Palmer v East & North Hertfordshire NHS Trust

A written agreement governing a professional performance assessment may be contractually binding where the parties intended legal relations, even if some practical details remain unresolved. A contingency concerning the identity of a host institution does not necessarily create uncertainty. The court may imply terms requiring performance within a reasonable time and requiring each party to take reasonable steps to achieve the agreed purpose.

Where an agreement excludes disciplinary action concerning identified matters, a party cannot withdraw without contractual justification and then pursue disciplinary proceedings concerning those matters. A contract is frustrated only where a supervening event fundamentally changes the nature of the outstanding obligations, rather than merely making performance difficult or inconvenient. Repudiatory breach does not automatically determine the contract where the innocent party has not accepted it.

The claimant, a consultant surgeon, agreed with the defendant NHS trust and the National Clinical Assessment Authority, later NCAS, that concerns about his clinical practice would be addressed through a clinical re-entry and performance assessment process. The agreement included a proposed six-month clinical placement, the lifting of his suspension, and an undertaking by the Trust to forgo disciplinary action concerning earlier matters.

After difficulties arose in securing a placement, the Trust withdrew from the assessment process and began a disciplinary investigation concerning the same underlying matters. The claimant sought damages and injunctive relief. The central issues were whether the agreement was binding and sufficiently certain, whether it was supported by consideration or discharged by frustration, and whether the Trust was entitled to commence disciplinary proceedings.

1. Claim succeeded. The agreement was contractually binding. The parties had agreed in principle to the assessment process, required a formal written agreement, signed the terms of reference and exchanged them formally. Those facts demonstrated an intention to create legal relations.

2. The agreement was not void for uncertainty. The absence of an identified host hospital was a contingency concerning performance, not uncertainty about the material contractual terms. The tension between the proposed six-month placement and the return-to-work timetable was resolved by implying a term that the placement and assessment should be completed within a reasonable time. The absence of an express allocation of responsibility was addressed by implying that each party had to take reasonable steps to secure a suitable placement.

3. The agreement was supported by consideration. The claimant’s agreement to undergo assessed practice at another hospital, potentially involving temporary relocation, and to submit to an assessment for which consent was required, supplied sufficient consideration.

4. The Trust had no contractual justification for withdrawing. The agreement had not been discharged by effluxion of time or frustration. The applicable principles, summarised in Gryf-Lowczowski v Hinchingbrooke Healthcare NHS Trust (2006) IRLR 100 by reference to Panalpina, required a supervening event, without default and without sufficient contractual provision, which fundamentally changed the nature of the outstanding obligations so that enforcing them would be unjust. The absence of a placement did not meet that standard, particularly since a suitable placement remained realistically achievable.

5. The Trust’s purported withdrawal breached the agreement. Its decision to commence a disciplinary investigation concerning matters covered by the undertaking to forgo disciplinary action was also a clear breach. The claimant was entitled to damages, with assessment adjourned.

6. Alternatively, the Trust’s unilateral termination without good reason was capricious and unfair and breached the implied obligation of mutual trust and confidence, as formulated in Malik v Bank of Credit and Commerce International SA (1997) IRLR 462.

7. The breaches were repudiatory, but the claimant had not accepted the repudiation. The agreement therefore remained undischarged. Appropriate injunctions were available to reinstate the assessment process and restrain continuation of the disciplinary investigation. The short delay before proceedings did not disentitle the claimant to relief.

First-instance decision. Judgment for the claimant, with damages and the wording of injunctions to be addressed in further submissions.