SENATE INVESTMENT TRUST THROUGH CROWN LEASE TRUSTEES LIMITED v COOPER [2021] NZCA 466

SENATE INVESTMENT TRUST THROUGH CROWN LEASE TRUSTEES LIMITED v COOPER[2021] NZCA 466 [13 September 2021]IN THE COURT OF APPEAL OF NEW ZEALANDI TE KŌTI PĪRA O AOTEAROACA269/2021[2021] NZCA 466BETWEEN SENATE INVESTMENT TRUSTTHROUGH CROWN LEASE TRUSTEESLIMITEDApplicantAND MATTHEW COOPERRespondentCourt: Cooper and Brown JJCounsel: K F Radich for ApplicantR Morgan, advocate for RespondentJudgment:(On the papers)13 September 2021 at 10.30 amJUDGMENT OF THE COURTA Leave is granted for Mr Morgan to appear as advocate for the respondentfor the purposes of the application for leave to appeal.B The application for leave to appeal is declined.C The applicant must pay to the respondent 50 per cent of the costs for anapplication for leave to appeal and usual disbursements.____________________________________________________________________REASONS OF THE COURT(Given by Brown J)[1] Senate Investment Trust, through its corporate trustee Crown Lease TrusteesLtd (Senate), applies for leave to appeal under s 214(1) of the Employment RelationsAct 2000 (the Act) against a decision of the Employment Court1 upholding a decisionof the Employment Relations Authority (the Authority)2 finding Mr Cooper's claimfor unjustified dismissal was established.[2] Under s 214(3) of the Act, this Court may only grant leave to appeal if thequestion of law raised by the proposed appeal is one which by reason of its general orpublic importance or for any other reason ought to be submitted to this Court fordecision. Senate seeks leave to appeal on two issues concerning the prerequisites forindividual employment agreements which include a trial period of employment.Statutory context[3] Part 6 of the Act addresses individual employees' terms and conditions ofemployment. The individual employment agreement of an employee must be inwriting and may contain such terms and conditions as the employee and the employerthink fit.3[4] One of the objects of pt 6 is to require new employees, whose terms andconditions of employment are not determined with reference to a collective agreement,to be given sufficient information and an adequate opportunity to seek advice beforeentering into an individual employment agreement.4[5] Where it is proposed that the terms and conditions of employment include aprobationary or trial period of employment, s 63A(2) provides:(2) The employer must do at least the following things:(a) provide to the employee a copy of the intended agreementunder discussion; and(b) advise the employee that he or she is entitled to seekindependent advice about the intended agreement; and(c) give the employee a reasonable opportunity to seek thatadvice; and1 Senate Investment Trust Through Crown Lease Trustees Ltd v Cooper [2021] NZEmpC 45.2 Cooper v Senate Investment Trust Through Crown Lease Trustees Ltd [2019] NZERA Wellington614.3 Employment Relations Act 2000, s 65(1).4 Section 60(b).(d) consider any issues that the employee raises and respond tothem.However the failure to comply with that provision does not affect the validity of theemployment agreement between the employee and the employer.5[6] Section 67A(1) provides that an employment agreement containing a trialprovision (for a specified period not exceeding 90 days) may be entered into bya small-to-medium-sized employer and an employee who has not previously beenemployed by that employer. If the employer gives the employee notice of terminationbefore the end of such a trial period, then s 67B(2) provides that the employee maynot bring a personal grievance or legal proceeding in respect of that dismissal.[7] Where s 63A applies an employer has an obligation to retain copies ofindividual employment agreements. Section 64 relevantly provides:(1) When section 63A applies, the employer must retain a signed copy ofthe employee's individual employment agreement or the current termsand conditions of employment that make up the employee's individualterms and conditions of employment (as the case may be).(2) If an employer has provided an employee with an intended agreementunder section 63A(2)(a), the employer must retain a copy of thatintended agreement even if the employee has not—(a) signed the intended agreement; or(b) agreed to any of the terms and conditions specified in theintended agreement.(6) To avoid doubt, an intended agreement must not be treated as theemployee's employment agreement if the employee has not—(a) signed the intended agreement; or(b) agreed to any of the terms and conditions specified in theintended agreement.5 Section 63A(4).Factual background[8] Mr Cooper who lived in Greymouth responded to a TradeMe advertisement fora labourer position in Palmerston North and was interviewed for the role by Mr Sowry(the director of Crown Lease Trustees Ltd) by telephone on 30 May 2018. Mr Cooperrequested a copy of the proposed employment agreement so that he could provide itto Work and Income in order to obtain assistance with moving costs toPalmerston North.[9] Mr Sowry claimed to have sent to Mr Cooper by email on 31 May 2018a signed copy of the employment agreement which contained a 90 day trial periodclause and made reference to s 67A of the Act. It included a form of declaration in thefollowing terms:I, Matt Cooper, declare that I have read and understand the conditions ofemployment detailed above and accept them fully. I have been advised of theright to seek independent advice in relation to this agreement, and have beenallowed reasonable time to do so.Signed by: . Date: ..[10] Mr Cooper said he did not receive the agreement.[11] Mr Cooper started work with Senate on 18 June 2018. Mr Sowry claimed thatwhen Mr Cooper arrived at Senate's premises on that day, he gave Mr Cooper anenvelope containing two copies of the employment agreement sent previously. Hisevidence was that Mr Cooper put the envelope in his car and started work. Hisrecollection was that although at that time Mr Cooper said he would sign it and returnit the following day, Mr Cooper did not do so. Mr Cooper's evidence was that he wasnever given an envelope containing the employment agreements.[12] A short time after the employment commenced there was a parting of the ways.Mr Cooper lodged a claim for unjustified dismissal. Senate sought to invoke the trialperiod provision. The Authority considered that the offer of employment had beenmade and accepted before the agreement was provided and that there was nodiscussion about a trial period before Mr Cooper commenced work.6 The Authorityruled that the dismissal was unjustified and awarded Mr Cooper compensation forhurt, loss of dignity and injury to his feelings in the sum of $4,800 and lost wages forthree months, less an amount Mr Cooper had earned during that period.The Employment Court judgment[13] On appeal Senate contended that, having provided the employment agreementto Mr Cooper who did not indicate that he did not accept its terms, it must be impliedthat he had accepted the terms. Senate further submitted that it had met its obligationsunder s 63A(2)(b) of the Act to advise Mr Cooper that he was entitled to seekindependent advice about the intended agreement. Reliance was placed on thewording of the declaration.[14] The Employment Court found that it was more likely than not that Mr Cooperreceived the proposed employment agreement via email. However it was commonground that he did not sign it, nor that he ever made any statement purporting to acceptit. In those circumstances the Judge did not consider it necessary to determine whetheror not Mr Cooper was given copies of an employment agreement in an envelope onthe day he commenced work.7[15] On the issue whether the required advice was given to Mr Cooper the Judgeheld:[37] I find that there was no advice to Mr Cooper that he was entitled toseek independent advice. A declaration at the end of an employmentagreement, with no accompanying advice beforehand, does not meet theobligation under the Act. Specific advice is required. This argument is furtherundermined by the fact that this declaration was at no point signed byMr Cooper; Senate cannot rely on a warranty it has not been given.(Footnote omitted.)[16] The Judge also rejected Senate's argument that it was entitled to rely upon thetrial period clause, stating:6 Cooper v Senate Investment Trust Through Crown Lease Trustees Ltd, above n 2, at [17]–[19].7 Senate Investment Trust Through Crown Lease Trustees Ltd v Cooper, above n 1, at [15].[43] Accordingly, taking into account the strict approach to compliancewith which s 67A should be regarded, the failure to have Mr Cooper sign theagreement before he started employment is fatal. An agreement is only a draftor a proposed agreement until it is executed. This is consistent withMr Sowry's email message accompanying the draft employment agreementthat stated "I will need the original so I have printed one here for you whenyou arrive" and the wording of the proposed agreement itself which requiredhis signature:I, Matt Cooper, declare that I have read and understand the conditionsof employment detailed above and accept them fully. I have beenadvised of the right to seek independent advice in relation to thisagreement, and have been allowed reasonable time to do so.Signed by: Date: [44] As the drafter of the agreement, it fell on Senate to follow up the issueprior to allowing Mr Cooper to begin work. It was incumbent upon Senate toensure that execution took place before his employment began. It did not doso and, therefore, cannot now rely on the trial period clause contained in it.The application for leave to appeal[17] In its application for leave to appeal Senate submits two proposed questions oflaw:(a) whether s 63A(2)(b) of the Act requires the advice which is given to anemployee recipient of an intended employment agreement about theirentitlement to seek independent advice to be additional to, or separatefrom, wording to that end which is contained in the declarations sectionof that employment agreement; and(b) whether an employment agreement needs to be executed by signaturefor a trial period clause to be valid.Leave to appear[18] Mr Morgan filed materials in this Court on behalf of Mr Cooper. Mr Morganacts as an employment advocate but is not a lawyer. A party may be represented byan advocate in the Authority or the Employment Court without leave.8 There is no8 Employment Relations Act, s 236.equivalent provision for an appeal to this Court.9 Leave to appear must be sought.10Mr Morgan has done so. Given the employment context and interlocutory nature ofthe proceeding, we grant leave for Mr Morgan to appear as advocate for Mr Cooperfor the purposes of this application for leave.DiscussionAdvice of entitlement to seek independent advice[19] Ms Radich for the applicant submits that there are no requirements ins 63A(2)(b) as to a particular form or location of the advice which an employer isrequired to give concerning the entitlement to seek independent advice about theintended agreement. She observes that only "advice" is required. That need not be inwriting.[20] She contends that the Court erred in law at [37] in finding that, because therequisite advice to Mr Cooper was contained in the declaration section of theagreement, Senate did not discharge its obligation under s 63A(2)(b).[21] Mr Morgan for Mr Cooper responds that s 63A relates to intended rather thanconcluded agreements. The declaration in the agreement was framed in the past tense,stating that advice had been received. While acknowledging there is no prescribedform, he submits that advice must in fact be given but there was no evidence it wasgiven to Mr Cooper.[22] In our view the issue in this case concerning the giving of the prescribed adviceis not one of law but of fact: was the requisite advice given to Mr Cooper in relationto the intended agreement. As the Employment Court has previously recognised, thesigning of a warranty to the effect that there has been compliance with s 63A(2)(b) isnot conclusive that advice was in fact given.11 Furthermore in the present case thedeclaration was not actually signed. Hence the warranty was not provided.9 Commissioner of Police v Aarts CA400/2013, 21 August 2015 at [22].10 Lawyers and Conveyancers Act 2006, ss 24 and s7(1)(b)(ii).11 Blackmore v Honick Properties Ltd [2011] NZEmpC 152, (2011) 9 NZELR 306 at [98].[23] The Judge's analysis at [37] is fact specific. It does not incorporate a questionof law the answer to which could, in the circumstances of this case, support a findingthat there had been compliance by Senate with the s 63A(2)(b) obligation.Consequently we do not accept the first proposed question as supporting leave toappeal.Signature of an employment agreement[24] Ms Radich submits, correctly, that the Act does not require an employmentagreement to be signed by the employee in order for a trial period clause to beapplicable. The requirement is only that the agreement be in written form. Shecontends the Court erred in law at [43]–[44] in finding that a failure to have Mr Coopersign the agreement which had been sent by email was fatal to Senate's reliance on thetrial period clause.[25] Read in isolation the third sentence at [43] of the judgment could be construedas having the meaning contended by Senate, namely that an employment agreementcontaining a trial period provision is not made and enforceable until it has been signed.However it is apparent from the totality of the Judge's reasons that that was not theratio of her decision.[26] The Judge had earlier cited a passage from Smith v Stokes Valley Pharmacy(2009) Ltd12 concerning agreements which contemplated execution by signature.13She noted that in another earlier case, which she viewed as analogous on a number oflevels,14 the fact that the proposed employment agreement sent to the employeeprovided a space for both parties to sign indicated that the agreement contemplatedexecution by signature.15 In our view what the Judge was intending to convey wasthat in light of the email and the terms of the agreement it was Senate's intention thatthe agreement was to be executed by signature. As the Judge explained at [44], thatnot having occurred, Senate could not rely on the trial period clause.12 Smith v Stokes Valley Pharmacy (2009) Ltd [2010] NZEmpC 111, (2010) 7 NZELR 444 at [100]–[101].13 Senate Investment Trust Through Crown Lease Trustees Ltd v Cooper, above n 1, at [38].14 Smith Crane and Construction Ltd v Hall [2015] NZEmpC 82.15 Senate Investment Trust Through Crown Lease Trustees Ltd v Cooper, above n 1, at [42].[27] It is apparent from s 64(6) of the Act that a draft written employment agreementcontaining a trial period clause can be agreed to otherwise than by signature by theemployee. But the Judge concluded that did not occur on the facts. In our view noquestion of law arises in the terms proposed by Senate.Result[28] Leave is granted for Mr Morgan to appear as advocate for the Mr Cooper forthe purposes of the application for leave to appeal[29] The application for leave to appeal is declined.[30] The applicant must pay to the respondent 50 per cent of the costs for anapplication for leave to appeal and usual disbursements.Solicitors:Innes Dean, Palmerston North for Applicant