D. D. PTY LTD & TRITTON

[2011] FamCA 972

FAMILY COURT OF AUSTRALIA

D. D. PTY LTD & TRITTON [2011] FamCA 972

FAMILY LAW – JURISDICTION – application by the wife’s former solicitors seeking variation of previous costs order such that funds to be paid pursuant to those orders be redirected to them pursuant to a solicitor’s lien – consideration of whether the Court has jurisdiction to make such an order – where it was held that the Court had jurisdiction either under the section 4 definition of “proceedings” or through its inherent jurisdiction.

FAMILY LAW – COSTS – solicitor’s lien – where the wife argues that any equitable lien that might exist over the proceeds of the costs order has in effect been waived or overtaken by an agreement reached between the parties – where the parties agreed that the applicant would not commence further proceedings pending the outcome of the appeal – consideration of the meaning of the term “further proceedings” – where the Court held that these proceedings came within the interpretation of the agreement reached between the parties – where the Court held that any equitable lien which existed over the proceeds has been waived by the terms of the agreement – application dismissed.

FAMILY LAW – COSTS – oral application by the wife seeking costs against the applicant – whether the circumstances justify the making of a costs order – orders that the applicant pay the wife’s costs.

Family Law Act 1975 (Cth) s 117

Chester and Cassidy Gibson Howlin (1994) 18 Fam LR 463
Roam Australia Pty Ltd v Telstra Corporation trading as Telecom Australia and Ors [1997] FCA 980
Re P’s Bill of Costs (1982) FLC 91-255

APPLICANT: D. D. Pty Ltd

RESPONDENT: Ms Tritton

FILE NUMBER: ADF 1063 of 2001

DATE DELIVERED: 19 December 2011

PLACE DELIVERED: Adelaide

PLACE HEARD: Adelaide

JUDGMENT OF: Dawe J

HEARING DATE: 19 December 2011

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Haebich

SOLICITOR FOR THE APPLICANT: Sykes Bidstrup

COUNSEL FOR THE RESPONDENT: Mr Heinrich

SOLICITOR FOR THE RESPONDENT: C E Legal Pty Ltd

Orders

1. The Application in a Case filed on 5 December 2011 is dismissed.

2. The applicant solicitors forthwith advise the husband in writing with a copy to the wife’s solicitors that the Order of 8 September 2011 (requiring payment of TWO HUNDRED THOUSAND DOLLARS [$200,000.00] to the wife) has not been varied and therefore the monies are due forthwith.

3. The applicant is to pay the costs of the wife and if such costs cannot be agreed by 31 January 2012 the sum is to be determined by taxation of costs with such determination to be commenced by the wife no later than 29 February 2012.

IT IS NOTED that publication of this judgment under the pseudonym D.D. Firm & Tritton has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT ADELAIDE

FILE NUMBER: ADF 1063 of 2001

D. D. Pty Ltd

Applicant

And

Ms Tritton

Respondent

EX-TEMPORE REASONS FOR JUDGMENT

1. This matter comes on before me pursuant to an application filed by the former solicitors for the wife.  The former solicitors for the wife are D. D. Pty Ltd (who were the applicants in the application filed on 5 December 2011).  In that application the solicitors firm sought orders that the previous orders for costs be varied such that:

   (a)costs to be paid by the husband to the wife to be paid to the former solicitor for the wife, D. D. Pty Ltd, pursuant to a solicitor’s lien over the funds;  and

   (b)alternatively, that any costs to be paid by the husband pursuant to the costs order of this Court be paid into Court pending a determination of costs to be initiated by the wife.

2. The application also sought costs and “any such other order”. 

3. The application was listed urgently.  It came on before me on 9 December 2011 when the wife appeared in person.  The matter was adjourned to today’s date. 

4. On 5 December 2011 the applicant filed an affidavit of Mr D, annexing certain material and setting out the basis of the claim.  Subsequently, on 9 December 2011 I raised with counsel for the applicant the issues of jurisdiction and power in relation to what would otherwise be described as the completed proceedings between the husband and wife at first instance (the proceedings having been completed some time ago and now the subject of an appeal to the Full Court of the Family Court of Australia, which remains to be heard and determined) and the costs order that I had made on 8 September 2011 (which provided for the closure of the first instance proceedings to the extent that the husband was ordered to pay the wife the sum of $200,000 on account of her costs, such sum to be paid within three months).

5. There is nothing to indicate that the husband has paid or made arrangements to pay the costs order.  Indeed today I have received Exhibit 1 indicating that he was aware of these proceedings in this Court, had been served with a copy of the application and was aware of the hearing before me today. 

6. Exhibit 1 is an email to the applicant’s solicitor, Mr Haebich, from the husband indicating that he had been advised by his doctor to take a two week break on health grounds (the email does not say a break from what).  It says in the letter that he is not required to attend and is not going to attend today.  He says that he will:

   ...seek the protection of the Court from any action taken by you in the event that I am ordered to pay [Ms Tritton] the money.  Clearly, if they order me to pay you, I will have that protection from any action [Ms Tritton] may want to take against me.

7. The husband was clearly aware of these proceedings and has indicated in his email that he is not proposing to take any part in these proceedings. 

8. The matter came on before me today when the applicant was again represented by Mr Haebich.  The wife is represented by Mr Heinrich.  The Court has further now received an affidavit of the wife filed on 9 December 2011 and more significantly the affidavit of Mr D filed on 16 December 2011, to which is annexed a considerable amount of correspondence relevant to the application before me today.

9. This morning (because I raised the matter on a previous occasion) Mr Haebich has dealt with the issue of jurisdiction in helpful detail.  Mr Heinrich, appearing on behalf of the wife, does not oppose any finding that in the normal course of events the Court would acknowledge that a solicitor has the usual equitable lien over the proceeds of litigation in which the solicitor has been participating for the party.  Nor does Mr Heinrich oppose a finding that this Court has jurisdiction and power to deal with these sorts of applications. 

10. The submissions from Mr Haebich make it clear from the authorities that this Court can deal with this matter as an issue arising from, or in connection with, the proceedings before the Court.  In particular section 4, which sets out definitions, contains the definition of “proceedings” includes a proceeding which is incidental to, or in connection with, the main matrimonial causes before the Court. 

11. The authorities upon which Mr Haebich has relied include the authority of Chester and Cassidy Gibson Howlin (1994) 18 Fam LR 463 which sets out the implied jurisdiction of the Court to deal with these matters. I accept that there is also the support for that inherent power of the Court in the decision of Roam Australia Pty Ltd v TelstraCorporation Ltd trading as Telecom Australia and Ors [1997] FCA 980.

12. I will not recite all of the authorities to which Mr Haebich has referred the Court, but I am prepared to accept that the authority to which I referred in Re P’s Bill of Costs (1982) FLC 91-255 (decision of the Full Court of the Family Court) clearly indicated that it was not the jurisdiction of this Court to act as a Court to enforce recovery of debts due by a client to a solicitor.

13. I accept Mr Haebich’s submissions in which he points out that this is not simply a case of just seeking recovery of a debt and that therefore the Court has power, either pursuant to section 4 or the inherent powers of this Court, to consider the application before the Court.

14. It then is necessary to make a determination of whether (assuming the Court has the power and jurisdiction to make the orders sought) in these particular circumstances it is appropriate to make the orders sought.  The argument before the Court presented by Mr Heinrich, counsel for the wife, stresses the fact that any equitable lien which might exist over the proceeds of the costs order which I made in September this year has in effect been waived or overtaken by an agreement reached between the parties as set out in the correspondence. 

15. Counsel, Mr Haebich, for the applicant says that there is no method of implying that an equitable lien over the proceeds of the order of September 2011 has been waived because it is a matter that is not mentioned in the agreement and therefore cannot be implied.

16. It is therefore necessary to consider in detail the agreement that was reached between the parties as a result of what would appear to be negotiations concerning what were then Supreme Court proceedings being brought between the former solicitor and the wife, primarily dealing with the enforcement of a loan agreement and mortgage over a property which has since been the subject of sale.  For that purpose, I turn to the annexures to the affidavit of Mr D filed on 16 December 2011 and in particular annexures 11, 12 and 13. 

17. The relevant parts of that correspondence are the proposals about an agreement.  It commences in annexure 11, which is a letter from Sykes Bidstrup (the applicant’s lawyers) to the wife.  The proposal commences at the bottom of page 1:

    As a commercial resolution to the current state of proceedings, my client proposes the following:

    (1)of the funds held in the account, the following distribution is to be made:

    (a)      $140,000.00 to be released immediately to Ms Nelson QC;

    (b)      $30,000.00 to be released immediately to Mr Whittle; 

    (2)The remaining balance - including the $20,000.00 to be released under the varied undertaking - to be split equally between yourself and [D. D. Pty Ltd] (approximately 30,000.00 each); 

    (3)The above payments are part payments only, with any balance of each respective accounts to Nelson QC, Mr Whittle, and my client to be paid, where necessary after resolution of quantum through agreement or taxation; 

    (4)On payment of distributions above, my client will agree not to continue or commence any current or further proceedings (including but not limited to the current mortgage enforcement proceedings) until the resolution of the current Family Court appeal or 1 May 2011 (whichever is earlier); 

    (5)The above will require an undertaking from you to keep this firm informed as to the progress in the Family Court appeal and in particular the date of and content of final Orders made.

18. That is the relevant section of the letter, but I take into account the whole of the letter for this purpose. 

19. On 9 December 2010 the wife replied (annexure 12).  In that reply, which deals with the release of the funds from the sale of the real estate over which the mortgage was placed, she said:

    I have sought some advice regarding taxation of costs and I have considered the Family Law Act costs schedule. I expect that Miss Nelson’s fees and Mr Whittle’s fees will be reduced on taxation, so I cannot now agree their fees.

    However, I am prepared to release $180,000 to you now, and whatever [Mr D] chooses to pay to Miss Nelson and Mr Whittle is a matter for him.  I will need the remaining funds.

20. I interpose here to say that I interpret the reference there to be “the remaining funds” being the funds remaining from the $230,082.03, which were received and referred to in the letter of 26 November 2010.  I continue with Ms Tritton’s letter:

    The release of $180,000 is conditional upon your agreement not to continue or commence any current of further proceedings until the payment of the remainder of the judgment sum, as may be varied by the appeal.  I cannot have a cut-off date of 1/5/11 as the appeal may not be concluded by then. 

    I am prepared to give you the undertaking given in paragraph 5 of your letter.

    I agree that I will have to pay a further sum to you once the costs issue is settled either by taxation or by agreement.

21. Again, that is not the whole of the letter in annexure 12 but the relevant portions for the purpose of this specific judgment. 

22. In the reply of 17 December 2010 (annexure 13) the relevant portions from the solicitors for the applicant to the wife are in the second paragraph:

    I am instructed that my client will accept an immediate payment of $180,000, upon receipt of which neither current nor further proceedings will be continued or commenced until the payment of the remainder of the judgment sum in your Family Court matter.

23. It is accepted by both parties before me today that the sum of $180,000 has been paid.  Indeed that is referred to in the letter from the applicant’s solicitors to the wife, which is annexure 15.  There is no reference in any of the correspondence to the proceeds that might be received by the wife from any order in relation to costs. 

24. I accept the submissions made by Mr Heinrich that the reference in the agreement is quite wide and is not limited to the Supreme Court proceedings.  It specifically says that the applicant, upon receipt of the monies, will not continue or commence current nor further proceedings. 

25. On behalf of the applicant, Mr Haebich, suggests that these proceedings are not “further proceedings” because the Family Court proceedings had already been started.  However, the Family Court proceedings were proceedings between the husband and the wife.  These are further proceedings because it is a fresh application and the only application in this Court brought by the applicant solicitors against the wife. 

26. Therefore, I make a finding that the proceedings commenced by the solicitor by the Application in a Case filed on 5 December 2011 are such “further proceedings” and are further proceedings which would come within the interpretation of the agreement reached between the parties as set out in the correspondence to which I have referred.

27. I accept, therefore, that any equitable lien which existed over the proceeds of litigation (which would include the proceeds made pursuant to an order for costs of this Court) has been waived, put on hold or varied to the extent that these proceedings are inappropriate in this Court because the agreement has been reached between the parties that there would be no further proceedings to enforce any costs sought by the applicant against the wife until such time as the Family Court Full Court appeal had been dealt with (as is suggested in the correspondence) and that the applicant would not continue or commence any current or further proceedings until the payment of the remainder of the judgment sum, as varied by the appeal.  (This is referred to in the wife’s correspondence and the correspondence of the applicant, which specifically says “...until the payment of the remainder of the judgment sum in your Family Court matter.”).

28. The fact that there was no specific reference to any order for costs does not overcome the specific reference to “any other proceedings” nor does it specifically deal with any lien which might otherwise exist over the costs order.  But in the circumstances of this matter, it is not appropriate for the Court to make the orders which are sought by the applicant, which would on the face of it be in contradiction of the agreement which the parties reached in their correspondence. 

29. The Court did give consideration to making an alternative order in terms of subparagraph (b) of the application or in terms which might be a variation of those terms.  However, I again accept that this would further be a contradiction to the agreement which the parties reached and therefore do not consider it appropriate for the Court in these circumstances to make any order as sought by the applicant.

30. Reference was made about the wife not having taken any steps to bring about a taxation of the costs.  That was a side issue which is not one that needs to be significantly considered in determining whether the orders which were sought by the applicant should be made. 

31. It would seem sensible for the parties to enter into some serious negotiations to offset ongoing litigation about costs of the litigation.  This whole matter has been one which has caused more than a little concern about the amount of money that has been spent arguing about an amount of money that would not seem to justify the proceedings.  The proceedings in this Court to argue about the amount of costs which are the subject of this application would also be a matter which should require sensible negotiations rather than further costly litigation.

32. Section 117 has various criteria that have to be considered, but the primary issue in this matter is whether an order for costs can be made if the Court considers that is just and equitable in these circumstances. Many of the provisions of section 117 are inapplicable in this case. The concession is made that, subject to quantum issues, no submissions were put on the question of costs of this unsuccessful application.

33. I strongly again recommend an agreement be reached rather than the costs of the taxation of the costs.

I certify that the preceding thirty-three (33) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Dawe delivered on 19 December 2011.

Associate: 

Date:  21 December 2011