THIS IS NOT A “PLEADING POINT”: WHY LISTS OF ISSUES NEED TO BE CAREFULLY DRAFTED: COURT OF APPEAL DECISION

In  Scicluna v Zippy Stitch Ltd & Ors [2018] EWCA Civ 1320 the Court of Appeal reiterated the importance of  the list of issues.  This relates to procedure in the Employment Tribunal however, as the judgment points out, lists of issues are common in civil proceedings generally. The parties drafting them need to give careful consideration to the matters they cover. A failure to raise a point in the list of issues is likely to prevent a party being able to argue it, probably at trial and almost certainly at the appeal stage. These documents need drafting with some care, particularly by defendants who want to raise defences in the alternative.

“A list of issues is a useful case management tool developed by the tribunal to bring some semblance of order, structure and clarity to proceedings in which the requirements of formal pleadings are minimised. The list is usually the agreed outcome of discussions between the parties or their representatives and the employment judge. If the list of issues is agreed, then that will, as a general rule, limit the issues at the substantive hearing to those in the list”

THE CASE

The claimant started work in a family business. It was his case that there was an agreement that he be paid £100 a day, but he deferred payment because the business could not afford it at the time. Following a fall out with the business he issued proceedings for arrears of wages in the employment tribunal and his action succeeded in part, the ET finding that

“I am satisfied that the claimant’s entitlement to deferred pay was outstanding on the termination and therefore his contract claim is made out subject to the cap.”

The Employment Appeal Tribunal upheld that decision. The defendant employer appealed to the Court of Appeal.

THE DEFENDANT’S ARGUMENT

The defendant attempted to argue that no sums were payable on termination.

THE PRELIMINARY OBJECTION TO THE DEFENDANT’S ARGUMENT

The claimant objected to the defendant taking these points on appeal.

“he had contended in his ET1 form that it was either an express or implied term that unpaid salary would be paid by the company on (among other things) termination. That was not denied by the company in its ET3 form which merely alleged that “there was no contractual provision for the payment of salary as alleged or at all”. It was said to follow that the company accepted that, once the claimant proved an agreement to pay wages, he was entitled to be paid his salary on termination.”

THE DEFENDANT’S ARGUMENT: THIS WAS “NO MORE THAN A PLEADING POINT”

The defendant argued that this was “no more than a pleading point”.  This argument was not accepted by the Court of Appeal.

THE LIST OF ISSUES

The parties to the action had prepared a list of issues

“Under the heading “Unauthorised Deduction from Wages/Breach of Contract” the list of issues provided:-
“1. What was the agreement regarding the claimant’s wages, if any?
i) The claimant’s case is that there was an oral agreement the claimant would receive a salary of £100 net per day (equivalent to £36,000 per annum) (ET1 paragraph 7 [1/14]). Further, whilst the claimant agreed to defer payment of his salary he did not waive his rights to the salary (ET1 paragraph 8[1/14]).
ii) The respondents’ case is that there was no agreement for the claimant to be paid a salary (ET3 paragraph 11 [1/30]), although it was agreed in summer 2013 that the departure of another employee could provide the opportunity for the claimant to draw a salary (ET3 paragraph 49 [1/39]).”

WHAT WAS NOT IN THE LIST OF ISSUES

The claimant pointed out

“.. .if that list of issues had included the question whether, if there was an agreement, nevertheless nothing was payable because the company could not afford to pay, then there would have to have been further issues relating to
i) whether by the time of termination the company could in fact afford to pay the claimant any amount and, if so, how much;
ii) if it could not afford to pay, whether a term providing for the right to payment to crystallise on termination should be implied; and
iii) whether, even in the absence of any contractual obligation to pay, there was at least an obligation to pay the minimum wage or, perhaps, a quantum merit based on the value of the services actually performed.
None of these matters were in issue and were thus never resolved.”
THE COURT OF APPEAL JUDGMENT: THE CENTRAL IMPORTANCE OF THE LIST OF ISSUES
    1. I agree with Ms Betts [counsel for the claimant] . Ever since the Woolf reforms, parties in the High Court have been required to agree lists of issues formulating the points which need to be determined by the judge. That list of issues then constitutes the road map by which the judge is to navigate his or her way to a just determination of the case. Employment tribunals encourage parties to agree a list of issues for just that reason and, if advocates are retained on both sides, it is right and proper for a list of issues to be prepared.
    2. In paragraphs 32-33 of Land Rover v Short (2011) UKEAT/0496/10/RN Langstaff J approved the submission of counsel that:-
“it was trite law that it was the function of an Employment Tribunal to determine the claims which the claimant had actually brought, rather than the claims which he might have brought and that accordingly the claimant was limited to the complaints set out in the agreed list of issues.”
So likewise must the respondent be limited to the defences set out in the agreed list of issues.
    1. In similar vein, Mummery LJ in Parekh v London Borough of Brent [2012] EWCA Civ 1630 (with whom Patten LJ and Foskett J agreed) said:-
“31. A list of issues is a useful case management tool developed by the tribunal to bring some semblance of order, structure and clarity to proceedings in which the requirements of formal pleadings are minimised. The list is usually the agreed outcome of discussions between the parties or their representatives and the employment judge. If the list of issues is agreed, then that will, as a general rule, limit the issues at the substantive hearing to those in the list: see Land Rover v Short at [30] to [33].”
  1. Professional advocates were retained in the present case and agreed the list of issues which was given to the employment judge (so we were told) on the morning of the hearing. The judge was, therefore, entitled to proceed on the basis that the only issue in relation to the claim for unauthorised deduction from wages and breach of contract was whether there was an agreement that the claimant be paid a salary. Having decided that there was such an agreement, she not unnaturally upheld the contract claim as being outstanding on termination. She never dealt with any argument that nothing was outstanding because the company could not afford to pay the claimant’s salary and still less with any argument that, even if the company could not afford to pay it, it was necessary to imply a term that, nevertheless, the company was obliged to pay once the employment had come to an end. These issues were never said to be issues which the judge needed to decide.
  2. When the matter came before the Employment Appeal Tribunal, HHJ Peter Clark correctly upheld Judge Balogun’s determination of the contract claim and dismissed the cross-appeal. Once he had done that, consistency required that the unlawful deduction claim also had to be allowed because there was a sum “properly payable” to the claimant on the occasion of his termination.
  3. I cannot, therefore, accept Mr Bryden’s submission that Judge Balogun inferentially made a decisive finding of fact that the company could not afford to pay the claimant; nor can I accept that there was any argument before her about the possibility that such inability could be relied on by the company as at termination. The case proceeded on the basis that if there was an agreement to pay the claimant a salary at all, he would be paid that salary. It may be that to sustain that basis some implication needed to be made as a matter of law but that was never an issue before the employment judge and cannot be made an issue now. If it had been an issue, the case would have proceeded on different lines, since there would have to be a finding that the company could not, in fact, afford to pay the claimant his salary if the matter were to be disposed of fairly.
  4. I would therefore dismiss this appeal.
  5. Having said that, I would not wish to give any credence to a view that it would be right to imply a term into this contract that the claimant’s salary would be payable on termination. There are arguments both ways but that was never on the list of issues and I express no view about it.