Three former employees of Rooney Earthmoving Ltd (REL) have been ordered to pay the company $4.29 million in damages after the trio set up their own business in competition with their former employer.
It is the largest award of damages made against employees by the Employment Court, according to solicitors Bell Gully.
Employment Court judge Barry Travis found in favour of Waimate-based REL following a hearing last year, but the case then went back to court to deal with the issue of damages.
The three defendants, Kelvin McTague, Clarence Whiting and Kerry Bartlett, all worked for REL in the company's Ashburton operation before June 2004 when the new company BMW Contracting was established.
The original shareholders of BMW were Mr McTague and his wife, Suzanne. All three men were directors and received annual salaries of $70,000.
Mr McTague was the company's regional manager. The court found he was under a duty to disclose to REL his knowledge of the effort of the other two to obtain work for BMW while still employed by REL.
Mr Bartlett was found to have breached his duties to REL by soliciting employees from that company to join BMW, removing confidential material and quotes from his office, obtaining REL client lists from another employee, and using the quotes he had unlawfully obtained from REL to undercut the company for the benefit of BMW.
The judge found Mr Whiting, along with the others, solicited work from REL clients and prepared quotes for BMW clients with assistance of Mr McTague, while he was still employed by REL.
Mr McTague handed in his notice on April 22, 2004, and on May 4 met an accountant to discuss establishing the new company.
The judge found Mr McTague was the main person behind establishing the new company. He also found the immediate success of BMW was based on the defendants' efforts to secure future work and obtain key personnel at the expense of REL.
Judge Travis also found that BMW had sourced sufficient plant and equipment to enable BMW to begin trading from about June 1 2004. By then they had secured 12 months' forward orders and recruited nine skilled staff.
If they had not been able to secure the work and staff, the court found BMW would have been unable to secure the substantial loan it required to purchase equipment needed to carry out the specialised border-dyke irrigation schemes and farm-storage irrigation systems in Mid-Canterbury.
The company secured a substantial loan from UDC Finance on May 28 and was then able to commence full trading.
Until BMW began operating, REL had no direct competitor in the region for work on the same scale as that being carried out by BMW. REL purchased Doug Hood Ltd for a substantial sum to get that work.
The court found that the new company had a substantial impact on REL's Ashburton income over a number of years, and the company's other operations saw increased profits over the same period.
BMW Contracting went into liquidation in December last year. Companies office records show the only company director at that stage was Mr Bartlett.
Mr Rooney could not be contacted for comment.
- The Timaru Herald