HEARING DATE 2 August 1989
University - Academic staff - Dismissal - Jurisdiction - Jurisdiction of court - Dispute between university and members of academic staff concerning proposals to dismiss staff for redundancy - Statutes of university making no provision for dismissal for redundancy - Lecturers seeking to restrain university from proceeding with proposals - Whether court having jurisdiction to hear internal university dispute - Whether jurisdiction of visitor of university over internal disputes ousted in respect of employment disputes - Education Reform Act 1988, s 206(1)(2).
HEADNOTE
The respondents were employed as lecturers at a university and were among members of the academic staff which the university was proposing to dismiss on the grounds of redundancy due to shortage of funds. The respondents objected to the university's proposals for compulsory redundancy, claiming that the proposals were in breach of section XXV of the university's statutes, which provided that academic staff could only be dismissed for good cause and made no provision for dismissal for redundancy. In proceedings brought by the respondents against the university for an injunction restraining it from proceeding with its redundancy proposals it was held that the court had jurisdiction under s 206 of the Education Reform Act 1988 to hear and determine employment disputes between the university and its academic staff unless and until a reference was made to and accepted by the visitor and that that situation would continue until the new procedures for handling such disputes made under that Act were incorporated into the university's statutes. The court indicated that an injunction would be granted if the university failed to refer the dispute to the visitor. The university accordingly referred the dispute to the visitor, claiming that, although it had no power to terminate the respondents' rights as members and office-holders of the university under its charter and statutes by reason of section XXV, the respondents were employed under contracts of employment and the university, acting by its council, had power to issue notices of redundancy. The university contended that, although they would be a breach of the respondents' contracts of employment because they would be contrary to their conditions of service, which incorporated the provisions of section XXV into the contracts of employment, the notices would nevertheless be effective to terminate the respondents' contracts of employment, subject to the payment of compensation, while still leaving them as members and office-holders of the university, albeit with only vestigial rights. The question arising for the visitor's determination was whether, assuming the separate existence of a contract of employment, the university had power to breach the respondents' contracts without at the same time terminating their rights as members and office-holders of the university under its charter and statutes.
Held
The university had no power under its domestic laws to breach the respondents' contracts of employment by issuing redundancy notices, since under art 3 of its charter the university only had power to do acts which complied with the terms of its charter and statutes and it was clear that if it committed the proposed breach it would be acting in breach of section XXV of those statutes, which was intended to ensure security of tenure for its academic staff, and would in effect remove or substantially interfere with the rights of the respondents as members and office-holders of the university under its charter and statutes. It followed that, even if the respondents were employed under contracts of employment separate from their membership of the university, the university had no power to breach the respondents' contracts of employment since to do so would inevitably terminate their rights under its charter and statutes as full-time members of the academic staff. Accordingly, members of the academic staff of the university could not lawfully be removed from office or have their contracts of employment terminated otherwise than for good cause as provided by section XXV of the university statutes.
Thomas v University of Bradford [1987] 1 All ER 834 considered.
NOTES
For the visitor's power to hear university disputes and the exclusion of the visitor's jurisdiction, see 15 Halsbury's Laws (4th edn) paras 260-261, and for cases on the subject, see 19 Digest (Reissue) 570-571, 4262-4265.
For the nature of visitatorial powers, and for a visitor's powers and jurisdiction, see 5 Halsbury's Laws (4th edn) paras 872-873, 879-885, and for cases on the subject, see 8(1) Digest (2nd reissue) 641-642, 646-647, 5112-5124, 5172-5184.
For the Education Reform Act 1988, see 15 Halsbury's Statutes (4th edn) (1990 reissue) 421.
CASES REFERRED TO
Jenkin v Pharmaceutical Society of GB [1921] Ch 392.
Pearce v University of Aston in Birmingham (No 1) [1990] 2 All ER 461, CA.
Thomas v University of Bradford [1987] 1 All ER 834, [1987] AC 795, [1987] 2 WLR
677, HL.
INTRODUCTION
Petition and cross-petition
The University of Aston in Birmingham, by a petition dated 27 June 1989 and addressed to the visitor of the university, sought the determination of a dispute between itself and the respondents, Charles George Pearce, Barry J Simpson and Michael Stanley Wrenn, who were members of its academic staff, about whether the university's proposals to dismiss certain members of its academic staff for redundancy were in breach of section XXV of its statutes, which provided for the dismissal of academic staff on the sole ground of good cause, and therefore outside its powers. The respondents, by a cross-petition, sought, inter alia, interlocutory orders restraining the university from taking any further steps preparatory to the service of redundancy notices. In the absence of the appointment of a visitor of the university pursuant to the power reserved to Her Majesty by art 28 of the university's royal charter dated 22 April 1967, the visitatorial power in relation to the university was and remained vested in Her Majesty, and accordingly by permission and command of Her Majesty Sir Nicolas Browne-Wilkinson V-C undertook the burden of determining the petitions in exercise of Her Majesty's visitatorial powers. The facts are set out in the determination.
COUNSEL
John Mitting QC and Colman Treacy for the university.
Jeffrey Burke QC and David Bean for the respondents.
PANEL: SIR NICOLAS BROWNE-WILKINSON V-C ON BEHALF OF THE VISITOR
JUDGMENT READ 2nd August 1989
JUDGMENT BY SIR NICOLAS BROWNE-WILKINSON V-C
By Her Majesty's warrant dated 26 July 1989 I was appointed her commissioner to exercise on her behalf Her Majesty's visitatorial jurisdiction upon a petition by the University of Aston and a cross-petition presented on behalf of Charles George Pearce and others to determine and resolve a dispute between the university and certain members of the academic staff. I propose now to make my determination and give my reasons therefor. I am doing so orally and without taking the time necessary to give my determination and report to Her Majesty in writing because there is considerable urgency in the matter. I can state quite shortly the background facts necessary for my determination.
The respondents to the petition, Mr Pearce, Mr Simpson and Mr Wrenn, are three members of the full-time academic staff of the university. They were each appointed before 20 November 1987 and have not been promoted since that date. They, together with 20 other members of the academic staff, are facing the possibility that they will be dismissed by the university on the ground of redundancy. The exact number of the anticipated redundancies cannot be ascertained at present, but it is thought there might be approximately 12. The identity of those out of the 23 who would be selected for redundancy cannot as yet be ascertained. The respondents allege that the university has no power to dismiss them on the ground of redundancy since they enjoy academic security of tenure under the charter and statutes of the university.
On 14 June 1989 the three respondents started proceedings in the Queen's Bench Division asking for an injunction restraining the university from pursuing a course of action which could lead to compulsory redundancy. They relied on certain provisions in the charter and statutes of the university which were expressly incorporated in their terms of service whereby their appointments could only be terminated for good cause, that is to say not on the ground of redundancy.
On 19 June 1989 Morland J, on the application of the university, struck out the writ on the ground that the dispute fell within the exclusive jurisdiction of the visitor, Her Majesty the Queen. On 23 June the Court of Appeal held that, although the dispute was of a kind which fell within the exclusive direction of the visitor, unless and until there was a reference of the dispute to the visitor s 206 of the Education Reform Act 1988 gave the court jurisdiction to entertain the action (see Pearce v University of Aston in Birmingham (No 1) [1991] 2 All ER 461). The university thereupon indicated an intention to refer the matter to the visitor and by the petition dated 27 June 1989, which is the petition before me, did so refer the matter. The university gave the Court of Appeal an undertaking not to issue any redundancy notices before 30 September 1989.
Subsequent to the Court of Appeal decision, the university proceeded to take certain further steps preparatory to giving redundancy notices. In consequence there is a cross-petition by the respondents claiming, amongst other things, that there should be interlocutory orders restraining the university from taking further steps preparatory to the service of redundancy notices.
The desire of the university to make members of the academic staff compulsorily redundant is due to shortage of funds caused by the policies being pursued by the government through the University Grants Commission and the Universities Funding Council. It is unnecessary for me to go into any great detail. Broadly, the scale of public funding to the university has become dependent on the grading of various cost centres in each university. Cost centres which are below average attract substantially less public funding than those which are above average or outstanding. The university, having tried other methods (including voluntary redundancy) to reduce its salary expenditure and maximise public funding, has now reached the conclusion that the only solution is to make redundant some of these 23 members of staff, who are all grouped within cost centres classified as below average.
The respondents see the matter differently and deny there is any need for compulsory redundancy. If the petition got to that stage there would be substantial issues of fact which I would have to resolve. But the respondents claim that before one gets to that point there is a short answer. They say that under the charter and statutes of the university they enjoy security of academic tenure which is written into the statutes. They say that the council of the university cannot dismiss them other than for good cause. That is the question of law which I am determining.
Before turning to the charter and statutes I must mention the position under the Education Reform Act 1988. Section 202 and the following sections establish a body of university commissioners who are to exercise their power so as to secure that the statutes of the university enable the university to dismiss academic staff for redundancy. The commissioners, as I understand it, have not yet dealt with Aston University. In any event, the position of these 23 members of the academic staff will not be affected by the actions of the commissioners, since under s 204 any right to dismiss for redundancy which the commissioners may introduce will not apply to those like these 23 members of staff who were appointed before 20 November 1987. Accordingly, the respondents and the other 20 members of staff will under the existing and future law enjoy security of tenure, unless the university is free under its existing statutes to dismiss on the ground of redundancy.
The university is incorporated by royal charter divided into a number of articles. The charter contains in its second schedule the statutes of the university. The statutes are divided into a number of sections. There is power to amend both the charter and statutes, but only with the consent of the Privy Council. Article 1 of the charter contains the incorporation of the university.
The persons who are corporators are defined as including a number of different individuals, together with all others who shall pursuant to this charter and the statutes of the university for the time being be members of the university. That body of persons is constituted as one body politic and corporate. Article 28 reserves to the Crown the right to appoint a visitor.
The members of the university are defined by the statutes, section II, para 1 of which provides that members of the university shall include 'The Members of the Academic Staff '. Academic staff is defined by section I of the statutes as meaning 'the Academic Staff of the University, and shall include the members of the full-time teaching staff of the University...' Therefore, these 23 teachers at the university are members of the university and are corporators.
Going back to the charter, the objects of the university are set out in art 2 and the powers are set out in art 3. Article 3 provides as follows:
'The University shall be both a teaching and an examining body and in furtherance of its objects it shall subject to this Our Charter and the Statutes, have the following powers . . .'
I need only mention two of them:
'(m) To institute Professorships, Readerships and Lectureships, and any other offices of any kind and whether academic or not as the purposes of the University may require: to appoint persons to and remove them from such offices, and to prescribe their conditions of service.'
Pausing there, it is clear therefore that persons appointed to the academic staff are office-holders within the university. Article 3(x) provides:
'To do all such other acts and things including the promotion of a Bill or Bills in Parliament whether incidental to powers aforesaid or not as may be requisite in order to further the objects of the University.'
The introductory words of art 3 make it clear that any powers which the university enjoys are 'subject to this Our Charter and the Statutes'. It is therefore clear that the university can do nothing under art 3 which does not comply with the provisions of the charter and statutes.
The charter proceeds to establish various organs of the corporate body and to distribute the powers and functions of the university between those bodies. For present purposes it is sufficient to mention convocation, which is the general body of the university, the council, upon which broadly the administrative and directional functions of the university are conferred, the senate, to which academic functions are assigned, and an academic assembly, which, as I understand it, has functions of an advisory nature comprising members of the academic staff. Of these the most important for present purposes is the council, since that is the body which is proposing to issue the redundancy notices. Article 11 provides as follows:
'There shall be a Council of the University (herein referred to as "The Council") which shall, subject to the Statutes, be the executive governing body of the University, and shall have the custody and use of the Common Seal, and shall be responsible for the management and administration of the revenue and property of the University and shall subject to the powers of the Senate as provided in this Our Charter and the Statutes, have general control over the conduct of the affairs of the University and shall have all such other powers and duties as may be conferred upon it by the Statutes.'
The university at one stage contended that under art 11 the council could dismiss for redundancy, notwithstanding that such dismissal would be a breach of other provisions of the statutes, since art 11, in so far as it conferred general powers of administration, did not expressly make such powers subject to the provisions of the charter and statutes. That argument was abandoned in the course of submissions, to my mind rightly, since the council under art 11 could not have any power wider than that conferred on the university as a whole by art 3.
Article 17 provides for the making of statutes and art 18 provides that the statutes in the second schedule to the charter should remain in force until amended. The statutes as amended provide as follows. They establish various offices of the university, the chancellor, the pro-chancellor, the vice-chancellor, pro-vice-chancellors, the auditor and various others. Then section XIII establishes convocation. I need only notice that the members of the academic staff are members of convocation. By section XVI the council is established and four members appointed by the academic assembly are members of council. Section XVII sets out the powers of the council and starts with these words:
'Subject to the Charter and these Statutes, the Council shall, in addition to all other powers vested in it, have the following powers...'
Again, those preamble words indicate that the powers of the council are expressly subject to the charter and the statutes.
Amongst the powers conferred by section XVII, in para 17 there is power to enter into, vary, carry out and cancel contracts on behalf of the university. In para 25 it is provided:
'Generally to exercise all such powers as are and maybe conferred on the Council by the Charter and these Statutes...'
I do not think I need read further.
Section XVIII constitutes the senate, and para 1(6) provides that there shall be one member of the senate for each 75 members of the academic assembly to be elected by members of the academic assembly.
Under section XIX, para 5 the senate is given power to appoint all academic staff in accordance with rules approved by the council.
Section XXV is the most critical provision. Its cross-heading is 'Removal of Officers and Members' and it reads as follows:
The Chancellor, Pro-Chancellor, Vice-Chancellor, Pro-Vice-Chancellors, Members of the Council, and members of the Academic Staff, the Secretary, the Academic Registrar, the University Librarian, and the holder of any other office specified by the Council for this purpose may be removed by the Council and Senate sitting together in joint session for good cause which shall for this purpose mean...'
I can summarise the headings for good cause. They are: (a) conviction of a criminal offence (b) physical or mental incapacity (c) immoral, scandalous or disgraceful conduct and (d) conduct judged by the authority in question as constituting failure or inability of the person concerned to perform the duties of his office.
Subject to the terms of his appointment, no member of the staff specified in paragraph (1) of this Section shall be removed from office save upon the grounds specified in paragraph (1) of this Section and pursuance of the procedure to be specified in the Ordinances, provided always that no such member shall be removed from office unless he shall have been given reasonable opportunity of being heard by the Council and Senate, sitting together in joint session.
There are a number of points to be emphasised. First, there is no suggestion by the university that any of the members of the academic staff in question are guilty of any of those matters which are there categorised as being 'good cause'. Second, no attempt has been made to exercise the powers under section XXV, nor is it proposed to do so. Thirdly, it is clear from the wording of section XXV that, amongst others, members of the academic staff are holders of an office within the university. The 23 members of the academic staff with whom I am concerned took office on the terms set out in a document called 'Conditions of Service - Academic (Teaching) Staff '. The preamble to that document states:
'These conditions shall apply only to the full-time permanent staff engaged upon teaching and research and appointed as Professors, Readers, Senior Lecturers, and Lecturers, hereinafter described as "teachers". Teachers on appointment by virtue of the Charter and Statutes become members of the University and of the body politic and corporate and thereby accept the responsibilities involved...'
Paragraph 4 of the conditions of service is headed 'Termination of Appointment' and reads:
'The University shall not suspend or remove or terminate the appointment of the teacher otherwise than in accordance with the provisions of Sections XXV and XXVI of the Statutes.'
The effect of those conditions of service is necessarily to introduce into any contract of employment the provisions of section XXV of the statutes.
The case ultimately advanced by the university is as follows. It says that the respondents, although members and office-holders of the university under the charter and statutes, are also employed under a contract of employment, on the terms set out in the conditions of service. It is accepted that under the general law of the land it would be a breach of contract to terminate those contracts of employment, since the requirements of cl 4 of those conditions of service, that is to say termination only for good cause, do not exist.
The university, before the Court of Appeal, advanced an argument that there was an implied term in the contract which authorised it to dismiss for redundancy. That argument has not been persisted in before me. But the university contends that acting by its council it has power to breach contracts if it thinks fit. The university contends that it should be free to breach the contract of employment of these members of the staff. It contends that the breach will be effective to terminate the contract of employment, and that the visitor will have jurisdiction to award compensation for such breach.
The university submits and accepts that under the charter and statutes it has no power to terminate the respondents' rights as members and office-holders of the university but contends that this does not matter: the respondents will remain members of the university, albeit only with vestigial rights.
The foundation of this argument is that the respondents enjoy two separate rights: first, their rights under the charter and the statutes second, their rights under a contract of employment. I have some doubt whether this is the right analysis of the position, but I will assume, without deciding, that it is correct.
The powers of the university are contained in art 3 of the charter, under which all powers are made expressly 'subject to this Our Charter and the Statutes'. Therefore, under the domestic law of the university, it can do nothing which infringes the terms of the charter and statutes. It is true that as against the outside world the university, being a body incorporated by royal charter, has the capacity of a natural person as a result even acts done in contravention of a provision of its statutes are as against the outside world not ultra vires or void. But, as between those subject to the domestic law of the corporation, the members are entitled to insist on the lawful administration of the corporation. If there is no visitor, the courts will grant an injunction to restrain a breach of the regulating documents (see Jenkin v Pharmaceutical Society of GB [1921] 1 Ch 392 at 398-400). Where, as in this case, there is a visitor, it is his function to ensure due compliance with the terms of the charter and statutes. If there is a threat to do an act in breach of the charter or statutes it is the visitor's function to prohibit such breach.
As I understood Mr Mitting QC's speech in reply on behalf of the university, he submitted, in reliance on passages in the speeches in Thomas v University of Bradford [1987] 1 All ER 834 esp at 848-849, [1987] AC 795 at 823-824, that the visitor could leave the respondents to a remedy by way of compensation for breach of contract. I do not accept this. If a breach of contract or of the charter and statutes has already occurred, the visitor has a discretion whether to remedy that existing breach by reinstatement or compensation. That was the position which the House of Lords was considering. But if the matter comes before the visitor before any breach of the charter and statutes has occurred, his function is to ensure the lawful conduct of the university in accordance with its regulating document. The visitor does not have any general power to dispense with due compliance by the organs of the university with its charter and statutes.
The sole question therefore is whether, assuming the separate existence of a contract of employment, the university has power to breach such contract without purporting at the same time to terminate the respondents' rights as members and office-holders of the university under the charter and statutes. I have no doubt that as against persons not enjoying rights under the charter and statutes the university has power, if it thinks fit, to commit a breach of contract. But as between the university and its members, such breach of contract may also constitute a breach of the members' rights under the charter and statutes. If so, in my judgment the university has no power under its domestic law to commit such breach of contract since art 3 of the charter provides that all its powers are expressly made exercisable only subject to the other provisions of the charter and statutes.
Currently the respondents enjoy the following rights under the charter and statutes: (a) they are full-time teaching staff, and for that reason fall within the definition of academic staff under section I, para 1 of the statutes (b) by reason of being academic staff, and on that ground only, they are members of the university (section II, para 1 of the statutes) (c) as part of the academic staff they are members of convocation (section XIII), their faculties (section XXI) and of the academic assembly (section XXII). As members of the academic assembly, they are entitled to vote on the election of members to the council (section XVI) and to the senate (section XVII, para 6) (d) they enjoy the use of university facilities, in particular for research and teaching.
In order to achieve the results desired by the university, that is to say reduced staffing with consequential saving on salaries and improved grant, the proposed breach of contract would have to be effective to prevent the respondents from carrying out any teaching or research functions. They would therefore cease to be 'full-time teaching staff ' and would accordingly cease to fall within the definition of academic staff. If they are not members of the academic staff, they will cease to be members of the university. Therefore the proposed breach of the contract of employment would by the back door remove exactly the security of tenure which section XXV of the statutes is designed to ensure and which the university accepts it cannot achieve by using the machinery laid down by section XXV itself.
Even if this be wrong and despite the breach of contract the respondents would remain members of the university, the proposed breach of contract would remove all the other rights currently enjoyed by them in virtue of their membership of the academic staff, and would also remove their right to teach and research. What would be left would be vestigial remains, shorn of the rights that they currently enjoy under the statutes.
In my judgment, therefore, if the proposed breach of contract of employment were to be committed by terminating the respondents' contracts of employment, such breach would consequentially involve an unauthorised breach of the respondents' rights under the statutes: the breach of the contract of employment would ipso facto also involve a breach of section XXV of the statutes. It follows in my judgment that the university has not got the power to terminate the respondents' contracts of employment, even if they exist as separate contracts. Under art 3 the university only has power to do acts which comply with the terms of the charter and statutes, and the proposed dismissal for redundancy would remove or substantially interfere with the rights of the respondents under the charter and the statutes.
For the reasons I have given, I shall accordingly humbly report to Her Majesty my determination that no members of the academic staff of the university may lawfully be removed, or have his or her contract of employment terminated, otherwise than for good cause as defined in para 1 of section XXV of the statutes of the university.
As to the cross-petition, I am confident that in the light of my determination the council will not proceed with the proposal to make academic staff compulsorily redundant. I have been given an undertaking by the vice-chancellor of the university that the university will not take any step in defiance of the directions which I have given without first giving 14 days' notice of its intention to the respondents or their solicitors. I will accordingly stand over the cross-petition generally with liberty to apply. As to the costs of the petition and the cross-petition, I direct that they be paid by the university.
DISPOSITION
Petition dismissed. Cross-petition stood over.
SOLICITORS
Robin Thompson & Partners, Birmingham;
Martineau Johnson, Birmingham