SHEEHAN & SHEEHAN
[2019] FCCA 1085
•26 April 2019
FEDERAL CIRCUIT COURT OF AUSTRALIA
| SHEEHAN & SHEEHAN | [2019] FCCA 1085 |
| Catchwords: FAMILY LAW – Injunction to restrain respondent’s solicitor from continuing to act – respondent’s home suffers storm damage necessitating that she secure alternative accommodation – respondent has limited financial means – applicant bears costs of alternative accommodation – respondent’s solicitor acts for respondent in claim for indemnity against home insurer – offer received from insurer – offer confines indemnity for alternative accommodation to the costs of a further four weeks accommodation – applicant told that insurer’s offer has resulted in return of settlement cheque and alternative dispute resolution with insurer – applicant not told of limit placed on indemnity – applicant continues to bear accommodation costs for extended period – respondent compromises issues in dispute with insurer and accepts lesser sum than that necessary to reimburse accommodation costs to the applicant – respondent settles insurance claim without consulting applicant – insurer pays settlement monies to respondent’s solicitor – part of settlement monies applied by respondent in discharge of liability for legal costs – balance of monies transferred to respondent’s family law file – where, despite repeated request, communications with insurer not disclosed or not sufficiently disclosed – whether solicitor should be restrained from continuing to act – applicable principles to claim for injunction based upon whether conflict of interest, threatened disclosure of confidential information and supervisory jurisdiction over officers of court – post-hearing submission not to be considered – application dismissed – costs – case management required. |
| Legislation: Legal Profession Uniform Law Australian Solicitors’ Conduct Rules 2015, rr.3.1, 4.1.1, 4.1.4, 10, 12.1, 27.1, 27.2. |
| Cases cited: Bahonko v Nurses Board of Victoria (No 3) [2007] FCA 491 Belgravia Nominees Pty Ltd v Lowe Pty Ltd (No 5) [2016] WASC 263 Black v Taylor [1993] 3 NZLR 403 Bowen v Scott [2004] WASC 94 Bransdon and Davis and Gilbert (2007) FLC 93-328 Carindale Country Club Estate Pty Ltd v Astill [1993] FCA 218 Carr v Finance Corporation of Australia Ltd [No 1] (1981) 147 CLR 246 CGU Insurance Ltd v AMP Financial Planning Pty Ltd (2007) 235 CLR 1 Coal & Allied Operations Pty Ltd v Australian Industrial Relations Commission (2000) 203 CLR 194 Knight v FP Special Assets Ltd (1992) 174 CLR 178 Kooky Garments Limited v Charlton [1994] 1 NZLR 587 Texts referred to: Dal Pont, Law of Costs, 4th Ed |
| Applicant: | MR SHEEHAN |
| Respondent: | MS SHEEHAN |
| File Number: | MLC 3278 of 2018 |
| Judgment of: | Judge A Kelly |
| Hearing date: | 29 March 2019 |
| Date of Last Submission: | 29 March 2019 |
| Delivered at: | Melbourne |
| Delivered on: | 26 April 2019 |
REPRESENTATION
| Counsel for the Applicant: | Ms Smallwood |
| Solicitors for the Applicant: | Lander & Rogers |
| Solicitor advocate for the Respondent: | Mr Dudderidge |
| Solicitors for the Respondent: | Nevile & Co. |
ORDERS
The Application in a Case filed on 5 March 2019 be dismissed.
The applicant’s costs of and incidental to this application, the costs of the mention hearing on 26 October 2018 and the costs of the trial adjourned on 1 November 2018 be reserved.
The mention listed for 10.00 am on Monday, 6 May 2019 be vacated.
By 4.00pm on Friday, 10 May 2019, the applicant serve in electronic format, a document which itemises each asset, liability, superannuation or other interest in any property which he contends comprise the Asset Pool the subject of the application for an adjustment of property interests pursuant to s 79 of the Family Law Act 1975 (Cth) (Itemised List).
By 4.00pm on Friday, 31 May 2019, the respondent serve in electronic format, a document which addresses and annotates each entry in the applicant’s Itemised List as necessary indicating whether:
(a)she agrees or disagrees with each item in that list and why;
(b)she contends there are any further assets, liabilities, superannuation or other interests in any property which she contends comprise the Asset Pool the subject of this proceeding.
By 4.00pm on Friday, 14 June 2019, the applicant file and serve in electronic format, a consolidated Itemised List indicating where he agrees or disagrees with each item in the respondent’s annotated list served pursuant to paragraph (5) of this Order.
The proceeding is listed for hearing at 10.00 am on 28 October 2019, before Judge Blake.
IT IS NOTED that publication of this judgment under the pseudonym Sheehan & Sheehan is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLC 3278 of 2018
| MR SHEEHAN |
Applicant
And
| MS SHEEHAN |
Respondent
REASONS FOR JUDGMENT
Introduction
By Application in a Case filed on 5 March 2019, the applicant husband seeks an injunction to restrain the respondent wife’s solicitor from acting in this proceeding. Ancillary relief is sought which is directed to secure the result that certain costs are paid, either by the respondent’s solicitor or the respondent. For the reasons which follow, I have concluded that the application should be refused. In substance, applying the caution which is required in an application of this kind, no exceptional circumstances are established to warrant the grant of the relief sought. The relief claimed arises from the conduct of the respondent and her solicitor respecting the handling of an insurance claim. In particular, the applicant claims that he was not informed, whether adequately or at all, that the insurer had declined to afford indemnity for certain accommodation costs being paid by the applicant for the benefit of the respondent and that she, together with her solicitor, failed either deliberately, or in a timely way, to inform him of these facts, leaving him to continue to incur such costs. The applicant further complains that the respondents conduct in settling the insurance claim has produced the result that he has not been indemnified for those accommodation costs.
Overview
The parties who are aged in their early fifties were married in 1997 and separated in 2017. There are two teenage daughters of their marriage.
The elder of the two children was thought to have, and may yet be shown to have, particular ability as a sports person. To that end she had attended a sports academy in Country A. The applicant and the elder child lived in Country A for a time until they were advised that her career prospects in sports were not as she had hoped. Ultimately, the applicant and/or the sports academy formed the view that the child should withdraw from that program and accordingly, to the child’s significant regret, plans were made for her to return to Australia with the applicant. They returned to Australia on … 2017.
Following the parties separation, on 27 March 2018, the applicant commenced a proceeding seeking parenting orders and property relief. The elder child has, to this point, refused further communication with the applicant, apparently blaming him for her withdrawal from the sports academy and her return to Australia. While the applicant says that he has accordingly discontinued his application for parenting orders, no explanation was given in relation to the position of the younger child.
As concerned property orders, the Initiating Application sought a just and equitable adjustment of property interests pursuant to s 79 of the Family Law Act 1975 (Cth) (Act).
By her Amended Response filed on 19 March 2019, the respondent seeks orders that she retain, to the exclusion of the applicant, all property held in her name. A practical effect of that relief would be to preserve in the respondent her interests as registered proprietor of the fee simple estate in the former matrimonial home, being a property in Property B (Property). In addition, the applicant also seeks orders for:
a)the applicant to transfer to the respondent whatever interest he may have in that Property and that he assume all liability for the registered mortgage over that Property; and
b)the applicant to pay her a sum of $816,931; and
c)the respondent to retain whatever interest the applicant may claim in his accounting practice and to indemnify her in respect of all liabilities associated with that practice.
In the course of submissions, it was put that the parties most significant assets comprise the Property and the applicant’s 80% interest in an accounting practice as to which, however, it was said that:
a)the net equity in the Property is ~$500,000.
b)the accounting practice has been valued at $2M but is subject to a secured debt to the National Australia Bank of $2.114M with a resulting negative equity of ~$114,000.
For completeness, I note that the applicant has superannuation of ~$22,000 and that the respondent’s superannuation is ‘unknown’.
In the result, on the applicant’s case, after setting off the negative equity of ~$114,000 against the equity in the Property of $500,000 the Asset Pool has a worth of less than $400,000. The respondent contends that this is an inaccurate summary of the position (as evidenced by the relief which is sought in the Amended Response). How the respondent will prove the position for which she contends was not explored. However, from the applicant’s perspective, the immediate objective would seem to entail orders for the sale of the Property and discharge of the mortgage.
Of significance is that, in the context of the parties’ Asset Pool, the applicant contends for a result that the respondent should obtain 100% of the net Asset Pool. Precisely what orders are needed to secure such a result was not considered in the course of the present application.
Orders regulating the conduct of the proceeding have been made on 17 April, 9 July, 26 October and 1 November 2018. Some of those orders were made to address issues which had arisen in the circumstances described below. The matter is presently the subject of a Mention on 6 May 2019 and a Final Hearing on 28 October 2019.
As noted, by the Application in a Case filed on 5 March 2019, the applicant seeks orders for the removal of the respondent’s solicitor. The application was opposed by the respondent and her solicitor, Mr Dudderidge, who appeared on the application. While the parties’ affidavits filed in relation to this application are summarised below, their evidence has not yet been tested.
History of events
It was common ground that the respondent is registered as proprietor of the fee simple estate in the Property. As such the respondent had an insurable interest in that Property which is one of the lots in a body corporate. Although the position is not entirely clear, it seems that some insurance in relation to the Property is held by the Owners Corporation. Those facts combined to support the submission by Ms Smallwood of counsel for the applicant that he was neither the registered proprietor of the Property nor a person who held any insurable interest under a contract of insurance in relation to the subject damage. To recognise as much cannot, however, distract attention from the parties’ statutory claims to an adjustment of property interests under the Act.
The insurance claim referred to at [1] above apparently arose from the defective installation of a refrigerator, the failure of which caused extensive flood damage, and for which the insurer apparently accepted some liability. The problem was, however, compounded by defective rectification works. The respondent and insurer later found themselves in dispute concerning the extent of the liability to indemnify.
It is not clear when the flood damage occurred. For a time, the Property was rendered uninhabitable such that the respondent, and children, required alternative accommodation. As appears below, the insurer adopted the stance that the Property was again habitable by December 2016, a fact not disclosed to the applicant in a timely manner.
The respondent, who does not work, obtained the applicant’s assistance in relation to the costs of that temporary accommodation. Contextually, this meant that the applicant was bearing the cost of that accommodation, his own accommodation and the mortgage liability over the Property.
The respondent’s accommodation costs were $3,880 per fortnight. The applicant made arrangements for these costs to be the subject of a direct debit from his credit card. The applicant adopted a practice of sending the fortnightly invoices to the insurer for payment.
Upon the recommendation of the Law Institute of Victoria, the respondent retained Mr Dudderidge of Nevile & Co. to act on her behalf in relation to the claim for indemnity under the insurance contract. On 22 August 2017, the respondent consulted Mr Dudderidge and shortly afterwards, he sent her an email attaching a costs agreement.
The respondent deposed that on 13 September 2017, the applicant informed her that their marriage was over. Subsequently, the respondent retained Nevile & Co. to act for her in relation to her family law matters, deposing that the question of conflict of interest was discussed with their lawyer who considered that there was none.
The respondent further deposed that she discussed the costs agreement with the applicant who replied to the effect that he did not care about the claim and that it was a matter the respondent should deal with herself. She further deposed that to her knowledge, the applicant has never had any communication with her solicitor in relation to the matter.
The applicant has been represented in this proceeding by his solicitors, Lander & Rogers. On 15 September 2017, this firm first wrote to the respondent seeking that she pass their correspondence to her lawyers.
On 19 September 2017, the respondent’s lawyers wrote to:
a)Lander & Rogers, advising in part that the applicant had apparently withdrawn the elder child from the sports academy in Country A and was in the midst of returning to Australia, requesting that the return to Australia be deferred to … 2017;
b)a building practitioner, making demand for the costs of rectification works (yet to be undertaken) arising from defective plumbing work that had been completed in November 2015 and which had resulted in a burst pipe and significant flooding.
In consequence of the sequence of events referred to above it is evident that, before Nevile & Co. accepted instructions to act in this proceeding, this firm had already accepted instructions to act for the respondent in relation to her claim for indemnity upon the insurer of the Property.
Contrastingly, the applicant deposed that his solicitors communicated with the respondent’s solicitors that he could not bear that ongoing liability for accommodation costs if the insurer did not provide indemnity for it. He further deposed that, on multiple occasions, the respondent’s solicitor’s reply had been that no correspondence had been received from the insurer in relation to the accommodation issue.
The respondent’s solicitor did not disclose to the applicant’s solicitors in a timely way some communications with the insurer. The failure to do so is the subject of the present application.
The applicant returned with the daughter from Country A on … 2017 at which time the respondent travelled to the airport to meet them. She deposed that the applicant did not speak to her at that time and that he has not done so since. This was not contradicted.
On 26 October 2017, the respondent’s lawyers wrote to the insurer making demand for reimbursement of her accommodation costs which were no longer being reimbursed and seeking an urgent response.
Matters came to a head on 27 October 2017, when the applicant’s solicitors wrote to the respondent’s solicitors stating that the applicant was not prepared to pay ongoing accommodation costs. A request for copies of all communications with the insurer was made. Notably, the respondent did not seek to contradict this contention.
On 3 November 2017, the respondent’s solicitor received a letter from the insurer which, relevantly, offered indemnity for a further four weeks accommodation costs and stated that it would not provide any further financial assistance in the matter. The insurer’s letter was not provided to the applicant’s solicitors at that time. Indeed it was not disclosed until early February 2018. Consequently, while the respondent’s solicitor knew that this was the stance being adopted by the insurer, neither the applicant nor his solicitors knew that to be the case.
On 9 November 2017, the respondent’s solicitor sent an email to the applicant’s solicitor responding to the letter of 27 October 2017 and stating, relevantly, that it was wrong for the applicant’s solicitors to assume that there had not been numerous items of correspondence with the insurer including as to accommodation costs. Further, he stated that “we will forward copies of the correspondence to your office as soon as practicable.” In fact, this did not occur in a timely way either.
On 22 November 2017, the applicant’s solicitor sent an email to the respondent’s solicitor advising that he was consulting with his client at 10.00am that day and requested advice as to the progress of the insurance claim and whether the insurer had confirmed they would reimburse their client for the temporary accommodation costs. The reply from the respondent’s solicitor was that the insurer had been provided the invoices but that the insurer was not responding in relation to either the rectification costs or the accommodation costs. The respondent’s solicitor further stated that a settlement cheque – which was not sufficient to cover all the required works – had been sent by the insurer and returned having regard to the quantum of that settlement cheque. Further, the respondent’s solicitor advised that he had initiated a dispute resolution process provided by the terms of the insurance policy.
On 23 November 2017, the insurer reimbursed a sum of $31,031.72 in relation to accommodation costs which were paid to the applicant and acknowledged by his lawyers on 1 December 2017.
On 30 November 2017, the insurer advised the respondent’s solicitor that no further indemnity would be granted on the stated basis that they considered that: “the temporary accommodation settlement issued to you thus far to be more than fair”. At some point, the rationale for the insurer’s stated position had been explained on the basis that it considered the Property to have been habitable since December 2016. The applicant was not aware of the insurer’s view until 2018.
By December 2017, the applicant’s solicitor had complained to the respondent’s solicitor of the ongoing failure to disclose any correspondence with the insurer. In particular, it was stated that such information was relevant to any final adjustment of property interests.
On 28 January 2018, the applicant’s solicitor again wrote to the respondent’s solicitors pressing for further information in relation to the progress of the claim for indemnity.
It is against this background that the applicant had continued to pay the respondent’s accommodation costs for many weeks after 27 October 2017. Although the precise quantum of the accommodation costs was somewhat unclear, the applicant deposed that he had “paid a further $70,000 towards accommodation expenses on [my] credit card that have not been reimbursed.” In the course of submissions it was accepted that he had been reimbursed the sum of $31,031.72 on 23 November 2017. Viewed from the position as at 22 November 2017, the insurer was prepared to pay a sum equivalent to a further four weeks accommodation costs under the claim for indemnity. It is not clear whether that sum formed part of the amount of $31,031.72 referred to above or was later reimbursed in the course of the settlement referred to below. In either event, the gravamen of the applicant’s complaint is explicable by reference to the further accommodation costs which he incurred.
On 8 February 2018, the respondent’s solicitor wrote to the applicant’s solicitor attaching amongst other things a copy of the insurer’s letters dated 3 and 30 November 2017. The letter stated in part that “there is a dispute with the insurer in respect to the rectification works . . . and therefore in respect of their temporary accommodation costs since November 2017.”
It was not until this date that these letters had been disclosed to the applicant’s solicitor and accordingly, they had not been told that a cap on costs of a further four weeks accommodation had been placed on the claim for indemnity and that no further indemnity would be granted.
It is not clear whether, or when, the applicant or respondent resumed occupation of the Property.
The applicant deposed that although he had formed the view the respondent’s solicitor should not be acting for the respondent in relation to the claim for indemnity and in this proceeding, he did not act upon this view, in part, because on 17 April 2018 an assurance had been given by the solicitor that he would no longer continue to act. By contrast, the respondent deposed that she had been asked, and was considering whether, to retain another firm of lawyers to act in relation to the insurance claim. Although some attempt was made to retain other lawyers, the respondent ultimately decided to remain with her existing solicitor.
On 29 June 2018, the applicant’s solicitors again wrote to the respondent’s solicitors pressing the case that the respondent’s solicitor had failed to make proper disclosure of the insurers attitude to the claim for indemnity. The letter, marked URGENT, contended that the behaviour of the respondent’s solicitor in failing to disclose the prior communications received from the insurer was either negligent or knowingly false. The letter gave notice that the applicant may claim from the respondent’s lawyer for loss said to have been incurred by reason of the payment of ongoing accommodation costs, reserving the position whether it was appropriate for that lawyer to continue to act.
On 4 July 2018, the respondent’s lawyer replied, contending that he had never acted for the applicant. The adoption of that stance was later undermined by correspondence which was located as a result of a subpoena served on the insurer by the applicant’s lawyers: see at [47].
On 12 July 208, the parties attended a Mention in the proceeding in the course of which discussions respecting the insurance issues took place. The respondent’s lawyer apparently indicated that a response from the insurer was expected imminently.
In the period July 2018 – August 2018:
a)the parties’ lawyers exchanged further communications during which the respondent’s lawyer appears to have been non-responsive respecting the insurance issues addressed above;
b)in July 2018, the respondent accepted an offer of $50,000 from the insurer to settle the claim for indemnity made on the insurer;
c)by deed of release dated 7 August 2018, the respondent agreed to accept $50,000 in settlement of the insurance claim;
d)the respondent was paid $50,000 in full and final settlement of the insurance claim.
It was common ground that the applicant was not consulted by the respondent or her solicitors as to whether the proposed settlement was reasonable or whether he agreed to the terms being negotiated.
Remarkably, the respondent deposed that she did not disclose the fact of the settlement because: “I was concerned that if Mr Sheehan knew about the Insurance Settlement he would seek orders to obtain part of it.” Her evidence to this effect may be contrasted with her earlier evidence that she had retained lawyers other than those who were usually used by the applicant as “at that time, I did not trust Mr Sheehan and I questioned his honesty and ethics.”
On 19 July 2018, the applicant lodged a formal complaint with the Victorian Legal Services Board (VLSB). The complaint stated that the failure to disclose the insurer’s position had resulted in the applicant continuing to pay for the respondent’s temporary accommodation costs and incurring expense of some $50,000 by way of further accommodation costs in respect of the period beyond November 2017.
The respondent’s lawyer replied to that complaint on 22 August 2018 by a detailed letter, attaching copies of a series of communications, including a letter from the insurer dated 3 November 2017 in which an offer had been made to pay for a variety of matters including an:
Allowance for 4 weeks’ temporary accommodation $8,298.00
The response to the VLSB detailed the extensive delays which had been encountered in seeking a response from the insurer. It also contended that no conflict of interest arose in the circumstances, adding that the applicant had been aware that the respondent and his children required accommodation in any event and that he knew she was unemployed.
In or after September 2018, the applicant received documents from the insurer in answer to a subpoena that had been issued in connection with trial of the proceeding fixed for 1 November 2018. Amongst the documents produced by the insurer were:
a)a letter of demand by the respondent’s solicitor addressed to the insurer stating (erroneously) “I act for Mr and Mrs Sheehan”. The applicant correctly relied upon this letter as undermining the statement made by the respondent’s lawyer to the VLSB that he had never considered the applicant to be his client;
b)the insurer’s letter dated 3 November 2017 in which the offer to pay a further four week’s temporary accommodation costs had been made;
c)a letter from the insurer to the respondent’s lawyer dated 10 July 2018 in which the insurer explained its contention that its offer was more than reasonable on the basis that “your client’s unit became habitable as at 15 December 2016.”
d)a deed of release dated 7 August 2018, signed by the respondent whereby the respondent was paid $50,000 in full and final settlement of the insurance claim.
Some of those letters may not have previously been disclosed to the applicant’s solicitor. The fact of the settlement and the deed of release had not been disclosed until 22 August 2018 when the respondent’s solicitor replied to the VLSB in relation to the applicant’s complaint. The applicant complained that the respondent’s settlement of the claim without consultation with him or his lawyers had produced the result where he was not to be reimbursed for the accommodation costs incurred in the period after November 2017.
On 19 September 2018, the VLSB responded to the applicant’s complaint indicating that “I am likely to decide that I cannot take any further action with respect to the concerns you have raised in your complaint.” Reasons for that indicative position were provided. Included in those Reasons was a statement to the effect that the VLSB may consider the matter further if a court were to make adverse findings in relation to the manner of the lawyer’s communications in the matter. The VLSB also stated that it considered the losses claimed to form part of the family court proceedings. The VLSB’s Reasons attached significance to the advice from the respondent’s lawyer that the settlement cheque which been sent by the insurer had been returned and that the dispute resolution process had been initiated. The VLSB thus appeared to consider that the initiation of this procedure as making:
. . . . it clear that there is more to the matter and [the respondent’s lawyer] does not explain what is going on behind the scenes.
The VLSB’s Reasons also appear to recognise that a failure to address the insurer’s persistent non-responsiveness to the matter would have been a concern, but that the decision to initiate the dispute resolution procedure under the policy provided some answer to one aspect of the complaint; namely, a failure to act. For the avoidance of doubt, the VLSB reply made clear that it recognised the applicant’s claim for costs turned on the issue of the accommodation costs which he had incurred.
The applicant’s lawyers then sought an urgent Mention by reason of, amongst other things, the failure of the respondent’s lawyers to have made timely disclosure of the communications with the insurer and the respondent’s failure to file material for the trial. The applicant’s complaints were informed in part by the respondent’s failure to file a Response in a form which stated in clear terms the type of relief being sought in the proceeding. This complaint was addressed only shortly before the hearing of this application.
On 26 October 2018, orders were made to adjourn the trial fixed to commence on 1 November 2018. The matter had been listed on that date with priority. The adjournment was granted in part because the respondent’s solicitor sought an opportunity to obtain legal advice.
Following the adjournment, and in consequence of orders made on 26 October 2018, the applicant obtained a report quantifying the costs of rectification works to the Property. The report, obtained on 31 October 2018 quantified those costs at $94,773. The applicant therefore contends that the respondent’s execution of a deed of settlement for a sum of $50,000 has resulted in the incurring of a loss to the Asset Pool.
Orders were made that the applicant should have sole use and occupation of the former matrimonial home. Orders were also made for the respondent’s lawyer to produce the file retained in relation to the insurance claim. When that file was produced, the applicant’s lawyers identified documents which had not been produced by the respondent’s lawyer (i.e. based upon a comparison with the insurer’s file).
On 20 November 2018, the applicant’s solicitors wrote to the respondent’s solicitor making demand that he cease acting for the respondent. This demand is to be seen in the context that:
a)on 29 June 2018, the applicant’s solicitors reserved their position whether it was appropriate for that lawyer to continue to act;
b)the matter had been set down for hearing on 1 November 2018.
The delay in making that demand is a matter which I consider.
No response was received to that demand until 26 February 2019 when the respondent’s lawyer wrote denying any conflict of interest.
The applicant distilled his complaints respecting the conduct of the respondent and her lawyer as follows:
a)a failure to recognise that the letter of demand to the insurer stating that he acted for both the applicant and respondent stood in direct contrast to the stance adopted with the VLSB that he had never acted for him but had acted only for the respondent;
b)a failure to provide the applicant with the insurer’s letter dated 3 November 2017 until 8 February 2018, which, he said, had caused him to incur significant additional accommodation costs, including on behalf of the respondent as he had assumed that those costs would be reimbursed by the insurer;
c)the settlement of the insurance claim for $50,000 and execution of the deed of release when:
i)the claim for reimbursement of the accommodation costs had not been pursued, either adequately or at all;
ii)the rectification costs were properly quantified at ~$94,700;
d)a failure to reveal to the applicant that the insurer considered the Property to be habitable from December 2016. The applicant deposed that, had he known this to be the insurer’s position, he would at the least have been able to move back into the Property, thereby mitigating the costs which he had been incurring;
e)the respondent’s failure to file material from which the applicant was able to identify the respondent’s intended position, particularly in circumstances where the applicant was prepared to allow in her favour 100% of the equity in the Asset Pool (as he sees it);
f)a continuing failure to produce the entirety of the insurance file;
g)a contention that the respondent’s lawyer has been on notice that he would be required to give evidence.
The respondent made an affidavit on 18 March 2019 which addressed the matters deposed to by the applicant. Much of what has been set out above was repeated by that affidavit. A great many of the documents exhibited to that affidavit were needlessly exhibited to her affidavit. The respondent’s lawyer confirmed that he had prepared and settled that affidavit. However, the following additional matters were deposed to.
The respondent swore that the insurance settlement of $50,000 (together with the proceeds of a term deposit of $100,000) had been expended, amongst other things, on legal fees.
On 19 March 2019, the respondent filed an Amended Response in which she claimed for the relief described at [6] above.
The applicant tendered in evidence a ‘Combined Matter Ledger’ from Nevile & Co. which revealed that, of the settlement monies of $50,000, a sum of $9,026 had been applied for the costs of the insurance claim, and the balance ($40,973) transferred to the respondent’s family law file.
Applicable principles
While parties are generally entitled to retain and be represented by the lawyer of their choice, there are exceptional occasions where this may not be so. Even on those occasions the court retains a discretion whether to grant relief to restrain a lawyer from continuing to act in a proceeding.
I was referred to some authority respecting the principles to be applied in the determination of the application. In Bahonko v Nurses Board of Victoria (No 3) [2007] FCA 491, Middleton J stated at [2]-[4] that:
The Court’s jurisdiction to restrain a legal practitioner from acting in proceedings is an exceptional one and discretionary. It must be exercised with appropriate caution and due weight must be given to the public interest in a litigant not being deprived of the legal practitioner of its choice without due or good cause: Grimwade v Meagher [1995] 1 VR 446, 452; Geelong School Supplies Pty Ltd v Dean [2006] FCA 1404, [35],[51]. The cost, inconvenience or impracticality of requiring a legal practitioner to cease to act may provide a reason for refusing to grant relief: Geelong School [2006] FCA 1404 at [51]; Kallinicos v Hunt; (2005) 64 NSWLR 561; Black v Taylor [1993] 3 NZLR 403 and Bowen v Stott [2004] WASC 94.
The Court must be careful not to intervene unless it is absolutely required in the circumstances of the case. Further, the Court should be mindful that sometimes applications for restraining legal practitioners may be misused or quite inappropriately pursued by a party to proceedings. In Freeman v Chicago Musical Instrument Co [1982] USCA7 831; 689 F2d 715 (1982), the Court observed at 722:
We do not mean to infer that motions to disqualify counsel may not be legitimate, for there obviously are situations where they are both legitimate and necessary; nonetheless, such motions should be viewed with extreme caution for they can be misused as techniques of harassment.
Justice Young in Geelong School [2006] FCA 1404 recently set out the relevant legal principles to be applied when considering whether to restrain a legal practitioner from acting for a particular party to litigation, there being three possible grounds for so restraining a legal practitioner:
(a)the danger of misuse of confidential information: Geelong School [2006] FCA 1404, [24];
(b)breach of a fiduciary duty of loyalty not to act against a client or against a former client in the same matter or a closely related matter: Geelong School [2006] FCA 1404 at [24]; and
(c)the inherent jurisdiction of the court to control the conduct of legal practitioners as officers of the court: Geelong School [2006] FCA 1404 at [24], [32] and [33].
The principles stated by Middleton J are supported by a range of other authorities including those to which I was referred by the solicitor for the respondent: Kallinicos v Hunt (2005) 64 NSWLR 561, [76] (Brereton J); Mitchell v Burrell [2008] NSWSC 772, [20] (Brereton J); Lake Burrendong State Park Trust v Thompson [2011] NSWSC 1554, [104] (Hallen AsJ); Larne-Jones v Human Synergistics [2012] FMCA 1209, [30]-[33] (Barnes FM); Belgravia Nominees Pty Ltd v Lowe Pty Ltd (No 5) [2016] WASC 263, [34]-[37] (Tottle J); Lyons v Legalese Pty Ltd [2016] SASC 160, [51]-[61], [128] (Hinton J).
In addition, those principles are applied in applications under the Act: see, eg, Oram v Lambert (No 2) [2018] FamCAFC 161, [10] (Aldridge J, Ryan and Watts JJ agreeing); Huda & Huda [2017] FamCAFC 17, [17] (May J); Pencious & Searle (No. 2) [2016] FamCAFC 151, [43]-[44] (Bryant CJ, Aldridge and Kent JJ); Naczek & Dowler [2011] FamCAFC 179, [60]-[68] (Bryant CJ, Thackray and Bennett JJ).
The test to be applied in Australia when determining such an application is whether a fair-minded, reasonably informed member of the public would conclude that the proper administration of justice requires that a legal practitioner should be prevented from acting, in the interests of the protection of the integrity of the judicial process and due administration of justice, including the appearance of justice: Kallinicos (2005) 64 NSWLR 561, [76] (Brereton J); Bahonko [2007] FCA 491, [11] (Middleton J); Lyons [2016] SASC 160, [51] (Hinton J); Naczek, [2011] FamCAFC 179, [62] (Bryant CJ, Thackray and Bennett JJ).
The mere circumstance that a solicitor may be a material witness, even on a controversial matter, does not in or of itself, justify restraining a solicitor from continuing to act. The line will be crossed only where the solicitor has a personal stake in the outcome of the proceeding beyond the recovery of proper fees in acting (although reputational or personal interests may suffice): Mitchell [2008] NSWSC 772, [20].
The authorities confirm that the circumstances should be exceptional in order to exercise the power to grant an injunction of this kind. The power so conferred is discretionary and requires that appropriate caution be exercised: Naczek & Dowler [2011] FamCAFC 179, [63]. The court should consider whether there is a real likelihood of an evaluation of the solicitors conduct occurring in the proceeding or whether there is a real likelihood that the practitioner will need to defend himself or herself in the proceeding: Bahonko [2007] FCA 491, [12].
In my opinion, the ‘line’ may be crossed and a lawyer may be found to have a sufficient stake in a proceeding where their conduct is such as to give rise to a potential personal liability for costs. While in such circumstances, the discretionary power to make an order restraining a lawyer from acting or continuing to act may be engaged, the power to make an order for costs against a legal practitioner is also well settled: see, eg, r. 21.07 Federal Circuit Court Rules 2001. I do not consider that a lawyer’s personal liability for costs is a circumstance which would warrant their removal from the proceeding in all cases. On the principles considered above, it remains for an applicant seeking an injunction of this kind to demonstrate exceptional circumstances and that it is appropriate to grant such relief as a matter of discretion.
Consideration
No submission was made that this court lacked jurisdiction to grant the relief sought. While the authorities consistently identify an inherent jurisdiction to control the conduct of solicitors, it is clear that this court has no inherent jurisdiction. The Federal Circuit Court was created by statute, is a court of record, a court of law and equity and has such original jurisdiction as is vested in it by laws of the Commonwealth: Federal Circuit Court of Australia Act 1999, ss 8(3), 10(1)-(2). However, this court has no inherent jurisdiction: DJL v The Central Authority (2000) 201 CLR 226, [25]ff; Flint v Busuttil & Co Pty Ltd (2013) 216 FCR 375, [20]. Those authorities establish that this court has the powers expressly conferred on it by statute and such powers which as may be seen to arise, upon the proper construction of the statute, as a matter of proper implication from the laws that are vested in it expressly. Whether the court has implied power to restrain a lawyer from continuing to act in a proceeding thus requires identification of the court’s express powers generally and in proceedings under the Act.
The court has such original jurisdiction as is vested in it, relevantly, by an express provision of a law of the Parliament and may make such orders as it thinks appropriate: Federal Circuit Court of Australia Act 1999, ss 10(1)(a), 15(a). Subject to exceptions which are not presently relevant, by s 39(5AA) of the Family Law Act 1975 (Cth), the court is vested with jurisdiction with respect to matters arising under that Act.
Power is conferred on the court to make such order adjusting the parties’ interests in property: Act, ss 79-80. In property settlement proceedings, the court may make such order as it considers appropriate including for the conservation of property and any order which the court thinks necessary to make so as to do justice: cf Commissioner of Taxation v Tomaras [2018] HCA 62, [57]-[59] (Gordon J, Kiefel CJ and Keane J agreeing). Relevantly, power is conferred on the court to make such order or grant such injunctions as it considers proper with respect to the matter to which the proceeding relates, including in relation to the property of a party: Act, s 114(1)(e). Power is also conferred to make an order under s 79, or grant an injunction under s 114, that is directed to or alters the rights, liabilities or property interests of a third party: Act, s 90AA. The discretion to make orders adjusting property interests fall to be exercised having regard to the scope and purposes of the Act: cf Klein v Domus Pty Ltd (1963) 109 CLR 467, 473; Coal & Allied Operations Pty Ltd v Australian Industrial Relations Commission (2000) 203 CLR 194, [19]. As concerns the present application, powers conferred on a court are not to be hedged about by limitations which do not appear from the express terms of the statute: Owners of the Ship Kobe Maru v Empire Shipping Company Inc (1994) 181 CLR 404.
Having regard to those principles and although the issue was not argued, I proceed on the basis that where an application is made in a property settlement proceeding for the grant of an injunction, the court is vested, expressly, with jurisdiction and power to restrain a party or third party, their servants or agents from acting in a manner which might imperil the property of the parties or either of them. In my opinion, it follows that as a matter of proper implication the court has jurisdiction and power to restrain a lawyer from acting or continuing to act in such a proceeding.
Having regard to the identified categories of case in which a lawyer may be restrained from acting, in my view, the present case does involve the misuse of confidential information, a conflict of interest or of a solicitor seeking to act against a former client: cf Rule 10, Legal Profession Uniform Law Australian Solicitors’ Conduct Rules 2015 (Rules). It follows that the available ground upon which such relief might be sought is that the circumstances of the case are said to be such that the court should exercise its power to control the conduct of a legal practitioner; that is, an officer of the court: see Bahonko at [63] above.
Although the applicant and his solicitors had maintained the position that Nevile & Co. had acted for both the respondent and the applicant in relation to the insurance claim, this stance was abandoned at the hearing. It was correctly accepted that the respondent was the registered proprietor of the Property and held the insurance in her own name. The parties were in dispute whether the applicant had taken the position during the course of the insurance claim that he had simply left the respondent to ‘handle it’ for herself. In the circumstance that the Property and insurance was held in respondent’s name, it is difficult to see how the applicant could have had title to any cause of action for breach of the contract of indemnity. Absent the making of some application under the Act for the preservation of the Property or the proceeds of any payment made by the insurer, the applicant was in no position to dictate to the respondent or to control decisions made (or not made) in relation to that Property or any proceeds of an insurance claim. It was of course an entirely separate question whether the respondent should be held responsible for such conduct, decisions made and actions taken as may have affected the value of the Property or use made of the proceeds of such insurance claim. Such questions, which relate directly to the ultimate value of the Asset Pool, are matters for trial.
The fact that the applicant did not own the Property or hold any contract of insurance in relation to it would deny a conclusion that Nevile & Co. could have acted for him in relation to the insurance claim which was made for indemnity in relation to costs incurred as a result of the flood damage. While Mr Dudderidge wrote a letter to the insurer stating, erroneously, that he acted for both the applicant and respondent in relation to that claim, the error was not capable of creating a conflict of interest. He in fact only ever acted for the respondent in relation to that claim. Counsel for the applicant correctly recognised this to be so.
The earlier failure to recognise that the respondent’s solicitor was not acting for the applicant in relation to the insurance claim or otherwise to treat the case as engaging considerations of conflict of interest resulted in the evidence supporting the application to be presented in a way which unnecessarily expanded the quantity of material which was presented in support of the application. While the application may have been pressed continually by the applicant’s solicitors as one involving questions of conflict of interest, upon her retainer Ms Smallwood was able to redirect the focus of the application to one involving an evaluation of the conduct of the respondent’s lawyer in light of the matters addressed above.
While there will be overlap in the categories of case which might attract the grant of a prohibitory injunction to restrain a lawyer from acting for a client, the present application falls more clearly within the category of case where the court is being asked to restrain a solicitor from acting so as to protect the integrity of the processes of the court and the due administration of justice. In Naczek & Dowler [2011] FamCAFC 179, [6] Bryant CJ, Thackray and Bennett JJ stated:
The duty to the court arises from the court’s concern that it should have the assistance of independent legal representation for the litigating parties. Preserving the integrity of the administration of justice, and in the appearance as well as the reality of independence, the duty underpins the court’s practical approach to its supervisory discretion.[1] The authorities however also caution concern in the exercise of this discretion where the discretion being exercised is that in the court’s inherent jurisdiction to control its process in the aid of the administration of justice.
[1]Citing Kallinicos & Anor v Hunt supra; Fruehauf Finance Corp Pty Ltd v Feez Ruthning [1991] 1 Qd R 558; Murray v Macquarie Bank Ltd (1991) 33 FCR 46; Carindale Country Club Estate Pty Ltd v Astill [1993] FCA 218; (1993) 42 FCR 307; Macquarie Bank Ltd v Myer [1994] VicRp 22; [1994] VR 350; Kooky Garments Limited v Charlton [1994] 1 NZLR 587; Oceanic Life Limited v HIH Casualty and General Insurance Limited [1999] NSWSC 272.
As the case is one involving the protection of the integrity of the processes of the court, it is useful to recognise that: “A solicitor’s duty to the court and the administration of justice is paramount and prevails to the extent of inconsistency with any other duty” Rules, cl. 3.1. Those Rules subject a solicitor to fundamental ethical duties including that the solicitor must act in the best interests of a client in any matter in which the solicitor represents the client and avoid any compromise to their integrity and professional independence: Rules, cll 4.1.1, 4.1.4.
Further, subject to qualifications that are not here relevant:
a)“A solicitor must not act for a client where there is a conflict between the duty to serve the best interests of a client and the interests of the solicitor”: Rules, cl 12.1.
b)“A solicitor representing a client in a matter that is before the court must not act as the mere mouthpiece of the client or of the instructing solicitor (if any) and must exercise the forensic judgments called for during the case independently, after the appropriate consideration of the client’s and the instructing solicitor’s instructions where applicable”: Rules, cl 12.1.
c)“In a case in which it is known, or becomes apparent, that a solicitor will be required to give evidence material to the determination of contested issues before the court, the solicitor may not appear as advocate for the client in the hearing”: Rules, cl 27.1.
However, “[i]n a case in which it is known, or becomes apparent, that a solicitor will be required to give evidence material to the determination of contested issues before the court the solicitor . . . may act or continue to act for the client unless doing so would prejudice the administration of justice”: Rules, cl 27.2. This Rule is reflective of the common law principles addressed at [62]-[69] above.
The gravamen of the applicant’s complaint was the manner in which he had not been adequately informed by the respondent’s solicitor in relation to: (1) the insurer’s view that the Property was habitable from late 2016; (2) the four week offer of indemnity respecting further accommodation costs; (3) the decision to compromise the claim for indemnity. The context in which the applicant’s complaint arises is that he was, all the while, bearing the accommodation costs which continued to accumulate at a not insignificant rate. Objectively, his complaint was not without substance. The applicant was not told in a timely way that the insurer considered the Property to be habitable from December 2016. Nor was he told of the four week cap that had been placed on the payment of further accommodation costs from November 2017. However, the implications of such non-disclosure will require separate consideration. The applicant did not return to Australia until … 2017. Precisely what steps might have been taken to mitigate the liability for ongoing accommodation costs was not explored in any detail. Ultimately, the respondent may be considered liable for expenditure which was unnecessarily incurred and for her decision to effectively exclude the applicant from consideration of the decision to settle the insurance claim. These are also matters for trial.
The history of the matter is also indicative of delay by the respondent’s solicitor in answering the requests from the applicant’s solicitor for advice as to the progress of the claim for indemnity. This aspect of the problem can be viewed from three perspectives. First, the respondent’s solicitor was being asked to address delay on the part of the insurer in deciding the claim for indemnity. Secondly, the respondent’s solicitor himself appears to have been non-responsive to requests for information. Thirdly, the applicant’s solicitor appears to have adopted the stance that it was sufficient to attribute responsibility for the insurer’s delay to the respondent’s solicitor. To have done so was not entirely reasonable.
Each of the applicant’s complaints that the respondent and her lawyer had concealed matters including the insurer’s letter of 3 November 2017 until 18 February 2018, are omissions which I regard as serious. However, they must also be considered in their proper context.
First, it is clear that from 27 October 2017, the respondent’s solicitor knew that the applicant was not prepared to pay further accommodation costs and that a request for copies of all communications with the insurer had been made.
Secondly, from 3 November 2017, the respondent’s solicitor further knew that the insurer had capped its offer of indemnity in relation to accommodation costs for a further four weeks of such costs and stated that it would not provide any further financial assistance in relation to that aspect of the matter. The insurer’s letter was not provided to the applicant’s solicitors at that time.
Thirdly, and contrastingly, as at 22 November 2017, the applicant’s solicitors had actual knowledge that the claim for indemnity was in dispute. Specifically, they had been told by respondent’s solicitor that:
a)the insurer had been provided the accommodation invoices but was not responding in relation to, amongst other things, the claim for indemnity for those accommodation costs, and;
b)the respondent had returned the settlement cheque to the insurer;
c)the respondent had commenced a dispute resolution process under the terms of the policy.
Collectively, those matters undermined the basis for any unqualified assumption that the accommodation costs would be reimbursed.
Fourthly, as the cases concerning the grant of such injunctions indicate, the respondent’s solicitor owed a duty to the court, not to her opponent: Holborow v Macdonald Rudder [2002] WASC 265, [30] (EM Heenan J).The reasoning in Holborow has been endorsed by the Full Court of the Family Court, including in the view that the court would only restrain a lawyer from acting by reason of a potential conflict of duty to the court in a clear case: Bransdon and Davis and Gilbert (2007) FLC 93-328, [70] (Faulks D-CJ, Coleman and Boland JJ). Importantly, the applicant was legally represented and receiving legal advice as to how he wished to respond to the claim for indemnity. Objectively, the facts clearly demonstrated that the insurer had not accepted liability for the ongoing accommodation costs. So much was obvious from the terms of the letter sent by the respondent’s solicitor to the applicant’s solicitor on 22 November 2017. This view is confirmed by the VLSB’s Reasons which attached significance to the respondent’s lawyer’s advice that the settlement cheque had been returned to the insurer and that the dispute resolution process had been initiated. In my opinion, it was not reasonable for the applicant to assume that the insurer would do other than adhere to the position that it was obliged to do neither more nor less than comply with its obligations to indemnify in accordance with the terms of the insurance policy: cf CGU Insurance Ltd v AMP Financial Planning Pty Ltd (2007) 235 CLR 1. Consequently, the applicant cannot reasonably have assumed that indemnity for all accommodation costs would be borne by the insurer. This does not deny that the respondent had not made disclosure of material facts, however, it does demonstrate that the applicant was seized of sufficient information to support a conclusion that indemnity was a matter that was squarely in dispute.
Fifthly, although it is a fact intensive question, in the circumstances of this case, it may be doubted whether the respondent’s solicitor engaged in conduct which was misleading or deceptive or likely to be so. The question is whether the failure to disclose the subject communications was misleading in all the circumstances: Miller & Associates v BMW Australia (2010) 241 CLR 357. In this case, the disclosures which were made by the respondent’s solicitor on 22 November 2017 included that the settlement cheque had been returned and that the respondent had triggered the dispute resolution procedure under the insurance policy. Collectively, those matters deny that the applicant could reasonably have concluded that the insurer had agreed, whether in unqualified terms or at all, to provide indemnity for all of the ongoing costs of temporary accommodation.
Sixthly, however, because this is an application for an adjustment of property interests, the parties were subject to a duty of full and frank disclosure – from this perspective the respondent was obliged to keep the applicant informed – and the failure to do so was a serious matter which I take into account in the evaluation whether an injunction should issue to prevent the respondent’s solicitor from continuing to act. As explained in the course of the hearing, an application for an adjustment of property interests is not strictly analogous to inter partes litigation. The parties are not at arms-length and their proceeding involves a claim for an adjustment of property in which each of them presently claims an interest. It was incumbent on the respondent to make disclosure in a timely way of her communications with the insurer and her decision not to do so was in at least in one respect quite deliberate.
Seventhly, in relation to the complaint that the respondent entered into the settlement with the insurer, I do not consider that this is a matter which, of itself, would support a conclusion that the lawyer should be restrained from acting further in the proceeding. It is a separate question whether the respondent’s conduct in proceeding to settle that claim without consulting the applicant and in entering into and executing the deed of release (which, I assume, would extinguish any further claim on the insurer), should be regarded – as between the applicant and respondent – as representing a reasonable settlement of that claim for indemnity: cf Unity Insurance Brokers v Rocco Pezzano (1998) 192 CLR 603. If that should be found to be the case, the implications of the respondent having settled on other than reasonable terms may well affect the proper treatment of the Asset Pool but that is a matter for trial. Given the applicant’s stance that the respondent should have the entire net Asset Pool, any shortfall between the settlement sum and that which the applicant might have secured by way of settlement would only serve to increase an amount that would otherwise form part of that pool.
Eighthly, as concerns the significance as to whether the respondent’s lawyer will be a witness in the proceeding, I do not regard the case as one in which his evidence would place him in the position of having a sufficiently personal stake in the proceeding as to warrant the grant of relief. There was force in the submission that the objective facts are located in contemporaneous documents within the files of the respondent’s lawyer and that of the insurer. The respondent’s lawyer has made admissions to both the VLSB and this court respecting the failure to reveal the various items of correspondence and the fact of the settlement. The seriousness of the failure to make that disclosure is not to be understated but this cannot be allowed to distract attention from the high threshold of the test to be applied in cases of this kind. On the evidence before me, there are no conversations which would warrant the conclusion that the respondent’s lawyer is likely to play a critical part in the outcome of the proceeding. To the contrary, I consider that the documents examined above will speak for themselves. The admissions made by the respondent’s solicitor respecting the dates on which correspondence and the deed of settlement were first disclosed to the applicant’s lawyer are, objectively, incontestable facts. It follows that the respondent’s solicitor’s oral evidence is not critical to the case.
Ninthly, the grant of relief in the present case is to be considered in the context that the applicant expressed disavowed any claim for relief against the respondent’s lawyer other than in relation to costs. Claims for an injunction are commonly resisted on the basis that damages will be an adequate remedy. Where, as here, no remedy is sought other than in relation to costs, this is a further reason for denying injunctive relief. As I have stated, it is a separate question whether the respondent’s solicitor ought to be subjected to a personal liability for costs.
Finally, I recognise that the jurisdiction sought to be engaged here is discretionary. First, there is a strong policy in permitting a party to retain the lawyer of their choice. Secondly, in Bahonko, [2007] FCA 491, [19], Middleton J recognised that the cost, inconvenience and impracticality of requiring practitioners to cease to act may provide a reason for refusing relief. As the circumstances of this case demonstrate, the net Asset pool is presently estimated to be ~$400,000. The applicant has made an open offer that the whole of that sum should be awarded to the respondent by way of a final adjustment of property interests. Contrastingly, the respondent pursues what presently appear to be vague and unsubstantiated allegations that the Asset Pool is larger than that which was submitted by the applicant to be the case. Additionally the size of their Asset Pool has been significantly eroded by the costs of this application. Thirdly, the delay, until November 2018, in making the demand that the respondent’s lawyer cease to act is a matter which I consider. Fourthly, the result of depriving the respondent of her lawyer at this stage of the proceeding is a disproportionate response to the problem which has been created by the failure to make disclosure or to do so in a more timely or transparent way.
As concerns the ancillary relief sought by the applicant, I do not consider that joinder of the respondent’s lawyer which was sought only for the express purpose of enforcing a costs order was necessary. The court has express power to make an order for costs against a lawyer; joinder for this purpose is unnecessary: cf r. 21.07 Federal Circuit Court Rules 2001; Knight v FP Special Assets Ltd (1992) 174 CLR 178. I record that the applicant expressly disavows any claim for other relief as against the respondent’s lawyer. Joinder is unwarranted.
In all the circumstances I decline the application.
Unsolicited submissions
Following the hearing, the respondent’s lawyer sent an email making a further submission, seeking to clarify the admissions made respecting disclosure of the insurer’s communications to the applicant’s lawyers. On orthodox principles, the court is entitled to ignore such submissions: cf, eg, Carr v Finance Corporation of Australia Ltd [No 1] (1981) 147 CLR 246 at 258 (Mason J); Eastman v Director of Public Prosecutions (ACT) (2003) 214 CLR 318, [29]-[30] (McHugh J); Re Chief Commissioner of Police (Vic) (2005) 214 ALR 422, [20]-[22], (Gleeson CJ, McHugh, Gummow, Hayden and Heydon JJ), [120] (Kirby J); Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Limited (2010) 241 CLR 357, [111] (Heydon, Crennan and Bell JJ); Commonwealth Bank of Australia v Doggett [2017] FCA 1176, [35] (O’Callaghan J). The problem presented by unsolicited submissions was articulated in Eastman, [29]-[30] where McHugh J stated:
Once the hearing has concluded, the workload of the Court makes it impossible for the Court to give leave to file further submissions – with all the attendant delay in the Court's business by a fresh round of submissions. Efficiency requires that the despatch of the Court's business not be delayed by further submissions reflecting the afterthoughts of a party . . .
I decline to consider the respondent’s further submissions.
Costs
As concerns the costs of and incidental to this application, the respondent and her lawyer have successfully resisted the claims for an injunction and ancillary relief. Both parties sought costs. While costs are in the discretion of the court, in proceedings under the Act, generally each party shall bear their own costs: Act, s 117(1). However, the court may make such order as to costs as it considers just where it is of the opinion that there are circumstances which justify it in doing so: Act s 117(2). In considering what order as to costs ought be made, the court is required to give consideration to the non-exhaustive list of matters enumerated in sub-s 117(2A).
While each of the parties sought costs, no submissions were made which specifically addressed each or any of the matters in sub-s 117(2A). Accordingly, I have considered those matters for myself. The conduct of the respondent as described above engages in particular the matters in par 117(2A)(c) of the Act. As noted above, the respondent had somewhat astonishingly deposed that the applicant was not informed of material facts because she well recognised that he may have decided to claim some part of the settlement monies. This recognition accords with the prima facie position that those monies, being the fruits of her cause of action for indemnity under the insurance policy, would in fact form part of the Asset Pool. Whether the Asset Pool has been diminished by the quantum of the settlement with the insurer is also a matter to be addressed at trial. The respondent would seem likely to bear direct responsibility for the failure to make timely disclosure of those matters. In addition, it was not until shortly before the hearing of this application that an Amended Response was filed which gave some level of precision to the relief which was being sought.
Further, there are circumstances in which a successful party will be denied their costs of a proceeding: see Dal Pont, Law of Costs, 4th Ed, [8.65]-[8.68]. In my opinion, the circumstances of this case are clear that the respondent ought not to have any costs of or incidental to this application and that the applicant’s costs of and incidental to this application ought to be reserved.
Conclusion
The circumstances of the present application are concerning. The catalyst for applicant’s decision to institute the application appears to have been the combined effect of his ongoing payment of the respondent’s accommodation costs and his not informed in a timely way of: (1) the insurer’s view that the Property was habitable from December 2016; (2) the cap which was placed on the insurer’s offer to grant indemnity for such costs for a period of four weeks from November 2017; (3) the respondent’s unilateral entry into a settlement with the insurer for an amount which did not secure reimbursement of the sum expended for her benefit on accommodation. That the applicant was not informed of those events has had a material effect on him.
I note the applicant’s submission that the VLSB had stated it may reconsider the matter following the delivery of any judgment in the proceeding. I have reflected upon whether the court should direct that a copy of these reasons for judgment should be supplied by the Registrar to the VLSB. I have concluded that this is a matter which may be adequately dealt with by the parties themselves should they choose to do so. However, at one level, the applicant may be seen to be attributing blame to the respondent’s solicitor for matters which were at least in part objectively apparent from the communication of 22 November 2017.
The history of the matter considered above confirms the view that this case needs case management. In particular, the claims being advanced by the Amended Response warrant further consideration. The applicant seeks a result which would see all liabilities (other than business liabilities) discharged and for the respondent to obtain orders for a sum equal to 100% of the net Asset Pool. By contrast, the respondent appears to submit that the applicant, who carries on practice as an accountant, is well familiar with litigation and that he has not made adequate financial disclosure. More broadly, the proceeding has been listed for trial on one occasion and is now relisted for hearing on 28 October 2019. It is not acceptable that the court’s scarce resources should be further wasted by reason that the parties’ competing claims have not been finally articulated or properly prepared.
To that end, orders will be made which provide for the applicant to provide the respondent in electronic form with an itemised Asset Pool, for the respondent to indicate where she agrees or disagrees with each item in that document and whether she contends for any further items, whether by way of asset, liability or otherwise. When that has been done the applicant should file a consolidated Asset Pool in relation to which the application for an adjustment of property interests may be held.
Otherwise, the Application in a Case must be dismissed.
I certify that the preceding one hundred and six (106) paragraphs are a true copy of the reasons for judgment of Judge A Kelly
Date: 26 April 2019
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