#6733 - Rose Gibb V. Maidstone And Turnbridge - Commercial Remedies BCL

Rose Gibb v. Maidstone and Turnbridge

Facts

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 - 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 - By 21 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 Committee decided to seek to terminate Ms Gibb's employment by way of a negotiated settlement.

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 October 2007, Mr Glen Douglas, who had taken over the role of CEO of the Trust, received a letter from David Flory, Director-General of 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 – in this case, she sues for the remaining part of the compensation package.

Holding

The sum of 75,000 odd paid to the appellant (with the blessing of the Department of Health, thus the Secretary of State) was provided for in the compromise agreement to be paid in lieu of due notice to terminate the appellant's contract of employment. Her claim in these proceedings is for the balance of the whole sum of 250,000 agreed: that is, the sum of 175,000 odd stated to be by way of a compensation payment. That is resisted on the basis, upheld by the judge, that it was ultra vires the Trust to agree the payment: it was "irrationally generous".

The Court found that the payment was not ultra vires the trust.

If my Lords agree, my conclusion on the ultra vires issue disposes of the whole case in the appellant's favour. But out of respect for the parties' submissions and the judge's views I should address the restitution issue.

This aspect of the appellant's claim proceeds on the premise that (contrary to her primary case on the ultra vires issue) the compromise agreement is indeed void as being "irrationally generous". On that footing the claim is formulated as restitution of the value of benefits conferred on the Trust under a void contract. In paragraph 11A of the Re-amended Particulars of Claim it is alleged that the appellant's entering into the compromise agreement secured in the Trust's hands the following benefits: (1) the value of the statutory unfair dismissal claim which she forewent and the costs of contesting that claim which the Trust saved, (2) the confidentiality requirement imposed on the appellant, (3) the immediate cessation of the appellant's employment, and (4) the avoidance of any internal grievance procedure of which the appellant might have contested to the detriment of the Trust in terms of "significant human and/or financial resources".

Foregoing a valid claim – enrichment

Mr White submits that such cases provide at least indirect authority for the proposition that the foregoing of a valuable claim may confer a benefit – an enrichment – on the party not so pursued.

Notwithstanding Miss McNeill's tenacity and ingenuity it seems to me that the facts of this case are readily aligned to established categories of unjust enrichment. If everything else is equal I can see no principled distinction between a benefit consisting in money paid and a benefit consisting in a claim foregone. For the purpose of this branch of the law the material benefit may take many forms.

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