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Articles | Fri 13th May, 2016
In this recent case the Court of Appeal, confirmed that under the law governing the relationship between employer and employee, whether in contract or tort, an employee needs to show that he has suffered physical injury in order to be able to claim substantive damages including financial losses he has suffered as a result of such injury.
Background to the case
The five appellants worked for Johnson Matthey in factories making catalytic converters. The production process involved use of platinum salts. The factories were not properly cleaned and as a result, the appellants were exposed to platinum salts to a greater extent than they should have been.
Exposure to platinum salts gives rise to platinum sensitisation which does not have symptoms or create any adverse effects for the individual in carrying on ordinary life. It is detectable by the reaction of the skin to a skin prick test. Sensitisation can be the first step in the process whereby, with continued exposure to platinum salts, an individual develops an allergy to platinum salts, symptoms of which include running eyes or nose, skin irritation or bronchial problems.
The appellants’ trade union had negotiated a collective agreement with Johnson Matthey, which had been incorporated into the individual contracts of employment of the appellants. This provided for regular skin prick testing and for individuals testing positive for platinum sensitisation to be removed from work which exposed them to platinum salts and, if possible, redeployed. Any employee who could not be redeployed would be dismissed under special termination conditions.
Each of the appellants at a point in their employment developed platinum sensitisation. All, with the exception of Mr White, could not be redeployed and were therefore dismissed and received the “ex gratia” payments under the collective agreement terms.
The appellants appealed against the decision of Jay J that they had no completed cause of action in tort and were not entitled to recover anything more than nominal damages for breach of contract; their claim being, in his judgment, a claim for pure economic loss.
The appellants submitted that they had suffered actionable physical injury because their bodies had undergone a physiological change by acquiring platinum sensitisation and this had an adverse effect upon them, as it had meant the loss of their jobs and ability to work in environments in which they might be exposed to platinum salts. The appellants sought to rely on Cartledge v Jopling  1 QB 189, CA, a case concerning men who had contracted pneumoconiosis through exposure to fine silica dust during their employment as steel dressers.
Lord Justice Sales, giving the judgment of the Court upheld the decision of the trial court that the condition was not an actionable injury. He said, at para. 30-31:
“On the medical evidence, platinum sensitisation is not harmful in itself in any relevant sense. It is a physiological change analogous to the development of pleural plaques in the lungs in the Rothwell case [Rothwell v Chemical and Insulating Co. Limited  UKHL 39;  1 AC 281], and hence does not constitute actionable damage or injury. Unlike the lung scarring from pneumoconiosis in Cartledge, platinum sensitisation is not a “hidden impairment” which has the potential by itself to give rise to detrimental physical effects in the course of ordinary life.
The removal of the appellants from their jobs was detrimental for them in financial terms. But as the judge observed, this was a form of pure economic loss. The presence of such economic loss does not convert a physiological change which does not in itself qualify as an actionable injury into such an injury.”
The appellants could therefore only recover damages for financial loss if they had a right of action for breach of contract in respect of pure economic loss or a right of action in tort to recover such loss.
Lord Justice Sales went on to consider the appellants’ claim in contract and in tort for pure economic loss. In dismissing the appeal for breach of contact he said:
“In my view…the contractual arrangements between Johnson Matthey and the appellants make it particularly difficult to interpret the appellants’ employment contracts as including a duty to hold them harmless in respect of the financial consequences of their loss of employment beyond the provision expressly made in those contracts in respect of that type of risk. I do not think it is fair, just or reasonable in these circumstances to hold Johnson Matthey liable in relation to such financial consequences.”
He went on to consider the appellants’ claim for damages in tort for pure economic loss, arguments which had not been before the trial court. In dismissing the appellant’s case he said:
“Although a duty of care in tort may run in parallel with the contractual duty and have the same content, it is difficult to see how the law of tort could impose obligations in this area which are more extensive than those given by interpretation of the contract which the parties have made for themselves. The usual rule is that freedom of contract is paramount, and if the parties have agreed terms to govern their relationship which do not involve the assumption of responsibility by the employer for some particular risk, the general law of tort will not operate to impose on the employer an obligation which is more extensive than that which they agreed.”
The Court ruled that since there was no contractual term according to which Johnson Matthey was obliged to protect the Appellants in relation to their financial losses arising in the circumstances of the case, so equally could there be no duty in tort to protect them in relation to the pure economic loss they suffered by reason of those financial losses.
The appellants sought to challenge the conventional view that under the law governing the relationship between employer and employee, whether in contract or in tort, an employee needs to show that he has suffered physical injury in a case such as this in order to be able to claim substantive damages which cover also the financial losses he has suffered as a result of such injury. The appellants’ arguments sought firstly to water down the concept of physical injury so at to include mere physiological changes which happen to have financial consequences and secondly to establish a duty to compensate for pure economic loss. The Court of Appeal roundly rejected these arguments stating that the law does not furnish a remedy for every harm suffered by an individual, and in particular does not do so where the infliction of the harm in question does not constitute a “wrong” in the contemplation of the law.