C Pty Limited and Ryves and Anor

[2014] FamCA 380

FAMILY COURT OF AUSTRALIA

C PTY LIMITED & RYVES AND ANOR [2014] FamCA 380

FAMILY LAW – PRACTICE AND PROCEDURE – Where the husband’s former solicitors sought leave to intervene in the proceedings and for orders to preserve funds presently held in a controlled monies account – Where orders made granting leave to intervene and that the husband and wife be restrained from dealing with the funds held on their behalf in a controlled monies account without first giving written notice to intervener of their intention to deal with those funds.

Family Law Act 1975 (Cth)
Legal Profession Act 2004 (NSW) ss 309(1), 317, 350, 355

APPLICANT: C Pty Limited

FIRST RESPONDENT: Ms Ryves

SECOND RESPONDENT: Mr Wantworth

FILE NUMBER: SYC 4861 of 2011

DATE DELIVERED: 12 March 2014

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Aldridge J

HEARING DATE: 12 March 2014

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Gersbach

SOLICITOR FOR THE APPLICANT: C Pty Limited

THE FIRST RESPONDENT IN PERSON: Ms Ryves

THE SECOND RESPONDENT IN PERSON: Mr Wantworth

Orders

1. That leave is granted to the Applicant, C Pty Limited, to intervene in these proceedings.

2. That upon the Applicant giving the usual undertaking as to damages and, pending further order of the Court, the Respondents, Ms Ryves and Mr Wantworth, are hereby restrained from dealing with the funds held on their behalf by Harris Freidman in a controlled monies account without first giving fourteen (14) days’ written notice to C Pty Limited of their intention to deal with those funds.

IT IS NOTED that publication of this judgment by this Court under the pseudonym C Pty Limited & Ryves and Anor has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYC 4861 of 2011

C PTY LIMITED

Applicant

And

Ms Ryves

First Respondent

And

Mr Wantworth

Second Respondent

REASONS FOR JUDGMENT

Introduction

1. This is an application by a firm of solicitors, C Pty Limited (‘the applicant’) to be interveners to the proceedings and for orders to preserve funds presently held in a controlled monies account.  The applicant previously acted for Mr Wantworth in these proceedings, which are both parenting and property proceedings.  The factual issues in relation to the property proceedings seem somewhat complex but there does not seem to be available to the parties either a significant number of assets or significant assets that would be readily divisible. 

2. The parties presently have approximately $58 000 in a controlled monies account held by Ms Ryves’ previous solicitors. The applicant in the Application in a Case filed 8 August 2013 previously acted as the solicitors for Mr Wantworth. They say they are owed $47 033.10, pursuant to a Memorandum of Costs delivered to Mr Wantworth on 4 March 2013. On 4 March 2014 Mr Wantworth applied for the assessment of the fees of the applicant, pursuant to section 350 of the Legal Profession Act 2004 (NSW) (‘the Legal Profession Act’). That cost assessment has yet to be determined. Section 355 of the Legal Profession Act provides:

   If an application for a costs assessment is made in accordance with this Division:

   (a)the costs assessment must take place without any money being paid into court on account of the legal costs the subject of the application, and

   (b)the law practice must not commence or maintain any proceedings to cover the legal costs until the costs assessment has been completed.

3. The interim orders sought by the applicant are for leave to intervene and then to have orders which appear to be in the alternative. The first is that $47 033.10 be paid into a controlled monies account or paid into court, pending the determination of the costs assessment. The payment into court would seem to be prohibited by section 355(a) of the Legal Profession Act. It is not so clear whether the payment into a controlled monies account is so prohibited. The alternative order is that Ms Ryves and Mr Wantworth be restrained from dispersing any monies in their settlement, up to a sum not exceeding $47 033.10, other than to pay it to the present applicant or to pay it to a controlled monies account.

4. During the course of argument I raised with the parties the possibility of making neither of those orders but making an order prohibiting Mr Wantworth and Ms Ryves from dealing with the funds in the controlled monies account without first giving 14 days’ notice in writing to the applicant.

5. Section 355 prohibits the commencement or maintenance of any proceedings to recover the legal costs, that is to say the proceedings must be proceedings that attempt to recover the costs.

6. An application to be joined as a party to the proceedings is clearly not proceedings to recover legal costs. An injunction that gives notice of an intended dealing with funds is not, in my opinion, a proceeding to recover costs. It does not seek the payment of any money or assets in lieu of payment. It simply provides that if the parties have an intention to deal with a particular asset, notice of that is then given to the applicant. Accordingly, such an order is not in breach of section 355 of the Legal Profession Act.

7. The issue then becomes whether or not such an order should be made. Mr Wantworth does not dispute that the applicant was engaged as his lawyers in his family law proceedings. He makes a number of criticisms of their entitlement to those costs. Mr Wantworth says that because of a number of breaches of section 309(1) of the Legal Profession Act, the applicant is not entitled to pursue its costs until they have been assessed. He says further, that the work done and amounts charged were excessive and the quality of work was not appropriate.

8. They are matters that will be determined in the assessment and are not matters for me.  It is clear that the lawyers have a claim for up to $47 000 of costs, but their actual entitlement to costs will be determined by the assessment.  The position as to the finances of Mr Wantworth is not clear.  It is not strong.  He tells me that, in addition to the $58 000 in the controlled monies account, Ms Ryves has had access to an excess of $200 000 of funds but has dealt with those funds in a way, putting it neutrally, that the assets acquired with those funds may not easily be able to be realised for division between the parties.

9. It is clear that, in any event, there are not significant assets available to the parties to be divided.  Accordingly, if those assets are dissipated prior to the determination of the costs assessment, it may be that the applicant would miss out on whatever it is ultimately held to be entitled to.  Mr Wantworth points out that, notwithstanding the limited assets available to the parties, there is a five day hearing in prospect, for which experts and the like will need to be paid and that this account is the only source of payment. 

Conclusion

1. The order I will make does not prohibit them dealing with these funds at this stage.  What it does is permits Mr Wantworth and Ms Ryves to do as they please with the funds, subject to giving 14 days’ notice of that intention to the applicant.  It will be then up to the applicant to decide whether it wishes to bring an application to restrain that dealing and will have to provide a basis for doing so.  On the hearing of any such application, depending on its form and nature, Mr Wantworth and Ms Ryves will be able to oppose that application on any basis they see fit. 

2. They may, if they choose, seek to oppose that application on the ground that the application is in breach of either section 355 of the Legal Profession Act, section 317 or any other basis for which they see fit.

3. However, it seems to me that the applicant has a claim for the payment of legal fees, which is a prima facie claim, subject to the assessment and that the balance of convenience weighs in favour of there being some form of preservation of the assets available to meet that claim, although it is important to do that in as least invasive way as possible.

I certify that the preceding twelve (12) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Aldridge delivered on 12 March 2014.

Legal Associate: 

Date:  7 April 2014