| Restrictions | OK |
|---|---|
| Jurisdiction | Employment Relations Authority - Auckland |
| Reference No | AA 75A/04 |
| Hearing date | 2 Aug - 4 Aug 2004 (2 days) |
| Determination date | 15 November 2004 |
| Member | J Scott |
| Representation | M Berryman, D Campbell ; P Davey |
| Location | Auckland |
| Parties | Jackel (NZ) Ltd v Ireland |
| Summary | BREACH OF CONTRACT - Breach of implied term of duty of fidelity and good faith - Breach of fiduciary duty - Applicant imported, distributed and marketed baby products - Respondent was applicant's managing director - Applicant summarily dismissed respondent for serious misconduct in respect of his involvement in wife's baby product business (IHL") - Obligation of duty of fidelity prohibited respondent from competing with applicant directly - Arguably higher duty than ordinary employee because respondent was applicant's most senior employee entrusted with responsibility of maximising sales and profitability - Respondent as director was a fiduciary required to act in best interests of applicant - Respondent owed duty of confidentiality - Credibility finding against respondent - Growth of IHL not accidental but carefully planned venture with respondent as key driver - Respondent did not inform applicant of opportunity to import and supply lower end of range of baby products but took opportunity for himself - IHL competed directly with applicant for nine months while an respondent an employee - Dishonest about involvement during applicant's investigation - Not entitled to use hours outside work to pursue IHL business as required to always act in applicant's best interests - Deliberate, planned, substantial, ongoing and undisclosed breaches of duties of fidelity and good faith and duty as fiduciary - Remedies - Applicant suffered loss of sales and profit caused by respondent's breaches - However respondent not bound by restraint of trade - Applicant awarded 18 months of lost profit as compensatory damages - Awarded reimbursement for expenses of forensic examination of computers, two thirds costs of legal advice and engaging business consultant - Unable to claim both exemplary damages and penalty as same intention of punishing wrongdoer - Exemplary damages awarded for respondent's contumelious conduct - Managing director" |
| Result | Application granted ; Compensatory damages (18 months' lost profit)($205,000) ; Reimbursement of expenses ($70,000) ; Exemplary damages ($20,000) ; Costs reserved |
| Statutes | ERA s134;ERA s135;ERA s162 |
| Cases Cited | Anglia Television v Reed [1972] QB 60 ; [1971] All ER 690 (CA);BFS Marketing Ltd v Field (No 1) [1993] 2 ERNZ 101;Binnie v Pacific Health Ltd [2002] 1 ERNZ 438;Canadian Aero Service Ltd v O'Malley (1973) 40 DLR (3d) 371;Interchem Agencies Ltd and Ors v Morris unreported, Travis J, 28 April 2004, AC 24/04;Medic Corporation Ltd v Barrett [1992] 3 ERNZ 977;Morris v Interchem Agencies Ltd [2003] 1 ERNZ 93;NZ Netherlands Society Oranje" Inc v Kuys [1973] 2 NZLR 163;Walden v Barrance [1996] 2 ERNZ 598" |
| Number of Pages | 36 |
| PDF File Link: | aa 75a_04.pdf [pdf 225 KB] |