Musa v Whanganui Dhb and Another Wn
 NZEMPC 120
IN THE EMPLOYMENT COURT WELLINGTON
In the Matter of proceedings removed from the Employment Relations Authority
Gerard Dewar, Counsel for Plaintiff
Peter Churchman, Counsel for First Defendant appearing and represented by leave (on 4 and 5 August 2010)
Michael Leggat, Counsel for Second Defendant
Claim for monetary penalties for breach for confidentiality of personal grievance settlement details. CEO of District Health Board resigned his role among much public criticism and a settlement agreement of a personal grievance with the Board. One Board member made further comments regarding the CEO's poor performance to a journalist — whether there was a breach of the terms of the settlement agreement by a Board member — whether there was a breach of the duties of confidence as a term of the employment agreement.
Held: The word “person” in s149(4) Employment Relations Act 2000 (“ERA”) (person breaching term of settlement) was not limited to a person who was party to a settlement as that would defeat the object of s149 which was to preserve the confidentiality of settlements. S could technically therefore be liable for a breach of s149. To support this it first needed to be shown that S knew of both the fact of a settlement having been achieved and of the relevant terms of that settlement.
Being aware of M's resignation was not the same as being aware of the settlement that included the resignation, and the settlement's terms, which, as a penalty action, M had to establish to a sufficient standard of high probability. M could not establish this as, even though S and other Board members were aware of the negotiating parameters, given the volatile situation there was a distinct possibility negotiations could have broken down and details of the settlement had not been disclosed to Board members S received before speaking to the journalist. S therefore could not be liable under s149.
In the claim for penalty for breach by S of M's employment agreement, M relied on s134 ERA (penalties for breach of employment agreement) and had to bring himself within s134(2). Section s134(2) made liable a non-party such as S but only as a secondary breacher. M had to show that there was a breach of his employment agreement by a primary breacher, namely the Board. The argument that what S did amounted to a breach by the Board of which he was a member, thus making S in law the instigator of the breach of the employment agreement could not succeed. There was nothing in the legislation which would cause the acts or omissions of a single board member to be deemed to be the acts or omissions of the Board as a statutory entity and for which it could be liable. The settlement agreement was a separate contract to M's employment agreement. Neither the Board nor S could be said to have breached the employment agreement when M was relying on breaches of implied obligations in the settlement agreement. Claims for penalties dismissed.
JUDGMENT OF CHIEF JUDGE GL Colgan
Should Clive Solomon be penalised for breaching the confidentiality of the settlement of Memo Musa's personal grievance against the Whanganui District Health Board (the Board) and/or for breaching Mr Musa's employment agreement with the Board?
This is hopefully the last episode in a long running saga which has included the raising and settlement of two personal grievances by Mr Musa against the Board; Mr Musa's resignation; the dismissal on lack of jurisdiction grounds of a claim for damages by Mr Musa against the Board and Mr Solomon; and finally this bitterly fought and defended claim for monetary penalties by the Board's former Chief Executive Officer (CEO) against an individual member and now former surgeon employee of the Board. Despite a number of interlocutory rulings and judgments defining and confining the parameters of relevant evidence, the hearing of evidence over two days in Whanganui revealed a remarkable depth and intensity of antagonism. As I will note at the conclusion of this judgment, and as one of the witnesses said, “the time has now come for this circus to end”. Before that can happen, however, Mr Musa's claims must be decided.
In March 2001 Mr Musa became the CEO of the Board. Mr Musa's employment agreement was renegotiated in 2006 and provided materially for the purposes of this case:
• that the first defendant as employer would act as a good employer in all its dealings with the plaintiff including treating him fairly and properly in all aspects of his employment; and
• that it was for an indefinite duration but was terminable on not less than three months' written notice.
At all relevant times the second defendant was a general surgeon and an employee of the Board at Whangarei Hospital. In 2004 Mr Solomon was elected as a member of the Board.
In mid 2006 issues arose within the Board about the provision of paediatric services which led to public criticism of Mr Musa by Mr Solomon in the Wanganui Chronicle, the local newspaper. These included publication of Mr Solomon's view that Mr Musa should be replaced as CEO and Mr Solomon's promotion of another general manager at the hospital to that role.
The board's standing orders (communication policy) at the time that governed both employees and board members provided, so far as board members including Mr Solomon were concerned, as follows:
15.1 No member of the Board shall discuss business conducted at a meeting, or the business of the District Health Board, with any person not a member of the District Health Board or its staff, unless authorised to do so by the Chairperson.
15.2 No member of the Board or a Committee shall release any information to any person not a member of the District Health Board or its staff, or make any statement to the media unless approved by the Chairperson.
The board's relevant “Communication Policy” provided as follows:
- The Chief Executive Officer is the primary spokesperson for the Whanganui District Health Board in all management and operational matters. Other staff may make media statements only when given delegated authority. 2.2 The Board Chairman may speak on behalf of the Board on matters of governance and policy. … 2.4 The Medical Officer of Health is the spokesperson on issues relating to public health. … 2.7 Staff, other than those identified in this policy, should not comment when approached by media and should refer the journalist to the Communications/Media Advisor. … 4.1.1 Elected Members Members may make statements on behalf of the Board only with the specific authority of the Board or relevant committee Chair. No statements made in this capacity shall undermine any existing policy or decision of the Board or criticise the conduct of district health board Managers or staff nor should it undermine any existing policy or decision of the Board.
Among Mr Solomon's criticisms of Mr Musa was the latter's refusal or failure to speak to the news media despite Mr Musa's obligations of compliance with the Board's communication policies.
After having sought legal advice about these public criticisms of him, Mr Musa wrote to the Board on 24 August 2006. He complained formally about public criticisms, not only by Mr Solomon but also by other board members, Dr PJ Faumui and Philippa Baker-Hogan. Mr Musa said that the clear inference from these public statements was that he was incompetent and was not performing adequately in his role. Mr Musa rejected these inferences and complained that the public criticisms were made contrary to board policies, a constraint that his critics had themselves acknowledged they had breached. Despite asserting that the statements were actionable, both against the individuals and the Board, Mr Musa's letter sought a constructive solution with his employer. This included a request that board members acknowledge and comply with the constraints of the Board's Standing Orders and Communication Policy, an assurance about the lawful nature of any future communications, a written apology for the damage to his reputation and stress, and reimbursement of his legal costs.
The board accepted the validity of Mr Musa's complaints, apologised to him formally, and met his legal costs. The Chair at the time of the Board also wrote formally to all its members by letter dated 24 August 2006, reminding them of their obligations with regard to statements made in public and drawing their attention to the relevant standing orders and communication policies as well as to their statutory obligations under ss 53 to 57 of the Crown Entities Act 2004.
There was, however, further public criticism of Mr Musa by board members in late 2007 following a clinical review of the hospital undertaken by the Ministry of Health which, despite a public perception to the contrary, concluded that the hospital provided a safe clinical environment and was comparable with other similar hospitals in New Zealand. As a result...
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