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Scottish Court of Session Decisions |
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You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> Young Or Logan v Falkirk & District Royal Infirmary NHS Trust [1999] ScotCS 184 (3 August 1999) URL: http://www.bailii.org/scot/cases/ScotCS/1999/184.html Cite as: [1999] ScotCS 184 |
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OUTER HOUSE, COURT OF SESSION
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0/198/5/98
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OPINION OF LORD REED
in the cause
BARBARA YOUNG OR LOGAN
Pursuer;
against
FALKIRK AND DISTRICT ROYAL INFIRMARY NHS TRUST
Defenders:
________________
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Pursuer: Allardice; Thompsons
Defenders: Dunlop; R.F. Macdonald
3 August 1999
In this action the pursuer seeks damages in respect of a psychiatric disorder which is said to have been caused by a breach of her contract of employment. The action came before me for a Procedure Roll debate, at which the defenders sought to have the action dismissed.
According to the pursuer's pleadings, she has been employed at Falkirk and District Royal Infirmary since 1977. From 1989 she was employed there as a Grade 3 X-ray secretary with the job title of clerical supervisor. That position required her to deputise for her immediate supervisor, Mrs McMain, if Mrs McMain was absent. Between June 1994 and June 1995 the pursuer was herself absent from work due to post-natal depression. The defenders were aware of the reason for her absence. She had been seen by a doctor from their occupational health service, and had been visited by a Ms Rendall, who was a member of staff of their Human Resources Department. Mrs McMain had also visited and telephoned her from time to time. By May 1995 the pursuer's condition had improved and she had been advised by her doctors to consider going back to work. She told Mrs McMain that she would soon be fit to return to work. She was then visited by Mrs McMain and Ms Rendall and told that during her absence a colleague, Ms Graham, had been given her Grade 3 position, and that upon the pursuer's return she would be demoted to a Grade 2 position, the downgrading to be reviewed after six months. In response, the defenders maintain that their decision to downgrade the pursuer temporarily was taken, after consultation with their occupational health service and their Department of Human Resources, due to concerns about her ability to cope with the stress of a supervisory position. Be that as it may, the pursuer invoked the defenders' grievance procedure, and after a hearing in August 1995 she was reinstated to an alternative Grade 3 position, but subject to a proviso that she would not be entitled to deputise for Mrs McMain. She appealed against that restriction, and eventually in October 1996 accepted an alternative Grade 3 position in which she would share with Ms Graham the responsibility of deputising for Mrs McMain.
According to her pleadings, the pursuer was under stress during her attempts to regain her original position, and suffered a recurrence of depression in consequence. She was unfit for work, due to a depressive disorder, between about June 1996 and April 1997, and suffered a loss of earnings in consequence.
The pursuer maintains that the defenders' conduct was in breach of contract. Her pleadings on this point are in the following terms:
"The defenders had a policy for dealing with the situation of staff being absent from work through ill health. Their policy was incorporated into the pursuer's contract of employment. The defenders' policy provides for persons absent on sick leave to return to their positions which they held prior to going off. The defenders' policy was against appointing a permanent employee to fill the post vacant as a result of an employee on sick leave. The policy was to fill such a vacant post by an acting up arrangement or temporary appointments. In demoting the pursuer prior to her return to work in June 1995 and appointing Graham to the pursuer's position, the defenders were in breach of contract. In not permitting the pursuer to return to the position she held prior to June 1994 the defenders were in breach of contract. The pursuer's contract of employment under the heading 'Documents' provides: 'Current documents relating to this contract ... policy and procedure manuals, may be inspected by arrangements with Unit/Area Personnel Officers.' Enquiries made by Mrs D S Spawson on the pursuer's behalf and relating to the defenders' policy in the event of absence due to illness resulted in a letter being sent to (sic) Mr Peter O'Hagan, Director of Human Resources, to said Spawson of 20th September 1995. A copy of said letter will be produced in process and founded upon, its terms are herein held repeated brevitatis causa. Said letter reflects the defenders' policy for dealing with the situation of staff being absent from work through ill health as hereinbefore condescended upon. In the circumstances the pursuer believes and avers that the sickness absence policy referred to in said letter is the 'policy' referred to in her contract of employment."
Counsel for the defenders submitted that the pursuer's pleadings were irrelevant and lacking in specification in two respects: first, there were no relevant averments of any breach of contract, in particular because no specification was given of how the alleged policy was supposed to have been incorporated into the pursuer's contract of employment; and secondly, no claim could lie in contract for damages in respect of a psychiatric injury. I shall deal with each of these submissions in turn.
In relation to the first point, it was agreed that I should have regard to two documents which were produced and agreed between parties. The first of these was headed "Contract of Employment", and contained an offer of employment made by Forth Valley Health Board (the defenders' predecessors) to the pursuer as a clerical supervisor at pay grade 3 with effect from 1 April 1989, and her acceptance of that offer. The second document was the letter from Mr O'Hagan to Mrs Spawson referred to in the pursuer's pleadings.
The pursuer's case proceeds on the basis that the defender had a certain policy which was not followed in her case. The critical averment is that the policy in question was incorporated into the pursuer's contract of employment. I emphasise that there is no other basis on which a breach of contract is alleged in this case. The document headed "Contract of Employment" states:
"TERMS AND CONDITIONS are as agreed by the General Whitley Council and the Administrative & Clerical Staffs Whitley Council".
It contains a number of references to other documents, and concludes:
"DOCUMENTS - Current documents relating to this Contract, copies of Whitley Council Agreements, S.H.H.D. Circulars, Superannuation Regulations and Policy and Procedure Manuals, may be inspected by arrangement with Unit/Area Personnel Officer."
The document contains one reference to "policy and procedure":
"DISCIPLINARY PROCEDURES AND RULES - Copies of the board's policy and procedure on disciplinary action and appeals may be seen in the Unit/Area Personnel Department or by contacting your head of department."
The document contains one other reference to "policy":
"HEALTH AND SAFETY AT WORK - The Board has a written statement of policy in terms of Section 2(3) of the Health and Safety at Work Act."
The letter from Mr O'Hagan to Mrs Spawson is in the following terms:
"Dear Sarah
SICK LEAVE POLICY
Thank you for the letter of 26 August 1995 in relation to the Trusts' policy for staff returning to work following a period of long term sick leave.
I am aware of the particular case you refer to in your correspondence, but as you are fully aware and would expect, I am unable to comment on that particular case or any other unless you are representing the particular employee concerned.
I would, however, wish to offer you the following comments, which I hope may address some of the questions you raise in your correspondence.
i) The Trust will not treat any group of employee or any employee individually in a discriminatory manner but will deal with each case of long term sickness on an individual basis, addressing the particular needs of the individual employee and the Trust in that particular case.
ii) The Whitley Council terms and conditions facilitates up to 6 Months full pay and 6 months half pay on the basis that the individual has been assessed as being able to return to their full duties of their particular post during that period or within a reasonable period following sick pay. It is the responsibility of the Trust as the employer to determine whether or not an employee is able to return to the full duties of their post. To ascertain this it will be necessary to seek advice from the Occupational Health Department through the Occupational Health Medical Adviser, who may also seek the advice of the employee's own G.P. or Consultant.
ii) (sic) All advice given by the Occupational Health Medical Adviser is confidential to the manager requesting the advice and where the Occupational Health Medical Adviser deems it appropriate to the individual at the time of their interview.
iii) Where it is clear that an employee cannot undertake the full duties of their own post, it is normal practice for the employer to try to find suitable alternative employment prior to any consideration of termination of employment on competency grounds (health). Nothing prevents the employee form presenting information to their manager, including medical information from their own General Practitioner or Consultant when they feel that this will be of value in assisting the manager's decision.
iv) It is not the practice of the Trust to fill a post temporarily vacant because of sick leave on a substantive basis during the period of sick leave. Facilities exist and should be used for this particular event through the use of acting arrangements, temporary appointments or locum appointments.
Your question clearly raises the need for the Trust to develop its own clear policy and procedure for sick leave arrangements within the Trust. I therefore suggest that we place this policy at the top of our agenda for the Trust Joint Staff Consultative Committee Sub Group on Policies and Procedures. I have asked Helen, my Secretary, to organise the initial meeting that the Staff Side chair as Secretary of the Trust Joint Staff Consultative Committee.
In the meantime, please contact me should you wish to discuss this matter any further."
Counsel for the pursuer submitted that the "practice" referred to in paragraph (iv) of the letter constituted a policy, and that policies were given contractual effect by virtue of the paragraph headed "DOCUMENTS" in the contract of employment, which I have quoted above. He was unable to develop his submission beyond these assertions.
I am unable to accept this submission. The pursuer's averment that the alleged policy was incorporated into her contract of employment is critical to her case. The defenders are entitled to fair notice of how the policy is said to have been incorporated. In my opinion, no such notice has been given. Even if I were to accept that "Policy and Procedure Manuals" are incorporated into the contract (which is not clear to me from the terms of the contract alone), and even if I were to accept that such documents might cover the policy alleged in the present case (which seems more dubious, given that they appear from the terms of the contract to be concerned with disciplinary matters rather than the issue which arose in the pursuer's case), the pursuer is left with the difficulty that Mr O'Hagan's letter is not itself such a document, and its terms do not imply that the "practice" to which he refers forms part of any such document. On the contrary, paragraph (ii) of his letter suggests that the relevant contractual terms and conditions are to be found in the Whitley Council Agreements (as the contract of employment would lead one to expect); paragraph (iii) and (iv) refer to "practice" rather than contractual obligations; and the concluding paragraph ("Your question clearly raises the need ...") implies the absence of any clear policy or procedure for dealing with sick leave arrangements.
In these circumstances, I am in no doubt that the averments that the defenders had a particular policy which was incorporated into the pursuer's contract of employment are lacking in specification, and that the action therefore falls to be dismissed.
I turn now to the second point, relating to the recoverability in contract of damages for psychiatric injury. Counsel for the defenders referred me to the discussion of damages in contract for mental distress in McGregor on Damages (16th edition) paragraphs 98ff, and relied in particular on the decision in Bliss v South East Thames Regional Health Authority [1987] ICR 700, and to the overruling in that case of the earlier decision in Cox v Philips Industries [1976] ICR 138. Counsel for the pursuer referred to the same authorities, and also to an observation made by myself in Ward v Scotrail Railways Limited, 1999 SC 255, 264:
"Whatever room for argument there may be in cases where only mental distress is averred, the present case is one in which actual injury (in the form of a psychiatric illness) is alleged; and there is no rule that damages for such injury are irrecoverable in contract (see e.g. McGregor on Damages, 16th ed., paras 96-97)."
I should say at once that I remain of the view which I expressed in Ward. It would to my mind be somewhat surprising if there were some rule which debarred the recovery of damages in contract for psychiatric illness. The consequent anomalies are obvious, and can be illustrated by three examples:
(i) An employee is placed in physical danger through the negligence of his employer and suffers a psychiatric illness as a result of shock. Assuming that he is entitled to recover damages in delict, why should he not be equally entitled to recover damages in contract? As Lord Steyn observed in White v Chief Constable of South Yorkshire Police [1998] 3 WLR 1509, 1545:
"The rules to be applied when an employee brings an action against his employer for harm suffered at his workplace are the rules of tort .... The duty of an employer to safeguard his employees from harm could also be formulated in contract. In that event, and absent relevant express provisions, a term is implied by law into the contract as an incident of a standardised contract: see Scally v Southern Health and Social Services Board [1992] 1 AC 294. But such a term could not be wider in scope than the duty imposed by the law of tort. Again one is thrown back to the ordinary rules of the law of tort."
As that passage suggests, the breach of the employer's delictual duty will (absent relevant express provisions) entail the breach of his contractual duty; and the breach of a contractual duty causing actual harm will sound in damages, unless the harm was too remote a consequence of the breach.
(2 A psychiatrist is negligent in his treatment of a private patient, with the consequence that the patient suffers a psychiatric illness from which he would otherwise have recovered. Assuming that the patient can recover in delict (as Sir Thomas Bingham MR, as he then was, accepted in M v Newham London Borough Council [1995] 2 AC 633 662), I cannot see why the patient cannot equally well recover in contract. Adapting the Master of the Rolls's words (at 664C), it would be little short of absurd if the patient were held to be disentitled to claim damages for injury of the very type which the psychiatrist had contracted to exercise her skill to try and prevent.
(3) An employee suffers from psychiatric illness in consequence of stress at work due to sexual harassment (as in Ward) or overwork (as in Johnstone v Bloomsbury Health Authority [1992] 1 QB 333 or Walker v Northumberland Country Council [1995] ICR 702). For the reasons explained by Lord Steyn in the passage I quoted earlier from White, I cannot see why the recoverability of damages should depend, as a matter of principle, on whether the employee sues in delict (as in Walker), or contract, or both (as in Johnstone and Ward). Indeed, in a situation in which there are relevant express provisions, it has been said that the parties' respective rights and duties have to be analysed wholly in contractual terms (see Johnstone at 350 C, per Sir Nicolas Browne-Wilkinson V-C, as he then was).
Whether damages are recoverable in contract for psychiatric illness in a given case will in my opinion depend on the application, to the circumstances of that particular case, of familiar principles of the law of contract. Plainly, there may be circumstances in which there was no breach of any contractual duty: on the facts of White, for example, there would appear to have been no breach of any contractual duty of care; and similarly on the facts averred in the present case. In other cases there may be a breach of contract, but it is impossible to establish a causal link between that breach and the psychiatric illness. In other cases again there may be a breach of contract resulting in psychiatric illness, but that consequence may be too remote to sound in damages, applying the familiar principles in Hadley v Baxendale (1854) 9 Ex. 341. Cook v Swinfen [1967] 1 WLR 457 was a case of that kind. But any fixed rule that damages for psychiatric illness are per se irrecoverable under the law of contract appears to me to be unsupportable in principle and contrary to authority. Provided that a relevant breach of contract can be established, and the requirements of causation and remoteness are satisfied, there is, in my opinion, no good reason why the recovery of damages for psychiatric disorder caused by a breach of contract should necessarily be excluded.
I turn now to consider the authorities which were said to support the existence of such a rule. The case principally relied on was Bliss v South East Thames Regional Health Authority [1987] ICR 700, a decision of the Court of Appeal. The case concerned a consultant surgeon who had been required by his employers to undergo a psychiatric examination. On his refusing to comply with that request he had been suspended. The employers' conduct was held to constitute a repudiatory breach of contract. At first instance, the plaintiff was awarded damages in respect of certain financial losses and also in respect of frustration and mental distress. On appeal, it was held that the latter award ought not to have been made. Giving the leading judgment, Dillon LJ said:
"It remains to consider the final point on the cross-appeal, viz the validity of the judge's award of £2,000 with interest by way of general damages for frustration and mental distress. In making such an award, the judge considered that he was justified by the decision of Lawson J. in Cox v Philips Industries Ltd [1976] I.C.R. 138. With every respect to them, however, the views of Lawson J. in that case and of the judge in the present case are on this point, in my judgment, wrong.
The general rule laid down by the House of Lords in Addis v Gramophone Co Ltd [1909] A.C. 488 is that where damages fall to be assessed for breach of contract rather than in tort it is not permissible to award general damages for frustration, mental distress, injured feelings or annoyance occasioned by the breach. Modern thinking tends to be that the amount of damages recoverable for a wrong should be the same whether the cause of the action is laid in contract or in tort. But in the Addis case Lord Loreburn regarded the rule that damages for injured feelings cannot be recovered in contract for wrongful dismissal as too inveterate to be altered and Lord James of Hereford supported his concurrence in the speech of Lord Loreburn by reference to his own experience at the Bar.
There are exceptions now recognised where the contract which has been broken was itself a contract to provide peace of mind or freedom from distress: see Jarvis v Swans Tours Ltd [1973] Q.B. 233 and Heywood v Wellers [1976] Q.B. 446. Those decisions, do not however cover this present case.
In Cox v Philips Industries Ltd [1976] I.C.R. 138 Lawson J. took the view that damages for distress, vexation and frustration, including consequent ill-health, could be recovered for breach of a contract of employment if it could be said to have been in the contemplation of the parties that the breach would cause such distress etc. For my part, I do not think that that general approach is open to this court unless and until the House of Lords has reconsidered its decision in the Addis case.": pp.717-718.
It is important to note that the decision in Bliss concerned the recoverability of damages for mental distress rather than for personal injury in the form of a psychiatric disorder. As Dillon LJ's judgment indicates, the case forms part of a long line of authority going back at least to the Addis case. More recent authorities in the same line include Watts v Morrow [1991] 1 WLR 1421, where the position was usefully summarised by Bingham LJ (as he then was) at 1445, Malik v Bank of Credit and Commerce International SA [1998] AC 20 and Johnson v Unisys Ltd [1999] 1 All ER 854. Assuming for the present that this line of authority should be followed in Scotland (cf. Watson v Swift & Co's Judicial Factor, 1986 SLT 217), it is in any event not germane to the point now in issue.
Counsel for the defenders however focussed particularly on the Court of Appeal's overruling in Bliss of the earlier decision in Cox v Philips Industries Ltd [1976] ICR 138, where Lawson J had taken the view that damages for distress, vexation and frustration, including consequent ill-health, could be recovered for breach of a contract of employment. I note that the learned author of McGregor on Damages, in discussing the case of Cox, and in particular the recovery of damages for illness in that case, states:
"This aspect of the decision would not seem to be affected by its overruling in connection with mental distress": para. 96, n. 68.
I respectfully agree. Other English decisions cited in McGregor (at paragraph 97) similarly suggest that there is no necessary bar in principle to the recovery of damages for ill-health, including psychiatric illness, caused by a breach of contract.
Assuming that a breach of contract causing psychiatric illness was relevantly averred by the pursuer in the present case, the real issue, as it appears to me, would be whether the recurrence of her depressive illness was too remote a consequence of the breach. In that regard, it is important to remember that the time as at which one has to determine what was in the reasonable contemplation of the parties is the time when the contract was concluded. To quote the familiar but important words of Alderson B in Hadley v Baxendale (1854) 9 Ex 341 at 354-355:
"We think the proper rule in such a case as the present is this: where two parties have made a contract which one of them has broken, the damages which the other party ought to receive in respect of such breach of contract should be such as may fairly and reasonably be considered either arising naturally, according to the usual course of things, from such breach of contract itself, or such as may reasonably be supposed to have been in the contemplation of both parties, at the time they made the contract, as the probable result of the breach of it."
As to the necessary degree of probability, I refer to Lord Reid's analysis in Koufos v Czarnikow [1969] 1 AC 350. In a case of the present kind, it might well be difficult in practice to establish that the requirements of remoteness were satisfied in respect of a claim for psychiatric illness, unless there was some particular reason why the possibility of such an illness could have been anticipated at the time when the contract was entered into (cf. Johnson v Unisys Ltd [1999] 1 All ER 854, 862 per Lord Woolf MR). That issue was not however discussed before me, and it was not suggested that I should determine at this stage that the claim was too remote.
In the whole circumstances, I shall sustain the defenders' first plea-in-law and dismiss the action.
