Kallias and Kallias

[2018] FamCA 245

FAMILY COURT OF AUSTRALIA

KALLIAS & KALLIAS [2018] FamCA 245

FAMILY LAW – COSTS – objection to subpoena withdrawn – time unnecessarily wasted.

Family Law Act 1975 (Cth)

APPLICANT: Mr Kallias

RESPONDENT: Ms Kallias

FILE NUMBER: MLC 9443 of 2014

DATE DELIVERED: 10 April 2018

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Cronin J

HEARING DATE: 10 April 2018

REPRESENTATION

THE APPLICANT: Excused

SOLICITOR FOR THE APPLICANT: Robinson & Gill

COUNSEL FOR THE RESPONDENT: Dr Smith

SOLICITOR FOR THE RESPONDENT:

THE SUBPOENAED PERSON

Barbayannis Lawyers Pty

Mr F, in person

Orders

1. That the objection by Mr F is struck out.

2. That the wife’s costs are fixed at $12,000 and reserved to the trial judge subject to the following order:

3. If Mr F makes an application as a creditor of the husband and the wife or either or both of them by 4.00pm on 31 May 2018 in the proceedings, the payment of the costs referred to in this order are stayed to be determined by the trial judge.  If no such application is made by 31 May 2018, the said costs shall be immediately due and payable.

4. All outstanding applications for final orders (currently the application filed 28 February 2017 and the response filed 15 March 2017) are referred to the Honourable Justice Thornton for listing as a directions hearing at 10.00 on 1 June 2018 for fixing for trial for the period 29-30 August 2018.

5. That the documents produced by Mr F are to be made available for inspection and copying but any such copies shall be destroyed upon the conclusion of the proceedings.

6. That the husband file an amended initiating application by 4.00pm on 26 April 2017 and the wife file an amended response by 4.00pm on 10 May 2018 setting out with precision the orders that they are seeking.

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 Kallias & Kallias 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: MLC 9443 of 2014

Mr Kallias

Applicant

And

Ms Kallias

Respondent

REASONS FOR JUDGMENT

1. This application is by the wife for her legal costs to be paid by her accountant.  The husband and wife are engaged in a property dispute revolving around some corporate entities.  Suffice to say a dispute seems to have arisen between the husband and the wife or at least the wife, and their previously engaged in accountant, Mr F.

2. On two occasions in 2017, the wife’s solicitors obtained from the registrar permission to file and serve, and the registrar thereby issued subpoena addressed to, Mr F asking him to produce documents for a number of years relating to the accounting work that he had done or was doing for the parties.

3. Mr F has said to me today, and it would seem uncontroversial, that he is owed a substantial sum of money.  The precise quantum of that remains to be seen.  Having been served with a subpoena, Mr F obtained legal advice.  An objection to the subpoena was filed, although it was never served, and it does not appear to have ever been formally recognised on the court file, but I am satisfied that somehow or other it was put before the court on 8 November noting that there was a hearing on the following day.

4. I also observe that these proceedings and the dispute in relation to the documents had been going for some weeks prior to that.  Suffice to say that the objection seemed to raise a point that the documents should not be released for inspection and copying on the ground that Mr F claimed a lien over the documents for work that he had done. 

5. At its highest, the objection has to be read in the context of the affidavit that he subsequently filed with the assistance of his lawyers.  That affidavit sets out his invoices.  All of that, in my view, is entirely irrelevant.  In one sentence in the last paragraph of his affidavit he said that he claimed a lien.  He tells me from the bar table today that his lawyers told him that he was entitled to a lien, and indeed he draws some comfort from the fact that when the registrar ultimately set this matter down in the judicial duty list, the registrar seemed to think that there was a lien. 

6. To establish a lien requires a contractual arrangement and as Mr F correctly concedes today, he never had his clients sign anything.  Contracts do not have to be in writing but there is also no evidence that an oral contract was entered into under which the documents belong to Mr F until he was paid.

7. In any event, this dispute over the subpoena wandered along on a number of occasions, including some interesting, but it seems to me entirely irrelevant, arguments over misconduct said to have been the responsibility of Mr F.  I fail to see how any of that has anything to do with this subpoena. 

8. Today was the return date of the objection.  Mr F has appeared without legal representation primarily on the basis that he has already spent $27,000 on his lawyers which included fees for other matters as well.

9. He conceded that, in hindsight, there was no basis to his objection as had been pleaded, and in reality his claim as against either or both of his former clients lies in contract.  No doubt that can be determined in due course.  For reasons that also escape me, no claim was ever made in this court formally by Mr F to become a party to the proceedings, and under s 79(10), as a creditor he would have been entitled to at least been heard to have some decision made by the court as to who, if either of these parties, should be paying his debt. 

10. Having withdrawn the objection, there is no basis for me to say that the documents ought not be available for inspection, and indeed, it would seem that if the documents in the box held by the court, and they will remain with the court until the conclusion of the proceedings, contain documents said to be the more recent tax returns, then presumably as between the husband the wife and their agreement contained in a court order, Mr F will get paid at least $80,000.

11. In any event, the application now before me relates to costs on an indemnity basis. The costs asserted by the wife amount to $24,000 and the usual costs agreement is annexed to the most recent affidavit as is required by the rules of the court. Section 117 of the Family Law Act 1975 (Cth) (“the Act”) provides that in proceedings under the Act, each party shall bear their own costs unless there is a justifiable circumstance to depart from that principle.

12. If proceedings involve another party who is not a party to the marriage, then orders for costs can be made against them subject to some conditions.  If the court considers that there are circumstances that justify departure from the principle that each party should pay their own costs then the same sorts of principles should apply to a non-party to the marriage.  Here, what is asserted is that an objection was formally lodged but nothing done about it, and ultimately today, months later, it is withdrawn. 

13. In my view, that must be seen as a justifiable circumstance having regard to the fact that the amount of time and energy of not only the parties and Mr F, but also the public purse in the form of the court spending time upon it, has been entirely wasted. Before an order for costs can be made as between the parties, and it should apply also to a non-party to the marriage, the court must consider the matters set out in s 117(2A) of the Act.

14. Here the issue is focusing entirely upon the fact that Mr F, whilst he filed the documents ultimately to the court, he did not comply with an order of the court made earlier that the objection be set out in a formal affidavit, and so forth.  In other words, much of the time of everybody has been wasted.  There are other considerations such as financial circumstances, but I am not addressed in respect of any of those matters so I do not intend to spend any time on it. 

15. In my view, this is a case where an order for costs should be made.  I take into account, though, that one of the bases upon which Mr F explains his behaviour and conduct, and I do not use that in a pejorative sense, is that he was advised to do certain things by lawyers.  How they would justify the actions taken is unclear to me, and as they are not present, nor are they parties to any argument, it is not fair that I raise any criticisms of them.  However, it seems to me that based upon the fact that Mr F was operating on the advice of lawyers, it does affect the question of whether or not I should make an order for indemnity costs or costs otherwise. 

16. As is well known, the Full Court of this court in Prantage said that an order for indemnity costs is the exception rather than the rule, and whilst it is perhaps seen as unusual if not exceptional for these sorts of objections to be heard by the court, I could not find that this is a case here where the circumstances were so exceptional that the wife should be indemnified in respect of all of the costs that she incurred.  In that vein, I therefore would make an order for costs on scale.  To avoid a further hearing and a further argument between the parties, I will exercise my discretion and fix the costs in the sum of $12,000. 

17. It seems to me, however, that I ought not make an order today that Mr F pay the $12,000 because he has a claim which he says is somewhere in the vicinity of $160,000 for work that he has done.  It seems to me that the issue of his claim as a creditor ought to be part of the proceedings between the husband and the wife if the parties can’t reach agreement as to what he is to be paid.  I also consider that to simply leave the costs to trial could mean that he would have to be engaged in the proceedings unnecessarily, not to mention the constant delays. 

18. The sensible solution is to make an order that he files a claim supported by application by 31 May this year, notwithstanding he says this is the most busy time of the year for him.  If he does not do that, then as a self-executing order, he will find that the order for costs of $12,000 becomes due and payable.  He would then have great difficulty participating in the proceedings by making his claim for his own professional costs thereafter.

I certify that the preceding eighteen (18) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin delivered on 10 April 2018.

Associate: 

Date:  23 April 2018