Several executives have quit or are about to quit Toppro, the distributor of set top boxes in Australia. This is the same Company that is currently embroiled in a Court case involving allegations of fraudulent transfer of shares in the NSW Supreme Court.
The case before Justice Brereton was bought by one Raphael Ahn, it was later joined by several other defendants.
In a statement of claim lodged before the Courts the plaintiffs allege that Il Nam Yoo held 100% of the shares in Toppro and that in or about May 2012, he agreed with another Korean national Joon Won Choi to execute a transfer of those shares for US$12,000.
It is then alleged that between May and June 2014, Choi – without authority – gave the transfer document to a second defendant Ok Ja Joo who fraudulently and without authority altered it by substituting herself as the transferee, and thereafter obtained registration of the transfer.
The plaintiffs claim that the transfer to Ok Ja Joo was procured by fraud, or was a conversion of the shares, or was pursuant to a transfer document which was impermissibly and fraudulently altered and, on any of those grounds, was void.
The plaintiffs are now claiming a return of the shares, and alternatively damages.
Subpoenas have been sought for the production from each recipient as well as Toppro and Topfield of the following documents.
(1) all bank statements for the periods of 1 January 2014 to date.
(2) all Business Activity Statements for the periods from 1 January 2014 to date.
(3) all Profit and Loss Statements for the periods from 1 January 2014 to date.
(4) all balance sheets for the periods from 1 January 2014 to date.
(5) all records of orders from Topfield Korea for the periods from 1 January 2014 to date.
(6) all records of payment to OK Shop for the periods from 1 January 2014 to date
(7) all wage records for the periods from 1 January 2014 to date.
(8) all documents of communications between Topfield Korea and in particular with Yong Chul Lee between takeover to now for the periods from 1 January 2014 to date.
The plaintiffs claim that it was “on the cards” that, sometime after 20 June 2014, the business of Toppro declined, while that of Topfield Australia grew, reflecting a transfer of business from Toppro to Topfield Australia.
The plaintiffs claim that the production of certain documents would provide evidence – or at least a basis for cross-examination of the defendants’ witnesses that once having obtained control of the company the Company wanted to transfer its business of selling set top boxes, and place it beyond the plaintiff’s reach.
The plaintiffs are seeking damages as a result of the alleged action.
Justice Brereton said that it would be difficult to see how such evidence could be useful on the question of damages without further expert evidence.
He claimed that in his view and having regard to the evidence given in the related proceedings, it is “on the cards” that the documents called for by these subpoenas will assist in the resolution of the issues in these proceedings.
The Company that has been plagued with one court drama after another is again facing a major upheaval with insiders telling ChannelNews that Harvey Norman has moved to restrict sales of the brand with the category buyer now having to sign off all new orders.
Currently Topfield is selling around $1M a month via Harvey Norman stores. Recently auditors conducted a stock take at Toppro, ChannelNews was told that $800,000 worth of stock was identified as having gone missing.
Within hours of starting to research this story Korean lawyers acting for Toppro contacted ChannelNews. They threatened to take action “for deformation” despite the fact that Companies cannot sue for deformation only individuals can, they also had no knowledge about what story we were actually going to write.
All that ChannelNews did prior to being contacted by the solicitor, was contact several current employees, former employees and agents for Toppro products.
The move by Harvey Norman to control sales follows rumours that supply is again being restricted by Topfield the Korean manufacture of the set top boxes and Toppro the distributor of Topfield media players.
Topfield a public Company in Korea is run globally by, Yong-Cheol Lee and in what has been described as an unusual move his wife Elice Joo Lee, runs Toppro, the Australian distributor of Topfield set top boxes with both Companies now embroiled in another Court drama in an Australian Court.
Recently the General Manager of Toppro quit, there is also speculation that their new national sales manager, has told Elice Lee the CEO of Toppro that he wants to quite, a move that has been described as “The death Nell for the Company” following the axing of former Sony Sales Director David Hargreaves late last year.
Insiders have told ChannelNews that Hargreaves an experienced consumer electronics executive, was used by Toppro management to build sales and then axed with Korean management taking over the sales and marketing process.
This proved to be a “disaster” according to former staff with the Company struggling to hire experienced staff due to the constant upheavals at the NSW based Company.
In the past Topfield has churned through sales staff, with one buyer telling ChannelNews that Hargreaves was used by the Korean Company to rebuild relationships with retailers and that once this was achieved he was axed because he was seen as being “too expensive”.
“His replacement was hired on a significantly lower salary”.
When Hargreaves replacement moved to quite the Company last week insiders are claiming that he was offered a $30,000 top up to his salary to stay.
In 2013 the Company was forced to restructure their business in Australia after the South Korean Company took over the sale of their products in Australia after a prior dispute with Toppro.
This was not the first time that Topfield has fallen out with employees or distributors.
At the time Topfield Korean claimed that the decision was made because “Of a dispute about outstanding payments” with Toppro.
A letter sent to retailers and sub distributors in June 2014 asked both retailers and sub distributors to not make payments to Toppro Pty Ltd.
A separate letter sent to Toppro Pty Ltd threatened the Company claiming that if they continue to engage in commercial activities involving Topfield products after the 16th of June 2014 “civil and criminal action” will be entered into”.
The issue was settled out of Court.
This is not the first time that Topfield has found itself in a fight with a distributor.
In 2008 the Korean Company ended up in the WIPO Arbitration and Mediation Centre in a fight with Jai Kemp and the Digital Products Group.
In August 2007 Topfield suddenly announced that it was appointing another distributor in Australia and that it still considered DPG to be one of its distributors even though DPG was handling Beyondwiz at the time which was seen as a competing products.
DPG challenged Topfield claiming that they were Topfields sole distributor, they even produced a “Sole Distributor Certification” which the Complainant had issued to it in 2004.
At the time DPG also owned the registered name Topfield in Australia and the web domain www.topfield.com.au.
The Panel ruled against Topfield granting Jai Kemp and the Digital Products group the rights to the name.
The latest Court case involving Topfield is expected to last three weeks.
