Employment Contracts and Parties Expressed Intentions: A Legal Analysis of the New Zealand Court of Appeal Approach

There is a rather simple thesis to explain the tension between Koia and Cunningham. The thesis is predicated on the interaction between two main dynamics that underlie the field of employment law: the first is the jurisdictional tension between the EC, which has its jurisdictional fons et origo in the equitable notions of trust and confidence, and the CA, with its formalistic common law inclinations. The second dynamic stems from the socio-economic gyrations affecting the quantum of legislative public policy considerations injected into employment law.

The tension between the EC and the CA is evidenced in the traction that the EC made in Curlew and in a more recent decision which went all the way to the SC. In Three Foot Six Ltd v Bryson [2004] 2 ERNZ 526 the majority judgment in the CA disagreed with the EC’s conclusion that the analysis of the “real nature of the relationship” turned on a question of fact, which would have precluded any appeal to the CA. The SC, however, confirmed that the section 6 inquiry is a factual inquiry and that it will be particularly rare for a decision of the EC to be overturned (section 214(1) ERA 2000) in the absence of compelling evidence that the judge has misdirected him or herself as to the interpretation of the section or that the decision is completely unsupported by reference to all the evidence.[21] The same tension is highlighted by CA dicta in Lowe Walker Paeroa Ltd v Bennett [1998] 2 ERNZ 558 at 567 in relation to the EC’s interpretation of employment contracts in “equity and good conscience.” As put by Bernard Robertson, the editor of the New Zealand Law Journal: [22]

Historically, the labor institutions were separate from the ordinary Courts because they set awards and did other tasks Courts do not do. Today, the Employment Court determines disputes of fact and law and it is difficult to see why a separate Court is required.

 The second dynamic relating to the interaction between private and public law is seen in Koia’s paragraph [25] which stresses Cunningham’s emphasis on the laissez-faire principles exemplified in the fundamental doctrine of classical contract law: the freedom of contract.[23] Anderson et al[24] suggest that the combination of the explanatory note to the original ERA bill, the majority Select Committee report, and ministerial statements in Hansard make it clear that Parliament intended to modify the potential effect on some employment agreements of that formalistic approach.[25] Note, however, that public policy is evidenced even in the Cunningham decision. Had the relationship between the contracting parties been purely a private law relationship, which on the face of it does not affect a third party, then once one signs an agreement saying that he is a contractor, one would be estopped from denying that one was a contractor as against the other party to the agreement. However, under the ERA policymakers have decided that they wanted the “real nature of the agreement” to be identified even where both parties may have acted in good faith. In addition, policy makers wanted to interfere to prevent, on social policy grounds, employers from tilting the balance of the employment relationship. Hence, the real objective behind the “real nature of the agreement” approach is to make a social policy decision, although this is not explicitly stated in the ERA or in its case law.[26] In the words of Richardson P in Telecom South [1992] 1 ERNZ 711, 722: “the contract of employment cannot be equated with an ordinary commercial contract. It is a special relationship under which workers and employers have mutual obligations of confidence, trust, and [fair] dealing.”

In conclusion, it is submitted that Koia’s paragraph [25] is an accurate representation of Cunningham. The Curlew retraction is distinguished on merit. Under the ERA 2000 (section 6), equal weight is given to intention whether from the express terms or from the classical common law tests.

[1] Cunningham v TNT Express [1993] 1 ERNZ 695.

[2] Curlew v Harvey Norman Stores (NZ) Pty Ltd [2002] 1 ERNZ 114.

[3] Bryson v Three Foot Six Ltd [2003] 1 ERNZ 581.

[4] Aoraki Corporation Ltd v McGavin [1998] ERNZ 601 (CA) at 611-612.

[5] 586 NZPD 4103 and 4120.

[6] Chief Judge Goddard “Editorial: The Employment Court and the Role of Full Courts” [1997] ELB 134.

[7] While I tend to resist Machiavellian inclinations when visiting such dicta, it is difficult not to link Colgan J’s conciliatory remarks to his honor’s ascendancy to the Chief Justice position, only three years later.

[8] Cunningham v TNT Express [1993] 1 ERNZ 695 at 701.

[9] [1993] 1 ERNZ 695 at 711-712.

[10] [1993] 1 ERNZ 695 at 715.

[11] [1993] 1 ERNZ 695 at 716.

[12] [1993] 1 ERNZ 695 at 718.

[13] These principles were approved by the Supreme Court (SC) in Bryson v Three Foot Six Ltd [2005] 3 NZLR 721, where the SC also sided with the EC assertion that the classification of contractual relationships was a question of fact.

[14] The industry practice was considered as relevant as far back as the decision in Muollo v Rotaru [1995] 2 ERNZ 414.

[15] [1993] 1 ERNZ 695 at 719.

[16] Bryson v Three Foot Six Ltd [2005] 3 NZLR 721.

[17] Macfie R “Employment News in Brief” [2000] ELB 111.

[18] Department of Labor, memorandum to the Minister of Labor, “Employment Relations Bill – Policy Issues”, 23 December 1999, cited in Anderson et al Employment Law Guide (7th edition, Lexis Nexis, Wellington, 2005) ER6.4 at 145.

[19] Anderson et al Employment Law Guide (7th edition, Lexis Nexis, Wellington, 2005) ER6.4 at 146.

[20] The CA majority view in Three Foot Six Ltd v Bryson [2004] 2 ERNZ 526 at para 113.

[21] Hughes J “Recent Case Comment” [2005] ELB 93.

[22] Robertson B “Editorial: Bryson – contractor or employee?” [2005] ELB 131.

[23] See Atiyah P S Rise and Fall of Freedom of Contract (Clarendon Press, Oxford, 1979). Cited in Boldeman L The cult of the market: economic fundamentalism and its discontents (The Australian National University Press, Canberra, 2007) Chapter 9.

[24] Anderson et al Employment Law Guide (7th edition, Lexis Nexis, Wellington, 2005) ER6.6 at 149.

[25] Bryson v Three Foot Six Ltd (2003) 7 NZELC 97,317, also noted at [2003] ELB 112.

[26] Robertson B “Editorial: Bryson – contractor or employee?” [2005] ELB 131.