An employment dispute between Kaipara District Council and its former CEO Jack McKerchar has been moved straight to the Employment Court.

KDC is pursuing Mr McKerchar for his handling of the "botched" Mangawhai Community Wastewater Scheme system that was initially estimated to cost $10.8 million, but ended up costing ratepayers about $57 million.

The council filed its case against Mr McKerchar in the Employment Relations Authority and Mr McKerchar launched a counter-claim with the ERA, saying the council breached a deed of settlement between him and the body by releasing it to the media. In a decision released this week the ERA ruled that because the matter was of public interest it should be moved to the higher Employment Court for determination. Normally the ERA would hear such a case and its decision could then be appealed to the Employment Court.

Mr McKerchar was employed by the council as CEO in August 1993 and his last employment agreement - October 1, 2007 - stipulated that it would expire on October 31, 2012. On August 2, 2011, KDC and Mr McKerchar entered into a deed of settlement (the deed) which recorded the terms of an agreement whereby his employment was to terminate prior to the expiry date.


After signing of the deed, the council raised multiple claims against Mr McKerchar. It alleged he had breached terms of his agreement; he had breached his statutory duties under the Local Government Act 2002 and failed to comply with the Local Government (Rating) Act 2002.

Mr McKerchar denied the claims and said the deed was full and final settlement of all matters arising from his employment and it prevented the council from bringing its claims against him. He also alleged the council breached the deed by releasing it to the media and details of it to a member of the public. Mr McKerchar said these breaches caused him loss and damages and is seeking damages for breach of contract, distress and loss of reputation. The council said it was not aware of Mr McKerchar's alleged breaches at the time the deed was entered into, which does not prevent it pursuing claims against him.

ERA member Anna Fitzgibbon said in her ruling that the case was of such a nature and of such urgency - and contained important questions of law - that it is in the public interest that it be moved to the Employment Court.

"The matters between the parties have been the subject of intense media scrutiny. The statement of problem filed by the council includes wide ranging allegations against Mr McKerchar and his alleged failure in his role as CEO to comply with his statutory and contractual duties," Ms Fitzgibbon said.

"These failures allegedly led to, among other things, serious issues concerning the assessment and setting of rates by the council and the withholding of rates by a number of ratepayers in the (Mangawhai) community."