$6.5 million judgement against Futuresoft Technologies overturned

A $6.5 million dollar judgement against machinery supplier Futuresoft Technologies Inc. and its director Dr. Weining (Wayne) Song, defendants in a lawsuit for fraudulent misrepresentation filed by wood-plastics composite (WPC) start-up Newlab Plastics Ltd., has been set aside by a judge in the Supreme Court of Newfoundland and Labrador.
The ruling, handed down on July 28, 2006, does not mean that the case is over, however, as the court also instructed Futuresoft and Dr. Song to file respective defenses in order for Newlab’s lawsuit to continue.
The decision to overturn the judgement is the latest twist in a legal battle that is being fought between Newlab, which is headquartered in St. John’s, Nfld., and Futuresoft and Dr. Song, initially based in Mississauga, Ont. and now relocated to Manalapan, N.J.
The dispute began after Newlab solicited and received a quote from Dr. Song in April 2004, detailing the costs for Futuresoft to supply a state of the art, small-scale turnkey WPC operation.
In its lawsuit, filed in March 2006, Newlab alleged that it paid Futuresoft upwards of $475,000 for the equipment to manufacture WPC decking boards, as well as materials and almost $250,000 more for mechanical and electrical setup, only to find the equipment, most of which was shipped from China, unsuitable for use.
Newlab also alleged that it was forced to pay an additional $500,000 on material and personnel to render the equipment useable and its facility operational, but was ultimately unable to operate the plant; and that the failure of the business cost Newlab $300,000 in both personnel and leased space.
Dr. Song failed to respond to the lawsuit initially, and did not attend court hearings held in St. John’s.
The court in Newfoundland and Labrador awarded the $6.5 million default judgement against Futuresoft and Dr. Song in May 2006.
Chris O’Brien, Newlab’s COO, said that the July 28 verdict overturning the award was not unexpected, given both the amount of the initial settlement against Futuresoft and Dr. Song, and the complexity of the case. “Because (the $6.5 million) award was so much money, and because we have to prove that some of the things we asked for in damages actually cost what we say they did, I think the judge erred on the side of caution and overturned it,” he said. “We’re not overly concerned, however. It’s an inconvenience, but we’ve got all the documentation ready and we are quite prepared to go ahead.”
Futuresoft’s legal team declined to comment on the July 28 verdict. On August 4, lawyers for Futuresoft and Dr. Song filed a Demand for Particulars with Newlab’s legal team to request that it provide additional documentation in order for Futuresoft and Dr. Song to file their respective defenses with the court.