Wealthy US cafe owners not responsible for payments made to laid-off workers

Eight cafe workers awarded nearly $150,000 after being abruptly fired just before the first nationwide Covid lockdown have yet to see the money.

In January last year, the ERA ruled in favor of the former employees’ personal complaint, finding that they had been terminated without cause from a cafe in Snells Beach.

However, that cafe, Bayside Fine Foods (BFFL), is now insolvent and the ERA has ruled in a new ruling that its wealthy American owners, Deanna and James Dehlsen, are not personally liable to pay the unpaid money.

James Dehlsen made his money in America, where he is known as a pioneer in wind power and renewable energy. He founded several companies, including one called Zond that reportedly sold for $100 million in 1997.

In the original ruling, ERA member Marija Urlich found that BFFL wrongly invoked a newly added business interruption clause in workers’ contracts and failed to consult with them about the dismissal.

As a result, cafe workers – who were beyond reproach – were left with no income on the eve of a nationwide lockdown and denied access to the government’s Covid-19 wage subsidy, Urlich said.

She ordered Bayside to pay the workers $83,817 for three months of lost wages and $63,000 for compensatory damages.

However, the Dehlsens, who are the sole directors and shareholders of the company, put it into liquidation and the payments were never made.

The employees returned to ERA earlier this year in hopes of obtaining an order to force payment from the company or the Dehlsens. The authority had since ruled the couple should be added as a defendant to the claim.

Employee attorneys Simon Mitchell and Jeremy Lynch argued that the requested compliance order was fair and reasonable.

There’s no doubt the Dehlsens were able to take steps to ensure BFFL won the awards, Mitchell and Lynch said. They criticized the way the couple had structured their affairs and responded to the applicants’ personal grievances.

But Urlich refused to accede to the request.

She admitted that the Dehlsens had already advanced funds to the bankrupt company to pay the workers’ final salary and vacation pay at the end of their employment, to pay off all of the company’s creditors, including IRD. , and to liquidate the business.

But she said the Dehlsens should not be expected to personally abide by the sanctions she had previously imposed on the company, which was effectively what was sought.

There was no scope in the relevant part of the Labor Relations Act for the power to order it, Urlich said.

“The terms of such compliance orders would generally be to ensure that the original party complies with the orders being executed, not that the added parties themselves must comply, for example by personally paying the sums of money ordered,” she said.

James Dehlsen, owner of a bankrupt cafe business in Snells Beach, is a leading figure in global wind technology and has received numerous accolades, including a Danish Medal of Honor.  Photo / Provided

James Dehlsen, owner of a bankrupt cafe business in Snells Beach, is a leading figure in global wind technology and has received numerous accolades, including a Danish Medal of Honor. Photo / Provided

It also appears from the evidence that the Dehlsens were not hiding behind the corporate entity to deliberately avoid the workers’ claim and that they were unlikely to recoup a substantial sum that they had already personally invested in the company. failed company, Urlich said.

His decision has left workers wondering if they will ever see their money again.

Mitchell and Lynch told Open Justice that the group could challenge the authority’s decision in labor court, but nothing had been decided yet.

The Dehlsens’ attorney, Sam Houliston, said the ex-employees knew when they first “threatened” that Bayside was insolvent and had no assets to meet the claims.

“Shareholders are not automatically obligated to discharge the judgment debts of a bankrupt company. This approach is consistent with the well-established principle of limited liability,” Houliston said.

He pointed to the authority’s conclusion that the Dehlsens were not hiding behind the corporate entity to deliberately avoid claims from former employees and that they were unlikely to recover the personal funds they had. invested in the bankrupt company.

The couple are currently listed as owners of property on Rodney’s Tawharanui Peninsula with an assessed value of $6.3million.

– Sarah Curtis, Open Justice

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