KIDD v COWAN [2020] NZCA 681

KIDD v COWAN [2020] NZCA 681 [21 December 2020]IN THE COURT OF APPEAL OF NEW ZEALANDI TE KŌTI PĪRA O AOTEAROACA475/2020[2020] NZCA 681BETWEEN CHARLES KIDD IN PARTNERSHIPWITH GEOFFREY KIDD TRADING ASKIDD PARTNERSHIPApplicantAND GEORGE ROBERT COWANRespondentCourt: Clifford and Gilbert JJCounsel: S N McKenzie for ApplicantP G Skelton QC and J R Copeland for RespondentJudgment:(On the papers)21 December 2020 at 4.00 pmJUDGMENT OF THE COURTA The application for leave to appeal is declined.B The applicant is to pay the respondent costs for a standard application ona band A basis and usual disbursements.____________________________________________________________________REASONS OF THE COURT(Given by Clifford J)Introduction[1] This is an application by the Kidd Partnership (the Partnership) for leave toappeal the decision of the Employment Court that the transfer of land valued at$80,000 by the Partnership to Mr Cowan could not be offset against wages thatthe Partnership owed to Mr Cowan.1Background[2] The Partnership comprises Mr Kidd and his son, Geoffrey. It operatesbusinesses, including farms and a rest home, and owns property in and around Winton.[3] Mr Kidd and Mr Cowan were once friends. Concerned about Mr Cowan'sliving situation after he was left without a home, in April 2009 Mr Kidd invitedMr Cowan to stay with him and his partner in a separate apartment forming part oftheir home. Mr Cowan accepted that offer. Mr Cowan lived in that apartment, andlater in a cottage at the rest home owned by the Partnership, rent-free until October2016.[4] For most of that period Mr Cowan worked part time for the Partnership.He drove trucks, and assisted with Partnership building projects. Mr Cowan lastworked for the Partnership in May 2016. Mr Cowan never had a written employmentagreement, nor did he receive wages.[5] In July 2010 the Partnership transferred a parcel of land to Mr Cowan nearthe Partnership's rest home.2 The arrangement was structured as a sale, with anassigned value of $80,000 for the land. Mr Cowan paid no money for that land.[6] The relationship between Mr Cowan and the Partnership deteriorated andeventually completely broke down. In late 2015 or early 2016 Mr Cowan claimedwages from the Partnership. The Partnership refused that claim. In July 2016Mr Cowan lodged a personal grievance, claiming he was in an employmentrelationship with the Partnership and for wages owing for the period 27 July 2010 to23 May 2016. In his claim for wages, Mr Cowan did not recognise he had beenprovided with free accommodation and the piece of land in return for the work heperformed.1 Cowan v Kidd [2020] NZEmpC 110 [Employment Court decision].2 At [16].[7] Before the Employment Relations Authority, the Partnership accepted therehad been an employment relationship, denied Mr Cowan had worked all the hours heclaimed, disputed the hourly wage he sought, and said that he had been provided withthe free accommodation and the piece of land in exchange for the work he hadperformed. Therefore, the Partnership said, the value of that land and accommodationshould be set off against any debt for wages owed.[8] The Authority resolved matters largely in the Partnership's favour. It foundthat Mr Cowan had only worked for approximately half the hours he claimed, andfixed Mr Cowan's wage at the minimum hourly adult rate.3[9] As to the significance for wages owed of the free accommodation the Authorityfirst concluded a set-off was available as provided for by s 7 of the Minimum WageAct 1983, notwithstanding there was no agreement to that effect between Mr Cowanand the Partnership.[10] The correct treatment of the land transferred was more difficult. The partieshad, the Authority concluded, some form of understanding the value of the section"would somehow represent the equivalent of money wages for work performed byMr Cowan for the partnership".4 The Authority then reasoned:[90] Whatever else is true, it is abundantly plain that the section is neitherboard nor lodgings and therefore it seems to me unlikely that it can be treatedin the same way as the calculation of lodgings in terms of the 1983 Act.[91] That notwithstanding, it is equally plain that the parties intended, onmy reading of the evidence, that the value of the section be taken into accountand I am not persuaded that in equity and good conscience I can simply ignoreit.[92] So I conclude that the parties' intention was that the value of thesection be taken into account as if it were money wages paid while the valueof the accommodation in terms of the provision in the 1983 Act, must becalculated as the statute sets out and deducted from the wages that wouldotherwise have been payable.3 Cowan v Kidd Partnership [2018] NZERA Christchurch 50 [Employment Relations Authoritydecision].4 At [88].[11] On that basis the Authority, concluding it had the power to do so pursuant tos 161(1)(r) of the Employment Relations Act 2000 (the Act), ordered Mr Cowan topay the Partnership the sum of $80,000.5 In doing so, the Authority also relied on theprovisions of the Contract and Commercial Law Act 2017, imported into the Act bys 162(a).6Employment Court decision[12] Mr Cowan challenged the Authority's determination on a de novo basis:accordingly, all aspects of Mr Cowan's dispute with the Partnership were consideredafresh by the Employment Court. At the same time, the Partnership withdrew theconcession it had made before the Authority and disputed that there had been anemployment relationship between it and Mr Cowan.[13] Like the Authority, the Employment Court found the real nature of therelationship between the Partnership and Mr Cowan was, at least in part, anemployment relationship.7 That employment relationship had evolved alongsideMr Kidd and Mr Cowan's friendship. That employment relationship covered, inparticular, the truck driving and general construction work that Mr Cowan had donefor the Partnership. On the question of the time worked by Mr Cowan, the Courtagreed with the Authority that Mr Cowan was not entitled to wages for all the hourshe claimed, but reached a conclusion somewhat more favourable to Mr Cowan thanthe Authority had on the proportion of those hours for which he was entitled to bepaid.8 Like the Authority, the Court concluded that the appropriate hourly rate forMr Cowan was the minimum adult rate.9[14] The Employment Court, however, reached different conclusions from theAuthority on the significance of the free accommodation and the transfer of the section5 At [128]–[129]. Section 161(1)(r) provides that the Authority has exclusive jurisdiction to makedeterminations about employment relationship problems generally, including "any other action(being an action that is not directly within the jurisdiction of the court) arising from or related tothe employment relationship or related to the interpretation of this Act (other than an actionfounded on tort)".6 At [130]. In particular, the Authority concluded s 24(1)(a)(ii) applied as both parties wereinfluenced by the same mistake when entering into a contract.7 Employment Court decision, above n 1, at [33]–[36].8 At [44]–[46].9 At [52].for the amount of any wages owed by the Partnership to Mr Cowan. Its reasoning onthe point was succinct:[54] Despite Mr Kidd's evidence that the transfer of the propertyrepresented a gift to Mr Cowan, Kidd Partnership submits any amount due toMr Cowan ought to be reduced by $80,000, being the stated value of thesection transferred to him in July 2010.[10] However, while I have acceptedthat the transfer in part recognised work done by Mr Cowan, its value cannotbe taken into account in the calculation of wages due to him.* In any event,it is not possible to establish what portion of the value of the property mighthave reflected recognition for Mr Cowan's ongoing work for the period beforethe Court.[55] I also consider the provision of accommodation was a personalarrangement entered into between Mr Kidd and Mr Cowan. That isparticularly clear for the accommodation in the flat above Mr Kidd's home,but I view the move to the cottage as on the same basis.* Wages Protection Act 1983, s 7. If Kidd Partnership has a claim, it would be inanother jurisdiction.[15] Thus the Employment Court denied recognition of the value of the land byreference to s 7 of the Wages Protection Act 1983, whereas the Employment Authorityhad recognised a set-off for the value of accommodation by reference to s 7 of theMinimum Wage Act. In reaching its conclusion on the significance of the value of theland, the Employment Court made no reference to the "equity and good conscience"jurisdiction found in s 189 of the Act nor to ss 161 and 162.The Partnership's leave application[16] In applying for leave, the Partnership no longer asserts the Employment Courtwas wrong on the conclusion it reached as to the significance of the value ofaccommodation Mr Cowan received, either from Mr Kidd personally or fromthe Partnership. However, as to the value of the land transferred, the Partnership says10 That assessment of matters appears to reflect a different approach taken by the parties, and inparticular Mr Cowan, in the Employment Court to their understanding as to the significance of thefree accommodation and transfer of land. The Judge had earlier summarised the position:[18] Mr Cowan claims that the provision of the section and the assistance with the housewas payment for work he had performed, and would continue to perform for Kidd Partnership.Mr Kidd's evidence on this point was somewhat conflicting. On the one hand he said that thetransfer of the property and offer of assistance recognised that Mr Cowan had assisted thebusiness, but he also said that it was provided to Mr Cowan essentially as a gift to help himout. I accept that there were mixed motives in the provision of the property and promisedassistance with the house. Mr Kidd was concerned that his friend Mr Cowan was at or nearretirement age without any home and in somewhat straitened circumstances. I also accept,however, that Mr Kidd recognised that Mr Cowan had been helping Kidd Partnership.that the Employment Court, having accepted that transfer was in part recognition forwork undertaken by Mr Cowan, erred by determining that the value of that land couldnot be taken into account in the calculation of wages due to Mr Cowan or to offset anywages due.[17] The proposed question of law raised on appeal is:Whether the Court can exercise its inherent jurisdiction to act in equity andgood conscience and take into account the provision of the section (or othervaluable consideration) by way of an offset when calculating wage arrears.[18] The Court's inherent jurisdiction to act in equity and good conscience is saidto come from s 189 of the Act, which provides:189 Equity and good conscience(1) In all matters before it, the court has, for the purposes of supportingsuccessful employment relationships and promoting good faithbehaviour, jurisdiction to determine them in such manner and to makesuch decisions or orders, not inconsistent with this or any other Actor with any applicable collective agreement or the particularindividual employment agreement, as in equity and good conscienceit thinks fit.[19] The Partnership says the proposed appeal raises a matter of general or publicimportance, as the scope of the equity and good conscience provision has not beenconsidered as regards the provisions of the Wages Protection Act. Further,the Partnership claims the Employment Court's decision conflicts with anotherdecision, Kidd v Beaumont, and it is a matter of public importance that this Courtclarify the correct approach.11[20] Mr Cowan, in response, contends that the grounds of appeal seek to challengefactual findings and do not raise any point of law. In any event, he says the law isclear: s 7 of the Wages Protection Act specifies that wages may be paid in money only,the wording of the provision is unambiguous, and the Judge correctly interpreted andapplied it. Mr Cowan also notes the qualification in s 189(1) of the Act, whichprovides the Court cannot exercise its jurisdiction in a way that is inconsistent with11 Kidd v Beaumont [2016] NZEmpC 158, [2016] ERNZ 257.that, or any other, Act. In this regard, Mr Cowan submits the "equity and goodconscience" provision is not untrammelled, and does not allow the Court to contradicts 7 of the Wages Protection Act.[21] Mr Cowan draws this Court's attention to differences betweenKidd v Beaumont, relied on by the Partnership, and the present case. Namely, in Kiddv Beaumont the reward offset against wages was accommodation, expressly allowedby s 7 of the Wages Protection Act. Further, Mr Kidd was also receiving a cash sumfor his work as contemplated by s 7 of that Act. Accordingly, Mr Cowan says no broadprinciple that non-monetary benefits may be deducted for the purposes of calculatingwages can be gleaned from the judgment.[22] To the extent the Partnership's application does raise a question of law,Mr Cowan says it does not give rise to any question of general or public importancethat would justify granting leave to appeal: the matter is confined to its facts.Analysis[23] The relevant provision is s 214 of the Act, which provides as follows:214 Appeals on question of law(1) A party to a proceeding under this Act who is dissatisfied with adecision of the court (other than a decision on the construction of anindividual employment agreement or a collective employmentagreement) as being wrong in law may, with the leave of the Court ofAppeal, appeal to the Court of Appeal against the decision; andsection 56 of the Senior Courts Act 2016 applies to any such appeal.(2) A party desiring to appeal to the Court of Appeal under this sectionagainst a decision of the Employment Court must, within 28 days afterthe date of the issue of the decision or within such further time as theCourt of Appeal may allow, apply to the Court of Appeal, in suchmanner as may be directed by rules of court, for leave to appeal to thatcourt.(3) The Court of Appeal may grant leave accordingly if, in the opinion ofthat court, the question of law involved in that appeal is one that, byreason of its general or public importance or for any other reason,ought to be submitted to the Court of Appeal for decision.Kidd Partnership must therefore demonstrate that the question of law proposed is oneof sufficient general or public importance to warrant a further appeal to this Court.[24] The Employment Court did not rely on the Authority's analysis under ss 161(1)and 162(a), and that analysis was not referred to by the applicant in its submissionregarding significance of the Employment Court's equity and good consciencejurisdiction. We have, accordingly, not considered the significance, or otherwise, ofthat analysis with regards that application.[25] Rather, the challenge was to the Employment Court's conclusion there was nopower to deduct any amount from the wages due from the Partnership to Mr Cowanby reference to the value of the land transferred.[26] In reaching her conclusion that set-off for the stipulated value of the sectionwas not available to the Partnership, the Judge relied on the provisions of s 7 of theWages Protection Act, which reads:7 Wages to be payable in moneySubject to sections 8 to 10, an employer shall pay the wages of everyworker in money only.[27] "Money" is defined in s 2 to mean New Zealand coin or New Zealand banknotes. In effect, s 7 requires wages to be paid in cash, subject to agreement to thecontrary. It does not, in our view, address the question of deductions from wagesotherwise payable in cash.[28] Rather, the extent to which amounts may be deducted from wages payable isaddressed by ss 4–6 of the Wages Protection Act. As relevant here, deductions mayonly be made for lawful purposes with the written consent of a worker.12The unchallenged finding of fact below is there was no written employmentagreement, or any other form of agreement in writing, between the Kidd Partnershipand Mr Cowan. There would appear to be no possibility of Mr Cowan havingconsented to a lawful deduction.[29] Whilst s 7 of the Minimum Wage Act allows for a deduction with respect toboard and lodging, as recognised by the Authority and acknowledged by the12 Wages Protection Act 1983, s 5(1).Employment Court in Kidd v Beaumont,13 that is not an issue which the Partnershipseeks to raise in its appeal.[30] Furthermore, the section on which the Partnership would base its appeal, s 189of the Act, does not — on its own terms — provide an untrammelled discretion to actin equity and good conscience where that would be contrary to express statutoryprovisions. Given these terms, and as Judge Inglis stated in 8i Corp v Marino:14[16] While s 189(1) confers an equity and good conscience jurisdiction, itdoes not entitle the Court to rewrite the statute or cut across other statutoryprovisions on the basis that it considers it appropriate, for reasons of equityand/or good conscience, to do so.[31] The outcome the Partnership seeks is inconsistent with both s 7 of theMinimum Wage Act, being outside the type of deduction possible, and with s 5 of theWages Protection Act, not being one agreed to by Mr Cowan in writing.[32] Whilst, therefore, we are satisfied that — contrary to Mr Cowan's submission— the proposed question is one of law and not one of fact, in our view that questionis not one that is seriously arguable.[33] We therefore decline the Partnership's application for leave to appeal thedecision of the Employment Court.Result[34] The application for leave to appeal is declined.[35] The applicant is to pay the respondent costs for a standard application on aband A basis and usual disbursements.Solicitors:Preston Russell Law, Invercargill for ApplicantCopeland Ashcroft Law, Invercargill for Respondent13 Kidd v Beaumont, above n 11, at [122]; and Employment Relations Authority decision, above n 3,at [86].14 8i Corp v Marino [2017] NZEmpC 69, [2017] ERNZ 315.