NEW ZEALAND FIRE SERVICE COMMISSION v JEFFREY REGINALD MCCULLOCH & ORS [1999] NZCA 223 (12 October 1999)

IN THE court of appeal of new zealand

ca272/98 Ca309/98

	between	new zealand fire service commission
		Appellant

	and	jeffrey reginald mCculloch
		First Respondent

	AND	david christopher jowett
		Second Respondent

ca36/99

	between	new zealand fire service commission
		Appellant

	and	lance trevor mitchell
		First Respondent

	AND	david christopher jowett
		Second Respondent

Hearing and Judgments:	11 and 12 October 1999
Coram:	Elias CJ Thomas J Keith J Blanchard J Tipping J
Appearances:	J F Timmins, D R Broadmore and P A McBride for Appellant S M Moran and P Cranney for Respondents
Reasons for Judgments:	22 October 1999

reasons for judgments of the court delivered by blanchard j

[1] The New Zealand Fire Service Commission (the Commission) has brought to this Court three appeals against decisions of Chief Judge Goddard in the Employment Court.The first appeal relates to a judgment of 15 October 1998 and is against the granting of a permanent injunction in the following form:

1. That a permanent injunction issue restraining the defendant, acting pursuant to the scheme or plan of action that it adopted on or about 26 June 1998, from:

(i) disestablishing the totality of positions occupied by staff of the defendant represent by the plaintiffs; and

(ii) creating the positions, comparable to existing positions, of fire officer and senior fire officer, without first offering such positions to the staff of the defendant represented by the plaintiffs.

But nothing in the foregoing order shall be construed to prevent the defendant from disestablishing identified positions surplus to requirements and selecting by a fair process the persons to be made redundant.

We will call this the "McCulloch appeal".

[2] The second appeal is against a judgment of 23 November 1998 in which the Chief Judge ordered the Commission to pay Mr McCulloch and Mr Jowett costs of $150,000 and certain disbursements in relation to the McCulloch proceeding. This will be called the "costs appeal".

[3] Thirdly, there is an appeal against an interlocutory judgment of the Chief Judge on 5 February 1999 in a separate proceeding.The Commission was there restrained from implementing a further plan known as the "November [1998] plan," from dismissing any employees for redundancy in pursuance of it, and from making any changes to the establishment in any brigade or the minimum shift manning of any brigade, other than certain changes and arrangements particularised in the Court's order.We will call this the "Mitchell appeal".

[4] Because during the course of the hearing in this Court the parties were able to agree upon certain terms, to be referred to shortly, on the basis of which the McCulloch appeal could be dismissed and Mr McCulloch and Mr Jowett then withdrew their cross-appeal against one aspect of the judgment of 15 October, it is unnecessary to do more than give a broad outline of what the McCulloch appeal and the cross-appeal were all about.

[5] Mr McCulloch is a firefighter employed by the Commission and Mr Jowett is also employed by it as a member of a community safety team (CST).The Commission is a statutory body constituted under the Fire Service Act 1975 and under that Act has general control of the New Zealand Fire Service.

[6] The proceeding giving rise to the McCulloch appeal was brought in a representative capacity through the auspices of the New Zealand Professional Firefighters Union (the Union) and sought to prevent the Commission from implementing a proposal to disestablish existing paid firefighter and CST positions and invite the affected employees to apply for new positions in the Fire Service upon different terms and conditions from those constituting their existing contracts of employment.In general terms, the plaintiffs alleged breach of contract in failing to consult the Union prior to commencing the process and brought personal grievance claims for unjustified dismissal.They also alleged an unlawful lockout.Their remaining claims do not need to be mentioned but the Chief Judge noted that there were 10 separate causes of action, including much that was duplicated.He said that what they came down to was "an assertion that if the Commission needs change it must negotiate it, but if its obligation is limited to consulting before taking unilateral action then it has not adequately engaged in any effective or genuine consultation." However, the Chief Judge said, the real and primary controversy between the parties was whether what the Commission intended to do was a genuine reorganisation or restructuring resulting in the work of firefighters disappearing and the creation of new positions, or an attempt to vary contracts unilaterally.

[7] Having found that the Commission was not entitled to disestablish the positions and call for new job applications as it had done, the Chief Judge then briefly considered the consultation issue which gave rise to the cross-appeal and is the background to the question arising in the Mitchell appeal.He said that he had strong reservations about the adequacy of the general consultation process.He set out the contractual obligations to consult contained in the contracts, which was the only consultation relied on in the statement of claim, describing those obligations as "both specific and limited":

(a) D1 contract (firefighters):

1.4.10 "Establishment" shall mean the total number of workers employed in a brigade.Should there by [sic] any need to review the establishment in any brigade the Chief Executive/National Commander shall consult with the Union prior to any changes taking place.In determining such establishment the Chief Executive/National Commander shall have regard to the operational needs of the district and the health and safety of the members of the brigade concerned. Such consultation shall be conducted in a manner which allows the Union to consult the members of the brigade(s) concerned.

...

1.4.16 "Minimum Shift Manning (MSM)" means the minimum number (as determined by the Chief Executive/National Commander) of Firefighters, Officers, and Controlroom workers who shall be on duty twenty four hours every day, seven days of the week through each year.In determining such minimum shift manning the Chief Executive/National Commander shall have regard to the operational needs of the District and the health and safety of the members of the Brigade concerned.Should there be any need to review the minimum shift manning of any Brigade, then the Chief Executive/National Commander shall consult with the Union prior to any changes taking place.Such consultation shall be conducted in a manner which allows the Union to consult the members of the brigade(s) concerned.

(b) CST contract:

22.1 Should the employer determine that the number of employees employed at a particular location is in excess of requirements, the employees concerned are to be consulted about the options available for redeployment of the excess numbers of employees.Redeployment may be by way of relocation of personnel to other locations, or retraining employees to take up other roles within the Fire Service.Where the employer decides that redeployment is an appropriate course of action, the costs associated with the relocation or retraining are to be met by the employer.

[8] The Judge observed that the specific consultation with CST employees lay in the future."The excess number at a particular location having been determined, the employees concerned are to be consulted about available options."In relation to the firefighters' (D1) contract, the Judge found that the Union's stance in declining in May or June 1998 a presentation by the National Commander of the fire service was unwarranted.The Commander's offer to the Union "did not preclude a continuing consultation that would enable the Union to consult its membership."The Judge held that the Union's refusal of this and other facilities for the consultation was fatal to Mr McCulloch's cause of action based on a complaint that the Union was not consulted.Mr McCulloch's claim on that basis therefore failed.

Disposition of the appeals

[9] It emerged during the hearing in this Court, which was of course confined to issues of law (s135 Employment Contracts Act 1991), that the Commission's argument largely turned upon whether the existing employment contracts constituted a fetter on its ability to restructure the fire service by placing a primary emphasis on fire prevention rather than putting out fires.The Commission says that it has a statutory obligation to concern itself primarily with fire prevention.

[10] It became apparent that there may have been a misunderstanding about the firefighters' attitude to undertaking fire prevention work as part of their "routine work", as defined in the employment contract.Miss Moran, appearing for the respondents, was able to clarify the firefighters' position and it then appeared to the Court that the contract might not be such an impediment to a greater emphasis on fire prevention as the Commission had thought it to be. Counsel discussed the question and on the second morning of the hearing the matter was able to be resolved by agreement.Upon the completion of the hearing of the other appeals the Court announced the result of the McCulloch appeal.By consent, and on the basis of a written acknowledgement tendered by Miss Moran, the following declarations were made:

[i] The definition of "routine work" at cl.3.5.1 of the New Zealand Fire Service Uniformed Employees and Mechanics Collective Employment Contract dated 24 December 1992 includes and has always included fire prevention work.

[ii] The Chief Fire Officer may require and has always been able to require, firefighters and officers, to carry out fire prevention work both within and outside of routine hours.

[iii] If such work is required to be carried outside routine hours, then the allowance provided for under cl.3.6.12 applies.

[11] By consent also, the appeal was dismissed and the cross-appeal, having been withdrawn, was also dismissed.

[12] The Court also announced that the costs appeal and the Mitchell appeal were dismissed and that reasons would be given later.Those reasons now follow.

The costs appeal

[13] An appeal against an award of costs is always an appeal against the exercise of a discretion by a Judge and carries with it the consequent difficulty for the appellant that it is necessary to show that the Judge erred in principle, took into account an irrelevant consideration, overlooked a relevant consideration or arrived at a result which was clearly wrong.The discretion as to costs in the Employment Court is expressed in s108 of the Employment Contracts Act:

108. Power to award costs-

The Court in any proceedings may order any party to pay to any other party such costs and expenses (including expenses of witnesses) as it thinks reasonable, and may apportion any such costs 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.

[14] It is not enough that the members of this Court might themselves have fixed costs upon a different basis.The appellant has to show that the Judge has erred in law.

[15] The Chief Judge's costs judgment runs to some nine pages in the course of which he carefully worked his way through a number of considerations.The plaintiffs had incurred costs of $229,500 representing 1020 hours work and sought an order for a contribution equivalent to two-thirds of those costs, i.e. $153,000.The Judge arrived at his award of $150,000 by making a deduction of $3,000 in respect of the evidence of two witnesses whose evidence "did not amount to much".Mr Broadmore criticised the smallness of the deduction but concentrated on attacking the Chief Judge's general approach which was to determine the question of costs globally or, as the Judge said, "as a matter of overall impression rather than by mechanically going through the causes of action and working out which side won on how many."Central to Mr Broadmore's argument was the contention that no reasonable Judge could have made such an award globally and that overall the figure was excessive.He pointed out, as he had done before the Judge, that a substantial portion of the argument had related to the question of consultation on which the respondents had not succeeded.

[16] We see no error of law in approaching a question of costs on a global basis and agree with the Judge that it is largely a matter of overall impression.Factors which the Judge took into account were the plaintiffs' overall success; that they had made out a strong case; that the Commission had acted, as the Judge found, unlawfully, but also contrary to the firm advice of its Chief Executive; the fact that the case had come on for hearing under conditions of urgency and in circumstances where the plaintiffs had no ability to secure justice otherwise than by incurring substantial costs; and the fact that those actions of the Commission which were found not to amount to a breach of contract were "all part of the picture."

[17] The Judge clearly disapproved of the position adopted by the Commission, as appears from the following passage:

When the defendant has acted, as I found, unlawfully in breach of employment contracts by which it was bound and in breach of the law imposing constraints upon the right of an employer to lockout its employees, and deliberately, the defendant can scarcely be heard to complain that the plaintiffs spent too much money asserting their rights and defending their position.This is a case in which the defendant made a calculation that it could probably get away with acting unilaterally but at the price of expensive litigation.It does not seem right that it should now insist that the Court scrutinise closely, for its benefit, the costs that the plaintiff incurred.

[18] Mr Broadmore said that the Judge's attitude was "punitive", but the Judge had the matter before him for some 16 hearing days which gave him a more than ample opportunity of assessing what had occurred, and on our acquaintance with the facts of the case we are not prepared to say that he was wrong in his assessment of the Commission's conduct.

[19] All in all, the Judge arrived at his costs award in a manner which cannot properly be criticised as erring in principle.He took into account, and confined himself to, relevant considerations and the figure he arrived at, though it may possibly have been generous to the plaintiffs, cannot be said to have been beyond the range open to him.The costs appeal was accordingly dismissed.

The Mitchell appeal

[20] Following the making of the permanent injunction pursuant to the judgment of 15 October 1998, the Commission considered that it would still be possible to progress its restructuring in part without transgressing the terms of the injunction.It took the view that the judgment entitled it to implement brigade establishment reductions as it had previously proposed, so long as it did not alter the terms and conditions of any employee's employment.It further took the view that it was entitled to reduce crewing on fire engines from four to three but in this respect accepted that its proposal was still subject to a consultation requirement.In November 1998 it announced two stages, one to be implemented starting from 19 January with the second stage being deferred in the meantime.Under stage 1 there was to be a reduction of 24 hour cover to daytime cover.Stage 2 was to reduce the minimum crew sizes on appliances.The Commission offered consultation on stage 2 but not on stage 1.

[21] It was not until 21 January 1999 that Mr Mitchell and Mr Jowett commenced a new proceeding seeking an injunction to stop the Commission going ahead with what became known as the "November plan".By that time implementation of stage 1 had begun.The plaintiffs sought an interim injunction.They alleged that the Commission had a contractual obligation to consult the Union before making the changes and had failed to do so.

[22] In a decision delivered on 5 February 1999 the Chief Judge determined that the plaintiffs had made out a threshold case that there had not been proper consultation in the circumstances that existed after the October judgment.On the material before the Court he said that it was "quite clearly arguable" that the November plan was a new review falling within the contractual requirements for consultation:

The plaintiffs are arguably entitled to say that the consultation in May and June was about new employment arrangements and that what is required now is a consultation about establishment changes within the regime of existing arrangements.The health and safety of the employees, their welfare, now becomes a mandatory consideration when previously it may not even necessarily have been a relevant one.

It is not open to the Court to assume that any consultation will be useless. Rather, it seems abundantly plain that the plaintiffs' contention that the defendant was under an obligation to consult the union about the November plan overall is a serious issue on which the union can go to trial.It is difficult to understand the defendant's dichotomous attitude of showing willing [sic] to consult over crew sizes (part of the May consultation) but standing firm on position numbers.As a matter of impression, therefore, it would seem, subject to discretionary considerations, that the status quo should be protected until a further hearing can be had.

[23] The Judge concluded that the status quo to be preserved was that immediately before 21 January.If interim relief were not granted stage 1 would proceed and by the time of a substantive trial, then anticipated by the Judge to take place from 1 March, it would be too late for consultation if the plaintiffs were successful.Damages would be no substitute and would not be capable of assessment.The balance of convenience favoured the plaintiffs. An examination of the overall justice of the matter revealed to the Chief Judge "no considerations of strength or weakness of the respective cases" coming to the assistance of either in the resolution of the application for interim relief.

[24] The Commission had argued that relief should be refused because of delay by the plaintiffs in commencing proceedings and the prejudice caused by that lateness.The Judge considered that there had been delay "beyond reason" but that it did not render unjust the granting of the relief.In large measure the Commission's expenditures may have been incurred anyway as part of the "modernisation plan".If the plaintiffs succeeded in obtaining a permanent injunction it could delay implementation only pending consultation which was "more likely to lead to a modification of the proposals than to their complete abrogation."Thus the delay might cause some inconvenience but not any significant detriment.The Court's order in its final form, made on 9 February, was as follows:

The defendant be restrained from implementing the November plan, from dismissing any employees for redundancy in pursuance of it, and from making any changes to the establishment in any brigade or the minimum shift manning of any brigade other than the changes made on 19 January 1999 in the Arapawa and Southern fire regions and without restricting the defendant from completing arrangements for the exit from the service by mutual consent of the 18 employees who have conditional arrangements for such termination but so that their departure is not to alter or further alter the establishment or minimum shift manning of the brigade to which they currently belong.This order is in substitution for and not in addition to the order made on 5 February 1999 which shall cease to apply as from the date of the present order.

[25] On the appeal to this Court against the interim injunction Mr Timmins realistically did not place any real weight on the issue of delay in the commencement of the proceeding and prejudice resulting therefrom.He recognised that it was an appeal from the exercise of a discretion and that it would be difficult to say that the Judge was clearly wrong on this question.

[26] Instead, the argument for the appellant concentrated on the Judge's finding that there was an arguable case that proper consultation had not occurred - in breach of the employment contracts - concerning what the Commission proposed to do as announced in November.Mr Timmins submitted that there is no general duty on the part of an employer to consult with its employees about pending redundancies upon a restructuring, citing this Court's decision in Aoraki Corporation Limited v McGavin [1998] 3 NZLR 276, 294, so that any duty to consult in the present case had to be found within the express terms of the contracts.Mr Timmins said that the Chief Judge had gone beyond those terms.Although counsel was suggesting that the Judge had misinterpreted the contractual obligation, he put the matter on a different basis, recognising that this Court has, in terms of s135 of the Employment Contracts Act, no jurisdiction to hear an appeal from a decision on the construction of any individual employment contract or collective employment contract.

[27] Counsel submitted that the Judge had interpreted the D1 contract in his October judgment, correctly in counsel's view, as a limited obligation which had been fulfilled or waived in the earlier consultation process and/or by reason of the Union's attitude at that time.It was therefore submitted that the errors of law which the Judge had committed in his February judgment were (a) to misinterpret his earlier judgment and treat the consultation obligation as wider than he had then found and (b) to make a finding unsupported by any evidence that the factual situation relevant to consultation differed in November from that in June, so requiring a fresh process of consultation.

[28] Essentially the Commission's case on this appeal was that in the D1 contract the obligation to consult related to numbers only; that it was required to consult with the Union only about the consequences of the Commission's decision to reduce the establishment of a brigade - about how that decision was to be implemented - and that it was not obliged to enter into any discussion about the reasons for the decision.It was said of the CST contract that, as the Judge accepted in the October judgment, consultation is expressly limited to available options after a decision has been taken to reduce the establishment of a brigade.

[29] Again, the appellant had taken upon itself a hard task for, to succeed in reversing a decision to grant an interim injunction, it had to satisfy this Court that the Chief Judge was clearly wrong, as a matter of law, in finding that the respondents had an arguable case in connection with consultation.

[30] On our reading of the October judgment it does not appear that the Chief Judge was expressing a concluded view concerning the ambit of the requisite consultation under either contract.His determination on the consultation question turned on the Union's attitude.Any remarks construing the contractual provisions appear to be obiter dicta, and, if that is so, he would be entitled to look at the matter again and take a different view.He had said he had "strong reservations" about the consultation process.Indeed, although it is not within our province, we are inclined to prefer the views which the Judge expressed in the February judgment concerning what was required of the Commission by way of consultation.The appellant has taken the position that consultation under both contracts is restricted to a discussion of the change in the number of an establishment and the consequential redeployment. We doubt whether a meaningful consultation, which is what the contracts must be taken to require, could really be limited in this way.Also, the Commission was arguably not entitled to assume in November an adherence by the Union to its earlier attitude to consultation.

[31] The second alleged error of law, namely that there was no evidence supporting the Judge's factual conclusion that the situation in November relevant to the need for consultation was different from that in June, is also not made out by the appellant.The Commission accepted that the November plan had a different pattern of rostering from that contemplated in June.That would appear to be relevant to the establishment of a brigade and therefore, arguably, the situation in November may have been different and may have required a fresh consultation about material differences.

[32] For these reasons we were not satisfied that there was any error of law made by the Judge in the February judgment and the Mitchell appeal was dismissed.

Non-compliance with Practice Note

[33] Before leaving this matter we make some observations about the Case on Appeal filed by the appellant and its written submissions.The Practice Note - Civil Appeals [1997] 3 NZLR 392 was not observed in several respects.The appellant's submissions in two out of the three appeals as originally filed failed to contain a properly cross-referenced summary of its argument.A separate volume containing the notice of appeal, pleadings, judgment, sealed order and points on appeal (and only that material) in respect of the Mitchell appeal was not filed.These matters were corrected as a result of a direction given at a judicial conference.More important, however, was that a Case on Appeal was filed consisting of some 15 volumes and 2500 pages when it must have been apparent to counsel for the appellant that the Court would be referred to but a very small amount of this material.And, even if it had proved that the appellant had some good reason for the quantity of material presented to the Court, there was still a failure to identify and place in a core bundle the documents, such as the employment contracts, which were central to the case and would definitely have to be consulted by the Court.When counsel came to refer to the key documents during the hearing it was necessary to move backwards and forwards between several large volumes.These departures from the required procedures caused some inconvenience to the members of the Court in attempting to identify the gist of the case.

Costs

[34] We fix the costs of the appeal which are to be paid by the Commission to the respondents at $7,500.The Commission is also to pay the respondents' reasonable disbursements as fixed by the Registrar.

Solicitors

Broadmore Barnett, Wellington for Appellant

Oakley Moran, Wellington for Respondents