Dear All,

Some of you may be interested in the decision of the Court of Appeal
of England and Wales in Greenway v Johnson Matthey Plc, which was
published yesterday.

http://www.bailii.org/ew/cases/EWCA/Civ/2016/408.html

The Court concluded, following a review of relevant authority, that
the claimants' sensitization to platinum salts in the course of their
employment due to the admitted negligence of their employer in
exposing them to platinum salts unnecessarily (by not properly
cleaning its factory) did not amount to an actionable personal injury
at law. The basis of the Court's conclusion that no injury actionable
at law had been caused is perhaps best explained at paragraph 30 of
the judgment of Sales LJ (who gave the only reasoned judgment) where
he said that:

"... 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."

On the evidence presented to the Court, sensetization to platinum
means that a person who continues to be exposed to platinum salts may
go on to develop an allergy to platinum salts. This is apparently the
only consequence of sensetization. One will not be exposed to the
salts in ordinary life but an individual who is found to have become
sensetized to platinum (the employer having put in place regular
medical tests to ascertain if this had happened) must stop working
with platinum salts. This was apparently relatively high paid work.

On those facts, the Court also dismissed the employees' claims for
negligent infliction of pure economic loss and breach of contract
against their employer, arising out of their sensitization to platinum
salts in the course of their employment.

The employees argued that a term should be implied into their
contracts to the effect that the employer would not cause them
economic loss by exposing them to platinum salts unnecessarily, which
had the foreseeable consequence that they would be prevented from
working with platinum salts thereafter and would lose earnings as a
result.

Sales LJ concluded that no such term could be implied for a number of
reasons (paragraphs 34-46 of his judgment)and in part because a
collective agreement had been reached between the claimant's union and
the employer regarding compensation to be paid on sensetization
(regardless of negligence) and which provided that employees who
became sensetized would be redeployed by the employer where possible.
That agreement was incorporated into the claimants' contracts. It
expressly provided that its terms did not preclude the employees
bringing a claim against the employer (see paragraph 7 of the
judgment).

Sales LJ also rejected the claim for negligently inflicted pure
economic loss, principally on the basis that such a claim would cut
across the contract between the parties and could not therefore be
allowed.

He said that:

"39.
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.

40.
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. ...

43.
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.


44.
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.

45.
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."

Sales LJ made the following concluding observations:

"53.
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.

54.
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 [1973] 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.

55.
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
[2005] 2 AC 373,
at [100] per Lord Rodger of Earlsferry."

Comment:

I have to say I am uneasy regarding the result in this case. It leaves
the employer unpunished for negligence which seems to have been
readily preventable. The consequences of the employers negligence are
and were readily foreseeable at all times. If anything the collective
agreement referred to in the judgment makes that clear. The class of
persons effected (employees who might become sensetized to platinum
salts if proper cleaning was not done) was both obvious and limited
and the damage to those persons was potentially significant, in terms
of loss of earnings. Depending on the particular skill sets of
employees who might be exposed to platinum salts, they may be unlikely
to get work which did not involve exposure to platinum salts and which
was as highly paid. There is little or nothing which an employee could
do to protect himself from the risk that due to his employer's
negligence he would be unnecessarily exposed to salts and would
therefore become sensetized, where he would otherwise not have.

I think the Court's conclusion regarding actionable injury is correct
but I am not so sure that the Court's refusal to impose a duty to
prevent pure economic loss are necessarily right.

The Court's reliance on the collective agreement regarding
compensation for workers who became sensetized, regardless of
negligence, is a good reason for not implying a term into their
contracts of employment but cannot be relevant to whether a duty to
safeguard the employees from pure economic loss should be imposed in
tort, since the employees' right to bring a claim was expressly
preserved. The other reasons given, at paragraphs 44 and 45 concerning
the argument that a term should be implied into the employees'
contracts (and adopted at paragraph 51 concerning the tort claim)
appear very unpersuasive to me, in light of the vulnerability of the
employees and the foreseeability that their earnings and employability
would be limited.

With apologies for an excessively long email on the subject.

Kind regards

Ger