Alan Mayne v Polychem Marketing Ltd

JurisdictionNew Zealand
JudgeGL COLGAN
Judgment Date18 April 2012
CourtEmployment Court
Docket NumberARC 68/11
Date18 April 2012

In the matter of a challenge to a determination of the employment relations authority

And in the matter of a preliminary question of jurisdiction

Between
Alan Mayne
Plaintiff
and
Polychem Marketing Limited
Defendant

[2012] NZEmpC 60

ARC 68/11

IN THE EMPLOYMENT COURT AUCKLAND

Challenge to Employment Relations Authority determination raising a preliminary question of jurisdiction — plaintiff employee in 1981 of company sold to defendant in 1982 — terms of sale that employees to be taken on terms and conditions of employment no less favourable than those with company — company had agreed to provide “healthcare cover” to all its employees and to continue to pay for those healthcare benefits after those employees retired from employment with it — plaintiff retired in 1990 — defendant continued to pay plaintiff's healthcare costs under its healthcare scheme until 2009 — alleged breach of employment contract — whether the Employment Court had jurisdiction to determine claim if plaintiff had ceased to be an employee before the Employment Contracts Act 1991 came into force.

Counsel::

Chris Patterson and Andrea Halloran, counsel for plaintiff

John Hannan and Lauren Simpson, counsel for defendant

INTERLOCUTORY JUDGMENT OF CHIEF JUDGE GL COLGAN
1

This challenge to a determination 1 of the Employment Relations Authority raises a preliminary jurisdictional point concerning whether the Authority was, and this Court is now, empowered to determine the plaintiff's claims. Polychem Marketing Limited (PML) says that the Authority was, and the Court is, not so empowered for the following reasons.

2

First, the defendant says that the plaintiff was never its employee. Rather, it says that the plaintiff was a director of the company but resigned from that role in 1990. Alternatively, the defendant says that even if the plaintiff was once its employee, he ceased to have that status at the latest by 31 December 1990 or perhaps

even as long ago as 1986 when he ceased to perform any duties for the defendant. In these circumstances, the defendant says that there was no employment agreement or contract between the parties immediately before the Employment Relations Act 2000 (the Act) came into effect. It follows, the defendant says, that the transitional provisions of s 242 of the Act do not apply to the circumstances of Mr Mayne's claim. PML says that, in these circumstances, neither the Authority nor this Court on a challenge had or has jurisdiction to consider these claims
3

Some of the relevant allegations in the plaintiff's amended statement of claim are admitted, although some are denied. For the purpose of determining whether the Court has (and the Authority had) jurisdiction to enter upon the merits of Mr Mayne's claims, I will assume that those allegations of fact in the amended statement of claim which are denied, will be capable of proof by the plaintiff. That is the conventional way in which the Court determines an application to strike out a proceeding for lack of jurisdiction.

4

The following is the statement of the issues for decision that was agreed between the lawyers:

If the plaintiff was ever an employee of the defendant, but ceased to be an employee before the coming into effect of the Employment Contracts Act 1991, does the Court have jurisdiction to determine, and if appropriate provide a remedy in relation to, the plaintiff's claim that his alleged employment contract with the defendant included an obligation to provide on-going health care and insurance cover to him after he retired?

5

Materially, the plaintiff's claim is as follows.

6

In 1981, Mr Mayne was both the sole shareholder in, and (as its managing director) an employee of, a company known as Polychem NZ Limited (PNZL). In that year, PNZL agreed, as a matter of contract, to provide what is described as “healthcare cover” to all its employees (including Mr Mayne) and to continue to pay for these healthcare benefits after those employees retired from employment with it.

7

In May 1982, PNZL sold its assets and goodwill to the defendant (PML). Under the terms of sale, PNZL employees were taken on by PML on terms and conditions of employment including that these would be no less favourable than those which they had enjoyed with PNZL and that PML would meet any and all obligations then owed by PNZL to its employees, both current and former.

8

PML continued to pay for Mr Mayne's healthcare benefits as part of its company healthcare scheme.

9

In mid-1986, the defendant's shares in PML were sold to English China Clay PCL Limited (ECCL). Among the terms of this sale of shares was that PML's employment obligations to its employees would continue unchanged. In particular, it is said by the plaintiff that an oral condition of this sale was that the defendant's operations would remain the same and, amongst other things, it would continue to meet any and all of its employment obligations including those to former employees under its healthcare scheme. The plaintiff says that following this sale of shares, the defendant continued to provide and pay for the plaintiff's healthcare costs. Despite this change in shareholding, PML continued in existence as the same legal entity and as Mr Mayne's employer.

10

In 1990, Mr Mayne retired from the defendant's employment but it continued to pay for his healthcare costs under its healthcare scheme.

11

In November 2004, the plaintiff says that he and the defendant agreed that he would remain in the defendant's healthcare scheme but that henceforth he would meet his own costs of doing so provided that PML continued to provide the full benefits of its healthcare scheme to other former employees of PNZL. Although it is not entirely clear what became of the entitlements of those other employees, if PML discontinued providing these to them, then it is arguable that Mr Mayne's conditional variation to his own employment agreement was not adhered to by PML so that he was entitled to expect the defendant to continue to maintain his benefits.

12

On about 1 December 2005, shares in the defendant company were sold to Nuplex Industries Limited. Employment obligations, including the conditional healthcare scheme obligations to the plaintiff, remained unchanged following this sale of shares.

13

In late September 2009, the plaintiff was advised that he and other former employees would no longer be included in the healthcare scheme with effect from 1 November 2009. Since that date, the defendant has not paid for Mr Mayne's healthcare benefits or retained him within its healthcare scheme.

14

The plaintiff's case, in essence, is that a contractual obligation by his employer was inherited in law by the defendant and has now been breached by it. Mr Mayne's cause of action is for breach of employment contract, which breach occurred first on 1 November 2009 and has continued since then.

The Court's jurisdiction/powers
15

On a challenge from a determination of the Employment Relations Authority, this Court draws the...

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