The customer is grumpy – by Tristam Price

High-fives all around at the office of Norris Ward McKinnon (NWM) on its partial success in putting employment advocate Allan Halse out of action. On NWM’s second attempt, Halse’s company CultureSafe NZ Ltd was placed in liquidation ostensibly on the instructions of NWM’s client Rangiura Trust Board (RTB), a South Waikato rest home, which claims a debt of around $100,000 including penalties and costs that are still in dispute and remain before the courts.

The liquidation hearing was on 1 August. The following day, RTB, via NWM, applied to have Halse adjudged bankrupt using the same legal technique. The High Court reserved its decision on bankruptcy because of other proceedings before the High Court that we understand are to be heard on 22 November, in Hamilton.

Halse is suing (similar to counter-suing) RTB, NWM and two of its partners for fraud, conspiracy to defraud, deceit and knowing assistance, while RTB (via NWM) has successfully enforced a disputed penalty against Culturesafe for allegedly breaching a clause in a contract between his client and her then employer RTB in 2018, by way of an act of insolvency.

Halse was the director and employee of CultureSafe NZ Ltd, so when his company was placed in liquidation he found himself technically unemployed. Despite this, he appears to be in a good position to set up shop as a sole trader and is likely to retain most of CultureSafe’s clients. Any restructuring activity is disruptive, although unlikely to be fatal in this case. We elaborate on Halse’s restructuring options here.

Hours after the liquidation, NWM put a “gloat post” on its LinkedIn and Facebook pages. The Facebook post was removed that night because while the former CEO of Bay of Plenty DHB “loved” it, the vast majority of comments were negative. By contrast, he LinkedIn post received mostly positive comments and quickly reached 200 “likes”.

Three of those “likes” were from partners of the firm tasked with liquidating CultureSafe NZ Ltd. A liquidator we know suggested that it’s “bad form [and] not smart to get embroiled publicly in someone else's fight”. That makes us wonder if that insolvency firm would be open to receiving a secret commission to trump up a Companies Act breach applying s 261 or similar to facilitate Halse’s bankruptcy which would effectively put an end to Halse’s claim against RTB and NWM. It wouldn’t be particularly ethical or legal, but it might make good business sense as long as they’re not caught! Or maybe I’m just a mad conspiracy theorist...

As to RTB, we understand they were hopping mad at Halse in 2018. RTB went on to drop around $250,000 on proceedings that yielded a theoretical award of $52,800 in a March 2019 ERA determination, none of which had been paid at the time of liquidation (a process that will probably yield less than $5,000 for RTB).

From a budgeting perspective, residential fees probably had to increase to cover that net loss, but hey, everyone is wise after the fact! RTB was legally advised by NWM, and presumably instructed NWM based on that advice. While technically successful, RTB probably wishes it had “sucked it up” and not brought these unusual proceedings in the Employment Relations Authority in the first place.

It may further irritate RTB that even if it manages to successfully defend Halse’s fraud claim and then have him declared bankrupt in the next few months, he will still be able to continue his work as a sole trader, which would make RTB’s victory lap somewhat subdued.

Does anyone think RTB is a satisfied client? We were unable to find any “likes” from RTB employees on NWM’s gloat post, so that seems unlikely.

https://en.wikipedia.org/wiki/Falling_Down