The means employed by the abbey to dismiss the organist and his wife "must score gamma minus on the scale of natural justice", Lord Jauncey concluded at the end of a 12-day hearing. He added that, had the dean and chapter acted differently, a "less dramatic resolution" could have been reached.
The hearing, however, upheld the Very Rev Wesley Carr's decision to sack Dr Martin Neary, organist and master of the choristers of the abbey, and his wife, Penny, the concert secretary, for gross misconduct.
The Nearys were dismissed in April for alleged financial irregularities relating to a company they had set up to administer fees from concerts. The dean and chapter had not known of its existence and accused the couple of abusing their position "to further their own financial gain". The Nearys insisted the fund had been set up on the advice of accountants to avoid tax problems, and appealed to the Queen as head of the abbey.
In July, the Queen appointed Lord Jauncey of Tullichettle, a senior Scottish judge, to adjudicate on her behalf. Issuing his decision that the Nearys were guilty of gross misconduct, Lord Jauncey said yesterday: "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."
Dr Carr said last night that he thought that sacking the Nearys had done less damage than if "we'd pulled a carpet" over the matter. It was not a matter that could have been solved "simply by sitting down with a cup of tea", he said. "I do think it shows that a Christian organisation can act with integrity and honesty. Where money is involved, you have very little choice and that is what we did."
He added that the abbey would act immediately on Lord Jauncey's call for improved internal communications. "What is most painful for us is the realisation that the abbey has run successfully on trust between colleagues for a thousand years. However painful it is for us to recognise, we acknowledge that we now have to introduce more modern financial controls on top of that trust," he said.
The Nearys said yesterday that they regarded the penalty as "out of proportion". In a statement Dr Neary said: "We find it hard to understand how, if we have been found to have acted without dishonesty or concealment and in good faith, our actions can still be considered sufficiently ill-judged to constitute gross misconduct."
The Labour MP Frank Field, a friend of the Nearys for many years, said of yesterday's decision: "I am totally knocked sideways by it and perplexed. To read the judgment is like reading a bad detective novel, where every page gives you clues saying who the main culprit is, but on the last page you find the wrong person in the dock."
The Very Rev Wesley Carr, 57, has a reputation for being a remote, insensitive man who deals high-handededly with his staff. Since arriving at Westminster Abbey in February 1997, he has caused many upsets - just as he did during his previous 10-year tenure as Dean of Bristol Cathedral.
A former senior member of staff at Bristol, who served at the cathedral for 22 years, says the six years under Dr Carr were "the unhappiest years of my career". Before that, Dr Carr was a canon at Chelmsford Cathedral, during which time the then Bishop of Chelmsford, the Right Rev John Trillo, said of him: "Who will rid me of this turbulent priest?"
Dr Carr is programme adviser to the Tavistock Institute of Human Relations in London. He is married to Natalie, and has one daughter. He is an academic at heart, with degrees from Oxford and Cambridge, and has written a number of books.
The Bishop of Bristol, the Right Rev Barry Rogerson, is among the few who have something positive to say about Dr Carr. He has a "desire for the truth and integrity" and an ability to "see things clearly", in his view.
The Church Musician
Dr Martin Neary is one of the most respected figures in the world of church music. The zenith of his career was arranging the music and conducting the choir for the funeral service of Diana, Princess of Wales,an achievement for which he was decorated by the Queen. As a boy, Dr Neary was in the choir of the Chapel Royal, singing at the christenings of Prince Charles and Princess Anne and at the Coronation.
Dr Neary, 58, and his wife, Penny, 54, are much loved at Westminster Abbey, where they have both lived and worked for the past 10 years as organist and master of the choristers, and abbey secretary respectively. They also have a considerable number of friends among the great and the good, who were quick to rally after their dismissal. Before going to Westminster Abbey, Dr Neary was master of the choristers at Winchester Cathedral for 15 years. The couple have three children.
Dr Neary is the only person to have been elected president of the Royal College of Organists twice. He has raised the profile of the abbey's music considerably, taking the choir on 12 foreign tours.