Gibb v Maidstone and Tunbridge Wells NHS Trust
| Jurisdiction | England & Wales |
| Judgment Date | 28 April 2009 |
| Neutral Citation | [2009] EWHC 862 (QB) |
| Court | Queen's Bench Division |
| Docket Number | Case No: HQ09X00614 |
| Date | 28 April 2009 |
[2009] EWHC 862 (QB)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
The Honourable Mr Justice Treacy
Case No: HQ09X00614
Oliver Segal (instructed by Thompsons Solicitors) for the Claimant
Jane McNeill QC (instructed by Brachers Solicitors) for the Defendant
Hearing dates: 26 th– 30 th January 2009
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
THE HONOURABLE MR JUSTICE TREACY :
This is an action for monies owed, alternatively damages, brought by Ms Rose Gibb (“Ms Gibb”) against her former employer Maidstone and Tunbridge Wells NHS Trust (“the Trust”). The action is brought pursuant to the terms of a contract entered into by the parties agreeing terms of severance of Ms Gibb's employment on 5 th October 2007 (“the Compromise Agreement”). The issues in the case are whether the Compromise Agreement was ultra vires and therefore unenforceable and whether the Claimant has an alternative claim for damages if it was not enforceable.
Ms Gibb was appointed as Chief Executive of the Trust and as its accountable officer in November 2003. Her contract gave her an entitlement to six months notice of termination. By the date of the termination of her employment Ms Gibb's basic salary was approximately £150,000.00. She also had a pension entitlement.
The background to the matter is that in 2006 there were outbreaks of the “super bug”C.difficile at hospitals managed by the Trust. There was a significant number of deaths and widespread anger and anxiety expressed by relatives of those affected and by others. Substantial publicity had been given to the matter. The Healthcare Commission (“HCC”) investigated the outbreaks and the measures taken to control and respond to them. The HCC produced draft reports in April and July 2007. Those drafts were shared with the Trust. Towards the end of September 2007 it was known that the final report would be published on 10 th October 2007.
When published, the report's conclusions were highly critical of the leadership of the Trust. It recommended that the Trust's board must review the leadership of the Trust in the light of significant failings in order to ensure that the Trust was able to discharge its responsibilities to an acceptable standard. The report also indicated that the HCC considered the findings of its investigation to be “extremely serious” and to constitute “a significant failing on the part of the Trust which failed to protect the interests of patients”. It will be noted that the report itself post-dated the Compromise Agreement, but its conclusions were known to the Trust in mid-September, in advance of publication. The witness David Flory, called by the Defendant, himself a former CEO of an NHS Trust who has seen many HCC reports, described it as the most critical report he had read.
One of the draft reports referred to had raised issues about Ms Gibb's probity. As a result of that, the Trust commissioned a report from its legal advisors, Capsticks, to consider such allegations. On 31 st July 2007 Capsticks presented its findings to the Remuneration Committee of the Trust. The Capsticks report made no adverse finding about Ms Gibb's probity and the Remuneration Committee unanimously concluded that having regard to that report, the Trust board should not remove Ms Gibb from her duties. The Committee also concluded that the current draft of the HCC report did not give grounds for the dismissal of Ms Gibb with respect to any other matter and noted its unanimous support for Ms Gibb from the executive members of the board. The Trust had, however, left the door open to reviewing this conclusion in the event that the final draft of the HCC report recommended that there should be change in the leadership of the Trust.
The local Strategic Health Authority (“SHA”) which exercises a supervisory role in relation to the Trust was informed of the Remuneration Committee's conclusions on 2 nd August 2007. During August and September 2007 there were contacts between the Trust and the SHA. It is clear from the contemporaneous documents that the SHA, anticipating the likely conclusions of the HCC final report, was encouraging the Trust to review its leadership. By 21 st September 2007, James Lee, the non-executive Chair of the Trust, had considered the matter with fellow directors and was recording in a letter to the Chairman of the SHA “while no formal decision has yet been made, we have determined informally that the best course of action would be to encourage, or if necessary force our CEO to step down”.
The Trust sought written advice from Peter Edwards, a partner in Capsticks. Mr Edwards advised on 21 st September 2007 that the Trust should seek a negotiated settlement with Ms Gibb, but that if such a settlement could not be achieved within a reasonable time frame she should be dismissed without cause. It will be necessary to consider later in this judgment some of the considerations which Mr Edwards laid before the Trust in his advice.
Mr Edwards' advice considered three options for terminating Ms Gibb's contract and concluded with these words: “In the light of these matters, my advice is that the Trust's financial exposure in this case is likely to be in the range from about £90,000.00 to £250,000.00, subject to confirmation of her notice period and salary. My advice is that a total package settlement that equated to twelve months salary and pension contributions would probably be about the norm for this type of case.”
On or around the 25 th September 2007 Mr Glen Douglas was offered the post of Chief Executive Officer of the Trust. His appointment was to follow the termination of Ms Gibb's employment.
On 28 th September 2007 at a meeting of the Remuneration Committee it was decided that Ms Gibb's contract should be terminated for three reasons.
i) The further deterioration in the performance of the Trust.
ii) The state of the management team and the need for a different style of leadership given by a new leader.
iii) The strength of the findings of the HCC report and its recommendation that the Trust board must review its leadership.
The Committee also concluded that it was essential that Ms Gibb's contract be terminated well in advance of the HCC report, which was to be published on 10 th October 2007. The Committee decided to seek to terminate Ms Gibb's employment by way of a negotiated settlement. A draft Compromise Agreement had been prepared by Capsticks. The Trust also had advice provided by its HR Director, Terry Coode. It was decided that termination must take place in any event by 5 th October 2007.
On 1 st October 2007 Ms Gibb met the Chairman of the Trust, Mr Lee, together with the Deputy Chair, Aaron Cockell. She was told of the Trust's decisions and that such decisions were final. She was provided with a draft Compromise Agreement and told that she had 96 hours in which to agree. Ms Gibb was then placed on immediate gardening leave.
Ms Gibb consulted her Trade Union and its appointed solicitors, Russell Jones and Walker. There were discussions between the parties, leading to the executed Compromise Agreement which provided for a payment of approximately £250,000.00, representing £75,427.00 in lieu of notice and a compensation payment of £174,573.00. Amongst the terms of the agreement, Ms Gibb undertook to accept the immediate termination of her employment; not to pursue any internal grievance or bring any contractual or statutory claim against the Trust; not to make any statement potentially damaging to the Trust; and not to disclose the substance of the Compromise Agreement.
On 11 th October 2007, Mr Glen Douglas, who had taken over the role of CEO of the Trust, received a letter from David Flory, Director for General NHS Finance, Performance and Operations, which instructed Mr Douglas as the accountable officer of the Trust to withhold the severance payment to Rose Gibb until further notice.
Subsequently, in 2008, the Department authorised the Trust to make a payment to Ms Gibb in respect of her six month notice period and the sum of approximately £75,000.00 was then paid to Ms Gibb without prejudice to the remaining issues in this case.
The immediate issue then relates to the compensation payment element of approximately £175,000.00. The Trust asserts that it is not obliged to pay that sum. It says that the agreement to make the compensation payment was irrationally generous and fell outside the powers of the Trust. The Claimant asserts that she is entitled to that sum under the terms of the Compromise Agreement. She further argues that if the compensation payment was ultra vires, she is entitled to an equitable remedy by reason of which this court should exercise its jurisdiction to award equitable damages. The existence of any power so to do in the circumstances which arise in this case is strongly challenged by the Defendant.
A helpful starting point in considering whether the compensation payment was outside the Trust's powers is to consider the source of the Trust's powers. Section 26 of the National Health Service Act 2006 provides
“An NHS Trust must exercise its functions effectively, efficiently and economically.”
Paragraph 14 (2)(b) of the Act gives an NHS Trust specific power to enter into contracts. Paragraph 26 (1) of Schedule 4 provides that a Trust
“may for or in respect of such of its employees as it may determine, make arrangements for providing pensions, allowances or gratuities.”
Paragraph 26 (3) provides
“The reference in sub...
To continue reading
Request your trial
-
Charles Terence Estates Ltd v Cornwall Council
...the Court of Appeal held that it had a very steep hill to climb, and that the judge was wrong to think it had done so: Gibb v Maidstone & Tunbridge Wells NHS Trust [2010] EWCA Civ 678, [7], per Laws LJ, drawing on Simon Brown LJ's judgment in Newbold v Leicestershire County Council [1999] I......
-
Gibb v Maidstone and Tunbridge Wells NHS Trust
...Arden LJ (on the appellant's remaining points) against the judgment of Treacy J given in the Queen's Bench Division on 28 April 2009 ( [2009] EWHC QB 862) by which he dismissed the appellant's claim to enforce the terms of a severance agreement (“the compromise agreement”) and rejected her ......
-
Charles Terence Estates Ltd v Cornwall Council
...of a price. It is surprising to see a local authority contending for that. It is something that courts are alert to avoid. In Gibb v Maidstone & Tunbridge NHS Trust [2010] EWCA Civ 678, this Court was concerned with an attempt by the Trust to avoid liability under a severance agreement on t......
-
R (Shoesmith) v Ofsted and Others
...which is what happened to the appellant, remains an accepted expedient of public administration in this country. ( Gibb v Maidstone & Tunbridge Wells NHS Trust [2010] EWCA Civ 678, (at paragraph 42)" 135 In my view, it is also what happened in the present case. Those involved in areas such......