IN THE EMPLOYMENT COURT AUCKLAND [2016] NZEmpC 33 ARC 75/12. ROBERT WADE LEWIS Plaintiff. JPMORGAN CHASE BANK, N.A. Defendant

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1 IN THE EMPLOYMENT COURT AUCKLAND IN THE MATTER OF AND IN THE MATTER AND IN THE MATTER BETWEEN AND [2016] NZEmpC 33 ARC 75/12 a challenge to a determination of the Employment Relations Authority of a challenge to a costs' determination of the Employment Relations Authority of an application for costs ROBERT WADE LEWIS Plaintiff JPMORGAN CHASE BANK, N.A. Defendant Hearing: By memoranda of submissions filed on 29 September, 12 November, and 4 and 18 December 2015 Appearances: MW O'Brien and B Nicholson, counsel for plaintiff R Towner and S Maxfield, counsel for defendant Judgment: 7 April 2016 COSTS JUDGMENT OF CHIEF JUDGE G L COLGAN [1] In its judgment issued on 5 September 2013, the Court reserved costs between the parties. 1 [2] The substantive findings in that judgment were set aside by the Court of Appeal on 18 June The parties have been unable to agree on costs for the plaintiff s substantive challenge in this Court and, separately but to be dealt with in this judgment, costs on the plaintiff s challenge to the Authority s costs determination. 3 1 Lewis v JPMorgan Chase Bank N.A. [2013] NZEmpC 148 at [117]. 2 JP Morgan Chase Bank, N.A. v Lewis (also cited as JP Morgan Chase Bank NA v Lewis) [2015] NZCA Lewis v JP Morgan Chase Bank, N.A. [2013] NZERA Auckland 18.

2 [3] The defendant s submissions in support of its claims for costs against the plaintiff Robert Lewis are lengthy and comprehensive. [4] First, the defendant JPMorgan Chase Bank, N.A. (the Bank or JPMorgan) says that in view of its success in the Court of Appeal, Mr Lewis should pay it costs in respect of the Employment Court s hearing. [5] Next, the Bank says that it should also have an award of costs on what must now be Mr Lewis s unsuccessful challenge to the Authority s costs determination, more particularly in light of a without prejudice save as to costs offer (also called a Calderbank offer) made by the defendant to the plaintiff on 8 September Further, the Bank says that this is an appropriate case in which to direct an uplift of the award to approximately 75 per cent of its actual costs. [6] The amounts claimed for costs by the Bank are $73,000 in respect of the substantive challenge and $7,500 on the plaintiff s unsuccessful challenge to the Authority s award of costs. [7] The defendant relies on the well-established principles affecting costs in the Employment Court set out in the trio of Court of Appeal judgments in Victoria University of Wellington v Alton-Lee; 4 Binnie v Pacific Health Ltd; 5 Health Waikato Ltd v Elmsly. 6 The defendant s next submission is that costs should follow the event, in reliance on the judgment of this Court in Stevens v Hapag-Lloyd (NZ) Ltd. 7 As the defendant acknowledges, however, the statutory discretion allowed to the Court by cl 19 of sch 3 to the Employment Relations Act 2000 (the Act) must govern its decision in any particular case. Also, reg 68 of the Employment Court Regulations 2000 (the Regulations) provides that in the exercise of this discretion the Court may have regard to any conduct of the parties tending to increase or contain costs. The defendant invokes this in relation to its Calderbank offer which Mr Lewis spurned. 4 Victoria University of Wellington v Alton-Lee [2001] ERNZ 305 (CA) at [48]. 5 Binnie v Pacific Health Ltd [2002] 1 ERNZ 438 (CA) at [14]. 6 Health Waikato Ltd v Elmsly [2004] 1 ERNZ 172 (CA) at [17]. 7 Stevens v Hapag-Lloyd (NZ) Ltd [2015] NZEmpC 137 at [4].

3 [8] The defendant invites the Court to consider its offer of settlement to the plaintiff, made before the Authority s investigation meeting, albeit not renewed on Mr Lewis s challenge. It says that this fact will be relevant to assessing court costs and also whether an uplift is appropriate. In this regard, it relies on the judgment of the Court of Appeal in Bluestar Print Group (NZ) Ltd v Mitchell, 8 followed recently in Stevens. The defendant says that the Court of Appeal s judgment in Bluestar was also followed in this Court in Rodkiss v Carter Holt Harvey Ltd. 9 The Bank says that the settlement offer made to but rejected by the plaintiff falls within the scope of reg 68. [9] The defendant s Calderbank offer (referred to above) was made to the plaintiff in respect of the Authority s proceedings (including its costs award) and, had it been accepted by Mr Lewis, would have left him in a better position financially than that in which he is now. [10] Turning to the defendant s costs in respect of the substantive challenge, it says that it incurred legal fees of $98, (excluding GST and a service charge) and paid disbursements of $ It has supplied the Court with invoices, rendered to it by its lawyers together with accompanying cover letters, and billing addenda, which record in detail a breakdown of the attendances for which fees have been incurred. These are said to cover all fees paid by it following the filing of the plaintiff s statement of claim on 2 November [11] In respect of the plaintiff s challenge to the Authority s costs award, the defendant says that it incurred actual legal fees of $9, (excluding GST and service charges) and similar documentation in support of this claim has been supplied. These fees are said to have been incurred after 14 September 2015 when Mr Lewis rejected the defendant s Calderbank offer. [12] As to the reasonableness of these actual fees and disbursements, the defendant submits that they reflect both the substantial amount of work undertaken and the complexity of the legal issues arising from it. 8 Bluestar Print Group (NZ) Ltd v Mitchell [2010] ERNZ 446 (CA). 9 Rodkiss v Carter Holt Harvey Ltd [2015] NZEmpC 147.

4 [13] The defendant says that the interlocutory and other preparations required for the case included: responding to five statements of claim; preparing two statements of defence; preparing three applications regarding interlocutory issues; responding to two applications by the plaintiff regarding interlocutory issues; and lengthy correspondence with the plaintiff s solicitors regarding these issues. Further, the defendant says that it prepared submissions for, and attended, the hearings of seven interlocutory issues. It says that there was also its successful application for recall of the Court s judgment 10 which was opposed by the plaintiff. The need for recall was, however, the Court s error and it would be unjust to saddle Mr Lewis with costs in this respect. [14] The defendant has disclosed its lawyers hourly charge-out rate (excluding GST) in the substantive challenge proceedings. Senior counsel s was $585; that of junior counsel rose from $250 in 2012 to $330 in 2014; and additional research tasks were performed by a law clerk at an hourly rate of $185. The defendant emphasises that junior counsel was involved significantly in all aspects of the proceedings and preparation for trial, being a cost-effective approach. It says that the proceedings were complex and justified the engagement of senior counsel experienced in the field. This was acknowledged in the Court s judgment in 2015 where it was stated, in relation to the proceedings in the Authority and costs thereon: 11 That is not to say that the defendant s legal costs were unreasonable. This was a case which warranted the involvement of a senior and experienced employment law practitioner. [15] So, the defendant submits, a two-thirds (of actual and reasonable costs) starting point should be accepted by the Court as being $65, [16] Turning to the reasonableness of the defendant s costs on the challenge to the Authority costs determination, the defendant discloses that the hourly charge-out rates of the lawyers involved were $585 (partner); $365 (solicitors); and $180 (law clerk). In these circumstances, the defendant says that a two-thirds starting point for this claim would be $6, Lewis, above n Lewis v JPMorgan Chase Bank, N.A. [2015] NZEmpC 185 at [45].

5 [17] As to the level of uplift on each award, the defendant says that the Court should award it 75 per cent of actual and reasonable costs on the substantive challenge, being the sum of $73,000. That is because, the defendant says, the plaintiff contributed to the time and expense of conducting the litigation in a way that was unnecessary and put the defendant to unwarranted trouble and, therefore, expense. [18] More particularly, the defendant says, first, that the plaintiff rejected unreasonably its genuine attempts and proposals to resolve the dispute before the Authority s investigation. That included, more than two years before the Authority s determination, the defendant s attempts to resolve, other than by litigation, the parties employment relationship problems in a constructive, speedy and low-level manner. It says that Mr Lewis responded unreasonably to these attempts, as this Court acknowledged in the costs challenge judgment: in my assessment, Mr Lewis rejected unreasonably some of the Bank s proposals and proposed an unrealistic justification for doing so. 12 The defendant refers to a number of documents (attached to its submissions) which are said to also illustrate the plaintiff s unreasonable stances. [19] It is necessary to go back to the start of the case. In the plaintiff s first letter to the Bank dated 30 August 2010, he complained of breach by it of the parties settlement agreement and in addition to setting out reasonably his complaints and grounds for them. Mr Lewis also referred to his intention to take court action to enforce his settlement and to compensate him for losses which he said he had incurred as a result of the Bank s failure or refusal to acknowledge to a prospective employer that he had been the Bank s Chief Executive Officer (CEO). The plaintiff did this by saying that this would result in an investigation by the Reserve Bank of New Zealand of JPMorgan s conduct which would, in turn, identify Mr Lewis s earlier reporting of wrongdoing within JPMorgan. He repeated much of the essential detail of that alleged wrongdoing and added detail of what he proposed to allege further against JPMorgan in such an investigation by the Reserve Bank. This information appears to have been conveyed to JPMorgan in the form of a threat, to 12 At [43].

6 persuade it to agree to further compensation in return for Mr Lewis not making a complaint to the Reserve Bank. As the letter said, also, Mr Lewis requested that: you do not involve any of the (conflicted) staff who were part of the consultation process, nor the investigator nor the banks legal counsel in New Zealand, Bell Gully. The Bell Gully representative provided poor advice to JPMorgan, and resorted to personally threatening me during the without prejudice discussion. [20] The defendant s solicitors reply to Mr Lewis, sent on 14 September 2010, attempted to deal with those issues about which he had complained justifiably and to explain why these had occurred. It suggested that the intervention of the Authority should be unnecessary in these circumstances. [21] Mr Lewis s response to the solicitors was sent on the following day, 15 September In essence, he rejected the Bank s proposals for resolution as addressing insufficiently the problems he had raised. He continued to seek to involve the Reserve Bank. [22] On 24 January 2011 the defendant proposed settling the claims Mr Lewis claims had made to the Authority in the form of an agreement drafted and sent to the plaintiff on that date. At all relevant times Mr Lewis was unrepresented before the Authority; he only obtained legal representation after commencement of his proceedings in this Court. [23] By dated 27 January 2011, Mr Lewis responded to the defendant s solicitors draft settlement agreement. He rejected the defendant s overtures, repeating all of the claims that he had made previously along with the background to them. [24] On 18 March 2011 the defendant s solicitors wrote to Mr Lewis in response to an amended statement of problem which he had filed in the Authority, claiming damages for disparagement by the Bank. Mr Lewis was advised that this amended statement of problem was defective in that it did not provide sufficient information to fully, fairly and clearly inform the Authority and the defendant, as

7 was required by the Employment Relations Authority Regulations sought a number of specific particulars to enable its pleading to be filed. The letter [25] On 30 March 2011 the Authority issued a memorandum to the parties in the proceedings which Mr Lewis had instituted in that forum. In essence this referred Mr Lewis to some authoritative cases about the hurdles he faced in his proceeding and required more particulars of his claim from him. [26] The defendant s lawyers wrote again to Mr Lewis on 2 May 2011 pointing out that case law which had been brought to the plaintiff s attention meant that he was unable in law to claim damages for breach of a settlement agreement, as was the substantial nature of his statement of problem. The lawyers invited Mr Lewis to withdraw the claim as being misconceived, in which case they said the Bank would not seek costs. Mr Lewis was advised, however, that if he continued with his claims, application would be made to the Authority to dismiss them on a preliminary basis of lack of jurisdiction to award damages because the claim was vexatious. Mr Lewis was put on notice that he would then be subject to a claim for increased costs to be awarded against him. [27] These details of the case before the Authority have been included only as background because its costs award covered them and Mr Lewis has been unsuccessful in challenging that award, which stands. [28] The defendant, however, invites the Court to find that these documents reflect reasonable and extended efforts by the Bank to resolve the employment relationship problem directly with the plaintiff and indicate his general unwillingness to consider a reasonable compromise. [29] Turning to the particulars of the claim for costs in respect of Mr Lewis s unsuccessful costs challenge, the Bank says that this, too, should be uplifted from a starting point of 66 per cent to 75 per cent of actual and reasonable costs, being the sum of $7, It identifies its Calderbank offer made to Mr Lewis on 8 September 2015 which offered to settle by accepting the sum of $5,000 from the 13 Employment Relations Authority Regulations 2000, reg 6.

8 plaintiff in circumstances where the Authority awarded costs of $15,000 against Mr Lewis. [30] The Bank proposed that this costs award in its favour of $15,000 be reduced to the sum of $5,000 for a full and final settlement of Mr Lewis s challenge. The Court s judgment reduced the amount awarded by the Authority 14 but this sum ($7,000) still exceeded, and not insignificantly, the defendant s offer of $5,000. [31] The particulars of the plaintiff s opposition to the defendant s costs applications may be summarised as follows. [32] Mr Lewis says, in essence, that neither party should be required to pay anything towards the costs of the other, that is that costs should lie where they fall. [33] The plaintiff accepts, in principle, that what he acknowledges was a Calderbank offer made before the Authority s investigation, can be considered by the Court on a challenge in determining the question of court costs. However, he submits that where the matters in dispute between the parties change or evolve after the Authority proceedings, a Calderbank offer made before the Authority s investigation should not be considered in determining costs in the Court. The plaintiff says that his claim changed substantially after he sought legal advice and obtained legal representation in the proceeding. So, Mr Lewis says, whereas before the Authority the question was whether it could award damages for breach of a settlement agreement, the issue before the Court was whether that 4 March 2010 agreement was capable of being categorised as variation to the employment agreement and, therefore, a breach of it might lead to an award of damages. In these circumstances, the plaintiff says, the defendant s offer made before the Authority s investigation and determination did not address the real issues between the parties. [34] I do not accept that inventive argument for the plaintiff. Whether the settlement amounted to a variation of the employment agreement was another and legally alternative way of determining the same broad question, whether damages could be awarded for breach of a settlement agreement. It was not a fundamental 14 Lewis, above n 11, at [46].

9 alteration to the claim but, rather, a legal re-categorisation of it. The outcome of the proceeding is now that damages could not be awarded for breach of the settlement agreement, albeit that these were claimed on the basis of any damages for breach of a varied employment agreement. [35] Next, the plaintiff says that the defendant s settlement proposals made before the Authority investigation and determination, were insufficient to resolve his claims because they did not address issues of personal vindication. In this regard he relies on the judgment of this Court in Wellington Racing Club Inc v Welch. 15 In that case the Court referred to an expectation of personal vindication in the absence of which it would be unreasonable to expect a claimant to consider favourably an offer that did not address those legitimate complaints. That statement followed the reference in the judgment of the Court of Appeal in Alton-Lee that: The element of vindication in those circumstances is more eloquent than a purely financial cost benefit approach to the matter. 16 In addition, counsel for Mr Lewis submits that this Court in Binnie acknowledged that a purely economic approach to the effect of Calderbank offers ignores the important non-monetary reputational aspect of the litigation. It went on to state: 17 The Calderbank offers did not meet Dr Binnie's reasonable expectations of this aspect of his litigation and that point was made clear to the defendant when the offers were rejected. [36] Mr Lewis says that his desire for personal vindication has been a clear feature of his case at all stages and reminds the Court that it noted that if he was the Bank s New Zealand CEO, then the denial of this may have amounted to a disparaging comment. 18 Mr Lewis submits that the defendant s offers of settlement before the Authority s investigation and determination did not attempt in any way to address the damage which he says had already been done to his reputation by the defendant s initial denial that he had been its New Zealand CEO. That was said to have been compounded by its refusal to confirm this to a prospective employer or employers of Mr Lewis for whom this would have been a very important, if not critical, consideration in assessing his application for a senior banking position. 15 Wellington Racing Club Inc v Welch [2002] 1 ERNZ 685 (EC) at [13]. 16 At [16]. 17 Binnie v Pacific Health Ltd AC10/02, 5 March 2002 at [38]. 18 Lewis, above n 1, at [80].

10 [37] Mr Lewis says that, instead, the Bank both denied that it had breached the settlement agreement and proposed only solutions that might prevent further breaches occurring. He says that in view of the company s Access HR system limitations, the defendant s suggested solution would not have guaranteed that this denial or non-confirmation would not have recurred in the future. In these circumstances, the plaintiff says it was unreasonable for him to reject the defendant s proposals for settlement at that point. [38] Next, Mr Lewis makes the point that the defendant s settlement proposals were not renewed during the proceedings before this Court, at least after he had sought and obtained legal representation. He says that, in these circumstances, he was not able to take legal advice in relation to the settlement offers made when he was unrepresented, so that these should not be taken into account in relation to costs in these proceedings. Mr Lewis says that had the offers of settlement been genuine, they would have been renewed once the plaintiff was represented by counsel and this would have enabled him to have the benefit of proper advice about them. [39] I do not accept this submission. When counsel is instructed part-way through a proceeding, it is assumed that counsel will become familiar with the client s file which would have included these references to settlement. However, there was no suggestion that the question of a settlement on the earlier terms proposed by the defendant, or a variation of these, was raised by counsel for the plaintiff after their engagement. My impression is that throughout the proceedings Mr Lewis was determined to have his day in court and to go to judgment, at least on some of the issues including that of his personal reputation and the losses which he claimed to have suffered as a result of the Bank s misrepresentation of his role with that company. He could have re-opened settlement discussions once counsel was advising him, but he did not do so. [40] Next, the plaintiff says that the defendant s costs of $98, were excessive for what amounted, at most in his submission, to a one-day interlocutory hearing. He says that it was unreasonable for the defendant to have engaged two counsel, including one who is a senior partner and very experienced employment lawyer, for these purposes. I do not accept that simplistic approach to the assessment

11 of reasonableness of costs. Although it is true that the case concluded effectively in this Court with the judgment following that one-day interlocutory hearing, the question which it decided was important, difficult and ultimately decisive of the case. That is illustrated by the fact that decision of the same question in different forums produced different answers. There were also numerous ancillary matters which had to be decided, which necessitated the expenditure of legal fees leading to a one-day hearing. [41] The plaintiff opposes any uplift in any of the awards sought by the defendant. He denies the defendant s claims that the plaintiff s several amendments to his statement of claim increased costs unnecessarily. [42] I agree with the plaintiff on this issue. When he commenced his proceedings he was not represented and it was, in these circumstances, appropriate that his statement of claim be amended to focus on the legal and factual issues in the case. Although the defendant may have been put to some additional cost in pleading to these amendments, the refinement of the issues probably saved as much cost as was expended by bringing greater focus to the case. As I noted in the Court s interlocutory judgment of 5 September 2013: 19 There cannot be much, if any, criticism directed at the plaintiff for his amended pleadings in these circumstances including, as the defendant does at least obliquely, by reference to the changes effected to those statements of claim after the plaintiff s solicitors became involved for him. [43] The plaintiff s statement of claim was first amended as a result of his seeking legal advice and instructing counsel. A subsequent amended statement of claim included, as a new challenge by hearing de novo, an appeal against the Authority s costs determination. That amendment was appropriate and necessary. [44] The defendant subsequently applied to the Court to require Mr Lewis to file a more explicit statement of claim. Mr Lewis says that the Bank cannot now complain that the orders it sought, increased its costs in these circumstances. Finally, the Court required the plaintiff to file a further amended statement of claim as a result of its interlocutory judgment issued on 5 September Mr Lewis says that this 19 Lewis, above n 1, at [17].

12 amendment resulted from a direction by the Court. Although that is correct as far as it goes, the broader picture is that this requirement was caused by Mr Lewis s inadequate pleading. However, in the circumstances I do not think that the amendments to pleadings can, on their own, provide a good ground for a significant uplift in costs. [45] Turning to the several interlocutory applications made in the course of the proceeding in this Court, the plaintiff disagrees with the defendant s contention that because he opposed unsuccessfully its interlocutory applications, it should be entitled to an uplift in costs. Mr Lewis relies, by analogy, on r 14.6(3)(b) of the High Court Rules which provides that increased costs can be awarded where a party opposing costs has contributed unnecessarily to the time or expense of the proceeding. Mr Lewis says that his opposition to the defendant s interlocutory applications was not unnecessary. He says that his opposition was not without merit and should not be the subject of a finding that he should have conceded the defendant s arguments from the outset. [46] So, the plaintiff says, his lack of success in opposing the defendant s interlocutory application should not be a factor supporting an uplift in costs. [47] Next, the plaintiff submits that because the issue before the Court was a novel one of law, it was in effect a test case as a result of which the general rules relating to costs should not apply. In this regard the plaintiff relies on the judgment of the Court in Adams v Alliance Textiles (NZ) Ltd. 20 The plaintiff submits that there were several factors present in this litigation which would justify letting costs lie where they fall. The question at issue is said to have concerned the scope of the Court s jurisdiction to resolve matters between parties after the conclusion of their employment relationship. [48] Next, the plaintiff says that the decision about the Court s jurisdiction will affect a large number of litigants or potential litigants as well as the Authority s jurisdiction. The plaintiff says that the case establishes an authoritative 20 Adams v Alliance Textiles (NZ) Ltd [1992] 3 ERNZ 822 (EC).

13 interpretation of s 161(1)(r) of the Act which had been subject to conflicting judgments of the Employment Court and the Court of Appeal. [49] Finally, in this regard, Mr Lewis submits that no judicial body has yet determined that his claim was without merit or cannot be pursued. Indeed the Court of Appeal has advised that Mr Lewis can pursue his claim in the courts of ordinary jurisdiction. I would note, however, that if he now chooses to litigate elsewhere, an independent costs regime will apply to that case on the merits of his claims. [50] Turning to the defendant s level of success in the proceeding, the plaintiff says that although the Bank was the successful party ultimately, elements of its case were either unsuccessful or only partially successful. Mr Lewis says that he succeeded in opposing the defendant s application to strike out his claim on the basis that it was not the same matter that was heard by the Authority. The Court refused to strike out on this basis and this was confirmed by the Court of Appeal. [51] Next, although the Court accepted that paras of the plaintiff s then statement of claim should be struck out, it noted at [83] of that preliminary judgment that the information contained in those paragraphs may form background information leading or contributing to the interpretation of the agreement into which the parties entered on 4 March [52] Next, the plaintiff says that the defendant s application to strike out parts of his claim was only partially successful. The Court refused to strike out a number of issues including whether comments made by the defendant could be disparaging ( I do not think it can be said that such advice did not amount to the making of a disparaging comment ). 21 Next, the Court refused to strike out paras 7-8 which alleged implied terms. The Court likewise refused to strike out paras 34(a)(iii) and (iv) and para 35(b). Further, the Court dismissed outright the defendant s application for determination of a preliminary question of law. So, the plaintiff says, the defendant pursued a large number of unsuccessful or minimally successful applications and that, in these circumstances, costs should lie where they fall. 21 Lewis, above n 1, at [80].

14 [53] Addressing, next, his conduct of the proceeding, Mr Lewis says that this was appropriate for the circumstances and that he took steps to minimise the time required during the interlocutory hearing. He says that he did not, for example, pursue his challenge to the defendant s objection to disclosing documents, or oppose the defendant s application for a verification order. He says that, in any event, the plaintiff s own unsuccessful application for a verification order occupies only one paragraph out of 117 of the interlocutory judgment. [54] Next, the plaintiff asks the Court to take account of his ability to pay an order for costs. He relies on his affidavit filed on 4 December In that affidavit, Mr Lewis says that the proceeding began when another potential bank employer (Westpac Banking Corporation) declined his application for employment and advised him not to apply to it again because he was a CV Cheat. Mr Lewis says that he was unable to find a job within his field of expertise (banking) until he was fortunate to find a friend who could vouch for his background and he obtained employment as a business development manager with a chartered accountancy firm. He says that five months later he took up a banking role with another large New Zealand bank, being able to do so because he was recruited by one of his previous managers who was also able to vouch for him. He was made redundant from this banking job in May 2015 and has been unemployed since then, finding it difficult to obtain further employment in his field. Mr Lewis says that he has been told by reputable recruiters that he is effectively unemployable due to the publicity about his litigation and that, despite assurances to the contrary, JPMorgan s internal systems have not been changed to record correctly that he was, he says, its CEO in New Zealand for the full period of his employment. [55] Mr Lewis says that the costs already awarded against him have consumed all his savings and that he is now both avoiding non-essential expenditure and is getting by due to the generosity of his family. Mr Lewis says that he has no income and no savings and will have to borrow to pay any award of costs which will simply compound his current financial hardship and that experienced by his family. [56] Next, Mr Lewis s submissions deal with the question of costs on the costs challenge. He says that he was successful and that costs should follow this event.

15 He submits that the Bank s Calderbank offer should not have the effect of reversing that position, even in the discretion of the Court. [57] Alternatively, Mr Lewis submits that the defendant s costs of almost $10,000 were excessive for this part of the case, given that the challenge was heard on papers and without any affidavit evidence. Although it is not in effect in cases such as this, Mr Lewis submits that the Court s Pilot Costs Guideline Scale 22 would award the defendant the sum of $2,230 on a Category 2 23 recovery rate and it would be inequitable for the Court to award the defendant more than four times that amount as it seeks. In these circumstances, also, the plaintiff submits that costs, in relation to the costs challenge, should lie where they fall. [58] In reply, the defendant submits that, in reality, Mr Lewis s claim did not change substantially after he sought legal representation in that the substantive issue between the parties remained the same as it had been in the Authority. The defendant says, therefore, that its offers of settlement before the Authority s investigation and determination are relevant to assessment of its costs in this Court and that the plaintiff would have been better off to accept the offer regardless of how his claim may have been pleaded. [59] The defendant says that its offers of settlement did address the real issues between the parties and that Mr Lewis s submissions to the contrary are simply wrong. [60] Next, the defendant says that Mr Lewis s affidavit claims that it has been the publicity surrounding this litigation which has made him effectively unemployable. The defendant says that this is self-induced and that Mr Lewis would have been better off accepting the offers of settlement made by the defendant at the outset. It says that: Any damage to the plaintiff's reputation was brought on himself as a result of pursuing a misconceived claim. 22 Practice Direction Costs Guideline Scale, October 2015 < employment-court/documents-1/practice-notes/costs-guideline-scale-october-2015>. 23 The submissions do not contain a Band reference under the trial scale.

16 [61] The defendant points out that the plaintiff s current solicitors were advising him during the negotiations that led to the settlement agreement between the parties on 4 March It says that the plaintiff therefore had an opportunity to obtain legal advice about the effect of the defendant s early attempts to settle the proceeding and must have been well aware of his ability to do so because he had previously engaged counsel in the same matter. [62] The defendant denies that its costs were excessive and says that the proceedings were complex and justified the engagement of a senior practitioner. [63] The defendant points out that the plaintiff s statement of claim dated 18 February 2013 was filed by his lawyers in error, which error was addressed by the Court in its Minute of 20 February It reiterates that the plaintiff filed five statements of claim in total. [64] The defendant says that Mr Lewis s opposition to its successful interlocutory applications was unmeritorious, as was his own unsuccessful pursuit of interlocutory relief, and that these, together, should result in an uplift in costs. [65] The defendant denies that this was a test case and submits that it did not raise novel points of law. It denies that the case is one in which it would be appropriate to allow costs to lie where they fall. [66] Expanding upon the absence of novelty, the defendant points to the judgment of this Court, by way of example, in Wade v Hume Pack-N-Cool Ltd 24 where the Court held that a challenge against a determination of the Authority, relating to a settlement not certified by a mediator under s 149 of the Act, was not justiciable and that bringing such a challenge was an abuse of process. The defendant also relies on the judgment in South Tranz Ltd v Strait Freight Ltd 25 to submit that there was existing case law that the Court did not have jurisdiction to award damages in relation to a certified settlement agreement. 24 Wade v Hume Pack-N-Cool Ltd [2012] NZEmpC 64, [2012] ERNZ South Tranz Ltd v Strait Freight Ltd [2007] ERNZ 704 (EC).

17 [67] Further, the defendant submits that it was not a novel argument that a settlement agreement, providing for the termination of employment (among other terms), might amount to a variation to an employment agreement. It points out that these circumstances had already been considered in other cases, for example Counties Manukau Health Ltd (t/a South Auckland Health) v Pack, 26 Majestic Horse Floats Ltd v Goninon, 27 and Musa v Whanganui District Health Board. 28 [68] In these circumstances, the defendant says that the plaintiff was arguing for a significant change in well-established law. It submits that such a stance should not cause a case to become a test case or to be categorised as raising a novel point of law which might justify awarding no costs. The Bank says that an outcome could encourage litigants to pursue claims that blatantly disregard established legal principles in the hope that even if they are unsuccessful, no costs liabilities may flow from that. The defendant says it would be unfair to it, having relied on existing law, if this were the case. [69] Next, the defendant submits that many cases, both in the Employment Court and the Court of Appeal on employment appeals, affect potentially large numbers of litigants or potential litigants, in the case of appeals to the Court of Appeal, because leave to appeal requires that an issue of law must be of general or public importance. However, the defendant submits, this does not mean that every judgment of the Court of Appeal will be a test case or raise a novel point of law. The defendant submits that by awarding costs to the defendant in the Court of Appeal, that Court did not consider this to be a test case or to raise a novel point of law. Likewise, the defendant argues that simply because there may be conflicting authorities about a question of law, such a case does not become a test case or one on a novel point of law. [70] The defendant submits that the merits of Mr Lewis s substantive claim about disparagement should not be relevant to determining whether this proceeding is a test case or raises a novel point of law. It says, also, that Mr Lewis is incorrect to say that no judicial body has determined that his case should not be pursued. It submits, 26 Counties Manukau Health Ltd (t/a South Auckland Health) v Pack [2000] 1 ERNZ 518 (EC). 27 Majestic Horse Floats Ltd v Goninon [1993] 1 ERNZ 323 (EC). 28 Musa v Whanganui District Health Board [2010] ERNZ 236 (EC).

18 correctly, that the Court of Appeal s decision was that Mr Lewis s claim could not be pursued in the employment jurisdiction. [71] Turning to Mr Lewis s ability to pay, the defendant submits that the ability of an unsuccessful party to pay costs is no longer a decisive factor in determining such a claim. [72] I have to say that I do not think that such decisiveness has ever been so or that this was the position adopted by Mr Lewis in this case. It is, however, a factor in the mix which includes such other considerations as being just to the interests of the successful party and the broader public interest, and any aggravating conduct by a party. That emerges from the cases relied on by the defendant including Tomo v Checkmate Precision Cutting Tools Ltd, 29 Scarborough v Micron Security Products Ltd 30 and Stevens v Hapag-Lloyd (NZ) Ltd. 31 For example, the Court noted in Stevens, while ability to pay is a relevant factor in deciding costs it is not a trump card. 32 [73] The defendant submits that, in reality, Mr Lewis is in a position to pay an award of costs because he appears to accept that to do so he would have to borrow money. [74] Last in reply, the defendant submits that the Calderbank offer made in relation to the costs challenge should have the effect of reversing the costs award made previously. That is because, the defendant says, it made an offer that would have been more beneficial to the plaintiff than the judgment obtained subsequently. It says that the plaintiff s rejection of that offer was unreasonable and should be taken into account by the Court. 29 Tomo v Checkmate Precision Cutting Tools Ltd [2015] NZEmpC Scarborough v Micron Security Products Ltd [2015] NZEmpC Stevens, above n At [33].

19 Decision [75] First, it is necessary to put this application into perspective by re-stating that the application to the Court by the defendant was one to strike out the proceeding on absence of jurisdiction grounds. The merits of Mr Lewis s claim were not ever determined. Although important arguments were mounted for and against the application to strike out, and these required research and careful presentation, the necessary preparation and hearing time was accordingly and appropriately limited. [76] Next, the questions of law raised by the plaintiff s proceeding, and which were the subject of the strike-out application, were not incontrovertible. Although, as the defendant submits, the plaintiff s case faced several precedential decisions that would prove to be hurdles to it, the law generally, no less employment law, develops by a process of re-examination of previously decided principles and their modification as may be appropriate over time. The plaintiff cannot be criticised for mounting arguments that both sought to distinguish this case and, if it was indistinguishable from precedent, to change the law. [77] Although the plaintiff s case can (and if it is to go further, must now) be pursued in the ordinary courts, it was not so clearly non-justiciable before the Authority or this Court that this should sound in an extraordinary award of costs against Mr Lewis. [78] The starting point for determining costs is two-thirds of the defendant s actual and reasonable costs. What its actual costs were has been disclosed by the defendant. These amounted to $98, (excluding disbursements). What should be determined as reasonable costs for the purpose of an award against the plaintiff is more difficult to decide. As has often been said before in such cases, where reasonable costs are determined to be less than actual costs, this is not a criticism of the defendant or its lawyers. Parties choose their representation and, thereby, the costs that they will incur for this. The Court is not critical either of that choice of representation or of the amounts incurred. The point is whether it is reasonable for these to be the basis of an award against the plaintiff.

20 [79] I have concluded that reasonable costs for the purpose of this application were less than the actual costs. That is for several reasons. Again without being critical of the defendant s legal representation, I do not consider this was a case warranting second counsel, at least at the hearing. Whilst it was good and justifiable practice to allocate different preparatory tasks in the litigation to lawyers with appropriate experience and skill, thus reducing costs to the client, and the strike-out argument was one for skilled and experienced senior counsel, to the extent that the defendant s actual costs reflect this, the plaintiff should not be called upon to contribute to funding second counsel. [80] Costs of $50,000 for arguing a strike-out application, including leading to which there had been several interlocutory applications, impress me as reasonable for the purpose of this decision. Further, because the judgment encompasses these also, reasonable costs for successfully opposing the plaintiff s challenge to the award of costs against him in the Authority would be $5,000. I will, therefore, take as a starting point for reasonable costs the combined sum of $55,000. [81] The next step is to determine whether two-thirds of this sum (ie $36,666) should be adjusted up or down. The defendant argues for an uplift to 75 per cent and although based originally on its actual costs, I will assume that this also applies to the figure of $55,000 determined by me to be reasonable costs. [82] In some, but not all, of the period of litigation in this Court, Mr Lewis was an unrepresented litigant. Some, at least, of the additional costs for interlocutory matters (in which the defendant was very substantially successful) may not have arisen if Mr Lewis had had the representation of counsel as he did subsequently. The plaintiff s unrepresented status did not, logically, reduce the amount the defendant considered it was obliged to spend on legal fees and, had Mr Lewis been represented at an earlier stage, the defendant may have been saved some of those costs. On the other hand, it is an important principle that a litigant who chooses to be unrepresented should not be penalised or disadvantaged as a result of that election.

21 [83] In all of the relevant circumstances, I am not persuaded to uplift the plaintiff s contribution to reasonable costs beyond two-thirds of $55,000, that is $36,667. That is to be the amount awarded as costs in the Court and in the Authority. [84] Next comes the important issue focused on by the defendant, its early Calderbank offer to the plaintiff. It says that if Mr Lewis had accepted sensibly its proposal for a payment to him, continued litigation would have been unnecessary and Mr Lewis would certainly have been better off than he is now. With the benefit of hindsight, of course that is correct. Nevertheless, I have doubts about the defendant s apparent certainty and comprehensiveness of this outcome. Its Calderbank offer did not address the important reputational elements of Mr Lewis s proceeding. Mr Lewis says that the defendant proposed nothing that would have counter-balanced its earlier refusal to confirm that Mr Lewis had been JPMorgan s CEO in New Zealand. This refusal is said to have caused him to be labelled a cheat and probably contributed to his inability to obtain an equivalent position elsewhere in a relatively small market of senior banking executives. Mr Lewis s concern was not, at least primarily, one of money although he says that he was deprived of income which he might otherwise have expected to receive had JPMorgan not denied what it eventually conceded, that Mr Lewis had been its CEO. [85] The defendant s Calderbank offers impressed me as being ones made with a view to concluding the litigation in an economic way but without addressing the plaintiff s reputational concerns. In these circumstances, I decline to take into account for the purpose of uplifting the costs award as the defendant submits the Court should, Mr Lewis s refusal of those offers of settlement. [86] Finally, I propose to cross-check my preliminary conclusions by ascertaining the likely award of costs had this proceeding been in the High Court and, secondly, as it might subsequently have been dealt with under this Court s 2015 practice direction establishing, as a trial, a guideline scale of costs, albeit applicable to proceedings issued after 1 January I re-emphasise that these are not the tools that I have applied to determine costs in this case but which, nevertheless, may be useful to provide an accuracy check. 33 Above n 22.

22 [87] Applying the High Court scale to the proceeding from its commencement by statement of claim in this Court to judgment provides an approximate equivalent costs award of $42,777. Similarly applying this Court s trial guidelines (described above) provides an equivalent figure of $34,251 using a Category 3, Band 2 analysis. [88] In these circumstances, I conclude that the most just outcome is for the defendant to be awarded costs of $36,667 together with its disbursements claimed of $ GL Colgan Chief Judge Judgment signed at 9.15 am on Thursday 7 April 2016