John Matsuoka v Lsg Sky Chefs New Zealand Ltd

JurisdictionNew Zealand
CourtEmployment Court
Judgment Date21 December 2012
Docket NumberARC 19/11
Date21 December 2012

[2012] NZEmpC 220



Judge Travis

ARC 19/11

In the matter of proceedings removed from the Employment Relations Authority

John Matsuoka
Lsg Sky Chefs New Zealand Limited

Rob Towner, counsel for plaintiff

Garry Pollak, counsel for defendant

Timothy Oldfield, counsel for Service and Food Workers Union Nga

Ringa Tota Inc as intervener

Decision on remedies — plaintiff had obtained a declaration that he was entitled to transfer his employment to the defendant, on an equivalent position he had occupied with his previous employer, under Part 6A Employment Relations Act 2000 (“ERA”) (continuity of employment if employees' work affected by restructuring) — defendant refused to accept transfer of plaintiff's employment to it — defendant had been awarded an airline catering contract held by the plaintiff's previous employer — plaintiff was a shareholder of that company — defendant then accepted plaintiff as an employee for six months but disputed accuracy of figures supplied by plaintiff quantifying his entitlements and previous salary for the purposes of his claim for $10,000 compensation under s123(1)(c)(i) ERA (remedies — distress, humiliation and injury to feeling) and his claim for penalties of $20,000.


Both meetings between P and M had been friendly and P had found M to be very personable. It was difficult to accept M's claim that the situation had created anxiety for him similar to his being shipped to Vietnam in his capacity as a US soldier when he was 19 years of age. M was was being supported in his claim by his previous employer and because of his relationship with Pacific, he would have been aware that he could have returned to his prior employment as a fall-back position.

At the time of the second meeting on 28 February 2011, when M had unilaterally turned up to work against the advice of P, there was no binding finding that the refusal to accept him as an employee was unlawful. LSG had substantial grounds for distinguishing M's position on transfer from at least 36 other employees from PFC. It was entitled to have its position determined as a matter of law and this could have been done in the context of a dispute. It was open to M to challenge it, as he had done, by way of a personal grievance and allegations of breach of the statutory requirements. That did not, however, provide any licence to award substantial compensation for distress and humiliation for unlawful behaviour in what was clearly a legitimate difference of opinion.

The legal position had not been clear-cut: It was a unique and new situation and the law was yet to be tested. M had responded inadequately to P's questions which she was entitled to put. She had every reason to be concerned about the true nature of the work he carried out for Pacific. P had grounds for concluding that M had acted in the nature of a manager and was the eyes and ears of the managing director, a shareholder in the holding company of Pacific and that he could be in a conflict situation. His legal entitlements as provided by Pacific were allegedly incorrect and inflated and therefore the terms on which M was going to transfer were very much in issue.

Nothing had taken place in the meetings with P which would have justified an award of compensation for distress and humiliation. If M was experiencing such distress, he had not demonstrated it to P. Because the meetings were amicable and M was found to be very personable, his claim for compensation was excessive and not borne out by compelling evidence.

LSG was entitled to involve M's former work colleagues to establish whether he was a person entitled to be transferred under Part 6A ERA. There was no actionable loss of dignity or injury to feelings caused by LSG's actions in testing M's entitlements to be transferred.

However M had been left in a state of uncertainty as to whether he would be accepted by LSG as an employee, although he had a clear fall-back position. The position that LSG took, which had been incorrect in law, and had caused a degree of distress and anxiety which warranted a modest award of compensation at $1,000.

LSG's breaches had not been flagrant or deliberate and the steps that it taken to resist the transfer, in what was a new area of law, were reasonable. LSG had a number of seriously arguable issues on which it was entitled to seek a ruling and, once that ruling was obtained, LSG accepted the transfer of M's employment. It was not an appropriate case for the imposition of penalties, where so many issues were legitimately arguable. Claim for penalties dismissed.



At the conclusion of my substantive judgment issued on 18 May 2011 1 which answered the seven questions posed by the parties that arose out of Part 6A of the Employment Relations Act 2000 (the Act), I recorded that remedies and grounds of defence were reserved for further consideration, which might include evidence and submissions. The plaintiff, Mr Matsuoka, had sought declarations as to his employment status, compliance orders, penalties, a disadvantage grievance, compensation, damages and arrears of wages and benefits.


Following the issue of the judgment, the parties provided an agreed timetable for the filing of legal submissions. The plaintiff filed his legal submissions on 1 August 2011, the defendant company responded on 5 August 2011, and the plaintiff replied on 18 August 2011. There the matter rested because of parallel proceedings

in the High Court between the defendant company (LSG) and Pacific Flight Catering Limited (PFC) and PRI Flight Catering Limited (PRI), jointly described in this judgment and the High Court judgment as Pacific. 2

The plaintiff had been previously employed by PRI before his transfer to LSG. The matter was further complicated by the dismissal of Mr Matsuoka by LSG on 11 July 2011. Mr Matsuoka filed personal grievance proceedings in the Employment Relations Authority (the Authority) in relation to his dismissal and those proceedings were later removed to the Court. 3 Those removed proceedings under ARC 23/12 were initially consolidated by the Court with the outstanding remedies in the present matter. These procedural issues are summarised in an interlocutory judgment setting out the reasons why I dismissed an application by LSG for declarations that the plaintiff's solicitors should not continue to act for him and for Pacific. 4


LSG also made allegations that the figures supplied to it on the transfer of Mr Matsuoka, quantifying his entitlements and previous salary, were incorrect and should not form the basis of his claim for remedies. These issues also arose in the High Court proceedings as my interlocutory judgment sets out. I note that the grounds of defence raised by LSG for further consideration, which involved these issues and claims of misrepresentation, were not expressly referred to in the subsequent legal submissions. No doubt they will be dealt with if remedies are revisited in ARC 23/12.


It was agreed by counsel on behalf of the parties that the only two matters outstanding in ARC 19/11, which could be resolved without the necessity of further evidence or hearings as to the accuracy of the figures supplied to LSG concerning Mr Matsuoka, were:

  • … his claim for compensation under s 123(1)(c)(i) of the Act for the distress, humiliation and injury to feelings he alleges he suffered as a

    result of the disadvantage in not being transferred to the defendant's employment under Part 6A of the Act; and
  • … his claim for penalties, which I granted him leave to increase from $10,000 to $20,000.


This judgment now deals with those two outstanding matters.


Mr Towner, in his written submissions, contended that the plaintiff was entitled to compensation of $10,000 under s 123(1)(c)(i) of the Act in relation to his disadvantage grievance. Mr Matsuoka claimed that he was disadvantaged in his employment by the unjustifiable actions of LSG in refusing to accept that he was entitled to transfer to its employment, refusing to employ him, refusing to provide him with work in the role in which he was entitled to transfer, and refusing to remunerate him according to the terms of his employment agreement.


Alternatively, Mr Matsuoka claimed damages resulting from what he alleged were the defendant's breaches of contract, including for the distress caused to him by the defendant not employing him in the same role that he had with PRI. Mr Towner cited Whelan v Waitaki Meats Ltd.5 He accepted that the alternative claim for compensatory damages was for the same reasons and in the same amount as could be recoverable under s 123(1)(c)(i) and (ii) of the Act. He was not seeking a double recovery for Mr Matsuoka.


Mr Towner submitted that the context for the plaintiff's claim for compensation was that the defendant acted unlawfully in denying Mr Matsuoka employment from 23 February 2011 and that thereafter he was out of employment until his dismissal by the defendant on 11 July of that year.


Mr Towner submitted that the defendant's unlawful actions resulted in the plaintiff experiencing stress, extreme anxiety, second only to when he was sent to war, sleeplessness, physical manifestations and a deterioration of what had

previously been good relationships with his fellow workers. He submitted that these adverse consequences were ongoing and extended over the period of four and a half months during which the plaintiff rightly believed he was entitled to employment with LSG but was denied that opportunity.

Mr Towner submitted that the claim for $10,000 was justified in light of the following:

  • (a) the humiliation which the plaintiff would undoubtedly have experienced as a result of the open manner in which the defendant opposed his right of transfer and involved a number of his...

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