Suing an empty shell

A failing seven year old road freight company was put into liquidation by the Inland Revenue Department in May 2025 for failing to account for tax.   The size of the hole is approximately $300,000 according to the Official Assignee’s first liquidator's report.

A couple of months before Stland Contract Ltd was placed in liquidation (and we have no idea how to pronounce that name), Mr Shea, an employee of three months had raised personal grievances for unjustified dismissal and unjustified disadvantage.

Under Section 142W of the Employment Relations Act, employees are able to apply to recover wage arrears and holiday pay from anyone involved in a breach of minimum standards – usually the director(s). 

There was no claim under Section 142W, but a personal grievance claim for failure to give notice of redundancy (which was advised by phone call without a formal process), and bullying was determined by the Employment Relations Authority.

Stuff picked up the story the same day as the determination was publicised on the Authority database:

Truck driver awarded $45,000 after phone call dismissal | Stuff

Mr Shea was treated appallingly by the director Mr Kingi, and the operations manager Mr Hartstone, but for context the company had probably been technically insolvent for years, and in such circumstances working relationships within a doomed company can become toxic – especially after half of its trucks had been repossessed.  As the Stuff headline says, around $45,000 was awarded – probably $50,000 in the event that costs are applied for.

We hate to ruin a good story, but what the Authority (and Stuff) didn’t mention is that the determination is barren – there are no legal grounds to recover any part of the award from Mr Kingi.  If wages and holiday pay were paid up, then there’s no Section 142W component.   The paper win can be registered with the Official Assignee and added to the pool of unsecured creditors, but the IRD is at the top of the pecking order so even a small payout is unlikely.

Regardless of whether Mr Shea’s advocate’s terms were No Win No Fee, it’s better to let the grievances die with the company than to keep going and “win” a barren determination. 

FUN FACT: I'm currently advocating for a security guard who was found by the Authority to have put his company into liquidation to avoid liability for a personal grievance claim and currently owes around $50k personally - my job is to get him off the hook. I can't say much more because the matter is before the Employment Court, but like the Stland matter, poor knowledge of accountancy and insolvency is a major factor.

Tristam Price

Editor

Why the liquidator gets paid first - by Bede Henderson