By Anna Longdill

Determination of preliminary legal issue: whether the Employment Court has the power to order compensatory relief for alleged breach of the duty of good faith by a union to a member – Employment Relations Act 2000, ss 4, 4A, 161, 189 – use of s 189 equity and good conscience jurisdiction as a remedial compensatory mechanism

Harte v Midwifery Employee Representation and Advisory Service Inc  [2025] NZEmpC 5

Jacqueline Harte is a midwife and member of a union, the Midwifery Employer Representation and Advisory Service (MERAS). The relationship between a union and its members is a qualifying employment relationship under s 4(2)(c) Employment Relations Act 2000 (the Act), requiring both parties to deal with each other in good faith.

Harte alleged that MERAS had breached the duty of good faith in two ways: (a) it misled and deceived her by making representations about her, and (b) it made statements about her that were false and to her discredit. She filed proceedings in the employment jurisdiction seeking compensatory remedies (and, in the first instance, a penalty).

Harte also filed proceedings in the District Court under the Defamation Act 1992 against a MERAS official and a midwife whom she alleged had made defamatory statements about her. Damages were sought.

A legal issue arose as to whether Harte’s claim for damages could be obtained in the Employment Court on the basis of breaches of the duty of good faith and, if not, whether the claim was accordingly excluded under the Act, leaving Harte able to pursue her defamation action.

The Employment Court approved a preliminary legal issue for determination.  The approved question was:

For the purposes of this proceeding where it is alleged by the plaintiff that the defendant is in breach of its duty of good faith, does the Court have power to order compensatory relief under s 189(1) of the Employment Relations Act 2000, or is the controversy between the parties excluded pursuant to s 161(1)(r)?

Section 189 sets out the equity and good conscience jurisdiction of the Court:

189      Equity and good conscience

(1)        In all matters before it, the court has, for the purpose of supporting successful employment relationships and promoting good faith behaviour, jurisdiction to determine them in such manner and to make such decisions or orders, not inconsistent with this or any other Act or with any applicable collective agreement or the particular individual employment agreement, as in equity and good conscience it thinks fit.

Section 161 sets out the jurisdiction of the Employment Relations Authority (which the Employment Court assumes for the purposes of a challenge). It provides 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)” (s 161(1)(r)).

Harte argued that s 189 provided a basis for the court to award damages for a breach of the obligation of good faith, relying on statements by the Supreme Court in FMV v TZB [2021] NZSC 102, [2021] 1 NZLR 466.

Alternatively, if that were not the case, she argued there was no effective remedy and s 161(1)(r) applied, meaning she could pursue her District Court defamation proceedings.

MERAS argued that Harte’s case was correctly brought in the employment jurisdiction, but that s 189 could not be used for compensation as that would be inconsistent with another provision in the Act: s 4A, which is a penalty provision for failure to comply with the duty of good faith (but imposes a high bar, including reference to the failure being deliberate, serious and sustained).

MERAS maintained that Harte must establish the threshold for the imposition of a penalty under s 4A and there was no other compensatory option.

Applicable principles: Employment Relations Act 2000, ss 4, 4A, 161, 189 – what common law rights may be applicable? (breach of statutory duty and defamation) – can s 189 be used as a remedial compensatory mechanism? (yes, s 189 has a broad scope and may be considered for remedial purposes) – does s 4A preclude damages for breach of the duty of good faith because it provides the sole remedy for such breaches? (no, nothing in statutory history to indicate the introduction of a penalty regime was also intended to rule out possibility of damages action for breach of the obligation of good faith. It is a constitutional principle that presumes Parliament did not intend to abrogate common law rights. Do not consider a concern about floodgates is warranted in the present context).

Held: Where there are no other potential remedies of a compensatory nature for breach of good faith duties (as in this case which involves an employment relationship problem between a member and her union), the court may consider exercising its jurisdiction under s 189 in the particular circumstances.

For the purposes of this proceeding, the court does have power to order compensatory relief under s 189(1) of the Act.