Danilov & Wynn

Case [2022] FedCFamC1F 1085

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

(DIVISION 1)

Danilov & Wynn [2022] FedCFamC1F 1085

File number(s): BRC 15350 of 2019
Judgment of: HOWARD J
Date of judgment: 15 June 2022
Catchwords:

FAMLY LAW – PRACTICE AND PROCEDURE – Where the husband made an application for the mother’s solicitor to be restrained from acting – Where a substantially similar application had already been determined by another judge of this Court – Common law estoppel – Where the jurisdiction to restrain a lawyer from acting is to be exercised with caution – Where the husband failed to provide sufficient evidence to support his application – Where the application is dismissed.

FAMLY LAW – PRACTICE AND PROCEDURE – Where the husband made an application for the joinder of additional parties, including the family company and its liquidators – Where the husband seeks an order that the appointment of the liquidators be declared invalid and an injunction issue restraining further dealings with the company – Where the appointment of the liquidators was ordered by the Queensland Supreme Court – Where the husband did not appeal this order – Where the circumstances did no justify setting aside the orders of another court – Where the application is dismissed.

FAMLY LAW – COSTS – Where the husband was wholly unsuccessful – Where the Court notes that impecuniosity is not a bar to a costs order – Where the husband has failed to comply with a costs order made previously by a judge of this Court – Where the husband is ordered to pay the costs of the respondents and the proposed parties in accordance with the scale.  
Legislation:

Corporations Act 2001 (Cth) ss 198G, 474

Evidence Act 1995 (Cth) s 140

Family Law Act 1975 (Cth) ss 79, 117, 121

Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) rr 3.01, 3.02, 5.08
Cases cited:

B Pty Ltd v K (2008) FLC 93-380

Clayton v Bant (2020) 272 CLR 1

Fox v Percy (2003) 214 CLR 118

Grieves & Tully [2011] FamCA 617

Kallinicos v Hunt (2005) 64 NSWLR 561

Magro v Magro (1989) 93 FLR 365

Northern Territory v Sangare (2019) 265 CLR 164

Sanchez & Lee (2013) 49 Fam LR 567

Tomlinson v Ramsey Food Processing (2015) 256 CLR 507

Wayne & Dillon (2008) 40 Fam LR 543

Whisprun Pty Ltd v Dixon (2003) 200 ALR 447

Division: Division 1 First Instance
Number of paragraphs: 96
Date of hearing: 15 June 2022
Place: Brisbane
Solicitor for the Applicant: Mr Nowers
The Respondents: Litigants in Person
Independent Children’s Lawyer: No appearance

ORDERS

BRC 15350 of 2019

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN:

MS DANILOV

Applicant
AND:

MR WYNN

First Respondent

MS F

Second Respondent

INDEPENDENT CHILDREN'S LAWYER

order made by:

HOWARD J

DATE OF ORDER:

15 JUNE 2022

THE COURT ORDERS:

1.That the first respondent husband’s Application in a Proceeding filed 21 September 2021 (and amended 15 February 2022) be dismissed.

2.That the first respondent husband’s Application…

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Danilov & Wynn [2022] FedCFamC1F 1085
Case
[2022] FedCFamC1F 1085
Decision Date

CaseChat Overview and Summary

The case involves parties seeking a restraining order against a solicitor, Mr. Nowers, who has been acting for the mother, with the father arguing that Mr. Nowers' continued representation poses a conflict of interest due to prior representation of the father. The court must determine whether Mr. Nowers should be restrained from acting for the mother based on the principles of estoppel, breach of confidence, and inherent jurisdiction. The key legal issues include whether the previous court's decision precludes the father from asserting certain claims, whether Mr. Nowers' actions constitute a breach of confidence or fiduciary duty, and if the court has the inherent jurisdiction to restrain Mr. Nowers from acting.

The court examined the principles of estoppel, specifically cause of action estoppel and Anshun estoppel, and concluded that the father's claims were previously determined, thus barring him from reasserting them. The principles outlined in previous cases were applied, emphasizing the importance of confidentiality and the integrity of the judicial process. The court noted the importance of balancing the public interest in a litigant's choice of lawyer against the need to protect confidential information. The court also highlighted the exceptional nature of the inherent jurisdiction to restrain a solicitor, which should only be exercised with caution.

The court ultimately found that the father's claim lacked arguable standing and that the proper course of action would have been to challenge the liquidation order in the Supreme Court of Queensland. The court denied the restraining order, noting that the father's failure to act promptly in seeking relief from the Supreme Court was a significant factor in its decision. The decision underscores the importance of adhering to procedural requirements and the limitations on the court's jurisdiction to intervene in matters already decided by another court.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

Those paragraphs of the decision in Tomlinson set out very clearly what each form of estoppel means. It is important, I think, to look at the first example; the cause of action estoppel. Estoppel in that form, as stated by the High Court in paragraph 22:“22.…operates to preclude assertion in a subsequent proceeding of a claim to a right or obligation which was asserted in the proceeding and which was determined by the judgment.” So any matters, it seems to me, relating to the fact that Mr Nowers may have represented Mr B in relation to 1 D Pty Ltd or other matters that he might have represented Mr B in relation to – they have all been looked at. These issues have been looked at by Baumann J and estoppel does arise. The other decision upon which I rely is the decision of Clayton v Bant (2020) 272 CLR 1, and in particular there is a helpful explanation of this area of the law by Edelman J in relation to the “Anshun estoppel”. That is the third form that I referred to from Tomlinson. His Honour said at [70]:“70.…A party will be precluded from relying upon a cause of action or an issue if it was so relevant to the subject matter of the first action that it would have been unreasonable not to rely on it.” That is the situation here in relation to any aspect of the matter relating to Mr Nowers acting for Mr B in relation to 1 D Street and Mr Nowers acting for Mr B in relation to any other dealings. All of those issues and matters were before the previous judge and have been determined and an estoppel does arise. As I have made it clear, there is only certain material that is included in the father’s Outline of Case that I have permitted him to rely upon. It is the main affidavit of his filed 6 May 2022 and the other documents to which I have referred. In relation to the wife’s or the mother’s response thereto, there is a Response to the Application in a Proceeding and there is an affidavit, both of which were filed on about 20 May 2022. In the decision of Baumann J, his Honour set out the principles to be relied upon in deciding whether or not this Court should exercise its discretion and issue an order restraining Mr Nowers from continuing to act for the mother. I note in particular in paragraph 5 of the reasons of Baumann J. His Honour conveniently set out the relevant principles and made references to many of the applicable cases. I think it is helpful to actually include those paragraphs here in this judgment. They read as follows:-In Antony & Joyce [2020] FamCA 150, I set out the following principles:“4. In Osferatu (supra) at [20], the Full Court said:“There are three established categories on the basis of which solicitors may be restrained from acting against their client or former client. They are: breach of confidence, breach of fiduciary duty and the inherent jurisdiction of a court over its officers and to control its process. Each category has its own principles which guide its operation. The third category may be involved in conjunction with either of the first two so there is clearly an overlap; nonetheless, the basis for the exercise of the jurisdiction in each is different (Kallinicos v Hunt (2005) 64 NSWLR 561).”5.In Kallinicos v Hunt (supra) Brereton J summarised the relevant principles at [76]:“…However, 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...The test to be applied in this inherent jurisdiction is whether a fairminded, 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.The jurisdiction is to be regarded as exceptional and is to be exercised with caution.Due weight should be given to the public interest in a litigant not being deprived of the lawyer of his or her choice without due cause.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.”…6. …7. …8.I accept that the authorities adopted and summarised in McMillan & McMillan (2000) FLC 93-048 require the husband in this case to:“…give evidence that he has provided confidential information to the solicitor… The client does not have to divulge the content of that information.” At [87].9.When considering how appropriate weight must be given “to the public interest in a litigant not being deprived of the lawyer of his or her choice without due cause (see Billington & Billington (No. 2) [2008] FamCA 409, this must be balanced against the competing interests of the client which were described by Lord Millett in Prince Jefri Bolkiah v KPMG (a firm) [1999] 2 AC 222 at [236] as follows:“It is of overriding importance for the proper administration of justice that a client should be able to have complete confidence that what he tells his lawyer will remain secret. This is a matter of perception as well as substance. It is of the highest importance to the administration of justice that a solicitor or other person in possession of confidential and privileged information should not act in any way that might appear to put that information at risk of coming into the hands of someone with an adverse interest.”10.When considering Lord Millett’s judgment, Goldberg J in PhotoCure ASA v Queen’s University at Kingston [2002] FCA 905 at [50] – [51] said inter alia:“50. It is apparent from Lord Millett’s judgment that there are three stages which need to be considered:•whether the firm is in possession of information which is confidential to the former client;•whether that information is, or may be, relevant to a matter in which the firm is proposing to act for another party with an interest adverse to the former client;•whether there is any risk that the information will come into the possession of those persons in the firm working for the other party.51.The burden of establishing the first two propositions is upon the former client but the burden of establishing the third proposition moves to the firm proposing to act once the first two propositions are satisfied.”11. Again at [35] in Osferatu (supra) the Court said:“A balancing of the nature of the information against a consideration of the person to whom the information was given, when the information was given, the relevance of that information to the current proceedings, the risk of disclosure and any proposed protective measures is required before any determination can be made as to whether any relief is required and, if so, what is the appropriate relief.””

Ratio Decidendi

Legal Principle Established

Clause 5-15 from schedule 2 of the Corporations Act:Meaning of external administration of a company.A company is taken to be under external administration if:(a) the company is under administration; or(b) a deed of company arrangement has been entered into in relation to the company; or(ba) the company is under restructuring; or(bb) a restructuring plan has been made in relation to the company; or(c) a liquidator has been appointed in relation to the company; or(d) a provisional liquidator has been appointed in relation to the company.Note: A company is not under external administration for the purposes of this Schedule merely because a receiver, receiver and manager, or other controller has been appointed in relation to property of the company. That is the clause that makes it clear that external administration includes, for instance, when a liquidator has been appointed in relation to the company. The point being made by Mr J, Mr K and Mr Nowers is that the husband, as I have said earlier, does not have the standing, at this stage, to bring any claim on behalf of 1D Pty Ltd. That company is in liquidation; liquidators have been appointed by the Supreme Court of Queensland. I also note that given that 1D Pty Ltd is in liquidation, that company which is referred to as having acted as trustee for the 1D Trust, by going into liquidation, that company was disqualified from holding office as a trustee. Mr J drew this to the Court’s attention in his submission by reference to an affidavit of Mr O which the Court granted leave to Mr J to rely upon and, in particular, page 29 of 35, rule 15 related to the resignation and appointment of trustees. The husband says he could amend his statement of claim or his proposed statement of claim but this version is less than one month old and the trial begins in about six to eight weeks’ time. Seeking to join a party to litigation is a serious step. It can involve a significant financial cost on the proposed parties if orders are granted allowing the joinder. The claim, as framed in the proposed statement of claim is not a claim which is open to this applicant, Mr Wynn, to bring. He does not have necessary standing to do it. Mr Wynn says, look, if they can be joined, he would then seek orders setting aside the liquidation. I have significant issue with taking that approach. Firstly, as I have said, there is no arguable claim that he – Mr Wynn – can pursue having regard to his proposed statement of claim. Secondly, the order placing the company into liquidation was made almost three years ago by the Supreme Court. It may well be the case that this Court, being a superior court, has the power under the Corporations Act to make all sorts of orders provided, of course, it can be said that there is a sufficient nexus to the parties to the marriage. But just because this Court may have the power to do something, it does not mean that it is appropriate to do it. It seems to me the better approach for the husband would have been to apply promptly to the Supreme Court of Queensland after mid-2019 to set aside the appointment of the liquidators, but he did not do that.