Bing and Bing and Anor (No 3)

[2009] FamCA 936

FAMILY COURT OF AUSTRALIA

BING & BING AND ANOR (NO. 3) [2009] FamCA 936

FAMILY LAW – PRACTICE AND PROCEDURE – Extension of time to review of decision of a registrar relating to the determination of a disputed costs account where party gave instructions to lawyers who did not take action expeditiously nor advise the party successful under the costs determination

Family Law Act 1975 (Cth)
Family Law Rules 2004 Rules 1.14, 19.20, 19.22(1), 19.23
Evidence Act 1995 (Cth) ss 76(1), 79

Makita (Australia) Pty. Ltd.  v  Sprowles [2001] NSW CA 3005
HG  v  R [1999] HCA 2,
Sydneywide Distributers Pty. Ltd.  v  Red Bull Australia Pty. Ltd. 2002 FCA FC 157
Adler  v  Australian Securities and Investments Commission 2003 NSW CA 131
McMahon  v  McMahon (1976) FLC 90-038
Clivery  v  Conway (2007) FamCA 1435
Gallo  v  Dawson (1990) HCA 30
Brott  v  Abeles 2007 FLC 93-310

APPLICANT: Ms Bing

RESPONDENT: Mr Bing

INTERVENOR: Rockman & Rockman

FILE NUMBER: MLF 1745 of 2006

DATE DELIVERED: 1 October, 2009

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: CRONIN J

HEARING DATE: 4 September, 2009

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr. Walmsley SC

SOLICITOR FOR THE APPLICANT: Buxton & Associates

COUNSEL FOR THE INTERVENOR: Mr. Bloch

SOLICITOR FOR THE INTERVENOR: Rockman & Rockman

Orders

1. That subject to the conditions set out below, the wife have leave to review the orders of registrar Riddiford made 8 April, 2009 out of time. 

2. If the said conditions referred to are not met in full, the wife’s application filed 28 July, 2009 stands dismissed and the leave referred to in paragraph (1) hereof is declined. 

3. If the said conditions are met in full, by arrangement with the Associate to the Honourable Justice Cronin, the matter of the disputed cost assessment be listed for hearing and determination.

4. The conditions referred to in paragraphs (1) to (3) hereof are as follows :

   (a)by 30 October, 2009, the wife present to this Court a minute of orders sought with the consent of the husband and the wife for :

   (i)the expeditious sale of the business referred to by Mr. B. Walmsley S.C. in submissions made on 4 September, 2009;  and

   (ii)from the net proceeds, the sum of $285,798.44 for and on behalf of the wife, be paid into the trust account of Rockman and Rockman;

   (b)by 30 October, 2009, the wife file and serve a precise list of objections to the costs account of Rockman & Rockman as certified by the registrar to sufficiently identify what matters are in dispute. 

5. That subject to the wife complying with paragraph (4) hereof, pending the ultimate determination of the costs dispute, Rockman & Rockman hold the said funds in trust for themselves and the wife.

6. That the costs of Rockman & Rockman upon the hearing concluded on 4 September, 2009 be reserved to be determined upon submission in writing to be filed and served by them by 16 October, 2009 to which any submission and reply by the wife be filed and served by no later than 22 October, 2009 and to be determined in chambers. 

IT IS NOTED that publication of this judgment under the pseudonym  Bing & Bing and Anor is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER:  MLF 1745 of 2006

MS BING

Applicant

And

MR BING

Respondent

And

ROCKMAN & ROCKMAN
Intervener

REASONS FOR JUDGMENT

1. On 8 April, 2009, Registrar Riddiford ordered that the sum of $285,798.44 was forthwith due and payable (by the wife) to Rockman & Rockman (for professional services rendered) pursuant to an itemised costs account dated 10 February, 2009. 

2. Rockman & Rockman had acted for the wife in family law proceedings until August 2008 at which stage, their retainer was terminated.  It would not be unkind to say that the wife was unhappy about what that firm had done for her but nothing is to be read into what I say in these reasons as any criticism of Rockman & Rockman for what was done by them.

3. Under the present application before me, the wife sought to have the costs assessment order of Registrar Riddiford revisited because she did not participate.  That was so because of inaction by her own lawyers.  She therefore seeks a significant indulgence. 

4. Rockman & Rockman, the respondents to the application, oppose any orders being made other than that the application be dismissed. 

5. The wife filed her application on 28 July, 2009 and sought four orders.  They were :

   (a)that pending the determination of this application in a case, a stay apply to the Cost Assessment Order made by Registrar Riddiford and dated 8 April, 2009 (“the Cost Assessment Order”);

   (b)      that the Cost Assessment Order be set aside;

   (c)that an extension of time until 28 days following the Order be granted to the applicant to file and serve a form 15 Notice Disputing itemised Costs Account;  and

   (d)      that the respondent pay the Costs of and incidental to this application. 

6. The wife’s application was supported by two affidavits.  The first was filed by the wife on 28 July, 2009 and sworn by her.  The second was filed on 29 July, 2009 and sworn by Alan Maxwell Thompson.

7. The wife was represented in the hearing before me by Mr. Walmsley of Senior Counsel and Rockman & Rockman was represented by Mr. Bloch of counsel.

8. I shall turn to the affidavit material of the wife in a moment but it is important to record the opening remarks of Mr. Walmsley.  He said that after the wife was served in February 2009 with the itemised bill of costs, an “unfortunate and unforgivable breakdown occurred between the solicitor and Alan Thompson”.  Mr. Walmsley said that this breakdown led to the wife not reacting to the timetable under the Court’s rules.  He said that the delays were inexcusable and what had occurred was no fault of the wife. 

9. It will be seen therefore that the application seeks an indulgence in a number of ways and for a number of reasons. 

10. The wife’s evidence was that Rockman & Rockman served her with a bill of costs on or about 5 September, 2008.  It was for $229,329.18. 

11. The lump sum bill has some significance because it transpired that it was prepared on the basis of a cost agreement where ultimately, Mr. Rockman on behalf of his firm, conceded that the agreement had never been signed.  The reversion then to the scale in the schedule to the Family Law Rules 2004 produced the figure of $285,798.44 on the itemised account. That is, almost $55,000 more than the earlier lump sum bill.

12. The sequence of events leading to the certification of the costs by the registrar was as follows.  The wife said that by 29 January, 2008 (by which I presume she meant 2009) despite “repeated requests” for a bill in taxable form, Rockman & Rockman had failed to provide anything.  The wife’s solicitors at the end of January and again on 3 February, 2009 wrote to Rockman & Rockman making a demand for an itemised account. 

13. There could be no doubt about the wife’s desire to seek the itemised account because in the letter dated 29 January, 2009, her lawyers wrote :

    We note that you have periodically assured that you are to serve the account without doing so subsequently.

    Our client, on the advice of this office, has been extraordinarily patient.

    We are instructed that should you fail to provide an undertaking that a bill in taxable form shall be served on our client (this office) within fourteen days an application will be made without further notice and this entire correspondence will be submitted to court on the issue of costs. 

14. On 10 February, 2009 or thereabouts, Rockman & Rockman served on the wife’s then solicitors “a bill in taxable form”.

15. The wife said that the bill was served on her on 11 February, 2009 and she instructed her solicitors to challenge the bill.  That did not happen.  Hence, the abject apology of senior counsel for the wife. 

16. In addition to giving instructions to challenge the bill, the wife said that she was told by her solicitors that she needed to obtain “expert opinion” as to whether the bill was excessive and the solicitors were to obtain that opinion. 

17. The wife said that Mr. Allan Thompson was given instructions to advise on the costs on 26 February, 2009 and was asked to complete the relevant notice objecting to the bill. 

18. The wife said that Mr. Allan Thompson did not do what he was instructed to do. 

19. Sadly, although Mr. Allan Thompson was consulted and an affidavit by him filed, I could not conclude that he has the requisite expertise for reasons that I shall return to below. 

20. What then followed was that Rockman & Rockman took the steps under the rules to obtain the certification of the costs bill.  The wife and her lawyers did not participate.

21. Mr. Walmsley said that Rockman & Rockman did not contact the wife’s solicitor to indicate their intention to proceed to obtain certification.  As there had been no action by the wife (on her own evidence) from 11 February, 2009, as far as Rockman & Rockman were concerned, I am not surprised.  The wife did not produce any evidence to show that having not received the bill in taxable form on 11 February, 2009, her solicitors had notified Rockman & Rockman that she intended to challenge it.  In light of the veiled criticism of Rockman & Rockman by Mr. Walmsley for failing to communicate with a legal practitioner, it is even more odd that the wife said in her affidavit that she was not told by her solicitor of the order of the registrar until some time late in June or perhaps early July 2009.  That is very odd because the wife said that her solicitor contacted Mr. Thompson on 29 April, 2009, fifteen days after being told of the order of Registrar Riddiford.  There can be no doubt that the solicitor, if not the wife, was aware of the making of the order by Registrar Riddiford. 

22. When the solicitor for the wife eventually contacted Rockman & Rockman on 9 June, 2009, it was on the basis of an assertion that the bill (already certified) did not comply with the Family Law Rules 2004. Perhaps again in light of Mr. Walmsley’s concession and his veiled criticism of Rockman & Rockman, this was an aggressive and unreasonable approach.

23. In June 2009, the wife’s solicitor Mr. Dean had his employment discontinued by her then solicitors Isaac Brott & Co.  When she learned that Mr. Dean was the employee of Buxton & Associates, she gave instructions authorising that firm to continue to act for her.

24. The wife made an observation which was consistent with the confession made by Mr. Walmsley.  That was that any delay in challenging the itemised account was not due to the lack of instructions on her part.  However, it is not entirely clear when those instructions were given.  There is some relevance in all of this because the application was not filed until 29 July, 2009. 

25. In support of the application for the indulgence, the wife said that Rockman & Rockman were always aware their bill was to be challenged and that she would suffer hardship if the registrar’s order was not set aside as she had always “maintained that the bill of costs is greatly excessive”.  However, those sentiments have no weight because they do not assist me to determine whether the whole or some (and if so, what) portions of the professional fees are in dispute. 

26. The wife then relied upon the draft notice prepared by Mr. Thompson but in the folder of documents which form the annexures to the wife’s affidavit, I could not decipher what portion (if any) amount was in fact in dispute.  There is some significance in that because of the fact that of the amount claimed by Rockman & Rockman, a substantial portion relates to disbursements particularly in relation to counsel. 

27. The wife relied upon the affidavit of Mr. Thompson.  He set out that he was a legal costs consultant.  In his affidavit, Mr. Thompson said that the bill of costs did not “constitute a bill of costs in taxable form” and did not comply with the rules of the Court.  He said it was deficient in that it was not complete.  In addition, it did not itemise items of work that had already been paid for by the wife.  He said the wife had paid Rockman & Rockman $38,182.26.  But in his opinion, the wife was entitled to an itemisation for all work and disbursements. 

28. Mr. Thompson then said that an itemised bill had to reflect in detail the work undertaken by the practitioner from the time that instructions were first issued and the bill did not do that.  He said that even if the bill of costs were regular, it ought not to be allowed in the current form as many of the items appeared excessive.  He said in his opinion, the wife’s dispute with Rockman & Rockman had merit even if the bill of costs was found to have complied with the rules. 

29. The difficulty that I have with the evidence of Mr. Thompson, as was highlighted by counsel for Rockman & Rockman, is that it purports to be of an expert nature. 

30. There might be some debate in this case about whether the application is of an interlocutory or final basis, but on any view, the Evidence Act 1995 still applies. Section 76(1) of the Evidence Act 1995 provides that evidence of an opinion is not admissible to prove the existence of a fact about the existence of which the opinion was expressed. Section 76 of the Evidence Act 1995 does not apply to evidence falling within the exception in s.79. Section 79 permits as an exception, evidence where a person has specialised knowledge based upon the person’s training, study or experience. In other words, the opinion rule does not apply to evidence of an opinion that is wholly or substantially based upon that knowledge.

31. The test for whether or not the evidence is of an expert nature was set out by Heydon JA. in Makita (Australia) Pty. Ltd.  v Sprowles [2001] NSW CA 3005.  His Honour said that if evidence was tendered as an expert opinion, to be admissible, it had to be agreed or demonstrated that there was a field of specialised knowledge about which the evidence was to be given.  The facts observed by the expert had to be identified and admissibly proved by the expert.  If there was an opinion based on assumed facts, they had to be identified and proved in some other way.  In other words, it had to be established that the facts upon which the opinion was based had a proper foundation.  His Honour went on to make a number of other comments about the nature of the expert evidence, but said that :

    “If all these matters are not made explicit, it is not possible to be sure whether the opinion is based wholly or substantially on the expert’s specialised knowledge.  If the court cannot be sure of that, the evidence is strictly speaking not admissible, and, so far as it is admissible, of diminished weight.”

32. His Honour’s decision has been followed in a number of subsequent authorities (see HG  v.  R [1999] HCA 2, Sydneywide Distributers Pty. Ltd.  v  Red Bull Australia Pty. Ltd. 2002 FCA FC 157 and Adler v Australian Securities and Investments Commission 2003 NSW CA 131).

33. In this case, there is no evidence of Mr. Thompson’s expertise.  Mr. Bloch on behalf of the firm Rockman & Rockman did not make the concession that his expertise was agreed.  In addition, the evidence does not support the opinion as I do not know its factual basis.

34. Mr. Bloch on behalf of Rockman & Rockman maintained that the order was made regularly.  There can be no argument about that.  He argued and I agree, the wife had to demonstrate a case on the merits and address questions of delay, prejudice and hardship.  The nature of the evidence according to Mr. Bloch was unsatisfactory.  He said that the wife boldly asserted that the costs were excessive but provided no draft notice disputing the itemised account nor enabled me to ascertain what portion of the costs awarded was contested and what was not in contest.  His assertion albeit based on what was said by Mr. Thompson, was that the real percentage now being contested was miniscule.

35. Mr. Bloch also observed that at the request of the wife having challenged Mr. Rockman to do so, the firm paid in excess of $13,000 to someone to prepare the bill of costs. 

36. The essence of Mr. Bloch’s submission was that the delay had not been explained and ought not be excused.  His view was that the delay did not reflect a genuine desire to contest the bill but rather a desire to delay and frustrate Rockman & Rockman.  He said there was no satisfactory evidence as to why the order would impose any hardship on the wife or any prejudice. 

37. Mr. Walmsley on behalf of the wife replied that the wife was otherwise impecunious.  However, that may be a temporary position because as I understand the wife’s case, there are significant funds tied up in assets.  The wife presented no material as to her financial circumstances. 

38. Mr. Bloch asserted that Rockman & Rockman had been prejudiced and he made reference to my recent decision to require Mr. Rockman to remove a caveat which he said then put the wife in a position to sell property and evade her obligations to Rockman & Rockman. 

39. Chapter 19 of the Family Law Rules 2004 sets out the relevant procedures concerning the certification of professional costs.

40. Rule 19.20 reads :  

    19.20Request for itemised costs account

    A person who has received an account (except an itemised costs account) and wants to dispute the account, or any part of it, must, within 28 days after receiving the account, request the lawyer who sent it to serve an itemised costs account for the whole or part of the account disputed.

41. The requirements of rule 19.20 were fulfilled.

42. Rule 19.22 (1) reads :   

    19.22Lawyer’s itemised costs account

    (1)         An itemised costs account (the account) must specify each item of costs and expense claimed.

43. That requirement was fulfilled.

44. The rules then provide what the details in the account must set out.  That was fulfilled.

45. Rule 19.23 provides :  

    19.23Disputing itemised costs account

    A person served with an itemised costs account may dispute
    it by serving on the person entitled to the costs a Notice Disputing Itemised Costs Account within 28 days after the account was served.

46. The wife did not comply with Rule 19.23.  She said she was served on 11 February, 2009 and she had 28 days thereafter to comply with notice provisions.  The certification was therefore regularly entered into the orders of the registrar.

47. Rule 1.14 says :  

    1.14Shortening or extension of time

    (1)         A party may apply to the court to shorten or extend a time that is fixed under these Rules or by a procedural order.

    (2)         A party may make an application under subrule (1) for an order extending a time to be made even though the time fixed by the rule or order has passed.

    (3)         A party who makes an application under subrule (1) for an extension of time may be ordered to pay any other party’s costs in relation to the application.

48. No guidance is provided in the rules about how those principles are to be exercised.

49. The wife must show that there are adequate reasons which explain the delay and that there is a substantial issue to be tried.  She also needs to show that there is no hardship or injustice caused to Rockman & Rockman that cannot be compensated by an order for costs or otherwise.  Those principles come from such decisions as McMahon v McMahon (1976) FLC 90-038 and Clivery v Conway [2007] FamCA 1435. As was said in Clivery v Conway which related to the exercise of discretion in relation to an application for security of costs from appeal, the words of McHugh J. in Gallo v Dawson [1990] HCA 30 are relevant to all applications for leave to extend time limits provided by rules. The principles in Gallo v Dawson were that an extension of time is not automatic but by the same token, the rules of courts are not to be seen as instruments of injustice.  The discretion to extend time is given for the sole purpose of enabling a court to do justice between the parties but the discretion can only be exercised “upon proof that strict compliance with the Rules will work an injustice upon the applicant”.  In addition, when working out what injustice, if any, would occur, it is necessary to have regard to the history of the proceedings, the conduct of the parties, the nature of the litigation and the consequences for the parties of a grant or refusal for the application for extension of time.  Significantly in Gallo v Dawson, McHugh J. referred to the fact that it was necessary to also consider the prospects of success in that application. 

1. I am very conscious of the fact that the rules of the court are designed to make the system work and they must not be used as an instrument of injustice. 

2. However, there is no evidence about why the delay occurred here other than it was the responsibility of the legal practitioners and the costs consultant.  There might be some justification for excusing those delays if there was some correspondence between the wife’s solicitors and Rockman & Rockman asking for indulgences in relation to the course of instructions that the wife had given.  There was none. 

3. There is a provision in Rule 1.14(2) to extend time ex post facto.  None of that occurred.

4. It cannot be said in this case that the time restrictions under the Rules have created a situation in which the Rules have become instruments of injustice. 

5. It cannot be said in this case that I have any idea what amount is in dispute because the wife has not presented any evidence. 

6. I do not know whether the refusal to grant the indulgence would work an injustice to the wife, because although she says so, I do not know how that is the case.  Equally importantly, the wife has not presented any evidence other that bald assertions by Mr. Thompson about the prospects of success if the matter was reviewed.  It must be understood that a review of the registrar’s decision in this case will not be a taxation in the sense of that which was undertaken by the registrar or would normally be undertaken by the registrar.  Although the review of the registrar’s decision must be undertaken by a judge and the case be heard de novo, the authorities make clear that the applicant on that review has to point to where the registrar erred.  (See Brott v Abeles 2007 FLC 93-310.)

7. As with all discretionary judgments however, there is a balancing act.  It makes some difference in this case that I accept that the material to which I have referred filed by the wife was drawn by her solicitors and on any view of the analysis that I have undertaken above, it does not cover any of the issues that a successful applicant would normally be required to produce.  It is somewhat ironic that the very same affidavit material acts as a mea culpa by the practitioners who drew the material sworn by the wife.

8. The one constant theme throughout these proceedings is that the wife has maintained a desire to dispute and challenge the account of Rockman & Rockman.  She has relied heavily upon her advisers.  Their incapacity to provide the material seems to me something that I should ignore, having regard to what I have described as the wife’s desire.  In this case, it is not the rules of the court nor the judicial process which gives rise to the question of prejudice to the wife but rather the way in which her case has been presented.  It would be tempting to say that the wife has another remedy against her own advisers but having regard to what I have just suggested, to deny her the opportunity to at least endeavour to get her house in order and challenge the bill of costs on the basis of the conduct of her practitioners, seems to me to be a potential miscarriage of justice.  There are two sides to the argument however, and in my view, there is no prejudice to Rockman & Rockman if certain safeguards are put in place to ensure that they have security by the control of the funds that are in fact in dispute.

9. I was assisted greatly by the submission of Mr. Walmsley in which he indicated that there is some light at the end of the tunnel because a property of significant value appears now to be sold leaving substantial funds available.  However, as I pointed out, the limitation on that is the requirement for the husband to consent to the disbursement of any funds that the wife might need to ameliorate the position to which I have just referred.  I note however that there are existing orders of this court against the husband that he provide funds for the wife to litigate.  He is clearly in default.  As I understand it, that was one of the causes of the falling out between the wife and Mr. Rockman.

10. In the circumstances, it seems unlikely that the husband could withhold any consent to the dispersal of the funds. 

11. Rockman & Rockman has a fallback position as set out in the submissions of Mr. Broch.  His submission was that if the court was prepared to give the wife that opportunity, then conditions ought to apply.  It seems to me that having regard to the way the litigation has been conducted to date, there is much to be said for that course of action.

12. What I propose to do is to grant the wife leave to review the decision of the registrar out of time, but only on the condition that within 30 days of the day of this order, the wife produces to the court the request for consent orders by husband and wife in terms :

    (a)that the business to which Mr. Walmsley of senior counsel referred is to be sold expeditiously;

    (b)that the husband and wife agree to the whole of the amount referred to in the certified account in Registrar Riddiford’s order being paid into Mr. Rockman’s trust account pending further order of the court;  and

    (c)that a proper indication be given as to the precise nature of the disputed sums. 

13. If the wife fails to comply within 30 days, her application in a case will be deemed to have been unsuccessful and therefore dismissed.

14. If the wife complies with that order, a minute be delivered to my associate for the making of orders in chambers and obviously, a notice to that effect and in full detail, be given to Rockman & Rockman.  I would then propose to list the matter urgently for a short hearing on the disputed issues to show where Registrar Riddiford is said to have erred. 

15. Although no submissions were put about the costs of this hearing, having regard to the nature of the proceedings and the indulgence sought, I will set about a regime for submissions to be filed and determined in chambers.  If the wife feels aggrieved by not having her costs considered, I would have the matter relisted in open court and to that end, she can make a formal application supported by an affidavit. 

I certify that the preceding sixty-four (64) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin

Associate: 

Date:  1 October 2009