Onesource Ltd v Hjorth CA210/05 [2005] NZCA 410; [2005] ERNZ 763 (14 December 2005)

Last Updated: 22 January 2014

IN THE COURT OF APPEAL OF NEW ZEALAND

_CA210/05

BETWEEN ONESOURCE LIMITED Applicant

AND BRETT HJORTH Respondent

Hearing: 5 December 2005

Court: Anderson P, Glazebrook and Hammond JJ Counsel: J E Latimer for Applicant

M W O’Brien and R H Lally for Respondent

Judgment: 14 December 2005

_{JUDGMENT OF THE COURT}

A The application for leave to appeal is declined.

2. Respondent is entitled to costs of $1,500 together with usual disbursements.

REASONS

(Given by Anderson P)

[1] This is an application pursuant to s 214 Employment Relations Act 2000 for leave to appeal against a decision of the Employment Court given by Judge Shaw.

[2] By virtue of s 214(1) and (3), the appeal is confined to a question of law and this Court may not grant leave unless it is of the opinion that the question of law involved is one that, by reason of its general or public importance or for any other

_{reason, ought to be submitted to the Court of Appeal for decision.}

ONESOURCE LIMITED V BRETT HJORTH CA CA210/05 14 December 2005

[3] The decision from which the applicant seeks to appeal is an award to the respondent, as one of the remedies for his unjustified dismissal, of the income lost by him from the time of the dismissal in September 2003 until his commencement of new permanent employment on 1 June 2004.

[4] Following his dismissal, the respondent suffered significant emotional and financial stress. That is hardly surprising given the circumstances and manner in which he was unjustifiably dismissed together with the insistence of the applicant following dismissal that it would enforce certain aspects of a restraint of trade clause incorporated in his prior employment contract.

[5] In October 2003 a friend of the respondent offered him employment on a commission only basis. The respondent felt constrained to accept because of the stressful financial circumstances he had been forced into. Judge Shaw found that this employment was not comparable in income to that obtained in the position from which he had been dismissed, and that he had no certainty of a reasonable income. There was evidence before the Judge that the respondent was over qualified for that work. She held that this job was an act of kindness from a friend to tide the respondent over until such time as he was able to obtain proper and alternative employment. Although the income earned by the respondent during what turned out to be a reasonably transient period of employment had to be brought into account, that employment did not prevent the respondent from recovering lost income down to the commencement of the permanent employment on 1 June 2004.

[6] That award was made pursuant to the Employment Court’s discretionary power derived from the Employment Relations Act s 123(1)(b) and s 128(3). However, the grounds on which leave to appeal to this Court is sought relate not to the exercise of the discretion but to the question what wages were lost, to use the words of s 123(1)(b) “as a result of the grievance”. The applicant had argued before the Employment Court that the causal chain between the occurrence of the personal grievance and resulting financial loss was broken by the respondent’s taking up employment with his friend in October 2003.

[7] In rejecting that argument Judge Shaw said it is clear the position which the respondent took was not comparable in income to his former position. In dealing with a submission that the respondent had failed to mitigate his losses after his employment ended, notwithstanding that he was bound by a restraint of trade clause, Judge Shaw said:

[42] Whether the causal link between a personal grievance and the lost remuneration is broken is a matter of fact and degree in each case. Where a dismissed employee rejects an offer of reinstatement the question is whether the offer was reasonable in all the circumstances.

[43] The chain of causation may also be broken when an employee obtains permanent work whether employment, self-employment, or otherwise, as long as it is compatible in income to that of the former position and the employee is no longer suffering losses as a result of the personal grievance.

[44] Obviously this test is constrained by the period of time it takes an employee to get such a position and other discretionary factors.

[8] The careful and extensive submission of counsel for the applicant can be reduced to an elemental proposition. That is, that the Judge misdirected herself in holding that the chain of causation between a personal grievance and resulting financial loss will not be broken by the taking of alternative employment unless the income from the new employment is compatible with a prior remuneration. Counsel accepted that the Judge used the term “compatible” in the sense of “reasonably comparable” but submitted that even in this sense the Judge’s proposition in [43] of her judgment was wrong. Nevertheless, the Judge applied that proposition, holding that wages or other money lost by the respondent as a result of his unjustified dismissal included loss of income down to the taking up of new employment on

1 June 2004, albeit subject to a deduction or the income earned from the employment taken up with the respondent’s friend. In counsel’s submission the alleged error of law is articulated by [43] of the judgment sought to be appealed from.

Discussion

[9] We do not accept that Judge Shaw held that the causal chain between a personal grievance and resulting financial loss will be broken by subsequent employment only if that employment produces income reasonably comparable to that of the prior employment. The essential principle is expressed by Judge Shaw in

[42] in the words “whether the causal link between a personal grievance and the lost remuneration is broken is a matter of fact and degree in each case”. The Judge’s approach is described by [42], [43], or [48], examined in the context of the particular facts of the case. All that the Judge was indicating in [43] was one situation which might arise. Obviously she was not indicating a mandatory principle, as the use of the word “may” and the context of her observation indicate.

[10] Even if the Judge’s approach was an error of law, we could not regard the question of law involved as one of general or public importance. The principles relating to compensation, wages or other money lost by an employee as the result of a personal grievance were extensively discussed and authoritatively laid down in Telecom NZ v Nutter [2004] 1 ERNZ 315. The Judge’s approach in the present case is not incompatible with that decision; still less does it indicate the possibility of tangential influence in respect of any other cases. Further, we would in any event decline leave as a matter of discretion on the basis that having regard to the facts, as found by Judge Shaw, an appeal would have no prospect of success.

Result

[11] For the above reasons leave to appeal is declined. The respondent is entitled to costs of $1,500 together with usual disbursements.

Solicitors:

Kensington Swan, Auckland for Applicant

Bell Gully, Auckland for Respondent