Scott v Inland Revenue

A continuing duty of disclosure requires a party to disclose a material change affecting the likely duration of employment lost through dismissal. A claimant who has lost an existing job need prove its probable duration; possible earnings from other work are ordinarily relevant to mitigation, not to whether the lost employment would have continued.

Aggravated damages remain distinct from compensation for injury to feelings. An appellate court will not substitute a higher permissible award merely because it might have assessed the injury differently. A compensation award based on a material misreading of unchallenged medical evidence requires reassessment. The employment tribunal costs jurisdiction is disciplinary, and requires attention to whether the defended case had reasonable prospects of success.

Mr Scott was dismissed by the Inland Revenue after a long career. The Employment Tribunal found unfair and wrongful dismissal, sex and disability discrimination, and victimisation. It awarded compensation of £98,378, including awards for injury to feelings and psychiatric injury, but declined to award costs.

The Employment Appeal Tribunal declined to interfere with the award. While that appeal was pending, the Inland Revenue changed its retirement policy so that staff satisfying health and efficiency criteria could continue working until 65. Mr Scott sought unsuccessfully to amend his appeal to rely on the change.

The Court of Appeal considered the effect of the non-disclosure, the awards for injury to feelings and psychiatric harm, costs, and whether the possible continuation of employment to age 65 could be raised on remittal.

1. The appeal was allowed in part. The case was remitted to the Employment Tribunal to reassess psychiatric injury and reconsider costs. The court rejected the challenge to the award for injury to feelings.

2. The Inland Revenue ought to have disclosed its revised retirement policy. The duty of disclosure was continuing, and the policy was material to the probable duration of employment lost by Mr Scott. It was wrong to regard the policy as irrelevant because the illness and dismissal had occurred before age 60. The disclosure issue differed from an attempt to obtain documents in order to discover an unpleaded claim.

3. The court held that loss of an existing job expected to continue until 65 differs from a claim for earnings in other employment after a job ends at 60. In the former situation, the claimant need establish the probable duration of the lost employment. The respondent may contend for mitigation, but cannot rely on the consequences of its own wrongdoing to deny the relevance of the lost employment.

4. The award of £15,000 for injury to feelings was not untenably low when assessed against the guidance in [2003] ICR 318. A higher award could have been sustained, but there was no error of principle or evaluation requiring appellate intervention. Aggravated damages were a separate head of loss, directed to high-handed, malicious, insulting or oppressive conduct, rather than part of the injury-to-feelings award.

5. The psychiatric-injury award was founded on an inaccurate understanding of the unchallenged expert evidence. The tribunal had treated the medical prognosis as supporting recovery within 12 months, although the evidence did not do so. That award had to be reassessed by the tribunal.

6. The costs jurisdiction is disciplinary rather than compensatory. The tribunal had not adequately addressed whether the Inland Revenue had reasonable grounds for defending a case which its findings indicated was doomed to fail, and from when. Claims not pursued or not wholly successful could affect the amount of any costs award, but did not answer whether one should be made. On reconsideration, the tribunal was to exclude its erroneous criticism of the decision to take the initial sexual-harassment complaint seriously.

7. Although counsel had adequate general authority to challenge the Registrar's refusal orally before the Employment Appeal Tribunal, the court could not allow an appeal on a ground known to the appellant's representatives but not pursued there. Since the matter was being remitted, however, the tribunal could consider an amendment to the schedule of loss. Its paramount consideration would be the relative injustice of allowing or refusing it.

• Court of Appeal (Civil Division): Allowed the appeal in part and remitted the case for reassessment of psychiatric injury and reconsideration of costs: [2004] EWCA Civ 400.
• Employment Appeal Tribunal: Declined to interfere with any element of the Employment Tribunal's award: EAT/0068/03/ZT.
• Employment Tribunal, Norwich: Found unfair and wrongful dismissal, sex and disability discrimination, and victimisation; awarded £98,378 compensation and declined to award costs.