WARWICK HENDERSON GALLERY LIMITED V WESTON CA CA80/04

WARWICK HENDERSON GALLERY LIMITED V WESTON CA CA80/04 5 July 2004IN THE COURT OF APPEAL OF NEW ZEALAND CA80/04BETWEEN WARWICK HENDERSON GALLERY LIMITED Applicant AND EMMA LOUISE WESTON Respondent Hearing: 21 June 2004 Coram: McGrath J Hammond J O'Regan J Appearances: R Harrison for Appellant C L Kimpton for Respondent Judgment: 5 July 2004JUDGMENT OF THE COURT DELIVERED BY McGRATH J[1] This is an application under s214 of the Employment Relations Act 2000 for leave to appeal against a decision of the Employment Court delivered on 5 April 2004. [2] The background to the matter is that on 9 March 2001 the respondent, Ms Weston, commenced part-time employment with the applicant, Warwick Henderson Gallery Limited. Initially her employment was part-time and she was remunerated, under the terms of an individual employment agreement, at an hourly rate together with commission on her sales. During November 2001 there were discussions between Mr Henderson on behalf of the applicant and the respondent over her becoming a full-time employee which she did on 1 December 2001. The dispute in the Employment Court, as it had earlier been before the EmploymentRelations Authority, concerned whether the parties' discussions had reached the stage of either reaching a new employment agreement, or alternatively concluding a variation of the existing agreement, the terms of which had formed the basis of the respondent's employment from 1 December 2001. The applicant had been successful before the Authority in opposing the respondent's claim that the parties had reached such an agreement or variation. In the Employment Court, however, Judge Shaw upheld the respondent's appeal and found that a new contract had been concluded in the course of the parties' discussions during November 2001, according to the terms of which she had been employed since 1 December 2001. [3] The Judge ordered the applicant to pay the respondent outstanding commission, based on the terms of the new employment agreement, holiday pay and also interest from the time of the respondent's resignation until the date of judgment. [4] The applicant has applied to this Court for leave to appeal, and suggests the following questions are appropriate for determination on appeal to this Court:9.1 Whether an individual employment agreement that is entered into without complying with section 65(1)(a) of the Employment Relations Act 2000 is unenforceable and cannot be sued upon. In particular, is an oral term of employment (that has not been acted on by the parties during the employment) invalid and unenforceable? 9.2 Whether the application of the legal principles relating to the formation of contract and the principles of offer, acceptance and certainty of terms were correctly applied in this case. 9.3 The weight to be given the Employment Relations Authority's decision where the same evidence was before both the Authority and the Employment Court.It is necessary for the applicant to show in each case that there is a question of law which by reason of its general and public importance ought to be submitted to the Court of Appeal for decision: NZ Employers Federation Inc v National Union of Public Employees (NUPE) [2001] 1 ERNZ 212. [5] The first of the three questions concerns s65(1) of the Employment Relations Act which provides:The individual employment agreement of an employee whose work is not covered by a collective agreement that binds his or her employer- (a) must be in writing; and (b) may contain such terms and conditions as the employee and employer think fit.[6] Counsel for the applicant, Mr Harrison, told us that in the Employment Court he had argued on behalf of the appellant that the oral agreement which the Employment Court found had been reached by 1 December 2001 was invalid and unenforceable, in that it was not in writing as required by s65(1)(a). Mr Kimpton for the respondent had argued to the contrary but the question had not been addressed by the Employment Court's judgment. Mr Harrison accepted that the Employment Court had said that the parties wished to have the individual employment agreement put in writing, but said that it had not addressed whether the formation of a written agreement, was a condition of their reaching agreement at all. Mr Harrison points out that, had his argument been upheld by the Employment Court Judge, he would have been successful in the Employment Court. He submits that, as s65 is new in the 2000 Act, and not yet the subject of any judgment of either the Employment Court or this Court, the question of the effect of non-compliance with the statutory provision is one of sufficient importance to warrant a second appeal. Mr Kimpton accepts, on behalf of the respondent, that the issue is one of importance, on which the outcome of the decision in the Employment Court would have turned had the argument been addressed by the Judge. He expressed no opposition to the granting of leave to appeal on this question. [7] In those circumstances, while regretting that this Court will not have the advantage of a decision of the Employment Court on the issue in question, we consider that the requirements for leave to appeal under s214 are made out and that it is appropriate to grant leave to appeal in respect of the first question of law. [8] Mr Harrison enlarged upon the issue raised by the second question by saying that he wished to argue that there had been no evidence to support Judge Shaw's finding that the parties had reached agreement on new terms for the full-time employment of the respondent from 1 December. It is of course the case that if the Court's finding is contrary to all of the evidence before the Employment Court then the finding must be in error of law. When asked how he could say that the findingwas contrary to the evidence Mr Harrison pointed to the notes of the crucial meeting in November 2001, taken by Mr Henderson, the principal of the applicant. He said they were inconsistent with the Court's conclusion that terms of sufficient certainty had been agreed on to found a new contract. Mr Harrison also pointed to the fact that the parties did not thereafter implement immediately commission payments at the higher rate which the Judge found they had agreed on, but only an interim arrangement. This, coupled with the exchange of correspondence, was inconsistent with concluded agreement. [9] Our discussions with Mr Harrison at the hearing of the application have satisfied us that the appellant's argument on the second question is one that goes only to the correctness of the Employment Court Judge's finding, rather than whether there was any evidence before the Court on which she could properly base it. It is apparent from Judge Shaw's judgment that she had before her oral evidence from Ms Weston, which if accepted as it was, coupled with the wages book of the Gallery, provided a sufficient basis for the Judge's finding that new terms for an employment agreement had been agreed on, to apply from 1 December 2001. In those circumstances we are satisfied that there is no question of law raised under this head on which this Court can grant leave to appeal. [10] The third question proposed by Mr Harrison concerns the extent to which the Employment Relations Authority's earlier determination should have been given weight on the appeal to the Employment Court. Here Mr Harrison wishes to argue that the Authority had received the same evidence as the Employment Court, despite an observation by Judge Shaw that a letter sent by the respondent to the applicant on 8 March 2002 was new evidence not before the Authority. The general argument will then be that insufficient weight was placed on the findings of the Authority given the absence of any new evidence in the Employment Court. He went so far as to foreshadow an argument that weight should be given to the Authority's findings upon matters of credibility. [11] The difficulty with this line of argument is that the nature of proceedings before the Authority and the Employment Court under the Act is very different. In the Employment Court on appeal the procedure amounts to a fresh hearing involvingthe taking of evidence on oath which is subject to cross-examination. This is in marked contrast to the less formal inquisitorial proceedings before the Authority. Although this Court in Coutts Cars Ltd v Baguley [2002] 2 NZLR 533 at [4] said that the Employment Court should not "deny itself the benefit of considered views in" a decision of the Authority on appeal, there are obvious limits to the extent to which it should do so when questions of credibility of witnesses who have appeared before the Court arise. The procedure is such that the Court must ultimately make its own findings on the credibility of the witnesses who appear before it Shotover Gorge Jetboats Ltd v Jamieson [1987] 1 NZLR 437, 400. That obviously has happened in this case Furthermore it is apparent from the judgment that Judge Shaw had regard to the findings of the Authority even if, as Mr Harrison submits, she was mistaken on aspects of the commonality of the material before the two jurisdictions. Overall, given the particular nature of the argument that is raised, we are satisfied that the third question is one that would bring no prospect of success in the appeal for the applicant and that it would be inappropriate for this Court to grant leave in respect of it. [12] Leave to appeal is accordingly granted in relation to the first question only. As the respondent did not resist the granting of leave in respect of that question and was successful in opposing leave to appeal in respect of the other two questions we award costs to the respondent of $1000 together with reasonable disbursements, including the travelling and accommodation costs of counsel where appropriate, to be agreed by counsel or failing agreement to be fixed by the Registrar.Solicitors: R Harrison, Auckland, for Applicant Kensington Swan, Auckland, for Respondent