Bristol City Council v Deadman

The Court of Appeal allowed the employer's appeal against a finding for the employee in a claim for psychiatric injury arising from an internal harassment investigation. The court held that the council's formal Procedure for Stopping Harassment in the Workplace, particularly the investigatory process in section 7, was incorporated into the claimant's contract, but the broader Integrated Equalities Policy and the general statement that investigations should be handled "sensitively" did not form a separate contractual term. The judge's findings that the council had been contractually liable for informing the claimant by leaving a letter on his desk and for convening a two‑member panel were re‑examined: the appellate court concluded that (a) the manner of giving the letter did not breach the employer's common law duty of care and there was no adequate finding that the employer ought to have foreseen psychiatric harm from that act; and (b) although convening a two‑member panel breached the contractual procedure, any psychiatric injury said to flow from that breach was too remote to be recoverable under established principles of remoteness and foreseeability (Victoria Laundry/Koufos and Hatton v Sutherland considered).

Background and facts:

• Claimant (Mr Deadman) worked for Bristol City Council for over 30 years. A complaint alleging sexual harassment by a colleague led to an internal investigation.
• The original investigatory panel comprised two members (contrary to the published procedure requiring three) and found against the claimant. He successfully challenged that decision under the Council's Grievance Procedure, leading to a decision that a fresh panel should be convened.
• The claimant suffered depression and alleged that breaches by the Council (contractual and/or in tort) caused his psychiatric injury. The judge at first instance found breaches of contract and awarded damages but rejected a tort claim for breach of common law duty of care.

Procedural posture: Appeal by the Council from the decision of His Honour Judge Bursell Q.C., Queen's Bench Division, Bristol District Registry (BS250397).

Nature of the claim / relief sought: Damages for personal injury (psychiatric harm) suffered in the course of employment, pleaded in contract and in tort.

Issues framed:

• Whether the Council's Equalities Policy, the Procedure for Stopping Harassment in the Workplace and the related Investigation Guide were incorporated into the claimant's contract of employment.
• Whether an implied contractual term existed requiring the employer to handle investigations "sensitively" and whether that was breached by leaving a letter on the claimant's desk to notify renewal of the investigation.
• Whether the employer was in breach of its common law duty of care to take reasonable care for the employee's health, and whether psychiatric harm was reasonably foreseeable.
• Whether convening an investigatory panel of two (rather than three) members was a contractual breach giving rise to recoverable psychiatric injury, or whether any such damage was too remote.
• Causation and apportionment between different events alleged to have contributed to the claimant's condition.

Court's reasoning and conclusions:

• The court accepted that some parts of the published Procedure, especially the formal investigatory provisions (section 7), were sufficiently precise and had been adopted so as to be incorporated into the claimant's contract; the more general Integrated Equalities Policy did not itself constitute a contractual term but informed the context and standards expected.
• Contrary to the first-instance judge, the appellate court concluded there was no contractual term requiring the employer specifically to "handle all aspects of any investigation sensitively"; such an obligation was better understood as part of the implied obligation of mutual trust and confidence and the employer's duty of care.
• Applying Hatton v Sutherland, foreseeability of psychiatric injury depends on what the employer knew or ought to have known about the employee. The court found no sufficient indication that the employer should have foreseen psychiatric harm from the manner of notifying the fresh investigation (the letter on the desk) and accepted the first-instance judge's findings that the employer had not been put on clear notice of impending harm.
• The convening of a two‑member panel did amount to breach of the incorporated procedural term, but damage said to flow from that breach was too remote: at the time of contracting it would not have been within reasonable contemplation that such an error would likely cause psychiatric injury.
• The court therefore allowed the appeal and set aside the judgment for the claimant. Because the appeal succeeded on remoteness and foreseeability grounds, detailed issues of causation and apportionment were not resolved on appeal.

Appeal allowed. The Court of Appeal held that the formal investigatory procedure was incorporated into the employment contract but there was no separate contractual term requiring that investigations be handled "sensitively"; the manner of notifying the claimant did not establish breach of the employer's duty of care in tort, and the breach consisting of convening a two‑member panel (contrary to the procedure) produced damage that was too remote to be recoverable. Accordingly the first-instance judgment for the claimant was set aside.

Appeal from the High Court of Justice, Queen's Bench Division, Bristol District Registry (His Honour Judge Bursell Q.C., BS250397). Judgment of the High Court in favour of the claimant was overturned by the Court of Appeal ([2007] EWCA Civ 822).