Darren Cavanaugh v Folsana Pressed Sections Ltd

Hearing dates: 11 – 19 March 2024

Approved Judgment

This judgment was handed down remotely at 2pm on 7 June 2024 by circulation to the parties or their representatives by email and by release to the National Archives.

Gavin Mansfield KC:

(Sitting as a Deputy High Court Judge)

INTRODUCTION

This is a claim for damages for personal injury brought by Mr Cavanaugh against his former employer (“ Folsana”).

Mr Cavanaugh was summarily dismissed by Folsana on 21 November 2018. He claims that he was caused psychiatric injury by Folsana's breaches of duty, contractual and tortious, in suspending him and subjecting him to disciplinary investigation.

The effect of the House of Lords decision in Johnson v Unisys [2003] 1 AC 518 is that in these proceedings Mr Cavanaugh cannot claim damages for personal injury arising out of his dismissal. However, a claim can be brought for personal injury caused by breaches which occurred prior to dismissal: Eastwood and other v Magnox Plc, McCabe v Cornwall County Council [2004] 3 All ER 991.

BACKGROUND FACTS

Folsana is a family owned metal fabrication business in Bolton, Lancashire. It was founded in 1979 by Robert Haslam. The Haslam family retain the majority of the shares in the company. Although Robert Haslam retired as a director and employee, he remained involved in the management of the business at the time of the events giving rise to this claim.

Mr Haslam's son, Stephen Haslam, is a director and shareholder. He has been involved in the business since the late 1990s. He describes his role in the business as minimal – he keeps an eye on the business finances. He operates his own property business from the same office premises as Folsana.

Mr Cavanaugh started working for Folsana in 1982 at the age of 16. Apart from a short gap between 1985 and 1987 he worked there for his whole career until his dismissal in 2018. He worked his way up in the business and in 1995 he was made a company director and Operations Manager. In 2001 he purchased a 15% holding of non-voting shares.

At the same time as Mr Cavanaugh was made a director, Darren Marsden was also made a director. Mr Marsden had started working at Folsana age 17, a year or two before Mr Cavanaugh. Like Mr Cavanaugh, he worked his way up through the business. For around 10 years from 1995, Mr Cavanaugh and Mr Marsden ran the business together with Robert Haslam. When Mr Haslam stepped back, Mr Cavanaugh and Mr Marsden ran the business together. Broadly, Mr Marsden was responsible for sales and commercial matters and Mr Cavanaugh for production.

Bernard Donnelly started working for Folsana in 1984. He left in 1988 but returned in 1993. He has remained working for Folsana since then. In 2012 he was appointed Works Manager, reporting to Mr Cavanaugh.

The company is a relatively small one. In 2018 there were around 45 employees. There was no dedicated Human Resources (“ HR”) function. Natalie Christie (nee Young), who was employed in an administrative role from 2016, also took care of HR. Mr Cavanaugh himself ultimately was responsible for HR.

The key events took place between September and December 2018. Although I will need to address the facts in some detail, in the following paragraphs I outline the key events, in order better to explain the issues to be determined.

On 17 September 2018, Mr Cavanaugh was suspended by Robert Haslam, pending disciplinary investigation. Folsana's case is that the suspension arose because Mr Donnelly had tendered his resignation, claiming constructive dismissal, and had submitted a grievance. He said that Mr Cavanaugh's treatment of him had become intolerable. The circumstances of Mr Donnelly's complaints are hotly contested by Mr Cavanaugh.

Having suspended Mr Cavanaugh, Folsana carried out an investigation. That was done initially by Ms Christie but then by a third party — Neil Hutchings. Mr Hutchings was an acquaintance of Mr Marsden. He runs a home improvement business, but had extensive experience as a trade union representative.

During the course of the investigation, a number of other employees provided evidence of Mr Cavanaugh's behaviour towards themselves and others. Mr Hutchings recommended that disciplinary proceedings be commenced against Mr Cavanaugh for gross misconduct.

Mr Cavanaugh raised a grievance against Folsana's treatment of him on 19 September. The grievance was handled by Karen Pilkington, an independent HR consultant. Ms Pilkington rejected the grievance on 8 October. He appealed the grievance, but the appeal was subsequently rejected by Emma Fay, independent HR consultant.

Detailed disciplinary charges were provided to Mr Cavanaugh on 30 October. The disciplinary process was handled by Kerry Green, independent HR consultant. After a disciplinary hearing on 14 November, Ms Green decided that Mr Cavanaugh should be dismissed summarily for gross misconduct. Mr Cavanaugh appealed his dismissal. The appeal was heard by Jane Carroll, an independent HR consultant. She dismissed the appeal on 17 December.

In the meantime, Mr Cavanaugh started to experience symptoms of mental ill-health. He first attended his GP on 24 September, the week after his suspension. The GP recorded stress, poor concentration and poor sleep and placed him on anti-depressants. On 27 September, the GP referred Mr Cavanaugh to Greater Manchester Mental Health and Social Care Trust. Mr Cavanaugh's first appointment with the Trust was on 29 October.

During the course of the investigation and disciplinary process Mr Cavanaugh made seven “ Mental Health Notifications” (the phrase used in the Particulars of Claim) to Folsana, or to the HR consultants who were dealing with the process. These were occasions on which he made reference to his mental health condition.

After his dismissal Mr Cavanaugh obtained a job in Liverpool, starting at the beginning of January 2019. He resigned from that that job and moved to another job in Bolton in March 2019, where he worked until he resigned in June 2019. He attributes his inability to remain in either job to his psychiatric condition. He has not worked in paid employment since June 2019. He has set up a handyman business, DBC Maintenance NW Ltd.

The parties each called expert evidence from a consultant psychiatrist: Dr Michael Isaacs for the Claimant and Professor Declan Murphy for the Defendant. There was a large amount of agreement between them. The agreed medical position is that Mr Cavanaugh has suffered a recognized psychiatric illness – an adjustment disorder with mixed anxiety and depressed mood, which evolved into a major depressive disorder, single episode. The experts agree that Mr Cavanaugh is not, at the date of trial, capable of working in a high pressure or highly skilled role similar to his old job, though it is likely that in the medium term he will be able to take on higher stress jobs and develop his new business.

OUTLINE OF THE ISSUES

I take the following outline largely from Mr Hyam KC's List of Issues produced at the end of the evidence, though I have expanded on and sub-divided some of the breach issues.

Breach of duty – suspension and its immediate aftermath

Mr Cavanaugh claims that Folsana suspended him without reasonable and proper cause. He puts this case in two ways:

a. The whole disciplinary case was a premeditated plot or contrivance, by some or all of Robert Haslam, Stephen Haslam, Mr Marsden, Mr Donnelly and Mr Hutchings. He argues that Mr Donnelly never genuinely resigned and had no genuine grievance. He was put up to it by Folsana's management, who wanted to get rid of Mr Cavanaugh for other reasons. Mr Platt KC, for Folsana, referred to this as the “conspiracy” case. Although conspiracy is not a word used by Mr Cavanaugh, or Mr Hyam KC, his counsel, it is a fair synonym for a pre-meditated plot or contrivance by a number of people, and I will use it for ease of reference in this judgment.

b. In the alternative, even if Mr Donnelly genuinely resigned and raised a grievance, the matters he raised did not give reasonable and proper cause for suspension.

Even if there were grounds to suspend, Mr Cavanaugh claims that the manner in which the suspension was carried out and its aftermath was without reasonable and proper cause. He points to the following:

a. The suspension was carried out without warning and in a public and humiliating manner.

b. An email was sent to Folsana on the day of suspension, essentially to all of its database, which he claims was defamatory.

c. The investigation was commenced without proper terms of reference.

d. Folsana refused or failed to provide proper details of the allegations against him.

e. On the day of his suspension a junior employee was sent to remove his laptops and mobile phone, which amounted to a punishment.

Reasonable foreseeability and suspension

Was it reasonably foreseeable that Mr Cavanaugh would suffer psychiatric injury if suspended in the manner in which he was, and in the steps taken in the immediate aftermath?

Breach of Duty – Mental Health Notifications

Mr Cavanaugh further claims that the manner in which the disciplinary process was conducted, between his suspension and his dismissal, disregarded the Mental Health Notifications, and further caused him injury.

Was Folsana on notice of the risk of psychiatric injury, if Mr Cavanaugh was suspended in the way he was? Was Folsana under a duty to take steps to...