Ipsofactoj.com: International Cases [2002] Part 9 Case 5 [NZCA]



Ark Aviation Ltd

- vs -





14 AUGUST 2001


McGrath J

(delivered the judgment of the court)


  1. The concept of unjustifiable dismissal which gives rise to a personal grievance is a creature of statute. Its elements are accordingly a question of statutory interpretation. So are the scope of the power and duty to award remedies for unjustifiable dismissal under the relevant Act and the constraints on doing so. In the present appeal an employee was held to have been unjustifiably dismissed because he had not been given the opportunity to address the employer’s concerns prior to his dismissal. The issue in the appeal is whether, in these circumstances, evidence of the employee’s misconduct is nevertheless relevant to the possible reduction of remedies.


  2. Ark Aviation Ltd, the appellant, owned a float plane which it operated from Lake Taupo. It took sightseers on short trips. From 1979 when it was formed until 9 September 1997, the respondent, Mr. Newton, was its manager and sole employee. He flew its plane and was responsible for the day to day running of the business. He took bookings, collected money, paid bills and organised supplies. He also did the maintenance work that was required on the plane. In its operations during that time the appellant was very much a one man band.

  3. In 1997 the appellant’s share capital was held equally by its three directors -the appellant, Mr. Campbell and Mr. Harnish. The appellant and Mr. Campbell were original shareholders. Mr. Harnish acquired his shares in the early 1980s. At the time he did so it was agreed that Mr. Harnish would get a commercial pilots licence and a rating on the company’s aircraft. He did so but later encountered resistance from the respondent to his continuing involvement in the company’s operations. On one occasion the respondent told Mr. Harnish to stay out of the company’s affairs in the bluntest of terms. Although the respondent later apologised for the incident it had an impact on the willingness of Mr. Harnish to have any hands-on dealings with the appellant. Thereafter he had little personal involvement with the company and, according to evidence he gave at the Employment Tribunal, he found it well nigh impossible over the years to obtain any sort of financial information concerning the business. He refused to guarantee financing arrangements entered into at the time of the purchase of a new engine for the aircraft.

  4. In 1997 Mr. Harnish was provided by Mr. Campbell with accounts for the company covering a fourteen year period. He was surprised to find that the company had made a net loss, year after year, but was continuing to operate. Working from the cost of fuel over the 14 years, as shown in the appellant’s accounts, Mr. Harnish made indicative calculations of the revenue that should have been earned by the company. He ascertained, as best he could over the period concerned, the average costs of aviation fuel, likely per hour fuel consumption of the aircraft, and adjusted hourly rates charged to passengers. He also made some assumptions as to average passenger loads. The aircraft could carry five passengers but generally carried only two or three. On the basis of those calculations Mr. Harnish formed the view that gross revenue from flying operations over the period should have been about twice that shown in the accounts. He had schedules of his calculations typed and approached Mr. Campbell seeking a meeting between them and the respondent.

  5. The accounts of the appellant were also shown by Mr. Harnish to his accountant who raised further concerns. One related to expenditure of $10,000 on travel to the United States paid for from company funds. Another concerned a loan in 1987 on which interest had never been paid, to a company called Mid Island Aviation Ltd in which both the respondent and Mr. Campbell held shares. A third was that no insurance premiums had been paid on the aircraft from the time that a finance company loan had been paid off.

  6. Notice was given by Mr. Harnish of a directors’ meeting to be held on 9 September 1997. The fourth item of business listed was: "A review of management of the company and decision on the future management". The meeting was attended by the three directors and Mr. Harnish’s accountant. According to evidence given by Mr. Harnish at a hearing of the Employment Tribunal which took place on 11 November 1999, at the commencement of the meeting the respondent was told he could have an adviser present if he wished but took the view that he should proceed with the meeting.

  7. Mr. Harnish had at the meeting a written list of "Things to put to Keith", from which he worked. The seven matters listed were the travelling expenses question, a loan to the appellant from Mr. Burr, the loan by the appellant to Mid Island Aviation, revenue shortfall in banking, the poor performance of the company between 1983 and 1996, an incident of engine failure on take-off in 1996 and failure to report it to the Civil Aviation Authority, and the lack of insurance cover on the appellant’s aircraft.

  8. The item of travelling expenses concerned the trips to the United States to attend conventions in 1990 and 1993. There was a difference between Mr. Harnish and the respondent at the meeting over whether the trips were of a personal or business nature. The respondent explained that the reason for the loan from Mr. Burr was to finance the purchase of a new engine for the aircraft. Interest had been paid at the bank rate. There was a difference over whether interest had been paid on the appellant’s loan to Mid Island Aviation. Mr. Harnish pointed out none was shown as paid in the accounts. He said in evidence it was agreed that there should be a compounding rate of 12%, that being the rate of interest paid by the appellant on the loan from Mr. Burr.

  9. This brought the meeting to the item "Revenue shortfall and banking". Mr. Harnish gave evidence that at this point he began to refer to the typed schedule of calculations he had prepared, having given a copy to the respondent. He told the respondent of his view that, based on the calculations, it was probable he had not banked considerable revenue. To clarify these concerns he asked the respondent for copies of the flight logs or the diaries that he had kept as manager of the company.

  10. At this point, according to Mr. Harnish, the respondent returned the schedule and said: "I do not have to justify this to you. You’re not getting those diaries, they’re personal". He then walked out of the meeting.

  11. The respondent’s evidence to the Tribunal was that there had been further discussion at the meeting about fuel usage in which he had pointed out that in recent times he had sold fuel to other operations using the fuel depot at Lake Taupo for a profit. His point was that there was no allowance for such sales in the calculations. He accepted that he then left the meeting.

  12. Mr. Harnish said that because the meeting had received no explanation in response to his questions about an apparent shortfall in income, and because access was not given to logs and in particular the diaries which might have verified actual numbers of trips and payments received, the remaining directors concluded that the respondent’s position of manager of the company should be terminated immediately.

  13. A letter of dismissal was delivered to the respondent’s home at 4.30pm that afternoon. In relation to the reasons for the dismissal the letter said:

    At the meeting the Directors resolved that your employment as Manager of the Company be terminated. The decision was taken after considering a number of matters relating to the operation of the company. These included the poor performance of the Company and your inability, or unwillingness, to explain the shortfall of revenue.

  14. Following the meeting Mr. Harnish and Mr. Campbell went through the appellant’s records. A number of further matters came to their attention. The company’s car was registered in the respondent’s name. Fuel charge cards had been applied for in the company’s name for aircraft owned by Mid Aviation Ltd. That company’s business was being conducted at the office of the appellant. Invoices indicated that other aircraft had been fuelled at Taupo Airport using the appellant’s facility. This surprised the two directors as the sole aircraft of the appellant was based on Lake Taupo and had its own fuel storage there. There was no need as they saw it for fuel at Taupo Airport.


  15. On 12 September 1997 the respondent gave notice of a personal grievance claiming unjustifiable dismissal. A general meeting of the appellant held two weeks later removed him as a director. The respondent lodged a personal grievance claim with the Employment Tribunal in September 1998. The grievance was heard by the Tribunal on 11 and 23 November 1999. It issued its decision on 15 February 2000.

  16. The Tribunal found that the appellant had a cavalier attitude to cash handling. It was not his practice to issue receipts for cash paid because of the inconvenience, an excuse which the Tribunal rejected. Accordingly the only transaction receipts for which there were financial records were those paid for by cheque and credit card. There was no accounting for cash payments at all. He also admitted paying for some items with cash without always getting or keeping receipts. All this had left him open to the concerns of the other directors.

  17. In relation to the indicative calculation by Mr. Harnish of likely income based on fuel costs shown in the accounts, the Tribunal concluded he had formed a legitimate concern over what was happening with the income derived from flights. The appellant did not produce in evidence the flight diaries he had maintained, because in his view they were private. The Tribunal considered they might have answered some of the concerns. The calculations were a crude indicator, open to fluctuation of cost items and variation of interpretation, but Mr. Harnish had a good idea, from his own experience with another company in the industry, of what the earnings should have been. The Tribunal concluded overall on the basis of his evidence that the shortfall shown in the calculations was considerable.

  18. In relation to other matters raised the Tribunal took the view that because the trips to the United States were disclosed in the accounts, copies of which were provided to Mr. Campbell, the company must be taken to have condoned that use of the company’s money. Mr. Campbell had however objected to the expression by the respondent of his intention to cancel the insurance policy on the aircraft. The Tribunal found that was not a prudent management decision and that the respondent should have continued to have arranged such insurance.

  19. The Tribunal also found the incident involving engine failure on take-off due to a broken crank-shaft ought to have been reported to the Civil Aviation Authority, and that the matter was serious. In this respect the respondent was "gravely derelict in his duty to ensure that the operation was run safely".

  20. Nevertheless the Tribunal found that the respondent had not been given a fair opportunity to address the concerns of the directors prior to his dismissal. That was because after he had left the meeting his employment was immediately terminated. The Tribunal concluded that the fuel usage against banking receipts question was a complex matter for which the respondent was entitled to have time to study the figures and give a considered response. Overall, while the matters of concern to the company were grave and may have required prompt action, it was open to the appellant to suspend the respondent from his position while an investigation continued and it was precipitate to terminate his employment. There should have been a fair inquiry in which the respondent was given an opportunity to be heard in his own defence. It followed that the dismissal was procedurally unfair and thus unjustified.

  21. In relation to remedies the Tribunal observed that s 40(2) of the Employment Contracts Act 1991 required the Tribunal to consider the extent to which the actions of the employee contributed towards the situation giving rise to the personal grievance. It was mandatory that any award be reduced in the event that default was found. Independently of ss 40(2) and 41(3), in equity and good conscience under s 79(2), proved misconduct had to be taken into account even if the employer had no knowledge of it at the time of dismissing.

  22. The Tribunal found that the appellant’s behaviour was blameworthy to such an extent that remedies it otherwise would have awarded should be reduced by 100%. In essence that was because at the hearing before the Tribunal the dismissal had been proved to be substantively justified. The respondent’s conduct had indeed warranted summary dismissal without notice.


  23. The respondent appealed to the Employment Court. The matter was heard on 27 October 2000 and a reserved judgment was delivered by Judge Shaw on 10 November 2000.

  24. Judge Shaw observed that the Tribunal hearing was the first opportunity for the parties fully to engage in the issues resulting in the dismissal. The respondent had been entitled to convene a company meeting to question the respondent about the other directors’ concerns and had been thwarted from doing so when the appellant stormed out of the meeting. On the other hand the response of immediate dismissal was precipitate. In consequence the Tribunal had to assess the disputed facts in a context where nothing had been established through a proper inquiry prior to the employer’s decision. The procedural defects of the appellant’s process were so serious, in the view of Judge Shaw, that it was necessary for the Tribunal to be cautious about coming to firm conclusions on whether the dismissal had been substantively justified at the Tribunal hearing. The conclusions that were reached were relied on to deprive the appellant of remedies.

  25. The Judge was critical of the absence of a specific statement of all contributing behaviour which had led to the Tribunal’s decision to reduce any remedies by 100%. The Tribunal found:

    there is a direct relationship between the actions of the applicant and his failure properly to account for moneys, and other acts and omissions, and the personal grievance.

    In another part of its decision however the Tribunal had taken into account evidence of the respondent’s actions which subsequently came to light. Some of this material confirmed suspicions at the time of the aborted meeting but parts of it also raised new issues. Matters in that category which the Tribunal found proved and to be of substance had influenced the Tribunal’s ultimate decision on remedies. The Judge then proceeded to examine whether they had been properly taken into account.

  26. Judge Shaw held that only contributory conduct clearly known to the appellant at the relevant time could be assessed in reducing remedies that otherwise should be awarded. Moreover that conduct had to be known, rather than merely suspected. This required knowledge deriving from an inquiry that involved consultation with the respondent.

  27. The Tribunal had held that the appellant’s concerns over an income shortfall, arising in particular from the fuel usage based calculations, were well founded. That conclusion was rejected by Judge Shaw because of the defects in procedure prior to dismissal. She also doubted that the hearing before the Tribunal had provided the respondent with a fair opportunity to fully consider this material. It had been made available for consideration only the day before the hearing. This had prevented the appellant from conducting a proper accounting analysis.

  28. Other matters raised at the Tribunal’s hearing, but not previously, included the poor condition of the aircraft, failure to report the engine failure during take-off and failure to insure the aircraft. Here, however, the respondent had an answer for each allegation. The Judge’s conclusion was that the respondent did not appear to be taken by surprise even though this was the first time the allegations were put to him. Judge Shaw also regarded the respondent’s refusal to hand over the diaries and his indication he was not prepared to discuss the respondent’s concerns further, as matters that legitimately could be taken into account on remedies. Overall however the Tribunal was held to be in error through taking into account unresolved substantive matters to reduce the remedies available to the appellant.


  29. The Employment Court excluded from its consideration in remedies matters of which the appellant had knowledge at the time of dismissal but concerning which it had not heard the employee’s version of the events. The question in the appeal to this Court is whether that approach is based on a misinterpretation of ss 40 and 41 of the Employment Contracts Act 1991.

  30. So far as are relevant to the present appeal these provisions provide as follows:




    Where the Tribunal or the Court determines that an employee has a personal grievance, it may, in settling the grievance, provide for any one or more of the following remedies:


    The reimbursement to the employee of a sum equal to the whole or any part of the wages or other money lost by the employee as a result of the grievance.


    Reinstatement of the employee in the employee’s former position or the placement of the employee in a position no less advantageous to the employee.


    The payment to the employee of compensation by the employee’s employer, including compensation for-


    Humiliation, loss of dignity, and injury to the feelings of the employee; and


    Loss of any benefit, whether or not of a monetary kind, which the worker might reasonably have been expected to obtain if the personal grievance had not arisen:


    Where the Tribunal or the Court determines that an employee has a personal grievance by reason of being unjustifiably dismissed, the Tribunal or Court shall, in deciding both the nature and the extent of the remedies to be provided in respect of that personal grievance, consider the extent to which the actions of the employee contributed towards the situation that gave rise to the personal grievance, and shall, if those actions so require, reduce the remedies that would otherwise have been awarded accordingly.




    Subject to subsections (2) and (3) of this section, where the Tribunal or the Court determines, in respect of any employee,-


    That the employee has a personal grievance; and


    That the employee has lost remuneration as a result of the personal grievance,-

    the Tribunal or the Court shall, whether or not it provides for any of the other remedies provided for in section 40 of this Act, order the employer to pay to the employee the lesser of a sum equal to that lost remuneration or to 3 months’ ordinary time remuneration.


    Notwithstanding subsection (1) of this section, the Tribunal or the Court may, in its discretion, order an employer to pay to an employee by way of compensation for remuneration lost by that employee as a result of the personal grievance, a sum greater than that to which an order under that subsection may relate.




    The Tribunal or the Court is obliged to make an order under subsection (1) of this section; and


    The Tribunal or the Court is satisfied that the situation that gave rise to the personal grievance resulted in part from fault on the part of the employee in whose favour the order is to be made,-

    the Tribunal or the Court shall reduce, to such extent as it thinks just and equitable, the sum that would otherwise be ordered to be paid to the employee by way of reimbursement.

  31. Mr. Harrison QC for the appellant first contended there was no scope at all in proceedings under the personal grievance provisions of the 1991 Act for a rule that excluded from consideration matters not gone into at the time of dismissal. He contended that such a rule had emerged in the Employment Court through a misunderstanding of Airline Stewards and Hostesses of New Zealand Industrial Union of Workers v Air New Zealand Ltd [1990] 3 NZLR 549. Mr. Dench for the respondent replied that neither the Employment Court nor the Tribunal was in error in finding that in personal grievance proceedings whether a dismissal was justifiable had to be assessed as at the time it took place. That conclusion directly followed from this Court’s decision in the Airline Stewards & Hostesses Union case that an employer is not required to show the employee actually committed the relevant misconduct, but rather that the employer had reasonable grounds for that belief at that time and following proper inquiry. He cited in support this Court’s objective expression of the test for unjustifiable dismissal in Northern Distributor Union v BP Oil New Zealand Ltd [1992] 3 ERNZ 483, 487. He also relied on Whanganui College Board of Trustees v Lewis [2000] 1 ERNZ 397 where at para 19 this Court referred to the danger in applying the civil standard of proof of overlooking the distinction between the employer’s inquiry and that of the Tribunal or Court.

  32. Mr. Harrison’s bold contentions are essentially a challenge to the Tribunal’s decision that the dismissal of the respondent was unjustified. That decision was not in issue in the Employment Court and under s135(1) of the Act cannot now be challenged in this Court. In those circumstances it is both unnecessary and inappropriate to address the question further.

  33. Mr. Harrison however mounted an alternative argument that such a rule of exclusion did not apply at the stage when the Tribunal or Employment Court was determining remedies for personal grievances under ss 40 and 41. He submitted that existence of such a rule was inconsistent with the purpose of those provisions, which was that links between an employee’s contributory fault and the situation giving rise to the grievance should be reflected, as necessary, in reduced remedies. He emphasised that where ss 40(2) and 41(3) applied, a reduction in remedies was mandatory.

  34. Mr. Dench submitted that if an employer could obtain relief at the remedies stage, having ignored the employee’s right to a fair opportunity to be heard before the decision to dismiss was taken, there would be no incentive on employers to apply fair process. There would also be a lack of balance in the parties’ position where the employer lacked reasonable grounds for believing there had been misconduct by the employee, as it is never open to the dismissed employee to succeed at the grievance hearing by showing he or she had not actually committed misconduct. These factors, Mr. Dench said, favoured confining what is covered by the situation that gave rise to the grievance to material known at the time of an unjustifiable dismissal and concerning which the employee’s perspective had been heard.

  35. This issue must be resolved by interpretation of the provisions of the Act that deal with remedies. The starting point is that it is an object of the statutory personal grievances procedure that the remedy for a proven grievance is determined in each case by the circumstances of the case (s 26(d)). Sections 40 and 41 give effect to that object and must be read together and in the context of the object. Under s 40 three remedies are available to the Tribunal or the Court following a determination that an employee has a personal grievance. They are reimbursement of lost wages, reinstatement and payment of compensation. Section 40 expresses the power to confer such remedies in broad discretionary terms. However that language must be read subject to certain requirements of s 41(1) concerning reimbursement. These direct that, when a finding that an employee has a personal grievance is made, the Tribunal or Court must order the employer to reimburse the employee within the statutory limits for remuneration lost as a result of the personal grievance.

  36. Importantly, however, both the discretionary power to award remedies and the statutory obligation to order reimbursement of lost wages are made subject to further statutory direction. Under s 40(2) "the extent to which the actions of the employee contributed to the situation that give rise to the personal grievance" must be considered and the Court must reduce remedies which it otherwise would have awarded "if those actions so require". Similarly, in relation to the particular obligation under s 41(1) to direct reimbursement of lost remuneration, the Tribunal or Court must reduce the reimbursement sum under s 41(3) if satisfied that the situation that gave rise to the personal grievance resulted in part from fault of the employee. The reduction is to be "to such extent as it thinks just and equitable".

  37. In the present case Judge Shaw encapsulated the respective requirements of ss 40(2) and 41(3) in expressing the question on appeal to the Employment Court as:

    Whether the Tribunal was justified in finding that the appellant had so contributed to his situation that he should receive no remedy for procedural breaches.

  38. The Judge held it was not open to the Tribunal, when considering the impact of the respondent’s contributory conduct on remedies for his grievance, to have regard to matters not known at the time to the appellant, in the sense that such knowledge had not been reached following consideration of the appellant’s side of the story. Only matters which, as the Judge put it, were "truly known" at the time of the dismissal could be taken into account in considering remedies. These consisted only of those matters on which discussion was complete at the 9 September 1997 directors’ meeting, together with the respondent’s refusal to hand over diaries and to discuss further the other directors’ concerns at the meeting. Judge Shaw favoured that approach to applying the remedies provisions principally because of the desirability, in unjustifiable dismissal cases, of first considering the employer’s procedure when considering the dismissal overall. The Tribunal had of course found the dismissal unjustifiable because of flaws in that procedure.

  39. When in the Airline Stewards & Hostesses Union case this Court observed that "further evidence might be relevant to the question of appropriate remedy if that issue arose" it clearly had in mind that, under the provisions of the 1987 Act, evidence that was not relevant to the issue of unjustifiable dismissal might be relevant to application of the remedies provisions. The Court had held the question of whether a dismissal was unjustifiable was confined to whether, as a result of a complete and fairly conducted inquiry, the employer was justified in believing that serious misconduct had occurred. The Court was indicating that further evidence, not available to the employer from its inquiry, and thus not directly relevant to the reasonable belief, might be relevant to decisions on remedies.

  40. That approach is consistent with the underlying policy reflected in s 26(d), and reinforced by the broad discretionary scope of the remedies provisions in the 1991 Act. This is reflected in the apparent purpose of ss 40(2) and 41(3) that where an employee’s fault has contributed towards an unjustified dismissal situation, remedies must be reduced to the extent that is just and equitable. Although this characterisation reflects the language of s 41(3), we see no significant difference in the different expression in s 40(2) of this requirement. The provisions essentially carry the same meaning.

  41. The purpose of the direction to assess the nature and extent of remedies, including sums which in general must be awarded to reimburse lost wages according to what is thought just and equitable, is to enable the Tribunal and the Employment Court to do justice to the overall situation that is proved at the hearing of the grievance. That is ultimately done when determining remedies. The statutory provisions should be interpreted to give them full effect, consistent with this statutory purpose.

  42. The present case is one where the employer has dismissed the employee for misconduct without having completed a fair and reasonable inquiry into its legitimate concerns. The employer was however able to prove to the satisfaction of the Tribunal that the employee’s acts of misconduct in fact extended to the incidents which at the time had merely given rise to concern. In our view, matters of which an employer was aware at the time which, directly or indirectly, impacted on its decision to dismiss may be shown to be actions contributing to the situation, or fault on the part of the employee resulting in the dismissal. They then will form part of the "situation which gave rise to the personal grievance" under ss 40(2) and 41(3). There is no threshold under ss 40 or 41 of the Act that requires such knowledge or awareness to derive exclusively from a sound process, provided it is of sufficient substance to be the basis for legitimate concern at the time of the dismissal.

  43. The view we take of the meaning of ss 40 and 41 appears generally in accord with that applied in the Employment Court in cases such as Ramage v Ministry of Education [1998] 2 ERNZ 188, 201, Porter v Board of Trustees of Westlake Girls High School [1998] 1 ERNZ 377, 393 and Paewhenua v Manukau City Council [1998] 2 ERNZ 376, 385 from which views we see the Judge’s decision in the present case as a departure.

  44. It follows from what we have said that the matters included in the list of Mr. Harnish headed "Things to put to Keith" all qualified as actions which at the time of dismissal gave rise to the legitimate concern of the appellant. To the extent they were proved at the hearing they could accordingly support the Tribunal’s decision to reduce remedies for the grievance to nil.

  45. While it is not strictly in issue in the present case we should make it clear that we do not rule out the possibility that in some situations misconduct of an employee only discovered after a dismissal may be so egregious as to require the discretion to provide for a remedy under s 40(2) not to be exercised at all in favour of the employee whose grievance has been established. We have in mind deliberate and serious misconduct by an employee, which significantly affects the employer, and which amounts to a serious abuse of the trust and confidence that underpins the relationship.

  46. As the Employment Court pointed out in Carlton & United Breweries (NZ) Ltd v Bourke [1994] 2 ERNZ 1, it would be surprising indeed if Parliament had intended that such misconduct, knowledge of which was unavailable until an employee had left the place of employment, should not be relevant to remedies simply because the dismissal was procedurally flawed. In the Carlton & United Breweries case the Court saw the issue as turning on s 79(2) of the Act, which gives jurisdiction to determine such matters as in equity and good conscience, the Tribunal thinks fit. The difficulty we see with that approach is that under s 79(2) the equity and good conscience jurisdiction can only be exercised consistently with the Act. The true basis must accordingly first be sought in the specific statutory provisions as to personal grievances. We are inclined to the view it lies in ss 40(1) and 41(1)(b). A contract of employment is a special relationship under which workers and employers have mutual obligations of confidence, trust and fair dealing: Telecom South Ltd v Post Office Union Inc [1992] 1 NZLR 275, 285 per Richardson J. An employee guilty of a fundamental breach of those contractual obligations arguably cannot be said under s 40(1) to have lost wages or other money or any benefit, or under s 41(1)(b) to have lost remuneration, as a result of a personal grievance. If that is so no obligation to order reimbursement arises at all. Nor would reinstatement or compensation for humiliation, loss of dignity or injury to feelings, both of which are discretionary remedies, be appropriate.

  47. The answer may also be implicit in the term grievance in the definition of "personal grievance" under s 27. The essence of a grievance in its ordinary meaning is the infliction of a wrong or hardship upon a person. An employee guilty of a fundamental breach of such central obligations to the employer justifying dismissal arguably cannot be said to have been subjected to wrong or hardship and thus to have a grievance at all. However neither point was argued before us and the present case does not require their determination.

  48. The consequence of our conclusion that matters known to an employer at the time of an unjustifiable dismissal can be considered in relation to remedies, if they gave rise to legitimate concern about misconduct at the time, is that the appeal must be allowed. A subsidiary question also argued before us addressed the Judge’s concerns that the Tribunal itself had denied the respondent the opportunity to conduct a proper analysis of the indicative calculations of revenue shortfall. We do not accept that any breach of natural justice or unfairness occurred. The respondent received the document in time to give it consideration during the evening before the Tribunal’s hearing. Mr. Harnish was cross-examined on the key variables by Mr. Dench with some effect, in particular concerning his assumptions of fuel consumption per hour. The Tribunal in its decision accepted that this was a complex calculation with many variables and the failure of the appellant to give a considered response was an important factor in the Tribunal’s finding of unjustifiable dismissal. But the Tribunal also recognised the fuel usage based calculations were a crude form of measure open to fluctuations and variation of interpretation. It found no more than that they gave rise to a legitimate concern as to what had happened to income. Our impression of the decision is that it was the failure to properly account for monies received which carried greatest weight in the Tribunal’s decision to reduce by 100% remedies that might otherwise have been awarded and there was no factual issue seriously in dispute on that question. Other matters of legitimate concern as at 9 September 1997 included the failures to report the engine failure and to insure the appellant’s aircraft. Both were subject of adverse findings by the Tribunal which could properly have been seen as relevant to remedies.


  49. In those circumstances we have given careful consideration to Mr. Harrison’s submission that we should reinstate the Tribunal’s decision. Mr. Dench, however, urged on us that there were other issues argued in the appeal on which the Employment Court did not rule. In case that is the position, we allow the appeal but remit the case back to the Employment Court for final determination of the appeal including the question of costs.

  50. The appellant is entitled to costs in this Court in the sum of $3,000 together with reasonable disbursements, including travelling and accommodation costs of counsel, to be agreed or failing agreement determined by the Registrar.


Airline Stewards & Hostesses of New Zealand Industrial Union of Workers v Air New Zealand Ltd [1990] 3 NZLR 549; Northern Distributor Union v BP Oil New Zealand Ltd [1992] 3 ERNZ 483; Whanganui College Board of Trustees v Lewis [2000] 1 ERNZ 397; Ramage v Ministry of Education [1998] 2 ERNZ 188; Porter v Board of Trustees of Westlake Girls High School [1998] 1 ERNZ 377; Paewhenua v Manukau City Council [1998] 2 ERNZ 376; Carlton & United Breweries (NZ) Ltd v Bourke [1994] 2 ERNZ 1; Telecom South Ltd v Post Office Union Inc [1992] 1 NZLR 275


Employment Contracts Act 1991: s.40, s.41, s.79(2)


R E Harrison QC for the Appellant (instructed by Dawsons, Howick).

S C Dench for the Respondent (instructed by Adrienne Morgan, Taupo).

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