Investors
backing the Chrisco Hamper business looked to have fallen out with allegations of
secret side deals surfacing in litigation between investors. One investor being sued claims he was fired
as director of an associated company to keep hidden from him details of an out
of court settlement which might affect how much he owes.
Chrisco Hamper
attracted adverse publicity in February 2012 with fines of $175,000 for
breaches of the Fair Trading Act after misleading customers about their
cancellation rights when paying for Christmas hampers on layby.
Behind the scenes
there has been a long-running dispute between investors over the operation of
Chrisco’s finance company: Hopscotch Money Ltd.
This reached boiling point in April 2008 when ASB Bank pulled funding to
Hopscotch investors Opus Fintek Ltd and Fibroin Initiatives Ltd; funding guaranteed
in part by a Gregory and Robert Symons on one side and an Alan Wiltshire on the
other.
The court was told
that interests associated with Mr Wiltshire repaid ASB and in return took over
all the bank’s rights under its security documents and guarantees.
When Mr Wiltshire gave
notice that the Symons owed some $3.5 million as their share of the ASB debt,
the Symons demanded details as to how this figure was calculated. There was evidence that interests associated
with Mr Wiltshire had extracted funds exceeding one million dollars from a Chrisco
subsidiary in an out of court settlement.
The Symons demanded to see the settlement terms arguing it could affect
how much they would have owed to ASB. They were told it was confidential. To ensure he did not learn of the details, Gregory
Symons was removed as director of an Opus Fintek subsidiary prior its board agreeing
to the settlement.
Wiltshire interests used
rights assigned from ASB to sue the Symons, claiming some $1.9 million in High
Court summary judgment proceedings. The
beauty of summary judgment proceedings is that there is no contested court
hearing provided the claim is for a fixed amount and the defendant has no
possible defence.
The Symons stated they
might have a defence to all or part of the money claimed; they needed to see
details of the secret out of court settlement.
They said Wiltshire may not have disclosed all the money received.
Wiltshire interests
said terms of the out of court settlement were not relevant to the amount owed
by the Symons and need not be disclosed.
The Supreme Court
expressed disquiet about the haphazard way in which Wiltshire interests had
progressively reduced how much they claimed from the Symons and agreed that excessive
secrecy about the out of court settlement and benefits received under it raised
suspicions. The court said this shadowy
impression might be unfair to the Wiltshire interests, but they had only themselves
to blame. In the circumstances, they
should have disclosed the agreement.
Summary judgment was refused. It
was for Wiltshire interests to prove the Symons had no arguable defence and
they had failed to do so by not disclosing the agreement.
Symons
v. Wiltshire Investments – Supreme Court (9.08.12)
12.027