A million-dollar mistake – the Employee who tried to steal his Employer’s supplier

This article explores the recent Employment Court case of Manawatu Motors 1970 Ltd t/a Robertson Motors v Renner [2025], where Mr. Renner, an employee, took steps to leave his role and commence business of his own account, but was not communicative, open, honest, or transparent about this with his employer, and failed to act in its best interests as he did so. The case serves as a timely reminder to the parties to an employment relationship that their mutual duties of good faith and fidelity are serious.  If breached, they can result in substantial and costly consequences for the party at fault.

The Law

The Employment Relations Act 2000 (The Act) outlines the good faith obligations that apply to the parties to an employment relationship.  These require that the parties must:

• not, directly or indirectly, do anything to mislead or deceive each other; and
• be active and constructive in establishing and maintaining a productive employment relationship, including being responsive and communicative with each other.

Parties to an employment relationship are also bound by the implied duties of trust, confidence, and fidelity.

The obligation of fidelity requires the parties to an employment relationship to be loyal, and act in the best interests of one another.  They must not take any steps that might undermine the trust and confidence in the relationship, and/or cause damage the other party, their reputation, or their interests.[1]

The Facts

Mr Renner was employed by Robertson Motors as a Sales Manager. In his role, Mr Renner was responsible for the sale of vehicles and managing and maintaining Robertson Motors’ relationships with its suppliers.

Mr Renner was also bound by express obligations as outlined in his individual terms of employment with respect to conflicts of interest, confidential information, and non-solicitation.

A key relationship for Robertson Motors was that with one of its parts suppliers, ShinMaywa – an equipment manufacturer based in Japan.

Mr Renner was the primary point of contact for ShinMaywa and worked with it to establish and maintain an exclusive distribution agreement with Robertson Motors in New Zealand.

Mr Renner’s Breaches

Seven years into Robertson Motor’s exclusive distribution contract, the relationship took a turn.  Mr Renner advised Robertson Motors that he was due to commence a period of sick leave for a serious operation.  Then, later that same day, Mr Renner suddenly resigned from his role.

Approximately one week after Mr Renner’s resignation, ShinMaywa advised Robertson Motors that it wished to change the distribution contract between the parties, removing Robertson Motors’ exclusive right to sell its parts in New Zealand.

Robertson Motors became suspicious about the timing of ShinMaywa’s request and Mr Renner’s resignation.

Acting on this hunch, Robertson Motors conducted a review of Mr Renner’s work laptop and cell phone, discovering that during his employment with it, Mr Renner had secretly:

• utilised client relationships and information obtained in his role for Robertson Motors for his own benefit;
• provided information about Robertson Motors’ clients to ShinMaywa that was not beneficial to Robertson Motors; and
• spoke negatively to ShinMaywa about Robertson Motors’ management of its business.

The above, once established, evidenced a breach of fiduciary duty on Mr Renner’s part.

Mr Renner also breached his duty of good faith by engaging in conduct that was deceptive or intended to deceive Robertson Motors and failing to notify or be open and communicative with his employer about his intentions.

The evidence supported that Mr Renner was attempting to set up business on his own account, working directly with ShinMaywa.

ShinMaywa then cancelled its exclusive distribution contract with Robertson Motors.

The Claims

Following the end of its business relationship with ShinMaywa, Robertson Motors made two primary claims against Mr Renner.  It claimed that Mr Renner was responsible for ShinMaywa’s cancellation of its contract, and:

1. that Mr Renner’s actions resulted in a loss of profit of approximately $2,240,000; or
2. in the alternative, it suffered a loss of the chance to obtain further business with ShinMaywa, to the value of $900,000.

Robertson Motors sought to recover these sums from Mr Renner by way of damages.

For an employer to successfully establish a connection between an employee’s breaches of contract and the employer’s loss, there must be:

• a causal connection between the two[2]; and
• the employee’s breaches must have been a substantive factor in causing the loss.[3]

The Decision

Ultimately, the Court found that Mr Renner’s actions exhibited a pattern of him acting against Robertson Motors best interests, which:

• constituted a breach of his common law duties of fidelity and good faith; and
• were in breach of the terms of his written employment agreement, including that he:
  • did not carry out his duties faithfully, nor use his best endeavours to promote, develop, and extend Robertson Motors’ reputation and business interests;
  • acted to Robertson Motors’ detriment; and
  • attempted to discourage customers and suppliers of Robertson Motors from engaging with it.[4]

The Court concluded that, given the wider circumstances, Mr Renner was not directly responsible for ShinMaywa’s decision to end its contract with Robertson Motors.  However, it found that he responsible for Robertson Motor’s inability to secure ongoing work with ShinMaywa.

On this basis, for the loss of chance, the Court ordered Mr Renner to pay $900,000 in damages to Robertson Motors. [5] 

Takeaways

This case emphasizes that, particularly in situations where the parties are engaged in high-value business dealings, there is significant risk in not adhering to the implied obligations of good faith and fidelity.

These obligations are more substantial than what the word implied may suggest. Adherence is not optional, and, as this case shows, breaches can create a real cause of action with the potential for very expensive and serious consequences.

If you have questions about your good faith and fidelity obligations, or any other employment law queries, reach out to our specialist team here[link] for further guidance.

[1] Caffe Coffee (NZ) Ltd v Farrimond [2016] NZEmpC 65 at [35]–[36].

[2] Caffe Coffee (NZ) Ltd v Farrimond, above n 1, at [200].

[3] Schilling v Kidd Garrett Ltd [1977] 1 NZLR 243, at 267.

[4] Manawatu Motors 1970 Ltd t/a Robertson Motors v Renner [2025] NZEmpC 68 at [51] and [53].

[5] Renner, above n 4, at [71] to [73].

 

This article is current as at the date of publication and is only intended to provide general comments about the law. Harkness Henry accepts no responsibility for reliance by any person or organisation on the content of the article. Please contact the author of the article if you require specific advice about how the law applies to you.