AN CHÚIRT UACHTARACH
THE SUPREME COURT
Hamilton C.J,
0‘Flaherty J,
Lynch J,
(54/98)

BETWEEN:
MICHAEL MURPHY
Applicant/Respondent
.V.

THE REVENUE COMMISSIONERS
Respondents/Appellants

Judgment delivered on the 22nd day of October, 1998, by O’Flaherty J. [Nem. Diss.]

Section 17 of the Civil Service Regulation Act, 1956, provides:-

“(1) The Minister [for Finance] shall be responsible for the following matters:-

(a) 	the regulation and control of the Civil Service,

(b) 	the classification, re-classification, numbers and remuneration of civil servants,

(c)	the fixing of-
(i) the terms and conditions of service of civil servants, and
(ii) the conditions governing the promotion of civil servants

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(2) 	The Minister may, for the purpose of subsection (1) of this section, make such arrangements as he thinks fit and may cancel or vary those arrangements.

(3) ……………….”

On 3rd February, 1992, Mr. Joseph McGovern, Assistant Secretary at the Department of Finance, notified all departments of the Minister’s decision to put in place new procedures for dealing with grievance and disciplinary problems in the civil service. This amended and extended the procedures that had been hitherto in force and should be approbated as the right way forward to resolve such unhappy differences as may arise in the workplace of the civil service from time to time.

The grievance procedure provided as follows:-

“Claims affecting individual officers are, in general, excluded from the scope of the Conciliation and Arbitration Scheme. In the event, therefore, of an individual officer or group of officers having a complaint affecting their official position which is not appropriate for discussion under the Conciliation and Arbitration Scheme, and in order that such a complaint can be dealt with promptly and satisfactorily, the procedure set out below shall be followed:

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Stage I:	Any complaint which arises should (where appropriate) first be the subject of discussion between the complainant and his/her appropriate superior.

Stage II: If the matter cannot be resolved by informal discussion the complainant should outline his/her complaint in writing to his/her superior, indicating (a) that he/she is invoking the grievance procedure and, if possible, (b) the corrective action sought.

Stage III: The superior should reply in writing to the complainant within two weeks.

Stage IV: If the complaint is not resolved at Stage III, the complainant should (within two weeks) refer the matter in writing to the appropriate level of management above his/her superior.

Stage V: The manager will endeavour to resolve the complaint by informal agreement. If these efforts are unsuccessful, he/she will arrange a meeting with the parties concerned. The meeting should be held within two weeks of the complaint being formally referred to the manager.

Stage VI: If the matter is not resolved within a further week, it will be referred in writing by the complainant to the personnel section. (This stage will still be appropriate where the complaint arises within the personnel section itself). Within two weeks of referral to personnel section, a meeting will be held between the

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personnel section and those directly concerned including, if he/she so wishes, the complainant’s union representative.

Stage VII: The decision of management on the complaint and the reasons for the decision will be conveyed in writing within 2 weeks of the meeting referred to in Stage VI.

Stage VIII: A complainant who is dissatisfied with the decision of management on the complaint may make a written request to the personnel officer that the dispute be referred to a mediation officer appointed by the Minister for Finance with the agreement of the General Council Staff Panel. Any such request shall be dealt with on the following basis:

(a)	Complaints concerning the following shall not be referred to the mediation officer:

- disciplinary action taken in accordance with the provisions of the disciplinary code;
- selection for promotion, whether by way of competition or normal course promotion, or selection for assignment to a post carrying an allowance,
- exclusion from competitions or from consideration for promotion on grounds of health or sick leave record;
- the interpretation of general regulations, circulars or agreed reports of general council or departmental councils.

(b)	Subject to (a) above, the personnel officer shall not refuse to refer a complaint to the mediation officer where the complainant has suffered an immediate and direct loss of earnings as a consequence of the action complained of.

(c)	In any other case the complaint shall be referred to the mediation officer if the personnel officer considers the matter appropriate for such reference.

The mediation officer shall investigate any matter referred to him/her and mediate between the parties with a view to resolving the dispute amicably. Where such resolution in not possible, the mediation officer may make such recommendation as he/she considers appropriate. Where the action complained of is defended on the grounds that it was required by the needs of the work, the mediation officer shall accept that the definition of the needs of the work is a matter for management but may uphold the complaint on the grounds that the action complained of was arbitrary, improperly discriminatory or otherwise inconsistent with good management practice.”

The matter of the payment of increments to officers is dealt with in a Departmental circular 9/87 of 17th September, 1987. It defines an increment

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as: “an increase in pay for which provision is made in a pay scale.” As a general rule, increments are granted annually provided an officer’s services are satisfactory.

The circular provides at paragraph 3:-

“The onus is on individual officers to show that their performance during the year merits an increment. It follows that officers are not entitled to any prior formal warning of possible deferral of an increment. However, every effort should be made to ensure that officers are advised in good time of any perceived deficiencies in their performance and are given an opportunity to remedy them.”

Paragraph 4 provides:-

“The payment of an increment should normally be deferred as a matter of course where doubts arise, during a probationary period or a period of acting appointment, as to an officer’s suitability for final appointment. Where such doubts are due solely to health considerations that increment may, however, be allowed provided that the officer’s services including the, sick leave record are in all other respects accepted as satisfactory.”

Paragraph 13 of the circular provides - under the heading “Deferral of Increments”:-

“If a certificate of satisfactory service cannot be given, payment of the increment will be deferred for a specified period e.g. three, six, nine or twelve months. On the expiration of the period, the

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officer’s performance should be reviewed and the increment may be allowed with effect from the end of the review period provided the officer’s service is satisfactory. The increments should not be restored with effect from an earlier date save in the most exceptional circumstances.”

The respondent, Michael Murphy, joined the staff of the Revenue Commissioners as an executive officer in June, 1973. He has been a higher executive officer in the capital taxes branch of the Commissioners since September, 1982.

He made a claim for the payment of two long service increments, being increments which were introduced under a restructuring agreement in relation to grades represented by the Public Service Executive Union, of which union he is a member. The increments were calculated on the basis of 7.4% of gross salary as of 1st October, 1994, and were to be paid in the following manner:-

7/12 with effect from the 1st October, 1994; 3/12 with effect from the 1st June, 1996, and the final 2/12 with effect from the 1st June, 1997.

Otherwise these increments were payable in accordance with the terms of the circular 9/87, to which reference has already been made.

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However, Mr. Murphy’s principal officer, Mr. H.B. Early, on 22nd November, 1995, told him that, in relation to his situation, the appellants intended to defer payment of the two long service increments until October, 1996.

Mr. Murphy thereupon invoked the grievance procedure and, accordingly, Mr. Early set out the reasons for his decision in a memorandum of the 13th December, 1995. The reasons relied upon were:-

(i)	That Mr. Murphy lacked the ability to bring cases to a satisfactory and speedy conclusion and showed indecision;
(ii)	That there were delays in getting cases returned, and that the responses contained queries and gave rise to additional correspondence and
(iii)	That Mr. Murphy had poor interpersonal skills which hindered his ability to work successfully with others.

A meeting was held in conformity with Stage V of the grievance procedure on 9th January, 1996, the other stages having been exhausted. It was attended by Mr. Murphy, accompanied by Mr. Richard Hughes, Mr. Michael

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O’Grady, Assistant Secretary capital taxes division, and Mr. H.B. Early. The matter was not resolved at this meeting and it was then referred to the personnel section.

So a Stage VI meeting was convened. Mr. Murphy did not succeed at that meeting either.

By letter of 20th March, 1996, in compliance with Stage VII the personnel officer, Mr. Kevin O’Connor, wrote to Mr. Murphy with reference to Stage VI of the grievance procedure as follows:-

“I have given careful consideration to your complaint. Given your length of service as a higher executive officer (appointed in 1982) and in particular your experience in CAT Division (since 1987), I am satisfied that, apart from any other considerations, the delay factor involved in clearing CAT 500 type cases raises doubt as to whether your services are satisfactory.

I note that the question of satisfactory services for incremental purposes has not arisen since 1988 when you reached the maximum of your pay scale. However, your personnel file clearly shows that since that time (1988) the question of unsatisfactory services has been raised directly with you by the respective Principals in CAT Division.  I am satisfied, in all the circumstances, that the decision is warranted to defer the grant of long service increments until 1st October, 1996, when this position will be reviewed.

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In the meantime your services will be reviewed periodically during the deferral period. In this regard I am putting into place arrangements whereby I will receive a report of your services by 14th June, 1996, and again by 13th September, 1996.”

The rest of the letter dealt with certain non-attendances of Mr. Murphy at his duties due to absence on sick leave which are not relevant to anything we have to deal with on this appeal.

On 2nd April, 1996, Mr. Tom McKevitt, General Secretary of the Public Service Executive Union, wrote to Mr. O’Connor, noting that he was not prepared to reverse the decision to defer the grant of two long service increments to Mr. Murphy and asking him to proceed to Stage VIII of the grievance procedure.

On 9th May, 1996, Mr. O’Connor replied to him as follows:-

“Dear Mr. McKevitt,

I refer to your letter of 2nd April, 1996, regarding Mr. Michael Murphy, higher executive officer and your request to proceed to Stage VIII of the Grievance Procedure.

The issue that arises in this case is the question of Mr. Murphy’s service being satisfactory to meet the requirements which merit the payment of long service increments under the restructuring agreement. These requirements are covered by Department of

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Finance Circular 9/87 and the same requirements apply also to the payment of long service increments under the Restructuring Agreement.

You are aware, of course, that complaints in relation to certain matters set out under Stage VIII(A) of the Grievance Procedure and in particular complaints relating to interpretation of general regulations, circulars or agreed reports of general council or departmental councils shall not be referred to the mediation officer. Accordingly, I consider that this case comes within the ambit of those excluded for referral, and is one which shall not be referred to the Mediation Officer.

In the meantime, I can assure you that Mr. Murphy will be given every opportunity to demonstrate that he can give satisfactory service in every respect.”

Mr. McKevitt replied by letter dated 29th May, 1996:-

“Dear Mr. O’Connor,

I refer to yours of 9th May about the case of Michael Murphy.

The Union is disappointed that you are not prepared to go to the mediation officer. The case in question is not an ‘interpretation’ of the general council agreement on restructuring or the relevant circular. There is no dispute, as far as I am aware, between the Union and the Revenue Commissioners on what the

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agreement/circular means in relation to the long-service increments.

The disagreement is about whether or not Revenue are justified in not paying Mr. Murphy the long-service increments. It is not about an interpretation of the restructuring agreement. If the Revenue’s interpretation of the grievance procedure is correct, then it would be impossible for almost any complaint to go to mediation. I would ask, therefore, that you reconsider the decision conveyed in your letter of 9th May.  In addition, Mr. Murphy has asked me again to request you to forward him a copy of the report of Stage V of the Grievance procedure in his case.”

By letter of 17th July, 1996, sent by the respondent’s solicitors to Mr. O’Connor, he was asked, once again, to refer the matter to a mediation officer but, aside from an acknowledgement of the letter, no reply was received to that and, so, judicial review proceedings were brought by the respondent.

They were duly heard by McCracken J., and in his judgment delivered on 17th February, 1998, he held with the respondent that there should be a referral of the dispute to a mediation officer.

This litigation has thrown up three issues for determination:-

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(1)	Does Mr. Murphy’s complaint involve “the interpretation of general regulations, circulars or agreed reports of general council or departmental council” so as to disentitle him to have the dispute referred to a mediation officer?

(2)	If not, has the complainant suffered “an immediate and direct loss of earnings as a consequence of the action complained of” requiring the personnel officer to refer the matter to a mediation officer under Stage VIII?

(3)	Would the fact that a mediation officer would resolve such a dispute as this mean that departmental functions (ultimately the responsibility of the Minister) in determining that increments are only granted to officers whose attendance, performance and commitment has been completely satisfactory, had been transferred from management to a mediation officer - and thus, be contrary to s. 17 of the 1956 Act (quoted at the outset of this judgment).

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As regards the first question, while at one time the respondent asserted that the onus of proving lack of satisfactory performance on his part rested with the Revenue Commissioners, this contention was abandoned at the High Court hearing and was not pursued here and, in any event, would fly in the face of the express wording of the circular in question: circular 9/87 of 17th September, 1987. Further, assertions as to where the burden of proof rests in any particular situation is purely an evidentiary matter; as I ventured to suggest in the course of the debate at Bar, it is merely “a tool of the trade” to bring about a just solution in any particular case. I cannot see that there is any question for interpretation here. The question is rather the application of the grievance procedure to the facts of this case. The respective situation of the parties is clear: Mr. Murphy asserts that he is entitled to these deferred increments; the Revenue Commissioners assert that he is not because of his unsatisfactory performance at work. So there is a conflict of fact which is clearly proper to be determined by the mediation officer.

The second question is whether the refusal to refer the complaint in question to the mediation officer has the consequence that the complainant has suffered “an immediate and direct loss of earnings as a result of the action complained of” so as to make it mandatory for the personnel officer to refer the dispute to a mediation officer. One need only look at the definition of

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increment in the document in question, ie. “an increase in pay for which provision is made in a pay scale” for the answer to this.  If a person is entitled to an increment and it is not paid then such a person suffers an immediate and direct loss.  Of course, once there is a dispute, it may not be apparent that he has suffered an immediate and direct loss of earnings and the right or wrong of that cannot be crystallised until the decision is given as to whether he was entitled to succeed in his claim or not. If it is ultimately found that Mr. Murphy is not entitled to the increments in question the appellants will not be damnified in any way as a result of the matter having been referred to a mediation officer.

As regards the point about transferring responsibility from management from the Department of Finance to the mediation officer, this submission, as the learned High Court judge held, is without any substance.  The whole thrust of the grievance procedure is that the Minister has provided that grievances such as this should be resolved in the way that he has laid down, obviously with the agreement of the workers, or the union acting on their behalf. 

One further point. Counsel for the Revenue Commissioners placed reliance on the decision of this Court in The State (Keegan) .v. Stardust Victims Compensation Tribunal [1986] IR 642.  That case lays down that the decision of an administrative tribunal, or where a person has to take a decision in an 

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administrative context, is not to be disturbed unless, to quote the well known passage from the judgment of Henchy J. in that case (at p. 658):-

“...... the impugned decision plainly and unambiguously flies in the face of fundamental reason and common sense. If it does, then the decision-maker should be held to have acted ultra vires, for the necessarily implied constitutional limitation of jurisdiction in all decision-making which affects rights or duties requires, inter alia, that the decision-maker must not flagrantly reject or disregard fundamental reason or common sense in reaching his decision.”

That case was concerned with where the decision-maker comes to deal with the substantive matters in dispute. Here, we are concerned rather with the question of law whether the personnel officer was entitled to refuse to refer the matter on to a mediation officer. I am satisfied that he was not entitled so to find. Cf judgment of Kinlen J. in P.L .v. An tÁrd Chláraitheoir [1995] 2 IR 241.

In light of these findings, it is not necessary to address the matter of the residual discretion that the personnel officer has under paragraph (c) of Stage VIII.

I should emphasise that the bona fides of the personnel officer was not called in question in the course of the debate in the High Court or here. Further, the merits of the respective parties have not been approached at all in

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this present litigation.  That is another day’s work: a day’s work to be undertaken by the mediation officer.

Accordingly, I would affirm the judgment and order of the learned High Court judge and would dismiss the appeal.