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In January 2007, Mr Yapp was appointed by the Foreign and Commonwealth Office (FCO) as British High Commissioner to Belize. His posting was set for a fixed term of three years but his tenure was brought to an abrupt end when allegations of impropriety and misconduct were levelled against him in June 2008. The allegations were made by a Belizean politician ‘in confidence’ to FCO staff, on the agreement that the source would not be revealed. Acting with some degree of haste, the FCO removed Mr Yapp from his post and commenced an investigation without disclosing the source of the complaint or the substance of the allegations. As a result, Mr Yapp suffered from a depressive episode and while his suspension was ultimately lifted, he received no further appointment until his retirement in January 2011.

Duty of care

Mr Yapp commenced proceedings in the High Court, claiming, inter alia, a breach of the implied term of mutual trust and confidence (see Malik v Bank of Credit and Commerce International SA [1997]) and of the employer’s common law duty of care. Damages were sought, including compensation for the psychiatric injury.

Tort of negligence

While the claims in contract and the tort of negligence cover very similar ground, the duties owed are distinct: one key area in which they differ is the requirement for foreseeability of injury. The relevant tests in contract and tort are long-settled law but the application to psychiatric injury is still relatively fertile ground for debate. In contract, the defaulting party will be liable for damages that were within the ‘reasonable contemplation’ of the parties at the time the contract was entered into (see The Heron II [1967]), whereas in tort, damages will only be recoverable for loss that was ‘reasonably foreseeable’ at the time of the tortious act (see The Wagon Mound No.2 [1967]). It was noted in this case that the contractual requirement carries a higher burden because it demands a “higher degree of likelihood of damage occurring,” (Lord Justice Underhill at para 84). Given that the contractual claim was bound to fail if the claim in tort did not succeed, Lord Justice Underhill focused attention on the latter, while taking care to explain how the relevant authorities applied to each duty.

Psychiatric injury at work

The case of Walker v Northumberland County Council [1994] is the first key decision relating to psychiatric injury at work. Mr Walker had suffered two nervous breakdowns as a result of being given an excessive workload by the council. The High Court held that the employer’s duty to ensure the physical safety of its employees extended also to their mental wellbeing, where the risk of psychiatric injury was reasonably foreseeable. Such injury was not foreseeable in relation to Mr Walker’s first breakdown; however, being fully aware of Mr Walker’s breakdown and the surrounding circumstances, the risk of a second breakdown was reasonably foreseeable and the employer was accordingly liable. The claim was pursued in tort but comments by Mr Justice Colman indicate that the duty is “co-extensive with the scope of the implied term as to the employee’s safety in the contract of employment,”(at p.721A).

Gogay v Hertfordshire County Council [2000] follows on from Walker, this time arising from the oppressive application of a disciplinary process. The claim was pursued purely on the basis of a breach of the implied contractual term of mutual trust and confidence (the ‘Malik term’). Lord Justice Hale confirmed that there was no bar to damages being claimed in respect of psychiatric injury arising from a breach of the Malik term.

Unfair dismissal

Gogay was followed by Johnson v Unisys Ltd [2001], in which the claimant suffered psychiatric injury as a result of his unfair dismissal. The House of Lords upheld the decision of the County Court in dismissing the claim. The primary ratio centred on an inconsistency with the unfair dismissal regime under the Employment Rights Act 1996, although Lord Steyn’s judgment considered a different issue – that of remoteness. His judgment implies that, in order for the test of foreseeability to be met, some evidence of a pre-existing vulnerability was required.

The next case in the series is Hatton v Sutherland [2002]. This involved four conjoined appeals relating to stress at work and psychiatric injury. In the Court of Appeal, Lord Justice Hale espoused sixteen “practical propositions” for dealing with psychiatric injury claims, including confirmation that the appropriate test was of whether the type of harm was reasonably foreseeable in the particular employee and that an employer is “usually entitled to assume that the employee can withstand the normal pressures of the job unless he knows of some particular problem or vulnerability” (at para.29). The key point here is that some evidence of pre-existing vulnerability was required in order for the test of foreseeability to be met.

Formal warning

Croft v Broadstairs & St Peter’s Town Council [2003] applied the approach taken in Hatton to a claim arising from a ‘one-off’ event – the unjustified and unreasonable pursuit of a formal warning for alleged misconduct. Overturning the decision of the County Court, the Court of Appeal found that while psychiatric injury could potentially arise from a significant but isolated breach by the employer, the requirement for foreseeability was still present and, in this case, decisive. Bonser v RJB Mining (UK) Ltd added no new principle to the discourse, but emphasised the requirement for there to be foreseeability of actual psychiatric injury as a result of the breach and that foreseeability of stress or upset alone is not sufficient.

Hartman v South Essex Mental Health and Community Care NHS Trust [2005] looked at the issue from a slightly different angle. In his judgment, Lord Justice Scott Baker expressed the view that the requirement for an employee to show signs of vulnerability applied principally in cases whereby the employer had not otherwise recognised that a risk of psychiatric injury was present. Here, in the context of a healthcare officer working in a prison (whose duties included removing the bodies of prisoners who had committed suicide), the risk of psychiatric injury had been clearly identified by the Trust and as a result they were found to be liable, regardless of the fact that the employee had shown no previous signs of predisposition to psychiatric illness.

Contractual liability

Next was Bristol City Council v Deadman [2007]. Mr Deadman’s claim for breach of the common law duty in tort failed at the County Court but his claim for breach of the Malik Duty, arising from two relatively trivial breaches of procedure, succeeded. The Court of Appeal upheld the employer’s appeal, applying what Lord Justice Underhill describes as a “Hatton approach” to the contractual liability – that evidence of pre-existing vulnerability is required.

Finally, the case of Rothwell v Chemical & Insulating Co Ltd [2007]shores up the position, confirming that the Hatton approach is not restricted to the particular instances of the above cases, but applies generally to all cases where any employer has caused psychiatric injury to its employees as a result of a breach of duty.

Psychiatric injury claim

The court held that Mr Yapp’s claim for psychiatric injuries should fail and duly allowed the FCO’s appeal on this point. In reaching this decision, Lord Justice Underhill carefully balanced the above authorities, finding that “While it was certainly important that there was no reason for the FCO to believe that the Claimant had some special vulnerability […] the Judge was entitled not to treat that fact as decisive […] Each case depends on its own facts, and in principle the employer’s conduct in a particular case might be so devastating that it was foreseeable that even a person of ordinary robustness might develop a depressive illness as a result,” (at para.123).

The actions of the FCO, while reprehensible, were not deemed to be sufficiently egregious to meet the above test.

Mutual trust and confidence

There are a few key points that employers should take away from the above. It should be of some reassurance to know that liability for psychiatric injury is unlikely to arise in respect of an employee who shows no signs of any pre-existing disposition or vulnerability, unless the employer’s breach is so significant that the risk of psychiatric injury is foreseeable in a person of ‘reasonable fortitude’. This does not mean that employers can avoid liability altogether and it is important that any indications that an employee may be at risk is acted on appropriately. However, it does significantly restrict the circumstances in which such claims may succeed. Also, it will be important for employers to be mindful of the joint duties they hold towards employees – the Malik Term, of mutual trust and confidence, which will be implied into each contract and the common law duty of care, to take reasonable steps to ensure the safety of employees.

If you have any questions regarding this case or any other employment law issue, please contact the Bristol employment law team by phoning 0117 904 6000.