The Spectacular End of a Startup - by Tristam Price

Props to a Mr Scott Lloyd of Napier who has recently set up a vapes retail business, after a shocking experience as an employee of another vapes business that failed spectacularly. Our knowledge of this comes from a recent ERA determination .

Mr Lloyd was employed by P J Vapes Ltd whose director was his friend Paul Forster. They had a falling out because it appears that Mr Forster over-extended himself and often couldn’t afford to pay Mr Lloyd his wages and even had to borrow money off him including the cost of getting the company website up and running. ERA Member Michael Loftus described the payment of Me Lloyd’s wages as “erratic and deficient”.

There was an employment agreement (after a short period of voluntary work) and that included a six month post-employment restraint of trade period which would have been hopelessly unenforceable as we’ll explain shortly.

After an informal intervention in September 2019 the situation around payment of wages improved slightly, then worsened again. A second informal intervention in November 2019 turned ugly with Mr Forster visiting the home of Mr Lloyd’s parents (with whom Scott Lloyd lived), accompanied by “undesirable elements” late at night.

Mr Lloyd senior, and the friend of Scott Lloyd who intervened in September, both sought trespass orders against Mr Forster, which triggered a large number of unhinged texts that disparaged Mr Lloyd, his father and his friend. A comprehensive restraining order was then issued by the District Court.

Mr Scott sought remedies in the ERA for outstanding wages, repayment of the loan and compensation for hurt and humiliation, and was awarded:

- $20,800 for wages lost as a result of the constructive dismissal (taxable)

- $20,000 for hurt and humiliation

- $9,529.81 for outstanding wages and holiday pay (taxable)

- $267.78 for repayment of a loan

- $71.56 for the filing fee.

No legal costs were awarded because Mr Lloyd represented himself, but in the event P J Vapes Ltd collapses, Mr Forster will be personally liable for the taxable portion of the award ($30,329.81) and faces personal bankruptcy if he fails to pay.

Despite the terrible experience Mr Lloyd has had with his former friend’s startup business, he appears to want to stay in the retail/vapes industry hopefully having learned how not to run a business! Leighton Associates wishes him all the best with his new venture.

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