Cansdall & Cansdall
[2021] FamCAFC 162
•26 August 2021
FAMILY COURT OF AUSTRALIA
Cansdall & Cansdall [2021] FamCAFC 162
Appeal from: Cansdall & Cansdall [2020] FCCA 1929
Cansdall & Cansdall (No 2) [2020] FCCA 1930
Appeal number(s): SOA 54 of 2020
SOA 55 of 2020File number(s): MLC 2209 of 2018 Judgment of: STRICKLAND J Date of judgment: 26 August 2021 Catchwords: FAMILY LAW – APPEAL – INDEMNITY COSTS AGAINST SOLICITORS – Where the respondent seeks costs on an indemnity basis against the solicitors for the appellant – Where the application is made consequent upon the appellant’s solicitors advising this Court part-way through the hearing of the appeals that they had received instructions to abandon the appeals and the appeals were subsequently dismissed – Where an order for costs is justified – Where both appeals were incompetent and had absolutely no chance of success – Where the appeals should not have been filed or been pursued to the point where they were both abandoned mid-way through the hearing – Where there are exceptional circumstances here which justify an order being made on an indemnity basis – Where the appeals were commenced and continued in circumstances where the appellant properly advised and his solicitors should have known that the appeals had no chance of success – Where the contentions in both appeals as authored by the appellant’s solicitors and his solicitor-advocate, and purportedly put on his behalf, were baseless and had absolutely no merit – Where the appellant waived privilege and permitted his solicitors to provide to the court two file notes – Where the file notes provided did not demonstrate that the advice given to the appellant from day one was that the appeals had no chance of success and the instructions from the appellant on the basis of that advice was to proceed regardless – Where it is incomprehensible that there were no other file notes and correspondence that would be relevant – Where the solicitors for the respondent were corresponding with the solicitors for the appellant correctly pointing out that the appeals were flawed and should be withdrawn and giving notice that their client would seek costs on an indemnity basis not only against the appellant but also against the solicitor if the appeals proceeded – Where the jurisdiction is enlivened so as to order costs against the appellant’s solicitors – Where here, there was a significant breach of duty by the appellant’s solicitors – Costs ordered in the sum as sought by the respondent. Legislation: Family Law Act 1975 (Cth) ss 79A, 117(2), 117(2A)
Family Law Rules 2004 (Cth) rr 19.10, 19.11
Cases cited: Cassidy v Murray (1995) FLC 92-633; [1995] FamCA 91
Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225; [1993] FCA 801
Collins & Collins (1985) FLC 91-603; [1985] FamCA 15
Fitzgerald (as child representative for A) Legal Aid Commission of Tasmania)) v Fish v Another (2005) 33 Fam LR 123; [2005] FamCA 158
Ex Christmas Islanders Association Inc v Attorney-General (Cth) (No 2) 233 ALR 97; [2006] FCA 671
Kohan and Kohan (1993) FLC 92-340; [1992] FamCA 116
Levick v Deputy Commissioner of Taxation (2000) 102 FCR 155; [2000] FCA 674
Munday v Bowman (1997) FLC 92-784; 22 Fam LR 321
R (A Barrister) and Anor & Roberts and Anor [2010] FamCAFC 147
Ridehalgh v Horsefield [1994] 3 All ER 848; [1994] Ch 205
White Industries (Qld) Pty Ltd v Flower & Hart (A Firm) (1998) 156 ALR 169; [1998] FCA 806
Division: Appeal Division Number of paragraphs: 91 Dates of hearing: 19 November 2020
7 December 2020
12 February 2021Place: Melbourne via video to Adelaide Solicitor-Advocate for the Appellant Mr McNally Solicitor for the Appellant James McConvill & Associates Counsel for the Respondent Mr Testart Solicitor for the Respondent Morrison & Sawers Lawyers ORDERS
SOA 54 of 2020
SOA 55 of 2020
MLC 2209 of 2018APPEAL DIVISION OF THE FAMILY COURT OF AUSTRALIA
BETWEEN: MR CANSDALL
AppellantAND:
MS CANSDALL
Respondent
ORDER MADE BY:
STRICKLAND J
DATE OF ORDER:
26 AUGUST 2021
THE COURT ORDERS THAT:
1.James McConvill & Associates, the appellant husband’s solicitors, pay the costs of the respondent wife fixed in the sum of $31,105.50.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to 17.02 Family Law Rules 2004 (Cth).
IT IS NOTED that publication of this judgment by this Court under the pseudonym Cansdall & Cansdall has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
INTRODUCTION
This is an oral application by Ms Cansdall (“the wife”) seeking an order for costs against James McConvill & Associates, the solicitors for Mr Cansdall (“the husband”).
The costs are sought on an indemnity basis in the amount of $31,105.50.
The application is made consequent upon the dismissal on 19 November 2020 of two appeals filed by the husband on 7 July 2020, respectively numbered SOA 54 of 2020 and SOA 55 of 2020.
The application is opposed by the solicitors. However, the amount sought includes the costs thrown away on 7 December 2020 as a result of that hearing having to be adjourned, because of the failure by the husband’s solicitors to arrange for the husband to attend that hearing. At that hearing the solicitor-advocate appearing for the husband indicated that there was no opposition to an order covering those costs against the solicitors. Thus, I proceed on the basis that the application now before the court is only opposed insofar as it relates to the costs sought, other than those thrown away on 7 December 2020.
I record that the solicitors chose not to be represented by independent counsel, and the husband’s solicitor-advocate, who is a member of the firm of solicitors, argued the case for the solicitors.
BACKGROUND
On 14 November 2018, final orders for property settlement were made by consent. Relevantly those orders provided for a property at Suburb D in the State of Victoria to be sold forthwith.
As a consequence of the husband’s failure to comply with the orders for that sale, on 4 June 2019, the wife filed an Application in a Case seeking specific orders relating to that sale.
On 3 July 2019, the husband filed a Response seeking that he have the sole right to occupy the property, and orders pursuant to s 79A(1)(b) [sic] of the Family Law Act 1975 (Cth) (“the Act”), seeking in effect to delay the sale of the property, and discharging the order appointing the real estate agent and substituting another agent.
On 15 July 2019, a Judge of the Federal Circuit Court of Australia dismissed the husband’s s 79A application, provided for the wife to have sole occupation of the property after three months, maintained the same real estate agent, appointed the wife trustee for sale, and provided for the sale price to be such amount as was accepted by the wife.
On 3 April 2020, the property sold for $350,000, and that sale was ultimately settled on 17 August 2020.
On 15 April 2020, the husband filed an Amended Application in a Case seeking the following orders:
1.That the Court grant an injunction forthwith, restraining the sale and settlement for the property situate at C Street, Suburb D (“Family Home”) from proceeding.
2.That the current contract of sale for the Family Home be set aside forthwith in its entirety.
3.That the currently appointed real estate agent … be immediately removed from any real estate dealings associated with the sale of the Family Home.
4.That the parties may list the sale of the Family Home with multiple real estate agencies for the purpose of maximising sale opportunities and price.
5.That the Applicant be provided with access to the Family Home for the purposes of rubbish removal and preparing the Family Home for sale.
…
7.That the Court grant a cost Order in favour of the Applicant for all costs associated with this Application.
(Emphasis as per original)
For some unexplained reason, on 28 April 2020, the husband filed another Application in a Case seeking the same orders as in the Amended Application in a Case.
On 26 May 2020, the wife filed a Response seeking dismissal of the husband’s application, and specific orders of a mechanical nature to give effect to one of the orders made on 15 July 2019.
At a directions hearing on 9 June 2020, the husband’s solicitor insisted on the application being listed before a judge, despite being put on notice that the court did not have the jurisdiction, or more to the point, the power, to hear those applications.
The matter proceeded before the primary judge on 11 June 2020, when her Honour found that she did not have the “jurisdiction” to deal with the husband’s applications, and they were dismissed.
Her Honour did though make the specific orders sought by the wife, and heard submissions as to the wife’s application for costs calculated on an indemnity basis.
On 12 June 2020, her Honour delivered her reasons for judgment on the costs application, and made orders that the husband pay the wife’s costs on an indemnity basis fixed in the sum of $14,605, and that that amount be paid to the wife by way of an adjustment of the surplus funds payable to the parties pursuant to the final orders for property settlement made on 14 November 2018.
On 7 July 2020, as referred to above, the husband filed his appeals against the orders made by her Honour respectively on 11 June 2020 and 12 June 2020.
On 14 July 2020, the husband filed an Application in a Case seeking leave to join the purchasers of the property and the real estate agent, and a stay of the orders made by the primary judge, pending the determination of the appeals.
On the same day the wife filed a Response seeking dismissal of the husband’s application and costs on an indemnity basis with such costs to be paid by the husband and/or his solicitors.
Her Honour heard the husband’s application on 12 August 2020, and on 24 August 2020 delivered her reasons for judgment, and made orders dismissing the husband’s application and providing for the filing of written submissions on costs. The wife complied with that order, but the husband did not, and at the time of the hearing of the appeals judgment was still pending.
The appeals were heard by this Court on 19 November 2020, and part-way through that hearing the husband’s solicitors obtained instructions to “abandon both appeals”. As a result, the wife, through her counsel, made an oral application for an order for costs against the solicitors calculated on an indemnity basis.
Orders were then made for the appeals to be dismissed, for the parties to file written submissions as to the issue of costs, and for the hearing to take place on 7 December 2020.
The wife complied with the order, but the husband filed his submissions late. However, more importantly, the solicitors made no arrangements for the husband to appear at the hearing. That was necessary because if the inevitable order for costs was not made against the solicitors, it would be made against him.
Accordingly, the hearing needed to be adjourned, and the wife made an application for the costs thrown away, which was not opposed by the solicitor-advocate for the husband. However, an order was not made at that time because it was thought appropriate to conclude the hearing before any costs orders were made.
The hearing was adjourned to 12 February 2021, when the husband appeared and further submissions were received.
DISCUSSION
There is no question that an order can be made providing for the solicitors of the husband to pay the costs of the wife (e.g. see Collins & Collins (1985) FLC 91-603 and Cassidy v Murray (1995) FLC 92-633).
The first issue though is whether there should be an order for costs at all. In that regard, at the hearing on 19 November 2020, the solicitor-advocate for the husband indicated that he anticipated “receiving instructions not to oppose an application for indemnity costs” (Transcript 19 November 2020, p.38 lines 26 – 27), but on 7 December 2020 he said this:
Your Honour, I can say this. I’m formally bound by my instructions to oppose an order for costs, but from the material and the way the matter has proceeded, I don’t hold any prospect of succeeding in opposing [a] costs order.
(Transcript 7 December 2020, p.3 lines 32–35)
However, regardless of any concession by the husband’s solicitor-advocate, there can be no doubt that an order for costs is justified here pursuant to s 117(2) of the Act. Both appeals were incompetent and had absolutely no chance of success. They should never have been filed, or been pursued to the point where they were both abandoned midway through the hearing on 19 November 2020, and dismissed as a result.
The relevant circumstances to be found in s 117(2A) of the Act that justify an order for costs are first, the fact that the husband was wholly unsuccessful in the proceedings (s 117(2A)(e)), and secondly, the conduct of either the husband and/or the solicitors in bringing the appeals and pursuing them (s 117(2A)(c) and/or (g)).
The detail of that will be addressed shortly when considering who the costs order should be against. I will also leave for the moment the issue of the financial circumstances of the parties, because that may not necessarily be relevant depending on who is to bear the order for costs. In other words, if it is the solicitors, then there will be no need to address the financial circumstances of the parties, and it was not suggested otherwise by the husband’s solicitor-advocate.
As for how the costs should be calculated, the ordinary rule is that it is done on a party/party basis, but if there are exceptional circumstances which warrant the court departing from that approach, they can be calculated on an indemnity basis (Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225; Kohan and Kohan (1993) FLC 92-340; and Munday v Bowman (1997) FLC 92-784).
Here there are such circumstances. For example, the appeals were commenced and continued in circumstances where the husband properly advised, and the husband’s solicitors, should have known that the husband had no chance of success. Further, the contentions in both appeals as authored by the husband’s solicitors and his solicitor-advocate, purportedly on behalf of the husband, were baseless and had absolutely no merit (Colgate-Palmolive Co v Cussons Pty Ltd per Shepherd J at 256).
Turning then to the primary issue here, namely whether the order for costs should be made against the solicitors, as is sought by the wife.
To repeat, the appeals as drawn were incompetent, the written summaries of argument were baseless, and the oral submissions made at the hearing were devoid of all merit.
In relation to the appeal against the order dismissing the application (“the first appeal”), her Honour found that she had no jurisdiction to deal with the husband’s applications. However, as flagged above, it is probably more accurate to say that her Honour had no power rather than no jurisdiction, and her Honour appeared to recognise that in [5] of her reasons for judgment. Nothing though turned on that distinction for the purposes of the appeals, and her Honour was correct to find that she could not make the orders sought in the husband’s applications. As her Honour pointed out in [5] of those reasons, no appeal had been filed from the orders for the sale of the property, and her Honour could not vary those orders as the husband sought in the applications that were before the court.
Her Honour did not consider this in her reasons, but it is relevant to note that the sale had already taken place, and thus it was not open to grant “an injunction restraining the sale of the property” or to “set aside” the “contract of sale”, or to remove the real estate agent, or for the husband to have “access” to the property, all of which were orders sought by the husband.
During the hearing before her Honour an oral application was made by the husband to stay the order for sale, but her Honour, correctly, was not prepared to exercise her discretion to grant a stay of the order because she was not “satisfied” that the husband had “identified any factors which would warrant the granting of a stay” ([8]). I add of course that it would have been of no utility to do so because, to repeat, the property had been sold.
In the Notice of Appeal filed on 7 July 2020, leave to appeal was sought, however, the facts outlined in support of that application were completely inadequate in demonstrating a basis for granting leave, and not only identified a finding that the primary judge did not in fact make, but also referenced certain evidence as being in her Honour’s reasons, when that was not the case.
Importantly, there was nothing whatsoever in the facts relied upon that addressed her Honour’s finding that she had no jurisdiction or power to make the orders sought. And in any event, no argument was included in the written summary of argument filed on 2 November 2020, or in the amended summary of argument filed on 18 November 2020, which addressed the application for leave to appeal.
As for the appeal, in the event that leave was granted, the grounds of appeal were also completely inadequate. Those grounds were as follows:
1.The learned Judge erred in failing to order an Injunction restraining the sale of the property situate at C Street, Suburb D in the State of Victoria (“the property”);
2.The learned Judge erred in failing to set aside the contract for sale of the property;
3.The learned Judge erred in failing to order the removal of the Court appointed Real Estate agent … in respect of the sale of the property.
4.The judgment was against the evidence and/or the weight of the evidence; and
5.The judgment was otherwise contrary to law.
Apart from the two general assertions in Grounds 4 and 5, the balance of the grounds merely complain that her Honour erred in failing to make the specific orders sought. There was no indication as to how her Honour had erred, and again, significantly, there was no direct challenge to her Honour’s finding that she had no jurisdiction or power to make the orders sought, and that should have been the primary issue raised in the appeal.
Then there were the orders sought in the appeal, and they were equally deficient. For example, the husband sought to join the purchasers of the property to the appeal, and how that could be an order sought in this appeal is a complete mystery. The husband had filed a separate Application in a Case seeking joinder of these third parties, and a stay of the orders the subject of the appeal. However, that application was dismissed on 24 August 2020, and there was no appeal against that dismissal. Thus, there could be no basis for seeking an order to the same effect in this appeal, and attempting to justify it by the bare assertion in the summary of argument that “[t]he Court has power and jurisdiction to make Orders binding third parties” (paragraph 54 of the amended summary of argument filed on 18 November 2020).
Further, despite the sale already having taken place, another order sought by the husband in the appeal was an injunction restraining the sale and settlement of the property, and the removal of the real estate agent.
As referred to above, the husband’s solicitors filed his initial written summary of argument on 2 November 2020, but they then sought to file an amended summary of argument on 18 November 2020, namely the day before the hearing of the appeal. At the hearing of the appeal I gave leave to rely on that amended summary.
However, as with the initial summary of argument, the amended summary of argument was completely without merit, either legally or factually. Further, to compare either summary with the reasons given by her Honour in dismissing the husband’s application, was like comparing chalk and cheese.
Despite there being nothing in the application for leave to appeal, or in the grounds of appeal, directly challenging her Honour’s finding as to her jurisdiction or power, the one amendment made by the husband’s solicitors in the amended summary of argument, was to include the submission that her Honour’s decision in that regard “ignored the potential application of s.79A” and “was therefore a failure by her Honour to consider the exercise of her discretion under that Section” (paragraph 24 of the amended summary of argument filed on 18 November 2020).
The husband’s solicitors went on in that summary to identify s 79A(1)(a) of the Act as providing “the Court with jurisdiction and power to vary or set aside Orders with respect to matrimonial property where there has been a ‘miscarriage of justice’ arising from the several particular factors enumerated in the Section or by reason of ‘any other circumstance’”, and submitted that that applied in this matter (paragraph 45 of the amended summary of argument filed on 18 November 2020).
However, there were two insurmountable hurdles to s 79A(1)(a) providing the relevant jurisdiction or power. First, there was no application made by the husband seeking orders pursuant to that paragraph. Thus, her Honour could not have erred by not applying it. Secondly, and equally fatal to this submission, the miscarriage of justice has to arise out of events prior to or occurring at the time of the making of the orders being sought to be varied or set aside. Plainly, this was not the case here, yet not only was that not recognised by the husband’s solicitors who prepared the amended summary of argument, but it was not recognised by the solicitor-advocate, who, to repeat, was a member of that firm of solicitors, at the hearing of the appeal. And this, despite the quote from the one authority cited by the husband’s solicitors in the amended summary of argument recording that well-known principle.
Although this Court pointed out these hurdles to the solicitor-advocate at the hearing of the appeal, he persisted in submitting that s 79A provided the jurisdiction or power that enabled her Honour to make the orders the husband sought, but also making the submission in any event that even if it did not, her Honour still erred because the husband had presented sufficient evidence in his affidavit material to demonstrate that the wife had sold the property at an undervalue, and that was all that was required for her Honour to make the orders sought by the husband in his applications. Of course, what this submission overlooked was, if there was no jurisdiction or power to make the orders sought, it mattered not what the evidence said.
Inexplicably, the solicitor-advocate also submitted that with the evidence the husband presented, her Honour should have granted a stay of the orders. How this overcomes the lack of jurisdiction or power to entertain the applications that were before her Honour, which did not include an application for a stay, was not explained by the solicitor-advocate. Indeed, as referred to above, there was an oral application for a stay made to her Honour, but to repeat, her Honour found there was no basis for her to exercise her discretion in making such an order.
It was also apparent that in this context the solicitor-advocate made up submissions as he went along. For example, he then submitted that “the court has inherent jurisdiction to protect its processes” (Transcript 19 November 2021, p.9 lines 22–23) but without relating that to anything that her Honour did or did not do, or to anything in the application for leave to appeal or in the appeal.
Further, in his convoluted submissions at the hearing of the appeal, the solicitor-advocate attempted to rely on a separate paragraph of s 79A(1), without understanding that it was a separate paragraph, namely (b). In the context of paragraph (a) he submitted that it could apply where an order had become “unworkable”, whereas impracticability is to be found in (b).
Her Honour indicated in her reasons for judgment that the proper course for the husband would have been to appeal the orders for sale, and in that regard her Honour was entirely correct. However, the husband’s solicitor-advocate, without any reference to authority, and without providing any basis for the argument, submitted that her Honour was wrong in this regard and continued to insist that her Honour had the “jurisdiction” to make the orders sought.
In this context the solicitor-advocate misrepresented what her Honour found. He insisted that her Honour found that she had no jurisdiction because no appeal had been filed. However, what her Honour in fact said was as referred to above, namely, she had no jurisdiction or power to make the orders sought, and the appropriate course for the husband would have been to appeal.
In relation to the appeal against the order for costs (“the second appeal”), her Honour found that there were circumstances that justified the making of an order for costs against the husband, and that those costs should be calculated on an indemnity basis, because of the husband’s conduct in pursuing an application where the court had no power to make the orders sought, and where properly advised, the husband would have been aware of that.
In the Notice of Appeal leave to appeal is sought, but because it is a final order, leave is not in fact required. It is relevant to note though that if it was, the facts relied on in support of leave to appeal are precisely the same as the facts relied on in support of the application seeking leave to appeal in the first appeal. I rhetorically ask, how could that be, and when I put that to the solicitor-advocate for the husband, he was non-responsive, reverting to the argument that her Honour should have made the orders sought. Clearly, that was of no assistance.
There was only one ground of appeal here, and that was the general assertion that her Honour erred; plainly an inadequate pleading.
The written summary of argument fares no better, and the description I used during the hearing was that it was “nonsense”, and I stand by that description.
The primary argument of the husband’s solicitors was that s 117(2A)(d) applied, and the proceedings were necessary because the wife had failed to fulfil her “fiduciary duties as trustee”, when she accepted a sale price below market value. However, this overlooks the fact, apart from this not being an order of the court, that her Honour had no jurisdiction or power to make the orders sought by the husband, and thus, the proceedings were fatally flawed.
A secondary argument put by the husband’s solicitors was that even if the first appeal was dismissed, the appeal against the order for costs could still proceed. However, the solicitor-advocate for the husband failed to appreciate that if the first appeal was dismissed, then that would mean that her Honour was correct in dismissing the application, and the husband having been wholly unsuccessful, there could be no doubt that that provided the circumstance justifying an order for costs. Indeed, this was the primary basis for her Honour making the order for costs, but as referred to above, the conduct of the husband in bringing the flawed application was also highly relevant. Thus the second appeal would have to be dismissed as well.
When this was pointed out to the husband’s solicitor-advocate he submitted that it was incorrect that only one circumstance justifying an order for costs needed to be found. That submission of course flies in the face of authority, for example, the Full Court decision of Fitzgerald (as child representative for A) Legal Aid Commission of Tasmania)) v Fish v Anor (2005) 33 Fam LR 123, and reveals a lack of understanding of s 117 of the Act.
Finally, in the amended summary of argument filed on 18 November 2020, and repeated at the hearing of the appeal, it was put that the husband’s financial circumstances should have resulted in no order for costs being made. However, her Honour was made aware of the husband’s then financial position, and took it into account in ordering that the amount of costs be paid to the wife by way of an adjustment of the surplus funds payable to the parties following the sale of the property.
Further, I point out that at the hearing of the appeal, without any application seeking leave to adduce further evidence, the husband’s solicitor-advocate sought to make submissions as to the husband’s financial circumstances since the order for costs was made, to demonstrate that her Honour had erred in making that order.
THE DISPOSITION OF THE APPLICATION
The husband’s solicitors’ opposition to a costs order being made against them is twofold. First, it is alleged that they gave appropriate advice to the husband and he instructed them to pursue the appeals. Secondly, if that is not the case, then the only realistic basis for an order for costs to be made against them is if it is demonstrated that there was a serious dereliction of duty, and they argued that that was not the case. They say that this was “a case of a mistaken yet genuinely believed understanding of the Law” (page 1 of the appellant’s submission on costs filed on 7 December 2020).
As to the first issue, at the hearing on 12 February 2021 the husband spoke on his own behalf, and he waived his privilege by permitting his solicitors to provide to the court two file notes dated respectively 26 August 2020 and 2 October 2020, allegedly recording the advice given to him about his prospects upon appeal, and of his potential exposure to a costs order. Those file notes are as follows:
File Note
Date: 26 August 2020
Time: 13:20
15 minutes
File No:
2019. … . …….
Matter: Your family law matter Mr Cansdall
Notes: Conference call with client/ James/Sean/Simone
Discussed most recent letter with client and strategy moving forward.
James advised client that while we still had a number of things we could do in relation to further proceedings with this matter, we also need to consider not bankrupting the client, particularly in view of the costs the client is incurring from the other party (excluding any of our fees)
We maintain that the law is in our favour however the Judge is clearer putting up obstacles at every step and therefore even should we continue our prospects of success is questionable.
The appeal is still on foot at this time as is VCAT – pending response as to whether the matter will be heard (VCAT closed due to COVID)
In relation to the recent letter, James confirmed that despite the appeal the OS have already taken the costs from the settlement amount which they are permitted to do.
James advised client that this was probably the one window of opportunity for him to walk away without incurring even further costs.
James confirmed that we had really exhausted every possible option at this time.
James confirmed that he would look at the numbers put forward by the OS and despite their demands for a response today, we would be responding tomorrow, however we would look at accepting this once numbers had been reviewed.
Client would like complaint lodged against the Judge.
File Note
Date: 2 October 2020
Time: 13:24
File No:
2019. …. …….
Matter: Your family law matter
Notes:
Discussed the two appeals
James raised the possibility abandoning the appeal for the stay and only follow with the costs appeal due to risk of further costs.
James explained the difference between the two appeal
- Stay, even if agreed that the Judge was wrong there is not much that can be done which may be seen by the Court as unfortunate but nothing can be done
- Costs – Explained to try and minimise costs to Mr Cansdall that the other side is seeking against him
Mr Cansdall raised that he is concern that there should be some accountability for the error of the Judge (if Appeal is successful) and he wants someone to be held responsible.
Client instructed to proceed with both appeals
James explained risk of costs
Client advised that he is not prepared to allow OS to get away with what they have done
James acknowledge Mr Cansdall’s honesty
(As per originals)
A number of issues arise from those file notes.
First, having waived privilege, it is concerning that the solicitors’ entire file in relation to the appeals was not made available, or at the very least, all other file notes and correspondence wherein advice was given and instructions received. The solicitor-advocate conceded correctly that legal professional privilege had been waived for the entire file, yet it would be incomprehensible that there were no other file notes and correspondence that would be relevant.
Secondly, and as an extension of the first issue, it is concerning that the only file notes produced were those dated 26 August 2020, and 2 October 2020. The most relevant time to explore the advice given and the instructions received, would be in the lead-up to the filing of the Notices of Appeal on 7 July 2020, and in the lead-up to the hearing of the appeals on 19 November 2020, once all summaries of argument were in.
Thirdly, it is unclear why in the context of the opposition of the solicitors to an order being made against them, it was those two file notes that were released, because they do not assist the primary argument of the solicitors. For the solicitors to succeed in that argument, they had to demonstrate that the advice given to the husband from day one was that the appeals had no chance of success, and the instructions from the husband on the basis of that advice was to proceed regardless, and for that advice to be maintained at all times thereafter with the same instruction from the husband. However, in the file note of 26 August 2020, which was a conference call between the husband, the principal of the firm who authored the majority of the appeal documents, the solicitor-advocate who was a member of the firm, and another member of the firm, it is recorded that the solicitors maintain “that the law is in our favour”. It is then suggested that the “prospects of success” were “questionable”, but the solicitor-advocate explained that that comment stemmed from the primary judge’s handling of a stay application, and not in relation to the merits of the appeal.
Now, nothing could be further from the truth than to suggest to the client that the law was in his favour, and demonstrates that the advice being given to the client was not correct, but presumably it would have been on the basis of advice such as that that the client instructed the solicitors to proceed with the appeals.
Importantly, it should be noted that at all times, including at the time that this file note was made, the respondent’s solicitors were corresponding with the husband’s solicitors, correctly pointing out that the appeals were flawed and should be withdrawn.
Turning to the other file note of 2 October 2020, it might be thought that that provides some comfort to the husband’s solicitors, but that is not the case.
The context of this note was that on 29 September 2020, the wife’s solicitors had again written to the husband’s solicitors pointing out the flaws in the appeal, and inviting them to discontinue the same prior to the directions hearing in this Court set for 6 October 2020, when the appeals would be listed for hearing. As can be seen there was discussion around abandoning the primary appeal, and only pursuing the costs appeal, but the reason for that was not lack of merit in the primary appeal, but because the settlement of the sale of the property had taken place, and thus there was “not much” that could be done. Again, it is not apparent that the appropriate advice was given, and without that advice, the husband instructed the solicitors to proceed with both appeals.
Importantly, on 6 October 2020, orders were made for the filing of summaries of argument, and for the hearing of the appeal to take place on 19 November 2020. I again note that I have not been provided with any file notes or correspondence between the solicitors and the client between 6 October 2020 and 19 November 2020, but it is readily apparent from the correspondence passing between the solicitors in this period, that the advice the solicitors were giving the husband, was that the appeals had good prospects of success. For example, having received the husband’s initial summary of argument, the wife’s solicitors again correctly wrote suggesting that on the arguments to be put, the appeals were “doomed to fail”, and giving notice that their client would be seeking costs on an indemnity basis, not only against the husband, but also against the solicitors, if the appeals proceeded (paragraph 35, affidavit of Ms B filed on 7 December 2020).
Tellingly, the response by the husband’s solicitors on 11 November 2020 was as follows:
We confirm that we have sought instructions from our client in relation to the proposed withdrawal of the Appeal based on your position that the Appeal has no prospect of success, however as we do not share this same view, we confirm that it is our intention to proceed with the Appeal as filed. In this regard, we hereby advise that no withdrawal of our Appeal will be provided.
(paragraph 37, affidavit of Ms B filed on 7 December 2020)
Finally, although the participation of the husband in the hearing on 12 February 2021 was not particularly helpful, given he was generally non-responsive to questions about the advice that he was given and the instructions that he gave, he did say that he relied on the expertise and knowledge of his solicitors, and that he left it to them to undertake what was required for the appeals.
In the circumstances I am satisfied that the primary position of the husband’s solicitors that they were acting on the instructions of the husband having given him appropriate advice cannot be maintained. It is readily apparent, even from what this Court now knows about the interaction between the husband and his solicitors, that he was not given the correct advice, and indeed the advice given was substantially flawed, and devoid of any merit, and the fact that the husband instructed the solicitors to proceed with the appeals cannot prevent an order for costs being made against them.
That leads to a consideration of the secondary argument, namely that the relevant principles pursuant to which an order for costs may be made against solicitors, do not apply here, and this was a case of a misunderstanding of the law.
The power to order the solicitors of one party to pay the costs incurred by the other party “arises from the inherent jurisdiction of the court over solicitors in their capacity as officers of the court and from the duty of the solicitor to conduct litigation with propriety” (Collins & Collins at 79,878).
In Cassidy v Murray, the Full Court, in approving the decision of Sir Thomas Bingham MR in Ridehalgh v Horsefield [1994] 3 All ER 848 set out the principles relevant to an award of costs against a solicitor at 82,364-82,365, namely:
Whereas some of the cases say that there must be “a serious dereliction of duty” by the solicitor before a costs order can be made against that solicitor, in our view the matters identified by the Master of the Rolls in Ridehalgh v Horsefield accurately reflect the law, which, in its application to this jurisdiction, can be set out as follows:
1. Pursuant to s. 117(2) Family Law Act, the Court has jurisdiction to make an order for costs against a solicitor or a non-party.
2. The [C]ourt should not make such an order without giving the person to be affected by the order an opportunity to be heard.
3. The Court may make an order for costs against a solicitor without the necessity to establish that the solicitor has been guilty of serious professional misconduct.
4. The solicitor has a duty to the Court to promote the interests of justice whilst at the same time attending to the needs of the solicitor’s client.
5. A mistake or error of judgment would not justify an order for costs against a solicitor. However, misconduct, default or negligence, any of which are found by a Court to be of a serious nature, may be sufficient to justify an order.
6. The jurisdiction is compensatory.
I note that rr 19.10 and 19.11 of the Family Law Rules 2004 (Cth) (“the Rules”) largely reflect the principles approved in Cassidy v Murray (see R (A Barrister) and Anor & Roberts and Anor [2010] FamCAFC 147 at [46] and [48]).
Subsequent authorities confirm that a solicitor commencing and maintaining proceedings on behalf of a client in the absence of consideration as to the legal merits may lead to an award of costs against that solicitor.
Goldberg J in White Industries (Qld) Pty Ltd v Flower & Hart (A Firm) (1998) 156 ALR 169 said this at 236:
The authorities do not support the proposition that simply instituting or maintaining a proceeding on behalf of a client which has no or substantially no prospect of success will invoke the jurisdiction. There must be something more namely, carrying on that conduct unreasonably. It is not clear what is encompassed by ‘unreasonably’ initiating or continuing proceedings if they have no or substantially no chance of success. It seems to me that it involves some deliberate or conscious decision taken by reference to circumstances unrelated to the prospects of success with either a recognition that there is no chance of success but an intention to use the proceeding for an ulterior purpose or with a disregard of any proper consideration of the prospects of success.
(Emphasis added)
And further at 239:
This analysis of the cases makes it clear that the jurisdiction to order costs against an unsuccessful party’s solicitors is enlivened when they have unreasonably initiated or continued an action when it had no or substantially no prospects of success but such unreasonableness must relate to reasons unconnected with success in the litigation or to an otherwise ulterior purpose or to a serious dereliction of duty or serious misconduct in promoting the cause of and the proper administration of justice. Further, the cases establish the proposition that it is a relevant serious dereliction of duty or misconduct not to give reasonable or proper attention to the relevant law and facts in circumstances where if such attention had been given it would have been apparent that there were no worthwhile prospects of success.
The Full Court of the Federal Court in Levick v Deputy Commissioner of Taxation (2000) 102 FCR 155, while noting that the jurisdiction to award costs against solicitors is to be exercised cautiously, approved Goldberg J’s statements at [44] as follows:
Having said that, it is equally important to uphold the right of a court to order a solicitor to pay costs wasted by the solicitor’s unreasonable conduct of a case. What constitutes unreasonable conduct must depend upon the circumstances of the case; no comprehensive definition is possible. In the context of instituting or maintaining a proceeding or defence, we agree with Goldberg J that unreasonable conduct must be more than acting on behalf of a client who has little or no prospect of success. There must be something akin to abuse of process; that is, using the proceeding for an ulterior purpose or without any, or any proper, consideration of the prospects of success.
(Emphasis added)
In the circumstances of that case, the Full Court was satisfied that the primary judge had made no appealable error and said this at [45]:
In the present case, Hill J inferred that the subject arguments “clearly originated with the lawyers”; that is, Mr Levick and Mr Fitzgibbon. No challenge can be made to that inference. So this is not a case, like Orchard, where a difficult case was taken to a lawyer by a client who wished it to be pursued in the court. Neither is it a case, like that contemplated in Ridehalgh v Horsefield, where the lawyer had “to present, on instructions, a case which he regards as bound to fail”. This is a case where the lawyers themselves thought up the “legal” points and advanced them on behalf of the client. It is unreasonable, in the sense of a dereliction of duty (to both the client and the court), for any lawyer to take that course without first being satisfied that the points are, at least, seriously arguable. We agree it was not necessary in the present case that the lawyers be satisfied that the points would succeed; but it was necessary they be satisfied there was a rational basis upon which they might succeed.
(Emphasis added)
French J (as he was then) took up those statements of the Full Court in Ex Christmas Islanders Association Inc v Attorney-General (Cth) (No 2) (2006) 233 ALR 97. His Honour said at [2] the “preparation and presentation of the application … was done at such a poor level of competence as to amount to a significant breach of duty” by the applicant’s solicitor. And further, his Honour said this at [21]–[22]:
21.In the present case the way in which the application was formulated and the argument presented indicated not merely the presentation of an unarguable case, it indicated a failure to discharge the practitioner’s basic duty to consider the legal issues which should have been considered before the application was prepared and filed and before argument on it was presented to the court.
22.Having regard to the passages to which I have referred from the decision of the Full Court in Levick and the subsequent cases, I do not consider that the generality of the approach enunciated in De Sousa has been relevantly limited. A costs order may be made under s 43 of the Federal Court Act or O 62 r 9 when the solicitor or counsel has so failed in the duty to give proper consideration to the legal and/or factual questions involved in the preparation and presentation of an application as to be seriously derelict in his or her duty to the client and/or the court. …
(Emphasis added)
Plainly, recalling what I have outlined above as to the initiation of the appeals and the progressing of the same until part-way through the hearing on 19 November 2020, when both appeals were abandoned, enlivens the jurisdiction to order costs against the husband’s solicitors. To adopt the phraseology of Goldberg J, they have “unreasonably initiated [and] continued [the appeals] when [they] had no prospect of success” and that unreasonableness relates “to a serious dereliction of duty or serious misconduct”. As his Honour also said, and which applies here, “it is a relevant serious dereliction of duty or misconduct not to give reasonable or proper attention to the relevant law and facts in circumstances where if such attention had been given it would have been apparent that there were no worthwhile prospects of success”. In other words, there was a significant breach of duty by the husband’s solicitors here.
To repeat, the amount of costs sought on an indemnity basis is $31,105.50, and that includes the costs in relation to the aborted hearing on 7 December 2020.
I confirm that as discussed, indemnity costs are warranted, given the extraordinary conduct of the husband’s solicitors, and I note that when asked, the husband’s solicitor-advocate indicated that he had no comment to make as to the reasonableness or otherwise of the amount of costs sought.
Thus, there will be an order that James McConvill & Associates, the husband’s solicitors, pay the costs of the wife fixed in the sum of $31,105.50.
I certify that the preceding ninety-one (91) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Strickland. Associate:
Dated: 26 August 2021
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