Hejiz and Hejiz and Anor - [2017] FamCA 436

FAMILY COURT OF AUSTRALIA

HEJIZ & HEJIZ AND ANOR

[2017] FamCA 436

FAMILY LAW – COSTS – Where dispute between husband and his former solicitor as to release of the husband’s file and papers to the husband’s new solicitors – Where husband seeks order for delivery up of file subject to protective agreement as to outstanding costs – Where solicitor seeks payment in consideration of release of file – Where matter resolved by consent following interim property resolution between husband and wife so as to make funds available – Where solicitors seek order for costs against husband – Consideration of general principles – Application for costs dismissed.

Family Law Act 1975 (Cth) ss 70AA, 70AC, 70NFB, 117, 118

Hawkins & Roe [2012] FamCAFC 77
Penfold v Penfold (1980) 144 CLR 311
Strahan & PP Lawyers Pty Ltd [2017] FamCAFC 22

APPLICANT:

Mr Hejiz

FIRST RESPONDENT:

Ms Hejiz

SECOND RESPONDENT:

B Lawyers

FILE NUMBER:

PAC

2891

2014

DATE DELIVERED:

23 June 2017

PLACE DELIVERED:

Parramatta

PLACE HEARD:

Parramatta

JUDGMENT OF:

Foster J

HEARING DATE:

12 May 2017

REPRESENTATION

COUNSEL FOR THE APPLICANT:

Mr Gardiner

SOLICITOR FOR THE APPLICANT:	Coleman Greig Lawyers
COUNSEL FOR THE FIRST RESPONDENT:	Mr Priestley

SOLICITOR FOR THE FIRST RESPONDENT:

Thornton Storgato Law Pty Ltd

COUNSEL FOR THE SECOND RESPONDENT:

Mr Othen

SOLICITOR FOR THE SECOND RESPONDENT:

B Lawyers

Orders

That the application for costs by the Second Respondent be dismissed.

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 Hejiz & Hejiz and Anor 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 PARRAMATTA

FILE NUMBER: PAC 2891 of 2014

Mr Hejiz

Applicant

And

Ms Hejiz

First Respondent

And

B Lawyers

Second Respondent

REASONS FOR JUDGMENT

This application concerns the question of costs as between the husband who is the applicant in the primary proceedings and the “second respondent” that was sought to be joined by the husband to these proceedings.
The second respondent is the husband’s former solicitors.
The second respondent was sought to be joined in these proceedings by the husband in circumstances whereby no agreement could be reached between the husband, his present solicitors and the second respondent such as to facilitate the release of the husband’s file from the second respondent to his present solicitors.
The husband filed an Application in a Case on 3 May 2017 that in summary sought orders as follows:
a)that B Lawyers be joined as a party to the proceedings;
b)that the husband’s current solicitors provide to B Lawyers an undertaking that they would hold the husband’s family law file from B Lawyers subject to that firm’s lien as to costs, that they would provide reasonable access to such file to B Lawyers, that the file would be kept intact and within Australia and that the file be returned to B Lawyers upon completion of the primary proceedings;
c)that a tripartite deed be entered into between the husband, B Lawyers and his present solicitors to give effect to the previous arrangement;
d)that B Lawyers pay the husband’s costs of and incidental to the application;
e)that upon compliance with b) and c) above B Lawyers deliver up to the husbands current solicitors all documents and files held by that firm in respect of the husband’s family Law proceedings.
The husband’s application was listed before the Court ultimately on 12 May 2017 in the context of other applications by the husband and wife as to interim property distribution.
B Lawyers filed a Response to the husband’s application, an affidavit in support of that Response, a case outline document with summary of argument and instructed counsel to appear on 12 May 2017.
The husband and wife reached a resolution as to interim property distribution by reason of further funds being available by way of a redraw facility secured against their property. Ultimately orders were made by consent that the husband and wife be able to receive about $300,000.00 each from such redraw.
It was agreed between the husband and wife and B Lawyers that from the funds to be provided to the husband he pay to B Lawyers firstly the sum of $43,361.29 unconditionally and a further sum of $17,659.32 to be held by B Lawyers on trust pending resolution of any dispute arising from the invoice in this amount raised by that firm. It was further agreed by B Lawyers that upon receipt of the two payments they would release the husband’s family law file and papers as directed by the husband in writing.
As a consequence of the agreement and consent orders referred to the husband’s Application in a Case was dismissed with costs reserved.
B Lawyers now seek an order that the husband pay their costs of and incidental to their engagement in these proceedings. B Lawyers seek an order that the husband within seven days shall pay or cause to be paid to B Lawyers the sum of $6,000.00 by way of costs in these proceedings. The quantum sought in the circumstances, including the attendance of counsel appears modest having regard to the work undertaken.

Costs

Section 117 of the Family Law Act 1975 (Cth) (“the Act”) provides that each party to the proceedings shall bear his or her own costs and is in the following terms:
(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.
Although s 117(2) requires a finding of justifiable circumstances as an essential preliminary to making an order for costs, there is no additional or special onus on an applicant who seeks an order for costs: see Penfold v Penfold (1980) 144 CLR 311.
The matters relevant to determining what order, if any, should be made for costs are set out in subsection (2A) of that section. They are the following:
a)the financial circumstances of each of the parties to the proceedings;
b)whether any party has legal aid and the terms of any grant of aid;
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 answers, 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.
The Full Court in Hawkins & Roe [2012] FamCAFC 77 said:
17. With respect to the application of the section, in Penfold v Penfold (1980) 144 CLR 311, the High Court said at 315 and 316:
Sub-section (2) requires a finding of justifying circumstances as an essential preliminary to the making of an order. Beyond this there is nothing in the subject matter or in the interrelationship of the two provisions which imposes any additional or special onus on an applicant for an order for costs. Consequently, with respect to their Honours in the Family Court, we do not agree with the suggestion made in the judgment under appeal that an order can only be made under s. 117(2) in "a clear case".
Sub-section (2) does not in our view as a matter of law require the judge to specify the circumstances which justify the making of an order. It does not expressly say so, and in the context of the making of an order for costs there is no sufficient basis for making an implication. Judges very frequently make orders for costs without giving reasons or making findings, even when costs are in issue. The absence of reasons or findings does not in itself indicate that a judge has erroneously exercised his discretion to award costs, though it will place an appellate court in the position of examining the circumstances and of determining for itself whether the circumstances show that the discretion was erroneously exercised (Kent v Kent). Accordingly, in the absence of some positive legislative indication we should not attribute to Parliament the requirement that a judge must make particular findings in relation to an order for costs.
(footnotes omitted)
18. The weight to be given to a particular consideration under s 117(2A) is a matter for the discretion of the judge. However, in I and I (No 2) (1995) FLC 92-625 the Full Court of this Court held that the relevant matters in s 117(2A) “must all be taken into account and all balanced in order to determine whether the overall circumstances justify the making of an order for costs”. That is not to say that one single matter may not ultimately be determinative…
The financial circumstances of the parties as known are that the husband will shortly or has received an interim distribution of property from which it is to be inferred funds would be available to meet the modest order for costs sought by B Lawyers. Otherwise the husband has business interests of significant but as yet undetermined value. B Lawyers is a prominent law firm with the inference that it is not in impecunious circumstances.
The background to the present application is that the husband’s present solicitor was previously in the employ of B Lawyers for a considerable period during the conduct of these proceedings. On 28 February 2017 he left the employ of B Lawyers and commenced employment with the husband’s present solicitors.
Subsequent to the husband’s present solicitor leaving B Lawyers and the husband seeking to retain his present solicitor at his new place of employment the husband was prevented from having access to his file such as was relevant to the ongoing conduct of the litigation.
On 13 March 2017 the husband and wife agreed on a “dollar for dollar” order as to payment of ongoing legal expenses with funds to be by way of a $600,000.00 redraw facility that was thought to be available to the parties at that time. On 10 April 2017 B Lawyers were informed by the husband’s present solicitors that they would be paid once funds were available from the proposed redraw facility.
B Lawyers would not make the husband’s file available until actual payment.
The husband’s solicitors proposed a tripartite arrangement that was replicated in the orders sought in the husband’s Application in a Case, such arrangement are being supported by recent authority: Strahan & PP Lawyers Pty Ltd [2017] FamCAFC 22 (20 February 2017). Yet any such arrangement is a matter of bargain and agreement in the particular circumstances that prevail at that time.
B Lawyers were not prepared to enter into such arrangement with the consequence that the husband who had no access to his file, filed his Application in a Case.
Outstanding costs to the firm were asserted to be over $60,000.00 in the context of overall fees charged in excess of $400,000.00. In circumstances where B Lawyers must be inferred to have intimate knowledge of the husband’s financial circumstances and his capacity, it is perhaps not unreasonable that they sought payment in lieu of some contract or arrangement that may not come to fruition for some years.
The orders made 12 May 2017 between the husband and the wife were made in circumstances where it had become known during the intervening period that a fresh redraw facility needed to be negotiated as provided for in orders made that day.
In its Response to the husband’s application B Lawyers sought an order that the application be dismissed and an order for costs.
As to the conduct of the parties in relation to the discrete application, it is conceded by B Lawyers in submissions that the application was made, and responded to promptly. Fortuitously it was resolved on the first listing day as referred to above.
B Lawyers submit that they provided to the husband an opportunity prior to 12 May 2017 to withdraw his application with no order for costs. However, it is clear that the husband was in no position to make any arrangement as to payment to B Lawyers until such time as interlocutory property issues were resolved by he and his wife that day, such resolution facilitating orders that provided for payment of the sums provided to B Lawyers.
In considering all of the circumstances discussed above the Court is not persuaded that there are justifying circumstances such that the usual rule should be displaced.
The application for costs will be dismissed.

I certify that the preceding twenty eight (28) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Foster delivered on 23 June 2017.

Associate:

Date: 22 June 2017