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The Employment Court has struck out a claim for damages by former Whanganui District Health Board chief executive Memo Musa against outspoken board member and surgeon Clive Solomon.
But in a reserved decision, Judge Coral Shaw said that if Mr Musa amended his pleadings, the court had jurisdiction to hear a claim for penalty against Mr Solomon for breaching a settlement agreement between Mr Musa and the board.
Mr Musa took action against the board and Mr Solomon before the Employment Relations Authority following allegedly critical comments by Mr Solomon published in an online publication.
The former health board CEO said that was contrary to a settlement between him and the board at mediation on March 26.
Under the terms of the settlement neither side was to "speak ill of each other", all matters discussed were to remain confidential, and the employer recognised a written apology to Mr Musa in September 2006.
It was also acknowledged that any breach of the settlement was likely to cause Mr Musa "further distress and humiliation".
The day after the settlement was signed, Mr Solomon made "allegedly adverse" comments about Mr Musa and his resignation from his position with the board.
Mr Musa said that the health board had failed to bind Mr Solomon to the terms of the agreement and was therefore liable for his actions.
While seeking damages against both the board and Mr Solomon personally for breaching the settlement agreement, he was also seeking exemplary damages against Mr Solomon.
Mr Musa said that Mr Solomon was bound by the terms of the settlement, he had breached a duty of confidence, he knew the online statements would cause damage to him and he "acted deliberately and out of malice".
At the time Mr Solomon said he was speaking as an individual and not on the board's behalf and defended his right to speak out.
He said his comments were made to a medical publication.
Mr Musa resigned his position in July.
Over the past few years Wanganui Hospital has had a troubled time with paediatrics and obstetrics crises that forced pregnant women to go to other hospitals, and administrative errors that left patients without referrals.
In his report into the activities of Dr Roman Hasil, who bungled six tube-tying operations, the Health and Disability Commissioner said that there were problems with hospital management.
Judge Shaw said the Employment Relations Authority had identified an important question as to whether the board was liable for Mr Solomon's actions when he was not authorised to act on its behalf and did not claim to do so.
Mr Solomon's lawyers applied to the court for the case against him to be struck out.
Judge Shaw said that there was no basis to the claim of an employment relationship between Mr Musa and Mr Solomon.
She said there was no tenable cause of action against Mr Solomon for damages for breach of the settlement agreement and in any event, no ability to award damages.
However, she said that the court had jurisdiction to hear a claim for penalty against Mr Solomon for breaching the agreement between Mr Musa and the DHB.
"On the facts as stated the second defendant (Mr Solomon) by reason of his position on the board, was aware of the provisions of the settlement agreement including its requirement of confidentiality but published material in breach of that agreement," Judge Shaw said.
She said that if the pleadings were amended, there would be a tenable cause of action for penalty against Mr Solomon.
- NZPA
