Manotis & Manotis - [2014] FamCAFC 103

FAMILY COURT OF AUSTRALIA

MANOTIS & MANOTIS AND ORS

[2014] FamCAFC 103

FAMILY LAW – APPEAL – PROPERTY – Where five years after property orders were made for the sale of the matrimonial property the husband and the wife entered into a Deed of Settlement varying the orders – Where the wife filed an application for consent orders seeking to set aside the previous orders and have the Deed of Settlement stand ‘as orders of the court’ – Where the wife’s solicitors sought to intervene at the hearing of the application before the trial judge to oppose the application and to be appointed as trustees for sale of the matrimonial property – Where the second respondent to this appeal also appeared at the hearing of the application for the trial judge in relation to two caveats he had over the matrimonial property, including a lease – Where the trial judge dismissed the application for consent orders, joined the wife’s solicitors as a party to the proceedings and appointed the wife’s solicitors as trustee for sale, in lieu of the wife – Where the husband appealed the trial judge’s orders on the basis that the trial judge had denied procedural fairness to the husband, the wife, and the second respondent to this appeal, had improperly led the wife to resile from the consent orders and placed the solicitors in a position of conflict of interest with the husband and the wife – Where the Full Court so found – Appeal allowed – Matter remitted for rehearing.

Family Law Act 1975 (Cth): ss 90AF, 90AE, 106B and 114
Legal Profession Conduct Rules 2010 (WA): r 15

Cameron v Cole (1944) 68 CLR 571
Harris v Caladine (1991) 172 CLR 84
NAFF v Minister for Immigration and Multicultural and Indigenous Affairs (2004) 221 CLR 1
Redman & Redman [2013] FamCAFC 183

APPELLANT:

Mr Manotis

FIRST RESPONDENT:	Ms Manotis
SECOND RESPONDENT:	Mr Matthews
THIRD RESPONDENT:	X Lawyers

FILE NUMBER:

PTW

2347

2004

APPEAL NUMBER:

2013

DATE DELIVERED::

17 June 2014

PLACE DELIVERED:

Melbourne

PLACE HEARD:

Perth

JUDGMENT OF:

Bryant CJ, Thackray and Ainslie-Wallace JJ

HEARING DATE:

1 November 2013

LOWER COURT JURISDICTION:

Family Court of Western Australia

LOWER COURT DATE OF ORDERS:

21 January 2013

REPRESENTATION

COUNSEL FOR THE APPELLANT:

In person

COUNSEL FOR THE FIRST AND THIRD RESPONDENTS:

Mrs Brownlie

SOLICITOR FOR THE FIRST AND THIRD RESPONDENTS:

X Lawyers

COUNSEL FOR THE SECOND In person

RESPONDENT:

Orders made on 1 November 2013

The appellant have leave to rely upon the further evidence as sought by the first three points of his Application in an Appeal filed 2 October 2013.
The appeal be allowed.
Orders 2 to 11 inclusive of the orders made by the Honourable Justice Moncrieff on 21 January 2013 be set aside.
Any monies presently held by X Lawyers be retained in their entirety and not dispersed without an order of a judge of the Family Court of Western Australia.
The application be remitted for rehearing to a judge of the Family Court of Western Australia other than Justice Moncrieff.
The third respondent pay the appellant’s costs of and incidental to the appeal as agreed and in default of agreement, as assessed.

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

THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT PERTH

Appeal Number: WA 5 of 2013
File Number: PTW 2347 of 2004

Mr Manotis

Appellant

And

Ms Manotis

First Respondent

And

Mr Matthews

Second Respondent

And

X Lawyers

Third Respondent

REASONS FOR JUDGMENT

Introduction

On 1 November 2013 we heard an appeal by Mr Manotis (“the husband”) against orders made by Moncrieff J on 21 January 2013.
The orders appealed were made nearly five years after property orders were made in proceedings between the husband and the first respondent, Ms Manotis (“the wife”). The wife had been represented in those proceedings by the third respondent, X Lawyers (“the solicitors”), but they had ceased to act for her when the matter came before Moncrieff J.
The property orders made provision for the sale of a farm owned by the husband at Town N. The second respondent, Mr Matthews, who claims to have had a valid lease of portion of the farm, registered two caveats against the title to the property after the property orders were made. The first sought to secure $10,000 said to have been advanced by Mr Matthews to the husband. The second related to his entitlements under the alleged lease.
On 8 June 2012, the husband and the wife signed a deed of settlement, varying their entitlements under the property orders. Relevantly, the wife agreed to:
·    forthwith instruct her solicitors to desist from enforcing the property orders and in particular to withdraw the property at Town N (“the N property”) from sale;
·    join with the husband in seeking to obtain consent orders varying the property orders;
·    accept an alternative means of receiving her entitlement under the orders, with the wife to be at liberty to lodge a caveat over the N property to secure her entitlement, as well as a caveat over a property in Suburb D in Perth (“the D property”) in which the husband claimed to have an interest.
The Deed noted that the agreement had been entered into with the assistance of an intermediary who, it transpired, was Mr Matthews.
On 2 August 2012, the wife filed an application for consent orders seeking the discharge of all orders made subsequent to the original property orders, and a further order that the terms of the Deed “stand as Orders of the Court”. The husband joined with the wife in seeking those orders.
The orders of Moncrieff J, which are the subject of this appeal, inter alia:
7.1Dismissed the application for consent orders.
7.2Gave leave to the solicitors to become a party to the proceedings.
7.3Appointed the solicitors as trustee for sale of the N property in lieu of the wife who had been earlier appointed as trustee for sale.
7.4Required Mr Matthews to vacate the property within seven days, and to withdraw at his expense any caveat relating to the lease.
7.5Required Mr Matthews, within 14 days of the date of any contract of sale of the property, to withdraw at his expense any other caveat registered by him against the title to the property.
7.6Required the husband and wife, within seven days of receipt of a request from the solicitors, to execute all documents required to procure a sale of the property “in accordance with these or any previous orders”.
The interest of the solicitors in the matter arose from the fact that they claimed the wife had agreed to pay them for their services from the proceeds of her property settlement. Following the making of the orders the subject of this appeal, the solicitors sold the N property (at a price which the husband asserted before us was under true market value). By the time of the hearing of the appeal, some of the proceeds of sale had been disbursed, but an order had been made preventing the disbursement of the balance. No application had been made to set aside the sale.
After hearing argument, we were satisfied, inter alia, that the orders had been made in circumstances attended by lack of procedural fairness. We determined the appeal should be allowed and the matter be remitted for rehearing. Given the already long delay, we considered it appropriate to make our orders immediately on the basis the reasons would follow. These are our reasons.

Background

The genesis of this appeal lies in the following orders of Penny J made on 23 January 2008 after a defended hearing:
1.On or before 60 days from today’s date the [husband] is to pay to the [wife] the sum of [$77,717.50] [being an amended figure substituted by an order made in June 2008].
2.If the [husband] fails to comply with paragraph 1 hereof, the [N property] be sold and the proceeds of sale of the property distributed as follows:
(a)      in adjustment of rates and taxes;
(b)in payment of the expenses including the real estate agent’s commission;
(c)in payment of any monies required to secure discharge of any encumbrance registered against the title to the said property; and
(d)the balance be divided in order to effect a distribution of the assets as to 30% to the [wife] and 70% to the [husband].
3.        Pending the payment or completion of sale of the property:
(a)      [the husband] has the sole right to occupy the property …
(b)      …
(c)neither party encumber the real property without the consent in writing of the other party.
The husband failed to comply with Order 1 and the wife commenced enforcement proceedings. These proceedings involved many applications concerning the sale of the N property. Ultimately, on 2 June 2009, Penny J appointed the wife as trustee for sale, with the solicitors to “have the conduct of the sale, whether by auction or private treaty, and be authorised to instruct an auctioneer for that purpose”. Penny J also ordered that the wife receive, from the net proceeds of sale, the costs the husband was to pay pursuant to an order made in April 2008, together with a further amount of $660 relating to an appeal. (Reference to the first instance file reveals that the order of April 2008 required the husband to pay 75 per cent of the wife’s costs of the property proceedings and 50 per cent of her costs relating to a dispute about her taking the child of the marriage overseas on a holiday).
For reasons we need not discuss, the sale of the property did not proceed in an expeditious way. In further proceedings, commenced by the wife in December 2011, seeking that the husband vacate the property, the court was informed that part of the property had been leased to Mr Matthews and had been so leased since 2003. Notwithstanding the failure by the husband to mention the lease during the course of the proceedings, a handwritten lease dating from 2003 was produced. This was for a period of five years with a five year option.
The wife’s application was heard by Magistrate Andrews on 2 May 2012. Her Honour had before her an affidavit of Mr Matthews asserting the existence of the lease. He claimed he had run his herd of livestock on the leased area since 2003. The court was also advised that Mr Matthews had lodged a caveat over the property in August 2011 to secure a debt of $10,000 the husband owed him. The wife doubted the validity of the lease but said that, in any event, it could and should be broken and the husband should meet any resulting liability.
Magistrate Andrews, in her reasons, traced the long history of the proceedings, observing that there had been no mention of the lease until 2011. Her Honour also noted that orders had been made in January 2012 “for any debt owed to Mr [Matthews] to be paid from the proceeds of sale of the property”. She further recorded the wife’s assertion that she now had a purchaser for the property, but the purchaser would not progress the sale while it was subject to the lease. She ordered the husband to terminate any leasehold interest in the property pursuant to ss 114(1) and 90AF(2)(b) of the Family Law Act 1975 (Cth) (“the Act”).
Relevantly, her Honour’s orders of 2 May 2012 also provided:
3.In the event that [Mr Matthews] seeks any expenses, damages, or other compensation arising from the termination of any leasehold interest that exists or is purported to exist over the property in accordance with these orders, that [Mr Matthews] provide the [husband] within 35 days of the date of this order, particulars of any damages, expenses or compensation incurred.
4.Unless otherwise agreed between the [husband] and [Mr Matthews] that any expenses, damages or compensation incurred by [Mr Matthews] be paid by the [husband] from the [husband’s] share of the net proceed of sale of the property.
Importantly, Mr Matthews was a party to the proceedings when these orders were made; however, the orders did not specify what priority his entitlements had in relation to the other payments that were to be made from the husband’s share of the proceeds of sale. The orders also did not deal with the $10,000 said to be owed by the husband to Mr Matthews and they were also silent as to what was to occur to the two caveats Mr Matthews had registered against the title.

The Applications before Moncrieff J on 21 January 2013

We have earlier set out the orders made by Moncrieff J. There are no formal reasons for judgment; the husband having been advised by letter from the court that his Honour did not intend to hand down dedicated reasons and that his reasons were contained in the transcript of the proceedings.
The formal order issued after the hearing identified three applications which were before his Honour:
·Form 11 application filed by the wife on 2 August 2012;
·Form 2 application filed by the solicitors on 5 September 2012; and
·Form 2A response filed by the husband on 15 January 2013.

Form 11 application

The first application was the wife’s application for consent orders (Form 11).
As we have already mentioned, this application sought orders to give effect to the Deed of Settlement. The application was signed by both the husband and the wife. The wife’s signature was witnessed by a lawyer. Both parties acknowledged they were aware of their right to have independent legal advice.

Form 2 application

The Form 2 application filed by the solicitors sought the following:
1.That the solicitors be added as a respondent to the proceedings.
2.The application of the wife filed 2 August 2012 for consent orders be dismissed.
3.That the orders made on 2 June 2009 be amended to provide that the solicitors be appointed the trustee (in lieu of the wife) for the purpose of the sale of the N property.
4.That the husband vacate the property within 14 days of the date of a contract of sale.
We observe that no order was sought for the removal of Mr Matthews’ caveats.

Form 2A response by the husband

The third application before his Honour was the Form 2A response filed by the husband on 15 January 2013 seeking a number of orders. Those of most relevance to this appeal sought:
·Orders in terms of the application for consent orders;
·That the solicitors pay any compensation sought by Mr Matthews as foreshadowed in the orders of Magistrate Andrews made 2 May 2012;
·The orders proposed by the solicitors be dismissed.

Form 2A response by Mr Matthews

Although the orders extracted following the hearing do not reflect it, there was a fourth application before Moncrieff J. This was contained in a Form 2A response which had been filed by Mr Matthews by fax (Transcript, 21 January 2013, p 2).
Inter alia, the relief sought by Mr Matthews was for the solicitors to pay the costs he had incurred as “intermediary” between the husband and wife in relation to the Deed of Settlement, and that the solicitors also be responsible for compensating him for the early termination of his lease over the property.

The Affidavits before Moncrieff J on 21 January 2013

The solicitors relied upon two affidavits by Mr H. The first, sworn on 17 August 2012, asserted, inter alia, that:
·The solicitors had been acting for the wife since 2005.
·They had received a letter (in both English and Thai) signed by the wife on 16 August 2012 indicating that she no longer had confidence in them and terminating their services immediately.
·Prior to receiving this letter the solicitors had been informed by the court that the wife had filed an application for consent orders which they believed may seek to set aside the orders made by Penny J.
Mr H’s affidavit went on to say:
10.The wife has incurred a significant liability to [X Lawyers] with respect of her costs and disbursements arising from these proceedings. The wife has not paid any accounts for legal fees apart from some disbursements. [X Lawyers] have acted on behalf of the wife on the basis that the wife would be able to discharge her liability to meet payment of her legal fees from the sale of the [N] property. We have continued to act on her behalf provided that the amounts payable to her pursuant to the orders including her legal fees will be paid from the proceeds of sale of the former matrimonial home at [Town N]. (our emphasis)
11.The wife had agreed to the sale and had attended upon the selling agents on a number of occasions with respect to offers or counter offers which may have been received from prospective purchasers.
12.The proceedings were most recently before the Court on 2 May 2012 in respect to an alleged lease of the property by the husband to [Mr Matthews]. It has not been possible to complete a prospective sale by reason of [Mr Matthews’] occupation of the property. The orders made on 2 May 2012 effectively required [Mr Matthews] to vacate the property and that the husband compensate him for any losses incurred.
13.Since the orders made 2 May 2012 I believe that [Mr Matthews] has been communicating directly with the wife in relation to the proceedings and had arranged for the wife to enter into a Deed of Agreement through a solicitor in [Town N], [Mr E]. The deed was signed by both the husband and the wife. The Deed was prepared in English. There was a Thai translation…
14.I made enquiries with [Mr E] who informed me that he acted on instructions from [Mr Matthews] and not from the husband or wife. He accepted that Family Court orders were required to give effect to the terms of the Deed. I believe the wife has acted on advice from [Mr Matthews] in signing the Deed. I believe [Mr Matthews] may possess some legal qualifications, but does not hold a practising certificate.
15.Pursuant to the terms of the Deed the wife was persuaded that she would be paid monies from the husband, which would presumably be all of the monies due to her under any orders made by the Family Court, from the husband’s share or interest in the deceased estate of [the husband’s mother]. This interest primarily arose from a unit [in Suburb D].
…
19.The husband has proposed that monies due by him to the wife pursuant to orders be paid from his share of this inheritance …
20.Although Landgate has recently accepted, after requisitions, lodgement of a Caveat by the wife in respect of the [Suburb D] unit based on the agreement that was prepared by [Mr E] the extent of any caveatable interest by either the wife or the husband remains uncertain …
21.I confirm that under the current orders made by the Family Court the wife retains control of the sale of the matrimonial home in her capacity as trustee and pursuant to a number of consequential orders made to facilitate the sale. I further confirm there is a prospective purchaser who seeks to purchase the property. I believe that the net proceeds of sale of the [N] property would be sufficient to pay the monies due to the wife.
22.The wife had been assisted in filing the application by [Mr Matthews] who has a clear conflict of interest with the wife, evidenced in particular by the letter to [Mr Matthews] from Registrar Andrews dated 4 July 2012.
We pause to note that the letter of 4 July 2012 did nothing more than to advise Mr Matthews that, as he was not the legal representative of either party, it would not be appropriate for the court to enter into correspondence with him, but that if the husband and wife “had reached an agreement for any arrangements different from the existing orders I would suggest they enter into a Form 11 Application for Consent Orders”.

In his second affidavit, sworn 23 November 2012, Mr H asserted, inter alia, that:
29.1On 22 August 2012 the wife’s application for consent orders had been adjourned to a date to be fixed before Magistrate Andrews, inter alia to allow an interpreter to be present.
29.2At the hearing on 22 August 2012, Mr Matthews had sought permission to withdraw as a party and claimed he had vacated the property and there was therefore no purpose in him remaining a party.
29.3He had since been informed by the real estate agent that Mr Matthews had not vacated the property and livestock remained on the property.
29.4His enquiries revealed that both caveats lodged by Mr Matthews “with respect to the property remain registered on the title, including the Caveat based on [Mr Matthews’] claim that he had an interest in the property based on the purported lease”.
29.5The wife’s costs incurred with his firm amounted to $150,735.
29.6The husband had previously stated “he has no problem with the property being sold and that he would be able to get some money from a fair sale which he could put towards accommodation”.
29.7In a letter sent to the solicitors on 24 August 2012 the husband had said he was hoping to move to Town B within the next two weeks.
The husband filed an affidavit on 15 January 2013 in reply to the two affidavits of Mr H and in response, it seems, to other material, including nine pages of submissions filed by the solicitors. His affidavit was 14 pages in length. Although we accept the affidavit had voluminous attachments, we observe that Mr H’s affidavits, including attachments, occupied nearly 100 pages of the Appeal Books.
Much of the husband’s affidavit was irrelevant and argumentative, but amongst this objectionable material, the husband deposed to the following:
31.1He had recently vacated the N property and had moved to live in Town B.
31.2“Our plan, as discussed with [the wife], is for her to move into the [N property] in the coming months …”
31.3Part of his reason for moving to Town B was for educational purposes for the child of the marriage, including his participation in an elite sports training program into which he had been accepted.
31.4The mother did not object to the child relocating to Town B and the child himself wished to relocate.
31.5“[The Deed of Settlement] shows that [the wife] desires that the [N property] be kept in the family as an inheritance to our son” (original emphasis).
31.6“[Since the orders of Penny J] matters have changed. That is why [the wife] has been deeded one third of my late Mother’s Estate. When that estate is sold, [the wife] will be able to pay her [lawyer’s] account, after it has been taxed”.
31.7“[If orders were made as requested by the solicitors the court would] not only not recognise the ‘Deed of Settlement’ (a legally binding agreement) but also place a $10,000 financial burden on [the wife] to ‘undo what has been settled and paid for’… I have already fulfilled the conditions of the ‘Deed of Settlement’” (original emphasis).
31.8“[Mr Matthews] and I, sat down and calculated 3 payment scenarios for [the wife’s] $150,000 bill, [before taxation]. These scenarios are detailed on pages 4/5 of Annexure B.M. 29. It can be seen that the ‘Deed of Settlement’ scenario is the best result for [the wife] while the [order sought by the solicitors] is financially the worst outcome for [the wife]”. (original emphasis)
The affidavit contained other material which we accept was in the form of argument/submissions rather than evidence; however, the husband had commenced his affidavit by claiming he had been given insufficient time in which to respond to the submissions he had just received from the solicitors. Amongst the arguments/submissions made in the affidavit were these:
·the solicitors are more concerned about their bill being paid, rather than providing “even-handed” advice to the wife;
·that if the solicitors believed the wife was going to default on her obligation to them, they needed to take action against her rather than “trying to collect a debt not owed by me to them”; and
·having noted Mr H’s concession that the wife’s English was “imperfect”, and having gone on to assert that Mr H had previously acknowledged in court that his firm had not used interpreters and translators in their dealings with the wife, the husband asserted “that is a conflict of interest between his client’s needs and the ever expanding legal bill. And he seeks to be the Trustee. A bit like trying to put out a fire with petrol, the problem is only exasperated [sic] further”.
The husband annexed to his affidavit a letter from the wife to Mr H, dated 11 June 2012, enclosing a copy of the Deed of Settlement, and instructing him to cease all efforts to sell the N property and to inform the Family Court that she had reached an accord with the husband in relation to the settlement and further instructing him to make an application to the Family Court to set aside the orders of Penny J.
Also annexed to the affidavit was a letter from the solicitors to the wife dated 28 June 2012 not only advising that they were not willing to accept payment of their fees from the sale of the D property but also “confirming” that the Deed of Settlement between the husband and the wife “is not legally binding and is unreliable”. The basis for this assertion was not stated, although we note an earlier statement in the letter of the solicitors’ belief that there was “clear evidence of … undue influence, duress and misrepresentation”.
It is a reasonable inference from the husband’s affidavit, and that of Mr Matthews to which we will refer shortly, that the wife put the husband into possession of these letters. In any event, we note the record does not disclose any objection by the wife to the use of the letters in the husband’s affidavit, albeit as we will see the entire affidavit was given short shrift by his Honour.
The Appeal Books included not only the Form 2A response of Mr Matthews but also an affidavit sworn by Mr Matthews on 14 January 2013. It is impossible to glean from the transcript whether Moncrieff J ever saw or read this affidavit, but our own examination of the first instance file reveals that the affidavit is indeed on the file, alongside the Form 2A.
In addition to detailing the “3 payment scenarios” the husband had mentioned in his affidavit, Mr Matthews deposed to the following:
37.1He had acted as an intermediary between the husband and the wife after the orders were made on 2 May 2012.
37.2The wife had told him that she was unaware she was the trustee for sale of the N property and that he had been the first person to explain to her what a trustee was and what her responsibilities were.
37.3The wife had told him that her solicitors had not put to her a proposal of settlement which the husband had made (which appears to have been along the lines ultimately contained in the Deed of Settlement).
37.4The wife emphatically stated that had she known of the terms of the offer the husband had made she would have accepted it and reiterated that she wanted to “save the [N property] for her son”.
37.5The wife later approached him to advise she did not feel able to engage Mr H and asked him (Mr Matthews) “to make this ‘deal’ happen”, as a result of which, he had engaged Mr E who was prepared to act for him, but not for either the husband or the wife, in drawing up the terms of settlement (which Mr Matthews then had translated).
37.6 He had instructed Mr E to:
construct the ‘Deed’ in such a fashion that [the wife’s] rights would not be diminished, and that she would not be a cent short of what she was due. Indeed, if one considers the scenarios on offer, [the husband’s] – in my opinion – is far superior to that which is proposed by [Mr H].
37.7Having signed the Deed, the wife told him what she wished to have communicated by letter to Mr H. After he drafted the letter, the wife “vetted” it and gave him a signed copy the following day.
37.8After Mr H refused to follow the wife’s instructions, the wife had Mr Matthews write another letter which was translated into Thai, following which the wife asked him to change the letter so it exactly reflected the instructions she wished to give to Mr H.
37.9After a meeting between the wife and Mr H, the wife came to him:
upset by the fact ‘my lawyer’ as she referred to him, wouldn’t listen to her and by his threat to take her to court, if she persisted with her intentions to save the [N] property. [The wife] asked me what she could do, to make ‘my lawyer’ do what he was instructed to do and to stop him from taking her to court. I informed [the wife] that as any employer, who was dissatisfied with an employee, she could terminate his services and find another lawyer that would follow her instructions. [The wife] then stated that she could not do that because [Mr H] [was ] “The Boss”. I then informed [the wife] that as she was ‘paying the bill’, she was [Mr H’s] boss.
37.10The wife then informed him that she did not want Mr H to act for her anymore and asked him to write a letter to that effect which he did, again having had it translated and vetted by the wife.
37.11In light of the solicitors’ failure to comply with the wife’s requests, and acting in his capacity as intermediary, he had informed the court that the husband and wife had reached an accord, as a result of which he received the correspondence mentioned above, advising that the husband and wife should file a Form 11 application for consent orders if they wanted to vary the orders of Penny J.
37.12On 13 July 2012, the wife had asked him why he was no longer keeping his livestock on the N property, to which Mr Matthews replied that it was because she had said he had to leave the property. The wife immediately denied ever proposing this and claimed her lawyer “just do whatever he wanted and no tell me”.
37.13The assertion made by Mr H about Mr Matthews remaining on the

N property had no foundation in fact, and that he had left the property on 2 June 2012.
Mr Matthews went on to make various claims concerning what he now considered to be the negligence of the solicitors and their failure to follow the wife’s instructions. These matters were advanced in support of his claim that the solicitors, rather than the husband, should now be obliged to compensate him for the loss sustained as a result of being forced to vacate the property.
Mr Matthews’ affidavit also dealt with matters said to militate against the solicitors being appointed as trustees for sale. In doing so, he made reference to the fact that the husband had succeeded in obtaining a very considerable reduction in the solicitors’ claim for costs on behalf of the wife against the husband when they were taxed by a Registrar.

Written submissions of the solicitors before Moncrieff J

In their submissions dated 9 January 2013, filed in support of their application filed 5 September 2012, the solicitors said:
16.The Court has already effectively (if not actually) involved [the solicitors] by ordering that it be served with a copy of the Wife’s application for consent orders. That Order was made on 22 August 2012 at the same time as the permission for [the solicitors] to withdraw and after the Wife had terminated [the solicitors’] retainer …
17.It is submitted that Orders 2 and 4 of the Orders made on 22 August 2012 were because [the solicitors are] a creditor of the Wife and as such its interests are affected by any order to be made (as referred to in s79A(4)) and is also a “person interested” as referred to in s79A(2). It is further submitted that this was in compliance with the principles of procedural fairness.
…
22.In addition, or alternatively, [the solicitors] should be made a party so that it may be permitted to have its interests considered and protected due to the fact that it is an “other person” as contemplated by s79A(2) and a “creditor” as referred to in s79A(4).
23.The payment of [the solicitors’] legal and other costs incurred by it and/or others on behalf of the Wife are the only interests of [the solicitors].
…
28.… the orders sought by the wife leave her without means to pay her legal fees

The Appeal

In his amended notice of appeal the husband relies upon twelve grounds. The grounds are discursive, difficult to follow and to a large extent could not be said to be proper grounds at all. Nevertheless, amongst the grounds we discern that the husband asserts that his Honour erred by:
·denying procedural fairness to the husband, the wife and Mr Matthews;
·improperly leading the wife to resile from the consent orders; and
·placing the solicitors in a position of conflict of interest with both the husband and the wife by appointing them as trustees for sale.
We should note that at the commencement of the hearing before us, Mrs Brownlie of counsel announced her appearance on behalf of both the solicitors and the wife. The wife was not present, but we were told she had reengaged the solicitors (notwithstanding she had earlier told them she had lost confidence in them and we were told at the hearing that she had reported them to the Legal Practice Complaints Committee).
The husband immediately complained to us about Mrs Brownlie purporting to represent both the solicitors and the wife and sought that she be restrained from appearing for the wife. In support of his application, the husband drew our attention to rule 15 of the Western Australian Legal Profession Conduct Rules 2010 which provides that:
(2)A practitioner must avoid conflicts between the interest of a client and the interests of –
(a)       the practitioner; or
(b)      the practitioner’s law firm; or
(c)      an affiliate of the practitioner.
(3)A practitioner must not provide or agree to provide legal service to a client if the practitioner knows or ought reasonably to know that the interest of the person referred to in subrule (2)(a) to (2)(c) may conflict with the interest of the client.
We gave Mrs Brownlie time to seek advice about her position. On the resumption of the hearing, Mrs Brownlie said she had taken advice, and was satisfied she could continue to represent the solicitors and the wife. Although we had grave reservations, we anticipated we would receive adequate argument on both sides of the appeal and therefore allowed the hearing to proceed.

The Hearing on 21 January 2013

Given that Moncrieff J did not deliver formal reasons, it is necessary to consider the transcript of what occurred on 21 January 2013, as well as the other documents his Honour had before him, to see how the matter unfolded.
The wife, who was born in Thailand, attended without a lawyer, and spoke through an interpreter, it being common ground she has limited English. Indeed, earlier hearings were adjourned to allow an interpreter to be present.
The husband and Mr Matthews also appeared without representation. Mr Matthews has worked in the law in the United Kingdom but, as Moncrieff J pointed out, does not hold a practising certificate (Transcript, 21 January 2013, p 3).
Mr H appeared on behalf of the solicitors, notwithstanding he had sworn two affidavits in the proceedings and was the subject of a litany of allegations about his conduct by both the husband and Mr Matthews.
Moncrieff J dealt first with the application of Mr Matthews. The full transcript of his Honour’s treatment of that application is set out below (our emphasis):
HIS HONOUR:       Now, Mr [Matthews], as I understand it you have filed a form 2 seeking costs.
[MR MATTHEWS]: Yes.
HIS HONOUR:       That is the only application that you have outstanding.
[MR MATTHEWS]: I had a [Form 2A] response that I faxed to the court.
HIS HONOUR:       That’s the one seeking costs as against [X Lawyers], is it not?
[MR MATTHEWS]: Yes, that’s right.
HIS HONOUR:       How is it that you would have a claim for costs against [X Lawyers], given the orders made by Magistrate Andrews?
[MR MATTHEWS]: Well, your Honour, it’s basically based around the fact that I was actually put off the property from a statement from Ms [Manotis]. I was in conversation with Ms [Manotis] and she told me that she never actually made those statements, that those statements actually came from Mr [H] of [X Lawyers].
Now, since 2009 Mr [H] has been signing affidavits on behalf of Ms [Manotis].
HIS HONOUR:       Mr [Matthews], you do not have a practising certificate. You are not here to represent any party other than yourself.
[MR MATTHEWS]: No.
HIS HONOUR:       Thank you. So given the orders of Magistrate Andrews, how is it you have a claim against [X Lawyers]?
[MR MATTHEWS]: Because Ms [Manotis] never actually asked me to be put off the property, your Honour. That was down to [X Lawyers], and that actually came into a conversation that Ms [Manotis] and I had.
HIS HONOUR:       So you’ve appealed the order by Magistrate Andrews, have you?
[MR MATTHEWS]: Well, I’m here today and that was actually part of the actual application.
HIS HONOUR:       All right. Well, I’m not satisfied that you can found an application for costs against [X Lawyers]. Have you removed your caveat?
[MR MATTHEWS]: From the actual property?
HIS HONOUR:       Yes.
[MR MATTHEWS]: There are two caveats.
HIS HONOUR:       Yes.
[MR MATTHEWS]: One is actually for the $10,000 that is on the property, and I was not asked to remove that. The second caveat, no I haven’t, I have actually vacated the property and therefore would not be actually enforcing any lease that I had on the property.
HIS HONOUR:       All right. So you’ve now vacated the property?
[MR MATTHEWS]: Your Honour, I’ve been off the property for over six months.
HIS HONOUR:       That’s how I understood it. Yes, thank you. All right. Given the orders made by her Honour Magistrate Andrews on 2 May 2012 there is no basis for an application for costs against [X Lawyers] who, in any event, have not been joined as a party to the application at this point, although that, of course, does not prevent such an application being brought.
Indeed, Ms Andrews, having delivered her reasons, made it quite clear that any compensation, expense, damages or otherwise arising that was sought by the second respondent were to be sought as against Mr [Manotis]. That order has not been the subject of any judicial review or appeal, and in the circumstances I’m not satisfied that an action for costs against the named party would be sustained.
I note that Mr [Matthews] has now vacated the property and indeed any basis for him securing his second caveat arising out of the lease has evaporated and he is directed to forthwith cause the same to be withdrawn. You may now withdraw. Thank you, Mr [Matthews].
(Transcript, 21 January 2013, pp 2 to 4)
His Honour then turned his attention to the husband, as appears from the following extract:
[HIS HONOUR]     Now, Mr [Manotis], I have received from you an affidavit of an inordinate length, but amongst all the vitriol, vexatious and scandalous comments that you make, it appears that you’re saying now that you’re happy to transfer the property to Ms [Manotis]. Is that right?
[MR MANOTIS]:     Which property? The [D] property?
HIS HONOUR:       No, the matrimonial home at [Town N].
[MR MANOTIS]:     No.
HIS HONOUR:       All right. Well, I must have misunderstood. “Our plan, as discussed with the former Ms [Manotis], is for her to move into the matrimonial home in the coming months.”
[MR MANOTIS]:     Yes. Sorry, yes, she’s going to move in, subject to once I’ve moved out to [Town B], which I’m starting this weekend and then in the next two months we’ve discussed Ms [Manotis] moving in so that the house won’t be vacant.
(Transcript, 21 January 2013, p 4)

His Honour did not pursue the import of that arrangement.
Then, without seeking any oral submissions, his Honour announced:
HIS HONOUR: All right. Now, I am satisfied that [X Lawyers] have a sufficient interest in the proceedings to be given leave to intervene, and I so order that [X Lawyers] have leave to intervene in the proceedings and will henceforth be known as the interveners.
(Transcript, 21 January 2013, p 4)
It is clear to us that the solicitors were merely protecting their interests, as they were entitled to do as a creditor of the wife, and there could be little doubt they were entitled to intervene. It is the other orders they sought, being the dismissal of their former client’s application for consent orders and their appointment as trustee for sale in lieu of their former client that are controversial.
His Honour then turned to the application for consent orders. He commenced by making the following remarks to the husband and making a ruling about his affidavit, again without seeking any submissions:
HIS HONOUR: Now, may I say that the material that you have filed in the last few days is one of the most unhelpful documents that I have ever read. It is scandalous, it’s vexatious, it’s frankly just straight out libellous of Mr [H], and I reject it. The document will be returned to you and will not be accepted for filing. It is also prolix.
(Transcript, 21 January 2013, p 5)
After then also rejecting a document filed by the husband challenging the wife’s costs on the basis it was a matter between the wife and her solicitors, his Honour continued:
HIS HONOUR:       Now, Mr [Manotis], as I understand it, what you say is that you’ve reached an agreement with your former wife that you will pay to her, or pay to her from your one-third entitlement to your later mother’s estate. Correct?
[MR MANOTIS]:     Well, actually I’ve deeded the whole thing to her already. The whole one-third share of my mother’s estate has been deeded to her already.
HIS HONOUR:       But she hasn’t received any money, has she?
(Transcript, 21 January 2013, p 5)
After an exchange about proceedings in the Supreme Court relevant to the sale of the D property, the following exchange occurred:
HIS HONOUR:      So why should Ms [Manotis] wait further for her money to some unspecified uncertain amount when you don’t know when it’s going to sell, you’re in dispute with your brother, it would seem, and you’ve got Supreme Court proceedings.
[MR MANOTIS]:     We’re in dispute, yes.
HIS HONOUR:       The costs for that will probably come out of the estate. That’s the usual order. So indeed at this point it would be fair to say you have no idea when the [D property] unit will sell and you have no idea what your third of the estate is going to be.
[MR MANOTIS]:     Well, actually, your Honour, the estate – the actual unit is valued at $450,000.
HIS HONOUR:       Where do I find the evidence of that?
[MR MANOTIS]:     There’s an annexure in those notes that I supplied (indistinct) basically [a real estate agency], some gentlemen [sic] called [Mr V], has looked at the place, valued it and that’s what he’s valued at 450,000. Plus, of course, there was, as the form 9B stated, there was money in mum’s estate when she passed away.
I’ve also asked the Public Trustee to let me know how much money was actually handed to the executor of the estate, which has been done. As for selling the [D property] unit, [I] know it will sell because there’s already – Mr [V] - already has a potential buyer. It’s just that inside the unit a couple of things need to be completed by my brother.
HIS HONOUR:       So you don’t have a contract yet.
[MR MANOTIS]:     We don’t have a contract yet, no.
(Transcript, 21 January 2013, pp 6 to 7)
After a further exchange about the estate, his Honour then said to the husband:
HIS HONOUR: … What troubles me greatly is that previously you have represented to this court that you are keen for this property to be sold and you have represented, it would seem, elsewhere, according to Mr [H], at least, that is the case and now you enter into this purported agreement with your former wife. You would understand that given the history of the litigation in this matter, that might be cause for some suspicion.
(Transcript, 21 January 2013, p 10)
After further discussion, the following exchange occurred:
[MR MANOTIS]: Can’t [Ms Manotis] be asked whether she actually – what the –
HIS HONOUR: I will ask [Ms Manotis] what I want to ask her in due course, all right? I am just trying to get a bead on your position at the present time because it was not clear from one statement that you had made in your affidavit what your position was.
(Transcript, 21 January 2013, p 11)
We pause to note that, by this point, the husband’s affidavit had been rejected, and was thus not in evidence. In any event, after exchanges in which his Honour was clearly becoming exasperated with the husband for raising matters that were, in his view, irrelevant, the following exchange occurred:
HIS HONOUR:       … [Ms Manotis], please stand up. Why is it that you want to change the orders than Penny J made for you to receive a sum of money from the sale of the [N] property?
TRANSLATOR:      The reason was that [the husband] had a friend and come to talk to me about that – if you changing your mind, changing the judge order will be more benefit to my son. That’s why I did that.
HIS HONOUR:      Now Mr [Manotis] is moving to [Town B], are you happy for your son to reside in [Town B] with Mr [Manotis]?
TRANSLATOR:      Not really, your Honour.
HIS HONOUR:       Where are you expecting to reside?
TRANSLATOR:      My son learn to play [sport] but [sport] is at [Town B] – you know, if that his wish, I will, you know, let him go to [Town B].
…
HIS HONOUR:       If he was to move to [Town B], what would be the prejudice to you?
TRANSLATOR:      We’ll be more less contact because I probably want to see him, you know, every weekend but because he have [sport] and travelling, and also that I would like to see maybe school holiday a bit more.
HIS HONOUR:       Where are you presently living?
TRANSLATOR:      [Town N], your Honour.
HIS HONOUR:       You are renting premises, are you?
TRANSLATOR:      Yes, your Honour.
HIS HONOUR:      When do you expect to receive the money from Mr [Manotis] that is due to you?
TRANSLATOR:      When I was approaching to have a swap the house and then Mr [Manotis] said that the house in [Suburb D], we will sell quicker, so if it sell quicker I will re-send that time, that I shouldn’t receive the money but because the house haven’t been you know, sold yes so I haven’t received the money he sent.
HIS HONOUR:       You say that you spoke with a third party about this. Who was that?
TRANSLATOR:      It’s the gentleman sit on the back, your Honour.
HIS HONOUR:       What did he tell you?
TRANSLATOR:      He advised a proposal to me that – sell the house in [Suburb D] and swap in [N property], but in [N property] basically we would make that house to be inherited – make a will for my son – you know, so I’m not allowed to sell or [the husband] not allowed to sell – and keep that house in [Town N] just for our son. That’s what he’s telling me.
HIS HONOUR:      Did you talk to him about the money you owed [X Lawyers]?
TRANSLATOR:      Yes, I did talk to the [husband’s] friend about the ---
HIS HONOUR:       What did he tell you about that?
TRANSLATOR:      Maybe sell the [D property] and you can pay your lawyer, and he very convincing that the house in [Suburb D] be sold then less one or two months, so you get money very quickly and I believed it because the – sorry, the house in [Town N] will be – you know, my son will have a title of it.
(Transcript, 21 January 2013, pp 12 to 14)
Crucially, the following exchange then took place (there were obvious errors in the transcript and the version below is taken directly from the audio recording):
HIS HONOUR:       There is a contract offer for the sale of the [N property] so you get your money quite quickly now. Surely you would prefer that wouldn’t you?
TRANSLATOR:      Yes, your Honour, I would like to – sorry- … something?
HIS HONOUR:       Yes, Mr [H], yes?
TRANSLATOR:      --- yes, sorry, to, you know, to continue to act on my behalf because I, you know, I believe that what – [the husband] friend told me that’s why I -
HIS HONOUR:       You want [X Lawyers] to sell the property at [Town N] so you get your money?
TRANSLATOR:      Yes, your Honour.
HIS HONOUR:       Yes, thank you. Yes, please sit down.
TRANSLATOR:      Thank you.
HIS HONOUR:       Yes, Mr [H]. Do you wish to address me?
[MR H]:Well, I suppose I should, your Honour, yes. The circumstances when I prepared the submissions are perhaps a bit different from today, your Honour, the ‑ ‑ ‑
HIS HONOUR:       It would seem to me that the wife now does not wish to vary the orders - that she, indeed, wishes you to press ahead with the sale of the property.
[MR H]:                  Yes, your Honour.
HIS HONOUR:       I am prepared to so order.
[MR H]:Yes, your Honour, so I’ve got nothing further I need to ‑ ‑ ‑
(Audio of transcript, 21 January 2013)
Having said what he proposed to order, his Honour then asked the husband whether there was anything he wished to add. The husband responded by drawing attention to the three “scenarios” mentioned in the affidavit evidence. He also advised his Honour of advice he had received that:
The deed of settlement can’t be undone. The deed of settlement is done, 100 per cent, it’s in Thai, it’s in English, she understands it…. (Transcript, 21 January 2013, p 15)
To which his Honour responded “I can undo it in one sentence”.
When the husband enquired how it could be “undone”, his Honour said it could be done under s 106B of the Act. After the husband asked what this was, the following exchange ensued:
HIS HONOUR:       The ability in the court to set aside an agreement which has the effect of defeating a client and I do not think that in any event I need to because there is already an order of the court that is prevailing. As far as I am concerned Mr [Manotis], the order will prevail.
[MR MANOTIS]:     The order, which is what? That you are going to sell my home?
HIS HONOUR:       Yes, I am and as far as I am concerned, if the deed needs to be revoked your wife can enter into a deed of revocation. I made orders dealing with the caveat. The current contract for sale, the current offer, Mr [H] - what is it?
[MR H]:                  The current contract to sell it, your Honour?
HIS HONOUR:       Yes.
[MR H]:There’s still an offer which is open to be accepted and I think it’s 365,000, from memory.
HIS HONOUR:       That is the best offer that you have been able to obtain?
[MR H]:                  Yes, it is, your Honour...
(Transcript, 21 January 2013, p 15 to 16)
We pause to note that Penny J found the property was worth $440,000 in her judgment delivered in 2008. In any event, there was then discussion between his Honour and Mr H about a valuation the solicitors had obtained and one the husband had obtained from a property valuation company. His Honour asked Mr H to comment on the valuation, telling the husband to “sit down … and do not make any comment”. Mr H then made very brief submissions about what he said were “a number of deficiencies” in the valuation. Without calling upon the husband to respond, his Honour then immediately made the following observations, which in the absence of written reasons, we take as his reasons for decision:
HIS HONOUR: Very well. It is quite clear to me from the evidence that I have heard that [Ms Manotis] was induced into entering into a deed of arrangement with Mr [Manotis] through the intervention of a third party in the expectation that she would receive the entitlement that she is due, pursuant to orders made on 23 January 2008, sooner rather than later.
The thrust of the arrangement was that Mr [Manotis] would assign to her his entitlement in his late mother’s estate, whatever that may be. There appears to be no detailed or reliable evidence as to what that may be. It largely becomes irrelevant because, notwithstanding some of the quite scandalous allegations that were made against Mr [H] by Mr [Manotis], [Ms Manotis] has confirmed openly with me in court that she wishes to proceed with Mr [H] and have him effect the sale of the property.
In those circumstances it would seem that whatever was said to her to induce her to enter in to the arrangement no longer stands. The court has to be satisfied that an order is just and equitably made before such an order can be made, setting aside the original order. I have permitted [X Lawyers] to intervene in these proceedings so I am satisfied that they have a genuine interest in the outcome of the proceedings, as they have forgone their costs pending the payment to the wife of her entitlement, pursuant to the judgment now some nearly, almost to the day, five years ago.
…
I am not satisfied that a variation to the order, by setting it aside, is just and equitably made in any event. The application is predicated upon the consent of the wife, which is now withdrawn and the wife has indicated that she consents quite clearly to Mr [H] continuing to act on her behalf and to effect the sale.
For these reasons I make an order in terms of the schedule attached to the affidavit of Mr [H], sworn 23 November 2012 …
(Transcript, 21 January 2013, pp 16 to 17)
Having then heard from Mr H on the issue of costs, and made directions about the filing of costs submissions (again without having sought comment from the husband or Mr Matthews), the following exchange occurred:
HIS HONOUR:       Anything further, Mr [Manotis]?
[MR MANOTIS]:    If I understand this correctly, your Honour, you are not even going to consider the [property valuation company’s] valuation as a price for the property?
HIS HONOUR:      It is not before me, Mr [Manotis]. I have returned that affidavit to you. I simply touched upon it and Mr [H] has addressed me about it. Yes, I have made the orders. Yes, is there anything else you wish to raise with me arising from the orders I have made?
[MR MANOTIS]:     I have to say, your Honour, you flabbergasted me as much as ‑ ‑ ‑
HIS HONOUR:       I would remind you, I have extensive powers of contempt, Mr [Manotis]. Think very carefully about what you say.
[MR MANOTIS]:     I’m using an adjective. You have surprised me, is that all right?
HIS HONOUR:       Very well, Mr [Manotis]. You are surprised. Anything else you wish to add?
[MR MANOTIS]:     Well, no.
HIS HONOUR:       Thank you. Yes, [Ms Manotis], anything you wish to add?
TRANSLATOR:      No, your Honour. Thank you, your Honour.
HIS HONOUR:       Good, thank you. We are adjourned.
(Transcript, 21 January 2013, pp 17 to 18)

The assessment of the wife’s costs

Before we discuss the husband’s complaints about what emerges from the transcript, it is important to record the position relating to the wife’s costs.
We recorded earlier that the husband had been ordered to pay 75 per cent of the wife’s costs of the property proceedings and 50 per cent of her costs relating to a discrete parenting dispute, as well as $660 costs relating to an appeal. Attached to the affidavit of Mr Matthews sworn 14 January 2013 (“… M 11”) was a copy of the decision of the taxing officer who determined the amount the husband was to pay pertaining to the property proceedings. The taxing officer’s decision also quantified the amount payable pursuant to a costs order made by another Full Court on 23 July 2010.
The reasons delivered by the taxing officer reveal that the wife claimed $102,577 in her Itemised Costs Account in respect of the property proceedings. An amount of $49,047 was taxed off and the husband was therefore obliged to pay $40,147, being 75 per cent of the costs. The wife also claimed $11,391 in her Itemised Costs Account in respect of the order of the Full Court made on

23 July 2010. After taxation, and including the costs of the taxation, the husband was obliged to pay $7,777 for the appeal. The total payable by the husband was accordingly $47,924.
The taxing officer’s decision did not deal with the costs relating to the discrete parenting issue; however, reference to annexure “… M 9” to the husband’s affidavit, which is a letter from the wife’s solicitors to the husband’s solicitor dated 15 December 2011, reveals that the costs relating to the parenting issue had been taxed at $8,601.49. The letter also referred to other costs orders that had been made against the husband. The letter reveals that the total of all the costs payable by the husband, including the costs relating to the property settlement proceedings and the appeal, was $61,086.41. We also note that an order for costs in an amount of $1,500 was made against the husband by Magistrate Andrews on 2 May 2012, bringing the total of costs owed by the husband to the wife to $62,586.41.

DISCUSSION

It is appropriate at the outset that we acknowledge the frustration his Honour understandably felt in dealing with a dispute which remained unresolved nearly five years after the substantive orders had been made. We acknowledge also the difficulty associated with the husband seeking to rely upon an affidavit, which although not of great length, attached a very large number of documents, many of which were seemingly of little or no relevance. We also accept that the affidavit contained much objectionable material. Finally, we accept that his Honour was entitled to entertain suspicions about the Deed of Settlement.
Notwithstanding all this, his Honour’s obligation was to determine the issue according to law and to afford procedural fairness. With great respect, we consider the transcript reveals that his Honour approached the matter having predetermined the outcome; acted as prosecutor on behalf of the solicitors and failed to afford a proper opportunity to any of the parties to present their case.
We propose to deal with each of the deficiencies which we considered warranted appellate intervention.

Procedural unfairness and prejudgment

The factual and legal issues presented to his Honour were potentially of some complexity. However, having apparently arrived at a view of the proper outcome, his Honour did not give the husband or Mr Matthews an adequate opportunity (and in some instances any opportunity) to present their cases in order to dissuade him from the view he had reached.
The wife was then led by his Honour into what he treated as consent to the outcome he proposed, without having the ramifications adequately explained to her or having been advised of the desirability of taking independent advice.
The extent to which his Honour acted as prosecutor of the case for the solicitors can be seen from the fact that, save for very brief submissions on the issue of costs, Mr H was called on only to make a very brief comment about a valuation issue his Honour wished to have clarified.
We were therefore satisfied that the husband’s complaint about procedural unfairness was made out.

Rejection of the husband’s affidavit

His Honour summarily rejected the husband’s affidavit. He did so without any request having been made for him to do so and without giving the husband any opportunity to make submissions. Having determined the affidavit would be rejected, no consideration was given to the possibility of the husband being permitted to provide an alternative affidavit. Furthermore, having rejected the affidavit, his Honour thereafter referred to it selectively during the hearing.
In rejecting the affidavit, his Honour asserted that it was “straight out libellous” of Mr H. We accept that the affidavit made strong allegations about the conduct of the solicitors, and Mr H in particular. We have no reason to consider there was any basis for those allegations, but they were the very allegations on which the husband and Mr Mathhews were basing part of their claim. The manner in which his Honour approached the matter gave no opportunity for any of the allegations to be tested. In our view, it was simply not open to his Honour to dismiss them in the summary way that he did.

Order for discharge of both caveats

Moncrieff J made an order for discharge of both of Mr Matthews’ caveats without there being any application for him for to do so. Furthermore, his Honour gave no notice to Mr Matthews of his intention to make such an order.
It would also appear that his Honour did not appreciate the import of the information given to him that one of the caveats had nothing to do with Mr Matthews’ lease over the property, but instead secured repayment of funds said to have been advanced by Mr Matthews to the husband. The order for the discharge of both of the caveats removed a legal entitlement of Mr Matthews, without notice, and without any reasons being given for doing so. Accordingly, no regard was paid to the requirements of ss 90AE and 90AF of the Act.
Although there was no cross-appeal by Mr Matthews concerning the discharge of the caveats, we consider the husband had standing to challenge the relevant orders given that it is by no means certain the husband will be left with sufficient funds from the sale of the property to meet his obligations to Mr Matthews. Had the caveats remained in place, and absent an application to set them aside, the settlement of the sale would presumably not have been able to proceed without Mr Matthews’ claims being met. The order for the discharge of the caveats leaves the husband exposed to payment to Mr Matthews from sources other than the proceeds of sale of the property. And, as Mr Matthews colourfully pointed out in his submissions, the effect of the order on him was that he had gone from the position of a secured creditor to “carrying the drinks” (Appeal Transcript, 1 November 2013, p 78).

Dismissal of the application for consent orders

We accept that despite the fact that parties may ask a court to make consent orders, the court has a discretion whether to make those orders, depending upon whether it is satisfied the orders are just and equitable. See Harris v Caladine (1991) 172 CLR 84 and Redman & Redman [2013] FamCAFC 183 where the Full Court held that:
… The fact that the parties consent to the making of an order is not of itself sufficient to satisfy the requirements of s 79 of the Family Law Act. The court has an independent responsibility to satisfy itself that the requirements of the Family Law Act are met.
It was therefore clearly open to his Honour to dismiss the application for consent orders. However, the application was ultimately dismissed primarily on the basis that the wife had withdrawn her consent. But in seeking to persuade the wife to withdraw her consent, his Honour appears not to have taken any account of what the wife and the husband said was going to happen with the N property under their new arrangement, which involved the wife living in the property and it being ultimately inherited by their son. None of the potential advantages to the wife of this arrangement were put to the wife by his Honour when he was attempting to persuade her to resile from the application for consent orders (seemingly in breach of the Deed of Settlement).
In making these observations, we recognise that the Deed itself did not make provision for the wife to live in the property and for the son to inherit it. However, the wife accepted this was an arrangement she and the husband had made between themselves and the transcript suggests they were in the process of implementing at least the first part of it. At the least, the wife should have been given the opportunity to seek advice about the options available to her.
The transcript suggests that the wife came to court expecting to obtain orders in terms of her application for consent orders, which she anticipated (along with the understanding she had reached with the husband) would allow her to move into the N property and remain there, on the basis that the husband would ensure the property was inherited by their son. She left court with an order which led to the almost immediate sale of the property, leaving her with no home of her own and potentially no money.
In our view, there is some basis for the husband’s assertion that the wife was, at worst bullied, and at best, led into giving what his Honour took as consent to the outcome his Honour had pre-determined. Furthermore, for his Honour to have found that the wife had “indicated that she consents quite clearly to Mr [H] continuing to act on her behalf and to effect the sale” was to overstate his Honour’s exchange with the wife.
In any event, anything the wife had to say to his Honour had to be considered in light of what she had observed in the courtroom prior to being called upon to state her position. The husband, by reference to the transcript, attempted to describe this in his oral submissions:
… But what I tried to point out in my … amended summary of argument, Moncrieff J effectively – to use the word “barked” at myself and Mr [Matthews], and “Do this. Do that.” And he threw out, literally, the form 2A. And it’s on page 419 of the appeal book is where he effectively returns my form 2A. Now, you need to understand [Ms Manotis] comes from a different culture. But she looked at what was going on. She was scared. On page 424 and 425 of the appeal book, Moncrieff J has just finished berating me, threatening me with contempt. Now, I can handle that, I’m – and next he says, “Mrs [Manotis], stand up.” You weren’t there. No one was here, [except] Mr [Matthews], to see what happened …
(Appeal Transcript, 11 November 2013, p 22)
The husband also submitted that Moncrieff J had displayed:
what can best be described [as] a hostile manner and attitude towards myself, as the transcripts show, but the transcripts do not convey his Honour’s verbal tone and facial hostility in his manner in disregarding the two affidavits, the form 2As, at the commencement of the hearing.
The start of the hearing set the tone for what followed. When the proceeding sufficiently commenced, in an abrupt and aggressive manner, his Honour barked at [Mr Matthews’ and myself as to where to sit. It’s appeal book page 416, lines 5 to 37. One then can only imagine how [Ms Manotis], a short, shy person from a third world country, with no understanding of the Australian legal system, and very limited English, would have felt at having seen Mr [Matthews] and myself aggressively dumped by his Honour. She was visibly taken aback, as I looked at her when I sat down.
In other words, we have a situation there – and I will take my transcripts on page 425 to 427. If you have it in front of you, his Honour, at page 425, at line 30, he berates me, doesn’t want to know about an item, and he says, “Sit down.” Then he basically instructs [Ms Manotis], “Please stand up,” and you people, obviously you have all read 425 and 426. …
Basically the bench badgered [Ms Manotis] and showed a complete lack of that – and this is quite – of cultural awareness and sensitivity. Moncrieff J treated and spoke to [Ms Manotis] with the attitude of what one may say is a colonial superior …
(Appeal Transcript, 11 November 2013, pp 31 to 32)
Having carefully reviewed the entire transcript, we consider there is some foundation for the husband’s assertion that the wife would have felt considerable apprehension about proposing any outcome other than that which his Honour himself clearly considered to be the appropriate one.
In any event, we consider there must be real doubt that the wife understood the ramifications when she gave her affirmative response to his Honour’s suggestion that she wanted “[X Lawyers] to sell [the N property] so you get your money”. As best we can understand the position, the wife did not stand to obtain any money from the sale of the property.
The wife’s entitlement under the original property orders was only $77,717.50, but her costs exceeded $150,000. As we have pointed out, the wife stands to recoup only $62,586.41 pursuant to the costs orders. Accordingly, the wife will receive insufficient funds from the sale of the property to meet her liability to her solicitors. We observe that this point was made in Mr Matthews’ affidavit of 14 January 2014 – see in particular [42.1].
We accept that the arrangements the wife had made with the solicitors for payment of her fees may ultimately have left her with no home and no money anyway. However, it is at least arguable that she was free to enter into arrangements with the husband which had the effect of leaving her with accommodation provided by the husband, but with insufficient funds to meet her full obligation to her lawyers. If that be so, the lawyers would then be at liberty to pursue such remedies against her as they considered appropriate. Again, this point was made by Mr Matthews at [44] in his affidavit of 14 January 2013. Had the wife been given the opportunity to take advice she may have determined that the arrangement proposed by the husband was indeed the best outcome for her, albeit much to the disadvantage of her lawyers.

Treatment of the Deed

There was no application before the court to set aside the terms of the Deed executed by the husband and the wife, and indeed his Honour did not set it aside, even though he mentioned he had power to do so. It follows that the Deed remained in full force and effect between the parties and, in our view, the approach his Honour adopted put the wife in apparent breach of its terms.
To compound the problem, his Honour pronounced that Penny J’s orders prevailed over the Deed. With respect, his Honour was wrong. There is no reason why the Deed should not prevail over the orders of Penny J if the parties had freely entered into it and wished it to record a compromise of their existing entitlements. Further, in stating that “if the deed needs to be revoked [the] wife can enter into a deed of revocation”, his Honour overlooked the fact that the husband would have needed to be a party to the “deed of revocation”.
We do not, of course, suggest that the wife was left without remedy if she wished to resile from the Deed. Nor do we suggest that the solicitors would necessarily have lacked standing if they had applied to set it aside. The error, in our view, was that the Deed was treated as if it did not exist or as if an application to set it aside would inevitably succeed. Such assumptions were not warranted where there was no evidence concerning its execution (the wife having given no evidence; the husband’s evidence having been rejected; and it being unclear whether his Honour had read Mr Matthews’ affidavit, – which in any event would have supported the validity of the Deed).

Conflict of interest

There can be no doubt that at the time the matter came before Moncrieff J, there was a conflict of interest between the wife and her former solicitors. This was properly conceded before us (Appeal Transcript, 1 November 2013, p 19).
The submissions of the solicitors in support of the relief they sought from his Honour expressly stated that their only interest in the matter was payment of their fees. Those fees were in excess of $150,000 in circumstances where the wife’s entitlement under the property orders was only roughly half that amount. And as we have shown, following the significant reduction the husband achieved on taxation, the wife herself stood to receive nothing from the sale.
The wife was already the trustee for sale of the land, albeit the solicitors had been given responsibility for the conduct of the sale. The fact that the solicitors were seeking, in effect, to remove their former client from her position as trustee and substitute themselves in that role demonstrated the position of conflict in which they found themselves. The significance of this change was not canvassed by his Honour with the wife. Nor was she advised of the possibility of seeking independent advice in circumstances where it is abundantly clear she needed such advice. We accept that it would not have been easy for his Honour to have explained all this to the wife, given she required an interpreter and was unrepresented. But, in our view, it was incumbent on his Honour to ensure the wife understood.
Apart from the conflict of interest between the wife and her solicitors, there was also an issue to be considered concerning a conflict between the solicitors and the husband, who also hoped to receive funds from the sale of the property. It would be an understatement to say that the record discloses that the relationship between the solicitors and the husband was acrimonious. That in itself warranted, at the very least, delivery of reasons to explain why it was proper for the solicitors to be appointed as trustees to sell the husband’s land.
Given the clear conflict of interest, we consider his Honour should also have given at least some consideration to laying down conditions on which the property was to be sold, rather than simply appointing the solicitors as trustees for sale. This was especially so in circumstances where there was a dispute between the husband and the solicitors about the price at which the property should be sold. As we have pointed out, the solicitors were permitted to make submissions on this issue, but the husband was denied any opportunity to do so.

Conclusion

We have already recorded our acceptance of the many difficulties his Honour faced in dealing with this long-running dispute. However, it is important to keep in mind that the process followed in every case not only has an impact on the litigants in that case but it also has wider ramifications. This was pointed out in NAFF v Minister for Immigration andMulticultural and Indigenous Affairs (2004) 221 CLR 1 where Kirby J said, at [69]:
If the law requires a particular course to be followed, such as was the case in the present proceedings, the true legal issue is not, or is not only, whether the person adversely affected by a decision has had his or her legitimate expectations disappointed. That may be a consequence of the departure from the legal standard; but it is not the invalidating cause. The failure to observe proper procedures itself amounts to a legal defect in the performance of the task conferred by law as the law requires. In this sense, the invalidating element is not the disappointment but the anterior failure to conform to the law. That failure is, in a sense, a legal wrong against the whole community. The duty to accord procedural fairness is part of the public law. It is upheld to ensure that the element of governance contemplated by law will (absent lawful exceptions) be discharged fairly.
We also respectfully adopt these observations of Rich J in Cameron v Cole (1944) 68 CLR 571 at 589 (emphasis added):
It is a fundamental principle of natural justice, applicable to all courts whether superior or inferior, that a person against whom a claim or charge is made must be given a reasonable opportunity of appearing and presenting his case. If this principle be not observed, the person affected is entitled, ex debito justitiae, to have any determination which affects him set aside …
The hearing in the present matter was attended by such procedural unfairness that the only proper order was to discharge all of the orders. In doing so, we recognised that the solicitors had already sold the property. And, as we explained to the husband, the property having seemingly been acquired by a bona fide purchaser, the transaction could not be undone.
Nevertheless, the issues raised on appeal were not entirely moot, as the solicitors continued to hold funds from the sale. There accordingly remained an issue as to whether they should continue to hold those funds as trustees or in some other capacity, and as to how those funds should be disbursed. We were in no position to determine those issues, since they were not fully argued before us, and we were also aware there has already been some disbursement of the funds pursuant to orders made after the orders the subject of the appeal.
There was also discussion at the hearing of the appeal of the possibility of a claim by the husband against the solicitors for their alleged breach of trust by selling the property at well under what the husband claimed was its true value. We make no comment on whether that issue could be appropriately determined pursuant to the accrued jurisdiction of the court. We also considered Mr Matthews should be afforded an opportunity to develop his argument about whether the solicitors have any legal obligation to him, notwithstanding the terms of the orders made by Magistrate Andrews.
These issues necessarily must be determined by a judge other than Moncrieff J.

Costs

Although the husband was self-represented, he incurred costs in preparing the appeal. We made an order for the solicitors to pay his costs, since they had been entirely unsuccessful. We should also note that Mrs Brownlie, properly in our view, did not seek to be heard in relation to costs.

Application in an appeal

We allowed the husband leave to rely on three items of evidence sought to be relied upon in his application for leave to introduce further evidence. The fourth item related to something that happened after the orders were made and would not have been relevant to the orders under appeal. The balance of his application for leave to rely on further evidence was not pressed.

I certify that the preceding one hundred and eight (108) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court (Bryant CJ, Thackray and Ainslie-Wallace JJ) delivered on 17 June 2014

Associate:

Date: 17 June 2014