RPW v H, Part 1 of 3: The Legal Precedent With Terrifying Implications – by Tristam Price

Updated: Sep 15, 2020

This recent judgement from the Employment Court that upheld a $52,800 penalty against an employment advocate has been filed in the Court of Appeal for Judicial Review on the basis that the ERA had no jurisdiction over third parties.

The Employment Relations Authority (ERA) states on its website:

The Employment Relations Authority (ERA) is an independent organisation that sits below the Employment Court.

The ERA helps to resolve employment relationship problems by looking into the facts and making a decision based on the merits of the case, not on technicalities.

Any employer or employee who has an employment problem can apply to have their case heard at the ERA.

Parties to employment disputes that end up in the ERA are employees, employers and, while not mentioned above, unions and labour inspectors. In this article we examine the intent of the legislation with regard to the ERA’s control over third parties.

I was in the public gallery of the Hamilton Employment Court on 20 November 2019. “RPW” is a Waikato retirement community that had a severe bullying problem; a situation that improved with the replacement of its General Manager. Sam Hood and Cameron Fraser were counsel for RPH and Dr Caroline Sawyer acted for H; actually C and its director H.

The ERA determination eight months earlier provided for a $6,000 payment, or $3,000 each from C and H, to Mr Hood as compensation for a Calderbank offer to the Law Society as a form of blackmail (Para 345, 347). This means that, if unchallenged, Mr Hood would have received money from both sides of the dispute, which among other things would be a breach of Law Society rules. In the November hearing this was raised briefly with Judge Perkins asking Mr Hood if he was expecting to receive a share of the penalty, obviously recognising that award as a conflict of interests. Mr Hood spontaneously replied that he had not asked for it, but apparently had not taken any steps to disclaim it.

The successful challenge of the award to RPW’s counsel was illusory though; not only did Judge Perkins divert that portion to the Crown but he noted counsel’s description of the award as (2 x $3,000) “kickbacks” as insulting and unacceptable (Paragraph 53). He did not say what he thought of Member Larmer for awarding the “kickback” or of Sam Hood for not disclaiming it, other than such apportionment being inappropriate.

Before the Judicial Review gets underway, we will examine the legal basis for penalising third parties in the first place. Counsel for RPW advanced an obscure 2010 precedent, Musa v Whanganui DHB and this has also been used in another recent case before the Employment Court (decision pending) by counsel for Turuki Healthcare which is a challenge to penalties imposed against CultureSafe NZ Ltd, Halse and Simpson .

In the recent RPW v H decision, counsel for C & H argued that the ERA had no jurisdiction to punish third parties, so the penalties were invalid. Judge Perkins disagreed, using the 2010 Musa precedent as per Paragraph 32. And in Paragraph 33 the judge ruled that C and H were actually parties because of the way the settlement transactions took place. The relevant “parties” are employers and employees so we’re not sure which Judge Perkins thinks C and H were.

What we’ll examine now is the Musa precedent itself, and whether or not C and H were parties to a mediated settlement agreement.

Briefly, Mr Musa was the CEO of Whanganui DHB until about 2008. A Board member Mr Solomon repeatedly undermined Mr Musa which caused the new Chair to warn Mr Solomon that he was exposing the Board to liability for disparaging Mr Musa.

Mr Musa had left the WDHB under the terms of a mediated settlement and Mr Solomon disparaged him again, so Mr Musa made a claim in the Employment Court against WDHB and Mr Solomon, a third party.

Chief Judge Colgan dismissed Mr Musa’s claim. This is not unusual in itself, but what was interesting is that Judge Colgan quietly made a new rule that a mediated Record of Settlement binds third parties. But he did not use this rule, so it was of no practical use to either party because the claim against both respondents WDHB and Solomon was dismissed.

If a settlement agreement does bind third parties, we would expect to see evidence of this on the ERA website. Because there is nothing on the obligations or potential liability of third parties, it appears that it was not the intention of Parliament that under s149 of the Employment Relations Act 2000, a Record of Settlement binds third parties. Chief Judge Colgan talked about binding third parties because of the confidentiality in s 149, but he appears to have made that up.

We are not aware of any cases where the Musa precedent was used openly as a basis for enforcing settlement agreements against third parties, between 2011 and early 2018; notwithstanding a few kickbacks awarded to third parties in the last few years. The two senior counsel or RPW and Turuki are professionally close to each other, and to the now retired Chief Judge Colgan.

In Musa, Paragraph 55, Judge Colgan noted:

To constrain only parties would, for example, mean, on Mr Leggat’s (Mr Solomon’s counsel) interpretation, that a journalist could broadcast or publish with impunity the confidential terms of a settlement reached under s 149 so defeating, without sanction, the statutory confidentiality of that settlement. That interpretation of the word “person” cannot have been intended by Parliament.

Ten years later we are not aware of any attempts to enforce against any reporters, or any third parties for that matter, in the employment jurisdiction. When making the decision on Musa in 2010, Chief Judge Colgan would not have known that his new rule would not come up in publicised proceedings for another ten years. It doesn’t come up in ERA136 (2018) or ERA121 (2019), not until 2020 when both cases wereinto final submissions in the Employment Court.

We note the following in relation to three cases that the Court of Appeal have recently accepted for Judicial Review:

- The parties have been anonymised under circumstances that might justify a new article in itself.

- BOP DHB applied for former employee Ana Shaw and her employment advocate Allan Halse to be found in contempt of the ERA and penalised for a breach of an oral direction that they claim the ERA did not have the power to make and neither BOP DHB nor the ERA has overtly claimed they did have the power.

- Turuki applied for penalties against Allan Halse, Tracey Simpson and CultureSafe NZ Ltd for a purported breach of a client’s settlement agreement in the course of their repeated and increasingly desperate attempts to recover money owed to CultureSafe’s client.

Now that Judge Perkins has ruled that a settlement agreement binds third parties, RPW v H can be used as a more recent and solid precedent to bind anyone, eg: reporters and colleagues and even family members, and make claims against third parties in a jurisdiction where the defence of truth is not available. That is scary.

In Part 2, we explain why we believe that C and H was not parties to the settlement agreement, despite Judge Perkins ruling that they were parties as per Paragraph 33.

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