City of Newcastle will pay former employee Jill Gaynor more than $145,000 after the two parties settled her unfair dismissal case.
Supreme Court orders arising from the out-of-court settlement dismissed a council appeal against a District Court ruling last year that chief executive officer Jeremy Bath had invalidly terminated Ms Gaynor's employment contract in 2018.
The court orders upheld one aspect of the council's appeal pertaining to the District Court's assessment of damages, reducing Ms Gaynor's payout to 38 weeks' pay and superannuation.
Acting District Court Judge James Curtis had ruled that Ms Gaynor was entitled to the final 46 weeks' pay of her five-year contract plus annual and long service leave.
The Supreme Court orders say Ms Gaynor and the council must pay their own legal costs accrued during the appeal, but the council must pay Ms Gaynor's legal costs from the original District Court proceedings.
The council says all the legal costs for which it is liable are covered by insurance.
The council and Ms Gaynor reached the settlement on the eve of a council appeal in the Supreme Court on Tuesday after Judge Curtis found in Ms Gaynor's favour in September.
Judge Curtis ruled that Mr Bath was "plainly wrong" in his reasons for dismissing Ms Gaynor over her handling of the city's business levy scheme.
The judge's ruling raised questions over the council's rationale for reviewing its business improvement associations and excluding Newcastle Now from the scheme.
Mr Bath cut off money to Newcastle Now, the city's largest BIA, in July 2018, claiming it had not been submitting business plans as required under the terms of its 2011 funding deed.
The council then engaged a consultant, Centium Group, to investigate Newcastle Now's funding, which led to the sacking of Ms Gaynor, a corporate and community planning manager, and economic development facilitator Greg Fenwick.
The council said the Centium report had been "prompted by the discovery that around $7 million has been paid to Newcastle Now without a business plan submitted or approved".
The council then restructured the BIA scheme, excluding Newcastle Now and Hamilton Chamber of Commerce from applying for funding, after another report by consultants AECOM referred to "poor financial disclosure relating to BIAs".
But Judge Curtis said Newcastle Now had submitted adequate business plans from 2012 to 2017 and it was "wrong of Mr Bath to suggest otherwise".
Mr Bath had also been "plainly wrong" in accusing Ms Gaynor of wrongfully approving Newcastle Now money be spent on Nobbys Lighthouse.
Judge Curtis also took issue with the Centium report, which had found Newcastle Now's financial reporting was in breach of its agreement.
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The council's Supreme Court notice of appeal argued that Judge Curtis had erred in finding that the council had repudiated Ms Gaynor's contract, had erred in finding that it had done so invalidly and had erred in finding that Ms Gaynor had not been neglectful in the discharge of her duties.
The notice of appeal also argued that Judge Curtis had failed to provide reasons or adequate reasons for reaching those three findings.
But the Supreme Court orders arising from the out-of-court settlement dismissed these aspects of the council appeal, leaving intact Judge Curtis' original judgement on these matters and the rationale behind them.
The Supreme Court orders upheld the section of the council appeal that argued Judge Curtis had erred in awarding Ms Gaynor 46 weeks' pay because the council, had it not repudiated her contract, had a lawful right to terminate her employment with 38 weeks' notice or a 38-week payout.
The council must pay Ms Gaynor $133,925 in salary less withheld tax plus $12,723.42 in superannuation.
Ms Gaynor said she was "glad there has been some resolution".
"I'm very thankful to my legal team, thankful for the messages of support I received from people," she said.
A City of Newcastle spokesperson said the Supreme Court had "confirmed CN had a lawful right to terminate Ms Gaynor's employment and reduced the damages payable to her".
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