Summary
James Candlin, acting for the Plaintiff alongside Advocate Michael O’Connell of Ardent Chambers, has secured judgment in a high-profile work related stress claim in Jersey’s Royal Court. Commissioner Thompson, sitting with lay Jurats Le Cornu and Powell, found that the Defendant’s employees acted in bad faith and that the Plaintiff was caused to sustain reasonably foreseeable psychiatric harm. Judgment was entered for over £3,500,000.
Background
The Plaintiff began working for the Channel Islands Co-op as a trainee in 1990. In 2010, he was promoted to chief executive. Despite positive financial results, he became subject to increasing challenge from Co-op’s Board. This heightened when a Ms Jennifer Carnegie joined in March 2018, and particularly when she took over the Remuneration Committee (‘RemCo’) in August 2018.
The Court found that Ms Carnegie and two other RemCo members (Ms Paula Williams and Ms Carol Champion) who were non-executive directors embarked on an unconscionable campaign to see the Plaintiff removed from office. RemCo, without justification, commissioned internal and external audits of the Plaintiff’s expenses. Ms Carnegie engaged in bullying and planned a hostile appraisal. Ms Williams mocked and inappropriately applied to replace the Plaintiff despite the conflict of her being a non-executive director.
Co-op’s President, Mr Ben Shenton, failed to intervene, admitting to the Plaintiff that he had tried to play “both sides”. Mr Shenton invited the Plaintiff to write a complaint about Ms Carnegie, before performing a volte face and declining her resignation. He did not force Ms Williams to step down despite stating that he would ask for her resignation. The Plaintiff felt that he had been left in “a virtually impossible position”.
Preliminary Issue
On the first day of trial, the Commissioner ruled that he would not allow the Plaintiff to advance arguments based on the tort in Wilkinson v Downton. While the Plaintiff had particularised breaches of duty in his statement of case, it was held that he had not pleaded that individuals intended to cause him psychological harm. The Commissioner considered that, for such a case to be advanced, the individuals concerned should have been named and joined as Defendants, and the material acts tending to cause harm identified. No application to amend had been made. The relevant parts of the Plaintiff’s skeleton arguments and affidavit were directed to be redacted.
Injury
The parties agreed that the Plaintiff suffered psychiatric injury, most appropriately diagnosed as prolonged adjustment disorder. He received medication and therapy for symptoms of depression and post-traumatic stress disorder. The Plaintiff was signed off with work related stress on 28 May 2019. His employment contract was terminated on 27 March 2020, and he was put on gardening leave and he was made a payment in lieu of notice on 28 June 2020.
The Court accepted that the Plaintiff’s mental health had been improving but that he remained unwell when his claim went to trial and would not recover fitness to work with treatment before 2027.
Bad Faith, Breach of Duty, and Foreseeability
The Royal Court considered that the way the RemCo members sought to “remove Mr MacLeod without justification was in breach of their duties as directors but was also improper, commercially unacceptable and unconscionable”, amounting to bad faith under the guidance in Yam Seng v International Trading Corp [2013] EWHC 111 (QB). Their actions, combined with Mr Shenton’s inaction, amounted to a breach of duty.
The Commissioner was conscious that, for the claim to succeed, the Plaintiff had to show that his injury was reasonably foreseeable following Hatton v Sutherland [2002] EWCA Civ 76. It was noted that, in this case, none of the RemCo members foresaw that the Plaintiff would be injured. The Court nonetheless – in a finding that could broaden the scope for business’ liability – considered that, “where completely inappropriate conduct occurs without justification to remove a senior executive, […] there is a serious and foreseeable risk that such an executive could suffer psychiatric injury”. Co-op’s conduct was held to be “sufficiently egregious” (following Yapp v FCO [2014] EWCA Civ 1512) that the Plaintiff’s injury was foreseeable.
The Court also noted that injury arising from improper dismissal attracts remedies limited by statute (in Jersey as would be the case in England and Wales). It noted, however, with reference to Johnson v Unisys [2003] 1 AC 518, that there could be cases in which employees suffer loss from illness caused by their pre-dismissal unfair treatment. The Jurats found that this was such a case, accepting the Plaintiff’s evidence that he had been injured by his treatment by RemCo, that his illness improved without resolving, and that he then suffered a relapse when he was dismissed. It assessed his loss on ordinary common law principles, awarding general damages of £40,000 and lost past and future earnings exceeding £3,500,000.
The court addressed costs upon handing down judgment. The Plaintiff had made an effective Calderbank offer significantly below the damages award and the court made an award reflecting the cost issues for the Defendant to pay 60% of Plaintiff’s costs on indemnity basis, 30% on the standard basis and for Plaintiff to meet 10% of his own costs.
The Defendant which is entitled to appeal the substantive judgment without leave of the court has intimated an intention to appeal.
