Metallic Sweeping (1998) Ltd v Ford

 
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[2010] NZEMPC 129

IN THE EMPLOYMENT COURT CHRISTCHURCH

CRC 31/09

IN THE MATTER OF a challenge to a determination of the Employment Relations Authority

Between
Metallic Sweeping (1998) Limited
Plaintiff
and
Sandra Ford
Defendant
Appearances:

Owen Paulsen, counsel for the plaintiff

No appearance for the defendant

Challenge to a costs determination under s179 Employment Relations Act 2000 with regard to a failed personal grievance — defendant sought a hearing de novo — the defendant challenged the amount of costs on the basis she was unable to pay the award — principles relating to the award of costs in the Employment Relations Authority — principles regarding how the Court conducts a de novo hearing of a costs determination made by the Employment Relations Authority — what extent the Court should call for information when a defendant fails to take any steps in the proceeding — what was the nature and extent to which a party's financial circumstances should be taken into account when making an award of costs.

Held: Where a party had exercised their statutory rights under s179 ERA and requested a hearing de novo of the Authority's costs determination, the Court must hold a de novo hearing unless the Court was satisfied the plaintiff has failed to properly participate in the Authority's investigation. There was no suggestion of that in this case.

The only practical way of of deciding a challenge to a costs determination was for the Court to be primarily informed through the submissions of the parties, with the possibility that that could be supported by affidavit evidence. In areas of uncertainty, the Court would need to have regard to the Authority's assessments of matters in a manner it would not do when deciding a substantive challenge by way of a hearing de novo. Where the challenge related to principles applied by the Authority, the quality of its reasoning in relation to stated facts or the assessments of issues which were documented would not arise. In such a case, the Court should be able to decide the matter as well informed as the Authority.

F's ability to pay was a real issue. Were it guided strictly by legal principles, the Court would not be able to regard to the defendant's letter. Furthermore, the letter was from a defendant who had not filed a statement of defence and therefore had no standing. However, as well as having regard to legal principles, the Court was also given discretion to act in equity and good conscience under s189 ERA (equity and good conscience). Given that F's inability pay was a real factor in the case, the Court was of the view that it would be both inequitable and unconscionable for the Court to have ignored the issue and therefore it took into account the contents of her letter as well as the parties' cost submissions originally made to the Authority. In addition to those materials the Court also had the first determination of the Authority which granted leave to F to pursue her personal grievance out of time and the papers relating to the subsequent challenge to that determination which was withdrawn but costs were awarded to F.

Costs should generally follow the event; there was nothing in this case which warranted a departure from that principle. Its proper application however, required that an allowance should be made for aspects of the case in which F was successful, namely in overcoming Metallic's opposition to leave being granted. There was no evidence presented as to those costs but in taking a daily tariff approach, a reasonable allowance for that was $2,000. F had not unnecessarily prolonged the hearing. It was the defendant's right to have her claims heard in the Authority. It was not automatic that a party who made an offer of settlement which was unreasonably rejected was entitled to be indemnified for all subsequent costs. Exercising the right to be heard in the Authority was also not a factor justifying an increased award of costs. Part of the costs sought by Metallic had not been reasonably incurred, such as the costs incurred in opposing F's application to pursue her grievance out of time; that sum had to be deducted from the total sought. The appropriate award of costs was $7,500, of which $2000.00 had to be deducted in favour of F for her application for leave which left $5,500.00, subject to F's ability to pay.

It was a well established principle applicable to the award of costs that they should be limited by the ability of the party to pay, without undue hardship. The party's financial position should be assessed on income, outgoings, assets and liabilities. While F only had a small income she had more than $400,000.00 equity in three houses, two of which were rented out. Therefore, F had ample assets from which to pay an appropriate award of costs.

Challenge successful; the determination of the Authority as to costs was set aside and F was ordered to pay $5,500 costs and $131.52 for disbursements.

1

This case raises three interrelated issues. The first is how the Court can conduct a de novo hearing of a costs determination made by the Employment Relations Authority. The second is the extent to which the Court should call for information when a defendant fails to take any steps in the proceeding. The third issue is the manner and extent to which a party's financial circumstances should be taken into account in making an award of costs.

2

Ms Ford was employed by Metallic Sweeping (1998) Limited as a clerical worker from April 2001 until she was dismissed in July 2005. She pursued personal grievances alleging that her dismissal was unjustifiable and that she was unjustifiably suspended immediately prior to her dismissal. Those claims were investigated by the Authority which dismissed them in its determination dated 6 August 2009 1. The Authority reserved costs which were then the subject of written submissions and determined on the papers 2. The plaintiff challenges that costs determination and, in its statement of claim, sought a hearing de novo.

3

A statement of claim was filed in the Court on 26 November 2009 but a copy was not properly served on the defendant until 31 March 2010. The period of 30 clear days in which the defendant could file a statement of defence therefore ran until 30 April 2010. The defendant did not file a statement of defence. Rather, she sent a letter to the registrar dated 23 April 2010, parts of which were:

  • 1. I do not at this time have a representative acting on my behalf as my former Advocate Mr Robert Thompson informed me by email when I was served with the court documents regarding this challenge to the costs. I am not in the financial position to employ a solicitor to take over where Mr Thompson left off.

  • 2. My present circumstances are that I am being fully supported financially by my current partner due to on going health issues which means that I am now only in paid employment for 4.25 hours per week, I am attaching a copy of a current pay slip

  • 5. I have no further information to add to what my former Advocate Mr Robert Thompson has already presented to the Authority regarding costs.

4

Attached to the letter was a copy of a payslip showing that the defendant was paid $13.25 per hour for 13 hours work in a pay period ending on 7 March 2010.

5

For the plaintiff, Mr Paulsen provided the Court with a copy of the costs submissions he had made to the Authority. When asked if he wished to have an oral hearing, Mr Paulsen confirmed that the plaintiff was content for the Court to decide the matter on the papers.

6

The Authority's costs determination was brief. It was also written for the parties in the sense that it made general references to the history of the proceeding but no details. For example, the Authority said:

[2] This matter has had an almost labyrinthine progress to determination which has inflated costs incurred by both parties beyond the usual, given the

uncomplicated matter involved. The history is simply that and is well known to the parties.
7

Later in its determination, the Authority referred to “the intricacies and delays which muddy the water in this particular matter” but, again, did not elaborate.

8

Although Mr Paulsen's memorandum was reasonably detailed and informative, it shed only a limited amount of light on the events so obscurely referred to by the Authority.

9

Another aspect of the Authority's determination was its reference to the financial position of the defendant. The Authority said:

5

Mr Thompson has forwarded information on the applicant's current financial position. Ms Ford has secured employment for 20 hours a week and has a school aged daughter to support. The applicant's financial position is far from comfortable and the Authority is required to put this in the balance.

10

While not saying so explicitly, it appears that its perception of the defendant's ability to pay caused the Authority to reduce an award of costs of $4,500 it would otherwise have made to one of $1,500.

Nature of a de novo hearing on costs
11

In the exercise of its statutory rights under s179 of the Employment Relations Act 2000 (the Act), the plaintiff was entitled to seek a hearing de novo of the Authority's costs determination. Where it is sought, the Court must hold a de novo hearing unless a good faith report is requested under s181of the Act and the Court is satisfied that the plaintiff failed to properly participate in the Authority's investigation. 3...

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