Where to sue?

by 24 Feb 2014
In the real world, cases don't come labelled with causes of action and categorised in jurisdictional boxes.  In the employment arena, issues often arise where claims could be brought in either the High Court or the Employment Relations Authority (or, via a challenge, the Employment Court).  This arises particularly where equitable causes of action are alleged, or where both employee and non-employee defendants are involved.
The starting point is the jurisdiction of each institution. 
Unlike the High Court, the Employment Relations Authority has no inherent jurisdiction.  It is a creature of statute, and only has jurisdiction/powers as set out in the Employment Relations Act.  Under the Act, it has exclusive jurisdiction to deal with "employment relationship problems", defined in s161 as actions "arising from or relating to the employment relationship or related to the interpretation of this Act (other than an action founded on tort)".
Because the Authority's jurisdiction is not defined by reference to causes of action, this is where the issue starts to become sticky.  
In BDM Grange Limited v Parkers & Ors the High Court considered the issue of concurrent jurisdiction.  From BDM Grange, and subsequent cases applying it in the High Court, Employment Court and Authority, it is (or, at least, was) clear that:

  • The Authority does not have jurisdiction to deal with tortious causes of action.
  • The Authority does not have jurisdiction to deal with non-employee (or non-ex-employee) defendants (with some narrow exceptions).
  • Actions founded on employment agreements/employment statutes can only be brought in the Authority.
  • The Authority only has the power to grant remedies specified in the Employment Relations Act.  This includes a broad power to grant relief regarding breaches of contract, but no other general powers to grant injunctions or other equitable relief. 
  • The Authority therefore has no jurisdiction regarding equitable causes of action, but does have the power to order equitable remedies for breach of contract.
It was relatively settled that where equitable or common law rights had their origins in an employment relationship, but did not depend on (or were not "arising from or related to") that relationship, it was possible to plead the matter so that it could be heard by the High Court.  Unless the claim was founded on the employment relationship (rather than that relationship just being the context in which the claim arose), the case did not have to be brought in the Authority.
Previous High Court decisions (including Transnet NZ Limited v Dulhunty Power (NZ) Limited & Ors ) had also counselled against situations where plaintiffs were forced to bring claims regarding the same facts against different defendants in different jurisdictions. 
That was the case, until two recent decisions from the High Court - Hibernian and Aztec Packaging Limited v Malevris.  These two decisions are in contrast to the decisions that have come before.
Both cases dealt with an employer trying to recover money stolen by an ex-employee.  In Aztec Packaging, the plaintiff pleaded a claim for money had and received and a breach of fiduciary duty.  In Hibernian, the judgment recorded that no particular cause of action was pleaded. 
In both cases Associate Judge Bell held that the claim fell within the jurisdiction of the Authority regardless of how it was pleaded and could therefore not be brought in the High Court.  
This outcome required a much broader interpretation of "arising from or related to" an employment relationship in s161.  It was also premised on an assumption that the Authority is able to order the same remedies as the High Court when it comes to equitable causes of action.
These conflicting decisions have created a situation where the dividing line between the High Court and the Employment Relations Authority is once again starting to blur. 
Under the Court's interpretation of s161 in Hibernian and Aztec Packaging, an employer plaintiff is required to bring separate proceedings in separate jurisdictions against separate defendants if it seeks recovery against both an ex-employee and a third party.  And - critically - it may well find itself without a remedy in the Authority, given the narrow set of statutory remedies available.  
Given the conflicting decisions in recent times, this remains Anchoran issue to watch.
Kylie Dunn
Senior Associate, Employment and General Litigation
Russell McVeagh