Asset recovery in the ERA/Employment Court – by Tristam Price

Someone got caught with their fingers in the till at a private hospital in Ellerslie, Auckland. A determination by the Employment Relations Authority (ERA) indicates that Angela Freiden had agreed to repay her former employer, Columba at Ascot (2009) Ltd, $374,114 for false invoices and unauthorised payroll payments.

Member Marija Urlich recorded this as a consent determination, similar to a Record of Settlement under Section 149, but publicised.

This was reported by media, although not in as much detail as we typically report.

Woman admits using fake invoices to pay herself more than $299,000 | Stuff.co.nz

Freezing order

Normally proceedings move from the ERA to the Employment Court, but this matter went the opposite way. What has not been reported, except on the Employment Court database, is that Columba had earlier applied for a Mareva injunction, or Freezing order, ex-parte. This was granted by Judge Kathryn Beck on 19 July, but with an interim non-publication order:

2023-NZEmpC-109-MNO-v-PQR.pdf (employmentcourt.govt.nz)

[2] As this application is made without notice, the respondent has not had the opportunity to address the allegations or to try and preserve their identity. The allegations currently made are such that they may cause reputational damage.

[25] There is prima facie evidence of fraud committed by the respondent which goes a considerable way to establishing that there is a risk of dissipation of their assets.

[26] The applicant also notes that PQR may be contemplating a move to Australia…

The Court extended the freezing and non-publication orders twice over the next few weeks before being released on 29 August.

Two things the Employment Court can do, that the ERA can’t, is issue Search orders, and Freezing orders.

When Ms Freiden’s bank account was frozen, the best way for her to avoid a criminal conviction for fraud was to agree to repay her ill-gotten gains, or thereabouts, which would almost certainly have saved Columba a lot of time, expense and stress.

Forum shopping

Some may disagree with Columba’s approach, allowing a criminal prosecution to be avoided, but as the victim organisation it is entitled to recover what it lost using the best legal mechanism available to it.

A Certified Fraud Examiner I spoke to last year has been involved in employment mediations where the employee has agreed to take out a loan against the value of their home to repay their ill-gotten gains, to avoid criminal prosecution. A clause in the settlement agreement, under Section 149, allowed the employer to publicise the agreement if it became aware of fraud committed by that individual against a subsequent employer. The confidentiality otherwise protects the employer from reputational harm, but unfortunately the next employer unwittingly risks becoming a target - remember Joanne Harrison?

We believe that a Freezing order leading to a Consent determination without a permanent non-publication order is a better approach than a quiet settlement.