Karin Upton Baker and Gary Baker start untangling their financial knots
Karin Upton Baker, the Sydney boss of highly profitable French luxury goods chain Hermes, has settled her $18 million dispute with her Perpetual Trustee Company mortgagees out of court.
She was due to take the stand at a three-week hearing due to start yesterday. But instead she’s back at her desk presiding over the recently expanded luxury goods store, which reported $32 million turnover and a $5.2 million profit in its most recent financial results. Such was its improvement on its previous result – $3.8 million profit on a $25 million turnover – that the Sydney office was able to send back a $6 million dividend to head office.
Upton Baker’s lawyers told the court there had been an in-principle settlement with the terms of the settlement not being revealed, according to the Australian Financial Review.
It’s not known if the legal settlement includes her husband, Gary Baker, the Sydney property developer, who’s been battling bankruptcy attempts by Perpetual Trustee.
Her husband’s next court appearance has been scheduled for February 10 next year, Justice Anna Katzmann determined last month, after a series of postponements since his notice of appeal was filed in May.
Upton Baker, the managing director of Hermes Australia and former Harper's Bazaar editor, had been entangled in the financial court case since 2009.
Upton Baker, who earns $360,000 a year, was sued by lender Challenger Managed Investments after she stopped repaying the mortgage she took out in December 2006.
It’s been an embarrassing saga played out in the courts with details of the couple’s personal finances and relationship made public over her alleged default on $18 million in property development loans, which had her Elizabeth Bay non-waterfront penthouse (pictured above) as collateral.
Her affidavits presented the argument that husband Gary Baker "enjoyed such an ascendancy over" her that she could not "make any worthwhile judgment", signing the $18 million worth of mortgages, according to Vanda Carson's Daily Telegraph report.
She claimed she was "reduced to tears at her husband's insistence she sign" mortgage documents "under threat that, if she did not do so, the family would 'lose everything'."
Gary Baker’s dream development was a project overlooking Bondi Beach that turned into a nightmare.
An examination by the liquidator of one of Gary Baker's companies heard that the couple borrowed more than $10 million in 2006 for the Maxwell Court, Bondi project.
They planned to use the funds to buy the eight apartments at 6 Notts Avenue, a rundown 1920s building with postcard views of Bondi Beach.
The Bakers spent $12.2 million on their six purchases over 20 months.
But the couple's plans were stymied when they were unable to get two of the owners in the building to sell – and left holding six apartments in the block.
Without ownership of the entire building, their development was unfeasible and they were stuck with a loan they could not repay or refinance.
By late 2010 the overly ambitious Bondi Beach apartment block consolidation lost its foundations in resales.
The mortgagee sold the first one of the six prime Notts Avenue apartments for $1.5 million, having funded its $3.5 million purchase in early 2008.
The listing was the costliest of the purchases in the amalgamation attempt that began in late 2006 with a $1.1 million acquisition.
Each of the apartments had two bedrooms, one bathroom and a sunroom, totalling 103 square metres.
Challenger Managed Investments, which financed the other consolidated units, sold the five other apartments for $7.8 million last December.
The mortgagees, Perpetual and Challenger Managed Investments, sought vacant possession in February of the Elizabeth Bay penthouse.
For the past decade Upton Baker has headed the French house Hermes, which opened a new menswear department within its expanded Elizabeth Street store earlier this year.
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