| Restrictions | OK |
|---|---|
| Jurisdiction | Employment Relations Authority - Auckland |
| Reference No | AA 60/08 |
| Hearing date | 23 Oct 2007 - 21 Dec 2007 (5 days) |
| Determination date | 26 February 2008 |
| Member | L Robinson |
| Representation | P Skelton, E Powell ; F Godinet, J Ropati |
| Location | Auckland |
| Parties | Bradford Trust Ltd v Roebeck and Anor |
| Other Parties | Pakieto |
| Summary | BREACH OF CONTRACT – Applicant alleged respondents breached contractual duty of fidelity and statutory duty of good faith – Applicant provided industrial cleaning services – Respondents acquainted with applicant’s client contact details, pricing information, information relating to current and future tenders and information regarding internal systems, strategy and planning – Respondents held share in another business (“Environmental”) – Second company (“Coatings”) incorporated and first respondent’s nephew appointed director and shareholder – Common law implied duties of fidelity, good faith and honesty – Applicant alleged respondents, while employees of applicant, colluded to establish and run businesses in competition with applicant – Authority satisfied respondents directors of Environmental while also employees of applicant – First respondent tendered on applicants behalf for new project (“Project 1”) – Unknown to applicant tender also submitted by Environmental – Due to change in requirements client approached for tenderers again – Quote provided by second respondent on behalf of Coatings – First respondent provided quote on behalf of applicant – Client accepted Coatings tender as lower than applicants – Authority accepted applicant’s claim that Environmental and Coatings made use of applicant’s system information to have received approval from client in such short time – Subcontract between client and Coatings signed by second respondent and witnessed by first respondent when respondent’s neither directors or shareholders of Coatings – Authority found respondents had effective management and control of Coatings – Matter put beyond doubt on evidence that first respondent had signing authority and able to pay employees of Coatings – Applicant learned first respondent involved when saw him driving new car registered by Environmental – Environmental invited to tender for second project (“Project 2) – Tender submitted and approved by client – Third client contacted second respondent directly asking for quotation for project (“Project 3”) – Sub-contract was signed between client and Coatings – Authority found respondents breached duties in respect of Project 1 as pursued personal interests ahead of applicants – Competing with applicant through tender for projects breach of duty to serve applicant faithfully – Respondents acted to undercut employers tender for work – Deliberately underbid employers tender price to secure Project 1 for own benefit – Work/wage bargain required respondents to devote efforts to employers best interests – Respondents acted dishonestly by not disclosing involvement with Environmental to applicant – Respondents also acted in breach of IEAs – Breaches found to be blatant and deliberate – Respondents also breached duty to applicant with respect to project 2 and project 3 – First respondent was in position to secure project 2 and project 3 for employer – Deliberate and calculated decision made not to further employers interests – Respondents stood to benefit directly from Coatings – DAMAGES – Damages awarded for breach of implied term of fidelity – Damages to reinstate applicant to position it would have been in had breaches not occurred – Damages for loss in respect of Project 1 $136,500 – Damages for loss in respect of Project 2 $12,000 – Damages for loss in respect of Project 3 $75,000 – PENALTY – Penalties directed at legislative objectives of punitive sanction – Considerable public utility to proscribe conduct as wholly undesirable and to additionally discourage similar behaviour – Respondents found to have failed to act in good faith towards applicant – Through various activities were deceptive, dishonest and underhanded – Penalty $5000 each |
| Result | Application granted; Breach of contract ($223,500)(Damages) ; Penalty against first respondent ($5,000) ; Penalty against second respondent ($5000) ; Non-publication order ; Costs reserved |
| Main Category | Breach of Contract |
| Statutes | ERA s162 |
| Number of Pages | 26 |
| PDF File Link: | aa 60_08.pdf [pdf 79 KB] |