment tribunal proceedings. Mr Fraser sought to rely on the doctrine of issue estoppel to prevent HLMAD from denying liability for wrongful dismissal, as already determined by the employment tribunal, in order to recover the excess of damages...

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