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First case up next week is a contractual dispute case. These are quite technical in the sense that there is usually not that much evidence that is admissible particularly subjective evidence around ‘intentions‘.

The legal argument is primarily concerned with an interpretation of the language used in the clause[s] under dispute.

This case is no different. There are four clauses that require analysis [interpretation] in the contract.

The law in New Zealand is clear: Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] (HL) is the leading case, and in particular Lord Hoffmann’s speech.

Essentially the legal principles boil down to these:

  1. First, construction is concerned with ascertaining the meaning which the document would convey to a reasonable person. It is not concerned with identifying some [fictional] common intention of the parties. The parties are taken to have contracted on the basis that they both accept the determination of an independent tribunal as to the meaning and effect of the language they have deployed, applying the principle of the ‘reasonable person’ test, thus, the meaning is objectively ascertained.
  2. Secondly, the court adopts a common-sense approach to the meaning of language, rather than an approach based on literalism or technical arguments of syntax and semantics. Whilst the general rule is that a common-sense reading is to be preferred, in respect of some contracts, or some species of contractual clause [exemption clauses] a stricter approach to language may [will] be used based upon legal policy.
  3. Thirdly, the tribunal considers as relevant not just the immediate context of the [total] instrument, but all admissible surrounding circumstances [legal, regulatory and factual background, but not the prior negotiations of subjective intention] when interpreting the language. Crucially, this approach is adopted whether or not a particular phrase or clause is unclear or ambiguous. Ambiguity is no longer a precondition for recourse to such extrinsic evidence.

Those than are the broad principles. In my case, there is both an exemption clause and an ambiguity, which is found in the exemption clause.

The word “or”, as it does in so many contractual cases provides the ambiguity. There should be no need to actually argue the exemption clause as the clauses prior to the exemption clause are clear on the facts and should not actually require recourse to the exemption clause in the first instance.

The Employer, has, of course, jumped directly to the exemption clause and ignored in their entirety all clauses that deal specifically with the legal question that is in dispute with regard to the contractual obligations.

More interestingly, this is a collective agreement. Which of course means that all Union Members so affected will have a claim under the provisions. Now I have done a back-of-the-envelope calculation and found a liability potentially reaching $1M. This is a significant dollar value and elevates my little case into a much more important case.

Now, from my previous utterances on this blog, the reader will realise that I am no ardent admirer of Trades Unions. This Trades Union is no exception, they have been singularly unhelpful to their member. They have been very happy to collect his Union dues through the years, but, when he actually required some legal support, suddenly, his dues were in arrears and…we’re very sorry but you are not actually a Union Member any longer.

The other technical issue which may arise is that the current collective agreement expired. The new collective is currently being negotiated. While I’m sure there are some heated negotiations occurring around our currently disputed clauses, the question is: where does my client stand in this grey area?

Under the Employment Relations Act 2000; s53(1) A collective agreement that would otherwise expire as provided for in s52(3) continues in force –

(a) if ss(2) is complied with; and (b) for the period specified in ss(3).

(2) This ss is complied with if the union initiated collective bargaining before the collective agreement expired and for the purpose of replacing the collective agreement.

(3) The period is a period (not exceeding 12 months) during which bargaining continues for a collective agreement to replace the collective agreement that has expired.

We comply with the law, therefore, we are good-to-go.