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Smith v Chelsea Football Club PLC [2010] EWHC 1168 (QB)

Keywords • breach of contractissue estoppelunlawful deductions

Application for strike out of claims arising from alleged underpayments and unpaid bonuses and where the claims had previously been dismissed in an employment tribunal. Parts of the claim were struck out as barred by issue estoppel.

The claimant was a senior executive with the club. He was originally paid on a self-employed basis pending the arrival of a new chief executive but was eventually added to the payroll in 2003 though the draft contract was not signed. He was made redundant, unfairly, in July 2007 and awarded the maximum compensation. His application to the ET reserved his right to pursue wrongful dismissal and breach of contract claims in the High Court. The tribunal itself found that there were no unauthorised deductions or enforceable bonus terms though he was entitled to some back pay of a salary increase and reasonable period of notice.

The claimant subsequently applied to the High Court and the defendant, in this application sought to strike out parts of the claim as already determined by the ET. Counsel for the claimant argued, broadly, that the present claim was not based on the alleged agreement but on the work the claimant actually carried out, which required reasonable remuneration or quantum meruit. Such claims could have been heard by the ET, their findings did not prevent pursuit of this claim and, in the absence of agreement, the question of the true worth of claimant's services was still undecided. Cox J reviews the relevant case law, including Coors, New Century and the principles of issue estoppel in Thoday. She rejects these submissions as "artificial" as the tribunal's judgment should be read as a whole and the ET clearly found that the claimant was being paid pursuant to a contract. She then distinguishes this case from Coors as that concerned loss of chance. Accordingly, the claims for salary entitlement and unpaid bonuses had already been determined by the tribunal and were barred by issue estoppel.
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Case No: HQ09X04109

Neutral Citation Number: [2010] EWHC 1168 (QB)

IN THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

Royal Courts of Justice

Strand

London WC2A 2LL

Tuesday, 27 April 2010

BEFORE:

MRS JUSTICE COX

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BETWEEN:

Paul Smith (Applicant/Claimant)

- and -

Chelsea Football Club Plc (Respondent/Defendant)

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Mr A White QC And Mr T Kibling (instructed by Fox Williams LLP) appeared on behalf of the Claimant

Mr A Stafford QC (instructed by Russell Jones & Walker) appeared on behalf of the Defendant

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Judgment

MRS JUSTICE COX:

1. The claimant is a former employee of the defendant football club ("the defendant"). He was dismissed on 27 July 2007. He brought a claim in the employment tribunal in October 2007 raising a number of complaints, which were all determined after a three-day hearing. The Tribunal's reserved judgment was promulgated with reasons on 11 August 2008. He did not appeal against those complaints which were dismissed. Subsequently, on 16 September 2009, the claimant commenced proceedings in this court in respect of his employment with the defendant.

2. The defendant has now applied to strike out the greater part of the claimant's claim, or for summary judgment in relation to that part. This is on the basis that the claims now being advanced before this court are the same as those which were brought before the employment tribunal and dismissed. The defendant contends that the tribunal's judgment and reasons give rise to an issue estoppel, and that it is an abuse of process for him to attempt to re-litigate the same claims before this court.

3. The claimant opposes this application on the basis that the tribunal's conclusions and findings of fact do not prevent his pursuit of the present claims, and that there is nothing in their reasoned judgment which acts as an insuperable barrier to them. He contends that the claims have reasonable prospects of success and do not amount to an abuse of process.

4. The starting point, as it seems to me, is the judgment of the employment tribunal and their findings on the issues they were asked to determine.

5. In his amended grounds of complaint, the claimant claimed the following relief: (1) a declaration as to his terms and conditions of employment with the defendant, pursuant to section 11 of the Employment Rights Act 1996; (2) compensation for unfair dismissal; and (3) an award for alleged unlawful deductions from his wages, pursuant to section 30 of the 1996 Act. This consisted of the following payments, to which he claimed that he was legally entitled pursuant to an agreement with the defendant in February 2007:

"(i) £130,000 in lieu of backdated salary and bonuses for the 2003/04, 2004/05 and 2005/06 football seasons payable on 30 June 2007; and

(ii) £236,250 in lieu of backdated benefits for the period from 1 October 2003 to 30 June 2007 payable on 30 June 2007."

6. Pausing there, I note that in respect of underpaid salary and bonuses the sums claimed in the Particulars of Claim before this court are different in amount, but cover the same period as claimed before the employment tribunal. The figure claimed in respect of benefits is exactly the same figure. It also covers the same period.

7. In his tribunal claim form, the claimant expressly reserved his right to bring a claim in the High Court in respect of (a) his unpaid notice period (see box 10.1 of the claim form); (b) £130,000, said to be the bonus due and payable to him on 30 June 2008, i.e. after his dismissal (see paragraph 28 of the Amended Grounds), and (c) £5,250 in lieu of benefits for July 2007, allegedly payable on termination. Save for these payments, the essential claim before the tribunal, in addition to the declaration sought as to his terms and conditions of employment and entitlements, and compensation for unfair dismissal, was in respect of sums said to be due and owing to him by his employers, non-payment of which was said to constitute unlawful deductions from his wages.

8. The defendant resisted these claims on the basis that the claimant had no legal entitlement to the sums claimed. At paragraph 5 of their written response, they pleaded as follows:

"For the avoidance of doubt, no agreement was ever reached in respect of any additional remuneration beyond his salary, including a bonus entitlement, in respect of which no financial or other objectives were determined. Importantly, as a consequence, the claimant did not have a legitimate and enforceable expectation and/or right to any payment beyond his basic salary."

9. At the hearing, the claimant gave evidence and called witnesses. The defendant also called witnesses and agreed bundles of documents were received in evidence. Written and oral submissions were presented and the tribunal reserved judgment at the conclusion of the hearing.

The Findings of the Tribunal

10. In view of the submissions advanced by Mr Stafford QC, appearing before me on behalf of the claimant, it is necessary to set out the tribunal's findings in some detail, so that the issues arising on this application may be properly understood. The relevant facts were found to be as follows.

11. The claimant is a sports marketing executive specialising in football. He had a long-standing, professional and personal relationship with Peter Kenyon who, in early 2003, was CEO at Manchester United Football Club, and who whilst there engaged the claimant on a consultancy basis.

12. Following the purchase of the defendant club by Roman Abramovich in the summer of 2003, Mr Kenyon was offered and accepted the post of CEO with that club. His contractual obligations with Manchester United meant that he was put on garden leave, and was unable to join the defendant for a period of time. This was originally to be one year from September 2003, although in the end he was released after six months and joined the defendant in February 2004.

13. On 16 September 2003, Mr Kenyon telephoned the claimant and, with the defendant's approval, offered him an interim post with the defendant, pending his arrival.

14. Contrary to what is pleaded (or at any rate suggested) at paragraph 1 of the Particulars of the Claim before this court, the tribunal found that the claimant was described as a "consultant" to the defendant's board of directors. He was not in fact appointed as interim CEO, although the media apparently represented his appointment in that way. Once Mr Kenyon arrived at the defendant club in February 2004, the claimant reverted to the role of group business affairs director.

15. The tribunal made clear findings as to the claimant's salary, from his arrival at the club until his dismissal in July 2007. After initial negotiations, the claimant received a draft contract at the end of October 2003. The material terms of that contract were that his commencement date was 18 September 2003; that he was employed as a marketing commercial director at a salary of £300,000 per annum, payable monthly in arrears; that his salary review date would be 1 July 2004, and each 1 July thereafter; and that he was entitled to six months' notice of termination of his employment. There were other standard terms relating to various employment benefits, pension, holidays and sick leave. There were also clauses relating to confidentiality and non-competition, which the defendant wished to have in place for its protection. So far as bonus was concerned, the claimant was to be entitled to a bonus calculated and payable in accordance with financial objectives and criteria to be established by the board.

16. The claimant refused to sign this contract, apparently because of his objection to the proposed confidentiality and non-competition clauses. Initially, it appears that he was told to wait for Mr Kenyon to arrive, in order "to sort out the contractual position", and that he was not being paid. However, he agreed to invoice the club for £25,000 per month, (which equates to £300,000 per annum), sending in four such invoices until he was put on the payroll, backdated to September 2003. Once on the payroll, the claimant received monthly remuneration at an annual rate of £300,000. The tribunal found at paragraph 8.4 that once he was on the payroll and receiving this monthly remuneration, he:

"... did not act in any other way inconsistent with the terms of the draft contract with which he had been provided, albeit not signed by him."

17. The tribunal did not find therefore that the claimant's initial salary was £350,000 per annum, which is now pleaded as part of the reasonable remuneration claim (see paragraph 4(b) of the Particulars of Claim. In fact the tribunal found that, in line with the pay review day of 1 July, the claimant's salary was increased by 10 per cent to £330,000 in July 2004, in line with percentage increases to the other executive directors at the club. Thereafter, there was no increase in 2005 or 2006, until the jump to £400,000 which was found to have been agreed with Mr Kenyon on 27 February 2007 and backdated to 1 January 2007. It appears that, with the exception of Mr Kenyon, the claimant was the highest-paid executive director at the club.

18. There was a clearly a dispute before the tribunal as to what, if anything, was agreed in respect of the other employment benefits and the claimant's bonus. The tribunal rejected the claimant's contention that there was a series of express agreements, and found on the evidence that there was no agreement reached at any stage about payment of bonus. In fact, no bonus scheme was ever implemented by the club for any executive director. There was agreement that the claimant would receive payment for accumulated benefits, on condition that he signed the contract of employment and subject to proper calculation. He received a new draft contract for discussion in February 2007. In the event, however, the tribunal found that, save in respect of the salary of £400,000 per annum agreed in early 2007, there was no concluded and enforceable agreement ever reached in respect of bonus or any employment benefits.

19. Time passed. On 27 July 2007, Mr Kenyon met the claimant and told him that his role was redundant. Other than confirming his dismissal in writing, the defendant conceded that the statutory dismissal and disciplinary procedures were not followed and that the claimant's dismissal was therefore unfair. They paid him the maximum compensatory award of £60,600, together with a basic award of £1,395. The claimant then raised a grievance dated 14 August 2007, through his solicitors, in respect of certain sums of money that he said were due to him, and which the tribunal said formed the basis of his claims before them, and any claim that he might have for breach of contract. The grievance was not upheld and his appeal was unsuccessful.

20. These were the facts found by the tribunal. They directed themselves correctly to the relevant statutory provisions and to the case law which applied to the various claims. They noted that they were concerned only with those payments said to be due and owing prior to the claimant's dismissal. They noted that the claimant had specifically reserved to the High Court his claims for wrongful dismissal and for breach of contract as regards those sums said to be payable at date of termination (eg the bonus alleged to be due in June 2008), and that they were therefore not within the tribunal's jurisdiction. Unfair dismissal had of course been conceded and the claimant had been compensated accordingly.

21. The tribunal reached the following conclusions:

(1) The defendant did not make any unauthorised deductions from the claimant's wages. Save for the increase in salary to £400,000, agreed on 27 February 2007 and backdated, there was no other concluded agreement as to payment of bonus or any employment benefits.

(2) The defendant had provided a statement of particulars of employment in the October 2003 draft contract, which contained all the mandatory particulars. They found that although the claimant did not sign it or agree it, he did receive the remuneration payable under the contract and did not thereafter do anything inconsistent with its terms. There was no bonus term in favour of the claimant, because he had not signed the 2003 agreement. However, even if he had signed, the defendant had in fact not exercised its discretion to operate the scheme and thus such sums would not be properly payable. The scheme was not in operation, because the defendant had not set any financial objectives and criteria. No other director, save for the possible exception of Mr Kenyon himself, was paid a bonus, and the defendant did not agree such a payment with the claimant.

(3) The defendant had, however, failed to comply with the requirements of section 4 of the 1996 Act. When the claimant's salary was increased to £330,000 per annum in July 2004, and then again to £400,000 per annum from January 2007, he was not given a written statement containing particulars of this change. In accordance with section 12(1) of the 1996 Act, they determined that the claimant was entitled to a salary of £400,000 per annum, to be paid monthly. Further, given that the claimant did not reach agreement with the defendant over his notice period, they concluded that he was entitled to a reasonable period of notice of termination of his employment.

22. It will be apparent from the above that the main claim before the tribunal was the non-payment of sums said to be due to the claimant for the period of his employment, but which the defendant had not paid; namely the alleged underpayment of salary and the non-payment of bonus entitlement and employment benefits.

23. Such sums, save for some exceptions (which are irrelevant to this dispute) can be recovered in the employment tribunal, in a claim for unlawful deductions from wages. If the claimant had a legal entitlement to wages, including bonus payments and other financial benefits, he could have pursued a claim for them either in the employment tribunal or in the High Court.

24. In the tribunal the defendant challenged the claimant's legal entitlement to the sums claimed. The tribunal dismissed all the claims for unpaid sums said to be due during the claimant's period of employment with the defendant. At paragraph (iv) of the formal judgment, the tribunal held:

"It is determined and declared that the claimant was entitled under the statement of particulars of change to his salary to a salary of £400,000 per annum, payable in 12 equal monthly instalments."

25. There were then some further developments. The claimant's solicitors wrote a letter before action to the defendant's solicitors on 18 September 2008, setting out claims in respect of underpayment of salary, bonus and other benefits said to be due to him during his employment. In their response, the defendant's solicitors: (a) stated that each of these claims was barred by issue estoppel and that it was not open to the claimant to re-litigate the claims determined against him by the tribunal; and (b) formally admitted on the defendant's behalf that the claimant was wrongfully dismissed and that he was entitled to a reasonable notice period, which would be 12 months, as in the case of all the other executive directors at the club. The defendant offered compensation for wrongful dismissal on that basis, and based upon the salary of £400,000 determined by the tribunal as his salary entitlement in 2007, subject to credit for the unfair dismissal compensation, and to the claimant demonstrating that he had taken reasonable steps to mitigate his loss.

The Present Application

26. Against that background, I turn to the defendant's application to strike out the greater part of the claim subsequently issued in the High Court in September 2009.

27. In these proceedings the particulars of the remuneration claimed, set out at paragraph 7, are as follows: (a) underpaid salary of £231,250 from 1 October 2003 to 31 December 2006; (b) underpaid bonus from October 2003 until dismissal, calculated as £461,718; and (c) non-payment of benefits valued at £236,250.

28. The claim for these sums is advanced on two alternative bases: (1) that no remuneration was expressly agreed at the commencement of his employment, and it was therefore an implied term of the contract that the claimant would be paid reasonable remuneration; or alternatively (2) that he is entitled to a quantum meruit in respect of the work done during his employment. The remainder of the Particulars of Claim pleads a cause of action in wrongful dismissal in relation to underpaid salary and non-payment of bonus and employment benefits.

29. On behalf of the defendant, Mr White QC does not apply to strike out the salary element of the wrongful dismissal claim which, if the defendant's offer in settlement is not accepted, will require consideration of mitigation of the claimant's loss.

30. His challenge is to the claims made for unpaid salary, bonus and benefits, and as to the bonus and employment benefits elements of the wrongful dismissal claim. He submits, essentially, that the facts relevant to this claimant's employment, and to the claimant's legal entitlement to payment during his employment, have already been established.

31. He submits that the tribunal determined the claimant's salary entitlement, both at the commencement of his employment and following the increase to £400,000 per annum with effect from 1 January 2007. That salary had been paid to him. They also determined that there was no agreement for the claimant to be paid a bonus and no discretionary bonus scheme in place, and that the payment of benefits was conditional upon him signing a written contract of employment, which he failed to do.

32. The claims being advanced now are therefore exactly the same claims which were advanced before the employment tribunal and rejected. The reasoned judgment of the tribunal gives rise to an issue estoppel against this claimant, and it is an abuse of process for him to attempt to re-litigate the same claims in this court. The action should therefore be struck out, so far as these claims are concerned, or summary judgment entered against the claimant in respect of them.

33. On behalf of the claimant, Mr Stafford QC submits essentially as follows. At the heart of the claim for unlawful deductions from wages in the tribunal was an alleged agreement, which the claimant asserted he had entered into with Mr Kenyon on 27 February 2007. The tribunal found that, save as to a salary of £400,000 per annum, there was no agreement reached on anything else, on that or on any other date. The present claim, by contrast, is not based upon an alleged agreement between the parties, but on the work which the claimant actually did, on the basis either of an implied term of the contract, requiring reasonable remuneration for the work done during his employment, or alternatively on a quantum meruit.

34. These two, alternative bases acknowledge the tribunal's findings on the absence of agreement between the parties as to remuneration, and focus on either an implied contractual term, or the fact that the claimant did actually work for the defendant and should therefore be paid the worth of his services to them. Neither of these claims was or could have been pursued by the claimant before the employment tribunal (see Coors Brewers Limited v Adcock & Ors [2007] IRLR 440 CA and Lucy and Ors v British Airways UKEAT/0033/08  (Unreported)). These claims are therefore properly brought by means of the present proceedings.

35. Further, Mr Stafford submits that the tribunal's findings of fact do not prevent the pursuit of these claims. It is his role and the work that the claimant actually carried out that is important, not his formal appointment and job title. In what he suggests was a "carefully phrased" judgment, he submits that the tribunal found that there were initial sums paid to the claimant pending the arrival of Mr Kenyon, and thereafter only inconclusive negotiations as to remuneration, save as to basic salary in 2007. Although the claimant was working at the club and receiving sums of money, there was never any agreement between the parties as to his entitlement, and the tribunal's findings of fact reflect that. The corollary of these findings, says Mr Stafford, is that it is open to the claimant to contend, in the absence of a concluded and comprehensive agreement, that he is entitled to be paid a reasonable sum, or to be paid for his services on a quantum meruit basis.

36. Further, in relation to bonus, in the absence of any agreement it is open to this court in these claims to decide that reasonable remuneration or a quantum meruit claim would include an element of bonus.

37. In considering these submissions, it is necessary first to examine the nature and scope of an unlawful deductions claim. Section 13 of the Employment Rights Act provides, so far as is relevant, as follows:

"13 Right not to suffer unauthorised deductions

(1) An employer shall not make a deduction from wages of a worker employed by him unless-

(a) the deduction is required or authorised to be made by virtue of a statutory provision or a relevant provision of the worker's contract, or

(b) the worker has previously signified in writing his agreement or consent to the making of the deduction.

…….

(3) Where the total amount of wages paid on any occasion by an employer to a worker employed by him is less than the total amount of the wages properly payable by him to the worker on that occasion (after deductions), the amount of the deficiency shall be treated for the purposes of this Part as a deduction made by the employer from the worker's wages on that occasion."

38. Section 27(1) of the Act contains a very broad definition of the term "wages", which means:

"…any sums payable to the worker in connection with his employment, including-

(a) any fee, bonus, commission, holiday pay or other emolument referable to his employment, whether payable under his contract or otherwise," ……

39. In the case of New Century Cleaning Company Limited v Church [2000] IRLR 27, the Court of Appeal held that the effect of these provisions is that a worker can recover unpaid sums to which he has a legal entitlement, although not necessarily a contractual entitlement. At paragraph 43 Morritt LJ said this:

"The word 'payable' clearly connotes some legal entitlement. The adverb 'probably' is also consistent with a legal requirement, but is not necessarily limited to a contractual entitlement. This is confirmed by the provisions of s.27(1)(a), which show that the wages 'probably payable' may not be due under the contract of employment. But the words 'or otherwise' do not, in my view, extend the ambit of 'the sums payable to the worker in connection with his employment' beyond those to which he has some legal entitlement."

40. At paragraph 62 Beldam LJ said that:

"For wages to be 'properly payable' by an employer, he must be rendered liable to pay, either under the contract of employment or in some other way. Section 27 contains some examples of sums which may be payable, either under contract or because for some other reason the employer is liable to make payment as an addition or supplement to 'wages'. An example of a sum properly payable otherwise than under contract would be a minimum wage payable by order of a wages council. Nor is it difficult to see how a fee, bonus, commission, holiday pay or other emolument referable to employment may be payable otherwise than under the contract of employment. Such payments may be customary or required by collective agreements without express provision being made in a contract of employment."

41. Although dissenting with the court's conclusion on the facts, Sedley LJ agreed with this reasoning, pointing out at paragraph 37:

"...Parliament has not limited wages to what can be contractually ascertained. Defining them so as to embrace all that is 'properly payable' aims, by looking beyond the lawyer's contract to the industry reality, to avoid some of the niceties of legal analysis which would otherwise arise."

42. In directing themselves on the law, the employment tribunal in this case clearly and correctly described the applicable principles, stating as follows at paragraph 5:

"Section 23 of the 1996 Act provides that the worker may present a complaint to an Employment Tribunal that his employer has made a deduction from his wages in contravention of section 13. There must be some legal right to the payment, even if not contractual (see New Century Cleaning Company Limited v Church [2000] IRLR 27 CA) and it must be quantifiable - see Coors Brewery Limited v Adcock[2007] IRLR 440 CA). Non-payment of a bonus can be "properly payable", and therefore fall within section 13(3) of the 1996 Act, but only if the employer has indicated that it will be paid - see Farrell Matthews and Weir v Hansen [1995] IRLR 160 EAT. The EAT held that a discretionary bonus which has been declared is a wage which is properly payable to an employee in terms of section 13(3) of the Act. Until the discretion is exercised in favour of granting a bonus, no bonus is payable, provided that the discretion is exercised properly."

43. It is clear from their reasoned conclusions that the tribunal applied these principles to the facts they had found. I agree with Mr White that their essential conclusion was that this claimant had no legal entitlement, whether contractual or otherwise, to payment during his period of employment to the sums he claimed as underpaid salary, unpaid bonus or unpaid employment benefit.

44. There is no dispute between the parties as to the principle of issue estoppel, which is well established and was most clearly articulated by Diplock LJ in Thoday v Thoday [1964] P 181:

"...'issue estoppel' is an extension of the same rule of public policy. There are many causes of action which can only be established by proving that two or more different conditions are fulfilled. Such causes of action involve as many separate issues between the parties as there are conditions to be fulfilled by the Plaintiff to...establish his causes of action; and there may be cases where the fulfilment of an identical condition is a requirement common to two or more different causes of action. If in litigation upon one such cause of action any of such separate issues as to whether a particular condition has been fulfilled is determined by a court of competent jurisdiction, either upon evidence or upon admission...neither party can, in subsequent litigation between one another upon any cause of action which depends upon the fulfilment of the identical condition, assert that the condition was fulfilled if the court has in the first litigation determined that it was not, or deny that it was fulfilled if the court in the first litigation determined that it was."

45. Nor is it in dispute that this principle applies to findings made in the judgment of an employment tribunal. There is ample authority for the proposition that the findings of an employment tribunal may give rise to an issue estoppel in subsequent proceedings in the High Court. Mr White placed particular reliance in this respect on the case of Green v Hampshire County Council [1979] IC 861, a decision of Fox J in the Chancery Division.

46. In that case, the claims of two employees for unfair dismissal were dismissed by the industrial tribunal. Subsequently, the employees issued proceedings in the Chancery Division, contending that their dismissals were illegal, ultra vires and void. These were claims that clearly could not be brought in the tribunal, but Fox J struck out the proceedings on the grounds of issue estoppel and abuse of process. At pages 864F-865B and 865G-866B he said as follows:

"It is clear that in the very full judgment of the tribunal two things were decided. First, that the plaintiffs were dismissed by the defendants: see paragraph 36 of the decision; secondly, that the dismissals were not unfair: see paragraph 40. The burden of paragraph 5, 6, 7 and 9 of the statement of claim is (a) that there was no dismissal of the plaintiffs at all; what was done was quite unlawful (b) that what was done was in breach of contract; and (c) that the purported dismissals were in breach of the rules of natural justice and of equity. These conditions seem to me to be quite inconsistent with the findings of the tribunal. The tribunal found that the plaintiffs were dismissed and that such dismissals were not unfair. Those findings are inconsistent with the contention that the plaintiffs were never lawfully dismissed at all, that the defendants were in breach of contract, and acted illegally and contrary to natural justice. If the dismissals, as the tribunal found, were not unfair, it is difficult to see how they or the proceedings by which they were arrived at could have been contrary to natural justice.

It may very well be that not all the arguments or facts which are now being presented by the plaintiffs were put to the tribunal, but that is irrelevant. When an issue has been decided, litigants cannot be permitted to keep returning to the court with new arguments. The position is stated by Sir James Wigram VC in Henderson v Henderson [1843] 3 Hare 100, 115:

'... where a given matter becomes the subject of litigation in, and of adjudication by, a court of competent jurisdiction, the court requires the parties to that litigation to bring forward their whole case, and will not (except under special circumstances) permit the same parties to open the same subject of litigation in respect of matter which might have been brought forward as part of the subject in contest, but which was not brought forward, only because they have, from negligence, inadvertence, or even accident, omitted part of their case.'

In my view, the matters in paragraphs 5, 6, 7 and 9 are all res judicata.

………

As I have indicated, it seems to me that the claims under paragraphs 5, 6, 7 and 9 fail on grounds of res judicata. The matter can, however, be looked at rather more widely. If a party seeks to raise a point which has already been decided between the same parties, the fact may be brought before the court and the statement of claim, even though good on the face of it, may be struck out and the action dismissed even though a plea of res judicata might not strictly be an answer to the action. ………That in my view applies to this case.

Essentially, this case, and in particular the allegations made under paragraphs 5,6,7 and 9 is just re-litigation of the matters decided by the industrial tribunal in May 1973. The matter is to some extent differently presented and some new arguments have been added, but essentially it is the old dispute all over again."

47. Proceedings brought in the High Court subsequent to dismissals of claims for either unfair dismissal or race discrimination were also struck out by application of the same principle in O'Laoire v Jackell International Limited (No. 2) [1991] ICR 718, Sheriff v Klyne Tugs (Lowestoft) Limited [1999] ICR 1170 and Fraser v HLMAD Limited [2006] ICR 1395.

48. In submitting that this principle does not apply in the present case, Mr Stafford relied upon the following matters. Firstly, he embarked upon a dissection of the tribunal's judgment, and a minute analysis of various passages or phrases, in order to seek to persuade me that their findings do not suggest, at any point, that until the agreement as to basic salary in February 2007, this claimant was working and receiving money pursuant to any agreement between the parties. He accepts that work was done and that sums of money were handed over and, as he puts it, "unilaterally increased" by the defendant in July 2004; but, in the absence of any agreement as to the claimant's entitlement, he submits that the question of what he should reasonably have been paid for the true worth of his services remains at large.

49. This, in my view, is an entirely artificial and impermissible approach to this tribunal's judgment, which should not be subjected to the kind of analysis most suited to statutory construction, but should be read as a whole and without losing sight of the issues that the tribunal were being asked to determine. There can be no doubt that the members of this tribunal were being asked to determine (and did in fact determine) whether this claimant was legally entitled to any of the sums he claimed. They found that he was not.

50. Further, whilst rejecting the claimant's assertion that there was a series of express agreements as to all elements of his remuneration, there can be no doubt that the tribunal found that he was working at the club and being paid pursuant to a contract. The finding that there was a contract of employment was the basis upon which their declaration as to his entitlement could be made. The claimant did not seek to reserve his position in any way, in terms of his receipt of the sums paid to him. On the contrary, the tribunal found expressly at paragraph 8.4 that he did not act in any way inconsistent with the terms of the draft contract with which he had been initially provided, albeit that he did not sign it.

51. That the relationship of these parties was contractual is plain. Paragraph 1 of the Particulars of Claim refers to an oral agreement between them made on or about 15 September 2003, and the defendant has admitted the contractual nature of the relationship in its defence. It is not a point in issue between them.

52. Secondly, Mr Stafford relies on the decision of the Court of Appeal in Coors Brewers Limited v Adcock & Ors [2007] IRLT 440, referred to by the tribunal at paragraph 5 of their judgment, in submitting that the claims brought now could not have been pursued in the tribunal. He submits that this decision is authority for the proposition that, in order to be justiciable, a claim under the unlawful deduction from wages provisions has to be the equivalent to an action for an agreed sum.

53. In Delaney v Staples [1991] IRLR 112, Lord Browne-Wilkinson, who gave the leading opinion, did not question the proposition that there was no power to award damages for breach of contract under the unlawful deduction from wages provisions. He proceeded on the basis that it is a given that there must be a contractual or other right to a specific sum by way of liquidated damages which arises on a particular occasion. In Coors, Mr Stafford submits, the Court of Appeal agreed with this approach, Wall LJ holding at paragraph 46 that:

"The underlying premise on which the case is brought is that the employee is owed a specific sum of money by way of wages which he asserts has not been paid to him."

54. Chadwick LJ agreed, and Mr Stafford relies on particular passages in his judgment at paragraphs 69 and 70 as follows:

"It is important, also, to recognise that there will be a number of different schemes – that is to say, schemes which differ in the targets set and the incentives offered – which will meet the test. To put the point another way, given a realistic prediction of the employer company's likely financial performance for the year ahead (which, itself, allows some flexibility within a range of possible outcomes, the prediction of any of which can be said to be realistic), it will be possible to choose different combinations of targets and incentives. All that is required is that the chosen combination, in conjunction with the prediction of likely performance for the year ahead, can be expected to give rise to benefits equivalent to those which the claimants would have received under the BEPSS scheme. If there are a number of different combinations of targets and incentives, any one of which satisfies that requirement, it is impossible to hold that the employer company was bound to choose one rather than another. And, of course, different combinations of targets and incentives can be expected to give rise to different outcomes when applied to the company's actual financial performance at the year-end.

It follows that it is impossible to hold that, if the employer company had met the requirement imposed on it by the claimants' employment history, the amount of the wages paid to any individual claimant on the relevant date for payment of benefits accrued in respect of the year 2003 would have been greater than the amount of the wages actually paid to that claimant on that date. The most that can be said is that it might have been. And, accepting that it might have been, it is impossible to say by how much the amount of the wages actually paid was less than the amount that would have been properly payable if the employer company had met the requirement to put in place a substitute scheme which, properly and fairly operated, would be capable of replicating the benefits of the BEPSS scheme. It is that feature which, to my mind, makes it impossible to hold that there has been 'a deduction from wages' for the purposes of Part II of the 1996 Act."

55. He submits that this claimant could not have pursued before the tribunal the claims that he now brings to this court, which will require a judicial determination as to his entitlement and the basis for it, rather than the mechanistic operation of a scheme within the scope of the unlawful deduction provisions. These claims could not have been advanced by the claimant as part of any claim brought under the unlawful deductions provisions, as an alternative to his primary contention that the situation was governed by express agreements between the parties.

56. I have read Coors with care. It is apparent that the court was dealing with an entirely different factual matrix from that arising in the present case, and in my view the facts necessitated a different analysis.

57. The claimants were employees at a Bass brewery. Bass operated a share scheme for eligible employees, including the claimants, whereby they were entitled to an allocation of shares based on a proportion of annual profits in the discretion of the board. Bass was acquired by Interbrew SA in 2000, and the Bass employee members of the scheme became ineligible for continued membership by virtue of cessation of their Bass employment. It appears that "one-off" payments were in fact made on two occasions.

58. In February 2002, the business was acquired by Adolph Coors, who announced an incentive scheme. Employees' receipt of incentive payments depended on the growth and performance of the business. In 2003, the targets that had been set were not met, so that no payments were made. The claimants brought proceedings in the employment tribunal for unlawful deductions from wages. The tribunal upheld the claims, but the EAT allowed Coors' appeal. The Court of Appeal dismissed the claimants' appeals, applying the reasoning I have referred to above, and upon which Mr Stafford relies.

59. However, it is clear from the judgment of Chadwick LJ that, on a correct analysis, the employees were seeking compensation in these circumstances for the loss of a chance. He analysed the situation as follows at paragraph 71:

"As I have said, I am content to assume for the purposes of this appeal that the claimants have claims against the employer company for breach of contract. But, on a true analysis, those claims are, as it seems to me, claims for damages by way of compensation for the loss of the chance that, if the employer company had put in place a substitute scheme which met the requirement imposed by the claimants' employment history, the effect of such a scheme, when applied to the company's actual financial performance for the year 2003, would have been that the claimants received some benefit which (absent such a scheme) they did not receive. I have no reason to doubt that, in the context of a claim for damages advanced on that basis, a court could measure the loss of chance by an appropriate award. But that task is outside the jurisdiction which (in the case of a claimant whose employment has not come to an end) the legislature has chosen to confer on an Employment Tribunal by the 1996 Act. I agree with Wall LJ that, if and for so long as the claimants remain in the company's employment, they must seek their remedy in the county court."

60. I note that Wall LJ, although adopting different terminology at different places in his judgment, agreed with the judgment of Chadwick LJ.

61. The present case is not concerned at all with the loss of a chance. On the contrary, the claimant's case is that the defendant was legally obliged to pay him the sums that he claimed. I consider it to be clear from Coors that, in order to sustain a claim under the unlawful deduction from wages provisions, the claim must be quantifiable, although it is not necessary for an employee to be able to quantify it when the claim is presented. In that case the claim was not quantifiable for the reasons explained. In this case, however, the claims advanced by this claimant are clearly both quantifiable and quantified, because he quantified them before the tribunal and seeks to quantify them again, in the same way, in the proceedings presently before this court.

62. I find myself entirely in agreement with the observations of HHJ Burke QC in the EAT in Lucy and Ors v British Airways when considering Coors and the nature of a claim under part 2 of the 1996 Act. At paragraphs 34 - 35 of his judgment, and referring to the judgments in Coors, he said this:

"34……..as I understand their judgments, neither Wall LJ nor Chadwick LJ based their ultimate conclusion on a requirement that the amount claimed should be a specific or quantified sum. At paragraph 51 Wall LJ referred to 'An identifiable sum' (although I recognise that he used the word 'quantified' in paragraph 56). Chadwick LJ did not use that terminology at all; his reasons are based on the fact that there was no more than a chance that the scheme which the employers, on the employees' case, should have introduced if they had complied with their contractual obligations, would have resulted in receipt by the Claimants of more than they had in fact already received.

35. Employment tribunals are familiar with difficulties of quantification, such as may arise in a number of jurisdictions or contexts, including claims under Part II of the 1996 Act. When an employee who is entitled to commission, in addition to his ordinary wage or salary, claims that commission has not been paid or paid in full, he may not, until after detailed disclosure, be able to specify the amount owing; and there may be complex disputes as to the correct quantification or calculation of commission due, if any, which the tribunal may have to resolve. Such disputes are not restricted to mathematical issues; a tribunal may have to determine, for example, whether the employee played a sufficient role in the obtaining of a particular sale to qualify for commission. The same exercise may have to be carried out by a Tribunal in assessing compensation for unfair dismissal. Similar difficulties may arise in relation to unpaid bonuses and in many other ways. In such circumstances, albeit often with difficulty, the Tribunal has to quantify and does quantify the relevant sum; such claims are quantifiable albeit not necessarily brought for a quantified sum."

63. That reasoning, together with the observations of Fox J in Green, seems to me to apply clearly to the present case. The fact that the claimant is seeking to advance entitlement to these sums under the heading of an implied contractual term, or alternatively a quantum meruit, is irrelevant. Issue estoppel applies to prevent him from advancing matters which have already been determined by the employment tribunal.

64. In my judgment, the tribunal's findings that the claimant's salary entitlement was initially £300,000 per annum, rising in July 2004, and then being increased to £400,000 per annum with effect from 1 January 2007 (which salary entitlement was paid to him in full) create an issue estoppel, preventing him from claiming in these proceedings that he was entitled to any further salary during his period of employment with the defendant.

65. Further, the tribunal's findings that no agreement was ever reached as to the payment of a bonus, that no directors of the defendant club with discretionary bonus clauses in their contracts received a bonus, and that there was in fact no bonus scheme in operation also create an issue estoppel, which prevents the claimant from contending in these proceedings that he was entitled to payment of bonus during his period of employment. So too does their finding that the claimant had no legal entitlement to payment of employment benefits in the circumstances.

66. It follows that these parts of the claimant's claim, together with the bonus and benefits elements of the claim for wrongful dismissal, are barred by issue estoppel and their pursuit amounts to an abuse of the process.

67. Having reached those conclusions, I have considered the defendant's application more broadly. I bear very much in mind that this claimant has already had the benefit of a three-day hearing in the tribunal, when a great deal of evidence was adduced, and the benefit of a determination of all his claims upon that evidence. It seems to me that it is entirely just and proportionate in the circumstances that those parts of his claim I have found to be barred by issue estoppel should be struck out; and that the parties should concentrate from now on upon those issues which remain in dispute between them and which relate, essentially, to calculation of the sum to which he is entitled in respect of the salary element of wrongful dismissal, subject to the unfair dismissal compensation he has already received and to mitigation of loss. For all those reasons I grant the defendant's application.