Court rules in favour of dismissed Southern Cross director

Mark Kalmus will receive $50K after being dismissed without notice

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A magistrate court judge has ruled in favour of former Southern Cross Computer Services director Mark Kalmus after he was dismissed without notice in 2016.

The case was brought against the company, now under the name of SXIQ, and was heard on 4 June at the Magistrate Court of Victoria.

The decision, which was made on 15 August, will see Kalmus receive $45,000 related to the notice payable under the employment agreement plus $4,275 in superannuation.

Kalmus was dismissed without notice from SCCS in February 2016, at the time the company believed he had allegedly engaged in "serious misconduct".

During the proceedings, Southern Cross alleged that false invoices were created in respect of 1020 computer monitors that had been ordered from the technology provider by Telstra - the invoices were considered fake because they contained a false billing and delivery address for Telstra.

Kalmus' defence argued he was not involved in creating the invoices in question.

"However, whilst the delivery address on the invoices was false, in my view, that fact alone does not render the entire invoice false in circumstances where it appears that in all other respects, the invoices were genuine," Judge Julie Grainger said.

SXIQ's defence also questioned a payment made by Scottish Pacific Finance of 80 per cent of the value of the alleged false invoices, which would have increased Southern Cross' revenue for 2015/2016 financial year.

"Given my finding that Mr Kalmus was involved in and approved the invoices for the monitors being presented to Scottish Pacific Finance at a time when the monitors had not been delivered to Telstra, and that he signed the finance deed with Scottish Pacific Finance, I am also satisfied that Mr Kalmus was aware that Scottish Pacific Finance was going to make a payment when it was not properly due and that this would artificially increase Southern Cross’ revenue for the 2015/2016 financial year," Judge Grainger said.

In handing the decision, Judge Grainger said that SXIQ managing director John Hanna learned of the scheme before the products were delivered to Telstra and that this diminished his faith in Kalmus.

"I am satisfied that this was primarily because of its possible impact on the share sale and purchase agreement between Ingenio and Mandossa and Lendossa rather than its possible impact on Southern Cross," Judge Grainger added.

In 2006, Kalmus and his business partner, Chris Palmer bought the shares in Southern Cross through their respective companies, Mandossa and Lendossa.

At the time, Kalmus was the sole director of Mandossa, which owned 50 per cent of the ordinary shares in Southern Cross and Palmer was the sole director of Lendossa, which owned the other 50 per cent of shares.

"In all of the circumstances, I do not consider Mr Kalmus’ conduct to be objectively so serious from Southern Cross’ point of view, that it could have damaged Southern Cross’ trust, confidence and faith in Mr Kalmus to the extent that it justified his immediate dismissal without notice," Judge Grainger added.

"For these reasons, Southern Cross, which bears the onus of proving that it had the right to dismiss Mr Kalmus without notice, which onus has been described as a heavy burden, has not satisfied me that in all the circumstances, Mr Kalmus’ dismissal without notice was justified."

In August 2017, Palmer was facing legal action in the Supreme Court of Victoria for allegedly breaking contract terms after working with a potential competitor.

The Court found that the potential competitor, Blue Connections, could be considered a direct competitor of SXIQ, and therefore the request by Southern Cross to restrain Palmer from having any involvement with the company until 28 June 2020 should be upheld.

In August 2016, John Hanna led a consortium that acquired Southern Cross Computer Systems.

ARN has contacted Kalmus and SXIQ for comment.