MHC & Y &Y

The appeal concerned the wife's application for an extension of time to dispute interim costs accounts rendered by her former solicitors, Y & Y, and to have those accounts assessed. The Family Court of Australia, constituted by Bryant CJ, Kay and Boland JJ, heard the appeal against the trial judge's refusal to grant this extension. The dispute arose from ten interim accounts totalling $224,723.60 rendered between January 2000 and December 2002, of which the wife had paid $165,500.72, with $70,000 held as security for the outstanding balance.

The central legal issues before the Full Court were whether the trial judge had erred in his exercise of discretion by refusing the extension of time, and whether further evidence sought to be adduced by the wife should be admitted. Specifically, the court considered whether a factual error by the trial judge in misconstruing a letter from the solicitors, which led him to believe they threatened to cease acting if the wife taxed a previous solicitor's bill rather than their own, vitiated his decision. The court also examined the relevance of the accounts being interim, the commencement of time for seeking assessment under the *Family Law Act 1975* (Cth) and the *Family Law Rules 2004*, and the potential impact of costs agreements on these provisions. The wife argued that the trial judge failed to consider all relevant matters and that any prejudice to the solicitors from granting an extension was outweighed by the prejudice to her.

The Full Court found that the trial judge's misconstruction of the solicitors' letter of 18 August 2000 constituted a significant factual error. This error, concerning whether the solicitors threatened to cease acting if their own bill was taxed, was conceded by the solicitors' counsel. The court determined that this misconstruction was central to the trial judge's reasoning regarding the wife's intentions and the potential consequences of taxing costs, thereby vitiating the exercise of his discretion. Furthermore, the court considered the wife's delay in seeking taxation, noting that the solicitors conceded no substantial prejudice would arise from the assessment process. The court concluded that the prejudice to the wife of refusing the extension outweighed any prejudice to the solicitors. The court also exercised its discretion to admit further evidence, comprising two affidavits, which corroborated the wife's version of events and, if accepted, demonstrated the trial judge's order to be erroneous.

The Full Court allowed the appeal, setting aside the trial judge's order refusing the extension of time. The court exercised its discretion in favour of the wife, granting an extension of time for her to dispute the interim costs accounts and have them assessed. The court ordered that the wife should pay the solicitors' costs, including reserved costs of the proceedings before the trial judge, but granted certificates to each party under the *Federal Proceedings (Costs) Act 1981* (Cth) in respect of the costs of the appeal.