Sanders and Jameson (No. 2)

[2007] FamCA 1417

FAMILY COURT OF AUSTRALIA

SANDERS & JAMESON (NO. 2) [2007] FamCA 1417

FAMILY LAW – COSTS – Assessment

Family Law Act 1975 (Cth)

Cassidy & Murray (1995) FLC 92-633
Ridehalgh & Horsefield [1994] 3 All ER 848
Levick & Commissioner of Taxation (2000) 102 FCR 155

APPLICANT: Ms Sanders

RESPONDENT: Mr Jameson

FILE NUMBER: SYC 5122 of 2007

DATE DELIVERED: 23 November 2007

PLACE DELIVERED: Sydney

JUDGMENT OF: Loughnan JR

HEARING DATE: 23 November 2007

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Ward

SOLICITOR FOR THE APPLICANT:

COUNSEL FOR THE RESPONDENT:

SOLICITOR FOR THE RESPONDENT: Jones Mitchell Lawyers

Orders

1. The time in which an objection can be made to any bill served pursuant to the order for costs made on 1 August 2007 is extended for a period of 21 days from today's date.

2. The costs of the father of and incidental to the application filed 24 day of September 2007 and the appearance before Her Honour Justice Moore and Judicial Registrar Loughnan on 20 November 2007 be paid by the mother within six months from today's date, those costs to be as agreed between the parties or as assessed.          

3. The papers are referred to the Bar Association.

4. In relation to the costs decision made today the time in which either party can seek to review that decision is extended to a date 3 calendar months from today’s date.

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

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYC 5122 of 2007

MS SANDERS  

Applicant

And

MR JAMESON  

Respondent

REASONS FOR JUDGMENT

1. These are proceedings in the context of proceedings for parenting orders that came before me on 20 November 2007. There were some problems with the matter being fully determined on that day and the matter was put over to today's date.  On that day the matter had come before a judge of this Court and an application characterised as an application for review of a decision had been withdrawn before that judge and then the matter referred to me on an application under the slip rule.  That application I determined by dismissing it and then there were related issues to be dealt with. 

2. Firstly, there was an application to extend the time within which there could be an objection to an itemised bill issued for the quantification of costs ordered by me on an earlier date.  Then there was an application for the costs of the application for review which had been withdrawn that day and to the extent that that application also was an application under the slip rule, for costs relating to that. The orders sought by the father in his Response filed 16 November 2007 included the following:

   4.That the legal representative of the applicant, namely Mr Warwick Ward, be ordered to personally pay the costs incurred by the respondent as a result of this application in a case.

   5. In the alternative to order four, that the applicant be ordered to pay the respondent's costs of and incidental to this application in a case.  

3. The documents - although there was no specific mention of them on Tuesday last - appear to be the documents that came with the interim proceedings.  So there was an application filed 24 September 2007 which was supported by an affidavit of Warwick Ward, sworn 24 September 2007 and there was the Response that I have referred to and an affidavit of the father, sworn 13 November 2007, filed 16 November 2007. 

4. On Tuesday I reserved judgment and put the matter over to today.  The parties are both represented and it was confirmed that the matter was listed today just for delivery of judgment. 

5. Firstly, in relation to the extension of time to object to an itemised bill; there is no statutory criteria for the granting of an extension of time.  There are criteria in the Family Law Act 1975 in relation to some matters, for example, the extension of time to bring proceedings for a property settlement or maintenance out of the time, where the issue of hardship is identified but in relation to other extensions of time there is no criteria and it is not for me, as the High Court has reminded this Court on scores of occasions since 1976, to manufacture criteria.  The real issue is the attainment of justice in my view.  It has pleased the Court in similar circumstance to consider issues such as what hardship would be caused by not extending the time and in that regard whether there is a substantial issue to be examined.  In this case the issue is about the reliability of particular charges, the integrity of particular charges contained in itemised bill and so what the chances of success of the objection might be.

6. And similarly, it has pleased the Court once that is identified to consider matters that might go to the exercise of discretion in relation to an extension of time.  Examples given in other areas are there being an adequate explanation for delay and the question of the competing prejudices to the parties. 

7. There is no evidence on the basis of which I can identify whether there is hardship in the sense of there being a substantial issue to go forward, save to say that this relates to a costs order.  I was provided with an estimate on the date that I made the order of $1500 preparation plus attendance for the day.  I am told, and I think it would be an agreed fact, that the bill as rendered is something of the order of $4000.  The attendance for the day was by a solicitor so absent anything else, one might say there is something to be explained about the difference between those two figures.  So I think perhaps from that point of view one could say there is at least an issue to examine.

8. There is no explanation at all for the delay, although it appears in correspondence that there might have been a view thought that the review application itself in some way might have implied a stay, which of course it does not. It was submitted that if the review for example had been successful or if the application under the slip rule had been successful in the way that it was sought, that would have had a significant effect on the quantum of costs.

9. There is no explanation for delay beyond those facts. The prejudice to the mother is obvious because she does not get a chance to be heard in relation to quantum.  There is no prejudice identified to the father. 

10. There is a case to be made in relation to quantum, there is obvious prejudice to the mother and no prejudice to the father. On that basis the time should be extended. 

11. The next issue is the costs application. Section 117 of the Family Law Act 1975 provides that - subject to a number of sections - the parties to proceedings under the Act shall bear his or her own costs.  Subsection (2) says:

    If in proceedings under the Act the Court is of the opinion that there are circumstances to justify it in doing so the Court may, subject to sub-s.2(a), 4 and 5 and the applicable rules of Court, make such order as to costs and security for costs whether by way of interlocutory order or otherwise as the Court considers just.

    2A says:

    In considering what order if any should be made under sub-s.(2) the Court shall have regard to firstly the financial circumstances of each of the parties to proceedings, 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, the conduct of 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 fact, production of documents and similar matters. Whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the Court. Whether any party to the proceeding has been wholly unsuccessful in the proceedings.Whether any party - 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:Such other matters the Court considers relevant.

12. Relevant here too because of the application in the alternative against the mother’s counsel; is Rule 19.10 of the Family Law Rules, sub-r.(1) says:

    A person may apply for an order under sub-r.(2) against a lawyer for costs thrown away during a case for a reason including:

    (a)  The lawyer's failure to comply with these rules or an order.

    (b)  The lawyer's failure to comply with a pre-action procedure.

    (c)  The lawyer's improper and unreasonable conduct and

    (d)  Undue delay or default by the lawyer.

    The Court may make an order, including an order that the lawyer:

    (a)  Not charge the client for work specified in the order.

    (b)  Repay money that the client has already paid towards those costs.

    (c)  Replay the client any costs that the client has been ordered to pay to another party.

    (d)  Pay the costs of a party or repay another person's costs found to be incurred or wasted.

13. And then there is 19.11 which says:

    Before making an order the costs against the lawyer or other person who is not a party to a case, the Court must give the lawyer or other person a reasonable opportunity to be heard.  If a party who is represented by a lawyer is not present when an order is made, the costs to be paid by the party or the party's lawyer, the party's lawyer must give the party written notice of the order and an explanation for the reason for the order.

14. There is case law in relation to orders against practitioners.  In Cassidy & Murray (1995) FLC 92-633 the Full Court dealt with an appeal against an order for costs made against a solicitor personally in circumstances where the solicitor had sent a letter of complaint to various authorities, including the trial judge, prior to the conclusion of proceedings. That meant that the trial thereafter was aborted and costs were thrown away. It was a situation where as the final judgment came through his fax machine, the solicitor blasted off a letter in very critical terms in relation to the judge and inter-alia, sent a copy of the letter to the judge not thinking that there were still issues of costs and other things to be determined by that same trial judge.

1. The Full Court said “In Ridehalgh &. Horsefield [1994] 3 All ER 848 at 855 Sir Thomas Bingham MR said:

   Solicitors and barristers may, in certain circumstances, be ordered to compensate a party to litigation other than the client for whom they act for costs incurred by that party as a result of acts done or admitted by the solicitors or barristers in their conduct of the litigation.  The argument we have heard discloses a tension between two important public interests.  One is that lawyers should not be deterred from pursuing their client's interest by fear of incurring personal liability to their client's opponents, that they should not be penalised by orders to pay costs without fair opportunity to defend themselves, that wasted cost orders should not become a backdoor means of recovering costs not otherwise recoverable against the legally aided or impoverished litigants and that the remedy should not go unchecked to become more damaging than the disease.  The other public interest recently and clearly affirmed by the Act of Parliament is that litigants should not be financially prejudiced by unjustifiable conduct of litigation by their or their opponent's lawyers.  The reconciliation of these public interests is our task in these appeals.  Full weight must be given to the first of these public interests but the wasted costs jurisdiction must not be emasculated. 

2. Coming back to Cassidy; the Full Court largely adopted the comments of the Master of the Roll saying:

   Whereas some of the cases say that there must be a serious dereliction of duty by the solicitor before a costs order can be made against that solicitor.  In our view, the matters identified by the Master of the Rolls in Ridehalgh v. Horsefield accurately reflect the law, which in its application to this jurisdiction can be set out as follows:

   Firstly, pursuant to s.117(2) of the Family Law Act, the Court has jurisdiction to make an order for costs against a solicitor or a non-party.

   Two; the Court should not make such an order without giving the person to be affected by the order an opportunity to be heard.

   Three; the Court may make an order for costs against a solicitor without the necessity to establish that the solicitor has been guilty of serious professional misconduct.

   Four; the solicitor has a duty to the Court to promote the interests of justice while at the same time attending to the needs of the solicitor's client.

   Five; 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.

   Six; the jurisdiction is compensatory.

3. Going on in Cassidy the Full Court said:

   Whilst the English cases talk of the conduct needing to be serious or gross, it adds nothing to the threshold at serious or gross, rather than at serious; gross being a more extreme term than serious.  We think this represents an appropriate balance between the competing public interest involved, namely the concern that lawyers should not be deterred from pursuing their client's interest for fear of being made personally subject to orders for costs and the principle that innocent parties should not be occasioned costs for which they would not otherwise be liable as a result of inappropriate conduct of solicitors. 

4. There is a later case of Levick & Commissioner of Taxation, the Full Court of the Federal Court (2000) 102 FCR, 155:

   We accept the statements of principle made in the cases we have cited.  We endorse the emphasis on caution in making orders against solicitors, particularly as it will often be difficult for a Court to know all the details and circumstances of the solicitor's instructions.  We share the concern expressed by Master of the Roll Donaldson and Lord Justice Dylan in Orchard about the risk of a practice developing whereby solicitors endeavour to browbeat their opponents into abandoning clients or particular issues or arguments for fear of personal costs order being made against them.  We agree such conduct might amount to contempt of Court.  Having said that, it is equally important to uphold the right of a Court to order a solicitor to pay costs wasted by the solicitor's unreasonable conduct of a case.  What constitutes unreasonable conduct must depend on the circumstances of the case.  No comprehensive definition is possible.  In the context of instituting or maintaining a proceeding or defence we agree with Goldberg J that unreasonable conduct must be more than acting on behalf of a client who has little or no prospect of success.  It must be something akin to an abuse of process.  That is, using proceedings for an ulterior purpose or without any or any proper consideration for the prospects of success.  In the present case, Hill J inferred that the subject arguments clearly originated with the lawyers.  That is, that was a Mr Levick and a Mr Fitzgibbon.  No challenge can be made to that inference.  So this is not a case like Orchard where a difficult case was taken to a lawyer by a client who wished it to be pursued in the Court.  Neither it is the case like that contemplated in Ridehalgh v. Horsefield where the lawyer had to present on instructions a case which he regards as bound to fail.  This is a case where the lawyers themselves thought up the legal points and advanced them on behalf of the client.  It is unreasonable in the sense of a dereliction of duty to both client and the Court for any lawyer to take that course without first being satisfied that the points are at least seriously arguable.  We agree it is not necessary in the present case that the lawyers be satisfied that the points would succeed but it was necessary they be satisfied that there was a rational basis upon which they might succeed.  The situation would be different if the viability of the points depended on one or more unresolved questions of fact.  In that situation, lawyers might be entitled, acting reasonably, to notify the points against the possibility that the facts when determined would lend support to them.  In the present case there was no unresolved issue of fact.   By letter dated 20 July 1999, which was annexed to an affidavit made by Mr Levick on 4 August 1999, the Deputy Commissioner of Taxation had pointed out: "The Australian Taxation Office is not the entity which either issues assessments or collects outstanding taxes.  These powers and rights are exercised by the Commissioner of Taxation, the Deputy Commissioner of Taxation and their delegates and authorised officers." 

5. Once again, the Full Court in the Federal Court saying:

   While we again emphasis that the jurisdiction to order costs against a solicitor in respect of an unsuccessful issue held to have been pursued in a serious dereliction of the solicitor's duty, ought to be exercised sparingly and with great caution.  We think it was open to Hill J to take that course in this case.  The question whether he should do so was one committed to his Honour's discretion.  It has not been demonstrated that his Honour erred in the exercise of that discretion. 

6. The submissions before me in relation to this issue were refreshingly brief on both sides. No significant submissions were made in support of the costs order at all, save the obvious point that the withdrawal of an application late will often have automatic costs consequences and by reference to s.117 - the application was wholly unsuccessful. There were no submissions made in relation to the order being against the practitioner personally. Similarly, there were no submissions against the order for a personal order bar a comment that counsel would like to know how much it was and he would prefer that the order not be made.

7. I know nothing of the father's financial circumstances. I know nothing of counsel's financial circumstances.  It is asserted in the mother's case that she has $100 and she is pregnant and I think it would be safe for me to infer that the evidence would be that she is not in paid employment. There is no suggestion of any proceedings being brought about by reason of a breach of Court orders. 

8. As to offers of settlement in writing; there is a deal of correspondence dealing with settlement of the costs issue arising from 1 August, offers in relation to a compromise sum. I think $3000. There were two letters on behalf of the husband's solicitors proposing a payment of $3000 and one might say, it could have been sensible for that offer to be accepted. So there were offers of compromise. And it is clear from letters the other way that there was an anticipation and perhaps an implied request that the consideration be given to a stay in relation to the enforcement of the costs and also some assertions were made in relation to the prospects of success of the slip rule application.

9. The mother was wholly unsuccessful in that her review application to the extent that it was that, was withdrawn and her application under the slip rule, to the extent that the application constituted such an application, it also failed. 

10. There is nothing about the conduct of those two proceedings that comes to attention.  There is no suggestion that documents were filed late.  There was cooperation between practitioners in relation to the matter coming over to today's date.  Nothing else that comes to attention in relation to that. 

11. The key issue in relation to costs is that the applications were wholly unsuccessful. And in those circumstances, in my view, an order should be made. We are well past the situation that the generality of s.117 applies to. In many cases both parties are applicants. Here we are dealing with the costs arising out of an event which itself was deemed to be an event worthy of a costs order. In circumstances where the further events were both unsuccessful then a costs order should be made.

1. As to the question of whether Mr Ward should bear the costs personally; as I say, there were no submissions made as to why that would be and there were no submissions made as to why it would not be.  And from what I have said from the authorities it is clear that this is a remedy available - I am not saying this was the motivation for it - to simply avoid the problems of an impecunious party.

2. It is not a remedy that is available where there has been an error of judgment in relation to proceedings.  It is a remedy which involves something short of a serious professional misconduct but where it is clear that the lawyer has interposed his or her judgment beyond instructions. Because of the way the matter has been conducted, there is no evidence that would enable me to make that judgment.  And it is a matter that causes me some disquiet I must say.  In other words; I think there is a person missing from the court room. The evidence about instructions given by a client or the detail of the advice given would presumably come from the mother and she is not here. 

3. But I am obliged to deal with the matter as it stands and there are some issues about it.  I referred in the substantive proceedings to it being akin to an abuse of process to bring proceedings in a place which is not the natural forum of proceedings.  This was a case where there was a very young child and the family lived in south east Queensland.  The mother had decided that she would leave south east Queensland and came to New South Wales and I think I was told - if I am not confusing cases - perhaps in the Illawarra area. She had reasons that she said were compelling including the lack of proper family support in south east Queensland. She was not able to bring the child with her.

4. Then proceedings were launched here on her behalf. In those circumstances, in my view, the natural forum for the proceedings, the place where any ICL would be appointed, the place where the counsellors would best be located, and other experts, was south east Queensland. 

5. I did not intend the words, "abuse of process" in that context to be akin to the abuse of process that the Master of the Rolls referred to. The reference there is to bringing proceedings for a purpose other than that which the proceedings were intended for. I cannot infer that commencing these proceedings here was not a step taken bona fides. So, in my view, it is not a situation where there is a clear abuse of process. Further, I am not privy, as I have said, to the communications that have passed between Mr Ward and his client. I do not have an opportunity to hear from his client in relation to the matter.

6. In my view the circumstances do not constitute the circumstances for an order against a practitioner, that are identified in the authorities or in the formulation that is set out in the Family Law Rules.  The rules refer to a failure to comply with the rules or an order. There is no sense of that.  As to the failure to comply with pre-action procedure; that is a complicated issue because we are now in a situation where the legislature has imposed steps outside the Court system and there is an issue I suppose about how those steps sit with the pre-action procedures that are identified in the practices of this Court. In relation to the legislature's steps, which include reference to a Family Relationship Centre, there are exemptions which may have been said to apply in this case, including urgency.

7. As to improper or unreasonable conduct by the lawyer; I cannot make that finding.  There are matters that are of concern. For example; there is a dispute between Mr Ward and the father about the import of communication that occurred directly between them. The issue is whether Mr Ward sought to arrange a meeting directly with the father in circumstances where he knew the father had solicitors acting for him. That, in my view, would be inappropriate.  But there is a dispute of fact about it and I cannot determine it.  Mr Ward said that was not the intention of the communication.  The father says that is the way he understood the communication.  In this situation I am not permitted simply to pick one version of events.

8. There is a reference in the correspondence to Mr Ward offering - I think this is fair to say - to travel to Queensland himself and to bring the child to New South Wales for the purposes of the child spending time with the mother.  That is an unusual thing I must say if I have not misread that communication. He wrote:

   Please let me know if you want me to bring the child to Sydney?

9. Now, one might say that is a very unusual position for a practitioner to put himself in but I cannot say that it amounts to improper or unreasonable conduct. 

10. As to undue delay or default by the lawyer; in my view there is no suggestion of that.  In terms of a remedy that is to be applied sparingly, I cannot make the findings that would justify an order against Mr Ward personally.

11. There should be an order for costs and again, I am not in a position to make an estimate of quantum. I have not been offered a calculation so again the costs will need to be quantified and from that point of view the mother may well need some time to deal with that. 

12. Secondly, it was the issue of when the payment should be made. The fact is, although I think the background evidence was that each of the parties was in paid employment at some time in the past, not too distant past, she is close to confinement in relation to the parties' second. I can imagine that her financial circumstances will at least be very qualified.  So in that regard and subject to the quantification of costs, I propose to give her six months to make the payment. 

13. I have referred to my concern that the mother is not present or independently represented today. My concern is that there may have been a denial of natural justice to her. Again, I am not privy to what has happened but what I propose to do is to refer the papers to the Bar Association for consideration.  My worry about it is the obvious one. The application for costs in the alternative create a conflict of interest between the barrister and the client.  Now it may be that the mother was given a chance to obtain independent legal advice.  It may be that she was invited to be here today and it may be that she chose not to be here today. This is not a case as I said before - where fulsome submissions were made either for or against the order, so it was not the case where Mr Ward, today, or on the previous occasion made submissions calculated to sway an order against his own client. However, I am left very concerned that because of a conflict of interest there may have been a denial of natural justice to the mother in relation to these proceedings. There are also the issues that the father raises in relation to the correspondence conducted directly between Mr Ward and the father. 

14. I acknowledge that I have never been in the position that Mr Ward has been in and that it must be very difficult taking direct instructions in these circumstances. For example, the correspondence from Mr Ward is mostly handwritten so there are problems of not having the support through an instructing attorney and the separation that usually occurs between an advocate and the client was not available here. Mr Ward has corresponded directly with the other client. I cannot infer that he was motivated by anything other than the best interests of his client, but one can just see from the flavour of the correspondence it has caused a level of complexity that we do not ever usually have to see. For those reasons I propose to refer the papers to the Bar Association.  That does not mean I make any recommendations or invite some particular thing.  I am not qualified to do it.  I do not have the evidence to do it and I do not know, to be frank, what the ethical rules are in relation to taking direct instructions. I am so worried by the circumstances of this case that a referral is justified.

15. Finally, because of what I have said, in my view the mother needs an additional opportunity to revisit the orders that I make today, if she is aggrieved about them.  In relation to the costs order made today, I extend the time within which the mother can seek to review that decision to three calendar months from today's date

I certify that the preceding forty (40) paragraphs are a true copy of the reasons for judgment of Judicial Registrar Loughnan

Associate

Date:  6 December 2007