Wetherell v Student Loans Company Ltd

Factual and Procedural Background

The Appellant was employed by Company A as a call handler and claims tinnitus arising from a defective telephone headset supplied by Company A. The Appellant does not pursue negligence (which would fail) but relies upon Article 3(1) of Directive 2009/104/EC ("the Directive") as a stricter, directly effective obligation on employers. Company A pleaded limitation (resolved in the Appellant's favour), disputed causation and denied it was an emanation of the state. At trial Judge Freedman determined, as a preliminary issue, that Company A was not an emanation of the state and dismissed the Directive-based claim. The Appellant’s appeal to the High Court was dismissed on the same two grounds (emanation and that absence of an express domestic civil remedy did not render the Directive directly effective). Permission to appeal to the Court of Appeal was granted. The Court of Appeal panel (Judge Baker, Judge Green and Judge Lewis) heard the appeal and delivered an approved judgment allowing the appeal in part and remitting the matter to the County Court for further factual and legal work on emanation.

Legal Issues Presented

1. Issue I - Liability: Is Article 3(1) of Directive 2009/104/EC capable of giving rise to liability (i.e. does it confer rights on workers and is it sufficiently clear, precise and unconditional)?
2. Issue II - Emanation of the state: If Article 3(1) is capable of giving rise to liability, can it be enforced against Company A (is Company A an emanation of the state)?

Arguments of the Parties

Appellant's Arguments

• Article 3(1) is directly effective: it imposes a clear, unconditional duty of result on employers to "ensure" equipment is suitable and may be used without impairment to safety or health.
• Article 3(1) is intended to confer rights on employees and thus is enforceable; Company A is an emanation of the state so the Directive can be enforced vertically against it.
• The absence of an express domestic civil remedy at the relevant time does not prevent direct effect or the court providing an effective remedy (damages).

Respondent's Arguments

• Article 3(1) is insufficiently clear and precise because Article 3(2) qualifies it (permits "appropriate measures" where full compliance is not possible).
• The Directive leaves Member States procedural autonomy; it does not require creation of a strict private right to avoid injury.
• The domestic scheme (criminal sanctions and tort/negligence law) suffices; Article 3(1) confers no independent rights beyond domestic law.
• Company A contended it was a private limited company / executive non-departmental public body and not an emanation of the state.
• Relied on the CJEU decision in MG and other authority to support limited reach of directive-based private claims.

Table of Precedents Cited

Court's Reasoning and Analysis

The Court undertook a staged analysis.

• On Issue I (liability/direct effect): the Court applied the settled tests (Van Gend en Loos; Becker; Francovich; Three Rivers/Dillenkofer). It held that Article 3(1) imposes a clear, unconditional duty of result on employers to "ensure" that work equipment is suitable and usable "without impairment to their safety or health". The Directive's language ("ensure", "duty", "minimum requirements", recitals describing protections as "essential") and the Framework Directive context support that Article 3(1) was intended to confer rights on employees and is sufficiently precise and unconditional. The carve-out in Article 3(2) (where full compliance is not possible) is an impossibility defence and does not prevent Article 3(1) meeting the direct-effect/state-liability test. Consequently Article 3(1) is capable of giving rise to liability and national courts must provide effective remedies (damages being an appropriate remedy where needed).
• On Issue II (emanation): the Court identified a procedural error below. The High Court treated Foster as requiring two cumulative limbs (public service under state control AND special powers). The Court of Appeal, following Farrell and domestic authority (MIB v Lewis), held the correct approach is disjunctive: a body may be treated as an emanation if it is subject to the authority or control of the state OR it possesses special powers beyond those in normal private relations. The High Court had found the first limb satisfied but rejected the second under its incorrect conjunctive approach. Because relevant factual and documentary material about Company A's statutory basis and administrative arrangements (notably its relationship with the revenue authority and the Treasury) was not fully presented, the Court concluded the question of whether Company A is an emanation must be remitted to the County Court for application of the correct test and for Company A to supply the factual material within its control (with the evidential burden noted).
• Disposition: the Court therefore allowed the appeal on the liability point and on the procedural/misapplied-test point on emanation, and remitted the case to the County Court to determine whether Company A is an emanation under the correct legal test.

Holding and Implications

HOLDING: The Court allowed the appeal on Issue I and on the procedural error relating to Issue II. The Court held that Article 3(1) of Directive 2009/104/EC is capable of giving rise to liability (it is sufficiently clear, precise and unconditional) and remitted the question of whether Company A is an emanation of the state to the County Court to be decided applying the correct (disjunctive) test.

Implications: Direct consequence — the Appellant has standing to pursue a Directive-based claim against Company A if the County Court finds Company A to be an emanation of the state; national courts must provide effective remedies (damages) where necessary to give effect to Article 3(1). The Court did not purport to establish any broader novel precedent beyond application and clarification of existing CJEU and domestic authorities (notably Farrell and Three Rivers) and remitted factual questions to the trial court.