Gleeson and Anor and Estate of King
[2007] FamCA 1255
•24 October 2007
FAMILY COURT OF AUSTRALIA
| GLEESON AND ANOR & ESTATE OF KING | [2007] FamCA 1255 |
| FAMILY LAW – COSTS – bill of costs not served within time – long period of delay – application for leave to issue bills out of time – Questions of the exercise of discretion – review of a Registrar’s decision |
| Family Law Act 1975 (Cth) Family Law Rules 2004 (Cth) |
| Marriage of Thomson (1993) FLC 92-392 Marriage of McMahon (1976) FLC at 90-038 Gallo & Dawson (1990) 93 ALR 479 Strudwick & Baker Johnson (1996) FLC 92-683 Lawecki & Marcel Kalfus & Co (1985) FLC 91-644 |
| 1ST APPLICANT: | Mr Gleeson |
| 2ND APPLICANT: | W Pty Ltd |
| RESPONDENT: | Estate of King |
| FILE NUMBER: | PAF | 3932 | of | 1996 |
| DATE DELIVERED: | 24 October 2007 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Cronin J |
| HEARING DATE: | 22 October 2007 |
REPRESENTATION
| COUNSEL FOR THE 1ST APPLICANT: | Mr Dura |
| SOLICITOR FOR THE 1ST APPLICANT: | Barkus Edwards Doolan |
| COUNSEL FOR THE 2ND APPLICANT: | As for 1st Applicant |
| SOLICTOR FOR THE 2ND APPLICANT: |
| COUNSEL FOR THE RESPONDENT: | Ms Haughton |
| SOLICITOR FOR THE RESPONDENT: | Ian Harper & Co |
ORDERS
IT IS ORDERED THAT
The application in a case (Form 2) filed 28 May 2007 be dismissed.
Any issue as to costs arising out of these orders be determined upon written submissions to Justice Cronin and any such application;
(a) be filed with the Associate to Justice Cronin by 4:00pm on Friday 2nd November 2007; and
(b) be served upon the other party by that date.
In the event that an application is made for costs by either party pursuant to paragraph 2 hereof, the other party shall have until 4:00pm on Friday 9 November 2007 to reply.
If no further application by either party is filed by the date referred to in paragraph 2 hereof, all interim applications shall be otherwise dismissed.
IT IS CERTIFIED
Pursuant to Rule 19.50 of the Family Law Rules 2004 this matter reasonably required the attendance of counsel.
IT IS NOTED that publication of this judgment under the pseudonym Gleeson and W Pty Ltd & Estate of King is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)
| FAMILY COURT OF AUSTRALIA AT SYDNEY |
FILE NUMBER: PAF 3932 of 1996
| MR GLEESON & W PTY LTD |
Applicants
And
| ESTATE OF KING |
Respondent
REASONS FOR JUDGMENT
This is an application to review a decision of Registrar Tran who made orders on 22 May 2007 giving leave to the Estate of King to serve formal bills of costs arising out of a number of orders that had been made by Courts over a number of years.
The Registrar made the three formal orders:
“1. That pursuant to Rule 1.14(2) leave be granted to extend time for service by the Applicant of an itemised cost account on the person liable to pay under Rule 19.21(1)(b) for the costs order made by Justice Coleman on the 19th of March 2001 for which the 2nd and 3rd Respondent were liable under costs orders by Justice Waddy on the 25th of March 2003 for the 2nd and 3rd Respondents to pay the costs order made by Justice Coleman against the husband to Mrs [King].
2. That pursuant to Rule1.14(2) leave be granted to extend time for service by the Applicant of an itemised cost account on the person liable to pay under Rule 19.21(1)(b) for the costs order made by The Appeal Court of the Family Court of Australia on the 18th of December 2003 for which the 2nd and 3rd Respondents were made liable.
3. That pursuant to Rule 1.14(2) leave be granted to extend time for service by the Applicant of an itemised cost account on the person liable to pay under Rule 19.21(1)(b) for the costs order made by Justice Waddy by consent on the 7th of September for which the 2nd and 3rd Respondents are liable.”
The second and third respondents to the proceedings are Mr Gleeson and W Pty Ltd. Both objected to the orders and sought that they be reviewed. That is the issue for determination by me.
I will not traverse all of the history of the matter and there is no need that I do so. An important issue for my determination is the fact that not only are there orders of Judges at first instance but also an order of the Full Court of this Court for costs. The applicants for review, that is the second and third respondents were dissatisfied with the orders of the Full Court and sought special leave in the High Court of Australia which leave was refused.
The applicants on the review relied upon an affidavit of Mr Gleeson. The respondent to the review relied upon an affidavit of the solicitor responsible for the management of the file, Ian Harper and also an affidavit of the medical practitioner of Mr Harper, a Dr K.
Various arguments were put by each party about admissibility of the various material.
Mr Dura of Counsel for the applicants on the review objected to the evidence of Mr Harper in relation to issues associated with his medical condition and its connection with the problems of his practice. Fundamental to the initial application for leave to extend time was that Mr Harper claimed that because of his health, he was just unable to face the fact that he had to undertake the task of completing the necessary paperwork associated with the taxation of the costs arising out of the orders of the Court. Some of the material in paragraphs 13, 18, 19 and 31 of the affidavit of Mr Harper was not read. I struck out all of paragraph 19 of the Harper affidavit on the basis that Mr Harper was not in a position to give the evidence about his medical condition. I ruled that other evidence was admissible on the basis Mr Harper was able to say what issues were causing him problems such that he was unable to undertake the task that an ordinary prudent solicitor would have undertaken.
In respect of the affidavit of Dr K, objection was taken that Dr K did not set out his professional qualifications such as would enable him to give the purported diagnosis. I ruled that the evidence was not relevant having regard to the fact that it was not so much a matter of the cause of the Mr Harper’s inability to undertake the legal tasks required of him but rather the fact that he did not complete them. His unchallenged evidence was that he could not face the prospect of undertaking the task.
Ms Haughton for the estate objected to a number of paragraphs in the affidavit of Mr Gleeson. She said that these were predominately hearsay. Strictly speaking she was right because those statements related to information provided to Mr Gleeson by his solicitor. In my view, whilst they did go to the truth of the statements, that was not the relevant issue before me. That evidence related to the service of formal documents all of which would be overcome if an order for leave was granted in any event.
The evidence, such as it is, was that Mr Harper did not carry out the duty on behalf of his client because of his health. I accept that.
There may very well have been a period when Mr Harper was not acting for the Estate but in this case, that matters little.
Sequentially, up until March 2004, there were two orders for costs that required agreement or taxation. I am satisfied that in late August 2003, Mr Harper gave instructions to a costs assessor to undertake the tasks associated with preparing a bill of costs for those orders. In November 2003, there was some query from the costs assessor but ultimately the three bills of costs drawn on a party-party basis were completed by the end of November 2003. At that time, there was an appeal under way before the Full Court and judgement was handed down on 18 December 2003. From that order, leave was sought to appeal to the High Court. The Special Leave application was dismissed on 11 February 2005. By that time, nothing had been served by Mr Harper.
At the end of March 2005, the solicitor for the applicants on review, sought to know what was happening and Mr Harper replied the very next day. Six and a half months went by without Mr Harper doing anything about these issues.
In September 2005, Mr Harper wrote to the solicitors for the reviewing parties enclosing the bill of costs associated with the first judgment of Coleman J. It then seems that there was silence until October 2006.
It is important to understand that during the whole of this period of time, the applicants on review disputed the costs.
Mr Harper deposed to the fact that on many occasions during 2004, although he did other work, he could not face starting work on this particular file and clearly avoided it. He went and obtained medical advice. The problem seemed to resolve itself for a while when Mr Harper obtained professional assistance in his office but that did not last very long and when the practitioner left, Mr Harper reverted to his previous position of being unable to attend to the file.
Mr Harper acknowledged that it was not until 20 October 2006 that he was able to send the bills of costs out. In part, the delay in 2006 was caused by the assessor but ultimately, the major delay was as a result of the inability of Mr Harper to face the fact the he had to undertake the task.
Counsel for the Estate seeking the leave (as distinct from the review) said that the detriment in this case to her client was that if leave was not granted, the Estate would be in a position where it could not enforce the orders of the Court. She said that to some extent it was reasonable during the period from April 2003 to February 2005 for there to be inactivity because of the appeal situation. The appeal situation was compounded by Mr Harper’s health. On the other hand, notwithstanding the delay, the applicants on the review had not been prejudiced at all because they had not had to pay the sums of money involved.
The applicants on the review claimed that the rules of the Court had to mean something and that if there was a timetable or a time requirement, a person who sat on their hands lost any advantage or rights that they had. Counsel pointed to Rule 1.04 of the Family Law Rules 2004 setting out the main purpose of the rules namely that things had to be done in a just and timely manner. He said that Mr Harper had had ample opportunity even during the period when there was inactivity because of the appeals. He pointed to the fact that in August 2003, Mr Harper was actually doing something about the bills of cost but that he had just let the matter lapse. The obvious question according to Counsel was why nothing happened at various triggering points such as when the High Court of Australia dismissed the special leave application. Even after that, in circumstances where his clients objected to and disputed the costs, Mr Dura for the applicants on review said that they could not organise their life. He pointed to the fact that there was no evidence from Mr Harper that he would in fact sue the Estate for his costs. In essence therefore the applicants on review were prejudiced by having waited so long in circumstances where the rules of the Court made it very clear that there were important restrictions. There must be significant sympathy for the parties against whom costs orders were made in circumstances where they wanted to get on with things.
Part of the problem in this case is that some of the orders of the Court were governed by Order 38 of the 1984 Family Law Rules whereas the more recent costs order was governed by the Family Law Rules 2004. Thus the issue may not arise in respect of the orders for costs prior to 31 March 2004 but out of an abundance of caution, I intend to approach the matter on the basis that leave is required.
The Family Law Rules 2004 do not and did not set out what factors were to be considered in relation to an application for leave to do something out of time. That issue is covered by Chapter 1 of the Family Law Rules 2004 and in particular Rule 1.07 and 1.14. I shall not set those out in detail but it is ultimately to those particular provisions that I turn in order to work out what to do in this case.
Each party indicated to me that there were very few authorities that would assist me however I set out hereafter the basis upon which I intend to approach the determination of this case.
DISCUSSION
In the Marriage of Thomson (1993) FLC 92-392 the Full Court said:
“The fundamental issue in application for extension of periods of time prescribed by rules of court is whether this will enable the court to do justice between the parties: Hughes v National Trustee Executors & Agency Co. of Australasia Ltd. McInerney J cited with approval Gallo v Dawson (1990) 93 ALR 479. In that connection the Court must weigh the right which the respondent to the application prima facie has to attain the benefit of the judgment and the desirability that there be finality of litigation. A failure to explain the delay adequately can certainly lead to a conclusion that justice demands that the application be dismissed but in appropriate cases the interests of justice may outweigh the absence of an appropriate application and there is an analogy with applications for leave to institute proceedings under Section 44(3) of the Family Law Act where the absence of an adequate explanation has been regarded as merely a factor to be considered.”
Although it was argued that this is a different issue, in an application to appeal out of time, the Court has a discretion to grant leave. In the Marriage of McMahon (1976) FLC at 90-038 at page 75,144 the Full Court said:
“The general principles governing applications for leave to extend time are established by a number of cases. In summary, the applicant must show that there are adequate reasons which explain the delay; that there is a substantial issue to be raised on appeal and that no hardship or injustice is caused to the Respondent which cannot be compensated by orders as to costs or otherwise.”
In Gallo v Dawson (1990) 93 ALR 479, McHugh J said that the discretion to extend time is given for the sole purpose of enabling the court to do justice between the parties. His Honour stated that the discretion should be exercised in favour of the applicant if there was proof that compliance with the rules would work an injustice upon that applicant. McHugh J referred to the need to have regard to the history of the proceedings, the conduct of the parties, the nature of the litigation and the consequences to the parties of the grant or the refusal of the extension of time.
There is little other authority to guide me. In Strudwick & Baker Johnson (1996) FLC 92-683 and in Lawecki & Marcel Kalfus & Co (1985) FLC 91-644, the courts noted the wide discretion but observed that matters such as the extent of any delay, the explanation for that delay, hardship if the extension was not granted and prejudice to the respondent, were relevant to the exercise of that discretion.
Here, there is not only one costs order made by a court but several. As such, the prospect of success issue is not relevant. What must be considered is the consequence for the payer if time is extended and for the payee if it is not. Whichever way one looks at that test, justice must be done.
The rules cannot circumvent the orders of the court. Rule 1.14 clearly provides for that situation. The Court is given extensive power under that rule to extend or abridge time. In the exercise of that discretion, the court is required to consider the objectives of the Rules but without losing sight of the purpose namely to avoid injustice between the parties. The discretion must be a wide one.
The injustice to the applicant here is that on the evidence, the estate would not be able to recover what the court(s) intended. The injustice to the respondent is that it may now have to pay a significant amount of money in circumstances where it may justifiably have presumed that the applicant had slept on its rights.
Balancing all of those things, I am persuaded that notwithstanding the delay which I accept was caused by the solicitor for the applicant, there was a clear message to the parties from those courts deciding the cases that culminated in orders for costs. The delay in this case has been explained and although unsatisfactory, I accept that it is plausible. The prejudice to the estate is therefore greater than that to the applicants on the review. In my view, this is an appropriate case to exercise the discretion in favour of the estate.
As those orders were also made by the registrar and the matter comes to me by way of review, I dismiss the review application and re-affirm the orders of the registrar made on 22 May 2007.
I indicated to counsel that I would deliver reasons and make provision for the parties to make further submissions should they so desire on the issue of costs. I propose to do that but having regard to what I have indicated about the balancing of interests above, it is clearly the party seeking the leave rather than the party seeking the review who has come to court seeking an indulgence. Without closing my mind to the matter, I express the view that I would be hard pressed to be indulgent on any costs application towards the estate in respect of the review having regard to what I have said above but equally hard pressed to disagree with the registrar in relation to the costs of the reviewing party because they have taken their chances and been unsuccessful.
I certify that the preceding thirty-two (32) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin
Associate
Date: 24 October 2007
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