7th October, 2024

James Hurd secures strike out of unfair dismissal claim on the basis of doctrine of frustration.

I recently acted for the Respondent in the case of Rayner v MOD in the Bristol Employment Tribunal (03 October 2024).  The case was unusual for two reasons. Firstly, the Claimant lacked capacity and a Litigation Friend was appointed in accordance with the guidance in Jhuti v Royal Mail Group Limited (Practice & Procedure) (2017) UKEAT 0062/17.

Secondly, I successfully argued that the contract of employment had automatically terminated due to frustration – hence there was no dismissal, and the unfair dismissal claim was struck out as having no reasonable prospects of success.

This was a very sad case. The Claimant was a former third officer (“Commander”) in the Royal Fleet Auxiliary (RFA), who could be deployed to any RFA ship around the world. He had been unable to work due to his mental health since 2017 and had been in and out of psychiatric units during this period. A claim for ill health retirement failed in 2018 due to a lack of medical evidence as to the permanence of his condition.

In September 2020, the Claimant was released early from a section, against the wishes of his family, and attacked his partner. The Claimant was subsequently convicted of attempted murder in 2021 and sentenced to a hybrid order - 16 years detention in a psychiatric hospital with an extended 3 year licence period.  

When the Respondent found out about the conviction in late 2022, they commenced disciplinary proceedings for gross misconduct. However, before any hearing took place, the Respondent changed strategy and sent the Claimant a letter, on 02 March 2023, asserting that the contract had been frustrated as at the date of his conviction. Before the Respondent became aware of the conviction, there had been renewed attempts to grant the Claimant ill health retirement. This process was halted in light of the conviction. 

The Claimant’s father, who acted as his Litigation Friend, sought to argue that there was an  unfair dismissal and that the Claimant should be reinstated and then granted ill health retirement.

Employment Judge Beever applied the principles set out in Paul Wilson & Co A/S v Partenreederei Hannah Blumenthal [1983] 1 AC 854, namely whether the performance of the contract had become impossible or substantially different from that contemplated by the parties at inception without fault on either side, by reason of some unforeseen or unprovided for event.

The Judge also had regard to the two stage test in FC Shepherd & Co Limited v Jerrom [1986] ICR 802, and considered whether, (1) the circumstances were capable of amounting to frustration and (2) whether the contract was actually frustrated?

On the first point, the Judge concluded that the long period of detention was capable of frustrating the contract – the conviction being the frustrating event, not the Claimant’s mental health. This was not caused by any fault of the Respondent. Although the Respondent had foreseen the possibility of a criminal conviction and provided for this eventuality in its policies and procedures, it had not foreseen a sentence of this length, akin to a life sentence, as opposed to one on the cusp of custody, or leading to a short period of incarceration.   

The Judge considered frustration in light of the Claimant’s clear disability, despite the fact that there was no disability discrimination claim, applying Warner v Armfield Retail & Leisure Limited [2014] ICR 239, but concluded that there were no reasonable adjustments which were capable of returning the claimant to work. Ill health retirement was not a reasonable adjustment, following the decision in Tameside Hospital NHS Foundation Trust v Mylott [2011] WL 806723, as the aim of a reasonable adjustment was to return the Claimant to work, not to grant a benefit to him, on termination.

On the second question, the Judge found that given the Claimant was likely to be detained for an extended period of time, with inevitable de-skilling and given the nature of his work as a Commander on a RFA ship, it was highly unlikely he would ever be in a position to return to work, certainly not in the foreseeable future – hence the contract was frustrated.

Frustration is an objective question – it did not matter that the Respondent had originally decided to use the disciplinary process and changed its approach. The only question was whether objectively the contract had been frustrated by his conviction.  

The Judge also struck out wrongful dismissal and breach of contract claims.

The doctrine of frustration has only limited relevance to modern employment law, particularly in the context of incapacity and ill health dismissals, largely superseded by the provisions of the Equality Act 2010. Imprisonment remains one area where it can still be deployed by employers to useful effect. However, this was an extreme set of circumstances and is less clear whether if there has been a shorter custodial sentence, or where the Claimant had a less challenging role, a similar result would have been obtained.

View James Hurd's profile page here.



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