Nz Fire Service Commission v Warner

 
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[2010] NZEMPC 90

IN THE EMPLOYMENT COURT WELLINGTON

WRC 41/09

In the Matter of the referral of a question of law from the Employment Relations Authority

BETWEEN
The New Zealand Fire Service Commission
Plaintiff
and
Steve Warner and Others
Defendant
Appearances:

Geoff Davenport and Guido Ballara, Counsel for Plaintiff

Peter Cranney and Anthea Connor, Counsel for Defendants

Referral of question of law from the Employment Relations Authority under s177 Employment Relations Act 2000 as to whether Authority had jurisdiction to investigate and determine the plaintiff's claims for repayment of allowances mistakenly paid to a number of employees.

Held: Section 161 ERA (jurisdiction) provided for the Authority to have exclusive jurisdiction to make determinations about employment relationship problems generally arising out the employment relationship or related to the interpretation of the ERA other than an action founded on tort. The repayment of monies allegedly overpaid mistakenly to employees fell within the definition of an employment relationship problem. While the Commission's causes of action in contract were within the jurisdiction, its claim in tort was not.

The claim for repayment of repayment of allowances provided for in the collective agreement which may have been overpaid to the employees, was a relationship problem as defined by the ERA. The tort claim was not within the jurisdiction of the Authority, but the claim for breach of an implied contractual obligation of good faith was as was the Commission's cause of action for the equitable remedy of restitution/unjust enrichment. The Commission's alternative argument that it was entitled to recover the monies overpaid as a matter of compliance by an employee with an employer's lawful and reasonable instruction did not extend to an instruction to repay money, it related to reasonable instructions given for the performance of the employee's duties. The Commission could not expect that formal instructions to repay allowances allegedly overpaid could be backed up with disciplinary sanctions in the event of non-compliance. Rather, the Commission's claims were matters of legal entitlement between parties to an employment relationship.

The majority of the Commission's causes of actions were lawfully before the Authority. The Authority had jurisdiction to investigate and determine them. It was for the Authority to determine whether s94A Judicature Act 1908 (recovery of payments made under mistake of law) applied as a defence.

JUDGMENT OF CHIEF JUDGE GL Colgan

1

The question of law removed by the Employment Relations Authority under s 177 of the Employment Relations Act 2000 is whether an employer may sue an employee in the Authority for remuneration mistakenly overpaid. Some of the defendants, full-time fire fighters, assert that the Authority is not empowered to investigate and determine their employer's claims for repayment of allowances mistakenly overpaid by the New Zealand Fire Service Commission (the Commission) to a number of its employees.

2

Although the Authority did not make findings of fact and state these for the Court on its referral of a question of law under s 177, the nature of the question is fundamentally jurisdictional and logically precedes its investigation and determination. In these circumstances I did not direct the Authority to make those factual findings in view of the parties' confidence that the question referred could be decided on the basis of the statements of problem and in reply in the Authority together with the agreed relevant facts.

3

Accepting the burden of persuading the Court that the Authority cannot do so, Mr Cranney for the defendants advanced the following arguments.

4

Counsel submitted broadly that except to make orders for payment of penalties for breaches of employment agreements and in some other similar penalty actions, the Authority is not empowered to make any pecuniary awards against employees. Counsel relied on the judgment of this Court, albeit under the different statutory regime of the Employment Contracts Act 1991, in Master Builders Association (Auckland) Inc v Doe. 1 That was a claim said to have been brought in reliance on s 94A of the Judicature Act 1908 which, then and now, provides materially:

94A Recovery of payments made under mistake of law

  • (1) Subject to the provisions of this section, where relief in respect of any payment that has been made under mistake is sought in any Court, whether in civil proceedings or by way of defence, set off, counterclaim, or otherwise, and that relief could be granted if the mistake was wholly one of fact, that relief shall not be denied by reason only that the mistake is one of law whether or not it is in any degree also one of fact.

  • (2) Nothing in this section shall enable relief to be given in respect of any payment made at a time when the law requires or allows, or is commonly understood to require or allow, the payment to be made or enforced, by reason only that the law is subsequently changed or shown not to have been as it was commonly understood to be at the time of the payment.

5

The Doe case turned on the important test under s 104 of the Employment Contracts Act 1991 whether the proceeding was “founded on an employment contract”. The Court decided it was not, following such cases as Medic Corporation Ltd v Barrett2and Conference of the Methodist Church of NZ v Gray. 3 The judgment in the Doe case records that although it was not in issue that overpayments “were in some way connected with the employment contract” between the parties,

the jurisdictional test under s 104 (“(f) [t]o hear and determine any question connected with any employment contract which arises in the course of any proceedings properly brought before the Court:”) was not met.
6

Mr Cranney submitted that the subsequent enactment of the Employment Relations Act 2000 has not changed the position under the previous legislation. Counsel submitted that the Authority's jurisdiction under s 162 to “make any order that the High Court or a District Court may make under any enactment or rule of law relating to contracts” does not save the position because s 94A is not an “enactment … relating to contracts” and because none of the five Acts specified in s 162 confers any jurisdiction on any court to make an order such as is sought here. Mr Cranney submitted that s 162 can only engage where the Authority otherwise is seized of a matter lawfully. Section 162 does not confer jurisdiction or expand the scope of jurisdiction.

7

Further, Mr Cranney submitted that s 161(1)(r) does not give the Authority jurisdiction to determine this case. That extends the Authority's reach to “any other action (being an action that is not directly within the jurisdiction of the Court) arising from or related to the employment relationship or related to the interpretation of this Act (other than an action founded on tort):”

8

Mr Cranney relied on the judgment of the High Court in BDM Grange Ltd v Parker4 which interpreted s 161(1)(r) as being limited by the opening words of s161(1), “employment relationship problems generally” and the definition of “employment relationship problem” in s 5 of the Employment Relations Act 2000. Mr Cranney submitted that the judgment in BDM Grange was subsequently endorsed by this Court in Axiom Rolle PRP Valuations Services Ltd v Kapadia5 and in particular at para [55].

9

Thus, Mr Cranney submitted, the Employment Relations Act 2000 limits the Authority's jurisdiction to contractual causes of action only. This does not include,

in counsel's submission, what was described as a s 94A Judicature Act 1908 cause of action.
Relevant statutory provisions
10

The Authority is a creature of statute. Its jurisdiction and powers are those given to it by Parliament either expressed in, or necessarily implied from, the Employment Relations Act 2000. Section 157(1) provides in relation to the “Role of the Authority” :

  • (1) The Authority is an investigative body that has the role of resolving employment relationship problems by establishing the facts and making a determination according to the substantial merits of the case, without regard to technicalities.

  • (3) The Authority must act as it thinks fit in equity and good conscience, but may not do anything that is inconsistent with this Act or with the relevant employment agreement.

11

Section 160 sets out the Authority's express powers. They enable the Authority to do certain things once it is lawfully seized of a case. That preliminary stage is known as “jurisdiction” and is dealt with in s 161. This provides materially (by reference to my emboldened passages):

  • (1) The Authority has exclusive jurisdiction to make determinations about employment relationship problems generally, including-

    • (a) disputes about the interpretation, application, or operation of an employment agreement:

    • (b) matters related to a breach of an employment agreement:

    • (f) matters about whether the good faith obligations imposed by this Act (including those that apply where a union and an employer bargain for a collective agreement) have been complied...

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