Breach of Contract Damages

[Thanks to Marcus Pilgerstorfer of Old Square Chambers, who was junior Counsel for the employer, for providing this case summary]

The Court of Appeal (Ward, Lloyd, Moore-Bick LJJ) has today handed down its decision in Edwards v Chesterfield Royal Hospital NHS Foundation Trust [2010] EWCA Civ 571.

This case is authority for the proposition that a doctor, whose contract is terminable on 3 months' notice, but who suffers damage as a result of findings of misconduct leading to dismissal and loss of professional status that were made against him in disciplinary proceedings conducted in breach of a contractual disciplinary procedure, but which would not otherwise have been made, may recover damages at large.

The Court of appeal rejected the employer's argument that damages should, in accordance with Gunton v Richmond-upon-Thames LBC [1980] ICR 755, be limited to damages over the contractual period of notice plus the time it would have taken for a contractually compliant disciplinary procedure to have been carried out.

In reaching those conclusions, the Court held that:

(a) Comments in Johnson v Unisys properly understood did not require the result contended for by the employer (§23, §27), and the provisions of the Employment Rights Act 1996 did not take away rights enjoyed at common law or under contract (§38).

(b) The decision in Gunton supported Mr Edwards' case because "the decision in that case can be explained only on the basis that the employee had a contractual right to have the benefit of the agreed disciplinary procedure before he was dismissed" (§26, §40). Breach of the express term relied on by Mr Edwards gives rise to the normal contractual remedies: had he acted in time, he could have obtained an injunction (§50).

(c) In Skidmore v Dartford and Gravesham NHS Trust Lord Steyn held at §15 that: "The trust is entitled to decide what disciplinary route should be followed. That decision must, however, comply with the terms of the contract. If a non-conforming decision is taken and acted upon, there is a breach of contract resulting in the usual remedies".

(d) The reasoning of Slade J in Botham v Ministry of Defence was not correct (§42, §53).

The Respondent is seeking permission to appeal to the Supreme Court.