Foai v Air New Zealand Ltd

• Jurisdiction: New Zealand
• Judge: A D Ford
• Judgment Date: 04 April 2012
• Court: Employment Court
• Docket Number: WRC 36/10
• Date: 04 April 2012

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

Between

Clint Foai

Applicants

And

and

Air New Zealand Limited

Defendant

[2012] NZEmpC 57

WRC 36/10

IN THE EMPLOYMENT COURT WELLINGTON

Challenge to Employment Relations Authority determination that employer was entitled to recover overpayment of salary “as a recoverable debt” — plaintiff worked as part-time service person before being appointed to new fixed term administration role — over 16 month period plaintiff was overpaid by $70,000 and had queried his wages on a number of occasions — overpayment not disputed — plaintiff maintained he received wages in good faith and altered his position in reliance on wages — defendant had not pleaded mistake but relied on it — whether mistake had to be pleaded — whether payments made under mistake — whether recoverable under action in restitution — whether plaintiff entitled to rely on defence under s94B Judicature Act 1908 (payments made under mistake of law not always recoverable) and equitable defence of alteration of position.

Appearances:

Johanne Greally, counsel for the plaintiff

Tim Cleary, counsel for the defendant

JUDGMENT OF JUDGE A D Ford

A D Ford

Introduction

1 During the course of a 16-month period between July 2007 and November 2008, the defendant (Air New Zealand) overpaid Mr Foai, who was then on its payroll, a total of $70,428.04. The company now seeks to recover the nett amount of the overpayment which equates to $42,635.40. It was successful in its claim before the Employment Relations Authority (the Authority) and Mr Foai has challenged that particular determination. Mr Foai does not, at this point in time, dispute the overpayment but he maintains that he received his wages in good faith and that he altered his position in reliance on the validity of the wages he was paid. He, therefore, seeks to rely upon the equitable defence of change of position and the statutory defence under s 94B of the Judicature Act 1908 in support of his contention that the defendant is not entitled to recover the overpayment of wages.

2 Mr Foai's employment with Air New Zealand was terminated in July 2009. Air New Zealand claimed that there had been a fundamental breakdown of trust and confidence in the employment relationship in four respects. Relevantly, one of its allegations was that Mr Foai had not been proactive enough in querying the overpayment. Mr Foai pursued a personal grievance in the Authority claiming that he had been unjustifiably dismissed. The Authority issued a determination 1 in relation to that grievance on 30 June 2010. There was no challenge to that determination and the claim relating to Mr Foai's dismissal, therefore, forms no part of the case before me. The parties accept that the only relevance of the Authority's determination dated 30 June 2010 is that, by agreement, it reserved making a determination on two of the issues that had been raised before it. One of those issues was Air New Zealand's claim in respect of the overpayment and the other was a claim by Mr Foai that Air New Zealand was required to pay to him the sum of $9,363.04 which it had withheld from his final pay and purported to offset against the overpayment.

3 Subsequently, the Authority was requested to revisit the two issues it had reserved making a determination on and in a further determination 2 dated 8 November 2010, it concluded that Air New Zealand was required to pay Mr Foai the sum withheld of $9,363.04 together with interest and Mr Foai was required to repay Air New Zealand the sum of $42,635.40 being the nett amount of the overpayment. Air New Zealand has accepted that it is required to pay the amount withheld of $9,363.04 but Mr Foai has challenged that part of the determination that dealt with the overpayment. In particular, he challenges the Authority's conclusions that Air New Zealand was not precluded from recovering the amount of the overpayment as “a recoverable debt” and its factual finding that while Mr Foai accepted his pay in good faith and did ask questions to check that he was being properly paid, “Air New Zealand had no knowledge of a problem.” Mr Foai told the Court that since his dismissal from Air New Zealand, he has had various casual and part-time jobs. Currently, he is working as a Court Security Officer with the Ministry of Justice.

Background

4 Mr Foai commenced working for Air New Zealand Airport Services on 20 March 2002 as a casual loader/cleaner at Wellington Airport. Initially, he was not a member of the union but he later joined. His terms and conditions of employment were set out in an individual employment agreement dated 19 March 2002 which incorporated the terms and conditions of the Air New Zealand Ground Staff Collective Employment Agreement. He was employed on an “as required” basis to cover absences of permanent employees. He described his duties as being the loading and unloading of luggage and freight and the interior cleaning of aircraft.

5 As from 30 September 2002, Mr Foai's status changed from a casual worker to that of “Permanent Part-time Airline Serviceperson”. That position was confirmed in a letter dated 27 September 2002. His status under the new individual employment agreement which he signed on 21 October 2002 was shown as “Part time Airline Serviceperson”. He continued to be bound by the Ground Staff Collective Agreement. Mr Foai said in evidence that he remained a part-time employee until March 2007. During that period he worked under a roster which required him to work split shifts. He was living at Porirua at the time and he said that he found the split shift work frustrating because of the effects his irregular working hours were having on his young family. For that reason, he became anxious to secure a full-time position. He made four applications for full-time positions during the period he was employed on a part-time basis but on each occasion he was unsuccessful.

6 Mr Foai's change of status from casual worker to part-time serviceperson did not result in any immediate pay increase. His individual employment agreements, dated 19 March 2002 and 21 October 2002 respectively, stated clearly that he would be paid at a rate of $11.192 per hour (the October agreement actually showed a figure of $11.1928). That hourly rate figure increased over time and Mr Foai said that in early 2007 he was paid $17 per hour for up to 30 hours per week. He would then work overtime according to the roster and be paid at time and a half for the first three hours and double time thereafter. Mr Foai said that when he worked “a lot of overtime” as a part-time loader he could earn “about $2000 per fortnight”.

7 In 2005, Mr Foai was awarded a letter of appreciation from the airport manager for having handed in a wallet which he had found on an aircraft containing a large amount of money. The customer also gave him $50 as a token of appreciation. The airport manager congratulated him on his efforts and integrity and the manager's letter was retained on Mr Foai's employment file.

8 As a relatively junior employee, Mr Foai appeared to demonstrate some initiative in his work. In an uncontested passage of his evidence, he explained one of the voluntary assignments he undertook in early 2007 which involved Air New Zealand's CEO, Mr Rob Fyfe:

• 8. At the start of 2007 it was announced that there were to be job cuts and major restructuring among Air NZ ground staff. A lot of my colleagues were very unhappy with the newly appointed CEO Rob Fyfe's decision at the time. Especially the Senior Loaders who have been there for more than 20 years. A lot of the staff morale had dropped which had affected the performance of the workers. [Staff] weren't turning up to work and the atmosphere in our environment was increasingly negative.

• 9. I took the initiative to do something about this as it was also affecting the way I worked as well, and I did not like the impact it was having on my workmates. I knew that the re-structuring was affecting not only them but most importantly their families. I decided to approach the management team and brought forward the idea of having a “Family Day” for the loaders. I explained in regard to staff morale and negative attitude and thought this would be a good idea for us loaders to enjoy each other's company outside of work and meet and greet our partners and children.

• 10. Management thought it was a great idea, and supported my idea and planning of the ‘family day’ in March 2007. Me and two of my work mates helped organise the event. I also decided to invite the CEO himself to a fun day out. I called Mr Fyfe and asked if he would like to attend our [loaders'] family day and he happily obliged. Despite the fact that he was not a ‘popular’ person at the time, I knew that given children and family were present, the loaders were restricted to any ‘inappropriate’ behaviour towards Mr Fyfe.

• 11. The day was a success as all families present were treated to fun filled games and entertainment and not much talk of the re-structuring process, though Rob Fyfe did give a full description on what the plans were for the future where those who were present understood a lot more than what was broadcast earlier about the new re-structure. This event also gave the incentive for Mr Fyfe himself to come to Wellington and be a loader for the day to get a better understanding on how our role works and also to answer more questions our colleagues had for him in regards to their futures with Air New Zealand.

• 12. I felt a sense of accomplishment with what the ‘family day’ achieved. I received a letter from Mr Fyfe himself thanking me for the invite and booking in a date to come down and fulfil his promise as stepping in to being a loader for a day. He also passed on to me and the 2 work mates who helped me organise the day tickets to watch the Wellington Hurricanes game in the Air NZ...