TLNZ AUCKLAND LIMITED V NEENEE AND OTHERS CA CA67/06

TLNZ AUCKLAND LIMITED V NEENEE AND OTHERS CA CA67/06 22 August 2006IN THE COURT OF APPEAL OF NEW ZEALAND CA67/06BETWEEN TLNZ AUCKLAND LIMITED Appellant AND HENRY NEENEE AND OTHERS Respondents Hearing: 7 August 2006 Court: William Young P, Robertson and Arnold JJ Counsel: P M Muir and K N Dines for Appellant S Mitchell for Respondents Judgment: 22 August 2006 at 11amJUDGMENT OF THE COURT A The application for leave to appeal is dismissed. B The respondents are awarded costs of $1,500 and usual disbursements.REASONS OF THE COURT(Given by William Young P) [1] This is an application for leave to appeal against a judgment delivered by Judge Travis in the Employment Court on 16 March 2006. [2] The appellant is a stevedoring company. Due to market conditions, the appellant was not able to provide skilled work for all its permanent skilled employees although it was able to keep them occupied with unskilled work. So the appellant decided to reorganise its staffing arrangements, to employ less permanent and skilled employees and to rely more on casual labour for unskilled work. This provided the basis upon which the appellant dismissed the seven respondents, all permanent and skilled employees, on redundancy grounds. [3] The respondents challenged the resulting dismissals in proceedings which, in the end, came before the Employment Court. That Court reversed an earlier ruling by the Employment Relations Authority in favour of the appellant and held that the dismissals were unjustifiable. [4] In the judgment under appeal Judge Travis held: (a) The circumstances relied on by the appellant to justify the dismissals did not meet the definition of "redundancy" in the relevant collective employment contract (CEC). (b) The appellant's actions associated with the restructuring were a breach of the obligation of good faith imposed by s 4 of the Employment Relations Act 2000. (c) The dismissals were not carried out in a procedurally fair manner. [5] The appellant seeks leave to appeal against the first two of those conclusions.[6] The key provisions in the CEC are as follows: (a) Clause 2(c) and (d) which provide:(c) [I]t will be the Companies' right to introduce whatever new technology or machinery that they may require, provided that statutory safety and health requirements are met. For their part the Companies will give preference of work to its permanent employees, notwithstanding that during work peaks it may be essential to use non-permanent or cross hired labour. (d) It is acknowledged that management has the right to plan, organise, manage and decide finally upon the operations of the employer's undertaking and all activities involved in those operations. This includes the deployment and allocation of labour assigned to any specific task or operation. Except as may be specifically prescribed herein, no provision of this collective employment contract shall be deemed to limit, control or curtail the exercise of those rights held prior to the making of the contract.(b) Clause 7 which provides:The employment of casual labour shall be at the discretion of the employers who are committed to minimising the idle time and maximising the earnings of their permanent workers. Recognising the nature of the waterfront industry with its peaks and troughs in labour demands, it is agreed that a ratio of 25% casual workers of the total workforce and replacement for absentees on any one day can be employed. The use of cross hired labour may be considered by the employers. When required to exceed the 25% casual workers ratio to maintain contract performance, the New Zealand Waterside Workers Union, Auckland Branch is to be advised by fax. The advice given shall confirm that all reasonable cross hire options have been undertaken. Only skilled permanent employees shall be deployed to skill duties.(c) Clause 16(d)(ii) which defines redundancy as:a situation where a person's employment is terminated by the employer, the termination being attributable, wholly or mainly, to the fact that the position filled by that worker is, or will become, superfluous to the needs of the employer.[7] The definition of redundancy is identical to that which appeared in s 184 of the Labour Relations Act 1987 and was discussed in GN Hale & Son Ltd v Wellington Caretakers IUOW [1991] 1 NZLR 151 (CA). [8] Judge Travis held that it was the respondents, and not their positions, which were superfluous to the appellant's requirements; this because the intention of the appellant was simply to replace the respondents with casual labour. He buttressed this conclusion by referring to cls 2(c) and 7 (which he plainly saw as being in the nature of contractual fetters on what would otherwise have been the appellant's management entitlements as to business organisation). [9] On our appreciation, the Judge did not square up to the appellant's argument that its business was inefficiently configured with more permanent and skilled staff than were required for the skilled work which was available. On that basis, there were a number of permanent skilled positions which were truly superfluous to requirements. This conclusion was not negated by the ability of the appellant, if necessary, to deploy skilled permanent staff on unskilled work. Nor do we see cls 2(c) and 7 when read in context (including cl 2(d)) as limiting the entitlement of the appellant to configure its workforce so as to meet the market. Clause 2(c) appears to be addressed to work allocation and we were told from the bar that the dismissal of the seven respondents and their replacement with casual labour did not result in any breach of cl 7. [10] For the appellant, Ms Muir challenged this aspect of the judgment on two bases, which, in reverse order, were that the Judge was wrong to conclude that the respondents' positions were not redundant and that his approach to the interpretation of the CEC was wrong. [11] On the first of these grounds, Ms Muir maintained that the undisputed evidence before the Employment Court was that the positions which the replacement casuals would fill were appreciably different from those held by the respondents and that conclusions to the contrary (along the lines that the work of the respondents was simply being carried out by casuals) were wrong in law on the no evidence ground.We think it unlikely, however, that the Judge was mistaken in his assessment of the evidence in the radical sense suggested by Ms Muir. Rather we see his conclusions as reflecting his evaluation of the evidence in light of his preferred construction of the CEC, under which the respondents (and other permanent employees of the appellant) have a contractual entitlement to available work ahead of casual labour. [12] That brings us to the key question in the case which is whether we ought to grant leave in relation to the Judge's construction of the CEC. As is apparent, we think that the Judge's construction was wrong, but that in itself would not warrant allowing the appeal given s 214 of the Employment Relations Act 2000 (which precludes appeals to this Court on issues of law associated with the construction of employment agreements). If there is no way around s 214 for the appellant, it would not be right for us to grant leave to appeal. [13] We recognise that s 214 does not preclude a challenge where the Employment Court has adopted irregular or unorthodox construction techniques, see for instance Secretary for Education v Yates [2004] 2 ERNZ 313 (CA). But no irregular or unorthodox construction techniques are apparent from the Judge's reasoning. Indeed, we were left with the view that Ms Muir's argument came down to the proposition that the Judge's construction was so wrong that he must have adopted an inappropriate construction technique. But we could not adopt that approach without negating the statutory limitation on our jurisdiction provided by s 214. As it turns out, we are unable to discern any arguable error on the part of Judge Travis other than in the result which he reached. Accordingly we see s 214 as precluding an appeal. [14] The appellant also sought to challenge the finding that it had not acted in good faith. In effect the Judge held that the appellant's actions in dismissing the respondents were not in good faith given an agreement which the appellant had entered into eight months before it initiated the redundancy process. The Judge took the view that the actions of the appellants were in breach of the spirit of that agreement. We are, to say the least, doubtful whether this finding ought to have been made. But it relates to what is a comparatively minor aspect of the case. Onthe basis of the Judge's findings (which are now past the point of challenge, by reason of our refusal to grant leave to appeal on the principal issue) the dismissals of the respondents were in breach of the underlying contractual arrangements between the parties. On that basis, the issues whether the dismissals were also in breach of the spirit of those arrangements and, if so, whether this justified the conclusion that the appellant had not acted in good faith, seem largely beside the point. This aspect of the case is therefore of insufficient significance to the parties to warrant the grant of leave to appeal. [15] Accordingly we dismiss the application for leave to appeal. The respondents are awarded costs of $1,500 and usual disbursements.Solicitors: Simpson Grierson, Auckland for the Appellant Gubbs Solicitors, Auckland for Respondents