News
Jada Loutoo
THE High Court has ruled that The Surgical Specialist Centre Ltd wrongfully dismissed its former managing director, Elizabeth Kelly, but also ordered her to repay more than $215,000 to the company for unauthorised payments.
In a recent judgment delivered by Justice Jacqueline Wilson, the court found that while Kelly must reimburse the company for sums she conceded were improperly taken from its accounts, the centre failed to prove that she breached her fiduciary duties as a director, rendering her dismissal unjustified.
The claim arose after the breakdown of the personal and business relationship between Kelly and Dr Alan de Freitas, a director and shareholder of the medical facility. The Surgical Specialist Centre alleged Kelly misappropriated company funds, made unauthorised payments and breached her fiduciary obligations, leading to her termination in November 2022. Kelly accepted responsibility for several disputed transactions but counterclaimed that her dismissal was wrongful and sought damages.
The court heard that the company was incorporated in June 2016, with de Freitas and Kelly as equal shareholders and directors, and began operations in 2018 after acquiring a private medical business. Its operations were financed through multiple bank loans, including a major loan from an investment company, which governed salary arrangements and certain financial controls.
Justice Wilson found that the company’s financial arrangements, particularly concerning the payment of personal and household expenses from company accounts, were informal, loosely defined and applied inconsistently to both principals.
As a result, the court concluded that the claimant failed to establish a breach of fiduciary duty by Kelly and that the loss of trust cited by the company did not justify her summary dismissal.
“Both parties have admitted to using company funds for personal expenses,” the judge said, noting that the lack of clarity and consistency in the financial arrangements had to be resolved in Kelly’s favour.
“There was no written contract of employment between the claimant and the defendant, and the question whether there was a breach of contract, for which the defendant is entitled to damages, must be determined on the facts of the case,” the judge said.
She added, “In the circumstances and having regard to the undefined scope of the personal expenses for which the claimant was liable, the overall flexibility in the financial arrangements and the inconsistency in their application, I have concluded that the claimant has failed to establish that the defendant has acted in breach of her fiduciary duty.
“The lack of clarity in the claimant’s financial arrangements or consistency in their application must be resolved in the defendant’s favour.
“Her dismissal was, therefore, unjustified, and she is entitled to damages for breach of contract.”
On damages, the judge determined that Kelly, who earned a monthly salary of $20,000, was entitled to six months’ notice, awarding her $120,000 for wrongful dismissal. That amount is to be deducted from the $215,724.05 she agreed to repay to the company.
The court ordered Kelly to pay the company $215,724.05 and prescribed costs of $41,358. The Surgical Specialist Centre was also ordered to pay Kelly $120,000 in damages and prescribed costs of $27,000 on her counterclaim.
Naline Sharma and Andrea Goddard represented Surgical Specialist Ltd while Jean Louis Kelly and Natalie King represented Kelly.
