Dave Baxter, the man behind ‘Love Love Love‘, recently won a large payout from his former manager Matt Coleman. Hayden Donnell gleans some key findings from the judgment – and explains why Baxter may still never receive what he’s owed.

About a month ago, Matthew Coleman, one of New Zealand’s leading music managers (and 2010 New Zealand Music Manager of the Year), was ordered to pay $307,287.27 to Dave Baxter, a musician better known as the one-man band Avalanche City.

The High Court judgment against Coleman and his company Let The People Speak is interesting in revealing how Baxter lost out on what is known in legal circles as ‘shitloads’ of money through a combination of lax accounting and what appears to be dishonesty.

It’s also a devastatingly boring 60-page snooze-fest only a spreadsheet nerd like journalist Matt Nippert could love.

Mercifully for you, and traumatically for me, I’ve read the whole thing. Combed it for the most egregious breaches of trust. The worst examples of financial mismanagement. The most incisive legal judgments. These are my findings from a landmark case in New Zealand music.

Baxter lost money in a lot of ways, and none of them were good

How did Coleman not pay Baxter what he was due? Let High Court judge Justice Susan Thomas count the ways. She found Coleman had withheld more than $240,000 owed to Baxter through various means including:

– Under-reporting Avalanche City’s income, and keeping more than the 20% share he was owed as the band’s manager.

– Under-stating funding given to the band

– Charging for disputed expenses

– Overstating his commissions on merchandise sales

But none of those actions were as on-the-nose as this one…

Coleman siphoned nearly $85,000 of Baxter’s royalties into his family bank accounts

Some of Coleman’s actions could be explained by incompetence. In her judgment, Justice Thomas was careful to point out that one incident couldn’t be interpreted so charitably.

The judgment states that Coleman signed Let The People Speak – which  represented several artists including Dane Rumble, Ezra Vine and Jupiter Project – up to receive Recorded Music NZ royalties earned by Avalanche City without Baxter’s knowledge. All the royalties collected on the band’s behalf were then paid directly into a joint bank account Coleman held with his wife, or, in one case, his wife’s personal account. Coleman never reported the income to Baxter, the judgment shows.

Coleman argued he was entitled to collect the royalties as the band’s label. Justice Thomas ruled several things:

1. He wasn’t the band’s label
2. Even if he was, he’d only be entitled to 50% of the royalties he took
3. He should’ve reported the income to Baxter no matter his role
4. Under no circumstances should income have been paid into Coleman’s personal account

She decided Baxter was owed nearly $85,000 and issued this precisely worded legal burn:

“A generous interpretation of Mr Coleman’s dealings with Mr Baxter would conclude that he had not deliberately siphoned off money due to Mr Baxter but rather displayed an inexcusably lax attitude towards accounting practices…

“The Recorded Music situation however falls into a different category. It is difficult to accept any innocent explanation of the non-disclosure of those sums.”

Elsewhere she wrote:

“The payment of the money into various personal bank accounts of Mr and Mrs Coleman emphasises the concerns. Those circumstances are more suggestive of active dishonesty.”

Baxter benefited from slacking off on signing his contracts

These stories usually play out a certain way: Young, naive band gets presented with bad contract, doesn’t read it properly, ends up getting screwed by a record company for all eternity. Baxter’s story is a twist on that tale. He only ever entered into an oral agreement with Coleman; one made when the two of them met in an office in 2011. After the meeting, Coleman started acting as his manager. Coleman eventually sent a contract through to Baxter, but like any good musician, he procrastinated, then procrastinated some more, and eventually ended up becoming so suspicious of Coleman he refused to sign.

If Baxter had signed, Let The People Speak would have become his label, and had a stronger claim on his royalties. Instead, the court ruled – despite Coleman’s protests – that the looser oral agreement formed in 2011 was the only contract between the parties.

The lesson: always procrastinate.

This also seems bad

“A further issue arose on 17 February 2012 in relation to funding for the first trips to the USA and London. Outward Sound (a funding entity run by the New Zealand Music Commission) and New Zealand On Air had made grants in respect of the band’s first USA and London trips, for which the Baxters said they had in fact paid themselves. Mrs Baxter checked with Outward Sound and discovered that Avalanche City had received close to $100,000 in grants for travelling costs, but approximately $80,000 of this had been retained by Mr Coleman. The Baxters described alarm bells starting to ring very loudly at this stage.”

An Air New Zealand corporate gig was the final straw

For a long time, Baxter didn’t know how much money he was missing out on. The turning point came in December 2012, when he was hired to perform at an Air New Zealand function. Coleman told Baxter he was going to receive $10,000 in travel credit and $1,000 in cash for the gig. But Baxter saw a copy of the original contract. It was for $20,000 in travel credit and $1,000.

“In addition, the organisers told Mr Baxter they were surprised he did not take the cash offer of $15,000 instead of the travel credit,” the judgment states. “Mr Baxter said this was never mentioned to him by Mr Coleman and he was shocked that Mr Coleman had misled him to the true value of the travel credit.”

Their relationship deteriorated after that.

Epilogue finding

Though the court ruled Baxter was owed roughly $307,000, it remains to be seen whether that full sum will be paid. Let The People Speak went into liquidation on November 30. Its reason for doing so, according to the first statement from the liquidators: “The director identified that the company was unable to pay its debts as they were due”.

Like many times before, Baxter may not be paid as much as he’s owed.

As for Coleman, he’s branched off into a new career in the virtual reality business.

The Spinoff has reached out to Matt Coleman. He said he doesn’t accept the judgement, but won’t be appealing it. Coleman said he would provide a written statement on the ruling.

Full disclosure

Dave Baxter is an acquaintance of mine, who I know through music stuff and mutual friends. He didn’t direct me to this story.

Do you have information relating to this story that you’d like to share? Contact the author at hayden@thespinoff.co.nz.

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