Martin and Harris and Ors
[2010] FamCA 239
•11 March 2010
FAMILY COURT OF AUSTRALIA
| MARTIN & HARRIS AND ORS | [2010] FamCA 239 |
| FAMILY LAW – COSTS – indemnity costs – loss said to be occasioned by conduct of the husband and husband’s solicitor – costs order against husband’s solicitor personally – intervenor and husband wholly unsuccessful in the proceedings |
| Family Law Act 1975 (Cth) Family Law Rules 2004 |
| Cassidy and Murray (1995) FLC ¶92-633 In the marriage of Collins (1985) FLC ¶91-603 |
| APPLICANT / WIFE: | Ms Martin |
| 1st RESPONDENT / HUSBAND: | Mr Harris |
| 2ND RESPONDENT: | Mr Z |
| 3RD RESPONDENT / INTERVENOR: | Mr R |
| FILE NUMBER: | SYC | 1251 | of | 2007 |
| DATE DELIVERED: | 11 March 2010 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Justice Fowler |
| HEARING DATE: | Dealt with by written submissions |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Broun QC |
| SOLICITOR FOR THE 1ST RESPONDENT: | Mr Z |
| SOLICITOR FOR THE 2ND RESPONDENT: | Mr Killalea |
| SOLICITOR FOR THE INTERVENOR/ 3RD RESPONDENT: | Mr Orlizki |
Orders
The Third Respondent is to pay the Applicant’s costs of and incidental to the Intervenor’s application assessed in the sum of $20,000.
The Second Respondent is to pay on account of the Applicant’s costs the sum of $20,000.
The First Respondent is to pay the Applicant’s costs assessed in the sum of $203,211.
IT IS NOTED that publication of this judgment under the pseudonym Martin & Harris and Ors is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)
| FAMILY COURT OF AUSTRALIA AT SYDNEY |
FILE NUMBER: SYC 1251 of 2007
| MS MARTIN |
Applicant / Wife
And
| MR HARRIS |
1st Respondent / Husband
And
| MR Z |
2nd Respondent
And
| MR R |
3rd Respondent / Intervenor
REASONS FOR JUDGMENT
Introduction
The proceedings before the Court are proceedings bought by the wife for orders for the payment of her costs of and incidental to certain proceedings commenced by her seeking to enforce an order for alteration of interests in property and opposing an application under section 79A of the Family Law Act 1975 (“the Act”) seeking to set aside that order.
The proceedings were ones to which the third respondent, Mr R, became a party. He filed an application seeking orders for the repayment of a debt he asserted was due to him by the husband and wife. That application was opposed by the wife and not opposed by the husband.
The application of the wife seeks orders for costs against each of the husband, the husband’s solicitor and the intervenor.
The order for costs sought against all parties is sought on the basis that the costs order be made as a percentage of the costs actually incurred by the wife in the proceedings. In particular the wife seeks orders that:
a)The husband pay the wife’s costs of and incidental to these proceedings on an indemnity basis, assessed in the sum of $142,301.69;
b)The husband’s solicitor pay the wife’s costs of and incidental to these proceedings on an indemnity basis, assessed in the sum of $61,907.03; and
c)The intervenor, Mr R, pay the wife’s costs of and incidental to these proceedings on an indemnity basis, assessed in the sum of $39,002.58.
The costs are therefore sought on an indemnity basis.
The primary proceedings referred to in Order 1 hereof were the subject of a Judgment published by me on 18 June 2009. The wife relies on certain of the findings made in that Judgement, which should be read in conjunction with these reasons.
All parties agree that the applications are ones to which the provisions of section 117 of the Act apply.
Section 117(1) provides to the effect that “[s]ubject to subsection (2), subsection 70NFB(1) and sections 117AA, 117AB, 117AC and 118, each party to proceedings under this Act shall bear his or her own costs.” By definition “proceedings” which are related proceedings such as the application by
Mr R are proceedings to which the section applies.
Section 117(2) gives the Court a broad discretion to make orders for costs. Costs orders can be made against a party, a solicitor for a party or a third party to the proceedings. In making such an order the Court has the discretion to nominate an amount or refer the matter for determination by an assessor.
The Court is obliged to have regard to the matters set out in sub-section 2A of section 117 in considering what, if any, order it might make.
The claim against Mr R (the Third Respondent)
I consider those matters in section 117(2) in relation to the claim against
Mr R as follows.
(a) the financial circumstances of each of the parties to the proceedings
Mr R has not adduced any evidence to suggest that he cannot meet any order for costs which the Court might make and so the Court will assume that he is able to meet any such order.
The wife is an employee of a government department and has a modest income. She has the benefit of the proceeds of the proceedings to the extent that they are held but as against that she has incurred costs in the sum of $243,211.59.
There is no evidence before me that the balance of the sum ordered by me to be paid by the husband has been paid.
(b) whether any party to the proceedings is in receipt of assistance by way of legal aid and, if so, the terms of the grant of that assistance to that party
There is no evidence that either the wife or Mr R is in receipt of a grant of legal aid.
(c) the conduct of the parties to the proceedings in relation to the proceedings including, without limiting the generality of the foregoing, the conduct of the parties in relation to pleadings, particulars, discovery, inspection, directions to answer questions, admissions of facts, production of documents and similar matters
As between the wife and Mr R there is no suggestion by the wife that Mr R and those representing him behaved in other than as model litigants. Nor in my observation could there be. I will deal otherwise in relation to this matter when considering the other applications before me.
(d) whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the court
As between Mr R and the wife the proceedings were not so necessitated.
(e) whether any party to the proceedings has been wholly unsuccessful in the proceedings
Mr R has been wholly unsuccessful in his claim in these proceedings.
(f) whether either party to the proceedings has made an offer in writing to the other party to the proceedings to settle the proceedings and the terms of any such offer
There is evidence that the wife made a certain offer to settle the proceedings with Mr R. However, as his solicitor points out such offer was conditional on matters beyond the control of the wife or Mr R and those conditions were not fulfilled. The offer was, therefore, not one capable of acceptance and I thus give it no weight.
(g) such other matters as the court considers relevant
There are two issues which are the subject of submission from the third respondent and they are:
a)The issues as between the third respondent and the parties or the husband would be a matter which, in any event, would have to be determined as between the husband and the wife in the issues between them. In those circumstances, the intervention of the third respondent did not increase the costs of the wife significantly.
I agree that the financial position of the parties was relevant to the proceedings but I cannot say that the third respondent intervening in the proceedings did not occasion costs to the wife. The solicitor for the third respondent filed documents which would have had to be considered by the other parties and their legal advisors and the third respondent was the subject of examination and cross examination and his solicitor cross examined the husband and the wife. The third respondent chose to intervene in these proceedings and pursue his claim before this court rather than commence action elsewhere. He was wholly unsuccessful in that process. Had he been wholly unsuccessful in another court costs would ordinarily have followed the event.
b)The third respondent has asserted he should not pay costs other than on a party and party basis (to which I agree) and that they should be the subject of assessment if they are not agreed. It is argued by the wife that, having regard to the costs burden she has already shouldered, such a process would put unnecessary additional burdens on her and that having regard to my knowledge of the case I can assess a reasonable sum as Judges have in this court frequently done. I note that such a process of assessment could involve the third respondent and the other parties in further costs.
I do not consider that the third respondent has so acted as to require any consideration of the payment of the wife’s costs on an indemnity basis. I assess the just reimbursement which should be made to the wife upon a consideration of the matters referred to above to be appropriately the sum of $20,000 and I will so order.
The Claim against the husband’s solicitor (The Second Respondent)
I now turn to a consideration of the claim for costs against the solicitor for the husband.
This claim is based on the assertion that the conduct of the solicitor for the husband in relation to the proceedings was so egregious in falling short of a standard of competence that one reasonably ought to expect, that the Court should make an order that he meet some part of the costs of the wife on an indemnity basis or in the alternative some other basis.
The Court has power under section 117(2) and Rule 19.10 of the Family Law Rules 2004 (“the Rules”) to make costs orders against solicitors personally
(In the marriage of Collins (1985) FLC ¶91-603).
I refer to Cassidy and Murray (1995) FLC ¶92-633 and note that that case established the following:
a)The Court may make an order for costs against a solicitor even though it is not established that he is guilty of serious professional misconduct;
b)A solicitor has a duty to the Court to promote the interests of justice while at the same time attending to the needs of his or her client;
c)A mistake or error of judgment would not justify an order for costs against a solicitor however misconduct default or negligence any of which are found by a court to be of a serious nature may be sufficient to justify an order; and
d)The jurisdiction to award costs is compensatory (and not punitive).
It is submitted by the wife that the solicitor for the husband:
a)Demonstrated incompetence which lead to costs being incurred improperly and without reasonable cause.
In broad terms it was asserted by the wife that the solicitor prepared correspondence that fell short of the standard expected by the Court and other legal practitioners. This is a matter to which I referred in paragraphs 42 and 43 of my judgment in the following terms:
“42.Thereafter, there was a continuing exchange of correspondence between the parties’ solicitors relating to the implementation and enforcement of orders. This exchange has continued between the parties and or their representatives, up to the commencement of the hearing.
43.This correspondence has I might say, particularly where it emanated from the husband’s solicitors, failed in meeting that standard of politeness, neutrality and professionalism that the Court and the parties are entitled to expect from those who represent them. A similar comment could be made in relation to the affidavits filed in the proceedings. In addition, some of the statements generally made in affidavit material in this case were scandalous and offensive and marked a low point in the husband’s conduct and the conduct of those who more recently represented him in permitting the husband to make them.”
In addition, the husband’s solicitor drew affidavits which were in large part inadmissible. So lengthy were the objections and so much the material that I acceded to considering the matter pre-trial and ruling out much of the husband’s affidavit material. Amongst the inadmissible material was material which it is submitted by the wife’s representatives was highly offensive to them and to the wife and I fully agree with that submission.
The solicitor for husband argues that, on an analysis of the objections and the Court’s response to them, there should be no order for costs or an order for costs should be of a lower order, taking into account the number of objections allowed and those disallowed and those which were subject to some other ruling such as a grant of leave to adduce oral evidence. He seeks to make a calculation of a percentage “wins and losses” basis and project them into a mathematical calculation of an amount for which he should be liable of the costs thrown away by the process undertaken for objection.
Such an approach is flawed. The wife, because of the sheer weight of objections, had to be put to bringing an application for the matter to be dealt with by the trial Judge prior to the hearing and indeed I acceded to that application since a simple reading of even part of the affidavit showed a level of inadmissibility almost unparalleled in my experience. I do not accept that the solicitor should pay other than on an indemnity basis. With respect to the costs that I assess as appropriate and occasioned by his conduct, I will later assess those costs.
It is further asserted that a legal practitioner with knowledge of the proceedings and the relevant legislation is expected to produce documents that are relevant to the issues in dispute and not to waste time and put to expense the other parties and the Court. I agree with that submission.
It is further submitted that the wife was put to unnecessary cost in having to respond to the affidavit material and correspondence and answers to specific questions prepared by the husband’s legal representatives. I agree that this was so.
It is also submitted the conduct of the husband’s solicitor went beyond mere incompetence and that his conduct of the case was offensive and abusive and designed to exert pressure in an inappropriate manner to influence the outcome of the proceedings and that it lacked the basic requirements under law and frustrated the proper processes of the Court. I agree that this was so.
It would be assumed by me, in the absence of any evidence to the contrary (and none is adduced) that the solicitor was acting on instructions either general or particular in the way in which he conducted the case. He, however, can gain no comfort from that.
A solicitor has an obligation to act competently and in accordance with his obligations as an officer of the court. There was regrettably in this case a failure in achieving that standard. A solicitor must not act for a client in a way which puts him in conflict with that duty, no matter how strongly insistent the client might be, nor how much the action is on specific instructions. In those circumstances, if there is a conflict of the proportions that arose in this case, the solicitor should inform the client that if he insists on so instructing then the solicitor will have to cease to act and then do so if the client continues to so insist. Having heard the evidence of the husband and having regard to the conclusions I have drawn about his conduct I can well imagine that he would have been difficult to dissuade from any course upon which he had set his mind. Nevertheless, that is the obligation of the solicitor in circumstances where to follow those client edicts would be to abuse the court process, waste the court’s time and incur more particularly for this case the unnecessary costs which could have otherwise been avoided.
I agree with the submission of the wife that any case which could reasonably be put before the Court on the part of the husband could have been put without the faults that existed in this presentation.
This Court is not a professional tribunal however and it is not open to it to make orders for costs by way of punishment for inappropriate professional behaviour.
What the court has to do is find that the behaviour of the solicitor was such as required the wife to incur unnecessary costs and to compensate her only to that extent. In my view, this is a case where to that extent it is proper to make an order for costs against the solicitor.
The wife has particularised in detail the claim that she makes for costs thrown away by the conduct of the solicitor and I have considered that claim. I have also considered the responses to the claim made by the solicitor.
I am obliged to consider the matters referred to in section 117(2A) in relation to this claim and I do so as follows.
(a) the financial circumstances of each of the parties to the proceedings
No evidence is adduced by the solicitor as to his financial position and I accordingly take the position that, in the absence of him adducing such evidence, he is able to meet any order the Court might see fit to make.
(b) whether any party to the proceedings is in receipt of assistance by way of legal aid and, if so, the terms of the grant of that assistance to that party
There is no evidence that the solicitor is in receipt of legal aid.
(c) the conduct of the parties to the proceedings in relation to the proceedings including, without limiting the generality of the foregoing, the conduct of the parties in relation to pleadings, particulars, discovery, inspection, directions to answer questions, admissions of facts, production of documents and similar matters
I refer to the matters set forth above.
(d) whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the Court
This is not a matter in issue in this claim.
(e) whether any party to the proceedings has been wholly unsuccessful in the proceedings
This is not a relevant consideration in this application for an order for costs.
(f) whether either party to the proceedings has made an offer in writing to the other party to the proceedings to settle the proceedings and the terms of any such offer
This is not a relevant consideration in these proceedings against the solicitor.
(g) such other matters as the court considers relevant
I have come to the conclusion that, after a consideration of all the matters referred to above and the particulars supplied by the wife upon which the solicitor has had the opportunity to make comment, that the appropriate order to make is that the solicitor make a contribution to the wife’s costs to compensate her for costs incurred by reason of the solicitor’s conduct.
Solicitors generally, and this solicitor in particular, must be aware that although their primary duty is to their client, that duty cannot be exercised other than in the context of their obligation to the Court and their obligation to uphold the administration of justice.
To the extent that they fail in those obligations they should at a minimum bear the costs of those parties who suffer loss by reason of and to the ascertainable extent of that failure.
Having considered the wife’s claim it is, in my view, the just assessment of costs thrown away by the solicitor’s conduct for which he should be liable is $20,000. I intend to make an order requiring him to pay that sum.
The claim against the Husband (The First Respondent)
I now turn to the question of the application for costs against the husband.
I am obliged to consider the matters referred to in section 117(2A) in relation to the claim against the husband.
(a) The financial circumstances of each of the parties to the proceedings
It is submitted by the husband that:
“the husband’s financial circumstances are most dire, so dire that the Court, in dialogue with the parties’ representatives, during submissions suggested that a sequestration order might be appropriate.”
I discussed the sequestration of one or both of the parties’ estates as a means to doing justice to all the creditors who were said to be owed money. I found that that was not the case and the other creditors were subsequently found to be within a number of different categories - for example, relating to a debt of one of the parties only, subject to some arrangement, being statute barred or not currently or historically being pursued by a creditor. To suggest the interpretation implied is, in my view, not sustainable.
The husband further submits that his lawyer acted pro bono in the matter. That may be so but there has been no disclosure of the financial position of the husband currently.
The husband in his evidence at trial failed to provide an updated Financial Statement and claimed during the trial that evidence of anything concerning his financial position post separation was irrelevant. One got the impression that no one was going to be enlightened as to what that might be and the parties and the Court remain in the same state of ignorance as to those matters. The current financial position of the husband is not known. He did not file any Financial Statement in relation to the costs proceedings. The Court cannot accept, absent a current statement of the husband’s financial affairs, that they are as presently represented by him.
In fact the husband has been on notice of this application for some time and the Court infers from his failure to file any updated statement that such a statement if filed could not assist him in relation to his submission and that no order should be made against him by reason of his circumstances.
Even if his financial circumstances were otherwise than inferred, his circumstances are but one factor for consideration in relation to the making of an order for costs and, in my view, on a consideration of the whole of the matters to be considered in determining this application, in this case of comparatively little weight in doing what is just and equitable and appropriate.
It is submitted that the wife’s position financially is parlous and the costs which she has incurred are going to far outweigh any benefit that she has received from these proceedings. Costs which have been incurred have been incurred as a result of the conduct of the husband and in part of the other parties to these proceedings as herein described.
(b) whether any party to the proceedings is in receipt of assistance by way of legal aid and, if so, the terms of the grant of that assistance to that party
There is no evidence before the Court which would suggest that the husband is in receipt of a legal aid grant. The husband’s solicitor has asserted that he acted in the matter pro bono. Apart from that submission there is no formal evidence of the nature of the retainer of the husband’s solicitor. Even accepting that it were so and that it was appropriate to take it into account under this heading it is, in my view having regard to the matters otherwise set out above and hereafter, not determinative of the issue.
(c) the conduct of the parties to the proceedings in relation to the proceedings including, without limiting the generality of the foregoing, the conduct of the parties in relation to pleadings, particulars, discovery, inspection, directions to answer questions, admissions of facts, production of documents and similar matters
This is a case brought about by the continuing failure of the husband to abide by an order which was made by the consent of himself and the wife in these proceedings.
It is clear that such consent was given and it is also clear that after the order was made the husband did everything that he reasonably could to frustrate its implementation.
Indeed, on the hearing of the matter he asserted (with no capacity to sustain such an assertion) that the order was not binding upon him because he had not really consented to it.
His application under section 79A with respect to the order had little chance of success from the outset and failed totally.
He has either instructed his lawyer or acquiesced in him putting forth before the Court material which is irrelevant or of little or no probative value and was otherwise frivolous, vexatious, offensive or scandalous.
His evidence as given before me was subject to the deficiencies referred to in my judgement. His bellicose answers or more frequently his non-responsive statements, took time unnecessarily and despite warnings from the Court they continued.
Litigants should understand that when they come before a court of law they owe it and those who establish and support those courts, namely the people of Australia, an obligation in return for the privilege of using them.
That obligation is to be forthright and honest and not waste the time and resources of the Court.
In this jurisdiction there is an obligation to make a full and frank disclosure of the litigant’s financial position and make a full and frank disclosure of relevant facts and not to seek to introduce before a court irrelevant material and particularly not scurrilous, offensive and frivolous and inadmissible evidence.
This husband failed in his obligations in every way to meet these reasonable criteria. I refer to my judgment generally and to in particular paragraphs 120, 121, 122, 123, 125, 126 and 127 thereof.
In addition, parties have the obligation in a timely way to comply with orders made by the court and which are not stayed. The failure of the husband in this case to do so was exemplary of the antithesis of the fulfilment of that obligation.
(d) whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the Court
This case was entirely occasioned by the husband’s unreasonable default in complying with orders of this Court. Orders which had been made with his consent.
The evidence suggests the husband also failed to honour more than one agreement he made with the wife, who was prepared to agree to procure compliance with the order. It seems that his agreement means as much to him as apparently the orders did.
His non-compliance with those orders had no justification except in his own mind.
The wife suffered loss by reason of his conduct and was obliged after the exercise of considerable patience to commence these proceedings in the fact of obdurate refusal on the part of the husband to obey the orders.
(e) whether any party to the proceedings has been wholly unsuccessful in the proceedings
The proceedings were defended by the husband and he brought his own application to set aside the orders made with, on the evidence, no reasonable prospect of success. He has wholly failed in the proceedings.
(f) whether either party to the proceedings has made an offer in writing to the other party to the proceedings to settle the proceedings and the terms of any such offer
The wife made an offer in writing to settle the matter on 22 June 2007 which would have afforded the husband a better result than the one ultimately achieved by the wife. The rejection of that offer was imprudent and unreasonable. Such rejection occasioned the wife further costs.
(g) such other matters as the court considers relevant
This is a case which rarely occurs but one in which I find that it is reasonable that any order for costs made against the husband should be on an indemnity basis.
This is a case brought about by the failure of the husband to abide by an order which was made by consent of parties in these proceedings.
It is clear that such consent was given and it is also clear that after the order was made the husband did everything he reasonably could to frustrate its implementation.
Indeed, on the hearing of the matter he asserted with no capacity to sustain such an assertion that the order was not binding upon him. His approach to this matter has been to obfuscate and oppose.
He has not at any time been seen by the Court as giving respect to the orders of the Court and even his purported attempt to comply with the orders made by the Court for sale of the former matrimonial home were for an unconscionably long period, following attempts to frustrate that sale at every turn.
The husband’s conduct in his pleadings and his evidence and his time wasting behaviour in Court add justification to such a decision.
I will, however, not put to his account the costs which were occasioned as a result of the actions of the intervener and the husband’s solicitor.
I accordingly will order that the husband pay the wife’s cost in the sum of $203,211 and I find that order to be just.
I certify that the preceding eighty-our (84) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Fowler.
Associate:
Date: 11 March 2010
Key Legal Topics
Areas of Law
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Civil Procedure
Legal Concepts
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Costs
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