Appeal No. UKEAT/0321/08/DA

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 8 September 2008
Judgment handed down on 12 September 2008

Before
HIS HONOUR JUDGE ANSELL
(SITTING ALONE)

GFI HOLDINGS LTD	APPELLANT

MR D CAMM	RESPONDENT

Transcript of Proceedings

JUDGMENT

	APPEARANCES

For the Appellant	MR AKHLAQ CHOUDHURY
(of Counsel)
Instructed by:
Messrs Salans Solicitors
Millennium Bridge House 
2 Lambeth Hill
London EC4V 4AJ
	
For the Respondent	MR MOHINDERPAL SETHI
(of Counsel)
Instructed by:
Messrs Edwards Angell Palmer & Dodge Solicitors
One Fetter Lane
London EC4A 1JB	

SUMMARY
PRACTICE AND PROCEDURE:  Case management
Tribunal error in failing to order a stay of Tribunal proceedings, to allow a claim for bonus monies in the High Court to be determined where the issue of whether there was a dismissal and the reasons for dismissal were issues common to both proceedings.

HIS HONOUR JUDGE ANSELL
Introduction
1.	This is an appeal from an interlocutory decision of an Employment Judge, Mr D Pearl, sitting at London Central Employment Tribunal on 2 May 2008 when he refused an application by the Respondent employer, GFI Holdings Ltd (GFI), for a stay of Tribunal proceedings commenced by the employee, Mr D Camm, to await the result of High Court proceedings between the same parties.  Reasons were sent to the parties on 4 June 2008 and a Notice of Appeal was filed by GFI on 10 July 2008.  Leave for this hearing was given on the sift by Mrs Justice Cox by order dated 24 July 2008;  she ordered an expedited hearing as the Tribunal proceedings had been fixed for hearing in October 2008.  At the time of Mr Pearl’s decision there was no hearing date fixed for the High Court proceedings, however these have now been fixed for early January 2009.

2.	This appeal turns on GFI’s contention that the Tribunal’s judgment was based on a fundamental error as to the nature of the High Court proceedings which has the result of entirely vitiating the decision on whether to stay the Tribunal proceedings.  The main error in the Tribunal’s decision, it is argued, was a finding that Mr Camm’s potential High Court claim for a bonus, in respect of which GFI is seeking negative declaratory relief in the High Court proceedings, “does not turn upon a finding that (Mr Camm) was dismissed”.  Further GFI criticised the Employment Judge’s conclusions that there was not an overlap between the two proceedings and also that an adjudication by the Tribunal would not embarrass the High Court proceedings.

Background
3.	The background facts are that Mr Camm was employed by GFI as an inter-dealer broker by a contract dated 9 January 2006, which was for a minimum fixed term of eighteen months plus six months notice thereafter.  Mr Camm was paid £125,000 per annum plus substantial bonuses which were paid six monthly in arrears.  His contract provided that the entitlement to a bonus would only arise when and if the bonus was paid and was subject to him still being in the employment of GFI, not under notice to terminate that employment or in breach of the agreement.  GFI’s case is that from about June 2007 it was the target of a sustained raid of some of its employees by a competitor, Tullett Prebon Group Ltd (Tullett) which was offering increased salaries to lure away staff.  As a result, GFI sought to protect its position by offering new fixed term and incentive-based contracts with its employees, including Mr Camm.  In July 2007 there were a number of meetings between GFI and Mr Camm.  Initially it appeared that he was agreeable to signing the new contract, but, at a meeting on 20 July 2007, it is alleged that he would not sign the contract and that he was resigning to go with Tullett.  GFI alleges that he offered to work out his notice if that was required and was indifferent as to whether or not he would be released early from his existing GFI contract.  GFI placed him on gardening leave.  Mr Camm’s case, however, is that he did not resign at that meeting and expressed no intention of doing so but that when he refused to sign a new contract, he was at first dismissed orally without notice and then put on six months garden leave.  After further meetings and correspondence, GFI contends it decided that it would be destabilizing for its workforce if Mr Camm continued to be paid whilst doing no work on garden leave; and, accordingly, GFI contend that they agreed to release him as from 31 July 2007.  Mr Camm says that this early release amounted to a dismissal with inadequate notice:  whereas GFI contend that the termination on the 31st was mutually agreed following his earlier resignation on 20 July 2007.

4.	Initially thereafter Mr Camm maintained that his employment had not terminated on that date but had continued until his resignation on 19 October 2007 in response to alleged repudiatory conduct on GFI’s part – in other words his claim was for constructive dismissal, which was the basis for the claim that was presented to the Tribunal on that date, 19 October 2007.  However, on 1 May 2008 Mr Camm confirmed that he was no longer pursuing a claim for constructive dismissal and the effective date of termination was agreed between the parties as being 31 July 2007.  Mr Camm’s case is now that he was dismissed on that date.  GFI maintain that it was a mutual discharge of obligations following his earlier resignation.

5.	On 12 December 2007 in a letter before action Mr Camm claimed alleged loss of bonuses amounting to £160,000, later increased to £190,000, failing which High Court proceedings would be issued.  On the same date a letter was written to the Tribunal by his solicitors seeking a stay of the Tribunal proceedings, apparently on the basis that he was about to issue a High Court claim.  GFI agreed that a stay would be appropriate. However, on 18 December 2007 Mr Camm had changed his mind and asked the Tribunal not to consider a stay at this stage.  As a result GFI invited the Tribunal to proceed with a stay and Mr Camm objected on the basis that there were no High Court proceedings underway.

6.	It should be noted that three other brokers who had agreed to leave GFI in order to join Tullett had also threatened proceedings against GFI claiming sums totalling almost £6m (the LBO claims).  They too had initially sought a stay of their Tribunal claims pending the outcome of their proposed High Court proceedings but had changed their minds.  GFI decided that it did not want to have such massive unresolved claims hanging over its head and decided to issue High Court proceedings for declarations that they were not liable in respect of any of the LBO claims or in respect of Mr Camm’s claim.  The High Court claim against him was issued on 18 February 2008 and Particulars of Claim served shortly thereafter.  By this time Mr Camm had joined Tullett and his schedule of loss in the Tribunal proceedings relates to the period between July 2007 and January 2008 when he started his new employment.

7.	GFI’s claim in the High Court proceedings alleged that the employment ended on 31 July 2007 by mutual agreement following Mr Camm’s resignation.  Alternatively, they contend that their letter of 23 July 2007 amounted to a lawful notice of dismissal with effect from 31 July 2007 on the basis that Mr Camm had indicated by words and conduct a willingness to be released from his employment immediately.  They therefore argued that with effect from 31 July 2007 Mr Camm was no longer entitled to any payments under his contract, particularly relating to notice and bonuses.

8.	There was a Tribunal CMD hearing on 3 March 2008 when GFI pursued its claim for a stay.  That application was adjourned to 2 May 2008 by which time the shape of the High Court proceedings would be clearer.  Mr Camm’s defence in the High Court proceedings was eventually served on 30 April 2008, denying any mutual agreement to terminate, resignation or a lawful notice to terminate.  He contended that the letter from GFI dated 23 July 2007 amounted to a dismissal with inadequate notice in breach of contract, and further relied upon an implied term that GFI would not terminate his employment in order to avoid the obligation to make bonus and other payments to him.  However, there was no counterclaim for outstanding bonuses or notice money although the loss of salary claimed in the Tribunal proceedings effectively covers the notice period.

9.	By the stage of the adjourned CMD hearing on 2 May 2008 it had been agreed between the parties that the Tribunal proceedings in relation to the LBO claims should be stayed by consent pending resolution of the High Court proceedings in respect of those three individuals.

10.	Mr Pearl noted that although there might be some evidential linkage between the LBO claims and that involving Mr Camm, the issues were different:  the LBO claims as stated above involved amounts of around £6m and there were also allegations of gross misconduct made by GFI against the three employees.

11.	On 16 May 2008 the parties agreed issues in relation to the Tribunal proceedings.  The first and principal issue to be determined is whether or not there was a termination of the contract by mutual agreement or an actual dismissal within the meaning of s95 Employment Rights Act 1996.  If a dismissal is found then the Tribunal would have to consider issues of automatic unfair dismissal as well as issues relating to ordinary unfair dismissal.  GFI alleged, in the alternative, that if there was a dismissal it was for some other substantial reason, namely Mr Camm’s alleged intention to leave and his dealings with Tullett.

12.	Turning to Mr Pearl’s decision, he was not prepared to accept the argument being advanced by Mr Sethi, on behalf of Mr Camm, that the motive for bringing the High Court proceedings should be regarded as a “stopping writ” for the purpose of stopping the Tribunal claim in its tracks.  Mr Pearl found that GFI could have had various motives for wanting to launch litigation and, in my view, he quite properly concentrated on the form of those proceedings and the issues at stake.

13.	Mr Pearl having reviewed the history of the case and in particular in paragraphs 7-10 setting out the issues raised in the High Court proceedings came to these conclusions in paragraph 11:
“In my view, the claim to a bonus does not turn upon a finding that the Claimant was dismissed.  It is a claim which is consequent upon the termination of the employment relationship, however that termination came about.  The simple point therefore is that I do not regard any claim in respect of the bonus to turn upon the issue of dismissal which certainly does arise in the Tribunal if the Tribunal claim is to proceed.”

14.	Thereafter he dealt with the further allegation raised by Mr Choudhury, on behalf of GFI, that the Tribunal claim could also be an embarrassment in the legal sense since it could affect the High Court determination in relation to any notice claim.  Mr Pearl noted that at this time no notice claim had been made within the High Court proceedings and as it now appears the equivalent of notice monies are only being sought within the Tribunal proceedings.

15.	In paragraph 14 Mr Pearl summarised the various authorities to which he had been referred by Counsel and came to his conclusions in paragraphs 16 and 17 as follows:

“16.	The question here turns on the identity of common issues in the two sets of proceedings.  There is nothing complex about the claim being put before the Tribunal by Mr Camm.  It engages the important question as to whether or not there was a dismissal or whether either by mutual agreement or resignation there was no dismissal and therefore the unfair dismissal for that reason fails.  If there was a dismissal, and this is the finding which I understand the Respondent is anxious to avoid in advance of High Court proceedings, then the next issue for the Tribunal is whether it was unfair, whether generally under Section 98(4) or automatically because of a failure to observe the statutory dismissal procedures.  This is not a difficult question for the Tribunal and indeed involves matters that are routinely adjudicated.

 17.	If the Claimant were to be found here to have been dismissed, that does not appear to have any relevance to the commission claim in the High Court, even if he chooses to bring it and is given permission by that court to proceed with it.  It would have some bearing on the notice claim but I know nothing about the quantification of such a claim and it currently does not exist.  I have therefore come to the conclusion that all of the factors that I need to take into account point to the same result which is that the Tribunal claim should go ahead.  I do not regard the delay that I think may be occasioned by a contrary adjudication to be in the interest of justice.  I have no reason to think that the two sets at High Court proceedings will not at some point be allowed to proceed in parallel given that Mr Choudhury himself has referred to some common evidence in both cases.  This raised the possibility that the unfair dismissal claim will go off for a substantial time since the LBO litigation is not to be heard until next year.  I have no basis for saying that the amount of damages claimed is a reason why there should be no adjudication in the Tribunal and there is no undue complexity of issues.  It is not as far as I am aware technical.  The real point here is whether or not there is an overlap and whether an adjudication by the Tribunal would embarrass the High Court.  The simple point is that there is currently no overlap and it does not follow, even if there were, that the matter must be stayed in the Tribunal pending an adjudication on the question of dismissal by a High Court Judge in proceedings which currently do not require such an adjudication.  In my judgment, the staying of the Tribunal proceedings would work injustice to the Claimant who is entitled to as swift a resolution as can be provided in this forum unless there are some good reasons as to why the matter should be stayed.  I cannot find sufficient grounds for so doing and therefore it is my view that the claim should proceed.”

The law
16.	Both parties referred me to the relevant section in Harvey on Industrial Relations and Employment Law, Division T (paras. 760-782).  The Tribunal has a broad discretion to stay proceedings before it under Rule 10(2)(h) of the Employment Tribunal (Constitution and Rules of Procedure) Regulations 2004; that power being exercisable particularly where there are parallel High Court proceedings arising out of similar facts.  It is generally desirable to dispose of High Court actions first where there are issues in both sets of proceedings which are substantially the same, see Automatic Switching Ltd v Brunet [1986] ICR 542.  Cases such as Carter v Credit Change Limited [1979] IRLR 361, Bowater Plc v Charlwood [1991] ICR 798 and First Class Electronics Limited v West [1989] ICR 72 set out the factors to be taken into account when determining whether a stay is appropriate, including a similarity of issues between the two sets of proceedings, the complexity of those issues, the technicality of the evidence and the amount of damages claimed.  The decisions have also stressed the need for an orderly disposal of proceedings and the delay that would be occasioned by postponing Tribunal proceedings.

17.	Mr Sethi reminded me that the exercise by a Tribunal of its discretion under its case management powers will not be easily upset on appeal by this court.  In Bastick v James Lane (Turf Accountants) Ltd [1979] ICR 778 at 782, Arnold J in a passage approved by the Court of Appeal in Carter indicated the limited basis on which the Employment Appeal Tribunal would interfere with such a decision:
“Either we must find the tribunal or the employment judge has taken some matter which it was improper to take into account or has failed to take into account some matter which it was necessary to take into account in order that discretion might be properly exercised.  Or alternatively if we do not find that but the decision which was made by the tribunal or the judge in the exercise of its discretion was so far beyond what any reasonable tribunal or judge could have decided that we are entitled to reject it as perverse.”

18.	Mr Choudhury criticised the Tribunal’s conclusions as set out in paragraphs 11 and 17.  He argued that the judge was in error in concluding as he did in paragraph 11 that “the claim to a bonus does not turn upon a finding that the Claimant was dismissed”.  This conclusion being repeated in paragraph 17 in the words “If the Claimant were to be found here to have been dismissed, that does not appear to have any relevance to the commission claim in the High Court”.  Later in that paragraph there are the conclusions that there was no overlap between the two proceedings and by inference that an adjudication by the Tribunal would therefore not embarrass the High Court.  Mr Choudhury argued that in both sets of proceedings the Tribunal would be required as a first step to make a determination as to whether there was a resignation followed by a mutual discharge of obligations or lawful termination or a dismissal.  In the Tribunal proceedings, if a dismissal was not established to the satisfaction of the Court that was an end of the matter, save for a small claim in respect of unlawful deduction of wages concerning one week’s salary.

19.	In the High Court, Mr Sethi conceded that if the court were to determine that there was a resignation followed by a mutual discharge of obligations or lawful termination GFI would be entitled to their declaration and Mr Camm would therefore not be entitled to payment of bonus or notice monies.

20.	Mr Choudhury submitted that in the Tribunal proceedings a finding of dismissal would then require the Tribunal to consider issues such as the reason for dismissal and the fairness of any dismissal.  In the High Court, if the court determined that there was a dismissal, then Mr Camm would be entitled to claim damages for wrongful dismissal, including all sums he would have received had he been lawfully dismissed on notice.  Whilst his contract, as I have set out above, provided that he was not eligible to be considered for a bonus if he was on notice as at the date of payment of any bonus, Mr Choudhury argued that there would clearly be arguments as to GFI’s entitlement to rely on that clause in circumstances where there was an alleged wrongful dismissal and in particular that Mr Camm had pleaded the implied term – that his contract could not be terminated if the reason for termination was to avoid payment of the bonus.

21.	Mr Sethi argued that the issue of whether there was a dismissal was not central to the High Court proceedings but was central to the Tribunal proceedings in that dismissal was a pre‑condition to a finding of unfair dismissal.  He argued that Mr Camm’s non-entitlement to damages in respect of bonus did not turn on the finding of fact as to how the Claimant’s contract came to be terminated, i.e. by dismissal or mutual agreement, but on the fact of its termination howsoever arising before the date any bonus became payable.  

22.	I cannot agree.  It seems to me that a finding of dismissal is an important first stage in both sets of proceedings.  In the Tribunal proceedings, it is the first stage before the Tribunal go on to consider issues such as reasons for dismissal and fairness.  In the High Court, the finding of dismissal is the required first stage in order for Mr Camm to defeat the claim by GFI for declaratory relief.  Accordingly, I cannot agree with the Employment Judge’s conclusions in paragraphs 11 and 17 that the claim to the bonus does not turn upon a finding that the Claimant was dismissed.  

23.	The other area of overlap of evidence highlighted by Mr Choudhury concerns the contention advanced by Mr Camm in the High Court proceedings that his entitlement to a bonus arises by reason of the breach of the implied term that the contract would not be terminated if the reason for termination was to avoid payment of the bonus i.e. that he was dismissed by GFI so as to avoid their obligation to pay the bonus.  I have already set out above that within the agreed issues to be determined by the Tribunal is the alternative contention on behalf of GFI that the reason for dismissal was some other substantial reason, namely Mr Camm’s alleged intention to leave and his dealings with Tullett.  Mr Choudhury argued that there is therefore a real risk that the Tribunal if asked to make a determination on the reason for dismissal may well make findings which touch upon the issue in the High Court proceedings, namely the allegation that the dismissal was to avoid paying bonus.  Mr Sethi argued that if the Tribunal find that the reason for dismissal did not fall within the s98 reasons there is no obligation on the Tribunal to set out any other reasons for dismissal;  and he referred to the decision in Automatic Switching Ltd where the Employment Appeal Tribunal urged the Tribunal in giving its reasons to be “extremely careful and ultra cautious in reaching certain conclusions and inferences from such primary facts as they may find are clear” and suggested that this was a direction that I could give in this case.  It seems to me, however, that there is a real risk that the Employment Tribunal if they reach the stage of having to consider the reason for dismissal may well make findings which touch upon the issues concerning the implied term.

24.	It follows, therefore, that I agree with the submissions advanced by Mr Choudhury that there is an overlap of issues in the two main areas that I have highlighted.  If the Tribunal proceedings were to precede the High Court proceedings, it follows that the High Court might find itself bound by findings made by the Tribunal as to the nature of the termination and the reasons for that termination, thereby limiting the High Court’s freedom to make findings in respect of the same factual issues; and I therefore conclude that the Tribunal have made some clear and fundamental errors in their determination.

25.	Notwithstanding these errors Mr Sethi argues that, even if I am minded to substitute my judgment for that of the Tribunal, nevertheless it is clear that the Tribunal reached the correct result for the following reasons:  
1.	that the Tribunal should strive to achieve the general objects of the legislation which are that statutory employment claims should be entirely determined in the Employment Tribunals and should be determined as quickly as possible;
2.	that the issues are not unduly complex and the Tribunals are well versed in making determinations concerning dismissal or resignation and the reasons for dismissal;
3.	the sums claimed in the High Court are not large and therefore should not demand by their very nature that the High Court proceedings are determined first;
4.	issues concerning automatic unfair dismissal can only be dealt with by the Tribunal;
5.	delay – this was a factor before Mr Pearl but in the light of the fact that the High Court can hear this case in January 2009 it is obviously of much less importance;
6.	Mr Sethi still maintains that the issue of the High Court proceedings by GFI was contrived and a thinly veiled attempt to delay and add costs to the determination of the Claimant’s statutory employment rights.

26.	I cannot agree with Mr Sethi’s arguments.  It seems to me that the key issue between these parties is the bonus and that is the issue that is effectively before the High Court by way of the claim by GFI for declaratory relief.  I am therefore of the view that the issues of dismissal and the reasons for dismissal are much better determined within the High Court unfettered by any prior determination of issues by the Tribunal; and therefore I allow the appeal and order a stay of the Tribunal proceedings pending determination by the High Court of GFI’s action.