Greenway & Ors v Johnson Matthey Plc  EWCA Civ 408
Claimants' claims of significant loss of earnings as a result of losing their relatively highly paid jobs working in the areas of the factories in which it was known that there was an increased risk of exposure to platinum salts and being unable to take up work in any other work environment in which such exposure might arise. Appeal dismissed.
The Claimants all tested positive for platinum sensitisation and were removed from that workplace environment. For different reasons, four of them could not be redeployed within Johnson Matthey's workforce or their redeployment failed, and each was then dismissed or resigned. These appellants, apart from one, received the relevant "ex gratia" payments under the collective agreement terms. Mr Greenway remained employed by Johnson Matthey in work settings which did not involve exposure to platinum salts; he claimed that he had suffered financial loss through loss of promotion prospects with the company. The judge reviewed relevant authority and held that they had not suffered an actionable injury, and that properly analysed the appellants were claiming damages for pure economic loss. Their claims were dismissed and they appealed.
The appeal was dismissed. The collective agreement terms made provision for the protection of the employee's economic interests in relation to possible sensitisation to platinum in the course of their employment. It was not fair, just or reasonable in these circumstances to hold Johnson Matthey liable in relation to such financial consequences.
Case No: B3/2014/4159, B3/2014/4168,
Neutral Citation Number:  EWCA Civ 408
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
MR JUSTICE JAY
Royal Courts of Justice
Strand, London, WC2A 2LL
MASTER OF THE ROLLS
**LORD JUSTICE DAVIS
LORD JUSTICE SALES
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(1) DANIEL GREENWAY
(2) WAYNSWORTH DRYDEN
(3) DEAN WHITE
(4) SIMON YORK
(5) TONY CIPULLO (Claimants)
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JOHNSON MATTHEY PLC (Defendant)
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Frank Burton QC, Harry Steinberg QC & Edward Ramsay (instructed by Slater & Gordon (UK) LLP) for the Claimants
Michael Kent QC (instructed by Weightmans) for the Defendant
Hearing dates : 23 February 2016
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Lord Justice Sales:
- This is an appeal from the judgment of Jay J in a trial on the issue of liability in which he held that the respondent ("Johnson Matthey") was not liable in damages to the appellants for breach of statutory duty, negligence or breach of contract arising out of their employment by Johnson Matthey at its chemical plants in Royston (Messrs Greenway, Dryden, White and York) and Brimsdown, Enfield (Mr Cipullo).
- The judge held that the appellants had no completed cause of action in tort and were not entitled to recover anything more than nominal damages for breach of contract. He held that they had not suffered any physical injury as necessary to give them a cause of action in tort, on the basis of which they could claim damages for consequential loss of earnings suffered by them. He analysed their claim as being, in truth, a claim for pure economic loss. The judge also held that the losses the appellants claimed to have suffered were outwith the scope of the relevant contractual duty owed to them by Johnson Matthey under their contracts of employment.
- In this court, alongside their challenges to these rulings by the judge, the appellants were given permission by Aikens LJ in advance of the hearing to argue a case not put below, namely that if their losses are properly to be regarded as in the nature of pure economic loss, Johnson Matthey owed each of them a duty of care in tort to hold them harmless from that sort of loss. Accordingly, we heard wide-ranging submissions on this point which had not been made to the judge.
The factual background
- Each of the appellants worked for Johnson Matthey in factories making catalytic converters. The production process involved use of platinum salts. The factories were not properly cleaned. Johnson Matthey does not contest its breach of duty in that regard under regulation 5 of the Workplace (Health, Safety and Welfare) Regulations 1992 and regulations 7 and 12 of the Control of Substances Hazardous to Health Regulations 1994. As a result, each of the appellants was exposed to platinum salts in the course of their employment to a greater extent than they should have been.
- There are two conditions to which exposure to platinum salts can give rise. A first stage is that an individual can become sensitised to platinum salts ("platinum sensitisation"). Platinum sensitisation does not have symptoms or create any adverse effects for the individual in carrying on ordinary life. It is detectable by the reaction of the skin to a skin prick test. The medical expert evidence at trial, as accepted by the judge, was to the effect that an individual who has merely been sensitised to platinum salts "is not limited in any way in the course of their life except **that they must avoid circumstances in which they are exposed to platinum salts." Platinum salts are not encountered in everyday life, but only in relation to certain specialist workplace environments.
- Sensitisation can be the first step in the process whereby, with continued exposure to platinum salts, an individual develops a full–blown allergy to platinum salts ("platinum allergy"). An individual who develops platinum allergy may show symptoms such as running eyes or nose, skin irritation or bronchial problems. It was common ground that an employee who came to suffer platinum allergy as a result of improper exposure to platinum salts at work would have suffered physical harm or injury of a kind sufficient to give rise to a cause of action in tort.
- By reason of the potentially harmful effects from development of platinum allergy, the appellants' trade union had negotiated a collective agreement with Johnson Matthey. This was incorporated into the individual contracts of employment of the appellants. The collective agreement provided for regular skin prick testing of individuals employed in the relevant locations every three months to screen for anyone who might have developed platinum sensitisation and thus would be at risk of progressing to develop platinum allergy; for individuals who had a reaction to the skin prick test to be removed from work which exposed them to platinum salts and, if possible, redeployed elsewhere by Johnson Matthey to a work environment in which they would not be so exposed; and for any employee who could no longer remain working in a factory as a result of platinum allergy and could not be redeployed to be dismissed under special termination conditions which included what was referred to as an "ex gratia" compensation payment, which was in fact a matter of contractual entitlement. In addition, individuals working in factory areas in which there could be exposure to platinum salts were paid salary at a higher rate.
- Each of the appellants was employed by Johnson Matthey to work in areas in its factories in which they were capable of being exposed to platinum salts. Accordingly, each of them was screened under these testing arrangements. Each of them, at a point in his employment, tested positive for platinum sensitisation; and at that point he was removed from that workplace environment. For different reasons, four of them could not be redeployed within Johnson Matthey's workforce or their redeployment failed, and each was then dismissed or resigned. These appellants, apart from Mr White, received the relevant "ex gratia" payments under the collective agreement terms, but as was made clear by those terms this did not preclude them from bringing a claim against Johnson Matthey. Mr Greenway remained employed by Johnson Matthey in work settings which did not involve exposure to platinum salts; he claims that he has suffered financial loss through loss of promotion prospects with the company.
- The appellants then commenced these proceedings against Johnson Matthey. They claim significant loss of earnings as a result of losing their relatively highly paid jobs working in the areas of the factories in which it was known that there was an increased risk of exposure to platinum salts and being unable to take up work in any other work environment in which such exposure might arise.
The claim in tort: damages for physical injury and consequential loss
- It is common ground in relation to the standard causes of action pleaded in tort in negligence and for breach of statutory duty which were in issue at first instance that in order to establish liability the appellants have to show that they had suffered actionable physical injury. The appellants maintain that they have done, because their bodies have undergone a physical change by acquiring platinum sensitisation (as revealed by the skin prick test) and this has had an adverse effect upon them, as it has meant they have lost their jobs and cannot work in an environment in which they might be exposed to platinum salts. The judge reviewed relevant authority and held that they had not suffered an actionable injury, and that properly analysed the appellants were claiming damages for pure economic loss: paras. -.
- In my view, the judge was right about this.
- The appellants rely on Cartledge v Jopling:  1 QB 189, CA, and  AC 758, HL. The judge provides a careful and helpful analysis of the case. It concerned a claim by men employed as steel dressers in the defendant's factory who contracted pneumoconiosis, a disease in which slowly accruing and progressive damage may be done to the lungs of an individual exposed to fine silica dust without his knowledge. The question in the case was whether the claims were statute-barred; this depended on when the cause of action in tort first accrued through the occurrence of an actionable physical injury.
- The key findings of fact by the trial judge are noted at  AC 758, 761-2, as follows:
"The disease was caused by the inhalation of invisible and infinitesimal particles of fragmented silica which entered the lymphatic vessels forming part of the lung tissue. Either by their sharpness or by some toxic action they damaged the tissue and caused minute scars. The scarred tissue was inelastic and could not perform the functions of the unscarred tissue. As the amount of scarred tissue increased with continued inhalation of the particles, so the efficiency of the lung tissue was reduced. "The ordinary man in normal health," said the judge, "has when young a substantial surplus of lung capacity upon which he need never call save in the exceptional case of severe illness or extraordinary exertion; and until the damage is sufficiently material to diminish this surplus capacity there may be no indication of shortness of breath or other clinical sign or symptom of lung disease; and if during this stage a patient is removed from exposure to these fine particles of silica, no more damage will be done, and his condition should not further deteriorate in the absence of some complication, and it may well be that he will never become aware or have any reason to suspect that any damage has been done to his lungs." No treatment, however, could repair the damage that had already been done to the lung. The disease might make a patient more vulnerable to tuberculosis, and when it got to a more advanced state it might increase of itself without the further inhalation of particles. In any serious case there was a reduction of the expectation of life."
- In this court, Pearson LJ said this at  1 QB 189, 208:
"Both theories have in common this point, which is indeed obvious, that damage has occurred and the cause of action is complete when the plaintiff concerned has suffered serious harm. In the end that must be the test. Had these plaintiffs suffered serious harm by the critical date, October 1, 1950? The injured condition of the lungs has to be advanced – the scarring has to be extensive – before signs of the disease will appear in an X-ray examination. The judge made findings which Mr Waller was on the evidence unable to challenge, that, in the case of each of the plaintiffs except South, X-ray examination in October, 1950, would have revealed the existence of the disease. It appears from the judgment below (unless there was some misunderstanding) that in the court below, Mr Waller, after some discussion, conceded that he could not maintain the contention that a man who was shown by X-ray examination to have pneumoconiosis had not suffered damage. In this court, Mr Waller was not held bound by this concession and argued to the contrary. But without any concession, the point is clear from the evidence and the contrary argument cannot succeed."
- At p. 210, in a passage on which the appellants placed particular reliance, Pearson LJ said:
"In deciding whether a cause of action had accrued at the stage of the pneumoconiotic condition which had been reached by the plaintiffs at the critical date, one has to envisage the possibility of an action being brought at that stage. Suppose that some steel-dresser, having reached that stage of the condition and having become aware of it by X-ray examination or otherwise, prudently decided to give up his well-paid occupation as a steel-dresser for some less lucrative occupation free from dust, and brought an action against his former employer for damages in respect of injury to the plaintiff's lungs and his loss of earning capacity. It is assumed that the employer had committed breaches of statutory or common law duty causing or contributing to the causation of the injury. It would be very remarkable if the plaintiff's action failed on the ground that he had not suffered any damage, because there was not yet any clinical symptom such as shortage of breath and not yet any loss of faculty."
- I do not think that this passage assists the appellants. In discussing the scenario set out in it, Pearson LJ was explicitly making the assumption that there was "injury to the plaintiff's lungs" (that is to say, a physical injury sufficient to complete the relevant cause of action in tort) and that the employer had committed breaches of duty causing or contributing to the causation of this injury. Pearson LJ was not seeking to water down or eliminate the need for actual physical injury to have been suffered, as the earlier passage in his judgment at p. 208 makes clear. Pneumoconiosis was taken to be asymptomatic under ordinary circumstances, but was capable of being diagnosed by an X-ray which revealed scarring to the lung tissue, and that scarring constituted physical injury amounting to serious harm.
- The judge said at  that Pearson LJ "appears to have regarded a reduction in future earning capacity as being a salient feature of the injury", but I do not think that is right: Pearson LJ treated the relevant injury for the cause of action to arise as the physical injury to the lungs, which once established could also allow for recovery of damages for loss of earning capacity. In fact, Pearson LJ was simply reiterating the conventional and accepted position in a personal injury case, that where actual physical injury has been caused by a breach of duty in tort the damages recoverable in respect of that injury can include loss of earnings which result from it.
- The scarring in Cartledge was part of a disease which could have significant impact upon the individual's ordinary life. As Harman LJ stated at p. 202, "the injury to the lung makes the sufferer far more susceptible to tuberculosis or bronchitis or other pulmonary afflictions". This reflected the findings made by the trial judge. Sellers LJ said that the trial judge's finding of damage should be accepted: p. 197.
- This court's analysis of the position meant that the claims were statute-barred, because the limitation period began to run when scarring had occurred which could have been discovered by X-ray, even though in fact the sufferer might well not appreciate that it was there. The decision was upheld by the House of Lords and eventually the Limitation Act was amended to remedy the injustice which could occur in such a case.
- In the House of Lords Lord Reid held that a cause of action accrues as soon as the tortious act causes "personal injury beyond what can be regarded as negligible, even when that injury is unknown to and cannot be discovered by the sufferer" ( AC 758, 771-772). Lord Pearce said this at pp. 778-779:
"In my opinion, it is impossible to hold that a man who has no knowledge of the secret onset of pneumoconiosis and suffers no present inconvenience from it cannot have suffered any actionable harm. So to hold might possibly on the wording of the Fatal Accidents Act deprive of all remedy a widow whose husband dies of pneumoconiosis without having had any knowledge or symptom of the disease. And it would be wrong to deny a right of action to a plaintiff who can prove by X-ray photographs that his lungs are damaged but cannot prove any symptom or present physical inconvenience. It would be impossible to hold that while the X-ray photographs are being taken he cannot yet have suffered any damage to his body, but that immediately the result of them is told to him, he has from that moment suffered damage. It is for a judge or jury to decide whether a man has suffered any actionable harm and in borderline cases it is a question of degree…?…It is a question of fact in each case whether a man has suffered material damage by any physical changes in his body. Evidence that those changes are not felt by him and may never be felt tells in favour of the damage coming within the principle of de minimis non curat lex. On the other hand, evidence that in unusual exertion or at the onslaught of disease he may suffer from his hidden impairment tells in favour of the damage being substantial."
- On the approach of both Lord Reid and Lord Pearce, therefore, some form of physical injury which involves "material damage" or is "beyond what can be regarded as negligible" has to have occurred before the cause of action in tort arises. The absence of symptoms under ordinary circumstances does not mean that no injury has occurred, but then Lord Pearce would have looked to see if there were potential detrimental effects from the hidden impairment which might be felt during the ordinary vicissitudes of life ("in unusual exertion or at the onslaught of disease"). This was in line with the approach of Harman LJ in this court and none of the judges in the case indicated that they disagreed with this analysis.
- In Rothwell v Chemical and Insulating Co. Limited  UKHL 39;  1 AC 281 Lord Hoffmann summarised the factual position in Cartledge in this way at para. :
"At a date earlier than the commencement of the limitation period their lungs had suffered damage which would have been visible upon an x-ray examination, reduced their lung capacity in a way which would show itself in cases of unusual exertion, might advance without further inhalation, made them more vulnerable to tuberculosis or bronchitis and reduced their expectation of life. But in normal life the damage produced no symptoms and they were unaware of it."
- This is in line with the approach of Harman LJ and Lord Pearce, as set out above.
- In Rothwell the House of Lords affirmed the conventional position that there must be a breach of duty which causes material physical injury before a cause of action for damages for personal injury arises. Lord Rodger of Earlsferry pithily stated the relevant law as follows at para. :
"In summary, three elements must combine before there is a cause of action for damages for personal injuries caused by a defendant's negligence of breach of statutory duty. There must be (1) a negligent act or breach of statutory duty by the defendant, which (2) caused an injury to the claimant's body and (3) the claimant must suffer material damage as a result."
- In my view, notwithstanding some variation in the language used by other members of the Appellate Committee, this statement accurately encapsulates the law identified and applied by the House in Rothwell. Lord Hope said that the test was whether there was "real damage, as distinct from damage which is purely minimal": . Lord Hoffmann said that the relevant injury has to be "sufficiently serious" and that "a trivial injury" would not qualify; the difference between them being "a question of degree": .
- The case concerned asymptomatic pleural plaques in the lung caused by inhalation of asbestos fibres. The presence of pleural plaques was evidence that lung tissue had been penetrated by asbestos fibres, but did not in themselves increase susceptibility to other asbestos-related diseases or shorten life expectancy. The plaques were harmless in themselves and were not an aspect of any progressive disease process. The House held that the presence of such asymptomatic pleural plaques did not constitute injury capable of giving rise to a claim for damages in tort, by contrast with the lung scarring evidencing pneumoconiosis as discussed in Cartledge.
- Lord Hoffmann, for example, compared and contrasted the two cases at -, where he emphasised that the pleural plaques in Rothwell would never cause symptoms, would not increase the susceptibility of the individual to other diseases or conditions and did not reduce life expectancy (see ). This is all true of platinum sensitisation, provided the worker is removed from an environment in which he may be exposed to platinum salts.
- Lord Hope emphasised at  and  that even though the presence of pleural plaques could in his view be said to amount to an injury or a disease, they were not harmful and so were not physical changes of a kind which could constitute relevant damage such as to give rise to a cause of action in tort:
"47. Whatever its strict meaning may be, the maxim in its less literal sense can be appealed to in the present context as an expression of legal policy. It is well settled in cases where a wrongful act has caused personal injury there is no cause of action if the damage suffered was negligible. In strict legal theory a wrong has been done whenever a breach of the duty of care results in a demonstrable injury, however slight. But the policy of the law is not to entertain a claim for damages where the physical effects of the injury are no more than negligible. Otherwise, the smallest cut, or the lightest bruise, might give rise to litigation the costs of which were out of all proportion to what was in issue. The policy does not provide clear guidance as to where the line is to be drawn between effects which are and are not negligible. But it can at least be said that an injury which is without any symptoms at all because it cannot be seen or felt and which will not lead to some other event that is harmful has no consequences that will attract an award of damages. Damages are given for injuries that cause harm, not for injuries that are harmless.?
- This approach does not seem to me, however, to address the fundamental point that, while the pleural plaques can be said to amount to an injury or a disease, neither the injury nor the disease was in itself harmful. This is not a case where a claim of low value requires the support of other claimants to make it actionable. It is a claim which has no value at all. Pleural plaques are a form of injury. But they are not harmful. They do not give rise to any symptoms, nor do they lead to anything else which constitutes damage. Furthermore it is not possible to bring the risks of developing a harmful disease into account by applying the ordinary rules of causation. The risks are no doubt due to the same exposure to asbestos. But they are not created, or in any way attributable to, by the pleural plaques. That can also be said of anxiety. It is the risk of developing a harmful disease in the future that gives rise to it. So also where the claimant is required to attend for the periodical medical attention and is worried about the results. Pleural plaques themselves do not require periodical medical attention. The need for this is due to what the pleural plaques indicate about the extent of exposure to asbestos."
- In the present case the appellants submit that they have suffered actionable physical injury or damage by reason of the physiological changes in their bodies revealed by the skin prick test, which showed that they had become sensitive to platinum, and that the materiality of this injury is shown by the impact upon them in being removed from their jobs as a result and by the fact that unless so removed their sensitisation would likely have progressed to the allergy stage. Jay J rejected this submission at -, as follows:
"30. I agree that there are factual differences between the instant cases and Rothwell. In particular, further exposure to asbestos fibres would not materially worsen the pleural plaques, although it might well engender a different, asbestos-related disease process. Also, the progression from sensitisation to allergy can be envisaged as being along a direct causal pathway. In contrast, as Mr Steinberg elegantly put it, the pleural plaques were a biological cul-de-sac.
- Critically, however, that progression would not occur if an employee is removed from the source of the sensitisation, namely exposure to relevant platinum salts. In such circumstances, the sensitisation will either remain constant (the antibodies will remain in the system but will not increase) or it will diminish: in both instances, without symptoms. Accordingly, that progression will not occur in any of the five cases I am considering. My interpretation of the passage in Pearson LJ's judgment on which Mr Steinberg relies is that pneumoconiosis may progress even if the sufferer is removed from the source of the dust, but the risk is higher if exposure continues, rendering it both sensible and necessary to take preventative measures. In my view, this passage does not assist Mr Steinberg's argument because, in its approach to the question of what is actionable injury, it presupposes the existence of a disease process which is real and present.
- In my judgment, one cannot define the actionable injury by the steps which are taken to prevent it. Those steps may result in economic loss, but that is not the same as, or an ineluctable component of, the injury. The correct approach is to analyse the sensitisation in terms of the physical (or physiological) harm it may be causing, not any financial loss which may be consequent upon that harm. The sensitisation is no more, and no less, than the presence of antibodies which in themselves are not harmful. They may become harmful if they endure or multiply to the extent that they subsequently interact with mast cells such that histamine is generated, but that harmful state of affairs requires further exposure. Thus, something more has to happen before actionable injury may be sustained, and that something more cannot as a matter of logic and principle be the very thing (sc. the preventative measures) which precludes the development and manifestation of symptoms, in other words injury.
- Properly analysed, therefore, this is a claim for pure economic loss. Mr Kent Q.C. [for Johnson Matthey] submitted that general damages for pain, suffering and loss of amenity would not be awarded on these facts, and I agree. That cannot be determinative of the issue, but it serves to indicate the true nature of the claim."
- I agree with this reasoning. On the medical evidence, platinum sensitisation is not harmful in itself in any relevant sense. It is a physiological change analogous to the development of pleural plaques in the lungs in the Rothwell case, and hence does not constitute actionable damage or injury. Unlike the lung scarring from pneumoconiosis in Cartledge, platinum sensitisation is not a "hidden impairment" which has the potential by itself to give rise to detrimental physical effects in the course of ordinary life.
- The removal of the appellants from their jobs was detrimental for them in financial terms. But as the judge observed, this was a form of pure economic loss. The presence of such economic loss does not convert a physiological change which does not in itself qualify as an actionable injury into such an injury.
- The financial loss arose because, to safeguard the appellants' health and protect them from suffering the physical injury which would have arisen if they had become allergic to platinum, they were removed from their higher paying jobs working in an environment with platinum salts and would be prevented from working in such an environment elsewhere. In a sense, this was a sort of mitigation of loss in advance of injury. If someone contracted the allergy while working (which it is agreed would amount to suffering a relevant physical injury) – for example, because there was a failure to carry out the screening testing regularly - and then ceased work to prevent it getting worse, damages might then be recoverable in respect of their loss of earnings as the lost opportunity cost incurred by taking reasonable steps to mitigate their loss. But in my view one cannot extend this reasoning so as to apply it in the present case, where no physical injury has been suffered and none will be. I consider that this is simply the result of following through the logic of the conventional analysis of when the cause of action in tort for personal injury arises, namely when physical injury is suffered. A right to claim damages covering the expenses of mitigation only arises where there is a right to sue for a wrong in the first place. There is no right to sue for a wrong in this case.
- Accordingly, in my view the appellants can only sue to recover damages for this element of loss if they have a right of action for breach of contract in respect of pure economic loss or a right of action in tort to recover such loss.
The claim in contract
- The appellants have a claim for breach of their contracts of employment. Johnson Matthey acted in breach of the pleaded contractual duty to take all necessary and reasonable steps to ensure the appellants were safe while at work. The question, however, is whether the appellants are entitled to claim substantial damages in relation to that breach of contract. They have suffered no relevant physical harm as a result of it, so the answer to this question depends upon whether they can claim damages in contract for the financial losses they have suffered.
- The judge held that they cannot: -. The financial losses in issue are outwith the scope of Johnson Matthey's contractual duty. In seeking to determine the scope of the contractual duty the judge followed guidance given by Lord Hoffmann in South Australian Asset Management Co. v York Montague  AC 191 at 211-212 ("the SAAMCO case"). At p. 212D-F Lord Hoffmann said:
"How is the scope of the duty determined? In the case of a statutory duty, the question is answered by deducing the purpose of the duty from the language and context of the statute: Gorris v Scott (1874) L.R 9 Ex. 125. In the case of tort, it will similarly depend upon the purpose of the rule imposing the duty. Most of the judgments in the Caparo case [Caparo Industries Plc v Dickman  2 AC 605] are occupied in examining the Companies Act 1985 to ascertain the purpose of the auditor's duty to take care that the statutory accounts comply with the Act. In the case of an implied contractual duty, the nature and extent of the liability is defined by the term which the law implies. As in the case of any implied term, the process is one of construction of the agreement as a whole in its commercial setting. The contractual duty to provide a valuation and the known purpose of that valuation compel the conclusion that the contract includes a duty of care. The scope of the duty, in the sense of the consequences for which the valuer is responsible, is that which the law regards as best giving effect to the express obligations assumed by the valuer: neither cutting them down so that the lender obtains less than he was reasonably entitled to expect, nor extending them so as to impose on the valuer a liability greater than he could reasonably have thought he was undertaking."
- In the light of this guidance the judge ruled as follows at -:
"46. Thus, if the claim is for breach of statutory duty, the scope of the duty is ascertained by discerning the purpose of the duty from the statutory scheme. A similar exercise applies in other tortious claims where the common law imposes the relevant obligation. The position is slightly more complicated where the claim is for breach of an implied contractual duty. In the circumstances of SAAMCO, the exercise was said to entail construing the agreement as a whole in its commercial setting. In my judgment, in circumstances where the law imposes an implied term in view of the relationship between the parties, essentially for reasons of policy, and that implied term is in substance the same as the tortious obligation which arises for exactly the same reasons, it seems obvious that the exercise embodies a consideration of the scope of the rule or principle of public policy which creates, or impresses, the duty.
- In my judgment, the scope of the rule of public policy in operation in these cases, and all cases of employers' liability, is to safeguard the health, safety and welfare of employees from the careless acts and omissions of their employers; and, in the event of breach, where personal injury is suffered to require the payment of condign compensation. The concepts of health, safety and welfare, properly understood, embody the notion of protection from personal injury and not from economic or financial loss suffered without personal injury. Put another way, it is because the implied contractual duty is precisely conterminous with and reflects the obligations imposed by the law of tort – and, in particular, the tort of negligence – that the outcome must be the same however the cause of action is sought to be classified."
- I agree with this reasoning. The classic formulation of the duty owed by an employer to an employee is focused on protection of the employee from physical injury, not protection from economic harm (albeit if there is physical injury then damages may be recovered for consequential loss of earnings), and this is true both in contract and tort: see e.g. Wilsons & Clyde Coal Company Ltd v English  AC 57, 81-82 per Lord Wright, quoting Lord Watson's speech in Smith v Baker  AC 325 at 353: "… at common law, a master who employs a servant in work of a dangerous character is bound to take all reasonable precautions for the workman's safety …"; Spring v Guardian Assurance Plc  2 AC 296, 353G per Lord Woolf ("… in the earlier authorities the courts were prepared to imply by necessary implication a duty on an employer to exercise due care for the physical wellbeing of his employees …"). Having regard to the general policy reasons which inform the analysis of whether a standard term or duty of care should be implied into a contract of employment, in my view the proposed term or duty to hold the employee harmless from economic loss should not be taken to be implied.
- Mr Burton QC for the appellant confirmed that the argument presented to the judge was to the effect that the relevant term should be found to be implied in law. Mr Burton's submission on the appeal was likewise that the relevant term should be found to be implied in law. As I understood his argument, there were two aspects to it. First, he sought to suggest that a relevant term of sufficient ambit as to protection from financial loss should be found to exist by implication in law, as part of the general features of any employment contract implied by law. Secondly, such a term should in any event be found to exist by implication in law in the particular context of these specific employment contracts, incorporating as they do the terms of the collective agreement, and by construing each agreement "as a whole in its commercial setting". On the second aspect of his argument, Mr Burton emphasised that the collective agreement terms showed that both Johnson Matthey as employer and the appellant employees knew that there was a risk of development of platinum sensitisation should an employee be exposed to platinum salts and that if he did develop sensitisation he would lose the ability to work in an environment where there might be exposure to them, with a consequent potential loss of earnings as a result. It was in the contemplation of Johnson Matthey that if it failed to clean its factories properly that would increase the risk that employees would develop platinum sensitisation, with the consequential detrimental financial effects which would follow. It was therefore fair, just and reasonable in the context of these particular employment contracts to imply into them the required term.
- I do not accept these submissions. In my judgment, the relevant term cannot be implied in law either as a usual feature of employment contracts in general or as a feature of these particular employment contracts, construing them as a whole in their commercial setting. Indeed, contrary to Mr Burton's argument, I think that consideration of the particular factual context or commercial setting of these contracts affords additional reasons for rejecting any argument for implication of such a term, by reference to further authorities which were cited to us but not to the judge. This is because the collective agreement terms, as incorporated into the individual employment contracts, made specific provision as to the extent of Johnson Matthey's responsibility for the financial welfare of each employee in so far as that was affected by the possibility of developing platinum sensitisation, and it cannot reasonably or fairly be said that Johnson Matthey should be taken to have assumed any wider responsibility for their financial welfare in that regard.
- The collective agreement terms made provision for the protection of the employee's economic interests in relation to possible sensitisation to platinum in the course of their employment. Johnson Matthey paid the appellants a higher rate for working in factory areas where they might be exposed to platinum salts. The collective agreement obliged Johnson Matthey to attempt to redeploy an employee who developed platinum sensitisation, failing which he was entitled to be paid a special termination payment, as a sort of enhanced redundancy amount to compensate him for loss of employment. In my view, these aspects of the contractual arrangements between Johnson Matthey and the appellants make it particularly difficult to interpret the appellants' employment contracts as including a duty to hold them harmless in respect of the financial consequences of their loss of employment beyond the provision expressly made in those contracts in respect of that type of risk. I do not think it is fair, just or reasonable in these circumstances to hold Johnson Matthey liable in relation to such financial consequences.
- I consider the position here is analogous to that addressed in Reid v Rush & Tompkins Plc  1 WLR 212, CA. In that case this court held that in the light of express terms in the plaintiff's contract of employment which dealt with his economic welfare in relation to working abroad, it was not possible to imply a further obligation on the employer to provide or to advise the employee to obtain insurance cover to protect against the effects of injuries incurred in a motor accident caused by an unidentified driver in Ethiopia (a territory in which there was neither compulsory third party motor insurance not any compensation scheme in relation to accidents caused by unidentified or uninsured drivers).
- I also consider that Crossley v Faithful & Gould Holdings Ltd  EWCA Civ 293;  ICR 1615 supports the conclusion that the relevant contractual duty of the employer in the present case does not extend to protecting the appellants against the financial consequences of losing their jobs working in the more exposed parts of Johnson Matthey's factories and of being prevented from working in future in work environments involving exposure to platinum salts, beyond the protection for those interests provided by the collective agreement terms and the ordinary right under the contracts of employment to receive a period of notice before termination of employment. In Crossley the claimant employee was advised by his doctor to apply for early retirement from his employment with the defendant on medical grounds, but was not warned by the defendant that the effect of doing so would be that he no longer qualified as of right to long term payment benefits under the defendant's long-term disability insurance scheme, but would only continue to receive such benefits at the discretion of the insurers. The claimant took early retirement and in due course the insurers terminated the payment of benefits under the scheme. The claimant sued the defendant, alleging that it had breached an implied term of the contract of employment requiring it to take reasonable care for the claimant's economic well-being. His claim failed at first instance and on appeal. This court held that there was no basis for the standard implication of such a term in contracts of employment: see - per Dyson LJ, giving the lead judgment. It should be recognised "that, to some extent at least, the existence and scope of standardised implied terms raise questions of reasonableness, fairness and the balancing of competing policy considerations …" (); relevant authority did not support the implication of such a wide-ranging term and it would not be appropriate to introduce a major extension of the law in this area (); moreover, "[s]uch an implied term would impose an unfair and unreasonable burden on employers": .
- The following points are also relevant. So far as concerns the inability of the appellants to continue working for Johnson Matthey in the more highly paid jobs involving their presence in the higher risk areas of its factories, Johnson Matthey as their employer was entitled to dismiss them on notice from its employment, including from employment in those jobs. On the face of it, the notice requirement defined the extent to which Johnson Matthey had assumed responsibility for their financial position in relation to employment with the company. I do not consider that Johnson Matthey did anything which could reasonably be taken to have extended its obligation to protect the appellants in relation to this aspect of their financial position more widely than this.
- The fact that the appellants became sensitive to platinum salts meant that they could not obtain employment in other environments involving exposure to platinum salts. This appears to have been a very small sector of the total jobs market for which the appellants would be suited. The appellants sought to suggest that an analogy should be drawn with cases in which an employer may be found liable in negligence or contract for providing an inaccurate and detrimental reference for an employee seeking to find work with another employer: see Spring v Guardian Assurance Plc.
- In my view, however, the circumstances justifying imposition of liability in that sort of case are not replicated in the present context. In a negligent reference case the employer is asked directly to provide a reference and is on clear notice at the time when he acts to provide it of its significance for the employee and for the particular person asking for it. The employer has fair warning of what is at stake when he acts and thus has a fair opportunity to adjust his behaviour in the light of that knowledge, such that it is fair, just and reasonable to assess that he has assumed responsibility in relation to the financial aspect of the employee's particular work opportunity dependent on that reference. By contrast, the nexus between the wrong committed in the present case and the impact on the employees' future employability is more indirect and remote. It was not even known when the breach of duty occurred whether, if they could not continue working for Johnson Matthey, the appellants would be likely to wish to find employment in another equivalent work environment involving exposure to platinum salts. The liability sought to be imposed on the employer is also potentially more extensive, being for financial loss in respect of an indeterminate range and number of future employments in work environments involving exposure to platinum salts. Absent the threshold trigger of infliction of a physical injury with these consequences, I do not consider that it could properly be said that it is fair, just or reasonable to extend the obligation of the employer to cover this type of loss in this case.
The claim in tort for damages for pure economic loss.
- There is a long-established distinction in the law of tort between the imposition of a duty of care to protect a person from physical injury or physical damage to property and the imposition of a duty of care to protect a person against pure economic loss. The courts will identify the existence of the former duty of care far more readily than the latter. This is a very familiar distinction in the law. Lord Oliver of Aylmerton summarised the difference in Murphy v Brentwood District Council  1 AC 398 at 487B-C, when explaining why Anns v Merton London Borough Council  AC 728 should not be followed:
"The infliction of physical injury to the person or property of another universally requires to be justified. The causing of economic loss does not. If it is to be categorised as wrongful it is necessary to find some factor beyond the mere occurrence of the loss and the fact that its occurrence could be foreseen. Thus the categorisation of damage as economic serves at least the useful purpose of indicating that something more is required and it is one of the unfortunate features of Anns that it resulted initially in this essential distinction being lost sight of."
- In Crossley this court noted how in recent years particular duties of care owed by an employer to protect an employee from pure economic loss have been identified in very specific situations, but declined to extend those exceptions to the conventional established rule so as to identify a new general duty of care to protect against economic loss; rather, the court emphasised the narrowness of the categories in which such a duty would be found: -. In Spring v Guardian Assurance Plc, for example, Lord Woolf was at pains to emphasise the very specific set of circumstances which would justify finding a relevant duty of care or the implication of a relevant contractual term in the case at hand, and that his views were "confined to the class of case with which I am now dealing" ( 2 AC at 354D). I see no basis to depart from the analysis in Crossley. Indeed, later authority of the House of Lords appears to me to support the general message that the courts should be slow to extend the categories of case in which a duty to protect against pure economic loss will be found to arise, and will usually be astute to examine whether there has in fact been a voluntary assumption of responsibility by the defendant in relation to the particular type of damage in issue: see Customs & Excise Commissioners v Barclays Bank plc  UKHL 28;  1 AC 181.
- The principal authority referred to in Crossley and relied upon by the appellants in the present appeal is the decision of the House of Lords in Spring v Guardian Assurance Plc. In that case the House of Lords, by a majority, held that an employer who gave a reference in respect of a former employee owed that employee a duty to take reasonable care in its preparation and would be liable to him in negligence if he failed to do so and the employee thereby suffered economic damage, for example by failing to obtain employment with another person as a result. A similar duty was found to arise under a term implied into the contract of employment between the plaintiff employee and his former employer (pp. 320A-B, per Lord Goff of Chieveley, 340B-C, per Lord Slynn of Hadley, and 353B-354C, per Lord Woolf). The policy arguments relevant to implication of the duty in contract and imposition of a duty of care in tort were closely similar.
- This is significant. Where the nexus between parties is founded in a contractual relationship, as here, it is the contract which they have made with each other which is the primary source and reference point for the rights they have and the obligations they owe each other. Although a duty of care in tort may run in parallel with the contractual duty and have the same content, it is difficult to see how the law of tort could impose obligations in this area which are more extensive than those given by interpretation of the contract which the parties have made for themselves. The usual rule is that freedom of contract is paramount, and if the parties have agreed terms to govern their relationship which do not involve the assumption of responsibility by the employer for some particular risk, the general law of tort will not operate to impose on the employer an obligation which is more extensive than that which they agreed.
- This was the point made by Lord Bridge of Harwich in Scally v Southern Health and Social Services Board  1 AC 294, at p. 303. Scally was a case in which an implied term in an employment contract obliging the employer to take action to protect the employee from financial harm was identified as arising in specific circumstances, where an employee had a valuable contingent right to claim a pension of which he could not be expected to be aware unless his employer brought it to his attention. Lord Bridge, in a speech with which other members of the House of Lords agreed, said:
"If a duty of the kind in question was not inherent in the contractual relationship, I do not see how it could possibly be derived from the tort of negligence."
- In my judgment, the same point applies here. Therefore, the answer to the appellants' new argument on appeal is given by the answer to their case based on the implied term in contract. Since there is no implied contractual term according to which Johnson Matthey is obliged to protect the appellants in relation to their financial losses arising in the circumstances of this case, so equally there can be no duty in tort to protect them in relation to the pure economic loss they have suffered by reason of those financial losses.
- For the reasons given above, I would dismiss this appeal.
- At the heart of this case is an attack by the appellants, from various different directions, on the conventional view that under the law governing the relationship between employer and employee, whether in contract or in tort, an employee needs to show that he has suffered physical injury in a case such as this in order to be able to claim substantive damages which cover also the financial losses he has suffered as a result of such injury. This is sought to be achieved either by watering down the concept of physical injury so that it is taken to include mere physiological changes which happen to have financial consequences or alternatively by seeking to say that there is a duty to compensate for pure economic loss.
- In my view, neither approach should be accepted. Although there is a certain mismatch between the condition which needs to be satisfied in order to give rise to a cause of action (i.e. negligent infliction of physical injury) and the extent of the losses for which damages may then be recoverable (which can include loss of earnings flowing from that injury, even though that part of the damages may be far greater than the damages awarded for the injury itself), the requirement that actual physical injury be suffered before the cause of action arises is deeply embedded in the law, both in relation to liability in respect of personal injury and in relation to liability for damage to property (as is illustrated by the well-known case of Spartan Steel & Alloys Ltd v Martin & Co. (Contractors) Ltd  1 QB 27, CA). Although in the context of the employment relationship one is not looking at potential liability to an indeterminate class of people, I do not consider that it is for this court to create a new duty of care in tort or to impose a new implied term in contract to bypass the effect of such well-settled legal doctrine in an effort to align more closely the wrong and the damages recoverable. This could have wide-reaching ramifications which it is difficult for a court seeking to apply the law in an individual case to identify and assess. For example, insurance practices may well have developed in the light of such settled understandings of the law.
- The appellants could be said to be just on the wrong side of a reasonably "bright line" rule according to which the threshold for liability is the infliction of physical injury. It is in the nature of bright line rules that some marginal cases fall close to the dividing line created by the rule yet fail to satisfy it. In my opinion this does not lead to the conclusion in the present case that the existing clear rule should be modified. That would tend to undermine the virtue of having a bright line rule in the first place, whereby people can have a reasonably clear idea of how things stand when they plan their affairs and also a reasonably clear idea whether to embark on litigation and what their prospects of success might be. The law does not furnish a remedy for every harm suffered by an individual, and in particular does not do so where the infliction of the harm in question does not constitute a "wrong" in the contemplation of the law: see D v East Berkshire Community Health NHS Trust  2 AC 373, at  per Lord Rodger of Earlsferry.
Lord Justice Davis:
- I agree with the judgment of Sales LJ.
Lord Dyson MR
- I also agree.
Published: 05/05/2016 10:24