Lalji v Post Office Ltd

Summary judgment is inappropriate where material questions of fact, causation or foreseeability require evidence at trial. A claim for loss to an associated business following summary termination may have a real prospect of success, even where amendment is needed and causation is disputed. A written standard term allowing withheld remuneration to be forfeited may engage section 3(2)(b) of the Unfair Contract Terms Act 1977; the party relying on it must satisfy the section 11 reasonableness test. However, a claim for damages for the manner of termination, aggravated damages and psychiatric injury may be summarily dismissed where the factual case is extremely thin and serious foreseeability, causation and legal difficulties remain. The caution against deciding developing claims before facts are established does not require a trial in every case.

A sub-postmaster claimed remuneration withheld during suspension, three months’ notice pay, losses suffered by an associated newsagent and grocery business, and damages for the manner of his dismissal and resulting psychiatric illness. He had been suspended during investigations into accounting irregularities and alleged improper dealings with pension and allowance books, and his contract was later terminated summarily.

Judge Mackay struck out paragraphs 11–14 of the particulars of claim and entered summary judgment for the Post Office on the remuneration and associated-business-loss claims. The claimant appealed, raising whether those claims involved triable issues and whether the claim concerning the manner of termination had a real prospect of success.

The Court of Appeal allowed the appeal to the extent set out in the judgment.

1. Associated-business loss. The claim was fit for trial. Issues of causation and reasonable foresight could not properly be resolved without evidence. The business might have survived suspension but suffered a decisive loss on summary termination. A possible amendment to plead loss of the opportunity to sell the combined business did not justify striking out the claim.
2. Withheld remuneration. The Post Office’s entitlement to withhold remuneration during suspension was not disputed. The issue was whether clause 19(6), which purported to give an unfettered discretion to forfeit the remuneration permanently, was subject to section 3(2)(b) of the Unfair Contract Terms Act 1977. As the contract used the Post Office’s written standard terms and the clause was said to permit no performance of the remuneration obligation, the Post Office had to establish at trial that the term satisfied the section 11 reasonableness test.
3. Manner of termination. Summary judgment was upheld on the claim for damages for harsh and humiliating dismissal, aggravated damages and psychiatric injury. The pleaded factual case was extremely thin, the illness emerged considerably later, and serious issues of foreseeability, causation and law remained. Brooke LJ treated the caution in X (Minors) v Bedfordshire County Council [1995] 2 AC 633 at 740H–741A as not requiring a trial where the claim was too weak on the available material. He also compared the approach of Lord Steyn in Johnson v Unisys Ltd [2001] UKHL 13; [2003] 1 AC 518 at [29].
4. Sedley LJ agreed. He added that the claimant’s failure to attend interviews did not itself entitle the Post Office either to terminate summarily or arbitrarily to forfeit withheld remuneration.

• Court of Appeal (Civil Division) — In [2003] EWCA Civ 1873, allowed the appeal concerning the associated-business-loss and remuneration claims, while upholding summary judgment on the claim relating to the manner of termination.
• High Court, Queen’s Bench Division — Judge Mackay struck out paragraphs 11–14 of the particulars of claim and entered summary judgment for the Post Office on the remuneration and associated-business-loss claims.