Beatrice Katz v Mana Coach Services Ltd

JurisdictionNew Zealand
CourtCourt of Appeal
JudgeArnold J
Judgment Date02 Dec 2011
Neutral Citation[2011] NZCA 610
Docket NumberCA386/2011

[2011] NZCA 610

IN THE COURT OF APPEAL OF NEW ZEALAND

Court:

Glazebrook, Arnold and Ellen France JJ

CA386/2011

Between
Beatrice Katz
Applicant
and
Mana Coach Services Ltd
Respondent
Counsel:

P McBride and T Kennedy for Applicant

B A Corkill QC and B Scotland for Respondent

Application for leave to appeal determination of Employment Court — applicant caused accident by negligence while driving bus during course of employment and was charged with careless driving — a guilty plea was entered and applicant was discharged without conviction — sought to recover legal costs from employer — whether employee entitled to be indemnified for legal costs following a prosecution for a fault based offence — whether case raised sufficient question of law for leave to appeal to be granted.

The issues were: whether an employee was entitled to be indemnified for legal costs following a prosecution for a fault based offence; whether the obligation to indemnify at common law was lost if there was an act of negligence on the part of the employee; and whether the case raised a question of law that was sufficient for leave to appeal to be granted.

Held (Glazebrook J dissenting): The indemnification of agents at common law did not extend to expenses incurred in defending an allegation that the person charged did something which he or she did not in fact do and which it was not his or her duty to do. The reason was that such expenses were not incurred by the worker as an agent of the employer in the reasonable performance of the worker's duties ( Christchurch City Council v Davidson).

Although the discharge without conviction was deemed to be an acquittal, it did not preclude the Employment Court judge from considering the evidence in order to reach a view about the cause of the accident. Having heard that evidence, the judge concluded that the accident was caused solely through K's negligence. In other words, there was conduct that constituted the offence. On the principle in Christchurch City Council v Davidson it could not sensibly be argued that K's conduct fell within the reasonable performance of her duties. In any event, that did not involve a question of law, but rather the application of a settled legal principle to the particular facts.

This did not mean that it was accepted that Mana could recover its losses (damage to the bus) from K. The considerations relevant to whether an employee was entitled to be indemnified for legal costs following a prosecution for a fault based offence might be different from those that arose where the employer sought to recover its losses from its employee and that question should be addressed when, if ever, it arose.

Application for leave to appeal dismissed.

JUDGMENT OF THE COURT
  • A The application for leave to appeal is dismissed.

  • B The applicant must pay the respondent costs for a standard application on a band A basis plus usual disbursements.

REASONS

Arnold and Ellen France JJ

[1]

Glazebrook J

[16]

ARNOLD AND ELLEN FRANCE JJ

(Given by Arnold J)

Background
1

The applicant, Ms Katz, seeks leave to appeal from a decision of the Employment Court dated 25 May 2011. 1 In that decision Judge Ford held that Ms Katz' employer, Mana Coach Services Ltd (Mana), was not liable to indemnify her for legal costs which she incurred when she was prosecuted for careless driving. The prosecution arose out of a traffic accident that occurred while Ms Katz was driving a bus on her assigned route in the course of her employment. The Employment Relations Authority had also dismissed Ms Katz' claim. 2

2

The accident happened when Ms Katz was attempting a right turn at an intersection and came into contact with a stationary car which was waiting to cross the intersection. Both the bus and the car suffered damage. In an insurance claim form which she completed on the day of the accident, Ms Katz admitted responsibility, saying that she simply did not see the car.

3

Ms Katz was charged with operating a vehicle carelessly. She entered a plea of guilty and was discharged without conviction, presumably under s 106 of the Sentencing Act 2002. In terms of s 106(2), such a discharge is deemed to be an acquittal.

4

Ms Katz received a fee note from her lawyer for $562.50, which covered advice and three court appearances in relation to the prosecution. Ms Katz then sought, through her union, to recover this sum from Mana. There being no express indemnity clause in her employment agreement, Ms Katz relied on what she described as “the general rule of law that an employee is to have an indemnity acting in the execution and reasonable performance of duty” and an implied term in her employment contract. Mana refused to indemnify her.

Basis of application
5

This Court may grant leave to appeal on a question of law where the question is one that “by reason of its general or public importance or for any other reason” ought to be submitted to the Court for decision. 3 For Ms Katz, Mr McBride submitted that three questions of law were raised, each of which was of general or public importance and should be dealt with by this Court.

6

He put the questions in this way:

Did the Employment Court err in determining:

  • (i) That there was no common law indemnity where the bringing of the charges was linked to the performance of the employee's duty?

  • (ii) The obligation to indemnify at common law is lost if there is some mere act of negligence on the part of the employee?

  • (iii) The discharge without conviction did not affect the above?

7

In support of his submission that the scope of the common law indemnity was an important issue, Mr McBride referred to an affidavit by Ms McAra, the General Secretary of the New Zealand Merchant Service Guild. The Guild includes among its membership maritime pilots, ships' masters and deck officers. Ms McAra said that the members of the Guild place significant reliance on being indemnified by their...

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4 cases
  • The Attorney-General v Van Essen and Others
    • New Zealand
    • Court of Appeal
    • 24 Febrero 2015
    ...n 10, at [19]. 178 As to the common law right of indemnity owed by an employer to an employee see Katz v Mana Coach Services Limited [2011] NZCA 610, [2011] ERNZ 186 at [9], citing Christchurch City Council v Davidson [1997] 1 NZLR 275 (CA) at 294. Such an indemnity is limited to employees ......
  • Laura Jane George v Auckland Council NZEmpC Auckland
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    ...Interpretation Act 1999, s 7 . 23 Auckland Regional Council v Tilialo ERAAuckland AA368/09 , 15 October 2009. 24 [1957] AC 555 (HL). 25 [2011] NZCA 610. 26 At [14]. 27 At [17]. 28 It does not appear that there was an indemnity clause in the employment agreement at issue in Lister and Masonr......
  • Beatrice Katz v Mana Coach Services Ltd Coa
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    ...COURT OF APPEAL OF NEW ZEALAND CA386/2011 [2011] NZCA 610 BETWEEN BEATRICE KATZ Applicant AND MANA COACH SERVICES LTD Respondent Hearing: 20 October 2011 Court: Glazebrook, Arnold and Ellen France JJ Counsel: P McBride and T Kennedy for Applicant B A Corkill QC and B Scotland for Respondent......
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