Eastwood and another (Appellants) v. Magnox Electric plc (Respondents). McCabe (Respondent) v. Cornwall County Council and others (Appellants)
OF THE LORDS OF APPEAL
FOR JUDGMENT IN THE CAUSE
Eastwood and another (Appellants)
Magnox Electric plc (Respondents)
Cornwall County Council and others (Appellants)
THURSDAY 15 JULY 2004
The Appellate Committee comprised:
Lord Nicholls of Birkenhead
Lord Rodger of Earlsferry
Lord Brown of Eaton-under-Heywood
LORD NICHOLLS OF BIRKENHEAD
The 'trust and confidence' implied term
The Eastwood case
The McCabe case
The boundary line
The present cases
In other words, the majority held that the statutory regime of unfair dismissal precludes a common law development in respect of wrongful dismissal despite the different meanings of those concepts.
This observation was relevant to Lord Hoffmann's reasoning that the development of a general common law remedy as contended for by the employee would have involved a complete or virtually complete overlap with the statutory remedy. Lord Hoffmann's assumption was shared by the other Law Lords hearing the case. In Dunnachie v Kingston upon Hull City Council  UKHL 36 the House has now unanimously held that section 123(1) of the 1996 Act does not permit the recovery of non-pecuniary loss. While Lord Hoffmann's observation was in terms of precedent only an obiter dictum it did lend support to his reasoning. That support of the reasoning in Johnson has now disappeared. It does not necessarily follow that, if the true position had been appreciated, Johnson would have been decided differently. But it raises some doubt about the reasoning in Johnson.
Unfortunately, as Hale LJ implicitly pointed out, Johnson will tend to encourage precipitate and unfair decisions by employers to dismiss employees. The decision of the Court of Appeal in Gogay sits uneasily with Johnson. How in policy terms the disharmony should be reconciled is not clear. The majority's reasoning in Johnson also means that, although the exercise of the power to suspend must be exercised with due regard to trust and confidence (or fairness), the more drastic power of dismissal may be exercised free of any equivalent constraint. An employee confronted with a repudiatory breach of contract by an employer who elects to treat the contract as continuing may still have a claim for breach of contract. But in practice an employee may often not have much choice but to accept the repudiation. If the employee accepts the repudiation, the claim becomes one of unfair dismissal and the Johnson exclusion zone comes into play. In constructive dismissal cases the employee's response to the employer's breach will dictate whether there can be common law liability. The more outrageous the breach the less likely it is that the employee can affirm the contract: Lizzie Barmes, The Continuing Conceptual Crisis in the Common Law of the Contract of Employment, (2004) 67 (3) MLR 435, at 451. Contractual analysis arguably suggests a more even-handed solution as between employer and employee. These negative policy factors were not explicitly considered in Johnson.
These observations were critical to the decision in Johnson.
A footnote to the first quoted sentence observes:
Hepple QC and Morris (31 ILJ 245, at 253) put the point as follows:
Freedland (The Personal Employment Contract, at 304 and 342) described the principal reasoning in Johnson, founded as it was on an account of the intention of Parliament, as "more than slightly artificial" and "rather contrived". He stated (at 342-343):
These are quotations from the writings of distinguished and experienced specialists in the field.
The concerns expressed in McCabe are understandable.
My analysis was to the same effect: 50A-51E. The other Law Lords in the case agreed with this analysis. On a careful analysis of Addis it will be seen that there was no majority for ruling out the recovery of financial loss flowing from the manner of a wrongful dismissal. The headnote of Mahmud rightly states "Addis v Gramophone Company Limited  AC 488 not followed". In Johnson the view prevailed that because of the statutory regime the common law development contended for could not be permitted. But in terms of stare decisis the status of Addis remained exactly the same as it was when Mahmud was decided. The reasoning of the majority in Johnson did not re-invigorate the corpse of Addis. In any event, in the present case the House heard no oral argument on the status of Addis.
This was, of course, said in the context of a claim for financial loss.
LORD HOFFMANN My Lords,
LORD RODGER OF EARLSFERRY
LORD BROWN OF EATON-UNDER-HEYWOOD