Industrial Tribunals Northern Ireland Decisions

 
THE INDUSTRIAL TRIBUNALS

CASE REF:1044/05

CLAIMANT: Joseph Copeland

RESPONDENT: Belfast City Hospital Trust

DECISION

The unanimous decision of the tribunal is that the claimant was not unfairly dismissed by the respondent.

Constitution of Tribunal:

Chairman: Mr Cross

Panel Members: Dr Ackah

Ms Madden

Appearances:

The claimant was represented by Mr McGleenan Barrister-at-law instructed by Higgins Hollywood Deazley Solicitors.

The respondent was represented by Mr O'Reilly Barrister-at-law instructed by The Central Services Agency,

The Issues

1. The claimant, who was disciplined by his employer, the respondent, was, at his disciplinary hearing, demoted from his post of Director of Finance to the respondent Trust and suffered a reduction in salary. On appealing against this decision, the appeal panel overturned the decision of the original disciplinary panel and summarily dismissed the claimant from his employment. This tribunal was asked to decide whether this dismissal was fair and whether the procedures leading up to it were fair.

The Evidence

2. The tribunal heard the evidence of the claimant and a number of witnesses called by each party, namely: - Mr Quentin Coey, Miss Jennifer McCaw, Mrs K McKeown, Mr Alistair Brown, Mrs M A Mutry, Mr Brendan Cunningham, Dr Fullerton, Mr Stephen Irwin, Mr Peter Shaw, Mrs Ramsay, Mrs Julie Thompson, Mr Allen, Mrs Ruddock, Mr Philip Leyton, Miss Haynes, Mr Kevin Corr, Mr A Murphy and Mrs Kathleen Brown.

Findings of fact

3. The claimant was the Director of Finance of the respondent Trust and as such was responsible for implementing the accounting rules and procedures laid down to be followed by all Health Board Trusts, by the Department of Health and Social Services (hereinafter called the "Department"). The accountable officer of the respondent was its Chief Executive, Mr Coey.
4. One of the accounting rules which had to be adhered to and was well known to all senior accounting staff in the Trusts, the Health Boards and in the Department, was known as the Capital Charges System. This worked in the following way. The Trusts advise the Department at the start of the year of their estimated level of capital charges, being depreciation and interest. This is based on an estimate of the Trust's projected year end position with regard to fixed assets. This information is given to the Department in a form known as Form 1 & 2. Each Trust is then funded as required. This Capital Charges System is a closed system and each Trust's net position must remain neutral with regard to capital charges income and expenditure. The Trusts may only use the capital charges income from the Department to pay interest and depreciation and if there is any balance it is paid back to the Department as Public Dividend Capital (PDC). The PDC dividend is the balancing figure that ensures that total expenditure equals the total income requested in the Form 1 & 2. Thus any changes that occur during a year are accounted to the Department as a windfall gain or loss. This procedure was introduced to the Health Service by means of a Department circular of March 1996 and from then its principals were strictly enforced by the Department
5. As Director of Finance the claimant understood the importance placed on the Capital Charges System and PDC by the Department. Despite the clear rules governing any adjustment of PDC, the claimant made an adjustment to the 2002/2003 Accounts of the respondent Trust, reducing the PDC and using the reduction to offset against an underestimation of expenditure on non-clinical provisions. These provisions had been understated by some £600k. The proper procedure for dealing with a situation such as this, ie when PDC was greater than the original estimate, would have been for the claimant, on behalf of the respondent, to have submitted a form to the Department, being a revised Form 1, which would have recast the figures. However the claimant did not do that, instead he reduced PDC from £7.9 million to £7 million.
6. The claimant's case was that he had authority from the Department to do what he had done. The tribunal studied the documents produced for it. The two important documents on this point were an e-mail dated 5 June 2003, from the claimant to Julie Thompson, in the Accounts Department of the Department. The second was a clear and frank letter of explanation of the problem from the claimant to Andrew Hamilton, the Director of Financial Management of the Department. This letter which was dated 4 June 2003 explained in detail what had gone wrong and ended up suggesting that the claimant would resolve the problem of the £600k shortfall in the expenditure side of the accounts, by using part of an increased operational surplus to offset it. The claimant ended his letter by stating, "I propose, unless I hear from you to the contrary, to proceed with the surplus in income to meet the increased costs of movements from provisions." This course would be in direct conflict with the Capital Charges and PDC regime and would almost certainly have been rejected by the senior officials at the Department, such as Andrew Hamilton and Julie Thompson. Indeed this was the case made by the respondent and supported by the evidence of Ms Thompson to the tribunal. This letter of 4 June 2003 was never received by Mr Hamilton. A copy was shown to the tribunal, but no copy ever appears to have arrived at the Department. Unfortunately the respondent does not keep a record book of letters going out.
7. The problem caused for the Department by the non-arrival of the letter of 4 June was compounded by the e-mail of 5 June to Ms Thompson. The e-mail which went to Ms Thompson contained two main paragraphs, which reported in paragraph one a slight improvement in operational surplus. The second paragraph touches on the PDC issue, but only to say that total amount of PDC is reduced from the expected amount of £7,974k to "approx £7,000m but the reduction is offset by increased expenditure in operating expenses". The e-mail ends by saying that there will be"no material change to the bottom line reported position". The copy of that e-mail which was filed in the claimant's computer and which was circulated to his staff in the respondent's accounts department contained a middle paragraph which was not contained in the email that went to Ms Thompson.
8. This missing paragraph from the email sent to Ms Thompson read as follows:-

"The attached letter to Andrew Hamilton details the problem. Basically my staff over-recovered capital charge income and underestimated movements in provisions which understated operating expenses. The excess income offsets the increase in operating expenses".

The letter, which is referred to as an attachment to the e-mail, was not attached to the e-mail that went to Ms Thompson. The combined effect of the deletion of the middle paragraph to the e-mail (as recited above) and the fact that the Department never received the letter, resulted in the Department getting a completely false picture of what had occurred in the respondent's accounts and what the claimant proposed to do. Consequently the reply, which the claimant received from Ms Thompson, which is referred to below, was based on a quite different set of facts in her mind.

9. Ms Thompson replied to the claimant, consenting to the course of action that he was proposing, as of course she only had the information that was contained in the truncated e-mail, which, although it revealed a proposed adjustment to the figures in the PDC return, did not reveal that the claimant was seeking permission to break the fundamental rule of the PDC regime.
10. The claimant subsequently reported to the Board of the respondent that there was a small problem in the annual accounts but that he was resolving it. The true situation was only discovered some months later when an official in the accounts department of the Department was researching some unrelated matter. This resulted in an investigation of the situation, by way of internal audit. After various letters had passed between the Department and the respondent a meeting was held between Mr John Allen the Acting Director of Finance in the Department and Mr Coey of the respondent. Also present was the legal advisor to the respondent and Mr Barkley the respondent's Director of Personnel.
11. The claimant gave evidence that he had mentioned the problem of the PDC dividend to Mr Coey at a meeting that was held between the two men. Mr Coey in his evidence denied that he had been so apprised of the problem. Although there is reference, in the notes of the first disciplinary hearing, to Mr Barkley mentioning that he had overheard such a reference to the problem when he had come into that meeting. The tribunal find, in this conflict of evidence, that even if the matter was mentioned to Mr Coey, it was not stated with sufficient emphasis of the seriousness of the problem, to have alerted Mr Coey to the potential difficulty. Neither party called Mr Barkley to give evidence and the tribunal is left with the written note of the first disciplinary hearing and the conflicting evidence of Mr Coey and the claimant, from which it concludes that Mr Coey was unaware of the gravity of the matter.
12. At that meeting, Mr Allen pressed the respondent to dismiss the claimant or seek his resignation. Mr Coey resisted this advice and said that a proper disciplinary process should be adhered to. Mr Coey then arranged for a full report of the matter to be prepared by an external audit and investigatory team, from an organisation called The Beeches Management Centre. The report of the Beeches formed the basis of the charges against the claimant. A disciplinary hearing was then set up under the chairmanship of Mr Alistair Brown. The other member was a member of the respondent Trust. An accountancy advisor was appointed as a non-voting member of the committee, namely Mr Saville an accountant, with much experience in the Health Service. Mr Brown was on the same employment level as the claimant, a Director of the Trust. Mr Brown's salary level was lower than that of the claimant. The allegations against the claimant were set out in a letter to the claimant dated 2 April 2004 from the Director of Personnel of the respondent, Mr Mervyn Barkley. This letter stated that it appeared to the respondent, "in compiling the Trust's Annual Accounts for 2002/2003 you contravened Departmental instructions in respect of PDC dividend payable. Furthermore it is also suggested that you altered the record of a related e-mail communication which had been sent to the Department."
13. The disciplinary panel, having heard the evidence of the parties, held in favour of the respondent and decided to remove the claimant from his position as a Director of the respondent and to downgrade him to the level of Unit Senior Manager, with effect from 5 July 2004. The claimant alleged that the disciplinary committee were in touch with Mr Barkley about this demotion. However the tribunal hold that this was merely to check that there was a suitable post for the claimant to go to on his demotion. The claimant appealed the decision and although his appeal was out of time the respondent accepted it and set up an appeal committee to hear the case. The appeal which commenced on 21 March 2005 took the course of a complete re-hearing and was heard by Dr Fullerton, Medical Director of the respondent, and Ms Fiddis, a member of the respondent Trust, with an accountant non-voting member of the committee, Mr Cunningham, a retired Finance Director of the Southern Board.
14. The claimant was represented by Counsel, as was the respondent. The Disciplinary Rules of the respondent make provision for a claimant to be so represented but are silent on allowing representation for the employer. The claimant objected to the respondent being so represented but the committee allowed the representation. The claimant also complained that he had not been given five working days notice of the appeal hearing. Furthermore the claimant complained that his salary had not been paid to him between the first disciplinary hearing and the appeal at the full pre demotion rate.
15. After hearing the appeal the committee discussed a report which Mr Cunningham had written up as the appeal unfolded. The claimant was critical of Mr Cunningham for having written his report whilst the appeal was in progress. Mr Cunningham stated that he had only written non-controversial aspects and details of some evidence before the final submissions. After the submissions he withdrew to write up his advice to the voting members of the committee. After he had made his report to the voting members he withdrew from their deliberations and took no further part in the proceedings or the decision.
16. The appeal committee viewed the claimant's offences more seriously than the first disciplinary committee, particularly the alteration of the e-mail, which the committee decided was a particularly serious breach of trust given the claimant's role as Director of Finance. Despite the fact that he had not been warned by the respondent that he might face dismissal, it was the committee's decision that he be dismissed. Which decision was implemented by the respondent with immediate effect?
17. Further matters of fact concerning the first and appeal disciplinary committees were as follows:-

1. The chair of each committee was also a member of the respondent's Finance Committee and as such would have had some knowledge of the PDC dividend problem when it was reported on to the committee by the claimant.

2 The first hearing was held in a hotel, as a neutral venue. However the appeal was held in the City Hospital.

3. Although there is no provision concerning cross-examination in the respondent's disciplinary code the appeal permitted cross-examination by both sides.

4. A bundle of papers which the claimant wanted to rely upon at the appeal hearing was lost. However a copy of the papers, known as Section K was located and produced to the parties but the appeal committee did not view them as they were only discovered at the last moment.

18. The claimant was not warned, at any time by the respondent, during the disciplinary process, that he might face the loss of his job as a result of his conduct. However one of the claimant's witnesses, Ms Kathleen Brown the respondent's Human Resource Manager, and a friend of the claimant, did warn the claimant, that in her view the charges were sufficiently serious to warrant summary dismissal.
19. The respondent's accounts for the year in question were audited, without any qualification, by Pricewaterhousecoopers the respondent's auditors and by the Government Auditor. In the following year the accounts in question were not subject to a prior year adjustment.

The Law

20. The claimant firstly contended that his dismissal from his employment was unfair under the provisions of Article 130 of The Employment Rights (Northern Ireland) Order 1996 ("the 1996 Order"), in that his conduct was not such as would justify his dismissal. It is for the employer to show that the reason for the dismissal, in this case the conduct of the claimant, justifies the respondent in invoking the sanction of dismissal. The tribunal must not merely substitute its own view of the claimant's conduct for that of the employer. The tribunal must look at the actions of the employer/respondent and decide whether the action of the respondent in dismissing the claimant fell within a band of reasonable responses that a reasonable employer would adopt in dealing with a disciplinary matter such as this one before this tribunal. The tribunal must be satisfied that the investigation of the claimant's conduct is reasonable in the circumstances and that the decision to dismiss is a reasonable response in the light of the results of the investigation.
21. Furthermore the tribunal must look into the claimant's second contention that the respondent had bowed to unlawful pressure from the Department, the officials of which indicated the Department's insistence that the claimant be dismissed or forced to resign.
22. The claimant's third complaint to the tribunal was that the respondent failed, in a number of respects referred to above, to follow its own disciplinary code in its handling of the case against the claimant. In this respect the tribunal has to bear in mind Article 130A of the 1996 Order, in relation to the allegation of failure to follow its own code. In Article 130A (2) the tribunal is aware that "the failure by an employer to follow a procedure in relation to the dismissal of an employee shall not be regarded for the purposes of Article 130(4) (a) as by itself making the employer's action unreasonable if he shows that he would have decided to dismiss the employee if he had followed the procedure". Article 130(4)(a) refers to the circumstances (including the size and resources of the employer) which should be taken into account in deciding if it was reasonable for the employer to dismiss the employee. The tribunal was guided by the judgment of Mr Justice Elias, President of the English Employment Appeals Tribunal, in the case of Kelly- Madden v Manor Surgery [2007] IRLR 17. In that case the learned Judge stated that the equivalent provision in the GB legislation to our Article 130A applied to all procedural failures and not just the statutory procedures set out (in Northern Ireland), in the first part of Schedule 1 to the Employment (Northern Ireland) Order 2003. Mr Justice Elias states in Paragraph 49 of the said case :-

"In our view the section [in NI Article 130A] is broader in its effect. Whenever a tribunal is minded to find that the dismissal is unfair for procedural reasons alone, it is open to the employer to show that compliance would, on the balance of probabilities, have made no difference."

The Decision

23. The unanimous decision of the tribunal is that the claimant was not unfairly dismissed. In arriving at this decision the tribunal considered the evidence concerning the main points of the claimant's case, namely that he had not been guilty of a serious breach of the Department's accounting regulations. Secondly, that his alteration of the e-mail was not intended in any way to mislead the recipient and thus he had the consent of the Department to make the accounting corrections that he did make. Thirdly, that Mr Allen of the Department exerted influence on the respondent to ensure that the claimant was dismissed and fourthly, that in a number of respects the respondent failed to follow correct procedures in its disciplinary process. Each of these assertions will be dealt with in this decision.
24. The tribunal is satisfied that the relevant accounting regulations concerning the PDC dividend, set out in the Department's Circular were breached by the claimant. The only way that the breach could be permitted, as was admitted by the claimant, was if the Department had given consent to the breach. The consent issue will be dealt with in the next paragraph. The claimant's assertion that the Department had power to alter its regulations and thus to amend the PDC regime is correct, however the Department had not availed itself of this power and consequently the PDC arrangements continued to apply with all their original vigour. Without consent of the Department to a departure from the strict rules, the claimant is, in the view of this tribunal guilty of a departure from them. The fact that the respondent's accounts were audited and subsequent yearly audits, by both the respondent's auditors and the government auditor, raised no reference to the fact that the PDC dividend rules had not been adhered to, did not influence the tribunal in its decision. There might be various reasons for this, possibly the so-called consent was not investigated by the auditors who took it at face value, or this matter was simply not investigated by the audits which cannot cover every aspect of the respondent's business.
25. The tribunal then considered whether the claimant had the consent of the Department to this departure from the strict interpretation of the rules. The tribunal hold that the respondent was justified in concluding, after it had examined the detailed investigation report from The Beeches, that the claimant did not have a genuine consent. He had deliberately set out to mislead the officials in the Department who were charged with overseeing the implementation of Health Service policy on this issue. The claimant obtained his so-called "consent"to his course of action, by writing a letter, in which he frankly set out the true situation. However this letter was either never sent to the department, or was lost in the post. The claimant then typed out an e-mail to Ms Julie Thompson which did not mention the said letter or the true problem that required the Departmental consent. The e-mail laid a false trail and sought the Department's consent, to what appeared to Ms Thompson, to be a non-controversial request. The claimant then added an additional paragraph to the copy of the e-mail which he circulated to his own staff and saved on his file. This additional paragraph referred to the said letter, indeed attached a copy to the copy e-mail and gave the true reason for the request for permission to depart from the strict PDC rules. Had Ms Thompson seen the additional paragraph in the e-mail which she received, she would not have consented to the departure from the rules. Furthermore she would have been alerted to the fact that there was a letter, a copy of which should have formed an attachment that she had not seen and she would have asked for a sight of it and that would have further explained the true position. The tribunal hold that the reason for the alteration of the e-mail, after it was sent to Ms Thompson, was to lay a false trail for any one checking whether or not the claimant had received consent to depart from the PDC regulations. The tribunal hold, that the so-called consent thus obtained from the Department to this course of action, was no consent and thus the claimant was in breach of the Department's regulations on PDC.
26. As mentioned above the alteration of the e-mail of 5 June 2003 was a deliberate attempt to conceal the fact that the consent of Ms Thompson was based on incomplete and misleading information and was thus a nullity. In reaching this decision the tribunal hold, that in its view, this is the most serious aspect of the case. Had the claimant been only disciplined for misapplying the PDC regulations, then in the view of this tribunal, it would not have been appropriate for the respondent to have dismissed him. However the very serious breach of trust between the respondent and its Financial Director which flowed from this incident fully justified the respondent in dismissing the claimant.
27. The third matter pleaded by the claimant concerned the pressure to dismiss the claimant, exerted on the respondent by Mr Allen. The tribunal heard the evidence concerning this issue and read Mr Allen's letters to the respondent. The tribunal accept that Mr Allen did try to influence the respondent in this way. However the tribunal hold that Mr Coey resisted this pressure and insisted on the matter proceeding in the proper way through the disciplinary process. Despite some faults in that procedure, which will be referred to below, the tribunal hold that the respondent's disciplinary procedure was not compromised.
28. The final matters that the tribunal considered were the various complaints of the complainant concerning the disciplinary process itself. There were various points made by the claimant, some of more substance than others. For instance, the tribunal did not consider the fact that the appeal hearing took place in the City Hospital and not at a neutral venue, could be a serious complaint. The tribunal did not consider that the missing Bundle K documents would have been of great help to the disciplinary process, even if they had been made available sooner in the process, as they did not take away the fault from the claimant for his alteration of the e-mail message to Miss Thompson. However other departures from the respondent's disciplinary code did require investigation.
29. The fact that the first and appeal hearings were chaired by co-directors of the claimant, both of whom were at the same level as him and in the case of Mr Brown at a lower salary level, was considered by the tribunal. Both of these men were also on the respondent's finance committee and thus would have been involved in the decisions regarding the PDC regulations. The tribunal hold, that the respondent, when dealing with a disciplinary hearing involving such a senior employee as the finance director, had a very narrow pool of people to call upon to make up a disciplinary panel. Mr Coey could not sit upon either panel as he had been very much involved in the investigation and lead up to the disciplinary hearings. This only left fellow directors who, because of the seniority of the claimant were on the same level as him. Outside assessors were involved in each stage of the process and non-executive directors took part with the executive chairmen. There was no provision in the respondent's disciplinary code to allow an outsider to sit as a voting member of a disciplinary committee. The directors both sat on the finance committee. However the tribunal hold that this produced no conflict, as any director of the board would have known something of the finances of the respondent, whether from the Finance committee or from the main board. The tribunal hold that there was no conflict in this situation, as the directors were not in any deep involvement with the finance side and in particular were only aware of the PDC problem from what the claimant said at meetings concerning it, namely that there was not a problem. The tribunal hold that the constitution of the first and appeal panels was reasonable.
30. A further matter raised by the claimant was the contact that the first disciplinary panel had with Mr Barkley the Director of Personnel. The tribunal is satisfied that this contact was to ascertain that there was a post available for the claimant in the event of his demotion. There was nothing sinister in the contacts that were made for this purpose alone. Likewise there was criticism of Mr Cunningham, the outside expert, who sat as a non-voting member of the appeal committee. The claimant contended that he had written his report before the conclusion of the evidence and submissions. The tribunal having heard evidence from Mr Cunningham is satisfied that he did indeed write explanatory and non-contentious parts of his report before the final evidence was given, but at the end of the hearing he went away from the two voting members and completed his full report, with the benefit of having heard the full evidence and submissions.
31. The claimant complained that he did not get five working days notice of the date of the appeal, as required in the respondent's disciplinary code. The tribunal accept that this is the case. However the appeal was set on a date to accommodate counsel and the parties had been contemplating the appeal for some time and the tribunal hold that the claimant was not prejudiced by short notice, which was caused by St Patrick's Day and a weekend. The claimant also contended that the respondent's said code did not provide for legal representation for the respondent, although such representation is allowed for the employee. The tribunal hold that the code is deficient in this respect and that it should provide for legal representation for both parties or for neither. The tribunal hold that the appeal panel acted fairly in allowing the respondent to be represented by counsel in the same way as the claimant.
32. The claimant was not warned by the respondent, that the case against him was one of gross misconduct, which might result in his summary dismissal. The claimant argued that had he been aware that he might face such dismissal he might not have proceeded with his appeal. The tribunal considered this point but hold, that although it is important to warn employees that they may face summary dismissal for certain offences, in this case the claimant was such a senior employee and had a considerable experience in acting as a disciplinary authority himself, that he would have known the possibility of such a dismissal. Furthermore he was himself warned that this could be the outcome, by his friend and work colleague, Mrs Brown, who at the meeting that they had before the appeal did warn the claimant of the possibility of such an outcome. In holding that the claimant was not prejudiced in this regard the tribunal bore in mind the very senior nature of the claimant's employment and the fact that these consequences could not have been a surprise to him. Furthermore the claimant was advised at the first disciplinary hearing by a trade union official and at the appeal by solicitor and counsel.
33. The tribunal has dealt with these matters of possible faults in the procedures adopted by the respondent. If the tribunal is wrong in its decision on these procedural matters, it holds that the breach of trust which resulted from the alteration of the e-mail and the laying of the false trail and the misleading of the accounts department staff by the claimant, all justified the dismissal. Much of the evidence of the alteration of the e-mail and the laying of the false trail, to secure the consent of the Department to the claimant's proposed action, to use the excess income obtained from the Department to offset the increase in the respondent's operating expenses, came out at the appeal hearing. This was a lengthy hearing stretching over a number of days, in comparison to the relatively short first hearing which lasted for only one day. Because the appeal heard so much more evidence of these events, the members of the appeal panel appear to have felt much more strongly that the breach of trust created by the claimant justified dismissal. The tribunal was impressed by the clear evidence of Dr Fullerton on this. The tribunal hold that as required by Article 130A of the1996 Order, the respondent has discharged the requirement of satisfying this tribunal, that even if all the procedural requirements had been complied with to the letter, the claimant would still have been dismissed.
34. The tribunal has examined all the above claims that have been raised by the claimant, and has borne in mind that it is not the function of the tribunal to replace the respondent's decision in the matter with its own decision. It is the tribunal's function to decide whether or not, the decision of the respondent falls within a band of decisions that a reasonable employer would invoke, after carrying out a fair enquiry into the matter. This tribunal concludes that the respondent had a genuine belief in the wrongful conduct of the claimant and that it conducted a full enquiry into both the aspects of the claimant's conduct, namely the PDC issue and the alteration of the e-mail. Bearing in mind the very senior position that the claimant held in the respondent Trust, the tribunal holds that the action of the claimant destroyed the trust that the respondent had the right to expect in its dealings with its Finance Director. Consequently the decision to dismiss fell within the band of reasonable decisions that an employer could invoke in dealing with such a disciplinary matter. For these reasons this tribunal holds that the claimant was not unfairly dismissed.

Chairman:

Date and place of hearing:

2 & 6 October 2006, 6 - 8, 11 - 14, 19 - 21 December 2006, 3 – 5 January 2007 & 14

February 2007, Belfast

Date decision recorded in register and issued to parties: