Restaurateur’s frivolous claim before downward spiral

Former Christchurch city councillor and bar / restaurant owner Gordon Freeman managed to have one of his receptionists fined $500 for giving “only” two weeks’ notice instead of six, after she resigned in 2012.

Then he got squeezed out of the industry.

Freeman operated the Redwood Hotel / Sequoia 88 through his company G L Freeman Holdings Ltd, which ceased trading around 2015 and was struck off the Companies register soon after.

A 2013 determination by Helen Doyle, Member of the Employment Relations Authority (now a judge) noted that:

[11] Ms Livingston said that she became unhappy in her role and started to look for other positions…

[12] Ms Livingston then resigned from her employment on or about 19 July 2012 and gave two weeks notice…

Member Doyle ordered G L Freeman Holdings Ltd to pay Ms Livingston withheld holiday pay of $1,943, finding that penalty clauses in employment agreements are unenforceable.  Ms Livingston was ordered to pay a $500 penalty for breaching a clause in her employment agreement, half to G L Freeman Holdings Ltd and half to the Crown.

Freeman challenged the determination to the Employment Court, and the only material difference between the determination and Judge Couch’s decision was that G L Freeman Holdings Ltd's $250 share of the penalty was diverted to the Crown (and the company was ordered to pay $3,700 costs).  Ms Livingston received a rebuke that, in hindsight, seems unfair:

[45] I find that Ms Livingston’s behaviour in breaching the notice provision of her employment agreement was sufficiently egregious that a penalty ought to be imposed. That is solely on the basis of the need for general deterrence of such conduct.

Frequent flyer

When imposing that penalty, neither the Authority nor the Court would have known what was in the pipeline.

In 2015, G L Freeman Holdings Ltd came before Member Doyle again, for the same reason.  A cleaner/housekeeper had given eight days’ notice instead of six weeks, and G L Freeman Holdings Ltd helped itself to her holiday pay.  Ms McDonald was awarded her $1,047 holiday pay and $583 costs.  This time there was no penalty for the short notice.  But given her actual costs, Ms McDonald ended up around $600 poorer.

Raid by the Labour Inspectorate

Word got around, and few months later, the Labour Inspectorate pounced.  Four other complainants, Ms Morriss, Ms Green, Ms Sun and Ms Singh were awarded a total of $7,122.  G L Freeman Holdings was also ordered to pay $15,000 in penalties.

Freeman challenged that too, then discontinued the challenge.  $580 costs were added by Judge Corkill.

But wait, there’s more…

Gordon Freeman remains the sole director and shareholder of Victoria 88 Ltd, through which he used to operate the Watershed Bar and Restaurant.  A 2018 judgment of Judge Corkill found that two employees Ms Thompson was similarly swindled out of $1,174, and Ms Wealleans $1,858.

As the restaurant had ceased trading, Gordon Freeman was ordered to pay a $20,000 penalty and became the first employer to be banned from employing anyone, for three years.

Redwood and Watershed under new ownership

With apologies to the new owners, these legal issues pre-date them.

Wage suppression tools

It is unclear why Mr Freeman felt that his companies were so special that his low-paid staff should be required to give six weeks’ notice of resignation.  The problem in a competitive job market problem is that most hiring managers would be less likely to offer a job to a candidate who had to give six weeks’ notice, instead of two.  For a job that paid a couple of dollars above minimum wage, two weeks is reasonable. Overall, the $500 penalty and the now discredited “egregious” comment by Judge Couch in [2015] NZEmpC 120 G L Freeman Holdings Ltd v Livingston seems to have been a price worth paying for a better job. 

The judgment referenced [2007] NZCA 58 Fuel Espresso Ltd v Hsieh, which was an enforcement of “a restraint of trade provision of an employment agreement” against a barista, that “reflects a general proposition which must be respected”, and “Agreements are made to be kept”.

Again, the few weeks that Victor Hsieh had to stop working due to a restraint of trade injunction, along with a $3,000 costs order (and his own costs) appears to have been an acceptable gamble, given that he went on to trade for around seven years.

So, just like an overreaching noncompete clause, the notice period likely operated as a wage suppression tool.  But the employment jurisdiction caught up eventually.

Case law

In 2024 The Authority made $36,424 in awards, including costs, in favour of an enforcing employer that cited Fuel Espresso in a noncompete dispute.   Leighton Associates provided advice that tanked that award because in general, enforcement of overreaching noncompete clauses against low-paid workers goes beyond what can be tolerated.  Similarly, while G L Freeman v Livingston may appear in isolation to support penalties for insufficient notice (which can in theory be used to leverage a costs claim), employment law practitioners should be careful how they cite it, given the Labour Inspectorate prosecution, the banning order and the outing by media that occurred since.

Or perhaps it’s better not to cite these cases at all!

Tristam Price, Editor