Chatwin & Chatwin
[2023] FedCFamC2F 1442
•9 November 2023
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Chatwin & Chatwin [2023] FedCFamC2F 1442
File number(s): MLC 8505 of 2023 Judgment of: JUDGE MYERS Date of judgment: 9 November 2023 Catchwords: FAMILY LAW – Property Proceedings.
FAMILY LAW – LEGAL PRACTITIONER/ LAW FIRM – restraint on representing a party – conflict of interest.
Legislation: Family Law Act 1975 (Cth) ss 90C, 90K(1)(b), (e),
Legal Profession Uniform Law Australian Solicitors’ Conduct Rules 2015 rr 2.1-2.2, 4.1, 27.1-27.2
Cases cited: Charisteas v Charisteas [2022] FedCFamC1A 160, [37]
Kallinicos & Hunt [2005] NSWSC 1181
Mitchell v Burrell [2008] NSWSC 772
Mumbin v Northern Territory of Australia (No 1) [2020] FCA 475
Division: Division 2 Family Law Number of paragraphs: 36 Date of last submission/s: 3 November 2023 Date of hearing: 3 November 2023 Counsel for the Applicant: Ms Swann Solicitor for the Applicant: Kenna Teasdale Lawyers Counsel for the Respondent: Mr McCormick Solicitor for the Respondent: C Lawyers ORDERS
MLC 8505 of 2023 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: MR CHATWIN
Applicant
AND: MS CHATWIN
Respondent
ORDER MADE BY:
JUDGE MYERS
DATE OF ORDER:
9 NOVEMBER 2023
THE COURT ORDERS THAT:
1.Mr B and C Lawyers Pty Ltd trading as C Lawyers be and are hereby restrained from representing the Applicant (Wife) in these proceedings.
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 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under a pseudonym has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
JUDGE MYERS:
This is an early interlocutory decision in the matter of Chatwin.
The substantive proceedings are those between the Applicant Wife (“the Wife”) and Respondent Husband (the “Husband”) where the Wife seeks to enforce the provisions of a Financial Agreement entered into between the parties on 10 December 2013 pursuant to section 90C of the Family Law Act 1975 (Cth) (‘the Act’). The Respondent Husband seeks the agreement be set aside.
The parties commenced cohabitation in 2007 and married in 2009. They separated in 2013 after the Wife discovered the Husband had been having an affair with a person the Court will refer to as Ms D. The parties subsequently reconciled and then separated again for a final time on or about December 2022.
These interlocutory proceedings relate to an application by the Husband asking the Court to make orders that Mr B and C Lawyers Pty Ltd trading as C Lawyers be and are hereby restrained from representing the Applicant (Wife) in these proceedings.
It is uncontroversial that Mr B prepared the Financial Agreement the subject of the substantive dispute. Having examined the Financial Agreement annexed to the Husband’s affidavit filed 19 October 2023 it is apparent Mr B witnessed the Wife’s signature on the Financial Agreement and signed the Statement of Independent Legal Advice in her name, that is annexed to the Financial Agreement.
The Husband complains about Mr B’s conduct. That conduct relates to the contents of Mr B’s written correspondence with the Huband’s solicitors following the first breakdown of the parties’ marriage set out in the paragraphs below.
It is the Husband’s untested evidence that shortly after separation, the Wife sent photographs that she had found on the Husband’s mobile phone to his professional colleagues, to the Husband’s brother, and the Husband’s children. The photographs depict the Husband and Ms D.
The Wife provided those photographs to Mr B who referred repeatedly to them in correspondence, where on 23 July 2013, Mr B sent an email to the Husband’s then solicitor E Lawyers in which Mr B stated:
Whilst we all know about no fault divorce our client is in possession of your client's phone and has accessed all the material which has been deleted and stored on the hard drive. The material consists of many explicit photographs, text messages and can only be described as highly disturbing in the setting of what our client considered to be a loving marriage based upon mutual trust and respect.
Mr B continued to refer to the subject of the Husband’s extra-marital affair and the photographs the Wife had accessed in his subsequent correspondence with the Husband’s former solicitors, E Lawyers. On 25 July 2013, Mr B forwarded to E Lawyers an email he had apparently drafted to send to the Husband, in which Mr B stated he said he had been provided with:
literally hundreds of explicit text messages, emails and photographs passing between yourself and ([Ms D]) over a protracted period of time.
On 1 August 2013, Mr B sent a three-page letter to E Lawyers in which he referred to the:
lurid obscene and pornographic material that [Ms Chatwin] has had to confront.
The Husband deposed that Mr B was referring to the photographs that the wife had accessed on his mobile phone. Mr B went on to express his opinion about the Husband and his conduct and said:
In my opinion, there needs to be a significant display of contrition, remorse and repentance on your client's behalf if he is ever to win the trust of [Ms Chatwin] again.
In his letter of 1 August 2013, Mr B set out his "three step plan" for a possible reconciliation between the Wife and the Husband that provided:
1.First, agreeing to the Wife’s terms for a property settlement and encapsulating those terms in a "Section 90C BFA or Minutes of Consent Orders to be filed with the Court”, which would need to be: "a property settlement in terms extraordinarily favourable to our client if it was ever to be accepted by her that he has shown genuine remorse and agreed to engage in conduct designed to underpin the persuasive lack of trust and insecurity currently experienced by her”;
2.Secondly, submitting to an assessment by a forensic psychiatrist: "in an attempt to explain what appears to our client as being dishonest, deceitful and sociopathic conduct of the worst kind" and complying to any treatment recommendations made by the psychiatrist;
3.Thirdly, "if the psychiatric assessment established that there was no significant personality disorder which was capable of being remedied through medical or therapeutic intervention", then the Wife would “agree to participate in relationship counselling with either a psychologist or an approved marriage guidance counselling organisation”.
It was the Husband’s untested evidence that he had never been diagnosed with any psychological or psychiatric disorder. Mr B also said in his letter of 1 August 2013 that:
Words will not suffice, only actions of the self-sacrificial nature outlined herein. In the event, that in the fullness of time, the relationship can be re-established and the parties reunite then of course the property settlement will be rendered null and void. If reconciliation does not eventuate the property settlement will stand and will not be conditional upon there being counselling or a reconciliation.....If your client is prepared to explore the remote possibility of making up for his misdeeds and to agree to the course outlined herein please advise and I shall encourage [Ms Chatwin] to participate under the guidance of her counsellor.
On 15 August 2013, the Husband’s solicitors, E Lawyers, responded to the letter from Mr B dated 1 August 2013 and said:
There are numerous aspects of your letter which clearly breach your professional obligations. The letter certainly does nothing to assist the amicable and dignified resolution of the issues. In particular, your correspondence constitutes a breach of the following:
1.The general principles of professional conduct and Rule 13, 2 and 30 of the Professional Conduct and Practice Rules 2005, which require, inter alia, the avoidance of personal bias and/or opinion and the use of offensive and provocative language;
2.Section 12A of the Family Law Act 1975 (Cth), which requires practitioners to assist parties where a reconciliation may be possible, not create impediments;
3.Sections 2.1 and 2.2 of the Best Practice Guidelines for Lawyers Doing Family Law Work, which require the avoidance of inflammatory exchanges and the consideration of the effect of correspondence upon clients and other family members.
Your repeated further reference in your letter of 1 August 2013 and almost every prior item of correspondence to photographs and the like obtained by your client which are "in your possession" (and which on our instructions were circulated by your client to family members and our client's professional colleagues) also smacks of blackmail.
Our client offers your firm the opportunity to withdraw from acting for [Ms Chatwin]. If you refuse to do so, our client will give further consideration to a formal misconduct complaint.
Mr B declined to cease acting for the Wife.
On 6 September 2013, Mr B wrote a letter in response to a request by the Husband that the Wife return the Husband’s my mobile phone and SIM card. Mr B set out that the Wife would return the SIM card:
…having transferred all the information contained thereon to her phone and thereby maintained a permanent record of the text message and photographs passing between your client and ([Ms D]).
Mr B also attached to his letter photographs that the Husband deposed were of him and Ms D together on vacation and stated:
If your client is precious regarding any allegation made against him he ought to be more discreet in his choice of holiday locations.
It was submitted on behalf of the Husband that he may seek to have the Financial Agreement set aside under section 90K(1)(b) and (e) of the Act on the following grounds:
1.Equitable estoppel: certain representations were made to the Respondent by the Applicant and by [Mr B] prior to the Financial Agreement being entered into with the intention that they would be relied upon by the Respondent. The representations were to the effect that the Financial Agreement would not be enforced by the Applicant if the parties reconciled and the Respondent did not engage in any further infidelity. The Respondent relied on such representations and acted to his detriment when entering into the Financial Agreement, which is heavily weighted against him. The Applicant should now be estopped from resiling from those representations; and/or
2.The Respondent was under undue influence or duress at the time the Financial Agreement was entered into and for that reason, he signed a document that was patently unfair to him. The duress took the form of excessive pressure exerted on the Respondent by the Applicant and/or her solicitor, [Mr B]; and/or
3.The Respondent and/or her solicitor, [Mr B] engaged in unconscionable conduct in the lead up to the Financial Agreement being executed. Such conduct took the form of the Applicant unconscientiously taking advantage of the special disadvantage the Respondent was under in the months leading up to the execution of the Financial Agreement, with the support of her solicitor, [Mr B]. The special disadvantage took the form of the Applicant being in a position of emotional dominance over the Respondent, of which she and her solicitor were well aware.
Rule 2 of the Legal Profession Uniform Law Australian Solicitors’ Conduct Rules 2015 (“the Rules”) sets out:
2. Purpose and effect of the Rules
2.1The purpose of these Rules is to assist solicitors to act ethically and in accordance with the principles of professional conduct established by the common law and these Rules.
2.2In considering whether a solicitor has engaged in unsatisfactory conduct or professional misconduct, the Rules apply in addition to the common law.
Rule 4 of the Rules sets out:
4. Other fundamental ethical duties
4.1 A solicitor must also:
4.1.1act in the best interests of a client in any matter in which the solicitor represents the client;
4.1.2be honest and Courteous in all dealings in the course of legal practice;
4.1.3deliver legal services competently, diligently and promptly as reasonably possible;
4.1.4avoid any compromise to their integrity and professional independence; and
4.1.5 comply with these Rules and the law.
The written submission made on behalf of the Husband, filed on 2 November 2023, are replete with complaint about Mr B’s conduct including that:
1.[Mr B] had “engaged in unprofessional conduct…”;
2.[Mr B] had drafted “a Financial Agreement that contained information that he knew or ought to have known was false in order to advantage his client…”;
3.[Mr B] proposed that the Husband undergo some form of forensic psychiatric assessment, “in an attempt to explain what appears to our client as being dishonest, deceitful and sociopathic conduct of the worst kind (referring to an extra-marital affair), without there being any evidence” that the Husband “had a mental health disorder and which was irrelevant to the division of the parties’ matrimonial assets”. And that [Mr B’s] “request can only have been intended to humiliate” the Husband.
4.[Mr B] was “complicit in the making of the representations to the Respondent upon which the Respondent relied when entering into the Financial Agreement”.
5.[Mr B] was complicit “in applying inappropriate pressure to the” Husband.
6.That either “[Mr B] will be in conflict with his client about the instructions she provided, or he must be found to be complicit with her in presenting a Financial Agreement to the Respondent that contained errors and a division of assets that was unconscionably weighted in his client’s favour.
7.The “fact that [Mr B] does not see any issue with him acting for the Applicant and has opposed this application for injunctive relief demonstrates an ongoing misunderstanding or disregard for his professional responsibilities”.
8.That “[Mr B] engaged in unprofessional conduct, which is an important and relevant part of the context in which the Financial Agreement was prepared…”.
Noting the obligations within the provisions of the Rules and complaints made against Mr B, the determination of the substantive issue in these proceedings will extend well beyond the simple reading of the Financial Agreement in order to determine whether on its construction the agreement is, or is not binding, having regards to the requirements found at section 90G of the Act. Mr B’s conduct has been, and will at the final hearing, be called into question.
It was submitted on behalf of the Husband that:
[Mr B] will be called to give evidence about a controversial matter, being the circumstances in which the Financial Agreement was negotiated and prepared. Further, he may be questioned about the contents of the Financial Agreement and its drafting.
The Court accepts that Mr B will (on the face of the Husband’s case as it now appears to the Court) be subpoenaed by the Husband to give evidence and that Mr B will be a material witness in a contested matter in the proceedings. To put the issue simply, the Court will be asked in part to determine whether Mr B and or the Wife’s conduct, alone or together, at and around the time of the drafting and signing of the Financial Agreement, was such that the Financial Agreement ought to be set aside. And while the Court accepts that it will be submitted on behalf of the Wife that the Husband’s study, qualifications, training, and experience are such that he knew well the bargain he entered into, such a submission does not bar or prevent the Husband running a case that in no small part will focus upon Mr B’s conduct.
Rule 27 of the Rules sets out:
27. Solicitor as material witness in client’s case
27.1In a case in which it is known, or becomes apparent, that a solicitor will be required to give evidence material to the determination of contested issues before the Court, the solicitor may not appear as advocate for the client in the hearing.
27.2In a case in which it is known, or becomes apparent, that a solicitor will be required to give evidence material to the determination of contested issues before the Court the solicitor, an associate of the solicitor or a law practice of which the solicitor is a member must not continue to act for the client if doing so would prejudice the administration of justice.
It was correctly submitted in the hearing that Rule 27 of the Rules is consistent with the common law, which was set out by Brereton J in Kallinicos & Hunt [2005] NSWSC 1181 and Mitchell v Burrell [2008] NSWSC 772.
By way of summary, the general principles include:
a.The Court always has inherent jurisdiction to restrain solicitors from acting in a particular case, as an incident of its inherent jurisdiction over its officers and to control its process in aid of the administration of justice;
b.The test to be applied in this inherent jurisdiction is whether a fair-minded, reasonably informed member of the public would conclude that the proper administration of justice requires that a legal practitioner should be prevented from acting, in the interests of the protection of the integrity of the judicial process and the due administration of justice, including the appearance of justice;
c.The jurisdiction is to be regarded at exceptional and is to be exercised with caution;
d.Due weight should be given to the public interest in a litigant not being deprived of a lawyer of his or her choice without due cause;
e.The timing of the application may be relevant, in that the cost, inconvenience or impracticality of requiring lawyers to cease to act may provide a reason for refusing to grant relief.
Brereton J said in Mitchell v Burrell at [20] that:
I do not accept that the mere circumstance that a solicitor will be a material witness, even on a controversial matter, of itself justifies restraining the solicitor from continuing to act….that line is crossed only when the solicitor has a personal stake in the outcome of the proceedings or in their conduct beyond the recovery of proper fees for acting, albeit that the relevant stake may not necessarily be financial, but involves the personal or reputational interest of the solicitor, as will be the case if his or her conduct and integrity come under attack and review in the proceedings. The presence of such circumstances will be a strong indication that the interests of justice – which in this field involve clients being represented by independent and objective lawyers unfettered by concerns about their own interests – require the lawyer to be restrained from continuing to act.
The Federal Circuit and Family Court (Division 1) Appellate Jurisdiction comprising Alstergren CJ, McClelland DCJ & Alderidge J, in Charisteas v Charisteas [2022] FedCFamC1A 160 at [37] determined, by reference to what had earlier been said by Griffiths J in Mumbin v Northern Territory of Australia (No 1) [2020] FCA 475, that the correct test was:
[37]The correct test that should have been applied by the primary judge, in determining whether a legal practitioner should be restrained from acting on behalf of a party, is that which is adumbrated by the Full Court of the Federal Court of Australia (Besanko, Lee and Abraham JJ) in Porter v Dyer (2022) 402 ALR 659 who applied, with approval, the following statement of principle by Griffiths J in Mumbin v Northern Territory of Australia (No 1) [2020] FCA 475:
39.The relevant principles which guide the exercise of the Court’s separate discretion are broadly as follows:
(a)The Court has an inherent jurisdiction to ensure the due administration of justice, to protect the integrity of the judicial process and to restrain legal practitioners from acting in a particular case as part of its supervisory jurisdiction (see, for example, Grimwade v Meagher [1995] VicRp 28; [1995] 1 VR 446 at 452 per Mandie J and Dealer Support Services Pty Ltd v Motor Trades Association of Australia Ltd [2014] FCA 1065; 228 FCR 252 at [37] per Beach J).
(b)The test to be applied is whether a fair-minded, reasonably informed member of the public might conclude that the proper administration of justice requires that a solicitor be prevented from acting in the interests of the protection of the integrity of the judicial process and the appearance of justice (I prefer this formulation of the principle, as opposed to the use of the term “would”: see Timbercorp at [62] per Anderson J and the cases cited therein, as opposed to the different formulation adopted by Beach J in Dealer Support Services at [94], upon which the Jawoyn Claim applicant relied, but I would regard even that higher standard to have been met in the circumstances here).
To be clear, Mr B’s personal or reputational interests are at stake in these proceedings, his conduct and integrity have been under attack since 15 August 2013 when E Lawyers wrote to Mr B about his correspondence. The Court is cognisant that its jurisdiction to oust Mr B is to be regarded as exceptional and is to be exercised with caution. Unfortunately, it is the content of Mr B’s correspondence and the complaints against Mr B that make these proceedings exceptional.
The Court gives due weight to the public interest that the Wife, as a litigant, should not be deprived of a lawyer of her choice without due cause. But in this case, there is due cause, namely the fact that the lawyer of her choice, Mr B, is in a position in this litigation where his personal and professional reputation are at risk. This is in circumstances where his conduct and integrity are under attack and where his duty to act in the best interest of his client is not unfettered; where because of the accusations made against him by the Husband in the proceedings Mr B has a personal stake in the outcome of the proceedings beyond the recovery of proper fees for acting.
The timing of this application is relevant. It is made very early on in the proceedings and in the view of the Court, the Court should not refuse to grant the relief sought by the Husband based on the cost, inconvenience, or impracticality of requiring Mr B to cease to act.
What is financially at stake for the parties in the substantive proceedings is significant. These will be hard fought proceedings where the Huband will attempt to make much of Mr B’s conduct at and around the time of the execution of the Financial Agreement.
The Husband’s pursuit of orders that the Financial Agreement be set aside will in no small part focus and relying on Mr B’s conduct. The Husband’s application to set aside the Financial Agreement may or may not ultimately prove successful. While the Court makes no findings, in this interlocutory decision, as against Mr B regarding the tone and content of his correspondence, Mr B’s correspondence leaves the door open to the type of criticism levelled against him in these proceedings. The Court expects that Mr B will be subpoenaed by the Husband to give evidence, his firm subpoenaed to produce its files, and that during the proceedings Mr B’s conduct will be examined and the Court asked to make findings against Mr B. To that end Mr B will become embroiled personally in the dispute.
With respect to the fair-minded, reasonably informed member of the public - what might that member of the public conclude. It is the view of the Court the conclusion might and would be this – how can Mr B and his firm continue to act for the Wife putting her best interest first where he is busy worrying about himself. In other words what the fair-minded, reasonably informed member of the public might (and on a higher standard than is necessary would) in the view of the Court conclude, is that - as Mr B’s personal and reputational interests are at risk; where his conduct and integrity are under attack, should Mr B and his firm continue to act for the Wife, she will not be represented by independent and objective lawyers unfettered by concerns about their own interest and as such the proper administration of justice requires that Mr B and his firm (of which he is the principal) be prevented from acting in the interests of protection of the integrity of the judicial process and the appearance of justice.
For the reasons set out above the Court orders that Mr B and C Lawyers Pty Ltd trading as C Lawyers be and are hereby restrained from Representing the Applicant (Wife) in these proceedings.
I certify that the preceding thirty-six (36) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Myers. Associate:
Dated: 9 November 2023
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