A Pty Ltd as trustee for the Storrer Family Trust and Anor and N Pty Ltd Ors (No 2)

[2020] FamCA 491

FAMILY COURT OF AUSTRALIA

A PTY LTD AS TRUSTEE FOR THE STORRER FAMILY TRUST & ANOR & N PTY LTD ORS (NO. 2) [2020] FamCA 491

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: 17 June  2020

PLACE DELIVERED: Brisbane

PLACE HEARD: Brisbane

JUDGMENT OF: Hogan J

HEARING DATE: 7 May 2020

REPRESENTATION

COUNSEL FOR THE APPLICANTS:  Mr Page QC

SOLICITOR FOR THE APPLICANTS: Bridge Brideaux Solicitors

COUNSEL FOR THE RESPONDENTS: Mr Looney QC with Ms O’Connor

SOLICITOR FOR THE RESPONDENTS: McCullough Robertson Lawyers

Orders

IT IS ORDERED THAT:

1. Order 2 of the Orders made on 21 February 2020 is discharged.

IT IS ORDERED UNTIL FURTHER ORDER BY CONSENT THAT:

1. Orders 4, 6, 7, 8, 10, 13, 14, 15 and 16 of the Orders made on 18 February 2020, as amended on 12 March 2020, are stayed pending the determination of Appeal NOA20/2020, commenced by Notice of Appeal filed 17 March 2020.

IT IS ORDERED UNTIL FURTHER ORDER THAT:

1. Order 5 of the Orders made 18 February 2020, as amended on 12 March 2020,  is stayed pending the determination of Appeal NOA20/2020, commenced by Notice of Appeal filed 17 March 2020, on the following conditions:

   (a)the First Respondent pay the First Applicant all unpaid fully franked dividends on the shareholding of the First Applicant in the First Respondent for the financial year ended 30 June 2020 in the following manner:

   (i)in respect of dividends already declared and/or paid by the First Respondent to any of the Third to Sixth Respondents during the 2020 financial year to the date of this Order: by payment to the First Applicant of a sum that represents 12 per cent of the total sum of the same, with such payment to be made within twenty-eight (28) days of the date of this Order and to be made to the trust account of the solicitors for the First Applicant (Bridge Brideaux); and

   (ii)in respect of any future dividends declared and/or paid by the First Respondent to any of the Third to Sixth Respondents during the 2020 financial year and on the same franking credit basis: by payment contemporaneously with the payment made to any of the Third to Sixth Respondents, with such payment to be made to the trust account of the solicitors for the First Applicant (Bridge Brideaux).

   (b)no amount shall be paid out of the trust account of the solicitors for the First Applicant (Bridge Brideaux) unless both of the following conditions are met:

   (i)the total amount paid out does not exceed $1,585,300.00; and

   (ii)both the Second Applicant and Ms Storrer have provided written authority for any payment out of the trust account.

2. Order 17 of the Orders made on 18 February 2020, as amended on 12 March 2020, is stayed pending determination of Appeal NOA20/2020, commenced by Notice of Appeal filed 17 March 2020.

IT IS NOTED THAT

(A)The payment by the First Respondent to the First Applicant as provided for in Order (3) above is subject to future adjustment pursuant to Order 14 of the Orders made on 18 February 2020, as amended on 12 March 2020. 

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

1^st Applicant

And

Mr Storrer

2^nd Applicant

And

N Pty Ltd (ACN …)

1^st Respondent

And

N Investments Pty Ltd (ACN …) as Trustee for The N Property Trust

2^nd Respondent

And

R Pty Ltd (ACN …) as Trustee for The Mr O Family Trust

3^rd Respondent

And

T Pty Ltd (ACN …) as Trustee for The Z Family Trust

4^th Respondent

And

M Pty Ltd (ACN …) as Trustee for The S Family Trust 

5^th Respondent

And

B Pty Ltd (ACN …) as Trustee for The C Family Trust

6^th Respondent

And

Mr O 

7^th Respondent

And

Ms Z 

8^th Respondent

And

Mr J 

9^th Respondent

And

Mr C 

10^th Respondent

And

Mr O and Ms O as Trustee for The O Property Trust

11^th Respondent

And

Ms Z and Mr D as Trustee for The E Property Trust 

12^th Respondent

And

N Property Pty Ltd (ACN …) as Trustee for The N Investments Trust 

13^th Respondent

REASONS FOR JUDGMENT

1. On 18 February 2020, I made a number of orders (the February 2020 orders) to reflect the findings and determinations made in Reasons for Judgment published on 31 May 2019. Such orders are the subject of an appeal, commenced by Notice of Appeal filed by the Respondents on 17 March 2020.

2. The Respondents seek that Orders 4, 5, 6, 7, 8, 10, 13, 14, 15, 16 and 17 of the February 2020 orders be stayed pending the determination of the appeal. The Applicants agree that it is appropriate that Orders 4, 6, 7, 10, 13, 14, 15 and 16 of the February 2020 orders be stayed pending the determination of the appeal. Whilst they also agreed that Orders 5 and 17 be stayed, they did so only on the basis of conditions[1] to which the Respondents do not agree.

   [1] As outlined in the Response to Application in a Case filed 8 April 2020.

3. Consequently, the Court must determine whether the Respondents have persuaded that, in the circumstances of this case, it is appropriate to stay the operation of Orders 5 and/or 17 unconditionally pending the determination of their appeal or whether it is proper and appropriate that the same be stayed on the conditions advanced on behalf of the Applicants or some other conditions.

Applicable principles

1. The principles applicable to the determination of an application for the stay of orders pending appeal are well known. I accept that they are as helpfully summarised in the written submissions prepared on behalf of all parties.[2]

   [2] See: paragraphs [7] and [8] of the Submissions of the Respondents filed 21 April 2020 and paragraphs [2] and [3] of the Submissions of the Applicants filed 1 May 2020.

Stay of Order 5 pending the determination of the appeal

1. Order 5 of the February 2020 orders is in the following terms:[3]

   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 that remain unpaid, calculated until the date of transfer of the First Applicant’s shareholding and on the assumptions referred to in Order 14(b), together with interest therein, in an amount agreed between the parties, or failing agreement, as determined by the Court.

   [3] As subsequently amended on 12 March 2020.

2. The Respondents submitted that, absent an unconditional stay of Order 5, their appeal would, in part at least, be rendered nugatory; they would be unduly prejudiced because, if their appeal is successful, they would be at risk of having to attempt to recover the full amount of the dividends paid in compliance with the appealed against order. 

3. The Respondents also submitted that, if a stay was granted on the terms sought by the Applicants, the funds they would have to pay would be an amount greater than that to which they are presently entitled, as this sum would not reflect the deductions to be made in accordance with Order 14. It was submitted that, consequently, they would then be at risk of having to seek to recover the full amount of dividends paid (if their appeal is successful) or an amount representing the adjustments required by Order 14 to be made (if their appeal is unsuccessful). It was also submitted that, in seeking the conditions that they proposed, the Applicants were, in essence, seeking to circumvent the findings and orders made vis-à-vis the manner in which the dividends payable to them should be quantified: it was submitted that, should they have wished to re-agitate this issue, the appropriate approach would have been to have challenged this aspect of the orders on appeal.

4. It was also submitted on behalf of the Respondents that, if the Court was against their primary position that an order unconditionally staying Order 5 pending the determination of their appeal was appropriate, then the Court would stay the operation of the same such that the requirement to pay dividends to the Applicants was capped at $1, 585, 300.00 – the amount offered in 2015 to acquire the Applicants’ shares/interest.

5. In contesting the submissions made on behalf of the Respondents, the Applicants emphasized that they are entitled to the fruits of the Judgment; it was submitted in particular that, given the findings of oppression as a consequence of the relevant Respondent’s determination not to pay dividends on the shares owned, it would not be appropriate for a stay of the order requiring the payment of dividends on the same as this would, in essence: perpetuate the oppression found rather than remedy it; deny the remedy found to be appropriate (namely, the payment of unpaid dividends on the shares); be unfair to the Applicants and prolong the impact of the found oppression; cause severe prejudice to the Applicants’ ability to respond to the appeal and prosecute the balance of the valuation hearing; and, in essence, sanction the found oppression, as it would provide the Respondents with an imprimatur to continue to act in the future in the manner in which they have previously, despite such actions having been found to be oppressive.

6. I am not persuaded that it is appropriate simply to stay the operation of the orders in relation to the payment of dividends pending the determination of the appeal.  I consider there is much force in the submissions made by the Applicants in opposing such a course; I also consider that, were the Court to make such an order, it would, in effect, be tantamount to providing a sanction for the continuation of the very oppression which I have previously found to have occurred.

7. However, given the conclusions reached about the quantification of unpaid dividends (see paragraphs 434 and 435 of the Reasons delivered 31 May 2019), the difficulty arises in quantifying the amount of dividends to be paid to the First Applicant. On balance, I accept the submission proffered on behalf of the Applicants to the effect that payment of dividends at the rate of 12 per cent is nothing more than a payment subject to the future adjustment contemplated by Order 14 of the February 2020 orders. A Notation to the Orders will reflect this acceptance.

8. I also consider it appropriate that I fashion orders to ensure that, in the event that the Respondents’ appeal is successful, their positions are appropriately protected. Consequently, considering and weighing the balance of convenience and the competing rights of the parties, I intend to make orders in relation to the manner in which the Applicants can deal with funds deposited into the trust account of the solicitors for the First Applicant: first, I will cap the funds that can be paid out of trust at $1,585,300.00 – being the amount offered in 2015 to acquire the First Applicant’s shares in the First Respondent; secondly, as I have done previously, I will ensure that no funds are paid out from the trust account of the solicitors of the First Applicant unless both the Second Applicant and Ms Storrer provide written authority for the same.

Stay of Order 17 pending the determination of the appeal

1. The disclosure required by Order 17 of the February 2020 orders is clearly intended to facilitate the implementation of the balance of those orders: all of which will now be stayed pending the determination of the appeal.

2. Given this, I consider it appropriate to stay Order 17 pending the determination of the appeal. I have arrived at this decision after taking into account the evidence about the costs likely to be associated with compliance with Order 17 and the prospect that, if the appeal is successful, the relevant documents may be narrower in scope than those particularised in Order 17.

3. So that there is no prospect of future misunderstanding amongst the parties, this decision does not, of course, affect their ongoing obligations, imposed by the Rules, in relation to the disclosure of all information relevant to the case – which obviously includes the implementation of the terms of the orders made today.

4. For these short reasons then, I make orders set at the commencement of these reasons. 

I certify that the preceding sixteen (16) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Hogan delivered on 17 June 2020.

Associate:     

Date:              17 June 2020