Paladin Group fails in attempt to stop a $50 million court case

The former operator of the Manus Island detention centre has failed in an attempt to stop a former director’s legal case.

Paladin was approached to take over contracts on Manus after a previous provider pulled out. Picture: Brian cassey

The company that formerly managed the Manus Island detention centre under a controversial $423m federal government contract has failed in an attempt to have a $50m court case against it thrown out.

Paladin Group’s former director, Adelaide-based Ian Stewart, is suing the group, arguing that it owes him about $US780,108 for unpaid salary and end-of-year bonuses, and $US33.59m for his share of the profits from the company — a total of $49.5m at the current exchange rate.

Former Adelaide-based Paladin Group director Ian Stewart.

The company, operated by founder and director Craig Thrupp, asked the Supreme Court for a permanent stay of the case on the basis that it was an “inappropriate forum for the proceedings’’, as the Paladin Group companies are not incorporated in South Australia, and are not registered as foreign companies in Australia.

Orders were also sought, should that argument fail, to strike out Mr Stewart’s in whole or in part.

Justice Tim Stanley refused the application for a stay and the matter will return to court in February, with Mr Stewart given time to replead his claim.

Paladin’s Manus Island contracts ran from 2017 until mid-2019 when the Papua New Guinea Government took over responsibility for the facilities.

Mr Stewart’s original statement of claim says a contract he signed in 2013 entitled him to a “25 per cent profit bonus” of Paladin’s annual after-tax profit.

This applied to “anything the plaintiff did to increase Paladin’s revenue from the date of the commencement of the employment contract’’, including expanding the scope of current contracts or winning new work.

The claim says that Paladin made a net profit of $US134,377,531 ($177.95m at today’s exchange rate) from January 1, 2017, until he left the company in late 2019.

Mr Stewart’s claim says he was managing director and CEO for a time, and was responsible for running the company.

The shack on Kangaroo Island where security firm Paladin registered its company.

Between late 2017 and early 2018 he attended “key meetings with representatives of the Australian government and Papua New Guinea government for the purpose of preserving the said contract with the Australian government which had been endangered by certain actions of Thrupp,’’ the documents state.

The statement of claim also indicates that the main operating business was in fact registered in Singapore for the purpose of minimising tax. “In 2016 Paladin … relocated its head office to Singapore … for the purpose of obtaining banking and tax advantages available due to treaties between Singapore, Australia and Papua New Guinea,’’ the court documents state.’’

Paladin has argued in documents lodged with the Supreme Court that Mr Stewart is entitled to nothing, and says a contract he is relying on to make his claim is a forgery.

Paladin was approached to take over contracts on Manus after a previous provider pulled out, and the federal government was grilled early last year about the process for awarding the contracts to a firm which was then registered to a beach shack on Kangaroo Island. The contracts did not go through a tender.

The matter returns to court in February.