KLD & SCVG
[2009] FamCAFC 56
•6 April 2009
FAMILY COURT OF AUSTRALIA
| SCVG & KLD | [2009] FamCAFC 56 |
| FAMILY LAW - Extension of time for service – Service of itemised costs account – Review of Registrar’s order not to extend time – Review constitutes original hearing – Where the delay is significant – Whether the failure to serve an itemised bill within 28 days of the order for costs was explained – Whether the failure to serve itemised bill was excused by the filing of a special leave application – Whether there was injustice to either of the parties in allowing the matter to proceed out of time – Whether a remedy against the solicitor is a relevant matter – Where a remedy against the solicitor does not meet the justice of the situation – Extension of time for service of itemised costs account granted |
| Family Law Act 1975 (Cth). Family Law Rules 2004 |
| Harris v Caladine (1991) 172 CLR 84 |
| APPELLANT: | KLD |
| RESPONDENT: | SCVG |
| FILE NUMBER: | SYF | 2639 | of | 2005 |
| APPEAL NUMBER: | EA | 55 | of | 2006 |
| DATE DELIVERED: | 6 April 2009 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | O'Ryan J |
| HEARING DATE: | 23 March 2009 |
| LOWER COURT JURISDICTION: | Family Court of Australia |
| LOWER COURT JUDGMENT DATE: | 20 November 2008 |
| LOWER COURT MNC: | N/A |
REPRESENTATION
| COUNSEL FOR THE APPELLANT: | Ms Rees |
| SOLICITOR FOR THE APPELLANT: | Macphillamy’s |
| COUNSEL FOR THE RESPONDENT: | Mr Twigg, solicitor |
| SOLICITOR FOR THE RESPONDENT: | Adrian Twigg & Co, Solicitors |
Orders
1.Pursuant to Rule 1.14 of the Family Law Rules 2004 the 28 days fixed by Schedule 6 Rule 6.22 be extended.
2.It be noted that the provision by the Wife's solicitors of the Itemised Costs Account under cover of their letter dated 9 May 2008 be sufficient service for the purpose of the rules.
3.The time for the Husband to serve a Notice Disputing Costs be extended to 29 April 2009.
IT IS NOTED that publication of this judgment under the pseudonym KLD & SCVG is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth). This judgment was previously published under the pseudonym Doriemus & Vanderhum.
| THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT SYDNEY |
Appeal Number: EA 55 of 2006
File Number:
| KLD |
Appellant
And
| SCVG |
Respondent
REASONS FOR JUDGMENT
INTRODUCTION
Before me is an application filed on 28 November 2008 by KLD (“the Wife”) seeking a review of orders made by Registrar Halbert, who is the Eastern Appeals Registrar, on 20 November 2008 dismissing an application in which was sought, among other things, an extension of time to serve an itemised costs account. The Respondent is SCVG (“the Husband”).
In support of the application an affidavit was sworn on 1 December 2008 by Mr M who is the Wife’s solicitor.
The application was opposed by the Husband and he relied on an affidavit sworn on 3 October 2008 by his solicitor, Mr T.
The Wife seeks the following orders:
1.That the Order made on 20 November 2008 by Appeal Registrar Halbert be reviewed.
2.That pursuant to Rule 1.14 of the Family Law Rules 2004 the 28 days fixed by Schedule 6 Rule 6.22 be extended.
3.That the wife serve an Itemised Costs Account and a Costs Notice on the husband or his solicitors on or before 23 January 2009.
4.In the alternate that the provision by the wife's solicitors of the Itemised Costs Account under cover of their letter dated 9 May 2008 be sufficient service for the purpose of the rules and that the time for the husband to serve a Notice Disputing Costs be extended to 23 February 2009.
BACKGROUND
On 24 May 2007 the Full Court (Coleman, Warnick & Thackray JJ) made an order dismissing an appeal by the Husband against final parenting orders. The Full Court also made an order that the Husband pay the Wife's costs of and incidental to the appeal as agreed or assessed on a party/party basis.
On 21 June 2007 the Husband filed an Application for Special Leave to Appeal to the High Court against the judgment of the Full Court made on 24 May 2007.
Mr Macphillamy testified that he was not aware of the requirement to serve an itemised costs account within 28 days. He said that no such requirement exists in relation to costs ordered by the High Court, the Federal Court or the Supreme Court of the Australian Capital Territory, that being where he practises. He took the view, which he accepted was wrong, that if the Husband succeeded in his special leave application, the whole issue of costs of the appeal may be irrelevant and that he would wait to pursue the costs after he knew the outcome of the special leave application.
As was pointed out by Mr Twigg in his affidavit of 3 October 2008 the application for special leave to appeal to the High Court did not operate as a stay of the orders of the Full Court. On 14 December 2007 the High Court dismissed the Husband’s application.
From 11 January 2008 to 20 March 2008 the parties attempted to agree on the amount of costs payable by the Husband to the Wife under the costs order, but failed to reach an agreement.
By letter dated 11 January 2008 Mr Macphillamy wrote to Mr Twigg and requested payment of costs in the sum of $41,937.14. Mr Macphillamy forwarded a "summary of costs and disbursements".
By letter dated 16 January 2008 Mr Twigg wrote to Mr Macphillamy and queried the amount of costs sought but did not request an itemised costs account.
By letter dated 18 February 2008 Mr Macphillamy wrote to Mr Twigg and provided further details regarding the costs claim and asked whether an itemised costs account was required.
By letter dated 26 February 2008 Mr Twigg wrote to Mr Macphillamy and requested more details and failing provision of those details requested an itemised costs account.
By letter dated 20 March 2008 Mr Macphillamy wrote to Mr Twigg and acknowledged the request for an itemised costs account
On 20 March 2008 Mr Macphillamy instructed CL, a costs consultant, to prepare a “Bill of Costs”. On 10 April 2008 Mr Macphillamy received an email from CL. On 15 April 2008 Mr M forwarded a letter to CL. On 28 April 2008 Mr Macphillamy received the itemised costs account from CL.
On 9 May 2008 Mr Macphillamy forwarded a letter to Mr Twigg enclosing the itemised costs account prepared by CL. This occurred 73 days after the request from Mr Twigg for an itemised costs account and 50 days after acknowledgment of that request by Mr Macphillamy. Mr Macphillamy received no response to his letter dated 9 May 2008 to Mr Twigg.
On 25 June 2008 Mr Macphillamy attempted to file by mail the application in a case, supporting affidavit and itemised costs account with the Eastern Region Appeals Registry in Sydney.
Mr Macphillamy said that he understood that as from 1 July 2008 Schedule 6 to the Family Court Rules (“the Rules”) commenced and that Schedule now deals with party/party costs in matters commenced before 1 July 2008.
Mr Macphillamy testified that the Eastern Region Appeals Registry in Sydney returned by mail the documents referred to in paragraph 17 because in completing Part D of the form titled “Itemised Costs Account” he had inserted the words "as set out in Attachment ‘A’” (which attachment was the 35 page document entitled “Itemised Costs Account” referred to at Annexure "L" to his affidavit) as opposed to retyping the whole attachment of 35 pages in the format required at Part D of the form. Mr Macphillamy then arranged for the retyping and inserting in Part D of the form the material that was the 35 page document referred to as Annexure "L" to his Affidavit.
On 25 July 2008 Mr Macphillamy dispatched a letter to the Appeal Registrar.
On 28 July 2008 an application in a case was filed by the Wife seeking an extension of time to serve an itemised costs account. An affidavit in support sworn by Mr Macphillamy was also filed on 28 July 2008.
The Appeals Registrar then listed the matter for hearing on 15 October 2008 and called for any submissions from each party to be filed by 1 October 2008.
A response was filed on 3 October 2008 by the Husband and an affidavit in support sworn by Mr Twigg was also filed on that day.
The Appeals Registrar said that no other submissions were received from either party. An adjournment was sought and granted. The matter was next listed for 20 November 2008.
In her reasons the Appeals Registrar observed that Schedule 6.21 of the Rules requires that a person who receives an account and who wants to dispute it must request an itemised costs account within 28 days of receipt of the account.
The initial summary of costs was served on 11 January 2008. The request for the itemised costs account was made on 26 February 2008 being 46 days after the initial summary of costs was sent. The Appeals Registrar observed that there was no evidence as to the date the summary of costs was received by the Husband. However no issue was taken by the Wife with the timing of the Husband's request for the itemised costs account.
In her reasons the Appeals Registrar observed that Schedule 6.22 of the Rules requires a party to provide an itemised costs account within 28 days of receiving a request to do so together with a costs notice. She said that there was no evidence as to whether a costs notice was served and the itemised costs account was certainly not served within 28 days of the request nor of the acknowledgment of the request.
In her reasons the Appeals Registrar observed that Schedule 6.23 of the Rules sets out the requirements of an itemised costs account. The Husband contended that there was no adequate explanation provided by the Wife for the delay.The Appeals Registrar said “I would say there is no explanation provided by the applicant for the delay”.
In her reasons the Appeals Registrar said that “[t]he principles to be applied to applications for extension of time are set out in Gallo and Dawson (1990) 93 ALR 479: the discretion to extend time is given for the sole purpose of enabling the court to do justice between the parties — this means the discretion can only be exercised in favour of the applicant on proof that strict compliance with the rules will work an injustice upon the applicant”.
In her reasons the Appeals Registrar also stated that “[i]n order to determine whether the rules will work an injustice it is necessary to have regard to the history of the proceedings, the nature of the litigation and the consequences for the parties of the grant or refusal of the application for extension of time”. The Appeals Registrar said that neither party addressed any of those issues in their affidavits nor had they filed any submissions regarding those issues despite the opportunity to do so.
The Appeals Registrar concluded: “Having regard to the matters set out in Gallo and Dawson and the affidavits filed by the parties, I do not find any reason to extend time to file an itemised costs account and I therefore dismiss the application filed 28 July 2008”.
SUBMISSIONS
On behalf of the Wife it was submitted that the failure to serve an itemised bill within 28 days of the order for costs was explained, though not excused, by the fact that the Husband filed a special leave application. The delay in preparation of the itemised bill was explained by the affidavit of Mr Macphillamy.
It was submitted that it was not asserted that there would be any injustice to the Husband in allowing the matter to proceed out of time. However, in the event that time was not extended, then the Wife would be deprived of the proper compensation for her costs thrown away in the Husband's unsuccessful appeal. It was submitted that the fundamental issue in extending time is to allow the court to do justice between the parties. The Wife referred to and adopted the reasoning of Cronin J in Gleeson and W Pty Ltd & Estate of King [2007] FamCA 1255.
RELEVANT PRINCIPLES
This is an application seeking a review of orders made by a Registrar. The power to review is contained in s 37A(9) of the Family Law Act 1975 (Cth). Section 37A(10) provides that upon a review the Court “may make such an order or orders as it considers appropriate with respect to the matter with respect to which the power was exercised”.
Part 18.2 of the Rules deals with the review of decisions. Rule 18.10 deals with the power of a court on hearing an application for review. Rule 18.10(1) provides that a court must hear an application for review of an order of a Registrar “as an original hearing”: see Harris v Caladine (1991) 172 CLR 84 per Mason CJ and Deane J at 95-6; per Brennan J at 106; per Dawson J at 125-6; and per McHugh J at 164; cf however per Gaudron J at 154 and Parrott v The Public Trustee of New South Wales (1994) FLC 92-473 at 80,904-5.
Rule 1.14 of the Rules deals with the shortening or extension of time. Rule 1.14(1) provides that “[a] party may apply to the court to shorten or extend a time that is fixed under these Rules or by a procedural order”. Rule 1.14(2) provides that “[a] party may make an application under subrule (1) for an order extending a time to be made even though the time fixed by the rule or order has passed”. However, there are “no preconditions to the exercise of power” to extend time: see Strudwick v Baker Johnson (1996) FLC 92-683 per Lindenmayer J at 83,098. The Rules do not set out what matters are to be considered in relation to an application for leave to do something out of time.
However the discretion to extend time although unfettered will not be exercised automatically. In Gallo v Dawson (1990) 93 ALR 479 McHugh J said at 480 “[t]he grant of an extension of time… is not automatic…” and citing the decision of McInerney J in Hughes v National Trustee Executors & Agency Co of Australasia Ltd [1978] VR 257 at 262 said “[t]he discretion to extend time is given for the sole purpose of enabling the court or justice to do justice between the parties”. The discretion to extend time is given for the purpose of enabling the court to avoid an injustice and the court must determine whether justice as between the parties is best served by granting or refusing the extension sought. In The State of Queensland v J L Holdings Pty Ltd (1997) 189 CLR 146 Dawson, Gaudron and McHugh JJ said at 154: “…case management is not an end in itself. It is important and useful aid for ensuring the prompt and efficient disposal of litigation. But it ought always be borne in mind, even in changing times, that the ultimate aim of a court is the attainment of justice and no principle of case management can be allowed to supplant that aim”.
In OP v HM [2002] FamCA 454 the Full Court (per Kay, Coleman and Rose JJ) at 19 said that whilst there is a broad discretion the fundamental issue is whether an extension of time will enable the Court to do justice between the parties. Their Honours explained that this is “normally shown by the applicant demonstrating that there are adequate reasons which explain the delay, that there is a substantial issue to be raised on the hearing of the application, and that no hardship or injustice will be caused to the respondent which cannot be compensated by orders as to costs or otherwise”: see also McMahon and McMahon (1976) FLC 90-038 at 75,144, and Tormsen and Tormsen (1993) FLC 92-392 at 80,017.
Various authorities have established that in order to determine whether compliance with the Rules would work an injustice, it is necessary to have regard to the history of the proceedings, the conduct of the parties, the nature of the litigation and the consequences to the parties of the grant or the refusal of the extension of time: see Gallo v Dawson (supra) per McHugh J at 480-1; Lawecki & Marcel Kalfus & Co (1985) FLC 91-644; Prowse v Prowse (1995) FLC 92-557 at 81,568-81,573 but in particular at 81,572-3; Morrison v Morrison (1995) FLC 92-573 at 81, 674; and more recently OP v HM (supra).
However, the Full Court (Lindenmayer, Baker and Rowlands JJ) observed in Prowse v Prowse (supra) at 81,572: “[h]owever, whilst it is no doubt correct to identify those matters as ‘factors’ to be considered, and even as ‘the usual considerations’, we believe that it would be an error to elevate those ‘factors’ or ‘considerations’ into an exclusive code within the confines of which the court’s discretion to extend time must be exercised”. In other words, it is important to recognise that although the factors set out in various cases are “normally shown” by a successful applicant for an extension of time they should not confine the broad discretion: Hill v Hill [2007] FamCA 1657 (Unreported, O’Reilly J, 1 November 2007) at 13.
CONCLUSION
In the circumstances of this case the delay is significant. However insofar as it is relevant an explanation has been given by Mr Macphillamy. Mr Macphillamy testified that he resolved to await the outcome of the application by the Husband for special leave to appeal to the High Court before he pursued the recovery of the costs. In so doing Mr Macphillamy made a mistake and he has accepted that what he failed to do was an error on his part. The chronology corroborates what Mr Macphillamy contended for because after the special leave application was dismissed he took steps to recover the costs. However the very considerable delay is a matter that I take into account.
If an extension of time was not granted then I am satisfied that there would be an injustice caused to the Wife because she may not be able to recover as costs what was intended by the Full Court she should receive.
On behalf of the Husband it was submitted that in considering the prejudice to the Wife, if an extension of time was not granted it is a relevant matter that she may have a remedy against Mr Macphillamy. No authorities were cited in support of the submission, which in any event was very brief. However there is a great deal of case law in relation to the relevance of a claim against a solicitor in proceedings in which an extension is sought of a limitation period: see Morrison & Anor v Judd (Unreported, New South Wales Court of Appeal, Kirby P, Meagher and Powell JJA, 10 October 1995); Repco Corporation Ltd v Scardamaglia [1996] 1 VR 7; Tsiadis v Patterson (2001) 4 VR 114: Blackburn v Allianz Australia Ltd (2004) 61 NSWLR 632 per Sheller JA (Mason P and Hodgson JA agreeing); Andresakis & Skouteris v Alexus Holdings Pty Ltd [2006] 68 NSWLR 507 at 525-530 per McColl JA (Giles and Hodgson JJA agreeing) and Gordon v Norwegian Capricorn Line (Australia) Pty Ltd [2007] VSC 517.
The issue of professional negligence or professional incompetence can arise in other proceedings. For example an application pursuant to s 79A to set aside an order made pursuant to s 79 on the ground of miscarriage of justice: see Clifton and Stuart (1991) FLC 92-194.
The authorities have established that any potential claim against former solicitors is a relevant consideration in determining an extension of time, but the question of what weight is to be given to it depends on the circumstances of each case. In considering the circumstances of each case the Court should take into account the prejudice associated with confining an appellant to an action against former solicitors: see Repco Corporation Ltd v Scardamaglia (supra). It is important to consider the prejudice to the applicant for an extension of time in prosecuting the claim against the solicitors as opposed to prosecuting the original claim. Examples of prejudice may include a more complex, expensive and time consuming action against the solicitor and a diminution in the value of the claim itself: see Repco Corporation Ltd v Scardamaglia (supra) and Tsiadis v Patterson (supra). In the context of a notice of motion endeavouring to set aside a preliminary dismissal order, in Andresakis & Skouteris v Alexus Holdings Pty Ltd (supra) McColl JA at [92] discussed the principles as set out in Repco Corporation Ltd v Scardamaglia (supra) and Tsiadis v Patterson (supra).and concluded that the authorities ascribed the prospect of bringing a claim against former solicitors little weight “partly because of the difficulty of evaluating the prospects of success”.
In Taylor v Taylor (supra) Gibbs J, in considering whether to set aside orders obtained in circumstances where, although a party was on notice of proceedings, by accident or mistake the party did not attend, found that any potential claim against former solicitors is not a relevant consideration when there is a real question to be tried or where there has been a breach of a fundamental principle of natural justice. In the context of consideration of the incompetence of legal representation as an arguable ground of appeal, in Jowett v Kelly [2008] NSWSC 1009 Brereton J at 15 discussed Taylor v Taylor (supra) and concluded that although no question of a breach of a fundamental principle of natural justice arose, the consideration of a remedy against the solicitor is not relevant “not only where a party is absent, but also where its representation is incompetent and perverse”.
While the current proceedings can be distinguished from the preceding authorities the principles that have been established are easily transferable. It is my view that although the Wife may have a right to pursue an action against Mr Macphillamy, given the circumstances of the case, the error on Mr Macphillamy’s part and his detailed and relevant explanation, I find it difficult to ascribe weight to the prospect of such a claim. In the circumstances of this case I am of the view that leaving the Wife to a remedy against Mr Macphillamy would not meet the justice of the situation. I therefore give very little weight to the “secondary remedy” (Morrison & Anor v Judd (supra) and Andresakis & Skouteris v Alexus Holdings Pty Ltd (supra)) against Mr M.
Very few submissions were made on behalf of the Husband in relation to the issue of prejudice to him. However the injustice that the Husband may suffer is similar to that identified by Cronin J in Gleeson and W Pty Ltd & Estate of King (supra), namely he may have to pay a significant amount of money in circumstances where he may have presumed that the Wife was not pursuing her rights. However in all other respects I do not accept that there would be any further injustice caused to the Husband if an extension of time was granted. Subject to interest the costs order was made some considerable time ago.
In all the circumstances, I have come to the conclusion that the extension of time should be granted.
COSTS
Counsel for the Wife informed me that in the circumstances if the application succeeded the Wife would not seek an order for costs. I am of the view that the general rule in s 117(1) of the Family Law Act should apply and I propose to make no order for costs.
I certify that the preceding fifty (50) paragraphs are a true copy of the reasons for judgment of the Honourable Justice O’Ryan.
Associate:
Date: 6 April 2009
8
13
2