Keane and Keane and Ors

[2014] FamCA 261

FAMILY COURT OF AUSTRALIA

KEANE & KEANE AND ORS [2014] FamCA 261

FAMILY LAW – PROCEDURAL – Application to disqualify

APPLICANT: Ms Keane

1^st RESPONDENT: Mr Keane

4^th RESPONDENT: Mr R

FILE NUMBER: SYC 279 of 2011

DATE DELIVERED: 17 April 2014

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Watts J

HEARING DATE: 24 February 2014

REPRESENTATION

SOLICITOR FOR THE APPLICANT: Not participating

SOLICITOR FOR THE 1^ST RESPONDENT: Litigant in person

SOLICITOR FOR THE 4^TH RESPONDENT: Litigant in person

Orders

1. The 4^th respondent’s application that I disqualify myself from further hearing the father’s application contained in order 1 sought in the father’s Response to an Application in a Case filed 11 October 2013 is dismissed.

2. This matter be listed for mention on 4 June 2014 at 9.15am for consideration of the 4^th respondent’s application for adjournment pending determination of his appeal to the Full Court and any condition that might be placed upon that adjournment and consideration in respect of making directions in relation to any further argument (to be had on another day) in respect of jurisdiction.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Keane & Keane and Ors has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYC 279 of 2011

Ms Keane

Applicant

And

Mr Keane

1^st Respondent

And

Mr R

4^th Respondent

REASONS FOR JUDGMENT

INTRODUCTION

1. On 11 October 2013 by way of response to an application in a case, the father sought an order that the 4^th respondent, his former solicitor Mr R, pay the applicant’s costs. The applicant’s costs included an order for costs made against the applicant on 12 November 2013 in the following terms:

   The father pay to the mother on a party/party basis seventy-five percent (75%) of the mother’s costs in relation to the proceedings to be as agreed or assessed.

2. The reasons for that costs order were provided on the date the costs order was made, namely 12 November 2013.

3. In his affidavit in support filed 11 October 2013, the father in general terms makes various complaints about Mr R’s representation of the father and in very general terms what Mr R had and had not done. The father alleges Mr R failed to comply with an order made on 23 May 2013; pre-action procedures and would not draft documents in a timely manner.

4. The father also points to what he says is a knowing disregard for orders of the court and Mr R engaging in “unlawful and criminal behaviour in allowing a breach of the orders to occur for his own financial benefit and at his insistence”.

5. On 28 November 2013 Mr R filed an application in the following terms:

   1.    That His Honour Watt J [sic] disqualify himself from further hearing any application in which the 4^th respondent is a party.

6. In the alternative, Mr R wanted the further hearing of the father’s application adjourned until a date after the appeal against the orders made by me on 10 May 2013. Those orders restrained Mr R from relying upon a charge that he obtained from the father in 2009 to secure legal fees in respect of work done after an injunctive order was made in July 2012. (That injunctive order had restrained the father from further encumbering his property.)

7. In support of his application filed 28 November 2013, Mr R swore and filed an affidavit on 28 November 2013. No admissible part of that affidavit grounded Mr R’s disqualification application.

8. When the matter came before me on 28 January 2014, after exchanges between Mr R and myself, I extended to Mr R a further opportunity to provide the court with a written document within 14 days setting out what findings were made in the primary proceedings which were critical of Mr R’s recollection, credit and behaviour and any part of any transcript of the proceedings before me involving Mr R that post-dated me dealing with the application that I disqualify myself that has already been dismissed by order made 10 May 2013, which order is the subject of an appeal.

9. On 28 January 2014 I made an order in the following terms:

   2.  [Mr R] file and serve any further material within 14 days.

   I relisted the matter on 24 February 2014 for further mention.

10. On 11 February 2014 Mr R filed further submissions pursuant to the leave that had been granted to him. Notwithstanding the order that was made in his presence on 28 January 2014, those submissions had not been served upon the father. Somewhat surprisingly, notwithstanding the order that was made in Mr R’s presence on 28 January 2014, he attempted to assert that it was his understanding of the father’s position that he did not want to say anything about the disqualification application and therefore he did not need to have regard to the order that was made on 28 January 2014, requiring him to serve his further submissions upon the father. A copy of the submissions was handed to the father at the bar table. The father was given an opportunity to read paragraphs 8 and 9 of those submissions which are the only paragraphs that relevantly ground Mr R’s application.

11. Dealing with Mr R’s submissions, he has correctly identified the appropriate test for disqualification by reason of apprehended bias, namely, whether a fair-minded lay observer might reasonably apprehend that the judge might not bring an impartial and unprejudiced mind to the resolution of the question the judge is required to decide (Johnson v Johnson (2001) 201 CLR 488 at [11]). Mr R asserts that findings have been made by myself which are critical in relation to his behaviour in circumstances where he is a party to the proceedings in which the same issues of fact arise (he quotes Australian National Industries Limited v Spedley Securities (in liquidation) (1992) NSW Law Reports @ 411).

12. In support of his application, Mr R first refers to paragraphs 124.1 and 124.2 of my Reasons for Judgment of 10 May 2013. Both those paragraphs refer to a preliminary view and a prima facie case against Mr R. Mr R relied upon those preliminary statements to ground the earlier disqualification application which was unsuccessful (and which is the subject of an appeal). Reference to that material in the further submissions does not fall within the leave that was given and is not relevant to this application.

13. Next Mr R refers to paragraph 142 of the judgment which speculates that Mr R was probably aware that the Child Support Registrar had made an application for enforcement prior to 29 June 2012. Mr R submits that I was critical of his knowledge and awareness of that application without evidence. At all relevant times Mr R acted for the father. The enforcement proceedings were filed on 9 November 2011. The inference that I drew was that Mr R probably knew about them by 29 June 2012. It is incorrect to say that the inference was drawn “without evidence”. Nothing in paragraph 142 would ground a disqualification.

14. Next Mr R points to the fact that I made a finding that he had received part of the drawdown of $20,000. Mr R asserts that there is no evidence about that and asserts that he did not receive any of the $20,000. Mr R, as is noted in paragraph 153 of the judgment, chose not to tender in evidence copies of his office and trust ledgers nor redacted memorandums of account. There was however evidence from the father and the father’s new wife that some of the monies that were received by them by way of the drawdown from their new facility on 12 July were paid to Mr R. I did not however have any evidence of how much that was. It is inaccurate to say there was no evidence that Mr R received money from the drawdown. No ground for disqualification arises from paragraph 153.

15. Mr R finally relies upon paragraphs 166, 175 and 177 of the judgment. They are in the following terms:

    166.  Counsel for [Mr R] submitted that it was a serious matter to interfere with the agreements between a party and its legal advisers. Counsel for [Mr R] asserted that the standard of proof in this case was on the civil standard in accordance with the Briginshaw v Briginshaw (1938) 60 CLR 336 test and that s 140(2) Evidence Act 1995 (Cth) applied. Whilst I accept, given the seriousness of what is asserted, that that may well be the test, it is of no great moment given that there are sufficiently known uncontroversial facts to allow me to determine the Registrar’s application. No finding needs to be made as to whether or not [Mr R] will rely upon the charge in his fee agreement to secure fees for work done after 10 July 2012. He said he is going to do it. Consequently, there is a real risk that [Mr R] will wish to assert that his encumbrance gives him priority. That he will do so is not a remote possibility (see Hammond v Commonwealth (1982) 152 CLR 188)....

    175.  Counsel for ]Mr R] asserted that [Mr R] was not doing anything to change the costs agreement nor was the father doing anything to change the agreement. The submission is that no new dealing or transaction was being entered into. I do not accept that submission. The new transaction that was being entered into was fresh work being done by [Mr R] after the date of the order by the Federal Magistrate, the cost for which was to be secured by the charge....

    177.  I conclude that the father and [Mr R] were required by the injunctive order made 10 July 2012 to act in a way that did not further encumber the Galston property. If [Mr R] and the father were to continue their solicitor/client relationship, there needed to be a renegotiation of the terms upon which the legal services were being provided so that the property was not further encumbered under the charge after 10 July 2012. If that was not possible, the father could have sought the services of another legal practitioner who was prepared to accept the retainer on some other basis, or alternatively the father could have acted on his own behalf in the proceedings.

16. Mr R points to the fact that in these paragraphs I concluded that there was more than a remote possibility that Mr R would in the future attempt to assert that he was able to rely upon a charge to secure the costs of his legal services to the father after the date of the injunctive order, namely 10 July 2012 and that I was of the view that his intention to act in that manner meant that he was breaching the injunctive order made on 10 July 2012.

17. I have made a finding that Mr R asserts that he is entitled to act in a way which I have found breaches an injunctive order. That finding does not impugn Mr R’s credit nor is it a finding about any disputed fact. Mr R has challenged my finding on appeal, apparently asserting that, as a matter of law, my finding is incorrect. A fair minded lay observer reading paragraphs 166, 175 and 177 of my Reasons for Judgment dated 10 May 2013 would conclude that any criticism of Mr R’s behaviour flows from an interpretation of a legal principle. Although Mr R’s behaviour is likely to be an issue in the current application, the finding about that behaviour has been made (subject to any interference on appeal) in proceeding in which Mr R and the husband were parties and (although it is yet to be argued), Mr R may be estopped from any further argument about that finding. I find there is no basis to assert apprehended basis and accordingly, the 4^th respondent’s application that I disqualify myself from further hearing the father’s application contained in order 1 sought in the father’s response to an application in a case filed 11 October 2013 is dismissed.

18. The matter is to be relisted before me for further mention. Two further preliminary issues need to be considered. Mr R’s alternate application for this hearing to be adjourned until a date after the appeal against the orders made by me on 10 May 2013 is determined as one that seems appropriate, subject to two matters:

    18.1.Firstly, on 24 February 2014 the father indicated that Mr R had commenced proceedings against him in relation to his outstanding fees in a Local Court. The issue might arise as to whether or not, if Mr R is granted an adjournment, an order be made that Mr R not continue the proceedings in the Local Court during the period of that adjournment.

    18.2.The other issue that arises is whether or not it is in fact appropriate for this court to continue to hear the application. The Full Court in Noll & Noll & Anor (2013) 48 Fam LR 635, in the context of a dispute about the efficacy of a binding financial agreement, dealt with a factual situation in which a husband sought to claim against a law firm who had advised the wife seeking to recover damages from that firm for failing to provide the wife with independent legal advice. The Full Court in that case found that the claim for negligence by the husband against the wife’s solicitors did not fall within a single justiciable controversy on the basis that what was to be litigated did not arise out of a common substratum of facts. I am yet to hear argument about whether or not this court can continue to hear a controversy between lawyer and client for family law work (and any associated cross claim in negligence by the client against the lawyer).

I certify that the preceding eighteen (18) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Watts delivered on 17 April 2014

Associate:

Date:  17.4.14