THE boss of Vegas Enterprises, the operating name of international surfwear brand Rusty, planned to kick back and enjoy a well-earned beer after a positive judgment in an 18-month court battle with a former friend and employee.
Geoff Backshall said he was “stoked” at the decision from Federal Court Justice Michael Barker to dismiss the lawsuit brought against him and fellow director Rod Hart by former in-house legal adviser and surf buddy, Philip Clifford.
“Stoked to have this behind us,” Mr Backshall told WA Business News. “I’m going to have a beer.”
Mr Clifford filed the lawsuit against Messrs Backshall and Hart in February last year alleging misleading and deceptive conduct in breach of the Trade Practices Act and Fair Trading Act.
Mr Clifford alleged that he had been deceived into investing more than $2.3 million into Vegas in 2006, in exchange for an 8 per cent stake in the company, after first coming in contact with the company in 1986.
According to the judgment papers, Mr Clifford was the sole lawyer providing legal advice to Vegas and its associated companies for 17 years, apart from some small law firms advising on minor debt collection and leasing work, up until April 2008.
However, Mr Clifford told the court he would not have made the investment if he had been adequately informed (by Messrs Backshall and Hart) about Vegas’ failure to meet budgeted sales targets and significant increases to lending facilities.
“I thought it was pretty easy for him to bring that sort of action, being his background,” Mr Backshall explained.
“I’m just disappointed that this is the path it went down as it’s been a huge distraction for myself and the other senior guys in the company.”
Mr Backshall said what compounded matters, beyond having a former acquaintance take him to court, was the timing of the court case coinciding with a capital raising Vegas was undertaking in 2008.
“It came out of left field for us,” he said.
“To say that it was a distraction, that we had to deal with that (the case) in the middle of a capital raising, is a big understatement ... and the havoc that it caused.”
Mr Clifford will also have to pay his opponents’ legal costs after Justice Barker rejected requests from his lawyer to discount court costs after suggesting the “matter could have been run by one set of solicitors”.
“It’s good to have the company completely vindicated,” Mr Backshall said.
