Akbar & Gandega

Case [2023] FedCFamC1A 174

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

(DIVISION 1)

Akbar & Gandega [2023] FedCFamC1A 174

Appeal from: Gandega & Fulmali [2023] FedCFamC1F 308
Appeal number: NAA 135 of 2023
File number: PAC 4811 of 2016
Judgment of: MCCLELLAND DCJ, AUSTIN & WILSON JJ
Date of judgment: 12 October 2023
Catchwords: FAMILY LAW – APPEAL – PROPERTY – JURISDICTION – Where the first respondent wife joined the appellant as a party to the original proceedings – Where the second respondent husband and the appellant were former business associates – Where at trial both spouses contended for the husband’s right to financial remedies against the appellant – Where the spouses relied upon multiple causes of action pleaded both at common law and in equity – Where the primary judge made orders compelling the appellant to pay the husband a fixed sum – Where there was no common substratum of facts between the spouses’ matrimonial cause and the husband’s civil suits against the appellant at common law and in equity –
Where the authority to decide the non-federal aspects of the justiciable dispute only arises when such non-federal aspects are an integral part of the same controversy – Where the primary judge mistakenly assumed jurisdiction – Where the orders of the primary judge are ultra vires – Appeal allowed – Where the causes of action at common law and in equity pleaded by the spouses against the appellant in the original proceedings are dismissed for the want of jurisdiction to entertain them – No order as to costs.
Legislation:

Family Law Act 1975 (Cth) Pt VIII, ss 75, 78, 117

Federal Proceedings (Costs) Act 1981 (Cth)
Cases cited:

Amaca Pty Ltd v Latz (2018) 264 CLR 505; [2018] HCA 22

AZC20 v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs [2023] HCA 26

Bergman & Bergman (2009) FLC 93-395; [2009] FamCAFC 27

Berowra Holdings Pty Ltd v Gordon (2006) 225 CLR 364; [2006] HCA 32

DMW & Anor v CGW (1982) 151 CLR 491; [1982] HCA 73

Dougherty v Dougherty & Anor (1987) 163 CLR 278; [1987] HCA 33

Eberstaller v Poulos (2014) 87 NSWLR 394; [2014] NSWCA 211

Fencott v Muller (1983) 152 CLR 570; [1983] HCA 12

Fox v Percy (2003) 214 CLR 118; [2003] HCA 22

Harris v Caladine (1991) 172 CLR 84; [1991] HCA 9

Hsiao v Fazarri (2020) 270 CLR 588; [2020] HCA 35

Johnson v Perez (1988) 166 CLR 351; [1988] HCA 64

Kennon v Spry (2008) 238 CLR 366; [2008] HCA 56

Loxton v Moir (1914) 18 CLR 360; [1914] HCA 89

Minister for Immigration and Border Protection v SZVFW (2018) 264 CLR 541; [2018] HCA 30

Minister for Immigration and Multicultural and Indigenous Affairs v B (2004) 219 CLR 365; [2004] HCA 20

National Trustees Executors and Agency Co of Australasia Ltd v FCT (1954) 91 CLR 540; [1954] HCA 71

QYFM v Minister for Immigration, Citizenship, Migrant Services…

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AGLC
Akbar & Gandega [2023] FedCFamC1A 174
Case
[2023] FedCFamC1A 174
Decision Date

CaseChat Overview and Summary

The appeal in the case of Akbar & Gandega involved the appellant, Mr Akbar, and the respondents, Ms Gandega and Mr Fulmali, who were husband and wife. The dispute centred on the jurisdiction of the court to hear and adjudicate claims against Mr Akbar by Mr Fulmali, who was also a former business associate of the appellant. The case was heard in the Federal Circuit and Family Court of Australia, Division 1. The central legal issue was whether the court had the authority to hear and decide the causes of action pleaded by the spouses against the appellant in the original proceedings, given that these actions were not directly related to the spouses' matrimonial dispute.

The court determined that the primary judge's jurisdiction to decide the non-federal aspects of the justiciable dispute was limited to situations where such aspects were integral to the same controversy. In this case, the court found that the causes of action at common law and in equity pleaded by the spouses against the appellant were not integral to the matrimonial cause. Consequently, the primary judge's assumption of jurisdiction was mistaken, and the orders made by the primary judge were beyond the court's authority, making them ultra vires. The court concluded that the appeal should be allowed, and the causes of action pleaded by the respondents against the appellant were dismissed for lack of jurisdiction. The court also dismissed the appellant's application for costs and the parties' respective applications for costs certificates.

In summary, the court's decision highlighted the importance of jurisdictional limits in family law proceedings, particularly when dealing with causes of action that extend beyond the scope of the matrimonial dispute. The court's ruling underscored the necessity for careful consideration of the applicability of jurisdiction in complex cases involving multiple parties and causes of action.

Orders

Orders of the court

NAA 135 of 2023

PAC 4811 of 2016

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)

BETWEEN:

MR AKBAR

Appellant

AND:

MS GANDEGA

First Respondent

MR FULMALI

Second Respondent

ORDER MADE BY:

MCCLELLAND DCJ, AUSTIN & WILSON JJ

DATE OF ORDER:

12 OCTOBER 2023

THE COURT ORDERS THAT:

1. The Application in an Appeal filed on 14 August 2023 is dismissed.

2. The appeal is allowed.

3. The causes of action at common law and in equity pleaded by the respondents against the appellant in the original proceedings are dismissed for the want of jurisdiction to entertain them.

4. The appellant’s application for costs is dismissed.

5. The parties’ respective applications for costs certificates pursuant to the Federal Proceedings (Costs) Act 1981 (Cth) are dismissed.

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

The following reasons explain why the appealed judgment suffers from the want of jurisdiction, despite the respondents’ contention to the contrary.Background The wife asserted marital separation in 2012, but no finding was made to resolve that issue. The matrimonial proceedings were not commenced between them until some years later. The husband and the appellant were former business associates, running a successful business operation through corporate structures. In 2016, the husband struck an agreement with the appellant about the terms on which he would withdraw from the business and its controlling corporations. The agreement entailed the appellant’s payment of an unspecified sum of money to the husband, the quantum of which would depend on the calculation of future net profits by accountants. The husband alleged the appellant breached the agreement, but had not brought any civil suit for remedies against the appellant before the matrimonial proceedings were commenced. The wife commenced the proceedings in October 2016, unexceptionally seeking discretionary financial relief against the husband under Pt VIII of the Act. However, apparently without any forethought as to her lack of standing to do so, she joined the appellant as a party, purporting to sue him on behalf of the husband for damages to compensate him for the appellant’s alleged breach of the contract. Evidently, the wife’s objective was to recover damages for the husband, which money would then form part of his property and hence be amenable to financial adjustment orders between the spouses in the matrimonial dispute. By the time the proceedings reached trial in August 2022, both spouses contended for the husband’s right to financial remedies against the appellant by reliance upon multiple causes of action, pleaded both at common law and in equity. The array of their claims included breach of contract, an account for profits, equitable compensation, restitution, unjust enrichment, and constructive trust. The appellant denied liability on any basis. As it transpired, the trial ran for eight days and focused almost entirely upon the appellant’s alleged liability to the husband and the quantification of the liability. The matrimonial dispute between the spouses was but a small part of the contest. The spouses’ cross-examination of one another on factual issues was easily confined to a single day. Indeed, they agreed their contributions were equal (at [150]) and pursued only a narrow dispute about the quantum of the percentage adjustment the wife should have by reference to considerations under s 75(2) of the Act (at [151]). The primary judge made no orders at all to conclude the financial cause between the spouses, instead directing them to bring in orders reflecting the reasons (at [162]). For reasons it is presently unnecessary to discuss, that has not yet happened. The appealed judgment pronounced by the primary judge in April 2023 comprised only three orders, designed to quell only the controversy as between the husband and the appellant. In effect, the orders compel the appellant to pay to the husband the sum of $2,456,002, which sum was included within the table of the spouses’ assets and liabilities for the purpose of the ultimate determination of their matrimonial cause (at [147]).

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

Section 78 of the Act is located within Pt VIII, dealing with financial relief between spouses, and provides as follows:78 Declaration of interests in property (1)In proceedings between the parties to a marriage with respect to existing title or rights in respect of property, the court may declare the title or rights, if any, that a party has in respect of the property.(2)Where a court makes a declaration under subsection (1), it may make consequential orders to give effect to the declaration, including orders as to sale or partition and interim or permanent orders as to possession. By its specific terms, s 78 of the Act empowers the Court to declare “existing title or rights” in respect of “property”. The concept of “property” is used in different ways in different statutory contexts but, where the term appears in the Act, it has been given a wide meaning conformably with the remedial purpose of the Act (Kennon v Spry (2008) 238 CLR 366 at 387, 390 and 396–397). It certainly extends beyond property in which the spouses have legal interests (Kennon v Spry at 442). The causes of action alleged by the husband against the appellant were “choses in action” and hence “property” in his hands (National Trustees Executors and Agency Co of Australasia Ltd v FCT (1954) 91 CLR 540 at 584; Loxton v Moir (1914) 18 CLR 360 at 379). Yet s 78 of the Act only empowered the primary judge to declare the husband’s existing title or right in the chose in action, which title or right the wife certainly did not separately enjoy. The provision did not empower the primary judge to hear and adjudicate the causes of action by granting a compensatory remedy, thereby converting the husband’s “chose in action” into a “chose in possession”. If the power afforded by s 78 of the Act was to extend so far there would be no limit to the extent of the jurisdiction to hear and decide common law, equitable and statutory causes of action against third parties concerning spouses’ entitlements to money and property merely because it is convenient to establish the ambit of the property interests which may then be divided between them in the exercise of discretionary power under Pt VIII of the Act. The power under s 78 of the Act is confined to the use of legal and equitable principles to establish the spouses’ existing, not prospective, legal and equitable property interests, which is the first step in exercising discretionary power to make adjustment orders pursuant to s 79 of the Act (Stanford v Stanford (2012) 247 CLR 108 at [37] and [50]; Hsiao v Fazarri (2020) 270 CLR 588 at [50] and [66]; R v Ross Jones; Ex parte Beaumont (1979) 141 CLR 504 at 511 and 517). Such statutory power is commonly used in that way to declare spouses’ existing equitable interests in real or personal property (Warby and Warby (2002) FLC 93-091 at 88,792), with expert evidence often then led about the value of such property interests, though the court cannot stray far into that contentious territory unless the jurisdiction to do so is properly accrued (Valceski v Valceski (2007) FLC 93-312 at [29]–[36]).