New Zealand Fire Service Commission v McCulloch HC Auckland CIV 2009-404-1088

[2010] NZHC 1870

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2009-404-1088

IN THE MATTER OF     claims in tort by way of intimidation, unlawful interference in business interests, conspiracy by unlawful means and interference with contractual relations

BETWEEN  THE NEW ZEALAND FIRE SERVICE COMMISSION, A BODY CORPORATE UNDER THE FIRE SERVICE ACT 1975

Plaintiff

AND  JEFFREY REGINALD MCCULLOCH, UNION OFFICIAL AND FIREFIGHTER First Defendant

ANDBOYD GORDON RAINES, UNION OFFICIAL AND FIREFIGHTER Second Defendant

ANDTHE NEW ZEALAND PROFESSIONAL FIREFIGHTERS UNION INCORPORATED, A UNION REGISTERED UNDER THE EMPLOYMENT RELATIONS ACT 2000

AND AN INCORPORATED SOCIETY HAVING ITS REGISTERED OFFICE IN PETONE

Third Defendant

Hearing:         13 October 2010

Appearances: Mr P Wicks and Mr G Davenport for plaintiff

Mr P Cranney for defendants

Judgment:      20 October 2010 at 12 noon

JUDGMENT OF LANG J

[on application for review of Associate Judge’s order striking out claim]

THE NEW ZEALAND FIRE SERVICE COMMISSION V MCCULLOCH & ANOR HC AK CIV-2009-404-

1088  20 October 2010

This judgment was delivered by me on 20 October 2010 at 12 noon, pursuant to Rule

11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date……………

Solicitors/Counsel:
Mr P Wicks, Auckland
McBride Davenport James, Wellington
Oakley Moran, Wellington

[1]      The   New   Zealand   Fire   Service   Commission   (“the   Commission”)   is responsible for the provision and administration of firefighting services throughout New Zealand.  The Chief Executive of the Commission is empowered by s 66(1) of the Fire Service Act 1975 to authorise employees to temporarily act in a higher rank or position.  When an employee acts in that capacity, he or she is said to be “acting up”.

[2]      This proceeding arose out of a decision by the Chief Executive in November

2008 to seek expressions of interest for two “acting up” positions in the greater Auckland district.  The New Zealand Professional Firefighters’ Union Incorporated (“the Union”) decided to dissuade its members from applying for those positions.  It issued notices banning its members from applying for either of the two positions. Ultimately, however, two members of the Union, Mr Chris Best and Mr Chris Scott, applied for and were appointed to the vacant positions.   Subsequently, two union officials, Mr McCulloch and Mr Raines, exerted considerable pressure on Mr Best and Mr Scott in an effort to persuade them to resign from their positions.  Ultimately their efforts were successful and both men resigned from the temporary positions to which they had been appointed a short time earlier.

[3]      As  a  result  of  those  acts,  the  Commission  seeks  damages  against  the defendants in tort under a variety of heads.  These include intimidation by unlawful means, unlawful interference in economic interests, conspiracy by unlawful means and interference by contractual relations.

[4]      The  defendants  considered  that  the  acts  that  form  the  basis  of  the Commission’s claims occurred within the wider context of a strike as that term is defined in the Employment Relations Act 2000 (“the Act”).  Section 99 of the Act provides the Employment Court with full and exclusive jurisdiction to hear and determine all proceedings founded on tort that have “resulted from” or are “related to” a strike.  For that reason, the defendants sought a stay of the present proceeding so that the matter could be resolved by the Employment Court.

[5]      In an oral judgment delivered on 10 May 2010, Associate Judge Bell held that the Commission’s claims clearly fell to be heard and determined by the Employment Court.   He therefore ordered that the proceeding be struck out.   The Commission now applies for review of that decision.

The arguments

[6]      The Commission accepts that the Union’s ban on its members acting up forms part of the background to its claims.  It says, however, that the ban does not fall within the statutory definition of a strike for the purposes of s 99 of the Act.  In the alternative, it argues that its claims against the three defendants have not resulted from, and are not related to, the ban.  Either way, it argues that this Court has the necessary jurisdiction to hear and determine its claims against the defendants.

[7]      The defendants disagree.  They say that the ban amounted to a strike for the purposes of the Act.   They also say that the Commission’s claims have resulted from, or are related to, the ban.   For that reason they argue that the Employment Court has the exclusive jurisdiction to hear and determine the Commission’s claims.

The Law

[8]      Neither counsel took issue with the manner in which the Associate Judge described the law relating to the meaning of the term “strike”.

[9]      As he noted at [16], the key statutory provisions are ss 99 and 187(1)(h) of the Act.  They provide as follows:

Jurisdiction of Employment Court

99     Jurisdiction of Court in relation to torts

(1)     The Court has full and exclusive jurisdiction to hear and determine proceedings founded on tort—

(a)     issued against a party to a strike or lockout that is threatened, is occurring, or has occurred, and that have resulted from or are related to that strike or lockout:

(b)     issued against any person in respect of picketing related to a strike or lockout.

(2)     No other court has jurisdiction to hear and determine any action or proceedings founded on tort—

(a)     resulting from or related to a strike or lockout:

(b)     in respect of any picketing related to a strike or lockout.

…

187    Jurisdiction of Court

(1)     The Court has exclusive jurisdiction—

…

(h)     to hear and determine proceedings founded on tort and resulting from or related to a strike or lockout:

…

(3)     Except as provided in  this  Act, no  other  court  has jurisdiction  in relation to any matter that, under subsection (1), is within the exclusive jurisdiction of the Court.

[10]     I would also include s 81, which provides the following definition of the term

“strike”:

Interpretation

81      Meaning of strike

(1)     In this Act,

strike means an act that—

(a)  is the act of a number of employees who are or have been in the employment of the same employer or of different employers—

(i)in  discontinuing  that  employment,  whether  wholly  or partially, or in reducing the normal performance of it; or

(ii)     in refusing or failing after any such discontinuance to resume or return to their employment; or

(iii)    in breaking their employment agreements; or

(iv)    in refusing or failing to accept engagement for work in which they are usually employed; or

(v)     in reducing their normal output or their normal rate of work; and

(b)     is due to a combination, agreement, common understanding, or concerted action, whether express or implied, made or entered into by the employees.

…

[11]     As the Associate Judge noted at [19], the current definition of “strike” has been in existence for a considerable time.   The same definition appeared in the Labour Relations Act 1987 and the Employment Contracts Act 1991.  They had their genesis in the Industrial Conciliation and Arbitration Amendment Act 1908 and the Strike and Lockout Emergency Regulations 1939.

[12]     The Associate Judge referred, at [19] to [21], to passages from judgments of the Court of Appeal and the House of Lords that demonstrate the breadth of activity that the statutory definition will encompass.  First, in New Zealand Labourers Union v  Fletcher  Challenge  Limited  [1988] 1 NZLR 520 (CA), the Court of Appeal referred, at 527, to the following passage from the speech of Lord Wilberforce in Heatons  Transport  (St.  Helens)  Ltd  v.  Transport  and  General  Workers’  Union [1973] A.C. 15 (HL) at 101:

The classic form of industrial action is a strike or withdrawal of labour, and its converse a lock-out.   This involves financial loss to the workers; they cease to draw their wages. But there are other forms of industrial action by workers which have been increasingly used in recent years. These have the advantage of involving little or no financial loss to members who take part in them. The TUC Handbook, already quoted, refers to such industrial action as a 'go slow', a 'work to rule', and an 'overtime ban'.  To these may be added

'blacking' - a particularly effective sanction when used in the transport industry.

[13]     The Court of Appeal then continued at 527:

Clearly the New Zealand section has been drawn to bring within the wide statutory definition of ‘strike” various forms of industrial action which may not fall within the common law meaning of the term.   It is also clear that concerted action which does not amount to breaches of contracts of service may nevertheless  be  a strike  within  the  meaning of  the  statute: see  for instance Ross v Moston [1917] GLR 87. ...

[14]     Finally,  the  Associate  Judge  reproduced  the  following  passage  from  the decision of the Court of Appeal in New Zealand Airline Pilots’ Association v Air New Zealand Limited [1992] 2 NZLR 656 (CA) at 662:

There is no doubt that the legislature had primarily in mind strikes in the traditional sense, which do involve the withdrawal of labour, but the net has been cast wider in recognition, as Chief Judge Goddard put it, “of the almost infinite capacity for ingenuity that has been exhibited by those engaging in strikes and lockouts”.

[15]     As the Associate Judge noted at [23], the provisions of the Act dealing with strikes and lockouts are to be found within Part 8 of the Act.  That part of the Act commences with s 80, which provides:

80       Object of this part

The object of this Part is—

(a)     to recognise that the requirement that a union and an employer must deal with each other in good faith does not preclude certain strikes and lockouts being lawful (as defined in this Part); and

(b)     to define lawful and unlawful strikes and lockouts; and

(c)     to ensure that where a strike or lockout is threatened in an essential service, there is an opportunity for a mediated solution to the problem.

[16]     The Associate Judge also observed at [23] that disputes between a union and an  employer can  give  rise  to  employment  relationship  problems  under  the  Act. Although strikes and lockouts may be less desirable aspects of any employment relationships, they are nevertheless a fact of life that both parties may need to deal with from time to time.   If a strike is unlawful, an employer is entitled to seek remedies under the Act.  If it is lawful, there is nothing to prevent a union and its members from engaging in it.

[17]     Collective action forms the basis of any strike.  That requirement comes from s 81(1)(b) which provides that, in order to amount to a strike, the acts of the employees must be “due to a combination, agreement, common understanding, or concerted action, whether express or implied, made or entered into by the employees”.

[18]     With that background in mind it is appropriate to turn to the first of the two issues that the Associate Judge was required to determine.

Was the ban on acting up a strike in terms of s 81(1) of the Act?

[19]     The  Associate  Judge  made  a  positive  finding  that  the  ban  on  acting  up amounted to a strike in terms of s 81(1)(a)(i), (iv) and (v) of the Act.

[20]     It was not necessary for him to go that far.  In the Fletcher Challenge case the

Court of Appeal said at 525-526:

A mere assertion by a defendant that the conditions making s.242 apply are fulfilled - namely that there is or has been a strike or lockout and that as a result the tort proceedings have been issued against any party to it – could not in itself be enough to justify a stay of the High Court proceedings. We do not attempt to lay down an inflexible rule. Ultimately the matter must be one for the discretion of the High Court Judge on the facts of the particular case. Still, it is safe to say that a defendant applying for a stay should usually be  granted  one if  on  the  pleadings  and  any  supporting  evidence  he satisfies the High Court Judge that it is reasonably arguable that the conditions stated in s.242 are fulfilled. Although a plaintiff is not lightly to be deprived of his right to seek a High Court adjudication, we consider that in general the governing principle in the exercise of the High Court Judge's discretion should be that serious and substantial questions of labour relations law and similar questions of fact are best determined in the Labour Court, subject to the statutory rights of appeal. (Emphasis added)

[21]     The threshold for the defendants was therefore not particularly high.  They only needed to show that it was reasonably arguable that the ban on acting up amounted to a strike in terms of s 81.  They did not need to persuade the Court of the correctness of that proposition.

[22]     There can be no doubt that the requirements of s 81(1)(b) are satisfied in the context  of  the  present  case.     The  ban  comprised  the  collective  act  of  the Commission’s employees, encouraged by their union, not to apply for acting up positions.  The real issue is whether the ban falls within any of the categories set out in s 81(1)(a).

Did the ban amount to a full or partial discontinuation of employment or a reduction of normal employment in terms of s 81(1)(a)(i)?

[23]     The Associate Judge expressed his conclusion in relation to s 81(1)(a)(i) as follows:

From the employers point of view, there is a normal expectation that if vacancies arise, it can look to its existing workforce to fill them.  And from an employee’s point of view, there is an expectation that if vacancies should arise and he or she is qualified, he or she will have the opportunity to put himself forward to fill that vacancy.  Once the workforce collectively decide that they will not apply to fill vacancies, then there is a discontinuance of part of the employment or a reduction in the normal performance of the employment by the workforce as a whole.

[24]     The  defendants  did  not  seek  to  argue  that  the  ban  amounted  to  a discontinuation of employment.  That is not surprising because the ban was designed to prevent employees from applying for acting up positions.  It was not designed to stop them continuing in that employment.

[25]     The  defendants  argued,  however,  that  the  ban  meant  that  there  was  a reduction in the normal performance of the employee’s employment.  It pointed out that in the past employees had normally applied to act up when vacancies became available.  Once they ceased to do so, they ceased to act as they normally did and there was therefore a reduction in the normal performance of their employment.

[26]     The Commission pointed out that employees could not be forced to apply for acting up positions.   If they elected not to do so, there was nothing that the Commission could do to compel them to put themselves forward.   In those circumstances it submitted that the ban could not amount to a reduction in the normal performance of their employment.

[27]     The Commission also pointed out that very few acting up positions become available to its employees.  As a result, it argued that it was impossible to say that applying for acting up positions was part of the normal performance of employees’ duties.

[28]     It  seems  to  me  that  the  answer  to  both  arguments  lies  in  the  fact  that Parliament has used the word “normal” in s 81(1)(a)(i).  “Normal” does not mean “common” or “regular”.  Neither does it mean “compulsory” or “required”.  It does not connote the frequency with which an act is performed or that it is an act that an employee is required to perform in the course of his or her employment.  Rather, it emphasises that there must be a reduction in performance from that which is usual.

[29]     There is no dispute that the Commission’s employees have usually applied for and filled acting up positions in the past.  That is the normal way in which such positions  have  been  filled.     Any  ban  that  prevents  that  from  occurring  will necessarily reduce the normal performance of the Commission’s employees.   I therefore consider that it is reasonably arguable that the ban amounted to a strike in terms of the second limb of s 81(1)(a)(i).

Did the ban mean that the Commission’s employees refused or failed to accept engagement for work in which they were usually employed in terms of s 81(1)(a)(iv)?

[30]     In reaching his conclusion in respect of s 81(1)(a)(iv) the Associate Judge said:

[29]      Similarly, when a workforce collectively say that they will not act up,  they  are  doing  something  that  the  workforce  collectively  would otherwise do, in the sense that at least some members would offer to act up. When there is a concerted refusal from the entire workforce to act up, the workforce is refusing to do  something which is a usual incident  of  the employment of the workforce as a whole.  That brings the matter within s

81(1)(a)(iv) of the definition.

[31]     I agree with this conclusion.   It is common ground that, when acting up positions have become  available in the past, the Commission’s employees have accepted appointment to those positions.   The acceptance of engagement in such positions is therefore work in which the members of the Commission’s workforce were usually employed.  In collectively refusing to accept engagement for that work, it is well arguable that the Commission’s employees have brought their actions within the definition in s 81(1)(a)(iv).

Did the ban mean that employees were reducing their normal output or their normal rate of work in terms of s 81(1)(a)(v)?

[32]     The Associate Judge concluded that, in refusing to act up, the Commission’s employees also satisfied the definition under s 81(1)(a)(v).  He considered that this was the case because they were thereby reducing their normal output and rate of work.

[33]     I am not sure that this conclusion necessarily follows, because s 81(1)(a)(v) relates to actual output or rate of work.   It can be argued that, provided the Commission’s  employees  maintain  their  usual  output  and  rate  of  work  in  their current positions, their  actions will not fall within those to which s  81(1)(a)(v) applies.    It  is  not  necessary,  however,  for  me  to  express  any  concluded  view regarding this sub-section given my conclusions in relation to s 81(1)(a)(i) and (iv).

Conclusion

[34]     I  therefore  accept  that  it  is  at  least  arguable  that  the  ban  on  acting  up amounted to a strike in terms of s 81(1)(a)(i) and (iv) of the Act.

Do the Commission’s claims result from, or are they related to, a strike?

[35]     The Commission urges the Court to take a narrow view on this point.   It argues that its claims are based solely upon the actions of the defendants when they placed pressure on Mr Scott and Mr Best to relinquish their acting up positions.  It says that the defendants took those actions independently of the ban.  It points out that the ban had been ineffective so far as Mr Best and Mr Scott were concerned, because  they  had  acted  in  defiance  of  the  ban  when  they  agreed  to  accept appointment to the vacant positions.  For that reason, the Commission contends that its claims do not result from, and are not related to, the ban.  There is therefore no impediment to the Court hearing and determining its claims.

[36]     I do not consider, however, that the defendants’ actions can be viewed in a vacuum.  The only reason that they engaged in the conduct that forms the basis of the Commission’s claims was because Mr Scott and Mr Best had defied the Union’s ban on acting up.   Had there been no ban, the defendants would not have put pressure on the two men to resign.  That being the case, it is well arguable that the defendants’ actions have resulted from, or are related to, the ban on acting up.   I therefore agree with the Associate Judge that the second issue must be decided in favour of the defendants.

Should the proceeding be struck out or stayed?

[37]     The Associate Judge elected to strike out the proceeding notwithstanding the fact that the defendants had only applied for an order that it be stayed whilst the dispute  was  referred  to  the  Employment  Court.    He  took  that  step  presumably because he had a firm view that the ban on acting up amounted to a strike, and that the plaintiff’s claims resulted from, or related to, that strike.  He may have seen little purpose in the proceeding remaining in existence for that reason.

[38]     Generally, however, the appropriate remedy in this context is to stay the proceeding.  This leaves it open to the plaintiff to return to the Court in the event that the Employment Court ultimately concludes that the ban was not a strike, or that the defendants’ actions do not result from, or relate to, a strike.

[39]     Both counsel agreed that, in the event that I upheld the Associate Judge’s conclusion in relation to the issue of jurisdiction, it would be appropriate to stay the proceeding rather than confirm the Associate Judge’s action in striking it out.

Should the stay be subject to conditions?

[40]     The   matter   now   needs   to   proceed   to   the   Employment   Court   for determination.  In Fletcher Challenge the Court of Appeal said at 526:

. . . Where a stay is granted on the application of a defendant, it should normally be on condition that the defendant applies to the Labour Court within a specified time for a declaration that, in short, the case falls within s

242 and that accordingly the Labour Court has full and exclusive jurisdiction to determine the proceedings.

[41]     I consider that a condition of that type should be imposed in the present case.

Result

[42]     The application for review is granted to the extent that the order striking out the proceeding is set aside.   The proceeding is, however, stayed pending further order of the Court.

[43]     The stay is granted on the condition that the defendants are required, within

28 days, to apply to the Employment Court for a declaration that the issues that fall to be determined in this proceeding are subject to s 99 of the Employment Relations Act 2000.

[44]     The Commission has leave to ask for the proceeding to be reactivated in the event that the defendants fail to comply with this condition, or in the event that the Employment Court determines that the Commission’s claims do not fall within its exclusive jurisdiction.

Costs

[45]     Although the Commission has succeeded in having the proceeding reinstated, it has failed in relation to the substantive issues that the application for review raised. For that reason, the defendants are entitled to an award of costs on a Category 2B basis together with disbursements as fixed by the Registrar.

Lang J