Almost since our 2019 inception we’ve been aware of a dirty trick that appears to be intended to amplify employment disputes in order to increase billable hours.
Costs awards - the basics
The Employment Relations Authority (ERA) usually doesn’t let costs lie where they fall, but orders the unsuccessful party to pay the successful party a contribution to their legal costs. Scale costs are currently $4,500 for the first day of an investigation meeting, and $3,500 for each subsequent day. This is already a barrier to raising a grievance, subject to uplift of discount depending on conduct of either party during the litigation that increases the other side’s costs.
Parties’ actual legal costs usually exceed the ERA scale costs, sometimes significantly. But it is a balancing act – tariff-based (scale) costs are a benchmark to assist with cost control, and could discourage employees from bringing meritless claims that are nonetheless costly, time consuming and stressful.
Lawyers and advocates are expected to explain to their clients what costs orders they are exposed to if mediation does not result in a settlement, they progress their grievance in the ERA, and lose – it could be more than their own costs.
Filing fee
Both the ERA and Mediation Services are part of the Ministry of Business, Innovation and Employment. The ERA charges $71.55 to file a Statement of Problem, and there is no charge for mediation. There is no fee charged to the respondent to file a Statement in Reply.
The ERA usually refers the parties to mediation which is also fee-free (unless the parties opt for a private mediation due to MBIE’s backlog). Most mediation meetings result in a confidential settlement. But where mediation fails, an ERA Member will be allocated to the case, and will assess submissions “on the papers” or hold an investigation meeting. The ERA Member will eventually make a determination which is publicised. Occasionally a non-publication order is applied to anonymise the parties and/or witnesses in circumstances where the ERA Member considers that the welfare of the parties is more important than open justice.
Now that you know how the sausage is made, readers, hold on to your lunch for the following.
McSLAPP #1 – Hairdressing salon
An Auckland employment advocate has written to Dr Andrew Dallas, Chief of the ERA, expressing concern that, with the addition of a few paragraphs in a Statement in Reply the employee can counter-sue the employee or former employee. That requires no separate Statement of Problem and no filing fee.
Lawrence Anderson is representing a hairdresser in an otherwise ordinary unjustified dismissal claim. That entailed making an assessment of the merit of his client’s claim, and the drafting of a Statement of Problem to file in the ERA.
In its Statement in Reply (which probably denies that the employee has a valid grievance) we understand that the employer applied to claw back some of the commission it had paid the hairdresser over the last few years, framing the payment of that commission as an accidental overpayment which the hairdresser is liable to repay. That was a cross claim by way of the addition of a few paragraphs to the Statement in Reply.
We have not named the parties because, in theory, the parties could still settle in a confidential mediation which would spare them the ignominy of googling up as parties involved in an employment dispute, and worse, one that involved a counterclaim.
Anderson’s open letter is here.
And he’s not the only one having a moan. Check out the Nicholson v Progress to Health debacle which is now five years old.
McSLAPP #2 – Healthcare charity
[2] These proceedings have a lengthy and protracted procedural history. They stem from personal grievance proceedings filed in the Employment Relations Authority in January 2020 by Mr Halse on behalf of a former employee of Progress to Health and from a counterclaim filed in February 2020 by Progress to Health against both its former employee and Mr Halse. The counterclaim involves a claim that the former employee breached their employment agreement and that Mr Halse aided and abetted in that breach.
Allan Halse is a Hamilton-based advocate and Julie Nicholson is his client who in January 2020 raised grievances against her former employer, registered charity Progress to Health, and similarly Progress to Health folded a counterclaim into its Statement in Reply. Halse applied for a judicial review of the ERA’s decision to entertain that counterclaim, to no avail. Halse was then ordered to pay over $17,000 in costs to Progress to Health, and Nicholson’s claim remains unresolved.
McSLAPP #3 – High school in statutory management
Also in January 2020 we reported on a matter where a pregnant trainee teacher from a high school that was in statutory management at the time had raised a grievance for unjustified disadvantage. She was then sacked. The unnamed trainee teacher and her representative interviewed with a reporter at a local newspaper, which ran the story (without naming the teacher or reporting that she was in her third trimester) and subsequently received a legal threat.
Over the next few weeks:
The teacher raised a second grievance for unjustified dismissal.
The school counter-sued for talking to the media.
The counterclaim, again folded into the school’s Statement in Reply, was served to the teacher. It came through by email - while she was in labour!
Leighton Associates blogged on the matter (a few weeks later we took the blog down because we also received a legal threat, although not by the school).
Our blog was copy-pasted into the school’s submissions to the ERA, in a way that suggested the school administrator was doubling down rather than backing off.
At a teleconference ERA Member Robin Arthur balked, and refused to entertain the counterclaim.
We understand that the school eventually settled with the trainee teacher in a mediation, but it took a couple of years.
Dumpster fire causes
It should be noted that New Zealand does not have anything resembling anti-SLAPP legislation or practice directions, so anything goes, including the weaponising of costs orders.
When we see dumpster fires like this, what’s the main cause? Is it the lawyers being compelled to act on the horrible (albeit lawful) instructions of a delusional client? Or is the counsel exceptionally good at selling snake oil with the ulterior motive of creating billable busywork?
Because of lawyer-client privilege, we will probably never know. But a practice direction that forces counter-claimants to file their counterclaims separately (and pay the filing fee) could go some way towards improving the situation, as Anderson appears to suggest.
Tristam Price, Editor
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