Rose Gibb is £175,000 better off today after the Court of Appeal ruled the former chief executive of Maidstone and Tunbridge Wells trust should be paid her severance deal.

In the judgment issued today one of the judges in the case - Lord Justice Sedley - made stinging criticisms of the Department of Health, saying it was willing to see her sacrificed on the “altar of public relations”.

He also had harsh words for the former board saying that the “trustees” of the hospital group took the view, when a highly critical report was about to be published, that  “the sacrifice most likely to propitiate the deities of Whitehall and the media was their chief executive officer, Ms Gibb.”

He said the trust was now seeking “to escape the coils of a contractual obligation it has entered into by saying hat it could not rationally have signed up to it.”

The three judges comprehensively rejected the main thrust of the trust’s case - that the previous board had acted beyond its powers in agreeing the pay-off - and the lead judge, Lord Justice Laws, indicated that Ms Gibb would also have won on other grounds, even if they upheld the trust‘s “ultra vires” argument that it had acted beyond its powers by agreeing her original pay off of £240,000.

The judge in the lower court had put too much importance on what he saw as a “lack of financial rigour in the trust’s decision-making process,” the judgment said, and the trust did not have to disregard Ms Gibb’s previous good service or the impact on her future when deciding the level of a severance deal.

The verdict will be a blow for the Department of Health, which under Alan Johnson, had been determined not to pay Ms Gibb.

Lord Justice Sedley said: “Central government (which, it seems, will be picking up the bill) might have done better to recognise that the trust, in reaching the agreement, had been making the best of a bad job; and perhaps better still to recognise that the bad job had been the decision, which the Department does not appear to have cavilled at, to sacrifice on the altar of public relations a senior official who had done nothing wrong.”

Lord Justice Sedley added: “On the scale of severance payments not only in the private sector but in parts of the public sector, £240,000, was not on its face outlandish compensation for the arbitrary termination of a career which it was unlikely Ms Gibb would be able to resume or resurrect.”

He urged that those responsible should consider “that all this money, both compensation and costs, could have been spent on improving hygiene and patient care in the trust’s hospitals.”

Ms Gibb left the trust in October 2007, days before the publication of a highly critical Healthcare Commission report into outbreaks of clostridium difficile at the trust.

Her pay-off - a year’s salary and benefits, plus six months’ pay in lieu of notice - had been negotiated with the then remuneration committee and she understood had been approved higher up in the NHS.

But days after the report came out the then health secretary Alan Johnson told the trust not to pay it until the legality of the payoff had been examined.

Ms Gibb was eventually told the trust would pay the six months in lieu of notice - which it was contractually bound to - but not the remaining £175,000 because the trust had been acting beyond its powers in agreeing the severance deal.

When she took the case to the High Court, she lost with Mr Justice Treacy agreeing that the agreement was “irrationally generous” - although he did suggest the trust could reasonably have paid her an additional £70,000, the maximum she would have got from an employment tribunal.

Ms Gibb’s lawyers argued that because she had followed the terms of the severance agreement she had not launched an employment tribunal case - and a gagging clause meant she had been unable to defend herself when she was “hounded, victimised and demonized” by Alan Johnson.

Earlier this year she went to the appeal court, to get the lower court’s judgment overturned. In a two day hearing,  the trust’s arguments were scrunitised with the appeal court judges seemingly reluctant to accept that a contract between employer and employee could be easily set aside.

After she left the trust, Ms Gibb and her husband, Mark Rees, former chief executive of Barking, Havering and Redbridge Hospitals trust, set up their own consultancy company operating from their home in Kent.  They, and their young family, later relocated.

The chairman of the trust when Ms Gibb left James Lee said the appeal court judgment had vindicated the decisions made by the then board. He said: “She deserved the settlement and it was completely wrong of Alan Johnson to block it.” 

Jon Restell, chief executive of the NHS manager union Managers in Partnership, said: “Rose and the union are not celebrating the outcome of the appeal, because there are no winners. This case should never have come to court. It only did so because the NHS handled things so incompetently.”

“Rose never shunned her responsibilities and she left the trust against her wishes. She would have remained in post to answer public concerns personally. She would have been able to inform and explain matters to the public in an open way. There would have been no need for a compensation payment.”

A Department of Health spokesperson said: “We are disappointed by the Court of Appeal’s decision. We understand the Trust is in consultation with its lawyers to discuss its options. The Trust has new leadership, and its priority is to continue to provide high quality care for all of its patients.”