Gandega & Fulmali (No 2)

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FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

(DIVISION 1)

Gandega & Fulmali (No 2) [2023] FedCFamC1F 469

File number(s): PAC 4811 of 2016
Judgment of: SCHONELL J
Date of judgment: 8 June 2023
Catchwords: FAMILY LAW – PRACTICE AND PROCEDURE – Stay – Where the second respondent sought a stay of orders that are the subject of appeal – Where the second respondent contended that that his appeal would be rendered nugatory if the stay was not granted – Where the Court is not satisfied that the second respondent has discharged the onus that there is a proper basis to stay the orders other than on terms consented to by him – Second respondent’s application dismissed – Costs ordered against the second respondent as agreed or assessed on a party/party basis.
Legislation:

Evidence Act 1955 (Cth) s 140

Federal Circuit and Family Court of Australia Act 2021 (Cth) s 26

Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) r 13.12(2)

Cases cited:

Aldridge & Keaton (Stay Appeal) [2009] FamCAFC 106

Alexander v Cambridge Credit Corp Ltd (1985) 2 NSWLR 685

Gandega & Fulmali [2023] FedCFamC1F 308

Kelly and Kelly (1981) FLC 91-007; [1980] FamCA 88

Division: Division 1 First Instance
Number of paragraphs: 46
Date of hearing: 8 June 2023
Place: Sydney
Solicitor for the Applicant: Marsdens Law Group
Solicitor for the First Respondent: Cumpton Lawyers
Counsel for the Second Respondent: Mr Ford
Solicitor for the Second Respondent: David Leamery Solicitor & Barrister

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:

SCHONELL J

DATE OF ORDER:

8 JUNE 2023

THE COURT ORDERS THAT:

1.The Application in a Proceeding filed by the second respondent Mr Akbar (“the second respondent”) seeking a stay of the orders made by Riethmuller J on 21 April 2023 be dismissed.

2.Any funds paid by the second respondent in accordance with Order 2 of the orders made by Riethmuller J on 21 April 2023 be held in the trust account of the solicitor for the first respondent husband (“the husband”) or, in the event that the parties agree, the monies be invested in an interest bearing deposit account in the names of the parties respective solicitors, pending the determination of the appeal by the second respondent and any subsequent hearing in the event of a successful appeal.

3.The second respondent pay the costs of the husband as agreed or assessed on a party/party basis.

4.The husband file an Application in a Proceeding by 4.00 pm on Wednesday 14 June 2023.

5.The second respondent file a Response to Application in a Proceeding, supporting affidavit and Financial Statement by 4.00 pm on Friday 16 June 2023.

6.The matter is to be listed for hearing on a date to be advised.

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…

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Details
Case
[2023] FedCFamC1F 469
Decision Date

CaseChat Overview and Summary

This appeal concerns the family law proceedings between the husband and wife. The wife seeks to have the husband’s interest in the business of [C Pty Ltd] treated as a marital asset for the purposes of a property settlement. The husband claims that he is entitled to half the profits from the business’s current projects, and half the value of the business’s assets, pursuant to an agreement with the second respondent, the former business partner. The Court of Appeal was asked to determine whether the primary judge erred in his interpretation of the agreement between the husband and the second respondent, and whether the primary judge correctly exercised his discretion in ordering the wife to pay the husband’s costs in relation to the appeal.

The Court of Appeal found that the primary judge erred in his interpretation of the agreement between the husband and the second respondent. The primary judge had found that the agreement was for the husband to transfer his shares in the business to the second respondent in exchange for 50 per cent of the profits of all of the business’s current projects less contingent liabilities, with the accounts to be finalised by nominated accountants. However, the Court of Appeal found that the agreement was for the husband to transfer his shares in the business to the second respondent in exchange for 50 per cent of the profits of all of the business’s current projects less contingent liabilities, with the accounts to be finalised by nominated accountants, and 50 per cent of the value of the business’s assets. The Court of Appeal found that the primary judge had overlooked relevant evidence and had placed too much weight on the husband’s affidavit.

The Court of Appeal also found that the primary judge had not correctly exercised his discretion in ordering the wife to pay the husband’s costs in relation to the appeal. The Court of Appeal found that the primary judge had not adequately considered the wife’s position, and had not given sufficient weight to the fact that the wife had not filed any documents in relation to the stay and had not opposed the stay. The Court of Appeal found that the primary judge had erred in his exercise of discretion, and set aside the order for costs.

The Court of Appeal remitted the case to the primary judge for reconsideration in light of the Court of Appeal’s findings. The Court of Appeal did not make any orders as to costs.

Orders

Orders of the court

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Background

Background to the litigation

The wife (the applicant in the proceedings) has not filed any documents in relation to the stay and indicated to the Court that she neither consented to nor opposed the stay. The husband (the first respondent in the proceedings) relied upon the following documents: (1)Response to Application in a Proceeding filed 6 June 2023;(2)Affidavit of husband filed 6 June 2023;(3)Reasons for judgment of the primary judge delivered 21 April 2023; and (4)Case Outline document. BACKGROUND The proceedings the subject of the judgment under appeal first commenced in 2016. A significant part of the judgment addresses what are said to be claims by the husband as against the second respondent. In that respect, the primary judge conveniently summarised the claims of the parties as follows:2.The second respondent is the former business partner of the husband. Together they operated [a] business known as [C Pty Ltd]. The husband transferred his interests in the business to the second respondent in 2016, pursuant to an agreement in writing that provided for the husband receiving half of the profits of various projects and half of the value of the business assets. However, the husband never received such payment from the second respondent. The husband pursues a claim against the second respondent, either pursuant to a sale agreement or in equity. The husband’s claim is supported by the wife, who contends that the husband’s interest in the business is an asset that should form part of the parties’ marital property for the purposes of s 79 of the Family Law Act 1975 (Cth) (“the Act”). The second respondent contends he has no obligation to the husband as a result of their business dealings and denies that there exists any basis for such a claim at common law or equity.3.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. The primary judge identified that in late 2016, the husband and the second respondent signed an agreement “that the husband would transfer his shares in the business to the second respondent in exchange for 50 per cent of the profits of all of the business’ current projects less contingent liabilities, with the accounts to be finalised by nominated accountants” (at [15]). The primary judge recorded the following:18.The second respondent ultimately paid nothing to the husband pursuant to their 2016 agreement, alleging that there were no profits. However, the second respondent put in place no accounting arrangements to track the profits of the existing projects separately from any new projects after the date of the agreement, nor did he engage the nominated accountants to prepare the accounts. 19.There is no dispute that the issues between the husband and the second respondent must first be determined in order to determine the husband’s assets for the purpose of the property settlement proceedings between the husband and wife, nor is there any dispute that it is just and equitable to make property settlement orders as between the husband and the wife in the circumstances of this case.

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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