Nisha v LSG Sky Chefs New Zealand Ltd [2018] NZEmpC 8 

Employment Court – Costs award for multiple judgments – Distributing liability for costs when third party controls and finances vexatious claim 

The employee had brought a personal grievance against her former employer (LSG). The employee’s claim was financed by another former employer (PRI). LSG and PGI were competitors in the same industry and PGI’s support of the claim was part of a broader strategy to disadvantage LSG. Mr Hay, a former director closely associated with PRI, coordinated the claim. 

The claim was tenaciously advanced in a manner disproportionate to the modest issues at stake. As a result, the matter involved two preliminary judgments, 19 interlocutory judgments, the substantive judgment and five judgements concerning various aspects of costs. 

The Court held that the interlocutory bombardment had become vexatious and when the claim advanced to the substantive stage it became evident the claim was based on a sham (see para 318).The employee was unsuccessful on all pleaded causes of action. The employee had unreasonably rejected a number of Calderbank offers from LSG. In total, the Employment Court awarded LSG $195,926 in costs and disbursements. At issue was how these costs should be apportioned between the employee, PRI and Mr Hay. 

The Court held that the employee was vulnerable and had not controlled the claim. Rather, it was probable that a strategy was conceived for her which she was asked to approve (see para 261). When assessing the employee’s liability it was necessary to take into account her limited ability to pay and the possibility of imposing costs against PRI and Mr Hay (see para 273)

The Court held that PRI had shielded Mr Hay involvement in litigation to allow him to avoid personal liability (see para 316). In addition, it actively supported the claim. Accordingly, PRI was liable for LSG’s costs (see para 323). Mr Hay was not protected by the corporate veil since it did not apply when making costs awards against third parties (see para 338). Mr Hay was instrumentally involved in arranging PRI funds to be used for the employees claim and he was the only person who provided the relevant instructions for litigation (see para 344). Accordingly, Mr Hay was also liable for costs. 

The Court ordered the employee to pay $10,000 in costs. Mr Hay was to pay costs in respect of the final two interlocutory judgments which amounted to $19,164. The remaining costs of $166,784 were to be paid by PRI and Mr Hay who were jointly and severally liable.

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Page last revised: 6 April 2018