Johnson v Unisys Ltd

In an express dismissal, a claim cannot avoid the rule in Addis v Gramophone Company Limited [1909] AC 488 by pleading failure to follow disciplinary procedures as breach of an implied term of trust and confidence. Where the alleged breach is confined to the manner of dismissal, damages do not include compensation for the manner of dismissal, injured feelings, or loss caused by the dismissal making future employment difficult. Malik v Bank of Credit and Commerce International SA [1998] AC 20 did not overrule that rule. It concerned a separate, anterior breach during employment, independent of termination. Financial loss from such a breach may in principle be recoverable, subject to causation, remoteness and mitigation.

Mr Johnson was dismissed by Unisys on 20 January 1994 following an investigation and disciplinary appeal which he alleged failed to put the allegations to him or give him a proper opportunity to respond. An Industrial Tribunal upheld his unfair-dismissal complaint and awarded the maximum available sum, reduced by 25 per cent for contribution.

He then brought a substantial claim in contract and negligence for psychiatric injury and consequential loss, relying on implied terms including trust and confidence and compliance with disciplinary procedures. The Milton Keynes County Court, on 26 June 1998, struck out the claim. The appeal concerned whether the pleaded procedural unfairness could found damages at common law, and whether the decision in Malik had altered the rule in Addis.

Disposition

Lord Woolf MR delivered the judgment. Lord Justice Hutchison and Lord Justice Tuckey agreed. The appeal was dismissed unanimously, with costs, subject to legal aid taxation.

1. Effect of Addis. The rule in Addis remained applicable to an express dismissal where the alleged breach was confined to the manner of dismissal. It had been repeatedly followed, including in O’Laoire v Jackel International Limited (No. 2) [1991] 1 ICR 718. The fact that the employer failed to follow its disciplinary procedures did not alter the substance of the complaint.
2. Distinction from Malik. Malik [1998] AC 20 concerned a separate and independent anterior breach of trust and confidence during employment. The resulting stigma and labour-market loss were not caused by the manner of dismissal. The speeches in Malik were to be reconciled on that basis. Lord Nicholls’s observation that the House was not bound by parts of Addis was not treated as overruling it.
3. Application. The present claim was based on the alleged failure to put allegations to the employee, hear his defence, investigate his appeal and comply with disciplinary procedures. It was therefore a claim about the manner of dismissal. The court did not need to determine the scope of the other alleged implied terms. On the assumption that the dismissal was wrongful, the rule in Addis was fatal to the claim.
4. Remoteness. Although unnecessary to the decision, the court considered the claimed loss too remote in contract and tort. The lapse between the earlier psychological problems and the dismissal was sufficient to prevent the necessary foreseeability being established.

• Court of Appeal ([1998] EWCA Civ 1913, 4 December 1998): dismissed the appeal with costs and upheld the striking-out order.
• Milton Keynes County Court (His Honour Judge Ansell, 26 June 1998): struck out the claim and granted leave to appeal.