A legal dispute over the $42 million sale of Australian industrial spray-paint company MMP Industrial has exposed allegations of a murder plot, an arson attack and years of regulatory problems concealed from the buyer.
Andrew King is suing the company’s former owner, David Stewart, and several Stewart family businesses in the NSW Supreme Court, claiming he was misled into believing MMP was profitable, well-run and largely free from serious competition.
The Stewarts deny the allegations and have brought their own claim over the remaining $3 million owed from the transaction. A trial is due to begin in November.
The case began with a celebratory dinner at Beppi’s Italian restaurant in Darlinghurst in 2022, after King agreed to buy the business. Stewart attended with his sons, Nathanael and Bartholomew, who were fellow company directors.
King gave the family patriarch a £7,400 bottle of Scotch, while the two sons received whisky and Penfolds Grange. But within months, King says, he discovered that the business he had bought was close to collapse rather than the reliable money-spinner presented during negotiations.
Alleged plot against MMP rival
Among the most serious allegations examined during an interlocutory hearing was a plot linked to MMP’s rivalry with Stalyce, a competing company run by Craig O’Sullivan.
According to material put before the court, MMP’s former manager Brian Murphy allegedly instructed an employee, Peter Gregory Lomax, to arrange an arson attack intended to “wipe out” Stalyce’s factory and to arrange a “hit” on O’Sullivan. The claims are disputed by the Stewarts.
Lomax allegedly passed money from Murphy to Gavin Crosby, a recently released prisoner, to carry out the attacks. Crosby organised a fire that damaged some contents of the Stalyce factory but did not destroy it.
When the deadline for killing O’Sullivan passed, Crosby was reportedly told either to complete the job or return a $50,000 advance. He had already spent the money and was repeatedly arrested by police on unrelated matters, leaving Lomax unsuccessfully searching for another person to carry out the murder.
O’Sullivan survived unharmed. Several weeks later, however, Stalyce’s factory was destroyed in a blaze that took four hours and about 100 firefighters to bring under control. Damage was estimated at more than $8 million, and no one has been charged, although investigators believed the fire was deliberately started.
King’s barrister, Liam Kelly KC, told the court that the destruction of the factory caused Stalyce to lose numerous supply contracts and set the business back by a decade.
The NSW Court of Criminal Appeal heard that Lomax was arrested the following year after police investigations and intercepted telephone calls. He initially said Murphy had asked him to target both the company and its owner, and agreed to give evidence against him in return for a reduced sentence.
But at a later committal hearing, Lomax withdrew his account, saying he could not remember who had asked him to “set the fire”. The charges against Murphy were dropped. Lomax’s sentence was later increased to six years and 10 months after he failed to co-operate with police.
Murphy remained close to the Stewart family and, according to submissions by Mr Kelly, was still involved with MMP as recently as Christmas 2019. He provided security at the factory after David Stewart emailed his sons that the business had “recently taken sales from Stalyce”.
Dispute over the company’s financial health
When King began considering the acquisition in 2021, MMP’s accounts appeared to show annual revenue of about $50 million, average yearly profits of roughly $10 million and stock worth more than $13 million.
King says he was also told that MMP had long-standing customer relationships, few meaningful competitors and no unresolved issues with its industry regulator. As part of the sale agreement, Stewart was due to remain at the company part-time for its first year under the new ownership.
Instead, King alleges, Stewart soon said he would stop attending the office because staff continued to treat him as the boss. King says he has not seen or spoken to Stewart since.
King later noticed widespread staff absences and says he learned that employees had been offered a $2,000 cash payment if they took no sick leave during the year. He also claims workers had illegally disposed of waste aerosol cans for years by puncturing them with a spike and hammer in the warehouse.
SafeWork NSW inspectors subsequently visited the business. King says he was told the regulator had previously decided to cancel MMP’s licence to operate as a major hazard facility because of a long history of non-compliance and 246 improvement and prohibition notices issued since 2006.
That decision was reversed only after the regulator learned that the business had changed hands, according to King’s claim. He says the information contradicted a disclosure in the sale agreement that the Stewarts had not received orders, directions or notices from regulators and were not subject to enforcement action.
King also says he was unaware of a SafeWork NSW prosecution arising from an incident in which a worker had three fingers on her right hand crushed. The sale documents described the incident as a “self-inflicted” injury and a workplace injury claim, he alleges.
A stocktake later suggested that MMP’s ability to fulfil customer orders had deteriorated. About half the orders from its largest customer, Supercheap Auto, were reportedly out of stock.
King claims the Stewarts had deliberately reduced stock and avoided buying raw materials in the year before the sale, creating the appearance of stronger profits while the business’s inventory was being depleted. Within a year of the takeover, Supercheap Auto had moved its business elsewhere, taking an estimated $12 million to $15 million in annual revenue with it.
Stewart rejects the allegations
Stewart denies misleading King and rejects the claims about waste disposal, regulatory non-compliance and MMP’s supply record.
He says he was ready and willing to work part-time for the new owner but was prevented from doing so after being asked not to attend the business. He also disputes the suggestion that management accounts were used to make the company appear more profitable, saying those accounts had no correlation with its inventory position.
Stewart attributes staff absences partly to flooding in the Hawkesbury region and to low morale following the change in leadership. He argues that the buyers carried out their own inspections, searches and enquiries before completing the transaction.
King has since rebranded MMP as Paragon Aerosol. Property records show plans to move the company from a Stewart family-owned warehouse in Mulgrave to a warehouse complex in Port Kembla bought for $15 million.
Attempts to contact Stewart with detailed questions were unsuccessful. His lawyer declined to comment.
