Strahan & Strahan
[2021] FamCA 97
•5 March 2021
FAMILY COURT OF AUSTRALIA
Strahan & Strahan [2021] FamCA 97
File number(s): ADF 228 of 2005 Judgment of: MEAD J Date of judgment: 5 March 2021 Catchwords: FAMILY LAW – COSTS – Claims by two of the wife’s previous solicitors for liens over ‘fruits of the litigation’ – ‘fruits of the litigation’ comprised of $2 million fund standing to credit of the wife in the Family Court of Australia Litigants Fund – fund came into existence as part of final property settlement order between husband and wife – litigation between husband and wife extended over nearly 13 years prior to final order on 27 November 2017 – final hearing conducted on undefended basis in absence of wife – one firm of solicitors ceased acting for the wife in December 2010 – the other firm acted between either October 2015 or April 2016 to September 2016 – Court not satisfied as to ‘causal link’ between the efforts of the solicitors and the existence of the fund – claims dismissed.
FAMILY LAW – COSTS – Husband sought payment of outstanding costs orders prior to the wife becoming entitled to any part of the fund – order for payment of husband’s costs as sought – wife entitled to the balance of the fund.
Legislation: Family Law Act 1975 (Cth) ss 75(2), 79, 79(2) Cases cited: Carew Counsel Pty Ltd v French (2002) 4 VR 172
Doyles Construction Lawyers v Harsands Pty Ltd (Unreported, Supreme Court of New South Wales, McLelland CJ, 24 December 1996
Ex parte: Patience; Makinson v The Minister (1940) 40 SR (NSW) 96
Firth v Centrelink & Anor (2002) 55 NSWLR 451
Roam Australia Pty Ltd v Telstra Corporation Ltd t/as Telecom Australia & Ors [1997] FCA 980
c and Ors [2020] FamCA 27
Worrell v Power & Power (1993) 46 FCR 214
Dal Pont, Gino Evan, Law of Costs (Lexis Nexis Butterworths, 4th edition, 2018
Number of paragraphs: 124 Date of hearing: 11 May 2020 Place: Adelaide Counsel for the Applicant: Mr Williams QC Solicitor for the Applicant: McInnes Wilson Lawyers Counsel for the Respondent: Mr Wilson of Counsel Solicitor for the Respondent: Kennedy Partners Counsel for the First Intervener: Mr Cox QC Solicitor for the First Intervener: Mr PP, Solicitor Counsel for the Second Intervener: Mr NF Solicitor for the Second Intervener: NF Lawyers ORDERS
ADF 228 of 2005 BETWEEN: MS STRAHAN
Applicant
AND: MR STRAHAN
RespondentPP LAWYERS PTY LTD AND MS PP
First Intervener
NF PTY LTD
Second Intervener
ORDER MADE BY:
MEAD J
DATE OF ORDER:
5 MARCH 2021
THE COURT ORDERS THAT:
1.That the application in a case filed herein by NF Pty Ltd on 30 October 2018 be dismissed.
2.That any claim of the first and/or second interveners to entitlement to payment of any outstanding fees and/or costs and disbursements from funds standing to the credit of the applicant in the Family Court of Australia Litigants Fund pursuant to their respective asserted liens over ‘fruits of the litigation’, be dismissed.
3.That the wife do pay to the husband the sum of $167,347 in satisfaction of orders for costs made in the Family Court of Australia on each of 29 November 2018, 21 February 2019 and 10 June 2019 and in the High Court of Australia on 16 October 2019.
4.That such costs be paid to the husband directly from the funds standing to the credit of the wife in the Family Court of Australia Litigants Fund by electronic funds transfer to the account nominated to the Court by the husband.
5.That the balance of the funds standing to the credit of the wife in the Family Court of Australia Litigants Fund be paid to the wife by electronic funds transfer to the account nominated to the Court by the wife.
6.That all extant applications be otherwise dismissed.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to 17.02 Family Law Rules 2004 (Cth).
IT IS NOTED that publication of this judgment by this Court under the pseudonym Strahan & Strahan has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
INTRODUCTION
On 24 January 2020[1] reasons were delivered and orders made pertaining to the method of payment of the judgment sum of $2 million owed by Mr Strahan (hereinafter referred to as ‘the husband’) to Ms Strahan (hereinafter referred to as ‘the wife’) pursuant to the orders of Cronin J of 23 November 2017.
[1] Strahan & Strahan and Ors [2020] FamCA 27
The orders included leave, to the extent that it was necessary, to PP Lawyers Pty Ltd and Ms PP (hereinafter referred to as ‘PP Lawyers) and NF Pty Ltd (hereinafter referred to as ‘NF Lawyers’) to intervene in the proceedings as between the husband and the wife as first intervener and second intervener respectively. Both firms of solicitors claimed to hold liens over the fruits of the wife’s litigation.
Paragraphs 12-81 inclusive of the said reasons set out in detail the background to the claims of each of the firms of solicitors referred to herein and the evidence upon which they relied in respect of each of their assertions to entitlement to such a lien.
The judgment sum of $2 million referred to in those reasons was, pursuant to the orders of 24 January 2020, paid into the Family Court of Australia Litigants Fund on account of the wife. The Court is now called upon to determine whether the claims of PP Lawyers and NF Lawyers are sustainable and if so to what extent.
On 21 February 2020 the husband filed an application in a case and affidavit in support.
The husband sought the following orders:
1.The monies held in the Family Court of Australia Litigants Fund account on behalf of the wife pursuant to the order made on 24 January 2020 be applied in the following order:
1.1In payment to the husband of such amounts as may be outstanding to him pursuant to the following orders:
1.1.1Order made by the Family Court of Australia on 29 November 2018 in the sum of $36,171.94;
1.1.2Order 5 of the order made by the Full Court of the Family Court of Australia on 21 February 2019 in the sum of $33,750.08;
1.1.3Order made by the Family Court of Australia on 10 June 2019 in the sum of $38,178.41; and
1.1.4Order made by the High Court of Australia on 16 October 2019 in such amount as may be agreed upon between the husband and the wife in writing or taxed by the High Court of Australia;
1.2In payment to the husband of his costs of and incidental to this application; and
1.3As may otherwise be determined by this Honourable Court.
2. Such further or other orders as this Honourable Court deems appropriate.
In his affidavit in support he deposed to the details of the respective orders to which he referred in his application.
The quantum of the order for costs of 29 November 2018 was fixed in that order.
The quantum of costs claimed by the husband in respect of the costs orders made on each of 21 February 2019 and 10 June 2019 were deposed to by the husband in paragraph 11 of his affidavit as having been agreed with the wife in the sums of $33,750.08 and $38,178.41 respectively. The quantum of those costs has not been fixed by Court.
In paragraphs 12 and 13 of the same affidavit the husband refers to the order made in the High Court of Australia on 16 October 2019 refusing the wife’s application for special leave to appeal to that Court, with costs, and to those costs not having been agreed or fixed.
In a further affidavit filed 7 April 2020 he deposed to estimated costs in respect of those proceedings in the sum of $55,341.26, and in paragraph 6 of that affidavit to additional claims for interest totalling $3,904.84 as at 6 April 2020. In paragraph 7 he deposed to seeking, as at 6 April 2020, a total sum of $167,347 from the wife.
There is no reference in the affidavit of the wife filed on 26 February 2020 to the husband’s evidence as to his costs, nor did the wife file a response to the said application in a case.
In paragraph 18 of the wife’s affidavit filed 26 February 2020 she proposed directions be made by the Court providing for:
·the $2 million held in the Court’s Litigant Fund be paid to her;
·that in the alternative $1,308,711.81 be paid to her; and
·in those circumstances $691,288.19 remain in the Court’s Litigant Fund until further order.
In her further affidavit filed 17 April 2020 no reference was made to the husband’s application for costs.
In written submissions Counsel for the wife opposed the orders sought by the husband and in oral submissions argued that the husband’s application for payment of various costs orders was not made by him in aide of an equitable right and that the decision as to the disposition of the $2 million in the Litigants Fund related to the issue of the asserted liens and not the husband’s costs.
These reasons should be read in conjunction with reasons delivered in these proceedings on 24 January 2020.
FRUITS OF THE LITIGATION LIEN
The nature of such a lien was discussed by Jordan CJ in Ex parte Patience; Makinson v The Minister (1940) 40 SR (NSW) 96 (‘Ex parte Patience’) at 100 to 101 where His Honour said:
A solicitor has no lien for his costs over any property which has not come into his possession. If, however, as the result of legal proceedings in which the solicitor has acted for the client, the client obtains a judgment or award or compromise for the payment of money, although the solicitor acquires no common law title to his client’s right to receive the money or to any part of that right, he acquires a right to have his costs paid out of the money, which is analogous to the right which would be created by an equitable assignment of a corresponding part of the money by the client to the solicitor. That is to say, the solicitor has an equitable right to be paid his costs out of the money; and if he gives notice of his right to the person who is liable to pay it, only the solicitor and not the client can give a good discharge to that person for an amount of the money equivalent to the solicitor’s costs: Welsh v. Hole. If the person liable to pay refuses, after notice, to pay the costs of the solicitor, the solicitor may obtain a rule of Court directing that the amount of his costs be paid to him and not to the client; and payment by the judgment debtor to the client after notice of the solicitor’s claim is no answer to an application for such a rule: Read v. Dupper; Ormerod v. Tate; Ross v Buxton. Further, if the client and a judgment debtor make a collusive arrangement for the purpose of defeating the solicitor’s right, the Court will enforce that right against the judgment debtor notwithstanding the arrangement and notwithstanding that no notice of the solicitor’s claim had been given to the judgment debtor prior to the arrangement: Ross v. Buxton. These special rights have no resemblance to a solicitor’s general possessory lien, although they are sometimes miscalled liens: Bozon v. Holland. In Barker v. St Quinton Parke B. said that ‘the lien which an attorney is said to have on a judgment (which is, perhaps, an incorrect expression) is merely a claim to the equitable interference of the Court to have that judgment held as security for his debt,’ a remark which is reproduced in Chitty’s Archbold, and has been repeated in many later authorities: cf. also Smedley v. Philpot; North v. Stewart. In practice, however, the solicitor has always been treated as possessing equitable rights in the judgment independently of any declaration of those rights, and the Court’s assistance is invoked not to create the rights but to enforce them: Lord v. Colvin; Haymes v. Cooper. The rights are assignable: Briscoe v. Briscoe.
(footnotes omitted)
The lien has been described as a “particular” lien, sometimes also described as an “equitable” lien or “fruits of the action” lien.[2]
[2] Gino Evan Dal Pont, Law of Costs (Lexis Nexis Butterworths, 4th Edition, 2018) 27.1
In paragraph 146 of the reasons delivered in these proceedings on 24 January 2020 I referred to those principles relating to “fruits of the litigation” liens discussed by Campbell J in Firth v Centrelink & Anor (2002) 55 NSWLR 451 (‘Firth’) in [35(d)] to [35(g)] that I considered to be relevant to these proceedings, namely:
d.The solicitor need not be still acting for the client at the time that the money was recovered.
e.For the right to arise it must be shown that there is a sufficient causal link between solicitor’s exertions and the recovery of the fund of money.
f. The quantum of money for which the solicitor has the equitable right is the amount which is properly owing to the solicitor by the client, whether that amount be ascertained by taxation of a bill of costs, or assessment, or pursuant to a costs agreement…
g.The solicitor’s equitable right exists before the court is asked to intervene to protect it; it ‘arises immediately upon the recovery of monies through the exertions of the solicitor…
(citations omitted)
Proceedings between the husband and the wife in this matter commenced in 2005.
It is common ground as between the wife and the first named interveners PP Lawyers that Ms PP, firstly acting as a sole practitioner under the trading name of PP Lawyers and subsequently as the sole practitioner and shareholder of PP Lawyers Pty Ltd, acted for the wife, on retainer, between April 2008 and December 2010.
During that time PP Lawyers acted for the wife with respect to proceedings for settlement of property, spousal maintenance, interim property settlements and parenting issues.
On or about 20 December 2010 PP Lawyers terminated their instructions.
From 2012 and continuing to the present time the wife and PP Lawyers have been engaged in litigation in the Family Court of Australia, Supreme Court of South Australia, District Court of South Australia and in the Adelaide Magistrates Court with respect to various issues including a solicitor’s lien over the file, the costs of storage of the files relating to the wife and the payment of outstanding legal fees, disbursements and costs sought by PP Lawyers.
The final order for settlement of property including the order for payment by the husband to the wife of the sum of $2 million, being the judgment sum over which each of PP Lawyers and NF Lawyers claim their respective entitlements to a ‘fruits of the litigation’ lien, was made by Cronin J in the Family Court of Australia on 23 November 2017.
Clearly neither PP Lawyers nor NF Lawyers were acting for the wife at the time her entitlement to the funds arose nor at the time the funds were paid into Court pending a determination of their respective rights to sustain their claimed liens.
PP Lawyers had acted for her for a period of approximately two years and eight months during the course of litigation between the husband and the wife, having ceased to do so approximately seven years prior to the judgment.
PP Lawyers’ fees were paid from the time they commenced acting for the wife until approximately September 2010. The wife did not, and to-date has not, paid fees claimed by PP Lawyers as specified in five invoices forwarded to the wife between 3 September 2010 and 8 December 2010.
In addition to those outstanding fees PP Lawyers also seek to establish the existence of their lien on account of various costs orders made in their favour against the wife in the Family Court of Australia, the Supreme Court of South Australia, the District Court of South Australia and the Adelaide Magistrates Court.
NF Lawyers acted for the wife between October 2015 and September 2016.[3] In paragraph 5 of the affidavit of Mr NF filed 30 March 2020 he deposes to having had the carriage of the proceedings on behalf of the wife between 8 April 2016 and 7 September 2016. That was the same time period deposed to by Mr NG, another director of NF Pty Ltd filed 30 October 2018. That firm ceased acting approximately 14 months prior to judgment.
[3] Wife’s affidavit filed 17 April 2020, paragraph 36
They are claiming to hold a lien over the judgment on account of unpaid legal fees in respect of which an invoice was rendered to the wife on 23 September 2016, together with interest as calculated on those fees.
Both firms of solicitors also claim the costs of these proceedings.
CAUSAL LINK
An important principle to be considered in the unusual circumstances of this case is the question of whether or not there is a sufficient causal link between the exertions of the respective solicitors and the recovery of the judgment sum by the wife.
In Dal Pont at Chapter 27,[4] the author discussed the authorities relevant to the requirement of causation and said:
27.14Being grounded in the notion that a solicitor should be paid ‘out of the produce of his industry and skill’, for the Court to give effect to the particular lien, there must be a link between the property recovered pursuant to the judgment or compromise and the work performed by the solicitor. If he or she remains the solicitor on the record, there is ordinarily little difficulty in satisfying this nexus. If the solicitor claiming the lien is no longer on the record, the issue arises as to whether or not the solicitor was ‘instrumental’ in obtaining the judgment or compromise or whether or not it came about ‘by reason of’ the solicitor’s exertions (essentially an inquiry into causation).
27.15A solicitor is not prevented from asserting the lien simply because he or she has ceased to act for the client prior to the receipt of the judgment or settlement proceeds (or even that the solicitor has, since having provided the relevant legal services, stopped practicing, whether due to a disciplinary sanction or a decision to retire). The relevant inquiry is two-pronged.
…First, did the proceeding result in a judgment, award or compromise under which money is payable to the party for whom the solicitors acted; and, secondly, was the part played by the solicitors sufficient to justify the conclusion that there is a sufficient causal link between the solicitors’ efforts and the result, so that the solicitors may be regarded as having been instrumental in obtaining the result…’
(footnotes omitted)
[4] Dal Pont (n 2) 27.14 – 27.15
It is the wife’s position that notwithstanding an acknowledgment on her part that PP Lawyers and NF Lawyers acted for her on her instructions pursuant to retainer agreements in proceedings between she and the husband at the times specified by the solicitors, no causal link has been established by PP Lawyers or NF Lawyers such that the Court could be satisfied on the balance of probabilities that there is a sufficient connection between the work done by them on her behalf and the recovery by her of the fund of money by virtue of the judgment of Cronin J.
It was submitted on behalf of PP Lawyers that to establish a causal link to the judgment sum it was not necessary for them to satisfy the Court any more than that they had acted for the wife and that the proceedings between the husband and the wife resulted in a payment to the wife.
The same argument was advanced on behalf of NF Lawyers, with both firms relying in particular on the decision of McLelland CJ in EQ in Doyles Construction Lawyers v Harsands Pty Ltd & Ors[5] (‘Doyles Construction Lawyers’) where His Honour said at 4, referring to the statement of principle by Jordan CJ in Ex parte Patience:
…In my opinion it is unnecessary for Doyles to demonstrate that the settlement came about as the result of specific efforts by them. According to the statement of principle by Jordan CJ… it is sufficient to give rise to the equitable right that the settlement resulting in payment to the client came about as a result of the legal proceedings and that the solicitor had acted for the client in those proceedings, this being treated as a sufficient causal link…
[5] Doyles Construction Lawyers v Harsands Pty Ltd (unreported, Supreme Court of NSW, McLelland CJ, 24 December 1996)
His Honour’s reasons in that case were discussed by Lehane J in the Federal Court in Roam Australia Pty Ltd v Telstra Corporation Ltd t/as Telecom Australia & Ors [1997] FCA 980 (‘Roam Australia’) where His Honour said at 4:
The right appears to be based upon the fact that the solicitor was ‘instrumental’ in obtaining the judgment or compromise (Patience at 103) or (Worrell at 224) that the judgment or compromise has ‘come about by reason of [the solicitor's] exertions’. The entitlement may, nevertheless, arise although the solicitor's exertions came to an end before the judgment was obtained or the compromise negotiated…
His Honour at 5 then referred to the passage of the judgment of McLelland CJ in Doyles Construction Lawyers and said the following:
I do not think it follows that solicitors will always, in a case where they have acted for a party to proceedings in which ultimately a judgment is obtained, or which are compromised, obtain an equitable interest in the judgment or settlement proceeds commensurate with the amount they are owed for costs and disbursements, no matter how slight or fleeting their participation may have been or even if they acted only for a short period after the commencement of proceedings later conducted by others through interlocutory procedures and trial to judgment. In each case, in my view, it must be a question whether the requisite causal link is established, whether the judgment or compromise is, on the evidence, to be regarded as brought about (or partially brought about) by the efforts of the solicitors…
To my mind it is important to consider the entirety of the passages to which Lehane J was referring firstly in the judgment of Jordan CJ at 103 in Ex parte Patience, namely:
…I see no reason to doubt that the fact that the present applicant was instrumental in obtaining for his client the verdict which has been given against the Crown has vested in the applicant, as between himself and his client, a right to have his costs paid out of the moneys recovered under the verdict…
(emphasis added)
and in Worrell v Power & Power (1993) 46 FCR 214 at 224 where the Full Court of the Federal Court followed the reasoning in Ex parte Patience and said:
With respect to what has been said upon the subject in other decisions, Ex parte Patience; Makinson v Minister contains a reasoned and thorough exposition of the nature and characteristics of the equitable rights which supports the operation of a solicitor’s lien in a case such as the present. It is a decision of a strong Australian intermediate court of appeal, and one which we should follow…
Their Honours went on to say:
In the present case, it follows that the primary judge correctly concluded that upon the making of the order for costs on 28 May 1991, the solicitors, because the order had come about by reason of their exertions, had equitable rights in the order…
(emphasis added)
In Carew Counsel Pty Ltd v French (2002) 4 VR 172 (‘Carew Counsel’) Winneke P said, at [33]:
As a matter of general principle, a solicitor has an equitable lien over the fruits of litigation, whether obtained by way of judgment or compromise, where those ‘fruits’ have been gained, at least in part by the solicitor’s exertions on behalf of the client: Roam Australia Pty Ltd v Telstra Corporation Ltd [1997] FCA 980 at [3]-[4] per Lehane J…
…The essence of the solicitor’s ‘particular’ or ‘non-possessory’ costs lien is that the solicitor has been instrumental in recovering the judgment sum (whether by way of compromise or otherwise) or, put another way, that the moneys have been recovered as a result of his exertions. Thus the fund in respect of which the lien arises is the fund represented by the fruits of the labours exercised by the solicitor in recovering it: Phillipa Power & Associates v Primrose Couper Cronin Rudkin [1997] 2 Qd R 266 at 270-271 per Macrossan CJ and White J. The charge on the fund represented by the ‘particular’ lien arises immediately upon the recovery of the moneys through the exertions of the solicitor (Ex parte Patience; Makinson v The Minister (1940) 40 SR (NSW) 96 at 100) and should be distinguished from rights which might arise through a solicitor’s exertions in respect of other matters. However, for the right to arise, it must be shown that there is a sufficient causal link between the solicitor’s exertions and the recovery of the fund: Roam Australia Pty Ltd v Telstra Corporation Ltd (at [4]) per Lehane J. In each case, that is a question of fact. The costs which are protected by the lien will not only include the costs incurred in recovering the judgment, but also those ‘immediately incidental thereto’: Re Meter Cabs Ltd [1911] 2 Ch 557 at 559 per Swinfen Eady J.
(emphasis added)
In [35(e)] of the judgment of Campbell J in Firth His Honour considered the decision of Lehane J in Roam Australia and that of the Full Court of the Victorian Supreme Court of Appeal in Carew Counsel when stating that:
For the right to arise it must be shown that there is a sufficient causal link between solicitor’s exertions and the recovery of the fund of money.
(citations omitted)
The facts of this case are unusual.
I have already referred to litigation between the husband and the wife commencing in 2005 and encompassing parenting issues, interim property settlement, spousal maintenance and final property settlement orders. The litigation extended over a period of almost 13 years. Many millions of dollars were expended by each party in pursing their various claims.
It was submitted on behalf of PP Lawyers that during the period of the proceedings the wife was paid $1.5 million in spousal maintenance and $12 million in interim property settlements as well as a final property settlement order in the sum of $11.8 million.
The only monetary sum ordered to be paid to the wife by the husband by way of the final order of Cronin J on 23 November 2017 was the $2 million to which I have already referred.
In considering whether the requisite causal link has been established by either PP Lawyers or NF Lawyers, it is important to consider the reasons upon which Cronin J founded the final property settlement order as delivered on 23 November 2017.
I make that observation in the unusual circumstances of the final hearing taking place almost 13 years after proceedings were instituted, and on an undefended basis.
CRONIN J REASONS DELIVERED 23 NOVEMBER 2017
In [2] of His Honour’s reasons, he referred to the proceedings involving “innumerable hearings and over 700 filed documents”. In [4] he referred to the proceedings before him relating to “the division of property and to the wife’s application for spousal maintenance” and that they “were ultimately heard on an undefended basis in the absence of the wife”.
It is not in dispute that during the course of the proceedings the wife had involvement with approximately 15 different firms of lawyers.[6] His Honour refers in [5] to [20] to the basis upon which he refused a further application for adjournment of the final hearing made on behalf of the wife, and determined that the matter should be heard on an undefended basis.
[6] Reasons for Judgment of Cronin J of 23 November 2017 at [5]
In discussing those issues in [7] and [8] of his reasons, he referred to “unresolved issues of litigation funding and discovery”, to a hearing being fixed for 3 March 2017 to deal with those issues, which was relisted for 20 April 2017, and that by that date “the husband had filed his evidence but the wife had not”.
He went on to say in [8]:
…So out of date was the wife’s application for orders or (sic) final relief, that her last document was well-buried in the court file. Years had passed without any clear indication of what she was seeking, notwithstanding the parade of lawyers passing. Most of those lawyers were involved in interlocutory disputes about discovery and litigation funding.
After referring to his reasons for declining a further application on the part of the wife to adjourn the trial His Honour said at [20]:
Upon ruling that the adjournment was refused, senior counsel then withdrew and the matter proceeded on an undefended basis as anticipated…
Paragraphs [21] to [27] inclusive of the reasons were headed “THREE CONTROVERSIAL ISSUES”. They are set out herein in their entirety:
21.Three controversial issues had been raised by the wife as indicated by the affidavit of her recent solicitor [Mr RL], her August counsel Mr Glick QC and even by the evidence of the husband himself.
22.First, the wife has said (at least as late as a few days ago to her new solicitor) that the husband sent $142 million ‘offshore’. That allegation was made ten years ago and answered by the husband by affidavit. In the circumstances I do not accept that, apart from testing the husband’s evidence in cross‑examination, the ten years of discovery and $20 million of legal fees (which the wife asserted she had paid) could not have elicited an unequivocal piece of evidence to show that the husband’s statement to the court was untrue. Absent such evidence, particularly since the husband’s affidavit was in the wife’s hands from 1 March 2017 or thereabouts, I do not intend to be further concerned about that allegation.
23.Secondly, in the August 2017 hearing, it was said that there were many boxes of documents that the wife (or more particularly her Melbourne lawyers) wanted to investigate but they were subject to a lien by her former Adelaide solicitors. This had something to do with the many millions of dollars which the wife’s solicitors in February 2017 had said would expose a significant amount of money that the husband had not disclosed. In August 2017, the husband’s counsel scoffed at the possibility of these documents establishing anything. He asserted that they were entirely historical and of little value. As the wife terminated the instructions of her lawyer (or vice versa) in September 2017, that investigative exercise was never undertaken. An unusual statement had been made in early 2017 that the wife had found over $60 million that the husband had not disclosed. Since then, no evidence has even hinted at the source of that knowledge.
24.Again, absent an unequivocal indication about what discovery needed to be undertaken, having regard to the time that has expired and the amount of money spent, I consider that the court should not be unduly troubled about that issue.
25.Thirdly, comment had been made in the February 2017 hearing about the husband’s income stream and how implausible his explanation was. I return to that evidence concerning the ‘[KC] Trust’ below. But on that issue too, I saw no investigative work being undertaken. The wife said the case was complex and beyond her capacity particularly with the health problems she said she endured and those of the parties’ adult son. However, as the wife alleged, $20 million had been spent on her legal case over many years. No cogent evidence to dispute the husband’s assertions of March 2017 have been presented.
26.It could not be said that the wife is incapable of acting for herself. She filed an affidavit in early 2017 decrying the role her then lawyers had fulfilled. She made clear through the affidavit filed by her present solicitor that the many lawyers who had represented her, had let her down. That is an easy accusation to make but I do not accept there is any relevant evidence to support it.
27.In respect of this third issue therefore, nothing I have read has indicated that the husband’s income is not as he so described.
In [28] His Honour said with respect to the evidence relied on by the husband:
The evidence of the husband has been in the wife’s hands since March 2017. It is a relatively simple story and absent some indication of implausibility, it will be accepted as unchallenged…
In [29] he referred to the solicitor acting for the wife at the time not setting out in his evidence the issues about the husband’s evidence that were disputed by the wife. Further in that paragraph he said:
…To be clear, the husband has been paying over $6000 per week in spousal maintenance for years in addition to the various lump sums of partial property settlement to which I shall refer later and at the time the wife last filed a financial statement (July 2016), she had over $100,000 in the bank.
In [31] to [36] Cronin J referred to issues concerning the parties child Mr S, who by that time was 21 years of age. He referred to Mr S’s myriad psychological and physical challenges as set out in an affidavit of the wife’s then solicitor Mr RL.
He referred to evidence contained in the wife’s financial statement filed in July 2016 concerning the means by which the husband paid Mr S’s expenses. In [36] he found, after considering issues of the amount claimed by the husband for maintenance payments/child support for Mr S as deposed to in the husband’s financial statement filed 1 March 2017, and accepting the submission by the husband’s Counsel, that the husband would continue to support his son.
Paragraphs 37 to 45 were headed “SPOUSAL MAINTENANCE”. In [37] His Honour referred to an application filed by the wife in March 2010 for interim spousal maintenance, and to an interim order for lump sum spousal maintenance being made on 31 May 2010. He referred to a further order by consent with respect to either spousal maintenance or interim property settlement in July 2010.
The application and orders were clearly made at the time that PP Lawyers were acting for the wife and there would be little doubt that there was a “requisite causal link” between that work undertaken on behalf of the wife by PP Lawyers and that judgment sum. It is common ground that the wife’s legal fees were all paid up to at least early September 2010.
I am not persuaded as to any causal link between that work and the final judgment sum in any event, particularly in circumstances where His Honour refers in [39] to [44] to a further application for spousal maintenance being filed by the wife in December 2011, some 12 months after PP Lawyers ceased acting for the wife, to that issue being litigated and to an order being made by Dawe J on 24 April 2012 for spousal maintenance in the sum of $26,021 per calendar month which order continued to the date of the final orders.
He referred to the financial statement filed by the wife in July 2016, at which time NF Lawyers were acting for the wife, to showing similar expenses to those contemplated by Dawe J in 2012. His Honour said in [44]:
…The difficulty for the court now is that the wife has not participated in these proceedings and importantly, the orders I propose to make relating to property have her capital entitlements in mind so I am entitled to consider whether she can live within her means with those assets.
His Honour went on in [45] of his reasons to discuss some of the expenses the wife deposed to in her financial statement filed in July 2016 and then said:
…Absent some indication as to why those expenses are necessary even taking into account the ‘luxurious lifestyle’ to which the wife deposed in the proceedings before Dawe J, and even allowing for income which would now be taxed (as it has not been by virtue of the fact that the payment she has received has been spousal maintenance), my view is that the wife should be able to live comfortably by community standards factoring in the significant amount of money and property that she will have from this case.
Under the heading “PART PROPERTY SETTLEMENT” His Honour said “something in the vicinity of $12 million has been paid in addition to the payments to which I have already referred” and he referred to having “no idea where it has gone other than relying upon the hearsay evidence of the solicitor for the wife”.
In [47] His Honour referred to the “absence of evidence” as to what had happened to that money creating a problem in the exercise of his discretion under s 79 of the Family Law Act 1975 (‘the Act’), to the “approach of the husband”, to the impact of the extraordinary amount of legal fees allegedly spent by the wife, and to his determination that the question of any ‘add backs’ as claimed by the husband would best be dealt with by him pursuant to s 72(2)(o) of the Act.
In [48] and [49] of the judgment Cronin J made comment as to the husband’s legal costs and orders in the husband’s favour for costs against the wife arising from some unsuccessful applications made to the Court by the wife.
As at the date of His Honour’s reasons on 23 November 2017 he states he is able to identify costs orders in favour of the husband exceeding $100,000 which the husband agrees to waive. He takes that into account as a significant resource for the wife. He further takes into account that the wife should have been responsible for half of the expenses incurred with respect to experts, accepts the amount calculated in that regard by the husband in the sum of $348,327.11 and takes into account that the husband’s waiver of his entitlement to the half‑share of that amount results in a resource in favour of the wife in the sum of $174,163.
In [51] to [58] of his reasons His Honour discusses the husband’s proposed orders for settlement of property. He considers the issue of any possible tax consequences arising out of the transfer of certain properties to the wife out of the trust and to evidence relied on by the husband in that regard in respect of which the solicitor for the wife said nothing, notwithstanding that evidence having been in the hands of the wife since 18 September 2017. In [54] His Honour noted that such evidence was unchallenged.
He considers the orders sought by the husband with respect to a withdrawal of caveats placed on certain properties by the wife and considers the husband’s evidence with respect to the wife not cooperating to reduce an outstanding debt relating to SH Pty Ltd.
In [59] under the heading “THE ORDERS PROPOSED BY THE WIFE” His Honour says as follows:
As I have indicated, the wife’s amended application is now seven years old and there is little point me referring to it because it otherwise does not assist. For that reason and the absence of the wife, I have dismissed that application.
This order dismissing that application was made by him on 13 November 2017, prior to the commencement of the final hearing that same day.
In [60] to [68] inclusive under the heading of “THE LEGAL ISSUE” His Honour discussed the legislative requirements of the Court.
In [68] His Honour said, inter alia:
…I propose to set out what I consider the current assets are about which the evidence is clear and then to take into account all of the things that have occurred such that there is a recognition of the monies received by the wife and which have no longer any apparent existence.
After further consideration in [69] of whether to approach the matter by way of a “percentage or lump sum alteration” His Honour said under the heading “THE EVIDENCE” in [72]:
In this unusual case, the assessment is best considered with an examination of four specific time periods. Those are, before the marriage occurred, the period from the date of the marriage until the separation 11 years later, the period of 12 years since separation, and ultimately, the future for each of the parties.
Under the heading “BEFORE THE MARRIAGE” and in [73] His Honour said “The evidence of the husband is unchallenged and I accept it is plausible.” He then went on to discuss the husband’s evidence during that time period.
Under the heading “THE MARRIAGE PERIOD” and in [85] to [93] it is clear from His Honour’s reasons that he again relied on the evidence of the husband. He said in [90]:
Earlier, I mentioned the wife’s interest with her sister in the property at Suburb K. Just after separation, the wife transferred her interest to her mother. That interest has now gone but absent some evidence from the wife as to the basis for the transfer, I ought conclude that if she needed to, she could make arrangements with her mother to assist her financially particularly having regard to the fact that the husband paid the substantial debt to the mortgagee at the time of the marriage. I shall treat that property as a resource of the wife in taking into account the holistic assessment.
In [91] he referred to valuation exercises having first been commissioned from Ms E in 2007, being completed at a cost of $1.2 million, and to subsequent reports costing $628,000.
He finds in [92] that the wife has already received $12.6 million to assist her in litigation and does not doubt that most of that money has gone on legal fees. He concludes that the fact that various costs orders were made against the wife in proceedings under which each party is normally expected to pay their own costs suggests that at least from the wife’s perspective the litigation was not diligently pursued.
He further finds in [92] that the wife had not contributed to all of the single expert fees. He referred back to his earlier comments about the fact of her not having to account for her share of those fees in a final order as proposed by the husband being a resource for her in accordance with his findings in [60] of his reasons.
In [94] under a heading “THE [CX COMPANY]” His Honour commented that:
Having regard to the amount of focus on the primary source of the parties’ wealth, it remains uncertain just what present view the wife has about the husband’s interest in the [CX Company].
In [95] to [103] under the heading “THE POST SEPARATION PERIOD” Cronin J again refers to reliance on the husband’s evidence with respect to issues arising from the intervention of the Australian Federal Police and the Australian Taxation Office regarding the husband’s entitlement in the CX Company.
In [99] and [100] he referred to disputes between the participants in the CX Company in Hong Kong, to the husband commencing litigation in Hong Kong against a Mr TA in May 2015 with respect to the betting business, to the dispute settling and to the remaining AUD9.3 million being available to the husband for distribution and alteration. There is no reference in any of that part of His Honour’s reasons to taking into account any evidence of the wife.
In [104] to [111] inclusive under the heading “THE [KC] TRUST” he referred specifically to the husband’s evidence about the KC Trust and to the implausibility of the husband’s evidence but said at [109]:
The wife had been aware of the husband’s assertion through his affidavit from at least March 2017 and presumably earlier from disclosures he made. Whilst the simplicity of the husband’s evidence might be seen to be implausible, the absence of any approach by the wife as to how she would establish that the husband’s evidence was untrue or that he had some control over, or was the owner of, the capital proceeds that gave rise to these distributions, must mean that his evidence is unchallenged…
In [112] under the heading “THE FUTURE” Cronin J said inter alia:
…The wife’s future depends entirely upon what she does with the assets with which she is left. On the basis of the transfer of the properties proposed by the husband, the wife will still have substantial assets in her name but absent her evidence as to what she will do with them, I see no reason why I should not conclude that she could adequately support herself from either the capital or indeed, income from their use…
In [113] to [120] Cronin J set out a list of the parties’ assets and the wife’s “resources”. Paragraph [113] commenced in the following manner:
Extrapolated from a helpful summary of the assets, prepared by counsel for the husband which I accept, I find the parties have the following…
In [117] of his reasons he remarks that the schedule set out in [113]:
…identifies the interests of the parties in property owned by them or, in the case of the Strahan Trust, those controlled by the husband. I have also included as a resource, the husband’s cost entitlements relating to orders made by the court and what would be expected to be paid by the wife towards single experts. I only propose to take those into account on the basis that they are benefits that the wife is receiving by not having to pay those obligations.
and in [119] he said:
Various loans have also been shown as being due to the husband by companies or others and I have accepted his calculations on the basis that they are unchallenged by the wife. These figures were provided to the court on 10 November 2017 so I have presumed that they are up to date.
Under the heading “THE ASSESSMENT OF CONTRIBUTION” and in [121] to [129] His Honour said at [124]:
There is no evidence from the wife as to what role she played in the conservation of the assets of the parties but she has had the use of the various properties for years.
His Honour made findings as to the overwhelming nature of the husband’s financial contribution not only to the wife but to the support of their child Mr S, and to the fact of contributions made by or on behalf of the parties to the acquisition, conservation or improvement of their property of a non-financial nature being hard to assess.
In [127] His Honour says:
Section 79(4)(f) requires the court to take into account any other order made under the Act affecting a party to the marriage or a child of the marriage. At the moment there is an extant interim order for spousal maintenance and the wife has shown no inclination to agitate the continuation of that order by participating in the proceedings as she should have.
In [130] to [141] under the heading “SECTION 75(2)” His Honour refers in [134] to the commitments of each of the parties necessary to enable the party to support himself or herself and a child or other person that the party has a duty to maintain. After a discussion of Mr S’s needs and the husband’s significant ongoing contribution to those needs, His Honour expresses having no understanding of why the wife:
…would need $1500 each week for clothing and shoes or a similar amount for ‘other’ commitments which are undefined in circumstances where she is predominantly caring for her adult son with the assistance of others and there is no indication of how she otherwise spends her time. Subjectively, I can only presume that there is a limit to what money can be spent and I do not accept that the figures she has portrayed in her statement of financial circumstances in July 2016 give an accurate picture of what her ‘commitments’ are.
In [137] he refers to the wife’s financial statement being “not sufficiently clear to enable me to understand how that money is spent” in reference to the allowance of almost $7,000 per week paid to the wife by the husband, in [140] and [141] discusses the basis for any significant s 75(2) adjustments and says in [141]:
…In my view, some adjustment needs to be made simply on the basis that I find the husband will go on to build on his capital base whereas it is unlikely that the wife would do so absent some investment outside of the property market and again, I am bereft of any evidence that might indicate what her intentions are.
Under the heading “HOW THEN TO DIVIDE THE ASSETS?” and in [142] to [151] inclusive, His Honour refers to a table showing the husband’s proposed alteration of property interests and rejects that proposal on the basis that it is “not a just and equitable outcome”. In [149] he discusses the need for the wife to have some immediate capital to continue the lifestyle that he accepts she has become accustomed to and to a determination that such sum should be in the amount of $2 million “to enable her to re-establish herself until the assets can otherwise be reconstructed.”
In the final paragraph of His Honour’s reasoning under the heading “SPOUSAL MAINTENANCE” he says:
As the interim orders were only until the final determination and the wife’s response has been now struck out, that order will be discharged as proposed by the husband upon the transfer of the properties.
Cronin J refused the wife’s application for an adjournment of the final property trial. She neither attended the final hearing nor participated in it in any other way. The wife’s amended application for final orders for settlement of property filed by her on 1 June 2010 was dismissed prior to the commencement of the undefended hearing.
The application determined by the Court was the amended response of the husband filed on 1 March 2017.
In dismissing the wife’s application for a further adjournment of the trial on 13 November 2017, His Honour said inter alia at [22]:
My assessment of the situation is very much limited by what I have read from the husband’s side and I have no idea how the husband’s evidence would be challenged…
In [31] he said:
The husband has put his position very clearly and succinctly and the wife has had ample opportunity to test some of the propositions that he has put in his trial affidavit which has been before the Court for many months…
and went on to say at [35]:
The wife has had ample time in this case over a number of years to sort out how she wanted to conduct the proceedings and I accept that the Court has, at times, not been necessarily as vigilant as it might have been. But, in the 12 months or more that I have dealt with the case, I have given the wife at least two occasions to try and get her house in order and whilst she has clearly had difficulties with getting representation, the material that might give me some indication as to the nature of the argument has been absent.
I am unable to find any causal link between the efforts of either PP Lawyers or NF Lawyers, made on behalf of the wife during the respective periods of time they each acted for her in the proceedings between the husband and the wife, and the judgment sum of $2 million received by the wife.
That is not to say that work done by each of the firms of solicitors during the time they acted for the wife was other than appropriate in the circumstances of the case at those times, undertaken diligently and professionally on the instructions of the wife. That is not a matter I am called upon to determine.
The final order for property settlement including a judgment sum of $2 million was made by Cronin J after a careful consideration of the evidence relied on by the husband.
It was submitted on behalf of PP Lawyers that they had made “considerable contribution” to the expert report of Ms E considered by Cronin J. In the husband’s affidavit filed 7 April 2020 he deposed to valuations of real property before the Court at the final hearing being obtained during the period 2014 to 2016.[7] In paragraph 10 he deposed as to Ms E’s valuation as follows:
…[Ms E] was initially engaged as single expert to value my and the wife's private corporate interests on about 6 July 2007, by our respective lawyers at the time, [NP Firm] (acting for me) and [WM Firm] (acting for the wife). [Ms PP] commenced acting for the wife in April 2008 and [Ms E's] first valuation reports were released on or about 28 November 2008 and 16 December 2008. However, these reports were not the valuation evidence before His Honour Justice Cronin at the final hearing. [Ms E] prepared valuation reports dated 31 March 2016 and 13 May 2016 pursuant to a joint letter of instructions from my lawyers and the wife's then solicitors, [CW Lawyers], dated 21 March 2014. The 2016 reports were the valuation evidence before His Honour Justice Cronin at the final hearing and referred to in His Honour's judgment.
[7] Husband’s affidavit filed 7 April 2020, paragraph 9
I find that is the correct position with respect to what valuation evidence was before Cronin J at the time of the final trial particularly taking into account His Honour’s comments as to the specific amount expended on the updated valuations.
I find that it is not sufficient to establish a causal link that the original report of Ms E was sought prior to and obtained during the time PP Lawyers were acting as the wife’s solicitors, in circumstances whereby the time of trial it was nine or ten years out of date, not relied on by the husband and not taken into account by Cronin J.
I am not satisfied, following careful consideration of His Honour’s reasons delivered on 23 November 2017 that the work undertaken by PP Lawyers for the wife during the time they acted for her establishes a causal link to the judgment in the wife’s favour.
Likewise, the financial statement filed on the wife’s behalf by NF Lawyers during their period of instruction was referred to by Cronin J but only in the context of it being unhelpful. It had been filed as part of the wife’s case in 2016, which case had been dismissed by Cronin J prior to determining the final property settlement proceedings.
In Firth, Campbell J said in [48]:
The rationale for the existence of the solicitor’s lien over the fund recovered through his or her efforts is that, if the solicitor had not done the work, and spent the money, there would not be any fund in existence. The solicitor’s role in bringing the fund into existence is of such importance that equity recognises proprietary rights which enable the solicitor to be paid out of the fund…
I find that the fund recovered by the wife pursuant to the judgment of Cronin J of 23 November 2017 was not recovered through the efforts of either PP Lawyers or NF Lawyers. It came into existence as an award made to the wife by the trial Judge, hearing the matter on an undefended basis and taking into account evidence presented to the Court by the respondent husband.
As I have said previously, the efforts of the solicitors’ may have been entirely appropriate but I find they did not go to the existence of a fund comprising the judgment sum.
I find that neither PP Lawyers nor NF Lawyers have established their respective claims to liens “over the fruits of the litigation”, being the judgment sum of $2 million currently standing to the wife’s credit in the Family Court of Australia Litigants Fund. Accordingly, neither firm of solicitors have established an entitlement to have any amount of fees, costs and disbursements owing to them paid to them from that fund.
HUSBAND’S APPLICATION IN A CASE FILED 21 FEBRUARY 2020
The orders sought by the husband in respect of this application are set out in paragraph 6 of these reasons.
The costs sought by the husband arise from orders made in his favour against the wife on each of 29 November 2018, 21 February 2019, 10 June 2019 and arising from the order made in the High Court of Australia on 16 October 2019. The only order that has been quantified was that of 29 November 2018, quantified in the sum of $36,171.94.
In paragraph 11 of the husband’s affidavit filed 21 February 2020 he deposed to he and the wife having agreed to the quantum of the second and third orders for costs to which I have referred being in the sum of $33,750.08 and $38,178.41 respectively. The husband also seeks the sum of $59,246.10 inclusive of interest as at 6 April 2020 in respect of the order made in the High Court on 16 October 2019.
All of these orders post-dated the costs orders referred to by Cronin J in [48] and [49] of the judgment of 23 November 2017, which the husband agreed to waive and which were taken into account by Cronin J as a “resource” for the wife.
It is not necessary for me to determine whether orders for costs should be made. It only requires the Court to consider whether payment should be made to the husband out of the funds standing to the wife’s credit in the Court’s Litigants Fund, and the amount of any such payment.
It is the wife’s position, as submitted by her Counsel in paragraph 36 of the summary of argument on behalf of the wife filed 4 May 2020, that:
The mere fact that the husband has outstanding cost orders in his favour against the wife does not equate, in law, to a right to enforce the monies now held in court. The monies paid into Court were only in protection (and subject to adjudication of) the asserted equitable liens.
Counsel further submitted that the husband’s application should be refused with costs.
True it is that a fund of $2 million currently rests in the Court’s Litigants Fund only because of the need to protect those funds pending the determination of the claim on the part of each of PP Lawyers and NF Lawyers for equitable relief for their fees and costs pursuant to a purported lien over the “fruits of the litigation”. Those claims have not been upheld by the Court. Nevertheless, the funds are available and I am not persuaded that they cannot be utilised to satisfy costs orders made in favour of the husband after 23 November 2017 that have not been paid by the wife.
I find that the wife should pay the costs orders in favour of the husband to which I have referred from the funds standing to her credit in the Litigants Fund, prior to the distribution of the balance of that fund to the wife.
As I have said, the costs arising from the order made in this Court on 29 November 2018 have been quantified in the sum of $36,171.94. I am satisfied that the sums referred to in paragraph 11 of the husband’s affidavit filed 21 February 2020 in relation to the costs orders made in this Court on each of 21 February 2019 and 10 June 2019 should be quantified in the sum of $33,750.08 and $38,178.41 respectively in circumstances where the wife’s affidavits filed on each of 26 February 2020 and 17 April 2020 do not take issue with those sums.
In addition, I find that the amount of costs the husband estimated with respect to the proceedings in the High Court of Australia should be fixed in the sum of his estimated amount of $55,341.26 deposed to in his affidavit filed 7 April 2020. In the wife’s affidavit filed 17 April 2020 she took no issue with that sum.
The husband claimed interest totalling $3,904.84 as at 6 April 2020. It may well be that further interest has accrued with respect to the husband’s costs.
Nevertheless, in an attempt to finalise this matter once and for all, I intend to make an order that the sum of $167,347 be paid to the husband, being the total sum of costs and interest referred to in paragraph 11 of these reasons.
That sum will be deducted from the sum of $2 million meaning that the sum of $1,832,653 will be released to the wife.
For those reasons I make the orders as set out at the commencement of these reasons for judgment.
I certify that the preceding one hundred and twenty-four (124) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Mead. Associate:
Dated: 5 March 2021
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