Permezel & Grey

[2009] FamCA 697

FAMILY COURT OF AUSTRALIA

PERMEZEL & GREY [2009] FamCA 697

FAMILY LAW - COSTS - Between solicitor and client - Respondent represented the applicant in substantive proceedings for property settlement between the applicant and her former husband - Applicant’s professional relationship with the respondent broke down following a dispute over the quantum of legal fees charged by the respondent - Orders were made in November 2005 and the respondent has not complied with those orders on the basis that an agreement was reached between him and the applicant - Applicant denies reaching such an agreement and seeks enforcement of the November 2005 orders - Held that no agreement was reached between the parties about the resolution of their dispute over the quantum of the respondent’s costs and disbursements - Respondent ordered to comply with the November 2005 orders within 14 days

Family Law Act 1975 (Cth)
Evidence Act 1995 (Cth)

APPLICANT: Ms Permezel

RESPONDENT: Mr Grey 

FILE NUMBER: MLC 4379 of 2009

DATE DELIVERED: 31 July 2009

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Justice Austin

HEARING DATE: 28 July 2009

REPRESENTATION

COUNSEL FOR THE APPLICANT: Litigant in Person

SOLICITOR FOR THE APPLICANT:

COUNSEL FOR THE RESPONDENT: Mr M Pavone

SOLICITOR FOR THE RESPONDENT: Grey Solicitors

Orders

1. The respondent shall comply with orders 2(a), (b), (c) and (d) made by Benjamin J on 18 November 2005 within 14 days of the date of these orders.

2. The orders sought by the respondent in his Response to an Application in a Case filed on 8 July 2009 are dismissed.

3. The parties shall bear their own costs of and incidental to these proceedings.

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

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLC 4379 OF 2009

MS PERMEZEL

Applicant

And

MR GREY  

Respondent

REASONS FOR JUDGMENT

Introduction

1. The respondent in these proceedings is the former solicitor of the applicant. 

2. The applicant was formerly engaged in property settlement proceedings against her husband, and the respondent represented the applicant in those proceedings.

3. The applicant retained the services of the respondent in relation to that litigation in May 2003.  The applicant settled her dispute with her husband in November 2004, and her professional relationship with the respondent broke down shortly thereafter following a dispute over the quantum of legal fees charged by the respondent.

4. On 18 February 2005 the applicant commenced proceedings in this court contesting the costs and disbursements charged by the respondent.  That dispute ultimately came on for hearing before Benjamin J in October 2005, which resulted in his Honour delivering a judgment on 18 November 2005.

5. On that date Benjamin J made orders including the following:

   1.That the agreement entered into between [Ms Permezel] (“the wife”) and [Mr Grey] (“the legal practitioner”) on 10 March 2004 be set aside.

   2.        That the legal practitioner:

   a)file and serve on the wife an itemised costs account in accordance with the Family Law Rules 2004, and

   b)ensure that such itemised costs account be in respect of the costs and disbursements for the whole of the period of the retainer between the wife and the legal practitioner, and

   c)that such itemised costs account shall be prepared in accordance with the costs agreement entered into between the wife and the legal practitioner dated 10 June 2003 and the costs agreement between the wife and Mr Thompson of Counsel dated 11 August 2003 (“the costs agreements”), subject to

   d)the fees claimed in respect of Mr Thompson of Counsel being limited to $70,000 including GST, and the balance of costs and disbursements being limited to $80,290.

   3.That upon the filing of such itemised costs account the court fixes a date before a Registrar for a settlement conference in accordance with Div 19.6.2 of the Family Law Rules 2004.

   4.That a Registrar assess the itemised costs account in accordance with the rules and in accordance with the terms of the costs agreements subject to the total fees claimed in respect of Mr Thompson of Counsel being limited to $70,000 including GST, and the balance of costs and disbursements being claimed by the legal practitioner being limited to $80,290 including GST.

   5.That if after costs have been assessed and a costs assessment order is made,

   a)there is money due to be paid to the legal practitioner by the wife pursuant to that costs assessment order, then interest shall accrue on that sum, in accordance with the Rules.  Such interest to be calculated from the date of service of the itemised costs account in accordance with these orders to the date of payment, and

   b)if there is money due to be repaid by the legal practitioner to the wife pursuant to that costs assessment order, then interest shall accrue on that sum, in accordance with the Rules.  Such interest to be calculated from the date when the costs were paid by or on behalf of the wife to the legal practitioner or held by the legal practitioner in trust on behalf of the wife to the date of payment.

6. The orders made by Benjamin J bound the respondent personally. Although the applicant brought these further proceedings nominating “[Grey] Solicitors” as respondent, a Response was filed by Mr Grey in his personal capacity. The proceedings were conducted on the basis that Mr Grey was the proper respondent and that any further orders would bind him personally.

7. It is common ground that the respondent failed to comply with any of the orders made by Benjamin J.  The parties are in dispute as to the reasons for that non-compliance.

8. It will be observed from the orders extracted above that Benjamin J did not specify the date by which the obligations cast upon the respondent ought to be performed.

9. On 19 May 2009 the applicant filed an Application seeking that the respondent forthwith comply with Order 2 made on 18 November 2005.

10. On 8 July 2009 the respondent filed a Response seeking dismissal of the applicant’s Application.  In the alternative, the respondent sought the grant of leave to appeal out of time against the orders of Benjamin J made on 18 November 2005, and the grant of leave to file an application seeking an order for costs against the applicant arising out of the contested hearing conducted before Benjamin J during October 2005.

11. It was that Application and Response which came before the court for hearing on 28 July 2009.

Evidence relied upon

1. In support of her Application filed on 19 May 2009 the applicant relied upon her two affidavits filed on 19 May 2009 and 21 July 2009.

2. In his case, the respondent relied upon his affidavit filed on 8 July 2009.

3. At the commencement of the hearing the respondent also indicated his wish to file in court a further affidavit sworn by him, and to rely upon that further affidavit evidence at the hearing.  Leave to do so was refused.  The fresh affidavit of the respondent was only served upon the applicant on the morning of the hearing, and such further affidavit evidence from the respondent was not contemplated by the procedural orders made by Cronin J on 25 June 2009.  The respondent’s counsel conceded that the fresh affidavit pertained primarily to the orders sought by the respondent in his Response, and not the rebuttal of the applicant’s affidavit in reply.  The husband was unable to satisfactorily explain why the further evidence he sought to elicit in his second affidavit was not already contained within his first affidavit.

4. Although there was no apparent prejudice caused to the respondent through the refusal of leave to file his most recent affidavit in court, for abundant caution, leave was granted to the respondent to adduce some additional oral evidence-in-chief when he was called to give evidence in his case.  That course was adopted with the consent of the applicant.

Background facts

1. The respondent was retained by the applicant to act on her behalf on 21 May 2003. [1]

   [1] Respondent’s affidavit 8 July 2009 paragraph 6

2. On 10 June 2003 the applicant and respondent entered into a costs agreement.[2]

   [2] Respondent’s affidavit 8 July 2009 paragraphs 8 and 25

3. On 22 January 2004 the respondent rendered his first Bill of Costs to the applicant pursuant to the terms of their costs agreement. [3]

   [3] Respondent’s affidavit 8 July 2009 paragraph 10

4. The respondent’s first Bill of Costs totalled $59,469.69. There was some agitation on the part of the applicant about the quantum of those costs and disbursements.  The upshot of that agitation was that the respondent agreed to reduce those costs and disbursements by the sum of $10,000.  Their agreement in that regard was recorded in a further costs agreement dated 10 March 2004.[4]

   [4] Respondent’s affidavit 8 July 2009 paragraphs 14 – 15

5. The respondent’s representation of the applicant in the family law proceedings continued, and the respondent engaged Mr Thompson of counsel to appear for the applicant at a judicial settlement conference conducted before Guest J on 2 September 2004.[5]

   [5] Applicant’s affidavit 21 July 2009 paragraphs 1 and 5

6. Within a relatively short space of time of that judicial settlement conference, the applicant settled her family law dispute with her husband. The gist of the settlement was that the husband would pay to the applicant the sum of $180,000 in satisfaction of the proceedings between them conducted pursuant to section 79 of the Family Law Act1975 (Cth).

7. On 8 November 2004, in consummation of that settlement, the husband paid to the respondent on behalf of the applicant a bank cheque in the sum of $180,000.  The respondent banked that cheque into his trust account.[6]  It is common ground that since that time the respondent has exhausted the entirety of those funds in the payment of legal costs and disbursements.  The sum of $70,000 was paid by the respondent to the counsel who had been retained on behalf of the applicant, being Mr Thompson, and the balance of $110,000 was retained by the respondent on account of his fees and other disbursements.[7]

   [6] Respondent’s affidavit 8 July 2009 paragraph 23

   [7] Respondent’s affidavit 8 July 2009 paragraphs 24 – 26

8. The disbursement of those funds in that fashion by the respondent occurred at or shortly following the time at which the respondent rendered to the applicant his second Bill of Costs in early December 2004.  There is some uncertainty in the evidence, which was not clarified during cross-examination, as to the date and quantum of that second Bill of Costs.[8]

   [8] Respondent’s affidavit 8 July 2009 paragraphs 11 and 17

9. In any event, the applicant was aggrieved by the quantum of the fees charged by the respondent.  She asserts that she was told, at or about the time of the judicial settlement conference in early September 2004, that her costs and disbursements were a significantly lesser amount than the amount ultimately charged by the respondent.

10. The applicant’s dissatisfaction was such that she brought proceedings before the court on 18 February 2005 to challenge the quantum of the respondent’s costs and disbursements.[9]

    [9] Respondent’s affidavit 8 July 2009 paragraphs 20 and 27

11. That application came on for hearing over several days before Benjamin J in October 2005,[10] resulting in the orders being made by Benjamin J on 18 November 2005 which I have extracted above.[11]

    [10] Respondent’s affidavit 8 July 2009 paragraph 31

    [11] Respondent’s affidavit 8 July 2009 paragraphs 31 and 39

12. As I have noted, it is conceded that the respondent has failed to comply with the orders made on 18 November 2005.[12] The respondent alleges that that is so by reason of discussions between the parties, resulting in agreements between them being concluded on 2 December 2005,[13] and 1 February 2006.[14] The applicant vehemently disputes striking any such agreement with the respondent.

    [12] Respondent’s affidavit 8 July 2009 paragraph 68

    [13] Respondent’s affidavit 8 July 2009 paragraphs 70 – 75

    [14] Respondent’s affidavit 8 July 2009 paragraphs 76 – 83

The alleged agreements

1. The respondent alleges sending a letter to the applicant dated 21 November 2005 concerning his intention to appeal the orders of Benjamin J.[15] The applicant denies ever having received such letter.  She denies seeing the letter until it was produced to her in the witness box.  The letter was not mentioned in or annexed to the respondent’s affidavit filed on 8 July 2009.

   [15] Exhibit 1

2. The respondent alleges sending another letter to the applicant on 2 December 2005.[16]  That followed an alleged telephone conversation between the parties on that day, which was the subject of a file note prepared by the respondent and tendered in evidence.[17] The letter pertains to the prospective settlement of all issues in dispute between the parties.  Similarly, the applicant denies ever having received that letter, or even seeing it until it was produced to her in the witness box.

   [16] Exhibit 2

   [17] Exhibit 7

3. The respondent alleges sending another letter to the applicant dated 12 January 2006.[18] That letter concerned a prospective costs application by the respondent against the applicant.  As with the preceding letters, the applicant denied ever having received that letter, or ever seeing it before it was produced to her in the witness box.  That letter was not mentioned in or annexed to the respondent’s affidavit filed on 8 July 2009 either.

   [18] Exhibit 3

4. It is agreed that the applicant wrote to the respondent on 19 January 2006 requesting the respondent’s compliance with the orders of Benjamin J made on 18 November 2005.[19] That letter resulted in a response by the respondent the very next day.  The respondent wrote a letter in reply to the applicant dated 20 January 2006.[20]  That reply recited the respondent’s knowledge that the orders made by Benjamin J were not the subject of a specific time frame for compliance, and furthermore indicated a prospective costs application by the respondent against the applicant arising from the recent hearing between them.

   [19] Applicant’s affidavit 19 May 2009 Annexure MP1

   [20] Applicant’s affidavit 19 May 2009 Annexure MP2

5. The respondent’s letter dated 20 January 2006 does not mention the earlier letters allegedly written by him to the applicant on 21 November 2005, 2 December 2005, and 12 January 2006.

6. The respondent says in evidence that the failure to mention the preceding correspondence in his letter of 20 January 2006 is unremarkable because his letter was written directly in response to the applicant’s letter dated 19 January 2006. 

7. The respondent further contends that the reason for him not having referred to Exhibits 1 and 3 in his affidavit compiled for these proceedings was that those letters each contained a “without prejudice” heading.  I do not find that explanation convincing, given that any privilege attaching to that correspondence was a privilege enjoyed singularly by the respondent as the author, which he could have unilaterally waived at any time.  He was prepared to waive that privilege by tendering those letters in evidence at the hearing, and so the court is left to wonder why he would not have been prepared to waive that privilege and incorporate reference to that material correspondence when preparing his affidavit only some weeks before the hearing.

8. The letter written by the applicant to the respondent on 19 January 2006 makes no reference to her receipt of the letters from the respondent, comprising Exhibits 1, 2 and 3.  The available inference, which I draw, is that at the time she authored that letter she was ignorant of that correspondence.  I accept the submission of the applicant that she had not received the letters from the respondent comprising Exhibits 1, 2 and 3.

9. The respondent alleges that he had telephone conversations with the applicant on 30 January 2006 and 1 February 2006, which were the subject of contemporaneous file notes made by him.[21] The respondent deposes to the nature of the agreement he alleges concluding with the applicant at the time of those conversations.[22]

   [21] Exhibits 8 and 9

   [22] Respondent’s affidavit 8 July 2009 paragraphs 76 – 77

10. I should observe at this point that the applicant denies the telephone conversations that the respondent alleges that he had with her on 2 December 2005, 30 January 2006, and 1 February 2006. The applicant asserts that she has never spoken with the respondent, either in person or by telephone, since she formally commenced the costs dispute with the respondent around a year before on 18 February 2005.

11. The respondent alleges that he sent a further letter to the applicant dated 1 February 2006,[23] following their alleged telephone conversation on that date. That letter enclosed draft orders prepared by the respondent allegedly reflecting the oral agreement reached over the telephone between the parties, which the applicant was requested to sign and return.  The applicant denies having received that letter, and denies ever having seen it until it was presented to her in the witness box.

    [23] Exhibit 4

12. The respondent alleges sending further letters to the applicant dated 8 March 2006[24] and 26 June 2006.[25]  Those letters were allegedly sent to remind the applicant of the draft orders and the need for them to be signed and returned.  The applicant denies ever having received those letters, and denies ever seeing them until they were presented to her in the witness box.

    [24] Exhibit 5

    [25] Exhibit 6

13. It will be clear from the facts that I have recited to this point that the respondent contemplated the need to verify in writing the alleged agreement between himself and the applicant and to take steps to discharge the orders of Benjamin J made on 18 November 2005.  The respondent concedes that that did not ever occur, despite his contemplation of its necessity. 

14. On 10 July 2006 the applicant alleges sending another letter to the respondent.[26] That letter was intended to remind the respondent of the outstanding orders of Benjamin J and to request compliance with those orders.  The respondent denies having received that letter from the applicant.

    [26] Applicant’s affidavit 19 May 2009 Annexure MP3

15. I accept the evidence of the applicant that she did indeed send that letter on or about that date to the respondent.  Even if the respondent did not receive the letter, as he alleges, the significance of the letter is clear.  The contents of the letter inferentially demonstrate that the applicant was ignorant, at the time she wrote it, of any of the preceding correspondence allegedly directed to her by the respondent.  The applicant realised that the orders of Benjamin J made on 18 November 2005 were still the subject of default and she was desirous of compliance by the respondent.

16. The applicant alleges that she approached Kyrou Lawyers in May 2008 to take up correspondence on her behalf with the respondent.[27] The evidence demonstrates that those lawyers attempted to telephone the respondent without success, and that a letter dated 16 June 2008 was forwarded by those lawyers to the respondent concerning the need for the respondent’s compliance with the orders made by Benjamin J on 18 November 2005.  The respondent denies having received that letter from Kyrou Lawyers.  Even so, I accept that that letter was indeed sent, demonstrating the continued belief on the part of the applicant that she had not previously reached any contrary agreement with the respondent and that she still desired the respondent’s compliance with those outstanding orders.

    [27] Applicant’s affidavit 21 July 2009 paragraph 19 - 21

17. It was submitted to the court by the respondent’s counsel that to find against the respondent’s version of events would necessarily entail a finding that the respondent had perjured himself and fabricated documents. I reject that submission. The provisions of s 140 of the Evidence Act 1995 (Cth) enjoin the court to make findings of fact by reference to the orthodox civil standard of proof. Findings of fact which adopt the applicant’s version of events in preference to the version given by the respondent simply reflects a preference for the applicant’s version on the balance of probabilities – no more no less.

1. Counsel for the respondent submitted that the court would find the credit of the applicant wanting.  He cited several examples where the evidence of the applicant could be contrasted with the contents of documents in evidence.  It is true that there was some potential disparity between the evidence of the applicant and some documents.  However, the examples cited on behalf of the respondent were not compelling in my view.  My overall impression of the applicant, having heard her tested in cross-examination and observed her demeanour, was that she was a truthful witness.  Any peripheral inconsistency between her evidence and documents was plausibly due to genuine mistake or erosion of memory rather than deliberate deception.

2. I find as facts that the applicant wrote the letters to the respondent that she alleges, that she did not actually receive the letters that she denies receiving from the respondent, and that she honestly believes that she did not conclude any agreement with the respondent in either December 2005 or February 2006. I also conclude on the balance of probabilities that no agreement was reached between the parties about the resolution of their dispute over the quantum of the respondent’s costs and disbursements and the respondent’s compliance with the orders of Benjamin J made on 18 November 2005.

3. To the extent that those findings of fact conflict with the evidence of the respondent, I reject his evidence.

Default in compliance with Benjamin J’s orders

1. The case for the respondent was conducted on the basis that, although an agreement had allegedly been struck with the applicant on or about 1 February 2006, that agreement was never implemented.  The draft orders prepared by the respondent which were allegedly sent by him to the applicant under cover of his letter dated 1 February 2006 were never executed and returned by the applicant.  The respondent admits that to be so.

2. The respondent admits that he knew that the orders made on 18 November 2005 by Benjamin J needed to be discharged.[28]  That has never happened.

   [28] Respondent’s affidavit 8 July 2009 paragraph 77c

3. The respondent alleges that a component of the agreement that he reached with the applicant was that he would pay to the applicant the sum of $10,000.[29]  The respondent concedes that he has never made such a payment to the applicant.

   [29] Respondent’s affidavit 8 July 2009 paragraph 77d

4. In effect, the respondent has sat idly by in default of Benjamin J’s orders, notwithstanding his failure to implement the agreement he asserts having reached with the applicant.

5. As things stand, the default of the respondent is not simply a failure to comply with the orders of Benjamin J since 18 November 2005.  The respondent’s default of those orders is compounded by him having failed to rectify a state of affairs that actively repudiates the intention of the orders.  Order 2(d) made by Benjamin J effectively capped the respondent’s costs and disbursements at a total sum of $150,290 inclusive of GST.  The respondent admits having received and retained a greater sum, namely $180,000, since December 2004.

6. It was submitted to the court by the respondent’s counsel that the need for the respondent to comply with the orders of Benjamin J ceased once the applicant and respondent reached private agreement between themselves on 1 February 2006.  I reject that submission.  It is more than a little surprising that the respondent has retained nearly $30,000 more than the maximum amount to which he was entitled in contravention of the court’s orders when he readily admits that the agreement that he allegedly concluded with the applicant was never implemented.

7. The respondent was critical of the delay perpetrated by the applicant in her pursuit of compliance of the court orders.  If the applicant’s evidence is accepted, she did nothing to further her claim against the respondent between the time of her letter to the respondent dated 10 July 2006 and the time of the letter written to the respondent by Kyrou Lawyers on her behalf on 16 June 2008.  There was therefore a hiatus of nearly 2 years.

8. I observe in passing that any delay appears to have benefited the respondent.  He has had the benefit of the entire sum of $180,000 received by him in December 2004, subject to his payment of $70,000 from that sum in satisfaction of counsel’s fees.  Nor has he paid to the applicant the sum of $10,000 that he allegedly agreed to pay to her following the alleged agreement in February 2006. 

9. The applicant’s explanation for the delay was that she had been traumatised by both the litigious experience she had endured with her husband and the grievance over fees she had contested with the respondent.  I accept the applicant’s evidence and submissions that she was in a state of emotional fragility and was unable to face further confrontation to bring the matter to a head at an earlier time. The delay does not afford the respondent any ground for relief.

Conclusion

1. It will be apparent from the remarks I have already made that, by application of the civil standard of proof, I do not accept the respondent’s explanation for his continued non-compliance with the orders of Benjamin J made on 18 November 2005.  Consequently, his compliance with those orders ought to be enforced.  That will be achieved by ordering his compliance with those orders within a stipulated time frame, as the applicant has proposed.

2. I decline to make Order 2 as proposed by the applicant. It is superfluous because it merely replicates Order 3 made by Benjamin J, which continues to subsist, and will become operative once the respondent’s compliance with the orders is enforced.

3. It was conceded by the respondent’s counsel during submissions that if the court did not accept the respondent’s evidence about the alleged agreement with the applicant then the respondent would fail – both in his defence of the applicant’s application, and also in the prosecution of his application for leave to appeal out of time against the existing orders (being Orders 1-3 contained within his Response). In my view, that submission was sound.

4. As a consequence of the findings I have made, there will be no need to consider the authorities cited by the respondent in submissions dealing with the principles concerning the grant of leave to file an appeal out of time.

5. The respondent abandoned his pursuit of Order 4 set out in his Response as being unnecessary.

6. I will make orders sustaining the applicant’s Application and dismissing the respondent’s Response.

7. At the hearing of these proceedings the applicant was self-represented.  Although the applicant has been wholly successful with her application she has not borne any legal expenses in the prosecution of her case.  In the circumstances, there is no proper basis upon which to consider the prospect of an order for costs in her favour against the respondent.  Costs orders are compensatory, not penal.

8. The respondent has been wholly unsuccessful in his case.  There is no proper basis upon which he can seek an order for costs in his favour against the applicant.

9. For these reasons I make orders identified at the beginning of this judgment.

I certify that the preceding sixty-five (65) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Austin

Associate: 

Date:  31 July 2009