Edwards v Chesterfield Royal Hospital NHS Foundation Trust
| Jurisdiction | England & Wales |
| Judge | LORD DYSON,LORD WALKER,LORD PHILLIPS,LORD MANCE,LADY HALE,LORD KERR,LORD WILSON |
| Judgment Date | 14 December 2011 |
| Neutral Citation | [2011] UKSC 58 |
| Court | Supreme Court |
| Date | 14 December 2011 |
[2011] UKSC 58
Lord Phillips, President
Lord Walker
Lady Hale
Lord Mance
Lord Kerr
Lord Dyson
Lord Wilson
Appellant
Mark Sutton QC
Marcus Pilgerstorfer
(Instructed by DAC Beachcroft LLP)
Respondent (Edwards)
Mary O'Rourke QC
Oliver Williamson
(Instructed by Ryan Solicitors)
Appellant
Wendy Outhwaite QC
(Instructed by Treasury Solicitors)
Respondent (Botham)
Frederic Reynold QC
Philip Mead
(Instructed by Dean Wilson LLP)
Heard on 22 and 23 June 2011
LORD DYSON (WITH WHOM LORD WALKER AGREES)
It is now well established that an employment contract is subject to an implied term that the employer and employee may not, without reasonable and proper cause, conduct themselves in a manner likely to destroy or seriously damage the relationship of confidence and trust between them: Mahmud v Bank of Credit and Commerce International SA [1998] AC 20. In Johnson v Unisys Ltd [2001] UKHL 13; [2003] 1 AC 518, the claimant sought to rely on an alleged breach of this implied term, not as a foundation for a statutory claim for unfair dismissal or as a foundation for a claim for damages unrelated to dismissal, but as a foundation for a claim at common law for damages for the manner of his dismissal. But the House of Lords refused to extend the implied term to allow an employee to recover damages for loss arising from the manner of his dismissal because (per all members of the House except Lord Steyn) such a development of the law would be contrary to the intention of Parliament that there should be such a remedy, but that it should be limited by the statutory code regarding unfair dismissal now to be found in the Employment Rights Act 1996 ("the 1996 Act"). Some regarded the decision in Johnson as contentious: see, for example, Deakin and Morris Labour Law, 5 th ed (2009), at para 5–45. At para 36 of Mr Botham's written case, Mr Reynold QC invited the court to depart from Johnson, but this suggestion was not developed in the written case or in oral argument. Indeed, it was reaffirmed by the majority of the House of Lords in Eastwood and another v Magnox Electric plc and McCabe v Cornwall County Council and another [2004] UKHL 35; [2005] 1 AC 503 (" Eastwood's case").
Loss arising from the unfair manner of a dismissal is not therefore recoverable as damages for breach of the implied term of trust and confidence: it falls within what has been called the " Johnson exclusion area". The principal questions that arise in these two appeals are (i) whether the reasoning in Johnson applies so as to preclude recovery of damages for loss arising from the unfair manner of a dismissal in breach of an express term of an employment contract; and if so (ii) whether the claims made by Mr Edwards or Mr Botham fall within the Johnson exclusion area. It is submitted on behalf of Mr Edwards and Mr Botham that the first question should be answered in the negative and that their claims for damages should be assessed in accordance with orthodox common law principles. In Mr Edwards' case, the Court of Appeal (Ward, Lloyd and Moore-Bick LJJ) accepted this submission and in Mr Botham's case, Slade J did not. By a consent order dated 31 August 2010, the Court of Appeal (Pill LJ) reversed the decision of Slade J.
The Chesterfield Royal Hospital NHS Foundation Trust ("the Trust") was established on 1 January 2005 as an NHS Foundation Trust and acquired the rights and liabilities of its predecessor, the Chesterfield and North Derbyshire Royal Hospital NHS Trust. Mr Edwards had been employed by the Trust's predecessor as a consultant trauma and orthopaedic surgeon pursuant to a contract which incorporated the terms of its letter to Mr Edwards dated 2 June 1998. Para 2 of the letter referred to the Trust terms and conditions of employment copies of which could be seen at the Medical Personnel Office. Para 8 stated that the employment was subject to three months' notice on either side. Para 13 stated that in matters of professional misconduct, Mr Edwards would be subject to a separate procedure which had been negotiated and agreed by the Local Negotiating Committee.
By letter dated 22 December 2005, disciplinary proceedings were instituted against Mr Edwards arising from allegations that he had undertaken an inappropriate internal examination of a female patient and had then denied that the examination had taken place. It is his case that the applicable procedure at that time was that set out in "Disciplinary procedures for Hospital and Community Medical and Dental Staff" (HC(90)9). Annex B to HC(90)9 sets out in detail the procedures which authorities should use "when handling serious disciplinary charges, for example, where the outcome of disciplinary action could be the dismissal of the medical or dental practitioner concerned" (para 1).
A disciplinary hearing was held on 9 February 2006. On 10 February, the disciplinary panel decided that Mr Edwards should be summarily dismissed from his employment on grounds of gross personal and professional misconduct. This decision was confirmed by a letter dated 16 February which set out in detail the panel's findings and the reasons for its decision. Mr Edwards' appeal against this decision was dismissed on 24 April 2006.
On 12 May 2006, Mr Edwards started unfair dismissal proceedings before the Sheffield Employment Tribunal. The matters on which he relied as giving rise to the alleged unfairness of his dismissal included that the disciplinary panel had been "inappropriately constituted". His case was that his contract of employment entitled him to have a panel including a clinician of the same medical discipline as himself and a legally qualified chairman. The disciplinary hearing of 9 February was chaired by the Trust's medical director who was not legally qualified and the panel did not include an orthopaedic or trauma surgeon. Mr Edwards had always maintained that, if the panel had been properly constituted, it would not have made incorrect findings and he would not have been dismissed.
Prior to the pre-hearing review before the tribunal, Mr Edwards withdrew his claim for unfair dismissal and it was dismissed by order of the tribunal on 17 August 2006.
The Trust referred the complaints against Mr Edwards to the General Medical Council ("GMC"). The GMC's Investigation Committee decided not to refer the matter to a Fitness to Practise Panel and the complaint was closed. In the result, Mr Edwards was not subjected to any practising restrictions by the GMC arising out of the subject matter of the Trust's disciplinary investigation.
By a claim issued on 15 August 2008, Mr Edwards issued proceedings in the High Court against the Trust in which he claimed damages for breach of his employment contract and its wrongful termination. By his particulars of claim, he alleges that the termination of his contract was wrongful and in breach of contract in a number of procedural respects. It is not necessary to refer to them all. They include the plea that the panel had not been properly constituted. Other allegations are that he was denied a fair hearing with legal representation before a properly constituted and unbiased panel; the Trust caused or permitted the Investigator of the allegations to become a witness and the effective prosecutor to become an adjudicator; and he was denied the right to cross-examine the key witnesses who were called to give evidence against him. His case is that, if the panel had included a clinician of the same discipline as himself, it "would not have reached the erroneous conclusions it did and the Claimant's contract would not have been wrongfully terminated". The preliminary schedule of loss alleged that, but for his dismissal, Mr Edwards would have continued to work in his role as a consultant orthopaedic surgeon with the Trust until his retirement in 2022 and that he had suffered loss of earnings (including future earnings) in excess of £3.8 million.
By an application notice issued on 17 February 2009, the Trust applied to the court for an order that Mr Edwards' claim for damages for loss in respect of a period in excess of his three months' contractual notice period be struck out under CPR 24.4. District Judge Jones acceded to the application. Mr Edwards appealed. Nicol J [2009] EWHC 2011 (QB) allowed the appeal, but only to the extent of holding that, subject to liability for breach of contract being established, in addition to compensation for the three months' period of his contractual notice, Mr Edwards was also entitled to compensation for the additional period that it would have taken to conduct the disciplinary procedure if it were conducted and completed with reasonable expedition (the so-called Gunton extension). In allowing this additional compensation, the judge was applying the Court of Appeal decision in Gunton v Richmond-upon-Thames London Borough Council [1981] Ch 448.
Mr Edwards appealed to the Court of Appeal. The lead judgment was given by Moore-Bick LJ. It was recorded at para 44 of his judgment that Mr Edwards was now advancing two discrete claims of breach of contract, namely (i) a claim of wrongful dismissal (termination of the contract without notice) and (ii) a claim that the Trust had failed to carry out the proper disciplinary procedure. The failure to carry out the proper disciplinary procedure was alleged to have resulted in the findings of misconduct which damaged his reputation. It was said that, even if Mr Edwards had continued in his employment with the Trust after the disciplinary process had concluded, he would still have suffered difficulty in obtaining (a)...
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