Brill v Labour Inspector - [2017] NZCA 169

IN THE COURT OF APPEAL OF NEW ZEALAND

CA701/2015
[2017] NZCA 169

BETWEEN	BARRY EDWARD BRILL Appellant
AND	LABOUR INSPECTOR (MELISSA ANN MACRURY) Respondent

Hearing:	16 February 2017
Court:	Randerson, French and Cooper JJ
Counsel:	Appellant in person S V McKechnie and R D Garden for Respondent
Judgment:	9 May 2017 at 12.00 pm

JUDGMENT OF THE COURT

AWe answer the two questions of law submitted for determination by this Court:
(i)“What threshold must the Labour Inspector meet in order to obtain authorisation under s 234(2) of the Employment Relations Act 2000?”

The Labour Inspector must satisfy the Employment Relations Authority that there is a tenable cause of action.
(ii)“What does the Labour Inspector have to prove to establish that any officer or director or agent of the company has “directed or authorised the default in payment” within the meaning of s 234(3)?”

The Labour Inspector must prove the officer, director or agent knew the payment was in default of the company’s obligations under the Minimum Wage Act 1983 or the Holidays Act 2001. The relevant knowledge may be proved by direct evidence or by inference.
BThe appeal is allowed.
CThe respondent is ordered to pay the appellant costs for a standard appeal on a band A basis together with usual disbursements.
DCosts in the Employment Court are to be determined by that Court in accordance with this judgment.

____________________________________________________________________

REASONS OF THE COURT

(Given by French J)

Introduction

Mr Brill is the sole director of a company.[1] The Labour Inspector wants to make him personally liable pursuant to s 234 of the Employment Relations Act 2000 (the Act) for the company’s underpayment of an employee’s minimum wage and holiday pay entitlements.
[1]The sole shareholder is another company in which Mr Brill is a majority shareholder and the sole director.
The key issue for determination is whether the Labour Inspector must prove Mr Brill knew the company was under-paying the employee or whether it is sufficient he authorised the payments in question.

Background

The proceedings in the Employment Relations Authority

The company of which Mr Brill is the sole director failed to pay its employee correctly in accordance with its obligations under the Minimum Wages Act 1983 and the Holidays Act 2003. That resulted in the Labour Inspector issuing proceedings against the company for recovery of the arrears in the Employment Relations Authority (the Authority).[2] The Labour Inspector also applied to the Authority for authorisation to bring an action for recovery against Mr Brill in his personal capacity under s 234 of the Act.
[2]Labour Inspector v Cypress Villas Ltd [2014] NZERA Auckland 124 [Authority Decision].
Section 234 provides that in certain specified circumstances an officer, director or an agent of a company may be held personally liable for minimum wages and holiday pay owing by the company to its employee. The section relevantly states:
234Circumstances in which officers, directors, or agents of company liable for minimum wages and holiday pay
(1)This section applies in any case…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Brill v Labour Inspector

Details

AGLC: Brill v Labour Inspector [2017] NZCA 169
Case: [2017] NZCA 169
Decision Date: 9 May 2017 at 12.00 pm

CaseChat Overview and Summary

In the Court of Appeal of New Zealand, Barry Edward Brill, the sole director of a company, appealed against a decision of the Employment Court regarding his potential personal liability for the underpayment of an employee's wages. The Labour Inspector sought to hold Mr Brill liable under section 234 of the Employment Relations Act 2000 for the company's failure to pay minimum wages and holiday pay. The central legal issues were whether the Labour Inspector needed to demonstrate that Mr Brill knew about the underpayment or if it was enough that he authorised the payments. The Court was asked to determine the threshold the Labour Inspector must meet to obtain authorisation and what the Inspector must prove to establish that an officer, director, or agent directed or authorised the default in payment.

The Court of Appeal concluded that the Labour Inspector must satisfy the Employment Relations Authority that there is a tenable cause of action to obtain authorisation. Moreover, to establish that any officer, director, or agent directed or authorised the default in payment, the Inspector must prove that the individual knew the payment was in default of the company's obligations under the Minimum Wages Act 1983 or the Holidays Act 2003. The Court rejected the notion that mere authorisation without knowledge was sufficient, emphasising the need for a positive action and actual knowledge of the default. The appeal was allowed, and the Labour Inspector was ordered to pay Mr Brill's costs for the appeal. The Court also directed that costs in the Employment Court are to be determined in accordance with this judgment.

Orders