HINES v EASTLAND PORT LIMITED [2018] NZCA 564

HINES v EASTLAND PORT LIMITED [2018] NZCA 564 [6 December 2018]IN THE COURT OF APPEAL OF NEW ZEALANDI TE KŌTI PĪRA O AOTEAROACA455/2018[2018] NZCA 564BETWEEN PAUL HINESApplicantAND EASTLAND PORT LIMITEDRespondentCourt: Brown and Clifford JJCounsel: P A McBride for ApplicantE J Brown for RespondentJudgment:(On the papers)6 December 2018 at 3.30 pmJUDGMENT OF THE COURTA The application for leave to appeal is declined.B The applicant must pay the respondent costs for a standard application on aband A basis and usual disbursements.____________________________________________________________________REASONS OF THE COURT(Given by Clifford J)Introduction[1] Paul Hines, the applicant, was dismissed by his employer, the respondentEastland Port Ltd, in May 2017. In July this year the Employment Court dismissedCaptain Hines de novo challenge to determinations of the Employment RelationsAuthority upholding the lawfulness of the actions of Eastland Port.1[2] Captain Hines now applies pursuant to s 214 of the Employment Relations Act2000 for leave to appeal that decision of the Employment Court as being wrong in law.[3] We may only grant leave if in our opinion the question of law involved in thatappeal is one that, by reason of its general or public importance or for any other reason,ought to be submitted to us for decision.Background[4] In 2017 Captain Hines was employed by Eastland Port as a pilot for its port atGisborne. In that role, Captain Hines was the duty pilot on 26 February and 30 March.[5] On 26 February Captain Hines was not on board a cruise ship, theEmerald Princess, when it left Gisborne port. On the morning of 30 MarchCaptain Hines was not on board a fishing trawler, the Seamount Explorer, when itcame into port and, in doing so, collided with an ice tower on a wharf at the port.[6] The Maritime Transport Act 1994 requires the master of a ship to ensure that apilot is taken on board in accordance with and whenever required by maritime rules.2As relevant, those rules require a master to do so when her ship is navigating in thatpilotage area and her ship meets or exceeds any limits specified for that area.3 She isnot required to do so when she receives advice from a pilot that the pilot is unable totransfer to or from the ship safely and, in the opinion of the pilot, the movement of theship within the pilotage area can be completed safely with the pilot's advice.That requirement does not apply where the ship is transiting between the perimeter ofthe pilotage area and a designated pilot boarding station or anchorage within that area,with the prior approval of a pilot.1 Hines v Eastland Port Ltd [2018] NZEmpC 79 [Employment Court decision].2 Maritime Transport Act 1994, s 60A(1).3 Maritime Transport Rules, pt 90.[7] Both the Emerald Princess and the Seamount Explorer exceededEastland Port's 500 gross tonne trigger for a pilot. Eastland Port's general manager,Mr Gaddum, became aware of the arrival of the Seamount Explorer without a pilot onboard. After an initial conversation with Captain Hines about the possibility of abreach of rules, Mr Gaddum asked the Port's Health, Safety and EnvironmentalFacilitator (Mr Gordon) to look into the matter with support of the other pilot andanother Port executive. Shortly thereafter Mr Gaddum became aware ofthe Emerald Princess having departed without a pilot. That prompted Mr Gaddum toformalise and extend the investigation already underway. Captain Hines was putunder the supervision of his fellow pilot.[8] By early May, Mr Gordon had completed his report. Mr Gaddum providedthe report to Captain Hines under cover of a letter which alleged that the two incidentsconstituted serious failures by Captain Hines of his obligations as an employee ofEastland Port. The letter also advised that if the allegations were established it couldlead to the termination of Captain Hines' employment for serious misconduct.Following a relatively informal meeting on 17 May (no formal record was kept)Mr Gaddum wrote on 19 May advising Captain Hines that he had concluded hisbehaviour amounted to serious misconduct. A further meeting would be held at whichCaptain Hines could make further representations before Mr Gaddum made a decision.That meeting took place on 26 May. As described by the Employment Court in itsjudgment, it "principally involved Captain Hines speaking and others listening".4Following that meeting, Mr Gaddum concluded that Captain Hines' behaviouramounted to serious misconduct. Captain Hines' employment was terminated at thatpoint. In reaching that conclusion, Mr Gaddum recorded that not only did the twoincidents constitute a breach of Captain Hines' obligations as an employee, but that hewas satisfied that Captain Hines had also been dishonest in the way he had explainedcircumstances relating to the berthing of the Seamount Explorer.Serious Misconduct[9] Before the Employment Court Captain Hines said it was not open toEastland Port to find that his behaviour constituted serious misconduct. He had an4 Employment Court decision, above n 1, at [69].honest belief that he was acting lawfully when he did not pilot the two vessels. In thecase of the Seamount Explorer he had a genuine but mistaken view of the rules, andthe breach was minor. As regards the Emerald Princess, his decision was inaccordance with the rules. A finding of dishonesty in the course of the investigationhad no proper basis.The Employment Court decision[10] The Employment Court found that:5(a) It was open for Eastland Port to find that Captain Hines' conduct wasserious misconduct.(b) The investigation was sufficient despite some defects in the process.These defects did not create unfairness.(c) Eastland Port should have consulted Captain Hines before placing himunder supervision of another captain and before relieving him frompiloting duties, but these defects were minor and did not createunfairness or disadvantage.(d) Captain Hines was not entitled to indemnity costs under anindemnification clause in his employment agreement.Grounds for appeal[11] Captain Hines applies for leave on the basis that the Employment Court madeerrors of law by reaching findings that were not open on the evidence and bymisdirecting itself as to the legal principles that apply to employment relationsdisciplinary processes. The Employment Court also erred in the way it interpretedprovisions of Captain Hines's employment contract relating to indemnity costs.[12] Those errors are of general and public importance because they are ofpotentially wide significance to employers and employees generally, the matter is of5 At [5].particular importance to Captain Hines and because the approach taken by the Courtin Captain Hines' case diverges from the approach previously taken.[13] Eastland Port responds that the matters identified are not errors of laws, butfindings of fact that were open to the Employment Court. Moreover, there is no matterof general or public importance, or which otherwise justifies a grant of leave. This wasa procedurally sound and substantively correct decision by Eastland Port. After aprocedurally fair process Eastland Port had found that Captain Hines had failed to beon the two vessels as required by maritime rules and hence his contract of employment.That was manifestly serious misconduct which justified dismissal.The Employment Relations Authority and the Employment Court were right todismiss Captain Hines' challenges.Analysis[14] In his submissions, Captain Hines says there are four questions of law whichjustify the grant of leave:(a) Did the Employment Court err in law in finding his dismissal to havebeen justified?(b) Did the Employment Court err in law in its findings that s 4(1A)(c) ofthe Employment Relations Act did not require full disclosure of allrelevant information held by Eastland Port and an opportunity tocomment on that before dismissal?(c) Did the Employment Court err in law in finding that no personalgrievance arose from a change to and removal from professional dutieswithout prior consultation?(d) Did the Employment Court err in law in its determination of theinapplicability of cl 14 of sch 1 of the employment agreement?[15] We focus our analysis on whether the proposed questions are questions of lawof general or public importance.Did the Employment Court err in law in finding the applicant's dismissal to have beenjustified?[16] In support of the first proposed question, Captain Hines says the Court erred inmaking findings contrary to the only available evidence. Here he is concerned withthe Employment Court's reliance on what Mr Gaddum considered to be dishonesty inthe way Captain Hines had responded to the investigation into his conduct.[17] He focuses on whether the allegations of dishonesty and Mr Gaddum's requestfor the SMS audit report were raised at the 17 May meeting. The Employment Courtfound they were.6 However, Captain Hines' evidence-in-chief explicitly disavowedthis, and Mr Gaddum in cross-examination accepted that he could not recall whetherthe allegations were discussed at the 17 May meeting.[18] With that in mind, we accept that the Judge's finding about the contents of the17 May meeting may not be sustainable. However, there is no challenge to the Judge'sfinding that Captain Hines was able to, and did, respond to those matters "at length atthe meeting of 26 May".7 As the Judge noted, at that stage the "factual findingsremained in issue and were discussed at length", with Captain Hines responding"extensively".8 In other words, Captain Hines was given a reasonable opportunity torespond to the allegations — as is required when a disciplinary process is expanded toinclude alleged untruthfulness in the employee's explanations throughout thatprocess.9[19] Captain Hines also contends that the Employment Court departed from theevidence when — in not upholding the concern he had as regards the way Mr Gaddumhad approached issues of dishonesty — it found that "although [the] issues ofinconsistency and perceived deceit were of concern to Mr Gaddum, the key point forhim remained that Captain Hines was not on board [the vessels]".10 In other words,Captain Hines says that the Employment Court underestimated the part that6 At [93].7 At [93].8 At [106].9 George v Auckland Council [2013] NZEmpC 179, [2013] ERNZ 675 at [101].10 Employment Court decision, above n 1, at [58].Mr Gaddum's assessment of his dishonesty had played in the investigation and finalemployment decision.[20] In support of this point, Captain Hines refers to Mr Gaddum'scross-examination. It was put to Mr Gaddum that throughout the process the focuswas on Captain Hines' conduct as a pilot. Mr Gaddum responded by stating that "itstarted as that and then [got] more into issues of honesty and trust by the end of it,which is indicated in the way through". Captain Hines says that confirms his view ofthings, and highlights that the Employment Court had departed from the evidence inthe way he had submitted.[21] We do not agree. The basic reason Eastland Port dismissed Captain Hines wasthat it found he had not been on two vessels when the terms and conditions of hisemployment required him to be. It was during the course of its investigation into thoseoccurrences that Captain Hines' incorrect and inconsistent explanation relating tothose two events became an additional matter of concern for his employer. We thinkthat is what Mr Gaddum was explaining at that point of his evidence. That isconfirmed where, at another stage in his evidence, Mr Gaddum said "for me as thedecision maker at the core of everything the fundamental fact is [Captain Hines]was not on board the Seamount Explorer or the Emerald Princess piloting those twovessels as he is employed to do".[22] With that in mind, we are satisfied that the Employment Court did not err inlaw in finding Captain Hines' dismissal to have been justified. In reaching thatconclusion, we emphasise that the Employment Court had explicit regard to thecriteria in s 103A of the Employment Relations Act when considering whetherCaptain Hines' dismissal was justified. As relevant, the Employment Court alsoconsidered the leading case of Angus v Ports of Auckland Ltd when determining thatany defects in the process were not fatal to the decision to dismiss Captain Hines.11We are accordingly satisfied that there is nothing in Captain Hines' first proposedquestion of law.11 Angus v Ports of Auckland Ltd [2011] NZEmpC 160, [2011] ERNZ 466.Did the Employment Court err in law in its findings that s 4(1A)(c) of the EmploymentRelations Act did not require full disclosure of all relevant information held bythe Eastland Port and an opportunity to comment on that before dismissal?[23] Captain Hines second proposed question focuses on the scope of the obligationin s 4(1A)(c) of the Employment Relations Act. Section 4 deals with the requirementthat parties to an employment relationship must deal with each other in good faith.As part of that requirement, s 4(1A)(c) provides that an employer who is proposing tomake a decision that is likely to have an adverse effect on the continuation ofemployment of the employee must provide the employee with "access to information,relevant to the continuation of the employees' employment, about the decision".[24] On appeal, Captain Hines proposes to argue that the Employment Court"substantially narrowed the scope of that obligation, in stark contrast to existingEmployment Court jurisprudence, in finding that there was no requirement to providecertain relevant information".[25] We are satisfied that there is no merit in this proposed question of law.The Employment Court did not find that "there was no requirement to provide certainrelevant information". To the contrary, it simply found that Eastland Port had providedall relevant information:[121] Another complaint of Captain Hines was that various notes created by[Eastland Port] in the course of its process were not provided to him.While employees are entitled to receive information and evidence relevant tothe employer's decision, it is not a requirement of either s 4(1A)(c) or s 103Aof the Act that an employee be provided with all the employer's own notes.The documentation Captain Hines received included the relevant informationand was sufficient for him to understand respond to [Eastland Port's] concerns.[26] Captain Hines' submission ultimately boils down to a contention that he didnot receive all relevant information. In the context of this case, this does not amountto a question of law, but rather a challenge to the Judge's factual findings of relevance.That is not amenable to a grant of leave pursuant to s 214 of the Employment RelationsAct.Did the Employment Court err in law in finding that no personal grievance arose froma change to and removal from professional duties without prior consultation?[27] The third proposed question of law relates to the decisions in April and May toplace Captain Hines under supervision and later remove his vessel piloting duties.In the Employment Court, Captain Hines said this amounted to a personal grievance,being an unjustified action by Eastland Port to Captain Hines' disadvantage.This failed in the Employment Court, on the basis that there were no identifieddisadvantages to Captain Hines.12 In so finding, the Employment Court acknowledgedthat ideally there would have been at least a discussion prior to the decisions beingmade.[28] On the proposed appeal, Captain Hines seeks to argue thatthe Employment Court erred in law in finding that no personal grievance arose from achange to and removal from professional duties without prior consultation. He pointsto Sefo v Sealord Shellfish Ltd, where the Employment Court stated "it is wellestablished that a suspension of an employee from employment is a disadvantageousaction so far as the employee is concerned".13 As is reasonably evident, however, thatcase concerned suspension. That is not the case here.[29] In a personal grievance claim for unjustifiable action, the onus is initially onthe employee to establish the employment conditions have been affected to theirdisadvantage. The concept of disadvantage caused by unjustified action on anemployer's part is a wide concept and can include many forms of disadvantage.14However, the onus is still ordinarily on the employee to establish that they have beendisadvantaged. On that basis, we see no error in the Employment Court consideringwhether Captain Hines' evidence established that he had been disadvantaged.The conclusion that he had not been — based on Captain Hines' own evidence thatsupervision did not impact on him operationally — was one that was open to the Court.[30] We are satisfied that there is nothing in Captain Hines' third proposed questionof law.12 Employment Court decision, above n 1, at [125].13 Sefo v Sealord Shellfish Ltd [2008] ERNZ 178, (2008) 5 NZELR 407 at [40].14 Alliance Freezing Co (Southland) Ltd v New Zealand Engineering Workers Union [1990] 1 NZLR533 (CA).Did the Employment Court err in law in its determination of the inapplicability of cl 14of sch 1 of the employment agreement?[31] The final proposed question of law relates to the interpretation of anindemnification clause in the employment agreement. In essence, Captain Hinesclaims that, under the employment agreement, Eastland Port agreed to pay his costs ifhe brought a personal grievance claim.[32] As the Supreme Court noted in New Zealand Air Line Pilots' Association v AirNew Zealand, a question of interpretation arising out of an employment agreementmay give rise to a question of law that is appealable under s 214 ofthe Employment Relations Act. However, the error must extend beyond constructionof an individual agreement to the principles and the approach in general that is taken.15[33] Captain Hines says the approach the Court took to interpretation was irregularand unorthodox, but has failed to explain why the approach was irregular andunorthodox.[34] In our view, the Employment Court adopted an orthodox approach wheninterpreting the clause in question. This included consideration of the terms of theclause in question, the purpose behind the clause, and the place of the clause in theagreement as a whole. Of particular importance was the fact that, if Captain Hines'interpretation was to be adopted, then another clause in the contract would be of noeffect. We see no reason to differ from the Employment Court's interpretation of theclause in question.[35] For those reasons, we decline to grant leave on the fourth proposed question oflaw.Result[36] The application for leave to appeal is declined.15 New Zealand Air Line Pilots' Association Inc v Air New Zealand Ltd [2017] NZSC 111, [2017]1 NZLR 948 at [62].[37] The applicant must pay the respondent costs for a standard application on aband A basis and usual disbursements.Solicitors:McBride Davenport James, Wellington for ApplicantBrown & Bates, Napier for Respondent