Chontoglou & Chontoglou (No 2)
[2024] FedCFamC1F 775
•14 November 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Chontoglou & Chontoglou (No 2) [2024] FedCFamC1F 775
File number(s): DNC 98 of 2023 Judgment of: KARI J Date of judgment: 14 November 2024 Catchwords: FAMILY LAW – LEGAL PRACTITIONERS – Where the wife makes an application to restrain the husband’s lawyers from acting for him – Where the trial in the matter is part-heard – Where the cross examination of the parties has concluded – Where the issue of conflict had been raised prior to trial commencing – Where the husband’s solicitors resumed acting following the conclusion of the first tranche of the trial – Where there is insufficient basis to deny the husband the legal representation of his choice – Where it is not concluded that a fair minded reasonably informed member of the public might conclude that the integrity of the judicial process will be impacted by the husband’s solicitor continuing to act Legislation: Family Law Act 1975 (Cth) s 79 Cases cited: Charisteas & Charisteas (2022) FLC 94-109
Metwally v University of Wollongong (1985) 60 ALR 68
Porter v Dyer (2022) 402 ALR 659
Division: Division 1 First Instance Number of paragraphs: 55 Date of hearing: 13 November 2024 Place: Adelaide via Webex Counsel for the Applicant: Ms Fraser Solicitor for the Applicant: AFL Withnalls Lawyers Counsel for the Respondent: Mr Polley Solicitor for the Respondent: EV Law ORDERS
DNC 98 of 2023 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MR CHONTOGLOU
Applicant
AND: MS CHONTOGLOU
Respondent
ORDER MADE BY:
KARI J
DATE OF ORDER:
14 NOVEMBER 2024
THE COURT ORDERS THAT:
1.That paragraph 2 of the Response to an Application in a Proceeding filed by the wife on 6 November 2024 be dismissed.
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).
Part XIVB of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish an account of 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 the pseudonym Chontoglou & Chontoglou has been approved pursuant to subsection 114Q(2) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
KARI J:
INTRODUCTION
These reasons relate to an application made by the wife in which she seeks to restrain the husband’s current solicitor and the firm of solicitors from acting for him in proceedings before the Court.
For the reasons that follow that application is to be dismissed.
THE APPLICATIONS BEFORE THE COURT
On 6 November 2024 the wife filed a Response to an Application in a Proceeding that had been filed by the husband on 21 October 2024. Significantly for present purposes, the wife sought an order in the following terms:
2.That the Respondent Husband be restrained from engaging AFL Withnall [sic] Lawyers or [Ms JJ] to act on his behalf.
It is not necessary or relevant to the present determination to address the Application in a Proceeding filed by the husband on 21 October 2024, other than to record that as is often the case, the Response filed by the wife raised an entirely new issue, namely the orders sought in relation to the husband’s legal representation.
By orders made in chambers on 23 October 2024, the Application in a Proceeding was listed for hearing on 13 November 2024, and the wife was required to file a Response and Affidavit by 4.00 pm on 6 November 2024; both of which she did.
On the morning of the scheduled hearing on 13 November 2024, the husband filed a Reply, in which he relevantly sought that paragraph 2 of the wife’s Response be dismissed, together with a range of other orders which are not presently relevant.
At the hearing on 13 November 2024, counsel for each of the parties agreed that the Court ought determine the application with respect to the husband’s legal representation prior to hearing any of the other issues the parties wish to ventilate. That approach was taken by the Court.
DOCUMENTS RELIED UPON
In relation to the present application the wife relied upon, and regard has been had to:
(a)An outline of case filed 12 November 2024;
(b)The Response to an Application in a Proceeding and Affidavit in support both filed 6 November 2024;
(c)An earlier affidavit filed in the proceedings filed 30 August 2024, albeit that no submissions were made in relation to the matters raised in that affidavit so little regard has been had to the same;
(d)Two costs notices filed on behalf of the husband on each 11 April 2023 and 1 November 2024.
The husband simply relied on his Reply filed 13 November 2024, to which regard has been had.
Counsel for each of the parties made fulsome submissions during the hearing and judgment was thereafter reserved.
BACKGROUND
The current application must be viewed and considered in the broader context of the proceedings more generally.
The substantive proceedings relate to the question of property settlement.
The proceedings were commenced by the husband in urgent circumstances on 2 March 2023, in the Federal Circuit and Family Court of Australia, Division 2.
After procedural hearings before a Senior Judicial Registrar, the proceedings were transferred to the Federal Circuit and Family Court of Australia, Division 1, and listed for an interlocutory hearing before Berman J on 12 April 2023. Interlocutory issues were fully ventilated before Berman J and his honour published reasons and made extensive orders on 26 April 2023.
The proceedings have thereafter been case managed by me towards a trial. This case management has included from time to time the hearing, management and determination of a range of interlocutory issues. It is not relevant for present purposes to canvass the numerous interlocutory issues that have arisen in the proceedings.
By orders made on 15 April 2024 the proceedings were listed for trial commencing 16 September 2024 with a time estimate of five days (Order 1). The trial directions made that day, included orders for the husband to file and serve the material he relied upon for trial by 7 July 2024 (Order 2), and the wife to file the material she relied upon at trial by 27 July 2024 (Order 3).
At times throughout the proceedings the wife has been represented by legal representatives, and at other times she has not. In recent times, the wife has been represented by EV Law, and in that regard, with reference to the various Notices of Address for Service and Notices of Ceasing to Act filed on behalf of the wife in these proceedings:
(a)EV Law represented the wife between 13 March 2024 and 11 June 2024;
(b)The wife was self-represented between 11 June 2024 and 16 August 2024; and
(c)EV Law have represented the wife since 16 August 2024.
Subject to the events described below, throughout the proceedings the husband has been represented by Ms JJ of AFL Withnalls Lawyers.
Germane to the present issue before the Court is a series of events which took place in August 2024, which flowed from the filing of the parties’ respective trial material in accordance with the trial directions made 15 April 2024
By correspondence from my chambers dated 21 August 2024, the parties were advised that the proceedings were listed for mention before me on 28 August 2024. At the commencement of the hearing on 28 August 2024, the parties were advised by me that the proceedings had been listed for hearing that day for a number of reasons being; that I wished to understand whether the matter was ready to proceed to trial in September 2024 and, secondly, because I had perused the material filed for trial and as a result I understood that the wife had deposed that she did not intend to return to Australia for the trial and there was no application for her to appear “electronically” for the trial.
During the course of the hearing, counsel for the husband made an oral application for the Court to rule on an objection to the wife’s trial affidavit affirmed 27 July 2024. The objection that was made, was to paragraph 149 of the affidavit, in which the wife deposed the following:
149.I am aware that [Mr Chontoglou] has also carried out [trade] works on his solicitor [Ms JJ]’s house which I have requested disclosure, but to date have not received anything. I found an email on my old email address with a reference as [Ms JJ]’s house. I asked [Mr GG] about this, and he confirmed that they had done work at [Ms JJ]’s house.
The objection took on what might colloquially be called “a life of its own”, and resulted in argument spreading over two additional hearings on each 29 August 2024 and 30 August 2024.
The Court ultimately understood from the submissions made over the course of the three hearings that the wife:
(a)Had been seeking discovery of documents from the husband and seemingly unusually Ms JJ and/or AFL Withnalls Lawyers, in relation to the wife’s allegation that the business operated by the husband was carrying out works on a property owned by his solicitor, Ms JJ.
(b)The asserted relevance of the request for disclosure, while not deposed by the wife in her trial material, was because the wife apprehended that the husband had made a private arrangement with Ms JJ in relation to the payment of his legal fees which included a “contra” or offset against work done by the business operated by him. As a result of this apprehension, the wife squarely considered that this allegation made by her infected the issues to be determined at trial, including the composition of the property of the parties and the accuracy of the single expert valuation of the business.
Ultimately, the Court was not required to rule on the objection by the conclusion of the hearing on 30 August 2024. As recorded in the notations to the orders made on 30 August 2024, a ruling was not made on the objection because the husband’s solicitor, Ms JJ, determined that day that she would cease acting for the husband in the proceedings. Whilst not recorded in the notations to the orders, the Court was advised that Ms JJ had taken this position as she was concerned that she may become a witness in the proceedings.
On 3 September 2024, HH Lawyers, filed a Notice of Address for Service on behalf of the husband.
The proceedings returned before the Court for further case management on 4 September 2024. On that occasion, the objection taken to paragraph 149 of the wife’s Trial Affidavit affirmed 27 July 2024 was adjourned to trial.
The trial proceeded for five days between 16-20 September 2024. Both of the parties were represented by counsel who were both present in the City E Registry and appeared in person before me, together with the solicitors on record for each of the parties. The husband was present in person throughout the trial. The wife was in Country B and appeared electronically throughout the trial.
At the commencement of the trial the Court was asked to rule on the husband’s objection to paragraph 149 of the wife’s trial affidavit affirmed 27 July 2024. The objection was overruled.
Each of the parties gave oral evidence during the trial and they were each cross examined by opposing counsel.
The trial was ultimately adjourned part-heard on 20 September 2024, with the Court to allocate at least one additional sitting day for closing submissions. The notations to the orders made on 20 September 2024 recorded the possibility of an application to reopen the evidence in the proceedings in relation to three specific topics contemplated in the body of the orders being:
(a)The wife’s response to a call for the production of documents made by her during the course of her evidence for discovery of her Country B “Tax” number;
(b)The evidence from an agreed single expert to translate into English documents in Country B that had been received into evidence during the trial; and
(c)The evidence from an agreed single expert in relation to matters flowing from the non-compliance of the parties’ self-managed superannuation fund.
By orders made 14 October 2024, the trial has been listed for further hearing on 4 and 5 December 2024.
THE PRESENT APPLICATION
As indicated earlier the present application was made by the wife on 6 November 2024.
The precursor to the application however was the resumption of Ms JJ’s representation of the husband as and from the filing by her of a Notice of Address for Service on 23 September 2024; some three days after the conclusion of the first tranche of the trial.
In support of her application, the wife filed an affidavit on 6 November 2024. The portions of the affidavit that are relevant to the present application are paragraphs 27-41 which appear under the heading “AFL Withnalls Acting”. I have had regard to those portions of the wife’s affidavit.
Relevantly, the wife deposes in that affidavit to her unsuccessful attempts to obtain disclosure from the husband, and specifically as to her allegation as to the arrangement between the husband and Ms JJ regarding the husband’s legal fees, as follows:
40.I am concerned that [Mr Chontoglou] and [Ms JJ] have come to an agreement that our company, [G Pty Ltd] has conducted work on [Ms JJ]’s property in return of legal services being conducted. This subsequently reduces the assets of our company which remains part of the property pool.
(As per the original)
The wife additionally deposed to her recollection of the evidence given by the husband during the trial in the following terms:
31.[Mr Chontoglou] was crossed [sic] examined about the works conducted on [Ms JJ]’s property whereby he said words to the effect of that it is ongoing, and no invoice have yet been rendered. I find this difficult to believe given that the work is a [trade] job and it was conducted in or around December 2023.
Unfortunately, the transcript of the husband’s evidence in this regard has not been obtained by the wife, and was not before the Court for the purposes of the application.
Despite this, during the course of the hearing, I indicated to the parties that I had a recollection of the evidence that the husband had given in relation to this topic (which was later confirmed to the parties during the course of the hearing when I had regard to my contemporaneous notes of the evidence made during the trial). My recollection included that there had been limited cross examination of the husband by the wife’s counsel on the topic, something that I indicated during this hearing I was surprised about at the time given the prominence of the issue in the lead up to trial. I also outlined to counsel for the wife that my recollection, and later confirmed during the hearing by reference to my contemporaneous notes, of the husband’s evidence was that:
(a)His business practice is that he generally invoices customers at the completion of a job.
(b)That unless the job was a “million dollar job” he did not ordinarily require progress payments from customers.
(c)There were no documents to produce regarding the works for Ms JJ as he had not provided a written quote.
(d)The works for Ms JJ were not yet completed.
(e)He estimated the works for Ms JJ to be between $14,000 and $16,000.
(f)He intended to invoice Ms JJ when the job was completed.
(g)It was specifically put to the husband whether the works for Ms JJ were done “off the books for payment other than money”, to which the husband responded that it was not “off the books” and that he had not yet invoiced the works.
THE LEGAL PRINCIPLES
Despite the significance of the application, counsel for the wife did not refer the Court to any relevant authorities, nor did the husband’s counsel.
This aside, it is understood that the Court has the ability to restrain practitioners from acting in proceedings in furtherance of the Court’s ability to control its own processes and proceedings.
In the recent decision of the Full Court of the Federal Court in Porter v Dyer (2022) 402 ALR 659 (Lee, Besanko and Abraham J) (“Porter v Dyer”), the legal principles applicable in applications of this nature were authoritatively set out as follows:
113.The primary judge correctly identified the relevant principles. They have been comprehensively summarised by Brereton J in Kallinicos v Hunt [2005] NSWSC 1181; (2005) 64 NSWLR 561 (at 582 [76]) and Griffiths J in Mumbin v Northern Territory of Australia (No 1) [2020] FCA 475 (at [39]). Justice Griffiths’ summary was as follows:
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] 1 VR 446 at 452 per Mandie J and Dealer Support Services Pty Ltd v Motor Trades Association of Australia Ltd (2014) 228 FCR 252; 318 ALR 507; 108 IPR 26; [2014] FCA 1065 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).
(c)Due weight must be given to the public interest in a client not being deprived of the legal practitioner of its choice, however, this important value can be over-ridden in an appropriate case (Dealer Support Services at [95] per Beach J).
(d)This basis for disqualification is not discharged by it simply being demonstrated that there is no risk of the misuse of confidential information (Dealer Support Services at [96] per Beach J).
(e)This basis for disqualification is an “exceptional one” and is “to be exercised with appropriate caution” (Geelong School Supplies Pty Ltd v Dean (2006) 237 ALR 612; [2006] FCA 1404 at [35] per Young J).
(f)A legal practitioner may be restrained from acting in a matter not only where the practitioner has a conflict of interest viz a viz a former client, but also viz a viz a person who is “as good as” a client (Macquarie Bank Ltd v Myer [1994] VicRp 22; [1994] VR 350 at 359 per J D Phillips J).
(Emphasis in original)
In Charisteas & Charisteas (2022) FLC 94-109, the Full Court of this Court (Alstergren CJ, McClelland DCJ & Aldridge J), having had regard to the aforementioned statement of principles in Porter v Dyer, further identified:
38.Additionally, we refer to and adopt that which was said by Thomas J in a New Zealand case, Kooky Garments Ltd v Charlton [1994] 1 NZLR 587 at 590 where, in commenting on the role of legal practitioners as officers of the Court, his Honour stated:
In such cases, apart altogether from the position of the client, the Court is not receiving the assistance of counsel who are observably independent. Independence is a function of counsel. The Court is entitled to assume that solicitors and counsel appearing before it possess that independence. Solicitors not only owe a duty to their clients to do the best for them but also owe an overriding duty to the Court. The same overriding duty is owed by counsel who have been granted a right of audience to appear in this Court. As part of their professional responsibility, therefore, solicitors and counsel must ensure that they do not appear in a matter in which they have an actual or potential conflict of interest or where, by reason of their relationship with their client, their professional independence can be called in question.
39.Significantly, that conflict of interest can arise where the personal or reputational interest of the legal practitioner is at stake in the proceedings. In that respect, in Mitchell v Burell [2008] NSWSC 772, Brereton J stated that:
20. … [The] 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.
DISCUSSION
One of the difficulties with the present application is that the final hearing in the proceedings is part-heard, the evidence of the parties has concluded, and when regard is had to the orders made at the conclusion of the first tranche of the trial on 20 September 2024, there is limited scope for further evidence to be adduced before closing submissions are made. Particularly, both parties’ evidence about this topic has been given; the wife’s as deposed at paragraph 149 of her trial affidavit and the husband’s as given orally when cross examined during the trial by the wife’s counsel.
Whilst it would have been helpful for the transcript of the husband’s evidence on this topic to have been before the Court, neither of the parties took issue with my recollection and summary of the evidence given by the husband during the trial about these matters as summarised at [38] herein.
As raised with counsel for the wife during submissions made in the course of the present application, the wife is bound by the manner in which her case was prosecuted during the trial (Metwally v University of Wollongong (1985) 60 ALR 68).
Importantly in this regard, where the wife’s counsel did not traverse this issue when cross examining the husband in any more detail than that earlier identified, the Court is left with the evidence of the husband summarised at [38] herein, as against the wife’s mere assertions and apprehensions as to the possible fee arrangement between the husband and his solicitor, Ms JJ.
In particular, there was no cross examination of the husband of matters that may well have been significant to any findings that the Court might (if necessary) make about the wife’s apprehension of the fee arrangement between the husband and his solicitors. Matters which foreseeably may have impacted any such findings and consequentially the Court’s attitude to the present application, include but are not limited to the details of the work being undertaken by the business for Ms JJ, the likely duration of such works, any breakdown of the verbal quote given by the husband, when it was likely that the works would be completed and thereafter the timing of when an invoice would likely be rendered.
More importantly perhaps, it is necessary to point out that the wife’s apprehensions about a fee arrangement between the husband and Ms JJ, was not one that disappeared at the point in time that Ms JJ ceased acting for the husband before the commencement of the trial. Rather, the centrality of the issue from the wife’s perspective, particularly if proven on the balance of probabilities, was relevant from the wife’s perspective to the considerations imposed on the Court when determining the parties’ competing applications for adjustment of property pursuant to s 79 of the Family Law Act 1975 (Cth). Conceivably, the relevant considerations to which these matters might have gone include but are not limited to the composition and value of the property available for division between the parties and specifically the value of the roofing business and the potential for taxation liabilities, together with the husband’s income and earning capacity. Additionally, the issue was one which may well have had an ancillary impact of the assessment of credit for each of the parties.
The Court is not to know what instructions were given by the wife in relation to these matters, the advice given and the forensic decisions made by her legal representatives as to the manner in which the trial was prosecuted on her behalf. All that is known is that the issue was not agitated beyond those matters already surmised at [38] herein.
Whilst it may have been ill-considered by the husband and/or Ms JJ for her to resume acting for the husband against the backdrop of that which had led to Ms JJ ceasing to act (which as discussed at [51] below put her in a position of conflict), it is hardly surprising that Ms JJ resumed acting in the proceedings in light of the manner in which the issue was traversed during the trial and the evidence given by the husband which removed the possibility of Ms JJ being a witness in the proceedings; particularly as Ms JJ had represented the husband throughout the proceedings, other than the period between 3 September 2024 and 23 September 2024.
Equally, it may also have been ill-considered by Ms JJ to have engaged the husband’s business to undertake works on her property at a time when she was representing the husband in matrimonial proceedings; after all, this very arrangement and the conflict that arose in the possibility that she may have been required to give evidence in the proceedings is what led to Ms JJ ceasing to act in early September 2024.
However again, in light of the unchallenged evidence of the husband about these arrangements, it appears at this stage, without expressing any concluded view on the topic that there is no evidence to suggest that the husband and Ms JJ and/or AFL Withnalls Lawyers have a “contra” arrangement with respect to the husband’s legal fees. Rather it appears more likely that Ms JJ was no different to any other client of the husband’s roofing business, in so far as Ms JJ engaged the business to carry out Trade works, a verbal quote was given and at the completion of the works (whenever that might be), an invoice will be rendered for Ms JJ’s payment. If that be the case, I do not consider that these matters cause any conflict or potential conflict in Ms JJ and/or AFL Withnalls Lawyers continuing to represent the husband, and particularly not so at this late juncture in the proceedings.
In light of the matters discussed throughout these reasons, I consider that there is insufficient basis to deny the husband the legal representation of his choice such that the Court exercise discretion to restrain Ms JJ and/or AFL Withnalls Lawyers from representing the husband in these proceedings.
In particular, and for all of the reasons that I have enunciated, I do not consider that a fair minded, reasonably informed member of the public “might conclude” that the integrity of the judicial process has been or will be impacted by Ms JJ and/or AFL Withnalls Lawyers’ continued representation of the husband.
For all of these reasons, the application shall be dismissed.
I certify that the preceding fifty-five (55) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Kari. Associate:
Dated: 14 November 2024
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