Ramsey & Ramsey

Case [2021] FamCA 405

FAMILY COURT OF AUSTRALIA

Ramsey & Ramsey [2021] FamCA 405

File number(s): BRC 9850 of 2018
Judgment of: KENT J
Date of reasons for judgment: 18 June 2021
Catchwords:

FAMILY LAW – PROPERTY – CONSENT ORDER – Where the husband and the wife agreed upon a 50 per cent/50 per cent division of whatever their property interests were found to be – Where resolution of a commercial dispute involving third parties is required to enable the property interests of the husband and the wife to be identified – Where it was not feasible to draft orders reflecting that agreement until the outcome of the commercial dispute was known – Where the parties ought be afforded the opportunity to make further submissions.

CORPORATIONS LAW – OPPRESSION – Where an issue of shares resulted in a majority shareholder being relegated to a minority shareholder – Where the company was essentially the vehicle utilised to operate a quasi-partnership – Where the husband was not provided any advance notice or opportunity to participate in discussion as to the issue of shares – Where the issue of shares amounted to oppression – Where the parties ought be afforded the opportunity to make further submissions as to the appropriate remedy.

Legislation:

Corporations Act2001 (Cth) Ch 2D, ss 180, 181, 182, 198A, 203C, 232, 233, 234, 235, 249A

Family Law Act 1975 (Cth) ss 75, 79, 106B

Income Tax Assessment Act 1936 (Cth) Div 7A

Family Law Rules 2004 (Cth) Pt 10.3

Cases cited:

Abrath v North Eastern Railway Co (1883) 11 QBD 440

Australian Securities Commission v Multiple Sclerosis Society of Tasmania (1993) 10 ACSR 489

Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304; [2009] HCA 25

Catalano v Managing Australia Destinations Pty Ltd (2014) 314 ALR 62; [2014] FCAFC 55

Dynasty Pty Ltd v Coombs (1995) 59 FCR 122

Foody v Horewood and Ors (2007) 62 ACSR 576; [2007] VSCA 130

Harding Investments Pty Ltd v PMP Shareholdings Pty Ltd (No. 3) (2011) 285 ALR 297; [2011] FCA 1370

Hillig v Darkinjung Pty Ltd (2006) 201 FLR 148; [2006] NSWSC 594

Hogg v Dymock (1993) 11 ACSR 14

Latimer Holdings Ltd v SEA Holdings New Zealand Ltd [2005] 2 NZLR 328

Lee v Chou Wen Hsien [1984] 1 WLR 1202

Mopeke Pty Ltd v Airport Fine Foods Pty Ltd (2007) 61 ACSR 395; [2007] NSWSC 153

Nassar v Innovative Precasters Group Pty Ltd (2009) 71 ACSR 343; [2009] NSWSC 342

Re Bodaibo Pty Ltd (1992) 6 ACSR 509

Re D G Brims & Sons Pty Ltd (1995) 16 ACSR 559; [1995] QSC 53

Re Five Minute Carwash Service Ltd [1966] 1 WLR 745

Re London School of Electronics Ltd [1986] Ch 211

Re Tivoli Freeholds Ltd [1972] VR 445

Roberts v Walter Developments Pty Ltd & Ors (1997) 15 ACLC 882

Thomas v H.W. Thomas Ltd [1984] 1 NZLR 686

Tomanovic v Global Mortgage Equity Corporation Pty Ltd (2011) 288 ALR 310; [2011] NSWCA 104

Vigliaroni v CPS Investment Holdings…

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Ramsey & Ramsey [2021] FamCA 405
Case
[2021] FamCA 405
Decision Date

CaseChat Overview and Summary

In *Ramsey & Ramsey*, Kent J of the Family Court of Australia considered a dispute between a husband and wife concerning the division of their property interests. The parties had agreed to a 50 per cent division of their combined property. However, the precise identification of these property interests was contingent upon the resolution of a complex commercial dispute involving third parties, which made it impossible to draft final orders at that stage.

The central legal issues before the court were twofold. Firstly, the court needed to determine how to proceed given that the parties' property interests could not be definitively ascertained until the outcome of an external commercial dispute was known. Secondly, the court was required to consider whether the conduct of a majority shareholder in issuing shares, which relegated another shareholder to minority status, constituted oppression, particularly in circumstances where the company functioned as a quasi-partnership and the affected shareholder had no prior notice or opportunity to participate in the decision.

Kent J reasoned that the resolution of the commercial dispute was a necessary precursor to determining the parties' property interests and making just and equitable orders under s 79 of the *Family Law Act 1975* (Cth). The court acknowledged that this might necessitate the adjournment of proceedings to allow for further expert accounting evidence. Regarding the oppression claim, the court found that the share issue, in the context of a quasi-partnership and without notice to the affected party, amounted to oppression.

Consequently, the court ordered that the proceeding be listed for a directions hearing to allow the parties to make further submissions concerning the terms of the orders to be made, both in relation to the property division and the appropriate remedy for the oppression found.

Orders

Orders of the court

THE COURT ORDERS THAT:

1. This proceeding be listed for a directions hearing at 9:30 am on 23 June 2021 for the purpose of making directions concerning further hearing from the parties about the terms of orders to be made to give effect to the findings recorded in Reasons for Judgment delivered on 18 June 2021.

Note: The form of the order is subject to the entry in the Court’s records.

Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to 17.02 Family Law Rules 2004 (Cth).

IT IS NOTED that publication of this judgment by this Court under the pseudonym Ramsey & Ramsey has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

Background

Background to the litigation

However, as will be seen, the nature of the issues raised in the commercial dispute, and more particularly the potential need for further expert accounting evidence depending upon the findings made in relation to those issues, dictates that the commercial dispute be resolved essentially as a discrete issue.[4] The parties recognised that this may involve the proceedings being adjourned for the purpose of further expert accounting evidence to be obtained before final orders are made. Moreover, as will be further discussed, it simply is not possible to determine the property interests of the parties and thus the orders which are appropriate and just and equitable within the meaning of s 79 until the ultimate outcome of the commercial dispute is known.[4] Pursuant to Part 10.3 of the Family Law Rules 2004 (Cth).BACKGROUND TO THE COMMERCIAL DISPUTE From about 1998 the husband commenced business as a sole trader, trading under the name of G Pty Ltd undertaking civil construction work. In May 2003 the husband and wife registered G Pty Ltd, a proprietary company limited by shares in which the husband and wife each held 500 shares. G Pty Ltd continued to be the vehicle through which the husband and wife operated a specialist construction business. The bulk of G Pty Ltd’s work was derived via subcontracting to a company owned by one Mr H named A Pty Ltd. In 2008 the husband and wife established D Pty Ltd as the corporate trustee of their family discretionary trust, the Ramsey Family Trust. The wife was appointed, and remains, the sole director of D Pty Ltd whilst the husband and wife were, and are, equal shareholders in D Pty Ltd. By the year 2013:(a)The husband and wife were the joint owners, subject to mortgage, of the real property at L Street, M Town (“the M Town property”) having purchased that property in 2008 for $585,000;(b)The husband and wife were the joint owners, subject to mortgage, of the property at N Street, Suburb O (“the Suburb O property”) having purchased that property for $1,385,000 in September 2011; (c)G Pty Ltd owned 50 per cent of a real property described as an industrial yard at P Street, Suburb Q (“the Suburb Q property”) used in the G Pty Ltd business with the other 50 per cent of that property being owned by Mr H’s company A Pty Ltd;(d)G Pty Ltd owned a cruiser, this vessel having been purchased in 2010 for $310,000 financed by an equipment hire purchase loan with the National Australia Bank (“NAB”);(e)G Pty Ltd owned a 5-tonne excavator and other equipment which, as part of G Pty Ltd’s business, was used by G Pty Ltd but was also let out for general hire;(f)The NAB held cross-collateralised securities in respect of borrowings by the husband and wife personally and by G Pty Ltd, including over the M Town property, the Suburb O property and the assets of G Pty Ltd. Mr H’s company A Pty Ltd was registered with S Corporation as an accredited civil service provider and A Pty Ltd held a construction contract with S Corporation for such work (“the S Corporation contract”). In late 2013 Mr H and the husband commenced negotiations about the sale by Mr H/A Pty Ltd to the husband/G Pty Ltd of:(a)The 50 per cent share of the Suburb Q property held by A Pty Ltd;(b)The S Corporation contract and the associated plant and equipment of A Pty Ltd (for convenience collectively referred to as “the A Pty Ltd assets”).

Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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