Fraser v Hlmad Ltd.

A final employment tribunal judgment on a wrongful-dismissal claim merges and extinguishes that single cause of action. The claimant cannot bring a High Court claim for the balance merely because the tribunal could award no more than £25,000 under the Employment Tribunals Extension of Jurisdiction (England and Wales) Order 1994.

A reservation of rights does not prevent merger. A claimant who seeks damages above the tribunal limit must withdraw or avoid bringing the wrongful-dismissal claim in the tribunal and pursue it in the ordinary courts. Tribunal findings on a separate unfair-dismissal claim may nevertheless create issue estoppel in later wrongful-dismissal proceedings.

The claimant, a dismissed chief executive, brought claims in the employment tribunal for unfair dismissal and wrongful dismissal. His ET1 reserved the right to pursue High Court proceedings for wrongful-dismissal damages above the tribunal's £25,000 limit. Before the tribunal determined the claims, he also issued a High Court claim for the full contractual loss.

The tribunal found both unfair and wrongful dismissal. It assessed contractual damages at £80,090.62 but awarded £25,000 for wrongful dismissal because of the statutory cap. Master Eyre struck out the High Court action. The claimant appealed, contending that he could recover the assessed balance without reopening the tribunal's findings.

The central issue was whether the tribunal's final judgment on the wrongful-dismissal claim merged the cause of action and barred the High Court claim.

1. Appeal dismissed. The final tribunal judgment on wrongful dismissal merged the claimant's contractual cause of action in that judgment. It therefore ceased to exist independently and could not found a High Court claim for the balance of the loss.

2. The statutory cap in Article 10 of the Employment Tribunals Extension of Jurisdiction (England and Wales) Order 1994 restricted the remedy available in the tribunal. It did not divide wrongful dismissal into separate causes of action for the first £25,000 and for the excess. A claim for the full contractual loss remained one indivisible cause of action.

3. The claimant's express reservation of a right to sue in the High Court was ineffective. Merger followed from the tribunal's final adjudication between the same parties, not from the claimant's intention or from an exercise of discretion. The apparent unfairness of losing the balance did not create an exception.

4. Sajid did not assist because its claimant had withdrawn the tribunal contract claim so that it could be litigated for the first time in the High Court. Here the claimant pursued the wrongful-dismissal claim to final judgment in the tribunal. The Court also held that the wider statement in Sivanandan concerning a reservation of rights was obiter and incomplete because it omitted the requirement of withdrawal.

5. The Court approved the principle that tribunal findings on a separately determined unfair-dismissal claim may give rise to issue estoppel in subsequent High Court proceedings for wrongful dismissal. That route avoids re-litigation of common issues but does not avoid merger where the tribunal has itself finally determined the wrongful-dismissal cause of action.

6. The Court advised that a claimant seeking more than £25,000 for wrongful dismissal should confine the tribunal proceedings to unfair dismissal and pursue wrongful dismissal in the High Court. Moore-Bick LJ agreed with Mummery LJ's reasoning and conclusion.

• Court of Appeal (Civil Division): In [2006] EWCA Civ 738, dismissed the appeal and upheld the strike-out of the High Court wrongful-dismissal claim.
• High Court, Queen's Bench Division: Master Eyre, by order dated 15 July 2005, struck out the claim form and particulars of claim and dismissed the wrongful-dismissal action.