Federal Court of Australia

Gaha v Gaha [2024] FCA 531

ORDERS

THE COURT ORDERS THAT:

1.    The requirement in r 9.71(2)(c) of the Federal Court Rules 2011 (Cth) (Federal Court Rules), that the interlocutory application filed on 3 April 2024 be accompanied by an opinion of a lawyer who is “independent”, be dispensed with.

2.    Pursuant to r 9.70 of the Federal Court Rules, settlement of these proceedings, as set out in the Deed of Undertaking Not to Sue & Indemnity marked as Annexure “CMK-3” to the affidavit of Chloe Melissa Kopilovic filed 3 April 2024 and as Annexure “ET-4” to the affidavit of Erin Brook Taylor filed 3 April 2024, be approved.

3.    To the extent necessary, leave be granted to the applicant to discontinue the following applications:

(a)    The originating application filed 31 October 2022 (Originating Application); and

(b)    The interlocutory application filed 1 February and the statement of charge dated 30 January 2023 (Contempt Application).

4.    Subject to Order 5 of these Orders, pursuant to s 37AF of the Federal Court of Australia Act 1976 (Cth), the affidavit of Chloe Melissa Kopilovic filed 3 April 2024 (including Annexures), and the affidavit of Erin Brook Taylor filed 3 April 2024 (including Annexures) (confidential affidavits), be treated as confidential to the parties to this proceeding, and until further order:

(a)    be marked as confidential to the parties on the Court’s Electronic Court File; and

(b)    not be available for public inspection, disclosed in open court or disclosed in the open part of any court transcript.

5.    The confidentiality imposed by Order 4 of these Orders is subject to the following exceptions:

(a)    the first respondent being permitted to disclose the terms of the confidential affidavits in any application sought to be made pursuant to Order 6 of these Orders; and

(b)    the first respondent being permitted to disclose the terms of the confidential affidavits to the Australian Capital Territory Civil and Administrative Tribunal in proceedings GT 83/2023 – Nelly Mobayed Gaha.

6.    Any application by the first respondent for a special costs order or a third-party costs order be filed within 30 days of the date of these Orders.

7.    The costs of the Originating Application and the Contempt Application be reserved.

8.    There be no order as to the costs of and incidental to the interlocutory application filed on 3 April 2024.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

COLLIER J

1    Before the Court is an interlocutory application filed by the applicant, through her litigation representative, on 3 April 2024 (interlocutory application). The interlocutory application seeks approval of the Court pursuant to r 9.70(1) of the Federal Court Rules 2011 (Cth) (Federal Court Rules) of a compromise reached between the parties for settlement of the matters in dispute in this proceeding. The terms of compromise are set out in a Deed of Undertaking Not to Sue & Indemnity signed by the parties and dated 2 April 2024 (Deed).

2    The Deed is marked as Annexure “CMK-3” to the affidavit of Chloe Melissa Kopilovic filed 3 April 2024 and as Annexure “ET-4” to the affidavit of Erin Brook Taylor filed 3 April 2024.

3    It is well established that the Court has a responsibility to determine, for itself, whether a proposed settlement is beneficial to the interests of the person who has a litigation guardian: Scandolera v Victoria (Department of Education and Early Childhood Development) [2015] FCA 1451 at [26]-[27]; Young v State of Victoria (Department of Education and Training) [2018] FCA 1124 at [11]-[12].

4    The matters in dispute in respect of which the parties seek compromise are found in:

(1)    An originating application filed 31 October 2022 wherein the applicant sought access to, inspection of, and copies of records of the second respondent, with steps to be taken by the first and second respondents to arrange for those records to be produced; and

(2)    An interlocutory application filed 1 February 2023 wherein the applicant applied to the Court for orders that the first respondent was in contempt of court for failure to comply with orders of Downes J of 11 November 2022 requiring relevant material to be made available for inspection by the applicant (contempt application).

5    Specifically, the orders sought in the interlocutory application are:

1.     Pursuant to Rule 9.70(1) Federal Court Rules 2011, the Court approves the compromise of the matters in dispute in the proceeding.

2.     No order as to costs of this application.

6    In support of the interlocutory application was an affidavit of Mr Chloe Kopilovic, the applicant’s litigation guardian, filed on 3 April 2024.

7    The parties subsequently provided draft consent orders to resolve the interlocutory application.

Background

8    At the time of commencing these proceedings, the applicant, Mrs Gaha, was 83 years old and did not have a litigation representative. The applicant was a director, shareholder and the secretary of the second respondent (Gaha Bros).

9    The first respondent is one of the applicant’s four children. The first respondent is also a director and shareholder of Gaha Bros.

10    The applicant commenced these proceedings on 31 October 2022 pursuant to ss 198F, 247A, 290 and 1303 of the Corporations Act 2011 (Cth) seeking orders that the applicant, as a director and member, be provided access to (including receiving copies) and permitted inspection of the books and records of Gaha Bros.

11    On 11 November 2022, Downes J made orders by consent that, materially, within seven day the applicant be permitted access to the books and financial records of the second respondent including (but not limited to) the documents described in Schedule A to the originating application; and that the first respondent (by himself, his servants or agents) take all and any such steps as may be necessary to produce and make available for inspection by the applicant or her solicitors the documents.

12    The contempt application was filed referable to compliance by the first respondent with those orders of Downes J.

13    On 5 June 2023, by order of Downes J, Mr Charles Londy was appointed as litigation representative of the applicant.

14    On 27 November 2023, I ordered by consent that:

1.    Mr Londy’s resignation as Mrs Gaha’s litigation representative is accepted, and Ms Kopilovic is appointed in his place.

……

INTERLOCUTORY Application

15    As I noted earlier, on 3 April 2024 Ms Kopilovic as applicant sought the approval of the Court pursuant to r 9.70(1) of the Federal Court Rules of a compromise reached between the parties for settlement of the originating application and the contempt application.

16    Rule 9.70 of the Federal Court Rules provides:

Compromise or settlement of matter in proceeding

(1)     If a litigation representative agrees to the compromise or settlement of any matter in dispute in a proceeding, the litigation representative must apply to the Court for approval of the agreement.

(2)    If the Court approves the agreement, the agreement is binding on the person by or for whom it was made as if:

(a)     the person were not under a legal incapacity; and

(b)     the litigation representative had made the agreement as the person's agent.

(3)     The Court may, as a condition of approval, require that any money or other property payable for the benefit of a person under a legal incapacity be dealt with by way of a settlement, or in any other way that the Court considers appropriate.

Note: The Court may give approval subject to conditions--see rule 1.33.

(4)     If the Court does not approve the agreement, the agreement is not binding on the person under a legal incapacity.

17    Rule 9.71 of the Federal Court Rules provides further requirements for such applications for approval:

Application by litigation representative for approval of agreement

(1)     An application by a litigation representative for approval of an agreement must be made by filing an interlocutory application.

(2)     The interlocutory application must be accompanied by the following:

(a)     an affidavit stating the material facts on which the application relies;

(b)     the agreement that is sought to be approved;

(c)     an opinion of an independent lawyer that the agreement is in the best interests of the person under a legal incapacity.

18    In support of the interlocutory application Ms Kopilovic, in her capacity as both the litigation representative and lawyer for the applicant, filed an affidavit setting out material facts, and annexing the agreement sought to be approved. Ms Kopilovic further deposed that she had personally examined the books and financial records of the second respondent, and had had regard to such materials as provided to her office or annexed to affidavits deposed by the first respondent, Ms Aprilyn Jessa Quarmby, and Mr Justin Barry. Ms Kopilovic deposed that she was satisfied that the respondents had complied with the Orders of Downes J dated 11 November 2022.

19    Ms Kopilovic deposed that she was satisfied that the compromise of the proceeding as set out in the Deed was in the best interests of Mrs Gaha.

20    As Ms Kopilovic was both the appointed litigation representative and solicitor for the applicant following the orders made on 27 November 2023, at a case management hearing on 16 May 2024 I asked the parties to make submissions as to whether Ms Kopilovic could be regarded as an “independent” lawyer for the purposes of r 9.71(2)(c) of the Federal Court Rules. Ms Taylor, the legal representative of the first respondent, submitted in summary that Ms Kopilovic was appointed as an independent lawyer, and in that capacity Ms Kopilovic had reviewed the work of Ms Taylor’s firm to satisfy herself that it was in the best interests of Mrs Gaha to compromise the proceedings.

21    There are numerous authorities supporting the proposition that a lawyer is “independent” within the meaning of r 9.71(2)(c) despite being involved in the matter or being the lawyer retained as legal representation for one of the parties: Bushby (by his litigation representative Webling) v State of Victoria (Department of Education and Training) (No 2) [2023] FCA 340 at [17]; Wade v State of Victoria (No 2) [2012] FCA 1080 at [9]; Lewis v State of Victoria (Department of Education and Training) [2019] FCA 714 at [13]- [14]. Justice Bromberg in Wade at [9] explained:

There is ambiguity as to what the word “independent” in r 9.71(2)(c) intends. I doubt that it was intended to effect a change in the long-standing practice to which I have referred. Arguably, the rule now imposes a requirement that a lawyer with no prior association with the proceeding provide an opinion. Whilst there may be cases where such an opinion would assist, the substantial additional costs involved in obtaining the opinion of the lawyer with no prior knowledge or familiarity with the proceeding, would likely far outweigh any potential benefits. It is more likely that what the rule intends is that the opinion prepared by the lawyer be provided in furtherance of the lawyer’s duty to assist the Court and not in furtherance of any duty the lawyer may have to a party in the proceeding. In my view, it is in that respect that the lawyer must be “independent”.

(emphasis added)

22    I also note however other authorities which have determined that a lawyer who has been involved in the case cannot be said to be “independent” in the sense required by r 9.71(2)(c) of the Federal Court Rules (see for example Allen v State of Victoria (Department of Education and Training) [2019] FCA 1074 at [8] and Jones v State of Victoria [2014] FCA 1404; (2014) 145 ALD 619 at [4]-[5].

23    In the present case I understand that Ms Kopilovic has no relationship with Mrs Gaha or any of the parties other than in her formal capacity as appointed litigation representative for Mrs Gaha. I am satisfied from her evidence, and submissions before me at the case management hearing of 16 May 2024, that her opinion that the compromise is in the best interests of Mrs Gaha, can be regarded as that of an independent lawyer, as an officer of the court, such as to satisfy r 9.71(2)(c) of the Federal Court Rules. I further consider that for a separate lawyer to be briefed to familiarise themselves with the matter and to provide a further opinion would impose unnecessary costs on the applicant.

24    However I also note the approaches taken by McEvoy J in Bushby at [19] and Moschinsky J in Freeman v State of Victoria [2018] FCA 797 at [17]. For the avoidance of doubt, I will specifically order that the requirement in r 9.71(2)(c) that the interlocutory application be accompanied by an opinion of a lawyer who is “independent” be dispensed with pursuant to r 1.34 of the Federal Court Rules.

25    The originating application filed by the applicant on 31 October 2022 and in respect of which the compromise is proposed sought orders for (inter alia) access to, inspection of, and copies of books and financial records of the second respondent, as well as orders compelling the respondents to take such steps as required to make those materials available. The contempt application concerned the alleged non-production of those materials.

26    Materially, Ms Kopilovic deposed in her affidavit filed 3 April 2024 that relevant books and financial records had been produced or disclosed, that she had personally examined them, that to the extent to which documents had not been produced there was a satisfactory reason for that non-production, and that in Ms Kopilovic’s view the orders of Downes J had been satisfied.

27    On 2 February 2024, the Australian Capital Territory Civil and Administrative Tribunal ordered that the Public Trustee and Guardian be appointed as manager of all of the property and finances of Mrs Gaha. Ms Kopilovic further deposed in her affidavit at [9] that the fact that a statutory body had management of the property and finances of Mrs Gaha meant that she had protection if such protection was required.

28    In the circumstances I am satisfied that it is appropriate that both the originating application filed 31 October 2022 and the contempt application filed 1 February 2023 be discontinued, and that it is in the best interests of Mrs Gaha to do so. I will order that the Deed be approved. To the extent necessary I will make orders granting leave to the applicant to formally discontinue relevant proceedings.

29    The Court is empowered by s 37AF of the Federal Court of Australia Act 1976 (Cth) to make a confidentiality order. In the present case the parties have sought an order of the Court that these orders be confidential. Generally, in such cases it is the terms of settlement and the lawyer’s opinion which are the subject of a confidentiality order: see for example Bushby at [25]. In my view, and noting that the terms of settlement of litigation are generally confidential, the interests of justice are served by a confidentiality order which preserves the confidentiality of those documents rather than the orders the subject of this judgment.

30    I note that the terms of settlement are set out in the Deed. The Deed, and the basis on which Ms Kopilovic formed the opinion that the Deed was in the best interests of Mrs Gaha, are set out in Ms Kopilovic’s affidavit filed 3 April 2024, and also in Ms Taylor’s affidavit filed 3 April 2024. It is appropriate to make an order that these affidavits (including their annexures) be confidential, subject to the exceptions sought by the parties in their draft consent orders (referable to further costs applications and dealings with the Australian Capital Territory Civil and Administrative Tribunal).

31    The parties seek no costs referable to the costs of the interlocutory application filed 3 April 2024.

32    However, the respondents plainly seek the opportunity to make a separate application for costs or third party costs relating to the originating application and the contempt application. I will make an order that any such costs application be filed within 30 days.

Associate:

Dated:    20 May 2024