Court of Appeal confirms that claimants must have physical injury to recover financial losses for negligence

Posted: 23/05/2016

The Court of Appeal in Greenway and others v Johnson Matthey Plc [2016] EWCA Civ 408 has recently dismissed a set of claims confirming the principle that financial losses without physical injury are not recoverable and that physiological changes do not constitute physical injury.

In 2015, the High Court tried a case brought by five claimants who were sensitised to platinum after using platinum salts during the course of their employment at the defendant employer's chemical factory. The defendant employer had admitted breach of duty and liability for the exposure but disputed the entitlement to recover damages.

As a result of the sensitisation, the claimants could no longer do any work involving contact with platinum. Their employer had been unable to redeploy them and they had all either resigned or been dismissed. The five claimants brought claims predominantly for loss of earnings as a result of their inability to continue in their employment because of the sensitisation.

Of note, it was clear that progression to an allergy had not occurred and would not occur once the claimants were removed from the source of platinum exposure. So, although they were suffering financial loss from being unable to continue in their employment, the defendants took the view that there was no physical injury which would form the basis for a claim in tort. The High Court held that the physiological changes in the form of sensitisation fell short of being classified as a physical injury and dismissed the claims.

The claimants appealed and submitted that they had suffered actionable physical injury or damage by reason of the physiological changes in their bodies. In his judgment, Sales LJ agreed entirely with the first instance judge that:  "One cannot define the actionable injury by the steps which are taken to prevent it. Those steps may result in economic loss, but that is not the same as... the injury. The correct approach is to analyse the sensitisation in terms of the physical (or physiological) harm it may be causing, not any financial loss which may be consequent upon that harm. The sensitisation is no more, and no less, than the presence of antibodies which in themselves are not harmful."

The claimants could only recover damages if they had a right of action for breach of contract in respect of pure economic loss or a right of action in tort to recover such loss.

The court found that an employer’s duty to ensure employee safety at work, whether in contract or in tort, was focused on protecting employees from physical injury not economic harm. There was no standard implied term in a contract of employment requiring protection of the employee from economic loss. The court refused to extend the duty in tort owed to employees to protect against pure economic loss on the basis that the employer/employee relationship was essentially founded in contract and the law of tort should not impose more extensive obligations.

The claimants were only entitled to nominal damages for breach of contract and could not recover their loss of earnings.

Philippa Luscombe, partner in the personal injury team at Penningtons Manches, comments: “This judgment essentially confirms the long held principle that in tort (ie claims for negligence) there is no provision for recovering financial losses if there is no physical injury. The interesting point of this case is the focus on what qualifies as a physical injury. Both the High Court and the Court of Appeal were robust in defining injury as an actual physical injury and not a physiological change, thus eliminating scope for a line of claims of this type.

“This case is also interesting as, in employers’ liability claims, we often come across people who suffer over-exposure to chemicals due to failings of their employers. This does not eliminate such claims but does mean that they must have demonstrable symptoms or apparent physical damage as a result of the exposure. As always with these cases, part of the difficulty is that the effects of negligent exposure are not always contemporaneous and can only be demonstrated later so a careful assessment needs to be made of whether a case should be considered and, if so, at what stage.”

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