Yapp v Foreign and Commonwealth Office

An employer exercising a contractual power to remove an employee from a posting must act fairly. An operational label does not avoid that obligation where the decision depends on allegations of misconduct.

Psychiatric injury caused by workplace unfairness will not usually be reasonably foreseeable where the employee appears robust and the employer knows of no relevant vulnerability. This is guidance, not an absolute rule. Exceptionally, the employer’s conduct or the nature of the work may make psychiatric injury foreseeable without prior indications of vulnerability.

Contractual damages for psychiatric injury remain subject to the stricter requirement that injury of that kind was not unlikely to result.

The Foreign and Commonwealth Office summarily withdrew the claimant from his appointment as British High Commissioner in Belize after receiving allegations about his conduct. It did not first investigate the allegations or give him an opportunity to respond. A subsequent disciplinary process rejected allegations of inappropriate conduct towards women but upheld allegations concerning his treatment of staff.

Cranston J held in [2013] EWHC 1098 (QB) that the withdrawal was a breach of contract and of the employer’s common law duty of care. He found that it caused the claimant’s depressive illness and associated financial loss. Damages of £320,000 were agreed subject to appeal.

The appeal concerned contractual fairness, causation, remoteness of psychiatric injury, the fairness of using the same officer as investigator and disciplinary decision-maker, and interest on money held by the claimant’s solicitors pending appeal.

1. Appeal allowed in part. The summary withdrawal was unfair and therefore a breach of contract. The FCO had a broad contractual discretion to withdraw an officer for operational reasons, but it acted precipitately by relying on serious, uncorroborated allegations without preliminary inquiries or giving the claimant an opportunity to respond. Calling the decision operational did not remove the requirements of fairness where misconduct allegations supplied its foundation.

2. The trial judge’s findings on causation were upheld. He was entitled to find that the unfair withdrawal materially contributed to the depression. The later disciplinary findings did not show that a fair preliminary process would have produced the same withdrawal decision. The claimant’s cardiac illness was a contingency relevant to the assessment of future loss, rather than an event which necessarily broke the chain of causation.

3. The psychiatric injury was nevertheless too remote. Underhill LJ held that, in claims under the common law duty of care, psychiatric injury will not usually be reasonably foreseeable unless the employer knew or ought to have known of a relevant problem or psychological vulnerability. That guidance applies both to continuing workplace pressure and to a single unfair disciplinary or managerial act. It is not absolute: exceptionally grave conduct, or a risk inherent in particular work which the employer actually foresees, may make injury to an apparently robust employee foreseeable.

   Here the claimant had appeared robust, had no relevant history and had displayed reactions which the FCO’s experienced welfare officer regarded as usual during disciplinary proceedings. The withdrawal was a grave career setback, but it was neither dismissal nor a disciplinary finding, and the FCO promised a proper investigation and possible alternative posting. Psychiatric illness was therefore not reasonably foreseeable. The common law duty-of-care claim failed, and the injury was necessarily too remote under the stricter contractual test.

4. Using the same officer to investigate and determine the disciplinary allegations was not inherently unfair. Separation of those roles is good practice where practicable, but not an inflexible requirement of natural justice. Fairness depends on the circumstances.

5. The interest appeal was dismissed. Payment to solicitors who were bound not to release the money pending appeal did not satisfy the judgment debt. The arrangement was substantively a stay of execution, so the judge was entitled to preserve interest for the period during which the claimant could not use the money.

6. Davis and Patten LJJ agreed. The case was remitted to the High Court for assessment of damages confined to recoverable contractual loss, unless quantum was agreed.

• Court of Appeal (Civil Division): In [2014] EWCA Civ 1512, upheld the finding that the withdrawal was an unfair breach of contract and upheld the causation findings. It reversed the award relating to psychiatric injury on remoteness and duty-of-care grounds, dismissed the interest appeal and remitted quantum.
• High Court, Queen’s Bench Division: Cranston J held in [2013] EWHC 1098 (QB) that the withdrawal was a breach of contract and of the employer’s common law duty of care. He found the resulting depressive illness recoverable and subsequently awarded interest on the agreed damages held pending appeal.