Robert Wade Lewis v Jpmorgan Chase Bank, N.A.

• Jurisdiction: New Zealand
• Judge: G L COLGAN
• Judgment Date: 19 October 2015
• Court: Employment Court
• Date: 19 October 2015
• Docket Number: ARC 75/12

[2015] NZEmpC 185

IN THE EMPLOYMENT COURT AUCKLAND

Judges:

Judge Colgan

ARC 75/12

In The Matter Of a challenge to a determination of the Employment Relations Authority

And In The Matter of a challenge to a costs' determination of the Employment Relations Authority

BETWEEN

Robert Wade Lewis

Plaintiff

and

Jpmorgan Chase Bank, N.A.

Defendant

Appearances:

MW O'Brien and B Nicholson, counsel for plaintiff

R Towner and S Maxfield, counsel for defendant

Plaintiff's challenge to the costs determination of the Employment Relations Authority — the Authority awarded $15,000 against the plaintiff, which was equivalent to a standard costs award for an investigation meeting lasting more than four days at the Authority's standard rate of $3,500 per day — L's proceeding was dismissed by the Court of Appeal as extra-jurisdictional and there had been no investigation meeting — the award was determined by reference to the defendant's actual costs incurred, taking account of the defendant's early and repeated offers of settlement which the Authority found were, inappropriately, not accepted by the plaintiff — whether the Authority should have applied a notional daily tariff as there had been no investigation — whether the Authority gave undue weight to the defendant's statement to the plaintiff that it would seek full indemnity costs on a solicitor/client basis against him in the Authority if he did not settle his claim.

The issue was: whether the Authority should have applied a notional daily tariff as there had been no investigation; and, whether the Authority gave undue weight to the defendant's statement to the plaintiff that it would seek full indemnity costs on a solicitor/client basis against him in the Authority if he did not settle his claim.

Held: The Authority was correct, in all the circumstances of this case, not to limit itself to its notional daily tariff for awarding costs, even though there was no investigation meeting as such. If the Authority had taken, as its starting point, its daily tariff of $3,500 for dealing with the matter on the papers as opposed to in an investigation meeting, an uplift from this sum would have been warranted because, Lewis rejected unreasonably some of the Bank's proposals and proposed an unrealistic justification for doing so.

L (who was without the benefit of representation at that time) did have some apparently valid complaints which the Bank's settlement proposals did not address. The Bank's agents had acted unreasonably and appeared to have brought pressure on L to settle his dispute. L was not unjustified in objecting to the defendant's settlement proposal which offered money but did nothing to address what appeared to be a conflict of interest on the part of an outplacement service provider.

In all the circumstances, an uplift from the starting point of $3,500 of 100 per cent should have been applied, so that the Authority's costs award should properly have been $7,000. Because its award ($15,000) was more than twice that sum, this was not a borderline case in which the Authority's discretion should be allowed to prevail and not be adjusted by the Court.

The defendant's legal costs were not unreasonable as the case warranted the involvement of a senior and experienced employment law practitioner. Nonetheless, the question was how much of that justified legal expense should be visited on the plaintiff in an award of costs. The Authority was intended to be a low-level, speedy and user-friendly jurisdiction in which unrepresented litigants such as Lewis could participate on an equal footing with clients represented by leading counsel. There was no investigation meeting, all matters having been dealt with by telephone conference calls and on papers filed. In those circumstances, the Authority's award of costs was set aside and an award of $7,000 was made in substitution in the defendant's favour.

JUDGMENT OF CHIEF JUDGE G L COLGAN

1 Despite other aspects of the plaintiff's proceeding now having been dismissed by the Court of Appeal as extra-jurisdictional, 1 there remains for decision the plaintiff's challenge to the costs determination of the Employment Relations Authority. 2 The parties have agreed to deal with that challenge on memoranda filed (as they have been now) without a further hearing.

2 The Authority's costs award made against the plaintiff amounted to $15,000, equivalent in effective terms to a standard costs award in the Authority for an investigation meeting lasting more than four days at the Authority's standard rate of

$3,500 per day. That award was, however, determined by reference to the defendant's actual costs incurred, taking account of the defendant's early and repeated offers of settlement which the Authority found were, inappropriately, not accepted by the plaintiff.

3 Amongst the Authority's conclusions about costs, including whether Mr Lewis should pay these and, if so, the amount, were the following statements which are taken from its determination issued on 21 January 2013.

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This was a case where Mr Lewis persevered with an application to the Authority over an extended period of time despite the clearest intimations both from the Bank and indeed from the Authority itself that his claim was misconceived. [15] … what is unusual in Mr Lewis' claim is his contention that if there were a breach of the settlement agreement, he is entitled to damages. As the Authority noted in the substantive determination, the usual remedy for breach of a settlement agreement is compliance, but because of the particular nature of the settlement agreement entered into by the parties, the Authority would not have been able to order compliance either, in the present case. Furthermore, Mr Lewis' claim for damages for breach cannot be sustained because the Authority has no power to grant that relief. [16] Those considerations as to the extent of the Authority's remit aside, it is appropriate for the Authority to again observe that there is simply no evidence to suggest that there had been a breach of the settlement agreement of the sort complained of by Mr Lewis. Indeed, the reverse is the case. The evidence available to the Authority in an investigation on the papers, which the parties accepted and agreed to, was that there had been no breach of the settlement agreement. [17] But even if the Authority's conclusions, both in respect to jurisdiction and the evidence around a breach are put to one side, there is also the fact that, as the Authority has already observed in this determination and made more extensive observations about in the substantive determination, just as soon as the Bank became aware of Mr Lewis' concerns, it promptly engaged with him and endeavoured to find a basis for resolving matters by agreement. Despite those efforts, which on the face of it appeared to deal appropriately with the complaints which Mr Lewis has pleaded, he decided to press on with his claim in the Authority. [18] In the Authority's judgment, there is nothing in the present matter which obviates the desirability of dealing with costs in the usual way. As costs follow the event, Mr Lewis is obligated to make a contribution to the Bank's costs and, given the Authority's usual principle of dealing with costs in its jurisdiction even where the matter goes on challenge, it is appropriate that those costs be fixed now.

4 The Authority adopted the reasoning in two previous and unrelated determinations justifying, as it said, “a higher than normal award of costs”. It said:

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… The fixing of costs is an exercise to be informed by principle and there is nothing in the present factual matrix which would discourage the Authority from a significant costs award. Mr Lewis has chosen to persevere with a claim in the Authority which has put the Bank to significant expense. The Bank seeks a contribution to its significant costs in the order of around 40 per cent of the total costs incurred. There was no hearing in person3 and so the notional daily rate approach does not avail. … [21] There were numerous points in this saga where Mr Lewis could have withdrawn his proceedings, either without cost or with the ability to negotiate a cost-free outcome with the Bank. Indeed, the Bank made precisely that offer during the two year period that this matter has continued. [22] The Authority is satisfied that Mr Lewis would have had the resources and the opportunity to seek professional legal advice about the merits of his application and that that advice, if taken, would likely have confirmed the outcome Mr Lewis now faces.

5 Although not referring to the exact amount of the costs incurred by JPMorgan Chase Bank, N.A. (the Bank) or apparently making any assessment of the reasonableness of those in all the circumstances, the Authority set the contribution payable by Mr Lewis in the sum of $15,000. I must assume that, the defendant having sought a contribution of 40 per cent to its actual costs, the sum of $15,000 could not have been more than 40 per cent, so that its actual costs could not have been more than $37,500. The Authority could, or at least should, not have awarded a greater sum than was sought by the Bank in these circumstances.

6 The plaintiff's case on appeal is that the costs awarded by the Authority's determination were manifestly excessive and were punitive in nature.

7 The plaintiff emphasises the principles as stated by the full Court in PBO Ltd v Da Cruz4 and reiterated recently by another full Court in Fagotti v Acme & Co Ltd.5 These principles are that although costs will usually follow the event, those awarded in the Authority should generally be modest and recognise the Authority's role as a low-level specialist decision-making body. Those principles were also the subject of recent examination and endorsement by Judge Inglis in Booth v Big Kahuna Holdings Ltd6

in which the Authority had made a costs award of...