Last month was decidedly mixed for Auckland employment advocate Lawrence Anderson.
A costs judgment contained an admonishment for being rude to the other side’s counsel. Witnesses to other alleged rudeness (without context) going back as far as early 2019 were sought out to smear Anderson. The “story” was quickly picked up by mainstream media, most likely after lobby group the Employment Law Institute of New Zealand, Inc (ELINZ) issued a “call to action”. Anderson published a rebuttal of certain aspects of the Joyce v Ultimate Siteworks matter on his own website.
For context, ELINZ lobbied hard for compulsory regulation of lay employment advocates in 2022, but the New Zealand Law Society decided to maintain the status quo. As far as I can tell, the biggest lobbying effort ELINZ has made since late 2022 has been in the last few weeks.
Disclosure of relationship between Anderson and this blogsite
Lawrence Anderson has contributed at least a dozen articles to the Leighton Associates blogsite from December 2021 to June 2024; several of these before I became the Editor. See also: We wrote a song (24 June 2023)
Non-compete dispute: damages and penalties
By late August 2024 I had published two articles on a restraint of trade dispute, Cookright Filtering Service Limited v Hill. Motueka-based Keith Hill had resigned from Cookright in mid-2023 after seven years to work for a competitor, Kaye Thomas trading as A1 Vat Services. Thomas is also Hill’s domestic partner. Cookright successfully applied for a restraint of trade injunction that kept Hill out of action for the first half of 2024.
It got worse: in a 19 August 2024 determination of the Employment Relations Authority (ERA), Hill was ordered to pay Cookright $14,854 in damages and a $8,000 penalty. Thomas was also ordered to pay Cookright $6,000 for aiding and abetting (a costs award of $7,570 was later added making the total award $36,424).
What was striking about this award was that it was against an employee who by 2023 was earning just a couple of dollars above minimum wage due to the amount of unpaid overtime, so this was bankruptcy territory. That went well beyond what could be tolerated in a supposedly competitive market.
Rookie, but willing to learn
Initially hesitant because of his lack of experience in litigating non-compete disputes, Anderson and another employment advocate worked pro bono (voluntarily) behind the scenes to research and legally advise Thomas, who was on the record as representing both herself and Hill.
Because Anderson and his colleague did not have the opportunity to participate while the matter was before the ERA, they picked it up at the next phase, to challenge the ERA decision to the Employment Court.
The way that works is, if a party is unhappy with an ERA determination they have 28 days to challenge it to the Court. The application for a challenge is often followed by an interlocutory application for a stay of execution (of the damages and penalties in this case). The original intention was to draft submissions to meet deadlines on the assumption that Hill and Thomas would eventually find an employment solicitor to take over for a future hearing, however no counsel was willing to take it on.
So the advocates kept working in the background. A lot of correspondence was filed and exchanged and, long story short, the parties signaled their intentions to settle just after a few days after Anderson had his bad experience with mainstream media.
Settlement mechanism
There are several ways that parties to a dispute can settle. Usually the ERA directs the parties to mediation and if resolved in that forum a Record of Settlement (s 149) is drafted and signed, and countersigned by the mediator.
There are also consent determinations (ERA) and consent judgments (Employment Court). A Judicial Settlement Conference is a mediation where a judge is the mediator, and while this is rare it could be appropriate for matters of significant public interest, and was contemplated in the Cookright matter.
A 3 December 2024 consent judgment by Judge Corkill records that no money would change hands between the parties, costs are to lie where they fall, and there are certain agreements around confidentiality.
Why this case is a big deal
Now that we’ve seen a $36,424 award against a startup business evaporate, which is about as good as it gets, Anderson discusses his motivation for taking on this unusual case.
“With a challenge to the Employment Court there’s always a risk that the challenge could fail and additional costs are awarded to the successful party, and that risk needs to be assessed.
The employer’s celebration for having won in the Authority will usually be short-lived whenever a challenge to the Court is filed. As this increases the costs and reputational exposure of both parties, it is often at this point that the parties will have a (further) attempt at negotiating a settlement.
The risk of costs getting out of control therefore does go both ways. And, in any case, the risks to business reputation should be considered. So too should the stress placed on the directorship of the business and how much of a waste of time it all is.
As reported by the Court in the published consent judgment, the parties have agreed to forgo the $36k award. In the end I guess this has, like in other cases I have dealt with where the employee (often the weaker party) is liable for a significant amount of the other side’s costs, it appears to have just come down to a sensible business decision to walk away from it.
Kaye [Thomas] is a PA and more legal savvy than most clients and was able to hold up well when appearing at the directions conference for example. This made it relatively straight forward for us to work in the background writing up the paperwork and providing coaching.
Fuel Espresso v Hsieh [2007] NZCA 58 gets trotted out all the time in noncompete disputes - the Court of Appeal overruled the Employment Court’s refusal to grant a restraint of trade injunction against a barista on the grounds that the restraints did not require extra consideration. While a short injunction period was granted in that case, no penalties were sought or awarded.
Now, nearly two decades later, we are often seeing applications for large penalties against employees when these restraint issues arise. The Authority can issue injunctions where previously only the Employment Court could. But when the liable party does not have the means to pay, I guess you could say that Christmas is cancelled. Santa Claus will not be coming to town, and even if he does, he is only handing out coal.
Determinations that make large awards for penalties against low paid workers of modest means do set a dangerous precedent and may embolden anticompetitive conduct and I understand there’s nothing the Commerce Commission can do about it.”
So there you have it. A horrible legal precedent has been avoided.
To my knowledge, no rude words were exchanged in this matter.
Tristam Price
Editor
“De-mystifying employment law since 2019”
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