Liatos & Silid

[2009] FamCA 674

FAMILY COURT OF AUSTRALIA

LIATOS & SILID [2009] FamCA 674

FAMILY LAW – PRACTICE AND PROCEDURE – Restraining Wife’s solicitor from acting – Matters in the Supreme Court and Family Court – Previous personal relationship between Respondent and solicitor – No basis for disqualification

FAMILY LAW – PRACTICE AND PROCEDURE – Transfer of proceedings to Supreme Court – Application dismissed – Preferable for Family Court Registrar to assess Family Court costs

FAMILY LAW – PRACTICE AND PROCEDURE – Transfer of proceedings to Melbourne or Brisbane Registries – To be case managed in Brisbane

FAMILY LAW – COSTS – Between solicitor and client – Extension of time to file a notice disputing costs – Extension allowed as justice of the case demands it – Respondent to file itemised accounts – Stay assessment pending determination of validity of costs agreement in Supreme Court

Jurisdiction of Courts (Cross-Vesting) Act 1987 (Cth)
Jurisdiction of Courts (Cross-Vesting) Act 1987 (NSW)

MCH & Y & Y [2006] FamCA 610
Garrey & Crosby [2007] FamCA 696
In the Marriage of Tormsen (1993) FLC 92-392
Kallinicos & Anor v Hunt & Anor (2005) NSWSC 1181
McMillan & McMillan (2000) FLC 93-048
Strudwick & Johnson (Unreported, Family Court of Australia, Lindenmayer J, 7 March 1996)

APPLICANT: Ms Liatos

RESPONDENT: Mr Silid

FILE NUMBER: SYC 579 of 2007

DATE DELIVERED: 17 July 2009

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Barry J

HEARING DATE: 13 July 2009

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Jarrett of Counsel appeared for the Applicant

SOLICITORS FOR THE APPLICANT: Marello Lawyers & Associates

COUNSEL FOR THE RESPONDENT: The Respondent appeared in person

Mr Cook of Counsel appeared for Ms Marello

Orders

IT IS ORDERED THAT:

1. The Respondent is to deliver an itemised account of all fees rendered to the Applicant, to the extent that he has not already done so, within twenty-eight (28) days after the New South Wales Supreme Court’s decision is delivered on the application to set aside the costs agreement dated 6 August 2007.

2. The Respondent is to ensure that all itemised accounts rendered to the Applicant are numbered, such that each item for which a charge has been made, whether by way of fees or disbursement, is readily identifiable.

3. The time within which the Applicant can serve a notice disputing itemised costs under r 6.2.3 of Schedule 6 be extended by twenty-one (21) days from the date of delivery of the itemised numbered account.

4. The proceedings are to be re-listed for assessment by a Registrar of this Court after the itemised account of fees has been delivered in accordance with the New South Wales Supreme Court’s determination and after the Applicant has filed her Notice Disputing Costs.

5. Costs of and incidental to the current proceedings are reserved.

6. Each party be at liberty to apply to re-list on forty-eight (48) hours notice to the other parties.

7. The Respondent’s application to restrain the Applicant Wife’s solicitor from acting in the proceedings is dismissed.

8. The Respondent’s application for the proceedings to be transferred to the Supreme Court is dismissed.

NOTATION:

1. The Registrar forward a copy of these reasons when settled to the Registrar, Supreme Court of New South Wales, for the attention of Justice ….

2. The assessment of the costs in this matter are stayed pending the determination in the Supreme Court of New South Wales on the application to set aside the costs agreement of August 2007.

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

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYF 579/2007

MS LIATOS

Applicant

And

MR SILID

Respondent

REASONS FOR JUDGMENT

1. The applicant, Ms Liatos, was a respondent in this Court in proceedings for property settlement initiated by her husband in January of 2007.  Those proceedings were resolved by consent orders made on 15 August last year.  In the course of the property settlement litigation, Ms Liatos engaged a number of different legal firms to act on her behalf.  The respondent, who is a solicitor practising in Sydney, in his own firm as a sole practitioner, acted for the wife in the period from 29 May 2007 until Christmas Eve that year.  There is a dispute between the parties as to who terminated the retainer.  The costs and disbursements issue by the respondent to the applicant totalled in excess of $550,000 for the period of about seven months.

2. The fees were rendered by a series of accounts commencing in August of 2007.  It was not until 6 August 2007 that Mr Silid asked his client to sign a costs agreement governing the fees to be paid.  I have not had the opportunity to delve into this matter in the detail I might have wished, but it does seem as if the costs at all times from 1 June onwards, have been charged pursuant to the costs agreement.  It is arguable that costs agreements are not documents that can have a retrospective operation, however, that is a matter that may require determination at some point in the future.

3. The figure of $550,000 includes considerable allowance for disbursements.  In paragraph 58 of her affidavit filed on 22 June, Ms Liatos deposes that her then solicitor, Glenda Lawrence, subsequently engaged a Mr Ehrlich, a solicitor in Sydney, who I infer specialises in costs assessments, to prepare a notice disputing the costs.  The notice disputing the costs challenges in excess of $250,000 as being legitimate charges.  The wife says in paragraph 58 of her affidavit of 22 June that if the charges are to stand, she has been charged at the rate of approximately $92,000 per month, or $23,000 a week, for the approximate seven month period.  On my calculations there may be a touch of hyperbole in the applicant’s claims in this regard but by any measure the fees claimed are significant.  I understand from correspondence of yesterday’s date, 16 July that Mr Silid contends that of Mr Earlich’s notice disputing the assessment, only about $50,000 relates to the actual solicitor’s charges.  The rest is said to be unresolved counsel’s fees and other disbursements.  That was not the subject of detailed submissions before me, but I have certainly read the letter which was forwarded to the wife’s current solicitors of yesterday’s date and a copy forwarded to me in Chambers.  It was in turn responsive to an email from counsel for the wife responding to a request for information that I had made during the course of Monday’s hearing.

4. The fees rendered by the solicitor are to be found at JL1, being the annexure to the wife’s affidavit filed 22 June.  The notice of objection is to be found at JL2.  These documents are held in one large binder.  As I understand it, the fees were issued on a monthly basis, with the fees for June and July backdated from

   
   

   30 August.

5. The essential issue I have to determine is whether the wife should be at liberty to dispute the legal fees, in particular the solicitor’s costs.  She brings an amended application, seeking an extension of time within which to file a notice disputing costs pursuant to r 19.23.  This rule has been repealed as from 1 July 2008, but as the costs agreement was signed in August 2007 and the costs were all rendered during that calendar year, the rule is still applicable.  The rule has been reproduced in Sch 6 of the current rules.

6. In her initial application, the wife also sought an order setting aside the costs agreement of August 2007.  The respondent instituted proceedings in the Supreme Court of New South Wales in February this year, seeking a declaration concerning a parcel of land in the name of Liatos Group Pty Ltd, a company, which I understand, is largely in the control of the applicant’s former husband.  An amended summons dated 1 April 2009 was filed joining the wife in that action.  The wife then filed a cross-claim in the Supreme Court seeking that the costs agreement of 16 August be set aside. 

7. In his response to the amended application in a case filed in this Court on

   
   

   10 July this year, Mr Silid seeks orders:

   “That the wife’s application to file a notice disputing costs be dismissed;

   If her application is not dismissed, then the proceedings be stayed pending the outcome of the Supreme Court proceedings;

   An order restraining the wife’s current solicitor from continuing to act for her both in this Court and in the Supreme Court proceedings;

   That these proceedings be transferred to the Supreme Court and be joined in the existing proceedings in that jurisdiction;

   Finally, in the alternative, that the proceedings be transferred to the Brisbane or Melbourne Registries of this Court to ensure privacy and confidentiality of the parties.”

   I note that this part of the response application was not pressed.

8. I propose to deal with the orders sought by the respondent before turning to a consideration of the wife’s application to be permitted to file a notice disputing costs.

Application to restrain wife’s legal representative, Ms Marello, from continuing to act on behalf of the wife in this Court and in the Supreme Court

1. The first and most obvious comment I would make is I have no intention of making an order restraining Ms Marello from acting in the Supreme Court proceedings, assuming that somehow I had the power to do so.  Such a decision is entirely a matter for a Judge presiding in that jurisdiction.  The basis of the restraint application, so far as it relates to proceedings in this Court, is set out in paragraphs (3) to (32) of Mr Silid’s affidavit filed on 10 July, namely he was previously in a relationship for almost a decade with Ms Marello and they have a nine year old son together.  His evidence indicates that they separated about seven years ago. Mr Silid claims that he and Ms Marello are in conflict over the care of their son, and to put it mildly, they do not get on.  As I observed during the course of submissions, I have never known the fact that practitioners do not get on to be a basis for restraining a practitioner from acting for a particular party.

2. On behalf of the wife’s solicitor it was submitted by her counsel that a client has a right to choose his or her own legal representative.  I accept this is so with the corollary that a Court would be slow to interfere with a litigant’s right to choose who should represent that individual.  It was further submitted that it is irrelevant whether Ms Liatos has had a number of other solicitors act for her both prior to and subsequent to the engagement of Mr Silid.  Once again, I accept the force and accuracy of a submission in those terms.

3. I accept the submission made on behalf of Ms Marello that to accede to

   
   

   Mr Silid’s application would have the effect of putting the wife to yet further expense and result in further delay in the final resolution or determination of this matter.

4. Counsel for Ms Marello referred the Court to the decision of Garrey & Crosby [2007] FamCA 696, a decision of Johnston JR, delivered 12 July 2007. The learned Judicial Registrar there reviewed a number of authorities on point, including a 2005 determination by Brereton J in the New South Wales Supreme Court in the matter of Kallinicos & Anor v Hunt & Anor (2005) NSWSC 1181.

5. A review of the authorities indicates three grounds on which a Court may restrain a solicitor from acting in proceedings:

   (a)A fiduciary basis, which results in a conflict of interest;

   (b)Where a solicitor has previously acted for a client and there is a risk of disclosure or misuse of material which is confidential; and,

   (c)An inherent jurisdiction in Courts to maintain authority in respect of legal practitioners.

6. The leading authority in this jurisdiction is a decision of the Full Court in McMillan & McMillan (2000) FLC 93048.  The Full Court, Finn, Kay and Moore JJ held:

   “The narrow or English approach which involves a Court only intervening to restrain a solicitor if it is convinced that real mischief and real prejudice will follow if the solicitor is allowed to continue to act, not followed.  It is sufficient if a party swears that he or she has conveyed confidential information to his/her solicitors and he/she believes that information may be used to his/her disadvantage in the proceedings.  There only needs to be a theoretical risk of prejudice.  There need not be proof of prejudice.”

7. I have read and reread the affidavit of Mr Silid.  Nowhere can I find any basis upon which he brings himself into one of the three factors that the Court must take into account.  There is no suggestion that as between the solicitors, there has been any communication of a confidential nature.  I have reviewed the authorities and I can see no merit whatsoever in Mr Silid’s application.  The fact that he was in a relationship with Ms Marello seven years ago is irrelevant.  The fact that he does not get on with her at the present time is equally so.  If Mr Silid elects not to engage a solicitor to act on his behalf in this Court, it is a matter for him.  He would do well to bear in mind the old adage about a lawyer who elects to act for himself.  The fact that Mr Silid may be uncomfortable litigating where his former partner is acting on the other side is not a basis for her disqualification.  I accept the force of the submissions that the prejudice to the wife in the event the application was acceded to, would be considerable.

8. I turn to consider the second application, namely that these proceedings should be transferred to the Supreme Court.  In the event I dismissed the wife’s application to file a notice disputing costs, that would be the end of the matter in this jurisdiction.  Mr Silid would be free to sue for the balance of his fees in the Supreme Court.  There is, as I understand the submissions, something of a conflict between the parties, whether the caveats presently encumbering the R and V properties are preventing implementation of the consent orders of August last year.  I have given the matter some thought and I do not find it necessary to make a determination on that aspect at this point in time.  The Supreme Court is seized with jurisdiction on that issue; I simply note that in the event that for any reason consent orders are frustrated and ultimately set aside, there may be further financial consequences.

9. In the event that the wife’s application is successful, it will fall to a Registrar to assess the costs under Division 6.6.2 of the Rules.  Rule 6.2.7 provides under the heading, “Assessment process”:

   (1)“On the filing of an itemised costs account and a notice disputing itemised costs account under sub-cl 6.2.5(3) the Registrar must fix a date for:

   (a)A settlement conference;

   (b)A preliminary assessment; and,

   (c)An assessment hearing.

   (2)The date fixed must be at least 21 days after the notice disputing the itemised costs account is filed.”

10. Before a Registrar can proceed to an assessment conference pursuant to this rule and the various stages which follow, it will be necessary for the Registrar to know whether costs are to be determined pursuant to the costs agreement or according to scale.  The New South Wales Supreme Court judge noted that the wife was seeking to have the costs agreement set aside, both in this jurisdiction and in the proceedings before himself.  He required the wife to give an undertaking to discontinue the application to set aside the costs agreement in this Court, and she has done that by filing the amended application to which I have adverted.

11. Section 9 of the Jurisdiction of Courts (Cross-Vesting) Act1987 (NSW) states at paragraph (9):

    “The Supreme Court:

    (a)May exercise jurisdiction (whether original or Appellate) conferred on that Court by a provision of this Act or the law of the Commonwealth or a State relating to cross-vesting of jurisdiction and;

    (b)May hear and determine a proceeding transferred to that Court under such a provision.”

12. It follows that where the law of the Commonwealth has conferred jurisdiction on the Supreme Court of New South Wales, the Supreme Court may exercise that jurisdiction. Section 4 of the Jurisdiction of Courts (Cross-Vesting) Act1987 (Cth), provides under the heading of “Additional Jurisdiction of Certain Courts”:

    (1)“Where:

    (a)The Federal Court or the Family Court has jurisdiction with respect to a civil matter, whether that jurisdiction was or is conferred before or after the commencement of this Act; and

    (b)The Supreme Court of a State or Territory would not apart from this section, have jurisdiction with respect to that matter; then

    (c)In the case of the Supreme Court of a State, that Court is invested with federal jurisdiction with respect to that matter.”

13. This Commonwealth Act then is conferring onto the Supreme Court its jurisdiction in relation to civil matters.  It follows that the Supreme Court may exercise the jurisdiction of the Family Court of Australia which is precisely what the Supreme Court judge has elected to do in relation to the determination on the validity as to whether the costs agreement should be set aside.

14. I do not propose at this point in time to consider whether a Registrar of the Supreme Court has the power to assess costs pursuant to the Family Court Rules.  For present purposes, I proceed on the basis that such power exists but on both a practical and theoretical level, it is preferable that costs assessments are carried out by Registrars of the Court in which the costs are incurred.

15. A Registrar of this Court has the necessary expertise to assess costs in the family law arena.  Once the Supreme Court has ruled on the application to set aside the costs agreement, the preferable course is for a Registrar of this Court to proceed to an assessment of the costs under Division 6.2.

16. I propose to dismiss the application to transfer these proceedings to the Supreme Court.  The only consequence of doing so would be to have a Registrar of that Court assessing costs which were incurred in this jurisdiction, and as I have indicated that is not a practical outcome.

17. For reasons soon to be given, I propose to allow the wife an extension of time within which to file her notice disputing costs.  The relevant document, as I have noted, has already been filed in this jurisdiction.  The bill of costs, which is extraordinarily lengthy, has also been filed.  I note the Registrars of this Court have special training to proceed through the assessment process, as detailed in our Rules.

18. In relation to his application to have the proceedings transferred to the Brisbane or Melbourne Registries as an alternative relief, as I have indicated, Mr Silid did not press for this outcome.

19. The property settlement proceedings were originally in O’Ryan J’s docket, but have since been resolved.  His Honour is fully occupied in Appeal Court listings at the present time.  It is likely other Judges in this Registry may have had dealings with the respondent in the course of private practice and may not wish to adjudicate in this matter in any event.  For this reason, I indicated I would be prepared to case manage this litigation, albeit from the relative sanctuary of the Brisbane Registry.  The file will be retained in Sydney.  The assessment process will take place in Sydney.  There was no dissent on the proposal that the matter remain in my docket.

20. I turn to consider the wife’s application to extend time to file the notice disputing costs.  A number of relevant authorities were produced.  I note the first of those to which I intend to refer was In the Marriage of Tormsen (1993) FLC 92-392, a decision of the Full Court, Fogarty, Nygh and Burton JJ. That related to an issue of granting a litigant leave to appeal out of time. The Court held the fundamental issue in an application for extension of periods of time prescribed by rules of Court is whether this would enable the Court to do justice between the parties. The Court must weigh a right which the respondent to the application prima facie has to obtain the benefit of a judgment and a desirability that there be finality of litigation. A failure to explain delay adequately can lead to a conclusion that justice demands that the application be dismissed, but in appropriate cases, the interests of justice may outweigh the absence of an adequate explanation.

1. Lindenmayer J, in S & J [1996] (Unreported, Family Court of Australia was dealing with a costs dispute where the solicitor sought review of a Registrar’s decision, whereby the husband was granted an extension of time for service of a notice disputing costs upon the solicitors.  The Court had to determine several matters:

   (1)whether an account within the meaning of then O 38 had been served;

   (2)whether the notice disputing costs presented for filing was filed on that date and within the time limit prescribed;

   (3)whether there was power in the Court to extend the time for filing.

2. His Honour, for the reasons he gave, granted the extension of time for service.  In doing so, his Honour held:

   “The practice of the Court, subject to proper exercise of discretion, is to extend the time for filing or service under [then] O 3, r 3 and the Court has a wide discretion to do so.  The Court will take into account certain matters such as the length of delay and the reason for it, hardship to the applicant if leave is not granted and prejudice to the respondent if leave were granted.”

3. That represents a succinct summary of the standard factors the Court has to consider when determining such applications.  His Honour went on to note the husband had adequately explained the delay and there was a likelihood he would suffer hardship if an extension was not granted, but prejudice to the solicitors arising from the delay was not so great as to call for an exercise of discretion adverse to the husband.

4. I note that the result of a decision granting the wife an extension of time in which to file her notice disputing costs is that effectively, the substantive proceedings to recover the balance of costs owing in the Supreme Court, will be stayed.  The issue of compensation to the solicitor can be cured by the payment of interest in the event that events call for that outcome to be considered.

5. I was also referred to the 2006 decision of the Full Court, in the matter of MCH & Y & Y [2006] FamCA 610, a decision of the Chief Justice, Kay and Boland JJ. That was again the determination of a costs dispute between solicitor and client and whether there should be an extension of time within which to allow a challenge.

6. There is a dispute between the parties, as to whether there has been a request to the solicitor to file an itemised account.  As I understand the position, the wife says she did not request that and Mr Silid contends that she did.  In view of the fact that the solicitor has largely filed an itemised account, the point does not seem greatly relevant, however, for the wife the technical point was taken that pursuant to r. 6.2.3 each item of a bill has to be numbered.  It is evident from a perusal of exhibit JL1 that the accounts rendered by Mr Silid are not numbered.  The point that I have noted is that the account only has to be itemised and numbered if the account has been disputed, which on the wife’s case, has not formally been done.  If an itemised account has been requested, I accept there has not been proper compliance in that regard, as required by r 6.2.3.  The purpose of numbering is to allow the objector to identify the particular charges to which objection is taken.  JL2 of the wife’s affidavit consists of a 54 page list of objections. The objections are only referable to dates in the solicitor’s bill.  The view I have taken, in light of the fact that I am going to allow the notice disputing costs to be filed, is that I will make an order that Mr Silid is to file itemised accounts, itemising all accounts rendered to the wife over the relevant period, and is to number those accounts in accordance with the rules.

7. I will extend the time.  I propose to extend the time for filing by a period of 21 days.  The notice disputing costs can be filed by the wife’s solicitors 21 days after receipt of the numbered itemised account to be delivered following the determination on the validity of the costs agreement by the Supreme Court.

8. My reasons for allowing the notice disputing costs to be delivered out of time in summary form are:

   ·The justice of the case in my view demands it.

   ·The costs charged are significant and the challenges to the costs considerable.

   ·I have to consider the period of delay. I accept that the costs were rendered largely on a monthly basis over a period from late August up until about March 2008.

   ·It appears that the first challenge was made through solicitor Glenda Lawrence by service in about December 2008, so the period involved is about nine months.

9. To the extent that there has been delay, as I understand it, the wife’s explanation is that her various bank accounts have been frozen.  I accept that that is a fact.  It is not for me to go behind that, regardless of how that situation came about.  The wife says she was unable to afford the legal advice to challenge the bills.  I, at this point in time, proceed on the basis that her version of events may be correct, and it seems to me appropriate for such a large bill, over such a relatively brief period of time, should be, in all fairness to the wife, the subject of assessment.

10. The view that I have formed, is that the hardship to the litigant far outweighs any prejudice to the legal practitioner.  The legal practitioner has been paid for a substantial proportion of the fees.  I understand that there is a sum of approximately $130,000 or $140,000 outstanding.  To the extent that there is any delay, he could be compensated by an order for payment of interest.  However, where there is such a large bill and a significant challenge, it is fundamental in the interests of justice, in my view, that the solicitor be able to justify his costs.  The wife asserts she has been overcharged to a significant extent and it is readily apparent if her version of events be correct, that may be the case.

11. For the reasons given, the proposed orders that I make are as follows but I will hear submissions before the orders issue in sealed form.

ORDERS DELIVERED

RECORDED : NOT TRANSCRIBED

I certify that the preceding thirty-nine (39) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Barry

Associate: 

Date:  17 July 2009