New rules for old?
Date: 25 June 2010
Authors: Ian Smith
Issue: Vol 160, Issue 7423
Categories: Features, Employment
Every now and then when reading a case you start to feel, in the words of that great Irish jurist Terry Wogan, “Is it me?”. In other words, is it genuinely strange, or am I missing something?
The most positive thing to say about Edwards v Chesterfield Royal Hospital Trust [2010] EWCA Civ 571, [2010] All ER (D) 247 (May) is that permission is being sought to appeal to the Supreme Court; it is to be hoped that it will be granted because as it stands this decision could open up a veritable pallet of cans of worms, without it being too obvious on what basis.
To be fair, one problem was that the appeal took the form of an appeal against a striking out application (rather than a final judgment on the facts) which can often complicate matters and, moreover, it appears that the original grounds of appeal (on whether Art 6 of the European Convention on Human Rights could be used to reappraise certain longstanding limitations on damages for wrongful dismissal) expanded at the hearing into other related matters.
A lost career
The claimant was a consultant who was dismissed for gross professional misconduct. He claimed that this was done in breach of a contractually binding disciplinary procedure and claimed damages for that breach.
What he sought was general damages for future losses (in effect for loss of career) in the region of £480,000. The hospital sought to have this struck out, to the extent that it exceeded damages for loss of wages during his notice period (three months under his contract). The district judge did so.
On appeal, Nicol J added in an amount for the time it would have taken to have gone through proper procedure (the well-known extension in Gunton v Richmond-upon-Thames BC [1980] ICR 755, [1980] 3 All ER 577 but otherwise agreed. So far so ordinary on longstanding rules of common law damages for dismissal.
However, the claimant appealed further to the Court of Appeal wanting general damages on the basis that, if the proper procedure had been used he would not have been dismissed at all, he would have continued to work for the hospital, he would not have lost his career and therefore should have open-ended damages.
The claimant lawyers’ Holy Grail
The idea of common law damages (not tied to the £60k for unfair dismissal before a tribunal) stretching way into the future on a par with personal injury damages has long been the Holy Grail for claimants’ lawyers (especially in the case of highly paid professionals) but each time it has cropped up, either in relation purely to damages law or in the wider guise of trying to produce in effect a common law version of unfair dismissal, eg by an implied term not to dismiss except in certain circumstances, the courts have recoiled from it like the devil form a crucifix. Until now.
In the principal judgment Moore-Bick LJ said that the issue was whether a person suffering damage as a result of disciplinary findings reached in breach of contractual damages (which would not have been reached under the proper ones) “can recover damages at large”.
Johnson’s notoriety
His answer was yes. However, most of the judgment was not actually on that point. It got caught up in a detailed consideration of the notoriously difficult case of Johnson v Unisys Ltd [2003] AC 518 which ultimately is about liability at common law and under statute, not about damages.
Indeed, at the end of this extensive passage he in effect says so in terms that the Johnson point would prove too much anyway because if the claimant had fallen within the Johnson exclusion zone he would not have been able to claim at all (whereas liability here was admitted and the issue was quantum).
Other points of difficulty are that Gunton was apparently approved but without mention of its major limitation to the time it would have taken to complete the procedure, and that an argument for the claimant that the three month notice period clause was effectively trumped by the disciplinary procedure clause, ie that the former could not be used if the employer was in breach of the latter was disapproved, whereas arguably it was essential if he was not to be limited to damages for three month’s pay as is usually the case. Moreover, in Lloyd LJ’s short concurring judgment he says that the case should proceed for damages to be assessed in the usual way, but without saying what that is; indeed he mentions the normal rule that the employer could have dismissed by three months’ notice anyway.
Ultimately, however, the fact remains that Nicol J had followed and applied the longstanding rules (wages for notice plus a bit under Gunton) and the appeal against this was allowed. It is not being argued that there should not be change in an area such as this, but the problem here is seeing just how and to what extent, when the case is so difficult to understand and when the longstanding case law establishing the old, restrictive rules (from Addis v Gramophone Co [1909] AC 488, [1908-10] All ER Rep 1 onwards) was not considered. Or is it me?
Old rules remain—police inquiries
Ironically, the other cases chosen for this month’s rant go the other way, namely reaffirming longstanding law. While that may be less exciting, as an exercise it serves a useful function, making the lawyer more confident in relying on that law then he may be if looking the point up in Harvey and finding that the latest case on it was in 1982.
The relationship between internal disciplinary procedures and a contemporaneous police investigation into the same charge(s) has always caused problems. Should the employer proceed in spite of the police investigation (thus placing the employee in a difficult position as to whether to answer the charges at that stage) or should the employer postpone the internal procedure pending the result of the police investigation (thus potentially causing considerable delay)? While there is no definite answer to this conundrum, the decision of the Employment Appeal Tribunal (EAT) under Bean J in Secretary of State for Justice v Mansfield [2010] UKEAT/593/09 is of interest in reaffirming that the employer must have a wide discretion as to whether to continue or postpone.
Secretary of State for Justice v Mansfield
The employee was a prison officer accused of drug offences in relation to prisoners. He was suspended in May 2006 and, because of impending police inquiries, the internal procedures were postponed. Eventually in April 2007 no evidence was presented by the prosecution. No internal action was resumed until August 2007 when an investigation was commenced by an independent governor who produced a lengthy report.
A disciplinary hearing based on this took place in late January 2008 and in February the decision was announced to dismiss the employee. This was upheld in two appeals, culminating in October 2008. On the employee’s unfair dismissal complaint, the tribunal held for him, partly on the basis of delay, but this was overturned by the EAT.
Citing the authority of RSPCA V Crudden [1986] ICR 205, [1986] IRLR 83 and A v B [2003] IRLR 405, [2003] All ER (D) 184 (May), it was accepted that unreasonable delay can of itself produce unfairness, ie that there is not legal requirement to prove actual prejudice caused by the delay (though of course if it exists it is a strengthening factor).
However, in Crudden the delay was for the employer’s own purposes (not because of police action and in A v B there had been a delay for police action but then there had been unconscionable delay. Here the EAT took the view that the major delay had been caused entirely by the decision to postpone because of the police action and the employer could not be faulted for that—it was a proper exercise of discretion which had not been compounded by any actual prejudice to the employee.
It is perhaps significant that one reason for this last point was that the main witnesses had been interviewed in 2006, so that there was not the complicating factor of potential witnesses only being involved a couple of years after the events.
Consequences to the employee remain relevant
The precedent of A v B [2003] ICR 405, EAT was also in contention in Salford Royal NHS Trust v Roldan [2010] EWCA Civ 522, [2010] All ER (D) 110 (May) but on a different point, namely that the overall question of whether dismissal was a fair sanction may take into account the gravity of the charges and their potential effect on the employee.
Particularly serious charges with particularly serious consequences may require a particularly scrupulous investigation by the employer, concentrating as much on possible exculpatory evidence as on evidence put forward as showing guild.
Here, the claimant was a nurse from Singapore who had worked for the hospital for four years before being accused by another member of staff of disrespectful conduct to patients.
A finding of guilt and dismissal would have not only prejudiced her future employment prospects in her profession, but would also have led to the revocation of her work permit and deportation.
Against that background the tribunal had been within its powers to hold that the investigation as held had been inadequate and the dismissal procedurally unfair.
Elias LJ reminds us that, once it has been shown that the tribunal directed itself properly under the fundamental rules in BHS v Burchell [1978] IRLR 279, EAT (reasonable investigation by the employer leading to a genuine belief in guilt) its decision should only be impugned on appeal if it is shown that there was no proper evidential basis for it or that is conclusion was perverse—“a very high hurdle”.
Ian Smith, barrister, emeritus professor of employment law at the Norwich Law School, UEA, & an editor of Harvey on Industrial Relations and Employment Law
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