O'Hagan v Waitomo Adventures Limited

[2014] NZHC 905

IN THE HIGH COURT OF NEW ZEALAND TAURANGA REGISTRY

CIV-2013-470-602 [2014] NZHC 905

BETWEEN

BRENT O'HAGAN

Plaintiff

AND

WAITOMO ADVENTURES LIMITED Defendant

Hearing:	2 May 2014
Appearances:	Plaintiff in person N J Edwards for Defendant
Judgment:	5 May 2014

JUDGMENT OF ASSOCIATE JUDGE BELL

This judgment was delivered by me on 5 May 2014 at 4:00pm

pursuant to Rule 11.5 of the High Court Rules.

...................................

Registrar/Deputy Registrar

Solicitors:

Whitfield Braun Ltd (Toby Braun/N J Edwards) Hamilton, for Defendant.

Copy for:

Brent O’Hagan, Te Kuiti 3910.

O'HAGAN v WAITOMO ADVENTURES LIMITED [2014] NZHC 905 [5 May 2014]

[1]      Mr O’Hagan seeks  a declaration that a judgment the defendant obtained against  him  in  the  Employment  Court  was  obtained  by  fraud.    He  wants  the judgment set aside.  He has sued in this court.  The question is whether this court can hear the proceeding.

[2]      Mr  O’Hagan  had  brought  an  unsuccessful  constructive  dismissal  and unjustified disadvantage claim in the Employment Relations Authority.   He then challenged  the  determination  of  the Authority  under  s  179  of  the  Employment Relations  Act  2000.    The  Employment  Court  found  against  Mr  O’Hagan  and awarded Waitomo Adventures Ltd $84,089.17, most of it costs.   Mr O’Hagan’s statement of claim says that Waitomo Adventures Ltd obtained the Employment Court judgment by fraud because its director, Mr Andreef, allegedly gave perjured evidence.

[3]      At the first case management conference on 19 March 2014 I raised the jurisdiction issue and in my minute from that conference I recorded my doubts as to this  court  having  jurisdiction.    Both  parties  have filed  memoranda in  response. While the defendant did not lodge an appearance objecting to jurisdiction under r

5.49 of the High Court Rules, this is a decision as to jurisdiction under that rule, as if there had been an application under r 5.49(3) or (5).

[4]      In my minute of 19 March 2014 I set out two broad grounds for doubting that

this court had jurisdiction to hear Mr O’Hagan’s claim:

(a)       any proceeding to set aside a judgment on the grounds that it was fraudulently obtained should be brought in the original trial court; and

(b)      this court does not have jurisdiction for litigation concerning employment relationship problems.

[5]      For  the  first  ground  I  relied  on  the  decision  of  the  Supreme  Court  in

Commissioner of Inland Revenue v Redcliffe Forestry Venture Ltd1 that indicated that the proceeding should be brought in the trial court.   For the second I relied on

1      Commissioner  of  Inland  Revenue  v  Redcliffe  Forestry  Venture  Ltd   [2012] NZSC 94, [2013] 1 NZLR 804.

provisions of the Employment Relations Act giving institutions established under that Act exclusive jurisdiction to hear and decide employment relationship problems, in particular the Employment Court’s exclusive jurisdiction under s 187(3).

[6]      In response to my minute, Mr O’Hagan noted this statement in the judgement of the Court of Appeal in Redcliffe Forestry Venture Ltd v Commissioner of Inland Revenue:2

But it was an exception that needed to be alleged and proved in the fresh proceeding, which would generally be brought in the Court at first instance, particularly if the facts were in dispute: Kuwait Airways Corporation v Iraqi Airways Corporation (No 2).

He referred to “generally” as indicating that the practice was not invariable and therefore there could be exceptions.  The quoted passage is explaining the reasoning of the judge at first instance.   It is not part of the ratio of the Court of Appeal’s decision.  Even so, the statement needs to be put in context.  When an unsuccessful party alleges that the other side prevailed because of fraud, the question may arise whether the appropriate remedy is appeal to an appellate court or a new proceeding in the original court to set aside the earlier judgment.  Decisions showing that a fresh

proceeding is more appropriate are: Flower v Lloyd,3  Cole v Langford,4  Jonesco v

Beard5  and Kuwait Airways Corporation v Iraqi Airways Corporation (No 2).6 The Supreme Court’s decision in Commissioner of Inland Revenue v Redcliffe Forestry Venture Ltd is consistent with that approach.   Noble v Owens goes another way.7

Rather than require a new trial the English Court of Appeal referred the case back to the original trial judge to decide only the fraud issue.  None of these cases support the proposition that a proceeding to set aside a judgment on the ground that it was fraudulently obtained can be brought in some first instance court other than the one

in which the original judgment was given.

2      Redcliffe Forestry Venture Ltd v Commissioner of Inland Revenue [2011] NZCA 638, [2012] 2 NZLR

823 at [13].

3      Flower v Lloyd (1877) 6 Ch D 297.

4      Cole v Langford [1898] 2 QB 36.

5      Jonesco v Beard [1930] AC 298.

6      Kuwait Airways Corporation v Iraqi Airways Corporation (No 2) [2001] 1 WLR 429 (HL).

7      Noble v Owens [2010] EWCA Civ 224, [2010] 1 WLR 2491 at [29] and [72].

[7]      For Mr O’Hagan, appeal could not be the remedy for his complaint against the  Employment  Court’s  decision.   An  appeal  from  a  decision  of  that  court  is available only for error of law.8    His proceeding is based on factual errors by the Employment Court attributable to perjury by Waitomo Adventures Ltd.  He needs to bring this proceeding there.

[8]      Mr O’Hagan queried whether the Employment Court had jurisdiction to hear a proceeding to set aside one of its judgments on the grounds that it was obtained by fraud.  He submitted that the jurisdiction provision of the Employment Relations Act (s 187) does not allow for this.   In his submission s 187(3), which ousts the jurisdiction of any other court, does not apply, and therefore the High Court should be able to hear his case.

[9]      Mr O’Hagan reads s 187 too narrowly.  Sections 179 and 187(1)(a) together allow   the   Employment   Court   to   hear   challenges   to   determinations   of   the Employment Relations Authority.  It was in a proceeding under s 179 that Waitomo Adventures Ltd obtained judgment against Mr O’Hagan.  This jurisdiction includes power to hear all matters ancillary to such a proceeding, including an action to set aside a judgment obtained by fraud.

[10]     Further, under s 186 the Employment Court within its limited jurisdiction has all the powers inherent in a court of record.  That includes the power to prevent an abuse of its processes.9    In Hunter v Chief Constable of the West Midlands Police,

Lord Diplock referred to:10

... the inherent power which any court of justice must possess to prevent misuse of its procedure in a way which, although not inconsistent with the literal application of its procedural rules, would nevertheless be manifestly unfair to a party to litigation before it, or would otherwise bring the administration of justice into disrepute among right-thinking people.

8      Employment Relations Act 2000, s 214.

9      See Watson v Clarke [1990] 1 NZLR 715 at 718-721 for a similar position taken in relation to the District Court, also a court of record with a limited jurisdiction. See the discussion of the Employment Court’s jurisdiction in NZ Railways Corporation v NZ Seamens Union IUOW

(No 2)  [1989]  2  NZILR  613  at  622-623  and  the  Court  of  Appeal’s  recognition  of  the

Employment Court’s powers as a court of record in Capital Coast Health Ltd v New Zealand Medical Laboratory Workers Union Inc [1996] 1 NZLR 7 at 20. For present purposes there are no material differences between the provisions of the Employment Contracts Act 1991 and the Employment Relations Act.

10     Hunter v Chief Constable of the West Midlands Police [1982] AC 529 at 536.

Misuse of a court’s procedure must include obtaining a judgment by fraud.

[11]     In summary, the Employment Court has power to set aside a judgment in a proceeding under s 179 if it was obtained by fraud under its inherent power to deal with all matters arising under s 179 and under its power as a court of record to ensure that its procedures have not been abused.

[12]     I accept the submission of Waitomo Adventures Ltd that Snowdon v Radio New Zealand Ltd11 is an example of the Employment Court hearing a proceeding to set aside one of its earlier decisions on the grounds that it was fraudulently obtained. While the Employment Court struck out the proceeding on the grounds that it was an abuse of process, the court did not say that it did not have jurisdiction to hear the proceeding.  Ms Snowdon sought leave to appeal to the Court of Appeal.12    While refusing leave, the Court of Appeal seemingly accepted that the Employment Court did have the jurisdiction to set aside one of its earlier decisions on the grounds that it was obtained by fraud.

[13]     I accordingly find that this proceeding is within the exclusive jurisdiction of the Employment Court under s 187 of the Employment Relations Act.  Therefore, this court cannot hear it.  That is consistent with the approach taken by the Supreme Court in Commissioner of Inland Revenue v Redcliffe Forestry Venture Ltd that any proceeding to set aside a judgment on the grounds that it was fraudulently obtained

is to be brought in the trial court.13   If Mr O’Hagan wishes to have the Employment

Court decision set aside because of Mr Andreef ’s alleged perjury, he ought to start a fresh proceeding in the Employment Court. This proceeding is dismissed.

Costs

[14]     Waitomo Adventures Ltd seeks costs.  It claims costs of $7,562.00 on a 2B basis plus disbursements of $110.00.  I accept that this is a category 2 proceeding but I do not accept the time allocations sought by the defendant.  I fix costs for 2.2 days

as follows:

11     Snowdon v Radio New Zealand Ltd [2010] NZEmpC 10, [2010] ERNZ 33.

12     Snowdon v Radio New Zealand Ltd [2010] NZCA 271.

13 Above n 1, at [31].

Item No.	Description	Days Allocated	Amount
2.	Commencement   of   defence   by defendant	1.0	$1,990.00
10.	Preparation     for     first     case management conference	0.2	$398.00
11.	Filing    memorandum   for   case management conference	0.2	$398.00
12.	Taking     part     in     telephone conference	0.2	$398.00
11.	Submissions on jurisdiction	0.4	$796.00
12.	Taking     part     in     telephone conference	0.2	$398.00
2.2	$4,378.00
Plus  disbursements  –  filing  a statement of defence	$110.00
TOTAL:	$4,488.00

Right of Review

[15]     If Mr O’Hagan wishes to review this decision, he would benefit from taking legal advice first.  To enable him to do so in good time, under r 2.3(2) of the High Court Rules I extend the time for seeking a review of this decision to 10 working days.

[16]     I make the following orders:

(a)       This proceeding is dismissed for want of jurisdiction.

(b)      I   order   costs   in   favour   of   Waitomo  Adventures   Ltd   against

Mr O’Hagan in the sum of $4,378.00 plus disbursements of $110.00.

(c)       The time for filing and serving any application for review is no later than 10 working days of this decision.

...........................................

Associate Judge R M Bell