Jardine Risk Consultants Limited v Beal Ca208/99
[2000] NZCA 106
•29 June 2000
| IN THE COURT OF APPEAL OF NEW ZEALAND | CA208/99 |
| BETWEEN | JARDINE RISK CONSULTANTS LIMITED |
| Appellant |
| AND | ALAN STEWART BEAL |
| Respondent |
| Hearing: | 24 May 2000 |
| Coram: | Richardson P Gault J Keith J |
| Appearances: | A R Drake for Appellant P D Green for Respondent |
| Judgment: | 29 June 2000 |
| JUDGMENT OF THE COURT DELIVERED BY GAULT J |
This appeal is from a decision of Judge Shaw in the Employment Court delivered on 26 July 1999 in which she dismissed the application by the present appellant Jardine Risk Consultants Ltd to dismiss for want of jurisdiction a proceeding for wrongful dismissal brought by Mr Beal.
The appellant is a New Zealand company and a member of the group of companies forming part of the Jardine Mathieson organisation. That part of the group of immediate concern is headed by (now) Jardine Lloyd Thompson Group Plc Ltd with its headquarters in Great Britain. Mr Beal was employed in New Zealand in the Jardine group from 1988. He had special experience in the provision of insurance brokerage services to local government.
Early in 1993 Mr Beal was approached to accept secondment to Great Britain to assist with the development of the business of providing similar brokerage services there. Between that time and the time he agreed to the secondment which commenced at the beginning of 1994, he was presented with a new individual employment contract in a standard form. He signed his contract on 18 September 1993. The designated employer was Jardine Insurance Brokers Ltd, a company related to the appellant.
The secondment was confirmed by letter dated 19 October 1993. It is common ground that this effected a variation of the employment contract in providing terms and conditions under which Mr Beal would work in Britain. This provided for secondment for two years extendable to three years. There was no employer designated in the letter but Mr Beal assumed a managerial role in Jardine Municipal Services, a division of Jardine Insurance Services Ltd, one of the British companies in the Jardine Lloyd Thompson group. His secondment was extended to three years and after that was extended for a further two years from January 1997. But on 19 August 1997 he was dismissed for “gross misconduct” by the officer responsible for personnel employed by the Jardine group in Britain. He alleges the dismissal was substantively and procedurally unfair.
There is some unorthodoxy in a proceeding in New Zealand alleging as a tort wrongful dismissal in England by someone who is neither the named defendant nor the company designated as the employer in the contract of employment. However the application under r131 High Court Rules was not made on the grounds that the wrong party was sued nor on the ground that the proceeding is wrongly brought in tort (in respect of which there may be a question as to the jurisdiction of the Employment Court), but under protest to the jurisdiction because the forum conveniens for the proceeding is the United Kingdom.
Two points were argued on the application. The first was whether the law of the employment contract was English law or New Zealand law. The second was whether the New Zealand Employment Court was forum conveniens. The judgment under appeal recorded the following:
No issue has been taken with the identity of the defendant as the original employer. Indeed, counsel for the defendant acknowledged that the defendant was the employer at the time and submitted that it remained the employer up until the date of the dismissal of the plaintiff. This concession was made because, it was argued, the question of who the employer is was not the central issue.
If the claim is in tort, it is not clear why the proper law of the contract is determinative of jurisdiction. But if the law of the contract is material we find it difficult to comprehend the acknowledgement as it seems to lead almost inevitably to the conclusion that the law of the contract is New Zealand law.
It seems that the issues may not have been properly analysed. If the claim is in tort the principles for determining the applicable law are not those that apply to contractual claims. If the claim is in contract, as it seems to have been treated in argument, the identity of the contracting parties is crucial as, in secondment situations, there may be more than one contract to be considered. Counsel’s acknowledgement effectively excludes any enquiry into whether, for the period of secondment, there were two employment contracts effective in tandem (see Sheldrick v W T Partnership (Aust) Pty Ltd (unreported, 1998 – 0907F – FCA, decision 7 September 1998 per Einfield J), upheld by the Full Federal Court (1999) FCA 843), perhaps with one suspended during the period of the other. In this respect it is instructive to consider the “borrowed employee” doctrine developed in the United States of America in the workers compensation context but seemingly resting on generally applicable rules (Taylor v Brainard 37 N.E. 2d 714).
In Stephens v Witco Corporation (unreported, Court of Appeals for the 5th Circuit, No 98-30955, judgment 16 December 1999), the Court stated that under the borrowed employee doctrine, an employee of one company may become the servant of another if he is transferred by the former to the employ of the latter. In Louisiana, there is a presumption that a general employer retains control of his employees. However, the employer may prove that the new (“special”) employer is the actual employer. Several factors have been identified in determining whether the borrowed employee doctrine applies:
Whether the original employer terminated his relationship with or relinquished his control over the employee;
Who selected the employee;
Which company pays the employee’s wages;
Which company has the power of dismissal;
Whether there has been relinquishment of control by the general employer;
Which employer’s work was being performed at the time in question;
Whether there is an agreement between the borrowing and lending employer and what the terms of any such agreement are;
Who is responsible for furnishing tools and the place of performance of work;
Whether the new employment was over a considerable length of time;
The acquiescence of the employee in the new work arrangement.
The Court in Stephens cited the decision of the Court of Appeal of Louisiana, 3rd Circuit, in Green v Popeye’s Inc (1993) 619 So.2d 69, another case of workers compensation. The Court held that the new employer was the borrowed employer, and as such was solidarily liable with the old employer (who was an agency) for the workers compensation benefits payable to the employee. However, there was an agreement between the employers that the agency was to be solely liable for the worker’s compensation payments.
The issue was also discussed in Marzula v White 488 So.2d 1092 (La.App. 2 Cir. 1986), where the Court stated that there is a presumption that the general employer retains control of his employee. However, the party who alleges that an employee has become a borrowed servant bears the burden of proof on that issue, and a mere showing of a division of control is not enough to meet that burden. The Court went on to state at p1095:
In order for an employee of the general employer to become the borrowed employee of the special employer, it must be shown that the employer-employee relationship between the general employer and his employee has been suspended and a new and like relationship has been created between the general employer’s employee and the special employer. This change of relationship does not occur when the work being performed by the general employer’s employee is the general employer’s work and where he retains some control over his employee.
It was emphasised in Crawford v Florida Steel Corp. 478 So.2d 855 (Fla.App. 1 Dist. 1985) that in determining the existence of an employer-employee relationship for the purposes of the “borrowed servant” doctrine, of primary importance is the existence of any contract, expressed or implied, between the employee and the alleged special employer. Of secondary importance is whether the work done at the time of the injury was that of the special employer, and whether the power to control the work done at the time of the accident resided in the alleged special employer. The Court also stated that continuance of the general employment is presumed in any borrowed employee situation, and to overcome this presumption, there must be a clear demonstration that a new temporary employer has been substituted for the old.
It appears therefore, that at least in the situation of worker’s compensation, American courts consider that the seconded employer may have an employment relationship with the employee, and that the original employment relationship may be suspended. This depends, of course, on the facts. The Supreme Court of Florida has, however, held that in a proper case two or more corporations can be the joint employer of a single employee (Roberts’ Fish Farm v Spencer 153 So.2d 718 (Fla. 1963)).
All that is to be put aside however. It is accepted that for present purposes the appellant is to be treated as the employer. The contract, signed on 18 September 1993, is to be treated as the relevant employment contract and the issue is whether that was varied so as to make the applicable law (admittedly originally New Zealand law) the law of England. Judge Shaw held there was no such variation. The appellant has argued that was wrong.
It is common ground that during the course of the secondment the terms of the contract were varied. There were several increases in salary, made by the appropriate British companies, without apparent reference to the contractual employer – presumably as agent.
The crucial variation said to have brought a change to the law governing the contract of employment was the acceptance by Mr Beal of the revised employment handbook at the end of June 1997. This comprehensive handbook set out the terms and conditions of employment for employees of the Jardine Lloyd Thompson Group Plc Ltd, its subsidiaries and associated companies. A copy was sent to Mr Beal with a note which stated:
As this handbook forms part of your Contract of Employment, please acknowledge that you have read, understood and accepted its contents (and the other documents referred to as constituting your Contract of Employment) by signing one copy of the attached duplicate letter and returning it …
The handbook included the statement:
In addition to this handbook you will also have been issued with an offer letter and your Statement of Terms of Employment (“Contract of Employment”) shortly before joining the Group. These should be kept in a safe place for future reference.
Mr Beal duly signed and returned the copy of the letter as required acknowledging the application of the provisions of the handbook.
It seems likely that the procedure adopted in sending the handbook and requesting the acknowledgement was followed in order to comply with the requirement of s4 of the English Employment Rights Act 1996, although that was nowhere stated expressly. It was in purported compliance with the procedures laid down in that handbook that Mr Beal’s dismissal was carried out.
But for the acknowledgement that the New Zealand company remained the employer throughout there would be a strong argument that once Mr Beal’s employment became subject to the terms and conditions of the British handbook which prescribed almost all of the terms of employment and superseded most of those in the original New Zealand contract, the employment was governed by English law which underpinned the applicable terms and conditions. However, the fact, as the Judge found, that the original individual employment contract continued as the operative contract, although varied, meant that the law governing the contract would have to have been changed from New Zealand to English law. Certainly that was not done expressly. The Judge considered but rejected implied variation to that effect.
Mr Drake argued that the Judge erred in law in that while she correctly stated the factors necessary to establish a variation of contract by conduct, she did not correctly apply them. It was submitted that the Judge focussed on the requirement for express variation – clear and informed agreement by both parties – which necessarily meant she would reject implied variation. We are unable to accept that. The Judge made it clear that she looked at the dealings between the parties but was unable to find sufficient basis for an inference that the claimed variation was agreed. Her assessment of the evidence was against a requirement for inferred agreement. There was no error of law in that.
It does appear that the Judge understated the effect of the adoption by the parties of the terms and conditions in the British handbook. It was not correct that there was “no evidence that the addenda significantly altered the plaintiff’s contract of employment in any way”. Nor was it correct to say that the provisions of the handbook lacked sufficient certainty to form “ … valid [terms of a] contract of employment”. Nevertheless, the handbook purported only to modify the terms of the earlier contract. It was silent on the applicable law, and did not contain provisions contradictory of the continuation of New Zealand law as the governing law.
Of course, while working in Britain Mr Beal was required to comply with local laws but that is not determinative.
We have not been persuaded that the decision reached by the Judge, that New Zealand law continued as the applicable law of the contract, was not open to her. There being no material error of law, we cannot interfere.
On the second aspect of the appeal, that the Judge erred in holding New Zealand as forum conveniens, there was no dispute between counsel on the applicable principles. They were accepted as having been correctly stated by the Judge as:
(a)A stay will only be granted where the Court is satisfied that there is some other available forum, having competent jurisdiction, which is the appropriate forum for the trial of the action.
(b)The burden of proof rests on the defendant to persuade the Court to exercise its discretion to grant a stay.
(c)The “natural forum” is that with which the action has the most real and substantial connection both in terms of convenience and expense and also the law governing the relevant transaction.
The appellant faced the real obstacle of s135 Employment Contracts Act 1991 permitting appeals only on points of law. Counsel accepted that the law was stated correctly and submitted that the Judge had not “properly considered the competing factors”. That was an argument on the weight given to the various facts.
Adding to the burden on the appellant is the fact that the appeal in this respect is against the exercise of a discretion with which an appellate court should be slow to interfere: Spiliada Maritime Corp v Cansulex Ltd [1987] AC 460, 465.
There was no argument that the Judge failed to consider relevant matters or considered irrelevant matters. It was accepted that the judgment fairly summarised the factors advanced in support of New Zealand being forum non conveniens.
It is increasingly being recognised that employment disputes should be resolved in the jurisdiction in which the work is carried out (save where that location is temporary). The 1991 European Convention Regarding the Law Applicable to Contractual Obligations (Art 6) and the English Employment Rights Act (ss196 and 204) reflect this. See also Dicey & Morris, The Conflict of Laws (13th ed, 2000) Rule 182, and Gamillscheg & Franzen, “Conflicts of Laws in Employment Contracts and Industrial Relations”, in Blanpain & Engels (eds), Comparative Labour Law and Industrial Relations in Industrialised Market Economies (6th ed, 1998). But on the facts of this case, given the continued operation of the original New Zealand contract, we are not prepared to find that the decision of the Judge was plainly wrong: May v May (1982) 1 NZFLR 165,169.
In the circumstances we are not convinced that there is any ground for interfering with the Judge’s discretion.
Accordingly, the appeal is dismissed. The respondent is entitled to costs which we fix at $5,000 together with disbursements as approved by the Registrar.
Solicitors
Buddle Findlay, Auckland, for Appellant
Gibson Sheat, Lower Hutt, for Respondent
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