In the case of Yapp v Foreign and Commonwealth Office [2014] EWCA Civ 1512, the Court of Appeal had to decide whether an employee could claim compensation arising from a depressive illness, following alleged breaches of contract and the employer's common law duty of care.

Facts

Mr Yapp was employed by the Foreign and Commonwealth Office (FCO) and was appointed British High Commissioner in Belize in 2007. A year later he was summarily withdrawn from his post and suspended, pending an investigation into allegations that (1) he had a bullying and autocratic management style and (2) he had behaved inappropriately towards women at social functions. Mr Yapp was then subjected to a lengthy disciplinary process, following which he received a final written warning in relation to his bullying and autocratic management style. The allegation of inappropriate conduct towards women was not upheld. As a result of this process, and considerable hostile press intrusion, Mr Yapp became severely ill with depression. He was offered no other position by the FCO (despite being certified as fit to work for a period of time) and was therefore unable to work until his retirement in 2011.

In May 2011, Mr Yapp brought a claim against the FCO alleging breach of contract and breach of duty of care arising from his removal from the position of British High Commissioner and the FCO's subsequent conduct of the disciplinary procedure. He asserted that these actions had caused him to suffer from a depressive illness and he claimed damages for that illness and financial loss, as he was unable to return to work.

High Court decision

The High Court found that the FCO should have treated the allegations concerning Mr Yapp’s conduct with some caution and conducted an initial investigation before taking any action. By removing him from his position without any discussion, it had acted in breach of an express clause in his contract that assured him of “fair treatment” during any disciplinary proceedings and in breach of its implied duty of care towards him. In addition, the judge held that it was reasonably foreseeable that Mr Yapp would suffer psychiatric harm as a result of the FCO’s actions and held that he could recover damages for this aspect of his claim. Although the judge accepted that Mr Yapp had “an ostensible robustness”, it remained reasonably foreseeable that his depressive illness could result from a “knee-jerk withdrawal from post”. Damages were agreed between the parties at £320,000 and the FCO appealed.

Court of Appeal decision

The Court of Appeal agreed with the High Court that the FCO had acted in breach of contract in removing Mr Yapp from his position without first conducting a preliminary investigation and putting the allegations to Mr Yapp. Whilst the FCO did have the discretion under Mr Yapp’s contract to withdraw him from his post for “operational reasons”, there was still a requirement to confirm the reliability of the allegations being made before such withdrawal. Accordingly, the FCO had acted in breach of Mr Yapp’s contract and in breach of the implied duty of care. The case was remitted to the High Court to decide the level of damages.

The Court of Appeal also dismissed FCO’s appeal on the issue of whether its actions had caused Mr Yapp’s depressive illness. The Court was satisfied that the High Court could rely on a medical opinion, which found that the unfair treatment of Mr Yapp was one of the factors that had caused or contributed to his illness.

However, the Court of Appeal allowed the FCO's appeal on the issue of whether Mr Yapp’s illness was reasonably foreseeable. Accordingly, Mr Yapp was not entitled to be awarded damages for his depressive illness as the Court determined that it was too remote a consequence from the breach of contract.

The Court came to the conclusion that it was wrong to find that it was reasonably foreseeable that the FCO’s conduct in withdrawing Mr Yapp from post without having had the opportunity to state his case might lead him to develop psychiatric illness. According to the Court, it would be exceptional for an apparently robust employee, with no history of any psychiatric ill health, to develop a depressive illness as a result even of a very serious set back at work. The FCO could not have foreseen, in the absence of any sign of special vulnerability, that Mr Yapp might develop a psychiatric illness as a result of its decision. It therefore followed that the losses were too remote to be recoverable following the breach of contract.

Comment

This decision demonstrates that the courts may be reluctant to conclude that psychiatric injury is a foreseeable consequence of unfair treatment of an employee, unless there is some evidence of a pre-existing medical condition.

However, it is important to bear in mind that this will remain a risk even without any evidence of pre-existing conditions, particularly if there has been a significant breach of contract or duty of care. The Court in this case found that the employer’s actions caused the depressive illness and it would still be open to an employee to argue that any conduct was so unfair and unreasonable that it was foreseeable that the employee would develop such an illness as a result.

Therefore, employers considering disciplinary action should always ensure that a fair procedure is followed and it is worth remembering that employees with mental health issues, or a history of being signed off sick with stress, might be more susceptible to personal injury if dismissed without a fair procedure being followed.