DARROW & MALDEN

[2018] FamCA 1060

FAMILY COURT OF AUSTRALIA

DARROW & MALDEN [2018] FamCA 1060

FAMILY LAW – COSTS – JURISDICTION - Where the substantive proceedings were dismissed for want of jurisdiction - Where s117 of the Family Law Act1975 (Cth) does not apply as these are not ‘proceedings under the act’ – whether the Family Court of Australia has an implied power to order solicitors to pay costs – where the solicitors must have engaged in conduct that was more than ‘mere negligence’ and would amount to a ‘serious dereliction of duty’ – where the actions of the applicant and respondent’s solicitors were found to be inexcusable – Where the proceedings should never have been brought in the Family Court of Australia – Where previous orders are in place for the applicant to pay the costs of the second, third and fourth respondents on an indemnity basis and to indemnify the first respondent up until the date the issue of jurisdiction was raised – Orders made for the applicant’s solicitors to indemnify the applicant for any costs incurred in the proceedings – Orders made to restrain the first respondent’s solicitors in relation to any work for the proceedings.

Civil Procedure Act 2005 (NSW)
Family Law Act 1975 (Cth)

Darrow & Malden and Ors (2017) 57 Fam LR 142
Darrow & Malden and Ors (No. 2) [2017] FamCA 660
DJL & Central Authority (2000) 201 CLR 226
Jachimowicz & Jachimowicz (1986) 81 FLR 459

APPLICANT: Ms Darrow

FIRST RESPONDENT: Mr Malden

SECOND RESPONDENT: Australia and New Zealand Banking Group Limited

THIRD RESPONDENT: Mr Quaid and Mr Vincent

FOURTH RESPONDENT: B Pty Limited

FIFTH RESPONDENT: D Pty Ltd (ABN …) (Deregistered)

SIXTH RESPONDENT:	Ms Egan
FILE NUMBER:	NCC	1896	of		2015
DATE DELIVERED:	13 December 2018

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Rees J

HEARING DATE: 9 October 2018

REPRESENTATION

SOLICITOR FOR THE APPLICANT AND THE FIFTH AND SIXTH RESPONDENTS: Legal Minds

SOLICITOR FOR THE FIRST RESPONDENT: Watts McCray

SOLICITOR FOR THE SECOND RESPONDENT: Kemp Strang Lawyers

SOLICITOR FOR THE THIRD AND FOURTH RESPONDENTS: Wiggins Cheffings Lawyers (no appearance)

Orders

IT IS ORDERED

1. That Legal Minds indemnify the applicant in relation to any costs incurred in proceedings NCC1896 of 2015.

2. That Watts McCray be restrained from charging the first respondent in relation to any work done in proceedings NCC1896 of 2015 after 30 September 2016.

Note: The form of the order is subject to the entry of the order in the Court’s records.

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

Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: NCC 1896 of 2015

Ms Darrow

Applicant

And

Mr Malden

Respondent

REASONS FOR JUDGMENT

1. In Darrow & Malden & Ors (No. 2) [2017] Fam CA 660, I determined competing applications for indemnity costs arising out of proceedings filed and continued in this Court without jurisdiction. The facts are set out in that judgment delivered on 28 August 2017. In broad terms, the proceedings relate to an agreement which purported to be a Binding Financial Agreement (“BFA”), between a couple whose de facto relationship ended in 1993.

2. In the substantive proceedings, Legal Minds represented the applicant. Watts McCray represented the first respondent. Mr E was the solicitor advising the first respondent at the time of the execution of the BFA.

3. Having determined that the applicant pay the costs of the first respondent from a particular date and that the applicant pay the whole of the costs of the second, third and fourth respondents, I directed that the lawyers for the applicant and the first respondent file affidavits and written submissions directed to the issue of how those costs should be borne. That order was made pursuant to either or both s 99 of the Civil Procedure Act 2005 (NSW) (“Civil Procedure Act”) and the implied power of this Court.

4. When the matter came before the Court to consider that issue, Legal Minds was represented by solicitors instructed by Lawcover.

5. The matter was heard on 9 October 2018. The issues to be determined were, firstly, whether the applicant’s solicitors should indemnify her in relation to costs ordered to be paid by her and be restrained from charging her for work done, or pursuing the payment of charges for work done.  Secondly, whether the first respondent’s solicitors should be restrained from charging him for work done, or pursuing the payment of charges for work done.

6. In the course of discussions with Counsel, I raised the question whether the Family Court of Australia has an implied power to deal with the issue of costs in such circumstances or whether the power is derived solely from ss 98 and 99 of the Civil Procedure Act 2005 (NSW).

7. Counsel for Legal Minds and senior counsel for Mr E made written submissions. The first respondent adopted the submissions of senior counsel for Mr E.

8. The position of Legal Minds was that the power to order costs against a solicitor, or restrain a solicitor from charging costs, was found only in the Civil Procedure Act.

9. The first respondent and Mr E submitted that such an order could be made relying on the implied powers of the Family Court of Australia (“the Family Court”).

10. It is agreed that these proceedings were not proceedings under the Family Law Act 1975 (Cth) (“the Act”) and thus the provisions of s117, which apply to “proceedings under this Act” are not available.

11. In DJL & Central Authority (2000) 201 CLR 226, 25.

    The Family Court is thus not a common law court as were the three common law courts at Westminster. Accordingly, it is "unable to draw upon the well of undefined powers" which were available to those courts as part of their "inherent jurisdiction". The Family Court is a statutory court, being a federal court created by the Parliament within the meaning of s 71 of the Constitution. A court exercising jurisdiction or powers conferred by statute "has powers expressly or by implication conferred by the legislation which governs it" and "[t]his is a matter of statutory construction"; it also has "in addition such powers as are incidental and necessary to the exercise of the jurisdiction or the powers so conferred". It would be inaccurate to use the term "inherent jurisdiction" here and the term should be avoided as an identification of the incidental and necessary power of a statutory court.

    (footnotes omitted)

12. Thus the question to be determined is whether the Family Court has implied power to order costs against solicitors. 

13. This issue was considered by the Full Court of the Family Court of Australia (“the Full Court”) in re P’s Bill of Costs (1982) 45 ALR 513 where the Court held:

    Although the Family Court is a creature of statute it is a Court of Record and has inherent powers in appropriate circumstances. Those are powers which arise as a necessary adjunct to the existence of the court itself, and as such are necessary to control and regulate the proceedings before it to avoid injustice.

14. The Full Court there held that the power of the Court to regulate the costs charged by legal practitioners is of long standing and is a necessary part of the Court’s power to control its own procedures. 

15. In Jachimowicz & Jachimowicz (1986) 81 FLR 459, in circumstances where the legislation then current did not contain provisions for costs to be ordered against solicitors, the plurality of the Full Court held:

    On the question of the Court's power to order a solicitor to pay costs personally the Family Law Rules are silent. There is no provision similar to the English RSC O. 62 r. 8 which gives the Court power to make an order “directing the solicitor to repay to his client costs which the client has been ordered to pay to other parties in the proceedings”, or “directing the solicitors personally to indemnify such other parties against costs payable by them”. The Rule provides that such orders can be made “where in any proceedings costs are incurred improperly or without reasonable cause or are wasted by undue delay or by any other misconduct or default”.

    Even the terms of this Rule presuppose that an order is first made against a person other than the solicitor and the solicitor may be then ordered to repay or indemnify such person.

    Where the order is made directly and personally against the solicitor it seems that the power to make such an order arises from the inherent power of the Court; and the cases indicate that such orders are not made lightly.

    The leading case is Myers v. Elman (1939) 4 All E.R. 484. There, the solicitor for one of the parties had left the conduct of the case in the hands of his managing clerk who was not a solicitor. It was alleged that the solicitor had been guilty of unprofessional conduct in that:

    (a) he had filed a defence putting the plaintiff to the proof of her allegations, knowing that the defence was unlikely to succeed; and

    (b) had prepared affidavits of documents which no solicitor could help knowing were inadequate.

    It was held (Lord Russell of Killowen dissenting), that the affidavits of documents had been inadequate and that in the circumstances the solicitor was guilty of misconduct because, as a solicitor, and as an officer to the Court, he could not escape his responsibility to the Court for the proper discharge of his duties to the Court by delegating them to a managing clerk who was not personally amenable to the jurisdiction exercised by the Court over solicitors as its officers. Viscount Maugham at p. 489 cited with approval the principle laid down by Hatherley L.C. in Re Jones (1870) 6 Ch. App. 497 at p. 499 that it was “the duty of the Court to be equally anxious to see that solicitors not only perform the duty towards their own clients, but also towards all those against whom they are concerned”. In his judgment Viscount Maugham at one stage appears to suggest that the principle would apply in cases of mere negligence by a solicitor; but a close reading of his Lordship's judgment indicates otherwise. Certainly his Lordship said: “If, then, as I think, the authorities show that the jurisdiction may be exercised where the solicitor is merely negligent...”, but the sentence immediately preceding that in his Honour's judgment after referring to earlier cases, reads: ``These cases did not depend on disgraceful or dishonourable conduct by the solicitor, but depended on mere negligence of a serious character, the result of which was to occasion useless costs to the other parties”. Thus, although his Honour does use the term “merely negligent”, such term is governed in its context by the expression “of a serious character”. This is further emphasised by his Honour where, at p. 490, he says: “I entirely agree with the contention that the jurisdiction in question ought to be exercised only when there has been established a serious dereliction of duty as a solicitor, either by himself or by his clerks.” Viscount Maugham agreed with the trial Judge that the solicitor in the case had been guilty of “professional misconduct” (see p. 496), and we take that to be a term of greater severity than “mere negligence”.

    The judgment of the other members of the Court indicate that, to attract an order for costs under this inherent jurisdiction of the Court, a solicitor must exhibit a degree of blameworthiness beyond mere negligence. Lord Atkin was of the view that the finding that, “in resisting further discovery, the solicitor was obstructing the interests of justice, adding to the difficulties of the plaintiff and causing delay where a speedy judgment was of great importance”, was well warranted (p. 500). His conclusion was: “It is because the rule of conduct was in this case gravely broken that I think that the salutary decision of Singleton J. should be restored.”

    Lord Russell of Killowen dissented because he was of the view that the conduct complained of had not been proved. He had “an uneasy feeling that the Judge may, in arriving at his findings of fact, have unconsciously transferred to a solicitor and his clerk the prejudice which properly attached to the rogues for whom they were acting”. 

    Lord Wright at pp. 508-509 says:

    “The underlying principle is that the court has a right and a duty to supervise the conduct of its solicitors, and visit with penalties any conduct of a solicitor which is of such a nature as to tend to defeat justice in the very cause in which he is engaged professionally, as was said by Lord Abinger, C.B., in Stephens v. Hill (1842) 10 M. & W. 28. The matter complained of need not be criminal. It need not involve peculation or dishonesty. A mere mistake or error of judgment is not generally sufficient, but a gross neglect or inaccuracy in a matter which it is a solicitor's duty to ascertain with accuracy may suffice.”

    Lord Porter was of the view that the findings of the trial Judge were enough to fix the clerk and his employer solicitor with “professional misconduct” (p. 522). 

    In R & T Thew Ltd. v. Reeves (No. 2) (1982) 3 All E.R. 1086 the Court of Appeal consisting of Lord Denning M.R., Dunn and O'Connor L.JJ., following Myers v. Elman (supra), held that the jurisdiction of the Supreme Court over solicitors as officers of the Court is both punitive and compensatory, although, as Lord Denning points out the compensatory jurisdiction still retains “a disciplinary slant”. Discussing this jurisdiction, the learned Master of the Rolls said: “The cases show that it is not available in cases of mistake, error of judgment or mere negligence. It is only available where the conduct of the Solicitor is inexcusable and such as to merit reproof”. Lord Denning referred to the different terms used by the Law Lords in Myers v. Elman (supra) to describe the circumstances which would call for the exercise of the compensatory jurisdiction: “A serious dereliction of duty” (Viscount Maugham); “Gross negligence” (Lord Atkin); “Gross neglect or inaccuracy” (Lord Wright); ``Grossly negligent” (Lord Porter).

    In the case of R & T Thew Ltd. v. Reeves (No. 2) (supra) the Court of Appeal refused an application for costs to be paid by solicitors of one party because, although there was error on the part of the articled clerk of a solicitor's firm, it was, in Lord Denning's words, “at worst a mere slip”. In the words of O'Connor L.J., “now that I have seen the account given by the articled clerk of exactly what occurred I find it quite impossible to say that it discloses the kind of misconduct spoken of in speeches in Myers v. Elman which I have cited”. 

    In Mauroux v. Pereira (1972) 2 All E.R. 1085 at p. 1092 Megarry J. discussed the Court's power to order a solicitor personally to pay the costs of the proceedings. He said:

    “It is not entirely clear whether the jurisdiction should be regarded as punitive or as compensatory, or as some combination of the two: the speeches are not altogether consistent, and in any case something may depend on the point of view. A defendant who is ordered to pay a fine of £50 and a defendant who is ordered to pay £50 damages is, in a sense, equally punished by each order. The difference appears in the position of the person injured, in that damages go into his pocket and a fine into the public purse. The better view seems to be that the jurisdiction is compensatory, at least primarily. In Edwards v. Edwards [(1958) 2 All E.R. 179], Sachs J. discussed Myers v. Elman, and then said: “The jurisdiction is exercised not to punish the solicitor but to protect and compensate the opposite party.”

    However, even on the footing that the jurisdiction is compensatory, not all breaches of duty suffice to invoke it. As the Judge said, an error of judgment is not enough:

    “nor is even an error merely because it is of an order which constitutes or is equivalent to negligence. There must be something that amounts, in words of Lord Maugham, to `a serious dereliction of duty', something which justifies according to other speeches in that case, the use of the word gross. It is not, however, normally necessary to establish mala fides or other obliquity on the part of the solicitors, though it may be that if mala fides is established that might turn the scale in a particular case...”

    As counsel for the plaintiff pointed out, in Myers v. Elman Lord Wright said:  “A mere mistake or error of judgment is not generally sufficient, but gross neglect or inaccuracy in a matter which it is a solicitor's duty to ascertain with accuracy may suffice.”

    With perhaps an exception for exceptional cases, it is not enough merely to establish negligence.”

    In that case Megarry J. found that the conduct of a solicitor did not fall within the scope of the Rule nor that it came within the provisions of RSC O. 62 r. 8. 

    In Edwards v. Edwards (1958) 2 All E.R. at p. 179 the solicitor for one party was ordered to pay costs on the basis that his conduct in not making a proper appraisal of a situation which he ought to have made after discovery was “of the serious nature” to which the speeches in Myers v. Elman refer. Here, the conduct of the solicitors was held by Sachs J. “to be oppressive and therefore well within the test of Myers v. Elman”. However, Sachs J. in discussing the type of conduct complained of said (at p. 186):

    “It is, of course, axiomatic, but none the less something which in the present case should be mentioned, that the mere fact that the litigation fails is no reason for invoking the jurisdiction... nor is even an error merely because it is of an order which constitutes or is equivalent to negligence. There must be something that amounts, in the words of Lord Maugham (ibid. at p. 490) to `a serious dereliction of duty', something which justifies according to other speeches in that case, use of the word gross.”

    It would seem, therefore, that something more than “mere negligence” is required before the Court can exercise its inherent jurisdiction in ordering a solicitor to pay costs personally. While it is difficult to reconcile the various expressions used in the cases we have cited we consider they establish that a degree of blameworthiness in the solicitor must be shown including, but beyond, negligence simpliciter: conduct which attracts the censure of the Court in a serious way; or to return to the words of Viscount Maugham “a serious dereliction of duty”. 

16. It is accepted that the Family Court has implied power to determine whether a matter comes within its jurisdiction.

17. I accept the submission made on behalf of Mr E that, where lawyers initiated and continued proceedings in relation to which the Court had no jurisdiction, it is untenable to conclude that the Court is powerless to protect the litigants from the economic loss occasioned by the conduct of the lawyers in advising the litigants to initiate or defend that application. A similar submission was rejected by the Full Court of the Federal Court in Caboolture Park Shopping Centre Pty Ltd (in liq) v White Industries (QLD) Pty Ltd (1993) 45 FCR 224.

18. The Family Court of Australia has implied power, in appropriate circumstances, to order solicitors to pay costs or indemnify clients against orders for costs.

19. Does the conduct of the lawyers in these proceedings come within that category of conduct which attracts the censure of the Court in a serious way; or to return to the words of Viscount Maugham “a serious dereliction of duty”? 

LEGAL MINDS

1. I propose firstly to consider the written submissions dated 3 October 2018 made on behalf of Legal Minds.

2. I note that the submissions do not specifically address the test set out in Jachimowicz.

1. Legal Minds relied upon two affidavits of Mr K sworn 7 August 2017 and 12 October 2017 and two affidavits of the first respondent sworn 25 January 2017 and 13 February 2018.

2. Mr K’s affidavit sworn 7 August 2017 annexed relevant correspondence and, in particular, letters to Ms C, the solicitor who acted for the applicant in the preparation of the purported BFA. I was not directed to, and cannot find, any enquiry made by Legal Minds of Ms C about whether the applicant and the respondent “opted in”, any reference to the provisions whereby they might have done so or any reference to whether the applicant was given advice about “opting in” by Ms C.

3. Neither was there any correspondence between Legal Minds and Watts McCray asking whether Watts McCray asserted that any procedure for “opting in” had been undertaken.

4. On behalf of Legal Minds it was submitted that Mr K gave consideration to the issue of jurisdiction. That submission was expressed to be based on paragraphs 35 to 39 of Mr K’s affidavit sworn 12 October 2017.

5. Mr K deposed that he considered the recital which stated:

   The Agreement is a Financial Agreement under s90UD. It relates to all financial matters between the parties including claims for alteration of property interest spousal maintenance and declaration of rights. This Agreement shall operate in relation to all those matters in substitution for the rights of both parties under Part VIIIAB of the Family Law Act 1975.

   and formed the view that the recital fulfilled the requirement “of a demonstrated written choice” by the applicant to “opt in” to the de facto regime pursuant to the Act.

6. Mr K deposed:

   In the absence of any written advice other than recitals and statements contained in the BFA, I had sought instructions from the Applicant to confirm her intention and understanding of the purported BFA that she had entered into with the First Respondent. [The applicant] confirmed that at all times she was aware that the BFA was being made pursuant to the Family Law Act and not as a business agreement or an agreement under any other State legislation. However, [the applicant] was uncertain as to the specific advice, if any, provided to her by [Ms C] and could not recall if she had ever received any other written advice. Her firm recollection was that the advice she did receive if any, was rushed and comprised no more than a short conversation at the time of signing the purported BFA.

7. Whatever may be Mr K’s recollection of his discussions with the applicant at that time, in her trial affidavit she deposed, in relation to the “opting-in” issue that “I was never given any such verbal or written advice from my former solicitor Ms C, or any other lawyer.”

8. It is difficult to reconcile Mr K’s statement that he:

   ...formed the opinion that [the applicant] understood that it was arguable that the agreement she had entered into was made under the Family Law Act and that there was sufficient evidence by way of her actions and the reliance of both the Applicant and the First Respondent to satisfy the Court that the choice had been made by the parties to opt-in...

9. In any event, that position was abandoned in the hearing of the substantive application. The parties were asked to address three questions:

   Question 1

   Whether the requirements of sub-item 86A(5) of Part 2 of Schedule 1 of the Family Law Amendment (De facto Financial Matters & Other Measures) Act 2008 (Cth) are mandatory to give to effect a choice under item 86A(1) of Part 2 of Schedule 1 of the Family Law Amendment (De facto Financial Matters & Other Measures) Act 2008 (Cth)?

   Question 2

   Whether by the Agreement the parties made an effective choice, as contemplated by item 86A(2) of Part 2 of Schedule 1 of the Family Law Amendment (De facto Financial Matters & Other Measures) Act 2008 (Cth) for Parts VIIIAB and VIIIB and subsection 114(2A) of the Family Law Act 1975 (Cth) to apply to their de facto relationship?

   Question 3

   If no effective choice has been made by the parties to opt in to Parts VIIIAB and VIIIB and subsection 114(2A) of the Family Law Act 1975 (Cth) does the court have jurisdiction to determine the application for relief sought in the Amended Initiating Application filed 15 September 2015 and any Response thereto filed on behalf of the first respondent.

10. In written submissions, prepared by Legal Minds on behalf of the applicant,  they stated:

    Question 1:  Yes, the requirements are mandatory and must be strictly complied with;

    Question 2: No, there was no choice made by entering into the Agreement itself; and

    Question 3: No, by reason of item 86 of Part 2 of Schedule 1 of the Family Law Amendment (De Facto Financial Matters and Other Measures) Act 2008 (Cth) (the Amending Act), Parts VIIIAB and VIIIB and subsection 114(2A) of the Family Law Act 1975 (Cth) (FLA), cannot apply to the Agreement and accordingly there is no “matter” to attract the Court’s jurisdiction under ss 31 and 33 of the FLA.

11. Thus, whatever might have been the consideration of Mr K before the proceedings were instituted, by July 2017 when the substantive issue was heard, he had abandoned that position.

12. It is a matter notorious to practitioners of Family Law that the Family Court has jurisdiction in matters relating to de facto relationship only in relation to couples who separated after 1 March 2009.

13. That fact alone should have alerted the applicant’s solicitors to the potential difficulties she faced in asserting the validity of the purported BFA.

14. In the reasons for judgment delivered on 17 July 2017, I found, at paragraph 20 and following:

    At the time the applicant signed the Agreement, she was represented by a solicitor, [Ms C]. Both the applicant and [Ms C] signed a certificate which is annexed to the Agreement. In the certificate the applicant states that:

    A copy of the Agreement was given to me;

    Before signing the Agreement, I received independent legal advice from [Ms C] about the effect of the Agreement on my rights, and the advantages and disadvantages, at the time that the advice was provided, to me of making the Agreement.

    I have received a signed statement from [Ms C] stating that I have received independent legal advice about the effect of the Agreement on my rights, and the advantages and disadvantages, at the time that the advice was provided, to me of making the Agreement.

    I have received a copy of a signed (sic) by the legal practitioner for [the respondent] stating that before signing the Agreement he received independent legal advice about the effect of the Agreement on his rights, and the advantages and disadvantages, at the time that the advice was provided, to that party of making the Agreement.

    Also annexed to the Agreement, is a certificate in mirrored terms, signed by the respondent as to the advice he received from his solicitor.

    Also annexed to the Agreement are two Certificates, one signed by each solicitor, in identical terms, certifying that, before the Agreement was signed he or she gave advice as to “The effect of the Agreement on the rights of my client” and “The advantages and disadvantages, at the time the advice was provided, to the party making the Agreement.”

    There is no reference in the certificates of advice in relation to the “opting in” provisions. There is no reference in the body of the Agreement to the “opting in” provisions or to any decision by the parties or either of them to “opt in” to the provisions contained in the Family Law Act.

    …

    The respondent also swore an affidavit. He deposed, “[The applicant] and I each executed the Agreement.”

    The respondent deposed that they each attended to the implementation of the Agreement.

    The respondent does not depose to having received advice about the “opting in” provisions.

    The respondent did not submit that he had received any such advice.

15. It is not clear on what basis Mr K could have formed the view that he was satisfied that there was an arguable case that the parties had “opted in” to the regime provided in the Act.

16. As I stated in the reasons delivered on 17 July 2017:

    It follows from the clear language of item 86A, that for a former de facto couple to “opt in” to the provisions, the following steps must occur:

    ·They must make an informed choice to do so;

    ·The choice must be evidenced in writing signed by both parties;

    ·Before the document evidencing the choice is signed, each of the parties must be provided with independent legal advice by a legal practitioner about the advantages and disadvantages, at the time the advice was provided, to the party making the choice;

    ·Each of the legal representatives must provide a signed statement to the effect that the advice had been given.

17. The intention of the applicant, in commencing the substantive proceedings, was to set aside the purported BFA.

18. Failure to “opt-in” would be a clear basis to set the purported BFA aside.

19. Rather than commencing proceedings on that basis, Legal Minds, for the applicant, commenced proceedings based on the assertion that the BFA was valid but that the applicant was not properly advised by her solicitor at the time. The extent and terms of both the final application and the interim application by which the proceedings were commenced are fully set out in reasons for judgment delivered on 28 August 2017.

20. In commencing those proceedings, the applicant joined not only the first respondent but the additional five respondents.

21. The actions of Legal Minds were “inexcusable and such as to merit reproof” to use the words of Lord Denning, and come within the category described as “conduct which attracts the censure of the Court in a serious way; or to return to the words of Viscount Maugham ‘a serious dereliction of duty’”. 

22. Legal Minds should indemnify the applicant in relation to any and all of the costs of the proceedings.

WATTS MCCRAY

1. Watts McCray relied on written submissions dated 5 October 2017.

2. I was not made aware of any evidence that Watts McCray had given any consideration to the validity of the purported BFA until that issue was drawn to their attention by Legal Minds.

3. In the reasons for judgment delivered on 28 August 2017 I stated:

   The Response to the Initiating Application was filed on 20 August 2015. The first respondent in relation to each application sought that the application be dismissed and that the applicant pay his costs on an indemnity basis. The first respondent did not answer question 26a; “Did your de facto relationship break down on or after 1 March 2009 or if a resident in South Australia on or after 1 July 2010?”

   Had the solicitors for the first respondent turned their minds to question 26a, they, too, might have considered the fact that the Family Court only has jurisdiction in relation to de facto relationships that end after 1 March 2009.

   The first respondent did not answer question 21; “Have the parties entered into a financial agreement or Part VIIIAB Financial Agreement under the Family Law Act 1975 or under any relevant state of territory legislation.

4. I further stated:

   There is no evidence that, at any time, the solicitors for the first respondent turned their minds to whether the parties had “opted in” to the regime and consequently whether the parties could have effectively entered into a binding financial agreement.

   In oral submissions in relation to the costs applications, the solicitor for the first respondent submitted that there was no obligation on the first respondent to inform the Court if they came to the view that the Court had no jurisdiction. Their only obligation, it was submitted, was to put the applicant to proof.

   I reject that submission.

   Every officer of the Court, including solicitors, has an obligation to inform the Court of matters relating to jurisdiction and to ensure that the Court does not fall into error.

5. I consider that the conduct of Watts McCray in persisting with the respondent’s position that the purported BFA was valid after being alerted to the difficulties inherent in that position falls into the same category as the conduct of Legal Minds and I will restrain Watts McCray from charging any costs to the first respondent for work done after 30 September 2016.

I certify that the preceding forty-eight (48) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Rees delivered on 13 December 2018.

Associate:

Date:  13 December 2018