Ripped
off by a Wellington joint venture partner offering specialised software used in
quantity surveying, a Malaysian-based investor was awarded damages exceeding
$3.3 million.
The High Court ruled John Meroiti with his
spouse Jill missapropriated joint venture funding provided by Rinota Project
Management Services Sdn Bhd, a Malaysia company controlled by a Mr
Tankersley. When Mr Tankersley tried to
regain control of the business Mr Meroiti then duped him by supposedly selling
software programmes he had no authority to sell – the software was part-owned
by Fletcher subsidiary Placemakers.
The High Court was told Mr Tankersley met with
Mr Meroiti in Kuala Lumpur in 2005. He
agreed to assist the Meroitis in developing and licensing use of specialised
software for the building trade. In
anticipation of joint venture details being finalised, Mr Tankersley pledged
$800,000. Funds were to be released
against receipts for expenses incurred by Mr Meroiti. Mr Tankersley became suspicious about the activities
of his fellow investor following a lack of detailed receipts for expenses
claimed. Investigations uncovered a
pattern of missappropriations. Out of
$956,900 advanced by the end of 2005, an
investigative accountant found at least $697,000 had not been used for joint
venture purposes. Some funds had been
used personally by Mr & Mrs Meroiti, other funds had been ploughed into
their purchase of a property called Lindale Lodge. To bring Mr Meroiti to account, Mr Tankersley
negotiated a formal agreement with Mr Meroiti for the transfer of intellectual
property rights in the software to a joint venture company in which he held a
49 per cent stake. As part of this
agreement Mr Tankersley agreed to pay two million dollars, with credit for the
$956,900 already advanced. He was later
to learn that Mr Meroiti did not have sole ownership of the software and had no
authority to transfer it to their joint venture company. He sued.
When Mr & Mrs Meroiti did not respond to High Court orders freezing
assets and requiring bank statements to to be handed over, the court issued an
“unless order”: they were barred from defending Mr Tankersley’s claim unless
they complied. Following their failure to
comply, judgment in favour of Mr Tankersley and Rinota Project was given after
formal proof of their claim.
Justice Brown ordered Mr & Mrs Meroiti pay
$697,000 for breach of fiduciary duty in respect of the missappropriated funds,
Mr Meroiti pay $1.35 million for misrepresentation as regards ownership of the
software plus a total of $1.27 million in court-ordered interest.
Tankersley
v. Meroiti – High Court (9.06.15)
15.064