England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE EMPLOYMENT APPEAL TRIBUNAL
HHJ Ansell, Lord Davies of Coity CBE, Miss S M Wilson CBE

		Royal Courts of Justice Strand, London, WC2A 2LL
		26 April 2005

Lord Justice Rix:

1. This appeal concerns a complaint which started in the Employment Tribunal in May 1999, brought by Mrs Jacqueline Beart, who is here the respondent, against her former employer, HM Prison Service, here the appellant. It arises out of Mrs Beart's allegations of disability discrimination and unfair dismissal. Mrs Beart succeeded in the Employment Tribunal and the Employment Appeal Tribunal (EAT) on both grounds. Her claim has previously reached this court on liability [2003] EWCA Civ 119, [2003] ICR 1068. It is now before this court again, this time on damages.
2. Mrs Beart entered the Civil Service on leaving school and after spells in the Foreign and Commonwealth Office and in HM Customs and Excise transferred in 1990 to HM Prison Swaleside, in the Isle of Sheppey. There in 1996 she obtained a temporary promotion to executive officer. Her appraisals were invariably good. In April 1997 her line manager's annual report on her, concurred in by the prison governor, was enthusiastic. When things went wrong, Mrs Beart had put in 18 years of exemplary service.
3. In September 1997, however, Mrs Beart went off work suffering from depression, and never returned to work. A subsequent joint medical report made in September 2003 in the course of these proceedings diagnosed a pre-existing vulnerability to minor depressive illness. But it had never before materially interfered with her work. What triggered a severer depression on this occasion was an altercation with her immediate superior, Mrs Tetley, who misunderstood her inquiry about the possibility of working part-time (to assist with collecting children from school) as an intention to resign her job as temporary executive officer. She was therefore reassigned a part-time job as an administrative officer (a lower rank with a substantial pay cut) which did not in any event meet her child care problem. When Mrs Beart tried to get her old job back, she was told that the advertisement for it could not be withdrawn, which was not true.
4. Mrs Beart went off sick on 11 September 1997. Her employer should have obtained a medical report when she had been away for one month, but it was May 1998 before Dr Susan Harvey, an occupational health consultant, reported that Mrs Beart was still unwell and undergoing treatment, adding:

"I do not think she will recover fully until the difficulties referred to above have been addressed…She does not feel that she will ever be able to return to HM Prison Swaleside but would consider a suitable post at another prison and I think that suitable redeployment may be the only answer to this situation."

5. Mrs Beart had an interest in a clothes shop at that time in Sheerness High Street, as was well known to her employer. The shop was run by a manageress and two part-time assistants. While she was ill Mrs Beart sometimes visited the shop for company, but she did not work there (as the Employment Tribunal found). Mrs Tetley decided to investigate whether Mrs Beart was working in the shop at a time when she was receiving sick pay (half pay). In April 1998 a pair of private investigators, the Lucks, were deployed, who reported in June 1998. For four days running they did not see her in the shop at all. On the fifth and sixth days they saw her unlock the shop, and, before any staff arrived, they made two purchases and engaged her in conversation, for about ten minutes on each day. Mrs Beart was interviewed on 23 August 1998: but the contents of the Lucks' report were not put to her.
6. Two disciplinary charges were brought against her, one that she had undertaken outside work contrary to written instructions, the other that she had undertaken outside work whilst claiming sick pay. Mrs Beart asked for disclosure of a copy of the Lucks' report, to which she was entitled, but it was withheld from her. She wrote to the governor of the prison to ask why Dr Harvey's recommendation for relocation was never dealt with, but he did not reply. The disciplinary hearing took place on 15 December 1998. Both charges were found proved, and on 11 February 1999 Mrs Beart was dismissed.

Liability

7. On 10 May 1999 Mrs Beart issued an originating application to the Employment Tribunal, complaining of disability discrimination and unfair dismissal. At all stages HM Prison Service has been represented by Mr Ashley Underwood QC. The Service denied the complaints, "but accepted that Mrs Beart was disabled by reason of depression" (to quote from the Service's own chronology). The Employment Tribunal heard the complaints over a period of six days in late February 2001 and resolved both of them in Mrs Beart's favour. They referred to Dr Harvey's report and said that it was unusual to have such a clear diagnosis of the cause of a depressive illness and such a clear recommendation (redeployment) for its treatment. They said:

"It seems to us that there is a substantial possibility that, if that adjustment had been made, Mrs Beart would probably still have been employed by the Prison Service and this case would not have been brought."

8. They concluded that the Service's failure to redeploy or relocate Mrs Beart amounted to a failure to make a reasonable adjustment and thus to disability discrimination.
9. As for unfair dismissal, the Employment Tribunal found that although Mrs West, the deputy governor of Maidstone Prison who conducted the disciplinary hearing, honestly believed in Mrs Beart's guilt, she had been unreasonable in that belief. The Tribunal also found that the investigation had been seriously flawed, most seriously by the failure to disclose the Lucks' report, that the disciplinary hearing had itself been unfair, and that dismissal was not within the range of reasonable responses.
10. That hearing of the Employment Tribunal was only concerned with liability not with remedies, the subject of which was adjourned to another hearing. In the meantime the Prison Service appealed to the EAT on both issues, but unsuccessfully. A further unsuccessful appeal was made to this court. At that stage Mr Underwood was submitting that that there was no disability discrimination because it was reasonable for the Prison Service not to act on Dr Harvey's recommendation because an adverse view of Mrs Beart had already been formed in relation to the question of her working elsewhere while on sick pay. Peter Gibson LJ described that submission as "astonishing" and added:

"The truth may well be, as Mr Underwood's submission appears to suggest, that the employer had prejudged the investigation adversely to Mrs Beart. But in fact there is no evidence as to why it was that the employer did not act on the medical advice. In any event Mrs Beart's disability and the question of her business activities are quite discrete matters."

11. Peter Gibson LJ went on to point out that the onus of proving justification was on the employer and that although the prison governor had been asked twice why Dr Harvey's recommendation had not been implemented, he chose not to reply. As for unfair dismissal, Peter Gibson LJ dealt with the appeal on this issue very swiftly, saying that it was an appeal on the facts where the Employment Tribunal had identified four serious defects, any one of which might have founded a conclusion of unfair dismissal. The Tribunal's decision could not be described as perverse.

The Employment Tribunal's remedies decision

12. The adjourned remedies hearing was held by the Employment Tribunal on three further days in September 2003. Both parties called psychiatric evidence: Dr Feeney was heard on behalf of Mrs Beart and Dr Jacobson on behalf of the Prison Service. The Tribunal found their joint report of great assistance and otherwise Dr Feeney's evidence to be particularly compelling. Mrs Beart was described as "highly credible" save that she was over-optimistic in her promotion prospects.
13. Relevant passages from the joint report are as follows:

"1. Diagnoses: We agree that Mrs Beart has had Recurrent Depressive Episodes, at worst of moderate severity, F33.1, since 1997, with onset probably around the first GP recording of low mood on 16.7.97. We agree that she probably had a first moderate depressive episode from then, resolving probably in summer 1998, with a recurrence (in Dr Jacobson's view) about October 1999, lasting some months. Dr Feeney felt that she had some depressive symptoms in April 2000, but Dr Jacobson did not think she had a recognised psychiatric disorder that year. We agree that she had a recurrence of depression in Spring 2001, lasting several months, and a further recurrence of moderate depression around January 2003, still evident in August 2003…

4. Would relocation of Mrs Beart in summer 1998 have been viable? We agree that had she been relocated, she would probably have been satisfactorily employed. Dr Feeney considers that this could probably have taken place in summer 1998. Dr Jacobson considers this could have taken place perhaps towards the end of the year or in early 1999.

5. If Mrs Beart had taken up relocation to a post in another establishment in 1998, would her underlying condition have allowed her to continue to work indefinitely in that capacity?" Dr Feeney considers that the pattern of the effect of Mrs Beart's illnesses over the previous part of her working life – only one period off work with depression in more than a decade – would indicate the likely course for the future, so that one further episode would not be unexpected over a similar timeframe This sort of episode might have necessitated a limited (weeks to three months) time off work but not be an incapacity in general. Dr Jacobson considers…Possibly she would have had further depressive episodes, with short periods of time off work and then return to work…

8. If future psychiatric illness imposes any limitation on the type of work Mrs Beart undertakes, to what degree does such limitation arise from her discrimination at the hands of the Prison Service and her dismissal? Dr Feeney considers that the depressive illness which Mrs Beart now shows is of a more severe degree and longer duration than would ever have occurred if she had not been exposed to the traumatic events that she was exposed to, especially her dismissal, and future episodes are now more likely to have more of an impact on her ability to work than they would have if things had been resolved satisfactorily, ie without discrimination and dismissal.

Dr Jacobson considers that discrimination at the hands of the Prison Service and her dismissal have probably made a material [contribution] to recurrent depressive episodes and to psychiatric ill health, through until September 2003…"

14. Mrs Beart claimed damages for loss of earnings from the time she should have been relocated and continuing into the future, as well as compensation for personal injuries, injury to feelings, and aggravated damages. She succeeded in all these respects, although not for the maximum sums she had sought. As for loss of earnings, the Employment Tribunal made the following findings:

(1) The Prison Service should have relocated her by 1 November 1998.

(2) If she had been relocated, she would "more probably than not have continued" in her employer's service.

(3) She would have been promoted to the substantive grade of executive officer by 1 January 2000, but not thereafter to any grade senior to that.

(4) She would have continued in employment to age 62.

(5) She would be likely to start seeking new employment from 1 January 2004, would be likely to take 12 months to find work, would start earning at half pay for part-time work on 1 January 2005, and would move up to full time work on 1 July 2005.

(6) Her starting salary would be at the rate of £11,650 pa.

(7) Her future loss of earnings would continue to be career long.

15. As to these matters the Employment Tribunal had said this (at para 5):

"It had been hoped that the actuary's report would have enabled the parties to reach agreement on such matters as financial loss to date, future loss, and, if problem arose, pension loss. Unfortunately, on the information available to the actuary, there were too many imponderables for this to be possible. It was agreed therefore that we, at this hearing, should find necessary facts which would enable the actuary to revise his report, so that, it is greatly to be hoped, the parties can reach agreement on these matters. If the parties cannot reach agreement, there may have to be a further hearing, but the tribunal thinks that would be extremely undesirable, and ought to be avoided if at all possible."

16. In other respects, however, the Tribunal was able to reach definitive figures. Thus their award for personal injuries was £22,000, for injury to feelings £10,000, and for aggravated damages, £5,000. They made a basic award of £3,300 for unfair dismissal (Mrs Beart had been employed for 18 years) but no separate compensatory award. It is relevant to give some further detail of the Tribunal's findings in respect of personal injuries. They dealt with this at paras 27/33 of their remedies decision. I set out the most important passages in which they make clear that they accept that Mrs Beart's vulnerability to depressive illness was exacerbated by the act of discrimination and that that act materially contributed to an illness whose effects were seriously disabling and, albeit of a recurrent and episodic nature, had continued over a period of five years. Thus the Tribunal said this:

"27…We think that it is certainly consistent with Dr Feeney's medical evidence, and substantially consistent with the joint medical report, that the effect of the discriminatory act has been that, whereas, if Mrs Beart had been relocated, this would have resulted in a continued improvement in her condition, at least back to the pre-September 1997 level at which her depression could be controlled by medication, she has continued to suffer from depression for very nearly five years. We accept the submission of Counsel for the Applicant that the act of discrimination was a material contributory factor to the Applicant's subsequent illness, and that that is sufficient to found a liability in tort: Hotson v East Berkshire Area Health Authority [1987] AC 750. Although Dr Feeney and Dr Jacobson differ somewhat in their estimate of the effects of Mrs Beart's illness on her, the significant finding in the joint medical report…is that:

"Dr Jacobson considers that discrimination at the hands of the [Prison Service] and her dismissal have probably made a material [contribution] to recurrent depressive episodes and to psychiatric ill health through until September 2003."

17. The Tribunal then quote the doctors for further details of the effects on Mrs Beart, and continue:

"30. Despite what may seem to those of us who happily do not suffer from Mrs Beart's symptoms to be the severe nature of those symptoms, both doctors agree in describing her depression as being of "moderate severity". What impresses us – we accept [Mrs Beart's Counsel's] submissions on this point – is the length of time over which Mrs Beart's symptoms have lasted…

32. [Mrs Beart] contends for an award of £30,000. The [Prison Service] contends that the contribution to post-July 1997 depression made by the failure to relocate is no more than one-third, though no figure is set out. But it seems to us that that approach is not consistent with Hotson's case.

33. We think that the findings of the doctors constrain us, despite the severity and prolongation of the symptoms from which Mrs Beart suffers, to regard this as a moderately severe injury, and we bear in mind that what we are compensating is in effect the exacerbation of a pre-existing condition. Taking all these matters into account, and doing the best we can, we think that the right figure for an award for damages for personal injuries is £22,000."

18. There have been no appeals against these findings in respect of personal injuries, injury to feelings or aggravated damages.
19. The Employment Tribunal also, unusually, awarded costs against the Prison Service in respect of both hearings, save in respect of the unfair dismissal claim at the first hearing. They did so because they considered that the defence of the disability discrimination claim was misconceived, and that in respect of the remedies hearing as a whole the Prison Service had behaved "unreasonably and/or abusively". They said that the Service's conduct at the time of the discrimination showed "either an ignorance of, or a complete insouciance about, their obligations under the Disability Discrimination Act".

The Employment Tribunal's clarification

20. Despite these strictures the Prison Service sought and obtained leave to appeal to the EAT in respect of loss of earnings which might follow Mrs Beart's dismissal in February 1999, and in respect of the order as to costs. It will be recalled that the Service had accepted already at the liability hearing that she was disabled by reason of depression. At the remedies hearing, however, the Service had (inter alia) two further, and separate, arguments on causation: one was that Mrs Beart was so badly disabled by her depression that "she would not have been physically capable of doing any job that was offered by way of relocation, and so would have been dismissed for ill health even if relocated"; the other was "alternatively, that if she could have done such a job, the cause of her unemployment was the unfair dismissal" (I quote from para 13 of the Service's own Chronology, attached to its skeleton argument before this court). Both arguments are reflected in the Prison Service's closing written submissions before the Employment Tribunal. The reasoning in support of the second submission is hard to fathom from that document. Its role is stated, viz that since Mrs Beart's unemployment was due to her dismissal, her damages should be limited as a consequence to the amount which at that time represented the cap on damages for unfair dismissal, viz £12,000. Thus para 23 of the written submissions stated:

"It follows that the only consequences to be compensated for are those flowing from unfair dismissal. They obviously do not include injury to feelings or psychiatric damage, let alone aggravated damages. They are of course capped."

21. However, quite why the statutory tort of disability discrimination should be subsumed in the further wrong of unfair dismissal is nowhere explained – other than in the throwaway line (at para 21): "In circumstances where there is a direct actual cause of a loss it is inappropriate to seek a hypothetical one." That, however, simply ignores the context that the tort of disability discrimination, consisting in a failure to relocate Mrs Beart, had been found as a fact and was in no way hypothetical. I would infer, however, that what had happened before the Employment Tribunal was that Mrs Beart's forensic answer (among others) to the Service's reliance on its own act of unfair dismissal was to argue that that reliance was in any event misplaced because, if there had been no act of disability discrimination and she had been relocated, then the Service would never have dismissed her. Thus the Service's closing submissions responded to that argument by arguing in turn that Mrs West would still, on the balance of probabilities, have dismissed her in the light of what she honestly believed, on the basis of the Lucks' report, to have been her conduct.
22. The Employment Tribunal rejected both these arguments of the Prison Service, the first explicitly, the second at least implicitly. Thus, in its para 13 it said this:

"(b) Would Mrs Beart have remained in employment by the Respondents if she had been relocated?

13. In our view, the answer to this question is "Yes": we rely on the first sentence of paragraph 4 of the joint medical report. We note that it was Dr Jacobson's opinion that it was likely that Mrs Beart would have further attacks of depression, perhaps with resulting periods away from work, but not so as to interfere significantly with her prospects of remaining in employment."

The Tribunal also summed up at para 24(2): "If she had been relocated, we think that she would more probably than not have continued in the [Prison Service's] employment."

23. That is certainly an explicit rejection of the Service's first argument ("too ill to work"). It is also, it seems to me, an implicit rejection of the Service's second argument ("loss caused by dismissal"). I say this in the light of the Employment Tribunal's subsequent clarification of its findings (see below); but also because the question to which para 13 is an answer is phrased not simply in terms of "Would Mrs Beart have been able to work?" but "Would Mrs Beart have remained in employment"? That after all had been the issue debated between the parties.
24. However, in the light of the Prison Service's complaint to the EAT that the Employment Tribunal had simply failed to deal with its second argument, the EAT invited the Tribunal to consider paragraph 10 of the Prison Service's notice of appeal to the EAT and to state any further findings by way of clarification. In its notice of appeal the Prison Service had said this:

"10. The Tribunal apparently forgot to deal with the issue. Its finding that Mrs Beart would probably have remained employed if relocated is at paragraph 13, and again at paragraph 24(2). But its reasoning in paragraph 13 shows that it was only addressing its mind to the different argument that, had another job been offered, her illness would have prevented her taking it up and continuing in it. If it did deal with the issue it wholly failed to give any reasons."

25. Accordingly, and without hearing the parties further or accepting further submissions from them, the Employment Tribunal on 26 February 2004 made and on 5 March 2004 published its "Clarification of Decision promulgated 16 October 2003". It stated that it did so "on the basis only of the arguments we have already heard, and the findings we have already made". Their clarification is central to the submissions we have heard on this appeal and I therefore quote the relevant part of it in full:

"2. We deal first with the argument in paragraph 10 of the Notice of Appeal that we forgot to deal with the submission that, had Mrs Beart been relocated, she would still have been dismissed. We accept that paragraph 13 of our Remedy Decision does not deal with that issue in terms, but it is, we submit, implicit in our decision that Mrs Beart would have remained in employment, and that we did not accept the [Prison Service's] submissions for the following reasons:-

i. If relocation had taken place, it would have meant that the [Prison Service] would have been adopting a different, and more reasonable, mindset towards Mrs Beart and, indeed, would not have been discriminating against her. With that difference in background, we are not prepared to assume that the result of the disciplinary hearing would necessarily have been dismissal, let alone the unfair dismissal which occurred.

ii. But if that charitable view is wrong, and the [Prison Service] would still have unfairly dismissed Mrs Beart even if she had been relocated, then we accept [Mrs Beart's] argument put forward at the hearing that the [Prison Service] should not be allowed to profit from what would have been their own unlawful conduct. In our view it would have been unconscionable if they were allowed to do so. If the [Prison Service] were, by unfairly dismissing Mrs Beart, to escape or partly escape the consequences of having discriminated against her, it would, in our view, severely damage the protection given to employees by the Disability Discrimination Act, or, for that matter, other provisions against, eg race or sex discrimination.

iii. We refer to the comment in paragraph 9 of the Notice of Appeal that the dismissal was made "in the genuine belief" that Mrs Beart was guilty of misconduct. It is true that in paragraph 79 of our original decision we did indeed say that Mrs West had such a genuine belief, but we went on to find the dismissal unfair for, among other reasons, lack of evidence and lack of proper investigation. It is clear from paragraph 71 of the Court of Appeal that they accepted the arguments of [Mrs Beart's] Counsel that Mrs West's belief was, in the circumstances, unreasonable."

Dismissal as a break in the chain of causation

26. In the EAT, whose judgment on remedies was delivered on 14 September 2004 by HHJ Ansell, Mr Underwood argued three grounds of appeal. The second ground complained about the manner in which the Employment Tribunal dealt with the Prison Service's very late offer of reinstatement, but unsuccessfully. This court is not concerned with that ground. The third ground complained about the Employment Tribunal's award of costs, again unsuccessfully. Permission to appeal on that ground to this court was sought, but refused and has not been renewed. So this court is only concerned with the first ground argued in the EAT, which HHJ Ansell expressed in this way:

"The essence of the Appellant's argument, before the Tribunal and before us, is that the fact of dismissal, albeit unfair, terminates its liability for the earlier wrong of disability discrimination and that all further losses have to be assessed under the unfair dismissal regime with its restrictive statutory cap, as opposed to the substantial sums (in excess of six figures) being paid under disability discrimination compensation."

27. I cite that distillation of the argument, for in this court Mr Underwood's argument has tended to be protean, and it is as well to have in mind exactly what is being said. Mr Underwood does not rely on any special rule relating to the law of unfair dismissal. His argument is one that relates to general matters of causation. In effect, Mr Underwood seeks to submit, as an issue of law, that the Employment Tribunal and the EAT erred in law in failing to hold that, as a matter of causation, Mrs Beart's dismissal "broke the chain of causation" between the earlier disability discrimination (which goes back to 1 November 1998) and the subsequent dismissal (of 11 February 1999). For these purposes, therefore, Mr Underwood seeks to submit that there is no difference between an unfair dismissal and a justified dismissal.
28. It is because he founds himself on the dismissal as a break in the chain of causation that Mr Underwood is concerned to show that even if there had been no act of disability discrimination, that is to say even if the Prison Service had relocated Mrs Beart as of 1 November 1998, she would still have been dismissed, in the honest if unreasonable belief that she had misconducted herself by working in her shop in June 1998, when the Lucks were investigating her. For if he cannot hold that dismissal, then the foundation stone of his argument disintegrates.
29. The EAT rejected Mr Underwood's argument. It did so on the assumption that the Employment Tribunal had not positively found that Mrs Beart would not have been dismissed even if she had been relocated. It therefore assumed that the Prison Service could rely on Mrs Beart's dismissal, for what that was worth. But it held that that dismissal did not assist the Prison Service. It accepted the relevance to the present case of a decision of this court which had been delivered on 27 February 2004, that is to say on the day after the Employment Tribunal's clarification decision: namely, Coudert Brothers v. Normans Bay Limited [2004] EWCA Civ 215 (unreported, 27 February 2004), where it was held that a defendant cannot rely on his own wrong to break the chain of causation. In effect, in its clarification decision, the Employment Tribunal in para 2(ii) had espoused the same principle, albeit in ignorance of what the morrow would bring, when it said that it accepted Mrs Beart's argument that the Prison Service should not be allowed to profit from what would have been its own unlawful conduct. The EAT, fortified by Coudert, agreed and thus concluded:

"40. There was the clearest evidence in this case that the psychiatric harm caused by the act of discrimination and its impact on the Respondent's ability to work continued far beyond the date of the unfair dismissal and in the absence of a fair dismissal we see no reason why the chain of compensation should be broken at that date."

30. I agree. Indeed, despite the skill and enthusiasm with which Mr Underwood has presented his submissions, the argument that the Prison Service's own act of unfair dismissal can be said to break the chain of causation is very puzzling to me. This is the language of new intervening act, but I do not understand how it is said that the unfair dismissal is an "intervening" act, when it is the act of the tortfeasor itself. Nothing in the submissions began to explain this to me: indeed, we were not shown any authority or learning on the concept of new intervening act. McGregor on Damages, 17^th ed, 2003, speaks in this context of the intervening acts of a third party (at paras 6-031ff) and of the claimant (at paras 6-057ff) but not of the tortfeasor. Nor do I understand why the mere act of dismissal, even if it were justified which of course it was not, could do more to wash away the long-lasting effects of the prior discriminatory act than merely to prevent the damages for loss of earnings being measured by a comparison with earnings under the old employment.
31. Of course, if a claimant commits a repudiatory breach of his own contract of employment, thereby entitling a defendant employer to terminate that contract by dismissing him, then it is possible, if necessary, to describe that as a new intervening act. The fact that the defendant reacts as he is entitled to do, by accepting the repudiation as bringing the contract to an end, does not make his reaction the critical new act: it is the repudiatory conduct of the claimant which is significant, unless perchance it is waived. In any event, the repudiatory conduct might have taken place even prior to the tort of discrimination and be discovered only later: but if the contract was already potentially doomed to be lost upon discovery of the repudiatory conduct, then again the claimant has lost the value of that contract, once the employer had acted as he was entitled to do properly to accept the repudiation as bringing the contract to an end.
32. But that is not what happened here. The Prison Service never proved that Mrs Beart had misconducted herself so as to entitle the Service to dismiss her. All that it proved was that Mrs West honestly believed that she was entitled to dismiss Mrs Beart. But the Employment Tribunal found, quite apart from the other factors which rendered the dismissal unfair, that Mrs West's belief was unreasonable. So Mrs Beart's alleged misconduct was never proved and has never been proved. Moreover, dismissal was not within the range of reasonable responses. So, even if the alleged conduct had been proved, it would not have entitled the Prison Service in the context of Mrs Beart's statutory rights to terminate the employment. So, there never was a justified dismissal which would have entitled the Prison Service to say to Mrs Beart: as from 11 February 1999 you had no contract of employment with us against which you can measure your loss of earnings.
33. Yet, even if the Prison Service had been able to say that much to Mrs Beart, all that that would have meant was that Mrs Beart could not have asked for her loss of earnings to be measured against what she would have earned if she had remained with the Prison Service. On the facts found, however, which were that the discriminatory act had caused, in the sense of materially contributed to, Mrs Beart's long-lasting psychiatric injury, which had in turn prevented her working and would in the future limit her earnings to the starting figure found by the Tribunal, her loss of earnings claim would not fail after 11 February 1999: it would merely need a new comparator in the form of the annual earnings which Mrs Beart would have been able to command, admittedly outside the Civil Service, if her vulnerability had not been exacerbated in the manner found by the Tribunal; albeit I would accept that such a new comparator would be likely to be lower than the figures under her old employment, and would probably also affect her claim in respect of pensions.
34. Thus, even in the absence of Coudert Brothers, I cannot see any reason why Mr Underwood should say that the chain of causation was broken by the Prison Service's second wrong. All that has happened is that the Prison Service has committed two discrete wrongs in respect of which statute has provided a cap in respect of one but not the other.
35. As it is, Mr Underwood accepts that he is bound by Coudert Brothers, and all that he can say and says is that he can distinguish it. The basic facts of that case were that the claimant there sued Coudert, a firm of lawyers, for negligent advice in connection with a tender for shares in a Russian undertaking. The complaint was that Coudert had failed to advise carefully in two different respects, which it will suffice to describe as negligence A and negligence B. However, the complaint in respect of negligence B was not pursued. Thereupon Coudert itself relied on negligence B and the fact of it being time-barred as being causatively relevant to the loss of a chance case being advanced against it. In effect it argued that the loss of a chance percentage would have to be discounted because there was no remedy available in respect of negligence B. The counter-argument was that Coudert could not rely on its own fault as breaking the chain of causation.
36. The issue was examined by Waller LJ in this passage:

"42. Can Coudert rely on the anti-monopoly point at all? If the limitation period had not expired, this point would not arise. There cannot be any doubt that in any ordinary case, where there are competing causes of damage to a plaintiff, a defendant will gain nothing from relying on a factor which would provide a separate cause of the damage, if that cause is due to the defendant's own negligence. In such a case, the claimant could have made the separate cause part of the claim against the defendant. In this case, IML could have relied on the 3-5 year point, and the failure to obtain permission, although the net effect of so doing would not be to increase their damages. The case would still remain that Coudert failed to provide the chance by amending the agreements, and that chance is still the same chance that they would have failed to provide by not obtaining anti-monopoly permission.

43. IML deliberately claimed on the basis of the loss of a chance simply by reference to the 3-5 year point. They did not want to continue with the claim based on the failure of the anti-monopoly permission, and since their Russian law experts were going to say that the permission was not in fact required, that may be the reason.

44. The question is whether, if IML can establish that Coudert should have provided them with the chance by reference to the 3 to 5 year point, Coudert can say in relation to the assessment of that chance, that it should be reduced by virtue of an "intervening" act of negligence by Coudert, because the "intervening act" gives rise to a separate cause of action in respect of which the limitation period has expired.

45. There is very little authority which assists. It is of interest that when one examines the index of Mayne & McGregor 17^th Edition on Causation whether in Contract or in tort, there are constant references to "intervening acts of the claimant" or "intervening acts of third parties" but no reference at all to "intervening acts of defendants". Mr Leggatt was however able to point to a passage in the speech of Lord Browne-Wilkinson in Bolitho where he said at 240:-

"However in the present case the answer to the question "What would have happened?" is not determinative of the issue of causation. At the trial the defendants accepted that if the professional standard of care required any doctor who attended to intubate Patrick, Patrick's claim must succeed. Dr. Horn could not escape liability by proving that she would have failed to take the course which any competent doctor would have adopted. A defendant cannot escape liability by saying that the damage would have occurred in any event because he would have committed some other breach of duty thereafter. I have no doubt that this concession was rightly made by defendants. But there is some difficulty in analysing why it was correct. I adopt the analysis of Hobhouse LJ in Joyce v. Merton, Sutton and Wandsworth Health Authority [1966] 7 Med LR 1. In commenting on the decision of the Court of Appeal in the present case, he said, at p.20:

Thus a plaintiff can discharge the burden of proof on causation by satisfying the court either that the relevant person would in fact have taken the requisite action (although she would not have been at fault if she had not) or that the proper discharge of the relevant person's duty towards the plaintiff required that she take that action. The former alternative calls for no explanation since it is simply the factual proof of the causative effect of the original fault. The latter is slightly more sophisticated: it involves the factual situation that the original fault did not itself cause the injury but that this was because there would have been some further fault on the part of the defendants; the plaintiff proves his case by proving that his injuries would have been avoided if proper care had continued to be taken. In the Bolitho case the plaintiff had to prove that the continuing exercise of proper care would have resulted in his being intubated."

46. The Bolitho case could be said to be rather different from the instant case. I have quoted the passage to include the quotation from Hobhouse LJ because it would appear that what was being said in that case was, the plaintiff can prove the injury, if the plaintiff established, either that the baby would have been intubated as a fact, or (if he cannot show that) that it would have been negligent not to intubate. It would thus seem to have been part of the plaintiff's case to prove causation, that it would have been negligent not to intubate. In the loss of a chance case, such as the one we are dealing with, the failure to produce the agreements relating to the 3-5 year point has caused a loss of a chance. IML does not need to rely, and indeed does not seek to rely, on the failure to obtain permission, to establish the chain of causation of that loss of a chance. It is Coudert who want to reduce the value of the chance, by asserting they failed to do something which would have lowered the chance. Is there a principle which disallows a defendant from relying on a wrong which he has committed in order to reduce the damages that would otherwise flow from a tort or breach of contract? It seems to me that there should be such a principle, and that is what Lord Brown Wilkinson was recognising. It is quite difficult to say why it should be so, other than that it flows from public policy where it is a principle that a person should not be entitled to rely on their own wrong in order to secure a benefit. It is furthermore not unfair to apply such a principle. Damages would flow from the original act of negligence; why should Coudert be allowed to rely on a further act of negligence to reduce that damage?"

37. Laws LJ agreed and added the following observations:

"64. First, although I entertained considerable doubts about the matter while the case was being argued, I have reached the clear conclusion that in principle a defendant should not be allowed to rely on a wrong perpetrated by himself in order (in whole or part) to break the chain of causation put forward by the claimant to establish and quantify the damage sustained by him by reason of the defendant's breach of contract or tort. This may be seen (as Waller LJ expresses it: paragraph 46) as an application of the general rule of the common law that a party may not rely on his own wrong to secure a benefit, and I agree that some support is to be found for that approach in the speech of Lord Browne-Wilkinson in Bolitho. But I think it is also consonant with modern ideas of causation now being developed in the cases. Authority supports the proposition that the resolution of causation issues, certainly in the law of tort, is by no means merely a fact-finding exercise; in many instances it is an evaluative judgment, concerned to establish the extent to which a defendant should justly be held responsible for what has befallen the claimant. This seems to me to be vouchsafed in particular by the opinions of Lord Bingham and Lord Hoffmann in Fairchild [2002] 3 WLR 89 at paragraphs 10 – 12 and 52 – 54 respectively; to which may be compared, in the context of damages for loss of a chance, the observations of Kirby J in the High Court of Australia in Chappel v Hart [1999] Lloyd's Law Reports: Med 223 at 245, 246, cited by Latham LJ in this court in Gregg v Scott [2002] EWCA Civ 1471."

38. Now what Mr Underwood submits is that such a principle of causation is all very well, and he accepts that the decision is binding on him, indeed he accepts that it was "plainly correct", but he says that it should not be extended beyond its limited situation and that is one in which a defendant is himself raising and relying on his own wrongdoing as breaking the chain of causation. In the current case, on the other hand, it is Mrs Beart who has pleaded, called evidence about and is generally relying on her dismissal for her second cause of action in unfair dismissal. The Prison Service on the other hand was resisting any finding of unfair dismissal – indeed it had sought to argue that Mrs Beart had resigned rather than be dismissed.
39. In my judgment this attempt at distinguishing Coudert Brothers is hopeless. It is accepting a statement of broad principle, derived, as Waller LJ said, from public policy and a concept of fairness, or, as Laws LJ said, to be seen as an application of a general rule of the common law, and then attempting to cut it down or limit it on the basis of who has first raised an issue in the litigation. This is taking a pleading point to a new level of refinement. The issue of unfair dismissal having been properly raised and established, albeit by Mrs Beart the claimant, the Prison Service as respondent then sought to rely on its own wrongful act, its dismissal of Mrs Beart from her employment, as limiting the damages which would otherwise flow from the separate tort of disability discrimination which it had previously committed. It is true in one sense that the Prison Service does not seek to rely on the fact that it had acted unfairly, as distinct from the fact of dismissal itself. But it cannot take the one without the other. As stated above, if the dismissal had been justified, then Mrs Beart's claim would have been affected, albeit for quite different reasons and in different ways than those advanced by Mr Underwood. As it is, the dismissal was unfair and if the Prison Service is to rely on it as breaking the chain of causation that it must take it with all its qualities. Indeed, that is just what the Prison Service is seeking to do by relying on the statutory cap of £12,000 as explaining why, unusually, in this case it benefits a wrongdoer to rely on its own wrong.
40. In these circumstances it seems to me to be unnecessary to explore further, in line with the submissions and counter-submissions of counsel, the additional points made as to whether the doctrine in Coudert Brothers is supported or to be extended by consideration of either (a) the recent decisions liberalising the "but for" test of causation in Fairchild v. Glenhaven Funeral Services Ltd [2002] UKHL 22, [2003] 1 AC 32 and Chester v. Afshar [2004] UKHL 41, [2004] 3 WLR 927 or (b) the particular public policy considerations present in the statutory torts of discrimination, see for instance Savjani v. Inland Revenue Commissioners [1981] QB 458 at 466/7 and BNP Paribas v. Mezzoterro [2004] IRLR 508 at para 35.

Would Mrs Beart have been dismissed, if relocated?

41. It also seems to me to be unnecessary to reach a definitive conclusion on just what the Employment Tribunal in its remedies decision and clarification ruling found in relation to the issue debated before it of whether or not the Prison Service would still have dismissed Mrs Beart on 11 February 1999, if she had been relocated as she ought to have been on 1 November 1998. As I have explained above, the importance of this issue to the Prison Service is that if it was to rely, as it was seeking to do, on Mrs Beart's dismissal as limiting to £12,000 her right to damages beyond the later of those dates, then it had to be able to argue that her dismissal would still have taken place even if she had previously been relocated and there had been no act of discrimination. That, however, is the limit of the importance of this argument. It follows that if, as the Employment Tribunal and now the EAT have in my judgment correctly held, Mrs Beart's unfair dismissal does not affect the damages she has suffered as a result of the Prison Service's tort of discrimination, then it does not matter whether or not the Prison Service would still have dismissed her if it had not discriminated against her. It is only if that did matter that it would have been necessary to determine two further questions: one, whether it was Mrs Beart or the Prison Service who bore the burden of proving that Mrs Beart would or would not have been dismissed if she had been relocated as she ought to have been; and secondly, what exactly the Employment Tribunal found in relation to that factual question.
42. As for the burden of proof question, that itself only becomes relevant if, as Mr Underwood has submitted, the Employment Tribunal's findings are to be read as being so delicately poised as to turn on the burden of proof. I shall therefore briefly address the second question first. What did the Employment Tribunal find? Mr Underwood submits that in para 2(i) of its clarification the Tribunal was merely saying that it had not been proved that the result of the disciplinary hearing would have been any different ("we are not prepared to assume that the result of the disciplinary hearing would necessarily have been dismissal, let alone the unfair dismissal which occurred"). It appears that the EAT may have agreed with this reading (at para 20: "we accept that the Tribunal made no specific finding that the outcome of the process would necessarily have been different"). On the other hand, at the outset of para 2 of its clarification the Tribunal had stated firmly that it had always been "implicit in our decision that Mrs Beart would have remained in employment", and that is indeed what it had said at paras 13 and 24(2) of its original decision (eg "if she had been relocated, we think that she would more probably than not have continued in the [Prison Service's] employment"). I would have equally firmly adopted this reading for myself had not Mr Antony White QC, counsel for Mrs Beart, been reluctant on his side to do so, initially accepting Mr Underwood's reading that these paragraphs of the original decision related only to the separate argument about Mrs Beart being too ill to continue in her employment. However, after his initial reluctance, Mr White ultimately was not prepared, so to speak, to look a gift horse (being handed to him by the court during argument) in the mouth and submitted that the original decision and the clarification could and should be read as dealing with both the "too ill to work" argument and the "would still have been dismissed" argument.
43. In the circumstances, I am left with sufficient uncertainty to be pleased that this is not a decisive point. If I had had to decide the point, however, I would have been inclined to say (see also at paras 22/23 above) that the finding is ultimately clear and the explanation of the Tribunal in its clarification must be accepted; and that the somewhat more hesitant language of para 2(i) itself should not be read as leaving the question in the air. In effect, the Tribunal is saying: "we find on the balance of probability that, if she had been relocated, Mrs Beart would have continued in employment and not have been dismissed; we recognise that she was in fact not relocated and was dismissed and that we are therefore having to form a view on the hypothetical basis that she had been relocated; but we are not prepared to say that an honest employer, acting in good faith, would still have dismissed her where it had recognised its statutory obligation not to discriminate against disabled persons and had therefore relocated her; it is one thing to act honestly but unreasonably in ignorance of statutory obligations under the Disability Discrimination Act, it is another thing to do so when alive to those obligations". It seems to me that any other view of what the Tribunal is saying can only be achieved by reading limited parts of the clarification ruling as though it was a statute, while ignoring the overall context.
44. To revert to the question concerning burden of proof: in the light of the view just stated regarding the Tribunal's findings, this question becomes doubly moot. I would merely say, therefore, that, had I felt that the Tribunal had failed to make a positive finding that Mrs Beart would not have been dismissed if she had been relocated, and had it been open to the Prison Service to rely on its own unjustified dismissal, then I am inclined to think that because the burden of proving that her damages should be assessed by reference to her continued employment would rest on her, therefore that element of her claim would not have been proved.

A "new contention"?

45. Finally, as the proverbial plank in a shipwreck, Mr Underwood sought to submit that Mrs Beart had failed to prove her loss of earnings at all, on the ground that the two doctors' joint report spoke of only intermittent and episodic bouts of depressive illness, viz that her original illness had resolved in the summer of 1998, and that recurrent episodes lasted for only a few months from October 1999 and in spring 2000, spring 2001, and from January 2003. He submitted that those matters, being stated in the opening paragraph of the joint report (quoted above at para 13), were implicit in the Tribunal's acceptance of the doctors' evidence, and that, if they were not part of the Tribunal's findings, then they should have been, and that any other factual approach was perverse. He submitted, indeed, that it was Mrs Beart who, in her respondent's skeleton argument, had raised a "new contention" that the discrimination had caused a continuing illness and that the continuing illness had caused her loss of earnings.
46. If this were a good point, it would be fundamental. It would then have been a matter of some disquiet for everyone concerned, not least for the Prison Service, that this point played no part in its notice of appeal to the EAT or its notice of appeal to this court. The fact is, however, that if this is a new point, then its novelty is on the side of the Prison Service. At the liability stage, it was common ground that Mrs Beart was disabled by reason of depression. At the remedies stage, the Prison Service's primary argument was that Mrs Beart was too ill to hold down employment in any event, albeit for reasons unconnected with disability discrimination; alternatively, it was submitted that, whereas her "mental health since May 1998 has been the subject of a number of ups and downs", most of her ill health was due to factors other than the discrimination, viz existing propensity, events which had no connection with work, and her dismissal. It was therefore submitted that the Prison Service's liability should be limited to one third (see the Prison Service's closing submissions at paras 28/31). As for the three grounds on which the Prison Service took its appeal to the EAT, I have referred to them above. Only its first ground was repeated in its appeal to this court, viz that the dismissal broke the chain of causation. There is and has been no other attack on the findings of the Employment Tribunal. Indeed, there never has been any attack at all on its findings and conclusions in relation to personal injuries (at paras 27/33), which included findings that Mrs Beart "has continued to suffer from depression for very nearly five years" and the rejection of the Prison Service's one-third point (see above at para 17). The EAT, in my judgment correctly, stated its understanding of the Employment Tribunal's findings when it said, in a passage at para 44 of its decision which I have cited above (at para 29), that there was "the clearest evidence in this case that the psychiatric harm caused by the act of discrimination and its impact upon [Mrs Beart's] ability to work continued far beyond the date of the unfair dismissal". The Employment Tribunal heard both doctors give oral evidence. It is impossible at this stage to suggest that the Tribunal's findings as to the effect of their evidence was perverse.
47. Mr Underwood has also sought to submit that Mrs Beart has failed to prove that she was unable to obtain employment in the interim. This, however, is to raise a defence of lack of mitigation, the burden of which rests on the wrongdoer, and which has never been pleaded let alone proven.

Conclusion

48. In sum, when faced with claims for disability discrimination and unfair dismissal, the Prison Service denied both. When both were found, it submitted that Mrs Beart was too ill, for reasons unconnected with discrimination, to hold down her employment with the Prison Service. When that submission was lost on the findings of the Tribunal, it persevered in its alternative argument that its unfair dismissal brought an end to all liability (for loss of earnings) beyond the statutory cap of £12,000. When that argument had been lost before the Tribunal and the EAT and was in danger of being lost again in this court, it sought to say that Mrs Beart was only very intermittently disabled from working by her disability, and that she had wholly failed to prove what the Employment Tribunal had found as a fact, that the Prison Service's discrimination has materially contributed to her disability for the years over which this litigation has dragged on, and that her disability has in the meantime prevented her from regaining her health sufficiently to work. In October 2003 the Employment Tribunal found that Mrs Beart would probably be able to start looking for work on 1 January 2004. That I would infer was on the basis that the parties would be able to reach prompt agreement on final figures, since it foresaw that a further hearing would be "extremely undesirable" (para 5 of its decision, see para 15 hereof above). I do not know what the present position is, but I express my concern about that, as well as about the amount of public money which is being devoted to these numerous appeals on the part of the Prison Service.
49. In conclusion, for all the reasons set out above, I would dismiss this appeal.

Lord Justice Wall:

50. I entirely agree. Throughout Mr Underwood's sustained submission, I shared the puzzlement expressed by Rix LJ at the proposition that any employer, let alone a public body, could escape liability for acts of disability discrimination by relying on a further wrong committed against the employee, namely that of unfair dismissal. Whilst respectfully adopting my Lord's analysis, I also agree with the succinct and powerful way in which the Employment Tribunal expressed its view on the point in the final sentence of paragraph 2(ii) of its "Clarification" document dated 5 March 2004. This is cited by Rix LJ at paragraph 25 of his judgment, and I need not repeat it.
51. I would also like to associate myself expressly with the summary contained in paragraph 48 of Rix LJ's judgment, and in particular with the final sentence of that paragraph. Beneath the urbane sophistication of Mr Underwood's submissions one could not but detect an animus on the part of the appellant against the respondent. The factual sub-stratum of these proceedings is not particularly complex, yet they have lasted the best part of six years. Every inch of the way has been fought. Both liability and remedy have been the subject of second appeals. In my view, it is high time this litigation came to an end.
52. For the reasons given by Rix LJ, I too would dismiss this appeal.

Lord Justice Hooper:

53. I agree.