REANEY & PAGGETT
[2021] FCCA 190
•4 February 2021
FEDERAL CIRCUIT COURT OF AUSTRALIA
| REANEY & PAGGETT | [2021] FCCA 190 |
| Catchwords: FAMILY LAW – Costs – Application for the solicitor for the applicant to personally pay the respondent’s costs on an indemnity basis – Application granted |
| Legislation: Family Law Act 1975 (Cth), s.117 |
| Cases cited: Fitzgerald v Fish (2005) 33 FamLR 123 Z (A Solicitor) v Limousin (2010) FLC 93-433 Panwar & Panwar and Anor (No. 2) [2020] FamCA 724 Forster & Forster (2012) Fam LR 77 White Industries (Qld) Pty Ltd v. Flower & Hart (a firm) (1998) 156 ALR 169 InEx Christmas Islanders Association Inc v Attorney-General (Cth) (No 2)(2006) 233 ALR 97 |
| Applicant: | MR REANEY |
| Respondent: | MS PAGGETT |
| File Number: | BRC 13799 of 2019 |
| Judgment of: | Judge Lapthorn |
| Hearing date: | 15 April 2020 |
| Date of Last Submission: | 5 November 2020 |
| Delivered at: | Brisbane |
| Delivered on: | 4 February 2021 |
REPRESENTATION
| Solicitors for the Applicant: | C Lawyers |
| Solicitors for the Respondent: | Lloyds Solicitors |
ORDERS
That Mr C, solicitor for the applicant, personally pay the respondent’s costs of the Application in a Case filed 5 March 2020 and the Application in a Case filed 1 May 2020 on an indemnity basis within 60 days of the date of these orders.
IT IS NOTED that publication of this judgment under the pseudonym Reaney & Paggett is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT BRISBANE |
BRC 13799 of 2019
| MR REANEY |
Applicant
And
| MS PAGGETT |
Respondent
REASONS FOR JUDGMENT
On 21 October 2020, I dismissed the applicant's Applications in a Case for the appointment of a litigation guardian (the applications). The respondent had in her submissions in response to the applications sought an order that the applicant's solicitor, Mr C, personally pay her costs of the applications on an indemnity basis (the costs application). I directed the solicitor for the applicant to make written submissions in relation to the costs application and made provision for the respondent to file any submissions in reply. This judgment relates to the costs application only and should be read in conjunction with my judgment delivered on 21 October 2020.
By way of background the applicant filed an Initiating Application for property adjustment orders on 13 November 2019 in relation to a de facto relationship between him and the respondent. On 5 March 2020 the applicant’s solicitor filed an Application in a Case seeking that he be appointed the applicant’s litigation guardian. He filed a further Application in a Case on 15 April 2020 seeking the appointment of Mr D as the litigation guardian although no notice of discontinuance was filed in relation to the earlier Application in a Case. The respondent argued that it was entirely inappropriate for the solicitor for the applicant to propose the appointment of himself as the litigation guardian; purport to give evidence of his client’s mental state; and to bring the application in the absence of proper evidence of the applicant’s capacity.
Ordinarily each party to proceedings under the Family Law Act would bear his or her own costs.[1] However if the court is of the opinion that there are circumstances justifying a costs order the court may make such order as it considers just.[2] In determining whether to make such an order the court is required to have regard to the following factors set out in section 117(2A):
[1] Section 117(1)
[2] Section 117(2)
[117(2A)] In considering what order (if any) should be made under subsection (2), the court shall have regard to:
(a) the financial circumstances of each of the parties to the proceedings;
(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;
(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;
(d) whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the court;
(e) whether any party to the proceedings has been wholly unsuccessful 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; and
(g) such other matters as the court considers relevant.
Neither party was legally aided although the solicitor for the applicant informed the court he was acting pro bono. The respondent argued that the applicant’s lack of success[3] and the obvious lack of merit[4] warrant the making of the costs order. I am satisfied that these two factors are the most relevant when considering the costs application. In Fitzgerald v Fish[5] the Full Court[6] said:
…Nowhere in subs (2A) or elsewhere in s 117, is there any prescription that more than one factor must be present before an order for costs is made nor of comparative weight of the factors set out in subs (2A). As a consequence, there is nothing to prevent any factor being the sole foundation for an order for costs.
[3] Section117(2A)(e)
[4] Section 117(2A)(g)
[5] (2005) 33 FamLR 123 at [41]
[6] Kay, Warnick and Boland JJ
In this particular case I am asked to make an order that the solicitor for the husband personally pay the wife’s costs rather than the husband. The wife argued that the solicitor for the husband brought an unmeritorious application when seeking the appointment of a litigation guardian and acted without instructions in doing so. There is no doubt the court has power to make such an order.[7]
[7] Z (A Solicitor) v Limousin (2010) FLC 93-433
It was submitted by the respondent that she incurred significant and unnecessary costs responding to an application that was flawed from the outset. It was also submitted that the applicant’s solicitor should not have filed the Application in a Case for the appointment of a litigation guardian without sufficient evidence to ground it and certainly not by contending for the applicant’s solicitor to act as the litigation guardian. It was further submitted that the solicitor acted without instructions.
Regrettably the submissions written by the solicitor for the applicant appeared more like an attempt to give evidence than present an argument against an order for costs. Notwithstanding that criticism I am able to determine the matter on the material provided. It is clear that the solicitor for the applicant was sympathetic to the husband’s poor financial circumstances and his belief that he was entitled to a property adjustment order. I do not criticise the solicitor for filing the Initiating Application as it is clear that he received instructions to do so. At least at first glance there was some merit in making that application. The problem arose when the solicitor became concerned as to the applicant’s reaction to the respondent’s response documents and filed the Application in a Case seeking a litigation guardian.
The respondent had alleged that the applicant’s claim as to the length of the relationship was wrong and that he had been claiming a single person’s Centrelink benefit during some of the period he claimed to be in a relationship with her. The solicitor for the applicant made the following comment in his written submissions:
[38] The intimidation by the Respondent towards the Applicant had the desired effect. The Applicant became emotional from that point on and was unable to give clear instructions to our firm. We believe that as an Officer of the Court has a responsibility to seek a just and equitable outcome for any member of our Society as per the Family Law Act 1975.
[39] We believe that if cost order goes in place against our firm it may send a clear message to all legal practitioners to abandon a vulnerable member of our Society knowing full well that an injustice will occur. Panwar & Panwar and Anor (No. 2).[8]
[8] [2020] FamCA 724
Although I was referred to the decision of Panwar, I was unable to find anything in the judgment to assist the applicant’s solicitor. The reference to intimidation by the respondent is not only emotive in language, it misrepresents the respondent’s actions in simply giving her evidence in light of the claim made by the applicant in the substantive application. This sort of submission is inappropriate.
In my judgment dismissing the application for the appointment of a litigation guardian I accepted the respondent’s submissions that the solicitor for the applicant did not file any medical evidence to support the application and relied on his own assertions and those of the person proffered to become the litigation guardian. It was submitted in this application for costs that the solicitor for the applicant should have been aware of the need for medical evidence. As I pointed out in the earlier judgment there may be circumstances when the court will make an order for a litigation guardian in the absence of medical evidence but the court must take great care in doing so.[9] The difficulty in this case arose when the solicitor for the applicant purported to give unqualified evidence as to the applicant’s mental health. He should have been well aware he could not do so and nor could Mr D. It would seem the solicitor lost all sense of objectivity in providing his professional services to the applicant. In doing so he not only failed his client, he also failed in his duty as an officer of the court. It did not seem to dawn on him that he could not act as his client’s lawyer and be the litigation guardian at the same time.
[9] See Forster & Forster (2012) Fam LR 77
Whilst errors can be made by even the most prudent lawyer, in this case the solicitor pressed on with the application even after being alerted to the difficulties in the case by the legal representatives for the respondent. The case lacked merit from the start and should have been abandoned once the lack of merit had been brought to the solicitor’s attention. Rather than abandoning the claim altogether an amended application was filed seeking the appointment of Mr D as the litigation guardian rather than the solicitor himself. No medical evidence was filed and the court was left in almost the same position as the earlier application.
In White Industries (Qld) Pty Ltd v. Flower & Hart (a firm)[10] Goldberg J said:
There have been dicta in a number of cases which have suggested that commencing or maintaining proceedings with no or no substantial prospects of success enlivens the jurisdiction to order a solicitor to pay the costs of a party. However, a proposition expressed so broadly must be treated with considerable caution as it exposes a tension with the important right of a person to have a case conducted in the courts irrespective of the view which his or her legal adviser has formed about the case and its prospects of success. The courts must be open to any party who claims that he or she has been wronged and seeks to vindicate a right or to compel the enforcement of an obligation. In such circumstances clients should be entitled to expect that the practitioners acting for them will conduct their litigation without any conflict of interest and with a view, consistently with their duty to the court, to putting the client’s case as instructed. A practitioner should not be looking over his or her shoulder wondering whether what the practitioner proposes to do as part of the strategy, tactics and conduct of the litigation may result in the practitioner being visited with a costs order: cf Ridehalgh v Horsefield [1994] CH 205 at 226. Ordinarily, such a situation would be quite oppressive and unacceptable in the court system as we presently know it. Nevertheless, practitioners have a duty to the court to ensure that the court’s process is not abused and used for improper or ulterior purposes.
I consider there are limitations on the proposition that commencing or maintaining proceedings which have no or substantially no prospects of success may result in a costs order being made against a practitioner. Something more must be added to the equation such as, for example, an ulterior purpose, abuse of process or a serious dereliction of duty. However, before turning to these issues it is necessary to analyse those cases from which it is said that this proposition is derived
[10] (1998) 156 ALR 169 at 231
After considering a number of authorities Goldberg J concluded:[11]
…the jurisdiction to order costs against an unsuccessful party’s solicitors is enlivened when they have unreasonably initiated or continued an action when it had no or substantially no prospects of success but such unreasonableness must relate to reasons unconnected with success in the litigation or to an otherwise ulterior purpose or to a serious dereliction of duty or serious misconduct in promoting the cause of and the proper administration of justice. Further, the cases establish the proposition that it is a relevant serious dereliction of duty or misconduct not to give reasonable or proper attention to the relevant law and facts in circumstances where if such attention had been given it would have been apparent that there were no worthwhile prospects of success.
[11] Ibid at 239
I am satisfied that not only were the Applications in a Case lacking in merit from the outset, the solicitor for the applicant was derelict in his duties to his client and the court in pressing on with the applications when it should have been obvious to him that they would not succeed.
A personal costs order was made against a solicitor in In Ex Christmas Islanders Association Inc v Attorney-General (Cth) (No 2).[12] In that case French J found:[13]
[12] (2006) 233 ALR 97
[13] Ibid at 105
[26] ……
There is no basis for any suggestion that the shortcomings of the application and the way in which the proceedings were conducted has anything to do with the applicants themselves. The circumstances of this case make it highly improbable that the practitioner advised his clients of the hopelessness of the application and that he was instructed to proceed with it notwithstanding.
His Honour went on to say:[14]
[31] In my opinion, the formulation of the application and the presentation of the case indicated that the practitioner acting for the applicants, as both their solicitor and counsel, was so incompetent in the conduct of the application as to be seriously in breach of his duty to his clients and the court. He had failed to give proper consideration to the essential elements of the judicial review application which he presented. The applicants, evidently unsophisticated people entirely in his hands, should not have to bear the burden of a costs order in favour of the respondent in this case.
[14] Ibid at page 106
Similarly the solicitor in the case before me has failed in duties. I am satisfied his conduct alone is responsible for the respondent incurring the costs she has and warrants the making of a costs order. I do not consider it appropriate for the applicant to bear those costs. They should be borne by his solicitor.
It was argued that in the special circumstance of this case the costs order should be on an indemnity basis rather than the usual party and party basis.
In Colgate Palmolive v Cussons[15] Sheppard J considered the jurisprudence in relation to the question of costs and confirmed the long standing practice is that such orders are to be on a party and party basis. His Honour held that the court must not make an order on another basis unless the circumstances of the case warrant it departing from the usual practice. In exercising its discretion the court would look to the particular facts and circumstances of the case and consider whether there is “some special or unusual feature in the case to justify the court in departing from the ordinary practice.”[16]
[15] (1993) 118 ALR 248
[16] Preston v Preston [1982] 1 All ER 41
In this case I am so satisfied. The approach taken by the applicant’s solicitor, although motivated by a desire to help his client, lacked any objective and professional analysis of the merits. The respondent was put to an unnecessary expense that cannot be properly compensated by an order for costs on the usual terms. I will therefore order that the applicant’s solicitor personally pay the respondent’s costs on an indemnity basis. Although the order sought was for the solicitor to pay the costs within 21 days I consider 60 days to be a more appropriate amount of time and will order accordingly.
I certify that the preceding twenty (20) paragraphs are a true copy of the reasons for judgment of Judge Lapthorn
Associate:
Date: 4 February 2021
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