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You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> Martin v. Scottish Equitable Plc & Anor [A2406_99.html] ScotCS 9 [2002] ScotCS 154 (30th May, 2002) URL: http://www.bailii.org/scot/cases/ScotCS/2002/154.html Cite as: [2002] ScotCS 154

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Martin v. Scottish Equitable Plc & Anor [A2406_99.html] ScotCS 9 [2002] ScotCS 154 (30th May, 2002)

OUTER HOUSE, COURT OF SESSION
A2406/99	OPINION OF LORD HARDIE in the cause MARJORIE MARTIN (AP) Pursuer; against (FIRST) SCOTTISH EQUITABLE PLC and (SECOND) FRIENDS PROVIDENT LIFE OFFICE Defenders:   ________________

 

 

Pursuer: P Stuart, Advocate; Gray Muirhead, W.S.,

First Defenders: Fairley, Advocate; MacRoberts

Second Defenders: A McLean, Advocate; HBM Sayers

 

30 May 2002

1. In this action for damages the pursuer avers that she was employed by the first defenders as a microfilm operator in their office at Edinburgh Park and that on or about 4 June 1994 she had an accident in the course of her employment. As a result of that accident she avers that she has been unable to return to work. The pursuer was a member of the first defenders' Permanent Health Insurance Scheme which was a benefit arising out of her employment. The Scheme was insured by the second defenders under a Group Permanent Health Insurance Policy issued by them. The policy was intended to confer a benefit upon employees of the first defenders such as the pursuer and in particular a member, who was totally unable by reason of sickness or accident to follow his or her employment, as defined in the Scheme, was entitled to disability benefit for the period of disability. On 28 August 1996 the pursuer wrote a letter to the first defenders which the first defenders state they treated as a letter of termination of the pursuer's contract of employment with them. If that letter terminated the pursuer's said employment with the first defenders, the pursuer's entitlement to benefit under the Permanent Health Insurance Scheme ceased as at the date of termination.
2. In or about December 1994 the pursuer submitted a claim form to the first defenders in respect of Permanent Health Insurance. The first defenders in turn submitted the form to the second defenders. The pursuer's claim was refused by the second defenders in or about April 1996 but the pursuer appealed against that decision. In or about August 1996 the appeal was refused. Following the refusal of the appeal the first defenders attempted to initiate discussions with the pursuer about the possibility of her return to work. In particular the first defenders wrote a letter dated 12 August 1996 (No.7/1 of process). The relevant paragraphs of the said letter were in the following terms:-

"Our insurers have now reconsidered your claim, taking into account the new medical evidence, however, I am sorry to inform you that your appeal against our decision has been unsuccessful.

We therefore need to discuss with you a plan for you to return to work. I would be grateful if you would phone Gareth Humphreys on 0131 549 3022 to arrange a convenient time for you to come along to our new Head Office at Edinburgh park (sic) to meet with Gareth and John Hood".

The pursuer did not respond to that letter and made no contact with the first defenders. On 23 August 1996 the first defenders wrote a further letter to the pursuer (7/2 of process), which was in the following terms:-

"We recently wrote to you on Monday 12 August 1996, however, we are aware that you have not been in contact with Gareth Humphreys as

requested.

Our letter stated that the insurers had now reconsidered your claim, however your appeal against their decision had been unsuccessful. We also asked you to contact Gareth to arrange a meeting to discuss with you a plan for your return to work.

We are concerned that since we have not heard from you that you are considering not returning to work. It is therefore vital that we speak to you as soon as possible to gauge your intentions. Please phone Gareth on 0131 549 3022 as soon as possible.

We look forward to hearing from you".

The only response from the pursuer was her letter dated 28 August 1996 (7/3 of process), which was in the following terms:-

"Moira has asked that I contact you to discuss a plan for me to return to work. It is with deep sadness and regret that I must inform you that I will not be able to return to work, not because I don't want to, but that I am unable to, due to my health problems".

Under reference to the history of the attempts by the first defenders to communicate with the pursuer after the refusal of her appeal against the second defenders' decision to refuse her benefit, the first defenders' pleadings in Answer 4 contained the following averments:-

"After refusal of the appeal, the first defenders attempted to initiate discussions with the pursuer about the possibility of her return to work. By letter dated 12 August the first defenders advised the pursuer of the second defenders' refusal of her appeal and invited her to call them to arrange a meeting to discuss a plan for her return to work. The pursuer did not respond to that letter and made no contact with the first defenders. On 23 August, the first defenders wrote again to the pursuer in similar terms. Copies of said letters are produced herewith and referred to for their terms which are held as repeated herein for the sake of brevity. The pursuer did not call the first defenders to arrange a meeting as requested. By letter dated 28 August 1996, the pursuer intimated her resignation from her employment with the first defenders".

In response to those averments the pursuer, having referred to the history of her application and the refusal of the appeal in August 1996, averred in Condescendence 4:-

"Admitted that after refusal of the appeal the first defenders attempted to initiate discussions with the pursuer about the possibility of her return to work. Not known and not admitted that the decision to reject the pursuer's claim and subsequent appeal were made by the second defenders alone. Quoad ultra the defenders' respective averments in answer are denied, save in so far as coinciding herewith".

That response to the specific averments of the first defenders about the correspondence could hardly be described as frank. The first defenders lodged a notice to admit the correspondence in terms of Rule of Court 28A. The pursuer did not respond to that notice and in terms of the Rule of Court the correspondence is deemed to have been admitted.

3. In Article 3 of Condescendence at page 9A-C of the Closed Record the following averments are made on behalf of the pursuer:-

"Further explained and averred that esto the pursuer's letter of 28 August 1996 did on a proper construction of its terms terminate, or constitute an offer to terminate, the pursuer's contract of employment with the first defenders, which is denied, the defenders are not entitled to rely on the resulting termination of the pursuer's employment so as to defeat in whole or in part her claim to Disability Benefit. The pursuer was induced to send the letter by a representation to the effect that she was not entitled to Disability Benefit. The representation was made by the first defenders and the second defenders. The representation was made inter alia by the first defenders in their letter of 12 August 1996 to the pursuer. The representation was wrongful, in that the pursuer was on the view of any reasonable life office and any reasonable employer at that time entitled to Disability Benefit. She was contractually entitled to Disability Benefit under the Scheme. Reference is made to Article 5 of Condescendence. The pursuer relied on the misrepresentations in deciding to send her letter of 28 August 1996 to the first defenders. But for the misrepresentation she would not have sent the letter. The defenders are therefore not entitled to rely on the letter".

The fourth plea-in-law for the pursuer was in the following terms:-

"Esto the pursuer's letter of 26 August 1996 terminated or constituted an offer to terminate the pursuer's contract of employment with the first defenders, which is denied, the defenders having by their misrepresentation induced the pursuer to deliver that letter are barred from reliance upon it".

The first defenders had the following preliminary pleas-in-law:-

"(1) The pursuer's averments being irrelevant et separatim lacking in specification, the action so far as directed against the first defenders should be dismissed.

(2) The pursuer's averments in support of her plea of personal bar being irrelevant et separatim lacking in specifiation, should not be admitted to probation".

The second defenders had preliminary pleas in the following terms:-

"(1) The pursuer having no right of action against the second defenders and no title to sue them, the second defenders are entitled to Decree of Dismissal.

(2) The pursuer's averments, so far as directed against the second defenders, being irrelevant et separatim lacking in specification, the second defenders are entitled to Decree of Dismissal".

4. When the case called before me on procedure roll counsel for the first defenders invited me to exclude from probation the passage in Article 3 of Condescendence at page 9A-C, to sustain his second plea-in-law and to repel the fourth plea-in-law for the pursuer. Counsel for the second defenders invited me to repel the first plea-in-law for the second defenders and he adopted the submissions of counsel for the first defenders. Quoad ultra I was invited by counsel for both defenders to allow a proof before answer restricted to the issue of whether the letter dated 26 August 1996 constituted an offer to terminate the pursuer's contract with the first defenders and whether the letter was accepted by the first defenders as such, as a result of which the contract was terminated shortly thereafter. In view of the first defenders' averments in Answer 2 to the effect that the pursuer gave them no indication that the letter was not a letter of resignation and that the first defenders had no reason to believe that it was not such a letter, it would be necessary for the first defenders to lead evidence about this matter. It was accepted by counsel for all parties that the construction of the letter dated 28 August 1996 was a matter for the Court and would not require any evidence. Apart from seeking to resist the motion to repel the pursuer's fourth plea-in-law, counsel for the pursuer sought a proof before answer at large.
5. Counsel for the first defenders criticised the pursuer's pleadings on the basis that there were insufficient averments to substantiate a plea of personal bar. These submissions were adopted by counsel for the second defenders. It is unnecessary for me to rehearse in detail the submissions made by counsel for the first defenders or to refer to the authorities upon which he relied because in his reply counsel for the pursuer accepted that there were insufficient averments to substantiate such a plea. However, he explained that the fourth plea-in-law was not directed to personal bar in its classic sense. Rather the plea was based upon the principle that where a party prevents or impedes the fulfilment of a condition in a contract, that party cannot found upon the failure of the other party to fulfil the condition. The passage in Article 3 of Condescendence at page 9A-C of the Closed Record to which exception had been taken by the defenders was directed to that principle rather than the principle of personal bar. Counsel for the pursuer referred to numerous authorities where this principle had been considered but I did not find these authorities to be of general assistance, depending as they did upon the particular circumstances of each case. The formulation of the principle was contained within several of the authorities or textbooks referred to by counsel for the pursuer. It is sufficient for the purposes of this Opinion to refer to the passage in the Opinion of Lord President Inglis in Paterson v McEwan's Trustees (1881) 8R 646 at page 654 where he stated:-

"It is contended that the case falls to be decided by the application of the well-known rule of law, that where a condition is prevented from being fulfilled by the party who is bound in the conditional obligation it shall be held as fulfilled, and the doctrine of potestative conditions has been largely dwelt upon in the argument. I am of the opinion that that rule of law has no application to the present case. It is quite true that if a man has it in his power to perform conditions the fulfilment of which gives rise to a binding obligation against himself, then he is not entitled to refuse so to do; and still further, if he obstructs or prevents the conditions from being fulfilled, the condition will be held in law as being fulfilled".

(6) As in the case of Paterson v McEwan's Trustees the doctrine of potestative conditions was largely dwelt upon in the argument of counsel for the pursuer and various issues were canvassed including the necessity or otherwise of establishing bad faith on the part of the defenders. It is unnecessary for me to determine such issues in this case because I am not satisfied that the doctrine of potestative conditions has any application in the present case. No case was cited to me in which the non-fulfilment of a condition or the obstruction or prevention of the condition from being fulfilled was attributable to the actions of the party obliged to fulfil the condition. The difficulty for the pursuer in the present case is that on the hypothesis that the letter dated 28 August 1996 was a letter of resignation, it was an act of the pursuer herself. Moreover there are no averments that the first defenders obstructed or prevented the pursuer from fulfilling her obligation to remain in the employment of the first defenders. If the letter is to be construed as a letter of resignation, it is clear that the pursuer did not do everything within her power to fulfil the condition of remaining in the employment of the first defenders. On the contrary she took the one course of action which had the effect of thwarting that condition, namely sending to her employers the letter of resignation. The only answer which the pursuer has in her pleadings to the first defenders' criticisms is that the refusal of disability benefit induced her to send the letter dated 28 August. The first defenders did not have any responsibility for determining the issue of the pursuer's entitlement to disability benefit. That was the sole responsibility of the second defenders and the first defenders simply communicated to the pursuer the decision of the second defenders. In these circumstances it is difficult to conceive that the first defenders can be accused of having obstructed or prevented the pursuer from fulfilling her contract of employment with them. The second defenders simply determined the pursuer's claim for benefit and subsequent appeal. Those decisions by the second defenders cannot have prevented the pursuer from fulfilling her obligation to remain in the employment of the first defenders. Counsel for the pursuer accepted that at the date of intimation of the second defenders' decision, it would have been competent for the pursuer to raise an action seeking declarator similar to the declarator in the first conclusion of this action. Had she done so, and had she been successful, she would have been entitled to benefit in terms of the Group Permanent Health Insurance Policy. Instead of taking that course of action the pursuer wrote the letter dated 28 August 1996 to the first defenders. If that letter amounts to a letter of resignation from her employment, the effect of the pursuer's action was to terminate her employment and thereby terminate her entitlement to disability benefit.

6. I have accordingly concluded that the passage in Article 3 of

Condescendence at page 9A-C should be excluded from probation and I shall

sustain the second plea-in-law for the first defenders. I shall also repel the fourth plea-in-law for the pursuer and of consent the first plea-in-law for the second defenders.

7. As far as future procedure is concerned I inquired as to whether it would be possible for me to construe the letter dated 28 August 1996 without any evidence being led. I was advised by counsel for the first defenders that, in view of the averments by him that there was no indication by the pursuer to the first defenders that the letter was not a letter of resignation and that the first defenders had no reason to believe that it was not such a letter, it would be necessary for evidence relating to those matters to be adduced by the first defenders because these averments were denied by the pursuer. The proof of these matters would be in short compass. Moreover in the absence of any averments by the pursuer that her medical condition had any bearing upon the decision to write the letter dated 28 August 1996 and more significantly in the absence of any averments by the pursuer that the first defenders knew or ought to have known that as a result of her medical condition the letter should not be treated by them as a letter of resignation, I have reached the view that the pursuer's medical condition is irrelevant to the question of construction of the letter and the action taken by the first defenders upon receipt of the letter. Only if the Court concludes that the letter was not a letter of resignation or was not treated as such by the first defenders will the pursuer's medical condition be relevant to the remaining issue of whether the second defenders reached a conclusion which no reasonable insurer could have reached on the information available before them. In all the circumstances I consider that it is appropriate to allow a proof before answer restricted to the construction of the letter and the action taken by the first defenders upon receipt of that letter.