New Zealand Meat Workers & Related Trades Union Incorporated v Alliance Group Limited [2014] NZCA 367 (5 August 2014)

Last Updated: 14 August 2014

IN THE COURT OF APPEAL OF NEW ZEALAND
CA232/2014 [2014] NZCA 367
BETWEEN	NEW ZEALAND MEAT WORKERS & RELATED TRADES UNION INCORPORATED Applicant
AND	ALLIANCE GROUP LIMITED Respondent

Hearing:	21 July 2014
Court:	Ellen France, White and Miller JJ
Counsel:	P B Churchman QC for Applicant K G Smith for Respondent
Judgment:	5 August 2014 at 11 am

JUDGMENT OF THE COURT

1. The application for leave to appeal is dismissed.
2. The applicant must pay the respondent costs for a standard application for leave on a band A basis and usual disbursements.

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REASONS OF THE COURT

(Given by Ellen France J)

Introduction

[1] This is an application for leave to appeal under s 214 of the Employment Relations Act 2000 against a decision of Judge Couch dealing with the interpretation of the annual holidays provisions in the parties’ collective agreement.^[1] Judge Couch concluded that the effect of cl 9(g)(i) of the collective agreement was that employees were entitled to four weeks annual holiday, regardless of their length of service.

Background

[2] The respondent, Alliance Group Ltd (Alliance), operates meat processing plants in the South Island and in the southern part of the North Island. As Judge Couch noted, the terms and conditions of most of Alliance’s employees have traditionally been negotiated via collective bargaining and reflected in collective agreements.^[2] The current case arose in the context of the series of collective agreements applying since 1 January 2006. Those agreements followed earlier written arrangements dating back to 1966.
[3] As Judge Couch said, the earlier documents incorporated the annual holidays provisions of the holidays legislation then in force but provided exceptions for some employees based on, among other matters, length of service.^[3] Employees covered by those exceptions have, generally, received additional annual holidays.
[4] The current issue arose out of the increase in annual holiday entitlement for all employees introduced by the Holidays Act 2003. From 1 April 2007, the annual holidays entitlement was increased from three to four weeks minimum.
[5] The Employment Court had evidence about the bargaining process leading up to the relevant agreements and we return to that briefly later. For these purposes we need only note the final form of the relevant provision in the collective agreement, namely, cl 9(g) which reads as follows:

(g) The provisions of the Holidays Act 2003 and any Act passed in amendment of that Act or substitution for it shall apply to all workers covered by this Agreement: except that the following enhanced or additional entitlements shall apply:

(i) Upon completion of six years’ continuous service with the Alliance Group Ltd each worker shall, in respect to service for the sixth and subsequent years, be allowed an annual holiday of four weeks instead of three weeks. The third and/or fourth week’s holiday may be taken in conjunction with or separate from the first two weeks by agreement between the employer and the worker concerned or, failing such agreement, as the employer shall decide.

(ii) Shift workers shall receive up to an additional weeks holiday calculated on a proportional basis.

(iii) In lieu of the fifth week’s annual holiday for shift workers or fourth week’s annual holiday for day workers, as the case may be, it shall be competent for the employer to agree with any individual worker to pay one week’s wages at the rate prescribed for one week’s annual holiday.

(iv) For periods of service of less than one year, all workers shall receive their proportional annual holiday pay entitlement in accordance with the provisions of the Holidays Act 2003 and any Act passed in amendment of that Act or in substitution for it.

[6] The applicant Union lodged an application with the Employment Relations Authority but, on the parties’ joint application, the matter was removed to the Employment Court. The Union’s case was that the effect of cl 9(g)(i) was to provide long serving employees with an additional week of annual holidays over and above the four-week minimum.
[7] Judge Couch heard the case in the Employment Court. The Judge said both parties’ interpretation of cl 9(g) raised some difficulties. On Alliance’s approach, cl 9(g)(i) had no practical effect but on the Union’s approach “three” meant “four” and “four” meant “five”. The Judge recorded that the approach to be taken was that set out in the Supreme Court’s decision in Vector Gas Ltd v Bay of Plenty Energy Ltd.^[4] When considered against the evidence of the parties’ bargaining process, the Judge was satisfied the proper interpretation was as advanced by Alliance. Judge Couch concluded that:^[5]

... a reasonable person viewing the matter objectively would conclude that it was never Alliance’s intention to continue to provide an extra week of annual holidays to longer serving employees after 1 April 2007. ... Indeed, having withdrawn its claim for such a provision, it cannot be said objectively that it was the Union’s intention when it settled the collective agreement. If the parties had intended to preserve the benefit of an additional week of annual holidays for long serving employees, they could have done so expressly, as they did in directly comparable circumstances in 1975.

Criteria for grant of leave

[8] An appeal is available only in respect of questions of law which, by reason of their general or public importance, or for any other reason, should be submitted to this Court for decision.^[6] The Employment Relations Act also provides that the Court has no power to consider decisions on the construction of an employment agreement.^[7]

Proposed basis of appeal

[9] Mr Churchman QC for the applicant Union accepted that the only proposed question arising was whether the Employment Court had erred in concluding that a reasonable person, viewing the matter objectively and in context, would conclude it was not the parties’ common intention to provide long serving employees with an extra week’s annual holiday after 1 April 2007. Mr Churchman says the Court has erred essentially because the interpretation adopted deprives the introductory words of cl 9(g) of any meaning. Mr Churchman refers in this respect to the reference to “enhanced or additional” entitlements.

Is the test for leave met?

[10] We accept that the proposed question could give rise to a question of law.^[8] Leave to appeal was granted on a similar basis in relation to the interpretation of annual holiday entitlements in Silver Fern Farms Ltd v New Zealand Meat Workers & Related Trades Union Inc and in Service and Food Workers Union Nga Ringa Tota Inc v Cerebos Greggs Ltd.^[9] In Silver Fern Farms, it was said that the limitation on appeal rights in employment agreement interpretation cases “does not extend to questions of principle going beyond the terms of the contract”.^[10] However, in this case it is plain there was no error of law in Judge Couch’s decision. Therefore, the proposed appeal does not meet the threshold for leave.
[11] We explain our conclusion in this way. The first point to note is that Mr Churchman properly accepts that it was appropriate to consider extrinsic material, in particular, the evidence as to the parties’ bargaining process. Having considered that evidence, the Judge found that the Union had sought a change to the terms of the collective agreement to secure a fifth week of annual leave for long serving employees but, in the face of Alliance’s “implacabl[e]” opposition to the claim, the Union withdrew its claim.^[11] In other words, the interpretation now advanced for by the Union had been bargained for but no agreement was in fact reached to provide a fifth week of annual holidays for long serving employees.
[12] There was evidence to support this finding. First, provision for additional annual holidays for long serving employees was not automatic but was, generally, the subject of negotiation.^[12] Secondly, the margin for long service employees had not always been maintained.^[13] Thirdly, the Union’s claim involved a rewording of cl 9(g)(i) and the Judge rejected the evidence of Union witnesses that they believed the previous, unaltered, form of the clause would have sufficed to achieve the same result. Finally, there was evidence about the importance of the financial aspects of the bargain to Alliance so that Alliance’s agreement to other increases (such as to rates of pay) could be seen as dependent on rejection of the Union’s claim for an additional week’s annual leave.
[13] There is no question of inconsistency in approach to that taken in Silver Fern Farms or in Cerebos. The interpretation in Silver Fern Farms turned on the Employment Court’s conclusion as to the parties’ intentions reached against a consideration of the prior instruments and the particular wording of the agreement in issue.^[14] The difference in outcome is explicable by reason of the factual differences. In Cerebos an error in the approach to interpretation was identified as the Judge had focussed on the statutory purpose or nature of the leave rather than the contractual purpose of granting the additional benefit.^[15]
[14] We add that the reference to “enhanced or additional” entitlements in cl 9(g) is not entirely without meaning given that it is agreed that sub-cl (ii) confers holidays on shift workers which are over and above the statutory minimum.
[15] In conclusion, we are satisfied that the Judge has applied orthodox principles of contractual interpretation to the facts as he found them. On the basis of those factual findings, the Judge’s conclusion was inevitable. No question of principle going beyond the facts of the case arises.

Result

[16] The application for leave to appeal is accordingly dismissed.
[17] The applicant must pay the respondent costs for a standard application for leave on a band A basis and usual disbursements.

Solicitors:
Peter Sara, Dunedin for Applicant
Buddle Findlay, Christchurch for Respondent

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^[1] New Zealand Meatworkers & Related Trades Union Inc v Alliance Group Ltd [2014] NZEmpC 53.

^[2] At [5].

^[3] At [6].

^[4] At [19]–[23]; Vector Gas Ltd v Bay of Plenty Energy Ltd [2010] NZSC 5, [2010] 2 NZLR 444.

^[5] At [51].

^[6] Employment Relations Act 2000, s 214(3).

^[7] Section 214(1).

^[8] Secretary for Education v Yates [2004] NZCA 329; [2004] 2 ERNZ 313 (CA).

^[9] Silver Fern Farms Ltd v New Zealand Meat Workers & Related Trades Union Inc [2009] NZCA 394; Service and Food Workers Union Nga Ringa Tota Inc v Cerebos Greggs Ltd [2011] NZCA 431.

^[10] At [10].

^[11] At [48].

^[12] At [39].

^[13] At [40]–[41].

^[14] Silver Fern Farms Ltd v New Zealand Meat Workers & Related Trades Union Inc [2010] NZCA 317, [2010] ERNZ 317.

^[15] Service and Food Workers Union Nga Ringa Tota v Cerebos Gregg’s Ltd [2012] NZCA 25, [2012] ERNZ 38.