Rival gas move costs ex-employee millions in damages

Michael Mitchell, a former employee of Auckland Gas Company, has been ordered to pay Nova Energy annual damages of $1m a year for the next 7 years. Photo / Derek Flynn

A former employee who used company information to sign on clients for his competing business has been ordered to pay millions of dollars to his old workplace in damages.

The Employment Relations Authority has ordered Michael Mitchell to pay Nova Energy annual damages over $1 million for a period of seven years.

Mitchell was a former employee of Auckland Gas Company, a subsidiary of Todd Energy, before it amalgamated with Nova in 2013.

Mitchell decided to leave the company, and before he quit he uploaded Nova's client list and rates, described as a "kit book" to set up a gas brokerage, onto a USB drive. He kept that information once he ended his employment.

He set up a competing business, National Energy Limited, and used the information from Nova to identify certain Nova customers, particularly those paying high margins, without a recent contract or near the end of their contract.

The ERA found Mitchell had breached his duty of fidelity, but there had not been a valid restraint of trade agreement made between Nova and Mitchell.

Nova said its annualised loss for seven lost customers was $45,936, the loss for 81 customers re-signed on new, more competitive contracts was $471,306 and the loss for 237 customers that had gas prices lowered after being approached by NEL was $503,967.

Nova wanted the annual loss, totalling $1,021,209, to be paid as damages for a projected ten years, at a final total around $4.5 million.

The ERA found the payment period should be changed to seven years, following an agreed upon formula that took into account relevant discount factors. The total amount would be reached between the two parties.

In addition to the damages, Mitchell was ordered to pay a penalty for breaches of his contractual obligations of $30,000 and NEL was penalised for 'aiding and abetting' the breaches and ordered to pay $50,000.

See the latest ERA decision here: