David Bourne and Others v Real Journeys Ltd

JurisdictionNew Zealand
CourtEmployment Court
Judgment Date28 September 2011
Docket NumberCRC 27/09
Date28 September 2011

[2011] NZEmpC 120


CRC 27/09

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

David Bourne
First Plaintiff


John Stephen Conrad
Second Plaintiff


James King Turner
Third Plaintiff


New Zealand Merchant Service Guild Industrial Union Of Workers Incorporated
Fourth Plaintiff
Real Journeys Limited

Paul McBride, counsel for the plaintiffs

Peter Churchman and Janet Copeland, counsel for the defendant

Challenge to aspects of determination by Employment Relations Authority which held plaintiffs had not been unjustifiably dismissed and that they had breached their statutory and contractual duties of good faith — non de novo challenge — plaintiffs were harbor masters on Milford Sound scenic cruises — defendant undertook restructuring — whether selection process for redundancy unfair — whether plaintiffs discriminated against due to union activities under s104 (discrimination) — whether defendant breached its obligation of good faith by failing to supply information under s4(1A)(c) (access to information, relevant to the continuation of the employees' employment) — whether the plaintiffs had breached their obligation of good faith under s4(1A)(b) (parties to be responsive and communicative) by delaying responses in the consultation process — issues regarding non de novo hearings.

The issues were: whether the selection process was flawed; whether the plaintiffs were discriminated against due to involvement with union activities under s104 ERA (discrimination) and s107 ERA (definition of involvement in activities of union); whether Real Journeys had breached its obligation of good faith by failing to supply information under s4(1A)(c) ERA (access to information, relevant to the continuation of the employees' employment); and whether the plaintiffs had breached their obligation of good faith under s4(1A)(b) ERA (parties to be responsive and communicative).

Held: The redundancy clause relied on the by the plaintiffs in relation to the flawed selection process only applied to selection for “new or redefined positions”. It did not apply to selection for redundancy of employees in redundancy positions. The clause imposed a general obligation to consult with affected employees, and it was clear the company had done that.

As the main loss of business was the Milford Sound operation, the company's decision to make savings there made sense. The disestablishment of their positions would not have any effect on the other launch masters but the converse did not apply. Also, launch masters varied in their experience and capabilities. Each one was cleared to operate one or more particular vessels. A relocation of some of the masters might have required retraining. A fair and reasonable employer would have made the section for redundancy from the Milford Sound launch masters.

Conrad fell within the definition in s107 ERA by reason of being a union delegate and negotiator. Bourne and King-Turner did not. Being covered by a collective agreement and opposing the redundancy did not meet the definition under s107(1)(d) ERA (had made or caused to be made a claim for some benefit of an employment agreement). As all of the Milford launch masters had been included in the selection pool, Conrad had not been discriminated against. The presumption under s119 ERA (presumption in discrimination cases — union activities) had been rebutted. There was no evidence that the company had predetermined the nature of the restructuring or that the consultation process had been conducted other than in good faith.

The plaintiffs' statement of claim had not included any reference to good faith on the part of the company or to the obligation imposed by s4(1A)(c) ERA. There was no evidence that the Authority had made any decision about Real Journeys' obligations under s4(1A)(c) ERA. The claim was not properly before the Court and could not be decided.

Criteria requiring subjective assessment could not be objectionable in themselves. Issues such as the impression that the candidates made were valid considerations. It was justifiable that some of the criteria were subjective and it was what a fair and reasonable employer would have done in the circumstances. Further, it was wrong to argue that the criteria were unfair because they were unilaterally determined. Under the collective agreement and as a matter of good faith, the company was obliged to consult about the proposed criteria, but there was no requirement for it to obtain the employees' agreement to the proposal. The evidence showed that Real Journeys had done all it was required to do by consulting and considering the responses.

The without prejudice settlement letter could be taken into account in considering possible breaches by the plaintiffs of their duty of good faith. It was a vital ingredient of Real Journeys' cause of action. The only facts that the court needed to know about it was that it had been received and that an offer had been made to settle. Further s189(2) (equity and good conscience — evidence and information) ERA allowed the court to accept such evidence and information as in equity and in good conscience it thought fit.

While the plaintiffs' delay as a whole was substantial and avoidable, it had not amounted to a breach of good faith. However, the Guild's late response to the settlement offer had been a breach of good faith. Parties had to be active, constructive, responsive and commutative to resolve their differences by agreement if possible. Not every failure to comply with the obligation of good faith in s4(1) ERA warranted a penalty. The Guild's response had not been deliberate or sustained and it had not been the Guild's intention to undermine the employment relationship.

Plaintiffs challenge succeeded in relation to the imposition of a penalty for breach of good faith only.


This judgment decides a challenge by the plaintiffs to some aspects of a determination of the Employment Relations Authority. As that challenge was not to the whole of the determination, the case also raises issues about the nature and scope of what is commonly known as a non de novo challenge.


The first, second and third plaintiffs were employed by the defendant as launch masters, principally in command of tourist excursion vessels on Milford Sound. They were all members of the fourth plaintiff (the Guild) which is a union representing employees in the maritime industry.


In early 2009, the defendant proposed a restructuring of its business on Milford Sound. This involved the possibility that one or more of its launch master positions might become redundant and staff dismissed as a result. Changes to terms of employment of remaining staff were also proposed. After a consultation process which occupied more than three months, the defendant decided to proceed with a revised restructuring plan. The plaintiffs objected on several grounds, including discrimination, unfair process and an alleged breach of an applicable collective agreement between the Guild and the defendant which covered the work of the first, second and third plaintiffs.


This led to proceedings before the Authority initiated by the plaintiffs. In a determination dated 5 June 2009, 1 the Authority issued an interim injunction restraining the defendant from proceeding with the restructuring until the claims made by the plaintiffs had been substantively determined.


The Authority held its substantive investigation meeting later in June 2009 and issued its final determination on 5 October 2009. 2 That dealt with the claims initially made by the plaintiffs and also with counterclaims made by the defendant that the plaintiffs had breached obligations of good faith and fair dealing imposed by s 4 of the Employment Relations Act 2000 (the Act) and by provisions of the collective agreement. The Authority very largely dismissed the plaintiffs' claims and upheld the defendant's counterclaim. The plaintiffs challenge is to some aspects of that final determination.


The Authority's substantive determination effectively ended the interim restraint on the defendant completing the restructuring it had begun in May 2009. Shortly after the determination was given, the defendant dismissed the second and

third plaintiffs from their permanent positions but immediately re-engaged them on fixed term agreements for a period of months over the summer. Notwithstanding these developments, the plaintiffs elected only to have the Court hear selected aspects of the matter which had been before the Authority.
Nature and extent of the hearing

Originally, the plaintiffs sought urgency and this was granted to an extent by the Chief Judge on 6 November 2009 when he directed that a hearing of the matter begin on 10 February 2010. Unfortunately, the nature and extent of that hearing were unclear and unsatisfactory when it began. The statement of claim failed to include the particulars required by subsections ( 3) and (4) of s 179 of the Act: 3

  • 179 Challenges to determinations of the Authority

    • (3) The election must–

      • (a) specify the determination, or the part of the determination, to which the election relates; and

      • (b) state whether or not the party making the election is seeking a full hearing of the entire matter (in this Part referred to as a hearing de novo).

    • (4) If the party making the election is not seeking a hearing de novo, the election must specify, in addition to the matters specified in subsection (3),–

      • (a) any error of law or fact alleged by that party; and

      • (b) any question of law or fact to be resolved; and

      • (c) the grounds on which the election is made, which grounds are to be specified with such reasonable particularity as to give full advice to both the court and the other parties of the issues involved; and

      • (d) the...

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