John Matsuoka v LSG Sky Chefs New Zealand Ltd

• Jurisdiction: New Zealand
• Judge: M E Perkins
• Judgment Date: 04 September 2013
• Court: Employment Court
• Docket Number: ARC 23/12
• Date: 04 September 2013

In the Matter of proceedings removed and In the Matter of applications for orders for discovery

Between

John Matsuoka

Plaintiff

and

LSG Sky Chefs New Zealand Ltd

Defendant

[2013] NZEmpC 165

ARC 23/12

IN THE EMPLOYMENT COURT AUCKLAND

Applications for disclosure of documents of each of the parties against the other and non-parties — defendant was obliged to accept plaintiff as an employee pursuant to pt 6A Employment Relations Act 2000 (continuity of employment if employees' work affected by restructuring) but had subsequently dismissed plaintiff — plaintiff claimed to have been unjustifiably dismissed — r39(2) Employment Court Regulations 2000 provided that nothing in rr40 -52 (mutual disclosure and inspection of documents) applied to any action for the recovery of a penalty — whether by virtue of r39(2) plaintiff did not need to make disclosure.

Appearances:

Mr A Drake and Mr B Nicholson, counsel for the plaintiff

Mr G Pollak and Ms A Borchardt, counsel for the defendant

INTERLOCUTORY JUDGMENT OF JUDGE M E Perkins

Introduction

1 This judgment considers applications for disclosure of documents by each of the parties against the other and against non-parties. The matters in issue have come before the Court on an interlocutory basis by virtue of the following:

• (a) The defendant's notice requiring disclosure by the plaintiff dated 11 February 2013;

• (b) The plaintiff's notice of objection to such disclosure dated 15 February 2013;

• (c) The defendant's on notice interlocutory application for particular discovery against a non-party: Pacific Flight Catering Limited (“PFC”);

• (d) The defendant's on notice interlocutory application for particular discovery against a non-party: PRI Flight Catering Limited (“PRI”).

2 The plaintiff and the non-parties against whom the particular discovery is sought are connected in that the plaintiff was, prior to the circumstances giving rise to these proceedings, an employee of either PFC, PRI or both. In respect of the present applications they have similar interests. However, the plaintiff is separately represented from PFC and PRI. There is a history as to the relationships between the parties to these particular proceedings (that is the plaintiff Mr Matsuoka, PFC, PRI and the defendant (“LSG”)).

3 That history has been the subject of numerous pieces of litigation and judgments both of this Court and the High Court. It is not necessary to go into all of that litigation other than in passing and by way of background. It provides some explanation for the fact that what should be relatively easily resolved issues of discovery and disclosure of documents in these particular proceedings are proving to be difficult.

4 While they participated through counsel at a preliminary directions conference, the non-parties PFC and PRI were not represented at the hearing of the applications affecting them. The applications were set down for argument. PFC and PRI were given the opportunity, if they wished, to present their positions on the non- party disclosure applications by way of filing affidavits. Mr J K Goodall, counsel for the non-parties, filed a memorandum prior to the hearing on 9 July 2013 indicating that the non-parties would not be filing any affidavits nor appearing at the hearing and would abide the decision of the Court. Mr Goodall submitted, however, in a memorandum dated 5 July 2013, that:

• (a) Any non-party discovery orders be strictly confined to the issues in the proceeding and specify the particular documents to be discovered; and

• (b) any non-party discovery orders should include the standard order that the parties seeking discovery pay the non-parties' reasonable costs of complying with the orders.

Factual outline

5 These proceedings are before the Court having been removed to the Court by the Employment Relations Authority (the Authority) on 14 March 2012. 1 At that time there were questions of law proposed, which had not previously been before the Authority or the Court. These related primarily to issues arising under pt 6A of the Employment Relations Act (the Act). Urgency was granted for a hearing.

6 Mr Matsuoka was formerly an employee of PRI. That company traded under the name of Pacific Flight Catering (Pacific). PFC is a subsidiary of PRI and was incorporated simply for the purposes of protecting the Pacific Flight Catering brand name and does not otherwise trade. Over the time that these entities have been trading, in legal terms, there has been a somewhat murky relationship between them so far as employment issues are concerned. There have been previous decisions making findings on this and, to summarise the position, the name of the employer tended to be interchanged and often simply referred to as Pacific Flight Catering, the non-legal entity.

7 PRI as a separate legal entity and trading under the name Pacific Flight Catering formerly held catering contracts with Singapore Airlines. These contracts were to provide catering services for flights from New Zealand. Singapore Airlines put the contract up for tender. The successful tenderer as a result of this process was LSG and that company took over the catering services on 23 February 2011. The contract held by PRI ended the previous day on 22 February 2011.

8 As there were employees (whether of PRI, Pacific or PFC) who were providing food catering services, they were covered by sch 1A of the Act and therefore pt 6A of the Act applied to them. This required continuity of their employment so that they were, with their consent, required to be employed by LSG. Mr Matsuoka, at the time of the transfer of PRI, Pacific or PFC employees to LSG, claimed eligibility to transfer under pt 6A of the Act. LSG declined this, hence the urgency of the proceedings before Judge B S Travis under ARC 19/11.

9 As a result of a decision of Judge Travis dated 18 May 2011, 2 Mr Matsuoka's position under pt 6A of the Act and therefore his entitlement to require employment with LSG was resolved in his favour. At the time Judge Travis also answered several legal questions posed following the transfer of the proceedings to this Court from the Authority. Having answered those questions and made a finding that Mr Matsuoka was in fact an employee covered by pt 6A of the Act, in a later judgment dated 21 December 2012, 3 Judge Travis considered and resolved issues of compensation and penalties, which had been earlier reserved.

10 In the present proceedings the factual position, in summary, is that following the Employment Court's judgments under ARC 19/11, LSG, having to accept Mr Matsuoka as an employee, commenced a disciplinary process against him. He was dismissed from such employment. While Mr Matsuoka apparently endeavoured to report for work, he never actually commenced work with LSG. This was despite the company having to deal with him as an employee transferring by virtue of the catering work, which LSG was required to perform under the contract with Singapore Airlines. He now claims to have been unjustifiably dismissed.

Other litigation and decisions

11 As I have indicated, there is a long history of proceedings arising from LSG's acquisition of the contract with Singapore Airlines. Just prior to transfer of employees from PRI, Pacific or PFC in February 2011, the management of the PRI group, whichever of them was the employer, enhanced the terms and conditions of

most of the transferring employees so that their wage and leave entitlements were increased. This then imposed an unexpected liability on LSG, which was forced to take on those employees by virtue of the operation of pt 6A of the Act. Some employees, most notably those who had a history of involvement with their union, were not given such enhanced conditions of employment. Litigation in this Court has resulted from the actions of PRI, Pacific or PFC. In addition, there was a decision of Woolford J in the High Court at Auckland, imposing liability on the PRI Group, whether it is PRI or PFC, for their actions. 4 The High Court judgment was appealed to the Court of Appeal. A decision has now been issued. The appeal by PFC and PRI was successful

The present applications relating to discovery of documents and general disclosure

12 In respect of the defendant's notice against Mr Matsuoka for discovery, his arguments in objecting are twofold. First, he claims that as a penalty is being sought by him against LSG he is not required by virtue of reg 39(2) of the Employment Court Regulations 2000 (the 2000 Regulations) to make disclosure. This is on the basis that if reg 39(2) applies, the scheme of disclosure contained in regs 40–52 cannot then apply to him. Secondly, even if he is required to disclose documents, the breadth and range of the documentation sought is too wide and ought to be narrowed to only documents relevant to the issues in the litigation. As the proceedings have progressed the defendant has, in any event, narrowed the ambit of the discovery sought so that now only the true wage, time and leave records of Mr Matsuoka are required.

13 In respect of the first point relating to the plaintiff's claim for a penalty, the pleading in the first amended statement of claim appears to be defective in that it alleges that the defendant has breached its obligations under s 4(1A) of the Act. The entitlement to a penalty for breaches of duty of good faith under the Act is prescribed by s 4A. That in turn requires proof of failure to comply with s 4(1). Section 4(1)(a), sets out the requirement that each party must deal with each other in good faith whereas s 4(1A) simply defines the scope of the duty of good faith. It is not a

major point, however, and at some stage the plaintiff will need to give consideration to amending the pleadings if the penalty is to be pursued

14 Mr Drake for the plaintiff has maintained what is effectively an argument on the literal wording of subordinate legislation...