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Theft from workplace results in jail time for former employee

11 August 2014



James Watchorn stole his former employer’s 'secret recipes' for locating oil. He is now going to jail for 30 months and has also been ordered to pay $77,567. This case, the first of its kind and therefore decided in the absence of similar case law, has been a landmark decision by the Courts.

Concurrent cases were brought against James Watchorn, Canadian 42 year old, in the Employment Relations Authority and the District Court.

Watchorn illegally downloaded over 350,000 files containing Tag Oil Ltd’s successful “secret recipes” for locating oil and gas fields before leaving to work for Tag’s direct competitor, New Zealand Energy Corp.

The material stolen by Watchorn would equate to the height of 40 Auckland Sky Towers if it was printed and stacked up. Andrew Cadenhead, chief operating officer of Tag Oil, told the ERA that the oil and gas industry was fiercely competitive and the geotechnical information stolen would be of incalculable value to a competitor such as NZEC.

Susan Hughes QC, counsel for the defendant, asserted that Cadenhead’s claims as to the detrimental effect of the theft on Tag Oil were “unsupported by anything at all” and that there was no evidential basis for the claim of a $7 million loss.

Cadenhead conceded that any damage caused by a leak of information would take years to become apparent.

However, the ERA held that the severity of Watchorn’s actions were such that despite the absence of quantifiable damage, Tag Oil’s claims of detriment were accepted.

Watchorn claimed that he did not know the TAG Oil files he worked on during his employment were his employer’s property. The ERA found that it was not credible for someone who has spent nearly 20 years in a competitive industry to have such a level of ignorance.

The Authority Member ruled that Mr Watchorn was "deceptive" and his actions breached contract including his employment agreement obligations to carry out his employment responsibilities “honestly and diligently” and not to take “any actions at any time which are intended or likely to adversely affect the business or reputation of the employer”. Although it could not be shown that Watchorn had disseminated the information in any way, the Authority Member held that the taking of the information amounted to “significant offending” in and of itself.

The Employment Relations Authority awarded the remedy of $65,567 special damages to be paid by Watchorn to Tag Oil. Additionally, a $12,000 penalty was imposed, half of which to be paid to the Crown and half to Tag Oil.

The criminal jurisdiction of the New Plymouth District Court found Watchorn guilty of three counts of accessing a computer for the dishonest purposes of stealing Tag Oil’s geotechnical data from the company’s computer and imposed the penalty of 30 months imprisonment.

This decision illuminates a key point for employers and employees alike to note.  Although issues may arise in the Employment context, wrong-doers can be liable for both sizeable fines and criminal sanctions.

In addition to legal ramifications, other consequences arise from the actions of individuals like Watchorn. He is now unemployed and will be unlikely to secure work in New Zealand.

Cullen - The Employment Law Firm was one of the first eleven law firms in New Zealand approved to provide employment law services to Government and the public sector.

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