|
|
Home
| Databases
| WorldLII
| Search
| Feedback
Court of Appeal of New Zealand |
Last Updated: 13 February 2014
IN THE COURT OF APPEAL OF NEW ZEALAND CA 152/97
BETWEEN RONGOTAI COLLEGE BOARD OF TRUSTEES
Appellant
AND STEPHEN JOHN CASTLE Respondent
Coram: Richardson P Henry J Thomas J
Hearing: 27 May 1998
Counsel: J G Miles QC, P C Chemis and S S Cook for Appellant
B W F Brown QC and B A Buckett for Respondent
Judgment: 29 June 1998
JUDGMENT OF THE COURT DELIVERED BY HENRY
J
The respondent, Mr Castle, was employed as a teacher at Rongotai College. His
speciality was music, and he held a head of department
position in that
discipline although he also had teaching responsibilities in other subjects.
After some 14 years at the College
his employment was terminated in 1992. In
March 1996 he instituted proceedings in the Employment Court at Wellington
alleging breaches
of his contract of employment and claiming common law
damages. The personal grievance procedure under the Employment
Contracts
Act 1991 was not available by reason of the lapse of time. Following a three
day hearing, Mr Castle was awarded $36,000
for loss of remuneration, general
damages of $22,500, and $6,500 for humiliation, loss of dignity, and injury to
feelings. The
appeal is not concerned with the last mentioned award although
it is subject to an application for leave to cross-appeal.
Background
Each year secondary school rolls are examined by the Ministry of Education for the purpose of advising what will be each school’s guaranteed minimum staffing formula for the following year. If there is a falling roll, that will be reflected in a reduction in funding from the Ministry corresponding with the reduction in staff numbers indicated by the formula. In 1992 the examination in respect of Rongotai College resulted in a determination that effectively six teacher positions needed to be made redundant. When redundancies are likely, a process known as the curriculum and pastoral needs analysis (CAPNA) must be initiated. This process is referred to in Mr Castle’s contract of employment, and was carried out in August or September
1992. Mr Castle was advised of his redundancy on 1 October 1992. Pursuant
to the terms of his contract Mr Castle was then given
13 weeks notice
(effectively to the end of the 1992 school year), followed by a further 12
months supernumerary employment. He was
also given some part time
relieving work in the following year, but on obtaining other employment
finally left in September
1994.
The basis of the wrongful dismissal claim as upheld by the Employment Court
was that there had been a failure to consult Mr Castle
in the process leading to
the disestablishment of his position and his consequent redundancy. Mr
Castle’s employment contract
was an individual contract based on
an expired secondary teachers collective contract. The relevant provisions
are cl 2.2.5(a),
which gives the employer a right of termination without cause
on giving two months notice, and cl 2.2.7. Clause 2.2.7 provides:
Redeployment - (a) Where it is proposed to reduce the number of teaching staff or alter the status of positions the position(s) to be disestablished or altered in status shall be determined as follows:
(i) A detailed analysis of the school’s current curriculum and pastoral needs and of the projected needs for the following year will be carried out after consultation with the teaching staff of the school at least 13 school weeks before any proposed changes are to take effect. The completed analysis will be made available to the staff and the union.
(ii) The board after consultation with a nominee of the National
Executive of the Association will identify the basic
scale
teaching positions to be disestablished in accordance with the following guidelines in the order stated:
b) the tenure of the position(s) being considered;
...
(c) A judgment of whether the teacher is competent to teach is not one of the criteria for selection and should not be a consideration for disestablishment. Matters of competence shall be dealt with in terms of clause 2.3 of this award.
(d) Where a teacher holds a position which has been or will be disestablished or reduced in status the following provisions will apply: (i) the employer will assist the teacher to find another suitable
teaching position. If no such position can be found by the teacher applying for other positions the teacher is employed as a supernumerary within the school at the same salary.
(ii) the supernumerary teacher will be encouraged to apply for suitable advertised vacancies at other schools. Actual and reasonable expenses for attendance at such interviews will be refunded centrally where prior approval is given.
(iii) if at any time a suitable vacancy for a permanent position of equal or lower status than that held by the supernumerary teacher occurs at the school, for which the supernumerary teacher is suitable, clause 2.2.6(b) or (c) of this award as appropriate shall apply.
(iv) in the case of the closure, amalgamation or translation of a school the supernumerary status shall begin on the date of the opening of the new school. In other cases the teacher’s supernumerary status will begin when the disestablishment of the position takes effect which will be the start of the next school year except in exceptional circumstances and shall last for a period of 12 months or until a new position is taken up, whichever is the earlier. At the end of the 12 months the supernumerary employment is terminated.
...
(e) A teacher aggrieved by an action taken by the employer under these
provisions must be advised of their right to pursue a
personal grievance in
terms of the procedures contained in Part 10 of this
award.
It is common ground that the procedures expressed in cl 2.2.7 were carried
out, and that they led to six teaching positions being
disestablished. The
second of those, as determined in order of priority, was that held by Mr
Castle.
The problem arose from the fact that Mr Castle was not a member of the New
Zealand Post Primary Teachers Association. It was therefore
contended that
although the consultation process laid down in cl 2.2.7(a)(ii) involving the
nominee of the PPTA national executive
had been followed, as Mr Castle was not a
member he was entitled to be consulted personally or through his own nominee on
those specified
matters. This contention was upheld by Chief Judge Goddard in
the Employment Court, who consequently found that there had been a
breach by the
employer of Mr Castle’s contract of employment in this respect. There
is no appeal against that finding, and
this Court must therefore proceed on the
basis that the dismissal was wrongful because Mr Castle had not been afforded
the opportunity
to be consulted before the disestablishment decision was taken.
Although classed as wrongful dismissal, the true nature of the resulting
claims
must be kept in mind. The cause of action is breach of contract. The
remedy, by way of damages, is the amount
required to put the employee
in the same position as he or she would have been had the contract been
performed (Murgatroyd v Henry Berry Ltd (CA191/90, 12 August
1992). It was therefore necessary for Mr Castle to establish, on the balance
of probabilities, the losses
which flowed from that particular
breach.
Loss of Income
The Chief Judge assessed the loss of remuneration from the date of
termination of employment (September 1994) down to the date of
hearing. In
making his assessment of $36,000, he deducted the amount of unemployment benefit
received by Mr Castle over that
period, and made a further deduction for
probable loss of ability to maintain full employment over that time attributable
to health
reasons. For the respondent Mr Miles submitted that as a matter of
law damages for the theoretical loss of income over this period
of time were not
recoverable.
The basis of this award is not readily apparent from the judgment. The
rationale would appear to be that because a condition precedent
to the right to
terminate had not been fulfilled, the resulting damage was the arithmetical
continuing loss of income which Mr Castle
was contractually entitled to enjoy.
There are major
difficulties with that approach. First, there was no continuing
entitlement to employment - it was subject to the two months notice
provision
entitling either the employer or employee to terminate, and also to the
redeployment provisions. Secondly, and
importantly, the approach fails to
identify the particular breach and the loss which flowed from it. The only
breach was in terminating
the employment without having undertaken the process
of consultation - the requirements in the event of redeployment for continued
employment through to the end of 1992 and for the following supernumerary year
were met. The enquiry therefore was to ascertain
the loss, if any, which
resulted from that breach. To succeed on this head of claim to the extent of
the award, it was necessary
for Mr Castle to establish on the balance of
probabilities that had he been consulted his position would
not
have been disestablished and his employment would have continued through
to trial.
There is no such finding, and it is apparent the Chief Judge did not directly
address this essential issue. The section of the judgment
which is concerned
with this aspect of the claim proceeds on the basis that because a condition
precedent to the right to give notice
was not fulfilled, entitlement to loss of
future income followed as a matter of course. The Chief Judge went on to
assess that
loss down to the trial date, but made no reference to or any
analysis of the evidence as to causation of that loss. Mr Brown was
forced to
rely on a later passage of the judgment, where it was stated:
The plaintiff was entitled to an opportunity to be consulted in accordance
with the contract and was deprived of that opportunity
and probably his position
as a result. I think that the figure of $16,000 is a proper reflection of the
value of the chance that
the plaintiff had of retaining his position, if given
the opportunity. This is especially so as music is a core subject required
by
the regulations to be taught in all schools. There was some suggestion that
this regulatory requirement is honoured more in
the breach than the observance
but that is plainly, on the evidence before me, without the concurrence of the
MOE and is, in any
event, a state of affairs to which the Court cannot lend its
support, even if it exists de facto.
We do not think that can assist. In that passage the Chief Judge was
referring to an item of general damages, which will need to
be considered
separately, relating to the non-pecuniary effect on Mr Castle of having lost his
employment (a thing of value
in itself), or his position in society, as it was termed. We are quite
unable to read the reference to Mr Castle being deprived
of “probably his
position as a result” as a finding that had there been consultation,
disestablishment of the position
would not have occurred. The very next
sentence of the passage in question quantifies the value of the chance of
retaining the
position, which is inconsistent with retention being established
as more probable than not.
The absence of this necessary finding is not surprising, because there is a lack of evidence which could support it. It is clear that a reduction of six in the number of staff had to be implemented. Mr Castle’s position was found to be the second in terms of priority for disestablishment. Three of those present at the meeting of
1 October when the decisions were taken gave evidence. Mr Jarratt,
principal of the College, said he did not believe that Mr Castle
would have been
able to add anything that would have changed the decision - “it was based
purely on numbers”. He was
not cross-examined on the point. Mr
Ferrel did not address the issue either in evidence in chief on
cross-examination, neither
did the PPTA redeployment specialist. Mr Brown was
unable to point to any evidence of substance from which it could properly be
inferred
that had consultation taken place, a different result would have
eventuated. He placed reliance on the fact that music was a
core subject,
and therefore required to be offered in the third, fourth and fifth forms.
There was however no attempt to explore
this in any detail in the evidence in
respect of the possible consequences of consultation, and that factor cannot now
be elevated
to a level beyond that attributed it by the Chief Judge in the
passage quoted. The reality of the situation was that the position
was one of
those which in all probability was going to be made redundant.
We are therefore satisfied that the Chief Judge erred in law in making an
award for loss of income which was based on assumed employment
down to the date
of trial.
Accepting for present purposes that the Board had no right to terminate the
employment because the procedural requirements of the
contract were not met, the
resulting loss of income as damages must still be measured by taking into
account
factors relevant to the likelihood of continued employment if there had been
no breach. Here, the following factors required evaluation,
to be assessed as at
the date of breach:
(a) the strong likelihood that Mr Castle’s participation would have made no difference;
(b) his position was subject to a two month’s notice provision;
(c) his position was subject to the possibility of a later CAPNA process and consequent disestablishment;
(d) the uncertainties inherent in forecasting the future;
(e) Mr Castle in fact remained in employment by the Board through to
1994.
In essence, what Mr Castle lost was the chance, by exercising his right of
consultation, of persuading the Board that his position
should not be
disestablished. This was the loss which flowed from the breach, and should have
been the basis for assessing loss of
income.
It is clear that the Chief Judge did not make his assessment on this basis.
In the interests of finality, it is appropriate for
this Court now to undertake
that task. Taking into account all relevant circumstances, and in particular
giving due weight to the
likelihood that consultation would not have altered the
decision, only a modest award could be justified, which we fix at
$7,500.
General damages
This award came under two heads. The first was a sum of $16,000, expressed
by the Chief Judge in the passage already quoted and
now repeated so far as
relevant to this issue:
The plaintiff was entitled to an opportunity to be consulted in accordance
with the contract and was deprived of that opportunity
and probably his position
as a result. I think that the figure of $16,000 is a proper reflection of the
value of the chance that
the plaintiff had of retaining his position, if given
the opportunity.
We think it is clear that when looked at in context, the award was intended
to represent a measure of compensation for the fact of
having lost his
employment and his particular position, but in terms of social and self esteem
considerations. The passage quoted
preceded a reference to the earlier case of
De Soysa v Porirua College Board of Governors [1996] 1 ERNZ 538,
where an award of $24,000 had been made on a claim following redeployment of a
teacher, when under his contract
he was entitled to absolute protection from
redeployment. The Chief Judge observed that Mr Castle had sustained comparable
losses
to those of Mr De Soysa, and having draw a distinction between the two
cases assessed the sum of $16,000. In De Soysa the following
factors supporting the award were identified:
The loss of the employment, a thing of value in itself: Horsburgh v NZ Meat Processors IUOW (1988) ERNZ Sel Cas 193; [1988] 1
NZLR 698;
The pecuniary cost of job search and of successive relocations to relieving positions and the set-back in the progress of his career; The grave blow to the plaintiff’s feelings of self-worth and self-confidence;
The plaintiff’s particular vulnerability as a newcomer to the teaching profession;
The plaintiff’s social position as a member of an ethnic minority (State Sector Act 1988 s77A (2)(f)) and the humiliating impact of the dismissal, especially on the plaintiff’s standing in that ethnic minority;
The distress caused to the plaintiff by consciousness of the anxiety suffered by his family;
The conduct of all parties; and
The plaintiff’s feelings of frustration in his quest for justice over a
long period of time.
No such factors were identified in the present case. It would appear
however that the award was intended to compensate Mr Castle
in the same sort of
way, because the only distinction drawn with De Soysa was the fact
that one-third of that award was for the role played there by the union as a
contracting party. It seems that what
was valued in Mr Castle’s case was
the non-pecuniary consequences of the loss of his position. In truth this is
and should
have been no more than part of the loss of dignity aspect of the
separate claim for humiliation, loss of dignity and injury to
feelings,
which was the subject of a separate assessment. There can be no doubling
up. We can therefore see no room for allowing this award
as a separate head of
damages.
A further problem requires consideration. The reference to the
loss by Mr Castle of a chance to retain his position is
difficult to follow in
this context. The calculation of $16,000 is linked directly to De
Soysa, being two-thirds of that award. There is no suggestion of any
reduction or allowance for the “chance” element. The
employee’s entitlement to absolute protection from redeployment in that
case was not seen as a relevant distinction. It
therefore seems inescapable
that the award was for the loss of position, which is consistent with the Chief
Judge’s general
approach, evident from reading the judgment as a whole,
namely that because the procedure was flawed the dismissal was wrongful and
damages were to be assessed on the basis that it should not have occurred. In
other words on this aspect of the case as a result
of not having the chance or
opportunity to retain his position, Mr Castle in fact lost it. If this is a
correct analysis, then
the same problem which affects the loss of income claim
again arises. The loss of position, and any resulting adverse effects
(non-pecuniary) would only be compensable if caused by the breach. But as
already discussed, there is no such causative link.
If, as discussed in
relation to the loss of income award it is assumed that the Board had no right
to terminate and this particular
consequence of disestablishment requires to be
valued, then the same discounting factors must be taken into account. The
result
must be a necessarily small impact on any overall entitlement under the
humiliation, loss of dignity and injury to feelings head
of damages. It will
require consideration in the cross-appeal.
The second element of the award was a sum of $6,500, said to be “an
amount equivalent to the expense of professional fees of
$6,500 incurred in
connection with the sale occasioned by the defendant’s breach of
contract.” The expenses referred
to relate to the sale by Mr Castle of
his home at the end of 1993 because of what he saw as the bleak prospects of
secure future
employment. The award is also described in the judgment as a
consequential loss. Clearly it cannot be general damages in the
true sense.
As an item of damage the issue of remoteness requires consideration.
We do not see how this loss can come within accepted principles. The
failure to consult did not result in or cause the dismissal,
therefore it could
not have resulted in or caused the sale of the home. Furthermore, there can be
no basis for holding that it
was in the reasonable contemplation of the parties
that following redeployment Mr Castle would be required to sell his home.
The provision in the contract of employment for meeting expenses when an
employee is required to transfer has no relevance and cannot
assist to overcome
the “within contemplation” test. It concerns entirely different
circumstances. There is also
a possible further problem in that expenses of
sale are an integral part of selling realty, and will be incurred whenever and
for
whatever reason property is sold. They may not constitute a loss, but
rather a factor to be taken into account in ascertaining
the net value of the
asset to the owner.
Cross-appeal
Mr Brown submitted that if the Court was minded to allow the appeal, the
award of $6500 for humiliation, loss of dignity and injury
to feelings should be
increased because the Chief Judge expressed himself as applying moderation and
being influenced by the other
losses for which Mr Castle was being compensated.
First, as a matter of principle it cannot be right to reduce an entitlement to
a
particular head of damage because there has been recovery under an entirely
separate head not involving any element of double recovery.
The award must
stand on its own. Secondly, we are satisfied that the amount of the award is,
if anything, generous. Again,
the remedy must be related to the breach.
The breach was a failure to consult. As the Chief Judge found, the major
emotional
trauma was the sense of rejection in being redeployed. The
emotional consequences arising from the incorrect process were
not significant.
It was not a situation where Mr Castle had been kept in ignorance of what was
happening, or that his position was
under review and the subject of possible
disestablishment. He was fully aware of those matters. The procedural
defect was simply
the lack of personal consultation with him, and a resulting
lack of his direct involvement in the final stages of the process.
The level
of the award cannot be said to be inadequate, even allowing for the chance that
consultation may have avoided disestablishment
and its non-pecuniary
consequences.
Conclusion
The appeal is therefore allowed, the award of $36,000 for loss of income is
quashed and substituted by the sum of $7,500. We also
quash the awards of
$16,000 for the loss of the chance of retaining employment, and of $6,500 for
expenses associated with the sale
of the home. The cross-appeal is
dismissed.
If any question of costs arises, counsel may submit
memoranda.
Solicitors
Buddle Findlay, Wellington, for Appellant
Ramona Rasch & David Leong, Wellington, for Respondent
NZLII:
Copyright Policy
|
Disclaimers
|
Privacy Policy
|
Feedback
URL: http://www.nzlii.org/nz/cases/NZCA/1998/242.html