Thurston and Loomis and Ors - [2016] FamCA 318

FAMILY COURT OF AUSTRALIA

THURSTON & LOOMIS & ORS

[2016] FamCA 318

FAMILY LAW – PROPERTY – Asset pool - Superannuation – Interim - Where there has been substantial non-compliance with relevant legislation and regulations – Where the parties have improperly withdrawn funds from the superannuation account – Where withdrawals treated as loans – Where there is expert evidence the loans should be repaid with interest calculated at the appropriate rate.

Family Law Act 1975 (Cth) s 90SM (5), (6) & (7)
Superannuation Industry (Supervision) Act 1993 (Cth)
Superannuation Industry (Supervision) Regulations 1994 (Cth)

Georginas v Kostrati (1988) 49 SASR 371
Malpass and Mayson (2000) FLC 93-061
T and T (1984) FLC 91-588

APPLICANT:

Ms Thurston

FIRST RESPONDENT:

Mr Loomis

SECOND RESPONDENT:

L Ltd

THIRD RESPONDENT:

C Pty Ltd

FILE NUMBER:

BRC

1010

2012

DATE DELIVERED:

9 May 2016

PLACE DELIVERED:

Brisbane

PLACE HEARD:

Brisbane

JUDGMENT OF:

Forrest J

HEARING DATES:

7, 8, 9 & 10 December 2015

REPRESENTATION

COUNSEL FOR THE APPLICANT:

Mr Baston

THE FIRST RESPONDENT:

In Person

THE SECOND RESPONDENT:

Mr Loomis

THE THIRD RESPONDENT:

Mr Loomis

Orders

IT IS ORDERED UNTIL FURTHER ORDER

That Mr Loomis and Ms Thurston as directors of R Super Pty Ltd as trustee of the R Superannuation Fund forthwith do all things and sign all documents necessary to appoint Mr BG of E Accountants to finalise the said Superannuation Fund’s financial statements, that include statements of financial position, operating statements, balance sheets, profit and loss statements and members’ statements, and also tax returns for the financial years ending 30 June 2013, 30 June 2014, 30 June 2015 and 30 June 2016 and to determine and direct them as to all steps necessary to be taken to address the said trustee’s non-compliance with statutory and regulatory requirements in an endeavour to make the said R Superannuation Fund a complying fund according to law.
That, in particular, in discharging the role conferred upon him by these orders, Mr BG shall treat the following transactions involving the R Superannuation Fund as loans to the members of the fund owing by them to the fund from the date of the advance of the funds from the said superannuation fund, to be repaid by them with interest calculated by Mr BG at the rate appropriately fixed or approved by the Australian Tax Office for such advances:
(i)All funds withdrawn from the accounts of the superannuation fund and used in connection with the development and sale of real property that was registered in the name of Ms Thurston situated at Suburb GG in the State of Queensland;
(ii)The Australian dollar equivalent of GBP130,000 as at 13 January 2011, the date such amount that was property of the superannuation fund was deposited into a personal account of Mr Loomis;
(iii)Any other amounts separate and distinct to and not part of the previous two amounts, identified by Mr BG as having been withdrawn from accounts of the superannuation fund by either Mr Loomis or Ms Thurston since 1…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2016] FamCA 318
Decision Date: 9 May 2016

CaseChat Overview and Summary

This matter came before Forrest J concerning R Super Pty Ltd, the trustee of the R Superannuation Fund, and its directors, Mr Loomis and Ms Thurston. The dispute centred on the trustee's non-compliance with statutory and regulatory requirements, preventing the fund from being a complying fund. The court was tasked with determining the necessary steps to rectify this non-compliance and ensure the fund's compliance with the law.

The court was required to determine how to address the trustee's failure to lodge financial statements and tax returns for the financial years ending 30 June 2013, 2014, 2015, and 2016. Furthermore, the court needed to identify and classify specific transactions involving the fund as loans to members, establish a mechanism for repayment with interest, and direct the process for rectifying the fund's non-compliant status. The court also had to consider the role and responsibilities of appointed professionals in achieving these objectives and the reporting obligations to the Australian Tax Office.

Forrest J ordered that Mr BG of E Accountants be appointed to finalise the fund's financial statements and tax returns, and to address the trustee's non-compliance. Specific transactions, including funds used for property development and a sum transferred to Mr Loomis's personal account, were to be treated as loans to members, repayable with interest. Mr BG was empowered to seek information, but final decisions rested with him. Mr BG was also directed to instruct Mr RO, a solicitor, to withdraw funds from a specified account to repay these loans and associated interest, and to cover any tax liabilities, penalties, or interest owed to the Australian Tax Office, as well as Mr BG's professional fees. The financial statements were to be audited, and Mr BG was to report the remedial steps taken to the Australian Tax Office, requesting their consideration of the matter. Upon conclusion of dealings with the Australian Tax Office, Mr BG was to file a final report.

Orders

Orders of the court

IT IS ORDERED UNTIL FURTHER ORDER

That Mr Loomis and Ms Thurston as directors of R Super Pty Ltd as trustee of the R Superannuation Fund forthwith do all things and sign all documents necessary to appoint Mr BG of E Accountants to finalise the said Superannuation Fund’s financial statements, that include statements of financial position, operating statements, balance sheets, profit and loss statements and members’ statements, and also tax returns for the financial years ending 30 June 2013, 30 June 2014, 30 June 2015 and 30 June 2016 and to determine and direct them as to all steps necessary to be taken to address the said trustee’s non-compliance with statutory and regulatory requirements in an endeavour to make the said R Superannuation Fund a complying fund according to law.

That, in particular, in discharging the role conferred upon him by these orders, Mr BG shall treat the following transactions involving the R Superannuation Fund as loans to the members of the fund owing by them to the fund from the date of the advance of the funds from the said superannuation fund, to be repaid by them with interest calculated by Mr BG at the rate appropriately fixed or approved by the Australian Tax Office for such advances:

(i) All funds withdrawn from the accounts of the superannuation fund and used in connection with the development and sale of real property that was registered in the name of Ms Thurston situated at Suburb GG in the State of Queensland;

(ii) The Australian dollar equivalent of GBP130,000 as at 13 January 2011, the date such amount that was property of the superannuation fund was deposited into a personal account of Mr Loomis;

(iii) Any other amounts separate and distinct to and not part of the previous two amounts, identified by Mr BG as having been withdrawn from accounts of the superannuation fund by either Mr Loomis or Ms Thurston since 1 July 2012 and not already repaid to the superannuation fund.

That Mr BG shall be entitled to seek the provision of information from either Mr Loomis and/or Ms Thurston that might assist him in carrying out the tasks required of him pursuant to these orders, but he shall, subject to further order of this Court to the contrary, be solely responsible for the final decisions to be taken in the undertaking of these tasks.

That Mr BG shall, once he has determined the steps necessary to be taken pursuant to these orders, subject to further order of this Court to the contrary, give written direction to Mr RO to withdraw sufficient funds from ANZ account styled Mr RO as trustee for Mr Loomis and Ms Thurston BSB … Account Number … and to deposit those funds into ANZ account styled Mr RO as trustee for the Trustee of the Loomis-Thurston Superannuation Fund BSB … Account number …, so as to address the issues of non-compliance and to cause any and all of those loans to members of the fund that he has identified, to be repaid along with the appropriate amount of interest (having regard to the relevant balance, at the time, of the second of those named accounts, and the fact that a large amount of money owed to the superannuation fund by Mr Loomis and Ms Thurston was repaid by deposit initially to the trust account of ML Lawyers at some point in 2014 or 2015 on the sale of real property by one or both of Ms Thurston and Mr Loomis).

That Mr RO, solicitor, shall, subject to further order of this Court, follow the directions of Mr BG in respect of the withdrawal and/or transfer and/or payment of funds from either or both of the accounts referred to in the previous paragraph, including in respect to payment to the Australian Tax Office of any amount of tax, penalties, or interest on unpaid tax or penalties assessed to be owed by the R Superannuation fund, and including as to the reasonable professional fees payable to E Accountants for Mr BG’s services in undertaking the tasks effectively assigned to him by these orders and in preparing, and causing to be audited as required by law (and paragraph 6 hereof), the documents referred to in paragraph 1 of these orders.

That Mr BG shall also cause the documents prepared pursuant to paragraph 1 of these orders to be audited as required by law and by this order the parties authorise Mr BG to retain any auditors he considers appropriate to undertake the auditing task and to provide the audit reports, including any section of E Accountants who are entitled at law to audit financial statements of a self-managed superannuation fund otherwise prepared by another section of that firm.

That when Mr BG and the auditors consider the matters of past non-compliance by the Trustee of the said superannuation fund have been addressed to a point where the best possible outcome for the members of the fund and the directors of the trustee of the fund might nevertheless be able to be achieved, the matters of non-compliance, the steps taken to remedy them, the financial statements and the auditors’ reports along with any representations Mr BG considers professionally appropriate to make on behalf of the trustee and any other information required by law to be reported, shall be reported to and fully drawn to the attention of the Australian Tax Office by Mr BG with a call by him, at the request of this Court, for the Australian Tax Office to consider the matter and address all the issues raised as it considers necessary according to law.

That when Mr BG is satisfied that all business between the R Superannuation Fund and the Australian Tax Office arising from these orders is concluded he shall file in these proceedings and bring to the attention of the parties, Justice Forrest and Mr RO, solicitor, a final report of his dealings in the matter pursuant to these orders to which he attaches all relevant documents including, in particular, the financial statements and member statements of the fund for the year ended 30 June 2016.

That when Mr RO receives that report referred to in paragraph 8 hereof, he shall cause the parties and Justice Forrest to be notified in writing of the then current balances of the two accounts referred to in paragraph 4 hereof, and provide the Court and the parties with copies of all monthly statements received by him from the ANZ Bank in respect of those two accounts since the end of November 2015.

10.

That each of Mr BG and Mr RO has liberty to apply directly to the Court for any further direction or orders either considers necessary in order to properly discharge the duties assigned pursuant to these orders, on the giving of 2 days’ notice to the parties and to the other.

11.

The delivery of the final judgement in this matter is stayed until the completion of all of the matters required to be completed by these orders.

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

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