Fraser v HMLAD

This appeal concerns the operation of the common law doctrines of merger of causes of action, cause of action estoppel (estoppel per rem judicatam), issue estoppel and abuse of process in the context of concurrent proceedings in the Employment Tribunal and the High Court. The Court of Appeal held that where an employment tribunal, lawfully seised of a wrongful dismissal claim, gives final judgment on that cause of action the cause of action merges in the judgment and is extinguished; a claimant cannot thereafter bring a separate action in the ordinary courts to recover the excess above the tribunal’s statutory financial limit (article 10 of the Employment Tribunals Extension of Jurisdiction (England and Wales) Order 1994).

The court emphasised that an express reservation in the tribunal claim form of a claimant’s intention to pursue excess damages in the High Court does not prevent merger once the tribunal has delivered a final judgment on the same cause of action. The decision applied established authorities on cause of action estoppel and merger and noted that issue estoppel remains available to bind factual and legal issues determined by the tribunal in any subsequent proceedings where the cause of action has not merged.

This is an appeal from Master Eyre’s order of 15 July 2005 striking out the appellant’s High Court action for wrongful dismissal. The appellant, Mr Fraser, had pursued both unfair dismissal and wrongful dismissal claims before an employment tribunal. The tribunal found in his favour on both causes of action and assessed contractual damages at £80,090.62 but, because of the statutory cap, awarded only £25,000 for wrongful dismissal in addition to compensatory unfair dismissal sums.

Nature of the claim and relief sought:

• The appellant sought damages for wrongful dismissal (breach of contract) in excess of the tribunal’s £25,000 cap; he therefore issued High Court proceedings to recover the excess (claimed at £261,146 in the High Court claim).

Procedural posture: The defendant applied to strike out the High Court claim as res judicata/abuse of process. The Master struck out the claim. The Court of Appeal heard the appellant’s appeal.

Issues framed by the court:

• Whether a cause of action for wrongful dismissal is merged and extinguished by a final judgment of the employment tribunal in favour of the claimant, thereby preventing a subsequent High Court action to recover the excess over the tribunal’s statutory limit.
• Whether an express reservation in the tribunal application preserving the claimant’s right to sue in another court prevents merger or estoppel arising from the tribunal judgment.
• How the doctrines of cause of action estoppel, issue estoppel and abuse of process apply to tribunal judgments.

Court’s reasoning and conclusions:

• The Court analysed established authority on cause of action estoppel and the doctrine of merger (including the distinction that merger is not merely a species of estoppel but extinguishes the underlying cause of action once judgment is given).
• It held that an employment tribunal’s final judgment on wrongful dismissal creates the same effect as a judgment of an ordinary court: the cause of action merges into the judgment and ceases to exist independently. The claimant therefore cannot bring a fresh action in the High Court to recover the balance of loss once the tribunal has given final judgment on the same cause of action between the same parties.
• An express reservation in the tribunal form that the claimant might pursue excess damages in the High Court is ineffective to prevent merger once the tribunal has given final judgment on the wrongful dismissal claim.
• The court distinguished cases in which a claimant withdrew the contractual claim from the tribunal before adjudication (Sajid v Sussex Muslim Society and similar authorities), noting withdrawal may prevent merger; where the tribunal gives a final judgment, merger follows.
• The court confirmed that issue estoppel still operates to prevent re-litigation of factual or legal issues decided by the tribunal in later proceedings, but that does not permit splitting the single indivisible cause of action for wrongful dismissal into two separate causes of action (one within and one outside the tribunal cap).

The Court dismissed the appeal and affirmed the Master’s order striking out the High Court proceedings. The judgment also gave practical guidance to litigants and advised that tribunal literature should warn claimants that pursuing a contractual wrongful dismissal claim to judgment in the tribunal will preclude a later claim in the courts for excess damages.

The appeal was dismissed. The Court of Appeal held that the employment tribunal’s final judgment on a wrongful dismissal claim caused the cause of action to merge in the judgment and be extinguished; an express reservation to pursue excess damages in the High Court did not prevent merger and the High Court claim for the excess was therefore barred.

Appeal from an order of Master Eyre (High Court, Queen's Bench Division) dated 15 July 2005 striking out the claimant’s High Court wrongful dismissal claim; this Court of Appeal judgment reported as [2006] EWCA Civ 738.