England and Wales High Court (Queen's Bench Division) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION

		Royal Courts of Justice Strand London WC2
		26 May 2000

The Hon. Mr. Justice Moore-Bick

1. In 1972 the claimant in this action, Mr. Simon Earl, embarked on a career in the City. He received his initial training as a stock jobber with the firm of R.A. Blackwell and later with Wedd Durlacher Mordaunt ("Wedd Durlacher") and was subsequently employed by Wedd Durlacher in that capacity until the de-regulation known as the 'Big Bang' in 1986 when that firm became part of Barclays de Zoete Wedd ("BZW"). Thereafter he remained in the employment of BZW as a market-maker until he was made redundant with effect from 31^st January 1991. Mr. Earl did not find the change in working practices brought about by the 'Big Bang' very congenial and having been made redundant he hoped to make a complete change of career by taking up a position as manager of a golf course attached to a hotel in Barbados. Unfortunately that prospect fell through and he then spent many months seeking employment of a different kind, again mostly related in one way or another to the game of golf which is his primary leisure interest. He made an attempt to create a business arranging corporate hospitality, but none of his plans came to fruition and eventually in March 1992 he returned to the City as a Eurobond broker with the defendant, Cantor Fitzgerald International.
2. After only a few months with Cantor Fitzgerald Mr. Earl began to complain of serious pain and stiffness in his spine which made it difficult for him to sleep at night. The pain and loss of sleep adversely affected his concentration at work. He also began to drink more heavily. During the months which followed his symptoms became worse and he found it increasingly difficult to do his job properly. Eventually in October 1992 he was admitted to a psychiatric hospital, Huntercombe Manor hospital, for treatment for alcohol dependency and depression. He was discharged in December 1992, but he did not feel physically capable of returning to work, and indeed he has not felt fit enough to return to work at any time since then.
3. In September 1992 Cantor Fitzgerald had introduced a new permanent health insurance scheme for its employees which was underwritten by an insurance company, UNUM Ltd. When it became clear to Mr. Earl that he would be off work for a considerable period of time he applied for benefits under the scheme and Cantor Fitzgerald for its part presented a claim to UNUM. Unfortunately the claim was not pursued as promptly as it should have been and difficulties were encountered in providing all the information which UNUM required. Eventually in October 1996 UNUM rejected the claim on a variety of grounds including late notification and insufficient evidence that Mr. Earl had been actively at work when the scheme took effect in September 1992. At one stage there was a dispute as to whether Mr. Earl or Cantor Fitzgerald was responsible for failing to pursue the claim against UNUM promptly, but once it was recognised that Mr. Earl's claim lies against Cantor Fitzgerald under the terms of the scheme this issue faded into the background and has ceased to be of any significance. Throughout the period during which the claim was under review Mr. Earl had formally remained in the employment of Cantor Fitzgerald. However, following UNUM's final rejection of the claim he was dismissed on 29^th October 1996 on the grounds that he would never be fit enough to return to work. Mr. Earl maintains that it was a breach of his contract of employment for Cantor Fitzgerald to dismiss him under those circumstances and in this action he seeks to recover damages sufficient to compensate him for the loss of the benefits which, but for his dismissal, he would have been entitled to receive under the company's permanent health scheme. He also seeks to recover damages in respect of the loss of the separate medical insurance which he would have continued to enjoy while he remained in Cantor Fitzgerald's employment.

   The Rules governing the Scheme

4. The permanent health insurance scheme which Cantor Fitzgerald introduced for all existing and new employees with effect from 11^th September 1992 was established in the form of a body of rules which formed part of Mr. Earls' contract of employment. The parts of the Rules which are material for present purposes provided as follows:

"GENERAL RULES

2. DEFINITIONS

"Incapacitated Member" means . . . . . . . . . .

A. (b) In respect of a member who is not required to hold a licence as above, Incapacitated Member shall mean that the Member while in Service and before Terminal Date is totally unable by reason of sickness or accident to follow his Occupation and is not following any occupation except as provided under the reduced benefit provision of General Rule 6(b).

. . . . . . . . . . . . . . . . . . . .

"Member" means a person who has been admitted to membership of the Scheme and remains for the time being in membership in accordance with these Rules.

"Occupation" means the occupation of a Member immediately prior to incapacity.

"Service" means continuous active service with the Employer and includes any period while benefit is payable . . . . . . . . . . . .

3. ADMISSION TO MEMBERSHIP

. . . . . . . . . . . . . . . . . . . .

(d) An employee who is to be included in the Scheme shall furnish such information (including proof of age) in such form and at such times as the Principal Employer and/or the Insurer may request. Any misrepresentation including mis-statement of age may affect any entitlement to benefits under the Scheme.

4. EVIDENCE OF HEALTH

(a) When an employee becomes a Member or becomes eligible to be covered under the Scheme for an increased amount of benefit, commencement of or increase in his benefit shall be subject to such evidence of active employment in his usual occupation and/or of insurability, including evidence of health, as the Insurer shall specify. If the employee is not actively employed and working the normal basic hours in his usual basic occupation because of illness or injury the benefit or increase therein will become effective only when he returns to such occupation with the approval of his medical adviser and any evidence of health and insurability requirements of the Insurer are fulfilled.

. . . . . . . . . . . . . . . . . . . .

6. DESCRIPTION OF BENEFIT

(a) If a member becomes a totally Incapacitated Member the benefit under Special Rule C shall become payable to him on completion of the Deferred Period and shall continue to be paid for so long as he remains an Incapacitated Member subject always to the terms and provisions of these Rules.

(b) If after becoming an Incapacitated Member within base A(b) . . . . . and having completed the Deferred Period a Member with medical consent either adopts or has adopted a different and less well paid occupation or returns or has returned to his Occupation or any occupation on a part-time basis, or partially follows his Occupation at a lesser rate of pay, or is undertaking any work either on an unpaid basis or for less than the market rate of pay, then provided that in all other respects he remains an Incapacitated Member benefit in respect of him under Special Rule C shall commence or continue to be payable as appropriate, but for a reduced amount.

7. NOTIFICATION OF OTHER EMPLOYMENT

During any period when benefit is being paid in respect of an Incapacitated Member the Employer must be notified within 31 days by the Incapacitated Member if he undertakes any work, gainful or otherwise or there is a change in any other circumstances affecting the benefit of the Incapacitated Member.

. . . . . . . . . . . . . . . . . . . .

11 PAYMENT OF BENEFIT

(a) Benefit will be paid by equal monthly instalments in arrears until the Member ceases to be an Incapacitated Member or he reaches Terminal Date or until the death of the Member, whichever shall first occur.

. . . . . . . . . . . . . . . . . . . .

(c) payments of benefit made to a Member under the Scheme who is in Service are a continuance of salary or earnings and although benefits are insured by the Employer they are not insurance benefits to the Member. . . . . . . . . . . .

(d) The Employer shall not be under any obligation to make any payment to an Incapacitated Member or any other person unless the Employer has first received such sum from the Insurer or the Principal Employer as applicable.

. . . . . . . . . . . . . . . . . . . .

13 CESSATION OF SERVICE AND MEMBERSHIP

(a) A Member shall cease to be a Member at whichever is the earliest of –

(i) his Terminal Date

(ii) the date on which he ceases to be in Service, and

(iii) his death.

. . . . . . . . . . . . . . . . . . . .

15 LEGAL LIABILITY AND RIGHTS OF EMPLOYER

Nothing in these rules is intended to create any legal relation between the Insurer and any Member it being (as respects the Employer and the Members) the purpose of these Rules to establish the terms of the Scheme as between the Employer and the Members.

. . . . . . . . . . . . . . . . . . . .

SPECIAL RULES

A. DEFINITIONS

"Deferred Period" means the first 26 weeks of any continuous period during which the Member is an Incapacitated Member.

"Terminal Date" means the 60^th anniversary of birth of a Member."

C. BASIC BENEFIT

Subject to the provisions of General Rules 4 and 10 the annual rate of basic benefit in respect of an Incapacitated Member shall be 75 per cent of his Remuneration, less the Social Security Pension."

Mr. Earl's medical history

5. Before turning to the construction of the Rules it is necessary to say something about Mr. Earl's medical history. For many years prior to his employment with Cantor Fitzgerald Mr. Earl had suffered from various conditions, some or all of which are said to have been the root cause of the breakdown which he suffered in October 1992. They can conveniently be described under four heads: back pain; alcohol abuse; depression; and an under-confident personality. The evidence is contained in the various records and correspondence kept by the doctors who examined him over the course of that period, the evidence of the expert witnesses and, of course, the evidence of the lay witnesses, principally Mr. Earl himself. Insofar as it is necessary to do so at all, I shall comment on the other witnesses as and when I come to consider their evidence, but I think it appropriate to say something about Mr. Earl at the outset. He gave evidence for well over a day and in the course of cross-examination was quite properly asked to explain or comment on various aspects of his personal and medical history which he may well have found somewhat embarrassing. I was struck on more than one occasion by his frankness and his willingness to acknowledge the force of points which were adverse to his case and also by the fact that there were occasions on which he answered a question in a way not altogether helpful to his case when a less honest witness could have given a more favourable answer without any great fear of contradiction. Having seen him give his evidence I have no hesitation in accepting him as a witness of truth.
6. It is right to say that Mr. Foskett Q.C. on behalf of Cantor Fitzgerald did not suggest that Mr. Earl was a dishonest witness, but he did suggest that in some respects his evidence ought not to be accepted uncritically. In particular, he submitted that Mr. Earl's recollection of how he felt about his job during the time he was working for BZW and Cantor Fitzgerald had moderated during the passage of time. He also suggested that those who suffer from alcohol abuse are inclined to minimise the extent of their problem. These are fair points to make and I have certainly borne them in mind when assessing Mr. Earl's evidence. However, insofar as his evidence related to matters such as the symptoms he experienced or his consumption of alcohol I have reached the conclusion that Mr. Earl was generally a reliable witness. When it comes to his state of mind at different stages in the history of events I accept that the contemporaneous notes are likely to provide the best evidence of the picture he presented at the time, but I also think that there may be some force in his comment that his state of mind on such occasions was coloured by the pressures of the moment. In the end, for the reasons I have given, I found Mr. Earl to be an impressive witness whose evidence in general I have no hesitation in accepting.

(a) Back pain

7. On his own evidence Mr. Earl has a history of pain and stiffness in his spine going back to his late teens. In July 1979 when he underwent a medical examination on behalf of Wedd Durlacher he reported that he suffered from chronic back pain. He was then aged 24. In September 1984 he consulted his own general practitioner, Dr. Perry, complaining of persistent back pain which interrupted his sleep and led to early morning stiffness. He was referred to a consultant orthopaedic surgeon, Mr. James Scott, who noted an upper lumbar and thoraco-lumbar scoliosis and quite marked restriction of movement of the lumbar spine. Mr. Scott arranged for a course of physiotherapy and saw him again some weeks later. As the physiotherapy had not given rise to any improvement in Mr. Earl's condition Mr. Scott thought that he might be developing ankylosing spondylitis and in November 1984 he sought the advice of a consultant rheumatologist, Dr. Jean Colston. At the time of his examination by Dr. Colston Mr Earl was complaining of pain in the back just above waist level sufficient to wake him every night and of stiffness in the morning. However, Dr. Colston could not find anything to support a diagnosis of inflammatory back disease and was of the view that the pain from which he was suffering was mechanical in origin.
8. Whatever their cause, the troublesome symptoms appear to have subsided after a time because there are no records of Mr. Earl's consulting Dr. Perry again over this particular problem until the latter part of 1988. In September 1987 he was seen by another consultant rheumatologist, Dr. Dudley Hart, complaining of pain in his knuckles. According to Dr. Dudley Hart, Mr. Earl said that his back was giving him little trouble at that stage. In November 1988, however, Mr. Earl consulted Dr. Perry again complaining of pain in his back at night, mainly at the top of the spine and lower neck. Dr. Perry referred him once more to Mr. Scott, but he was unable to find any radiological or other evidence of abnormality to account for his symptoms. He prescribed some medication and exercise. In June 1989 Mr. Earl saw Dr. Perry again complaining of persistent pain in the back which interfered with his sleep. During the summer of 1989 Mr. Earl's employers noticed that he was over-tired and allowed him to take a period of two to three months off work while the cause of his back pain was investigated. When referring him to a consultant psychiatrist, Dr. O'Connor, in August 1989 Dr. Perry described Mr. Earl as suffering from ankylosing spondylitis. This appears to be the first occasion on which this diagnosis had been positively suggested. He took a further three weeks off at a health farm at the beginning of 1990 and shortly after that Dr. Perry was reporting him as "much improved". Once again, therefore, the symptoms appear to have subsided to a marked degree.
9. During the whole of this period Mr. Earl was working for Wedd Durlacher and, following the 'Big Bang', for BZW and he continued to do so until he was made redundant at the end of January 1991. It does not appear that he suffered unduly from pain in his back during his last year of his employment with BZW, although he was taking medication to control the symptoms. Nor does he appear to have been greatly troubled by pain and sleep loss during the period between January 1991 and March 1992 while he was out of work. Indeed, Mr. Earl agreed that his back improved when the pressures of work were lifted and that during his period off work he did not suffer to any very great extent from loss of sleep.
10. However, there is other evidence that during that period the problems with his back had not completely disappeared. In the first place, Mr. Earl continued to take anti-inflammatory drugs on a regular basis. More significant in my view, however, is the evidence of the effect which the problems with his back were having on his ability to play golf. Mr. Earl has been a keen amateur golfer since he was a young man. He played off a low handicap and was an active member of the Royal Blackheath Golf Club. I think there is little doubt that golf provided Mr. Earl with his main leisure and social activity. Two witnesses who played with him regularly described the changes which they had observed in his game between 1986 and the present day. The first was Mr. James McGregor, the professional at the Royal Blackheath, who had known Mr. Earl as a member of the club since 1986. During 1988 and 1989 Mr. Earl was his partner in a number of Pro-Am tournaments, but early in 1990 Mr. McGregor noticed that his swing was becoming affected by stiffness in his back and shoulders and that he found it increasingly difficult to complete a full round. They played in only one tournament together in 1990 before the partnership had to cease. He described how Mr. Earl adapted his swing to accommodate the difficulties he was having moving his back and shoulders. Although Mr. McGregor had noticed that Mr. Earl was more mobile on some days than others, he said he had seen a steady, albeit gradual, deterioration in his condition over the period since 1990. The other witness was Mr. Kelvin McGregor-Alcorn who for a time was himself a professional golfer and has been a member of the Royal Blackheath club since 1988. He has played regularly with Mr. Earl since 1990 and described how during the intervening period he has become progressively more restricted in his ability to play the game. During the course of the trial there was debate about both the cause and severity of the symptoms of which Mr. Earl complained at various times. Whatever difficulties there may be in identifying the cause of those symptoms, however, this evidence strongly supports his account and leaves me in no doubt that he did experience the pain and stiffness which he described to an extent which markedly interfered with his normal activities.
11. There was some disagreement between the expert witnesses as to the precise cause of these symptoms. The two consultant orthopaedic surgeons who considered the case, Mr. Vanhegan and Mr. James Scott, agreed that Mr. Earl suffered from a mild form of ankylosing spondylitis as well as degenerative disease of the lumbar spine. Ankylosing spondylitis is an inflammatory disorder, however, and properly falls within the expertise of rheumatologists. Dr. Mackworth-Young, a consultant rheumatologist who gave evidence on behalf of Mr. Earl, first examined him in March 1993 and subsequently saw him on a further five occasions between April 1993 and June 1995. He also had access to Mr. Earl's medical records and to the x-rays taken over the period between 1984 and 1995. In his report he noted that these showed some degenerative changes in the cervical and lumbar spine and concluded that overall there were some features of ankylosing spondylitis as well as some features of degenerative change. He thought that these, in conjunction with the nature of the symptoms described by Mr. Earl and his acute-phase response, pointed to a diagnosis of ankylosing spondylitis, albeit in a mild form. Dr. Denman, a consultant rheumatologist instructed by Cantor Fitzgerald, took a rather different view. He felt unable to attach as much, if any, significance to the raised acute-phase response and did not think that the x-rays showed any changes characteristic of ankylosing spondylitis. He was of the opinion that such abnormalities as could be observed were consistent with congenital abnormalities and degenerative changes.
12. Both Dr. Mackworth-Young and Dr. Denman are eminent men in the field of rheumatology and in a case of this kind where the interpretation of the x-rays is open to debate it is particularly difficult for the court to decide between the views of two distinguished experts. Happily I do not need to do so in this case because during the course of the trial Dr. Mackworth-Young and Dr. Denman were able to reach a considerable measure of agreement. In particular, they agreed that Mr. Earl has suffered from disease of the lumbar, thoracic and cervical spine for at least sixteen years (that is, since at least 1984) and that this disease has produced troublesome symptoms for most of that period with frequent exacerbation. Dr. Mackworth-Young held to the view that the nature of the disease is a combination of mild ankylosing spondylitis and degenerative disease whereas Dr. Denman considered that degenerative changes were the dominant problem. However, irrespective of the precise diagnosis they agreed that the disease, although relatively mild, was severe enough to produce significant pain during the period between 1984 and the present day.

(b) Alcohol abuse

13. Mr. Earl agreed that during the years prior to 1992 he had been drinking excessively. On his admission to Huntercombe Manor hospital in October 1992 he told staff there that his average daily consumption of alcohol was eight pints of beer, one bottle of wine and one bottle of vodka. He said in evidence that that was an exaggeration, but he did not seek to deny that he had been a heavy drinker for many years. His own description of his drinking habits suggests that although the amount he consumed varied, between 1989 and 1992 he would sometimes drink seven or eight pints of beer a day as well as wine at lunch. He told me that during 1992 he began to drink at home during the evenings as well and would sometimes drink half a bottle or more of spirits at a time. The medical notes state that he was admitted to Huntercombe Manor hospital for treatment for anxiety and alcohol abuse and although it may be that he did over-state his average consumption when he was questioned by the staff, I think it likely that there were days when he did drink the quantities he described. I have no doubt that when he was admitted to hospital Mr. Earl was in need of treatment for alcohol abuse. Although they differed in their conclusions, the consultant psychiatrists who considered Mr. Earl's medical history, Dr. Frank and Dr. Field, were agreed that alcohol misuse had been a major factor in his problems.

(c) Depression

14. Mr. Earl was first referred to a consultant psychiatrist, Dr. O'Connor, by Dr. Perry in October 1986 because he was having difficulty sleeping. That was during the period between two of the bouts of back pain I described a little earlier. Dr. O'Connor diagnosed endogenous depression and prescribed a course of anti-depressive drugs. Although no formal report from Dr. O'Connor has survived (if indeed any was made), it is apparent from the notes he made on his copy of the letter he wrote to Dr. Perry in October 1986 that he saw Mr. Earl again in May 1987. On that occasion Dr. O'Connor noted that Mr. Earl was complaining of a loss of self-confidence rendering him incompetent to deal and causing anxiety. He noted that Mr. Earl disliked his work and had "lost his bottle for dealing since August '86 [the 'Big Bang'] and has never regained confidence." He noted that the position had got worse in the previous six weeks. Mr. Earl denied that he had ever considered himself incompetent to deal; he thought that Dr. O'Connor had over-simplified what he was trying to express, although he accepted that he probably had told Dr. O'Connor that he was having problems with dealing. He said that there were long periods in which he enjoyed his work and felt that he was performing competently, although there were days when he did not feel up to it and that the comments made by Dr. O'Connor reflected his feelings on bad days. There is nothing apart from this note to suggest that Mr. Earl either was, or thought himself to be, generally incompetent to do his job at that time and I very much doubt whether he really intended to give that impression.
15. Although there is no record of such a consultation, it is likely that Mr. Earl saw Dr. O'Connor again at some time in 1988 because in a letter to Dr. Perry of 16^th August 1989 Dr. O'Connor referred to having seen him a year earlier. However, I do not think it is a matter of great significance either way. In that letter Dr. O'Connor expressed the view that Mr. Earl had become clinically depressed. On seeing him again in November 1989 he found that the depression had increased; he thought the main problem was that life in the City had become a more serious affair since the 'Big Bang' and that Mr. Earl no longer enjoyed his job. It was during this period that he was also suffering from a bout of serious pain in his back. It is right to say, however, that Mr. Earl did not have any formal consultations with Dr. O'Connor after he returned to work in 1990 until June 1992.
16. Mr. Earl was examined by both Dr. Frank and Dr. Field, each of whom had access to the documents recording his medical history. Although they differed sharply in their assessment of Mr. Earl's condition at the time when he stopped work in October 1992, they agreed on the basis of the observations of Dr. O'Connor that he had previously suffered episodes of clinical depression. Towards the end of his treatment at Huntercombe Manor Mr. Earl suffered a mild hypomanic upswing which itself called for treatment. The significance of this event only really emerged in the course of Dr. Frank's evidence when he explained that a hypomanic episode of that kind is indicative of bi-polar mood disorder, a condition which renders the patient vulnerable to episodes of clinical depression and hypomania. That was a conclusion with which Dr. Field agreed, although as I have said he did not accept that Mr. Earl was suffering from clinical depression in October 1992. That is a question to which I shall return at a later point in this judgment.

(d) Under-confident personality

17. I have already referred to the fact that in May 1987 Dr. O'Connor noted that Mr. Earl complained of a lack of self-confidence and in the December of the previous year he had noted that Mr. Earl complained of periods of feeling under-confident. At a much later stage when providing the insurers with a summary of his notes on Mr. Earl in March 1995 Dr. O'Connor referred to him as having an under-confident personality. This was not, however, something which either Dr. Frank or Dr. Field specifically remarked on.

The Breakdown

18. When Mr. Earl began working for Cantor Fitzgerald on 16^th March 1992 he was asked to complete a medical history for the purposes of the company's medical insurance scheme. In response to the question seeking details of all conditions which had led to his consulting a specialist during the previous seven years he referred in very general terms to numerous consultations for "back pain", but made no reference to his consultations with Dr. O'Connor for depression, nor indeed to his consultations with other specialists for various minor matters. Nor did he mention other matters such as raised blood pressure which he agreed he ought to have disclosed. Mr. Foskett suggested to him in cross-examination that he was deliberately minimising his medical history to ensure that he was accepted for insurance without exclusions. Mr. Earl was prepared to recognise the force of the evidence, but he denied having set out to mislead the insurers and said that he had filled in the form in a hurry while he was at work and had not set out to mislead anyone. There is no doubt that the information he gave was far from complete, but I am satisfied that that was due to his filling in the form in a very casual manner rather than to an intention to mislead Cantor Fitzgerald or the insurers.
19. Mr. Earl's job as an inter-trader broker required him to be in the office between 7:15 a.m. and 5:30 p.m. with a break for lunch and involved sitting at a desk using the telephone and a computer workstation. It was, therefore, essentially sedentary in nature, although there were opportunities from time to time to stand up, move about and generally change his position. In these respects his working conditions were little different from those he had experienced at BZW following the 'Big Bang'. In about June 1992 his condition began to deteriorate again. He experienced increased pain and stiffness in his back which developed to the point where it interrupted his sleep more and more. That in turn resulted in greater tiredness during the day and difficulty in coping with the demands of his job. His mood became depressed, he suffered from episodes of anxiety and he began to drink more heavily. In late June and July 1992 he saw Dr. O'Connor who referred him to Dr. Tom Scott, a consultant rheumatologist. Dr. Scott could discern no features of ankylosing spondylitis on the x-rays and thought that the problem was caused by degenerative changes, but he did not think that it was particularly critical. However, Mr. Earl's symptoms of back pain, sleep deprivation, depression and anxiety persisted throughout the summer and he continued to drink heavily, partly to alleviate the pain. Eventually the point was reached in October 1992 at which he felt he could no longer cope. He did not attend the office on 7^th October; instead he went to see Dr. O'Connor who concluded that he had suffered a breakdown which rendered him unfit to work. Dr. O'Connor arranged for him to receive hospital treatment and as a result Mr. Earl was admitted to Huntercombe Manor hospital on 12^th October. While there he was treated for alcohol dependence and depression.
20. Whatever may have been the precise cause of his symptoms, it was common ground that by 7^th October Mr. Earl was unable to carry on doing the job for which he was employed by Cantor Fitzgerald. However, it is nonetheless necessary to consider what had led to that situation. As I have already mentioned, despite their differences Dr. Mackworth-Young and Dr. Denman agreed that Mr. Earl's condition was sufficiently severe to produce significant pain and I see no reason to reject Mr. Earl's own account of his symptoms. It was also common ground that during the months preceding his breakdown Mr. Earl had been drinking very heavily. If he was depressed as well, that would have tended to exacerbate the problem. However, although Dr. Frank and Dr. Field were agreed that Mr. Earl was and remains incapable of carrying out his former job, there was a clear difference between them as to whether he was in fact suffering from clinical depression during the months immediately preceding his breakdown. Dr. Frank thought he was; Dr. Field thought he was very unhappy, but not depressed in the clinical sense.
21. In his report Dr. Frank expressed the opinion that the symptoms of back pain, depression and alcohol misuse had evolved together over many years, each tending to exacerbate the others. In the light of the medical records, particularly the information obtained from Dr. O'Connor, Dr. Frank and Dr. Field both accepted that Mr. Earl had suffered episodes of clinical depression in the past. They also agreed that these, taken with the episode of mild hypomania which Mr. Earl experienced at Huntercombe Manor, indicated that he suffered from bi-polar mood disorder. In my view that is significant because it means that he is a person who is constitutionally liable to suffer from episodes of depression. Dr. Field thought that the root of the problem lay in the fact that Mr. Earl was just not up to the job he had taken on. In the absence of some clear organic cause he was disinclined to accept his reports of pain and stiffness in his back. When he examined Mr. Earl he did not consider that he displayed the classic symptoms of clinical depression.
22. Dr. Field's view that Mr. Earl was constitutionally incapable of doing his job at Cantor Fitzgerald rested to a degree, though not entirely, on the evidence which suggests that following the 'Big Bang' he had found his previous job at BZW disagreeable and highly stressful. There is certainly quite a body of evidence that that had been the case. Loss of confidence and dislike of his work was mentioned by Dr. O'Connor in October 1986 and again in November 1989. The notes made following his admission to Huntercombe Manor and other hospital notes record him as having said that he had wanted to leave BZW after the 'Big Bang', that he welcomed redundancy in 1991 and that he hated his new job with Cantor Fitzgerald. Mr. Earl accepted that he did not find the changes brought about by the 'Big Bang' congenial and that from time to time thereafter he found his job more difficult to cope with. He also accepted that there were times when he lost confidence and suffered from stress and anxiety, although he thought that for most of the time he performed adequately. He said that he found it very difficult to contemplate returning to work at Cantor Fitzgerald and that he suffered a panic attack when he visited the offices for the first time after his breakdown some time in 1993.
23. Dr. Field derived additional support for his view that Mr. Earl was not suffering from clinical depression in October 1992 from the fact that none of the anti-depressant drugs prescribed for Mr. Earl over the course of the previous years had had a significantly beneficial effect on his mood and from the fact that in his view Mr. Earl showed no signs of depressive illness when he examined him in April 1999. As far as the apparent ineffectiveness of anti-depressant drugs is concerned, I find that part of his evidence a little difficult to reconcile with his acceptance that Mr. Earl had indeed suffered from episodes of depression in the past. Dr. Frank suggested that the various anti-depressants were prescribed in doses that were too small to enable any reliable conclusion to be drawn. He also pointed out that the consumption of alcohol in large quantities may negate to a substantial extent the effect of such drugs. Dr. Field said that when he examined Mr. Earl in April 1999 he did not note any loss of interest; indeed he was struck by the fact that Mr. Earl was still very interested in his golf. Nor did he detect any loss of sense of humour or appetite. In short, he found nothing to suggest the presence of any psychological illness; in his view depression and anxiety were conspicuous by their absence.
24. In a case such as this it is obviously very difficult for a psychiatrist who did not examine Mr. Earl in October 1992 to make a wholly independent assessment of his condition at that time. Inevitably both Dr. Frank and Dr. Field had to take account of the views expressed by Dr. O'Connor. Insofar as they differ on this question I prefer the evidence of Dr. Frank which in my view better reflects all the independent evidence of Mr. Earl's personality and behaviour. I am satisfied on the balance of probabilities that the breakdown he experienced in October 1992 was the result of physical pain, depression and alcohol abuse, all of which combined to render him incapable of carrying on with his job. I accept that he has a basically under-confident personality, but I am not satisfied that that played a significant part in the development of his condition. I am quite satisfied that he genuinely experienced the physical symptoms which he reported at the time; whether they were exacerbated by the effects of depression does not in my view matter, although I think they probably were. I accept Dr. Frank's analysis that the effects of pain, depression and excessive consumption of alcohol evolved together, each reinforcing the others.

The nature of the scheme

25. I turn next to the application of the scheme in the present case. Mr. Foskett made a number of submissions about the fundamental nature of the scheme which it is necessary to consider at the outset since they have important implications for the approach to the construction of the individual Rules. It is convenient to begin with his submission that schemes of this kind are not generally to be understood as being intended to apply to sickness or accident caused by conditions in the workplace. That proposition rested on two pillars: an assumption which he suggested is shared by both employers and employees that a person who is incapacitated in such circumstances will have a remedy against his employer under the general law or statutory provisions; and the assumption that no insurer of a scheme of this kind would be willing to underwrite the risks of injury resulting from improper employment practices. Mr. Foskett accepted that although the particular language of the scheme must govern in each case, this proposition, if correct, must be of general application. However, it is not hard to find examples of employees' recovering under similar types of scheme in just such cases: see, for example, Hussain v New Taplow Paper Mills [1988] A.C. 514. I do not find that surprising. There is nothing in the language of the scheme to suggest that it is not intended to apply in situations of that kind and from the employee's perspective it has many advantages if it does. In particular, he knows that if he becomes too ill to work he can continue to receive a regular income without having to show that his employer was in any way at fault. In the absence of anything in the language of the scheme to suggest that it was intended to be limited in the way suggested by Mr. Foskett, I am unable to accept that part of his argument.
26. Mr. Foskett's next submission was that the scheme is not intended to cover incapacity resulting from conditions which were already in existence at the time the employee became a member. Accordingly, since Mr. Earl suffered from back pain, depression, alcohol abuse and an under-confident personality long before he joined the scheme, he is not entitled to benefits following a breakdown due to those causes. At first sight this argument may appear to have some attraction since it might seem unlikely that an employer (or indeed his insurers) would be willing to take the risk of incapacity resulting from some pre-existing condition. On the other hand, one wonders whether the parties can really have intended that the scheme should exclude an employee who became incapacitated by a condition of which, although it pre-dated his membership of the scheme, he had previously been unaware. I think that unlikely. The most obvious way to deal with a problem of that kind is to obtain information about an employee's medical history before accepting him as a member of the scheme and to restrict or exclude benefits as appropriate. In the present case Rule 4(a) goes some way towards achieving that end because it entitles the insurer to obtain from an employee when he becomes a member of the scheme such evidence of insurability, including evidence of health, as it may specify. This suggests that the company may have the right to refuse membership or impose restrictions if the insurer will not otherwise accept the risk, but the point does not arise in this case because Mr. Earl was not asked to provide evidence of health or insurability when he became a member of the scheme. It does serve to emphasise, however, that it would have been easy to exclude sickness resulting from pre-existing conditions if the parties had wished to do so. The point is reinforced by Rule 8(a) which expressly excludes sickness resulting from HIV. In the absence of any general provision in the Rules expressly excluding incapacity resulting from pre-existing conditions I can see no basis for implying a restriction of that kind.
27. Mr. Foskett's next submission concerned the character of the contract embodied in this scheme. He submitted that it is clear from the terms of the Rules themselves that the insurer is standing behind the scheme and is to have effective control over its operation. This, he argued, has a number of consequences. First, and most importantly, it means that the court should approach the construction of the Rules having regard to the principles which apply to the construction of contracts of insurance. It is therefore necessary to identify the risk which the company was agreeing to undertake which in turn makes it necessary to identify in each case an event which is the proximate cause of the consequences envisaged by the scheme, namely, incapacity to work. As will be seen, this has important implications when one comes to construe the word "sickness". Secondly, it makes the insurer the final arbiter of whether an employee's claim is well-founded or not, or at any rate whether he has provided enough support for his claim to show that it is prima facie valid.
28. In my judgment this approach to the construction of the Rules is not justified. Although the scheme is described as a "Long Term Disability Insurance Scheme", it is quite clear from the terms of the Rules themselves that it is not in any sense a contract of insurance. It is nothing more or less than an undertaking on the part of the employer to make certain payments to the employee in certain defined circumstances and subject to certain defined conditions. That is plain from the general tenor of the Rules as a whole and is placed beyond doubt by Rule 11(c) of the General Rules which makes it clear that the payments are in the nature of salary. The fact that Cantor Fitzgerald has insured its liability under the scheme and that the insurer plays a prominent part in its administration does not detract from that. I can therefore see no grounds for adopting an artificial approach to the construction of the Rules by treating them as if they embodied a contract of an essentially different kind. The language used must simply be given its natural meaning having due regard to the nature of the scheme, its function as part of the contract of employment between the employee and Cantor Fitzgerald and its general commercial context, including, to the extent that it may be relevant, the fact that it was supported by a contract of insurance.
29. As far as the second point is concerned, even taking into account the fact that the scheme is supported by insurance, I am quite unable to find anything in the Rules to support the proposition that the insurer is the final arbiter of the validity of any claim, or even of whether an employee has provided sufficient evidence of incapacity to require a claim to be considered. In support of this part of his argument Mr Foskett drew my attention to the decision in Napier v UNUM Ltd [1996] 2 Lloyd's Rep. 550, but the claim in that case was made under a policy of insurance and the policy document contained terms which are not to be found in the Rules which govern Cantor Fitzgerald's scheme. In particular, it provided that

"UNUM will pay benefits as specified . . . . . . . . on production of proof satisfactory to [UNUM] of the insured's entitlement to such benefits."

A dispute arose between UNUM and the insured as to whether he was fit to return to work. UNUM contended that the policy only required it to pay on proof satisfactory to itself of the insured's entitlement to benefit and that provided it acted bona fide its decision was binding on the insured. Tuckey J. rejected that construction of the contract holding that the clause in question related only to vouching the claim.

30. However, it is unnecessary to deal in an detail with the reasons for the decision of Tuckey J. in that case because the Rules which govern the present scheme contain no comparable provision. Although Rule 4(a) gives the insurer the right to require such evidence of active employment and insurability, including evidence of health, as it may require, it does not purport to make the insurer the final arbiter of the validity of any claim. Equally, although Rule 12 gives the insurer the right to require evidence of continuing incapacity, it does not purport to give the insurer the right to determine that question so as to bind the employee and employer. Nor do I think that Rule 11(d) is sufficient to support any such implication. Mr. Foskett did not rely on it as providing his clients with a defence to Mr. Earl's claim in this case and I would, if necessary, hold that it was an implied term of the contract between Cantor Fitzgerald and the employee that the insurance would cover any valid claim that might be made under the terms of the scheme and that Cantor Fitzgerald would, if it became necessary to do so, pursue a claim against the insurer in order to recover any amounts which it was liable to pay its employees. Ultimately, therefore, it is for the court to decide whether Mr. Earl was and remains incapacitated.

The Rules

31. In these circumstances it is necessary to turn to the terms of the Rules themselves to see whether Mr. Earl became entitled to receive benefits under the scheme. Under Rule 6(a) an employee who becomes an Incapacitated Member becomes entitled to receive benefits on completion of the Deferred Period. (I do not think that the requirement that he become a "totally" Incapacitated Member in this Rule adds anything to the definition of Incapacitated Member which itself requires that he be totally unable to follow his Occupation.) In order to be an Incapacitated Member an employee must become totally unable by reason of sickness or accident to follow his Occupation while "in service"; and in order to be in service he must have previously been in "continuous active service". One of the grounds on which UNUM rejected the claim in this case was that Mr. Earl had not been actively at work when the scheme came into effect in September 1992 because he was already suffering from the conditions which resulted in his breakdown only a few weeks later. It is necessary, therefore, to consider whether Mr. Earl was in active service prior to 7^th October 1992.

"Active service"

32. It is common ground that Mr. Earl was in the full-time employment of Cantor Fitzgerald when the scheme came into effect on 11^th September 1992 and that consequently on that date he became a Member as defined in Rule 2. The Rules contain no definition of the term "active service" for this purpose, but some assistance can be derived from Rule 4(a). The second sentence of that Rule deals with the position of an employee who is eligible for membership and becomes a Member of the scheme at a time when he is already unable to work through sickness. It uses the expression "actively employed" to mean that the employee in question is working the normal basic hours in his usual job. In my view the expression "active service" should be construed in the same way. Despite the doubts which have been expressed about Mr. Earl's fitness for work, it has been accepted that from the time he joined the company until the time he went off sick he was attending the office on a daily basis during normal working hours and was carrying out the duties expected of him with reasonable efficiency. In those circumstances I am satisfied that he was actively employed throughout that period and that he was in active service within the meaning of the Rules when the circumstances which prevented him from working overtook him.

"Totally unable . . . . . . . . to follow his Occupation"

33. Having regard to the definition of "Occupation" in these Rules, I think that the expression "totally unable . . . . . . to follow his Occupation", taken by itself, naturally means that the employee is no longer capable of carrying out the duties which would enable him to be employed in his current position, whether full-time or part-time. However, that is not altogether easy to reconcile with the words that follow ("and is not following any occupation except as provided under the reduced benefit provision of General Rule 6(b)") and with Rule 6(b) itself. That Rule expressly contemplates that a person may remain an Incapacitated Member even though he is capable of returning to his job on a part-time basis. Despite the awkwardness of the drafting, however, I think that the intention is reasonably clear. The key lies in the use of the expressions "after becoming an Incapacitated Member" and "returns" in Rule 6(b). In order to become an Incapacitated Member in the first place an employee must be totally unable to do his job. However, once the Deferred Period is over he becomes entitled to receive benefit under the scheme and thereafter he remains an Incapacitated Member even though he is able to return to work on some less remunerative basis. That applies even if he is able to return to the same job on a part-time basis. This seems to me to be entirely consistent with the overall objective of the scheme which is to provide employees with protection against long-term disability. It was common ground that when Mr. Earl stopped work in October 1992 he was totally unable to continue doing his job.

"Sickness"

34. One of the main issues between the parties in this case has been whether Mr. Earl became totally unable to do his job "by reason of sickness" within the meaning of the Rules. Mr. Foskett submitted that he did not. His first argument was that the Rules were not intended to cover the deterioration of a condition or combination of conditions which already existed prior to the inception of the scheme. I have already rejected that argument. His second argument was rather more complicated. He submitted that in order to claim benefits under the scheme the employee must be able to show that sickness was the proximate cause of his incapacity. In the present case there were four possible causative factors: pain caused by disease of the spine, depression, alcohol dependence and personality defect. Of these he accepted that pain caused by disease of the spine and clinical depression amounted to "sickness", but not alcohol dependence or personality defect which he submitted must be regarded as excepted from the term "sickness". Mr. Earl's claim must therefore fail for one or other of two reasons: either because he could not show that his sickness did not itself result from one or other of the excepted conditions; or because his incapacity resulted from a combination of sickness and one or more excepted causes thereby exempting Cantor Fitzgerald from any liability. In support of that argument he relied on various passages from The Law of Insurance Contracts (Clarke) 3^rd ed. ch. 25 dealing with causation, especially those dealing with the decision in Wayne Tank & Pump Co. Ltd v Employers' Liability Assurance Corpn Ltd [1974] Q.B. 57.
35. There are many reasons why I am unable to accept this line of argument. In the first place, I am unable to accept that the word "sickness" should be construed as referring to a supervening event, such as the onset of a disease. This is a reflection of the argument which I have already rejected that the scheme should be construed as if it were a contract of insurance. In my judgment the word "sickness" is intended simply to describe a condition; that is, it refers to the absence of good health, without regard to the underlying cause of that condition. If a want of good health is so serious as to render an employee totally unable to do his job he is in every sense incapacitated "by reason of" sickness. In my view that is the natural meaning of the words used, which I think is reinforced by the absence of any exclusions (save in Rule 8(a)) for pre-existing conditions. Some support for this conclusion can also be found in the decision of the Court of Appeal in Maloney v St Helen's Industrial Co-operative Society Ltd [1933] 1 K.B. 293. In that case the court was concerned with the construction of a contract of employment which provided for the payment of wages during periods of sickness. The issue was whether the word "sickness" was apt to cover temporary disability caused by an accident at work or was limited to disability caused by disease. Having pointed out that "sickness" is an ordinary word with no technical meaning, Scrutton L.J. identified three different meanings, one of which was bodily incapacity as distinguished from bodily health. He put the matter in this way at page 297:

"In my view the word "sickness" is very commonly used to denote a body in imperfect health, whether that condition arises from disease or accident. If I ask myself what the parties to the arbitration in which this award was made were thinking about, and what language they were familiar with when they used the word "sickness", I answer that they were considering the case of a workman who for some reason was prevented from being on duty and deciding what he should receive as wages during that period." (My emphasis).

In my view the same considerations apply in the present case. At various points in his judgment Scrutton L.J. refers to "bodily" health, but I do not think he was seeking to draw a distinction between physical and mental health and I can see nothing to suggest that the parties in the present case intended to limit themselves to physical as opposed to mental illness. Such a distinction would be quite contrary to the objectives of the scheme. In my judgment, therefore, the scheme was intended to apply to all cases where a member is prevented by illness of any kind from carrying out his existing employment.

36. It follows that in my judgment the underlying cause of an employee's ill-health is irrelevant, at least as far as concerns the meaning of the word "sickness". However, even if I am wrong about that, there are other difficulties in the way of Mr. Foskett's argument. Even if, as he submitted, sickness requires some supervening disease and does not include alcohol dependence or personality defect, these cannot properly be regarded as excepted perils of the kind with which the court was concerned in the Wayne Tank & Pump case in the absence of some express provision in the Rules to that effect. As I have said, I am satisfied that Mr. Earl's condition was the result of the combined effects of disease of the spine, depression and alcohol dependence. Even if one were considering this question in the context of a policy of insurance he would be entitled to recover, in the absence of express exceptions, if any one of those was an insured peril: see The Miss Jay Jay [1987] 1 Lloyd's Rep 32. Accordingly the argument fails on this ground as well.

Self-induced sickness

37. There is one further line of argument which it is necessary to consider. Mr. Foskett submitted that Mr. Earl effectively made himself ill by accepting a job which he was constitutionally incapable of doing and which was bound to lead to a breakdown of the kind which he suffered in October 1992. The scheme cannot, he submitted, have been intended to provide benefits to a person who has incapacitated himself in this way.
38. I think that the question of self-induced sickness raises some difficult issues. To take an extreme case, I can see that a person who took a job knowing that it would make him ill, for example because he knew that he would inevitably come into contact with substances to which he was allergic, might well not be entitled to recover under a scheme of this kind. Such conduct could be regarded as tantamount to fraud and it was not suggested that the present case was of that kind. However, Mr. Foskett submitted that an employee would equally be disqualified from receiving benefits if he had become incapacitated as a result of taking a calculated risk that his conduct would cause him harm. In support of that proposition he drew my attention to the case of Dhak v Insurance Company of North America (UK) Ltd [1996] 1 Lloyd's Rep. 632. That case concerned a policy covering the insured in respect of death or bodily injury caused by accident. The insured died as a result of inhalation of vomit resulting from drinking a very large quantity of alcohol. The Court of Appeal held that although the insured died as a result of a bodily injury, that injury was not "caused by accidental means" within the meaning of the policy because in drinking such a large amount of alcohol she had taken a calculated risk of sustaining some bodily injury. Neill L.J., with whom the other members of the court agreed, emphasised that when considering this question it is necessary to take account of the insured's knowledge and apply the standard of foresight of the reasonable person with the attributes of the insured.
39. I have already explained why I do not think that under the present scheme it is generally relevant to enquire into the underlying cause of the sickness which has made the employee incapable of doing his job. On the other hand, I can see some force in the argument that the scheme cannot have been intended to allow an employee to receive benefits if he is incapacitated as a result of some act which clearly exposed him to a significant risk of serious bodily harm. However, this is not a point which I need to decide in the present case. Although Mr. Earl did not always find it easy to cope with the demands of his job, he was employed by BZW for over four years following the 'Big Bang' in a working environment similar to that which he was entering with Cantor Fitzgerald and generally did his job satisfactorily. It is true that in some respects he welcomed redundancy when it came and that he sought to find some quite different form of employment during the fifteen months he was away from the City. However, having seen Mr. Earl in the witness box, I am quite unable to accept any suggestion that he accepted the job with Cantor Fitzgerald knowing that he was taking a significant risk of having a complete breakdown.

Continuing incapacity

40. There remains the question of Mr. Earl's present condition. The disagreement between Dr. Frank and Dr. Field which emerged in relation to Mr. Earl's condition in October 1992 was, if anything, sharper in relation to his present condition. Dr. Frank considered that he remained incapable of returning to work as a broker because of his continuing problems of pain and depression. Dr. Field was of the opinion that Mr. Earl does not suffer from depression and was doubtful about the severity of the symptoms of pain and stiffness in his back. He considered that Mr. Earl was psychologically incapable of returning to work in the City rather than being rendered incapable of doing so by any form of disease. For the reasons I have already given I am satisfied that Mr. Earl's account of his symptoms was genuine and I therefore prefer Dr. Frank's evidence in relation to his present condition. However, it is significant that none of the doctors who have examined Mr. Earl consider him capable of returning to his old job.

Termination of the contract

41. It follows from what I have already said that in my judgment Mr. Earl did become totally unable by reason of sickness to follow his occupation and therefore became entitled to receive benefit in accordance with the Rules of the scheme once the deferred period had elapsed. In fact Cantor Fitzgerald paid Mr. Earl rather more generously than was required by the scheme throughout the period during which his claim was under consideration. Eventually, however, the company terminated his contract of employment on 29^th October 1996 after it had become clear that the insurer had finally refused to accept the claim. At that point he ceased to be a member of the scheme and his right to receive further benefit came to an end. However, since the only ground upon which his contract was terminated was his continuing inability to return to work due to sickness, Mr. Foskett accepted that that constituted a breach of contract on the part of Cantor Fitzgerald and I think he was right to do so. There is a growing body of authority to the effect that when an employee's contract of employment incorporates a permanent health scheme of the kind which existed in this case it is an implied term of the contract that once the employee has become entitled to the benefits due under the scheme the employer will not dismiss him simply on the grounds of his continuing incapacity to work: see Aspden v Webbs Poultry & Meat Group (Holdings) Ltd [1996] IRLR 521, Adin v Sedco Forex International Resources Ltd [1997] IRLR 280, Brompton v AOC International Ltd [1997] IRLR 639, Hill v General Accident Fire & Life Assurance Corporation [1998] IRLR 641 and Villella v MFI Furniture Centres Ltd [1999] IRLR 468. It was not suggested that Mr. Earl had failed to accept the repudiation of his contract of employment; the only remaining question, therefore, concerns the amount which he is entitled to recover by way of damages.

Damages

42. If Mr. Earl had not been dismissed in October 1996 he would have continued to receive benefits under the scheme until he ceased to be incapacitated or reached the age of 60. The starting point for damages, therefore, is the amount of the benefit he would have received during the whole of that period, including any incidental benefits which he would have continued to receive as an employee. Mr. Foskett submitted, however, that Mr. Earl was under a duty to mitigate his loss by seeking alternative employment but had failed to do so. Accordingly, some reduction in damages ought to be made to reflect the earnings which he could have received in the past and for earnings which he ought to receive in the future. Mr. Hendy Q.C. submitted, however, that the ordinary rules concerning mitigation cannot apply in a case such as the present because the scheme imposed no obligation on Mr. Earl to seek alternative employment while he remained an Incapacitated Member. He submitted that in these circumstances Cantor Fitzgerald could not improve its position by dismissing Mr. Earl in breach of contract, so forcing him to make a claim in damages.
43. Under the Rules an employee in Mr. Earl's position remains an Incapacitated Member until he is fit enough to return to his normal job or he leaves Cantor Fitzgerald's service and benefit remains payable throughout the period of his incapacity. If the employee is capable of doing some other job or is able to return to his original job on a part-time basis, and does in fact do so, Rule 6(b) provides for him to receive a reduced benefit. The way in which Rules 6(b) and 7 are formulated supports the view that an employee who is unable to do his normal job may find work elsewhere without losing his status as an Incapacitated Member, but there is nothing in the Rules which expressly requires him to seek alternative work. However, under Rule 12 an Incapacitated Member may be required to provide evidence of his continued incapacity at such times and in such form as the insurer may require and this includes an obligation to submit to examination by the insurer's medical advisers. To that extent the positions of the employer and the insurer are both safeguarded.
44. Mr. Foskett submitted that there is an implied obligation on an Incapacitated Member to make reasonable efforts to find alternative work within his reduced capabilities, but I find it difficult to reconcile any such implied term with the language of the Rules. In my view Mr. Hendy is right in saying that the scheme itself does not impose any duty on an Incapacitated Member to seek alternative employment; he simply becomes entitled to receive benefits for as long as he remains unable to resume his normal job. This aspect of the scheme means that the contract between Cantor Fitzgerald and an Incapacitated Member takes on a rather unusual nature because, although the member nominally remains in Cantor Fitzgerald's service, while he remains incapacitated nothing further is required of him in return for his right to receive benefits under the scheme. At most he must hold himself available to return to work if and when he becomes fit to do so, but in the case of an employee who has become permanently incapacitated the relationship between the parties becomes virtually one of creditor and debtor.
45. Mitigation and causation are really two sides of the same coin: see the comment of Sir John Donaldson M.R. in The Solholt [1983] 1 Lloyd's Rep. 605, 608 cited in McGregor on Damages, 16^th ed., paragraph 298. In a case where an employer who is left with nothing more than an obligation to pay benefits under a scheme of this kind wrongfully dismisses the employee, so ending his right to receive benefits, I think it is difficult to say that any part of the employee's loss has been caused by his own unreasonable behaviour in failing to obtain alternative employment. It may be that in such cases the employee would do better to refuse to accept a repudiation of his contract of employment (see Brompton v AOC International Ltd ), but in many cases that may not represent a practical possibility. Where the contract has been terminated I think there is a strong argument, therefore, for saying that an employee who was entitled to benefits under this particular scheme is under no duty to mitigate his loss by seeking alternative employment.
46. However, it is unnecessary to reach any final conclusion about that because I am unable to accept that there has in fact been any failure on the part of Mr. Earl to obtain alternative employment which was actually available to him. The fact is that Mr. Earl is not well placed to find employment. His continuing ill-health reduces the number of jobs which he is capable of doing and his training and experience in the City have not qualified him for other less specialised types of work. Until recently he has restricted himself to various unpaid and charitable activities, although he has also tried to return to organising corporate hospitality in the form of golfing days and has applied, unsuccessfully, for the post of secretary to a number of golf clubs. In the last few months he has also begun to investigate the possibility of taking up various administrative jobs in his home locality. I think it is fair to say that while he was in receipt of benefits he felt little incentive to seek regular paid employment, but such efforts as he has made since then do not suggest that he is likely to find a job easily. In the end I am not persuaded that employment was available for Mr. Earl if only he had made greater efforts to obtain it and I am therefore unable to accept that if he had a duty to mitigate his loss he failed to do so.
47. That brings me finally to the question of quantum. At the time of his dismissal in October 1996 Mr. Earl was aged almost 42. The medical evidence suggests that he is most unlikely ever to be capable of returning to his old job; in my view the possibility is too remote to be taken into account. I approach the quantification of his claim, therefore, on the basis that he could look forward to receiving benefit under the scheme for a further 18 years until he reached his Terminal Date at the age of 60. It was agreed that after allowing for tax and National Insurance and (in the case of future loss) discounting for acceleration and for the chances of death before reaching the Terminal Date, the full amount of his claim for loss of benefit (including interest as appropriate) is £514,841.80. However, that leaves the question whether some allowance ought to be made for the chance that Mr. Earl will in fact obtain some paid employment during the remainder of the period in which he would have been entitled to receive benefit, and if so, whether that should be taken into account in reduction of his damages.
48. I think it unlikely that Mr. Earl will choose to remain inactive if the opportunity to work is available. Ideally he would have liked to find some employment linked to his interest in golf and he has already applied for positions as secretary of a golf club. However, his long absence from the labour market, his age and his physical condition, which is likely to deteriorate as time goes on, all tend to reduce his prospects of obtaining a job of any kind. I do not think that the chances of his being employed as secretary of a golf club are sufficiently great to justify any allowance being made for them. On the other hand, I do think that there is a real prospect that Mr. Earl will eventually obtain an administrative job of some kind which will provide him with an outlet for his energies and a modest income. Whether he will be able to work full-time is, I think, much more debatable and there remains a very real risk that his health will prevent him from continuing in employment until he is 60. It was agreed that full-time employment of the kind just mentioned, if available, would provide an income of about £11,000 a year rising by £1,000 a year over four years to £15,000 a year. Part-time employment would produce a starting rate of between £6,500 and £8,000 a year depending on the number of hours worked. Adopting those figures and doing the best I can to allow for all the factors I have just mentioned, I think that it is appropriate to assess Mr. Earl's likely future earnings at £95,000. This represents a further 1½ years unemployment followed by 5 years' full-time employment at rates rising from £11,000 to £15,000 a year, followed by 4 years' half-time employment at £7,500 a year and a further 4 years' unemployment. These earnings should be taken into account because they would have led to a reduced benefit under the terms of Rule 6(b) of the scheme, but they would not have led to a directly equivalent reduction in the amount of the benefit received by Mr. Earl because the reduced benefit payable under Rule 6(b) is a proportion of the employee's net loss of earnings. In order to reflect that factor the discount for future earnings should be reduced by 25% to £71,250. However, these amounts represent gross earnings and it is therefore necessary to make a further reduction in respect of tax and National Insurance in order to arrive at a figure for net earnings. In my judgment an adjustment of 25% would be appropriate for those purposes bringing the final figure down to £53,437.50.
49. In these circumstances Mr. Earl's claim for loss of benefit under the scheme succeeds in the sum of £461,404.30. He is also entitled to recover damages to compensate him for the loss of the medical insurance which he would have continued to enjoy while he remained an employee of Cantor Fitzgerald. The appropriate amount calculated on the basis of agreed figures is £49,020.70.