Tang & Keats
[2016] FamCA 99
•25 February 2016
FAMILY COURT OF AUSTRALIA
| TANG & KEATS | [2016] FamCA 99 |
| FAMILY LAW – COSTS – order sought on a joint and several basis against solicitor and client where adjournment was necessitated by evidence not being comprehensively prepared. |
| Family Law Act 1975 (Cth) |
| Cassidy v Murray[1995] FamCA 91; (1995) FLC 92-633 Collins and Collins (1985) FLC 91-603 Fitzgerald v Fish (2005) 33 Fam LR 123 Forster & Forster [2014] Fam CAFC 88 I and I (No 2) (1995) FLC 92-625 Minister for Immigration and Multicultural Affairs v Vadarlis (No 2) (2001) 188 ALR 143 citing with approval Cretazzo v Lombardi [1975] 13 SASR 4 and Chilli v Abbott (1981) 53 FLR 108 Munday and Bowman (1997) FLC 92-784 Prantage and Prantage [2013] FamCAFC 105 Re: Felton (1942) 60 WN (NSW) 16 Z & Limousin [2010] FamCAFC 59; (2010) FLC 93-433 |
| APPLICANT: | Ms Tang |
| RESPONDENT: | Mr Keats |
| FILE NUMBER: | MLC | 8207 | of | 2014 |
| DATE DELIVERED: | 25 February 2016 |
| PLACE DELIVERED: | Melbourne |
| PLACE HEARD: | Melbourne |
| JUDGMENT OF: | Cronin J |
| HEARING DATE: | 18, 19 February 2016 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Ms Jenkins |
| SOLICITOR FOR THE APPLICANT: | Kennedy Guy Solicitors |
| COUNSEL FOR THE RESPONDENT: | Mr Hutchins |
| SOLICITOR FOR THE RESPONDENT: | Zeno Lawyers |
Orders
That the wife and solicitor, Ms Gault, be jointly and severally liable for the husband’s costs thrown away fixed in the sum of $10,100.
That all extant applications for final orders be adjourned to commence as a two day hearing on 4 August 2016.
That the wife file and serve any affidavit material upon which she intends to rely by 4.00pm on 28 March 2016.
That the husband file and serve any affidavit he is so advised in reply to the affidavit material of the wife by no later than 4.00pm on 29 April 2016.
That each party have liberty to have subpoenae issued as they are so advised subject to the usual conditions that the solicitors certify that the evidence sought is relevant to the issues in dispute.
That the outlines of case (to the extent they are amended) be filed as required by the orders of 6 October 2015 but by 4.00pm on 1 August 2016.
IT IS CERTIFIED:
That pursuant to Order 19.50 of the Family Law Rules 2004 it was reasonable to engage counsel to attend.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Tang & Keats has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| FAMILY COURT OF AUSTRALIA AT MELBOURNE |
FILE NUMBER: MLC 8207 of 2014
| Ms Tang |
Applicant
And
| Mr Keats |
Respondent
REASONS FOR JUDGMENT
These reasons explain a costs order set out at their commencement.
The order requires that a litigant and her solicitor be jointly and severally liable for costs incurred by the other litigant for the reasons that follow.
Proceedings about the parties’ property and their children have been in the litigation system of this Court since 2014. The parenting proceedings were compromised by final orders. On 6 October 2015, after a discussion with both of the parties’ legal practitioners (and the parties present) as to the issues then in dispute, the property settlement case was set for trial to commence on 18 February 2016.
As part of the timetable, by the orders made in October 2015, the wife had to file and serve her affidavit of evidence by 9 December. That did not occur until January although no issue of prejudice was taken by the husband. The lateness was raised as an indication of the reason why a costs order should be made.
On 18 February 2016, and with both parties represented by counsel, I held discussions during a break in another hearing and observed some of the problems that I then perceived in the evidence of the parties. Objections to evidence were still then being discussed between counsel.
On the morning of 19 February, counsel for the wife applied for an adjournment of the final hearing. That application was formally opposed. The basis of the application (as put by counsel) was that:
·On 2 December 2014, in an interlocutory hearing, Bennett J had ordered that the wife file an affidavit by a qualified translator saying that the affidavit material (then relied upon) had been read and understood;
·Counsel had found “numerous errors” in the material (the final trial affidavit filed in January 2016) when an interpreter was used to assist the wife;
·Counsel said there had therefore been a significant change in the wife’s case;
·There were mathematical and accounting errors such that it was inadequate to simply rewrite the trial affidavit;
·“Almost every issue” needed to be rewritten with the approval of the wife.
Thus, counsel said she could not do justice to the wife’s case on the material before the Court.
Counsel for the husband, whilst opposing the application, acknowledged that seeking to proceed on an undefended basis would not lead to a proper outcome. He expressed concern that if there was a new affidavit with new material, his client would have to consider that, and possibly present new material himself. Counsel for the husband contemplated without knowing about the detail of this new material from the wife, that his client might be facing a new case.
In Forster & Forster [2014] Fam CAFC 88, the Full Court (Bryant CJ, Finn and Thackray JJ) dealt with an appeal case where the husband had been refused an adjournment where his ground was that he had endeavoured to obtain legal representation and he was otherwise unready. The Full Court said:
We fully acknowledge that the decision whether or not to grant an adjournment of a trial was a matter very much within the discretion of the trial Judge. We also bear in mind the principles limiting the granting of adjournments which emerge from the High Court decision in Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175 and on which Cronin J correctly relied when he refused the first adjournment application. However, in our view, and with the greatest respect to his Honour, the adjournment application had to be considered against the background of this most unusual case.
The background to which the Full Court referred included long delays for which the husband was not entirely responsible and because of a series of events, he had not had an opportunity to present his own case. In respect of the latter, the Full Court said:
That trial would have given him that opportunity (to present his own case), and therefore for him to be denied that opportunity required compelling reasons.
In Forster (supra), the husband had sought legal representation for the final trial and there had been some confusion about where it was to be heard but as the Full Court noted, this was the first time that the husband had arranged representation. As such, the Full Court said:
It could not therefore be said that the (husband’s) claim that he needed an adjournment so that he could be represented, was just another delaying tactic or “ploy”. Given the history of the matter, it was, in our view, particularly important that the appellant should be legally represented once his case finally came to trial.
The Full Court acknowledged the Court’s resource problem and also the right of the other litigant to proceed to finalise matters but all of the indicia were that there was a justiciable issue to be tried.
The same situation in Forster applies here. The wife wanted to be a litigant, had engaged lawyers and had filed her evidence through those lawyers only to find that she had then received advice of its deficiency or inadequacy. An adjournment must therefore follow.
Counsel for the husband then sought costs on an indemnity basis against the wife and/or the wife and her solicitor jointly and severally. The costs were said to be less than counsel’s usual commercial fee but around the amount set out in the rules of the Court. Along with his solicitor’s fees of 2 days’ attendances and his own preparation, counsel sought the sum of $10,100.
Quantum is not really in dispute here. Counsel for the wife thought that a full day’s fees for the first of the two days was too much but she acknowledged that both counsel had worked all day and were still at the Court at its end. As for preparation by counsel, that issue could hardly be challenged because it was acknowledged by the wife that new material would be forthcoming and there would be a significant change in the wife’s case. The solicitor for the wife, to whose remarks I return in a moment, did not dispute quantum.
Counsel for the husband submitted:
·The orders of Bennett J should have put the wife on notice about the interpreter;
·The wife’s trial affidavit was late;
·The entire event and preparation had been wasted because of the “failure to do things” but he was unable to submit where the fault lay;
·It should have been clear to the wife and her solicitor from the 2014 order that the affidavit should have been translated;
·The solicitor should be jointly responsible because the husband could not point to the wife having funds;
It was submitted that the circumstances were exceptional and justified a departure from the usual rule that scale costs applied.
Counsel for the wife submitted:
·The wife had not had the material translated and by inference, it was necessary for that to have been undertaken;
·The wife now did not agree with her own material; and
·The material was not in a form with which she agreed.
Counsel said that she personally had had difficulty with the wife understanding the material and she had used a translator all day.
Counsel for the wife acknowledged that she did not speak for the solicitor who was her instructor, and she later acknowledged that she had sought (but not apparently then obtained) a ruling from the Victorian Bar Ethics Committee as to her own position. Having said that, she did not seek to withdraw from the case nor resile from the fact that she acted for the wife. She said that she understood that the application for costs against the solicitor required the solicitor to be heard and she had spoken to her accordingly. The solicitor indicated she wished to be heard on the subject.
I gave the solicitor an opportunity to get advice. She did not seek to adjourn the application for costs. She did not seek to have her own legal representation and at one point, I expressed concern that there were legal professional privilege issues that she had to consider. She pressed on.
The solicitor then submitted the following:
·She had not been on the record for the wife when the Bennett J orders were made and she had not read them;
·She had never used a translator with the wife and thus by inference, had not needed one;
·She had received both written and oral instructions from the wife;
·She conceded “an error” was hers but not the “rest of the affidavit”.
After a lunch break, the solicitor submitted:
·She was in a “difficult” position;
·She had been provided with the instructions as set out in the affidavit;
·The wife was aware of those instructions and aware of what was in the affidavit;
·The affidavit required by Bennett J in 2014 had said that the wife had had a reasonably high comprehension of English except for some difficult words.
Critical to my determination is the fact that when the solicitor was asked what the Court should do, she replied that there should be “an apportionment of blame” for the affidavit. That must be viewed as a concession that the task was deficient.
As to who should pay any costs if ordered, the solicitor left it up to the Court to decide.
The first of any questions and considerations in this case is whether a costs order should be made at all.
It is the general rule, as prescribed in s 117(1) of the Act, that each party should bear their own costs. However, the Court is empowered by s 117(2) of the Act to make an order for costs if it is of the opinion that there are “circumstances that justify it in doing so”. If the Court finds a justifying circumstance, it still has to have regard to the factors in s 117(2A) in considering what order, if any, should be made (see I and I (No 2) (1995) FLC 92-625).
It must also be remembered that costs are not awarded by way of punishment of the unsuccessful party but rather are compensatory in the sense that they are awarded to ameliorate the expense of the successful party as a result of having been required to participate in the legal proceedings. Here, the husband is clearly out of pocket, was ready to proceed and challenged the wife’s material. It was the wife who was the applicant. (see Minister for Immigration and Multicultural Affairs v Vadarlis (No 2) (2001) 188 ALR 143 citing with approval Cretazzo v Lombardi [1975] 13 SASR 4 and Chilli v Abbott (1981) 53 FLR 108).
The striking concessions by counsel for the wife and the candid concession by the solicitor for the wife are matters which must be seen as justifiable circumstances to depart from the main principle relating to costs.
The husband has been inconvenienced at a time when he had every right to consider that his trial was going to proceed. It would be unjust to make him pay his own costs (or even some of them) where the circumstances were as I have described.
Before making an order however, the Court is obliged to take into account the factors in s 117(2A). No one factor in s 117(2A) is decisive of the outcome.
The financial circumstances of the parties in general terms are in dispute. Counsel for the husband expressed concern about what the wife would ultimately have but I consider the fact that she has had solicitors throughout and access to money (even if the amount is disputed) indicates that she has property. She is not impecunious. To the extent that it is relevant, the solicitor did not raise any financial issues.
Section 117(2A) requires consideration of conduct but it is conduct as a litigant. The wife was late with the filing of her affidavit and no explanation was provided. The lateness with which this change of direction arose must be seen in the context of the husband having responded to what he was provided. It was clear from his material that not only were facts alleged by the wife disputed but there was also a complaint that the wife had not provided discovery when requested about amounts said to have been under her control. It may be with this new proposed evidence, the picture will be clearer. No clear explanation has been given as to why this deficiency in the wife’s material arose. It is difficult to accept that it simply arose out of a translation issue because of what the wife’s counsel said as I have outlined. The wife’s position must be seen also in the context of a person who does not have legal skills and training.
It is important to also observe here, as the Full Court did in Collins and Collins (1985) FLC 91-603, that the discretion in s 117 is broad and that the relevant factors in s 117(2A) are not to be read in a restrictive way. Any one or more of the factors in s 117(2A) may be the sole foundation for an order for costs (see Fitzgerald v Fish (2005) 33 Fam LR 123) but it is the law that all of the factors must be taken into account and balanced (see I and I (1995) FLC 92-625). I have done so.
I am satisfied that the husband is justified in seeking, and obtaining, an order for costs.
Counsel for the husband sought indemnity costs. In his submission, reference was made to a number of decisions including Munday and Bowman (1997) FLC 92-784. To justify a very great departure from the rule adopted not only in this Court but in most courts around Australia, the husband has to show that the circumstances are exceptional. The wife and the solicitor did not really address this issue save as I have described it above.
The question of who has been at fault for the paucity of evidence or its deficiency is a matter about which I cannot easily make any findings. However, it must be seen as the exception rather than the rule that a legal practitioner would concede that the evidence presented, was erroneous or deficient. That is not the norm. Parties rely very heavily on legal practitioners to marshal facts, understand the applicable law and present their cases so that there is a reasonable prospect of the court making a decision which is just.
In an interesting observation on the point but in the context of a dispute about costs, Maxwell J in Re: Felton (1942) 60 WN (NSW) 16 at 21 said that the essence of the rule is that the client must be protected; he is embarking upon a field which- it can invariably be assumed- is completely strange to him, and which is, or must be, taken to be familiar to the solicitor. It is therefore the duty of the solicitor to place his client in a position where he can, so far as possible, be able to fully appreciate the nature and extent of his financial liabilities in the course of litigation. I would add to that, that the lawyer’s role is to ensure that, having completed due diligence in a discovery and disclosure sense and formed an opinion of the entitlements at law to the disputed property, the lawyer has ensured that the evidence needed to achieve that result is provided. That did not happen here as conceded by both solicitor and counsel.
Chapter 1 of the rules of the Court provides the following in relation to responsibilities on lawyers:
[1.04] The main purpose of these Rules is to ensure that each case is resolved in a just and timely manner at a cost to the parties and the court that is reasonable in the circumstances of the case.
…
[1.06] The court must apply these Rules to promote the main purpose, and actively manage each case by:
(a) …
(b) …
(c)identifying the issues in dispute early in the case and separating and disposing of any issues that do not need full investigation and trial;
(d) …
(e)setting realistic timetables, and monitoring and controlling the progress of each case;
(f)ensuring that parties and their lawyers comply with these Rules, any practice directions and procedural orders;
(g) …
(h) …
(i) …
(j) …
…
[1.08]
(1) Each party has a responsibility to promote and achieve the main purpose, including:
(a)ensuring that any orders sought are reasonable in the circumstances of the case and that the court has the power to make those orders;
(b) complying with the duty of disclosure (see rule 13.01);
(c) ensuring readiness for court events;
(d)providing realistic estimates of the length of hearings or trials;
(e) complying with time limits;
(f)giving notice, as soon as practicable, of an intention to apply for an adjournment or cancellation of a court event;
(g) assisting the just, timely and cost-effective disposal of cases;
(h) identifying the issues genuinely in dispute in a case;
(i)being satisfied that there is a reasonable basis for alleging, denying or not admitting a fact;
(j)limiting evidence, including cross-examination, to that which is relevant and necessary;
(k)being aware of, and abiding by, the requirements of any practice direction or guideline published by the court; and
(l) complying with these Rules and any orders.
(2)A lawyer for a party has a responsibility to comply, as far as possible, with subrule (1). (my emphasis)
Note: The court recognises that a lawyer acts on a party's instructions and may be unable to establish whether those instructions are correct.
Rule 1.08(2) was not addressed by the solicitor. I appreciate the privilege issue arises but it was not suggested that the wife had been asked to waive it. The solicitor did not seek to call evidence to show the instructions were adequately and properly obtained and did not need to be questioned, corroborated or enhanced. No response was made by the solicitor to the allegations about inadequate discovery.
In relation to rule 1.08, the provisions of (a), (c), (e), (f), (h) and (j) are particularly pertinent here. The wife and the solicitor have failed in various ways, and for whatever reason, to enable the matter to proceed expeditiously. That is particularly so where the matter was set down in October after a discussion as to the nature of the issues in dispute. The criticism of the wife applies also to her lawyer.
The law relating to the departure from the general principle about parties being ordered to pay scale costs must be seen also in the context of what the Full Court said in Prantage and Prantage [2013] FamCAFC 105. This case is one in which the circumstances are exceptional. They justify a finding that an order for indemnity costs should be made.
Chapter 19 of the Family Law Rules 2004 provides specifically for costs orders against lawyers. That provides that a person may apply for an order against a lawyer for costs thrown away during a case, for a reason including:
(a)the lawyer's failure to comply with these Rules or an order;
(b)the lawyer's failure to comply with a pre-action procedure;
(c)the lawyer's improper or unreasonable conduct; and
(d)undue delay or default by the lawyer.
The principles relating to making cost orders against lawyers has been considered in various cases (Cassidy v Murray[1995] FamCA 91; (1995) FLC 92-633 at [82365] Z & Limousin [2010] FamCAFC 59; (2010) FLC 93-433 at [84704]). Relevantly here, what may be drawn from those cases is:
·The court should not make such an order without giving the person to be affected by the order an opportunity to be heard;
·The Court may make an order for costs against a solicitor without the necessity to establish that the solicitor has been guilty of serious professional misconduct;
·The solicitor has a duty to the Court to promote the interests of justice whilst at the same time attending to the needs of the solicitor's client;
·A mistake or error of judgment would not justify an order for costs against a solicitor. However, misconduct, default or negligence, any of which are found by a Court to be of a serious nature, may be sufficient to justify an order.
In this case, the solicitor has been given an opportunity to be heard. Whilst on the agreed facts, I could not find that this was serious professional conduct because I do not know the full extent of the evidence of explanation, the very concessions by the solicitor indicate that her task was not fulfilled in the way that Maxwell J described as an obligation towards a lay person. The fact that there was an issue about whether or not the evidence was translated seems to me to be secondary to the point that the work was not done in a way in which the client was entitled to expect. The extent to which the wife contributed to that dilemma has not been established but on any view, she has failed to provide detail which she should have. I do not consider I am in a position to “apportion” blame having regard to the restrictions on the solicitor because of professional privilege. I do consider that had counsel been engaged much earlier and the focus been on the discovery aspects, it is conceivable that this would not have occurred.
The solicitor has also failed to fulfil her obligations under the rules of the Court as earlier outlined.
This is a case where the husband should have his costs on an indemnity basis and that the wife and the solicitor should be jointly and severally liable.
I certify that the preceding Forty Seven (47) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin delivered on 25 February 2016.
Associate:
Date: 26 February 2016
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