Lsg Sky Chefs New Zealand Ltd v Pacific Flight Catering Ltd
| Jurisdiction | New Zealand |
| Judge | TOOGOOD J |
| Judgment Date | 09 August 2012 |
| Neutral Citation | [2012] NZHC 1996 |
| Docket Number | CIV-2011-404-000277 |
| Court | High Court |
| Date | 09 August 2012 |
and
[2012] NZHC 1996
CIV-2011-404-000277
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
Application for interlocutory orders to strike out affirmative defences on the grounds they were not tenable in law — plaintiff won tender to provide catering services to airline company and certain employees from defendant elected to transfer their employment — employees employment entitlements were transferred with them as per Part 6A Employment Relations Act 2000 (continuity of employment if employees' work affected by restructuring) — plaintiff assumed a liability to pay out accrued benefits valued at $258,000 at the date of transfer and sued defendant for restitution of money paid and to be paid in meeting the transferred entitlements — defendant denied there was a right to restitution, claiming that plaintiff had passed on to airline, the burden of meeting the transferred entitlements and had suffered no loss for which restitution should be made — whether defence of passing on was clearly untenable so that the Court could be certain that it could not succeed.
PG Skelton and A Borchardt for Plaintiff
JK Goodall and A Drake for Defendants
Strike-out and discovery — reasons)
This judgment was delivered by me on 9 August 2012 at 4:30 pm Pursuant to Rule 11.5 High Court Rules
Registrar/Deputy Registrar
| Table of Contents | Paragraph Number |
| Introduction | [1] |
| LSG's claim to restitution | [3] |
| Pacific's defences | [4] |
| The interlocutory applications | [5] |
| Applicable legal principles | [9] |
| Summary of issues | [12] |
| What is the present state of the law in New Zealand? | [15] |
| What is the present state of the law in Australia? | [22] |
| What is the present state of the law in Canada? | [27] |
| What is the present state of the law in England and Wales? | [32] |
| Did the Court of Appeal in Commissioner of Inland Revenue v Stiassny affirm the possibility of a passing on defence? | [42] |
| In Waikato Regional Airport Ltd v Attorney-General, did the Privy Council leave open the possibility that passing on might be a defence to LSG's claim in restitution? | [43] |
| Do the views of the academics provide a basis upon which the New Zealand courts might decide that passing on is an available defence to LSG's claim? | [46] |
| Are there practical considerations militating against the availability of the passing on defence? | [48] |
| Is the defence of passing on clearly untenable so that the Court could be certain that it cannot succeed? | [53] |
| The discovery issues | [54] |
These are my reasons for the interlocutory orders I made in a results judgment issued on 3 August 2012. 1
The plaintiff (“LSG”) won a tender to provide catering services to Singapore Airlines. As a consequence, 44 employees formerly employed by the defendants (“Pacific”) 2 elected to transfer their employment to LSG. 3 By operation of Part 6A of the Employment Relations Act 2000, their employment entitlements were transferred with them and LSG assumed a liability to pay out accrued benefits valued at $257,809.05 at the date of transfer.
LSG sues Pacific for restitution of the money paid and to be paid in meeting the transferred entitlements. It says it is a well-established common law rule that where a plaintiff has been compelled by law to pay money which the defendant was ultimately liable to pay, so that the defendant obtains the benefit of the payment by the discharge of his liability, the defendant is held indebted to the plaintiff in the amount of the payment. 4
Pacific denies that LSG has a right to restitution because:
(a) the effect of the legislative scheme is to transfer the entitlements of the employees into the new employment relationship in a way which extinguishes Pacific's liabilities and imposes new liabilities on LSG; and
(b) in any event, LSG has not actually met the transferred entitlements; and in the alternative, as affirmative defences,
(c) LSG has passed on to Singapore Airlines the burden of meeting the transferred entitlements and has suffered no loss for which restitution should be made; or
(d) if LSG has not passed on the liability, it should have done so under its duty as plaintiff to mitigate its losses.
LSG applied to strike out the two affirmative defences on the grounds they are not tenable in law, because passing on is not a defence to a claim in restitution, and LSG was not under any duty to mitigate.
Pacific alleges that LSG is in breach of its obligations to disclose all information relevant to LSG's claim for restitution and it applies, in respect of the passing on defences, for particular discovery of what LSG says are highly-sensitive commercial documents, including its contract with Singapore Airlines and all working papers and other documents relating to LSG's tender pricing.
Faire AJ had already delivered a judgment dealing with discovery, 5 some aspects of which Pacific asked to be reviewed. The affirmative defences have been pleaded since that judgment was issued.
In the results judgment I made the following orders: 6
(a) The defences pleaded in paragraphs 27–33 of the Amended Statement of Defence dated 13 June 2012 are struck out.
(b) The plaintiff shall comply forthwith, or verify by affidavit forthwith that it has complied with, the agreement to produce all internal communications within the plaintiff, and/or between the plaintiff and related companies,
relating to the recording or payment by the plaintiff of entitlements that accrued to the transferred employees prior to 23 February 2011 (“Transfer Date”), including all communications from and/or to Jaap Roest, Roger Deverell, Marie Park, Peta Kome, Sriram Bhardwaj, Anna Manuatu, Ashton Dempsey and Gaye Wilson.(c) The other applications for interlocutory orders are dismissed.
Rule 15.1 of the High Court Rules provides that the Court has a discretion to strike out a pleading if it discloses no reasonably arguable cause of action or defence. The parties are agreed that the relevant principles are those set out in McGechan on Procedure 7 at HR15.1.02 as derived from the judgments of the Court of Appeal in Attorney General v Prince 8 and the endorsement by the Supreme Court in Couch v Attorney General. 9 In this case, I have paid particular attention to the following:
(a) the cause of action or defence must be clearly untenable so that the Court must be “certain that it cannot succeed”;
(b) the Court is reluctant to terminate a claim or defence short of trial, so the jurisdiction to strike out should be exercised sparingly and only in clear cases;
(c) the jurisdiction to strike out is not excluded by the need to decide difficult questions of law, requiring extensive argument. However, the Court should be particularly slow to strike out a claim in any areas where the law is confused or developing.
The parties disagree over whether the law relating to the asserted defence of passing-on “is confused or developing.”
The principal test for LSG's discovery obligations is relevance. Whether LSG has met its obligations in this case fell to be determined principally on the nature of the pleadings after the strike-out application had been determined.
The central question to be answered is whether the defence of passing on is clearly untenable so that the Court could be certain that it cannot succeed. LSG submitted that the law in New Zealand rejects the defence in a case such as the present and should be regarded as settled, because it reflects the fundamental principles of the law of restitution and is supported by the leading authorities in Australia, Canada, and England and Wales. Pacific submitted that there were three main reasons why the law in New Zealand should be regarded as confused or developing. First, in Commissioner of Inland Revenue v Stiassny 10 the New Zealand Court of Appeal identified that where the necessary elements of a restitutionary claim are established, a remedy is prima facie available unless there are defences to the grant of the remedy or some overriding legal principle which may justify the defendant's enrichment and negate the claimant's right to restitution. Second, in a New Zealand case, Waikato Regional Airport Ltd v Attorney-General, 11 the Privy Council left open the possibility that passing on might be a defence to LSG's claim in restitution. Third, respected academic writers have criticised the doctrinal basis for the rejection of the passing on defence by the courts as misguided; they argue that the interpretation of the requirements for a claim in restitution is too simplistic and overlooks the corrective justice basis of the law of restorable enrichment.
To answer the central question, the following issues have to be determined:
(a) What is the present state of the law in New Zealand?
(b) What is the present state of the law in Australia?
(c) What is the present state of the law in Canada?
(d) What is the present state of the law in England and Wales?
(e) Did the Court of Appeal in Commissioner of Inland Revenue v Stiassny affirm the possibility of a passing on defence?
(f) In Waikato Regional Airport Ltd v Attorney-General, did the Privy Council leave open the possibility that passing on might be a defence to LSG's claim in restitution?
(g) Do the views of the academics provide a basis upon which the New Zealand courts might decide that passing on is an available defence to LSG's claim?
(h) Are there practical considerations militating against the availability of...
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Lsg Sky Chefs New Zealand Limited v Pacific Flight Catering Limited
...HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY CIV-2011-404-000277 [2012] NZHC 1996 BETWEEN LSG SKY CHEFS NEW ZEALAND LIMITED Plaintiff AND PACIFIC FLIGHT CATERING LIMITED First Defendant AND PRI FLIGHT CATERING LIMITED Second Defendant Hearing: 19 July 2012 Counsel: PG Skelton and A Borchardt......