NZ company denies $600k wage claim

File photo / NZ Herald

A New Zealand company being taken to court over hundreds of thousands of dollars allegedly owed to some Australian workers believes the claim is without merit.

The Australian Fair Work Ombudsman has started legal action in the High Court in New Zealand against New Image International Ltd, the parent company of Omegatrend International Pty Ltd.

It's the first time the Australian regulator has taken action outside Australia.

Omegatrend, a direct-marketing company selling health food products, went into liquidation in mid-2007 owing 14 of its Perth-based marketing and administration staff more than $600,000 in unpaid entitlements, Fair Work Ombudsman executive director Michael Campbell said.

The decision to pursue the company showed the lengths the agency would go to for "wage justice", he said.

New Image International was associated with the New Image Group, which is listed on the New Zealand Stock Exchange.

New Image Group deputy chairman Alan Stewart said in a statement today shareholders were aware of the ongoing nature of the dispute and the company had again signalled in its 2010 annual report it did not believe the claim "is with foundation and no provision has been made".

New Image International closed its Perth Omegatrend office in January, 2007 making its staff redundant. It had agreed to pay Omegatrend employees their entitlements in fortnightly instalments, but wrote to them in April, 2007, to advise that no further payments would be made, Mr Campbell said.

The workers pursued their outstanding entitlements by going to the Western Australia Supreme Court, which appointed Ferrier Hodgson as liquidator to investigate Omegatrend's affairs.

The Ombudsman decided to support the employees and the liquidator to look into the circumstances of New Image International's purchase of Omegatrend's assets.

Mr Campbell said it hoped to secure court orders that would allow the liquidator of Omegatrend to examine documents and to interview New Image International founder and executive chairman Graeme Clegg and other current and former directors and employees.

"In particular, the liquidator is investigating the circumstances relevant to the purchase by New Image International of Omegatrend's assets for an amount that appears to have been below the market value of the assets," he said.

"It is believed that the sale of the assets left Omegatrend with no means to meet its commitments or earn further income," he added.

New Image said it was disappointed the Ombudsman has gone to the media ahead of a planned legal meeting in Auckland this week.

The closed door chambers hearing had been arranged to clarify the facts around the financial affairs of Omegatrend International while under New Image Group ownership, Mr Stewart said.

New Image had been cooperating with the Omegatrend liquidator's legal counsel in the lead-up to the planned meeting.

"The matter has been a protracted affair since New Image bought Omegatrend from an insolvency accounting firm and discovered subsequently the full extent of its financial problems."

Because it was a complex dispute New Image said it wouldn't make any further comment until the matter had been dealt with legally.

- NZPA