DOUGLAS KARL HIXON (LABOUR INSPECTOR) v JUSTIN CAMPBELL NZEmpC CHRISTCHURCH

• Jurisdiction: New Zealand
• Judge: GL Colgan,Christina Inglis,AD Ford
• Judgment Date: 17 November 2014
• Court: Employment Court
• Docket Number: CRC 2/14
• Date: 17 November 2014

BETWEEN

In The Matter of the referral of a question of law from the Employment Relations Authority

Douglas Karl Hixon (Labour Inspector)

First Plaintiff

and

Marcia Joy Collins

Second Plaintiff

and

Justin Campbell

First Defendant

and

Dean Eggers

Second Defendant

and

Paula Campbell

Third Defendant

[2014] NZEmpC 213

Court:

Chief Judge GL Colgan

Judge Christina Inglis

Judge AD Ford

CRC 2/14

IN THE EMPLOYMENT COURT CHRISTCHURCH

Decision of the full Employment Court on a claim for recovery of wages — labour inspector investigated a company's practice of making deductions from employees' wages — commenced proceedings under s11 Wages Protection Act 1983 (WPA) (worker may recover wages) — company subsequently liquidated and liquidator refused to consent to the continuation of the proceedings in the Employment Relations Authority — liquidator then filed the current proceedings against the two company directors and its business manager — whether a labour inspector was entitled to bring proceedings for the recovery of monies deducted from employees' remuneration in breach of the WPA — whether the definition of “employer” in s2 WPA entitled a labour inspector (and/or an employee) to bringproceedings for recovery of deductions against persons other than the primary employer of the employee.

Appearances:

M Urlich and S Carr, counsel for plaintiffs

No appearance for defendants

M Palmer QC, counsel assisting the Court

• A A labour inspector is not empowered to recover in proceedings in his or her name, deductions from wages made in breach of the Wages Protection Act 1983.

• B The defendants were not the employer or employers of the second plaintiff and other employees in similar circumstances pursuant to the definition of “employer” in s 2 of the Wages Protection Act 1983.

• C The plaintiffs' claims are dismissed. D There will be no orders as to costs.

REASONS

INDEX

Introduction	[1]
Relevant facts	[5]
A labour inspector's powers	[27]
Who is an “employer” under the Wages Protection Act?	[44]
“Employer” in s 11 — the argument for the plaintiffs	[65]
The amicus's submissions	[70]
Statutory interpretive aids	[75]
The history of the Wages Protection act and truck legislation	[79]
New Zealand case law	[89]
Is the definition of “employer” affected by other legislation?	[102]
Recent statutory amendments to the Wages Protection Act	[105]
The meaning of “employer”	[108]
Decision	[115]
Costs	[119]
Postscript	[120]

Introduction

1 There are now two questions for decision in this case. In logical order they are:

• • whether a labour inspector is entitled in law to bring proceedings for the recovery of monies deducted from employees' remuneration in breach of the Wages Protection Act 1983; and

• • whether the definition of “employer” in s 2 of the Wages Protection Act 1983 entitles a labour inspector (and/or now an employee) to bring such proceedings for recovery of deductions against persons other than the primary employer of the employee.

2 The proceeding was removed to this Court by the Employment Relations Authority 1 in view of the uncertainty about, and importance of, the second question above. The first question arose more recently, the first plaintiff having responsibly brought to the Court's attention the doubt about his entitlement to bring proceedings for recovery of monies deducted from the remuneration of multiple employees of a company.

3 Marcia Collins was joined as a plaintiff in the proceeding on 19 April 2014. An amended statement of claim was filed on the first morning of the hearing, 2 bringing a separate claim by Ms Collins in respect of deductions allegedly made unlawfully from her wages. Those amended proceedings have now been served on the defendants but they have taken no formal step to defend them. That accounts for the delay in finalising the hearing of the case.

4 For the purpose of this judgment we assumed that the Labour Inspector would prove his allegations in the amended statement of claim and on the affidavit evidence filed, although this temporary assumption would not have precluded a later challenge to them by the defendants if the proceedings had survived. All references to events in the following narrative must be read accordingly.

Relevant facts

5 AHV Contracting Limited (AHV) employed a number of casual employees to prune grapevines at Black Birch Vineyard in the Awatere Valley in the winter months of 2012. The Labour Inspector, Mr Hixon, received a number of complaints from the employees including that AHV made unlawful deductions from the employees' wages for tools and travel. In August 2012 Mr Hixon began an investigation into these complaints and in late September 2012 met with the principal supervisor at the vineyard, Morris Tiueti, who provided him with time records of the employees.

6 In response to Mr Hixon's request the third defendant, Paula Campbell, emailed and couriered employee records of a number of AHV's employees to him.

These included copies of job application forms, employment agreements, and tax forms. Mrs Campbell also provided Mr Hixon with a summary of wages and deductions in respect of individual employees. Whilst these records were incomplete, he was able to compile a schedule of tool allowance deductions for 29 employees of AHV. In respect of the second plaintiff, Marcia Collins, tool deductions totalling $100 were assessed by the Labour Inspector to have been made by AHV. Most of the other 28 employees had identical amounts deducted in respect of tools provided by the employer although in four instances amounts of $93.14 had been deducted

7 The Labour Inspector's investigations showed that the employees were advised that the deductions for tools were made during their employment but they were told that these would be refunded at termination if the tools were returned to the company. The Labour Inspector's investigations show that whether or not tools were returned, none of the employees received a refund.

8 Mr Hixon alleged that these deductions had been made unlawfully by AHV, that is in breach of the Wages Protection Act. The Labour Inspector filed a claim against AHV in the Authority on 21 May 2013 including claims to recover those sums unlawfully deducted and for penalties for AHV's failure to comply with its statutory obligations.

9 On 29 July 2013 AHV was placed in liquidation and, on 31 January 2014, was removed from the Companies Register. During the period of its registration from 4 May 2011 and prior to its liquidation on 29 July 2013, the company's records show that its shareholders and directors were the first and second defendants with Mr Campbell holding 52 and Mr Eggers holding 48 of the company's 100 shares.

10 On 6 August 2013 the liquidator refused to consent to the continuation of the proceedings in the Authority and after the company was removed from the Companies Register on 31 January 2014, the Labour Inspector's proceedings against AHV were discontinued.

11 The current proceedings were then filed by the Labour Inspector against the two directors and shareholders of the company and against its Business Manager, Mrs Campbell.

12 The following modus operandi of AHV was ascertained by the Labour Inspector. Morris and Trish Tiueti were employed by both the owners of the vineyard and AHV to supervise employees such as Ms Collins and to provide records of their productivity and hours of work to AHV. Blair Fitzsimons (Mrs Campbell's brother) was the National Operations Manager of AHV and so managed its operations. Mrs Campbell, who is the wife of the director and shareholder, Justin Campbell, was ascertained by the Labour Inspector to be the Business Manager responsible for the payment of, and deductions from, wages. On the matter of tool deductions, Mrs Campbell communicated with the employees either directly through Mr Fitzsimons or through their immediate supervisors. Mrs Campbell compiled wage records and provided these to an entity called Luscombe Legal in Hawke's Bay to be entered electronically in a payroll system. The Labour Inspector ascertained that Mrs Campbell was aware of AHV's “tool allowance” deduction policy and actively implemented it.

13 The Labour Inspector says that Mr Campbell was involved in day to day operations of AHV and was aware of, and enforced, the tool deduction policy. The Labour Inspector says that he did not know of Mr Eggers's involvement, if any, in the tool deduction policy and practice. The Labour Inspector's evidence also names a number of others who were the supervisors of the employees and were often the conduit for the communication of information from AHV management to them. The Labour Inspector says that in his statement in reply to the claim filed in the Authority, Mr Campbell refers to the tool deduction policy.

14 The constitution of AHV required that the business and affairs of the company be managed by, or under the direction or supervision of, “the Board”, being the majority of directors.

15 To complete the picture, on 29 January 2013 the Authority conducted an investigation meeting into similar claims by two other employees of AHV who represented themselves. There was no appearance for AHV at the Authority's investigation meeting. It issued its determination on 1 February 2013. 3 The Authority found that each of the applicants in that case had the sum of $100 deducted from her and his pay towards the end of their employment. AHV claimed,

in its statement in reply to the Authority, that this was for tools (secateurs and a picking bucket) that the company had sold to each of the employees. The Authority found that the applicants nevertheless provided their own secateurs and declined ones offered by AHV. The Authority found that the applicants' picking buckets were lent to them and that payment for the buckets would only be required...