Hospo wars in Orewa – ERA deals with smear campaign

An Auckland man owned several restaurants and cafés on the North Shore and Hibiscus Coast, and sold two of them.  A recent determination of the Employment Relations Authority, which allocated random three-letter pseudonyms to all parties, indicates that the buyer and seller later fell out. 

We don’t yet know what they fell out over, but the new owner targeted the seller with a smear campaign, and the Authority Member Eleanor Robinson ordered penalties of $15,000 (following an earlier penalty of $2,000 for bribing a witness).

The reason the Authority had jurisdiction to hear the dispute is that the seller, NFK, worked for the new owner of the two restaurants that changed hands, for about three years as General Manager which meant there was an employment relationship, as opposed to a business relationship – that was part of the Sale and Purchase Agreement and is not uncommon.

In May 2024, NFK resigned his position as General Manager, was dismissed during his period of notice, and trespassed from the premises.  The new owner lodged a claim against NFK in the Authority for alleging that he’d breached his duty of fidelity.  NFK countersued for unjustifiable dismissal and unjustifiable disadvantage.

The determination notes at that in the last year or so, the directorship of the two restaurants has changed approximately nine times (a previous determination hints that a relationship breakup may be behind that).  We’d go to the Companies Office database and see for ourselves but the companies are also subject to the non-publication order, as is “LQI” who previously provided accountancy services to NFK.  We don’t know if LQI is a Chartered Accountant, but apparently he introduced the buyer to NFK and now appears to be the two restaurants’ controlling mind.

Section 134A - Obstruction

We have some hands-on experience with s 134A – in December 2023 a commercial cleaning company was granted a restraint of trade injunction against a former employee, Keith.  Not long after the injunction lapsed, and the former employee was back at work for his new employer, Kaye (his domestic partner), the Authority awarded the cleaning company over $36,000 in damages, penalties and costs.  This was in August 2024 and we got involved soon after, advising on a challenge (appeal) to the Employment Court, off the record and pro bono. 

Two employees of the enforcing company had been charged for assaulting the female employee that Kaye had hired to replace Keith while he was injuncted, causing her to quit.  The assault occurred about a month before the Authority’s investigation meeting, but convictions had not been recorded at the time of the determination.  A common assault conviction was recorded in late 2024 while the civil matter was before the Employment Court, with a counterclaim under s 134A in the pipeline.  The civil case then collapsed with both parties agreeing by way of a consent judgement that no money would change hands.

At this point we should explain what Section 134A of the Employment Relations Act is:

134A - Penalty for obstructing or delaying Authority investigation

(1) Every person is liable to a penalty under this Act who, without sufficient cause, obstructs or delays an Authority investigation, including failing to attend as a party before an Authority investigation (if required).

(2) The power to award a penalty under subsection (1) may be exercised by the Authority—

(a) of its own motion; or

(b) on the application of any party to the investigation.

What did the two restaurants’ owners do to obstruct the Authority’s investigation?

• Made allegations against NFK on its Facebook page in October 2024, and further allegations against NFK and his wife (who was neither a party nor a witness),

• Printed copies of the Facebook posts and placed them on tables outside the two cafes in an area adjacent to a public thoroughfare, in view of the public,

• Had LQI offer money to a witness, his former domestic partner “Ms B” who was to give evidence in the investigation meeting,

• Reneged on an undertaking to take the Facebook post down (but eventually did when ordered to).

The Authority ordered the company that owed the two restaurants, and LQI, to pay $10,000 and $5,000 in penalties respectively, of which NFK would receive a third.

The $2,000 penalty for bribing the witness was imposed in June 2025.  It seems light, but the determination notes that LQI and Ms B were embroiled in Family Court proceedings at the time.

Substantive hearing

Even after a four day hearing, this is far from over.   NFK’s barrister David Fleming confirmed that the substantive investigation will be in late November – presumably both the claim and the counterclaim, and we should watch this space.

Given the current backlog, a determination and follow-up article should happen around March.

The lesson for anyone unfortunate enough to be involved in an employment dispute is, let the Authority do its job and don’t complicate proceedings with smear campaigns or intimidation, as this will drive up legal costs.

Tristam Price, Editor