IN THE EMPLOYMENT COURT AUCKLAND [2018] NZEmpC 10 EMPC 213/2017. TKR PROPERTIES T/A TOP PUB & ROUTE 26 BAR AND GRILL Plaintiff

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1 IN THE EMPLOYMENT COURT AUCKLAND IN THE MATTER OF AND IN THE MATTER AND IN THE MATER BETWEEN AND [2018] NZEmpC 10 EMPC 213/2017 a challenge to a determination of the Employment Relations Authority of an application for stay of execution of an application for security for costs TKR PROPERTIES T/A TOP PUB & ROUTE 26 BAR AND GRILL Plaintiff KERRY MACDONALD Defendant Hearing: On the papers filed 5 January and 13 February 2018; 10 and 24 November 2017 and 12 February 2018 Appearances: R Mead, agent for plaintiff A Kersjes, advocate for defendant Judgment: 1 March 2018 INTERLOCUTORY JUDGMENT OF JUDGE J C HOLDEN APPLICATIONS FOR STAY OF EXECUTION AND SECURITY FOR COSTS Introduction and result [1] The plaintiff, TKR Properties t/a Top Pub & Route 26 Bar and Grill (TKR Properties), was found by the Employment Relations Authority (the Authority) to have unjustifiably dismissed the defendant, Ms MacDonald. TKR Properties was ordered to pay $2,200 in reimbursement of lost wages and $12,000 as compensation for humiliation, loss of dignity and injury to Ms MacDonald s feelings. 1 TKR Properties has challenged the determination of the Authority. 1 MacDonald v TKR Properties t/a Top Pub & Route 26 Bar and Grill [2017] NZERA Auckland 199. TKR PROPERTIES T/A TOP PUB & ROUTE 26 BAR AND GRILL v KERRY MACDONALD NZEmpC AUCKLAND [2018] NZEmpC 10 [1 March 2018]

2 [2] This interlocutory judgment resolves two applications: TKR Properties applies for a stay of execution of the Authority s determination; 2 and Ms MacDonald applies for an order requiring TKR Properties to pay security for costs. [3] For the reasons set out below: The application for a stay of execution is declined; TKR Properties is ordered to pay security for costs of $7,500 into Court within 14 days of the date of this judgment and these proceedings are stayed until the payment is made or there is a further order of the Court. TKR Properties applied for a stay [4] In its application for a stay, received by the Court Registry in September 2017, TKR Properties grounds were that it had applied to have the matter heard in the Employment Court and therefore it asked that any payment be deferred until such time as this matter can be heard. The application went on: Secondly if this is not successful we will ask for any payment demands be made over four s[e]parate equal monthly payments [5] TKR Properties also arranged for its accountant to file an affidavit in support of the application. The affidavit outlined issues that relate to the substantive challenge but also include the statement from the accountant: Every annual account time we have discussed the need to sell and reduce the debt levels and the losses incurred with the Top Pub operation. 2 TKR Properties described its application as a stay of proceedings on a determination of the Employment Relations Authority, but what it is seeking is a stay of execution so that it does not have to pay Ms MacDonald the amounts ordered by the Authority, pending the hearing of the challenge.

3 [6] The timetable for dealing with both interlocutory matters initially provided for both parties to file any further evidence and submissions in relation to the applications in December 2017, with each party then being able to reply to the documents filed. [7] TKR Properties did not file any other papers within the time allowed and there was some correspondence between Mr Mead, the director of TKR Properties who is acting for it in these proceedings, and the Court Registry. At one point Mr Mead advised the Court Registry that TKR Properties would be instructing a lawyer to represent it, but that has not happened to date. By minute dated 1 February 2018 I allowed TKR Properties one further extension of time to allow it to obtain representation and to file any further material in relation to the applications. [8] Within the extension period, TKR Properties filed a further or revised application for a stay. Most of the grounds set out in the application were directed to the substantive challenge but TKR Properties also said that it would suffer difficulties in trading if the amount awarded by the Authority were to be paid to Ms MacDonald. Principles applying to an application for stay [9] The starting point in considering applications for a stay of the orders of the Authority is s 180 of the Employment Relations Act 2000 (the Act). That section provides that the making of an election under s 179 does not operate as a stay of proceedings on the determination of the Authority unless the Court or the Authority so orders. [10] In North Dunedin Holdings Ltd v Harris 3 the Court said in relation to s 180: [6] It is clear from this provision that the orders of the Authority remain in full effect unless and until the Court sets them aside. The defendants are entitled to enforce those orders unless a stay of proceedings is granted. It follows that the plaintiffs are asking the Court to exercise its discretion to intervene in what is a perfectly lawful enforcement process. 3 North Dunedin Holdings Ltd v Harris [2011] NZEmpC 118.

4 [7] The discretion conferred by s 180 is not qualified by the statute but must be exercised judicially and according to principle. I note two key principles. There must be evidence before the Court justifying the exercise of the discretion. The overriding consideration in the exercise of the discretion must be the interests of justice. [11] When the Court comes to consider exercising its discretion under s 180 there are seven considerations that have been accepted as applicable to a greater or lesser extent in a particular case: This is not a comprehensive list. 4 if no stay is granted, whether the applicant s right of appeal (or challenge) will be ineffectual; whether the challenge is brought and prosecuted for good reasons, and in good faith; whether the successful party at first instance will be affected injuriously by a stay; the effect on third parties; the novelty and importance of the questions involved in the case; the public interest in the proceedings; and the overall balance of convenience. No basis for stay [12] Here there are no novel or important questions evidenced, nor is there any public interest in the proceedings. There is no identifiable effect on third parties. [13] There is no evidence that should TKR Properties be successful in the Employment Court it would not be able to recover any money paid to Ms MacDonald in satisfaction of the Authority s determination. 4 Assured Financial Peace Ltd v Pais [2010] NZEmpC 50 at [5]-[6].

5 [14] The Authority s determination is dated 7 July 2017; as noted, in September 2017 TKR Properties indicated a preparedness to pay the amounts due to Ms MacDonald in four separate equal monthly payments. I agree with Mr Kersjes, representing Ms MacDonald, that TKR Properties has had plenty of time to arrange for Ms MacDonald to be paid. I am also concerned that the evidence of the accountant, and the further or revised application filed by TKR Properties, both indicate that TKR Properties has financial difficulties. [15] TKR Properties has not made out any legitimate basis justifying a stay of execution. Ms MacDonald is entitled to enforce the orders of the Authority and to receive payment. [16] The application for a stay of execution is declined. Ms MacDonald applies for security for costs [17] Ms MacDonald applies for orders that TKR Properties pay security for costs, that the proceedings be stayed until that has been attended to, and that they be dismissed if security for costs is not paid. The amount sought as security for costs is $15,000. [18] In support of her application, Ms MacDonald says: TKR Properties has demonstrated by not paying the amounts awarded by the Authority, and through its request for time payments, that it is in financial hardship; Its conduct has lacked good faith and credibility and its ineptness, as demonstrated by its conduct of the case to date will no doubt greatly increase Ms MacDonald s costs; Ms MacDonald has been forced to obtain a distress warrant to secure payment of the amounts due to her with TKR Properties refusing to

6 engage in correspondence in dealing with the Authority s determination; TKR Properties claim is flawed in law and inconsistent; it has only a tiny likelihood of success ; In the event Ms MacDonald successfully defends the challenge she will have incurred further debt and would face further difficulties in recovering any costs awarded by the Court. Principles applying to an application for security for costs [19] The principles that apply to an application for security for costs have been considered by the Employment Court several times previously and were recently summarised in Quality Consumables v Hannah (No 2). 5 The Court has jurisdiction to order a party to pay security for costs and to stay the proceedings until payment has been made or security, in the quantum ordered by the Court, has been given. 6 As no procedure for ordering security is provided for in the Act or in the Employment Court Regulations 2000 (the Regulations) the application is to be dealt with in accordance with the procedures provided for in the High Court Rules [20] An order may be made if there is reason to believe that the plaintiff would be unable to pay the costs of the defendant if the plaintiff is unsuccessful in the proceedings. 8 If the threshold is met, the Court may order the giving of security for costs if it considers that such an order is just in all the circumstances. 9 In looking at whether it is just in all the circumstances to make an order, the Court must have regard to the merits of the challenge Quality Consumables v Hannah (No 2) [2017] NZEmpC 155 at [11]-[14]. 6 At [11]. 7 Employment Court Regulations 2000, reg 6; High Court Rules 2016, r High Court Rules 2016, r 5.45(1)(b). 9 Rule 5.45(2). 10 Quality Consumables, above n 4, at [13].

7 [21] Overall, the Court needs to balance the interests of the plaintiff and the defendant in the exercise. As the Court of Appeal observed in McLachlan v Mel Network Ltd: 11 [15] The rule itself contemplates an order for security where the plaintiff will be unable to meet an adverse award of costs. That must be taken as contemplating also that an order for substantial security may, in effect, prevent the plaintiff from pursuing the claim. An order having that effect should be made only after careful consideration and in a case in which the claim has little chance of success. Access to the courts for a genuine plaintiff is not lightly to be denied. [16] Of course, the interests of defendants also must be weighed. They must be protected against being drawn into unjustified litigation, particularly where it is over-complicated and unnecessarily protracted. Security for costs of $7,500 ordered [22] In the present case, on the limited information before the Court, it does seem that TKR Properties has some financial difficulties that may mean it would not be able to pay Ms MacDonald s costs should the challenge fail. [23] It also seems that Mr Mead, acting for TKR Properties, has had difficulties with the Court s processes and paperwork to date. However, I accept that the Court s administrative requirements for applications such as those presently being considered are unfamiliar to a layperson such as Mr Mead. It is hoped that ongoing management of the proceedings will be more straightforward. It would help if, as it previously indicated, TKR Properties obtained representation with expertise in Employment Court matters. [24] While Ms MacDonald alleges that TKR Properties conduct has lacked good faith and credibility, and that its case is weak, TKR Properties does appear to have a genuine belief that the Authority was wrong in its factual findings. At this stage, it cannot be said the challenge is unjustified. [25] In all the circumstances, I agree that Ms MacDonald is entitled to obtain an order for security for costs. However, I consider that the $15,000 she seeks is more than is appropriate. In the circumstances, I consider a proper sum to fix for security 11 McLachlan v MEL Network Ltd (2002) 16 PRNZ 747 (CA).

8 for costs should be $7,500, which gives Ms MacDonald reasonable protection but is not so high that it is unreasonable to expect TKR Properties to raise it. Of course, if Ms MacDonald successfully defends the challenge, any order for costs may exceed (or be less than) this amount. [26] Accordingly, the plaintiff, TKR Properties, is ordered to pay into Court the sum of $7,500 as security for costs. This will be held by the Registrar of the Employment Court on interest-bearing deposit until further order of the Court. That sum is to be paid into Court within 14 days of the date of this judgment. TKR Properties challenge is stayed until the payment is made or there is a further order of the Court. [27] In any event, the Court Registry is to convene a directions conference one month from the date of this judgment to monitor progress in the matter. If security has been paid, the directions conference will look to timetable the challenge to completion. If security is not paid within the time specified, consideration will need to be given at that directions conference to whether TKR Properties challenge should be dismissed. TKR Properties is encouraged to seek advice and representation before the directions conference. [28] Costs are reserved. Judgment signed at 10 am on 1 March 2018 J C Holden Judge