Scottish Sheriff Court Decisions

A5319/08

 

JUDGMENT

OF

SHERIFF PRINCIPAL

JAMES A TAYLOR

in the cause

David Mulhern

APPELLANT/PURSUER

against

 

Scottish Police Services Authority

RESPONDENTS/DEFENDERS

                                                                        

 

 

 

GLASGOW, 9 January 2009.

 

The Sheriff Principal, having resumed consideration of the cause, Allows the appeal; Recalls the interim interdict granted in terms of the interlocutor dated 5 December 2008 and varied on 9 December 2008 and Recalls the interlocutor of 16 December 2008; Reserves the question of expenses.

 

 

 

 

NOTE:-

 

[1] The respondent and pursuer (hereinafter "the pursuer") is chief executive of the appellants and defenders (hereinafter "the defenders"). He was appointed such by letter dated 22 December 2006 (6/1 of process) from the Scottish Executive Justice Department and his acceptance thereof of even date. The pursuer raised proceedings craving an interdict against the defenders "from holding a purported Disciplinary Hearing on 5 December 2008 or from taking any other purported disciplinary action against the pursuer in respect of his position as chief executive of the Scottish Police Services Authority". Interim interdict was granted on the warrant by interlocutor dated 5 December 2008. The defenders moved for the recall of the interim interdict which motion was refused. The basis for the refusal was, put shortly, that the pursuer was a holder of public office and not an employee of the defenders. Accordingly the defenders were committing a legal wrong by seeking to bring disciplinary proceedings against an individual who is not one of their employees.

 

[2] It was accepted by Mr Truscott QC, counsel for the defenders, that the issue before me was whether the learned sheriff had erred in law in coming to his decision. It was accepted that I was not re-hearing the motion for interim interdict. The factors relied upon by the learned sheriff in coming to his decision are set out by him in the Note to his interlocutor. At page 10 he states:-

 

"It is sufficient for me to say that having regard to the terms of (1) the Act and in particular the wording of Schedules 1 and 2, (2) the lack of terminology in the document sent to the pursuer suggestive of the creation of a contract of employment, (3) the non-existence of a written contract of employment, and the distinct possibility as a result that the person first appointed to be chief executive of this organisation was not intended to be an employee of it, the pursuer has established a prima facie case, and has shown that he has reasonable prospects of establishing a right to interdict the defenders from bringing disciplinary proceedings against him as an employee, on the basis that he is not. The balance of convenience clearly favours him, since the defenders are intent on proceeding immediately with what may not be a lawful proceeding, and it is unclear whether the pursuer has any other remedy at the moment."

 

[3] It was submitted by Mr Truscott that the terms of Schedule 1 to the Police, Public Order and Criminal Justice (Scotland) Act 2006 (hereinafter "the Act") pointed to the pursuer being an employee of the defenders and not a holder of a public office. Paragraphs 3 to 8 to Schedule 1 of the Act deal with membership of the defenders. Under the head note "Tenure", paragraph 5(1) is in the following terms:-

"Subject to this paragraph, each member holds and vacates office on such terms and conditions, and for such period, as the Scottish Ministers may determine."

 

Paragraph 5(7) also refers to a member holding office. According to the head note paragraph 6 deals with "Removal from Office" of members. Paragraph 6(1) provides:-

 

"The Scottish Ministers may remove a person from office as a member of the Authority if they consider that any of the grounds mentioned in sub-paragraph (2) is satisfied. "

 

Paragraph 8(3) states:-

 

"The reference in sub-paragraph (2) to pensions, allowances and gratuities includes pensions, allowances and gratuities by way of compensation for loss of office" (my emphasis).

 

A member of the defenders is thus very likely to be a holder of office.

 

[4] The schedule then goes on to deal with the chief executive. Paragraph 9 of Schedule 1 to the Act provides that the defenders are to have a chief executive who "must not be a member of the Authority". That paragraph goes on to provide that the first appointment of the chief executive is to be made by the Scottish Ministers (paragraph 9(2)) on such terms and conditions as the Scottish Ministers may determine (paragraph 9(3)). But perhaps most indicative of the status of the chief executive is paragraph 9(8) which falls to be contrasted with paragraph 8(3) supra. Paragraph 9(8) is in the following terms:-

 

"The reference in sub-paragraph (7) to pensions, allowances and gratuities includes pensions, allowances and gratuities by way of compensation for loss of employment" (my emphasis).

 

Thus, in contrast to a member of the defenders who upon ceasing to be a member can claim compensation for loss of office, the chief executive upon ceasing to be the chief executive can claim compensation for loss of employment. This seems to be a strong pointer to the chief executive being an employee. Paragraph 10 of Schedule 1 to the Act is under the head note "Staff of the Authority". Paragraph 10(1) provides that the defenders "may appoint other employees" (my emphasis). Given the structure of the Schedule the most likely meaning of that expression is that the defenders can appoint employees other than the chief executive. The chief executive is thus deemed to be an employee.

 

[5] Paragraph 11 goes on to deal with the remuneration and pensions of staff but specifically excludes the chief executive from the provisions of the paragraph. That is probably because the position of the chief executive in this regard was determined by paragraph 9. Paragraph 11(6) is of interest as it is the equivalent of paragraphs 8(3) for members and 9(8) for the chief executive. Paragraph 11(6) provides:-

 

"The reference in sub-paragraph (5) to pensions, allowance and gratuities includes pensions, allowances and gratuities by way of compensation for loss of employment or, as the case may be, loss of office" (my emphasis).

 

It is in my opinion significant that compensation for loss of office is a possibility for members of the defenders and for members of staff of the defenders. There is no such provision for the chief executive. He or she is only entitled to compensation for loss of employment.

 

[6] Thus in my opinion the terms of the Schedule to the Act point quite strongly towards the pursuer being an employee rather than a holder of public office. In his Note the learned sheriff contrasts the position of the director general of the defenders with that of the chief executive. He refers to there being considerable force in the submission that there is a "wealth of detail" in Schedule 2 with regard to the terms of engagement of the director general compared to what is said in Schedule 1 regarding the appointment of the chief executive. While it may be true that there is more said with regard to the position of the director general I am not sure it in any way assists one in coming to a view as to the status of the chief executive. It is clear from the terms of Schedule 2 that the director general will be an office holder. I refer to the terms of paragraph 1(2) - (5). However, that is of little assistance as the director general must be a police officer. I thus differ from the view of the learned sheriff who considered that the Schedules to the Act could be preyed in aid by the pursuer to establish that he was the holder of public office. Rather, they can be preyed in aid by the defenders to establish an employment relationship.

 

[7] Mr Truscott also took issue with the learned sheriff having concluded that there was a lack of terminology in the documents sent to the pursuer suggestive of the creation of a contract of employment. He conceded that there was no written contract of employment but submitted that there was a clear inference to be drawn from the documents and the circumstances which should have led the learned sheriff to recall the interim interdict. For example in the letter of 22 December 2006 appointing the pursuer as chief executive (6/1 of process) the second paragraph is in the following terms:-

 

"You have indicated your intention to resign from the police service in due course, but until then you will remain on secondment from Central Scotland Police to the Scottish Executive. When you become an employee of the SPSA you will move on to SPSA terms and conditions of service."

 

The pursuer accepted the appointment by signing the enclosed terms and conditions of service of even date with the letter. Thus it would appear that the parties anticipated the relationship would eventually be that of employee and employer. One must then look to the other documents sent to the pursuer to ascertain if this intention was ever departed from and by whom.

 

[8] Much would appear to have been made by the pursuer of the terms and conditions for appointment as chief executive of the defenders which terms and conditions were enclosed with the letter of 22 December 2006. Under the heading "Performance Appraisal" it is said:-

 

"Your appointment could be subject to termination by the Minister if your performance is assessed as unsatisfactory."

 

This, it was said by Mr Hennessy, Solicitor-Advocate for the pursuer, pointed to the pursuer being a holder of office. One can see the genesis of that submission. However it has to be noted that the provision is not limiting. It also has to be viewed in context. When the letter of 22 December 2006 was sent and the pursuer accepted appointment as chief executive of the defenders of even date, the defenders did not exist. It was not anticipated that the defenders would come into existence until 1 April 2007. The pursuer was, until the defenders came into being, on secondment to the Scottish Executive from Central Scotland Police Force. Thus, for at least three months, the Scottish Executive would require some means of terminating the appointment should that be appropriate. That may have been in the contemplation of the defenders when the foregoing provision was included in the terms and conditions sent to the pursuer.

 

[9] The terms and conditions must also be viewed against the background of the parties' intention that the pursuer would not be an employee of the defenders until he had attained 30 years service as a police officer. When continuing to be a police officer it was accepted by both parties that he would be a holder of office. Thus perhaps during the period when the pursuer continued to hold office as a policeman, albeit on secondment to the defenders, some provision might be desirable for bringing his appointment as chief executive of the defenders to an end with the pursuer then returning to being an officer of Central Scotland Police Force. It is clear from the terms of a letter dated 7 February 2007 from the Scottish Executive to the Clerk to the Joint Board of Central Scotland Police Force (6/6 of process) that such was considered a possibility by the Scottish Executive. The author of the letter states:-

 

"If for any reason David ceases to be the Chief Executive of SPSA before 12 March 2008 (the date upon which the pursuer would have acquired 30 years police service) and there happened to be no suitable portfolio for him to take up at Central Scotland Police, SPSA would of course meet any salary or other costs which arose during the outstanding period of the secondment."

 

In the event the pursuer completed 30 years of service with Central Scotland Police Force on 12 March 2008 at which time his secondment from Central Scotland Police Force came to an end (6/14 of process is the pursuer's P45). From 13 March 2008 he was no longer an officer of Central Scotland Police Force. His tenure with the defenders however continued as anticipated in the letter of 22 December 2006 (6/1 of process). Thus the documents before me, with the exception of the letter of 22 December 2006 (6/1 of process), at the very best for the pursuer point no more to the pursuer being a holder of office than an employee. They are probably neutral. Accordingly there are no documents sent to the pursuer which indicate that the parties departed from the intention stated in the letter of 22 December 2006 that upon ceasing to be an officer of Central Scotland Police Force the pursuer would become an employee of the defenders. Therefore all the documents sent to the pursuer, which must include the letter of 22 December 2006, do not warrant the conclusion drawn by the learned sheriff that they support the pursuer's submission that he is presently a holder of office rather than an employee. Rather they support the defenders' submission that the pursuer's tenure was as an employee.

 

[10] Consistent with their understanding of an employee/employer relationship the defenders prepared a draft contract of employment (6/7 of process). It is entitled "Contract of Employment between Scottish Police Services Authority and David Mulhern, Chief Executive". The pursuer's position is that he never saw this document, a position not accepted by the defenders. The defenders at a later stage had their lawyers prepare a further draft service agreement (6/8 of process). The pursuer's position was that although he had seen 6/8 of process before, and indeed had contributed to its drafting, he considered it was for other members of staff but not him. I was also shown an email dated 30 June 2008 (6/19 of process) which was lodged at the bar. It is from a Bill Matthews to inter alia the pursuer in which it is stated "The Convener will work with the HR Committee and David to get his contract signed in parallel". I accept Mr Truscott's submission that the reference to "his contract" is likely to be a reference to a contract of employment. Thus there can be little doubt that the defenders, at least, believed, and always did believe, that the relationship between the parties would eventually be that of employee and employer. When there is, as here, no formal document regulating the position of the pursuer it is relevant to have regard for these adminicles of evidence. This is particularly so when dealing with matters ex parte. The email was not available to the sheriff but the draft contracts of service were.

 

[11] Mr Truscott accepted that the defenders' disciplinary policy and procedure (6/5 of process) could not be adopted wholesale when dealing with the chief executive of the defenders. Some adaptation of its terms would be required. It is common for the disciplinary procedure for the chief executive and indeed senior executives of an organisation to be in different terms from those which apply to other employees. That is because it is usually the senior executives who have to implement such procedures. However, the basic framework of what constitutes a fair procedure can often be adapted for use by the organisation when disciplinary procedures require to be adopted in relation to the chief executive. Very often the contract of service with the chief executive will make provision for disciplinary measures. It is interesting to note that in the draft contract of employment (6/7 of process) it is provided that "Any disciplinary, dismissal or grievance matter relating to the chief executive shall be dealt with, where practicable, in accordance with these policies." "these policies" is a reference to the defenders' policies. Mr Hennessy did not address me in detail on this point but it seems to me that the defenders' disciplinary procedures, a non-contractual document, are capable of adaptation for use when the chief executive is the subject of the procedures. I do not consider that the lack of disciplinary procedures specific to the pursuer assists the pursuer in this action.

 

[12] The fact that the defenders were not in existence at the time when the pursuer was appointed also affords an explanation as to why Schedule 1 to the Act provides that the first appointment of the chief executive is to be made by the Scottish Ministers (paragraph 9(2)) whereas subsequent appointments of chief executive are to be made by the defenders albeit with the approval of the Scottish Ministers (paragraph 9(5)). It also explains why the first appointment of the chief executive is to be made on such terms and conditions as the Scottish Ministers may determine (paragraph 9(3)). It could not be otherwise if it was in contemplation that the chief executive would be appointed prior to the defenders being brought into existence by the statute. The learned sheriff would appear from his Note to have relied upon the distinction between the appointment of the first chief executive and subsequent chief executives to support the preliminary view that the pursuer was a holder of office as opposed to an employee. In my opinion such a conclusion is not warranted.

 

 

[13] I should also at this stage record that Mr Truscott criticised the learned sheriff for having approached the issue as if the pursuer had to be either a holder of office or an employee. I agree with Mr Truscott that an individual can be both a holder of office and an employee of a company or organisation. An example of a person who is very often both is a director of a company. A managing director or chief executive is very often on the Board of Directors and as such holds office. Such an individual may also, and usually does, have a contract of service. As was said by the Employment Appeal Tribunal in Johnston v Ryan [2000] ICR 236 at page 242B-C:-

 

"There are three categories of office holder: an office holder whose rights and duties are defined by the office they hold and not by any contract, such as a police officer; secondly, there are also office holders who retain the title "office holder" but are in reality employees with a contract of service (those workers would be rightly described as employees); and, thirdly, there are also workers who are both office holders and employees, such as company directors."

 

Thus in my view the learned sheriff erred in approaching the issue of the pursuer's status on the basis that he was either an employee or a holder of office. I should make it clear that the defenders' primary position was that the pursuer is an employee of theirs. Their fallback position was that the pursuer is both a holder of office and an employee.

 

[14] When considering whether the pursuer has established a prima facie case, the learned sheriff took into account the terms of the Act and in particular Schedules 1 and 2 as pointing to the pursuer being a holder of office and not an employee. For the reasons set out I consider that the terms of the Act point in the opposite direction. The learned sheriff also relied upon the lack of terminology in the documents sent to the pursuer suggestive of the creation of a contract of employment. These documents are for the reasons which I have given more likely to be capable of supporting the defenders' position than the pursuer's. In my opinion the learned sheriff's error is such that the test in Melon v Hector Powe 1980 SC 188 at p198 and Macphail Sheriff Court Practice 3^rd Edn at para 18.110 has been met. I can thus consider the issue de novo. For the reasons already given, I am of the view that the pursuer has failed to establish a prima facie case. Without expressing a concluded view on the status of the pursuer, a position I am required to take (Scottish and Universal Newspapers Ltd v Smith 1982 SLT 160), I consider that the pursuer is more likely to fail to establish that he is a holder of office than he is to succeed.

 

[15] That being so I am no longer required to consider the question of the balance of convenience. But lest I be wrong in my assessment of whether a prima facie case has been made out it is appropriate that I make some comment. In my opinion there would require to be a strong prima facie case before interim interdict should be granted. The strength of the prima facie case is a factor which falls to be considered when assessing where the balance of convenience lies (Toynar v Whitbread 1988 SLT 433; NWL Ltd v Woods [1979] 1 WLR 1294). There can be little doubt that there has been a breakdown of trust between the parties. They are in litigation. That speaks volumes. Each party had their own explanation as to why they are in litigation. That perhaps is not central. The fact remains they are in litigation and at an appeal. As was said by the Queen's Bench Division of the High Court in Lakshmi v Mid Cheshire Hospitals NHS Trust [2008] IRLR 956 at paragraph 49:-

 

"In my judgement the only basis upon which a court can or should grant a declaration or injunction that has the effect of preserving the relationship of employer and employee is where the court can find that a basis of mutual trust and confidence has survived between the employer and employee."

 

It is reasonably clear that the parties do not have trust and confidence in each other. That the pursuer may be a holder of public office does not alter the sentiment expressed in that passage. In my opinion the sentiment expressed applies regardless of the pursuer's tenure. If there is no mutual trust and confidence between a chief executive and the organisation of which the individual is the chief executive, the organisation will be severely hampered in its operation regardless of the nature of the chief executive's tenure. The chief executive will not be able to carry out his duties in a proper manner. Indeed, the position may be that regardless of the strength of a pursuer's prima facie case, interim interdict should not be granted in a situation where mutual trust and confidence does not exist. I reserve my position on that point as my notes do not disclose that Mr Hennessy responded to Mr Truscott's submission and the issue does not require to be resolved in this case given my views on the pursuer's prima facie case. If the defenders are unable to establish the position which they advanced before the learned sheriff and myself and thereby commit a legal wrong, the pursuer will be able to recover damages. An alternative remedy to interdict is thus available. As was pointed out by Mr Truscott, what the defenders are seeking to do is put to the pursuer certain allegations for his comment. On any view such a procedure will be necessary regardless of the pursuer's tenure. Fairness to the pursuer demands such. Even if the pursuer is a holder of office it is likely that any disciplinary procedures will be conducted by the defenders on behalf of Scottish Ministers as Mr Truscott submitted. Thus whether the defenders are correct in referring to the meeting as a disciplinary hearing is more an issue of form than substance. Mr Hennessy referred to the terms of the defenders' letter of 27 November 2008 to the pursuer (5/1 of process) as indicating that the defenders are acting as judge and jury. Mr Truscott's answer to that point is set out in the EAT's decision in Skidmore v Dartford and Gravesham NHS Trust [2001] ICR 911 at p922:-

"The first complaint as to the fairness of the procedure adopted is that the proceedings were unfair because the hearings before the chief executive and the appeal panel were before persons who had a clear interest in the outcome of the case. This is a complaint without substance. In virtually all internal disciplinary proceedings it can be said that the adjudicators have an interest in the outcome of the case by the very fact that the proceedings are internal. If the submission made to us were carried to its logical conclusion, it would follow that every disciplinary process carried out by an employer would be vitiated unless he had brought in some outsider to conduct it."

 

If the defenders do act unreasonably and the pursuer is an employee he has a right to apply to an Employment Tribunal for remedies. If he is a holder of public office he will almost certainly have a remedy, should there be unfairness, by way of judicial review. In my view the balance of convenience lies with the refusal of interdict.

[16] In addition to the cases which I have already made reference to the following cases were referred to in the course of the discussion:-

 

WAC Ltd v Whittock 1989 SC 397

Peace v City of Edinburgh Council 1999 SLT 712

Amey Services Ltd v Cardigan & Others [2008] IRLR 279

McMillan v Guest 1942 AC 561

102 Social Club v Bickerton 1977 ICR 911

Solicitors Estate Agency (Glasgow) Ltd v McIver 1993 SLT 23

Piggins & Rix Ltd v Montrose Boat Authority 1995 SLT 418