Tracey v Burton & Ors [2024] IEHC 762: Limits on Psychiatric and Reputational Damages Arising from Termination of a Commercial Contract for Services

1. Introduction

This High Court judgment of MacGrath J (Tracey t/a Engineering Design and Management v Burton & Ors, [2024] IEHC 762, 21 November 2024) is the culmination of an exceptionally protracted piece of litigation arising from the breakdown of a short-lived commercial relationship in 2004. It sits at the intersection of contract law, tort (particularly psychiatric injury and negligence), and the law on reputational harm.

The case is doctrinally important in at least three respects:

• It re‑affirms, and applies in a commercial context, the absence of a general duty of good faith in Irish contract law and construes a 16‑week notice clause in a contract for services as permitting termination “for any reason or none” without an obligation to give reasons.
• It draws a clear line around the recoverability of psychiatric injury and reputational loss: such losses are not recoverable in contract on these facts, and cannot be recovered in negligence where the pleaded harm is essentially reputational and where no recognised “nervous shock” duty of care arises.
• It illustrates how courts will treat overlapping claims for psychological injury and loss of earnings across multiple sets of proceedings, and how that can fatally undermine causation and quantum in a given action.

The judgment also gives practical guidance on:

• the distinction between a contract of employment and a contract for services;
• when side letters and subsequent correspondence are treated as part of the contractual package;
• how overtime approval clauses may be waived by conduct; and
• the limits of conversion and intellectual property claims where pleadings and evidence lack particularity.

1.1 Parties and factual background

The plaintiff, Kevin Tracey, is a highly qualified consulting engineer trading as Engineering Design and Management (EDM) (paras 3(a), 15). The defendants are:

• Michael Burton, quantity surveyor (first defendant);
• Anne O’Connor, sued as personal representative of her late husband Charles O’Connor, also a quantity surveyor (second defendant);
• Burton and O’Connor Limited, a company incorporated on 5 February 2004 (third defendant); and
• FPQ Consulting Engineers, a business name registered 21 June 2004 (fourth defendant).

In early 2004, Burton and O’Connor acquired the mechanical and electrical practice of F&P Quigley Ltd, trading as Frank P Quigley, Consulting Engineers, and launched a new combined venture branded FPQ Consulting Engineers (paras 12–14). They “headhunted” Mr Tracey to lead the mechanical and electrical arm.

Two competing contractual instruments lie at the heart of the dispute:

1. A contract of employment dated 30 January 2004, describing Mr Tracey as “Head Consulting Engineer” with a salary and overtime (paras 16–19); and
2. A later contract for services dated 24 February 2004, plus two “side letters” of 24 and 27 February 2004 (paras 20–23).

Crucially, the contract for services:

• styled the arrangement as a consultancy, dropping the “employer/employee” labels (para 21);
• provided for payment at an hourly rate (€75 per hour up to 35 hours per week, €119 per hour thereafter, plus VAT) and a €2,000 + VAT “standing charge” for use of Mr Tracey’s name on company stationery (cll. 4, 6, 7);
• contained a 16‑week minimum notice clause, “regardless of any circumstances” (cl. 11; para 21(g)); and
• envisaged, after 12 months (1 March 2005), a directorship and one‑third interest in the company and its future profits (cl. 10; para 21(f)).

The side letter of 24 February 2004 confirmed various benefits (holiday, parking, committee work, 1/3 of first year profit), while the “overtime letter” of 27 February 2004 purported to require prior approval of overtime by both Burton and O’Connor (paras 22–23).

Relations deteriorated in autumn 2004. On 4 October 2004, upon Mr Tracey’s return from holidays and shortly after press coverage of an unrelated assault prosecution in which he had been a defendant, Burton and O’Connor delivered a written notice terminating the contract for services with 16 weeks’ notice (para 45). Tensions escalated over the ensuing fortnight, including disputes about attendance, access to information, and the mysterious disappearance and stamping of the FPQ office diary (paras 55–64, 129–140).

On 19 October 2004, Burton and O’Connor gave Mr Tracey a second letter, requiring him to vacate the premises within one hour and stating that the “business relationship” ended from 9 a.m. that morning (para 68). Mr Tracey refused to leave immediately; the defendants consulted their solicitor, had the locks changed, and ultimately summoned gardaí to attend. Mr and Mrs Tracey left after 9 p.m., with gardaí present (paras 65–80, 137–140). These events, and their alleged psychological and reputational consequences, underpin the bulk of the plaintiff’s claims.

1.2 Causes of action and amounts claimed

By the time of the third (operative) statement of claim in April 2009 (para 7), Mr Tracey claimed:

• damages for breach of contract for allegedly wrongful and abrupt termination of the agreement and failure to honour the 16‑week notice period;
• damages in negligence and breach of duty (including “nervous shock” and psychiatric injury);
• damages for conversion (of physical and intellectual property);
• damages for nuisance and general breach of duty of care; and
• very substantial financial losses (over €3 million) on the basis that he was unable to return to his profession as a result of the defendants’ conduct (paras 6–7).

An attempted claim in defamation was effectively excluded in earlier proceedings: in 2011 Kearns P set aside a notice to trial by judge and jury; in 2016 the Supreme Court (MacMenamin J) upheld that order, holding that the case did not include a defamation claim and thus no jury right arose (para 8). The High Court was therefore not permitted to treat the proceedings as defamation.

2. Summary of the Judgment

MacGrath J’s core conclusions may be summarised as follows.

2.1 Contractual findings

1. Only the contract for services (24 February 2004) plus the side letters governs.
   The earlier contract of employment was superseded and ceased to have legal effect (paras 112–115). This was supported by:
   • material differences in terms between the two documents; and
   • Mr Tracey’s own pleadings and evidence expressly accepting that the contract for services superseded the contract of employment (para 113–115).
2. Burton & O’Connor Ltd is the sole contracting party.
   The company, not the individual directors, was the proper defendant for contractual claims. FPQ Consulting Engineers was only a business name, not a separate legal person (para 111).
3. The overtime letter formed part of the contract, but its prior‑approval requirement was waived.
   The court held that Mr Tracey did receive the 27 February 2004 “overtime letter” and that it became part of the contractual package (para 116). However, the requirement for prior approval of overtime was held to have been waived by conduct, given that overtime was worked and later claimed for months without objection (paras 116–117).
4. The 16‑week notice clause permitted termination for any reason or none, without a duty to explain.
   Clause 11 allowed either party to terminate on 16 weeks’ notice “regardless of any circumstances”. The court held that, properly construed, the clause did not require a reason to be given for termination (paras 148–150, 155–158). Mr Tracey’s own evidence acknowledged that either party could terminate the contract for “any reason or no reason”, provided 16 weeks’ notice was given (para 148).
5. The termination notice of 4 October 2004 validly ended the contract.
   The letter of 4 October 2004 was a valid notice of termination. It brought the contract for services to an end, subject only to the plaintiff’s right to 16 weeks’ notice or pay in lieu (paras 148–158).
6. Mr Tracey had a right to the economic value of the 16‑week notice, not a right to remain on the premises.
   The contract did not guarantee a right to work at the defendants’ premises during the notice period. The company could require him to cease attending and instead discharge its obligations by paying him in lieu of notice (paras 169–177, 171–175).

2.2 Tort, psychiatric injury and reputation

1. No compensable psychiatric injury under contract.
   Applying Addis v Gramophone, Watts v Morrow, and Irish authority including Murray v Budds, the court held that damages for psychiatric injury or mental distress are generally not recoverable for breach of a commercial contract of this nature, and the case did not fall within any of the narrow recognised exceptions (paras 178–186).
2. No duty of care in negligence for “nervous shock” on these facts.
   Applying the five‑step test in Kelly v Hennessy, the court held that:
   • Mr Tracey suffered moderate depression, but not post‑traumatic stress disorder (PTSD) (paras 142–144);
   • his condition was not “shock‑induced” in the legal sense – there was no sudden horrifying event leading to immediate psychiatric injury (paras 191–193); and
   • no recognised duty of care in nervous shock arose in a commercial setting of this kind.
3. No duty of care in negligence to protect reputation.
   The court held that damage to reputation is to be addressed through defamation, not negligence. Following Lonrho, Glencar and Cromane Seafoods, it would not be “just and reasonable” to extend negligence duties to encompass reputational loss where defamation law already governs the field (paras 194–198). The Supreme Court had already determined that this case did not include a defamation claim (para 8).
4. No negligence in calling the gardaí or changing locks.
   On the facts, and after the tensions of the previous fortnight (including the diary incident), it was reasonable for the defendants to:
   • seek legal advice when Mr Tracey signalled that he would not leave the premises;
   • change the locks; and
   • request Garda attendance.
   Acting on legal advice in these tense circumstances did not amount to negligence (paras 199–200).
5. Causation of long‑term losses not proved.
   The court found that Mr Tracey’s extensive claims for past and future loss of earnings and career destruction were not causally established. Other significant stressors (notably multiple other legal actions and disputes with state authorities) contributed to his psychological state, and similar loss of earnings claims were made in those other proceedings (paras 145–146, 201–210). The causal chain between the defendants’ actions and his alleged inability to work was not proved on the balance of probabilities.

2.3 Monetary outcome

Although most of the high‑value claims failed, Mr Tracey succeeded in recovering substantial unpaid contractual sums from Burton & O’Connor Ltd as follows (paras 219–228):

• Deferred payments for work in March–August 2004 (FPQ‑15 and FPQ‑16): €22,463.07
• Overtime from 1 March–16 September 2004 (FPQ‑17): €20,086.61
• Payment in respect of four months’ notice at 35 hours/week, €75/hr + VAT (FPQ‑18): €50,928.42
• Standing charge for use of name for four months (FPQ‑19): €9,680.00
• Unpaid holiday pay: €6,411.52
• Magazine subscription: €60.00

Total: €109,629.62.

The court disallowed sums which amounted to “double counting” (FPQ‑21 and FPQ‑22) and rejected the claim to a profit share, as no profit was made and the contract had been validly terminated before the profit‑sharing date (paras 226–228).

No interest was awarded, because in September 2005 the defendants had tendered a cheque for €91,528.82 (covering all sums except disputed overtime and some double‑counted elements) which Mr Tracey rejected (paras 229–230). Given that the overtime claim was “not clear cut” and the plaintiff insisted on amounts not ultimately recoverable, interest was considered inappropriate.

All contractual claims against the individuals (Burton and O’Connor personally) were dismissed; the claim against the business name FPQ was struck out; and claims in negligence, nuisance and conversion failed (paras 236(x), (xiv)–(xv)).

3. Detailed Analysis

3.1 Contractual architecture: employment vs contract for services

3.1.1 Supersession of the contract of employment

A central preliminary question was whether Mr Tracey could rely on the 30 January 2004 contract of employment in addition to, or instead of, the later contract for services. He argued at various points that the employment contract had not been expressly terminated and survived alongside the contract for services (paras 16–19, 24).

MacGrath J rejected this, on two converging bases:

1. Textual inconsistency and commercial logic.
   The two documents were not complementary; they were mutually inconsistent across multiple core terms (paras 112–113):
   • “Employer/employee” labels vs. neutral party descriptors;
   • fixed monthly salary vs. hourly remuneration plus standing charge;
   • place of work specified vs. no such specification in the later contract;
   • different overtime structures and benefits.
   The later agreement was clearly framed as a different type of relationship.
2. Pleadings and admissions.
   Crucially, Mr Tracey had pleaded in para. 8 of his own statement of claim that the contract for services “superceded the contract of employment” (para 113). In oral evidence he reiterated this, describing the employment contract as “for a PAYE worker” and the services contract as tailored to a consultant with his own business (para 114).

The court accordingly treated the contract of employment only as background context, not as an operative instrument. The binding agreement was the contract for services plus the two side letters (para 112).

3.1.2 The side letters and overtime

The two key side documents were:

• Letter of 24 February 2004 (benefits and profit share):
  This was accepted by both sides as part of the agreement. It confirmed:
  • 1/3 share of profits until 1 March 2005 (to be reviewed when a directorship was offered);
  • paid time for professional committee work; and
  • recognition of the need for occasional personal meetings (para 22).
• Overtime letter of 27 February 2004:
  This letter stated that overtime would only be paid if it had the prior approval of both Burton and O’Connor (para 23). Mr Tracey denied that it formed part of the contract, and also argued that, in any event, the practice was to notify overtime verbally, not to seek written pre‑approval (paras 24, 116–117).

The court held (para 116):

• Mr Tracey did receive the overtime letter;
• he raised no contemporaneous objection; and
• it therefore formed part of the contractual package.

However, recognising a clause as part of a contract is only the first step. The real issue was whether that clause remained operative in practice. Here the court applied a familiar commercial law concept: waiver by conduct/course of dealing.

Key factual points:

• Mr Tracey plainly worked significant overtime “almost immediately” upon taking up the position (para 24, 116–117);
• he submitted overtime claims in September and October 2004 (including a schedule dated 16 September) without any immediate repudiation; and
• Burton and O’Connor did not consistently insist on prior written approval before overtime was worked or claimed.

On this basis, MacGrath J found:

“strict adherence to a requirement for prior approval was waived by the parties, at least by implication, Mr Tracey, therefore, is entitled to maintain his claim for overtime.” (para 117)

This is a textbook application of waiver: even where a contract contains a formally strict condition, parties may by their consistent practical behaviour relax that requirement, giving rise to an implied variation or estoppel.

3.2 Termination, notice and “good faith”

3.2.1 Construction of the 16‑week notice clause

Clause 11 of the contract for services provided:

“The agreed minimum notice required for termination of this contract for services regardless of any circumstances by either party will be 16 weeks.” (para 21(g), emphasis added)

The interpretative question was whether this wording:

• merely fixed a minimum notice period; or
• also imposed some substantive constraint (eg a duty to terminate only for good cause or to give reasons).

The court took into account:

• the plain language (“regardless of any circumstances”);
• evidence that both sides initially understood it as a “get‑out clause” available to either party for any reason (paras 148–150); and
• Mr Tracey’s own concession in cross‑examination that either party could terminate “for any reason or for no reason” subject to 16 weeks’ notice (para 148).

The judge therefore concluded:

“as matter of legal construction, subject to consideration of the issue of good faith … the contract for services could be terminated by either party for any reason or for no reason. In my view it follows that if no reason was required, no explanation was required.” (para 150)

This is consistent with the modern Irish approach to contractual interpretation (drawing on ICS v West Bromwich, Analog Devices, and Law Society v MIBI, cited at para 163): the court looks at the text, context, purpose and reasonable expectations of the parties, rather than seizing on isolated words to retrofit a fairness standard.

3.2.2 The “good faith” argument and its rejection

Mr Tracey sought to undermine the effect of clause 11 by invoking a general principle of “good faith”, relying in particular on Bingham LJ’s observations in Interfoto Picture Library Ltd v Stiletto Visual Programmes Ltd [1989] QB 433 (paras 151–153).

In Interfoto, Bingham LJ famously said that many legal systems impose an overarching duty of good faith in the making and performance of contracts – essentially requiring “fair and open dealing” – and that English law had developed piecemeal solutions instead (eg, unconscionability, regulation of exclusion clauses, penalties, etc.) (para 152).

However, Irish law has not adopted a general, free‑floating duty of good faith. MacGrath J cited:

• Dakota Packaging Ltd v Wyeth Medica Ireland (unreported, 10 October 2003), where some limited good‑faith obligations were recognised in relation to termination powers; and
• Flynn v Breccia [2017] IECA 74, where Finlay Geoghegan J stated unequivocally:

  “there is no general principle of good faith and fair dealing in Irish contract law” (para 154, quoting Flynn).

MacGrath J accepted that specific contracts (partnership, insurance) may be subject to heightened good‑faith duties (para 154), but found no doctrinal basis to extend such duties to this commercial consultancy agreement between sophisticated parties (paras 153–155). There was no evidence of:

• unconscionability;
• dominance or inequality of bargaining power; or
• hidden onerous terms in need of special warning (the context in which Interfoto is typically applied).

Accordingly, the clause stood as written: either party could terminate on 16 weeks’ notice without giving reasons, and no implied term to the contrary was imported under a generalised “good faith” banner (paras 155–158).

3.2.3 Did the events of 19 October 2004 vitiate the earlier notice?

Mr Tracey argued that the 19 October 2004 letter, purporting to end the business relationship “from 9 a.m. that morning”, somehow superseded or invalidated the earlier 4 October notice, such that the contractual right to 16 weeks’ notice remained unexercised (paras 159–160, 226).

The court firmly rejected this. The 4 October letter was a valid and effective exercise of the contractual termination right (paras 148–158). The subsequent 19 October events might sound in damages (for example, if an employer wrongfully excludes an employee during a notice period), but they do not retrospectively nullify a valid notice.

The judge held that what the 19 October events gave rise to, at most, was a right to remuneration in lieu of working the balance of the notice period; they did not revive the contract (paras 169–177).

3.3 Right to work during notice and place of work

3.3.1 No absolute right to work out notice

Mr Tracey contended that, once served with a 16‑week notice, he had a contractual right to continue working until the end of that period, and that depriving him of that opportunity on 19 October was itself a breach of contract that extended the contract’s life to 1 March 2005 (para 159).

The court distinguished between:

• employment contracts (to which the Minimum Notice and Terms of Employment Acts and certain implied terms may apply), where some authority suggests a right to work during notice absent agreement to payment in lieu (para 169); and
• this commercial contract for services, between professional peers, which was not an employment contract.

For the latter, MacGrath J held:

• Mr Tracey’s core obligation was to provide professional services (cl. 3);
• if he had given notice, the defendants would reasonably expect him to continue providing services during that period, if required (para 171);
• however, it did not follow that he had an absolute right to remain engaged or to access the premises if the company decided that his services were no longer required; and
• any such obligation on the defendants could be satisfied by paying him what he would have earned during the remaining notice (paras 171–176).

The judge therefore accepted the concept of payment in lieu of notice, even though the contract did not expressly use that language:

“…any obligation which the defendants may have had under the agreement in respect of the notice period could be discharged by making a payment in lieu of notice, where his services were no longer required.” (para 171)

3.3.2 No implied right to remain on the premises

Although the earlier employment contract specified a place of work (68 Amiens Street), the contract for services did not (para 112(vi)–(vii), 172). Given that:

• this was a high‑level commercial consultancy;
• Mr Tracey traded independently as EDM; and
• the relationship was conceived as mutually beneficial with profit‑sharing ambitions,

the court was unwilling to imply a term that he was entitled to remain physically on the company’s premises for the entire 16 weeks regardless of the deterioration in relations (paras 172–175).

Applying the principles on implied terms from The Moorcock and Shirlaw v Southern Foundries (cited via Flynn v Breccia at para 164), the judge reasoned that:

• an implied term must be necessary for the business efficacy of the contract, not merely reasonable or desirable; and
• no such necessity had been shown here.

To the contrary, an implied right to remain on the premises could be positively destructive where relations had broken down and the company needed to protect its business (para 173).

3.4 Psychiatric injury and “nervous shock”

3.4.1 Medical findings

The medical evidence was as follows:

• Professor Aidan Corvin, psychiatrist (for the defendants), examined Mr Tracey in 2019 and opined that:
  • Mr Tracey had experienced a mild major depressive episode in the past, but was not currently suffering from a major mood or anxiety disorder (paras 92–93);
  • the symptoms likely pre‑dated the 2004 dismissal and related to Mr Tracey’s perception of a conspiracy against him since 1999; and
  • he exhibited features of a paranoid personality disorder which also pre‑dated the dismissal (para 93).
• Dr David Lombard, longstanding GP (for the plaintiff), had treated Mr Tracey from March 2005 onwards. He:
  • diagnosed moderate depression arising from job loss and difficulty in obtaining new work (paras 96–101);
  • prescribed Lexapro for about 18 months (ending by early 2007); and
  • never observed signs of paranoia or referred Mr Tracey for psychiatric care for such a condition (paras 99–105).
• Ms Martina Dennison, psychotherapist (for the plaintiff), used Beck scales and found:
  • extreme anxiety and moderate depression in late 2005 (paras 106–107);
  • symptoms she associated with PTSD, although she did not apply DSM‑V criteria or purport to give a medical diagnosis (paras 107–108).

MacGrath J ultimately:

• accepted Dr Lombard’s diagnosis of moderate depression lasting until approximately 2006/2007 (para 142);
• rejected the suggestion that Mr Tracey satisfied the criteria for post‑traumatic stress disorder (PTSD) (para 143); and
• considered it unnecessary to make a definitive finding on the alleged paranoid personality disorder (para 144).

3.4.2 Application of Kelly v Hennessy

The leading Irish authority on recovery for psychiatric injury in negligence is Kelly v Hennessy [1995] 3 IR 253 (paras 191–192). Hamilton CJ set out five requirements, which include:

1. a recognisable psychiatric illness;
2. induced by “shock” (as opposed to gradual stress or grief);
3. caused by the defendant’s negligence;
4. arising from actual or apprehended physical injury to the plaintiff or another person; and
5. the psychiatric injury in that specific form being reasonably foreseeable.

MacGrath J held that Mr Tracey’s case failed fundamentally on the “shock‑induced” requirement (para 192). While the events of 19 October 2004 were undoubtedly distressing and embarrassing, there was:

• no evidence of an immediate collapse or psychiatric crisis;
• no contemporaneous medical attendance or treatment — Mr Tracey did not see his GP until March 2005 (about five months later) (para 192); and
• no description of the sort of sudden, horrifying event extending beyond the ordinary upset of dismissal which has grounded nervous shock claims in cases like Kelly and Jaensch v Coffey.

The judge concluded:

“…there is no evidence on which a finding could be made that his injury or illness was ‘shock induced’ or was of a nature which has been determined to give rise to a duty of care in negligence.” (para 192)

Further, even if some duty could in theory arise, the requirement in Kelly and Jaensch that the psychiatric injury be linked to death, injury or peril of the plaintiff or another person was not satisfied (para 191–192(4)).

3.5 Reputational damage and negligence

3.5.1 Defamation as the proper remedy

Mr Tracey alleged that:

• the manner of his ouster (one hour’s notice, gardaí and locksmiths, presence of junior staff and outsiders) humiliated him;
• this destroyed his professional reputation and prevented him from obtaining further work in the industry; and
• the defendants owed him a duty of care in negligence not to conduct themselves in a way that would damage his reputation.

The High Court stressed that:

• a claim in defamation was not before the court (by reason of the 2016 Supreme Court ruling, para 8); and
• reputational harm is traditionally addressed by the law of defamation, which is heavily structured, statutorily regulated, and contains its own limitations, defences and time limits (paras 194–195, 197–198).

The court relied on:

• Lonrho plc v Fayed [1994] 1 All ER 188 – where the English Court of Appeal held that injury to reputation and feelings (as distinct from financial loss) is not recoverable in conspiracy but only in defamation (para 194);
• Glencar Exploration plc v Mayo CC [2002] 1 IR 84 – on the structured approach to recognising new duties of care, using proximity and “just and reasonable” criteria (para 197); and
• Cromane Seafoods Ltd v Minister for Agriculture [2016] IESC 6 – where Clarke and Charleton JJ cautioned against using negligence to “get round the limitations” and policy choices embedded in other torts, such as defamation and misfeasance in public office (paras 195–197).

Charleton J’s warning in Cromane is particularly apposite (quoted at para 195):

“Negligence is not all encompassing. It has not swamped every other tort. If ill is broadcast of a person, the remedy is defamation… The authorities heretofore support the maintenance of those traditional boundaries.”

MacGrath J followed this. He held that:

• there is no recognised duty of care in negligence to protect a person’s reputation as such;
• to recognise one would circumvent the carefully calibrated law of defamation; and
• it would not be “just and reasonable” to impose such a duty in this commercial context (paras 194–198).

Accordingly, the reputational aspects of Mr Tracey’s case could not be shoehorned into negligence. They were, at most, relevant background to his subjective experience of events, but not a basis for liability.

3.6 Causation and overlapping litigation

A striking feature of the judgment is the extensive catalogue of other proceedings brought by Mr Tracey and his wife (paras 110, 200–210). These include:

• multiple actions against State and media defendants for malicious prosecution, misfeasance in public office, assault, harassment, wrongful arrest, false imprisonment and libel;
• claims connected to planning disputes and alleged misuse of the criminal process;
• and several libel actions against newspapers for reporting the 2004 District Court proceedings (all of which included claims for PTSD, psychological damage and substantial loss of earnings up to, and beyond, 2009).

In one such case (2008/4425P), Mr Tracey pleaded that as a result of allegedly false newspaper reports he:

“Lost his senior esteemed professional position as Chartered Engineer and Company Associate with severe consequential loss… The loss of income alone to Kevin Tracey to 2009 is estimated at €1,185,270…” (para 110, bullet 3, emphasis added)

MacGrath J did not adjudicate the merits of those proceedings; however, they greatly complicated causation. He observed (paras 145–146, 201–210):

• Mr Tracey’s depression and distress had multiple causes, including long‑running stress related to planning disputes and alleged persecution by gardaí and neighbours;
• many of his other claims overlapped factually and temporally with the present claim, and made similar or identical assertions of catastrophic loss of career and income;
• where the same loss is attributed to multiple wrongs, “causation becomes muddied” (para 146); and
• the court could not simply attribute all his misfortunes and inability to work to the defendants’ conduct on 19 October 2004.

The upshot was that, even if a duty of care in negligence had been established, and even if the contract permitted recovery of non‑pecuniary loss (which it did not), the evidential foundation for proving that these defendants caused the pleaded long‑term financial and psychiatric consequences was not made out.

3.7 Conversion and intellectual property

The conversion claim was pleaded in very general terms, alleging retention of “personal and intellectual property” including design guides, technical data sheets, calculation sheets, drawing templates and the like, with damages “TBD” (to be determined) (para 212).

The court stressed the lack of:

• particularisation of specific items allegedly retained;
• evidence of demand and refusal; or
• any valuation or explanation of how the alleged loss arose.

Beyond a brief reference in an August 2005 solicitor’s letter listing categories of items (para 86–87), the evidential record was thin. The court held that it simply could not reach conclusions on alleged conversion in the absence of concrete detail and proof (para 212).

3.8 Monetary relief and interest

Having determined the contractual framework and rejected the high‑value tort claims, the court turned to quantify the contract debts. The key legal moves were:

1. Interpretation of “if required” and notice‑period hours
   The defendants argued that clause 6 (“up to 35 hours per week, if required”) meant that, during the 16‑week notice period, they had no obligation to provide work or pay for hours not actually worked (para 215–216).
2. The court rejected this, drawing on:
   • the course of dealing, whereby Mr Tracey consistently worked and billed 35 hours/week prior to termination (paras 219–221);
   • the defendants’ own complaints about his attendance post‑notice, which presupposed an expectation of his presence (para 220); and
   • the commercial logic that the agreement was not merely for use of his name at €2,000/month, but for active consultancy services (paras 221–222).
   It concluded that the reasonable interpretation of the contract, supported by the parties’ conduct, was that Mr Tracey was to be paid for 35 hours/week during the 16‑week notice period. That is what underpinned Invoice FPQ‑18 and the court’s award (para 223).
3. No interest
   On the question of interest, the court applied principles articulated by O’Donnell J in Reaney v Interlink Ireland [2018] IESC 13 (paras 229–230). Interest is generally awarded where money is unjustifiably kept from a plaintiff. Here, however:
   • the defendants tendered a substantial payment in 2005 (€91,528.82) covering virtually all of what the court later held to be due, apart from the disputed overtime; and
   • Mr Tracey rejected it and insisted on full payment, including items not ultimately recoverable.
   Given that the overtime entitlement was not straightforward, and the bulk of the properly due sum was effectively made available 19 years before judgment, interest was refused.

4. Complex Concepts Simplified

4.1 Contract of employment vs contract for services

In Irish law:

• A contract of employment (master–servant relationship) typically involves:
  • the employer’s control over how, when and where work is done;
  • PAYE and PRSI deductions;
  • statutory entitlements (unfair dismissal, minimum notice, holidays, etc.).
• A contract for services describes an independent contractor:
  • who is in business on their own account;
  • invoices for work, often with VAT;
  • has more control over how their services are provided; and
  • generally lacks statutory employment protections (unless some legislation extends them).

Here, the shift from the January “contract of employment” to the February “contract for services” – together with hourly billing, VAT, a standing charge for use of name, and the absence of an express place‑of‑work clause – was central to the court’s conclusion that Mr Tracey was an independent consultant, not an employee. This has knock‑on effects for which statutory protections and implied terms apply.

4.2 Implied terms and waiver by conduct

Courts sometimes “imply” terms into contracts to fill gaps where necessary to make the contract workable. Two main routes are:

1. Business efficacy (The Moorcock): would the contract be unworkable or nonsensical without the term?
2. “Officious bystander” test (Shirlaw v Southern Foundries): if an impartial observer had suggested the term at the time of contracting, would both parties have said, “Of course, that goes without saying”?

By contrast, waiver by conduct means that, although a term is expressed in the contract, the way the parties actually behave over time shows that they have agreed not to enforce it strictly. In practice:

• if a contract says “overtime only with prior written approval”, but the employer routinely pays for overtime claimed without prior written approval, the employer may be held to have waived that requirement; and
• the employee may then claim for further overtime on the same basis.

That is precisely what happened here with the overtime letter.

4.3 “Nervous shock” vs ordinary distress

Irish law draws a sharp distinction between:

• Ordinary emotional distress, upset, anger, or disappointment – which are not usually compensable in negligence or contract; and
• Nervous shock, shorthand for a recognisable psychiatric illness (like clinical depression or PTSD) caused by a sudden, shocking event – which may be compensable if strict criteria are met.

The Kelly v Hennessy criteria ensure that not every upsetting experience becomes a basis for a damages claim. There must be:

• a medically recognised disorder;
• caused by shock, not gradual wear‑and‑tear stress; and
• a link to physical injury or peril to someone.

In this case, the court accepted that Mr Tracey was depressed, but it was not “shock‑induced” in the narrow legal sense, and no duty of care arose in this commercial context.

4.4 Reputational harm: defamation vs negligence

When someone’s reputation is damaged by what others say or write, the proper legal route is usually a defamation action, not negligence. Defamation law:

• is tightly regulated by statute (e.g. Defamation Act 2009);
• contains prescribed defences (truth, honest opinion, privilege, fair and reasonable publication);
• has limitation periods; and
• involves complex balancing of free speech and reputation.

Allowing plaintiffs to bypass this framework by suing in negligence for reputational harm would undermine defamation’s carefully constructed boundaries. Hence the reluctance in Lonrho, Cromane, and now Tracey v Burton to recognise a general negligence duty protecting reputation.

5. Impact and Practical Implications

5.1 Commercial contracts for services and notice clauses

The judgment is likely to be cited in future disputes involving high‑level independent contractors and consultancy agreements, particularly where:

• there is a generous notice clause (here 16 weeks) and a question whether reasons must be given for termination; or
• the consultant argues for a right to work out notice at the client’s premises.

Key takeaways:

• A clearly drafted notice clause stating that notice may be given “regardless of any circumstances” will normally be construed as an unfettered termination right, subject only to the required notice period.
• Courts are unlikely to imply substantive constraints (eg “good cause” or “duty to give reasons”) into such a clause, especially between professional parties of equal bargaining power.
• Where the relationship has broken down, the paying party will typically be entitled to exclude the contractor from premises and discharge its obligations by paying in lieu of notice.

5.2 Psychiatric injury in commercial settings

The judgment reinforces that the law on psychiatric injury remains tightly controlled:

• Nervous shock duties are exceptional, not general, and are more readily found in settings involving accidents, medical negligence, or workplace bullying, than in the termination of a commercial consultancy.
• Even where a claimant demonstrably suffers depression, courts will look closely at:
  • whether it is “shock‑induced”;
  • whether treatment was sought promptly; and
  • what other life stressors contributed.
• Where a claimant has issued multiple overlapping proceedings alleging similar psychiatric and financial harm, causation in any one set of proceedings will be correspondingly more difficult to establish.

5.3 Attempting to “re‑label” defamation as negligence

For litigants and advisors, Tracey v Burton is a clear warning that:

• Courts will resist attempts to frame reputational grievances as negligence (or indeed breach of contract) to circumvent defamation routes or time limits.
• Even egregiously humiliating conduct in a workplace or commercial context does not, without more, generate a separate negligence duty to protect reputation.

This is especially so where, as here, the Supreme Court has already excluded a defamation claim from the same factual matrix.

5.4 Drafting and managing side letters

The decision underscores the need for careful handling of:

• Side letters: even if not countersigned, they may be held to form part of the contract package if received and relied upon.
• Operational practice: if an organisation repeatedly ignores or relaxes a formally strict clause (such as “no overtime without prior approval”), it may be held to have waived it. Internal discipline about compliance with such clauses is essential.
• Profit share and equity promises: aspirational provisions (e.g. directorships and share purchase opportunities after 12 months) will not survive a valid early termination unless clearly protected by explicit terms.

5.5 Managing difficult exits

Finally, the factual narrative provides real‑world guidance on handling fraught terminations:

• Giving only one hour to clear an office will almost always appear unreasonable, though here it did not create a distinct cause of action beyond the right to pay in lieu.
• Seeking legal advice early where an individual shows signs of non‑cooperation is sensible and was here found to be reasonable.
• Calling gardaí to assist in removing someone from commercial premises will be scrutinised but is not per se negligent where tensions are high and there is a legitimate concern about control of the premises.
• Having witnesses (e.g. staff in a conference room) may help corroborate events, but allegations of document destruction or conversion still require hard evidence and, ideally, contemporaneous documentation.

6. Conclusion

Tracey v Burton t/a Engineering Design and Management v Burton & Ors is a dense and fact‑rich judgment, but its legal messages are relatively clear and important. It:

• confirms that a contract for services with a robust notice clause can be terminated for any reason or none, with the contractor’s entitlement confined to the economic value of the notice period, not a right to remain on premises;
• refuses to recognise a new negligence duty to protect reputation, insisting instead on the traditional role of defamation law;
• applies and reinforces the Kelly v Hennessy framework to reject nervous‑shock claims where depression arises gradually amid multiple stressors rather than from a sudden horrifying event; and
• illustrates how overlapping litigation and diffuse causation can defeat expansive claims for lifetime loss of earnings and psychiatric sequelae.

On the narrower contractual front, the case shows:

• how side letters and course of dealing shape the operative terms, particularly around overtime and profit sharing; and
• how courts will approach the question of implied obligations concerning notice, place of work and payment in lieu in sophisticated commercial relationships.

While Mr Tracey succeeded in recovering all unpaid contractual sums (and more than had been offered in 2005 as a partial settlement), his broader attempt to secure damages for psychiatric harm, humiliation and career‑long economic loss was comprehensively rejected. The judgment is likely to be cited as a significant authority on the limits of both contract and tort remedies for emotional and reputational fallout from the termination of commercial contracts for services in Irish law.