Solomon Lew is taking risky action to protect his family's fortune from the former partners of his children, writes Cameron Houston.
As most shoppers scrambled for last-minute Christmas gifts last year, the billionaire Solomon Lew was planning his own surprise for two estranged members of his retailing dynasty.
Lew's daughter Jacqueline had been embroiled in a bitter matrimonial dispute with her former husband Adam Priester for months, while his son Steven was involved in divorce proceedings with his estranged wife Sarah Nowoweiski.
Both cases were before the Family Court, which bans any media coverage. But the private feuds would soon spill into the public domain in dramatic style.
As Priester collected his four children from the former family home in Toorak on December 24, he was confronted by a court-appointed sheriff and served with a Supreme Court writ. A few days earlier, Nowoweiski was also served with similar documents at a Richmond petrol station.
Lew, a former Coles Myer chairman, has alway displayed impeccable timing during his 45 years in the rag-trade, which span Just Jeans, Country Road, Portmans and Jacqui E, so the decision to lob a legal hand grenade over the festive season was unlikely to have been a coincidence.
Lew's writ in the Supreme Court of Victoria was a pre-emptive strike to protect part of his family's $621 million Lew Custodian Trust from Priester and Nowoweiski, who are parents to six of his grandchildren.
The case could have serious implications for Lew. Aside from the vast fortune at stake, Priester and Nowoweiski have been the custodians of business and family secrets that could be exposed in court.
Lew is an intensely private man, especially where his family is concerned. Last Wednesday, he launched a legal bid to gag all media reporting of the trial in an attempt to avoid publicity. Documents filed in the Supreme Court claimed publicity of trial proceedings would subject the grandchildren to further gossip and hurtful comments.
His lawyers have also taken the unprecedented step of asking The Sun-Herald's sister newspaper in Melbourne,The Sunday Age, to reveal a source, and have issued proceedings in the Federal Court. They claim someone breached the Privacy Act by providing the newspaper with the mobile phone number of Steven Fisher, who is a director of Lew's private company Voyager Distributing. Fisher was contacted by The Sunday Age three weeks ago and declined to comment. Fairfax Media will defend any action taken by Lew's lawyers,
Only last month, another high-profile business figure, the mining billionaire Gina Rinehart, failed in a High Court bid to uphold a suppression order that stopped the publication of details of her feud with three estranged children over a multibillion-dollar trust. Lawyers for Hancock Prospecting have also issued a subpoena to The West Australian journalist Steve Pennells, seeking all correspondence with John Hancock, Bianca Rinehart and Hope Welker. The Perth newspaper will defend the action.
In Melbourne, Lew had been expected to appear tomorrow in the Supreme Court in relation to the trust matter, but the trial was adjourned until May 7 following the death of his 99-year-old mother, Esther Lew-Nadelman, last Monday.
Famous for his elegant Italian suits and perennial suntan, Lew also has a fearsome reputation as a corporate heavyweight, who regularly unleashes his retinue of lawyers against those who cross him. Some opponents have lost their businesses and homes by taking him on, while most are sent packing with a menacing legal letter.
But the decision to move the family dispute into the Supreme Court will significantly up the ante.
The Lew family laundry will be hung out for all to see, if his legal team fail in their attempts to suppress all media coverage.
His former son-in-law was privy to sensitive business dealings while employed at the family company Playgro between 2004 and last year. Nowoweiski is also understood to have access to information that could embarrass the retailing dynasty.
Insiders say both parties are considering releasing the potentially damaging material in court affidavits, while the Australian Tax Office is expected to take a keen interest in the structure of the trust.
The Supreme Court judge Tony Pagone has also warned Lew his credibility would be at stake when he faces cross-examination.
"The evidence of Mr Solomon Lew's taxation concerns, the advice he received, the development of the trust proposal and the nature of the steps taken to implement it are matters said to be probative of whether he in fact had the conversations that he alleges to have had with each of his three children.
"Crucial to that evidence will be the credibility of Mr Lew and, to that extent, it is likely that he would be cross-examined," Justice Pagone said at a pre-trial hearing in February.
The dispute centres on a longstanding agreement between Lew and his three children, Peter, Jacqueline and Stephen, who each received $170 million but agreed to cede control to their parents.
While the deal is believed to have never been documented, each child would receive $25 million in loan accounts in their own names, with the remaining $145 million to be gifted back to Lew and his wife Rose.
According to Lew's senior counsel, Leslie Glick, the arrangement was designed to minimise tax, at a time when the former Howard government was contemplating a tax on the undistributed reserves from family trusts in 1999.
The tax never happened, but the deal remained in place, and only became an issue when the marriages of Jacqueline and Stephen unravelled.
Lew is seeking to block access to the $25 million loan accounts by Priester and Nowoweiski, who claim they are entitled to part of the fortune in their respective divorce settlements.
Nowoweiski's case appears to have been strengthened by recent claims that Stephen Lew made a $1 million contribution to his superannuation account from the loan account, which was also used to pay for travel expenses and bills.
Like most parents, Lew has become personally invested in the breakdown of his children's marriages and was regularly at their side during Family Court hearings last year. He reserves a deep antipathy for his erstwhile son-in-law, Priester, who married his daughter Jacqueline Lew in 1999 in Italy. They separated in 2010.
Priester was once the chief executive of the family company Playgro and a trusted lieutenant of Lew. Priester was sacked last year, but has intimate knowledge of Lew's retail empire.
Hostilities boiled over during a Friday night service at Malvern's Chabad House synagogue on September 15 last year, before about 50 worshippers.
Priester sat at a table normally used by the 65-year-old billionaire at the synagogue that bears his name. When Lew arrived, he bluntly told Priester he was not welcome and an argument ensued.
A letter from lawyers, Schetzer Brott & Appel, said Priester's attendance at the synagogue had been "calculated to unsettle Mr Lew". Sources close to Priester deny this.
The night after the confrontation, the pair were involved in a violent altercation in Crown Casino's valet-parking area in front of witnesses. Both blamed the other. Priester claimed his tooth was broken in the fracas, but never pressed charges.
Priester has also been blamed as the source of a series of stories in The Sunday Age that revealed a luxury swimming pool had been illegally built on public land that abuts a Mount Eliza property owned by the Lews' private company, Shuttlehall Pty Ltd.
A legal letter to The Sunday Age from Schetzer Brott & Appel threatening defamation claimed: "It is tolerably clear that one of the sources of information in relation to the swimming pool articles, whether directly or indirectly, is
Priester said he had never spoken to any journalist about the pool as the matter was before the Family Court. He would not respond to questions other than to say: "It's a shame for my family that he [Lew] chose this route for resolution after we tried for so long to reach an amicable solution."
Meanwhile, relations between the Lews and Nowoweiski have also been fraught. The Sunday Age cannot reveal details, but the Family Court hearings involving the couple have been an
Tensions between the two prominent Jewish families reached flashpoint last month, when Nowoweiski's father and brother, Max and Baron Nowoweiski, were investigated by police over claims they made death threats against Lew.
The investigation was abandoned, with police refusing to discuss the threats against Lew's life or where the information had come from. Ms Nowoweiski's lawyer Peter Nedovic would not comment yesterday.
The feud has brought unwanted attention to Melbourne's tight-knit Jewish community, while many powerbrokers and Toorak neighbours have been forced to take sides.
None of Lew's friends or associates were willing to speak publicly when contacted by The Sunday Age. An acquaintance said the billionaire was a "great Australian", while a relative claimed Priester was responsible for the acrimony.
A female friend of Rose Lew said the matter should have been discreetly resolved. "They [Priester and Nowoweiski] don't deserve a cent in my opinion, but I can't understand why they [the Lews] don't just pay them out. The whole thing is very sad," she said.
Lew's lawyer Sam Bond criticised The Sunday Age's coverage of the surrounding legal issues. "We have no confidence that any contribution will result in a fair and balanced article," Bond said.
Two weeks ago, Lew had a minor victory in his case against Priester and Nowoweiski, when his lawyers had Justice Pagone removed from hearing the trial. Justice Pagone had provided tax advice to the billionaire during the 1990s, but rejected allegations that his previous dealings as a tax barrister would compromise his professional objectivity as a Supreme Court judge. Lew and his lawyers have a knack of getting what they want, and Justice Pagone was forced to stand aside when further evidence was provided regarding his involvement with the $621 million trust.
While the trial is now slated for May 7, few would be surprised by another adjournment. Lew has a vast fortune to underwrite his legal bid and knows timing is critical in any fight, but the gloves are already off.