Gometto and A Firm

[2010] FamCA 582

FAMILY COURT OF AUSTRALIA

GOMETTO & A FIRM [2010] FamCA 582

FAMILY LAW – COSTS – Application for extension of time to dispute bill of costs

APPLICANT: Ms Gometto

FIRST RESPONDENT: Mr A

SECOND RESPONDENT: Mr E

FILE NUMBER: SYC 5065 of 2007

DATE DELIVERED: 13 July 2010

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: The Hon. Justice Cohen

HEARING DATE: 1 July 2010

REPRESENTATION

SOLICITOR FOR THE APPLICANT:

Mr Simons,

REMINGTON & CO

COUNSEL FOR THE 1ST RESPONDENT: Mr Hanson

SOLICITOR FOR THE RESPONDENTS: A Firm

Orders

1. That the Application in a Case of the wife filed 1 March 2010 is hereby dismissed.

2. That costs are reserved.

IT IS NOTED that publication of this judgment under the pseudonym Gometto & A Firm is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYC 5065  of 2007

MS GOMETTO

Applicant

And

MR A

First Respondent

MR E

Second Respondent

REASONS FOR JUDGMENT

1. Before the Court is an application by the wife for an extension of time to file a Notice Disputing Itemised Costs Account so she can contest the bill of costs from her solicitors, A & Co (A Firm). Rule 6.24 of schedule 6 to the Family Law Rules allows 28 days from the service of the account. Here, for reasons I shall return to, I am of the view that the account was served on the wife early May 2008. No notice has been served but, on 19 October 2009, the wife’s present solicitor filed an application in a case for time to be extended for the filing of a notice. This application was heard and refused by a deputy registrar on 26 February 2010. I am, by way of rehearing, reviewing the Deputy Registrar’s decision. The application for review was filed on 1 March 2010. As, once the application to extend time was filed, the delay in having the application heard cannot be said to be the fault of the wife, the relevant delay beyond the 28 days from the service of itemised accounts is from early June 2008 to mid October 2009, about 16 months.

2. The facts largely occurred before 7 May 2008. It is from about this date that time commenced to run. The wife’s application itself amounts to a concession, because it is implicit in it, that on or about 7 May a properly itemised bill of costs or costs account was served on the wife. If it had not been, the wife should have sought relief other than an extension of time to respond to a properly itemised costs account by filing a notice disputing it.

3. Initially, the wife retained A Firm to act for her against her husband who had commenced proceedings in the Supreme Court of New South Wales for severance of their joint tenancy in the former matrimonial home. A short time afterwards, on 18 July 2007, the husband filed a s79 Family Law Act application in the Family Court of Australia. On 31 July A Firm filed a notice of address for service on her behalf. On 3 August the wife signed a costs agreement which had already been signed by a principal of A Firm.

4. The last paragraph of this agreement is headed “Acknowledgements”. It recites that “The client acknowledges and confirms by signing this agreement that: …(f) The client have each received, read and understood the Family Court brochure in relation to costs entitled “Costs Notice.”” This last subparagraph appears immediately before and on the same page as the signatures of the parties to the agreement.

5. The wife has not suggested she did not receive or read the costs notice, so it can be inferred that it is more probable than not that she knew or should have known her rights to challenge any account she received from A Firm and her obligations if she wished to do so. If she did not know them, her ignorance has not only been self-imposed but, by signing the acknowledgement, she has misled A Firm into believing she knew them and, therefore, into taking no further steps to ensure she knew them or considering whether to refuse to act for her because they may be at risk in relation to their costs.

6. It is appropriate to mention, for the sake of avoiding any uncertainty, that the costs notice pamphlet issued by the Court fully and in an as easily understood manner as might be devised informs its readers of the effect of the provisions of the Family Law Rules which deal with disputes between solicitor and client over costs and what the client is able to do, is required to do and of the time limits involved in acting to effectively dispute costs.

7. A Firm continued to act for the wife pursuant to the costs agreement until 25 September 2007 when they received a letter from B & Associates (“B Firm”), Solicitors, informing them that they now acted for the wife and enclosing the wife’s authority to release her file to the new firm and requesting “itemised accounts in respect of all tax invoices rendered to her.” It is clear from this that B Firm were aware of the wife’s right to challenge the bill. The wife, too, knew she could challenge the bill because she says in her affidavit that she asked B Firm to do so.

8. A Firm immediately replied by letter enclosing documents relevant to costs including what was intended to be an itemised costs account. They said they would continue to hold the wife’s file until payment of their costs. The account which was provided could not be said to be a proper itemised bill. It clearly mixed its charges for the Supreme Court proceedings with its charges for the Family Court matter.

9. On 10 December 2007 A Firm issued a statement of claim in a local court for their costs. It was served on 18 December 2007. What B Firm then did appears to have been both proper and reasonable and the most rational approach which could be taken if it was assumed by B Firm that there had been no proper itemised bill provided by A Firm to the wife. On the day the wife was served, they approached a legal costing company for advice about the account. No doubt such advice would be used to decide whether, once a proper bill was received, to challenge it or whether it would be worthwhile to expend effort and cost on requiring a proper bill and analysing it on its receipt. The advice, promptly received on 8 January 2008, was that the bill was open to challenge. B Firm wrote to A Firm on 8 January challenging the costs account which the wife had received, noting that they had already requested an itemised bill of costs.

10. In their response written on 14 January, A Firm acknowledged the wife’s entitlement to have 2 bills of costs, one for the Supreme Court and one for the Family Court, and to have each assessed in the appropriate forum. They agreed to stay the Local Court proceedings “whilst the bills are assessed” and to “[prepare] and serve amended bills of costs” for assessment in each court. A Firm also gave their undertaking to take no further steps to obtain judgment until 14 days after costs have been ascertained either by agreement or taxation. Not long afterwards, A Firm decided to discontinue the local court proceedings and did so by way of their consent dismissal.

11. On 5 March 2008 A Firm served the wife with a memorandum of costs and disbursements in the Family Law proceedings which is dated 28 February 2008 and is for $22,877.11, including counsel’s fees. If this memorandum was a properly itemised account, the wife would have had until early April to file and serve a notice disputing the bill of costs. B Firm’s letter to the wife clearly requested her to pay the bill or seek assessment within 28 days, the proper time.

12. The wife changed solicitors just three days before she was served. She had earlier approached C Firm, Solicitors (“C Firm”) to question A Firm’s original account of 25 September 2007. On 2 March 2008 she retained C Firm. By 4 April 2008, the wife’s complaint about A Firm was that the account which was provided on 5 March did not give her credit for money which she had already paid. A Firm and C Firm then engaged in some somewhat fitful and inconclusive correspondence which was either settlement negotiations or precursors to them. On 22 April, C Firm requested A Firm to “forward to me both [meaning Supreme Court and Family Court] those accounts in proper taxable form.”

13. The inference from this request is that what had been sent was alleged to be defective. There was further correspondence over the form of the bills, including a letter of 7 May 2008 which A Firm wrote to C Firm accusing the wife of being “disingenuous”, asserting emphatically that the bills were in proper form, but providing an amended bill for the Family Law proceedings. The amendment is a simple one. Numbering was included for each item. It had not previously been included. How this could make any difference to the justice of the dispute is entirely beyond me. Despite a requirement in the rules that each item be numbered, from the wife’s point of view the lack of numbering could not have detracted from the clarity or any essential correctness of the bill and could not affect the issue of the fairness to her of the previous bill. Numbering was a requirement for ease of administration by deputy registrars who had the task of taxing bills. Nevertheless, when the letter of 7 May was brought to the wife’s attention, as it must have been soon afterwards, she effectively had notice of and had been served with a properly itemised bill of costs.

14. Of significance is the fact that, in the letter of 7 May, A Firm asserts that the bill is in proper form and that the wife should either pay it or apply for assessment. The latter of these two demands give her a reminder as well as notice of her right to challenge the bill and that she should do so promptly. The letter also explained the accusation of disingenuity. It asserted it was justified by the wife having “been given the opportunity to apply for assessment” but not having taken it. The wife was, therefore, put firmly on notice that she should act if she wished to have the bill taxed in circumstances where she had known or should have known her rights since 3 August 2007.

15. It is inconceivable that she did not know her rights on 7 May 2008. C Firm had written to A Firm on 2 May 2008 specifically requesting “a copy of each of the Costs Agreements and the Rule 19.03 Notice.” At the time, Rule 19.03 was the rule which required the costs notice to be given to a client by a lawyer when he first received instructions to act in Family Law proceedings. In any event, the wife has sworn in her affidavit that she “definitely” asked C Firm to have the solicitor’s costs assessed.

16. A problem she faces is that she then did nothing to properly instruct C Firm until she withdrew her instructions to them on 26 February 2009. C Firm were entitled to require the wife to enter into a costs agreement. It would have been foolish to do otherwise in view of the reason the wife had consulted them. She had not only consulted them in relation to A Firm’s fees, she was also seeking to challenge B Firm’s fees. C Firm issued a costs agreement to the wife and requested she make an initial payment to be held in trust for fees to be charged. The wife never executed the costs agreement nor put C Firm in funds.

17. Nevertheless, C Firm acted with a sense of responsibility. When A Firm issued another statement of claim in the Local Court on 28 May 2008 and obtained default judgment, Mr C filed a notice of motion to set the judgment aside using his own funds to meet the filing fee because nothing had been paid to the firm by the wife. They succeeded in having the judgment set aside, then sensibly asked a costs assessor to give an estimate of charges for assessing the costs claims of both A Firm and B Firm.  The estimate was $5,000. C Firm then, on 3 January 2009, asked the wife to pay $2,500 toward this cost. After receiving this request, on 26 February 2009 the wife withdrew her instructions.

18. The wife then made complaints about A Firm and C Firm to the Legal Services Commission. The complaints were dismissed and the wife was advised of this on 5 June 2009. She did not instruct any other firm, as far as I can tell on the evidence, until she instructed her current solicitor, Mr Howard Simons of Remington & Co, who is acting pro bono.

19. It seems to me that to act pro bono for the wife is misplaced altruism. She recently sold her interest in the former matrimonial home. In August 2007, she valued it at $900,000 after her husband valued it at $1.1 million in July of that year. They were joint tenants. It is not the wife’s only property. In her mid August 2007 statement of financial circumstances she disclosed ownership of an investment home unit which she said was worth about $550,000, mortgage liabilities of about $670,000 and a net assets pool worth something between $750,000 and $650,000, assuming that she would receive half of the net proceeds of sale of the former matrimonial home. She owns a business. Her income from it and rent was disclosed to be about $1750 per week with outgoings of $1005 per week. The outgoings, in view of the mortgage debts, are likely to have been interest and capital payments which, on sale of the home, are unlikely to have continued.

20. At no time did the wife pay anything to C Firm, so it is not reasonable to conclude that that firm should have filed a notice disputing costs or an application to extend time to do so or that the wife should have expected it to. What C Firm and B Firm did was attempt to discover whether there was a proper basis for disputing costs and whether the cost of being put into a position to dispute costs made it worth while to do so. It was proper for both solicitors to take this approach while at the same time not shutting off the possibility of a negotiated settlement with A Firm over costs.

21. The wife, in the face of her knowledge of her rights and obligations involved in a costs dispute, should have ensured that no time was lost in taking proper steps to conduct the dispute through a solicitor or when she was not represented, by her own actions. If she had acted reasonably she would have applied for an extension of time immediately after she was requested and failed to execute the C Firm costs agreement.

22. The applicant has the onus to satisfy the Court that it should exercise its discretion in her favour. The main purpose of the rules is based on public policy. The rules state their main purpose to be the timely disposal of cases at reasonable cost in the circumstances. I would add that the real purpose of the rules is the attainment of justice both for the parties and the community as a whole. It is to be assumed that the rules should be complied with to advance this end unless the demands of fairness and justice require a departure from them. The rules by rule 1.08(1)(e) specifically impose a duty on a party to comply with time limits. Rule 1.14(2) permits extension of time limits. By rule 1.12, which specifically permits dispensation from compliance with the rules; the essence of the application being dealt with, in considering such dispensation, the Court is reminded that in a suitable case it can consider whether the application for dispensation has been made promptly, whether non-compliance was intentional and the effect of a grant of relief on each party.

23. Here, there is little doubt that the application was not made promptly after the need to make it properly crystallised from the wife’s point of view in mid 2008, not long after C Firm first provided the wife with a costs agreement. Because of the wife’s ending of the solicitor client relationship with B Firm and the commencement of the relationship with C Firm, her failure to give proper instructions to that firm and enter into a costs agreement with it and put it into funds, it must be held that the failure of these firms to make an application for extension of time promptly after service of a proper itemised bill of costs by A Firm was entirely the fault of the wife and the result of her actions or failure to act. Although she may not have deliberately failed to make the appropriate application on her own behalf once she was unrepresented, she knew she should do something, or should have known, and created a situation where neither solicitor could be expected to have filed the application but where she, I find, has falsely blamed the solicitors. She bears, in my mind, full responsibility for the delay after 26 February 2009 in filing the application in those circumstances.

24. Her case here is that it was B Firm’s and C Firm’s obligation to file it and they let her down. That case, in my assessment, is baseless and false although the inexcusable non-compliance was from late February 2009 rather than from mid 2008.

25. I cannot say whether, on taxation, the solicitors bill would be maintained or reduced. I can say that because the bill is relatively small, the cost to the wife to be in a situation to challenge the bill on taxation has been estimated at $5,000 plus her legal costs. If she were to fail to attain significant success, she would probably have to pay the costs of A Firm in upholding the bill. At the modest costs being fought over, the risk is great. A Firm also face a similar costs risk if they lose.

26. The rules must be viewed in the light of some enlightening and authoritative comments in the High Court of Australia about the approach which should be taken to applications to extend limitation periods whether imposed by statute or rules. In Gallo v Dawson (1990) 93 ALJR 479, McHugh J. said the discretion to do so

    “can only be exercised in favour of an applicant upon proof that strict compliance with the rules will work an injustice on the applicant. In order to determine whether the rules will work an injustice, it is necessary to have regard to the history of the proceedings, the conduct of the parties, the nature of the litigation and the consequences for the parties of the grant or refusal of the application for extension of time.”

27. In Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541, Dawson J said at p.544:

    “The section confers a discretion upon a court to extend time and that discretion should only be exercised in favour of an applicant where, in all the circumstances, justice is best served by so doing. The onus of satisfying the court that the discretion should be exercised in favour of an applicant lies on the applicant. To discharge that onus the applicant must establish that the commencement of an action beyond the limitation period would not result in significant prejudice to the prospective defendant. I agree with McHugh J that, once the legislature has selected a limitation period, to allow the commencement of an action outside that period is prima facie prejudicial to the defendant who would otherwise have the benefit of the limitation.”

28. I have related the relevant history of this matter. A Firm are in the same situation as the defendant in the case Dawson J. was referring to, so would suffer detriment if a grant to the wife of extension of time. The relevant history, including the conduct of the wife, has been reviewed above as have the consequences of refusal of the application. Considering all of these, especially the extent of the delay from early 2009 in view of the time limit of 28 days for giving a notice disputing costs and my rejection of any bases upon which the wife might be said to have an excuse for her delay, i.e. a rejection of her claim to be ignorant as well as her claim that her solicitors were to blame, I am quite lacking in satisfaction that I should exercise my discretion in favour of the wife. I am satisfied that to do so would cause A Firm very significant delay and vexation in having to deal with the wife who is likely to continue to behave as the history has shown her wont to be, as well as very significant cost in actually dealing with challenge to their bill of costs with the likelihood of further challenges to any claim for costs of the challenge and further delay, to the extent that the prejudice will be out of proportion to the relatively small amount of the original bill and, if it could be reduced or challenged, the likely relatively small reduction. I shall dismiss the application to review the Deputy Registrar’s decision and reserve costs.

I certify that the preceding twenty-eight (28) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cohen

Associate:     

Date:              13 July 2010