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[2000]

1 I.R.

Sean Tierney
, Applicant v.
An Post
, Respondent
[S.C. No. 268 of 1998]
Supreme Court
6th October 1999
Labour law - Employment - Whether contract of service or contract for
services - Termination of contract - Constitutional and natural justice Whether termination proportionate response to misconduct - Conduct of
disciplinary hearing - Whether fair procedures followed - Conduct of
decision-maker after hearing.
The applicant was appointed postmaster of a sub-post office. The contract consisted of a
document called "Appointment of Postmaster",wherein the applicant agreed to be bound
by the rules in the postmaster's manual. Therein it was agreed, inter alia, that the
position did not entitle the applicant to medical attendance, sick pay or annual leave;
that the premises were to be kept to a certain standard and to provide certain facilities
for the public to use at the sub-post office. The applicant's pay was determined in
accordance with this document and while the respondent contributed to the applicant's
P.R.S.I., P.A.Y.E. was not deducted. The postmaster was stated to be under the control
of the regional manager of the respondent, and the permission of the Head Postmaster
was required before an assistant could be hired. The manual also dealt with the
disciplinary procedures, including those for dismissal.
In 1990 and 1991, some problems arose over the paying by the applicant of
customers' telephone accounts, which was one of the services provided by the sub-post
office. No further complaints were made until 1995, when two customers queried their
accounts. An investigator was appointed by the respondent to inquire into the matter.
The respondent wrote to the applicant stating that the standard of accounting at the
applicant's sub-post office was a source of concern. The letter stated that the termination
of the applicant's contract with the respondent was under consideration.
Following representations by the applicant, the respondent wrote again stating that
his contract as postmaster would be terminated, with payin lieu of notice. The applicant
appealed this decision and a hearing was held. After the meeting, the decision-maker
undertook further inquiries on certain issues, as a result of which he had doubts as to the

applicant's credibility. The appeal was turned down. The applicant was not furnished
with the full evidence against him, which was fully available to the decision-maker.
The High Court (McCracken J.) held the applicant to be an employee of the
respondent and granted an order of certiorari to quash the decision to terminate the
contract and an order of prohibition preventing the respondent from terminating the
contract. The respondent appealed to the Supreme Court.
Held by the Supreme Court (Hamilton C.J., Keane and Lynch JJ.), in dismissing
the appeal, 1, that the contract was not of service but was a contract for services.
Although the degree of control exercised by the respondent over the applicant was
always a factor to be considered, it was not the only factor to be taken into account.
Henry Denny & Sons (Ireland) Ltd. v. Minister for Social Welfare [1998] 1 I.R.
34 followed. Hitchcock v. Post Office [1980] I.C.R. 100 considered.

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Tierney v. An Post

2. That it was not normal to find a clause in a contract of service allowing an


employee to hire assistants for the work he was employed to do. While the applicant had
to carry on the same business as the respondent carried out at numerous other locations
in the country and as such, his business was part of the respondent's, sufficient regard
had to be given to the fact that the applicant operated the post office from the same
premises as his own business.
3. That, while the maxims associated with natural justice were not necessarily
capable of application to a contract for services, in this case, as there was a contractual
disciplinary procedure set out, there was an implied term that any inquiry held would be
conducted fairly.
Glover v. B.L.N. Ltd. [1973] I.R. 388 followed.
4. That, where the disciplinary machinery provided under the contract did not
expressly provide for an oral hearing but it was accepted that the matter was sufficiently
serious to warrant an oral hearing, it inevitably followed that the applicant was entitled
to fair procedures in the conduct of the hearing and the determination arrived at. Since
the applicant was not furnished with reports containing evidence against him and the
decision-maker was so furnished, an unfair procedure was used.

Cases mentioned in this report:Glover v. B.L.N. Ltd. [1973] I.R. 388.


In re Haughey [1971] I.R. 217.
Henry Denny & Sons (Ireland) Ltd. v. Minister for Social Welfare [1998]
1 I.R. 34.
2

Hitchcock v. Post Office [1980] I.C.R. 100.


Meskell v. Coras Iompair ireann [1973] I.R. 121.
Mooney v. An Post [1998] 4 I.R. 288.
Appeal from the High Court.
The facts are summarised in the headnote and are fully set out in the
judgment of Keane J., infra.
On the 25th July, 1996, the High Court (Smith J.) granted leave to the
applicant to apply for judicial review. The applicant's claim was granted by
the High Court (McCracken J.) in a judgment delivered on the 7th July, 1998.
Notice of appeal was filed on the 17th December, 1998.
The appeal was heard by the Supreme Court (Hamilton C.J., Keane and
Lynch JJ.) on the 22nd July, 1999.
Dermot P. Kelly S.C . (with him Colm MacEochaidh ) for the applicant.
Maurice Gaffney S.C . (with him Roderick Horan ) for the respondent.
Cur. adv. vult.
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Hamilton C.J. Keane J.

Hamilton C.J.

6th October, 1

I agree with the judgment about to be delivered by Keane J.


Keane J.
The facts in this case, insofar as they are not in dispute, are as follows.
The applicant was appointed postmaster in Termon, Virginia, County Cavan
on the 30th May, 1983. He succeeded his father, who had served as postmaster
for over 40 years at that time. Like many other rural post offices, the one at
Termon is a sub-post office which was run by the applicant in conjunction
with a grocer's shop in the same premises. In addition to the normal postal
services being provided it was also possible for customers of Telecom
ireann to pay their telephone bills at the post office and it was the
responsibility of the applicant to transmit the monies paid in respect of those
bills to the head post office for the area in Kells for transmission to Telecom

ireann . As a result of what was alleged by the respondent to be unjustified


delay by the applicant in transmitting some of these monies to Kells, the
respondent terminated its contract with the applicant on the 15th March, 1996.
In accordance with the procedure provided for in the contract, the applicant
appealed from that decision and on the 10th July, 1996, he was notified by the
respondent that his appeal had been rejected and the contract was then
terminated as of the 26th July, 1996.
On the 25th July, 1996, the High Court gave leave to the applicant to
apply by way of judicial review for, inter alia, an order ofcertiorari in respect
of the respondent's decisions of the 15th March, 1996, and the 10th July, 1996,
and an order of prohibition or an injunction prohibiting or restraining the
respondent from terminating its contract with the applicant. Leave having
been given by the High Court to seek such relief and a statement of opposition
having been filed on behalf of the respondent, a notice of motion seeking the
relief in question came on for hearing before the late Shanley J.
The first ground relied on in the statement of opposition was that the
proceedings arose out of an alleged breach of a contract between the applicant
and the respondent and, accordingly, were not properly brought by way of
judicial review. We were informed that, having heard submissions on this
matter, Shanley J. rejected this ground of opposition but that, at the time of his
death, no order to that effect had been passed or perfected. In the result, his
ruling was not the subject of any appeal to this court and I would expressly
reserve for another occasion the issue as to whether proceedings of this nature
are maintainable by way of judicial review.
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Keane J.

The motion seeking the relief in question then came on for hearing before
McCracken J. and in a reserved judgment delivered on the 7th July, 1998, he
found in favour of the applicant and granted the orders of certiorari and
prohibition sought on his behalf. From that decision, the respondent now
appeals to this court.
Before turning to the legal issues which were debated in the High Court
and again in this court, I should refer to some other aspects of the facts which

were also not in dispute. On the 3rd September, 1990, following what was
said by the respondent to be the applicant's delay in remitting paid telephone
accounts to Kells and his failure to date stamp telephone accounts, a formal
warning notice was sent by the respondent to the applicant. On the 14th
November, 1990, the head postmaster in Kells again wrote to the applicant
drawing his attention to the fact that three accounts which were transmitted on
the 2nd or 3rd November, 1990, had in fact been paid between three and four
weeks previously by the customers concerned. It was said in that letter that the
date had been omitted from the date stamp in each case and it was suggested
that this might have been deliberately done to avoid having to send the
accounts in each day.
There were no further complaints concerning the applicant until October,
1995, when two customers raised queries as to telephone accounts which they
had paid to the applicant. On the 16th October, 1995, the head postmaster at
Kells wrote to the applicant seeking explanations in respect of three specific
complaints. In one case, it was said that a sum of 76.31 had been paid on the
25th August, 1995, but not transmitted to Kells until the 12th October,
following a query by the customer. In a second, it was said that a sum of
66.84 paid in late July, 1995, had not yet been received at Kells. In a third
case, a sum of 91.11 was said to have been paid on the 27th September,
1995, and was not forwarded to Kells until the 13th October, 1995. On the
18th October, 1995, the applicant wrote in reply disputing the date of the
payments in the first and third cases and, in the case of the second complaint,
stating that he had forwarded the payment by registered post.
The respondent appointed Mr. Martin Walsh, a senior investigating
officer, to investigate the matter. He interviewed the two customers concerned
and the applicant and was given six documents dealing with the accounts by
the applicant. Five of them did not bear any post office stamp and the sixth
bore a stamp on which the date was illegible. The applicant admitted to Mr.
Walsh that he had omitted to date stamp the documents but disputed the dates
on which the customers were said to have paid their bills. He also claimed that
the sum of 66.84 had been paid by him to Kells. He agreed that in future all
accounts would be date stamped clearly and legibly to the best of his ability.

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Keane J.

On the 15th January, 1996, Mr. Pat Rooney of the respondent's head
office wrote to the applicant stating that the manner in which the applicant had
dealt with these accounts had seriously inconvenienced the subscribers
concerned and had brought the company into dispute with one of their major
customers. He said that the question of terminating the applicant's contract
was now under consideration but that, in order to afford him an opportunity of
furnishing any explanation or making any representations, no further action
would be taken for a period of fourteen days. This letter was replied to on the
applicant's behalf by the Irish Postmasters' Union: that letter vigorously
rejected what was seen as a suggestion by the respondent that the applicant
had been behaving improperly with regard to the monies in question. It was
pointed out on his behalf that he had transmitted thousands of such accounts
to the office at Kells over the years by registered post and that, for what was
described as very meagre remuneration, he had been providing an excellent
service to the local community. It would appear that the respondent did not
reply to this letter.
On the 15th March, 1996, Mr. Rooney wrote to the applicant as follows:"Following consideration of your case, I now have to inform you that the
company has ceased to have confidence in your ability to manage the office
and consequently, it has been decided to terminate your contract as
postmaster, Termon, with effect from the 29th March, 1996. You will be given
3 months scale payment in lieu of notice. Should you wish to appeal this
decision, you or your representative should do so within seven days.
I am sorry that your contract with the company has had to end in this way."
On the 21st March, 1996, the applicant notified the respondent that he
wished to appeal from the decision to terminate his contract and requested an
oral hearing of the appeal. This was held on the 28th May, 1996, before Mr.
Michael O'Connell, the manager of customer services for the respondent. The
applicant was accompanied by a Ms. McMahon, who in addition to being a
friend of the applicant was also a solicitor, but did not attend the meeting in
that capacity. The findings by the learned High Court Judge, at pp. 7 and 8 of
his judgment, as to what transpired at that meeting and subsequently to it,
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which were not challenged on behalf of the respondent, are of importance and
should be set out:"Towards the end of the hearing, Mr. O'Connell asked if they considered they
had had sufficient time and a fair hearing, and asked if there was anything else
they wished to raise. Ms. McMahon then asked whether the appeal was being
decided on the two items of complaint from Mr. Clarke and Mr. McCabe, or
whether there were any other
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Keane J.

items being considered and Mr. O'Connell replied that there were a number of
other items, namely, delays in sending accounts to the head office, failure to
date stamp accounts and illegible date stamping. Ms. McMahon's evidence is
that she pressed him as to what these items were and he said that he would
have to look at his file. Mr. O'Connell did not recollect this taking place,
although he does say that he had the full file in front of him, but he had not in
fact read all the material in it. I was generally very impressed with Ms.
McMahon's evidence, and I think it probable that Mr. O'Connell did make
some reference to consulting his file.
After the meeting concluded, Mr. O'Connell undertook further inquires on
issues on which he was not fully satisfied. He went to Kells Post Office and
looked at date stamps on a number of documents there, and went back to Mr.
Clarke and Mr. McCabe. His evidence was that at Kells Post Office he saw
some clear stamps on documents coming from the applicant and that as a
result of these inquiries he had serious doubts about the applicant's credibility.
In the course of the hearing the applicant had told him that he had problems
with his date stamp for years and that he had a bad date stamp and a lack of
ink for ink pads.
It should be added that Mr. O'Connell also had received letters from Mr.
Clarke and Mr. McCabe in which they both said they could not remember
when they paid the accounts which were in dispute."
On the 10th July, 1996, the respondent wrote to the applicant informing
him that, following consideration of the case, the chief executive of the
respondent had decided to reject the appeal and that the contract with the

company would now end with effect from the 26th July, 1996. It was said that
the office would then close on a temporary basis pending a review of services
in the area.
The learned High Court Judge concluded, at p. 8 that:"It is quite clear that when making his decision or recommendation, Mr.
O'Connell had before him the entire file of the respondent relating to the
applicant, a report from Mr. Walsh and his initial investigations, and the
results of investigations made by him or on his behalf subsequent to the
hearing. None of these matters were disclosed to the applicant at any time."
This finding was also not disputed on behalf of the respondent.
The applicant's contract with the respondent
The contract by virtue of which the applicant was appointed postmaster
was entered into between him and the Minister for Post and Telegraphs
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on the 30th May, 1983. In that contract, the applicant acknowledged that he
was bound by the rules contained in certain rule books: those rule books have
since been replaced by a document called the Postmaster's manual issued by
the respondent. The provisions relevant to these proceedings in the contract
itself are as follows:"I acknowledge that I am responsible for the whole of the official cash, stock
of stamps, etc., both as regards those I hold myself and those I entrust to a
subordinate officer and that I am liable to make good, without delay, any loss
or default which may occur from any cause whatsoever. I also acknowledge
that my financial responsibility does not cease when I relinquish office and
that I will be required to make good any loss incurred during my term of
office which may subsequently come to light.
I also hereby acknowledge that the letter box at this office is the property of
the Department
I shall be prepared to make proper provision, including the lighting, heating
and cleaning of the premises, for postal, telegraph and telephone work and to
provide at the standard rate of payment for a continuous telephone service, if

at any time required to do so; also to provide the necessary facilities (pen, ink,
etc.) to the public to complete documents at the post office.
I am aware that canvassing with the object of diverting business from another
office, or any practice having this effect, is forbidden.
I agree to the condition that should I desire to resign my office I must give
three calendar months notice in writing, failing which I shall be liable to bear
any expense incurred by the Department in consequence.
I understand that I will be liable for any expenditure I may incur on the
improvement of premises or fittings.
I also understand that the appointment is an unestablished one; that it does not
entitle me to the privilege of free medical attendance, sick pay or annual leave
at the expense of the Department; that it does not confer any claim to an
established appointment or entitle me to compensation for loss of office or
award under the Superannuation Acts and that if it be deemed necessary at any
time to alter the duties, to withdraw any part of the work of the office, or to
introduce the salaried system of payment, I have no claim to compensation for
any disappointment or loss of emoluments which may result from the
change."
Clause 2.39 of the Postmaster's Manual provides as follows:[2000]
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Keane J.

"Appeals in discipline cases


Any appeal against disciplinary decision (sic) should be made without delay.
The decision, or relevant form should at once be noted subject to appeal and
the appeal should be forwarded not later than 10 days thereafter, otherwise the
right of appeal will lapse. If the punishment be not of a serious nature only
one appeal is permitted. In serious cases up to three appeals are allowed; the
first should invariably be made by the officer himself/herself and, if he/she is
dissatisfied with the result, he/she has the option of making a second and third
appeal to the regional manager either on his/her own behalf or through his/her
association. Where an appeal is being made by an association, the officer must
produce a communication from the association, not later than 13 days after the

rejection of his/her own appeal, signifying that an appeal is being lodged on


his/her behalf. The association must then forward its appeal within a further
period of seven days. If this proves unsuccessful a final appeal may be made
within a further seven days."
There are other provisions in the Postmaster's Manual which are also
relevant and which will be referred to at a later stage in this judgment.
The proceedings in the High Court
It was contended on behalf of the applicant in the High Court that the
contract under which he was employed by the respondent was a contract of
service and that it was an implied term of such a contract that any disciplinary
procedures provided for by the contract should be conducted in accordance
with fair procedures. It was further submitted that such fair procedures had not
been observed in the present case.
It was submitted on behalf of the respondent that this was not a contract
of service but a contract for services and that, accordingly, in the absence of
any specific provision as to notice, it could be terminated by the respondent at
any time, provided reasonable notice was given. In this case, it was said, such
notice had been given. Alternatively, it was argued that the requirements of
fair procedures had been observed by the respondent.
In his judgment, the learned High Court Judge concluded that the contract
was one of service and that, accordingly, the respondent was obliged to
observe fair procedures. He further held that, while the applicant was clearly
in breach of some of the provisions of his contract and the respondent was
entitled to apply disciplinary sanctions in respect of such breaches, fair
procedures had not been observed. Specifically, he held that
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Keane J.

the fact that Mr. O'Connell, in arriving at his decision, took account of Mr.
Walsh's report which had not been made available to the applicant and also
made further inquiries at Kells Post Office, the results of which were not
communicated to the applicant, was in breach of the principles of natural
justice.

10

Although the notice of appeal served on behalf of the respondent


challenged all the findings of the learned High Court Judge which were
adverse to them, in their written and oral submissions to this court they
confined themselves to a submission that the finding that the contract was one
of service was erroneous in point of law.
On behalf of the applicant, it was submitted that the finding by the
learned High Court Judge that this was a contract of service was correct and
should be upheld but that, in any event, irrespective of whether it was a
contract of service or a contract for services it was subject to an implied term
that any disciplinary procedures therein provided should be conducted in
accordance with fair procedures.
The nature of the contract
The question as to whether a particular agreement is in law a contract of
service as distinct from a contract for services, has been considered in a
number of cases both in our courts and the English courts. In a recent case
of Henry Denny & Sons (Ireland) Ltd. v. Minister for Social Welfare [1998] 1
I.R. 34, in a judgment with which Hamilton C.J. and Murphy J. agreed, I
suggested, at p. 50, that the following approach should be adopted:"It is, accordingly, clear that, while each case must be determined in the light
of its particular facts and circumstances, in general a person will be regarded
as providing his or her services under a contract of service and not as an
independent contractor where he or she is performing those services for
another person and not for himself or herself. The degree of control exercised
over how the work is to be performed, although a factor to be taken into
account, is not decisive. The inference that the person is engaged in business
on his or her own account can be more readily drawn where he or she
provides the necessary premises or equipment or some other form of
investment, where he or she employs others to assist in the business and where
the profit which he or she derives from the business is dependent on the
efficiency with which it is conducted by him or her."
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Keane J.

11

A sub-postmaster such as the applicant provides the premises necessary


for the carrying on of the business of the post office. He or she is also entitled
to employ others to assist in the carrying on of the post office business, as is
made clear by art. 2.1(b) of the Postmaster's Manual which provides that:"The emoluments of postmasters are considered sufficient to provide for the
efficient performance of the duties, for the adequate remuneration of any
assistants who may be employed by the postmaster, for the cost of providing
office accommodation "
It is true that, under art. 2.25, the authority of the head postmaster is
required for the employment of any person at a sub-office. It is not surprising
to find that the respondent has, as it were, a right of veto over the appointment
of persons who for any reason it might not be appropriate to employ in a post
office: the fact remains that it is not normal to find in a contract of service that
the employee can hire assistants to perform the work which he or she is
employed to do.
Counsel for the applicant relied on clause 2.5 of the Postmaster's Manual
which provides that:"Postmasters are under the control and direction of the regional manager and
are also subject to the immediate direction of their respective head postmaster,
to whom in case of doubt arising on any point, reference should be made for
instructions."
In his judgment, the learned trial judge laid stress on this provision and
also on the undoubted fact that the applicant must carry on the same business
as the respondent carries on at numerous other locations throughout the
country and that, in that sense, his business was part of the business of the
respondent. While that approach is understandable, it seems to me, that, on the
whole, it does not have sufficient regard to the fact that the post office
business is carried on in the same premises as the applicant's own business.
No doubt the extent to which the applicant could maximise the profit which he
derived from carrying on the post office business was relatively modest, but
that cannot affect the legal principles applicable. Monies expended by him on
improving the premises or employing assistants which had the effect of
increasing the volume of the post office business would increase his own
profit from that business as well as the profit of the respondent. As to the right

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of the respondent to control and direct his operations, it has frequently been
emphasised in the authorities that, while the degree of control exercised by the
other party is always a factor to be taken into account, it has long since ceased
to be regarded as the only factor to be taken into account.
It is of interest to note that in Hitchcock v. Post Office [1980] I.C.R. 100,
the English Employment Appeals Tribunal concluded that, in circumstances
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Keane J.

closely resembling those with which we are concerned, the contract was one
for services and not of service. Slynn J., as he then was, delivering the
judgment of the appeal tribunal said that at pp. 108 and 109:"We accept, as Mr. Carr quite rightly has accepted, that there is here a
substantial measure of control which relates to the conduct of the Post Office's
business. It might be, if there were no other factors present, that that control
would be sufficient to make the contract one of service rather than for
services. But there are other factors present. The question in this case, it seems
to us, is really whether the control which does exist is such that it prevents the
contract from being one for services rather than of service. Accordingly we
must look at the matter as a whole. We consider here that great importance has
to be attached to the fact that the applicant provided the premises and a certain
amount of the equipment at his own expense. The sub-post office came into
what was his general store. It was a part of his own business. Moreover it is
clear that even though, apparently, he chose to spend a great deal of his
working week doing the sub-post office work at this particular premises
himself, he had the right to delegate, and did in fact delegate
Moreover it seems to us that even though there may be less chance of making
profit, or risk of loss than in many businesses, there was still here the chance
of profit and the risk of loss."
It seems to me that the reasoning in that passage, which is clearly in
accordance with the principles of law established in the many authorities on
the point, is entirely applicable to the facts of this case.

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I am satisfied, accordingly, that the conclusion of the learned High Court


Judge that this was a contract of service was wrong in law and should not be
upheld.
Conclusions
There remains the question as to whether the contract, although a contract
for services, should be construed as containing an implied term that the
respondent was obliged to conduct the disciplinary machinery provided for in
the contract in accordance with fair procedures.
Giving the judgment of the majority of this court in Glover v. B.L.N.
Ltd. [1973] I.R. 388, Walsh J. said at p. 425:"This court in In re Haughey [1971] I.R. 217 held that [Article 40.3] of the
Constitution was a guarantee of fair procedures. It is not, in my opinion,
necessary to discuss the full effect of this Article in the
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Keane J.

realm of private law or indeed of public law. It is sufficient to say that public
policy and the dictates of constitutional justice require that statutes,
regulations or agreements setting up machinery for taking decisions which
may affect rights or impose liabilities should be construed as providing for fair
procedures. It is unnecessary to decide to what extent the contrary can be
provided for by agreement between the parties."
That statement of the law is not confined to contracts of service. It is in
accordance with the general principle laid down by the same learned judge
in Meskell v. Coras Iompair ireann [1973] I.R. 121, that constitutional
rights may be protected or enforced in proceedings between private citizens
and not merely in proceedings against the State.
In the present case, the contract, although not a contract of service,
provided a machinery for taking a decision which could result, and did in this
case result, in the determination of the applicant's tenure of the office of subpostmaster. It is not in dispute that it had financial consequences for the
applicant which could fairly be equated to those resulting from a dismissal
from a particular employment.

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As was pointed out by Barrington J. giving the judgment of this Court


in Mooney v. An Post [1998] 4 I.R. 288, the two central maxims traditionally
associated with the concept of natural justice -nemo iudex in causa
sua and audi alteram partem - are not necessarily capable of application
where an employer dismisses an employee. Similar considerations would
apply to a contract for services of the nature now under consideration. But
where, as here, the contract provides a disciplinary machinery which is
invoked to determine whether the person should retain the office of subpostmaster or be visited with a lesser sanction, the reasoning in the passage I
have cited from Glover v. B.L.N. Ltd. [1973] I.R. 388 is, in my view, fully
applicable.
It is true that the disciplinary machinery provided under the Postmaster's
Manual does not expressly provide for an oral hearing. Where, however, the
respondent by implication accepts, as it did here, that the matter was
sufficiently serious to warrant an oral hearing, it follows inevitably that the
applicant was entitled to fair procedures in the conduct of that oral hearing
and the determination arrived at by the respondent following the hearing.
Unfortunately, as found by the learned High Court Judge, such fair procedures
were not observed in the present case. It follows that the applicant is entitled
to the orders of certiorari and prohibition granted in the High Court.
I would dismiss the appeal and affirm the order of the High Court.
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Lynch J.

Lynch J.
I agree.
Solicitors for the applicant: Mel C. Kilrane & Co.
Solicitor for the respondent: Hugh O'Reilly.
Conor Power, Barrister
[2000] 1 I.R. 536

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