David Brown v New Zealand Basing Ltd

• Jurisdiction: New Zealand
• Judge: B A CORKILL
• Judgment Date: 15 December 2014
• Court: Employment Court
• Docket Number: EMPC 237/2014
• Date: 15 December 2014

In the Matter proceeding removed from the Employment Relations Authority

BETWEEN

David Brown

First Plaintiff

and

Glen Sycamore

Second Plaintiff

New Zealand Basing Limited of Hong Kong (A wholly owned subsidiary of Cathay Pacific Airways Limited of Hong Kong)

Defendant

[2014] NZEmpC 229

court:

Ellen France, French and Cooper JJ

EMPC 237/2014

IN THE EMPLOYMENT COURT AUCKLAND

Applications for declarations that two pilots should not be discriminated against by being dismissed upon attaining the age of 55 years — employees were employed by a subsidiary of a Hong Kong airline company — were based in New Zealand but most of their duties took place outside of New Zealand — employment offers and conditions of service stated that the applicable law was that of Hong Kong — following a 2007 House of Lords case (Crofts) which stated that the base of a peripatetic employee should be treated as his place of employment, employer had indicated it was likely to raise the retirement age to 65 in conformity with local laws — instead offered employees a retirement age of 65 if they agreed to accept a lower salary, but otherwise the 55 year old retirement would apply — whether the base test from Crofts should be applied — whether, if New Zealand law applied, the retirement provisions were discriminatory — whether s238 Employment Relations Act 2000 (No contracting out) overrode the choice of law clause — whether public policy exclusion should be applied to the choice of law clause.

Appearances:

G Pollak, counsel for the plaintiffs

M Lawlor and C Coup, counsel for the defendant

JUDGMENT OF JUDGE B A CORKILL

INDEX

Introduction	[1]
Mr Brown's employment: 1990 to 2002	[4]
Mr Sycamore's employment: 1992 to 2002	[12]
Establishment of NZBL	[18]
NZBL's terms and conditions of employment	[22]
Events following establishment of NZBL	[41]
The pleadings	[59]
What is the proper law of the employment agreement?	[63]
Does the ERA have overriding effect?	[67]
Which New Zealand laws potentially apply?	[68]
The territorial limits of the ERA for the purposes of this case	[74]
Were Mr Brown and Mr Sycamore based in New Zealand?	[83]
Application of the age discrimination provisions	[85]
What is the effect of s 238 ERA?	[88]
Was the choice of law contrary to public policy?	[102]
Was the choice of law bona fide and legal?	[128]
Conclusion	[130]

Introduction

1 Captain Brown and Captain Sycamore are long-serving senior pilots of Cathay Pacific Airways Limited (Cathay Pacific) or its subsidiaries, one of which is New Zealand Basing Limited (NZBL). They are New Zealand citizens whose place of residence is Auckland. Since 2002 they have been employees of NZBL under terms of employment which provide for retirement at age 55. Each will attain that age next year.

2 The issue in this case is whether they are entitled to the protections of New Zealand law as to age discrimination. They claim they are; NZBL contends they are subject to the laws of Hong Kong since that is what their employment agreements expressly state. Hong Kong law does not provide protections against discrimination on the grounds of age.

3 Mr Brown and Mr Sycamore filed a joint statement of problem in the Employment Relations Authority (the Authority) on 10 September 2014. 1 The Authority removed the proceeding to this Court because it raises important issues as to conflicts of law, and as to the application of laws relating to age discrimination. Also relevant to the removal decision was the need to resolve the matter urgently, given both plaintiffs' impending 55th birthday, and because the decision in the proceeding may impact on other employees. 2 Once removed to this Court, the proceeding was timetabled for prompt disposition.

Mr Brown's employment: 1990 to 2002

4 Mr Brown joined the Royal New Zealand Air Force (the Air Force) in January 1978 as a Trainee Pilot, and eventually qualified and progressed to the rank of Flight Lieutenant. He left the Air Force in 1990 and moved to Hong Kong to take up employment with Cathay Pacific as a First Officer on 24 March 1990.

5 In 1995, as a result of the introduction of a Basings Policy by Cathay Pacific, Mr Brown was able to accept a basing outside of Hong Kong. He resigned from

Cathay Pacific and accepted employment with one of its subsidiaries, Veta Limited (Veta). Although registered in Hong Kong, Veta operated an Australasian base, for which Sydney was the Home Ticketing Port (HTP). Mr Brown, however, resided with his family in Auckland which was designated as his Preferred Ticketing Port (PTP). This arrangement meant that he could be rostered out of or into Sydney or Auckland as the company required, but any travel between either city was at his own expense

6 Mr Brown's employment was subject to Veta's Conditions of Service 1994 (CoS94); a copy of this document was unavailable for production to the Court. His letter of offer stated that the employment contract was governed by and would be construed in accordance with the laws of Hong Kong, and stated that the parties submitted to the non-exclusive jurisdiction of the Courts of Hong Kong. The Court has no evidence as to whether the Conditions of Service contained any limitation as to age.

7 In 1999, Mr Brown was offered the option of returning to Hong Kong or of accepting a reduced salary under new Conditions of Service (CoS99). Mr Brown chose to remain in Auckland thus providing his family stability in both their lifestyle and schooling, and to accept a reduced salary. He accepted this change on 7 June 1999.

8 CoS99 provided that it would be interpreted in accordance with the law as set out in the various applicable Ordinances of the Hong Kong Special Administrative Region (Hong Kong SAR). It provided for retirement at age 55.

9 At the same time, Mr Brown became subject to Veta's Permanent Basing Policy 1999. The policy stated that Cathay Pacific currently had Base Areas in Asia, Australasia, Europe and North America. It defined a Home Base 3 as the place where an officer would normally start and end a scheduled duty and at which place under normal conditions, the company was not responsible for the officer's accommodation. Auckland was Mr Brown's Home Base. The intention of the policy was to provide an option for officers to live in a base area.

10 First Officers who took up base appointments would normally be required to return to Hong Kong if they accepted an offer of Command Training, although they could subsequently reapply for a further base appointment, subject to eligibility requirements. Officers could “bid” for base appointments in accordance with the rules of the policy. In October 2000, Mr Brown resigned from Veta and returned to Hong Kong to undertake Command Training. He completed his training and qualified as an A330/A340 Captain, and was then re-employed by Veta from 24 July 2001. From that date he again took up the Australasia basing, with his Home Base being Auckland as before.

11 This contractual framework continued until 2002 when he ceased employment with Veta and commenced employment with NZBL.

Mr Sycamore's employment: 1992 to 2002

12 Mr Sycamore joined the Air Force in 1979 as a Technician and became a Pilot in 1984. He retired from the Air Force and commenced duties with Cathay Pacific as a First Officer on 21 March 1992. A basing policy did not exist at that time. He therefore resided in Hong Kong. He said that flights usually, but not always, commenced in Hong Kong and returned to that point.

13 In 1996 he applied for, and was awarded an Australasian base. From that point he was employed by Veta under its Conditions of Service 1995 with effect from 1 April 1997. His letter of offer stated that the employment contract would be governed by, and construed in accordance with, the laws of Hong Kong, and that the parties submitted to the non-exclusive jurisdiction of the Courts of Hong Kong. The document provided for a normal retirement age of 55. It stipulated that Cathay Pacific's Basing Policy 1994 would apply. Mr Sycamore's HTP was Sydney, but Auckland was designated as his PTP.

14 By this time there were approximately five First Officers based in Auckland (two of whom were Mr Sycamore and Mr Brown) and 12 Captains. There was no administrative function based in Auckland.

15 In 1999, Mr Sycamore was offered a choice of returning to Hong Kong, or accepting new Conditions of Service (CoS99) which provided for a reduced salary. Because Mr Sycamore had family commitments in Auckland, he agreed to be bound by CoS99 with a Home Base in Auckland; he was also subject to Veta's Permanent Basing Policy 1999.

16 In early September 2001, Mr Sycamore accepted an offer to commence Command Training in Hong Kong for Airbus A330 aircraft. He accordingly returned to Hong Kong for a year although his family remained in New Zealand. Soon after commencing training he was offered a position as a New Zealand-based Captain subject to successful completion of the training. This occurred in December 2001, at which point it was confirmed that he had been allocated (again) a basing in Australasia with a Home Port of Auckland.

17 This remained the position until 2002, when Mr Sycamore ceased employment with Veta and commenced employment with NZBL.

Establishment of NZBL

18 Advice of Cathay Pacific's intention to incorporate a wholly owned subsidiary was given to all New Zealand-based Veta crew in February 2000. This was to avoid a potential tax issue. A new basing company would be formed which would solely employ pilots who elected to take up a permanent basing in New Zealand. The company would be a solely-owned subsidiary of Cathay Pacific; it would be a requirement that all crew permanently based in New Zealand were employed by that...