JP Morgan Chase Bank NA v Lewis

JurisdictionNew Zealand
CourtCourt of Appeal
JudgeCooper J
Judgment Date18 June 2015
Neutral Citation[2015] NZCA 255
Docket NumberCA587/2013
Date18 June 2015

[2015] NZCA 255

IN THE COURT OF APPEAL OF NEW ZEALAND

Court:

Stevens, French and Cooper JJ

CA587/2013

Between
JP Morgan Chase Bank NA
Appellant
and
Robert Lewis
Respondent
Counsel:

R L Towner for Appellant

M W O'Brien and B Nicholson for Respondent

Appeal against an Employment Court (EC) decision declining a strike out application — appellant argued that there was no jurisdiction under the Employment Relations Act 2000 (ERA) for the Employment Authority and Court to deal with a claim relating to a breach of a settlement agreement between the appellant and the respondent — the agreement dealt with the termination of the respondent's employment with the appellant — respondent argued that the settlement agreement was a variation to an employment agreement and fell within the exclusive jurisdiction clause — whether the agreement could be characterised either wholly or in part as a variation to an employment agreement — whether the EC had jurisdiction to award damages for breach of a settlement agreement — whether the EC had jurisdiction to hear a challenge under s179(1) (Challenges to determinations of Authority) and s187(1) (Exclusive jurisdiction of the Court) ERA where the Authority's determination related to a claim about an alleged breach of a settlement agreement whereas the claim before the EC was based on an alleged variation to the employment agreement.

Held: (1) Nature of agreement: the starting point was to ask whether the settlement agreement had the effect of discharging by agreement obligations previously arising under the employment agreement, a “bilateral discharge”. Where the contract to be discharged was still executory (as with the employment agreement in this case) the consideration for the discharge was a mutual agreement to release each party from further performance.

It was clear that the settlement agreement was a new agreement, intended by the parties to replace the employment agreement and operate as a stand-alone statement of their obligations to each other after L ceased to be employed by the bank. This was do because:

(1) While the settlement agreement altered the termination provisions of the employment agreement, it did so for the very purpose of bringing L's employment to an end. It would be artificial to describe the settlement agreement as a variation of the employment agreement in those circumstances.

(2) The settlement agreement contained provisions that were plainly intended not to operate as terms of employment, but as terms that were to apply once the employment relationship was ended (an obligation on the bank to pay sums to L, obligations on L with respect to return of property, confidentiality and restraint of trade etc). The provisions of the employment agreement that were specifically referred to in the settlement agreement could be categorised as simply incorporated by reference. Once L left the bank's employ, their contractual force would rest on the settlement agreement, not the employment agreement.

(3) There was no doubt that the settlement agreement could be “sued upon” alone. The substance of L's claim was a breach of the settlement agreement and the obligation it contained that there would be no disparagement of L by JP Morgan in breach of cl 9 of the settlement agreement (the non-disparagement clause). Any loss arose from that failure. Further cl 18 of the settlement agreement provided that it constituted the entire agreement between the parties and that it superseded all and any prior agreements.

(4) Once the settlement agreement was executed, it could not be said that it was possible for both agreements to be performed. The employment agreement envisaged L's ongoing employment whereas the settlement agreement put that prospect to an end.. It would be entirely artificial to describe the situation as one involving the ongoing performance of both contracts.

The employment agreement would continue in effect until the point at which, on the day after the settlement agreement was executed, the parties had agreed L's employment would cease. The whole point of the settlement agreement was to bring his employment to an end and the provisions of the settlement agreement were only to take effect at and from that point. Consequently, the settlement agreement replaced the employment agreement and governed the relationship between the parties after the cessation L's employment. Since the settlement agreement could not be regarded as an “employment agreement” for the purposes of the definition in s 5 ERA, the Authority did not have jurisdiction to deal with the dispute under s161(1)(a) or (b) ERA.

Further, the Authority did not have jurisdiction under s161(1)(n) ERA: it could not have issued a compliance order under s137(2), since this was not a case where there was non-compliance with a provision of an “employment agreement” (s137(1)(a)(i)), and no other provision in s137 authorised a compliance order under that section.

Because the Act had not conferred jurisdiction on the Authority, the EC did not have jurisdiction to determine the matter under s187(1)(a). The EC was wrong in law in holding that the written agreement dated 4 March was capable of being characterised either wholly or in part as a variation to an employment agreement.

(2) Jurisdiction for awarding damages for breach of the settlement agreement: The focus of this question was on the broad conferral of jurisdiction in s161(1)(r), relating to “any other action … arising from or related to the employment relationship”.

The matter before the Authority was not one that either arose from or was related to the employment relationship. In essence it was a claim under the settlement agreement, and concerned the alleged breach of post-employment obligations. The settlement agreement constituted the entire agreement between the parties. Other claims, “arising out of or in connection with the subject matter” were specifically barred by cl 16 of the settlement agreement (agreement may be pleaded as a bar to any… proceedings… arising out of or in connection with the subject matter of this agreement).

The decision in The Hibernian Catholic Benefit Society v Hagai should not be followed. It effectively treated all issues that arose between employer and employee as exclusively within the Authority's jurisdiction because of the existence of that relationship. That could not have been Parliament's intention. In accordance with the definition in s5 ERA an “employee relationship problem”, had to relate to or arise out of an employment relationship. This meant that the problem had to be one that directly and essentially concerned the employment relationship.

The settlement agreement in this case was not signed under s149 (Settlements), and was not otherwise within the ambit of s151 (Decision by authority of parties). These procedures were not available in the case of a settlement agreement that was not signed by the relevant mediator under s149(1) (agreed terms of settlement following mediation). The ERA did not enable the Authority to impose a “penalty” for breach of an agreed term of an agreement that was not signed under s149. Statutory provisions that provided for a remedy in carefully restricted circumstances could not properly found an inference that the power would be more widely available. Nor was the power to impose a penalty equivalent to a power to award damages in any event.

Further since the settlement agreement was not an employment agreement and a claim based on it could not be brought within s161(1)(r), L's claim was not within the Authority's jurisdiction at all. That was the position regardless of any obstacles arising under s149 and s151.

Neither the Authority nor the EC had jurisdiction to award damages for breach of the settlement agreement. Such a power would not exist in the case of any breach of a settlement agreement (not being an employment agreement or a variation to it).

(3) Difference in claim before the Authority: This question concerned the extent to which the EC's jurisdiction depended on the precise terms of the issues raised before the Authority. Strictly, this question did not require an answer as there was no jurisdiction to determine the claim. It would only be dealt with briefly.

Section 179(1) ERA allowed a party to a matter before the authority dissatisfied with a decision to elect to have “the matter” heard by the Court. Similarly, under s187(1)(a) the EC's jurisdiction was to hear “a matter previously determined by the Authority”.

As submitted by the respondent, the relevant procedural rules did not require L to state the particular causes of action he relied on. Form 1 of the Employment Authority Regulations 2000 simply provided that the applicant had to state the “problem or matter” to be resolved. A non-technical approach was appropriate having regard to the Authority's role under s 157(1).

While L originally complained to the Authority about a breach of the settlement agreement, the substance of the complaint was the issue of disparagement arising from the bank's failure to give accurate information in response to inquiries about his status when employed by it. The EC was correct that the same matter that was before the Authority was addressed by the statement of claim, and it was not significant that it expressed the claim on the basis a breach of the employment agreement as allegedly varied.

Appeal allowed.

JUDGMENT OF THE COURT
  • A The appeal is allowed.

  • B The questions of law are answered as follows:

    Was the decision of the Employment Court wrong in law in holding that:

    • (a) The Employment Court had jurisdiction to hear a challenge to a determination of the Employment Relations Authority pursuant to ss 179( 1) and 187(1) of the Employment Relations Act 2000 in circumstances where the determination related to a claim about an alleged breach of a settlement agreement whereas the claim before the Employment Court...

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3 cases
  • Fmv v Tzb
    • New Zealand
    • Supreme Court
    • 20 August 2021
    ...judgment 30 The Court of Appeal considered that the matter involved a straightforward application of that Court's decision in JP Morgan Chase Bank NA v Lewis. 31 Since the claim “directly and essentially concerns the employment relationship” in accordance with the test in JP Morgan, it was ......
  • Fmv v Tzb
    • New Zealand
    • Supreme Court
    • 20 August 2021
    ...was correct.34 28 29 30 31 32 33 34 HC judgment, above n 23, at [26]–[27]. At [45]–[46]. At [53]–[54]. JP Morgan Chase Bank NA v Lewis [2015] NZCA 255, [2015] 3 NZLR CA judgment, above n 24, at [19]–[21], citing JP Morgan, above n 31, at [95]. At [20]–[21]. At [23]. Submissions on the Autho......
  • Robert Wade Lewis v Jpmorgan Chase Bank, N.A.
    • New Zealand
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    • 19 October 2015
    ...costs challenge, to be determined at the same time. Judgment signed at 4.45 pm on Monday 19 October 2015 GL Colgan Chief Judge 1JP Morgan Chase Bank, N.A. v Lewis (also cited as JP Morgan Chase Bank NA v Lewis) [2015] NZCA 2Lewis v JP Morgan Chase Bank, N.A. [2013] NZERA Auckland 18. 3 I a......

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