Mr Mitchell was employed as a guillotine operator by Printlink (a Blue Star subsidiary) from 1990. He brought a personal grievance for constructive dismissal following his resignation in 2003. Soon after mediation, Printlink made a Calderbank offer to settle for $13,000 under section 123(1)(c)(i) of the Employment Relations Act 2000, which amount was expressed to include $3,000 towards his past legal costs. Mitchell chose to ignore the letter completely.

He was unsuccessful in the Employment Relations Authority, and appealed to the Employment Court. Following a two-day hearing de novo, Mitchell was partially successful and was awarded $10,000 under section 123(1)(c)(i). In its costs decision, the Employment Court said it would “disregard” the Calderbank offer, stating that it did not address the personal vindication element which was “at the heart of Mr Mitchell’s claim”. The Court concluded that Mitchell had abandoned his large monetary claims during the hearing (particularly the $400,000 claim for exemplary damages) and that therefore he was not primarily motivated by money but by having a Court assess the merits of his claim. Despite acknowledging that “his desire for vindication led him to adduce voluminous material and evidence to the Court and present his case in an unfocussed manner which resulted in some frustration and inconvenience to the defendant” (not to mention cost), the Court awarded him $1,000 ERA costs, $3,000 Court costs, and $1,510 in disbursements. 

In Blue Star Print Group (NZ) Limited v Mitchell [2010] NZCA 385, the Court of Appeal found there was no basis for the Employment Court Judge’s conclusion that Mitchell had abandoned his claim for exemplary damages. It therefore held there was a reviewable error of law in the exercise of the Court’s discretion on that premise, and also in the Court’s choosing to disregard the Calderbank offer.

The Court of Appeal rejected a submission that Calderbank offers in the employment law context should not necessarily be treated in the same way as those in respect of ordinary civil cases, given the trust and confidence inherent in the employment relationship. It said at [19]:

“We accept that there may be cases where vindication through seeking a statement of principle in the employment context may be relevant to the exercise of the Court’s discretion. Thus the relevance of reputational factors means that cost assessments are not confined solely to economic considerations. But equally, an offer to pay compensation at a level that is reasonable might well be regarded as conveying a distinct element of vindication to the plaintiff.”

It reiterated that the developed jurisprudence in respect of Calderbank offers requires a “steely” approach, and that the scarce resources of the Court should not be burdened by litigants who choose to reject reasonable settlement offers, proceed with litigation, and then fail to achieve any more than was previously offered.

This is good news for defendants who act reasonably to try to resolve disputes and limit their exposure in the face of determined litigants. Plaintiffs (and their lawyers) who draft claims for significant remedies, at the same time claiming that it is “not really about the money”, need to ensure they weigh the potential costs of proceeding.

Carolyn Heaton was counsel for the appellant in Blue Star Print Group (NZ) Limited v Mitchell [2010] NZCA 385.

NZLawyer magazine, issue 146, 1 October 2010