NSW Company Fraud by Your Business Partner - What to Do?

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John55555

Member
11 August 2017
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0
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Good morning everyone,

Just a quick rundown of my situation.

About a year and a half ago, I moved from a different state to set up a dental clinic with my long time good friend. Due to the situation, I was really only given a very short period of time to consider the offer and did not have the time to do things more thoroughly. We have a heads of agreement email that we both have not signed but we have verbally agreed upon. I have been sent an official partnership contract (standard template shareholder’s agreement purchased from ‘cleardocs) that has not been signed by either party.

It is operating as a unit trust with each of us having a 50/50 stake-hold. I have found out recently that the dental chairs and some other equipment "I have bought" have been allocated to other surgeries I am not a party to. The equipment that is my surgery is much older and of a much lesser value.

The proof I have gathered are as follows:

1. The serial numbers and model year on my equipment do not match up with the invoices I have been given. In fact they match up with other equipment else where.

2. The invoice I have got direct from the supplier has the equipment being delivered elsewhere.

3. The main invoice I have been given by my partner prior to me agreeing on our partnership seems to have been fabricated as the same invoice with the same invoice number from the supplier is different.

4. One of the equipment needed major maintenance earlier in the year. My partner said it was covered under warranty. I have invoice and receipt stating that it was paid with his credit card associated with one of his other practices.

This is only the major equipment; I have not even gone through the small things as it will be hard to verify and would be extremely time consuming.

I have lost complete trust and obviously would like to move on from this partnership. It is really hard to value a practice that is just over a year old. My ideal outcome is to get my money back, with a bit of interest, some relocation/legal costs and my full commission for the year and a half. Even with all of that I would have taken a pay cut to be in this enterprise.

I know I need to see a lawyer, but I was wondering what my legal recourse was? Also is there a specific way I should be gathering information? A lot of the evidence I have are in Slack and Email conversations. However they are owned and controlled by my business partner. Are screenshots of Slack messages admissible?

Thank you.
 

Rod

Lawyer
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27 May 2014
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1. what my legal recourse was? 2. Also is there a specific way I should be gathering information? 3. Are screenshots of Slack messages admissible?

1. A lawyer needs to read your trust agreement and emails around setting up the trust, plus ongoing emails discussing how the business is to operate.
2. Carefully and thoroughly ;) Get hold of as many original documents as you can. Copies will work, but originals are better.
3. Yes. I have never used slack. I'd imagine though there's a way of copying messages to a PC and printing from the PC.

I don't like the chances of you getting your ideal outcome unless you have proof your partner was intending to cheat you from the very beginning. Otherwise your only claim is likely to be limited to fraudulent use of funds and financial advantage by deception. Not every action is claimable in court. Do business with a shyster and you'll lose something nearly every time.

Alternative is sell the business or assets, split proceeds 50:50 as per trust and walk away with a costly lesson. If the other party doesn't want to sell then you may need a court order to wind up the business. Not sure if NCAT can do this, might be worthwhile checking their powers.
 

John55555

Member
11 August 2017
2
0
1
I do not think my business partner will want to sell as he has expansion plans and has a brand to protect. I do realise that my ideal situation may be out of reach but hopefully I can have something close to it, although this is probably wishful thinking.

Thank you so much for the advice Rod, I will definitely look into the few things you have mentioned.