Chontoglou & Chontoglou (No 3)
[2024] FedCFamC1F 822
•27 November 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Chontoglou & Chontoglou (No 3) [2024] FedCFamC1F 822
File number(s): DNC 98 of 2023 Judgment of: BEHRENS J Date of judgment: 27 November 2024 Catchwords: FAMILY LAW – INTERIM HEARING – FINANCIAL PROCEEDINGS – where financial proceedings are part-heard – where Application in a Proceeding seeking orders against two third parties heard by judge other than the trial judge – where balance of Application was withdrawn – where remaining order sought was for respondent’s former lawyers to repay funds to litigation funder – where caveat had been lodged by litigation funder over property sought to be retained by the applicant – where characterisation of the order sought was not revealed until submissions commenced – where order was sought as a personal costs order against legal practitioners – where leave was given for an oral application for summary dismissal – where applicant’s case has no reasonable prospects of success – where application for personal costs order is summarily dismissed – where directions are made in relation to applications for costs Legislation: Family Law Act 1975 (Cth) div 1A, ss 90AF(2), 102QAB, 106B, 114, 117
Federal Circuit and Family Court of Australia (Family Law) Rules2021 (Cth) rr 10.09(d), 12.15, 12.16, 12.28
Division: Division 1 First Instance Number of paragraphs: 20 Date of last submission/s: 27 November 2024 Date of hearing: 27 November 2024 Place: Sydney Counsel for the Applicant: Ms Farmer Solicitor for the Applicant: AFL Withnalls Lawyers Solicitor for the First Respondent: Litigant In Person Counsel for the Second Respondent: Mr Pintos-Lopez Solicitor for the Second Respondent: Lander & Rogers Counsel for the Third Respondent: Ms Murphy Solicitor for the Third Respondent: Final Law Pty Ltd ORDERS
DNC98 of 2023 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MR CHONTOGLOU
Applicant
AND: MS CHONTOGLOU
First Respondent
KK PTY LTD
Second Respondent
LL LAWYERS
Third Respondent
ORDER MADE BY:
BEHRENS J
DATE OF ORDER:
27 NOVEMBER 2024
THE COURT ORDERS THAT:
1.The Respondent’s oral application for an adjournment is dismissed.
2.The Application in a Proceeding filed 24 October 2024 so far as it seeks Order 2 is summarily dismissed.
3.Otherwise, the Application in a Proceeding and the Reply filed 13 November 2024 are withdrawn and dismissed.
4.By close of registry filing on Friday 29 November 2024, the Respondent Wife, Second Respondent and Third Respondent will each file and serve a schedule of costs as well as any affidavit attaching any correspondence or other document which they seek be in evidence in relation to their applications for costs.
5.By close of business on Friday 6 December 2024, the Applicant Husband, Respondent Wife, Second Respondent and Third Respondent will file and serve brief written submissions in relation to costs.
6.The costs applications of the Respondent Wife, Second Respondent and Third Respondent will be determined in Chambers on the basis of the written submissions provided for in accordance with Order 5 unless, by close of business on 9 December 2024, the Court is notified via email to …@... and copied to all parties that any of the parties seeks to be heard further in relation to the costs applications, in which case the matter will be listed for that purpose.
7.Pursuant to Rule 12.28 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth), I certify that it was reasonable to engage counsel to appear today.
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
BEHRENS J
These reasons deal with the remaining aspect of an Application in a Proceeding filed 21 October 2024 (“the Application”) and a Reply to Response for Final Orders filed 13 November 2024 (“the Reply”). The substantive proceedings are financial proceedings. They are part-heard before Kari J, and the trial is due to resume on 4 December 2024. The Application was referred to me in circumstances where a decision had been made that it was not appropriate for the trial judge to deal with it.
The applicant is the applicant husband in the substantive financial proceedings. The second respondent is a litigation funder which has entered into an agreement with the respondent wife in relation to funding for her legal costs of the substantive proceedings. The third respondent is the firm of lawyers who were on the record for the respondent wife in the substantive proceedings until the filing of a Notice of Ceasing to Act the day before the hearing of the Application. The second and third respondents had been joined to the proceedings only for the purposes of the Application and Reply; they are not parties to the substantive proceedings.
The main contexts for the Application and Reply are that:
(1)Pursuant to her agreement with the second respondent, the respondent wife has drawn down funds for her legal fees from the second respondent and paid them to the third respondent; and
(2)Pursuant to their agreement with the respondent wife, the second respondent has lodged a caveat over a property which is jointly owned by the respondent wife and her mother; and
(3)The applicant seeks to retain the respondent wife’s interest in the property over which the caveat is lodged, as well as all other Australian property of the parties, in circumstances where his evidence is that the respondent wife unilaterally removed significant funds from Australia to Country B.
These reasons deal with the Application so far as it concerns Order 2. This was the only order sought at the hearing, with the balance of the Application and Reply being withdrawn and dismissed. The only Order sought was:
2. That [LL Lawyers] forthwith repay to [KK Pty Ltd] all funds paid to [LL Lawyers] for any Tax Invoices for professional fees or disbursements claimed or presented by [LL Lawyers] to the Respondent Wife and paid to [LL Lawyers] from the Line of Credit with respect to Federal Circuit and Family Court of Australia proceeding DNC98/2023.
The Application, Reply and the Case Outline filed on behalf of the applicant the evening before the hearing were all silent as to the powers that were relied on to make this order and the other orders sought. The Court and the second and third respondents speculated that the applicant may seek to rely on s 106B and/or ss 114 and 90AF(2) of the Family Law Act 1975 (Cth) (“the Act”). The Case Outlines filed on behalf of the second and third respondents addressed matters of relevance to those sections.
Upon the commencement of submissions in support of the application for Order 2, counsel for the applicant indicated that the only power relied upon as the basis for the making of Order 2 was the Court’s power to make a personal costs order against a party’s legal representatives. This is a power which derives from s 117 of the Act. No reference at all was made to that source of power in the Case Outline. Counsel for the third respondent (against whom the order was sought) confirmed that the third respondent was taken completely by surprise. In those circumstances, and given the general requirement of procedural fairness, as well as the specific obligation in r 12.16(1) of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) (“the Rules”), the Application could not be heard substantively today.
Counsel for the third respondent sought leave to make an oral application for the summary dismissal of the remnant Application and Reply. Such leave was not opposed and was granted. That oral application was made on the basis that there were no reasonable prospects of the applicant obtaining the order sought, as provided for in r 10.09(d) of the Rules.
The recent amendments to the Act created a new Division 1A which deals with summary decrees.
Section 102QAB provides, relevantly:
No reasonable prospect of successfully prosecuting proceedings
(2) The court may make a decree for one party (the first party) against another in relation to the whole or any part of a proceedings if:
(a)the first party is defending the proceedings or that part of the proceedings; and
(b) the court is satisfied that the other party has no reasonable prospect of successfully prosecuting the proceedings or that part of the proceedings.
When there is no reasonable prospect of success
(3) For the purposes of this section, a defence or proceedings or part of proceedings need not be:
(a) hopeless; or
(b) bound to fail;
to have no reasonable prospect of success.
Proceedings that are frivolous, vexatious or an abuse of process
(4) The court may dismiss all or part of proceedings at any stage if it is satisfied that the proceedings or the part is frivolous, vexatious or an abuse of process.
An application for summary dismissal must be determined only based on the evidence in the applicant’s case, and on the assumption that a court will accept that evidence and make findings accordingly.
In evidence in support of the Application and Reply was the applicant’s affidavit filed 22 November 2024 with its annexures.
Counsel for the third respondent referred me to r 12.15 of the Rules which, with s 117 of the Act, gives the power to make a personal costs order and sets out the bases on which it may be exercised, and proceeded to observe that no particulars had been provided of the conduct which might be said to form the basis of an application for a personal costs order. Counsel surmised (and counsel for the applicant subsequently confirmed) that the basis relied upon was that the third respondent had caused costs to be incurred because of “improper or unreasonable conduct” (r 12.15(1)(c)).
Counsel for the third respondent also surmised that the applicant would rely on what was said to be evidence of non-disclosure by the wife (and what was said to be the third respondent’s responsibility in that regard) as well as the wife’s obtaining of funds from the second respondent litigation funder, secured against property in Australia, and directing those funds to the third respondent in circumstances where it was known to the wife and her lawyers that the applicant’s case was for 100 per cent of the property in Australia.
In relation to the former, it was submitted that the obligation of disclosure is an obligation of the wife, and not of her lawyers, and that evidence about a lack of disclosure cannot of itself support the Application. I accept that submission.
In relation to the latter, it was submitted that the third respondent is not a party to the litigation funding agreement between the wife and the second respondent, and that no criticism can be made of the third respondent, particularly in circumstances where there is no suggestion that there was any relevant restraint on the applicant.
It was therefore submitted that there is no evidence on which the Court could be satisfied that the third respondent’s conduct was improper or unreasonable. It was then further submitted that the third respondent’s conduct was simply the standard issuing of invoices for work on a matter of which they have carriage, and being paid for that work from funds drawn down by the wife and provided by the second respondent.
In response, counsel for the applicant sought to take me to documents which were not in evidence- including the joint balance sheet and costs notice in the substantive proceedings and to make submissions that those documents were defective. Those submissions did not assist me.
The only paragraphs of the applicant’s affidavit which have any potential relevance to an application for a personal costs order are paragraphs 19-26 and paragraphs 28-30, along with Annexure B. Those paragraphs contain evidence of deficiencies in disclosure by the wife in relation to the litigation funding issue and evidence as to LL Lawyers having been advanced funds by KK Pty Ltd both prior to relevant disclosure being provided and following an oral application that LL Lawyers be restrained from further advances from KK Pty Ltd. No such restraint was made. No submissions were made as to how this evidence would lead to a finding that LL Lawyers acted improperly or unreasonably, nor how it could justify the order sought.
I am satisfied that the Application so far as it seeks Order 2, characterised as a personal costs order against LL Lawyers, has no reasonable prospects of success. I summarily dismiss it pursuant to s 102QAB of the Act.
I have made separate procedural orders in relation to the Applications by each of the respondents for costs.
I certify that the preceding twenty (20) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Behrens. Associate:
Dated: 27 November 2024
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