Supreme Court confirms no recovery for non-pecuniary loss

In a recent case, Murray v Budds & Ors [2017] IESC 4, the Supreme Court reviewed the law concerning recovery of damages for non-pecuniary loss (i.e. emotional distress) for breach of contract.  The Court confirmed that a contract-breaker cannot be liable for damages for injured feelings or distress (following Addis v Gramaphone Co. Ltd [1909] AC 488). The rule is, however, subject to certain exceptions, such as where the very object of the contract is to provide peace of mind or relaxation (e.g. a contract in relation to a holiday).  The Court also confirmed that damages for distress, short of any recognised psychiatric illness, are not recoverable in tort (following Walter and another v Crossan and others [2014] IEHC 377).

In addition, the Court ruled that where a claim is framed as a professional negligence action seeking damages for negligence and breach of contract, in which the particulars of loss and damage claimed are worry and stress short of a recognised psychiatric illness, it should be treated as a personal injury action, and subject to the statutory limitation period applicable to such actions.

The Facts

The plaintiff claimed damages for breach of contract and/or professional negligence by the defendant solicitors in their provision of legal services prior to and during his criminal trial.  The defendants issued a motion seeking to dismiss the plaintiff's claim as (i) statute-barred; (ii) an abuse of process; and (iii) frivolous or vexatious. After a part hearing of the defendants' motion, the plaintiff issued a motion seeking to amend his statement of claim. 

There were two appeals before the Court of Appeal. The plaintiff appealed against an order by Charleton J. striking out the proceedings as an abuse of process because, being an action alleging professional negligence, it was launched without first ascertaining that there were reasonable grounds for so doing by obtaining appropriate expert evidence to support it.  The defendants also appealed to the Court of Appeal against an order of Clark J. where she: (a) permitted the plaintiff to amend his pleadings in order to introduce a new claim for loss and damage, as a result of his exposure to "worry and stress" from facing an imminent trial without knowing who his counsel would be; (b) declined the defendants' application to strike out the proceedings in their entirety on the basis that they were statute-barred, and (c) directed that the issue of the application of the Statute of Limitations be determined by the trial judge.

At the Court of Appeal, the defendants submitted that while Clark J., at the High Court, struck out the plaintiff's claims for breach of contract and/or professional negligence, on the basis that they constituted an abuse of process, she erred in allowing the plaintiff to amend his pleadings and by not simply striking out the entire proceedings.

The Court of Appeal allowed the defendants' appeal.  It held that the permitted claim was a claim in tort only, and that it could only therefore be a personal injury claim. The fact that contract was pleaded, as part of the original claims, was not relevant as all those claims had been struck out.  The Court held that Clark J. ought not to have permitted an amendment of the plaintiff's claim in order to introduce a personal injury claim that was clearly statute-barred. The Court also found that even if the claim was not statute-barred, damages for the alleged "worry and stress" were not recoverable, given the absence of any pleaded recognisable psychiatric illness (following Hogan J's judgment in Walter).

Given that the defendants' appeal against Clark J's order was allowed, the Court found it unnecessary to reach a concluded view on the plaintiff's appeal against Charleton J's order. However, Peart J. commented that if he had been required to reach a determination on the plaintiff's appeal, he would have allowed that appeal because, where a professional negligence action is being contemplated against a solicitor, the plaintiff's solicitor may not in every case need to obtain an independent expert opinion in order to form an opinion that the facts of the case disclose a prima facie case, and it is not irresponsible to commence proceedings.  Every case will depend on its own facts.

The Supreme Court Appeal

The Supreme Court determined that the plaintiff had raised an issue of general public importance, namely, whether a claim framed as a professional negligence action seeking damages for negligence and breach of contract in which the particulars of loss and damage claimed are "worry and stress", short of a recognised psychiatric illness, should be treated as a personal injury action subject to the statutory limitation period applicable to personal injury actions.

The plaintiff submitted that two questions arose on the determination of the Court: (1) whether the plaintiff’s claim, as amended by Clark J, constituted a claim for personal injuries; and (2) if the claim should not be treated as a personal injuries action, whether the loss and/or damage claimed by the plaintiff for worry and stress was recoverable in an action for breach of contract and/or professional negligence.

The Decision

The Supreme Court dismissed the plaintiff's appeal.  It held that the claim seeking damages in negligence for worry and stress, short of psychiatric illness, should be treated as a personal injury action, and was statute barred. The Court also agreed with Hogan J's decision in Walter, that there is no recovery in damages for "worry and stress".

The Court further held that the plaintiff could not recover damages for worry and stress in an action for breach of contract.  It was established in Addis that there is no right to damages for worry or upset as a consequence of a breach of contract, subject to a few exceptions, and Addis remains the law today. In regard to the reason for the court's restrictive approach to non-pecuniary loss, the Court referred to Mason C.J.'s comments in Baltic Shipping v Dixon [1993] 176 CLR 344.  In Baltic, Mason C.J. stated that the rule seems to be based on an apprehension that recovery of compensation for injured feelings would lead to inflated awards of damages in contract cases.  Other reasons put forward include: it would be too harsh on the defendant; mental distress is incapable of exact proof, and the risk of mental distress is voluntarily assumed by the plaintiff on entering into the contract. The Supreme Court agreed with Bingham LJ in Watts v Morrow [1991] 1 WLR 1421 that the rule is not absolute, and where the "very object of a contract is to provide pleasure, relaxation, peace of mind…damages will be awarded if the fruit of the contract is not provided or if the contrary result is procured instead."  The Court concluded that the plaintiff’s claim did not come within one of the recognised exceptions to Addis.

Comment:

This is an important case which demonstrates the courts' restrictive approach to damages for non-pecuniary loss.  It confirms that there is no stand-alone right of claim for being upset, as a result of a breach of contract or in tort. 

For further information please contact Davinia Brennan.

Date published: 28 February 2017