An Appeal Court ruling in Vahidi leaves mediation as the preferred process for stress at work claims

The limits of liability for stress at work have been under debate throughout the 1990s. A series of reports led to the 1995 case of Walker v Northumberland CC, which awarded damages against an employer for stress-induced psychiatric illness.

Many cases were reportedly settled in subsequent years in the light of Walker. Then in two multiple appeals, the Court of Appeal laid down authoritative principles in such cases to encourage settlement. In 2002, in Hatton v Sutherland, Lord Justice Hale set out 16 factors intended as a comprehensive guide to liability, which was later approved this year in Hartman v South Essex MH & CC NHS Trust.

These broadly establish that: ordinary principles of employer’s liability apply to such claims; psychiatric harm must have been reasonably foreseeable; the same test applies to every type of employment; breach of duty will be found only against an employer who fails to take reasonable identifiable steps that are likely to do some good and not where the only alternative is demotion or dismissal; and apportionment between differing causes of stress, including pre-existing vulnerability, is appropriate.

Most recently, in Vahidi, the Court of Appeal did not make findings on causation, although if it had found breach of duty it was dubious whether compliance would have averted the problem. The striking paragraph to those interested in monitoring the courts’ views on mediation is paragraph 27: “One shudders to think of the costs of this appeal and of the trial, which apparently took as long as nine days. As the courts have settled many of the principles in stress at work cases, litigants really should mediate cases such as the present. Of course, mediation before trial is infinitely preferable to mediation before appeal. But it is a great pity that neither form of mediation has taken place in this case, or if it has, that it has not produced a result.”

This judgment means that single lord justices considering permission to appeal in stress cases will normally recommend mediation through the Court of Appeal Mediation Scheme. Furthermore, the court clearly feels mediation before trial is infinitely preferable in such cases. District judges nationwide need note this new piece of judicial policy-making, and case management conferences can perhaps be expected to take a similar course.

Judges have begun to realise that success in a mediation is not simply about settlement. There is a high settlement rate in mediations of between 70 to 80 per cent, and higher in some sectors such as personal injury. If a case does not settle it may do as a result of mediation within days or weeks. However, even if it still proceeds to trial, issues will have been clarified and tested with the help of a neutral and the dispute will consequently be in a more robust and tested state of readiness. Cost sanctions remain to cope with resistance to using mediation by those unused to the benefits of what is essentially a confidential, risk-free process.

In 2004, Lord Justice Dyson in Halsey v Milton Keynes NHS Trust reminded the legal profession that a party which ignores a judicial recommendation to mediate could face costs sanctions. “All members of the legal profession who conduct litigation should now routinely consider with their clients whether their disputes are suitable for ADR,” he stated.

The Court of Appeal in Vahidi has declared that stress at work cases are generically suitable for alternative dispute resolution, which in this context undoubtedly means mediation.

Tony Allen, director Cedr