Ramsey & Ramsey

Case [2022] FedCFamC1F 396

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1) FIRST INSTANCE

Ramsey & Ramsey [2022] FedCFamC1F 396

File number(s): BRC 9850 of 2018
Judgment of: CAREW J
Date of judgment: 3 June 2022
Catchwords: FAMILY LAW – PROPERTY – ISSUE ESTOPPEL – OPPRESSION - SHARE BUY BACK – Where an earlier judgment found oppression against the applicant – Where the applicant controls the third party company – Where the earlier judgment created an issue estoppel – Where the issue estoppel prevents the applicant from raising the option of the third party company buying out the third respondent company shareholding in the second respondent company – Where the second respondent company is ordered to buy back 49% shareholding of the third party company – Where contemporaneously with the share transfer the loan accounts for related interests of the applicant are credited with the shareholding value – Where funds held on trust by the first respondent’s lawyer be released to the second respondent company and credited against the loan accounts for the related interests of the applicant.
Legislation:

Corporations Act 2001 (Cth)

Family Law Act 1975 (Cth)

Federal Circuit and Family Court of Australia Act 2021 (Cth)

Federal Circuit and Family Court of Australia (Consequential Amendments and Transitional Provisions) Act 2021 (Cth)

Family Law Rules 2004 (Cth) (no longer in force)

Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)

Cases cited:

Blair v Curran (1939) 62 CLR 464

Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225

Costigan & Costigan and Ors (No 2) [2017] FamCA 886

C Pty Ltd and Ors & PGW as Liquidator of S Pty Ltd (in Liq) [2011] FLC 93-485

Fitzgerald v Fish sub nom PBF v TRF (FLR) (2005) 191 FLR 294

Idoport Pty Ltd v National Australia Bank Limited & Ors, Idoport Pty Ltd v Donald Robert Argus [2007] NSWSC 23

Kohan and Kohan (1993) FLC 92-340

Kuligoski v Metrobus (2004) 220 CLR 108

Lenova & Lenova (Costs) [2011] FamCAFC 141

Nada & Nettle (Costs) (2014) FLC 93-612

Nevins & Urwin [2022] FedCFamC1A 57

Parke & the Estate of the Late A Parke (2016) FLC 93-748

Penfold v Penfold (1980) 144 CLR 311

Prantage v Prantage (2013) 49 Fam LR 197

Re Wilcox, Ex parte Venture Industries Pty Ltd (1996) 72 FCR 151

Ramsey & Ramsey [2021] FamCA 405

Ramsey & Ramsey (No 2) [2021] FamCA 488

Spurling and Ors & Spurling [2019] FamCA 802

Stanford & Stanford (2012) 247 CLR 108

Stopford Malloy & Malloy(Costs) [2018] FamCAFC 6

Tomlinson v Ramsey Food Processing Pty Ltd (2015) 256 CLR 507

Number of paragraphs: 143
Date of last submission/s: 20 May 2022
Date of hearing: 11 May 2022
Place: Brisbane
Counsel for Applicant and Third Party: Mr Sams
Solicitor for the Applicant and Third Party: John P. Bussa & Co
First Respondent:  Did not participate (no appearance required)
Counsel for Second to Fourth Respondents: Mr Ivessa
Solicitor for the Second to Fourth Respondents: Cooper Grace Ward Lawyers

ORDER

BRC 9850…

Continue reading Ramsey & Ramsey

Sign in free to access the full text

Details
AGLC
Ramsey & Ramsey [2022] FedCFamC1F 396
Case
[2022] FedCFamC1F 396
Decision Date

CaseChat Overview and Summary

In the Family Court of Australia, the case of Ramsey & Ramsey involved a property dispute between the husband and wife. The husband, via D Pty Ltd, sought to buy out the wife's 49% shareholding in B Pty Ltd, while the wife opposed this claim. The court was tasked with determining whether an issue estoppel arose from a previous judgment, which found oppression against the husband, and precluded him from buying out the wife's shareholding. The husband argued that the previous judgment did not determine the remedy for the oppression and that he should be able to buy out the wife's shareholding at fair value. Conversely, the wife argued that the previous judgment determined that the only available remedies were for either D Pty Ltd's 49% shareholding to be bought out by B Pty Ltd or for B Pty Ltd to be wound up. The court found that the principles of issue estoppel applied, precluding the husband from challenging the essential findings of fact or law in the previous judgment. Consequently, the husband was precluded from buying out the wife's shareholding in B Pty Ltd.

The court's reasoning was grounded in the principles of issue estoppel, which prevent a party from relitigating an issue that has already been determined in proceedings between the same parties. The court considered the previous judgment, which found oppression against the husband, and determined that the husband was precluded from challenging the findings of fact or law in that judgment. The court noted that the husband's financial circumstances were constrained, and he had indicated a need to rely on a loan from his brother if permitted to buy out the wife's shareholding. The court concluded that the husband was precluded from buying out the wife's shareholding in B Pty Ltd, and that the only available remedies were for either D Pty Ltd's 49% shareholding to be bought out by B Pty Ltd or for B Pty Ltd to be wound up. The court ordered that the second respondent buy back D Pty Ltd's 49% shareholding in B Pty Ltd for the sum of $350,825, with the loan accounts held by D Pty Ltd, Ramsey Pty Ltd, and E Pty Ltd to be credited with the same amount. The court also directed HH Lawyers to release the $100,000 held in trust for the parties to the second respondent, to be used to extinguish the remaining loan accounts. The husband was ordered to pay the costs of the second and fourth respondents fixed in the sum of $50,000 within 60 days.

Orders

Orders of the court

1. By consent, D Pty Ltd is joined as a party in the proceedings.

2. The second respondent buy back D Pty Ltd's 49 per cent shareholding in the second respondent for the sum of $350,825 in the manner prescribed by paragraph (3) herein.

3. Contemporaneously with the share transfer, the loan accounts held by D Pty Ltd as trustee for the Ramsey Family Trust, Ramsey Pty Ltd as trustee for the Ramsey Family Trust and E Pty Ltd are to be credited with $350,825.

4. The applicant and second respondent sign all approvals necessary to give effect to the share transfer.

5. The applicant and second respondent sign all approvals necessary to cancel the 4 D class shares held by E Pty Ltd.

6. HH Lawyers is directed to release the $100,000 (together with any interest thereon) held in its trust account pursuant to the order made by consent by the Honourable Justice Baumann on 12 November 2021 to the second respondent.

7. Upon receipt of the $100,000 the second respondent extinguish the remaining loan accounts of D Pty Ltd as trustee for the Ramsey Family Trust, Ramsey Pty Ltd as trustee for the Ramsey Family Trust and E Pty Ltd.

8. The applicant pay the costs of the second and fourth respondent fixed in the sum of $50,000 within 60 days.

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 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).

Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.

Background

Background to the litigation

I should also record that neither party took issue with this matter being determined by a judge other than the trial judge, in circumstances where that judge has since resigned. While I initially had some concerns that the proceedings might properly be considered part-heard (and therefore require a re-hearing, save perhaps with the consent of the parties to an alternative course), or that I lacked the legal authority to determine the remaining issues in the absence of any provision in the relevant legislation permitting me to complete the proceedings (unlike judges hearing an appeal),[5] I have come to the conclusion that the commercial dispute is not part-heard and that I do have the legal authority to decide the remaining issues. This is because the cause of action i.e. the commercial dispute, was determined by the trial judge. I so conclude, notwithstanding the fact that an order is yet to issue giving effect to the judgment and notwithstanding the final form of relief is yet to be determined. It is not at all unusual for parties to be given the opportunity to make submissions about the form of order to be made, to give effect to the findings made by the Court. An appeal lies from a ‘judgment’[6] not just an order,[7] which fortifies my view that the judgment was a final decision. [5] See s 17(2) Federal Circuit and Family Court of Australia Act 2021 (Cth) (“FCFCOA Act”).[6] See s 26(1)(b) FCFCOA Act.[7] See s 7 FCFCOA Act.BACKGROUND B Pty Ltd was originally a business through which the husband and wife, via a related entity, subcontracted for work. In 2008, the husband and wife established D Pty Ltd (the third party added as a party to the proceedings by consent on 11 May 2022). D Pty Ltd is the corporate trustee of the Ramsey Family Trust. Up until the settlement of the s 79 Family Law Act 1975 (Cth) (“FLA”) property dispute i.e. the property dispute between the husband and the wife, the wife was the sole director of D Pty Ltd and the husband and wife were equal shareholders. Pursuant to the settlement reached between the husband and wife, the husband acquired the wife’s shareholding and he is the sole director. In 2013, the husband and wife agreed to purchase the B Pty Ltd business from its previous owner for $800,000. When the husband and wife were unable to raise sufficient funds to do so, they obtained the agreement of Mr Fields (the fourth respondent) and Ms Fields to invest $400,000 (plus working capital of $50,000) in what became the joint venture between the Fields (Mr and Ms Field) and the Ramseys (the husband and wife). The husband and wife were to invest $400,000 (plus working capital of $100,000) and the assets of a related entity into the joint venture. Subsequent accountancy advice resulted in the establishment of a structure which saw the Fields’ one third interest in B Pty Ltd held by a related entity, C Pty Ltd (the third respondent) as trustee for the J Family Trust and the Ramseys’ two thirds interest held by a related entity, D Pty Ltd (the third party) as trustee for the Ramsey Family Trust.

Evidence

Evidence Before The Court

The respondent opposed leave being granted on numerous grounds. Firstly, that the husband had not complied with the requirements of r 7.10 and 7.11 which are (relevantly) in the following terms:7.10 Permission for expert’s reports and evidence(1) A party must apply for the court’s permission to tender a report or adduce evidence at a hearing or trial from an expert witness, other than a single expert witness.(2) …7.11 Application for permission for expert witness(1) A party may seek permission to tender a report or adduce evidence from an expert witness by filing an Application in a Proceeding.(2) The affidavit filed with the application must state the following:(a) whether the party has attempted to agree on the appointment of a single expert witness with the other party and, if not, why not;(b) the name of the expert witness;(c) the issue about which the expert witness’s evidence is to be given;(d) the reason the expert evidence is necessary in relation to that issue;(e) the field in which the expert witness is expert;(f) the expert witness’s training, study or experience that qualifies the expert witness as having specialised knowledge on the issue;(g) whether there is any previous connection between the expert witness and the party.(3) When considering whether to permit a party to tender a report or adduce evidence from an expert witness, the court may take into account the following:(a) the purpose of this Part (see rule 7.02);(b) the impact of the appointment of an expert witness on the costs of the proceeding;(c) the likelihood of the appointment expediting or delaying the proceeding;(d) the complexity of the issues in the proceeding;(e) whether the evidence should be given by a single expert witness rather than an expert witness appointed by one party only;(f) whether the expert witness has specialised knowledge, based on the person’s training, study or experience:(i) relevant to the issue on which evidence is to be given; and(ii) appropriate to the value, complexity and importance of the proceeding.(4) If the court grants a party permission to tender a report or adduce evidence from an expert witness, the permission is limited to the expert witness named, and the field of expertise stated, in the order. Secondly, it was argued that Mr MM’s report seeks to revisit matters that have already been the subject of findings by the trial judge as follows:171. There is no doubt that the evidence establishes that the [vehicles] were treated as a “personal use asset” (by the [Ramseys]) within [B Pty Ltd]. There is equally no doubt that the husband and wife met the running costs of their personal use of the [vehicles]. However, there is no evidence to support the proposition that the husband and wife were responsible for the costs of the [vehicles] beyond their running costs. To the contrary, the financial records of [B Pty Ltd] as established on the accounting evidence at trial reflect that [B Pty Ltd] met the loans and associated costs with respect to each of the [vehicles].…194.To this may be added the observation that, as already referred to, there is ample evidence that the husband was obtaining withdrawals of funds from [B Pty Ltd] for his own purposes. I accept the submission that by spending company money and using company assets for his own personal use, without an agreement that he so do, the husband was in breach of his director’s duties prior to his removal.

Decision

Reasons for decision

CAREW J
An additional issue was identified by the parties at the hearing before me. It can perhaps be best articulated as follows (and should be considered as part of issue (2)):(5)Who should receive the $100,000 held in trust for the parties by HH Lawyers and should that sum be off-set against the loan accounts for the related interests of the husband in B Pty Ltd?WHETHER OR NOT THERE IS AN ISSUE ESTOPPEL ARISING AS A RESULT OF THE EARLIER JUDGMENT OF THE TRIAL JUDGE THAT THE APPLICANT CANNOT BUY OUT THE RESPONDENTS’ INTERESTS IN B PTY LTD? It is common ground that the 18 June 2021 judgment creates an issue estoppel as to the finding of oppression. However, the parties are at odds on whether an issue estoppel arises as to the remedy available and in particular, whether the husband is precluded from buying out the respondents’ interests in B Pty Ltd. The husband contends that it remains open for the Court to decide on the appropriate remedy for the oppression and that he (via his entity D Pty Ltd) should be able to buy out C Pty Ltd’s shareholding (the Fields) and that it should be C Pty Ltd’s pre-oppression shareholding i.e. 33 per cent rather than its current shareholding of 51 per cent. The husband purports to challenge the trial judge’s finding that that “[t]here is no realistic prospect of the husband and wife, either individually or collectively via [D Pty Ltd], having the capacity to buy out the [Fields’/D Pty Ltd’s] interests at fair value”. It is not open to the husband to challenge a factual finding of the trial judge before me. That would be a matter for appeal. However, I note the concessions made by the husband’s former counsel (when attempting to resist an order that his client be responsible for the cost of the updated valuation) that the husband’s financial circumstances (and those of the wife) were constrained. I further note that in the proceedings before me, the husband indicated a need to rely upon a loan from his brother if he were permitted to buy out C Pty Ltd’s shareholding in B Pty Ltd for $235,000. The respondents, on the other hand, contend that the 18 June 2021 judgment determined that the only two options available as a remedy for the oppression were either that D Pty Ltd’s 49 per cent shareholding be bought out by B Pty Ltd or that B Pty Ltd be wound up. The principles applying to issue estoppel, which preclude a person from challenging essential findings of fact or law in proceedings which determine the cause of action between the same parties, are not in dispute.[13] [13] Blair v Curran (1939) 62 CLR 464 at 531 - 532; Kuligoski v Metrobus (2004) 220 CLR 363 at [21], [25], [39], [40], [47], [60] – [62]; Tomlinson v Ramsey Food Processing Pty Ltd (2015) 256 CLR 507 at [22]. The husband submits that an issue estoppel does not arise because the issue determined by the trial judge was not the same issue as that to be determined now, and further that the decision was not final. When deciding whether or not an issue estoppel arises, I am not restricted to the reasons for judgment but may have regard to any material that shows what issues were raised or decided including the transcript of the evidence.[14][14] Ebber v Isager (1995) 1 Qd R 150 at 151.

Ratio Decidendi

Legal Principle Established

Established by: CAREW J

Full text does not contain this section.