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Justice - but at what cost?
One of the most famous military generals of all time is Pyrrhus of Epirus.
About four centuries prior to the birth of Christ, the peoples of the Mediterranean were locked in what have must have seemed like an everlasting war. The Carthaginians battled the Syracusians for over a hundred years. It was that drawn-out war that gave rise to the creation of a number of technological advances - such as the catapult.
In the midst of this, Pyrrhus of Epirus arrived on the scene. He was a military genius, who amongst other things dedicated himself to rescuing the Greeks of Southern Italy from Rome. His successes are well documented, and he managed to inflict a series of punishing blows upon the Roman Army.
Perhaps most famously, however, Pyrrhus gave his name to an expression which is used in English today – the “Pyrrhic victory”.
In one of his most famous battles against the Romans at Asculum, Pyrrhus managed to repel a spectacular assault – but at a devastating cost. Although he won the battle, his forces were severely - and eventually fatally – depleted. Hence, Pyrrhus lost more than he won.
Unfortunately, our legal system is filled with Pyrrhic victories such as this. All too often we hear stories of individuals or organisations who emerge from lengthy litigation as victors at the price of spectacular legal cost.
An illustration of the type of outcome that can eventuate in employment matters of this type is offered by the Court of Appeal’s decision in Health Waikato Limited v Elmsly (Unreported, Court of Appeal, 25 March 2004).
Dr Elmsly had worked at a pathologist at Waikato Hospital since 1986. His employment came to an end in October 1997. He alleged that his dismissal was unjustified and bought proceedings in the Employment Court.
In 1993 Dr Elmsly carried out two post-mortem examinations on patients who had died in the course of, or following, surgical procedures performed by a fellow employee at the hospital. There were Police investigations in relation to both of the deaths.
Dr Elmsly became anxious about what he thought was pressure and adverse comments from his colleagues concerning his co-operation with the Police. Dr Elmsly spoke to his immediate superior, and the Chief Executive of Health Waikato, about his difficulties.
In July 1995 the manslaughter charge against the co-employee was dismissed – following which the co-worker complained to Health Waikato about Dr Elmsly’s conduct. This complaint was referred on to the New Zealand Medical Council.
In September 1995 the Medical Council wrote to Health Waikato and indicated that it did not intend to take the complaint any further. This letter was not passed to Dr Elmsly until early 1997 – and he assumed that the complaint to the Medical Council was still outstanding.
Professional issues associated with Dr Elmsly’s participation in the prosecution of the co-worker were addressed by a report written by Professor Sir John Scott. That report concluded that Dr Elmsly had behaved according to high professional standards.
Unfortunately, however, this report did not resolve the underlying difficulties – and Dr Elmsly was left with the view that his competence as a pathologist had been brought in question. He found it difficult to face people at work and adopted a “siege mentality”. He was frequently absent from work. Eventually, in October 1997, Heath Waikato terminated his employment.
Dr Elmsly’s personal grievance was considered by the Employment Court – which found in his favour on three issues (relating to inappropriate pressure applied on him in relation to his co-operation with the Police, an event where he was suspended inappropriately from his employment, and the employer’s failure to tell him promptly about the disposal of the complaint to the Medical Council).
The Court did, however, also make a number of findings in favour of Health Waikato – including findings that there had been no breach of the contractual duty to provide a safe system of work and that the employer had not breached its duty to avoid excessive pressure and to provide Dr Elmsly with a safe system of work. Significantly, the Court held that Dr Elmsly had not proved that any recurrence of an underlying depressive illness had been caused by the employer’s breaches. This meant that Dr Elmsly’s claims for losses of salary, medical expenses, other lost income and loss of sick leave entitlements failed.
In the event, therefore, Dr Elmsly received a “modest” compensatory award of $15,000.
That was, however, not the end of the matter.
In achieving this judgment, Dr Elmsly incurred legal costs of $72,000. Similar costs had also been occurred by Health Waikato.
The Court has a general discretion to make orders as to costs as it thinks reasonable. The ordinary rule is that costs follow the event – meaning that a contribution to the costs of the victorious party is made by the defeated party. But in cases such as this where the parties had mixed success it is often more difficult to determine who “won”.
The Employment Court decided to award Dr Elmsly costs of $15,000. Dr Elmsly appealed this decision to the Court of Appeal.
The Court of Appeal took a wide range of considerations into account. Ultimately, it decided that Dr Elmsly had reasonably incurred costs of $30,000 – and that he should be entitled to recover two-thirds of that amount – meaning that he received a costs award of $20,000.
Overall, what this meant was that Dr Elmsly had spent $72,000 to have his case decided – and that, in total, he had recovered $35,000. The outcome might be described for him as a Pyrrhic victory.
The Court of Appeal had some hard words to say about the proceeding as a whole. It said that Dr Elmsly’s claim did not warrant nine hearing days and the laying out of nearly $150,000 in legal fees between the parties.
Significantly, the Court commented that defendants should be encouraged to make Calderbank offers – which should be enforced by the Courts on a steely basis. (A Calderbank offer is an offer to settle which, if refused – and if the Court’s decision is no better than the offer – entitles the maker to a more significant contribution to actual costs).
This is a case where an employee won, only to lose in an economic sense. The Court of Appeal has sent a warning to other claimants that outcomes of this type should be avoided wherever possible – particularly by way of employers issuing Calderbank offers to place real pressure upon parties to settle their differences.
