30 April 2018

Background

The claimant employee was a junior doctor whose employment with the NHS Trust employer was governed by the Derby Hospital Principal Terms of Contract of Employment (the Derby contract). The Derby contract required that the employer conduct monitoring to assess whether junior doctors took adequate rest breaks during their shifts over the term of the general surgery rota. The junior doctors were contractually obliged to assist in the monitoring process by way of providing daily record cards. There were financial incentives or penalties for NHS Trusts to secure compliance. In 2013, two monitoring exercises took place MR1 and MR2, for which the claimant was included in MR2. MR2 showed a compliance rate of 74.77% which, if the monitoring exercise had been validly conducted, would have triggered a band three uplift in salary that was due when compliance was by any margin below 75%. However, the exercise was treated as invalid by the defendant, on the basis that the duty return rate (the number of worked duties divided by the number of expected duties) had been below the 75% threshold. Accordingly, the doctors were advised that there would be a re-monitoring in January 2014. That was done with the result being a valid, compliant monitoring round. Notwithstanding, the claimant brought a test case, supported by the British Medical Association, seeking declaratory relief on behalf of herself and her cohort of junior doctors to the effect that, on her construction of the contract, MR2 was validly conducted and bound the defendant. The defendant had said that on its construction of the contract, MR2 had been invalid. A key issue related to whether the software used by the defendant to make its calculations had led to outcomes that were in breach of the defendant’s contractual obligations by virtue of the inclusion of artificial data. More particularly, the claimant had argued that the contract between the parties had incorporated the Junior Doctors’ Hours - Monitoring Guidance (DH Monitoring Guidance), which provided that actual recorded data relating to working times and natural breaks must be used, not an assessment based on the expected working pattern. The matter came on for trial.

Order accordingly.

Issues and decisions

(1) Whether, and if so to what extent, the Derby contract incorporated as enforceable contractual terms the contents of certain other documents.

The claimant had contended that certain parts of three Department of Health Documents (the DH Documents) and the DH Monitoring Guidance prescribing working hours and natural break monitoring and any consequential pay uplift were contractually incorporated. The defendant contended that the defendant’s local guidance documents (the Hours Monitoring Guide and the FAQ) were incorporated (see [11] of the judgment).

Having regard to established law, the first and overriding question was whether the parties had agreed (expressly or impliedly) that additional documents should have formed part of the contract between them (see [105] of the judgment).

Applying the legal principles, the Hours Monitoring Guide and the FAQ had contained the local monitoring arrangements that the defendant was required to operate by cl 6 of the Derby contract. The provisions contained in the two documents were apt for incorporation and had been expressly incorporated into the contract between the claimant and defendant. To the extent that the contract had not make express provision at the level of detail as to methodology for calculating validity and compliance, that had been a matter for the discretionary judgment of the defendant (see [90]-[96], [129] of the judgment).

The defendant had a residual discretion as to the precise methodology to be applied in practice in conducting the analysis of validity and compliance (see 131] of the judgment).

Alexander v Standard Telephones and Cables Ltd (No 2); Wall v Standard Telephones and Cables Ltd (No 2) [1991] IRLR 286 applied; Keeley v Fosroc International Ltd [2006] All ER (D) 65 (Oct) applied; Hussain v Surrey and Sussex Healthcare NHS Trust [2011] All ER (D) 91 (Jul) applied; Sparks v Department for Transport [2016] All ER (D) 94 (Apr) applied.

(2) Whether the defendant acted rationally in its approach to monitoring, in particular in relation to it’s use of substituted or expected data.

It had been a reasonable assumption that if a junior doctor had not returned monitoring data, that was because the shift had been compliant (see [141] of the judgment).

While using substituted data had tended to skew the assessment towards compliance, it had not led to the conclusion that it was irrational (see [144] of the judgment).

Braganza v BP Shipping Ltd; The British Unity [2015] All ER (D) 185 (Mar) applied.

(3) Whether the defendant’s approach to the disputed decisions taken in relation to MR1 and/or MR2 could be challenged.

Having regard to MR2, although the defendant had accepted in evidence that it had been a mistake to include one doctor in its calculation of expected duties, that had not meant that it had acted irrationally in breach of contract. The defendant had been entitled (as a matter of contract) to adopt a denominator of 218, being the shifts expected to be worked by reference to the contracted rota as a whole which was being tested during that particular monitoring period. Since the purpose of the monitoring exercise had been to assess compliance across all expected shifts for that rota, the defendant had been entitled to conclude that the exercise would be valid only where actual returns were submitted in respect of 75% of the shifts expected in the relevant period (see [151], [152] of the judgment).

As a matter of contract and on rational basis MR1 had been a valid exercise in respect of both return rates. MR2 had been an invalid exercise that had required re-monitoring, and that had occurred in January 2014 producing a valid, compliant result (see [148], [155] of the judgment).

John Cavanagh QC and Sarah Keogh (instructed by Capital Law Limited) for the claimant.

Richard Leiper QC and Joseph Barrett (instructed by Browne Jacobson) for the defendant.

Paul Mclachlan Barrister.

The defendant NHS Trust had been entitled to reach the conclusion, after two monitoring exercises, that it had complied with its contractual obligation to ensure that junior doctors took adequate rest breaks. Accordingly, the Queen’s Bench Division, declined to make the principal declarations sought by the claimant, save in respect of a declaration that the defendant was not entitled to operate a two-strikes policy in relation to non-compliance with its contractual obligations.

Background

Sections 13 and 14 of the Welfare Reform and Work Act 2016 (the WRWA 2016) brought into effect for child tax credit (CTC) and universal credit a limit of two children in respect of whom CTC and universal credit were payable.

The claimants were three families in different circumstances, all in receipt of CTC, each with a third or subsequent child born on or after 6 April 2017, for whom no CTC was now payable. They issued proceedings, seeking a declaration, under s 4 of the Human Rights Act 1998, that the WRWA 2016 ss 13 and 14 were incompatible with the European Convention on Human Rights (the ECHR). They also sought a declaration that the power to make exceptions by regulation to the general two child limit for CTC and universal credit had been exercised irrationally in relation to one exception, and the regulations, or part, should be declared to be ultra vires. That exception was in relation to non-parental caring arrangements, because whether a child looked after by two adults, who were not his parents, natural or adoptive, became their responsibility before or after a second child was born to those two adults, affected whether the exception applied so as to enable CTC, or its replacement universal credit, to be payable for whichever was the third child.

Issues and decisions

(1) Whether there were direct breaches of arts 8 or 12 of the ECHR.

It was impossible to argue that general welfare legislation directly engaged art 8. Further, it had not been the purpose of the legislation to prevent or discourage parents having a third child or more children. The context had been to reduce expenditure on welfare, including by reduction in CTC, and to alter the balance between taxpayer and beneficiary, so that both groups’ parental choices would be constrained by resources which did not expand as a consequence of their choice (see [70], [77] of the judgment).

It was inescapable that it had been anticipated that some would decide not to have a child when they might otherwise have done so. However, it could not be accepted that discouraging larger families for those claiming CTC could properly be described as the aim of the legislation and even less so in view of the other benefits which would still be available to assist with the enlarged family. The legislation was not equivalent to a single or two child rule; it did not forbid marriage, children of any number, or do so except at penal costs. Accordingly, neither arts 8 and 12 were engaged directly (see [78], [79] of the judgment).

R (on the application of DA and others) v Secretary of State for Work and Pensions (Shelter intervening) [2017] All ER (D) 129 (Jun) not followed; Okpisz v Germany (Application No 59140/00) [2005] ECHR 59140/00 considered; R (on the application of Ullah) v Special Adjudicator; Do v Secretary of State for the Home Department [2004] 3 All ER 785 considered; Stec v United Kingdom (Applications 65731/01 and 65900/01) (2006) 20 BHRC 348 considered; R (on the application of TG) v Lambeth London Borough Council [2011] 4 All ER 453 considered; R (on the application of SG) v Secretary of State for Work and Pensions (Child Poverty Action Group and Shelter Children’s Legal Service intervening) [2014] All ER (D) 203 (Feb) considered; R (on the application of SG and others (previously JS and others)) v Secretary of State for Work and Pensions [2015] 4 All ER 939 considered; R (on the application of Carmichael and Rourke) (formerly known as MA) v Secretary of State for Work and Pensions; R (on the application of Daly) v Secretary of State for Work and Pensions; R (on the application of A) v Secretary of State for Work and Pensions [2017] 1 All ER 869 considered.

(2) Whether art 14 of the ECHR was breached, when taken with arts 8, 9, 12 and art 1 of the First Protocol to the ECHR (A1P1).

The fact that, without legislative change, a claimant would have become entitled to CTC/universal credit, of itself did not come within the broadened approach to the ambit of A1P1. Nobody could reasonably expect that, regardless of economic circumstance or change of government, benefits upon which they might wish to rely in the future would not be altered. There could be no legitimate expectation, in the ECHR sense, that Parliament would not legislate to change benefits to which an individual had not already become entitled. The expectation of a prospective increase in CTC should a third child be born was not enough to create a pecuniary right or interest so as to be a possession. The expectation that, should a family with three or more children need to make a new or further claim for CTC in the future, was also not enough to create such a possession (see [92] of the judgment).

There was nothing in the cases to support so large an extension of A1P1 and its ambit as the claimants would need, who had never been entitled to CTC for the third child, even at the date of conception. No existing benefit entitlement had been removed. The fact that someone with three children born before that date could not make a fresh claim, or wholly new claim, for CTC for the third or more children, involved no act within the ambit of A1P1. The law had simply changed with effect on future claims. Accordingly, the WRWA 2016 did not come within the ambit of A1P1 (see [93] of the judgment).

There was no link with art 12 of the ECHR and the right to found a family. The absence or presence of a particular form of child benefit was not linked to that right and did not constitute one of the modalities of the exercise of the right to found a family. Of course, there was a potential overlap with art 8, but art 12 had been generally given a tighter interpretation, with a close but not necessarily each way link between its two parts, and it appeared unlikely that art 12 links could potentially do service with art 14 where art 8 could not (see [94] of the judgment).

Article 9 of the ECHR did not require public welfare support for the consequences of the exercise of that freedom; for those whose art 9 freedoms did not permit the use of contraception or abortion, there would come a point at which resources might act as a constraint in various ways, whether in receipt of benefits or not, without the gap being filled as a matter of right from the resources of the state, drawn from the public. Accordingly, art 9 did not preclude the change in welfare legislation coming within its ambit for the purpose of the link to art 14 (see [80], [95] of the judgment).

So far as arts 8 and 14 of the ECHR were concerned, the two child provision did not come within the ambit of art 8. Although one purpose in changing the legislation was to alter the circumstances in which families in receipt of CTC/universal credit would make decisions or choices about having a third child or more, the amount of income available to any potential parent would have the potential to affect such choices. More was required before a decision on the levels of benefit or family income came within the ambit of art 8 for the purposes of art 14. No recipient of CTC, as at the date of the change was affected. The impact of legislative change was on future claims and claimants. There was no sound basis for holding that, for art 8 and 14 ambit purposes, it should be considered in isolation from the other state support available for a third or further child within the claimant family (see [106] of the judgment).

However, if there were discrimination, it had been justified and no breach of the ECHR arose (see [160] of the judgment).

R (on the application of RJM (FC) v Secretary of State for Work and Pensions [2009] 2 All ER 556 applied; Okpisz v Germany (Application No 59140/00) [2005] ECHR 59140/00 considered; Stec v United Kingdom (Applications 65731/01 and 65900/01) (2006) 20 BHRC 348 considered; Mathieson v Secretary of State for Work and Pensions [2016] 1 All ER 779 considered; R (on the application of Carmichael and Rourke) (formerly known as MA) v Secretary of State for Work and Pensions; R (on the application of Daly) v Secretary of State for Work and Pensions; R (on the application of A) v Secretary of State for Work and Pensions [2017] 1 All ER 869 considered.

(3) Whether, interpreted with the United Nations Convention on the Rights of the Child (the UNCRC), art 14 of the ECHR had been breached by the two child provision with respect to the admitted discrimination indirectly against women and the asserted, but rejected, discrimination against children with multiple siblings.

The UNCRC was only relevant to the asserted discrimination against children with multiple siblings, and it would be assumed that it could illuminate the ambit of arts 8 and 14 and be relevant to justification (see [205] of the judgment).

There was plenty of scope for argument about whether the legislation was in the best interests of the child. However, that was not the question. The question was whether it had been a primary consideration. It plainly had been. It was clear that the judgment made by government had been that the proposals had been in the best interests of children generally, but even if they had not been, they had been justified because of the objectives which the two child provision had sought to meet (see [209] of the judgment).

The best interests of children had to be judged by reference to the total social welfare benefits available for the family in which the child was being brought up. No UNCRC obligation existed regardless of resources and it contained no bar on restricting the numbers of children in a family who might receive benefit, or how the needs of those children should be judged in relation to others who might benefit from the absence of provision or in other ways from a cut in public expenditure (see [210] of the judgment).

In so far as issues of discrimination and art 8 of the ECHR fell to be considered, and allowing an interpretative role for the UNCRC in determining the extent of the obligations and allowing it a role in judging the basis for, and quality of, the justification proffered for any such discrimination for the purposes of art 14, it led to no different outcome from that already reached without it. It certainly did not show the justification manifestly to be without reasonable foundations for discrimination against a group which, if it had a status, was on the periphery (see [212] of the judgment).

R (on the application of SG and others (previously JS and others)) v Secretary of State for Work and Pensions [2015] 4 All ER 939 applied; Mathieson v Secretary of State for Work and Pensions [2016] 1 All ER 779 applied.

(4) Whether the exception in relation to a child cared for by the family was perverse because the availability of CTC for a third child depended on whether the third child had been born before or after the family had begun to care for the second child.

The sequencing provision was not rational and justifiable in domestic public law terms. In so far as it had been seriously considered, there was no rational justification for a parent’s decision about whether to have a child of their own to be affected by whether that decision had been made before or after another decision, as to whether they should care for someone else’s child, which could need to be made quite independently of a decision about having their own children. The purpose of the exception was to encourage, or at least to avoid discouraging, a family from looking after a child who would otherwise be in local authority care, with the disadvantages to the child over family care which that could entail and the public expenditure it could require. The choice which the family was being asked to make had a very different and opposite purpose in relation to public expenditure, from that which was part of the principal thinking behind the two child provision. It was not rationally connected to the purposes of the legislation and it was in conflict with them (see [215], [216] of the judgment).

It was not the exception itself which was unlawful, but the sequencing or ordering part of it (see [217] of the judgment).

Richard Drabble QC and Tom Royston (instructed by the Child Poverty Action Group) for the claimants.

James Eadie QC and Galina Ward (instructed by the Government Legal Department) for the defendants.

Helen Mountfield QC and Mr Raj Desai (instructed by the Equality and Human Rights Commission) for the Equality And Human Rights Commission, as intervener.

Karina Weller - Solicitor (NSW) (non-practising).

The limit of two children in respect of whom child tax credit and universal credit were payable was not incompatible with the European Convention on Human Rights, in particular, arts 8, 9, 12, 14 and art 1 of the First Protocol to the Convention. However, the Administrative Court, in dismissing the claimant’s claim, held that the sequencing of the exception in relation to non-parental caring arrangements, which depended on whether the third child had been born before or after the family had begun to care for the second child, was not rational and justifiable.

Background

In April 2010, there was an explosion and fire on the Deepwater Horizon oil rig in the Gulf of Mexico, when a well which was in the process of being plugged and temporarily abandoned suffered a blow out. The claimant (Halliburton) provided cementing and well-monitoring services to the lessee of the rig in relation to the temporary abandonment of the well and it had purchased liability insurance on the Bermuda form from the first defendant (Chubb). The policy was governed by New York law, but provided for arbitration in London.

Halliburton made a claim on its liability insurance against Chubb. However, Chubb refused to pay Halliburton’s claim, contending amongst other things that Halliburton’s settlement of a claim was not a reasonable settlement and/or that Chubb had reasonably not consented to the settlement.

Halliburton commenced arbitration by appointing the third defendant as its arbitrator (reference 1). Chubb appointed the fourth defendant. Following a contested hearing, the High Court appointed the second defendant (M), Chubb’s preferred candidate, as the third arbitrator.

Halliburton learned of M’s appointment in a reference by Chubb (reference 2) and appointment as a substitute arbitrator in another claim (reference 3). It wrote to M, repeating concerns about his impartiality and suggesting that he resign, to which Chubb was not prepared to agree. Halliburton issued a claim form, seeking an order pursuant to s 24(1)(a) of the Arbitration Act 1996 that M be removed as an arbitrator. The judge dismissed the application and Halliburton appealed.

Appeal dismissed.

Issues and decisions

(1) Whether and to what extent an arbitrator might accept appointments in multiple references concerning the same or overlapping subject matter with only one common party without thereby giving rise to an appearance of bias.

Inside information and knowledge might be a legitimate concern for the parties to have in overlapping arbitrations involving a common arbitrator, but only one common party. However, that, in itself, it did not justify an inference of apparent bias. The starting point was that an arbitrator should be trusted to decide the case solely on the evidence or other material adduced in the proceedings in question (see [49], [50] of the judgment).

Arbitrators were assumed to be trustworthy and to understand that they should approach every case with an open mind. The mere fact of appointment and decision-making in overlapping references did not give rise to justifiable doubts as to the arbitrator’s impartiality. Objectively, that was not affected by the fact that there was a common party. An arbitrator might be trusted to decide a case solely on the evidence or other material before him in the reference in question and that was equally so where there was a common party (see [51] of the judgment).

The mere fact that an arbitrator accepted appointments in multiple references concerning the same or overlapping subject matter with only one common party did not, of itself, give rise to an appearance of bias. Something more was required and that had to be something of substance. The fact that such appointments might be accepted was not determinative of whether disclosure should be given before accepting such appointments (see [53], [54] of the judgment).

Guidant LLC v Swiss Re International SE and another [2016] All ER (D) 217 (Apr) applied; Beumer Group UK Ltd v Vinci Construction UK Ltd [2018] 1 All ER (Comm) 80 considered.

(2) Whether and to what extent should an arbitrator make disclosure of circumstances which might give rise to justifiable doubts as to his impartiality.

The authorities explained the important practical advantages of giving disclosure and addressing any issues which might arise at the outset. They also showed that, in borderline cases, disclosure should be given - disclosure should be given of circumstances which would or might lead the fair-minded and informed observer, having considered the facts, to conclude that there was a real possibility that the tribunal was biased. An important practical reason for that approach was that it might be difficult, at the time of considering whether to make disclosure, to draw any firm conclusion as to whether or not the fair-minded and informed observer would so conclude. The test was an objective one, to be judged by reference to what the fair-minded and informed observer would or might conclude (see [65] of the judgment).

The disclosure required depended on what the arbitrator knew. The fact that disclosure was required of circumstances that might lead to a conclusion of apparent bias, emphasised that the question of what was to be disclosed was to be considered prospectively. The question of whether or not disclosure should be made, or should have been made, depended on the prevailing circumstances at that time. A decision as to disclosure based on a conclusion which might be drawn could only be made on the basis of the circumstances as they were then known to be and, in principle, a determination of whether or not such disclosure should have been made should similarly be so judged (see [70] of the judgment).

The judge had erred in his approach in having considered that the issue of whether disclosure ought to have been made was to be determined retrospectively by reference to whether, having regard to all matters known at the later stage to the fair-minded and informed observer, the circumstance would lead to the conclusion that there was a real possibility of bias (see [70] of the judgment).

Locabail (UK) Ltd v Bayfield Properties Ltd [2000] 1 All ER 65 considered; Taylor v Lawrence [2002] 2 All ER 353 considered; Davidson v Scottish Ministers 2005 Scot (D) 10/12 considered; Almazeedi v Penner and another (Cayman Islands) [2018] All ER (D) 163 (Feb) considered.

(3) What were the consequences of failing to make disclosure of circumstances which should have been disclosed.

There were two distinct questions for the court considering an allegation of non-disclosure after the event. First, the court needed to consider whether disclosure ought to have been made in accordance with the enunciated principles. Second, it needed to consider the significance of that non-disclosure in the context of the application with which the court was dealing. In the case of an application for removal of the arbitrator in question, the court would consider, on the basis of all the factual information available when that application was heard, including the fact that there had been non-disclosure, whether the fair-minded and informed observer would conclude that there was a real possibility that the arbitrator was biased (see [73] of the judgment).

If a disclosure that ought to have been made had not been made, that would mean that the arbitrator would not have displayed the badge of impartiality which he should have done. The fact of non-disclosure inevitably had to colour the thinking of the observer (see [74] of the judgment).

Non-disclosure was a factor to be taken into account in considering the issue of apparent bias. An inappropriate response to the suggestion that there should be, or should have been, disclosure might further colour the thinking of the observer and might fortify or even lead to an overall conclusion of apparent bias. However, non-disclosure of a fact or circumstance which should have been disclosed, but did not, in fact, on examination, give rise to justifiable doubts as to the arbitrator’s impartiality, could not, in and of itself, justify an inference of apparent bias. Something more was required (see [75], [76] of the judgment).

(4) Whether M’s conduct had given rise to apparent bias, in particular, given: (i) the fact that M had been appointed against the wishes of Halliburton and had been the preferred candidate of Chubb; (ii) the degree of overlap between the arbitrations; (iii) the fact that M had accepted the benefit of paid employment at the nomination of Chubb at a time when he was sitting in judgment on Chubb’s dispute with Halliburton; (iv) M’s failure to disclose other appointments; (v) the fact that the need to make disclosure should have been obvious and the only explanation offered had been one of oversight; (vi) M’s failure to deal with Halliburton’s concerns appropriately, after it had discovered the further appointments; and (vii) the third defendant had expressed concerns.

First, M had been appointed by the High Court in accordance with the agreed contractual procedure set out in the arbitration agreement. Having been so appointed, the appropriateness of his appointment was not open to question. Further, Halliburton’s main objection to Chubb’s candidates, namely, that they were English lawyers, had been generic and had not related to M personally or to issues of a possible lack of impartiality (see [80] of the judgment).

Second, the mere fact of overlap did not give rise to justifiable doubts as to impartiality. In any event, the degree of overlap in the case had, in fact, been very limited (see [81] of the judgment).

Third, the financial benefit from the further Chubb appointment was not a matter of significance, essentially for the reasons given by the judge. In essence, the argument went too far and would mean that a remuneration benefit which an arbitrator received from his appointing party, even indirectly, was a disqualifying benefit. If that were so, it would equally apply to party-appointed arbitrators in a single arbitration and would be wholly inconsistent with the manner in which commercial arbitration was routinely conducted. The alleged secrecy of the benefit added nothing. Either the benefit was disqualifying or it was not. If it was, then objection could be made to every party-appointed arbitrator, which would be absurd (see [82] of the judgment).

Fourth, the fact that best practice in international commercial arbitration would have required disclosure of the other appointments, taken together with the clear possibility that other factors, such as the actual degree of overlap about which M had know little at the time and the nature of other connections, might have been argued to combine together to give the fair-minded and informed observer a basis for a reasonable apprehension of lack of impartiality. In the factual circumstances, disclosure ought, as a matter of law, to have been made. In so far as that impacted on the arbitrator’s duty of confidentiality in relation to the other arbitration, it had to be regarded as being an exception to that duty, a duty which was recognised not to be absolute. The enquiry was obviously fact-intensive, but M’s own instincts had been the right ones. He had recognised that it would have been prudent to make disclosure. M’s innocent oversight in failing to do so was not something for which he could be blamed, but it could not also excuse non-disclosure of a fact that ought properly to have been disclosed (see [89], [91] of the judgment).

Fifth, M had dealt with Halliburton’s concerns appropriately. In particular, there was no justification for criticising him for making his offer to resign conditional on Chubb’s consent. Having reached the conclusion in good faith that Halliburton’s complaints had not required him to resign, in circumstances where Chubb had wished him to remain in office, it had been appropriate for M to conclude that he should continue to discharge his responsibilities until the parties agreed, or the court ordered, otherwise. In doing so, he did not align his interests with Chubb; even if he had, that would have been limited to the preliminary issue in references 2 and 3, and would have had no impact on reference 1 (see [92] of the judgment).

Sixth, the court had to form its own judgment on the conclusion which the fair-minded and informed observer would draw, on the basis of the evidence and argument presented to it, applying English law. Although the third defendant had throughout been a party to the proceedings, he had never expressed any concerns about the procedural fairness of the arbitration until the award had been issued and had not dissented from the substantive decision in the award (see [93] of the judgment).

M ought, as a matter of good practice and, in the circumstances of the case, as a matter of law, to have made disclosure to Halliburton at the time of his appointments in references 2 and 3. However, the fair-minded and informed observer, having considered the facts, would not conclude that there had been a real possibility that M had been biased (see [94], [100] of the judgment).

Decision of Popplewell J [2017] 2 All ER (Comm) 1097 affirmed.

Lord Grabiner QC, Neil Kitchener QC and Owain Draper (instructed by K & L Gates LLP) for Halliburton.

Michael Crane QC, David Scorey QC and David Peters (instructed by Clyde & Co LLP) for Chubb.

Karina Weller - Solicitor (NSW) (non-practising).

The second defendant arbitrator, as a matter of good practice law, ought to have made disclosure to the claimant company at the time of his appointments in other references. However, the Court of Appeal, Civil Division, in dismissing the claimant’s appeal, held that the fair-minded and informed observer, having considered the facts, would not conclude that there had been a real possibility that he had been biased.

Background

The respondent employee had been employed by the appellant NHS Trust (the Trust). Her contract of employment with the Trust provided, among other things, that unless there was mutual agreement that a different period should apply, her employment could be terminated by a minimum notice period of 12 weeks, and if her employment terminated by reason of redundancy on or after her 50th birthday on 20 July 2011, she would be entitled to claim a non-actuarially reduced early retirement pension. If it terminated before that date, she would not.

On 20 April 2011, while the employee was away on annual leave, the Trust issued written notice of termination of her employment on the ground of redundancy. It had sent that notice, among other methods, by recorded delivery. While the employee was on annual leave with her husband, her husband’s father, C, had looked after the house. On 26 April, C had found the recorded delivery slip which had been left at the employee’s home on 21 April. C had collected the letter from the sorting office and left it at the employee’s home. The employee returned from holiday on 27 April. She opened and read the letter later that morning. The crucial date was 27 April. Notice given on or after that date would expire on or after the employee’s 50th birthday, entitling her to the early retirement pension. Notice given before that date would expire earlier.

The employee brought proceedings claiming that her 12 weeks’ notice had not begun until 27 April, when she had received and read the letter, and had therefore expired on 20 July, her 50th birthday, and that accordingly, she was entitled to the early retirement pension.

The Court of Appeal, Civil Division, dismissed the Trust’s appeal. The employee appealed.

Appeal dismissed (Lord Briggs and Lord Lloyd-Jones dissenting).

Issues and decisions

When the notice of dismissal became effective.

The Trust argued that there was a common law rule, principally derived from some historic landlord and tenant cases, which supported its case that notice was given when the letter was delivered to its address. The employee argued that the common law rule was not as clear cut as the Trust said that it was. Further, there was a consistent line of Employment Appeal Tribunal (EAT) authority which supported her case that, in the absence of an express contractual provision to the contrary, there was an implied term that a notice served by an employer upon an employee took effect only when it had actually been received by the employee and the employee had either read or had a reasonable opportunity of reading it.

In Brown v Southall and Knight[1980] IRLR 130 (Brown), the EAT had decided that it was not enough to establish that the employer had decided to dismiss a man or, indeed, had posted a letter saying so. That did not itself terminate the contract. In its view, the employer who sent a letter terminating a man’s employment summarily had to show that the employee had actually read the letter or, at any rate, had had a reasonable opportunity of reading it. That rule had survived the replacement, by the Employment Rights Act 1996, of the legislation which had applied in Brown and there had been several other Parliamentary opportunities to correct it should it be thought to have caused significant difficulty. It had not been confined to the interpretation of the ‘effective date of termination’ for the purpose of Pt X of the Act and had been applied in several different contexts. Although the possibility had been raised that the common law and statutory rules might be different, it made obvious sense for the same rule to apply to all notices given by employers to employees (see [22], [38] of the judgment).

The EAT’s consistent approach was correct for several reasons. First, the survey of non-employment cases did not suggest that the common law rule had been as clear and universal as the Trust suggested. Receipt in some form or other had always been required, and arguably by a person authorised to receive it. Second, the EAT had been consistent in its approach to notices given to employers since 1980. The EAT was an expert tribunal which should be taken to be familiar with employment practices, as well as the general merits in employment cases. Third, the contract at issue in the present case had, of course, been concluded when those cases had been thought to represent the general law. Fourth, there was no reason to believe that that approach had caused any real difficulties in practice. For example, if large numbers of employees were being dismissed at the same time, the employer could arrange matters so that all the notices expired on the same day, even if they were received on different days (see [39] of the judgment).

Fifth, if an employer did consider that that implied term would cause problems, it was always open to the employer to make express provision in the contract, both as to the methods of giving notice and as to the time at which such notices were (rebuttably or irrebuttably) deemed to be received. Statute laid down the minimum periods which had to be given but not the methods. Sixth, it was very important for both the employer and the employee to know whether or not the employee still had a job. That meant that the employee needed to know whether and when he had been summarily dismissed or dismissed with immediate effect by a payment in lieu of notice. That consideration was not quite as powerful in dismissals on notice, but the rule should be the same for both (see [39] of the judgment).

Brown v Southall and Knight [1980] IRLR 130 approved; McMaster v Manchester Airport plc [1998] IRLR 112 approved; Sandle v Adecco UK Ltd [2016] IRLR 941 approved; Jones d Griffiths v Marsh (1791) 100 ER 1121 considered; Doe d Neville v Dunbar (1826) 173 ER 1062 considered; Papillon v Brunton (1860) 157 ER 1285 considered; Tanham v Nicholson (1872) LR 5 HL 561 considered; Stidolph v American School in London Educational Trust Ltd [1969] 20 P & CR 802 considered; London Transport Executive v Clarke [1981] IRLR 166 considered; Hindle Gears Ltd v McGinty [1984] IRLR 477 considered; Stephenson & Son v Orca Properties Ltd [1989] 2 EGLR 129 considered; Edwards v Surrey Police [1999] IRLR 456 considered; George v Luton Borough Council [2003] All ER (D) 04 (Dec) considered; Wilderbrook Ltd v Oluwu [2006] 2 P & CR 54 considered; Gisda Cyf v Barratt [2010] 4 All ER 851 considered; Geys v Societe Generale, London Branch [2013] 1 All ER 1061 considered.

Decision ofCourt of Appeal, Civil division [2017] All ER (D) 170 (Mar .

John Cavanagh QC and Holly Stout (instructed by Samuel Phillips) for the employee.

Caspar Glyn QC and Tom Brown (instructed by Irwin Mitchell LLP, Birmingham) for the Trust.

Neneh Munu Barrister

In Brown v Southall and Knight [1980] IRLR 130, the Employment Appeal Tribunal (the EAT) had decided that the employer who sent a letter terminating an employee’s employment had to show that the employee had actually read the letter or, at any rate, had had a reasonable opportunity of doing so. The Supreme Court approved of the rule established by the EAT in Brown and the EAT’s consistent approach since Brown and held that it was correct for several reasons. Consequently, it dismissed the employer NHS Trust’s appeal against the Court of Appeal, Civil Division’s decision that the notice terminating the employee’s employment that the employer had sent to her had taken effect not when it had been delivered by recorded delivery, but when she had actually read it.