When Motörhead frontman Ian “Lemmy” Kilmister rose from the dead, by riding the motorcycle he had been buried with through six feet of freshly laid soil in this 1984 video for “Killed by Death” (at 3.35), it’s unlikely that he imagined an employment dispute some four decades later on the other side of the world having similar characteristics.
Levi Menzies knows all too well that half of New Zealand startup companies fail within a few years. An employment dispute arose out of the collapse of his startup, Prime Focus Security Limited (in liquidation). It’s not the first we’ve reported on, and it probably won’t be the last.
This one is particularly sad because a 7 Feb, 2021 Bay of Plenty Times article “From beneficiary to business owner: Levi’s story” noted that then 27 year old Menzies “has started his own business after spending years on the sickness benefit… with the help of Ministry for Social Development”. Nearly four years on, a recent marriage breakup has forced Menzies to seek accommodation while working part time, according to a recent Facebook post on a flatting page.
The Companies Office database indicates that Prime Focus Security was trading from 6 May 2020 to 7 September 2022. Menzies and his then wife incorporated XM Security Group Limited on 27 April 2023 but she resigned as co-director on 10 October 2024 leaving Menzies as the sole director and its part-time employee with some assistance from Work and Income as the Facebook post suggests.
So Levi Menzies has had a rough time and I hope the situation improves for him. But that’s easy for me to say because for now, lawyers are trying to get blood out of a stone.
Personal grievance claim
Let’s face it – when a company is failing, conflict in the workplace can be particularly bad. A former employee Nathan Corrigan raised a grievance. In the second half of 2024, Menzies was ordered by the Employment Relations Authority to:
Calculate and personally pay interest on the principal sums awarded that Prime Focus Security Limited (in liquidation) was liable for (now in the $2-3,000 range),
“take the necessary steps” to ensure that the company in liquidation receives the amounts that it had previously been ordered to pay Corrigan for his personal grievance claim.
In other words, cough up around $35,000 (£16,000).
In the determination the Authority (similar to the UK’s Employment Tribunal) left it up to the then liquidator of Prime Focus Security to distribute monies following the liquidation process in its normal way, but specifically referred to paying Corrigan the sums that had been awarded “or such lesser amount according to priorities set by law”.
This was not an application under Section 142Y which basically means that any person responsible for non-payment of wages or holiday pay can be found personally liable (this is Labour Inspectorate territory) – it was a garden-variety grievance. A novel aspect of this case is that the claimant has pursued the director personally by seeking a compliance order against him for grievance remedies including $20,000 for hurt and humiliation which Section 142Y does not extend to.
2024-NZERA-448.pdf 26 July 2024, $32,456 award (not wages or holiday pay)
2024-NZERA-556.pdf 17 September 2024, $4,500 costs – not subject to the compliance order
“[4] PFS through its liquidator has not sought to respond or be represented in the present application but has given consent for it to continue.”
The Authority records its rationale behind this: an analysis of the 31 March 2022 financial accounts suggested that Menzies had “siphoned” money from the company to avoid paying the personal grievance remedies. However, the facts pertaining to Corrigan’s grievance did not begin until the reported date of 13 April 2022.
2023-NZERA-125.pdf 10 March 2023
When legal types try to be accountants, mistakes happen.
Cash-strapped
Regardless of the reasons for the company’s failure, there is no way Menzies could meet that award, unless he wins Lotto. He has challenged the Authority’s determination to the Employment Court (similar to the Employment Appeal Tribunal) and there are no publicised decisions on the Court database as yet. However, a paywalled NBR article which I sent to Menzies’ employment advocate Lawrence Anderson - who in turn notified Corrigan’s counsel as a professional courtesy - reports that on 1 October 2024 the liquidator was struck off by the Institute of Chartered Accountants for unlawfully subcontracting work to an unregistered (and name-suppressed) person.
That means, even if Menzies was able to pay monies to the liquidator as ordered by the Authority, the liquidator’s bank account is no longer legitimate. The first liquidator’s report indicates that the company also owed the Inland Revenue Department $150,000 as a preferential creditor, and among the four liquidator’s reports there is a list of 11 claimants, but there’s no evidence that a claim was registered on Corrigan’s behalf.
It costs several thousand dollars to get a new liquidator appointed and there’s no guarantee that the Companies Office would even accept a new appointment. If it doesn’t happen, the Companies Office will likely remove the company from the register after publishing a “Notice of Intention”.
Public interest
New Zealand is generally business and startup-friendly but an outcome that increases the number of possible ways to “pierce the corporate veil” could discourage the formation of start-ups, and it’s for the Employment Court to decide whether that’s good, bad or indifferent. This is a test case to see if existing personal liability for unpaid wages and holiday pay (not in issue here) could be extended to cover grievances.
But from what’s in the public domain, the personal grievance claim appears to have collapsed, if for no other reason than you can’t get blood out of a stone. If the Employment Court publicises a decision that proves me wrong, then we may have ourselves an “undead” company and that can be revisited in a follow-up article.
Tristam Price
Editor
Te Rangahau ture Mahi me te tari Purongo
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