Hessing and Hessing

[2015] FamCA 1207

FAMILY COURT OF AUSTRALIA

HESSING & HESSING [2015] FamCA 1207

FAMILY LAW – PROPERTY – Just and equitable – Where there was a dispute about the value of a business owned by the parties – Final orders for property settlement made by consent.

Family Law Act 1975 (Cth) s 79

APPLICANT: Ms Hessing

RESPONDENT: Mr Hessing

FILE NUMBER: SYC 7537 of 2012

DATE DELIVERED: 28 July 2015

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Loughnan J

HEARING DATE: 28 July 2015

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Cummings SC

SOLICITOR FOR THE APPLICANT: Barkus Doolan

SOLICITOR FOR THE RESPONDENT: Mr Wilson

Orders

1. By consent, orders, declarations and notations are made in accordance with the document titled “Consent Orders” (Exhibit 1 dated 28 July 2015), as set out hereunder:

DEFINITIONS

A.1.“Act” means the Family Law Act 1975 (Cth);

A.2.“Companies” means:

A.2.1.C Pty Ltd, A.C.N. …;

A.2.2.B Pty Ltd as trustee for F Trust, A.C.N. …;

A.2.3.D Pty Ltd as trustee for G Trust, A.C.N. …;

A.2.4.H Pty Ltd; A.C.N. …;

A.3.“Entities” means:

A.3.1.Petrocare International Pty Ltd, A.C.N. 149 174 434;

A.3.2.I Pty Ltd, A.C.N. …;

A.3.3.J Pty Ltd, A.C.N. …;

A.4.“Settlements” means:

A.4.1.F Trust; and

A.4.2.G Trust;

A.5.“Husband” means the Respondent in these proceedings, Mr Hessing;

A.6.“Husband’s bank accounts” means the bank accounts held in the sole name of the Husband;

A.7.“Husband’s contents” means the household contents, furniture, furnishings and effects in the possession of the Husband;

A.8.“Husband’s superannuation” means the entitlement of the Husband under any superannuation fund of which he is a member.

A.9.“parties” means the Husband and Wife;

A.10.“K Group” means the Entities and Companies;

A.11.“K liabilities” means all liabilities, loans and/or debts associated with the Companies and/or Entities including but not limited to any loans to any Bank or Financial Institution and/or third parties including but not limited to the St George Bank Limited;

A.12.“Wife” means the Applicant in these proceedings, Ms Hessing;

A.13.“Wife’s bank accounts” means the bank accounts held in the sole name of the Wife;

A.14.“Wife’s contents” means the household contents, furniture, furnishings and effects in the possession of the Wife;

A.15.“Wife’s superannuation” means the entitlement of the Wife under any superannuation fund of which she is a member.

ORDERS

By consent it is ordered:

PAYMENT TO WIFE AND TRANSFER OF WIFE’S INTEREST IN THE K GROUP TO THE HUSBAND

1.That within 180 days of the date of these orders the Husband must:

a.pay to the Wife or as she may direct in writing the sum of $4,500,000 (“the  Wife’s payment”); and

b.procure the release of the Wife in respect of all and/or any of the K liabilities (“the Releases”) and provide evidence to the Wife of the Releases.

2.In the event the Wife’s payment is not made and the Releases are not procured within 120 days of the date of these orders then interest shall accrue in respect of the Wife’s payment in accordance with the Family Law Rules.

3.Provided that within 180 days of the date of the making of these orders, the Husband:

a.Makes the Wife’s payment; and

b.Procures the Releases and provides evidence of these Releases,

in accordance with order 1, then the Wife shall sign all documents requested by the Husband and at his cost, and do all acts and things necessary to:

c.transfer and assign to the Husband all of her right title and interest in the issued share capital, if any, of each of the Entities and Companies;

d.transfer and assign to the Husband all of her right title and interest in any credit or debit loan account, if any, in the Entities, and Companies

e.resign from each and every office that she holds with any of the Entities and Companies;

f.Sign any such documents as may be reasonably requested of her by the Husband that has the effect of transferring and assigning to the Husband any right, position, power or interest in any of the settlements and otherwise relinquishing any rights, position, power that she holds in relation to such settlements.

INDEMNITIES

4.That upon the Wife’s compliance with order 3, the Husband do all acts and things necessary to forthwith indemnify and keep indemnified the Wife against all liabilities (actual or contingent), suits, demands, causes of actions or claims of whatsoever kind or nature which may be brought against the Wife in relation to or arising in relation to the Entities and/or the Companies and/or the Settlements including but not limited to:

a.any guarantee or indemnities that the Wife has entered into or  otherwise provided whether as a director, shareholder or guarantor or otherwise;

b.any taxation liability, including any taxation liability incurred by the Wife as a consequence of her having been a member, officeholder or beneficiary of any of the Entities and/or the Companies and/or the Settlements.

DEFAULT PROVISIONS

5.That in the event the Husband does not make the Wife’s payment (including interest) and procure the Release as provided for in order 1, within 180 days of the date of these orders, then the Husband must immediately sign all documents requested by the Wife and do all acts and things necessary to:

a.transfer and assign to the Wife all of his right title and interest in the issued share capital, if any, of each of the Entities and Companies;

b.transfer and assign to the Wife all of his right title and interest in any credit or debit loan account, if any, in the Entities and Companies;

c.resign from each and every office that he holds with any of the Entities and Companies;

d.Sign any such documents as may be reasonably requested of him by the Wife that has the effect of transferring and assigning to the Wife any right, position, power or interest in any of the settlements and otherwise relinquishing any rights, position, power that he holds in relation to such settlements.

INJUNCTION

6.That pending the Husband’s compliance with order 1, the Husband is hereby restrained by injunction from making any representations to any of the clients; suppliers; financiers and/or employers of the Entities including but not limited to making representations that he is a director and/or employee of the Entities.

7.That pending the Husband’s compliance with order 1, the Husband is hereby restrained from doing any act or thing to interfere with the management of the Companies and Entities and in respect of the K Group Board of Directors, and from transferring, encumbering and otherwise dealing with his shareholdings in any of the Entities and Companies and in respect of the K Group Board of Directors.

8.That pending the Husband’s compliance with order 1 of the making of these orders the Husband is hereby restrained from doing any act of thing that would prohibit and/or impact upon the Wife receiving her salary as presently paid by the Entities and Companies.

PROVISION OF DOCUMENTS

9.The Wife is to provide to the Husband copies of any books, documents or records relating to the Companies and/or Entities necessary to enable the Husband to facilitate the raising of the sum of $4,500,000 and consents to the Husband communicating with the St George Bank Limited regarding potential future facilities only.

10.THE COURT NOTES:

A)the Wife’s Undertaking that she will not impede the Husband’s efforts to raise the sum of $4,500,000 and that she will not carry out any acts which might have the effect of damaging or harming the K Group, which undertaking is given on a without admissions basis.

B)The Wife will use her best endeavours to obtain audited accounts for the companies and entities within 28 days of the date of these orders, and in any event, the Wife warrants she is not aware of any issue that would cause the accounts to vary materially from those accounts already provided to the Husband in respect of the financial year ended 30 June 2015.

SUPERANNUATION

11.L Superannuation Fund (“the L Super Fund”) is a self managed superannuation fund listed by the Australian Taxation Office on the Super Fund Lookup website as a complying superannuation fund.

12.The Husband and the Wife are the only members of the L Super Fund and the Trustees of the L Super Fund. 

13.That within 21 days of the date of these Orders the parties as Trustees of the L Super Fund do all acts and things and sign all documents necessary to cause the L Super Fund to rollover the whole of the Wife’s member entitlement into another superannuation fund nominated by the Wife.

14.Thereafter, the Husband and Wife as Trustees shall cause a meeting of Trustees to be held in accordance with the Rules of the relevant Trust Deed of the L Super Fund, the purpose of that meeting being:

a.to note receipt of the request by the Wife to transfer her benefit to another complying superannuation fund;

b.to note receipt of the election by the Husband to hold the remaining benefits in the L Super Fund in his sole name;

c.to authorise the transfer to the Trustees of the Wife’s nominated complying superannuation fund of her member benefit in the L Super Fund.

15.Before the close of the meeting of the Trustees, the Wife shall do all acts and things and sign all documents as may be necessary to:

a.resign her membership from the L Super Fund; and

b.vote in favour of any resolution that the Husband may propose prior to her resignation as Trustee which may have the effect of appointing a new Trustee.

GENERAL ORDERS

16.That save as otherwise provided for herein the Wife is the sole owner of and the Husband has no interest in the following:

a.The Wife’s bank accounts;

b.The Wife’s superannuation;

c.The Wife’s personal belongings;

d.The Wife’s jewellery

e.All other real and/or personal property in the Wife’s possession and/or control.

17.That save as otherwise provided herein the Husband is the sole owner of and the Wife has no interest in the following;

a.The Husband’s bank accounts;

b.The Husband’s personal belongings;

c.The Husband’s jewellery

d.All other real and/or personal property in the Husband’s possession and/or control.

18.That except as otherwise provided for in these Orders other than 4b, the Husband and the Wife shall each respectively be solely responsible for all and any debts and/or liabilities including but not limited to credit card liabilities and income tax liabilities incurred in that party’s sole name or jointly with any other party and/or in relation to any of the assets to which each party is entitled pursuant to these Orders.

19.Except as any of these orders provide to the contrary each of the Husband and Wife indemnifies the other from all loans owing by one to the other.

20.That in the event either party refuses or neglects to sign a document as required by them pursuant to these orders then a Registrar pursuant to Section 106 A of the Family Law Act shall be permitted to sign on behalf of the defaulting party, so as to give effect to these orders.

21.All previous orders stand discharged.

22.No order as to costs.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Hessing & Hessing has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER:  SYC7537 of 2012

Ms Hessing

Applicant

And

Mr Hessing

Respondent

REASONS FOR JUDGMENT

1. These are proceedings for settlement of property. The matter was listed for hearing over four days, commencing today. The authorities would have it that in the case of a settlement, little more than the fact that the parties are represented and agree is required for the court to be satisfied that the requirements of s 79 of the Family Law Act 1975 (Cth) have been met. That is, the requirement for a just and equitable settlement of the property of the parties.

2. A rather unique situation has arisen here whereby, putting aside what might have been legitimately argued before the court and putting aside some problems about late changes in things, there was a dispute between the parties as to the value of a business made up of a group of companies.  And it was a substantial dispute of the order of $10 million. 

3. There is a single expert opinion that taking into account borrowings of about $18 million, the business had no real value. 

4. The husband had a different view and it looked like he was going to try and argue, presumably through cross-examination of the single expert, that the calculations were in error and that the business had a greater value. 

5. The settlement crafted by the parties is one which gives the husband the option of taking up his own argument.  That is to say, giving him the option of buying the wife out of the business on the basis that the business has a value of a certain order.  He is given, 120 days to do that without interest and 180 days to do it by way of indemnity and payment in absolute terms.  If that is not possible, then the parties have agreed that the business will go to the wife.  In a sense, the husband has the opportunity to have faith in his own argument. 

6. One thing to say about it; that is not a solution that is likely to have been imposed on the parties.  I must say, I had a similar thought about it when I was reading the documents but it would be a novel approach and the court is likely to have tried to resolve the issue of valuation. 

7. There is a just and equitable aspect to the proposal of the parties.  On balance, the parties are represented and they have agreed to this proposal and it makes sense of the arguments that they were going to put.  It seems to me that the court, in those circumstances, should endorse the settlement. 

8. There are some related matters; that the parties have an interest in a self-managed superannuation fund and they have arrived at some orders that separate the parties’ interests.  They have agreed to do things which they are able to do with a self-managed fund to cause the wife’s interest to move out to a fund of her choosing.  Otherwise, the parties have agreed that they retain what they have and retain what they owe.  Indemnities are provided each away, depending on whether the husband is successful in raising the finance or the default provision applies. 

I certify that the preceding eight (8) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Loughnan delivered on 28 July 2015.

Associate: 

Date:  15 February 2016