AVIATION WORKERS UNITED INC v CHIEF EXECUTIVE OF THE MINISTRY OF BUSINESS, INNOVATION AND EMPLOYMENT [2023] NZHC 1463

AVIATION WORKERS UNITED INC v CHIEF EXECUTIVE OF THE MINISTRY OF BUSINESS,INNOVATION AND EMPLOYMENT [2023] NZHC 1463 [13 June 2023]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYI TE KŌTI MATUA O AOTEAROATĀMAKI MAKAURAU ROHECIV-2023-404-802[2023] NZHC 1463UNDER Section 14(2) of the Crown Proceedings Act1950BETWEEN AVIATION WORKERS UNITED INCFirst PlaintiffELLA VEVESecond PlaintiffSEPASITIANO ATONIOThird PlaintiffTHOMAS HARRY D'CRUZFourth Plaintiff continued: .../2AND THE CHIEF EXECUTIVE OF THEMINISTRY OF BUSINESS, INNOVATIONAND EMPLOYMENTDefendantHearing: 1 June 2023Appearances: M O'Brien for the plaintiffsW Aldred and K Fitzgibbon for the defendantJudgment: 13 June 2023JUDGMENT OF GORDON JThis judgment was delivered by meon 13 June 2023 at 2.30 pm, pursuant tor 11.5 of the High Court RulesRegistrar/Deputy RegistrarDate:Solicitors/Counsel: M O'Brien, Barrister, AucklandHalliwells Lawyers Ltd, Hawera W Aldred, Barrister, WellingtonCrown Law, Wellington K Fitzgibbon, Barrister, Wellington/2PING XUEFifth PlaintiffIRENE FONGSixth PlaintiffERLAN RUSLIANTOSeventh PlaintiffMANDEEP KAUREighth PlaintiffLAFELE LAOANinth PlaintiffZHAOKE LITenth PlaintiffPHIMCHAI SAE-KHOOEleventh PlaintiffDENDAO SAE-KHOOTwelfth PlaintiffMALIA TUAMOHELOAThirteenth PlaintiffSHUANG GOODGERFourteenth PlaintiffALANA WANGFifteenth PlaintiffNARAYAN MESTRYSixteenth PlaintiffZHAOKE LISeventeenth PlaintiffANTHONY RUPS MIRANDASUTHARSHINIEighteenth PlaintiffJEFF CHAK FAI YEWNineteenth PlaintiffMAYUR SAVANITwentieth PlaintiffAMANDEEP SINGHTwenty-first PlaintiffDANH KEOTwenty-second PlaintiffASHIF ALI JFRAZTwenty-third PlaintiffBHAJMAN HUNDALTwenty-fourth PlaintiffIULIANA HUNTTwenty-fifth PlaintiffTERAI KAMANATwenty-sixth PlaintiffPALAKSH KOTINTwenty-seventh PlaintiffROSALINA LEAENATwenty-eighth PlaintiffJUDY LEETwenty-ninth PlaintiffRUTH SALU LEPUPAThirtieth PlaintiffVALUESE LEPUPAThirty-first PlaintiffLI-O LIAOThirty-second PlaintiffSUNNY MALHOTRAThirty-third PlaintiffDIVYANG MANIYAThirty-fourth PlaintiffJOHN MATSUOKAThirty-fifth PlaintiffARTI MONPARAThirty-sixth PlaintiffSELLIAH NESUMThirty-seventh PlaintiffBAXTER PEPEThirty-eighth PlaintiffHIEU TRANThirty-ninth PlaintiffSUPAWITH PRIWONFortieth PlaintiffMAINE SAMUELAForty-first PlaintiffRU SAMUELAForty-second PlaintiffSUKHJEET KAUR SANDHUForty-third PlaintiffMANDEEP SAREENForty-fourth PlaintiffINDIKA SEDARA DESAPRIYAForty-fifth PlaintiffDEEPAK SEHGALForty-sixth PlaintiffANA SILIPULEForty-seventh PlaintiffMATHEW SIMANUForty-eighth PlaintiffHARJOT SINGHForty-ninth PlaintiffWILKIE SMITHFiftieth PlaintiffJHAI TALAGI-AHOLIMAFifty-first PlaintiffNAAMA TASESAFifty-second PlaintiffILENE UNEFifty-third PlaintiffAMRITPAL SINGH UPPALFifty-fourth PlaintiffNAVEEN VASHISHTFifty-fifth PlaintiffJAMES VITALFifty-sixth PlaintiffHUIPING WUFifty-seventh PlaintiffYING LIANG ZHANFifty-eighth PlaintiffYEFENG ZHENGFifty-ninth PlaintiffAKHIR ZULKIFLIESixtieth PlaintiffJASPREET KUMARSixty-first PlaintiffJAMES PAYNESixty-second PlaintiffTELESIA SIONESixty-third PlaintiffHENNASEOSNI SEALIIMALIETOASixty-fourth PlaintiffELENA MASYUKSixty-fifth PlaintiffTARAMATI PATELSixty-sixth Plaintiff[1] This is a decision on an application for an interim injunction by the firstplaintiff, Aviation Workers United Inc (the Union), and sixty-five current and formeremployees1 of Gate Gourmet New Zealand Ltd (Gate) which provides airline flightcatering services to various airlines.[2] The plaintiffs seek orders that the defendant, the Chief Executive of theMinistry of Business, Innovation and Employment (Chief Executive) will instruct theLabour Inspectorate that it will not, in any way, advise Gate that:(a) Gate has complied with the Enforceable Undertaking dated 20 October2022; or(b) Gate has rectified its breaches of the Holidays Act 2003 as outlined inthe Enforceable Undertaking; or(c) Gate has otherwise completed its obligations under the EnforceableUndertaking; or(d) Gate is no longer bound by the Enforceable Undertaking.[3] The Chief Executive opposes the application.Background[4] In 2019, Varsha Mistry, a Principal Labour Inspector2 employed by theMinistry of Business, Innovation and Employment (MBIE),3 carried out aninvestigation into Gate after Gate came to the attention of the Labour Inspectorate inMay 2019 following a complaint by the Union. The Union's complaint raised anumber of issues about Gate, most of which pertained to individual contractualentitlements rather than minimum employment standards, and were therefore outsideMs Mistry's jurisdiction as a Labour Inspector. However, some of the allegations did1 The proceeding lists sixty-six individual plaintiffs but it appears that the tenth and seventeenthplaintiffs are the same person.2 Ms Mistry was promoted to Principal Labour Inspector in April 2023 but at the time of theinvestigation, was a Labour Inspector.3 Under the Employment Relations Act 2000, s 223, the Chief Executive has the power to designateemployees of MBIE as Labour Inspectors and provide them with a warrant of designation.relate to alleged breaches of minimum standards, primarily those in the Holidays Act2003.4[5] Ms Mistry commenced her investigation promptly in June 2019 and completedit in November 2019. She concluded that Gate had breached a number of minimumemployment standards:(a) section 16 of the Holidays Act – entitlement to four weeks paid annualholidays;(b) section 22 of the Holidays Act – calculation of annual holiday pay ifannual holidays taken in advance;(c) section 28 of the Holidays Act – when annual holiday pay may be paidwith employee's pay;(d) section 49 of the Holidays Act – payment if employee does not workon public holiday;(e) section 61 of the Holidays Act – alternative holiday may be exchangedfor payment; and(f) section 65(2)(a)(ii) of the Employment Relations Act 2000 – form andcontent of individual employment agreement.[6] Ms Mistry decided that the most appropriate way to address the breaches shehad identified was to enter into an enforceable undertaking5 with Gate.[7] An enforceable undertaking is a written undertaking entered into between aLabour Inspector and an employer, whereby an employer undertakes that it will, by a4 Under the Employment Relations Act, s 223A, the functions of a Labour Inspector include:determining whether the provisions of the relevant Acts (which include among others – theEmployment Relations Act 2000, the Holidays Act 2003, the Minimum Wage Act 1983, and theWages Protection Act 1983) have been complied with; taking all reasonable steps to ensure thatthe relevant Acts are complied with; monitoring and enforcing compliance with employmentstandards; and performing any other functions conferred by or under the relevant Acts.5 Employment Relations Act, s 223B.specified date, rectify a breach of any provision, pay money owed to an employeeunder legislation, or take any other action the Labour Inspector determines isappropriate.[8] If an employer fails to comply with the terms of an enforceable undertaking,the Labour Inspector can seek compliance orders and penalty orders in theEmployment Relations Authority.6[9] In summary, between 2020 and 2022 Gate entered into three separateenforceable undertakings with Ms Mistry as follows:(a) an enforceable undertaking dated 8 October 2020 whereby Gate was tocalculate the arrears owed to its current and past employees (2020 EU);(b) a second enforceable undertaking dated 18 October 2021 providing forthe calculation of arrears owed (2021 EU); and(c) a third enforceable undertaking dated 18 October 2022 which sets outa remediation process for the identified arrears (2022 EU). Under thatprocess Gate must pay all current employees and use reasonableendeavours to contact and pay former employees owed arrears. Thefinal deadline for completion of these actions under the 2022 EU andfor Gate to supply Ms Mistry with evidence of compliance was 28 April2023.[10] I refer to each of those undertakings in further detail below.2020 EU[11] In the audit undertaken by Ms Mistry only a very small sample of the employeebase was reviewed. It is apparent that Ms Mistry considered there were likely to bewider issues, as indicated by cl 1.3 of the 2020 EU which is as follows:Given the scope of the Employment Relations Act 2000 and the Holidays Act2003, there is a possibility that the employees selected may not be indicative6 Employment Relations Act, s 223C.of the entire workforce. It is probable that due to the small sample size ofemployees reviewed, the payroll issues identified do not cover all issues in theend-to-end payroll system and with all employees.[12] I set out the above clause because in the affidavit evidence for the plaintiffsand in the plaintiffs' submissions, there is a suggestion of bias on Ms Mistry's parttowards the employer. This is but one example which indicates otherwise.[13] Ms Mistry says the purpose of the 2020 EU was to require Gate to review itsrecords for all current and past employees from 14 June 2013 onwards (that date beingthe date of Gate's incorporation in New Zealand) in order to establish the arrears owedarising from the Holidays Act breaches referred to above.[14] The start date for the review encompassing the entirety of the period from whenGate was first incorporated in New Zealand further acts to contradict a suggestion ofbias in favour of the employer.[15] There are a number of acknowledgements by Gate in the 2020 EU includingthat:(a) the undertaking was given willingly by Gate;(b) Gate had been advised by the Labour Inspector that it could not offsetoverpayments against underpayments and that any deductions to anemployee's pay needed to comply with the Wages Protection Act 1983;7(c) in the event the 2020 EU was not fully met, certain enforcement actionscould occur;8(d) the 2020 EU did not affect the Labour Inspector's power to investigatefuture conduct of the employer; and7 A copy of the Labour Inspector's Position Statement – "Accounting for Overpayments throughHolidays Act Re-calculations" is attached as Appendix A to the 2020 EU.8 A compliance order sought in the Employment Relations Authority under s 137 of the EmploymentRelations Act; enforcement under ss 223C and 141 of the Employment Relations Act; and actionin the Employment Court.(e) the 2020 EU did not prevent an affected employee or theirrepresentative from taking their own action if the Labour Inspectorchose not to enforce or seek remedies to the extent that the legislationallowed them to do so.[16] It was a condition of the 2020 EU that within 60 days of its completion, Gatewould agree to enter into a subsequent enforceable undertaking which wouldencompass a remedial plan for payment of the identified arrears for current and pastemployees.[17] The completion date for the 2020 EU was 16 April 2021 but with provision forthe Labour Inspector to agree to a process of renegotiating the completion date if Gateprovided "significant and reasonable grounds for failure to meet that date".[18] Ms Mistry granted an extension and notified Gate on 8 March 2021 with thenew deadline for completion of the 2020 EU becoming 16 October 2021.[19] Ms Mistry said the six month extension was granted following discussions withher manager. She says she was satisfied that there were significant and reasonablegrounds to grant an extension given the complexity of the calculations involved.Ms Mistry says in her experience, it is difficult to accurately estimate at the outset theamount of time that it will take to perform large-scale payroll reviews and calculations.She says it is not unusual for extensions to be granted in those circumstances and iswhy the terms of the 2020 EU expressly included provision for an extension.[20] Ms Mistry further says, at that point, Gate had been co-operative with herinvestigation and enforcement action to date. Her view was that it was better to allowGate the time it needed to complete the review and calculation of arrears accurately,rather than to rush things and risk mistakes being made.[21] Ms Mistry refers to the statement by John Matsuoka, the President of theUnion, in his first affidavit of 28 April 2023 where he asserts Ms Mistry intentionallyfailed to provide the Union with an opportunity to be heard on the decision to extendthe completion date. Ms Mistry acknowledges she did not consult with the Unionbefore deciding to grant an extension but says the reasons for that were that the Unionwas not a party to the 2020 EU, and she did not consider that the Union's input wasnecessary on this particular matter as the issue was with Gate's resourcing and thevolume and complexity of work involved.[22] In July 2021 Gate requested a second extension to complete the review andcalculation undertakings in the 2020 EU. Ms Mistry says Gate had recently engageda third-party payroll specialist, Integrity1, to assist Gate with its compliance andIntegrity1 needed further time to complete the review and calculations. Ms Mistrysays the fact that Gate had instructed a third party to manage the review andcalculations process, and was paying for this, demonstrated to her that Gate wasserious about complying with the 2020 EU. She, therefore, decided a further extensionwas justified.[23] Ms Mistry disagrees that she did not seek feedback from the Union in relationto this extension. In support of this, Ms Mistry annexes correspondence she and hercolleagues had with the Union giving them time to provide feedback on the proposed2021 EU, specifically in relation to the financial guarantee the Labour Inspectoratewould seek from Gate.2021 EU[24] As a consequence of the decision to grant a second extension, Ms Mistryentered into a second enforceable undertaking with Gate. The 2021 EU came intoforce on 18 October 2021. It was a continuation of the 2020 EU in that it repeated therequirement that Gate was to review records for all current and past employees from14 June 2013 and was to calculate the arrears owed for its identified breaches of theHolidays Act. The date by which Gate was required to complete its calculations andprovide evidence of compliance was 31 March 2022.[25] A change from the 2020 EU was that the 2021 EU required Gate to transfer$575,000 to be held on trust by the Labour Inspectorate for the benefit of theemployees' owed arrears. The Labour Inspectorate was to hold those funds on trustand would release the funds back to Gate once a subsequent enforceable undertakingcontaining a remedial plan for the payment of arrears had been agreed. Ms Mistrysays the purpose of requiring a financial commitment from Gate was to alleviateconcerns raised with her by the Union regarding Gate's solvency.[26] Ms Mistry says the Labour Inspectorate initially looked at securing $100,000from Gate, but following concerns raised by the Union, it was raised to $575,000.That amount was the estimate provided by Integrity1 for the total arrears owed byGate.[27] Ms Mistry says on Friday 15 October 2021, Gate paid $575,000 to the LabourInspectorate trust account.[28] Then, on 31 March 2022, Gate provided her with evidence that it hadcompleted its review and calculations. In accordance with cl 3.2.4 of the 2021 EU,Ms Mistry requested a random sample of employees and reviewed the actualcalculations of those employees' leave entitlements. Ms Mistry says following somediscussions with Gate about the calculations they had applied, and some subsequentadjustments, the Labour Inspectorate was satisfied that the arrears had been calculatedcorrectly.2022 EU[29] The 2022 EU was signed on 18 October 2022 and remains in force. Its purposeis to provide for remediation of the arrears calculated in the 2020 and 2021 EUs.Following completion of the 2021 EU, it was established that Gate owedapproximately $985,480.59 in arrears to 45 current employees and 315 formeremployees.[30] The 2022 EU does not specify how many employees must be paid for theundertakings to be met. Gate is required to provide evidence of payments made withinthe prescribed timeframes and must also provide evidence to demonstrate it has used"reasonable endeavours" to contact past employees.[31] On 9 December 2022, the Labour Inspectorate released the $575,000 that wasbeing held on trust to Gate for the sole purpose of enabling Gate to pay the identifiedarrears.Payment[32] Clause 3.1.3 of 2022 EU required that Gate pay arrears to the following personsby 16 December 2022:(a) current employees of Gate, listed in Appendix B to the 2022 EU; and(b) former employees of Gate, listed in Appendix C to the 2022 EU, whereGate had received that past employee's information by 30 November2022.[33] Clause 3.3 provided that Gate was to provide evidence of compliance toMs Mistry by 20 December 2022.[34] Gate paid outstanding arrears to all current employees by 16 December 2022.That is not disputed by the plaintiffs. Gate also paid ten former employees in the firsttranche and paid all Union members, including former employees in advance of thefirst tranche deadline.[35] Clause 3.1.4 of the 2022 EU provided that where Gate received informationfrom past employees specified in Appendix C after 30 November 2022, it was to payarrears on 20 February 2023, 20 March 2023 and 20 April 2023.[36] Clause 3.4 provided that Gate was to provide evidence of compliance toMs Mistry by 28 April 2023. This included evidence of arrears payments for aselection of employees Ms Mistry would randomly select; evidence showing thatreasonable endeavours had been made to contact past employees; and in the event thatan employee had agreed to a deduction of their arrears to account for an overpayment,evidence of the employee's written consent.[37] For the period up to 20 March 2022 (which counsel referred to as the primaryperiod) Gate has paid arrears to:(a) all current Gate employees;(b) all Union members, both current and former employees; and(c) some non-Union member former employees.[38] Mr O'Brien, counsel for the plaintiffs, raises issues regarding "wash up"payments for current employees (for the period after 20 March 2022) and whetherthere have been excessive PAYE deductions or proper deduction of overpayments toex-employees who are members of the Union. He also raises those latter two issuesin relation to ex-employees who are not Union members. I will address these issuesin due course.Next steps[39] Ms Mistry says she is in the process of reviewing the information Gate hasprovided to her in order to make a decision on whether Gate has complied with the2022 EU. Ms Mistry says the question she is still reviewing is whether Gate has madereasonable endeavours to contact past employees who have not yet been paid thearrears owing to them. She says as part of this process she is also weighing up thevarious concerns the Union has raised with her.[40] Ms Mistry says she has received a significant volume of information from Gatewhich she is presently working through and she is also waiting for further informationthat she subsequently requested.[41] Therefore, Ms Mistry says she has not yet made a decision about whether Gatehas used reasonable endeavours to contact former employees, or whether it hascomplied with the terms of the 2022 EU. She says she anticipates seeking furtherinformation from Gate and possibly from the Union or other parties, over the courseof her decision-making process.[42] Ms Mistry disagrees with the statement by Mr Matsuoka that she can draw aconclusion on Gate's compliance with the 2022 EU solely from the number of currentand former employees paid. She notes that the 2022 EU does not specify the numberof employees who must be paid for compliance to be achieved. The requirement isthat Gate must use "reasonable endeavours". Having said that, Ms Mistry notes thatthe number of employees who have not been paid will be an important considerationin her decision-making process regarding whether Gate has used reasonableendeavours, as will the amounts of money those unpaid employees are owed.[43] Ms Mistry says that once she makes a decision about the sufficiency of Gate'scompliance, there are various options open to her including:(a) accepting that the 2022 EU has been complied with and completed,meaning Gate would no longer be monitored by the LabourInspectorate;(b) asking Gate to agree to an extension of the 2022 EU or to enter into anew enforceable undertaking if she is not satisfied with Gate'scompliance; and(c) taking enforcement action against Gate for failing to comply with the2022 EU, specifically by seeking compliance and penalty ordersagainst Gate in the Employment Relations Authority.[44] Ms Mistry says that the plaintiffs' application for an interim injunction appearsto be predicated on an assumption that she will make her decision without consultingthe Union and that she has already decided to discharge Gate from the 2022 EU.Ms Mistry says both of those assumptions are untrue. She says she is not in a positionto make a decision about Gate's compliance or to speculate as to what her decision islikely to be until she has closely considered all the relevant materials including anyfurther information she requests. She says she is aware of the concerns the Union hasexpressed to her during the process; she will consider them as she makes her decision,and she intends to consult with the Union before she makes a final decision.[45] Ms Mistry does not anticipate she will be in a position to make a decision untilJune 2023 at the earliest.Preliminary issue – further evidence[46] The Chief Executive sought leave to file a second affidavit from Ms Mistryaffirmed on 26 May 2023 and an affidavit of Graeme Emery, the EmploymentSpecialist Manager for Gate, sworn on 26 May 2023. The admission of that evidencewas not opposed by the plaintiffs. It is accordingly admitted.[47] The plaintiffs sought leave to file two supplementary reply affidavits ofMr Matsuoka sworn on 22 May 2023 and 29 May 2023. The admission of the 22 May2023 affidavit was opposed by the Chief Executive. Ms Aldred, counsel for the ChiefExecutive, submits that the supplementary evidence in the 22 May 2023 affidavit isnot relevant to the proceedings and ought not to be admitted because it relates solelyto a non-party. However, in the event that the Court decides to admit that affidavit, itis responded to in Ms Mistry's second affidavit.[48] In his 22 May 2023 affidavit, Mr Matsuoka says that a former employee ofGate, Mary-Beth Lim, made contact with the Union on 8 May 2023 as a Unionmember had reached out to her. He says that Mrs Lim had no knowledge of theremediation process and had not received any payments from Gate. He annexesrelevant correspondence. Mr Matsuoka says the Union is particularly concerned thatGate made no attempts to contact Mrs Lim despite her being listed in Appendix B(which was in fact the list of current employees).[49] In response, Ms Mistry says in her affidavit of 26 May 2023 that on19 December 2022 she asked Gate to provide her with evidence of reasonable effortsmade to contact past employees. She says on 20 December 2022, she was providedwith a copy of the statistics from Gate's email campaign to former employees of Gate.She annexes relevant documents. She says the documents show that Mrs Lim receivedan email from Gate notifying her of the remediation process and that Mrs Lim openedthe email once. Ms Mistry further notes that the email address recorded in the emailstatistics provided by Gate is the same email address Mrs Lim used to contact theUnion (as is apparent from the exhibit to Mr Matsuoka's affidavit of 22 May 2023).[50] I accept the submission on behalf of the Chief Executive that the evidence inMr Matsuoka's 22 May 2023 affidavit is not relevant because it relates solely to a non-party. It is accordingly not admitted. If I am incorrect in that decision and the evidenceshould have been admitted, the allegations Mr Matsuoka makes are answered byMs Mistry, who provides evidence that Gate did, in fact, make email contact with theformer employee, Mrs Lim.The statement of claim[51] The plaintiffs plead that in exercising the Labour Inspector's power to enforcecompliance with employment standards, each Labour Inspector is under a (novel) dutyof care owed to those employees who are victims of an employer's failure to complywith employment standards. It is pleaded that the duty of care includes ensuring thatthe Labour Inspector uses their best endeavours:(a) to ensure compliance with the terms of any applicable enforceableundertaking;(b) to attempt to achieve compliance by defaulting employers; and(c) that employees, or former employees, who have been underpaid, arepaid any outstanding amounts.[52] In the first cause of action, the plaintiffs plead that the Labour Inspector failedto take reasonable steps to ensure that Gate has a Holidays Act–compliant payrollsystem and to ensure they pay "wash up" arrears (being arrears arising after 20 March2022, namely after the primary period over which arrears have been calculated).[53] In the second cause of action, the plaintiffs plead that the Labour Inspectorfailed to take reasonable steps to ensure that Gate complied with the requirement toact in a good faith manner in the remediation process by keeping employees or theirrepresentatives informed during the remediation process.[54] In the third cause of action, the plaintiffs plead that the Labour Inspector failedto take reasonable steps to include the plaintiffs in the investigation and remediationprocess.[55] In the fourth cause of action, the plaintiffs plead that the Labour Inspectorfailed to take reasonable steps to ensure that Gate complied with the paymentobligation in terms of the 2022 EU.Plaintiffs' submissions[56] Mr O'Brien first focuses on the Court's approach in determining whether anovel duty of care is owed by a defendant. With that context, he makes submissionsunder the conventional headings for an interim injunction: whether there is a seriousquestion to be tried; balance of convenience; and overall interests of justice.[57] Mr O'Brien submits the Labour Inspector performs a range of duties aimed atgeneral monitoring of employment standards and employers. He says that havingestablished Gate to be in breach of obligations owed to its employees under theHolidays Act, the Labour Inspector chose to take enforcement action for the benefit ofthe employees. Mr O'Brien submits that having assumed control over enforcement, itis fair and reasonable to expect the Labour Inspector to exercise reasonable skill andcare in carrying out that enforcement action.[58] He submits it was reasonably foreseeable that if the Labour Inspector did notuse reasonable skill and care in carrying out the enforcement actions, and Gate wasthereby able to avoid paying the arrears owed to the identified employees, theidentified employees would suffer harm. He further submits that there are no policyconsiderations that would mean a duty of care should not be imposed. He submits, infact, policy considerations support the plaintiffs' position that a duty of care is owed.Accordingly, there is a serious question to be tried.[59] In terms of the balance of convenience, Mr O'Brien submits damages wouldnot be an adequate remedy. He says the plaintiffs seek only to preserve the status quopending a substantive hearing on whether the Labour Inspectorate has carried out itsenforcement action with reasonable skill and care. Mr O'Brien also submits theenforcement of minimum standards by the Labour Inspector is a matter of considerablepublic interest.[60] Mr O'Brien further submits there is a valid concern that if Gate is releasedfrom its obligations under the 2022 EU, there is a real likelihood that it might beinsolvent by the time the substantive claim is heard.[61] Mr O'Brien says that granting the interim injunction would cause no prejudiceto the Labour Inspectorate. The Labour Inspector would still be able to seek acompliance order and penalties against Gate in the Employment Court or negotiatefurther compliance by Gate. The only action being prevented is releasing Gate fromthe 2022 EU and associated obligations which would prejudice the plaintiffs.[62] In terms of the impact on innocent third parties, Mr O'Brien submits Gate isnot an innocent third party. It has admitted breaches of the Holidays Act. Mr O'Brienalso says that Gate has deliberately failed to either contact former employees or makereasonable attempts to contact former employees about the remediation process suchthat it has a 93 per cent failure rate.[63] Mr O'Brien says drawing all those threads together, the overall justice supportsthe granting of an injunction.Defendant's submissions[64] Ms Aldred says that it will be argued at a later stage that none of the pleadedduties are arguable, applying the principles governing the recognition of new duties ofcare.9 But Ms Aldred puts that issue aside for present purposes because she submitsit is clear that none of the pleaded causes of action can succeed as no loss is allegedby any of the plaintiffs sufficient to ground an action in negligence. Given that losssuffered is an essential ingredient of negligence, the failure to identify loss in this casemeans there is no serious question to be tried for any of the four causes of action.[65] Ms Aldred further submits that it is clear on the plaintiffs' own pleading that ifthey were to succeed in the substantive proceeding, damages are the appropriateremedy. Damages are the sole remedy sought in relation to the first, second and thirdcauses of action and the primary remedy sought in the fourth cause of action.9 North Shore City Council v Attorney-General (The Grange) [2012] NZSC 49, [2012] 3 NZLR341.Ms Aldred submits that the plaintiffs have failed to identify any basis as to why theprimary remedy they have sought is insufficient or the apparent "irremediableprejudice they will suffer."[66] Further, Ms Aldred submits that if granted, the orders sought by the plaintiffswould not achieve the plaintiffs' objectives, namely preservation of the ability of theLabour Inspector or the Union to sue Gate and recover the arrears owed. Ms Aldredsubmits the Labour Inspector's ability to later proceed against Gate would not beadversely affected even if she were to make the decision to release Gate from the2022 EU. The orders sought will not have any effect on Gate's financial position.[67] Finally, Ms Aldred submits the plaintiffs can proceed directly against Gate forthe sums they are owed. They have, in fact, done so in the Employment RelationsAuthority where they filed a Statement of Problem on 20 February 2023.Legal principles – interim injunctions[68] The High Court has power to grant interim injunctions under the High CourtRules 2016 and in the exercise of its inherent jurisdiction.10[69] Rule 7.53 of the High Court Rules provides:7.53 Application for injunction(1) An application for an interlocutory injunction may be made by a partybefore or after the commencement of the hearing of a proceeding,whether or not an injunction is claimed in the party's statement ofclaim, counterclaim, or third party notice.(2) The plaintiff may not make an application for an interlocutoryinjunction before the commencement of the proceeding except in caseof urgency, and any injunction granted before the commencement ofthe proceeding—(a) must provide for the commencement of the proceeding; and(b) may be granted on any further terms that the Judge thinks just.10 The inherent jurisdiction of the High Court is recognised in s 12 of the Senior Courts Act 2016.[70] As the Court of Appeal said in Commerce Commission v Viagogo AG:11[30] The principles that govern the grant of interim injunctions under r 7.53and the court's inherent jurisdiction are well settled. The court will usuallyadopt a two-stage approach. The first inquiry is whether there is a seriousquestion to be tried. If that threshold is met, the court moves on to considerwhether the balance of convenience favours granting or refusing relief. Butas this Court observed in Klissers Farmhouse Bakeries Ltd v Harvest BakeriesLtd , considerations are marshalled under these (non-exhaustive) heads as "anaid to determining, as regards the grant or refusal of an interim injunction,where overall justice lies. In every case the Judge has finally to stand backand ask himself that question."[71] When the Court assesses whether there is a serious question to be tried, it isinsufficient for a plaintiff to say only that there is a tenable cause of action from a legalperspective and a conflict of evidence on the facts.12 A plaintiff seeking interlocutoryrelief must adduce sufficiently precise factual information to satisfy the Court thatthere is a real prospect of succeeding in the claim at trial.13 In its analysis, the Courtmust consider the claim's substantive relief which is said to underpin the need for aninterim injunction.14[72] The main consideration at the balance of convenience stage is typically theextent to which damages are an appropriate remedy for the plaintiff such that aninterim injunction is unnecessary to preserve the plaintiffs' interests:15 the court should first consider whether, if the plaintiff were to succeed attrial in establishing his right to a permanent injunction, he would beadequately compensated by an award of damages for the loss he would havesustained as a result of the defendant's continuing to do what was sought to beenjoined between the time of the application and the time of the trial. Ifdamages in the measure recoverable at common law would be adequateremedy and the defendant would be in a financial position to pay them, nointerlocutory injunction should normally be granted, however strong theplaintiff's claim appeared to be at that stage.[73] The third step of the overall justice assessment is "essentially a check on theposition that has been reached following the analysis of the earlier issues of serious11 Commerce Commission v Viagogo AG [2019] NZCA 472, [2019] 3 NZLR 559 (footnotes omitted).12 Ansell v New Zealand Insurance Finance Ltd HC Wellington A434/83, 30 November 1983 at 6.13 Re Lord Cable (dec'd) [1977] 1 WLR 7 (Ch) at 19.14 Maniapoto v Maniapoto Māori Trust Board [2022] NZHC 455 at [43].15 American Cyanamid Co v Ethicon Ltd [1975] AC 396 (HL) at 408.question to be tried and balance of convenience".16 As was said in CommerceCommissioner v Viagogo AG:17[31] As Lord Hoffmann said in delivering the advice of the Privy Councilin National Commercial Bank Jamaica Ltd v Olint Corp Ltd :The purpose of such an injunction is to improve the chances of thecourt being able to do justice after a determination of the merits at thetrial. The basic principle is that the court should take whichever courseseems likely to cause the least irremediable prejudice to one party orthe other.Is there a serious question to be tried?[74] Without intending any disrespect to Mr O'Brien's careful submissions on theissue, I do not consider it is necessary to embark on a consideration of the allegednovel duty of care for the reasons set out below.[75] I start with the following principles. "Damage is the gist of the tort ofnegligence. Without damage there is no tort".18 "As damage, howsoever defined, isan essential element of liability, a cause of action in negligence does not accrue untilactual damage occurs."19[76] The references to loss or damage in the statement of claim are:First cause of action:Damage was caused to the second to twenty first plaintiffs by Gate Gourmet'sfailure to have a payroll system that complied with the Holidays Act 2003, andthe Labour Inspector's failure to take reasonable steps to enforce compliancewith the Holidays Act 2003.Second cause of actionThe Labour Inspector's breach of its duty of care caused damage to the AWUas the AWU was unable to properly represent its members' interests during theremediation process.16 NZ Tax Refunds Ltd v Brooks Homes Ltd [2013] NZCA 90 at [47].17 Commerce Commission v Viagogo AG, above n 11 (footnote omitted).18 Michael A. Jones "Negligence" in Clerk and Lindsell on Torts (23rd ed, Sweet & Maxwell,London, 2020) 423 at [7-05].19 Margaret Beazley "Damage" in Carolyn Sappideen and Prue Vines (eds) Fleming's The Law ofTorts (10th ed, Thomson Reuters, Sydney, 2011) 225 at [9.10].Third cause of actionThe Labour Inspector's breach of this duty of care caused each of the plaintiffsdamage in that they were not given the opportunity to participate in theinvestigation or remediation processes, or have their concerns considered bythe Labour Inspector.Fourth cause of actionA significant number of ex-employees have suffered damage as they have notbeen made aware of the remediation process and the arrears owed to them.[77] For each of these allegations of damage suffered, the nature of the damage isunclear. They are simply bland pleadings. The type of loss is not specified. In relationto the Union, it is not apparent what sort of damage it has allegedly suffered. Its roleis to advocate for the employees as it has done. But the alleged loss cannot bediscerned. Further, as Ms Aldred points out in relation to the allegation in the fourthcause of action that ex-employees have not been made aware of the remediationprocess and arrears owed to them, that allegation can only relate to persons other thanthe plaintiffs. However, any allegation of damage to a non-party is irrelevant to theclaim by the plaintiffs in negligence as the plaintiffs have no authority to claimdamages on behalf of non-parties.[78] As regards allegations of unlawful deductions of overpayments, there is nopositive allegation of such unlawful deductions. That issue is simply mentioned in theprayer for relief. As well, there is no pleading as to which plaintiffs are said to beowed money and the amount owed.[79] Further, in the statement of claim it is pleaded that the second to twenty-firstplaintiffs have not been paid "wash up" arrears. However, as Ms Aldred notes, whilethere is an acknowledgement by Gate in the 2022 EU to pay wash up arrears, there isno deadline in that EU by which wash up arrears are required to be paid. The actionsin the 2022 EU to rectify breaches required payment of the arrears calculated in the2020 and 2021 EUs.[80] In Maniapoto v Maniapoto Māori Trust Board,20 when considering an interiminjunction, albeit in a different context, Gault J said:[43] However, even if breach of fiduciary duty can be made out at trial, itis necessary to identify what the substantive relief might be in order toconsider the question of interim relief, not least because of the issue ofParliamentary privilege. The serious question to be tried needs to extend tothe claimed substantive relief underpinning the need for an interim injunction.[44] Several difficulties arise. As Mr Tennet acknowledged, the reliefsought at trial will need to be refined. That has not yet occurred, and thecurrent pleading is not a solid platform on which to seek interim relief. [81] What is said by Gault J at [43] of that judgment is equally applicable here.There is a failure to properly plead loss and damage and to specify the link to thatalleged loss. Stepping away from the pleadings, even the evidence does not providethe Court with a good understanding of any loss an individual plaintiff is said to havesuffered.[82] In conclusion, it is not possible to discern from the pleadings what loss is saidto have arisen from the alleged breaches. Allegations of damage without more are notsufficient to ground a claim. For that reason, there cannot be a finding that there is aserious question to be tried.Balance of convenience[83] In the first, second and third causes of action, damages payable by thedefendant and costs are the only remedies sought. Damages and costs are the primaryrelief sought in the fourth cause of action.[84] Accordingly, on the plaintiffs' own pleading they say the appropriate remedyfor their claims is damages.[85] The alternative prayers for relief in the fourth cause of action are:(a) an order directing the Labour Inspector to bring proceedings againstGate within seven days, in the name of each ex-employee who has not20 Maniapoto v Maniapoto Māori Trust Board, above n 14.been paid the arrears owed, or who has had overpayments deductedfrom arrears payments, to recover those sums; or(b) an order directing the Labour Inspector to co-operate with the Union ora major accounting firm to allow the Union to recover the arrears anddeductions referred to above.[86] It is doubtful whether the Court would consider making an order as in (a)above, fettering the Labour Inspector's discretion to proceed. In terms of the secondalternative, the Union is entitled in any event to bring an action on behalf of theplaintiffs. Even so, these are simply alternatives pleaded to the primary remedy ofdamages.[87] Mr O'Brien submits that interim relief is necessary because if the order is notmade and the Labour Inspector determines that Gate has complied with the EUs, thiswould undermine any subsequent action by the Labour Inspector to recover therelevant arrears. Mr O'Brien refers to concerns about Gate's solvency.[88] Addressing that submission, as Ms Aldred notes first, the claim in thesubstantive proceeding is for an award of damages against the Chief Executive andnot Gate. In other words, Gate's financial position is not relevant. But in any event,the refusal of injunctive relief does not prejudice any future recovery action by theLabour Inspector. For example, she has a power under s 228 of the EmploymentRelations Act to commence actions on behalf of employees to recover money owedunder the Holidays Act. That power is independent of the regime for enforceableundertakings.[89] Further, as I have set out in the background summary, there is no evidence thatthe Labour Inspector will find that Gate has completed the steps required of it underthe three EUs. Ms Mistry has not yet made her decision. In the event she determinesthat Gate has complied with what is required of it under the EUs, that would notprevent the Labour Inspector from taking further action in response to a futurecomplaint.[90] As to the submissions made on behalf of the plaintiffs regarding Gate'ssolvency, to date, Gate has complied with the financial requirements placed on it bythe Labour Inspector. She requested Gate to pay $575,000 to be held on trust whilethe arrears were calculated in 2022. Gate complied with that request.[91] There is also the issue of whether there would be any utility in the orderssought. The plaintiffs do not need the order sought to preserve their positions. Theyhave rights which enable them to bring claims against the employer directly21 if theysay that they have sustained losses (currently unspecified) in relation to the calculationor payment of their entitlements under the Holidays Act. In his affidavit, Mr Emerysays that 22 of the named plaintiffs have filed proceedings against Gate in theEmployment Relations Authority. The remedies sought in the Statement of Problemannexed to Mr Emery's affidavit include:(a) a declaration that Gate has breached the 2022 EU and ss 16, 56 and 81of the Holidays Act;(b) an urgent compliance order requiring Gate to comply with cl 3.1.3 ofthe 2022 EU and credit leave balances to the applicants;(c) an urgent compliance order requiring Gate to provide the Union with afull list of all Union members and their annual leave credits within threedays;(d) an urgent compliance order requiring Gate to provide the Union withthe calculations for accrued annual leave for all Union members withinthree days;(e) a compliance order requiring Gate to have a payroll system that iscompliant with the Holidays Act within 30 days; and21 Holidays Act 2003, ss 74 and 76.(f) awards for some applicants in amounts of at least $2,000 and for othersin amounts of at least $10,000 for humiliation, loss of dignity, andinjury to feelings as a result of the unjustified disadvantage.[92] Finally, on the balance of convenience, I do not accept it is correct to say asMr O'Brien does, that the Chief Executive will not suffer any prejudice if interim reliefwere to be granted. The relief would constrain the Labour Inspector from continuingthe remediation process that is underway.[93] Accordingly, for all the above reasons, even if there were a serious question tobe tried, the balance of convenience weighs in favour of the Chief Executive.Overall interests of justice[94] In all the circumstances I do not consider it is wrong to say, as Ms Aldred does,what the plaintiffs are effectively seeking is an order, unconnected to the relief soughtin the substantive claim, that the Labour Inspector may continue with her statutoryprocess provided she does not reach a decision that is unacceptable to the plaintiffs.[95] Relief of that sort would not serve the interests of justice.Result[96] The application for interim orders is refused.Timetable directions[97] Ms Aldred notes that the statement of defence was due for filing on 6 June2023. However, she submits that the statement of claim suffers from serious defectsincluding:(a) (as already referred to above) a failure to identify the nature of the losseach plaintiff is alleged to have suffered;(b) an apparent claim for relief that would require payment of moneys thathave been accepted by the Chief Executive as payable to all employeesand former employees affected by the EUs notwithstanding that only asubset of those persons are parties to this proceeding; and(c) the statement of claim pleads a large amount of evidence and is prolixin nature.[98] Ms Aldred submits that the defendant considers the claim as pleaded issusceptible to strike-out but suggests that a prudent course at this stage in theproceeding is to request further particulars and to allow the plaintiffs a reasonableopportunity to respond.[99] The plaintiffs consent to the timetable orders proposed.22 I agree that is theappropriate course and make the following timetable directions:(a) the defendant is to request further particulars of claim by 23 June 2023;(b) the plaintiffs' response to the request for further particulars is to beprovided by 21 July 2023;(c) the defendant is to respond to the statement of claim either by filing astatement of defence or an application for strike-out/summaryjudgment by 11 August 2023; and(d) a telephone conference with the Court is to be scheduled at the earliestdate available after 11 August 2023 to timetable next steps (to be fixedby the Registrar in consultation with counsel).Costs[100] I did not hear from the parties on costs. Costs are therefore reserved. If costscan be agreed, a joint memorandum is to be filed within 20 working days of the dateof this judgment. If costs cannot be agreed, counsel for the Chief Executive is to file22 The dates proposed and agreed to were predicated on orders being made at the hearing. Given theorders are made in this judgment rather than at the hearing, I add one week to each of the datesproposed.and serve a memorandum within five working days of the date for the jointmemorandum. Counsel for the plaintiffs is to file and serve the plaintiffs'memorandum within five working days of service of the Chief Executive'smemorandum on the plaintiffs.[101] Costs memoranda are not to exceed four pages (excluding attachments). I willdetermine costs on the papers._____________________________Gordon J