HEARING DATE 27 June 1994
University - Estoppel - Per rem judicatam - Cause of action estoppel - Dismissed professor's action against university and college - Action struck out as matter within exclusive jurisdiction of visitor - Statute enacted conferring jurisdiction on court - Professor bringing second action raising same issues against same parties - Whether res judicata - Education Reform Act 1988 (c. 40), s. 206(1) Education - University - Visitor's jurisdiction - Dismissal of professor by college - University committee recommending deprivation by university of title and status - Professor's claim against college and university struck out as being within exclusive jurisdiction of visitor - New enactment giving court jurisdiction - Fresh action - Whether parties entitled to refer matter to visitor - Education Reform Act 1988, s. 206(2)
HEADNOTE:
In 1971 the Senate of the University of London, with the consent of the governing body of Birkbeck College, appointed the plaintiff to a chair of economics at the college and conferred upon him the title of "Professor," with the status of "appointed teacher." His salary was paid by the college, which had the power to dismiss him. The university senate had power to deprive him of his title and status. In July 1983 the college dismissed the plaintiff for alleged serious misconduct and it invited the senate of the university to deprive him of his title and status of appointed teacher. The matter was considered by a university committee which recommended to the senate that the plaintiff be deprived of his title and status. On 17 March 1985 and before the senate had considered the committee's report, the plaintiff issued a writ claiming against the college that its purported decisions leading to his dismissal were ultra vires and void, and seeking an injunction against the university to restrain it from depriving him of his title of professor and status as an appointed teacher. On the defendants' motions, Hoffmann J struck out the action on the ground that the subject matter of the proceedings was within the exclusive jurisdiction of the visitor and the court had no jurisdiction in the matter.
Section 206 of the Education Reform Act 1988, which conferred on the court jurisdiction in matters which had previously been within the exclusive jurisdiction of the visitor, came into force on 29 July 1988. The plaintiff issued a writ endorsed with a statement of claim in similar terms to that issued in the first action and the defendants applied to have that action struck out. Mervyn Davies J. held that the matter was res judicata and ordered that the action be struck out. On other issues raised by the parties which would be relevant only if the action had not been struck out, the judge considered that either or both defendants were entitled to refer the dispute to the visitor and if it was referred, the action should be stayed, and also that the action should in any event be stayed until the plaintiff had paid the costs incurred by the defendants in the first action.
On appeal by the plaintiff:-
Held, allowing the appeal in part, (1) that at the date of the first writ the court did not have jurisdiction to entertain the plaintiff's action and, therefore, there had been no determination by the court on the merits of the plaintiff's claim which could give rise to an estoppel; that, since the doctrine of res judicata did not apply, there were no grounds for striking out the writ.
But (2) that there being a dispute between the parties concerning the termination of the plaintiff's appointment, the plaintiff or the defendants could refer the dispute under section 206(2) of the Education Reform Act 1988 to the visitor and, if the visitor accepted the reference, the action should be stayed; and that, in any event, the proceedings brought by the plaintiff concerning the same subject matter as the first action and between the same parties were to be stayed until the plaintiff paid into court the costs incurred by the defendants in the first action.
M'Cabe v. Bank of Ireland (1889) 14 App.Cas. 413, H.L.(I.) followed.
Counsel
The Applicant appeared in person;
R Bannister QC and J Russen for the Respondent
PANEL:
Balcombe, Hirst, Hoffmann LJJ
JUDGMENT BY HIRST LJ:
There are before the Court four applications by the plaintiff, three for leave to appeal and the fourth by way of a summons direct to this Court, seeking in effect to reopen an earlier order of the Court, and that I shall refer to hereafter as "the summons".
In order to understand the import of these applications, it is necessary to trace the truly labyrinthine history of these proceedings. The background is that the plaintiff has in two actions, one which has been struck out and now the present action, seeking to establish against the first defendant, Birkbeck College, and/or the second defendant, the University of London, that the plaintiff was wrongfully dismissed from an academic post which he held with the first and/or the second defendant.
His claim against these two defendants is for arrears of salary resulting from this alleged wrongful dismissal, a claim which is strenuously denied by both defendants.
The history of the matter can be summarised as follows. In the first action the writ was issued in May 1985, and was struck out in July 1985 by my Lord, Hoffmann J, as he then was, and the appeal against that order was dismissed with costs by the Court of Appeal on 4 August 1987.
The first defendant's costs in the High Court and the Court of Appeal were taxed on 8 August 1990 at £4,082.93 and £2,465.72 respectively. A similar taxation was made, and there is no need to give the figures, for the costs of the second defendant.
The Taxing Master's certificate in relation to those costs was sealed on 10 August 1990, at which juncture, as is clear under well-established law, those costs became due. Those costs orders are absolutely critical to all that has followed since.
On 29 July 1988 the Education Reform Act had come into force and that possibly gave the plaintiff a second string to his bow. As a result the second action was issued by writ dated 6 July 1989, which was the day before the expiry of the limitation period.
On 30 March 1990 Mervyn Davies J struck out that action, but on 24 May 1991 the Court of Appeal, consisting of Nourse LJ, Balcombe LJ, and McCowan LJ, [1992] Ch 33, allowed the plaintiff's appeal, but (and this is the crucial part of the order for present purposes) stayed the second action pending the payment of the costs of the first action. I shall be returning to the reasons for that order in a few moments.
The plaintiff petitioned the House of Lords and failed to get leave to appeal in July 1991. There was then on 15 May 1992 an order made by Master Winegarten on a summons by the defendants which was an Unless Order providing for the dismissal of the action unless the Court of Appeal stay was lifted not later than 31 July 1992, by payment to the first defendant of its taxed costs and interest.
The plaintiff then appealed against that order to Chadwick J, who on 29 October 1992 varied the Unless Order by extending the time limit to 31 December 1992, in other words, giving the plaintiff another five months beyond that granted by Master Winegarten, and secondly dismissed a summons by which the plaintiff sought to set off against his liability in costs the sum allegedly due to him by way of remuneration which would, if acceded to, have caused the stay to be lifted. Chadwick,J refused the plaintiff leave to appeal from that order, and that is the first order for which leave to appeal is sought in the proceedings before us today.
On 1 December the plaintiff issued the summons before the Court of Appeal seeking to lift the stay on the ground of set off, and also an order that interest on the taxed costs should run only from 10 August 1990, which was the date when the taxation certificates were sealed.
On 16 December 1992, the plaintiff applied by summons to the Master for a stay of the Unless Order pending the applications to the Court of Appeal upon payment into Court of the sum of £6,485.80 with interest.
On 18 December 1992, Deputy Master Weir made an order providing for the discharge, in contrast to the stay sought in the summons, of the Unless Order in the event of the plaintiff making the proposed payment into Court.
On 22 December 1992 the first defendant applied by summons for an amendment of that order and on the following day issued a Notice of Appeal against Deputy Master Weir's order. That appeal was heard by Rattee J who allowed the first defendant's appeal against that order and, in effect, substituted a provision that the stay would be lifted rather than that there would be a discharge. That is the second of the three orders on which there is an application for leave to appeal.
The plaintiff on 4 November paid into Court a sum of just over £4,200 in addition to a sum of £8,700 approximately, paid in at the end of 1992, bringing the total monies into Court to a sum which was only a little short of the sum due as at 31 December 1992, but not taking into account interest accruing subsequently.
On 8 December 1993 the plaintiff issued a motion for judgment in the second action on the ground that the first defendant was in default of defence. That was dismissed by Warner J on 13 December 1993, and gives rise to the third of the applications in which leave to appeal is sought.
With that introduction I will come to each of the applications in turn. But first of all it is of essential importance to see on what basis the Court of Appeal's order on 24 May 1991 rested. The foundation for it was the decision of the House of Lords in the case of M'Cabe v the Governor and Company of the Bank of Ireland [1889] 14 AC at page 413. In that case, Lord Herschell giving the leading speech in the House of Lords, with which Lord Fitzgerald delivered a concurring judgment, and Lord Macnaghten agreed, stated as follows at page 413:
"The only question remaining is whether the order was right in so far as it stayed the proceedings in the second action until the costs in the first action had been paid. Now, my Lords, I found that it was laid down in a recent case in the Court of Appeal, Martin v. Earl Beacham (1), that 'the rule is established that where a plaintiff having failed in one action commences a second action for the same matter the second action must be stayed until the costs of the first action have been paid;' and even although the actions were not between precisely the same parties or persons suing in the same capacity, the case was held to be within the rule inasmuch as the plaintiff there was 'suing substantially by virtue of the same alleged title'."
Lord Justice Nourse, who gave the leading judgment then proceeded to quote from Mervyn Davies J at first instance:
"'In the light of M'Cabe I conclude that when a plaintiff is ordered to pay the costs of an action and then brings a second action against the same defendant concerning the same subject matter then, on application by the defendant for a stay, the stay will be ordered as of course; unless no doubt there are some wholly exceptional circumstances.'"
Then Nourse LJ went on to say as follows:
"M'Cabe... is clear and binding authority for the rule to be applied where an action has been finally disposed of and the costs of it have not been paid. In my view the judge correctly extracted the principle of that decision and it cannot be said that he erred in applying it to the present case."
He then added:
"...I would order that all further proceedings in the second action be stayed, as against the college until after the plaintiff shall have paid it the sum of £6,485.80 and as against the university until after the plaintiff shall have paid it the sum of £8,236.98, in each case together with interest at the appropriate rate from whatever are the appropriate dates until the date of payment."
Subsequently the order was drawn up, and that laid down in the sealed copy of the order, which is at page 12 of the first defendant's core bundle, that:
"The interest should run [on part of the said sums] as from 8th July 1985 and [for another part of the said sums] from 4th August 1987."
Leave was apparently given to the plaintiff (who was then, of course, the appellant) to come back within fourteen days if he wished to raise any points with regard to interest, but he did not do so for reasons which he gives in an affidavit and so that matter has been resurrected before us for the first time in this Court today.
I now propose to deal with the first of the applications, that is for leave to appeal against the order of Chadwick J. The appellant first of all raises two procedural points. The first is that he submits that the Unless Order application should have been made to the Court of Appeal and not to the High Court, because it altered and amended the Court of Appeal order. If it were correct to say that the order of the Unless Order had that effect, I have little doubt that that submission was correct, but unfortunately the submission is based on a fundamental fallacy.
This application and Chadwick J's order made no alteration or amendment to the stay order which the Court of Appeal had made. This was a quite different application and a quite different order, which dealt with the dismissal of the action and not with the stay.
After the Court of Appeal made their order the action remained dormant until the costs in the first action were paid; the question before Chadwick J was quite different namely to whether the action should continue to exist at all. It was perfectly proper that that latter application should be made to the High Court and be adjudicated by the High Court.
The second point he makes of a procedural character is that if jurisdiction does lie, it is necessary to show that there was inordinate and inexcusable delay, which he says was not made good by the defendants in their applications before Chadwick J In support of that submission he relies on the case of Pryer v Smith [1977] 1 All ER 218, [1977] 1 WLR at page 425, where the Court of Appeal, consisting of Megaw, Scarman and Browne LJJ held that:
"Where, in an application for dismissal of an action for want of prosecution, a judge is satisfied that there has been inordinate or inexcusable delay, he has jurisdiction to make an order prescribing time conditions ordering the plaintiff to take further steps in the action and to provide that if those steps are not taken within the times so limited the action shall be dismissed; and the jurisdiction to make such an order can be exercised even though, at the time of the making of the order, the Judge is not satisfied that the plaintiff's delay is likely to cause serious prejudice to the defendant."
Mr Hines seeks to extract from that case a principle which certainly is not apparent from the decision which the Court of Appeal reached, that in every case where an Unless Order is made, there must have been inexcusable and inordinate delay.
That submission is effectively destroyed by the judgment of Scarman LJ which starts at page 432, but I read from a passage at page 433:
"Clearly, the judge was of the view that this inordinate and inexcusable delay must, in the interests of justice, be brought to an end. This situation arises from time to time in the interlocutory stages of a civil action. For instance, it is well recognised that a master, or a judge in chambers, may order that, in the event of particulars not being served within a certain time, the action shall stand dismissed or the defence struck out... Similarly, the court may order that if discovery is not made within a time set by the court, the court may dismiss the action.Is it, then, really to be said that a judge, faced, not with a specific failure in respect of a specific step in the action, but with a whole course of acts and omissions which he characterises as constituting inexcusable and inordinate delay, cannot order the dismissal of the action if a timetable for further steps in the action is not met? I think it would be contrary to the whole conduct of litigation that this power should not be available to the judge in the situation that I have outlined."
Browne LJ agreed with both judgments.
That passage makes perfectly clear what in any event is elementary law that the Court has power in the case of a single breach of an order to follow that up by an Unless Order, as in the instances Scarman LJ gives about particulars and discovery.
Here there was the plainest possible breach of the original costs orders in the first action, followed up by the failure to take the steps which the Court of Appeal in the second action had ordered to be done, with the stay meanwhile; and as a result, in my judgment, the order which Chadwick J made came fully within the jurisdiction of the Court, irrespective of whether the delay had been inordinate or inexcusable, on which it is unnecessary to make any comment either way. So, both those procedural points fail.
I now come to the issue which lies at the heart of the matter, which is Mr Hines' submission that he should in principle be entitled to set off against the costs in the fist action the amount which he claims to be due to him as arrears of salary in the second action.
In support of that, he submits that a set off is equivalent to payment and that, as laid down in the case of Axel Johnson [1992] 2 All ER 163, [1992] 1 WLR 270, where there is a liquidated or easily ascertainable sum due, provided the defendant's case on liability is soundly based, then that will give rise to a legal set off. Those principles are not in any way in dispute.
The obstacle which faces Mr Hines in that submission is the rule laid down in M'Cabe, which this Court held applied directly in the present case in their judgments in 1991, that there is an established rule that where costs are ordered in the first action, the second action must be stayed until the costs of the first action have been paid, thus taking a case like the present outside the ambit of the general set off rule.
Mr Hines sought to get around that by citing a case which preceded the M'Cabe case, that is Cobbett v Warner (1866) LR QB 108, where it was held that although this was the general rule, it might be disapplied if a real and probable cause of action was established by the defendant seeking the set off.
But that does not avail Mr Hines in any way, since that qualification was quite clearly overridden by the House of Lords in the M'Cabe case, by which we are bound.
He then sought to say as a final argument on this part of the case that even having applied M'Cabe's case, the Court could still say that the payment of costs which was ordered should be made by means of a set off. But, of course, that is an absolutely hopeless argument because if that was correct, the rule in M'Cabe's case would invariably be circumvented.
It therefore follows that the attack on Chadwick,J's order fails in all respects and I would refuse leave to appeal so far as that order is concerned.
It is convenient next to deal with the summons direct to this Court which invites the Court in effect of its own motion to do what Chadwick J refused to do, and allow the claim in the second action as a set off against the costs.
For the reasons which I have already given in relation to Chadwick J's order, it follows inexorably that that application must fail also for the same reasons.
However, there is, as I have already noted, a further point which is made so far as interest on the costs is concerned. What is said there is that because in correspondence the defendants had only made a demand for the principal sum of costs and not interest, they therefore in effect waived their right to interest.
In my judgment that is a wholly unsustainable submission. It was clearly quite open to them to seek the interest, and as I have already shown from the quotation from Nourse LJ's judgment, the Court of Appeal explicitly ordered interest and laid down the dates, from which it should run.
However, Mr Hines still sought to put forward a further argument so far as interest was concerned, in which he said that, even if interest was payable, it should only run from the date when the costs were taxed, and not the date when the order was made. That, unfortunately, is an argument which is closed to Mr Hines by the decision of the House of Lords in the case of Hunt v Douglas Roofing [1990] AC 398, [1988] 3 All ER 823 when the House of Lords declared that the interest should run from the earlier date.
Mr Hines sought to suggest that this did not apply because he argued that the effect of that case was only prospective. In fact, of course, as is very well established, when the House of Lords declares the law, in the manner they did in Hunt's case, then they are not just declaring it for the future, they are declaring the law as it always has been, even though hitherto the profession may have thought the law was different.
I should add by way of a post-script that the fact that the House of Lords made a practice direction in [1989] All ER 832, [1989] 1 WLR 135 (as to the position of interest on costs in proceedings in the House of Lords itself) has no effect on the general rule laid down by them in the Hunt case. I would, therefore, not make any change so far as the order for interest is concerned in the Court of Appeal order in 1991.
I now turn to the decision of Rattee J. As already highlighted when I introduced a summary of the facts and the course of the manifold proceedings in this case, what Mr Hines asked for, "that there should be a stay of the Unless Order pending the application to the Court of Appeal", was what Rattee J finally ordered, whereas what Deputy Master Weir ordered was a discharge which had not been sought.
I am prepared for present purposes to assume, having regard to the decision of this Court in Re Samuel [1945] Ch 364 that it is open to the Court to make a different order in such circumstances, although in my judgment it would only be in the most exceptional cases that it would do so.
Rattee J gave a number of reasons for his decision. By far the most important is that which is to be found at page 15 of his judgment, where he says this:
"...an order discharging the order of Master Winegarten as varied by Chadwick J. at that particular juncture of the proceedings, namely when the applications by the plaintiff to the Court of Appeal were still subsisting and as yet undetermined, seems to me, with all due respect to Deputy Master Weir, to have been wholly inappropriate."
Mr Hines submitted that that was wrong, but in my judgment that was correct, and could not be expressed in a more clear and accurate manner.
As Lord Justice Balcombe said, in reality the Deputy Master had no business to short circuit the order of the Court of Appeal in 1991, and also Chadwick J's order. I am therefore quite satisfied that the attack on Rattee J's judgment is a hopeless one, and that application should be dismissed.
Finally, there is the application for leave to appeal against Warner J's order, he having refused to strike out the defence on the ground that the stay was still subsisting and therefore the defendants were under no obligation to put in a defence. Mr Hines very frankly accepted that his position there depended essentially upon Deputy Master Weir's order having the effect that the stay was lifted. Since he has already failed on that point for reasons that I have already given in detail, there is no possible basis for granting leave to appeal against Warner,J's order.
In the upshot, therefore, I would dismiss all three applications for leave to appeal, and I would also dismiss the summons which is raised directly in this Court.
JUDGMENT BY HOFFMANN LJ:
I agree with the whole of the judgment which has been delivered. I think all four applications should be dismissed.
JUDGMENT BY BALCOMBE LJ:
I too agree that the plaintiff's summons to this Court of 1st December 1992 and his three applications for leave to appeal against the orders of Rattee, Chadwick and Warner JJ should be dismissed for the reasons given by my Lord Justice Hirst.
DISPOSITION:
Applications dismissed with costs
SOLICITORS:
Dawson & Co