In John Hallahan v Cork City Council [2026] IEHC 591, the High Court granted an interlocutory injunction restraining Cork City Council (the “Defendant”) from re-assigning the duties of its Head of Finance to another person pending the trial of the proceedings. The Defendant submitted it had a contractual right to vary the Plaintiff’s role due to a variation clause in his contract of employment. This interesting judgment discusses important case law concerning contractual clauses retaining discretion to one party, affecting both parties, and the principle for that discretion to be exercised in good faith.
Facts:
The Plaintiff had been employed by the Defendant since 2010 and was promoted to Head of Finance in 2016. As Head of Finance, he led the Defendant’s Finance Department, which comprised 68 employees, and was a member of the Defendant’s 12-person senior management team reporting into the Chief Executive Officer (“CEO”). The Plaintiff’s contract provided that the Defendant reserved the right to alter the Department or Directorate to which he was assigned.
The Defendant’s Finance Department recorded a deficit of just over €2.75 million in 2025. The Plaintiff noted this was less than 1% of the total budget and contextualised this deficit. Against this background, the CEO decided to create a new position of “Head of Cost Transformation”. On 11th May 2026, the Plaintiff was informed that the CEO wanted him to assume the new role. The Plaintiff submitted that he expressed reluctance to be appointed to this role at this meeting and suggested two other people who might be better suited.
The following day, the senior management team was advised that the Plaintiff would take up the position and that another employee, Jeremy Canty, would be appointed as Head of Finance in his place for a one-year period. Mr Canty was a subordinate of the Plaintiff. The Plaintiff emailed the CEO objecting to the proposed change, describing it as “a very significant change to [his] contracted role”. His solicitors subsequently wrote to the Defendant stating that he did not agree to take up the new position and sought to invoke the grievance procedure. He requested that an independent person be appointed (as it was the CEO’s decision/actions which were the subject of the complaint) and also requested the status quo to be preserved.
The Defendant maintained that the CEO had exercised a contractual right to alter the Department/Directorate to which the Plaintiff was assigned. It also took the position that no grievance had been received, contending that the grievance procedure did not permit an external legal representative to invoke the procedure on an employee’s behalf.
On 18th May, the CEO issued Delegation Order 2024/26, which delegated to the Plaintiff the executive powers, functions and duties of the “Head of Cost Transformation / Head of Fiscal Strategy”. The following day the Plaintiff’s solicitors issued High Court proceedings. The Court initially granted interim orders restraining the Defendant from treating the Plaintiff as holding any position other than Head of Finance and from assigning his duties to another person.
The Defendant subsequently rescinded the Plaintiff’s appointment as Head of Cost Transformation and appointed Mr Canty to that role instead. However, it proposed transferring certain functions from the Plaintiff’s role to the Head of Cost Transformation. These included responsibility for the preparation, management, oversight and operation of the Defendant’s annual budget and capital programme, together with liaison responsibilities involving the Finance and Estimates Committee, Audit Committee and Local Government Auditor. The Defendant’s solicitors acknowledged these functions might operate to breach the terms of the previous court order, restraining the assignment of the Plaintiff’s duties to any other person. In a letter dated 12th June 2026 they advised that if the Plaintiff’s consent was not forthcoming, it was proposed that both the Plaintiff and Mr Canty attend at each and every meeting, acknowledging this “doubling-up” was “both highly unusual and undesirable”.
The Plaintiff estimated that the proposed transfer of duties would remove functions that occupied approximately 40% of his working time. He argued that, having first attempted to remove him from his position, the Defendant was then seeking to hollow out his role by transferring important responsibilities to the person who had originally been selected to replace him.
Decision:
The Court ordered that the Defendant was restrained, pending trial, from assigning the Plaintiff’s duties to another person. For the avoidance of doubt, Mr Justice Micheál O’Connell clarified that the proposed duplication of functions between Mr Canty and the Plaintiff would breach the order. It was observed that this proposed arrangement would compound the professional harm to the Plaintiff and be “unworkable”.
Mr Justice O’Connell observed that removing the Plaintiff from his held position and assigning him to a newly created position of uncertain scope would have represented “a change of considerable significance”. The Court rejected the view, submitted by the Defendant, that there was no option available to the Plaintiff to reject re-assignment based on (i) his contract of employment and (ii) custom and practice, as this position fails to consider the Braganza principle. This principle stems from the UK Supreme Court case Braganza v BP Shipping Limited [2015] 1 WLR 1661, in which the court considered a matter where discretion was conferred on one party to a contract, in a manner that affected both parties. Mr Justice O’Connell directly quoted from that decision:
“the party who is charged with making decisions which affect the rights of both parties to the contract has a clear conflict of interest. That conflict is heightened where there is a significant imbalance of power between the contracting parties as there often will be in an employment contract. The courts have therefore sought to ensure that such contractual powers are not abused. They have done so by implying a term as to the manner in which such powers may be exercised, a term which may vary according to the terms of the contract and the context in which the decisionmaking power is given.”
The Braganza principle has been confirmed as applicable in Irish law by the Supreme Court in O’Sullivan v HSE [2023] IESC 11. It derives from the implied mutual duty of trust and confidence between employer and employee, even if this duty doesn’t appear on the face of the contract. Any decision to vary an employee’s role will be considered in the context of this implied term.
Test for Injunctive Relief
The Court considered the primary test for applying for an injunction. This test, stemming from the landmark Supreme Court Campus Oil1 decision and further refined in Merck Sharp & Dohme2, is the well-settled test applied in Ireland in applications for injunctive relief. The Court was satisfied that this was the appropriate test, the first limb of which is that there is a “fair question” to be tried, rather than the higher test of a “strong case” (as the Plaintiff was seeking to preserve the status quo, rather than requiring the Defendant to carry out any positive steps). The Court ultimately found the Plaintiff had raised a fair question to be tried. The Court observed the lack of consultation with the Plaintiff regarding the proposed change to his role and stated that the relevant contractual discretion relied upon by the Defendant “was required to be exercised honestly, in good faith and genuinely, and without arbitrariness capriciousness, perversity or irrationality”. The Court was also satisfied that there was a fair question to be tried concerning the Defendant’s approach to the invocation of the grievance procedure, as the Plaintiff’s grievance concerned the CEO and the normal course would have required him to submit his grievance directly to the CEO. Therefore, some adjustment to the normal procedure may have been necessary.
Next the Court considered the balance of convenience limb of the Campus Oil/Merck Sharpe and Dohme test, i.e. where the least risk of injustice lies if the injunction was granted. The Court found that the Defendant had not demonstrated that the immediate transfer of the functions at issue were of such urgency as to outweigh the harm likely to be caused to the Plaintiff. The Court observed that the purported re-assignment of the Plaintiff and the proposed transfer of functions to Mr Canty “has had, and if implemented would continue to have, a humiliating and degrading effect on the Plaintiff.” The resulting workplace and reputational harm to the Plaintiff would be difficult to quantify and damages would not provide an adequate remedy. Therefore, the Court made the relevant orders to preserve the existing position until the proceedings are determined.
Takeaway for Employers:
This decision highlights that the inclusion of a variation clause in a contract of employment does not necessarily give an employer an unfettered right to make significant changes to an employee’s role or responsibilities. The wording of the relevant clause must be considered in the context of the contract as a whole and in light of the Braganza principle of good faith. While the Court did not determine that the Council had breached the Plaintiff’s contract, the injunction preserves his existing duties until the substantive proceedings are decided.
Link – https://judgments.courts.ie/judgments/documents/67121
Authors – Tara Kelly and Jenny Wakely
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