New Zealand Basing Ltd v Brown

• Jurisdiction: New Zealand
• Judge: Harrison J
• Judgment Date: 04 November 2016
• Neutral Citation: [2016] NZCA 525
• Docket Number: CA12/2015
• Court: Court of Appeal
• Date: 04 November 2016

BETWEEN

New Zealand Basing Limited

Appellant

and

David Brown

First Respondent

and

Glen Sycamore

Second Respondent

[2016] NZCA 525

Court:

Harrison, Miller and Winkelmann JJ

CA12/2015

IN THE COURT OF APPEAL OF NEW ZEALAND

Appeal under s214 Employment Relations Act 2000 (“ERA”) (appeals on questions of law) against an Employment Court (“EC”) decision which declared that the age discrimination provisions of the ERA applied to the pilots' employment by the appellant and it would be discriminatory under the Human Rights Act 1993 to require each of them to retire from employment on the ground of age — the appellant was a wholly owned subsidiary of Cathay Pacific, a Hong Kong-based international airline — most pilots were based in Hong Kong but others were based in various other countries including New Zealand — the appellant entered into contracts of employment with a number of New Zealand-based pilots including the two respondents — the contract provided that the respondents were to retire on reaching the age of 55 years and Hong Kong law applied — consideration of Lawson v Serco Ltd, Botham v Ministry of Defence and Crofts v Veta Ltd— if the ERA applied, whether it overrode the parties' agreement that the law of Hong Kong applied to their contract to employment — if the ERA did not apply, would the application of the law of Hong Kong to the contract of employment be contrary to public policy.

Counsel:

A H Waalkens QC and M G Lawlor for Appellant

G M Pollak and HIK White for Respondents

• A The appeal is allowed.

• B The respondents must pay the appellant costs for a standard appeal on a 2B basis and usual disbursements.

JUDGMENT OF THE COURT

REASONS OF THE COURT

(Given by Harrison J)

Contents

Introduction	[1]
Background	[6]
The employment issues	[17]
Employment Court decision	[24]
Choice of law principles	[30]
First question: the Employment Relations Act 2000	[31]
Transnational employment	[31]
The Employment Court's approach	[33]
The proper law of the contracts	[34]
Overriding statutes	[36]
Distinguishing Crofts	[41]
Parliamentary intent	[56]
Second question: the public policy exception	[60]
The Employment Court's approach	[60]
Principles	[64]
Our analysis	[70]
Result	[84]

Introduction

1 Cathay Pacific is a Hong Kong-based international airline, employing about 3,000 pilots worldwide. Most pilots are based in Hong Kong but others are based in the United Kingdom, Germany, Canada, the United States of America, Australia and New Zealand. Through a wholly owned Hong Kong subsidiary, New Zealand Basing Ltd (NZBL), the airline entered into contracts of employment with a number of New Zealand-based pilots including Messrs David Brown and Glen Sycamore.

2 Two terms of the contracts are particularly relevant. One obliged Messrs Brown and Sycamore to retire from service with Cathay Pacific on reaching the age of 55 years. The other provided for Hong Kong law to apply to the pilots' conditions of service.

3 In determining an application for relief by Messrs Brown and Sycamore, the Employment Court declared that (a) the age discrimination provisions of New Zealand's Employment Relations Act 2000 (the ERA) apply to the pilots' employment by NZBL; and (b) it would be discriminatory under the Human Rights Act 1993 to require each of them to retire from employment on the ground of age. 1

4 NZBL appeals with leave on these two questions of law pursuant to s 214 of the ERA: 2

• (a) If the ERA applies, does it override the parties' agreement that the law of Hong Kong applies to their contract to employment?

• (b) If the ERA does not apply, would the application of the law of Hong Kong to the contract of employment be contrary to public policy?

5 The threshold issue underlying both questions is, as their terms recognise, whether the ERA applies to the contracts of employment. Our answer to that issue will largely determine the result of NZBL's appeal.

Background

6 Messrs Brown and Sycamore joined Cathay Pacific as pilots in the early 1990s. They were based originally in Hong Kong but in the mid 1990s they relocated to the Australasian base in Sydney which allowed them to reside in Auckland. Following that change they were employed along with other New Zealand-based crew by Veta Ltd, a Cathay Pacific subsidiary incorporated in Hong Kong.

7 In about 2001 Cathay Pacific formed NZBL to avoid a potential tax issue arising from Veta's participation in the airline's employment arrangements. The new structure separated New Zealand from the Australasian base and created Auckland as a permanent base. The pilots resigned from Veta and accepted formal offers from NZBL on the same terms of employment as those applying previously.

8 With effect from 1 July 2002 and 1 September 2002 respectively, Messrs Brown and Sycamore entered into identical new contracts of employment with NZBL incorporating “NZB Conditions of Service 2002” (CoS02). Materially, the contracts were subject to and incorporated a letter of offer from NZBL to the pilots including this provision:

This employment contract is governed by and shall be construed in accordance with the laws of Hong Kong and the parties hereto shall submit to the non-exclusive jurisdiction of the courts of Hong Kong.

The contracts themselves provided: 3

2. Application of Law

…

2.2. These Conditions of Service, which form part of the contract of employment between the Company and the Officer, will in all cases and in all respects be interpreted in accordance with the law as set out in the various applicable ordinances of the Hong Kong Special Administrative Region (Hong Kong SAR).

…

35. Retirement

35.1. The normal retirement age is fifty five (55) years of age. An officer will be deemed to have reached normal Retirement Age on the day on which the Officer reached his/her fifty fifth (55th) birthday.

9 Global legal developments provide a necessary backdrop to NZBL's present employment arrangements. In 2003 five London-based pilots employed by Veta and related entities filed originating applications against Cathay Pacific in the London South Employment Tribunal. The pilots complained that the airline had unfairly dismissed them on reaching the age of 55 years. At issue was the territorial scope of the Employment Relations Act 1996 (UK) (the UK Act).

10 In a threefold decision delivered in 2006— Lawson v Serco Ltd, Botham v Ministry of Defence, Crofts v Veta Ltd( Crofts)— the House of Lords upheld the pilots' claim that the UK Act applied to their employment contract with Veta including the right pursuant to s 94(1) not to be unfairly dismissed. 4 In reliance on factual findings made by the Employment Tribunal, the Lords were satisfied thatLondon was the centre of Mr Croft's operations. Mr Croft was a peripatetic employee whose work as a pilot necessarily took him many different places. London

was his working base and the place of his employment for the purposes of the unlawful dismissal provisions of the UK Act

11 Also, from November 2004 the International Civil Aviation Organisation (ICAO) revised the age standard for retirement of pilots so that 65 years became the international norm subject to certain conditions. 5

12 As a consequence of Crofts, Cathay Pacific undertook a comprehensive review of all local laws where its basing companies operated. The airline decided to revise its contractual arrangements to recognise that they would be governed by the employment law of the base jurisdiction. In October 2007 NZBL sent Messrs Brown and Sycamore a document advising them of Cathay Pacific's “on-shoring” process and of its intention to revisit the age of retirement of pilots to reflect local labour laws. NZBL also advised Messrs Brown and Sycamore of its intention to implement new Conditions of Service 2008 (CoS08) for all pilots employed after 1 January 2008.

13 In 2009 Cathay Pacific (and therefore NZBL) offered all of its pilots an election to enter into new contracts of employment incorporating CoS08, which materially departed from CoS02 in two related respects: the age of retirement was increased from 55 years to 65 years but a lower pay scale would apply in the interim. At that time Messrs Brown and Sycamore elected not to transfer to CoS08 because they said they understood that NZBL would soon increase the retirement age to 65 years under CoS02— probably by the end of 2009— and they were reluctant to lose the benefits otherwise available under their existing contracts. In Mr Brown's words, he did not see why he should “bargain [his] salary in order to work longer”.

14 In due course the on-shoring process was effected for pilots based in the United Kingdom, Canada and Australia, introducing express choices of local law and

lifting the age of retirement to 65 years. The same process did not occur for the 30 or so pilots based in New Zealand

15 In 2013 Mr Sycamore requested NZBL to change his conditions of service from CoS02 to CoS08. Mr Brown made a similar request in early 2014. Both were declined. Messrs Brown and Sycamore reached the age of 55 years on 4 March 2015 and 24 September 2015 respectively. Both face dismissal from NZBL, which has agreed to defer enforcement pending the result of this proceeding.

16 The pilots are presently employed as senior captains flying A340 and A330 aircraft, and are generally rostered for flights between Auckland International Airport and Cathay Pacific's hub at Hong Kong International Airport.

The employment issues

17 In 2014 the parties filed a joint statement of problem in the Employment Relations Authority which outlined the facts giving rise to what was called “the employment relationship issue” before addressing “the captains' position”. The proceeding was then removed to the Employment Court.

18 The pilots...