Court dismisses appeal holding employment contract terminable on reasonable notice despite 'permanent' label.

THE SUPREME COURT

No. 106/04

Geoghegan J.

Kearns J.

Finnegan J.

BETWEEN/

MARY SHEEHY

Appellant/Plaintiff

and

LAURENCE RYAN AND JAMES MORIARTY

Respondents/Defendants

JUDGMENT of Mr. Justice Geoghegan delivered the 9th day of April 2008

This is a rather sad dispute involving three successive bishops of Kildare and Leighlin and a diocesan secretary. Although the litigation

has engendered considerable heat and a great deal of paper including elaborate written submissions to this court on behalf of the

appellant raising all kinds of issues, the reality is that both in the High Court and on appeal in this court there was really only one

issue to be considered.

The appellant/plaintiff was the diocesan secretary to whom I have referred. The second-named respondent/defendant and the only

other party to the proceedings for the purposes of both the High Court hearing and the hearing of this appeal is the current Bishop of

Kildare and Leighlin. The first-named respondent/defendant is Bishop Moriarty’s immediate predecessor who is now deceased. Despite

being named as respondent on the notice of appeal, he is not, of course, in fact a party for the purposes of the appeal and his

personal representatives are not before the court. The single issue relates to the terms of employment of the appellant. Specifically,

it relates to one aspect of those terms, that is to say, the tenure of her employment. The appellant’s employment as diocesan

secretary was purported to be terminated by the service upon her of notice. It is not in dispute that if her contract of employment

was terminable upon service of reasonable notice (which most contracts of employment are) the notice served in this case was

reasonable. It is the appellant’s case, however, that she was originally employed by the immediate predecessor of Bishop Ryan who

was Bishop Lennon and that under the terms agreed between her and Bishop Lennon, her employment was to be “permanent and

pensionable” an expression not actually forming part of any express contract of employment and at any rate an expression to which in

these proceedings she and her legal advisers have assigned an incorrect meaning. That meaning strongly argued for by Mr. Gerard

Hogan, S.C., her counsel, is that in the absence of some serious illness or misbehaviour she was entitled to remain in her position until

she reached retirement age (not precisely defined) and that her contract could not be terminated by reasonable notice or otherwise

against her will whether the purpose be redundancy or any other purpose. In support of this proposition, Mr. Hogan relied primarily on

the speeches in the House of Lords in the case of McClelland v. Northern Ireland General Health Services Board [1957] 1 W.L.R. 594.

I will be considering that case in some detail later on in the judgment. There is also some relevant Irish case law to which I will refer

in due course. By way of general comment, however, at this stage, I would take the view that every contract of employment is

different and that case law is of marginal assistance only in construing the terms of any given contract. In that sense, I accept the

proposition of Mr. Hogan that there is nothing conceptually offensive to the law in the notion of a permanent non-terminable

contract. But where there is not a precise written contract setting out precise terms or where there is some ambiguity as to the

terms and the court has to determine on foot of evidence what the real contract is, the courts, undoubtedly, resort to guidance from

other cases as to the proper approach to construction. In that sense, the case law is useful and can be properly considered.

The High Court action to which this appeal relates was heard and determined by Carroll J. and she held that the contract of

employment in this case was terminable on reasonable notice and that such reasonable notice had been given. She also accepted

that there was genuine redundancy but that was a secondary decision. Independently of the redundancy issue altogether, she held

against the plaintiff that the contract was terminable on reasonable notice. What this court has to consider now is whether the

learned High Court judge misdirected herself in law in arriving at that conclusion. For this purpose, it is necessary to review the salient

aspects of the evidence.

The history of this employment begins in approximately July 1974. At that time, the appellant held a post described as “clerical

officer” in Carlow Regional Technical College. She had been in that employment since 1971. Prior to taking up that employment, she

was “Executive Officer” in the Central Bank of Ireland. Her evidence was that she changed jobs because her father was not in good

health and she wanted to live near her home. The Central Bank agreed to keep her job open for her and indeed she had decided to

return there when her father’s health took a turn for the worse and she remained in the Regional Technical College though still with an

understanding that she probably could return to the Central Bank. For the purpose of this litigation, her Central Bank position is not

really relevant. What is put forward as being relevant, however, was her position in the Carlow Regional Technical College. It was

while the appellant was in that employment and in the context of her position in the college under the VEC that she was approached

by the late Bishop Lennon. He knew nothing about her Central Bank involvement or in so far as he did, it is not relevant. In her

evidence, the appellant explained that a priest of the diocese, a Fr. Kelly arranged a meeting between her and Bishop Lennon after he

had informed her that Bishop Lennon was interested in procuring a secretary to assist him. The appellant had a number of meetings

with the Bishop while she continued to be employed with the Carlow VEC. In the course of these discussions or negotiations, the

appellant made it clear that she was not interested in a mere typing position as she had been accustomed to carrying out significant

administrative work in the college. It seems clear from her answers that each party was being somewhat tentative as to what the

nature of any proposed contract would be. The Bishop said that he had never had this kind of assistance before. He thought that as

time passed the work would increase. Early on in her oral evidence in the High Court, the appellant, describing what Bishop Lennon

said to her, said the following:

“He said that he was conscious of my being in a permanent and pensionable post where I was working, in the Regional

College. I did not mention to him the prospect I had of going back to the Central Bank. He said that he did not want me

to be at any loss for having left there and that he would attach my pay rate to the salary scale I was on at the time

and he would add twenty five per cent in view of the confidentiality and nature of the work. He was also conscious that I

would not have any chance of career advancement as I might have if I was a priest serving there. Priests could go on to

be bishops but I would not. In a later answer the appellant said that she had sought further reassurance from the Bishop

and that he had reiterated that it was not intended that she should be at a loss for having moved and that she would be

moving to an equally secure job permanent and pensionable.”

When asked what did she understand by that she said that her understanding was that “it was the equivalent to where I was in

terms of a job for life, if I wanted, till my sixty-fifth birthday.”

When her counsel asked her about whether there had been any discussion about pension, the appellant said the following.

‘He said he would put arrangements in place so that there would be a pension for me, he would set aside money in lieu

of pension, because it would not come automatically as it would if I had remained on with the local authority’.”

It seems clear particularly from the later evidence that no precise arrangements relating to pension were ever agreed though there

would have been clearly an understanding that some kind of reasonable pension arrangements would be put in place. It would not

seem to me on the evidence that either Bishop Lennon or either of the later bishops ever agreed that the appellant was to have the

same pension arrangements as she would have enjoyed if she had remained in the VEC.

On foot of those relatively loose arrangements relating to her new job, the appellant took up position in the diocese on the 29th July,

1974. Initially, she was not diocesan secretary. She was simply secretary to Bishop Lennon and she remained in that position until

1977 when the Bishop appointed her diocesan secretary jointly with one of his priests. She was still diocesan secretary when Bishop

Lennon retired on the 10th December, 1987. He was succeeded on that date by the first-named defendant, Bishop Ryan. The

appellant was asked by her counsel did she have any further discussion in relation to her terms and conditions with Dr. Ryan. She said

that he approached her and apologised that he had not been in touch with her “sooner about my remaining on”. In this context she

continued her answer as follows:

“I had raised a query with Bishop Lennon about whether he would be happy to have me stay even though I knew my job

was permanent. (The ‘he’ in that answer clearly referred to Bishop Ryan.) Bishop Lennon evidently said something to him,

I did not know this until after but Bishop Ryan approached me and he said that he was taking it for granted that I would

be remaining on and he might have been different from Bishop Lennon but he was sure we would get on. It was with

Bishop Lennon he spoke about my salary. At that time, I had not been accepting the increments because I was staying

in the house because the Bishop’s housekeeper had been ill and it was a help to her. Bishop Ryan said that I should be on

very much more, so he increased what I was actually in receipt of to a higher level.”

I would comment at this point that it is not without relevance that despite her alleged conviction that she had a “job for life” in the

diocese, the appellant, nevertheless, displayed some concern as to whether she would be allowed remain on with Bishop Ryan. Not

only does that indicate some element of insecurity in the mind of the appellant but such feelings of insecurity were wholly

understandable. The appellant would have understood well that she was not employed by a company. She was employed initially by a

bishop. He was her only employer. She would have understandably lacked confidence as to whether Bishop Ryan who after all would

be a brand new employer would take her on. Furthermore, even though on paper she may have enjoyed an increased remuneration

under Bishop Ryan, it seems clear as the evidence runs on that the salary she was actually drawing was considerably less than the

salary which she alleges she was entitled to and that this was so even after she ceased to live in the Bishop’s house. When asked

what her starting salary was in 1974, the appellant said “I think it was £150 a month”. She was then asked what was her salary at

the end of July 2002? She answered “roughly, €45,000 per annum. She was then asked whether she had any reason to obtain

confirmation of her terms of employment from Dr. Ryan and she explained that she did not have any reason when he started but she

then said the following:

“Subsequently I became very conscious that there was no record of my terms of employment in the diocese in the

archive and I asked Bishop Lennon if he would produce a document that could be left there. He was doing that when he

died. I gave the draft to Bishop Ryan…”

Unfortunately, what was said after that was drowned out as far as the stenographer was concerned. This draft document coming

from Bishop Lennon is the document on which the appellant places most reliance in this case. I do not think it necessary to set out

the document in full and it was at any rate only a draft. I will, however, cite the more relevant parts. The draft commenced as

follows:

“In July 1974, I engaged Mary C. Sheehy as my secretary. During the previous month I had preliminary discussions with

her and outlined the conditions of employment. At the time she had a permanent post in the Regional College, Carlow

and I was concerned that she should not be at any loss for accepting my offer.

Conditions offered.

1. Salary – to be linked with the salary of her existing post in the Regional College and with the annual increments of that

post.

2. Pension – provision to be made.”

The other terms were headed “Hours” “Holidays” “Duties”.

A significant feature of the draft document is that the numbering was changed so as to add in as the second term and condition

“Pension”. Pension was clearly not in the mind of the Bishop when he worked on his original draft.

It might be well if I stated at this point in the judgment, though I will expand on it later, that in my view, it was open on the evidence

for the trial judge to hold that neither the original conversations between Bishop Lennon and the appellant or the draft document, for

what it is worth given that it was written long after the events, should be interpreted as meaning that she would have a contractual

right to a “job for life” or until pensionable age. What the evidence does establish is that Bishop Lennon was concerned to convey

that he appreciated that the appellant had a “permanent” post in the Regional College in the sense that it was not freelance, casual

or temporary and that the appellant would not suffer in terms of salary. It was understood there would be a pension but that was

somewhat left in the air.

Bishop Lennon died before the so called draft could become a completed document as the draft had been given to Bishop Ryan for his

perusal. The next development was that Bishop Ryan prepared his own draft document. The terms of that document were produced in

full at the hearing before Carroll J. It provided for a number of matters but in relation to the issues relevant to this action, it provided

that pay was to be linked to the incremental salary scale attached to the senior administrative position which the appellant held at

Carlow RTC with an additional twenty five per cent in recognition of responsibilities and confidentiality attaching to the post. As far as

pension was concerned, it simply stated “provision to be made with a sum added each year by employer”. It went on to indicate

that she would continue as diocesan secretary linked to grade VII VEC employees. There was nothing to indicate that the agreement

could not be terminated upon reasonable notice. The proposed pension arrangements bore no relationship to the VEC post.

Apparently, a pension fund known as Fund Forty Nine which was originally intended to provide accommodation in his retirement for

Bishop Lennon and his housekeeper was, following on Bishop Lennon’s death in January 1990 allocated for the sole purpose of

providing a pension/lump sum for the appellant. When asked by her own counsel whether she was in fact in receipt of the pay

provided for in that document, her answer was as follows:

“No I do not think I was receiving the amount. It is the amount to which I was entitled, but my position was that I was

happy to have enough to live once my status was identifiable outside of the diocese if I were looking for employment.”

Subsequently, it appears that the appellant became concerned about the pension fund. Although the pension arrangements, as they

normally do, contemplated retirement at sixty five, that fact alone could not possibly give rise to an implied term prohibiting premature

termination.

As the evidence went on, it became clear that Bishop Ryan made various attempts to procure the appellant’s agreement to less

costly arrangements both in terms of salary and pension. It is not necessary to go into these in any detail. All of this uncertainty

however indicates that there was no special contractual term whether express or implied that the normal principle of termination by

reasonable notice could not be applied. Eventually, the appellant was told she was being made redundant. This was at the end of

Bishop Ryan’s period of office and just before he was replaced by Bishop Moriarty. The appellant persisted in her contention that she

had a “job for life” by which she meant a job until pensionable age and not terminable prematurely, or possibly at all or certainly at

least only if there was some gross misbehaviour or incapacity. Carroll J. in her judgment made the following basic finding:

“Based on the evidence before me, in my opinion the plaintiff was offered a permanent and pensionable job by Bishop

Lennon. There was no express or implied added condition or promise that it would be for life or until age sixty five. Her

previous employment with the VEC, while permanent and pensionable, was not a job for life.”

As I have already indicated, there was, in my view, ample evidence to support that finding by the learned trial judge.

The judge in fact went on to point out that the appellant had chosen a common law remedy. She could have initiated proceedings

under the Unfair Dismissals Act, 1967 or under the Redundancy Payments Act. The trial judge then said that the position at common

law is that an employer is entitled to dismiss an employee for any reason or no reason on giving reasonable notice. I would slightly

qualify that by saying that it does depend on the contract but in the absence of clear terms to the contrary which are unambiguous

and unequivocal, that clearly is the position.

The trial judge then gave a useful review of the Irish and English case law. In Walsh v. Dublin Health Board 98 I.L.T.R. 82 Budd J.

interpreted a so-called permanent job as meaning a job indefinite in duration but subject to dismissal on reasonable notice. The same

view was taken by McCracken J. in Dooley v. Great Southern Hotel [2001] E.L.R. 340 which is also referred to in the judgment.

The only case that could arguably support the appellant’s contention is the judgment of Costello J. in Grehan v. North Eastern Health

Board [1989] I.R. 422. But that was a very exceptional case which specifically provided that the employment of a medical practitioner

would terminate on reaching the age of seventy years and on the basis of the particular contract of employment pertaining in that

case it was held that premature termination was not permissible. Carroll J. quite rightly rejected that case as governing this case.

I now turn to the Northern Ireland case which went to the House of Lords and which is finally referred to in the judgment of Carroll J.

This is McClelland v. Northern Ireland General Health Services Board cited above. As I have already mentioned this was the case

particularly relied on by Mr. Hogan and I intend to treat of it in some more detail. In the House of Lords report there is a short head

note which is worth quoting.

“In 1948 the Northern Ireland General Health Services Board advertised, inviting applications for posts as senior clerks,

the appointments being expressed to be ‘permanent and pensionable’. The appellant, having applied, was appointed and

was shown the terms and conditions of service. These contained a clause providing for the dismissal of officers for

‘gross misconduct’ or if they proved ‘inefficient and unfit to merit continued employment’.

There was also a provision for dismissal on failure to take or to honour the oath of allegiance and another related to

termination of employment by reason of permanent ill-health or infirmity. There was no provision for dismissal in other

circumstances. It was, however, provided that “permanent officers”, who wished to terminate their employment with

the Board, must give one month’s notice. In 1953, the Board purported to terminate the appellant’s employment on six

month’s notice on the ground of redundancy of staff and without any suggestion of misconduct or inefficiency on her

part.”

What happened in the three courts is interesting. In the High Court of Northern Ireland, Curran J. dismissed the action on the grounds

that the appellant was a Civil Servant, and as such, held office during the pleasure of the Crown. The case then went to the Court of

Appeal of Northern Ireland and before that court it was conceded by both parties that the finding of Curran J. was clearly incorrect as

the plaintiff was not in fact a civil servant. The Court of Appeal, however, divided. Lord MacDermott LCJ and Black LJ held that in the

context of the contract “permanent” employment was to be contrasted with employment which was transient or linked to some

particular occasion or performance of some special task, and did not connote that the employment would endure for life and that six

month’s notice was proper notice and that accordingly, the employment was validly terminated. Porter L.J. dissented and took the

opposite view. On further appeal to the House of Lords, however, the House reversed the Court of Appeal, Lord Oaksey, Lord Goddard

and Lord Evershed holding that on the true construction of the terms and conditions of service, the express powers of the Board to

dismiss an officer were comprehensive and exhaustive and no further power could be employed, accordingly, the service had not been

validly terminated. The two dissenting Law Lords however, Lord Tucker and Lord Keith of Avonholm agreed with the majority view of

the Court of Appeal of Northern Ireland.

Having carefully read and considered the opinions of the three Law Lords in the majority and without considering whether I prefer the

dissenting opinions and/or the judgment of Lord MacDermott, I have come to the conclusion that that decision does not give any

comfort to the appellant in this case. Lord Oaksey made it clear that the question at issue depended entirely upon the construction of

the contract. He said that the word “permanent” must be construed in the light of its context. In favouring the allowing of the appeal

he based his judgment on the particular terms of the contract which allowed for termination. He did not, therefore, consider that the

rule which would relate to a general hiring for an indefinite time and which entitled an employer to terminate on giving reasonable

notice applied in that case. Lord Goddard made it clear that in his view the question at issue depended on the true construction of

the particular clause 12 of the conditions of employment. That set out certain circumstances in which dismissal, reduction in rank or

termination of employment was permitted and he concluded it was comprehensive. However, he also said that an advertisement

offering permanent employment did not, in his opinion, mean that employment for life was being offered. In fact he said the following:

“It is an offer, I think, of general as distinct from merely temporary employment, that is, that the person employed

would be on the general staff with an expectation that apart from misconduct or inability to perform the duties of his

office the employment would continue for an indefinite period. But apart from a special condition, in my opinion, a

general employment is always liable to be determined by reasonable notice. Nor do I think that because a person is

offered pensionable employment the employer thereby necessarily engages to retain the employee in his service long

enough to enable him to earn a pension.”

However, he went on to hold that on the particular terms which applied in that case, premature termination was not permissible.

Lord Evershed was also of the view that the word “permanent” would not of itself be sufficient to import the notion of a life

appointment. Nevertheless, he took the view that on the particular conditions which applied in that case viewed as a whole and

intended to be truly comprehensive there was not a right to terminate other than the expressed rights specifically provided for in the

clauses.

In this particular case, there is no written contract of that kind which has to be construed. What constitutes the contract is the

mixture of express oral terms and implied terms. I am satisfied that the general rule applied that the agreement could be terminated

on reasonable notice.

The only other matter which I think fit to comment on is the provisions relating to dismissal in the Vocational Education Act, 1930 as

these were partly relied on by Mr. Hogan. The relevant provisions of section 23 are cited in the judgment of the learned High Court

judge read as follows:

“(1) Subject to the provisions of this section, every vocational education committee shall appoint a chief executive

officer and such other officers and servants as it shall from time to time think necessary for the due performance of its

powers and duties under this Act.

(4) A vocational education committee may dismiss any servant of such committee and, with the approval of the

Minister, remove any officer of such committee.”

It is not necessary to go into these provisions in any detail. Nor is it necessary to consider whether the appellant was an officer or a

servant when employed by the Vocational Education Committee. The mere fact that she had the grade of clerical officer does not

mean she was an officer. I would be inclined to the view that she was probably a servant but in either event her employment is

capable of being terminated and as put to her in cross-examination, I do not know of any provision which would prevent termination

by the VEC on grounds of redundancy. However, reasons do not have to be given if general employments are terminated on

reasonable notice.

Mr. Hogan placed some reliance also on the terms of section 27 of the 1930 Act. That, however, relates to removal of an officer or

servant of the VEC by the Minister and not by the employer. I do not think that it has any relevance to this case.

I am satisfied that the learned High Court judge was correct in her view that this was an employment agreement terminable on

reasonable notice.

I would, accordingly, dismiss the appeal.