healthAlliance NZ Ltd v Cunningham

This judgment is about costs after two linked Employment Court applications. It is not a full retelling of the underlying employment dispute.

That matters for business owners because the Court was not revisiting every issue between the parties. Instead, it was deciding who should contribute to the other side’s costs after each side had some success.

The first application was brought by Mr Cunningham. He applied for a compliance order because healthAlliance had failed to comply with a verification order.

The Court recorded that healthAlliance did not comply with disclosure requests until Mr Cunningham started proceedings. It also recorded that healthAlliance’s delays in complying with the verification order were without reasonable excuse.

The judgment goes further than saying there was a minor delay. It says healthAlliance took more than 140 days to provide an affidavit explaining the steps it had taken to comply, and that the affidavit was deficient and needed correction at the hearing.

The second application was brought by healthAlliance. It sought sanctions for breach of a compliance order requiring Mr Cunningham to pay earlier costs awards made by both the Employment Relations Authority and the Court.

So the costs dispute came from two separate compliance problems moving in opposite directions. One side succeeded on one application. The other side succeeded on the other.

That left the Court with a practical question: what costs orders were fair and proportionate once the actual conduct of both parties was taken into account?

The fight in this judgment was not about the whole employment relationship. It was about compliance with court-related obligations and the costs consequences that followed.

On Mr Cunningham’s application, the focus was healthAlliance’s failure to comply with a verification order. The Court said healthAlliance did not comply with disclosure requests until proceedings were initiated.

The Court also said the delays were without reasonable excuse and fell well short of the conduct expected of parties before the Court. That language is important. It shows the Court treated the problem as more than a technical slip.

The affidavit issue also mattered. The judgment says healthAlliance took more than 140 days to provide an affidavit setting out the steps it had taken to comply, and the affidavit was deficient and needed correction at the hearing.

On healthAlliance’s application, the issue was different. healthAlliance said Mr Cunningham had breached compliance orders requiring him to pay earlier costs awards made by the Authority and the Court. The Court accepted that healthAlliance was successful on that application.

For a business owner, this is a useful reminder that side issues in litigation can become expensive in their own right. A dispute about whether an order has been followed can create fresh applications, extra filing fees, more preparation time and a separate costs argument.

Even where the underlying case is still the main commercial concern, procedural non-compliance can become a second front in the dispute.

The legal issue was how the Employment Court should use its discretion on costs after mixed success in two linked applications.

The Court restated the usual starting point: costs follow the event. In plain English, the successful party will ordinarily receive a contribution towards costs from the unsuccessful party.

But that is only the starting point. The Court also said costs are discretionary. It uses a guideline scale to assist with that exercise, but the result still has to be principled and consistent with equity and good conscience.

That means the Court does not simply accept whatever a party claims. It looks at the result, the way the case was run and whether the amount sought is a reasonable contribution in the circumstances.

In this judgment, the Court had to work through three practical questions.

First, was healthAlliance entitled to any costs on Mr Cunningham’s compliance application, as it argued there had been mixed success?

Second, if healthAlliance was entitled to costs on its own successful sanctions application, should it receive the full scale costs it claimed?

Third, should either side get an extra amount for the separate argument about costs itself?

For business owners, the important point is that costs are tied not only to who technically won, but also to conduct, proportionality and the reality of how the proceedings unfolded.

A narrow win can still produce a reduced costs outcome. A party that succeeds may recover only part of what it spent. A party that behaved poorly on one application may lose costs on that part even if it succeeded elsewhere.

On Mr Cunningham’s application for a compliance order, the Court did not accept healthAlliance’s argument that it should receive costs or that the result on that application was mixed.

The Court pointed to healthAlliance’s conduct. It did not comply with disclosure requests until proceedings were initiated. Its delays in complying with the verification order were without reasonable excuse. It took more than 140 days to provide an affidavit explaining the steps it had taken, and that affidavit was deficient and needed correction at the hearing.

Because Mr Cunningham was the successful party on that application, the Court awarded him costs of $2,500 plus the filing fee of $337.

On healthAlliance’s application for sanctions for breach of a compliance order, the Court accepted that healthAlliance had been successful and was entitled to costs.

However, the Court declined to award the full scale costs sought by healthAlliance. healthAlliance had argued for a larger amount and said no deductions should be made. The Court disagreed.

The reason was practical and important. The Court said the proceedings had been unnecessarily convoluted and protracted by both parties, and that both parties had adopted an overly adversarial approach.

So although healthAlliance won that application, the Court reduced the contribution and awarded $8,427, assessed on a category 1, band A basis, plus the filing fee of $337.

The Court also declined to award costs on costs to either side. Both parties had some success and both had to engage in correspondence about costs, so the Court did not think an extra order was justified.

All sums were ordered to be paid within 28 days of the judgment.

This judgment is a practical reminder that compliance steps in litigation should be treated like business-critical deadlines.

If your business is ordered to provide information, verify what has been done, or pay an amount already ordered, delay can become a separate problem even before the wider dispute is resolved.

In this case, the Court treated healthAlliance’s delay in complying with the verification order as serious enough to deny it costs on that application. The Court’s criticism was not limited to timing. It also focused on the quality of the affidavit filed and the need to correct it at the hearing.

That is a useful business lesson. Compliance is not just about eventually doing something. It is also about doing it properly, clearly and in a way that can be proved.

The judgment also shows why businesses should not assume that success on one application means full recovery of legal spend. healthAlliance won its sanctions application, but the Court still reduced the amount it recovered because the proceedings had become unnecessarily convoluted and protracted and both parties had taken an overly adversarial approach.

For SMEs, the safest reading is this: separate the merits of the dispute from the mechanics of compliance. Even if you think the other side is wrong, you still need to meet deadlines, provide required material and keep your evidence in order.

If you do not, you may hand the other side a costs point that could have been avoided.

A simple internal process can help. Assign responsibility for each order, keep a dated record of what has been sent, and check formal documents carefully before filing them.

If your business is in an employment dispute, this case suggests a simple operating approach.

First, treat procedural orders as non-negotiable unless they are formally changed or stayed. A verification order, disclosure step or payment order should be managed like any other deadline with legal and financial consequences.

Do not assume that ongoing negotiations, frustration with the other side, or confidence in your underlying case will excuse delay.

Second, make compliance easy to prove. The Court criticised the delay in providing an affidavit and also noted that the affidavit filed was deficient and needed correction at the hearing.

That is a reminder that partial or poorly prepared compliance can still damage your position. Keep a clear chronology, copies of documents sent, and a record of who approved each step.

Third, keep your litigation posture commercial. The Court reduced healthAlliance’s costs on its successful application because both parties had made the proceedings more convoluted, protracted and adversarial than necessary.

For a business owner, that means asking practical questions before each step: