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	United Kingdom Employment Appeal Tribunal
You are here: BAILII >> Databases >> United Kingdom Employment Appeal Tribunal >> Seafield Holdings Ltd (t/a Seafield Logistics) v. Drewett [2006] UKEAT 0199_06_2706 (27 June 2006) URL: http://www.bailii.org/uk/cases/UKEAT/2006/0199_06_2706.html Cite as: [2006] UKEAT 0199_06_2706, [2006] UKEAT 199_6_2706

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APPEARANCES

 

For the Appellant	MR JAMES ROBINSON (Of Counsel) Instructed by: Messrs Foys Solicitors 102 Bridge Street, Worksop Notts S80 1HZ
For the Respondent	MR MARK GARGAN (Of Council) Instructed by: Messrs Atteys Solicitors 82 Cleveland Street Doncaster DN1 3DR

SUMMARY

Compensation for unfair dismissal- assessment of economic loss.

Was employee's medical condition after her constructive dismissal caused or aggravated by employer's repudiatory conduct or by her pre-existing medical condition?

In determining what caused the employee's loss, was the proper approach to apply the "but for" test or to assess in percentage terms the prospect that the employee would have become ill and unable to work even if there had been no repudiatory conduct by the employee? Answer depends on whether it is past or future loss.

Were findings of Employment Tribunal perverse?


 


THE HONOURABLE MR JUSTICE SILBER

I. Introduction.

1. By a decision dated 4 November 2005 the Employment Tribunal sitting in Sheffield found that Mrs Tracey Drewett ("the respondent") had been unfairly and constructively dismissed by her employers Seafield Holdings Limited, who traded as Seafield Logistics ("the appellants"). The Employment Tribunal then had to consider compensation and by a decision sent to the parties 22 December 2005, it awarded the respondent £22,575.75 by way of compensation for unfair dismissal. The appellant appeals against this award principally on the grounds that the Employment Tribunal failed to consider properly the prospect that the respondent would have been unable to work even if she had not been unfairly constructively dismissed by the appellants.

II. The hearing before the Employment Tribunal

2. It was common ground between the parties that the respondent had at the time of her dismissal a long-standing underlying medical condition caused by matrimonial and domestic difficulties for which the appellants were not responsible. The appellants also accepted that the respondent's pre-existing medical condition had been exacerbated by their treatment of her, which culminated in her constructive dismissal
3. The Employment Tribunal considered that they had to decide whether:

"within the context of assessing the [respondent's] entitlement to compensation pursuant to section 123 of the Employment Rights Act 1996, to what extent may it is said that the [respondent's] continued incapacity to work is attributable to the acts or omissions of the [appellants]?"

4. The Employment Tribunal's reasoning was (with our underlining added) that:

"A. "The issue before the Tribunal requires resolution of the following question, namely: but for the actions of the [appellant], would the [respondent] have been unable to return to work in any event?"(paragraph 22 of the Reasons);

B. "There was no medical evidence to suggest those strategies [to combat all the respondent's domestic problems unconnected with the way she was treated by the appellants] were anything other than successful, such that they did not militate against the [respondent's] capacity to work in 2004" (paragraph 24 of the Reasons); and

C. "The Tribunal has to weigh these matters in the balance and posit the question: but for the actions of the [appellant], would the other external factors have lead (sic) to the incapacity from which the [respondent ] now suffers? In the view of the Tribunal, and mindful of the coping strategies incepted by the [respondent] in 2000, and her working record between 2003 and December 2004 the answer to that question is no" (paragraph 26 of the Reasons)."

4. The Employment Tribunal concluded that it was satisfied that the cause for the incapacity of the respondent at that time was the treatment given to her by the appellants which culminated in her dismissal. It is common ground between the parties that the approach which had to be followed by the Employment Tribunal was that enunciated by the Court of Appeal in Sutherland v Hatton [2002] ICR 612 and indeed that was how the Employment Tribunal sought to deal with this issue. Mr James Robinson, counsel for the appellants, contends that the Employment Tribunal failed to apply the principles in that case correctly but Mr. Mark Gargan counsel for the respondent disagrees and he supports the Employment Tribunal's reasoning and its decision.

III. The grounds of appeal

5. The grounds of appeal are that:

"(a) the Employment Tribunal wrongly applied a "but for" test rather than following the guidance in Sutherland, which was to assess the percentage chance that extrinsic factors may have resulted in the respondent's inability to work ("the Sutherland Issue"); and that

(b) the finding of the Employment Tribunal that there was no material evidence to suggest extrinsic factors may have resulted in an inability on the part of the respondent to work was perverse in the light of the evidence that was before the Employment Tribunal in the form of the respondent's medical records (" the perversity issue")."

6. It is also contended by the respondents that even if the Employment Tribunal erred and should have assessed her losses on the basis of a percentage chance, then in the words of the respondent's second written skeleton argument:

"in the circumstances the tribunal held that that (1) the [respondent] would remain incapable of work for the relevant period or (2) even if she recovered so as to be fit for work the [respondent] would not have been able to find work during that period . Therefore it was just that the [respondent] receive compensation for loss of earnings on the basis claimed i.e. the period up to 22 August 2006 [which was apparently the last date for which a claim was made]"

8. I will consider this point separately as "the future loss issue".

IV. The Sutherland Issue

9. It is common ground that the Tribunal was correct when it stated that:

"19.It was agreed between the parties that the Tribunal was required to approach the question of causation and loss upon common law principles, most recently enunciated by Hale LJ in Sutherland v Hatton and Ors [2002] IRLR 262. In the course of that Judgment, with which the other members of the Court of Appeal expressed approval, it was stated that:

"Many stress related illnesses are likely to have a complex aetiology with several different causes. In principal(sic), a wrongdoer should only pay for that proportion of the harm suffered for which he by his wrongdoing is responsible…." [para 36]

20. Hale LJ continued:

"Hence, if it is established that the constellation of symptoms suffered by the claimant stems from a number of different extrinsic causes, then in our view a sensible attempt should be made to apportion liability accordingly. There is no reason to distinguish these conditions from the chronological development of industrial diseases… Where the tortfeasors breach of duty has exacerbated a pre-existing disorder or accelerated the effect of pre-existing vulnerability, the award of damages for pain suffering and loss of amenity will reflect only the exacerbation or acceleration. Further, the quantification of financial losses must take account of contingencies. In this context, one of those contingencies may well be the change that the claimant would have succumbed to a stress related disorder in any event…." [para 42]"

7. Mr Robinson initially contended that, contrary to the approach in the Sutherland case, the Employment Tribunal applied what is described as a "but for" test rather than following the guidance in Sutherland which would have entailed assessing the percentage chance that extrinsic factors may have resulted in an inability to work on the part of the respondent. As we will explain in paragraph 15, he later accepted correctly in our view that the Employment Tribunal was correct to apply the "but for" in respect of past losses but he maintained that this was not the appropriate test for future losses. Mr. Gargan submitted that the Employment Tribunal had adopted the correct approach in applying the "but for" test. So the question for this appeal tribunal on this issue was refined to determining if this was the correct test for future losses
8. In our view, it is instructive to bear in mind that that when applying the Sutherland principles in one of the four conjoined appeals then before the Court of Appeal, Hale LJ dealt with the case of Mr. Barber, who was claiming damages for a moderately severe psychiatric illness. An issue for determination was whether Mr. Barber would in the future have suffered psychiatric illness if he had continued with a similar teaching job. Hale LJ stated that:

"167. The Judge also took the view on the balance of probability that Mr Barber would have continued in his chosen profession until retirement age but for his illness, provided that he had received assistance to alleviate the work overload and the pressures to which he had been subjected during 1996…

171. This type of case, however, which focuses on what would probably have happened in the past, is entirely different from a case where a court has to make an estimate of what may happen in the future. If there is a chance that an event may occur which would mean that an injured claimant would not have gone on working until retirement age in any event, then a familiar way of taking that chance into account is to reduce the multiplier used for calculating future loss. The first instance decision of Otton J in Page v Smith [1993] PIQR Q55,75-76 provides a good example of the technique at work…

173. In our judgment the Judge was wrong not to reduce the multiplier for future loss to cover the chance that if Mr Barber had continued with a similar teaching job, his health might nevertheless have broken down in the same way…"

9. This reasoning means that so far as future losses were concerned the Employment Tribunal was wrong to apply the "but for" test and instead it should have assessed the prospect of the respondent having been unable to work because of her underlying illness, which was not caused by the appellants. This approach is supported by the well-known analysis of Stuart-Smith LJ in Allied Maples Group v Simmons & Simmons [1995] 1 WLR 1602 at 1609-1610, when he said that:

"1. What has to be proved to establish a causal link between the negligence of the defendants and the loss sustained by the plaintiffs depends in the first instance on whether the negligence consists of some positive act or misfeasance or an omission or non-feasance. In the former case, the question of causation is one of historical fact. The court has to determine on the balance of probability whether the defendant's act, for example the careless driving, caused the plaintiff's loss consisting of his broken leg Once established on balance of probability, that fact is taken as true and the plaintiff recovers his damage in full. There is no discount because the Judge considers that the balance is only tipped in favour of the plaintiff; and the plaintiff gets nothing if he fails to establish that it is more likely than not that the accident resulted in the injury.

Questions of quantification of the plaintiff's loss, however, may depend upon future uncertain events. For example, whether and to what extent he will suffer osteoarthritis, whether he will continue to earn at the same rate until retirement, whether, but for the accident, he might have been promoted. It is trite law that these questions are not decided on a balance of probability, but rather on the court's assessment, often expressed in percentage terms, of the risk eventuating or the prospect of promotion, which it should be noted depends in part at least on the hypothetical acts of a third party, namely the plaintiffs employer".

13. At the hearing of the appeal, we referred counsel to two recent House of Lords decisions on damages (Gregg v Scott [2005] 2 AC 176 and Barker v Corus [2006] UKHL 20). We then invited further written submissions and Mr. Grogan,who unlike Mr. Robinson responded, then drew our attention to various parts of the speeches but they do not cast any doubt on the principles to which we have just referred. Lord Nicholls of Birkenhead in Gregg's case quoted at page 182 with approval the statement of Lord Diplock in Mallett v McMonagle [1970] AC 166, 176 that:

" ..In determining what did happen in the past a court decides on the balance of probabilities. Anything that is treated as more probable than not it treats as certain. But in assessing damages which depend upon its view as to what will happen in the future or would have happened in the future if something had not happened in the past, the court will make an estimate as to what are the chances that a particular thing will or would have happened and reflect those chances, whether they are more or less than even ,in the amount of damages it awards"

10. The reasoning of Lord Diplock, Stuart-Smith and Hale LJJ in their respective cases shows that the Employment Tribunal should not have applied the "but for" test to determine what the future losses of the appellant were and should instead have assessed the prospect of the respondent not being able to work. We have great sympathy for the Employment Tribunal in having to deal with these complex legal issues especially if their attention was not drawn to the statements in the Allied Maple case or in the Mallett case to which we have just referred.
11. For the purpose of completeness, we should explain that we consider that Mr. Robinson correctly latterly accepted that the Employment Tribunal was correct to apply the "but for" test to the past losses of the respondent in the light of the statements, which we have quoted in paragraphs 11 to 13 above.
12. In reaching these conclusions, we have not overlooked the contention of Mr. Gargan that we should not have permitted the appellant to raise the argument in respect of the "but for" test because it was not argued before the Employment Tribunal. Even if that argument had not been raised before the Employment Tribunal, we consider that we can and should deal with it. As was explained in Jones v Governing Body of Burdett Coutts School [1998] IRLR 521, a point cannot be taken on appeal unless the appeal court (which in the present case is the Employment Appeal Tribunal) is in possession of all the material necessary to enable it to dispose of the matter fairly without injustice to the other party and without recourse to a further hearing in the lower court. There were no such obstacles to this Appeal Tribunal dealing with the "but for test" argument and so we have dealt with it.

IV. The Perversity point

13. The appellants contend that the finding of the Employment Tribunal that there was no material evidence to suggest extrinsic factors may have resulted in an inability on the part of the respondent to work was perverse in the light of the evidence that was before the Employment Tribunal in the form of the respondent's medical records. The Employment Tribunal had stated in paragraph 26 of its Reasons (with our underlining added) that:

"...on the balance of probabilities, the Tribunal is satisfied that the cause for the present incapacity was the treatment meted out to the [respondent] which culminated in her dismissal. There is no material evidence to suggest the contrary".

14. The case for the appellants is that the words, which are underlined, are perverse because the respondent's medical records show first that the respondent was failing to co-operate with those medical professionals, who were treating her, second that there were factors not related to the respondent's work, which were affecting her and third that non-work related factors might have meant that the respondent would have been unable to return to work in the future.
15. No expert evidence was adduced by either party at the Employment Tribunal relating to "the nature, origins or prognosis of the [respondent's] present medical condition". It was also explained by the Employment Tribunal that the question of the respondent's medical condition was approached with sensitivity because of her condition. The Employment Tribunal therefore had to reach its conclusions on the basis of the notes of the respondent's general practitioner, a précis of attendance for treatment and correspondence between the general practitioner and third party medical advisers.
16. The findings of the Employment Tribunal were that:

"a. the respondent started her work with the appellants in November 2001. By that time, she had been diagnosed as suffering from a depressive disorder and she was at material times "a person susceptible to depression and anxiety related conditions";

b. although the respondent had previously had a depressive disorder but she did not consult her general practitioner about these problems until March 2003. The Employment Tribunal considered that until then during her employment with the appellants, "those matters were under control or, at least adequately addressed by medication";

c. in about February 2003 the respondent was off-work with significant symptoms;

d. after her return to work, there was no suggestion of any further absence from work for illness until about December 2004, which culminated in the respondent tendering her resignation in February 2005 and, as we have explained, it was held that the respondent had been constructively dismissed;

e. in the period from Spring 2003 until December 2004, the medication and coping mechanisms of the respondent were successful so that the Employment Tribunal concluded that "they did not militate against the [respondent's] capacity to work in 2004";

f. while the respondent was on sick leave from December 2004 until her resignation and again after the resignation, she was receiving medical treatment;

g. the medical report of Derek Taylor of 19 January 2005, which would have been when the respondent was experiencing the difficulties with the appellants which led to her resignation and constructive dismissal, shows that the respondent was experiencing "depressive/anxiety type symptoms", which is " further aggravated by poor anger control". It was said that these conditions:

"appear to have developed in response to severe ongoing situational concerns related to the stressful work environment which have resulted in [the respondent] being off work sick…"

h. in a further report of 4 May 2005, Derek Taylor stated that:

"However, [the respondent's] situational concerns have intensified over recent months to the extent where she is presently facing the prospect of having her home repossessed aggravated further by the fact that she is recently lost her job";

i. the financial concerns for the respondent of having her house repossessed would have been caused by her constructive dismissal; and

j. the Employment Tribunal considered that "the respondent's status and responsibilities in the work place shaped a good deal of her notions of self-worth and provided her with a principal source of stability. That stability was fundamental to her well-being".

17. This evidence is supportive of a conclusion that it was the appellant's treatment of the respondent that was on the balance of probabilities the cause of her problems at the time of the hearing. The contention that the decision of the Employment Tribunal was perverse has to be considered in the light of the fact that in Yeboah v Crofton [2002] IRLR 634, Mummery LJ explained that to show perversity, it had to be established ( with our underlining added) that:

" 93...where an overwhelming case is made out that that the Employment Tribunal reached a decision which no reasonable tribunal, on a proper appreciation of the evidence and the law, would have reached"

22. In our view, the Employment Tribunal's statement that "there was no material evidence to the contrary" in respect of their finding that the cause of the respondent's incapacity was the appellant's conduct was not a perverse conclusion. Thus the appeal on the perversity issue fails.

V. The future loss issue.

18. The case for the respondent is that even if the Employment Tribunal erred and should have assessed her losses on the basis of a percentage chance, then in the words of the respondent's second written skeleton argument:

"in the circumstances the tribunal held that that (1) the [respondent] would remain incapable of work for the relevant period or (2) even if she recovered so as to be fit for work the [respondent] would not have been able to find work during that period . Therefore it was just that the [respondent] receive compensation for loss of earnings on the basis claimed i.e. the period up to 22 August 2006 [which was apparently the last date for which a claim was made]"

19. Counsel for the appellants was given the opportunity to answer this point but he did not wish to do so. We have been unable to find in the Employment Tribunal's Reasons the findings which the respondent contends that they made. This is not surprising as the Employment Tribunal approached all issues of loss (both past and future) on the basis of the "but for" test and so they would not have considered the future prospects on the basis stipulated in the cases to which we have referred in paragraphs 11 to 13 above. Thus we are unable to accept the respondent's submission on this point.

VI. Conclusions.

20. For the reason we have sought to explain, the appeal must be allowed and remitted to the same Employment Tribunal to determine the losses of the respondent on the basis of the prospect of her having suffered from her pre-existing illness after the remedies hearing. We are very conscious that by then the part of her claim, which relates to the loss in the period from the date of the last hearing until the date of the new hearing in front of the Employment Tribunal will be looked at on a "but for" basis as it will be then seen as past losses. In those circumstances, we would urge the parties to try to resolve the matter by negotiation if that is possible.