Staff take everything and start new business

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#2581937 9-Oct-2020 14:36

sbiddle:

There is a lot more to this story than the rather one sided view expressed by the journalist who wrote the Stuff story.

This kind of context free and highly conclusory assertion is very irresponsible in the present context. An independent judicial officer has held:

1. The employer has a strongly arguable case; and

2. That the employer should receive an injunction which, at a minimum, prohibits the continuation of the conduct complained of. Injunctions are not lightly granted.

Really given what is available in the article and the inescapable fact that an independent judicial officer has found there to be substance to the allegations, it's utterly irresponsible and unfair for you and the other usual pile-on crowd to come up with the unsubstantiated hogwash that this is a journalist making things up or a plaintiff exaggerating. The nature of the allegations is particularly rich in view of how evidence-free the complaints are.

BlinkyBill:

The Employment Relations Authority granted an injunction to the employer and required the (former) employee’s to conform to their employment contracts, regarding non-compete clauses. The ERA wouldn’t have done this unless there was a prima-facie case to answer. The case requires more extensive investigation.

Thank goodness one person in this thread can read and is talking sense.

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#2581943 9-Oct-2020 14:42

There are complexities to this one. Looks like both an employment relationship and in the other direction an agreement to purchase related companies or assets.

surfisup1000

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#2581966 9-Oct-2020 15:41

Quinny:

No, in the circumstances you listed you still cannot take the goods. You do not own them. Even if a shareholder the company owns them not you. If you have revenues owed you are either a preferred or unsecured creditor. Same as wages and IRD are defined by law what happens.

Not legally, but , you didn't say that was the criteria.

But, an employee may 'feel' they are entitled.

surfisup1000

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#2581969 9-Oct-2020 15:46

dejadeadnz:

Thank goodness one person in this thread can read and is talking sense.

You're a lawyer. What do you think about what the men's lawyer who said the company did not have an arguable case ?

The judge disagreed. And not only was it arguable, the company won.

I really think these men should take a look at their choice of lawyer.

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#2581970 9-Oct-2020 15:51

Been discussing this in the office... thoughts are that maybe NZTG was purchasing the company/s that had those 4 staff - final contract expectation was not met so the 4 moved on with the gear ?

Just one theory.

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surfisup1000

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#2581972 9-Oct-2020 15:58

xpd:

Been discussing this in the office... thoughts are that maybe NZTG was purchasing the company/s that had those 4 staff - final contract expectation was not met so the 4 moved on with the gear ?

Just one theory.

Yes, there are all sorts of reasons why these men may have tried to justify their actions. I guess there is no point in speculation. Too bad the stuff journalist couldn't have filled in the blanks a bit.

But they took company property that did not belong to them and the judge sided with the company --- we have to trust that the judge understood the situation better than us .

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#2581976 9-Oct-2020 16:07

surfisup1000:

dejadeadnz:

Thank goodness one person in this thread can read and is talking sense.

You're a lawyer. What do you think about what the men's lawyer who said the company did not have an arguable case ?

The judge disagreed. And not only was it arguable, the company won.

I really think these men should take a look at their choice of lawyer.

I think from the article the company has not won their case yet. A battle, yes, but not the war.

The judge has granted an interim injunction in the interim until the matter can be fully dealt with. There was enough evidence (Employment contracts) to persuade him of an arguable case.

Not granting the injunction would result in the company going under (no assets, no staff, no way to make revenue).

So rather than letting the point become moot, they have taken steps to make sure it doesn't become so.

dejadeadnz

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#2582136 9-Oct-2020 21:45

surfisup1000:

You're a lawyer. What do you think about what the men's lawyer who said the company did not have an arguable case ?

The judge disagreed. And not only was it arguable, the company won.

I really think these men should take a look at their choice of lawyer.

That's a bit unfair. Clients frequently ignore/override lawyers' advice. This isn't America -- lawyers can't drop their clients just because they have a moral objection to their case or generally find them disagreeable. I can't locate a copy of the ERA's decision but if the lawyer obviously is just following the client's instructions to advance a hopeless case, they will often add "My clients instruct..." in their submissions and, in fairness to the lawyer concerned, the courts/tribunals will often give subtle hints that the lawyer doesn't really seriously believe or push the line of reasoning as an officer of the court. A (semi)-experienced pair of eyes can usually see whether it's a case of a poor lawyer giving crap advice/running a bad case versus a lawyer being instructed to pursue a hopeless argument from a judgment.

Unless at a minimum you've seen a copy of the ruling, it's unfair to immediately conclude that the lawyer gave poor legal advice.

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#2582140 9-Oct-2020 22:03

surfisup1000:
xpd:

Been discussing this in the office... thoughts are that maybe NZTG was purchasing the company/s that had those 4 staff - final contract expectation was not met so the 4 moved on with the gear ?

Just one theory.

Yes, there are all sorts of reasons why these men may have tried to justify their actions. I guess there is no point in speculation. Too bad the stuff journalist couldn't have filled in the blanks a bit.

But they took company property that did not belong to them and the judge sided with the company --- we have to trust that the judge understood the situation better than us .

I have no information other than the media but from what has been reported it looks like the employees were directors of companies aquired by NZTG and then it's gone south somehow. The assets may well have been owned previously by the aquired companies.

The employment side of things seems pretty cut and dried - they have employment contracts, had.employment relationships and are so are obliged to honour these.

The wider commercial side (including ownership of company assets) is probably somewhat more complex.

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#2582151 9-Oct-2020 23:08

Some more information in the PDF download named "https://www.employment.govt.nz/assets/elawpdf/2020/2020_NZERA_388.pdf" and available from the Employment New Zealand website.

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#2582152 9-Oct-2020 23:20

Thanks MF.

I read that with interest and it seems to have been a very sensible determination based on the facts set out within.

SomeoneSomewhere

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#2582155 9-Oct-2020 23:53

I wonder if this telegraphs the judge's expectations for the case:

If at a substantive hearing I was to find that for some reason none of the non-solicitation provisions and/or restraint provisions were enforceable, any loss suffered by the four respondents should be able to be easily assessed. If on the other hand I was to find at a substantive investigation meeting that the non-solicitation provisions and the restraint provisions were enforceable, it is likely NZTG’s business would have been significantly damaged in the interim and may not be able to be put back into the position it was before, when it thought it had the advantage and security of clear contractual restraints on the four respondents.

I.e. the judge has to issue the injunction in favour of NZTG because they will almost certainly go under otherwise, and it's too soon to look at enforceability... but the judge expects the respondents to largely win, as restraint of trades can be dubiously enforceable and it looks like the employment contracts may be/are dependant on the original purchase contracts being fully executed - NZTG may have failed to pay out, which might raise questions about the validity of the employment contracts.

The judge did say that:

Despite the respondents’ inference that the employment agreements were some form of device, there was a well-documented employment relationship in place and employment agreements between each of the four respondents which in each case set out specific contractual provisions surviving the termination of employment. Employment relationships need to be taken seriously.

But bad faith could alter all of that.

It would be a lovely business model to buy out all your competitors, absorb all their assets and clients, have all their staff sign employment agreements and non-competes... and then not bother to pay the original owners. You get all that stuff for free and your competition is gone.

I suspect the only winners will be the lawyers.

kiwifidget

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#2582178 10-Oct-2020 08:15

What sort of poo hole does this leave all the clients in?

If I were one I think I'd be looking for a completely different company.

Delete cookies?! Are you insane?!

sbiddle

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#2582200 10-Oct-2020 10:09

dejadeadnz:

sbiddle:

There is a lot more to this story than the rather one sided view expressed by the journalist who wrote the Stuff story.

This kind of context free and highly conclusory assertion is very irresponsible in the present context. An independent judicial officer has held:

1. The employer has a strongly arguable case; and

2. That the employer should receive an injunction which, at a minimum, prohibits the continuation of the conduct complained of. Injunctions are not lightly granted.

Really given what is available in the article and the inescapable fact that an independent judicial officer has found there to be substance to the allegations, it's utterly irresponsible and unfair for you and the other usual pile-on crowd to come up with the unsubstantiated hogwash that this is a journalist making things up or a plaintiff exaggerating. The nature of the allegations is particularly rich in view of how evidence-free the complaints are.

What pile on crowd? I did not express a view of who is right or wrong in my comment. If you're going to form an opinion then fine, but don't accuse me of having a public view on this topic when I explicitly did not express one.

The simple facts are that there is a lot more to this story than the Stuff article suggested (and some of that information is detailed in the ERA document) and that the Stuff story is one sided by not mentioning some of that.

dejadeadnz

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#2582446 10-Oct-2020 20:56

sbiddle:

What pile on crowd? I did not express a view of who is right or wrong in my comment. If you're going to form an opinion then fine, but don't accuse me of having a public view on this topic when I explicitly did not express one.

The simple facts are that there is a lot more to this story than the Stuff article suggested (and some of that information is detailed in the ERA document) and that the Stuff story is one sided by not mentioning some of that.

Sorry but as someone who's trained in the law and who's read the judgment, I find the reporter's summary to be more than accurate. And who said you commented on the rights and wrongs of the case? You made a very serious and unsubstantiated allegation (insofar as you offering no evidence or argument to back up the assertion) that the reporter's article was one sided. You keep asserting that the report didn't do enough, yet this post also also offers no argument.

The first paragraph is, for anyone who's read the actual judgment, in substance accurate. Further, another paragraph inside the article said:

The four men told the authority the dispute they had with the company was commercial and centred around the company’s failure to complete agreements to purchase various other companies. It was not an employment dispute, they said.

You can quibble with whether this paragraph should have been given greater prominence since this was the essence of the respondents' defence but it's fundamentally a reasonable summation of their case in a general article for lay audiences. The respondents essentially argued that the agreement(s) governing the purchase of the business(es) superseded their indiovidual employment agreements and prevented the ERA having jurisdiction -- the Authority Member disagreed.

Again, if you want to jump on someone's professionalism and integrity, you need to show some evidence.

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