Waiuku mechanic Neil Cathcart first learnt business tax payments were in arrears when lawyers advised that Inland Revenue was taking legal action to wind up his business, Neil’s Auto Centre Ltd, claiming core unpaid taxes of $259,000 plus penalties and interest. Attempts to recover from former employee Genevieve Elizabeth Bowman for alleged embezzlement has run into procedural hurdles.
The High Court was told Mr Cathcart borrowed money and also sold property he owned to pay in full the $571,700 owed Inland Revenue by his company. It is alleged Ms Bowman, who started as office manager in 2010, began diverting business tax payments from late 2015 and then supressed Inland Revenue correspondence chasing overdue taxes. Mr Cathcart sued Ms Bowman for $301,500, seeking summary judgment in the High Court alleging deceit. Summary judgment is a fast-track procedure where it is argued there is no defence to a claim. The $301,500 consisted of $142,900 it is alleged Ms Bowman stole from the company plus $158,600 for legal and accounting fees incurred sorting out the unpaid tax plus a portion of the penalties and interest paid Inland Revenue.
Associate judge Bell said allegations of dishonesty at the heart of Mr Cathcart’s claim in deceit require evidence of the date and the substance of dishonest statements made. Ms Bowman made no statements in the course of her daily work about stealing from the company, or of supressing Inland Revenue correspondence. She made no confession until April 2018, after Mr Cathcart agreed personally to settle with Inland Revenue. Her earlier silence could not amount to deceitful statements.
Judge Bell pointed out that claims by Mr Cathcart’s company for breach of the employment contract with Ms Bowman should be heard by the Employment Relations Authority. As a general rule, the employer has to carry any loss where employees are simply slack in performing their duties, causing financial loss. Employees become personally liable where they deliberately or maliciously cause loss. Detailed proof is required.
Neil’s Auto Centre Ltd v. Bowman – High Court (13.02.19)
19.039