Gallieni and Gallieni and Ors - [2013] FamCA 314

FAMILY COURT OF AUSTRALIA

GALLIENI & GALLIENI AND ORS

[2013] FamCA 314

FAMILY LAW – COSTS – Indemnity Costs – wife sought order that the husband, third and fourth interveners (the husband’s parents) pay the wife’s costs of the substantive property proceedings on an indemnity basis – the first and second interveners (the wife’s sister and brother in law) sought an order that the husband, third and fourth interveners pay indemnity costs of the proceedings – the wife, first and second interveners sought orders that the husband pay costs of the stay application – the wife, first and second interveners sought orders that the Liquidator use funds otherwise payable to the husband to meet existing costs orders and as yet other unassessed costs and various consequential orders

Family Law Act 1975 (Cth) ss 117(2), and 117(2A)
Family Law Rules 2004 (Cth) rr 19.18(1) and 19.34

Arundel Chiropractic Centre Pty Ltd and Deputy Commissioner of Taxation [2001] HCA 26; [2001] 179 ALR 406.
Brito v Jalaba [2012] FamCAFC 188
Colgate-Palmolive Company v Cussons Pty Ltd (1993) 46 FCR 225 at 233
Re Coomber v Coomber [1911] 1CH
Fountain Selected Meats (Sales) Pty. Ltd.v. International Produce Merchants Pty. Ltd. [1988] 81 ALR 397.
MG Corrosion Consultants Pty Ltd v Vinciguerra (No 2) [2011] FCAFC 48 (4 April 2011)
Fitzgerald (as child representative for AF (Legal Aid Commission of Tasmania)) v Fish and Anor (2005) 33 Fam LR 123
Kohan and Kohan (1993) FLC 92-340
Latoudis v Casey (1991) 70 CLR 534
Limousin v Limousin (Costs) (2007) 38 Fam LR 478
Munday v Bowman (1997) FLC 92-784
Penfold v Penfold (1980) 144 CLR 311
Pencious & Pencious (No 2) [2012] FamCA 212
Ragatta Developments Pty. Ltd. v. Westpac BankingCorporation (unreported, Federal Court, 5 March 1993)
Tetijo Holdings Pty. Ltd. v. Keeprite Australia Pty. Ltd (unreported, Federal Court, 3 May 1991)

APPLICANT:

Ms Gallieni

RESPONDENT:

Mr Gallieni

FIRST INTERVENER

Mr D

SECOND INTERVENER

Ms D

THIRD INTERVENER

Mr H

FOURTH INTERVENER

Ms H

FILE NUMBER:

MLC

7541

2008

DATE DELIVERED:

9 May 2013

PLACE DELIVERED:

Adelaide

PLACE HEARD:

Hobart

JUDGMENT OF:

Benjamin J

HEARING DATE:

12 March 2013.

Final written submissions 3 May 2013

REPRESENTATION

COUNSEL FOR THE APPLICANT:

Mr O’Shannessy

SOLICITOR FOR THE APPLICANT:

Slater & Gordon

COUNSEL FOR THE RESPONDENT:

In Person

SOLICITOR FOR THE RESPONDENT:

COUNSEL FOR THE 1^ST & 2^ND INTERVENERS:

Ms Smallwood

SOLICITOR FOR THE 1^ST & 2^ND INTERVENERS:

Mallesons Stephen Jacques

COUNSEL FOR THE 3^RD INTERVENER:

In person

COUNSEL FOR THE 4^TH INTERVENER:

In person

Orders

The husband and Mr H (the third intervener) pay the costs of the wife and the costs of Mr D and Ms D (the first and second interveners) of the substantive proceedings and this costs application;
(a)The costs of the wife to be assessed as against the husband as and from 1 January 2009 and as against the third intervener as and from 7 July 2009;
(b)The costs of the…

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: [2013] FamCA 314
Decision Date

CaseChat Overview and Summary

The proceedings involved property disputes between the husband, Mr Gallieni, and the wife, Ms Gallieni, under the *Family Law Act 1975* (Cth), and also raised issues under the *Corporations Act 2001* (Cth). Interveners in the proceedings included the wife's sister and her husband, Mr and Ms D, and the husband's parents, Mr and Ms H. The core of the dispute concerned the ownership and entitlements relating to a factory unit acquired by a company, K Pty Ltd, in which the parties held various interests.

The court was required to determine the precise extent of the asset pool available for division between the husband and wife, which was contingent upon resolving the rights and entitlements of all parties, including the interveners, in relation to K Pty Ltd. This determination was fundamental to ascertaining the overall financial position of the husband and wife.

The court acknowledged the complexity of the case, noting the intermingling of property with other family members and jurisdictional issues. The reasoning focused on carefully considering the facts presented, particularly in relation to the financial arrangements surrounding the acquisition of the factory unit in 1991. This involved examining the contributions made by the husband and wife, Mr and Ms D, and Mr and Ms H, including loans, mortgages, personal guarantees, and the transfer of property as consideration. The court indicated that a final determination of the asset pool would not be possible until K Pty Ltd had been wound up.

Orders

Orders of the court

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Background

Background to the litigation

The substantive proceedings related to disputes under the Corporations Code and property proceedings pursuant to the Family Law Act. In my reasons delivered 5 October 2011 I set out an introduction and a background in paragraphs 1 to 17 and I repeat them here:-1.These are property proceedings between [Mr Gallieni] and [Ms Gallieni] over a relatively modest asset pool. The proceedings are complex because they involve the intermingling of property with other members of the parties’ families and other jurisdictional issues. In these proceedings the evidence was that the legal costs have, and will continue to extinguish a significant proportion of the parties’ wealth.2.It is of value in these reasons to introduce the parties to these proceedings, they are:-·[Mr Gallieni] (“the husband”), a university educated [professional], who describes himself as an entrepreneur.·[Ms Gallieni] (“the wife”), the long term wife of the husband. She was the primary carer of their three children and describes herself as having been dominated by the husband throughout most of the marriage. She says she was either deceived or kept in the dark about financial issues.·[Mr and Ms D]. [Ms D] is the wife’s sister and she and her husband describe themselves as naïve investors who relied upon the assertions and representations of the husband. They assert that they have been the victims of fraud and other improper business practices employed by the husband. They likewise say they relied upon the husband in terms of a major property investment. They are the first and second interveners.·[Mr and Ms H]. They are the husband’s parents. [Ms H] claims that she relies almost wholly on that which [Mr H] says and otherwise has limited knowledge of the surrounding facts, that assertion was not seriously challenged by any of the other parties, including her husband. On the other hand, [Mr H] asserts that he is ‘his own man’. [Mr H] claims a significant interest in the assets of the parties and says that he was well informed about the financial dealing insofar as they related to him, the wife and the interests of [Mr and Ms D]. The case for the wife and [Mr and Ms D] was that [Mr and Ms H] have been used and are being used by the husband to meet his own ends. That assertion is strenuously denied by the husband and by [Mr and Ms H]. They are the third and fourth interveners in these proceedings. 3.The complexity that engulfs these proceedings has defied the wit and wisdom of the parties (and those who advised them) in finding their own solutions. This complexity includes the nature of a property investment made in 1991 by some or all of the relevant parties. BACKGROUND4.The husband and wife married in January 1987 and separated in mid 2008. There are three children of their marriage, twins [G] and [N] now aged about 24 and [R] now aged 18. 5.The husband is a [professional person]. 6.The wife has trained and worked [in the beauty industry] and as a receptionist. As at October 2010 she was working as a receptionist and had an income of about $33,000 per year. 7.The wife and husband each owned property at the time they married, the value of husband’s property at that time was greater than that of the wife. The extent of that difference is in issue.8.The evidence of the husband was that he had net assets valued at about $255,000 and the wife had net assets of about $10,000. The wife disputes the values and equity asserted by the husband at the time of the marriage. No objective evidence was provided by the husband in terms of the real estate values he promoted. Having regard to my concerns about his evidence I am not convinced that the difference was as stark as he claims. 9.However, the financial circumstances of the parties in the first few years after marriage diminished. By 1989 they had jointly acquired some real property and by 1990 the evidence of both the husband and the wife was that their overall net wealth was negligible. 10.From mid 1989 the finances of the husband and wife were in a parlous state. According to the husband, this was a time of high interest rates and flat or declining property values. The parties had apparently defaulted on a purchase of real estate and owed considerable money to a bank on non income earning assets. Their family trust had acquired vacant land at [Lot AA in J] in 1988 for $263,000 and they were unable to commercially sell that land. They later used this property as part consideration for the acquisition of the factory at [Lot BB in J] by [K Pty Ltd].11.The husband and wife, together with their twin children, commenced living with and at the home of the husband’s parents, [Mr and Ms H]. The family remained living at that home for about two and a half years. [Mr and Ms H] provided accommodation for that period and assisted in the care of the children over that period and beyond. 12.In 1991 the husband and wife acquired an interest in a factory unit by way of their two-thirds shareholding in [K Pty Ltd]. The funding of that investment to purchase the factory was in part provided by:-· [Mr and Ms D] by way of money loans, a substantial mortgage over their home and personal guarantees;· the husband and wife who contributed capital for their shares by way of directing their family trust to transfer an adjacent vacant property it owned as part consideration. In this regard [Mr and Ms H] and the husband borrowed money from Citibank to reduce an existing loan over the land. The Citibank loan was secured by personal covenants of the husband and his parents and by a mortgage over the home of [Mr and Ms H]. That loan was secured by personal guarantees given to [Mr and Ms H] by the husband and wife and later further security by way of mortgages over the husband and wife’s [S Street] home. The nature of that arrangement is an issue; and · Further money was secured by mortgages over the [K Pty Ltd] factory and personal covenants of the husband, wife and [Mr and Ms D]. 13.The factory owned by [K Pty Ltd] now has a value of about $2,000,000. The rights and entitlements of the husband and wife, [Mr and Ms D] and [Mr and Ms H] in relation to [K Pty Ltd] are a major issue of dispute in these proceedings. That determination was fundamental to enable the Court to ascertain the pool of assets of the husband and wife. The precise extent of the pool of assets will not be known until such time as [K Pty Ltd] has been wound up. 14.During the course of the marriage the husband and wife acquired their own home and directly and indirectly contributed to the creation of a superannuation fund. 15.When the husband and wife separated in May 2008 they had money in the bank of about $200,000 which, after deducting credit cards debts left them with net cash savings of about $160,000. Since separation this money has been spent by the husband and there is a question of an allowance in the context of contributions in respect of that sum.16.This hearing was conducted over a lengthy period of time and involved a significant number of issues of fact. I am alive to the comments made by Fletcher and Moulton LJ in Re Coomber v Coomber [1911] 1CH 723 at 729 where they said of cases involving alleged fiduciary relationship that there is “no class of case in which one more carefully to bear in mind the facts of the case”. In reflecting on the fact finding in this case I have borne in mind that observation and I have endeavoured to be very careful about making such findings.17.I have not endeavoured to repeat or list the large volume of evidence, although I have had regard to it in making the various findings. In these reasons any statement of fact is to be treated as a finding of fact, unless the contrary is clear form the context.

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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