Devi and Devi and Anor

[2021] FCWA 6

JURISDICTION : FAMILY COURT OF WESTERN AUSTRALIA

ACT: FAMILY LAW ACT 1975

LOCATION: PERTH

CITATION: DEVI and DEVI & ANOR [2021] FCWA 6

CORAM: O'BRIEN J

HEARD: 11 JANUARY 2021

DELIVERED : Ex tempore

FILE NO/S: PTW 3664 of 2017

BETWEEN: MR DEVI

Applicant

AND

MRS DEVI

Respondent

AND

LAW FIRM A

Proposed Intervener

Catchwords:

PRACTICE & PROCEDURE - Where law firm previously instructed by one party is owed fees and seeks leave to intervene in the property proceedings - Nature and scope of proposed intervention - Where orders are sought requiring the firm's claimed fees to be paid to the firm from any monies otherwise ordered to be paid to the former client - Discussion of relevant principles - Application dismissed.

Legislation:

Family Law Act 1975 (Cth)
Guardianship and Administration Act 1990 (WA)
Legal Profession Act 2008 (WA)

Category: Reportable

Representation:

Counsel:

Applicant	:	Mr Kavanagh
Respondent	:	Self-Represented Litigant
Proposed Intervener	:	Mr A

Solicitors:

Applicant	:	Kavanagh Lawyers
Respondent	:	Self-Represented Litigant
Proposed Intervener	:	Law Firm A

Case(s) referred to in decision(s):

Ascot Investments Pty Ltd v Harper and Harper (1981) FLC 91-000

Barro and Barro (1983) FLC 91-300

Devi and Devi [2020] FCWA 24

WORDS IN SQUARE BRACKETS REPLACE WORDS USED IN THE ORIGINAL JUDGMENT – PARTIES’ NAMES AND IDENTIFYING DETAILS HAVE BEEN CHANGED

IT IS NOTED that publication of this judgment by this Court under the pseudonym Devi & Devi has been approved by the Family Court of Western Australia pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

1The parenting and financial proceedings between [Mr Devi] (“the husband”) and [Mrs Devi] (“the wife”) have been ongoing since they were commenced in 2017, and have encountered a variety of obstacles in their progression towards trial.

2The trial was listed to commence before me on 15 April 2020; on 19 February 2020 I vacated that listing for reasons given extemporaneously that day. I incorporate that judgment in these reasons.[1] In short, an application had been filed on behalf of the wife, with her knowledge but not on her instructions, by her then solicitors [Law Firm A] (“the law firm”), seeking the appointment of the Public Trustee as her Case Guardian in circumstances where the solicitor with the conduct of the matter harboured significant concerns as to her capacity to understand the proceedings and give adequate instructions for their conduct. As I noted at the time, that application was brought in the appropriate discharge of the solicitor’s duty to the client and to the court.

[1] Devi and Devi [2020] FCWA 24.

3Subsequently, the wife was assessed by a psychiatrist who confirmed that in his view she understands the nature and possible consequences of the proceedings, has a solid degree of rational as well as factual understanding of her case, and is capable of giving adequate instructions for the conduct of it. Following the publication of that report, proceedings earlier commenced by the husband in the State Administrative Tribunal seeking orders under the Guardianship and Administration Act 1990 (WA) for the appointment of a guardian and administrator for the wife were discontinued.

4The required degree of confidence between solicitor and client no longer exists between the wife and the law firm, whose instructions have been terminated. The wife is presently self-represented.

5The matter presently requiring determination is the application of the law firm seeking “leave to join the proceedings as a third party creditor” and a further order in the following terms:

“2)In the event the [wife] receives any distribution of funds on a final or interim basis in these proceedings, those funds be paid to [the law firm] in the first instance to satisfy the outstanding debt owed to [the law firm] in the amount of $67,598.74, plus interest at the Cash Rate Target specified by the Reserve Bank of Australia plus 2%”.

6The application is opposed by the wife. She was ordered to file and serve a response and affidavit to the application by the close of Registry on 6 January 2021; she endeavoured to file her response via the court portal but it was rejected as incomplete. Counsel appearing for the husband was able to provide both the court and counsel appearing for the law firm with copies of the wife’s response and her affidavit. The wife has confirmed at the hearing this afternoon that she opposes the application. It is unnecessary for present purposes to refer in any detail to the content of the affidavit filed by her. It is sufficient to observe that it recounts a litany of complaints about her involvement in the proceedings, the conduct of the proceedings, the manner in which matters were referred to the State Administrative Tribunal and other matters not relevant for present purposes.

7The last paragraph of the wife’s affidavit is expressed as being a “request for judge to order waivering of [Mr A]’s fee” and goes on to say that as a result of the matters set out in the affidavit the wife requests that the Court “see if necessary to waiver” the lawyer’s fees.

8For reasons which will become obvious that is not something that the Court can do today. It is sufficient to note that there is clearly an ongoing dispute as to the fees raised.

9Understandably, counsel for the husband did not seek to be heard in relation to the application presently requiring determination.

Legal principles

10In certain limited circumstances, persons who are not parties to the marriage (“third parties”) are entitled as of right to intervene in proceedings; a relevant example for present purposes is a third party entitled by virtue of s 79(10) of the Family Law Act 1975 (Cth) (“the Act”) to intervene, being either:

(a)a creditor of a party to the proceedings in circumstances where the creditor may not be able to recover his or her debt if the order applied for by a primary party is made;

(b)a person who is in a de facto relationship with a party to the subject marriage and who could apply or has an application pending for financial relief against that party;

(c)a party to a financial agreement; or

(d)any other person whose interests would be affected by the making of the order which is sought.

11It will be noted that there is a degree of specificity in s 79(10) as to events being triggered by a particular order.

12It is not suggested by the law firm that it is a party entitled to intervene as of right, as is evident from the application for leave. That approach acknowledges that while the firm asserts that it is a creditor, s 79(10)(a) refers only to the ability to recover the debt, not the ease with which it can be recovered, nor any other concept of convenience. Similarly, any concern held as to the intention of the debtor to honour his or her proper obligations does not trigger the subsection so as to allow intervention as of right.

13Section 92(1) of the Act provides that any person may apply for leave to intervene, and the court may make an order entitling them to do so. Section 92(2) provides that such an order may be made upon such conditions as the court considers appropriate, and s 92(3) provides that upon intervention, unless the court otherwise orders, the intervening person is deemed to be a party to the proceedings with all the rights, duties and liabilities of a party.

14The High Court has pointed out that s 92(3) must be read down to a certain extent, as it cannot impose or bestow upon a third-party all the rights, duties and liabilities of a party to the marriage – the most obvious example being an obligation to pay, or a right to receive, maintenance. Rather, the section removes a possible procedural obstacle such as to enable the court to make orders in favour of or against any intervener if that order is one that can properly be made as a matter of substantive law. The section, in that sense, confirms that any intervener has the same rights, duties and liabilities in the proceedings as a party to the proceedings, as distinguished from rights, duties and liabilities arising as a party to the marriage.[2]

[2] Ascot Investments Pty Ltd v Harper and Harper (1981) FLC 91-000, at 76,063.

15The granting or refusal of leave is self-evidently a matter for the exercise of discretion. The discretion is wide and is to be “exercised pragmatically in the circumstances of the individual case so as to give adequate protection to the third party consistently with the rights of the parties to the proceedings. It is a matter of identifying the interest of the third party in the particular case and making orders which do justice in those circumstances”.[3]

The evidence

[3] Barro and Barro (1983) FLC 91-300, at 78057.

16The firm relies on the affidavit of Mr A sworn 7 May 2020 in support of the application. Mr A is the sole director and secretary of the law firm. His evidence may be summarised as follows:

(a)the firm acted for the wife from early April 2017 until 5 May 2020 when it filed a Notice of Ceasing to Act;

(b)prior to filing that Notice, he wrote to the wife informing her of his intention to file the application and received no subsequent communication from her;

(c)the firm acted on a deferred fee basis for the wife, with its charges being calculated in accordance with signed costs agreements exhibited to the affidavit;

(d)the wife owes the firm $67,598.74 in fees, and the interest claimed in the application is at the rate agreed pursuant to the costs agreement;

(e)the firm does not have any security for its fees, although he expresses the intention to further consider whether to lodge caveats over properties owned by the parties in joint names in case they are sold by agreement or the wife does not receive an ultimate cash payment sufficient to meet those fees. It may be inferred that the firm asserts a caveatable interest over relevant property by virtue of the statement on the part of the wife in each of the exhibited costs agreements to the effect that she “charges [her] estate, title and interest in all [her] real property with payment of legal costs incurred pursuant to the terms of [the agreements]” and/or the expression in each of those agreements, albeit in slightly different terms, of her consent to the firm registering a caveat against her property as security for any unpaid fees;

(f)he expresses uncertainty as to when the proceedings might be finalised, whether the wife will pay her debt voluntarily upon receiving funds, and what her ultimate entitlements might be in any event; and

(g)he says if permitted to intervene he would “not intend that [the firm] would have an active role in the proceedings otherwise, although [it] may attend hearings to keep informed about the progress of the matter”.

17The last mentioned aspect of the evidence falls to be considered against the clear provisions of s 92(3) given that the firm does not seek any order pursuant to s 92(2) that the proposed leave to intervene be granted upon conditions. While the court clearly has the power to impose conditions on intervention, and I perceive no reason why such conditions could not in appropriate circumstances include excusing the intervener from taking steps otherwise required of a party to the proceedings, including attendance at hearings and full participation in trial, no conditions of any nature are sought.

18That in turn potentially raises the question of whether what might be termed an unconditional intervention would have the consequence that the law firm would necessarily be involved in any settlement negotiations as between the primary parties, and whether for example its consent might be contended to be required for any final orders to be made by consent. As will be seen, it is unnecessary to consider those questions further.

The submissions of the firm

19In addition to the matters raised in his evidence Mr A made submissions at the hearing before me today.

20He drew attention to what he would say are factual inaccuracies in the affidavit filed by the wife. He noted the wife’s evidence that there is a defamation judgment against her arising out of proceedings brought against her by her neighbours, Mr and Mrs [P]. While a figure is not, on my brief perusal at least, set out in the affidavit, he said from the bar table that his understanding was that the judgment debt in that regard was $60,000. Mrs Devi did not seek to make any comment in response to that.

21He submitted further that the wife has had the relevant invoices from the law firm for a long time. He was uncertain as to the specifics and expressed himself to be uncertain as to whether the wife would seek to take the required formal steps to challenge the accounts. He expressed some uncertainty as to the value of the properties that the wife seeks to retain pursuant to what her otherwise non-specific orders proposed in relation to the property proceedings. He suggested further that a matter that could influence the exercise of discretion was the proposition that there might in fact be some benefit to the wife and convenience for her, particularly as the primary caregiver for the child, of having any dispute in relation to the security of the liability or otherwise dealt with in this court rather than placing the firm in the position of having to pursue her elsewhere.

22While I understand the basis of that submission the fact remains that the wife opposes the application. It is not for me to second guess what she regards as being more convenient or appropriate.

The submissions of the wife

23The wife declined the opportunity to make any submissions in response, simply confirming her opposition to the application and relying on her affidavit.

Discussion and Conclusion

24I consider it appropriate to preface the observations I am about to make, and the conclusions which I draw, with a more general observation.

25The firm accepts instructions to act on a deferred fee basis. While no doubt that is a commercially considered decision, involving consideration of the cash flow and credit control detriments balanced against the benefits of attracting work which might not flow to firms unwilling to make such arrangements, it is nevertheless reflective of a willingness to meet professional obligations and assist parties who cannot afford immediately to pay for legal services.

26Similarly, I am aware that the firm undertakes significant work under grants of legal aid, including appointments as Independent Children’s Lawyers, work under the Commonwealth Family Violence and Cross-Examination of Parties Scheme, and pro bono work.

27All of that is to the credit of the firm. All law firms who undertake work of that nature make a valuable contribution to the administration of justice, and to the efforts of this court to manage its workload in a timely fashion.

28I make those observations as I would not want the observations and conclusions which follow to be misconstrued in any way as critical of the firm or of the bringing of the application.

29There are however, in my view, both practical and conceptual difficulties associated with the application.

30First, the orders sought whereby any payment ordered to be made to the wife whether on a final or interim basis would be paid to the firm in the first instance to satisfy the debt for outstanding legal fees, plus interest, seek to afford a priority to that liability over any others, and for that matter over the entitlements of the parties.

31Second, the proposed orders presuppose that the full amount claimed by the law firm is a debt payable by the wife, without apparent consideration for her rights to seek a costs assessment under the Family Law Rules, or pursuant to the Legal Profession Act 2008 (WA). Both forms of assessment are contemplated by the costs agreements in evidence.

32The matters just identified, in my view, mean that the second of the orders sought by the firm whereby in effect the court would order that its fees be paid in priority from any funds flowing to the wife pursuant to an interim or final order as between the parties, simply cannot be made.

33Further, s 298 of the Legal Profession Act provides that if an application for costs assessment under that Act is made, the law practice must not commence any proceedings to recover the legal costs until the assessment has been completed.

34Similarly, s 289(1) of the Legal Profession Act provides that a law practice must not commence legal proceedings to recover legal costs from a person until at least 30 days after the practice has rendered a bill in accordance with s 290 and s 291. Section 290 sets out the formal requirements for execution and transmission of a bill, and s 291 sets out the requirements for the bill to include or be accompanied by a written statement notifying the client as to her rights.

35The application filed by the firm on 7 May 2020 is in my view properly construed as commencement of legal proceedings to recover costs within the meaning of s 289(1). There is no evidence before me as to compliance with the conditions of that section, nor as to whether any bills were rendered in lump sum or itemised form such as to potentially trigger the operation of s 292(4) and s 292(5). In making that observation I do not suggest that the sections have not been complied with, I note simply that there is no evidence to the effect that they have.

36Self-evidently the application must be considered on the basis of the evidence provided.

37The consideration of that question leads to another question. As already noted, it cannot be presupposed that the amount claimed would, if not conceded, properly be payable to the firm. What, then, would be the consequences of leave being granted to the firm to intervene in those circumstances, were the wife to exercise her rights either under the Rules or under the Legal Profession Act? That does not appear, with respect, to have been considered in the necessary detail by the firm; the existing processes for the assessment of costs are in place for a reason, and the procedural and potentially forensic issues which might arise in the present circumstances mitigate against leave being granted.

38Again, against the background of the matters just raised, in circumstances where there is not a judgment debt already established and proposed as the basis for the intervention, is it contemplated that the firm would actively participate in the trial? If, as it appears, the answer to that question is “no”, how then would the court properly exercise the discretion invoked to order the payment sought?

39The broader question, then, is whether the court’s discretion should be exercised to permit the intervention, particularly in circumstances where (notwithstanding that no conditions to the intervention have been formally sought) the readily acknowledged intention of the firm is not to actively participate in the proceedings, but simply to monitor them so as to become aware when any payment to the wife might be looming.

40Notwithstanding my earlier observations as to the value to the community inherent in the willingness of law firms to act on a deferred fee, discounted or pro bono basis, lawyers should not in my view be treated differently from any other creditor or claimed creditor in considering whether or not they should be granted leave to intervene whether on a limited or other basis.

41Once that conclusion is drawn, the outcome of the application logically follows. It cannot in my view seriously be suggested that the court would generally exercise its discretion to, for example, permit a non-legal commercial service provider claiming to be owed money by one of the parties but without the benefit of a judgment confirming the debt, to intervene in proceedings merely to monitor them and take steps to pursue or secure payment when appropriate. A proposed intervener of that nature would, I am confident, be pointed in the direction of the courts in which debts of unrelated parties are typically pursued.

42With no disrespect to the firm, and with no criticism for the fact of the application being brought, the fact that it might be perceived to be more commercially expedient or practically convenient for a firm practising primarily in family law to adopt the approach proposed in the present application, is neither here nor there.

43I note further that, as properly acknowledged by the firm, any refusal of its application for leave to intervene does not in any sense inhibit or restrict the remedies available to it in an appropriate other court, nor affect its claim to be entitled under the costs agreement to secure payment by the lodgement of a caveat or caveats.

44For all those reasons, I decline to exercise the required discretion to grant the firm leave to intervene in the proceedings.

45The application in a case filed on 7 May 2020 will be dismissed.

These reasons are the reasons for decision delivered on 11 January 2021, edited in places but only as to correct grammatical errors and some infelicity of expression without variation to the substance thereof.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Family Court of Western Australia.

KM

Associate

18 JANUARY 2021