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‘Building company must pay $300,000 for misleading former general manager’– The Australian Financial Review

By Alan J. McDonald


Senior insurance worker wins over $300k in compensation as a result of misleading representation. McDonald Murholme Senior Associate Trent Hancock comments it is a reminder not to make empty promises, or embellish the success of a business to entice a new recruit.

See below article for further details.

Building company must pay $300,000 for misleading former general manager

The former general manager of a builder was awarded $350,000 compensation after her employer enticed her to take the job by misrepresenting her potential share in the business’ profits.

Justice Mordecai Bromberg of the Federal Court found that Svetlana Rakic, the former general manager of insurance builder Johns Lyng Insurance Building Solutions, was misled by the company.

According to the judge’s ruling, Ms Rakic was offered a base salary of around $100,000 less than her previous employer, but was told this amount would be offset by her receipt of a 2.5 per cent share in the business’ profits.

Justice Bromberg found the company concealed from Ms Rakic the likelihood that its revenue in 2012-13 was likely to be millions of dollars less than the projected sales and profits conveyed to her.

Rather than sue for breach of contract or under unfair dismissal laws, Ms Rakic sought damages under the Australian Consumer Laws claiming Johns Lyng engaged in misleading and deceptive conduct in trade and commerce.

Justice Bromberg found the company wrongfully claimed it was likely to beat its profits and sales in the previous two years and would remain profitable. The financial distress was foreseen by the company, including in reports by its executives, and recorded in its board minutes, Justice Bromberg said.

Ms Rakic’s lawyer, McDonald Murholme, senior associate with Trent Hancock, said there were few successful claims under consumer law, certainly of this magnitude in payout.

“It is a reminder to employers to be careful to provide accurate information to applicants and not to make promises they can’t fulfil, or embellish the success of a business to entice a new recruit,” he said.

Ms Rakic claimed that there was oral agreement for the company to make the payments for the lease of her vehicle, but the judge found the company had no responsibility for the car.

Reference: ‘Building company must pay $300,000 for misleading former general manager’, The Australian Financial Review, 28th April, 2016.