Walton v Airtours Plc & Anor

In an income-protection provision, the ability to start any job does not necessarily mean that an employee is able to follow any occupation. The phrase naturally refers to regular work undertaken for a substantial or indefinite period, with an element of continuity. The assessment must be realistic and practical. Where an employee cannot even begin suitable work without necessary rehabilitation, psychiatric support or employer assistance, that employee remains unable to follow an occupation. A short-term or merely nominal capacity for work is insufficient. The commercial purpose of income protection supports this construction, since benefits should not cease merely because an employee could attempt work for a few days but could not continue earning income.

Andrew Walton, an airline pilot employed by Airtours Plc, claimed continued employment-related incapacity benefits after suffering from chronic fatigue syndrome. Airtours had arranged permanent health insurance with Sun Life, and the employment manual provided for benefits to continue after two years only if the employee was unable to follow any occupation.

The High Court held that Walton could undertake light sedentary work only part-time and with structured rehabilitation, psychiatric support and employer assistance. It therefore found that he remained unable to follow an occupation and gave judgment for him against Airtours. Sun Life appealed on the construction of the phrase in the employment manual. Walton’s separate appeal on costs was abandoned.

1. Appeal dismissed. Lord Justice Peter Gibson delivered the judgment, with Lady Justice Hale and Lord Justice Keene agreeing.
2. The question concerned the true construction of the phrase is unable to follow ANY occupation in Airtours’ employment manual. Walton was not a party to the insurance policy itself, so the appeal was not strictly concerned with construing the policy as between Walton and Sun Life.
3. The phrase had to be read in a commonsense and practical way. It did not mean merely that the employee could start any occupation. It naturally connoted engagement in regular work, not temporarily but for a substantial or indefinite period, and plainly involved continuity. The relevant inability had to be assessed realistically.
4. The judge’s findings were sufficient to establish incapacity. Although Walton was medically fit for light sedentary work on a part-time basis, the evidence showed that work would have to be introduced gradually, following rehabilitation and with structured support. The judge had therefore found that Walton could not start or follow an occupation without that support. Sun Life’s distinction between commencing work and continuing work could not succeed on those findings.
5. The Court of Appeal considered the judge’s construction commercially sensible because the provision existed to secure income where illness prevented the employee from earning by working. It would be harsh and commercially unrealistic to treat benefits as ending merely because the employee could begin a short period of work but could not continue. The order giving judgment for Walton was upheld. Sun Life was ordered to pay 75% of the appeal costs, and the stay on the award was lifted with interest at the judgment rate.

1. Court of Appeal (Civil Division): Sun Life’s appeal on construction was dismissed. Walton’s costs appeal was abandoned.
2. High Court, Queen’s Bench Division: His Honour Judge Rich QC gave judgment for Walton against Airtours on 16 January 2002, with Sun Life undertaking to indemnify Airtours if incapacity was established.