John Heugh wins litigation against CTP, page-16

Not sure if this has been posted already...

Fun of the west

CBD has often noticed that the fun factor seems to increase the smaller the company, and the further west you head.

So your columnist was eager to hear the story behind Central Petroleum's Supreme Court loss to its former chief John Heugh - who picked up $1.6 million in damages for unfair dismissal.

The court found that Heugh "seriously breached his employment contract by failing to comply with the directions of the board" but held he had "remedied those breaches" - hence the payout.

The judgment details a cloak-and-dagger caper that could have brought Heugh undone.

In February 2012, as the chasm between Heugh and his fellow board members widened over farmout agreements, the Central boss hired Introspec, a Toronto-based firm of corporate investigators and security consultants.

The firm was to check on the bona fides of another Central employee who was being handed farmout duties by the board - cutting Heugh out of the process.

According to the judgment, Heugh criticised the board resolution which handed the farmout responsibilities to his underling saying "we would be the laughing stock of the junior oilfield if news of this clumsy, inappropriate, disruptive and treacherous process is allowed to proceed".

Central argued that Heugh's conduct in procuring Introspec and directing the firm "not to contact any person on behalf of the company apart from Mr Heugh regarding its investigation", paying Introspec $15,000 to conduct the investigation, and "not having the permission of the company to procure investigation on behalf of the company constituted misconduct by Mr Heugh in the course of his employment".

Central said this misconduct "is a lawful ground for termination of Mr Heugh's employment notwithstanding that it was not relied upon by Central at the time it terminated Mr Heugh's employment".

The court found that the Introspec investigation was not a basis for termination because "Central was aware of Mr Heugh having retained Introspec but did not terminate on that ground".

Heugh may face a long wait on his payout if Central launches an appeal, but it might not be a problem if he cashed in his 6 million Central Petroleum shares at the right time.

In March 2012, when Central announced its "changes in key management personnel" - which reported Heugh was surplus to requirements - the shares were worth 26¢ each.

By October, when his replacement Richard Cottee, was doing the farmout deals that the board were eager for, the stock briefly climbed above the 90¢ mark.

That's a quick $4 million gain if Heugh picked his moment correctly.


Read more: http://www.smh.com.au/business/no-s...ick-curtis-20140909-10e4lp.html#ixzz3Ct03OBMC