Tertiary Education Union v Vice-Chancellor, University of Auckland [2016] NZEmpC 6 (5 February 2016)

Last Updated: 11 February 2016

IN THE EMPLOYMENT COURT AUCKLAND

[2016] NZEmpC 6

_{EMPC 319/2014}

IN THE MATTER OF	a challenge to a determination of the Employment Relations Authority
AND IN THE MATTER	of an application for costs
BETWEEN	TERTIARY EDUCATION UNION Plaintiff
AND	VICE-CHANCELLOR, UNIVERSITY OF AUCKLAND Defendant

Hearing:	By submissions filed on 6 November and 27 November and 7 December 2015
Appearances:	S Mitchell, counsel for plaintiff P Muir and A Sinclair, counsel for defendant
Judgment:	5 February 2016

_{COSTS JUDGMENT OF JUDGE CHRISTINA INGLIS}

Introduction

[1] The Vice-Chancellor, University of Auckland, has applied for costs following my earlier judgment dismissing a challenge by the Tertiary Education Union (the Union) to a substantive determination of the Employment Relations Authority.1 The Vice-Chancellor seeks a costs order of $18,364.17, which is said to represent two- thirds of the actual and reasonable costs incurred in defending the challenge.

_{Disbursements are also sought, together with an order for costs in seeking costs.}

1 _{Tertiary Education Union v Vice Chancellor, University of Auckland [2015] NZEmpC 169.}

TERTIARY EDUCATION UNION v VICE-CHANCELLOR, UNIVERSITY OF AUCKLAND NZEmpC AUCKLAND [2016] NZEmpC 6 [5 February 2016]

[2] The Union submits that costs should lie where they fall, in conformity with what is said to be the usual approach in this Court in cases involving a dispute as to the interpretation and application of collective employment agreements.

Analysis

[3] The starting point is cl 19 of sch 3 of the Employment Relations Act 2000 (the Act). It confers a broad discretion as to costs, providing that:

(1) The court in any proceedings may order any party to pay to any other

party such costs and expenses ... as the court thinks reasonable.

(2) The court may apportion any such costs and expenses between the parties or any of them as it thinks fit, and may at any time vary or alter any such order in such manner as it thinks reasonable.

[4] Regulation 68(1) of the Employment Court Regulations 2000 (the Regulations) also deals with costs. It provides that, in exercising the Court’s discretion under the Act to make orders as to costs, the Court may have regard to “any conduct of the parties tending to increase or contain costs ...”

[5] The discretion to award costs, while broad, is to be exercised judicially and in accordance with principle. The primary principle is that costs follow the event.2 The usual starting point in ordinary cases is 66 per cent of actual and reasonable costs. From that starting point, factors that justify either an increase or decrease are assessed.3

A rule as to costs in cases involving a dispute?

[6] Ms Muir, counsel for the defendant, submits that the general approach to costs which can be drawn from the established trilogy of Court of Appeal cases (namely Victoria University of Wellington v Alton-Lee, Binnie v Pacific Health Ltd and Health Waikato Ltd v Elmsly4) should apply to a determination of costs in the present case. Mr Mitchell, counsel for the plaintiff, rejects that argument having

_{regard to the fact that the challenge involved a dispute. Mr Mitchell referred to what}

2 _{Victoria University of Wellington v Alton-Lee [2001] NZCA 313; [2001] ERNZ 305 (CA) at [48].}

3 _{Binnie v Pacific Health Ltd [2003] NZCA 69; [2002] 1 ERNZ 438 (CA) at [14].}

4 Health Waikato Ltd v Elmsly [2004] NZCA 35; [2004] 1 ERNZ 172 (CA).

was characterised as the “long-standing approach that it is not appropriate to apply the 66% principle” in such cases. Rather, he submitted that “the usual rule”, namely that costs should lie where they fall, should apply. I am not persuaded that there is a well established approach or a rule of the sort contended for.

[7] Mr Mitchell referred to two judgments in support of the proposition that in cases involving a dispute as to the interpretation and application of collective employment agreements, costs will generally lie where they fall: Quality Service Enterprises Ltd v Huriwai5 and Hansells (NZ) Ltd v Ma.6

[8] In Ma, Judge Travis appears to have accepted a submission that a convincing argument would need to be advanced in support of a departure from ordering that costs lie where they fall in disputes over the interpretation of a collective agreement.7 In doing so he referred8 to earlier observations in Huriwai that:9

No doubt the rationale for costs being allowed to lie where they fall in disputes is that both parties need the services of the employment institutions to assist in resolving genuine disputes over agreements to which they are parties and, to this extent, can be contrasted with other more fractious employment relationship problems.

[9] Reference was also made to the obiter comments of Chief Judge Goddard in New Zealand Tramways Union (Wellington Branch) v Wellington City Transport (t/a Stagecoach New Zealand) that:10

In relation to the hearing before the Authority, it seems questionable whether the Authority should ever award costs when asked to assist parties by investigating the meaning of a collective instrument or by determining its proper application and operation.

[10] Ma was a test case. It is apparent that both it and Huriwai raised difficult issues under poorly drafted collective agreements affecting a significant number of

_{employees. There were, as noted in Huriwai, broader benefits in the Court’s}

5 _{Quality Service Enterprises Ltd v Huriwai & Anor WC 16A/05, 23 November 2005 (EmpC).}

6 _{Hansells (NZ) Ltd v Ma AC53A/07, 1 November 2007 (EmpC).}

7 _{At [12]-[13].}

8 _{At [10].}

9 _{Huriwai, above n 5, at [5].}

10 New Zealand Tramways Union (Wellington Branch) v Wellington City Transport (t/a Stagecoach

New Zealand) [2002] NZEmpC 151; [2002] 2 ERNZ 435 (EmpC) at [73].

determination of the parties’ dispute. The present case does not bear the same

characteristics.

[11] In Maritime Union of New Zealand Inc v TLNZ Ltd reservations were expressed as to whether the principles enunciated by the Court of Appeal in relation to costs ought to be strictly applied to cases involving disputes affecting a workforce generally as opposed to a single employee.11 Significant costs awards, it was suggested, may discourage claims by unions and have an undesirable chilling effect.12 I observe that a similar point can likely be made in relation to claims by individual employees and individual, as opposed to collective, employment agreements.

[12] I also observe that although TLNZ involved a dispute, was characterised as complex and important and amounting (at least in some respects) to a test case potentially having a broad impact beyond the parties, costs of $35,000 were ultimately awarded against the union.13 In awarding costs the Court noted that resolution of the dispute involved the application of well established principles to the particular facts and referred to the relative lack of merit of a central plank of the union’s case.14

[13] In my view, the two authorities relied on by Mr Mitchell in support of the submission that a different approach is required in relation to disputes must be viewed with a degree of caution. I do not read the Court of Appeal’s judgments relating to costs in this jurisdiction as being restricted to any particular class of

employment litigation.15

[14] It is well established that a Court may exercise its discretion to award no costs or reduced costs in test cases, or cases involving the broader public interest. I do not regard as pivotal the mere fact that a claim in this jurisdiction involves a

_{dispute (genuine or otherwise) as to the interpretation and/or application of a}

11 _{Maritime Union of New Zealand Inc v TLNZ Ltd [2008] ERNZ 91(EmpC).}

12 _{At [29]-[31].}

13 _{At [37]-[38].}

14 _{At [37].}

15 See Postal Workers Union of Aotearoa v New Zealand Post Ltd [2012] NZEmpC 68 at [6]- [8]; New

Zealand Meat Workers Union v AFFCO New Zealand Ltd [2012] NZEmpC 154 at [21].

collective agreement. The determination of a dispute may, but need not, benefit both parties and may, but need not, provide broader assistance in the public (or private) interest. That means that the type of claim may, but need not, be a relevant factor in assessing a reasonable (if any) contribution to costs. I would not state the position any more strongly than that. I agree with Judge Ford’s observation in New Zealand Meat Workers Union v AFFCO New Zealand Ltd that the general approach is sufficiently flexible to accommodate factors such as the nature of the proceedings

and the interests of the parties and others.16 I approach an assessment of costs in this

case on this basis.

Actual and reasonable costs

[15] I accept that the defendant incurred actual costs of $27,824.50 excluding GST. The actual costs incurred by the defendant are supported by copies of invoices before the Court.

[16] Mr Mitchell submits that it is impossible to determine the reasonableness of the defendant’s costs based on the information before the Court. As he points out, no detailed attendance records reflecting the time spent on various steps and applicable charge-out rates have been provided in support of the application for costs. While such material may be helpful in assessing whether the claimed costs are reasonable, it is not required. As the Court of Appeal observed in Binnie:17

Obviously this kind of information may help, and its absence may invite a degree of caution, but in the end the Court, when considering whether actual costs are reasonable, has to make a judgment, bearing in mind the proper interest of the losing party in the question.

[17] Ms Muir submits that the defendant’s actual costs reasonably included the costs associated with second counsel because of the complexity of the contractual interpretation arguments advanced by the plaintiff. Even accepting that the arguments were complex (which Mr Mitchell does not), they were ones which had already been advanced and responded to by the defendant in the Authority, as

_{counsel note in their costs’ submissions. That being so, it is unlikely that significant}

16 _{AFFCO New Zealand Ltd, above n 15, at [21].}

17 Binnie, above n 3, at [27].

additional costs would reasonably have been incurred in the Court. While I accept that the outcome of the challenge was important to the defendant, I agree with Mr Mitchell’s submission that the appearance of two counsel was not required and I make a downwards adjustment accordingly.

[18] Applying my own knowledge of the case, and the steps reasonably required to respond to the issues raised by the plaintiff ’s challenge, I would assess reasonable costs in the region of $20,000. This leads to a starting point of around $13,200.

Adjustment appropriate?

[19] I have considered whether an adjustment to the starting point is appropriate, including having regard to Mr Mitchell’s alternative submission that if the usual approach applies, a discount is warranted because of the nature of the challenge. The defendant submitted that no adjustment was appropriate because there was no “genuine dispute”. As I understood it, this characterisation was based on the fact that the plaintiff’s interpretation of relevant clauses of the collective agreement had failed to impress the Authority and had subsequently failed on the plaintiff’s de novo challenge. I agree with Mr Mitchell that the mere fact that the same result was achieved in both the Authority and the Court cannot sensibly be the yardstick for assessing whether a dispute is genuine or not. If it were so it would undermine the rationale for de novo challenges provided for in s 179 of the Act.

[20] While, as I have said, there will be instances in which the nature of the proceedings, and the potential impact of the Court’s judgment, may result in a reduced or nil award of costs, I do not propose to do so in the particular circumstances of the present case. It falls well short of being a test case and the issues identified by the plaintiff on its challenge, which were confined and relatively straightforward, were resolved applying well established principles of interpretation and have no broader public or private interest beyond the limited number of affected employees and their employer. The defendant was put to the cost of defending the challenge and it is appropriate in all of the circumstances that the plaintiff make a reasonable contribution to those costs.

[21] I consider that a contribution to costs of $13,200 is just.

[22] I did not understand the plaintiff to be taking any issue with the disbursements sought. Disbursements of $243.90 are ordered in the defendant’s favour.

Costs on costs

[23] The defendant seeks a contribution to costs in applying for costs. This is opposed on the basis that while there were to be discussions between the parties in an attempt to resolve matters, that did not occur and the defendant simply proceeded to file submissions. It is said that an order for costs in these circumstances would be inappropriate.

[24] While the defendant had an opportunity to file a reply, and did so, no substantive response was provided on the points made in respect of the application for an order for costs on costs. I am not satisfied, based on the material before the Court, that the claimed additional costs were reasonably incurred in the particular circumstances and I decline to order them.

Result

[25] The plaintiff is ordered to pay the defendant the sum of $13,200 by way of contribution to the costs incurred in defending its challenge, together with disbursements of $243.90. No order for a contribution to the costs associated with seeking costs is made.

Christina Inglis

Judge

Judgment signed at 3.15 pm on 5 February 2016