Smith v Christchurch Press Company Ltd
[2000] NZCA 341
•21 November 2000
| IN THE COURT OF APPEAL OF NEW ZEALAND | CA292/99 |
| BETWEEN | BRYAN HISLOP SMITH |
| Appellant |
| AND | THE CHRISTCHURCH PRESS COMPANY LIMITED |
| Respondent |
| Hearing: | 18 October 2000 |
| Coram: | Gault J Thomas J Keith J |
| Appearances: | A A Couch for Appellant C H Toogood QC and A M Toohey for Respondent |
| Judgment: | 21 November 2000 |
| JUDGMENT OF THE COURT DELIVERED BY GAULT J |
This is an appeal against a judgment of the Employment Court (Judge Shaw) dismissing the appellant's claim against The Christchurch Press Co Ltd (The Press), his employer, for wrongful dismissal; Smith v Christchurch Co Ltd [1999] 2 ERNZ 685.
The dismissal arose out of an incident between the appellant and a co-worker (S) during a lunch break one working day. According to the Judge's findings, the appellant approached S just before lunch and suggested they have lunch together. They knew each other through work functions. The appellant commented on S's neck, as she was wearing a neck brace. S considered the appellant to be compassionate and agreed to have lunch with him. The appellant drove home and got some sandwiches and then met S in his car. He then drove her back to his house, though S did not realise where they were going until they arrived. The appellant brought out the sandwiches and some alcohol. It was cold in the dining room so the appellant suggested they shift into his bedroom. S was wary, but the appellant assured her she was safe.
The appellant offered to massage S's neck, but she refused and told him she was in a happy relationship and was not interested in him. Finally, after more assurances, she sat on a cushion and the appellant began to massage her neck. Gradually he began to massage under her top and commented on her breasts. S resisted and moved towards the door, but by this time the appellant had removed his shirt and was unbuckling his belt. He kissed her, placed his hand inside her skirt and masturbated. S said that she was scared and decided to acquiesce to prevent any further trouble. She humoured him, though she refused to take hold of his penis. Eventually the appellant released her and she told him to take her back to work. The appellant suggested they keep the incident quiet and she agreed.
S was ten minutes late back to work and was forced to reschedule an appointment she had for 2:30pm. That afternoon she asked a colleague to stay with her because she was scared of seeing the appellant. She left work early after telling the colleague about the incident. That night S and her partner wrote a note to the appellant telling him to stay away from her. The next day she left the note on his desk and together with her colleague went to her supervisor and complained about the incident.
The following day a formal complaint was made to the deputy general manager of The Press, Mr Broughton, and an investigation was initiated. At the initial meeting Mr Broughton considered that S was uncomfortable talking to him about the issue. As a result, Mr Broughton decided to delegate the issue to the Human Resources Adviser for The Press, Ms Schroder, and also seek advice from Mr McGinn, a lawyer experienced in employment law. The advice received was that an independent person should conduct the initial interview with S in order to get a full statement. Accordingly, Mr McGinn retained an investigator on behalf of The Press, who interviewed S, with Ms Schroder present. Mr Broughton explained that he did not have the experience or expertise to take the statement from S in such circumstances and he considered that it would be better if the person taking the statement was completely independent. Mr Broughton did not attend the interview because of the nature of the complaint and because S was clearly uncomfortable speaking to him about it as a male member of management.
Later, an interview was also conducted with the appellant. Present were the appellant's legal adviser, Mr Broughton, Mr McGinn, and Ms Schroder. Mr McGinn conducted most of the interview.
After considering the notes of the interview with S, speaking to Ms Schroder about her impressions of her, considering the report of the counsellor retained by The Press, and sitting in on the interview with the appellant, Mr Broughton concluded that the behaviour amounted to serious misconduct. Mr Broughton also placed some weight on evidence of the appearance of S upon her return to work that afternoon. The appellant was subsequently advised of Mr Broughton's decision that there had been serious misconduct and he was dismissed.
The appellant brought an action in common law against The Press claiming that the dismissal was wrongful. He sought payment of two weeks' salary in lieu of notice and general damages in the sum of $85,000 together with costs of medical care and of the proceedings. The claim was based on two main grounds. First, the appellant contended that the inquiry conducted by the employer was flawed in several respects: failure to conduct a full and fair inquiry into the facts of the matter; delegation of crucial aspects of the investigation to parties other than the decision-maker; failure to adequately investigate and resolve significant credibility issues in relation to S; and breach of the appellant's right to be heard by all three decision-makers. Secondly, the appellant submitted that the behaviour complained of occurred away from the workplace in the participants' own time and so was unrelated to his employment.
Judge Shaw rejected the appellant's claim. She concluded that The Press was not in breach of its obligation to act fairly and reasonably in conducting an investigation into the conduct of the appellant. The appellant was fully and fairly informed of the allegations and the evidence supporting it, was represented at all times and given adequate opportunity to answer the allegations in his own way.
Judge Shaw then considered whether the appellant had been wrongfully dismissed. The terms of the appellant's contract provided:
21.1This contract may be terminated by not less than two weeks notice by either party. …
21.5Nothing in the preceding sub-clause shall affect the right of the company to dismiss you without notice where you are guilty of such misconduct as would at common law justify immediate dismissal.
It was clear to the Judge that what had occurred was sexual harassment but she considered that in order to constitute misconduct sufficient to justify immediate dismissal at common law, the conduct must have occurred in the course of employment. She said that the appropriate test of whether the incident was in the course of employment was the "but for" test: would the sexual harassment have occurred but for the plaintiff's employment? She found as follows:
The plaintiff was clearly interested in S because of the after work drinks where she had told a story that excited him. He did not contact her out of work hours but took the opportunity at work to approach her while she was going about her duties. The fact that the incident took place away from the work premises during the lunch time does not remove the nexus between employment and the sexual harassment.
I find that the plaintiff was acting in the course of his employment and that the employer was correct in concluding this.
The Judge rejected the appellant's claim for wrongful dismissal and concluded that there was no basis for the appellant's claim that the employer had acted in a manner calculated or likely to cause the appellant undue mental stress, anxiety, humiliation, loss of dignity or injury to feelings. While there was no doubt that the appellant did suffer these feelings, and that they were caused by the investigation, the investigation was not set up specifically to create harm to the plaintiff, but to investigate a serious complaint, as was required. She concluded:
The defendant had to balance the upset and mental distress caused to the complainant with that of the defendant. As it conducted the proceedings fairly throughout, the defendant could do little else to mitigate the inevitable effects. The no doubt unpalatable truth for the plaintiff is that but for his behaviour towards the complainant in the first place he would not have had to go through this unpleasant experience.
In this Court Mr Couch for the appellant presented largely the same arguments as in the lower Court. He submitted firstly, that the Employment Court had applied the wrong test in determining whether or not the conduct complained of occurred in the context of the employment relationship. The "but for" test as applied by Judge Shaw, he said, was inappropriate because it focussed on how the appellant came to be in the situation where the conduct occurred rather than the connection, if any, between the conduct and the employment relationship between the appellant and his employer. He argued also that the procedure adopted for the investigation was unfair for the same reasons as had been advanced in the lower court.
This is a common law claim for wrongful dismissal. It is not a personal grievance under s27 Employment Contracts Act 1991. The claim is that The Press breached the implied term in the appellant’s contract of employment that it would not conduct itself in a manner calculated or likely to cause him undue mental distress, anxiety, humiliation, loss of dignity or injury to feelings.
As this Court made clear in Board of Trustees of Marlborough Girls’ College v Sutherland [1999] 2 ERNZ 611:
The common law position is clear in principle. The employee sues for breach of contract in terms such as those pleaded by Mrs Sutherland in her statement of claim … . As with actions for breach of contract generally, it is for the Court hearing the claim to decide whether on the evidence before it the claim is made out. (p617)
…
The common law action is one which directly engages, on the basis of the evidence before the Court, the question whether there was just cause or not for the dismissal. So far as that issue is concerned, there can be no question of deferring to the employer’s judgment. (p618)
Accordingly, it was for the Employment Court to determine whether the appellant had established that his dismissal breached his contract. It was submitted that the Judge erred in finding as she did, first because the conduct in question did not occur within the scope of his employment, and secondly because the procedure by which his conduct was investigated was unfair.
It was not argued that the appellant’s conduct, if it was sufficiently related to his employment, did not amount to serious misconduct justifying dismissal. As to that see BP Oil NZ Ltd v Northern Distribution Workers Union [1989] 3 NZLR 580. The argument for the employee was directed to the link between the conduct and the employment necessary to trigger the right of dismissal. As already mentioned, the Judge adopted the test of “but for” the employment relationship, conduct would not have occurred though she had qualified this by reference to “in the employment setting”. She used this to ascertain whether the appellant was acting “in the course of his employment”. Her conclusion was that the fact that the incident took place away from the work premises during the lunch time “does not remove the nexus between employment and the sexual harassment”.
The “but for” test is not unfamiliar, though in other fields it no longer is accepted as a sufficient test of causation giving rise to legal liability. It was applied in the High Court in a case of sexual harassment in employment under the Human Rights Commission Act 1977 in Ellis v Proceedings Commissioner [1997] 1 ERNZ 325, 329. The test was adopted in that case from earlier employment cases, though again it seems to have been complemented with a finding that the conduct “arose out of the employer – employee relationship”. Those earlier employment cases are NZ Labourers, etc IUOW v Fletcher Challenge Ltd (1989) 3 NZILR 129, 197 and Z v A [1993] 2 ERNZ 469, 483. The “but for” test for causative link in those cases appears to be traced back to McMahon v Post & Telegraph Department [1958] NZLR 717, 718, but matters have moved on somewhat since then: see Bank of New Zealand v New Zealand Guardian Trust Co Ltd [1999] 1 NZLR 664, 681; Price Waterhouse v Kwan [2000] 3 NZLR 39, 46.
Without more the “but for” test could not provide a test for all circumstances. As Mr Couch pointed out, at the extreme it could extend to all conduct, whenever occurring, involving persons who first met in an employment situation. Plainly that would permit employers to intrude too far into the private lives of employees.
At the other end of the spectrum Mr Couch relied on a number of cases relating to vicarious liability of employers for acts of employees “in the course of employment”, a phrase also employed in workers’ compensation cases. It appears again, and has been construed much more widely in the light of statutory purposes, in discrimination legislation in various countries. We were referred particularly to Nancollas v Insurance Officer [1985] 1 All ER 833 (accident when travelling to work), Waters v Commissioner of Police of the Metropolis [1997] IRLR 589 (sexual assault on off-duty police officer), Cluff & Canadian Human Rights Commission v Department of Agriculture 94 CLLC 16,176 (sexual harassment after conference), Jones v Tower Boot Co Ltd [1997] IRLR 168 (racial harassment), Chief Constable of the Lincolnshire Police v Stubbs [1999] IRLR 81 (sexual harassment on off-duty police officer). These cases reflect their context and essentially involve construction of terms with which we are not directly concerned. The fact situations do, however, indicate the wide range of circumstances in which the line between activities that are “job related” and those that are not have arisen.
Dismissal for serious misconduct cannot be confined to conduct in the course of employment in any but the widest sense. It has long been recognised that conduct outside the work relationship but which brings the employer or his business into disrepute may warrant dismissal: Airline Stewards & Hostesses of NZ IUOW v Air New Zealand Ltd [1986] ACJ 462, DB Breweries Ltd v Hodgson ((unreported) AEC 68/96 14 October 1996, Judge Travis), Mussen v NZ Clerical Workers Union [1991] 3 ERNZ 368.
Similarly conduct outside work may demonstrate that an employee has lost the attributes essential for the particular job: NZ Bank Officers’ IUOW v Databank Systems Ltd [1984] ACJ 21; NZ Bank Officers’ IUOW v Bank of New Zealand Ltd [1984] ACJ 641.
In Jones v Wiremakers Ltd [1998] 3 ERNZ 711 (a personal grievance case) Judge Palmer dealt with a breach of a prohibition against drinking in the lunch hour imposed in the interests of safety.
Another illustration is to be found in Bell v General Motors of Canada (1989) 27 CCEL 110. The conduct in that case, although away from the workplace, might have been said to be work related, but the Judge dealt with it as conduct which “revealed the true character of the employee”.
Mr Couch submitted that the categories of cases in which the employer can be said to have a legitimate interest in conduct outside the workplace must be very limited in the interests of restricting intrusion into employees’ private lives. That is fair comment, but we are not persuaded of any need for categories of conduct as suggested. Such situations can be so variable. Nevertheless there must be a clear relationship between the conduct and the employment. It is not so much a question of where the conduct occurs but rather its impact or potential impact on the employer’s business, whether that is because the business may be damaged in some way; because the conduct is incompatible with the proper discharge of the employees’ duties; because it impacts upon the employer’s obligations to other employees or for any other reason it undermines the trust and confidence necessary between employer and employee.
In the present case, on the factual findings of the Judge, there was ample basis for her conclusion that there was sufficient nexus between the appellant’s conduct and his employment.
The Judge having found proved the conduct alleged, there can be no quarrel with the view both of the employer and the Judge that it amounted to serious misconduct. The appellant’s conduct towards S was between two present employees, arose out of the work situation and, more importantly, had the potential to adversely affect the working environment. It is irrelevant that the actual sexual conduct occurred outside the workplace at lunchtime.
We do not accept that it is necessary for there to be demonstrated actual adverse effect on the employment situation before the employer is entitled to conclude that the conduct warrants dismissal. Mr Couch contended that without any evidence of actual negative impact there was no justification for dismissal. This cannot be correct. The employer does not have to wait for a negative impact on the working environment before dismissing an employee when such impact is inevitable. In many situations the potential for such an effect is clear enough. We agree with the comment of Judge Shaw as follows:
Given these circumstances and the effect that it had on S it is difficult to see how any employer could have contemplated having the two employees remain in the same work place. As Mr Broughton told the plaintiff when he was dismissing him, such conduct has a serious effect on the work place and gives rise to real concerns of incompatibility and safety.
As the Court concluded in Sutherland, the procedure followed in dismissing the employee is irrelevant to a question of wrongful dismissal at common law. All that was required was serious misconduct, and as indicated, we are satisfied that this was shown and was properly found by the Judge. However, had it been necessary for us to decide the point, we would have been satisfied, as was Judge Shaw, that a proper procedure was undertaken in the circumstances. Mr Broughton appropriately sought advice before conducting the interviews with S and the appellant, and received advice to instruct an independent investigator. The procedure adopted cannot be seen to be inappropriate when the employer engaged an investigator who was more experienced and more competent than Mr Broughton to conduct the interviews.
All the grounds of appeal having failed, the appeal is dismissed.
As the appellant is legally aided there is no order for costs.
Solicitors
P F Cheyne, Christchurch, for Appellant
Anthony Harper, Christchurch, for Respondent
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