Ramsey & Ramsey (No. 2)
[2021] FamCA 488
•7 July 2021
FAMILY COURT OF AUSTRALIA
Ramsey & Ramsey (No. 2) [2021] FamCA 488
File number(s): BRC 9850 of 2018 Judgment of: KENT J Date of judgment: 7 July 2021 Catchwords: FAMILY LAW – CORPORATIONS LAW – OPPRESSION – Where there has been a finding of oppression – Whether there is utility in obtaining a further valuation of the company – Where the husband and the wife seek an updated valuation of the company and land owned by the company – Where the Court cannot be certain as to current fair value of the shares – Where the land may have increased in value – Where the husband and the wife are to meet the costs of the valuations in the first instance. Legislation: Corporations Act 2001 (Cth) s 233
Family Law Act 1975 (Cth)
Cases cited: Ramsey & Ramsey [2021] FamCA 405
Re Jermyn Street Turkish Baths Ltd [1971] 3 All ER 184
Re Quest Exploration Pty Ltd (1992) 6 ACSR 659; [1992] QSC 15
Short v Crawley (No. 30) [2007] NSWSC 1322
Tomanovic v One Australia Pty Ltd (2015) 104 ACSR 596; [2015 NSWCA 11
Number of paragraphs: 21 Date of hearing: 7 July 2021 Place: Brisbane Counsel for the Applicant: Mr Shoebridge Solicitor for the Applicant: McCarthy Durie Lawyers Counsel for the First Respondent: Mr Bunning Solicitor for the First Respondent: Simonidis Steel Lawyers Solicitor for the Second, Third and Fourth Respondents: Cooper Grace Ward Lawyers ORDERS
BRC 9850 of 2018 BETWEEN: MR RAMSEY
Applicant
AND: MS RAMSEY
First Respondent
B PTY LTD
Second Respondent
C PTY LTD
Third Respondent
MR FIELDS
Fourth Respondent
ORDER MADE BY:
KENT J
DATE OF ORDER:
7 JULY 2021
THE COURT ORDERS THAT:
(1)Mr DD of EE Accountants be appointed as the single expert for the purpose of preparing a written report in relation to the current value of:
a. B Pty Ltd; and
b. The 49 per cent interest in B Pty Ltd held by D Pty Ltd on the basis there is to be no discount for a minority interest.
(2)Within seven (7) days from the date of these Orders the Applicant Husband shall prepare a draft letter of written instructions to Mr DD of EE Accountants and provide same to the other parties.
(3)Within seven (7) days of receipt of the draft letter (referred to in Order 2) the parties shall confer and agree upon the letter of written instructions, failing which each party shall provide to the single expert by no later than fourteen (14) days from the date of these Orders a letter of written instructions.
(4)FF Valuers are hereby appointed as the single expert for the purpose of preparing a written report as to the current valuation of the property situated at P Street, Suburb Q in the State of Queensland.
(5)The Applicant Husband and the First Respondent Wife shall, in the first instance, be jointly and severally responsible for and cause payment of the fees of the experts appointed pursuant to these Orders as and when those fees fall due, with ultimate responsibility for such fees to be determined as part of the final determination.
(6)The parties shall comply with any reasonable requests of the experts appointed pursuant to these Orders including any request by them to provide information and documents.
(7)The matter be listed before a Registrar of the Family Court of Australia for further directions on a date to be fixed no earlier than 31 August 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).
EX TEMPORE REASONS FOR JUDGMENT
KENT J:
On 18 June 2021 I delivered reasons for judgment[1] in this matter dealing with essentially what is described in those reasons as the commercial dispute between these parties. I incorporate without unnecessary repetition those reasons for judgment as part of these current reasons.
[1] Ramsey & Ramsey [2021] FamCA 405 (“substantive reasons”).
In summary, I determined in respect of the commercial dispute that there ought be relief granted for the oppression as found. I otherwise dismissed the various claims for relief advanced by the husband and the wife in respect of the commercial dispute whether under the Corporations Act 2001 (Cth) (“the Corporations Act”) or the Family Law Act 1975 (Cth).
Since then, there have been further mentions and hearings in the matter with a view to advancing the case so far as finalising the relief to be granted with respect to the oppression found. As my substantive reasons for judgment record it was a matter of either a winding up of the company B Pty Ltd or for the interests of the Ramseys and associated entities to be removed from the company by the Fields’ interests. In short that the shareholding of D Pty Ltd be acquired by the Fields’ interests.
The further orders that have been made since my orders were delivered were primarily directed to disclosure to enable each of the husband and the wife to determine whether there was any utility in seeking a further valuation of B Pty Ltd, and by further valuation I mean further to the valuation that was provided by the single expert and used in the trial.
On behalf of the respondents Mr Fields has filed affidavits setting out in some detail the financial performance of B Pty Ltd in more recent times since the single expert completed his report. In a nutshell it is contended in those affidavits that there is significant reason to be satisfied that the financial performance of B Pty Ltd has deteriorated in recent years with the likely consequence that any formal valuation of B Pty Ltd now will demonstrate a value less than that determined by the single expert for the purpose of the trial.
The disclosure ordered was designed to provide sufficient documents to the husband and the wife respectively for them to make a considered decision as to the utility of any further valuation.
Despite that disclosure and despite the fact that there still exists apparently some dispute about what has been disclosed, it appears to be the position of the husband and of the wife that there ought be further valuation evidence obtained for the purpose of the Court determining the relief to be granted with respect to the oppression.
Section 233 of the Corporations Act provides an extremely wide discretionary power for the Court to make any order it considers appropriate in respect of oppression. There are of course principles of proportionality to be applied between the subject conduct and the remedy to be granted. The essential aim of remedial relief is to put an end to oppression. Whilst there is no fixed rule it is often the most appropriate order that the fair value for shares should be assessed as at the date of the order being made. In effect the overriding requirement is that the date of valuation should be fair on the facts of the case.[2]
[2] Re Quest Exploration Pty Ltd (1992) 6 ACSR 659; Short v Crawley (No. 30) [2007] NSWSC 1322; Re Jermyn Street Turkish Baths Ltd [1971] 3 All ER 184; Tomanovic v One Australia Pty Ltd (2015) 104 ACSR 596.
As already discussed fairness in this case would be driven, if the evidence advanced by Mr Fields is accepted, on the proposition that the Fields’ interests have made a fair offer to cancel out effectively the debts owing by the Ramsey entities to the company in exchange for the shares. Effectively, on Mr Fields case scenario, the amounts owing to B Pty Ltd by the Ramseys’ interests and entities are greater than any realistic fair value of the shares held by D Pty Ltd on a current valuation.
Mr Fields might ultimately be proved to be correct about this, but the problem at the moment is that the Court cannot be certain so far as the current fair value of the shares held by D Pty Ltd is concerned, primarily by reference, but not exclusively, to land held by B Pty Ltd as referred to in my substantive reasons.[3] There was some evidence at the trial of some potential for development of that land. Whether or not that is so, the reality is that the valuation for that land was taken from a bank valuation provided in about August 2018, so about three years ago and based on a notoriously conservative bank valuation. It may well be that there has been a significant increase in the value of that land since the valuation in August 2018 putting it at $475,000.
[3] Property at P Street, Suburb Q.
For these reasons it seems to me that there ought be orders for a real estate valuation for the subject land and there ought be orders for a further single expert report and opinion upon the current fair value of B Pty Ltd and in particular the shareholding of D Pty Ltd.
An issue was raised as to the costs of this exercise. As it seems to me in circumstances where the husband and the wife are pressing for these valuations (notwithstanding that they cannot point to anything by way of disclosure about the trading performance of the company to dispel Mr Fields primary foundation that the company has deteriorated in terms of its trading performance) there ought be an order made, at least in the first instance, that the husband and the wife be jointly and severally liable for the valuation exercise that they seek. They will have the opportunity to ultimately argue about those costs in the event that it is proven to be the case that there has been in fact some utility in the valuation exercise to be undertaken.
The expert to be appointed will be Mr DD of EE Accountants. He is identified in an affidavit of the husband’s solicitor sworn and filed on 1 July 2021. He is acceptable to the respondents as the appropriate expert of that list of experts to undertake the valuation exercise. There was no issue taken with FF Valuers being the valuers to undertake the real estate valuation and an order should be made for them to be appointed the single expert for that purpose.
In terms of the share valuation exercise to be undertaken it is simply a valuation of the current value of B Pty Ltd and the 49 per cent shareholding interest held by D Pty Ltd in B Pty Ltd. I ought emphasise as I did in my substantive reasons that it is the usual course when there is a buyout of a minority shareholder as a result of an oppression action that there is no discounting of the value of the shareholding by reason of it being a minority shareholding nor by reason of there being a discount for marketability. I will not detail that in the orders but it should be patently obvious to the parties and thus to the expert appointed that the valuation exercise proceeds on the basis that there is no discount on the basis that it is a minority holding being valued.
I do not propose to make an order in terms of that sought in the wife’s draft proposed orders so far as the loan accounts of B Pty Ltd are concerned. As at trial there was evidence from the company’s accountants, and indeed the single expert proceeded on the basis of the financial accounts of the company. As discussed in the substantive reasons, it was not in issue that the financial accounts of the company accurately reflected loan accounts to the point, at least up until the report of Mr GG was completed, of equal remuneration being paid to each family.
If the husband and the wife wish to agitate some issue about loan accounts with the single expert now appointed, Mr DD, they can do so at their cost. If they engage Mr DD in an exercise of some kind of audit or fishing expedition then at least in the first instance it will be the husband and the wife bearing the cost burden for that exercise.
Otherwise there did not seem to be issue taken with the proposed orders submitted in draft form on behalf of the wife and adopted by the husband.
In relation to the last of the orders made that order is necessary because of my pending resignation from the Court and it will be necessary for another Judge to determine ultimately the relief to be granted for the oppression and any further applications to be made including that foreshadowed in respect of costs.
It is regrettable that I have not been able to finalise this matter before my departure but in my view, having regard to the substantive reasons I delivered, the substantive commercial dispute at least is determined subject only to the question of relief for the oppression to be granted. As I have pointed out in my substantive reasons, it is impossible to determine just and equitable, and appropriate, property settlement orders as between the husband and the wife unless and until the commercial dispute is finalised and the outcome of it finally known.
It will thus fall to another Judge not only to determine the remedy for the oppression as found with the assistance of the further expert reports that have been ordered, but to also determine if there needs to be a determination following the exercise thus far of the final appropriate and just and equitable property orders to be made as between the husband and the wife.
For these reasons I make the orders set out at the commencement of these my reasons.
I certify that the preceding twenty-one (21) numbered paragraphs are a true copy of the Ex Tempore Reasons for Judgment of the Honourable Justice Kent delivered on 7 July 2021, edited to correct grammatical errors and some infelicity of expression. Associate:
Dated: 8 July 2021
3
2