Compromise agreements can sometimes go too far,
says Nicholas Dobson
An NHS trust recently afforded a useful reminder of the need to exercise due prudence in the management of public funds when Treacy J in the High Court declared a compromise agreement concerning a departing chief executive to be irrationally generous and consequently ultra vires.
The case in question was Gibb v Maidstone and Tunbridge Wells NHS Trust [2009] EWHC 862. The ultra vires element will be considered briefly below. But it is first worth having a flashback reminder of some previous case law in this area concerning local authorities.
The wrong type of generosity
In Roberts v Hopwood [1925] AC 57 the House of Lords had warned against munificence with the money of others—what rail companies might now call “the wrong type of generosity”. Lord Atkinson pointed out that the “indulgence of philanthropic enthusiasm at the expense of persons other than the philanthropists is an entirely different thing from the indulgence of it at the expense of the philanthropists themselves”.
For a: “…body charged with the administration for definite purposes of funds contributed in
