The Supreme Court of Victoria also heard that Walker – who remains the sole shareholder of National Tiles – offered to pay off a company director at the tiles group via director fees “in perpetuity” for his assistance in covering up the changes to the records of the board negotiations.
Frank Walker,the owner of National Tiles and star of the group’s well-known radio advertisements.Supplied
Former National Tiles director John Selak has launched civil action in the Supreme Court of Victoria alleging he did not receive the share options he was entitled to and that National Tiles doctored minutes of board meetings to cover up its actions against its former staff and board members. Walker denies these allegations.
On Tuesday,lawyers for Selak told the court they should be allowed to use the legal documents as evidence because the documents allegedly show Walker falsifying board minutes,a crime which would render any claim for legal professional privilege null and void. National Tiles is arguing the documents are covered by legal professional privilege.
Walker is the sole shareholder of National Tiles,one of the country’s best known radio advertisers,and a favourite of DJs doing mashups of his exaggerated ‘helloooooo’ and unusual pronunciation of tiles (tiiiiiiiiles).
The court heard that National Tiles had introduced an employee share options scheme some years ago to reward staff and directors who were assisting the company with its aims to one day list on the ASX. Employee shareholder plans are often used by businesses to reward senior staff and at the time,National Tiles was looking to double the size of its business.
In April 2020,the company’s board passed a resolution to protect these new minority shareholders created by the employee shareholder plan,according to a draft version of the company’s board minutes. The board minutes were later circulated to the company’s directors who all,bar Walker,agreed to the accuracy of the minutes.
However,the final version of the company’s minutes of the April board meeting report that show that no vote took place and there was no discussion at the board meeting about minority shareholders at all.
Lawyers for Selak allege that Walker sacked Selak and fellow independent director Sue Morphet from the board and offered a “pay off” to fellow independent director Greg Larsen to sign off on the changed minutes,despite Larsen having originally signed off on the draft versions of the minutes.
Sue Morphet has a long history in corporate Australia.Fairfax Media
“(Walker) proposed alternative and false minutes and he garnered the support of Mr Larsen by offering to pay him director fees in perpetuity -- a proposal inexplicable on any rational commercial basis and after Mr Larsen accepted the proposal and notwithstanding his earlier approval in writing of minutes in a different form he signed the falsified minutes,” counsel for Selak,Geoffrey Kozminsky,said.
The court heard that Walker began to get cold feet on the employee share plan in 2020 when the company brought in PwC to value the options and its final valuation was much higher than the family had expected.
The court heard that Walker wrote to his fellow board members to express his concerns about the valuations.
“To my fellow directors in my role as both shareholder and director I must object in entirely the valuation report by PwC. If my claims are not addressed I plan to take action against PwC in the Federal Court to have their valuation declared null and void.”
Morphet,an experienced director of ASX listed companies,wrote back to Walker to share her concerns about the tone of his email and to say it was not appropriate for the company to change its valuation processes. “These threats are extremely vexatious,” Morphet told Walker.
Walker shot back in an email:“Hello Sue,The valuation will not be proceeding. I have been given false and misleading information by PwC. Forgive me if I gave you the impression it was an idle threat,it was far from it.”
The case continues.
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