Dunnachie v Kingston upon Hull City Council

JurisdictionEngland & Wales
JudgeLord Justice Sedley,Lord Justice Brooke,Mr Justice Evans-Lombe
Judgment Date11 February 2004
Neutral Citation[2004] EWCA Civ 84
Docket NumberCase No: A1/2003/1261 EATRF
CourtCourt of Appeal (Civil Division)
Date11 February 2004

[2004] EWCA Civ 84




Royal Courts of Justice


London, WC2A 2LL


Lord Justice Brooke

(Vice-President of The Court of Appeal (Civil Division))

Lord Justice Sedley and

Mr Justice Evans-Lombe

Case No: A1/2003/1261 EATRF

Christopher Dunnachie
Kingston Upon Hull City Council

Antony White QC & Thomas Linden (instructed by Unison Employment Rights Unit) for the Appellant

John Bowers QC & Joanna Heal (instructed by Kingston upon Hull Legal Services Department) for the Respondent

Crown Copyright ©

Lord Justice Sedley

The issue


Ever since the introduction by the Industrial Relations Act 1971 of a right not to be unfairly dismissed, compensation for unfair dismissal has been required by law to be "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" (see now the Employment Rights Act 1996, s.123(1)) .


In the early days of the new legislation the National Industrial Relations Court, under its first (and only) president Sir John Donaldson, decided in Norton Tool Co Ltd v Tewson [1972] ICR 501 that this formula embraced only quantifiable pecuniary losses. This remained the almost unquestioned orthodoxy until in the speeches of the House of Lords in Johnson v Unisys Ltd [2001] UKHL 13 it was—putting it equivocally for the moment—indicated that, although at common law the House's decision in Addis v Gramophone Co Ltd [1909] AC 488 continued to confine damages for breach of contract to pecuniary losses, the statutory formula was large enough to embrace damages for non-economic harm in unfair dismissal cases.


The decision in Johnson has attracted a good deal of academic comment, not all of it favourable, partly because of its uncovenanted impact on the law of constructive dismissal. But its apparent enlargement of the accepted ambit of compensation led one learned commentator, Professor Hugh Collins (2001) 30 ILJ 305, to remark that a phoenix of truly just and equitable compensation might now rise from the ashes of the hoped-for evolution of the common law of wrongful dismissal.


This appeal is about the phoenix. If the Employment Appeal Tribunal is right and Norton Tool remains good law, the phoenix was an illusion. Whether this is the case depends on two things: first, whether the availability of full compensation was an integral part of their Lordships' reasoning; secondly, if it was not, whether this court should nevertheless now hold it to be the law.

The facts


It is not necessary to say a great deal about the history of the case. Mr Dunnachie, an environmental health officer, had begun work with Hull City Council at the age of 19 in 1986, had qualified two years later and by the time he was forced to resign was an acting principal EHO in the council's food section. His resignation on a month's notice in March 2001 was brought about, the Employment Tribunal found, by a prolonged campaign of harassment and undermining on the part of his colleague and sometime line manager Gary Kitching. The tribunal summed it up like this:

"In that connection, we found that Mr Kitching did, for whatever reason, have a low opinion of the applicant's capabilities. That opinion was misplaced. Nevertheless, he acted upon it by seeking to undermine the applicant whenever the opportunity presented itself. A particularly bad example was his irrational refusal to allow the prosecution of Skelton's Bakery to proceed. When the applicant challenged that decision by going to their manager, Mrs Cottis, we are satisfied that Mr Kitching retaliated by conducting an in-depth investigation into the management of the applicant's files, without telling him that he was doing so. He then threatened the applicant with disciplinary proceedings and left the matter hanging in the air. Mr Kitching's conduct was compounded by that of Mrs Cottis, who failed to alleviate the applicant's anxieties about the prospect of being suspended. Both she and Mr Duxbury [her line manager] either failed or refused to recognise that the applicant had been a victim of bullying by Mr Kitching. Mr Duxbury deliberately sought to deflect the applicant from making a formal complaint under the respondent's personal harassment policy. The respondent's treatment of the applicant by those officers caused his ill health. We are satisfied that there was the clearest evidence of a breach of the implied term of mutual trust and confidence."


It followed that Mr Dunnachie had been constructively and unfairly dismissed. Because he had a family to support, he had hung on until he found another job to go to and had only then given notice. The new job, with Doncaster City Council, was less well paid, of lower status and at a much greater distance from his home.


This was a bad case of workplace bullying, compounded by an equally serious refusal by management to deal with it. The blow to a conscientious employee's self-esteem which such treatment delivers may well be the unkindest cut of all, worse in many ways than the monetary loss. There was no professional evidence that the distress and its effects had amounted to a recognised psychiatric condition but Mr Dunnachie had been reduced by his treatment to a state of overt despair.

The proceedings


The tribunal gave their decision on 15 May 2002 and adjourned the question of remedies, failing agreement, to 24 May. On 11 June 2002 they handed down extended reasons for their award. The total was £54,940, together with £2752 costs. The breakdown was as follows:

Basic award 3,240.00

Compensatory award

Loss of earnings to date 6,148.16

Loss of future earnings 74,175.35

Additional cost of travel to work 29,514.77

Loss of statutory industrial rights 250.00

Compensation under Johnson v Unisys 10,000.00

The total compensatory award, £123,328.28, had to be reduced to the amount of the statutory cap of £51,700. To the total produced by adding the basic award to the capped compensatory award, the tribunal added an award of costs because they considered that the respondent council had conducted the proceedings high-handedly, in particular by unreasonably threatening Mr Dunnachie with a costs order should he lose.


The council appealed to the EAT against the calculation of the compensatory award—on which they succeeded to the extent of having it remitted to a fresh employment tribunal—and separately against the Johnson award of £10,000. It is the latter to which the present very full and careful judgment of the EAT, delivered by Burton P, is directed. Its conclusions are, first, that the material part of the speech of Lord Hoffmann in Johnson is not integral to the House's reasoning, and secondly that Norton Tool was rightly decided and should continue to be followed. Recognising the importance of the issues, the EAT itself gave permission to appeal.

The law


Although it will be necessary to refer to other provisions later in this judgment, the key provision is now found in Part X, s.123, of the Employment Rights Act 1996 as amended:

(1) Subject to the provisions of this section and sections 124, 124A and 126, the amount of the compensatory award shall be 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.

(2) The loss referred to in subsection (1) shall be taken to include -

(a) any expenses reasonably incurred by the complainant in consequence of the dismissal, and

(b) subject to subsection (3), loss of any benefit which he might reasonably be expected to have had but for the dismissal.


The remainder of s.123 and the other provisions referred to in subsections (1) and (2) do not matter to the present argument. The provisions which I have quoted do not differ in any significant way from the formula originally enacted in s.116 of the Industrial Relations Act 1971 and reproduced at intervals in amending or consolidating Acts. It will be relevant, however, that s.116 of the 1971 Act governed not only awards of compensation for unfair dismissal but all awards of compensation under the Act for unfair industrial practices. These included (under s.101) the inducement of victimisation by trade unions; (under s.102) failure by employers to implement agency shop agreements or provide information relevant to collective bargaining; (under ss.103, 107 and 108) unfair exclusion from trade unions and employers' associations; and (under s.106) victimisation by employers of trade union members (prohibited by s.5), as well as unfair dismissal.

What did Johnson v Unisys Ltddecide?


The issue before their Lordships' House in Johnson was whether in an action at common law for wrongful dismissal an employee can recover damages for consequential psychiatric harm. Their Lordships held that he could not, the majority on the ground that a claim for compensation arising out of the manner of a dismissal (which was what was sought) did not lie within the doctrine of Addis v Gramophone Co Ltd [1909] AC 488 and must now be made under the statutory unfair dismissal scheme or not at all. They consequently declined to enlarge the limit placed by Addis on the ambit of damages for breach of contract.


The holding, as reported in the Appeal Cases headnote [2003] 1 AC 518, was:

"… that (per Lord Bingham of Cornhill, Lord Nicholls of Birkenhead, Lord...

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