The Parnell Lawn Tennis Club has eight courts, a bar and a few unhappy members. Photo / Jason Oxenham
Accusations of defamation following the unauthorised distribution of a controversial report that looked into, among other matters, a Soul Bar long lunch, have rocked the Parnell Lawn Tennis Club. George Block investigates.
A year of accusation and recrimination at the country’s oldest tennis club has culminated in an employment settlement worth tens of thousands of dollars with a former manager.
The dispute, arising from contested allegations against a former manager, has driven a wedge between members of the club. It last year celebrated its 150th anniversary and is a social hub in the affluent suburb of Parnell.
Factions on opposing sides of the stoush are not speaking to each other at evening tennis matches.
The legal fees from the convoluted case, totalling almost $60,000, have pushed the club’s accounts into the red for the first time in years.
And the saga is not over yet, with threats of legal action still circling from the leak of a controversial report into the club’s management and finances.
The Herald has obtained that report and other club minutes and correspondence shedding light on its tumultuous year.
The report, since retracted by its forensic accountant author, is at the centre of the conflict.
Because the report was retracted by its author, a chartered accountant with decades of experience who is a certified fraud examiner, the Herald has chosen not to republish most of the specific findings and conclusions.
Among the various matters it canvassed, the report looked into a long lunch at swanky viaduct restaurant Soul Bar paid for by a club staff member and attended by a company that was later contracted by the club, along with various aspects of the club’s finances. There is no suggestion of any accusations of wrongdoing by that company.
If proven, the conclusions of the retracted report may have had tax implications for the club. In response to queries from the Herald, the club said it was not aware of any “material financial loss” during the tenure of the former manager and, to the best of its knowledge, all tax obligations had been fulfilled.
In 2021, questions began to be asked about aspects of the club’s management and finances.
The manager at the time had served in the paid position since 2013 and was a club stalwart. He had a broad remit encompassing the bar, coaching and entertainment and enjoyed a high level of autonomy.
Late in 2021, the incoming club committee appointed a Finance, Audit and Risk sub-committee.
They were able to get into the books, MYOB and bank accounts in February 2022.
The manager later resigned.
In May, the club’s president instructed a law firm to undertake a review of its management and the conduct of its affairs.
A forensic accountant was appointed to help in that review and report to the law firm. His report, based on a review of the club’s records, contained a range of findings and made broad conclusions about the way the club had been run.
In mid-July 2022, the law firm undertaking the review sent the forensic accountant’s report to the committee. The club secretary asked the lawyer for an assurance the report could be sent to members and that it was not potentially defamatory or violating the privacy of the manager.
The lawyer agreed it would be fine for members to come into the clubrooms and read the report.
However, there was pushback from some in the club worried the report could be damaging if it found its way from members to the wider public.
The committee eventually voted to allow financial senior members to read a hard copy of the report by appointment.
At some point, someone went ahead and sent the report to about half the club’s total members without the approval of the committee.
All hell broke loose.
The manager, several months after his resignation, threatened legal action against the club and eventually brought an employment case.
In August 2022, the committee voted unanimously to ban the former manager from the club with immediate effect.
The same month, the committee sought the advice of a defamation lawyer, an employment lawyer and a “review group” made up of three long-standing senior club members, according to a recent email to members by current club president Graeme Fraser.
The review group undertook its own “financial and legal analysis” before presenting their conclusion to the committee, Fraser said.
“Ultimately, based on the analysis and conclusions of the review group, the committee considered there was no evidence of any material financial loss to the club, that most of the allegations or inferences outlined in the forensic accountant’s report were unsubstantiated or wrong and that it failed to provide an accurate and balanced conclusion,” his email said.
“In response to the additional information provided to him by the Review Group, the forensic accountant retracted his report and refunded the club the fee for its preparation.”
The accountant declined to comment in response to questions from the Herald. Neither he nor the club would address questions as to what specific allegations or conclusions in the report were disputed.
Fraser said in his email the club entered into mediation with the former manager because it was viewed as the most pragmatic and cost-effective approach for the club. He did not specify the amount of the settlement but it is understood to exceed $20,000, not including the club’s legal fees.
He floated the idea of further legal action against the individual who “leaked” the forensic accountant’s report and urged members to move on.
“As the settlement was a legally binding and final resolution of all matters, further speculation and comments regarding any of the now retracted allegations puts the club and individuals at risk of legal action.
“Ongoing criticisms are not in the best interests of the club and, in our opinion, reflect badly on members.”
Fraser described the unauthorised release of the report as a “gross breach” of club confidentiality.
“This was not a case of ‘transparency’ or ‘whistle-blowing’; the person(s) involved violated committee responsibility and did not act in the best interests of our club. Should sufficient evidence be accumulated, the committee will investigate recovering the club’s costs from those involved.”
The legal costs had resulted in an operational deficit for the club for the first time in a decade, Fraser said.
“We have all been through a lot after the previous 12 months and appreciate it hasn’t been an easy time for the club.
“The experience has left a lasting impression on all involved and for its part the committee accepts that some areas could have been addressed differently; however, we remain comfortable that the outcome achieved was the best for the club given the situation we found ourselves in.”
In response to questions from the Herald, Fraser said in a statement the club concluded that most of the allegations in the forensic accountant’s report were unsubstantiated or wrong and the conclusions were inaccurate and unbalanced.
The statement did not specify which specific allegations were wrong.
He said the club was not aware of any material financial loss during the tenure of the former manager, and, to the best of its knowledge, all tax obligations had been fulfilled.
“The unauthorised leaking of false and defamatory statements concerning the club has been difficult, and unfair to the majority of club members. However, we believe that the club is in a healthy position.”
The Herald contacted the former manager of the club and asked whether he believed he had been fairly treated and to seek his response to specific allegations. He said he was unable to comment.
“The fact that the report is withdrawn and the money refunded tells you everything you need to know.”
He confirmed he remained a full financial member of the club.
George Block is an Auckland-based reporter with a focus on police, the courts, prisons and defence. He joined the Herald in 2022 and has previously worked at Stuff in Auckland and the Otago Daily Times in Dunedin.
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