Bliss v South East Thames Regional Health Authority
Bliss v South East Thames Regional Health Authority
Court of Appeal (Civil Division)
 IRLR 308,  ICR 700, (49 MLR 240)
HEARING-DATES: 24 April 1985
24 April 1985
Contracts of employment
Terms of employment — duty of mutual trust and confidence
Breach of contract
Remedies — damages
Mr Bliss was employed as a consultant orthopaedic surgeon at Medway Hospital. For some years he had worked with another consultant surgeon, a Mr Hay, but by the summer of 1979 their relationship had broken down. At that time, the plaintiff accepted a six-month appointment in Australia. During this period, disputes arose between the plaintiff and Mr Hay which led to a stream of angry and abusive letters to Mr Hay and others at the hospital. As a result of the letters, Mr Hay and his wife wrote to the Regional Medical Officer, Dr Forsythe, expressing concern as to Mr Bliss’s state of mind. In accordance with an established procedure, Dr Forsythe decided to refer the matter to a three-man committee known as the “Three Wise Men”. They concluded that the correspondence did not show pathological behaviour by Mr Bliss but showed a severe degree of breakdown in the Orthopaedic department.
When Mr Bliss returned from Australia, he was asked to see Dr Forsythe, but he did not attend the meeting. Dr Forsythe then wrote to the plaintiff asking him to agree to undergo a medical examination by a nominated consultant. When Mr Bliss refused to obey a subsequent order to undergo such an examination, in June 1980 he was suspended from his post as a consultant and refused access to the hospital.
Disciplinary proceedings were subsequently brought and in July 1981 a committee of inquiry acquitted Mr Bliss of virtually all the charges against him. Having considered that report, the defendants withdrew the requirement to submit to a medical examination, lifted the plaintiff’s suspension and reinstituted his salary payments. However, they also wrote to the plaintiff stating that “the Authority accepts that you will not in fact be taking up their offer to return to duty following your holiday on 4.8.81 and that you will require further time to let us know your intentions”. Upon his return from holiday, the plaintiff took legal advice and on 13 August requested an extension of time to decide whether or not he would return to his duties at the hospital. This was granted, with a caution that the matter would not be permitted to continue beyond the end of September. On 25 September, the plaintiff’s solicitors wrote to the defendants asserting that their action constituted a repudiation of the plaintiff’s contract of employment, which he elected to accept.
Mr Bliss sued for damages for breach of contract and Mr Justice Farquharson in the Queen’s Bench Division held that by requiring him to submit to a psychiatric examination, the defendants had committed a repudiatory breach of contract. However, the judge went on to hold that by his conduct between 16 July and 25 September, Mr Bliss had affirmed the contract. The judge awarded damages for loss during the period of the suspension. He also awarded £2000 as general damages for frustration, vexation and distress from the circumstances of the breach of contract.
Mr Bliss appealed against the finding that he had affirmed the contract. The employers cross-appealed against the finding of breach of contract, against the finding that any breach was repudiatory and against the award of damages for frustration, vexation and distress.
The Court of Appeal held:
The High Court judge had correctly found that the defendants had acted in breach of their obligations under the contract of employment by, without reasonable cause, requiring the plaintiff consultant surgeon to submit himself to psychiatric examination and by suspending him from duty on his refusal to submit to such an examination.
There is no general power in an employer to require employees to undergo psychiatric examination. In the present case, there was no other relevant specific power in the plaintiff’s contract or under the scheme of the National Health Service. Although it was common ground that it was an implied term of the plaintiff’s contract that the defendants were entitled to require him to undergo a medical examination if they had reasonable ground for believing that he might be suffering from physical or mental disability which might cause harm to patients or adversely affect the quality of their treatment, the defendants had this power only against the background of a circular which set up a procedure for dealing with reports of incapacity on the part of hospital medical staff and provided for an enquiry by a committee called the Three Wise Men. As the conclusion of the report by the Three Wise Men in the present case merely showed a severe degree of breakdown of personal relationships and found that there was no mental or pathological illness, the defendants had no right to require the plaintiff to submit to a psychiatric examination. Thus the defendants were in breach of contract in requiring the plaintiff to submit himself to a medical examination and in suspending him when he refused to do so.
The breach of contract by the defendants was repudiatory and was a continuing breach until the defendants lifted the suspension and withdrew the psychiatric examination requirement. The defendants were in breach of the implied term that they would not without reasonable cause conduct themselves in a manner likely to damage or destroy the relationship of confidence and trust between the parties as employer and employee. If ever there was a breach of such a term going to the root of the contract so as to entitle the employee to treat the contract as at an end, it was that in the present case. It would be difficult in this particular area of employment law to think of anything more calculated or likely to destroy the relationship of confidence and trust which ought to exist between employer and employee than, without reasonable cause, to require a consultant surgeon to undergo a psychiatric examination, and to suspend him from the hospital on his refusing to do so.
Contrary to the argument on behalf of the defendants, the decision in Woodar v Wimpey could not be applied to the present case to say that as the defendants were only doing what they claimed in all the circumstances to be entitled to do, what they did could not be repudiatory since it did not ex facie indicate an intention not to be bound by the contract. The two situations were wholly different. The defendants in the present case were not purporting to exercise any express power in the contract. They must be judged by what they did and not by their private intentions, and what they did was by any objective standard outrageous.
The judge below had erred, however, in holding that after his suspension was lifted in July 1981, the plaintiff by his conduct in accepting salary payments had affirmed the contract so as to preclude him from accepting the defendants’ repudiation of it, as he purported to do in September 1981.
The cardinal factor in the present case was that the defendants were repeatedly prepared to give the plaintiff time to make up his mind and to pay him his salary while he was making up his mind. There is no need for an employee to take the precaution of an express reservation of his right to accept repudiation when the employer has himself allowed the employee time to make up his mind. In taking the view that the time allowed was to enable the plaintiff to make up his mind whether he wished to return to duty and not to give him an opportunity to consider whether to treat the contract as being at an end, the judge below had drawn an unreal distinction. The two were essentially the same; if the employee decides not to return to work, he is electing to treat the contract as being at an end. Thus, on the facts of the present case, the plaintiff was not to be criticised for continuing to accept his salary and the appeal against the finding that he had waived the repudiation would be allowed.
The judge below had erred in awarding general damages for frustration and mental distress on the basis of the decision in Cox v Philips Industries Ltd. The general rule laid down by the House of Lords in Addis v Gramophone Company Ltd is that where damages fall to be assessed for breach of contract rather than tort it is not permissible to award general damages for frustration, mental distress, injured feelings or annoyance caused by the breach. Unless and until the House of Lords has reconsidered its decision in Addis, the view taken in Cox that damages for distress, vexation and frustration could be recovered for breach of a contract of employment if it could be said to have been in the contemplation of the parties that the breach would cause such distress etc was wrong. The cross-appeal would be allowed to the extent of disallowing the judge’s award of general damages.
Addis v Gramophone Co Ltd (1909) AC 488
Federal Commerce & Navigation Co Ltd v Molena Alpha Inc and ors (1979) AC 757
Woodar Investment Development Ltd v Wimpey Construction UK Ltd (1980) 1 WLR 277
Courtaulds Northern Textiles Ltd v Andrew  IRLR 84
Woods v WM Car Services (Peterborough) Ltd  IRLR 347
Western Excavating (ECC) Ltd v Sharp  IRLR 27
WE Cox Toner (International) Ltd v Crook  IRLR 443
Payman v Lanjani (1985) 2 WLR 154
Cox v Philips Industries Ltd  IRLR 344
Jarvis v Swans Tours Ltd (1973) QB 233
Heywood v Wellers (1976) QB 446
Hutchinson v Harris (1978) 10 Building Law Reports 19
For the Appellant/Plaintiff: Mr F Reynold QC and Mr MJ Brompton
For the Respondents/Defendants: Mr JR Playford QC and Mr CAH Gibson
PANEL: Cumming-Bruce, Dillon LJJ, Heilbron J
JUDGMENTBY-1: DILLON LJ
DILLON LJ: In this case we have an appeal by the plaintiff and a cross-appeal by the defendant against a decision of Mr Justice Farquharson given on 9.12.83. The plaintiff’s substantive claim in the action, as set out in his pleadings, was for damages for breach by the defendant of its implied obligations as employer under a contract of employment whereby the plaintiff was employed by the defendant as a consultant orthopaedic surgeon at the Medway Hospital in Gillingham.
Put in a nutshell, the plaintiff’s case is: (1) that the defendant acted in breach of its obligations under the contract of employment in that in April and May 1980, without reasonable cause, it required the plaintiff to submit himself to psychiatric examination by a consultant to be nominated by the defendant, and suspended the plaintiff from duty on his refusal to submit to such an examination; (2) that the breach was repudiatory and was a continuing breach until on 16.7.81 the defendant withdrew the requirement of psychiatric examination and lifted the suspension in the light of the findings, favourable to the plaintiff, of a disciplinary committee of enquiry into the plaintiff’s conduct set up under the National Health Service regulations and (3) that by a letter from his solicitors of 25.9.81 the plaintiff duly accepted the defendant’s repudiation of the contract of employment.
The judge held that the defendant had no reasonable cause for requiring the plaintiff to submit to psychiatric examination and that that requirement and the consequent suspension of the plaintiff for refusing to comply with it was a breach of contract on the part of the defendant which was both repudiatory and continuing throughout the suspension. But he also held that by his conduct between 16.7.81 and 25.9.81 the plaintiff had affirmed the contract of employment, with the result that by 25.9.81 it was too late for the plaintiff to elect to treat the contract as at an end by reason of the defendant’s breach. The judge therefore awarded the plaintiff damages for his loss during the period of the suspension. Since the plaintiff had been paid his full National Health Service consultant’s salary throughout, the primary head of damage, which was accepted by the defendant as a legitmiate head of damage if there had indeed been a breach of contract, was for the damage to the plaintiff’s private practice occasioned by his suspension and consequent exclusion from the Medway Hospital, with an allowance for the knock-on effect which the period of the suspension would be expected to have on the plaintiff’s receipts from his private practice in the following year. He also awarded the plaintiff £2000 with interest as general damages for frustration, vexation and distress from the circumstances of the breach of contract. He indicated a much higher sum which he would have awarded for repudiation of the contract, but of course declined to award this as he held that the plaintiff had affirmed the contract and the purported acceptance of the repudiation came too late.
By his appeal, the plaintiff challenges the judge’s finding that he had affirmed the contract between 16.7.81 and 25.9.81 and the plaintiff accordingly claims additional damages for the defendant’s repudiation of the contract. The plaintiff also challenges the judge’s assessment of the damages for the knock-on effect of his suspension on the plaintiff’s subsequent receipts from his private practice; on this subsidiary point, however, on which we did not find it necessary to call on counsel for the defendant, I would merely say that any assessment depends on a large number of imponderable factors, and there is no basis at all for this court to interfere with the amount of the judge’s assessment.
By cross-appeal, the defendant contends that it was justified in requiring the plaintiff to submit to a psychiatric examination and in suspending him when he refused to do so, and so, it is submitted, the defendant was never in breach of contract at all. Alternatively, the defendant contends that even if it was in breach of contract, the breach was not repudiatory and was not a continuing breach. While of course seeking to uphold the judge’s conclusion that the plaintiff affirmed the contract by his conduct from 16.7.81 to 25.9.81, the defendant submits that the plaintiff had in truth affirmed the contract from the very time of the suspension. Finally, the defendant submits that the award of £2000 for frustration, vexation and distress was, in the light of Addis v Gramophone Company Limited (1909) AC 488, impermissible and wrong in principle where, as here, the damages, if any, fell to be assessed for breach of contract and not in tort.
Before I turn to the primary facts of the dispute, I should say a little about the administrative structure of the National Health Service, in so far as relevant to this case, and about a National Health Service Circular issued by the Ministry of Health in May 1960 to all Regional Hospital Boards and Hospital Management Committees. These are essential matters of background.
The defendant Authority covers a large area and the Medway Hospital is only one of many hospitals in that area. The Chairman of the defendant at the relevant time was Sir John Donne, who gave evidence at the trial. He is by training a solicitor and not a doctor, but had great experience in public service in relation to hospitals. On the evidence the defendant Authority had at the relevant time some 17 or 18 members. It was basically a lay body, including trade union and some local government representatives, but it also included two distinguished consultants, a general practitioner and a nurse. The chief executive officer of the defendant who was involved was the Regional Medical Officer, Dr Forsythe, who also gave evidence at the trial. He had his office in Croydon. He is medically qualified, but his experience has lain to a great extent in hospital management in the National Health Service and what was referred to in the court below as administrative medicine, in which fields he had very great experience. Dr Forsythe had responsibility for, among other things, various personnel aspects of medical staff who work in every health district in the defendant’s area, but he did not have managerial responsibilities for the provision of day to day health services in the Medway district or in the Medway Hospital. That was a matter for various Committees, of which the only one that I need mention for the moment is the District Management Team or DMT which consisted of three doctors, the chief administrator, the chief financial officer and a nurse.
As for the circular, HM60 (45), this was an attempt to deal with the very difficult problem that a doctor or surgeon may, from physical or mental disability, including addiction, and possibly without even realising it, become unfit to treat patients. The problem had been highlighted by a recent case, referred to in the circular, in which a consultant anaesthetist had been convicted of manslaughter after he had inhaled anaesthetic gases in the course of an operation. The keynote of the circular was that the safety of the patient was paramount. The proposal of the circular which was adopted in relation to the Medway Hospital was that each hospital (or local group of hospitals) should have a Committee of three — known inevitably as the Three Wise Men. The function of the Three Wise Men was to receive, in confidence, and take appropriate action on, any report of incapacity or failure of responsibility, including addiction, on the part of any member of hospital medical or dental staff. The Three Wise Men were to make confidential enquiries on receiving any such report, and unless they were satisfied that the possibility of harm to patients could be excluded by the exercise of their influence with the individual concerned they were to bring the circumstances to the notice of the Regional Medical Officer for him to decide on appropriate action. The circular does not set out to cover all possible eventualities comprehensively, and it is not to be construed like an Act of Parliament; its general purport is clear. At the relevant time at the Medway Hospital the Three Wise Men were Mr Jennings, FRCS, who was also a member of the District Management Team, Mr Girolami, FRCS, who was the chairman of the surgical division of the hospital, and Dr Telfer, a consultant pathologist.
The plaintiff was appointed a consultant orthopaedic surgeon at the Medway Hospital as long ago as 1.9.70. There is no doubt that he is a man of great professional skill as a surgeon. Unfortunately, a few years after 1970, a Mr Hay was also appointed a consultant orthopaedic surgeon at the hospital. The plaintiff and Mr Hay had worked together as colleagues in Edinburgh before the plaintiff came to the Medway, and they were friends. Unfortunately that friendship did not last, and by the summer of 1979 the relationship between them was appalling. One factor which played a major part in this deterioration in their relationship was that the plaintiff took the strongest objection to an affidavit which Mr Hay had sworn in 1977 in support of the plaintiff’s wife in matrimonial proceedings which followed the break-up of the plaintiff’s first marriage. Of the plaintiff himself the judge commented: ‘Evidence was given to a Committee of Inquiry set up in 1980 to investigate disciplinary charges against the plaintiff that he is a man who looks to efficiency in his staff and does not suffer fools gladly. I would endorse those views and indeed suspect that the range of people he does not suffer may well extend rather more widely.’ I have no doubt that by the autumn of 1979 the plaintiff was generally regarded in the Medway Hospital as a difficult colleague. I should mention that by that stage Dr Forsythe had never met the plaintiff.
In the summer of 1979 the plaintiff was offered and accepted a six month appointment at Darwin in Australia to help set up an orthopaedic unit there. He was granted six months unpaid leave to do this and left in October 1979. Before he left, the plaintiff appointed, with all requisite consents, a Mr Parvaiz to be the plaintiff’s locum to do the plaintiff’s work as consultant in the Medway Hospital during the plaintiff’s absence. Unfortunately, however, two more very major disputes broke out between the plaintiff and Mr Hay, the one just before and the other just after the plaintiff’s departure for Darwin.
The first of these disputes concerned the appointment of another orthopaedic consultant at the Medway Hospital. The establishment of orthopaedic consultants was three. Besides the plaintiff and Mr Hay, there was a Mr Hafner, who was the senior of the three. However, in the autumn of 1979, Mr Hafner was retiring. Of the various applicants for appointment to fill the vacancy caused by Mr Hafner’s retirement, the plaintiff and Mr Hay both favoured a Mr Beavis, who in fact got the appointment. The practice was that all applicants would be seen by an interviewing committee and it was customary that the senior available of the orthopeadic consultants would sit on the interviewing committee. The plaintiff had accordingly expected that he would be sitting on the interviewing committee to select Mr Hafner’s replacement. But at a meeting of the consultants of the surgical divison held shortly before the interviews were to take place, Mr Hay, without any previous warning to the plaintiff, proposed that he, and not the plaintiff, should sit on the interviewing committee. This proposal was endorsed by a majority of nine to one of the surgical consultants present. The plaintiff was very angry about this, and certain comments of Mr Hay about it in a letter of 5.12.79 to the plaintiff in Australia seem to have been deliberately provocative. Neither side called Mr Hay to give evidence at the trial, and the court does not therefore have Mr Hay’s explanation of his conduct: this admitted disadvantage cannot, however, prevent the court drawing, where necessary, such inferences as are appropriate from what Mr Hay did and wrote.
The other major ground of dispute between the plaintiff and Mr Hay concerned a weekly children’s orthopaedic clinic which had been one of the plaintiff’s special interests at the hospital. The plaintiff had arranged that Mr Parvaiz, as his locum, would continue this clinic during the plaintiff’s absence, but within a couple of days of the plaintiff’s departure for Australia Mr Hay took over this clinic, insisted on retaining it thereafter during the plaitiff’s absence, and directed Mr Parvaiz to devote himself to some work for patients in the Isle of Sheppey who were no concern of the plaintiffs. In addition, Mr Hay gave the plaintiff a false explanation of his takeover of the children’s clinic, in asserting untruly that he, Mr Hay, had done so at the request of a Dr Fisher was was one of the paediatric consultants at the hospital.
There followed a stream of angry letters from the plaintiff in Australia. He wrote to Mr Hay, to Mr Parvaiz (until at the turn of the year Mr Parvaiz, for whatever reason, left the hospital), to the clinical tutor at the hospital and, several times, to Mr Girolami. Many of these letters were couched in intemperate terms and we were told that the Committee of Inquiry referred, in relation to some, to their inexcusable offensiveness. The plaintiff sent copies of some of these letters to all the members of the Surgical Division, to Dr Fisher and to Mr Beavis, and sent copies of some of the most intermperate to Dr Forsythe. He also wrote on 13.2.80 to Dr Forsythe complaining of Mr Hay’s takeover of the children’s clinic. The plaintiff’s practice was to send his letters in manufscript to his secretary at the Medway Hospital for her to type and sign on his behalf and send out as from the hospital.
In January 1980 Mr Jennings, who was also a member of the surgical division, sent copies which he had received of some of the correspondence between the plaintiff and Mr Hay and the plaintiff and Mr Girolami to Dr Forsythe with the comment: ‘I enclose more paranoia from our colleague who at the moment is on six months unpaid leave.’ Also Mr Hay, although writing at times apparently conciliatory letters to the plaintiff, went behind his back and wrote to Dr Forsythe on 7.3.80 a letter which included the following in relation to the plaintiff:
‘He is due to return to the District on 21 April, a prospect which as a District we regard with serious misgivings. . . . To say that Tony Bliss was a difficult colleague would be to seriously understate the situation . . . This recent deterioration in his condition causes us to seriously doubt the balance of his mind. I myself have fears for my personal safety if he returns to the post in this frame of mind . . . there has been a continuous stream of events which have provoked his paranoia in the six years I have been here. . . . I myself ask you to seriously consider the possibility of suspending him from the date of his return pending an appropriate enquiry, or alternatively I may have to consider withdrawing my own presence from the hospital . . . To attempt to work together would be at the least unsatisfactory and at the worst may be dangerous.
I realise you are a very busy man but I must ask you to give this situation priority otherwise we may well have a tragedy on our hands.’
In addition, Mr Hay’s wife, who was a consultant child psychiatrist at the Medway Hospital, but who had not in fact seen the plaintiff for three years, wrote on 13.3.80 to Dr Main, a member of the District Management Team. In this letter, which was passed on to Dr Forsythe, she referred to the developing state of paranoia evident in the plaintiff’s correspondence with Mr Hay, she described the plaintiff as a man of hyper-sensitive and paranoid personality, and she expressed her doubts as to the balance of his mind.
All this correspondence which passed while the plaintiff was in Australia, together with a few letters which passed immediately after his return in April 1980, is conveniently referred to as ‘the Australia correspondence’. It has to be read as a whole, and is to be found in the additional bundle of documents lodged for this appeal. It is of the utmost importance to this case, but to set out the whole of it would overburden this judgment.
Against this background, the Three Wise Men were called into action. They had a meeting on 13.3.80. On or just before 20 March Dr Forsythe went to the Medway Hospital, probably by invitation from the hospital, and saw the District Management Team, including Mr Jennings and Dr Main and also Mr Girolami, but not (although there is nothing sinister about this) Dr Telfer. Dr Forsythe’s file note of this meeting is so important, because it was ultimately sent to Sir John Donne, that it must be set out in full.
‘I met the Medway DMT and Mr Girolami to discuss the problems associated with Mr Bliss and Mr Hay. The Three Wise Men have met again and feel that there is a risk to patients as a result of Mr Bliss’ behaviour. We debated at some length whether or not he might be sick and whether or not a local psychiatrist might be consulted, but eventually it was agreed that this might be extremely difficult and that, in many ways, an independent opinion might be the best way. It was reported by Dr Mair at the meeting that his second wife thought that he might commit suicide and that he rejected twice advice from her that he should have psychiatric advice.
It was thought most likely that he had a personality disorder and that therefore it was likely to be a disciplinary matter, although there was clearly merit in excluding psychiatric illness before going down the road. We discussed the alternative ways of proceeding on the disciplinary way. I favoured seeing him myself first but because of the long history dating from Lena Fox, after which he was seen by the Chairman, and the fact that there was real anxiety about his behaviour and possible courses of action, it was thought preferable that he should be seen by the Chairman. I indicated that I would like to keep my options open on this. It was agreed that the Three Wise Men’s report would be sent to me in writing.’
Dr Forsythe’s attitude at this time is shown in a letter he wrote, alson on 20.3.80, to the District Administrator of the Medway Health District. He envisaged the possibility of getting an independent medical report on the plaintiff’s condition to exclude the possibility that the plaintiff was mentally ill.
The actual report of the Three Wise Men was not issued until 16.4.80, a very few days before the plaintiff’s return. It reads as follows:
‘The letters were considered and it was felt that they showed an extraordinary state of mind on Mr Bliss’s part. After much consideration it was felt that the papers did not show pathological behaviour but only showed a severe degree of breakdown in the Orthopaedic department.
We felt that if Mr Bliss returned to duty it could only have a deleterious effect on the running of the department and if breakdown between two colleagues was so complete, we felt that there may well be a danger of patients’ care being adversely affected.
It was decided that the District Management Team should be acquainted with the facts and that the Regional Medical Officer should also be acquainted with the facts and his opinion obtained on further management of the situation.’
In the light of hindsight, it may be said that the diagnosis of the Three Wise Men was entirely correct.
Dr Forsythe wrote to the plaintiff also on 20.3.80 notifying him that he, Dr Forsythe, had arranged an appointment for the plainntiff to come to see him at nine o’clock on 21 April, which was to be the plaintiff’s first day back at work at the hospital. For understandable reasons, however, he did not mention what he wanted to see the plaintiff about; he merely added an extremely cryptic comment ‘whenever consultants have difficulties I advise them to get in touch with their defence society and I think that you ought to follow this advice. The plaintiff received this letter before he left Darwin, but, no knowing what was in the wind, he attached little importance to it. His comment to his secretary in the Medway Hospital was that the proposed meeting sounded like a waste of time, and he instructed her to leave his hospital and private practice appointments for the day standing. Dr Forsythe also asked the Dean of the Maudsley Hospital to be prepared to see the plaintiff as an independent expert if the plaintiff agreed. Dr. Forsythe said in that letter: ‘I fear it may turn out to be a personality disorder problem again, but I believe we should exclude mental illness.’
Further letters passed between the plaintiff and Mr Hay, counched on the part of the plaintiff in trenchant terms, and copies were sent by the plaintiffs to the Medway District Administrator, who commented in a letter to Dr Forsythe of 14.4.80:
‘I think this latest letter from (the plaintiff) to Mr Hay shows yet again what very major problems we are going to have in running a satisfactory Orthopaedic Service if this inter-consultant feuding continues.’
The plaintiff did not attend the meeting with Dr Forsythe appointed by the latter for 21 April. Dr Forsythe therefore wrote to the plaintiff on that date inviting him to agree to undergo a medical examination by a consultant nominated by the defendant. I set out the substance of the letter in full:
‘Dear Mr Bliss,
I was very disappointed that you failed to see me here at 9 am today as I asked in my letter to you of 20.3.80. I received on 9 April a message from your secretary which, if I may say so, was not following what I would regard as normal procedure on the part of a consultant requested to see the Regional Medical Officer because of serious problems which had arisen in connection with the surgical services in the Medway Health District and about which you yourself wrote asking me to intervene.
I have given careful consideration to the position and having looked at the documentation, I consider that I would be well advised to request you to undergo a medical examination by a consultant nominated by this Authority. It is essential that I should have a report of this kind to enable me to recommend what, if any, further action is necessary by the Regional Health Authority.
In order that the necessary arrangements can be made, will you please let me know, by 25 April, that you will attend such an examination. I will then inform you of the name of the consultant suggested by this Authority. He might wish to have a report from your general practitioner so I wish you to advise me of your general practitioner’s name and address and your agreement to him being contacted by the consultant. A copy of the consultant’s report would, of course, be sent to your general practitioner.’
That letter must have come as a bolt from the blue to the plaintiff, and he replied in characteristically forthright terms on 25 April. Dr Forsythe then put the matter in the hands of Sir John Donne as chairman of the defendant authority; he supplied Sir John with copies of the Australia correspondence, including the plaintiff’s letter of 25 April, of Dr Forsythe’s own file note of 20 March and of the report of 16.4.80 of the Three Wise Men. Having considered these, Sir John Donne, by a letter of 7 May, required theh plaintiff to undergo a medical examination by a consultant nominated by the defendant authority. He stated the purpose of such an examination to be to exclude the possibility of harm to patients resulting from any illness from which the plaintiff might be found to be suffering. The plaintiff refused to obey this requirement. Accordingly, and inevitably, after a meeting of the members of the defendant authority on 14 or 15 May, whose decision was confirmed by a later meeting on 16 June, the plaintiff was suspended from his post as a consultant at the Medway Hospital, and then refused access to that hospital.
There was some discussion about the possibility of an examination by two consultants, one nominated by the defendant and the other by the plaintiff, but that was not acceptable to the defendant.
In September 1980, following an intimation in August, disciplinary charges were brought against the plaintiff under the National Health Service regulations, and a Committee of Inquiry under the chairmanship of a QC was set up to investigate those charges. There was one charge, which was not proceeded with, of rudeness to nursing staff in 1978. The other charges were that he had been guilty of personal and/or professional misconduct in writing a number of the letters in the Australia correspondence, in failing to respond to Dr Forsythe’s invitation to meet him on 21.4.80 and in failing without good cause to attend that meeting and in refusing the Chairman’s requirement that he should undergo a medical examination.
The Committee of Inquiry sat for several days in November and December 1980, but it did not produce its final report until July 1981. That report has not been put before this court. We understand, however, that it showed up the duplicity of Mr Hay and blamed Mr Hay for the matters which had so angered the plaintiff while he was in Australia. It did indeed comment on the inexcusable offensiveness of some of the plaintiff’s letters in the Australia correspondence, although recognising that they were written under intense provocation, but apart from that it acquitted the plaintiff of the charges against him. It has not however been suggested that this report concludes in favour of the plaintiff any of the issues in these proceedings.
On 16.7.81 the defendant Authority, having considered the report of the Committee of Inquiry, wrote to the plaintiff withdrawing the requirement that he submit to a medical examination and lifting, with immediate effect, his suspension from duty. By a further letter, however, also of 16.7.81 from the defendant’s Head of Legal Services, Mr Ferguson, to the plaintiff, Mr Ferguson confirmed that ‘the Authority accepts that you will not in fact be taking up their offer to return to duty following your holiday on 4.8.81 and that you will require further time to let us know your intentions, which will be by not later than the end of August.’
Before the final report of the Committee of Inquiry was issued, a provisional draft of the Committee’s proposed findings was sent to the plaintiff in accordance with the rules which govern such inquiries in the National Health Service.Following this, the plaintiff on or about 22.5.81 lodged a written complaint under the National Health Service Grievance Procedure. This document has not been put before this court. We are told, however, that it was lengthy and prepared by the plaintiff himself rather than by lawyers on his behalf, that it invited the defendant to take disciplinary action against Mr Hay and Mr Jennings, and suggested that some form of action might also be taken in respect of Dr Forsythe and Sir John Donne, and that it also indicated that the plaintiff thought he had a claim for damages against the defendant.
After 16 July the plaintiff went on holdiay. He returned or or just before 4 August. What happened thereafter is relevant to the appeal rather than the cross-appeal, and it can be summarised quite shortly.
Firstly, on 4.8.81, the plaintiff’s solicitors wrote two letters, one to the defendant’s Head of Legal Services, Mr Ferguson, and the other to the defendant’s solicitors, Messrs Bird & Bird. These expressed an anxiety on the part of the plaintiff to return to the practice as quickly as possible, provided that this could be achieved on a without prejudice basis. By that was meant without prejudice to any claims he might have against the defendant arising from his suspension or the requirement that he submit to a medical examination. But the letter also made it plain that the plaintiff had to take further legal advice, and could not commit himself to returning to duty otherwise than on a without prejudice basis, until after he had obtained that advice, later in August. On 5 August, the defendant, by Mr Le Fleming, the Regional Administrator, gave the assurance which the plaintiff’s solicitors had sought that the plaintiff could return to work on a without prejudice basis. However, on the next day, 6 August, the plaintiff himself wrote to Mr Le Fleming saying that he could not give any undertaking to return to duty at the Medway Hospital before, as I read the letter, he had had the benefit of legal advice.It was accepted in the lower court that this letter of 6 April was the result of a change of mind on the part of the plaintiff from his attitude when he authorised his solicitors to write the letters of 4 August. As I understand the letters, however, the change of mind was merely over whether he would be prepared to return to work on a without prejudice basis; he had never made or communicated any decision to return to work unconditionally and not on a without prejudice basis.
On or about 12.8.81 the plaintiff saw counsel in conference. Counsel, however, felt that he needed time to consider the plaintiff’s problems before he could give useful advice and, not surprisingly for August, counsel was about to go away on holiday. The plaintiff’s solicitors accordingly on 13 August wrote to Mr Ferguson asking for an extension of time to the latter part of September for the plaintiff to decide whether or not he would return to his duties at the hospital. This was granted by the defendant by a letter from Mr Ferguson of 20 August, in which he added a caution that the defendant would not be prepared to allow the matter to continue beyond the end of September.
On 2.9.81 the plaintiff himself sent to the Chairman of the Study Leave Committee of the defendant two applications for study leave to attend courses which were to be held on 28 and 29 September and from 30 September to 2.10.81. The object of these applications was twofold; that the defendant would give him leave of absence from his duties to attend the two courses in question, and that the defendant would pay his expenses of attending those courses. The applications for study leave were not expressed to be without prejudice to the plaintiff’s claims against the defendant or to his final decision whether or not to return to the Medway Hospital. I cannot however suppose that the defendant regarded these applications as a final election to return to work and not to accept the defendant’s conduct as a repudiation of his contract of employment.
It is clear that what the defendant was particularly worried about was how he would be received by his former professional colleagues after all the traumas of the Australia correspondence, his suspension for refusing to submit to a psychiatric examination and his subsequent vindication by the Committee of Inquiry.
The plaintiff received further advice from counsel in the course of September, and in the upshot, as I have already mentioned, his solicitors wrote on 25.9.81 asserting that the defendant’s actions had constituted a repudiation of the plaintiff’s contract of employment, which he elected to accept. He therefore never returned to work at the hospital after his suspension. But throughout the period from 16.7.81 to the end of September he continued to be paid, and to accept from the defendant, his salary as a consultant, just as it had been paid during his suspension; this is a factor to which the judge attached much importance.
After that summary of the facts, it is logical to consider first the question, which arises on the cross-appeal, whether the defendant was in breach of contract at all in requiring the plaintiff to submit himself to a psychiatric examination and in suspending him on his refusal to do so.
It is common ground on the pleadings that it was an implied term of the plaintiff’s contract of employment with the defendant that the defendant was entitled to require the plaintiff to undergo a medical examination if it had reasonable ground for believing that he might be suffering from physical or mental disability which might cause harm to patients or adversely affect the quality of the treatment of patients.
The defendant had this power, however, to require a medical examination only against the background of the circular, HM60 (45), and in relation to an enquiry by the Three Wise Men in accordance with the procedure set up following their circular. There is no general power in an employer to require employees to undergo psychiatric examination, and there is no other relevant specific power in the plaintiff’s contract of employment or under the scheme of the National Health Service. Even if Dr Forsythe, or somebody else in the management of the defendant, had formed the view that the plaintiff was suffering from mental illness which raised a risk of danger to patients, it would not have been permissible, in my judgment, for the defendant to have required the plaintiff to undergo a psychiatric examination if the Three Wise Men procedure had not first been gone through. In any event, however, Dr Forsythe’s evidence is clear that he did not form any view of his own as to whether the plaintiff was suffering from mental illness, and he did not regard himself as competent to form any such view.
It is also common ground: (1) that Sir John Donne, who made the decision to require the plaintiff to undergo the medical examination, and Dr Forsythe, on whose advice Sir John acted, both acted in good faith, and both thought that they had reasonable grounds for requiring the medical (or psychiatric) examination, and (2) that the question for the court is whether they had reasonable ground — not whether they thought they had.
The defendant’s difficulty is that, as is clear from the transcript of his evidence, Dr Forsythe supposed, from his meeting with two of the Three Wise Men and the members of the District Management Team on the occasion recorded in his file note of 20.3.80 that he was then told by the two Wise Men that in the view of the Three Wise Men there was a possibility, or at the very least the possibility could not be excluded, that the plaintiff was suffering from mental illness. Dr Forsythe then decided that the appropriate course would be to arrange for a psychiatric examination of the plaintiff, and he made his approach to the Dean of the Maudsley Hospital. When he received the written report of the Three Wise Men, he persuaded himself that the wirtten report meant, or was intended to mean, the same as he thought he had been told by the two when he had met them. In so far as there was a divergence of wording, he did not regard it as of any significance. He did, however, attach importance to the fact that the written report did not in terms state that the possibility of harm to patients from physical or mental disability could be excluded, whereas a report of the Three Wise Men on an earlier occasion had expressly said that.
For my part, I am unable to accept Dr Forsythe’s interpretation of the written report of the Three Wise Men. That report does indeed recognise that there was a risk of patient care being adversely affected, but that was because of the complete breakdown of the relationship between two colleagues, the plaintiff and Mr Hay, and not because of mental illness. The conclusion of the report, albeit reached after much consideration, was that the papers, ie the Australian correspondence, did not show pathological behaviour but only showed a severe degree of breakdown (ie of relationships) in the orthopaedic department.
If the report of the Three Wise Men had raised a doubt about the plaintiff’s mental condition and a suspicion of mental illness, Dr Forsythe and Sir John Donne would have been fully justified in requiring the plaintiff to submit to a medical examination. But as their powers in this field were, in my judgment, governed by the Three Wise Men procedure, they had no right, in my judgment, to require him to submit to a psychiatric examination in order to confirm the view expressed in the report, as I construe it, that there was no mental or pathological illness, but merely a severe degree of breakdown of personal relationships.
It follows that I agree with the learned judge that the defendant was in breach of contract in requiring the plaintiff to submit himself to a medical examination and in suspending him when he refused to do so. I have no doubt that the breach was a continuing breach, so long as the suspension lasted.
Was it then a repudiatory breach, which would entitle the plaintiff to treat the contract as at an end and claim damages on that footing?
It is common ground on the pleadings that it was an implied term of the plaintiff’s contract that the defendant would not without reasonable cause conduct itself in a manner likely to damage or destroy the relationship of confidence and trust between the parties as employer and employee. There is ample authority in employment cases to warrant the implication of such a term. The defendant was in breach of that term, and the question is whether that breach was fundamental, or repudiatory, or not.
No doubt Dr Forsythe and Sir John Donne and the members of the defendant authority would have said, if asked, that they wanted to retain the plaintiff’s services at the Medway Hospital if the personality clash could be resolved. But, as Lord Wilberforce said in Federal Commerce & Navigation Co Ltd v Molena Alpha Inc and others (1979) AC 757 at 780:
‘If a party’s conduct is such as to amount to a . . . repudiatory breach, his subjective desire to maintain the contract cannot prevent the other party from drawing the consequences of his actions.’
In Woodar Investment Development Ltd v Wimpey Construction UK Ltd (1980) 1 WLR 277, Lord Scarman put the matter very succinctly when he said at page 298: ‘To be repudiatory, the breach, or threatened breach, must go to the root of the contract.’ In Woods v WM Car Services (Peterborough) Ltd  IRLR 347, Mr Justice Browne-Wilkinson (as he then was) held, following Courtaulds Northern Textiles Ltd v Andrew  IRLR 84, that any breach of an implied term that the employers will not, without reasonable and proper cause, conduct themselves in a manner calculated or likely to destroy or seriously damage the relationship of confidence and trust between employer and employee was a fundamental breach amounting to a repudation since it necessarily went to the root of the contract. I do not find it necessary to generalise. There must be some breaches at least of such an implied term which are fundamental and repudiatory and go to the root of the contract, and if ever there was a breach of such a term going to the root of the contract, it was this. It would be difficult, in this particular area of employment law, to think of anything more calculated or likely to destroy the relationship of confidence and trust which ought to exist between employer and employee than, without reasonable cause, to require a consultant surgeon to undergo a medical, which was correctly understood to mean a psychiatric examination, and to suspend him from the hospital on his refusing to do so.
In Woodar v Wimpey it was held that there was no repudiation of a contract where one party, claiming in good faith but erroneously to be entitled to do so, had served a notice purporting to rescind the contract under a power in the contract. It was said that that did not show an intention not to perform the contract. It was sought, in argument, to apply that decision to the present case and to say that as the defendant was only doing what it claimed in all the circumstances to be entitled to do, what it did could not be repudiatory since it did not ex facie indicate an intention not to be bound by the contract. It seems to me, however, that the two situations are wholly different. The defendant in the present case was not purporting to exercise any express power in the contract. It must be judged by what it did and not by its private intentions, and what it did was by any objective standard outrageous.
It follows that there was a continuing repudiatory breach of contract on the part of the defendant until the suspension was lifted and the requirement of medical examination was dropped. Apart, however, from the continuing nature of the breach, the plaintiff had, realistically, no option but to stand and fight once the disciplinary process was set in train against him. He, of course, wanted an inquiry which would show up the truth about Mr Hay’s behavour. But if he had elected in, for example, September or October 1980 to treat his contract as repudiated by the defendant and to sue for damages, he would have put himself in an impossible position qua finding any employment under the National Health Service in the immediate future; his position would have been that, after being suspended for refusal to submit to a psychiatric examination, he had left when disciplinary proceedings were pending against him. In truth, both sides tacitly agreed that any consideration of his position would remain open until the Committee of Inquiry had reported. In those circumstances, I do not think that the plaintiff is to be criticised at all for continuing to accept his salary throughout the period of his suspension.
I turn then to the question raised by the appeal, whether after his suspension was lifted on 16.7.81 the plaintiff by his conduct affirmed the contract so as to preclude him from accepting the defendant’s repudiation of it, as he purported to do by his solicitor’s letter of 25 September.
The judge’s view was that, even allowing a period of indulgence after the lifting of his suspension, the plaintiff should by the end of July have refused to accept any further payments of salary pending his decision whether to affirm or reject the contract. As he did not do so, but continued to receive his salary, and a fortiori in view of the correspondence of 4 to 6 August and his applications for study leave, he must be taken to have affirmed the contract and lost his right to elect to treat it as repudiated before 25 September.
There are various statements of the law in reported cases which are useful as guidelines. There is, for instance, the statement of Lord Denning, Master of the Rolls, in Western Excavating (ECC) Ltd v Sharp  IRLR 27: ‘Moreover he must make up his mind soon after the conduct of which he complains: for, if he continues for any length of time without leaving, he will lose his right to treat himself as discharged. He will be regarded as having elected to affirm the contract.’ There is also the statement by Mr Justice Browne-Wilkinson (as he then was) in WE Cox Toner (International) Ltd v Crook  IRLR 443, cited in the court below in the present case:
‘If one party (“the guilty party”) commits a repudiatory breach of the contract, the other party (“the innocent party”) can choose one of two courses: he can affirm the contract and insist on its further performance or he can accept the repudiation, in which case the contract is at an end. The innocent party must at some stage elect between these two possible courses: if he once affirms the contract, his right to accept the repudiation is at an end. But he is not bound to elect within a reasonable or other time. Mere delay by itself (unaccompanied by any express or implied affirmation of the contract) does not constitute affirmation of the contract; but if it is prolonged it may be evidence of an implied affirmation.’
These are, however, merely guidelines to be applied to the facts of any particular case. In the present case the cardinal factor, as it seems to me, is that the defendant was repeatedly prepared to give the plaintiff time to make up his mind and to pay him his salary while he was making up his mind. Mr Justice Browne-Wilkinson indicates that the innocent party could further perform the contract to a limited extent while reserving his rights to accept the repudiation. But I see no need for him to take that precaution of an express reservation when the employer has himself allowed the employee time to make up his mind.
The learned judge took the view that the time allowed was to enable the plaintiff to make up his mind whether he wished to return to duty and not to give him an opportunity to consider whether to treat the contract as being at an end.In my judgment, however, that is an unreal distinction, because the two are essentially the same. If he decides not to return to work, he is electing to treat the contract as being at an end. Moreover, it is plain from the two letters of 4.8.81 that his consideration whether or not to return to work was linked to his consideration of his claims against the defendant arising from his suspension and the requirement that he submit to a medical examination. All that he was contemplating, according to his solicitors in those letters, was an interim return to work without prejudice to his final decision; the letters themselves cannot amount to an election which bars him from treating the contract as repudiated (since they make it plain that he has not made a final decision) and so the claims against the defendant which, according to the letters, he was needing time to consider, cannot be limited to a claim for damages for breach of contract on the footing that the contract would remain on foot and he would go back to work.
On the facts of this case, therefore, I respectfully differ from the learned judge’s conclusion that between 16 July and 25 September the plaintiff waived his right to treat his contract of employment as repudiated by the defendant’s breach.
The attitude of the defendant over this period from 16 July to the end of September in giving the plaintiff time to make up his mind in a difficult situation and in continuing to pay his salary in the meantime was very fair and is not to be criticised. But conversely the plaintiff, who needed time and acted fairly by the defendant, is not to be criticised for continuing to accept his salary.
Mr Reynolds for the plaintiff put forward a further argument on the appeal. Founding on Payman v Lanjani (1985) 2 WLR 154, a decision of this court only very recently reported, he submitted that as a matter of law the plaintiff could not be held to have elected to treat the contract as still subsisting and not at an end, until he knew his legal rights. He only received the relevant advice from counsel in mid-September, and he acted very promptly after that in electing to treat the contract as repudiated. See, for example, the statement of Lord Justice May at page 188:
‘This being so, I do not think that a party to a contract can realistically or sensibly be held to have made this irrevocable choice between rescission and affirmation unless he has actual knowledge not only of the facts of the serious breach of the contract by the other party which is the pre-condition of his right to choose, but also of the fact that in the circumstances which exist he does have that right to make that choice which the law gives him.’
This is a formidable argument, and the acceptance of it could have considerable repercussions in employment law. But I do not find it necessary to express any opinion on it in the present case and I prefer not to since Mr Reynolds candidly admitted that he did not take the point in the court below and, though Mr Playford did not object in this court to the point being taken, I am not wholly satisfied that further evidence might not have been adduced in the court below if the point had been taken.
It remains to consider the final point on the cross-appeal, viz the validity of the judge’s award of £2000 with interest by way of general damages for frustration and mental distress. In making such an award, the learned judge considered that he was justified by the decision of Mr Justice Lawson in Cox v Philips Industries Ltd  IRLR 344. With every respect to them, however, the view of Mr Justice Lawson in that case and of the learned judge in the present case are on this point, in my judgment, wrong.
The general rule laid down by the House of Lords in Addis v Gramophone Company Ltd (1909) AC 488 is that where damages fall to be assessed for breach of contract rather than in tort it is not permissible to award general damages for frustration, mental distress, injured feelings or annoyance occasioned by the breach. Modern thinking tends to be that the amount of damages recoverable for a wrong should be the same whether the cause of action is laid in contract or in tort. But in Addis Lord Loreburn regarded the rule that damages for injured feelings cannot be recovered in contract for wrongful dismissal as too invetrate to be altered, and Lord James of Hereford supported his concurrence in the speech of Lord Loreburn by reference to his own experience at the Bar.
There are exceptions now recognised where the contract which has been broken was itself a contract to provide peace of mind or freedom from distress. See Jarvis v Swans Tours Ltd (1973) QB 233 and Heywood v Wellers (1976) QB 446. Those decisions, as decisions, do not however cover this present case.
In Cox v Philips Industries Ltd Mr Justice Lawson took the view that damages for distress, vexation and frustration, including consequent ill-health, could be recovered for breach of a contract of employment if it could be said to have been in the contemplation of the parties that the breach would cause such distress etc. For my part, I do not think that that general approach is open to this court unless and until the House of Lords has reconsidered its decision in Addis.
We were referred to the decision of this court in Hutchinson v Harris (1978) 10 Building Law Reports 19 I do not, however, find any general statement of principle in that case and I regard it as no more than a decision on the facts of the case that the damages claimed were not recoverable.
In the upshot I would allow the cross-appeal to the extent only of diallowing the judge’s award of £2000 general damages with interest, and I would allow the appeal.
JUDGMENTBY-2: HEILBRON J
HEILBRON J: I agree.
JUDGMENTBY-3: CUMMING-BRUCE LJ
CUMMING-BRUCE LJ: I agree.
Appeal allowed; cross-appeal allowed to the extent of setting aside the award of £2000 general damages and interest for frustration and mental distress; defendants to pay plaintiff’s costs here and below; application for leave to appeal to the House of Lords refused; stay of payment out to plaintiff’s solicitors of the sum in court for 21 days; if petition for leave to appeal lodged within 21 days stay to continue over hearing of the petition; legal aid taxation of plaintiff’s costs.
Argles & Court; Bird & Bird