Farina and Lofts (No. 2)

Case •

[2021] FamCA 75

•

22 FEBRUARY 2021

FAMILY COURT OF AUSTRALIA

Farina & Lofts (No. 2) [2021] FamCA 75

File number(s): BRC 10102 of 2012
Judgment of: CAREW J
Date of judgment: 22 February 2021
Catchwords: FAMILY LAW – PROPERTY – Dispute over payment of an expert report – Where in the substantive proceedings, a single expert was initially engaged by two parties to provide a valuation and additional parties were subsequently joined to proceedings – Where a dispute arose as to which party was liable for satisfying the outstanding invoice – Where it is found that the first respondent is liable for the payment of the invoice as between the parties to the substantive proceedings.
Legislation: Family Law Act 1975 (Cth)
Cases cited: Farina & Lofts and Ors (No. 2) [2019] FamCA 228
Number of paragraphs: 37
Date of hearing: 22 December 2020
Place: Brisbane
Counsel for the First Applicant: Ms FitzGerald
Solicitor for the First Applicant: Bluewater Lawyers
Solicitor for the First Respondent: Self-represented
Counsel for the Second Respondent: Ms FitzGerald
Solicitor for the Second Respondent: Bluewater Lawyers
Counsel for the Third Respondent: Ms FitzGerald
Solicitor for the Third Respondent: Bluewater Lawyers
Solicitor for the Fourth Respondent: Mr Goldsworthy
For the Fifth Applicant: Self-represented

ORDERS

BRC10102/2012
BETWEEN:

MR WAGNER
Applicant
AND:

MR FARINA
First Respondent

C PTY LTD
Second Respondent

D PTY LTD

Third Respondent

U PTY LTD
Fourth Respondent

MS LOFTS
Fifth Respondent

ORDER MADE BY:

CAREW J

DATE OF ORDER:

22 FEBRUARY 2021

THE COURT ORDERS THAT:

1.By way of clarification of previous orders of this Honourable Court, and as between the parties to the substantive litigation, i.e. all parties other than U Pty Ltd, Mr Farina is liable for the payment of invoice number … to U Pty Ltd.

2.Mr F shall pay the sum of $43,156 to U Pty Ltd within 14 days.

3.The Amended Application in a Case filed by the applicant on 21 April 2020 (paragraphs 1, 4, 5 and 6) and the Response filed by the first respondent on 17 July 2020 and the Response filed by fourth respondent on 30 June 2020 and the Amended Response filed by the fifth respondent on 2 October 2020 are otherwise dismissed (save as to costs).

4.In the event that a party requires a determination of a costs application and the parties are unable to reach agreement in relation to costs within 21 days the following shall apply:

(a)The person/entity applying for costs shall file and serve one affidavit (if necessary) and written submissions within 14 days from the date of this Order;

(b)The person/entity against whom costs are sought shall file and serve one affidavit (if necessary) and written submissions within a further 14 days; and

(c)The person/entity applying for costs shall file and serve one affidavit strictly in reply (if any) and written submissions strictly in reply (if any) within a further 14 days.

5.The costs application (if any) will be heard in chambers without the need for further appearance.

NOTATION

A.The applicant filed a Notice of Discontinuance on 22 April 2020 in relation to paragraphs 2, 3, 7 and 10 of his Application in a Case filed 21 April 2020 and did not press paragraphs 8 and 9 thereof.

B.The parties all agreed that should costs be sought by any party, the application should be heard in chambers upon the receipt of written submissions.

C.The above order does not preclude U Pty Ltd from pursuing any contractual rights they may have against any party.

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

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 17.02 Family Law Rules 2004 (Cth).

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

REASONS FOR JUDGMENT

CAREW J

  1. Mr I from U Pty Ltd was engaged as a single expert in a dispute that initially involved only the first respondent (Mr Farina) and the fifth respondent (Ms Lofts). Other parties were later joined to those proceedings with all matters being finalised by consent and consequent orders being made on 12 November 2018 and 29 January 2019.

  2. The dispute that causes the parties to return to Court relates to fees still owing to U Pty Ltd.

    BACKGROUND

  3. When proceedings originally commenced in 2012, Mr Farina was the applicant and he sought a property adjustment order against Ms Lofts pursuant to s 90SM of the Family Law Act 1975 (Cth) arising out of their de facto relationship (“the property proceedings”).

  4. In September 2013, Mr Farina and Ms Lofts retained Mr I of U Pty Ltd to provide a valuation of various business assets relevant to the property proceedings.

  5. On 18 July 2014, Mr Wagner, C Pty Ltd and D Pty Ltd were joined to the property proceedings.

  6. On 25 August 2014, an interim order (“the 2014 order”) was made by consent which relevantly included the following provision:

    2.[Mr Farina] is responsible to pay any further fees of Mr I of U Pty Ltd in relation to the preparation of the single expert business valuation report as due by Mr I.

    3.[Ms Lofts] reimburse a half share of the costs at the conclusion of the proceedings from settlement funds.

  7. On 28 September 2015, U Pty Ltd required Mr Wagner to sign an Engagement Letter updating the terms of engagement to reflect the addition of the further parties to the proceedings. Relevantly, the Engagement Letter included the following:

    …

    All parties are responsible for our fees with Mr Farina responsible for payment in the first instance.

    …

    Unless otherwise advised, we will provide a copy of our invoice to all Parties care of your solicitor with payment to be made by Mr Farina in the first instance.

  8. A written acknowledgement to be bound by the terms of the Engagement Letter and U Pty Ltd’s Standard Terms and Conditions was signed on 29 October 2015 by Mr Wagner in his personal capacity and on behalf of D Pty Ltd and by Mr Farina in his personal capacity and on behalf of C Pty Ltd. The copy of the document that forms part of exhibit 3 before me does not include Ms Lofts’s signature.

  9. Relevantly, the acknowledgement contains the following provision:

    …

    We are jointly responsible for your fees with Mr Farina responsible for payment in the first instance. We also note that your fees are payable within 14 days of accounts being rendered. Any account unpaid within that time will accrue an administration fee from the date of rendering the account.

    …

  10. The Standard Terms and Conditions relevantly contains the following provisions:

    4.1 You agree to pay for the services we provide in accordance with the payment terms set out in the Engagement Letter and in these Standard Terms and Conditions.

    …

    7.4 Our invoice is payable within 14 days of the date of issue unless stated otherwise in the Engagement Letter.

    7.5      If you do not pay our invoice in full, we may:

    …

    Charge interest on any unpaid amount. …

    Instigate legal proceedings without further notice

    …

    … Any costs, fees or disbursements that we incur in the recovery of the outstanding amounts, together with any interest, will be added to the amount due from you.

  11. The substantive proceedings involving Mr Farina, Ms Lofts, Mr Wagner, C Pty Ltd, D Pty Ltd and V Pty Ltd comprised two distinct but intricately connected disputes. The first dispute has already been referred to, namely, the property proceedings between Mr Farina and Ms Lofts, and the second dispute (“the commercial dispute”) involved an action brought by C Pty Ltd, D Pty Ltd and Mr Wagner (“the C Pty Ltd respondents”) pursuant to the Court’s original jurisdiction under the Corporations Act 2001 (Cth) and the Court’s jurisdiction to determine the whole of a matter when determining a matter otherwise within the Court’s federal jurisdiction, concerning:

    (a)Alleged oppression by Mr Farina;

    (b)Alleged breach of director’s duties by Mr Farina in relation to misuse of C Pty Ltd funds; and

    (c)Alleged breach of director’s duties by Mr Farina and injunctive relief in relation to a lost business opportunity against Mr Farina and V Pty Ltd (a fifth respondent in the substantive proceedings).

  12. U Pty Ltd’s invoice number … issued to Mr Farina and Ms Lofts on 30 April 2018 and a copy was provided on 8 May 2018 to the lawyers then representing Ms Lofts, Mr Farina and to Mr Wagner’s lawyers.

  13. On 12 November 2018, an order was made by consent (“the November order”), the effect of which was to (inter alia):

    (a)Resolve the oppression action within the commercial dispute by the C Pty Ltd respondents promising to pay, on or before 90 days after the date of the order (“the settlement date”), the sum of $3,000,000 (“the settlement sum”) into the trust account of Bluewater Lawyers in consideration for:

    (i)The transfer of all of Mr Farina’s interest in E Pty Ltd, C Pty Ltd and the C Pty Ltd Trust to the trustee of the Wagner Family Trust or D Pty Ltd; and

    (ii)Mr Farina resigning as director of C Pty Ltd.

    (b)Maintain other actions in the commercial dispute against Mr Farina and V Pty Ltd by C Pty Ltd or Mr Wagner for alleged breaches by Mr Farina of his common law or statutory breaches as a director of C Pty Ltd.

  14. Relevantly, for present purposes, the November order specifically provided:

    12. Upon the payment of the settlement sum in accordance with Order 6 herein, this Order acts as an irrevocable written authority from all parties directed to Bluewater Lawyers to make the following disbursements from the settlement sum from the trust account of Bluewater Lawyers:

    12.1.    …

    12.2. $20,609.60 on behalf of Mr Farina to U Pty Ltd Australia Limited in payment of invoice ….

    [Emphasis added]

  15. Bluewater Lawyers continue to act for Mr Wagner, C Pty Ltd and D Pty Ltd.

  16. The settlement sum was not due to be paid until 12 February 2019.

  17. On 29 January 2019, prior to the settlement sum being paid, another order was made (“the January order”). It resolved the property dispute and the balance of the commercial dispute. Relevantly, the January order included the following paragraphs:

    1.That Order 6.1 of the Orders made 12 November 2018 be varied to read as follows:

    D Pty Ltd (or its nominee) will by 12 February 2019 (the settlement date) pay the sum of $1,850,000 (the settlement sum) into the trust account of Bluewater Lawyers to be held on trust for Mr Farina and Ms Lofts (the Payment).

    2.…

    3.That upon the payment of the settlement sum in accordance with Order 1 of this Order, this Order operates as an irrevocable written authority from all parties directed to Bluewater Lawyers to make the following disbursements from the settlement sum from the trust account of Bluewater Lawyers:

    3.1 $1,000,000.00 of the settlement sum to Ms Lofts as directed in writing to Bluewater Lawyers by Ms Lofts; and

    3.2 $850,000 to be disbursed to the general account of Dowd & Company Lawyers (being BSB …, account number …60).

  18. On 29 March 2019, U Pty Ltd’s lawyers wrote to Mr Farina requesting payment of the outstanding invoice.

  19. On 9 April 2019, clarification of the November order and January order was provided such that it was held that the January order was to be read subject to the November order. The effect of that clarification required a liability of Mr Farina to be paid from the settlement sum that was specifically provided for in the November order but not in the January order. It is perhaps helpful to read the reasons for judgment delivered on that date as part of the background to the current dispute.[1]

    [1]Farina & Lofts and Ors (No. 2) [2019] FamCA 228

  20. Mr Farina was granted leave to make an oral application during the hearing in April 2019 to seek an order that “any balance after payment of the liability on the Motor Vehicle be paid to U Pty Ltd”.  His application was dismissed because Mr Wagner, Ms Lofts, C Pty Ltd and D Pty Ltd and Mr Farina’s former solicitors, Dowd & Co (who were granted leave to make submissions) agreed such an order was not necessary given the clarification of the orders. Indeed, the notation to the order made that day recorded the following:

    It is noted that Bluewater Lawyers and Dowd & Co informed the Court that if the clarification as sought by Bluewater Lawyers was made there was no need to make the order sought by Mr Farina.

  21. On 29 October 2019, U Pty Ltd’s lawyers wrote to Mr Wagner’s lawyers requesting payment of the outstanding invoice.  

  22. U Pty Ltd contend that the outstanding amount has increased to $43,156.01 calculated as follows:

Principal debt $20,609.60
Administration fees $4,650.00
Interest $2,731.27
Subtotal $27,990.87
Incurred legal costs $12,442.64
Anticipated legal costs $2,722.50
Total $43,156.01

  1. It is not in contention that the debt is owed.

    WHAT ORDERS ARE NOW SOUGHT?

    By Mr Wagner

  2. Mr Wagner is the applicant in the current dispute and by his Amended Application in a Case filed 21 April 2020 he seeks the following order:

    Should the Court determine that Mr Farina is solely responsible by reason of the Order made 25 August 2014 and Order made 29 January 2019:

    1. That, within fourteen (14) days of the date of this Order, Mr Farina pay to U Pty Ltd Australia Ltd the sum of $26,426.50 in compliance with the Order made 25 August 2014.

    2.        (Discontinued)

    3.        (Discontinued)

    Should the Court determine that Mr Farina and Ms Lofts are jointly responsible by reason of the Order made 25 August 2014 and Order made 29 January 2019

    5. That, within fourteen (14) days of the date of this Order, Mr Farina pay to U Pty Ltd Australia Ltd the sum of $13,213.25 in compliance with the Order made 25 August 2014.

    6. That, within fourteen (14) days of the date of this Order, Ms Lofts pay to U Pty Ltd Australia Ltd the sum of $13,213.25 in compliance with the Order made 25 August 2014.

    7.        (Discontinued)

    8.        (Not pressed)

    9.        (Not pressed)

    10.      (Discontinued)

  3. Mr Wagner discontinued the relief sought in paragraphs 2, 3, 7 and 10 by filing a Notice of Discontinuance on 24 April 2020 and did not press the relief sought in paragraphs 8 and 9.

  4. Mr Wagner joined U Pty Ltd to the proceedings as a respondent (the 4th respondent) as well as Mr Farina (1st respondent), C Pty Ltd (2nd respondent), D Pty Ltd (3rd respondent) and Ms Lofts (5th respondent).

    By Mr Farina

  5. Mr Farina (who is self-represented) by his Response filed 17 July 2020 seeks the following order:

    (as per original)

    1.That the applicant and second respondent pay U Pty Ltd the sum of $20,609.60 to U Pty Ltd for invoice ….

    2.That the applicant and second respondent pay U Pty Ltd any cost incurred by U Pty Ltd in recovering the debt.

    By C Pty Ltd and D Pty Ltd

  6. C Pty Ltd and D Pty Ltd seek no orders and are represented in the proceedings by Mr Wagner’s lawyers.

    By U Pty Ltd

  7. U Pty Ltd by their Response filed 30 June 2020 oppose the order sought by the applicant and seek the following order:

    The applicant, first and fifth respondent pay the fourth respondent the sum of $34,715.79.[2]

    [2] This sum was amended to reflect the debt as at the date of hearing.

    By Ms Lofts

  8. Ms Lofts by her Amended Response filed 2 October 2020 sought the following order:

    (as per original)

    The Fifth Respondent (Ms Lofts) seeks an order that:

    1.The Applicant (Mr Wagner) pay;

    or in the alternative

    2.The Second Respondent (C Pty Ltd) pay;

    or in the alternative

    3.The First Respondent (Mr Farina) pay;

    And

    4.That the claim against Ms Lofts is dismissed.

    the outstanding fees owed to the Fourth Respondent, U Pty Ltd Australia Ltd in compliance with the final Orders dated 29 January 2019.

    DISCUSSION

  9. The 2014 order provided that Mr Farina was required to pay “any further fees of Mr I of U Pty Ltd in relation to the preparation of the single expert business valuation report as due by Mr I”. Ms Lofts was required to reimburse Mr Farina “a half share at the conclusion of the proceedings from settlement funds”.  However, the 2014 order was an interim order.

  10. The dispute was finalised by the November order and the January order. The November order made specific provision for the payment of the U Pty Ltd invoice … “on behalf of Mr Farina” from the settlement sum. Mr Farina thereby assumed sole responsibility for the payment of the invoice pursuant to the November order and Ms Lofts was no longer required to contribute a half share.

  11. The settlement sum was not due to be paid until 12 February 2020 by which time the January order was made but it did not discharge Mr Farina’s responsibility for payment of the U Pty Ltd invoice.

  12. While Mr Farina might have some basis for criticism of Bluewater Lawyers for failing to pay the invoice in accordance with the irrevocable authority to do so, ultimately it was a matter that either he or his then lawyers, Dowd & Co, should have ensured occurred. Mr Farina also makes some very serious allegations against his former lawyers, Dowd & Co. It is a matter for Mr Farina whether he pursues those allegations through the Legal Services Commission.

  13. As to the quantum of the current debt, I note that Mr Farina accepted that the debt was owed and did not take issue with the quantum. In any event, having considered the terms of the Engagement Letter and Standard Terms and Conditions the basis for the increase in the debt appears to be entirely reasonable.

    CONCLUSION

  14. As between the parties to the substantive litigation i.e. other than U Pty Ltd, Mr Farina is liable for the payment of the U Pty Ltd invoice number … in the sum of $43,156. Payment should be made within 14 days.

    MISCELLANEOUS   

  15. Mr Goldsworthy, the lawyer representing U Pty Ltd initially expressed dismay at his clients being joined to the application by Mr Wagner and indicated that it was his client’s intention to pursue their contractual rights elsewhere. Nevertheless, Mr Goldsworthy submitted that the Court had jurisdiction to determine the contractual dispute between the parties arising from the terms of their Engagement Letter signed by the parties. Mr Goldsworthy was provided an opportunity to file further written submissions as to the Court’s power to determine such a dispute in the absence of proceedings in which the Court is otherwise exercising federal jurisdiction.  No further submissions were filed. In my view, the Court does not have jurisdiction to determine that dispute.  

I certify that the preceding thirty-seven (37) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Carew j.

Associate:

Dated: 22 February 2021


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Farina & Lofts [2019] FamCA 228