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QLD Wholesale Agreement and Letter of Demand - Legal Owner of Goods?

Discussion in 'Commercial Law Forum' started by Meg000, 11 March 2015.

  1. Meg000

    Meg000 Active Member

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    Company A - has a Wholesale Agreement from the Australian Licensee of a Product. Company A is a registered Company with two directors Mr X and Ms Z and they each own 50% of the business.

    Mr X and Ms Z went about setting up a Business that sold an exclusive product. Ms Z had been in a similar business overseas and when Mr X heard about her knowledge, and did his homework on the product he felt that it was a very lucrative business to get involved in. But without the expertise of Ms Z it would be impossible for him to figure out what to do next.

    So, to get Ms Z to help him Mr X invited her to become a 50/50 partner. He was happy to invest 100% of the money in the business for stock and that was the scope of his input until later when he makes a few sales of the product that they had the Wholesale rights to sell.

    Ms Z has at the behest of Mr X built a website with shopping cart of over 90 pages. She has also done the all the graphics etc for the business stationary, advertising, media placement, SEO etc for the website and administered the business from her home office. She has purchased from her own money software to keep the book and even submitted the BAS etc to the ATO. She has used and paid for many resources that the business has used and spent 6 months working exclusively for the business with no financial compensation because Mr X promised her that once the business started to operate and money was coming in from sales she would be guaranteed at least $1000 per week as a 50% Owner.

    6 months have gone by and a few sales have been made, there is over $30k in the business bank account and one day, Mr X decides to raid the account and transfer the money to another of his business interests. (Company B)

    He then accuses Ms Z of being untrustworthy and makes that his excuse for transferring the money which was proceeds of sales from the business of Company A. He also states that he wants out of the business partnership.

    Ms Z is only too happy to finish the business relationship... and tells Mr X that he needs to make a settlement for the work and time that Ms Z has contributed to the business. Ms Z says to Mr X, that she had an agreement with Mr X in Company A and she wants compensation for all the work she has done for the business (during this time she has exclusively worked for Company A) Mr X was demanding of her time which meant she had no time to do anything else and she had let her own business run down as the business with Company A, could have been a lucrative business.

    Mr X promises payment of $20k to Ms Z for the website. But it is the belief of Ms Z that he only said this in order to get all of the stock that was in her possession back. Ms Z threatened Mr Z that she would retain some stock to the value of the money she was promised until she was paid.

    A few days later Mr X goes to a solicitor and started legal proceedings, but the legal proceedings are being drawn up with Company B as the Plaintiff. Company B has had nothing to do with this business from the start.

    In between Ms Z having received a letter of demand from the solicitor, thought that it would be easier to just take the loss and give back all the stock to Mr X so she arranged for him to pick up the stock.

    Mr X, said that he had not received all the stock and continued in his legal action.

    In regard to the legal action Mr X has instructed his solicitor and the court that Company B owns the stock. Ms Z believes that this is wrong... but it seems that no matter how many times she has told the solicitor that the stock belongs to Company A, he still wants to continue with Company B as the Plaintiff.

    The stock cost $18k but Mr X has no paperwork that can substantiate his claim. He is going on memory and there is no paper trail. At this point it is a situation of his word against hers. He has also told the Solicitor to get the full retail value of the stock. $38k to date there have been three different figures given to Ms Z as to the value of the goods.

    Ms Z has all the necessary evidence to show that Company A is the legal owner of the stock. She has said in her defence statement that she doesn't have the stock and that it was a threat she made, but after the escalation to a legal situation she thought better of the threat and gave the stock back. But the Solicitor doesn't seem to read English and has 'deemed everything as admitted'. He has also negated the counterclaim stating that it doesn't articulate a claim against the Plaintiff.

    It is obvious that the solicitor is being told a pack of porkies and Ms Z doesn't know what to do anymore. She wants her day in court, but this last Answer from the plaintiff (which should have been submitted 14 days after the filing of the defense and counterclaim) came 6 weeks later, well outside the time limits

    The Plaintiff has done nothing confuse the situation with the fact that they have shifted Company A's assets to Company B so to enhance their fraudulent claim and to negate the claim of Ms Z for compensation for her part in setting up the business which is ongoing.

    Any thoughts??

    Note: This situation has left Ms Z in debt and unable to pay for any legal help. Legal aid won't help, and no solicitor will work on a no win no fee... (She is being sued for $38k (retail price of the stock) Her counter claim is for $70k which is a reasonable price for her services over the 6 months)
     
  2. Ivy

    Ivy Well-Known Member

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    Hi Meg,

    On this website we provide guidance and helpful suggestions to people facing legal difficulties however no information here is a replacement for legal advice. I am sorry to hear that you are in a difficult situation. However given the complexity of the facts in your current situation and the various laws that are in play here, I strongly suggest that you find a way to seek legal representation.

    You can call solicitors offices and ask them about their fees and when payment would be due. In particular, you can ask them if they will accept payment at the conclusion of the settlement or whether they have a mandatory upfront amount and how much that would be.

    The solicitor of your ex-business partner has a duty of care and responsibility towards his/her client only and will be trying to get the best possible outcome for their client. They are not an independent mediator and it is not their job to listen to or heed your side of the story. This is why you need a solicitor who can help you negotiate and come to a settlement- there is strong chance that it will be better for you financially if you can reach a settlement out of court however your solicitor can provide specific advice on this as well.

    I hope this helps.
     
  3. Rod

    Rod Well-Known Member

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    Has a case been filed at court? If so, contact the court.

    If not, Ms Z can initiate her own action. With a bit of research it is not very hard to do.
     
  4. Meg000

    Meg000 Active Member

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    Hi Ivy,

    Thank you for your answer, it is as you say a complex matter.

    I have had spoken with a litigator briefly with the facts of the case and they are quoting an enormous amount of money to take this to a satisfactory solution. However, as I was told by the solicitor they would expect that this could cost me in round about sums approximately $20K and the fact that the Mr X has shifted (albeit illegally according to ASIC) the cash and the stock that was in the business valued at over $100k to his other Company "B" which I have no stake in. Even if I were successful in my claim I would be claiming from a shelf company with no assets or cash. More loss than I can envisage I am afraid.

    However, my problem is not that I lost 6 months income from my own business (because I was otherwise engaged and of the belief that I would get the income later rather than sooner) and that I was plunged into serious debt because of it. Not to forget that I was working 12 hour + days which I will never get back - I am resigned to the fact that I will have to treat this as a lesson (an expensive one) and learn never trust anyone ever again. But now what my biggest fear is that the solicitor is going to outwit me; yes, I am intelligent enough to figure it out and I have the capability of doing the legals myself but I am not a qualified lawyer (because I don't know how to deal with the legal administration required to fight this). That this will end up me paying for $38k+ of the stock that I don't have, and I can't prove that I don't have it... other than ask them to come look at my home?
    I thought the onus was on him to prove I had the stock, and not to use an empty threat against me.

    The sad part is that I am not the only person that he has ripped off in business...
     
  5. Meg000

    Meg000 Active Member

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    Hi Rod,
    I am not sure if it has been filed for hearing. He has sent me documents that have been filed by the court and that is the Claim and Statement of Claim, to which I replied with my Defence, Statement of Defence and Counterclaim... now I have a further document "Reply and Answer of the Plaintiff to the Defendant's Defence and Counterclaim... that just tells me that whatever I say is embarrassing and that I have not stated I don't have the goods (which I did make quite clear in the Defense. Plus my counter claim (according to the solicitor) "does not articulate a claim against the defendant" and "claims articulated against the 1st and 2nd Defendants by counterclaim are not supported by any legal interest to the dispute between the plaintiff and the defendants".

    Regards
    Ms Z
     
  6. Rod

    Rod Well-Known Member

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    Hmm, think they might be saying you have no claim against company B. Which may be true. Your claim is against Company A and Mr X.

    You may need to start your own action against those 2. Not sure if you can 'join' them to the Company B case in a counter claim. Need someone with more knowledge than I have.
     
  7. Meg000

    Meg000 Active Member

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    Hi Rod,

    Thank you - that kind of clarifies what I was told by the litigator and the discussion I had this morning with ASIC.

    You have made me feel a little more confident in that this is making me feel sick to my stomach. That anyone can do this to another person is beyond my comprehension. I always thought that if you are honest people will be respectful of that, but this Mr X has made me realise that not everyone is honest. You have my gratitude for your words!
     
  8. Meg000

    Meg000 Active Member

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    Hi Rod,
    Thanks for that, I will do that... it may give me a stronger bargaining chip to stop all litigation rather than continually going around in circles. I have put together a fairly good case I just need to readdress who I am claiming against. You have certainly helped to clarify my thoughts, this is invaluable as I had started to find the density of the forest before the trees!
     
  9. Rod

    Rod Well-Known Member

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    OK, remember you still need a defence against the claim made by company B, just that you probably can't counter claim except possibly for your costs. You also at the same time instigate your own case against company A and Mr X.

    BTW, to the lawyers out there, my understanding is that a lawyer's first duty is to the court, and their client second. If a lawyer proceeds with a claim that has no merit and might be a fraud (?) against the defendant, then can the lawyer be considered to be a party to the fraud?
     
  10. Meg000

    Meg000 Active Member

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    Hi Rod, Yes, I understand. I will make that very simple now... I don't have what they say I do!

    As for the claim against Company A I will just initiate a new claim against them.

    Re the second paragraph... I hope that what you say is so, because the way I see it, that is one of the reasons that most solicitors tell you that they cannot lie for you (not necessarily in those exact words... but you get my point.
     

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