C and C and Anor - [2006] FMCAfam 229

FEDERAL MAGISTRATES COURT OF AUSTRALIA

C & C & ANOR

[2006] FMCAfam 229

FAMILY LAW – Application for indemnity costs against a lawyer – where hearing could not proceed due to the second respondent’s non entitlement to appear before the Court as a legal practitioner by virtue of the Judiciary Act 1903 (Cth) and the Legal Profession Act 2004 (Qld) – assessment of costs incurred and costs thrown away.

Judiciary Act 1903 (Cth)
Legal Profession Act 2004 (Qld)
Federal Magistrates Court Rules 2001 (Cth), rr.21.02(2), 21.07
Family Law Act 1975 (Cth), ss.117(1), 117(2)

Craig & Craig [2005] FMCAfam 697
Knight v FP Special Assets Ltd (1992) 107 ALR 585
Da Souza v Minister for Immigration, Local Government and Ethnic Affairs (1993) 114 ALR 708
MZWOR v Minister for Immigration [2005] FMCA 845
Myers v Elman [1940] AC 282
Cassidy v Murray (1995) 124 FLR 267
White Industries (Qld) Pty Ltd v Flower & Hart (a firm) (1998) 156 ALR 169
Edwards v Edwards [1958] 2 All ER 179
Harley v McDonald [1999] 3 NZLR 545
R & T Thew Ltd v Reeves (No 2) [1982] QB 1283
Ridehalgh v Horsefield [1994] 3 WLR 462
Deputy Commissioner of Taxation v Levick (1993) 43 ATR 621
McKewins Hairdressing and Beauty Supplies Pty Ltd (in liq) v Deputy Commissioner of Taxation (2000) 34 ACSR 92
Re Yunghanns (2000) 26 Fam LR 331
Tetijo Holdings Pty Ltd v Keeprite Australia Pty Ltd (French J, Federal Court, 3 May 1991, unreported)
Colgate Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225
Preston v Preston [1982] All ER 41
Re: Wilcox; Ex parte Venture Industries Pty Ltd (No 2) (1996) 72 FCR 151 John S Hayes & Associates Pty Ltd v Kimberly-Clark Australia Pty Ltd (1994) 52 FCR 201
Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd and Others (1989) 81 ALR 397
McAlpin & McAlpin (1993) 16 Fam LR 888
Andrew v Barnes (1887) Ch D 133
Munday & Bowman (1997) 22 Fam LR 321; FLC 92-784
Kohan and Kohan (1993) FLC 92-340

Applicant:

D C

First Named Respondent:

R C

Second Named Respondent:

File Number:

BRM 8635 of 2003

Judgment of:

Pascoe CFM

Hearing date:

Nil

Date of Last Submission:

27 October 2005

Delivered at:

Sydney (In Chambers)

Delivered on:

1 June 2006

REPRESENTATION

Counsel for the Applicant:

Mr G J Fleetwood

Solicitors for the Applicant:

Neumann Turnour

Counsel for the First Respondent:

Nil

Solicitors for the First Respondent:

Journey Brisbane Lawyers

Counsel for the Second Respondent:

Nil

Solicitors for the Second Respondent:

Bennett Carroll Solicitors

ORDERS

That within 14 days the second respondent pay the applicant’s costs fixed in the sum of $2981.50.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
SYDNEY (In Chambers)

BRM 8635 of 2003

D C

Applicant

And

R C

First Respondent

Second Respondent

REASONS FOR JUDGMENT

Introduction

This is an application for indemnity costs against a lawyer. In her substantive application the applicant mother sought orders for residence of the two children of the parties. The matter was set down for final hearing on 16 March 2005 pursuant to orders made on 29 July 2004. However on that date the matter was adjourned at the request of the father who found himself unable to proceed without legal representation. Federal Magistrate Rimmer adjourned the matter to 26 September 2005. Her Honour ordered that the applicant’s solicitors file any written submissions as to costs in relation to the second respondent and further ordered that the second respondent file written submissions in reply. The matter proceeded to hearing on 26 September 2005. Judgment was delivered on 23 December 2005[1].
[1]See Craig & Craig [2005] FMCAfam 697.
To ensure that the second respondent was given every opportunity to be heard I directed my associate to obtain the consent of the parties for me to determine costs on the written submissions. I note that neither party objected to this course.

The undisputed evidence

On 16 March 2005 an Articled Clerk from Neumann Turnour solicitors and Mr Fleetwood of Counsel appeared on behalf of the applicant in anticipation that the matter would proceed to hearing. However, the respondent father requested an adjournment on the basis that he was no longer represented by his Counsel (the second respondent). The applicant, her legal representatives and the respondent father were only advised that day of the second respondent’s non entitlement to appear before the Court as a legal practitioner as he was not the holder of a barrister’s practicing certificate for the purposes of the Judiciary Act 1903 (Cth) and the Legal Profession Act 2004 (Qld).
The first respondent, in his affidavit of 6 September 2005, sets out the circumstances which he says transpired on the morning of the 16 March 2005. His evidence is that he had engaged the services of the second respondent to appear as Counsel for the hearing. He deposed that within the vicinity of the Court the second respondent gave him his file and said words to the effect: I have a problem. You will have to go on your own and seek an adjournment. I have been told I am not allowed to set foot in a courtroom by someone in the Bar Association. The first respondent also deposed in his affidavit that he later spoke with an employee of the Queensland Bar Association who said: someone had dobbed him in as the association does not police that. Thus, it was submitted for the applicant that the actions of the second respondent on 16 March 2005 caused her to incur unnecessary and unwarranted costs which could have been avoided had the second respondent taken appropriate steps to remedy his position, well before the hearing date.

Costs

The Court’s power to award costs against a lawyer is set out in Rule 21.07 of the Federal Magistrates Court Rules 2001 (Cth) (the Rules).

Rule 21.07 provides:
21.07 Order for costs against lawyer
(1) The Court or a Registrar may make an order for costs against a lawyer if the lawyer, or an employee or agent of the lawyer, has caused costs:
(a) to be incurred by a party or another person; or
(b) to be thrown away;
because of undue delay, negligence, improper conduct or other misconduct or default.
(2) A lawyer may be in default if a hearing may not proceed conveniently because the lawyer has unreasonably failed:
(a) to attend, or send another person to attend, the hearing; or
(b) to file, lodge or deliver a document as required; or
(c) to prepare any proper evidence or information; or
(d) to do any other act necessary for the hearing to proceed.
(3) An order for costs against a lawyer may be made on the motion of the Court or Registrar, or on application by a party to the proceeding or by another person who has incurred the costs or costs thrown away.
(4) The order may provide:
(a) that the costs, or part of the costs, as between the lawyer and party be disallowed; or
(b) that the lawyer pay the costs, or part of the costs incurred by the other person; or
(c) that the lawyer pay to the party or other person the costs, or part of the costs, that the party has been ordered to pay to the other person.
(5)Before making an order for costs, the Court or Registrar:
(a) must give the lawyer, and any other person who may be affected by the decision, a reasonable opportunity to be heard; and
(b) may order that notice of the order, or of any proceeding against the lawyer be given to a party for whom the lawyer may be acting or any other person.
The Court’s jurisdiction and its discretion to award costs against a non-party is not limited (Knight v FP Special Assets Ltd (1992) 107 ALR 585 at [589], per Mason CJ and Deane J (with whom Gaudron J agreed) and affirmed in Da Souza v Minister for Immigration, Local Government and Ethnic Affairs (1993) 114 ALR 708 at [712], per French J; MZWOR v Minister for Immigration [2005] FMCA 845, at [25], per Riethmuller FM). The primary object of the Court in ordering costs against a lawyer is not to punish the lawyer but to protect the party who has suffered loss or injury (Myers v Elman [1940] AC 282 at [289], per Viscount Maugham and at [319], per Lord Wright; Cassidy v Murray (1995) 124 FLR 267 at [281-2], per Fogarty, Kay and Hase JJ; White Industries (Qld) Pty Ltd v Flower & Hart (a firm) (1998) 156 ALR 169 at [229], per Goldberg J). The discretion of the Court to order costs against a lawyer will generally be exercised in circumstances where there is some misconduct on the part of the lawyer or a serious dereliction of duty or gross negligence (Edwards v Edwards [1958] 2 All ER 179 at [186], per Sachs J; Harley v McDonald [1999] 3 NZLR 545 at 564-5), per Tipping J; R & T Thew Ltd v Reeves (No 2) [1982] QB 1283 at [1285-6], per Lord Denning MR; Ridehalgh v Horsefield [1994] 3 WLR 462 at [482], per Sir Thomas Bingham MR). It is not, however, necessary to establish mala fides or other obliquity on the part of the lawyer, though it may be that if mala fides is established that might turn the scale in a particular case (Edwards (supra)), however the Court’s discretion must be exercised sparingly and with care and only in exceptional cases (Da Souza (supra)) particularly where the order sought is indemnity costs (Deputy Commissioner of Taxation v Levick (1993) 43 ATR 621 at [627], per Hill J; McKewins Hairdressing and Beauty Supplies Pty Ltd (in liq) v Deputy Commissioner of Taxation (2000) 34 ACSR 92 at [133], per Gummow J; Re Yunghanns (2000) 26 Fam LR 331 at [339-40], per Lindenmayer and Holden JJ). Evidence of particular misconduct causing loss of time to the Court and to other parties may in some circumstances justify an order for indemnity costs (Tetijo Holdings Pty Ltd v Keeprite Australia Pty Ltd (French J, Federal Court, 3 May 1991, unreported) and affirmed in Colgate Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 at [233], per Sheppard J). However there must be some special or unusual feature in the case to justify the Court in making an order an indemnity basis (Colgate (supra); Preston v Preston [1982] All ER 41 at [58], per Brandon LJ; Re: Wilcox; Ex parte Venture Industries Pty Ltd (No 2) (1996) 72 FCR 151 at [152], per Black CJ; John S Hayes & Associates Pty Ltd v Kimberly-Clark Australia Pty Ltd (1994) 52 FCR 201 at [203], per Hill J; Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd and Others (1989) 81 ALR 397 at [400], per Woodward J).
It was submitted for the applicant that this is a case where it is appropriate to make an order for indemnity costs pursuant to Rule 21.07(3) on the basis that she is a party to the proceedings and has incurred costs as a consequence of the actions of the second respondent. She says that his action or failure to act by not withdrawing from the proceedings at a much earlier date or making other arrangements to ensure that the second respondent was entitled to appear as a legal practitioner before the hearing of 16 March falls within the category of undue delay, negligence, improper conduct or other misconduct or default (Rule 21.07(2)(d)).
It was submitted for the second respondent that the cost provisions under s.117 of the Family Law Act 1975 (Cth) should apply and the basis upon which those costs are to be ordered should be set by Rule 21.02(2) of the Rules and that scale costs would be appropriate because the second respondent’s actions were not contemptuous or dishonest. Sections 117(1) and (2) refer to parties but s.117(2) is not limited and should be expressed in the widest possible terms (McAlpin & McAlpin (1993) 16 Fam LR 888 at (896-7), per Nicholson CJ, Maxwell and Baker JJ). The intent of ss.117(1) and (2) is that in the family law jurisdiction costs should not follow the event as a matter of course. However, where the justice of the matter so requires (Andrew v Barnes (1887) Ch D 133), the Court may make such order as the Court considers just. The Court should not depart lightly from the ordinary rules relating to costs between party and party and the departure should be of an exceptional kind (Kohan and Kohan (1993) FLC 92-340 at (79,614), per Strauss, Lindenmayer and Bulley JJ; Munday & Bowman (1997) 22 Fam LR 321; FLC 92-784 at (322), per Holden J).
The second respondent does not deny that the applicant has incurred costs as a result of his actions. Thus, in the circumstances I am satisfied costs should be ordered in the applicant’s favour. However, it is important that such costs be properly assessed. I am reluctant to make an order for costs on an indemnity basis for the following reasons. Firstly, I was not the presiding federal magistrate in the proceedings and it would be imprudent of me to assume that I know all of the details and circumstances of the case. Secondly, the authorities make it clear that the Court’s discretion should be exercised with caution. I am however satisfied that the actions of the second respondent which are complained of could have been avoided. I find it difficult to conceive that the second respondent was not aware of the Legal Profession Act prior to the hearing date. The Act required that from 1 July 2004 all barristers whose principal place of practice is Queensland must hold a barrister’s practicing certificate in order to appear before a Court in Queensland. The second respondent could easily have taken steps prior to the hearing date to avoid the matter being adjourned, the cause of unnecessary and unwarranted costs.
It was submitted for the second respondent that the costs incurred and the costs thrown away in this matter require different considerations. It was also submitted for the second respondent that as the matter ultimately proceeded to a defended hearing on 25 September 2005 the benefit of costs incurred in preparation for the initial hearing would ultimately have been utilised and accordingly not thrown away.
The applicant seeks costs incurred and/or thrown away in accordance with her amended application of 11 April 2005 as a result of the adjournment of the hearing. She seeks costs in the sum of $5167.80. Included in this sum is $3080 in Counsel’s fees, $1438.80 in solicitor’s fees and $649 for the preparation of the costs application (all inclusive of GST).
Annexed to the affidavit of Shayne Neumann is a Memorandum of Fees rendered by Mr Fleetwood of Counsel for his conference with the applicant and Mr Neumann’s Articled Clerk, Mr Stephen Potts and his appearance at the Court on 16 March 2005 and a costs agreement between the applicant and Neumann Turnour. In my view, the conference charge of $400 is not a charge recoverable under Schedule 1 of the Rules as the benefit of the conference would have been carried through to the ultimate hearing of the matter in September 2005 and therefore is not a cost thrown away and is not directly referable to any conduct of the second respondent and thus represents a costs incurred by the applicant in preparation of the matter.
In respect of the Articled Clerk’s travelling time at $180 per hour I note that Stage 6 of Schedule 1 provides for solicitor’s costs not Articled Clerk’s costs however given that the matter was adjourned through no fault of the applicant I am satisfied that the second respondent should meet that cost to be assessed as a daily hearing fee of $190 plus 50% loading as provided for under the scale.
I have no evidence before me that Counsel’s fees of $2400 were paid by the applicant however I note the tax invoice dated 23 March 2005 annexed to the affidavit of Shane Neumann. Mr Fleetwood had been briefed to appear as Counsel for a whole day in anticipation that the matter would proceed to hearing however his attendance was short as the matter was adjourned and therefore it is appropriate in my view to assess costs in accordance with Stage 1, Schedule 1 with a 50% advocacy loading.
In respect of the costs of this application I am satisfied that it is reasonable to order that the second respondent meet those costs as it was his conduct that resulted in the adjournment.
In respect of the remainder of the solicitor’s fees I am not satisfied on the material before me that they are costs referable to any conduct of the second respondent.
I am satisfied in all the circumstances that the second respondent should meet part of the applicant’s costs. I propose to order $190 plus 50% loading for the Articled Clerk’s attendance at the hearing, $649 for costs of this application and Counsel’s costs to be assessed on the daily hearing fee scale of $1365 plus 50% loading. That will be a total amount of $2981.50 to be payable within 14 days hereof.

I certify that the preceding eighteen (18) paragraphs are a true copy of the reasons for judgment of Pascoe CFM

Legal Associate: Peter Smith

Date: 1 June 2006