Doctor not precluded from recovering damages for breach of contractual disciplinary proceedings

Edwards v Chesterfield Royal Hospital NHS Foundation Trust [2010] EWCA Civ 571 CA

breach of contract | damages | loss of professional status

The Court of Appeal has held that the decision in Johnson v Unisys Ltd [2001] IRLR 279 HL did not preclude the claimant from recovering damages based on a breach of contractual disciplinary proceedings. 

Implications for employers

  • Employers should exercise caution when including policies and procedures in employees' contracts of employment as the right to claim for breach of contract will be available to employees with less than one year's service. 
  • If employers wish to ensure that a policy will not be legally binding, it is sensible to include it in a separate document such as the staff handbook and expressly state that it is not intended to be legally binding and is for information only. 

The claimant, Mr Edwards, was employed as a consultant trauma and orthopaedic surgeon by the Chesterfield Royal Hospital NHS Foundation Trust. In 2006, Mr Edwards was summarily dismissed for personal and professional misconduct, following a disciplinary hearing. He has subsequently been unable to obtain a permanent consultant post. 

In 2008, Mr Edwards brought proceedings against the trust in the civil courts for breach of contract. He argued that the trust had failed to comply with the contractually binding disciplinary procedure in that it: 

  • had not appointed a person with legal qualifications to chair the disciplinary panel;
  • had not appointed as a member of the disciplinary panel a clinician of the same medical expertise as himself; and
  • refused to allow him to be legally represented at the disciplinary hearing. 

He argued that, had the trust followed the contractual disciplinary procedure, no finding of misconduct would have been made against him. Mr Edwards considered that his failure to secure a permanent job was caused by the trust's finding against him. 

Mr Edwards sought damages of just under £4.3 million on the basis that, if he had not been wrongfully dismissed for misconduct, he would have continued in the trust's employment until his retirement at the age of 65. 

The first instance judge found that, if Mr Edwards' claim succeeded, his damages would be limited to the loss of earnings for the three-month contractual notice period. Mr Edwards appealed this decision to the High Court. 

The High Court allowed the appeal but decided that Mr Edwards' damages would be limited to the loss of earnings for his three-month contractual notice period and for the period during which he would have remained in employment while the contractual disciplinary procedure was complied with. As the High Court's decision meant that his compensation would be substantially restricted, Mr Edwards submitted a further appeal to the Court of Appeal. 

The Court of Appeal noted that it was required to determine whether or not a person who suffers damage as a result of findings of personal or professional misconduct leading to dismissal and loss of professional status that were made in disciplinary proceedings conducted in breach of contract, but which would not otherwise have been made, can recover damages at large. 

The trust argued that the case of Johnson established a general principle that breaches of a disciplinary procedure prior to dismissal are not meant to sound in damages. The trust also referred to the subsequent cases of Eastwood and another v Magnox Electric plc; McCabe v Cornwall County Council [2004] IRLR 733 HL in which a distinction was drawn between complaints occurring prior to the dismissal and complaints relating to the manner of the dismissal. The latter became known as the "Johnson exclusion area" and the trust argued that Mr Edwards' case fell into this category so that his claim was limited to damages for contractual notice and unfair dismissal. 

The Court of Appeal rejected the trust's argument and found that Mr Edwards' claim for damages for failure to carry out proper disciplinary proceedings was not excluded by Johnson. In so doing, the Court of Appeal considered the decisions in Johnson and Eastwood and noted that those cases involved claims for damages arising out of breaches of the implied term of trust and confidence and the manner of dismissal. In Mr Edwards' case, however, the Court of Appeal decided that the disciplinary procedure was expressly incorporated into his contract of employment and the trust's failure to comply with it meant that Mr Edwards could claim for damages for breach of contract at large. The Court of Appeal held that such an express term "has legal effect and is capable of sounding in damages if broken". 

The trust is now seeking permission to appeal to the Supreme Court. It is important to note that the Court of Appeal decision relates only to the issue of damages and Mr Edwards' substantive claim is yet to be determined. 

Additional resources

Case transcript of Edwards v Chesterfield Royal Hospital NHS Foundation Trust [2010] EWCA Civ 571 CA (on the BAILII website)

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