Hold on Tight to your (3rd party NDA enforcement) Dream – by Tristam Price

When Jeff Lynne crooned “Hold on Tight” in 1981 he could not have imagined that the phrase would be applied to a legal development in New Zealand’s employment jurisdiction around 40 years later.

A cabal of lawyers, eleven at last count, has collectively amassed an impressive war chest starting around four years ago with the aim of putting Hamilton employment advocate Allan Halse out of action. Specifically, it seeks to have him declared bankrupt for non-payment of penalties imposed by the Employment Relations Authority (ERA, part of MBIE), all of which are contested in the courts using a variety of legal methods.

Halse is the sole director of Culturesafe NZ Ltd, which is similarly subject to insolvency proceedings for non-payment of the contested penalties.

What stands out about Halse, in the context of employment advocacy, is that he is also an anti-bullying activist in a country where, as we’ve previously mentioned, workplace bullying remains stubbornly high. Since he started in 2014, almost all of Culturesafe’s employee clients have claimed to be subject to bullying in various forms.

Halse’s activism has made him a target. So far, none of the proceedings against Halse and Culturesafe have been in the High Court for defamation, where safeguards such as the defence of truth and/or “unclean hands” is available - all have been in the ERA where such safeguards can be circumvented under certain conditions.

In order for an employer party to sue someone for criticising it, there needs to be a certain type of contract. In most countries this is called a Non-Disparagement Agreement (NDA); in New Zealand it’s called a Record of Settlement (RoS) which usually includes a NDA clause and is drawn up and signed in mediation. A template for a RoS, available on the MBIE website, is shown below.

This s149 template does not mention non-disparagement, although we believe that most RoS do have non-disparagement clauses added. This would make sense given that most employees end up job-hunting immediately after signing a RoS, and DCB v RTS is a recent example of an employer getting penalised for breaching the NDA. Similarly a company will want to avoid reputational harm, brand damage and divulgence of trade secrets, with resulting financial losses, that a disgruntled ex-employee might otherwise cause.

The legal mechanism for protection of commercially sensitive information has been extended to protect the feelings of overly sensitive former colleagues in the public sector, as we saw recently in Hamilton City Council v Halse and Culturesafe NZ Ltd. Signed in February 2014, the RoS was so old that it had been shredded by the time the ERA had a chance to investigate the Council’s complaint! Undeterred, Member Ryan had an answer for everything as she bulldozed through $18,000 in fines, and the matter is currently before the Employment Court by way of a challenge.

In the last few weeks two judges have parked proceedings against Halse and Culturesafe:

  • Judge Corkill (Employment Court) stayed Bay of Plenty DHB’s claim, including against a former Culturesafe client Ana Shaw, because a jurisdictional issue was and still is before the Court of Appeal. Judge Corkill had little to say on the merits of the DHB’s claim but did mention allegations of stalking (of Shaw at her subsequent workplace).

  • Associate Justice Andrew (High Court) adjourned liquidation and bankruptcy proceedings brought by Rangiura Trust (and Turuki Healthcare, claiming legal costs) against Culturesafe and Halse because of a similar jurisdictional issue still before the Employment Court. The next hearing will be August 1 and 2.

  • Insurance lawyers Fee Langstone applied to strike out Halse’s claim for deceit, fraud, conspiracy to defraud and knowing assistance, against Rangiura and its external counsel Norris Ward McKinnon. Allegations of payroll fraud from which several personal grievance claims arose, and targeting of the advocate of rest home workers as an obfuscatory attempt to cover up the alleged fraud, had been made.

That’s about the best we can do to simplify the Halse matters down to a 750 word article. No doubt it’s long been the dream of several lawyers to finish the job, but dreams like this ain’t cheap, for anyone involved.

It may be distressing for Rangiura Trust Board and others, seeing the benefits of a RoS slipping away in spectacular fashion. But as bad as that is, a North Island school Principal similarly took comfort in a subordinate’s RoS until Police got involved in 2014, and he was forced to resign.

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