The Wellington College of Education employed Lynn Scott as associate principal. Her employment contract provided that she could only be dismissed for redundancy if the College formally discussed the situation with her, and jointly explored all reasonable alternatives to redundancy. The contract provided a 3-month time period for this to occur, but this could be extended by agreement.

The Chief Executive of the College, Dugald Scott, dismissed Mrs Scott without consulting with her or jointly exploring alternatives to redundancy. He also did so before the minimum 3-month time period allowed for consultation had expired.

Mrs Scott sued the College for wrongful dismissal and breach of her employment contract. Mr Scott told the Employment Court that consultation would not have affected the outcome Mrs Scott would have been dismissed regardless. He labelled Mrs Scott’s complaint as a mere process failure and argued that any damages awarded to her should be minimal. This stance was also maintained before the Court of Appeal.

Both the Employment Court and the Court of Appeal disagreed. Mrs Scott was awarded $56,000 in damages.

Mrs Scott’s performance as a competent and loyal employee was never in issue.

Mrs Scott’s employment difficulties began on 26 March 1996 when she received a fax from the College’s Chief Executive, Dugald Scott, while on College business in the Cook Islands.

In the fax, Dugald Scott requested to meet with her on Friday, 27 March when she returned to New Zealand. Dugald Scott also asked Mrs Scott to telephone his secretary to arrange a meeting time and to be informed of the contents of a letter that he had sent to her home.

Mrs Scott telephoned Dugald Scott’s secretary as directed. The secretary commiserated with Mrs Scott and read out the letter, which advised Mrs Scott that Dugald Scott wanted to meet with her to discuss his "proposed organisational restructuring plan for the College".

Mrs Scott advised the secretary that she was unable to attend a meeting on Friday, 27 March as she would rising at 4am NZ time to fly home and would not be back in Wellington until late afternoon. Dugald Scott had forewarned his secretary to expect such a response and to arrange for him to visit Mrs Scott at her home over the weekend if that was the case. Mrs Scott told the secretary that it was inappropriate for Dugald Scott to meet with her at her home, and that she would meet with him at the College the following Monday.

During the weekend, Mrs Scott received a further letter from Dugald Scott dated 28 March advising her of the proposed new management structure and requesting her input by the following Thursday.

On Monday, 1 April 1996 Mrs Scott met with Dugald Scott. At this meeting, Dugald Scott read a memorandum to her, which did no more than repeat his remarks in his letter of 28 March.

During the afternoon of that day, Mrs Scott attended two different functions outside of the College where the loss of her position was already known and had been talked about.

As a result of the sequence of events, on 2 April 1996 Mrs Scott consulted her solicitor, Sandra Moran, about the situation. Miss Moran couriered to Dugald Scott a holding letter on 4 April, and on Friday 12 April 1996 after the Easter vacation a full letter complaining that Mr Scott had already made up his mind to dismiss Mrs Scott.

On 15 April 1996 Mrs Scott attended a regular Monday morning meeting with Dugald Scott. At this meeting, Dugald Scott advised Mrs Scott that he had considered matters over the weekend and had decided to terminate her employment. He then dismissed her on three months notice.

In a bizarre twist, Dugald Scott then sent to Mrs Scott’s solicitor, Miss Moran, a letter advising that Mrs Scott was still employed and that he was prepared to meet to discuss his proposed new management structure and the concerns raised in her letter. However, he did not mention in his letter that he had dismissed Mrs Scott that morning, even although the he put the letter out to be couriered some two hours after he had dismissed her.

On 24 April 1996, Dugald Scott met with Mrs Scott and Miss Moran to discuss the situation. However, he made it plain at the meeting that he was only prepared to consult about the content of the communications that he intended to make to staff about the restructuring, and not about the restructuring proposal itself.

Mrs Scott continued to work out her notice period but felt that she was being harassed, bullied and left out of the loop by Dugald Scott. In the end her health collapsed and she left.

The Employment Court observed that it was impossible to say whether it was merely a case of process failure or whether, if the appropriate process had been followed, Mrs Scott could have averted her dismissal. The Court noted that the possibility of administrative changes had been present in Mrs Scott’s mind since the beginning of the year and that she had already formed some ideas about possible changes. It was therefore highly likely that she could have made a worthwhile contribution which may have saved her job. Accordingly, it was not prepared to treat the College’s failure to consult and follow the procedure set out in Mrs Scott’s employment contract as a mere "process failure".

The Employment Court also observed that

The Court of Appeal held that the $56,000 damages awarded to Mrs Scott by the Employment Court was appropriate. $10,000 to $15,000 of this could reasonably be allocated to her for the humiliation and distress she had suffered. The remainder recognised that her employment contract had 18 months left to run, that the contract provided for a right of renewal for a further 5 years, and that Mrs Scott had limited other earning opportunities. The Court of Appeal also allowed Mrs Scott to retain as well the $80,000 redundancy compensation paid to her under her employment contract when she was dismissed.

This case serves as a warning to employers not to disregard contractual obligations. If the obligation which is breached causes foreseeable damage or loss to the employee, albeit economic loss or distress, then the employer will be held responsible for that loss as the Wellington College of Education learned to its considerable cost.

The same also applies to obligations which employers have under the law relating to personal grievances.