Kirk and Mickelham

[2008] FamCA 278

FAMILY COURT OF AUSTRALIA

KIRK & MICKELHAM [2008] FamCA 278

FAMILY LAW – INJUNCTIONS
FAMILY LAW – COSTS
FAMILY LAW – JURISDICTION

Family Law Act 1975 (Cth)

Smith & Saywell (1980) FLC 90-856
Tansell & Tansell FLC 76-633

APPLICANT: Mr Kirk

RESPONDENT: Mickelham Solicitors

FILE NUMBER: MLC 9289 of 2007

DATE DELIVERED: 15 April 2008

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Dessau J

HEARING DATE: 15 April 2008

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Gray

SOLICITOR FOR THE APPLICANT: Just Law

COUNSEL FOR THE RESPONDENT: Mr  N.P. De Young

SOLICITOR FOR THE RESPONDENT: Mickelham Solicitors

Orders

1. That the application for an order restraining Mickelham Solicitors from proceeding with its claim against the applicant in the Magistrates’ Court of Victoria due to commence this day, as set out in the Application in a Case filed 31 March 2008, shall be and is hereby dismissed.

2. That the applicant shall pay Mickelham Solicitors costs of the interim application fixed at $3,879.85.

3. That a transcript of my reasons for judgment given this day shall be prepared and retained on the court file and a copy provided to each party.

4. That the hearing date of 13 June 2008 of the Application in a Case filed 31 March 2008 shall be vacated and the application shall be listed in the Judicial Duty List at 10.00am on 23 June 2008.

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

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER:  MLC 9289 OF 2007

MR KIRK

Applicant

And

MICKELHAM SOLICITORS

Respondent

REASONS FOR JUDGMENT

INTRODUCTION

1. The applicant, Mr Kirk, was a party to property proceedings that settled in this court last year.  His current application, filed on 31 March 2008, relates to a costs dispute between he and his former solicitors Mickelham Solicitors.  Specifically Mr Kirk seeks an anti-suit injunction to restrain Mickelham Solicitors from proceeding against him this morning in a defended Magistrates Court case in which Mickelham Solicitors are claiming $53,000-odd in fees that they say remain outstanding.  Mickelham Solicitors oppose the injunction.  They rely upon a response filed on 2 April 2008.

2. It is unfortunate that the matter was only in court yesterday in a particularly busy Duty List when a decision is required before court today.  That was neither party's fault, but was due to a combination of factors beyond their control. 

BACKGROUND

1. Mickelham Solicitors performed legal work for Mr Kirk between about October 2006 and March 2007.  He entered into a costs agreement with them, on 16 October 2006.  He then received invoices dated 21 December 2006, 30 January 2007, 23 February 2007, 15 March 2007 and 30 March 2007 totalling about $53,000 he having previously paid $10,000. 

2. The precise chronology is well set out in the reasons given by Senior Registrar FitzGibbon on 28 March 2008. Under r.19.20 of the Family Law Rules a party who wants to dispute an account has 28 days to request an itemised costs account.  On 10 April 2007 Mr Kirk sent a fax to Mickelham Solicitors requesting an itemised invoice.  There is a dispute as to whether that request sufficed pursuant to the Rules but in any event it was out of time, at least in relation to the first three outstanding invoices.  Mr Kirk retained a solicitor Mr Shenken to act on his behalf.  Between April and late May 2007 there was extensive communication between Mr Shenken and Mickelham Solicitors about the sum outstanding, about an itemised account, and about Mr Kirk being out of time and his proposal to seek an extension of time.

3. To complete this chronology I note that on 23 May 2007 Mr Kirk made a complaint to the Legal Services Commissioner.  That complaint was dismissed as being over the limit with which the Commission could deal. 

4. Also on 23 May last year Mickelahm Solicitors started the Magistrates Court proceedings, due to continue this morning, to recover the sum outstanding pursuant to the invoices.  Mr Kirk filed a defence.  The case was to be heard on 5 December 2007, but on 9 November 2007 Mr Kirk filed an application in a case in this Court seeking leave to proceed out of time to have Mickelham Solicitors provide itemised accounts.  That application was heard by the Senior Registrar on 1 February this year.  Judgment was given on 28 March.

5. On 31 March Mr Kirk filed his application effectively to review the Senior Registrar's refusal of his application.  That review application is returnable in this Court on 13 June.  It is against that backdrop that Mr Kirk now seeks an order to restrain Mickelham Solicitors from proceeding with the two day debt recovery hearing in the Magistrates Court.

THE RELEVANT LEGAL PRINCIPLES

1. It is common ground that this Court has the power to grant an injunction restraining a party from proceeding in a State court.  It must also be common ground that courts are extremely cautious about enjoining a party from seeking relief to which that party is entitled by law in another court of competent jurisdiction.  Traditionally, comity between courts has been considered important, an aspect emphasised as particularly important between Australian courts by Finkelstein J in Construction, Forestry, Mining and Energy Union v Mirvac Constructions Pty Ltd (2000) 171 ALR 279 at 292.

2. Mr De Young has referred me to a decision in the family law context of Baba v Jarvinen (1980) FLC 90-882. Nygh J in that case helpfully summarised the relevant principles as espoused by the Full Court of this court at page 75 575 when he said,

   In Smith v Saywell (1980) FLC 90-856 the jurisdiction of this Court to make an order restraining a party from proceeding in another court was sustained. This Court can only take such an extreme step when it is absolutely essential and I would respectfully agree with the statement of the Full Court in Tansell v Tansell (Family Law cases at page 76-633 FLR at 11,483) that the Family Court ought to avoid making orders which in terms restrain a party from continuing with proceedings validly instituted in another court.  However, I read that statement not as implying that it shall never be done but that if it was to be avoided, if possible.

3. Otherwise, both counsel have referred to the well established considerations in a case in which an interlocutory injunction is sought, namely, whether there is a serious issue to be tried and if so whether the balance of convenience favours the granting of the injunction. 

   IS THERE A SERIOUS ISSUE TO BE TRIED?

4. As to the serious issue to be tried, there is broad consensus that for Mr Kirk to obtain leave to dispute Mickelham Solictors’ costs out of time, he bears the onus to satisfy this Court that there is a reasonable explanation for his delay, that he has a substantial issue not without merit to be tried, and that there would be prejudice to him but not to Mickelham Solicitors if he could not proceed.  .

5. The essence of the argument for the applicant is that although out of time pursuant to the Family Law Rules in seeking itemised accounts of costs pursuant to r.19.20, Mr Kirk did informally seek such details within a short time of receiving invoices. He acted promptly once the combined invoices were well in excess of the approximation of costs he had previously received. His request for an itemised account was clear even if not in a manner formalised by the rules, and for some months there were negotiations between his new solicitor and the respondent, again from which it was clear he sought more details.

6. It is argued for him he did not rest on his rights. He actively agitated those rights. It is submitted that he has merit to his argument against the costs, in that he was quoted around $15,000, but ultimately received bills to $63,000. Moreover, it was in a case resolved for $65,000 by way of his payment to the wife, so there is an argument that the costs were not proportionate. In that context, see r.19.34 of the Family Law Rules whereby costs must not be allowed if not reasonably necessary for the attainment of justice and not proportionate to the issues.

7. It is then submitted for the applicant that those features, combined with there being no prejudice to Mickelhams Solicitors by an extension of time for him to dispute the costs, it being known to the solicitors within a very short time that there was a dispute, should lead me to conclude that there is a serious question or issue to be tried and that the balance of convenience favours the issue being determined in this court where all relevant issues can be determined. 

8. It was otherwise argued for Mr Kirk that an injunction would - and I quote Mr Gray - "protect the proceedings of the Family Court of Australia."  It may have been loose wording on his part.  In any event, that particular argument should be laid to rest immediately without further consideration.  It is contrary to the authorities and the significance of comity between the courts to proceed on that particular basis. 

9. Mr De Young, Counsel for Mickelham Solicitors, correctly points out that although Mr Kirk’s solicitor, Mr Gray describes the Application in a Case (filed by his client on 31 March 2008) as seeking a review of the Senior Registrar's decision, it in fact goes beyond the initial application that was before the Registrar.  That application (filed 9 November 2007) had simply sought Mickelham Solicitors to provide itemised accounts under the Rules.  Nevertheless, Mr De Young conceded that the current application does relate to and arise from the findings by the Senior Registrar.  It seeks an order extending the time for the applicant to dispute Mickelahm Solicitors first, second and third invoices; a declaration that the applicant has validly disputed Mickelham Solicitors fourth and fifth accounts; an order that Mickelham Solicitors provide itemised accounts; an assessment of Mickelham Solicitors costs under the Family Court Rules; and, an order that Mickelham Solicitors pay the applicant's costs of this application and the application before the Senior Registrar.

10. Mr De Young has filed clear and helpful written submissions relying on many factual matters apparently relied upon by the Senior Registrar in determining that Mr Kirk should not have leave to compel Mickelham Solicitors to provide itemised accounts.  The written submissions analyse the material relevant to those considerations, in paragraphs 36-41.

11. In order to deliver these reasons in the urgent and brief time available, I need to summarise.  It is apparent from the submissions for Mickelham Solicitors, backed by the affidavit material and attachments, as well as the Senior Registrar's carefully worded and detailed findings, that much of the material relied upon by Mr De Young is either unrefuted, or it in large measure speaks for itself.  Mindful that there is still dispute about significant parts of it, it nevertheless does seem clear that Mr Kirk received proper notice of his right to question, and how to question the solicitor’s costs, by way of the costs agreement and the appropriate acknowledgment with it. 

12. He was advised further in the covering letter with the costs agreement, and all invoices contained specific advice in the covering letters, to direct any concerns to Mickelham Solicitors.  It is argued it is thus clear that Mr Kirk cannot adequately explain his delay in taking action about the various relevant invoices. 

13. Although Mr Kirk was given a costs estimate of $10,000-$15,000 as he claimed, it is apparent from the material that it was specifically in relation to pre-trial costs, that is up to the Pre-Trial Conference.  The letter about it on 19 October 2006 appears to be clear.  Although it also contained cautions as to variations, at the time of the Pre-Trial Conference on 4 December 2006, it seems that the costs were in fact around $15,000.

14. I believe I can take judicial notice that if a case does not settle at that point, the costs generally mount very significantly, with the preparation of material for trial.  Indeed, Mickelham Solicitors claims that on 21 December 2006 the client was advised that his legal costs could be $50,000.  What is hard to dispute is that on 20 February 2007 Mr Kirk was advised in writing that likely costs by the end of the first day of trial would be $47,000 plus $4000 for each subsequent day.  Mickelham Solicitors then claims that the costs escalated because of the husband's own conduct in failing to make proper disclosure, failing to comply with court deadlines, and frequently changing instructions.  This aspect is of course open to conjecture. 

15. What is not open to conjecture is that monthly bills were rendered.  The applicant did not make any complaint at all, although the December, January and February bills totalled about $25,000.  His first disputation in any form was not until 10 April 2007, several weeks after the fourth bill. 

16. Mickelham Solicitors has given Mr Kirk significant details about its billing and it is agreed that his legal representatives have had full access to their files.  Again, it is a point of conjecture as to the degree of the detail, but the documents attached to the affidavit of Ms L, a solicitor at Mickelham Solicitors, support the fact that significant detail was in fact given to Mr Kirk.  Mr Kirk seems to complain that the detail was insufficient for the costs to be assessed.  It is likely that is not the case, particularly when coupled with the solicitor's access to the files.

17. It is submitted for Mickelham Solicitors that the final relief sought by Mr Kirk in this Court has little if any prospects of success.  For the reasons set out above I agree. However, even if I am wrong, I agree with the respondent's case that the balance of convenience and/or the interests of justice weigh against the injunction sought by the applicant. 

    THE BALANCE OF CONVENIENCE

18. Mr De Young relies on six points, set out in paragraphs 43-48 of his written submission.  I do not accept that the third point is reasonable.  It is that the applicant has brought this application only on the eve of the Magistrates Court proceedings without adequate explanation.  There is in fact adequate explanation.  As already noted, Mr Kirk’s application for an itemised costs account was filed on 9 November 2007.  It only reached the Senior Registrar for hearing on 1 February 2008.  The Senior Registrar understandably reserved his judgment, until 28 March 2008.  On 31 March 2008, really the earliest opportunity, the application for a review of that decision was filed, and yesterday, due to the unusual circumstances of a national Family Law conference last week, was the first court date available for that application. 

19. The applicant did delay in the past.  The Magistrates Court proceedings were commenced in May 2007, and he only sought to restrain them in this court in November 2007, so that the December hearing date did need to be adjourned. 

20. The other balance of convenience points argued for Mickelham Solicitors are persuasive.  First, I refer again to the authority in relation to comity, and that this Court should only disturb the other Court's hearing if it is "absolutely essential".  Next, Mr Kirk can defend the claim in the Magistrates Court.  Mr Kirk also has open to him an application to the Magistrates Court to adjourn the trial date pending proceedings in this court.  That is a matter for the Magistrates Court to decide.  In addition there has already been considerable cost and delay in this case.  If Mickelham Solicitors cannot proceed to prosecute its claim in the Magistrates Court today, the cost and the delay would be considerably compounded.  I do note Senior Registrar FitzGibbon invited Mr Kirk to pay money into Court and it seems that he refused.  That raises a concern that as the matter drags on, the risk in not obtaining funds if there is a judgment against the applicant, is heightened. 

21. In considering the balance of convenience, I have taken into account the argument for the applicant that the question of proportionality of the costs is not open to him in the Magistrates Court.  That is true.  It was necessarily conceded as such by the respondent.  I note that in his affidavit in support of his application filed 9 November 2007, at a time when he was legally represented, Mr Kirk did not mention this proportionality aspect.  However, it was raised in the affidavit of his new - his third solicitor - in an affidavit filed on 31 March 2008 where at paragraph 4 Mr Gray deposed:

    It appears to me that the questions arising under the Family Law Rules 2004 of whether the claimed costs of Mickelham Solicitors are fair reasonable and proportionate will not be determined at the Magistrates Court of Victoria.

22. I note two things.  One, in raising the issue of proportionality, Mr Gray made oral submissions that the husband paid $65,000 to the wife by way of final property order, but purportedly ran up legal costs of $63,000, the inference being that the costs were disproportionate.  However, there is no other material at all to set a context for me as to the pool the parties fought over.  If for example it were $130,000 the costs may have been disproportionate.  If for example some millions of dollars were involved, then they were not.  Moreover, although it is true that proportionality as such cannot be argued in the Magistrates Court, the applicant's overlapping claims that the fees were beyond the costs agreement, and that they were excessive and/or unreasonable are likely to be part of his defence in those proceedings. 

23. So for these reasons the applicant's application for an anti-suit injunction shall be dismissed.  It seems that it will be the only order that I need to make, and the other part of the application can remain on foot until its return date in this Court on 13 June 2008.

I certify that the preceding thirty (30) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Dessau

Associate: 

Date:  15 April 2008