Foley and Foley (Costs)
[2018] FamCA 319
•11 May 2018
FAMILY COURT OF AUSTRALIA
| FOLEY & FOLEY (COSTS) | [2018] FamCA 319 |
| FAMILY LAW – COSTS – Application by wife seeking a costs order on an indemnity basis against the husband on the substantive proceedings – Application by wife in the alternative seeking costs orders on a cascading basis being in a sum determined by the court, or on a practitioner/client basis as agreed and assessed or on a party/party basis as agreed or assessed – Orders made that husband pay a proportion of wife’s costs on a party/party basis as assessed by a judge. FAMILY LAW – COSTS – Application by wife for costs on the costs application – Application dismissed. FAMILY LAW – COSTS – Consideration of barristers’ cancellation fees. |
Family Law Act 1975 (Cth) ss 117, 117(2A)
Legal Profession Uniform Law (NSW) 2014 s 172
Federal Court of Australia Act 1976 (Cth) s 23
Cachia v Hanes (1994) 179 CLR 403
Prantage v Prantage (2013) FLC 93-544
Re Keith Hercules & Sons v Steedman and Others [1987] FCA 472
Atkins & Hunt and Ors [2018] FamCA 14
Commissioner of Australian Federal Police v Razzi (No 2) (1991) 30 FCR 64
The Pilbara Infrastructure Pty Ltd v. Brockman Iron Pty Ltd [No 2] [2014] WASC 345 (S)
Wilkie v Gordian Runoff Ltd [2005] NSWSC 873
K & V [2006] FamCA 252
Levy v Bergseng (2008) 72 NSWLR 178
Commissioner of Police v Hoffman (2014) 18 DCLR (NSW) 320
Twigg & Keady (1996) FLC 92-712
Re Blyth & Fanshawe; Ex parte Wells (1882) 10 QBD 207
A.G. Saddington and Brian K. White, Costs, solicitor and client: with precedents of bills in contested matters in the High Court, Supreme Court, Court of Bankruptcy (Law Book Co., 1947)
Council of Australian Governments (COAG) National Legal Profession Reform Discussion Paper: Legal Costs, 4 November 2009
| APPLICANT: | Ms Foley |
| RESPONDENT: | Mr Foley |
| FILE NUMBER: | SYC | 3203 | of | 2016 |
| DATE DELIVERED: | 11 May 2018 |
| PLACE DELIVERED: | Hobart |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Benjamin J |
| HEARING DATE: | 12 March 2018 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr W SC |
| SOLICITOR FOR THE APPLICANT: | V Firm |
| COUNSEL FOR THE RESPONDENT: | Mr ZZ |
| SOLICITOR FOR THE RESPONDENT: | X Firm |
Orders
The time for making an application for costs in respect of the parenting orders made 21 December 2017 is extended to 2 February 2018.
The husband shall pay to the wife $359,712, being part of the wife’s legal costs of these proceedings.
IT IS NOTED
The wife may set off the amount due pursuant to these costs orders against the sum of $338,381 payable by her pursuant to the property orders dated 15 February 2018 and amended 22 February 2018.
The balance of costs of $21,331 shall be paid by the husband to the wife, within six (6) months from 15 February 2018.
All extant applications in a case are dismissed.
All subpoenaed documents shall be returned to the persons or institutions from which they emanated and all exhibits are returned to the person or persons who tendered the same.
IT IS CERTIFIED
Pursuant to Rule 19.50 of the Family Law Rules 2004 (Cth) it was reasonable to engage senior counsel and counsel to attend.
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 Foley & Foley (Costs) 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: SYC 3203 of 2016
| Ms Foley |
Applicant
And
| Mr Foley |
Respondent
REASONS FOR JUDGMENT
INTRODUCTION
Ms Foley (‘the wife’) and Mr Foley (‘the husband’) were involved in property and parenting proceedings which were determined by this Court on 21 December 2017 (‘the substantive reasons’).
On that same day in December 2017 parenting orders were made (‘the parenting orders’). One of the children is to spend time and communicate with the father in accordance with her wishes and orders were made protecting her. These parenting orders provided that the wife have sole parental responsibility for the children and that they live with her.
The property of the parties involved complex and multiple issues and at times intricate arithmetic. As such time was given to the parties to make submissions as to the final form of property orders. Following those submissions the judgment was reissued on 15 February 2018 and it contained a detailed corrigendum.
Final orders were made on 15 February 2018 (‘property orders’), albeit the property orders were amended pursuant to the slip rule on 21 February 2018.
On 9 February 2018 the wife filed an application in a case seeking costs orders on an indemnity basis and then cascading, by way of alternative, as being:-
(a)in a sum determined by the Court;
(b)a practitioner/client basis agreed and assessed; and
(c)on a party/party basis as agreed or assessed.
The wife also sought an order that the husband pay the costs of her application for costs and an order pursuant to a general order under s 106A of the Family Law Act 1975 (Cth) (‘the Act’).
The costs issues included:-
(a)whether a costs order should or should not be made;
(b)if there were costs orders, whether it should be on a party/party, indemnity or other basis; and
(c)whether the quantum of costs should be determined by the Court;
The wife sought further ancillary orders in terms of payment of costs and a general order under s 106A of the Act.
There was no particular reason for the s 106A order, except perhaps that contained in paragraph 73 of the wife’s affidavit in support of her costs application[1] where she said that there were difficulties in settling the sale of a property owned by the parties in Suburb P (‘the Suburb P property’).
[1] Wife’s affidavit in support of costs filed and sworn 17 January 2018 (‘the wife’s affidavit’).
I was informed, and it was not disputed, that the settlement of that property had been completed. Accordingly, I will be dismissing the wife’s s 106A application, although it should not be taken that this prevents any further applications should the need arise pursuant to the property orders.
One area that was not argued and perhaps was not recognised is that the application for costs insofar as they related to the parenting orders were out of time. The parenting orders were made on 21 December 2017 and the application in a case was filed some seven or eight weeks later. However, given the history of the property orders and that those orders were not finally made perfect until 15 February 2018, I have extended the time to file and deal with that application insofar as it relates to the parenting orders. This was not argued and it seemed to be impliedly conceded that the Court ought to deal with it.
The husband opposed the wife’s application for costs orders.[2]
[2] Husband’s outline of submissions on costs, paragraph 1 – Exhibit CA4.
BACKGROUND
There are three children of the parties’ relationship, who at the time of the substantive hearing were aged 17, 15 and 14. The parties separated in April 2016 in difficult circumstances. The outline of the background of the parties is otherwise set out at paragraphs 22 to 32 of the substantive judgment:-
22.The husband was born in … 1964 and at the date of the hearing was aged 52. The husband is a company director and manages a business. The husband undertook training in a trade, which he completed in about 1986.
23.In 1987/1988 the husband formed a company. That business went into liquidation in 1990 and shortly after that time the husband formed another company called F Pty Ltd (‘the Company’), which was operating at about the time he met the wife.
24.The wife was born in 1968 and at the time of the hearing were aged 48.
25.The parties met in 1993 and commenced their relationship in about May 1994. I accept and prefer the wife’s evidence in that respect.
26.When the parties commenced their relationship in about 1994 the wife became involved in the administration of the Company. She continued that role until shortly after the parties’ separation in April 2016. The wife gave evidence that she worked extensively in the Company both at home and at the business premises over the years of the parties’ relationship, short engagement and then marriage. I accept the wife worked significant hours in the Company generally 30 to 40 hours per week and often at times of audit or around tax time or when there was particular work in place up to 50 or more hours per week.
27.The wife started work in about 1994, but began working regularly in about 1996.
28.The wife completed a Diploma in 1989.
29.It is not an issue that the husband was a hard worker and has worked at that level for the whole of the parties’ relationship.
30.In October 1994 the wife was involved in a car accident and subsequently received a payout of about $23,000 in December 1996.
31.The parties became engaged to be married in May1998 and subsequently married in September 1998.
32.The wife has since separation formed another romantic relationship, but she does not live with this person and he does not stay overnight at the family home. The wife and her friend do not provide financially for each other apart from occasionally buying a dinner and on one occasion they had a holiday together for which the wife paid. The wife has no plans to marry this person, at this stage.
In making this costs decision the Court considered and accepted the above background and the findings set out in the substantive reasons together with the history set out in the wife’s affidavit in support of her costs application.
When separation occurred in April 2016, a police provisional apprehended violence order was made against the husband and later an interim order was made by the local court on 4 May 2016.
In the substantive reasons, I dealt with the separation and the events following in paragraphs 75 to 90. The police proceedings had come before a State Magistrates Court and the wife gave evidence in those proceedings in May and June 2017. She was cross-examined by counsel for the husband, who acted as junior counsel for him in the hearing in this Court.
The learned Magistrate found the offences against the husband of possession of an unregistered firearm and not keeping a firearm safe proven, but did not proceed to conviction. In relation to the charge of possessing ammunition without holding a licence permit, the Magistrate deemed it inexpedient to inflict any punishment and provided for a twelve month bond in relation to the first offence and two years in relation to the second offence.
The Magistrate made a Family Violence Order against the husband for a period of six months from May 2017; that order did not include the children. In relation to a charge of intimidation, the Magistrate was not satisfied, beyond reasonable doubt, that the husband had intended to cause intimidation or fear.
This Court found, on the civil standard and in the light of the husband’s previous violent behaviour, that he was intent on bullying and intimidating the wife into a settlement which he desired.
In his submissions on costs, counsel for the husband again asserted that the acquittal of the husband in relation to the intimidation charge was pivotal. In that respect, I repeat the comments I made above and note the comments made by the Court in paragraphs 255 to 262 of the substantive reasons.
THE EVIDENCE
The wife relied upon her affidavit filed 17 January 2018 and an affidavit by Ms AB, the wife’s solicitor, filed 7 March 2018. In accordance with the rules and a direction made by this Court the wife tendered a costs letter.[3] The wife relied upon the parenting and property orders to which I have earlier referred and the substantive reasons delivered 21 December 2017.
[3] Exhibit CA1.
The husband relied upon his costs letter dated 11 March 2018,[4] his counsel’s written submissions,[5] and finally a bundle of correspondence.[6]
[4] Exhibit CA2.
[5] Exhibit CA4.
[6] Exhibit CA3.
The wife
In her affidavit the wife deposed to the history to which I have alluded earlier and to the history of the proceedings. She set out some material in relation to offers of settlement.
One of the offers to which she refers arises from the discussions between her and the husband on the night of their separation. I give those discussions no weight given the circumstances in which they arose; that is, in a very volatile and violent confrontation between the parties at a time when emotions were high and at a time when the parties were separating.
As to the other offers of settlement, I give them little weight. This approach was in many ways effectively conceded by senior counsel for the wife and submitted by counsel for the husband.
The wife provided a history of reluctant disclosure by the husband to which I have had regard. The husband has delayed in providing disclosure and with issues, such as the second boat, failed to make timely disclosure. I am satisfied that he endeavoured, at least initially, to conceal the acquisition of that boat.
I accept that the husband was ill overseas for part of that time however, given the later evidence, it is clear that the husband was focused on his relationship in Country U more than attending these matters in Australia.
Further, I am satisfied that the husband delayed the sale of the Suburb P property, although it was eventually sold and settled.
The wife provided evidence of non-compliance with orders and I accept that evidence. Those matters have added to the costs of the wife.
Ms AB’s affidavit provided evidence of the costs agreements, details of the hourly rates charged and some estimates of the legal costs incurred on a party/party basis. I accept that those costs were assessed with little experience in the assessment of legal costs on a party/party basis.
Given that evidence, I have assessed the solicitor’s costs on the lower of the figures.
In terms of counsel’s fees, I have had regard to the level of senior counsels fees formerly allowed in the Federal Court which are relatively close to those sought by counsel with a daily fee of $7,000 and an hourly charge of $850 plus GST. I am satisfied that on a practitioner/client basis the fees of senior counsel, at least on a daily basis, are fair and reasonable. Given the monies involved in this matter and the conflict to which I alluded in my substantive reasons and to which I allude in these reasons, the employment of senior counsel was warranted. I had certified for senior counsel on each occasion having considered that because of the complexity, the difficulty, and the level of conflict in these proceedings I have determined that senior counsel was warranted.
The Court notes that at paragraph 7.2[7] of his retainer senior counsel has a provision for ‘Reservation of Dates’ which includes a possible cancellation fee. The Court notes that junior counsel for the wife specifically eschewed cancellation fees. There is no evidence that senior counsel in this matter charged cancellation fees however, I will make mention of the Court’s views in relation to cancellation fees at the end of these reasons.
[7] Annexure “D” – Terms of Retainer – Senior Counsel - wife’s solicitor’s affidavit filed 7 March 2018.
Ms AB
Ms AB the wife’s solicitor, says that the wife had assessed party/party costs of $359,551.98 to $403,707.48. For the purpose of these reasons I have treated those party/party costs as being approximately $359,551.98 and counsel’s fees on a party/party basis of $180,016.28. This totals $539,568.26.
The solicitor for the wife discloses that the total costs of these proceedings, up to 5 March 2018, amounts to $930,648.46. This amounts to approximately $600,000 in solicitor costs around $200,000 in barristers’ costs and the balance in joint expert fees, single expert fees, shadow expert fees, transcript fees, a proportion of the Independent Children’s Lawyer’s fees, a fee for bill of costs in relation to interim orders, searches and other disbursements.
THE LAW RELATING TO COSTS
This costs application was considered and determined under the provisions of s 117 of the Act.
There are two areas to which I need to address the law. The first is in relation to whether a costs order ought to be made at all, and the second is in relation to whether it ought to be on an indemnity basis.
The power to make costs orders are set out in s 117 of the Act, which relevantly provides:-
(1)Subject to subsection (2), subsection 70NFB(1) and sections 117AA, 117AC and 118, each party to proceedings under this Act shall bear his or her own costs.
(2)If, in proceedings under this Act, the court is of opinion that there are circumstances that justify it in doing so, the court may, subject to subsections (2A), (4), (4A) and (5) and the applicable Rules of Court, make such order as to costs and security for costs, whether by way of interlocutory order or otherwise, as the court considers just.
(2A)In considering what order (if any) should be made under subsection (2), the court shall have regard to:
(a)the financial circumstances of each of the parties to the proceedings;
(b)whether any party to the proceedings is in receipt of assistance by way of legal aid and, if so, the terms of the grant of that assistance to that party;
(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 answer 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.
In Penfold v Penfold (1980) FLC 90-800 the majority of the High Court expressed the general rule that s 117(1) is not paramount to s 117(2) of the Act. A court must make a finding that there are circumstances justifying the making of a costs order before proceeding to make the orders.
There is no guidance in the legislation between the two sub sections nor any additional special onus on the applicant for an order as to costs.
It is necessary to consider the facts in the light of the provisions set out in s 117(2A) of the Act. There is nowhere in s 117(2A) that says any one factor provides a hierarchy in relation to the other factors. One factor may be enough. As such the Court has a broad discretion in determining costs.
It is of value to repeat what I have said in earlier judgments that the Court needs to consider the difference between the various types of unquantified costs orders available under the Act. There are many variations of types of costs orders, but they generally fall into three types:-
a)Party and party costs - which are calculated having regard to the schedule of costs under the Family Law Rules 2004 (Cth);
b)Lawyer and client costs – these are essentially indemnity costs, with the onus upon the costs applicant to satisfy the taxing authority that such costs are on balance fair, reasonable and proportionate; and
c)Indemnity costs - these are essentially lawyer and client costs, with the onus upon the costs respondent to satisfy the taxing authority that such costs are on balance not fair and reasonable and not on balance proportionate, that is the reversal of the onus of proof.
It should be borne in mind that costs orders are restorative and not punitive, and costs cannot exceed the amount actually incurred. They are an indemnity or partial indemnity. In Cachia v Hanes (1994) 179 CLR 403 the plurality of the Court, comprising Mason CJ, Brennan, Deane, Dawson and McHugh JJ observed:-
Whilst the restricted basis upon which party and party costs are awarded may be debated as a matter of policy, it is to be borne in mind that party and party costs have never been regarded as a total indemnity to a successful litigant for costs incurred, let alone total recompense for work done and time lost. Putting to one side the question posed by the relatively rare exception of a solicitor acting in person, there is no inequality involved: all litigants are treated in the same manner. And if only litigants in person were recompensed for lost time and trouble, there would be real inequality between litigants in person and litigants who were represented, many of whom would have suffered considerable loss of time and trouble in addition to incurring professional costs. The partial indemnity which the law allows represents a compromise between the absence of any provision for costs (which prevails as a matter of policy in some jurisdictions) and full recompense. In these days of burgeoning costs, the risk of which is a real disincentive to litigation, the proper compromise is a matter of both difficulty and concern.
DISCUSSION
I have had regard to the financial circumstances of each of the parties to the proceedings, in particular those in terms of the parties’ respective outcomes following the property orders and the parties’ current relationship circumstances. The husband is in another relationship and has the care of his present partner and her children. I am well appraised of the parties’ financial circumstances. I refer to those as set out in the substantive reasons and note that the husband, under the orders, will have his business together with the plant and equipment contained in it, his goodwill, his superannuation, plus $338,381 being the amount payable by the wife to the husband.
Further, I am conscious and have considered the division of property on the basis of 65 per cent to the wife and 35 per cent to the husband. That outcome provides the wife with a significant capital advantage than that of the husband.
Neither party were in receipt of legal aid, although each party has contributed towards the costs of the Independent Children’s Lawyer and I have had regard to those contributions.
In terms of the conduct of the parties to these proceedings, I have had regard to the matters addressed by senior counsel on behalf of the wife. In terms of the husband’s behaviour in the proceedings, he denied the violence and the ongoing violence to the children and put the wife to the proof, even after the evidence of the single expert Dr E became available, and pursued parenting including until very late in the piece, parenting in respect of the parties’ elder child. The mental health of the children, particularly the youngest child, is evidence of their ongoing family violence. I accepted the evidence of the single expert that that violence by the husband had caused significant emotional and psychological harm to the parties’ children.
I am satisfied that the husband did not make full and frank financial disclosure, at least at the level to which he ought. Further, I am also satisfied that he has, at times, put the interest of his new relationship ahead of the interest of the wife and the children, and not fully complied with orders regarding spousal maintenance, child support and other directions.
In many ways his continuation of his denials of violence added to the costs of the wife, as did his poor approach to disclosure.
The husband relies upon the dismissal of the intimidation charge as some vindication, however, I refer to the findings in the substantive reasons and I note the findings in the substantive reasons in that regard.
Counsel for the husband asserted that these proceedings travelled ‘at break- neck speed compared to the average time proceedings of this type generally take to resolve in this Court’. I accept that these proceedings were dealt with more promptly than is generally available to matters in the Sydney Registry, however, I do not believe they can be categorised as ‘break-neck’. The proceedings took slightly more than a year and a half from the commencement to the delivery of reasons and then another six weeks or so until orders were perfected. That cannot by any stretch be said to be ‘break-neck speed’ and it would seem to me that it is an appropriate period given the complexities of the business and the need to have it valued and the concerns of these very fragile children.
The husband asserted that because he agreed to pay for Dr E’s report, a very substantial sum, he should be given credit because it resulted in the quick finalisation of the proceedings. I do give him some credit for that payment.
I have had regard to the fact that the wife’s spousal maintenance application was wholly unsuccessful.
This Court made a costs order against the husband due to a delay in 2017 and I have had regard to the order and I have been careful not to ‘double count’ that already determined issue.
The husband was effectively wholly unsuccessful in terms of the parenting application. However, as to property neither party succeeded in what they were seeking, partly because of the close proximity of the single expert business valuers report to the trial.
In his submissions the husband denies that he intimidated the wife and reiterated the finding in the local court, however this must be read in terms of the findings and reasons delivered on 21 December 2017.
This Court was critical of the husband for the stance he took. It was not conciliatory in terms of the children; he pursued his parenting application. In relation to the property towards the end the husband adopted a conciliatory stance. However, his delay in providing evidence and the other matters to which I have referred elsewhere in these reasons are a factor in relation to this.
There are no relevant offers in writing to the other party to the proceedings to settle the proceedings. A bundle of letters was tendered to the Court in relation to the wife’s assertions, in paragraph 30 of her affidavit, about offers to settle. On 10 August 2017 the husband’s solicitors wrote to the wife asking whether she would engage in a mediation before the commencement of hearing. At this stage the parties had not received the valuation of the business. The value of the business was a contentious issue. The wife asserted that the value of the business was double that which the Court found and almost double that which Mr Z (‘the single expert’) found. The husband asserted that the business had a value of about half of that asserted by the single expert.
However, on 5 September 2017 the husband sought to enter into formal settlement negotiations. On the same day the solicitor for the wife indicated that as their senior counsel was absent and would not be returning until the commencement of the hearing, the wife was reluctant to participate in mediation, although the wife remained willing to consider settlement proposals. Given the history of family violence, that approach was understandable.
I have had regard to that evidence. I have also had regard to an email sent by the husband to the wife through her solicitors on 11 August 2017, including the undated letter from the husband to the wife commencing ‘dear Connie’.
In the context of the specific factors and generally, I have considered all of the material before me.
I had considered the application for the costs of the application for costs. However, given the holistic approach that I have adopted including the determination of costs by the Court rather than impose an obligation on the parties to go through the trauma and costs of an assessment process, I determine that there should be no further costs orders in respect of this costs application.
A final factor to which I have had regard in relation to costs is the cost of assessing costs. It was an agreed fact that the costs of preparing a bill of costs for the purpose of taxation would be at least five per cent of the bill. In this case that sum could be somewhere between $25,000 and $30,000. There would also need to be the legal costs associated with the assessment or determinative factors, the limited resources of the husband and that he is obliged to pay child support for the children subject to these proceedings and other expenses and has obligations in relation to his present partner and her children.
I have also considered the submission as to the husband’s income and the comments I made in paragraph 421 of the substantive reasons.
I do not accept that a costs order will financially cripple the husband given that he has the business which has, at least in the past, created significant income.
This Court has a wide discretion in terms of costs, and given the circumstances I have determined that there ought to be a costs order.
Should it be on a party/party, indemnity or other basis?
In Prantage v Prantage (2013) FLC 93-544 the Full Court of the Family Court said that there needed be exceptional circumstances to justify an order for indemnity costs. Thackray and Ryan JJ observed:-
100. His Honour’s statement, at [50], that Sheppard J’s emphasis in Colgate-Palmolive was “on parties who must have or should have known their approach was simply imprudent” does not, in our view, accurately reflect the law as explained in Colgate-Palmolive and other cases dealing with indemnity costs.
101. It is true, as the trial Judge noted, that Sheppard J included in the list of situations that might give rise to an order for indemnity costs “the imprudent refusal of an offer to compromise”. However, in our view, imprudence by a party in “their approach” is not sufficient to enliven the power to award indemnity costs.
102. It is important in this context to recognise, as Lindgren J did in NMFM Property Pty Ltd v Citibank Ltd (No 2) (2001) 109 FCR 77 at [56], that there is no rule that indemnity costs will be ordered “where the losing party was guilty of ethical or moral delinquency in the antecedent facts which have given rise to the litigation”.
103. Lindgren J went on to point out (original emphasis):
Even in a proved case of fraud, for example, in my opinion the presumption is that a costs order against the fraudulent party will be on the party and party basis. The conduct of a party that is relevant to the issue of indemnity costs is the party’s conduct as litigant. But, as noted below, the knowledge that a party has, including knowledge of his or her past conduct, may be relevant to an assessment of his or her conduct as litigant.
Given the approach of the Full Court in Prantage v Prantage (supra) I am not satisfied that this is a matter where there ought to be an indemnity costs order or a practitioner/client costs order.
Given the findings on which the property orders and the children’s orders are based I am satisfied that the husband has used these proceedings to continue with his controlling and coercive behaviour in relation to the wife.
This is indicated through his failure to comply with orders, his failure to make disclosures of some assets and his pursuit of orders regarding all three children, particularly given their fragile health, is deeply troubling.
Given the evidence of the wife and the findings in the substantive proceedings, I am satisfied that the level of fees payable by the wife was substantially and detrimentally affected by the aggressive and adversarial stand taken by the husband, including his failure to acknowledge and accept the violence he imposed upon the wife in the course of these proceedings.
The husband’s costs letter disclosed that he has spent about $134,000 on counsel plus $5,500 for the costs application, a total of approximately $140,000 plus solicitor costs slightly in excess of $200,000. In addition, there were expert fees of about $38,000, and Independent Children’s Lawyer’s fees of about $7,000. The husband’s costs were much lower than the wife’s legal expenses.
Given the costs of assessing costs and taxing costs, I have considered all of the evidence and determined, in the circumstances, to make an order based on the material that is before me and I will do so.
Given all of the facts and circumstances in this matter I have determined that the husband should pay a proportion of the total costs in these proceedings. Those costs should be determined on the lower of the solicitor’s costs on a party/party basis and a fair and reasonable rate for senior counsel’s fees. The husband was represented during the hearing by senior counsel, junior counsel and solicitors. They cannot be seriously heard to object to a certification for senior counsel’s fees.
I have had regard to the evidence of Ms AB in relation to such costs and, as I said earlier, I am satisfied that the party/party costs total $539,568.26. This figure excludes the single expert fees which were necessary, the subpoena and conduct money, and the fees of the Independent Children’s Lawyer.
Given the use of these proceedings as ongoing controlling and coercive conduct by the husband and his generalised behaviour in relation to property, as I discussed earlier, but having regard to the circumstance that the valuation of the business was only available shortly before the hearing, I determine that the husband should pay two thirds of the wife’s party/party costs, that being the sum of $359,712.
The Court is conscious that pursuant to the property orders the wife is to pay the husband the sum of $338,381 within six months from the date of the property orders.
Given the circumstances of the parties and to avoid further litigation, the Court will note that it is appropriate for the costs sum to be set off against the amount otherwise payable by the wife to the husband.
This will leave a balance of $21,331 in favour of the wife. The husband should pay this sum within six months from the date of the property orders. Interest shall accumulate on the outstanding sum as and from six months from the date of the property orders unless the sum is paid within that six month period.
Cancellation fees for Barristers
After the primary submissions were complete, the Court invited the parties on 19 April 2018 to make written submissions on the question of barristers’ cancellation fees. The legal representatives for the wife made submissions and contended that there was no cancellation fees charged. They made no other submissions in relation to cancellation fees generally. No submissions were made by or on behalf of the husband as to the question of cancellation fees.
These following comments are by way of obiter dictum in terms of my concerns that barristers are at times including the contractual right to claim so called ‘cancellation fees’ in their costs agreements and disclosures.
The evidence in this case is that the husband inflicted serious family violence on the children and on the wife over the course of the relationship. In his evidence he failed to acknowledge or deny culpability and endeavoured to deflect blame to the wife. He minimised the events at the time of separation during which the wife and children fled the former matrimonial home.
Given the evidence of that event the police, appropriately, took protective action under the NSW State apprehended violence legislation and prosecuted him under the criminal law. The wife was called as a witness by the police. On the instructions of the husband junior counsel for the husband (who also appeared during the property and parenting proceedings) aggressively cross-examined the wife in those criminal proceedings. The transcript shows the extent of that cross-examination and the husband’s minimisation of the violence at that time.
The husband promoted his parenting applications despite the clear evidence of significant emotional and psychological harm that all of his children suffered as a result of his behaviour and in particular the physical and psychological harm inflicted on the parties’ youngest child.
Such was his determination that he pursued parenting orders in respect of his 17 year old daughter notwithstanding her proximity to the age of 18 and notwithstanding her clear expressions, through the single expert, that she wanted nothing to do with him.
This was a case where the wife needed to have competent and effective legal advice.
From what I have seen, such competent legal advice was provided to her although, at significant cost. This advice and support was needed to protect her and the children from the ongoing violence, including the violence which I found was constituted by the husband’s aggressive and difficult approach in terms of these proceedings.
The husband was opaque in his approach to financial disclosure and he had a clear view that the significant financial and non-financial contributions of the wife were of little value, from his perspective.
Without the assistance of competent legal practitioners the children may have been exposed to these proceedings for a longer period of time. The wife may not have been able to properly identify the property or track down where funds were expended.
One example of this was the expenditure of money in Country U, which although a small sum was telling. The second was the purchase of a second boat without notice to the wife. The third was the extensive time the husband was absent from the business which, to some extent, explained the significant downturn in the business and enabled the husband to assert that the business’ value was far less than that asserted by the wife.
Those are factors I have taken into account in determining an order for costs.
I am, however, concerned with ‘boiler plate’ conditions about cancellation fees in some barristers fee agreements.
Professional work undertaken by licenced legal practitioners is said:-[8]
… strictly means only such work as is undertaken by a solicitor [legal practitioner] in his [and her] capacity and by reason of his [and her] qualification as such. It is “work in respect of which the solicitor [legal practitioner] was employed because he [she] was a solicitor [legal practitioner], or in respect of which he [she] would not have been employed if he [she] had not been a solicitor [legal practitioner] or if the relationship of solicitor [legal practitioner] and client had not subsisted between him [her] and his [her] employer” per Lord Langdale in Allen v Aldridge [5 Beav. 401].
Professional work is therefore the work for the proper performance of which legal knowledge and skill are required, and work for which a person cannot make a charge unless he [she] is a solicitor [legal practitioner].
[8] A.G. Saddington and Brian K. White, Costs, solicitor and client: with precedents of bills in contested matters in the High Court, Supreme Court, Court of Bankruptcy (Law Book Co., 1947) page 5.
To be a member of the legal profession a person must have been awarded a recognised law degree, have undertaken practical legal training and be a person of good character. They must undertake ongoing legal education and must apply for a licence. In that regard their conduct is monitored and regulated by Courts and statutory regulatory authorities. It is not open to all.
There are two fundament streams of costs.
The first is the retainer agreement between legal practitioners and their clients. These in New South Wales are regulated by the Legal Profession Uniform Law (NSW) 2014 legislation. Each State and Territory has its own legislative base upon which the commercial arrangements between a legal practitioner and their client is managed. In most jurisdictions a legal practitioner costs must be fair and reasonable (the approach necessary and proper having been legislatively excised) and in most states must be proportional.
In New South Wales s 172 of the Legal Profession Uniform Law (NSW) 2014, this relevantly provides:-
172 Legal costs must be fair and reasonable
(1)A law practice must, in charging legal costs, charge costs that are no more than fair and reasonable in all the circumstances and that in particular are--
(a) proportionately and reasonably incurred; and
(b) proportionate and reasonable in amount.
(2)In considering whether legal costs satisfy subsection (1), regard must be had to whether the legal costs reasonably reflect--
(a) the level of skill, experience, specialisation and seniority of the lawyers concerned; and
(b) the level of complexity, novelty or difficulty of the issues involved, and the extent to which the matter involved a matter of public interest; and
(c) the labour and responsibility involved; and
(d) the circumstances in acting on the matter, including (for example) any or all of the following--
(i)the urgency of the matter;
(ii)the time spent on the matter;
(iii)the time when business was transacted in the matter;
(iv)the place where business was transacted in the matter;
(v)the number and importance of any documents involved; and
(e) the quality of the work done; and
(f) the retainer and the instructions (express or implied) given in the matter.
(3)In considering whether legal costs are fair and reasonable, regard must also be had to whether the legal costs conform to any applicable requirements of this Part, the Uniform Rules and any fixed costs legislative provisions.
(4)A costs agreement is prima facie evidence that legal costs disclosed in the agreement are fair and reasonable if--
(a) the provisions of Division 3 relating to costs disclosure have been complied with; and
(b) the costs agreement does not contravene, and was not entered into in contravention of, any provision of Division 4.
Superior Courts of record have historically managed costs, although much of this is now undertaken through statutory powers such as those contained the New South Wales.
However, it is possible for a Family Court to tax or assess practitioner/client costs. Section 34 of the Act dealing with the ‘Issue of certain writs etc’ provides;
(1) The Court has power, in relation to matters in which it has jurisdiction, to make orders of such kinds, and to issue, or direct the issue of, writs of such kinds, as the Court considers appropriate.
This is in similar terms to s 23 of the Federal Court Act 1976 (Cth) which provides for the ‘Making of orders and issue of writs’:-
The Court has power, in relation to matters in which it has jurisdiction, to make orders of such kinds, including interlocutory orders, and to issue, or direct the issue of, writs of such kinds, as the Court thinks appropriate.
In terms of this provision the Full Court of the Federal Court said in Re Keith Hercules & Sons v Steedman and Others [1987] FCA 472 said:-
19. Section 23 is expressed in plain words which should be given their ordinary meaning. As was pointed out by the High Court in Jackson v. Sterling Industries Limited (1987) 61 ALJR 332 and by the Full Court of this Court in the same case (1986) 69 ALR 92 there is no justification for reading down the language of s. 23 so as to restrict the powers of this Court to those which may be the limits of exercise of the power of other courts differently constituted (see in particular per Bowen C.J. at 94). Section 23 is directed to equipping the Federal Court with power to make orders, final and interlocutory, as it thinks appropriate in relation to matters in which it has jurisdiction. As Toohey J. observed in Jackson v. Sterling Industries at 340:
“The effect of s. 23 is to equip the Federal Court with powers arising expressly or by implication, in this case from the Trade Practices Act, and with powers that are incidental and necessary to the exercise of the jurisdiction conferred by that Act and the powers so conferred: see for instance Hughes v. Western Australian Cricket Association (Inc.) (1986) 66 ALR 541. More generally, the section gives to the Federal Court 'the powers necessary for it to do justice in exercising the judicial power of the Commonwealth in matters over which it has jurisdiction' (Ellicott J. in Hiero Pty. Limited v. Somers (1983) 68 FLR 171 at 178; 47 ALR 605 at 612 ..."
See also the reasons for judgment of Mason C.J. at 332-3, Brennan J. at 344, Deane J. at 335-6 and Gaudron J. at 344.
…
22.The power conferred by s. 23 may be invoked to facilitate the judicial process for various purposes including ensuring the convenient, expeditious and fair conduct of legal proceedings and giving full force and effect to orders of this Court. In my opinion s. 23 confers power upon this Court to direct the taxation of a bill of costs as between a solicitor and his client when the costs are incurred in connection with a proceeding in this Court; but it would be in a comparatively rare case that the occasion would arise for the exercise of the power.
This interpretation was confirmed by Watts J in Atkins & Hunt and Ors [2018] FamCA 14 where he said:-
68. The statutory basis for the power to make an order in the terms sought by the wife directed to both the husband’s lawyers and the wife’s lawyers can be found in s 34 of the Act (see Re Keith Hercules & Sons v Steedman and Others [1987] FCA 472 at [19] and [22] which deals with s 23 of the Federal Court of Australia Act 1976 (Cth) and is in identical terms to s 34 of the Act). This court also has the incidental and necessary power of a statutory court (DJL v The Central Authority (2000) 201 CLR 226 at 241; Woolf v Snipe (1933) 48 CLR 677 at 678-679; Re P’s Bill of Costs (1982) FLC 91-255 at 77,416-77,417; Weiss v Barker Gosling (1993) FLC 92-399 at 80,071). This, in my view, includes the power to make an order directed to the lawyers.
Members of the legal profession are officers of the Court and they have obligations to the Court. Courts take seriously those obligations and have powers to make costs orders against legal practitioners or to prevent legal practitioners from charging costs. There is also likely to be implied powers to make orders for costs against legal practitioners or prevent legal practitioners from enforcing a costs entitlement in a way as to regulate their behaviour in limited circumstances in proceedings before a Family Court.
The second stream is pursuant to inter-party costs orders. In the family law jurisdiction these costs are governed by s 117 of the Act. Such party/party costs orders are of course not penalties, but they are an indemnity or partial indemnity of costs expended as was discussed in Cachia v Hanes (supra)
Further, there is no reason why Courts cannot, in their Rules, limit costs or through reasons set out principles regarding costs. In my view this can apply not only to the taxation or assessment of costs between parties but in terms of any assessment or determination of practitioner and client costs, either undertaken by a Judge pursuant to s 34 of the Act or by direction or order to a costs assessor or the like or by setting out the expectation of this Court in terms of how practitioners engage with litigants in proceedings before this Court.
I intend to make comments with regard to barrister’s cancellation fees.
On 5 February 2009, the Council of Australian Governments (COAG) agreed to add legal profession regulation to its microeconomic and regulatory reform agenda. Consequently, in April 2009, COAG agreed to set up a Taskforce on reform of the regulation of the legal profession, with the objective of achieving uniform laws across jurisdictions. A discussion paper on legal costs dated 4 November 2009 was prepared and made public in relation to legal costs.
That paper noted:-
While sophisticated clients usually are able to negotiate their legal costs based on previous experience in similar matters and commercial decisions about the value of the work to their business, retail consumers generally have less experience or information when engaging a legal practitioner or law practice. The complex and specialised nature of legal work also means that retail consumers can have limited capacity to determine whether work is necessary or valuable.
This ‘information asymmetry’ can disadvantage retail consumers in their relationship with their lawyer—often at times when clients are in a state of heightened sensitivity and pressed to make urgent and significant life decisions. The lack of market-based or scientific methods for valuing legal costs, and the costs of changing representation, can result in retail clients being charged more than reasonable costs for legal services, or create a perception of overcharging.
The paper also spoke of proportionality saying:-[9]
Proportionality in assessing reasonableness of costs
Proportionality of legal costs is already enshrined in certain areas. For example, section 60 of the Civil Procedure Act 2005 (NSW) provides that: ‘in any proceedings, the practice and procedure of the court should be implemented with the object of resolving the issues between the parties in
such a way that the cost to the parties is proportionate to the importance and complexity of the subject-matter in dispute’.In Seven Network Ltd v News Ltd [2007] FCA 1062, Justice Sackville commented adversely on the disproportionate amount of the legal fees relative to the amount ultimately in dispute. His Honour has subsequently commented that
‘… there is an undeniable public interest in the courts actively applying the principle of proportionality to all forms of litigation, whether the stakes are very high or comparatively low. If this is not done, judges can hardly be surprised if the civil courts are largely seen as the exclusive domain of the wealthy and powerful’.
The Victorian Law Reform Commission discussed the issue of proportionality in its report, Civil Justice Review (2008). The Commission noted certain difficulties in applying the principle of proportionality to legal costs. However, it recommended that new provisions should be enacted in respect of certain matters, including a paramount duty on parties, legal practitioners and law practices involved in civil proceedings to the court to further the administration of justice; and this would include a duty to ‘use reasonable endeavours to ensure that the legal and other costs incurred in connection with the proceedings are minimised an proportionate to the complexity or importance of the issues and the amount in dispute’.
(Footnotes omitted)
[9] Council of Australian Governments (COAG) National Legal Profession Reform Discussion Paper: Legal Costs 4 November 2009 - page 5.
There is a view that Judges should not interfere in contractual relationships between members of the legal profession and their clients. The argument contends that there is in place a national system of costs assessment by professional costs assessors which, together with the capacity of an aggrieved client to complain to the relevant professional body, provided an entirely satisfactory check and balance on fees charged. Further, that there was no need for the Family Court to add a further layer of complexity to what is a sophisticated system.
With respect, I disagree with that proposition. Legal practitioners are not mere businesses. They are professionals and that status is conferred by their admission as legal practitioners of the State or Territory Supreme Courts and, for many legal practitioners, of the High Court. The fundamental principle of being a practitioner is to be the subject of high and continuing education and subject to ethics which are preserved through regulatory functions, in modern times more through Legal Services Commissioners and through Law Societies or Bar Associations.
Sometimes costs in family law proceedings are out of kilter with the reasonable expectations of parties and the community to enable accessible justice.
I acknowledge that high legal costs can arise from a variety of sources, including:-
a)lack of resources in terms of judicial officers, Registrars, Family Consultants and the like;
b)sometimes, bureaucratic and unwieldy practices and requirements of Courts;
c)the anger and unrealistic expectations of parties to the conflict, including the desire to win or cause financial harm to the other party: and
d)some legal practitioners (very few) who inflame conflict and/or do not adopt a proportionate approach to litigation.
At this stage, I should add that people who need legal assistance following relationship breakdown are generally well served by the legal profession. The profession is mostly made up skilled professionals who are practiced in analysing facts, identifying issues and finding practical solutions. The Courts would grind to a halt without the assistance of competent legal practitioners.
The task of judges should be to do all they can reasonably do to enable parties to have access to the Courts. Part of this is to endeavour to create a system to ensure that legal costs and practices are not so expensive as to create an impenetrable barrier.
It is in this context that I address the practice of ‘cancelation fees’ or ‘disappointment fees’ charged by some barristers in family law proceedings.
I have anonymised the names of the legal practitioners involved in these proceedings. This is not done because I make any criticism of those barristers involved in this case, for I do not. It is done because I am critical of the cancellation fee provisions that I understand may be a very common provision in barristers’ fee agreements in family law, and perhaps more broadly. The comments I make are specifically referable to such cancellation fees sought to be charged in proceedings in Courts exercising jurisdiction under the Family Law Act.
So called ‘cancellation fees’ normally arise (pursuant to a costs agreement) in circumstances where a barrister is briefed to prepare for a hearing and appear on a hearing and the matter settles or is adjourned.
In this case the fee agreement for senior counsel for the wife contained conditions for payment of cancellation fees to which fall under paragraphs 5 (FEES) and 7 (RESERVATION OF DATES) which provided:-[10]
5.1 (Daily Fee) I will charge a daily fee of $7,000.00 per day inclusive of any necessary conferences (between the hours of 8.00 am and 4.30 pm), which will be payable for all attendances, whether in court, in conference, reading, preparation, research into any specific issue in the case, or otherwise, which occupy the whole or any substantial part of any day, or for which it is necessary to reserve the whole or such substantial part of any day in my diary. In particular, for hearings for one day or more, I will charge the full daily fee for each day I attend at court or the matter is listed to continue, or as a reserve matter and whether the whole hearing date is used or not.
5.2 (Final Hearings and Appeals when listed for less than one day) –I will charge my daily rate for the day on which the matter is first listed and, if not reached, each subsequent day irrespective of whether the whole of the day is used or not. In addition, I will charge for all preparation at my daily rate where that involves the whole or a substantial part of the day or at my hourly rate when this is not the case.
5.3 (Hourly Rate) - I will charge $850.00 per hour or $212.50 for each unit of 15 minutes or any part thereof for any other attendances including conferences, reading, preparation and telephone attendances.
5.4 Notwithstanding the foregoing, in the event th.al I am required to travel interstate for conferences, or for any hearing that occupies less than one day, then my fee shall nonetheless be charged on the basis of a fee for one day for each day I am required to remain outside the Sydney metropolitan area.
…
7.1 When advised of a date for these items I will set that day aside in my diary and, whilst I cannot guarantee that I will be available on that day, I will use my best endeavours to be available on that day and will not, without prior agreement, accept other Court commitments for that day.
7.2 Unless otherwise separately agreed with my solicitor, where I have reserved dates for any hearing of 3 or more days, I will charge my daily rate of one day plus all unbilled work done where the matter is adjourned for some reason which is no responsibility of mine, the fixture cancelled or the case settled at any time within the period commencing 14 clear working days prior to the first of those dates.
7.3 Where I have reserved less than 3 days In my diary for the hearing, I will charge my daily rate for 1 day and all unbilled work done where the matter is adjourned for some reason which is no responsibility of mine, the fixture cancelled or the case settled at any time within 2 clear working days of the first trial date.
[10] Wife’s solicitors March 2018 affidavit annexures D & E.
Subject to the Legal Profession Uniform Law (NSW) 2014, this agreement entitles this barrister to charge a cancellation fee if the hearing does not proceed if the case settles or is adjourned.
In most Australian jurisdictions, including New South Wales, the touchstone is that costs must be fair and reasonable and proportionate, see s 172 of the Legal Profession Uniform Law (NSW) 2014 legislation.
These types of fees have been the subject of comment in various cases over the years.
In Commissioner of Australian Federal Police v Razzi (No 2) (1991) 30 FCR 64 Wilcox J observed:-
9. I do not think that a solicitor-client order would in fact enable recovery of "cancellation fees". A solicitor-client costs order enables the recipient of the order to recover the actual costs, reasonably incurred, of all work reasonably required and actually performed in connection with a matter. But it does not extend to fees for work not done.
10. However, even if there was a basis for recovery of "cancellation fees", I would require a deal of persuasion ever to make an order which would have the effect of permitting a party to recover such payments from someone else. The charging of "cancellation fees" by some barristers seems to be a practice of very recent origin. In 21 years at the bar, from 1963 to 1984, I never heard of such fees being asked. There were, of course, occasions when cases were suddenly adjourned, or when they took less time than had been estimated, so that the barristers briefed in the matter found themselves unexpectedly out of court. Very often they would have refused other work because of the case and its estimated duration. But, as I understood the situation, barristers generally accepted that any financial loss caused by such circumstances was to be borne by them. Any disadvantage had to be balanced against the advantage conferred by the rule which permits barristers to charge a full fee on a matter settled after delivery of the brief but before any hearing. This approach was fair. The unexpected time out of court was rarely the personal fault of the barrister's client, or even of the opposing party. Moreover, it was right in principle. The practice of demanding "cancellation fees" can rest only on the premise that, if a case does not proceed or finishes early, the barrister will be left without remunerative work. But, except perhaps for beginners at the bar who are unlikely in any event to be able to command a "cancellation fee", the premise is rarely well-founded in point of fact. Most established barristers find that their problem is over-employment, not under-employment. For most, some unexpected time out of court is a welcome opportunity to catch up with chamber work.
This approach has been the subject of some criticism since that time, given the increasing length of hearings and the changing fees structures of barristers.
The Commissioner of Australian Federal Police v Razzi (No 2) (supra) was cited by Edelman J in The Pilbara Infrastructure Pty Ltd v Brockman Iron Pty Ltd [No 2] [2014] WASC 345 (S) where he said:-
39. That was said more than two decades ago. It appears that it is not as uncommon today for a party to agree to pay a cancellation fee for a senior barrister. But whether that fee should be borne by the other party to the litigation is a different matter. The Scale of costs has not yet included in it the recoverability of costs for work which was not done. In the absence of any evidence concerning practice or the reasonable need for such a fee or even that such a fee was charged in this case, I do not consider that it is fairly arguable that this could be recovered on a taxation of the costs in this case. In oral submissions, counsel for Brockman Iron did not submit the contrary.
In the more recent case of Wilkie v Gordian Runoff Ltd [2005] NSWSC 873 McDougall J was faced with a claim for cancellation fees sought in the context of a claim for insurance cover to meet these costs. The Court was to determine whether it was reasonable for Mr Wilkie to agree to pay cancellation fees.
His Honour observed that:-
12 Mr Wilkie has retained solicitors and senior and junior counsel (who did not appear before me on this application) for the defence of the charges. He has entered into a retainer and costs agreement with the solicitors. That costs agreement relates to their fees only. The solicitors have retained counsel. It is however a term of that retainer that counsel will not look to the solicitors for payment of their fees, and will look only to Mr Wilkie. Accordingly, Mr Wilkie has entered into costs agreements with counsel.
The factual background for claiming the cancellation fees was:-
13 The hearing of the charges is expected to occupy some 6 to 12 weeks. There will be a substantial amount of work to be done beforehand. It is apparent that both senior and junior counsel will be required to devote at least 2 months, and it may be in excess of 4 months, to virtually full time work in preparation for the hearing of the charges and for the hearing itself. In those circumstances, each counsel required payment in advance of an amount equal to 20 days’ fees, on the basis that the amount would be payable regardless of the duration of the hearing (or, indeed, regardless of whether the hearing proceeded at all).
The Court determined that it was reasonable in this circumstance to approve the payment of some cancellation fees, but not at the level sought by counsel.
Deputy Chief Justice Faulks in K & V [2006] FamCA 252 said:-
108. In the submissions from the wife I was supplied with the fees agreement for Mr J of Counsel. Such documents do not often find their way into evidence. Clause 4 refers to “cancellation fees” that is, fees payable to the barrister for not attending Court. I understand that this is now a common practice at the Sydney Bar.
109. The practice of charging cancellation fees is no doubt at least in part dictated by supply and demand. However, the market place is not the only determinant of professional practice. It is easy to feel some sympathy for counsel who in good faith reserve time in their diaries for a hearing only to find that the hearing is not reached or resolved by settlement on the first or second day of the time reserved for the trial. However, it has come to my attention that it has been known for counsel to be paid more than one cancellation fee in respect of the same period of hearing time.
110. Counsel, at least busy or well-regarded counsel rarely in my experience are left with no work to do even if a hearing resolves or is adjourned at short notice. Chamber work is an important part of counsel’s professional work.
111. The tradition that the brief fee included preparation and the first day’s hearing seems to have faded into a distant professional haze. Counsel seem now to charge and charge highly for preparation for trial on an hourly basis. In my opinion this practice makes it very difficult for litigants to have some firm idea of what legal services will cost them. (The same applies equally to solicitors or attorneys who charge for their services according to the time it takes them to do their work.) I accept that time-costing is now a wide-spread practice of both barristers and solicitors. I fear that the legal profession does itself no favour in persisting with this practice. It opens up lawyers to allegations that the charging system rewards the slow and incompetent over the fast and efficient. This is in most cases an unjustified criticism but persistence with this practice leaves the profession open to unfounded or even occasionally well-founded criticism.
112. The practice of charging cancellation fees falls into a similar category and if anything is even less justified. The fees agreement in this case which may or may not be typical makes no provision for a payment or penalty from counsel if for any reason counsel is unavailable. Counsel become jammed through no fault of their own. Counsel can become ill or have family emergencies. These events are beyond counsel’s control but have the effect of the litigant losing at short notice the support and skills of counsel in whom the litigants have reposed trust and confidence. The agreement lacks reciprocity of obligation. Litigants may have no choice in the market place except to agree to such terms but that does not make them reasonable.
113. I accept that commercial litigants may have sufficient bargaining power and financial strength to fairly enter into arrangements which might not appear to be fair or reasonable for those less powerful or well off. But I find it hard to believe that this could be so in many (if any) cases of family law litigation. In my opinion the practice of charging cancellation fees in family law matters at least is not to be encouraged and I urge individual barristers and the various Bar Associations to review their practices.
The question of cancellation fees was discussed by Rothman J in Levy v Bergseng (2008) 72 NSWLR 178 where his Honour found that the fee in that circumstance was reasonable, but warned:-
111. Nothing in this judgment should be taken as a general proposition that all counsel in all cases can reasonably and justly charge cancellation fees. In most cases, and for most counsel, cancellation fees would be unjustifiable. This judgment deals only with this appeal, relating as it does to senior counsel engaged “on spec” in particularly specialised work for which the lead time is lengthy and during which he has, in fact, foregone other paid court work.
In Commissioner of Police v Hoffman (2014) 18 DCLR (NSW) 320 Neilson DCJ said:-
42. I reject the contention that ABC did not do any relevant "work" which entitled him to charge a fee of brief. He held himself available at all material times until the matter was settled, until at least 13 March 2012 when he returned the brief, having advised that the matter had been resolved. As a result of holding himself available for Mr Hoffman during that period, he was entitled to and indeed required to refuse other work which would have interfered with his ability to represent Mr Hoffman on 23 March 2012. Furthermore, he held his experience and expertise ready for the benefit of Mr Hoffman. The greater the expertise and experience, the less time it takes to prepare a brief on hearing. ABC knows the area of the law here involved in great detail. He would not have to "work it out" as anyone would need to, who was not experienced in the field. He brought that experience and expertise to what he was required to do for Mr Hoffman and held it available to Mr Hoffman until the present plaintiff decided to concede the relief sought by the current defendant. The submission, if I may use a simile, is one that was sometimes met in the workers compensation field where it was argued that a worker whose periodic or other compensable journey was interrupted by having to wait, was not entitled to compensation if injured during the interruption. There was a difference, of course, between an interruption caused by the worker himself and some interruption in the journey done for reasons extraneous to the worker. For example, a worker who caught a bus to a bus stop and then had to wait to catch a different bus, was travelling, even though he was sitting on a chair at a bus stop. A person was still travelling, albeit that he was standing at a railway station waiting for the inevitably delayed New South Wales train to arrive at the station. A person was still travelling if his car broke down and he had to wait for the NRMA to attend to get it started for him, or for some other repairman to turn up to fix the car so that he could continue his journey. The principle, of course, was that they also travelled who waited.
Neilson DCJ’s approach was similar to that of Rothman J as they both adopted a somewhat laissez-faire approach to barrister’s cancellation fees.
Asking rhetorically, what should I make of this and what is the work undertaken by barristers in family law proceedings?
The answer to this question depends upon the nature of the brief to the barrister. However, for briefs on hearings or directions it falls into reading and considering the brief and the documentary evidence (including affidavits, reports material on subpoena, court records, orders and the like), conferences, advice on evidence (and perhaps the law) preparation and attending on hearing.
The nature of cancellation fees is at some levels to charge for time not used, presumably on the basis that the day is lost to the barrister, during which time he or she could undertake another hearing. In this context, I would have little difficulty in barristers charging reasonable and fair fees for preparation work which was actually done; that is entirely reasonable.
However, I have grave difficulty in endorsing, as fair and reasonable or proportionate, terms in fee agreements which provide for barristers to be paid for doing nothing.
The historical need for cancellation fees was claimed to protect the practice barristers who took themselves out of the day to day hurly burly work at the Bar for months or longer in circumstances where their day to day or week to week work was diminished or lost.
Cancellation fees are likely to be claimed by the most experienced and best regarded of the family law barristers and they in turn are likely to be the busiest of those practitioners. Their work is not all appearance; it inevitably includes advising, conferences, preparation and research. There is little or no reason why these busy barristers cannot apply the time lost on other matters. In terms of fairness it ought not be visited upon often inexperienced litigants as they find their way through the emotional and complex world of family law and relationship breakdown.
Almost inevitably, when relationships breakdown it has a significant effect on parties to that relationship. The parties to these proceedings relied upon the legal advice provided by solicitors and barristers.
These cancellation fees can also be contrary to public policy as they may be a barrier to settlement. If a party knows he or she can save many thousands of dollars by settling, that circumstance may lead to that negotiated outcome. If on the other hand, the party has or will be liable to pay the barrister irrespective of the settlement, the cost saving inducement is lost. In family law that may lead to a terrible outcome. Negotiated settlements are generally (but not always) a better outcome for parties involved in family law litigation.
Courts have traditionally monitored legal costs and provided processes for the determination of legal costs pursuant to cost orders. The principle, which may still apply in some states, was that the costs between a practitioner and a client had to be ‘necessary’ and ‘proper’. In States such as New South Wales it is under the Legal Profession Uniform Law (NSW) 2014 to which I have earlier referred and the measure is whether the costs are fair and reasonable and proportionate.
It is clear that the New South Wales Parliament expects costs assessors to interfere with the contractual arrangements between practitioners and clients if it is found the work or the charges for the work are not fair and reasonable or proportionate. The work of costs assessors is ultimately supervised by the Supreme Court of New South Wales.
As I have said earlier the Family Court has powers to ensure that the costs as between practitioners and clients are fair and reasonable or necessary and proper. For example, courts have, from time to time, prevented practitioners from charging costs where there is some concern about those costs (naturally procedural fairness would have to apply in relation to giving parties an opportunity to be heard).
Further, practitioners have from time to time used the Family Court to enforce costs orders such as in Twigg & Keady (1996) FLC 92-712. Legal practitioners are in a privileged position.
I see no reason why the Family Court cannot set parameters in relation to costs through Rules or by individual judgments of the Court.
Of course these comments are obiter. However, they must be persuasive in terms of assessment or taxation of costs by Registrars of this Court determining the level of costs pursuant to a costs order between the parties (party/party costs whether those costs be assessed on an indemnity basis, practitioner/client basis or under the costs schedules on a party/party basis).
As such the so called ‘cancellation fees’ would not be allowable pursuant to orders made between parties, unless it was in factual circumstances such as that set out in Wilkie v Gordian RunoffLtd (supra). Namely a six to twelve week hearing and months advance in terms of preparation. Even then, it would only likely apply in the shadow of an indemnity costs order or a practitioner/client costs order. Any such cancellation fee would be of very modest proportions.
Similarly, this Court can and should set guidelines which apply to the assessment of costs as between legal practitioner and client. These guidelines could and perhaps should be applied by costs assessors or taxing officers when determining the level of costs if there is a dispute between the practitioner and their client arising out of a dispute in this Court.
In terms of assessment of costs or taxation of costs under any State or Territory provisions, such cancellation fees would not seem to me to be fair and reasonable and/or proportionate in family law proceedings, unless in a factual scenario such as was in Wilkie v Gordian RunoffLtd (supra).
This would even be the case if there was compliance with the Rule in Re Blyth & Fanshawe; Ex parte Wells(1882) 10 QBD 207, where Baggallay, L.J. said at 210:-
I take it to be the general rule of law, and an important rule which is to be observed in almost all cases, that if an unusual expense is about to be incurred in the course of an action it is the duty of the solicitor to inform his client fully of it, and not to be satisfied simply by taking his authority to incur the additional expense, but to point out to him that such expense will or may not be allowed on taxation between party and party whatever may be the result of the trial.
As I have said earlier, this is because parties to family law litigation are generally not regular users of legal services for such expensive and complex litigation. They are often emotionally invested in the litigation and heavily reliant on those whom they instruct, be it barristers and/or solicitors.
From an instructing solicitor’s point of view, if such cancellation fees are sought from barristers, it would be prudent for the solicitor to require the client to enter into a separate agreement direct with the barrister or alternatively require the barrister to indemnify the solicitor against any repayment of fees (and perhaps the costs of the assessment or taxation) should the cancellation fee be challenged. Otherwise, on a practitioner/client assessment or taxation in other States or Territories, the disbursement which is the cancellation fee or fees may not be allowed and re-imbursement of such fee or fees may be visited upon the solicitor and not the barrister.
I reiterate that in the specialist jurisdiction as is family law, where there is a relatively small cohort of experienced barristers, there is no reason why those barristers cannot usefully apply the time not used when a case settles in some other professional endeavours.
I certify that the preceding one hundred and fifty-four (155) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Benjamin delivered on 11 May 2018 .
Associate:
Date: 11 May 2018
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