Marlene Campbell v The Commissioner of Salford School NZEmpC Christchurch

• Jurisdiction: New Zealand
• Judge: Judge B A Corkill
• Judgment Date: 20 October 2015
• Court: Employment Court
• Docket Number: EMPC 186/2015
• Date: 20 October 2015

[2015] NZEmpC 186

IN THE EMPLOYMENT COURT CHRISTCHURCH

EMPC 186/2015

EMPC 280/2014

In the Matter of a challenge to a determination of the Employment Relations Authority

Between

The Commissioner of Salford School

Plaintiff

and

Marlene Campbell

Defendant

Between

Marlene Campbell

Plaintiff

and

The Commissioner of Salford School

Defendant

Appearances:

R Harrison, counsel for Marlene Campbell

S Wilson, counsel for The Commissioner of Salford School

Application for costs following an Employment Court (EmpC) hearing and challenge to a costs determination of the Employment Relations Authority (the Authority) — the defendant had been suspended and then dismissed from her position as the principal of a school — the defendant had applied to the Authority for interim reinstatement which was declined — the defendant turned down three Calderbank offers — whether the plaintiff's failure to honour an undertaking given at the interim reinstatement hearing was relevant to the award of costs for that hearing — whether the failure to accept the Calderbank offers had reversed the costs position so that the defendant was liable to the Commissioner for costs — whether a tariff approach should be adopted.

Held: Although the Commissioner obtained an order for costs in the Authority, she had challenged that determination on a de novo basis. The consequence of doing so was that all issues as to costs in the Authority were at large, and required reconsideration by the Court. It was necessary to approach the issue of costs in the authority on the basis of the outcome of the challenge. the effect of s183(2) Employment Relations Act (ERA was that once the EmpC had made a decision, the determination of the Authority was set aside and the decision of the EmpC on the matter stood in its place. It would be artificial to proceed on any other basis ( Ruddlesden v Unisys New Zealand Limited).

The question of costs in respect of the reinstatement application had not been dealt with separately by the Authority. Despite the Commissioner's undertaking, the investigation was not concluded within the anticipated timeframe. That factor was relevant to the assessment of costs because had the Authority been aware that the investigation would not be concluded prior to the commencement of the next school year, there might have been a different outcome to the application for interim reinstatement.

C had lost the opportunity of arguing persuasively that she should succeed in her application for reinstatement and lost the opportunity thereby of obtaining an order for costs. Assessed on lost opportunity principles, that was a factor which should be taken into account when determining whether any order for costs should be made.

But for that factor, the EmpC would have concluded that costs should follow the event and that an uplift of the tariff to $7,000 per day was justified, thus entitling the Commissioner to an order for costs in the sum of $3,500 for the half day devoted to the Authority's investigation of the application for interim relief.

However in all the circumstances there should be no order as to costs to reflect the lost opportunity which C had sustained.

Because of the intense publicity which had surrounded her suspension and dismissal, C had sought an outcome that would allow some restoration of her reputation. The final Calderbank offer that was made for the Commissioner would not have achieved that. The proposed agreed public statement did not acknowledge that the dismissal was not justified, which was obviously important for C. Also relevant was the outcome of the disciplinary complaint which had been lodged with the CAC. This was a significant matter, since it was relevant to C's ability to maintain her registration and to continue to practice in her chosen profession. The Commissioner's second Calderbank offer would not have addressed the issue of the complaint, at least directly. An outcome of the challenge was a decision by the CAC to discontinue consideration of the complaint.

Although the financial offer which was made of $100,000 was better than the notional assessment of C's position at the time of that offer, $92,500, that offer was not in fact as beneficial to C as the judgment which she obtained. Therefore, it had been reasonable for C to have rejected that offer. Accordingly, there need not be any adjustment downwards of an award of costs in C's favour based on the Authority's normal daily tariff.

Given the complexity of the chronology which required review at the investigation meeting, undue criticism should not be made as to the way in which C's case had been presented to the Authority. No allowance was made for that factor.

The daily tariff applied to the Authority costs without increase of decrease. The commissioner was to pay C $19,250.

The amount sought by C for her costs in the EmpC, $52,000, which was 66 per cent of her actual costs, was reasonable. GST was not payable. A GST neutral approach was preferred since an unsuccessful party making contribution to costs was not paying for a service provided to it by a successful party ( Air New Zealand Limited v Kerr). The travel costs of C's lawyer were not payable as C had chosen to appoint out of town counsel.

JUDGMENT OF Judge B A Corkill

Introduction

1 This judgment resolves two issues as to costs.

2 The first arises from a challenge to a costs determination of the Employment Relations Authority (the Authority).

3 An application by Ms Campbell for an interim reinstatement order was unsuccessful. Then in its substantive determination, the Authority upheld one only of Ms Campbell's four disadvantage grievances; the Authority determined that the decision to suspend Ms Campbell was not justified and the Commissioner was ordered to pay $5,000 as compensation for humiliation, loss of dignity and injury to feelings. 1 Ms Campbell's dismissal grievance was dismissed. In its costs determination, the Authority determined that the Commissioner had successfully defended most of Ms Campbell's claims; Ms Campbell was ordered to pay the Commissioner $21,000 as a contribution to costs incurred in connection with both investigation meetings. 2

4 In the challenge now brought by the Commissioner it is asserted that Ms Campbell should have been ordered to pay $5,000 in respect of her unsuccessful application for an interim reinstatement order. In respect of the investigation meeting it was asserted that having regard to a Calderbank offer made in a timely way before the investigation meeting, the issue was to be approached on the basis of awarding two-thirds of actual and reasonable costs since the date of that offer being $80,000; alternatively, the daily tariff should be increased to $10,000 per day, and an award of $70,000 costs should be made.

5 For Ms Campbell, it is submitted that having regard to the ultimate outcome of her claim in the Court, it is appropriate to conclude that vindication has only now been achieved. It was not unreasonable for her to decline the Calderbank offer made for the Commissioner. Having regard to her success in the challenge of the determination, costs should follow that event. The Authority's approach in applying the daily tariff rate was correct. It was asserted that Ms Campbell should receive costs based on six hearing days, that is $21,000; if the Commissioner's Calderbank offer should be given some acknowledgment, then this could be reflected in a decrease to the tariff amount.

6 The second issue which the Court is required to resolve relates to costs incurred with regard to Ms Campbell's challenge. In resolving her claim, I determined: 3

• a) The decision to suspend Ms Campbell was not a conclusion which a fair and reasonable employer could have reached in all the circumstances, so that her disadvantage grievance was established.

• b) The decision to dismiss Ms Campbell was not a conclusion which a fair and reasonable employer could have reached in all the circumstances, so that her dismissal grievance was established.

• c) Remedies should be awarded. I directed that Ms Campbell should be paid lost wages from a date which was two months after her dismissal on 6 March 2014, until she obtained alternate work on 22 January 2015, reduced by 30 per cent for contributory conduct.

• d) Compensation for hurt, humiliation and loss of dignity was ordered in the sum of $22,400, after allowance for contributory conduct.

7 I also found that as Ms Campbell had succeeded in her challenge, she was entitled to costs. 4 Ms Campbell has now made an application for payment of 66 per cent of her actual costs being $52,113.60 plus GST, and disbursements of $7,760.60 including GST. It was submitted that although a Calderbank offer was made after the issuing of the Authority's determination and before the hearing in the Employment Court, the offer was not so significant as to justify a reduction in the amount sought.

8 For the Commissioner it was submitted in response that Ms Campbell should receive no costs award in respect of the Court proceedings, having regard to what is asserted to be an unreasonable refusal of three substantial Calderbank offers of settlement, made at an early stage prior to the Authority's investigation meeting and prior to the hearing of the challenge. The Commissioner submits that the effect of Ms Campbell's refusal of the Commissioner's offer is to reverse the costs position so

that Ms Campbell is liable to make a payment for costs to the Commissioner, being 66 per cent of the Commissioner's actual and reasonable costs in defending the proceeding, which is the sum of $67,261.26.

9 Because the Calderbank offers made for the Commissioner prior to the investigation meeting are central to a consideration of costs both in the Authority and in the Court, it is appropriate to deal with the cost issues in chronological sequence. I therefore begin by resolving the challenge...