QUEENS BENCH DIVISION
London, WC2A 2LL
B e f o r e :
|The Queen on the application of|
|EUNICE VERNER –v- DERBY CITY COUNCIL|
|MIRANDA SHEPPARD –v- NORFOLK COUNTY COUNCIL|
|ANNE RIDLEY –v- ST THOMAS MORE ROMAN CATHOLIC HIGH SCHOOL|
Smith Bernal Wordwave Limited, 190 Fleet Street
London EC4A 2AG
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Official Shorthand Writers to the Court)
Mr J. Goudie Q.C. and Mr P. Oldham (instructed by Derby City Council, Norfolk County Council and North Tyneside Council) for the Defendants
Crown Copyright ©
Mr Justice Lindsay:
The Pension Provisions
"E 4 (4) In Case C the person –
(a) has not attained the age of 60,
(b) has ceased after 31st March 1972 before attaining the age of 60 to be in pensionable employment,
(c) is incapacitated and became so before attaining the age of 60, and
(d) is not within Case D
and, in cases where the pensionable employment ceased on or after 1st April 1997 the Secretary of State has notified the person in writing that he has not exercised, or is not considering the exercise of, his powers under Regulation 5 (1) (b) or (c), or Regulation 9 (1) (a) of the Education (Restriction of Employment) Regulations 2000 by reason of that person's misconduct on the grounds mentioned in paragraph (b) (misconduct) or paragraph (c) (not a fit and proper person) of Section 218 (6 Z A) of the Education Reform Act 1988 to direct that he be not appointed to or employed in relevant employment as defined in Regulation 4 of those Regulations.
"Apply to the termination of a teacher's contract for any reason other than gross misconduct, including dismissal for ill health and redundancy."
Section 3 clause 5.1 makes reference to the Education (Teachers' Qualifications and Health Standards) (England) Regulations 1999 simply, as it would seem, to remind readers that thereunder there are circumstances in which a teacher "may have his/her employment suspended or terminated on medical grounds". I shall refer later to the 1999 Regulations.
" 6. Termination of employment during a period of sick leave.
6.1 In the event of a teacher exhausting in part or full his/her entitlements under paragraph 2.1 above and being given notice of the termination of his/her contract without returning to work on the ground of permanent incapacity or for some other reason related to the sickness absence, he/she shall be paid full salary for the notice period with normal deductions only."
Statutory Regulation of Teachers
"(3) For the purposes of this Part, employment includes the engagement of a person to provide his services as a teacher otherwise than under a contract of employment and references to employment or relevant employment shall be construed accordingly."
"Health standards – continued employment
7. – (1) A person in relevant employment shall not continue in that employment if, having regard to any duty of the employer under Part II of the Disability Discrimination Act 1995, he does not have the health and mental and physical capacity for that employment.
(2) For the purposes of this regulation, where it appears to his employers that a person may no longer have the health or mental or physical capacity for his employment
(a) they shall afford him an opportunity to submit medical evidence and make representations to them;
(b) they shall consider such evidence and representations and any other medical evidence available to them, including such evidence which has been furnished in confidence on the ground that it would not be in the best interests of the person concerned to see it;
(c) they may require him, or at his request shall arrange for him, to submit himself for examination by a duly qualified medical practitioner appointed by them and, if without good cause he fails to submit himself for such examination or refuses to make available medical evidence or information sought by the medical practitioner, they may reach a conclusion in the matter, including a conclusion that he no longer has the health or mental or physical capacity for his employment, on such evidence and information as is available to them, notwithstanding that further medical evidence may be desirable.
(3) At any time before such medical examination as is referred to in paragraph (2) (c) the employers, or the person himself, may submit to the appointed medical practitioner a statement containing evidence or other matter relevant to the examination: and the examination may be attended by any duly qualified medical practitioner appointed for the purpose by the person being examined."
There is no express provision that mirrors the provisions as to appointment of a person who is in receipt of IHRB as were found in Regulation 6 (4).
"2 (a) In the case of a person in relevant employment [to] direct his employer –
(i) to suspend or terminate his employment …."
And, under 2000 Regulation 5 (2) (b), to direct, with respect to that person, that he should not be subsequently appointed to, or be employed in, relevant employment or that he should only be so upon specified conditions. 2000 Regulation 5 (4) provides:-
"The employer of a person in relevant employment shall comply with any direction prohibiting or restricting that person's employment or further employment given under these Regulations."
Exercise of such powers requires, in general, consultation with the employer – 2000 Regulation 6 – and the giving to the person concerned of an opportunity to make representations – 2000 Regulations 6 and 7. Medical examination is provided for – 2000 Regulation 8. Any such a direction would be reviewable by the Secretary of State – 2000 Regulation 12. Whilst the 2000 Regulations make express provision for automatic prohibition of a person as a teacher in some specified cases, there is no such express power applicable specifically in relation to incapacity or health grounds or related to the acceptance of retirement benefits, nor for the case where there has been a retirement on such grounds.
"… is required by virtue of regulations under s218 of the Education Reform Act 1988….."
paragraph 24 is not required to be complied with. It will be remembered that Reg 7 was made under that Act. Thus in a Reg 7 case the detailed dismissal procedures specified for these types of school do not have to be followed, but no lesser or other procedure is prescribed.
Dorling No. 1
"….. did not shirk from the following proposition which inevitably followed. Once there is incapacity, the employment is at an end. That is so if (as here) the Claimant accepts it. It is equally so if that is the conclusion following the procedure under Reg 7 (2) and 7 (3)."
It has been no part of the argument before me that once there is incapacity the employment is, is without more, at end, even if the Claimant accepts that he is incapacitated.
"If, in the light of an investigation under Reg. 7 (2), the Local Authority comes to the conclusion that the teacher does not have the capacity for employment, Parliament must have intended should he not resign that the employer must dismiss."
But that says nothing as to what Parliament intended or must have intended in the case where there has been no investigation under Reg 7 (2) and where the IHRB process was initiated and pursued voluntarily by the employee. Nor does it explain, if statutory duties were to be imposed upon employer or employee, why a duty to resign on the employee's part should not be antecedent to the duty on the employer, there taken to have been intended by Parliament, to dismiss.
Application For IHRB
"a Once granted ill health benefits on the grounds that you are permanently unfit to teach, you should arrange for active teaching to cease with immediate effect. The employment should be terminated at the earliest possible retirement date……
…..If you are accepted TP will contact your other employer(s) for service and salary details up to your last day of employment with them (if we have not already received such details). You should be aware that benefits cannot be paid unless all employments are terminated. Upon notification from your employer(s) of this retirement date (via Form 18A) your benefits will be processed promptly, i.e. within 20 working days."
The question "What happens if I return to future employment?" (a question which seems to suppose there is or will be no present employment) was answered:-
"a "Warning" Any return to teaching would result in the loss of your pension and you must inform us of this immediately.
b If you do intend to return to work, before doing so you must contact this office."
In other cases the Notes were to the same effect save that none but those getting the April 2002 Notes were told in terms that "You should be aware that benefits cannot be paid unless all employments are terminated".
"If your application is accepted, i.e., you are deemed permanently unfit for teaching, you should arrange for active teaching to cease with immediate effect and for the employment to be terminated at the earliest possible retirement date."
I shall need to return later to consider the effect, in the light of the form being required to be sent on for completion by the employer, of the indication to the applicant by T.P. that if the application is accepted " you should arrange for…… the employment to be terminated at the earliest possible retirement date". The form includes a declaration that the applicant is applying for ill-health retirement benefit, that she gives her consent to undergo medical examination, that the medical evidence collected could be used by the Secretary of State for his consideration under the 2000 Regulations and that :
" I will inform TP if I begin any employment at any time during my retirement."
Upon the form being forwarded to the employer he is to certify that the teacher was applying for a retirement pension on ill-health grounds and that certain of the details given by the applicant were correct. The form was then to be sent on to TP. The layout of the form has been amended from time to time, but the passages I have cited remain in all variants and it is common to all that they do not invite the employer to agree or disagree that the applicant is incapacitated, permanently or at all. The form has a Box 13 in which the applicant is to complete a date for "Last date of employment or proposed date of retirement ….". Mrs Ridley left it blank.
"Your application to retire has been granted on the basis that you are now too ill to continue teaching. Your employer will be informed of our decision shortly. If you are still in pensionable service, you should agree with your employer the earliest possible retirement date."
TP indicated that they required further details so that the appropriate lump sum and annual pension could be computed. The letter continued:
"Entitlement to ill-health retirement benefits is subject to the requirement that the Secretary of State has notified you in writing that she has not exercised and is not considering exercising her powers under Regulation 5(1)(b) of the Education (Restriction of Employment) Regulations 2000 to bar you from relevant employment. I am pleased to give you that notification by means of this letter. However, you cannot return to teaching without your pension being stopped."
Whilst the details of this are not to be found in the papers, it is accepted that Mrs Ridley shortly thereafter received an appropriate lump sum payment and has received and is continuing to receive an annual pension. However, by a letter of the 7 November 2002, from Mrs Ridley's Union to the Head Teacher at the school at which she had worked, it was indicated on her behalf that she refused to agree to a termination date and would not resign. The Union took the view on Mrs Ridley's behalf that where there was no resignation by the teacher then the employer was obliged to dismiss the teacher and that if steps were not taken in that behalf then an application would be made to the Secretary of State requesting that he should intervene and give a direction procuring Mrs Ridley's dismissal. On 10 January 2003, the chairman of governors at the school at which Mrs Ridley had worked indicated that they would not be undertaking a dismissal process with regard to Mrs Ridley. They considered that by her actions she had already resigned from employment on the grounds of ill-health. On 9th April 2003, Mrs Ridley lodged her Judicial Review Claim Form seeking a mandatory order and/or a declaration from the Court requiring the school at which she had taught to perform, she said, its public law duty to terminate her contract of employment forthwith in accordance with its obligations under Reg 7.
"If [she] is actively teaching you should arrange for this to cease with immediate effect and for employment to be terminated at the earliest possible retirement date."
Has the employment already ended without any notice being served?
"I have to confirm, therefore, that the Teachers Pension Agency have been advised that your last day of paid sick leave was the 30 June and accordingly your contract of employment with this authority ended on that date by reason of your retirement on grounds of ill-health."
Mrs Healey treated that as a notice of termination and sued for damages on the basis that under the Burgundy Book she should have been given notice to expire on 31 December and that she should therefore have received £14,405.00 as salary and £1,310.00 as pension contributions in relation to the notice period.
"There was unchallenged evidence given by Mrs Healey that during the summer or early autumn of 1999 she, with her Union representative, met with the Director of Education and Leisure of the Local Authority, and it was agreed at that meeting that Mrs Healey would make an application for ill-health retirement benefits."
It is to be noted that at that stage Ward LJ did not ascribe more than that to what had been agreed at the meeting. Later (paragraph 16) he added;
"It seems to me to be plain ( and it is agreed) that at the meeting with the Director, it was not only agreed that the appellant would be applying for ill-health retirement, but that she must at that meeting as I have explained, have conveyed to the Director a decision, as she said, to retire on the grounds of ill-health. That must, in my judgment, amount to a notice of resignation."
In context the decision referred to can only have been a decision to retire if her application for IHRB was accepted. Later (paragraph 22) Ward LJ continued;
"An objective consideration of the communicated decision to retire, treated as a notice to retire, would carry with it the implication that it was to be effective only if the application for benefit were successful. That condition has been fulfilled. In my judgment the other implication which ineluctably arises from the facts is that her retirement would become effective from the earliest date that benefits become payable."
A little later (paragraph 23) Ward LJ added:
"If the officious bystander were to determine when that retirement would become effective, he would say, "when the benefits become available to her".
Describing Mrs Healey's actions Ward LJ said in, his paragraph 23;
"She was doing two things : first she was applying to a third party for these retirement benefits: but secondly, she was giving her employers notice of the decision to retire".
In his paragraph 25 he treated that as a notice by Mrs Healey to resign. Her employment, he held, had terminated by reason of "that resignation on the 30 June", that being the last day of pensionable service and the day before her pension of some £16,558 began and on which she was to be paid the lump sum of about £49,000.00.
"The appellant informed the defendants of her decision to retire on the grounds of ill-health. They did not object. In all the circumstances of the present case, the appellant was informing them that she would retire immediately after the date when her sick pay ceased and she became entitled to be paid ill-health retirement benefits. I agree, therefore, that this appeal must be dismissed."
Longmore LJ agreed.
Operation of law
"Erasure would clearly in my opinion have brought about the statutory ban in this case and an automatic termination by law of the Appellant's appointment and of the contract with the Board which was the basis of that appointment. The contention put forward was that the appointment was one thing and the contract of employment was another, the section affecting only the appointment. I am wholly unable to accept that position: the contract of employment and the appointment were not two things but one."
"So long as the contract of employment continues, so does the appointment and the statutory termination of the one must automatically terminate the other."
"Having regard to the correspondence, I now come to the question of whether there was frustration of this contract. It is quite clear, in my view, that the mere inability of the Plaintiff to perform his duties by reason of illness or accident does not in itself amount to frustration of the contract. The regulations regarding tenure clearly contemplate that, even if the teacher does become ill or suffers an accident, the contract shall continue in existence in spite of that. But as a matter of common sense it seems to me that an application for and acceptance by the plaintiff of a gratuity on the basis that he had become permanently incapable of serving efficiently as a teacher is wholly inconsistent with the continued existence of a contract by the County Council to employ him as a teacher and by him to serve the County Council as a teacher."
After drawing attention to the terms of the Teachers' (Superannuation) Act 1925 Browne J. continued, at page 182:-
"I consider that it is plain that the whole basis of this gratuity is that the teacher has become permanently incapable of serving efficiently as a teacher. In my judgment, it is impossible for the plaintiff at the same time to accept a gratuity on the basis that he is permanently incapable of serving as a teacher and also to continue to serve as such. Having accepted this gratuity, the plaintiff was not, in my view, eligible to return to the service of the County Council. In my view the foundation of the contract was destroyed when the plaintiff accepted the gratuity and the contract then came to an end by frustration. If there is frustration, there is no need for either party to give any notice terminating the date of it. The determination is automatic."
"The judge gave this case the fullest consideration, and has investigated all the issues most carefully and thoroughly. His judgment deals with all the issues so admirably that I am content to adopt it as my own. The appeal is accordingly dismissed."
" Frustration of a contract takes place where there supervenes an event (without default of either party and for which the contract makes no sufficient provision) which so significantly changes the nature (not merely the expense or onerousness) of the outstanding contractual rights and/or obligations from what the parties could reasonably have contemplated at the time of its execution that it would be unjust to hold them to the literal sense of its stipulations in the new circumstances; in such case the law declares both parties to be discharged from further performance."
A public duty to dismiss?
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MR JUSTICE LINDSAY: I hand out one judgment that covers all three cases. Yes, Mr Oldham.
MR OLDHAM: My Lord, the defendants are grateful. I do not know whether your Lordship has had a chance to see the draft orders.
MR JUSTICE LINDSAY: Yes, I have.
MR OLDHAM: I think at least the question of permission to apply and the refusal of the applications in each cases is uncontentious, my Lord. Your Lordship will recall that in the Verner case permission had already been granted, that is the reason for the difference. That leaves costs, my Lord, and I do apply for the costs in each case, to be assessed if not agreed.
MR CAVANAGH: My Lord, I cannot resist that application.
MR JUSTICE LINDSAY: No. You ask in each case, Mr Cavanagh, for permission to appeal?
MR CAVANAGH: My Lord, indeed I do.
MR JUSTICE LINDSAY: It seems an appropriate case, unless that is opposed.
MR OLDHAM: My Lord, I am instructed to oppose the application.
MR JUSTICE LINDSAY: Are you?
MR OLDHAM: If I could very briefly outline the grounds. My Lord, even before my learned friend gets, or your Lordship got, to Regulation 7, your Lordship considered the issues of resignation and operation of law, which your Lordship found for us on. I would suggest that the Court of Appeal is unlikely to interfere with your Lordship's finding on those issues, particularly the issue of resignation given Healey and given also the fact that the Court of Appeal will, in my submission, accord your Lordship discretion as to the interpretation of the law in the light of the facts.
My Lord, even if my learned friend were to succeed on those points, that leaves the issue of Regulation 7. I submit that for the reasons that your Lordship has expounded in your Lordship's judgment it is very unlikely that the Court of Appeal would find that Regulation 7 imposes the duty that my learned friend argues for. Unless I can help your Lordship further, those are my submissions.
MR JUSTICE LINDSAY: Mr Cavanagh, I will grant permission to appeal. It seems to me that these were test cases that involved a number of people, quite a good number, and of course a growing number over time, and the law is not that easy. I think you are entitled to test it further.
MR CAVANAGH: My Lord, I am very grateful.
MR JUSTICE LINDSAY: I will give leave to appeal in each of the three cases.