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Jesudhass v Just Hotel Ltd
WC 3/06
Heard: 28 Nov 2005, Wellington
Judgment Date: 21 Mar 2006
Court/Authority/Tribunal: Colgan CJ, Shaw, Couch JJ
Appearances: B Corkill, A Cressey ; M Gilkison
PROCEEDINGS REMOVED FROM EMPLOYMENT RELATIONS AUTHORITY - Preliminary question on admissibility of evidence - Extent, if any, to which communications between the parties in mediation may be relied on to determine the plaintiff's personal grievance - Plaintiff alleged dismissal during mediation - Meaning and effect of s148 Employment Relations Act 2000 concerning confidentiality of mediation process - Effect of other relevant sections of the Employment Relations Act - Emphasis on good faith in Employment Relations Act relevant - Confidentiality and inadmissibility contemplated by Parliament when enacting s148 could not be absolute - Plaintiff entitled to adduce evidence to attempt to establish that communications between the parties at mediation, other than those made in an attempt to resolve his employment relationship problem, should be admissible at the hearing of his personal grievance - General Manager
This was an application on a preliminary issue of the extent, if any, to which communications between the parties in mediation might be relied on to determine the plaintiff's personal grievance.
On 1 October 2004 the plaintiff was employed by the defendant company as general manager of the Just Hotel. The defendant company was owned by two shareholders, John and Michael Chow. The terms and conditions of his employment were set out in a written individual employment agreement ("IEA"), dated 29 September 2004. The plaintiff's employment was for a fixed term of 2 years. There was provision in the IEA for the plaintiff to be suspended if he was suspected of serious misconduct, and mechanisms for resolving employment relationship problems, including mediation.
In May 2005 employment relationship problems arose between the parties, culminating in the plaintiff being suspended from his employment. The plaintiff sought mediation assistance from the Department of Labour's Mediation Service. On 6 May 2005, the plaintiff notified the defendant that he had an unjustifiable disadvantage personal grievance.
On 18 May 2005 the parties met in a mediation conference chaired by a mediator employed under s144 of the Employment Relations Act 2000 ("the ERA"). Both parties were represented at mediation.
The plaintiff alleged that, in the course of the mediation, the defendant's representatives relayed to him through the mediator that he would not be permitted to return to work, and that he would be dismissed immediately after the end of the mediation. He said that this message led him to believe that he had been dismissed during the mediation process. The defendant denied that these events occurred as alleged by the plaintiff but, for the purposes only of this preliminary decision, it was assumed that he would be able to establish that his account of events was true.
Later on 18 May, after the mediation had ended, the plaintiff's solicitor wrote to the defendant's solicitor asserting that the message conveyed to the plaintiff through the mediator had effectively ended his employment. Notice was given of a further personal grievance alleging unjustified dismissal. By a letter dated 18 May, but sent to the plaintiff's solicitor on 20 May, Mr John Chow on behalf of the defendant confirmed the plaintiff's dismissal. This was said to be for a variety of reasons none of which, the plaintiff said, had ever been made known to him before the dismissal took place.
The principal issue for determination was the meaning and effect of s148 ERA concerning confidentiality of the mediation process, specifically the extent, if any, to which communications between the parties in mediation may be relied on to determine the plaintiff's personal grievance.
The plaintiff advanced an alternative argument, under s148(6) ERA, that dismissal being a matter of contract (its termination), the plaintiff's employment agreement and things done under it "existed independently of the mediation process." Counsel submitted that, unless it was varied by consent at mediation, it would not be open for a party to vary the employment agreement unilaterally at mediation and then claim confidentiality. The "mediation process" should not be regarded as extending to a "contested" unilateral step by an employer in respect of an agreement that exists independently of the mediation process. Counsel submitted that, in this case too, it would be a question of fact to be determined as a preliminary question by the decision-maker, whether the evidence sought to be introduced was or was not "independent of the mediation process".
Held (1) The phrase in s148(1) Employment Relations Act 2000 "created or made for the purposes of the mediation and any information that, for the purposes of the mediation, is disclosed orally in the course of the mediation" was at the heart of the case. The meaning of the phrase was not entirely clear on its face. It might mean for the purpose or purposes for which the mediation had been arranged or conducted, as opposed to other extraneous or earlier purposes. The "purpose" might, potentially, be as narrow as the resolution of the particular issue brought to the mediation by the party instigating it, or as broad as the state of health of the employment relationship as a whole at the date of mediation. The phrase might mean created for the purposes of mediation, as opposed to created at an earlier time for other purposes. (para 11)
(2) One source of guidance was s18 Family Proceedings Act 1980 ("FPA"). The most relevant judgment relating to s18 FPA was Parsons v Mathieson (cited below). Although not the same position as here, the interpretation of s18 in that case allowed that in some circumstances evidence would be admissible where the information had been gained in another context, albeit in circumstances very closely associated with ones in which privilege would attach. So even when uncompromising language was used, Parliament did not intend there to be an absolute prohibition on communications through evidence of relevant matters from an independent person otherwise subject to the statutory requirements of confidentiality. An examination of the evidence at issue might exempt a counsellor from the privilege in appropriate and no doubt rare cases. If the arguably more absolute protection of s18 might allow for exceptions it must follow that the less uncompromising s148 here must also allow for exceptions.
(3) The scheme of the ERA, particularly Part 9 (Personal grievances, disputes, and enforcement) and Part 10 (Institutions), assisted in determining the meaning of the phrase "for the purposes of the mediation", which was at the heart of the question for decision. The first object in s101 ERA addressing Part 9 was the recognition that, "in resolving employment relationship problems", access to information and mediation services is more important than rigid formulaic procedures. (para 42)
(4) The first object set out in s143 in relation to the institutions established under the Act, including the Mediation Service, was that they should support successful employment relationships and the good faith obligations that underpin them. The second object was to "recognise that employment relationships are more likely to be successful if problems in those relationships are resolved promptly by the parties themselves". (para 43)
(5) The question for decision was affected by a number of other relevant ERA sections, including ss143(a)-(da), 144(2) (particularly (d)), 147, 149, 150, 152, 153, and 159. From these sections a number of conclusions about "the purposes of the mediation" could be drawn. Where there is an employment relationship problem, mediation is to be the first port of call. The legislation places an emphasis on the parties themselves resolving employment problems, but assistance is also provided by mediators. Mediators are not adjudicators, unless the parties specifically request them to so act. Fast and effective resolution of employment relationship problems is promoted using a variety of communication tools, with flexibility being emphasised. Section 144 ERA emphasises the provision of information, the assisting of the smooth conduct of employment relationships, and the resolving, promptly and effectively, of employment relationship problems. (para 44)
(6) The word "resolve" in s144(2)(d) ERA ([mediation] services that assist persons to resolve, promptly and effectively, their employment relationship problems:") means to "settle or find a solution to": Concise Oxford Dictionary (10th ed), Oxford, Oxford University Press, 1999. It did not simply mean to bring matters to an end, but required a conclusion in the sense of a mutually agreed settlement or solution. (para 45)
(7) It was difficult to know what the Select Committee meant by use of the words "Clause 160 is intended to prevail over the finding in Crummer v Benchmark Building Supplies Ltd (cited below). It was not entirely natural to speak of a statute "prevailing over" a decided case. Crummer made a number of findings, both ratio decidendi and obiter dicta. Which ones to be prevailed over were not specified by the committee. The Court concluded that the Select Committee probably meant the case's primary finding that mediation would not be held on a "without prejudice" basis unless the parties specifically agreed to do so. That objective is certainly achieved by s148 and this, in turn, represented a significant change to the previous regime. Parliament wished to enshrine the "without prejudice" privilege in respect of all mediations. However, Crummer confirmed also that common law privilege is not absolute, and the Court doubted that Parliament intended to go further and create absolute privilege with all of the easily imaginable harshness and injustice that this might entail. The Court concluded that Parliament used a formula of words ("for the purposes of the mediation") to maintain the balance between predominant privilege on the one hand, and circumstances where common sense and the interests of justice would warrant disclosure and admissibility on the other hand. (para 46)
(8) The other key conclusion of the Crummer case was that statements made in writing in or for the purposes of the mediation are discoverable and may be inspected in subsequent adjudication proceedings unless they fall under the umbrella of legal privilege or a recognised head of public policy. The enacted provisions override ("prevail over") that finding. In most cases that will be because such a document will remain confidential under s148(1) ERA and will not fall within the exceptions contained in s148(6)(a). The parliamentary reference (during the enactment process) to the Crummer case and its intention to alter what had been found or confirmed by Crummer, related to the conclusion that, under the 1991 Act, confidentiality and inadmissibility had to be agreed upon by the parties on a case by case basis in mediation. Parliament's intention in 2000 was that such conditions should attach automatically to all mediations, and that there should be a form of blanket privilege on all mediations irrespective of whether or not the parties had agreed to this in advance. (paras 47, 48)
(9) Parliament could not be said to have gone further and, in particular, to have altered well-established and well-known common law principles relating to "without prejudice" communications and the admissibility of them in subsequent proceedings. To alter the common law would have required a clearly expressed intention to do so. Rather, it was the Legislature's intention to enshrine in the Act the relevant principles stated in Crummer, perhaps for the guidance of people who were not lawyers (of whom many are involved in mediations), and therefore perhaps unfamiliar with such evidential concepts. The common law of confidentiality and admissibility of "without prejudice" statements is reflected in s148(1) ERA. (para 49)
(10) It was difficult to accept counsel's submissions that Parliament used the phrase "for the purposes of the mediation" simply to distinguish anything which occurred at the mediation from pre-existing evidence. For example, if there was evidence of a statement made before mediation that was not privileged, and the statement was reiterated in mediation, it could not logically be suggested that evidence of the statement made before mediation was inadmissible only by reason of its repetition in a privileged environment. While the fact of its repetition in the mediation might be inadmissible, the content of the statement made before mediation and the circumstances in which it was made, would be admissible, unless of course otherwise protected by an independent ground of privilege. Indeed, s148(6) addressed expressly the question raised by counsel by distinguishing such a situation. (para 50)
(11) Also relevant was the legislation's emphasis upon conducting employment relationships in good faith. Sections 159(2) and 188(3) ERA require parties directed to mediation by the Authority or the Court to comply and to attempt in good faith to reach an agreed settlement of their differences. Although this express requirement applies to Authority or Court directed mediation, there could really be no valid distinction between such mediations, and those instigated by the parties themselves. It was inimical to the conduct of a mediation in good faith that wrongful or misleading or unlawful words or actions should be permitted as part of a dispute resolution forum in which parties are expected to behave towards each other in good faith. Similar expectations arose at common law. (para 51)
(12) Equally, parties to an employment relationship engaging in mediation with a view to sustaining and improving that relationship, or even settling the terms of a former relationship, were engaging in a process that required engaging in good faith behaviour. Although not falling specifically within the express list of matters in s4(4), s4(5) specified that these were examples and did not limit the requirements of s4(1). Engagement in mediation was just such an additional, but unspecified, circumstance in which the good faith rules applied. (para 52)
(13) Strengthening this conclusion was the new legislative provision for enforcement of good faith under s4 ERA. Section 4A ERA now provided for penalties for persons who failed to comply with the duty of good faith where such failure was either deliberate, serious, and sustained, or was intended to undermine, among other things, an employment relationship. Parliament could not have intended to penalise a party who failed to comply in mediation with the duty of good faith in s4(1) to the high standard set out in s4A, but in respect of whose conduct no evidence could be given. (para 53)
(14) Parliament could not have intended s148 to preclude evidence of the commission of a criminal offence from being adduced simply because this arose in mediation. For example, a party uttering a threat to kill or a blackmail in the course of mediation or in documents produced "for the purposes of the mediation" should not escape liability merely because of the inability to admit evidence of that unlawful conduct in subsequent Court proceedings. It was equally possible that a party might do or say something in mediation that perverted or amounted to an attempt to pervert the course of justice, another serious criminal offence. Parliament could not have intended to put such matters beyond the reach of the criminal law by making evidence of them inadmissible. Upon reflection, the observations in Shepherd v Glenview Electrical Services Ltd (cited below) to this effect went too far and could not be right. (para 54)
(15) Counsel submitted that the confidentiality and inadmissibility provisions were not absolute in the sense that they related to "statements, admissions, documents created or made for the purposes of the mediation, and information disclosed solely in the course of the mediation", and that this did not preclude evidence of the participants physical actions which might, in turn, include an assault for example. In the Court's view, that was an unsatisfactory distinction. What was said or written might be as powerful and as reprehensible, sometimes even more so, than what was unspoken or unwritten. The examples given by the Court of threats, blackmail, and attempts to pervert the course of justice might arise solely by words spoken and/or written. Parliament could not have intended that evidence might be given of criminal actions while words constituting an offence should be confidential and inadmissible. (para 55)
(16) The phrase "for the purposes of the mediation" reflected the common law requirement that such communications must be genuinely for the purpose of settling litigation or potential litigation. The protections, including inadmissibility, are lost where such communications are for other purposes. (para 56)
(17) Confidentiality and inadmissibility, as contemplated by Parliament when enacting s148, could not be absolute. However, Parliament must have intended that parties would have the freedom to express themselves and their positions in a way that they might not in an investigation meeting before the Authority or in proceedings before the Court. For example, an admission made in the course of mediation that a dismissal was unjustifiable should not be able to be the subject of subsequent evidence if the mediation did not settle the employment relationship problem. Equally, an offer of compensation without admission of liability in similar circumstances should not be admissible subsequently, either to establish liability or to support a submission that compensation should be fixed at a particular level. (para 57)
(18) Where privilege or admissibility was in issue, the question in each case was where to draw the line between these two positions. The phrase "the purposes of the mediation" related to that information which should be protected properly in the mediation context. If information was provided that was not for the legitimate purposes of the mediation, then it was not entitled to the protections of confidentiality and inadmissibility. (paras 58, 59)
(19) Parliament did not intend to enact an absolute protection, or at least as absolute a protection as it could have and did, for example, in other legislation summarised earlier in the judgment. Not only was the use of the phrase "for the purposes of the mediation" in s148(1) ERA an exception to absolute privilege, but so too was s148(5) (no protection for collective agreement negotiations at mediation) and s148(6) which created four further exceptions to absolute privilege. (para 60)
(20) The employment relationship between the parties existed independently of the mediation process. That being so, any variation of the agreement underlying the employment relationship must exist outside the mediation process if it was to have effect. The unilateral termination of the employment relationship by dismissal was arguably the most significant variation of the employment agreement possible. It followed that if a dismissal did occur in the course of mediation, that must have been intended to have effect outside the mediation process. Therefore, it existed outside the mediation process. So on that ground, too, a dismissal of an employee at mediation in the circumstances alleged in this case would fall beyond the legislative protection of confidentiality and admissibility. (paras 61, 62)
(21) The Court did not accept the defendant's alternative argument that the statutory duty of the Authority or the Court to investigate and determine a personal grievance based on an unjustifiable dismissal or an unjustified action would prevail over the provisions of s148 ERA. First and foremost, s148 was not subject expressly to any other provision in the legislation, including those in the personal grievance framework. It was also immediately apparent that the consequences of the proposition would very largely undermine the statutory mediation process. Virtually every personal grievance was initially the subject of mediation. The whole mediation process relied heavily on the parties being able to speak freely and make concessions in an effort to settle their differences. If the statements made by the parties at mediation were admissible in subsequent proceedings, the parties would be seriously inhibited and the process as a whole would be frustrated. (para 63)
(22) The Authority or the Court's statutory investigation or hearing mechanisms could not have been intended, by implication, to exclude s148 when issues of confidentiality or inadmissibility arose in such cases. It could not be a question of one prevailing over the other. The statutory rules of confidentiality and admissibility under s148 must be applied by the Authority or the Court when determining justification for dismissal for disadvantage in employment. The section could not be read down or set aside simply because the Authority or the Court was so doing. (para 64)
(23) A party's conduct in mediation going to subsequent events, including dismissal or disadvantage in employment that were alleged to be unjustified, but which were not for the purposes of the mediation, were not subject to confidentiality and inadmissibility. (para 65)
(24) The scope of confidentiality and admissibility is a two-edged sword. Although in this case it was an employee who sought to give evidence about what happened, threats made for example by an employee against an employer at mediation, or blackmail, would be similarly admissible in subsequent proceedings. (para 67)
(25) To uphold the plaintiff's position would not be to compromise the parties' ability to make and freely consider offers of settlement, including at times and if appropriate, by vigorous and emphatic statements intending to drive another party to a particular position. Although such conduct might be part of the mediation process on occasions, the law must draw a line between acceptable and unacceptable conduct, including in that exercise the need to acknowledge the desirability of settlement of disputes in mediation. Parliament had achieved that balance by enacting s148 as the Court had interpreted it. (para 68)
(26) If evidence of a dismissal at mediation were to be admissible, s148(2) would deprive a party of the potentially corroborative evidence of the mediator. While that was so, the primary objective of the Legislature in enacting that subsection was to ensure that mediators would not be placed in the potentially invidious position of being witnesses before the Authority or the Court to corroborate the version of events advanced by one party or the other in circumstances where the mediator's task was not to gather or record evidence of what was said but, rather, to assist the parties to resolve their differences. The statutory exclusion of mediators as witnesses did not necessarily mean that evidence of what occurred in the presence of a mediator was deficient. There would usually be other witnesses, often several. (para 69)
(27) The plaintiff was entitled to adduce evidence to attempt to establish that communications between the parties at mediation, other than those made in an attempt to resolve his employment relationship problem, should be admissible at the hearing of his personal grievance. If the plaintiff was able to establish the accuracy of his account of what occurred at mediation in this case, it was possible that some of the conduct of the parties might be found to be not "for the purposes of the mediation". Whether this was so, however, was not for the Court to decide at this stage. It was a matter for the trial Judge to determine in the first instance. On behalf of the plaintiff, counsel appropriately accepted that the onus of satisfying the decision-maker that any evidence of what occurred in the course of the mediation process should be considered would be on the plaintiff. That would be a threshold question of admissibility for the trial Judge, but one which was open to be addressed. (paras 70, 71)
Result: Application on preliminary issue granted ; Parties directed to further mediation ; Costs reserved
Statutes considered:
ECA s 78(1)
ERA s4(1)
ERA s4(4)
ERA s4(5)
ERA s4A
ERA s101
ERA s143
ERA s143(a)
ERA s143(b)
ERA s143(c)
ERA s143(d)
ERA s143(da)
ERA s144
ERA s144(2)
ERA s144(2)(d)
ERA s147
ERA s148
ERA s148(1)
ERA s148(2)
ERA s148(3)
ERA s148(5)
ERA s148(6)
ERA s148(6)(a)
ERA s149
ERA s150
ERA s152
ERA s153
ERS s159
ERA s159(2)
ERA s178
ERA s188(2)
ERA s188(3)
ERA s194
ERA s152(1)
Employment Relations Bill 2000
ERA Part 9
ERA Part 10
Family Proceedings Act 1980 s18
Words and phrases: For the purposes of the mediation
Resolve
Cases referred to in judgment:
Crummer v Benchmark Building Supplies Ltd [2000] 2 ERNZ 22; (2000) 5 NZELC 98,611
Lowe v NZ Post Ltd [2003] 2 ERNZ 172
Parsons v Mathieson (1990) 7 FRNZ 79; [1991] NZFLR 262
Shepherd v Glenview Electrical Services Ltd [2004] 2 ERNZ 118; (2004) 7 NZELC 97,600
Van Der Sluis v Health Waikato Ltd [1995] 1 ERNZ 478
Pages: 9
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Air New Zealand Ltd v Hudson
AC 30/06
Heard: 29 Nov 2005 - 30 Nov 2005 (2 days) Auckland
Judgment Date: 30 May 2006
Court/Authority/Tribunal: Shaw J
Appearances: K Thompson ; AM McInally
DE NOVO CHALLENGE TO A DETERMINATION OF THE EMPLOYMENT RELATIONS AUTHORITY - Unjustified dismissal - Reinstatement - Section 103A Employment Relations Act 2000 - Test of justification for dismissal to be determined on an objective basis - Objective approach did not give unbridled licence to substitute Court's views for that of an employer - Employer did not have to prove that incident which it characterised as serious misconduct happened - Must show that it carried out a full and fair investigation which disclosed conduct which a fair and reasonable employer would regard as serious misconduct - Difference between "could" and "would" could be described as the difference between whether a person was able to respond in a certain way or whether a person who was able to respond would actually respond in that way - "All the circumstances" included the circumstances under which the misconduct occurred and the circumstances of both the employee and the employer - Investigation into the allegations of serious misconduct by plaintiff's investigators was not one that a fair and reasonable employer would have carried out - Conclusions that investigators reached about the finding of serious misconduct could not be justified - Decision to dismiss not justified - Reinstatement not practicable - Compensation for humiliation etc reduced to take into account defendant's contribution - Customer service agent
This was a partially successful de novo challenge to a determination of the Employment Relations Authority. The Court found that the defendant's dismissal was procedurally unjustified but declined to order reinstatement.
The defendant was a customer service agent employed by the plaintiff airline. She had worked almost continuously for the plaintiff for approximately 9 years. In 2002 she received a written warning valid for 6 months resulting from complaints received by three customer airlines of the plaintiff. The complaints related to poor customer service and following the warning the plaintiff arranged training and mentoring for the defendant. In October 2003, after the expiry of the previous written warning, the defendant was given a final warning resulting from a breach of regulations in that she crossed without permission from landside to airside to speak to her ex-partner who had already boarded a plane and returned to landside with a book given to her by her ex-partner.
In 2004 the defendant was the subject of further complaints. First, in November 2004, a customer airline of the plaintiff complained that the defendant had pushed another employee of the plaintiff ("the first incident"). The day after the first incident the defendant and the other employee met with the defendant's team leader who was acting as a duty manager ("the duty manager"). At the meeting the first incident was discussed and an apology was tendered by the defendant and accepted by the other employee.
Second, in November 2004, a different customer airline received complaints from passengers about the way they were treated by the defendant at check in. Third, in October 2004, a passenger of a customer airline complained that the defendant incorrectly required payment of departure tax.
In December 2004 the plaintiff sent a letter to the defendant advising her of the allegations which was followed by several investigation meetings. At the first and second meeting the defendant was represented by the duty manager. One of the investigators outlined what she viewed as the role and scope of the defendant's representative. At the second meeting the investigators indicated that the complaints were a serious breach of customer service and that the defendant's employment was unsustainable. The plaintiff then allowed time for the defendant to arrange alternative representation. At the third meeting the defendant was accompanied by the duty manager as a support person, and a union delegate as representative. The delegate queried the delay in raising the complaints and queried how a decision could have been made without the plaintiff interviewing the duty manager. The investigators interviewed the duty manager that same day and the next day another meeting was held in which the defendant's employment was terminated effective immediately. The plaintiff's representatives left the meeting as the defendant was upset. Because of a misunderstanding the defendant and her delegate waited for an hour for the plaintiff's representatives to return but ultimately had to ask a duty manager to see the defendant off the premises as they understood she was no longer entitled to her swipe card.
The Employment Relations Authority found that the defendant was unjustifiably dismissed for serious misconduct and ordered she be reinstated and paid reimbursement for lost wages and compensation for humiliation etc.
The plaintiff submitted that because to a reasonable extent the occurrence of the first incident and the seriousness of it were admitted by the defendant, the real issue was whether the decision to dismiss was justified in light of her conduct and the complaints which showed the plaintiff in a bad light. The plaintiff further submitted that reinstatement was not an appropriate remedy as a number of customer airlines did not want the defendant working for them and that a special roster to accommodate the defendant was impractical. The plaintiff submitted that the new test of justification in s103A Employment Relations Act 2000 ("ERA") codified the previous common law position.
The defendant submitted that the dismissal was unjustified. The defendant further submitted that s103A ERA should be construed in the light of the plain meaning of the words and that Parliament had replaced the previous common law position.
Held
(1) Although Parliament had codified the test for justification in s103A ERA, the Court did not agree with the defendant's submission that the section could be interpreted in a vacuum without reference to case law. That was because the section adopted some of the wording of tests previously formulated by the courts and in other respects firmly changed other wording. It was necessary to interpret the words according to their plain meaning and to assess that against such legislative intent as could be ascertained from external materials as well as their common law antecedents and the relevant objects of the ERA. (para 111)
(2) The first element of s103A ERA confirmed expressly that justification for dismissal was to be determined on an objective basis. That meant that the matter was to be viewed from the point of view of a neutral observer. That element of objectivity was expanded on in the second part of the section. To decide whether the employer's actions were what a fair and reasonable employer would have done in all the circumstances the Court was to judge all the circumstances objectively. (para 113)
(3) In the light of the wording of the amendment and the Parliamentary expressions of intent, the effect of s103A ERA was to separate out the employer's actions for consideration. It required the Authority or the Court to consider those actions against what a fair and reasonable employer would have done. Although the amendment did not expressly prevent employers having recourse to a range of options from which it could choose, Parliament had legislated for the Authority or the Court to evaluate that choice against a specified objective standard: What would a fair and reasonable employer have done in the circumstances? (para 119)
(4) The above approach effectively restored to the Authority and the Court the duty of inquiry and the right of judgment. However, the s103A ERA requirement for the Authority and the Court to stand back and determine the matter on an objective basis by evaluating the employer's actions did not give an unbridled licence to substitute their views for that of an employer. The Court's role may mean that it reached a different conclusion from that of the employer but, provided that was done appropriately, that was objectively and with regard to all the circumstances at the time the dismissal occurred, a conclusion different from that of the employer may be a proper outcome. (para 120, 141)
(5) The Northern Distribution Union v BP Oil case (cited below) established an approach of approaching first the question of what was open to a reasonable and fair employer to do in the all circumstances. If the employer's decision came within the range of those options then dismissal was likely to be justified. The effect of s103A ERA was to move from that analytical approach to requiring the Court to evaluate all of the employer's actions in all the circumstances. While the range of responses open to an employer was obviously one of the matters to be considered, it was not the only matter and the Court was directed to a wider inquiry than was mandated by the previous decisions of the Court of Appeal. (paras 130, 131)
(6) Section 103A ERA did not differentiate between aspects of the dismissal process but, because it referred in general to the employer's actions, the test for justification applied at all stages including the employer's decision that misconduct had occurred and the employer's decision to dismiss. Each of those stages was open to scrutiny although that was not to be done in a mechanical way as it was recognised that the lines between each stage were often blurred. (paras 132, 133)
(7) When judging possible responses to evidence of misconduct, the difference between "could" and "would" could be described as the difference between whether a person was able to respond in a certain way or whether a person who was able to respond would actually respond in that way. The reference to what a fair and reasonable employer would have done represented a statutory curb on the range of responses an employer may justifiably take. (paras 139, 140)
(8) All the circumstances of the case included not just the employer's reaction to the misconduct which it honestly believed had occurred, but also the circumstances under which the misconduct occurred and the circumstances of both the employee and the employer. (para 142)
(9) An employer did not have to prove that the incident which it characterised as serious misconduct happened. It must, however, show that it carried out a full and fair investigation which disclosed conduct which a fair and reasonable employer would regard as serious misconduct. The employer was not required to conduct a trial or even a judicial process but there were some fundamental requirements of natural justice which were appropriate and which, in the present case, were reinforced by the plaintiff's policies. As part of a full and fair investigation, natural justice required that the defendant was given a proper opportunity to comment on the allegations made against her. (para 144)
(10) The plaintiff's submission that the real issue was whether the decision to dismiss was the appropriate outcome in the light of the defendant's conduct and the complaints which showed the plaintiff in a bad light presupposed that the investigation was carried out in a fair and reasonable way. In the Court's view it was not, because a fair and reasonable employer would not have viewed all the incidents as being serious misconduct. The letter advising the defendant of the allegations gave no date or details about the second complaint. The person who made the second complaint did not identify the date and when the defendant was first interviewed no date was given to her. No explanation was given as to why the complaint was not referred to the defendant at the time it was made in November 2004. The defendant had little recall of the incident and was unable to give a full explanation of what had happened. (paras 146, 147)
(11) During the disciplinary meeting it was revealed that, the year before, a customer airline had asked the plaintiff not to roster the defendant on a particular team. The defendant had had no opportunity to find out why that request had been made or to work on remedying the problem. Regarding the third incident, the letter was unspecific about what the alleged bad service was. The defendant had no memory of it 2 months after the event. Again, she was unable to answer it. (paras 148, 149 )
(12) Although both the second and third complaints were essentially performance issues, the plaintiff did not treat them as such and relied on them as evidence of serious misconduct, the most serious finding that the plaintiff could make against an employee. The defendant was entitled to prompt notice of the complaints and a full opportunity to comment on then at the time they were first received. A reasonable and fair employer would not have raised the above two matters in that manner. Thus, the plaintiff's findings of serious misconduct or even repeated serious breaches of obligations towards customers in relation to those were not sustainable. (paras 150, 151)
(13) There were serious flaws in the investigation of the first incident. The first flaw was the failure of the plaintiff to interview the duty manager as part of the original investigation. The defendant relied in part on her belief that, following the meeting with the duty manager, the matter was at an end. The decision to dismiss was made before the defendant had a chance to make submissions about the outcome of the disciplinary process and before the duty manager had been interviewed. (paras 152-154)
(14) The plaintiff's conclusion, that the allegation of the defendant that she had been provoked by the other employee had not been corroborated, overlooked relevant evidence. The Court found that there was significant corroboration which the plaintiff effectively closed its eyes to. If it had addressed that aspect of the defendant's explanation in a fair and open minded way, taking into account that corroboration, there was a strong possibility that the investigator's perceptions of the incident may have altered. (paras 158-159)
(15) The second flaw was the investigator's incorrect advice to the duty manager and the defendant at the first and second meetings about the role of a representative in a disciplinary hearing, which was accepted by the duty manager and the defendant. A representative of a person at a disciplinary hearing was not a mute observer and was not limited to the extent that was said. Thus, while the defendant had representation in theory at the first two important meetings, it was not proper representation in the sense of having someone able to act or speak on her behalf. By the time the representation issue had been rectified it was too late as the decision about serious misconduct and termination had been made and was not going to change. (paras 161-163)
(16) Added to the above unfairness was the fact that the duty manager was a material witness to the investigation. By preventing her participation in the interview, the plaintiff deprived the defendant of the benefit of her input on an important part of the circumstances surrounding the allegations at a time when the plaintiff's investigators could be expected to have had open minds. Given that they were in charge of the way the investigation was proceeding, they had a responsibility to advise the defendant that it was inappropriate for the duty manager to be a representative as she was a potential witness. (para 164)
(17) While the unwillingness of customer airlines to work with the defendant was relevant to a decision to dismiss, the principles of natural justice applied to all matters on which the plaintiff was relying to justify its decision to dismiss. The Court could not be certain on the evidence that the plaintiff had fully informed the defendant about the refusal of the relevant customer airlines to have her work for them. The investigation into the allegations of serious misconduct by the plaintiff's investigators was not one that a fair and reasonable employer would have carried out and therefore the conclusions that they reached about the finding of serious misconduct could not be justified. It followed that their decision to dismiss could not be justified. (paras 171, 173)
(18) Compensation must reflect whether it would be likely that an employee would have been dismissed if proper procedure had been followed. However, real difficulties arose in cases, such as the present, where the process was flawed to the extent that it was not possible for the Court to ascertain the degree and seriousness of misconduct because that had been obscured by failures of process. (paras 178, 179)
(19) Standing back objectively and evaluating the matter from the perspective of a fair and reasonable employer, it was inescapable to conclude that, even if the defendant's misconduct had been found by the plaintiff to have been limited to the first incident and that responsibility for that incident had to be shared with the other employee, her previous history and the impracticability of her continuing employment as a normally rostered customer service agent would have justified the plaintiff's decision to dismiss her. (para 183)
(20) The defendant was entitled only to a small monetary remedy under s123(1)(c)(i) ERA which acknowledged that the final investigation meeting was held in a manner that led to it being extended and fraught combined with the most unfortunate manner in which the plaintiff's investigators unintentionally left the defendant and the delegate alone following the dismissal. Given her years of experience, much of it positive with the plaintiff, the defendant deserved the dignity of a properly managed exit. Compensation was set at $5,000, taking into account the defendant's contribution. (paras 184, 185)
(21) In spite of reinstatement being a primary remedy (s125 ERA), there were good reasons not to order permanent reinstatement. It was simply not practicable for the plaintiff to employ the defendant permanently in her normal role of customer service agent without making exceptional and impracticable efforts to accommodate her. (paras 188, 189)
Result: Challenge granted in part ; Reimbursement of lost wages reserved ; Compensation for humiliation etc ($5,000) ; Costs reserved
Statutes considered:
ERA s3
ERA s3(a)
ERA s3(a)(ii)
ERA s4(1A)
ERA s103
ERA s103A
ERA s123(1)(c)(i)
ERA s124
ERA s125
ERA Part 9
Employment Relations Amendment Act (No 2) 2004 s38
IRA s117
Interpretation Act 1999 s5(1)
Words and phrases: All the circumstances ; Could ; Would ; Representative
Cases referred to in judgment:
Airline Stewards and Hostesses of New Zealand IUOW v Air New Zealand Ltd (1991) 4 NZELC 95,259 ; [1990] 3 NZLR 549 ; [1990] 3 NZILR 584 ; (1990) ERNZ Sel Cas 985 ; (1991) 4 NZELC 95,259
Auckland City Council v Hennessey [1982] ACJ 699 ; (1982) ERNZ Sel Cas 4
BP Oil New Zealand Ltd v Northern Distribution Workers Union [1989] 3 NZLR 580 ; (1990) 3 NZELC 97,486 ; [1989] 3 NZILR 276 ; (1989) ERNZ Sel Cas 512
Iceland Frozen Foods Ltd v Jones [1982] IRLR 439 ; [1983] ICR 17
Northern Distribution Union v BP Oil New Zealand Ltd (1992) 4 NZELC 95,600 ; [1992] 3 ERNZ 483 ; (1992) 1 NZELR 259
Poole v Horticulture & Food Research Institute of NZ Ltd [2002] 2 ERNZ 869
Post Office v Foley ; HSBC Bank Plc (formerly Midland Bank Plc) v Madden [2001] 1 All ER 550 ; [2000] ICR 1283 ; [2000] IRLR 827
Telecom South v Post Office Union [1992] 1 NZLR 275 ; (1991) 4 NZELC 95,352 ; [1992] 1 ERNZ 711
Telecom New Zealand Ltd v Nutter (2004) 7 NZELC 97,563 ; [2004] 1 ERNZ 315 ; (2004) 2 NZELR 83
Waitakere City Council v Ioane [2006] 2 NZLR 310 ; (2005) 7 NZELC 98,049 ; (2005) 2 NZELR 575
W & H Newspapers Ltd v Oram [2001] 3 NZLR 29 ; (2001) 6 NZELC 96,197 ; [2000] 2 ERNZ 448
Wellington Road Transport IUOW v Fletcher Construction Co Ltd [1983] ACJ 653 ; (1983) ERNZ Sel Cas 59
Whanganui College Board of Trustees v Lewis [2000] 1 ERNZ 397
Pages: 7
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Rawlings v Sanco NZ Ltd
CC 2A/06
Heard: 15 Jun 2006, Christchurch
Judgment Date: 23 Jun 2006
Court/Authority/Tribunal: Colgan CJ
Appearances: F Wall ; S McClelland
PRACTICE AND PROCEDURE - De novo challenge refused following s182 Employment Relations Act ("ERA") direction (see: CC 2/06) - Directions for non de novo hearing (s182(3) ERA) - HELD - Challenge to be akin to conventional appeal - Plaintiff had onus of persuading Court Authority's determination, on the information Authority had before it, was wrong - Three issues Authority relied on in reaching determination in issue - All other issues that were before the Authority on the parties' pleadings in issue - Regarding issues on pleading, undecided by Authority, usual onus to apply - Plaintiff entitled to call witnesses and relevant exhibits - Plaintiff to present case first
This was an interlocutory judgment determining the nature and extent of a hearing otherwise than by hearing de novo directed to occur pursuant to s182 Employment Relations Act 2000 ("ERA").
The plaintiff was employed by the defendant under an employment agreement that provided that there would be no redundancy compensation in the event that the defendant's business was sold as a going concern and that its employees were "retained in their positions". The defendant sold its business to another company and the plaintiff continued to work for that company until he was dismissed. Following his dismissal, the plaintiff brought proceedings in the Authority, by a statement of problem, which asserted that he had been unjustifiable disadvantaged by the defendant having given him certain assurances as to his entitlement to redundancy compensation.
Neither the plaintiff nor his agent appeared at the Authority's investigation meeting. The Authority member advised that he would determine the case "on the papers". The Authority had the plaintiff's statement of problem with some annexed documents and the defendant's statement in reply, together with further annexed documents that included an unsigned version of the employment agreement.
The Authority determined that: (i) the plaintiff had failed to raise his grievance within the relevant 90 day period and that the defendant had not agreed to the grievance being raised outside 90 days; (ii) the matter was not a grievance (s103(3) ERA) and that the real issue was whether redundancy compensation was payable under the terms of the employment agreement; and (iii) the terms of the employment agreement precluded the claim.
The plaintiff challenged the determination and elected a hearing de novo under s179 ERA. After receiving a good faith report requested under s181 ERA the Court issued an interlocutory judgment holding that the plaintiff had obstructed rather than facilitated the Authority's investigation and that the plaintiff was not entitled to a hearing de novo.
The present interlocutory judgment set the nature and extent of the hearing otherwise than by hearing de novo, required by s182(3) ERA.
The defendant submitted that the plaintiff should not have another opportunity to call evidence as he had but rejected before the Authority. The defendant also submitted that any documents leading to the challenge should be confined to those that were before the Authority.
Held
(1) As to the nature of the challenge, it should be akin to a conventional appeal. There was to be an onus on the plaintiff to persuade the Court that the Authority's determination on the information that was before it was wrong. That was a narrower form of challenge than by hearing de novo in which the Court would begin with a clean slate and without any presumption of correctness that the challenging party must dislodge. (para 12)
(2) As to the scope of the challenge, the three issues on which the Authority relied to dismiss the grievance ought fairly to be within the scope of the challenge. The plaintiff would be entitled to call relevant evidence and adduce relevant exhibits in respect of those three issues at the hearing of the challenge. (paras 13, 14)
(3) The plaintiff must, in fairness, have an opportunity to prove the three issues determined by the Authority were wrong by calling evidence including documentary exhibits. The fairest course was for all other issues that were before the Authority on the parties' pleadings to be dealt with at the same hearing although, in respect of those, there would be no presumption of correctness of the Authority's determination because it did not decide to dismiss the grievance in reliance on any finding about them. So in those other respects, the usual personal grievance onuses and burdens were to prevail: that was that the plaintiff had to establish a prima facie case of personal grievance and, thereafter, the onus would shift to the defendant to justify its actions. (para 18)
(4) The plaintiff was to present his case first and the defendant was to follow. (para 19)
Result: Orders accordingly ; No order for costs
Statutes considered:
Employment Court Regulations 2000 r11
ERA s103(3)
ERA s131
ERA s182(3)
Cases referred to in judgment:
Rawlings v Sanco NZ Ltd unreported, P Cheyne, 26 September 2005, CA 127/05
Telecom New Zealand Ltd v Nutter [2004] 1 ERNZ 315
Pages: 3
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Roberts v Commissioner of Police
AC 33/06
Heard: 16 Jun 2006, Auckland
Judgment Date: 27 Jun 2006
Court/Authority/Tribunal: Colgan CJ
Appearances: D Feist ; R Burns
DE NOVO CHALLENGE TO A DETERMINATION OF THE EMPLOYMENT RELATIONS AUTHORITY - Whether grievance barred by s114(6) Employment Relations Act 2000 ("ERA") - Interpretation and application of s248 ERA - HELD - Authority wrongly determined that s114(6) ERA applied to plaintiff's grievance - Plaintiff's grievance, "submitted" under s33 Employment Contracts Act 1991, was not a grievance "raised in accordance with" s114 ERA - Section 114 ERA did not come into effect until 2 October 2000 - Three year limitation period applied only to grievances raised under s114 ERA after 2 October 2000 - Unnecessary to determine whether there was a limitation period of six years under s4 Limitation Act 1950 - If plaintiff had been out of time under s114(6) ERA for issuing proceedings it would have been open to Authority to extend the time for doing so using s219(1) ERA - Challenge granted - Police constable
This was a successful de novo challenge to a determination of the Employment Relations Authority which had struck out the plaintiff's grievance claim as not being brought within the three year period required by s114(6) Employment Relations Act 2000.
The plaintiff was a former police constable. Following an inquiry under s12 Police Act 1958 into allegations of misconduct, the plaintiff was dismissed in October 1998. In January 1999 the plaintiff raised a personal grievance with the defendant and requested a rehearing of the s12 inquiry, which was declined. Next, the plaintiff filed a statement of problem with the Authority. The Authority directed the parties to mediation, which was unsuccessful. From time to time the plaintiff informed the Authority that he intended to pursue his application but it was not until April 2005 that a statement of problem was re-filed.
The Authority determined that as the plaintiff's personal grievance was commenced more than three years after it was raised, the grievance was barred under s114(6) Employment Relations Act 2000 ("ERA"). That was because the plaintiff's circumstances were governed by the transitional provisions of s248 ERA. Under 248(4)(b) proceedings commenced after 30 June 2001 had to be in accordance with s113(1) and Part 9 ERA. Section 114(6) was contained in Part 9. The Authority further held that it had no discretion to extend the time for filing the grievance.
The parties agreed that under the Employment Contracts Act 1991 ("ECA") which was the operative legislation when the plaintiff's cause of action arose, the plaintiff had a period of at least six years from the cause of action arising to file his personal grievance (s4 Limitation Act 1950).
Held
(1) Parliament could not be said to have intended to remove accrued rights to bring proceedings by legislative amendment unless the amending enactment "provides otherwise" (s4 Interpretation Act 1999). Not only had the ERA not done so, but on a plain reading of the full text of s114(6) ERA, only such personal grievances as had been "raised" after 2 October 2000 when the ERA came into force were intended to be subject to the three-year limitation set out in s114(6) ERA. Until the legislation came into force on 2 October 2000, personal grievances could not be "raised" in accordance with s114 ERA. The plaintiff had "submitted" his personal grievance to his employer, under s33 ECA, that was necessary before proceedings could be brought in reliance on a cause of action that arose in 1998 or 1999. (para 13)
(2) The Authority wrongly determined that s114(6) ERA applied to the plaintiff's grievance. The plaintiff's grievance was not a grievance "raised in accordance with this section". Section 114 did not come into effect until 2 October 2000. The three year limitation period applied only to grievances raised under s114 after 2 October 2000. The plaintiff had brought his proceeding in the Employment Tribunal within the time allowed for doing so. (paras 14, 21)
Comment
(1) It was unnecessary to determine whether there was a limitation period of six years under the Limitation Act 1950 as the defendant contended because the proceeding was filed within that time in any event. (para 11)
(2) Section 221 ERA did not enable the Authority to extend time to bring a matter before it that was otherwise out of time. However, on its face, s219(1) ERA was a discretionary power to extend time limitations. Section 219 ERA was not limited to any particular time limits: nor was that contained in s114(6) ERA excluded. Thus, even if the plaintiff had been out of time for issuing his proceedings, it would have been open to the Authority to extend the time for doing so if he had met the requisite discretionary tests. (paras 17-20)
Result: Challenge granted ; Costs in favour of plaintiff (Authority and Employment Court) (quantum reserved)
Statutes considered:
ECA s33
ERA s2
ERA s113(1)
ERA s114
ERA s114(6)
ERA s219
ERA s219(1)
ERA s221
ERA s221(c)
ERA s248
ERA s248(4)
ERA s248(4)(b)
ERA Part 9
Interpretation Act 1999 s4
Interpretation Act 1999 s17
Interpretation Act 1999 s18
Limitation Act 1950 s4
Police Act 1958 s12
Police Regulations 1992 r27
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TLNZ Auckland Ltd v Neenee and Ors
CA 67/06
Heard: 7 Aug 2006, Wellington
Judgment Date: 22 Aug 2006
Court/Authority/Tribunal: William Young P, Robertson, Arnold JJ
Appearances: PM Muir, KN Dines ; S Mitchell
COURT OF APPEAL - Practice and Procedure - Application for leave to appeal Employment Court decision - Appellant sought leave to appeal the findings (i) that the circumstances relied on to justify the dismissals did not meet the definition of redundancy in the collective employment contract; (ii) that the appellant's actions associated with the restructuring were a breach of s4 Employment Relations Act 2000 - HELD - Section 214(1) Employment Relations Act 2000 precluded appeal regarding first ground because it was associated with the construction of employment agreements - Second ground of insufficient significance to the parties to warrant grant of leave - Application dismissed - Permanent skilled employees
This was an unsuccessful application for leave to appeal an Employment Court decision.
The appellant was a stevedoring company. Due to market conditions, the appellant was not able to provide skilled work for all its permanent skilled employees, although it was able to keep them occupied with unskilled work. The appellant decided to reorganise its staffing arrangements, to employ less permanent and skilled employees and to rely more on casual labour for unskilled work. That provided the basis upon which the appellant dismissed the respondents. The respondents challenged the dismissals.
The Employment Court held that (a) the circumstances relied on by the appellant to justify the dismissals did not meet the definition of "redundancy" in the relevant collective employment contract ("CEC"); (b) the appellant's actions associated with the restructuring were a breach of the obligation of good faith imposed by s4 Employment Relations Act 2000; and (c) the dismissals were not carried out in a procedurally fair manner.
The appellant sought leave to appeal against the first two conclusions. It submitted that the undisputed evidence before the Employment Court was that the positions which the replacement casuals would fill were appreciably different from those held by the respondents and that conclusions to the contrary were wrong in law on the no evidence ground.
Held
(1) It was unlikely, that the Employment Court was mistaken in its assessment of the evidence in the radical sense suggested by the appellant. Rather the Employment Court's conclusion reflected its evaluation of the evidence in light of its preferred construction of the CEC, under which the respondents (and other permanent employees of the appellant) had a contractual entitlement to available work ahead of casual labour. (para 11)
(2) The Employment Court's construction of the CEC was wrong. But that in itself did not warrant allowing the appeal because s214(1) of the Employment Relations Act 2000 ("ERA") precluded appeals to the Court of Appeal on issues of law associated with the construction of employment agreements. If there was no way around s 214 for the appellant, it would not be right for the Court to grant leave to appeal. (para 12)
(3) Section 214 ERA did not preclude a challenge where the Employment Court had adopted irregular or unorthodox construction techniques. But no irregular or unorthodox construction techniques were apparent from the Employment Court's reasoning. The appellant's argument appeared to come down to the proposition that the Employment Court's construction was so wrong that it must have adopted an inappropriate construction technique. But the Court of Appeal could not adopt that approach without negating the statutory limitation on its jurisdiction provided by s214 ERA. As it turned out, the Court of Appeal was unable to discern any arguable error on the part of Employment Court other than in the result which it reached. Accordingly s 214 ERA precluded an appeal. (para 13)
(4) The Court of Appeal was doubtful whether the Employment Court's finding of breach of good faith ought to have been made. But it related to what was a comparatively minor aspect of the case. The second ground of appeal was therefore of insufficient significance to the parties to warrant the grant of leave to appeal. (para 14)
Result: Application dismissed ; Costs in favour of respondent ($1,500) ; Disbursements
Statutes considered:
ERA s4
ERA s214
ERA s214(1)
LRA s184
Cases referred to in judgment:
GN Hale & Son Ltd v Wellington Caretakers IUOW [1991] 1 NZLR 151 ; (1990)
ERNZ Sel Cas 843 (CA)
Secretary for Education v Yates [2004] 2 ERNZ 313 (CA)
Pages: 2
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Bryson v Three Foot Six Ltd
WC 17/06
Heard: 27 Jun 2006, Wellington
Judgment Date: 1 Sep 2006
Court/Authority/Tribunal: Shaw J
Appearances: M Gould ; P Muir
DE NOVO CHALLENGE TO DETERMINATION OF EMPLOYMENT RELATIONS AUTHORITY - PRACTICE AND PROCEDURE - Application for leave to file challenge out of time - Two week delay - Whether plaintiff raised personal grievance within 90 day period - Whether leave to raise personal grievance out of time should be granted - HELD - Delay relatively short - No prejudice defendant - Application granted - Plaintiff did not raise grievance within 90-day time limit - Section 115(c) Employment Relations Act 2000 applied as an exceptional circumstance - Absence of required explanation in employment agreement regarding resolution of problems occasioned delay in bringing personal grievance - Challenge granted in part - Special effects technician
This was a successful application for leave to challenge out of time the Employment Relations Authority's finding that the plaintiff had not raised a grievance within the 90-day period. This was also a successful challenge to the determination of the Authority which had declined leave to raise a personal grievance out of time.
The plaintiff was made redundant in September 2001 when the defendant's miniatures unit was downsized. The plaintiff lodged a personal grievance claim with the Employment Relations Authority in April 2002. The defendant challenged the plaintiff's ability to bring a personal grievance alleging that he was an independent contractor. The plaintiff was found by the Supreme Court to have been an employee and was able to bring a personal grievance.
The defendant then challenged the plaintiff's right to bring a personal grievance on the grounds that it had not been raised within the 90-day time limit imposed by s 114 Employment Relations Act 2000 ("ERA").
The Authority determined that: (i) the grievance had not been raised within time; and, (ii) that there were no exceptional circumstances which occasioned the delay. Thus, the Authority declined leave to raise the grievance out of time.
The plaintiff's solicitor initially brought a non de novo challenge concerning the second finding. The plaintiff, upon discovering the limitation to the challenge, instructed his solicitors to bring a challenge two weeks out of time in relation to the first finding.
Evidence and submissions on all matters was heard together in what amounted to a de novo challenge.
Held
(1) The delay between the plaintiff discovering that his challenge was limited and the application for leave being filed was relatively short. Because the Court had had the unusual benefit of hearing the full challenge, there had been no prejudice to the defendant as a result of that short delay. (paras 12, 13)
(2) The question of whether an application for leave should be granted was a matter of the Court's discretion. Although relevant considerations had been established for the exercise of that discretion, those only applied as the circumstances of each case allowed. In the present case, while the extension of time had been strongly opposed, the challenge had been heard in its entirety and it would be futile and against the interests of justice to refuse it. The leave to challenge both of the findings in the Authority's determination was granted. (paras 16-17)
(3) Viewing the evidence objectively the plaintiff did not raise a grievance within the 90-day time limit that was sufficiently apparent to enable his previous employer to remedy it. (para 37)
(4) On the face of it s115(c) ERA applied as an exceptional circumstance because the plaintiff's employment agreement did not contain the explanation concerning the resolution of employment relationship problems that was required by s65 ERA. (para 40)
(5) Despite the defendant's characterisation of the employment relationship as that of an independent contract in the crew deal memo which had governed the plaintiff's employment, his employment had been conclusively found to have been that of an employment relationship. The requirement for the explanation concerning the resolution of employment relationship problems was required by s65 from when the ERA commenced. It was not a case of applying s115(c) ERA retrospectively. The law applied to the defendant from that date. (paras 44, 45)
(6) Because of the absence of the required explanation of his rights in his employment agreement, the plaintiff could not be presumed to have had knowledge of those rights to raise his employment issues in the correct manner and within the correct timeframe. The lack of the explanation of rights occasioned his delay in bringing the personal grievance. (para 51)
(7) Regarding whether it was just to allow the case to be brought outside the 90- day period, the facts of the plaintiff's case were particularly unusual. Given that it took four judicial hearings to determine his precise employment status, it was hardly surprising that he would have been uncertain as to his rights and obligations in raising a personal grievance. (paras 52, 53)
(8) While there had been considerable delay since the plaintiff was dismissed and there might have been inevitable changes in the entity that employed him, that delay had not been caused by the plaintiff apart from the initial time it took to file a grievance. Having come so far in his attempt to bring a personal grievance, it would not be just for him to be cut off at the pass. (para 54)
(9) The exceptional circumstance in the present case was the absence of a s65 ERA explanation in the plaintiff's employment agreement. That occasioned the delay and it was just to grant leave for the grievance to be brought out of time. (para 55)
Result: Application granted (leave to bring challenge out of time) ; Challenge granted in part
(leave to raise grievance out of time) ; No order for costs
Statutes considered:
ECA
ERA s65
ERA s65(2)(a)(vi)
ERA s114
ERA s114(1)
ERA s114(2)
ERA s114(4)
ERA s115
ERA s115(c)
ERA s179
ERA s182(3)(b)
Words and phrases: Occasioned
Cases referred to in judgment:
Bryson v Three Foot Six Ltd (No 2) [2005] 1 ERNZ 372 ; [2005] NZSC 34 (SC)
Bryson v Three Foot Six Ltd unreported, P R Stapp, 10 February 2006, WA 20/06
Creedy v Commissioner of Police (2006) 3 NZELR 293
Goodall v Marigny (NZ) Ltd [2000] 2 ERNZ 60
McClutchie v Landcorp Farming Ltd [1993] 1 ERNZ 388
Poverty Bay Electric Power Board v Atkinson [1992] 3 ERNZ 413
Telecom New Zealand Ltd v Morgan [2004] 2 ERNZ 9
Pages: 3
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Tu'itupou v Guardian Healthcare Operations Ltd
AC 50/06
Heard: 9 Aug 2006, Auckland
Judgment Date: 6 Sep 2006
Court/Authority/Tribunal: Perkins J
Appearances: A Schaaf ; R Searle, P Akbar
DE NOVO CHALLENGE TO DETERMINATION OF EMPLOYMENT RELATIONS AUTHORITY - PRACTICE AND PROCEDURE - Whether action commenced within three years from raising personal grievance - Whether leave should be granted to extend three year time limit - HELD - Grievance raised orally at time of dismissal or in letter the following day - Action commenced out of time - Court not prepared to exercise its discretion to extend time - Challenge dismissed - Relief caregiver
This was an unsuccessful challenge to a determination of the Employment Relations Authority which determined that the plaintiff's action had not been commenced within three years from raising the personal grievance.
The plaintiff was dismissed for allegedly sleeping while on duty. At the dismissal meeting the plaintiff's lawyer stated orally that the plaintiff would be lodging a personal grievance. The next day the plaintiff's lawyer wrote and requested further information indicating she had "firm instructions to pursue a personal grievance". The letter also stated that once the requested information and the letter confirming the dismissal were received she would then formerly notify the relevant employer of the plaintiff's personal grievance ("the first letter").
After the relevant information was received and 10 weeks after the dismissal meeting the lawyer wrote "to notify [the employer] of [the plaintiff's] personal grievance action in accordance with section 114 of the Employment Relations Act" ("the second letter"). In the second letter and one sent the following day ("the third letter") the plaintiff set out a detailed account of the claim. The claim involved alleged: (i) unjustified disadvantages in respect of a final warning (for lifting a patient alone) and the manner in which the plaintiff was treated following her reporting of an assault by another employee ("the other employee"); and (ii) unjustified dismissal.
Three days short of three years from the second letter and two days short of three years from the third letter, the plaintiff's representative lodged a statement of problem with the Employment Relations Authority.
The Authority determined that the proceedings were lodged out of time and that there was insufficient information to exercise any discretion to extend time.
The plaintiff submitted that the statement at the dismissal meeting and the first letter were merely preliminary to the raising of the grievance. In the alternative the plaintiff submitted: (i) that the disadvantage grievances were preserved as the statement at the dismissal meeting and the first letter could only have related to the dismissal; and, (ii) the failure of the employer to respond to the first letter in a way which indicated it was reacting to the raising of a grievance gave rise to an estoppel. Finally the plaintiff asked the Court to exercise it discretion to extend time under either s219 or s221 Employment Relations Act 2000 ("ERA"). The plaintiff submitted as reasons for the delay her lawyer's illness and the need to see the criminal proceedings against the other employee for assault concluded.
Held
(1) The plaintiff had the benefit of legal representation at the dismissal meeting. The plaintiff's lawyer had attended the meeting, would have been aware of the allegations and presumably had the opportunity of making representations on behalf of her client. When she made the statement at the conclusion of the meeting it would have been from a fully informed position. Clearly there had been lengthy discussion between the parties as to the matters relied upon by the employer. The first letter was to be considered in that light. (para 43)
(2) Read in the context of the lawyer's oral statement at the end of the dismissal meeting, the first letter stated a concluded position that a grievance was being raised. The information sought was not to gather documents in order to make a decision but to gather documents to shore up the case. It was clear by that stage the plaintiff alleged a personal grievance that she wanted her employer to address. (para 43)
(3) Judging the present matter as an objective observer, it seemed that the tenor of the first letter from the plaintiff's lawyer in the context of her oral statement the previous day would have clearly alerted the employer that it was facing a personal grievance. Sufficient information was available by then to address the grievance with a view to resolving it. The plaintiff's failure to isolate the dismissal from the disadvantage allegations did not preserve the earlier matters. In all subsequent instances the plaintiff had claimed one set of remedies and presented one grievance. (para 52)
(4) The grievance was clearly raised on the date of the dismissal meeting or at the latest in the first letter. It was possible that one of the disadvantage claims might even have been raised as early as a letter from the plaintiff three days before the dismissal meeting. If that was not the position then certainly the first letter was to be taken as raising all three grievances. Accordingly, the proceedings were not lodged with the Authority within the three years required in s114(6) ERA. (para 53)
(5) Regarding the estoppel argument, if estoppel arose it could only be from some omission to act by the defendant. There was simply no evidence of that. Looking at it more widely, there was no evidence that the employer indulged in unconscionable behaviour. (paras 54, 58)
(6) The Court had jurisdiction to extend the time for filing of proceedings with the Authority under s219 ERA. (paras 60-63)
(7) The starting point to be adopted was that proceedings must be filed within the time limit prescribed. In enacting s114(6) ERA the Legislature effectively reduced the time limit from six years under the Employment Contracts Act 1991 to three years under the ERA. The reasons for that were clearly in keeping with the overall objects to provide speedy resolution of disputes. (para 70)
(8) There would need to be clearly established facts before an appeal to the equitable jurisdiction of the Court could be successful. The present was not a case where preservation of the integrity of the proceedings was necessary by the extension of time as the Court perceived to be provided under s221 ERA. (para 71)
(9) There was in the present case inadequate explanation for the failure and delay. The actual extent of the delay (10 weeks) was not substantial but in combination with the three year limitation, the failure to file and the subsequent delay in its entirety had clearly led to an unsatisfactory position where witnesses might or would not be available or contactable. The plaintiff's primary explanation that she wished to see resolution of the related criminal proceeding simply didn't hold weight when that criminal proceeding was resolved many months before the time limit expired. The plaintiff's lawyer's health difficulties, even if the Court could place weight on the raising of those matters from the bar, did not explain or answer why she could not have briefed the matter, or got her instructing solicitors to file, or answer the allegations that she was observed appearing in both the Court and the Authority during the relevant period. (para 72)
(10) If the statement of problem had been filed with the Authority a matter of days after the expiry of time through some inadvertence or oversight, then the discretion might have been readily exercised. Having regard to the entire history of the present matter, the Court was not prepared to exercise its discretion to extend time. (para 75)
Result: Challenge dismissed ; Costs reserved
Statutes considered:
ECA
ECA First Schedule cl5
ERA s114
ERA s114(1)
ERA s114(2)
ERA s114(4)
ERA s114(6)
ERA s115
ERA s219
ERA s221
ERA First Schedule
Police Act 1958
Police Regulations 1992
Cases referred to in judgment:
Creedy v Commissioner of Police (2006) 3 NZELR 293
Farmers Trading Company Ltd v Opuariki [1998] 1 ERNZ 313
Gold Star Insurance Company Ltd v Gaunt [1998] 3 NZLR 80
Goodall v Marigny (NZ) Ltd [2000] 2 ERNZ 60
Houston v Barker (t/a Salon Gaynor) [1992] 3 ERNZ 469
Liumaihetau v Altherm East Auckland Ltd [1994] 1 ERNZ 958
Pacific Plastic Recyclers Ltd v Foo [2002] 2 ERNZ 75
Roberts v Commissioner of New Zealand Police [2005] 1 ERNZ 755
Roberts v Commissioner of Police unreported, Colgan CJ, 27 June 2006 AC 33/06
Ruebe-Donaldson v Sky Network Television Ltd (No 1) [2004] 2 ERNZ 83
Waitemata Electric Power Board v King Builders Ltd [1993] 1 NZLR 312
Wilkinson v ISL Computer Systems Ltd [1993] 1 ERNZ 512
Winstone Wallboards Ltd v Samate [1993] 1 ERNZ 503
Pages: 4
[972987]
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Fuiava v Air New Zealand
AC 51/06
Heard: 3 Feb 2006, Auckland
Judgment Date: 12 Sep 2006
Court/Authority/Tribunal: Travis J
Appearances: G Pollak ; R Larmer
DE NOVO CHALLENGE TO DETERMINATION OF EMPLOYMENT RELATIONS AUTHORITY - Unjustified dismissal - Serious misconduct - Section 103A Employment Relations Act 2000 - Plaintiff received training concerning carriage of dangerous goods - Plaintiff sent cargo containing dangerous goods contrary to a security declaration he signed - Plaintiff had good work record with no previous disciplinary action - Whether dismissal was what a fair and reasonable employer would have done in all the circumstances - HELD - Plaintiff's actions were serious misconduct - Procedurally fair enquiry - Nature of industry meant safety was overriding consideration - Court would exercise caution in reaching a decision contrary to that of the employer where safety issues were involved - Plaintiff's misconduct was related to his employment - No disparity of treatment - Issues as to harshness of the action taken by the employer could now be considered under s103A - Actions were sufficiently serious to warrant dismissal - Challenge dismissed - Cargo Storeman
This was an unsuccessful challenge to a determination of the Employment Relations Authority which held that the plaintiff's dismissal for serious misconduct was justified.
The plaintiff worked for the defendant airline for three years. He had a good work record with no previous disciplinary action. When the plaintiff started work he received training and a booklet in dealing with the transportation of dangerous goods.
The plaintiff acknowledged that he had read the booklet and understood the instructions. He was also trained in the x-ray processing of goods for air cargo, a function he frequently carried out in the course of his employment.
In June 2004, all Cargo handling staff, including the plaintiff, received a special dangerous goods update and were issued with a dangerous goods handling booklet which the plaintiff signed that he had read and understood. The plaintiff received dangerous goods revalidation training in November 2004 and was regarded as a "known shipper". The defendant had no regulatory obligation to check or x-ray any luggage or parcels that a known shipper was consigning. The plaintiff knew that staff could be dismissed for shipping undeclared dangerous goods.
In January 2005, while on leave, the plaintiff consigned a personal package for international travel. The package contained aerosols containing highly flammable fluid ("the dangerous goods"), contrary to a security declaration that the plaintiff completed. The dangerous goods had been placed in the package by the plaintiff's wife without his knowledge.
The dangerous goods were removed in a routine x-ray of the package. When the plaintiff returned from leave, the Cargo Operations Manager advised the plaintiff of a disciplinary investigation and instructed him not to send any more consignments until the investigation was completed. At the conclusion of the disciplinary process the plaintiff was dismissed with four weeks pay in lieu of notice.
The Employment Relations Authority held that the dismissal was what a fair and reasonable employer would have done in all the circumstances. The plaintiff submitted that his dismissal was incredibly harsh and therefore unjustifiable and not open to the defendant. He further submitted that his conduct was not a work related matter and that the defendant had failed to take that into account. Finally, he submitted that the dismissal was unjustified due to disparity of treatment.
The defendant submitted that in assessing whether the action taken was what a reasonable employer would have done, the Court was not required to determine what sanction it would have imposed, but instead was to apply the well established principles relating to procedural and substantive fairness, including the principle that the Court was not to substitute its own views for that of the employer. The defendant submitted that the plaintiff's dismissal was fair and reasonable in all the circumstances.
Held
(1) The investigation revealed that the plaintiff had made a false declaration in a number of material respects and the defendant was entitled to conclude that the plaintiff had been fundamentally careless. The defendant was also entitled to conclude that the failure of the plaintiff to ensure that no dangerous goods were in the parcel and not to falsely declare that no one could have placed something in his parcel without his knowledge, demonstrated a failure to comply with the basic regulatory requirements imposed for dealing with the consignment of dangerous goods on aircraft. That was serious misconduct. (para 54)
(2) The defendant had carried out a procedurally fair enquiry during which the plaintiff was advised of all the steps taken and given full opportunity to proffer any explanations he wished, and those explanations he did proffer were given due consideration. The defendant acted reasonably and took all relevant factors, including those advanced in mitigation, into account before reaching its decision. (para 55)
(3) The defendant was entitled to conclude that although the plaintiff had been a good employee in all respects, he had received relevant training and recent reminders of the consequences of failing to provide proper declarations, was familiar with dangerous goods procedures, was a "known shipper" and yet had failed to properly ensure that his own consignment did not contain dangerous goods. (para 56)
(4) As to the nature of the industry it was clear that safety was the overriding consideration for the defendant in all its various operations. The defendant needed to be confident that a person such as the plaintiff employed in the very area which handled such dangerous goods would not be guilty of such a lapse and was reasonably entitled to form the view that it could not condone such conduct. The defendant, through its training of the plaintiff and through its communications, had made it clear that any breaches by its staff in relation to dangerous goods could be visited with the consequence of dismissal. (para 57)
(5) The plaintiff's misconduct was related to his employment. It was not a private action which was irrelevant to the performance of his employment obligations. He was employed in the cargo area and involved in the handling of dangerous goods. He had received adequate training and was familiar with the documentation. For all those reasons he was regarded as a "known shipper" and there was no obligation on the defendant to x-ray his consignment. It was only fortuitous that his consignment was x-rayed and the dangerous goods found and removed. (para 58)
(6) As to the allegation that the employer had demonstrated disparity of treatment, the Court looked for guidance from the Court of Appeal's decision Samu v Air New Zealand (cited below) and considered whether it had been altered by s103A Employment Relations Act 2000 ("ERA"). The Court of Appeal's formulation accorded with the new test for justification in s103A. It concentrated on whether the employer's actions were what a fair and reasonable employer would have done in all the circumstances, and required an objective test by the Court. Samu was a case involving safety, an area where an employer may not be bound in the future by a previous too lenient decision. (paras 59, 60)
(7) The dismissal of another employee for similar misconduct did not in some way demonstrate disparate treatment with the plaintiff. The argument appeared to be that as the other employee's conduct and employment record was much worse than that of the plaintiff, her dismissal might or might not have been justified but, because the plaintiff's conduct was not as bad, he should not have been dismissed. The Court could not accept the logic of such a comparison merely because one other employee who was dismissed behaved worse than the grievant. (para 62)
(8) As to the second case of alleged disparity, an adequate explanation for the disparity had been given and therefore it became irrelevant. (para 66)
(9) Even if there was not an adequate explanation and the situation of the plaintiff and the other employees were the same, there was the consideration referred to in Samu v Air New Zealand (cited below) that the employer could not forever be bound by an over generous treatment of a particular employee on a particular occasion. That appeared to answer the third question from Inland Revenue v Buchanan (cited below), assuming it had survived the passing of s103A ERA. (para 67)
(10) Issues of safety were critical in considering whether the actions taken by an employer were those that would have been taken by a fair and reasonable employer in all the circumstances. (para 68)
(11) Issues as to the harshness of the action taken by the defendant might now be considered under s103A ERA. Section 103A did not limit the test of justifiability to the determination of whether the misconduct in question was sufficiently serious to warrant a dismissal but also whether the action of the employer was what a fair and reasonable employer would have done in all the circumstances. The circumstances might include whether the hypothetical fair and reasonable employer would have been persuaded by mitigating factors to impose a penalty that was less than a dismissal. Thus if it could be determined on an objective basis that the mitigating factors were so strong that a fair and reasonable employer would not have dismissed, notwithstanding the finding of serious misconduct, the dismissal might well be held to be unjustifiable. (paras 69, 70)
(12) The defendant acted fairly and reasonably in reaching the conclusion that the plaintiff's actions were sufficiently serious to warrant his dismissal from his position where he was involved in the day to day handling of dangerous goods, notwithstanding his excellent work record to that point and the other mitigating factors. (para 71)
Result: Challenge dismissed ; Costs reserved
Statutes considered:
ERA s103A
Cases referred to in judgment:
Airline Stewards and Hostesses of New Zealand IUOW v Air New Zealand Ltd [1985]
ACJ 952 ; ERNZ Sel Cas 156
Air New Zealand v Hudson (2006) 3 NZELR 155
Barrett v Air New Zealand Ltd unreported, RA Monaghan, 4 November 2005, AA
435/05
Chief Executive of the Department of Inland Revenue v Buchanan and Anor (2005) 2
NZELR 693 ; [2005] 1 ERNZ 767
New Zealand Bank Officers IUOW v Databank Systems Ltd [1984] ACJ 21
Northern Distribution Union v BP Oil NZ Ltd [1992] 3 ERNZ 483
Post Office v Foley ; HSBC Bank Plc (formerly Midland Bank Plc) v Madden [2001]
1 All ER 550 ; [2000] ICR 1283 ; [2000] IRLR 827
Samu v Air New Zealand Ltd [1995] 1 ERNZ 636
Swan and ors v ACI NZ Ltd and NZ Amalgamated Engineering Etc IUOW ERNZ Sel
Cas 909 ; [1990] 3 NZILR 262
W & H Newspapers v Oram [2000] 2 ERNZ 448 ; [2001] 3 NZLR 29
Wellington Road Transport etc IUOW v Fletcher Construction Co Ltd ERNZ Sel Cas
59 ; [1983] ACJ 653
Pages: 4
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Progressive Meats Ltd v Meat and Related Trades Workers Union of Aotearoa Inc
WC 18/06
Heard: 9 Jun 2006, Wellington
Judgment Date: 15 Sep 2006
Court/Authority/Tribunal: Colgan CJ, Travis, Couch JJ
Appearances: T Cleary ; S Mitchell
DE NOVO CHALLENGE TO A DETERMINATION OF THE EMPLOYMENT RELATIONS AUTHORITY - Preliminary issue - Jurisdiction - Whether Employment Relations Authority had jurisdiction to determine a dispute about entitlements under the Holidays Act 2003 following the earlier determination of that same dispute by a labour inspector - HELD - Parliament intended to add a low or no cost dispute resolution mechanism to the Holidays Act 2003, but not in substitution for the Employment Relations Authority - Plain meaning of s79 Holidays Act was to both give effect to labour inspector's decision but also to allow parties to have such questions determined authoritatively and independently by the Employment Relations Authority - Challenge as to jurisdiction declined
This was a preliminary issue in a de novo challenge to a determination of the Employment Relations Authority which had overturned a determination by a labour inspector. The Court held that the Authority had jurisdiction to independently determine a labour inspector's decision.
The plaintiff operated a meat processing plant at which it employed members of the defendant union. In 2004 a dispute arose between the parties whether the Queen's Birthday holiday that year (Monday 7 June) was "otherwise a working day" for the purposes of the Holidays Act 2003 in relation to certain shifts. The union sought a determination of the dispute from a labour inspector. The plaintiff agreed to that course. The inspector made a determination under s13(2) of the Holidays Act, supporting the plaintiff's position.
The union then filed a statement of problem raising the same issue in the Employment Relations Authority, which determined the matter in the union's favour, contrary to the inspector's determination. The plaintiff filed a de novo challenge to the Authority's determination and asserted, as a preliminary issue, that the Authority had had no jurisdiction to make its determination.
The plaintiff's case was that any party was entitled to commence proceedings in the Authority asking it to determine one of the prescribed disputes under the Holidays Act at any time up until a labour inspector determined the dispute but not afterwards. Any proceeding so commenced could continue to be investigated and determined and, subject to rights of appeal, the Authority's determination would be binding and take precedence over any determination by a labour inspector. If proceedings in the Authority had not been commenced prior a labour inspector's determination being given, the inspector's determination was final except via judicial review.
Held
(1) Parliament intended to add a low or no cost informal and expeditious dispute resolution mechanism to the Holidays Act 2003. But it did not do so in substitution for the long established and authoritative mechanism of dispute resolution by independent expert tribunals, now the Employment Relations Authority and subsequently the Employment Court with rights of appeal. (para 24)
(2) The plaintiff's arguments required the logical addition of a number of words to those that Parliament used in s79 Holidays Act to achieve the proposed interpretation. Where the unadorned words used by Parliament could be given a sensible meaning, that meaning should normally be preferred to any other meaning requiring the addition of words Parliament did not use. The plaintiff's argument also required the inclusion of a sequencing or timing of actions that Parliament had not addressed. That too was a powerful indication that the interpretation by the plaintiff, relying as it did upon that timing or sequencing, was unlikely to be correct. (para 25)
(3) The plain meaning of s79 Holidays Act was to both give effect to an inspector's decision properly reached but also to allow parties to have such questions determined, in all cases, authoritatively and independently by the Authority, the Employment Court and even, in appropriate circumstances, the Court of Appeal and the Supreme Court. Parliament could not have intended that the only option for a party disagreeing with, and seeking to challenge, a labour inspector's determination would be the very limited right of judicial review in the High Court that would address only the decision-making process and not the merits of an inspector's decision. (para 26)
(4) A dispute such as the present might be, or might be dealt with as, an employment relationship problem and thus fell within the Authority's jurisdiction under s161 of the Employment Relations Act 2000. It followed that the plaintiff's jurisdictional challenge failed and the case was to be determined on its merits.
Result: Challenge dismissed (jurisdiction) ; Costs in favour of defendant (quantum to be
agreed between parties)
Statutes considered:
ERA s161
Holidays Act 1981 s20
Holidays Act 1981 s20(1)
Holidays Act 1981 s20(2)
Holidays Act 2003 s11(2)
Holidays Act 2003 s13
Holidays Act 2003 s13(2)
Holidays Act 2003 s17(2)
Holidays Act 2003 s54
Holidays Act 2003 s54(2)
Holidays Act 2003 s54(4)
Holidays Act 2003 s74
Holidays Act 2003 s75
Holidays Act 2003 s76
Holidays Act 2003 s77
Holidays Act 2003 s79
Holidays Act 2003 s80
Holidays Act 2003 s85(2)
Human Rights act 1993
Pages: 3
[973022]
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Yuan Cheng International Investment Group Ltd v Buer
AC 54/06
Heard: 13 Feb 2006, Auckland
Judgment Date: 20 Sep 2006
Court/Authority/Tribunal: Travis J
Appearances: H Keyte ; J Coyle
NON DE NOVO CHALLENGE TO A DETERMINATION OF THE EMPLOYMENT RELATIONS AUTHORITY - Unjustifiable dismissal - Remedies - Plaintiff sought decrease in remedy of 12 months loss of wages awarded to defendant - Plaintiff alleged employment casual not fixed term - Plaintiff alleged non-compliance with s66(2)(b) Employment Relations Act 2000 ("ERA") rendered fixed term agreement ineffective and meant that agreement was not a genuine fixed term agreement - HELD - Employment was fixed term for 12 months - Fixed term initiated by employee defendant - Situation did not fit comfortably with wording of s66 ERA - Was possible to bring situation within plain wording of s66 - Section 66 was intended to protect employees - Plaintiff not allowed to benefit from own wrong - Fixed term of 12 months not rendered ineffective - Plaintiff entitled to 12 months' loss of remuneration - Challenge dismissed - Personal assistant
This was an unsuccessful non de novo challenge to determination AA 199/05 of the Employment Relations Authority which held that the defendant was unjustifiably dismissed, and awarded 12 months lost remuneration.
The defendant was employed by the plaintiff. After four weeks the plaintiff terminated the employment relationship without giving any reasons.
There was conflicting evidence as to the job description and terms of employment. The defendant alleged that she was employed as a personal assistant to the plaintiff's managing director on a 12 month fixed term at $4,800 per month after tax. The plaintiff alleged that she was employed to take care of the overseas family of the managing director while they were in New Zealand, for a maximum of one month at $1,200 per week after tax. There was no written employment agreement.
The Employment Relations Authority believed that the plaintiff's version of events was an "utter fabrication". It determined that the defendant was unjustifiably dismissed and awarded remedies to the defendant which included 12 months reimbursement of lost wages. The plaintiff paid the defendant all the amounts awarded in her favour except for nine months' lost remuneration, which was the subject of the present non de novo challenge.
It was common ground that the 2004 amendments to s66 of the Employment Relations Act 2000 ("ERA") regarding fixed term employment did not apply as the employment came to an end before its commencement.
The plaintiff, relying on the Court of Appeal decision Norske Skog Tasman Ltd v Clarke (cited below), submitted that as the law stood before the 2004 amendment, non-compliance with s66(2)(b) ERA resulted in the fixed term agreement being ineffective. Thus a breach of s66(2)(b) was sufficient for a determination that the agreement in question was not a genuine fixed term agreement.
The defendant submitted that the plaintiff should not be able to rely on any non-compliance on its part to better its position to the detriment of the defendant, citing Warwick Henderson Gallery Ltd v Weston (cited below).
Held
(1) The Court preferred the defendant's account of events and rejected that of the plaintiff for similar reasons given by the Employment Relations Authority. (paras 29- 42)
(2) It followed from that conclusion that it was agreed between the parties that there would be a 12 month fixed term of employment at $4,800 per month after tax, to be reviewed at the expiration of the 12 month term. (para 43)
(3) It appeared clear that the provisions of s66 ERA, like those of s65, were intended to protect employees from certain consequences which flowed from the ending of a fixed term of a contract. (para 57)
(4) In the present case it was the defendant who had insisted upon a fixed term of 12 months. It appeared that her reasons for so doing were communicated to the plaintiff, who accepted them and agreed to a fixed term contract. She clearly had the necessary "informed consent" and obviously knew the reasons for the fixed term. (para 62)
(5) The present situation did not fit comfortably with the wording of s66 ERA which emphasised the employer's reasons and the communication of these to the employee. However, it was still possible to bring the present situation within the plain wording of s66(2). The plaintiff required a 12 month fixed term as a condition of her employment. If, as appeared to have been the case, the plaintiff wished to employ her on that condition, that would have given the company a genuine reason, based on reasonable grounds for agreeing to such a term. The defendant's assent would have sufficiently communicated those reasons back to the employee. In substance that meant that the plaintiff was in fact saying that the reason it was hiring her for a fixed term was because it was what she wanted and that was a condition of her agreeing to be employed by the company. That approach was consistent with Norske Skog Tasman Ltd v Clarke (cited below). (paras 63-65)
(6) In a situation where it was the employee that had advanced the reasons for the fixed term contract that appeared to obviate the need for the employer to set those reasons out again in order to comply with s66(2)(b). That was particularly so given that s66 was a provision intended to protect employees against the consequences of the termination of a fixed term contract, rather than to deprive them of a benefit that it was their wish to have included in their contractual arrangements. (para 65)
(7) A similar theme ran through the dissenting judgment of Heath J in Norske Skog Tasman Ltd v Clarke (cited below). The approach also met with statements of the then Associate Minister of Labour's parliamentary speech on 9 August 2000 that there had to be informed consent to the agreement. (paras 66-67)
(8) To allow the plaintiff to rely on s66(2)(b) ERA when it had failed to provide a written individual employment agreement as required by s65 ERA and requested by the defendant, and had been penalised by the Authority for that failure, would be to allow the plaintiff to benefit from its own wrong. (para 68)
(9) There had been compliance with s66(2)(b) ERA and the fixed term of 12 months had not therefore been rendered ineffective in any way. The finding that that term was agreed provided a basis for the Authority's award of the entire 12 month term, and for those reasons the challenge failed. The plaintiff was therefore entitled to the balance of the nine months' lost remuneration as awarded by the Authority. (paras 68-69)
Result: Challenge dismissed ; Costs reserved
Statutes considered:
ERA s65
ERA s65(1)(a)
ERA s66
ERA s66(1)
ERA s66(2)
ERA s66(2)(b)
Employment Relations Amendment Act (No 2) 2004 s27
Employment Relations Amendment Act (No 2) 2004 s73
Employment Relations Bill
Cases referred to in judgment:
Clarke v Norske Skog Tasman Ltd [2003] 2 ERNZ 213
Norske Skog Tasman Ltd v Clarke [2004] 1 ERNZ 127 ; [2004] 3 NZLR 323 (CA)
Pearce v Attorney-General in respect of the Department of Labour [2005] 1 ERNZ
731
Principal of Auckland College of Education v Hagg [1997] 1 ERNZ 116
Smith v Radio I Ltd [1995] 1 ERNZ 281
Warwick Henderson Gallery Ltd v Weston [2005] 1 ERNZ 921
Pages: 3
[973031]
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Whelan v The Attorney-General in respect of The CEO of The Children & Young Person Service
AC 63/06
Heard: 7 Aug 2006, Auckland
Judgment Date: 16 Nov 2006
Court/Authority/Tribunal: Travis J
Appearances: R Hooker ; S Dyhrberg
BREACH OF CONTRACT - Successful claim for breach of contract by plaintiff - Quantum of remedies - Plaintiff had major health collapse after breach of duty by defendant to provide safe system of work - Plaintiff sought lost remuneration - Future economic loss until age of retirement - Compensation for loss of chance of promotion - Future ongoing medical expenses - Compensation for humiliation and distress - Interest on distress claim - HELD - Plaintiff's health difficulties directly attributable to defendant's breaches - "But for" breaches plaintiff would have been able to obtain gainful full time employment at a similar level - Plaintiff had to show positively that she had a real or substantial chance of promotion - Assessment was to be carried out not only in relation to whether but also when plaintiff would have secured promotion - In all likelihood she would have been promoted - Unlikely she would have received further promotion - Medical treatment had assisted her in working - Court award ongoing medical expenses sought - Plaintiff had suffered significant distress, clinical depression and had been unable to pursue a promising career - Taking into account the defendant's actions to mitigate the plaintiff's loss (by making an interim payment) award of $60,000 for distress appropriate - Award of interest on non-economic loss not appropriate - Supervisor/social worker
This was a decision relating to remedies following an Employment Court judgment ([2004] 2 ERNZ 554) which found that the defendant had breached the plaintiff's employment contract.
The plaintiff worked for the defendant ("CYPS") for 17 years in a number of different
social work positions. She received consistently commendable performance reviews throughout. She took on a number of management responsibilities and undertook training which led her to believe she was being groomed for a senior management position. She had ambitions beyond middle management. The plaintiff had a major health collapse, which specialists on both sides attributed to her work environment. After a period of sick leave, the plaintiff sought, and was granted, retirement on medical grounds at aged 47. Her employment ended in March 1998.
The plaintiff succeeded in an action in damages for breach of her employment contract. The Court found that the defendant had breached its contractual duty of care to avoid reasonably foreseeable harm by failing to provide a safe system of work. The Court found that that the breaches caused the plaintiff's ill health, her need for medical treatment and her subsequent losses. The question of damages was reserved.
The parties were unable to agree on the issue of damages and the plaintiff sought the present hearing to determine the matter.
Prior to the present hearing, the plaintiff applied to the Court for an interim payment, but the parties partially settled aspects of the damages and costs. A payment was made by the defendant direct to the plaintiff and tax paid direct to the Inland Revenue Department.
The plaintiff sought: (a) lost earnings of $580,409 (taking into account the loss of chance of promotion to a senior management role); (b) damages for humiliation and distress of $80,000; (c) interest on the distress compensation; (d) ongoing medical expenses of $2,500; and, (e) loss of superannuation of $15,239.47.
The plaintiff led evidence that after leaving CYPS she received medical and counselling assistance and gained work as a relieving resource teacher. She then took a 35 hour per week co-ordinator position with a Trust. However, she resigned from that position because of concerns that the manager was inappropriately using funding money. The plaintiff then returned to working as a relieving resource teacher on a part time basis. Because that position required her to work in an environment of constant dispute and staff conflict which she could not cope with, she left the position in September 2001 and became a self employed clinician in private practice. Her working hours and income fluctuated in private practice. Due to a regression in her health she reduced the amount of higher paid supervision work she was doing and increased her assessment and reporting work. At the time of the present hearing concerning remedies she was working between 20 and 25 hours a week.
The defendant submitted that the plaintiff's career decisions including and since leaving the Trust broke the chain of causation between the breaches of duty and any subsequent losses suffered. The defendant accepted that in all likelihood if the plaintiff had stayed with CYPS she would have been promoted at some point but doubted the likelihood of the plaintiff being appointed to a further more senior management position. The defendant submitted that it had already paid $7,500 in respect of medical expenses and that in the absence of evidence of actual out of pocket expenses incurred or likely to be incurred, arising from the breaches of duty, that element of loss should be disregarded by the Court as having been met. It submitted that the distress suffered by the plaintiff was not as extreme as other cases summarised in Davis v Portage (cited below) including that of Mr Davis himself and that an award in the region of $35,000 was appropriate. It further submitted that no interest should be awarded on the distress compensation award as it was being formulated from up-to-date medical evidence. The evidence therefore took into account the passage of time since the substantive hearing and covered the additional distress the plaintiff suffered.
Both parties tendered expert actuarial evidence as to the correct calculation of the plaintiff's lost remuneration and future economic loss.
Held
(1) The plaintiff's actions in leaving the Trust were reasonable in the circumstances. If she had not taken those steps it was likely that the funding difficulties would have led to her termination by the Trust in due course. Further the ongoing damage to the plaintiff's health had led to a state of permanent disability, which had made it difficult for her to develop her private practice on a full time basis or to involve herself fully in the most highly paid, but stressful activity of social worker supervision. (paras 38, 39)
(2) The plaintiff's health difficulties were directly attributable to the defendant's breaches and the chain of causation had not been broken. The evidence established that "but for" the damage to her health she suffered as a result of the defendant's breaches of duty, she would have been able to have obtained gainful full time employment at a level which would not have produced any lost past or future remuneration. The plaintiff had lost and continued to lose income as a result of the injuries she sustained as a result of the defendant's breaches of duty. Her claim for economic loss could therefore extend beyond the time she left the Trust. (para 40)
(3) The Court preferred the plaintiff's actuary's approach concerning quantum of past loss income because it had the advantage of turning on what actually happened, rather than making assumptions of what might have happened. Close analysis of her continuing health difficulties satisfied the Court that the fluctuations in her earnings were attributable to the fluctuations in her mental health. (para 44)
(4) The plaintiff had to show positively that she had a real or substantial chance of promotion as opposed to a speculative one but if she succeeded in doing so the evaluation of the chance was part of the assessment of the quantum of damage, the range lying somewhere between something that just qualified as real or substantial on the one hand and near certainty on the other. (para 47)
(5) The above assessment was to be carried out not only in relation to the issue of whether or not the plaintiff would have secured the promotion but also as to when that would have occurred and which point in the range of salaries she would have received. In all likelihood she would have been so promoted. (para 48)
(6) Taking into account the small degree of uncertainty as to the promotion ever taking place, its date, and the likely income level, and assessing them in the round, the
Court considered the plaintiff's actuary's calculations of the value of the promotion to practice manager should be reduced by 25 percent from 1 April 2000 on his varying figures. (para 49)
(7) The Court added the above figures to the defendant's actuary's figures of the plaintiff's earnings at CYPS, without promotion during that same timeframe because those figures were based on the salary the plaintiff had when she left CYPS and a bonus together with the defendant's superannuation contribution. When the salary scales were increased the defendant's actuary did not apply the bonus. There was insufficient evidence to support the assumption that the bonus would have continued indefinitely, especially after a notional promotion. (para 50)
(8) The defendant's actuary's figures gave some recognition to the element of a bonus and allowed amounts above the mid point salary range for the promotion. They also met the contingency that when the scales changed the person would not necessarily remain on the top of the scale. (para 51)
(9) The Court deducted the plaintiff's actual net earnings (before tax) from what it assessed she would have received had she remained with CYPS, less a deduction for
the contingencies concerning her possible promotion. That left a shortfall of lost remuneration of $187,081 as at 31 March 2006. From that was to be deducted the interim payment made to the plaintiff, plus the tax paid direct to the Inland Revenue Department by the defendant. (paras 53, 54)
(10) In assessing future lost earnings the Court largely preferred the defendant's actuary's approach. There was room for an improvement in the plaintiff's consultancy earnings if the mix of the plaintiff's work was to change and the full effect of the rate increases she had already applied had yet to be seen. It was fair and reasonable to assume the 3 percent suggested by the defendant's actuary, based as they were not on the particular circumstances of the plaintiff's particular consultancy, but on projections for the economy as a whole. That had the additional advantage of using the same percentage for both her projected earnings and the future increases in CYPS's salaries. (paras 55, 56)
(11) The management positions in CYPS had changed their structure, placing much more emphasis on financial and management aspects rather than knowledge and experience in social work. That was a growing trend within CYPS which was likely to continue. The plaintiff may not have had the qualifications to have successfully obtained a senior management role. Further, there was the likelihood that she would have had to relocate and that might have had an impact on her current arrangements where she shared the work on their farm with her husband. The probability of a further promotion was speculative and would only just qualify as a real possibility. That would reduce the quantum to be assessed for the non-promotion to a senior management position so substantially as to render it a factor to be disregarded. (para 57)
(12) The figures concerning future economic loss were to be calculated by the actuaries, and hopefully agreed, with leave to apply to the Court if agreement proved impossible. The figure was to be calculated up until the year ended 31 March 2017. (para 63)
(13) The defendant's actuary's calculations properly took superannuation contributions into account and therefore no separate award under that heading was made. (para 64)
(14) The evidence was clear that the plaintiff was undergoing continuous medical treatment and that treatment had assisted her in working in her private practice. The treatment was rendered necessary because of the injury she sustained as a result of the defendant's breaches of duty and therefore was not too remote. The amount sought was not large and the Court award the amount sought of $2,500. (para 66)
(15) The plaintiff had suffered significant distress, clinical depression and had been unable to pursue a promising career to which she was highly committed and performing at the highest level. The effects of her injuries were apparent in both her professional and personal life. It was to her credit that she had performed so well in her private practice and had adopted coping techniques which had enabled her to remain in such gainful employment. Had she not so performed, her awards for economic loss would have been much higher. It was clear however that the plaintiff has been severely impaired by her injuries and her enjoyment of life had been greatly reduced. (para 71)
(16) It was extremely difficult to assess one plaintiff in comparison to another without taking into account the plaintiff's situation before the injuries and comparing them with the situation following them. Taking into account the defendant's actions to mitigate the plaintiff's loss, by making the interim payment, an award of $60,000 was appropriate. (para 72)
(17) The Court accepted the defendant's submissions that an award of interest on the non-economic loss was not appropriate. (para 74)
Result: Damages awarded ; Lost wages (January 1998 to March 2006)(quantum to be determined by parties) (directions as to calculation given) ; Future economic loss (up until March 2017)(quantum to be determined by parties) (directions as to calculation given) ; Loss of chance of promotion ; General compensatory damages for distress ($60,000) ; Special damages for medical expenses ($2,500) ; Costs reserved
Cases referred to in judgment:
Attorney-General v Gilbert [2002] 1 ERNZ 31 (CA)
Benge v Attorney-General [2000] 2 ERNZ 234
Brickell v Attorney-General [2000] 2 ERNZ 529
Davis v Portage Licensing Trust (2006) 3 NZELR 415
Gilbert v Attorney-General unreported, Colgan J, 4 December 2003, AC 63/03
Spring v Guardian Assurance plc [1995] 2 AC 296 ; [1994] 3 WLR 354 ; [1994] 3 All
ER 129 (HL)
Waugh v Commissioner of Police [2004] 1 ERNZ 450
Whelan v Attorney-General in respect of the Chief Executive Officer of the Children
& Young Persons Service [2004] 2 ERNZ 554
Pages: 5
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Reynolds v Burgess
CC 5/07
Heard: 19 Jun 2006, Christchurch
Judgment Date: 2 Mar 2007
Court/Authority/Tribunal: Couch J
Appearances: F Reynolds (in person) ; G Slevin
DE NOVO CHALLENGE AND CROSS CHALLENGE TO DETERMINATION OF EMPLOYMENT RELATIONS AUTHORITY - Defendant applied for permanent personal assistant position advertised by plaintiff - After interview defendant was offered and accepted work - Was dismissed eleven days later - Defendant claimed unjustified dismissal - Plaintiff alleged she told defendant that application for personal assistant unsuccessful but was able to offer other work for two weeks fixed term - Also claimed employer was company owned by plaintiff and not plaintiff personally - Defendant sought interest on remedies awarded under s123(1)(c)(i) Employment Relations Act 2000 - HELD - Offer and acceptance was for ongoing employment as advertised - Defendant was unjustifiably dismissed - Challenge dismissed - Authority's orders as to reimbursement of lost wages, outstanding holiday pay, interest, and costs confirmed - Authority's remedies for compensation for humiliation etc increased - Interest not available to award under s123(1)(c)(i) - Cross-challenge dismissed - Personal assistant
This was an unsuccessful de novo challenge and cross challenge to a determination of the Employment Relations Authority which held that the defendant was unjustifiably dismissed.
The plaintiff was managing director of Shelton Holdings Ltd and Eftpos Easy Ltd. Both companies traded under the name Eftpos Easy and Cash Register Hire.
In January 2002, the defendant replied to an advertisement placed by the plaintiff for a permanent full time personal assistant. She was offered employment by the plaintiff and began work soon after. That employment came to an end eleven days later. The defendant alleged that she was employed on a permanent basis as a personal assistant and was unjustifiably dismissed. The plaintiff alleged the employment was not for the position advertised but another position of a short fixed term nature.
The Employment Relations Authority found that the defendant had been employed as a personal assistant on an open ended basis and had been unjustifiably dismissed. The Authority also determined that the plaintiff was liable as employer because she had entered into the employment agreement as agent for an undisclosed principal.
The plaintiff challenged the Authority's determination.
The plaintiff alleged that the defendant was employed on a fixed term position of short duration. The plaintiff also alleged that Shelton Holdings Limited employed the defendant. The plaintiff further alleged that the defendant had signed a written fixed term employment agreement which was adduced in evidence. The defendant alleged she was offered and accepted the advertised permanent personal assistant position. She could not recall signing the written fixed term agreement adduced by the plaintiff.
The defendant cross-challenged seeking an award of interest on the remedies awarded by the Authority from its determination down to the date of the present judgment. The defendant sought to persuade the Court to resile from its conclusion in Salt v Fell (cited below) that interest might not be awarded under clause 14 of Schedule 3 to the Employment Relations act 2000 ("ERA") on compensation awarded under
s123(1)(c)(i) ERA or compensation under s123(1)(c)(ii) ERA for loss of benefits which were not of a monetary kind. The defendant relied on Gilbert v Attorney General (cited below).
The plaintiff submitted that (i) as a matter of logic the defendant's evidence was improbable and ought not to be given any weight; (ii) the work actually done by the defendant while employed was not that of a personal assistant and that that cast doubt on the defendant's evidence that she was appointed to that position; (iii) it was not credible that the defendant would be employed to work from 8.30 am to 5.30 pm when she did not start until 9 am and when the hours of work of other staff were 9 am to 5.30 pm; and (iv) the defendant's own description of her dismissal and of her reaction to it was illogical and therefore unlikely to be accurate. Specifically, the plaintiff referred to the defendant's evidence that, following her dismissal, she was very upset but remained at work for the rest of the day and worked until the end of the week. She also referred to another former staff member's ("AW") evidence that there was no "unpleasantness" while the defendant was employed.
As to whether the defendant had entered into a written fixed term employment agreement, the Authority commissioned expert evidence from a forensic document examiner and handwriting expert about the validity of the signatures on both the employment agreements purportedly signed. The expert witness had concluded that the evidence pointed away from the defendant having signed the employment agreement and considered that another writer had completed it by using other documents as models.
After filing her challenge the plaintiff sought a further expert opinion. That expert was of the opinion that the defendant's signature was a simulation or copy of those of the samples provided.
The issues for the Court were (i) whether the defendant's employment was open ended or for a fixed term of 2 weeks; (ii) whether the defendant knew or ought to have known that the offer of employment she received from the plaintiff was on behalf of Shelton Holdings Ltd; and (iii) remedies, if any.
Held
(1) To the extent it was necessary to do so, the Court preferred the evidence of the defendant where it was in conflict with the evidence of other witnesses. It did so partly for reasons supporting the reliability of the defendant's evidence and partly for reasons suggesting the unreliability of other witnesses. It also had regard to the submissions made by the parties and to the logic of certain aspects of the parties' cases. (paras 72-76, 78-84)
(2) Another significant factor affecting the Court's assessment of credibility between the parties was the expert evidence of the document examiners. The evidence of the document examiners clearly supported the defendant's evidence and cast doubt on the evidence of the plaintiff. (para 77)
(3) A key piece of evidence suggesting that the defendant was interviewed for a permanent position was the detailed interview schedule in the plaintiff's name which the plaintiff conceded had been completed by her. The plaintiff's attempts to explain that document by saying it was made during a series of mock interviews conducted after the defendant was employed were rejected. (para 85)
(4) The defendant's evidence was that she was engaged on the basis that she would be provided with training and would take up to 9 months to become proficient in the job. It was therefore not to be expected that she would be doing a full range of duties immediately. Overall, the evidence about the work the defendant did was not inconsistent with her evidence about the position in which she was employed. (para 90)
(5) Witnesses' evidence did not support the plaintiff's contention about the defendant's hours of work. As between the parties, there was some support for the defendant's evidence. It did not seem unlikely at all that the plaintiff wanted a member of staff to be at work from 8.30 am to answer the telephone and take messages for staff who started later. (paras 91-95)
(6) While dismissal might be an intensely distressing experience, it was not uncommon for employees who had been dismissed to hide their feelings from others in order to preserve their privacy and their pride. The defendant's explanation that she carried on working for the rest of the week because she needed the money was entirely credible. (para 98)
(7) Particular evidence the Court took into account in its assessment of credibility and making findings of fact was that the defendant and her husband were under some financial pressure. She needed to work. It was most unlikely that she would have given up her previous job with variable but ongoing hours to take a temporary position for two weeks. It was also unlikely that she would have spent a significant amount of money on clothes as she did if the job was to be a temporary one doing principally cleaning and tidying work. That was especially so given the financial pressure on the household. (paras 100-102)
(8) Based on its assessment of the credibility of the witnesses and having regard to all of the evidence adduced, the Court made the following findings of fact: (i) the plaintiff made an oral offer of employment which was immediately accepted by the defendant; (ii) the employment agreement concluded by that offer and acceptance was for ongoing employment as a personal assistant with training to be provided and stating the hours of work and the initial rate of pay; (iii) the plaintiff did not disclose that she was entering into that employment agreement as agent for a company and the defendant had no reason to believe that she was doing so; (iv) the defendant never signed a written employment agreement or otherwise agreed to her employment being for a fixed term; (v) the plaintiff gave the defendant notice of dismissal; (vi) that dismissal was given effect three days later; and (vii) that dismissal was unjustifiable. (para 105)
(9) The defendant did not contribute to the situation giving rise to her unjustifiable dismissal. (para 106)
(10) As the present was subject of a hearing de novo, all issues were at large, including remedies. (para 107)
(11) The Court confirmed the order of the Authority that the plaintiff pay the defendant the sum of $4,940.00 gross by way of reimbursement of lost wages pursuant to s123(1)(b) of the Employment Relations Act 2000. It also confirmed the Authority's order that the plaintiff pay the defendant outstanding holiday pay of $45.60 together with interest on that sum at the rate of 7 percent per annum from the date the dismissal took effect until the date on which payment was made. (para 108)
(12) As to compensation for distress, the Authority's award of $2,000 was inadequate to properly compensate the defendant in all the circumstances. Accordingly, the Court set aside the Authority's determination and awarded the sum of $4,000 instead. (para 109)
(13) As to interest on non-economic loss, in Gilbert v Attorney General the Court was exercising the jurisdiction of the Employment Court under the Employment Contracts Act 1991. The present case was to be decided under the ERA. Parliament having enacted clause 14 of Schedule 3 conferring express jurisdiction on the Court to award interest in specific circumstances, it was not open to the Court to attempt to extend that jurisdiction by inference from other provisions of the Act. The Court therefore dismissed the defendant's claim for interest on compensation awarded to her under s123(1)(c) ERA for the reasons set out in Salt v Fell. (paras 113-114)
(14) As to the claim for interest on reimbursement of lost wages, the merits were relatively straightforward. The sum awarded as reimbursement was calculated on the basis of what the defendant would have earned had her employment by the plaintiff continued for 3 months after her dismissal. It therefore reflected the loss of payment which would have been made to her at that time. Having been kept out of that money since then, the plaintiff had been deprived of a real part of its value to her. That could and should be remedied by an award of interest. (para 115)
(15) Interest was to be paid on the sum of $4,940.00 at the rate of 7 percent per annum until the date on which payment was made in accordance with the present judgment. The starting date for interest was the middle of the 3-month period in respect of which reimbursement had been ordered. (para 115)
(16) The Authority's order as to costs and disbursements associated with its investigation stood. The defendant was entitled to a proper contribution to her costs and disbursements associated with the proceedings in the Court. Quantum was reserved. (paras 117-118)
Result: Challenge dismissed ; Cross challenge dismissed ; Reimbursement of lost wages ($4,940) ; Arrears of holiday pay ($45.60) ; Interest (7 percent) ; Compensation for humiliation etc ($4,000) ; Costs in favour of defendant ($3,000)(Authority) ; (Quantum reserved)(Court)
Statutes considered:
ECA s104(1)(h)
ERA s123(1)(b)
ERA s123(1)(c)
ERA s124
ERA s131
ERA Third Schedule cl14
Cases referred to in judgment:
Burgess v Reynolds unreported, H Doyle, 27 Oct 2004, CA 129/04
Burgess v Reynolds unreported, Couch J, 10 May 2006, CC 5/06
Gilbert v Attorney General in respect of the Chief Executive Officer of the Department
of Corrections unreported, Colgan J, 4 December 2003, AC 63/03
Salt v Fell unreported, Couch J, 2 June 2006, AC 31/06
Pages: 5
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The Red Beach School Board of Trustees & Anor v The New Zealand Education Insitute (INC)
AC 13/07
Heard: 26 Jun 2006, Auckland
Judgment Date: 20 Mar 2007
Court/Authority/Tribunal: Couch J
Appearances: C Chilwell ; S Mitchell & D Martin
NON DE NOVO CHALLENGE TO DETERMINATION OF EMPLOYMENT RELATIONS AUTHORITY - Application and interpretation of collective employment agreement - Personal grievance - Unjustified disadvantage - Authority determined teacher aides had been placed on incorrect employment grade/bracket to their disadvantage - Plaintiffs alleged teacher aides correctly graded and sought declaration that first plaintiff's actions did not constitute unjustified action - HELD - Teacher aides incorrectly graded by plaintiff - However, Authority had no jurisdiction to make personal grievance findings - None of the teacher aides were parties to present proceedings - Section 103(3) Employment Relations Act 2000 precluded Authority's personal grievance finding - Court declined to make declaration sought - If any of teacher aides could establish first plaintiff was motivated in its grading decisions by other factor there might be scope to pursue a personal grievance notwithstanding s103(3) - Challenged dismissed - Teacher aides
This was an unsuccessful non de novo challenge to a determination of the Employment Relations Authority concerning the application of a collective employment agreement.
The second plaintiff was the employer party to a collective employment agreement ("cea") which governed a number of teacher aides who worked for the first plaintiff and were members of the defendant union. The cea defined possible grades for teacher aides which affected the aides' remuneration level. The relevant teacher aides were graded "A". They believed that they should have been graded "B" but requests to change the grading were declined.
The definition of grade A included three key elements. The position was to be: (i) "closely supervised", (ii) involve duties and tasks which were "specified and clear" and, (iii) the duties and tasks were to be carried out in accordance with "well defined procedures". The definition of grade B included that the position had to involve duties for which "advanced knowledge, skills and experience" were required; was "likely" to involved "periods without supervision" and, "may" be "sole charge". The grade B definition gave examples including "support and contribution" to teaching programs whereas the grade A definition included only "supporting teacher training programs".
The teacher aides worked with special needs children who had high and very high needs. The teacher aides' duties included toileting, feeding, physiotherapy and occupational therapy programmes and involvement in learning plans called IEPs and IDPs. The teacher aides would also accompany the children to mainstream classes.
The teacher aides brought a dispute about the correct application of the cea alleging they should have been graded B and that the failure to do so after being so requested amounted to an unjustified disadvantage.
The Employment Relations Authority determined that the teacher aides had been incorrectly graded A to their disadvantage.
The plaintiffs submitted the correct grade for the teacher aides was A. The plaintiffs submitted "contribution" to the teaching programmes and curriculum delivery required "adding to or being partly responsible for programmes/curriculum delivery" which was not within the teacher aides' duties. The plaintiffs alleged that toileting and therapy programs fell within the scope of the example to grade A which was to "assist with routine needs of students". The plaintiff also submitted the Authority had no jurisdiction concerning the unjustified disadvantage finding. The plaintiffs sought a declaration that the first plaintiff's actions did not constitute an unjustified action to the teacher aides' disadvantage.
The defendant submitted the teacher aides came within grade B. It submitted that the teacher aides' toileting and therapy duties contributed to and maintaining healthcare programmes for students which was contained in grade B.
Held
(1) The relevant skill, qualifications, experience and responsibility in grade A and B were not those actually possessed by the employee in the position but rather those required for the position itself. The personal attributes to be taken into account in grading the position were those reasonably required to carry out the duties of the position. (paras 58, 59)
(2) All three of the key elements were to be satisfied if a position was to fall within the definition of grade A. That followed from the mandatory nature of the wording used. (paras 67, 68)
(3) What was to be "closely supervised" was the work not the person carrying out that work. In practical terms, however, it would often be necessary to supervise the person in order to supervise the work that person was doing. Similar considerations applied to the construction to be placed on the term "closely supervised". The essential meaning of the expression "closely supervised" in the present context was that the work must be supervised "in a careful and thorough way". Mere physical proximity would not satisfy the requirement. If a supervisor was usually in close proximity to the person carrying out the work, that might be evidence suggesting that the work was being closely supervised but it did not of itself meet the requirement. (para 71)
(4) Construction of the expression "specified and clear" was inevitably a matter of degree. Having regard to dictionary definitions and to everyday usage of these words, the term "specified and clear" required that the tasks and duties of a grade A position be defined in detail, be free from ambiguity and give relatively little scope for discretion. That construction was consistent with the other requirement that the work was carried out in accordance with "well defined" procedures. It was also consistent with the fact that the definition included no particular requirement for knowledge, skills and experience. (paras 71-75)
(5) The clear implication of the expression "well defined procedures" in the context of the Grade A definition as a whole was that the employer must prescribe in detail not only the work to be done but how that work was to be done. The Grade A definition required there to be no ambiguity and little scope for discretion in the nature of the work done, so it also required that there be certainty and little scope for discretion in the manner in which the work was to be done.
(6) It was clear from the wording of the Grade B definition that there was only one essential requirement of the definition. It was that the position involved duties for which "advanced knowledge, skills and experience" were required. The key to the construction of that expression was the word "advanced". (para 78)
(7) The term "advanced" in the Grade B description meant by comparison with the requirements for grade A positions. Grade A did not require any particular level of knowledge, skills and experience. It might properly be inferred, however, that little if any knowledge, skills or experience were required over and above a basic education and everyday life skills. On that basis, the position would require "advanced" knowledge, skills and experience if the level of knowledge, skills and experience necessary to carry out the duties was significantly greater than that possessed by a person with a basic education and everyday life skills. (paras 79, 80)
(8) Grade B positions would usually involve a higher degree of responsibility and discretion than grade A positions. The use of the word "likely", however, did allow for the possibility that a position might be at a grade B level notwithstanding that it was constantly supervised. (para 82)
(9) The third component of the definition that the position "may be sole charge" meant that if the position did involve periods without supervision or was sole charge, that would tend to indicate that the duties of the position require advanced knowledge, skills and experience but was not sufficient on its own to establish that essential requirement. (para 83)
(10) There was overwhelming evidence that each of the teacher aides contributed to achieving the specific learning objectives for the special needs child or children with whom she worked. In the case of the high needs children, the teacher aides also contributed to achieving the learning goals set out in weekly goal sheets. (para 87)
(11) The plaintiff's construction relied on too narrow a meaning of the term "contribution". In any event, the teacher aides were regarded as partly responsible for the implementation of the teaching programme. (para 89)
(12) To the extent that the teacher aides assisted the special needs children to achieve any of the specific learning objectives in the IEPs or the IDPs, they assisted the learning of the children as that term was used in the example for grade B. All of the teacher aides did substantially assist the learning of the special needs children in that sense. (para 91)
(13) The teacher aides "contributed to and maintained" healthcare programmes as part of their work. It was they who conducted the physiotherapy, provided aspects of the occupational therapy, took the children to the toilet, changed their nappies, actively assisted with their feeding and had immediate responsibility for ensuring the children did not come to harm. (para 94)
(14) The level of knowledge, skills and experience required for the aide positions was very much greater than that possessed by most ordinary members of the community. (para 97)
(15) The teacher aides were not supervised by the mainstream class teacher when they attended those classes. The classroom teachers did not receive the weekly goal sheets for the special needs children who joined their mainstream classes. Without knowledge of the learning goals for that child, it would be effectively impossible for the mainstream teacher to supervise the work of the teacher aide. In any event, the evidence was that the mainstream teachers left the teacher aides to their work and focussed on the rest of the children in the class. Teacher aides working with these high needs children were therefore unsupervised for periods of up to one and half hours. (para 98)
(16) The positions of all the teacher aides involved periods without supervision. That finding supported the conclusion that those positions should have been graded B. A further and obvious consequence of that finding was that the work of the teacher aides was not "closely supervised" as required by the definition for grade A. In addition to there being periods without supervision, the level of supervision of the teacher aides by the teachers was not "careful and thorough" as required to satisfy the requirement of the definition of grade A that the position be "closely supervised". (para 100)
(17) The large majority of the working time of the teacher aides involved duties which should properly have been graded B. Equally, the substantive part of the job done by the special needs teacher aides involved duties within the definition grade B. To the extent that the positions of the teacher aides required them to perform duties which were within the scope of the definition of grade A and not within the scope of the definition of grade B, they formed a small part of the job and were relatively incidental to it. The positions of all of those teacher aides covered by the cea should have been graded B. (paras 103, 104)
(18) As to the Authority's personal grievance finding, there were two significant jurisdictional concerns. Firstly, none of the teacher aides were parties to the proceedings. Secondly, s103(3) Employment Relations Act 2000 ("ERA") precluded the conclusion reached by the Authority. (paras 107, 108)
(19) The Court declined to make the declaration sought. The teacher aides in question were not parties to the present proceedings. It would be ineffective and therefore inappropriate to make a declaration purporting to affect their personal rights. Section 103(3) ERA only related to actions of an employer deriving "solely" from the interpretation, application or operation of an employment agreement. Thus, if any of the teacher aides could establish by evidence that the first plaintiff was motivated in its grading decisions by any other factor, there might be scope to pursue a personal grievance notwithstanding s103(3). (paras 112, 113)
Result: Challenge dismissed ; Costs reserved ; Indication give costs to lie where they fall
Statutes considered:
ERA s103(3)
Words and phrases: Specify ; Closely supervised ; Advanced skills
Other workers/site names etc: The Attorney-General in respect of the Secretary for Education
Pages: 5
[973524]
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Davis v Canwest Radioworks Ltd
AC 21/07
Heard: 8 Feb 2007, Auckland
Judgment Date: 4 May 2007
Court/Authority/Tribunal: Travis, J
Appearances: L Campbell ; G Pollak
DE NOVO CHALLENGE TO DETERMINATION OF EMPLOYMENT RELATIONS AUTHORITY - Jurisdiction - Whether employee or independent contractor - Plaintiff and his company signed contract for services - Plaintiff alleged he later became full time employee fully integrated into business - HELD - Full time appointment was temporary - At a certain point in time plaintiff could well have been treated as an employee - But parties would have negotiated and determined appropriate contractual relationship - Parties did not reach that point in present case - Plaintiff was integrated into business - However, parties entered into a contractual arrangement in which the plaintiff's company and not the defendant was the employer of the plaintiff - To ignore position of the company would be to inappropriately lift the corporate veil - Challenge dismissed - Sports commentator/broadcaster
This was an unsuccessful de novo challenge to a determination of the Employment Relations Authority which held that the plaintiff was an independent contractor.
The plaintiff began a broadcasting career in 1998. He set up a company ("the company") but it did not trade until he needed a company to produce a television program in 2002. In early 2004 the plaintiff obtained casual part-time work for the defendant's radio network which steadily increased. He had a variety of other jobs to earn enough money, including with the defendant's competitor. When working for the defendant it supplied headphones, studio, office equipment and other resources including airfares and accommodation when he was required to travel. The plaintiff complained of invoices not being paid by the defendant on time. As a result a contract headed "Contract for Services" was signed in September 2004. The contract was between the company, the defendant and the plaintiff. The plaintiff was described as "an employee of the Company" and the contract stated no employment relationship existed between the defendant and the plaintiff. The company was responsible for payment of levies and premiums and taxes as required by relevant legislation. The contract did not provide for exclusivity. After the contract was signed, the company rendered invoices to the defendant with its registered GST number and required payment into the company's bank account.
In early February 2005 the plaintiff was given a regular, weekday, afternoon radio talkback show ("the talkback show"). In order to take that show the plaintiff gave up the other work he was doing, including work with the defendant's competitor. The defendant issued a media release advising of the new host. From that time the plaintiff attended weekly staff meetings, received advice and coaching and his remuneration increased. The plaintiff also received a "staff appointment form" which stated that he was employed as casual host/sports contributor and required an "employee's signature" which the plaintiff signed. In conclusion of discussions which had commenced the previous year, the defendant decided that the relevant radio station would not continue to have a talkback element shortly after the plaintiff's appointment to the position. He worked on the talkback show for two months before it was discontinued and he was then assigned to other shows on other radio stations. After a warning letter concerning the plaintiff's on air behaviour, the work given to the plaintiff ended.
The plaintiff alleged from February 2005 the nature of the parties' relationship changed and he became a full time employee and that his dismissal was unjustified. He relied on the staff appointment form he signed, the level of integration in the business and the fact that the talkback show was considered full time in which presenters were usually hired as employees.
The defendant submitted the plaintiff was working under a contract for services. It alleged the appointment to the talkback show was an interim cover role, was not full time and the nature of the parties' relationship remained the same.
Held
(1) It was difficult to distinguish between the role the plaintiff took as the talkback show host and the roles performed by other persons recognised by the defendant as full time broadcasters. Programmes such as the breakfast show appeared to have a similar broadcasting timeframe to that of the talkback show and also involved preparation time in advance of the broadcast. The hosts of breakfast shows appear to be regarded by the defendant as full time personalities who were also required to provide their services for client liaison work, promotions and the like at other times in the day without additional compensation. By contrast, the plaintiff's temporary role did not involve that obligation. If he had to do additional promotional work then, which he did occasionally, like the other work he performed covering the absences of other radio personalities, payment for that work would be separately invoiced through the company and paid by the defendant. (para 43)
(2) When the talkback show ended, there had been no discussions or changes agreed between the parties as to their contractual arrangements. The parties appeared to be operating under the original contractual arrangements, varied only as to the rate of pay and the frequency that the invoices of the company were being paid by the defendant. (para 44)
(3) The "staff appointment form" was a standard form document simply to record invoices on the payroll and did not purport to show the intention of the parties as to their relationship. In any event the bank account number and the IRD number both related to the company. (para 57)
(4) An invoice used by the plaintiff to support his position was also intended to ensure payment. The document itself was clear that the company was the presenter and payee of the invoice. The document did not assist the plaintiff. (paras 59, 60)
(5) Bank statements relied on by the plaintiff were too equivocal to place any reliance upon them as to the true intention of the parties. It was not clear who was responsible for having created the relevant entries in the company's bank account but it was more likely than not that the company, or the plaintiff on its behalf, was so responsible, rather than the defendant. (para 61)
(6) The warning letter was addressed to "[the plaintiff], [the company name]", and said in the opening sentence to be a letter to the plaintiff and his company with whom the defendant had a contract for services. It also alleged that both the plaintiff and his company were in breach of their contractual obligations. (para 62)
(7) The defendant controlled and supervised the plaintiff as to when and how he performed his duties which were rostered in defined hours. That might be an element which favoured a finding of an employment relationship. However there was no reason in principle why an independent contractor could not be treated in such a manner. The plaintiff himself appeared to have accepted that he was an independent contractor until February 2005 when he alleged his employment relationship changed. During that first period he was subject to the same control and supervision. (para 63)
(8) There was no issue between the parties that at a certain point in time the plaintiff could well have been treated as an employee, especially if the talkback hosting work had become permanent and was not a temporary arrangement. However the full time work was only for a temporary period of about 2 months, as the relevant radio station was changing its character. The change to an employee status would have only come about as a result of a freely negotiated new contractual arrangement. (para 64)
(9) Although it was clear that the defendant preferred that full time broadcasters who were identified with its "brand" should become employees rather than independent contractors, even then, some broadcasters preferred to remain independent contractors. (para 65)
(10) When a change from part time to full time was to occur, on a permanent rather than a temporary basis, the parties would have negotiated and determined the appropriate contractual relationship. The parties did not reach that point in the present case, partly because of the restructure of the relevant radio station, and partly because of the perceptions that the defendant formed about the performance of the plaintiff later in 2005. That appeared to prevent a permanent relationship between the parties being formed. (paras 65, 66)
(11) The plaintiff was also faced with the difficulty that the contractual arrangement to which he was a party, placed him at one step removed from the defendant in that he appears to have been both a director and employee of the company, which was the vehicle by which his services were provided to the defendant. His argument about his status would clearly have been stronger had he and the defendant been the only contracting parties. (para 67)
(12) The plaintiff used the defendant's premises, equipment, producers and staff, received a the defendant business card, was publicised as a "host", attended weekly staff meetings, was part of a team, was invited to cocktail parties as public relations exercises for the defendant, had become closely associated with the defendant's "brand" and was becoming fully integrated into the business of the defendant. Unfortunately for the argument being advanced on behalf of the plaintiff, difficulties had arisen just when the parties were reaching the stage when it might have been appropriate to have renegotiated the arrangements for the plaintiff to become either a permanent employee or a permanent independent contractor. (paras 68, 69)
(13) There was no question that the way in which the work was performed by the plaintiff for the defendant could have been by way of a contract of service. While he was performing the work for the defendant he was closely integrated with it, received direct supervision and was required to follow set procedures. However, a contract of service was not the contract with which the parties commenced their relationship. Nor had they reached a point where because of some necessity the original relationship had to change. Instead the parties entered into a contractual arrangement in which the company and not the defendant was the employer of the plaintiff. To ignore the position of the company would be effectively to deny its existence as a separate legal entity and would amount to a lifting of the corporate veil and recasting the arrangement as though it had been made directly between the defendant and the plaintiff. This would not have been an appropriate case for lifting the corporate veil. The company was not a sham entity. (paras 71, 72)
(14) Here the parties agreed as to the true nature of their contractual arrangement and to achieve the result the plaintiff sought would be to ignore the involvement of the company. Both the company and the plaintiff were free of any restraint from seeking work elsewhere even in competition with the defendant during the currency of the contract. The provisions which would have placed such restraints on the company and the plaintiff were struck out at the request of the plaintiff. That was another factor which also weighed heavily in favour of the conclusion that the contract for services freely entered into between the parties represented their true intention. The true nature of the relationship between the plaintiff and the defendant was not one of employer and employee and the challenge was dismissed. (para 72)
Result: Challenge dismissed ; Costs reserved
Statutes considered:
Arbitration Act 1996
ERA s6
Cases referred to in judgment:
Bryson v Three Foot Six Ltd [2003] 1 ERNZ 581
Bryson v Three Foot Six Ltd (No2) [2005] 1 ERNZ 372 (SC)
Telecom South v Post Office Union [1992] 1 ERNZ 711
Three Foot Six Ltd v Bryson [2004] 2 ERNZ 526 (CA)
TNT Worldwide Express (NZ) Ltd v Cunningham [1993] 3 NZLR 681, [1993] 1
ERNZ 695 (CA)
Pages: 4
[973654]
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