Pinfold North Ltd v Humberside Fire Authority

An authority’s statutory power to appoint an officer to administer its financial affairs does not, without more, require the appointee to be its employee. The question is one of statutory interpretation. Where the legislation does not expressly impose an employment requirement, an authority may appoint a person as an officer even though that person is not employed by it. A company cannot itself hold the statutory office, but a contract with the company may remain effective as a remuneration mechanism where the individual, rather than the company, was appointed to the office.

The claimant company sought damages for the termination of contracts under which it received remuneration for services performed by Mr Michael Price as Treasurer and Chief Finance Officer of the defendant combined fire and rescue authority. The authority applied for summary judgment under Part 24 of the Civil Procedure Rules, arguing that Mr Price could not lawfully have been appointed because he was not its employee and that the authority therefore lacked power to contract with the claimant.

The central issue was whether section 112 of the Local Government Finance Act 1988, read with the relevant local-government legislation, required the Chief Finance Officer to be an employee of the authority or a relevant local authority.

1. The application for summary judgment was dismissed. The authority’s application depended on the proposition that the contract was necessarily void because Mr Price was not its employee. That proposition was rejected.
2. Section 112 of the Local Government Finance Act 1988 requires the authority to secure that one of its officers has responsibility for the proper administration of its financial affairs. Neither that provision nor the related provisions of the Local Government Act 1972 defines “officer” as meaning only an employee. The fact that employees are necessarily officers does not mean that all officers are necessarily employees.
3. The authorities concerning statutory office-holders and employment, including Lincolnshire County Council and Another v Hopper, Miles v Wakefield Metropolitan District Council and Johnson v Ryan, showed that office-holding and employment may coexist or be distinct depending on the statutory scheme and facts. They did not establish a rule governing the construction of section 112.
4. The express employment requirement in section 127A of the Greater London Authority Act 1999 supported the conclusion that Parliament would have used clear words had it intended section 112 to require the Chief Finance Officer to be an employee. The only requirement was that the appointee should be an officer of the authority.
5. Mr Price had been appointed as the authority’s Treasurer and could therefore be appointed as its Chief Finance Officer without being its employee. The claimant company could not itself hold the statutory office, but it was the claimant’s case that Mr Price held the office and that the company merely provided the remuneration mechanism. The contract did not stipulate that the company, rather than Mr Price, was the office-holder.
6. The authority’s application failed. Following service of a Defence, the matter was to proceed to directions for an early trial. Costs were to be considered by written submissions.