DETERMINATION OF
LORD JAUNCEY OF TULLICHETTLE ACTING
AS A SPECIAL COMMISSIONER APPOINTED
BY HER MAJESTY THE QUEEN AS VISITOR TO
WESTMINSTER ABBEY AND AS ARBITRATOR

 

 

BETWEEN:

DR MARTIN GERARD JAMES NEARY

Petitioner

PENELOPE NEARY

Claimant

-and-

THE DEAN OF WESTMINSTER

Respondent

 

A Petition dated 3rd July 1998 has been presented to Her Majesty The Queen as Visitor of the Collegiate Church of St Peter, Westminster, ("the Abbey") by Dr Martin Neary requesting that She should resolve a dispute between him and the Dean and Chapter. Her Majesty has appointed me to be her Commissioner for the purposes of exercising Her visitatorial jurisdiction to determine the Petition.

The Abbey was created a Collegiate Church and Royal Peculiar by Royal Charter of 21st May 1560 which provided that it should be governed by a Dean and twelve Prebendaries who came to be known as Canons or Canons Residentiary. Only four Canonries are now filled and the four incumbents together with the Dean form the Dean and Chapter in whom is vested the Government of the Abbey.

Dr Neary was until his dismissal on 22nd April 1998 Organist and Master of the Choristers of the Abbey and, as such, a collegiate officer by virtue of the statute of 1560. The Abbey Charter of 1560 empowered the Dean to appoint and remove collegiate officers and a supplemental charter of 1951 abolished freehold tenure for inter alios future Organists and Masters of the Choristers.

Dr Neary's appointment as Organist and Master of the Choristers ("Organist") took effect from 1st January 1988 in terms of an agreement which he signed on 28th November 1996. On 20th March 1998 Dr Neary was suspended on full pay. On 9th April 1998 a disciplinary hearing took place before the Dean, Dr Arthur Wesley Carr, and on 22nd April 1998 Dr Neary was dismissed with immediate effect.

After I had been appointed to be Her Majesty's Commissioner I was asked by Counsel to determine at the same time a dispute between Mrs Neary and the Dean and Chapter. On 6th December 1988 Mrs Neary was appointed as temporary part-time secretary to Dr Neary, working a two and a half day week. This appointment was confirmed in April 1989. In December 1991 she was appointed as concert secretary which increased her part-time work to three days a week. She also was suspended on 20th March and dismissed on 22nd April 1998. A minute of submission to me as Arbitrator has been presented.

At a preliminary hearing it was determined that the procedure should be by way of a hearing de novo rather than an appeal against the Dean's decision following the disciplinary hearing. The hearing before me took place on twelve days and not only was evidence adduced by witnesses on both sides but a very large number of documents were produced and referred to.

At this stage it is convenient to describe the administration of the Abbey so far as relevant to the Petition and to give a brief summary of the events leading up to the dismissal of Dr and Mrs Neary. These fall naturally into two chronological periods namely 1st January 1988 to 6th April 1994 ("the first period") and the latter date to 22nd April 1998 ("the second period").

Administration of the Abbey

While policy decisions are taken by the Dean and Chapter, the day to day administration of the Abbey and its affairs are the responsibility of the Receiver General and Chapter Clerk who during Dr Neary's tenure of office was Rear-Admiral Snow. Immediately subordinate to the Receiver General are two assistant Receivers General, one responsible for administration ("ARGA") and one for finance ("ARGF"). Mr Fakes was ARGF from January 1991 until 30th June 1996, when he was succeeded by Mr Smith. Immediately subordinate to the ARGF is the Chief Accountant who at all material times was Mr Gould who still holds that office. The member of the Dean and Chapter responsible for financial policy is the Canon Treasurer who until May 1997 was Canon Semper. However, because of illness, Canon Semper effectively ceased to act in December 1996. His successor Canon Middleton took office on 25th November 1997.

As Organist Dr Neary was a member of the Music Foundation whose head is the Precentor, a minor Canon, and which also includes the twelve lay vicars and the ten boy choristers of the choir school. Dr Neary was thus immediately responsible to the Precentor.

The First Period

In terms of his agreement with the Abbey Dr Neary received a salary and in addition was entitled to receive fees for professional performances not associated with his employment at the Abbey and fees in respect of broadcast recordings or other special events in the Abbey in which he took part and for which the Dean and Chapter received a fee for the services of an organist. The Abbey Choir consists of twelve lay vicars who are professional singers, a number of deputy lay vicars and the ten boy choristers. The lay vicars were contracted to sing specified services in the Abbey for which they received a salary which was taxed at source under Schedule E. The lay vicars also received fees for broadcasts, recordings, outside concerts and other special events in the Abbey which were paid to them gross being subsequently charged to tax under Schedule D. During this period there took place a not inconsiderable number of concerts, recordings and tours for which the lay vicars received their fees without deduction of tax. The work involved in arranging and carrying out these events was done initially by Dr Neary, Mrs Neary and the concert secretary, but after December 1991 when Mrs Neary assumed the duties of concert secretary, she and Dr Neary did all the administrative work. The finances of these events, certainly so far as the lay vicars were concerned was handled by the Abbey Finance Department.

The Second Period

On 27th April 1994 the Inland Revenue wrote to the Abbey stating that fees paid to employees of the Abbey over and above their salaries must be taxed at source under Schedule E as from 6 April 1994 and paid under deduction of National Insurance contributions. Thereafter in order to preserve the Schedule D position for the lay vicars Dr Neary arranged with the respective promoters that fees for events for which they were not contracted to sing in the Abbey should be paid to a separate account operated by Mrs Neary who would then pay the lay vicars. At first an existing personal account was used by Mrs Neary but in October 1994 she opened a new account in name of Neary Music and on 15 April 1997 a company Neary Music Limited ("NML") was incorporated with Mrs Neary as sole shareholder and director. In December 1995 Mrs Neary had informed the Inland Revenue that as from October 1994 she was acting as a fixer/trader for providing singers and musicians for performances. A fixer in the music industry is an individual who assembles orchestras and choirs from among professional musicians on an ad hoc basis for promoters and who charges a percentage of the fees payable to the performers. Between 6th April 1994 and December 1996 Mrs Neary received fixing fees in relation to events in which the lay vicars and boy choristers had taken part to an amount exceeding 11,900 in addition to her salary as Organist's secretary and concert secretary. She also received a dividend of 1,500 from NML in lieu of fixing fees during 1997. The parties are in dispute as to the extent of knowledge of the Abbey Authorities of the foregoing arrangement for paying the lay vicars. There is however no dispute that the taking by Mrs Neary of fixing fees was never disclosed to the Abbey Authorities by either her or Dr Neary until their accountant informed the Abbey Auditor, Mr Hunt, on 11 March 1998. It is also not disputed that on occasions a surplus resulted from payment of fees to one of the foregoing accounts which surplus was retained in that account.

The Contractual Position

The 1560 Charter empowered the Dean for lawful cause to depose and expel from the Abbey every inferior officer and Minister thereof. Clause 6 of the 1951 supplementary Charter empowers the Dean to appoint inter alios the Organist upon such terms and conditions as may be agreed between the Dean and Chapter and the organist. Clause 7 provides that no agreement entered into pursuant to the preceding provisions shall prejudice the power conferred on the Dean by the 1560 Charter to depose and expel for lawful cause any inferior officer of the Abbey. The organist is such an inferior officer.

Clause 17 of Dr Neary's agreement with the Abbey provided inter alia that it could be terminated by six months notice in writing given by either side and:- "(c) by immediate notice in writing given by the Dean in the event of gross misconduct or in accordance with the established Disciplinary Procedure". Clause 18, entitled Disciplinary Procedure, provided inter alia that in the case of serious misconduct a written warning would be sent and "(b) if there is any further need for disciplinary action the Organist will again be warned such warning will be recorded in writing and in addition he shall if so requested attend a meeting with the Dean and a duly appointed representative on behalf of the Dean and Chapter to explain his conduct, (c) if the Organist's conduct remains unsatisfactory thereafter he will be liable to be dismissed from his employment".

The two principal matters relied upon by the Dean in his decision as amounting to gross misconduct were the taking of fixing fees and the retention of surpluses in respect of events that were clearly organised on behalf of the Abbey. The grounds relied upon before me by Mr Hochhauser Q.C. for the Abbey as justifying the summary dismissal of the Nearys were:-

(A) the unauthorised taking of fixing fees on the Abbey Choir (choristers as well as lay vicars);

(B) the wrongful and unauthorised retention of surpluses by the Nearys;

(C) the unauthorised retention of interest on sums due to the Choir;

(D) overtime claims by Mrs Neary in relation to non-Abbey promoted events for which she claimed a fixing fee;

(E) the fact that each of the Nearys signed contracts on behalf of the choir without authority;

(F) the fact that each of the Nearys failed in their duty of openness in their dealings with the Abbey and its auditors;

(G) failure to inform the Abbey of the incorporation of NML;

(H) the Nearys by their business activities had placed themselves in a position where their interests as Abbey employees and commercial operators conflicted;

(I) Dr Neary misled the Disciplinary Hearing as to:-

(a) Mrs Neary's role; and

(b) the lay vicars' knowledge of Mrs Neary's role as a fixer.

It was submitted that any one of these grounds could per se be sufficient to establish gross misconduct. I must emphasise at the outset that the Abbey's case against the Nearys was based on impropriety and not dishonesty. Furthermore, Dr Neary's well recognised musical abilities and the hard work which he and Mrs Neary had done on behalf of the Abbey and the choir were not in question.

I propose to consider the law relevant to the foregoing grounds of dismissal and then examine the evidence.

The Law

At the beginning of his cross-examination Dr Neary accepted the following propositions which were put to him:-

(1) That the Abbey was a collegiate body where trust between individuals was most important;

(2) That the highest standards of integrity were expected of its officers and staff,

(3) That in carrying out his duties it was important not to conduct himself in such a way as to undermine trust and confidence that had to exist between fellow officers;

(4) That he was obliged to carry out his duties in a spirit of openness befitting a religious foundation; and

(5) That as a senior collegiate officer he should not make a secret profit from his position.

Mrs Neary likewise accepted these propositions (T2/14, T6/64).

It has long been recognised that there exists between Master and Servant a fiduciary relationship of trust and confidence. In Hivac Ltd v Park Royal Scientific Instruments Ltd [1946] 1 Ch 169, Lord Greene M R at p 174 said "An employee owes a duty of fidelity to his employer". He went on to observe that on consideration of the authorities the extent of "the rather vague duty of fidelity" must depend on the facts of each case. Lord Porter in Reading v the Attorney General [1951] AC 507 at p516 referred to "Fiduciary relationship" as including "inter alia a case where the servant gains from his employment a position of authority which enables him to obtain the sum which he receives". He went on to point out that the fact that the master had lost no profits or suffered no damage was immaterial and the principle well known. The principle to which he was referring was the rule of equity which requires anyone making a profit by use of a fiduciary position to account therefor. Lord Porter had earlier observed that the sum in question did not require to be received in the course of the servant's employment it being sufficient if the employment afforded the opportunity by which the gain was made as was the case in Reading. More recently in Attorney General v Blake [1998] 2 WLR 805 Lord Woolf MR after referring to the existence of the relationship of trust and confidence which subsists between employer and employee said at p 8l4:- "The employee must act in good faith; he must not make a profit out of his trust; he must not place himself in a position where his duty and his interest may conflict; he may not act for his own benefit or the benefit of a third party without the informed consent of his employer". Although these three cases were concerned with the gains past and future of the servants rather than dismissal they are equally applicable to both situations so far as the existence of a fiduciary relationship between master and servant is concerned.

The extent of the duty arising out of the fiduciary relationship which a servant owes to his master is, as Lord Greene observed in Hivac Ltd v Park Royal Scientific Instruments Ltd, dependent on the facts of each case. The Abbey is a religious collegiate institution with a tightly knit community. The senior members of that institution are entitled to expect one from another a degree of openness and integrity which might not necessarily be expected in a commercial organisation. Indeed Dr and Mrs Neary admitted as much when they agreed to the five propositions referred to above. Mr Elias Q.C., for the Nearys, submitted that there was no foundation in law for the assertion that the standards to be expected of an Abbey employee were in some way different in kind to those expected in non-religious institution. If by different in kind he meant different in principle I would agree with him. But if as I understood he was referring rather to degree I must disagree. The character of the institutional employer, the role played by the employee in that institution and the degree of trust required of the employee vis-a-vis the employer must all be considered in determining the extent of the duty and the seriousness of any breach thereof. As Lord Maugham said, delivering the judgment of the Board in Jupiter General Insurance Co Ltd v Ardeshir Bomanji Shroff [1937] 2 All ER 67 at 74 C "The test to be applied must vary with the nature of the business and the position held by the employee".

The question of whether there has been a repudiatory breach of that duty justifying instant dismissal must now be addressed. Whether misconduct justifies summary dismissal of a servant is a question of fact. In Clouston and Co. Ltd v Corry [1906] AC 122, which concerned summary dismissal for drunkenness, Lord James of Hereford delivering the judgment of the Board said at p. 129:- "Now the sufficiency of the justification depended upon the extent of misconduct. There is no fixed rule of law defining the degree of misconduct which will justify dismissal. Of course there may be misconduct in a servant which will not justify the determination of the contract of service by one of the parties to it against the will of the other. On the other hand misconduct inconsistent with the fulfilment of the express or implied conditions of service will justify dismissal." His Lordship went on to observe that "the question of whether the misconduct proved establishes the right to dismiss the servant must depend upon facts - and is a question of fact". Mr Elias submitted that gross misconduct justifying summary dismissal almost invariably involved dishonesty in some form or other. A classic case is that of A contracting as agent for B with C and taking a back-hander or bribe from C as well as a payment from A. However in Regal (Hastings) Ltd v Gulliver which was heard in 1941 but not reported until [1967] AC 134 Lord Russell of Killowen said at p.144 G "The rule of equity which insists on those, who by use of a fiduciary position make a profit, being liable to account for that profit, in no way depends on fraud, or absence of bona fides; or upon such questions or considerations as whether the profit would or should otherwise have gone to the plaintiff," Lord Wright at p. 154 D observed that the rule did not depend on fraud or corruption. These statements were made in the context of a claim for accounting by a company against former Directors in respect of profits from the acquisition and sale of shares in a subsidiary company. The statements of law however are in my view equally applicable where the issue is dismissal of the servant who has made the profit rather than a call to account. I am fortified in this view by the decision of the Court of Appeal in Sinclair v Neighbour [1967] 2 QB 279. Sellers LJ at p.287C said "But whether it is to be described as dishonest misconduct or not, I do not think matters. Views might differ. It was sufficient for the employer if he could, in all the circumstances, regard what the manager did as being something which was seriously inconsistent - incompatible - with his duty as the manager in the business in which he was engaged." Davies LJ expressed views to similar effect at p.289 B "The judge ought to have gone on to consider whether even if falling short of dishonesty the manager's conduct was nevertheless conduct of such a grave and weighty character as to amount to a breach of the confidential relationship between master and servant such as would render the servant unfit for continuance in the master's employment and give the master the right to discharge him immediately."

Mr Elias further maintained that the law drew a fundamental distinction between the deceitful or dishonest receipt of money and the honest but mistaken receipt of it and that when financial wrong-doing is alleged nothing short of deliberate dishonesty or deceit will constitute gross misconduct and no such dishonesty or deceit is here alleged. In support of this argument he referred to two cases, namely, Keppel v Wheeler [1927] 1 KB 577 and Kelly v Cooper [1993] AC 205. In the former case house agents acting for a seller having received instructions to accept an offer subject to contract, then received a further offer of a larger sum to purchase the house from the intending purchaser. They failed to intimate this offer to the seller being under the mistaken but honest impression that on acceptance of the offer subject to contract their obligation to the seller terminated. The Court of Appeal held that they should have communicated the higher offer to the seller and were liable in damages to him but were not debarred from claiming their commission. Atkin LJ at 592 said "now I am quite clear that if an agent in the course of his employment has been proved to be guilty of some breach of fiduciary duty in practically every case he would forfeit any right to remuneration at all. That seems to me to be well established. On the other hand there may well be breaches of duty which do not go to the whole contract and which would not prevent the agent from recovering his remuneration; and as in this case it is found that the agent acted in good faith, and as the transaction was completed and the appellant has had the benefit of it he must pay the commission." I do not consider that this case supports Mr Elias' proposition. Atkin LJ is drawing the distinction between breaches of fiduciary duty which effectively destroy the relationship between principal and agent and thereby go to the whole contract, and breaches which do not have that result. Good faith was only one of the factors which enabled him to decide that the agent's breach did not go to the whole contract. He certainly did not predicate that dishonesty was a necessary element in any breach which went to the whole contract. Indeed common sense would militate against any such suggestion. Take the case of an officer of a company charged with the duty of investing surplus funds who, in the belief that it will be of most benefit to the company, places them in speculative ventures which fail. Surely such officer would be guilty of gross misconduct. Kelly v Cooper [1993] AC 205 was another case involving house agents who failed to give certain information to a seller for whom they were acting. The Board held that in the particular circumstances they were not in breach of a fiduciary duty to the seller. The house agents counterclaimed for their commission and the judgment of the board, given by Lord Browne-Wilkinson, stated at p.216H "As to the defendants' claim for commission, even if a breach of fiduciary duty by the defendants had been proved, they would not thereby have lost their right to commission unless they had acted dishonestly. In Keppel v Wheeler the agents admitted an honest breach of fiduciary duty by mistake and yet were entitled to their commission". This dictum was obiter and in any event I do not consider that it takes the matter any further than Keppel v Wheeler. The three cases to which I have referred in the preceding paragraph are to my mind far more relevant to this inquiry.

What degree of misconduct justifies summary dismissal? I have already referred to the statement by Lord James of Hereford in Clouston & Co Ltd v Corry. That case was applied in Laws v London Chronicle (Indicator Newspapers) Ltd [1959] 1 WLR 698 where Lord Evershed M.R. at p.700 said "it follows that the question must be - if summary dismissal is claimed to be justified - whether the conduct complained of is such as to show the servant to have disregarded the essential conditions of the contract of service". In Sinclair v Neighbour Sellers LJ at p287F said "the whole question is whether that conduct was of such a type that it was inconsistent, in a grave way - incompatible - with the employment in which he had been engaged as a manager". Sachs LJ referred to the "well established law that a servant can be instantly dismissed when his conduct is such that it not only amounts to a wrongful act inconsistent with his duty towards his master but is also inconsistent with the continuance of confidence between them". In Lewis v Motor World Garages Ltd [1986] ICR 157, Glidewell LJ at p.170 stated the question as whether the conduct of the employer "constituted a breach of the implied obligation of trust and confidence of sufficient gravity to justify the employee in leaving his employment ... and claiming that he had been dismissed". This test could equally be applied to a breach by an employee. There are no doubt many other cases which could be cited on the matter but the above four cases demonstrate clearly that conduct amounting to gross misconduct justifying dismissal must so undermine the trust and confidence which is inherent in the particular contract of employment that the master should no longer be required to retain the servant in his employment.

The Evidence

Before turning to the evidence in detail I must record that a very large number of different matters were canvassed in evidence and to a lesser degree in submissions. It is no disrespect to the efforts of Counsel if I refer only to those matters which in the end of the day appear to me to be definitive of the issues before me. The relevant events after 6 April 1994 are, of course, the crucial ones but these cannot be properly understood without some consideration of the arrangements prior thereto, to which I now turn.

First Period

Prior to his appointment as Organist of the Abbey Dr Neary had held a similar appointment at Winchester Cathedral. In terms of a supplementary agreement with the Winchester Dean and Chapter Dr Neary became entitled to an arrangement or negotiation fee in respect of activities involving the choir which were paid for by a third party and arranged and negotiated by him. His request to have a similar provision included in his agreement with the Abbey was refused, but the agreement entitled him to earn fees in addition to his salary for certain classes of performances which were specified.

During the first period Dr Neary negotiated with third parties who were promoting events and recordings involving the Abbey choir and arranged for the attendance of lay vicars and, where appropriate, choristers. Contracts with the third parties were signed by the ARGA and all financial transactions including the payment of lay vicars were carried out by the Abbey Finance Department to whom the third party promoter paid the fee. Thus, apart from the initial negotiation of appropriate fees for such events, Dr Neary had no concern with financial arrangements for the lay vicars or the choristers. Dr Neary however sometimes received fees directly from third party promoters for his own services and at other times from the Abbey.

As Organist's secretary, for which she was paid initially a salary of 4965 which increased to 6,720 per annum, it was part of Mrs Neary's duty to help with arrangements for concerts in the Abbey and to circulate mailing lists, prepare concert programmes, liaise with orchestras, and also to book singers for a Special Service choir. On appointment as concert secretary in December 1991 her salary was increased to 8,270 and her duties were extended to cover making arrangements for tickets, seating plans, rehearsals, staging, lighting, marking up and programmes.

Thus from December 1991 all the arrangements for events involving the Abbey choir which were promoted by third parties other than the financial transactions were handled by Dr and Mrs Neary. When Mrs Neary's work extended beyond the three days for which she was paid a salary she received overtime as certified by Dr Neary. Mrs Neary however received no fees from the promoters for her work. For events taking place in the Abbey the Dean and Chapter on occasions received a facility fee from the promoter to reflect the use of the Abbey but with the exception of the BBC who paid to the Abbey a management fee, no other third party paid any fixing, management or administration fee to the Abbey. Between 14 March 1988 and 19 April 1994 there were 55 events involving the choir of which five were tours and the remainder concerts and recordings.

In the early part of 1993 the Inland Revenue commenced to investigate the PAYE arrangements of the Abbey and St Paul's Cathedral. Discussions took place throughout the year to whose details it is unnecessary to refer. Suffice it to say that Mr Fakes, ARGA, corresponded with the Revenue and brought the matters to the attention of Canon Semper, the Canon Treasurer, and Mr Tipping, the lay vicars' elected representative. Finally by letter dated 27 April 1994 the Revenue wrote to Mr Fakes stating inter alia that "special additional fees paid to employees of the Abbey must be added to the PAYE income and subjected to tax and national insurance deductions from 6 April 1994". The effect of this instruction was that all fees paid by the Abbey to the lay vicars and Dr Neary which had previously been taxed under Schedule D had henceforth to be taxed under Schedule E and national insurance contributions deducted therefrom.

Following receipt of the above letter Mr Fakes, on 19 May 1994 sent a memorandum to Dr Neary informing him of the Revenue's instructions as to PAYE and national insurance deductions. This was the first intimation which Dr Neary had of the problem and he immediately went to see Mr Fakes with whom then and thereafter he had a number of discussions. According to Dr Neary Mr Fakes suggested that if the lay vicars were paid from a separate account for events for which the Abbey did not have financial responsibility it might be possible to retain Schedule D taxation of such payments (T3/27). Dr Neary then discussed the matter with Mr Tipping and reported back to Mr Fakes that he thought the arrangement of a separate account would work and that he and Mrs Neary would be able to handle it. Mr Fakes expressed the view that if the account were kept without involving the Abbey it would be all right. Dr Neary said that Mr Fakes really said "well, you just get on with it" (T3/31). Dr Neary also said that a reasonably clear recollection. of his visits to Mr Fakes led him to assume that a separate account would have the blessing of Mr Robson of Binder Hamlyn, the Abbey Auditor.

Mr Fakes' recollection of these discussions was somewhat different, although he could not recollect all the details thereof. He accepted that he may have thrown in the suggestion, which came from St Paul's, that if an agency could be created by someone outside it might work (T3/38). He was, however adamant that he did not sanction any arrangement nor had he told Dr Neary that a separate account had the approval of Mr Robson because he knew that would have been incorrect (T3/41 and 43). Mr Robson in his witness statement stated that at no time did he suggest to Mr Fakes or anyone else at the Abbey that it could be possible to avoid deduction of tax and National Insurance Contributions by interposing an outside agency between the lay vicars and third party promoters of events. Mr Fakes did however accept that there may have been a "horrible misunderstanding" between himself and Dr Neary whereby the latter got the impression that he was to go and make an arrangement to set up a third party agency (T3/20). He explained that the events which gave rise to the Schedule E/D problem were few in number and that having "got the Inland Revenue off his back" he could leave Dr Neary and the lay vicars to solve their own tax problems and wash his hands of the matter (T3/43 and 54). He said that he first learned that Dr and Mrs Neary were operating some arrangement to pay the lay vicars direct in 1998 (T3/52) although he accepted that Dr Neary might have spoken to him but did not recollect. However Mr Gould, the Chief Accountant, considered that Mr Fakes was aware of the Neary Music account sometime ago because of a discussion about it in his presence in the office which they shared (T7/85). Mr Gould dealt with the day to day financial affairs of the lay vicars and I have no doubt that his recollection on this matter is to be preferred to that of Mr Fakes. However that is not to impugn in any way the credibility of Mr Fakes whose evidence that he had not sanctioned any arrangement by Dr Neary I accept. I think he was probably correct in suggesting that there must have been a "horrible misunderstanding" and that Dr Neary had thereby assumed that he had been given the blessing of Mr Fakes as ARGA to operate a separate account for the benefit of the lay vicars. Although I accept Mr Fakes' evidence that he did not sanction the setting up of a separate account I conclude, not without some hesitation, that Dr Neary had some justification for thinking that he had Mr Fakes' approval for this course. Canon Semper said that arrangements had been made to preserve the lay vicars' tax status for outside events which Mr Fakes told him had been advised by Mr Robson (T5/96). In this he was clearly mistaken since Mr Robson had given no such advice and Mr Fakes had not reported that he had. Canon Semper went on to say that given the dynamics of the Abbey at the time it was inevitable that the Nearys would be the third party operator of the account (T5/47).

However Dr Neary should have appreciated that the approval of the ARGA alone was not of itself sufficient to warrant so significant a departure from an existing system. He did not inform the Receiver General as Head of Administration in accordance with the appropriate procedure of which by 1994 he must have been well aware (T8/88 and 121). Had he done so the matter would certainly have been referred to the Dean and Chapter by Admiral Snow (T8/89). He agreed that he had sought neither permission nor approval from the Canon Treasurer, Canon Semper, before approaching the lay vicars and had at no time reported to him the proposed or actual arrangement. His reason for not doing so was because he had been given to understand by the Senior Finance Officer that this would be acceptable (T3/58). In short he proceeded to change the system of payment to lay vicars for certain events without obtaining the proper authority for so doing.

Dr Neary's setting up of a separate account without proper authority, while indicative of a lack of openness, is not however critical to my decision because the Abbey now accept, rightly in my view, that the operation of a separate account for the sole purpose of receiving sums money and disbursing the whole of those sums among the lay vicars would not amount to gross misconduct.

Second Period

In examining the evidence relating to this period I shall do so by reference to the grounds (A) to (I) relied upon by the Abbey.

Grounds (A),(B),(C)

So far as the Nearys were concerned the so called "1994 arrangements" involved a good deal more than the setting up of a separate account for the sole purpose of receiving money on behalf of and disbursing it in toto to the lay vicars. In cross-examination Dr Neary accepted that there were five fundamental elements, namely,:-

(1) Mrs Neary set up the account;

(2) Mrs Neary handled the financial arrangements. He was prompted to add that as professional fixer she was responsible for the administrative duties connected with these events. Whether this prompted addition was justified will be seen later;

(3) The money went through a separate account;

(4) Mrs Neary acted as a principal; and

(5) Mrs Neary bore the risk (T3/76).

In cross-examination Mrs Neary agreed with (1), (2) and (3) (supra). When asked whether she was acting as a principal or agent she replied that she thought she was acting on behalf of the lay vicars in running the accounts. She also felt that she would have the financial responsibility to pay the lay vicars who had been contracted to sing in a concert which were to be cancelled. When asked whether she considered that she was financially liable to a promoter in the event of the choir being unable to perform she replied that she had not really thought of it (T6/109-10). The Nearys had taken no advice, legal or accounting, before embarking on the so called arrangements and I was left with the impression that Mrs Neary was far from clear as to what her financial responsibility, if any, was to third party promoters or the choir. I shall return to this matter later. She emphasised however that her primary concern was to help the lay vicars as indeed did Dr Neary.

The new arrangements necessarily involved the payment by third party promoters of fees for events to Mrs Neary rather than to the Abbey. These fees were initially paid into an existing joint account, the Neary Concert account, which had been used at Winchester as a conduit for payments for concerts. In October 1994, on the advice of their accountant, Mrs Neary opened a new account, the Neary Music account, into which payments from promoters were paid. Some time later she informed the Inland Revenue by letter that she had commenced trading as a fixer in October 1994. NML was incorporated on 15 April 1997 on the advice of the foresaid accountant as the most tax efficient way of passing money into Mrs Neary's hands by way of dividend. Dr Neary also referred to tax liability and openness as being two further reasons for the incorporation (T5/158) as well as the limitation of Mrs Neary's liability (T5/159). The openness to which Dr Neary was referring was, I assume, the fact that annual company accounts when ultimately delivered to the Registrar of Companies in accordance with Section 242 of the Companies Act 1985 are open to public inspection.

Fixers and Fixing Fees

Since the receipt of fixing fees by Mrs Neary is of critical importance to this case, I propose to look at the role of a fixer and the work which he or she does to earn a fixing fee. In a report submitted to the disciplinary hearing on behalf of the Nearys, Mr Trevor Ford, an accountant with long and wide experience of the music industry and the taxation of freelance musicians, described in broad terms the role of a fixer as being "to engage musicians of suitable competence for recordings and concerts, to deal with all aspects of personnel management, and to calculate fees and ancillary payments". Fixers fees are normally a percentage varying between 10 to 15% of the musicians' fees. This description was broadly agreed to by Mr Tipping (T7/142) and Mr Nixon, another lay vicar who had been a professional singer for 24 years (T8/139). I assume from this description that the fixer acts as agent of the promoter.

There was however dispute as to whether any role existed for a fixer in relation to a salaried choir. Dr Neary referred to the payment of fixing fees by promoters as being usual in the music industry and referred to such fees having been paid sometimes at St Paul's Cathedral and at St Margaret's Westminster (W/S p.6). Canon Semper referred to a conversation he had had very recently with an organist at Coventry Cathedral who told him that he customarily charged fees of never more than 10% for his work "where outside the Cathedral" and had just got a cheque for hiring brass players. This answer was not pursued and it is not clear whether the Coventry organist was charging fixing fees on a salaried choir or merely on the arrangement of additional singers or instrumentalists. However, when I asked him whether he would expect the Coventry organist to charge a fixing fee when using only the Cathedral choir, he replied: "if there was an in house concert, I would not expect him to charge a fixing fee." (T5/149).

So far as St Paul's is concerned Mr Tipping stated that he had recently telephoned the Vicar Choral who was the choir representative and had been informed by him that, on the instructions of the Dean and Chapter, he negotiated fees with third party promoters for the Vicars Choral and the organist for which he was paid a flat fee of 50 per engagement (T7/143). However a letter of February 1994 produced on behalf of the Nearys from the financial controller of St Paul's to an accountant referred to an individual acting as "fixer" in relation to the six assistant Vicars Choral and being paid a fee of 10% of the assistants' fees. No information was available as to the position of the individual or the assistant Vicars Choral or indeed whether the arrangement still prevailed. Both Mr Tipping and Mr Nixon were firmly of the view that there was no room for fixing a salaried choir where the numbers needed and available for any event could be determined with ease on the premises. Mr Nixon who had sung in a number of choirs explained that ad hoc choirs composed of freelance singers would usually be administered and booked by a fixer but in the case of standing choirs such as that at the Abbey, St Paul's and Westminster Cathedral the administration of the choir for the event would be done by a salaried member of staff with no additional fixing fees being payable (T8/138). There was before me a witness statement of Mr Simon Preston, Dr Neary's immediate predecessor as organist at the Abbey, who stated that in 20 years experience as an organist in Cathedrals he had never heard of a Cathedral organist taking a fixing fee for participating in events such as concerts, tours or recordings. Mr Preston was not present for cross-examination. I have no hesitation in accepting the evidence of Messrs Tipping and Nixon that in general there is no room for fixing a salaried choir. There is necessarily a considerable difference between the work of assembling from scratch and then organising a group of freelance singers who may be widely scattered and that of simply ascertaining the availability of stated number of salaried singers who are all under the existing management. More importantly prior to June 1994 apart from the automatic payment by the BBC of a management fee no fixing fee was charged by or paid to the Abbey in respect of third party promoted events in which the choir took part. The administration for such events was carried out by Dr and Mrs Neary as part of their salaried duties. I therefore conclude that the need to fix the choir and charge percentage fixing fees therefor neither accorded with the prior practice at the Abbey nor with the usual practice in similar ecclesiastical institutions.

Notwithstanding this conclusion, it is right that I should deal with a matter raised by Dr Neary namely the payment to him prior to June 1994 of notional fixing fees. He explained that this was a grey area and that a record company would recognise that when they were paying a conductor they were also recognising a little bit of work outside his conducting although the contract with them would not so state. This was implied rather than specified in the contract and was not asked for as such by Dr Neary. When he was asked whether his fees were correspondingly reduced after Mrs Neary assumed the role of professional fixer he replied that this was not necessarily the case because he was taking on more responsibilities which justified maintaining a fee of approximately that level (T2/158-63). Although Dr Neary was pressed in cross-examination on the matter of notional fixing fees his answers were vague and imprecise and I formed the impression that his evidence on this matter was somewhat speculative and unreliable. An impression re-enforced by Mr Preston's observations in his witness statement that the idea that it is custom and practice for a Cathedral organist's fees to include a notional fixing element is absolute nonsense.

How did the matter of fixing fees first arise in 1994? Dr Neary said that the matter was considered by him and Mrs Neary after he had received the assent of Mr Tipping and Mr Fakes to operate a separate account (T3/34). However Mrs Neary's recollection was somewhat different. During negotiations in June 1994 with Sony Classical about the recording of Queen Mary Part I and the payment by Sony direct to the lay vicars Sony asked "and will there be the usual 10% management fee?" to which the Nearys agreed. Mrs Neary mentioned this to Dr Neary who said that he thought she deserved a fixing fee because she had done so many hours of work and it was a standard procedure. This was the first occasion upon which she had discussed fixing fees with Dr Neary (T6/112-4). I do not require to decide which of these accounts is the correct one because thereafter fixing fees amounting to 1,958 were paid to and received by Mrs Neary for some 22 events between June 1994 and December 1996. In addition, during 1997, fixing fees amounting to 1,998 were paid to NML which in turn paid to Mrs Neary a dividend of l,500. It is fair to say that of these sums 2,000 was paid by Sony as a fee for assembling freelance instrumentalists and soloists for a recording. This fee which could in my view properly be described as a fixing fee did not relate to the choir and therefore does not appear to me to be relevant to this inquiry.

The events for which fixing fees were charged were described by Dr Neary as non-Abbey promoted events. In the further and better particulars of the statement of claim it is averred that such an event is one "for which the Abbey does not bear financial or organisational responsibility". The decision as to whether an event was non-Abbey promoted was made by Dr Neary without reference to anyone else other than possibly Mrs Neary although he would mention his decision to Mr Tipping during the course of discussion. Events which were so classified included recordings and other events within the Abbey building as well as outside concerts, towards the cost of which the Abbey had made a financial contribution such as Christmas concerts at the Barbican and tours.

Mrs Neary's Work as a Fixer

It is matter of admission that during the first period Dr Neary was responsible for arranging all concerts, tours, recordings and other events in which he and the choir participated. Third parties negotiated directly with him to arrange the level of fees payable to, inter alia, the organists, conductor and lay vicars and when a figure had been negotiated Dr Neary would consult with Mr Tipping, as lay vicars' representative to obtain their agreement to perform for that amount. After approval had been obtained from the Dean and Chapter the third party entered into a contract with and made all payments to the Abbey (B1/49 & 89). The Nearys worked as a team and after Mrs Neary was appointed concert secretary they made and oversaw all the arrangements for events described above. For her work Mrs Neary received her salary but no additional fee from the third party (12/119-20). During the second period Mrs Neary continued to do the work which she had done before. Dr Neary continued to make the arrangements and negotiate the fees as he had previously done but he also entered into contracts with the promoters and decided the fixing fees to be charged. Mrs Neary personally had no part to play in the negotiation of fees with the promoters or the lay vicars (T5/17) and in the only three contracts produced which she, rather than Dr Neary, had signed she did so demonstrably as agent for the choir and not as a principal. Mrs Neary was asked in cross-examination to point to the distinction in her work between certain outside events in the first period and similar events in the second period. She replied that financial administration which was the major responsibility of the fixer was a most important but not the only distinction. When pressed as to what were the other distinctions her only reply was that after 1994 she and Dr Neary were taking full financial responsibility as they understood they had been asked to do (T6/83-4). Dr Neary pointed to the financial responsibility under the new arrangement and said that Mrs Neary's fixing role was to make all the necessary financial arrangements for the singers and instrumentalists (T3/49 and 101). The financial administration involved sending an invoice to the promoter after the event, sometimes as a reminder, informing the performers that the fee had arrived and asking them to submit their invoices again often with a reminder, paying their fees and keeping the books (T6/58). Mrs Neary stated that after 1994 her duties had increased quantitatively but the essential elements had remained the same (T6/76-7, T7/52), although she did say that she took a much more active part in booking singers and making arrangements. Mr Tipping, however, thought the only change which took place in 1994 was that money passed through a different account although the arrangements for concerts, tours etc. were administered by Dr and Mrs Neary as before (T7/160 and 2). He said that Mrs Neary never played a role in booking lay vicars and that as far as he could see the only change in her duties after July 1994 was to write the cheques instead of providing a list of those to be paid, to the Chapter Office (W/S). Mr Nixon said that so far as the lay vicars were concerned there seemed to be no difference in Mrs Neary's work post-1994 apart from the fact that they now received cheques from one of the Neary Concert accounts (T8/159). No other independent witness spoke to Mrs Neary having booked lay vicars and, taking the foregoing evidence as a whole, I conclude that the extra work over and above her salaried duties for which she was receiving a fixing fee was the financial administration of events as above described and the alleged assumption of financial responsibility therefor. After describing the duties involved in the financial administration of an event Mrs Neary went on to say that when the event was in the Abbey she would be looking after the performers and basically behind the scenes work (T6/58). She did not indicate whether she considered that she was being paid for this work out of the fixing fee or as Music Department Secretary. There is, however, no doubt that this was work which fell naturally within her salaried duties and given her claims for overtime in relation to the five non-Abbey events the reasonable inference is that she was performing these duties wearing her Music Department hat.

The assumption of financial responsibility is a somewhat difficult concept to grasp in the context of fixing a salaried choir. As I understand it a fixer, as described in the evidence, is someone who acts as the agent of the promoter in assembling a choir or an orchestra from the requisite number of freelance musicians. He is therefore normally an agent acting for a disclosed principal and as such incurs no contractual liability to the other party namely the musicians. However the Nearys clearly took a very different view of their responsibilities. Dr Neary thought that by doing the work under the 1994 arrangements they were taking on financial responsibility and contractual liability to pay the lay vicars (T2/141, T3/117, T4/8). At one stage he suggested that Mrs Neary was acting as a principal both in relation to third parties and to the lay vicars although by contrast he considered that she was fixer to the British Council in relation to the choir tour in Moscow in October 1994 (T3/173). Mrs Neary thought she was acting on behalf of the lay vicars in running the account and assuming the financial risk of these events (T6/109). When asked further about her liability to the lay vicars she explained that she certainly thought that she had a moral liability but she had not gone so far as to think of it as legal liability (T6/138 and 149). However Mr Tipping said that if an event had collapsed he would never have expected to look to the Nearys or indeed the Abbey for payment (T7/138 and 161) and Mr Nixon assumed that Mrs Neary was administering the separate account as an employee of the Abbey.

As I have already remarked the Nearys took no advice before embarking on the 1994 arrangements and their thinking as to their position vis a vis the lay vicars and the promoters was undoubtedly muddled. I do not think they had ever thought the matter through beyond achieving a result which would enable the lay vicars to be paid gross. I do not doubt that Mrs Neary felt that she owed a moral duty to see that the lay vicars were paid nor do I doubt that both Dr and Mrs Neary worked very hard to achieve the success of outside events. However I do not consider that the financial administration involved in the separate account justifies the description of fixing. Furthermore while I accept that the Nearys thought they had assumed some financial responsibility, moral if not legal, to the lay vicars I am satisfied that they were substantially mistaken in this respect. Taking the evidence as a whole I am of the opinion that Mrs Neary was acting on behalf of the lay vicars in collecting and distributing fees which had been negotiated for events arranged by Dr Neary. Even if I should be wrong in this conclusion she was certainly not acting on behalf of promoters in relation to the Abbey choir as a professional fixer in the accepted sense and there was no suggestion that she was receiving fees for the work carried out by Dr Neary of negotiations with promoters and lay vicars.

Notwithstanding the foregoing conclusion I shall for convenience continue to refer to the fees paid to Mrs Neary and thereafter to NML as fixing fees since that is how they have been described throughout the course of these proceedings.

Specific Events

It would serve no useful purpose to refer to all the non-Abbey promoted events in respect of which a fixing fee was paid by the promoter but it is useful to look at a few in order to get the general flavour of the arrangements. The first event was a Sony recording - "Queen Mary" - in May 1994 for which a fixing fee of 245 was paid out of a contract price of 4,062.50. Mr Hochhauser argued that since all the arrangements and indeed the recording had taken place before the 1994 arrangements came into effect charging a fixing fee was in the circumstances gross misconduct. However the fee was not received until after the new arrangements had come into effect and because Mrs Neary's work of financial administration did not arise until that time I reject this argument. In October 1994 the choir went on a tour to Moscow promoted by the British Council. Mrs Neary received an honorarium of 350 as tour secretary and assistant matron and a fixing fee of 1,032.50 or 11% on the lay vicars' fees. Prior to June 1994 Mrs Neary had handled major organisational work for tours within her contract of employment (T6/85) as Dr Neary stated in his annual report for 1993 (B10/31). Such tours were to Germany and the USA in 1992 and to France in 1993. Mrs Neary said that the Moscow tour had involved about 150 hours work on her part. Although she did not give details of how the hours were made up they cannot all have been spent receiving money from the British Council and disbursing it to the lay vicars. It is obvious that a great deal of this time must have been spent on duties for which she was paid by the Abbey and for which she could perfectly properly have claimed overtime. In 1995, 1996 and 1997 the choir took part in a Christmas concert at the Barbican in conjunction with the English Chamber Orchestra. The orchestra guaranteed 4,000 or a little more to the musical expenditure and the Dean and Chapter contributed 1,000 to the orchestra. Notwithstanding this contribution Dr Neary categorised these concerts as non-Abbey promoted.

In the case of the 1995 concert 301.36 was the balance of .4,000 after all the expenses had been paid but Mrs Neary was paid a fee of 320 leaving the deficit to be made up out of surpluses on other events (T4/25). In 1996 out of an income of 4,400 Mrs Neary took a management fee of 380 leaving a surplus of 7.16. It did not occur to Dr Neary that the surpluses of 301.36 and 387.16 should have been returned to the Abbey in view of their contribution. In 1997, by which time more information was being required by the Dean and Chapter as to the finances of the music department no fee was charged by Mrs Neary for the Christmas concert. Dr Neary explained that no such fee had been budgeted for with the result that the surplus of 498.50 was returned to the Dean and Chapter in May 1998. 1 did not find Dr Neary's reasons for distinguishing this concert from those held in 1995 and 1996 particularly easy to follow (T4/137-9) nor indeed was it easy to see how the contribution of the Abbey and the return to it of a surplus was consistent with Dr Neary's categorisation of the concert as an independent, non-Abbey promoted event.

I have already referred to the sums paid as fixing fees to Mrs Neary and NML between June 1994 and the end of 1997. There was however an element of vagueness about the percentage rate of fees charged to promoters. When it was put to Dr Neary in cross-examination that the fixing fee was not calculated on any arithmetical basis but was merely a balance of the fee received from the promoter after all expenses had been paid he demurred to this suggestion and said "When there is sufficient in the budget for a fixing fee of up to 15%, then it is taken, but if there is not within that budget, then what remains is taken. I do not think that is anything other than being good managers" (T4/22). He qualified this statement later in relation to the 1995 Christmas concert at the Barbican where the fixing fee taken produced a small deficit, by agreeing that he had not reduced the fixing fee to break even but had created a deficit to be set off against surpluses against other events (T4/25). Appended to Dr Neary's witness statement was a list of non-Abbey promoted events between October 1994 and December 1997 as well as short statements of fees received, fees disbursed and expenses paid including fixing fees in relation to each of the events. It is apparent from a perusal of these statements that there is little consistency as to the percentage rate at which fixing fees were charged. It was contended on behalf of the Abbey that fixing fees were charged not only on the lay vicars' fees but on fees payable for the benefit of the choristers to whom the Dean and Chapter stood in loco parentis. The Nearys admitted that this had happened on two occasions in 1997, namely in the Griffin Golden Wedding and Favourite Hymns recordings and that it was wrong to charge for fixing the choristers. Fixing fees charged on both lay vicars and choir school would have been respectively 15% and 14.7% whereas if the choir school fees were excluded from the calculation the figures would have been 20.6% and 19.5% which were, of course, far higher than Dr Neary's top of the range figure of 15%. The statements above referred to give no clue as to the fees by reference to which the fixing fees were calculated and it is apparent that in several cases fixing fees amounted to more than 15% of the lay vicars' fees. To give but three examples the percentages in the case of the Aldeburgh Festival and the Sony Classical Allegri recording in 1995 and the Barbican Christmas concert in 1996 were respectively 17.8%, 15.9% and 17.8%. Either Dr Neary was incorrect in his evidence that 15% was the upper limit or choir school fees were taken into account on more than the above two occasions. The lowest percentage disclosed by the statements was 4%. Of the twenty events passing through the Neary Music account between October 1994 and December 1996 where a fixing fee was charged, nine showed a surplus after payment of the fixing fees, which surplus was retained in the account, seven broke even and four showed a deficit. In three cases the deficit resulted solely from payment of a fixing fee. The surplus was used to offset any deficit on other events and on two occasions to cover reconnaissences for possible future foreign tours. On one occasion Mrs Neary advanced 600 to lay vicars when payment of their fees was delayed due to a problem over foreign taxation. Both Dr and Mrs Neary were adamant that as they were running a business they were entitled to retain for their own benefit any accrued interest and any surplus arising from any events and were no obligation to account to the lay vicars nor to inform them of their retention. They were principals, Dr Neary said. However, the only three contracts which Mrs Neary signed bore her signature as agent for the choir. Dr Neary signed all the others and in at least some cases also as agent for the choir. To take a simple example, the contract for the Sony Classical Allegri recording in September 1995 consisted of a letter from Sony addressed to the Westminster Abbey Choir and starting "Gentlemen", which was signed by Dr Neary "For the Westminster Abbey Choir". I do not see how he can maintain that he was acting as a principal in that transaction which entitled him or Mrs Neary to keep the 100 surplus resulting from that event.

I have not thought it necessary to refer further to the various events where fixing fees were paid because it is not the financial details of those events which matter but whether the Abbey were aware of and approved the general system and if not whether operation thereof amounted to gross misconduct.

What Did the Abbey know of after the arrangements were put into operation?

Mr Fakes knew nothing definite until 1998. Mr Gould was unaware that Mrs Neary was charging fixing fees. Dr Neary never discussed fixing fees with Canon Semper (T3/61). Canon Semper had spent 13 years with the BBC and had experience of fixing fees. He was aware that there was in existence a separate account to pay the lay vicars their fees gross but although he surmised that Dr Neary was involved he was not aware that this was necessarily the case (T5/97, 132). He was unaware that Mrs Neary was working as a fixer but he explained that that would not surprise or alarm him in anyway because of his background (T5/104, 132 and 5). The lay vicars had no knowledge of fixing fees being charged, nor of surpluses and interest on unpaid fees being retained. Dr Neary accepted that he had never at any time informed anyone in authority at the Abbey that Mrs Neary was charging fixing fees (T3/63 to 4). The Abbey authorities first heard that Mrs Neary had been charging fixing fees when the Nearys' accountant so informed the Abbey auditor on the telephone on 11 March 1998. Since the Abbey authorities had no knowledge at any relevant time of these fees it follows that they cannot have approved them.

However Canon Fenton, who was appointed Precentor in September 1995, did hear from a lay vicar of the existence of a separate account for external engagements after Easter 1996 but it was not until the Autumn of 1997 that he was told by Mr Gould that it was dealt with by the Nearys outside the Chapter office (T7/184 to 6). In about May 1997 Canon Fenton told, the Dean of the existence of the separate account. At that stage no further inquiries were made.

Independence of Arrangements

Dr and Mrs Neary on a number of occasions pointed out how important it was that the operation of the separate account should be independent of the Abbey and Mr Elias submitted that had Mrs Neary claimed overtime for the work which she did the whole operation to achieve gross payments to the lay vicars would have been at risk of being treated by the Inland Revenue as a sham. If Mrs Neary were to be paid for her work fixing fees were a necessary part of the arrangement. In the absence of expert evidence on the matter it is only possible to speculate but it was accepted by both sides that payment of fees by a promoter direct to individual lay vicars would not attract Schedule E tax. This is what happened in the first Sony recording in the Second Period but was not repeated because of the extra administration involved to Sony. I should have thought that similarly if the sum of the fees were paid to someone who was not employed by the Abbey and who then distributed that sum among the lay vicars the result would have been the same. Mrs Neary was employed by the Abbey but only part-time and not for the purpose of receiving and disbursing fees to the lay vicars. It could be argued that in performing that task she would have been performing an independent role. However the alleged independence of non-Abbey promoted events from the Abbey must be examined more closely. Correspondence relating to such events from Dr Neary was invariably written on Abbey writing paper headed "From the Organist and Master of the Choristers" frequently directing that invoices or cheques be sent to the Neary Music account. To take two typical examples an invoice dated 16 February 1996 for a Benjamin Britten recording was sent to Sony by Dr Neary on writing paper so headed with a request to pay to the Neary Music account. A similar invoice dated 16 May 1996 for a Christmas Carol recording was sent to Sony by Mrs Neary on Abbey writing paper headed "Penny Neary, Music Department Secretary" with a request for a payment to the Neary Music account. The use of such writing paper by Mrs Neary was commonplace. Anyone receiving these communications could be forgiven for thinking that these events had taken place under the aegis of the Abbey. Furthermore the receipt by Mrs Neary of overtime in the case of five non-Abbey promoted events necessarily imports that she performed work in relation thereto which fell within her normal salaried duties. It was said that the overtime related to work other than the financial administration but even so this hardly supports the contention that the five events in question were being run entirely independently of the Abbey. Similarly the repayment to the Dean and Chapter of the surplus from the Barbican Christmas concert in 1997 pre-supposes that the Abbey had a financial interest in the event. It must also be borne in mind that every non-Abbey promoted event required the approval of the Dean and Chapter before it could take place.

It was argued that payment for the financial work and the extra work over and above the actual fixing could not be taken from the Abbey itself without undermining the principle of independence. This argument, taken to its logical conclusion, would mean that Mrs Neary should have taken no salary from the Abbey in respect of any work whatsoever carried out in relation to non-Abbey promoted events. There was no suggestion from either of the Nearys that this was how they viewed the matter and when Dr Neary on 3 July 1997 submitted a memorandum to the Receiver General requesting that Mrs Neary's salary be substantially increased because of a greater workload he referred to one of her responsibilities as "overseeing all the arrangements for organ recitals and concerts". The memorandum contained no suggestion that these responsibilities extended only to a limited number of these events. (B4/67). Mrs Neary explained that only three or four concerts a year went through the Abbey accounts, all the rest going through the Neary Music account (P6/150). Given the extra work described by Mrs Neary as involved in her fixing duties and the fees charged therefor together with the matters referred to in the preceding paragraph I cannot accept that the non-Abbey promoted events were, in fact being run entirely independently from the Abbey, to the extent that Mrs Neary was doing no work whatsoever in relation to such events in her role as Music Department secretary, she was necessarily performing duties in relation thereto in that capacity, and this did not apparently result in the Revenue treating the gross payments to the lay vicars as a sham.

Ground (D)

In relation to five of the events where a fixing fee was paid Mrs Neary also claimed and was paid overtime. It appears that at the time of the Neary's dismissal the Dean and Chapter were under the impression that she was seeking to be paid twice for the same work. The Abbey now accepts that this was not the case and that the overtime payments related to other duties which I have already described and not the work for which she claimed to be entitled to a fixing fee.

The overtime claims are in these circumstances more relevant to the questions whether the event in question could properly be described as independent of the Abbey and lack of openness than to gross misconduct per se.

Ground (E) - Signing Contracts on Behalf of the Choir without authority

Of all the contracts considered in evidence Mrs Neary signed only three on behalf of the Abbey choir, while Dr Neary signed the rest. Neither the Abbey nor the lay vicars were aware that the Nearys were signing these contracts. The Abbey authorities could have made themselves aware had they taken the trouble to find out but the lay vicars had no reason to suspect what was happening. There can be no doubt that Dr Neary should have informed both the Abbey and the lay vicars what was being done. However the lay vicars received their fees, agreed prior to signing of the contracts, and there was no suggestion that they had suffered by reason of the Nearys rather than the Abbey signing the contracts. I do not therefore consider that this procedure of itself constituted gross misconduct although it is necessarily relevant to the charge of lack of openness.

Ground (F) - Failure in duty of openness

Dr Neary said on several occasions that if anyone in authority in the Abbey had asked about the separate account and its operation he would have explained all the details. He was in regular contact with the Precentor, his immediate superior and Head of the Music Department, he attended Chapter meetings once a month to discuss musical matters and could have consulted the Receiver General at any time. However on no occasion did he disclose that Mrs Neary was operating a separate account and charging fixing fees. Dr Neary, as organist, also submitted annual reports to the Dean and Chapter. In that for 1994 he made reference to concerts in 1995 and recordings released in 1994 and to be recorded in the future. Some of these concerts and recordings were classified or to be classified by him as non-Abbey promoted events but no mention of this was made in the report. In the 1995 report reference was made to concerts and recordings past and future of which several were classified or to be classified as non-Abbey promoted events but no mention of this was made. The 1997 report refers inter alia to the Music Department secretary (Mrs Neary) having taken over the responsibility for the licensing of concerts in the Abbey as well as now overseeing safety arrangements at the concerts themselves. Once again no mention of the Music Department secretary as operator of a separate account and as fixer was made. In May 1997 the Dean instructed Dr Neary to provide financial details of recordings and concerts by the choir, and at a Chapter Meeting later that month, Canon Fenton the Precentor and Dr Neary were required to have weekly meetings. Thereafter these took place on Fridays but on no occasion did Dr Neary disclose the existence of a separate account nor Mrs Neary's role as a fixer. Dr Neary's memorandum of 3 July 1997 requesting a substantial increase in salary for Mrs Neary contained no reference to the fact that fixing fees were currently being paid to NML for her benefit.

On 22 December 1997 there took place a meeting attended by Canon Hutt, the Canon Steward, Canon Middleton, the Canon Treasurer and Dr Neary. The meeting discussed various topics and in particular the financial arrangements for concerts. Two of the items discussed were the Barbican concert of 15 December 1997 and the National Gallery concert of 12 December 1997. The finances for both of these concerts had been handled through Neary Music Limited but neither this fact nor the existence of Neary Music Limited was disclosed by Dr Neary (T9/110-1, B9/55). Also in December Dr Neary submitted to the Dean and Chapter the budget for the above Barbican concert which contained no reference to Neary Music Limited.

The Abbey's financial year ends on 30 September and the audit for the year ending on 30 September 1997 started on 24 November 1997. The Auditor Mr Hunt who is a partner in Binder Hamlyn, took over from his retiring predecessor on 30 June 1997. On 23 December 1997 two members of his staff had a meeting with Dr Neary and reported that he had been cagey and had ventured very little. On 21 January 1998 Mr Hunt had a meeting with Dr Neary with the objective of reviewing the types of music income, understanding the budgetary arrangements and checking what funds existed. Among the matters discussed were special events and services. Dr Neary mentioned the NML bank account and described it as a "clearing house" for receipts of fees from promoters from which income was then disbursed to lay vicars and others on receipt of their invoices. He did not mention that surpluses were retained in the account nor that Mrs Neary was receiving fixing fees. Mr Hunt's impression which he recorded contemporaneously on his written agenda for the meeting, was that it was an imprest account which was being cleared all the time back to zero (T8/9, 28 and 46). A further meeting between Mr Hunt and Dr Neary took place on the 10 March but Mr Hunt did not raise any questions about NML (T8/39). However on 11 March 1998 at the request of Dr Neary Mr Simmons, his accountant, telephoned Mr Hunt and during a discussion about NML he explained that he had advised the incorporation of that company because it was currently more tax efficient to draw dividends than salary and it was normal for a music fixer to have such a company to receive the income. This was the first occasion on which any mention was made to Mr Hunt, or indeed to any other officer of the Abbey, of the business of a fixer and income generated thereby. On 16 March 1998 Mrs Neary wrote to the Receiver General referring to the 1994 arrangements and stated inter alia "In other words I was to act as a clearing house for these payments". The letter contained no reference to the retention of surplus funds nor to the charging of fixing fees.

It can be seen from the foregoing narrative that there were ample opportunities between 1994 and 1997 for Dr Neary to disclose to the Dean and Chapter and the Receiver General the existence of a separate account and the purposes for which it was being operated. I asked Dr Neary whether it was his understanding that telling the Dean and Chapter of the existence of NML and Mrs Neary as a fixer would have invalidated the whole scheme from the point of view of the Inland Revenue. He replied "Not invalidated the whole scheme .... but what I was concerned with was that from the very beginning the whole accounting system had to be independent". (T5/36-37). It is clear from this answer that Dr Neary had no good reason for failing to inform the Abbey authorities of what he and Mrs Neary were doing. I can only conclude from all the circumstances above referred to that they both had a very narrow view of their duty to disclose information about their activities, which could be summed up as:- "We must answer direct questions which are put to us but we need not volunteer information". This falls far short of the spirit of openness which they agreed was incumbent upon them in carrying out their duties and which the law requires of servants holding such positions as they held in the Abbey. Mrs Neary did not have so many opportunities but there was clearly nothing to inhibit her from making such a disclosure had she felt it appropriate.

Ground (G) - Failure to inform Abbey of incorporation of Neary Music Limited

This is merely a facet of ground (F). NML as a company did nothing which Mrs Neary had not previously done. Fixing fees were charged and received and surpluses retained. The only difference resulting from the incorporation was that Mrs Neary received a dividend from the company instead of a fee direct from the promoter. If there was a duty to disclose the existence and purposes of a separate account operated by Mrs Neary then there was equally a duty to make a similar disclosure in relation to the NML account. If there was no such duty quoad Mrs Neary's separate account then there was none quoad that of NML. On no reasonable view could the mere incorporation of NML without the knowledge of the Abbey amount to gross misconduct and the Dean accepted that this was so. In his view, with which I agree, it was the use to which the accounts were put which was far more important (T10/187).

Ground (H) - The Nearys put themselves into a position where their business interests conflicted with their duties to the Abbey

This is merely a consequence of Ground (A) and does not stand on its own, I have already rehearsed the facts relevant to that Ground and no useful purpose would be served by repeating them.

Ground (I) - Dr Neary misled the Disciplinary Committee as to:-

(a) the Role of Mrs Neary

In a memorandum submitted by Dr Neary for the Disciplinary Hearing he stated that Mrs Neary had had the responsibility for the book-keeping of the company and in respect of her own trading as fixer. He continued "I cannot be held responsible for any mistakes or errors which she may have made". I am not impressed by this ground.

(b) Lay vicars' knowledge of Mrs Neary's role as fixer and the details of the contracts made on their behalf.

The above memorandum stated that the lay vicars were well aware of the arrangement made whereby Mrs Neary was acting as the promoter. However, neither of the two lay vicars who gave evidence Messrs Tipping and Nixon had any idea that Mrs Neary was charging fixing fees. Indeed they both assumed that the work she did in connection with outside events was in her capacity as the Abbey Concert Secretary. No lay vicar gave evidence in support of the statement in the memorandum which was therefore wrong.

So far as details of the various contracts is concerned it is correct that these were not shown to the lay vicars. However they were aware before a contract was concluded of the fees which they would receive and I accept that it had never been the normal practice to show completed contracts to the lay vicars before or after an event. I do not therefore consider that the Nearys can be criticised for not spelling out the details of contracts to the lay vicars. However the fact that Mrs Neary was charging fixing fees on the fees payable to the lay vicars, without telling them, is another matter and is further evidence of the Nearys' lack of openness.

At this stage it is appropriate to say something about the circumstances in which the Nearys were dismissed. Following receipt of a report of 17th March 1998 by the auditor into the operation of NML, the Dean and Chapter resolved on 20th March to suspend the Nearys. They were invited to and did attend an investigatory meeting with Canon Middleton on 23rd March. At about 7.15 p.m. that evening they received letters asking them to attend a disciplinary hearing on the afternoon of 24th March. After taking advice they declined and the hearing was first postponed to the 25th and then to the 26th March with an ultimatum that failure to attend might result in a decision being taken by the Dean in their absence. The Nearys then gave to the Abbey notice of their intention to seek an injunction and when counsel met together before the hearing an agreement was reached which resulted in the disciplinary hearing finally taking place on 9th April after a detailed statement of the issues had been provided for the first time by the Abbey's solicitors on 2nd April.

The Abbey's attempt to convene a disciplinary hearing at such short notice without a detailed statement of the case being made against the Nearys must score gamma minus on the scale of natural justice

Mr Elias for the Nearys submitted that they were entitled to take fixing fees because they had effectively been given by Mr Fakes in 1994 a discretion to operate alternative arrangements in a reasonable manner which included charging a fixing fees and retention of surpluses and even if they had not been so authorised they had acted in good faith for the benefit of the lay vicars and could not therefore be guilty of gross misconduct. Although Dr Neary may have had some justification for thinking, albeit mistakenly, that he had been given Mr Fakes' approval to operate a separate account for the lay vicars he had no possible justification for thinking that he had been given leave to operate an independent business involving the charging of fixing fees to promoters and the retention for his or Mrs Neary's benefit of any surplus resulting from particular events. The fact that he may have acted in good faith does not, as the authorities show, mean that the charging of fixing fees and retention of surpluses can in no circumstances amount to gross misconduct.

It was further submitted that there was no dispute that Mrs Neary was entitled to fair remuneration for the work which she did and that this was justification for the charging of fixing fees. I accept that she could not claim overtime for her work of financial administration not only because that might undermine any role she had as an independent financial administrator but more importantly because she could not claim overtime for doing work which did not form part of her Abbey duties. However, by using her position as Music Department secretary to devise, for work of which the method of payment neither disclosed to nor approved by the Abbey, she was making a secret profit and acting contrary to the spirit of openness which both she and Dr Neary accepted to be required in the Abbey.

It is right that I should emphasise that the operation of a separate account was to the benefit of the lay vicars as to Income Tax and to both the lay vicars and the Abbey as to deduction and payment of National Insurance Contributions. Furthermore the charging of fixing fees and retention of surpluses did not adversely affect the fees which the lay vicars had agreed in advance to accept. However that cannot alter the fact that Mrs Neary was in breach of her duty of fidelity to the Abbey.

Conclusion

What I have to determine is whether the conduct of Dr and Mrs Neary, as disclosed by the evidence, amounts to misconduct, and if so, whether serious or gross. The starting point is Dr and Mrs Neary's acceptance of the five propositions which were put to them in cross-examination and my conclusion from the authorities that conduct which strikes at the root of the trust and confidence inherent in their relationship with the Dean and Chapter can amount to gross misconduct. For some three and a half years Dr and Mrs Neary ran a business whose principal income earning assets were the lay vicars and the choristers. They derived profits from this business in the shape of fixing fees and surpluses on events involving the choir. They did not tell anybody in the Abbey what they were doing. They disclosed to no-one there that they and not the Abbey authorities were entering into some contracts on behalf of the choir. The fact that the Abbey authorities had all the information which would have enabled them to find out about the contracts, had they been so minded, does not alter the position. Dr Neary sought an increase in salary for Mrs Neary without mentioning that she was already receiving substantial sums by way of fixing fees. Both Dr and Mrs Neary, when the existence of the separate account became known to the auditor, indicated that it was an imprest account without going on to mention its other purposes. By these activities and their silence during this long period they were in clear breach of their duty of fidelity to the Abbey. They used their position as Organist and Music Department Secretary to make secret profits over a prolonged period and they entirely failed to inform the Abbey authorities of what they were doing, notwithstanding the fact that there were ample opportunities so to do and no good reason for not doing so. I consider that this conduct was such as fatally undermined the relationship of trust and confidence which should have subsisted between them and the Abbey. I am therefore satisfied that the Dean and Chapter were justified in summarily dismissing them. In reaching this conclusion I have not sought to differentiate the position of Mrs Neary from that of Dr Neary. Although Dr Neary had far more opportunity to disclose to the authorities what was going on he and Mrs Neary worked as a team and it was not suggested that she was unaware of his failure to disclose. In any event although Dr Neary organised the secret profit Mrs Neary retained it, and it has not been maintained on her behalf that she could be in a different position quoad any misconduct to that of Dr Neary.

For the foregoing reasons I shall humbly report to Her Majesty my determination that the Dean and Chapter were justified in summarily dismissing Dr and Mrs Neary.

One of the curious features of this case is the apparent lack of interest in the Abbey in what was going on after June 1994 in relation to non-Abbey promoted events. The consent of the Dean and Chapter had to be and was obtained for every event Abbey or non-Abbey and it must have been obvious that a considerable number of events were not being processed through the Abbey accounts department. Mr Gould was aware of this and Canon Semper, taking his evidence at its most favourable to the Nearys, assumed that this was occurring but made no inquiries. Mr Fakes said that the Abbey turnover was very large and that the non-Abbey promoted events were small in number with the result that it did not register with him or the auditors that such events were not going through the Abbey books between 1994 and 1998 (T6/52). For several years neither the Receiver General nor the Dean and Chapter were aware of the separate accounts. When the Precentor first heard of it after Easter 1996 he appeared to be concerned that it was outside the main enterprise. His evidence on this matter was not very easy to follow but I gather that he had not questioned Dr Neary directly on this matter because he did not want to pry (T7/185). When the Dean was told by the Precentor in May 1997 of the possible existence of a Neary fund he decided to await the arrival of the new Canon Treasurer before pursuing the matter. When it was put to the Dean that on hearing of the fund he should have raised the matter directly with Dr Neary he demurred to the suggestion because he thought that it might merely be a matter of gossip which he was very anxious to discourage (T10/175-7). Why a direct question to Dr Neary would have engendered gossip was not clear to me. When Canon Middleton took office as Treasurer on 25 November 1997 the annual audit was already under way and he first heard of NML at a meeting with the auditor on 28 January 1998. In the event all the investigation into the separate accounts and their operation was carried out by the auditor and his staff.

I find it surprising that neither the Precentor, Canon Fenton, nor the Dean, notwithstanding his explanation, asked Dr Neary directly about the fund and its operation as soon as they were aware of its existence. Had they done so and had the parties been prepared to discuss openly and frankly the Abbey's concerns, to acknowledge that serious mistakes had been made and to consider the reasons therefor, it might perhaps have been possible to avoid the present unhappy situation with all its attendant publicity and to have reached a rather less dramatic resolution of their differences.

Lord Jauncey of Tullichettle
9th December 1998

Note:
There are cross-references to the transcript of the hearing (T), bundles of evidence (B) and witness statements (W/S).