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Accident Compensation Cases

Kelly v Accident Rehabilitation & Compensation Insurance Corporation (EMC, 24/03/99)

Judgment Text

JUDGMENT OF PALMER J 
Palmer J
Introductory 
Ms Angela Kelly resigned from her employment with the Accident Rehabilitation and Compensation Insurance Corporation on 1 September 1995 in circumstances comprising — she then and consistently thereafter has contended — her constructive wrongful dismissal by the defendant. I shall subsequently refer to the Accident Rehabilitation and Compensation Insurance Corporation as such, as “the corporation”, “ARCIC” or as “the defendant”
When the plaintiff was allegedly constructively dismissed — which the corporation has adamantly contested from the outset — she was employed as the manager of the Sensitive Claims Unit (subsequently described as such, as “the unit” or “the SCU”). This national unit handled claims made to it by victims of sexual abuse which, given their inherent nature, were “sensitive claims” appropriately encompassed within the descriptive title of this structured undertaking conducted by ARCIC. The plaintiff had undertaken a management role continuously in the unit following her appointment in July 1993 as “team leader”, which was subsequently renamed in early 1994 as “manager” of and for the SCU. 
As the manager of the SCU Ms Kelly duly reported to Mr Hubert (“Bert”) Driessen, the then general manager operations. In this position Mr Driessen had the responsibility for the management of the service delivery of the corporation's services to its clients, including the service delivery of the defendant's services through its Sensitive Claims Unit to the unit's clients. During August 1995 Mr Driessen — in the circumstances I shall subsequently recount — caused a review to be undertaken/conducted by a specialist review team which was external to the corporation and which was constituted by Ms Anne Tucker of Anne Tucker & Associates, a Wellington based business which had previously been drawn upon by the corporation and which specialised in human resources consulting. Mr Driessen determined that the particular review of the SCU was to be of a sufficiently searching and wide-ranging character. He notified Ms Kelly of the intended review of the unit at a meeting which he purposefully arranged with her at a revised time of 2.00 pm on Friday, 11 August 1995. Consonant with Mr Driessen's intention the plaintiff was not made aware of the subject of this meeting in advance of it taking place. 
In this introductory phase of my judgment it will suffice for me to now traverse in highly condensed form comprising outline summaries, as it were, the events that then materially occurred, encompassing this meeting and the ensuing planned review of the unit which was to actively commence on Monday, 14 August 1995. 
The duration of the review in active interviewing/evaluative discussion settings with all staff then working in the unit was, consonant with Mr Driessen's planned contemplation, to be within a time frame comprising two weeks, and that the review report itself would/could also be prepared within this very restricted time frame. This contemplated time frame could not be achieved. The necessary interviewing required by the review team members was promptly undertaken over a two week period commencing on the deferred date for the interviewing process, that is to say Tuesday, 15 August 1995. The review report could not be completed within this time frame but it was nevertheless completed with timely expedition. 
Consonant with Mr Driessen's planned contemplation concerning this feature of the review, Ms Kelly — although there are highly contentious aspects relating to her absence from the SCU during the active undertaking of the review processes affecting the unit — was in fact continuously absent from the unit, except in the troubled/contentious circumstances affecting her during Monday, 14 August 1995. The plaintiff's absence from the SCU as its manager continued until she duly resigned from her employment on 1 September 1995 upon the contended basis that the corporation had, in the material circumstances then relevant to her employment situation, wrongfully — albeit constructively — dismissed her. 
The Contested Pleadings 
In her further amended statement of claim the plaintiff advanced her contended wrongful constructive dismissal on 1 September 1995 as her first cause of action. Ms Kelly has traversed in significant detail in her amended statement of claim material events which in her contention — cumulatively and separately assessed — rendered her dismissal wrongful. These particularised events allegedly occurred from 9 August until — and beyond — the plaintiff's contended wrongful dismissal on 1 September 1995, and included: 
events immediately preceding the review;  
the contended wrongful suspension of the plaintiff from performing her duties as manager of the SCU during the fortnight within which the review team interviewed the unit's staff (including management staff and, on 24 August 1995, the plaintiff personally);  
the contended conduct of the review by the external review team, which the plaintiff has contended was a fundamentally unfair process in material aspects for the reasons she has closely outlined;  
the corporation's material and sustained conduct towards the plaintiff, both concerning the review and during its continuance, was in alleged gross breach of material express and implied terms of Ms Kelly's employment contract with the defendant, and  
the corporation's conduct in fundamentally breaching its employment contract/relationship with the plaintiff seriously damaged — indeed repudiated — its primary obligation towards Ms Kelly of confidence, trust and fair dealing as its employee, and has occasioned serious damage to her personal and professional reputation and a very high level of humiliation, loss of dignity and injury to her feelings, independently of the special damages which have accrued to the plaintiff upon her contended wrongful constructive dismissal by the defendant. 
Pursuant to her first cause of action comprising her alleged constructive wrongful dismissal by the corporation, Ms Kelly seeks — as pleaded — the following damages awards and costs, namely: 
“(a)
Special damages reimbursing the plaintiff for the whole of any salary and benefits which have been and will be lost by her, by the time of hearing; 
(b)
Special damages for loss of anticipated salary and benefits up until 17 February 2006; 
(c)
General damages for undue mental distress, anxiety, loss of dignity, and injury to feelings — $75,000.00 
(d)
Compensation for damage to professional reputation — $75,000.00  
(e)
Aggravated damages — $75,000.00; 
(f)
Interest on all damages pursuant to the Judicature Act 1908
(g)
Costs. ”
The second cause of action advanced by Ms Kelly in her further amended statement of claim concerns contended breaches by the defendant of express and/or implied terms of her contract of employment with the corporation including: 
particularised clauses drawn from the collective employment contract which Ms Kelly has contended — but which the corporation contests — governs her employment relationship with the defendant in material aspects (paragraph 58(a) and (b)); 
the corporation's obligation to act “fairly and reasonably in its treatment of the plaintiff” and to comply with its “good employer” obligations provided for and defined in the Accident Rehabilitation and Compensation Insurance Act 1992, Second Schedule, cl 21; 
the immediately cited contended express and/or implied terms of the plaintiff's employment contract required “that the defendant ensure that the Review Report and review process carried out by the external and internal reviewers [the corporation's audit review] were done in a fair and proper manner” (paragraph 62). Ms Kelly contended that in breach of the plaintiff's obligations, the corporation “permitted the Review Report and review process to be carried out in an unethical and unprofessional manner”. In paragraph 63 of her further amended statement of claim Ms Kelly has closely particularised how and why, in her contention, the review report and the review process was carried out “in an unethical and unprofessional manner”. Ms Kelly contended that the review report was “seriously flawed” in significant important aspects which she has particularised in paragraph 64. These serious flaws allegedly comprised 
(a)
It demonstrated a serious lack of knowledge regarding the purpose and objectives of the SCU, and of the processes and procedures required to administer sexual abuse claims within the applicable statutory context; 
(b)
The Review Report was seriously inadequate in respect of its failure to address many of the major areas relating to the structure, function and processes of the SCU; 
(c)
The Review Report is inaccurate in many of its statements; 
(d)
The Review Report is selective and unbalanced in the material, view and opinions it has chosen to include and validate and those it has chosen to exclude. 
(e)
The Review Report was non-representative of the information it obtained; 
(f)
Hardly any of the information conveyed by the plaintiff or that given by management team members has been included in the Review Report, and the information included has largely been unfairly or inaccurately represented; 
(g)
The Review Report was misleading in that it quoted information and views made known to the team members out of context; 
(h)
A large [number] of unsubstantiated statements were made which impacted on the reputation of the plaintiff. 
: and 
consequentially upon the alleged breaches of the contended express and implied provisions of the plaintiff's employment contract with the defendant, in the aspects addressed through Ms Kelly's second cause of action 
(a)
the releasing of the review report and copies thereof to staff members in the unit, the “wider corporation”, the Counsellors Approval Committee (“CAC”) and allegedly others, further aggravated, through such circulation, the effect of the contended damaging statements made in the review report concerning Ms Kelly, and 
(b)
the contended breach of these express and implied terms of the plaintiff's employment contract “has caused damage to the plaintiff's professional reputation, particularly as the review, the Review Report and/or its content has been made known to persons in areas where the plaintiff would seek employment” (paragraph 66); 
Ms Kelly contended that by breaching the provisions of her employment contract immediately particularised, the corporation has consequentially “affected the plaintiff's ability to find alternative employment”. Ms Kelly has stressed that: 
“… Most of the areas in which the plaintiff could seek alternative employment potentially deal with the defendant, which would present difficulties for a future employer. ”
(Paragraph 67, further amended statement of claim.) 
The plaintiff further contended that she has suffered humiliation, loss of dignity and injury to her feelings through the release and distribution of the review report and copies thereof. 
Ms Kelly has sought general and special damages against and affecting the corporation — although certain aspects of the damages claimed duplicate aspects of the damages claimed under her first cause of action for contended wrongful constructive dismissal — as follows: 
“(a)
Special damages reimbursing the plaintiff for the whole of any salary and benefits which have been and will be lost by her, by the time of hearing;  
(b)
Special damages for loss of anticipated salary and benefits up until 17 February 2006; 
(c)
General damages for undue mental distress, anxiety, loss of dignity, and injury to feelings — $75,000.00  
(d)
Compensation for damage to professional reputation — $75,000.00 
(e)
Interest on all damages pursuant to the Judicature Act 1908
(f)
Costs. ”
Ms Kelly's third cause of action addressed in her further amended statement of claim is factually unrelated to her first and second causes of action which are, as advanced by the plaintiff, materially inter-related. The plaintiff's third cause of action concerns contended breaches by the corporation of material express and implied terms of Ms Kelly's contract of employment with the defendant, these breaches allegedly occurring in the context of a management competency programme which the corporation caused the plaintiff to participate in during May 1995. 
The contended express and implied terms of the plaintiff's employment contract which were relied upon by her in this immediate context were that: 
“(i)
the corporation impliedly ‘would ensure that the plaintiff was treated fairly and reasonably whilst participating in the Management Competency Programme, and that the Management Competency Programme would not unfairly disadvantage the plaintiff, as the Management Competency Programme … rated the plaintiff's competency as a manager’ (paragraph 70), and  
(ii)
the plaintiff's employment contract with the defendant required, as an integral part of ‘the defendant's personal grievance procedures …, inter alia, that a manager [of the corporation] discuss any such issue 'in an open-minded way' with the employee in order to reach a solution (clause 33.2)’ (paragraph 76). ”
In her further amended statement of claim Ms Kelly has particularised how and why the corporation significantly breached these contended implied and express terms of her employment contract which materially governed the parties' employment relationship and which were and are germane to the third cause of action advanced by the plaintiff. More particularly, in paragraph 74 of her further amended statement of claim concerning the implied term of her employment contract which I have already cited from paragraph 70, Ms Kelly has contended that: 
“The plaintiff has suffered unfair treatment and disadvantage by virtue of the Management Competency Programme, in that the Management Competency Programme report ascribed grades assessing the plaintiff's level of competence in 9 key areas. Because the Management Competency Programme did not contain realistic situations of the plaintiff's managerial work, and because of the way in which the Management Competency Programme and report were conducted in the plaintiff's case, she received some unfairly low grades. ”
Ms Kelly has contended, through the breaches of her employment contract by the corporation in this setting, she has suffered damage to her professional reputation as a manager, namely: 
“The Management Competency Programme formally evaluated the plaintiff's management skills and ability”;  
“The Management Competency Programme was distributed amongst the senior management group in the Corporation” (paragraph 77), and 
“In addition, the plaintiff has suffered professional and personal humiliation, pain and suffering because of the failure by the defendant to address the matters raised by her” (paragraph 78). These approaches allegedly made by Ms Kelly to the corporation concerned approaches which she purposefully made to the programme director and her manager, Mr Driessen, to address the issues expressly “raised by her in relation to the assessment programme report, however the defendant failed to take any steps to address the matters raised by the plaintiff” (paragraph 75). 
Ms Kelly has sought damages awards against and affecting the corporation concerning the matters at issue and which are traversed in her third cause of action, together with an award of costs, namely: 
“(a)
General damages for undue mental distress, anxiety, loss of dignity, and injury to feelings — $25,000.00; 
(b)
Compensation for damage to professional reputation — $50,000.00; 
(c)
Interest on all damages pursuant to the Judicature Act 1908
(d)
Costs. ”
In its amended statement of defence filed on 30 April 1997 the corporation has also encompassed therein a counterclaim against and affecting Ms Kelly. I briefly now traverse the nature of this counterclaim. In short, the defendant contended that: 
Ms Kelly was employed by it pursuant to an individual employment contract which she concluded with the corporation on 21 June 1993; 
it was allegedly a term of the plaintiff's contract of employment that she would observe the corporation's requirements as to confidentiality; 
Ms Kelly duly signed a declaration of secrecy in which she undertook (among other things): 
That when I leave the employment of the Corporation I will return all information or material of the Corporation or its associates, subsidiaries, agents, customers or clients; 
in alleged breach of this undertaking comprising part of her contract of employment, the plaintiff failed to return material belonging to the corporation; 
in contended further breach of her undertaking and employment contract, the corporation contended in paragraph 85 of its amended statement of defence and counterclaim that: 
“In breach of her undertaking and employment contract the Plaintiff returned to the Defendant's premises and collected and removed significant quantities of material belonging to the Defendant after she had left its employment. ”
The corporation specifically seeks an order from the Court for the return of the documents which the defendant contended the plaintiff has unlawfully/wrongly usurped, and additionally the defendant seeks an order as to costs in its favour concerning the corporation's counterclaim. 
Additionally to its counterclaim, the defendant has also pleaded “BY WAY OF AFFIRMATIVE DEFENCE” in paragraph 79 of its amended statement of defence that: 
“In the event that the Defendant is liable to the Plaintiff as alleged (which is denied) then the Plaintiff by her conduct contributed to any loss. ”
In support of this claim for contribution the corporation has provided particulars of this relief which it alternately seeks by way of subordinate defence, namely: 
Particulars 
(a)
The Plaintiff's actions in a previous internal review of the SCU in part led to the Defendants decision not to have the Plaintiff present during the review in that the Plaintiff was unco-operative and interfered with the review conducted by Shannon Auton in 1994. 
(b)
The Plaintiff failed to act reasonably in relation to the review in that the Plaintiff failed to consider the reasons for the review as explained to her by the Defendant and did not wait until the outcome of the review before resigning and further has failed to objectively consider the material in the Review Report. 
(c)
The Plaintiff failed to abide by her agreement not to be present in the Unit during the Review. 
80
As a result of the Plaintiff's contribution, any liability against the Defendant should be reduced by an amount to reflect that contribution. ”
The contended basis of contribution advanced by the corporation, as a subordinate alternate defence to the plaintiff's first, second and third alleged causes of action, comprising respectively: 
(i)
Ms Kelly's alleged wrongful constructive dismissal by the defendant on 1 September 1995; 
(ii)
the corporation's alleged breaches of its employment contract with the plaintiff arising out of and/or associated with the review of the SCU, and 
(iii)
the contended breaches of the plaintiff's employment contract in the setting of and arising out of and/or associated with the management competency programme, is contested by Ms Kelly. She contended this alternate pleading is legally inapposite to the plaintiff's common law claims and — in any event — completely devoid of merit. The plaintiff has formally filed a statement of defence to both the alternate basis of contribution pleaded by the corporation in its amended statement of defence and has also filed a statement of defence to the defendant's counterclaim. 
The Course of the Present Hearing 
This hearing was of a very lengthy duration extending over 45 sitting days, including the final five days which were required for counsel's closing arguments. 
The hearing was of a discontinuous character. I now disclaim any wish to purposelessly engage in recriminations. It will suffice for me to say that counsel for the parties misjudged — most significantly — the hearing time required for the case in their prehearing estimates of time. They were of the view that the hearing could be undertaken and completed within eight hearing days. In his interlocutory judgment of 20 November 1996 concerning the same parties Chief Judge Goddard, having heard counsel, assigned a fixture to accommodate the substantive hearing over an eight day period of a continuing character commencing on 14 April 1997. I referred to His Honour's approach in my interlocutory judgment also affecting the same parties and which I delivered to counsel on 13 December 1996, which is reported as Kelly v Accident Rehabilitation and Compensation Insurance Corporation [1997] ERNZ 173Has negative litigation history or citing cases, having been wholly or partly reversed or overruled[Red]  at p175.  
This assigned hearing commencing on 14 April 1997 did not proceed. I adjourned this assigned fixture on Saturday, 12 April 1997, upon the defendant's contested application for an adjournment. I heard counsel for the parties in an arranged teleconference on 12 April. The application for adjournment of the then imminent hearing was made by the corporation, through Mr Timmins, for what impressed me as the compelling reasons addressed in my interlocutory judgment which issued to the parties on 14 April 1997 confirming my reasons for adjourning the hearing. Both Ms Cooper and Mr Timmins recognised, and duly submitted to me on 12 April, that the duration of the hearing would significantly exceed eight days in their revised estimates of time. The revised estimates which I proceeded on for the hearing was then 12 days, for the reasons I have addressed and explained in my interlocutory judgment of 14 April 1997. At short notice, but with the assured co-operation of both Ms Cooper and Mr Timmins, we were hopeful in an anticipatory sense of re-assigning the adjourned hearing to two full sitting weeks commencing on 5 May and 26 May. Ten sitting days would be available through these two designated weeks and counsel and the Court were hopeful of obtaining further time, if required, of up to two additional days “early in the week commencing 12 May”
As it transpired, the re-assigned hearing time available was less than two full weeks during the periods commencing Monday, 5 May, and then 26 May 1997. Nine days were available comprising 5-9 May (inclusive) and 26-30 May (inclusive). With the now exercisable advantage of hindsight, whether 12 days or even 20 days had been available for continuous sitting time from 5 May 1997, this particular hearing simply could not have been completed within that time frame. In fact 45 hearing days were required for this fixture. Counsel's hearing estimates — and certainly my own estimate — never contemplated a hearing of this duration in this case. 
Secondly, I refer to the discontinuity in the hearing which occurred between 25 June 1997 and 3 November 1997 when the hearing resumed after an interruption of just over four months. The parties and their counsel had, through their initial and revised prehearing estimates of time expressed successively on 8 November 1996 and 12 April 1997, considered that the overall hearing would be completed within a 12 day hearing span which was in fact subsequently assigned up to — and inclusive of — 25 June 1997. In fact Ms Kelly was still being cross-examined by Mr Timmins at the close of the hearing on 25 June and it was relatively “early days” in the hearing at that time. 
Ms Cooper was significantly pregnant as at 25 June 1997. In counsel's prehearing estimates of time, it had not been contemplated that the hearing would require to be adjourned because of the pending birth of Ms Cooper's child. The hearing was necessarily — and entirely appropriately — so adjourned from 25 June to 3 November 1997 to accommodate counsel's advanced pregnancy, her child's birth and then the child's early infancy. This situation of extensive adjournment had inherent difficulties because Ms Kelly was still under cross-examination by Mr Timmins when the hearing was adjourned on 25 June 1997. These difficulties, essentially concerning the restraints upon and the extent to which Ms Cooper might consult with and take instructions from Ms Kelly regarding aspects of the plaintiff's case during the extensive adjournment while Ms Kelly was still under cross-examination, were, in the contested setting which had arisen between counsel — and upon which I fully heard them on 24 June — addressed in my reserved ruling which issued to counsel on 31 July 1997 under WEC 20A/97. 
Thirdly, it was not possible to complete the hearing during 1997. A further 25 hearing days were assigned between 3 November and 11 December 1997 when the hearing was further adjourned over the Christmas vacation period 1997/98. Thus further hearing discontinuity occurred before the hearing was resumed on 23 March and the evidence completed following a further three continuous hearing days up to 25 March 1998. The closing submissions of counsel were subsequently heard on 20-22 April and 27-28 April 1998. 
The record at the close of the hearing comprised a typed transcript of 3,475 pages, independently of the extensive briefs of evidence of differing witnesses called by the parties. Given the comprehensive nature of the contested alleged breaches by the defendant of the plaintiff's employment contract and her alleged wrongful constructive dismissal — particularised under the three contested causes of action advanced by Ms Kelly in her amended statement of claim filed on 9 April 1997 — a necessarily searching and thus very lengthy hearing in this particular case was, with the now wisdom of informed hindsight, inevitable from the outset. It was and is my considered view that this hearing was not unnecessarily prolonged by either side in the presentation of their respective cases. I now so remark because of certain of the submitted critical arguments urged upon me by counsel in their closing submissions, to which I shall further refer in due course. Again, quite independently of the extensive contested evidence called by Ms Kelly and the corporation respectively, and then painstakingly tested by counsel for the opposing parties, the parties have also adduced voluminous documentary evidence in support of their cases. Notwithstanding the very extensive character of this evidence, it impressed me as evidence appropriately adduced in this case, which was and is materially relevant to the wide-ranging issues which are central to the differing causes of action and which, in significant material aspects, the opposing parties have very vigorously contested. 
Determinations of fact and/or mixed questions of fact and law concerning a wide range of contested issues between the parties are at the heart of this case, extending to credibility findings affecting the plaintiff and other highly material witnesses called during the hearing. 
The Parties' Witnesses 
The plaintiff was the major witness called in support of her case. Ms Kelly's brief of evidence comprised 115 closely typed pages. Her evidence-in-chief — combined with my evidential rulings following contested issues of admissibility upon which I heard counsel for the parties — concluded on the fourth day of the hearing, that is to say 8 May 1997. The hearing did not proceed on 9 May 1997 because of the then temporary unexpected, but quite disabling, illness experienced by leading counsel for the corporation (Mr Timmins). Mr Timmins' cross-examination of Ms Kelly commenced on Monday, 26 May, and continued throughout that week. Her cross-examination continued on 23 June, following the brief initial calling of evidence by the plaintiff on that date of psychiatric evidence concerning herself from Dr Thakshan Fernando. The plaintiff's cross-examination then proceeded on 24-25 June, prior to the hearing being adjourned until 3 November 1997. Ms Kelly's cross-examination continued on 3 November. The plaintiff was then re-examined by Ms Cooper and Ms Kelly's evidence completed on 4 November 1997. Accordingly, Ms Kelly's evidence-in-chief occupied over three days, and her cross-examination almost nine days, succeeded by a relatively brief re-examination. 
Additionally to the psychiatric evidence called by the plaintiff from her psychiatrist, Dr Fernando, Ms Kelly called six further witnesses, comprising Ms Ann Alderson, Ms Finola Chamberlain, Ms Siobhon Smith, Ms Elizabeth Wall, Ms Frances Lapslie and Ms Christine Nelson.  
Ms Alderson had worked from August 1992 for the defendant in its head office as an advisory officer. Her initial appointment was for a finite term of three months. She believed this term was extended with a further term. Ms Alderson stated that prior to the end of this further term she applied for and was appointed as a client officer in the SCU. She continued working in the unit until she resigned from her employment with the corporation after Easter of 1995. I shall address material aspects of her evidence in due course. 
Ms Chamberlain was appointed to the newly established position of team leader in and for the SCU, commencing her employment on 25 July 1994. In this capacity she was responsible for the team of client officers who administered the claims undertaken by the unit. Her management role also extended to establishing a range of systems and processes and also refining those systems and processes already in place. 
Ms Chamberlain resigned from her employment with the defendant on 31 October 1995. In common with Ms Kelly — notwithstanding that Ms Chamberlain's claims were not framed in a common law setting but in a grievance setting under the Employment Contracts Act 1991 — Ms Chamberlain contended that she had exercisable grievance rights against and affecting the corporation. In paragraph 177 of her brief of evidence Ms Chamberlain contended that she considered, for reasons she particularised, that she: 

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