FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Gandega & Fulmali [2023] FedCFamC1F 308
File number(s): PAC 4811 of 2016 Judgment of: RIETHMULLER J Date of judgment: 21 April 2023 Catchwords: FAMILY LAW – PROPERTY – Where the husband and second respondent jointly owned a business – Determination of the value of the husband’s interest in the business required – Signed agreement for the husband to resign as director to receive 50 per cent of profits and value of business in return – Second respondent failed to fulfil his obligations under the agreement – Where accounting records for the business were scarce and inconsistent – Where the second respondent engaged in conduct to frustrate the calculation of the husband’s entitlement – Property pool generally agreed between the wife and husband – Declaration that the husband is owed funds in respect to funds contributed to a joint venture with the second respondent – Judgment against second respondent for fixed sums and interest in favour of the husband – 60/40 adjustment of the property pool in wife’s favour – Difficulties of enforcement and costs – Submissions as to the form of final orders and costs Legislation: Family Law Act 1975 (Cth) ss 79, 75(2) Cases cited: Konskier v B Goodman Ltd [1928] 1 KB 421 Division: Division 1 First Instance Number of paragraphs: 162 Date of hearing: 22–31 August 2022 Place: Parramatta Counsel for the Applicant: Mr Reeves Solicitor for the Applicant: Marsdens Law Group Counsel for the First Respondent: Mr Dura Solicitor for the First Respondent: Crumpton Lawyers Counsel for the Second Respondent: Mr Ford Solicitor for the Second Respondent: KPL Lawyers ORDERS
PAC 4811 of 2016 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS GANDEGA
Applicant
AND: MR FULMALI
First Respondent
MR AKBAR
Second Respondent
order made by:
RIETHMULLER J
DATE OF ORDER:
21 April 2023
THE COURT DECLARES THAT:
1.The husband is entitled to the sum of $290,692 from the monies held by KPL Lawyers in their trust account with respect to the D Pty Ltd venture.
THE COURT ORDERS THAT:
2.The second respondent pay the husband the sum of $2,165,310.
3.The balance of the sum held on trust by KPL Lawyers (in excess of the husband’s entitlement to a refund of $290,692) be paid to the husband in part satisfaction of the judgment sum.
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.
IT IS NOTED…
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- AGLC
- Gandega & Fulmali [2023] FedCFamC1F 308
- Case
- [2023] FedCFamC1F 308
- Decision Date
CaseChat Overview and Summary
The case of Gandega & Fulmali involved a dispute between the husband and the second respondent, with the wife seeking a property settlement under section 79 of the Family Law Act. The wife alleged that the husband was entitled to a significant sum due to business dealings between him and the second respondent. The husband and wife had been married since 1996 and had one child together. The husband had previously operated his own business before changing careers and working in the services industry. The wife worked in the health care sector. The husband and the second respondent had established two companies, B Pty Ltd and C Pty Ltd, which traded well until they had a business dispute in 2014 that resulted in the liquidation of C Pty Ltd. The husband and the second respondent continued to operate other businesses, including D Pty Ltd, which purchased and developed a property in Suburb DD. The husband and wife separated in around 2012, and the husband commenced a relationship with another woman in Asia. The wife sought to establish that the husband was entitled to a significant sum as a result of the business dealings between him and the second respondent. The court had to determine whether the husband was entitled to a property settlement and, if so, how much. The court also had to decide whether the husband was entitled to interest on the sums owed to him by the second respondent. The court found that the husband was entitled to a property settlement and that the second respondent was liable to pay the husband a total of $2,165,310, including interest. The court also found that the husband was entitled to interest on the sum of $290,692 currently held on trust with respect to the D Pty Ltd venture. The court ordered that the second respondent pay the husband the total sum of $2,165,310, along with any interest that may have accrued. The court also ordered that the sum held on trust in excess of the husband's entitlement of a refund of $290,692 should also be paid to the husband in part satisfaction of the judgment sum owed by the second respondent. The court will hear the parties with respect to consequential orders that may be appropriate, such as any applications for injunctions to restrain dealings with assets and with respect to costs, following delivery of these reasons.
Orders
Orders of the court
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Background
Background to the litigation
There is no claim by the wife that the second respondent has any obligation directly to her. Instead, the wife’s claim is for a property settlement pursuant to s 79 of the Act and, as an incident of that claim, she pursues a case against the second respondent to establish that the husband is entitled to a significant sum as a result of the business dealings between them.BACKGROUND The husband was born in 1966 and the wife was born in 1968. The husband and wife commenced cohabitation in Country Y in around 1996 and were married in Country Y in late 1996. In 1997, the husband ceased operating his own business and changed careers. In 1998, the wife and husband migrated to Sydney, Australia, where they spent time in a detention centre before being released in 2000 and 2021 respectively, and resumed cohabitation in New South Wales. After release from immigration detention, the husband obtained employment in the services industry and, later, the wife obtained work in the health care sector. There is one child of the relationship, born 2006, who is 16 years of age. In 2006 or 2007, the husband met the second respondent whilst undertaking a course. At around this time, the husband registered a business under the name C Pty Ltd. He and the second respondent became friends and the husband attended the second respondent’s wedding in Country Y in 2008. In 2008, the husband and the second respondent established two companies to operate their business, being B Pty Ltd (BPL) and C Pty Ltd. By 2012, the business was trading well. The husband and the second respondent had commenced importing equipment direct from Country Z and Country BB, rather than purchasing it from local suppliers. During this period, the husband and the second respondent were spending time travelling overseas. The wife contends that she and the husband separated in around 2012 under the one roof, however the husband contends that they separated at a later stage, albeit some time prior to August 2016. The husband commenced a relationship with a woman in Asia around this time. In 2014, the husband and the second respondent had a business dispute with a client, which resulted in C Pty Ltd being placed in voluntary liquidation. However, in the same year, they secured a large contract with CC Pty Ltd. In 2015, the husband and the second respondent register a company, D Pty Ltd, to purchase and develop a property in Suburb DD. By 2015, the business had a total revenue of over $4.9 million and generating a net profit of over $421,000 per annum. Whilst the business relationship appeared to be proceeding well, the second respondent had been establishing other companies, such as N Pty Ltd (trading as EE Pty Ltd), FF Pty Ltd, W Pty Ltd, and GG Pty Ltd. In 2016, when visiting Asia, the husband was arrested and held on remand until late 2017, when he was acquitted of all charges. Whilst on remand, the husband suffered a severe illness. During this period, the second respondent declined to provide funds from their jointly owned business for the husband’s support or medical treatment.
Evidence
Evidence Before The Court
The parties each gave evidence in the proceedings, as did a number of witnesses who had had involvement with the business, along with two experts, one engaged as a joint expert and one engaged by the second respondent. Aside from the wife and the second respondent (for reasons discussed below), I generally found that those who gave evidence in these proceedings presented as honest and credible witnesses in the witness box (or virtually). Whilst the valuation experts differed on some matters which I must resolve, I have no doubt as to their integrity or expertise. The wife’s evidence The wife gave evidence that she lives in the former matrimonial home with her and the husband’s son and relies upon Centrelink benefits. Remarkably, she did not bring her reading glasses when coming to give evidence where, one would presume, documents were to be read. Her answers were often not particularly responsive to the questions she was asked. When questioned by counsel for the second respondent in particular, she had difficulty accepting any proposition put to her, even if correct on her own evidence. I found her to be a witness who was clearly partisan and have treated her evidence with considerable caution. The wife gave evidence that she withdrew $309,369 from an HH Financial Services mortgage offset account and deposited the funds into an ANZ bank account operated for the benefit of her son. The wife deposes that she is the only person who had access to the account and that the subsequent withdrawals from those funds were made by her. Whilst the funds were first deposited in early 2017, they were completely exhausted by August 2018. Initially, the wife said she had applied about $50,000 to her legal fees and also met the mortgage repayments for a period of 15 months, which came to around $50,000 (the precise figure being $49,336.95). In addition, the wife deposes applying $23,010 to the purchase of a motor vehicle in mid-2017, explaining that the lower amount (compared to the $24,000 she mentioned initially in her evidence) was because she obtained a discount for paying cash. Initially, in her evidence, the wife said that the balance of the withdrawn funds was used to meet day to day living expenses, however, this represented around $11,560 per month over the period between early 2017 and mid-2018. When pressed to explain the use of the monies, she was unable to provide details beyond the three specific items earlier set out. The wife did, however, recall that on 19 and 20 June 2017, where the bank statements show she withdrew $5,000 one day after the other, she applied $2,000 of this to the building of a fence. She also said that though there was a car accident in which her previous car had been written off, the money was not used to repair it; the money was ultimately said by her to be for insurance. It remains unclear what that money was applied to, or to whom it was paid or given. The bank statements also indicated $10,000 withdrawals on two separate occasions, being 28 November 2016 and 8 February 2017. The wife could not recall what she did with these sums on either occasion. She also made withdrawals of large sums from ATMs; for example, on 27 March, 30 March, and 6 April 2017, the wife withdrew $1,000 on the first two occasions, and $1,500 on the third occasion.
Decision
Reasons for decision
The husband’s counsel argued that the second respondent had returned some of the money he contributed with an interest component and thus, the husband should also receive interest. The question of interest on the husband’s share does not turn upon the joint venture arrangements, rather, that the husband had an entitlement to the return of his share which was opposed by the second respondent, holding him out of his entitlement until judgment. At least by early 2017, monies were being repaid from the D Pty Ltd venture. The husband should have interest as claimed in his schedule on the sum from early 2017 until judgment, which amounts to $87,177. Conclusion on claims against second respondent As earlier noted, I find that the husband should have a declaration that he is entitled to the sum of $290,692 currently held on trust with respect to the D Pty Ltd venture. I also find that the husband should have judgment against the second respondent for the following sums:(a)With respect to the sale of the business: $1,587,177(b)Interest on the sale of the business: $456,468(c)With respect to the cash taken from the husband’s car: $26,000(d)Interest on the money taken from the car: $8,488(e)Interest on the D Pty Ltd monies of the husband: $87,177(f)Total $2,165,310 I am satisfied that the sum held on trust in excess of the husband’s entitlement of a refund of $290,692 should also be paid to the husband in part satisfaction of the judgment sum owed by the second respondent. I will hear the parties with respect to consequential orders that may be appropriate, such as any applications for injunctions to restrain dealings with assets and with respect to costs, following delivery of these reasons.PROPERTY SETTLEMENT AS BETWEEN THE HUSBAND AND WIFE The wife and husband were largely agreed as to their assets, which were set out in a joint balance sheet, save for a small number of items that can be dealt with briefly:(a)Whilst the value of the claim against the second respondent is clearly a significant asset of the wife and husband, it is appropriate for it to be dealt with separately in the orders so as to accommodate the complexities that may arise as a result of questions of the costs of the litigation against the second respondent and the possibility that the award may be difficult to enforce. However, I am persuaded that the same considerations with respect to contributions and other factors apply to this asset. (b)I am satisfied that the monies that the husband borrowed from Mr P should be included as a debt of the husband, as there is no doubt the monies were advanced and that they must be repaid at some point. The husband used these monies for living expenses, to establish a business and has, through the relevant period, attended to the mortgage repayments on the home. (c)I accept that the reason the husband has a tax liability is because he could not meet all of his expenses at a time when he was also meeting mortgage repayments. In the very unusual circumstances of this case, it is not a tax debt that has arisen because the husband has wasted money or mismanaged his affairs. As a result, the tax debt should also be included in the balance sheet.(d)The superannuation amount of $565 is so minor that it is suitable to simply include it in the balance sheet of assets, rather than dealing with it in a separate superannuation pool.
Ratio Decidendi
Legal Principle Established
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