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You are here: BAILII >> Databases >> Supreme Court of Ireland Decisions >> McGrath -v- Minister for Defence & ors [2009] IESC 62 (28 July 2009)
URL: http://www.bailii.org/ie/cases/IESC/2009/S62.html
Cite as: [2010] 1 IR 560, [2009] IESC 62
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Judgment Title: McGrath -v- Minister for Defence & ors Neutral Citation: [2009] IESC 62 Supreme Court Record Number: 239 & 349/06 High Court Record Number: [1998] 11905 p Date of Delivery: 28/07/2009 Court: Supreme Court Composition of Court: Geoghegan J., Fennelly J., Kearns J. Judgment by: Fennelly J. Status of Judgment: Approved
Outcome: Dismiss | ||||||||||||||||||||
THE SUPREME COURT Appeal No: 239/2006 Geoghegan J.Fennelly J. Kearns J. Between JAMES McGRATH Plaintiff/Respondent - and - THE MINISTER FOR DEFENCE, IRELAND AND THE ATTORNEY GENERAL Respondents/Plaintiffs JUDGMENT of Mr. Justice Fennelly delivered the 28th day of July, 2009. 1. This is an appeal from the judgment of the High Court (Laffoy J) of 7 April 2006 whereby she awarded a sum of €36,395 .77 with interest to the plaintiff/respondent (“hereinafter the plaintiff”). She held that the discharge of the plaintiff from the Army on 12th May 1996 had been in breach of contract. I will refer to the appellants together as “the Minister.” 3. The plaintiff was born on 18th July 1953. He enlisted in the Defence Forces on 29th October 1969. He served for more than 26 years prior to his discharge in 1996. His medical history is central to the matters in dispute. 4. In 1977, while engaging in recreational activity (a football match) at the Glen of Imaal, he suffered an injury to his right knee. In 1982 he underwent a meniscectomy. He was, nonetheless, sufficiently fit to serve in the Lebanon in 1983. He had continuous problems with his knee. In 1987, he had further surgery for the reconstruction of his anterior cruciate ligament. Following that surgery the plaintiff was excused from regimental duties. In November 1988, he was reclassified to Medical Category C. From that time on he was excused regimental duties. Between 1987 and 1996, the plaintiff performed a wide range of duties. He attained the rank of Sergeant and at times was Acting Quartermaster. He did everything except regimental duties. That he defined as guard duty with a weapon and ceremonial guard-mounting duties involving marching. This remained his position until the events of 1994 and 1995, which I will now describe. 5. The plaintiff had originally enlisted for a period of 12 years. Thereafter, he was continued in service for successive periods of enlistment of two years. In April 1994, his existing period of engagement was coming to an end. The plaintiff made a formal application "to continue in service pursuant to section 65 of the Defence Act, 1954.” That section provides that a man who has completed a total continuous period of twenty-one years’ service may be continued in service by the Minister for a specified period. By his application in writing the plaintiff gave notice of his desire to continue in the army “for the period of 2 years after the termination of my present engagement to enable me to render 27 year’s qualifying service towards pension.” For the purpose of that application, the plaintiff was medically examined by an Army Medical Officer, who, on 27 April 1994 certified that he had examined the plaintiff. He assigned him to medical category C. The plaintiff's Commanding Officer recommended that he be continued in service. His conduct was assessed as “very good.” The plaintiff’s continuance in service for the period of two years from 28 October 1994 to 28 October 1996 was duly approved and published in Routine Orders. 6. Around this time, and unfortunately for the plaintiff, some changes were taking place in the army. A report of Mr Dermot Gleeson, Senior Counsel, on pay and conditions in the Defence Forces and a subsequent efficiency audit carried out by Price Waterhouse led to a review within the Army of every soldier serving who was classified in medical category C and who was, consequently, unfit for 24-hour armed security duty at his own barracks. 7. Around the same time, and, as stated by the learned High Court judge, with broadly similar objectives, the Army authorities devised a scheme for voluntary early retirement ("the VER scheme"). The main objectives of the scheme were to reduce the number of personnel in medical category C, to reduce the age profile of the Army and thus to create greater scope for recruitment. The scheme which was relevant to the plaintiff was open for application from 29 April 1996. 8. On 9th August 1995, following a medical examination, a recommendation was made that the plaintiff be brought before a medical board. He was given notice on 17 October 1995 that the Medical Board would assemble on 20 November 1995 in order to determine his appropriate medical classification. He was informed that there was a possibility of his being reclassified to medical category E. The report of the Medical Board stated that the plaintiff suffered from “chronic ineffectivity since 1987 due to R cartilage injury and R anterior cruciate injury which has failed to allow him return to normal duties despite reconstructive surgery and physiotherapy.” 9. The plaintiff was reclassified as medical category E. He was informed that the provisions of DFR A12 would apply and that he was “regarded as not possessing the medical standard required for service with the Defence Forces.” He was recommended for discharge. 10. It is clear that the plaintiff and his commanding officers were conscious that his reclassification and impending discharge would make him ineligible to avail of the VER scheme. The GOC Curragh Command and the Adjutant of Curragh Command unsuccessfully recommended that he be allowed to serve out his current engagement ending on 29th October 1996. 11. Because of his reclassification to medical category E, the plaintiff was ineligible to apply for early retirement under the VER scheme. He was duly discharged from the Army on 12th May 1996. 12. In the plenary proceedings which were commenced on 3 November 1998, the plaintiff claimed that the various steps leading to the discharge of the plaintiff from the Army were ultra vires and had been adopted in breach of the principles of basic fairness of procedure and of natural and constitutional justice. He claimed declarations to that effect in respect of each of the decisions and in particular the decision of 20th November 1995 whereby he was reclassified to medical category E. 13. By a series of amendments to the Statement of Claim, the plaintiff alleged that from 29th October 1994 he had a fixed term contract for two years and that he was entitled, notwithstanding his knee condition, to remain in service until 29th October 1996. He also claimed that the defendants were estopped, within a two-year period, from finding the plaintiff unfit due to his knee condition to complete his period of service. The plaintiff also claimed that the defendant failed to respect his legitimate expectations. 14. The learned trial judge stated that the matter proceeded at the hearing in the High Court on the basis that it was a claim for damages for breach of contract and failure to respect the plaintiff’s legitimate expectation that he would be entitled to avail of the VER Scheme that was being primarily pursued. The learned trial judge held:
16. She addressed the submissions on legitimate expectations as follows:
17. The Minister, in his written submissions states that it is trite law that a member of the Permanent Defence Forces is not an employee of the Minister. Rather they are persons holding office under or in the service of the State. He relies on State (Gleeson) v Minister for Defence [1976] I.R. 294. This is the core of the appeal on liability. The plaintiff interprets Gleeson differently and submits that it is authority for the proposition that a man of the Defence Forces has a statutory contract for a fixed period carrying with it the statutory benefits and liabilities attaching to his rank in the army. 18. I am satisfied that the Minister is correct and that the learned judge made an error in law in concluding that there was a contractual relationship between the plaintiff and the Minister. She expressly found that the contract was with the Minister. It is well established that an employee of the State is not the servant of the Minister. Walsh J stated the well-known position in a different context in Byrne v Ireland [1972] I.R. 241 at 285: “The officials and other employees in the Department [for Posts and Telegraphs] are not the employees of the Minister for Posts and Telegraphs, and he cannot be made liable in damages for the tortious acts committed by these employees even though they may have been appointed by him to their particular employment.” That principle clearly applies with equal force to any potential vicarious liability in contract. If the Minister is not the employer, he cannot be vicariously liable. 19. Section 53(1)(a) of the Defence Act, 1954 provides:
20. This section has been amended by the Defence (Amendment)(No. 2) Act, 1979 to include women, but remains otherwise in force. Henchy J, at page 294 of his judgment in Gleeson referred to this provision in combination with Defence Force Regulations as follows:
22. In my view, it follows that the learned trial judge was in error in awarding damages for breach of contract to the plaintiff against the Minister. As both Henchy and Kenny JJ said, a man of the Permanent Defence Force is not a servant of the Minister. There was no contractual relationship between them. 23. It is clear from Gleeson that a man may be discharged from the Defence Forces prior to the termination of his period of enlistment only if his discharge is authorised by the Defence Force Regulations. In the present case, the plaintiff’s discharge was carried out pursuant to Defence Force Regulations A. 12 on the ground that he was medically unfit for service. The learned trial judge accepted that the Regulations applied to the plaintiff’s service in the Army, even under the sort of contract of employment which she found to exist. In other words, it is always open to the Army to discharge a man under the Regulations, properly interpreted and fairly applied: in Gleeson, the discharge was held invalid for want of fait procedures. Laffoy J found that the decision was crucially vitiated in the present case, because the discharge took place, not as a result of a normal application of the Regulations, but as a result of a change in policy. 24. It is clear that the plaintiff suffered from a chronic and significant disability such that he was unable to perform normal regimental duties. It is, in fairness, accepted by the Army that the plaintiff performed creditably in spite of his disability and that the Army was content for many years to dispense him from the performance of regimental duties. Nonetheless, his medical condition was such that the Army was entitled to discharge him, in the ordinary way, for that reason. 25. In my view, the only basis upon which the plaintiff could successfully challenge his discharge is by relying on the doctrine of legitimate expectations. Finlay C.J. remarked, in his judgment in Webb v Ireland [1988] 1 I.R. 353, at page 384 that the doctrine of "legitimate expectation" had not, up to that time, been the subject matter of any decision of our courts.He equated it with equitable concept of promissory estoppel and approved the following passage from the judgment of Denning M.R. in M.R. in Amalgamated Property Co. v. Texas Bank [1982] Q.B. 84, 122:
26. In my judgment in Glencar Explorations plc and another v Mayo County Council [2002] 1 IR 84, I reviewed the history of the doctrine of legitimate expectations and endeavoured to outline the necessary elements in a claim based on the doctrine. At page 162, in a passage which may be regarded as an obiter dictum, I said:
27. If that passage correctly states the doctrine, which I believe it does, how does it bear on the plaintiff’s case? It seems to me that he fits the requirements quite well. In the background is the fact that the plaintiff had been kept on in the Army for more than sixteen years during which he suffered from a significant disability. The Army might well have decided to reclassify him medically and to discharge him at an earlier date. The evidence shows that he was kept on to the benefit of the Army and of himself. He served loyally and effectively. He sought an extension in 1994 pursuant to a section that applied only to men who had served for a minimum of twenty-one years. He was concerned to build up his pensionable service, to which his application made express reference. The Army would have been perfectly entitled to refuse that extension on general grounds or, in particular, on the ground of his medical condition. In fact, the Army medical examination expressly continued him in Medical Category C. The Army thereby clearly accepted that his medical condition at that time did not prevent him getting a two-year extension. I believe the Army thereby represented to the plaintiff that he would be reatained in service for two years even with his existing medical classification and he was entitled to rely on that representation. 28. As the learned trial judge has expressly found, the later moves leading to his discharge were not motivated by a normal application of the Regulations, but resulted from a change of policy. I believe that, having regard to his long history of service, the plaintiff was entitled to believe, as of April 1994, that his medical condition would not present an obstacle to completing the extended two-year period of service. It followed that he could reasonably expect that he would not be medically reclassified and, consequently, discharged from the Army in the absence of a significant change in that condition. 29. It is true that a legitimate expectation does not necessarily confer substantive rights. The authority which created the expectation may be entitled to correct it if it gives fair notice and an opportunity to respond. There is no doubt that the Army was entitled to adopt a new policy with regard to medically unfit personnel, based, as it was, on reports from experts. However, the plaintiff was in a an exceptional situation. He had been granted an extension for the short period of two years in circumstances where his medical situation was as it had been for many years and was accepted without reclassification for that purpose. The Army were at fault only in failing to take account of such special situations. 30. I would hold the plaintiff entitled to succeed on the basis that his legitimate expectation to be allowed to continue in service to the 29th October 1996 was infringed. 31. The Minister contests the award of €36,395 .77 for damages. The sum is the agreed amount that the plaintiff would have received if he had been admitted to the VER scheme in 1996. It is common case that he wished to have the opportunity to apply and that he was deprived of that opportunity by his reclassification to Medical Category E. The Minister says that the learned trial judge was not entitled to conclude that the plaintiff would have been successful in his application for admission to the VER scheme. The Minister says that the statistics showed that only 500 out of 1,119 applications were successful in 1996. On this point, the learned trial judge said:
32. This was a matter of fact for the judge to decide in the light of the evidence. She had heard the evidence of the plaintiff’s superior officers and had seen the remarkably favourable views they held about him. In my view, the learned judge was entitled to rule as she did. 33. I would, therefore, dismiss the appeal, although I would uphold the award made by the High Court, though on a different legal basis. JUDGMENT of Mr. Justice Geoghegan delivered the 28th day of July 2009 The respondent in this appeal was a member of the Defence Forces for 26½ years. He was discharged from the army on the 12th May, 1996 and these proceedings arise from that discharge. In 1977, the respondent sustained an injury to his right knee as a consequence of which he was excused from “regimental duties” which essentially meant duties that included carrying weaponry. The evidence in the High Court established that there were various medical grades assigned to soldiers depending on their fitness. The highest of these grades was A1 which the respondent enjoyed before his injury and the lowest was Category E which almost invariably meant discharge. Following on the injury, the respondent was classified at Category C but permitted to carry out all duties except regimental duties. As it turned out, this included a tour of duty abroad. As the learned trial judge (Laffoy J.) points out in her judgment, the respondent, in the period from 1987 to 1996 in fact performed a wide range of duties. In 1992, the respondent required an extension of his service and he was duly granted a two-year service extension from October, 1992 to October, 1994. There was no material change in his medical condition. Again, in April, 1994, he sought a further extension of two years from October, 1994. Whenever an extension of service was under consideration there was a routine medical examination and he underwent that examination on the 27th April, 1994. He was again graded Category C and there was a recommendation that he be continued in service and his conduct was assessed as very good. There was no material change in medical or in any other circumstances from the time of his previous extension or indeed from the period right back to his injury. The respondent was granted the two-year extension terminating on the 29th October, 1996. In consequence of what the learned High Court judge correctly characterised as a policy change which followed a report commissioned from Mr. Dermot Gleeson, S.C. on various matters including numbers in the army, the respondent was given a separate special medical examination and he was downgraded to category E even though it was accepted in evidence that there was no material change in his medical condition. A policy change, however, required that all soldiers in Category C should be able to carry out regimental duties. The respondent, faced with a choice of appealing against the regrading or applying for an extension of time before discharge so that he would qualify for a new voluntary retirement scheme, opted on advice, for the latter. The extension was refused. The respondent instituted these proceedings in which he sought invalidation of the discharge on what might loosely be described as judicial review grounds and also damages “for breach of duty, breach of contract and unlawful interference with the plaintiff’s rights.” As the case was argued in the High Court, it was submitted (inter alia) that the respondent was entitled to damages for breach of his legitimate expectation. This concept would seem to me to come within the general heading of “Unlawful Interference with the Plaintiff’s Rights”. In the event, the learned trial judge found in favour of the respondent on the sole ground of breach of contract and awarded damages accordingly. The judge did not find it necessary to deal with the other issues. My position on this appeal is quite simple. I am in agreement with almost the entire of the judgment of Laffoy J. and I will return in due course to the salient aspects of her judgment. I have had the benefit, however, of reading the judgment proposed to be delivered by Fennelly J. and he takes a different view, not as to the correct outcome of the appeal but as to the basis on which the appeal should succeed. Fennelly J., in his judgment, has taken the view that as the respondent was an “officer” in the legal as distinct from military sense, he did not have a contract of employment with the Minister and that therefore no breach of contract claim could lie. On the other hand, he believes that the respondent is entitled to succeed on the basis of legitimate expectation. I also believe, that if I am wrong in my view that the respondent is entitled to succeed on a contractual basis, which was the view of the trial judge, I would certainly agree with Fennelly J. that the respondent is entitled to succeed in his claim for damages for breach of legitimate expectation. In other words, I consider that both causes of action are valid. Although Laffoy J. declined to decide the issue of legitimate expectation, I believe that it would be costly and unnecessary to send the case back to the High Court for trial on that issue, as, for all practical purposes, the arguments have been made in this court. I intend now to address the contractual issue. Before I do so, I would make this preliminary comment. Legitimate expectation is a relatively newly established cause of action especially in the context of substantive law as distinct from procedure. If that is the only basis on which the respondent is entitled to succeed, it means that prior to that concept being known to the courts, the respondent would have had to fail. Despite a crystal clear agreement that his service in the army could be extended for a precisely defined two-year period that decision could legally be reversed with no change of circumstances and no new relevant statute or statutory regulation within say a month of or at any time during the two-year period. This seems to me inherently improbable and unless I was compelled to take that view by virtue of the statutory provisions, I would not do so. I do not believe that I am so compelled and clearly that was the view also of Laffoy J. However, I do concede that there is a problem of terminology. The language of the learned trial judge would seem to indicate a finding by her of an ordinary contract. In support of this finding, reliance is placed by the respondent on a reference by Henchy J. in his judgment in The State (Gleeson) v. The Minister for Defence [1976] I.R. 294 to a member of the Defence Forces having a “statutory contract” for a period of three years “which carried with it the statutory benefits and liabilities attaching to his rank in the army.” It is difficult to know what exactly Henchy J. meant by that expression. I am not relying on it for the purpose of this judgment because I do not think he was referring to an ordinary private contract. He was using the phrase in the context of the ordinary terms and conditions of service in the army. On the other hand, Henchy J., as everybody knows, was extremely careful about words and I do not believe he used the word “contract” in a merely loose metaphorical sense. It is trite law that the expression “agreement” does not necessarily mean a legally enforceable agreement or contract. On the other hand, I can think of no legal context in which the word “contract” is used and where it does not involve some kind of legal liability connotation. Fennelly J., of course, makes an additional objection to any idea that there could have been a contract. He invokes the well-known principle that for the purpose of vicarious liability in a tort action, where the tort is committed by a state employee, the Minister (subject to one well known statutory exception) cannot be vicariously liable as both the Minister and the staff member are fellow servants of Ireland. On my understanding of the law, however, I think there is a distinction between potential tortious liability of a Minister and potential contractual liability. There is nothing conceptual in law to prevent a Minister entering into an intra vires contract with a state employee. Even if Laffoy J. was wrong in considering that there was a contract with the Minister for Defence (and I do not think she was) once she was of the view that there was a contract at all, I cannot see why it cannot be regarded as a contract with Ireland which is also a named defendant. Returning to the more important point as to whether there could in any sense have been a contract, I will start by drawing attention to what the learned trial judge actually said. She said the following: “In my view, the plaintiff’s claim in contract is well-founded. The continuance of the plaintiff in service for the two-year term expiring on the 29th October, 1996 created a contractual relationship between the first defendant and the plaintiff. That contractual relationship was, of course, subject to the provisions of statute law and regulations then in force governing the Defence Forces. It is undoubtedly the case that, if something had occurred during the two-year extension which, in accordance with that regulatory regime, gave rise to an entitlement to discharge the plaintiff from the army, such discharge would not have constituted a breach of contract. However on the evidence nothing occurred other than the reclassification of the plaintiff to medical category E. That reclassification resulted from a change of policy rather than any material change in the plaintiff’s medical condition since his extension of service medical examination in April, 1994 and the continuance of his engagement in October, 1994. In my view that is the only reasonable inference to be drawn from the certificate of the medical board, which rationalised his reclassification on the ground that the plaintiff had been suffering from ‘chronic ineffectivity’ since 1987. In those circumstances, I do not think that the discharge of the plaintiff prior to 29th October, 1996 was justified and, accordingly, I find that it was in breach of contract.” “The characteristic features of an office are that it is created by Act of the National Parliament, charter, statutory regulation, Articles of Association of a company or of a body corporate formed under the authority of a statute, deed of trust, grant or by prescription; and that the holder of it may be removed if the instrument creating the office authorises this. However, the person who holds it may have a contract under which he may be entitled to retain it for a fixed period: see the decision of the Supreme Court in O’Brien v. Tipperary Board of Health I.R. 761 and in Carvill v. Irish Industrial Bank Limited [1968] I.R. 325.” Section 65(2) of the Defence Act, 1954 provides that where “a man of the Permanent Defence Force is continued in service for a fixed period ‘he may be continued as a man of the Permanent Defence Force for that period in the same manner in all respects as if his term of service were still unexpired.” In my opinion, that subsection refers to the day to day incidents of his employment which are entirely governed by statute or statutory regulation but it does not mean that where the Minister as the designated person to do so, grants an extension for a fixed period, the Minister or arguably the State assumes no legal liability. Like the learned High Court judge, I take the view that the liability is contractual. There is benefit passing to the Minister and/or the State in the continued service of the soldier. If the learned trial judge and I are wrong for the reasons indicated by Fennelly J. in invoking the ordinary law of contract as the basis of ministerial or state liability for reneging on an extension officially granted where no new relevant factor has arisen, then I think the remedy should be fashioned out of the statute itself. I have already indicated my view that Henchy J. has always used language in a careful and deliberate fashion. He had in mind some particular meaning in using the expression “statutory contract”. The very word “contract” implies rights and liabilities between two parties. Whatever was precisely meant by the expression “statutory contract” it would seem to me that Henchy J. clearly had in mind that a member of the Defence Forces could have some enforceable rights as well as duties. In the passage quoted by Fennelly J., Henchy J. said the following: “Subject to the statutory provisions for discharge, he had a statutory contract for a period of three years which carried with it the statutory benefits and liabilities attaching to his rank in the army.” “Every established civil servant shall hold office at the will and pleasure of the Government.” “The situation I am considering is entirely different to that in The State (Gleeson) v. Minister for Defence [1976] I.R. 280 which was a case dealing with an express statutory provision (absent in the 1956 Act) that Privates in the army could enlist for a minimum period of three years and a maximum period of 12 years and in which reference was therefore permissible to a Private having a ‘statutory contract’ relating to his employment in the army.” If I am wrong therefore in my view that the respondent has a good cause of action in ordinary contract, I think it at least arguable that he would have rights under the statute itself. I cannot accept that he would have no legal remedy when no change of circumstances took place. The importance of such a remedy is vividly illustrated by a simple question and a simple answer in the cross-examination by Mr. Harold Whelehan, S.C., counsel for the plaintiff of Lieutenant Colonel Ronan Concannon, an army officer called by the State. It is question 373 on day 2 and the transcript reads as follows: “Q. So to use the awful cliché, the goalposts shifted so far as he was concerned? A. As far as he was concerned, yes, they did.” At the risk of repeating myself, I query that it could have been the intention of the Oireachtas in 1954 that if the “goalposts” were moved at any time after the extension was granted with no objective change of circumstances or supervening statutory regulation, the soldier would be without a remedy. I am also in agreement with the learned trial judge that the actual circumstances which gave rise to a change of position was a policy directive within the army arising out of the report of Mr. Dermot Gleeson, S.C. As I have taken the view that the learned High Court judge was correct in holding that the Minister had entered into what I have described as a “side contract” with the respondent and as, at any rate, even if I am wrong in that, I am in agreement with Fennelly J. about legitimate expectation. I do not find it necessary to explore further what exactly Henchy J. had in mind when using the expression “statutory contract” or the interpretation put upon it by Costello P. I would simply again point out that the status of a member of the Defence Forces is not the same as an ordinary civil servant and that may have implications in relation to his rights and liabilities under his statutory employment. I would, therefore, dismiss the appeal. I am in full agreement with the approach to damages set out in the judgment of Mr. Justice Fennelly. McGrath v. The Min. for Defence & Ors. | ||||||||||||||||||||