JP Morgan Chase Bank NA v Lewis

• Jurisdiction: New Zealand
• Judge: Cooper J
• Judgment Date: 18 June 2015
• Neutral Citation: [2015] NZCA 255
• Docket Number: CA587/2013
• Court: Court of Appeal
• Date: 18 June 2015

Between

JP Morgan Chase Bank NA

Appellant

and

Robert Lewis

Respondent

[2015] NZCA 255

Court:

Stevens, French and Cooper JJ

CA587/2013

IN THE COURT OF APPEAL OF NEW ZEALAND

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.

Counsel:

R L Towner for Appellant

M W O'Brien and B Nicholson for Respondent

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 was based on an alleged variation to the employment agreement?

    Answer: No.

  • (b) It was arguable that the Employment Court has jurisdiction to award damages for breach of a settlement agreement?

    Answer: Yes (where the settlement agreement is not an employment agreement or a variation to it).

  • (c) The written agreement dated 4 March 2010 was capable of being characterised either wholly or in part as a variation to an employment agreement?

    Answer: Yes.

  • C The appellant is entitled to costs calculated for a standard appeal in accordance with band A together with usual disbursements.

REASONS OF THE COURT

(Given by Cooper J)

Table of Contents

	Para No
Introduction	[1]
Background	[4]
Factual allegations	[7]
Claim in the Employment Relations Authority	[9]
Claim in the Employment Court	[11]
Employment Court judgment	[16]
The questions before this Court	[19]
The employment agreement	[23]
The settlement agreement	[30]
Relevant provisions of the Act	[40]
Section 161	[41]
Section 137	[43]
Section 151 and related provisions	[44]
Section 179	[49]
Section 187	[50]
Question (c)	[53]
Evaluation	[59]
Question (b)	[87]
Question (a)	[110]
Result	[117]

Introduction

1 This appeal raises an important question concerning the extent of the exclusive jurisdictions of the Employment Relations Authority (the Authority) and the Employment Court under the Employment Relations Act 2000 (the Act).

2 The issue arises in the context of an agreement (the settlement agreement) entered into by the parties to settle a personal grievance. Under the settlement agreement the respondent, Mr Robert Lewis, agreed to resign in return for certain payments to be made by the appellant, his then employer, JP Morgan Chase Bank NA (JP Morgan, or the bank). Mr Lewis alleges that the settlement agreement was breached.

3 He pursued that claim initially before the Authority, and subsequently before the Employment Court. 1 JP Morgan applied for an order striking out the claim as being outside the Court's jurisdiction. The Employment Court dismissed the strike-out application. The bank now appeals from that decision pursuant to leave granted by this Court under s 214 of the Act. 2

Background

4 JP Morgan is a financial services firm registered as a bank under s 69 of the Reserve Bank of New Zealand Act 1989. It employed Mr Lewis from 1 August 2008, initially as Treasury Services Sales Executive New Zealand and, between 15 September 2008 and 5 March 2010, as the Chief Executive Officer of its New Zealand branch.

5 During 2009 a dispute arose between Mr Lewis and Mr Tony O'Neill, JP Morgan's head of Treasury Services in Australia and New Zealand. It seems that their relationship deteriorated. In November that year a restructuring proposal was floated which Mr Lewis believed was designed to terminate his employment as a

consequence of the dispute with Mr O'Neill. He raised a personal grievance alleging that he had been unjustifiably disadvantaged in his employment

6 On 4 March 2010 the parties entered into the settlement agreement for the purpose of resolving the personal grievance. The settlement agreement provided, amongst other things, that Mr Lewis would resign from the bank the following day.

Factual allegations

7 Mr Lewis claimed that when he telephoned JP Morgan's human resources free phone on 18 March 2010 he was told by an operator that the bank's records did not show he had been the CEO. When he asked what needed to be done to correct the records he was told the bank's Head of Human Resources, Ms Simpson, would need to authorise the change. Mr Lewis says he emailed Ms Simpson later that day, emphasising that he was making approaches to potential employers and that his ability to secure further employment would be seriously damaged if the bank failed to confirm that he had been the CEO of the New Zealand branch.

8 Mr Lewis alleged that on 29 March he was advised by Ms Simpson that an appropriate correction had been made when that was not in fact the case. When he subsequently applied for a position with another bank, he told the prospective employer that he had been JP Morgan's CEO in New Zealand. When enquiry was made by the prospective employer, JP Morgan denied it. As a result, he lost that prospective employment opportunity. Mr Lewis says that, despite a further request for the bank's records to be changed, that did not occur; it was six months before he found new employment and over that period he suffered distress.

Claim in the Employment Relations Authority

9 Mr Lewis' claim was initially advanced in the Authority. Following an unsuccessful mediation, he sought an investigation to ascertain whether the settlement agreement had been breached, and if so, an award of damages. On 11 October 2012 the Authority issued a determination holding that it did not have jurisdiction to grant its usual remedy of a compliance order since the settlement agreement: 3

• (a) was not within the ambit of s 151 of the Act; and

• (b) could not be the subject of a compliance order under s 137(1)(a)(i) of the Act, because it was not an employment agreement.

10 Further, the Authority was satisfied it had no jurisdiction to grant the damages sought by Mr Lewis, the Act containing no power to do so. 4

Claim in the Employment Court

11 On 2 November 2012 Mr Lewis filed a statement of claim in the Employment Court alleging a breach of the settlement agreement. He subsequently instructed solicitors who filed two amended statements of claim. The second amended statement of claim alleged amongst other things that the settlement agreement was effectively a variation of the employment agreement, and the claim was recast to allege the employment agreement, as varied, had been breached. JP Morgan sought to strike out the claim on the basis that since the claim alleging variation of the employment agreement had not been made in the Authority it could not be entertained by the Employment Court. JP Morgan also based its strike-out application on the ground that the Court could not award damages for breach of the settlement agreement, because it was not an employment agreement.

12 The strike-out application was dismissed by Chief Judge Colgan in a judgment delivered on 5 September 2013. 5 The Judge held that the substance of the claim before the Authority, and what was now alleged in the Employment Court, was a complaint by Mr Lewis that JP Morgan had not abided by the settlement agreement. He said: 6

… That this agreement may have been described as a “settlement agreement” in the Authority, but is now described by the plaintiff as an

agreement varying their individual employment agreement, is a difference of description. The same agreement, and allegations of its breach, are still in issue. The plaintiff is entitled, particularly with the benefit of legal advice and representation that he now has, to advance alternative legal grounds in support of essentially the same proposition in reliance on the same transactions. The second amended statement of claim addresses the same “matter” as was before the Authority. No strike-out of the proceedings is warranted on this ground.

13 The Judge further considered it was arguable that the settlement agreement constituted “at least in part” a variation to Mr Lewis's employment agreement, because it altered “the essential nature of its termination”. He noted that the employment agreement continued in effect the following day, “in all respects” and arguably “in some respects” beyond the point when Mr Lewis ceased to work for the bank. 7 This meant he could allege a breach of that agreement.

14 The substantive allegations Mr Lewis sought to pursue were allegations that, contrary to the express or implied terms of the original employment agreement JP Morgan had denied that he was its New Zealand CEO and had not...