Banks and Banks
[2008] FMCAfam 941
•16 October 2008
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| SARRIS & KEFALAS | [2009] FMCAfam 941 |
| FAMILY LAW – Subpoena hearing – solicitors’ lien over documents. |
| Family Law Act 1975 (Cth), s.79 |
| Chester & Cassidy Gibson Howlin (1995) FLC 92 556 Hughes & Hughes (1958) Probate 224 Re Rapid Grow Transit Company (1991) Chancery 96 Gamlen Chemical Co (UK) Ltd & Rochem Ltd and Ors (1980) 1 All ER 1049 Abruzzese & David Jones Ltd (No.1) [2003] FMCA 280 |
| Applicant: | MR SARRIS |
| Respondent: | MS KEFALAS |
| File Number: | MLC 2181 of 2008 |
| Judgment of: | Phipps FM |
| Hearing date: | 6 August 2009 |
| Date of Last Submission: | 6 August 2009 |
| Delivered at: | Melbourne |
| Delivered on: | 6 August 2009 |
REPRESENTATION
| Solicitors for the Subpoena Party: | Mr Steele of M. K. Steele & Giammario |
| Solicitors for the Respondent: | Mr Churnock of Berger Kordos Lawyers |
ORDERS
That the subpoena to M K Steele & Giammario Barristers and Solicitors, filed on 16 June 2009, be set aside.
The Applicant Husband pay the costs M. K. Steele & Giammario, fixed of today, fixed at $506.
IT IS NOTED that publication of this judgment under the pseudonym Sarris & Kefalas is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE |
MLC 2181 of 2008
| MR SARRIS |
Applicant
And
| MS KEFALAS |
Respondent
REASONS FOR JUDGMENT
This is an application to set aside a subpoena. The subpoena is addressed to a firm of solicitors, M K Steele & Giammario. Mr Steele appears for that firm and has applied to set it aside. The proceeding before the court is a property proceeding. The significant issue in the property proceeding is whether a binding financial agreement entered into prior to the marriage should be set aside. If it is valid, the binding financial agreement excludes the property owned by the husband from being affected by a property settlement under s.79 of the Family Law Act 1975 (Cth).
The applicant’s solicitors, M K Steele & Giammario, previously acted for the husband. There is no material filed, but it is common that these are the relevant circumstances. On 9 February 2009, the husband terminated the solicitor’s retainer; that is, the retainer of M K Steele & Giammario. There is no allegation of misconduct on the part of the solicitors. The solicitors served a lump sum account on 28 May 2009. That is for an amount of $11,582.02. On 3 June 2009, pursuant to the relevant rules, an itemised account was requested. That was served on 21 July 2009 for an amount of $16,047.97. The husband, the former client, has now given notice of a solicitor taxation of that amount, and that process is pending. Although it is not strictly relevant to the issue before me, Mr Steele has indicated that the firm would accept the lump sum amount in payment.
The application to set aside the subpoena is applied for on the basis that the solicitors are protected from producing the documents and protected from the subpoena because they have a lien, and in these circumstances, that lien prevails. In Chester & Cassidy Gibson Howlin (1995) FLC 92 556, Moss J in the Family Court considered this issue; it was not a subpoena. His Honour looked at the authorities; he referred to Hughes & Hughes (1958) Probate 224, a decision of the English Court of Appeal. He quoted this passage at page 81, 554:
There is no doubt that a solicitor who is discharged by his client during an action otherwise and for misconduct can retain any papers in the cause in his possession until his costs have been paid.
And his Honour referred to in re Rapid Grow Transit Company (1991) Chancery 96:
This rule applies, as the authorities show, whether the client’s papers are of any intrinsic value or not, although it would seem, insofar as the solicitor’s working papers are concerned, where the work has not been paid for by the client, the solicitor would not be compelled to hand over his work unless it had been paid for apart altogether from the lien.
And that case of Hughes was subsequently applied by the Court of Appeal in Gamlen Chemical Co (UK) Ltd & Rochem Ltd and Ors (1980) 1 All ER 1049. Now, on the same page, Moss J quoted a passage from Gamlen Chemical at 1058:
A solicitor himself may determine his retainer during an action for reasonable cause, such as the failure of the client to keep the solicitor in funds to meet his costs and disbursements. In that case, the solicitor’s possessory lien, that is, his right to retain the client’s papers of any intrinsic value or not, is subject to the practice of the court, which, in order to save the client’s litigation from catastrophe, orders the solicitor to hand over the client’s papers to the client’s new solicitors, provided the new solicitors undertake to preserve the original solicitor’s lien, and to return the papers to the original solicitors, for what they are worth, after the end of the litigation.
Moss J applied that principle in this case. Abruzzese & David Jones Ltd (No.1) [2003] FMCA 280, Driver FM considered the situation where there had been a subpoena. His Honour referred to a number of authorities and then said at paragraph 18:
I conclude from those authorities that it would generally be an abuse of process for a subpoena to be issued compelling the production of a solicitor’s file in circumstances where the solicitor had been discharged by the client, other than for misconduct, and where the solicitor reasonably claimed a lien over that file. I say “generally” because there may be circumstances in which the interests of justice require that the file be produced for particular proceedings in any event.
While his Honour has said that, the passages cited in Chester & Cassidy Gibson Howlin suggest that they are very limited circumstances indeed, and some of the authorities suggest that the court has no discretion at all. So Mr Steele submits that this is a clear case where those principles apply. Mr Churnock, for the husband, asked the court to take a pragmatic approach. He says first that the process of taxation will necessarily mean that the file must be produced. Second, he says that the documents which are sought are financial documents; these are documents which are being sought by the wife in the proceedings and the husband needs them so that he can satisfy the requirement of disclosure, which is contained in the Family Law Act.
I discussed with Mr Steele and Mr Churnock whether there is any suggestion that there was a distinction between documents of the client, which had been given to the solicitor for the purpose of these proceedings, and documents which the solicitor had produced himself, or the solicitors had produced themselves. Looking at the manner in which the types of documents are discussed in the cases I have referred to, and the cases which have been cited, there is no distinction. The lien is a possessory lien; it is a lien over documents in the possession of the solicitor acquired for the purpose of the proceedings, or produced for the purpose of the proceeding. It is not a lien in the nature of a workman’s lien, that is, lien over work which has been produced, the work being the documents.
While what Mr Churnock puts, he says that the documents could be produced and then be returned and the lien maintained, but producing the documents in that way would destroy the value of the lien. It seems to me that the authorities that I have been referred to show that the principle is clear in these circumstances; the circumstances are these solicitors’ retainer has been terminated by the client, there is no allegation of misconduct and there is no allegation of an effect on third parties’ rights. There is some suggestion of a limited discretion, but the matters suggested on behalf of the husband by Mr Churnock, that is that the documents will be obtained through the taxation process in any event and also that they are required to satisfy the requirement of disclosure, are not matters I consider would enliven any discretion, even if it exists.
I certify that the preceding nine (9) paragraphs are a true copy of the reasons for judgment of Phipps FM
Associate: Paul Moss
Date: 3 September 2009
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