Henton & Henton (No 3)
[2022] FedCFamC1F 778
Federal Circuit and Family Court of Australia
(DIVISION 1)
Henton & Henton (No 3) [2022] FedCFamC1F 778
File number(s): PAC 1371 of 2018 Judgment of: RIETHMULLER J Date of judgment: 14 October 2022 Catchwords: FAMILY LAW – COSTS – Where the Federal Circuit and Family Court of Australia (Division 1) has implied power to order solicitors to pay costs – Where the applicant’s solicitors briefed two counsel – Orders made restraining applicant’s solicitors from charging client for both counsel Legislation: Family Law Act 1975 (Cth) ss 9, 21
Federal Circuit and Family Court of Australia Act 2021 (Cth) ss 67, 68
Federal Circuit and Family Court of Australia (Family Law)Rules 2021 (Cth) rr 12.08, 12.13, 12.15
Cases cited: Caboolture Park Shopping Centre Pty Ltd (in liq) v White Industries (QLD) Pty Ltd (1993) 45 FCR 224
Darrow & Malden [2018] FamCA 1060
DJL v Central Authority (2000) 201 CLR 226; [2000] HCA 17
Henton & Henton [2022] FedFamC1F 574
Henton & Henton (No 2) [2022] FedFamC1F 655
Jachimowicz and Jachimowicz (1986) FLC 91–702
Myers v Elman [1993] 4 All ER 484
Division: Division 1 First Instance Number of paragraphs: 25 Date of last submission/s: 24 August 2022 Place: Parramatta Counsel for the Applicant: Mr Shaw and Mr Moran Solicitor for the Applicant: Jameson Law Solicitor for the Respondent: Litigant in person ORDERS
PAC 1371 of 2018 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS HENTON
Applicant
AND: MR HENTON
Respondent
order made by:
RIETHMULLER J
DATE OF ORDER:
14 october 2022
THE COURT ORDERS THAT:
1.The applicant’s solicitors be restrained from charging the applicant fees for more than one counsel.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Henton & Henton has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
RIETHMULLER J:
Introduction
In the course of hearing the trial in this matter the applicant was represented by two barristers: see Henton & Henton (No. 2) [2022] FedFamC1F 655. At trial, I raised with counsel for the applicant a query as to why the applicant required two counsel in what appeared to be a relatively straightforward case.
After the trial in July 2022, the representatives for the applicant were afforded the opportunity to provide written submissions on the question of whether or not the Court should restrain the solicitors from charging their client for two counsel in this matter. This issue was not determined prior to the judgment in the matter itself (referred to above) so as to allow an opportunity for the solicitors, if they saw fit, to make any further submissions after judgment which may have been necessary for a proper consideration of the costs issue.
Written Submissions were received from the applicant’s lead counsel on 24 August 2022.
Background
The substantive proceedings in this matter have had a lengthy history, having been filed originally in 2018. Whilst the property pool of the parties was modest, an issue arose as to whether or not the respondent had forged the applicant’s signature on mortgage documents with the Australia and New Zealand Banking Group Limited (“ANZ”) bank. Some years ago ANZ was joined by the applicant as a party to the proceedings, interim injunctions were made, and considerable expense incurred in the dispute between the applicant and ANZ.
As is apparent from the first judgment I have given in this matter on 17 March 2022, whether the respondent in fact forged the applicant’s signature or not, made no difference to the case of ANZ as, in substance, ANZ had obtained indefeasible title for its mortgage, and even if it had not the mortgage amount was less than the one-half share of the respondent in the property based upon his legal title of the property: see Henton & Henton [2022] FedFamC1F 574. In these circumstances summary judgment was given in favour of ANZ on 17 March 2022.
The dispute between the applicant and respondent was listed for trial in July 2022 and ran for two days. At the commencement of the trial, counsel for the applicant raised a query as to whether or not the applicant had capacity or would require a litigation guardian. I heard evidence from the applicant on her capacity and concluded that she did have sufficient capacity to conduct the proceedings. I make no criticism of counsel for raising this issue as the combination of the applicant’s single-minded view (if not obsession) with the proposition that the respondent had secreted assets, coupled with her somewhat eccentric behaviours, gave rise to real concerns. In this regard, I note that the applicant’s disposition resulted in her being a difficult client to represent.
The trial itself proceeded quickly, with few factual issues. The applicant had no evidence of other property of the parties which was not disclosed. There were no disputes as to the extent of the debts of the parties from the relationship. The respondent represented himself and was brief in his cross-examination and submissions. As is apparent from the judgment, the assets of the parties were clear on the material that had been filed, and there was no dispute as to the respondent’s debts, nor the amounts spent by the parties on legal fees. It was a simple matter to ascertain the property of the parties and their debts for the purpose of the judgment, and the evidence relating to the contributions and future needs was also relatively straightforward: see Henton & Henton (No. 2) [2022] FedFamC1F 655. Ultimately, the outcome received by the applicant was far more generous than she may have expected, as a result of concessions made by the respondent in the proceedings. Had there not been the initial issue relating to the applicant’s capacity to give instructions, the hearing, if run efficiently, could have been heard in a day.
In these circumstances it was difficult to understand why the applicant would require two counsel in order to conduct the proceedings, and apparent from the applicant’s presentation that she had little to no capacity to critically consider whether or not she required two counsel.
Jurisdiction of the Court
The Court’s jurisdiction and powers have changed considerably since the High Court considered the Family Court’s jurisdiction in DJL v Central Authority (2000) 201 CLR 226 at 25, under the Family Law Act 1975 (Cth). The Act originally provided only that a Court “to be known as the [Family Court of Australia] is created”: see 21(1) of the Family Law Act 1975 (Cth). In light of this statutory provision, the High Court noted (at 25) that the Court was not a common law court as were the common law courts at Westminster and thus had limited powers.
The Court is currently constituted as a court in the following terms, as set out in s 9 of the Act:
Federal Circuit and Family Court of Australia (Division 1)
(1) The Federal Circuit and Family Court of Australia (Division 1) is:
(a) a superior court of record; and
(b) a court of law and equity.
(2)The Federal Circuit and Family Court of Australia (Division 1) consists of the following:
(a) a Chief Justice;
(b) a Deputy Chief Justice;
(c)such Senior Judges and other Judges as from time to time hold office in accordance with this Act.
(3) At least 25 Judges are to hold office in accordance with this Act.
(4) In working out whether at least 25 Judges hold office:
(a) include the Chief Justice and Deputy Chief Justice; and
(b)do not include a Judge who is also a judge of the Family Court of Western Australia.
Even without this broadening of the Court’s jurisdiction and powers, it was accepted that the Court had sufficient incidental powers so as to deal with the questions of costs with respect to litigants before the Court: see Jachimowicz and Jachimowicz (1986) FLC 91–702. Similarly, it has been held that the Federal Court has jurisdiction to make crosts orders even where the Court has no jurisdiction in the issue litigated: see Caboolture Park Shopping Centre Pty Ltd (in liq) v White Industries (QLD) Pty Ltd (1993) 45 FCR 224, followed in Darrow & Malden [2018] FamCA 1060 (at [17]).
In Jachimowicz, there is a lengthy summary of the opinions of the members of the House of Lords in Myers v Elman [1993] 4 All ER 484 with respect to the principles applicable when considering an order that a solicitor pay another party's costs. It is no longer necessary for this Court to rely solely upon the common law principles in this regard, as the issue is the subject of specific statutory powers and Court rules. Section 67(1) of the Federal Circuit and Family Court of Australia Act 2021 (Cth) (“the FCFCOA Act”) provides an important overarching purpose for the procedures of this Court saying
Overarching purpose of family law practice and procedure provisions
(1)The overarching purpose of the family law practice and procedure provisions is to facilitate the just resolution of disputes:
(a) according to law; and
(b) as quickly, inexpensively and efficiently as possible.
Particularly relevant to the current matter is the objective set out in section 67(2)(e) of the FCFCOA Act that:
Overarching purpose of family law practice and procedure provisions
(1)Without limiting subsection (1), the overarching purpose includes the following objectives:
…
(e)the resolution of disputes at a cost that is proportionate to the importance and complexity of the matters in dispute.
These obligations specifically apply to a party's lawyer in the conduct of proceedings as set out in s 68(2) of the FCFCOA Act which provides:
Parties to act consistently with the overarching purpose
...
(2)A party's lawyer must, in the conduct of a civil proceeding before the Federal Circuit and Family Court of Australia (Division 1) (including negotiations for settlement) on the party's behalf:
(a) take account of the duty imposed on the party by subsection (1); and
(b) assist the party to comply with the duty.
Failure to comply with such requirements can be taken into account in exercising the discretion with respect to costs: see s 68(4) of the FCFCOA Act. The power to order a party's lawyer to bear costs personally is specifically provided for in s 68(5) of the FCFCOA Act.
The Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) (“the FCFCOA rules”) also bear upon costs considerations. Rule 12.08(1) of the Rules specifically requires that:
Legal costs to be fair, reasonable and proportionate
(1) The legal costs incurred in a proceeding must be:
(a) fairly, reasonably and proportionately incurred; and
(b) fair, reasonable and proportionate in amount.
Clearly, r 12.08(1) of the FCFOCA rules applies to issues as between litigants and their own lawyers as well as issues of costs between parties and other parties' lawyers, as r 12.08(5) of the FCFCOA rules is limited to applications for costs by one party against another. Rule 12.15 of the FCFOCA rules makes specific provisions for costs orders against a lawyer providing as follows:
Costs order against lawyer
(1)The court may make an order for costs against a lawyer if the lawyer, or an employee or agent of the lawyer, has caused costs to be incurred by a party or another person, or to be thrown away, because of:
(a) a failure to comply with these Rules or an order; or
(b) a failure to comply with a pre-action procedure; or
(c) improper or unreasonable conduct; or
(d) undue delay or default.
(2)A lawyer may be in default if a hearing may not proceed conveniently because the lawyer has unreasonably failed:
(a) to attend, or send another person to attend, the hearing; or
(b) to file, lodge or deliver a document as required; or
(c) to prepare any proper evidence or information; or
(d) to do any other act necessary for the hearing to proceed.
(3)An order under subrule (1) may be made on the initiative of the court, or on application by a party to the proceeding or by another person who has incurred the costs or costs thrown away.
(4) An order under subrule (1) may include an order that the lawyer:
(a) not charge the lawyer's client for work specified in the order; or
(b) repay money that the client has already paid towards those costs; or
(c)repay to the client any costs that the client has been ordered to pay to another party or another person; or
(d) pay the costs of a party; or
(e) repay another person's costs found to be incurred or wasted.
It is clear that r 12.15(4) of the FCFCOA rules makes provision for orders to be made which prevent a lawyer from charging a client for work specified in the costs order. It is apparent from r 12.13(1) of the FCFCOA rules that the Court may make such an order on its own initiative (although necessarily only after giving the persons that may be affected by the order notice and an opportunity to be heard).
I am satisfied that I have power to make orders restraining solicitors from charging all or part of the costs that have been incurred by the applicant in these proceedings, based upon the terms of the statute and rules, in addition to any implied powers that the Court has as a superior Court of law and equity.
The question that arises in this case is whether or not the engagement of two counsel was proportionate to the circumstances of the case.
Written submissions were made by the lead counsel to the effect that initial counsel was originally briefed in the matter shortly before the hearing. On reading the brief, initial counsel noted the claims by the applicant against ANZ and became concerned that:
The case involved a possible forensic confrontation with the Australian [sic] and New Zealand Banking Group Limited.
It is said that this led initial counsel to be:
Under the impression that the contest with the ANZ Bank would require some more senior Counsel then [sic] he was at this time in his career to deal with the claim by the Bank as a party to the proceedings.
(Applicant’s written submissions filed 24 August 2022)
Subsequently, initial counsel sought assistance from lead counsel.
The difficulty with this position is that the claim by the bank had already been the subject of a summary judgment in favour of the bank in March of 2022, the orders for which were available to the parties through the Commonwealth Courts portal. Whether initial counsel’s impression arose through a lack of care when reviewing the documents he was provided with, or that he was not provided with copies of the orders dealing with the bank's claim, is not the subject of evidence before me and not an issue upon which I can make a determination. However initial counsel's impression came about, it was untenable in light of the actual circumstances of the case which ought to have been known to his instructing solicitors, if not known to him. In these circumstances, the basis upon which a second and lead counsel was engaged was an unjustified assumption.
The engagement of initial counsel was not proportionate to the issues in the proceedings. Whilst the FCFOCA rules do not set out a specific test to be applied when considering whether or not to exercise the discretion with respect to costs orders as between a lawyer and a party, it is necessary to bear in mind that in all cases a dispute looks far simpler after it has been determined than it did at the commencement of the proceedings. For this reason, courts have habitually exercised considerable care with respect to liability of a solicitor even if, at least with hindsight, the conduct of the matter may have been considered to have been negligent. Remedies are available for solicitor’s clients in other courts for negligent representation. It was for this reason that the House of Lords in Myers v Elman considered that mere negligence of a solicitor was insufficient to justify an order.
In this matter, the engagement of a second counsel was wholly unnecessary, and could only be justified on the mistaken belief that the case involved an ongoing issue with ANZ. Had the matter involved an ongoing issue with ANZ, given the nature and size of the proceedings, it still appears to me that it would not have required a second counsel. If initial counsel was not able to appropriately represent the applicant in such proceedings, he ought to have returned the brief so that a person with sufficient knowledge or experience could be briefed. However, in this case there was no issue with respect to ANZ, it having been determined months beforehand, as reflected in the orders made 17 March 2022 (as mentioned above).
I am persuaded that in these circumstances the applicant’s solicitors should be restrained from charging the applicant fees for two counsel, and limited to charging for one of the counsel, not both. It is a matter as between counsel and their instructors as to who should bear the loss among themselves.
I certify that the preceding twenty-five (25) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Riethmuller. Associate:
Dated: 14 October 2022
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