TripAdvisor still advertises glowing testimonials from tourists enjoying views from Rotorua Observer’s tethered helium balloon. The testimonials are dated 2017, the year the fledging business fell over; leaving investors fighting over a $968,000 insurance payout for a damaged balloon, all that is left after Kiwi Rider collapsed within months of setting flight.
Thomas Kaminski was the driving force behind Kiwi Rider Ltd. Evidence before the High Court painted a picture of an entrepreneur whose enthusiasm outran his competence.
With no money and interest garnered from viewing tethered balloon tourist attractions published on the internet, Mr Kaminski set about promoting a similar operation in Rotorua while at the same time talking up the prospect of expanding to Queenstown and into Australia.
Investors put in $1.74 million. Mr Kaminski provided no cash. The Rotorua project failed. Set up costs exceeded budget. In its three months of operation, sales amounted to just over $50,000. Failure to ensure all balloon fittings were made of stainless steel meant potential gear failure from Rotorua’s sulphurous atmosphere. The balloon purchased was damaged in a storm.
Three investors with a less than four per cent stake in the venture walked away, writing off their investment. Five original investors successfully sued Mr Kaminski under the Fair Trading Act, alleging they were misled as to his expertise and the project’s potential profitability. Mr Kaminski was ordered to repay their $750,000 investment.
The High Court was told of Mr Kaminski’s aggressive negotiations with overseas balloon suppliers, implying if they did not act quickly they would miss out. One French supplier responded with what proved to be prescient advice as to the type of balloon needed for New Zealand conditions, backed up with financial data detailing passenger loadings possible in various wind strengths for different balloon sizes. Mr Kaminski opted for a smaller and cheaper US product.
Start date for operations was pushed back several months when Mr Kaminski discovered preferred central Rotorua launch sites were unavailable; the tethered balloon would encroach on air space reserved for aircraft.
The project foundered when their balloon suffered storm damage. All that was left was an insurance payout.
Justice Walker ruled Mr Kaminski made misleading and deceptive representations at an investors’ meeting in February 2016.
His claim to have conducted extensive research was palpably misleading and deceptive, Justice Walker said. When formulating his business plan, Mr Kaminski’s research apparently went no further than trawling internet sites and associated media.
A claim to wide experience in adventure tourism having ‘worked alongside’ AJ Hackett’s bungy-jumping operations amounted to little more than involvement in a video production company filming customers’ jumps.
While financial predictions for a proposed business are not usually representations of fact and therefore not covered by the Fair Trading Act, Justice Walker ruled they were in the instance caught by the Act because of Mr Kaminski’s claim to have undertaken detailed research such that there was a sound basis for his predictions.
The court was told Mr Kaminski has a 27.5 per cent shareholding in the company. He stands to receive the largest individual payout from the company’s insurance proceeds when Kiwi Rider Ltd is liquidated. Investors are looking to recover some of their $750,000 losses from his share.
A smaller number of investors who also sued were unsuccessful. They did not attend the February 2016 investors meeting, putting money into the project at a later date.
Clyma v. Kaminski – High Court (30.10.23)
23.184