MAHETA v SKYBUS NZ LIMITED (FORMERLY AIRBUS EXPRESS LIMITED) [2022] NZCA 516

MAHETA v SKYBUS NZ LIMITED (FORMERLY AIRBUS EXPRESS LIMITED) [2022] NZCA 516 [2November 2022]IN THE COURT OF APPEAL OF NEW ZEALANDI TE KŌTI PĪRA O AOTEAROACA27/2021[2022] NZCA 516BETWEEN DHARMENDRA MAHETAAppellantAND SKYBUS NZ LIMITED(FORMERLY AIRBUS EXPRESSLIMITED)RespondentHearing: 30 August 2022Court: Cooper P, Miller and Gilbert JJCounsel: L M Hansen for AppellantA H Waalkens KC and S M Lapthorne for RespondentJudgment: 2 November 2022 at 2 pmJUDGMENT OF THE COURTA The appeal is allowed.B We answer the questions of law as follows:(a) Did the Employment Court err in holding it had no jurisdictionto order a stay of the Employment Relations Authority's costsdetermination, as Mr Maheta had applied for?Yes, the Employment Court had jurisdiction to order a stay.(b) Did the Employment Court err in awarding security for costs tothe respondent on the basis that Mr Maheta was not in receipt oflegal aid?Yes, as Mr Maheta was in receipt of legal aid.C The respondent must pay costs to Mr Maheta for a standard appeal on aband A basis and usual disbursements.____________________________________________________________________REASONS OF THE COURT(Given by Gilbert J)[1] Mr Maheta was employed as a bus driver by Skybus NZ Ltd from December2017 until 6 September 2018 when he was summarily dismissed following a numberof driving incidents.[2] On 6 December 2019, the Employment Relations Authority dismissedMr Maheta's claim that he had been unjustifiably dismissed.1 The Authority alsodismissed his claims that he had been unjustifiably disadvantaged in his employmentby being issued with a written warning,2 being demoted,3 and placed on unpaidsuspension.4 Costs were reserved.5[3] On 18 December 2019, Mr Maheta filed a statement of claim inthe Employment Court electing, pursuant to s 179 of the Employment Relations Act2000 (the Act), to have the matter heard de novo by the Court. Mr Maheta, who wasthen unrepresented, filed an affidavit on 30 January 2020 seeking an order staying anyorders the Authority "may subsequently make, and in particular in relation to costs".He stated that the Authority had reserved costs and Skybus had then applied for anorder exceeding $30,000. He said that he was opposing the application for costs andwas not aware of when the Authority would determine it. He concluded his affidavitby stating:If, eventually, I am required to pay costs to [Skybus], then I acknowledge myliability in law to do so and will try to make arrangements to this end.Until my proceedings are finalised, however, I would be put in a very harsh1 Maheta v Airbus Express Ltd [2019] NZERA 698 at [118].2 At [69].3 At [80].4 At [92].5 At [119].position financially if I had to pay [Skybus's] costs in the Authority, especiallyif these were to be for anything like the very substantial sum exceeding$30,000 asked for by the company.[4] On 5 February 2020, the Authority issued its costs determination and orderedMr Maheta to pay costs of $10,000 to Skybus.6[5] On 18 December 2020, the Employment Court determined Mr Maheta'sapplication for a stay (filed almost one year earlier) and Skybus's cross-application forsecurity for costs, which it filed on 3 September 2020.7 The Court found that it hadno jurisdiction to entertain Mr Maheta's stay application because he had notchallenged the Authority's costs determination.8 Alternatively, if Mr Maheta wasseeking an order preventing the Authority from taking any steps to determine costspending his challenge to the substantive determination, this was not permissiblebecause the Court could not "direct the Authority about its procedures".9 The Courtgranted Skybus's application for security for costs and ordered Mr Maheta to paysecurity for costs in the sum of $10,000.10 In making this order, the Court understoodthat Mr Maheta was not then in receipt of legal aid.11[6] This Court granted Mr Maheta leave to appeal against the Employment Courtjudgment on two questions of law:12(a) Did the Employment Court err in holding it had no jurisdiction to ordera stay of the Authority's costs determination, as Mr Maheta hadapplied for?(b) Did the Employment Court err in awarding security for costs to therespondent on the basis that Mr Maheta was not in receipt of legal aid?6 Maheta v Airbus Express Ltd [2020] NZERA 52.7 Maheta v Skybus NZ Ltd [2020] NZEmpC 236 [Employment Court judgment].8 At [30].9 At [31]–[33].10 At [62].11 At [58].12 Maheta v Skybus NZ Ltd [2021] NZCA 493.Did the Employment Court have jurisdiction to order a stay?[7] Section 179 of the Act enables a party who is dissatisfied with a determinationof the Authority to elect to have the matter heard by the Employment Court.The dissatisfied party may elect to have a full hearing of the "entire matter" de novo:13179 Challenges to determinations of Authority(1) A party to a matter before the Authority who is dissatisfied with awritten determination of the Authority under section 174A(2),174B(2), 174C(3), or 174D(2) (or any part of that determination)may elect to have the matter heard by the court.(2) An election under subsection (1) must be made in the prescribedmanner and within 28 days after the date of the determination.(3) The election must—(a) specify the determination, or the part of the determination,to which the election relates; and(b) state whether or not the party making the election is seekinga full hearing of the entire matter (in this Part referred to asthe hearing de novo).(4) If the party making the election is not seeking a hearing de novo,the election must specify, in addition to the matters specified insubsection (3),—(a) any error of law or fact alleged by that party; and(b) any question of law or fact to be resolved; and(c) the grounds on which the election is made, which grounds areto be specified with such reasonable particularity as to givefull advice to both the court and the other parties of the issuesinvolved; and(d) the relief sought.(5) Subsection (1) does not apply—(aa) to an oral determination or an oral indication of preliminaryfindings given by the Authority under section 174(a) or (b);and(a) to a determination, or part of a determination, aboutthe procedure that the Authority has followed, is following,or is intending to follow; and13 Employment Relations Act 2000 (emphasis in original).(b) without limiting paragraph (a), to a determination, or part ofa determination, about whether the Authority may follow oradopt a particular procedure.[8] The making of an election under s 179 does not operate as a stay of proceedingson the determination of the Authority unless the Court or the Authority so orders.14If an election is made under s 179, the Court is required to make its own decision"on that matter and any relevant issues".15 Once the Court has made a decision,the determination of the Authority is set aside and the decision of the Court stands inits place.16 The Court has a broad discretion to make such costs orders as it thinksreasonable.17 Clause 19 of sch 3 of the Act provides:19 Power to award costs(1) The court in any proceedings may order any party to pay to any otherparty such costs and expenses (including expenses of witnesses)as the court thinks reasonable.(2) The court may apportion any such costs and expenses betweenthe parties or any of them as it thinks fit, and may at any time vary oralter any such order in such manner as it thinks reasonable.[9] The power to grant a stay of proceedings is set out in reg 64 of theEmployment Court Regulations 2000:64 Power to order stay of proceedings(1) If an election is made under section 179 of the Act, the Authority andthe court each have power to order a stay of proceedings underthe determination to which the election relates.(2) If an application for a rehearing is made under clause 5 of Schedule 3of the Act, the court has power to order a stay of proceedings underthe decision or order to which the application relates.(3) An order under subclause (1) or subclause (2)—(a) may relate to the whole or part of a determination or decisionor order, or to a particular form of execution; and(b) may be made subject to such conditions, including conditionsas to the giving of security, as the Authority or the court thinksfit to impose.14 Section 180.15 Section 183(1).16 Section 183(2).17 Section 191; and sch 3, cl 19.[10] The Employment Court reasoned that because Mr Maheta did not make aseparate election under s 179 of the Act in respect of the costs determination, the Courthad no jurisdiction to grant a stay of that order.18 We respectfully disagree with thisconclusion for the reasons set out below.[11] Mr Maheta elected to have the entire matter heard by the Employment Courtde novo. The remedies he sought included orders for reinstatement, payment of lostremuneration, compensation, and costs. The Court "must make its own decision onthat matter and any relevant issues".19 Once the Court has made its determination,the Authority's determination will be set aside and the Court's determination will standin its place. There can be no doubt that the Court has jurisdiction to determine the issueof costs. If the Court were to uphold Mr Maheta's claims, he would normally beentitled to an award of costs.[12] If the Authority's substantive determination of his claims is reversed, its costsdecision could not stand. Costs awards are generally parasitic on the substantivedetermination to which they relate in the sense that they are assessed on the basisthe substantive determination is correct. Mr Maheta did not dispute beforethe Authority that costs should follow the event in the usual way; he only contestedthe quantum of costs claimed by Skybus. If Mr Maheta succeeds in theEmployment Court, the whole basis for the costs awarded by the Authority to Skybuswill fall away and the question of costs will have to be revisited.20[13] While costs had not been fixed by the Authority at the time Mr Maheta filedhis proceeding in the Employment Court, his challenge was to the entire matter andhe elected a full de novo hearing. In these circumstances, and by specifically seekingan award of costs from the Court, it was plain that he was challenging all aspects ofthe Authority's determination, which provided the foundation for the inevitableassociated costs award the Authority was yet to make. It is also clear fromMr Maheta's affidavit that he was challenging the expected costs award. Indeed, that18 Employment Court judgment, above n 7, at [30].19 Employment Relations Act, s 183(1).20 PBO Ltd v Da Cruz (2005) 3 NZELR 1 (EmpC) at [13].was the sole basis for his application for a stay; there was no other order capable ofbeing stayed.[14] As with an appeal, a party challenging a substantive determination need notseparately challenge an associated costs judgment if the only basis for the challenge isthat the substantive determination which underpins it is incorrect.21 The outcome oncosts will follow the event on the challenge to the substantive determination.The position is different if a party wishes to challenge the costs judgment on the basisit is incorrect irrespective of the correctness of the underlying substantivedetermination.[15] In summary, we do not consider it was necessary for Mr Maheta to have madea separate election under s 179 in respect of the costs determination after costs werefixed by the Authority. While, technically, there was no order for costs at the timeMr Maheta made his stay application, there was no dispute that costs should followthe event and that Skybus should therefore receive costs. In short, a costs award wasinevitable. Further, the costs award was made long before the stay application wasdetermined. It would have been pointless to require a fresh application to be made.[16] In conclusion, we consider the Employment Court erred in holding it had nojurisdiction to grant Mr Maheta's application for a stay of the Authority's costs award.Did the Employment Court err in ordering security for costs?[17] No order for costs can be made against an aided person in civil proceedingsunless the court is satisfied there are exceptional circumstances.22 The EmploymentCourt recognised this.23 However, it did not consider that Mr Maheta continued toqualify as an aided person:[58] As a result of subsequent inquiries made of Mr Maheta, at the Court'sdirection, it transpires that he has withdrawn instructions from the barrister towhom the Legal Services Commissioner's letter was written. A replacementgrant has not yet been made and, as a result, he is currently not a person in21 Parsot v Greig Developments Ltd [2009] NZCA 241, (2009) 10 NZCPR 308 at [33]; and Reid vNew Zealand Fire Service Commission [2010] NZCA 133, (2010) 19 PRNZ 923 at [26].22 Legal Services Act 2011, s 45(2).23 Employment Court judgment, above n 7, at [57].receipt of legal aid. That means the Legal Services Act does not need to beconsidered any further.[18] We agree with Ms Hansen, for Mr Maheta, that this was an error.[19] Mr Maheta received a grant of legal aid on an interim basis on13 November 2020. This grant, made under s 16(1)(b) of the Legal Services Act 2011,continued until the Legal Services Commissioner determined Mr Maheta's applicationfor legal aid for the whole of the proceedings or considered it appropriate thatpayments should cease.24[20] Mr Maheta advised the Court on 17 December 2020 that Legal Services hadadvised him that the grant could be reassigned to a new legal aid provider. He saidthat he had found a new legal aid provider and had advised Legal Services of this.However, he said that "until such time the grant [had] been reassigned byLegal Services to the new legal aid provider [he was] unable to confirm [he had] a newlegal provider". Mr Maheta said he would ensure the Court was advised as soon asthis occurred. We note that Legal Services subsequently approved the changeof lawyer. That was done on 6 January 2021, after the Employment Court judgmentwas delivered.[21] The Court considered that because instructions had been withdrawn fromthe barrister originally instructed to act, Mr Maheta was no longer in receipt oflegal aid and that a replacement grant would be required. This is not correct.An "aided person" under the Legal Services Act is a person who is granted legal aidunder the Act.25 This includes a person who is granted legal aid on an interim basis.26Mr Maheta was therefore an aided person against whom no costs order could be madein the absence of exceptional circumstances. That Mr Maheta was in the process ofengaging a replacement lawyer does not alter the fact that he was in receipt of a grantof legal aid.24 Legal Services Act, s 16(3).25 Section 4(1) definition of "aided person", para (a).26 Section 4(1) definition of "aided person", para (b)(i).Result[22] The appeal is allowed.[23] We answer the questions of law as follows:(a) Did the Employment Court err in holding it had no jurisdiction to ordera stay of the Employment Relations Authority's costs determination,as Mr Maheta had applied for?Yes, the Employment Court had jurisdiction to order a stay.(b) Did the Employment Court err in awarding security for costs to therespondent on the basis that Mr Maheta was not in receipt of legal aid?Yes, as Mr Maheta was in receipt of legal aid.[24] The respondent must pay costs to Mr Maheta for a standard appeal on a band Abasis and usual disbursements.Solicitors:Kiely Thompson Caisley, Auckland for Respondent