Air New Zealand has lost the battle against an employee it sacked, then took to court, after accidentally overpaying him $70,000.

Clint Foa'i of Porirua will not have to repay the money, the Court of Appeal ruled today in a judgment that also declined the national carrier the right to challenge an Employment Court decision.

The ruling also awarded costs Foa'i, who, if he lost the case, would have been declared bankrupt.

Justice Susan Glazebrook dismissed all of the points of law raised by Air New Zealand's lawyers, saying she agreed entirely with the Employment Court judge except on one small matter, which it declared would have no "practical outcome".

Foa'i was sacked in 2009 when Air New Zealand realised it had been overpaying him for some time, citing a breach of trust and confidence.

By that time, Foa'i had worked for Air New Zealand for seven years, starting on $11 an hour as a casual loader and cleaner in 2002.

When a fulltime, weekday-only, administrative job came up in 2007 Foa'i leapt at it, so he could spend more time with his family.

His new contract, which he was given only after he took on the role, was brief and did not specify his pay, saying only "average earnings". Foa'i said he had no idea what average earnings were but accepted it anyway.

Foa'i excelled in the role. Documents show he organised staff days and events, including some attended by chief executive Rob Fyfe, who gave him rugby tickets as a thank you.

He went from earning about $800 a fortnight to up to $4000, but documents produced at the Employment Court show the amount was different each pay day - for example, $1371 in April 2007, then $2724 in May.

Foa'i raised queries about his pay with his manager and human resources staff and also visited the Auckland payroll office several times, asking staff to check his pay was right.

The Employment Court judge said Foa'i could have a clear conscience because he "naively believed" his links to upper management might have contributed to the salary.

"It was ridiculous, but it's what I thought at the time, that maybe Rob Fyfe would have pulled, you know, some strings or something, " Foa'i told the court.

Happy with the reassurances he'd had, Foa'i continued on, moving out of home, buying furniture, household products, paying rent and taking his parents to Samoa for their 35th wedding anniversary.

"Me, my partner and daughter were looked after, and I felt the need not to put a foot wrong in the job because it was all going well, " he told the court.

While on holiday in Hawaii in 2008, he noticed another huge pay in his account. He rang payroll to get a copy of his payslip.

On his return he was finally told he'd been overpaid. He was dismissed almost a year later.

Air New Zealand argued it had a right to restitution because the money had been paid by mistake.

Judge Anthony Ford rejected the claim, saying Foa'i was entitled to expect that Air New Zealand would not misrepresent the amount of pay he was entitled to.

- © Fairfax NZ News