Rich shows his hand in Morningstar battle
Graham Richhas begun Supreme Court proceedings against his former employer, Morningstar.
The central issues outlined in a statement of claim lodged with the court involve four main allegations against Morningstar, including breach of contract, breach of fiduciary duty and oppression, failure to meet capital raising obligations as well as unfair dismissal.
Rich was dismissed as managing director of Morningstar Australia in November 2001, after his own research company, FPG Research, was purchased by Morningstar in 1999 as a corporate joint venture with Rich. Rich had built up FPG Research for 18 years prior to its purchase by Morningstar.
The joint venture included a heads of agreement, a shareholders agreement, a licensing agreement, a subscription agreement and a management agreement.
Rich’s statement of claim is understood to focus particularly on the licensing and management agreements and the alleged failure of Morningstar to meet its obligations under the agreed conditions of the joint venture.
In particular, under the licensing agreement, it is alleged that Morningstar had indicated that there would be a flow of new product resources to Morningstar Australia, including the use of software called Principia Pro, which was to be adapted to the Australian market and substantially increase Morningstar Australia’s product range, with a view to substantially increasing revenues.
Both the software and the know-how to adapt it were allegedly to be provided within 60 days of the date of commencement of the joint venture. According to the statement of claim, Rich was not provided with any relevant software until August 2001.
Further, the Morningstar board was said to have agreed to Rich’s business plan to increase staffing levels to facilitate the distribution and adaptation of the new software, and agreed to provide such funding. It is claimed that it failed to do so upon the terms agreed.
The claim asserts that the failure by Morningstar to provide the US$1 million funding as per the February 2000, funding agreement, or to agree to the alternative shareholders suggested by Rich to provide this capital, led to the dismissal of Rich via a telephone call in September last year, leading to his subsequent departure in November 2001.
With Rich’s statement of claim now lodged, it is over to Morningstar to provide a statement of defence. Morningstar Australia chief financial officer Craig Ellis toldMoney Managementthat the directions hearing held last week in the Supreme Court will effectively set the dates for the conduct of the legal matter.
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