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No quarter given in IPT ruling

IPT Systems has won a legal action in the WA Supreme Court against a former director of the company.

On Monday the Court awarded electronic transaction specialist IPT, the former Nexus Minerals, $800,000 that had been held in trust, potentially ending a dispute over an attempt to spin-off its mining assets.

In April 2001, IPT agreed with the defendants – Quadrant Management Pty Ltd (which had previously provided management services to IPT), Vladimir “Roger” Nikolaenko and Plato Mining Pty Ltd – to transfer IPT’s mining tenements and assets to Newco NL, a company controlled by Quadrant.

Mr Nikolaenko is the managing director of Reefton Mining NL, which is listed on both the ASX and London’s AIM exchange, and the sole director of both Quadrant Management and Plato Mining. He is a former director of IPT and former managing director of Nexus.

IPT paid $800,000 into a trust account overseen by law firm Steinepreis Paganin, acting for Newco. That money included $300,000 to settle a management agreement made in 1999 between IPT and Quadrant that IPT ended, and $500,000 as IPT’s subscription for shares in Newco, which was to become a publicly listed company.

IPT subsequently paid Quadrant $237,000 to settle the management agreement between the companies.

As part of the contract between the parties, Newco was to have become a publicly listed company by February 28 2002. If this did not occur, the agreement was to be terminated and IPT was to receive all the funds held in trust.

On November 15 2001 Quadrant proposed variations to the agreement, none of which was acceptable to IPT on the basis that they were not in the interests of IPT’s shareholders.

According to Justice Graeme Scott: “If, as the defendants contend, their wish is to proceed with the letter agreement, then their conduct has not demonstrated such an intention … the defendants have chosen to sit back and wait in the hope that some of the difficulties which have been en-countered in the course of implementing the transaction will disappear.”

Justice Scott found that IPT was entitled to a full refund of the $800,000 on the basis that the defendants had repudiated their obligations under the contract.

The defendants called only one witness, Bradley Moore – an employee of Quadrant, intended director of Newco and fiance of Mr Nikolaenko’s daughter. Mr Moore is also the chairman of Reefton Mining.

In part, Justice Scott said of Mr Moore: “I am of the view that his evidence should not be accepted in the critical areas of the case”.

Justice Scott said later: “It follows that, despite the protestations made by Mr Moore that the defendants were prepared to carry out the letter agreement if the variations could not be agreed, I do not accept his evidence in this regard. In my view, the evidence makes it clear that the defendants were prepared to put the implementation of the letter agreement on hold until such time as these difficulties were resolved.

“It was, in my opinion, in the interests of Newco to delay proceeding with the letter agreement for as long as possible, and its conduct, as evidenced throughout the course of correspondence from its solicitors to the plaintiff’s solicitors, indicated just such an approach.

“The evidence indicates that from the plaintiff’s point of view the variations were unacceptable, as indeed were the delays, and, as a consequence, the plaintiff decided to terminate the letter agreement. In my view, the plaintiff was entitled to do so.”

The plaintiff’s claim was allowed, and orders were made for the repayment to IPT of the $800,000 held in trust.

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