Fujifilm Business Innovation New Zealand Limited v Whittaker

[2021] NZHC 3292

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2017-404-2073

[2021] NZHC 3292

BETWEEN

FUJIFILM BUSINESS INNOVATION NEW ZEALAND LIMITED

First plaintiff

FUJIFILM LEASING NEW ZEALAND LIMITED
Second plaintiff

FUJIFILM BUSINESS INNOVATION ASIA PACIFIC PTE LIMITED

Third plaintiff

AND

NEIL WHITTAKER

First defendant

MARK DONALD ALLRIGHT
Second defendant

Continued overleaf

Remote hearing:

29–30 November 2021

Appearances:

M D O’Brien QC, W N Fotherby and C F Anyon-Peters for plaintiffs

J A Craig and J I Kerkin for first defendant
D P Hoskin and P J Muir for second defendant
S M Hunter QC and M J McGoldrick for third defendant

Date of judgment:

3 December 2021

JUDGMENT OF JAGOSE J

[Application for leave to bring second interlocutory application]

This judgment was delivered by me on 3 December 2021 at 1.00pm.

Pursuant to Rule 11.5 of the High Court Rules.

………………………… Registrar/Deputy Registrar

FUJIFILM BUSINESS INNOVATION NEW ZEALAND LTD v WHITTAKER [2021] NZHC 3292 [3

December 2021]

GAVIN POLLARD

Third defendant

ERNST & YOUNG
Fourth defendant

[1]    The individual defendants, having failed on their prior interlocutory application to strike out the plaintiffs’ then second (now first) cause of action, now seek leave to apply again for the same order.1 Because (if leave was granted) time then to determine the substantive application before August  2022 trial  was  uncertain,     I directed the applications for leave and strike out be heard together.2

Background

[2]    My 21 (and supplementary 22) June 2021 judgments determined the individual defendants’ interlocutory applications to strike out the plaintiffs’ first, second and fourth causes of action.3 I referred to the plaintiffs by their corporate group name, Fuji Xerox, since changed to Fujifilm.

[3]    I struck out the first and fourth causes of action, but dismissed the application to strike out the second cause (which, given the first cause’s strike out, now constitutes the first cause of Fujifilm’s second amended claim). On that second cause, Fuji Xerox pleaded it made payments to the individual defendants “as a result of a mistake”. The mistake was as to its revenue reflected in its financial statements, which it alleged “was materially overstated”. It seeks to recover the payments.

[4]    Common to the prior applications was if the particular cause was susceptible to the Employment Relations Authority’s exclusive jurisdiction. As the law then was understood, the issue was if the cause:4

… [arose] “independently” of the individual defendants’ employment relationship with Fuji Xerox. [It] will not if the ‘essence’ of the claim is

1      High Court Rules 2016, r 7.52(1).

2      Fuji Xerox New Zealand Ltd v Whittaker HC Auckland CIV-2017-404-2073, 12 October 2021 (Minute of Jagose J) at [4(a)].

3      Fuji Xerox New Zealand Ltd v Whittaker [2021] NZHC 1469 at [26] and [57] (supplemented by

Fuji Xerox New Zealand Ltd v Whittaker [2021] NZHC 1492 at [6]).

4      At [15] (footnote omitted).

employment-related; if the employment relationship is a necessary component of the claim.

[5]    I held that to be so for the first and fourth causes, for alleged breaches of duty, but not so for the second cause, for money had and received:5

An action for money had and received is a restitutionary remedy, which generally is “to correct normatively defective transfers of value, usually by restoring the parties to their pre-transfer positions”. The ‘defect’ on an action for money had and received is that “the money would not have been paid, but for a mistake of fact which [the payer] made”. Payment in excess of contractual entitlements does not mean the claim for its recovery necessarily also is contractual; the action only is ‘quasi-contractual’. The law on recovery of mistaken payments relies on correction of the mistake’s consequences, rather than the relationship between the parties. In very large part, the law of restitution exists exactly to stand apart from the parties’ relationship, to restore its ‘norm’.

Fuji Xerox is seeking to recover not money paid under its employment obligations, but money paid in excess of those obligations. There is no dispute about the obligations as may have brought the matter within the employment institutions’ jurisdiction; only if Fuji Xerox was mistaken as to its assessment of qualifying revenues, for which this Court’s jurisdiction is not excluded.

[6]    Subsequently, in FMV v TZB, the Supreme Court held previous understandings of the law were “flawed”.6 Rather, as the Authority had exclusive jurisdiction over ‘employment relationship problems’, the question was if the cause “arose during the course of the employment relationship and in a work context”; if it “reflects a problem that relates to or arises from an employment relationship”.7 The Court clarified:8

This, of course, does not mean that all issues arising between employer and employee will come within the exclusive jurisdiction of the Authority, as has sometimes been suggested. For example, if an employee purchases products from their employer’s retail outlet, a dispute over the quality of those products will clearly not be an employment relationship problem. The parties are in an employment relationship, but the issue does not arise in a work context. The relevant relationship is that of vendor and purchaser, not employer and employee.

and noted:9

This will not always be the case. For example, if there is a practice that staff may obtain factory seconds at lower cost, that circumstance would probably

5      At [24]–[25] (footnotes omitted).

6      FMV v TZB [2021] NZSC 102 at [91].

7      At [93] and [95] (original emphases).

8 At [98].

9      At [98], n 162.

import a work context. That situation gives rise to an expectation that is sourced in the employment relationship.

Discursus

[7]    I construe the Supreme Court’s note to its text to mean, in that circumstance of discounted factory seconds, a dispute over their quality “probably” arises in a work context.

[8]    I do not intuitively see why that should be the case, if the dispute is about the quality of factory seconds obtained from the outlet, rather than their availability from the outlet at a lower cost to employees. A claim founded in consumer protection should not be avoided by concessionary employment. But discounted footwear not supplied in trade similarly should not engage consumer protection. Perhaps the example is unfortunate, given the Fair Trading Act 1986’s general rule against contracting out, unless providing more advantageous remedies (as an employment agreement under the Employment Relations Act 2000 may do).10

Applicable law

[9]Rule 7.52 of the High Court Rules 2016 relevantly provides:

Limitation as to second interlocutory application

(1)    A party who fails on an interlocutory application must not apply again for the same or a similar order without first obtaining the leave of a Judge.

(2)    A Judge may grant leave only in special circumstances.

…

[10]‘Special circumstances’ is a common statutory phrase:11

What are “special circumstances” must be considered against the statutory background in which they are used. These words have been considered in a number of cases decided under a variety of statutes. But, apart from observations of general principle, decisions under one statute are not likely to be of much relevance to another. This is one reason why this appeal does not call for a declaration as to what situations are encompassed by the words. Another is that because the circumstances are special to each case, a judgment

10     Fair Trading Act 1986, s 5C.

11     Cortez Investments Ltd v Olphert & Collins [1984] 2 NZLR 434 (CA) at 441, citing Re Norman

(1886) 16 QBD 673 at 677.

on whether or not they exist will often be a value judgment on the facts, and not one of general application. It would be as unwise as it would be impossible to endeavour to identify the situations and circumstances which may be held to be special under this or any other statutory provision, and indeed even where circumstances have common characteristics such as a solicitor’s mistake, what are special in one case may not be special in another. All that can be said is that to be special circumstances must be abnormal, uncommon, or out of the ordinary. They may be extraordinary but they do not require to be given the extra emphasis which that word sometimes carries. The words are “… wide, comprehensive and flexible words” and “… no Court can or ought to lay down any exhaustive definition of them”.

Discussion

[11]   The ‘special circumstances’ relied on by the individual defendants are the supervening Supreme Court decision in FMV v TZB and the desirability then of excluding from trial matters falling without my jurisdiction.

[12]   The original application for strike out was argued and decided expressly in reliance on the Court of Appeal’s decision in FMV v TZB and in full knowledge of the reserved Supreme Court judgment.12  Leave  has  not  been  sought  to  appeal  my  21 June 2021 judgment. Neither is there any formal application for its recall.

[13]   As I raised with counsel at the outset of the hearing, recall13 — specifically available on grounds including a new judicial decision of relevance and high authority has issued since the hearing14 — might be thought the more natural candidate to address the present circumstance. For Mr Pollard (but supported by the other individual defendants), Stephen Hunter QC argued such was not to exclude a second strike out application, and I had own motion jurisdiction to recall my judgment if so inspired. For the plaintiffs, Mark O’Brien QC preferred any consideration of recall formally be addressed, as caution commends.15

12 Fuji Xerox New Zealand Ltd v Whittaker, above n 3, at [10].

13     High Court Rules, r 11.9.

14 Williams v Auckland Council [2016] NZSC 130 at [4(a)], citing Saxmere Co Ltd v Wool Board Disestablishment Co Ltd (No 2) [2009] NZSC 122, [2010] 1 NZLR 76 at [2] (citing Horowhenua County v Nash (No 2) [1968] NZLR 632 (SC) at 633, and referring also to Rainbow Corp Ltd v Ryde Holdings Ltd (1992) 5 PRNZ 493 (CA) and Unison Networks Ltd v Commerce Commission [2007] NZCA 49 at [10]).

15 Y v Foulkes [2014] NZCA 396, (2014) 22 PRNZ 331 at [34].

[14]   I already have dismissed strike out of the target cause on the exact jurisdictional ground on which strike out is sought again. Without recall, or some other exceptional basis on which to revisit my judgment in the interests of justice,16 the proposed strike out application must accommodate it as if a correct application of the law. The general principle of finality is not to be undermined.17

[15]   Thus recall and leave to bring a second application are distinguishable; as has been seen in criminal contexts,18 new clarification of the law may not be a ‘special circumstance’ in itself. I am not pointed to any authority by which a second interlocutory application may gainsay the correctness of the first’s dismissal;19 more typically, the ‘special circumstance’ is of some extraneous factor which may have derived a different result. That is consistent with the general prejudice against re-litigation of interlocutory matters.20

[16]   The proposed strike out application, of course, cannot accommodate my prior judgment. It seeks precisely to overturn it. No special circumstance can allow such disruption to my judgment’s finality. I will not grant leave for a second application.

[17]   As to recall of my 21 June 2021 judgment, there is nothing in its decision inherently at odds with the Supreme Court’s clarification. The struck out causes would remain struck out. As the Supreme Court noted,21 the existence of an employment

16 R v Smith [2003] 3 NZLR 617 (CA) at [36].

17 At [36]. See also Horowhenua County v Nash (No 2), above n 14, at 633, and Gibson v Official Assignee [2019] NZHC 532 at [21]–[22].

18 Taylor v R [2018] NZCA 498, [2019] 2 NZLR 38 at [14], citing R v Cottrell [2007] EWCA Crim 2016, [2007] 1 WLR 3262; Alofa v Department of Labour [1980] 1 NZLR 139 (CA) at 145–146, citing R v Mitchell [1977] 1 WLR 753 (CA) at 756–757 and R v Lidiard (1978) 122 SJ 743; and R v Jogee [2016] UKSC 8; [2017] AC 387 at [100].

19 Andrew Beck and others (eds) McGechan on Procedure (online ed, Thomson Reuters) at [HR7.52.02] refers to an observation in Hargreaves v The Radio Network Ltd HC Christchurch CIV-2002-409-725, 16 March 2010 at [49] to the effect “the desirability of reconsidering an interlocutory issue in light of a new precedent that was not available at the time of the first application would have constituted ‘special circumstances’”. As counsel on both the precedent judgment and in resisting the subject review application (and subsequently), I simply record the Judge’s observation was obiter.

20 See Henry v Ministry of Justice [2019] NZHC 889, [2019] NZAR 711 at [41]–[42]; Minister of Education v James Hardie Ltd [2018] NZHC 1481 at [106]; Sanson v Energy Products Ltd HC Auckland CIV-2009-404-5464, 4 December 2009 at [27]; and Kiwi Co-operative Dairies Ltd v Capital Dairy Products Ltd (1989) 1 PRNZ 622 (HC) at 627–628.

21 See [6] above.

relationship between litigants is not determinative of the Authority’s exclusive jurisdiction over them.

[18]   To  return to my discursus,22  a simpler and more applicable example may be  a dispute arising from an employer paying money into an employee’s bank account. The employer has employment obligations to pay money to the employee, for which purpose the employee is to provide bank account details. Thus the payment has a work context. But the work context of the payment at issue should be determinative, not necessarily the work context of the means of payment. Mistaken payment of a supplier invoice to the employee’s bank account may not engage the Authority’s exclusive jurisdiction, even although only achieved using information provided in a work context. Receipt is less material than mistake.

[19]   Assuming the pleadings here to be true for the purposes of strike out,23 they do not conclusively establish the first cause arose in the work context, or even necessarily reflects a problem that relates to or arises from an employment relationship. The target cause would remain as pleaded. I would not of my own motion have recalled my judgment merely to identify the Supreme Court’s clarification.24

[20]   The relevant threshold for strike out is the pleading “discloses no reasonably arguable cause of action”.25 I need “be certain that it cannot succeed”; that Fujifilm’s case must be “so certainly or clearly bad”.26 Here, much turns on the materiality of both receipt and especially mistake as to the constituent relationship and context. If to remove the cause from my jurisdiction depends on the evidence of that relationship and context as may be given at trial. I cannot address the defendants’ strike out arguments in the pleadings’ abstract alone.

22 See [7]–[8] above.

23     Couch v Attorney-General [2008] NZSC 45, [2008] 3 NZLR 725 at [33], endorsing Attorney- General v Prince [1998] 1 NZLR 262 (CA) at 267.

24     Rabson v Transparency International New Zealand Inc [2016] NZCA 26 at [7].

25     High Court Rules, r 15.1(1)(a).

26     Couch v Attorney-General, above n 23, at [33], citing W v Essex County Council [2001] 2 AC 592 (HL) at 601.

Result

[21]   I decline the individual defendants leave to bring a second application to strike out Fujifilm’s (now) first cause of action.

Costs

[22]   In my preliminary view, from what I presently know, as the unsuccessful parties — on this averagely complex application requiring counsel of average skill and experience, and in which a normal amount of time is considered reasonable for each step on the application — the individual defendants collectively should pay a single set of 2B costs to Fujifilm on each step.

[23]   If my view is not accepted by the parties, or they cannot otherwise agree,      I reserve costs for determination on short memoranda of no more than five pages — annexing a single-page table setting out any contended allowable steps, time allocation and daily recovery rate — to be filed and served by Fujifilm within 10 working days of the date of this judgment, with any response or reply to be filed within five working day intervals after service.

Postscript

[24]   In the course of drafting this judgment, counsel filed post-trial memoranda referring me to this Court’s recent application of FMV v TZB.27 Neither suggests it is of any particular materiality to the issues before me. With respect for the Judge — who held, as its fifth counterclaim for breach of a joint venture agreement could be framed as an employment relationship problem, the counterclaim was struck out28  — I agree.

—Jagose J

Counsel/Solicitors:

M D O’Brien QC, Auckland S M Hunter QC, Auckland Meredith Connell, Auckland Simpson Grierson, Auckland

Steindle Williams Legal Limited, Auckland SBM Legal, Auckland

Fee Langstone, Auckland A Leopold SC, Australia

27     Huang v Chen [2021] NZHC 3232.

28     At [27]–[28].