Gairola and Lakmali & Ors

[2020] FamCA 55

FAMILY COURT OF AUSTRALIA

GAIROLA & LAKMALI AND ORS [2020] FamCA 55

FAMILY LAW – INTERVENTION – Third party – where the third named respondent has an outstanding judgment debt from the County Court in relation to unpaid legal fees – where the husbands former solicitor has intervened as of right and has become the third named respondent

FAMILY LAW – INJUNCTIONS – Rights of third parties – where an injunction is granted restraining the husband and wife from accessing funds in a joint bank account – where there is no determination as to whether the second and third named respondents will be paid however the injunction is granted to protect the status quo – where the funds in the bank account are sufficient to cover the outstanding judgment debts of the second and third named respondents and any potential costs – where the injunction protects the possibility that the parties could reach an agreement, settle the matter and leave the costs of the second and third named respondents unpaid.

Family Law Act 1975 (Cth) s 79(10)

APPLICANT: Mr Gairola

FIRST RESPONDENT: Ms Lakmali

SECOND RESPONDENT: Ms Falk

THIRD RESPONDENT: B Lawyers

FILE NUMBER: DGC 774 of 2017

DATE DELIVERED: 14 January 2020

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Macmillan J

HEARING DATE: 14 January 2020

REPRESENTATION

APPLICANT: No appearance

FIRST RESPONDENT In person

SECOND RESPONDENT In person  

COUNSEL FOR THE THIRD RESPONDENT Mr J Hall

SOLICITOR FOR THE THIRD

RESPONDENT

B Lawyers

Orders

IT IS ORDERED THAT

1. Pursuant to section 79(10) of the Family Law Act 1975 (Cth) B Lawyers (ACN …) be entitled to intervene in these proceedings as the third named respondent;

2. Service of the Application herein and Notice of Intention to Intervene together with the Affidavit in Support be deemed to have been properly effected by the delivery via prepaid post to the husband at C Street, Suburb D in the State of Victoria and/or by service on husband's email address known to the Intervenor/third named respondent;

IT IS FURTHER ORDERED

1. All extant applications be adjourned for further mention on 12 February 2020 at 10 am.

2. UNTIL FURTHER ORDER the Applicant Husband and Respondent Wife be and are hereby restrained by injunction from transferring, disposing of, encumbering or otherwise dealing with the amount of $145,000 being part of the funds in their joint names in National Australia Bank joint account BSB … Account Number …03 without agreement in writing of both the second named respondent Ms Falk and the third named respondent B Lawyers or Order of the Court.

3. A sealed copy of this Order be served on the National Australia Bank by service upon "The Proper Officer" at the National Australia Bank, Suburb E.

4. The Husband and Wife:

   a.On or before 7 February 2020 make file and serve an Affidavit of Financial Circumstances providing full and frank disclosure of their assets and liabilities in accordance with Rule 13.04 Family Law Rules 2004 (Cth);

   b.File and serve on or before  7 February 2020 an Amended Application (applicant husband) and Response (respondent wife) setting out with particularity the Orders sought by them in respect of financial matters, including but not limited to:

   i.A Response to the Final Orders sought by the second named respondent in her Amended Application filed 7 January 2020 paragraphs 1 - 5, and the Final Orders sought by the third named respondent in its Application filed 10 January 2020 in paragraphs (d) to (h) thereof setting out with particularity the precise orders they or either of them seek with regard to the said Final Orders sought;

   ii.Any Minutes of Consent for which they seek approval as envisaged in the Notation to the Orders of Registrar Moser 25 September 2019.

   c.File and serve any further Affidavit upon which they seek to rely on or before 7 February 2020;

   d.In default of compliance with order 6 (a), (b) or (c) hereof, the second and third named respondents have leave to apply to have their applications heard and determined on an undefended basis.

5. The second and third named respondents be permitted to effect service of any further documents upon the Husband and Wife by way of email as follows:

   a.The Husband’s email address being …; and

   b.The Wife’s email address being ….

6. The second and third named respondent's costs be reserved.

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 Gairola & Lakmali 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 MELBOURNE

FILE NUMBER: DGC 774 of 2017

Mr Gairola

Applicant

And

Ms Lakmali

First Respondent

And

Ms Falk

Second Respondent

And

B Lawyers

Third Respondent

REASONS FOR JUDGMENT

Intervention by Third Respondent

1. These proceedings have been on foot for a number of years, both in the Federal Circuit Court of Australia (“the Federal Circuit Court”) and since March last year, this Court.  Both the husband and the wife have been legally represented at various times during these proceedings. The Application in a Case before me filed 10 January 2020 (“the application”) is an application by the husband’s former solicitor (“the applicant”) seeking to intervene in the proceedings to secure and ultimately to affect payment of outstanding costs.  Those costs are in the sum of $119,368.04.  In December 2019, the applicant obtained judgment in the County Court of Victoria with respect to the payment of those costs.  It is that judgment that he seeks to secure in these proceedings.

2. The application seeks leave to intervene either as of right pursuant to section 79(10) of the Family Law Act1975 (Cth) (“The Act”) or the applicant having an interest in the proceedings by the Court granting leave. I am satisfied that the application was served upon the husband by email on 10 January 2020, and by registered post on the same date, and that attempts were made to effect personal service upon the husband on 10 January 2020. Those attempts to effect personal service were, for reasons that will become clear, unsuccessful.

3. By email dated 14 January 2020, the husband responded to the email he received with the Application and the Affidavit in support as follows:

   I am not available in Melbourne until end of the Month.

   Mr Gairola

4. The history of these outstanding costs is relevant.  The applicant proposes that he represented the husband in proceedings from March 2017 to September 2019 in both the Federal Circuit Court and this Court.  He also represented the husband in criminal proceedings and in family violence proceedings. 

5. The husband terminated the applicant’s services when he was making submissions to this Court on 25 September 2019.  The applicant deposes that the husband did not advise him of his intention to terminate his services, although by this time, the husband had stopped returning any emails or telephone calls from the applicant.  The husband’s failure to return emails and telephone calls from the applicant was a cause of some concern to him, as a result of which he instituted the proceedings in the County Court of Victoria on 2 October 2019 in order to recover his costs. 

6. The applicant deposes that in those proceedings there were a number of attempts made to effect service and ultimately, he obtained an order for substituted service which required him to serve the proceedings upon the husband by prepaid post addressed to him at F Street, Suburb D and C Street, Suburb D and by SMS message to the husband’s mobile telephone number.  The husband was duly served with the writ and statement of claim in the manner proscribed. The husband did not file a defence and did not otherwise participate in the proceedings.  And although judgment was only entered in late December 2019, the husband has not sought to set aside that judgment, although I note that it was only entered in late December 2019. There is certainly a concern with respect to the likelihood of the husband paying those costs in these circumstances. 

7. The other concern that is raised in the applicant’s Affidavit is that the wife’s solicitor, who is also a party to these proceedings, also faced difficulties attempting service upon the husband and the wife. The applicant also believed, as advised or promised by the husband, that his legal fees would be paid out of monies held in trust on behalf of the husband and the wife upon application to the Court for part property settlement. 

8. However, it is his case that the husband, having terminated the applicant’s services, consented to orders dividing trust monies between he and the wife without making any provision for payment of any outstanding legal fees.  In my view, there would certainly appear to be a prima facie case that the applicant may not be able to recover his fees if a property settlement order is made without him having an opportunity to participate in the proceedings, and I am satisfied that he is entitled to become a party to the proceedings. The applicant will be the third named respondent for the purposes of the substantive property proceedings.

Injunction

1. As previously referred to, proceedings were instituted in the Federal Circuit Court in March 2017 and transferred to this Court in March 2019.  The matter comes into this list as a consequence of the Application in a Case filed by Ms Falk, the second named respondent, on 2 October 2019.  In that application, she is seeking payment of her costs, having acted for the wife in the early stages of the proceedings.  Ms Falk obtained a judgment for those outstanding costs in the Magistrates Court of Victoria in August 2019.

2. It is the evidence of the second named respondent that the wife in these proceedings, whom she acted for, did not defend the proceedings and judgment was entered in default against her. She sought leave to intervene in the proceedings in this Court and on 22 November 2019 was granted leave, her application was adjourned for hearing in this list today.  The substantive proceedings, which are the proceedings between the husband and the wife, were otherwise adjourned to the Registrar’s directions list for hearing at 9.30 am on 4 March 2020.  It was after those orders were made that the husband’s former solicitors filed the Application in a Case seeking payment of their costs in the sum of $119,368.04.

3. The orders that are sought by the second and third named respondents are to secure payment of the outstanding costs, pending the further determination of this matter.  The proposed order is by way of an injunction restraining the husband and the wife from withdrawing funds from a bank account in their joint names.  That account requires them both to sign for any withdrawal. 

4. The wife informed me from the bar table that the monies have been in that account since approximately October 2019 and that neither party has withdrawn any monies from that account since then.  The current balance of that account, account number …03 is $247,467.21.  The wife has over the luncheon adjournment, obtained a certificate of balance which is signed by a manager of the National Australia Bank where that account is held. 

5. I am further advised by the wife, again from the bar table, that she and the husband and the husband’s family have been involved in negotiations with a view to resolving the dispute between them, that is, the substantive dispute, since October 2019.

6. The wife opposes the making of an order restraining the parties from withdrawing any monies from that account on the basis that the negotiations are sensitive and that an injunction could make the husband or his family members fearful and undermine the negotiations.  There is, however, in the Affidavit of Mr G filed 10 January 2020, reference to the difficulties that both he and the second named respondent, Ms Falk, have experienced attempting to serve documents upon the husband and the wife with respect to their debt recovery actions.

7. The third named respondent also deposes that the husband had previously promised him that he would pay the legal fees from the sum of $302,144.00, being the proceeds of sale of a property held in trust and those fees would be paid from the monies held in trust in that account.  Thereafter, the husband having terminated the third named respondent’s instructions, the husband and the wife then acting on their own behalf, consented to an order releasing of the funds held in trust.   It is those monies or part thereof that are now in the account with the National Australia Bank in the joint names of the husband and the wife. 

8. It is not clear how the balance of the monies have been dispersed, however, what is clear is that there is sufficient in that account to cover the judgment debts in relation to both the second and third named respondents and the costs they say they have incurred in relation to these proceedings pursuing payment.

9. The applications filed by the second and third respondents also sought injunctive relief to prevent the sale of the property in which the wife is currently residing, at H Street, Suburb J in the State of Victoria (“the Suburb J property”). Those applications were made at a time when the second and third named respondents were unaware that the husband and wife still had funds in a joint account.   Having become aware of the funds in the joint account the second and third named respondents did not pursue their application with respect to either an order restraining the wife from dealing with that property, the Suburb J property or its sale.

10. Whilst it may well be that the parties are engaged in some meaningful negotiations and to that end, the wife sought an adjournment of this matter until April 2020. However these proceedings have been on foot for almost three years.

11. The Court has an obligation to bring proceedings to an end and in my view, orders need to be made which keep this matter on track, moving towards a hearing and some finality in the event that the parties do not reach agreement.  Even more so where there are third party creditors who have not been paid whose claims must also be addressed, the orders that are being made not determining whether or not the second and third named respondents will be paid, or from what source.  The orders I propose to make, which will include an order restraining the parties from dealing with a sum sufficient to cover the judgment debts and the possibility of any further costs, in the sum of $145,000, will protect the claims of the third parties and will prevent husband and wife reaching an agreement, settle the matter, leaving their costs unpaid.

12. I do not see any disadvantage to the husband and the wife in circumstances where these monies have been in that account since October and neither party has drawn on those funds, and in circumstances where the orders I propose to make will see this matter relisted in the Judicial duty’s list in February.  Therefore, if there is a reason why the injunction should not remain in force the parties will have an opportunity to bring the matter before the Court, in particular the husband, who is not here today. The husband will have the opportunity to respond to the orders proposed by the second and third named respondents and there will be a timetable put in place for the husband and the wife to file material so that this matter can be progressed. 

13. If the husband and wife settle and want orders made they can come to the Court with that settlement and put their proposals with respect to payment of the outstanding costs.  So far, neither the husband nor the wife have taken any steps with respect to the judgment debts.  However this matter has to progress, it cannot simply be left in abeyance.

14. I do propose to make the order the second and third named respondents seeks with respect to the monies in the joint account, albeit for the sum of $145,000 rather than the total balance in that account. That order will be served upon the National Australia Bank so that the bank is be aware of that order.

15. The second and third named respondents also seek an order for service of any further documents upon the husband and the wife by email to their respective email addresses. The husband has filed a notice of address for service which contains his email address. The wife in her response similarly has included an email address and I am satisfied that for convenience this is an appropriate way for service to be effected given the previous circumstances the second and third named respondents have both experienced with service.

I certify that the preceding twenty-three (23) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Macmillan delivered on 14 January 2020.

Associate: 

Date:  6 February 2020