Briscoe v Lubrizol Ltd
| Jurisdiction | England & Wales |
| Judge | Lord Justice Potter,Mr Justice Bodey,Lord Justice Ward |
| Judgment Date | 23 April 2002 |
| Neutral Citation | [2002] EWCA Civ 508 |
| Docket Number | Case No: A2/2000/3508 |
| Court | Court of Appeal (Civil Division) |
| Date | 23 April 2002 |
[2002] EWCA Civ 508
Lord Justice Ward
Lord Justice Potter and
Mr Justice Bodey
Case No: A2/2000/3508
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION
ON APPEAL FROM QUEEN'S BENCH DIVISION
(MR JUSTICE HUNT)
Royal Courts of Justice
Strand,
London, WC2A 2LL
Adam Pearson (instructed by Norman Jones) for the Appellant
Andrew Edis Q.C. (instructed by Bremner, Sons & Corlett) for the Respondent
INTRODUCTION
There is before the court an appeal by the defendants and a cross-appeal by the claimant, their former employee, from a judgment of Mr Justice Hunt given on 20 October 2000. The claimant sued for damages on a number of grounds in respect of non-payment of benefit to him under a long-term disability scheme ("the scheme") contained in Group Policy No ZG 9167 underwritten by Phoenix Assurance plc ("the insurers"). The claimant, who had been employed in heavy manual work by the defendants from December 1986, had a prolonged period off work in June 1990, during which he was paid benefit by the defendants while the insurers were considering whether he was in fact entitled to benefit under the policy. In November 1991, the defendants ceased paying benefit to the claimant following the insurers' refusal to pay the claim and, after a further period during which communication between the claimant and the defendants broke down, the defendants purported to terminate the claimant's employment by a letter of dismissal dated 3 June 1992. It was a summary dismissal, in that no period of notice was given. The letter which stated that the defendants were treating the claimant's employment as having been terminated on 20 November 1991, by virtue of his failure to return to work and the absence of medical evidence to justify this. The judge held that, in the circumstances of the case, to which I shall turn in more detail shortly, the claimant continued to be entitled to payment of benefit up to 3 June 1992, but that the dismissal which took place on that date was justified and that the claimant's right to payment of benefit thereupon ceased.
On this appeal the claimant contends that his contract of employment either was not terminated by the letter of 3 June 1992, in which case he is entitled to claim past and future benefits as a debt, alternatively that, if his contract of employment was terminated, that termination was wrongful and he is entitled to equivalent damages. By their Respondent's Notice the defendants assert that the judge erred in law in that, having decided that the relevant terms of the contract of employment were those contained in the defendants' handbook (which did not follow the precise wording of the terms of the insurers' policy), the claimant was never in fact entitled to payment of benefits by the defendants because he was never incapable of work as defined in the handbook; that being so, the payments made in anticipation that the insurers would meet the claim were not contractually due and thus the judge erred in holding that the claimant was entitled to payment for the period between November 1991 (when the payments ceased) and 3 June 1992 when he was dismissed.
THE RELEVANT CONTRACTUAL DOCUMENTS
Particulars of Terms of Employment pursuant to Section 1 of the Employment Protection (Consolidation) Act 1978
The claimant's written particulars of employment in relation to his job as a Shift Operator set out numbered terms of employment as to remuneration, hours of work, holiday entitlement etc. It referred in several places to the Company Information Handbook ("the handbook"). In particular, Paragraph 6 provided:
"The Company Information Handbook also contains information regarding Sickness and other Employee Benefits Plans. Any queries should be addressed to the Personnel Department."
It is pertinent to note that the reference to the handbook as containing 'information' regarding benefits contrasts with references to 'details' of holiday entitlements 'given' in the handbook (Paragraph 5) and details of the Defendant's Disciplinary Rules and Procedures to be 'found' in the handbook (Paragraph 9).
The handbook
The relevant information in the handbook appeared under the heading 'THE LUBRIZOL CONTINUOUS DISABILITY SCHEME', which included the following paragraphs:
"1. Objects of the Scheme
The Scheme is designed to provide benefits in respect of disability of members by sickness or accident …
3. Who is Eligible?
You will become eligible to join on the 1 st June on which you satisfy all of the following conditions:—
… [There is no dispute that the claimant became eligible and was included within the scheme] …
4. Costs of the Scheme
The Company will pay the whole of the cost of the benefits.
5. When the Benefit is Payable
Benefits will commence immediately after twenty-six weeks of continuous disablement and finish when you are no longer disabled or when you reach age sixty-five if male. The insurers will not cover you should your disability be (a) wilfully inflicted.. [and four other examples follow which are not relevant to this case]
Should a member be disabled for more than one period of twenty-six weeks, appropriate benefits will be paid in the same way as for the first period of disablement.
6. Amount of Benefit
This will be at the rate of 52% of your annual Pensionable Pay as defined in the Lubrizol Retirement and Death Benefits Plan. However, the insurance company may seek to impose limitations of benefits in certain cases and these will be notified to you individually if they apply …
7. Payment of Benefit
Full benefit will be payable after twenty-six weeks of total disability. This means that you must be unable to follow any occupation as a result of either sickness or an accident. If you are unable to follow your usual occupation but can do some other work, the benefit will be reduced in the same proportion as your loss of earnings bear to your previous Pensionable Pay. Your new occupation must be acceptable to the insurance company …
The Insurance Company reserves the right to ask for medical evidence of good health, and to impose special terms, except as set out in the next paragraph.
9. Income Tax on Benefit
The Insurers will pay the benefit to Lubrizol who will pay an equivalent amount to the member after deduction of Income Tax if any.
10. Continuation of Option
If you leave the Company you can continue the benefit by paying the premiums to the Insurance Company. Details will be given to you on request." (emphasis added)
Earlier in the handbook, in the section relating to health, under the heading 'DISABILITY SCHEME' it was provided that:
"On the 1 st June following the completion of three years' service employees under the age of sixty … enter the Lubrizol Continuous Disability Scheme, subject to acceptance by the insurers. Once acceptance has been given for a specified benefit, this cannot be reduced. Benefits over a certain level and subsequent increments above this level will, however, be subject to satisfactory evidence of health …"
The policy
Under Clause 1 (Definitions) of the First Schedule to the policy, the scheme was defined as 'The Lubrizol Ltd Continuous Disability Scheme' and by Clause 3 (Terms of Scheme) it was provided that:
"The terms of the Scheme shall be as agreed upon between the Grantees [Lubrizol] and the company [the insurers]. The Grantees shall notify the company of any intention to amend the Scheme and any such amendment that shall affect the Policy only to the extent agreed upon by the Company. Relevant details of the Scheme shall be given to members but nothing contained in such details or any amendment thereof shall affect the Company's liability under the Policy." (Paragraph 3 of Definitions).
Clause 5 (Eligibility for Membership) provided that:
"An employee shall be regarded as being in eligible employment and shall qualify for membership in accordance with the conditions set out in the Second Schedule."
[It is not disputed that the claimant was so qualified]
Clause 8 (Benefits) provided that:
"(A) A benefit (hereinafter referred to as the 'Benefit Insured' determined in accordance with the Third Schedule) will be payable under the Policy in respect of any part of a member's Disablement that occurs after the end of the waiting period [i.e. 6 months commencing on the date of commencement of the member's disablement] and before the Terminating Date [age 65] …
(B) (i) If the Disablement in respect of which a benefit is being paid under section (A) above ceases because the member engages in a gainful occupation (with the employer or otherwise) the company shall pay a reduced benefit in accordance with the Third Schedule (Part II) in respect of any continuous period following the end of the Disablement and before the Terminating Date …"
Clause 1 (Definitions) provided that:
"A Disablement" in respect of a member shall mean a continuous period of illness or disablement in respect of which evidence has been produced to the company which showed to the company's satisfaction that throughout such period the member has been totally unable because of his illness or disablement to perform his normal occupation (as hereinafter defined) and does not engage in any other gainful occupation or employment."
"Normal Occupation" in respect of a member shall mean the occupation in which he was employed by the employer immediately before the beginning of the Disablement." (emphasis added)
Clause 12 of the policy provided that:
"A member shall cease to be included in the Policy.
….
(2) On ceasing to be in the Employer's service … No benefit shall be...
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