[2007] UKSSCSC CCR_2658_2006 (04 June 2007)
CCR/2658/2006
DECISION OF THE SOCIAL SECURITY COMMISSIONER
- My decision is that the decision of the tribunal is erroneous in point of law. I set aside the tribunal’'s decision and because I can do so without making any fresh or further findings of fact, I give the decision which I consider that the tribunal should have given, that is, a decision under section 12 of the Social Security (Recovery of Benefits) Act 1997 directing the Secretary of State to issue a fresh Certificate of Recoverable Benefits and specifying that:
a. on the issue of a fresh certificate the existing certificate is to be varied by changing the relevant period of recoverable benefits for the purposes of section 3 of the 1997 Act to the period from 13 May 1993 to 12 May 1998;
b. the amount of recoverable benefit is to be re-calculated accordingly.
- This appeal, brought by the Secretary of State under section 13 of the Social Security (Recovery of Benefits) Act 1997 (“"the 1997 Act”"), raises the question of how the provisions of the Act should be applied in cases where a claimant recovers damages at common law in respect of psychiatric injury alleged to be caused by an employer, and also statutory compensation for unfair dismissal. The relationship between the common law and statutory remedies in these circumstances was considered by the House of Lords in this actual case in McCabe v Cornwall County Council (decided with Eastwood v Magnox Electric plc), reported at [2004] ICR 1064. It is not in dispute that the provisions of the 1997 Act apply only to common law damages, and not to statutory compensation under the provisions now contained in Part X of the Employment Rights Act 1996, but the Secretary of State contends that the tribunal erred in law in this case in determining the ambit of the common law claim. I held an oral hearing of the appeal on 14 December 2006, at which the Secretary of State was represented by Mr T Budy, of Counsel, and the compensator was represented by Mr D Grant, also of Counsel. The claimant’'s compensation was not reduced on account of the benefits which he received and he took no part in the proceedings either before the tribunal or before me.
- The claimant was employed as a PE teacher in a school maintained by the compensator education authority from September 1991 until his dismissal in March 1994. On 13 May 1993 allegations were made by a female pupil that he had behaved inappropriately towards her and another pupil, and on 18 May 1993 he was suspended. On 24 May 1993 a meeting concerning the allegations took place between the claimant and his head teacher, and on 8 June 1993 the head teacher wrote to the claimant confirming his suspension on full pay pending a disciplinary hearing.
- On 20 September 1993 a letter was sent to the claimant notifying him of a disciplinary hearing to be held on 13 October 1993 in connection with a total of ten disciplinary charges, alleging inappropriate physical contact with four female pupils. At the disciplinary hearing, which was not in fact held until 3 November 1993, a decision was made that the claimant should be given a final written warning. The claimant appealed against that decision, but his appeal was not heard until 9 March 1994. At the appeal hearing the claimant subjected the members of the panel to a violent outburst, resulting in a decision that he should be dismissed. On 15 March 1994 the claimant was sent a letter of dismissal.
- The claimant had consulted his general practitioner about his mental condition on 4 February and 15 February 1994. Shortly after the disciplinary hearing, on 14 March 1994, the claimant again consulted his general practitioner, who made an entry on the claimant’'s medical notes of “"stress ++”". In June 1994 the claimant was referred to a psychiatrist and on 13 June 1994 he made a claim for sickness benefit for the first time, specifying his illness as “"stress and depression”". Sickness benefit was awarded backdated to 17 March 1994 and remained in payment until 28 September 1994, when it was replaced by an award of invalidity pension and allowance, which was replaced in turn by incapacity benefit on 13 April 1995.
- Although the claimant was eventually permitted to retire on ill health grounds, he made a further appeal against his dismissal, which was heard in July and August 1996. Following the confirmation of the claimant’'s dismissal by the second appeal panel, the claimant commenced proceedings for unfair dismissal. The industrial tribunal upheld the complaint of unfair dismissal, on the ground that the employers had acted in breach of their disciplinary procedures because of their failure to arrange for a senior member of staff to carry out an investigation of the complaints against the claimant. The tribunal awarded the claimant as compensation for unfair dismissal a basic award of £504 and the maximum compensatory award at the time of £11,000. The tribunal also made a finding that the claimant had contributed to his dismissal to the extent that it was just and equitable to reduce his compensation by 20%, but the finding of contributory fault was subsequently set aside on an appeal to the Employment Appeal Tribunal heard in February 1998.
- In March 1997 the claimant instituted proceedings in the High Court against the compensator and the governors of the school, claiming damages for breach of contract, negligence and breach of statutory duty. His main complaint in the Statement of Claim, as originally drafted, was that because of the failure to investigate the allegations against him and to conduct the disciplinary hearings properly, and because of his dismissal, he had suffered psychiatric illness. The claimant claimed special damages of nearly £200,000 and obtained a number of medical reports to support the claim as originally pleaded.
- In February 2001 the House of Lords heard Johnson v Unisys Limited [2001] ICR 480, in which it upheld the striking out of a claim for damages arising out of the manner of dismissal of an employee whose complaint of unfair dismissal had been upheld by an industrial tribunal. The House held that the doctrine of the implied term of “"trust and confidence”" in a contract of employment, developed by the Employment Appeal Tribunal to enable claims of constructive unfair dismissal to be brought under the employment protection legislation, and extended to claims for common law damages in Mahmud v Bank of Credit and Commercial International SA [1997] ICR 606, did not allow a common law claim for damages to be brought in respect of the manner of dismissal of an employee, since to allow such claims would run counter to the intention of Parliament that they should be dealt with under the employment protection legislation.
- In the light of Johnson, the claimant applied to amend the Statement of Claim by claiming only in respect of events which had occurred prior to his dismissal, but on 27 May 2002 Judge Overend, sitting as a judge of the High Court, refused permission to allow the amendment and struck out the Statement of Claim as disclosing no cause of action. On 19 December 2002 the Court of Appeal (Auld, Brooke and Sedley LJJ) allowed the claimant’'s appeal, on the basis that the case should be permitted to go to trial to enable the underlying facts to be ascertained. However, Brooke LJ observed: “"I do not at present understand how (the claimant) can surmount the hurdle posed by his need to prove, whether in contract or in tort, that his severe psychiatric illness was a reasonably foreseeable consequence of the manner in which he was treated in May 1993”".
- The claimant’'s Statement of Claim had been struck out at first instance on the basis of the Court of Appeal’'s decision in Eastwood v Magnox Electric plc, but the House of Lords allowed the claimant’'s appeal in Eastwood and upheld the decision of the Court of Appeal in this case. In distinguishing Johnson, Lord Nichols of Birkenhead held:
“"27. Identifying the boundary of the “"Johnson exclusion area”", as it has been called, is comparatively straight forward. The statutory code provides remedies for infringement of the statutory right not to be dismissed unfairly. An employee’'s remedy for unfair dismissal, whether actual or constructive, is a remedy provided by statute. If before his dismissal, whether actual or constructive, an employee has acquired a cause of action at law, for breach of contract or otherwise, that cause of action remains unimpaired by his subsequently unfair dismissal and the statutory rights flowing there from. By definition, in law such a cause of action exists independently of the dismissal.
28. In the ordinary course, suspension apart, an employer’'s failure to act fairly in the steps leading to dismissal does not of itself cause the employee financial loss. The loss arises when the employee is dismissed and it arises by reason of his dismissal. Then the result of the claim for loss falls squarely within the “"Johnson exclusion area”".
29. Exceptionally this is not so. Exceptionally, financial loss may flow directly from the employer’'s failure to act fairly when taking steps leading to dismissal. Financial loss flowing from suspension is an instance. Another instance is cases such as those now before the House, when an employee suffers financial loss from psychiatric or other illness caused by his pre-dismissal unfair treatment. In such cases the employee has a common law cause of action which precedes, and is independent of, his subsequent dismissal. In respect of his subsequent dismissal he may of course present a claim to an employment tribunal. If he brings proceedings both in court and before the tribunal he cannot recover any overlapping heads of loss twice over.
30. If identifying the boundary between the common law rights and remedies and the statutory rights and remedies is comparatively straightforward, the same cannot be said of the practical consequences of this unusual boundary. Particularly in cases concerning financial loss flowing from psychiatric illnesses, some of the practical consequences are far from straight forward or desirable. The first and most obvious drawback is that in such cases the division of remedial jurisdiction between the court and an employment tribunal will lead to duplication of proceedings. In practice there will be cases where the employment tribunal and the court each traverse much of the same ground in deciding the facts or issues before them, with attendant waste of resources and costs.
31. Second, the existence of this boundary line means that in some cases a continuing cause of conduct, typically disciplinary process followed by dismissal may have to be chopped artificially into separate pieces. In cases of constructive dismissal where a distinction will have to be drawn between loss flowing from antecedent breaches of the trust and confidence term and loss flowing from the employee’'s acceptance of those breaches as a repudiation of the contract. The loss flowing from the impugned conduct taking place before actual or constructive dismissal lies outside the Johnson exclusion area, the loss flowing from the dismissal itself is within that area. In some cases this legalistic distinction may give rise to difficult questions of causation in cases such as those now before the house, where financial loss is claimed as the consequence of psychiatric illness said to have been bought on by the employer’'s conduct before the employee was dismissed. Judges and tribunals, faced perhaps with conflicting medical evidence, may have to decide whether the fact of dismissal was really the last straw which proved too much for the employee, or whether the onset of the illness occurred even before he was dismissed.”"
- 11. Following the decision of the House of Lords, the claimant’'s counsel settled an amended statement of claim in substitution for the original. Although the amended Statement of Claim was never formally served, it was seen by the defendants (and may have been the amendment which the House of Lords allowed), and formed the basis of the action which was ultimately settled as a result of a payment into court by the defendants. The amended Statement of Claim relied on the defendants’' suspension of the claimant without at any time carrying out the investigation required by their disciplinary procedure as constituting breaches of the implied term of trust and confidence and of the employer’'s duty to provide a safe system of work, and also as negligence at common law. The amended Statement of Claim gave the following Particulars of Injury:
“"The claimant has suffered, and continues to suffer, from psychiatric injury of the sort described in the attached medical report of Dr Smith dated 5 March 1997. Since then, the Claimant has suffered from depression and Post Traumatic Stress Disorder, and there is no realistic prospect of him again working as a professional teacher.”"
- The medical report referred to in the Particulars of Injury was prepared by Doctor Jeanette Smith, who is a consultant forensic psychiatrist, on the instructions of the claimant’'s solicitors. Doctor Smith expressed the view that the claimant was suffering from moderately severe post-traumatic disorder which started in May 1993 and which was caused by the claimant’'s realisation that the allegations against him would not be properly investigated. Doctor Smith described the claimant’'s symptoms as waxing and waning in response to disciplinary hearings, industrial tribunal proceedings and meetings connected with the litigation, and expressed the view that it was very unlikely that the claimant would ever be able to return to teaching or any other position of responsibility. Since the decision of the House of Lords allowed the claimant to rely only on events prior to his dismissal, it is not surprising that the claimant’'s legal advisers based their case specifically on Doctor Smith’'s report, rather than on the opinions of the other medical experts who considered that the claimant had a depressive condition which resulted from his dismissal.
- On 17 August 2004 the defendants’' solicitors wrote to the claimant’'s solicitors with a request for further information and notice of a payment into court of £14,000.00 under Part 36 of the Common Procedure Rules, which was said to take into account a payment of £7,000 in respect of the employment tribunal proceedings. The gross amount of the compensation payment for the purposes of the 1997 Act was stated to be £25,000. The question of whether the claimant should give credit for the compensation which he had received in the unfair dismissal proceedings was the subject of further discussions between the solicitors, and on 3 September 2004 the claimant’'s solicitor wrote to the defendant’'s solicitor setting out his reasons for stating that the claimant should not give credit for the statutory compensation in his personal injury claim:
“"Our reason for saying this is that the reference by Lord Nichols in paragraph 29 of his speech to “"overlapping heads of loss”" in our view is inapplicable to our client’'s claim in these proceedings. This is because the compensation payable as a result of the industrial tribunal proceedings was for the loss of earnings resulting from the dismissal – and that alone. (The claimant’'s) claim necessarily (as a result of the decision of the House of Lords in his case, which, although it clarified the earlier decision of the House of Lords in Johnson v Unisys, leaves that decision technically undisturbed) relates to losses which were not compensatable in the industrial tribunal proceedings. We say this because, as you yourselves point out, this claim can achieve meaningful damages for loss of earnings only if (the claimant) can satisfy the court that the personal injury which he suffered has caused loss which was not caused by his dismissal itself. In addition, in part as a result of the House of Lord’'s decision in Dunnachie v Hull City Council, the industrial tribunal’'s compensatory award must be treated as having been made in respect of the loss of earnings flowing from the dismissal ………..were therefore not in respect of any loss of earnings flowing from any injury which preceded the dismissal.”"
On 9 September 2004 the claimant’'s solicitors wrote a further letter to the defendant’'s solicitors seeking confirmation that the payment into court, although in full and final settlement of the claim, was in respect of pain and suffering only, but in their reply the defendants’' solicitors stated that the payment in was in settlement of all the claimant’'s claims, and not in relation to pain and suffering alone. Following an extension of time for acceptance of the payment in, the claimant’'s solicitors withdrew the payment and the action was concluded by an order made on 1 October 2004.
- On 13 December 2004 the Certificate under appeal was issued in respect of sickness benefit, invalidity pension and allowance, and incapacity benefit paid to the claimant in the period from 17 March 1994 to 16 March 1999, amounting in total to £26,205.18. The compensators appealed on 14 July 2005 and, in response to a query raised by a district chairman, stated that the appeal related to section 11(b) and (c) of the 1997 Act, on the ground that there must be some doubt as to the precise date when the alleged injury occurred, thus putting in doubt the commencement date of the relevant period for the purposes of section 3 of the 1997 Act.
- The compensator’'s case was later developed in a skeleton argument for the tribunal, as follows:
“"It is clear from the judgment of the House of Lords in the cases of Johnson and McCabe that (the claimant) does not have any claim in respect of anything arising out of dismissal … see the Judgment of Lord Nichols in the House of Lords. This is because (the claimant) has already exercised his statutory right to apply to the employment tribunal claiming unfair dismissal. He succeeded in that claim and was awarded the maximum compensation available under the employment legislation. The difficulty now lies in deciding the extent of a “"Johnson exclusion zone”". A boundary line has to be drawn between those matters which fall within the jurisdiction of the employment tribunal related to unfair dismissal, and those matters which may or may not relate to any accrued cause of action which (the claimant) may have benefited from before the dismissal process began. The appellants argue that (the claimant’'s) personal injury claim … cannot possibly have extended beyond 20 September 1993, when he was given the details of the allegations made against him … some of the difficulties about causation and other factors are referred to in the “"without prejudice”" letter dated 17 August 2004 which was drafted by Counsel for the appellants and sent to (the claimant’'s) solicitors with the notice of payment into court.
In over simplified terms, the appellants say that the dates speak for themselves. (The claimant) was suspended in May 1993 and he was given the details of the allegations against him in September 1993. The first disciplinary hearing he attended was in November 1993 and he was then given a final written warning. We suggest that the hearing in November 1993 may perhaps have been the start of his mental health problems, at the earliest. It was not until that hearing that matters were gone into in detail, and it became clear to (the claimant) that he was not really going to be believed. If he was suffering from stress and upset during the summer of 1993, it was certainly not enough to make him unfit for or incapable of work, and he did not consult his GP for any mental health problem during this period. There was then an appeal by him in March 1994, which was his internal appeal against the result of the disciplinary hearing of the previous November (the written warning). At this hearing, (the claimant) made a violent outburst against the panel members hearing his appeal. It was that outburst as much as anything else which led the panel to decide that he should be dismissed and he was actually dismissed on 15 March 1994. It is significant that the GP notes show two attendances in February 1994, but it is not until 14 March 1994, just after the disciplinary hearing at which there was the outburst and he had been dismissed, that the GP reports stress ++. He was not referred to a consultant psychiatrist until June 1994. He claimed state benefit during 1994, which actually commenced in payment from 17 March 1994. Prior to the date of his dismissal, he remained employed … but suspended on full pay. There were difficulties over him being granted a further appeal hearing, and because of his health this was not held un July/August 1996, over two years later. The employment tribunal hearing was in November 1996, and high court proceedings were commenced in March 1997.
Based on that brief outline the appellants argue that the problems for which (the claimant claimed benefit in June 1994 did not arise at the earliest until he was dismissed in March 1994 (or just possibly from the first disciplinary hearing in November 1993). However both these triggering events took place after the end of the possible claim period in September 1993.
The appellants repeat that the expert medical evidence obtained was all supplied in connection with the claim as previously pleaded, apart perhaps from the report of Dr Jeanette Smith, which although obtained in March 1997, was not produced to the (compensators) solicitors until the proposed amended statement of claim was produced in January 2002. Subject to that reservation, the appellants suggest that most of the weight of the medical evidence in the attached bundle supports their view that the mental health problems did not start until February 1994 at the earliest and resulted in the disciplinary hearings in March 1994 (and possibly November 1993)”".
The skeleton argument then referred in detail to the medical evidence on which the compensators relied for their contention that the claimant’'s mental state in early 1994 was significantly different from his condition in the summer of 1993. The compensators submitted that the certificate should be set aside in its entirety, on the basis that no compensation had been paid in respect of the illness for which the claimant claimed benefit in June 1994, or, alternatively on the basis that any psychological problems from which the claimant was suffering in the summer of 1993 lasted at most until 28 September 1994.
- The tribunal had before it all the medical evidence obtained in connection with the personal injury claim, including a draft report dated 11 November 1998 prepared on behalf of the defendants by Dr B K Rosen. After setting out the history of the case, including the decision of the House of Lords, the tribunal gave the following reasons for allowing the appeal against the Certificate in its entirety:
“"In the light of the decision of the House, it is clear that the Tribunal is required to identify the “"Johnson exclusion zone”". It was submitted that the Johnson exclusion zone in this case commenced on 20.09.1993. The first question for the Tribunal, then, is when did the process of dismissal start? The Tribunal is satisfied that it did not start earlier than 20.09.1993. The terms of the letter dated 8.06.1993 to the claimant from the headmaster (doc 129), and in particular the second paragraph of that letter, are inconsistent with a finding that the process of dismissal had been embarked upon. The Tribunal considers that the process of dismissal started not later than 3.11.1993; the date of the hearing at which it was decided to impose a final written warning, since such a warning is essentially a means of putting an employee on notice that his employment is at serious risk. As already noted, Mr Henderson Smith submitted that the process of dismissal started on 20.09.1993 when the claimant was given particulars of ten matters which were to be considered at the hearing which eventually took place on 3.11.1993. Although the Tribunal does not have the extracts from the staff handbook to which reference is made in the letter of 20.09.1993 (doc 130-131), in view of the terms of that letter and, in particular, the express warning it contains that “"it is probable that should the allegations be found to be proven the governors could recommend your dismissal”", the Tribunal (after some hesitation) accepts that submission. The Tribunal concludes that the Johnson exclusion zone commenced on 20.09.19993, and not on 3.11.1993.
Thus, injury/loss suffered by the claimant as a result of events occurring after that date was compensable only be means of an award such as was in due course made by the Employment Tribunal and not through the medium of a civil action at common law.
There remains the issue of causation. As already noted, the claimant claimed sickness benefit in June 1994; the award being backdated to 17.03.1994; one week after the appeal hearing which had decide upon his dismissal. By 17.03.1994 the claimant had already consulted his GP. The entries for 15.02.1994 (poor sleep) and 14.03.1994 (“"stress ++. Tightness in chest”") indicate the problems arising from stress and anxiety, while the reference on 4.02.1994 to “"chest-tightness when running”" may, in the light of later entries, be regarded as the first consultation of his GP with respect to stress-related problems. Diazepam was prescribed on 14.03333.1993. In his letter of referral (for other medical purposes) dated 7.10.1994, Dr Ryan (GP) refers to the chest tightness of 1994 having been “"A prelude to long-standing anxiety and depression”". Thereafter there is ample evidence in the papers of ongoing problems with his mental health.
Evidence indicative of earlier problems with the claimant’'s mental health is sparse. Rather, the other medical evidence (much of which was called into existence some considerable time later and, on the whole, not with a view to establishing precise causation) tends to suggest, in the view of the Tribunal that the claimant’'s mental health had not suffered any serious or lasting damage prior to 3.11.1993.
The papers contain a draft report dated 11.11.1998 from Dr Rosen, psychiatrist, and Mr Henderson Smith explained that it was labelled “"draft”" having been sent to the Council’'s solicitors for assurance that Dr Rosen had addressed the issues on which his opinion had been sought. The Claimant’'s own account appears from that draft report (doc151ff) (and it should again be noted that the narrative there recorded has at no time been subjected to the forensic process). At paras 44-46, Dr Rosen considered issues of causation. He concluded: “"It is difficult to ascribe the causation of his condition to individual events. However, my impression is that the claimant, although very troubled by the allegations that were made against him was not severely psychologically affected at that time. He believed that he would be exonerated. He was definitely affected by the first disciplinary hearing in November 1993 and was profoundly distressed by the first disciplinary appeal in March 1994”". The earlier part of this paragraph is somewhat at odds with the account recorded by Dr Smith, psychiatrist, whose report dated 5.03.1997 appears at doc 135ff. The report dated 11.02.1998 of Professor Trimble draws attention to the absence of any consultations with the claimant’'s GP prior to 4.022.21994 as an indication that he was “"psychologically robust”" until February 1994. The Tribunal does not consider it credible that there would have been no earlier consultation with his GP if the claimant had in fact been experiencing symptoms of the severity described in Dr Smith’'s report, commencing after the first meeting with the headmaster in May 1993. The reference by Professor Trimble to the claimant’'s reported insistence on an appropriate disciplinary investigation (see doc 146) tends, in the Tribunal’'s view, to support Dr Rosen’'s conclusion that the real damage wad done later, when the claimant’'s confidence in his eventual exoneration by a fair process was shown to have been misplaced.
In the face of this evidence, the Tribunal finds that, though naturally troubled by the fact that allegations of inappropriate behaviour had been made against him, the claimant was confident that a proper investigation would exonerate him. Though dissatisfied with the outcome of the disciplinary hearing of 3.11.1993, he seems still to have been confident that, by means of the appeal process, his employers would right the wrongs which he felt had been done to him. Nevertheless, the impending hearing of March 1994 appears to have precipitated problems sufficient to require medical attention; the claimant himself having stated that he became sick on 10.01.1994 (see doc 2). That hearing (which, as already noted, prompted an intemperate outburst from the claimant) in turn appears to have substantially exacerbated the claimant’'s emergent mental health problems.
The conclusion of the Tribunal is the mental health problems which rendered the claimant incapable of work (and thus entitled to the benefits included in the Certificate under appeal) stem directly from the process of dismissal in which he was embroiled from 20.09.1993 and, more specifically, from the hearing which took place in March 1994 and its outcome. The Tribunal further finds that the events which occurred within the Johnson exclusion zone were in their nature such as to overwhelm and supersede any mental ill-effects to which the claimant had already been subjected by his treatment by his employers prior to the commencement of the process of dismissal, and it does not accept that any such ill-effects were a continuing or contributory cause of the severe mental health problems which the claimant experienced from early 1994 onwards.
The Tribunal therefore finds that the benefits included in the Certificate under appeal were not in fact paid “"in respect of the accident, injury or disease”" in consequence of which the Council made the payment in settlement of the civil claim. The Certificate is accordingly revoked.”"
- The Secretary of State applied for leave to appeal against the tribunal’'s decision on the grounds that the tribunal had failed to give proper consideration to section 1(1)(a) of the 1997 Act, failed to provide adequate reasons for their decision and had reached a decision which was irrational. The compensators made a submission opposing the grant of leave to appeal, but leave was nevertheless granted by the chairman who had dealt with the appeal.
- Section 1 of the 1997 Act provides:
(1) This Act applies in cases where –
(a) a person makes a payment (whether on his own behalf or not) to or in respect of any other person in consequence of any accident, injury or disease suffered by another, and
(b) any listed benefits have been, or are likely to be, paid to or for the other during the relevant period in respect of the accident, injury or disease.
(2) The reference above to a payment in consequence of any accident, injury or disease is to a payment made –
(a) by or on behalf of the person who is, or is alleged to be, liable to any extent in respect of the accident, injury or disease, or
(b) …
(3) Subsection (1)(a) applies to a payment made –
(a) voluntarily, or in pursuance of a court order or an agreement, or otherwise, and
(b) in the United Kingdom or elsewhere.
(4) In a case where this Act applies –
(a) the “"injured person”" is the person who suffered the accident, injury or disease,
(b) the “"compensation payment is the payment within sub-section (1)(a), and (c) “"recoverable benefit”" is listed benefit which has been or is likely to be paid as mentioned in sub-section (1)(b).
“"Relevant period”" is defined in section 3:
“"(1) In relation to a person (“"the claimant”") who has suffered any accident, injury or disease, “"the relevant period”" has the meaning given by the following sub-sections.
(2) Subject to sub-section (4), if it is a case of accident or injury, the relevant period is the period of five years immediately following the day on which the accident or injury in question occurred.
(3) Subject to sub-section (4), if it is a case of disease, the relevant period is the period of 5 years beginning with the date on which the claimant first claims a listed benefit in consequence of the disease.
(4) If at any time before the end of the period referred to in sub-section (2) or (3) –
(a) a person makes a compensation payment in final discharge of any claim made by or in respect of the claimant and arising out of the accident, injury or disease, or
(b) an agreement is made under which an earlier compensation payment is treated as having been made in final discharge of any such claim, the relevant period ends at that time.”"
- Mr Budy accepted that the tribunal were correct to seek to identify the boundary of the “"Johnson Exclusion Zone”". In his skeleton argument he also accepted that the tribunal were correct in identifying the relevant period in this case as ending on 20 September 1993, although he withdrew that concession at the hearing. However, Mr Budy submitted that the tribunal had erred in considering the medical evidence in order to decide what event had in fact caused the injury in respect of which the claimant received benefit. Since section 1(2)(a) of the 1997 Act required the tribunal to decide what accident or injury the compensator was “"alleged”" to be liable for, it was not open to the tribunal to decide that the compensator was not liable for the accident or injury for which they had in fact compensated the claimant. In the alternative, Mr Budy submitted that the tribunal failed to give adequate reasons for preferring the evidence of Dr Rosen to that of Dr Smith.
- Mr Grant submitted that the amended Statement of Claim, which was drafted in the light of the decision of the House of Lords, specifically confined itself to events in the period prior to 20 September 1993, and that the tribunal were therefore correct in treating injury to the claimant caused by events after that date as outside the scope of the claim. Despite the terms of section 1(2)(a) of the 1997 Act, the tribunal were required by section 1(1)(b) to determine whether the relevant benefits were paid “"in respect of”" a particular accident or injury. The tribunal were entitled to prefer the evidence of Dr Rosen to that of Dr Smith and to conclude on the basis of that evidence that the effective cause of the injury in respect of which the claimant received benefit was the events surrounding the claimant’'s dismissal.
- Although both parties accepted at first that the tribunal were correct in holding that the “"Johnson exclusion zone”" extended to events after September 1993, I consider that the tribunal erred in establishing the boundary of the zone by seeking to determine the date on which the dismissal process started. As Lord Nichols of Birkenhead explained, an employee who has been dismissed may have a right of action for damages at common law in respect of actions taken by his employer prior to his dismissal which remains unimpaired by any statutory rights resulting from the dismissal. However, the common law and statutory rights and remedies are separate and distinct. In a common law action an employee will be able to claim damages for personal injury resulting from the employer’'s negligence or breach of statutory duty, or breach of an implied term of the contract of employment, but will only be able to claim compensation for termination of the contract of employment if there has been a breach of a provision as to notice. On the other hand, in a statutory claim for unfair dismissal, compensation is awarded only for the pecuniary loss resulting from the actual dismissal. The employment tribunal does not have power to make an award in respect of non-pecuniary loss resulting from the dismissal, such as compensation for injury to feelings-see the decision of the House of Lords in Dunnachie v Kingston upon Hull City Council [2004] ICR 1052.
- Although events prior to the claimant’'s dismissal were relevant in deciding whether his dismissal was unfair, the employment tribunal therefore did not have power to make an award to the claimant in respect of psychological or other injury caused to the claimant by those events. The boundary between the common law and the statutory claims was defined by the matters which lay within the scope of the common law and statutory claims respectively, and the so called “"Johnson exclusion zone”" covered those matters for which compensation could be awarded only in the unfair dismissal proceedings. Mental injury caused to the claimant by events prior to and leading up to his dismissal were not within the scope of the statutory unfair dismissal claim, and I therefore consider that the tribunal were in error in seeking to identify a point in time prior to the dismissal at which the process of dismissal could be said to have begun.
- However, since the amended Statement of Claim did not in fact rely specifically on any events after September 1993 as constituting breaches of contract, or negligence, the tribunal’'s failure to identify correctly what matters lay within the scope of the common law and statutory claims respectively was probably immaterial. However, I have come to the conclusion that Mr Budy is correct in submitting that the tribunal did make a material error of law in the way in which it applied section 1(1)(a) and (2)(a) of the 1997 Act.
- The effect of section 1(2)(a) is that, for the purposes of section 1(1)(a), a payment is “"in consequence”" of an accident or injury if the person making the payment is liable or is alleged to be liable in respect of any accident, injury or disease. In his recent decision CCR/2232/2006 Mr Commissioner Mesher held (para.22) that where a claim is made for personal injuries and a payment is made in settlement of that claim without there being anything to identify any specific elements making up the global payment, one must look to the claim as the primary factor in identifying what the payment was in consequence of. The first step in applying section 1 of the 1997 Act is therefore to identify the accident, injury or disease in respect of which a payment has been made by the compensator. If a payment has been made in respect of a claim alleging some specific accident, injury or disease and the compensator has not limited the payment in settlement of the claim in any way, in my view it is not open to the tribunal to hold on a consideration of the evidence that the compensator was not in fact liable for the specific accident, injury or disease alleged in the claim. Once a compensator makes a payment in respect of a specific injury which is alleged to have occurred in a particular way, then in my judgment it is not open to the compensator to resist a claim under the 1997 Act on the basis that the claimant in fact suffered some other injury, or suffered the injury alleged in the claim in some other way.
- The tribunal identified from the medical evidence a number of different opinions with regard to the cause of the claimant’'s psychiatric injury. However, the amended statement of claim relied specifically on Doctor Smith’'s report, in which the injury suffered by the claimant was said to be continuing post-traumatic stress disorder commencing in May 1993, and in my view it was that injury which was the relevant injury for the purposes of section 1(1)(a) of the 1997 Act. The claimant’'s solicitors invited the defendants to limit their payment-in so as relate to only part of the claim, but they expressly declined to do so. No doubt the very small amount of the payment-in, in relation to the size of the special damages claim, reflected the difficulties which the claimant faced in succeeding in his claim on the basis that he could not claim for personal injury resulting from his dismissal, to which Brooke LJ referred in the Court of Appeal. However, in my view there can be no doubt that the claim in consequence of which the defendants made their payment into court was a claim of continuing post traumatic stress disorder beginning in May 1993.
- I agree with Mr Grant that under section 1(1)(b) of the 1997 Act the tribunal were required to consider as a separate factual issue whether the benefits paid during the relevant period were in respect of the relevant accident or injury. For a benefit to be paid “"in respect of”" an accident, injury or disease, the accident injury or disease must be an effective cause of the payment of benefit – see R(CR)1/01, and if another cause of disablement arises after the relevant accident, any benefit which would have been paid as a result of the relevant accident if the other cause had not arisen is attributable to the relevant accident – see R(CR)2/04. However, when considering issues of causation under section 1(2)(a), it is again necessary to identify correctly the accident, injury or disease in consequence of which the payment has been made. Although Doctor Smith described the claimant’'s symptoms as ‘'waxing and waning’' in response to later stressful events, the only possible conclusion on her view of the aetiology of the claimant’'s condition was that the post-traumatic stress disorder which began in May 1993 was an effective cause of the claimant’'s illness throughout the period while he was in receipt of relevant benefits. I therefore consider that the tribunal were bound to find that the injury alleged in the amended Statement of Claim was and remained an effective cause of the payment of benefit throughout the relevant period.
- I therefore consider that the decision of the tribunal was erroneous in point of law, and accordingly set aside the tribunal’'s decision. For the reasons I have given, I consider that the tribunal should have held that the compensator made a payment to the claimant in consequence of an injury in respect of which listed benefits were paid. However, on the basis that the relevant injury was post traumatic stress disorder which commenced on 13 May 1993, under section 3(2) of the 1997 Act the relevant five year period began on that date and ended on 12 May 1998. The compensator was therefore not liable for benefit paid after that date. The compensator’'s appeal against the Certificate of Recoverable Benefits therefore succeeds on the limited ground which they advanced in their original reply to the district chairman’'s inquiry about the basis of the appeal.
- For those reasons, I allow the Secretary of State’'s appeal and substitute for the tribunal’'s decision the decision set out in paragraph 1.
(Signed) E A L Bano
Commissioner
(Date) 4 June 2007
