Beatrice Katz v Mana Coach Services Ltd

• Jurisdiction: New Zealand
• Judge: Arnold J
• Judgment Date: 02 December 2011
• Neutral Citation: [2011] NZCA 610
• Docket Number: CA386/2011
• Court: Court of Appeal
• Date: 02 December 2011

Between

Beatrice Katz

Applicant

and

Mana Coach Services Ltd

Respondent

[2011] NZCA 610

Court:

Glazebrook, Arnold and Ellen France JJ

CA386/2011

IN THE COURT OF APPEAL OF NEW ZEALAND

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.

Counsel:

P McBride and T Kennedy for Applicant

B A Corkill QC and B Scotland for Respondent

• 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.

JUDGMENT OF THE COURT

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 employer if things go wrong. The Employment Court's ruling, she said, “will potentially have a significant impact on employees generally”.

Discussion

8 While we accept that the scope of the common law indemnity owed by an employer to an employee does have general importance, we note that this Court has previously stated the relevant principle. In Christchurch City Council v Davidson 4 the Christchurch City Council appealed against various judgments of the Employment Court which dealt with claims against it by four employees at its Civic CrÈche. They had been prosecuted for the sexual abuse of children in their

care at the crÈche but were discharged by the trial Judge. Included in the employees' claims was a claim for indemnity for the legal costs they incurred in defending the charges

9 The Employment Court Judge had found that the employees were entitled to be indemnified for these costs under the terms of their collective agreement as well as at common law. A Full Bench of this Court dismissed the Council's appeal against the indemnity finding, as the Court is precluded from considering an appeal against a decision on the construction of a collective agreement. Despite this, the Court said that it had concluded that the Employment Court had erred in its view of the indemnification of agents at common law. 5 The Court went on to say: 6

While the appeal on the indemnity question must accordingly fail, we should record that the...