Yapp v Foreign and Commonwealth Office

Factual and Procedural Background

In January 2007, the Plaintiff was appointed British High Commissioner in Belize and took up the post in August 2007. In June 2008, he was withdrawn from his post on "operational" grounds and suspended pending investigation of allegations of misconduct. The Defendant, the Foreign and Commonwealth Office ("FCO"), applied its disciplinary procedures, finding some but not all allegations established, resulting in a written warning. The Plaintiff’s suspension was lifted, but he developed depressive illness and underwent heart surgery, receiving no further appointments until his retirement in January 2011.

In May 2011, the Plaintiff commenced proceedings against the FCO, challenging both his withdrawal and the disciplinary process. The issue of liability was tried in early 2013, with the trial judge finding that the withdrawal constituted both a breach of contract and breach of the duty of care by the FCO, but dismissing claims relating to the disciplinary process. Damages were agreed at £320,000, held by the Plaintiff’s solicitors pending appeal, with a dispute over interest resolved in the Plaintiff’s favor.

The FCO appealed the finding of breach regarding withdrawal and contended that damages for depression were too remote or causally unconnected. The Plaintiff filed a Respondent’s Notice raising additional grounds for upholding the judgment. The FCO also appealed the interest award.

Legal Issues Presented

1. Whether the FCO’s withdrawal of the Plaintiff from his post was a breach of contract and/or breach of duty of care.
2. Whether the Plaintiff is entitled to damages for depressive illness caused by the withdrawal, considering causation and remoteness.
3. Whether the disciplinary process conducted by the FCO was fair and lawful.
4. Whether the interest awarded on the damages sum was properly awarded.

Arguments of the Parties

Appellant's Arguments (FCO)

• The trial judge applied the wrong test of fairness, failing to recognize the "range of reasonable responses" available to the FCO in withdrawing the Plaintiff.
• The withdrawal was operational, not disciplinary, and did not require a preliminary investigation or disclosure of allegations to the Plaintiff before withdrawal.
• The FCO’s prompt withdrawal was justified by serious allegations and operational necessity, including reputational damage and internal conflicts.
• Confidentiality concerns prevented disclosure of the source of allegations to the Plaintiff.
• The disciplinary process was fair, and the dual role of the investigator and decision-maker did not cause unfairness.
• The depressive illness was caused by the later disciplinary outcome and media coverage, not the withdrawal itself.
• The Plaintiff’s cardiac illness broke the chain of causation for loss of earnings.
• The damages for psychiatric injury were too remote, as the Plaintiff was not known to be vulnerable to psychiatric illness.
• The interest award was improper because payment to solicitors satisfied the judgment debt.

Respondent's Arguments (Plaintiff)

• The withdrawal was unfair and in breach of contract and duty of care because no preliminary investigation or disclosure of allegations occurred.
• The FCO’s operational withdrawal was a pretext to circumvent contractual disciplinary protections.
• The depressive illness and its consequences were caused by the unfair withdrawal and were reasonably foreseeable.
• The disciplinary process was flawed in some respects, though overall fair.
• The interest award was proper given the agreed arrangement and the judgment debt was not satisfied.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Chhabra v West London Mental Health NHS Trust [2013] UKSC 80	Implied duty of fair treatment in employment contracts	Confirmed that fair treatment is an implied contractual term relevant to withdrawal decisions.
Malik v Bank of Credit and Commerce International SA [1998] AC 20	Implied term of mutual trust and confidence in employment contracts	Defined employer’s duty not to act in a manner likely to destroy trust and confidence; breach found in unfair withdrawal.
Matthews v Kuwait Bechtel Corp [1959] QB 59	Common law duty of care owed by employer to employee	Confirmed that employer owes a duty to take reasonable care for employee’s safety, including psychiatric health.
Coventry University v Mian [2014] EWCA Civ 1275	Range of reasonable responses test in employer disciplinary decisions	Applied to confirm that the judge’s fairness test was appropriate in assessing withdrawal decision.
Gogay v Hertfordshire County Council [2000] IRLR 703	Recovery for psychiatric injury caused by unfair employment suspension	Supported that psychiatric injury damages are recoverable for breach of implied contractual terms.
Johnson v Unisys Ltd [2001] UKHL 13	Remoteness and recoverability of damages for psychiatric injury in unfair dismissal	Held claim for psychiatric injury too remote absent evidence of vulnerability; affected analysis here.
Hatton v Sutherland [2002] EWCA Civ 76	Foreseeability and employer’s duty of care for psychiatric injury from workplace stress	Set out principles requiring foreseeability of psychiatric injury and knowledge of vulnerability.
Croft v Broadstairs & St Peter's Town Council [2003] EWCA Civ 676	Foreseeability of psychiatric injury from unfair disciplinary sanctions	Confirmed requirement of employer awareness of employee vulnerability to establish foreseeability.
Bristol City Council v Deadman [2007] EWCA Civ 822	Remoteness of psychiatric injury damages in disciplinary procedure breaches	Held minor procedural breaches unlikely to foresee psychiatric injury absent vulnerability evidence.
Melville v Home Office [2005] EWCA Civ 6	Foreseeability of psychiatric injury from traumatic workplace incidents	Employer liable where risk of psychiatric injury was actually foreseen, even without evidence of vulnerability.
Rothwell v Chemical & Insulating Co Ltd [2007] UKHL 39	Foreseeability test for psychiatric injury to person of reasonable fortitude	Reaffirmed that employers may assume employees are ordinarily robust absent known vulnerability.

Court's Reasoning and Analysis

The Court first considered the contractual framework, including the appointment letter and internal guidance, confirming that the FCO had a contractual power to withdraw the Plaintiff for operational reasons but that such power had to be exercised fairly. The Court agreed with the trial judge that the FCO failed to conduct any preliminary investigation or inform the Plaintiff of the allegations before withdrawal, breaching the implied duty of fair treatment.

The Court rejected the FCO’s argument that confidentiality of the informant justified non-disclosure, holding fairness to the Plaintiff trumped confidentiality in this context. The Court found that a preliminary investigation would have revealed the allegations were questionable and that the Plaintiff would not have been withdrawn if fair treatment had been afforded.

Regarding the disciplinary process, the Court upheld the trial judge’s finding that the investigator’s dual role was not a breach of natural justice and that the process was fair overall, save for a procedural irregularity without causative effect.

On causation, the Court agreed that the withdrawal caused loss of earnings and depressive illness, rejecting submissions that psychiatric injury was caused solely by later disciplinary findings or media coverage. The cardiac illness did not break the chain of causation for loss of earnings.

The Court undertook a detailed review of case law on foreseeability and remoteness of psychiatric injury damages. It acknowledged that such injury is generally not foreseeable absent evidence of employee vulnerability, but that exceptional cases may arise where the employer’s conduct is so severe that psychiatric injury to a person of ordinary fortitude is foreseeable.

However, the Court concluded that the trial judge erred in finding the psychiatric injury was reasonably foreseeable here. The Plaintiff was an ostensibly robust individual with no history of psychiatric illness. The withdrawal, while unfair and career-impacting, was not tantamount to dismissal or gross injustice. Support was offered by the FCO’s Health and Welfare department, and the Plaintiff’s reaction was not exceptional in the context of similar cases.

Consequently, the Court held that damages for psychiatric injury were too remote and not recoverable under either contract or tort. The Court dismissed the FCO’s appeal against breach findings and causation but allowed the appeal on remoteness, remitting quantum to the High Court if parties could not agree.

On the Respondent’s Notice, the Court rejected additional grounds related to the contractual interpretation of withdrawal and post-withdrawal conduct as academic or unpersuasive. The Court also upheld the interest award, reasoning that payment to solicitors pending appeal did not satisfy the judgment debt and that the judge’s discretion was properly exercised.

Holding and Implications

The Court’s final decision was to DISMISS the FCO’s appeal against the findings of breach of contract and causation but to ALLOW the appeal on the issue of remoteness of psychiatric injury damages, thereby overturning the award of damages related to the Plaintiff’s depressive illness. The case was remitted to the High Court for determination of quantum on the contractual claims excluding psychiatric injury damages if not agreed.

The interest appeal was dismissed, affirming the award of interest at the judgment rate less any interest earned while funds were held by the Plaintiff’s solicitors.

The decision clarifies that, absent evidence of vulnerability or exceptional circumstances, employers will not generally be liable for psychiatric injury damages caused by unfair treatment or withdrawal short of dismissal. It reinforces the necessity of fairness in exercising contractual powers but limits recovery for psychiatric illness to cases where such injury is reasonably foreseeable.