Left - Lady Deborah Chambers, lawyer for Michael Thompson. Right - the now Justice Anne Hinton, who acted for Thompson's wife Christine.
Left - Lady Deborah Chambers, lawyer for Michael Thompson. Right - the now Justice Anne Hinton, who acted for Thompson's wife Christine.
Christine Thompson, who today won a share of an $8 million restraint of trade payment received by her ex-husband, wanted to "set the law straight for other women", says her lawyer.
Her ex-husband, Michael Thompson, said he felt the Supreme Court's decision in the divorce case was "morally wrong on every principle".
That decision declared the $8 million restraint-of-trade payment Michael Thompson received after the sale of Nutra-Life Health and Fitness was relationship property.
Given a general principle of relationship property is that it is shared equally, this means Christine Thompson is likely entitled to $4 million.
After the Thompsons divorced in 2005 they agreed on how to split up their family home, a holiday home and $72 million from the sale of Nutra-Life Health and Fitness, a business which they established in 1984.
But the former husband and wife - who married in 1971 - were unable to agree on how to deal with an $8 million restraint-of-trade payment made to Michael Thompson in 2006 by the company that bought Nutra-Life.
This payment was made some four years after the pair first separated in 2002.
Christine Thompson made a claim in the Family Court that this payment was relationship property and should be divided equally.
This, however, was deemed to be her former husband's separate property and Christine Thompson then appealed this decision to the High Court.
It's been a pretty hard road for her. But the driver really for her is setting the law straight for other women".
While Justice Pamela Andrews in the High Court agreed that the payment was Michael Thompson's separate property, she exercised her discretion to treat part of it as relationship property.
However, Justice Andrews said there was not enough information to work out what part of the $8 million payment could be treated as such and said further evidence could be submitted to establish this.
Michael Thompson appealed this decision, claiming Justice Andrews wrongly allowed further evidence to be admitted in the case.
At the same time, Christine Thompson appealed the High Court's judgment treating the $8 million as her former husband's separate property.
In a decision released last year, the Court of Appeal allowed Michael Thompson's appeal and dismissed Christine Thompson's cross-appeal.
However, Christine Thompson then took the matter to the Supreme Court, which this morning unanimously allowed her appeal.
The Supreme Court today said the $8 million restraint of trade payment received by Michael Thompson is to be declared relationship property.
Christine Thompson did not want to speak to the Herald directly but one of her lawyers, Stephanie Ambler, said:
"The only comment she wishes to make is she sees the decision as a just and fair result which recognises the equal contribution to their marriage".
"It's been a pretty hard road for her. But the driver really for her is setting the law straight for other women".
I feel that this decision is not only totally unjust but morally wrong on every principle and on the rules of fair play," he said.
Michael Thompson, in a statement to the Herald, said "further legal challenge cannot be ruled out".
"I feel that this decision is not only totally unjust but morally wrong on every principle and on the rules of fair play," he said.
"What this decision basically says is the fact that I was prevented from working and earning money post separation essentially worldwide for now some 8 years cannot be personally compensated for and has to be shared with an ex-wife from whom I have been separated and divorced since 2002. I have given up everything, she has given up nothing. I believe in fairness and equality and have shared all our joint assets on at least a 50 - 50 basis and Christine has received in excess of $40 million, so I feel she has been very well and fairly compensated for a company that I alone not only started but invested most of my life in to make successful," he said.
In the Supreme Court's judgment released today, Chief Justice Sian Elias and Justices William Young, Susan Glazebrook, Terence Arnold and Mark O'Regan set aside the decisions from the lower courts that the $8 million payment was to protect the goodwill of Next Capital, which bought Nutra-Life, and that it couldn't be carved out from the purchase price.
Next proposed to buy the business for $72.3 million, of which $49.4 million was for the goodwill and intellectual property, and $22.9 million for the other assets, and another $8 million for a two-year restraint of trade clause.
As part of the deal, Michael Thompson would remain a director of the company, and invest $12 million for a 19.95 per cent stake. Of that, the $72.3 million was paid to ML Thompson Family Trust, which bought the shares in the company in 1994 from Health Foods International, an entity set up in 1989 and jointly owned by the Thompsons.
"If Mr Thompson had said that he was not prepared to give a covenant in restraint of trade, the court would have treated him as buying (or having sold) the business for $80 million and would thus have required him to account to Mrs Thompson for $40 million," Justice Young said in delivering the decision.
I have given up everything, she has given up nothing. I believe in fairness and equality and have shared all our joint assets on at least a 50 - 50 basis and Christine has received in excess of $40 million, so I feel she has been very well and fairly compensated for a company that I alone not only started but invested most of my life in to make successful.
"In conjunction with the way in which the transaction with Next was structured, the effect of the transfer of the HFI shares to the MLT Trust was to reduce by $4 million what would otherwise have been Mrs Thompson's share of the payout associated with the sale of the Nutra-Life business."
In 2007, there was an agreement between the Thompsons that the assets of the trust would be treated as relationship property, though Michael Thompson said there was never agreement to share the restraint of trade payment.
The Supreme Court said the Family Court's approach was "too austere" in deciding the trust's assets were relationship property, but the restraint of trade was not.
"We can see no reason why we should not give effect to the agreement and the only way we can see of doing so is to exercise the s 9(4) (of the Property (Relationships) Act) discretion in favour of Mrs Thompson and to declare that the $8 million payment is relationship property," the judgment said.
