ON April 29, 2012, prominent Hunter businessman and horse breeder Martin Hawcroft climbed through a barbed-wire fence on his Sandy Hollow property and accidentally shot himself in the stomach.
His tragic death at just 53, set in train a lengthy and complicated court battle between his widow, Jennifer Hawcroft, and the Hawcroft family company - which owns the landmark Newcastle hotel Noah's on the Beach.
The Hawcroft versus Hawcroft battle, over who was entitled to Mr Hawcroft's $2 million life insurance policy, opened a window on the complex relationships in the prominent business family.
It pitted the mother of Mr Hawcroft's two young sons against an alliance of his brother and sister, John Hawcroft, of Warrawee, and Michelle Jamieson, of Burrapine, who combined, own a controlling share of Hawcroft General Trading Co.
All three are directors and equal shareholders of the family company that purchased Noah's in 1989.
The two-year battle was finalised in the Supreme Court last month with Mrs Hawcroft finding herself on the wrong end of an appeal court decision that awarded the $2 million to Hawcroft General Trading Co.
A three-bench judge decision, it was in stark contrast to a year earlier when Justice Peter Young ruled Mrs Hawcroft was entitled to the money and ordered the company pay her the $2 million that was being held in its solicitor's trust account.
The complicated legal challenges heard that Mrs Hawcroft believed she had a "moral claim" to the money because her husband had been paying the policy premiums for more than a decade.
Required for a bank loan, the CommInsure life insurance policy was taken out by the company in 1996. As general manager of the company's hotel business, the policy was required on the basis that the success of the business depended on Mr Hawcroft.
If something happened to him, the money would be used to employ a manager to prepare the company hotels, Noah's on the Beach and Noah's Mid City Motor Inn, Muswellbrook, for sale.
In 2005, the insurance was no longer needed by the bank, the level of cover was dropped to $2 million and the company started deducting the monthly policy payments from Mr Hawcroft.
The court heard Mr Hawcroft made several enquiries about changing the beneficiary of the policy to include his wife, but he never actually did it.
In July 2007, Mr Hawcroft contacted the insurer asking about transferring the beneficiary of the policy and was told “certain documentation” was needed. Evidence before the court included a completed “Nomination of Beneficiary” form dated September 7, 2010, naming Mrs Hawcroft, but there was no evidence it was sent to the insurer.
Mrs Hawcroft gave evidence that her husband told her if anything happened to him, “there is that policy, there is a couple of million there”.
Backing up her evidence was notes from a 2005 meeting taken by the company's accountant. Mr Hawcroft and his brother Peter Hawcroft were directors of the company at the time and the accountant recalled Peter Hawcroft resenting having to pay any part of the insurance premium, indirectly as a shareholder, because he believed he would take over managing the company's hotels if anything happened to his brother.
The accountant’s note said that Peter wanted the company to stop paying for the policy, but rather than cancel it, Mr Hawcroft decided to take over the policy and pay the premiums himself. A split in the family saw Peter walk away from the business in 2011.
At the time of Mr Hawcroft's death, he was a director and joint owner of the company alongside his brother, John, and sister, Michelle. Mrs Hawcroft inherited her husband’s one-third share of the company and weeks after his death was appointed a director of the company, a position she still holds.
After Mr Hawcroft’s death, the directors employed a lawyer for advice on how to deal with the life insurance policy and were told the $2 million should go to Mrs Hawcroft.
On May 20, 2014, the trio signed an indemnity deed that stated the company should “promptly claim upon [the insurer] and account to [Jennifer as executrix] for the whole of the proceeds of the insurance policy”.
Things were further complicated when CommInsure refused to pay the money to Mrs Hawcroft, because the company was the beneficiary on the policy.
To avoid tax on the payment, further advice was sought from a taxation lawyer and the Australian Taxation Office on the best way to handle the money. The advice given was that the company was the legal owner of the policy and a court order was needed for the tax office to recognise a change in beneficiary.
In November, 2014, two other agreements were made that would see Mrs Hawcroft get $1million from the insurance payout and loan the business $1 million, dependent on a court order. The loan would be used by the company to secure more than $9 million for building works on the hotels.
Mrs Hawcroft launched legal action in May, 2015, seeking payment of the $2 million and the company filed a cross-claim stating it was entitled to the money. After Mrs Hawcroft won, an appeal was lodged and a hearing held in March.
The appeal judges found that the primary judge "erred" and the proceeds of the insurance policy, now valued at $2.2 million, belong to the company.
Mrs Hawcroft said this week she was “disappointed” by the ruling. “Martin had personally paid the premiums on the policy since 2005 believing his family would benefit from it in the event of his passing,” she said.
“Whilst we all have to accept the court’s decision, I personally cannot rationalise it, and, in my opinion, I do not believe it was morally correct for the company to deny Martin's sons and claim the insurance proceeds.”
A statement issued by Ms Jamieson said the company was initially unaware it owned the policy and was “pleased its contentions” were upheld by the court.