| Restrictions | OK |
|---|---|
| Jurisdiction | Employment Relations Authority - Wellington |
| Reference No | WA 108/07 |
| Hearing date | 12 Jul 2007 |
| Determination date | 06 August 2007 |
| Member | D Asher |
| Representation | V Donaghy ; J Langford |
| Location | Wellington |
| Parties | PPCS Ltd v Loughlin |
| Summary | BREACH OF CONTRACT – Respondent employed as chief executive of Richmond Ltd (“R Ltd”) – Applicant acquired sizeable interest in R Ltd over five year period – When apparent applicant would takeover R Ltd termination agreement reached with respondent – Respondent agreed to variation of redundancy clause in Chief Financial Officer (“CFO”) of R Ltd’s employment agreement (“EA”) – Respondent argued acted on directions from Chairman of the Board (“Chairman”) of R Ltd and purpose of variation to ensure retention of CFO during period of uncertainty – Respondent had financial cap to delegated authority with approval of R Ltd’s Board or Remuneration Committee (“RC”) required for amounts over cap - Applicant claimed by agreeing to variation greater than cap applicant acted outside authority – Applicant argued RC had no knowledge respondent sought approval for variation – Respondent resigned – CFO resigned and sought redundancy in accordance with variation of EA – Applicant sought legal advice and then made payment in accordance with variation – Legal advice suggested damages could be recoverable from respondent for acting outside authority – R Ltd and applicant amalgamated after respondent and CFO resigned – Respondent argued agreed with Chairman to increase CFO’s redundancy entitlement and prepared draft paper for RC - Chairman confirmed had asked respondent to put mechanism in place to retain CFO but could not recall particulars - Authority did not accept applicant’s claim that but for respondent’s actions in entering into variation, R Ltd would not have made payment and so respondent liable for damages - Authority did not accept applicant had proven respondent acted outside authority or responsible for payment or that suffered damage – Extent of damage suffered by applicant unclear – Evidence provided to Authority provided no fair and reasonable certainty that no benefit to respondent in CFO’s continued employment – Applicant’s record keeping less than comprehensive – In absence of evidence Authority not prepared to conclude RC not consulted about variation and did not sanction it, or would have voted down variation – Found on evidence likely RC was not consulted about variation - Authority satisfied respondent fairly and reasonably relied on Chairman’s direction to offer and implement variation to CFO’s EA – No reason for respondent to challenge direction or question Chairman’s apparent authority - No evidence respondent acted in matter without equity and good conscience or otherwise than in best interests of applicant - Applicant’s claim for damages against respondent dismissed |
| Result | Application dismissed ; Costs reserved |
| Main Category | Breach of Contract |
| Cases Cited | Richmond Ltd v PPCS Ltd [2004] 1 NZLR 256 |
| Number of Pages | 9 |
| PDF File Link: | wa 108_07.pdf [pdf 30 KB] |