Summary

John Dagnall appeared for Christine Laird who was employed as Chief Executive of Cheltenham Borough Council from 2002 until August 2005 when her employment terminated as a result of ill-health depression. Subsequently she was sued in misrepresentation with the employer alleging that she had fraudulently, and if not then negligently, made misrepresentations in a Medical Questionnaire. The employer asserted that it had suffered nearly £1 million damage in terms of cost and expense of an abortive disciplinary proceeding and the cost to it of an early retirement ill-health pension under the Local Government Pension Scheme. Christine Laird denied the claims, and also asserted that her being employed had benefited the Council and that she had an equitable set-of in relation to alleged breaches and wrongs on the part of the Council.

Facts

This litigation has attracted much press interest and has considerable importance for employer-employee relationships. While it is an application of an orthodox analysis of misrepresentation principles (and demonstrates the importance of careful drafting of pre-employment questionnaires), it raises numerous points of discrimination law, local government law (and including the extent to which local authorities are liable for the actions of their councillors and as to what is a committee), res judicata, causation and damages (and including both as to whether negligent misrepresentation damages are to be calculated on a “fraud” basis and as to when and in what circumstances benefits derived from the transaction are to be brought into account).

Held

While the completion and approval of the Medical Questionnaire was a condition precedent of the employment, Christine Laird had completed it accurately, honestly and reasonably. Accordingly, the case in misrepresentation failed. If there had been actionable misrepresentations then such had induced the Council to enter into the employment contract and, the Council had been sufficiently caused some damage which, subject to review to the House of Lords, could be claimed under the Misrepresentation Act 1967. The set-off (or an equivalent counterclaim) could be brought notwithstanding res judicata and limitation arguments, but while one breach had been proven, there had been no damage suffered in law. While Christine Laird had used her special contacts to obtain substantial finance for the Council, it was not sufficiently clear that an alternative employee would not have secured equivalent benefits. As the misrepresentation case had failed, the Claim was dismissed.