| Summary |
BREACH OF CONTRACT – Applicant claimed respondent breached employment agreement (“EA”) by knowingly and dishonestly authorising payments of two false invoices, and misusing funds for own benefit and benefit of another person (“X”) – Respondent engaged X to provide assistance in creating document – Respondent did not disclose in extra-marital relationship with X, or send letter of engagement or prepare contract – X sent several invoices - X edited payee name, bank account information and removing reference to own name – Respondent approved invoices and caused them to be processed for payment in name of Matukutureia Trust (“Trust”) – Trust was charitable trust not involved in services of sort X provided respondent – Authority found X’s credit card statement showed deposits at similar time to withdrawals from Trust account, and number of transactions in USA – Respondent and X travelled to USA – Third party reported to applicant X had holiday in USA with boyfriend, paid for by applicant, boyfriend’s employer – Simultaneously, applicant concerned at quality of document – Respondent advised X did work and not checked it due to workload – Respondent resigned and was working out notice period and applicant discovered invoices and initiated disciplinary investigation – Respondent dismissed for serious misconduct - Applicant sought damages for value of invoices, costs of applicant’s investigation and general damages for inconvenience and interruption to business – Damages claimed were on basis of breaches of EA, being implied terms of fidelity, trust and confidence and to use reasonable skill, and express terms in discipline and dismissal policy, being prohibitions on misuse or unauthorised use of applicant’s property and abuse of applicant’s authority including delegated authority, failure to disclose material conflict of interest and fraudulent activity - Authority found subject matter was related to EA and orders were of sort High Court or District Court could make, bringing matter within Authority’s jurisdiction under s162 ERA - Applicant’s forensic IT examination indicated respondent, not X, created document – Authority found little work went in to document but unable to conclude who created it – Found no reasonable grounds to authorise payments – Found X’s expertise in area and suitability for engagement doubtful – Found respondent and X in personal relationship and disciplinary policy included failure to disclose material conflict of interest as ground of serious misconduct – Found no transparency in arrangement, as respondent did not complete letter of engagement or require X to provide level of detail usual of contractor’s invoice – Found payments made to Trust immediately moved to X’s personal account and went towards USA trip – Found respondent breached implied duty to serve employer in good faith and fidelity, and obligation of trust and confidence – Found respondent breached express terms of EA as misused funds by authorising payment at unwarranted level, failing to follow procedures for engaging contractors, and failing to disclose relationship with X – Found allegation of fraud more serious – Found difficult to avoid conclusion of dishonesty, given failure to disclose conflict of interest and its nature, X overpaid, lack of transparency in X’s engagement, lack of explanation for change in payee details on invoices, and trip to USA – Found respondent’s breaches of EA caused loss to applicant – Authority ordered respondent pay applicant $9,000 as cost of invoices to return to position had breaches not occurred – Found legal costs incurred prior to issue of proceedings may be treated as special damages – Found allegations and suspected conduct serious – Found reasonably foreseeable legal advice would be sought and costs incurred – Found causal link between respondent’s breaches and cost of forensic investigation – Authority ordered respondent pay special damages for legal fees and forensic investigation – Applicant claimed general damages for executive time, general inconvenience and interruption of business caused by breaches – Authority found likely team members obliged to devote significant amounts of time to investigation – Found created inconvenience and adversely affected other duties – Found as three senior managers involved and matter serious, sum sought reasonable – Found foreseeable loss caused by respondent’s breaches – Authority ordered respondent pay $3,000 general damages – Interest awarded on damages – PENALTY – Applicant sought penalties for breaches of EA’s policies regarding use of funds, abuse of authority to authorise expenditure, failure to disclose material conflict of interest in relationship with X, and fraudulent activity – Applicant claimed respondent breached duties of fidelity, trust and confidence and to take all reasonable skill and care in use of funds – Authority found respondent’s conduct such that punishment and deterrence appropriate – Found breaches not technical and inadvertent – Found single penalty appropriate as same facts and breaches underlay both invoices – Found applicant suffered harm as result of breaches – Authority considered orders for damages already made – Respondent to pay applicant $2,000 penalty - Programme manager |