Case No: B2/2000/0449
Neutral Citation Number: [2001] EWCA Civ 649 
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM LEEDS COUNTY COURT
(Mr Recorder Duncan Smith)

Royal Courts of Justice
Strand, London, WC2A 2LL

Wednesday 9th May 2001

B e f o r e :

THE PRESIDENT
LORD JUSTICE MUMMERY
and
LORD JUSTICE RIX

- - - - - - - - - - - - - - - - - - - - -

	John Michael Cox	Claimant/
Respondent &
Cross-Appellant	
	- and -
		
	Sun Alliance Life Limited	Defendants/
Appellants	
- - - - - - - - - - - - - - - - - - - - -
(Transcript of the Handed Down Judgment of
Smith Bernal Reporting Limited, 190 Fleet Street
London EC4A 2AG
Tel No: 020 7421 4040,  Fax No:  020 7831 8838
Official Shorthand Writers to the Court)
- - - - - - - - - - - - - - - - - - - - -

Mr W Pawlak (instructed by David Yablon Minton & Ellis, Bradford, Yorks for the Claimant/Respondent/Cross-appellant)
Mr D Griffith-Jones QC (instructed by Messrs Lawfords, London & Richmond, Surrey for the Defendants/Appellants)

- - - - - - - - - - - - - - - - - - - - -

Judgment
Lord Justice Rix: 

1.	With effect from 12 March 1990 Mr (John) Michael Cox, the claimant and in this court the respondent, resigned his employment with Sun Alliance Life Limited (“SAL”), the defendants and in this court the appellants, after a successful seventeen year career with them had ended in dispute. He was at that time a branch manager. The dispute was settled by an agreement on ACAS’s COT 3 form. The settlement gave Mr Cox a tax-free sum of £15,000 by way of compensation and a further sum of nearly £6,000 in lieu of notice. It also incorporated an agreed reference.
2.	The issue on this appeal is whether SAL were in breach of that agreement, or in breach of a duty of care owed to Mr Cox, when they later provided Mr Cox’s subsequent employers with references. Mr Duncan Smith, sitting as a recorder at the Leeds County Court, held that there was no breach of contract, but that SAL were liable in negligence.  He also held that that negligence caused Mr Cox’s subsequent employment difficulties, subject to issues of quantum. SAL now appeal against that judgment, and Mr Cox cross-appeals to submit that SAL were  in breach of contract as well. 
3.	The giving of such references is a matter of great concern to all parties in such a situation. It is of course gravely important to the employee. Without a decent reference, he may find it difficult to obtain further employment, at any rate in the sort of occupation which he had previously enjoyed. Above all, if the reference impugns his honesty, he is likely to find his career destroyed. This is particularly so in the financial services industry, in which Mr Cox had spent his life. There Lautro rules (now the PIA) require the taking (and giving) of proper references and the need for a member to satisfy itself that its employees and representatives are fit and proper persons. For just these reasons, the question of references is of hardly less moment to the employers involved. The new employer is concerned for his obligations to Lautro and, of course, for his own business and its reputation. The old employer, from whom the reference is sought, is also concerned for his obligations to Lautro, but he has the added difficulty of doing justice both to the former employee and to the truth of the circumstances in which that employee had left. That may put the old employer in a difficult situation. 
4.	Nevertheless, it is clear, if relatively recent, law that an employer owes to his former employee a duty of care in the giving of a reference: see Spring v. Guardian Assurance Plc [1995] AC 296. I will consider the nature and extent of that duty below. For the present it will suffice to cite what Lord Lowry said in Spring at 325H/326E:
“The defendants’ second argument (which, in order that it may prevail, must be made to stand independently on its own feet) is that, even if one concedes foreseeability and proximity and even if it would otherwise be just and reasonable for the plaintiff to recover under the head of negligence, public policy dictates that the person who has been the subject of a negligent misstatement shall not recover. The argument is grounded on the proposition that the maker of the misstatement, provided he has acted in good faith, must, even if he has been negligent, be free to express his views in the kind of situation (including the giving of any reference) which is contemplated by the doctrine of qualified privilege which is part of the law of defamation.
“This argument falls to be considered on the assumption that, but for the overriding effect of public policy, a plaintiff who is in the necessary proximate relation to a defendant will be entitled to succeed in negligence if he proves his case. To assess the validity of the argument entails not the resolution of a point of law but a balancing of moral and practical arguments. This exercise could no doubt produce different answers but, for my own part, I come down decisively on the side of the plaintiff.
“On the one hand looms the probability, often amounting to a certainty, of damage to the individual, which in some cases will be serious and may indeed be irreparable. The entire future prosperity and happiness of someone who is the subject of a damaging reference which is given carelessly but in perfectly good faith may be irretrievably blighted. Against this prospect is set the possibility that some referees will be deterred from giving frank references or indeed any references. Placing full reliance here on the penetrating observations of my noble and learned friend, Lord Woolf, I am inclined to view this possibility as a spectre conjured up by the defendants to frighten your Lordships into submission. I also believe that the courts in general and your Lordships’ House in particular ought to think very carefully before resorting to public policy considerations which will defeat a claim that ex hypothesi is a perfectly good cause of action. It has been said that the public policy should be invoked only in clear cases in which the potential harm to the public is incontestable, that whether the anticipated harm to the public will be likely to occur must be determined on tangible grounds instead of on mere generalities and that the burden of proof lies on those who assert that the court should not enforce a liability which prima facie exists. Even if one should put the matter in a more neutral way, I would say that public policy ought not to be invoked if the arguments are evenly balanced: in such a situation the ordinary rule of law, once established, should prevail.”   
5.	The essence of the agreed reference in this case was that a question as to the reason for the termination of Mr Cox’s employment would be answered by saying that “Mr Cox resigned”; and that any request for “your impression of the applicant as an employee together with any additional information which you feel may be helpful to us” would be answered in accordance with an agreed resume of his career or with the spirit of that agreed resume. The resume was favourable if somewhat bland, and made no reference to the dispute which led to Mr Cox’s negotiated departure.
6.	Mr Cox thereafter moved almost directly into new employment, again as a branch manager, with Hambro Guardian Consultancy Ltd (“Hambro Guardian”), at that time a start-up company, but part of a larger group. 
7.	On 30 May 1990 the compliance department of Hambro Guardian wrote to SAL with a request for a reference for Mr Cox. That request was referred to Mr Malcolm Jones, at that time the personnel services manager at SAL, second only in his department to SAL’s personnel director. Mr Jones subsequently became personnel director. Mr Jones had been directly involved, as will appear below, in the events leading to Mr Cox’s departure from SAL. 
8.	On 2 July 1990 Mr Jones replied to Hambro Guardian, not to its compliance department, but directly to its senior executive, Mr Gunn. Mr Jones’ letter read as follows:
“I have received the attached reference request from your Compliance Department.
“As the reference is not entirely straight forward I felt that it was best to respond via yourself.
“If you wish to contact me please telephone me on the number quoted above.” 
9.	Almost immediately thereafter Hambro Guardian picked up that invitation to speak to Mr Jones. There was first a telephone conversation between Mr Jones and Ms Liz Wytchard. That was followed on 5 July 1990 by a further telephone conversation between Mr Jones and Mr Brian Cosgrave, who had been the person concerned with Mr Cox’s appointment at Hambro Guardian. It is what was said by Mr Jones during those telephone conversations that is at the heart of Mr Cox’s claim and the present appeal. 
10.	Mr Cox complains that during those telephone conversations Mr Jones said things that were inaccurate, unfair and misleading, and highly damaging to him, and that that led directly to his departure from Hambro Guardian. 
11.	There is in fact no dispute that as a result of what Hambro Guardian then learned from Mr Jones, Mr Cox was required to leave. He was given the opportunity of resigning, which he did on 24 July 1990.
12.	Between August 1990 and January 1991 Mr Cox worked either for or as a partner or prospective partner of a firm, Foster Cox and Associates, but that came to nothing as the firm was soon dissolved.
13.	In February 1991 Mr Cox obtained a position with Windsor Life Assurance Company Ltd (“Windsor Life”) as a self-employed senior sales manager. In March 1991 Windsor Life sought a reference from SAL. The request was again referred to Mr Jones. Mr Jones’ written response dated 19 March 1991 to a question as to SAL’s opinion of Mr Cox’s honesty, behaviour and reliability was that “Mr Cox resigned at a time when his conduct was being investigated”. On 27 March 1991 Windsor Life confirmed Mr Cox’s appointment “subject to receiving satisfactory references”. 
14.	Mr Cox’s subsequent history at Windsor Life is a little obscure, but matters appear to be as follows. A year later, in March 1992 the whole of Windsor Life’s sales force, including Mr Cox, had to be suspended at the request of Lautro, which was investigating whether the company had fulfilled its Lautro obligations in connection with the obtaining of proper references for its employees and representatives. As a result, Windsor Life had to obtain fresh references and wrote to Mr Cosgrave at Hambro Guardian. On 16 March 1992 Mr Cosgrave replied, on Windsor Life’s form, as follows. Having answered “Yes” to the question “Is there any reason why you would not re-employ?”, Mr Cosgrave gave details for that answer as follows:
“At the time there was a lack of clarity regarding his previous employers and reasons for Mr Cox’s resignation – this was most unfortunate for all concerned.” 
15.	In answer to a further question as to Mr Cox’s reliability, behaviour and health, Mr Cosgrave wrote:
“Excellent – very committed honest and hard-working, Mr Cox will not let you down. Although somewhat individualistic he is a good employee who will always do his best.”
16.	Windsor Life also got in touch with Mr Jones at SAL. There was a telephone conversation on 6 April 1992. It is not clear what was said. However, as a result of that conversation, Windsor Life wrote the same day to Mr Jones asking him for further details concerning the reasons for Mr Cox’s resignation from SAL. They asked as to the exact nature of the “alleged misconduct”, and whether it was true that the allegations were unproven and that there was an agreement for compensation to be paid and for a “guaranteed reference”. It also asked whether SAL had since breached this agreement.
17.	The terms of that letter may well reflect not only the telephone conversation with Mr Jones, but also conversations with Mr Cox himself. Following his enforced departure from Hambro Guardian, Mr Cox suspected that SAL had not kept to the terms of their agreed reference. Back in March 1991, he had asked that Windsor Life’s request for a reference from SAL should be directed to the union representative at SASU (the Sun Alliance Staff Union) who had assisted him in his dispute with SAL and had negotiated the settlement agreement and agreed reference. That was a Mr Kenneth McAleer. So it was that in March 1991 Mr McAleer sent to Windsor Life a letter headed “To whom it may concern” regarding Mr Cox. It read:
“I represented Mr Cox during the period of his suspension and I am prepared to provide information on this matter.
“I would, however, confirm that after prolonged investigation no disciplinary action was taken. Further, no LAUTRO related offences were involved.
“Indeed Mr Cox was not the subject of a disciplinary warning at any time during his 17 successful years with Sun Alliance.”

18.	Mr Jones was also on notice that Mr Cox suspected him of breaching the agreed reference because on 3 December 1991 Mr Cox’s solicitors had written to SAL, stating Mr Cox’s suspicion, and requesting copies of the SAL references given to Hambro Guardian and Windsor Life. That letter was passed to Mr Jones, who on 11 December 1991 had replied, refusing to supply any copies of references as a matter of principle, but also giving the categorical assurance that any references supplied were in accordance with the agreement made. The matter was pressed by Mr Cox’s solicitors in further correspondence, but without success. 
19.	No doubt bearing the beginnings of this correspondence in mind, Mr Jones’ reply to Windsor Life’s letter dated 6 April 1992 was suitably cautious. He said:
“It is true that a standard reference was agreed with ACAS and a copy has been sent to your offices previously. Because of this agreement with ACAS, I would not wish to add any further comment as this would infringe the agreement…Sun Alliance certainly has not breached this agreement at any time…”

20.	By 28 April 1992 Windsor Life wrote to Mr Cox to inform him that their enquiries had been concluded satisfactorily and his suspension had been lifted. 
21.	Nevertheless, Mr Cox complains that, as a result of the “black mark” on his file caused by SAL, suspension on this occasion lasted somewhat longer in his case than in the case of his colleagues, and, more importantly, that the employment which he obtained from Windsor Life in no way reflected the more senior status which his career and experience to date would ordinarily have entitled him to. For the same reason, promotion eluded him. He gave evidence at the trial below that the stress placed on him of attempting, by hard work and from a relatively junior position, to maintain his family’s well-being led to a nervous breakdown and ultimately to the inability to work. The recorder concluded his judgment below with these words:
“I am quite satisfied that, but for Mr Jones acting as he did by communicating with Mr Cosgrave and with Liz Wytchard, Mr Cox would have continued to pursue his impressive career within the insurance trade for as long as he would have wished, and that he would have enjoyed the promotion prospects congruent to his experience, skill and industry. The only word I can use to describe the allegation of financial impropriety is ‘baseless’ and it has blighted the plaintiff’s life in respects which will fall to be decided at some other time.”    

22.	The recorder was there referring to the fact that all questions of quantum had been split off for a further trial. He had only been concerned with issues of liability and causation.
23.	Before turning to the issues raised on the appeal and cross-appeal, I need to set out in greater detail the facts relating to Mr Cox’s departure from SAL, and to the written and telephone references given by Mr Jones to Hambro Guardian. In doing so, I will be drawing not only on the judgment below, but also on further submissions as to the facts made by counsel in this court. Both Mr Griffith-Jones QC, who appeared on behalf of SAL, and Mr Pawlak, who appeared on behalf of Mr Cox, recognised that in certain respects the recorder’s judgment had dealt with the facts somewhat superficially. Nevertheless, he had heard evidence for some four days, not only from Mr Cox, Mr McAleer, Mr Jones and Mr Cosgrave, but also from Mr Weatherall, who was Mr Cox’s divisional manager: and Mr Griffith-Jones recognised, with commendable realism, that he was not in a position to challenge, and he did not challenge, the recorder’s views as to the credit and reliability of the witnesses before him. 
24.	In that connection, I should record at the outset, as the prism, as it were, through which the facts have to be looked, what the recorder said about Mr Cox and Mr Jones respectively. As to Mr Cox, he said this:
“The parties are polarised. On the one side stands Mr Cox asserting his good character; on the other side is Mr Jones expounding his unshakeable belief that Mr Cox is a dishonest man. Whether he is or is not an honest man is not for me to decide, though I must say that nothing I saw or heard during four full days of evidence would persuade me to adopt the view held by Mr Jones.” 
25.	As to Mr Jones, on the other hand, the recorder said:
	“My impression of him as a witness was that he was an inveterate casuist to say the least, and at times I was in wholehearted agreement with Mr Pawlak’s suggestions during cross examination that he was a stranger to the truth. The most obvious example of this was his refusal to acknowledge that he was responsible for the noted telephone conversations with Brian Cosgrave and Liz Wytchard. The evidence satisfied me to the extent that I was sure that he was the other party to both conversations.” The circumstances of Mr Cox’s departure from SAL”

The circumstances of Mr Cox’s departure from SAL
26.	In April 1989 Mr Cox was promoted to be SAL’s branch manager at Leeds, in charge of an office which covered the whole of Yorkshire. He had previously, since 1985, been a local branch manager for West Yorkshire. His new appointment did not go well, however, and by the autumn of 1989 his staff at Leeds had mutinied against him. On 14 November 1989, during a period of absence through illness, he was suspended on full pay and told to stay away from the Leeds office. At the time of that suspension there was no suggestion whatsoever of any financial impropriety or dishonesty. As Mr Jones wrote to him on 16 November:
“In particular, as you are aware, a number of members of staff claim that a serious rift has developed between you and them as a direct result of your personal management style.
“I hope this is of assistance in clarifying the reason for your suspension.”
27.	On 27 November there was a meeting at which Mr Cox was present together with Mr McAleer, and SAL were represented by Mr Weatherall and Mr Jones. An aide memoire prepared by Mr Weatherall exists for that meeting. A large number of “issues” were presented, under the three headings of “Staff Management”, “Agents” and “Business Administration”. Again, there was no suggestion of any financial impropriety or dishonesty, even though Mr Cox was being told that one of the options being considered was summary dismissal. That came as no surprise to Mr McAleer, in the sense that he realised from an early stage that, with a mutiny of staff and no support from the management, Mr Cox would have to go. The only question was on what terms. 
28.	So it was that, in the background, negotiations were proceeding to a settlement under which Mr Cox would receive a lump sum of £25,000 (plus three months salary in lieu of notice) for his quiet departure. There is an internal memorandum [212] written by Mr Jones on 22 December 1989 recording his conversation with Mr McAleer that day concerning such a settlement. The £25,000 offer had come from SAL. Mr Cox wanted to think the deal over during the Christmas break. The note goes on to say that SAL intended to invite Mr Cox to a disciplinary interview, which would “concentrate his mind to accept the settlement as he knows that we will dismiss him at that interview and any subsequent reference given will reflect this”. Nevertheless, SAL recognised that a settlement was better than dismissal. As Mr Weatherall said in his witness statement: “To pursue the allegations which had been made against Mr Cox to a final conclusion would have involved a lot of time and effort and would have involved a number of individuals in rather uncomfortable circumstances”.
29.	However, matters were about to take a darker turn. On 28 December Mr Weatherall learned from a colleague that on 20 December a Mr David McGowan, a tied agent whose company, Armitage & Young, owed a lot of money to SAL, had “volunteered” that he had paid £1000 by cheque to Mr Cox’s wife for Mr Cox’s assistance in the purchase of a firm of estate agents in Bradford. Mr Weatherall discussed the matter with Mr Jones, and they decided that it would be useful to have confirmation of this information. Mr Weatherill made a note about this news, and commented: “We may not wish to use – but – it would be valuable to have the story formally confirmed”. Mr Jones also noted the news, but in this form: “£1,000 bribe paid to M. Cox’s wife by ‘Armitage & Young’?” The word “bribe” appears to be entirely Mr Jones’ own word. 
30.	On the same day, 28 December, Mr Weatherall wrote to Mr Cox to invite him to a “further disciplinary hearing” on 5 January 1990. Nothing was said about the £1,000 payment. In the event, that meeting was postponed a number of times and did not take place until 5 February. 
31.	On 3 January 1990 a Mr Wills, the marketing and development manager at SAL’s headquarters in Horsham, telephoned Mr McGowan for further information. In confirmation of that telephone conversation Mr McGowan wrote a long letter to Mr Wills in which he made a raft of allegations against Mr Cox. Amongst them was that he, Mr McGowan had made two payments to Mr or Mrs Cox totalling £1,250, as a “fee” for  introducing Mr McGowan to a friend of Mr Cox’s who was dying of cancer and wished to sell his estate agency business. Mr Cox, it was said, would even arrange to bring pressure on his friend to reduce the price. Mr Cox had requested cash, but as Mr McGowan was “unable to obtain such an amount in cash I drew a cheque…” The letter did not date these events, but Mr Wills’ note of their telephone conversation ascribed them to May 1988.
32.	Another note by Mr Jones at about this time stated: “Cox offered [McGowan] leads + requesting payment for providing them”. The note went on to describe Mr Wills’ view of Mr McGowan as “naïve but straight – wants to clear his name – continue doing business with Sun A.” It also said that Mr Cox had upset Mr McGowan over some matter. 
33.	On 9 January Mr Wills made a file note of a further telephone conversation with Mr McGowan. He had then reminded Mr McGowan that the latter’s letter of 3 January had failed to include a matter which he had obviously mentioned to Mr Wills in their previous telephone conversation, namely that Mr Cox had tried “to make a personal gain from providing leads”. Mr McGowan said that this was an oversight and that he would write confirming this. (He never did.) He also promised Mr Wills that he would immediately provide details of the payments he had made to Mr Cox.
34.	On 12 January Mr Wills spoke to Mr McGowan yet again. Mr McGowan again promised “the documentary evidence that cheques had been paid to Mrs Cox…” He said that he would prefer his letter of 3 January not to be handed out at the then imminent meeting planned with Mr Cox “although he accepted that it could be used at a tribunal”. Later that day Mr McGowan handed to a SAL representative at Leeds a handwritten note confirming that his companies had made payments to Mr Cox in the amount of £1250. He now said that on 6 January 1989 he had given Mr Cox “a brown envelope containing £1,000.00 in cash…” He also said that on 28 February 1989 he had paid a cheque for £250 to Mrs Cox, and a photocopy of the cheque stub was produced. The stub referred to “Introducers fee”.  
35.	On the same day Mr Jones made a note of a telephone conversation with Mr McAleer. He explained that the reason why SAL’s settlement offer (the £25,000 offer) had been withdrawn was because of “extra evidence relating to Armitage & Young”. Mr McAleer said that SAL must put this evidence in front of Mr Cox, and Mr Jones confirmed that it would be. That conversation, however, was perhaps overtaken by Mr McGowan’s request to Mr Wills that his letter not be used. For whatever reason, as will be seen, SAL refused to produce it.
36.	I would infer that it was at about this stage of events that Mr Jones scribbled a note raising queries as to what would be said in any reference, and what SAL would do if Mr Cox asked “for evidence”. 
37.	On 16 January Mr Weatherall wrote to Mr McAleer. It was a detailed letter answering 19 specific queries, many of them of a documentary nature, all in relation to the earlier issues raised concerning management. The letter then concluded:
“It has been and will remain our intention to ensure that Mr Cox is fully informed of our investigations and developments.
“Accordingly, I must advise you that new information, of a very serious nature, has come to our attention and if the reported incident is substantiated, it clearly has serious implications on Mr Cox's role as a Manager.
“It has been alleged that Mr Cox received an improper payment, directly related to his role as a Sun Alliance Manager, involving the payment of a cheque to his wife and the introduction of a firm of Estate Agents to Appointed Representatives, Armitage & Young…”   

38.	It may be noted that there was no charge of dishonesty; that only one payment was referred to; and that the suggestion being made was not so much that the estate agents had been introduced for the purpose of a business sale, but for other purposes directly relating to Mr Cox’s role as a manager. 
39.	On 18 January Mr McAleer replied to Mr Weatherall. So far as the new allegation was concerned, Mr McAleer pointed out that the information in Mr Weatherall’s letter conflicted with other information that SAL had orally given him concerning both a payment by cheque for £250 on 28 February 1989 and a payment of £1000 in cash on 6 January 1989. He pointed out the need for all relevant files to be made available.
40.	Mr Weatherall replied on 26 January. He said that he thought that the nature of the new allegations was “perfectly clear”; that SAL were very anxious to be fair to Mr Cox; and that at the meeting “we will, of course, give details of any supporting evidence that we have and similarly ask Mr Cox to respond”.
41.	On 1 February Mr McAleer replied to say that, with reluctance, he was prepared to allow his member, Mr Cox, to attend the meeting on 5 February, provided that all allegations were explained in full and that all relevant documents were identified and made available. 
42.	On 5 February Mr Cox and Mr McAleer met Mr Weatherall and Mr Jones. Previous SAL letters had described it as a disciplinary hearing, but at trial Mr Weatherall accepted that it was not. There is a full note of the meeting. Mr McAleer spoke for Mr Cox throughout. So far as the McGowan allegations were concerned, the only “charge” put was “an improper payment made by Armitage & Young”. The SAL representatives refused to hand over Mr McGowan’s statement, or even to acknowledge its existence. In response Mr McAleer refused to allow Mr Cox to do more, pending receipt of Mr McGowan’s statement, than to deny the receipt of any cash, to admit the receipt of the £250 cheque to his wife, and to assert that the payment was not an “improper payment” and did not relate to his role as a manager for SAL. There were repeated exchanges to the same effect. For instance, Mr Jones said: “For the record, JMC refuses to answer why the payment was made.” Mr McAleer replied: “He’s not refusing – he will explain if he gets the statement.” The SAL representatives emphasised that without an explanation, they would have to decide on the material available.
43.	Mr Cox may have been poorly advised not to give his explanation of the payment of £250 to his wife on this occasion, and it can be appreciated how this would have made a poor impression on SAL’s managers. Nevertheless, if Mr McGowan’s allegations, or Mr Cox’s response to the limited charge put relating to the £250 cheque, were being seen by SAL or Mr Jones, without more, as grounds for Mr Cox’s dismissal, that would have been unfair. I would in general refer to the judgment of my Lord, Lord Justice Mummery, which I have had the opportunity of reading in draft, and with which I would gratefully agree, on the subject of unfair dismissal and the test in BHS Ltd v. Burchell [1980] ICR 303. 
44.	I would also emphasise the following matters. It was never stated at any stage throughout the interview of 5 February that there was any suggestion that Mr Cox had been acting dishonestly or corruptly, or that he had been seeking or taking bribes in return for favours (“leads”), or anything of that sort. That is what McGowan may have been suggesting, and what Mr Jones may have believed, but it was never put to Mr Cox. The only matter that was put to Mr Cox was “an improper payment”. Even that was put in a curious way. Mr McGowan’s allegation had been that there had been two payments, totalling £1250, at different dates and in different modes, but that they were both for the same purpose. However, both in Mr Weatherall’s letter dated 16 January and in the interview itself, SAL only mentioned one payment (“an improper payment…involving the payment of a cheque to his Wife”; “an improper payment made by Armitage & Young”). The only reference to £1000 in cash had been made orally to Mr McAleer, and even at the interview, it was Mr McAleer, not the SAL representatives, who, because of the information that had been given to him orally, raised the matter of the £1000 cash. SAL’s ambivalence about the £1000 cash can, with hindsight, be understood. When the full documentation concerning Mr McGowan’s allegations is scrutinised, as SAL had been able to do all along, his prevarications concerning the £1000 (cheque or cash) are there to be seen. At the time, however, SAL were unwilling, despite earlier promises, to disclose to Mr McAleer and Mr Cox what Mr McGowan had written. Of course, they were not able to do so, quite apart from Mr McGowan’s desire for confidentiality, because what Mr McGowan had written went further than they were themselves willing to use (but on the other hand omitted the subject of the payment for “leads”) and also contradicted itself on the subject of the £1000. It now seems reasonably clear that SAL were not prepared to rely on what Mr McGowan had said or written about the £1000, but nevertheless were prepared to allow Mr McAleer and Mr Cox to believe that that too required an answer. To Mr McAleer and Mr Cox, on the other hand, the two payments must have seemed to be inextricably linked, as they were on Mr McGowan’s part. In these circumstances, although I believe it would have been much better for Mr Cox to have explained the £250 payment to his wife, I have some sympathy for his decision not to. He had put himself in the hands of Mr McAleer, whose advice was not to do so until the evidence which had been promised was produced. Moreover, the £250 was tied up with the £1000 in respect of which Mr Cox was adamant that Mr McGowan was lying. Furthermore, Mr McGowan was, probably correctly, believed to have his own axe to grind. 
45.	At trial, Mr Weatherall was asked why Mr McGowan’s letters had not been produced to Mr Cox. He said it was on the advice of SAL’s lawyers, but also accepted that he, personally, would not have been happy to have produced them, without first interviewing Mr McGowan himself. The recorder regarded that as a “key” answer, for it demonstrated that the elementary step of testing the reliability of Mr McGowan’s evidence was never taken. I would agree with that. In fairness to SAL, Mr Weatherall also said that SAL never got to the point of deciding whether they would dismiss Mr Cox. If they had, his would have been the recommendation, even if not the final decision. But “it did not reach that point”.
46.	Despite that evidence at trial, on 8 February 1990 Mr Weatherall wrote to Mr Cox to say “we now believe that we are in a position to make a decision in this case” but that they wanted to give Mr Cox a further opportunity to provide an explanation concerning (inter alia) the £250 payment. Mr Cox replied on the next day to say that Mr McAleer would be in contact regarding such matters. 
47.	By now, however, the dispute re-entered a negotiating stage. As far as matters appear from the documents, SAL, with one exception, took no further steps to investigate their complaints against Mr Cox or Mr McGowan’s allegations in particular. Mr McGowan was never interviewed. Indeed, he remained in place as a tied agent. He was not subsequently used as a witness for SAL at the trial. The one exception I have just referred to is that at this stage in February 1990 a special audit investigation was conducted into Mr Cox’s papers in his Leeds’ office. The internal audit team’s report concluded:
“The Office Search was conducted over a two day period, a large number of files were reviewed to identify unusual items, no evidence of fraudulent activity was identified.”

48.	On 14 February Mr Cox, as applicant, referred the dispute as a “request for conciliation” to ACAS. By 15 February Mr McAleer had already developed a draft narrative of Mr Cox’s career at SAL for incorporation into an agreed reference, and he submitted it on that day to Mr Jones. On 28 February Mr Cox had an interview with Mr Cosgrave at Hambro Guardian. By 2 March the negotiated settlement had been agreed, subject to the formalities. On that day Mr Cox wrote to Mr Weatherall tendering his resignation as from 12 March, conditional on the agreed settlement. The agreed compensation had now fallen to £15,000, plus three months salary in lieu of notice. On 5 March Mr Cox had a second interview at Hambro Guardian, and on 9 March he accepted an offer of employment from Mr Cosgrave. The COT 3 agreement was formally signed by Mr Cox on 14 and by Mr Jones on 16 March. It contained the following paragraph:
“The Respondent [SAL] agrees to provide the Applicant with a reference, the wording of which has already been agreed between the Respondent and the Applicant’s Staff Union Representative, Mr K McAleer.” 

49.	I shall address the terms of that agreed reference in the next section of this judgment.

The agreed reference
50.	I can deal with this matter more briefly than would otherwise be the case because, at a time when the appeal hearing had already well exceeded its estimated length, counsel for both parties agreed that it was unnecessary for the court to hear completed argument on Mr Cox’s cross-appeal on the question of breach of contract, if SAL’s appeal against the finding of liability in negligence were to fail. In particular Mr Griffith-Jones was content that he had said anything he wished to say on the later question of such liability.
51.	In the circumstances submissions concerning the question of breach of contract were never completed and no decision is being rendered on that issue in this judgment. Anything that is said about it must therefore partake of a degree of provisionality. Nevertheless, something must be said, for the agreement forms the background to what came later. 
52.	The agreement was negotiated between Mr McAleer and Mr Jones. There was some dispute at trial as to the wording of the agreed reference, but I do not consider that there is really much doubt about that. The COT 3 form stated that “the wording…has already been agreed”, and there is indeed a reference form which has been filled up in Mr Jones’ own handwriting, albeit it is not signed by him. I have already said above that the form’s question “For what reason was the employment terminated?” was answered “Mr Cox resigned”, and that the next (fourth and final) question “Please give your impression of the applicant as an employee together with any additional information which you feel must be helpful to us” was answered by reference to a narrative which Mr McAleer had developed and agreed. On the form itself, that last question was left blank, but the narrative in Mr McAleer’s handwriting, amended by snowpaked deletions from the first draft which had been submitted to Mr Jones, was evidenced by Mr McAleer’s note that “Agreed reference is standard form plus “extra” information to “4””. It is regrettable that such an important matter to the parties was not dealt with more clearly, as would have been achieved if the space for answering question 4 had itself been filled in by reference to the agreed narrative, if the form and the agreed narrative had then been signed or initialled on behalf of both parties, and if the reference as a whole, both form and narrative had been attached to the COT 3 form. As it is, however, the COT 3 form did refer in terms to a “wording…which has already been agreed”, and for present purposes it is sufficient if I merely indicate my opinion that that agreed wording can be identified. Mr Griffith-Jones did not, I think, dispute any of this.
53.	The remaining difficulty is as to whether, and if so how, that agreed wording was supplemented by a further oral agreement. Mr McAleer gave evidence that he and Mr Jones agreed that “if further questions were asked”, Mr Jones would seek to answer in the spirit of the agreed wording. It was his “understanding” of such agreed references, however, that direct questions would have to be given direct answers. Mr Jones, in an answer quoted by the recorder, said that he and Mr McAleer had agreed that “if specific questions were asked, I would have to answer them truthfully”. 
54.	That is all very well, but when this oral agreement was tested by reference to what Mr Jones should have said if asked a direct question as to his opinion of Mr Cox’s honesty, Mr McAleer said that Mr Jones should have answered that positively, since “at the point that he left their employment, he had not been proven, in any way, to be dishonest” (9 June 1999, at p134). Although Mr McAleer had got the distinct impression that Mr Jones “did not like Michael Cox and believed that allegations made against him were true”, nevertheless –
“you could have divorced yourself from your own personal feelings and say that somebody is innocent until they are proved guilty” (at pp170/1).

55.	The question was raised as to whether the agreement as to a reference had been made against the background of the Lautro rules: but both Mr McAleer and Mr Jones said that neither of them had been contemplating the sort of references which would be required by Lautro. That is a problematical issue which in the circumstances does not have to be resolved.
56.	In the event, the recorder found that Mr Cox’s claim in contract failed, since, as he put it, “there was no consensus ad idem on the specific question of how Mr Cox’s honesty would be described in any future reference”.    
57.	It is perhaps as well that the cross-appeal in contract did not have to be fought to a conclusion, for it would have raised some difficult questions, of fact, construction and law. For instance, was there, properly speaking, any side-agreement to the COT 3 agreement at all, and if so, what was it? Was it open to SAL to rely on any side-agreement in the face of the contractual term that the “wording” of a reference for Mr Cox “has already been agreed”? Was Mr Jones entitled to say that the agreed reference did not cater for a question as to honesty? If Mr Jones was entitled to go beyond the agreed wording, was it within the “spirit” of that agreement to cast any doubt upon Mr Cox’s honesty? Was Mr Jones entitled to go beyond even the “spirit” of the agreement, in answer to a direct question? If, in answer to a direct question, Mr Jones might have been tempted to go beyond the spirit of the agreed reference, would Mr Jones rather have been obliged to say that the reference had been agreed in settlement of a dispute and he was not at liberty to say more? How might the Lautro rules affect either the interpretation of the agreement that had been made, or its implementation? How might any contractual duty be reconciled with SAL’s duty as a member of Lautro, if indeed the duties were reconcilable?  
58.	None of the earlier cases cited to this court, starting with Spring, had been concerned with an agreed reference. The only comment on the range of problems thrown up by an agreed reference is to be found in Bartholomew v. London Borough of Hackney [1999] IRLR 246 at para 21 where Robert Walker LJ said this:
“Mr Bartholomew could have attempted to negotiate further with Hackney over the terms in which any reference might refer to the circumstances of his departure, but either he did not try to do so or if he did he was not successful. Had it omitted all reference to the suspension and to the disciplinary enquiry Hackney might well, it seems to me, have considered itself as failing in its civil duty to other local authorities, their ratepayers and clients. That must be true even though the charges against Mr Bartholomew were unproven and now, as I have said, are unlikely ever to be adjudicated on.”

59.	That, as far as it goes, suggests that if an employer, mindful of its overall duties, does make an agreement for a future reference, it may be held to it. 
60.	In any event, none of such issues have to be resolved. Moreover, although at one time in his skeleton argument Mr Griffith-Jones seemed to be suggesting that the contractual argument might affect the appeal on the question of breach of duty, for instance through the possibility that a positive agreement that all specific questions had to be answered honestly might curtail the duty of care which might otherwise operate to protect Mr Cox, by the end of the hearing that submission had not been pressed. It was not submitted that, if SAL were otherwise in breach of their common law duty to take care in giving a reference for Mr Cox, they were saved by any special agreement with him. 

The Lautro rules
61.	Mr Griffith-Jones did not seek to draw much, if any, assistance from the Lautro rules. They were there in the background, and he sought to say that they provided the context in which the agreement for a reference should be construed. But since Mr Jones said he was not contracting by reference to them, and sought no assistance from SAL’s compliance department, and even appeared to be unaware of the existence of any compliance department, Mr Griffith-Jones was unable to deploy regulatory considerations very far.  
62.	In Spring, where the claimant also worked in the insurance industry, the House of Lords had to consider whether the Lautro rules affected the existence or qualified the extent of the common law duty of care there in issue. Their Lordships held that they did not. 
63.	Rule 3.5 is the rule in question. It was amended on 27 February 1990, shortly before Mr Cox’s departure from SAL. The amended rule provided as follows (I have put the amendments in italics):
“(1) A person shall not be appointed as, or be permitted to continue to work as, a company representative of a Member unless the Member is satisfied that he is of good character and of the requisite aptitude and competence for that appointment, and before appointing any person as a company representative, the Member shall…take up appropriate references relating to character and experience. (2) A Member which receives an enquiry for a reference in respect of a person whom another Member or appointed representative is proposing to appoint as a company representative shall provide the reference within 15 working days of the date on which the enquiry is received, and in providing the reference shall make full and frank disclosure to the person making the enquiry of all relevant matters which the Member believes, or has reasonable grounds for believing, to be true...”

64.	The previous version of rule 3.5 can be seen set out in Spring at 321C/D. As to that, Lord Lowry said this (at 326H/327B):
“When I look again at Lautro rule 3.5(2), it does not seem to me that the obligation of a referee to make “full and frank disclosure of all relevant matters which are believed to be true” is in any way incompatible with the existence of an obligation, owed to the referee’s employee or agent, to exercise reasonable care in the giving of a reference. Indeed, it might without difficulty be implied that, in the interests of the recipient, a reference should be a careful one as well as being full and frank. Rule 3.5(2) cannot be determinative of the existence of a duty owed by the referee to the subject of a reference or of the nature of that duty, if one exists.”

65.	I do not see how the changes to Rule 3.5 affect the duty found in Spring. It might perhaps have been possible to argue that the distinction drawn, on the new wording, between matters which the member “believes, or has reasonable grounds for believing” to be true could lead to a new assault on the existence of the duty of care, on the basis that all that could be required in the circumstances was a duty to the employee to be honest. Under the previous wording – “disclosure of all relevant matters which are believed to be true” - it was perhaps easier to say, with Lord Lowry, that it was to be implied into the rule that the reference was to be a careful one. That implication is harder to make under the new wording of the rule. 
66.	However, although Mr Griffith-Jones did at one time submit that the Spring duty of care was fulfilled provided the giver of the reference was honest (as the recorder found Mr Jones to be), and his skeleton argument had been largely premised on that submission, he did not submit that the new wording of rule 3.5(2) undermined the Spring duty. Moreover, he ultimately accepted that honesty was not an answer to carelessness. 
67.	It may seem odd that the amended Lautro rule could require a member to provide a reference whose carelessness was overlooked in the cause of frank disclosure of honest belief. One can see, nevertheless, that as between member and member, and as between members and the regulator, honest frankness could be promoted even above carefulness. There was, however, no submission in this court as to how the Lautro rule should operate where the referee is careless, ie has no reasonable ground for his belief, but honest, ie where he honestly, albeit carelessly, believes in the disclosure provided. Moreover, it seems to me that as between referee and the subject of the reference, different considerations apply, and, as Lord Lowry said, the rule cannot be determinative of the existence or nature of the duty owed by the referee to the subject of the reference. Lord Goff spoke to similar effect (at 321E). Lord Slynn of Hadley, albeit speaking in the context of contract, thought that, even though the unamended rule did not require the taking of reasonable care by the referee, a term should be implied as a matter of necessity in the contract between an employer and an employee that the employer would be careful in giving his employee a reference (at 339G/340A). Lord Woolf, on the other hand, like Lord Lowry, regarded the Lautro rules as requiring references to be not only full and frank but also, by implication, accurate (at 345G). 
68.	Thus, although their Lordships did not all reason the matter in an identical way, the general approach of the majority (for Lord Keith dissented) was that the Lautro rules could not control the common law duty of care. Neither public policy, nor the approach of the law of defamation with its qualified privilege, nor the urgent demands of freedom of speech, should prevail over the duty of care owed to the subject of the reference. It ought to follow that the precise requirements of the Lautro rules should make no difference. Rather, the likely disaster for the individual of a careless reference should outweigh the mere possibility that the public would be protected by greater latitude for frankness on the part of the referee. As Lord Woolf concluded (at 352G):
“When I weigh these considerations I find that public policy comes down firmly in favour of not depriving an employee of a remedy to recover the damages to which he would otherwise be entitled as a result of being a victim of a negligent reference.”  

69.	I should also mention that Lautro rule 3.5(3) contains the following (again I put into italics the amendment which took affect on 27 February 1990):
“The Member by which a company representative is appointed shall give notice to the Board of the appointment, and of the termination of that appointment; and any such notice shall be in the form prescribed by the Board and shall be given within 10 working days of that appointment or termination, as the case may be and if the termination was for misconduct or if the company representative resigned while under investigation for misconduct, the notice shall include a statement of that fact.”

70.	However, SAL did not at any time notify Lautro of any concern about Mr Cox in connection with the termination of his employment: there was no suggestion that he had left for misconduct, nor that he had resigned while under investigation for misconduct, nor that any “complaint of significance” as that concept is used in the Lautro rules had been made against him.

The reference to Hambro Guardian
71.	It is now necessary to consider the references given by Mr Jones to Ms Wytchard and to Mr Cosgrave at Hambro Guardian in greater detail, prior to resolving whether the recorder was right to conclude that those references were given in breach of SAL’s duty of care. 
72.	It will be recalled that Mr Jones’ conversations with Ms Wytchard and Mr Cosgrave were initiated by Mr Jones’ letter to Hambro Guardian dated 2 July 1990. That letter accompanied Mr Jones’ completion of Hambro Guardian’s reference form. The form asked “Did you find the applicant (a) Honest (b) Loyal (c) Capable of working well without supervision (d) Able to get along with others?” To which Mr Jones answered “Yes” to (b) and (c), and answered merely “Not suited to Branch Manager position” to (a) and (d). To the question “Would you employ the applicant again?” Mr Jones said “Not in the same capacity”, which I suppose otherwise implies Yes. To the question “Is there any other information you feel would be useful?” Mr Jones answered “Mr Cox has been a successful salesman who regularly appeared in the “top ten salemen”.” Obviously, he was not willing to put any other information into writing.
73.	It was Ms Wytchard who was the first to speak to Mr Jones on the telephone. She did not give evidence, and Mr Jones denied speaking to her, so her notes of the conversation provide the only direct evidence of what was said. Those notes make it clear that Mr Jones began by requesting Ms Wytchard to treat matters in strict confidence, and to be careful of what information was disclosed to Mr Cox. Perhaps Mr Jones was mindful of his contractual obligations. Mr Jones next mentioned the fact that Mr Cox had been suspended on 14 November 1989. He went on to refer to Mr Cox’s difficulties with his staff. A little later Ms Wytchard noted the following: “an agent approached [SAL] direct re money changing hands. Proved unsatis nature as mgr…admitted to receiving amount from agent direct to wife in chq form. Larger amount not proved. £250 not admit to £1000…Wld have dismissed.”
74.	Mr Cosgrave said that Ms Wytchard was the chief compliance officer at Hambro Guardian. After speaking to Mr Jones, she advised Mr Cosgrave that there appeared to be definite undertones and that it was necessary to enquire further. So it was that Mr Cosgrave spoke to Mr Jones himself. His notes of that conversation are quite detailed. They begin with a reference to Mr Cox’s success as a salesman and to his entrepreneurial nature. They continue with less positive comments on his character. Ultimately “2 problems” are identified: the first was his problems with his staff (“fell out with ALL his staff”); and the second was the McGowan allegations. The latter are noted in the following terms: “very concerned with relationship with tied agents – little too close (inducements passed hands?)…got to the point where he was suspended! for investigation into above. Very long + drawn out hard to prove anything. Out of court settlement to allow him to resign. Doubts about honesty! 2 payments from an agent? Great shame: he was a great salesman…”
75.	I accept the submission of Mr Pawlak that the implication of these remarks was as serious as it could be. It was suggested that the real, or at least one of the real reasons why Mr Cox was suspended (“got to the point where he was suspended! for investigation into above”) were the allegations of dishonesty; that those allegations were properly investigated (“very long + drawn out”); that those allegations involved a cosy and corrupt relationship with not just one but a number of tied agents who were bribing Mr Cox or being bribed by him (“very concerned with relationship with tied agents – little too close (inducements passed?); that, although it was hard to prove anything, a proper investigation had left SAL with a reasonable basis for doubting Mr Cox’s honesty (“Doubts about honesty!”); that in those circumstances, and where SAL would have dismissed him (as Ms Wytchard was told), Mr Cox was nevertheless allowed to resign (“out of court settlement to allow him to resign”). Nothing was said to the effect that the settlement had involved an agreed reference which deliberately omitted any mention of these matters. Whereas the truth was that Mr Cox had been suspended for matters wholly unconnected with the McGowan allegations; that those allegations had never been properly investigated, if indeed they could be said to have been investigated at all where Mr McGowan had never been interviewed by anyone concerned with Mr Cox’s case; that with the exception of the £250 cheque (and possibly the £1000 as well) these allegations had never even been put to Mr Cox; that Mr Jones’ doubts about Mr Cox’s honesty were not based upon any proper enquiries; that a two day search and audit of Mr Cox’s papers had turned up not a shred of evidence against him; that SAL had had such doubts about the £1000 allegation that they had never properly charged Mr Cox with it; that SAL had never reached the point where they had decided to dismiss him on the ground of these allegations; that Mr Cox was therefore not so much allowed to resign as paid off under a settlement which provided him with tax free compensation for the loss of his employment; and that the settlement included an agreed reference in complimentary if bland terms. 
76.	Mr Cosgrave recognised the absolute seriousness of this report. He said of his telephone conversation with Mr Jones (8 June 1999 at pp 36/7):
“A. Well, I remember the phone call very well, and I had described it to somebody else after that this man was gleeful giving the information he gave: that was the way I felt. There was an enthusiasm, almost, to go into detail and make remarks that were innuendo…the information that I was now receiving that Michael Cox’s career in financial services was over. Not only would he…have to terminate his employment with us, but he was not going to get back into financial services again…Yes, that is why I was quite surprised at the – almost the enthusiasm that was being shown to me down the phone. This was a sort of ‘no way out’ conversation…it was hinted that there was questions of money passing hands of, almost like bribery going on…”

Was the reference to Hambro Guardian in breach of a duty of care owed to Mr Cox?
77.	Mr Griffith-Jones accepted the existence of a duty of care owed to Mr Jones in the giving of SAL’s reference. He accepted that such a duty of care went beyond mere honesty of belief in the reference given. He also accepted that, at any rate in respect of matters that went beyond the acceptance of the cheque for £250, such as the suggestion that Mr Cox had been corruptly taking bribes, Mr Jones had acted in breach of his duty of care. He submitted, nevertheless, that Mr Cox’s admission that his wife had received a payment of £250, in the absence of any explanation, was a sufficient basis for raising doubts about Mr Cox’s honesty. Although he had to recognise that a charge of dishonesty had never been put to Mr Cox at the interview of 5 February 1990 or at any other time, and that a valid distinction could be drawn between the dishonest and the merely improper, nevertheless the admitted receipt of a payment from a tied agent without explanation was prima facie dishonest and justified Mr Jones’ remarks to Hambro Guardian. As for the statement that Mr Cox would have been dismissed, that merely recognised, as Mr McAleer himself had done from the start, the inevitability of Mr Cox’s departure.
78.	Above all, or as what Mr Griffith-Jones termed his best point, he submitted that the existence of the admitted receipt of the £250 by Mr Cox’s wife, without explanation, was something which on any view Mr Jones was entitled to reveal; and that on the evidence, that would have been sufficient to have prevented Mr Cox from remaining at Hambro Guardian, since in his evidence Mr Cosgrave had made it clear that only a reference without any blemish would have sufficed. Therefore, even if Mr Jones had otherwise been in breach of his duty of care, such breach did not cause any loss to Mr Cox, for he would have been required to resign from Hambro Guardian in any event. Mr Griffith-Jones described this as a point of causation, and I will deal with it as such under the heading of causation below, together with SAL’s other point on causation: that it was not Mr Jones’ reference that had caused Mr Cox’s departure from Hambro Guardian, but Mr Cox’s own failure, at the time of interviewing for his job with Hambro Guardian, to reveal to Mr Cosgrave the circumstances of his resignation from SAL.
79.	In connection with his submissions on the issue of breach, Mr Griffith-Jones relied heavily on the decision of this court, subsequent to Spring, in Bartholomew v. London Borough of Hackney. He criticised the recorder for paying inadequate attention to this authority. Mr Bartholomew had been employed by Hackney as head of its race equality unit. He was suspended pending investigations into alleged financial irregularities, and ultimately faced disciplinary proceedings concerning those allegations. Mr Bartholomew thereupon brought a complaint to an employment tribunal alleging racial discrimination. During the course of the hearing of that complaint, the parties reached a settlement: Mr Bartholomew took voluntary severance with salary in lieu of notice, and withdrew his complaint. The settlement also recorded that the disciplinary proceedings automatically came to an end with the termination of his employment. Over a year later Hackney was asked by another local authority for a reference for Mr Bartholomew. The reference given stated the fact that Mr Bartholomew had taken voluntary severance and included the information that at the time of his departure he had been “suspended on a charge of gross misconduct and disciplinary action had commenced. This disciplinary action lapsed automatically on his departure from the authority.” Mr Bartholomew accepted that the reference was factually correct, but submitted that Hackney was in breach of its duty of care because the reference it had given was unfair. He failed both at trial in the county court and on appeal. 
80.	Mr Griffith-Jones submitted that the present case was on all fours with Bartholomew in that (a) serious allegations of financial impropriety had been levelled; (b) disciplinary proceedings had been overtaken by a settlement; and (c) there was no constraint on the employer’s freedom to express its opinion (as for present purposes is being assumed). Indeed, he submitted that SAL’s case was stronger than Hackney’s in that the recorder below found that Mr Jones had an unshakeable belief in Mr Cox’s dishonesty, and in that the Lautro rules underlined the professional duties of members in relation to the provision of references and the importance of full and frank disclosure. 
81.	In my judgment, however, the significance of Bartholomew is to be found not so much in the result of the case but in the acceptance there of this court that the Spring duty was not only to take reasonable care to provide an accurate reference, but also to take reasonable care to provide a fair reference. That point is made in the following remarks of Lord Justice Robert Walker at paras 17/18:
“…a number of discrete statements may be factually accurate, but nevertheless may in the round give an unfair or potentially unfair impression to the reader. That is very well understood in the law of defamation…
“Mr Bartholomew’s claim against Hackney was of course a claim in negligence, not libel. Nevertheless the libel cases seem to me to serve as a salutary reminder that the fairness or unfairness, the accuracy or inaccuracy, and, indeed, the truth or falsity of a statement have to be taken in the round and in context and cannot be in every case dissected into a number of discrete parts.” 

82.	In my judgment, in the references he gave to Ms Wytchard and Mr Cosgrave on the telephone Mr Jones failed to take reasonable care to be either accurate or fair. Unlike Hackney, he did not confine himself to a small number of factually indisputable statements. He inaccurately suggested that Mr Cox had been suspended (inter alia) for serious matters of dishonesty; that those charges had been properly brought and thoroughly investigated; that such charges embraced what were suspected as the taking of inducements from a number of tied agents; that such charges went beyond the matter of the two payments mentioned to Ms Wytchard; that in any event those payments embraced the £1000 in cash as well as the £250; and that it was only after thorough investigations which had satisfied SAL that they would have been entitled to dismiss Mr Cox, and would have done so, that they were prepared, because it was hard to prove anything, to allow Mr Cox to resign under a negotiated settlement. Almost every part of that was inaccurate to a greater or lesser degree. In total, the reference was wholly unfair. In the round, the reference was at the very least to the effect that SAL had a reasonable basis, following upon a reasonable investigation, for dismissing Mr Cox on the ground of dishonesty amounting to corruption. In truth, whatever Mr Jones’ personal beliefs, the charges of dishonesty suggested to Hambro Guardian had never so much as been put to Mr Cox (not even in connection with the £250 payment), never been made the subject of proper investigation, never, as it would seem, been made the subject of formal disciplinary proceedings, and, save for the special audit, were shelved pending negotiations towards a settlement which provided Mr Cox with a substantial tax free payment as compensation for his departure and (whatever its precise terms) an agreed reference. 
83.	In such circumstances it seems to me that Mr Jones was seriously at fault and that, save possibly under the heading of an argument about causation, the matter of the £250 payment cannot be isolated so as to bear the weight of the reference as a whole. Mr Griffith-Jones complains that the recorder did not make clear what Mr Jones should have said instead. I do not think that that is the question. I accept that an employer in the position of SAL in this case is put in a difficult position, with obligations of one kind or another, not necessarily of a legal kind, owed severally to its ex-employee, to the Lautro member which asks for a reference, to Lautro itself, and ultimately to the public. In such a position, it is necessary above all to try to be objective. It seems to me that Mr Jones did not try to be objective at all. Mr Cosgrave was struck by the enthusiasm with which he delivered the news about Mr Cox. I think that his lack of objectivity is demonstrated by the reference he gave, measured against the facts with which he was, after all, well acquainted. However, it is also highlighted by his unwillingness to face up to the truth that it was he that conducted the telephone conversations with Ms Wytchard and Mr Cosgrave. 
84.	In my judgment, therefore, SAL, through Mr Jones, were in breach of their duty to take care in the giving of a reference for Mr Cox to Hambro Guardian.

Causation
85.	Mr Griffith-Jones submitted that such breach of duty could have had no consequences for Mr Cox, since even the news about the £250 payment by itself, being admitted and without explanation, would have cost Mr Cox his job at Hambro Guardian. Thus Mr Griffith-Jones relied on Mr Cosgrave’s evidence to the effect that Hambro Guardian, as a new company, had to be particularly careful about allowing any question marks to be raised by Lautro. “The guiding factor,” he said “had to be if we could not prove that an individual was fit and proper or at least satisfy ourselves that he was, then we had to assume that he was not.” Mr Cosgrave accepted that his company’s compliance department would, even in the absence of Mr Jones’ covering letter inviting further communication, have followed up the absence of a straightforward answer on the reference form to the question about Mr Cox’s honesty. That was the critical question. Therefore, the submission went, the matter of the £250 payment would have had to have emerged in any event, and would have damned Mr Cox. 
86.	Nevertheless, Mr Griffith-Jones accepted, quite properly in my judgment, that the burden of proof of his present argument lay on SAL. In effect, SAL bear the burden of showing that the breach of duty which took place did not cause Mr Cox to lose his job, because that would have happened in any event. That is a heavy burden to bear. I do not think that SAL are able to meet it here. Mr Cosgrave was never asked to say what his or his company’s attitude would have been if Mr Jones’ reference had confined itself, on matters of honesty, to a question-mark raised by the simple facts of the admitted £250 payment and the lack of any explanation for it. It is speculation to surmise his reaction, but in all probability he would have asked Mr Cox for his explanation. If Mr Cox had continued to refuse an explanation, which is unlikely since the situation of 5 February 1990 would not have been paralleled, he would probably have been in difficulties. But it is more likely that Mr Cox would have given an explanation to Mr Cosgrave, as he did to the court at trial. He had also offered an explanation, through Mr McAleer, to SAL at about the time of his leaving, but the offer was not taken up. At trial Mr Cox explained that the payment to his wife had been in connection with work done by her on the accounts of his dying friend’s estate agency business in connection with its sale to Armitage & Young. His friend had begged him to help him sell his business before news of his illness became public and his business evaporated. He had taken nothing for himself; he had spoken of “a small cheque” for his wife, and in the event had said that £250 was too much, but Mr McGowan insisted on it. I have already cited the recorder’s reaction to Mr Cox’s evidence. Mr McGowan did not give evidence for SAL; in any event the explanation is consistent with Mr McGowan’s own account. There is no reason for thinking that such a payment was improper, let alone dishonest. The only evidence against Mr Cox in this respect was Mr McAleer’s statement at the 5 February interview that the £250 “was not in connection with an estate agents”. As to that, however, Mr McAleer said in his evidence at trial that he may have spoken there under a misunderstanding of the position (9 June 1999 at p162). In my judgment, SAL cannot prove that Hambro Guardian would not have been satisfied with Mr Cox’s explanation. As it was, Mr Cosgrave, who had seen Mr Cox in action for a number of months, was impressed by him and able to describe him as “very committed, honest + hard working” in his reference to Windsor Life.
87.	Mr Griffith-Jones’ other point on causation was that the real and effective reason why Hambro Guardian required Mr Cox to resign was that he had not been frank with Mr Cosgrave at interview about his difficulties at SAL. Mr Jones’ reference may have been the causa sine qua non, but it was not the causa causans. The basis of this submission was an internal file note which Mr Cosgrave had written at some time in 1994 to the effect that Mr Cox had not made him aware at interview of any dispute with SAL and that the Hambro Guardian board had agreed that it would not be appropriate to continue to employ someone who had withheld information regarding the nature of his departure from his previous employer. Even so, Mr Cosgrave expressed the opinion in that note, as a result of his subsequent understanding of the matter, that Mr Cox had been wronged by SAL in that an agreed reference had been negotiated and SAL had broken that agreement.
88.	In his evidence at trial, however, Mr Cosgrave was able to explain his thinking behind the note more accurately. What emerged was as follows. At his interviews, Mr Cox had informed him of a falling out with SAL. He had mentioned office politics and promotion not being by ability (as noted by Mr Cosgrave at the time), but he had also made it clear that there had been a serious falling out involving a disciplinary situation, which had ended in a negotiated settlement including an agreed reference, some sort of agreed form of words. At the time Mr Cosgrave had been satisfied by that, but when Mr Jones had spoken so openly to Ms Wytchard and himself he had concluded that there could not have been any agreement or agreed reference and that Mr Cox had been misleading him. 
89.	In my judgment, therefore, the lack of frankness which was blamed on Mr Cox was itself a consequence of Mr Jones’ negligent reference. Mr Cox was entitled, in the first instance at any rate, and subject to any direct questions from Mr Cosgrave which required equally direct answers, to rely on the fact of his settlement with SAL, including its agreed reference. He had said that there was a dispute, involving a disciplinary situation, and he was not to know the ramifications which lay behind the only financial charge put forward by SAL, that of an allegedly “improper payment” by cheque of £250. I do not see that the uncertain status of the allegation of payment of £1000 in cash alters the situation. The fact is that, at the 5 February interview, SAL had not used Mr McGowan’s allegations to charge Mr Cox with dishonesty. Thus when at trial Mr Griffith-Jones asked Mr Cosgrave to agree, which he did, that nothing said to him by Mr Cox at interview gave any suggestion that his “honesty and integrity” had been impugned, the question was beside the point. 
90.	In the event, Mr Griffith-Jones’ second causation point fails as well. It was a fair criticism of the recorder’s judgment that he had not articulated his reasons on questions of causation with any amplitude. But his conclusion was clear, that but for Mr Jones’ acting as he did by communicating with Ms Wytchard and Mr Cosgrave, Mr Cox would not have been required to resign. I agree, and regard the negligent reference as the effective cause of the loss of Mr Cox’s employment.

Windsor Life
91.	There remain the elements of the case which relate to Windsor Life. There was comparatively little submission concerning these aspects. Mr Jones’ written reference dated 19 March 1991 stated that “Mr Cox resigned at a time when his conduct was being investigated”. Mr Jones said that that sentence was included at the request of SAL’s compliance department. Outside the question of the agreed reference, I see nothing wrong with that statement in itself. On the other hand, it was given as the sole answer to the question “What is your opinion of his – Honesty – Behaviour – Reliability”. As such, it was hardly an adequate answer, especially against the background of the agreed narrative. Even Mr Jones’ written reference to Hambro Guardian had contained the sentence (under a question as to useful additional information) that Mr Cox had been a successful salesman who regularly appeared in the “top ten salesmen”. Moreover, since no charge of dishonesty had ever been put to Mr Cox before he left, it does not seem to me to be fair to suggest, by the only answer given on the question of honesty, that his honesty was in issue. Finally, the question “Did he observe the rules of Lautro?” was left unanswered. As far as I am aware, Mr Cox was never charged with breach of any Lautro rules. 
92.	On balance, in a jejune area of the case, I would accept that this reference was also unfair. In essence, the reference states or implies that Mr Cox resigned not merely as a coincidence of investigation into his conduct, but as a result of that investigation taking place. That investigation is linked, in the reference, to a question about his honesty. The facts are, however, that Mr Cox was never charged with an offence of dishonesty, and that his resignation was on the cards, indeed probably inevitable, as Mr McAleer thought, ever since the mutiny of his staff. In my judgment, therefore, SAL were again, through Mr Jones, in breach of their duty to take reasonable care to provide a fair reference for Mr Cox.
93.	In April 1992 Windsor Life spoke to Mr Jones and wrote to him for further information concerning the reasons for Mr Cox’s resignation. Mr Cox replied, declining to comment further. He said that “a standard reference was agreed with ACAS and a copy has been sent to your offices previously”. If that was intended to refer to the agreed reference rather than to Mr Jones’ previous reference of 19 March 1991, all I can say is that there is no other evidence that a copy of the agreed reference was in fact sent to Windsor Life, and Windsor Life’s own letter to Mr Jones is inconsistent with the idea that they had already received a copy of the agreed reference. Mr Jones added - “I would not wish to add any further comment as this would infringe the agreement”. If, as I would be minded to infer, no copy of the agreed reference was sent to Windsor Life, Mr Jones was thereby stating that what he said in his earlier reference represented the agreed reference. In a situation where submissions on the question of breach of contract were never completed, I hesitate to say anything further: but I am I think entitled to say that Mr Jones’ March 1991 reference could only represent the agreed reference if that agreement permitted SAL to say or omit to say almost anything. As it is, I think that the only conclusion I can come to in relation to Mr Jones’ April 1992 letter with respect to the issue of breach of duty, is that it did nothing to mitigate the failure to take reasonable care to present a fair reference, which I have found already existed by reason of Mr Jones’ March 1991 reference to Windsor Life.    
94.	It is harder to say what effect SAL’s breach of duty in relation to their reference to Windsor Life had on Mr Cox. The recorder made no specific findings. There has been no argument in this court on this question. Both the absence of findings below and the absence of argument in this court probably reflect the consideration that, since Mr Cox did not lose his employment with Windsor Life (at any rate until he was forced to retire through ill health in 1998), it was not for the trial on liability to disentangle the precise extent to which Mr Cox’s status at Windsor Life was affected by SAL’s breach or breaches of duty. That could only be done at a trial of quantum. If so, I agree. Mr Cox may be able to put his case in a number of different ways: either that everything flows from the loss of his employment with Hambro Guardian, and/or that incremental loss and damage flows from the separate breach of duty in relation to Windsor Life. All such argument and counter-argument lie in the future.     

Conclusion
95.	In sum, therefore, SAL’s appeal fails and must be dismissed. Mr Cox’s cross-appeal was not completed, and stands in abeyance. The consequences in terms of quantum of SAL’s breaches of duty must abide, if necessary, a separate trial of quantum. 

Lord Justice  Mummery :
96.	I agree that this appeal should be dismissed for the reasons given by Rix LJ.
97.	If a person suffers economic loss as a result of a damaging reference several causes of action are potentially available : there may be a claim for defamation or injurious falsehood, but the honest belief of the author  in  the  truth of the reference would be a complete answer to the claim; there may be a claim for unlawful discrimination or victimisation, but only if it can be established that the reference constituted less favourable treatment on the ground of sex or race (Coote v. Granada Hospitality  Ltd [1999] ICR 100 and 942); and, following the decision of the House of Lords in Spring v. Guardian Assurance PLC [1995] 2 AC 296, there is a duty to take reasonable care to provide an accurate and fair reference. Discharge of that duty will usually involve making reasonable inquiry into the factual basis of the  statements in the reference.  
98.	As the facts and arguments in this case demonstrate, the judicial development of liability for negligence in this sensitive area  of employment law is fraught with practical difficulties. The employer who is asked by an employee or a prospective new employer to provide a reference may be placed in a delicate and vulnerable position when the employment has terminated in contentious circumstances. It is not uncommon, for example, for an employee’s claim for unfair dismissal to be settled on terms under which the employer, who contends that he had a potentially fair reason to dismiss the employee, agrees to provide  the dismissed employee with a reference. The reference  needs to be satisfactory if the search for fresh employment is to have any real chance of success. The provision of a satisfactory employment reference serves the interests of both the employer and employee when they are parting company. But the particular interests of the prospective new employer and the general public interest in references which are frank and not misleading  also have to be considered.
99.	Spring was in some respects a complex case on the facts, but the issue of negligence, once the duty of care was held to exist, was not particularly problematical. The special feature in this case, which was not present in Spring, is that the employee complaining of a damaging reference resigned before the employer had completed pending disciplinary proceedings involving investigations into allegations of misconduct. In such a case what  should  be done by the reasonably careful employer who  agrees to give or  is asked to provide a reference? Must he continue with and complete the investigations before he can provide a reference which will not expose him to an action for negligence?
100.	In my judgment, some guidance in cases of this kind  is to be found in the law relating to unfair dismissal for a reason relating to conduct. An employee has a  statutory right not to be unfairly dismissed: section 94 Employment Rights Act 1996. If the reason for dismissal relates to conduct the general principle applied by industrial tribunals (now employment tribunals) for many years has been that the employer should have genuinely believed that the employee was guilty of misconduct, should have  had reasonable grounds for that belief and  should have carried out as much investigation into the matter as was reasonable in all the circumstances of the case: BHS Ltd v. Burchell [1980] ICR 303.
101.	That general principle would have applied here if  SAL had  decided  on 12  March 1990 to dismiss Mr Cox for misconduct  solely in respect of the limited charge concerning the £250 cheque. In my view, the dismissal of Mr Cox would not have satisfied the tripartite test in Burchell. An employment tribunal would probably have held that dismissal was unfair.
102.	A similar approach is appropriate in considering the contents and supply of a reference about Mr Cox if  it is given without reasonable prior investigation into the  various instances of his alleged misconduct. As the events in this case indicate, an unfair and inaccurate reference is probably even more damaging than an unfair dismissal to an employee’s employment prospects. If SAL had taken reasonable care to give a fair and accurate reference they would have confined unfavourable statements about Mr Cox to those matters  into which they had made reasonable investigation and had reasonable grounds for believing to be true.
103.	For understandable reasons SAL regarded further investigation into Mr Cox’s conduct as having been rendered unnecessary by his resignation. The investigations were only necessary if SAL would have to make a decision whether  to warn him or to discipline him or to dismiss him. In order to discharge the duty to take reasonable care in the preparation  and provision of a reference, the employer is not, in my view, obliged to carry on with the inquiry after the employee has resigned. SAL were entitled to discontinue their investigation into the allegations against Mr Cox after he had resigned on 12 March 1990. The Recorder was wrong to find that “the defendant chose to abandon its disciplinary proceedings (for reasons unconnected with the subsequent resignation)...”
104.	The essential point about a reference is that it will normally satisfy the requirements of a duty to take reasonable care if it is accurate and fair. Although it must not contain misleading information or create a misleading impression, a reference  does not, as a general rule, have to provide a full and comprehensive report on all the material facts concerning the subject: Barthlomew v. London Borough of Hackney [1999] IRLR 246 and Kidd v. AXA Equity & Law Life Assurance Society PLC [2000] IRLR 301.
105.	Accordingly SAL were not obliged to continue with the investigation in order to give a comprehensive report on Mr Cox, but they ought to have taken reasonable care to confine unfavourable written and oral comments to those matters which had been investigated before Mr Cox resigned and which provided reasonable grounds for statements about him.
106.	For the reasons given by Rix LJ I agree that the Recorder was entitled to conclude that there was negligence in Mr Malcolm Jones’ “reliance upon unexplored allegations of dishonest conduct attributed to Mr Cox” and in his subsequent communication of those views to Mr Cox’s new employers, Hambro Guardian and Windsor Life.  
107.	I would add a final word for the benefit of employers and employees who prefer to avoid  time consuming, costly litigation about job references. In a case where the terms of  an agreed resignation or of the compromise of an unfair dismissal claim make provision for the supply  of a reference, the parties should  ensure as far as possible that the exact wording of a fair and accurate  reference is fully discussed, clearly agreed and carefully recorded in writing in COT3 at the same time as  other severance terms.

The President:
108.	I agree with both Judgments.

ORDER: Appeal dismissed; cross-appeal stayed; paragraph 7 of recorder’s order set aside; assessment of quantum to be tried by circuit judge or section 9 judge; costs of the appeal to be paid by the appellant.
(Order does not form part of the approved Judgment)