Bransdon v Davis & Gilbert
[2007] FamCA 579
•14 June 2007
FAMILY COURT OF AUSTRALIA
| BRANSDON AND DAVIS & GILBERT | [2007] FamCA 579 |
| FAMILY LAW - APPEAL – CONFLICT OF INTEREST - Whether proceedings should not have been commenced by trial Judge when there was a prospect of conflict of interest – Whether legal representatives then appearing for the appellants and the cross appellant should have been restrained from further acting for both parties in the proceedings – Trial Judge specifically advised by counsel for the appellants and cross appellant there was no conflict - No application made that trial be aborted or that counsel or solicitors for the appellants and cross appellant should be restrained from further acting in the proceedings –Trial Judge, having raised issue of prospective conflict was not in the circumstances obliged to do more – Adopt decision in Holborow v Rudder [2002] WASC 265 that the court would only restrain the appearance of a legal representative because of his or her duty to the court in a clear case – This was not a “clear” case – At the commencement of the trial the prospect of conflict of interest was not such that it required trial Judge to herself abort the trial and restrain appellants’ and cross appellant’s legal representatives from further acting in the proceedings - Where evidence conflict arose resulting in counsel’s withdrawal from proceedings on the third day - Whether, to afford procedural fairness to the appellants and the cross appellant after withdrawal of counsel, trial Judge should have stood matter down to enable legal advice to be sought – In the circumstances no prejudice by reason of lack of procedural fairness to the appellants or the cross appellant by trial Judge continuing the matter. Appeal dismissed. FAMILY LAW - CROSS APPEAL – In contrast to appellant’s submissions, cross appellant’s submissions not directed to a prospective conflict but assumed an actual conflict between cross appellant and appellants – Do not accept there was an actual property conflict established prior to the commencement of the hearing or that the hearing, until the evidence conflict emerged, was permeated by a property conflict - Whether trial Judge erred in assessment of contributions – Whether trial Judge failed to provide adequate reasons – Trial Judge’s findings open on the evidence and within the ambit of discretion. Cross appeal dismissed. FAMILY LAW - COSTS – COSTS OF APPEAL – Appellants wholly unsuccessful – Appellants to pay two thirds of respondent’s costs – Wife unsuccessful - Wife to pay one third of respondent’s costs. |
| Family Law Act 1975 (Cth), s 117(2A) |
Giannarelli v Wraith (1988) 165 CLR 543
Gosper and Gosper (1987) FLC 91-818
Gronow v Gronow (1979) 144 CLR 513; (1979) FLC 90-716
Holborow v Rudder [2002] WASC 265
House v The King (1936) 55 CLR 499
Johnson v Johnson (1997) FLC 92-764
Kessey and Kessey (1994) FLC 92-495
Nangus Pty Ltd and Anor v Charles Donovan Pty Ltd (In liquidation) and Anor [1989] VR 184
Oceanic Life Ltd v HIH Casualty & General Insurance Ltd (1999) 10 ANZ Ins Cas 61-438; [1999] NSWSC 292
Re F: Litigants in Person Guidelines (2001) FLC 93-072
W and W [2000] FamCA 1302
Professor P Finn “Conflicts of Interest – The Businessman and the Professional” in Professional Responsibility, Legal Research Foundation Inc., Seminar at the University of Auckland 28/29 May 1987
| APPELLANTS: | Mr and Mrs Bransdon |
| CROSS APPELLANT: | Ms Davis |
| RESPONDENT: | Mr Gilbert |
| FILE NUMBER: | MLF | 2057 | of | 2003 |
| APPEAL NUMBER: | SA | 51 | of | 2006 |
| DATE DELIVERED: | 14 June 2007 |
| PLACE DELIVERED: | Parramatta |
| JUDGMENT OF: | Faulks DCJ, Coleman and Boland JJ |
| HEARING DATE: | 30 January 2007 |
| LOWER COURT JURISDICTION: | Family Court of Australia |
| LOWER COURT JUDGMENT DATE: | 9 August 2006 |
| LOWER COURT MNC: | [2006] FamCA 721 |
REPRESENTATION
| COUNSEL FOR THE APPELLANTS: | Mr Geddes QC with Mr Williams |
| SOLICITOR FOR THE APPELLANTS: | Alderuccio Solicitors |
| COUNSEL FOR THE CROSS APPELLANT: | Dr Ingleby |
| SOLICITOR FOR THE CROSS APPELLANT: | Maria Barbayannis & Co |
| COUNSEL FOR THE RESPONDENT: | Mr Sweeney |
| SOLICITOR FOR THE RESPONDENT: | Lander & Rogers Lawyers |
IT IS NOTED IN CONNECTION WITH THESE ORDERS that the judgment of the Full Court delivered this day will for all publication and reporting purposes be referred to as Bransdon and Davis v Gilbert.
Orders
The appeal against the orders of the Honourable Justice Carter of 9 August 2006 is dismissed.
The cross appeal against the orders of the Honourable Justice Carter of 9 August 2006 is dismissed.
The appellants pay two thirds of the respondent’s costs of the appeal as agreed and failing agreement as assessed under Chapter 19 of the Family Law Rules 2004.
The cross appellant pay one third of the respondent’s costs of the appeal as agreed and failing agreement as assessed under Chapter 19 of the Family Law Rules 2004.
| FAMILY COURT OF AUSTRALIA AT MELBOURNE |
Appeal Number: SA 51 of 2006
File Number: MLF 2057 of 2003
| Mr and Mrs Bransdon |
Appellants
And
| Ms Davis |
Cross Appellant
And
| Mr Gilbert |
Respondent
REASONS FOR JUDGMENT
Introduction
This is an appeal by the wife’s parents and a cross appeal by their daughter, the wife, against orders made by Carter J on 9 August 2006. The appeal, and cross appeal, are resisted by the husband.
The proceedings, which culminated in the trial before Carter J, commenced as proceedings between the husband and the wife for property settlement under
s 79 of the Family Law Act 1975 (Cth) (“the Act”). Subsequently the husband joined the wife’s parents as parties to the proceedings. The husband asserted that they held a property in south east Melbourne subject to an equitable charge in favour of himself and the wife. The trial Judge described the property, the subject of the dispute, as the subject property. We will also adopt that description when referring to the property in these reasons.
The trial Judge made orders, including a declaration, that the subject property was held by the wife’s parents subject to an equitable charge in the sum of $307,948.00 in favour of the husband and wife, and that the husband and wife’s interest in the property be “divided between them in proportions of 55 per cent to the husband and 45 per cent to the wife”. Her Honour further ordered that the wife’s parents pay to the husband the sum of $167,121.00, and for the wife and the wife’s parents to cause him to be released from, and indemnified in respect of, any mortgage secured against the title to the property.
The necessity to join the wife’s parents to the proceedings, and for the type of orders ultimately made by the trial Judge, arose from arrangements which occurred around the time of the parties’ marriage in 1985. In 1984 the wife’s parents purchased 25 acres of land to the south east of Melbourne on which there was a house erected. The following year the husband and wife married, and with the wife’s parents’ agreement, constructed the matrimonial home on part of the land. They obtained a loan from the National Australia Bank (“NAB”) which was guaranteed by the wife’s parents. The land was subsequently subdivided, but the wife’s parents remained the registered proprietors of the lot on which the matrimonial home stood. At the date of the trial the subject property was valued at $480,000.00. It remained subject to a mortgage to the NAB.
At trial the husband asserted the land on which the matrimonial home was erected was a wedding gift to the parties from the wife’s parents, and that the title to the lot had not been transferred to the husband and wife because the wife’s parents wished to avoid paying the stamp duty associated with a transfer.
The wife’s parents and the wife asserted that all payments made by the husband and wife under the mortgage and for other outgoings associated with the subject property were made in lieu of rent, and that the husband and wife had no interest in the property. The wife and her parents retained Messrs Issac Brott & Co (“the solicitors”) as their solicitors, and that firm briefed Mr Levine of counsel on their behalf in the proceedings.
A conflict between the evidence of the wife and that of the father occurred on the third day of the hearing. That conflict resulted in counsel who had up to that time appeared for the wife and the wife’s parents, withdrawing from the hearing and the continuation of the trial, which involved the evidence of the wife’s mother, concluding with the wife’s parents and the wife unrepresented. After the evidence concluded, separate legal representatives for the wife’s parents, and the wife, filed written submissions on behalf of their respective clients.
Before us, senior counsel for the wife’s parents, Mr Geddes, QC succinctly, and with clarity, identified the three issues he asserted were required to be determined in this appeal. They are:
·Where the wife’s parents and the wife were jointly represented, and there was a prospect of a conflict arising on an objective basis, but not perceived by the legal representatives, what is the duty of the Court?
·Subsequently when a conflict of evidence actually arises, and the legal representatives retire, leaving parties self represented, what is the duty of the Court to the unrepresented party (or parties)?
·Whether the trial Judge was in error in finding the husband and wife had an equitable charge over the subject property in the sum of $335,000.00 [semble $335,948.00].
Senior counsel for the wife’s parents submitted that the proceedings should not have been commenced by the trial Judge when there was a prospect of conflict of interest, and that the legal representatives then appearing for the wife’s parents and the wife should have been restrained from further acting for both parties in the proceedings.
As will become apparent when we discuss the submissions made on behalf of the wife, who asserted she had no interest in the subject property, but rather it was her parents’ property, it was submitted that there were two conflicts:
·the actual conflict (the evidence conflict); and
·the property conflict.
We perceive, whilst the submissions of the wife’s parents and the wife about the evidence conflict are identical, and the prospective conflict and the property conflict have, in some respects, a similar factual matrix, that there are subtle differences in the submissions of senior counsel for the wife’s parents and counsel for the wife on these conflicts.
Background
We have already referred to a number of relevant factual matters in our introductory remarks. Further background is found in the trial Judge’s reasons, and was not the subject of controversy before us.
The husband was born in 1961 and was aged 44 years at the date of the trial.
The wife was born in 1968 and was aged 37 years at the date of the trial.
The parties married in October 1985, and separated in August 1999. They were divorced on 30 June 2002. There were no children of the marriage. The wife had remarried at the date of the hearing. The wife remained living at the subject property for a few months after the parties’ separation. The matrimonial home was subsequently rented to an employee of the wife’s brother until December 2004. The matrimonial home was again rented in 2004 or 2005.
The wife’s father was born in 1936 and the wife’s mother was born in 1948. At the date of the hearing they were retired.
After their purchase of the land in south east Melbourne the wife’s parents and other members of her family lived in the house then constructed on the land. The wife’s parents conducted a nursery, or garden supply business, and leased part of the land to Readymix Concrete who conducted a concrete plant. One of their sons was conducting the garden supply business at the date of the trial.
The husband and wife met when the wife was aged approximately 17 years, and prior to their marriage the husband, whose evidence was accepted by the trial Judge, asserted they planned to purchase a house in a suburb near to the subject property.
The husband asserted, prior to the construction of the matrimonial home, he was shown “roughed out” plans of three blocks, and that he chose one of the blocks. The husband asserted the wife’s father said there was a block of land “‘for all his kids when they get married, to build on’”. The land was subsequently subdivided, and after subdivision the husband and wife paid for “rates, taxes and other charges including water for the former matrimonial home”. The husband also paid insurance premiums in respect of the cover on the matrimonial home.
The husband asserted he had savings of approximately $40,000.00 at the date of the marriage which he had invested in the Commonwealth Bank.
The husband made application to the Commonwealth Bank for a loan which application was rejected. The husband asserted the wife’s father told him to transfer his savings to the NAB and to obtain a loan from that bank. The sum of $40,000.00 was borrowed from the NAB, and the wife’s parents provided the land as security for the loan. Later in the marriage the home loan was extended to purchase a Commodore motor vehicle, a ride-on lawn mower and diving equipment. Subsequently the husband and wife obtained a personal loan of $15,000.00. They also borrowed $15,000.00 from the wife’s parents.
At April 2005, the most up to date evidence before the trial Judge revealed $27,292.90 was outstanding pursuant to the mortgage. The husband paid the mortgage payments during the marriage, and after separation until 8 March 2005, except for one payment of $50.00 or $55.00 made by the wife. The NAB statements were in the name of the wife’s parents until June 2004, and thereafter issued in the name of the husband and wife. The wife’s father asserted he made two lump sum payments totalling $4,200.00 in reduction of the mortgage.
In 1995 or 1996 the wife’s brother, C, built a house on the wife’s parents’ land. The parcel of land on which C’s house was built was subsequently transferred to him in about 2005. The wife’s sister, L also built a house on the parents’ land in about 1997 or 1998, and her brother J built a house on the land in 1998 or 1999. L’s and J’s properties were also transferred to them in about 2005. The wife’s father’s Financial Statement did not list these properties as being owned by him.
The parties were in dispute as to the construction costs of the matrimonial home. The husband asserted those costs were approximately $116,000.00 and the wife’s father asserted they were “‘approximately $81,400 with some variations’”. There was no dispute that the wife’s parents contributed $12,000.00 to the construction costs.
In April 2002 the wife obtained a personal loan of $52,000.00 from the NAB. The wife completed a loan application in which she disclosed her ownership of the subject property which she asserted had a value of $450,000.00 and that it was subject to a mortgage debt of $25,912.00.
Grounds of appeal
The wife’s parents relied on an amended Notice of Appeal filed 22 September 2006 containing 16 grounds. We set out below the grounds which were pursued before us. However, as we have already discussed, Mr Geddes, QC clearly articulated the three issues arising in this appeal, and we propose to deal with the grounds under the topics identified by him.
Before us Mr Geddes, QC conceded that ground 13 of the amended Notice of Appeal was abandoned, and that submissions made in respect of error in calculation of the quantum of the equitable charge as found by the trial Judge were relied on as illustrative of the conflict of interest ground, and lack of proper legal representation for the wife’s parents. He accordingly said if the appeal was allowed a retrial was required.
The grounds of appeal ultimately relied on by the wife’s parents are as follows:
1.The learned trial Judge erred in allowing the trial to proceed when there was a clear conflict on the evidence tendered to the Court which would prohibit Counsel appearing for the First Respondent / Wife [the cross appellant] and her parents (“the Second Respondents”) [the appellants].
2.The learned trial Judge erred in not inviting the Second Respondents to seek legal advice before proceeding.
3.The learned trial Judge erred in that she failed to provide the Second Respondents with the opportunity to obtain legal advice in respect of the following issues:
(a)their options arising from the loss of legal representation as to the future conduct of the trial which options inter alia would have been:
(i)an adjournment of the proceedings;
(ii)an application to seek leave for further cross examination of the Applicant;
(iii)the presentation of further evidence to the Court by [the wife’s father];
(iv)further cross examination of [the wife’s father] by the First Respondent’s new Counsel;
(v)the taking of instructions of [the wife’s mother] and her cross examination by the First Respondent’s Counsel.
(b)an application to abort the trial.
(c)an application for the provision of a transcript prior to the case proceeding to enable new practitioners to form a belief as to what options they should consider before proceeding with the trial.
(d)an application for the provision of inspection of exhibits prior to the resumption of the trial by new practitioners.
4.The learned trial Judge erred in that she failed to comply with her obligations to unrepresented litigants in the conduct of the trial.
5.The learned trial Judge erred in accepting any indications as to the attitude of the Second Respondents from their Counsel for them as to the further conduct of the case when he had announced that he was conflicted.
6.The learned trial Judge erred in acting upon submissions of their former Counsel when he had ascertained he was conflicted and the trial Judge advised the Second Respondents that they could not and should not act on the advice of their former Counsel.
7.The learned trial Judge failed to provide a fair trial by proceeding and expecting that the Second Respondents would engage legal advisors to prepare written submissions in respect of a case where they had not appeared and did not have access to exhibits.
8.The learned trial Judge erred and failed to provide a fair trial upon receiving written submissions from the Second Respondents which addressed only the issue of the aborting of the trial failed after ruling upon same to invite the Second Respondents to make submissions on the merits of the case.
9.The learned trial Judge erred in allowing the Second Respondents to proceed unrepresented when she knew or ought to have known that their capacity to engage in a contested trial was hopelessly compromised through the fault of their former legal practitioners.
10.The learned trial Judge erred in that she failed to invite [the wife’s father] before the close of his case the opportunity to produce further taxation returns which opportunity the Judge foreshadowed would be provided.
11.The learned trial Judge erred in not providing or explaining to [the wife’s father] his entitlement to ask questions of [the wife’s mother].
12.The learned trial Judge erred in depriving [the wife’s father] the opportunity of Counsel representing him to engage in appropriate re-examination and presentation of discoverable documents to the Court.
...
14.The learned trial Judge erred in calculating the Husband’s contributions to the construction of the home on the property and further erred in respect of same by not adjusting the Husband’s contributions in view of the concessions made by the Husband in cross-examination.
15.The learned trial Judge erred in accepting the extent of the Husband’s contributions when there was no corroboration thereof from any written source.
16.The learned trial Judge erred in not accepting the evidence of [the wife’s father] as opposed to the Husband who engaged a licensed builder in respect to building costs and who was experienced at developing residential buildings when the Husband had no such experience and failed to produce any appropriate documentation to support his claims of costings. (original emphasis)
The asserted error by the trial Judge in allowing the trial to proceed when there was a prospect of a conflict of interest (ground 1)
The written and oral submissions of the parties
In the written submissions filed on behalf of the wife’s parents, it was submitted there were five matters which disclosed “evidence of risk of conflict prior to Trial” (submissions of the wife’s parents, page 2). Those matters included:
a. The husband’s application to join the wife’s parents and the evidence in his affidavit in support of that application, namely,
(i)the circumstances surrounding the building of the matrimonial home; and
(ii)reliance on the accrued jurisdiction of the Court without which he asserted there would be a necessity for proceedings in the Supreme Court of Victoria in which the husband and wife would need to seek declarations that they were entitled to be registered as the owners of the subject property.
b. The joint affidavit evidence of the wife’s parents in which they conceded contributions made by the husband and the wife to the subject property.
c. The husband’s affidavit of evidence in chief in which he deposed to financial contributions to the construction, improvement and maintenance of the matrimonial home and the land.
d. The wife’s affidavit evidence of the wife’s parents’ contribution of the land and to the construction of the matrimonial home
e. The wife’s father’s affidavit evidence of payments made by the husband and wife to construction of the matrimonial home and mortgage repayments.
It was asserted the conflict was apparent first at the commencement of the trial, again on the second day of the trial, and on the third day when counsel for the wife’s parents and the wife withdrew. A distinction is drawn between the “conflict of interest” asserted to have been apparent at the commencement of the trial, and the “conflict of evidence” which arose on the third day of the trial, and led to the withdrawal of the wife’s parents and the wife’s legal representation. We will return to this asserted distinction in our discussion later in our reasons.
In his written submissions dated 22 January 2007 counsel for the husband dealt with the issue of conflict of interest in the following manner:
8.There is no conflict of interest identified by the Appellants, or the wife, that was evident at the commencement of the trial and which ought to have resulted in the withdrawal of Mr Levine from the proceedings. There was a possibility of such conflict that was alluded to by both the trial Judge and Counsel for the Respondent husband. The Appellants’ Counsel though assured the Court he had no conflict and prima facie he held consistent instructions from his clients at all times, until [the wife’s father] gave his evidence. At that point a decision was made to withdraw from the proceedings. That leave was granted.
9.Contrary to the assertion in paragraph 18 of the Appellants’ Outline of Argument, there is no onus on a trial Judge to challenge Counsel at the commencement of the case and determine whether or not a ‘conflict of interest’ exists. Counsel for the Appellants and the wife assured the Court that he held proper instructions and that no conflict was identified. There was no onus on the trial Judge to challenge the representations of Counsel.
10.There has been no assertion by the Appellants (or the wife) that there was any inconsistency in their instructions prior to [the wife’s father] giving his evidence. Even if there was an apparent conflict the Court was entitled to accept the representation of Counsel for the Appellants to the Judge that there was no conflict in fact. (original emphasis)
Whilst we were referred to a number of authorities by both senior counsel for the wife’s parents, and Dr Ingleby, counsel for the wife, specific reliance was placed by both counsel on the remarks of Young CJ in Nangus Pty Ltd and Anor v Charles Donovan Pty Ltd (In liquidation) and Anor [1989] VR 184, an appeal in which two parties who were represented by the same counsel may have had a conflict of interest.
In his oral submissions the husband’s counsel pointed out that Young CJ, having referred to general rules, had noted that every case depended on its own circumstances, and the instant case had unusual circumstances. He submitted that the case did not fall into the narrow class of case where the wife’s parents could assert that their legal representation was so incompetent that it amounted to no representation at all. He further submitted that it could not be incumbent on the Court in every case to make enquiry, and “in effect conduct a voir [sic] dire to see whether or not there is likely to be a conflict … and make an application or invite someone to make an application to injunct or of its own motion injunct someone from continuing to act” (transcript, 30 January 2007, page 48, lines 2-5). He concluded that it would only be in the clearest case that the Court could take such action. He also referred to the fact the wife and her parents came to the Court with “unity of approach”, there was a common result sought, and they did not differ in the assurances given by their counsel to the Court.
The conduct of the proceedings before the trial Judge
The helpful submissions of all parties’ counsel in this matter focussed our attention on the manner in which the trial commenced, and the evidence at that time before the trial Judge.
The following exchange took place between the trial Judge and the wife’s parents’ and the wife’s counsel at the commencement of the trial:
MR LEVINE: Your Honour, I appear on behalf of the wife and interveners in this proceeding.
HER HONOUR: No conflict between the wife and the interveners?
MR LEVINE: No. This is a financial dispute - - -
HER HONOUR: I know that. Yes, I’ve looked at the documents. They’re late, quite late, filings of the case outline summaries but I’ve had a look at them nonetheless. You say that the property is owned by the interveners?
MR LEVINE: That’s correct, your Honour.
HER HONOUR: And neither the wife nor the husband has any interest in that property?
MR LEVINE: That’s correct.
HER HONOUR: Is it conceded that the husband did in fact contribute some $40,000 towards the erection of a house upon that land?
MR LEVINE: It’s conceded that he provided some moneys to it. The interveners don’t know the exact amount.
HER HONOUR: But he built a house there?
MR LEVINE: No, they built a house jointly.
HER HONOUR: Who is “they”?
MR LEVINE: The interveners and the husband and the wife built a house jointly upon the land.
HER HONOUR: Who lived in the house after it was built?
MR LEVINE: The husband and wife.
HER HONOUR: Did the husband put in more than about two and sixpence?
MR LEVINE: He put in more than two and sixpence.
HER HONOUR: Yes, very generous of him to contribute towards somebody else’s property.
MR LEVINE: He was fully aware that he had no interest in the property and was not acquiring an interest.
HER HONOUR: He just was very generous? I see. All right. Well, gentlemen, you’ll have some time to consider your position. You’ve – I see in your material Mr Levine doesn’t – don’t think it necessary to ascribe any value to the property. (transcript, 23 January 2006, page 2, lines 6-43 and page 3, lines 1-12)
Later that morning when counsel made submissions that the wife’s parents were not required to file a Financial Statement the following exchange occurred:
MR LEVINE: Your Honour is not in a position to simply change – this is not an exercise for – this is a matter for your Honour to exercise your obligations pursuant to law and the law deals with the matters about constructive and other trusts. That’s the basis of this application against them. It’s not an application where you simply look at the financial circumstances of the respondents and decide to make a variation thereto. That’s not a matter for your Honour.
HER HONOUR: You’ve read Part VIIIAA, have you?
MR LEVINE: I’m sorry?
HER HONOUR: You’ve read the provisions of the Family Law Act set out in Part VIIIAA?
MR LEVINE: I’m just obtaining it, your Honour, a Part VIII.
HER HONOUR: Roman numerals VIII, yes, commencing with Section 90AA.
MR LEVINE: Yes, I’ve just read that, your Honour.
HER HONOUR: Have you read 90AE?
MR LEVINE: Yes, your Honour.
HER HONOUR: In particular, for example, 90AE(2)(b).
MR LEVINE: That’s correct.
HER HONOUR: And subsection (3).
MR LEVINE: Yes, that’s correct, I’ve read that.
HER HONOUR: Do you still say that financial circumstances are not relevant?
MR LEVINE: Yes. Section 90AE(3):
The court may only make an order under subsection (1) or (2). If the making of the order is reasonably necessary or reasonably appropriate, no doubt that it would affect the division of property between the parties to the marriage.
So it’s certainly contingent upon a statement that it’s to affect the division of property between the parties to the marriage. It doesn’t confer an unfettered judicial discretion and that’s why this application seems to be made. It’s an application to affect the statement in certain ways, certain property should be regarded as property of the marriage, and that’s been resisted. (transcript, 23 January 2006, page 14, lines 41-44 and page 15, lines 1-43)
Also later that morning counsel for the husband said, referring to the Financial Statement to be filed by the wife’s parents:
MR SWEENEY: ... But can I take an example, your Honour. One may be interested to look at that document, for example, to see whether or not this house that has not been occupied by the husband for some years – having a mortgage paid by one or other of the parties that my learned friend represents – whether the rental is received by one or other of the parties that he represents. Your Honour, I will put him on notice right now: he has indicated to your Honour quite clear, unequivocally this morning, there’s no conflict so he can represent everybody in this proceeding. It becomes evident that he can’t throughout the course of these proceedings he is on notice now. He ought consider his position. (transcript, 23 January 2006, page 18, lines 26-34)
…
MR SWEENEY: Your Honour, they’re all issues that I would have thought jumped off the paper. If my learned friend doesn’t see them as problems, so be it. We want to proceed. He has at all relevant times represented – and even represented the parties when orders for the filing of the document was made. So forget the orders of June – he argues as much as he likes about that – let’s just take the orders of May 05. He has agreed or been subject to an order that he file the document. I simply seek that document.
HER HONOUR: Yes. Right. Anything in reply, Mr Levine?
MR LEVINE: No, I just would like to clarify what my learned friend said about me having a potential conflict of interest. My instructing solicitors acted for both parties for a number of times. It’s never been raised before.
HER HONOUR: I raised it this morning though because I get concerned when I see any legal practitioner acting for separate parties.
MR LEVINE: Certainly.
HER HONOUR: I raised it. He said no, there was no problem. Mr Sweeney is simply saying, “You’d better be right.” (transcript, 23 January 2006, page 19, lines 25-44 and page 20, line 1)
At this point we record that no response setting out the orders sought by the wife’s parents had been filed at the commencement of the hearing, and that response was not filed until the third day of the trial. We also note that the wife did not seek any orders claiming an interest in the subject property, but rather she sought, in effect by way of reply to the order sought by the husband for a declaration, that their respective interest in the subject property was “nil” (wife’s response, filed 29 April 2003, Part B).
The trial Judge’s reasons for judgment
Her Honour, having set out the issues to be determined in the proceedings, and evidence filed in support of those proceedings, discussed the issue of the conflict between the wife and her parents under the heading “Withdrawal of Legal Practitioners”. At paragraph 31 of her reasons, the trial Judge summarised the evidence we have set out above. Her Honour then summarised the evidence given by the wife on the second day of the hearing and that of her father given on the third day. Her Honour noted:
... It appeared to me that there was a conflict between the wife’s evidence and that of her father and prior to the luncheon adjournment I inquired of Mr Levine whether or not he had any difficulty in those circumstances. (paragraph 32)
Her Honour then referred in detail to matters occurring after Mr Levine withdrew from the proceedings and the subsequent written submissions received by her from each party’s respective new legal representatives after the conclusion of the evidence. Her Honour then turned to the question of whether or not the trial should be abandoned. Her Honour said:
41.I have earlier set out the orders where [sic] were sought at the hearing by the wife and her parents. During her cross-examination Mr Sweeney sought to clarify with the wife her case. She confirmed that it was her case that the husband had no interest in the property at [the subject property]. When asked whether it was her case that she had no interest in the property, her response was “Absolutely”.
42.Mr Sweeney then enquired:
“You say that if the Court says that the interest that you and your husband have in this property or one of you has in this property - let’s say 250, 350 thousand dollars, as I understand it, you’re saying, ‘I don’t want my parents to pay anything because they shouldn’t.’ Is that your case?”
43.The wife’s response was:
“[The husband] and I knew full well that land was never ours.”
44.She was then asked to clarify that if the Court were to conclude that she and the husband did have an interest in the property, whether or not she was saying that she did not want to receive any part of it. After some discussion Mr Sweeney put the question this way:
“Do you understand what I am asking you? If the Court says that your parents are owed or owe money for what’s been done on this property, are you saying that they should pay you a large part of it, a small part of it? What amount do you say should come to you?”
45.The wife responded:
“If the Court said that they had to give me some, I would take it to give back to them.”
46.Mr Sweeney sought further clarification asking the wife:
“Do you say that you, in your mind, don’t have an entitlement and therefore you are not seeking that your parents pay you any money?”
47.The wife’s response was:
“No, I’m not seeking that my parents pay me money. My parents have paid a lot for me.”
48.She also agreed with Mr Sweeney that the land had always belonged to her parents.
49.The wife’s case was consistent with the position taken by her father and mother in their affidavit material.
In dealing with written submissions received her Honour said:
59.In par 6 it was submitted that it was “clear from the outset of this case that the interests of the wife and her parents were in conflict”. As I have said earlier the wife’s case was consistent with the position taken by her father and mother. They sought the same orders. I note further that in the earlier part of the submissions filed on behalf of the wife, it was submitted that:
“2.The wife at no stage has put forward a positive claim in relation to the issues in dispute between the parties in this case. In particular, she claims no money or other benefit for herself from this action …
3.Evidence given by the wife, which, it is submitted, the Court should accept, is to the effect that she was not involved in any dealings between the husband and her father in connection with issues in dispute. …”
60.Paragraph 6 of the wife’s submissions goes on to submit that the conflict between the interests of the wife and her parents, or the strong probability that such conflict existed was apparent to myself and counsel for the husband.
Later in her reasons, the trial Judge identified that the thrust of the wife’s and the wife’s parents’ submissions was “that their solicitors knew, or should have known, that conflict existed or that there was a potential of conflict”. Her Honour further said:
64.However, as Mr Sweeney has correctly submitted, it has not been suggested by any of the respondents that Mr Levine acted contrary to his instructions when he told me that he perceived no conflict or potential conflict nor has it been suggested that the instructions given to Mr Levine or to his instructing solicitor for that matter were inconsistent, and in particular, as Mr Sweeney correctly submitted, it has not been contended that when Mr Levine told me he perceived no conflict, the instructions he held from all of his clients were anything other than consistent.
65.When I pointed out to Mr Levine towards the latter part of the trial that the evidence of one of his clients contradicted that of another of his clients, Mr Levine told me that he would need to consider his position and further, that he had not been aware of that situation before that time. Thereafter Mr Levine promptly sought advice and acted upon it. He told me that the advice he had obtained from the Ethics Committee also involved consideration of whether or not he should have accepted the brief and it was to the effect that, based on what he recounted, there was nothing improper in doing that or in connection with his conduct, and further that the conflict arose during the running of the case. I see no reason not to accept that Mr Levine was anything other than accurate and truthful when he told me, effectively, that he had been caught by surprise, nor when he spoke to the Member or Members of the Ethics Committee involved, and when he told me of this discussion. Further, there were no submissions to the contrary.
66.In par 6 of the husband’s written submissions it was contended that:
“The issue of conflict came about for one reason - either the wife or [the wife’s father] changed their instructions as to the events at the Bank when the wife was making application for a loan. The Court is able to assume that Mr Levine had consistent instructions from each client up to that point and again there is no submission to the contrary.”
67.To my mind, that submission is well founded.
68.In the absence of any submissions to the contrary I do in fact accept that Mr Levine was acting on his clients’ instructions when he assured the Court that there was no conflict and, at that time, the instructions he held were consistent. When that situation changed and Mr Levine became aware of the conflict of evidence, he was placed in the situation where he could no longer act on behalf of any of the respondents.
Under the heading “Discussion”, her Honour noted that the situation which arose during the course of the trial was as a result of the differing evidence given by the wife and her father as to events at the NAB when the wife applied for a personal loan. Her Honour said, “[a]s a consequence Mr Levine found himself at a very late stage of the trial in a position where he could no longer act for either the wife or her father” (paragraph 91).
Her Honour recorded:
92.It has not been submitted that Mr Levine acted without instructions when he assured the Court that he saw no conflict or potential conflict between his clients, nor has it been submitted that at any prior stage the instructions he had been given by all his clients were inconsistent or in conflict. At the hearing the wife’s case was consistent with that of her father and mother.
93.I agree with Mr Sweeney’s submission that there can be no explanation for the difficulty which Mr Levine encountered other than that either the wife or her father changed their evidence and/or instructions as to the events which had taken place at the bank.
94.In those circumstances I am entitled to and do accept, that Mr Levine acted on his clients’ instructions and further that there was no conflict in those instructions at the time he made the assurances to the Court in respect of conflict or potential conflict. As a consequence I find no merit in par 27 of the submissions put on behalf of [the wife’s parents].
Later in her reasons, her Honour in dealing with the husband’s claim under s 79 said:
401.Finally, I note the submissions filed on behalf of the husband that the case was conducted by both parties on the basis that the interest in [the subject property] was the interest (if any) that was to be the subject of a claim under s 79 of the Family Law Act. It was further contended that it was accepted that the other items of property were of insignificant value and ought to remain with the person possessing same.
402.I accept that this was the way in which the husband’s case was conducted, however, it is by no means clear to me that this was an agreed approach. Certainly the focus throughout the case was on the determination of any interest of the parties in [the subject property]. It is also the case that there were no submissions filed on behalf of the wife which dealt with Mr Sweeney’s contentions or indeed in relation to the claim pursuant to s 79 of the Act. On her evidence the wife did not seek that any payment be made to her and this was referred to in the written submissions filed on her behalf. The only orders which the wife had sought were as set out earlier, namely, that the husband should pay or refinance the moneys secured over [the subject property] and also pay the sum of $4,200 to [the wife’s parents], representing what was described as the last two instalment payments” [sic] made by them pursuant to the loan.
Relevant legal principles
Discussion of relevant authorities
No party to this appeal, or in the proceedings before the trial Judge, referred to r 8.03 of the Family Law Rules 2004 (“the rules”) when discussing the issue of conflict of interest. Rule 8.03 deals with conflicting interests and is in the following terms:
A lawyer acting for a party in a case must not act in the case for any other party who has a conflicting interest.
Note This rule does not purport to set out all the situations in which a lawyer may not act for a party.
Whilst it may be said the rule is self evident we think it important to highlight the existence of the rule.
A conflict of interest may arise because of the fiduciary duty owed by a legal practitioner to his or her client. Although not raised by counsel, or otherwise mentioned during the appeal, examining the authorities to which we were referred, led us to a paper by Professor Finn (as he then was) and to the decision of Austin J in Oceanic Life Ltd v HIH Casualty & General Insurance Ltd (1999) 10 ANZ Ins Cas 61-438; [1999] NSWSC 292.
The nature of the fiduciary relationship between a legal representative and a client, and the obligations arising from such a relationship are discussed by Professor Finn in his paper “Conflicts of Interest – The Businessman and the Professional” in Professional Responsibility, Legal Research Foundation Inc., Seminar at the University of Auckland 28/29 May 1987, particularly at page 24 in the discussion “[s]ame matter conflicts”. Professor Finn said “[t]hese are at the heartland of fiduciary law, raising as they do in an acute form, a fiduciary’s duty of loyalty”. Using the example of a legal representative acting for both the vendor and purchaser in respect of a purchase, Professor Finn said “[u]ntil each client agrees to the contrary, or unless there is a legally acknowledged custom to the contrary, each is entitled to, and is entitled to assume that he has, the undivided loyalty of the fiduciary he has retained” (footnotes omitted). He noted the rule of fully informed consent to the legal representative acting with appropriate disclosure and said at pages 25 to 26:
This much is clear. The disclosure is not limited simply to the fact of the double employment as such. When one asks what here is the purpose of the disclosure, the answer I would venture to suggest is this. The disclosure is to appraise each beneficiary in turn as to the extent to which the fiduciary’s exertions on his behalf will or may be qualified or compromised, so that each beneficiary can then determine whether, in view of the adverse and possibly qualified representation, he should permit the fiduciary to continue so to act in the matter. Each beneficiary must be informed, in other words, of the extent to which the fiduciary will, by virtue of the double employment, act and be capable of acting in that beneficiary’s interests given the possible conflicts which might arise in the matter. (footnotes omitted)
It is self-evident that the relationship owed by the legal representatives to the wife’s parents and the wife was a fiduciary one.
Many of the cases to which we were referred dealt with applications to restrain legal representatives who had acted for a client, and obtained confidential information in the course of their retainer, acting for another party in circumstances where the confidential information obtained could potentially create a conflict of interest. Those cases do not have direct relevance to the principal issue raised on this appeal, that is, the “prospective” conflict issue.
The types of conflict of interest which may arise between a client and a legal representative are subject of exhaustive analysis by Austin J in Oceanic Life Ltd v HIH Casualty & General Insurance Ltd (supra).In discussing the law, his Honour noted that “[w]here it is alleged that a solicitor has acted improperly in representing more than one client in litigation, a surprisingly large number of principles may be brought into play”. His Honour noted these include the law of contract, the law of fiduciary duty, the law protecting confidential information, the law in respect of legal professional privilege, the law with respect to the solicitor’s duty to the court and a court’s discretion to supervise the conduct of its officers as well as “ethical principles developed and applied by a professional disciplinary body.” He also referred to principles which may be invoked if the solicitor receives gifts and the like which are not relevant to the issues to be determined in this appeal.
In discussing the duty to the court his Honour said:
In addition to fiduciary duties and the duty not to misuse confidential information, a solicitor who acts in litigation owes a relevant legal duty to the court, as well as an ethical duty. The duty to the court arises from the court’s concern that it should have the assistance of independent legal representation for the litigating parties: see D A Ipp, “Lawyers’ Duties to the Court” (1998) 114 LQR 63, 93. In the realm of conflicts of interest and conflicts of duty, the solicitor’s duty to the court may not be much different from his or her fiduciary duties to former and present clients. However, the duty to the court tends to be expressed in such a way as to emphasise the public interest in preserving confidence in the administration of justice, and therefore in the appearance as well as the reality of independence, and the court’s practical approach to its supervisory discretions: Freuhauf Finance Corporation Pty Ltd v Feez Ruthning (1991) 1 Qd R 558; Murray v Macquarie Bank Ltd (1991) 33 FCR 46; Carindale Country Club Estate Pty Ltd v Astill (1993) 42 FCR 307; Macquarie Bank Ltd v Myer [1994] VR 350; Kooky Garments Ltd v Charkon [1994] 1 NZLR 587; Watson v Watson (Supreme Court of New South Wales, Equity Division (Santow J), unreported, 25 May 1998). (paragraph 48)
The duty owed by a legal representative to the court was, as we have earlier in these reasons highlighted, referred to by Young CJ in Nangus Pty Ltd and Anor v Charles Donovan Pty Ltd (In liquidation) and Anor (supra). This matter involved an appeal brought in the Supreme Court of Victoria by a lessor who sought to challenge the quantum of damages payable on repudiation of a lease of commercial premises by the lessee (the first respondent), and the extent of the liability for those damages of the guarantor of the obligations under the lease (the second respondent). The appeal was dismissed, however at the hearing of the appeal both respondents were represented by the same counsel, and Young CJ in a separate judgment discussed the issue of duty of legal practitioners to the court and conflict of interest. Young CJ said at pages 185 to 186:
The general rule undoubtedly is that counsel ought not to appear for two clients whose interests may conflict: see Halsbury’s Laws of England, 4th ed., vol. 3, para. 1143.
…
Every case must depend upon its own circumstances but it is important to notice, as Re Burton and Re Morgan show, that the Court is concerned that it should have the assistance of independent counsel for parties whose interests are not identical in the case before it. The Court must necessarily be concerned for its own protection.
For the reasons which I have given it is unnecessary to go further in the present case. It is sufficient to say that where the interests of two parties apparently conflict or may conflict it will be for the Court to say whether there may be a departure from the prima facie rule.
As counsel for the husband highlighted in his oral submissions to us, Young CJ noted in his reasons counsel had been permitted to appear on the appeal for both the first and second respondent, who were also represented by the same solicitors, and the Court noted that “notwithstanding the apparent conflict and upon that assurance we allowed the argument to proceed, reserving the question of whether any difficulty would arise in disposing of the appeal”.
Dr Ingleby, counsel for the wife, provided us with comprehensive and well structured submissions, to which he helpfully annexed the authorities to which he referred. In dealing with the “property” conflict, Dr Ingleby submitted:
13.The property conflict of interest derives from one of the essential ingredients of the husband’s case. The husband sought to establish that he and the wife had an interest in the property, and then to secure a settlement in his favour from that interest.
14.A finding that the husband and wife had any interest in the property required a calculation of their interests vis-à-vis the interests of the wife’s parents; which calculation necessarily puts the wife’s interests against those of her parents, the property conflict: paragraph 10 of the wife’s written submissions 2AB303) [sic]. (original emphasis)
Counsel for the wife further submitted that “[t]he requirement of independent counsel for the parties whose interests are not identical goes to the administration of justice”. He further submitted it was not open to the trial Judge to rely on assurances of counsel that his instructions were that there was no conflict of interest. He thereafter set out four reasons why the wife’s parents’ and the wife’s instructions could not be determinative of the matter including the fact “that counsel appeared oblivious to the nature of the property conflict” (wife’s submissions, paragraph 18). Dr Ingleby submitted “the clearest statement of general principle emerges from the decision of Heenan J in Holborow v Macdonald Rudder [2002] WASC 265 at paragraph [30]” (wife’s submissions, paragraph 19, original emphasis).
Careful analysis of Heenan J’s judgment is instructive. The proceedings before his Honour were proceedings which were initially commenced by a firm of solicitors (“the firm”). The firm sought to restrain another solicitor (“Mr Williams”) who was not a party to the proceedings, from acting for the plaintiff in proceedings before the court. Mr Williams had been the former solicitor for the plaintiff. The basis for the relief sought was that Mr Williams had a personal interest in the outcome of the proceedings, that he was likely to be a witness and that it was “contrary to the due administration of justice and the integrity of the judicial process that he have any further participation in the proceedings”.
The allegations in the proceedings, which were said to affect the rights of the plaintiff in the proceedings before the Supreme Court of Western Australia, involved claims that both the firm and Mr Williams had been in breach of their duty to their clients at various times the firm and Mr Williams had acted for the plaintiffs. His Honour noted that generally the evaluation of the conduct of a legal practitioner would be left for examination until after the principal proceedings. His Honour noted the rationale for such procedure being “it is usually neither possible nor desirable to make a determination of the rights of the parties, whether provisional or otherwise, when they are still joined in issue on the very matters that the court will eventually have to decide”. His Honour further noted at paragraph 20 of his reasons “[t]here may be cases where, while the litigation dividing the adversaries is still pending, or even perhaps is in a very early stage, where it will be sufficiently apparent that there exist circumstances which would preclude a particular legal practitioner from acting so that orders restraining him from doing so may then be made.”
His Honour then went on to examine circumstances where an order was sought to restrain a legal practitioner from acting in proceedings, when there was no risk of disclosure of confidential information, and to identify what obligation was owed to a former client or to the court (our emphasis). Having recorded the fiduciary nature of the relationship between solicitor and client, his Honour referred to the legal practitioner’s “overriding” duty to the court.
Having referred to the principles enunciated by Mason CJ in Giannarelli v Wraith (1988) 165 CLR 543 his Honour then said:
30.A feature which emerges from the decision of this Court in Afkos Industries Pty Ltd v Pullinger Stewart (supra), is that while a properly informed and advised client, not under any disability, may waive or ratify any breach of duty due to it by the legal practitioner, the practitioner’s duty to the court cannot be waived, so that if the particular disqualifying feature involves a conflict between the interests of the practitioner and his duty to the court which could give rise to a situation where the independent administration of justice may be put in jeopardy, the court will restrain the practitioner notwithstanding the wishes or interests of the client. However, it by no means follows that every conflict of interest between the legal practitioner and a client will give rise to a concurrent conflict of interest between the legal practitioner and his duty to the court, or, even where it does, that there is a risk that the practitioner will disregard his overriding duty to the court in favour of his client’s interest. It seems to me that if it can be demonstrated that there is a risk that a practitioner will disregard his overriding duty to the court that this will usually, if not always, require action by the court to avoid such a risk by preventing the practitioner from acting even if the relief is sought by an opposing party in the litigation. But these principles do not render counsel or solicitors generally examinable at the suit of their client’s opponents. The duty of the legal practitioner is not to his client’s opponent and he is not answerable to his client’s opponent. His duty is to the court and he is certainly answerable to the court and to his or her professional and disciplinary bodies.
31.Consequently, if an opposing party asserts that a legal practitioner should be restrained from acting for his opponent it is necessary for a clear case to be made that the practitioner concerned is in a position where he is fixed with an interest which conflicts with his duty to the court and that that interest is one of such a nature that the solicitor or counsel may fail in his overriding duty to the court. ... However, the insidious threat imposed by a practitioner who, wittingly or unwittingly, does have a conflict between his personal interests and the duties which he owes to the court is another matter. As the passage cited from Giannarelli v Wraith (supra) reveals, it is inevitable that a practitioner in a cause will be obliged to advance his client’s interest but he must only do so while simultaneously observing his duties to the court and preferring that overriding duty to any other. That this is, and for ages has been, done regularly by counsel and solicitors in litigious proceedings is testimony to the professional traditions which should be the mantle of all practitioners. Consequently, although a court will always be alert to consider whether or not these are in jeopardy, in my view it would usually take an unequivocal situation to justify restraining a practitioner from acting on these grounds. (our emphasis)
We think it useful at this stage to consider the rationale underpinning a barrister’s overriding duty to the court. That rationale is fully explored and discussed by Mason CJ in Giannarelli v Wraith (supra) at 556 to 557 as follows:
The performance by counsel of his paramount duty to the court will require him to act in a variety of ways to the possible disadvantage of his client. Counsel must not mislead the court, cast unjustifiable aspersions on any party or witness or withhold documents and authorities which detract from his client’s case. And, if he notes an irregularity in the conduct of a criminal trial, he must take the point so that it can be remedied, instead of keeping the point up his sleeve and using it as a ground for appeal.
It is not that a barrister’s duty to the court creates such a conflict with his duty to his client that the dividing line between the two is unclear. The duty to the court is paramount and must be performed, even if the client gives instructions to the contrary. Rather it is that a barrister’s duty to the court epitomizes the fact that the course of litigation depends on the exercise by counsel of an independent discretion or judgment in the conduct and management of a case in which he has an eye, not only to his client’s success, but also to the speedy and efficient administration of justice. In selecting and limiting the number of witnesses to be called, in deciding what questions will be asked in cross-examination, what topics will be covered in address and what points of law will be raised, counsel exercises an independent judgment so that the time of the court is not taken up unnecessarily, notwithstanding that the client may wish to chase every rabbit down its burrow. The administration of justice in our adversarial system depends in very large measure on the faithful exercise by barristers of this independent judgment in the conduct and management of the case. In such an adversarial system the mode of presentation of each party’s case rests with counsel. The judge is in no position to rule in advance on what witnesses will be called, what evidence should be led, what questions should be asked in cross-examination. Decisions on matters such as these, which necessarily influence the course of a trial and its duration, are made by counsel, not by the judge. This is why our system of justice as administered by the courts has proceeded on the footing that, in general, the litigant will be represented by a lawyer who, not being a mere agent for the litigant, exercises an independent judgment in the interests of the court.
Discussion
Reference to r 8.03, the many authorities on conflict of interest and ethical rules of the various professional associations makes it clear that acting for two parties who are before the Court where there is a potential conflict is fraught with difficulty. Authority, prudent practice and experience dictates separate legal representation should almost inevitably occur.
We turn to consider the question posed by senior counsel for the wife’s parents - what was the trial Judge’s obligation, if any, in the factual situation which confronted her Honour? We note her Honour had not assumed responsibility for case management of this case, but rather was confronted on the first day of the trial with a situation where:
·the wife sought that the husband’s application for a declaration of an equitable interest in the subject property in effect be dismissed;
·the wife did not seek any relief against her parents;
·no response particularising the relief sought by the wife’s parents had been filed;
·no Financial Statement had been filed by the wife’s parents although there was an order they should do so;
·the evidence established sums of money had been paid by the husband and the wife to build and maintain the matrimonial home, and sums of money had been paid by the wife’s parents in respect of the subject property; and
·the wife and her parents asserted the husband and wife had no interest in the subject property, but that any moneys paid had been by way of rent.
On raising the question of a potential conflict of interest her Honour was assured by counsel then appearing for the wife’s parents and the wife there was no conflict of interest. We consider that an assurance by counsel, who owes a duty to the Court, must carry considerable weight. No application was made by any party that the trial should be aborted, and/or that counsel or solicitors then appearing for the wife’s parents and the wife should be restrained from further acting in the proceedings.
We accept there is a distinction between a possible conflict of interest, and the conflict which subsequently arose because of the conflict in the evidence between the wife and her father which led to the wife’s parents’ legal representatives withdrawing from the proceedings.
We find merit in the submissions made by the husband’s counsel relevant to the circumstances of this matter. First, this was an unusual case. Whilst the husband submitted “contributions” had been made by him and the wife, and Mr Levine acknowledged those contributions in opening, the issues presenting for determination put the purpose of the contributions in issue. The wife claimed no interest in her parent’s property and the wife’s parents’ untested version of the evidence at the commencement of the trial was the construction and occupation of the matrimonial home was pursuant to a rental agreement in respect of which the wife and husband made mortgage payments by way of or in lieu of rent. These assertions, if ultimately accepted, did not, prima facie, disclose a conflict.
Secondly, her Honour was specifically advised by counsel there was no conflict of interest.
Thirdly, no application was made by the husband (or any party) for the trial to be aborted, or particularly for Mr Levine to be restrained from continuing to act. We accept in a clear cut case, a trial Judge may be required to conduct a voire dire where there is a prospective conflict prior to commencing a hearing. The Court could then, of its own motion, exercising its implied jurisdiction, injunct a practitioner from continuing to act. We do not accept this case was, at its commencement, so clear cut that her Honour was required to undertake such a course. Thus, we do not accept her Honour, having properly raised the issue of a “prospective” conflict, was obliged in the circumstances of this case, to do more.
We are satisfied this case is distinguishable on its facts from Nangus Pty Ltd and Anor v Charles Donovan Pty Ltd (In liquidation) and Anor (supra). In that case, in the event the appeal was upheld both the lessee and guarantor under the lease were each liable for the increased damages sought by the lessor. In the instant proceedings, if the wife’s parents’ case was, at the conclusion of the hearing accepted, no declaration of an equitable charge over the subject property could have been made, and the property to be divided under s 79 between the husband and wife would have been the modest assets held by each of them. The prospective conflict would not have eventuated. Further, in the instant case the Court was assured by counsel there was no conflict. The trial Judge was entitled to assume this assurance was given after proper advice had been given by the legal representatives to their clients, and instructions received from them. We also note that in Nangus Pty Ltd and Anor v Charles Donovan Pty Ltd (In liquidation) and Anor (supra) the Full Court of the Supreme Court of Victoria, notwithstanding the potential conflict issue in that case, proceeded to allow counsel to appear for both respondents on the appeal.
We agree with the discussion and findings of Heenan J in Holborow v Rudder [2002] WASC 265 and adopt, with respect, his Honour’s view that the court would only restrain the appearance of a legal representative because of his or her duty to the court in a clear case. We are not satisfied this case, for the reasons set out above, was a “clear” case.
Conclusion – the “prospective conflict”
For the reasons set out above, and following we conclude that at the commencement of the trial the prospect of a conflict of interest was not such that it required the trial Judge herself to abort the trial and injunct the wife’s parents and the wife’s legal representatives from further acting in the proceedings as:
·there was nothing before the Court at that time which would confirm to the trial Judge that counsel’s forensic decisions in, and the conduct of, the case would be such that he could not represent the wife’s parents’ interests and the wife’s interests before the Court, thus affecting counsel’s overriding duty to the Court;
·the trial Judge properly raised the matter with counsel and was assured there was no conflict . It would be a rare case where given counsel’s duty to the Court, that a trial Judge could not rely on counsel’s assurances when a conflict issue was raised;
·the husband’s counsel further raised the issue of conflict at the commencement of the trial, but having done so agitated for the hearing to continue;
·the relief sought by the wife was identical to the relief sought by the wife’s parents; and
·whilst the wife’s parents interests and the wife’s interests theoretically in the future could possibly be an issue, such a situation had not arisen at the commencement of the trial, and there was no evidence before the trial Judge to support a finding that a future conflict was reasonably foreseeable.
The evidence conflict and continuation of the trial after counsel withdrew – the procedural fairness grounds
The circumstances of the withdrawal of counsel
To understand the arguments raised in respect of this ground, it is helpful to examine the factual circumstances which led to the so called “evidence conflict”.
In his affidavit of evidence in chief filed 27 July 2005 the husband deposed:
Following separation however, the Wife has asserted that neither she nor myself have any interest in the [subject] property and that same ought to be excluded by this Honourable Court as part of the matrimonial assets when considering my application for final property settlement. This is notwithstanding that the Wife has asserted to third parties, including financial institutions that she has an interest in the property. Attached hereto and marked with the letters “SG1” is a true copy loan application made by the Wife to the National Australia Bank in 2002, wherein the Wife records the [subject] property as belonging to her. (paragraph 19, original emphasis)
The annexure referred to in the husband’s affidavit is a copy of a loan application for a loan of $52,000.00 which he asserted was made by the wife.
In her affidavit sworn/affirmed on 15 September 2005 the wife said:
As at the time of separation, I did not have a car. I went to the National Australia Bank with my father and obtained a personal loan that my father guaranteed and he stated that I should simply put the property as my asset. I have a good relationship with my parents and they are willing to lend me money to help me out, if they can afford to help. (paragraph 12)
In his affidavit sworn the same date the wife’s father did not address the issue of the loan obtained from the NAB, so that there was no actual conflict in the affidavit evidence of the wife and the wife’s father about the loan or the loan documentation at the commencement of the hearing.
On the second day of the hearing counsel for the husband tendered to the trial Judge a Minute of Orders sought and said:
MR SWEENEY: ... Take, for example, the wife: does she say that of that figure of $335,000, less the mortgage, the 307,948, she seeks no payment from the second respondent, in which case my client will seek that without any contest, or is he [Mr Levine] saying that he wants as much as he can possibly get of the $307,000 that we say the charge is; in other words, does he want his second–named respondent to pay as much as they possibly can be ordered to pay in favour of the first respondent, or nothing? That’s a decision for my learned friend. But one would have thought that it would also highlight a conflict. If it doesn’t, if my learned friend is comfortable, I’m comfortable. (transcript, 24 January 2006, page 26, lines 20-28)
Later in cross examination the wife replied to questions about the circumstances of the loan application as follows:
MR SWEENEY: See, do you understand that what you were being asked is to identify and list for the bank what you own? Right?---Yes.
Because you knew that the bank would be interested in that because they’d want to know whether or not you should be advanced moneys. Right?---Yes.
What you represented to the bank, in the presence of your father, was that you owned [the subject property]?---Dad told me to put it down because I had no assets.
HER HONOUR: Pardon?
MR SWEENEY: Sorry?---Dad told me to put it down because I had no assets.
HER HONOUR: Thank you, just a moment. Yes, thank you.
MR SWEENEY: Now what you say is you knew that to be false. Right?---I didn’t know it to be false. I don’t - - -
You want the court to accept that you don’t own it. Right?---I don’t own it.
You want the court to accept that you’ve never owned it?---I’ve never owned [the subject property].
But you want the bank to accept that you do own it. Right?---I guess that’s the way it looks, but I didn’t – it was just like dad being a guarantor for me. That’s how I – I didn’t know I was doing the wrong thing by doing that.
Do you now say that’s a lie?---Yes, it is. I don’t own it. It is a lie and I’m – I lied.
HER HONOUR: Why did you tell the bank that you did?---Dad told me to put it down as an asset because he would cover it if I couldn’t pay it. (transcript, 24 January 2006, page 114, lines 28-45, page 115, lines 1-15)
The following day Mr Levine sought leave to adduce evidence in chief from the wife’s father about the wife’s application to the NAB. In his evidence the wife’s father said he had telephoned the bank manager, and said he would guarantee a loan and sign whatever papers were necessary. During the wife’s father’s cross examination the wife’s father responded to a question from the trial Judge as follows:
HER HONOUR: She has sworn that you told her that when she went to the bank to get the personal loan that you guaranteed that, “You should simply put the property” – she should put the property down as being her asset. Did you say that to her or not?---No, I didn’t say that to her. (transcript, 25 January 2006, page 190, lines 20-24)
When the issue of the conflict of evidence was raised by the trial Judge, Mr Levine indicated he had not been aware of the conflict before that day.
Following the luncheon adjournment, Mr Levine, having received advice from the Ethics Committee of the Victorian Bar, sought leave to withdraw from the proceedings. Mr Levine told the trial Judge the wife’s parents and the wife “would be seeking to have written submissions done” (transcript, 25 January 2006, page 203, lines 26-27). Thereafter the wife’s parents and the wife came to the bar table and told the trial Judge that it was their wish that the matter proceed with the last witness, the wife’s mother being called, and then the parties would file written submissions.
The submissions in respect of this challenge
In his further summary of argument, senior counsel for the wife’s parents submitted after counsel withdrew from the proceedings on the third day that the trial Judge should not have continued the proceedings on that day whilst the wife’s parents were unrepresented. Similar submissions were made on behalf of the wife in the cross appeal. On behalf of the wife’s parents it was further submitted that the transcript demonstrated that the wife’s father was confused, and although the trial Judge provided the wife’s parents and the wife with a copy of s 79 her Honour omitted to provide the wife’s parents and the wife with a copy of s 90AE(2) and (3) of the Act.
It was asserted in the written submissions of senior counsel for the wife’s parents that “[t]he learned trial Judge had significant obligations to the unrepresented litigants and should not have acted upon any assertions, indications or instructions from Counsel who was then disqualified as to the rights, wishes or views of any of the Appellants or the Cross Appellant Wife”. (wife’s parents’ submissions, page 5, paragraph 28) It was further submitted that her Honour should have given the wife’s parents and the wife the opportunity to obtain legal advice in respect of a number of specified issues including an adjournment of the proceedings.
Whilst the submissions acknowledged that new legal representatives prepared submissions on behalf of the wife’s parents, it was asserted that provision of transcript “does not overcome the prejudice to the new practitioners as the case would have been conducted on an entirely different basis if they had been involved at the outset or alternatively become involved when the conflict arose” (wife’s parents’ submissions, page 6, paragraph 34). It was contended that the trial Judge should have aborted the trial after consideration of the written submissions of the wife’s parents and the wife.
On the issue of procedural fairness, the submissions made on behalf of the wife noted “albeit with an understandable desire to save costs” the evidence was concluded in circumstances where it could not fairly be said that the wife had an opportunity to present her case. It was further submitted that procedural fairness required the trial Judge to “give the parties a realistic opportunity to consider whether they should seek legal advice” (wife’s submissions, page 8, paragraphs 23 and 25).
The trial Judge’s reasons
We have already extracted part of her Honour’s reasons in discussion of the “prospective” conflict (see paragraphs 39 to 45).
The trial Judge recorded when the matter resumed after lunch on the third day of the hearing that Mr Levine, after advising her Honour of the advice from the Ethics Committee and before formally seeking leave to withdraw, said:
“… and even if I’m not acting I should give an indication to the Court that my understanding is that the only witness remaining is the mother (i.e. [the wife’s mother]) and my understanding is that the cross-examination of her would be very short. So in those circumstances they would be seeking to continue for today to finish up the evidence.” (paragraph 33)
The trial Judge further recorded:
I inquired whether the wife and her parents were going to act for themselves and Mr Levine told me that they would be seeking to provide written submissions so as not to prolong the case. He told me that they would probably obtain legal advice for that purpose. (paragraph 34)
At paragraph 36 of her reasons the trial Judge noted her concerns about the wife’s parents and the wife’s status as self represented litigants at the time of Mr Levine’s withdrawal. Her Honour also set out the events which occurred subsequently including the giving of evidence by the wife’s mother and her cross examination and the preparation of written submissions. Her Honour then recorded advice provided to the wife’s parents and the wife about the nature and purpose of submissions. Her Honour also recorded she afforded an extended period of time for the filing of such submissions to allow the wife’s parents and the wife time to obtain legal advice. Her Honour then noted that submissions filed by the wife’s parents’ new solicitors “sought (among other things) that the trial be discontinued, and that the costs of the discontinued trial be borne equally by the former solicitor and counsel for the wife and her parents”. Her Honour also noted, “[a] similar submission was made on behalf of the wife” (paragraph 40).
In her consideration of whether or not the trial should be aborted, her Honour set out the wife’s position at the commencement of the trial, and said that she regarded the information provided by Mr Levine, not as instructions, but rather as wishes of his former clients.
In dealing with the submissions received from each of the parties’ legal representatives, her Honour set out paragraphs 10 and 11 of the wife’s submissions. We think it useful at this stage to repeat again her Honour’s findings in relation to Mr Levine’s position:
However, as Mr Sweeney has correctly submitted, it has not been suggested by any of the respondents that Mr Levine acted contrary to his instructions when he told me that he perceived no conflict or potential conflict nor has it been suggested that the instructions given to Mr Levine or to his instructing solicitor for that matter were inconsistent, and in particular, as Mr Sweeney correctly submitted, it has not been contended that when Mr Levine told me he perceived no conflict, the instructions he held from all of his clients were anything other than consistent. (paragraph 64)
The trial Judge said, having provided an extension of time to the wife to make submissions, “I do not therefore accept that there was any prejudice to the wife, or for that matter her parents, in the preparation of any submissions” (paragraph 72).
Her Honour noted that the wife’s submissions proposed a re-opening of the wife’s case. Her Honour noted, “[t]here has been no attempt to put before the Court information as to what other evidence would be called, nor has there been any attempt to explain what interests of the wife need to be protected” (paragraph 74).
Her Honour noted that the wife’s submissions contained no proposals as to how any prejudice to the husband in relation to a discontinued trial and new trial should be met. She also noted the submissions filed on behalf of the wife’s parents sought that their costs of the discontinued trial be paid by the solicitors and counsel, did not propose to extend their application to include the costs of the husband.
The trial Judge thereafter referred to submissions made in paragraphs 24 and 25 of the wife’s parents’ submissions. Those submissions were directed to the wife’s parents’ rights at that time (that is, at the withdrawal of Mr Levine) as to whether the trial should thereafter be aborted or their rights in the event that the trial should proceed.
Her Honour noted:
85.I was completely satisfied that the procedure which was to be taken was in accordance with their wishes and that they desired that I take the course of action which I ultimately determined to take. I was also satisfied that they understood what was to happen.
86.In par 26 it was submitted on behalf of [the wife’s parents] that when the trial continued “further evidence was addressed which then further prejudiced the Respondents”. It was not suggested how the respondents were prejudiced by this evidence. The evidence in question was given by [the wife’s mother] and I have already referred to it. That evidence was consistent with the evidence given by [the wife’s father] and by the wife. I do not understand how it could be possibly said that the respondents were prejudiced as a consequence of this evidence.
The trial Judge noted that the wife’s parents adopted the wife’s submissions in respect of a retrial and the costs associated with such retrial.
Her Honour then turned her consideration to whether or not she should, “exercise [her] discretion in favour of the respondents” noting that such exercise involved “a consideration of the overall justice of this case” (paragraph 89). Her Honour thereafter discussed the proposal made by the wife’s parents (and the wife) that costs thrown away should be paid by their former solicitor and counsel but made no provision for the payment of the husband’s costs. Her Honour also rejected that there was any necessity, given previous undertakings as to disclosure, that further discovery was required.
After referring to the principles enunciated in Johnson v Johnson (1997) FLC 92-764, her Honour recorded that the wife’s parents and the wife were given time to obtain legal advice and an extension of time to make submissions. Having noted the position adopted by the wife’s parents and the wife that the trial should be aborted and a new trial ordered her Honour found, in the exercise of her discretion, that the overall justice of the case required the matter proceed to judgment.
Discussion
The thrust of senior counsel for the wife’s parents’ oral submissions to us was that in order to afford procedural fairness to the wife’s parents (and the wife) when Mr Levine withdrew, the trial Judge should have stood the matter down to enable the wife’s parents to seek legal advice that afternoon before further proceeding with the case.
In Re F: Litigants in Person Guidelines (2001) FLC 93-072 the Full Court (Nicholson CJ, Coleman and O’Ryan JJ) extensively reviewed the authorities in relation to self represented litigants and revised the guidelines previously enunciated in Johnson v Johnson (supra). Having referred to the fact that the knowledge and skill base of a litigant in person could vary widely, their Honours said:
With these matters in mind, we think that the giving of such assistance should lie in the discretion of the trial judge and should not be required by mandatory guidelines nor should the nature of the interventions from the bench be rigidly proscribed or prescribed. The exercise of such discretion serves the goal of achieving a fair trial so that the interests of justice can be served. Therefore, the application of the guidelines must depend on the circumstances of the particular case. (paragraph 229)
In this case we note that the only evidence which was called after Mr Levine’s withdrawal was the short evidence of the wife’s mother. That evidence confirmed she had little involvement with relevant financial transactions. Thereafter the wife’s parents and the wife sought and obtained legal advice. Written submissions subsequently filed did not particularise any relevant evidence which would be called if the trial was reopened. We are satisfied, having regard to these circumstances, that there was no prejudice by reason of lack of procedural fairness which affected the wife’s parents or the wife by the trial Judge either continuing the trial immediately Mr Levine withdrew, or continuing the matter once written submissions were received from the new legal representatives.
Conclusion – procedural fairness grounds
We find merit in the submissions of the husband’s counsel that:
·the wife’s parents (and the wife) were represented until shortly prior to the conclusion of the trial;
·the wife’s parents (and the wife) made their desire to conclude the evidence on the final day of the trial clear to the trial Judge;
·the wife’s mother’s evidence was uncontroversial;
·the wife’s parents (and the wife) were afforded procedural fairness by the trial Judge enabling them to obtain legal advice and provide written submissions; and
·the wife’s parents had the opportunity in their submissions to provide details of any relevant evidence which would warrant reopening but failed to do so.
We conclude there is no merit in the wife’s parents’ (or the wife’s) grounds relating to procedural fairness.
No successful challenge having been established to either the prospective conflict of interest ground or the procedural fairness grounds the appeal must be dismissed.
The cross appeal
Grounds relied on by the wife in the cross appeal
The wife relied on the grounds set out in her cross appeal filed 13 September 2006. Before us the wife abandoned grounds 5 to 8 inclusive.
The wife’s counsel pursued the cross appeal principally in respect of the “property” conflict, which he asserted permeated the whole judgment on the basis that the wife was not properly legally represented.
We discern the wife’s counsel’s submissions were not, as were her parents’, directed to a “prospective” conflict, but rather assumed because of the husband’s case there was an actual conflict between the wife and her parents. To the extent we may not have dealt with this particular assertion in our discussion of the “prospective” conflict, we agree with the position as recorded by the trial Judge at paragraph 402 of her reasons (see paragraph 45). It follows we do not accept there was an actual property conflict established prior to the commencement of the hearing, or that the hearing, until the evidence conflict emerged, was permeated by a property conflict.
In dealing with the appeal we have addressed the arguments of both the wife’s parents’ senior counsel and the wife’s counsel in respect of the conflict grounds, and the asserted errors by the trial Judge once those parties were self represented.
The remaining grounds in the Notice of Cross Appeal challenged the exercise of discretion by the trial Judge in finding the husband and wife’s interest in the subject property which the trial Judge identified at paragraph 404 of her reasons as $335,948 should be divided as to 55 per cent to the husband and 45 per cent to the wife. Grounds 9 and 10 of the cross appeal are as follows:
9.The findings as to contributions were outside the reasonable range of discretion having regard to:
(a)the fact that the home could not have been built without the land to build it on;
(b)the finding that the Husband’s savings were not sufficient to build the home and that he required the assistance of the Wife’s parents to do so;
(c)the finding of the Wife’s fathers [sic] financial and non-financial contributions to the construction of the home; and
(d)the value of the land (according to single expert).
10.The Learned Trial Judge erred in fixing the reserve price of the property on a default sale of $400,000:
(a)when the single expert valuation was $480,000; and
(b)without giving any Reasons for her decision to do so.
Submissions in respect of the contribution grounds
The wife’s counsel’s submissions in respect of these grounds were twofold. First he asserted that the trial Judge failed to provide adequate reasons for “the process by which the weight has been given to the various contribution factors”, and by calculating the husband and wife’s entitlements “by reference to the amount of expenditure on the property, rather than by the value of the property itself, necessarily privileged the income history of the marriage rather than the capital contributions.” No written or oral submissions were offered in respect of ground 10.
The husband’s counsel submitted that the assessment by the trial Judge of the parties’ contributions were within the ambit of her Honour’s discretion. The written submissions in respect of ground 10 noted that the trial Judge had been asked by the parties to fix a reserve price, and the reserve price could have been varied by machinery order on application to the trial Judge. We have some difficulty understanding the basis of this ground of appeal as the order for the sale of the subject property is an order directed to the wife’s parents not the wife. To the extent the submissions are relevant, we accept the submissions of the husband’s counsel, and we see no merit in ground 10.
Trial Judge’s reasons in respect of contribution
Under the heading “Evaluation of Contributions” in paragraphs 405 to 421 of her reasons the trial Judge carefully set out the history of the husband and wife’s marriage. Her Honour set out the parties’ initial contributions, noting notwithstanding a “complete absence of submissions by the wife” that she could not “ignore the role played by [the wife’s] parents”. Her Honour thereafter recorded contributions made by the wife’s parents. Having referred to relevant authorities (Gosper and Gosper (1987) FLC 91-818; Kessey and Kessey (1994) FLC 92-495 and W and W [2000] FamCA 1302) she concluded that those contributions should be “seen as contributions made by the wife”. Her Honour also had regard to each party’s financial contributions from earnings and non financial contributions. Her Honour summarised her findings in respect of contribution at paragraphs 422 and 423 as follows:
422.It is necessary to evaluate the contributions which I have been able to identify within the context of all the contributions made by or on behalf of the husband and the wife throughout their relationship and up to the date of the trial. In determining the weight to be given to those contributions it is important to recall that the value of the husband’s pre-marital savings and the financial payments made by [the wife’s parents] at the time they were made was considerably larger than the value in present day terms. It should also be recalled that the moneys advanced by the wife’s parents by way of personal loan were repaid. Weight must also be given to the undoubtedly higher financial contributions made by the husband during the marriage, vis-à-vis the wife; the fact that the husband continued to make payments on the home loan almost to the exclusion of the wife following separation; and the fact that the latter payments were made at a time when the husband was not living in the property and any rental payments received were not contributed towards the payment of the loan.
423.I also give weight to the security provided by [the wife’s parents]; the contribution of $12,000 towards the costs of construction of the house; and the work and labour performed by [the wife’s father] in connection with that construction.
Discussion
This ground of appeal as identified in the cross appeal challenges the exercise of discretion by the trial Judge. The limits on appellate inference with such orders are well known (see Gronow v Gronow (1979) 144 CLR 513; (1979) FLC 90-716 and House v The King (1936) 55 CLR 499).
Nothing to which we have been referred demonstrates that the trial Judge failed to take into account any relevant matter in the exercise of her discretion or that she took into account any irrelevant matter. We are satisfied the findings of the trial Judge as to the husband and wife’s contributions were open to her on the evidence and within the ambit of her discretion. Although not directly raised as a ground of appeal, for completeness, we are satisfied that her Honour’s reasoning process is clear, and any challenge for lack of adequate reasons must fail.
Conclusions - cross appeal
As we noted at the commencement of these reasons, the challenge advanced to the trial Judge’s orders by both the wife and the wife’s parents was principally focussed on the “prospective” conflict, the “property” conflict and the consequences of the “evidence” conflict. We determined in dismissing the appeal that those grounds were not established. Having found no merit in the wife’s additional challenges to the trial Judge’s orders, we conclude the cross appeal must also be dismissed.
Costs
At the conclusion of the appeal we sought submissions from all parties on costs. Senior counsel for the wife’s parents sought a certificate under the Federal Proceedings (Costs) Act 1981 (Cth), but did not address the question of costs if the appeal was unsuccessful. Counsel for the wife also sought a certificate in the event the cross appeal was successful, but did not address any submissions in the event the cross appeal was dismissed. Counsel for the husband sought in the event, as has occurred, that the appeal and cross appeal were dismissed, that the wife’s parents and the wife each pay one half of the husband’s costs as agreed or assessed.
It appears to us that the principal attack on the trial Judge’s orders was that mounted by the wife’s parents. They have been wholly unsuccessful in their appeal. Taking that factor into account in our consideration of relevant matters under s 117(2A) as well as their financial circumstances disclosed in their Financial Statement sworn by the wife’s father on 23 January 2006 we are satisfied they should pay two thirds of the husband’s costs of the these proceedings as agreed and failing agreement as assessed.
We also have regard to the wife’s lack of success in the cross appeal. We also have regard to the trial Judge’s findings about the wife’s financial circumstances and her entitlement under the orders. We are satisfied the wife should pay one third of the husband’s costs (as agreed, or failing agreement, as assessed).
I certify that the preceding one hundred and eighteen (118) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court
Associate:
Date: 14 June 2007
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