Scottish Court of Session Decisions

OUTER HOUSE, COURT OF SESSION
A2788/01	OPINION OF T.G. COUTTS, Q.C. sitting as a Temporary Judge in the cause IAN SMITH WATSON Pursuer; against STUDENT LOANS COMPANY LIMITED Defenders:   ________________

 

 

Pursuer: Mitchell, Q.C., Skinner; Balfour & Manson (for Hughes Dowdell, Solicitors, Glasgow)

Defenders: Connal, Q.C.; McGrigor Donald

24 October 2002

Introductory

1. The late Ronald Joseph Harrison was dismissed by the defenders on the ground of gross misconduct on 10 March 1995. At that date he was absent from his employment on account of illness and was in receipt of sick pay. He was never thereafter fit for work. His "normal retirement date" was to occur on his 63^rd birthday.
2. He raised this action in 1996 against his former employers claiming damages for wrongful dismissal, but he died on 18 January 2000 before the present stage in the process. The present pursuer succeeded to the action and continued it as executor. I was informed that prior to his death, Mr Harrison's evidence was taken on commission.
3. The case appeared on Procedure Roll on the defenders' general plea to the relevancy of the action. The argument presented was not, however, directed to that generality and the precise points raised in the argument were not foreshadowed by appropriate pleas. However, the debate proceeded with the defenders arguing firstly, that the pursuer's averments of loss were irrelevant and, secondly, two matters of pleading by way of complaint about lack of specification. The first of these pleading points had to do with the pursuer's averments of lack of "proper investigation" but, after amendment, no substance remained in that point. The second, also directed to lack of specification, concerned the averments of the deceased's "instructions" or "remit". Again, a minor amendment removing the words "in particular" at p.7A, in the view of the court, cured the only difficulty which might have prevented a proof before answer on the merits.
4. The substantive argument presented by the defender was in relation to the averments of loss, which only arose if wrongful dismissal was established. The argument proceeded upon a construction of the deceased's service contract. Clause 10 thereof, provided that there could be immediate dismissal for gross misconduct. It was argued if that wrongful dismissal was established the provisions of Clause 2.3 operated to determine the extent of loss claimable by the pursuer to a maximum claim of twelve months' earnings from the date of dismissal.
5. Clause 2.3 reads:

"The Executive's employment hereunder shall be for a fixed period terminating on 9^th January 1998 unless previously renewed or replaced or unless terminated in the interim by the Company under Clause 10.1 hereof or by either party giving to the other twelve months prior written notice at any time prior to 10^th January 1997."

It was contended that the pursuer's pleadings incorrectly proceeded on the basis that he was entitled to remain until normal retirement age. Under reference to the authority of Morran v Glasgow Council of Tenants' Associations & Others 1997 S.C. 279 the defenders were entitled to fulfil their contract in the way least burdensome to them. In particular, it was there held that in an action for damages for breach of contract the pursuer was only entitled to recover the damages which would put him in the position in which he would have been if the defenders had fulfilled their obligation in the way which would have been least burdensome to them. In that case that was a payment in lieu of notice. That, not what the pursuer might have earned had the contract been continued was the measure of damages. Accordingly, it was argued, the only damages the pursuer could obtain in the present case, standing Clause 2.3, was his loss of such earnings as he would have obtained in the year of notice to which he was entitled. No question of any loss to normal retiring age could arise.

6. The pursuer's response was that if one had regard to the whole terms of the contract the defenders had no entitlement in the circumstances of the case to dismiss the pursuer other than for good cause, such as gross misconduct.
7. Clause 5 of the service agreement reads:

"5.1 If the Executive is absent as a result of sickness or injury he will comply with the Company's requirements for the time being in force as to notification of absence, details of which are available from the Secretary of the Company.

5.2 The Executive will be entitled to payment of his salary at the full rate (less any social security or other benefits payable to him) during any periods of absence from work as a result of sickness or injury up to a maximum of 26 weeks in aggregate for any twelve consecutive months.

5.3 The Company will pay statutory sick pay, where appropriate, in accordance with the legislation in force from the time of absence, and payment of salary in accordance with Clause 5.2 above will go towards discharging its liability to pay statutory sick pay.

5.4 The Company will maintain and continue to maintain for at least the period of this Agreement the Permanent Health Insurance Scheme which is currently in force for the benefit of employees of the Company including the Executive, the benefits of which are set out in the Schedule."

It was argued that the effect of that is that the pursuer could not be dismissed when 5.2 was in operation. On the facts the pursuer was off sick and he would have been entitled to receive the benefits provided for by that Clause where that situation pertained. Curiously, the least burdensome way for the defenders to have relieved themselves of the provision of the contract would have been to allow the matter to run until the permanent health insurance became exigible. However they did not do that and as a result the pursuer lost the benefit of his permanent health insurance. That was the damages claimed.

8. The pursuer contended that the reasoning in Hill v General Accident Fire and Life Assurance Corporation Ltd 1999 SLT 1157 applied. So, if the pursuer succeeded in his principal contention, there was no "good cause" to dismiss on notice, and he was entitled to all the benefits of the contract which he would otherwise have had. A year's notice would not have applied since that could not be given while the benefits under Clause 5 were available to the pursuer.
9. The pursuer also referred the court to Adin v Sedco Forex International Resources Ltd 1997 I.R.L.R. 280 and Aspden v Webbs' Poultry and Meat Group (Holdings) Ltd (1996) I.R.L.R. 521, both of which were considered by Lord Hamilton in Hill.
10. I adopt the approach of Lord Hamilton at p.1161 in Hill. I reject at this stage an interpretation of the contract of service which would have the effect of taking away the rights given to the employee at the employers' discretion without cause. The contract must be read as a whole as conferring a remuneration package.
11. In the present case, and in relation to this service contract, there was open to the employer an opportunity to dismiss for gross misconduct. The question before the court at the moment is merely the measure of damages if the dismissal was wrongful. The court would not endorse any summary dismissal at the whim of the employer when an employee was off sick, whether that be considered as a matter of implied term as in Aspden or as a construction of the instant contract. There are other ways of dealing with the dismissal of a sick employee which may be regarded by a court or tribunal as not being unfair.
12. In any event in the present case the defenders could not have dismissed the pursuer save on a year's notice. While such notice ran, the other provisions of the contract which served to protect the employee would continue to operate. His sickness benefit would ultimately convert to long-term disability payments. An employee on notice is still an employee, is still bound by and entitled to benefit from the relevant provisions of his contract of service. If that contract is breached the damages which flow from it are those sustained by the employee as a result of that breach, which in the present case includes damages for loss of his entitlement to long term disability payments.
13. I accordingly decline to sustain the defenders' first plea-in-law. I shall allow a proof before answer with all pleas standing.