Colleen Mattingly v Strata Title Management Ltd

• Jurisdiction: New Zealand
• Judge: CHRISTINA INGLIS
• Judgment Date: 14 February 2014
• Court: Employment Court
• Docket Number: ARC 50/13
• Date: 14 February 2014

In The Matter Of a challenge to a determination of the Employment Relations Authority

Between

Colleen Mattingly

Plaintiff

and

Strata Title Management Limited

Defendant

[2014] NZEmpC 15

judge/s

Judge Inglis

ARC 50/13

IN THE EMPLOYMENT COURT AUCKLAND

Challenge by the plaintiff to a costs determination of the Employment Relations Authority (the Authority) — Authority declined to award indemnity costs — investigation meeting had concluded at 2pm and Authority had pro-rated the time instead of apply a full day rate-whether it was contrary to equity and good conscience if a substantial part of the compensation awarded had to be disbursed to meet legal expenses — whether the daily tariff should be applied for a full day, half day, or at a pro rata rate — whether pre and post investigation meeting costs should have been allowed — whether the Authority had failed to adopt a “steely” approach to a without prejudice offer.

Appearances:

Mr Tim Oldfield, counsel for plaintiff

Ms Gemma Mayes, counsel for defendant

JUDGMENT OF JUDGE CHRISTINA INGLIS

CHRISTINA INGLIS

Introduction

1 This is a de novo challenge to a costs determination of the Employment Relations Authority (the Authority). 1 The parties agreed to the challenge being dealt with on the papers, and have filed extensive written submissions in support of their respective positions.

2 In the Authority the plaintiff had sought an award of indemnity costs against the defendant. The Authority declined to award such costs, and they are not pursued by the plaintiff in the context of its challenge. The Authority applied a pro rata approach to the notional daily tariff (of $3,500) to reflect the time spent at the investigation meeting (namely 9.30 am to 2.00 pm, with a lunch adjournment). This

led the Authority to a starting point of $2,000. The Authority Member then considered whether there were any factors that warranted either a decrease or increase to that starting point. The Authority concluded that a $300 decrease was appropriate to reflect the fact that the plaintiff withdrew an age discrimination claim at the beginning of the investigation meeting and a disability discrimination claim during the investigation, thereby putting the defendant to unnecessary costs. The Authority increased costs by $1,500 in recognition of the defendant's failure to accept a reasonable settlement offer made in advance of the Authority's investigation meeting. A submission that costs should be increased to reflect preparation time and attendances required in providing additional information prior to the investigation meeting fell on fallow ground. In the final analysis the Authority ordered the defendant to pay $3,200 to the plaintiff by way of contribution to its total claimed costs of $6,361.50. 2

3 The plaintiff seeks an award of $5,250. In summary, the plaintiff submits that the Authority applied the daily tariff in an unduly rigid manner; erred in failing to allow for preparation time and the plaintiff's success on an application to exclude evidence; failed to adopt a “steely approach” to the defendant's refusal to accept the without prejudice save as to costs offer; was wrong to have described the matter as “straightforward” and failed to approach its costs determination consistently with equity and good conscience. 3

4 The plaintiff invites the Court to rekindle an earlier approach to costs, namely balancing the quantum of any costs award against the relief ordered in favour of a successful employee party to ensure that they are not left out of pocket. This is said to be consistent with the equity and good conscience jurisdiction enjoyed by the employment institutions.

5 The defendant submits that the Authority's determination ought not to be lightly interfered with and that the plaintiff should be awarded the same amount as in the Authority, namely costs of $3,200 together with the filing fee of $71.56.

Approach

6 Because this is a challenge to a costs determination of the Authority, the starting point is cl 15(1) of sch 2 to the Employment Relations Act 2000 (the Act). It provides that the Authority may order any party to a matter to pay to any other party such costs and expenses “as the Authority thinks reasonable”. The Authority must exercise its discretion judicially and in accordance with principle. The principles relating to costs awards in the Authority are well established. 4 The general approach to costs in the Authority is by way of application of a notional daily tariff. That currently stands at $3,500. 5

7 As emphasised by the full Court in PBO Ltd (formerly Rush Security Ltd) v Da Cruz, “[t]he unique nature of the Authority and its proceedings means that parties to investigation meetings should not have the same expectations about procedure and costs as they have of the Court”. 6 The Court observed that there is nothing wrong in principle with the Authority's tariff based approach so long as it is not applied in a rigid manner without regard to the particular characteristics of the case. It recognised that flexibility could be injected into the costs assessment process by making upward or downward adjustments “in a principled way without compromising the Authority's modest approach to costs”. 7 Without prejudice save as to costs settlement offers may be taken into account as a factor increasing the costs contribution that would otherwise be ordered, along with conduct that increases costs unnecessarily. 8

8 In determining a de novo challenge to costs in the Authority the Court must stand in the Authority's shoes, but make its own decision. 9 While this approach can be simply stated its application is not without difficulty. As Judge Couch observed in Metallic Sweeping (1998) Ltd v Ford: 10

• [12] That raises the question of how the Court can and should conduct a de novo hearing of an application for costs. As in this case, most claims for

  costs are determined by the Authority on the basis of written submissions by the parties or their representatives. All concerned have been directly involved in the investigation and, as the Authority did in this case, may make only brief and general references to the events which are relevant to the outcome. Evidence is rarely if ever given in relation to costs. Rather the Authority relies on its own knowledge of events, particularly in relation to interlocutory matters and the manner in which the parties have conducted their cases.

• [13] When conducting a de novo hearing of substantive issues, the Court effectively puts the Authority's determination to one side and decides the matter on the basis of the evidence adduced before it. Given the nature of the process by which costs determinations are made, however, that is simply impractical when the Court is asked to decide what costs ought to have been awarded by the Authority. The Court receives nothing from the Authority. There is no record of the investigation meeting. While it would be possible for oral evidence to be given by the parties about every aspect of the Authority's investigation and each other's conduct on which they seek to rely, that could easily lead to a hearing out of all proportion to what is at stake.

• [14] It seems to me that the only practical way of deciding a challenge to a costs determination is for the Court to be primarily informed through the submissions of the parties, with the possibility that this may be supported by affidavit evidence about contentious issues. … Inevitably, a Judge of the Court deciding a challenge can never be as well informed about events as the member of the Authority who conducted the investigation but I can see no realistic means to bridge that gap. In areas of uncertainty, the Court will need to have regard to the Authority's assessment of matters in a manner it would not do when deciding a substantive challenge by way of a hearing de novo. It may also be helpful and appropriate for the Court to have regard to the Authority's substantive determination.

9 I agree with, and adopt, the approach identified by Judge Couch in Metallic Sweeping.

Is it contrary to equity and good conscience if a substantial part of the compensation awarded has to be disbursed to meet legal expenses?

10 The objects of the Act are set out in s 3, and include the need to address the inherent inequality of power in employment relationships. 11 Mr Oldfield, counsel for the plaintiff, submits that even modestly incurred costs are a significant burden on the majority of employees, bearing in mind the median wage (which, it is said, currently stands at $844 per week). He relies on s 3(a)(ii) as a springboard for a submission that, in assessing costs, there is a need to ensure that a successful claim is not negated by an award that does not amount to reimbursement and that:

To do otherwise does not acknowledge and address the inherent inequality of power in the employment relationship and would not accord with the Authority's equity and good conscience jurisdiction.

11 Boiled down to its fundamentals, Mr Oldfield's submission is that in determining costs the Authority should be guided by the relief granted to an employee party, to ensure that it is not eroded to the point that pursuing litigation becomes a cost neutral, or cost deficit, process. The argument is one that found favour with the Court in Harris v Nurse Maude District Nursing Association (No 2). There the Court expressed the view that: 12

… it would be grossly unfair and would offend against any principles of equity and good conscience if a substantial part of the compensation awarded to [the plaintiff] had to be disbursed to meet her expenses.

12 As Mr Oldfield acknowledged, the Court's approach in Harris did not find favour with the Court of Appeal in Aoraki Corporation Ltd v McGavin, a case decided under the Employment Contracts Act 1991. 13 However he submitted that the enactment of the 2000 Act, and...