COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM LEEDS COUNTY COURT
(Mr Recorder Duncan Smith)
Strand, London, WC2A 2LL
Wednesday 9th May 2001
B e f o r e :
LORD JUSTICE MUMMERY
LORD JUSTICE RIX
| John Michael Cox
|- and -
|Sun Alliance Life Limited
Smith Bernal Reporting Limited, 190 Fleet Street
London EC4A 2AG
Tel No: 020 7421 4040, Fax No: 020 7831 8838
Official Shorthand Writers to the Court)
Mr D Griffith-Jones QC (instructed by Messrs Lawfords, London & Richmond, Surrey for the Defendants/Appellants)
Crown Copyright ©
LORD JUSTICE RIX:
"The defendants' second argument (which, in order that it may prevail, must be made to stand independently on its own feet) is that, even if one concedes foreseeability and proximity and even if it would otherwise be just and reasonable for the plaintiff to recover under the head of negligence, public policy dictates that the person who has been the subject of a negligent misstatement shall not recover. The argument is grounded on the proposition that the maker of the misstatement, provided he has acted in good faith, must, even if he has been negligent, be free to express his views in the kind of situation (including the giving of any reference) which is contemplated by the doctrine of qualified privilege which is part of the law of defamation.
"This argument falls to be considered on the assumption that, but for the overriding effect of public policy, a plaintiff who is in the necessary proximate relation to a defendant will be entitled to succeed in negligence if he proves his case. To assess the validity of the argument entails not the resolution of a point of law but a balancing of moral and practical arguments. This exercise could no doubt produce different answers but, for my own part, I come down decisively on the side of the plaintiff.
"On the one hand looms the probability, often amounting to a certainty, of damage to the individual, which in some cases will be serious and may indeed be irreparable. The entire future prosperity and happiness of someone who is the subject of a damaging reference which is given carelessly but in perfectly good faith may be irretrievably blighted. Against this prospect is set the possibility that some referees will be deterred from giving frank references or indeed any references. Placing full reliance here on the penetrating observations of my noble and learned friend, Lord Woolf, I am inclined to view this possibility as a spectre conjured up by the defendants to frighten your Lordships into submission. I also believe that the courts in general and your Lordships' House in particular ought to think very carefully before resorting to public policy considerations which will defeat a claim that ex hypothesi is a perfectly good cause of action. It has been said that the public policy should be invoked only in clear cases in which the potential harm to the public is incontestable, that whether the anticipated harm to the public will be likely to occur must be determined on tangible grounds instead of on mere generalities and that the burden of proof lies on those who assert that the court should not enforce a liability which prima facie exists. Even if one should put the matter in a more neutral way, I would say that public policy ought not to be invoked if the arguments are evenly balanced: in such a situation the ordinary rule of law, once established, should prevail."
"I have received the attached reference request from your Compliance Department.
"As the reference is not entirely straight forward I felt that it was best to respond via yourself.
"If you wish to contact me please telephone me on the number quoted above."
"At the time there was a lack of clarity regarding his previous employers and reasons for Mr Cox's resignation – this was most unfortunate for all concerned."
"Excellent – very committed honest and hard-working, Mr Cox will not let you down. Although somewhat individualistic he is a good employee who will always do his best."
"I represented Mr Cox during the period of his suspension and I am prepared to provide information on this matter.
"I would, however, confirm that after prolonged investigation no disciplinary action was taken. Further, no LAUTRO related offences were involved.
"Indeed Mr Cox was not the subject of a disciplinary warning at any time during his 17 successful years with Sun Alliance."
"It is true that a standard reference was agreed with ACAS and a copy has been sent to your offices previously. Because of this agreement with ACAS, I would not wish to add any further comment as this would infringe the agreement…Sun Alliance certainly has not breached this agreement at any time…"
"I am quite satisfied that, but for Mr Jones acting as he did by communicating with Mr Cosgrave and with Liz Wytchard, Mr Cox would have continued to pursue his impressive career within the insurance trade for as long as he would have wished, and that he would have enjoyed the promotion prospects congruent to his experience, skill and industry. The only word I can use to describe the allegation of financial impropriety is 'baseless' and it has blighted the plaintiff's life in respects which will fall to be decided at some other time."
"The parties are polarised. On the one side stands Mr Cox asserting his good character; on the other side is Mr Jones expounding his unshakeable belief that Mr Cox is a dishonest man. Whether he is or is not an honest man is not for me to decide, though I must say that nothing I saw or heard during four full days of evidence would persuade me to adopt the view held by Mr Jones."
"My impression of him as a witness was that he was an inveterate casuist to say the least, and at times I was in wholehearted agreement with Mr Pawlak's suggestions during cross examination that he was a stranger to the truth. The most obvious example of this was his refusal to acknowledge that he was responsible for the noted telephone conversations with Brian Cosgrave and Liz Wytchard. The evidence satisfied me to the extent that I was sure that he was the other party to both conversations." The circumstances of Mr Cox's departure from SAL"
The circumstances of Mr Cox's departure from SAL
"In particular, as you are aware, a number of members of staff claim that a serious rift has developed between you and them as a direct result of your personal management style.
"I hope this is of assistance in clarifying the reason for your suspension."
"It has been and will remain our intention to ensure that Mr Cox is fully informed of our investigations and developments.
"Accordingly, I must advise you that new information, of a very serious nature, has come to our attention and if the reported incident is substantiated, it clearly has serious implications on Mr Cox's role as a Manager.
"It has been alleged that Mr Cox received an improper payment, directly related to his role as a Sun Alliance Manager, involving the payment of a cheque to his wife and the introduction of a firm of Estate Agents to Appointed Representatives, Armitage & Young…"
"The Office Search was conducted over a two day period, a large number of files were reviewed to identify unusual items, no evidence of fraudulent activity was identified."
"The Respondent [SAL] agrees to provide the Applicant with a reference, the wording of which has already been agreed between the Respondent and the Applicant's Staff Union Representative, Mr K McAleer."
The agreed reference
"you could have divorced yourself from your own personal feelings and say that somebody is innocent until they are proved guilty" (at pp170/1).
"Mr Bartholomew could have attempted to negotiate further with Hackney over the terms in which any reference might refer to the circumstances of his departure, but either he did not try to do so or if he did he was not successful. Had it omitted all reference to the suspension and to the disciplinary enquiry Hackney might well, it seems to me, have considered itself as failing in its civil duty to other local authorities, their ratepayers and clients. That must be true even though the charges against Mr Bartholomew were unproven and now, as I have said, are unlikely ever to be adjudicated on."
The Lautro rules
"(1) A person shall not be appointed as, or be permitted to continue to work as, a company representative of a Member unless the Member is satisfied that he is of good character and of the requisite aptitude and competence for that appointment, and before appointing any person as a company representative, the Member shall…take up appropriate references relating to character and experience. (2) A Member which receives an enquiry for a reference in respect of a person whom another Member or appointed representative is proposing to appoint as a company representative shall provide the reference within 15 working days of the date on which the enquiry is received, and in providing the reference shall make full and frank disclosure to the person making the enquiry of all relevant matters which the Member believes, or has reasonable grounds for believing, to be true..."
"When I look again at Lautro rule 3.5(2), it does not seem to me that the obligation of a referee to make "full and frank disclosure of all relevant matters which are believed to be true" is in any way incompatible with the existence of an obligation, owed to the referee's employee or agent, to exercise reasonable care in the giving of a reference. Indeed, it might without difficulty be implied that, in the interests of the recipient, a reference should be a careful one as well as being full and frank. Rule 3.5(2) cannot be determinative of the existence of a duty owed by the referee to the subject of a reference or of the nature of that duty, if one exists."
"When I weigh these considerations I find that public policy comes down firmly in favour of not depriving an employee of a remedy to recover the damages to which he would otherwise be entitled as a result of being a victim of a negligent reference."
"The Member by which a company representative is appointed shall give notice to the Board of the appointment, and of the termination of that appointment; and any such notice shall be in the form prescribed by the Board and shall be given within 10 working days of that appointment or termination, as the case may be and if the termination was for misconduct or if the company representative resigned while under investigation for misconduct, the notice shall include a statement of that fact."
The reference to Hambro Guardian
"A. Well, I remember the phone call very well, and I had described it to somebody else after that this man was gleeful giving the information he gave: that was the way I felt. There was an enthusiasm, almost, to go into detail and make remarks that were innuendo…the information that I was now receiving that Michael Cox's career in financial services was over. Not only would he…have to terminate his employment with us, but he was not going to get back into financial services again…Yes, that is why I was quite surprised at the – almost the enthusiasm that was being shown to me down the phone. This was a sort of 'no way out' conversation…it was hinted that there was questions of money passing hands of, almost like bribery going on…"
Was the reference to Hambro Guardian in breach of a duty of care owed to Mr Cox?
"…a number of discrete statements may be factually accurate, but nevertheless may in the round give an unfair or potentially unfair impression to the reader. That is very well understood in the law of defamation…
"Mr Bartholomew's claim against Hackney was of course a claim in negligence, not libel. Nevertheless the libel cases seem to me to serve as a salutary reminder that the fairness or unfairness, the accuracy or inaccuracy, and, indeed, the truth or falsity of a statement have to be taken in the round and in context and cannot be in every case dissected into a number of discrete parts."
LORD JUSTICE MUMMERY :