Cheltenham Borough Council v Laird

An employment contract may be conditional upon satisfactory medical clearance where the contractual documents objectively impose that condition. A medical questionnaire is construed objectively, from the standpoint of a reasonable lay applicant. Ambiguities are resolved by recognising the applicant’s non-specialist status and the employer’s responsibility for clarity. Answers must nevertheless be given with reasonable care; an obligation to answer to the applicant’s ability does not confine liability to deliberate dishonesty.

Representations made to an occupational health adviser for the employer’s benefit may be representations made to the employer under section 2(1) of the Misrepresentation Act 1967. The claim failed because the answers were neither false nor misleading, and were honestly and reasonably given.

The claimant local authority employed the defendant as its managing director after a recruitment process requiring medical clearance. The defendant completed a medical questionnaire which did not disclose her previous episodes of depression or continuing antidepressant medication. After serious disputes arose during the employment, she became unfit for disciplinary proceedings and retired on an ill-health pension.

The authority sued for damages for negligent and fraudulent misrepresentation, claiming the extraordinary costs of the employment and the pension. The defendant denied liability and advanced a contingent claim for losses allegedly caused by the authority. The principal issues concerned contract formation, the construction and truth of the questionnaire answers, inducement, limitation, causation, recoverability of the claimed losses and the defendant’s set-off arguments.

1. Contract formation. The employment contract was concluded on 14 January 2002, not when the parties reached an agreement in principle on 4 January. The recruitment documents and the letter of 7 January made satisfactory medical clearance a condition precedent, and the defendant accepted those terms. The later letter confirming that the council could proceed with the appointment confirmed satisfaction of the condition.
2. Construction of the questionnaire. The questionnaire was to be construed objectively, as a reasonable person in the defendant’s position would understand it. Its ambiguity had to be considered in light of the defendant being a lay person and the council having supplied the form. A reasonable answer addressing either of two reasonably available meanings would be true. The declaration concerning the applicant’s ability and knowledge did not exclude the ordinary duty to take reasonable care.
3. Representations and inducement. The answers concerning good health, impairment, last medical treatment and an ongoing condition affecting employment were not false or misleading on that construction. The defendant had recovered from her previous depressive episode, her vulnerability was not an ongoing impairment in the relevant sense, and the last medical treatment reasonably meant treatment by a doctor for symptoms rather than collection of a repeat prescription. Alternatively, she honestly and reasonably believed the answers to be true. The representations were made to the council through its occupational health adviser and would, if actionable, have induced the contract.
4. Remedy and statutory application. The wording making the defendant liable to termination did not exclude the ordinary remedies for actionable misrepresentation. Section 2(1) of the Misrepresentation Act 1967 was not confined to statements physically addressed directly to the contracting party where the statement was made for that party’s benefit.
5. Alternative matters. The court made findings on the contingent cross-claim. The council’s only established breach was the manner in which a councillor opened a discussion about the defendant leaving employment, but no loss was proved from it. The disciplinary and grievance procedures, suspension, handling of personal material and pension process did not otherwise establish actionable breaches. The claim was dismissed, and the defendant’s contingent claim for damages also failed.