https://www.stuff.co.nz/business/123278055/employees-who-walked-out-of-business-and-set-up-rival-claim-they-were-ripped-off

An update to this https://www.stuff.co.nz/business/123278055/employees-who-walked-out-of-business-and-set-up-rival-claim-they-were-ripped-off

Should've gone to Specsavers? 🧐

esawers:

 

https://www.stuff.co.nz/business/123278055/employees-who-walked-out-of-business-and-set-up-rival-claim-they-were-ripped-off

 

sbiddle:

 

An update to this https://www.stuff.co.nz/business/123278055/employees-who-walked-out-of-business-and-set-up-rival-claim-they-were-ripped-off

 

I don't see how the men hoped to get their commercial contracts, i.e. the sale of their businesses, enforced by an employment court. I'd guess that completion of the sales contracts wasn't included in their employment contracts, nor any rights to do what they've now done.

 

They said “agreements for the sale and purchase” of those businesses were entered into at the same time the employment agreements were signed. The sale agreements were entered into with the expectation that the owners of the businesses would be entitled to acquire shares in NZTG.

 

They didn't go to the employement court, the owner of the business did. They claimed the employment contracts were not valid because the business contract was not concluded.

Hammerer:

 

I don't see how the men hoped to get their commercial contracts, i.e. the sale of their businesses, enforced by an employment court. I'd guess that completion of the sales contracts wasn't included in their employment contracts, nor any rights to do what they've now done.

 

 

They said “agreements for the sale and purchase” of those businesses were entered into at the same time the employment agreements were signed. The sale agreements were entered into with the expectation that the owners of the businesses would be entitled to acquire shares in NZTG.

 

 

More to the point, I cannot see how they managed to get legal advice that doing so was the way to go! Assuming they did not just decide that they knew better of course.

freitasm:

 

They didn't go to the employement court, the owner of the business did. They claimed the employment contracts were not valid because the business contract was not concluded.

 

I didn't say that they went to the employment court. Just that they are relying on the employment court to enforce some parts of their contracts to sell their businesses.

The contracts for the sale of their businesses should have a clause to cover failure to perform. Instead of attempting to get those contracts enforced, the employees chose to break their employment contracts and are now relying on the employment court to enforce their sale contracts by invalidating their employment status.

I can't see how they can escape from the employment agreement because the Employment Relations Authority (ERA) cannot easily ignore or invalidate it.

Role of Authority  NB: bold added by me

 

(1) The Authority is an investigative body that has the role of resolving employment relationship problems by establishing the facts and making a determination according to the substantial merits of the case, without regard to technicalities.

 

(2) The Authority must, in carrying out its role,—
(a) comply with the principles of natural justice; and
(b) aim to promote good faith behaviour; and
(c) support successful employment relationships; and
(d) generally further the object of this Act.

 

(2A) [Repealed]

 

(3) The Authority must act as it thinks fit in equity and good conscience, but may not do anything that is inconsistent with—
(a) this Act; or
(b) any regulations made under this Act; or
(c) the relevant employment agreement.

Hammerer:

 

freitasm:

 

They didn't go to the employement court, the owner of the business did. They claimed the employment contracts were not valid because the business contract was not concluded.

 

 

I didn't say that they went to the employment court. Just that they are relying on the employment court to enforce some parts of their contracts to sell their businesses.

 

The contracts for the sale of their businesses should have a clause to cover failure to perform. Instead of attempting to get those contracts enforced, the employees chose to break their employment contracts and are now relying on the employment court to enforce their sale contracts by invalidating their employment status.

 

I can't see how they can escape from the employment agreement because the Employment Relations Authority (ERA) cannot easily ignore or invalidate it.

 

The way I see they aren't expecting that to happen. They want to use that as justification to walk out and defence. We don't know if there's any other civil action going on, with them as complainants. 

Googling finds the employment court decision regarding the freezing order mentioned:

https://www.employmentcourt.govt.nz/assets/Documents/Decisions/2020-NZEmpC-170-NZ-Technology-Group-Hawkes-Bay-Ltd-v-Flashoff-jud-161020.pdf 

Nothing really new there, but thus far it seems the Judge is doing things right IMO.

Effectively saying that the employment agreements do not mention the sale of the business, and so are a separate matter.  Which is the whole crux of the argument.

evnafets:

 

Nothing really new there, but thus far it seems the Judge is doing things right IMO.

 

Effectively saying that the employment agreements do not mention the sale of the business, and so are a separate matter.  Which is the whole crux of the argument.

 

This is where I find the law an ass. It's the same pedantry that recently let hundreds (thousands?) of drunk drivers avoid conviction over pure pedantry about technicalities. Probably a good thing I ended up chosing IT over Law because watching the innocent punished and the guilty walk free over technicalities would do my head in.

evnafets:

 

Googling finds the employment court decision regarding the freezing order mentioned:

 

https://www.employmentcourt.govt.nz/assets/Documents/Decisions/2020-NZEmpC-170-NZ-Technology-Group-Hawkes-Bay-Ltd-v-Flashoff-jud-161020.pdf 

 

 

 

Nothing really new there, but thus far it seems the Judge is doing things right IMO.

 

Effectively saying that the employment agreements do not mention the sale of the business, and so are a separate matter.  Which is the whole crux of the argument.

 

The EC's decision was entirely correct and legally conventional. Reading the ERA and this EC decision, my assessment as a lawyer and someone who is well-versed in contractual disputes is that the staff concerned have taken an approach that is altogether far too aggressive from a legal POV and liable to leave themselves extremely vulnerable in the interim period whilst the dispute is resolved. The law rightly looks down dimly upon people wantonly purporting to ignore established contracts and engaging in "self-help" behaviours like that exhibited by these people. Whatever the ultimate merits of the case, from a legal and frankly moral POV, I have no sympathy whatsoever for the state they have found themselves in based on the judicial authorities' decisions so far.

Had they instructed their solicitors to sue for breach of the sale contract under which they sold their businesses to their (now) employer, I would see where they were going.

What they have done falls into "two wrongs do not make a right" kind of action - they have (probably) done something they are probably not legally allowed to do (under their employment contract) because they felt that they were owed something under a different legal relationship (the sale contract).

It would serve them right if the end result was that the penalties for one cancelled out the reparations for the other!

Geektastic: Had they instructed their solicitors to sue for breach of the sale contract under which they sold their businesses to their (now) employer, I would see where they were going.

 

What they have done falls into "two wrongs do not make a right" kind of action - they have (probably) done something they are probably not legally allowed to do (under their employment contract) because they felt that they were owed something under a different legal relationship (the sale contract).

I completely agree,

Geektastic: It would serve them right if the end result was that the penalties for one cancelled out the reparations for the other!

I think this is too harsh.  Messing with someone's livelihood and their ability to look after their family is spoiling for a fight.

On the face of it, the course taken by these guys possibly wasn't the best idea.  We don't know what else they tried first, if anything, or a possible level of desperation.  Yes there may be repercussions for the course of action they have taken, but if ultimately the sale contract dispute goes in their favour then I would hope the employment contract issue punishment would be less than the gain from the sale agreement issue being sorted.

It's gone into the legal system so no one will win. Commercial disputes that go legal are almost always lose:lose.

Generally legal action is a tactic to force a settlement. This employment sideshow will be similar.

As someone with some knowledge of this situation I will attempt to clarify / put into context some things people have been speculating about.

• There are only three men named that are business owners. One is / was simply an employee.
• There are four businesses involved in this case, and one isnt named due to the fact the company (NZTG) can not dispute the fact they dont own the brand - that is Need a Nerd.

   

  • Nor did he have an employment contract.
• Sale and purchase agreements were never completed. Promises of shares and directorships in NZTG HB were never issued.

   

  • Years of negotiations failed to complete the SPAs
• Upon leaving, NZTG used the ERA (often described as a kangaroo court) to inflict as much damage as possible, and offers to go to mediation were turned down by NZTG.
• Cease and Desist letters were issued by NZTG lawyers, then two days later injunctions were filed.

   

  • Which meant no-one could reply within reason to the cease and desist letters.
• NZTG then put in urgent submissions to put freeze orders on the respondents personal and joint bank accounts. (these were later filed found to be filed deliberately wrong misleading the court)

   

  • These filings were also done without notice, just before 5PM on a Friday.
  • http://www.legislation.govt.nz/regulation/public/2016/0225/latest/DLM6953042.html (none of this was taken into consideration when the orders were requested)
• ERA agreed that the case was well above and beyond them and agreed to move all the employment issues into the employment court. Here all the commercial submissions would be heard, as it is a "proper" court.
• Two days before going to court NZTG retracted their freeze order against the one employee after 6 weeks of having it imposed and placed with urgency. They new it was filed incorrectly. Judge ruled in favour of the employee and costs and damages are being filed.
• This week the court discharged the freeze orders against the other business owners, and also the new business. The court set aside the injunctions of all respondents, ruling in favour of the repondents due to hearing the full set of submissions and evidence.

   

  • uplifted costs and damages are being filed.
  • Awaiting the full explaination from the judge due to his work load.
• All civil matters have now been filed into the high court along with a range of evidence, submissions, and some other serious accusations about NZTG's only company director
• The employment court judge has insisted that the new business continues and its customers come first. His aim is not to "throw the baby out with the bath water.

   

  • He has also insisted commercial mediation.
• A significant amount of money, time, and sanity has gone into the above. The new business has attempted to resolve this through mediation, and it has been turned down each time.

Clearly this is a very topographical look of the situation. All this information is public. If anyone wishes to have anything clarified, I can only answer what is presented here.