A Pty Ltd as trustee For the Storrer Family Trust and Anor and N Pty Ltd Ors
[2020] FamCA 87
•18 February 2020
FAMILY COURT OF AUSTRALIA
| A PTY LTD AS TRUSTEE FOR THE STORRER FAMILY TRUST & ANOR & N PTY LTD ORS | [2020] FamCA 87 |
| FAMILY LAW – CORPORATIONS LAW |
| Corporations Act 2001 (Cth) Family Law Act 1975 (Cth) |
| 1st APPLICANT: | A Pty Ltd (ACN …) as Trustee for The Storrer Family Trust |
| 2nd APPLICANT: | Mr Storrer |
| 1st RESPONDENT: | N Pty Ltd (ACN …) |
| 2nd RESPONDENT: | N Investments Pty Ltd (ACN …) as Trustee for The N Property Trust |
| 3rd RESPONDENT: | R Pty Ltd (ACN …) as Trustee for The Mr O Family Trust |
| 4th RESPONDENT: | T Pty Ltd (ACN …) as Trustee for The Z Family Trust |
| 5th RESPONDENT: | M Pty Ltd (ACN …) as Trustee for The S Family Trust |
| 6th RESPONDENT: | B Pty Ltd (ACN …) as Trustee for The C Family Trust |
| 7th RESPONDENT: | Mr O |
| 8th RESPONDENT: | Ms Z |
| 9th RESPONDENT: | Mr J |
| 10th RESPONDENT: | Mr C |
| 11th RESPONDENT: | Mr O And Ms O as Trustee for The O Property Trust |
| 12th RESPONDENT: | Ms Z and Mr D as Trustee for The E Property Trust |
| 13th RESPONDENT: | N Property Pty Ltd (ACN …) as Trustee for The N Investments Trust |
| FILE NUMBER: | BRC | 7225 | of | 2009 |
| DATE DELIVERED: | 18 February 2020 |
| PLACE DELIVERED: | Brisbane |
| PLACE HEARD: | Brisbane |
| JUDGMENT OF: | Hogan J |
| HEARING DATE: | 10 October 2019 and 4 November 2019 |
REPRESENTATION
| COUNSEL FOR THE APPLICANTS: | Mr Doyle of Queen’s Counsel on 10 October 2019 Mr Doyle of Queen’s Counsel with Mr Green on 4 November 2019 |
| SOLICITOR FOR THE APPLICANTS: | Bridge Brideaux Solicitors |
| COUNSEL FOR THE RESPONDENTS: | Mr Looney of Queen's Counsel with Ms Nichols on 10 October 2019 Ms Nichols of Counsel on 4 November 2020 |
| SOLICITOR FOR THE RESPONDENTS: | McCullough Robertson Lawyers |
Orders
IT IS ORDERED THAT:
Within 14 days of the date of this Order, the First Respondent pay to the First Applicant the sum of $25,000.00, together with interest thereon from 9 July 2012.
Within 14 days of the date of this Order, the First Respondent pay to the First Applicant unpaid leave entitlements in the amount of $9,986.86, together with:
(a) interest on $8,461.54 of this amount from 30 September 2012; and
(b) interest on $1,525.32 of this amount from 31 July 2013.
In the event that such payment has not already been made, the Thirteenth Respondent, or alternatively, the Second Respondent, is to pay to the First Applicant, within 14 days of the date of this Order, the sum of $489,762.70 by way of payment of the First Applicant’s estimated unpaid present entitlements and outstanding unitholder entitlements in The N Property Trust as at 31 March 2019.
The Thirteenth Respondent or, alternatively, the Second Respondent pay to the First Applicant any further unpaid present entitlements and outstanding unitholder entitlements in an amount agreed between the parties, or failing agreement as determined by the Court.
The First Respondent is to pay to the First Applicant all unpaid fully franked dividends on the shareholding of the First Applicant in the First Respondent, together with interest thereon, in an amount agreed between the parties or, failing agreement, as determined by the Court.
The First Respondent shall purchase the shares held by the First Applicant in the First Respondent, valued as at 31 December 2019, at a price to be agreed between the parties or, failing agreement, as determined by the Court.
The First Respondent shall purchase all of the units held by the First Applicant in The N Property Trust, at a price to be agreed between the parties or, failing agreement, as determined by the Court.
The Second Respondent or, alternatively, any one or more of the Seventh to the Tenth Respondents, shall purchase the shares of the Second Applicant in the Second Respondent for a price of $12.00, with such purchase to occur simultaneously with the purchase of the shares referred to in Order (6) and the purchase of the units referred to in Order (7).
The Order made on 30 September 2016 be further varied by adding the following words at the end of Clause 1 as follows:
“SAVE THAT the First Respondent is permitted to pay to the trust account of the solicitors for the First Applicant (Bridge Brideaux) the sums referred to in Orders (1) and (2) of the Order made 18 February 2020, (being the payments of unpaid dividend and unpaid leave entitlements together with interest thereon) PROVIDED THAT such sum or any part thereof shall not be paid out of the said trust account except with the written authority of both the First Applicant and Ms Storrer (the wife of the Second Applicant) or the Order of the Court.”
The costs of obtaining the valuations referred to in Orders (14), (15) and (16) shall first be met by the First Respondent and the costs of obtaining the valuations referred to in Order (13) shall first be met by the Second or Thirteenth Respondents and each of the Applicants, the First Respondent and the Second and Thirteenth Respondents have liberty to be heard about the contribution, if any, to be made to the same by the Applicants.
The parties’ costs of and incidental to the proceedings are reserved.
There be liberty to apply with respect to any matter arising out of the matters referred to in this Order upon the giving of three (3) business days’ written notice from any party to the other parties.
IT IS DIRECTED THAT
In order to facilitate the calculation of any further unpaid present entitlements and outstanding unitholder entitlements referred to in Order (4):
(a)the First Applicant and the Thirteenth Respondent or, alternatively, the Second Respondent shall jointly engage an accountant, as agreed between them or, failing agreement, as nominated by the President of the Queensland Law Society, to calculate the quantum of the unpaid present entitlements and outstanding unitholder entitlements; and
(b)for the purpose of the calculation of the quantum of the unpaid present entitlements and outstanding unitholder entitlements, it is to be assumed that:
(i)the property situated at 1 F Street, Suburb KK, Queensland is held beneficially on the terms of The N Property Trust; and
(ii)The N Property Trust is entitled to receive rent from the First Respondent in respect of the property situated at 1 F Street, Suburb KK, Queensland; and
(iii)the property situated at 3 F Street, Suburb KK, Queensland is held beneficially on the terms of The N Property Trust; and
(iv)The N Property Trust is entitled to receive rent from the First Respondent in respect of the property situated at 3 F Street, Suburb KK, Queensland; and
(v)the assets and undertaking of The N Investment Trust be treated as the assets and undertaking of The N Property Trust; and
(vi)the Thirteenth Respondent is liable to pay the First Applicant twelve per cent of the net trust proceeds.
In order to facilitate the calculation of the unpaid fully franked dividends and the interest on the same that the First Respondent is to pay to the First Applicant pursuant to Order (5):
(a)the First Respondent and the First Applicant shall jointly engage an appropriately qualified remuneration expert as agreed between them, or failing agreement as nominated by the President of the Queensland Law Society, to determine the quantum of the reasonable remuneration of each of the Third to Sixth Respondents for their respective roles within the First Respondent as at 31 July 2013 and up to and including 31 December 2019; and
(b)the First Respondent and the First Applicant shall jointly engage an accountant, as agreed between them or failing agreement as nominated by the President of the Queensland Law Society, to calculate the quantum of the unpaid fully franked dividends on the shareholding of the First Applicant and interest thereon and, for that purpose, the accountant shall assume that:
(i)each of the Third to Sixth Respondents was entitled to be paid reasonable remuneration for their respective roles within the First Respondent for the period from 31 July 2013 onwards; and
(ii)the quantum of the reasonable remuneration to which each of the Third to Sixth Respondents was entitled to be paid is, prima facie, as determined by the appropriately qualified remuneration expert engaged by the parties in accordance with Order 14(a); and
(iii)in each financial year commencing with the financial year ended 30 June 2014, the total of all dividends and franking credits declared for that financial year is to be taken to include:
A.all management fees paid to the Third Respondent on and after 1 August 2013 (pursuant to the Agreement and Intellectual Property Protection Deed between it and the First Respondent dated 1 August 2013); and
B.all management fees paid to each of the Fourth to Sixth Respondents on and after 1 August 2013 (pursuant to their respective Agreements and Intellectual Property Protection Deeds between them and the First Respondent dated 1 August 2013).
In order to facilitate the determination of the price to be paid by the First Respondent to the First Applicant for the purchase of its shares in the First Respondent, as provided for in Order (6):
(a)the parties shall jointly engage an appropriately qualified remuneration expert as agreed between them, or failing agreement as nominated by the President of the Queensland Law Society, to determine the quantum of the reasonable remuneration of each of the Third to Sixth Respondents for their respective roles within the First Respondent as at 31 December 2019; and
(b)the parties shall jointly engage an appropriately qualified valuer, as agreed between them or failing agreement as nominated by the President of the Queensland Law Society, to value the shares held by the First Applicant in the First Respondent as at 31 December 2019; and
(c) the appropriately qualified valuer shall assume that:
(i)each of the Third to Sixth Respondents is entitled to be paid reasonable remuneration for their respective roles within the First Respondent; and
(ii)the quantum of the reasonable remuneration to which each of the Third to Sixth Respondents is entitled to be paid is, prima facie, as determined by the appropriately qualified remuneration expert engaged by the parties in accordance with Order 15(a); and
(iii)the Intellectual Property Deeds purportedly entered into by the First Respondent dated 1 August 2013 are void and of no effect; and
(iv)there be no discount for the First Applicant having a minority shareholding in the First Respondent; and
(v)any and all loans from the First Respondent to any other Respondent are fully recoverable.
In order to facilitate the determination of the price to be paid by the First Respondent for the units held by the First Applicant in The N Property Trust, as provided for in Order (7):
(a)the parties shall jointly engage an appropriately qualified valuer, as agreed between them or failing agreement as nominated by the President of the Queensland Law Society, to value the property situated at 1 F Street, Suburb KK and the property situated at 3 F Street, Suburb KK, Queensland as at 31 December 2019; and
(b)the parties shall jointly engage an appropriately qualified valuer, as agreed between them or failing agreement as nominated by the President of the Queensland Law Society, to value the First Applicant’s twelve per cent unitholding in The N Property Trust as at 31 December 2019; and
(c) the appropriately qualified valuer shall assume that:
(i)the property situated at 1 F Street, Suburb KK, Queensland is held beneficially on the terms of The N Property Trust; and
(ii)The N Property Trust is entitled to receive rent from the First Respondent in respect of the property situated at 1 F Street, Suburb KK, Queensland; and
(iii)the property situated at 3 F Street, Suburb KK, Queensland is held beneficially on the terms of The N Property Trust; and
(iv)The N Property Trust is entitled to receive rent from the First Respondent in respect of the property situated at 3 F Street, Suburb KK, Queensland; and
(v)the assets and undertaking of The N Investment Trust be treated as the assets and undertaking of The N Property Trust; and
(vi)any loan from The N Property Trust to any other Respondent is fully recoverable; and
(vii)the Thirteenth Respondent is liable to pay the First Applicant twelve per cent of the net trust proceeds; and
(viii)there be no discount for the First Applicant having a minority unitholding in The N Property Trust; and
(ix)the values of the properties situated at 16 and 3 F Street, Suburb KK, Queensland are as determined by the valuer referred to in Order 16(a).
In order to facilitate the carrying out of the orders herein, within seven (7) days the Respondents make full disclosure and, if not already provided, produce to the Applicants all financial accounts and records of each of the First Respondent, the Second Respondent, The N Property Trust, the Thirteenth Respondent, and The N Investment Trust from 1 July 2013 until the current date, including but not limited to the following documents:
(a)where final end of year financial statements have been prepared: the final end of year financial statements (including profit and loss statements and balance sheets); and
(b)where final end of year financial statements have not yet been prepared: the draft end of year financial statements (including, but not limited to, draft profit and loss statements and draft balance sheets); and
(c)final end of financial year or, if not available, draft end of financial year statements of distribution of dividends to all classes of shareholders for each of the Second Respondent and the Thirteenth Respondent; and
(d)annual taxation returns; and
(e)annual unitholder distribution statements for each of The N Property Trust and The N Investment Trust; and
(f)copies of the leases applicable to each of the properties at 1 F Street, Suburb KK and 3 F Street, Suburb KK, Queensland; and
(g)any loan documentation between the First Respondent and the Thirteenth Respondent relating to the financing of the purchase of the property at 3 F Street, Suburb KK, Queensland; and
(h)statement of the loan repayments made since inception of the loan of $4.9 million, and the current loan balance outstanding, in respect of the property at 3 F Street, Suburb KK, Queensland; and
(i)any stamped contract for the purpose of the property at 3 F Street, Suburb KK, Queensland; and
(j)all valuations in the possession of any of the Respondents with respect to the purchase, finance or revaluation of each of the properties at 1 F Street, Suburb KK and 3 F Street, Suburb KK, Queensland; and
(k)any and all correspondence, valuations and other documents in relation to the sale, proposed sale, float or proposed float of the First Respondent.
IT IS FURTHER DIRECTED THAT
The matter is listed for mention at 9.30 am on 21 February 2020 for the purpose of hearing the parties further about the Directions to be made to facilitate the further hearing of the matter.
Note: The form of the order is subject to the entry of the order in the Court’s records.
IT IS NOTED that publication of this judgment by this Court under the pseudonym A Pty Ltd as Trustee for the Storrer Family Trust and Anor & N Pty Ltd and Ors has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).
| FAMILY COURT OF AUSTRALIA AT BRISBANE |
FILE NUMBER: BRC 7225 of 2009
| A Pty Ltd (ACN …) as trustee for The Storrer Family Trust |
1st Applicant
And
| Mr Storrer |
2nd Applicant
And
| N Pty Ltd (ACN …) |
1st Respondent
And
| N Investments Pty Ltd (ACN …) as Trustee for The N Property Trust |
2nd Respondent
And
| R Pty Ltd (ACN …) as Trustee for The Mr O Family Trust |
3rd Respondent
And
| T Pty Ltd (ACN …) as Trustee for The Z Family Trust |
4th Respondent
And
| M Pty Ltd (ACN …) as Trustee for The S Family Trust |
5th Respondent
And
| B Pty Ltd (ACN …) as Trustee for The C Family Trust |
6th Respondent
And
| Mr O |
7th Respondent
And
| Ms Z |
8th Respondent
And
| Mr J |
9th Respondent
And
| Mr C |
10th Respondent
And
| Mr O and Ms O as Trustee for The O Property Trust |
11th Respondent
And
| Ms Z and Mr D as Trustee for The E Property Trust |
12th Respondent
And
| N Property Pty Ltd (ACN …) as Trustee for The N Investments Trust |
13th Respondent
REASONS FOR JUDGMENT
On 31 May 2019, I published Reasons for Judgment in this matter and, so that the parties could be heard about the terms of orders to be made to reflect the findings expressed in the Reasons, listed it for further hearing on 24 July 2019.
Following a joint application to the Court by the parties, I then made an Order in Chambers on 11 July 2019, adjourning this hearing to 10 October 2019. I also made a number of Directions (by consent), which prescribed a process for the parties to exchange their respective proposed orders and written submissions in support of the same.
On 10 October 2019, I made an order varying an aspect of an earlier made order and adjourned the further hearing (about the terms of the orders to be made to reflect the Reasons delivered) to 4 November 2019; further Directions were also made.
On 4 November 2019, I heard oral submissions about the form of orders to be made to give effect to the findings expressed in the May 2019 Reasons. It was the consensus of Counsel who appeared then that the only issue in respect of which there was a need for further reasons to be delivered was the date at which the First Applicant’s interest in the First Respondent should be valued.
Date for valuation of the First Applicant’s shares in the First Respondent
Mr Doyle QC for the First Applicant submitted that the appropriate date for the valuation of the First Applicant’s shares in the First Respondent is contemporaneous with the making of the order for the same; Ms Nichols[1] for the First Respondent submitted that, if an order was to be made now fixing the date for the valuation of the First Applicant’s shares in the First Respondent, the appropriate date was 31 July 2013 or, alternatively, 30 June 2014.
[1] And Mr Looney QC via, in particular, the written submissions provided.
I consider it appropriate that I now make an order particularising the date on which the First Applicant’s shares in the First Respondent are valued so as to facilitate the fixing of the price the First Respondent is to pay (if the same is not agreed between the parties) for the First Applicant’s shares in the First Respondent; I am not persuaded given the nature of the oppression I have found – as expressed in the lengthy Reasons for Judgment published earlier – that it is necessary for the parties to incur the expense of obtaining valuations at 31 July 2013 or 30 June 2014 and 30 June 2019 or 31 December 2019 to aid in the exercise of the wide and absolute discretion to determine the date for valuation.
By their respective written submissions and the oral submissions made on their respective behalf by Counsel who appeared for them, the parties helpfully identified a number of authorities which were submitted to be germane to the resolution of the issue of the date on which to value the First Applicant’s shares in the First Respondent.[2] Having regard to these and the relevant statutory provisions, I consider that it is clear that:
[2] Including: Foody v Horewood & Ors 62 ASCR 576; Campbell & Anor vBackoffice Investments Pty Ltd (2009) 238 CLR 304; Re Bodaibo Pty Ltd (1992) 6 ASCR 509; In re London School of Electronics Ltd [1985] Ch 211; Harding Investments Pty Ltd v PMP Shareholding Pty Ltd (No 3) (2011) 285 ALR 297; Tomanovic & Anr v Global Mortgage Equity Corporation Pty Ltd & Anor (2011) 288 ALR 310.
a)the object of the power prescribed in ss 232 and 233 of the Corporations Act is to identify a remedy which is fair to overcome the oppression found in the case; and
b)the power to order the compulsory acquisition by the First Respondent of the First Applicant’s shares in it is not hedged about by limitations; and
c)the Court’s discretion to determine the price of the shares ordered to be purchased from an oppressed shareholder is wide and absolute and the exercise of the same in any case is to be informed by the justice and fairness of the particular circumstances in that case; and
d)the requirement imposed on the Court is to fix a price for the shares of an oppressed shareholder that represents a fair value in all the circumstances of the particular case; and
e)the only “rule” in exercising the discretion to determine the date at which it is appropriate to value the First Applicant’s shares in the First Respondent is that there is no rule – the exercise of the wide discretion reposed in the Court simply requires that consideration be given to the relevant circumstances in each particular case, that the discretion be exercised judicially and that the overriding requirement is that the date of valuation should be fair on the facts of the particular case.
I reject the submissions made by Ms Nichols for the First Respondent where such submissions link the concept of fairness in the price to be determined for the First Applicant’s shares in the First Respondent to the concept that the same should be based on an evaluation of the efforts of the Respondents who remain working in the business, such that the First Applicant should not be permitted to obtain the benefit of the same by a valuation of its shares at any date other than 31 July 2013 or, alternatively, 30 June 2014. I do so because I consider that such submissions ignore the nature of the oppression found (namely, that the First Respondent in essence determined to treat the First Applicant as if it ceased to be a shareholder after the Second Applicant ceased working in the business).
Given that the First Respondent maintained to and at trial that it had not acted oppressively toward the First Applicant in any way, I am not persuaded that previous offers to purchase the First Applicant’s shares in it for fair value or its application in September 2015 for orders on a summary basis for the compulsory purchase of those shares are circumstances that persuade of a conclusion that it is fair that the date for valuing the First Applicant’s shares in the First Respondent is either 31 July 2013 or 30 June 2014 or a date earlier than that sought by the First Applicant.
Similarly, given the oppressive conduct found, I do not consider that Mr Storrer’s asserted expectations about the disposition of the First Applicant’s shares if he left the business operated by the First Respondent persuades of a conclusion that it is fair that the date for valuing the First Applicant’s shares in the First Respondent is either 31 July 2013 or 30 June 2014 or a date earlier than that sought by the First Applicant.
Given the findings of oppression made against the First Respondent, the fact that the First Applicant sought a buyout order in 2013 does not persuade me that it would be fair for the First Applicant to receive a price for its shares based on a valuation at that time.
I accept the thrust of the submissions made by Mr Doyle QC for the Applicants to the effect that, given the oppressive conduct found, it would not be fair to the First Applicant to order the valuation of its shares as at 31 July 2013 (or 30 June 2014) because to do so would, in essence, ignore the findings made about the First Respondent’s oppressive conduct toward the First Applicant. I accept his submissions to the effect that, as the oppression found is of an ongoing nature, fairness requires the First Applicant to be compensated satisfactorily for the same and that valuing its shares in the First Respondent contemporaneously with the date of the order is the mechanism by which this can best be achieved. I also accept that the nature of the oppression found against the First Respondent – namely, that it determined to treat the First Applicant as though it were no longer a shareholder after the Second Applicant ceased to work in the business – permeates the consideration of the date at which it is fair to value the First Applicant’s shares in the First Respondent.
I accept that to order that the First Applicant’s shares in the First Respondent be valued as at 31 July 2013 or 30 June 2014 would not meet the overarching obligation to fashion a remedy that undoes the damage caused by the oppression found against the First Respondent. I also accept the thrust of the submissions to the effect that, if the date for the valuations of the First Applicant’s shares in the First Respondent was nominated as 31 July 2013 or, alternatively, 30 June 2014, such an approach would result in the First Respondent benefitting from its oppressive conduct. I also accept that, if the date for valuation was determined to be 31 July 2013, such order would in effect result in treating the First Applicant as though the value of its shares in the First Respondent was dependent on the Second Applicant’s continued engagement in the business rather than, given the finding that its status as a shareholder was not dependent on this, it being entitled to the benefits of being a shareholder on an ongoing basis.
Whilst not the subject of further particular discussion here, I generally accept the submissions made by Mr Doyle in advocating for the exercise of the discretion in favour of nominating a contemporaneous date for the value of the First Applicant’s shares in the First Respondent. In particular, I accept that, given the findings made about the First Respondent’s oppressive conduct toward the First Applicant, the appropriate remedy - and that which accords fairness - is that which recognises that the First Respondent has remained entitled as a shareholder from 31 July 2013 onwards: I accept that, by ordering the value of its shareholding to occur contemporaneously with the making of orders, such finding will be given effect.
Given that the object of the orders to be made now is to implement a remedy that is fair to overcome the oppression as found and that the oppression I found was, in effect, that the First Respondent treated the First Applicant as if it ceased to be a shareholder after the Second Applicant stopped working in the business operated through it (for example, by failing to pay dividends to it when they were paid to other shareholders), I consider that the appropriate date at which the First Applicant’s shares in the First Respondent should be valued is contemporaneous with the date on which the Orders are made; for ease, however, I consider that it is appropriate that the First Applicant’s shares in the First Respondent be valued as at 31 December 2019. Given the inter-relationship between the First Respondent and The N Property Trust, the units in it should be valued at the same date.
I certify that the preceding fifteen (15) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Hogan delivered on 18 February 2020.
Associate:
Date: 18 February 2020
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