Breach of contract

Case 7: The facts

Ian Holladay worked as a nurse on the night shift. The hospital was concerned at the disappearance of certain drugs and, following a stock check, decided to call the police. Holladay and another nurse were arrested, held in custody but eventually released without charge.

Holladay was suspended and, in the event, never returned to work, having suffered a psychiatric injury as the result of his treatment.

He claimed damages from the hospital on the basis that the implied term of mutual trust and confidence had been breached. The hospital had been aware at the time when the police were called that the tiny amount of drugs found on his person were legitimately there for work reasons.

The ruling

The Court of Appeal ruled that it was the fact that the drugs were on Holladay's person that led to his arrest. Therefore the arrest was caused by the employer's breach of duty to inform the police about the real reasons for the presence of the drugs.

The judges went on to rule that the employer must have been able to foresee that the arrest in front of patients and colleagues together with a period of incarceration could cause psychiatric ill health.

Holladay v East Kent Hospitals NHS Trust Case No: A2/2003/0659