Making the bullies pay

Much fanfare accompanied the award in Green v DB Group Services (UK) Limited (2006) IRLR 764 of £828,000 to employee Helen Green, who had suffered a nervous breakdown and a relapse a year later, both brought about by the bullying behaviour of her colleagues.

Even before the world started heading for recession, demands upon partners in professional practices have been increasing year on year. That trend shows no sign of easing. Inevitably there will be partners who take on too much or have too much imposed upon them, and who then succumb to the strain. There is a fine line between a tough commercial environment and an overbearing and bullying regime.

But where does that line lie as a matter of law, and what are the duties and liabilities of partners who have a hand in pushing their co-partners too far? Are there partnership duties equivalent to those that led to the award to employee Green? Or are such considerations redundant in the partnership arena, given the duty of good faith inherent in all partnerships?

Bad faith

Few would doubt that bullying of one sort or another does take place between partners in some firms, even in professional partnerships, whether by way of autocratic rule, offensive office banter, strategic manoeuvring, ‘creative tension’ – a euphemism for the ‘eat what you kill or don’t eat and leave the firm’ system of inspiring partner performance – or in some other way.

In Mullins v Laughton & ors (2003), Mr Justice Neuberger made a finding of bad faith against a group of partners who had sprung a meeting on an unsuspecting partner at which they attempted to persuade him to resign and then sought his acceptance of various adverse financial consequences.

Neuberger J concluded: “Bullying, seeking to trap and intentionally taking by surprise with a view to shock, in hope of obtaining an advantage for the co-partners and a disadvantage for the partner concerned, must, in my view, amount to a breach of good faith.”

Neuberger J, having taken a “dim view” of this and other subsequent conduct, giving rise to grounds for dissolution, did not order the winding up of the partnership, but rather ordered that the partner should be bought out by his co-partners at a price no worse than that which would be achieved for him on a sale of the business in a winding-up, on the authority of Syers v Syers (1876).

As well as a partnership account, the claimant Mullins had sought damages for loss of reputation, career disruption and being deprived of an opportunity to obtain employment elsewhere before terminating his relationship with the partnership, claims he advanced on the basis of the findings in Mahmud v Bank of Credit and Commerce International SA (1998).

In that case the House of Lords held that there was an implied obligation on an employer to the effect that it would not, without reasonable and proper cause, conduct itself in a manner likely to destroy or seriously damage the relationship of confidence and trust between employer and employee, and that where the employer was in breach of this obligation and as a result the employee’s attractiveness to future employees is diminished, damages could be recoverable.

Reflecting on this case in Mullins, Mr Justice Neuberger said: “I can see no reason why a former partner who is treated by some or all of his co-partners in a manner that is contrary to an express and/or implied duty of good faith should not be similarly entitled to recover damages of [this] sort … [E]xpress or implied terms in a deed of partnership are contractually binding as between partners.

“In my judgement, it would be a most unfortunate state of affairs, and very unfair on a person in the position of Mr Mullins, if the law could afford him no redress in respect of damage which he could establish that he suffered as a result of the way in which he was treated on and after 28 June 2002 – at least in so far as that treatment was plainly in conflict with the express or implied duty of his partners to act towards him in good faith.

“I therefore conclude that the account should be carried out, taking into account the loss of reputation and other damage, if any, which Mr Mullins can establish that he has suffered as a result of the breach of good faith on the part of his co-partners.”

Limited-liability partnerships

In the Green case, Green’s award was made up for the most part as to £25,000 in respect of her disadvantage on the labour market, £128,000 for past loss of earnings and around £640,000 for future loss of earnings. One could well imagine similar heads of loss, and similar amounts, arising in a partnership case.

But what is the position in an limited-liability partnership (LLP), where there is no statutory and may be no express duty of good faith between members?Some writers take the view that in a professional practice there is likely to be an implied duty of good faith between the members. Even without an implied duty of good faith as a route to a damages award, there would seem to be no reason why the usual common law duties to take reasonable steps to protect others from foreseeable harm should not be applied to all in the workplace irrespective of the business relationship between the parties.

Damages for financial loss and psychiatric injury (amongst other heads of loss) are frequently awarded in situations where there is no pre-existing relationship of any kind between the parties.

In addition, partners (and LLP members) whose colleagues make undue demands upon them in a manner akin to bullying may well have remedies under the Protection from Harassment Act 1997. That act was relied upon by both Green and also the successful claimant in Majrowski v Guy’s and Thomas’ NHS Trust (2006).

Section 1 (1) of the Protection from Harassment Act provides that a person must not pursue a course of conduct (a) which amounts to harassment of another, and (b) which he knows or ought to know amounts to harassment of the other.

Section 1 (2) provides that for the purposes of the section, the person whose course of conduct is in question ought to know that it amounts to or involves harassment of another if a reasonable person in possession of the same information would think the course of conduct amounted to or involved harassment of the other.

By section 3, a breach of section 1 may be the subject of a claim in civil proceedings, and on such a claim “… damages may be awarded for (among other things) any anxiety caused by the harassment and any financial loss resulting from the harassment”.

Section 7 provides that references to harassing a person include alarming the person or causing the person distress, and that a ‘course of conduct’ must involve in the case of conduct in relation to a single person conduct on at least two occasions in relation to that person, and that conduct includes speech.

The reader will find it easy to imagine partnership scenarios that would fall within the ambit of the above provisions of the act.

Peter Garry is head of the partnerships and professional practices group at Cripps Harries Hall