Millhouse and Mullens (No 2)

[2015] FamCA 1015

FAMILY COURT OF AUSTRALIA

MILLHOUSE & MULLENS (NO 2) [2015] FamCA 1015

FAMILY LAW – COSTS – Where the wife was wholly unsuccessful in an Application in a Case that she brought before the Court – Where the husband seeks an order that the wife pay his costs of that application – Whether costs should be ordered on an indemnity basis or a party and party basis.  

Family Law Act 1975 (Cth)
Family Law Rules 2004 (Cth)

Naczek v Dowler [2011] FamCAFC 179

APPLICANT: Ms Millhouse

RESPONDENT: Mr Mullens

FILE NUMBER: BRC 10196 of 2013

DATE DELIVERED: 19 November 2015

PLACE DELIVERED: Brisbane

PLACE HEARD: Brisbane

JUDGMENT OF: Forrest J

LAST SUBMISSIONS RECEIVED: 23 October 2015

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Hackett

SOLICITOR FOR THE APPLICANT: Hirst & Co Family Solicitors

COUNSEL FOR THE RESPONDENT: Mr Linklater-Steele

SOLICITOR FOR THE RESPONDENT: Barry.Nilsson. Lawyers

Orders

1. That the wife pay the husband’s costs of and incidental to her Application in a Case seeking to restrain the husband from instructing his solicitors that was dismissed, such costs to be as agreed or as assessed on a party and party basis in accordance with the Family Law Rules 2004.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Millhouse & Mullens (No 2) has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT BRISBANE

FILE NUMBER: BRC 10196 of 2013

Ms Millhouse

Applicant

And

Mr Mullens

Respondent

REASONS FOR JUDGMENT

1. On 24 August 2015 I heard an Application in a Case brought by the wife in this matter for an Order that the husband be restrained from continuing to instruct the solicitors who are acting for him in the proceedings. I determined to dismiss the application, delivering  judgment on 11 September 2015.

2. The husband seeks an order that the wife pay his costs of that application.

3. Of course, pursuant to s 117(1) of the Family Law Act 1975 (Cth) (“the Act”) each party to proceedings under this Act bears his or her own costs unless the Court is of the opinion “that there are circumstances that justify it in” making an Order as to costs “as the Court considers just”.

4. Matters the Court must consider in determining “what order (if any) should be made” are set out in s 117(2A) of the Act. The breadth of the discretionary exercise is clear considering one of the matters set out in s 117(2A) is “such other matters as the Court considers relevant.”

5. I acknowledged in my judgment when dismissing the application that the inherent supervisory jurisdiction of the Court to restrain a solicitor from acting in a particular case is “to be regarded as exceptional and exercised with caution” with “due weight [to] be given to the public interest in a litigant not being deprived of the lawyer of his or her choice without due cause”. See Naczek v Dowler [2011] FamCAFC 179 at [60] and [61].

6. It follows, in my judgment, that a party ought only seek to invoke the jurisdiction in circumstances where she or he can readily “identify precisely the obligation towards the former client or towards the court that may be breached or imperilled by the practitioner acting in the cause”.  In my view, at least, invocation of the jurisdiction in speculative circumstances is not something to be encouraged.

7. After the wife’s solicitors came into the matter, when the firm that had previously acted for her ceased to represent her due to a conflict of interest, they demanded that the husband’s solicitors cease to act for the husband. The wife’s solicitors asserted, simply, that the husband’s solicitors had an interest in the matter beyond the mere expectation of payment of their fees. As became clear at the hearing, that simple assertion was based on a view, apparently held by the wife and/or her solicitors, that the husband has an actionable damages claim against his solicitors for negligence.

8. In response to the demand for them to cease acting for the husband, the husband’s solicitors informed the wife’s solicitors that such alleged negligence was not admitted and was not proved by the simple assertion that actionable negligence had occurred.

9. Despite that having been pointed out to the wife’s solicitors, the application to have the Court exercise its supervisory jurisdiction was commenced. The husband’s legal representatives essentially maintained the same position before the Court – that the wife’s assertion of negligence by the husband’s solicitors that might give rise to a conflict in their duty to their client and their duty to the Court was purely speculative and without sufficient evidentiary foundation to attract the exceptional discretionary exercise of the inherent supervisory power.

10. That position, advanced by the husband, was, essentially, the position I determined to be correct in this case and the reason why I dismissed the application.

11. In the application, the wife sought to restrain the husband’s solicitors for the reasons that had been advanced to the husband’s solicitors before the application seeking that restraint had been filed. The husband’s solicitors effectively informed the wife’s solicitors, before the wife’s application was filed, that the argument advanced would not succeed. They effectively told the wife’s solicitors the reasons why it would not succeed. They were correct in that, as my decision to dismiss the wife’s application confirmed.

12. The wife was, by any measure, wholly unsuccessful in an application that clearly requires very careful consideration before it is brought and before the other party incurs their own legal costs. That weighs heavily in my determination that an order as to costs is justified in this matter.

13. The comparative financial circumstances of each of the parties is to the husband’s distinct advantage, but that does not persuade me not to make an order as to costs in this case.

14. However, I am also not persuaded, as the husband seeks to persuade me, that the circumstances justify costs to be ordered on an indemnity basis, particularly where the husband and his legal representatives have, between themselves, contracted out of the scale based determination of costs. On the evidence, the husband’s costs of responding to the dismissed application pursuant to his contract with his lawyers were more than double what they would be if charged pursuant to scale. I will not depart from scale in this case. I do not assess the wife’s conduct as justifying such departure.

15. I will order the wife to pay the husband’s costs of and incidental to her Application in a Case to restrain him from instructing his solicitors that was dismissed, such costs to be agreed or assessed on a party and party basis in accordance with the Family Law Rules 2004 (Cth).

16. For the wife, it was submitted that any order that she pay costs should defer the payment of such amount until the property adjustment proceedings are finalised. In support of that submission, the Court was reminded that she has brought an application for interim litigation costs funding orders seeking funds from the husband to be able to continue to instruct her lawyers in the proceedings and also that she has brought an application for interim spousal maintenance.

17. I am not persuaded to defer the payment of the costs. There is evidence that the wife had recently loaned $41,000 to a friend on a short term loan which the wife said was repayable to her “in the near future”. I am satisfied she has access to funds from which the costs order could be paid.

I certify that the preceding seventeen (17) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Forrest delivered on 19 November 2015.

Associate:

Date:  19 November 2015