Greenway & Ors v Johnson Matthey Plc [2014] EWHC 3957 (QB)

Case No HQ13X05919HQ13X05158, HQ13X00560 and HQ13X00189[2014] EWHC 3957 (QB)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 26/11/2014
Before
MR JUSTICE JAY
Between
(1) Daniel GreenwayClaimants(2) Waynsworth DrydenClaimant(3) Dean WhiteClaimant(4) Simon YorkClaimant(5) Tony CipulloClaimantJohnson Matthey PLCDefendant
Harry Steinberg and Edward Ramsay (instructed by Slater & Gordon) for ClaimantsMichael Kent QC (instructed by Weightmans LLP) for DefendantHearing Hearing date: 12 th November 2014
Judgment

Introduction

[1]The five Claimants in these proceedings claim damages for breach of statutory duty, negligence and breach of contract arising out of their employment by the Defendant at its chemical plants in Royston (Messrs Greenway, Dryden, White and York) and Brimsdown, Enfield (Mr Cipullo). The Claimants say that they were wrongfully exposed to complex halogenated platinum salts, and consequently developed sensitivity to platinum, which is a personal injury cognisable under the law of tort. The Claimants contend that this personal injury involves serious consequences. In the alternative, the Claimants argue that they have a completed cause of action in breach of contract.[2]On 12th June 2014 Master McCloud ordered a split trial as to liability and quantum, and gave directions designed to take the matter forward to today’s hearing date. On 10th September 2014 Master McCloud gave permission to the Claimants to introduce the claim for breach of contract, and made further pre-trial directions.[3]Having regard to the parties’ pleadings and to the skeleton arguments, it seems to me that the two key issues for the Court to resolve are:- i) whether the Claimants have a completed cause of action in tort; and ii) whether the Claimants may recover more than nominal damages in respect of their contractual claims.

The Evidence

[4]The basic facts are not in dispute and do not require extensive recitation. Save for Mr Dean White who was a maintenance engineer, the Claimants were chemical process operators. Owing to the risk of sensitisation through exposure to platinum salts, which are produced in consequence of the refining process undertaken at the Defendant’s factories and are used in the making of catalytic converters, the Defendant required routine and regular skin prick testing undertaken by its Occupational Health Department. All the Claimants were found to have become sensitised to chlorinated or halogenated platinum salts; and, in consequence, have been taken off any work involving potential contact with platinum. Four of the Claimants no longer work at this company, and claim substantial damages for loss of earnings or for loss of earning capacity. Mr Daniel Greenway and Mr Simon York, who remain employed by the Defendant, claim that their earnings have been reduced by the restrictions placed on their employment. All the Claimants save for Mr Waynsworth Dryden, seek provisional damages under s.32A of the Senior Courts Act 1981. They accept that those claims also depend on establishing the presence of actionable injury on standard tortious principles.[5]The precise facts surrounding each individual case are, in reality, immaterial for present purposes because I am required to resolve a point of principle, not the quantum of these claims. The Defendant does not dispute the fact that each Claimant suffered the platinum sensitivity claimed, and also does not contest its breach of duty under Regulation 5 of the Workplace (Health, Safety and Welfare) Regulations 1992 and Regulations 7 and 12 of the Control of Substances Hazardous to Health Regulations 1994. An issue does arise whether the Defendant may contest, or has been deemed to admit, the Claimants’ remaining formulations of claim, but I will consider that matter subsequently.[6]I permitted Mr Steinberg for the Claimants to call one of his clients to give oral evidence, so as to provide greater flavour and context to the claims. In the result, I was assisted by hearing the oral evidence of Mr Dean White, who testified to the major effects his platinum sensitivity has had on his career in this particular niche of the engineering industry. Once he was removed from his ‘hands on’ role, and became a co-ordinator with administrative and supervisory responsibilities, he felt extremely uncomfortable, occasionally embarrassed, and always dissatisfied. In the end, he did not want to continue in this capacity and gave notice.[7]It is clear from the witness statements which I have read and considered that the other four Claimants have similar stories to tell. During the course of his oral argument, Mr Steinberg gave helpful summaries of their experiences, and I am grateful for those.

The Medical Evidence

[8]The medical evidence in this case is, in effect, agreed. At one stage, the sole area of possible disagreement related to the significance of the differences between pleural plaques and platinum sensitisation, because Dr John Moore-Gillon for the Defendant was not made aware of exactly how the Claimants were advancing their case on this topic. However, there are distinctions in physiological terms between these two conditions, but whether they are relevant distinctions for the purposes of the law of tort gives rise to matters of law rather than to aspects of medical expertise.[9]What follows is my summary of the reports of Dr R.M. Rudd, for the Claimants, and Dr John Moore-Gillon, for the Defendant, and in particular their joint report dated 13th September 2014.[10]Repeated exposure to platinum salts may give rise to sensitisation which, in turn, may engender an allergy. Sensitisation is defined by the presence of IgE antibodies in the immune system of the individual, and may be ascertained by either a skin prick test (in which a minuscule amount of the substance at issue is injected into the skin, resulting in the development, in cases of sensitisation, of a raised red area), or by a blood test. The presence of some IgE antibodies, without more, does not create symptoms – indeed, they are part of the body’s immune response to exposure to an antigen - but various manifestations of allergy, including rhinitis, dermatitis and asthma, may result if these antibodies interact with mast cells causing the latter to release chemical mediators including histamine.[11]The common ground between the experts set out at paragraphs 7-15 of their joint report is a sufficient platform to resolve the points of law I am asked to determine. In those circumstances, I set out those paragraphs in full:- “7. Platinum sensitisation may occur in response to complex halogenated platinum salts, and not to platinum or platinum compounds generally. Sensitisation to platinum salts may be present in an individual before they develop any physical symptoms of that sensitisation. The fact of sensitisation, though, may be demonstrated by skin prick testing. 8. If exposure continues after sensitisation has occurred (as demonstrated by positive skin prick test) then most (but not all) individuals thus exposed will develop physical symptoms relating to one or more of the eyes, nose, chest and skin. 9. Occasionally, these symptoms may occur in exposed individuals in the absence of positive skin prick tests. This may mean that the observed symptoms are in actual fact unrelated to the platinum salt exposure. They may, though, be thus related and such a circumstance reflects the fact that skin prick tests are not a totally reliable means of demonstrating sensitisation. 10. If exposure ceases (or at the least is very markedly reduced) when skin prick tests are positive, but before there are any symptoms of sensitisation, then the degree of sensitisation often reduces.11. Those who are sensitised to platinum salts as demonstrated by the presence of positive skin tests, but do not have any symptoms, will not develop such symptoms unless there is further exposure.12. Accordingly, the fact of sensitisation cannot be perceived by the sensitised individual unless he or she is exposed again to platinum salts. Thus, exposure by skin prick testing will give rise to an itchy weal of skin. If (and only if) the sensitisation has proceeded to the point where there are eye, nose, chest or skin manifestations then exposure by these routes will give rise to the associated symptoms.13. An individual who has been sensitised, as demonstrated by positive skin prick tests, but who has no eye, nose or respiratory symptoms is not limited in way in the course of their life except they must avoid circumstances in which they are exposed to platinum salts.14. For those who have already developed symptoms, cessation of exposure may lead to abolition of the symptoms, although this is not invariable.15. Sensitisation to platinum salts is a specific matter. An individual who is sensitised in this way is not at greater risk of becoming sensitised in other substances, either in the work-place or in the environment generally. A platinum salt-sensitised individual who has no further exposure is not at greater risk of developing asthma or rhinitis in later life than is an individual who has not become platinum sensitised.”[12]Dr Moore-Gillon does not disagree with the gist of paragraphs 6(1)-(3) of Dr Rudd’s report dealing with the differences between pleural plaques and platinum sensitivity. In my judgment, those paragraphs are uncontroversial in the sense that they accurately describe the nature, aetiology of and prognosis for pleural plaques as explained in relevant House of Lords authority, and also correctly summarise the agreed expert position on platinum sensitivity. Accordingly, I set out these paragraphs in full:- “I would suggest that the important distinctions between pleural plaques and platinum sensitisation are: 1) Slight further exposure to asbestos will not materially worsen pleural plaques whereas slight further exposure to platinum salts is likely to increase the degree of sensitisation and may result in asymptomatic sensitisation becoming symptomatic. 2) Pleural plaques do not themselves turn into any other asbestos attributable injury whereas asymptomatic sensitisation may turn into symptomatic sensitisation i.e. allergy. 3) The presence of pleural plaques does not place any restriction on the type of work that an individual may undertake other than avoidance of further significant asbestos exposure which current legislation requires be avoided by all individuals whether they have pleural plaques or not, i.e. the individual with pleural plaques is not more restricted in the jobs that he can do than a person without pleural plaques. In contrast, the presence of asymptomatic sensitisation to platinum salt does give rise to restrictions on working capacity which do not apply to persons who do not have platinum sensitisation.”

Actionable Injury and the Claim in Tort

[13]The first issue which arises for my determination is whether the Claimants have suffered ‘actionable injury’ for the purposes of the law of tort. At this stage of the analysis, the parties are agreed that the position is the same under both of the pleaded causes of action in tort.[14]In Cartledge v Jopling ([1962] 1 QB 189 (CA) and [1963] AC 758 (HL)) the plaintiffs, while employed as steel dressers in the defendant’s factory, contracted pneumoconiosis, a disease in which slowly accruing and progressive damage may be done to the lungs of an individual exposed to fine silica dust without his knowledge. The issue was whether the claims were statute barred, and that issue depended on when the cause of action accrued; or, put another way, when actionable injury or damage first occurred.[15]The trial Judge, Glyn-Jones J’s, key findings of fact are noted at [1963] AC 758, pages 761-2:- “The disease was caused by the inhalation of invisible and infinitesimal particles of fragmented silica which entered the lymphatic vessels forming part of the lung tissue. Either by their sharpness or by some toxic action they damaged the tissue and caused minute scars. The scarred tissue was inelastic and could not perform the functions of the unscarred tissue. As the amount of scarred tissue increased with continued inhalation of the particles, so the efficiency of the lung tissue was reduced. “The ordinary man in normal health,” said the judge, “has when young a substantial surplus of lung capacity upon which he need never call save in the exceptional case of severe illness or extraordinary exertion; and until the damage is sufficiently material to diminish this surplus capacity there may be no indication of shortness of breath or other clinical sign or symptom of lung disease; and if during this stage a patient is removed from exposure to these fine particles of silica, no more damage will be done, and his condition should not further deteriorate in the absence of some complication, and it may well be that he will never become aware or have any reason to suspect that any damage has been done to his lungs.” No treatment, however, could repair the damage that had already been done to the lung. The disease might make a patient more vulnerable to tuberculosis, and when it got to a more advanced state it might increase of itself without the further inhalation of particles. In any serious case there was a reduction of the expectation of life.”[16]I was taken during the course of argument to various passages in all three judgments of the Court of Appeal (Sellers, Harman and Pearson LJJ), but for present purposes I mention only two passages in the judgment of Pearson LJ. First, at page 208:- “Both theories have in common this point, which is indeed obvious, that damage has occurred and the cause of action is complete when the plaintiff concerned has suffered serious harm. In the end that must be the test. Had these plaintiffs suffered serious harm by the critical date, October 1, 1950? The injured condition of the lungs has to be advanced – the scarring has to be extensive – before signs of the disease will appear in an X-ray examination. The judge made findings which Mr Waller was on the evidence unable to challenge, that, in the case of each of the plaintiffs except South, X-ray examination in October, 1950, would have revealed the existence of the disease. It appears from the judgment below (unless there was some misunderstanding) that in the court below, Mr Waller, after some discussion, conceded that he could not maintain the contention that a man who was shown by X-ray examination to have pneumoconiosis had not suffered damage. In this court, Mr Waller was not held bound by this concession and argued to the contrary. But without any concession, the point is clear from the evidence and the contrary argument cannot succeed.”[17]Secondly, at page 210:- “In deciding whether a cause of action had accrued at the stage of the pneumoconiotic condition which had been reached by the plaintiffs at the critical date, one has to envisage the possibility of an action being brought at that stage. Suppose that some steel-dresser, having reached that stage of the condition and having become aware of it by X-ray examination or otherwise, prudently decided to give up his well-paid occupation as a steel-dresser for some less lucrative occupation free from dust, and brought an action against his former employer for damages in respect of injury to the plaintiff’s lungs and his loss of earning capacity. It is assumed that the employer had committed breaches of statutory or common law duty causing or contributing to the causation of the injury. It would be very remarkable if the plaintiff’s action failed on the ground that he had not suffered any damage, because there was not yet any clinical symptom such as shortage of breath and not yet any loss of faculty.”[18]Thus, the Court of Appeal proceeded on the basis that pneumoconiosis was asymptomatic but could be diagnosed by the presence at X-ray of marked scarring to lung tissue. Further, as Harman LJ made explicit (at page 202), ‘the injury to the lung makes the sufferer far more susceptible to tuberculosis or bronchitis or other pulmonary afflictions’.[19]The Court of Appeal fully recognised that the outcome, albeit logical and well-founded in principle, was capable of working injustice because the limitation clock was ticking against a Plaintiff who would not necessarily know that he had any compensatable injury. In due course, but only after the case had gone to the House of Lords, the Limitation Acts were amended to remedy this state of affairs.[20]The House of Lords upheld the Court of Appeal’s decision, with the same reluctance.[21]Lord Reid held that a cause of action accrues as soon as the tortious act causes “personal injury beyond what can be regarded as negligible, even when that injury is unknown to and cannot be discovered by the sufferer” (pages 771/2). He did not specify the personal injury he was referring to, although he did mention what would be observable at X-ray.[22]Lord Pearce, after setting out the facts as found by the Judge, said this (at pages 778-779):- “In my opinion, it is impossible to hold that a man who has no knowledge of the secret onset of pneumoconiosis and suffers no present inconvenience from it cannot have suffered any actionable harm. So to hold might possibly on the wording of the Fatal Accidents Act deprive of all remedy a widow whose husband dies of pneumoconiosis without having had any knowledge or symptom of the disease. And it would be wrong to deny a right of action to a plaintiff who can prove by X-ray photographs that his lungs are damaged but cannot prove any symptom or present physical inconvenience. It would be impossible to hold that while the X-ray photographs are being taken he cannot yet have suffered any damage to his body, but that immediately the result of them is told to him, he has from that moment suffered damage. It is for a judge or jury to decide whether a man has suffered any actionable harm and in borderline cases it is a question of degree… …It is a question of fact in each case whether a man has suffered material damage by any physical changes in his body. Evidence that those changes are not felt by him and may never be felt tells in favour of the damage coming within the principle of de minimis non curat lex. On the other hand, evidence that in unusual exertion or at the onslaught of disease he may suffer from his hidden impairment tells in favour of the damage being substantial.”[23]Thus, whether or not Lord Pearce felt that this was a borderline case, what was decisive for him was the evidence of lung damage in the form of scarring of tissue, observable at X-ray, and the fact that in event of subsequent disease or exceptional exertion ‘he may suffer from his hidden impairment’. The absence of symptoms or present physical symptoms did not prevent there being a completed cause of action.[24]Mr Steinberg emphasised the absence of present symptomatology and knowledge as being crucial to the ratio of Cartledge. However, one needs to see what there was as much as what there was not. Approaching the matter without reference to subsequent authority, I consider that Cartledge v Jopling was predicated on the findings of(a) exposure to fine silica particles causing a progressive disease process including scarring to otherwise healthy lung tissue,(b) an enhanced susceptibility to serious lung conditions including bronchitis and tuberculosis, and(c) a potential loss of physiological function which might have manifested itself in extreme circumstances. It is true that only Lord Pearce made point (c) explicit, although it flows directly from the first instance judge’s finding of act, and it is therefore debatable whether it forms part of the ratio of the case. It is also true that Pearson LJ appears to have regarded a reduction in future earning capacity as being a salient feature of the injury. On the other hand, this was in the context of a piece of reasoning which included a present reduction in ability to resist infection. Overall, points (a) and (b) above are certainly part of the ratio, and point (c) may well be.[25]In Rothwell v Chemical and Insulating Co Limited (2008) 1 AC 281, the House of Lords decided that asymptomatic pleural plaques did not constitute injury capable of giving rise to a claim for damages in tort. The presence of pleural plaques was evidence that lung tissue had been penetrated by asbestos fibres, but did not in themselves increase susceptibility to other asbestos-related diseases or shorten life expectancy. The plaques were, accordingly, entirely harmless, and not an aspect of any progressive disease process.[26]On my understanding of its reasoning, the House of Lords in Rothwell did not seek to reinterpret its earlier decision in Cartledge, although – as has been pointed out in the parties’ written submissions – their Lordships’ individual formulations of the legal test varied slightly. For Lord Hoffmann the test (in tort claims generally) involved the “abstract concept of being worse off, physically or economically, so that compensation is an appropriate remedy” (at 289D). For Lord Hope, the test was whether there was “real damage, as distinct from damage which is purely minimal” (at 297E). For Lord Rodger, the test was “material damage” (at 311F). It might be argued that some of the formulations tend to circularity. What may be more valuable is to consider how the test was applied to the facts of both Cartledge and Rothwell itself.[27]As for Cartledge, Lord Hoffmann said this (at 289G-H):- “At a date earlier than the commencement of the limitation period their lungs had suffered damage which would have been visible upon an x-ray examination, reduced their lung capacity in a way which would show itself in cases of unusual exertion, might advance without further inhalation, made them more vulnerable to tuberculosis or bronchitis and reduced their expectation of life. But in normal life the damage produced no symptoms and they were unaware of it.” Overall, I think that Lord Hoffmann was right to say that pneumoconiosis might advance without further inhalation. That is consistent with Pearson LJ’s observations referred to under paragraph 16 above. On the other hand, it might be going slightly too far to state that any reduction in lung capacity would show itself in cases of unusual exertion: might is probably more accurate, and that would depend on the state of progression of the disease and the constitution of individual sufferers. The key point was that the scarring of lung disease was not neutral as to its health impacts. This was to be contrasted with the presence of pleural plaques which would never cause symptoms, would not increase the susceptibility of the individual to other diseases or conditions, and did not reduce life expectancy (at 290H).[28]Lord Hope made similar points at paragraphs 47 and 49 of his Opinion, which I set out in full:
“47. Whatever its strict meaning may be, the maxim in its less literal sense can be appealed to in the present context as an expression of legal policy. It is well settled in cases where a wrongful act has caused personal injury there is no cause of action if the damage suffered was negligible. In strict legal theory a wrong has been done whenever a breach of the duty of care results in a demonstrable injury, however slight. But the policy of the law is not to entertain a claim for damages where the physical effects of the injury are no more than negligible. Otherwise, the smallest cut, or the lightest bruise, might give rise to litigation the costs of which were out of all proportion to what was in issue. The policy does not provide clear guidance as to where the line is to be drawn between effects which are and are not negligible. But it can at least be said that an injury which is without any symptoms at all because it cannot be seen or felt and which will not lead to some other event that is harmful has no consequences that will attract an award of damages. Damages are given for injuries that cause harm, not for injuries that are harmless. … 49. This approach does not seem to me, however, to address the fundamental point that, while the pleural plaques can be said to amount to an injury or a disease, neither the injury nor the disease was in itself harmful. This is not a case where a claim of low value requires the support of other claimants to make it actionable. It is a claim which has no value at all. Pleural plaques are a form of injury. But they are not harmful. They do not give rise to any symptoms, nor do they lead to anything else which constitutes damage. Furthermore it is not possible to bring the risks of developing a harmful disease into account by applying the ordinary rules of causation. The risks are no doubt due to the same exposure to asbestos. But they are not created, or in any way attributable to, by the pleural plaques. That can also be said of anxiety. It is the risk of developing a harmful disease in the future that gives rise to it. So also where the claimant is required to attend for the periodical medical attention and is worried about the results. Pleural plaques themselves do not require periodical medical attention. The need for this is due to what the pleural plaques indicate about the extent of exposure to asbestos.”
[29]In a nutshell, Mr Steinberg’s submission was that his clients had sustained actionable injury or damage because(a) it was probable that their sensitisation would progress to allergy (see paragraph 8 of the Joint Report, paragraph 11 above, and c.f. pleural plaques),(b) in the absence of further exposure, there would be no progression, and(c) it was a direct and necessary consequence of the foregoing that restrictions were placed on their working activities so as to obviate (a). Mr Steinberg relied on Pearson LJ’s reasoning in Cartledge (see paragraph 16 above) in support of proposition (c). In essence, the harm or damage – and, consequently, the actionable injury - was the amalgam of or inextricable nexus between the presence of the antibodies, which was a relevant physiological change, and the reduction in earning capacity (whether compensated under Smith v Manchester or on a multiplier/multiplicand basis).[30]I agree that there are factual differences between the instant cases and Rothwell. In particular, further exposure to asbestos fibres would not materially worsen the pleural plaques, although it might well engender a different, asbestos-related disease process. Also, the progression from sensitisation to allergy can be envisaged as being along a direct causal pathway. In contrast, as Mr Steinberg elegantly put it, the pleural plaques were a biological cul-de-sac.[31]Critically, however, that progression would not occur if an employee is removed from the source of the sensitisation, namely exposure to relevant platinum salts. In such circumstances, the sensitisation will either remain constant (the antibodies will remain in the system but will not increase) or it will diminish: in both instances, without symptoms. Accordingly, that progression will not occur in any of the five cases I am considering. My interpretation of the passage in Pearson LJ’s judgment on which Mr Steinberg relies is that pneumoconiosis may progress even if the sufferer is removed from the source of the dust, but the risk is higher if exposure continues, rendering it both sensible and necessary to take preventative measures. In my view, this passage does not assist Mr Steinberg’s argument because, in its approach to the question of what is actionable injury, it presupposes the existence of a disease process which is real and present.[32]In my judgment, one cannot define the actionable injury by the steps which are taken to prevent it. Those steps may result in economic loss, but that is not the same as, or an ineluctable component of, the injury. The correct approach is to analyse the sensitisation in terms of the physical (or physiological) harm it may be causing, not any financial loss which may be consequent upon that harm. The sensitisation is no more, and no less, than the presence of antibodies which in themselves are not harmful. They may become harmful if they endure or multiply to the extent that they subsequently interact with mast cells such that histamine is generated, but that harmful state of affairs requires further exposure. Thus, something more has to happen before actionable injury may be sustained, and that something more cannot as a matter of logic and principle be the very thing (sc. the preventative measures) which precludes the development and manifestation of symptoms, in other words injury.[33]Properly analysed, therefore, this is a claim for pure economic loss. Mr Kent Q.C. submitted that general damages for pain, suffering and loss of amenity would not be awarded on these facts, and I agree. That cannot be determinative of the issue, but it serves to indicate the true nature of the claim.[34]Mr Kent also submitted that pure economic loss is outside the ambit of the relevant obligation in tort, whether arising in negligence simpliciter or for breach of statutory duty. I did not understand him to submit that this was an additional, free-standing basis for repudiating these claims, since it would depend on the primary conclusion that there was no actionable injury. However, I agree with Mr Kent that the purpose of the tortious obligation, however framed, is to safeguard employees from the risk of personal injury, not from financial harm per se: see Lord Hoffmann in SAMCO v York Montague and others [1997] AC 191, at 211B and 212D-F (set out in full under paragraph 45 below); and, by analogy, Arden LJ in Vibixa Ltd v Komori UK Ltd and others [2006] 1 WLR 2472, at 2488F-H in particular. In that case, the concept of ‘welfare’ in the Health and Safety at Work etc Act 1974, and subordinate legislation, did not comprehend, without more, interests of an economic nature.[35]Mr Kent advanced other arguments opposing Mr Steinberg’s case, but in the circumstances I do not consider that it is necessary to address these.[36]The Claimants have not suffered actionable injury, and the claim in tort must, therefore, fail.

The Claim in Contract

[37]This is the claim which the Claimants introduced by amendment pursuant to the Order of Master McCloud dated 10th September 2014. Mr Steinberg frankly told me that the purpose the amendment was to cater for the possibility that the Court might rule that his clients had not suffered actionable injury. In the event that they had, the contract claim would obviously be otiose.[38]The implied term relied on by the Claimants for the purpose of this claim is exactly co-extensive with the Defendant’s obligation under the general law of tort to provide and maintain a safe place and system of work, and to take reasonable care for the Claimants’ safety. It is not an implied term required to give business efficacy to the contract or to reflect the parties’ unexpressed intentions; rather, it arises because the law imposes it in view of the relationship between the parties. As I remarked in oral argument, all employers’ liability claims in tort may also be regarded as claims in contract, for breach of that implied term. In practice, such claims are very rarely brought, because it is more convenient, and more conventional, to frame the cause of action solely in tort.[39]The Claimants expressly eschew any claim for nominal damages for breach of contract. Such a claim would avail them not at all. In order to achieve something of real and concrete benefit, they must establish that the breach of contract relied on has caused them substantial loss and damage.[40]Before addressing the merits of the Claimants’ argument, it is necessary to touch on a pleading point. The claims as originally constituted were purely in tort; more specifically, in breach of statutory duty and in negligence. The Defences, which were not drafted by Mr Kent, admitted ‘breach of duty’ without discriminating between the two formulations of that duty. I accept Mr Kent’s explanation that, given that the Defendant was advised that it had no defence to the breach of statutory duty claim, there was no point contesting the negligence claim, but the fact remains that the latter was not placed in issue. Under the rules, the negligence claim was, in effect, admitted. For the reasons which I have already outlined, the Claimants then pleaded an alternative claim in contract. Mr Kent arrived on the scene and amended his client’s Defences so as to plead a bare denial of the negligence and contract claims. No particulars of the denial were given, contrary to CPR Part 16.5. The Defences pleaded that it would be disproportionate to give such particulars, since the contract claim placed the Claimants in no better position. In such circumstances, it seems to me that the Defendant must be confined to that point of law and cannot be permitted to contend that, as a matter of fact, it was neither negligent nor in breach of the implied term. Ultimately, Mr Kent accepted that this was the case.[41]Mr Steinberg also sought to argue that an admission of breach of statutory duty is necessarily an admission of negligence. He relied on high authority which, in my view, does not go that far. Indeed, in an authority he did not cite, London Passenger Transport Board v Upson [1949] AC 155, Lord Wright at page 168 explained that breach of statutory duty is not to be equated with negligence in all cases. The one may inform the other, but they are not legal synonyms (unless, I would add, the statutory duty in play imposes something akin to a reasonable care obligation).[42]A contractual claim in these circumstances is certainly novel. Its possibility was mentioned by Lords Hope and Scott in Rothwell, although the point did not arise for decision. A contractual claim would scarcely ever arise in a case involving inhalation of asbestos fibres owing to the implacable six year limitation period, and the long ‘incubation period’ which is required. It would be fair to say that Lord Scott could see little reason why a contractual claim should not succeed.[43]The way in which Mr Steinberg advances the contractual claim was both compact and beguiling. In essence, he submitted that the loss claimed is within the scope of the relevant duty, that it is not a pre-requisite of this claim that personal injury be sustained, and that the loss suffered was a natural consequence of the breach, falling within the first limb of Hadley v Baxendale 156 E.R. 145; (1854)9 Ex. 341. Mr Steinberg naturally recognised that the claim could be characterised as being one for pure economic loss, rather than for economic loss consequent on physical damage, but he contended that the distinction between economic loss and physical damage was a false or legally irrelevant one for these purposes. The question to be asked, and answered, is whether the loss falls within the envelope of the contractual duty. Even in the absence of personal injury, Mr Steinberg submits that his clients have suffered non-trivial harm or loss, and are therefore entitled to more than nominal damages, because they have sustained (at the very least) a loss of earning capacity.[44]I am unable to accept Mr Steinberg’s submissions on this issue. I agree that the critical question is whether the losses in question are within the scope of the Defendant’s contractual duty, but in order accurately to answer that question it is necessary to analyse the type or kind of damage, or loss, which is at issue.[45]This is the exercise which Lord Hoffmann specifies in SAMCO v York Montague and others [1997] AC 191 at 211A/B and 211H. Moreover, in a critical passage of his Opinion at 212D-F, one sees the following:
“How is the scope of the duty determined? In the case of a statutory duty, the question is answered by deducing the purpose of the duty from the language and context of the statute: Gorris v Scott (1874) L.R 9 Ex. 125. In the case of tort, it will similarly depend upon the purpose of the rule imposing the duty. Most of the judgments in the Caparo case are occupied in examining the Companies Act 1985 to ascertain the purpose of the auditor’s duty to take care that the statutory accounts comply with the Act. In the case of an implied contractual duty, the nature and extent of the liability is defined by the term which the law implies. As in the case of any implied term, the process is one of construction of the agreement as a whole in its commercial setting. The contractual duty to provide a valuation and the known purpose of that valuation compel the conclusion that the contract includes a duty of care. The scope of the duty, in the sense of the consequences for which the valuer is responsible, is that which the law regards as best giving effect to the express obligations assumed by the valuer: neither cutting them down so that the lender obtains less than he was reasonably entitled to expect, nor extending them so as to impose on the valuer a liability greater than he could reasonably have thought he was undertaking.”
[46]Thus, if the claim is for breach of statutory duty, the scope of the duty is ascertained by discerning the purpose of the duty from the statutory scheme. A similar exercise applies in other tortious claims where the common law imposes the relevant obligation. The position is slightly more complicated where the claim is for breach of an implied contractual duty. In the circumstances of SAMCO, the exercise was said to entail construing the agreement as a whole in its commercial setting. In my judgment, in circumstances where the law imposes an implied term in view of the relationship between the parties, essentially for reasons of policy, and that implied term is in substance the same as the tortious obligation which arises for exactly the same reasons, it seems obvious that the exercise embodies a consideration of the scope of the rule or principle of public policy which creates, or impresses, the duty.[47]In my judgment, the scope of the rule of public policy in operation in these cases, and all cases of employers’ liability, is to safeguard the health, safety and welfare of employees from the careless acts and omissions of their employers; and, in the event of breach, where personal injury is suffered to require the payment of condign compensation. The concepts of health, safety and welfare, properly understood, embody the notion of protection from personal injury and not from economic or financial loss suffered without personal injury. Put another way, it is because the implied contractual duty is precisely conterminous with and reflects the obligations imposed by the law of tort – and, in particular, the tort of negligence – that the outcome must be the same however the cause of action is sought to be classified.[48]I should add, although the point was not argued, that the Claimants’ case is not advanced by considering the post-Addis v Gramophone [2009] AC 488 authorities such as Malik v BCCI SA [1998] AC 20, Johnson v Gore Wood & Co [2002] 2 AC 1 and Johnson v Unisys Ltd [2003] 1 AC 518. These were all cases where the claims could be examined within the ambit of the relevant duty, typically the obligation of mutual trust and confidence. The instant claims cannot be envisaged in that manner.[49]Thus, the answer to Mr Steinberg’s submission is that the Claimants’ pure economic loss falls outside the parameters of the Defendant’s duty, and the claim in contract must fail.

Conclusion

[50]These claims fail and there must be judgment for the Defendant.

Cited in 2 later judgments