Evett and Lao

[2016] FamCA 219

FAMILY COURT OF AUSTRALIA

EVETT & LAO [2016] FamCA 219

FAMILY LAW – COSTS - Between solicitor and client – Previous ex parte orders providing for a solicitor’s lien for costs and for costs of that application – Previous costs order set aside – Reconsideration of the issue of costs – Consideration of section 117 – Considerations justify a departure from the general rule that each party to proceedings shall bear his or her own costs.

Family Law Act 1975 (Cth) s 117

Evett & Lao [2015] FamCA 723
Hawkins & Roe [2012] FamCAFC 77
Penfold v Penfold (1980) 144 CLR 311

APPLICANT: Mr Evett

RESPONDENT: Ms Lao

FILE NUMBER: PAC 2326 of 2013

DATE DELIVERED: 8 April 2016

PLACE DELIVERED: Parramatta

PLACE HEARD: Parramatta

JUDGMENT OF: Foster J

HEARING DATE: 11 February 2016

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Shaw

SOLICITOR FOR THE APPLICANT: F W Evett & Evett

COUNSEL FOR THE RESPONDENT: Litigant in Person

Orders

1. That the respondent Ms Lao pay the applicant’s solicitors costs of and incidental to the proceedings relating to orders made on 19 August 2015 as agreed between the respondent and applicant within one month’s from this date and in default of agreement as assessed on a party/party basis.

2. That the respondent Ms Lao pay the applicant’s solicitors costs of and incidental to this application for costs as agreed between the respondent and applicant within one month’s from this date and in default of agreement as assessed on a party/party basis.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Evett & Lao 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 PARRAMATTA

FILE NUMBER: PAC 2326  of 2013

Mr Evett

Applicant

And

Ms Lao

Respondent

REASONS FOR JUDGMENT

1. The present application is an application for costs as between a solicitor and his former client.

2. On 19 August 2015 ex parte orders were made in the absence of the client as follows:

   (1)      That the Applicant Solicitor have leave to proceed ex parte.

   (2)      The Applicant Solicitor [Mr Evett] have a lien to the extent of $100,000 over monies payable to the Wife pursuant to orders made on 27 May 2015 by the Husband in consideration of which the Wife is to transfer her interest in the property at [B Street, Suburb C] to the Husband.

   (3)      That by reason of the lien referred to above the Solicitor [Mr Evett] shall do all things necessary and sign all necessary documents so as to direct the Husband on payment of funds to the Wife pursuant to order made on 27 May 2015 to pay directly to the Solicitor the sum of $100,000 from funds otherwise payable to the Wife.

   (4)      That the Solicitor [Mr Evett] deposit those funds in an interest-bearing controlled monies account on trust for the Wife pending agreement as to costs payable to the Solicitor or assessment of those costs on taxation.

   (5)      That upon agreement between the Solicitor and the Wife as to the Solicitor’s costs or in default of agreement upon completion of taxation or assessment the amount so assessed or taxed as due and payable to the Solicitor may be deducted by the Solicitor from the controlled monies account with the balance then remaining payable to the Wife.

   (6)      That the Applicant Solicitor [Mr Evett] shall have a charge over the Wife’s interest in the property at [B Street, Suburb C] to the extent of his lien for costs as determined above and in respect of that charge be at liberty to register a caveat over the Wife’s interest in the said property pending discharge of his lien.

   (7)      The Respondent Wife pay the Applicant Solicitor’s costs of this application as agreed within one month from the date of this order or as assessed.

3. Subsequently on 22 January 2016 on application by the former client the following orders were made:

   (1) That the order for costs made on the 19 August 2015 be set aside pursuant to rule 1.11 of the Family Law Rules 2004.

   (2)      That the application for costs by the solicitor proceed by way of written submissions with the solicitor to file and serve submissions by 26 February 2016 and the wife to file and serve her submissions in response by 11 March 2016 with any submissions in reply by the solicitor to be filed and served by 24 March 2016.

   (3)      Judgment as to costs reserved from the date of last submissions.

4. The present application for costs relates to the application for orders that were made on 19 August 2015.

Costs

1. Section 117 of the Family Law Act 1975 (Cth) (“the Act”) provides that each party to the proceedings shall bear his or her own costs.

2. That principle is, however, subject to the discretion afforded to the trial judge in subparagraph (2), which provides that if the Court is of the opinion that there are circumstances that justify it in doing so, the Court may, subject to further subsections thereof and the applicable Rules of the Court, make such order as to costs as the Court considers just.

3. Although s 117(2) requires a finding of justifiable circumstances as an essential preliminary to making an order for costs, there is no additional or special onus on an applicant who seeks an order for costs: see Penfold v Penfold (1980) 144 CLR 311.

4. The matters relevant to determining what order, if any, should be made for costs are set out in subsection (2A) of that section as follows:

   a)The financial circumstances of each of the parties to the proceedings;

   b)Whether any party has legal aid and the terms of any grant of aid;

   c)The conduct of the parties to the proceedings in relation to the proceedings including, without limiting the generality of the foregoing, the conduct of the parties in relation to pleadings, particulars, discovery, inspection, directions to answers, questions, admissions of facts, production of documents and similar matters;

   d)Whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the Court;

   e)Whether any party to the proceedings has been wholly unsuccessful in the proceedings;

   f)Whether either party to the proceedings has made an offer in writing to the other party to the proceedings to settle the proceedings and the terms of any such offer; and

   g)Such other matters as the Court considers relevant.

5. The Full Court in Hawkins & Roe [2012] FamCAFC 77 said:

   17. With respect to the application of the section, in Penfold v Penfold (1980) 144 CLR 311, the High Court said at 315 and 316:

   Sub-section (2) requires a finding of justifying circumstances as an essential preliminary to the making of an order. Beyond this there is nothing in the subject matter or in the interrelationship of the two provisions which imposes any additional or special onus on an applicant for an order for costs. Consequently, with respect to their Honours in the Family Court, we do not agree with the suggestion made in the judgment under appeal that an order can only be made under s. 117 (2) in "a clear case".

   Sub-section (2) does not in our view as a matter of law require the judge to specify the circumstances which justify the making of an order. It does not expressly say so, and in the context of the making of an order for costs there is no sufficient basis for making an implication. Judges very frequently make orders for costs without giving reasons or making findings, even when costs are in issue. The absence of reasons or findings does not in itself indicate that a judge has erroneously exercised his discretion to award costs, though it will place an appellate court in the position of examining the circumstances and of determining for itself whether the circumstances show that the discretion was erroneously exercised (Kent v. Kent). Accordingly, in the absence of some positive legislative indication we should not attribute to Parliament the requirement that a judge must make particular findings in relation to an order for costs.

   (Footnotes omitted)

   18. The weight to be given to a particular consideration under s 117(2A) is a matter for the discretion of the judge. However, in I and I (No 2) (1995) FLC 92-625 the Full Court of this Court held that the relevant matters in s 117(2A) “must all be taken into account and all balanced in order to determine whether the overall circumstances justify the making of an order for costs”. That is not to say that one single matter may not ultimately be determinative. The Full Court confirmed this in Fitzgerald (as child representative for A (Legal Aid Commission of Tasmania)) v Fish and Another (2005) 33 Fam LR 123 at paragraph 41:

   … A number of factors are then listed in the subparagraphs. The financial circumstances of each of the parties to the proceedings is the first mentioned factor. Nowhere in subs (2A) or elsewhere in s 117, is there any prescription that more than one factor must be present before an order for costs is made nor of comparative weight of the factors set out in subs (2A). As a consequence, there is nothing to prevent any factor being the sole foundation for an order for costs.

The solicitor’s submissions

1. The background circumstances relating to the ex parte orders made in August 2015 are more fully set out in the Reasons for Judgment delivered on that day (Evett & Lao [2015] FamCA 723).

2. It is clear that the solicitor was entitled to the orders ultimately obtained by him on that day. The only way in which the solicitor could protect his position in relation to the authority previously provided to him by his former client was to make application to the Court.

3. The solicitor contends that there is a significant inference that the former client was well aware of the application that resulted in orders being made in August 2015 and indeed if the client had appeared before the Court the orders would in any event have been made to protect the solicitor’s position under the authority signed by the former client.

4. The solicitor further contends that the inference that arises from the conduct of the former client is that she was seeking to avoid payment to the solicitor in accordance with the authority previously signed by her and to facilitate a receipt by her of the whole of the proceeds of her family law settlement.

The former client’s submissions

1. The former client submits that she is in difficult financial circumstances, being reliant upon Centrelink benefits that leave her with a shortfall of $284 per week which she is funding from monies received by her from her family law property settlement. She has assets comprising a modest motor vehicle and a bank account with $2744 to her credit and an outstanding loan, she asserts to her parents of $30,000.

2. Former client contends that she suffers from depression, lack of concentration, anxiety, loss of memory and headaches and has done so since September 2014. The former client is unaware as to when she would be able to return to employment.

3. The solicitors have $100,000 held in their trust account pending assessment of costs as between solicitor and client in the Supreme Court of New South Wales.

4. As to matters of conduct the former client contends that the primary application to the Court by the solicitors was unnecessary as she was “always willing to ensure payment of their legal fees”. This contention simply ignores the fact that the former client had signed an authority directing that funds be paid to the solicitor to meet their outstanding costs.

5. As to the issue of the costs as between solicitor and client, the client asserts that she has never signed any costs agreement with the solicitors and contends there was an oral agreement that legal costs would be negotiated after her matter had been finalised. This issue was not a matter for determination in these proceedings but as a matter for determination in the assessment process in the Supreme Court of New South Wales.

The relevant considerations

1. The financial circumstances of the former client are referred to above. There is no evidence as to the financial circumstances of the solicitor.

2. Neither party is in receipt of a grant of legal aid.

3. The conduct of the parties “in relation to the proceedings” is not the subject of any adverse submission.

4. Neither party has failed to comply with any previous orders of the Court.

5. The former client was the subject of orders made on an ex parte basis by way of “lien” to which the solicitor was clearly entitled. In this regard the solicitor has been completely successful.

6. There is no relevant offer in writing relied upon.

7. Other relevant circumstances to this determination are considered above.

8. In the circumstances of the present application there are considerations that justify a departure from the general rule that each party to proceedings shall bear his or her own costs.

9. The solicitor is entitled to his costs of the application giving rise to orders made on 19 August 2015. In the circumstances of this matter it is appropriate that there be no order for costs in relation to orders made on 22 January 2016.

10. The solicitor has been successful in his application for costs and he should be entitled to his costs as to the costs application.

11. The quantum of costs should properly be the matter of assessment.

12. Orders will be made accordingly.

I certify that the preceding thirty (30) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Foster delivered on 8 April 2016.

Associate: 

Date:  8 April 2016