- This
is an appeal by Mr. Robert Jocelyn McCabe against an order of His Hon. Judge Overend
on 31st May 2002, sitting as a High Court Judge in Exeter, refusing
him permission to amend his statement of claim by substitution of a new claim
and striking out his claim as disclosing no cause of action. The proceedings arise
out of an original claim by Mr. McCabe, a teacher employed by the Respondents,
for damages for psychiatric injury in respect of events leading up to and arising
out of their dismissal of him. By his proposed amendment, Mr. McCabe sought to
substitute and limit his claim to damages for breach of an implied contractual
duty of mutual trust and confidence and/or in negligence in respect of their suspension
and manner of investigation of his conduct prior to dismissal.
- The
appeal raises two main issues. The first is the extent to which an employee who
has been unfairly dismissed is confined, in respect of injury caused by unlawful
conduct of his employer prior to and leading to dismissal, to the statutory remedy
for such dismissal of a compensatory award from an employment tribunal. The issue,
thus narrowly stated, is an illustration of the broader tension between, on the
one hand, a need for certainty and tidiness in the avoidance of an overlap between
common law and statutory remedies and, on the other, the interest of justice or
fair play in preserving established common law rights where statutory remedies
may not provide an adequate substitute for them. The second issue is whether,
in the circumstances, the Judge should have refused permission to amend and should
have struck out the claim as disclosing no cause of action or, as provided by
CPR, Part 3.4, as disclosing no reasonable grounds for bringing it.
The
facts
- I
take the facts, as the Judge did, from the statement of claim and adopt with gratitude
much of his helpful summary of them. Mr. McCabe began work as a teacher at the
school for which the Respondents were responsible in September 1991. In early
May 1993 a number of girl pupils made complaints against him of inappropriate
sexual conduct. Five days later the head teacher suspended him, and about a week
later, on 26th May, interviewed him. In the interview the head teacher
gave him no details of the allegations, but offered him a formal written warning,
which he declined to accept. While remaining under suspension, nearly four months
elapsed before he learned of the allegations made against him in a letter of 20th
September 1993 requiring him to attend a disciplinary hearing. It was during that
period, according to the proposed amended statement of case, that he began to
suffer from the psychiatric illness in respect of which he now seeks to claim
damages.
- Over
the following three years there were three disciplinary hearings, each resulting
in a determination adverse to Mr. McCabe. The first was in November 1993 conducted
by three members of the Second Respondent, the School’s Governing Body, who gave
him a final written disciplinary warning. The second, which was by way of an appeal
to three other members of the Governing Body, concluded in their decision that
he should be dismissed notwithstanding that they characterised his alleged conduct
as "a relatively trivial affair". As a result, the First Respondent,
Cornwall County Council, dismissed him on 15th March 1994. His response,
given the greater severity of this outcome than that at the first hearing, was
to request a further disciplinary hearing. He also sought compensation for unfair
dismissal against both Respondents before an industrial tribunal under the statutory
predecessors of Parts X and II of the Employment Rights Act 1996. Both those procedures
were delayed because Mr. McCabe continued to suffer from the psychiatric illness
triggered by his initial suspension. The third disciplinary hearing took place
first. It was conducted by three members of the County Council over four days
in July and August 1996. Although it purported to be an appeal by way of rehearing,
no evidence, other than mostly unsigned written statements drafted by a member
of staff, was called from the complainants. This body too dismissed his appeal,
confirming his dismissal.
- Three
months later, in November 1996, an industrial tribunal heard Mr. McCabe’s complaint
of unfair dismissal, and, in December 1996, upheld it. It did so because the manner
of dismissal was in breach of the Respondents’ disciplinary procedures in that
a senior member of the School’s staff had not promptly investigated the matter
and that all but one of the written statements attributed to the complainants
were unsigned. The tribunal deferred a decision as to contributory fault and as
to the amount of compensation to be awarded in order to give the parties an opportunity
to settle the matter. At an adjourned hearing in April 1997 the tribunal ordered
payment to Mr. McCabe of compensation of £11,000, the then maximum sum awardable
under the statutory scheme, but found him to be contributorily at fault to the
extent of 20%. On appeal by both parties to the Employment Appeal Tribunal, the
Tribunal upheld the finding of unfair dismissal but quashed the finding of contributory
negligence.
- Meanwhile,
in March 1997 Mr. McCabe commenced these proceedings in the High Court seeking
damages for psychiatric illness in contract caused by the Respondents’ conduct
of the disciplinary procedure leading up to his dismissal and in tort caused by
such procedure and by the dismissal itself. The progress of the claim was slow.
Given Judge Overend’s refusal to strike it out for delay and that his decision
in that respect is not challenged by the Respondents, I need not rehearse the
reasons for the delay and the procedural skirmishing that it engendered. It is
sufficient to note that it was not until February 2002 that Mr. McCabe applied
to amend his claim by substituting for it claims in contract and in tort for damages
for psychiatric injury caused by the Respondents’ initial suspension of him and
failure, over the four months from May to September 1993, to inform him of the
allegations against him, and for their failure during that period to carry out
a proper investigation. The claim in contract was for alleged breach of a relationship
of trust and confidence, and the claim in tort, based on the same facts, was for
breach of duty to provide a safe system of work. Those claims did not include,
as the original ones had done, claims for damages caused by the dismissal itself.
The new pleading was accompanied by a medical report of 5th March 1997
stating that Mr. McCabe was suffering from a psychiatric illness attributable
to his suspension in May 1993 and the accompanying failure to inform him of the
allegations and to make proper investigation.
- The
Respondents sought strike-out of the new claim on the basis that it was essentially
the same as the original, namely a claim for damages caused by the manner of his
dismissal. They maintained that the authorities showed that such a claim was no
longer possible as a result of the introduction of the statutory remedy of compensatory
awards for unfair dismissal. Mr. McCabe maintained that the statutory remedy had
not ousted his new claims because he was not seeking damages caused by the manner
of his dismissal but by matters preceding it.
The
authorities
- Before
I turn to the Judge’s reasons for striking out the claim, I should briefly summarise
the effect of the main authorities with which he was confronted. The starting
point is the now well established principle, acknowledged by the House of Lords
in Mahmud v. BCCI [1998] AC 20, that there is a mutual obligation
implied in every contract of employment, not, without reasonable and proper cause,
to conduct oneself in a manner likely to destroy or seriously damage the relationship
of trust and confidence between an employer and employee. The obligation, the
employer’s alleged breach of which the House ruled disclosed a reasonable cause
of action, was not to carry on a dishonest or corrupt business the stigma of which
might imperil its employees’ chances of future employment. In so ruling, the House
heavily qualified its own much older decision in Addis v. Gramophone Company
Ltd. [1909] AC 488 that a wrongly dismissed employee could not recover, in
addition to damages resulting from his dismissal, damages for the manner of the
dismissal in the injury caused to his feelings or to his prospects for obtaining
fresh employment. In Mahmud Lord Nicholls, with whom Lords Goff and Mackay
agreed, explained, at page 39C-D, the extent of the loosening of the Addis
shackle:
"In
my view these observations [in Addis] cannot be read as precluding the
recovery of damages where the manner of dismissal involved a breach of the trust
and confidence term and this caused financial loss. Addis … was decided
in the days before this implied term was adumbrated. Now that this term exists
and is normally implied in every contract of employment, damages for its breach
should be assessed in accordance with ordinary contractual principles. This
is as much true if the breach occurs before or in connection with dismissal as
at any other time." [my emphasis]
However,
as Lord Steyn, with whom Lords Goff and Mackay also agreed, observed at page 52B,
the claims in that case were clearly not based "on the manner of a wrongful
dismissal but on a breach of contract which is separate from and independent of
the termination of the contract of employment."
- In
Gogay v. Hertfordshire County Council [2000] IRLR 703 this Court applied
the Mahmud principle by upholding an employee’s common law claim against
her employer for damages caused by unjustifiable suspension not followed by dismissal.
The claim was in contract for breach of an implied term of mutual trust and confidence
for damages for clinical depression caused by the suspension coupled with failure
properly to investigate the circumstances giving rise to it. Lady Justice Hale,
with whom Peter Gibson and May LJJ agreed, distinguished the case from a ruling
of the Court of Appeal in Johnson v.Unisys Ltd.[1999] ICR 809, later affirmed
in the House of Lords ([2001] 2 WLR 1076), striking out an employee’s common law
claim for damages allegedly caused by the manner of his dismissal, as disclosing
no reasonable cause of action. In paragraph 68 of her judgment, she said that
Gogay was distinguishable because it related to a suspension, which manifestly
contemplated the continuation of the employment relationship. The Lady Justice,
who had other concerns about the effect of Johnson (see paragraph 67),
added in paragraph 69:
"I
recognise that this produces the strange result that, according to Johnson,
the defendant authority would have done better had they dismissed rather than
suspended the claimant. That simply reinforces my view that the sooner these matters
are comprehensively resolved by higher authority or by Parliament the better."
- A
distinguishing feature of Johnson in this context was, not only that it
involved a dismissal, but also that the dismissal followed quickly on the complaints
giving rise to it. Within days of them being made he attended a meeting at which
no specific allegations were put to him and later the same day he was dismissed.
Following failure of an internal appeal he applied to an industrial tribunal for
compensation for unfair dismissal and to the County Court for damages for loss
of earnings of over £400,000. The latter claim was in contract for psychiatric
injury caused by breach of an implied term of trust and confidence to treat him
fairly, and/or in negligence, arising out of the manner of his dismissal. The
House held by a majority of four to one that his complaint lay within the jurisdiction
of the industrial tribunal and that there was no common law remedy for unfair
circumstances attending dismissal whether in contract or in tort. The rationale
of the majority (Lord Bingham of Cornhill, Lord Nicholls of Birkenhead, Lord Hoffmann
and Lord Millett; Lord Steyn dissented) was that Parliament, in introducing a
statutory right to compensation for unfair dismissal, before a separate tribunal,
subject to its own special procedures and with a limited compensatory award (the
maximum was then £11,000), must have intended that it could not coexist with a
common law right for damages for the manner of dismissal. In the course of this
appeal Sedley LJ described the ratio more pithily as being that there is no remedy
at common law for any wrong justiciable under the employment legislation, that
is, no overlap of jurisdiction.
- It
is clear from the facts of Johnson that the House did not have to consider
the effect of their decision on a case where disciplinary proceedings, possibly
accompanied by suspension, have not resulted in dismissal, or where they have,
but the focus of the complaint is on the manner of the employer’s investigations
before embarking on proceedings leading to dismissal. As to the former, suspension
not followed by dismissal, Gogay was cited to them in argument and mentioned
by Lord Steyn, at para. 19, in the context of a move away from Addis. The
House must be taken to have been aware of the Court of Appeal’s application of
the mutual trust and confidence principle to such facts; yet it did not expressly
approve or disapprove of it. As to the latter, investigation with or without suspension
culminating in dismissal, the facts of Johnson did not require consideration
of how and in what circumstances the Gogay approach might have to be applied,
say, to an extended period of investigation and suspension, leaving the manner
of dismissal as a separate matter for an employment tribunal.
- A
common feature of the speeches in Johnson of Lord Hoffmann, at para. 46,
and Lord Millett, at para. 78, with whom Lord Bingham agreed, was that the Mahmud
principle of an implied relationship of mutual trust and confidence was concerned
with the preservation of such a relationship, not as to the manner of its termination.
However, both Law Lords were clearly uneasy about the "tidiness" of
that distinction. Thus, Lord Hoffmann mused at paragraph 46:
"It
may be a matter of words, but I rather doubt whether the term of trust and confidence
should be pressed so far. In the way it has always been formulated, it is concerned
with preserving the continuing relationship which should subsist between employer
and employee. So it does not seem altogether appropriate for use in connection
with the way that relationship is terminated. If one is looking for an implied
term, I think a more elegant solution is McLachlin J’s implication [in Wallace
v. United Grain Growers Ltd. (1997) 152 DLR (4th) 1, 39 of
a separate term that the power of dismissal will be exercised fairly and in good
faith. But the result would be the same as that for which Mr. Johnson contends
by invoking the implied term of trust and confidence. … I think it would be possible
to reach such a conclusion without contradicting the express term that the employer
is entitled to dismiss without cause."
-
Lord Millett, in saying much the same, at paragraph 78, prompts a question as
to whether a principled distinction can be drawn from reliance upon an implied
term of mutual trust and confidence in proceedings where the relationship has
in fact come to an end, albeit without formal termination by either side, and
those where the parties’ conduct one way or the other eventually leads to dismissal
or constructive dismissal:
"I
agree with Lord Hoffmann that it would not have been appropriate to found the
right on the implied term of trust and confidence which is now generally imported
into the contract of employment. This is usually expressed as an obligation binding
on both parties not to do anything which would damage or destroy the relationship
of trust and confidence which should exist between them. But this is an inherent
feature of the relationship of employer and employee which does not survive the
ending of the relationship. The implied obligation cannot sensibly be used to
extend the relationship beyond its agreed duration. Moreover, manipulating it
for such a purpose would be unrealistic. An employer who summarily dismisses an
employee usually does so because, rightly or wrongly, he no longer has any trust
or confidence in him, and the real issue is: whose fault is that? That is why
reinstatement or re-engagement is effected in only a tiny proportion of the cases
that come before the employment tribunals."
-
Eastwood &
Williams v. Magnox Electric PLC [2002] EWCA Civ. 463, was another dismissal
case, but one in which the "run-up" to actual termination of the claimants’
employment was very much longer than that in Johnson. The two claimants
alleged that they had been subjected to long periods of harassment in the form
of a spurious disciplinary investigation, each coupled with suspension followed
by dismissal. In the case of Eastwood, the period of harassment was one year,
for the last eight months of which he was suspended, and in the case of Williams
the corresponding periods were four and two months. Each of them claimed in contract,
for breach of an implied mutual duty of trust and confidence and in negligence,
for damages for stress related illness, depression and disability caused by that
conduct. The Court of Appeal, on the authority of Johnson, upheld the ruling
of the Judge below striking out the claims under CPR 24.2 and 3.4 on the grounds
that they had no real prospect of success and that the statements of case disclosed
no reasonable grounds for bringing the claims. However, in doing so and possibly
in deference to the last sentence in Lord Nicholls’ observation in Mahmud,
at page 39C-D (see paragraph 8 above), Peter Gibson LJ, with whom Mantell LJ and
Sir Swinton Thomas agreed, allowed for the possibility that the Johnson
ruling might not bar all such claims at common law for unfairness in the conduct
of domestic disciplinary procedures eventually culminating in dismissal. He said
in response to the claimants’ counsel’s argument that Johnson was not intended
to, and did not, preclude a common law claim for breach of mutual trust and confidence
in respect of conduct which ante-dates the dismissal and was not part and parcel
of it:
"23.
Attractively though these submissions were advanced and whilst … I can readily
see that there could be very great difficulties arising in other cases, for example
a case where constructive dismissal might have been but was not asserted, I am
not able to accept Mr. Hunter’s arguments. It is … plain that in Johnson
the majority of the House of Lords held that unfairness in the manner of dismissal
of an employee does not give rise to a common law action, whether it be founded
in contract or in tort, but must be the subject of Employment Tribunal proceedings.
The implied term of trust and confidence cannot be used in connection with the
way the employer/employee relationship is terminated. There may be cases where
the particular manner in which an employee is dismissed or the circumstances attending
dismissal is or are confined to events occurring at the same time or immediately
before the dismissal. In other cases that manner and those circumstances
may include a pattern of events stretching back over a period. It is a question
of fact for the trial judge to determine in each case. [my emphasis]
24.
In the present case I venture to suggest that the position is tolerably plain
and uncomplicated. The two claimants were actually dismissed. Mr. Hunter accepts
that the dismissals were part of the unfair circumstances. The claimants did apply
to an employment tribunal; and in Mr. Williams’ case we have the benefit of the
Employment Tribunal’s Extended Reasons. From them we know what facts were considered
by that Tribunal as relevant to the claim that Mr. Williams was dismissed unfairly
and that, in the Tribunal’s words, ‘the immediate circumstances which finally
resulted in his dismissal began in May 1996’ when Mr. Eastwood on 1st
May was accused of abusive, aggressive and intimidatory behaviour towards Mr.
Owens. Over the next six pages the Employment Tribunal consider ‘the broad circumstances
which led to the dismissal of Mr. Williams’. They support the judge’s view of
how the boundaries imposed by Johnson affect the issues in the case; and
the compensation which was recoverable in the Employment Tribunal covered the
substance of what Mr, Williams now seeks to recover in the county court proceedings.
…
25.
Mr. Eastwood’s position is on its face slightly different, because there was no
hearing in, or decision from, the Employment Tribunal on his complaint … But I
cannot believe that that puts him in any different position, given that his case
was so intertwined with that of Mr. Williams and that after commencing proceedings
before the Employment Tribunal, when Mr. Williams’ case was decided Mr. Eastwood
was able to recover an agreed sum in compensation. …" [my emphasis]
- The
problem is how to draw the boundary between the two jurisdictions in the circumstances
of each case. Peter Gibson LJ, in upholding the judge’s ruling, appears to have
approved of the test he had applied, namely that the court could not consider
conduct within the purview of the employment tribunal, which, on the particular
facts, included those acts which had taken place since the disciplinary machinery
began to run (see paras. 20(2) and 26 of Peter Gibson LJ’s judgment).
The
judgment under appeal
- The
present case proceeded on the same footing as that in Eastwood and Williams,
namely that the factual allegations of Mr. McCabe were true. Judge Overend appears
to have based his decision to strike out the claim on three main factors. The
first was the broad similarity, as he saw it, between the facts of this case and
those in Eastwood and Williams, namely that they were "complaints
about the procedures prior to dismissal". The second was that, on his view
of the ratio of Gogay and that of Johnson, the Gogay principle
of entitlement to recovery at common law for injury caused by the manner of disciplinary
proceedings, including suspension but falling short of dismissal, has no application
where dismissal in fact follows. He said, at page 6 of his judgment:
"…
where a claimant has actually been dismissed, as was Mr. McCabe, the authority
of Gogay will not avail him, in the light of … Johnson and …Eastwood.
In this case the matters over which complaint is now sought to be made are all
within a relatively narrow compass over a few days in May 1993, leading up to
the suspension of the Claimant, followed by the failures of the First Defendants
to tell the Claimant what allegations had been made against him for some four
months up to September 1993 or to carry out a proper investigation themselves
through a senior member of staff. These allegations all seem to the court to fall
precisely within the Johnson rationale, as elaborated by Eastwood.
… The
activities (or inactivities) complained of by the Claimant are all part and parcel
of the events that led up to the claimant’s dismissal and are caught by the Eastwood
extension of the Johnson principle."
The
third factor was that Mr. McCabe’s claim, as presented to the industrial tribunal
and before the Employment Appeal Tribunal, covered the substance of what he sought
to claim in these proceedings.
The
submissions in the appeal
- Mr.
Satinder Gill, on behalf of Mr. McCabe, prefaced his submission with an observation
reminiscent of that of Lady Justice Hale in Gogay (see para.9 above) that,
if Judge Overend is correct in his view of the combined effect of Johnson
and Eastwood and Williams that no common law action lies for the manner
of domestic disciplinary conduct where it is followed by dismissal, employers
will have an incentive to dismiss suspended employees who fall ill whilst suspended.
- Mr.
Gill’s first submission was that there is no such rigid rule, noting that the
House of Lords in Johnson did not need to consider the possibility of separate
claims. All the events culminating in dismissal had occurred over such a short
period that it would have been difficult, if not impossible, to disentangle injury
caused by the manner of dismissal from that anterior to it. He had to acknowledge
that the same could not be said about Eastwood and Williams, where the
Court of Appeal upheld a strike-out of the claim in respect of a dismissal process
extending up to a year. However, he drew on Peter Gibson LJ’s acceptance in paragraph
23 of his judgment that drawing the boundary between injury compensatable at common
law and that under the statute was a question of fact for the trial judge to determine
in each case.
- Mr
Gill’s second submission – though it overlapped with the first – went to the interpretation
and application of the meaning of "dismissal" in section 95(1) of the
1996 Act and of a "compensatory award" under section 123(1) of the Act.
Section 95(1) defines "dismissal" in three ways, the criterion of each
of which is termination of the employment, whether by the employer or by expiry
of a fixed term or by the employee (constructive dismissal). A "compensatory
award" is defined in section 123(1) as:
"such
amount as the tribunal considers just and equitable in all the circumstances having
regard to the loss sustained by the complainant in consequence of the dismissal
in so far as that loss is attributable to action taken by the employer."
The
effect of these definitions, Mr. Gill submitted, is that the Act only provides
for losses flowing from termination, not for losses caused by acts or omissions
occurring prior to it. He acknowledged that, depending on the facts, the manner
of some conduct before actual dismissal may be so closely bound up with it in
time and in circumstance that it falls to be considered under the Act. However,
he said that, as Peter Gibson LJ envisaged, there may be other cases in which
the conduct complained of is so distinct in time and in nature that it cannot
fairly be said to be so bound up with the dismissal so as to be part of it. He
submitted that Judge Overend’s seeming application of a general rule that, whenever
there had been dismissal, there could be no claim for compensation for personal
injury caused by conduct leading up to, but not part of the dismissal, was to
ignore the fact-sensitive nature of the meaning of dismissal in this context and
to go further than Johnson as interpreted in Eastwood and Williams.
If correct, its effect could be to preclude a dismissed employee recovering any
compensation at all for injury resulting from conduct, such as suspension, before
that termination, either under the Act or at common law.
- Mr.
Gill’s third submission was that this was not an appropriate case for a strike-out.
He said that, pursuant to CPR 3.4(2)(a) and 24.2(a)(i), the Judge could only properly
have struck out the claim if it had disclosed no reasonable grounds for bringing
it or if it had disclosed no real prospect of success. He maintained that neither
could be so here, in a developing area of law and where the outcome could be expected
to turn in large part on questions of law and fact for the trial judge. As he
put it, Mr. McCabe’s claim, on the medical evidence, was that his illness was
caused by the initial four months suspension from May to September 1993 coupled
with the failure to inform him of the details of the allegations. The extent to
which that conduct could be described as an aspect of the manner in which he was
dismissed could not properly be determined without a full consideration of the
evidence.
- Mr.
Richard Mawhinney, for the Respondents, submitted that the decision in Johnson
was fatal to Mr. McCabe’s claims, both in contract and in tort and in their original
or amended form. Both claims concerned the manner of his dismissal, which process
began in May 1993 when he was suspended and that anything that happened thereafter
was part of the process of dismissal. He maintained that the employment legislation,
in providing a remedy for unfairness of dismissal, included unfairness in the
procedure as well as the reasons for dismissal. He acknowledged that it may be
a question of fact in each case how far back from the dismissal the manner and
circumstances of the process leading to it may extend before ceasing to be part
of the dismissal itself. However, he relied on what he submitted were the similar
circumstances of the nature of the allegation in Johnson, of failure to
detail the allegations and comply with a fair disciplinary process, and on the
lengthy investigative process before dismissal in Eastwood and Williams, where
the Court of Appeal upheld the order of the judge below striking out the claims.
He added, rightly in my view, that it is not necessary to look at the way in which
the industrial tribunal or Employment Appeal Tribunal considered the case. But
he said that, if it were necessary, he would rely on Judge Overend’s finding that
the substance of Mr. McCabe’s claim before those tribunals was the same as that
in these proceedings and is, therefore, caught by the combined effect of the decisions
in Johnson and Eastwood and Williams. As to the propriety of the
Judge striking out the claims, he maintained, again in reliance on the Court of
Appeal’s decision on the facts in Eastwood and Williams, that this too,
on Mr. McCabe’s own version of the facts, was a straightforward case for a strike-out.
Conclusion
- The
law on this matter is clearly still in a state of development, not least because
the House of Lords in Johnson did not expressly approve or disapprove of
the Court of Appeal decision of Gogay and did not, on the facts of the
Johnson case, need to do so. Part of the problem lies in the uncertainty
inherent in the application on a case by case basis of the word "dismissal"
in the employment legislation, given the "just and equitable" test available
to a tribunal in determining compensation for loss consequent on dismissal, and
part in the extent and application on a case by case basis of the common law remedy
for unlawfulness in the manner of dismissal, and the potential for overlap permitted
by such uncertainties.
- As
to the former, uncertainty in application on a case by case basis of the statutory
test of "dismissal", Lord Hoffmann said, at paragraph 55 of his speech
in Johnson, that loss caused by the unfair manner of dismissal is a consequence
of the dismissal and may form the subject matter of a compensatory award. In saying
that, he departed, as employment tribunals appear to have done for some time,
from the ruling of the National Industrial Relations Court in Norton Tool Co.
Ltd. v. Tewson [1973] ICR 45 that a tribunal should award compensation only
for financial loss and not for the manner of dismissal. He justified that departure
by reference to the "just and equitable" formula in the definition of
a "compensatory award". Whether or not that approach "is quite
breathtaking in its potential implications for the compensatory award", as
one academic has put it (Hugh Collins, in a case note on Johnson in 31
ILJ 305, at 309), the scope that it gives for unevenness in application remains
a problem when looking for a clear line between the statutory and common law remedies.
- As
to the latter, uncertainty in the extent, and its application on a case by case
basis, of the common law remedy for unfair manner of dismissal, it seems to me
that the following assessment of Johnson by Professor Bob Hepple, QC, and
Gillian Morris in an article on The Employment Act 2002 (2002) 31 ILJ 245, at
253-254, may be unduly pessimistic, at least in relation to conduct prior and
leading to dismissal which may not on its facts properly be regarded as part of
the dismissal itself:
" …
in Johnson the House of Lords, by a 4:1 majority, stopped the common law
developing ‘to reflect modern perceptions of how employees should be treated fairly
and with dignity’ in the context of dismissal. …
The
argument that Parliament had intended to freeze out the development of the common
law by creating a statutory remedy for unfair dismissal is contentious; the absence
of any reference to the common law in the legislation may have occurred because
Parliament was content to let the courts develop it in the usual way. Indeed,
it would be open to the courts to reason by analogy that a requirement for employers
to follow a fair procedure is not regarded by Parliament as unduly onerous. The
majority’s reasoning means that although the exercise of the power to suspend
must be exercised with due regard to trust and confidence, the more drastic power
of dismissal is free from any equivalent constraint. ..."
See
also Douglas Brodie, Legal Coherence And The Employment Revolution, 117
LQR 604, at 624-625
- It
also seems to me that the potentially strange result of Johnson - identified
by Lady Justice Hale in Gogay – that it will encourage employers to dismiss
at an early stage where they might otherwise content themselves with suspension
pending completion of their investigations - is avoidable by the courts without
the intervention of Parliament.
- The
way forward was, I believe, first indicated by Lord Nicholls in the passage from
his speech in Mahmud, at page 39C-D to which I have referred (see para.
8 above), that every contract of employment now contains a duty of mutual trust
and confidence, damages for breach of which should be assessed on ordinary contractual
principles whether the "breach occurs before or in connection with dismissal
as at any other time". And Peter Gibson LJ, in Eastwood and Williams,
with the benefit of the tension between Gogay and Johnson clearly
in mind, identified it more precisely at the end of paragraph 23 of his judgment
when he said that it is a question of fact for the trial judge to determine on
the facts of each case whether the manner of dismissal or circumstances attending
it are confined to events at the same time or immediately before the actual dismissal.
Whilst he found to the contrary on the facts of that case, it is important that
those facts should not be taken as a blue-print for the same response in all cases
where there is a broadly similar or greater length of disciplinary process culminating
in dismissal.
-
Judge Overend appears to have proceeded on the basis that the combined effect
of Johnson and Eastwood and Williams is that once there is a dismissal
the nature and duration of the events preceding and eventually giving rise to
it, if comparable with what sufficed for the trial judge and the Court of Appeal
in Eastwood and Williams, is an automatic bar to a common law action in
respect of conduct which, but for the dismissal, would have entitled a claimant
to bring such an action. But, as I have said, the essential question is where,
on the facts of any particular case, should the line be drawn between dismissal
caught by the legislation and conduct prior to it causing injury compensatable
in damages at common law. The actual decision on the facts in Eastwood and
Williams should not be treated as part of the ratio in the sense that it is
a binding comparison. The question is not just one of the length of the disciplinary
process eventually giving rise to dismissal. There may be many other relevant
factors. For example, an employer may not embark on disciplinary proceedings with
dismissal in mind and may only come to it late in the day when he discovers that
the complaint is much more serious than he at first thought. So, the consistency
of conduct and intention of the employer at different stages of the process may
be relevant, as also may be: the nature and pattern of any warnings; whether there
is a natural break in the process before dismissal becomes a practical proposition;
and the attribution of the alleged injury to the time and nature of the particular
conduct of which complaint is made. All such matters, and no doubt others, fall
to be considered on a case by case basis. Perhaps Mr. Mawhinney put his finger
on it when, in argument, he accepted that investigation and suspension, to be
included in the statutory definition of "dismissal", must be "part
of the procedure" of dismissal. His other suggested test of "an unbroken
causal chain" leading to dismissal is not so apt. Such a chain of causation
is a different concept from whether conduct is so close to dismissal in time and
circumstance as to be included in it. The former may be very long in time and
in the number and varying strength of its links, the latter is more a matter of
feel on the particular facts of each case.
- Here,
as Mr. Gill submitted, there were a number of potentially distinguishing factors
between Mr. McCabe’s case and that of Eastwood and Williams. One was that
there seems to have been no fixed intention from the outset to dismiss Mr. McCabe,
whereas there clearly was such an intention on the assumed facts in Eastwood
and Williams. Another was that in Mr. McCabe’s case the employer’s progress
towards dismissal only started after Mr. McCabe began to suffer from the psychiatric
injury in respect of which he claims, whereas in Eastwood and Williams
the progress started before they began to suffer their injuries; and in Johnson
it was the confirmation of dismissal that triggered the psychiatric injury.
- As
to the suggested similarity of the claims before the industrial tribunal and that
now sought to be made in these proceedings, I should caution against such comparisons
of the "substance" of the claim in the two jurisdictions. There may
be sound policy and conceptual reasons for looking for a certain and "tidy"
outcome, that is, of avoidance of overlap between compensation for unfair dismissal
and common law damages for breach of duty associated with and prior to it. I have
in mind the concerns expressed by Lord Hoffmann in Johnson at paragraphs
47-50 of his speech as to difficulties of attribution in causation and to the
open-ended nature of a common law liability in this context. I also have in mind
the problems for the claimant in having to separate his claims, that is, to bring
his statutory claim first, within the three months time limit permitted for it,
and the common law claim second, albeit with the greater latitude of the three
years limit for personal injury claims, for additional loss not flowing from his
dismissal but from his employer’s unlawful conduct prior and leading to it. However,
the other side of the coin may be that the tribunal may not award all the compensation
claimed before it because it does not regard it as a consequence of the "dismissal"
and/or its possible maximum award under the legislation may not, in any event,
be sufficient to cover the seriousness of the loss caused by such conduct. In
such a circumstance, unless there is some scope for appropriately separate treatment
of the two forms of claim, a claimant could be left without adequate remedy in
either jurisdiction for loss attributable to prior unlawful conduct which, but
for the supervening dismissal, would have been available to him at common law.
- I
should add, that to identify any offending overlap or exclusion of liability by
reference to how the case was put before a tribunal or as to the basis of the
tribunal’s award is not, in my view, a logical or permissible way in which to
determine whether a common law claim survives the fact of termination of employment.
The facts on which the common law claim turns are for the court to decide, not
a tribunal. And the existence of a common law entitlement does not, or should
not, depend on whether the claimant has in fact made a claim to a tribunal for
compensation for unfair dismissal, or, if he has, how he framed the claim or how
the tribunal characterised it and dealt with it. Such matters may be relevant
to an assessment of the credibility or other reliability of his evidence in the
common law claim, but that is all – and rarely, if at all, at the strike-out stage.
It may be – and I express no view on this – that if he has succeeded in obtaining
a compensatory award from a tribunal, the extent and make-up of the award could
have some bearing on the amount of damages, if any, which he could recover in
a common law claim, if only to prevent inadvertent double recovery. But that is
a different question from the survival of a separate and discrete common law remedy
notwithstanding recovery for unfair dismissal before a tribunal. I do not understand
Peter Gibson LJ’s reference to such matters in paragraphs 24 and 25 of his judgment
in Eastwood and Williams (see para. 14 above) in support of the view of
the judge below to be part of the ratio of his decision.
- In
any event, there is a wider point of principle that the existence of a common
law claim in any given case should not depend on the chance that an employer chooses
not to terminate the contract by dismissal or that an employee chooses not to
treat his employer’s improper conduct as amounting to constructive dismissal.
In the latter circumstance, the extent of the common law right would leave the
employee with a dilemma that surely the legislature cannot have contemplated -
still less have intended - of requiring him to choose early in the piece between
accepting constructive dismissal and losing his common law claim or retaining
his common law claim and losing his statutory entitlement for unfair dismissal.
Such a dilemma could produce great injustice in cases where there has been a malicious
attempt by an employer to force constructive dismissal. Mr. Mawhinney, in argument,
recognised such a dilemma sub silentio when acknowledging that, if there had been
no dismissal in the present case, there might well have been a claim actionable
at common law.
- For
all those reasons, I am of the view that the Judge wrongly struck out this claim
as disclosing no cause of action and that he should have allowed the matter to
proceed on the proposed amended statement of case, leaving it to the trial judge
to determine the matter in accordance with the law as indicated, so far, by the
authorities and on the particular facts of the case. I would accordingly allow
the appeal.
Lord
Justice Brooke :
- I
am very uneasy about certain aspects of the present state of the law, which appear
to me to warrant re-examination by the House of Lords, or by Parliament, at an
early date. On the present appeal I agree with Auld LJ that Mr McCabe’s claim
should not be struck out, for the reasons he gives. In the present developing
state of the law it would be wrong for liability to be determined before the underlying
facts are ascertained. I also agree with the judgment of Sedley LJ. I am adding
this short judgment of my own in order to explain my unease.
- The
writ in this action was issued on 4th March 1997. The claimant annexed to his
statement of claim a short psychiatric report, written on 4th March 1996 by Dr
Hand, a consultant psychiatrist who had known him since October 1994. She said
he had been in contact with the psychiatric services since June 1994.
- She
attributed his reactive depression and post-traumatic stress disorder ("PTSD")
to his dismissal in 1994. She reported that since his dismissal he had found it
very difficult to think or plan, and that he had problems in concentrating. In
December 1994 she had prescribed psychotherapy. Because this did not help him,
she felt that his condition was intractable, and that he would be incapable of
returning to teaching on the grounds of ill health for the foreseeable future.
- On
the basis of this report it was averred in the original statement of claim (dated
3rd March 1997) that "following the Plaintiff’s dismissal on 13th March 1994"
he had suffered from the psychiatric disorders mentioned in Dr Hand’s report.
A claim for over £46,000 past loss of earnings and just over £145,000 future loss
of earnings accompanied the statement of claim. This claim, as thus formulated,
was bound to fail on the authority of Johnson v Unisys Ltd [2001] 2 WLR
1076.
- Four
days before the writ was issued Mr McCabe saw a different psychiatrist, Dr Smith.
Her report is dated 5th March 1997. It is very much fuller, and it draws in part
on GP’s notes and the psychiatric notes from Cornwall. There does not appear to
be anything in this report which suggests that either the head-teacher or his
employers would have regarded Mr McCabe as psychologically vulnerable prior to
the events which Auld LJ describes in paragraph 3 of his judgment.
- From
this report it appears that Mr McCabe received no significant medical treatment
in connection with any of these matters until March 1994 when he was prescribed
Diazepam, which was continued for a few months. In June 1994 he was diagnosed
by a consultant psychiatrist as suffering from a stress reaction, and thereafter
he received care, support, medication and counselling, principally from a community
mental health team.
- In
this report the history of his psychiatric troubles was taken back to the day
in May 1993 when he was first told, in general terms, of what was being alleged
against him. His initial reaction was one of terror (because he had to tell his
wife he had been suspended, and the reason for his suspension). A week later,
when he was offered a formal written warning, he was said to have been devastated.
He felt he had been judged to be guilty without any proper investigation having
been conducted.
- Mr
McCabe told Dr Smith that since that time he had been tormented by very distressing
psychological symptoms, including feelings of anger, frustration, helplessness
and powerlessness, depression, anxiety, comfort eating, a two-stone weight increase,
nausea and a pre-occupation with the unjust way that he perceived he had been
dealt with. He had also suffered from very severe insomnia since May 1993 and
from migraine headaches which he believed to be tension-related. It is on Dr Smith’s
report that Mr McCabe’s amended statement of case is based. His claim for damages
remains unaltered.
- This
history will, of course, be subjected to close examination at the trial. The trial
judge will face formidable difficulties because the events in issue occurred so
long ago and because Mr McCabe received no medical care expressly related to his
complaints (apart from relief for his migraines) until March 1994, the month when
he was actually dismissed. (He does, however, place reliance on a letter dated
29th June 1993 which suggests that the McCabe family had withdrawn from any social
contact "during recent weeks" and that they were "under severe
pressure at the moment"). Further difficulties will be created by the fact
that Dr Smith wrote in the plural of "the traumatic experiences he has been
through since 1993" as having an effect on his condition when she saw him
in March 1997, although she identified the single triggering event for his PTSD
as:
"the
devastating discovery that the allegations of inappropriate sexual behaviour with
schoolgirls were not to be thoroughly investigated and instead there was an assumption
that he had been guilty."
- She
said that the implications of this for a man who took such pride in his work were
obvious, and that his reaction to it was to develop PTSD. If the single triggering
event, however, occurred in May 1993, it will be difficult for Mr McCabe to sustain
his claim for damages for negligence in its present form, because its viability
depends on the defendant’s awareness of the severe stress which he did not begin
to suffer until after the triggering event had occurred.
- However
that may be, and however difficult it may be to ascertain the facts at this distance
of time, I am satisfied that the present condition of the law, as now declared
by the House of Lords, demands that the effort be undertaken. If the claim might
otherwise be considered viable, it will also be necessary for the trial judge
to consider the effect of the recent decision of this court in Hatton v Sutherland
[2002] EWCA Civ 76, [2002] 2 All ER 1, which is itself under appeal to the House
of Lords. We received no submissions from Mr Mawhinney about the effect of this
decision in a suspension (as opposed to an overwork) context, but it would be
odd if the law:
(i) permits
a claim by an employee known by his employers to be psychologically vulnerable
for PTSD arising out of the kind of treatment of which Mr McCabe complains when
dismissal was not in contemplation at the time of the triggering event;
(ii) disallows
such a claim when the employee was not known to be psychologically vulnerable;
(iii) disallows
such a claim by either type of employee (except where embraced in a statutory
award for unfair dismissal) if the disciplinary process intended to lead to dismissal
was the triggering event.
- Such
oddities are perhaps inevitable when Parliament legislates in one small corner
of the employment relationship and leaves the rest to the justice of the common
law. The common law, however, thrives on incremental development on a case by
case basis, and this is not a case which should be stifled at birth.
- This
short judgment should make it clear that I do not at present understand how Mr
McCabe can surmount the hurdle posed by his need to prove, whether in contract
or in tort, that his severe psychiatric illness was a reasonably foreseeable consequence
of the manner in which he was treated in May 1993. In McLaughlin v Jones
[2001] EWCA Civ 1743 at [35] – [47] and [59], [2002] 2 WLR 1274, this court identified
the matters which would have to be proved before a client could succeed in recovering
damages for psychiatric injury against his solicitor for a breach of duty arising
out of the solicitor-client relationship. In Hatton v Sutherland Hale LJ
considered issues concerned with foreseeability of psychiatric injury in an employment
context at paras 23-31.
- As
I have said, no argument was adduced to us about any of these issues, and the
law is still in a state of flux. As the law now stands (or appears to stand) I
am very uneasy about the long-term social consequences of a law which may permit
an employee who is known to be psychologically vulnerable to recover damages of
nearly £200,000 if his or her employer’s breach of duty (committed with no thought
of dismissal of the employee) triggers off a foreseeable psychiatric injury, while
an employee who is perceived to be more robust can recover nothing at all when
treated in the same way.
Lord
Justice Sedley:
- An
employee may suffer psychiatric trauma by reason of a breach not only of the implied
term of good faith but of the implied duty of care. In the present state of the
law, if he is so traumatised that he cannot come back to work, there appears still
to be no obstacle to the quantification of his loss to include future loss of
earnings if the breach was of the duty of care; but if it was a breach of the
duty of good faith, it seems that his leaving becomes a constructive dismissal
and his loss becomes subsumed in his limited statutory rights.
- This
case is neither of those two. Once the claim is amended as I agree it should be,
it is a case in which two arguably distinct things have happened. The claimant
has been traumatised by being suspended on a minor and unproven but very distressing
accusation; and, much later, he has been dismissed by reason of the same accusation.
Johnson v Unisys [2001] ICR 480 without question decides that he cannot
bring an action in relation to the latter. It also, I accept, decides that he
cannot bring an action in relation to the former if it was simply part of the
process of dismissal. But it does not decide that every breach of contract which
precedes a dismissal is part of the dismissal.
- Accordingly,
it seems to me, it remains to be decided in the present case whether the act of
suspension was (a) wrongful and (b) causative of trauma; and then, if it was both
these things, (c) whether it formed part of the process of dismissal or was –
as the claimant asserts it was – a discrete event which would have rested where
it was but for his own election to appeal against the warning which followed it.
- The
decision of their Lordships’ House in Johnson v Unisys has been the subject
of academic comment: see the full casenote by Hugh Collins [2001] IJL 305 and
the editorial endnote by Mark Freedland; Douglas Brodie, "Legal coherence
and the employment revolution" (2001) 117 LQR 604; and the passage on the
case in Bob Hepple and Gillian Morris, "The Employment Act 2002 and the crisis
of individual employment rights" [2002] ILJ 245, 253-5. It is in no way disrespectful
to say that this case illustrates the percipience of Professor Freedland’s comment
(loc. cit.) that the phoenix of full and fair compensation has risen from the
ashes of the common law of wrongful dismissal. It may be, as Professor Brodie
remarks (loc. Cit.) that the price of achieving coherence between common law and
statute has been the creation of discord with the common law.
- In
this situation I see no offence in our conclusion against the principle established
by Johnson v Unisys. This court is after all also bound by its own decision
in Gogay v Hertfordshire County Council [2001] IRLR 703, which was cited
in Johnson and not disapproved. Whatever our view of the chapter of legal
history of which the Industrial Relations Act 1971 formed part (mine, for what
it is worth, can be found (1994) 23 ILJ 201, 202-5) we must take from Johnson
the Parliamentary intent to curtail the common law where the statutory scheme
overlaps it – namely in relation to remedies for dismissal. For the rest the common
law remains the responsibility of the courts. There is still no obvious reason,
for example, why a suspension or dismissal in clear breach of contract should
not in a suitable case be restrained by injunction or struck down as void: see
Malloch v Aberdeen Corporation [1971] 1 WLR 1578; Stevenson v United
Road Transport Union [1977] ICR 893.
- I
am unable to accept Mr Mawhinney’s exegesis of Johnson, that wherever a
dismissal eventuates, a common law claim is excluded. Mr Mawhinney himself accepts,
rightly, that there must be some causative sequence ending in the dismissal. The
employee who is wronged but remains in the job appears still to have a complete
cause of action. It will have in due course to be decided whether, for example,
an employee who is so distressed by the employer’s wrongful act that he leaves,
and so may be said to have been constructively dismissed, is bound up in the causal
chain. Similarly it will have to be decided in this case whether, if the claimant
establishes the facts he has now pleaded, they are subsumed in the dismissal for
which he has already recovered such compensation as statute allowed, or whether
they constitute a separate and antecedent wrong.
- If
none of this is going to be easy, it is not the fault of the common law. The severance
from the body of the common law of dismissal, a common law concept with its own
rights and remedies, means that a novel question may arise as to whether earlier
events do or do not form part of the dismissal process. For the present it is
by no means clear that the suspension of the claimant was sufficiently linked
to his eventual dismissal to bar his action, and I agree that the issue, a mixed
one of fact and law, should go to trial on a suitable amended pleading.