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Kapadia v Axiom Rolle PRP Valuations Services Ltd
AC 48/07
Heard: 15 Aug 2007, Auckland
Judgment Date: 2 May 2007
Court/Authority/Tribunal: Travis, J
PRACTICE AND PROCEDURE – Application to set aside purported discontinuance – Whether plaintiff’s email was effective discontinuance – Plaintiff sent email stating he would like to withdraw challenge – Next day sent second email stating he wanted to withdraw request for withdrawal – HELD – Clause 18, Schedule 3 Employment Relations Act 2000 governed issue but provided no form or procedure – Procedure and form in High Court Rules to be used – Although Court did accept service of documents electronically, correct form not filed and served on defendant – Email not effective discontinuance – Application granted
This was a successful application to set aside a purported discontinuance.
The plaintiff filed a challenge to a determination of the Employment Relations Authority. In November 2006 the Court ordered the plaintiff to provide security for costs on the basis that his challenge would be stayed until that amount was paid into Court. The plaintiff was by then resident overseas. He did not pay the relevant sum into Court or costs awarded against him. In March 2007 the Registrar of the Court asked the plaintiff whether he wanted to proceed with his challenge. The plaintiff replied via email stating he would like to withdraw. The Registrar forwarded the email to the defendant who responded the same day advising that it wished to seek costs in relation to the plaintiff’s discontinuance. The Court granted leave to file a costs memorandum. The next day the plaintiff sent a second email to the Court and the defendant stating “I withdraw my email requesting withdrawal”.
The plaintiff submitted that the first email was an inquiry as to the necessary procedure required to formally discontinue.
The defendant submitted the plaintiff had failed to set out the legal basis for any contention that he had a right to withdraw his request for withdrawal.
Sections 219 and 221 of the Employment Relations Act 2000 (“ERA”) were not relied on by either party.
Held
(1) Discontinuance was governed by clause 18 of Schedule 3 ERA but no form of procedure was provided. Regulation 6 of the Employment Court Regulations 2000 provided that in the present case it was necessary to look at the High Court Rules. (paras 15-17)
(2) Rule 475 of the High Court Rules gave a plaintiff the right to discontinue proceedings by filing a notice of discontinuance in the form provided and serving a copy of it on every other party to the proceeding, or by orally advising the Court of the discontinuance at the hearing. The form required was 34E. (para 19)
(3) Although the Court did accept service of documents electronically, no signed notice of discontinuance in the specified form was filed and served in the present case. (paras 23, 24)
(4) The present proceedings had not been withdrawn and the plaintiff was free to continue with them. In light of the undertakings the plaintiff had given, he should proceed to provide the security for costs and pay the costs award. (paras 27, 28)
Comment
(1) There was no express rule in the High Court allowing a plaintiff to withdraw a discontinuance. However, the High Court had inherent jurisdiction, and possibly the District Court inherent power, to allow a discontinuance to be withdrawn in appropriate cases. In order to do so the Court would have to be satisfied that not to do so would amount to an abuse of process. These could include matters such as the coercion of a plaintiff, irrational behaviour by counsel, or fraud. It could not arise in a situation where the discontinuance had been filed as a result of a tactical or technical error. (para 25)
Result:
Application granted ; Costs reserved
Statutes considered:
Electronic Transactions Act 2002 s22
Employment Court Regulations 2000 r6
ERA s212(1)
ERA s219
ERA s221
ERA Third Schedule cl18
High Court Rules R475
High Court Rules R476
High Court Rules R476B
High Court Rules R476C
High Court Rules R476D
High Court Rules Form 34E
Cases referred to in judgment:
Auckland Trotting Club (Inc) v Ralf Enterprises Ltd (2003) 16 PRNZ 710
Ben View Farms Ltd v GE Capital Returnable Packaging Systems Ltd (2001) 16
PRNZ 25
Clemance v Cleary (1995) 9 PRNZ 194
Edwards & Hardy Hamilton Ltd v Woodhouse [Irregularity] (1990) 3 PRNZ 362
IHC New Zealand Inc v Scott unreported, Judge Perkins, 18 October 2006, AC
45A/06
Practice Direction [2005] 1 ERNZ 60
RG Developments Ltd v MacLennan Realty Ltd and Anor unreported, Laurenson J, 18
March 2005, HC Auckland, CIV 2003-404-003260
R v MacKay [1980] 2 NZLR 490
R v Pelikan [1959] NZLR 1319
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Rooney Earthmoving Ltd v McTague & Ors
CC 7/07
Heard: 18 Dec 2006, Christchurch
Judgment Date: 11 May 2007
Court/Authority/Tribunal: Colgan, J
PRACTICE AND PROCEDURE – Application for leave to challenge out of time – 4 day delay – Delay caused by counsel’s inadvertence – Applicant emphasised short delay and reason for delay – Further, that the Authority had erred in a number of respects – Respondents opposed granting of leave – HELD – Applicant entitled to judicial determination – Delay minimal – Applicant had lessened effect of delay by informing respondents’ solicitors of intention to file application for leave and providing draft statement of claim – Little or no prejudice to respondents – Applicant’s case not so obviously unmeritorious that it should not be allowed to proceed – Application granted
This was a successful application for leave to challenge an Employment Relations Authority determination out of time.
The applicant alleged that the respondents had breached their employment agreements and claimed damages of approximately $2 million. The Authority found that two of the three respondents had breached their employment agreements but that the breaches were not causative of the financial losses claimed by the applicant.
The applicant’s counsel overlooked the time limit for filing the challenge. He realised his error one day after the statutory time limit expired, which was a Friday afternoon.
The applicant’s counsel emailed a copy of the draft statement of claim to the respondent’s solicitor and informed him that he intended to file and serve an application for leave the following Monday. The intended challenge was, therefore, filed four days, or two working days, out of time.
The applicant emphasised the short time between the expiry of the 28 day period and the filing and service of the papers, and the reason for the failure. The applicant also
alleged that the Authority investigation and determination were flawed in a number of respects.
The respondents opposed the application for leave, submitting that the prospects of success of the challenge should be given more weight than other factors. The respondents made a number of submissions concerning the merits of the proceedings including asserting that the applicant could not litigate an issue abandoned before the Authority (breach of fiduciary duty). They also submitted that the obligations of the employees were better expressed as part of the contractual duty of fidelity.
Held
(1) It is sometimes thought that s221 of the Employment Relations Act 2000 (“ERA”) is applicable in cases such as the present. That is not so because of the qualification in that section that proceedings must be before the Court. Cases such as the present, however, are ones that seek to bring proceedings before the Court. The appropriate section is therefore s219 ERA. (para 2)
(2) The respondent’s proposition of primacy of prospects of success was incorrect. The six factors identified in Stevenson v Hato Paora (cited below) must all be weighed in assessment of the justice of the case. In some cases, including this, some factors will assume greater prominence than others. But none is predominant in principle. Doing justice in the particular case is always the yardstick. (para 14)
(3) There had not been a judicial determination of the parties’ rights or liabilities in adversarial litigation at first instance. Although no doubt thorough, an Authority determination after an investigation is not a judgment of a court. (para 38)
(4) The Court exercised its discretion to enlarge the time for filing the challenge on the following grounds. First, the delay was minimal. Second, on the first day out of time the applicant advised the respondents’ solicitors of its intention to file a challenge (and an application for leave to do so out of time) and served a comprehensive draft statement of claim. Third, in these circumstances, there can have been little or no prejudice to the respondents beyond whatever prejudice they may have suffered if the challenge had been filed within the 28 day period. Fourth, the Court did not consider that any delays in formally serving the respondents assisted their case. Finally, it was appropriate to stand back and determine where the overall interests of justice lay. It could not be said that the applicant’s case was so obviously unmeritorious that it should not be allowed to proceed. (paras 44-45)
Comment
(1) The Court questioned seriously the appropriateness of the present case being considered first in an investigative body that has the role of resolving employment relationship problems according to the substantial merits and equities of the case without regard to technicalities (s157(1) ERA) and whose aim is to promote good faith behaviour and support successful employment relationships (s157(2) ERA). The application of s178 ERA may have seen the case removed to the Court for hearing at first instance under either subsection (2)(a) or (d). (paras 48-49)
(2) The interface between fiduciary obligations, duties of good faith, and duties of mutual trust, confidence, and loyalty in commercial relationships (including employment relationships) is, if not in a state of change, at least in one of re-evaluation by courts at present. That is illustrated by cases decided recently by the Supreme Court including Paper Reclaim Ltd v Aotearoa International Ltd (cited below) and Chirnside v Fay (cited below). These judgments illustrate that the courts are examining critically and, where appropriate, re-evaluating the nature of obligations owed between parties to commercial transactions and employment law may not necessarily be immune from that process. (paras 26-28)
Result:
Application granted (leave to file challenge out of time) ; Orders accordingly ; Costs
reserved
Statutes considered:
ERA s157(1)
ERA s157(2)
ERA s174(b)
ERA s178
ERA s178(2)(a)
ERA s178(2)(d)
ERA s219
ERA s221
Employment Court Regulations 2000
Cases referred to in judgment:
AC Nielson (NZ) Ltd v Pappafloratos [2003] 1 ERNZ 363
Chirnside v Fay [2007] 1 NZLR 433
Coutts Cars Ltd v Baguley [2001] 1 ERNZ 660; [2002] 2 NZLR 533
Henkel KGAA v Holdfast New Zealand Limited [2007] 1 NZLR 577
Jerram v Franklin Veterinary Services (1977) Ltd [2001] 1 ERNZ 157
Korbond Industries Ltd v Jenkins [1992] 1 ERNZ 1141
Motorpol Australasia Limited v Roche [2006] 1 ERNZ 253
Pacific Plastic Recyclers Limited v Foo [2002] 2 ERNZ 75
Paper Reclaim Ltd v Aotearoa International Ltd [2007] NZSC 26
Predict (NZ) Ltd v Morgan (No 1) [1993] 2 ERNZ 867
SAS Technologies Ltd v Hollis [2003] 2 ERNZ 98
Stevenson v Hato Paora College Trust Board [2002] 2 ERNZ 103
Telecom New Zealand Ltd v Nutter [2004] 1 ERNZ 315
Varney v Tasman Regional Sports Trust unreported, Judge Shaw, 16 December 2003,
CC 25/03
Weston v Warwick Henderson Gallery Ltd [2003] 2 ERNZ 723
Other workers/site names etc: Whiting, Bartlett
Pages: 3
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Auto-Movements (NZ) Ltd v Eveleigh
WC 15/07
Heard: 11 May 2007, Wellington
Judgment Date: 18 May 2007
Court/Authority/Tribunal: Shaw, J
Appearances: G Paine ; D Vincent
INJUNCTION – Restraint of trade – Non-solicitation – Breach of confidence – Clauses contained in fixed term contract – Respondent continued after expiry of fixed term contract in new role – No new agreement formed – Applicant submitted clauses continued into new role or should be implied – Respondent alleged clauses had expired – HELD – Respondent’s employment continued after expiry of fixed term on different footing – No agreement that restrictive covenants would continue – Test to imply terms not met – Presumption against implying restraint of trade into employment agreements without clear evidence of agreement – No restraint of trade or non-solicitation clauses binding on respondent – No evidence of breach of confidentiality – Application dismissed – Transport manager
This was an unsuccessful application for injunctions to restrain the respondent from breaching contractual clauses relating to restraint of trade, non-solicitation and breach of confidence.
The applicant company was purchased from the respondent in 1996. The sale was accompanied by a five-year restraint of trade. The respondent initially provided vendor assistance but left in mid-1997. In 1998 the applicant employed the respondent for a fixed term of three months to provide assistance in improving the operating performance of the company. The contract contained clauses relating to restraint of trade, non-solicitation and confidentiality (“the 1998 contract”). Just before the 1998 contract expired the applicant’s managing director asked the respondent to continue with the company in the role of transport manager. The parties did not form a new employment agreement. The respondent worked as transport manager for approximately 8 years before resigning in December 2006.
The applicant submitted that the terms and conditions of the 1998 contract continued beyond the expiry date with both parties agreeing to be bound until the respondent left the applicant’s employment. Alternatively, it submitted that the restraints should be implied into the employment relationship.
The respondent submitted that the restrictive covenants expired after the end of the 1998 contract. Alternatively, he alleged that the restraints were unreasonable and contrary to the Illegal Contracts Act 1970.
Held
(1) Although the respondent’s employment continued with the applicant it was intended to be and it was in fact in a different capacity from the position he took on under the fixed term. From being a temporary employee engaged to improve the operating performance of the company, he became transport manager. There was no evidence to find that the respondent and the applicant’s managing director expressly agreed that his employment status had not changed. (para 31)
(2) If a fixed term of a contract cannot be extended other than by agreement of the parties, no doubt because it does not reflect the intent of the parties, neither can terms such as a restraint of trade be extended without the parties specifically turning their minds to the extension. There was no agreement between the applicant’s managing director and the respondent that the restraint of trade and other restrictive clauses would continue into the new employment. The requirement for agreement is especially necessary because contractual provisions in restraint of trade are prima facie void. (para 33)
(3) On the facts, even if the past behaviour of the parties in agreeing to restraints of trade in two previous contracts were to be taken as evidence of a particular course of conduct governing a relationship, this was not sufficient to meet the conditions for implication of terms. (para 36)
(4) When the 1998 contract expired so did the restrictive covenants. There were no such covenants binding the respondent during the rest of his employment by the applicant apart from the pre-existing sale and purchase agreement. There was therefore no restraint of trade or non-solicitation clause which bound the respondent since he left his employment. (para 41)
(5) A confidentiality term is implicit in all contracts of employment. However, the statement of claim did not specify the way in which it was alleged such confidentiality had been breached and there was no evidence about this given to the Court. There was therefore no proof of any breach of the term of confidentiality. (para 43)
Comment
(1) In the context of commercial transactions it has been held in an interim injunction application that restraint of trade clauses are standard and may be implied: see United Pukekohe Ltd v Grantley (cited below). The position in relation to employment agreements has long been distinguished from commercial constraints for a number of reasons. A restraint of trade clause is not an integral part of a contract of employment. It is certainly not so obvious it goes without saying. It requires consideration and express agreement to be enforceable and the reasonableness of its terms are open to close scrutiny. (paras 37-39)
Result:
Application dismissed ; Costs reserved
Statutes considered:
Illegal Contracts Act 1970
Cases referred to in judgment:
Axiom Rolle PRP Valuations Services Ltd v Kapadia [2006] 1 ERNZ 639
BP Refinery (Westernport) Pty Ltd v Hastings Shire Council (1977) 16 ALR 363
Credit Consultants Debt Services NZ Ltd v Wilson (2007) 8 NZELC 98,807
Marine Helicopters Ltd v Stevenson [1996] 1 ERNZ 472
O’Neill v Victoria University of Wellington unreported, Chief Judge Goddard, 11
December 1996, WEC82/06
Varney v Tasman Regional Sports Trust unreported, Chief Judge Goddard, 23 July
2004, CC 15/04
United Pukekohe Ltd v Grantley [1996] 3 NZLR 762
Pages: 3
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Transnet NZ Ltd v Dulhunty Power (NZ) Ltd & Ors
CIV 2007-404-002000
Heard: 16 May 2007, High Court
Judgment Date: 21 May 2007
Court/Authority/Tribunal: Keane, J
Appearances: P Skelton, R Upton ; M Casey, P McBride
HIGH COURT – Practice and procedure – Interlocutory injunctions – Breach of fiduciary duty – Misuse of confidential information – Conspiracy to injure – Whether causes of action or power to grant relief fell within exclusive jurisdiction of Employment Relations Authority – Section 161(1)(r) Employment Relations Act 2000 – Plaintiff sought to restrain first and second defendants from using confidential information and taking benefit of a contract – Plaintiff sought to restrain fifth defendant from approaching certain plaintiff customers – HELD – Authority lacked jurisdiction – Arguable case concerning all causes of action – Injunction granted to restrain first and second defendants, their agents and employees from fulfilling contract, disclosing or using confidential information and requiring delivery up and deletion of confidential information – Injunction restraining contact by fifth defendant with certain plaintiff customers declined – Sales engineer
This was a partially successful application for interlocutory injunctions.
The plaintiff and the first defendant each supplied products to the New Zealand electricity transmission industry as competitors. The second defendant was the first defendant’s parent company. The third defendant was the second defendant’s Managing Director. The fourth defendant was the first defendant’s Chief Executive. The fifth defendant was the plaintiff’s Sales Engineer who joined the first defendant as a sales representative.
The plaintiff alleged that the fifth defendant, with another, embarked upon a strategy with the third defendant, to promote the first and second defendants in New Zealand at the plaintiff’s expense. The fifth defendant was to receive some gain from this strategy. During the strategy, the plaintiff alleged the fifth defendant diverted a contract from the plaintiff to the second defendant which the plaintiff had been invited to tender for by a third party. The plaintiff also alleged the fifth plaintiff used and disclosed the plaintiff’s confidential information including the plaintiff’s tender and its customer and price lists. It was alleged that the first and second defendant were complicit in the breaches.
The plaintiff sought interlocutory injunctions: (i) to restrain the first and second defendant from using the plaintiff’s confidential information; (ii) to restrain them from continuing to take the benefit of the contract; and, (iii) to stop the fifth defendant from approaching certain plaintiff customers for whom he was formerly responsible.
The defendants submitted that exclusive jurisdiction to grant relief under the first two causes of action (breach of fiduciary duty and misuse of confidential information) were within the exclusive jurisdiction of the Employment Relations Authority. They submitted the third cause of action in tort (conspiracy) was beyond the jurisdiction of the High Court.
There fifth defendant denied he was an employee of the plaintiff. Thus, the plaintiff in the present proceedings relied on duties imposed by statute, at common law and in equity.
Held
(1) At the heart of the three causes of action advanced by the plaintiff were two interlocking relationships. The first was between the plaintiff and the fifth defendant, as to which the Authority had jurisdiction and the High Court did not. The second was between the fifth defendant and the first to fourth defendants, as to which the Authority had no jurisdiction and the High Court ordinarily did. The result could not be a complete void in jurisdiction. Thus, as to these causes of action the Authority lacked jurisdiction and they lay instead within the jurisdiction of the High Court as they would ordinarily do. (para 24)
(2) The Court did not agree that whether the relationship was fiduciary turned on where an employee ranked in the hierarchy. The plaintiff had a strongly arguable case of breach of fiduciary duty against each defendant. The evidence indicated that the third to fifth defendants, each of whom had prepared one of the two tenders for the contract, knew the second defendant had tendered a lower price. (paras 33, 39, 41)
(3) The information in the plaintiff’s tender for the contract, in particular the prices offered, was confidential. There was a serious question to be tried against each of the defendants in relation to the tender information. The Court was less clear that the plaintiff’s prices were in that category as there was not any basis in the evidence to assess the degree to which those prices were general, or tailored to the customer, made freely available or held close to the chest. (paras 44-47)
(4) The tender for the contract was a cogent example of a conspiracy by unlawful means and the plaintiff had an arguable case. (para 51)
(5) The balance of convenience favoured the grant of interim relief. In the absence of discovery, the Court could not be confident that damages could be quantified, leaving aside the issue of whether they would suffice. (para 53)
(6) The overall justice of the case required the grant of an interlocutory injunction to restrain the first and second defendant, their agents and employees from fulfilling the contract, to prevent them from benefiting from the various breaches of the fifth defendant in which they were actively complicit. (para 54)
(7) The Court was less clear that the fifth defendant should, despite his evident part, be enjoined from approaching certain plaintiff customers. Five months had elapsed since his employment. The relief had been sought too late. (paras 55-56)
(8) Overall justice did warrant an order requiring the first and second defendant and their officers to disgorge whatever information was passed to them, though the plaintiff’s evidence in that respect was less than compelling. (para 57)
Result:
Application granted in part ; Interlocutory injunctions ordered ; Orders accordingly ; Costs in favour of plaintiff (quantum reserved)
Statutes considered:
ERA s4
ERA s4(1A)
ERA s4(4)
ERA s4(5)
ERA s5
ERA s5(1)(a)
ERA s5(1)(b)
ERA s5(1)(e)
ERA s161
ERA s161(1)
ERA s161(1)(a)
ERA s161(1)(b)
ERA s161(1)(e)
ERA s161(1)(f)
ERA s161(1)(r)
Interpretation Act 1999 s5
Cases referred to in judgment:
American Cyanamid Co v Ethicon [1975] AC 396; [1975] 1 All ER 504
BDM Grange Ltd v Parker [2006] 1 NZLR 353; [2005] 1 ERNZ 343; (2005) 7
NZELC 97,928; (2005) 2 NZELR 632
BDM Grange Ltd v Parker unreported, Priestley J, HC Auckland, 31 March 2005,
CIV 2005-404-993
Bradford Trust; Bradford Trusts Ltd v Roebuck Ltd unreported, Venning J, 7
December 2006, HC Auckland, CIV 2006-404-7111
Cayne v Global Resources plc [1984] 1 All ER 225 (CA)
Credit Consultants Debt Services NZ Ltd v Wilson & E C Credit Control Ltd (2007) 4
NZELR 372; (2007) 8 NZELC 98,807
EIL Brigade Road Ltd v Brown unreported, Fogarty J, 5 August 2004, HC
Christchurch, CIV 2001-409-733
Faccenda Chicken Ltd v Fowler [1987] 1 Ch 117; [1986] 3 WLR 288; [1986] 1 All
ER 617
Films Rover International Ltd v Cannon Film Sales Ltd [1986] 3 All ER 772
Henry Roach (Petroleum) Pty Ltd v Credit House (Vic) Pty Ltd [1976] VR 309
Klissers Farmhouse Bakeries Ltd v Harvest Bakeries Ltd [1985] 2 NZLR 129 (HC)
Klissers Farmhouse Bakeries Ltd v Harvest Bakeries Ltd [1985] 2 NZLR 140 (CA)
Korbond Industries Ltd v Jenkins [1992] 1 ERNZ 1141
Locabail International Finance Ltd v Agro Export [1986] 1 All ER 901
Longbeach Holdings Ltd v Chia unreported, William Young J, 25 November 1998,
CP182/98
Mason Engineers (NZ) Ltd v Perry [1992] 2 ERNZ 550
Nedax Systems Ltd v Waterford Security [1994] 1 ERNZ 491
Pain Management Systems (NZ) Ltd v McCallum unreported, Panckhurst J, 14 August
2001, HC Christchurch, CP72/01
Peninsula Real Estate Ltd v Harris [1992] 2 NZLR 216
PSM International Plc & McKenzie Plc v Whitehouse [1992] ILR 279
SSC & B Lintas New Zealand Ltd v Murphy [1986] 2 NZLR 436
Todd Taranaki Ltd & Todd Pohokura Ltd v Energy Infrastructure Ltd & Shell
Exploration NZ Ltd unreported, Wild J, 26 January 2007, HC Wellington, CIV 2006-
485-2372
Watson v Dolmark Industries Ltd [1992] 3 NZLR 311
Other workers/site names etc: Dulhunty Power Ltd, J Roughan, B Mathieson, A Yates
Pages: 4
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The New Zealand Fire Service Commission v The New Zealand Professional Firefighters Union
WC 13/07
Heard: 26 Feb 2007, Wellington
Judgment Date: 31 May 2007
Court/Authority/Tribunal: Full Court
Appearances: G Davenport ; P Cranney & C Belich
PROCEEDINGS REMOVED FROM EMPLOYMENT RELATIONS AUTHORITY – No dispute – Parties jointly sought declarations – Interpretation of collective employment agreement – Whether method of payment for public holidays complied with ss 50, 52, 55 Holidays Act 2003 – Firefighters total weekly wage included regular payment for public holidays – Parties submitted payment an enhanced entitlement – Parties entitled to agree on enhanced mechanism for making enhanced payments – HELD – Amount of payment exceeded statutory minimum and was an enhanced entitlement – Payment for public holidays must be made in pay period in which holiday occurred – Timing of payment inconsistent with s55 Holidays Act 2003 – Application granted – Firefighters
This was a joint application for declarations regarding whether the way that the plaintiff paid certain employees for public holidays complied with ss 50, 52, 55 of the Holidays Act 2003.
The collective employment agreement (‘cea”) provided for payment for work performed on public holidays through a ‘total weekly wage’ system. That meant rather than being paid additional wages for each public holiday worked, employees received a regular amount for public holidays added to each fortnightly payment.
The issues were whether the cea complied with the following sections of the Holidays Act 2003 (“the Act”): (i) s50 which requires payment of at least time and a half for working on a public holiday; (ii) s52 which requires all employment agreements entered into after 1 April 2004 to include a provision relating to payment for work on public holidays; and, (iii) s55 which provides an employer must pay an employee for a public holiday in the pay that relates to the pay period in which the holiday occurs.
Both parties submitted that the total weekly wage approach was an enhanced entitlement compared to the statutory minimum. Further, that, just as parties to a cea
could agree to additional payments for working on public holidays in excess of the statutory requirement, they may also agree on an enhanced mechanism for making those additional payments provided that an employee’s entitlement under the Act was not undermined.
Held
(1) What had been transferred to the Court by the Authority was an employment relationship problem requiring resolution within the powers and jurisdiction provided in the Employment Relations Act 2000. The Court was empowered to make the declarations sought but not pursuant to the Declaratory Judgments Act 1908, which reserves jurisdiction under that Act exclusively to the High Court. (para 13)
(2) The total weekly wage exceeded the requirement in s50 of the Act for time and a half and could properly be regarded as an enhanced entitlement within the meaning of s6(2) of the Act. (para 33)
(3) Section 52 of the Act will be satisfied if the employment agreement contains payment provisions which themselves comply with s50 of the Act. The cea met the requirements of s52(2) of the Act . (paras 36-38)
(4) The meaning of the words in s55 of the Act was clear and unambiguous. Payment for the holiday worked must be made in the particular pay period in which the holiday occurred. It followed that payment, in full or in part, could not be made in any other pay period. To the extent that the cea provided that payment for work on any particular public holiday was to be made in part or in full other than in the pay that related to the pay period in which the holiday occurred, the cea was inconsistent with the Act and, pursuant to s6(3) of the Act, it had no effect. (paras 58, 59)
(5) The provisions of the cea relating to payment for work done on public holidays were consistent with the Act with respect to the amount of payment to which firefighters were entitled but not with respect to the timing of that payment. The cea complied with ss50 and 52 but it did not comply with s55 of the Act. (para 60)
Result:
Application granted ; Declarations accordingly ; Costs to lie where they fall
Statutes considered:
Declaratory Judgments Act 1908
ECA s104(1)(h)
ERA s162
ERA s190
Holidays Act 1981 s21
Holidays Act 1981 s21(2)
Holidays Act 2003 s3
Holidays Act 2003 s4
Holidays Act 2003 s4(2)(b)
Holidays Act 2003 s5
Holidays Act 2003 s6
Holidays Act 2003 s6(1)
Holidays Act 2003 s6(2)
Holidays Act 2003 s9
Holidays Act 2003 s27
Holidays Act 2003 s28
Holidays Act 2003 s46
Holidays Act 2003 s48
Holidays Act 2003 s50
Holidays Act 2003 s50(1)(a)
Holidays Act 2003 s51
Holidays Act 2003 s52
Holidays Act 2003 s52(2)
Holidays Act 2003 s52(3)
Holidays Act 2003 s53
Holidays Act 2003 s53(2)
Holidays Act 2003 s53(3)
Holidays Act 2003 s54
Holidays Act 2003 s55
Holidays Act 2003 Part 2
Holidays Act 2003 Part 2 subpart 3
Holidays Amendment Act 2004
Interpretation Act 1999 s5
Cases referred to in judgment:
Air New Zealand Ltd v New Zealand Airline Pilots’ Association IUOW Inc [2006] 1
ERNZ 956 (CA); (2006) 4 NZELR 122
Ashcroft v Ansett New Zealand Ltd [1993] 2 ERNZ 891
Dillon v Chep Handling Systems Ltd [1995] 2 ERNZ 282
Drake Personnel (New Zealand) Ltd v Taylor [1996] 1 ERNZ 324
Manufacturing and Construction Workers Union Inc v Honda New Zealand Ltd
[1996] 1 ERNZ 354
New Zealand Tramways and Public Transport Employees Union Inc v Transportation
Auckland Corporation Ltd [2006] 1 ERNZ 1005
Sears v Attorney-General [1995] 2 ERNZ 121 (CA)
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Timu v Waitemata District Health Board
AC 34/07
Heard: 3 Jul 2006, Auckland
Judgment Date: 7 Jun 2007
Court/Authority/Tribunal: Couch, J
Appearances: G Pollak ; A Russell
DE NOVO CHALLENGE TO DETERMINATION OF EMPLOYMENT RELATIONS AUTHORITY – Unjustified dismissal – Serious misconduct – Alleged assault on patient and abusive language – Procedural fairness – Conflicting accounts – Delegation of investigation – HELD – Decision maker had no contact with witnesses – Failure to take reasonable steps to resolve conflicting information – Failure to disclose suspicions of conspiracy or ulterior motive of witnesses – Fair and reasonable employer in position of decision maker would have made further investigations – Dismissal procedurally unfair – Challenged granted – Plaintiff’s
conduct unacceptable – Remedies reduced by 40% for contributory conduct – Psychiatric nurse
This was a successful de novo challenge to a determination of the Employment Relations Authority which had held the plaintiff’s dismissal was justified.
The plaintiff was employed by the defendant Health Board as a psychiatric nurse in a forensic psychiatric unit for the criminally insane. In June 2004 a patient alleged that
the plaintiff had assaulted him. The plaintiff denied the allegation. There were several witnesses to the alleged assault, some of whom gave conflicting accounts. A number of managers were involved in the investigation and a report was written to the General Manager decision maker. After receiving the report, the General Manager met with the plaintiff and confirmed the finding of serious misconduct contained in the report. The plaintiff was given further time to respond to the issue of penalty. The plaintiff was dismissed in July 2004.
The plaintiff submitted the investigation was deficient. In particular, given the conflicting evidence, further inquiries were required and the decision maker should have conducted those inquiries to resolve issues of credibility.
The defendant submitted the obligation to conduct a full and fair investigation into suspected misconduct did not require an employer to conduct a trial or to test evidence.
Held
(1) The General Manager did not have any contact with anyone who had spoken to the witnesses, let alone the witnesses themselves. He was at least two steps removed from them and had only the bare written record of what it was reported they had said. It was also significant that the defendant’s disciplinary policy expressly provided that the decision maker was to be “actively involved in the disciplinary process”. The General Manager’s very limited involvement did not satisfy that requirement. The extent to which the General Manager was isolated from the primary evidence he needed to evaluate made it unfair for him to be the decision maker. (paras 88-91)
(2) The management team failed to take readily available steps to clarify and resolve the conflicting information they received. In the course of the investigation, it was not established where the witnesses to events were relative to the patient and the plaintiff and relative to each other. No-one appeared to have asked the witnesses about the lighting levels in the corridor at the time in question. (paras 96-98)
(3) On the above and other similar issues, the questions were relatively obvious and the answers were readily available from the people involved. The failure of the defendant’s management team to ask the necessary questions inevitably led to the quality of the information provided to the General Manager being distinctly inferior to what it could have been. His total reliance on that information and his refusal to make his own inquires then led just as inevitably to the investigation being deficient. (para 100)
(4) Given the stark conflict in the evidence provided to the General Manager, his remoteness from the investigation and the relative ease with which he could have carried out further constructive investigation, it was not reasonable for the General Manager to have simply adopted the finding of credibility in the report. A fair and reasonable employer in the General Manager’s position would have stepped back from an immediate decision and made further investigations. (para 104)
(5) The General Manager’s failure to disclose that he suspected: (i) some staff, who witnessed the events, were conspiring to withhold information from the investigation; and, (ii) that one witness had an ulterior motive for reporting the plaintiff was a plain breach of the principles of natural justice and unfair, not only to the plaintiff, but also to the other staff in question. The investigation was seriously flawed. (paras 105-108)
(6) Although, the plaintiff’s conduct was clearly unacceptable and unprofessional, it was not capable of being regarded as serious misconduct justifying dismissal. Assessing the matter as a whole, the Court considered that the plaintiff contributed 40 percent to the situation giving rise to his personal grievance. (paras 122, 124)
(7) It was appropriate that the plaintiff be compensated for his loss of earnings for a period of 6 months. The Court assessed compensation for distress at $8,000. Allowing for the finding of contribution, the amounts payable to the plaintiff were $6,000 for loss of earnings and $4,800 as compensation, plus interest. (paras 128, 130)
Result:
Challenge granted; Reimbursement of lost wages ($6,000 including 40% reduction for contributory conduct) ; Compensation for humiliation etc ($8,000 reduced to $4,800 contributory conduct) ; Interest ; Costs reserved
Statutes considered:
ERA s123(1)(c)(i)
ERA s124
ERA s189(2)
Cases referred to in judgment:
Airline Stewards and Hostesses Union v Air New Zealand Ltd [1990] 3 NZILR 584
Ioane v Waitakere City Council [2003] 1 ERNZ 104
Smith v Christchurch Press Co Ltd [2001] 1 NZLR 407; [2000] 1 ERNZ 624
W & H Newspapers Ltd v Oram [2001] 3 NZLR 29; [2000] 2 ERNZ 448
Whanganui College Board of Trustees v Lewis [2000] 1 ERNZ 397
Reed v Smith & Anor unreported, Judge Palmer, 20 December 1996, CEC 40/96
G Pollak counsel for plaintiff (Hemi Timu)
A Russell counsel for defendant (Waitemata District Health Board)
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White v Auckland Distrcit Health Board
CA 102/07
Heard: 14 May 2007, Wellington
Judgment Date: 8 Jun 2007
Court/Authority/Tribunal: William Young P, Glazebrook and Wilson JJ
Appearances: J Haigh QC and P A Swarbrick ; C H Toogood QC and R M Larmer
COURT OF APPEAL – Practice and procedure – Application for leave to appeal and cross-appeal Employment Court decision – Employment Court found appellant’s dismissal unjustified and ordered permanent reinstatement but no other remedies –- Employment Court discontinued name suppression – Appellant sought to appeal failure to award remedies and order permanent name suppression – Respondent submitted Employment Court incorrectly applied s103A Employment Relations Act 2000 and challenged reinstatement – HELD – Employment Court found no serious misconduct occurred – Reinstatement inevitable – Nothing in remedies challenge – Open justice extremely important – Challenge to name suppression had insufficient prospects of success – Applications dismissed – Senior physician
This was an unsuccessful application for leave to appeal and cross appeal an Employment Court decision.
The appellant was dismissed for taking photographs of his genitals and sending them via his work email and for forwarding a pornographic calendar.
The Employment Court found that the appellant’s dismissal was unjustified and ordered permanent reinstatement (see: AC 10/07, 23 February 2007). Further remedies were declined to reflect the appellant’s contribution. The Employment Court refused to continue to prohibit publication of the appellant’s name. The appellant sought leave to appeal the refusal of compensation for non-economic loss and the discontinuation of the non-publication order.
The respondent sought leave to appeal against the unjustified dismissal finding and permanent reinstatement order. The respondent alleged the Employment Court had
incorrectly applied s103A Employment Relations Act 2000. It submitted the Employment Court should have determined whether the actions were “serious misconduct” because once serious misconduct was established, the Employment Court could not substitute its judgment as to whether dismissal was justified. The Employment Court had failed to answer whether the appellant’s conduct was “serious misconduct”.
Held
(1) The Employment Court made statements tantamount to a finding that the appellant’s behaviour did not amount to serious misconduct. Further, given the extensive findings of fact made by the Employment Court against the respondent, the Court could see no serious possibility that the difference (if any) between the approach taken by the Employment Court and that contended for by the respondent would have been material to the outcome of the case. (paras 7, 8)
(2) Reinstatement was practically inevitable. There was nothing in the proposed appeal on that ground. The Employment Court was well entitled not to order compensation for non-economic loss. (paras 10, 12)
(3) As to name suppression, if the appellant had not challenged his dismissal it was at least likely the whole affair would have remained under wraps and that raised an access to justice issue not addressed by the Employment Court. There were, however, some serious countervailing considerations. Open justice considerations were always extremely important and the reality was that those who litigate necessarily put themselves and their affairs in the public domain. In that context the challenge to the refusal to continue the suppression order had insufficient prospects of success to warrant granting leave to appeal. (paras 15-17)
Result:
Applications dismissed ; Orders accordingly ; No order for costs
Statutes considered:
ERA s103A
Cases referred to in judgment:
BP Oil New Zealand Ltd v Northern Distribution Union [1992] 3 ERNZ 483 (CA)
Muir v Commissioner of Inland Revenue (2004) 17 PRNZ 365 (CA)
W & H Newspapers Ltd v Oram [2000] 2 ERNZ 448; [2001] 3 NZLR 29 (CA)
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Clear v Waikato District Health Board
AC 40/07
Heard: 15 Jun 2007, Auckland
Judgment Date: 28 Jun 2007
Court/Authority/Tribunal: Perkins, J
Appearances: M hammond ; G Bevan
PRACTICE AND PROCEDURE – Application for leave to challenge out of time Authority determination concerning substantive personal grievance – 22 day delay – Authority referred parties to mediation to resolve remedies – Mediation unsuccessful and Authority investigation on remedies pending – Delay due to oversight of plaintiff and counsel – HELD – Reasons for delay explained and arose from unusual circumstances of referral to mediation – Reservation of determination on remedies meant, even if leave refused, scope of any challenge on remedies might result in same liability issues and evidence needing to be heard – No prejudice specifically related to period of delay – Challenge had reasonable prospect of success – Application granted
This was a successful application for leave to challenge out of time a determination of the Employment Relations Authority.
The plaintiff was dismissed and brought a personal grievance alleging unjustified disadvantage and dismissal. The Authority upheld the disadvantage grievance but held the dismissal was justified and directed the parties to mediation concerning remedies.
The parties were unable to resolve the matter at mediation. The issue of remedies was therefore referred back to the Authority for investigation. The investigation was to occur shortly after the present application hearing.
The plaintiff submitted it was her intention to attempt to resolve all matters finally in mediation as she had at that stage decided to dispute all the findings of the Authority
not in her favour. The failure to challenge within time was due to an oversight of the plaintiff and her counsel.
The defendant submitted it would be prejudiced by the delay because of the further substantial costs and daunting effect on witnesses who would have to give evidence
again. The defendant submitted it was entitled to assume from the failure to challenge that the Authority’s determination was being accepted. Finally, the merits of the case did not justify leave.
Held
(1) The reasons for delay were well explained and arose from the unusual circumstances of the referral to mediation on remedies. The delay was not excessive
and counsel moved to remedy the position by filing the present application immediately after the error was discovered. Matters of prejudice raised by the defendant would have existed if the plaintiff had filed her challenge within time. There was no prejudice specifically related to the period of delay. As to the argument that the defendant was entitled to assume the Authority’s determinations were being accepted the matter of remedies remained to be decided and there was no certainty that would be an end of the proceedings. It was likely that at the mediation the plaintiff would have made her dissatisfaction with the determinations known. (paras 12-16, 22)
(2) The reservation of a determination on remedies pending mediation had led to the position where, even if leave was refused, the scope of any challenge on remedies might result in the same liability issues and evidence needing to be heard. An equally lengthy hearing was likely to be required to that, which would eventuate with leave granted. The one disadvantage grievance, which would be covered by the further determination on remedies, was of a substantial nature and was likely to require the
canvassing of a large portion of the evidence heard by the Authority. (paras 10, 18,24,)
(3) The Court needed to be careful not to place too much emphasis on the merits of the challenge, which was just one of the several issues to be considered in the assessment of overall justice. Nevertheless, the Court could make an assessment at a reasonably basic threshold. Where, as in the present case, an applicant for leave could demonstrate reasonable prospects of success, they should not readily be deprived of their rights of appeal. (paras 20 ,21, 25)
Result:
Application granted ; Orders accordingly ; Costs reserved
Statutes considered:
ERA s179(1)
ERA s179(2)
ERA s179(3)
ERA s219
Cases referred to in judgment:
An Employee v An Employer unreported, Judge Couch, 15 May 2007, CC 8/07
Avery v No 2 Public Service Appeal Board [1973] 2 NZLR 86
Bilderbeck v Brighouse Ltd [1993] 2 ERNZ 74
Day v Whitcoulls Group Ltd [1997] ERNZ 541
McDonald v Raukura Haurora O Tainui [2003] 2 ERNZ 322
Peters v Television New Zealand unreported, High Court Auckland, Cooper J, 1 May
2007, CIV 2004-404-003311
Ratnam v Cumarasamy [1964] 3 All ER 933 (PC)
SAS Technologies Ltd v Hollis [2003] 2 ERNZ 98
Stevenson v Hato Paora College Trust Board [2002] 2 ERNZ 103
Woud v Department of Corrections unreported, Judge Travis, 31 August 2004,
AC 37A/04
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Credit Consultants Debt Services NZ Ltd v Wilson & Anor
WC 12C/07
Heard: 28 Mar 2007, Wellington
Judgment Date: 3 Jul 2007
Court/Authority/Tribunal: Full Court
Appearances: L Taylor & M Richards ; T Kennedy & MJ Brewer
PRACTICE AND PROCEDURE – Proceedings removed from Employment Relations Authority – Jurisdiction – Section 187 Employment Relations Act 2000 (“ERA”) – Plaintiff alleged first defendant breached restraint of trade, confidentiality and non solicitation covenants – Plaintiff sought injunctions, compliance order, penalties and damages – Whether Employment Court had original jurisdiction to grant general injunctive relief – HELD – No express power conferred on Court to grant injunctions for matters other than strikes and lockouts – Express power conferred on Court under previous legislation had been given to Authority in the first instance by ss161 and 162 ERA – That came close to express removal of Court’s jurisdiction – At least such removal must necessarily be implied
This was a matter removed from the Employment Relations Authority. The Court held that it did not have first instance jurisdiction to grant injunctions for matters other than strikes and lockouts.
The plaintiff alleged that the first defendant had breached clauses in his employment agreement relating to restraint of trade, non-solicitation and confidentiality and
claimed that the second defendant had incited, instigated, aided or abetted those alleged breaches. It sought from the Authority interlocutory, interim and permanent injunctions. Other relief sought included a compliance order, damages for loss of business attributable to the defendants’ actions, and penalties under s134 of the Employment Relations Act 2000 (“ERA”).
In proceedings removed from the Employment Relations Authority the full Court determined that the Authority had original jurisdiction, and the Court derivative jurisdiction, to grant injunctive relief against the first defendant. The Authority could hear a claim for a penalty under s134 ERA against the second defendant but other claims against the second defendant were to be brought in the courts of ordinary jurisdiction (see: WC 12A/07).
The full Court reserved for the present judgment the issue of whether the Court also had original jurisdiction to grant injunctive relief against the first defendant. The issue was not of direct relevance to the parties. However, in the interests of the Court registry and future litigants who sought to invoke the Court’s original jurisdiction without first applying to the Authority, the Court expressed its views obiter dicta.
Held
(1) Section 187(1)(m) ERA did not give the Court jurisdiction to grant general injunctive relief. That section required that any other functions and powers must be conferred by the ERA or any other Act. That meant that the Court’s powers and functions were limited to those which were conferred on it by statute. There was no express power to grant injunctions other than in relation to strikes and lockouts which had been conferred on the Employment Court by the ERA or any other act. (para 43)
(2) Regulation 6 of the Employment Court Regulations 2000 could not confer a power to grant injunctions unless there was a matter already before the Court. The scheme of the ERA was that, except in limited circumstances such as ss6, 99, and 100, matters came before the Court only by way of the Authority. Regulation 6 did not give the Court original jurisdiction. It was a regulation prescribing the source of procedure and was not part of the substantive statute. It only applied once a matter came before the Court in a manner provided for by the ERA. (para 48)
(3) In the case of injunctive powers, apart from those in respect of strikes or lockouts, the legislation had expressly given the powers previously conferred on the Court under the Employment Contracts Act 1991 to the Authority in the first instance by ss161 and 162 ERA. That came close to an express removal of that part of the Court’s jurisdiction. At the very least such a removal must necessarily be implied. The Court did not have original common law or injunctive jurisdiction other than in relation to strikes and lockouts. (paras 67, 69)
(4) (per Chief Judge Colgan) His Honour reluctantly agreed with the above conclusions. The Court was a creature of statute and the express statutory basis of the former clear jurisdiction was no longer present in the ERA. But to deprive citizens of the established right of access to established remedies from a court, should require more than for Parliament to say nothing about it. It required, as a matter of constitutional principal affecting statutory interpretation, more than Parliament giving that right of access to another body that was not a court. In the absence of compliance with the principle by Parliament, there was a strong case on principle for the former right of access to the same court to remain. (paras 1, 19)
(5) (per Chief Judge Colgan) There might be good practical reasons why a party seeking interlocutory injunctive relief would wish to come to the Court rather than to the Authority. It was ultimately for Parliament to determine where cases were to be heard as questions of access to justice. When Parliament did so again, his Honour respectfully urged it to reconsider the above issues. (para 21)
Result:
Questions answered ; Costs to lie where they fall
Statutes considered:
ECA s73
ECA s76
ECA s79
ECA s103
ECA s104(1)(f)
ECA s104(1)(g)
ECA s104(1)(h)
ECA s104(3)
Employment Court Regulations 2000 r6
ERA s6
ERA s99
ERA s100
ERA s113
ERA s143
ERA s143(fa)
ERA s148(3)
ERA s157(2)(a)
ERA s161
ERA s161(1)
ERA s161(1)(b)
ERA s161(1)(r)
ERA s161(3)
ERA s162
ERA s176(2)
ERA s177
ERA s178
ERA s179
ERA s179(5)
ERA s186(2)
ERA s187
ERA s187(1)(m)
ERA s187(2)
ERA s190
ERA s190(1)
ERA Part10
Employment Relations Amendment Act (No 2) 2004 s59
Interpretation Act 1999 5(1)
High Court Rules R624
Words and phrases: Directly
Cases referred to in judgment:
Axiom Rolle PRP Valuations Services Ltd v Kapadia [2006] 1 ERNZ 639; (2006) 7
NZELC 98,331; (2006) 3 NZELR 390
BDM Grange Ltd v Parker [2006] 1 NZLR 353; (2005) 7 NZELC 97,928; [2005] 1
ERNZ 343; (2005) 2 NZELR 632
In Re Boaler [1915] 1 KB 21
Credit Consultants Debt Services NZ Limited v Wilson and Anor (2007) 8 NZELC 98,
807; (2007) 4 NZELR 372
Credit Consultants Debt Services NZ Limited v Wilson and Anor unreported, Judge
Shaw, 1 May 2007, WC 12B/07
Chester v Bateson [1920] 1 KB 829
Conference of the Methodist Church of New Zealand v Gray [1996] 2 NZLR 554;
[1996] 1 ERNZ 48; (1996) 9 PRNZ 235
Hobday v Timaru Girls High School Board of Trustees [1993] 2 ERNZ 146
Lai v Chamberlains [2006] NZSC 70; [2007] 2 NZLR 7
New Zealand Drivers’ Association v New Zealand Road Carriers [1982] 1 NZLR 374
New Zealand Shop Employees Industrial Association of Workers v Attorney-General
& Ors [1976] 2 NZLR 521
Nicholls v Registrar of the Court of Appeal [1998] 2 NZLR 385; (1998) 4 HRNZ 537
Ports of Auckland Ltd v Auckland City Council [1999] 1 NZLR 601
Raymond v Honey [1983] 1 AC 1; [1982] 1 All ER 756
R v Lord Chancellor; Ex parte Witham [1998] QB 575; [1997] 2 All ER 779
R v Secretary of State for the Home Department; Ex parte Leech [1994] 1 QB 198,
[1993] 4 All ER 539
Swann & Ors v ACI New Zealand Ltd [1990] 3 NZILR 262
X v Y Ltd and NZ Stock Exchange [1992] 1 ERNZ 863
Other workers/site names etc: EC Credit Control Ltd
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Abernethy v Dyena New Zealand Ltd
CC 13A/07
Heard: 19 Jun 2007, Nelson
Judgment Date: 12 Jul 2007
Court/Authority/Tribunal: Travis J
Appearances: N Ironside ; S Wilson
DE NOVO CHALLENGE TO DETERMINATION OF EMPLOYMENT RELATIONS AUTHORITY – Settlement negotiations – Whether accord and satisfaction – Plaintiff submitted no binding agreement reached as written agreement not signed by both parties and signed off by mediator – Defendant submitted oral agreement was binding – HELD – Process agreed by parties required written agreement to be signed by parties and mediator – Process not completed – No accord and satisfaction – Plaintiff able to pursue personal grievance – Challenge granted – Senior process technician
This was a de novo challenge to a determination of the Employment Relations Authority which held that the plaintiff was barred from pursuing his personal grievance.
Following a disciplinary investigation, the plaintiff was demoted with a reduction in salary and given a final written warning. The following day the plaintiff had an accident at work and was on accident compensation for a number of weeks. The plaintiff’s representative and the defendant entered into discussions about the plaintiff’s options. Following negotiations, the plaintiff’s representative informed the defendant they had a deal for an exit package and that he would draw up a record of settlement, which was to be signed by both parties and then sent to the Mediation Services to be signed off under s149 Employment Relations Act 2000 (“ERA”). The defendant signed the record of settlement. The plaintiff was unhappy with the record of settlement and refused to sign. The plaintiff’s representative informed the defendant that the plaintiff was not going ahead with the settlement. When the plaintiff returned to work he was denied access and asked to leave.
The plaintiff lodged a personal grievance alleging unjustified dismissal and unjustified disadvantage, and sought interim reinstatement. The Authority determined that the plaintiff was barred from pursuing his personal grievance because, under verbally agreed terms, he had received accord and satisfaction.
The plaintiff submitted that the negotiations had been conducted on a without prejudice basis and no final agreement had been reached.
The defendant submitted that the matter had been settled by verbal agreement and the plaintiff’s representative had not said the agreement was conditional upon the record of settlement being signed by the parties or the Mediation Service.
Held
(1) The parties intended from the outset to submit any oral agreement reached to the s149 ERA procedure, as they understood it from the plaintiff’s representative’s description. This meant that any agreement reached between the negotiating parties was subject to the plaintiff’s representative reducing the terms to a written record of settlement which would then be sent to the defendant for its approval and then sent to the plaintiff for his approval. It would then go to the mediation service. The mediator would then get in touch with each party to confirm that they understood the terms and were happy with them and that once the mediator signed the record off then there was a binding contract. Although this process is not contained in s149 it was the process agreed by the parties. (para 56)
(2) Where the parties have agreed to such a process there is no binding accord until that process has been completed. The agreed process was not completed because the plaintiff did not approve the record of settlement and did not submit it to the mediation service for the completion of the process as the parties understood it. Unlike Graham v Crestline (cited below) the parties agreed to their understanding of the s149 ERA process in advance and the orally agreed terms were subject to the due completion of that process. There was no binding accord and the challenge must succeed. (paras 57, 58)
Result:
Challenge granted ; Costs reserved
Statutes considered:
ERA s123(1)(c)(i)
ERA s149
Words and phrases: Accord and satisfaction
Cases referred to in judgment:
Abernethy v Dynea New Zealand Limited (2007) 4 NZELR 544; (2007) 8 NZELC
98,908
Carruthers v Whitaker [1975] 2 NZLR 667
Fredricsen v Northland Districts Aero Club Inc unreported, Judge Colgan, 23 April
2001, AC 30/01
Goodall v Marigny (NZ) Ltd [2000] 2 ERNZ 60
Graham v Crestline Pty Limited unreported, Chief Judge Colgan, 15 September 2006,
AC 53/06
Houston v Barker (t/a Salon Gaynor) [1992] 3 ERNZ 469
Ozturk v Gultekin, (t/a Halikarnas Restaurant) [2004] 1 ERNZ 572
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Service and Food Workers Union Nga Ringa Tota Inc v Spotless Services (NZ) Ltd
AC 43A/07
Heard: 11 Jul 2007, Auckland
Judgment Date: 13 Jul 2007
Court/Authority/Tribunal: Colgan, CJ
Appearances: P Cranney, T Oldfield ; S Wilson, K Burson
INJUNCTION – Application for interlocutory injunctions to restrain purported lockouts – Reasons for oral judgment – Defendant purported to lockout employees under s84 Employment Relations Act 2000 (“ERA”) for reasons of safety and health – Defendant demanded that certain employees remain available for work during strike in essential service – Plaintiff alleged demands made under s82 ERA must be lawful – Defendant’s demand not lawful as prevented statutory right to strike – HELD – Plaintiff had arguable case – Balance of convenience and overall justice favoured defendant – Plaintiff’s failure to meet several good faith requirements relevant – Application dismissed – Hospital workers
This was the reasons following an unsuccessful application for interlocutory injunctions to prevent purported lockouts (see: AC 43/07).
The defendant employed members of the plaintiff union in hospital essential services.
The parties had been in bargaining for a collective agreement for a long time. The
parties had exchanged a number of strike and lockout notices, most of which had been withdrawn mutually. The plaintiff then gave further notice of rolling strike action.
The defendant asked for a minimum number of employees to not participate in the strike to ensure patient safety. The plaintiff did not reply and in the absence of agreement the defendant issued lockout notices of selected employees. The defendant demanded a certain minimum number of employees be available for normal duties during the strike action.
The plaintiff submitted that s82(1)(b)(ii) Employment Relations Act 2000 (“ERA”) required the “demands made by the employer” be lawful. The defendant’s demand was not lawful as it sought to coerce employees to abandon their statutory entitlement to strike.
The defendant submitted the lockouts were justified on grounds of health and safety and relied on s84 ERA.
Held
(1) Two separate tests must be established to cause a strike or lockout to be lawful under s84 ERA. First, the person or persons locking out or striking must have a belief that the strike or lockout is justified on the grounds of safety or health. Second, the person must have reasonable grounds to support that belief. Section 84 does not define the class of persons whose safety or health might be saved or improved by the strike or lockout action. Thus, questions of patient safety or health have been covered by s84 ERA even where the safety or health of the staff on strike has been in issue. (para 15)
(2) The plaintiff had an arguable case the lockouts did not meet the statutory definition in s82 ERA. The plaintiff had also made out an arguable case, albeit less strongly, that there were no reasonable grounds for believing that what were intended to be lockouts would be justified on the grounds of safety or health. (paras 17, 19)
(3) Taking account of the effects of the intended strikes and lockouts upon innocent third parties including area health boards, other hospital personnel, and patients, the defendant’s arrangements brought about by its intended lockouts impressed as the lesser of two evils. The economic loss to the employees may be minimal and was able to be met by the defendant if its stance was subsequently proved to be wrong. The balance of convenience favoured the defendant. (paras 23- 25)
(4) There were several elements in the present case which meant it was just overall not to grant relief. First was the plaintiff’s apparent failure to meet several good faith obligations required by parties to employment relationships and in the public health sector was relevant to the overall justice of the case. The plaintiff failed to engage on the important question of working arrangements during the strike. Second, the plaintiff indicated shortly before bringing the present application that it would seek only wage reimbursement for the prospectively unlawful conduct. Third, the plaintiff first notified the defendant of the present claim at about 4 pm on the day before the end of which the lockout was scheduled to commence. (paras 27-29)
(5) Finally, the employer could have locked out its employees to attempt to persuade the union to accept its demands in the bargaining. Although perhaps not alone, when that consideration was added to the other discretionary factors favouring the lockouts being allowed to proceed, it supported a realistic rather than a technical result. The overall justice of the case favoured the defendant’s position. (paras 30, 31)
Comment
(1) The term “safety” in s84 ERA may extend beyond the safety of animate persons and include the safety of inanimate objects or of systems. Section 84 ERA is open-textured. It has been expressed broadly by Parliament, perhaps to enable employers, employees and unions to do extraordinary things that they could not otherwise do, in the interests of safety and health. (para 15)
Result:
Application dismissed ; Costs reserved
Statutes considered:
ERA s82
ERA s82(1)(b)
ERA s82(1)(b)(ii)
ERA s83
ERA s84
ERA s86
ERA s91
ERA s90(3)(a)
Words and phrases: safety
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Service and Food Workers Union Nga Ringa Tota Inc v Spotless Services (NZ) Ltd
AC 43D/07
Heard: 23 Jul 2007, Auckland
Judgment Date: 27 Jul 2007
Court/Authority/Tribunal: Colgan, CJ
Appearances: P Cranney, A Hughes ; S Wilson, K Burson
DECLARATION AND INJUNCTION – Application for declaration that defendant’s actions were not lockouts – Application for injunction preventing further purported lockouts – Reasons for oral judgment – Defendant purportedly locked out employees under s84 Employment Relations Act 2000 (“ERA”) for reasons of safety and health – Defendant demanded that certain employees remain available for work during strike in essential service – Whether demands under s82(1)(b)(ii) ERA must be lawful – Plaintiff alleged defendant’s demand not lawful as prevented statutory right to strike – HELD – Demands must be lawful – Parliament had provided expressly for situations where parties must make alternative arrangements and had not intended any further constraints – Demand that employees not strike unlawful – Applications granted – Hospital workers
These were the reasons for successful applications for a declaration that the defendant’s actions were not lockouts and a permanent injunction to prevent further purported lockouts.
The defendant employed members of the plaintiff union in hospital essential services.
The parties had been in bargaining for a collective agreement for a long time. The plaintiff gave notice of rolling strike action. The defendant asked for a minimum number of employees to not participate in the strike to ensure patient safety and health. The plaintiff did not reply and in the absence of agreement the defendant issued lockout notices of selected employees. The defendant demanded a certain minimum number of employees be available for normal duties during the strike action.
The plaintiff unsuccessfully sought interlocutory injunctions to restrain the purported lockouts (see: AC 43A/07).
The plaintiff submitted that s82(1)(b)(ii) Employment Relations Act 2000 (“ERA”) required the “demands made by the employer” be lawful. The plaintiff submitted the defendant’s demand was not lawful as it sought to coerce employees to abandon their statutory entitlement to strike invoking s238 ERA.
The defendant submitted the lockouts were justified on grounds of health and safety and relied on s84 ERA. The defendant submitted the demand was lawful and represented a genuine attempt to find a solution to protect patient health. The demand did not curtail the right to strike as: (i) employees could still exercise the right if they did not accede to the demand; (ii) the demand related only to a small number of employees who would remain parties to the strike action; and, (iii) the right to strike must be balanced against the rights of the employer.
Following the substantive hearing the Court issued an oral judgment declaring that the defendant’s actions were not lockouts and issuing a permanent injunction (see: AC 43C/07). The present judgment recorded the Court’s reasons.
Held
(1) The demand made must be lawful and not seek to compel an employee to perform an act or omission that was contrary to law and the provisions of the ERA. At common law an employer may only make demands of an employee that are lawful and reasonable. The statute did not go further than that and permit demands, backed up by the sanction of lockout, for conduct that was unlawful. (para 31)
(2) The rights and obligations attendant upon strike action as defined in s81 ERA were both collective and individual. Thus, individual employees could assert an individual right to participate in a strike within the confines of the legislation. (paras 35-36)
(3) It was true in a sense that the employees were “free” to refuse the demand, but it was a refusal that carried significantly adverse consequences. The demand did not afford a real choice. The right to strike was not absolute. There were statutory constraints upon when and how it could be exercised. If those were met the ERA did
not permit or require the Court or any other independent third party to then assess whether the strike action taken was excessive or unreasonable by its infringement of the rights of others including the employer. (paras 37, 38)
(4) Lawfulness of a lockout under s84 ERA could only be considered if the action said to be justified, constituted a lockout in law. (para 42)
(5) Section 238 ERA included an assurance or promise (and acceptance) to act or refrain from acting in a particular manner that contravened a provision in the ERA. In the present case, the employees were asked to “agree” and the union was asked to provide a written undertaking (in effect a solemn promise) which would both be covered by s238 ERA. (para 44)
(6) Although not every waiver of statutory rights was intended to be covered by s238 ERA, here the defendant sought to compel employees, who were lawfully entitled to strike, to instead become strike breakers for an undefined future period and without apparent countervailing benefit to those employees or union. (paras 46, 47)
(7) After considering s97 and Schedule 1B of the ERA, the Court concluded that Parliament, having provided expressly for the particular types of cases in which unions and employers in the public health sector should make alternative arrangements in the event of strikes and lockouts, had not intended any further constraints including in the circumstances of the present parties. (paras 50-57)
(8) The demand that the employees not strike was unlawful. (para 58)
Result:
Application granted ; Declaration accordingly ; Permanent injunction ; Costs in favour of plaintiff (quantum reserved)
Statutes considered:
ECA
ERA s3(a)(ii)
ERA s81(1)(a)
ERA s82
ERA s82(1)(b)(ii)
ERA s84
ERA s90(4)
ERA s97
ERA s100D
ERA s238
ERA Schedule 1B
ERA Schedule 1B cl11
ERA Schedule 1B cl12
ERA Schedule 1B cl13
Industrial Relations Act 1973 s124
Industrial Relations Act 1973 s128
Words and phrases: demands made by the employer
Cases referred to in judgment:
Bickerstaff v Healthcare Hawkes Bay Ltd [1996] 2 ERNZ 680
Kelly v Tranz Rail Ltd [1997] ERNZ 476
New Zealand Amalgamated Engineering Printing and Manufacturing Union Inc v Air
Nelson Limited (2007) 8 NZELC 98,877; (2007) 4 NZELR 568
New Zealand Engineering, Coachbuilding, etc IUOW v Pacific Steel Ltd and Pacific
Metal Industries Ltd [1985] ACJ 511
New Zealand Timber Industry Employees IUOW v Carter Oji Kokusaku Pan Pacific
Ltd [1985] ACJ 299
Tranz Rail Ltd v Rail & Maritime Transport Union (Inc) [1999] 1 ERNZ 460
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White v Auckland District Health Board
SC 37/2007
Heard: Wellington
Judgment Date: 8 Aug 2007
Court/Authority/Tribunal: Elias CJ, McGrath and Anderson JJ
Appearances: J Haigh QC, KM Beck ; CH Toogood QC
SUPREME COURT – Practice and procedure – Application for leave to appeal Employment Court decision – Section 214A Employment Relations Act 2000 – Application to Court of Appeal dismissed – Applicant critical of Court of Appeal decision – Applicant alleged private nature of employment grievances warranted Employment Court taking different approach to name suppression – Respondent submitted Supreme Court had no jurisdiction to grant leave – HELD – No jurisdictional barrier to applicant applying for leave to appeal directly to Supreme Court – High threshold test of extremely compelling circumstances must be met – Merits of name suppression were properly examined by Court of Appeal – Time allocated by Court of Appeal for hearing was sufficient – Name suppression issues did not provide sufficient basis for leave – Application dismissed – Senior physician
This was an unsuccessful application for leave to appeal an Employment Court decision.
The applicant was dismissed for taking photographs of his genitals and sending them via his work email and for forwarding a pornographic calendar.
The Employment Court found that the applicant’s dismissal was unjustified and ordered permanent reinstatement (see: AC 10/07, 23 February 2007). The Employment Court refused to continue to prohibit publication of the applicant’s name.
The applicant unsuccessfully sought leave to appeal to the Court of Appeal regarding the issues of compensation for non-economic loss and the non-publication order. The respondent’s cross-appeal, concerning the substantive decision and reinstatement, was
also unsuccessful (see: CA103/07, 8 June 2007).
The applicant applied for leave to appeal out of time directly to the Supreme Court under s214A Employment Relations Act 2000 (“ERA”) concerning the refusal to grant permanent name suppression.
The applicant submitted the Court of Appeal allowed insufficient time for hearing the respective applications (45 minutes) and inappropriately determined the merits of the Employment Court’s refusal to grant permanent name suppression. He submitted the effect on third parties of the failure to grant permanent name suppression and the private nature of employment grievance disputes warranted leave to appeal to the
Supreme Court being granted.
The respondent submitted the Supreme Court had no jurisdiction to permit a direct appeal to the Court following the refusal of leave by the Court of Appeal.
Held
(1) There was no jurisdictional barrier to the applicant applying for leave to appeal directly to the Supreme Court from the Employment Court’s judgment. The application was out of time but was brought promptly once leave to appeal was refused by the Court of Appeal and the Court considered time should be extended. The high threshold of extremely compelling circumstances referred to in Burke (cited below) must, however, be met before leave under s 214A ERA would be given. (para 6)
(2) The parties were required to file written submissions to the Court of Appeal in advance. In that context there was no basis for concern over the time allocated by the Court for the hearing of the leave applications. (para 8)
(3) The merits of name suppression were properly examined by the Court of Appeal. The evaluation of them legitimately formed part of the Court’s reasoning for its overall conclusion that the applicant’s proposed appeal had insufficient prospects of success to warrant granting leave to appeal. (para 8)
(4) The consequences on third parties of lifting name suppression were explicitly addressed by the Court of Appeal and were only one aspect of the considerations taken into account. In the absence of some failures of process of addressing the matter, consequences for third parties raised no extremely compelling circumstances that warranted the hearing of an appeal by the Supreme Court. (para 10)
(5) The issue of whether the private nature of employment grievances warranted the Employment Court taking a different approach to name suppression than that applied by other courts, and in particular those exercising the criminal jurisdiction, came closest to raising an issue that meet the criteria for the Supreme Court to grant leave to appeal. However, in the circumstances of the present case, the point would not provide a sufficient basis for the applicant to advance an argument having any prospect of success in an appeal to the Supreme Court. (para 11)
Result:
Application dismissed ; Orders accordingly ; No order for costs
Statutes considered:
ERA s214A
Court of Appeal (Civil) Rules 2005 R23
Supreme Court Act 2003 s7(b)
Supreme Court Rules 2004 R11(4)
Cases referred to in judgment:
Burke v Western Bay of Plenty District Council (2005) 18 PRNZ 560 (SC)
Clark v R [2005] 2 NZLR 747; (2005) 22 CRNZ 52 (SC)
White v Auckland District Health Board unreported, William Young P, Glazebrook
and Wilson JJ, 8 June 2007, CA102/07
X v Auckland District Health Board unreported, Chief Judge Colgan, 23 February
2007, AC 10/07
Pages: 3
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Hansells (NZ) Ltd v Ma
AC 53/07
Heard: 6 Sep 2007, Auckalnd
Judgment Date: 14 Sep 2007
Court/Authority/Tribunal: Travis, J
Appearances: R Towner ; S Mitchell, T Oldfield
NON DE NOVO CHALLENGE TO DETERMINATION OF EMPLOYMENT RELATIONS AUTHORITY – Dispute – Application and interpretation of collective agreement – Whether employee entitled to both redundancy compensation and severance payment – Evidence – Whether evidence about pre-contractual bargaining admissible – HELD – Pre-contractual negotiations could not be used to aid interpretation – In present case, terms “severance payment” and “redundancy compensation” synonymous – Defendant not entitled to additional severance payment – Court’s interpretation consistent with parties’ subsequent conduct – Process worker
This was a successful non de novo challenge to a determination of the Employment Relations Authority which had held that the defendant was entitled to a severance pay in addition to redundancy compensation.
The defendant was made redundant from the plaintiff’s food processing plant. The collective agreement covering her work contained a redundancy clause. The second sub-clause made provision for a “severance payment to that employee, in addition to that employee’s contractual notice requirement, of 4 weeks.” The sub-clause, after discussing transfer of employees to a new employer, stated: “Should the employee not transfer to the new employer, the provisions relating to redundancy compensation above shall apply”. The third sub-clause set out entitlements to “redundancy compensation” for employees with more than 12 months service.
When the defendant and others were made redundant the relevant union became involved in negotiating final redundancy payments, including payment of 2 weeks redundancy for those who had 6 months service. The claim for 4 weeks severance payment was first made in the defendant’s statement of problem.
The plaintiff sought to introduce evidence of the union’s claims in bargaining for the collective agreement which did not include an extra 4 week severance payment and pointed to the union’s conduct during and after the redundancies were announced, to show the parties did not intend two separate entitlements. The plaintiff submitted the comma following the word “requirement” was a grammatical error and the “4 weeks” related to the notice period not the severance payment. The “severance payment” and the “redundancy compensation” were the same.
The defendant submitted that on a plain reading of the clause she was entitled to both a severance payment and redundancy compensation. The Court need not look at extrinsic aids. The defendant submitted the plaintiff’s evidence of the parties’ negotiations was inadmissible.
Held
(1) The point had not yet been reached where pre-contractual negotiations could be called on in aid of interpretation, unless they constituted an agreed meaning or a common assumption about a clause which finally appeared in the written contract. (para 35)
(2) The plain meaning of the second sub-clause, with the commas in place, clearly contemplated a severance payment of “4 weeks”. The second sentence, which stated that in the case of redundancy the period of notice shall in no case be less than “four weeks” lent support to the view that the “4 weeks” in the first sentence related not to the contractual notice requirement, but to the severance payment. However, because of subsequent inconsistencies, little guidance could be derived from the needless repetition as to whether or not it was meant to link the “4 weeks” to a severance payment or to the employee’s contractual notice requirement in the first sentence. (paras 55, 56)
(3) The greatest difficulty facing the defendant was the words “redundancy compensation above”. Those words denoted a clear intention to refer to what had gone above, because the last line referred also to notice as provided for above. The only redundancy compensation referred to above could be the words “severance payment”. (para 59)
(4) There appeared to be a difference between a “severance payment” and “redundancy compensation”. The dictionary defined “severance pay” as an amount paid to an employee on the early termination of a contract. That termination was not linked in that definition to redundancy which could, of course, be one reason for the early termination of the contract, but not the only reason. “Redundancy of a person” was defined as being no longer needed at work and therefore unemployed. (para 60)
(5) In the present case the severance payment was to be made to the employee only when that person’s employment was terminated by reason of redundancy. That made the terms “severance payment” and “redundancy compensation” synonymous. (para 61)
(6) Whilst the bulk of the document appeared to have been correctly grammatically expressed, that was not entirely true. The poorer the quality of the drafting of a contract, the less willing any Court should be to be driven by semantic niceties to attribute to the parties an improbable and unbusinesslike intention. The clause must be read as meaning that there would be a severance payment by reason of redundancy, in addition to the employee’s contractual notice requirement of 4 weeks. That did less violence to the clause than requiring the word “above” to be read “below”. (paras 62-64)
(7) The Court was fortified in the above view because it was consistent with the subsequent conduct of the parties from the point of time that the redundancies were announced right through until the filing of the statement of problem. The interpretation contended for by the defendant was also inconsistent with the union’s conduct when negotiating final redundancy payments. (paras 38, 65, 66)
(8) The challenge was successful and the defendant was not entitled to a “severance payment of 4 weeks”. (para 68)
Result:
Challenge granted ; Costs reserved
Statutes considered:
ERA s69M
ERA s69N
ERA s129
ERA Part 6A
Words and phrases: severance payment ; redundancy compensation
Cases referred to in judgment:
Air New Zealand v Nippon Credit Bank Ltd [1997] 1 NZLR 218
Aoraki Corporation Ltd v McGavin [1998] 1 ERNZ 601; [1998] 3 NZLR 276
Association of Staff in Tertiary Education v John Webster, CEO, Unitec Institute of
Technology [2006] 1 ERNZ 37
Association of Staff in Tertiary Education Inc: ASTE Te Hau Takitini o Aotearoa v
Hampton, Chief Executive of the Bay of Plenty Polytechnic [2002] 1 ERNZ 491
A-G v Dreux Holdings Limited (1996) 7 TCLR 617 (CA)
Brownsons Holdings (1999) Ltd v The Plaza Pakuranga Ltd HC AK CIV-2004-404-
2113 30 May 2006
Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 All
ER 98
McKechnie Pacific (NZ) Ltd v Clemow [1998] 3 ERNZ 245
Mitsui Construction Co Ltd v A-G of Hong Kong (1986) 33 BLR 1
New Zealand Fasteners Stainless Ltd v Thwaites [2000] 1 ERNZ 739
New Zealand Merchant Service Guild IUOW Inc v Interisland Line a Division of
Tranz Rail Ltd [2003] 1 ERNZ 510
Prenn v Simmonds [1971] 1 WLR 1381
Spotless Services (NZ) Ltd v Service and Food Workers Union Nga Ringa Tota Inc
unreported, Judge Perkins, 10 August 2006, AC 44/06,
Sword v Telecom New Zealand Ltd [1998] 3 ERNZ 1228
Verissimo v Walker [2006] 1 NZLR 760
Wellington etc Local Body Officers IUOW v Westland Catchment and Regional Water
Board [1989] 3 NZILR 385
Yoshimoto v Canterbury Golf International Ltd [2004] 1 NZLR 1
Yoshimoto v Canterbury Golf International Ltd [2001] 1 NZLR 523
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