Gandega & Fulmali (No 3)

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FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

(DIVISION 1)

Gandega & Fulmali (No 3) [2024] FedCFamC1F 453

File number(s): PAC 4811 of 2016
Judgment of: RIETHMULLER J
Date of judgment: 5 July 2024
Catchwords: FAMILY LAW – COSTS – Costs applications brought by the second, fifth and eighth respondents – Consideration of matters set out in s 117(2A) of the Family Law Act 1975 (Cth) – Costs where successful appeal on issues of jurisdiction not raised by the parties before trial judge – Where Full Court refused to order costs on appeal – Where significant costs incurred which could have been avoided if issues upon which appeal was allowed were argued earlier – Where applicant for costs unsuccessful on the merits at trial but successful on appeal on issues the subject of jurisdiction argument not raised at trial – Where claim now being re-litigated in Supreme Court – Partial costs order for principle proceedings – Costs of enforcement actions after judgment ordered on party and party basis – Costs of costs application ordered on party and party basis – No matters of principle.
Legislation:

Corporations Act 2001 (Cth)

Family Law Act 1975 (Cth) ss 78, 79, 106B, 117

Cases cited:

Akbar & Gandega [2023] FedCFamC1A 174

Anison & Anison (2019) FLC 93-908; [2019] FamCAFC 108

Beck v Spalla (2005) 223 ALR 21; [2005] FCAFC 82

Collins and Collins (1985) FLC 91-603; [1985] FamCA 15

Gandega & Fulmali and Anor [2018] FamCA 491

Gandega & Fulmali [2023] FedCFamC1F 308

Hockey v Fairfax Publications Pty Ltd (No 2) [2015] FCA 750

PBF as Child Representative for AF (Legal Aid Commission of Tasmania) & TRF & LKL (2005) 33 Fam LR 123; [2005] FamCA 158

Penfold v Penfold (1980) 144 CLR 311; [1980] HCA 4

Division: Division 1 First Instance
Number of paragraphs: 36
Date of hearing: 1 March 2024
Place: Parramatta
Solicitor for the Applicant: Marsdens Law Group
Counsel for the First Respondent: Ms Spain
Solicitor for the First Respondent: Crumpton Lawyers
Counsel for the Second, Fifth and Eighth Respondents: Mr Cox SC
Solicitor for the Second, Fifth and Eighth Respondents: David Leamey Solicitor & Barrister
Solicitor for the Third Respondent: Did not participate.
Solicitor for the Fourth Respondent: Did not participate.
Solicitor for the Sixth Respondent: Did not participate.
Solicitor for the Seventh Respondent: Did not participate.

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

EE PTY LTD (and others named in the Schedule)

Third Respondent

ORDER MADE BY:

RIETHMULLER J

DATE OF ORDER:

5 JULY 2024

THE COURT ORDERS THAT:

1.The applicant and first respondent pay costs to the second respondent fixed in the sum of $25,000.

2.The applicant and first respondent pay the fifth and eighth respondents’ costs of and incidental to the Enforcement Application filed 14 June 2023, as agreed, and failing agreement, as assessed on a party and party basis.

3.The applicant and first respondent pay…

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Details
Case
[2024] FedCFamC1F 453
Decision Date

CaseChat Overview and Summary

The case of Gandega & Fulmali (No 3) involved a complex family law dispute where the second, fifth, and eighth respondents sought costs associated with the proceedings previously determined in Akbar & Gandega. The wife, the applicant, and the husband, the first respondent, were the respondents to this application. The proceedings originally commenced in the Family Court of Australia in 2016, with the wife seeking property settlement orders against the husband and the second respondent. The trial judge, Foster J, had determined the joinder of parties in June 2018, but no appeal was made against these orders. The second respondent, however, did not challenge the court's jurisdiction, which later became a significant issue on appeal.

The legal issues before the court included whether to order costs for the entire proceedings, the impact of not raising jurisdictional issues earlier, and the appropriate basis for assessing costs. The court had to consider the potential savings in costs had the jurisdictional issues been raised earlier, as well as the merits of the appeal and the need for the claim to be re-litigated in the Supreme Court. The court also needed to determine whether to award costs on a party and party basis or to make a more generous order.

In reaching its decision, the court noted the unusual circumstances of the case and the potential for significant cost savings had the jurisdictional issues been addressed earlier. Despite the second respondent's failure to challenge jurisdiction, the court found that ordering costs for the entire proceedings would not be appropriate. Instead, the court ordered that the husband and wife meet the second respondent's costs for removing a Request from the fifth respondent’s real properties and part of the costs of the proceedings against the second respondent, totaling $25,000. The court also ruled that the fifth and eighth respondents should receive costs for their enforcement application filed after the trial judgment. The costs of the costs applications were to be assessed on a party and party basis. The court concluded that no further costs orders were necessary and that the costs should be paid at the time of judgment in the ongoing Supreme Court proceedings.

The court made specific orders that the applicant and first respondent pay costs to the second respondent fixed at $25,000, cover the fifth and eighth respondents' costs of the Enforcement Application, and pay the costs of the costs applications on a party and party basis. The payment of these costs was to be made upon the final orders in the Supreme Court proceedings, and the costs applications were otherwise dismissed.

Orders

Orders of the court

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

EE PTY LTD (and others named in the Schedule)

Third Respondent

ORDER MADE BY:

RIETHMULLER J

DATE OF ORDER:

5 JULY 2024

THE COURT ORDERS THAT:

1. The applicant and first respondent pay costs to the second respondent fixed in the sum of $25,000.

2. The applicant and first respondent pay the fifth and eighth respondents’ costs of and incidental to the Enforcement Application filed 14 June 2023, as agreed, and failing agreement, as assessed on a party and party basis.

3. The applicant and first respondent pay the costs of the Costs Applications of the second, fifth, and eighth respondents’ as agreed, and failing agreement, as assessed on a party and party basis.

4. The time for payment of the costs awarded in Orders 1 to 3 be the date upon which final orders are made in the Supreme Court of New South Wales proceedings number ….

5. The Costs Applications be otherwise 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).

Part XIVB of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish an account of proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.

Background

Background to the litigation

The second, fifth, and eighth respondents (the first and second applicants in this application) seek costs orders with respect to the proceedings between the parties determined in Akbar & Gandega [2023] FedCFamC1A 174 (“Akbar”). The applicant wife and first respondent husband (in the substantive proceedings) are the respondents to this application.BACKGROUND The wife commenced proceedings in the Family Court of Australia in 2016, seeking property settlement orders against the husband and the second respondent. The claim was poorly articulated when commenced. In June 2018, following argument in November and December 2017, issues relating to the joinder of the parties other than the spouses were determined by Foster J in Gandega & Fulmali and Anor [2018] FamCA 491. The substance of the claims was summarised by Foster J as:82It is clear that the husband seeks to hold the second respondent liable to account for his interest in the corporate entities as it should have been. The second respondent controls those entities and his own to which it appears there will be an argument as to the “phoenixing” of the business of [B Pty Ltd] to entities under the control of the second respondent. Indeed the wife seeks that the disposition of the husband’s shares be set aside. The claim for relief, loosely described as “pheonixing”, necessarily arises pursuant to the Corporations Act 2001 (Cth) (pursuant to which this Court has original jurisdiction) and at equity. There was also a pending claim pursuant to s 106B of the Family Law Act 1975 (Cth) (at [92] of Foster J’s Reasons) seeking orders to set aside the transfer of shares that had been held by the husband. Justice Foster declined to remove the second respondent from the proceedings (at [83] of Foster J’s Reasons). No appeal was brought against the orders of Foster J. No other challenge was made with respect to jurisdiction in the proceedings. During the litigation the second respondent sought to rely upon a contract (which was ultimately relied upon by the applicant wife and respondent husband in the trial of the matter) for the transfer of the husband’s interests in a company to the second respondent in order to defend the claims concerning his alleged breaches of duty when operating the company. The contract between the second respondent and the husband was a central feature of the factual matrix concerning the dealings with the companies in which the husband held interests, and central to the defence against any order pursuant to s 106B of the Family Law Act. By the time the matter proceeded to trial, the companies at the centre of the dispute had been de-registered or placed into liquidation. The applicant wife and respondent husband were no longer pursuing claims under the Corporations Act, nor pursuant to s 106B of the Family Law Act, relying only upon the claims in equity (analogous to many of the rights that arise pursuant to the Corporations Act) in their points of claim. During the course of the trial, they were permitted to pursue the claim that arose from the contract that was relied upon by the second respondent as a feature of his defence. The relevant facts and circumstances are set out in the trial judgment: see Gandega & Fulmali [2023] FedCFamC1F 308.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

The husband points to the failure of the second respondent to challenge the jurisdiction of the Court. Indeed, had the issue of jurisdiction been raised prior to trial, the questions of accrued or implied jurisdiction could have been squarely addressed (and subject to an interlocutory appeal, if disputed). Alternatively, the whole matter could have been cross-vested to the Supreme Court.CONCLUSION The circumstances that arose in these proceedings are very unusual. When considering the matter as a whole, in the context of s 117 of the Family Law Act, I am not persuaded to make a costs order in favour of the second respondent for the whole of the proceedings. For the purpose of the costs argument, it is appropriate to accept that the outcome of any early challenge to jurisdiction would have been the same outcome as occurred on the appeal of the trial judgment. Had the jurisdiction issue been squarely raised at an appropriate time, the vast majority of the costs could have been avoided. I am persuaded to order that the husband and wife meet the second respondent’s costs to remove the Request from the fifth respondent’s real properties. I am also persuaded to order that the husband and wife meet part of the costs of proceedings against the second respondent. Having regard to the costs evidence and the circumstances of this case I fix the total amount of costs payable to the second respondent at $25,000. I am persuaded that the fifth and eighth respondents should have a costs order for the costs incurred with respect to the Enforcement Application filed 14 June 2023 after the trial judgment. I am not persuaded that costs should be ordered on a scale more generous than party and party costs. I am not persuaded to fix the sum for costs in this regard on the material before me and will make orders for the parties to have the costs assessed if they are unable to agree. The second, fifth and eighth respondents have succeeded in obtaining costs orders and should have their costs of the costs applications on a party and party basis. I am not persuaded to make any further costs orders. I accept that it is appropriate that the costs be made payable at the time of judgment in the Supreme Court proceedings where the substantive issues continue to be litigated. I will make orders accordingly.

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.