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Cite as: [2000] 1 IR 536, [1999] IESC 66, [2000] 2 ILRM 214

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Tierney v. An Post [1999] IESC 66; [2000] 1 IR 536; [2000] 2 ILRM 214 (6th October, 1999)

THE SUPREME COURT

268/98

Hamilton, C.J.

Keane, I.

Lynch, J.

BETWEEN

SEAN TIERNEY

Applicant

AND

AN POST

Respondent

JUDGMENT delivered the 6th day of October, 1999 by Keane, J. [Nem. Diss.]

1. The facts in this case, in so far as they are not in dispute, are as follows. The applicant was appointed postmaster in Termon, Virginia, County Cavan on the 30th May, 1983. He succeeded his father, who had served as postmaster for over 40 years at that time. Like many other rural post offices, the one at Termon is a sub-post office which was run by the applicant in conjunction with

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a grocer’s shop in the same premises. In addition to the normal postal services being provided it was also possible for customers of Telecom Eireann to pay their telephone bills at the post office and it was the responsibility of the applicant to transmit the monies paid in respect of those bills to the head post office for the area in Kells for transmission to Telecom Eireann. As a result of what was alleged by the respondent to be unjustified delay by the applicant in transmitting some of these monies to Kells, the respondent terminated its contract with the applicant on the 15th March 1996. In accordance with the procedure provided for in the contract, the applicant appealed from that decision and on the 10th of July 1996 he was notified by the respondent that his appeal had been rejected and the contract was then terminated as of the 26th July 1996.

2. On the 25th July 1996, the High Court gave leave to the applicant to apply by way of judicial review for inter alia an order of certiorari in respect of the respondent’s decisions of the 15th March 1996 and the 10th July 1996 and an order of prohibition or an injunction prohibiting or restraining the respondent from terminating its contract with the applicant. Leave having been given by the High Court to seek such relief and a statement of opposition having been filed on behalf of the respondent, a notice of motion seeking the relief in question came on for hearing before the late Shanley J.

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3. The first ground relied on in the statement of opposition was that the proceedings arose out of an alleged breach of a contract between the applicant and the respondent and, accordingly, were not properly brought by way of judicial review. We were informed that, having heard submissions on this matter, Shanley J rejected this ground of opposition but that, at the time of his death, no order to that effect had been passed or perfected. In the result, his ruling was not the subject of any appeal to this court and I would expressly reserve for another occasion the issue as to whether proceedings of this nature are maintainable by way of judicial review.

4. The motion seeking the relief in question then came on for hearing before McCracken J and in a reserved judgment delivered on the 7th July 1998, he found in favour of the applicant and granted the orders of certiorari and prohibition sought on his behalf. From that decision, the respondent now appeals to this court.

5. Before turnig to the legal issues which were debated in the High Court and again in this court, I should refer to some other aspects of the facts which were also not in dispute. On the 3rd September 1990, following what was said by the respondent to be the applicant’s delay in remitting paid telephone accounts to Kells and his failure to date stamp telephone accounts, a formal warning notice was sent by the respondent to the applicant. On the 14th November 1990, the head postmaster in Kells again wrote to the applicant

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drawing his attention to the fact that three accounts which were transmitted on the 2nd or 3rd November 1990 had in fact been paid between three and four weeks previously by the customers concerned. It was said in that letter that the date had been omitted from the date stamp in each case and it was suggested that this might have been deliberately done to avoid having to send the accounts in each day.

6. There were no further complaints concerning the applicant until October 1995 when two customers raised queries as to telephone accounts which they had paid to the applicant. On the 16th October 1995, the head postmaster at Kells wrote to the applicant seeking explanations in respect of three specific complaints. In one case, it was said that a sum of £76.31 had been paid on the 25th August 1995 but not transmitted to Kells until 12th October following a query by the customer. In a second, it was said that a sum of £66.84 paid in late July 1995 had not yet been received at Kells. In a third case, a sum of £91.11 was said to have been paid on the 27th September 1995 and was not forwarded to Kells until the 13th October 1995. On 18th October 1995 the applicant wrote in reply disputing the date of the payments in the first and third cases and, in the case of the second complaint, stating that he had forwarded the payment by registered post.

7. The respondent appointed Mr. Martin Walsh, a senior investigating officer, to investigate the matter. He interviewed the two customers concerned

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and the applicant and was given six documents dealing with the accounts by the applicant. Five of them did not bear any post office stamp and the sixth bore a stamp on which the date was illegible. The applicant admitted to Mr. Walsh that he had omitted to date stamp the documents but disputed the dates on which the customers were said to have paid their bills. He also claimed that the sum of £66.84 had been paid by him to Kells. He agreed that in future all accounts would be date stamped clearly and legibly to the best of his ability.

8. On the 15th January 1996, Mr. Pat Rooney of the respondent’s head office wrote to the applicant stating that the manner in which the applicant had dealt with these accounts had seriously inconvenienced the subscribers concerned and had brought the company into dispute with one of their major customers. He said that the question of terminating the applicant’s contract was now under consideration but that, in order to afford him an opportunity of furnishing any explanation or making any representations, no further action would be taken for a period of fourteen days. This letter was replied to on the applicant’s behalf by the Irish Postmasters’ Union: that letter vigorously rejected what was seen as a suggestion by the respondent that the applicant had been behaving improperly with regard to the monies in question. It was pointed out on his behalf that he had transmitted thousands of such accounts to the office at Kells over the years by registered post and that, for what was described as very meagre remuneration, he had been providing an excellent

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service to the local community. It would appear that the respondent did not reply to this letter.

9. On 15th March, 1996, Mr. Rooney wrote to the applicant as follows:-

“Following consideration of your case, I now have to inform you that the Company has ceased to have confidence in your ability to manage the office and consequently, it has been decided to terminate your contract as Postmaster, Termon with effect from 29th March 1996. You will be given 3 months scale payment in lieu of notice. Should you wish to appeal this decision, you or your representative should do so within seven days.

“I am sorry that your contract with the Company has had to end in this way.

On the 21st March 1996, the applicant notified the respondent that he wished to appeal from the decision to terminate his contract and requested an oral hearing of the appeal. This was held on the 28th May 1996 before Mr. Michael O’Connell, the manager of customer services for the respondent. The applicant was accompanied by a Ms. McMahon, who in addition to being a friend of the applicant was also a solicitor, but did not attend the meeting in

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that capacity. The findings by the learned High Court judge as to what transpired at that meeting and subsequently to it, which were not challenged on behalf of the respondent, are of importance and should be set out:-

“Towards the end of the hearing, Mr. O‘Connell asked if they considered they had had sufficient time and a fair hearing, and asked if there was anything else they wished to raise. Ms. McMahon then asked whether the appeal was being decided on the two items of complaint from Mr. Clarke and Mr. McCabe, or whether there were any other items being considered and Mr. O ‘Connell replied that there were a number of other items, namely, delays in sending accounts to the Head Office, failure to date stamp accounts and illegible date stamping. Ms. McMahon ‘s evidence is that she pressed him as to what these items were and he said that he would have to look at his file. Mr. O‘Connell did not recollect this taking place, although he does say that he had the full file in front of him, but he had not in fact read all the material in it. I was generally very impressed with Ms. McMahon ‘s evidence, and I think it probable that Mr. 0 ‘Connell did make some reference to consulting his file.

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“After the meeting concluded Mr. O‘Connell undertook further enquires on issues on which he was not fully satisfied. He went to Kells Post Office and looked at date stamps on a number of documents there, and went back to Mr. Clarke and Mr. McCabe. His evidence was that at Kells Post Office he saw some clear stamps on documents coming from the Applicant and that as a result of these enquiries he had serious doubts about the Applicant ‘s credibility. In the course of the hearing the Applicant had told him that he had problems with his date stamp for years and that he had a bad date stamp and a lack of ink for ink pads.

It should be added that Mr. O‘Connell also had received letters from Mr. Clarke and Mr. McCabe in which they both said they could not remember when they paid the accounts which were in dispute.”

10. On the 10th July 1996, the respondent wrote to the applicant informing him that, following consideration of the case, the Chief Executive of the respondent had decided to reject the appeal and that the contract with the company would now end with effect from 26th July 1996. It was said that the

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office would then close on a temporary basis pending a review of services in the area.

11. The learned High Court judge concluded that:-

“It is quite clear that when making his decision or recommendation, Mr. 0 ‘Connell had before him the entire file of the Respondents relating to the Applicant, a report from Mr. Walsh and his initial investigations, and the results of investigations made by him or on his behalf subsequent to the hearing. None of these matters were disclosed to the Applicant at any time.”

12. This finding was also not disputed on behalf of the respondent.

The applicant’s contract with the respondent

13. The contract by virtue of which the applicant was appointed postmaster was entered into between him and the Minister for Post and Telegraphs on the 30th May 1983. In that contract, the applicant acknowledged that he was bound by the rules contained in certain rule books: those rule books have since been replaced by a document called the “Postmaster’s Manual” issued by the

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respondent. The provisions relevant to these proceedings in the contract itself are as follows:-

“I acknowledge that I am responsible for the whole of the official cash, stock of stamps, etc., both as regards those I hold myself and those I entrust to a subordinate officer and that I am liable to make good, without delay, any loss or default which may occur from any cause whatsoever. I also acknowledge that my financial responsibility does not cease when I relinquish office and that I will be required to make good any loss incurred during my term of office which may subsequently come to light.

“I also hereby acknowledge that the letter box at this office is the property of the Department...

“I shall be prepared to make proper provision, including the lighting, heating and cleaning of the premises, for postal, telegraph and telephone work and to provide at the standard rate of payment for a continuous telephone service, if at any time required to do so, also to provide the necessary facilities (pen, ink, etc.) to the public to complete documents at the Post Office.

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“I am aware that canvassing with the object of diverting business from another office, or any practice having this effect, is forbidden.

“I agree to the condition that should I desire to resign my office I must give three calendar months’ notice in writing, failing which I shall be liable to bear any expense incurred by the Department in consequence.

“I understand that I will be liable for any expenditure I may incur on the improvement of premises or fittings.

“I also understand that the appointment is an unestablished one; that it does not entitle me to the privilege of free medical attendance, sick pay or annual leave at the expense of the Department; that it does not confer any claim to an established appointment or entitle me to compensation for loss of office or award under the Superannuation Acts and that if it be deemed necessary at any time to alter the duties, to withdraw any part of the work of the office, or to introduce the salaried system of

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payment, I have no claim to compensation for any disappointment or loss of emoluments which may result from the change.

Clause 2.39 of the Postmaster’s Manual provides as follows:-

“Appeals in discipline cases

“Any appeal against disciplinary decision ( sic) should be made without delay. The decision, or relevant form should at once be noted ‘subject to appeal’ and the appeal should be forwarded not later than 10 days thereafter, otherwise the right of appeal will lapse. If the punishment be not of a ‘serious’ nature only one appeal is permitted. In ‘serious’ cases up to three appeals are allowed; the first should invariably be made by the officer himself/herself and, if he/she is dissatisfied with the result, he/she has the option of making a second and third appeal to the Regional Manager either on his/her own behalf or through his/her Association. Where an appeal is being made by an Association, the officer must produce a communication from the Association, not later than 13 days after the rejection of his/her own appeal, signifying that an appeal is being lodged on his/her behalf. The

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Association must then forward its appeal within a further period of seven days. If this proves unsuccessful a final appeal may be made within a further seven days.

There are other provisions in the Postmaster’s Manual which are also relevant and which will be referred to at a later stage in this judgment.

The proceedings in the High Court

It was contended on behalf of the applicant in the High Court that the contract under which he was employed by the respondent was a contract of service and that it was an implied term of such a contract that any disciplinary procedures provided for by the contract should be conducted in accordance with fair procedures. It was further submitted that such fair procedures had not been observed in the present case.

It was submitted on behalf of the respondent that this was not a contract of service but a contract for services and that, accordingly, in the absence of any specific provision as to notice, it could be terminated by the respondent at any time, provided reasonable notice was given. In this case, it was said, such notice had been given. Alternatively, it was argued that the requirements of fair procedures had been observed by the respondent.

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In his judgment, the learned High Court judge concluded that the contract was one of service and that, accordingly, the respondent was obliged to observe fair procedures. He further held that, while the applicant was clearly in breach of some of the provisions of his contract and the respondent was entitled to apply disciplinary sanctions in respect of such breaches, fair procedures had not been observed. Specifically, he held that the fact that Mr. O’Connell, in arriving at his decision, took account of Mr. Walsh’s report which had not been made available to the applicant and also made further inquiries at Kells Post Office, the results of which were not communicated to the applicant, was in breach of the principles of natural justice.

Although the notice of appeal served on behalf of the respondent challenged all the findings of the learned High Court judge which were adverse to them, in their written and oral submissions to this court they confined themselves to a submission that the finding that the contract was one of service was erroneous in point of law.

On behalf of the applicant, it was submitted that the finding by the learned High Court judge that this was a contract of service was correct and should be upheld but that, in any event, irrespective of whether it was a contract of service or a contract for service it was subject to an implied term that any disciplinary procedures therein provided should be conducted in accordance with fair procedures.

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The nature of the contract

The question as to whether a particular agreement is in law a contract of service as distinct from a contract for services, has been considered in a number of cases both in our courts and the English courts. In a recent case of Denny & Sons (Ireland) Limited T/A Kerry Foods v. The Minister for Social Welfare (unreported; Supreme Court, 1st December 1997), in a judgment with which Hamilton CJ and Murphy J agreed, I suggested that the following approach should be adopted:-

“It is, accordingly, clear that, while each case must be determined in the light of its particular facts and circumstances, in general a person will be regarded as providing his or her services under a contract of service and not as an independent contractor where he or she is performing those services for another person and not for himself or herself. The degree of control exercised over how the work is to be performed, although a factor to be taken into account, is not decisive. The inference that the person is engaged in business on his or her own account can be more readily drawn where he or she provides the necessary premises or equipment or

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some other form of investment, where he or she employs others to assist in the business and where the profit which he or she derives from the business is dependent on the efficiency with which it is conducted by him or her.”

14. A sub-postmaster such as the applicant provides the premises necessary for the carrying on of the business of the post office. He or she is also entitled to employ others to assist in the carrying on of the post office business, as is made clear by Article 2.1(b) of the Postmaster’s Manual which provides that:-

“The Emoluments of Postmasters are considered sufficient to provide for the efficient performance of the duties, for the adequate remuneration of any Assistants who may be employed by the Postmaster, for the cost of providing office accommodation...

It is true that, under Article 2.25, the authority of the head postmaster is required for the employment of any person at a sub-office. It is not surprising to find that the respondent has, as it were, a right of veto over the appointment of persons who for any reason it might not be appropriate to employ in a post office: the fact remains that it is not normal to find in a contract of service that

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the employee can hire assistants to perform the work which he or she is employed to do.

Counsel for the applicant relied on Clause 2.5 of the Postmaster’s Manual which provides that:-

“Postmasters are under the control and direction of the Regional Manager and are also subject to the immediate direction of their respective Head Postmaster, to whom in case of doubt arising on any point, reference should be made for instructions.

In his judgment, the learned trial judge laid stress on this provision and also on the undoubted fact that the applicant must carry on the same business as the respondent carries on at numerous other locations throughout the country and that, in that sense, his business was part of the business of the respondent. While that approach is understandable, it seems to me, that, on the whole, it does not have sufficient regard to the fact that the post office business is carried on in the same premises as the applicant’s own business. No doubt the extent to which the applicant could maximise the profit which he derived from carrying on the post office business was relatively modest, but that cannot affect the legal principles applicable. Monies expended by him on improving the premises or employing assistants which had the effect of increasing the

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volume of the post office business would increase his own profit from that business as well as the profits of the respondent. As to the right of the respondent to control and direct his operations, it has frequently been emphasised in the authorities that, while the degree of control exercised by the other party is always a factor to be taken into account, it has long since ceased to be regarded as the only factor to be taken into account.

It is of interest to note that in Hitchcock v. Post Office [1980] ICR 100 the English Employment Appeals Tribunal concluded that, in circumstances closely resembling those with which we are concerned, the contract was one for services and not of service. Slynn J, as he then was, delivering the judgment of the appeal tribunal said that at pages 108-109:-

“We accept, as Mr. Carr quite rightly has accepted, that there is here a substantial measure of control which relates to the conduct of the Post Office ‘s business. It might be, if there were no other factors present, that that control would be sufficient to make the contract one of service rather than for services. But there are other factors present. The question in this case, it seems to us, is really whether the control which does exist is such that it prevents the contract from being one for services rather than of service. Accordingly we must look at the matter as a whole. We consider

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here that great importance has to be attached to the fact that the applicant provided the premises and a certain amount of the equipment at his own expense. The sub-post office came into what was his general store. It was a part of his own business. Moreover it is clear that even though, apparently, he chose to spend a great deal of his working week doing the sub-post office work at this particular premises himself he had the right to delegate, and did in fact delegate...

Moreover it seems to us that even though there may be less chance of making profit, or risk of loss than in many businesses, there was still here the chance of profit and the risk of loss...

It seems to me that the reasoning in that passage, which is clearly in accordance with the principles of law established in the many authorities on the point, is entirely applicable to the facts of this case.

I am satisfied, accordingly, that the conclusion of the learned High Court judge that this was a contract of service was wrong in law and should not be upheld.

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Conclusions

There remains the question as to whether the contract, although a contract for services, should be construed as containing an implied term that the respondent was obliged to conduct the disciplinary machinery provided for in the contract in accordance with fair procedures.

Giving the judgment of the majority of this court in Glover v. BLN Limited [1973] IR 388, Walsh J said:-

“This court in In re Haughey [1971] IR 217 held that [Article 40.3] of the Constitution was a guarantee of fair procedures. It is not, in my opinion, necessary to discuss the full effect of this Article in the realm of private law or indeed of public law. It is sufficient to say that public policy and the dictates of constitutional justice require that statutes, regulations or agreements setting up machinery for taking decisions which may affect rights or impose liabilities should be construed as providing for fair procedures. It is unnecessary to decide to what extent the contrary can be provided for by agreement between the parties.

That statement of the law is not confined to contracts of service. It is in accordance with the general principle laid down by the same learned judge in

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Meskell v. CIE, [1973] IR 121, that constitutional rights may be protected or enforced in proceedings between private citizens and not merely in proceedings against the State.

In the present case, the contract, although not a contract of service, provided a machinery for taking a decision which could result, and did in this case result, in the determination of the applicant’s tenure of the office of sub-postmaster. It is not in dispute that it had financial consequences for the applicant which could fairly be equated to those resulting from a dismissal from a particular employment.

As was pointed out by Barrington J giving the judgment of this court in Mooney v. An Post (unreported; Supreme Court, 20th March, 1997), the two central maxims traditionally associated with the concept of natural justice - nemo iudex in causa sua and audi alteram partem - are not necessarily cap able of application where an employer dismisses an employee. Similar considerations would apply to a contract for services of the nature now under consideration. But where, as here, the contract provides a disciplinary machinery which is invoked to determine whether the person should retain the office of sub-postmaster or be visited with a lesser sanction, the reasoning in the passage I have cited from Glover v. BLN is, in my view, frilly applicable.

It is true that the disciplinary machinery provided under the Postmaster’s Manual does not expressly provide for an oral hearing. Where, however, the

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respondent by implication accepts, as it did here, that the matter was sufficiently serious to warrant an oral hearing, it follows inevitably that the applicant was entitled to fair procedures in the conduct of that oral hearing and the determination arrived at by the respondent following the hearing. Unfortunately, as found by the learned High Court judge, such fair procedures were not observed in the present case. It follows that the applicant is entitled to the orders of certiorari and prohibition granted in the High Court.

I would dismiss the appeal and affirm the order of the High Court.