Bluestar Print Group (Nz) Ltd v David Mitchell

• Jurisdiction: New Zealand
• Judge: Stevens J,Heaton
• Judgment Date: 19 August 2010
• Neutral Citation: [2010] NZCA 385
• Docket Number: CA504/2009
• Court: Court of Appeal
• Date: 19 August 2010

BETWEEN

Bluestar Print Group (Nz) Ltd

Appellant

and

David Mitchell

Respondent

[2010] NZCA 385

Court:

O'Regan P, Randerson and Stevens JJ

CA504/2009

IN THE COURT OF APPEAL OF NEW ZEALAND

Catchline:

Appeal concerning the correctness of the Employment Court's decision to disregard a Calderbank offer when assessing costs because the offer did not address the vindication that employee (who had brought a personal grievance claim for constructive dismissal) was seeking — whether there was an error of law by the Employment Court in not taking into account the Calderbank offer because it did not address the personal vindication elements of the personal grievance.

C Heaton for Appellant

P B Churchman as counsel assisting the Court

JUDGMENT OF THE COURT

• A The appeal is allowed.

• B The costs order in the Employment Court is quashed.

• C There is no order for costs in this Court.

REASONS OF THE COURT

(Given by Stevens J)

Introduction

1 Mr Mitchell was employed as a cutter and guillotine operator by Printlink (a subsidiary of the appellant Bluestar) from 1990. He brought a personal grievance for constructive dismissal following his resignation on 30 December 2003. He claimed reimbursement of lost wages, compensation, including $100,000 for hurt and humiliation, and exemplary damages of $400,000, each sought under s 123 of the Employment Relations Act 2000 (ERA). Among other complaints, he contended that the appellant had given incorrect information to the Accident Compensation Corporation (ACC) which led to his claim for compensation for a work-related accident being declined.

2 This appeal concerns the correctness of the Employment Court's decision 1 to disregard a Calderbank offer 2 by the appellant when assessing costs because the offer did not address the vindication that Mr Mitchell was seeking. This Court 3 granted leave to appeal under s 214 of the ERA on the following question of law:

Was there an error of law by the Employment Court in not taking into account the Calderbank offer because it did not address the personal vindication elements of the personal grievance?

Procedural history

Employment Relations Authority

3 Mediation failed and the matter went to the Employment Relations Authority. The Authority dismissed Mr Mitchell's personal grievance and exemplary damages claims. After the parties were unable to settle costs, the Authority awarded $6,000 to the appellant. Mr Mitchell appealed to the Employment Court.

Employment Court

4 Mr Mitchell was partially successful in the de novo hearing before the Employment Court. 4 Judge Shaw found that the employer had breached its duty of good faith to Mr Mitchell by failing to respond to his complaints, failing adequately to review his working conditions when he returned to work from sick leave, and providing incorrect information to ACC without offering him a chance to comment on it, which resulted in his ACC claim being initially declined. The Judge concluded that the employer's unreasonable actions caused his foreseeable resignation. She found that he had been unjustifiably constructively dismissed and awarded him

$10,000 under s 123(1)(c)(i) of the ERA. The claim for exemplary damages was dismissed on the basis that it had been abandoned. 5 We return to this finding below.

Costs decision

5 The Judge noted that there was no specific guidance in the Employment Court Regulations 2000 (the Regulations) and applied the costs regime stated at r 14.11(4) of the High Court Rules. This rule provides that the Court may take into account a Calderbank offer which is “close to” the benefit obtained in judgment. The Judge disregarded the Calderbank offer stating that it did not address the personal vindication element which was “at the heart of Mr Mitchell's claim”. 6 The offer was unaccompanied by an acknowledgement of wrongdoing or apology. Hence, the Judge concluded that Mr Mitchell, having abandoned some of the large monetary claims, was not motivated by money, but rather by having a court assess the merits of his claim. The Judge awarded Mr Mitchell $1,000 for Authority costs,$3,000 Court costs and $1,510 disbursements.

Applicable regulations and rules

Employment Court Regulations

6 Regulations 68 and 69 contain costs rules for that Court. Regulation 68(1) states:

In exercising the Court's discretion under the Act to make orders as to costs, the Court may have regard to any conduct of the parties tending to increase or contain costs, including any offer made by either party to the other, a reasonable time before the hearing, to settle all or some of the matters at issue between the parties.

7 Regulation 6 states that where there is no relevant procedure in the Regulations or the ERA, the Court must resolve the issue, as nearly as is practicable, in accordance with the High Court Rules.

High Court Rules

8 Rules 14.1–14.23 of the High Court Rules set out the costs regime. Rule

14.10 states that a party may make a Calderbank offer at any time. Rule 14.11 governs the effect of Calderbank offers on costs:

Effect on costs

• (1) The effect (if any) that the making of an offer under rule 14.10 has on the question of costs is at the discretion of the court.

• (2) Subclauses (3) and (4)–

  • (a) are subject to subclause (1); and

  • (b) do not limit rule 14. 6 or 14.7; and

  • (c) apply to an offer made under rule 14.10 by a party to a proceeding (party A) to another party to it (party B).

• (3) Party A is entitled to costs on the steps taken in the partner after the offer is made, if party A–

  • (a) offers a sum of money to party B that exceeds the amount of a judgment obtained by party B against party A; or

  • (b) makes an offer that would have been more beneficial to party B than the judgment obtained by party B against party A.

• (4) The offer may be taken into account, if party A makes an offer that–

  • (a) does not fall within paragraph (a) or (b) of subclause (3); and

  • (b) is close to the value or benefit of the judgment obtained by party B.

Submissions

9 Ms Heaton for the appellant submitted that the Employment Court erred in finding that Mr Mitchell had abandoned his claim for exemplary damages with the result that Judge Shaw erred in her decision to disregard the Calderbank offer. Ms Heaton also submitted that she erred in considering the offer under r 14.11(4) of the High Court Rules, rather than the more prescriptive r 14.11(3). As a result the Calderbank offer was not given its proper weight.

10 Mr Churchman, counsel assisting the Court, submitted that the appellant had not identified an error of law in Judge Shaw's decision. Rather, the issue of whether he had abandoned his exemplary damages claim was one of fact which the Judge was competent to determine. Further, the Judge was exercising a discretion on the question of costs and this should not lightly be interfered with. Finally, he submitted that Calderbank offers in the employment law context should not necessarily be treated in the same way as those in respect of ordinary civil cases, given the trust and confidence inherent in the employment relationship.

Discussion

The Calderbank offer

11 It is convenient to refer first to the terms of the Calderbank offer. It was made on 30 November 2005, before the claim came before the Employment Relations Authority. The offer relevantly stated:

Without Prejudice Save as to Costs

Dear Mr Mitchell

Printlink — Employment Relations Authority Matter

This letter is what is known as a “Calderbank letter”. It is privileged and “without prejudice save as to costs”. That means it cannot be shown to the Employment Relations Authority until the Authority has made its decision following the hearing. It is written for the purpose of trying to resolve the dispute between you and Printlink.

Printlink offers to settle fully and finally for $10,000, plus the sum of $3,000 toward your past legal costs. The total sum of $13,000 would be paid to you immediately, under section 123(1)(c)(i) of the Employment Relations Act 2000, which means it would not be subject to any taxation in your hand.

I urge you to take legal advice about this letter and what it means. I recommend that you discuss it with your local community law centre or give the Wellington Community Law Centre a call…

12 Mr Mitchell chose to ignore the letter and made no reply to it.

A...