Te One A Mara Ltd v Chad Olsen NZEmpC WN

JurisdictionNew Zealand
CourtEmployment Court
JudgeA D Ford
Judgment Date12 October 2012
Docket NumberWRC 10/12
Date12 October 2012

[2012] NZEmpC 176

IN THE EMPLOYMENT COURT WELLINGTON

WRC 10/12

In the matter of a point of law challenge to a determination of the Employment Relations Authority

BETWEEN
Te One A Mara Limited
Plaintiff
and
Chad Olsen
Defendant
Counsel:

Michael Quigg and Simon Martin, counsel for the plaintiff

Jills Angus Burney, counsel for the defendant

Challenge on a non-de novo basis of an Employment Relations Authority costs' determination which held costs should lie where they fell — Authority concluded defendant had personal grievance for unjustified disadvantage actions in regard to warnings and dismissal by plaintiff — net amount of remedies was $14,650 — Calderbank offer of $15,000 had earlier been made by plaintiff in full and final settlement (costs inclusive) — defendant unsuccessful in application for costs as found to have unnecessarily prolonged proceedings — consideration of pre-offer costs — whether unsuccessful plaintiff should be entitled to costs because Calderbank offer had been made at an early stage of the proceedings.

The issue was whether the Authority had failed to give sufficient weight to the Calderbank offer, made at an early stage of the proceedings, such that the plaintiff, though unsuccessful, was entitled to costs.

Held: The Calderbank offer in the present case was expressed to be “inclusive of costs”. In other words, at the time it was made, O would have had to assess, inter alia, his prospects of success before the Authority, making allowance for his own pre-offer legal costs, in the knowledge that the offer did not include any additional payment to cover such costs.

In Australia there was authority that there was no “definitive rule” that a Calderbank offer which purported to be inclusive of costs could never be considered by the courts, but the practical difficulties demonstrated by the authorities indicated that there were sound reasons to discourage Calderbank offers from being framed in such a way. In New Zealand it was probably fair to say that “inclusive of costs” Calderbank offers had not had the same focus of judicial attention as they had had in Australia, although the Court of Appeal (“CA”) in Health Waikato Ltd v Van der Sluis had observed in relation to offers stated to be without costs “that is the proper ‘transparent’ approach which should be encouraged”. In Binnie v Pacific Health Ltd the CA said that Calderbank offers which were not inclusive of costs “ought sensibly to propose a specific figure for costs” to avoid later problems. A steely approach was required to costs orders where plaintiffs did not better a Calderbank offer ( Bluestar Print Group (NZ) Ltd v Mitchell).

The difference between the Calderbank offer amount and net amount awarded by the Authority was $349. It would have been open to the Authority to have concluded that, as the “costs inclusive” offer had necessarily included an unquantified element for pre-offer costs, the Calderbank offer would have been ineffective unless the plaintiff had been able to establish that the defendant's pre-offer costs came to something less than $350 ( Tourism Holdings Ltd (t/a C E Munro) v Charlesworth and Fitzpatrick v Cheal). Evidence before the Court would have indicated a costs figure considerably in excess of that sum. The Authority could have taken the approach that it was not unreasonable for O to reject the Calderbank offer and on that basis ought to have been entitled to his costs.

The “steely” approach emphasised by the CA in Bluestar was specifically confined to cases, “where plaintiffs do not beat Calderbank offers” However there was no cross challenge on this point. Therefore, accepting the correctness of the Authority's decision to take the Calderbank offer into account, the issue became whether it erred in law by giving too much weight to the tariff-based approach to costs and to the genuineness of O's claim, while failing to give sufficient weight to the Calderbank offer.

The Authority did not in fact fail to exercise its discretion appropriately. The outcome of the costs determination was not dissimilar to other decided cases involving Calderbank offers such as Bluestar. Ordering costs to lie where they fell in recognition of the Calderbank offer, after noting that as successful party O would normally have been entitled to costs on a tariff basis totalling $7,000, did not indicate an unduly “rigid” approach, nor did it support a submission that the Authority failed to give adequate weight to the Calderbank offer.

Challenge dismissed.

COSTS JUDGMENT OF JUDGE A D Ford

Introduction
1

The plaintiff has challenged on a non-de novo basis that part of a costs determination 1 of the Employment Relations Authority (the Authority) dated 12 April 2012, which held that costs in the Authority should lie where they fall. There are other issues but, in essence, the plaintiff claims that the Authority failed to give sufficient weight to a Calderbank offer it made at an early stage of the proceedings. It was agreed that the challenge would proceed in this Court on the basis of an exchange of written submissions but leave was also granted to the defendant to file an affidavit as to means.

Background
2

By way of brief background taken from the Authority's substantive determination 2 dated 3 November 2011, the defendant, Mr Chad Olsen, was employed as a dairy farm manager on the plaintiff's farm property near Waiouru. The majority shareholder in the plaintiff company was Mr Charlie Pedersen who ran the company's farms with assistance from his wife, son and son-in-law. Mr Olsen lived on the farm with his domestic partner Ms Jackson and their one-year-old child. Ms Jackson assisted Mr Olsen with his work on the farm. The employment relationship commenced in May 2009 but the Authority found that from the outset it did not run smoothly. Mr Olsen received three warnings between June and September 2009 and he was dismissed on 5 October 2009 for alleged misconduct. The final two warnings related to “milk quality/animal welfare”.

3

After reviewing the evidence in some detail, the Authority concluded that Mr Olsen had a personal grievance for unjustified disadvantage actions in regard to the three warnings and unjustified dismissal. He was awarded $8,653.86 on account of loss of wages and $8,000 compensation for humiliation, loss of dignity and injury to feelings. Both sums were reduced by 15 per cent on account of Mr Olsen's contribution to the personal grievance in not meeting “the Fonterra requirements that were part of his job”. 3 In addition, he was awarded a payment of $495 for “farm report communications”. 4 The net amount of his remedies totalled $14,650.78. The Authority reserved the question of costs.

4

The employment relationship problem had been filed in the names of both Mr Olsen and Ms Jackson but the Authority concluded that Ms Jackson was never employed on the farm. Although her name had appeared on one copy of the employment agreement, the Authority concluded that it had been added by Mrs Gina Pedersen as “a memory-jogger” 5 only. Another complication was that in the statement of problem both the company and Mr and Mrs Pedersen personally had been cited as respondents. The Authority stated at the outset of its determination that

there had been no necessity to include Mr and Mrs Pedersen because no claims had been alleged against them personally.
5

From the pleadings it appears that the statement of problem was filed with the Authority on 1 December 2010 and a statement in reply comprising of approximately 300 pages was filed on 24 January 2011. The parties were then directed to attend mediation in Palmerston North in February 2011 but the matter was not resolved.

6

On 29 March 2011, Mr Quigg, counsel for the plaintiff, wrote to Ms Angus Burney, counsel for the defendant, on a “without prejudice save as to costs” basis and made an offer in full and final settlement in the amount of $15,000 (the Calderbank offer). Relevantly, the letter stated:

… we are instructed to offer $15,000 in full and final settlement of all the claims and remedies sought by your clients in respect of the current proceedings and any future proceedings that could be issued arising from the employment relationship, including the cessation of that relationship. This offer is made without prejudice and without any admission of liability, and is inclusive of costs.

This offer will remain open for acceptance until 5 pm on Wednesday 6 April 2011 after which time it will lapse. If your clients consider they require further time to consider the offer please advise us accordingly and we will take instructions as to a possible extension of time.

7

The plaintiff's response was not included in the agreed bundle of documents produced to the Court but in his statement of defence, Mr Olsen confirmed that the Calderbank offer was rejected on 7 April 2011.

8

After the release of the Authority's substantive determination on 3 November 2011 in which costs were reserved, the parties entered into correspondence in an effort to reach agreement on the issue but agreement was far off. Ms Angus Burney sought costs totalling $18,564.81 made up of $1,000 for Mr Olsen's “first advocate at Tararua Advocacy Service” together with costs of $17,564.81 which included GST and disbursements for the two-day hearing in the Authority. In response, Mr Quigg rejected that proposal and indicated that his client sought recovery of its own costs on an indemnity basis. They were said to total $15,345.64 including GST and disbursements. In addition, an amount of $7,500 was sought for the “executive time” of Ms Pedersen in responding to Mr Olsen's claim.

9

The plaintiff's claim for indemnity costs was based on the Calderbank offer and the actions of Mr Olsen and Ms Jackson before the Authority in allegedly unnecessarily prolonging the hearing by joining Mr and Mrs Pedersen personally as second respondents...

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