Carter Holt Harvey Limited v Yukich

[2004] NZCA 55

IN THE COURT OF APPEAL OF NEW ZEALAND

CA42/04

BETWEENCARTER HOLT HARVEY LTD

Appellant

ANDLOU YUKICH

Respondent

Hearing:19 April 2004

Coram:McGrath J
Hammond J
O'Regan J

Appearances:  P T Kiely and R M Larmer for Appellant

G M Pollak for Respondent

Judgment:28 April 2004 

JUDGMENT OF THE COURT DELIVERED BY HAMMOND J

[1]       We have before us an application by Carter Holt Harvey, which seeks leave to appeal to this Court, pursuant to s214 of the Employment Relations Act 2000, against a decision of the Employment Court.

[2]       The respondent, Mr Yukich, was an employee of Carter Holt Harvey at the Kinleith Pulp and Paper Mill.  He was a maintenance electrician.  Mr Yukich was also very much involved in workplace unions.  The Employment Relations Authority found that the constructive dismissal of Mr Yukich from his employment with Carter Holt Harvey on 7 December 2002 was unjustified.

[3]       The Authority declined to order Mr Yukich’s reinstatement to that employment but left the question of the appropriate remedies to mediation between the parties. Both parties proceeded to appeal against the decision of the Employment Relations Authority in the Employment Court.

[4]       Judge Colgan delivered a judgment in the Employment Court proceedings (ARC58/02) on 16 February 2004.  The Judge confirmed that Mr Yukich’s constructive dismissal was unjustified in all the circumstances as they had pertained between the employer and the employee. 

[5]       The Employment Relations Authority had declined to reinstate Mr Yukich to his former employment.  That declinature was upheld by Judge Colgan.

[6]       The Employment Court held that the monetary compensation to be awarded to Mr Yukich under s124 of the Employment Relations Act 2000 should be reduced by 50 percent (increasing the Employment Relations Authority’s reduction of 30 percent) with respect to remuneration loss and distress compensation.

[7]       Remuneration loss was calculated at $76,687.73 (gross) for 58 weeks’ work (reducing in fact to $38,343.86 for the s124 deduction). 

[8]       A reduced award for distress was allowed under s123(c)(i) of $5,000. 

[9]       An allowance was to be made for superannuation losses, the final figure to be resolved by the parties, with, if necessary, leave reserved to apply.

[10]     Mr Yukich was also awarded redundancy compensation under s123(c)(ii).  There was some dispute between the parties as to the amount of that compensation.  Mr Yukich’s claim was over $115,000; Carter Holt Harvey calculated the figure at closer to $50,000.  Again it was left to the parties to settle that figure, with leave reserved to apply.

The basis of leave applications to this Court

[11]     Section 214 of the Employment Relations Act 2000 provides that a party to a proceeding under the Act who is dissatisfied with a decision of the Employment Court (other than a decision relating to the construction of an individual employment agreement) as being wrong in law may with the leave of this Court appeal to this Court against the decision.  This Court may grant leave if, in the opinion of the Court, the question of law involved in that appeal is one that, by reason of its general or public importance or for any other reason, ought to be submitted to this Court for its decision.  In granting leave under this section this Court may, in its discretion, impose such conditions as it thinks fit, whether as to costs or otherwise.

[12]     The question whether the character of issues sought to be appealed raise a question of law has been as troublesome in the employment context as in most other areas of the law.  It is not necessary for the purposes of this application to give that question extended consideration.  It is sufficient for present purposes to note that a question of law arises if (1) the Employment Court has misdirected itself in law or misunderstood or misapplied the law; (2) the decision has been made without any evidence to support it; or (3) the decision offends reason or is one to which the Court could not reasonably have come to (i.e., it is perverse in a legal sense).

[13]     As a general proposition, this Court must be persuaded that the Employment Court’s conclusion on the facts was wrong, in the sense that no person acting judicially and properly instructed as to the relevant law could have come to the determination (Ogilvy & Mather (New Zealand) Limited v Turner [1996] 1 NZLR 641 (CA)). And so long as the Employment Court takes into account relevant factors and excludes irrelevant factors in making a discretionary assessment this Court will not interfere with that assessment (Gallagher Group Limited v Walley [1999] 1 ERNZ 490 (CA) and Carter Holt Harvey Ltd v Pirie [1997] ERNZ 648 (CA)).

The issues sought to be advanced to this Court

[14]     Carter Holt Harvey does not now seek to challenge the dismissal as such.  All of the points it wishes to advance to this Court go to the question of remedies.  It is convenient to take each of these points separately, although for convenience, and for reasons which will become apparent hereafter, we think it more convenient to organise the points under five heads.

(a)      Lost remuneration

[15]     In his submissions as originally framed, Mr Kiely put this issue thus: “Was an award of 58 weeks’ lost remuneration manifestly excessive in the circumstances and having regard to previous case law.”  In argument, he referred to Air New Zealand v Johnston [1992] 1 ERNZ 700 (CA) and Telecom South v Post Office Union [1992] 1 ERNZ 711 (CA) for the propositions that the (then) Labour Court was required to act on the basis of principle and to have regard to the level of its awards in its other decisions and not to depart from them without explanation and good reason.

[16]     Mr Kiely relied upon the compendium of factors referred to by the various Judges in this Court in Telecom South (as extracted in the head note to Telecom South in the Employment Reports of New Zealand) as follows:

(a)   the salary and nature of the position held;

(b)   the period for which the employee could reasonably have expected to work but for the dismissal;

(c)   consistency with other grievance awards;

(d)   Parliament’s expectation of moderation;

(e)   the competing interests of workers’ rights to work and their legitimate interest in job security and employers’ rights to manage;

(f)    the overall award of remedies to a grievant;

(g)   what the contractual termination period was, or what the “reasonable notice” to the grievant would have been at common law;

(h)   the length of the grievant’s service.

[17]     It should be noted that that list was simply a convenient extrapolation by the editors of the law report concerned.  However, it appears that none of the members of the Court expressly dissented from any of those factors.

[18]     Before us, Mr Kiely initially argued that an amount equal to 12 months’ salary is an upper limit for the dismissal of senior management persons.  He relied upon an observation of Richardson J (at page 723 in Telecom South) that “ordinarily it will be difficult to justify an award of compensation … for a senior management employee substantially in excess of a year’s salary overall.”  Based on that proposition, Mr Kiely said that this award was out of the range available for a case of this kind.  Clearly the applicant’s concern here is that there should not be a figure of this kind which could become regarded as something like a benchmark figure (particularly in the case of an employer such as Carter Holt Harvey, which employs in excess of 8,000 persons).

[19]     To put the matter on that footing runs into the usual difficulties of a challenge to a discretionary assessment (as to which see the cases cited in Brooker’s Employment Law at 1-2496(b), paragraph 4).

[20]     As the argument developed, however, Mr Kiely changed his stance somewhat to a sounder basis namely that at paragraph 141 of the judgment under appeal the Judge had not distinctly addressed the relevant criteria as set out in Telecom South (and in particular the nature of the position held by Mr Yukich as an electrician).  In a distinctly attenuated holding all the Judge said was, “I find that, but for Mr Yukich’s unjustified dismissal in November 2001, he would probably have continued to work for CHH until dismissed by reason of redundancy along with the whole of the mill’s maintenance work force in January 2003.”

[21]     In our view, there is at least an arguable case that the Judge failed to distinctly consider the appropriate criteria and was thereby led into error as to the extent of the award in fact made.  It may also be that, on closer examination, the award is “outside the range” which is fairly open for cases of this kind and we would not wish to be taken as restricting argument on that point when the merits of the case fall for consideration.

[22]     Leave to appeal will therefore be granted with respect to this issue of whether the award of 58 weeks’ lost remuneration was appropriate.

(b)      Redundancy

[23]     To understand this potential head of appeal, it is necessary to add that s123(c)(ii) of the Act provides that the Authority or Court may provide remedies for “loss of any benefit, whether or not of a monetary kind, which the employee might reasonably have been expected to obtain if a personal grievance had not arisen.”

[24]     The Employment Court held that the probabilities were that Mr Yukich would have worked on with Carter Holt Harvey until 19 January 2003 at which time all maintenance workers at the Kinleith site were dismissed by reason of redundancy.

[25]     Mr Kiely accepted that redundancy entitlements may be awarded under s123(c)(ii).  He said however that the issue for appeal is to determine a point at which post-termination redundancy entitlements “become too remote.”  His argument is that redundancy entitlements may not be awarded post any period for which loss of earnings and/or lost remuneration has been awarded.  Further, he said it would be submitted that the effect of a 50 percent reduction in remedies precludes an award of redundancy entitlement in this case.  This on the grounds that lost remuneration is actually only to be paid for 29 weeks, “during which time no redundancy entitlements arose.”  To put this another way, by reason of the 50 percent reduction, it is said that effectively Mr Yukich had been notionally removed from the time at which redundancy would otherwise have arisen, and hence the Employment Court did not have jurisdiction to make any award under s123(c)(ii).

[26]     We are obliged to say (without determining) that we have some reservations as to whether an argument based on the statutory construction of s123, that “redundancy” is not the loss of a “benefit” within the meaning of the section has any real prospect of success.  However, the complication raised by the 50 percent reduction ordered by the Judge does, we think, raise a question of law, and one of general importance, of such a character that leave should be, and is, granted under this head.

[27]     In the result, because the redundancy compensation issues overlap somewhat, we give leave to advance on appeal the issues of both the award of post-termination redundancy entitlements per se, and the effect the 50 percent reduction for contribution has on the award of post-termination redundancy entitlements.

Mitigation

[28]     The fourth question of law identified by the appellant was framed as, “did the Employment Court apply the correct legal approach to the respondent’s duty to mitigate his loss?”  As so framed, the concerns of Carter Holt Harvey are somewhat misstated.  For, it was common ground before us that the obligation on Mr Yukich’s part mirrored the common law obligation to take all reasonable steps in the particular circumstances to mitigate his loss.

[29]     What Mr Kiely then said, was that the Court had “misapplied” the law in three critical respects:

(a)The Employment Court “introduced a gloss that an employee who is seeking reinstatement in some way has a lower obligation to mitigate their loss”.  Reference was made in particular to paragraph 144 of the Employment Court decision where it was held that for Mr Yukich to have accepted long-term employment elsewhere would have compromised the feasibility of reinstatement.  The concern here is that, if the judgment is fairly to be read as suggesting that by seeking alternative employment the duty to mitigate loss is less onerous on an applicant who is seeking reinstatement, then that is an erroneous legal gloss on the mitigation principle.

(b)The Employment Court accepted that voluntary work for a trade union did constitute (in part) an attempt to mitigate loss.  Mr Kiely wishes to submit that it is wrong as a matter of law to treat voluntary work as evidence of mitigation of loss.

(c)It was submitted that the Employment Court failed to take into account evidence that employees with comparable skill sets (i.e. other trades people) whose employment had also been terminated by Carter Holt Harvey, were able to secure alternative employment.

[30]     Whilst we have some reservations that points (a) and (b) are to be read in the judgment under review entirely as Mr Kiely suggests they should be read, we are satisfied that, if so read (and they are not entirely clear passages) they raise questions of law of a character which are appropriate for appeal to this Court.  So far as those two points are concerned therefore, we grant leave.

[31]     As to point (c), in our view, on a consideration of the judgment as a whole Judge Colgan was well aware of the context of Mr Yukich’s employment; he was properly apprised of the steps which Mr Yukich had taken; and what had happened with respect to other employees.  There was evidence on which the Judge could come to the view he in fact came to.  Leave is therefore declined to appeal on what, in essence, is a purely factual point.

Was the rehearing “de novo”?

[32]     Mr Kiely framed the suggested question under this head as follows: “Does the Employment Court have jurisdiction in a non-de novo challenge to consider matters that were not put before the Authority and that are not identified as questions of fact or law that have been challenged in the challenger’s Statement of Claim?”

[33]     This somewhat technical, adjectival question, requires some further reference to the statute.  Section 179 of the Employment Relations Act 2000 provides that a party to a matter before the Authority who is dissatisfied with the determination of the Authority or any part of the determination may elect to have the matter heard by the Employment Court.  This election is to be made by way of a Statement of Claim.  Section 179(3) requires the challenger to state whether or not it is seeking a full hearing of the entire matter (which the section defines as a hearing de novo).  If the challenger does not seek a hearing de novo it is required by s179(4) to specify the alleged error of law or fact.  Mr Kiely submitted that this means that the challenge is then in the nature of a true appeal, and thus is restricted to the issues that have been raised in the Authority.

[34]     What happened in this case is that each of the parties filed a challenge to the Authority’s determination by filing a Statement of Claim, and each party elected that the challenge was to be “non-de novo”.  The essence of Mr Kiely’s submission was that if on a non-de novo challenge the Court is restricted to considering those issues that were previously raised in the Authority then the Employment Court was precluded from considering the redundancy issue and hence the award made to Mr Yukich was nugatory.

[35]     The essential objective of this head of submissions is therefore an attempt (adjectivally) to shut Mr Yukich out of any possibility of redundancy compensation, at least in the absence of an entirely fresh hearing on that point (if such could now be had).

[36]     Counsel took us in some detail through the steps (of a case management variety) which took place prior to the matter coming on for hearing in the Employment Court.  We do not find it necessary for present purposes to recite all of those steps.  We are quite satisfied that a fair assessment of the course which events took from the filing of the respective statement of claims, reveals that the Employment Court was justified in proceeding as it did; and the Court did not proceed over any objection of the parties to the manner in which it in fact proceeded.

[37]     What the Court did was to hold a full rehearing on the points in issue before it.  In part this was because, as Mr Kiely explained, no permanent record in a formal sense was taken of the proceeding before the Authority (which is not under the present legislation of the true character of a court) and hence the Employment Court had no alternative but to rehear and reconsider the entirety of the evidence.  Secondly, and even more importantly, circumstances had materially changed between the time of the hearing before the Authority and the matter reaching the Employment Court.  Whereas previously redundancy had not been an issue, by the time the matter reached the Employment Court it was very distinctly an issue on account of the events which had taken place at Carter Holt Harvey.  It was therefore entirely appropriate for the Employment Court to proceed as it did, and, as with any litigation, to endeavour to see that all issues between the parties were resolved at the one hearing.  Finally, under this head we can see no material prejudice to Carter Holt Harvey in the Employment Court having proceeded in the manner it in fact proceeded.

[38]     Leave to appeal under this head is therefore declined.

The obligation to attend work

[39]     The Employment Court made a factual finding that Mr Yukich had not applied for annual leave before absenting himself from work.  Mr Kiely said that it would be submitted that, in the absence of an application for leave, there is no legal obligation on an employer to advise an employee that he or she must attend work.  He said that the correct legal position is that an employee is required to be at work unless they have obtained authorised leave, and that in stating the reverse, the Employment Court made an error of law.

[40]     On closer examination, we consider this suggested question too, at least in this case, to be an attempt to challenge a factual finding.  A fair reading of Judge Colgan’s decision we think, is that the Judge was saying that it was Carter Holt Harvey’s failure to get the position squarely nailed down as to the basis on which (if any) Mr Yukich could take leave on the occasion which was in fact the immediate cause of this whole imbroglio.  There was a great deal of manoeuvring between the parties, through which we were taken again in some detail, and which does not reflect particular credit on either party.  But the Judge could fairly come to the view that, in the circumstances as they arose, the employer had insufficiently got the position plain in the confused situation which had arisen between the parties.  There was evidence on which the Judge could have come to that view; indeed we think in coming to that view the Judge was, in this case, plainly right.

[41]     In any event, this issue has no relevance to the points of substance that fell for determination.  The appellant seeks to assert a self-evident truth, in a vacuum. 

[42]     Leave to appeal will be refused under this head.

Conclusion

[43]     The application for leave to appeal is therefore allowed in part, and only to the extent set out in this judgment.

[44]     As to costs, each party has enjoyed a measure of success on this application.  Each party will therefore bear their own costs.

[45]     To avoid any uncertainty, we confirm that the fixture which has been allocated for the admission of further evidence on the hearing of the appeal still stands.  This Court records that it gave a firm indication that it ought to be possible, between counsel, to have the evidence which is sought to be admitted reduced to affidavit form prior to that date so that, if necessary, precise argument can be had on that issue.

.

Solicitors:
Kiely Thompson Caisley, Auckland for Appellant
Garry Pollak & Co, Auckland for Respondent