The board of Maidstone and Tunbridge Wells trust acted beyond its powers in agreeing a payoff of £250,000 to former chief executive Rose Gibb, the High Court heard yesterday.
At the time of the agreement in October 2007, the trust’s remuneration committee did not have a business case outlining why such a payment was justified.
Jane McNeill QC, defending the trust against a breach of contract action brought by Ms Gibb, said the trust had acted outside its powers because the sum of money agreed was unreasonable. It had no powers to pay a premium for previous service, she said.
“It’s my submission that any trust acting reasonably in making this sort of decision had to have a business case before arriving at a figure for a termination package,” Ms McNeill said.
Although a business case was subsequently produced, it was aimed at justifying the decision already made, she said.
“It is perfectly clear in this case that the board did have considerable sympathy with Ms Gibb and wanted to do the best for her,” said Ms McNeill.
She said that it was “quite unimaginable” that a chief executive against whom there were these sorts of serious findings could have been found another job in the NHS.
She said that if the termination package had not been agreed, there was an option of dismissing Ms Gibb.
This would have been an unfair dismissal because the proper procedures would not have been gone through, and it would not have been one which the trust could have defended at an employment tribunal, she suggested. However, the total award a tribunal could make was considerably less than the severance package.
She said there was a dispute about whether the strategic health authority had given approval for the package accepted by Ms Gibb. The trust’s understanding, through chair James Lee, was that the SHA had done so. But this was disputed by the SHA and there had been an “an irritable, if not irate” exchange of emails at the time.
James Keegan, national officer of Ms Gibb’s union Managers in Partnership, told the hearing he had been assured by the legal firm advising the trust on the settlement that “all the ducks had been lined up”.
This assurance had been given before the deal was signed and Mr Keegan understood it to mean that the necessary approvals were in place. He said he remarked how quickly these approvals had been obtained. The court heard that the process of getting a payoff approved by the Treasury could take many weeks.
NHS director general of finance, performance and operations David Flory said the Healthcare Commission report was the most serious and critical report that he had read.
“It was impossible to envisage how the accountable officer of the trust could be redeployed into a role carrying significant responsibility,” he said.
Ms McNeill said: “As an accountable officer, Ms Gibb’s main priority had to be patient safety. The findings of the Healthcare Commission report cast considerable doubt on whether patient safety had been the main priority on her watch.”
When the report came out, Mr Flory wrote to the trust telling it not to pay the agreed settlement. Several months later, Ms Gibb was told she would get six months’ salary in lieu of notice but not the additional£175,000 negotiated.
By this time, she was too late to go to an employment tribunal. Mr Flory categorically denied that this potential loss of her right to seek a hearing was a factor in the timings of Department of Health decisions.
Oliver Segal, Ms Gibb’s counsel, mentioned a series of cases where NHS chief executives had left or been transferred to another job. These included Pennine Acute Hospital trust, Mayday trust in 2007, Leicester, Hastings and Eastbourne in 2006, Brighton, North West London, and Medway.
The case continues.