FEDERAL CIRCUIT COURT OF AUSTRALIA
| RAGLAND & BALLOCK | [2020] FCCA 1685 |
| Catchwords: FAMILY LAW – Property – de facto relationship of 10 years – significantly greater initial contributions by Applicant de facto Husband – very large number of disputes about the valuation of various property including a company used by the Applicant for tender-panel contracts – consistent lack of reference to authority by Respondent de facto Wife to support her multiple claims most of which were also unsupported by evidence – significant age difference between the parties but both with significant assets and income prospects notably the Respondent in the Employer R – the trial was unnecessarily protracted due to the conduct of the litigation by the Respondent – considerations regarding case and trial management. |
| Legislation: Family Law Act 1975 (Cth), ss.90SF(3), 90SM(4)(d) & (e) |
| Cases cited: Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175 In the Marriage of Kowaliw (1981) FLC 91-092 Mallet v Mallet (1984) 156 CLR 605 In the Marriage of Turnbull (1990) 15 Fam LR 81 In the Marriage of Georgeson (1995) 19 Fam LR 302 Harrison & Harrison (1996) 129 FLR 74; (1996) 20 Fam LR 322; (1996) FLC 92-682 In the Marriage of Pierce (1998) 24 Fam LR 377 Hickey v Hickey (2003) 30 Fam LR 355 NHC & RCH (2004) 186 FLR 240; (2004) FLC 93-204 AJO v GRO (2005) 33 Fam LR 134 Gollings v Scott (2008) 37 Fam LR 428 Goddard & Patterson [2011] FamCAFC 14 Stanford v Stanford (2012) 247 CLR 108 Bevan v Bevan (2013) 279 FLR 1; (2013) 49 Fam LR 387 Marsh & Marsh (2014) FLC 93-576 Bevan & Bevan [No.2] (2015) 51 Fam LR 363 Chapman v Chapman (2015) 51 Fam LR 176 Watson v Ling (2015) 52 Fam LR 79 Fields v Smith (2015) FLC 93-638; (2016) 53 Fam LR 1 Elford & Elford (2016) FLC 93-695 Vass v Vass (2016) 53 Fam LR 373 Wender & Wender (2017) FLC 93-768 Grier v Malphas (2017) 55 Fam LR 107 Trask v Westlake (2017) 55 Fam LR 153 Trevi & Trevi (2018) FLC 93-858 Falcken & Weule [2019] FamCAFC 140 Jabour v Jabour (2019) 59 Fam LR 475 |
| Applicant: | MR RAGLAND |
| Respondent: | MS BALLOCK |
| File Number: | CAC 733 of 2017 |
| Judgment of: | Judge WJ Neville |
| Hearing dates: | 1 & 2 May 2019; 8 November 2019 |
| Date of Last Submission: | 14 February 2020 |
| Delivered at: | Canberra |
| Delivered on: | 17 July 2020 |
REPRESENTATION
| Counsel for the Applicant: | Mr G Howard |
| Solicitors for the Applicant: | Phelps Reid Foster Johnson |
| Counsel for the Respondent: | Mr J Masters |
| Solicitors for the Respondent: | Marjason & Marjason Solicitors |
ORDERS
Subject to any other agreement in writing between the parties:
The Applicant Husband and Respondent Wife do such things and…
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- AGLC
- Ragland and Ballock [2020] FCCA 1685
- Case
- [2020] FCCA 1685
- Decision Date
CaseChat Overview and Summary
The court was tasked with resolving numerous disputes regarding property valuations, including the significant issue of retained earnings within the applicant's company, N Pty Ltd. A key legal question was how to treat these retained earnings within the context of family law property division, particularly when the company was solely directed by the applicant. The court also had to consider the impact of the respondent's litigation conduct on the proceedings and the overall case management.
In its reasoning, the court adopted a pragmatic approach to the company's retained earnings, acknowledging that in family law matters, courts often treat sole director-controlled entities and their retained earnings as effectively belonging to the individual, even if a strict legal distinction exists. This approach aimed to avoid unnecessary complexity and protracted arguments over corporate law technicalities, focusing instead on the substance of the parties' financial positions. The court also noted that the respondent's approach to litigation had unnecessarily prolonged the trial. The final orders reflected a division of assets and liabilities, with the applicant receiving 57% and the respondent 43%, and detailed provisions for the transfer of specific properties, refinancing of loans, and a significant adjustment payment from the respondent to the applicant, as well as a superannuation splitting order. Each party was ordered to bear their own costs.
Orders
Orders of the court
Subject to any other agreement in writing between the parties:
1.
The Applicant Husband and Respondent Wife do such things and sign such documents as are necessary to divide their assets and liabilities on the basis that the Applicant Husband receive 57% and the Respondent Wife receive 43% to the following effect.
2.
Within 42 days of the date of these Orders, being by 28 August 2020, the Applicant Husband do all things and sign all documents as are necessary to transfer to the Respondent Wife all his interest in the B Street, Suburb C property known as B Street, Suburb C, in the Australian Capital Territory.
3.
Within 42 days of the date of these Orders, being by 28 August 2020, the Respondent Wife do all such things and sign such documents as are necessary to transfer to the Applicant Husband her interest in D Street, Town E, New South Wales.
4.
The Applicant Husband and the Respondent Wife do such things and sign such documents as are necessary to refinance and secure into their separate names any existing loans owing to Westpac Bank in respect of the Account Number ...12 in the proportion to their share of the value of assets being transferred to them. For avoidance of doubt the Wife shall be responsible for 58% of the loan owing to Westpac which is calculated as [value of B Street, Suburb C] divided by [value of unit B Street, Suburb C + value of D(1) & D(2) Street, Town E] and the Husband 42% which is calculated as [value of D(1) & D(2) Street, Town E] divided by [value of B Street, Suburb C+ value of D(1) & D(2) Street, Town E].
5.
Within 42 days of the date of these Orders, being by 28 August 2020:
(a) The Applicant Husband do all things and sign all documents as are necessary to transfer to the Respondent Wife all his interest in the property known as F Street, Town G, New South Wales; and
(b) Concurrently with such transfer the Wife do such things and sign such documents and pay such money as are necessary to refinance into her sole name the mortgage secured over F Street, Town G, New South Wales.
6.
Within 30 days of the date of these Orders, being by 16 August 2020, the Husband in his capacity as Director of H Pty Ltd do such things and sign such documents as necessary to transfer the interest of H Pty Ltd in the property situated at J Street, Suburb K in the Australian Capital Territory being Volume ... Folio ... to the Husband and thereafter the Husband be solely responsible for all outgoings and liabilities of the J Street, Suburb K property and refinance the Mortgage number ... to the Husband’s sole name.
7.
Whereas:
(a) The self-managed super fund The H Pty Retirement Plan (“the self-managed super fund”) is a self-managed superannuation fund listed as a complying superannuation fund on the Australian Government Website “Super Fund Lookup”;
(b) The Husband is the only member of the self-managed super fund;
(c) The Husband is the only director and shareholder of H Pty Ltd as trustee for the self-managed super fund; and
(d) Pursuant to Section 90XT(4) of the Family Law Act 1975 the base amount of $159,000 (“the base amount”) is allocated to the Wife out of the Husband’s interest in the self-managed super fund.
(e) In accordance with Section 90XT(1)(a) of the Family Law Act 1975:
(i) The Wife is entitled to be paid, using the base amount allocated in the immediately preceding order, the amount calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001;
(ii) The entitlement of the Husband in the self-managed super fund is correspondingly reduced by force of this Order
(f) The self-managed super fund trustee (“the trustee”) must do all such acts and things and sign all such documents as may be necessary to:
(i) Calculate, in accordance with the requirements of the Family Law Act 1975, the entitlement awarded to the Wife in the immediately preceding clause of this Order;
(ii) Pay the entitlement whenever a splittable payment becomes payable out of the Husband’s interest in the self-managed super fund in the amount of $159,000 forthwith.
(g) This Order has effect from the operative time and the operative time is four days after service of the Order on a Trustee.
(h) After service by the trustee of the payment split notice pursuant to section r.7A.03 of the Superannuation Industry (Supervision) Regulation 1994 for the transfer of the transferable benefits from the self-managed superannuation fund to the Wife’s fund of her choice.
(i) The Husband, .after receipt of the Wife’s election contemplated in the immediately preceding order, convene a meeting of the trustee and do all such acts and things and sign all such documents as may be necessary to transfer the transferable benefit to the trustee of the Wife’s new super fund by way of transferring the base amount $159,000 from the cash account of the self-managed superannuation fund.
8.
Within 42 days of the date of these Orders, being by 28 August 2020, the Respondent Wife do such things and sign such pay the Applicant Husband a sum of $100,840.30 as a cash adjustment.
9.
Thereafter the Husband shall be entitled to be the sole legal and beneficial owner of:
(a) The property situated at J Street, Suburb K, in the Australian Capital Territory;
(b) The property situated at L Street, Town M in the state of New South Wales;
(c) His interest in the H Pty Ltd Trust;
(d) His interest in his business N Pty Ltd;
(e) His interest in H Pty Ltd;
(f) His interest in the H Pty Ltd Retirement Plan;
(g) Any money in any bank account in his name;
(h) Any contents and personal effects in his name or possession;
and he shall be solely responsible for all debts in his name or attaching to any item of property that he retains under these Orders.
10.
Thereafter the Wife shall be entitled to be the sole legal and beneficial owner of:
(a) The property known as F Street, Town G, in the State of New South Wales;
(b) Any money in any bank accounts in her name;
(c) Her share portfolio;
(d) Her motor vehicle;
(e) The horse float in her possession;
(f) Her horse collection of ponies;
(g) Her horse gear;
(h) Her Super Fund O entitlements
(i) Her Super Fund P;
(j) Any contents and personal effects in her name or possession;
and she shall be solely responsible for all debts in her sole name or attaching to any item of property that she retains under these Orders.
11.
Absent any other Application within 21 days of the date of these Orders, being by 7 August 2020, each party is to pay their own costs.
Background
Background to the litigation
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Evidence
Evidence Before The Court
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Decision
Reasons for decision
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Ratio Decidendi
Legal Principle Established
In response to the Husband’s answers, Counsel for the Wife said immediately after the above exchange (emphasis added):[31][31] T 87.Yes. You’re mixing principles up. I don’t need to go down that – your Honour, do you – I don’t propose to go down the path any further of this witness’s interpretation of what a corporation is, but unless you want me to clarify it, it will be my submission that in fact company owns property, and retained earnings within a corporation is owned by the corporation.HIS HONOUR: They’re all matters for submissions, Mr Masters. After a few more questions to the witness, the Husband’s Counsel intervened, thus:[32][32] T 87 – 88.MR HOWARD: Your Honour, I’m going to object at this stage, because I don’t understand the issue that it goes to. N Pty Ltd exists. It has, within the corporate structure, the retained earnings. They are already in the material. The material has already got about all of this. It’s clear that this court, when dealing with family law matters – I’m not talking about the Supreme Court dealing with corporate law matters and the Federal Court dealing with corporate law matters. This court, dealing with family law matters, when there’s a sole director and, if a trust, a sole appointor, or as we talked about with the other trust, with the trust, they treat them as the same even if they aren’t legally the same. Whether or not there is this legal difference and a difference in point of view between my learned friend and the witness is wholly irrelevant to your Honour’s determination and, with respect, it’s wasting that precious time that we’ve got. MR MASTERS: Your Honour, if my friend is prepared to make the concession that the ..... earned by the company, I don’t need to make any ‑ ‑ ‑ MR HOWARD: As long as my friend isn’t saying that I am then conceding that the company is worth the amount of the retained earnings because that has been taken into account in the valuations. It’s not up to my client to give that ‑ ‑ ‑ MR MASTERS: I am prepared to accept that concession on the basis ..... it’s owned by the corporation, the retained earnings and ‑ ‑ ‑ …MR HOWARD: It can’t be anything else. The issue of “retained earnings” was re-visited by some of the experts in the matter, notably Mr EE, later in the hearing. The cross examination continued with further questions to the Husband about the shareholding of his adult sons in N Pty Ltd. He confirmed that one of his sons had received a modest dividend in recent years of $20,000. He confirmed that he was not required to distribute funds equally to his sons who, combined, held a one-third share in the company. He also confirmed that both of his sons have worked for N Pty Ltd from time to time as contractors.[33][33] T 89. During the time that the Wife was at home for the two-plus years looking after X (recalling that X was born in 2009 and the Wife returned to work in 2012), the Husband said that his recollection was that the Wife was still contributing to her superannuation. Obviously, as a professional, it was the Employer R that was doing the actual contributing. The Husband also confirmed, without specifying detailed dollar amounts, that the Wife received some income from N Pty Ltd for performing various duties during her time caring for X.[34][34] T 90.