A procedural cornucopia - Case Round-Up: January 2014

In this month’s round-up, Mark Shulman consultant solicitor with Keystone Law looks at recent cases concerning Pre Hearing Reviews, issue estoppel and abuse of process.

Mark Shulman, Consultant Solicitor at Keystone Law

Pre-Hearing Reviews
Should a PHR have taken place after having given directions for a full hearing and dismissed a subsequent application for a PHR? No said the EAT in [Bonkay-Kamara v APCOA Parking UK Ltd ]()UKEAT/0577/12/RN.

The proceedings arose out of claims for arrears of pay, breach of the rules as to maximum working time and also non-payment of expenses. The Respondent company opposed the claims and sought a PHR. That was rejected by the ET on the grounds that:

"The application for a Pre-Hearing Review has been refused, as to grant it would not be in accordance with the overriding objective. A Pre-Hearing Review is likely to be of the same length and to cover the same issue as the substantive hearing."

However, after further communication the ET said that a PHR would take place after all. The Claimant's solicitors objected pointing out that the ET had not been invited to review its earlier decision not to hold a PHR. Nevertheless, the PHR went ahead to consider whether any of the three claims should be struck out.

The Claimant appealed the decision to proceed with the PHR, submitting that the PHR had proceeded without jurisdiction and he also appealed the strike-out of two of his claims.

The EAT was referred by the Claimant to Goldman Sachs Services Ltd v Montali [2002] ICR 1251. In that case the EAT had decided that although it was open to an ET to make an order inconsistent with an earlier order of its own, it should only do so in "appropriate circumstances" and most usually only when there had been a change of circumstances since the earlier order. On this aspect of the case, the employer contended that Rule 10 of the then ET Rules gave exceptionally wide case management powers to an ET to take such steps and make such directions as it considered fit. Therefore, there had been ample power to hold a PHR, even though a PHR had previously been ruled out.

However, the EAT agreed with the Claimant. It was trite law that the ET had no power to review, let alone reverse, its decisions to proceed to a full hearing and refuse an application for a Pre-Hearing Review. Whilst Rule 10 was expressed in wide terms, the Judgment of the EAT in Montali indicated that the wide scope of the Rule does not allow the ETs to direct something to occur that has previously been refused, absent some material change of circumstances.

In the instant case neither party had pointed to any relevant change of circumstances. If the Tribunal was acting within its jurisdiction pursuant to Rule 10, the determination of an EJ to hold a PHR must have been based on their own initiative and in that case, there had been a failure to comply with the requirements of the then Rule 12, which dictated what must happen procedurally if the ET acted of its own motion.

Therefore, the EAT was satisfied that there ought never to have been a PHR as it proceeded without jurisdiction and accordingly the orders made at the Pre-Hearing Review were set aside.

Issue estoppel
Is there an issue estoppel where a Claimant is not permitted to proceed with a race discrimination claim and then decides to issue proceedings in the Queen's Bench Division of the High Court for damages for negligence and breach of Health and Safety Regulations based on the same facts? Yes said the High Court in [Nayif v High Commission of Brunei Darussalam ]()[2013] EWHC 3938 (QB).

Mr Nayif complained among other things that he had been subjected to racial discrimination at work and that he had suffered psychiatric injury as a result. The claim had been presented well outside the three month time limit for discrimination claims and an EJ held that it was not just and equitable to extend time. The Claimant gave notice of appeal to the EAT but it was held that there were no reasonable grounds for an appeal and a direction was given that no further action was to be taken on the appeal.

Mr Nayif's solicitors then issued a claim in the Queen's Bench Division against his former employers for damages for negligence and breach of the Management of Health and Safety at Work Regulations 1999. The factual allegations were of harassment resulting in psychiatric injury. Like the Claimant in the case of Sheriff v Klyne Tugs (Lowestoft) Ltd [1999] ICR 1170, Mr Nayif was essentially putting forward the same factual case as he had before the ET.

The employers served a Defence arguing that the claim was an abuse of process and should be struck out. This was on the basis that "The Defendant relies on the dismissal by the Employment Tribunal of the Claimant's claim for damages for compensation arising out of the same facts and matters as found the basis for the instant Claim."

The Defendant applied for the claim to be struck out and this was granted by a High Court Master who held that he was bound by the decisions of the Court of Appeal in Lennon v Birmingham City Council [2001] IRLR 826 and Sheriff v Klyne Tugs (above). The Master gave permission to appeal to the Court of Appeal on the grounds that there was a point of practice and procedure of significant importance. However, the Court of Appeal remitted the case back to the Queen's Bench Division of the High Court for a decision.

At the substantive QBD hearing, the Defendants relied on the doctrine of res judicata. They said that Mr Nayif's claim had already been brought forward in the earlier case in the ET and had been the subject of a decision of a court of competent jurisdiction. This was not a Henderson v Henderson case of abuse of process (under the rule in Henderson v Henderson [1843] 3 Hare 100), where a claim could and should have been brought forward in earlier proceedings, but was not.

The Defendants relied upon two case authorities to support their contention that the claim should be stuck out. In Barber v Staffordshire County Council [1995] ICR 379, Mrs Barber claimed a redundancy payment before the ET, but not at that stage unfair dismissal. She withdrew the redundancy payment claim at a hearing and the ET dismissed that claim. She subsequently presented a second ET claim, this time for both a redundancy payment and unfair dismissal. The ET allowed her to proceed, but on appeal both the EAT and the Court of Appeal held that both claims should have been struck out. In the case of the redundancy payment claim that was because of res judicata in the form of cause of action estoppel. The unfair dismissal claim failed because of a bar by virtue of the Henderson v Henderson abuse of process principle.

Barber was followed in Lennon v Birmingham City Council. Mrs Lennon brought a sex discrimination claim before an ET alleging harassment over a long period causing a stress-related illness. Two days before the hearing for directions she sent in a letter saying she wished to withdraw her application. The ET made an order stating that the application was dismissed on withdrawal by the applicant. Five months later she brought a county court claim for damages for negligence or breach of contract, again based on an allegation of harassment causing her to be ill and to be absent from work. The Court of Appeal affirmed the County Court Judge's decision striking out the claim. They said that Barber was binding authority that the dismissal of a claim on withdrawal was an adjudication and therefore the case was one of res judicata because the whole claim had already been brought forward in the ET.

However, in contrast with Lennon was Ako v Rothschild Asset Management Ltd & another [2002] ICR 899. Ms Ako brought a Tribunal claim for unfair dismissal and racial discrimination. She wrote asking to withdraw it and an order was made dismissing the claim in both its aspects on withdrawal. A week later she issued essentially the same claim but this time against both Rothschild Asset Management Ltd and another company.

The Court of Appeal in Ako held that cause of action estoppel did not apply where it was clear on examining the facts that the withdrawal of the first claim was intended to be a discontinuance preserving the Claimant's right to issue new proceedings. Barber and Lennon were distinguished and the Court of Appeal held that Ms Ako was not barred from bringing the second claim. Mummery LJ observed that the ET Rules did not have the equivalent of the provision in the Civil Procedure Rules for discontinuance as a form of disposing of a case to be distinguished from its dismissal. He said:

"Discontinuance does not release or discharge the cause of action. It preserves the right to establish an untried claim on the merits in other proceedings. If… this is so in ordinary courts, it does not make any sense that the position should be more strict in its application in the less formal setting of the employment tribunals".

Mr Nayif argued that he never presented a valid claim for racial discrimination to the ET at all. The claim which he did present was out of time and the ET held that it had no jurisdiction to consider it. Therefore, so the argument went, the claim was a nullity, just as much as if he had submitted to the ET, a claim for defamation or for infringement of a patent.

The employer contended that the decisions in Barber and Lennon meant that if the ET made an order dismissing a claim, the Court could not go behind it, the only exception being that which derives from the decision in Ako, (i.e. where the dismissal is on withdrawal and the Claimant's true intention was not to withdraw altogether, but to discontinue).

The High Court agreed with the employer. Two types of circumstances had to be considered. First, there are cases where the reason that the ET had no jurisdiction is because the subject matter of the claim was wholly outside its remit. In that case there is no question of a time bar and no question of exercising any discretion. Such cases could not be heard in an ET any more than a defamation claim, a private prosecution or a divorce petition. However Mr Nayif's case was different. The EJ had decided that the claim had been brought outside the primary limitation period.  After hearing submissions from the Claimant's representative and considering the documents placed before her, she found that it was not just and equitable to extend time and hence was a substantive decision.

The Claimant put forward an alternative argument based on Article 6 of the ECHR. This was to the effect that whilst the right of access to the courts is not absolute and may be subject to limitations, those limitations must not restrict or reduce the access left to the individual in such a way or  to such an extent that the very essence of the right is impaired.

However, the High Court was not persuaded. As Buxton LJ had said in Barber, "the principle of avoiding repetitious litigation is plainly a legitimate aim". Further, it was a proportionate means of furthering that legitimate aim that the courts should adhere to the principle of issue estoppel. Therefore, where a Claimant had brought his claim before an ET which could have exercised a discretion to grant an extension of time and consider the case on the merits (but had declined an extension of time), it was entirely proportionate that the doctrine of issue estoppel should prevent him from putting essentially the same case again in a different forum. However, there may still be cases "of great technicality" where it would not be proportionate for the doctrine of issue estoppel to be applied (e.g. Ako).

**Abuse of process

**Was it an abuse of process to bring a claim in the High Court using documents obtained in the course of ET proceedings? Yes, said the High Court in **[*IG Index PLC v Cloete* ]()[2013] EWHC 3789 (QB).

Mr Cloete was an employee of IG working as a network services engineer in the IT department. He was bound by a number of covenants for the protection of the confidential information relating to the business of the IG and the dealings of its clients.

Mr Cloete had concerns over IG's data security and he informed the company's legal department and also wrote to the Information Commissioner. Subsequently, Mr Cloete was subject to disciplinary action and he was dismissed for "unauthorised work".

ET proceedings followed and during the process of exchange of documents between the parties as directed by the ET, Mr Cloete delivered to IG a USB memory stick containing various documents including details of South African clients of IG. The company considered that Mr Cloete had no justifiable reason in the course of his employment for copying or retaining such information.

IG wrote to Mr Cloete requiring him to return the originals and copies of the confidential information and to provide specific undertakings. When Mr Cloete did not respond, IG served Particulars of Claim pleading that, in copying, retaining and disclosing (to the Information Commissioner) copies of the memory stick items, Mr Cloete was in breach of the express terms of the covenant and contract he had entered into with IG. IG sought orders for the delivery up of "all documents that are the property of the Claimant or that contain confidential information belonging to the Claimant". At an interim hearing, the Judge who heard the application made an order for delivery up of the documents and for the destruction of electronic copies. He also granted an interim injunction sought by IG and ordered the Mr Cloete to pay the costs of the application.

Mr Cloete applied to strike out a claim for damages against him by IG as an abuse of court process. He submitted that because the High Court proceedings were based on documents disclosed in separate proceedings before the ET, they were commenced by IG in breach of the rule that a party to whom a document has been disclosed may use the document only for the purpose of the proceedings in which it is disclosed. No permission has been sought by the IG Index to use the documents for the purposes of the present action.

The law
The relevant part of CPR r31.22, is as follows:

"(1) A party to whom a document has been disclosed may use the document only for the purpose of the proceedings in which it is disclosed, except where –

a) the document has been read to or by the court, or referred to, at a hearing which has been held in public;
b) the court gives permission;
c) the party who disclosed the document and the person to whom the document belongs agree.

It was common ground between the parties that this statutory principle applied to proceedings in the ET (see Harvey on Industrial Relations and Employment Law, Practice and Procedure, Section M, para 3:454). In McBride v The Body Shop International Plc [2007] EWHC 1658 (QB), the Claimant in defamation proceedings asked the High Court for an order that she be permitted to sue upon an e-mail obtained by way of disclosure in ET proceedings. The Defendant applied for and was granted, an order under CPR r.31.22(2) prohibiting the Claimant from suing upon the e-mail and that the claim be struck out in consequence.

Mr Cloete's case was that IG had used the client information in the High Court proceedings and not just for the purposes of the ET proceedings. The High Court agreed. IG had used information obtained from the ET disclosure, the use of which was prohibited by CPR r.31.22(1), unless one of the exceptions applies. None of the exceptions were said to apply in the present case. It was only because of the ET proceedings that Mr Cloete had had to disclose the fact that he was in possession of the items on the memory stick. The use of the information for the purpose of advancing a claim for damages was "plainly and obviously" a breach of the prohibition under CPR r31,22 (1). Although it might be unjust to bar a good claim, that was not a reason for limiting the scope of CPR r.31.22(1). However, where appropriate, the risk of any injustice could be addressed by a grant of permission under sub-rule (b).

As to whether such permission should be granted, the High Court held that it should not. At the interim hearing the Judge was not asked and had not himself raised the issue of whether any permission was required. It may well have been that if IG had asked the Judge at that stage for permission to use the disclosed documents for the limited purpose of seeking an order for delivery up and destruction of any copies retained by Mr Cloete, then the Judge would have given permission. In any event, the evidence was not strong in relation to the claim for an injunction and in relation to any claim for damages, the evidence was "non-existent". Whilst arguments directed to showing that there was a good case against the defendant "may be relevant in the exercise of any discretion", it did not provide an answer to the complaint that it has been prosecuted in circumstances amounting to an abuse of the process of the court (as per Rimer J in Miller v Scorey [1996] 1 WLR 112).

On the facts, the High Court considered that there would be no injustice to IG by an order striking out their present action as in the light of the position regarding the claim for damages and as there was no continuing need for an ongoing injunction, there was no good reason for giving permission to use information obtained from the ET proceedings for the further pursuit of the action against Mr Cloete. Accordingly, as IG had acted in breach of CPR r.31.22(1), the justice of the case required that the claim by IG be struck out.

Mark Shulman is a Consultant Solicitor with Keystone Law and an accredited workplace and employment mediator.

Published: 13/01/2014 10:15

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