The High Court judgment by Mr Justice Elias raises key issues potentially affecting all university academics who carry out external paid research work.
His draft judgment illuminates the grey world of public versus private clinical consultancy income. It also highlights the "turn a blind eye" culture of universities to the activities of their top academics. Issues of academic contracts and pay, and the pressures faced by universities seeking to retain control of their intellectual capital in a free global market are also raised.
Nottingham University had claimed that Dr Fishel was in breach of contract for failing to secure the consent of the university for carrying out paid work at a number of clinics overseas while he was a full-time employee of the university. Dr Fishel had been providing in vitro fertilisation for infertile couples.
In 1991, Dr Fishel, who had built an international reputation in IVF, was appointed scientific director of Nurture, an IVF clinic set up by the university. It was designed to be a self-funding unit providing private treatment to infertile couples.
Nurture had no separate legal status from the university. Dr Fishel was scientific director but he was answerable to a board of management. Mr Justice Elias said he was not a director in the sense of a typical company director.
The management board was chaired by Malcolm Symonds, who was until 1993 head of the university's department of obstetrics and gynaecology. In 1993, Professor Symonds became dean of the medical faculty and was replaced by Grahame Johnson. The board in turn was accountable to the obstetrics and gynaecology department, the medical faculty and ultimately the university.
The university's case was aimed primarily at securing damages in respect of the breach of contract. It wanted damages for the income Dr Fishel had earned for undertaking the external IVF. It also claimed damages because Dr Fishel had introduced other Nottingham University embryologists to overseas work. Dr Fishel was paid fees from clinics abroad from which he paid the embryologists. Dr Fishel made a profit from these arrangements.
Mr Justice Elias said that it was "clear beyond doubt" that professors Symonds and Johnson were aware that Dr Fishel was doing consultancy work abroad. In fact, said Mr Justice Elias, they positively encouraged such work. Work abroad is particularly useful because United Kingdom controls on embryo experimentation are very rigorous. The judge said that some of the research carried out by Dr Fishel and his colleagues, which would benefit Nottingham University, could only be conducted overseas.
Mr Justice Elias said: "I am satisfied that Dr Fishel at all times genuinely thought that the work he was carrying out abroad was for the benefit of Nurture. There are many benefits to the university from its staff doing outside work, not least the fact that many academics are under-rewarded for their skills and may be tempted to leave the university unless they can supplement their income."
Professor Symonds admitted that he assumed Dr Fishel was being paid for the work, although he underestimated the amounts, and that other embryologists were being paid. Professor Johnson said he "rather naively" did not realise Dr Fishel was earning a private income from this work.
By 1996, Dr Fishel was earning more than any other university employee, including the vice-chancellor Sir Colin Campbell. The university thought this was inappropriately high, and it capped Dr Fishel's salary at that of a clinical professor in receipt of an A-plus merit award. This was about 25 per cent less than he had earned the year before. A few months later, in 1997, he handed in his notice and became involved in setting up his own rival IVF clinic.
Mr Justice Elias upheld the claim that Dr Fishel had breached his contract by undertaking overseas work. The judge said that, while the university regulations on this matter were sometimes ill-defined, Dr Fishel could not claim that he was not in breach of his contractual obligations because his superiors, Professors Symonds and Johnson, knew that he was doing work. His employment contract was specific on the procedures that should be followed in such cases. Nor could he claim that, because the work abroad benefited the university, it was in fact "inside" as opposed to "outside" work.
But Mr Justice Elias rejected the university's claim for damages in respect of the breach of contract. This is because it could not demonstrate any loss from Dr Fishel's work abroad. In fact, he said: "I consider that the university benefited from the work."
The judge said that he did not think that as a general principle employees are bound to tell their employers if and when they are doing outside work, paid or unpaid, in breach of contract. He said that Dr Fishel had secured the work because of his personal reputation and not because he was employed by Nottingham.
He also rejected a claim by the university that Dr Fishel owed it, as his employer, fiduciary duties. The distinguishing obligation of a fiduciary is the obligation of loyalty, classically of the sort owed by, for instance, partners in a company.
Fiduciary duties can arise out of an employment contract but an employee does not automatically owe any fiduciary obligation to the employer. Mr Justice Elias said that Dr Fishel was an employee and not a partner or involved in a joint venture with the university. In other words, Dr Fishel was under no obligation to give his employer "the benefit of every opportunity falling within the scope of its business".
But Mr Justice Elias did award damages in respect of Dr Fishel's profit from the work of other Nottingham embryologists. This was because there was a potential conflict between Dr Fishel's specific duty to the university, as scientific director of Nurture, to direct the work of the embryologists in the interests of the university, and his own financial interests in directing them in work abroad. Therefore Dr Fishel benefited by virtue of his position at the university.
Mr Justice Elias proposed that damages should reflect the profits made by Dr Fishel in respect of the other embryologists. He calculated the profit as the total sums received by him for treatment provided by the other embryologists, less the amount he paid them, perhaps including a deduction for any tax paid by him in respect of these profits.