MRS H HOGAN v CAMBRIDGESHIRE COUNTY COUNCIL [2001] UKEAT 0382_99_2607

EMPLOYMENT APPEAL TRIBUNAL
BAILII case number: [2001] UKEAT 0382_99_2607Case No Appeal No. EAT/0382/99Venue 58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS
Between
MRS H HOGANAPPELLANTCAMBRIDGESHIRE COUNTY COUNCILRESPONDENT
Before
His Honour Judge Peter Clark Mr D A C Lambert Mrs R A VickersDate 26 July 2001
[1]APPEARANCES For the Appellant MRS HOGAN (NOW WARD) (The Appellant in Person) For the Respondent MR GALBRAITH-MARTEN (Of Counsel) JUDGE PETER CLARK This is an appeal by Mrs Ward (formerly Mrs Hogan), the Applicant before an Employment Tribunal sitting at Bury St. Edmunds on 18-20 January 1999 (under the chairmanship of Mr D R Crome), against that Tribunal's reserved decision, promulgated with extended reasons on 21 January 1999, dismissing her complaints of unfair dismissal and breach of contract on the ground that her contract of employment with the Respondent Council was not terminated by dismissal but by operation of law. They found that the contract was frustrated due to the Appellant's long term incapacity caused by her sickness.[2]The appeal was listed for preliminary hearing before a division presided over by Lindsay P on 18 October 1999. The purpose of such a hearing is to identify what, if any, arguable point(s) of law raised in the appeal ought to go forward to a further appeal hearing at which argument is presented by both parties.[3]The points raised in the Notice of Appeal were many and various. In a judgment delivered on that day Lindsay J identified one issue, in two parts, only, which was to proceed to a full hearing, namely:
"…whether there was any, and if so, what, error of law in the Tribunal's conclusion that by 4 February 1997 (Mrs Ward's) contract of employment no longer existed. Secondly, if so, what, if any remedy should EAT (sic) have ordered?"
[4]We should say that permission was granted to the Appellant to amend her grounds of appeal so as to frame those issues and no other. In the event Mrs Ward produced a document headed 'Amended Notice of Appeal' which traverses ground outside the limited scope of enquiry directed by the President. We shall not permit any additional grounds to be argued before us.[5]All other grounds of appeal were dismissed by the Employment Appeal Tribunal at the Preliminary Hearing. Absent a successful appeal to the Court of Appeal we cannot and will not broaden the enquiry.[6]That causes no injustice to the Appellant. The frustration point is a discrete one. Further, it is accepted on behalf of the Respondent that, if the contract was not frustrated prior to 4 February 1997, then it was terminated by dismissal and that dismissal was unfair. That deals, shortly, with the second part of the issue now raised before us.[7]For completeness, we should record that this Full Appeal Hearing was originally listed for hearing on 11 December 2000 before a different division, but could not proceed on that day. Background[8]We take the factual history from the Employment Tribunal's findings of fact, based on the oral and documentary evidence before them. We have before us the Chairman's notes of evidence and a bundle of documents submitted by the Appellant.[9]She commenced employment with the Respondent as a Senior Legal Executive in the Legal Department on 10 July 1989. On 3 July 1990 she signed a contract of employment which provided, among other things, that her conditions of service were those agreed by the relevant National Joint Council, including provisions for sick pay; that her normal retirement age was 65 and that the contract was terminable upon notice, 3 months by the Respondent and 2 months, or less by agreement, by the Appellant.[10]The Appellant was absent from work by reason of certificated sickness from 14 November 1994 until 9 May 1995. On 2 August 1995 she was suspended pending a disciplinary investigation of allegations of misconduct. Before any disciplinary hearing took place, scheduled for 13 October 1995, she was certificated unfit for work due to depression on 4 October 1995. Thereafter she was never certificated fit for work and did not return to work for the Respondent again.[11]Unchallenged evidence from Ingrid Smith, the Respondent's Human Resources Adviser, showed that the Appellant's entitlement to full sick pay ran out on 8 May 1995. Between 4 October 1995 and 20 March 1996 the Appellant received half pay plus statutory sick pay. Sick pay ceased altogether on 7 May 1996.[12]On 25 April 1996 the Respondent received a recommendation from Dr Baxter, the occupational health physician, that the Appellant be retired on grounds of ill health. That recommendation was not, in the event, taken up by the Respondent.[13]On 8 July 1996, her right to sick pay having ceased, the Appellant was certificated unfit for work for a period of 3 months. On 22 August 1996 the Benefits Agency advised that the Appellant was to be regarded as unfit for work. She was awarded incapacity benefit without the need to submit further medical certificates.[14]On 3 September 1996 the Appellant applied successfully to the Respondent Council for a grant to pursue a 3-year degree course at Huntingdon Regional College to commence on 23 September 1996.[15]On 17 January 1997, following correspondence in December 1996, the Appellant met with Ms Smith. She did not then mention that she had embarked on a 3-year degree course. She told the Employment Tribunal that she dare not inform her employer of her taking the degree. It was no business of her employer to know what she was doing.[16]As at the date of the Tribunal hearing in January 1999 the Appellant remained incapable of work, having been in receipt of incapacity benefit continuously since August 1996.[17]On 4 February 1997 David Earle, Director of Resources, wrote to the Appellant on behalf of the Respondent, referring to her absence from work due to ill health since 4 October 1995 and anticipating that her health would not permit a return to work until, at the earliest July 1999, given that she had embarked on a 3-year course of full-time studies. In these circumstances he informed her of the Respondent's view that her contract of employment had come to an end by frustration.[18]On 2 May 1997 the Appellant presented the relevant Originating Application to the Employment Tribunal alleging unfair dismissal and breach of contract. She gave as her dates of employment 10 July 1989 to 5 February 1997. By a Notice of Appearance dated 20 June 1997 the Respondent denied that she had been dismissed and asserted that the contract had ended through frustration on a date in August or September 1996. Employment Tribunal Decision[19]Based on the material before them the Employment Tribunal upheld the Respondent's plea of frustration. Their reasoning is set out at paragraph 10 thus:
"The Tribunal has taken account of the documents submitted by both sides and the submissions which have been made and it is the view of the Tribunal that the Applicant was not dismissed from her employment with the Respondent but that the performance of the contract was frustrated by the events which we have described and the other circumstances in the case, so that by 4 February 1997 the contract of employment no longer existed. Through no fault of either of the parties, circumstances unprovided for in the contract of employment, unforeseen, had arisen, that is to say the Applicant's long term incapacity, which rendered performance of the contact impossible. In those circumstances the claim for unfair dismissal must fail."
Frustration[20]During the course of his submissions below Counsel then appearing for the Respondent, Mr Horan, referred to the leading authorities including Marshall v Harland & Wolff Ltd [1972] IRLR 90, Egg Stores (Stamford Hill) Ltd v Leibovici [1976] IRLR 376 and Hart v AR Marshall & Sons (Bulwell) Ltd [1977] ICR 539, dealing with sickness frustration and, more generally, the Court of Appeal decision in FC Shepherd & Co. Ltd v Jerrom [1986] ICR 802.[21]It follows that the Employment Tribunal was reminded, in particular, of the factors identified by Sir John Donaldson P in Marshall as being relevant considerations in answering the question, was the employee's incapacity, looked at before the purported dismissal (on this Appellant's case, 5 February 1997) of such a nature, or did it appear likely to continue for such a period that further performance of her obligations in the future would either be impossible or a thing radically different from that undertaken by her and agreed to be accepted by the employer under the agreed terms of her employment?[22]Those factors include: (1) The terms of the contract, including the provisions as to sickness pay. The point is made in Marshall that the contract will not be frustrated if the employee returns or is likely to return to work during the time when sick pay is payable. That point was passed in this case at latest in May 1996.[23](2) The anticipated length of the contract. This was a potentially long-term contract, where normal retirement age was 65.[24](4) The nature of the illness, its progress and its prognosis. Here, the Appellant had been incapable of work through sickness since 4 October 1995, following an earlier absence of nearly 6 months between November 1994 and May 1995. The prognosis was poor, based on the Benefits Agency assessment and the opinion of Dr Baxter in April 1996. In the event, there had been no improvement by January 1999.[25]Finally, whilst termination by frustration is independent of the volition or intention of the parties, their conduct may be relevant as evidence to be considered by the Employment Tribunal in making a judgment as to whether the changed circumstances, caused by a long sickness absence, were so fundamental as to strike at the root of the relationship. In this connection we note the observation made by the Chairman during the Respondent's closing address below:
"Did not Applicant September 1996 recognise the realities of the situation by applying for the 3-year course?"
[26]It seems to us that that was a factor which the Employment Tribunal did take into account and was entitled to take into account in reaching their overall conclusion that the contract had been frustrated by 4 February 1997. The Appeal[27]We begin by reminding ourselves of the limit of our jurisdiction. We may only interfere with Tribunal decisions where an error of law is made out, Employment Tribunals Act 1996 Section 21 (1). We cannot and must not interfere with findings of fact.[28]In this connection we have been referred by Mr Galbraith-Marten to the short passage in the judgment of Lawton LJ in Shepherd v Jerrom where he said this at 811B:
"The first question is whether what happened was capable in law of frustrating the contract; the second is whether it did frustrate it. This is a question of fact: see Pioneer Shipping Ltd v BTP Tioxide Ltd [1982] AC 724, 752 per Lord Roskill."
[29]Mr Galbraith-Marten also points out, correctly, that in his judgment given at the Preliminary Hearing in this case, Lindsay P did not identify any specific arguable error of law in the Employment Tribunal's approach, rather the case was permitted to proceed to this full hearing because the application of the doctrine of frustration to employment contracts is a complex question, which required full argument.[30]In these circumstances we have sought to discern from Mrs Ward's skeleton arguments and submissions to us today any error in the Employment Tribunal's approach to the question of frustration as a matter of law.[31]It follows that we have not been helped by Mrs Ward's understandable enthusiasm for revisiting the internal disciplinary proceedings commenced against her but not completed by the Respondent, depriving her, as she puts it, of an opportunity to clear her name; or the fact that she instituted an internal grievance which was never resolved.[32]Of rather more interest, we thought, was the argument that the contract of employment foresaw the relevant event, that is long term incapacity through sickness, in that the Respondent had an ill-health termination procedure on which the Respondent had embarked, leading to Dr Baxter's report dated 25 April 1996; which was then put on hold pending certain Tribunal proceedings brought by the Appellant being determined and later restored in December 1996 and January 1997 by Ms Smith, leading to a further appointment with Dr Baxter being arranged for 17 March 1997.[33]However, we are reminded by Mr Galbraith-Marten that(a) we must not seek to retry the case on its facts and(b) it is unclear that the point, which may be formulated in this way, that long term incapacity was not a supervening or frustrating event because it was foreseeable and because there were procedures for long-term incapacity, which were in train up to 4 February 1997, was specifically argued below or was advanced, either in the original Notice of Appeal or amended grounds of appeal following the Preliminary Hearing before Lindsay J division.[34]On reflection, we think that the answer to the point, leaving aside Mr Galbraith-Marten's submissions, is to be found in Hart v Marshall , where the Employment Appeal Tribunal (Phillips J) that the fact that the employer had not expressly dismissed the employee on grounds of incapacity was not determinative of the question whether or not the contract had been earlier frustrated. It may be relevant evidence going to the Tribunal's overall consideration of all relevant factors as to whether or not the contract was indeed frustrated.[35]In short, we have concluded that no error of law is made out in this appeal. On the particular facts of this case, and we do not wish to be taken to be laying down any new principles in applying the doctrine of frustration to employment contracts, it was, in our judgment, open to the Employment Tribunal to conclude that this contract was frustrated. In these circumstances there are no grounds in law for interfering with the Employment Tribunal's decision and the appeal must be dismissed.