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Man O'War Farm Ltd v Bree [2003] NZCA 170; [2003] 1 ERNZ 83; (2003) 1 NZELR 402 (31 July 2003)

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Man O'War Farm Ltd v Bree [2003] NZCA 170 (31 July 2003); [2003] 1 ERNZ 83; (2003) 1 NZELR 402

Last Updated: 17 December 2011


IN THE COURT OF APPEAL OF NEW ZEALAND

CA169/02

BETWEEN MAN O'WAR FARM LIMITED
Appellant


AND DAVID PIERRE BREE
Respondent


Hearing: 9 June 2003


Coram: Gault P McGrath J Glazebrook J


Appearances: P G Skelton and A C Schirnack for Appellant
R M Harrison for Respondent


Judgment: 31 July 2003


JUDGMENT OF THE COURT DELIVERED BY GLAZEBROOK J

Introduction

[1] Mr Bree was employed in the role of Amenity Tree Manager on Man O’War farm on Waiheke Island from December 1997. He was dismissed in August 2001. Prior to his dismissal he had been suspended on full pay from 21 June 2001.
[2] Mr Bree took a personal grievance to the Employment Relations Authority which found both the suspension and the dismissal to have been unjustified. The Employment Court, after a de novo hearing, also found the suspension and dismissal unjustified.
[3] Man O’War Farm Ltd appeals against the decision that the dismissal was unjustified. There is no appeal on the suspension finding.

Background facts

[4] Man O’War Farm is a large farm at the eastern end of Waiheke Island and operates farming, vineyard and amenity tree planting programmes. It is owned by Man O’War Farm Ltd which is a subsidiary company of Clime Group Ltd. Mr Denis Machell, the General Manager of Clime Group Ltd, has overall responsibility for all programmes at Man O’War. He is not on site but spends about 30-40% of his time on Man O’War matters and visits Man O’War for about one day every two weeks.
[5] Each of the programmes on the farm has a separate manager. Mr Richard Keast is the farm manager. He and all other farm staff are housed on the property. The vineyard programme has a separate manager and seven permanent staff but the manager is the only one who lives on the Island. Mr Bree, in his role of Amenity Tree Manager, had three permanent staff and a number of casual staff reporting to him. He was also provided with a house at Cactus Bay on the property but was the only one in his division housed on the property. The three staff reporting to Mr Bree were Ms Karen Devine, Mr Allan Culley (Ms Devine’s partner) and Mr Paul Grubner. From February 2001 Mr Culley was appointed security manager for the farm.
[6] In February 2001 Mr Culley’s first security report in his new capacity as security manager made reference to questionable practices regarding the use of drugs in and around the Cactus Bay house. As a result of that report a letter was issued to all employees advising them that drug cultivations had been found on or near the property and warning that the cultivation of drugs would not be tolerated. We note that in late 2000 and early 2001 two separate cannabis plantations had been located on the Man O’War Farm property but the police had been unable to identify who was responsible.
[7] No further action was taken until Mr Machell, in the course of a review of the tree planting programme for the upcoming season, spoke to Ms Devine on 6 June 2001. She mentioned that she had seen Mr Bree and some casual employees under the influence of drugs during work hours. She also expressed concerns about Mr Bree’s management style. Mr Machell considered that these matters needed to be investigated and contacted Mr Bree in the week of 11 June 2001 to set up a meeting. He did not tell Mr Bree what the meeting was to be about. The meeting date was set for 19 June 2001.
[8] On 18 June 2001 Mr Machell was contacted by Mr Keast about an incident that had occurred between Mr Keast’s and Mr Bree’s pre-school children. Mr Machell was concerned that this issue had the potential to cause major disharmony on the farm and thus rang Mr Bree to bring forward the meeting to that day. At that meeting the allegations as to Mr Bree’s and the casual workers’ use of drugs during work hours were put to Mr Bree as well as the allegations of cultivation of cannabis around his property. The concerns that had been expressed about Mr Bree’s management style were also disclosed and the incident between the Keast and Bree children discussed. Mr Bree denied that he had used drugs during work hours or that he cultivated drugs. The meeting set for the next day was cancelled.
[9] Mr Machell arranged for Mr Culley and Ms Devine to provide written statements on the issues relating to Mr Bree. These were received on 20 June 2001. A few days later Mr Machell spoke to Mr Grubner who confirmed that he had seen Mr Bree under the influence of drugs during work hours.
[10] On 21 June Mr Machell had a letter delivered to Mr Bree requesting an urgent meeting and informing Mr Bree of his right to bring a representative to that meeting. The issues for discussion were set out as being the use of drugs by Mr Bree and casual workers during work hours, the cultivation of cannabis plants in and around Mr Bree’s house and compatibility issues. A meeting took place at 3pm that day. Mr Machell gave Mr Bree a copy of Mr Culley’s statement and suspended Mr Bree on full pay while the matter was fully investigated. Mr Bree did not at that time challenge the suspension decision, although we note he was unrepresented at that meeting.
[11] There was a further meeting on 2 July between Mr Bree and Mr Machell. At that meeting both parties had their legal representatives present. Ms Devine’s statement was given to Mr Bree. Mr Bree denied the drug allegations but would not discuss matters further.
[12] Issues then arose between the parties as to the manner in which the investigation was being conducted. After mediation the investigation continued but without prejudice to Mr Bree’s ability to raise his issues in any later proceedings.
[13] On 17 July a letter was sent to Mr Bree’s solicitor giving further details of the specific allegations Mr Bree was to respond to. They were set out as follows:
[14] On 18 July 2001 Mr Machell and his legal advisor met with Ms Devine, Mr Culley and Mr Grubner and obtained further detailed statements. They met with each complainant separately and for a total period of some three hours. The statements were provided to Mr Bree on 24 July, along with copies of Mr Culley’s diary notes and an extract from his February security report.
[15] On 25 July Mr Machell met with Mr Bree and his legal representative, Mr Harrison. Mr Bree at that meeting provided written statements from himself and a number of other workers. He also, through Mr Harrison, gave some oral explanations. Minutes of that meeting were produced and sent to Mr Harrison on 27 July 2001.
[16] Mr Machell said in evidence that he carefully reviewed the statements provided on Mr Bree’s behalf but did not interview the workers who had provided the statements. He said:

It was clear to me that somebody had interviewed these witnesses on David’s behalf. I thought it was reasonable to assume that this person would have included all relevant evidence which would assist David to respond to the allegations.

[17] He did, however, consider that Mr Bree had called into question the credibility of some of the statements from Ms Devine, Mr Culley and Mr Grubner and therefore decided to undertake a further intervivew with each on the issues raised. Mr Machell and his legal adviser met again with them and obtained further written statements. These were provided to Mr Bree by letter dated 7 August 2001.
[18] In the meantime, on 31 July, Mr Harrison had written enclosing copies of extracts from Mr Bree’s diary (but with no comment on these). The letter also dealt with some matters relating to the allegation about magic mushrooms.
[19] On 10 August there was a further meeting between Mr Bree and Mr Machell. Both were legally represented. Mr Bree was given a further opportunity to respond to allegations but, through Mr Harrison, said he had nothing further to add. Mr Bree also agreed in cross-examination with the proposition that he had been happy to rely on the written statements he had previously provided. Mr Machell then adjourned the meeting for about 15 minutes. He considered each allegation in turn. He said in evidence:

In the adjournment, I considered all the evidence that had been obtained. In particular, I carefully considered whether, as David had alleged, Paul, Alan or Karen may have had any motive to provide damaging statements about David. After speaking to each of these witnesses at length, I was confident that none of them had a vendetta against David. Because Alan and Karen were aware they were going to be provided accommodation on Man O’War as part of a new vineyard development project, I was confident that they were not trying to obtain David’s house. My assessment of both Alan and Karen is that they are honest people who were genuinely concerned about the drug use and cultivation on the property.

I was also confident that Paul was telling the truth. Paul strikes me as somebody who is not malicious. He assured me that he had no ill-will against David, and the way in which he talked about David throughout our discussions indicated to me that he was not seeking any form of revenge.

The credibility of each of these witnesses was reinforced by the fact that, when meeting with each of them separately, their stories corroborated one another. Because we had given none of the witnesses warning of the particular incidents we were going to discuss with them, I concluded that it was unlikely that they had got together and ‘agreed’ upon a story. I also noted that Alan had diary notes which supported the statements of Paul and Karen.

I also took into account the various witness statements provided by David. I accepted that these witnesses were telling the truth and that they had not seen David under the influence of drugs during work hours and had not seen cannabis plants at the Cactus Bay property. I noted, however, that the majority of these witnesses did not work very closely with David. Further, although these witnesses had not seen cannabis plants in and around the property, this did not in itself prove that cannabis plants were not being grown there. On balance, I concluded that their evidence did not overwhelm the evidence of Karen, Alan and Paul.

[20] Mr Machell went on to say that he had come to a conclusion on each of the allegations set out in the letter of 17 July, finding some had been substantiated and some not. He recognised that some of the allegations, such as the incompatibility issue, would not have justified dismissal. He then returned to the meeting and advised Mr Bree that he was dismissed for serious misconduct. The reasons were explained at the meeting and were also recorded in a dismissal letter sent to Mr Bree later in the day by the appellant’s solicitors. The letter said the following in respect of the specific allegations:
  1. Based on the evidence of Paul Grubner and Karen Devine, Mr Machell concluded that, on the balance of probabilities, Mr Bree was under the influence of cannabis shortly before 4.00 pm on Wednesday 7 February 2001.
    1. With respect to the second allegation, Mr Machell noted that no one actually saw Tanya or David Bree under the influence. Accordingly he concluded that there is insufficient evidence to substantiate the second allegation against Mr Bree.
    2. With respect to the 12 March incident, Mr Machell noted that there were three eye witnesses who did not accept Mr Bree’s behaviour could satisfactorily be explained by dehydration as a result of wearing a spray suit. Mr Machell concluded that it is more probable than not that Mr Bree was under the influence of cannabis shortly before 4.00 pm, 12 March 2001.
    3. With respect to the fourth allegation, Mr Bree noted that the witnesses’ observations are limited to Tanya Bree. Accordingly, he determined that there was no basis for any disciplinary action against Mr Bree in relation to this matter.
    4. With respect to the fifth allegation, Mr Machell accepts that Karen could not be precise about the date of the conversation. However, he found Karen’s evidence as to what Mr Bree had said as likely to be correct. He determined that it was likely that Mr Bree did say to Karen that he was going to harvest magic mushrooms found around the station. If this were the only allegation against Mr Bree, however, Mr Machell would not have taken any disciplinary action, given the length of time that has elapsed since this matter occurred.
    5. The sixth allegation is acknowledged to be a very serious one, therefore requiring a high level of proof. Mr Machell accepts that other workers (other than Paul/Alan/Karen) may not have seen cannabis plants on the Cactus Bay property. He also has carefully considered the explanation given that the plants that Paul/Alan/Karen saw may have been tomato plants or maples. The eye witnesses are adamant that they can distinguish between tomato plants and cannabis plants, and at the end of the day Mr Machell was left in no doubt that Mr Bree was either cultivating cannabis plants in the garden area of his Cactus Bay property, or he was aware that such plants were being cultivated.
    6. With respect to the seventh allegation, Mr Machell accepts that Mr Bree may have had dust or grit in his eyes at various times, and that the handbrakes on the vehicles may have failed. He does not believe, however, that any of those factors adequately explain why Mr Bree was observed being under the influence. Mr Machell concludes that it is more probable than not that Mr Bree was under the influence of cannabis during work hours on various occasions.
    7. With respect to the eighth allegation, Mr Machell accepts that there is insufficient evidence (based solely on hearsay reports), to substantiate this allegation.
    8. Mr Machell believes that there are serious compatibility issues arising out of a number of incidents. Incompatibility is acknowledged by Mr Bree in his own statement. While this matter is relevant background material, Mr Machell accepts that if incompatibility were the only issue, it would not in itself give rise to dismissal.

Employment Court judgment

[21] The Employment Court noted that Man O’War Ltd had a contractual right to suspend on pay during any investigation of actions alleged to amount to serious misconduct. The Court found, however, that, while Mr Machell was concerned about the allegations of drug use and cultivation, the decision to suspend was made after the details of the incident with the children emerged. In addition, no proper notice was given to Mr Bree as to the possibility of suspension and he was not afforded a reasonable opportunity to consider the implications or make a protest. The Court held therefore that the suspension was not carried out in a fair and reasonable manner and that it was unjustifiable conduct on behalf of the employer.
[22] In relation to the dismissal the Employment Court held that Mr Machell genuinely believed that Mr Bree was guilty of serious misconduct but that it was not satisfied that the belief was based on a full and proper inquiry. The Court held that the investigation of the complainants, including putting allegations to them made by Mr Bree and the obtaining of statements from them, was done very properly and set a high standard of investigation. The Court also proffered no criticism of the opportunity given to Mr Bree to explain his side of things. The Court held, however, that Mr Bree was denied the opportunity to substantiate his case with evidence from his witnesses. The procedure was not carried out fairly because Mr Machell did not interview those of Mr Bree’s witnesses who could usefully have added information. The dismissal was therefore unjustified.

Appellant’s submissions

[23] Mr Skelton, for Man O’War Ltd, submits that the Employment Court was wrong in law to impose an obligation on Mr Machell to interview Mr Bree’s witnesses. In Mr Skelton’s submission the rules of natural justice (which are the genesis of the obligation to conduct a full and fair inquiry) do not impose a positive obligation on an employer to do more than give the employee a reasonable opportunity to be heard and to consider with an open mind the employee’s response to the allegations under investigation.
[24] In this case Mr Bree was given prior warning of the specific allegations he had to answer, was given copies of all relevant statements, was advised of the possible consequences if the appellant determined that there was misconduct, was given the opportunity to present his case in person, and was legally represented by experienced counsel at all material times. Mr Skelton also submits that, when viewed as a whole, Mr Bree was given a real opportunity to explain, mitigate or refute the allegations against him. Mr Bree never requested that Mr Machell interview his witnesses, although there was ample opportunity for him to have done so. In addition Mr Machell accepted the truth of the statements provided by Mr Bree. To impose an obligation to interview witnesses in such circumstances would, in Mr Skelton’s submission, add unnecessary time and effort to the process with little practical benefit.

Respondent’s submissions

[25] Mr Harrison, for Mr Bree, submits that the Employment Court was correct to hold that Man O’War Ltd had failed to undertake a full and fair inquiry in the circumstances of this case. Mr Machell concentrated on interviewing the complainants without testing their allegations against Mr Bree’s witnesses. He submits that it is the employer who determines procedure. The fact that Mr Bree did not request that his witnesses be interviewed is irrelevant. After the meeting of 25 July, at which Mr Machell indicated that he would make further inquiries, Mr Bree was entitled to expect that these further inquiries would involve the questioning of Mr Bree’s witnesses.
[26] Mr Harrison accepted that there would not always be a positive obligation on an employer to question witnesses in person and that what is necessary to ensure a full and fair inquiry will vary depending on the nature of the inquiry. In this case, the seriousness of the conduct alleged, the fact that the complainants were interviewed a number of times, the resources of the employer and the fact that most of Mr Bree’s witnesses were readily available, some being current employees of Man O’War Ltd, meant that this was a case where there was such an obligation.
[27] It was also submitted that Mr Machell was in error when he concluded that Mr Bree’s witnesses would have had nothing to add in regard to the specific allegations. Mr Bree’s diary, a copy of which had been sent to Mr Machell, would have confirmed that some of the witnesses were working on some of the critical days. At least those workers should have been spoken to.
[28] Mr Harrison further submitted that the maxim that justice must be seen to be done would be undermined if the employer is not required as part of a fair inquiry to seek out or interview witnesses that may give evidence in favour of an employee.
[29] He also noted that, even if the finding of unjustified dismissal is reversed, the finding as to the suspension stands and the appellant would still be entitled to compensation under s123(c)(i) of the Employment Relations Act 2000. He expressed a preference for this Court to deal with the matter should that arise. Mr Skelton did not object to this approach.

Discussion

[30] In order to justify a dismissal an employer must have reasonable grounds for believing and must honestly believe that there has been misconduct by the employee of sufficient gravity to warrant dismissal. An employer must also carry out the dismissal in a manner that is procedurally fair. The minimum requirements of procedural fairness are that the employer has properly investigated the allegations, given the employee an opportunity to be heard and considered (with an open mind) that explanation before making the decision to dismiss (Mazengarb’s Employment Law (6ed, 2003) para 103.57).
[31] In this case the only issue is whether there had been an adequate investigation. This Court has said in Airline Stewards and Hostesses of New Zealand Industrial Union of Workers v Air New Zealand Ltd [1990] 3 NZLR 549, 554 that there is an obligation to make reasonable inquiry but that an employer is not required to continue investigations indefinitely:

An employer could not justify the dismissal of the employee if he had closed his eyes to available evidence or not given the employee an opportunity to be heard in his or her own defence. However, the employer is not required to continue investigations indefinitely, only to carry out inquiries to a reasonable extent in all the circumstances of the case.

[32] Turning to the circumstances of this case we note first that Mr Bree was provided on 17 July with a list of the specific allegations against him. He was also provided by early July with the initial statements of Ms Devine and Mr Culley, and the more detailed statements of all three complainants were sent to him on 24 July with some supporting documentation.
[33] Mr Bree was given the opportunity at the meeting on 25 July to answer those allegations and he provided at that meeting written statements from himself and a number of other witnesses and gave some oral explanations. On 31 July his solicitor also forwarded extracts from Mr Bree’s diary.
[34] Mr Bree was also provided on 7 August with the further statements taken from the complainants after the 25 July meeting. There was then a further opportunity given to Mr Bree at the meeting of 10 August to respond to the allegations. Through his counsel Mr Bree indicated that he had nothing further to add. Neither Mr Bree nor his counsel at any time suggested that Mr Machell should interview any of Mr Bree’s witnesses, although it must have been obvious by the time of the 10 August meeting that he had not done so. No further witness statements were obtained by Mr Bree even after the additional statements from the complainants were provided.
[35] In our view the assumption by Mr Machell that all relevant evidence that would assist Mr Bree had been included in the written statements was a reasonable one in the light of the above and particularly in light of the fact that Mr Bree’s experienced counsel, at the 10 August meeting, said that Mr Bree had nothing further to add, thereby in effect, inviting a decision on the evidence then available.
[36] We also note that the statements of the complainants and the statements provided by Mr Bree could be seen to be in conflict only at the most general level. Mr Bree’s witnesses said they had not seen Mr Bree under the influence of drugs nor had they seen evidence of cannabis cultivation, and the complainants said they had seen cannabis plants around his house and had seen him under the influence of drugs. The statements were not, however, in conflict on any specific issues. Mr Machell could reasonably take the view that Mr Bree’s witnesses were telling the truth but that this did not necessarily lead to the conclusion that the complainants were lying, given the fact that the complainants worked much more closely with Mr Bree than the others. There was thus no direct credibility contest.
[37] When asked to identify areas of direct conflict between the two sets of statements Mr Harrison referred only to motive. The allegation that the complainants had a motive for lying was, however, thoroughly investigated by Mr Machell. It was that which led to the complainants being interviewed again after the 25 July meeting. Indeed the Employment Court noted that the interviewing of the complainants and the putting to them of allegations as to motive set a high standard of investigation.
[38] We do not consider that Man O’War Ltd was required legally to do more. The Employment Court took the rules of natural justice beyond their proper reach in the circumstances of this case.

Suspension

[39] There was no appeal against the finding that Mr Bree’s suspension was unjustified. Accordingly, as requested, we now determine Mr Bree’s entitlement to compensation.
[40] The following points are relevant. First, there can be no claim for lost wages as Mr Bree was suspended on full pay. The only remedy available therefore is compensation in terms of s123(c)(i) of the Employment Relations Act. Secondly, we accept that the suspension caused Mr Bree a good deal of stress although presumably much of the stress involved was related to the allegations and the possibility of dismissal. Thirdly, the Employment Tribunal recorded Mr Bree’s acknowledgement that his suspension had probably allowed him better to deal with the allegations and the stress these had caused him and his family. Although this acknowledgement does not negate the finding that the suspension was unjustified, it may mitigate any compensation due to Mr Bree. Finally, the Employment Court found that the catalyst for considering suspension was concern unrelated to the serious misconduct.
[41] Mr Bree was unjustifiably suspended for reasons that were unrelated to the allegations of serious misconduct he was facing, but was, in the event, justifiably dismissed. In these circumstances we consider the appropriate award is $500.

Result and Costs

[42] The appeal is allowed and the award of damages set aside, except that Mr Bree is awarded the sum of $500 under s123(c)(i) of the Employment Relations Act 2000 in regard to the unjustified suspension.
[43] We do not know if Mr Bree is legally aided. If there is any issue of costs the parties have leave to file memoranda on or before 15 August 2003 if the matter cannot be resolved between them.

Solicitors:
Russell McVeagh, Auckland for Appellant
R M Harrison, Auckland for Respondent


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