Posts Tagged ‘Horticulture Innovation Australia Ltd v Westley [2015] NSWSC 1292’

Avenue Q Sydney 2015

September 6, 2015

It’s almost six years since I went to Sydney’s Theatre Royal to see Avenue Q.  This is a musical which ingeniously uses puppets and riffs on a combination of The Muppets and Sesame Street.  As the “Q” suggests, it is a gay-friendly musical (is that a tautology? overall I think not).  I really enjoyed it.

I was surprised to see Avenue Q pop up again this year for a short season (2 July to 18 July) at the much larger Enmore Theatre.  It seemed an unlikely venture.

Just how unlikely has now come to light. 

The show was produced by Luke Westley. Westley was the Liberal Party candidate for the seat of Adelaide in the 2010 election. Westley had been manager, marketing services, at Horticulture Australia Limited since 2011 and since November 2014 at HAL’s successor, Horticulture Innovation Australia.  He pops up in the internet in various promotional moments for apples and pears and the like. In May this year APAL (Apples and Pears Australia) paid him tribute on the announcement that Westley would be moving on from the role in July.

Westley did move on, but probably not in the way anyone was expecting apart from, possibly, Mr Westley.

On 7 July 2015 Westley was summarily dismissed from HIA.  It had come to light that he had financed Avenue Q with misappropriations from HAL and HIA. The exact amount of Mr Westley’s misappropriations may well not have been known at that stage but has subsequently been found to be $310,563.87 including a few other relatively small amounts not associated with the show.

That was the Friday at the end of the first week of Avenue Q’s run.  The next Monday, 10 July, HIA obtained freezing orders from Justice Bergin, Chief Judge in Equity.

The basis of a freezing order is that a defendant is likely to dispose of assets so as to frustrate a plaintiff’s claim. It’s not clear on what basis that order was made but you can imagine it was in a fairly dramatic atmosphere of some outrage and affront and where Mr Westley’s (at that stage merely alleged by HIA though doubtless convincingly so: Mr Westley may already have admitted some of them) fraudulent misappropriations (by payment of doctored invoices which were within his authority to pay) would have excited suspicion.

Subsequently the freezing order was discharged following payment of $433,575.61 into court by the owner of the theatre. Mr Westley said that the total ticket sales were $775,598.

The matter came back before Justice Stevenson on 31 August 2015.  HIA said that it had a proprietary claim to the money (or a large part of it) as money which could be traced as the proceeds of the money misappropriated (in this case, stolen) by Westley.  Mr Westley said he wanted the money back to pay expenses of the production totalling $343,858.20 including $330,613.70 owing to the cast and crew. Of those cast and crew members, 12 together also put their hand up for $116,320 to be paid to them. Presumably they were claiming some sort of a lien.

HIA claimed a few other amounts which had been misappropriated by Westley. Westley admitted he had taken $2,486 to pay obligations owing by an online dog treats business, known as “Café Barkery”, that he conducted with his former wife.

Westley also paid $5,720 to an audio producer for a new club song for Eastern Suburbs Rugby League club. Westley said this was part of a sponsorship deal for “Aussie Apples.” Westley conceded in cross examination that the song was never promoted by Aussie Apples. Justice Stevenson held that it was not part of the sponsorship deal and Westley was liable to repay this amount to HIA. This was the earliest payment that HIA claimed for – dating back to January 2014. I suspect that it was only pursued by HIA because of the later payments.

Westley had also had paid an invoice of $5,000 from the Bingham Cup, the international gay rugby tournament held in Sydney in 2014. He said this was also sponsorship by HIA but the judge found that it was Westley who obtained the credit for this by being acknowledged publicly as one of the “Bingham 15” rather than his employer.

HIA also claimed for invoices which had been paid for a “taxi back” advertising campaign. Westley tried to say this was for an HIA promotion but in the face of the actual invoices, his Honour rejected this. These were invoices of $7,095 (including GST) which was for the manufacture of 150 taxi backs (the display ads on the boot of taxis) and for $33,264 as the fee to display them for four weeks- both for Avenue Q. I mention these partly to illuminate why the publicity costs for performing arts ventures are so high.

By all accounts Avenue Q was enjoyed by almost all (maybe not so much by the cast and crew if they got wind of the producer’s difficulties – this must have occurred part way through the run unless as this 8 August report suggests they weren’t told). Judging from the ticket sales, the attendance must have been reasonably good. Nevertheless, the show did not make a profit. The rough sums which emerge from the judgment are:

Door take: $775K
Charges by theatre owner: $342K
Net receipt to producer after charges deducted by theatre owner: $433K
Expenses already paid by HAL and HIA and now repayable to them: $301K
Money owed to cast and crew: $330K
Other expenses: $13K

By my reckoning that’s costs of $986K for a door take of $775K.

You can see the misappropriations in more detail as an appendix (PDF) to the judgment. Leaving aside the payment for the Roosters’ club song, Westley seems to have embarked on this spree in June 2014 when he caused an invoice to be paid to Promo (presumably Promotechnics who made the puppets) and shelled out for the Bingham Cup. Later that year (end of Sep beginning Oct) he paid Hal Leonard, presumably for the rights and maybe also score hire. The rest of the payments were in Feb-June 2015.

That’s leaving out any other expenses which Mr Westley may have actually paid from his own money.

Justice Stevenson held that HIA could not trace the money stolen from it into the proceeds of the show because the money paid from the theatre was something too different from the money taken from HIA. Along with the unpaid cast and crew members (as well as unpaid cast and crew other than the 12 who were represented in the proceedings) HIA was just an unsecured creditor. The money from the theatre should be paid out to Mr Westley and if he didn’t otherwise have enough money to pay everyone the position would need to be sorted out through the law of insolvency.

The owner of the Enmore Theatre was the big winner in this, or rather, not the loser, because it got to take its cut out of the door takings before anybody else got a look in. Actually, I’m a bit shocked about the size of the Theatre’s take in all of this. How could this show ever have been viable?

Was it all really a vanity project? I can’t help feeling there was a bit of a Walter Mitty thing going on here not inconsistent (in my view) with the political candidature in 2010 and maybe influenced by other things going on in Westley’s life.

How can Westley have ever thought he would get away with it? He said he planned to repay the money but it is impossible to see how he could have done so undetected. There must have come a point where he was in way too deep but past a point of no return. (On reflection, objectively, that point was pretty well right at the start, in June 2014.)

Just to rub things in but probably inevitably, Westley’s successor as marketing manager has announced that the campaign Westley launched for Australian Apples and Pears at the beginning of this year, “Refresh Yourself” has not been a success and has already been cancelled.