|
|
Home
| Databases
| WorldLII
| Search
| Feedback
University of Otago Law Theses and Dissertations |
Last Updated: 11 April 2024
Frustration is Redundant for Employment Contracts: Why Aotearoa New Zealand’s Modern Employment Law Should Abolish Frustration
Gabriel Clarke
October 2023
A dissertation submitted in partial fulfilment of the degree of Bachelor of Laws (Honours) at the University of Otago – Te Whare Wānanga o Otāgo
Acknowledgements
To my supervisor, Dr Simon Connell, for all your hours of support, kindness and enthusiasm
– your guidance has been invaluable.
To Dr Dawn Duncan for igniting what I know will be a lifelong interest and enthusiasm for Employment Law.
To the Pride in Law Otago (PILO) exec committee members over these many years. Thank you for helping to cultivate a safe and inclusive space within the law school. PILO has been one of the most special aspects of my journey at Otago.
To the dwellers of 9N12 for tolerating my constant presence. Apologies if you walked in while I was studying in darkness, illuminated only by a single lampshade at any moment this year.
To Kate Thompson for keeping her patience in helping me navigate the Law Style Guide even where several layers of ‘frustration’ were occurring simultaneously...
To the contributors at my seminar for donating their time, input and ideas.
To my friends – Jackson, Cabriana, Nicola, Eve, Nikita, and Meredith for always being a good time and supporting me throughout my five years at Otago.
To the wonderful Law Faculty here at Otago and the friendships I have made with lecturers along the way – Professor Nicki Taylor in particular.
To my family, Byron, Alessandra, and Rafael for all your encouragement, humour, and love.
Special shoutout to Raf for the Monday night dinners.
(i) Can incapacity constitute a substantive ground of dismissal for the stranded migrant worker? 45
(ii) Could this dismissal be carried out in a procedurally justified manner? 45
Introduction
Playing the frustration card provides the employer with an exit route from the contract of employment worthy of the great escapologist Harry Houdini. This makes it an enticing prospect for an employer.1
A critical problem for employment law, or labour law,2 is how contractual thinking in judicial decisions can undermine modern employment protection legislation. On one hand, this might seem inevitable; employment rights contained within the Employment Relations Act 2000 (ER Act) are available only to employees who work under a written employment agreement. As with any other contract, a contract of employment in principle is expected to be subject to contractual doctrines.3 On the other hand, the ER Act advocates the view that an employment relationship is not merely contractual but relational.4 A firm adherence to the law of contract as a means of regulating employment relationships fails to acknowledge the ER Act’s intention of reducing the inherent discrepancy of bargaining power present in the employment relationship.5 This bears an unacceptable resemblance to an attitude now passed.6
One area where this tension is particularly apparent, which will form the topic of this dissertation, is the application of the legal doctrine of frustration to employment relationships. The friction lies in frustration’s “automatic operation”7 and ability to discharge parties of their contractual obligations and further performance8 as soon as the frustrating event occurs or “kill the contract”.9 In doing so, frustration prejudices an employee’s statutory prerogative to take a
1 David Cabrelli and Jessica D’alton “Common Law Frustration and Redundancy in the Context of Covid-19 Furlough” (1 September 2020) UK Labour Law Blog <https://uklabourlawblog.com/2020/09/01/common-law- frustration-and-redundancy-in-the-context-of-covid-19-furlough-by-david-cabrelli-and-jessica-dalton/>.
2 While this dissertation predominantly uses the modern term “employment law” as opposed to “labour law” these terms may be used interchangeably.
3 John McMullen “Frustration of the Contract of Employment and Statutory Labour Law” (1986) 49 MLR 785 at 785. Moreover, this ought to be so whether the contract is for a short-term specific purpose, a longer fixed- term, or an indefinite period terminable by notice.
4 Employment Relations Bill 2000 (8-1), explanatory note.
5 Section 3(a)(ii).
6 Employment Contracts Act 1991 (EC Act).
7 John Burrows “Frustration of Contract” in Law Commission Contract Statutes Review (NZLC R25, 1993) 275 at 277.
8 Daniel Brinkman “Planet Kids Ltd v Auckland Council: An Analysis of the Supreme Court's Approach to Frustration” (2016) 22 NZBLQ 126 at 127.
9 Planet Kids Ltd v Auckland Council [2013] NZSC 147 at [9] citing J Lauritzen AS v Wijsmuller BV (The Super Servant Two) [1990] 1 Lloyd’s Rep 1 at 8; Bank Line Ltd v Arthur Capel & Co [1918] UKHL 1; [1919] AC 435 at 452; and Toni Collins “The Doctrine of Frustration, Commercial Leases and the Canterbury Earthquakes” (PhD Thesis, University of Canterbury, 2016) at 37.
personal grievance against an employer or former employer, removes any requirement for procedural fairness, casts doubt on whether an employer owes their usual good faith obligations, and threatens an employee’s contractual entitlement to redundancy compensation.
The purpose of this dissertation is twofold. First, to analyse the employment law protections that frustration can thwart, and second, to argue that dismissal should be preferred above frustration as the avenue to pursue when terminating an employment relationship. Intrinsic to this second aim is the abolition of frustration in employment law. Decision-makers are aware of the danger that frustration poses and have responded by raising the threshold of the doctrine so that it is very difficult to meet.10 But the doctrine remains an available cause of action. This dissertation goes one step further and calls for the removal of frustration from employment law.
In Chapter I, I delve into the legal doctrine that forms the basis of my dissertation: frustration, including its historical underpinnings and modern formulation. In Chapter II, I survey case law to determine how the Authority and Employment Court have applied frustration and to identify the threat that frustration poses to modern employment law protections. Chapter II argues for the exclusion of frustration where the circumstances also give rise to a dismissal. Chapter III examines the scope of dismissal law to reason that internal labour law dismissal mechanisms can address essentially every scenario that frustration otherwise could. Chapter IV brings together my findings and makes the argument for abolition.
Ultimately, the ongoing texts and judgments that entertain the idea of making out frustration in the context of employment law are unhelpful and engender an unacceptable amount of uncertainty. 11 Abolition would make the position more straightforward for employers and employees and prioritise the protection of employee rights, ensuring circumstances beyond their control do not unfairly burden them, consistent with the objectives of the ER Act.12
10 See Mark Freedland The Personal Employment Contract (Oxford University Press, Oxford, 2006) at 534. Until now, the general trend in the case law has been to restrict the circumstances in which the employment contract will be treated as having automatically terminated by the doctrine of frustration by developing various methods to limit the scope of frustration in unjustified dismissal cases.
11 See Robert Guthrie and Frances Meredith “Long-Term Employee Illness and Frustration of the Contract of Employment” (2007) 49 JIR 87 at 98 who argues that “the doctrine has little application in contemporary employment relationships” as opposed to ruling it out together.
12 Employment Relations Act 2000, s 3.
I Chapter I: The Legal Doctrine of Frustration
This chapter will provide an overview of the history of frustration as it developed through the common law. It will then state the modern tests of frustration as stated in Planet Kids v Auckland Council, the leading judgment in New Zealand, and subsequent judicial approaches to the doctrine of frustration.
After contracting parties have made an agreement, subsequent events can occur and make performance impossible or difficult, which can prevent the parties from enjoying the purpose that they had in mind. 13 Historically, the common law was not concerned as to why performance was unable to be carried out by the promisor.14 This rule was enunciated by the Court in Paradine v Jane in the 17th century where the Court held that an intervening civil war that forced a lessee from the leasehold did not entitle the lessee to withhold rent from the lessor.15 The rule can be stated as follows:16
if a person binds himself or herself by contract absolutely to do a thing, he or she cannot escape liability for damages by proving that as events turned out performance is futile or even impossible.
Contractual duties were absolute, in that supervening events provided no excuse for non- performance.17 In doing so, the law sought to preserve the sanctity of contract. A further rationale for such a rigid rule was that it was open to parties to guard against supervening events by carefully drafting the contract and providing for such contingencies. In the absence of such drafting, a party is deemed to have voluntarily entered into an unconditional obligation.18 As stated by the court in Touteng v Hubbard, “the parties must submit to whatever inconvenience may arise therefrom”.19 In other words, liability for breach of contract is strict.20 If performance
13 Stephen Todd and Matthew Barber Burrows, Finn and Todd on the Law of Contract in New Zealand (7th ed, LexisNexis, Wellington, 2022) at 786.
14 Marcus Roberts “Planet Kids: The Resurrection of the Failure of Consideration Approach to Frustration?” (2014) 26 NZULR 350 at 351.
15 Paradine v Jane (1647) Aleyn 26 at 173.
16 Todd and Barber, above n 13, at 786.
17 Edwin Peel and GH Treitel The Law of Contract (15th ed, Sweet & Maxwell, London, 2020) at 19–002.
18 Todd and Barber, above n 13, at 786.
19 Touteng v Hubbard [1802] EngR 413; (1802) 3 B & P 291 at 299.
20 See Eurico Spa v Phillip Brokers (The Epaphus) [1987] 2 Lloyd’s Rep 215 at 218 where the court stated that “parties to a contract are free to agree upon any terms which they consider appropriate, including a term
turns out to be more challenging than expected the promisor must either perform or pay damages for failing to do so.21
Gradually, and beginning in the 19th century with Taylor v Caldwell, the legal doctrine of frustration developed as an exception to the rule of absolute contracts.22 The application of this rule produced many harsh results23 and demanded the impossible out of contracting parties: knowledge of the future.24 The common law began to recognise that contracting parties should not be reasonably expected to provide for every possible contingency or supervening event expressly.25 Courts started to excuse a party’s performance in cases where that performance was rendered impossible by supervening events outside the promisor’s control that the promisor did not contemplate.26 While the presumption underlying Paradine v Jane remains the default stance of the common law,27 frustration represents an exception that developed to mitigate the rigour of the common law’s traditional insistence on the performances of promises irrespective of supervening events.28
After being established in Taylor v Caldwell, the doctrine of frustration entered a period of growth. 29 In the 19th century, courts recognised excusable impossibility, frustration of adventure, and failure of consideration as three separate grounds for frustration.
requiring one of the parties to do the impossible... If they do so agree and if, as is inevitable, he fails to perform, he will be liable in damages.”
21 Tsuriel Rashi and Andrew A. Schwartz “Contracts Capsized by COVID-19: A Legal and Jewish Ethical Analysis” (2021) 178 J Bus Ethics 403 at 404.
22 AWB Simpson “Innovation in Nineteenth Century Contract Law” (1975) 91 LQR 247 at 269–273.
23 See Carter v Cunmming [1667] EngR 198; (1666) 1 Cas in Ch 84 where a property was destroyed, and the court held the tenant liable for the ongoing rent. See also Belfour v Weston (1786) 1 TR 650.
24 Peel and Treitel, above n 17, at 19–002.
25 Taylor v Caldwell [1863] EngR 526; (1863) 3 B & S 826.
26 Roberts, above n 14, at 351.
27 See Grant Smith and Co and McDonnell Ltd v Seattle Construction and Dry Dock Co [1920] AC 162 at 169 where the Court states, “There is no phrase more frequently misused than the statement that impossibility of performance excuses breach of contract ... indeed, if it were necessary to express the law in a sentence, it would be more exact to say that precisely the opposite was the real rule.” See also Peel and Treitel, above n 17, at 19– 002 where they state the doctrine continues to apply: “where it would be reasonable, having regard to the nature of the contract or the circumstances in which it was made, to expect it to provide for the event.”
28 Denny, Mott and Dickson Ltd v James B Fraser & Co Ltd [1944] UKHL 3; [1944] AC 265 at 272 and 274. See also Peel and Treitel, above n 17, at 19–002 who state: “the doctrine is no longer regarded as a satisfactory way of allocating the loss that is occasioned by supervening events”.
29 Peel and Treitel, above n 17, at 19–004.
Excusable impossibility operated as a positively imposed rule of law and found its beginnings in the seminal case of Taylor v Caldwell.30 In that case, the defendants contracted to rent a music hall to the plaintiffs for a series of concerts. Before the date of the first concert, the hall was burned to the ground without the fault of either party. The contract did not mention what was to happen in light of this event. The plaintiffs sued the defendants for failing to provide the hall. Blackburn J stated that the continued existence of the hall was essential for the fulfilment of the contract, and on its destruction, the defendants were freed from their obligation. Where the contract contains a “given” thing necessary for performance, and where that thing has “perished”, a condition is implied that the impossibility of performance shall excuse the performance of the contract.31
Frustration of adventure, as originally conceived, dealt with circumstances where a party sought to excuse their performance because it was temporarily impossible, but not completely impossible as in the case of excisable impossibility. Examples included blockaded ports,32 congestion at the docks, 33 or ships running aground.34 Whether the party’s adventure was frustrated was a matter of the construction of the contract.35
Failure of consideration allowed a party to escape their contractual obligations when a supervening event meant that they would entirely or substantially fail to get what they bargained for.36 For example, in Poussard v Spiers, Blackburn J held that “the consequent failure of consideration” that had arisen because of the singer’s inability to perform the first
30 Bryn Jones “Unscrambling the Eggs of Modern Frustration” (LLB (Hons) Dissertation, University of Otago, 2014) at 8.
31 At 829.
32 Geipel v Smith (1872) LR 7 B 404.
33 Jackson v Union Marine Insurance Co [1874] UKLawRpCP 73; (1874) LR 10 CP 125.
34 Dahl v Nelson Donkin & Co (1881) 6 App Cas 38.
35 William Herbert Page “The Development of the Doctrine of Impossibility of Performance” (1920) 18 Mich L Rev 589 at 604.
36 Poussard v Spiers [1876] UKLawRpKQB 47; (1876) LR 1 QBD 410; and Jackson v Union Marine Insurance Co, above n 33. See also Roberts, above n 14, at 360 and 373 for discussion concerning how failure of consideration could release a promisee from their obligations when the promisor has substantially failed to perform their side of the bargain due to a frustrating event such as impossibility, inordinate delay or intervening illegality. See also Roy Granville McElroy and Glanville L Williams “Impossibility of Performance” (Cambridge University Press, Cambridge, 1941) at 87–88.
few nights of her contracted season due to illness excused the defendants from further performance.37
These three grounds were “scrambled” together during the 20th century.38 The common law courts gradually turned their backs on failure of consideration as a distinct ground of discharge by instead endorsing the common object test as formulated by the court in Krell v Henry.39 Due to mounting “pressure of the war cases” 40 the principles of excusable impossibility and frustration of adventure were combined in FA Tamplin Steamship Co Ltd v Anglo-Mexican Petroleum Products Co Ltd.41 Ever since courts have seen frustration as a single principle covering all instances of discharge by supervening events. Because the law previously recognised three distinct principles that can cause a contract to be frustrated due to a supervening event, the modern test of whether a contract is frustrated has been expressed in different ways.42
Planet Kids is the leading case and most recent and authoritative of the New Zealand Supreme Court’s discussions about the doctrine of frustration.43 While courts often cite New Zealand cases as examples of where the doctrine will44 and, for the overwhelming majority, will not45
37 At 414.
38 Bryn Jones, above n 30, at 18.
39 Krell v Henry [1903] UKLawRpKQB 169; [1903] 2 KB 740 (CA). But see Roberts, above n 14, at 360–374 who argues that William Young J’s judgment in Planet Kids was potentially a revival of the “substantial failure of consideration” approach to frustration. William Young J’s judgment is short in length and asks only one question: did the frustrating event make it impossible for one party to substantially perform its side of the bargain? This is an inquiry typical of the failure of consideration approach. However, the common object approach has wider recognition and was preferred by the other Supreme Court judges.
40 Arnold D McNair “War-time Impossibility of Performance in Contract” (1919) 36 LQR 84 at 87.
41 FA Tamplin Steamship Co Ltd v Anglo-Mexican Petroleum Products Co Ltd [1916] 2 AC 397.
42 Todd and Barber, above n 13, at 787.
43 See Nielsen v Dysart Timbers Ltd [2009] NZSC 43, [2009] 3 NZLR 160 for the Supreme Court’s previous discussion regarding the doctrine of frustration, which was by way of obiter and brief.
44 See Maass Mussels and Oysters Ltd v New Zealand’s Bluff Oyster Company (2013) Ltd [2021] NZDC 22543 at [52] where Judge Tuohy held that the contractual arrangements between MMO, a coastal permit holder who, by virtue of the permit was allowed to engage in mussel and oyster farming activities and New Zealand’s Bluff Oyster Company were frustrated. The frustrating event was the Ministry of Primary Industries taking steps to effectively prohibit oyster farming in Stewart Island after oyster parasite Bonamia ostreae was detected in Big Glory Bay.
45 See The Power Co Ltd v Gore District Council [1996] NZCA 483; [1997] 1 NZLR 537 where a contract entered into in 1927 to provide electricity at one penny per unit “for all time hereafter” was held not to be frustrated merely due to the reduction in the value of money. See also Hawke’s Bay Electric Board v Thomas Borthwick & Sons (Australia) Ltd [1933] NZLR 873, where a five-year contract to buy power was held not to be frustrated by the 1931 Napier earthquake which destroyed the defendants’ factory since in New Zealand earthquakes must be considered a foreseeable risk, which should be provided for in the contract. For further cases where the threshold for
be invoked, Glazebrook J, delivering the decision of herself, McGrath and Gault JJ in Planet Kids was drawn to English cases for well-known formulations of the doctrine.46 The law of frustration in New Zealand is based upon and therefore very similar to that of the United Kingdom.47
Planet Kids operated a childcare business from premises leased from the Auckland Council. The Council wished to use the land for a roading project and sought to acquire the lease under the Public Works Act 1981.48 Planet Kids initially objected to the proposed land acquisition. Ultimately the parties agreed on a settlement that included a compensation payment. Planet Kids and the Council entered into an agreement said to be in full and final settlement of any claim for compensation under the Public Works Act. 49 Before the settlement date of the agreement, the premises were destroyed by a deliberately lit fire.50 The High Court51 and Court of Appeal52 both held that the contract was frustrated. However, the Supreme Court took a different view of the parties’ common object and unanimously held that it was not frustrated.53 The purpose of the settlement agreement was to provide the Council with certainty that its roading project could go ahead by a certain date. There were no further impediments to it doing so.54 This underlying purpose was still able to be achieved, meaning performance was not radically different after the fire.
Glazebrook J extracted tests from case law trends to take into account when ascertaining whether a contract has been frustrated.55 This included the modern exposition of frustration as stated by Lord Radcliffe in Davis Contractors Ltd v Fareham Urban District Council56 in a
frustration was not reached, see Zhang v Zhai [2014] NZHC 1026; New Zealand Local Authority Protection Disaster Fund v Auckland Council [2013] NZHC 1858; and Zwarst v Saxton [2013] NZHC 386.
46 Marcus Roberts “An Update on Frustration in New Zealand: The Multifactorial Approach in the Age of COVID-19” (2021) 26 NZBLQ 182 at 183.
47 Marcus Roberts, above n 47, at 183.
48 Public Works Act 1981.
49 At [1]–[2].
50 At [3]; and Supreme Court of New Zealand Planet Kids Ltd v Auckland Council (press release, 17 December 2013).
51 Planet Kids Ltd v Auckland Council HC Auckland CIV-2011-404-1741, 16 December 2011.
52 Planet Kids Ltd v Auckland Council [2012] NZCA 562, [2013] 1 NZLR 485.
53 At [13], [80], [96]–[97] and [181].
54 At [122]–[123].
55 At [62] referring to [50]–[55].
56 At [50] citing Davis Contractors Ltd v Fareham Urban District Council [1956] UKHL 3; [1956] AC 696 (HL).
well-known passage that has become the “classic and most widely cited formulation of the doctrine”.57 Lord Radcliffe stated:58
Frustration occurs whenever the law recognises that without default of either party a contractual obligation has become incapable of being performed because the circumstances in which performance is called for would render it a thing radically different from that which was undertaken by the contract. Non haec in foedera veni. It was not this that I promised to do.
Glazebrook J also referred to Lord Simon’s articulation of the doctrine in similar terms:59
Frustration of contract takes place where there supervenes an event (without default of either party and for which the contract makes no sufficient provision) which so significantly changes the nature (not merely the expense or onerousness) of the outstanding contractual rights and/or obligations from what the parties could reasonably have contemplated at the time of its execution that it would be unjust to hold them to the literal sense of its stipulations in the new circumstances; in such case the law declares both parties to be discharged from further performance.
Glazebrook J referred favourably to the widely accepted true construction rationale for frustration,60 that a contract may be frustrated if, on the true construction of the contract, taking into account the surrounding circumstances, it is not wide enough to apply to the situation that has arisen.61 This involves a focus on the parties’ objective intentions ascertainable from the contract itself. This approach is consistent with other components of construction, such as contract interpretation62 and implication.63 This is as opposed to other contractual doctrines that may function as an escape mechanism to relieve parties from a contract when it is no longer fair and reasonable to require them to perform where the reference point is something other than the parties’ intentions.
57 Whanau Tahi Ltd v Kiran Dasari [2016] NZEmpC 120 at [43].
58 Planet Kids v Auckland Council, above n 9, at [51] citing Davis Contractors, above n 56 at 729.
59 At [53] citing National Carriers Ltd v Panalnina (Northern) Ltd [1980] UKHL 8; [1981] AC 675 (HL) at 700.
60 Davis Contractors Ltd v Fareham Urban District Council, above n 56, at 720–721. According to Lord
Radcliffe, the key question is whether the contract, “on its true construction, is wide enough to apply to the new situation” when “read in light of the nature of the contract and the relevant surrounding circumstances when the contract was made ... if it is not, then it is at an end”.
61 At [50]; and Sarah Gray “Denying Contractual Relief to Greenhouse Gas Emitters?” (LLB (Hons) Dissertation, University of Otago, 2020) at 22.
62 See Bathurst Resources Ltd v L & M Coal Holdings Ltd [2021] NZSC 85; Firm PI 1 Ltd v Zurich Australian Insurance Ltd [2014] NZSC 147, [2015] 1 NZLR 432; and Vector Gas Ltd v Bay of Plenty Energy Ltd [2010] NZSC 5, [2010] 2 NZLR 444.
63 See Bathurst Resources Ltd v L & M Coal Holdings Ltd, above n 62; and Barton v Morris [2023] UKSC 3.
Drawing on Nielsen v Dysart Timbers Ltd, Glazebrook J stated that frustration arises where a supervening event destroys a basic assumption the parties had made upon entering into the contract.64 Glazebrook also cited Lord Sumner in Hirji Mulji v Cheong Yue Steamship Co Ltd who placed importance on whether the parties’ “common object” has been frustrated such that the parties would be bound to a contract “that they did not really make”.65
The Supreme Court was of the view that frustration requires a flexible approach that is sensitive to the facts and circumstances of the particular case. Elias CJ, citing Cricklewood Property and Investment Trust Ltd v Leightons Investment Trust Ltd, stated “frustration is a tool that is “modern and flexible and is not subject to being constricted by an arbitrary formula”. 66 Glazebrook J echoed similar sentiment and endorsed Stephen J’s comments67 in Brisbane City Council v Group Projects Pty Ltd that the application of the test calls for the “exercise of judgment” stating that the test for frustration is “inherently imprecise”.68 Two of the three judgments69 of the Supreme Court in Planet Kids were drawn to the method advocated by Rix LJ in the English Court of Appeal, citing it favourably.70 The multi-factorial approach posits that the following factors be considered in deciding whether a contract has been frustrated:71
a) the terms of the contract;
b) its matrix or context;
c) the parties’ knowledge, expectations, assumptions and contemplations, in particular as to risk, as at the time of the contract, at least to the extent that these can be ascribed mutually and objectively;
d) the nature of the supervening event; and
e) the parties’ reasonable and objectively ascertainable calculations as to the possibilities of future performance in the new circumstances.
Drawing on Rix LJ’s dictum, the Supreme Court stated that the doctrine should only be invoked where there is a need to remedy injustice to the parties.72 This does not mean that the courts
64 At [54] citing Nielsen v Dysart Timbers Ltd, above n 43, at [30]–[31]. See also National Carriers Ltd v Panalpina (Northern) Ltd, above n 59, at 700.
65 At [55] citing Hirji Mulji v Cheong Yue Steamship Co Ltd [1926] AC 497 at 507.
66 Cricklewood Property and Investment Trust Ltd v Leightons Investment Trust Ltd [1945] AC 221 (HL) at 241.
67 At [59].
68 Brisbane City Council v Group Projects Pty Ltd [1979] HCA 54; (1979) 145 CLR 143 at 163.
69 See William Young J’s judgment starting at [173].
70 Edwinton Commercial Corp v Tsavliris Russ (Worldwide Salvage and Towage) Ltd (The Sea Angel) [2007] EWCA 547, [2007] 2 Lloyd’s Rep 517 at [111]. See also Todd and Barber, above n 13, at 788.
71 Planet Kids v Auckland Council, above n 9, at [60].
72 At [9] per Elias CJ and [61]–[62] per Glazebrook J citing The Sea Angel, above n 70, at [112].
have a wide absolving power to dispense justice, but rather that after undertaking a multifactorial assessment of the parties’ intentions, the interests of justice operate as a “reality check”. This ensures that the multi-factorial approach does not “lead one automatically, and without an exercise of judgment, to a determined answer without consideration of the demands of justice”.73
It is an enduring principle throughout the centuries that because the effect of frustration is to dissolve further performance of the contract, the doctrine should not be “lightly invoked” and “kept within very narrow limits”.74 McGrath J reflects these ideas in an earlier Supreme Court ruling, stating that frustration “has a high threshold for fundamental policy reasons, linked to the sanctity of context”.75 Sanctity of contract or ‘context’ as McGrath J put it is a principle closely related to the doctrine of absolute contracts that insists upon the literal performance of contracts. Because frustration represents an incursion on sanctity in that a judge becomes “the criterion of what is reasonable” and can discharge the parties from further performance, there is unease concerning any expansion of the doctrine.76
Despite the multifactorial test’s intended purpose of bridging the gap between theoretical expositions of the doctrine and the practical finer details, 77 the test has not been without criticism. 78 While subsequent cases concerning frustration do not express an outright scepticism of the test, they reveal that the multi-factorial approach has had something of a muted reception in the High Court79 and Court of Appeal.80 The analysis of frustration in these cases instead revolves around foreseeability, the true construction of the contract, and the allocation of risk under the contract, with lower courts tending to minimise and even ignore the
73 Planet Kids v Auckland Council, above n 9, at [61] citing The Sea Angel, above n 70, at [113].
74 The Super Servant Two, above n 9, at 8 per Bingham LJ.
75 Nielsen v Dysart Timbers Ltd, above n 43, at [59].
76 DH Parry The Sanctity of Contracts in English Law (FB Rothman, Littleton, CO, 1986) at 50-51.
77 Marcus Roberts, above n 47, at 186.
78 See Rex Adhar “Frustration of Contract in the New Zealand Supreme Court” (2014) 42 ABLR 249 at 253 where he notes that Glazebrook’s analysis was “an entirely conventional application of the Davis Contractors ‘radical difference’ test and the attainment of the ‘main object’ sub-test”. Ahdar also questioned whether the courts simply replaced a “single familiar criterion” with “an indeterminate number of considerations of uncertain weight”.
79 The Roman Catholic Bishop of the Diocese of Christchurch v RFD Investments Ltd [2015] NZHC 2647; Air New Zealand Ltd v BP Oil Ltd [2019] NZHC 1187; Wylie v Wylie [2019] NZHC 2638; and McKinlay v Whitburn [2023] NZHC 468.
80 Montgomerie v Montgomerie [2020] NZCA 3.
multi-factorial approach. The test is especially underutilised where the Court does not see frustration as a meritorious argument worthy of much scrutiny.81
In The Roman Catholic Bishop of the Diocese of Christchurch v RFD Investments Ltd Davidson J’s discussion revolved around the construction of the contract and whether it was “wide enough to apply to the new situation”.82 Davidson J also placed importance on whether the performance of the contractual obligations was fundamentally different from those the parties contracted for.83 In a similar vein, the Court in Wylie v Wylie cited the multi-factorial but did not use it systematically, rather the consideration of justice provided the only explicit justification for the Court’s reasoning in obiter that the contract, if it had been found to exist, would have been frustrated by the earthquake.84
There have also been cases where the frustration analysis is so straightforward that the multi- factorial approach is ignored entirely. For example, McKinlay v Whitburn, where Associate Judge Lester rejected an argument that a contract was allegedly frustrated due to difficulties the vendors encountered in obtaining certain compliance documents. 85 Similarly, in Montgomerie v Montgomerie, the Court of Appeal held that it was determinative of the case that the risk that the development might not go ahead was foreseen by the parties and provided for in the contract.86 The High Court in Air New Zealand Ltd v BP Oil New Zealand Ltd applied only the common object test.87
There has been limited substantive discussion of the doctrine of frustration in New Zealand since Planet Kids was decided. 88 Primarily, this stems from the courts viewing the cases presented before them as uncomplicated and not demanding concentrated analysis. While there is general consensus concerning the broad tests that can be applied when undergoing a
81 Marcus Roberts, above n 47, at 182 and 183. See also Whanau Tahi Ltd v Kiran Dasari, above n 57 for an example of a case brought before the Employment Court following Planet Kidsv Auckland Council, above n 9 that cites the multi-factorial approach but does not use it in any meaningful way.
82 At [61].
83 At [61] and [63]. These questions were to be overlaid by a residual and flexible judgment as to whether a proposed application of the doctrine accords with the demands of justice.
84 At [537]. The High Court held that the contract alleged by the plaintiff that would have required the defendant to advance money to the family trust did not exist, meaning that the subsequent discussion on the frustration of the contract by the 2011 Christchurch earthquakes was by way of obiter.
85 McKinlay v Whitburn, above n 79, at [26]–[32]. Associate Judge Lester’s discussion of frustration is brief, stating only at [29] that “hardship, or inconvenience or material loss will not found frustration”.
86 Montgomerie v Montgomerie, above n 80, at [32]–[33]. 87 Air New Zealand Ltd v BP Oil Ltd, above n 79, at [152]. 88 Marcus Roberts, above n 47, at 193.
frustration analysis, there is uncertainty surrounding which test a court will give the most weight to.89
89 This concern was picked up by Stephen J in Brisbane City Council, above n 68, at 162–163: “the various expositions of the true basis of the doctrine of frustration leave imprecise its actual operation when applied to the facts of particular cases. How dramatic must be the impact of an allegedly frustrating event? To what degree or extent must such an event overturn expectations, or affect the foundation upon which the parties have contracted?”
II Chapter II: Frustration in Employment Law
This chapter explores the application of frustration to New Zealand employment law. It begins by confirming that “personal” contracts, such as contracts of employment, are susceptible to being frustrated;90 it then lays down the test of frustration in the context of labour law as articulated by the Authority and courts; it provides evidence that frustration poses many risks for employment protection law; and lastly, it moves to present an argument of how a decision- maker should approach frustration in light of this uncertainty.
There is statutory authority for the proposition that employment contracts can be frustrated. Section 162(a) of the Employment Relations Act 2000 confers power on the Authority to make any order that the High Court or the District Court may make relating to contracts under Part 2 of the CCLA. This includes powers relating to a frustrated contract.91 Frustration is one of several circumstances where the Authority might make an order under Part 2 of the CCLA.92
In terms of judicial authority, the common law has been alive to the possibility that an employer could be discharged from the terms of an employment contract as early as 1891.93 This release could occur where services were to be performed only at a particular workplace, and because of supervening events that workplace became unavailable.94
Two New Zealand Court of Appeal authorities exist regarding the operation of frustration in employment law, each confirming that frustration can apply to contracts of employment.95 However, there is lingering uncertainty concerning whether the modern test of frustration can successfully be made out under these circumstances and permit the discharge of the parties.96
90 Peel and Treitel, above n 17, at 19–016 give employment or apprenticeship contracts as examples of “personal contracts”.
91 But see the now repealed s 162(e) that, as originally enacted, expressly referred to the repealed Frustrated Contracts Act 1944. In doing so, it plainly confirmed that employment contracts could be frustrated. Section 162(a) provides the Authority with the same power as s 162(e).
92 See Contract and Commercial Law Act 2017, Part 2 (CCLA). Other circumstances include contractual mistake, cancellation, and illegal contracts.
93 Turner v Goldsmith [1891] 1 O.B. 544.
94 Turner v Goldsmith, above n 93; Hall v Wright [1858] EngR 837; (1858) E.B. & E. 746 at 758; and Ronni Cabraal and John Farrow “Lessons from COVID-19 and the Workplace: Building a new future” in Conference Employment Law Kei Te Mahi! - Stepping Up to 2022 & Beyond (NZLS CLE, 2022) 209 at 238.
95 Karelrybflot AO v Udovenko [1999] NZCA 331; [2000] 2 NZLR 24 (CA) at [37] and A Worker v A Farmer [2010] NZCA 547,
[2010] NZCA 547; [2010] ERNZ 407 at [17].
96 See “Employment during and after disasters” (7 March 2023) Employment New Zealand
<https://www.employment.govt.nz/leave-and-holidays/other-types-of-leave/employment-during-and-after-
Frustration has developed through the common law where the cases generally concerned commercial contracts as opposed to employment contracts or labour law matters.97 It is because of frustration’s versatility, in that it applies to “infinitely variable factual situations”,98 that the same broad tests of frustration ultimately apply to the employment context.99
In Taylor v Air New Zealand, Chief Judge Colgan stated that for frustration to apply, the situation must be “fundamentally” or “radically” different from the situation earlier contemplated by the parties.100 Reflecting this test, the Court of Appeal in Karelrybflot AO v Udovenko discussed how a supervening event might produce consequences for an employer which would “render the performance of an employment contract, particularly one for a fixed term, radically different from what had been undertaken when the contract was entered into.”101 The Court of Appeal further stated that:102
whether a contract is frustrated in the particular circumstances of the case will be a matter of fact and degree, and in view of the nature of a contract of employment, the doctrine will not easily be able to be invoked by an employer because of the drastic effect which it would have on the rights of vulnerable employees.
The Court’s formulation of frustration, notably its mention of the rights of vulnerable employees, suggests that the threshold for frustration, which is ordinarily high, might be even higher in the employment context. Consistent with subsequent comments from the Employment Court “that the test is a high one”, the Court of Appeal’s discussion represents specific guidance concerning frustration in labour law.103
disasters/>. The official advice from the Ministry of Business, Innovation and Employment reads: “If the workplace is severely damaged and or it will be closed for a prolonged period, particularly where working from home is not suitable, then they should seek expert advice on their options.”
97 See Chapter I. Labour law does not generally form the backdrop of the cases where frustration initially developed.
98 Whanau Tahi Ltd v Kiran Dasari, above n 57, at [51] citing Brisbane City Council v Group Projects Pty Ltd, above n 68, at 536.
99 See Whanau Tahi Ltd v Kiran Dasari, above n 57, at [41]–[51] where the Employment Court identifies many of the well-known formulations of frustration discussed in Chapter I.
100 Taylor v Air New Zealand Ltd EmpC Auckland AC61/04, 28 October 2004 at [29].
101 At [37].
102 At [37].
103 Smith v Air New Zealand [2000] NZEmpC 249; [2000] 2 ERNZ 376 at [71].
Taylor and Karelrybflot were decided before the Supreme Court illuminated the doctrine as it applied in New Zealand. However, Whanau Tahi Ltd v Kiran Dasari confirms that Planet Kids did not change the test of frustration in the context of employment law in any substantial way. The Court in Whanau Tahi cited the multi-factorial approach but did not apply it in any concentrated way because the analysis of frustration on the facts of the case was straightforward.104 This reflects the case law following Planet Kids that tends to assess whether a contract has been frustrated without placing much reliance on the multi-factorial approach.105
According to John Burrows, a salient feature of the frustration is that “Frustration is not dependent on the election of either of the parties. It operates automatically.” 106 The Employment Court in Smith v Air New Zealand added to this discussion: “it does not depend on the action or inaction of the parties”.107 In other words, the cessation of the employment is not because of any steps of the employer, justified or unjustified.108
This chapter now discusses the consequences of applying frustration to employment agreements, comparing it to the protective employment law concept of dismissal.
A dismissal is the termination of employment at the initiative of the employer.109 Dismissal entitles an employee to a range of privileges, rights, and safeguards. No such protections apply where an employment agreement is frustrated, as the employee has not been dismissed110 (termination arises by operation of law and not because of any action of any party to it).111 It follows that statutory remedies for unjustified dismissal cannot be invoked.112
104 Whanau Tahi Ltd v Kiran Dasari, above n 57, at [48] citing The Sea Angel, above n 70, at [111].
105 See Chapter I at 14.
106 Whanau Tahi v Kiran Dasari above n 57, at [42] citing Planet Kids v Auckland Council above n 9, at [48] citing John Burrows, above n 7, at 277.
107 Smith v Air New Zealand, above n 103, at [71].
108 Parker v Lakeside Farm Fresh Ltd [1996] EMC Wellington WEC26/96, 6 May 1996 at 8.
109 Gordon Anderson and Dawn Duncan Employment Law in Aotearoa New Zealand (3rd ed, LexisNexis, Wellington, 2022) at 263. See also Wellington Clerical Union v Greenwich [1983] ACJ 965 (AC) at 973 where the Court defines dismissal as “sending apart” or “sending away”.
110 Gordon Anderson and Dawn Duncan, above n 109, at 267. 111 Personal Grievances (online ed, Thomson Reuters) at 2.2.03. 112 Gordon Anderson and Dawn Duncan, above n 109, at 267.
Courts have generally been reluctant to apply frustration where it would allow avoiding protective legislative mechanisms that would otherwise apply where an employee is dismissed.113 These include the mutual implied duty of good faith,114 procedural fairness,115 and the right to take a personal grievance.116 Frustration also discharges the parties of the performance of any contractual safeguards such as notice periods and redundancy compensation clauses. The doctrine is thus carefully controlled by the courts and rarely successfully invoked to safeguard the statutory right of an employee to take a personal grievance for unfair dismissal.117
Thus, I turn to the threat that frustration poses to procedural fairness, good faith, and redundancy compensation clauses.
A dismissal must be performed in a procedurally fair manner.118 On a practical level, this might look like an employer beginning a dialogue with their employees, consulting, providing all relevant information, giving the employee an opportunity to comment, genuinely considering those comments, and not arriving at any decision to dismiss until that consultation process has concluded.119
Where a contract is frustrated, the employer will be justified in omitting a fair process insofar as it would otherwise give rise to liability for a personal grievance claim.120
In Motor Machinists v Craig, Chief Judge Goddard stated that where a contract of employment is frustrated, “there is no requirement of fairness as termination of the contract comes about by operation of law, rather than by the decision of one of the parties.”121 These ideas were repeated
113 See Harman v Flexible Lampts Ltd [1980] IRLR 418; and Notcutt v Universal Equipment Co (London) Ltd
[1986] EWCA Civ 3; [1986] ICR 414.
114 ER Act, s 4(1)(a).
115 ER Act, s 103A(3).
116 ER Act, ss 102 and 103.
117 ER Act, s 103(1)(a).
118 John Hughes Mazengarb's Employment Law (NZ) (online ed, LexisNexis) at [ERA103.24]; and Gordon Anderson and Dawn Duncan, above n 109, at 292. Procedural fairness is discussed further in ch three.
119 ER Act, s 103A(3). See also Simon Lean-Massey “Employment Agreements: Special Contracts Worthy of Special Treatment?” [2008] CanterLawRw 4; (2008) 14 Canta LR 101 at 199. He states that consultation is “a natural justice requirement of audi alteram partem, rather than any obligation to negotiate.”
120 The personal grievance regime is discussed at length in Chapter III.
121 Motor Machinists Ltd v Craig [1996] NZEmpC 225; [1996] 2 ERNZ 585 (EmpC) at 591.
by Judge Travis in Elmsly v Health Waikato Ltd: “if there is frustration then the contract came to an end by operation of law and issues of fairness and natural justice do not arise.”122 More recently in Workforce Development Ltd v Hill Judge Inglis expressed her difficulty in accepting the proposition that on a frustration analysis the statutory requirements set out in s 103A have no application, stating: “parties to an employment relationship are not permitted to contract out of their statutory obligations, including the procedural requirements relating to fair process”.123 The view espoused by Judge Inglis illustrates the tension between frustration and employment protection legislation, but was by way of obiter and does not have the effect of undoing Motor Machinsts and Elmsly.
The implied mutual duty of good faith 124 formed the most significant part of modern employment law reform.125 The duty has been described as a fundamental126 and amorphous concept that cannot be “placed, held up, examined and presented as a measurable yardstick against which the facts of a particular case can be assessed”.127 Without limiting the duty, s 4(1)(b)(i) states that parties to an employment relationship must be transparent and not do anything that could directly or indirectly mislead or deceive one another.128
In the most recent determination concerning an alleged frustrated employment contract,129 Peter van Keulen emphasised that the employment relationship is the real focus as opposed to the application of contract law.130 He stated:131
122 Elmsly v Health Waikato Ltd [2002] NZEmpC 86; [2002] 1 ERNZ 85 (EmpC) at [113].
123 Workforce Development Ltd v Hill [2014] NZEmpC 174, [2014] ERNZ 465 at [57] citing ER Act, s 238.
124 ER Act, s 4(1)(a).
125 The Employment Relations Amendment Act (No 2) 2004 came after the Court of Appeal in Auckland City Council v The New Zealand Public Service Assoc Inc [2003] NZCA 311; [2004] 2 NZLR 10 (CA) at [25] failed to embrace
Parliament’s vision and read down the original provision. The newly enacted s 4(1A) established that good faith “is wider in scope” than the common law duty of implied mutual obligations of trust and confidence.
126 John Hughes, above n 118, at [ERA4.3].
127 Christina Inglis, Chief Judge of the Employment Court “Defining good faith (and Mona Lisa’s Smile)” (paper presented to Law @ Work Conference, Wellington, 31 July 2019) at 6. Parliament has not sought to provide good faith with an exhaustive definition.
128 ER Act, s 4(1)(b)(i).
129 At [37] the Authority sets out its formulation of frustration: “Frustration occurs when a contract has become impossible to perform and for this reason the parties are discharged from their obligations to perform.” It is worth flagging that this is an oversimplification of the doctrine and lacks acknowledgement of the other dimensions of frustration. A broader spectrum of unforeseeable events may occur, for instance, that may thwart the parties’ common object, render the contract radically different, or destroy the essential subject matter of the contract.
130 Shankar v Aquaflow Spa & Swimming Pools Ltd [2022] NZERA 420.
131 At [54].
The employment relationship is the real focus and this brings with it the duty of good faith (amongst other things); an obligation to be responsive and communicative and to comply with procedural fairness requirements. This means a party cannot simply rely on contractual provisions and/or the application of contractual law to bring an employment relationship to an end. There must be some communication to understand the other party’s position before action is taken or a position asserted. There will be very few, if any, situations where an employer can rely on frustration, repudiation or abandonment without understanding the employee’s particular circumstances that either inform the alleged frustration, repudiation or abandonment or respond to the alleged frustration, repudiation or abandonment.
The Authority likely provided a stronger caution to employers seeking to rely on frustration (akin to that of Judge Inglis in Workforce Development Ltd)132 than Motor Machinists because the mutual obligation of good faith was legislated since that decision and was still realising its potential at the time that Elmsly was decided, prior to its reform in 2004.133
It remains an open question of law whether a breach of good faith will occur where an employment contract was frustrated and good faith was not followed. On the one hand, s 4(1A)(c) requires an employer who is proposing to make a decision that will, or is likely to, have an adverse effect on the continuation of employment of their employees to provide the employees access to information, relevant to the continuation of the employees’ employment, about the decision; and an opportunity to comment on the information to their employer before the decision is made. Failing to allow employees to respond to a proposed frustration of their employment contracts cannot be said to be maintaining a productive employment relationship in an “active and constructive” manner while being “responsive and communicative”, which are requirements of good faith.134 It is possible that the employer would breach good faith if they simply announced that the contract was frustrated without performing this groundwork.
Also pointing towards the importance of good faith is the Court of Appeal’s approach in A Worker v A Farmer, which suggests that an employment contract cannot be frustrated until good faith processes have been carried out. The Court held that the statutory processes for
132 Workforce Development Ltd v Hill, above n 123, at [57]. Judge Inglis also noted that her unease concerning the application of frustration relates to the potential erosion of the “mutual obligations” on parties to an employment relationship, such as good faith.
133 Employment Relations Amendment Act (No 2).
134 ER Act, s 4(1A)(b).
dismissal, 135 good faith, and providing the employee with an opportunity to comment on information relevant to a proposed termination are imported into the contract.136 Therefore, the performance of the contract entailed the process that good faith makes part of the contract. Because this process was never “put in train”, the Court held that the contract was still capable of being performed and was not frustrated.137
The multi-factorial approach to frustration also requires grappling with the duties and procedural requirements of the ER Act discussed by the Court of Appeal.138 The approach brings these terms within the matrix of the contract.139 Where the court does not require the guidance of the multi-factorial approach (which generally occurs where the application of frustration is a straightforward issue) the provisions are still relevant as implied terms, pursuant to A Worker v A Farmer.
On the other hand, because the employment relationship terminated when the frustrating event occurred, it is arguable that any good faith obligations died at that moment with the contract. From that point onwards, the employer is excused from observing good faith.140 Good faith may also not be required in the sense of s 4(1A)(c) because the statutory wording is inconsistent with the orthodox view of frustration. Frustration is not a “decision”141 dependent upon the election of the employer, rather, it operates “automatically”.142
Penalties for certain breaches of good faith are set out in s 4A of the ER Act.143 They do not tend to carry much ‘bite’ (damages are not among the statutory remedies). 144 Although
135 At [24].
136 At [21] citing ER Act, s 4(1A)(c).
137 At [25].
138 A Worker v A Farmer, above n 95, at [21].
139 Ronni Cabraal and John Farrow, above n 94, at 240.
140 It follows that there would be no legal obligation to be “responsive and communicative” and provide employees with an opportunity to comment on the proposed termination.
141 Section 4(1A)(c).
142 John Burrows, above n 7, at 277.
143 Section 4A(a) states that a party who has failed to comply with good faith is liable to a penalty under the ER Act if the failure was deliberate, serious, and sustained. Section 4A(b)(ii) states a penalty could alternatively attach where the failure was intended to undermine an individual employment agreement or a collective agreement. Section 4(b)(iii) provides a party will alternatively be liable to a penalty where the failure was intended to undermine an employment relationship.
144 Section 137(1)(a)(ii) states that where a person does not comply with good faith under Part 1 of the ER Act, the Authority under s 137(2), may issue a compliance order requiring good faith compliance. See Bay of Plenty District Health Board v Midwifery Employee Representation and Advisory
Service Inc [2018] NZERA Auckland 380 where the Authority found that MERAS breached the duty of good faith, and granted the application for a compliance order, forcing it to comply with the duty.
damages may be available through the common law for pursuing a breach of an implied term,145 this is contested.146
This section has three purposes. First, to lay down the CCLA regime that applies to frustrated contracts; second, to continue the discussion concerning the tension between frustration and employment law by demonstrating how frustration may prevent the execution of redundancy compensation clauses; and third, to examine how the CCLA might provide relief.
The CCLA was introduced to redraft and consolidate eleven statutes governing contract and commercial law in New Zealand into a single piece of legislation.147 The CCLA provides no direction or guidance as to when a contract will be frustrated.148 This is a matter for the courts which remains entirely within the realm of the common law.149
Sections 61–69 of the CCLA, which replace the Frustrated Contracts Act 1944, apply where “a contract governed by New Zealand law has become impossible to perform or has been otherwise frustrated”150 and “the parties to the contract have for that reason been discharged from the further performance of the contract.”151 The frustrated contracts machinery in the CCLA allows for restitution of someone’s prepaid money before the time of discharge for goods or services that they do not receive.152 The CCLA machinery also provides that payment due for a valuable benefit such as work performed before the contract was frustrated remains
145 Baguley v Coutts Cars Ltd [2001] NZEmpC 47; [2000] 2 ERNZ 409 (EmpC) at [64] where the Full Bench of the Employment Court stated: “It may be that in an appropriate case, damages can be recovered for a breach of s 4 of the Act”. 146 Hally Labels Ltd v Powell [2015] NZEmpC 92, [2015] ERNZ 940 where the Court found that the statutory amendment in 2004 precluded damages as a penalty for a breach of good faith as it specifically provides for remedies for breach of good faith and damages is not among them.
147 CCLA, s 3(a); and David McLauchlan “A Conversation about the Contract and Commercial Law Act 2017”
(2019) 50 Victoria University of Wellington Law Review 387 at 390. The statutes that the CCLA consolidates are listed at 390.
148 Kevin Leary (ed) Employment Law (online ed, Thomson Reuters) at [ER162.07]. Leary states that the legislation only “provides for the adjustment of rights and liabilities as between the parties to a frustrated contract.”
149 CCLA, s 4(1); and David McLauchlan, above n 147, at 389. The CCLA is a revision Act that is not intended to change the effect of the law. The law remains as it was under the Frustrated Contracts Act, which did not interfere with the common law tests of frustration.
150 CCLA, s 60(1)(a).
151 Section 60(1)(b).
152 Section 61(1).
payable.153 Section 162(a) confirms that the Authority has jurisdiction to make any order under Part 2 of the CCLA relating to an employment agreement.154
For example, X pre-pays $500 to go on a train trip. A bridge collapses, frustrating the contract, meaning that X’s train trip cannot proceed. The train operator is not obliged to perform the contract because the contract is frustrated. X can get the money back under s 61(1).
By way of another example, Z pays Y $500 to paint Z’s house. Z’s house burns down, and the contract is frustrated. Y does not have to paint the house any more. Y had incurred $200 worth of non-refundable expenses hiring scaffolding to paint Z’s house. Under s 62, a court might let Y keep up to $200 of the $500 that Z would otherwise get back under s 61(1).
(a) Severance of a specific clause
Available research indicates that 74 per cent of collective employment agreements in New Zealand include a redundancy clause providing for both pay and a period of notice.155 An employee with a contractual entitlement to redundancy compensation may feel particularly hostile towards the invocation of frustration because of the risk that it circumvents that clause.156
While frustration poses a risk to the execution of these clauses, the CCLA statutory machinery allows for parts of a frustrated contract to be preserved. It is theoretically possible for a redundancy compensation clause to be severed from the remainder of the contract and given effect under s 68(2).157 This will hinge on whether the court considers that the clause can “properly be severed from the remainder of the contract” 158 and whether that part of the
153 Section 63(1).
154 ER Act, s 162(a). Contrast with EC Act, where the Employment Tribunal had no jurisdiction under the Frustrated Contracts Act. For more on the Tribunal’s jurisdiction under the Frustrated Contracts Act, see Watkins v Bacica [1996] 1 ERNZ 594 (EmpC).
155 Employment Contracts: Bargaining Trends and Employment Law Update (Centre for Labour, Employment and Work, Victoria University, annual).
156 See Gordon Anderson and Dawn Duncan, above n 109, at 352. While there is no statutory entitlement to redundancy pay in New Zealand, it is not uncommon to have a contractual entitlement in an employment agreement. Redundancy entitlements and redundancy generally are discussed in more detail in Chapter III. 157 If an employee claims a contract has been frustrated (which will be an exceedingly rare instance) an
employer, on the other hand, may wish to sever a clause relating to the ex-employee's obligation to maintain the confidentiality of information acquired in the course of employment. See Andrew Stewart and J.W. Carter “Frustrated Contracts and Statutory Adjustment: the Case for a Reappraisal” (1992) 51 C.L.J. 66 at 71.
158 Section 68(1)(a).
contract was 159 either “wholly performed before the time of discharge” 160 or “wholly performed... except for the payment in respect of that part of the contract”.161
The Supreme Court in Carr v Gallaway Cook Allan consolidated differing principles of severance.162 It settled unanimously on the overall approach to severability of a contractual term being “an issue of construction of the contract” as opposed to the subjective intentions of the parties.163 The Court stated that severance cannot be permitted where doing so would change or destroy the contract’s substance or object.164 Carr concerned severability in the context of an arbitration agreement, however, the High Court in New Zealand's Bluff Oyster Company (2013) Ltd v Maass Mussels & Oysters Ltd noted that the approach to severance when considering frustration and the CCLA is no different from the doctrine of severance generally.165
The Supreme Court endorsed the broad two-limb approach to severance taken by the Privy Council in Carney v Herbert. 166 The first being where the elimination of the frustrated provision would “leave unchanged the subject matter of the contract and the primary obligations” of the parties, the valid portion would be severable. The second being whether the valid clauses were enforceable.167
159 Section 68(1)(b).
160 Section 68(1)(b)(i).
161 Section 68(1)(b)(ii).
162 See Carney v Herbert [1985] AC 301 (PC) at 311 and 316 where the Privy Council held that the question of severability had two limbs. See also Humphries v The Proprietors “Surfers Palms North” Group Titles Plan 1955 [1994] HCA 21; (1994) 179 CLR 597 at 620–621 where the High Court of Australia agreed with Carney and expressed the importance of keeping the test of severability flexible: “The test of severability is a flexible one. There are no set rules which will decide all cases” and subsequently formulated a different test based on the case at hand that concerned a different factual basis to Carney.
163 Carr v Gallaway Cook Allan [2014] NZSC 75, [2014] 1 NZLR 792 at [62]. See also New Zealand's Bluff Oyster Company (2013) Ltd v Maass Mussels & Oysters Ltd [2022] NZHC 3475 at [106] where Nation J confirms the Supreme Court’s discussion concerning the test of severability: “The determination as to severability must be based on the construction of the contract.”
164 At [62]; and Nupur Upadhyay “Carr v Gallaway Cook Allan” (2014) 20 AULR 284 at 287.
165 At [62].
166 At [53] citing Carney v Herbert, above n x. However, the Court noted that the test “provides only limited guidance because there is no single statement of principle that will provide the answer in all cases.” McGrath J emphasised that courts addressing severability “exercise judgment with regard to the circumstances of particular cases”.
167 Carr v Gallaway Cook Allan, above n 163, at [51] citing Carney v Herbet, above n 162, at 311. At [52], the Supreme Court stated, “on the Privy Council’s approach, if the first question were answered “yes” and the second question “no”, the contract could be enforced with the unlawful provision severed”.
A frustrated redundancy compensation clause is likely to be severable if “it is subsidiary to the main purpose” of a given employment contract.168 An employment agreement is fundamentally an exchange of labour for money. 169 This function can be achieved with or without a redundancy clause. Therefore it would be unlikely to defeat the motive of an employment contract if the redundancy clause was severed.
Policy considerations can also form part of the test of severance.170 If an employment contract is frustrated in a situation that could otherwise resemble a redundancy, public policy points in favour of severance to avoid an employee being cheated of a contractual entitlement by an artificial doctrine.
In all likelihood, such a clause could probably be severed from the frustrated contract. However, because there is no case law concerning this specific matter, it exacerbates the overall uncertainty that frustration introduces into employment contracts.
In light of the threat of frustration, this chapter will now argue that frustration should not apply where a labour law mechanism of dismissal can apply instead.
Gordon Anderson and Dawn Duncan observe that “it is relatively unusual to find frustration argued in employment law cases since most events that prevent performance are usually contemplated by the contract”.171 Citing Turner v Goldsmith, the Court of Appeal in A Worker v A Farmer stated that frustration can only be used if the employment agreement “did not make sufficient provision for what occurred”.172 This is a straightforward application of modern frustration law which sees frustration as an exercise of construction.173 It is unlikely that an employment agreement will expressly address a given supervening event.
168 Carr v Gallaway Cook Allan, above n 163, at [62]. 169 Ronni Cabraal and John Farrow, above n 94, at 240. 170 Carr v Gallaway Cook Allan, above n 163, at [52]. 171 At 266.
172 At [21] citing Turner v Goldsmith, above n 93, at 550 per Lindley LJ; and Siegmund v Marlborough Tour Company Ltd [2021] NZERA 180 at [35].
173 Planet Kids v Auckland Council, above n 9, at 50; and Davis Contractors Ltd v Fareham Urban District Council, above n 56, at 720–721.
For instance, prior to the COVID-19 pandemic, it was uncommon for an employment contract to include a force majeure clause 174 that would trigger on the occurrence of restrictive government and public health measures in response to a pandemic such as lockdowns.175 A force majeure clause may oust frustration on the basis that the parties expressly turned their minds to how a particular event should be dealt with contractually, but that question is highly fact-specific.176
Likewise, at present, few employment contracts contemplate a contingency if work premises become uninhabitable because of an extreme weather event, natural disasters or Government regulations. In the absence of an express contractual provision for the changed circumstances, parties may pin their hopes on frustration, which applies in “default” when the contract is silent.177 Frustration currently remains an available argument where the parties have failed to provide for the situation in the employment contract, either expressly or implied.178 Thus, I will now consider the capacity of implied terms to respond to disruptive events.”
The matrix of the contract under the multi-factorial approach and terms implied in employment agreements provide an additional consideration. On the Court of Appeal’s reasoning, an employment agreement imports statutory processes for both dismissal and fairness.179 They are terms implied by law.
Likewise, it is also accepted and long understood that an employer has the power to dismiss in certain circumstances where it is substantively justified.180 This is enshrined in art 4 of the International Labour Organisation Convention concerning Termination of Employment at the Initiative of the Employer (ILO Convention 158) to which New Zealand is a signatory.181
174 Peel and Treitel, above n 17, at 19–037 define a force majeure or prohibition of export clause as a clause in a contract that “excuses one party, or both, if a specified event prevents performances”.
175 Tsuriel Rashi and Andrew A. Schwartz, above n x at 406.
176 Peel and Treitel, above n 17, at 19–037.
177 Jenny Bychan and Rob Nicholls “The Challenges of Navigating the COVID-19 Pandemic for Australia’s Franchise Sector” (2020) 48 ABLR 126 at 130.
178 Nor is there a specific implied term in the ER Act that would dictate a specific procedure or provide a substantive justification for the occurrence of a supervening event.
179 A Worker v A Farmer, above n 95, at [24].
180 John Hughes, above n 118, at [ERA103.24]; and Gordon Anderson and Dawn Duncan, above n 109, at 292. 181 ILO Convention Concerning Termination of Employment at the Initiative of the Employer 1412 UNTS 159 (entered into force 23 November 1985), art 4; and Simon Lean-Massey, above n 119, at 120. He states: “current legislation does not prevent employers from terminating employees’ contracts for serious misconduct, nor from making the decision that a worker’s position is redundant in the event of genuine commercial necessity.”
While not always expressly provided for in an employment agreement the power to dismiss is inherently part of employment law and the managerial prerogative.182 This power is curbed by the obligation to act as a fair and reasonable employer could have acted in all the circumstances at the time of dismissal.183 Any dismissal that is substantively and procedurally justified will stand. Notionally, the parties will be held to have agreed that fair process and exit mechanisms should apply on the true construction of the contract. These concepts equip an employment contract with the ability to deal with an extensive range of circumstances that disrupt performance.
Frustration is precluded by the presence of employment law exit mechanisms that are provided for in a contract where a situation fits within those exit mechanisms. A Worker v A Farmer and Taylor v Air New Zealand provide helpful illustrations of where frustration was unavailable because the contract addressed the supervening event in question.184
In A Worker v A Farmer, the five-year-old son of the employer made an allegation of sexual abuse against the worker, following which the employer gave the employee a week’s pay and told him to leave the farm immediately.185 The Employment Court held this was a supervening event that frustrated the contract meaning that the employee could not claim unjustifiable dismissal.186 However, the Court of Appeal held that the contract was not frustrated.
It did not follow from the son’s complaint “that the farmer could not afford the worker the benefit of the statutory processes for dismissal.” 187 Describing possible alternatives to frustration, the Court of Appeal stated, “it is however possible the worker may have agreed to
182 Aoraki Corporation Limited v McGavin [1998] NZCA 88; [1998] 1 ERNZ 601 at 618. The case contains a discussion of “an employer’s prima facie right to organise and run its business operation as it sees fit”. See also New Zealand Building Trades Union v Hawkes Bay Area Health Board [1992] 2 ERNZ 897 at 913 where Judge Colgan states managerial decisions will only be interfered with where “they may not have been made in good faith, without reference to relevant criteria, by reference to irrelevant criteria or the like”. While the new standard of the test of how a fair and reasonable employer could have acted in all the circumstances at the time of the dismissal has replaced the test of whether the decision was made in good faith, the general sentiment expressed by Judge Colgan remains. See also Sarah Hughes “A Portrait of Redundancy Law in New Zealand” (LLM Thesis, University of Canterbury, 2011) at 87 where she states: “the New Zealand judiciary has always been supportive of the notion of managerial prerogative”.
183 ER Act, s 103A(2).
184 The supervening event was impliedly addressed by the contract in A Worker v A Farmer, above n 95, and expressly addressed by the contract in Taylor v Air New Zealand, above n 100.
185 At [10].
186 A Farmer v A Worker EmpC Christchurch CC3/09 CRC 49/07, 20 March 2009 at [51].
187 At [24].
suspension on pay” and “the process necessary to meet statutory provisions was not put in train”.188 While the allegations were serious they were not beyond the scope of the contract.
Employment relationship breakdowns are common, and this is why adequate mechanisms exist to address such issues under labour law.189 The kind of situation where an employer cannot afford an employee a warning, a suspension or a substantively and procedurally justifiable dismissal is unlikely to be one where the employee is alleged to have been at fault.190
A similar outcome materialised in Taylor v Air New Zealand Ltd. In that case, Mr Taylor was a long-serving licensed aircraft tradesman employed by Air New Zealand who suffered a stroke. After around 20 months of time off work recovering, Mr Taylor’s accrued sick leave became exhausted, and he was reluctant to look into possible re-deployment options. Air New Zealand determined that Mr Taylor’s return to work was unlikely and terminated his employment, submitting that it ended by frustration of contract.191 The Employment Court held that the employment contract made provision for Mr Taylor’s medical incapacity by allowing the employer to fairly and reasonably dismiss him if he could not perform his contractual obligations.192 The test of a fair and reasonable employer was, therefore, the suitable way of determining Mr Taylor’s claims, as Air New Zealand dismissed him.193
These cases illustrate that frustration involves an exercise of construction where only if the employment contract did not make sufficient provision for what occurred can frustration apply.194 They also highlight that employment contracts already can deal with a wide range of disruptive circumstances.
The next chapter will examine what constitutes a valid ground or ‘substantive justification’ of dismissal in employment law, thereby covering the field and precluding frustration.
188 At [25].
189 If the employer has conducted an inquiry and still deemed the employee to be at fault, then a finding of serious misconduct would likely have been reasonable in all the circumstances. Such a finding would have allowed the employer to summarily dismiss the worker, achieving a swift dismissal in a case where this would have been a more appropriate method to follow.
190 See Mark Freedland, above n 10, at 534; and Davis Contractors Ltd v Fareham Urban District Council, above n 56, at 729. Termination by operation of law as a result of frustration is not attributable to the fault or conduct of either of the contracting parties, but to a supervening event.
191 At [13].
192 At [31].
193 At [31].
194 A Worker v A Farmer, above n 95, at [24].
III Chapter III: The Search for a Frustrating Event
This chapter aims to determine whether a supervening event could conceivably fall beyond the scope of an employment agreement. This requires discussion of the extent of the law concerning termination at the initiative of the employer (dismissal) as well as termination by operation of law in New Zealand in circumstances other than frustration. Resignation is another way that an employment relationship can terminate, but this, by its nature, is a deliberate as opposed to supervening event.195
A focus is placed on situations that could otherwise resemble a potential frustration claim. I contend that where a dismissal can be performed, frustration should not be an available argument. As we will see, dismissal covers the entire field, thereby immensely limiting frustration’s applicability to the employment context, if not entirely. The personal grievance regime must first be laid down to provide context to this chapter’s discussion.
An employee who believes they have been dismissed unfairly, can take a personal grievance for unjustified dismissal under s 103(1)(a) of the ER Act.196 A personal grievance is a civil claim made by an employee against an employer or former employer. Personal grievances are a unique creature of New Zealand employment law and are the only way to challenge a dismissal in New Zealand. 197 The ER Act lays down the process for raising a personal grievance.198
The onus is on the employer to advance an acceptable justification for the dismissal if they are to avoid liability.199 The test of whether a dismissal was justifiable is whether the employer’s
195 See John Hughes, above n 118, at [ERA103.8]. Resignation will usually occur by an employee making their intention to terminate the contract quite explicit but consent to bring an employment relationship to an end does not require any particular words or form and can even be evidenced by an employee’s conduct.
196 Because, for instance, they object to the termination of their employment agreement on the basis of frustration.
197 Section 113(1).
198 Under s 114(1) a personal grievance must be raised within the applicable notice period unless the employer consents to the personal grievance being raised after the expiration of that period. Under s 114(7)(b) the applicable notice period means the period of 90 days beginning with the date on which the action alleged to amount to a personal grievance occurred or came to the notice of the employee, whichever is later. This applicable notice period is distinct from the applicable notice period of 12 months stated in s 114(7)(a) where an employee is raising a personal grievance under s 103(1)(d) for sexual harassment. Under s 114(3), employees who wish to raise a personal grievance must make the employer or a representative of the employer aware that the employee alleges a personal grievance and wants the employer to address it.
199 Gordon Anderson and Dawn Duncan, above n 109, at 288.
actions, and how the employer acted, were what a fair and reasonable employer could have done in all the circumstances at the time the dismissal or action occurred. 200 Justification involves two elements: the employer must have a substantive reason for the dismissal or disciplinary action and must carry out the dismissal in a procedurally fair manner.201 If the employer cannot make out both elements the employee will have a legitimate personal grievance.202
There are a range of remedies available in relation to personal grievances.203 These include reinstatement,204 the reimbursement of a sum equal to the whole or any part of the wages or other money lost by the employee as a result of the grievance,205 and recommendations made to the employer regarding how to prevent similar problems occurring again. 206 Remedies commonly sought for unjustified dismissal include the payment to the employee of compensation for humiliation, loss of dignity, and injury to the feelings of the employee.207
This chapter focuses on the substantive limb of the test of justification. Generally speaking, an employer will seek to substantively justify a dismissal on one of three broad and inexhaustive grounds208 as set out in ILO Convention 158.209 These include the conduct of the worker; the capacity of the worker; and the operational requirements of the undertaking, establishment or service.210 This chapter places a particular focus on the latter two because they have the greatest capacity to fit situations that might arguably trigger frustration. This is because frustration
200 Section 103A(2).
201 Gordon Anderson and Dawn Duncan, above n 109, at 292; and John Hughes, above n 118, at [ERA103.24]. 202 See “Interpreting the New Justification Test” (2011) ELB at 13 and 25. While there is a distinction to be observed between procedural and substantive matters, the Court of Appeal in Nelson Air Ltd v New Zealand
Airline Pilots’ Assoc [1994] 2 ERNZ 665 (CA) at 668 has warned against drawing a sharp delineation between the two, stating that “in the end the overall question is whether the employee has been treated fairly in all the
circumstances”. The Employment Court in T&L Harvey Ltd v Duncan (2009) 7 NZELR 161 (EmpC) has further made the point that the two elements, in practice, will often overlap, “at the end of the day the issue of
justification must be determined as a whole”.
203 Where awarded, remedies constitute a rejection of an employer’s argument that an employment agreement was frustrated, and the employee was actually dismissed.
204 Section 123(1)(a). See also s 125. Where an employee seeks reinstatement and has a personal grievance, s 125(2) states: “the Authority or court must provide for reinstatement wherever practicable and reasonable, irrespective of whether it provides for any other remedy as specified in section 123”.
205 Section 123(1)(b).
206 Section 123(1)(ca).
207 Section 123(1)(c)(i).
208 Gordon Anderson and Dawn Duncan, above n 109, at 292.
209 Article 4.
210 Article 4.
requires a supervening event, which conduct generally is not. Each section draws on the existing case law to reason that dismissal is a better fit than frustration.
An employee’s conduct can justify termination where it is repeated or serious misconduct. Successfully arguing that an employment contract is frustrated is highly improbable in cases of repeated misconduct, even more so than in situations involving serious misconduct. Repeated misconduct, by its nature, involves a pattern of behaviour that becomes foreseeable over time.211 It is for this reason that this section focuses more on one-off displays of serious misconduct.212
Serious misconduct is labelled ‘serious’ because it is conduct that deeply impairs, erodes, or is destructive to the relationship of trust and confidence such that it cannot continue.213 The range of serious misconduct that an employee may commit is very broad and includes disobedience, breaches of work rules, dishonesty, and criminal offending. 214 Where an employee has committed serious misconduct, dismissal can be performed summarily or on notice. 215 A summary dismissal is carried out without the contractual period of notice, or in the absence of such a period, reasonable notice, being given to the employee.216
Several frustration-like events are accepted as serious misconduct. For example, a breach of the general law of contract can amount to serious misconduct. If an employee misrepresented that they could perform the job they were employed for, there is no need for an employer to try and make out that this has made the situation radically different from anticipated, or rendered performance impossible. Rather the employer can dismiss on the basis of that misrepresentation.217
211 Such behaviour can be addressed through progressive disciplinary measures, such as warnings or performance improvement plans.
212 Serious misconduct is also unlikely to found frustration, as the inherent nature of an employee’s conduct does not align with the criteria for a supervening event. However conduct is frequently advanced as a supervening event by employers in the case law, further necessitating this discussion.
213 Gordon Anderson and Dawn Duncan, above n 109, at 323; and “Dismissal” (8 May 2018) Employment New Zealand <https://www.employment.govt.nz/ending-employment/dismissal/>.
214 Gordon Anderson and Dawn Duncan, above n 109, at ch 9.
215 Gordon Anderson and Dawn Duncan, above n 109, at 315.
216 John Hughes, above n 118, at [ERA103.26]; and Gordon Anderson and Dawn Duncan, above n 109, at 315. To comply with procedural fairness and safeguards, summary dismissal is only possible if, after a fair investigation and disciplinary process, the employer believes on reasonable grounds that the employee has committed serious misconduct.
217 Gordon Anderson and Dawn Duncan, above n 109, at 327.
Likewise, the Court has held that a conflict of interest can provide a substantive reason for dismissal while stressing the need to follow procedural fairness. Dismissal would be justified where, for example, an employee begins their employment only to find out that they cannot represent any of a firm’s clients because of a series of unfortunate conflicts.218 This is a frustration-like event because the situation arises without default of either party and reflects a change of circumstances so fundamental as to strike at the root of the agreement: work to be performed. While dismissing for an actual or potential conflict of interest or conduct may seem unjust because there may be no misconduct or wrongdoing by the employee involved,219 it is nonetheless a preferable outcome for the employee than frustration.220
Contrary to an earlier English case, imprisonment should no longer be thought of as triggering frustration.221 Serious misconduct can occur outside of work provided it “negatively impacts” the employment relationship, the employer’s business, 222 or brings the employer into “disrepute”. This can occur when an employee commits a criminal offence or is sentenced to imprisonment 223 The commission of any offence serious enough to warrant a custodial sentence could be considered a breach of company policy or, in any event, capable of seriously damaging an employer’s reputation.224 Likewise, an employee’s out-of-work conduct that runs directly counter to the interests and actions of their employee can be serious misconduct.225
Abandonment of employment will generally involve a termination of employment by the operation of a contractual clause in the employment agreement.226 A relatively standard clause
218 Circle Pacific Asparagus Ltd v Scia [1999] NZEmpC 63; [1999] 1 ERNZ 579 (EmpC); and Gordon Anderson and Dawn Duncan, above n 109, at 327.
219 Gordon Anderson and Dawn Duncan, above n 109, at 327.
220 See Chapter II at 19 for discussion concerning why a dismissal is more preferrable for an employee than frustration.
221 F C Shepherd & Co Ltd v Jerrom [1987] 1 QB 301. The Court deemed a contract to be frustrated because an apprentice plumber was incarcerated for a period of six months.
222 Hallwright v Forsyth Barr [2013] NZEmpC 202 at [49]–[50] citing Smith v Christchurch Press Co Ltd
[2000] NZCA 341; [2001] 1 NZLR 407 (CA).
223 See Wikaira v Chief Executive of Dept of Corrections [2016] NZEmpC 175 at [158] where the Employment Court considered that the correct test is whether “a neutral, objective, fair-minded and independant observer, apprised appropiately of the relevant circumstances, could have considered that the relevant actions to have brought, or to be a reasonable risk of bringing, the employer into disrepute”.
224 See Hallwright v Forsyth Barr, above n 222, where a senior investment analyst was held to be justifiably dismissed following his conviction for grievous bodily harm with reckless disregard following a road rage incident on the basis that his conduct and media profile has brought the employer into disrepute.
225 Turner v Te Whatu Ora – Health New Zealand [2023] NZEmpC 158 at [80] and [82].
226 Where an abandonment clause exists the parties will be held to have taken on the risk of abandonment occurring meaning that on a straightforward application of frustration the doctrine cannot apply.
in many employment agreements deems an employee to have resigned or the employment to have terminated, where the employee is absent without explanation or without contacting the employer for a minimum of three days.227 Where an employee abandons employment in the absence of an express provision concerning abandonment, this can be dealt with as a misconduct inquiry.
Dismissal for serious misconduct generally concerns employee behaviour rather than supervening events and furthermore, a dismissal would be a better fit.
Capacity in relation to employment law concerns someone’s ability to do their job. An employee may be justifiably dismissed if they lack the requisite skills, capacity, or personality 228 to perform the job for which they have been employed. 229 Incapacity has constituted substantive justification in cases involving an employee’s disability or illness230 such that it would not be in the interests of the employee or other employees for employment to continue.231
Cases that successfully invoke frustration in the context of employment law tend to concern medical incapacity. A long line of early English cases from the 1970s and 1980s have held that an employment contract can be frustrated where illness prevents its performance. 232 This approach has generally been followed in New Zealand. However, the case law has some inconsistencies.233 The following cases are discussed in chronological order.
227 Gordon Anderson and Dawn Duncan, above n 109, at 273. See also E N Ramsbottom Ltd v Chambers [2000] NZCA 183; (2000) 2 ERNZ 97 (CA) at [26] where the Court of Appeal stated that an employer should be cautious in drawing the
inference that an employee has abandoned their employment and encouraged employers to “make inquiries of the employee where the employee has not clearly evinced an intention to finally end his or her employment”. 228 See Reid v New Zealand Fire Service Commission [1999] NZCA 348; [1999] 1 ERNZ 104 (CA) at 107.
229 Gordon Anderson and Dawn Duncan, above n 109, at 339; John Hughes, above n 118, at [ERA103.39].
230 See Canterbury Clerical Union v Andrew and Bevan [1983] ACJ 875 (AC) at 877. Illness is more likely to constitute incapacity where the employee’s ability to perform their work in the longer term is impaired.
231 Wilson v Sleepyhead Manufacturing Co Ltd [1992] 3 ERNZ 614 (EmpC); and O’Loughlin v Hodgson [1993] 2 ERNZ 265 (EmpC).
232 Hoskin v Coastal Fish Supplies Ltd [1985] ACJ 124; Canterbury Clerical Union v Andrew and Bevan, above n 230; Hart v A R Marshall & Sons (Bulwell) Ltd [1978] 2 All ER 413, [1977] ICR 539; Hebden v Forsey & Son [1973] ICR 607, (1973) 15 KIR 161; and Marshall v Harland & Wolff Ltd [1972] 2 All ER 715, [1972] ICR
101.
233 Elmsly v Health Waikato Ltd, above n 122; Motor Machinists Ltd v Craig, above n 121; Paykel Ltd v Morton
[1994] 1 ERNZ 875; and Bramwell v A M Bisley and Co Ltd [1946] NZGazLawRp 82; [1946] NZLR 759.
In Motor Machinists Ltd v Craig, one such case decided in New Zealand; Chief Judge Goddard acknowledged that a contract of employment may be frustrated where illness prevents its performance.234 Subsequently, in Barry v Wilson Parking New Zealand (1992) Ltd the Court took a different view, stating that “it is inapt to refer to medical incapacity as frustration”. Rather, medical incapacity should be thought of as a termination of an employment relationship by the election of the employer taking “proactive steps to bring it to an end and not by operation of law”.235 Despite Barry, a pathologist’s employment was held to be frustrated as a result of lengthy absences from work stemming from chronic bouts of anxiety coupled with episodic depression in Elmsly v Health Waikato Ltd.236 A more recent example of a case successfully invoking frustration is Harris v Talley’s Group Ltd.237 The case concerned a seafarer who was not able to obtain a clearance from an approved medical practitioner after suffering an episode of atrial fibrillation, as required under the Maritime Rules. 238 The Authority held that the contract was frustrated as a result because the applicant could no longer fulfil her role and Talley’s would have been in breach of the law if they allowed her to recommence those duties.239
Despite this earlier case law from the Court and more recent decision from the Authority, I agree with the view espoused by the Court in Barry and the general scholarship that contends that the correct approach is to address medical incapacity through dismissal for incapacity rather than by frustration.
Dawn Duncan and Gordon Anderson suggest that termination arising from medical incapacity “should not be thought of in terms of frustration in the contractual sense, as the employer takes proactive steps to bring it to an end”. The employer’s motivation is the employee’s inability to perform their contractual obligations.240 McMullen expresses similar views, arguing that “a dismissal on the grounds of ill-health, is for a permitted reason and may in appropriate cases, be justifiable” meaning it should not give rise to frustration. 241 This matches the Court’s suggestion in Barry.242 A factor pointing away from Harris having any value as a precedent is
234 Motor Machinists Ltd v Craig, above n 121, at 591.
235 Barry v Wilson Parking New Zealand (1992) Ltd [1997] NZEmpC 311; [1998] 1 ERNZ 545 at 549–550.
236 Elmsly v Health Waikato Ltd, above n 122, at [114].
237 Harris v Talley’s Group Ltd ERA Christchurch CA104/10, 30 April 2010 at [24].
238 Kevin Leary (ed), above n 148, at [ER162.07].
239 At [25].
240 Gordon Anderson and Dawn Duncan, above n 109, at 342.
241 John McMullen, above n 3, at 786.
242 At 549–550.
that it relies heavily on the Employment Court’s decision in A Farmer v A Worker,243 which was overturned by the Court of Appeal the following year.244
Frustration is an exercise of construction that asks whether the contract could deal with the circumstance that has arisen. As argued in Chapter II, an employment agreement contains the machinery to deal with a range of disruptive circumstances.245 Performance is not impossible where the employee could be dismissed, as this is part of the contract as an implied term. This reflects the well-reasoned conclusion that the Court of Appeal came to in A Worker v A Farmer.246 Managing medical incapacity as a routine aspect of the employment relationship offers a more compassionate and adaptive approach consistent with the ER Act’s incentivising of the internal resolution of workplace issues, instead of resorting to frustration to simply kill the contract.
Because there is no set legal retirement age in New Zealand, an employer is only entitled to dismiss where a person, because of their age, is incapable of performing their contractual obligations.247 An employee aging could never conceivably reach the threshold of frustration, as an employee aging will always be foreseeable.
In Smith v Air New Zealand, a pilot who turned 60 could not command an aircraft due to International Civil Aviation Organisation flight standards.248 Air New Zealand asserted that this was a frustrating event. At worst, it made the performance of the contract inconvenient or more difficult for both parties because the destinations to which Mr Smith could then operate as a pilot were more limited.249 Given that the plaintiff was employed as a pilot and not as a captain, there were numerous services on which he could continue to fly. The Court stated that attaining 60 years of age could not be described as something "fundamentally" or "radically"
243 At [24] citing A Farmer v A Worker, above n 186, at [55] and [57].
244 A Worker v A Farmer, above n 95.
245 For instance, it includes the three broad reasons recognised by ILO Convention 158, art 4. Medical incapacity, as a sub-set of incapacity is a legitimate mechanism of dismissal.
246 At [21].
247 McAlister v Air New Zealand [2009] NZSC 78 at [26]. See also ER Act, ss 104(1)(c) and 105(1)(i); and Human Rights Act 1993, ss 21 and 149.
248 At [79].
249 At [71] citing The Power Co Ltd v Gore District Council, above n 45, at 29 where the Court of Appeal confirmed that it is not sufficient that the contract has become "more burdensome or performance more expensive".
different from the situation contemplated by the contracting parties.250 This was especially so considering that the contract was entered into only three years prior when he was 57.251
Circumstances that can give rise to dismissal on the basis of incapacity can resemble the circumstances that lead to frustration where an employee’s access to the usual workplace is dependent on the permission of a third party, and permission is withdrawn.
Thompson v AsureQuality Ltd involved a triangular employment relationship. 252 The inspector, Mr Thompson, was employed by AsureQuality and worked at AFFCO’s Wairoa meat plant site. AFFCO banned Mr Thompson from the AFFCO Wairoa site after an incident involving Mr Thompson and two of AFFCO’s employees. Under the terms of his employment, Mr Thompson could not be required to work away from AFFCO Wairoa without his consent, which he would not provide. AsureQuality intended to terminate Mr Thompson’s employment on the basis of frustration.253
The Authority was of the view that it was prevented from reaching a concluded view on whether the applicant’s employment was frustrated, as he was still employed and was on special leave at the time of the Authority’s investigation.254 However, the Authority did state that under the circumstances, “a likely outcome is for the employer to decide his continuation will be frustrated”.255
Respectfully, the Authority’s language is not easy to reconcile with the operation of frustration as a matter of law. A contract is either frustrated or it is not. It is not for the employer to decide whether that is so. If AFFCO barring Thompson from attending the site frustrates the contract, then the contract was frustrated at that moment and ended. Thompson’s leave placement does not prevent a finding that the contract is frustrated. The Authority further stated that the
250 At [80].
251 At [80]. The Court also considered that the contract contained an unlawful and unenforceable clause that purported to provide for compulsory retirement at age 58 meaning age was a factor expressly considered by the parties. The attainment of age by pilots and continuation of their employment therefore could not constitute a supervening event.
252 Thompson v AsureQuality Ltd ERA Wellington WA70/10, 15 April 2010.
253 At [33]–[35]. Mr Thompson was placed on notice of the proposed termination of his employment contract.
254 Kevin Leary (ed), above n 148, at [ER162.07].
255 At [15].
applicant deserves an opportunity to have further discussions with his employer.256 This and the Authority’s general reasoning is far more consistent with this being a dismissal.
Given that AsureQuality conducted a disciplinary investigation, found that Mr Thompson did not commit serious misconduct, and decided not to take any disciplinary action, the period for which they could have reasonably dismissed for serious misconduct would have lapsed.257 Whether incapacity could instead be made out is discussed later in this chapter in the context of a very similar scenario.
Redundancy is its own special category of dismissal where employees have committed no wrong nor become incapacitated.258 The ER Act does not define redundancy.259 Parties can expressly define redundancy and provide redundancy machinery in the employment agreement. 260 Where they do not, dismissal on the basis of redundancy is still possible, and courts tend to refer to the definition provided in the now repealed Labour Relations Act 1987:261
employment is terminated by the employer, the termination being attributable, wholly or mainly, to the fact that the position filled by that worker is, or will become, superfluous to the needs of the employer.262
256 At [36].
257 At [21].
258 Aoraki Corporation Limited v McGavin, above n 182, at 293. See also Grace Team Accounting v Brake [2014] NZCA 541 at [87], the leading case on redundancy in New Zealand where the Court of Appeal states: “the dismissal arises because of the circumstances of the business, not because of any misconduct”.
259 Sarah Hughes, above n 182, at 22. Consequently, redundancy law in New Zealand has developed through common law processes within a broad legislative framework, such as the personal grievance regime.
260 Sarah Hughes, above n 182, at 45 citing Ross Nelson “The Implied Term of Trust and Confidence: The Change in Approach of the Court of Appeal to the Requirement to Pay Redundancy Compensation” (2000) 31 Victoria University of Wellington Law Review 599 at 602–603.
261 Labour Relations Act 1987, s 184(5)(a). See also GN Hale & Son Ltd v Wellington Caretakers etc IUOW
[1991] 1 NZLR 151 (CA) at 155 where the Court of Appeal regarded this as the ordinary usage of the word but noted that an individual or collective agreement may contain a more restrictive definiton of redundancy.
262 Contrast with the definition of redundancy in s 139 of the Employment Rights Act 1996 (UK).
(1) For the purposes of this Act an employee who is dismissed shall be taken to be dismissed by reason of redundancy if the dismissal is wholly or mainly attributable to—
(a) the fact that his employer has ceased or intends to cease—(i) to carry on the business for the purposes of which the employee was employed by him, or
(ii) to carry on that business in the place where the employee was so employed, or
(b) the fact that the requirements of that business—
(i) for employees to carry out work of a particular kind, or
(ii) for employees to carry out work of a particular kind in the place where the employee was employed by the employer,
have ceased or diminished or are expected to cease or diminish.
By way of example, a redundancy is likely to be substantively justified where there is a legitimate need to reduce staff to avoid insolvency, restore or increase profitability, or for operational reasons where the need for the employee’s position has become redundant to an employer’s requirements.263 A redundancy is unlikely to be substantively justified where an employee loses their position and then is replaced by someone else in that same position as this suggests the redundancy was “tainted by some inappropriate motive”.264 Where an employee is made redundant in New Zealand they do not have a statutory entitlement to compensation,265 in contrast with other jurisdictions.266 Courts have a consistent approach when dealing with redundancies that arise out of a business restructuring.267 The concept of redundancy is also broad enough to include circumstances where the position does not exist anymore.268
Section 4(4)(e) lists redundancy as one of the matters to which the duty of good faith applies.269 Whether the statutory obligations of good faith were complied with will inform the decision under s 103A about how the reasonable employer would have acted.270 To act in a procedurally justified manner, an employer must follow a proper and fair process and all redeployment options exhausted before any positions are made redundant.
(a) Redundancy or frustration?
Circumstances that can give rise to redundancy can be similar to the circumstances that lead to frustration where the essential subject matter of the relationship, namely work to be performed, has disappeared without the initiative of either party.271
263 Gordon Anderson and Dawn Duncan, above n 109, at 343.
264 Savage v Unlimited Architecture Ltd [1999] NZEmpC 149; [1999] 2 ERNZ 40 at 11; and John Hughes, above n 118, at [RED2.2]. 265 Gordon Anderson and Dawn Duncan, above n 109, at 352. In New Zealand if an employee was unable to negotiate redundancy pay as part of their contract or as a separate contractual entitlement at the time of dismissal, they will not be entitled to compensation for their loss of employment. Whether the lack of statutory entitlement to redundancy compensation should be subject to reform is outside the scope of this dissertation.
266 Employment Rights Act (UK), s 135(1)(a).
267 See Caddy v Vice Chancellor, University of Auckland [2021] NZEmpC 129 at [86] where the Court states that it will not substitute its business judgment for that of the employer when inquiring into whether a redundancy made pursuant to a business restructuring will be legitimate. See also Innovative Landscapes (2015) Ltd v Popkin [2020] NZEmpC 40, [2020] ERNZ 55 for its discussion that a genuine business rationale will not cure more than minor defects in the process of enacting that redundancy.
268 Redundancy as a concept arguably grew broader in the wake of the COVID-19 pandemic. Discussion of this will follow very shortly.
269 New Zealand Steel Ltd v Haddad [2023] NZEmpC 57 at [78]. For further discussion of good faith see Chapter II at 21.
270 Simpsons Farms Ltd v Aberhart [2006] NZEmpC 92; [2006] ERNZ 825 (EmpC) at [65].
271 Watkins v Bacica, above n 154, at 607 citing Wellington Clerical Union v Greenwich, above n 109, at 981.
Watkins v Bacica concerned employees hired by the employers to be the farm managers for a farm that the employers were to purchase. 272 However, the employers did not settle the purchase and never became the owners of the farm. This meant that the employees could not work there. The employers argued that the contract had been frustrated, but the Employment Court found this was a case of redundancy.273 Settlement was prevented by the employer’s default in failing to come up with the necessary finance, which is an example of self-induced frustration. 274 This default was the key factor which meant that the unavailability of the workplace was not capable in law of frustrating the contract.275
In De Sousa v Bayside Fine Food Ltd the Authority considered the ability of an employer to invoke a “business interruption clause” to terminate employment due to the impact of COVID- 19 on its business.276 The clause in question covered instances of “business interruption” that triggered on the occurrence of “unforeseen events” beyond the employer’s control. Distinct from frustration, the clause also required the employer to consult.277 When invoked, the clause, which the Authority described as “a type of frustration clause”, would achieve a result akin to the legal doctrine of frustration.278
The Authority nonetheless stated that the standard for frustration is high and came to the conclusion that the pandemic measures at the time did not trigger the clause because the café could still operate and the employer failed to consult. 279 The Authority thus treated the termination as an unjustified dismissal on the grounds of redundancy.280 The employer had invoked the clause before the government announced the level 4 lockdown.
Because frustration was not made out, the Court and Authority held that an unjustified dismissal on the basis of redundancy in both cases occurred. Scenarios on the boundary of
272 Watkins v Bacica, above n 154.
273 At 607.
274 Gordon Anderson and Dawn Duncan, above n 109, at 266 state that self-induced frustration “is no frustration at all”. See generally Maritime National Fish Ltd v Ocean Trawlers Ltd [1935] UKPC 1; [1935] AC 524 (PC) at 90.
275 At 594.
276 De Sousa v Bayside Fine Food Ltd [2021] NZERA 27; and Kevin Leary (ed), above n 148, at [ER162.07]. 277 At [10]. The clause provided some examples such as “natural disasters, damage to the workplace premises including electrical failure or fire, governmental action, war, terrorism or health epidemic or pandemic.”
278 At [16].
279 At [17]–[18]. Unlike frustration the clause required consultation.
280 At [13], [20], and [26].
frustration will be discussed later in this chapter and it will be argued that redundancy should apply at the point of intersection of the two.
Employment agreements sometimes contain a clause that gives an employer the power to dismiss in specified circumstances. Such a clause existed in Workforce Development Ltd v Hill, another case involving a tripartite employment relationship where the employee’s access rights were withdrawn.281
Workforce Development (WD) was party to a contract with the Department of Corrections (DOC) and provided literacy and numeracy tuition to serving prisoners. Mrs Hill was a tutor who provided these services.282 DOC discovered that Mrs Hill had sent a postcard to a serving prisoner while away on holiday and subsequently suspended her access.283 WD then dismissed Mrs Hill pursuant to a clause in her contract that allowed for termination where DOC withdraws access and WD has no other positions to fill.284 The Court held that Workforce Development’s decision to dismiss was open to it in the circumstances, and was justifiable.285
The Court stated in the alternative that it would have “difficulty accepting” the proposition that the contract was frustrated (which would mean there was no dismissal and no grounds for a personal grievance). The Court stressed that “Parties to an employment relationship are not permitted to contract out of their statutory obligations, including the procedural requirements relating to fair process and their mutual obligations”.286
Where a clause equips an employer with the power to dismiss, it is clear that the Court would have serious reservations about even entertaining a frustration argument.287
281 Kevin Leary (ed), above n 148, at [ER162.07].
282 At [1].
283 At [3]–[4].
284 At [5] and [55].
285 At [55].
286 At [57].
287 This argument, that sought to classify something expressly provided for in the employment agreement as a frustrated contract, runs directly counter to the view that sees frustration as a matter of construction. See Chapter I at 12.
This chapter will now explore scenarios on the boundary of frustration and dismissal. The breadth of redundancy and incapacity will continue to be analysed. The following scenarios assume that working from home is not a suitable option, and no contingency is provided in the employment agreement that would otherwise address the situation.
(a) Climate change, natural disasters, and the COVID-19 Pandemic
It is possible to conceive of situations where extreme weather events, natural disasters, and pandemic measures damage or disrupt workplace access. For instance, climate change, which is expected to cause additional and more frequent extreme weather events, may force an employer to terminate operations altogether.288
In a similar vein, it is within the Government’s power to declare an area a ‘Red Zone’ when land and housing stock become so badly damaged that it cannot be salvaged, accessed, or built on ever again in the event of a severe earthquake.289 While there were no cases brought before the Court concerning the dismissal of employees arising from Red Zoning in the 2010 and 2011 Christchurch earthquakes, it is easy to contemplate a scenario where a workplace inside a Red Zone is forced to cease operations permanently.
Likewise, the COVID-19 pandemic prompted several organisations to undergo business restructures to reduce costs. The pandemic saw a mass number of dismissals where employers advanced redundancy as a substantive justification. Procedurally, there are several cases involving issues with how employers enacted redundancy290 however, it was largely accepted as a substantive justification, including where the position no longer existed.291
288 Already in 2023 Auckland suffered severe flooding and Cyclone Gabrielle ravaged nearby areas of the North Island.
289 The 2010 and 2011 Christchurch earthquakes caused devestating damage, soil liquefaction, and lateral spreading to several residential areas in Christchurch. Such areas were effectively rendered uninhabitable by the earthquakes. To address the situation, Parliament passed emergency legislation, the Canterbury Earthquake Recovery Act 2011, to give power to the Government to declare specified areas a ‘Red Zone’.
290 See de Wys & Jenney v Solly’s Freight (1987) Limited [2020] NZERA 285 at [36] and [42] where despite Solley Freight’s argument that that the standard expected of a fair and reasonable employer was significantly altered by the context of the Global Pandemic and consequent economic turmoil, the Employment Relations Authority held that Solly’s Freight did not perform adequate consultation about the redundancies and made a decision to disestablish positions while still waiting on its application for the Wage Subsidy.
291 See Amos Ors v Evandale Plant Productions Limited T/A Evandale Gardens [2021] NZERA 414 at [74] where the Authority accepted that the redundancy was for legitimate reasons however it was conducted in a procedurally unfair manner.
Redundancy is broad and flexible enough to constitute a substantial justification for dismissal in these scenarios. Primarily, this is because it is legitimately the position that is disappearing here rather than the need for a particular employee. Even if the measures limiting workplace access were not permanent, a redundancy could still be made out. This would be because it was not economically sustainable for the business to stay out of operation for an extended period, or because economic conditions have changed even when the business can operate again, and it is no longer viable.
(b) The stranded migrant worker
The following scenario concerns where the employee, without default, cannot make it to work. This does not give rise to redundancy because the position is still required, but the employee is absent. 292 This scenario will be rare but theoretically possible, for example, when the Government cancels an employee’s temporary entry class visa293 under the Immigration Act 2009.294
The Minister of Immigration or an Immigration Officer may cancel a temporary entry class visa at any time while its holder is outside New Zealand.295 It is conceivable that this authority could be exercised where New Zealand faces a sudden economic downturn resulting in a lack of demand for workers in specific industries. Another variation on this might be where the employee is unable to travel because of pandemic restrictions that will remain in place longer than the period of employment.296 There is no case law specifically on this matter, although frustration in the context of immigration law was argued, but rejected in Whanau Tahi.297 It is, therefore, an open question of law.
292 If an employer made the stranded migrant worker redundant and then proceeded to hire someone else to perform that role who was in the country, the migrant worker is likely to have a legitimate personal grievance. A personal grievance can still be raised even where the individual raising the grievance is outside the country.
293 See Immigration Act 2009, s 4. Temporary entry class visas allow people to work, study, and visit New Zealand for a set period of time.
294 Immigration Act, s 66(1)(a). Where a migrant acquires a temporary entry class visa to work in New Zealand and signs an employment agreement in advance of the beginning of their employment that person, naturally, becomes an employee.
295 Sections 64–66.
296 See Reuters Staff “New Zealand shuts border to all foreigners to curb spread of coronavirus” (19 March 2020) Thomson Reuters <https://www.reuters.com/article/us-health-coronavirus-newzealand-ban- idUSKBN2160KX/>. New Zealand did not cancel temporary entry class visas during the early days of the COVID-19 pandemic, but it did prevent them from entering New Zealand which would have the same effect for the purposes of this scenario.
297 At [63]. The facts of this case, while engaging immigration law, were wholly different to the stranded migrant worker scenario. Whanau Tahi concerned an employee who failed to obtain a variation of an employer specific visa. The employee was unable to procure a variation because of the employer’s refusal to sign his employment agreement and send it through to Immigration New Zealand. The employer was labouring under
This scenario is an unforeseeable event that makes performance impossible because the employee cannot travel to New Zealand to work. But frustration still may not be the right fit. This is because it is unlikely that the employee will be permanently incapacitated from performing the contract, rather only temporarily incapacitated while they are prevented from entering the country. Peel and Treitel observe that it would be difficult to invoke frustration where the incapacity is not permanent.298
(i) Can incapacity constitute a substantive ground of dismissal for the stranded migrant worker?
Capacity is best considered as a broad grounds of dismissal that recognises several different forms of incapacity. Absences is one such form.299 While absence arising from an impossibility to be present at the physical site of work has not yet been recognised, it is within the same vein of thinking characterising the case law concerning absences as a form of incapacity. Namely, absence that does not arise from any fault of the employee.
(ii) Could this dismissal be carried out in a procedurally justified manner?
Section 103A(3) provides some idea of the steps that an employer should take to act in a procedurally fair manner where they advance incapacity as the ground of dismissal, however, case law provides a more helpful indication to this novel scenario.300
In Trotter v Telecom Corp of New Zealand Ltd, the leading case on lack of capacity, Chief Judge Goddard stressed the importance of the need for a fair trial of an employee’s abilities
the mistaken and unsubstantiated belief that there were compliance issues that could lead to prosecution. The Court held that this did not meet “the high threshold required to prove that performance had become
impossible”.
298 At 19-016.
299 See Canterbury Clerical Union v Andrew and Bevan, above n 230, at 877 for discussion on illness as the usual reason for lengthy absences.
300 See Angus & McKean v Ports of Auckland Ltd (No 2) [2011] NZEmpC 160, (2011) 9 NZELR 40 at [46] where the Court notes that the procedural steps in the s 103A(3) list may need modification in cases that do not concern the dismissal ground of misconduct, such as a determination of justification for dismissals or disadvantages in employment on grounds such as redundancy, medical incapacity. See also Grace Team Accounting Ltd v Brake, above n 258, at [77] where it affirms the discussion in Angus & McKean, stating “we agree with the full Court that it will be necessary to interpret s 103A(3) in a way that adapts it to a situation not involving misconduct”.
against clear criteria and whether the employee was able to rectify the situation or improve their performance following the employer’s communication of their concerns.301
Of most relevance is likely to be whether remedial steps such as redeployment have been observed. Namely, exploration of whether it is possible for the migrant worker to remain employed and work from the country they live in while they cannot enter New Zealand for work. While considering redeployment, the employer must consult under s 4(1A)(c)302 and do so in a way that is active and constructive in maintaining a productive employment relationship under s 4(1A)(b).303 Where an employer thoroughly investigates whether redeployment is possible and at all times acts responsively and communicatively towards their employee,304 it is likely that the employer is acting as a fair and reasonable employer would.305
Labour law must have a way of addressing situations where there is no prospect for an employee to engage in the work they were contracted for, and the employer no longer receives what they bargained for. A mechanism to deal with a failure of consideration in the context of employment law is necessary to prevent a temptation to rely on the general law of contract instead, which prejudices employee protections.
Ultimately, it seems likely that incapacity could be made out to dismiss an employee in this scenario. There may be little practical difference between relying on frustration or incapacity in the context of this scenario. 306 However, if incapacity cannot respond to this type of situation, the case for abolition of frustration in employment law is weaker, because there remains a situation where it could theoretically operate.
301 Trotter v Telecom Corp of New Zealand Ltd [1993] NZEmpC 152; [1993] 2 ERNZ 659 (EmpC), affirmed in Ho v Chief of Defence Force [2005] NZEmpC 33; [2005] 1 ERNZ 93 (EmpC). See also Gordon Anderson and Dawn Duncan, above n 109, at 339 who emphasise that procedural fairness is a key focus for the court where incapacity is advanced as the ground of dismissal.
302 Section 4(1A)(c). See Chapter II at 22 for more discussion on s 4(1A)(c).
303 See New Zealand Steel Ltd v Haddad, above n 269, at [81]. While this case concerned redeployment in the context of redundancy its reasoning is applicable to incapacity as the statutory regime does not differentiate between the various grounds of dismissal.
304 Section 4(1A)(b).
305 Section 103A(2). See also s 103A(5); and Drivesure Ltd v McQuillan [2022] NZEmpC 176 at [26]. Defects in the way that the employer enacts the dismissal will not cause a dismissal to be unjustifiable if they were minor or did not result in the employee being treated unfairly.
306 Especially if an employer asserting frustration engages with the employee to satisfy good faith anyway which, as established, is best practice. However if the event was truly frustrating, then the employer will be justified in omitting dismissal procedure. If they were dismissed on the ground of incapacity as opposed to frustration they would also be required to work out their notice period, or alternatively an employer may pay out an employer for this period.
(c) Damaged disability access ramp
To further test the proposition that incapacity should apply instead of frustration one further scenario should be examined. This scenario concerns a workplace that, in the wake of an unforeseeable natural disaster, remains safe to work in but a disability access ramp was destroyed. 307 It would be a rare and unusual case that there is genuinely no reasonable accommodation an employer could make, but it remains a possibility.308 Redundancy, for the same reasons that applied to the stranded migrant worker, is not readily arising out of this scenario. Incapacity could likely be made out here too.309 As established, incapacity in modern labour law has developed to overtake frustration as a means for dealing with health issues.
As discussed elsewhere in this dissertation frustration is one way that an employment contract is held to terminate by operation of law, rather than the actions of the parties.310 There are a few other circumstances where employment terminates by operation of law, in which case, similarly to frustration, there has been no dismissal, and an employee cannot take a personal grievance.311
The most common is the expiration by the effluxion time where an employment agreement is entered into for a stated period.312 The law has also long since recognised that it is an implied condition 313 that a contract of employment will be discharged by the death of either employee314 or employer315. Discharge by operation of law of a personal contract may also occur where an employee is conscripted or interned if it will interfere with long-term
307 Whether climate change is foreseeable or not has been the subject of recent academic literature. See Sarah Gray, above n x; and Jocelyn L Knoll and Shannon L Bjorklund “Force Majeure and Climate Change: What is the New Normal?” (2014) 8 Journal of the ACCL 29 at 50. Foreseeability may present an issue because it is becoming increasingly more predictable that there will be floods and extreme weather events. Arguably severe weather events are less foreseeable in relation to employment contracts of short duration as it is unlikely this would come to the attention of the parties at the time the contract is entered into.
308 Human Rights Act, s 29(1)(a) permits different treatment based on disability where the accommodations that an employer would need to provide are unreasonable. See also McClelland v Schindler Lifts NZ Ltd [2015] NZHRRT 45.
309 See Warner v Armfield Retail & Leisure Ltd [2014] I.C.R 239 EAT for an example of an English case where the Court did not find a breach of the duty to make reasonable accommodations under the Equality Act 2010 (UK).
310 John Burrows, above n 7, at 277.
311 Gordon Anderson and Dawn Duncan, above n 109, at 268.
312 John Hughes, above n 118, at [1045].
313 John Hughes, above n 118, at [1043].
314 Farrow v Wilson [1869] UKLawRpCP 63; (1869) LR 4 CP 744.
315 Stubbs v Holywell Railway Co [1867] UKLawRpExch 37; (1867) LR 2 Exch 311.
performance of the contract.316 Bankruptcy can result in the discharge of an employer or employee from an employment contract where the Assignee disclaims it317 because it is onerous property.318 Where a company is placed into liquidation and wound up by order of a liquidator who decides the business should cease, trading notice of discharge will be served on the company’s employees.319 Employment will also terminate where a company is wound up voluntarily on being unable to meet its obligations.320
Since the law recognises termination in these circumstances, this is further support for the lack of need for frustration.
316 See Mindy Chen-Wishart Contract Law (7th ed, Oxford University Press, Oxford, 2022) at 308 and Peel and Treitel, above n 17, at 19–023.
317 Insolvency Act 2006, s 187(b). See also Lucas v Moncrieff (1905) 21 TLR 683.
318 Insolvency Act, s 117(4) defines onerous property and it means an unprofitable contract.
319 Gordon Anderson and Dawn Duncan, above n 109, at 263.
320 Mark Freedland, above n 10, at 335.
IV Chapter IV: Law Reform Suggestions
This dissertation has sought to unpack why frustration “will not be easily invoked”321 beyond the reasons typically given by the Authority and courts, namely that the “test is a high one”,322 especially in the employment context because of the “drastic effect it has on vulnerable employees” 323 that can apply only where the situation is “fundamentally” or “radically” different from the situation earlier contemplated by the parties.324
This dissertation has argued that employment law measures for ending employment contracts, especially incapacity and redundancy, cover the field which means that there is no scenario where frustration is available. In terms of the systematic imbalance of bargaining power between an employee and employer that characterises employment relationships, dismissal above frustration cannot be seen as anything but preferable.325 In light of this conclusion, this chapter calls for the abolition of frustration in employment law.
A Abolition of Frustration in Employment Law
This chapter supports the proposed abolition with three key arguments. Firstly, that abolition matches the ER Act’s modern objectives and is consistent with a legacy of curtailing the employer’s discrepant bargaining power; second, that abolition is required to eliminate the uncertainty cast by frustration’s shadow, which can be leveraged and used by employers seeking to ignore their statutory and contractual obligations; and third, that abolition is justified because arguably the test of frustration in the employment context is so high that it may not ever be satisfied again.
Overall, the possibility of frustration’s application to a one-off, fact-specific scenario that has only arisen twice326 since the ER Act was passed in relation to medical incapacity to protect a hypothetical employer is not worth the risk of causing disadvantage to employees who are at the lesser bargaining power end of the employment contract.327 The trade-off is too great and inconsistent with the spirit and objectives of modern employment law and an employee can
321 Karelrybflot v Udevenko, above n 95, at [37].
322 Smith v Air New Zealand Ltd, above n 103, at [71].
323 Karelrybflot v Udevenko, above n 95, at [37].
324 Taylor v Air New Zealand Ltd, above n 100, at [29].
325 Geoff Hogbin Power in Employment Relationships: Is There An Imbalance? (New Zealand Business Roundtable, Wellington, 2006) at vii.
326 Elmsly v Health Waikato Ltd, above n 122; and Harris v Talley’s Group Ltd, above n 237.
327 Section 3(a)(ii).
only seek redress and vindication where they can fund bringing the case to a decision-maker for correction.
Regarding the stranded migrant worker situation, if my argument that incapacity is capable of addressing the situation is rejected, avenues of dismissal can evolve post-abolition to fill any potential gaps to exclude frustration’s operation. The expansion of substantive grounds of dismissal upon the abolition of frustration would be a natural consequence of removing frustration as a cause of action to fill any gap that abolition creates.
According to the explanatory note, the ER Act is:328
a framework based on the understanding that employment is a human relationship involving issues of mutual trust, confidence and fair dealing, and is not simply a contractual, economic exchange. This basis requires specific recognition in any regulation of the relationship — something not satisfactorily achieved by general contract law.
These objects contrast radically with the objects of the Employment Contracts Act 1991 (EC Act) which, as the name of the Act suggests, placed a stronger focus on the contract of employment, with the overarching purpose of promoting “an efficient labour market”.329 This reflects the unitary perspective of employment law which, legally speaking, is the view that an organisation should be free to contract the labour it requires, on whatever terms it can negotiate in a free labour market, to best pursue the organisation’s ownership goals.330
The unitary perspective is most strongly advanced by those advocating a neoliberal approach to both law and the economy.331 A neoliberal school of thought ran parallel to the EC Act’s ethos. Neoliberals argue that there is no need for a specialised employment law and assert that employment can be adequately regulated solely by the common law of contract and tort.332 This model rejects the idea that the law should be concerned with social and equitable goals. Under the EC Act, the Employment Court and Court of Appeal took an increasingly generous
328 Employment Relations Bill (8-1), explanatory note.
329 John Hughes, above n 118, at [ERA.2].
330 Gordon Anderson and Dawn Duncan, above n 109, at 13. 331 Gordon Anderson and Dawn Duncan, above n 109, at 14. 332 Gordon Anderson and Dawn Duncan, above n 109, at 14.
and unitarist approach to its application of frustration, as evidenced by the amount of successfully argued frustration-inducing medical incapacity cases. The EC Act, passed by a right-wing Government, was clearly intended to promote unitary objectives and support the managerial prerogative. 333 This is in contrast to Labour’s more pluralist approach to employment law, recognising multiple interests in the workplace.334
The unitary values of the common law have had a strong influence in shaping the common law approach to employment law.335 Frustration’s current availability to employers represents a vestige of the neoliberal EC Act era. The ER Act, in emphasising that labour law is not merely a matter of the legal enforcement of contracts,336 has attempted to extinguish that neoliberal ethos. But because the Act grants the Authority jurisdiction over Part 2 of the CCLA, frustration’s availability has diminished but remained.337
As established, frustration provides employers with an escape route from their dismissal obligations.338 This is counterintuitive to the spirit and trajectory of modern employment law. Many of the judiciary’s decisions between 1991 and 2000 can be seen as a response to the EC Act and the values that it espoused.339 It is a fact that far fewer cases alleging frustration of contract come before the Authority and Court now than prior to the ER Act’s passing. This is because the scheme of the ER Act acknowledges that employment relationships are relational and encourages the internal resolution of workplace issues. The Supreme Court recently confirmed this in FMV v TZB and discussed the application of contractual principles to employment law. It considered that the ER Act stepped back from the EC Act’s strictly contractual focus stating:340
the current Act takes a relational approach, insisting that employment is more than a market transaction theoretically conducted at arm’s length between individuals with equal bargaining
333 See Simon Lean-Massey, above n 119, at 113 who further states: “There is little doubt that the objective of the was to marginalise unions and collective bargaining.”
334 Margret Wilson “The Politics of Workplace Reform: 40 Years of Change” in Gordon Anderson, Alan Geare, Erling Rasmussen and Margret Wilson (eds) Transforming Workplace Relations in New Zealand 1976-2016 (Victoria University Press, Wellington, 2017) at 46–47.
335 Gordon Anderson and Dawn Duncan, above n 109, at 19.
336 Hugh Collins, Gillian Lester, and Virginia Mantouvalou Philosophical Foundations of Labour Law (Oxford Scholarship Online, 2019) at 3.
337 Section 162(a).
338 John McMullen, above n 3, at 785 and 789; and David Cabrelli and Jessica D’alton, above n 1.
339 Gordon Anderson and Dawn Duncan, above n 109, at 22.
340 At [46].
power... The scope of the employment relationship is wider than the employment contract and it adds an extra dimension to contractual rights and obligations.
The result is that while the employment agreement remains very important, the employment relationship is the real focus and spirit of the current Act. The contractual thinking that characterised and permeated the EC Act deflected attention from the policy considerations in employment protection cases, which have now garnered explicit recognition in the purposes of the ER Act.341
Statutory unjustified dismissal protection laws have developed to adjust the bargaining strength of employees and to shift the judiciary away from their historical insistence on protecting the economic interests of employers, prompted by the former neoliberalist EC Act.342 Frustration threatens to undo these efforts to curb worker exploitation. While case law provides an indication, it is impossible to gauge the overall number of employers relying on frustration to terminate employment. This is because some employees will accept the termination altogether or come to a confidential mediated settlement rather than have the termination reviewed by the Authority or Court. Where the Court or Authority is not involved, there is a risk that frustration was invoked where the contract was, in fact, not frustrated. In all likelihood, it is unlikely that the employer’s invocation of frustration will have been the correct cause of action, considering its immensely limited application. As established, a frustrated employment contract means that an employee cannot take a personal grievance for unjustified dismissal for there is no dismissal on which to base the statutory claim.343 This means there is clear potential that an unscrupulous employer could use frustration to exploit employees by disguising a below-board dismissal as a frustrated employment contract.
It follows that abolishing frustration is in keeping with the abandonment of neoliberalist thought and consistent with modern labour law. The law of contract is a frequent visitor to employment law and frustration is a particularly troublesome guest that does not serve to
341 Section 3.
342 See Sarah Hughes, above n 182, at 72. Those drafting the ER Act believed that the EC Act had tipped the scales of power too far in favour of the employer and realignment was necessary.
343 John McMullen, above n 3, at 785.
maintain employment relationships productively. 344 Frustration cannot be reconciled with statutory employment protection.345 The two must be decoupled.346
Abolishing frustration serves the object of the ER Act, which is to build productive employment relationships through the promotion of good faith.347 This is because the existence and availability of frustration constitutes a direct threat to good faith in the employment relationship.348 It is also clear that abolition is proportionate to the importance of the object as it only requires employers to act fairly and reasonably in accordance with their duty of good faith.
To mitigate the risk of exploitation and the devastating effects that frustration has on an employee, courts have hedged the application of contractual thinking where it undermines modern employment legislation and employee liberties, stating that it can apply only in exceptional circumstances.349 But the downside of leaving the door ajar as opposed to closing it altogether is that an employer seeking to dismiss can blithely plead a claim that a supervening event justifies frustration of contract, asserting that their case is in the “exceptional” category.350
At a broad level, the Court of Appeal’s rationale in Paper Reclaim v Aotearoa International Ltd for abolishing exemplary damages 351 for breach of contract aligns with the notion of
344 David Howarth “Frustration for Labour Lawyers” (1987) 46 C.L.J. 47 at 47.
345 There has been a suggestion that the doctrine of frustration may be irreconcilable, or at least creating of tension, in another area of the law too. See The Power Co Ltd v Gore District Council, above n 45, at 23 where the Court of Appeal noted that in contracts between public utilities the exercise of executive and legislative powers might be a better means of dealing with changes in circumstances than the doctrine of frustration. The Court stated: “invoking a broadly or ill-defined doctrine in circumstances such as the present would prevent public agencies from carrying out their public functions rather than freeing them to do that.”
346 David Howarth, above n 344, at 49.
347 Section 3(a).
348 See Chapter II for more discussion of the risk that frustration poses to the mutual duty of good faith; and
Workforce Development Ltd v Hill, above n 123, at [57].
349 See Whanau Tahi v Kiran Dasari, above n 57, at [25] where the wrongful termination of the employee’s employment by frustration caused him severe mental consequences that his friend, a health care professional, corroborated.
350 Paper Reclaim Ltd v Aotearoa International Ltd [2006] 3 NZLR 188 (CA) at [181].
351 Couch v Attorney-General [2010] NZSC 27 at [58] per Blanchard J where his honour states that exemplary damages punish and deter outrageous wrongdoing committed intentionally or in a subjectively reckless manner. See also Joseph Corbett “Equitable Exemplary Damages: Have We Made Coward of Conscience?” (LLB (Hons) Dissertation, University of Otago, 2020).
supporting the abolition of frustration in the context of labour law.352 To quote the Court of Appeal, “the fact that the odds may be slim may not deter an employer with stars in his eyes” who labours under the mistaken belief that frustration of contract has occurred or sees frustration as a shortcut to dismissal whereby they can bypass a fair process.353 Only brazen employers undeterred by a public backlash will attempt to escape liability by presenting a frustration case to a decision-maker yet, as we have seen, many employers nonetheless attempt to mount this argument.354
Frustration is usually thought of as benefitting an employer, but this is only where it is successfully made out. Where an employer asserts frustration and an employee sues their former employer, they are very likely to have a successful personal grievance for unjustifiable dismissal. 355 This is because the employer in thinking their frustration argument was defensible, will have adhered to the argument that the contract was frustrated, thereby omitting fair process.
Additionally, an employer relying on frustration also may be looked at unfavourably in terms of public relations because it circumvents the usual procedural safeguards.356 Termination by operation of law arising from the death of an employee, abandonment, or insolvency will not attract moral condemnation or negatively affect public relations like frustration will. Removing frustration altogether eliminates any temptation to rely on the doctrine, making the position more straightforward for employers.
The cost and time that would be saved if frustration was abolished are practical considerations further pointing towards abolition. The cost of challenging an employer’s claim of frustration on an employee may be high. Fees for professional assistance often exceed damages that an
352 Paper Reclaim v Aotearoa International, above n 350, where the Court of Appeal gave policy factors to justify their decision to abolish contractual exemplary damages in New Zealand. Part of the ratio for this conclusion was that punishment fell outside the purpose of contractual actions, which are supposed to compensate, not punish, the claimant. However, the Court also drew upon the reasons of the English Law Commission justifying the exclusion of exemplary damages for breach of contract, which stressed the importance of a greater need for certainty in contract law.
353 At [181]. The Court of Appeal uses this quote to describe the risk of claimants trying to claim exemplary damages despite having an unmeritorious claim.
354 David Cabrelli and Jessica D’alton, above n 1.
355 See Whanau Tahi v Kiran Dasari, above n 57, at [67] for an example of the Court finding that an employer erroneously frustrated an employment contract and the employer beyond held to have unjustifiably dismissed that employee.
356 David Cabrelli and Jessica D’alton, above n 1.
employee may receive for being unjustifiably dismissed, which represents a further disincentive to bring the case to the Authority or Court for correction.357 Where an employer erroneously claims frustration, and an employee does dispute its application, the employee will likely experience delays before a decision-maker can hear their claim. The need to have the termination heard by a decision-maker increases the case workload of an already backlogged Authority or Court. 358 Adjudication concerning the doctrine of frustration, while often straightforward, can sometimes be complex and demanding of court resources and time. Abolishing frustration would mean that an employer would instead be obligated to pursue the termination as a dismissal, pursuant to the process laid out in the employment agreement or as dictated by law.359
Where a righteous employee can fund their challenge, they may nonetheless be disappointed by the outcome. Despite the consensus of the courts that frustration will be very rarely applied due to taking into account principles of modern labour law, policy issues and sympathising with an employee’s vulnerable position, it is plausible that a judicial or quasi-judicial decision- maker may, nevertheless and against key considerations, uphold a frustration argument. This is not helped by the lingering uncertainty concerning the precise test that a decision-maker will use and apply the most weight to when determining whether a contract has been frustrated.360 Frustration is something of a lottery in this regard.
For example, the Employment Court in A Farmer v A Worker held that the allegations of the farmer’s five-year-old son fundamentally changed the situation and made any further performance of the contract radically different from what the parties had undertaken initially.361 According to Judge Couch, it would have been unjust for the farmer to have been held to his obligations under the employment relationship after the allegations were made.362
357 Max Whitehead “Costs put employment justice out of reach of ordinary folk” (19 April 2018) New Zealand Herald <https://www.nzherald.co.nz/nz/max-whitehead-costs-put-employment-justice-out-of-reach-of-ordinary- folk/DYF6O7COO2KD2HGX2TYZ6PMCRM/>.
358 Kate MacNamara “Key employment dispute authority mired in delay, as Government presses on with industrial relations change” (2 April 2022) New Zealand Herald < https://www.nzherald.co.nz/business/key- employment-dispute-authority-mired-in-delay-as-government-presses-on-with-industrial-relations- change/UBGB3HAYWIOOIZDH6E5OPRBIUA/>.
359 Section 103A(3).
360 See the discussion in Chapter I concerning the various tests that the courts have applied since Planet Kids v Auckland Council, above n 9, was decided.
361 A Farmer v A Worker, above n 186, at [51].
362 At [51].
Respectfully, this approach contradicts the long-established understanding of frustration as a matter of construction. Frustration should have been excluded because the parties made provision for the occurrence of the alleged frustrating event in the contract. In reconciling this with other Employment Court decisions post the introduction of the ER Act that have sought to constrain the scope of frustration tightly, Freedland states that “the courts sometimes apply the accelerator and sometimes the brake”.363 It is possible that an employee who wants their day in court to protest the dissolution of their employment agreement with what appears to be a robust unjustified dismissal claim may nonetheless be disappointed by the judges’ driving ability.364
According to the Authority, most frustration claims “relate to an employer justifying the end of an employment relationship faced with a personal grievance claim”.365 The Authority and the Courts generally do not take lightly to arguments that advance frustration as a defence only on appeal,366 or where the evidence does not establish that an employer ever thought the contract was frustrated and purported to dismiss an employee. 367 These arguments can be considered the tickets in the frustration lottery. Abolition would prevent an unworthy litigant from having the lucky one-off winning ticket pulled out of the draw and end such arguments desperately mounted by employers seeking to retrospectively classify a dismissal that was neither substantively nor procedurally justified as a frustrated employment contract.
Following a frustrating event, over the period where an employer is deciding what the best course of action to take is, an employer acting in good faith may continue to pay employees while they are ready, willing and able to fulfil their contractual obligations to work. The Court
363 Mark Freedland, above n 10, at 166.
364 See Senerik Holdings Ltd v STAMS [1991] 2 ERNZ 543 (EmpC) for another example of a case that came to a questionable outcome. The Court held that an employment contract was frustrated by a decision not to proceed with the mutual objective of establishing a partnership or profit-sharing arrangement. This judgment can be critiqued because the employer pulled out of the profit-sharing initiative on the basis of the employee, Mr Ferguson’s, poor performance. This is both a valid ground for dismissal and a foreseeable consequence of an employee trial period.
365 Thompson v AsureQuality Ltd, above n 252, at [33]. See also Watkins v Bacica, above n 154, at 603 where the Court states: “The doctrine of frustration has not infrequently been raised as a justification for the termination of an employment contract.”
366 See Smith v Air New Zealand, above n 103, at [63] and [76] where the Court stated that “it is not open for Air NZ to argue very belatedly that the contract had been frustrated and was not capable of performance.” See also Whanau Tahi v Kiran Dasari, above n 57, at [30] where the Court stated that “it is a little difficult to discern from the amendments to the statement of claim on what basis the causes of frustration and illegality are being pleaded by the plaintiff.”
367 See Whanau Tahi v Kiran Dasari, above n 57 at [29] and [63]. The Court identifies several evidential deficits with the argument that Mr Dasari’s employment agreement could ever have been frustrated in the circumstances.
of Appeal recently held that the minimum wage is payable for the hours of work that an employee has agreed to perform while they are still employed.368 This is regardless of whether the work is actually performed because of, for instance, a supervening event.369 But if the employment contract was frustrated, then the contract died at that moment 370 meaning an employer was discharged of any obligation to pay ready, willing and able employees.371 An employer may be able to demand back any wages paid since the supervening event on the basis of restitution for unjust enrichment. However, if the employee had a reasonable belief that the contract was not frustrated and altered their position in reliance on the payment, an alternation of position defence may be available to the employee as restitution would be unfair.372
Despite a possible alteration of position defence, this anomalous outcome could conceivably follow orthodox thinking of frustration. Yet this does not seem like a result the law should sensibly produce, as it prejudices an employee’s right to be paid where they are ready, willing, and able. The tension this causes with the object of the Minimum Wage Act cannot be understated.373
The Court of Appeal in Paper Reclaim also considered that the lack of any exemplary damages awards for breach of contract being given was further inviting of the need to abolish them. The only cases that have successfully invoked frustration since the passing of the ER Act can be discounted on the basis that medical incapacity no longer gives rise to frustration.374 Given that every other case alleging frustration of employment contract has been unsuccessful, the same reasoning should apply to put an end to the uncertainty that accompanies a doctrine that has hardly been invoked.
368 Sandhu v Gate Gourmet New Zealand Ltd [2021] NZCA 203 at [3].
369 See Sandhu v Gate Gourmet New Zealand Ltd, above n 368, at [48] for its discussion on s 6 of the Minimum Wage Act 1983. The Court held that it is unlawful to make deductions from wages where time is lost as the result of an employer’s direction or an inability of the employer to provide work. Legitimate reasons for minimum wage deductions are limited to the exceptions in s 7(2) of the Minimum Wage Act, including the worker’s default, illness, or accident.
370 See Andrew Stewart and J.W. Carter, above n 157, at 70 where they state: “Once frustration has occurred the terms of the contract cease to operate and neither party may claim to enforce them.”
371 Gordon Anderson and Dawn Duncan, above n 109, at 267; and Smith v Air New Zealand, above n 103, at
[72] citing Karelrybflot v Udevenko, above n 95, at [37]. The doctrine of frustration applies even when the employee is still ready, willing, and able to perform the employment contract.
372 Tessa Cooksley “The Role of Unjust Enrichment in New Zealand” (Victoria University of Wellington Legal Research Paper, Student/Alumni Paper No. 21/2019) at 14–15.
373 The Court in Sandhu v Gate Gourmet New Zealand Ltd, above n 368, at [10]–[11] stated that the Act recognises the diminished bargaining power of those in low-paid employment and intends to prevent the exploitation of workers.
374 Elmsly v Health Waikato Ltd, above n 122; and Harris v Talley’s Group Ltd, above n 23.
Providing employers with a powerful weapon with which they can unilaterally terminate employment without notice and often without accountability (unless reviewed by a decision- maker) exacerbates the already existing inherent inequality of bargaining power in employment relationships. The great majority of New Zealanders derive their economic security, and consequently, their ability to participate in society by virtue of employment, whether directly or indirectly. It is from employment that people can access the material conditions of life.375 For that source to come to a sudden and unexpected end can cause immense disruptions to their lives,376 and would likely cause individuals to fall back on social security benefits.377
As the Supreme Court recently acknowledged, reliance on standard contractual doctrine and principles in employment law is inappropriate because an employment relationship is not a one-off transaction but, in most cases, a long-term relational contract. 378 Terminating an employment relationship without notice is to treat it as the former.379 Notice periods act as an essential buffer for employees to find time to transition to new employment.
Then there is also a supporting argument that frustration could be abolished in employment law within a framework of contractual analysis. If there is a scenario where frustration could theoretically apply because the true construction of the contract does not exclude it, recall that giving effect to justice and reaching a fair and reasonable result is an inherent justification for, and key criterion of, frustration.380 It is hard to conceive of any situations where the demands of justice require the invocation of a doctrine that, to quote the Court of Appeal has a “drastic effect” on “vulnerable employees”381.
375 Gordon Anderson and Dawn Duncan, above n 109, at 3.
376 Simon Lean-Massey, above n 119, at 117 describes this as “an employee’s relative lack of financial fallback”.
377 See Social Security Act 2018, ss 20 and 225. People who have their employment terminated by frustration are eligible for Jobseeker’s support if they meet the requirements of s 20. They will not face the 13 week ‘basic rule’ stand-down period that applies after leaving employment voluntarily without good and sufficient reason or for losing their employment due to the commission of misconduct as an employee.
378 FMV v TZB [2021] NZSC 102 at [51].
379 Observance of a reasonable notice period is not required where frustration terminates the contract.
380 Planet Kids v Auckland Council, above n 9, at [9] and [61]–[62] citing The Sea Angel, above n 70, at [113]. See Chapter I at 14 for further discussion.
381 Karelrybflot v Udevenko, above n 95, at [37].
Employment agreements in New Zealand are required to contain a reasonable notice period where the employment agreement comes to an end.382 In doing so, it could be argued that the parties have turned their mind to the possibility of the contract coming to an end. This means that the parties have made provision for the allocation of risk. On the approach of viewing frustration as a matter of construction, this would exclude the operation of the doctrine.
Whether the facts of a case concern the impossibility of performance or “radically different”383 performance leaves open the question of the precise degree of impossibility or difference that must be reached before frustration occurs.384 Either way, whether an alleged supervening event has rendered performance impossible or radically different is a highly fact-specific analysis. Decision-makers, therefore, are slow to find frustration and reluctant to act as the handmaiden for employers to sidestep their obligations of a fair and reasonable employer where, in substance and reality, it is the employer that brought the contract to an end, not frustration.385
There is a clear case for a statutory provision eliminating the application of frustration.386 Against the backdrop of the highly protective regime of the unjustified dismissal jurisdiction, scant space is left for frustration to operate. 387 The primary purposes of labour law are to minimise the “unique characteristics of employment relationships that put the employee in a vulnerable position” 388 and “to be a countervailing force to counteract the inequality of bargaining power” within the employment relationship.389 The ER Act further recognises the need to reduce the inherent disparity of power present in employment relationships.390 In light of these aims, there is no reason in principle to add yet another means whereby an employer can terminate an employment agreement where there exists ample pathways to do so already. Doing so tilts the already discrepant bargaining power even more in the employer’s favour.
382 Two to four weeks’ notice is generally considered fair and reasonable, but this may vary significantly depending on the industry.
383 Taylor v Air New Zealand Ltd, above n 100, at [29].
384 John Hughes, above n 118, at [1045].
385 David Cabrelli and Jessica D’alton, above n 1.
386 John McMullen, above n 3, at 790 further states there may also be a case for abolishing “other contractual doctrines which are prejudicial to the operation of statutory employment rights”. Whether this is so is outside the scope of this dissertation.
387 See John Hughes, above n 118, at [ERA103.8] where he states: “There would seem to be few situations where termination cannot be adequately resolved through the personal grievance process applying the standard s 103A test of justification.”
388 Guy Davidov A Purposive Approach to Labour Law (Oxford University Press, 2016) at 31.
389 Paul Davies and Mark Freedland Kahn-Freund’s Labour and the Law (3rd ed, Stevens, London, 1983) at 18.
390 Section 3(a)(ii).
Employment law cannot be purely a matter of private transactions and contracting; society as a whole must have a voice regarding the formation of the law, as employment law impacts significantly on all sections of society.391 Employment law does not draw its coherence from a set of doctrinal legal principles and rules. Rather, its focus is on employment and the employee, which forms the subject matter and context of the law. Subject-oriented fields of the law tend to be dominated by statute and supplemented by the common law. Indeed, despite their common law origins in the law of private contract, governments have overlaid employment contracts with statutory regulation and public law policy. 392 The prominence of statutory regulation of the employment relationship reflects the importance of Parliament driving fundamental political change, social innovation and providing standardised rules.
Statutory intervention concerning frustration has only ever been to the extent of stating what happens after a contract is frustrated.393 In a similar vein, the amendment will not attempt to change, alter, or meddle with the common law tests of frustration. Instead it will simply state that these tests do not apply to employment agreements. Labour law in New Zealand is regulated and dominated by statute as opposed to judicial intervention.394 Parliament represents the appropriate body to abolish it from labour law.
Parliament should provide in the ER Act that the doctrine of frustration does not apply to employment contracts. It would also be suitable to include a mirror provision in the CCLA395 specifically regarding the frustration of employment contracts, as it has done with money
391 Gordon Anderson and Dawn Duncan, above n 109, at 4.
392 Simon Lean-Massey, above n 119, at 111.
393 When describing how the common law treated the result of a frustrated contract Andrew Stewart and J.W. Carter, above n 157, at 66 stated: “no one has ever been satisfied with the common law treatment of the consequences of frustration ... Reacting to the perceived inadequacies of this approach, a number of legislatures around the Commonwealth have over the past 50 years replaced the law with statutory provisions designed to effect or facilitate an adjustment of the financial position in which parties find themselves in following
frustration”.
394 See the ER Act; Holidays Act 2003; Health and Safety at Work Act 2015; Wages Protection Act 1983; Minimum Wage Act; Parental Leave and Employment Protection Act 1987; Equal Pay Act 1972; Privacy Act 2020; and Human Rights Act. Other areas peripherally relevant to employment law are also statute dominated. See the Accident Compensation Act 2001; Trade Unions Act 1908; and Shop Trading Hours Act 1990.
395 Ronni Cabraal and John Farrow, above n 94, at 239 have argued that the specific operation of the Frustrated Contracts Subpart of the CCLA and the concept of recovering money paid or retaining money for expenses incurred does not readily fit with an exchange of wages for work. This argument carries merit in that Subpart 4 was written for frustrated contracts at large, as opposed to with employment contracts specifically in mind. This constitutes a further layer of uncertainty in favour of abolition.
payable under frustrated insurance contracts.396 The amendment should be clear, short, and sharp, making it inescapably clear to the reader that an employment contract is immune from, and not susceptible to, the doctrine of frustration. This is regardless of whether a given employment agreement makes any mention of the doctrine or not.
As the proposed amendment will also ban clauses in employment agreements that purport to resurrect the doctrine of frustration or restate it to get around the provision in the ER Act, the amendment would be a limitation on freedom of contract. This, however, is already achieved by s 238 of the ER Act which specifies that the ER Act’s provisions cannot be contracted out of.397 Employment law significantly curtails freedom of contract already. The amendment would be one of the many ways in which Parliament has legislated for different rules concerning employment contracts compared to contracts at large.398 In other words, legislating for the removal of frustration from labour law would follow a pattern of modification to standard contract law approaches and freedom of contract.399
The amendment to the ER Act should be inserted under Part 9A.400 Section 142A(1) states that the object of Part 9A is to provide additional enforcement measures to promote the more effective enforcement of employment standards. The discontinuation of frustration is one such measure that would better uphold employment standards and principles such as mutual obligations and procedural fairness.
The amendment could be implemented as the next available provision in Part 9A, s 142ZE.401
It should be titled “Employment contracts cannot be frustrated”. It should reflect the wording
396 Section 66 is the exception to Subpart 4’s general application to various kinds of contracts. It specifically addreses the issue of money payable under a frustrated insurance contract. No provision currently exists specifically regarding money payable under a frustrated employment contract. See generally Todd and Barber, above n 13, at 812–813 for discussion about frustrated insurance contracts.
397 Section 238 reads: “The provisions of this Act have effect despite any provision to the contrary in any contract or agreement.”
398 There are numerous other instances of a modification of contractual rules for the purposes of employment legislation and there is no reason to suppose it could not work in the context of frustration.
399 For example, employers are bound to follow the minimum code of employee rights and keep records of compliance with the code under s 4B(1) of the ER Act. The minimum code is contained throughout a range of statutes and includes the right to four weeks’ paid annual holiday per year, twelve public holidays per year and payment for time and a half for working on public holidays, ten days sick leave per year, three days paid bereavement leave for certain family members, up to fifty-two weeks paid parental leave, unpaid leave for jury service, the provision of rest and meal breaks, and payment of at least the minimum wage unless an exemption has been provided.
400 Part 9A is titled “Additional provisions relating to the enforcement of employment standards”.
401 So that the new s 142ZE is not grouped under the sub-heading for ss 142ZB–142ZD, a new sub-heading should be inserted.
used regarding frustrated contracts in the CCLA to ensure consistency. The amendment should be as follows:
An employment contract that has become impossible to perform or had been otherwise frustrated does not discharge the parties from further performance.
An amendment could also be made to s 142A to signpost s 142ZE. This could be contained in s 142A(1)(e) and use similar wording to s 142ZE.
Conclusion
The main thrust of my argument is that there are numerous employee protections in labour law that frustration has the potential to defeat. To combat this, frustration should not be triggered where an employer can enact a substantively and procedurally justified dismissal instead.
In Chapter I, I explained how the doctrine of frustration is a flexible tool designed to avoid the injustice of forcing parties to perform a contract in drastically different circumstances than contemplated that developed in the context of commercial contracts. 402 The case law post Planet Kids demonstrates that there is uncertainty concerning the test that a decision-maker will place the greatest value in. Chapter II examined how frustration has been applied in employment law, highlighting the vulnerability of good faith practices, procedural fairness, and redundancy compensation clauses in the face of frustration. This chapter also argued that the managerial prerogative, statutory implied terms, and employment contracts contain the machinery to deal with a range of events that might otherwise frustrate an employment agreement.
Chapter III sought to detail that machinery. In doing so, it identified conflicting case authorities concerning whether withdrawal of access to enter the usual workplace gives rise to either frustration or dismissal. 403 An exploration of hypothetical scenarios including a stranded migrant employee revealed that incapacity as a ground of dismissal is likely to be considered comprehensive enough to constitute a substantive ground of dismissal in this kind of situation. In line with the sentiment expressed by Judge Inglis in Workforce Developments, frustration, therefore ought not to be invoked.
In laying out the argument for reform, Chapter IV argued that abolition is consistent with the spirit and ethos of modern labour law 404 and would extinguish the uncertainty cast by frustration’s shadow.405 Linked with this is how the severity of the outcome of frustration and dismissal, being the loss of employment, is grave. When carried out in line with the law,
402 Planet Kids v Auckland Council, above n 9, at [8].
403 The Authority suggested that frustration was “a likely outcome” in this situation whereas the Employment Court preferred to treat the situation as a dismissal.
404 In particular abolition would incentivise good faith and procedurally fair practices in the employment relationship by removing a doctrine that would allow their neglect.
405 Such uncertainty is harmful to vulnerable employees.
dismissal seeks to cushion the blow of that outcome. Whereas frustration in its potential to be deployed in a way that thwarts employee protections arguably exacerbates it. Such is the tension between a doctrine that matured in the presence of commercial contracts and the personal employment agreement.
Bibliography
A Cases
A Farmer v A Worker EmpC Christchurch CC3/09 CRC 49/07, 20 March 2009.
A Worker v A Farmer [2010] NZCA 547, [2010] ERNZ 407.
Air New Zealand Ltd v BP Oil Ltd [2019] NZHC 1187.
Amos Ors v Evandale Plant Productions Limited T/A Evandale Gardens [2021] NZERA 414.
Angus & McKean v Ports of Auckland Ltd (No 2) [2011] NZEmpC 160, (2011) 9 NZELR 40.
Aoraki Corporation Limited v McGavin [1998] NZCA 88; [1998] 1 ERNZ 601.
Auckland City Council v The New Zealand Public Service Assoc Inc [2003] NZCA 311; [2004] 2 NZLR 10 (CA).
Baguley v Coutts Cars Ltd [2001] NZEmpC 47; [2000] 2 ERNZ 409 (EmpC).
Barry v Wilson Parking New Zealand (1992) Ltd [1997] NZEmpC 311; [1998] 1 ERNZ 545.
Bathurst Resources Ltd v L & M Coal Holdings Ltd [2021] NZSC 85.
Bay of Plenty District Health Board v Midwifery Employee Representation and Advisory Service Inc [2018] NZERA Auckland 380.
Bramwell v A M Bisley and Co Ltd [1946] NZGazLawRp 82; [1946] NZLR 759.
Caddy v Vice Chancellor, University of Auckland [2021] NZEmpC 129.
Carr v Gallaway Cook Allan [2014] NZSC 75, [2014] 1 NZLR 792.
Circle Pacific Asparagus Ltd v Scia [1999] NZEmpC 63; [1999] 1 ERNZ 579 (EmpC).
Couch v Attorney-General [2010] NZSC 27.
De Sousa v Bayside Fine Food Ltd [2021] NZERA 27.
de Wys & Jenney v Solly’s Freight (1987) Limited [2020] NZERA 285.
Drivesure Ltd v McQuillan [2022] NZEmpC 176.
E N Ramsbottom Ltd v Chambers [2000] NZCA 183; (2000) 2 ERNZ 97 (CA).
Elmsly v Health Waikato Ltd [2002] NZEmpC 86; [2002] 1 ERNZ 85 (EmpC).
Firm PI 1 Ltd v Zurich Australian Insurance Ltd [2014] NZSC 147, [2015] 1 NZLR 432.
FMV v TZB [2021] NZSC 102.
GN Hale & Son Ltd v Wellington Caretakers etc IUOW [1991] 1 NZLR 151 (CA).
Grace Team Accounting v Brake [2014] NZCA 541.
Hallwright v Forsyth Barr [2013] NZEmpC 202.
Hally Labels Ltd v Powell [2015] NZEmpC 92, [2015] ERNZ 940.
Harris v Talley’s Group Ltd ERA Christchurch CA104/10, 30 April 2010.
Hawke’s Bay Electric Board v Thomas Borthwick & Sons (Australia) Ltd [1933] NZLR 873.
Ho v Chief of Defence Force [2005] NZEmpC 33; [2005] 1 ERNZ 93 (EmpC).
Innovative Landscapes (2015) Ltd v Popkin [2020] NZEmpC 40, [2020] ERNZ 55.
Karelrybflot AO v Udovenko [1999] NZCA 331; [2000] 2 NZLR 24 (CA).
Parker v Lakeside Farm Fresh Ltd [1996] EMC Wellington WEC26/96, 6 May 1996.
Paykel Ltd v Morton [1994] 1 ERNZ 875.
Planet Kids Ltd v Auckland Council HC Auckland CIV-2011-404-1741, 16 December 2011.
Planet Kids Ltd v Auckland Council [2012] NZCA 562, [2013] 1 NZLR 485.
Planet Kids Ltd v Auckland Council [2013] NZSC 147.
Maass Mussels and Oysters Ltd v New Zealand’s Bluff Oyster Company (2013) Ltd [2021] NZDC 22543.
McAlister v Air New Zealand [2009] NZSC 78. McClelland v Schindler Lifts NZ Ltd [2015] NZHRRT 45. McKinlay v Whitburn [2023] NZHC 468.
Montgomerie v Montgomerie [2020] NZCA 3.
Motor Machinists Ltd v Craig [1996] NZEmpC 225; [1996] 2 ERNZ 585 (EmpC).
Nelson Air Ltd v New Zealand Airline Pilots’ Assoc [1994] 2 ERNZ 665 (CA).
New Zealand's Bluff Oyster Company (2013) Ltd v Maass Mussels & Oysters Ltd [2022] NZHC 3475.
New Zealand Building Trades Union v Hawkes Bay Area Health Board [1992] 2 ERNZ 897. New Zealand Local Authority Protection Disaster Fund v Auckland Council [2013] NZHC 1858.
New Zealand Steel Ltd v Haddad [2023] NZEmpC 57.
Nielsen v Dysart Timbers Ltd [2009] NZSC 43, [2009] 3 NZLR 160.
O’Loughlin v Hodgson [1993] 2 ERNZ 265 (EmpC).
Paper Reclaim Ltd v Aotearoa International Ltd [2006] 3 NZLR 188 (CA).
Reid v New Zealand Fire Service Commission [1999] NZCA 348; [1999] 1 ERNZ 104 (CA).
Savage v Unlimited Architecture Ltd [1999] NZEmpC 149; [1999] 2 ERNZ 40. Sandhu v Gate Gourmet New Zealand Ltd [2021] NZCA 203. Senerik Holdings Ltd v STAMS [1991] 2 ERNZ 543 (EmpC).
Shankar v Aquaflow Spa & Swimming Pools Ltd [2022] NZERA 420.
Siegmund v Marlborough Tour Company Ltd [2021] NZERA 180.
Simpsons Farms Ltd v Aberhart [2006] NZEmpC 92; [2006] ERNZ 825 (EmpC). Smith v Christchurch Press Co Ltd [2000] NZCA 341; [2001] 1 NZLR 407 (CA). Smith v Air New Zealand [2000] NZEmpC 249; [2000] 2 ERNZ 376.
T&L Harvey Ltd v Duncan (2009) 7 NZELR 161 (EmpC).
Taylor v Air New Zealand Ltd EmpC Auckland AC61/04, 28 October 2004.
The Power Co Ltd v Gore District Council [1996] NZCA 483; [1997] 1 NZLR 537.
The Roman Catholic Bishop of the Diocese of Christchurch v RFD Investments Ltd [2015] NZHC 2647.
Thompson v AsureQuality Ltd ERA Wellington WA70/10, 15 April 2010. Trotter v Telecom Corp of New Zealand Ltd [1993] NZEmpC 152; [1993] 2 ERNZ 659 (EmpC). Turner v Te Whatu Ora – Health New Zealand [2023] NZEmpC 158.
Vector Gas Ltd v Bay of Plenty Energy Ltd [2010] NZSC 5, [2010] 2 NZLR 444.
Watkins v Bacica [1996] 1 ERNZ 594 (EmpC).
Wellington Clerical Union v Greenwich [1983] ACJ 965 (AC).
Whanau Tahi Ltd v Kiran Dasari [2016] NZEmpC 120.
Wikaira v Chief Executive of Dept of Corrections [2016] NZEmpC 175. Wilson v Sleepyhead Manufacturing Co Ltd [1992] 3 ERNZ 614 (EmpC). Workforce Development Ltd v Hill [2014] NZEmpC 174, [2014] ERNZ 465.
Wylie v Wylie [2019] NZHC 2638.
Zhang v Zhai [2014] NZHC 1026.
Zwarst v Saxton [2013] NZHC 386.
Brisbane City Council v Group Projects Pty Ltd [1979] HCA 54; (1979) 145 CLR 143.
Humphries v The Proprietors “Surfers Palms North” Group Titles Plan 1955 [1994] HCA 21; (1994) 179 CLR 597.
Bank Line Ltd v Arthur Capel & Co [1918] UKHL 1; [1919] AC 435.
Barton v Morris [2023] UKSC 3.
Belfour v Weston (1786) 1 TR 650.
Canterbury Clerical Union v Andrew and Bevan [1983] ACJ 875 (AC).
Carney v Herbert [1985] AC 301 (PC).
Carter v Cunmming [1667] EngR 198; (1666) 1 Cas in Ch 84.
Cricklewood Property and Investment Trust Ltd v Leightons Investment Trust Ltd [1945] AC 221 (HL).
Dahl v Nelson Donkin & Co (1881) 6 App Cas 38.
Davis Contractors Ltd v Fareham Urban District Council [1956] UKHL 3; [1956] AC 696 (HL).
Denny, Mott and Dickson Ltd v James B Fraser & Co Ltd [1944] UKHL 3; [1944] AC 265.
Edwinton Commercial Corp v Tsavliris Russ (Worldwide Salvage and Towage) Ltd (The Sea Angel) [2007] EWCA 547, [2007] 2 Lloyd’s Rep 517.
Eurico Spa v Phillip Brokers (The Epaphus) [1987] 2 Lloyd’s Rep 215.
F C Shepherd & Co Ltd v Jerrom [1987] 1 QB 301.
FA Tamplin Steamship Co Ltd v Anglo-Mexican Petroleum Products Co Ltd [1916] 2 AC 397.
Geipel v Smith (1872) LR 7 B 404.
Farrow v Wilson [1869] UKLawRpCP 63; (1869) LR 4 CP 744.
Grant Smith and Co and McDonnell Ltd v Seattle Construction and Dry Dock Co [1920] AC 162.
Hall v Wright [1858] EngR 837; (1858) E.B. & E. 746.
Harman v Flexible Lampts Ltd [1980] IRLR 418.
Hart v A R Marshall & Sons (Bulwell) Ltd [1978] 2 All ER 413, [1977] ICR 539.
Hebden v Forsey & Son [1973] ICR 607, (1973) 15 KIR 161. Hirji Mulji v Cheong Yue Steamship Co Ltd [1926] AC 497. Hoskin v Coastal Fish Supplies Ltd [1985] ACJ 124.
J Lauritzen AS v Wijsmuller BV (The Super Servant Two) [1990] 1 Lloyd’s Rep 1.
Jackson v Union Marine Insurance Co [1874] UKLawRpCP 73; (1874) LR 10 CP 125.
Krell v Henry [1903] UKLawRpKQB 169; [1903] 2 KB 740 (CA).
Maritime National Fish Ltd v Ocean Trawlers Ltd [1935] UKPC 1; [1935] AC 524 (PC). Marshall v Harland & Wolff Ltd [1972] 2 All ER 715, [1972] ICR 101. National Carriers Ltd v Panalnina (Northern) Ltd [1980] UKHL 8; [1981] AC 675 (HL). Notcutt v Universal Equipment Co (London) Ltd [1986] EWCA Civ 3; [1986] ICR 414.
Paradine v Jane (1647) Aleyn 26.
Poussard v Spiers [1876] UKLawRpKQB 47; (1876) LR 1 QBD 410.
Taylor v Caldwell [1863] EngR 526; (1863) 3 B & S 826.
Touteng v Hubbard [1802] EngR 413; (1802) 3 B & P 291.
Stubbs v Holywell Railway Co [1867] UKLawRpExch 37; (1867) LR 2 Exch 311.
Turner v Goldsmith [1891] 1 O.B. 544.
Warner v Armfield Retail & Leisure Ltd [2014] I.C.R 239 EAT.
B Legislation
Accident Compensation Act 2001.Canterbury Earthquake Recovery Act 2011. Contract and Commercial Law Act 2017.
Employment Contracts Act 1991. Employment Relations Act 2000. Equal Pay Act 1972.
Frustrated Contracts Act 1944. Health and Safety at Work Act 2015. Holidays Act 2003.
Human Rights Act 1993. Immigration Act 2009.
Insolvency Act 2006. Labour Relations Act 1987. Minimum Wage Act 1983.
Parental Leave and Employment Protection Act 1987. Privacy Act 2020.
Public Works Act 1981.
Shop Trading Hours Act 1990. Social Security Act 2018.
Trade Unions Act 1908. Wages Protection Act 1983.
The Employment Relations Amendment Act (No 2) 2004. Employment Relations Bill 2000 (8-1), explanatory note.
C Treaties
ILO Convention Concerning Termination of Employment at the Initiative of the Employer 1412 UNTS 159 (entered into force 23 November 1985).
D Texts
Edwin Peel and GH Treitel The Law of Contract (15th ed, Sweet & Maxwell, London, 2020). Gordon Anderson and Dawn Duncan Employment Law in Aotearoa New Zealand (3rd ed, LexisNexis, Wellington, 2022).
John Hughes Mazengarb's Employment Law (NZ) (online ed, LexisNexis).
Mark Freedland The Personal Employment Contract (Oxford University Press, Oxford, 2006).
Mindy Chen-Wishart Contract Law (7th ed, Oxford University Press, Oxford, 2022). Stephen Todd and Matthew Barber Burrows, Finn and Todd on the Law of Contract in New Zealand (7th ed, LexisNexis, Wellington, 2022).
E Books and chapters in books
DH Parry The Sanctity of Contracts in English Law (FB Rothman, Littleton, CO, 1986). Geoff Hogbin Power in Employment Relationships: Is There An Imbalance? (New Zealand Business Roundtable, Wellington, 2006) at vii.
Guy Davidov A Purposive Approach to Labour Law (Oxford University Press, 2016). Hugh Collins, Gillian Lester, and Virginia Mantouvalou Philosophical Foundations of Labour Law (Oxford Scholarship Online, 2019).
Margret Wilson “The Politics of Workplace Reform: 40 Years of Change” in Gordon Anderson, Alan Geare, Erling Rasmussen and Margret Wilson (eds) Transforming Workplace Relations in New Zealand 1976-2016 (Victoria University Press, Wellington, 2017).
Paul Davies and Mark Freedland Kahn-Freund’s Labour and the Law (3rd ed, Stevens, London, 1983).
Ronni Cabraal and John Farrow “Lessons from COVID-19 and the Workplace: Building a new future” in Conference Employment Law Kei Te Mahi! - Stepping Up to 2022 & Beyond (NZLS CLE, 2022) 209.
F Journal Articles
Andrew Stewart and J.W. Carter “Frustrated Contracts and Statutory Adjustment: the Case for a Reappraisal” (1992) 51 C.L.J. 66.Arnold D McNair “War-time Impossibility of Performance in Contract” (1919) 36 LQR 84. AWB Simpson “Innovation in Nineteenth Century Contract Law” (1975) 91 LQR 247.
Daniel Brinkman “Planet Kids Ltd v Auckland Council: An Analysis of the Supreme Court's Approach to Frustration” (2016) 22 NZBLQ 126.
David Howarth “Frustration for Labour Lawyers” (1987) 46 C.L.J. 47.David McLauchlan “A Conversation about the Contract and Commercial Law Act 2017” (2019) 50 Victoria University of Wellington Law Review 387.
Jenny Bychan and Rob Nicholls “The Challenges of Navigating the COVID-19 Pandemic for Australia’s Franchise Sector” (2020) 48 ABLR 126.
Jocelyn L Knoll and Shannon L Bjorklund “Force Majeure and Climate Change: What is the New Normal?” (2014) 8 Journal of the ACCL 29.
John Hughes “Interpreting the New Justification Test” (2011) ELB.
John McMullen “Frustration of the Contract of Employment and Statutory Labour Law” (1986) 49 MLR 785.
Marcus Roberts “Planet Kids: The Resurrection of the Failure of Consideration Approach to Frustration?” (2014) 26 NZULR 350.
Marcus Roberts “An Update on Frustration in New Zealand: The Multifactorial Approach in the Age of COVID-19” (2021) 26 NZBLQ 182.
Nupur Upadhyay “Carr v Gallaway Cook Allan” (2014) 20 AULR 284.
Rex Adhar “Frustration of Contract in the New Zealand Supreme Court” (2014) 42 ABLR 249.
Robert Guthrie and Frances Meredith “Long-Term Employee Illness and Frustration of the Contract of Employment” (2007) 49 JIR 87.
Ross Nelson “The Implied Term of Trust and Confidence: The Change in Approach of the Court of Appeal to the Requirement to Pay Redundancy Compensation” (2000) 31 Victoria University of Wellington Law Review 599.
Roy Granville McElroy and Glanville L Williams “Impossibility of Performance” (Cambridge University Press, Cambridge, 1941).
Simon Lean-Massey “Employment Agreements: Special Contracts Worthy of Special Treatment?” [2008] CanterLawRw 4; (2008) 14 Canta LR 101.
Tsuriel Rashi and Andrew A. Schwartz “Contracts Capsized by COVID-19: A Legal and Jewish Ethical Analysis” (2021) 178 J Bus Ethics 403.
William Herbert Page “The Development of the Doctrine of Impossibility of Performance” (1920) 18 Mich L Rev 589.
G Online Commentaries and Looseleaf Texts
Kevin Leary (ed) Employment Law (online ed, Thomson Reuters).
Personal Grievances (online ed, Thomson Reuters).
H Unpublished Papers
Bryn Jones “Unscrambling the Eggs of Modern Frustration” (LLB (Hons) Dissertation, University of Otago, 2014).Christina Inglis, Chief Judge of the Employment Court “Defining good faith (and Mona Lisa’s Smile)” (paper presented to Law @ Work Conference, Wellington, 31 July 2019). Joseph Corbett “Equitable Exemplary Damages: Have We Made Coward of Conscience?” (LLB (Hons) Dissertation, University of Otago, 2020).
Tessa Cooksley “The Role of Unjust Enrichment in New Zealand” (Victoria University of Wellington Legal Research Paper, Student/Alumni Paper No. 21/2019).
Sarah Gray “Denying Contractual Relief to Greenhouse Gas Emitters?” (LLB (Hons) Dissertation, University of Otago, 2020).
Sarah Hughes “A Portrait of Redundancy Law in New Zealand” (LLM Thesis, University of Canterbury, 2011).
Toni Collins “The Doctrine of Frustration, Commercial Leases and the Canterbury Earthquakes” PhD Thesis, University of Canterbury, 2016).
I Internet Resources
David Cabrelli and Jessica D’alton “Common Law Frustration and Redundancy in the Context of Covid-19 Furlough” (1 September 2020) UK Labour Law Blog<https://uklabourlawblog.com/2020/09/01/common-law-frustration-and-redundancy-in-the- context-of-covid-19-furlough-by-david-cabrelli-and-jessica-dalton/>.
“Dismissal” (8 May 2018) Employment New Zealand
<https://www.employment.govt.nz/ending-employment/dismissal/>.
“Employment during and after disasters” (7 March 2023) Employment New Zealand
<https://www.employment.govt.nz/leave-and-holidays/other-types-of-leave/employment- during-and-after-disasters/>.
Kate MacNamara “Key employment dispute authority mired in delay, as Government presses on with industrial relations change” (2 April 2022) New Zealand Herald
<https://www.nzherald.co.nz/business/key-employment-dispute-authority-mired-in-delay-as- government-presses-on-with-industrial-relations change/UBGB3HAYWIOOIZDH6E5OPRBIUA/>.
Max Whitehead “Costs put employment justice out of reach of ordinary folk” (19 April 2018) New Zealand Herald <https://www.nzherald.co.nz/nz/max-whitehead-costs-put-employment- justice-out-of-reach-of-ordinary-folk/DYF6O7COO2KD2HGX2TYZ6PMCRM/>.
Reuters Staff “New Zealand shuts border to all foreigners to curb spread of coronavirus” (19 March 2020) Thomson Reuters <https://www.reuters.com/article/us-health-coronavirus- newzealand-ban-idUSKBN2160KX/>.
J Other Resources
Employment Contracts: Bargaining Trends and Employment Law Update (Centre for Labour, Employment and Work, Victoria University, annual).
John Burrows “Frustration of Contract” in Law Commission Contract Statutes Review (NZLC R25, 1993) 275.
Supreme Court of New Zealand Planet Kids Ltd v Auckland Council (press release, 17 December 2013).
NZLII:
Copyright Policy
|
Disclaimers
|
Privacy Policy
|
Feedback
URL: http://www.nzlii.org/nz/journals/UOtaLawTD/2023/6.html