CultureSafe ordered to pay $33,000 in penalties and damages

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In Waikato Business News’ January 2018 edition, I wrote a column on settlement agreements, often used to resolve employment relationship problems where the parties would rather settle the matter privately than litigate.

Common clauses in these agreements include the employer paying the employee a sum of money, the parties each agreeing to do/not do certain things and that the agreement is in full and final settlement of the problem.

Almost all of these agreements also include clauses that the agreement is confidential to the parties and its advisors and that neither party will make disparaging comments about the other. Employers sometimes include a statement that they are entering an agreement on a “no admittance of liability” basis, which effectively means they are entering the agreement solely to avoid risky and expensive litigation, not because they have done anything wrong.

Once signed by the parties, the agreement is signed off by an MBIE mediator, and the agreement is then binding and enforceable. Neither party can seek to subsequently have the agreement altered or set aside, and the agreement can only be put before the Employment Relations Authority for the purposes of enforcement, where a party has breached the agreement.

On March 23, 2018, the Authority granted urgent interim (temporary) orders to prevent CultureSafe NZ Limited, a Hamilton-based advocacy business, from making further breaches of a settlement agreement that had been signed between Turuki Healthcare Services and an employee, in November 2017.

This settlement agreement contained confidentiality and non-disparagement clauses. Specifically, the non-disparagement clause precluded either party from making any reference whatsoever to the employment relationship problem in any publications, including social media. The clause expressly included CultureSafe, as the employee’s representative.

Turuki inadvertently failed to make one of the payments in accordance with the agreement, but the first they learned of this was when they were copied into statements made by CultureSafe to certain Members of Parliament and Ministers of the Crown. Turuki immediately made the payment but the statements continued.

The March 23, 2018 determination ordered compliance with the agreement, no further breaches, no publication of Turuki’s name and compliance was to occur immediately. A timetable was also set for CultureSafe to respond to the documents filed by Turuki.

CultureSafe did not comply by filing any further documents, other than to file a letter dated April 14, 2018 addressed to the Minister of Workplace Relationships, Iain Lees-Galloway, seeking the dismissal of Chief Authority Member, James Crichton, who was hearing the matter.

Evidence filed by Turuki on CultureSafe’s breaches largely comprised emails between Turuki’s lawyer and CultureSafe’s Allan Halse and Tracey Simpson. Member Crichton stated that the emails from Halse and Simpson were “characterised by a hectoring, bullying tone” and suggested that unless Turuki withdrew the current proceedings, they would contact Turuki’s funders and would also be publicly named by CultureSafe.

The emails also contained another letter to Mr Lees-Galloway dated April 2, 2018 seeking member Crichton’s dismissal for “corrupt behaviour” and a CultureSafe press release dated April 5, 2018. Although no further breaches of the agreement occurred between the interim determination on March 23, 2018 and the second determination published May 1, 2018, the Authority held that the threats made by CultureSafe during this period, foreshadowed further improper behaviour that entitled the Authority to make the interim compliance orders permanent.

The Authority stated that the correspondence from CultureSafe to Turuki’s lawyer indicated that the former continued to find fault with Turuki “… notwithstanding the plainest evidence that the parties to the settlement agreement entered into a voluntary commitment, a fundamental term of which there was no admission of liability by Turuki to having bullied the first respondent or indeed anybody else.”

The Authority made reference to CultureSafe’s Facebook page showing a willingness to engage in “offensive and improper identification of parties” suggesting “…an undesirable enthusiasm for what CultureSafe sees as wrongdoing, even if there is no evidence of such wrongdoing save for CultureSafe’s own representations on the matter.”

CultureSafe, Halse and Simpson were ordered to pay a total of $30,000 in penalties, $3000 in damages and Turuki has filed an application for indemnity (full) costs against them, which is yet to be determined by the Authority. On May 9, 2018, Halse posted on CultureSafe’s Facebook page that he would go to jail before he would pay one cent towards the fines the Authority had ordered and that he was happy to debate the matter in public. As CultureSafe, Halse and Simpson are jointly and severally liable for payment of the penalties and damages, Mr Halse’s refusal to pay on behalf of himself and CultureSafe could leave Ms Simpson liable for the entire amount, unless she too, is prepared to go to jail.

On May 15, 2018, Turuki’s lawyers, WynnWilliams, sent Mr Halse a letter threatening defamation proceedings if all reference to themselves and Turuki were not removed from CultureSafe’s Facebook page by 4 pm, May 16, 2018. Mr Halse’s response was to publish this letter on CultureSafe’s Facebook page on May 16, 2018.

Signatories to settlement agreements often focus mainly on the terms that involve payment. However, recent decisions, including this one, indicate the Authority is increasingly taking a very dim view of those who breach the confidentiality and non-disparagement obligations they voluntarily sign up for. Both the March 23 and May 1, 2018 determinations can be read by going to MBIE’s online employment law database and entering the word “Turuki” in the “Parties” field.

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About Author

Erin Burke

Employment Lawyer and Director at Practica Legal Email: erin@practicalegal.co.nz phone: 027 459 3375