A2/2002/0187/0189
Neutral Citation Number: [2002] EWCA Civ 1659         
IN THE SUPREME COURT OF JUDICATURE 
IN THE COURT OF APPEAL (CIVIL DIVISION) 
ON APPEAL FROM THE HIGH COURT
QUEEN'S BENCH DIVISION 
(HIS HONOUR JUDGE RICH QC)
Royal Courts of Justice 
Strand 
London, WC2 

Tuesday, 5th November 2002
 
B E F O R E:

LORD JUSTICE PETER GIBSON 
LADY JUSTICE HALE 
LORD JUSTICE KEENE 
 
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ANDREW DAVID WALTON
Claimant/Respondent 
‑v‑
 
(1) AIRTOURS PLC
Defendant 
(2) SUNLIFE ASSURANCE COMPANY OF CANADA
 
Part 20 Defendant/Appellant 
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MR JOHN BELLAMY (instructed by Penningtons, Hampshire RG21 7QY) appeared on behalf of the Appellant
MS RUTH DOWNING (instructed by AJ Hows & Associates, Harlington, Middlesex UB3 5BG)  appeared on behalf of the Respondent
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J U D G M E N T
5th, Tuesday November 2002 
1.	LORD JUSTICE PETER GIBSON:  The Part 20 defendants, Sun Life of Canada Assurance Company ("Sun Life"), appeal with the permission of His Honour Judge Rich QC, sitting as a Deputy High Court Judge, from the order made by that judge on 16th January 2002, whereby he gave judgment for the claimant, Andrew Walton, against the defendant, Airtours Plc ("Airtours").  That permission was limited to a point of construction of wording in a permanent health insurance policy ("the Policy") effected by Airtours with Sun Life as insurers.  Mr Walton appealed with the permission of Latham LJ from the costs order of the judge, whereby he did not give the successful claimant 100% of his costs but allowed only 90%.  However, the appeal on costs was abandoned in the course of the hearing and I say no more about it.  On this appeal only Mr Walton and Sun Life appear and are represented.  Airtours has played no part in the appeal.
2.	The facts underlying the dispute can be summarised in this way.  Mr Walton was born on 1st April 1949.  He was employed by Airtours as an airline pilot.  He became ill with chronic fatigue syndrome and stopped work on 21st September 1995.  He did not return to work again.  As an employee he was a member within the meaning of that term in the Policy and benefit was payable in respect of him in accordance with the conditions of the Policy.  Various benefits are expressed to be payable under the Policy to Airtours.  Full benefit, as defined in the Policy, is payable in respect of an incapacitated member until whichever of four specified events first occurs.  Two of those events are cessation of employment as an employee and cessation of incapacity.  The definition on incapacity reads:
"(a)		  in relation to a Member who is a flight deck ... employee, a condition whereby that Member is totally unable by reason of injury or illness to follow the Member's own occupation and is not following any other. If Incapacity shall have persisted for 24 months Incapacity shall be deemed to continue only if the Member is unable to follow any occupation." 
3.	Mr Walton's terms and conditions of employment with Airtours refer to the Pilot's Procedures Manual.  This contained obligations by Airtours to provide insured benefits as set out in the manual.  In it he was told that all pilots are covered by the prolonged disability insurance provisions of Airtours' pension scheme; that in the event of a pilot being totally unable, by reason of illness or injury, to follow his normal occupation for a continuous period of 26 weeks, he would be entitled to payment of his salary; and that for the following 18 months the insurance would provide an income of 75% of his salary.  The manual continues:
"After this total period of 2 years, the benefits (compounded by 5% annually) will only continue to be paid if the employee is unable to follow ANY occupation."
It can at once be seen that the terms of employment differ from the terms of the Policy.  For example, there is no disentitling condition in the first two years if the pilot is following another occupation.  But the phrase "is unable to follow ANY occupation"  is common to both.
4.	   Mr Walton was paid full benefits from September 1995 and on an ex gratia basis until 31st December 1997.  At the request of Sun Life he was examined by a consultant neurologist, Dr Andrew Bowden, on 9th October 1997.  Dr Bowden reported to Sun Life that Mr Walton was "clearly not unfit for any type of work" and "would cope easily both physically and mentally with less demanding jobs". In the light of that report, Sun Life on 10th December 1997 gave notice that payment of benefits would cease on 31st December 1997.  On 11th December 1997 Airtours wrote to inform Mr Walton that his employment would cease with effect from 31st December 1997.  
5.	Mr Walton commenced proceedings in the Employment Tribunal against Airtours as well as in the Queen's Bench Division.  He claimed by the latter proceedings that Airtours wrongly terminated his contract of employment and caused the cessation of payment of benefits under the Policy, alternatively had ceased to make payments in sums equivalent to benefits payable under the Policy.  He claimed a declaration that he was entitled to payments under the Policy, by reason that he was unable to follow any occupation, and damages equivalent to the benefits payable under the Policy until such time as he was able to pursue an occupation.  
6.	Airtours denied Mr Walton's claim.  By a third party notice Airtours claimed an indemnity from Sun Life.  Sun Life pleaded by its Part 20 defence that Mr Walton had been able to follow an occupation since 31st December 1997 and had therefore not been incapacitated within the meaning of the Policy.  
7.	The action was tried by the judge with oral evidence, both factual evidence from Mr Walton and medical evidence from three medical experts.  The judge noted that it was accepted that (i) if Mr Walton was still suffering from incapacities Airtours had no right to terminate the contract of employment with the effect of bringing his entitlement to an end; (ii) the question whether Mr Walton's illness did amount to incapacity was a matter for the court's determination; and (iii) if it was incapacity, Airtours was in breach of the contract of employment and liable in damages for the benefit that should have been paid.  The judge thought it clear that from the date when Mr Walton ceased to be an employee Sun Life was not liable on the contract of insurance.  He said that if he decided that Sun Life's determination that Mr Walton was not entitled to benefit was wrong, Airtours could recover from Sun Life the amount which Airtours had to pay its employee, Mr Walton, but, if he found that the incapacity continued, Sun Life would be bound to indemnify Airtours for the sum for which it was liable to Mr Walton in damages.  It was agreed that Mr Walton's loss up to that time was £153,414.98 and that Sun Life would undertake to make further payments as if Mr Walton had remained a member if the judge found for him.
8.	The judge referred first to the evidence which he received from the medical experts.  There were four such experts for Mr Walton, Professor Wesseley (a consultant psychiatrist who is director of the Chronic Fatigue Syndrome Research Unit at Kings College Hospital) gave written and oral evidence; Dr Van den Broek (a consultant psychologist) gave written evidence; for Sun Life Professor Neary (Professor of Neurology at the University of Manchester) and Dr Andrew Bowden (a consultant neurologist) gave written and oral evidence.  Unfortunately, for technical reasons connected with the court's recording equipment, no transcript of the oral evidence of Professor Wesseley, Professor Neary and Dr Bowden is available.  Nor have any notes of that evidence been made available to the court.  
9.	What the judge said of the oral evidence was this (I read from internal page seven of the judgment: 
"In cross‑examination, however, Professor Neary made clear that any work would have to be introduced in a structured way and on a part‑time basis.  Both elements of the qualification are, as I understand it, agreed by both these experts.  [That is to say Professor Wesseley as well as Professor Neary.]  Dr Bowden also accepted that even in 1997 when he examined the claimant.  It would have been unrealistic to expect him suddenly to return to full‑time work.  He added that: 
	`Any attempt to return to work should be gradual, preceded by rehabilitation, and  accompanied by a programme of support.'" 
This led the judge to make this important finding: 
"I find that the claimant was at that date medically fit to undertake light sedentary work, but on a part‑time basis only, and I have come to the conclusion on the balance of probability that in ordinary that the claimant should be able to follow an occupation involving such work it would be necessary that he should have a programme of rehabilitation involving psychiatric support and the help of his employer.  This I call structured support." 
10.	The judge next referred to Dr Van den Broek's written evidence, to the effect that some types of work would be too menial for Mr Walton to do because it would be psychologically damaging to his self‑esteem and so render him incapable of following an occupation involving such work.  The judge rejected that in the light of Mr Walton's own oral evidence.  Mr Walton said that he denied that he would reject work on the ground that it was too menial, but he did not feel able to undertake employment because he did not know how he would feel from day‑to‑day.  He referred to the fact that during his illness he had taught himself the basic computer skills.  The judge then said this: 
"Thus, whilst accepting that there is a difference between being able to perform a particular task and being fit to follow an occupation involving performance of such task, and that the test of incapacity under the policy is rather by reference to the latter than to the former, I have concluded that the claimant was at the relevant date capable of following an occupation involving light sedentary work, provided that he was not required, at least initially, to work on more than a part‑time basis and that the initiation was appropriately supported.  I do not have evidence upon which I can define "part time" more precisely, but by this I mean less than a full working day, possibly less than a full working [week], and clearly a wholly different level of commitment than that of a full‑time air pilot.  The essence of the qualification, however, is that the introduction to such work would need to be what the experts have called structured."
11.	The judge then considered the wording of the Policy.  He rejected a submission for Mr Walton that an ability to follow some menial occupation was insufficient to bring this airline pilot's entitlement to benefit to an end and that the reference to "any occupation" was intended to be any occupation without reference to choice by the member or comparability with his previous employment.  He accepted that "following an occupation" meant something more than undertaking a short‑term job and that there must be a commercially undertaken occupation, that any course of employment with some reasonable expectation of continuity would satisfy the requirement and that it need not be full term.
12.	The judge noted that Miss Downing, for Mr Walton, in her final submissions, focused for the first time on the meaning of the word "unable".  She relied on the fact that although Mr Walton was fit for some form of occupation of a sedentary nature, he was, on the evidence, unable to follow such occupation without structured support.  The judge commented that no support had been offered Mr Walton.  The judge referred to Professor Wesseley's strongly expressed view that it was little short of scandalous that Mr Walton had not been referred for some form of psychological rehabilitation, such as cognitive behaviour therapy, and said that that really should be offered him.  The judge said that Mr Walton remained unable to follow such occupation for which he would otherwise be fit.  He accordingly held that Mr Walton was entitled to succeed in his claim.  He added that if, as he hoped, Sun Life made structured support available to Mr Walton, he would not be unable to follow an occupation for which, subject to such support, he had been agreed to be fit and that benefit would cease to be payable upon cessation of the incapacity, even though the income from any alternative occupation was less than the benefit he had been receiving.  The judge, therefore, entered judgment for the claimant in the agreed sum upon Sunlife's undertaking to make payments as if the claimant remained a member.
13.	Sunlife's appeal is limited, according to the terms of the judge's order, to the question of the true construction of the term "incapacity"  in the Policy.  However, as Miss Downing pointed out in her skeleton argument and as Mr Jonathan Bellamy for Sunlife readily accepted, that is not strictly correct as Mr Walton was not a party to that policy.  His entitlement was to benefits from Airtours in accordance with the manual and the question raised by this appeal is as to the true construction of the phrase in the manual "is unable to follow ANY occupation".
14.	Mr Bellamy pointed to two findings of fact made by the judge, (i) that Mr Walton in 1997 when examined by Dr Bowden was medically fit to undertake light sedentary work on a part‑time basis only, and (ii) that the term "occupation" was satisfied by part‑time work.  He submitted that those findings supported the conclusion that Mr Walton was able to start an occupation.  He argued that the judge erred in construing "to follow ANY occupation"  as connoting to continue an occupation which had been started.  He argued that it was irrelevant to the assessment of the employee at the end of the two‑year period that he needed structured support to continue in an occupation which he could start.  He said that the judge's construction gave rise to uncertainties as to how long the employee had to be able to work before being able to follow an occupation.  He submitted that the judge's finding that it was necessary for Mr Walton to have structured support was not relevant, therefore, to the proper determination of the issue before the court.
15.	I cannot accept any of these arguments.  The material wording of the manual must be read in a commonsense practical way, as indeed I think is common ground.  The relevant inability must be assessed realistically.  Mr Bellamy accepted that the employee, to follow an occupation, must be able to do more than a minor part of an occupation and must be able to undertake more than a short‑term job.  He gave as an example of such a job one week of temporary work.  He also accepted that on his submission he was equating "to follow ANY occupation" with to start any occupation.  To my mind that is not the natural meaning to be given to the relevant phrase.  "To follow ANY occupation" naturally connotes to be engaged in regular work, not temporarily but for a substantial or indefinite period.  "To follow ANY occupation" also, to my mind, plainly implies an element of continuity.  Further, given that the purpose behind the relevant provision of the manual is to provide an entitlement to income to an ex‑employee who cannot earn income by working, it makes little commercial sense to treat the condition for the payment of benefit as not being satisfied if the person in question can only start a job for a few days but thereafter cannot continue to earn income.  It is scarcely conceivable that such an unfair and insensitively harsh term in respect of an employee who has suffered from serious illness, as is suggested by Mr Bellamy, would form part of any modern contract of employment. 
16.	In any event, Mr Bellamy's submission, drawing a distinction between being able to commence work and being able to continue work, cannot avail him on the facts found by the judge.  The crucial finding is not that Mr Walton was medically fit to undertake light sedentary work on a part‑time basis, the adverb "medically"  showing that the judge was treating such fitness as only qualifying.  It is the finding in the remainder of the sentence which I have already cited that, in order that the claimant should be able to follow an occupation involving such work, it would be necessary that he should have a programme of rehabilitation, including psychiatric support and the help of his employer.  The judge, thus, was finding that Mr Walton could not follow an occupation at all without such support.  But the judge had immediately before that set out the medical evidence which led him to that conclusion, and it included Professor Neary's view, agreed by Professor Wesseley, that any work would have to be introduced ‑‑ and I stress introduced ‑‑ in a structured way and Dr Bowden's view that any attempt to return to work should be preceded by rehabilitation and accompanied by a programme of support.  Any doubt on this point, though I have difficulty in seeing how there could be doubt, is removed by the judge's conclusion that Mr Wesseley was capable of following an occupation, including light sedentary work, provided that the introduction was appropriately supported and the judge's further finding that Mr Walton's introduction to work would need to be structured.  It is therefore apparent that the judge was saying that Mr Walton could not start work without the structured support.  Mr Bellamy very fairly accepted that if that was this court's view his submissions could not be maintained.
17.	For these reasons, I reach the clear conclusion that the judge's decision cannot be impugned.  We have not found it necessary in the circumstances to call on Miss Downing, and we have not heard argument from her on the respondent's notice.  
18.	I would dismiss this appeal. 
19.	LADY JUSTICE HALE:  I agree. 
20.	LORD JUSTICE KEENE:  I also agree.

Order: Appeal dismissed.  Sunlife Assurance of Canada will pay 75% of the costs of the appeal, to be assessed on a detailed basis if not agreed. The   stay on the £10,053,000 award, which has never been paid, be lifted with interest at the judgment rate from the date of the judgment.   
 (Order does not form part of approved judgment)