The director liquidated, discontinued, then tried judicial review. The Court had seen enough
A director who liquidated his company amid a grievance claim has lost his bid to reopen a compliance order, Judge J C Holden ruled on 22 July 2026.
The case, heard on the papers in the Employment Court at Auckland, traces back to a former employee of a security company who filed a personal grievance in June 2022. The company's sole director had incorporated the business in May 2020, telling the Court he wanted limited liability, and later said he made mistakes and the company failed.
In September 2022, on his advocate's advice, the director put the company into liquidation by special resolution, finding a liquidator through an internet search. The liquidator allowed the grievance to proceed, and the Authority found the former employee had been unjustifiably disadvantaged and unjustifiably dismissed, awarding remedies and costs. The company paid nothing.
The former employee then sought compliance orders against the director personally. A liquidator's report recorded that the director had taken excessive drawings from the company, which he denied. The Authority declined to make findings under the involvement-in-breach provisions of the Employment Relations Act 2000, instead ordering the director under section 137(2) to take the necessary steps to ensure the company received $32,456.56 plus interest so the former employee could be paid.
None of it was paid. What followed was nearly two years of manoeuvring. The director challenged the compliance determination in August 2024, won a stay on conditions that he pay money into court and cover a costs award, paid nothing, then discontinued the challenge in April 2025. He was ordered to pay costs on the discontinuance. He filed for judicial review in May 2025, only to have it stalled once a jurisdictional problem surfaced. This application, seeking leave to file a challenge out of time, followed in February 2026.
His advocate tried to shrink the delay, submitting it "is either 12 days or a little over nine months." Judge Holden did not accept the shorter figure and found the delay very significant.
Weighing the factors from Almond v Read, the Judge found the reasons for the delay were not compelling and that the director's shifting approach had prolonged the litigation. The former employee, meanwhile, had incurred more than $23,400 in costs and received nothing. Having chosen to discontinue and pursue judicial review, "He can be expected to bear the consequences of his decisions," the Judge said.
The director's advocate had argued wider public interest was at stake, including the effect on business confidence if a director of a liquidated company were made to fund grievance remedies personally. Judge Holden acknowledged the Authority's use of section 137(2) in such circumstances might benefit from reconsideration, but was not persuaded this outweighed the factors against granting leave.
The application for leave to extend time to file a challenge was declined, and the Court made no order as to costs.
