Civil stress claim after employment tribunal settlement not an abuse (Farnham-Oliver v RM Educational Resources Ltd)

The defendant employer’s application to strike out a civil claim on the grounds that it was an abuse of process contrary to CPR3.4(2)(b) was dismissed by the High Court. The defendant argued that the settlement of an employment tribunal claim in February 2015, lodged in December 2014, arising out of work related stress caused by unlawful discrimination, prevented the claimant from pursuing a claim for work related stress in the civil court for damages arising out of the same circumstances of his employment. The court held that the primary focus in such cases is the construction of the settlement agreement and that in this case there was a contractual bar (by the terms of the settlement agreement and clause 7 in particular) which prevented the defendant from succeeding with his application (at para [60]).  

Farnham-Oliver v RM Educational Resources Ltd [2021] EWHC 2418 (QB)

What are the practical implications of this case?

This case does not establish any new or divergent points of law but is a useful guide through the various cases in this niche area, and a reminder that the starting point when considering whether a subsequent civil claim is appropriate should be the terms of the settlement agreement itself. Practitioners should carefully consider whether such a clause is appropriate and necessary on the facts of their case and, if so, what its precise terms should be.

In conjunction with that, although not discussed in the case, an obvious yet sometimes overlooked preliminary point is a primary consideration of the available remedies available to an applicant in an employment tribunal; an employment tribunal has an inherent jurisdiction to award damages for personal injury, including both physical and psychiatric injury, caused by the statutory tort of unlawful discrimination, confirmed by the Court of Appeal decision of Sheriff v Klyne Tuggs (Lowestoft) Ltd [1999] IRLR 481 (such principles are now governed by the Equality Act 2010 which replaces the legislation discussed in that case). It follows that damages for personal injury arising out of any other aspect of employment will be one for the civil courts at the outset so defendants should also consider, before raising the argument, whether a civil claimant even had a remedy available to him from a preceding tribunal claim.

There was no consideration by the Master in Farnham-Oliver whether the civil claim fell within the terms of the clause 7 exception to the full settlement provided by the settlement agreement. At para [15] the judgment states:

‘no submissions have been made to me to such effect and therefore I proceed on the basis that this civil high court claim does fall within the clause 7 exemption wording. That may not necessarily prevent the Defendant from contending in the future that some, or all, of this civil claim is outwith the clause 7 exception but I do not have to, and do not, decide that point.’

This may have been included on a ‘belts and braces’ approach by the Master and without sight of the pleadings it is not possible to comment further, but its inclusion gives rise to an interesting collateral consideration regarding the definition of a ‘personal injury’ claim and whether it includes the consequential losses of special damages too or should be limited to the ‘personal injury’ i.e., the recovery for the physical/psychiatric harm only. Some tribunal settlement agreements do specifically provide, for example, that it is inclusive of all loss of earnings arising out of the employment, while preserving the right of the appellant to bring a separate personal injury claim, and this case reminds practitioners that failure to establish that a civil claim is, in its entirety, an abuse of process does not automatically legitimise all heads of claim in any subsequent civil action.

Crucially, Farnham-Oliver is not, as may be thought on initial review, an authority that in every case where both an employment tribunal and a civil claim are commenced from the same cause of action, a claimant will now be entitled to pursue both. Each case will be determined by its own particular facts and there will continue to be cases where a subsequent civil claim pursued will not be permitted to continue.

Case details

• Court: Queen’s Bench Division, High Court of Justice
• Judge: Master Dagnall
• Date of judgment: 31 August 2021

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