On 20 August 2021, the Supreme Court delivered judgment in FVM v TZB [2021] NZSC 102.  The case was not a defamation proceeding, nor predicated on defamatory statements. But the Court’s findings calibrate the determination of defamation law in employment-related disputes.

Defamation law in employment disputes

Defamation lawyers often advise upon such disputes.  The standard brief goes something like this: the employee (or former employee) will come upon statements by a manager or colleague which meets the usual elements of an actionable claim: publication, identification, and defamatory meaning.  The statements will be work-related and bear on the employee’s performance or character.  The question will be where the defamatory statement stands vis-à-vis a parallel personal grievance: should the plaintiff file separate proceedings through the courts? Or should the defamatory statements be enveloped by an existing claim for unjustified disadvantage/dismissal?  The legal advice will normally hedge itself around the application of qualified privilege and its potential rebuttal.  Another mainstay will be the legal and practical implications of what is usually a limited pool of recipients of the impugned email, performance appraisal, or the like.  Issues of reputational harm and proportionality (potential damages vs anticipated legal costs) will be assessed.  In most cases, the Employment Relations Authority, with its more simplified processes and less adverse costs consequences upon failure, will be considered the more suitable vehicle to litigate the dispute.

This advice is now virtually moot.  By its decision, the Supreme Court has positively restricted such claims—or, rather, ‘problems’—to the Authority’s jurisdiction.

FVM v TZB

The case itself needs only brief mention.  The plaintiff brought parallel proceedings in the Authority and High Court.  Both claims concerned issues that arose in the plaintiff’s employment.  The claim before the Authority included claims for unjustified disadvantage (with particulars of bullying, discrimination, differential treatment), unjustified dismissal, and negligence.  The High Court claim was brought solely in negligence, yet the particulars mirrored those in the claim before the Authority.

The claim before the Authority was stayed over medical issues.  Unable to lift the stay, the plaintiff sought to advance the High Court claim.  The defendant applied successfully to strike out the claim, the High Court finding the Authority had exclusive jurisdiction over the dispute.  The Court of Appeal upheld this decision.  The Supreme Court then granted leave to appeal.

On appeal, the Supreme Court examined the application of s 161(1) of the Employment Relations Act.  This section gives the Authority exclusive jurisdiction to make determinations about “employment relationship problems”.  To give the flavour, the jurisdiction covers disputes over individual and collective employment agreements, bargaining, personal grievances, wages, unions, strikes and lockouts (with exceptions), penalties arising from employment-related legislation, reinstatements, patent issues, and other matters.

However, the crunchy part for the Supreme Court’s consideration was the tort exclusion in s 161(1)(r).  In full, this provides:

The Authority has exclusive jurisdiction to make determinations about employment relationship problems generally, including— … any other action (being an action that is not directly within the jurisdiction of the court) arising from or related to the employment relationship or related to the interpretation of this Act (other than an action founded on tort).

The issue with which the Supreme Court grappled was how the tort exception squared with the Authority’s supposed exclusive jurisdiction over employment relationship problems.

Glazebrook J read the exclusion at face value: that actions in tort are excluded from the exclusive jurisdiction of the Authority. (See [218].)

The other judges disagreed.  The majority (Winkelmann CJ, O’Regan and Williams JJ) held that, in view of the themes they saw arising from the Employment Relations Authority (relationships, not contracts; empowerment, pragmatism and accessibility; and problems, not causes of action) the better view was that if a claim could be framed as a personal grievance (or another claim for which the Authority had exclusive jurisdiction), then it must be brought through the Authority.  (See [93]–[95].)

Flowing from this, the Court provided some examples of how this would work in practice.  They began with a defamation example (see [96]):

So, for example, if an employer accuses an employee of dishonesty, notifies other employees of the accusation and dismisses the alleged wrongdoer, that is an employment relationship problem because the words reflect their work context. There has been an unjustified dismissal. The employee may not sue the employer in the High Court, say in an action in defamation, though they would be able to seek compensation under s 123(1)(c) of the Act, which confers a broad discretion to award compensation.

According to the majority, the only caveat would be if the problem, though work-related, could not be addressed within the framework of a dispute for which the Authority had clear exclusive jurisdiction.  Only in those cases, the majority suggested, would the tort exception be activated, thus permitting the plaintiff to bring proceedings through the ordinary courts. (See [129].)

In a separate decision, William Young J reached, essentially, the same conclusion as the majority: that the tort exception (or “carve-out”) does not affect the width of the examples of dispute (or “heads of jurisdiction”) for which the Authority has exclusive jurisdiction. (See [172].)

In sum, the law is now settled that, if a claim for defamation (or indeed any other tort save for industrial/economic torts pertaining to strikes and lockouts) can be framed as a conventional employment relationship problem, such as a personal grievance, then it must be brought through the Authority.

What does one make of the Supreme Court’s decision from a defamation standpoint?

Sensible and practical.  Indeed, litigants have previously overcomplicated employment relationship disputes by bringing parallel claims through the courts.  In the defamation context, the most noteworthy case in recent years is Opai v Attorney-General [2018] NZHC 2267.  There, the plaintiff, a non-sworn employee of New Zealand Police, sued the Attorney-General on the Police’s behalf in respect of five statements said to be defamatory: a draft performance appraisal, an internal briefing paper, a report recording a complaint, some alleged slanders at a staff meeting, and some entries in a diary of notes the plaintiff’s manager handed over to his successor.  While the High Court proceeding ensued, Ms Opai’s parallel claim before the Authority lay dormant.

Ms Opai’s defamation claim fell down on fundamental principles. As the plaintiff, Ms Opai was required to prove the alleged publications of the statements in question — that is, whether the third parties alleged to have read or heard the publications at issue, did in fact do so. Only a handful of alleged publications were proved. Among several affirmative defences raised by the defendant, perhaps Ms Opai’s biggest stumbling block was the defence of qualified privilege.  Brewer J held this defence applied to all the statements complained of.

Brewer J concluded his judgment with these comments (see [132]):

As the hearing of this case progressed I was increasingly saddened. Ms Opai worked her way to a responsible position in the Police. She had the respect and admiration of her superiors. Then S/Sgt Traill, her manager, was replaced on secondment by S/Sgt Culpan who did not know her. Ms Opai was shocked by his first draft of her annual appraisal. Her reaction included going to S/Sgt Culpan’s superior and later extended to raising a personal grievance. The first draft was amended. But, Ms Opai began to see malice behind any action of S/Sgt Culpan. I understand there is a number of personal grievances against the Police currently before the Employment Relations Authority. I fear Ms Opai is now obsessed with the way she perceives she was treated as an employee. This case is in point. There is no basis for a defamation case given the employment context, the nature of the statements complained about and the processes being followed when they were made. Really, Ms Opai’s complaints are how she was treated as an employee and they go beyond the snapshot of her employment shown to me in this case. I raised this with Ms Opai’s counsel. It was made clear that one of the main reasons for bringing this claim in defamation was that potential yield in damages was greater than that possible in the Employment Relations Authority.

Ironically, at an early stage of the proceeding, the defendant had sought to strike out the claim on the basis the dispute was within the exclusive jurisdiction of the Authority: Opai v Culpan [2015] NZHC 2010.  The defendant had submitted the Court should not be swayed by the plaintiff’s “dressing up” of her employment relationship problems as defamation claims, and urged the court to look at the substance of the claims as personal grievance claims. (See [14].)  However, Associate Judge Sargisson dismissed the application, placing store in the fact that, as pleaded, the claim contained the essential elements of defamation.  (See [16].)  The Associate Judge recognised, “No doubt that pleading duplicates in part complaints that lie at the heart of her personal grievance claim…” but, nevertheless, dismissed the application, finding comfort in the fact that one proceeding could be stayed until the other was concluded.

With the benefit of the Supreme Court’s latest decision, it seems clear Ms Opai’s defamation claim would now have been struck out at the outset.

Could any problems arise from the Supreme Court’s decision?

From a defamation standpoint, one would think the few potential situations that might test the utility of the decision, will far be outweighed by the clarity the decision brings to individuals weighing up their choice of forum (and those advising them).

On one view, it might be thought lay Authority members, confronted with defamation nuances and vagaries, might end up spending Friday evenings trying to square screeds of Gatley and Cheer with Authority imperatives of simplicity, looser rules of evidence and speed of decision-making.  Unlikely.  If thorny legal issues arise, one expects they could be diverted to the Employment Court for determination.  Indeed, the Employment Court has long been populated by judges well versed in defamation law, from the late Chief Judge Tom Goddard (father of current Court of Appeal judge David) to Judge Bruce Corkill QC.

One quirk may be the effective shift from two-year limitation periods to 90 days for employment relationship defamations.  Then again, once a grievance is raised, it would seem the applicant has three years to issue the proceeding before the Authority, as opposed to the usual two years for plaintiffs to issue ordinary proceedings under the Limitation Act.

One problematic scenario that can be envisaged is where an employer defames, say, their employee and a third party over some work-related allegation; say, an allegation that the employee corruptly awarded a tender to the third party with whom they had some prior personal relationship, and that the third party was complicit in this corruption.  If a multiplicity of actions was to be avoided, it would seem odd that the third party should find themselves seeking justice before the Authority.

In the Supreme Court, the majority observed of its approach (at [109]):

If Parliament considers this position unsatisfactory, it will no doubt move to amend the legislation accordingly. William Young J suggests that one possibility is to provide for default assignment of employment-related disputes to the Authority, with a power to remove appropriate cases to other courts, tribunals or agencies. We endorse that suggestion.

Given recent reverberations about simplifying civil procedure, it would seem that, unless there are some truly chaotic pieces of litigation in years to come, where non-parties to the employment relationship find themselves stuck within frameworks incongruous to their part in a dispute, Parliament is unlikely to legislate over the Supreme Court’s latest decision.  If anything, perhaps Parliament will move to give the Employment Court wider first-instance powers to resolve factual issues of tort in a workplace setting.