FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
FIRST INSTANCE
Venter & Venter (No 2) [2024] FedCFamC1F 862
File number: BRC 7462 of 2024 Judgment of: CAREW J Date of judgment: 13 December 2024 Catchwords: FAMILY LAW – COSTS – Applications by the husband and other respondents for costs against a barrister and firm of solicitors who previously acted for the wife, or alternatively, against the applicant wife – Whether there has been exceptional circumstances to justify an order for costs on an indemnity basis – Where it is found that the barrister and firm of solicitors engaged in improper and unreasonable conduct – Where the conduct caused significant costs to be incurred unnecessarily and a waste of Court resources – An order for costs to be paid jointly and severally made against the former barrister and solicitor for the applicant wife – Legal practitioners referred to the relevant state Legal Services Commissioners. Legislation: Family Law Act 1975 (Cth) ss 117
Federal Circuit and Family Court of Australia Act 2021 (Cth) ss 67, 68, 69
Federal Circuit and Family Court of Australia Rules 2021 (Cth) rr 12.08, 12.13, 12.15, 12.17 12.47
Cases cited: Boland v Yates Property Corporation Pty Ltd (1999) 74 ALJR 209
Cassidy & Murray (1995) FLC 92-633
Clifton (Liquidator) v Kerry J Investment Pty Ltd trading as Clenergy [2020] FCAFC 5
Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225
Dura (Australia) Constructions Pty Ltd v Hue Boutique Living Pty Ltd (No 5) (2014) 48 VR 1
EI Du Pont De Nemours & Co v Commissioner of Patents (1987) 16 FCR 423
Ex Christmas Islanders Association Inc and Others v Attorney-General (Cth) (No 2) (2006) 233 ALR 97
Jones v Dunkel (1959) 101 CLR 298
Kohan and Kohan (1993) FLC 92-340
Lenova & Lenova (Costs) [2011] FamCAFC 141
Mineralogy Pty Ltd v Sino Iron Pty Ltd (No 7) [2018] FCA 1217
Nada & Nettle (Costs) (2014) FLC 93–612
Parke & the Estate of the Late A Parke (2016) FLC 93-748
Penfold v Penfold (1980) 144 CLR 311
Re Wilcox, Ex parte Venture Industries Pty Ltd (1996) 72 FCR 151
Stopford Malloy & Malloy (Costs) [2018] FamCAFC 6
Venter & Venter (No 5) [2023] FedCFamC1F 635
Venter & Venter (No 6) [2024] FedCFamC1F 94
Warbrick & Warbrick (No 2) (2021) FLC 94-030
Z (a solicitor) & Limousin (2010) FLC 93-433
Number of paragraphs: 250 Date of last submissions: 29 August 2024 Date of hearing: 15 – 16 August 2024 Place: Brisbane Counsel for the Applicant: Mr Tatarka Solicitor for the Applicant: Kalus Kenny Intelex Counsel for the First Respondent: Mr Kelly KC with Dr Smith Solicitor for the First Respondent: Broun Abrahams Burreket Counsel for the Second, Third, Fifth and Seventh Respondents: Mr Stewart KC with Mr Barnett Solicitor for the Second, Third, Fifth and Seventh Respondents: Mangioni Biggs & Co The Fourth Respondent: Did not participate Counsel for the Non-Party Respondent, Mr P: Mr De Jersey KC Solicitor for the Non-Party Respondent, Mr P: Colin Biggers & Paisley Counsel for the Non-Party Respondent, GG Lawyers: Mr Jones KC with Mr Sheptooha Solicitor for the Non-Party Respondent, GG Lawyers: Hall & Wilcox ORDER
BRC 7462 of 2024 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS VENTER
Applicant
AND: MR VENTER
First Respondent
MR B VENTER
Second Respondent
MR C VENTER (and others named in the Schedule)
Third Respondent
MR P
Non-Party Respondent
GG LAWYERS
Non-Party Respondent
ORDER MADE BY:
CAREW J
DATE OF ORDER:
13 DECEMBER 2024
THE COURT ORDERS THAT:
1.The first respondent’s costs thrown away by the adjournment of the trial listed to commence on 24 July 2023 and adjourned on 3 August 2023 be paid by Mr P and GG Lawyers Pty Ltd jointly and severally in the fixed sum of $400,000.
2.The first respondent’s costs of and incidental to his Application in a Proceeding filed 1 August 2023 be paid by Mr P and GG Lawyers Pty Ltd jointly and severally in the fixed sum of $150,000.
3.The first respondent’s costs of and incidental to his Application in a Proceeding filed 28 March 2024 be paid by Mr P and GG Lawyers Pty Ltd jointly and severally in the fixed sum of $200,000.
4.The second, third, fifth and seventh respondents’ costs thrown away by the adjournment of the trial listed to commence on 24 July 2023 and adjourned on 3 August 2023 be paid by Mr P and GG Lawyers Pty Ltd jointly and severally in the fixed sum of $550,000.
5.The second, third, fifth and seventh respondents’ costs of and incidental to the Application in a Proceeding filed on 2 August 2023 be paid by Mr P and GG Lawyers Pty Ltd jointly and severally in the fixed sum of $150,000.
6.The second, third, fifth and seventh respondents’ costs of and incidental to the Application in a Proceeding filed on 28 March 2024 be paid by Mr P and GG Lawyers Pty Ltd jointly and severally in the fixed sum of $250,000.
7.The costs be paid within 60 days.
8.The Applications in a Proceeding filed 28 March 2024 by the first respondent and second, third, fifth and seventh respondents be otherwise dismissed.
IT IS FURTHER ORDERED THAT:
9.The Principal Registrar of the Federal Circuit and Family Court of Australia (Division 1) send a copy of the following documents to the Victorian Legal Services Commissioner for consideration of what, if any, investigation, disciplinary action, or educative process might be undertaken into the professional conduct of any of the legal practitioners referred to in paragraph 2(a) and 2(c) of the order made by this Honourable Court on 28 February 2024:
(a)The Order made on 28 February 2024 and the Order made on 13 December 2024;
(b)The reasons for judgment in Venter & Venter (No 5) [2023] FedCFamC1F 635;
(c)The reasons for judgment in Venter & Venter (No 6) [2024] FedCFamC1F 94;
(d)The reasons for judgment delivered on 13 December 2024; and
(e)The transcript of proceedings on 15 and 16 August 2024.
10.The Principal Registrar of the Federal Circuit and Family Court of Australia (Division 1) send a copy of the following documents to the Queensland Legal Services Commission for consideration of what, if any, investigation, disciplinary action, or educative process might be undertaken into the professional conduct of Mr AK and MM Lawyers:
(a)The Order made on 28 February 2024 and the Order made on 13 December 2024;
(b)The reasons for judgment in Venter & Venter (No 5) [2023] FedCFamC1F 635;
(c)The reasons for judgment in Venter & Venter (No 6) [2024] FedCFamC1F 94;
(d)The reasons for judgment delivered on 13 December 2024; and
(e)The transcript of proceedings on 15 and 16 August 2024.
NOTATION
A.The covering letter sent by the Principal Registrar of the Federal Circuit and Family Court of Australia (Division 1) to the Victorian Legal Services Commissioner and the Queensland Legal Services Commission should state only the following:
At the direction of the Honourable Justice Carew please find a copy of the following documents:
(a)The Order made by the Honourable Justice Carew dated 13 December 2024;
(b)The reasons for judgment of the Honourable Justice Carew delivered on 13 December 2024;
(c)The Order made by the Honourable Justice Carew on 28 February 2024;
(d)The reasons for judgment in Venter & Venter (No 5) [2023] FedCFamC1F 635;
(e)The reasons for judgment in Venter & Venter (No 6) [2024] FedCFamC1F 94; and
(f)The transcript of proceedings on 15 and 16 August 2024.
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 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Part XIVB of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish an account of proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Venter & Venter has been approved pursuant to subsection 114Q(2) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
CAREW J:
The current dispute in this long running matter concerns applications for costs being sought against a barrister, Mr P, and a firm of solicitors, GG Lawyers Pty Ltd, or alternatively against the applicant wife in the substantive proceedings.
The substantive proceedings involve a property dispute between a former husband and wife and various other members of the Venter family and related entities.
The husband, who is the first respondent in the substantive proceedings, seeks the following costs:
(a)Costs thrown away by the adjournment of the part-heard trial last year on an indemnity basis fixed in the sum of $560,119;
(b)Costs of and incidental to the application to restrain the wife from retaining her then lawyers or former lawyers, being the Application in a Proceeding filed 1 August 2023, on an indemnity basis fixed in the sum of $189,154;
(c)Costs of the application for costs, being the Application in a Proceeding filed 28 March 2024, on an indemnity basis fixed in the sum of $449,917; and
(d)In his written submissions, the husband includes a claim for his costs of and incidental to the proceedings to date (not including the sums already covered in the previous sums) on an indemnity basis fixed in the sum of $783,839. Although the latter sum was not included in the filed application for costs, it is submitted by the husband that those costs should be awarded having regard to the evidence of Mr AK of MM Lawyers and Mr P’s alleged egregious interference in the administration of justice from October 2021.
The total costs claimed by the husband are $1,983,029.
The other respondents (being two of the three adult children of the husband and wife and two related entities of the adult children) seek the following costs:
(a)Costs thrown away by the adjournment of the trial last year on an indemnity basis to be assessed or, at the Court’s discretion, fixed in the sum of $840,178;
(b)Costs of and incidental to the application to restrain the wife from retaining her then lawyers or former lawyers, being the Application in a Proceeding filed 1 August 2023, on an indemnity basis to be assessed or, at the Court’s discretion, fixed in the sum of $283,731;
(c)Costs of and incidental to the application for costs, being the Application in a Proceeding filed 28 March 2024, on an indemnity basis to be assessed or, at the Court’s discretion, fixed in the sum of $454,814.
The total costs claimed by the other respondents are $1,578,723.
The respondents seek an order that the costs be paid by Mr P, who represented the wife from September 2021 until 13 December 2023 when he withdrew, and by GG Lawyers Pty Ltd (“GG Lawyers”), who represented the wife from on or about 9 March 2023 until the injunction issued on 28 February 2024 restraining the wife from continuing to retain them, and that they be jointly and severally liable, or in such proportion as determined by the Court, or alternatively, if not so ordered, against the wife.
Mr P and GG Lawyers were each separately represented at the costs hearing on 15 and 16 August 2024. The wife has obtained new solicitors and was represented by them and counsel, although no material was read in her case in opposition to the costs application against her. A previous solicitor of the wife’s, Mr AK from MM Lawyers, was also separately represented at the hearing. Mr AK attended the hearing pursuant to a subpoena issued by the husband.
Pursuant to an order made on 5 June 2024, Mr P and GG Lawyers each received a list of particulars upon which an order for costs would be sought against them.
The costs’ hearing proceeded on the basis of an acceptance by all parties that the findings made in Venter & Venter (No 6)[1] would bind the parties.
[1] [2024] FedCFamC1F 94 (“Venter (No 6)”).
The parties each filed lengthy written submissions, including in reply, with the last submissions filed on 29 August 2024.
For the reasons which follow I propose to order that Mr P and GG Lawyers pay the first respondent’s costs thrown away by the adjournment of the part-heard trial, the restraint application, and this application in the total sum of $750,000, and that Mr P and GG Lawyers pay the other respondents’ costs thrown away, the restraint application, and this application in the total sum of $950,000.
The substantive proceedings have again been listed for a further 10 days of trial commencing 10 February 2025. At a recent case management hearing, all parties in the substantive proceedings confirmed that the matter was ready to proceed and that no further directions were required. Counsel for the other respondents indicated there may be a request for certain targeted subpoena to be issued.
Legal costs incurred by the parties to date and estimated future costs
The wife has paid legal costs and outlays to date of $80,072.34. The wife owes her former lawyers approximately $2,775,531. As of 15 August 2024, the wife’s estimated costs to her current lawyers were $42,167 but no estimate of the wife’s future costs was provided. An earlier estimate dated 4 July 2024 from previous lawyers estimated the wife’s future legal costs and outlays at over $2,000,000 to the end of trial.
The husband has incurred and paid legal costs and outlays to date of $1,791,951. The husband and wife’s adult sons, Mr B Venter and/or Mr C Venter (the second and third respondents respectively), have been the source for payment of $1,359,255 of those costs. The husband’s lawyers estimate the husband will incur further legal costs and outlays of $921,490 to the end of trial.
The other respondents have incurred and paid legal costs and outlays to date of $2,966,071. The source for payment has been payments received from D Management Services Pty Ltd as Trustee for the D Management Services Unit Trust allegedly by way of loan. The other respondents’ lawyers estimate that the other respondents will incur further legal costs and outlays of $1,768,400 to the end of trial.
ADJOURNED TRIAL
On 27 March 2023, the first tranche of the final hearing was set down for a hearing over 10 days, commencing 24 July 2023, in relation to:
all issues, save as to any disputed value of any asset, liability or financial resource, and the determination by the Court of the terms of any property settlement order or spousal maintenance order.
As noted in Venter & Venter (No 5)[2] at [22]:
22.The reasons for a bifurcation of the trial issues related to the apparent inability of the wife or the husband to pay the valuation costs at first instance, in circumstances where, if the wife’s claims against the respondents fail, they would have no prospect of recovering the costs of valuations if they were required to pay for them.
[2] [2023] FedCFamC1F 635 (“Venter (No 5)”).
The trial was ultimately adjourned part-heard on 3 August 2023, although there was very little focus on the substantive issues due to continuing and piecemeal revelations about the unsatisfactory nature of the wife’s disclosure in the proceedings. As observed in Venter (No 5) at [5]-[8]:
5. The trial commenced on 24 July 2023 but little of the actual trial has proceeded. One witness, [Mr CC], who appeared pursuant to subpoena has partially provided his evidence in chief. The balance of the time has been taken up with objections to evidence (on the first day) and various attempts to overcome any prejudice that may result from the wife’s very late discovery of documents, initially said to number 60,000 and later 96,000 documents. Some of the documents were sourced from a number of hard drives, first mentioned by the wife through her solicitors on 14 July 2023.
6. On 27 July 2023 additional documents, said to be contained in a “suitcase”, were produced by the wife to the respondents for the first time, accompanied by a 27 page list of documents prepared by her solicitors (which also refers to a “black box with handles” and “notebooks” which appear to be in addition to the suitcase). The list purports to identify documents that are relevant to the proceedings or over which one or other of the respondents might claim legal professional privilege.
7. Since the commencement of the trial, the wife has filed two further affidavits and her solicitor, [Ms AL], has filed one affidavit, addressing various matters arising from the late disclosure of documents.
8. Day five of the trial was solely occupied by submissions made in relation to an application in a proceeding filed by the 8th respondent on 28 July 2023, seeking to dismiss the wife’s claim against it pursuant to r 6.17(b) of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021…
The eighth respondent succeeded in having the case against it dismissed.[3]
[3] Ibid at [78].
CHRONOLOGY – WIFE’S DISCLOSURE
The wife’s attempts, in her written submissions, to attribute responsibility to the respondents for the adjournment of the trial does her little credit.
To fully appreciate the bases for the costs applications, it will be helpful to set out the detailed chronology relating to the wife’s disclosure and use of documents, reproduced below from Venter (No 5) at [10]-[54] and [63]-[68]:
10.In early 2021, the wife located what she contends were three hard drives; a blue one and two silver/black ones, in a box in the former matrimonial home at [H Street, Suburb LL]. The wife delivered the three hard drives to her former solicitors, [MM Lawyers], shortly after locating them. The wife’s lawyers accessed the contents of the blue hard drive which the wife contends is “largely, if not wholly, an external back-up of the two silver hard drives”.
11.At some point between early 2021 and March 2023 (when the wife retained her current solicitors, [GG Lawyers]), [MM Lawyers] extracted 146 emails from the blue hard drive and stored them in what is referred to as Folder 1. These are emails that by the descriptor accompanying them, indicate an assessment was made that they would be helpful to the wife’s case.
12. The wife commenced the substantive proceedings on 11 August 2021.
13.On 12 October 2021, the wife filed an application seeking to join the 8th respondent and annexed points of claim.
14.On 3 February 2022, the 8th respondent filed points of defence to the wife’s points of claim.
15.As a consequence of an application by the 8th respondent to strike out points of claim and for summary dismissal, I found that the wife’s points of claim were embarrassing but gave the wife leave to re-plead her claim against the 8th respondent.
16.On 22 June 2022, the wife filed amended points of claim and on 5 August 2022 the 8th respondent filed amended points of defence.
17.In early 2023, the wife accessed the contents of a hard drive referred to by her as the “family computer”.
18. In February 2023, the wife retrieved the three hard drives from [MM Lawyers].
19.On 20 February 2023, I ordered the wife to pay the 8th respondent’s costs of responding to the wife’s initial points of claim and its application to strike out those points of claim but that payment of those costs be stayed until 28 days after finalisation of the substantive proceedings. At [38] of those reasons I found:
… the respondents have been put to additional expense because of the deficiencies identified in the original Points of Claim. It is relevant to also observe that the wife had been put on notice as to the basis for the strike out application and notwithstanding the sound basis for the application to strike out, continued to resist it.
20.On 15 March 2023, the wife’s current solicitors, [then GG Lawyers], received the contents of the wife’s file from [MM Lawyers] in electronic form, including Folder 1.
21.On 23 March 2023, the wife accessed “a small number of documents” from the blue hard drive with the assistance of [Mr NN].
22. …
23.On 31 March 2023 the wife filed a further further amended initiating application and on 10 May 2023, the wife filed her trial affidavit.
24.On 19 June 2023, an affidavit by [Mr J] was filed as a witness relied upon by [Mr B Venter], [Mr C Venter], the family trust and [R Pty Ltd] (the 7th respondent) (“[R Pty Ltd]”).
25.On 20 June 2023, an affidavit by [Mr J] was filed on behalf of the 8th respondent.
26.In the first week of July 2023, the wife accessed the contents of the blue hard drive “for approximately five minutes”, reviewing “about 10 documents”.
27.[In] July 2023, the wife gave the “two silver hard drives” to [Mr NN], who in turn took them to a “computer shop called ‘[PP Shop]’”. [Mr NN] informed the wife that “the technician extracted what he could which he saved on [an] external hard drive”. The wife contends that she supplied the previously unused […] hard drive to the technician.
28.[A few days later], [Mr NN] returned the “two silver” hard drives and the [external] hard drive, also referred to as the “restored” hard drive, to the wife.
29.On the following day, the wife downloaded the files from the “restored” hard drive to her personal laptop “which took place overnight”.
30.On 12 July 2023, the wife “browsed” the contents of the “restored” hard drive from her personal laptop for about “10 minutes” and contends that the documents she can “recall” browsing were “recipes, personal photos and other general documents … a folder with [Mr C Venter’s] name on it which had photos of him and documents relating to his [sporting] days”. Clearly such documents would not be relevant to an issue in the proceedings. The wife nevertheless provided the contents of the restored hard drive to her solicitors on 12 July 2023 by uploading it to a “share point link to Folder 3”, between 6.40pm on 12 July 2023 and 12.48am on 13 July 2023. [Ms AL] deposes to Folder 3 containing five “outlook data files (.pst)” named “[Mr CC]”, “[Mr J]”, “[Ms QQ]”, “[Ms RR]” and “Old [Mr B Venter] mail” and an empty folder named “[Mr CC]” which [Ms AL] says she was instructed by the wife was “created at the time the information was uploaded” by the wife.
31.On 14 July 2023, the wife’s solicitors informed the respondents, for the first time, that the wife “has access to hard drives at [H Street]”.
32.On 17 July 2023, the husband’s solicitors requested the hard drives be produced to them.
33.On 18 July 2023, the wife filed an affidavit in reply purporting to contradict evidence given by [Mr J] relying upon documents from the hard drives. (I note that objections have been taken to the wife’s reply affidavit with the respondents reserving their position pending clarification of the wife’s late disclosure).
34.On 19 July 2023, the wife’s solicitors provided to the respondents a link to three folders: Folder 1; Folder 2; and Folder 3.
35.On 20 July 2023, the husband’s solicitors sent a letter to the wife’s solicitors including the following:
…
Based on the limited review of the documents we have been able to undertake in the short period in which your client has elected to make them available, we anticipate that there are no less than 60,000 emails in Folder 3 and several hundred emails and documents contained in folders, and subfolders in Folder 1 and Folder 2.
We require the production of the hard drives in your client’s possession referred to in your correspondence of 14 July 2023. Please ensure that your client makes those hard drives available prior to the commencement of Trial on 24 July 2023.
We further request that your client provide the following particulars in relation to the documents disclosed by your client on 19 July 2023 by no later than 4:00pm on Friday, 21 July 2023:
1. When did your client first access the hard drives? Where were they located when she first found them? What other devices, if any, were they connected to at the time? How many hard drives were there?
2. When did your client provide the documents on the hard drives to her legal representatives in these proceedings (whether [MM Lawyers], [SS Lawyers] or [GG Lawyers])? In the event they were provided to your office by your client’s prior legal representatives, please confirm.
3. In what format did your client provide the documents? Did your client provide the hard drives or a copy of the hard drives? If the hard drives, or any of them, are copies, please confirm how many copies your client possess and the identity of any person that has been provided with or presently retains a copy.
4. Please identify all of the people that have had access to the documents on the hard drives. Those persons should include any person other than your client, including but not limited to:
4.1 The name and position of any person at your firm;
4.2 The name and position of any person at any other or previous law firm;
4.3 The name of any Counsel or Senior Counsel to whom these documents have been provided during the course of these proceedings; and
4.4 The name of any person or other entity to whom these documents have been provided (i.e. any software/ IT/ Legal Transcription or Consultancy firm).
5. A number of the lead folders in Folder 2 contain subfolders in which there are no documents provided. Please confirm that your client has provided all of the documents and all of the folders available on the hard drives in her possession.
6. In relation to the documents in Folder 1:
6.1 [Ms TT] is the person identified as having last modified the Documents. Each of these documents were modified between 30 August 2021 and 10 October 2021, prior to your client retaining your firm and, in some instances, prior to [Ms TT’s] employment appears to have commenced at [GG Lawyers] Please confirm the basis upon which [Ms TT] is identified as having modified the documents in Folder 1 given date of modification in respect of each document.
6.2 A number of the documents in Folder 1 have been named or identified by a description as to the purported contents of the email (with respect to which no concession is made by our client as to the accuracy or otherwise) including for instance “GOOD EMAIL – [Mr CC] tells [Mr B Venter] to pay attention to the business”. Where emails in Folder 1 have been named or given a description, please identify the person or persons that gave the description in each instance, and when that occurred.
7. In relation to the documents generally, there are a number of clearly privileged documents and email communications contained within the hard drives produced by your client. Some of those communications are relied upon by your client in the proceedings; others have been identified in Folder 1 by the person or persons who named the document as being an email communication to or from Lawyers.
It ought to have been obvious to your client and her advisors that the documents, or some of them, may be subject to a potential claim of legal professional privilege. Please identify what notice, if any, was given by your client to any interested person or entity prior to your inspection of the documents contained on the hard drives. In the event that prior notice was given, we request that you produce a copy of that correspondence with your reply to the preceding requests for particulars.
36.On 21 July 2023, the solicitors for [Mr B Venter], [Mr C Venter], the family trust and [R Pty Ltd] requested that the information sought by the husband’s solicitors be provided by way of affidavit, failing which an application would be brought seeking an order to that effect. The letter included the following:
…
It is only when there is a full understanding of the extent of the privileged material (and who that privilege may belong to), identification of each person who had access to the material and from when, who provided instructions to lawyers that may have been based on access to privileged material (even if the privileged material itself was not provided to lawyers), when each of those steps occurred, and what documents they may have flowed into, will our clients then be able to form a concluded view as to the further application/s that may then necessarily follow including but not limited to vacating the trial, injunctions and costs.
37.On 21 July 2023, the wife’s solicitors responded to the requests including as follows:
…
We will not be serving any affidavits as requested by your clients.
…
Any attempt by any of the respondents to make an application on the first day of the trial will be vigorously opposed …
38.On 23 July 2023, the wife filed an undertaking as to disclosure in the following terms:
1) I have read, or had read to me, Parts 6.01 and 6.02 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021;
2) I am aware of my duty to the Court and to each other party … to give full and frank disclosure of all information relevant to the issues in the case in a timely manner;
3) I undertake to the Court that to the best of my knowledge and ability, I have carried out and complied with my duty of disclosure;
4) I undertake to continue to comply with my duty of disclosure until the conclusion of the case;
5) I understand the nature and terms of this undertaking and that if I breach the undertaking I may be guilty of contempt of court.
39.The undertaking is accompanied by a certificate from the wife’s solicitor, [Ms AV], in the following terms:
I am the lawyer for the person giving the undertaking and I certify that I have explained to the person giving the undertaking:
(a) The nature and terms of the undertaking; and
(b) That the undertaking is a promise to the court to comply with its terms; and
(c) That the undertaking has the same effect as an order of the court; and
(d) That a breach of the undertaking may be a contempt of the court punishable by a fine or imprisonment.
40.On 24 July 2023 (the first day of trial), the wife was directed to respond, by affidavit, to items 1 through to 6 of the letter from the husband’s solicitor dated 20 July 2023 and to produce the hard drives. The wife filed an affidavit at 2.20pm on 24 July 2023. The affidavit was unsatisfactory in a number of respects. The hard drives were produced by the wife on 25 July 2023.
41.On 25 July 2023, the solicitors for the 2nd, 3rd, 5th and 7th respondents wrote to the wife’s solicitors requesting further clarification about a number of matters arising from the wife’s affidavit filed on 24 July 2023. The letter noted, in particular, that the link to the three folders provided by the wife’s solicitors on 19 July 2023 included communications that were subject to legal professional privilege by a number of the respondents (and I would add, including the 8th respondent).
42.On 25 July 2023, the wife was required to file a list of documents identifying from Folder 1 those documents that are relevant to an issue in the proceeding and those documents to which a claim for professional legal privilege from the respondents might attach.
43.A witness appearing pursuant to subpoena, [Mr CC], commenced his evidence in chief on 25 July 2023. Leave was granted to adduce the evidence orally. Part of the evidence adduced related to a topic on which the wife’s reply affidavit sought to contradict the evidence of [Mr J] in his witness affidavit.
44.On 26 July 2023, the 8th respondent objected to [Mr CC] continuing his evidence until the wife had satisfactorily addressed the issue of late disclosure. The matter was stood down to enable the wife to file a further affidavit and for her current and previous solicitors to file affidavits.
45.On 27 July 2023, the wife’s solicitors produced a 27 page list relating to documents contained in a “suitcase” and documents contained in a “black plastic tub with handles” (many of which are identified in the list as relevant to the proceeding) and “notebooks”. One of the notebooks is described in the list as an “orange exercise book labelled [Mr J]”, and identified to potentially attract a claim for legal professional privilege. There are another six notebooks listed without any indication of their relevance or otherwise to the proceeding. None had previously been disclosed, although the wife referred in her reply affidavit to having “found some notebooks that belong to [Mr CC], [Mr B Venter] and [Mr J] that were left in the [H Street] property. These notebooks contain handwritten notes”. The wife does not state which of the notebooks she read but exhibits to her affidavit pages from some of the notebooks. Unfortunately, the description of the notebooks in the wife’s reply affidavit is different to the description of the notebooks in exhibit 2, being the list prepared by the wife’s solicitor.
46.On 27 July 2023 at 2.21 pm the wife filed a second affidavit which sought to expand upon and clarify her affidavit filed 24 July 2023 and included the following:
17. At paragraph 2(a) and (b) of my Previous Affidavit, I deposed that I did not personally access the Blue HD or Silver hard drives. This is not correct. My previous Affidavit was prepared at short notice and I did not have sufficient time to retrace how I extracted the data from the hard drives. This was not intended to mislead this Honourable Court.
47.On 27 July 2023, at 2.41 pm the wife’s solicitor, [Ms AL], filed her affidavit. [Ms AL] annexed three “tables” to her affidavit. The first table relates to Folder 1 and lists 146 emails which [Ms AL] says were provided to her firm by the wife’s previous solicitors. [Ms AL] identifies some documents in that table to which privilege might be claimed by the respondents and identifies some other documents as “read”. A significant number of the listed documents have no entry next to them. I am unclear whether these are the “balance of the documents in Folder 1” to which [Ms AL] refers in her affidavit, that have not been accessed or viewed by anyone in [Ms AL’s] firm or by counsel, although that seems unlikely.
48.[Ms AL] deposes that the second table annexed to her affidavit relates to Folder 2 and contains 2,562 “items” of which 18 are documents “in the first folder and 8 sub-folders”. The eight sub-folders are variously labelled. [Ms AL] says that only one document from the first folder of Folder 2 has been exhibited to the wife’s affidavit in reply and is the only document that has been provided to counsel. Only a portion of the documents in Folder 2 have been reviewed and accessed by [Ms AL’s] firm. In Table 2, the description of a number of the documents would appear to be irrelevant to the proceeding but of the ones highlighted (i.e. indicating they have been accessed by [Ms AL’s] firm), the description of the documents does little to identify whether or not the documents are relevant e.g. “68 word documents, 1 audio file, 3 PDF documents, 8 Excel documents”.
49.Table 3 annexed to [Ms AL’s] affidavit relates to Folder 3 and contains outlook data files including for “[Mr J]”. [Ms AL] contends that on a “preliminary review” undertaken on 13 July 2023 (when Folder 3 was provided by the wife) it was identified that the emails covered a period of approximately 2009 to 2014 and that the volume of emails was “substantial”. By undertaking certain word searches, (although how the words used were determined is not explained), [Ms AL] says Table 3 was created and it identifies 71 emails, two of which have been relied upon by the wife in her challenge to the witness evidence provided by the 8th respondent. Those emails are dated 6 June 2013 and 28 November 2013.
50.While [Ms AL] describes in her affidavit the process adopted by her firm in ensuring potentially privileged material is not inspected, namely, a document sent or received by a solicitor is not accessed or reviewed and all such documents are returned to the privilege holder and permanently deleted from her firm’s system, it is clear that [Ms AL’s] firm’s process was not adopted in this case, at least on all occasions e.g. one recording marked “[Mr UU] and Barrister” was listened to for an undisclosed period, and a letter from “[Mr UU] of [VV Lawyers], [Mr CC], [Mr B Venter] … and [Mr J], subject RE: Asset Protection and Restructuring” is relied upon by the wife in her case, it being argued that privilege does not attach to the letter. That conclusion is disputed by the respondents.
51.I note that the husband’s solicitors informed the wife’s solicitors in a letter dated 25 July 2023 that they had identified 861 documents in Folder 3 that may be subject to legal professional privilege by one or more of the respondents. I reiterate that the documents contained in Folder 3 were also contained on the blue hard drive.
52.Finally, [Ms AL] explains in her affidavit that 6 recordings had been received from the wife’s previous solicitors in March 2023. The recordings were saved under descriptors. [Ms AL] says that three of the recordings were reviewed “prior to or around the time that [the wife] uploaded Folders 2 and 3 to our office”. That is a rather large window of opportunity. In another paragraph of her affidavit, [Ms AL] says the three recordings marked d, e, and f were reviewed between 3 and 12 July 2023, by playing a sample of each recording to see if they had been labelled correctly. In relation to recording ‘d’ which was labelled as “[Mr UU] and Barrister”, [Ms AL] says she stopped the recording once she heard a barrister’s voice that she recognised. [Ms AL] thought that the recordings had been provided to the respondents on 19 July 2023 but none of the six recordings were disclosed until 27 July 2023. I assume the recordings were disclosed either because they were relevant to an issue in the proceedings or that at least one of them may be subject to privilege.
53.Counsel for the wife informed the Court that of the 96,000 documents disclosed by the wife in the various forms, since 19 July 2023, only about 17,000 had been reviewed by his instructing solicitor over the few days preceding 28 July 2023 and about ten percent of the 17,000 had been identified to be relevant to the proceedings.
54.To say that this state of affairs is most unsatisfactory is an understatement. The Court has allocated ten days (in fact now 12 days) to hearing this trial which has been held up because of these disclosure issues.
…
63. In the present case, the wife offers no explanation for the delay in disclosing such an extraordinary number of documents other than to initially suggest that the silver hard drives were not able to be accessed until she obtained assistance from an IT specialist [in] July 2023. Contrary to that assertion, is her subsequent evidence that the blue hard drive contained a back-up of the silver hard drives, and the blue hard drive was located by the wife in early 2021 and given to her previous solicitors shortly thereafter. The blue hard drive was accessed by the wife’s previous solicitors, and documents said to support the wife’s case were extracted.
64. The blue hard drive and the two silver hard drives were not made available to the respondents until 25 July 2023 (the second day of the trial). There is no mention of the suitcase or black tub or the notebooks in either of the wife’s recent affidavits or in her solicitor’s affidavit, let alone any explanation for the failure to disclose them earlier than the 27 July 2023. This is despite the fact that select parts of the notebooks were reproduced in exhibits to the wife’s affidavit in reply. There is also the ‘restored’ hard drive, yet to be disclosed, as I understand it.
65. The wife may have been under a misapprehension about what her duty of disclosure required, when regard is had to paragraph 10 of her affidavit filed on 24 July 2023 in which she said:
On 3 July 2023, my solicitors received a letter from [the husband’s solicitors] enclosing financial disclosure. This letter also states “Our client [the husband] does not retain historical (including email) communications.” Prior to this communication, I understood that [the husband] retained and had access to his historical records and communications …
66. This might explain, although not justify, why the wife did not disclose some of the documents in her possession i.e. she thought the respondents would already have them. How that misapprehension could have remained up to and including the time of providing her undertaking as to disclosure remains unexplained. Of course, the obligation to disclose documents relates to all documents that are or have been in the possession or control of a party and relevant to an issue in the proceeding, whether or not they are documents or copies of documents thought to be in the possession of the other party.
67. The blue hard drive was accessed by the wife’s previous solicitors and by the wife, at least to some extent. There are said to be 60,000 documents on the blue hard drive. To meet her disclosure obligations the wife was required to disclose all documents assessed to be relevant to the proceedings, and, importantly in this case, identifying any documents that may be subject to a claim for legal professional privilege by the respondents. A party does not meet their disclosure obligations by in effect, dumping, a large number of documents on another party and leaving it up to them to snorkel through them.
68. On 11 July 2023, the wife’s counsel informed the registrar that the wife had complied with her duty of disclosure, and on 23 July 2023, the wife filed an undertaking as to disclosure, which will be noted includes a statement that the wife has read the relevant parts of the Rules that require her to disclose each document that is or has been in her possession and relevant to an issue in the proceedings. The wife’s undertaking to the Court, that she had complied with her disclosure obligations, was patently wrong.
(Emphasis added)
GENERAL BACKGROUND
It will also be helpful to set out some general background, which I reproduce below from Venter(No 6) at [8]-[40]:
8. The wife and husband were married in 1985, separated in 2017, and divorced in 2020. The wife and husband have three adult children. Relevantly, [Mr B Venter], the second respondent, is 35 years of age and [Mr C Venter], the third respondent, is 33 years of age. As already mentioned, [Ms Glynn] has taken no part in the proceedings to date.
9. The family are originally from [Country M] but moved to Australia, via [Country N], in 2001.
10. In about 2007, the husband set up a business which involved lending small sums of money to people short of cash between pay days. The family were in dire straits at the time. The wife was unwell. The husband was working full time for a loan company on a wage of $700 per week. [Mr B Venter] had to leave university, where he was only halfway through a […] degree, because the family could not afford the university fees. [Mr C Venter] was a talented [sportsman] and received a scholarship to continue at his private school. [Ms Glynn] had to leave her private school. All three children contributed what they could to the family finances from part-time jobs.
11. A family friend, [Mr HH], initially provided some modest capital for the business, about $30,000. [F Pty Ltd] was incorporated and [Mr B Venter] was the sole director, secretary, and shareholder. Neither the husband nor the wife could hold a credit licence or hold the position of a director in a company as they had both been bankrupt and indeed, the wife was not discharged from bankruptcy until […] 2010. The business traded as [V Company] and involved the sourcing of borrowers to whom [F Pty Ltd] would lend money. Initially it was a very small family affair operating from the former matrimonial home.
12. In [early] 2010, the [V Company] business commenced to operate via [V Pty Ltd], a company already in existence by another name and owned by [Mr HH]. [Mr B Venter] was appointed sole director and joined the business full time. [Mr HH] took over as director of [V Pty Ltd] until 2012, when another family friend, [Mr J] was appointed sole director until 2019. [V Pty Ltd] was deregistered in 2019.
13. The business operation came to the attention of the regulatory authorities, namely, the Australian Consumer and Media Authority (“ACMA”) and ASIC in about 2010 and was the subject of several investigations into potential breaches of the National Credit Code and the Spam Act 2003 (Cth). Consequently, there have been several proceedings in the Federal Court of Australia over several years.
14. It is common ground that the husband, at least, knew by about 2009 or 2010 that the lender of the funds ([F Pty Ltd]) had to be at arms-length from the facilitator of the loans ([V Pty Ltd]), or as explained by the husband in his affidavit filed 2 November 2023 – “it was necessary that there be a strict legal separation between the entity that performed the role of lender ([F Pty Ltd]) and the entity that performed the role of an associate or agent for the consumer ([V Pty Ltd])”.
15. [In late] 2010, [Mr HH], [Mr B Venter], [V Pty Ltd] and [F Pty Ltd] signed a Deed of Agreement (“the 2010 agreement”) in which they agreed (contrary to the ASIC register recording that [Mr HH] beneficially held 100% of the shares in [V Pty Ltd] and [Mr B Venter] beneficially held 100% of the shares in [F Pty Ltd]), that [Mr HH] would hold 50% of his shareholding in [V Pty Ltd] on trust for [Mr B Venter] and [Mr B Venter] would hold 50% of his shareholding in [F Pty Ltd] on trust for [Mr HH]. The wife obtained a copy of this deed on 30 June 2023 from [Mr HH’s] daughter after [Mr HH’s] death.
16. By early 2013, the husband “understood from discussions with [Mr J], [Mr HH] and [Mr B Venter]… that there was a very real possibility that [V Pty Ltd] could incur a fine of several million dollars depending on the outcome of the ACMA investigation”.
17. A written agreement dated […] March 2013 between [V Pty Ltd], [F Pty Ltd], [Mr HH], [Mr B Venter], [Mr J], the husband, [YY Pty Ltd] (in its own right and as trustee for [Superannuation Fund 1]) and [ZZ Inc] ([Mr HH’s] company) (“the 2013 agreement”) recorded the following:
(a) Confirmed that the husband was retained as a consultant for [V Pty Ltd];
(b) Confirmed that [Mr HH] held 50% of his shares in [V Pty Ltd] on trust for [Mr B Venter] and [Mr B Venter] held 50% of his shares in [F Pty Ltd] for [Mr HH] as per the 2010 agreement;
(c) [Mr B Venter] agreed to sell to the husband or his nominee 50 of his shares (half the issued shares) in [F Pty Ltd] so that the husband or his nominee would become the sole legal and beneficial owner of those shares;
(d) [Mr HH] and [Mr B Venter] would each sell their one share in [V Pty Ltd] to [Mr AB] for $20,000 per share so that [Mr AB] would become the legal and beneficial owner of all shares in [V Pty Ltd] following their sale to him;
(e) [Mr B Venter] would remain the sole director and secretary of [F Pty Ltd]; and
(f) [Mr J] would remain the sole director and secretary of [V Pty Ltd].
18. The husband contends in his affidavit filed 20 June 2023:
30. … [Mr B Venter] and [Mr HH] sold 100% of the shareholding in [V Pty Ltd] to [Mr AB] in 2013, as stated at clause 5 of [the 2013 agreement]. [Mr J] became the director of [V Pty Ltd]. When [Mr C Venter] came into the [V Pty Ltd] office in 2014 when his [sports] career finished, that company was fully owned by [Mr AB] and he was the sole shareholder.
19. The content of a recording made on 6 March 2013 of a meeting between the husband, [Mr B Venter], [Mr J], and [Mr HH], which the husband disclosed for the first time on the eve of trial, casts doubt about the true nature of [Mr AB’s] interest. The recording provides the following information:
(a) Given the risk posed by the regulatory authorities to the business model, it was necessary to find someone who could hold the [V Pty Ltd] shares;
(b) The husband knew that he could not legally hold the shares in [V Pty Ltd] and [F Pty Ltd] and that they needed to ensure that it was not “one of us” who owned the shares;
(c) [Mr AB] was “simply a name or nominee”, “like a placeholder”, “nothing”, “a name on a document”; and
(d) The husband did not want anyone outside the conversation to know about the plan.
20. [In] March 2013, the husband caused [EE Pty Ltd] to be incorporated to act as trustee of a new trust, namely, the [EE Family Trust]. The husband was the appointor of the trust. The wife was the sole director, secretary, and shareholder of [EE Pty Ltd]. The trust became a 50% shareholder in [F Pty Ltd].
21. Additionally, a written agreement dated […] April 2013 (“the side agreement”) was signed by the wife, in her capacity as the sole director of [EE Pty Ltd] as trustee for the [EE Family Trust], and [Mr AB]. Their signatures were purportedly witnessed by the husband and Brent. The agreement records the following:
…
In a restructure of companies owned by [Mr B Venter] and [Mr HH], [Mr HH] decided to sell his shares of the company [V Pty Ltd].
The issues related to [V Pty Ltd] as well as the regulatory environment presented obstacles for the sale.
[EE Family Trust] decided to purchase all the shares of [V Pty Ltd] from [Mr HH] for the total price of $40,000.00 (Forty thousand dollars).
[EE Family Trust] purchased the shares through a third party, [Mr AB].
Although the shares are indicated as beneficially held by [Mr AB] as per ASIC records, it is hereby acknowledged and confirmed by the parties that the shares are owned solely by [EE Family Trust] and are held by [Mr AB] on a non - beneficial basis.
Thus, notwithstanding the official records of ASIC, the shares are held non - beneficially by [Mr AB] on behalf of [EE Family Trust] as from the date of share transfer, […] 2013.
Immediately upon request, [Mr AB] will relinquish and transfer the shares to the rightful owner without reservation of any kind.
…
22. The side agreement presents a very different picture about the ownership of [V Pty Ltd] i.e. that the shares were not beneficially owned by [Mr AB] but rather on trust for the [EE Family Trust] being a trust established by the husband and which he controlled as the appointor.
23. The side agreement was disclosed by the wife for the first time on the evening of 1 August 2023, after the husband had filed an application in a proceeding seeking to restrain the wife’s lawyers from continuing to act for her.
24. It seems that a share transfer form was also disclosed by the wife at the same time as the side agreement. The share transfer form is purportedly signed by [Mr AB] reflecting the transfer of his two shares (i.e. 100% of the shares) in [V Pty Ltd] for $2.00. The document is undated save for the year, 2013, and there is no name inserted as transferee.
25. In the husband’s affidavit filed 2 November 2023, the husband says the following about the side agreement:
(a) He prepared the side agreement but had forgotten it existed until receiving a copy of it from the wife on 1 August 2023;
(b) He did not have the original or any copies of the document;
(c) He did not intend it to be a legally binding document and did not believe the signatories to the document intended it to be a legally binding document;
(d) He had discussed the purpose of the side agreement with the wife and she said she “trust[ed] his judgment”;
(e) He became concerned that a potential purchaser of the business operated by [F Pty Ltd] and [V Pty Ltd] may have questions in relation to the separate ownership of [V Pty Ltd], whereby a sale had occurred just a short while before, compared with [F Pty Ltd], which although sold, was sold to a trust of [Mr HH] and the [EE Family Trust];
(f) If a potential purchaser wanted to meet [Mr AB], the husband was concerned he would not make a very good impression because he sounds “rough and uneducated” and would not inspire confidence;
(g) If something happened to [Mr AB] or he was away at the time of a sale, it could compromise the sale;
(h) “[T]here may be a need for some credibility regarding our authority to conduct negotiations and sell the businesses”;
(i) He did not seek legal advice or any assistance in the preparation of the document;
(j) He does not recall when it was signed but believes it would have been signed within a week of it being scanned and emailed to him by [Mr J] [in] May 2014;
(k) He believes he (the husband) backdated the agreement to […] April 2013 (I note that under [Mr AB’s] signature is the date “[…]/4/2013” and under the wife’s signature is the [same date] and that the wife confirms the legitimacy of her signature and that the date under her signature is in her handwriting); and
(l) [Mr J] signed the document as a witness (although there is no suggestion [Mr J] was present when [Mr AB] or the wife signed the document).
26. The husband says the following about the share transfer form:
(a) He prepared the share transfer;
(b) He thought it could be used when a sale occurred, if for some reason [Mr AB] was unable to be present or complete the form;
(c) [Mr AB] signed the share transfer form, “the entire rest of which was left blank” (which is not accurate as it includes a sale price of $2.00 in circumstances where [Mr AB] purportedly paid $40,000 for his shares and it includes the year “2013”); and
(d) The form was never used or sent or shown to any other person.
27. In an email exchange between the husband and [Mr J] [in] April 2013, the husband told [Mr J] that the ASIC register was wrong because it still showed [Mr HH] as the owner of the shares in [V Pty Ltd] rather than [Mr AB] “as nominee”. [Mr J] replied that one of “[Mr UU’s] girls is changing it for us but we needed the company key … All the information needed has been sent now so it should be changed early next week if it hasn’t already been done”. The reference to “[Mr UU]” is a reference to [Mr UU], a solicitor with [VV Lawyers].
28. The husband contends that the reference to [Mr AB] “as nominee” was only to indicate that the vehicle by which [Mr AB] was to own the shares may not be him personally, but an entity owned by him and not that [Mr AB] was holding his shares on trust for anyone else.
29. [In] November 2013, [Mr J] emailed the husband. The subject heading is:
Do you want me to have [Mr UU] put an amendment through RE [Mr AB’s] beneficial holding of the [V Pty Ltd] Shares
30. The husband does not recall receiving this email or whether he responded to it. Further, he says that no instructions were given by him “to amend the ASIC records, which accurately reflected that [Mr AB] was the sole registered and beneficial shareholder in respect of the shares issued in [V Pty Ltd in November] 2013”. [Mr J’s] affidavit filed 23 October 2023 does not refer to his email to the husband [in] November 2013. It is unclear whether it was provided to him to refresh his memory.
31. By 2015, all three children were very much involved in the business, and it is not in contention that the business is a now multi-million-dollar operation.
32. [Mr C Venter] contends that in 2015 he was granted an option to purchase the [V Pty Ltd] business from [Mr AB] who ostensibly acquired 100% of the shares in 2013 for $40,000. [Mr C Venter] contends that he assigned the option to [D Group Holdings Pty Ltd] which exercised the option to purchase the [V Pty Ltd] business [in mid] 2016 for $1,677,555. [D Group Holdings Pty Ltd] is a wholly owned subsidiary of the trust, as is [R Pty Ltd] ([Mr C Venter] is the sole director of [R Pty Ltd]).
33. The trust was established in 2016 and [Mr C Venter] is the sole director of the trustee, [D Group Holdings Family Pty Ltd] and [Mr B Venter], [Mr C Venter] and [Ms Glynn] are the shareholders. [Mr B Venter], [Mr C Venter] and [Ms Glynn] are also eligible beneficiaries of the trust. The husband and wife are no longer eligible beneficiaries of the trust although the wife is seeking to set aside certain instruments which would reinstate the husband as the appointor of the trust and the husband and wife as eligible beneficiaries. The husband and wife were removed as potential beneficiaries [in early] 2017. The husband was removed as appointor [in mid] 2020.
34. The husband and the other respondents contend that the appointment of the husband as appointor of the trust was an error and that it was always the intention that the control of the trust would rest with the three adult children and that they would be the beneficiaries to the exclusion of the husband and wife.
35. The corporate operation is now operated through [R Pty Ltd] which took over from [V Pty Ltd], and [G Pty Ltd] (a company owned by [Mr J] which was released as the eighth respondent in the proceedings in July 2023) which took over from [F Pty Ltd].
36. The wife contends that the husband and wife or either of them are the true owners of the assets of the trust. The wife further contends that the home in which she is living at [H Street] is not owned by the children but by [S Pty Ltd] or the husband. The husband is the sole director and shareholder of [S Pty Ltd]. Among other things, the wife relies on recordings she surreptitiously made of conversations with various members of the family which she contends support her contention about the true ownership of assets. Whether they do or not may depend upon credit findings after the participating persons are cross-examined.
37. The wife is seeking an equal division of the assets of the trust between her and the husband and a transfer to her of the home in which she lives at [H Street].
38. The husband and the other respondents resist the relief sought by the wife, rejecting her contentions about the ownership of the assets.
39. If the husband and the other respondents are successful in their contentions, the wife may receive nothing by way of property settlement.
40. There are certainly concerning features about the evidence as it currently stands, and the parties were given the opportunity to make submissions about whether a referral to appropriate authorities is justified at this stage of the proceedings. The purpose of any such referral would be for the appropriate authorities to consider whether any investigation should be conducted of potential breaches of Commonwealth legislation. The wife supports such a referral. The husband submits that any consideration of referral is premature. The other respondents submit there is presently no basis for [Mr B Venter] or [Mr C Venter] to be the subject of any referral, in circumstances where they are neither parties nor witnesses to the 2013 agreement.
The orders made in Venter (No 6), among other things, restrained the wife from retaining any of her then or former legal practitioners, dismissed the other respondents’ application for summary dismissal of the wife’s claims against them, and due to the possible commission of breaches/offences of the National Credit Code,[4] and/or the Corporations Act 2001 (Cth) by one or a number of the respondents and others, a referral of various documents was made to the Australian Securities and Investment Commission.
[4] National Consumer Credit Protection Act 2009 (Cth) Schedule 1.
The consequences of the wife’s late disclosure and the decision by her previous legal advisors to ignore their own protocols and view privileged material had serious consequences for all parties.
In Venter (No 6), in the context of the application to restrain the wife from continuing to retain her then lawyers or from retaining her former lawyers, there was a dispute between the parties as to whether certain documents were protected by legal professional privilege inhering in one or more of the respondents. It was agreed by all parties that I would view the documents and rule on the question of privilege. It was also agreed that no party would thereafter take any issue about my continuing as the trial judge in the part-heard substantive proceedings.
In respect of each document, I ruled they were protected by legal professional privilege.
I also made the following findings at [159]-[160]:
159. Given the wide-ranging factual matters in dispute in the current case, there is a very real prospect that the wife has obtained some forensic advantage from accessing privileged material. Firstly, there appears to have been careful consideration given to the documents contained in folder 1 (some of which were privileged) with various privileged documents identified as helpful to the wife’s case. Secondly, the language used in paragraph 106 of the wife’s trial affidavit would appear to have been informed by recording (b). Thirdly, the timing of the emails to [Mr P] with a request that he review the 29 emails occurred the day before the wife’s amended Points of Claim was filed on 12 October 2021. The amended Points of Claim were settled by [Mr E] KC and [Mr P]. There is also a real prospect that the wife has been assisted by access to the privileged material in the formulation of the documents sought pursuant to the subpoena issued to [VV Lawyers].
160. While I can readily accept that [Mr P] has no recollection of reading the email and documents attached to the email dated 11 October 2021, it is inconceivable in the circumstances that [Mr P] would not have read the documents. Likewise, it is inconceivable that [Ms OO] and [Ms XX] would not have read the 11 October 2021 email forwarded to them by [Mr P] in February and April 2023, notwithstanding their inability to recall whether they did so.
RELEVANT LEGAL PRINCIPLES - COSTS
Generally, in this Court, each party bears their own costs unless there are circumstances that justify a costs order having regard to the matters contained in s 117 of the Family Law Act 1975 (Cth) (“the Act”), ss 68(4) and 69(4)(d)-(e) of the Federal Circuit and Family Court of Australia Act 2021 (Cth) (“the FCFCOA Act”) and the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) (“the Rules”).
It is uncontroversial that this Court also has power to order costs against a party’s lawyer.[5]
[5] Cassidy & Murray (1995) FLC 92-633 at 82,364-82,365; Z (a solicitor) & Limousin (2010) FLC 93-433 at [39].
Section 117(2A) of the Act sets out the matters to which the Court must have regard, namely:
…
(a) the financial circumstances of each of the parties to the proceedings;
(b) whether any party to the proceedings is in receipt of assistance by way of legal aid and, if so, the terms of the grant of that assistance to that party;
(c) the conduct of the parties to the proceedings in relation to the proceedings including, without limiting the generality of the foregoing, the conduct of the parties in relation to pleadings, particulars, discovery, inspection, directions to answer questions, admissions of facts, production of documents and similar matters;
(d) whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the court;
(e) whether any party to the proceedings has been wholly unsuccessful in the proceedings;
(f) whether either party to the proceedings has made an offer in writing to the other party to the proceedings to settle the proceedings and the terms of any such offer; and
(g) such other matters as the court considers relevant.
An additional source of power to award costs in an appropriate matter is to be found in s 69(4)(d) and (e) of the FCFCOA Act, which empowers the Court to award costs against a party to be assessed on an indemnity basis or otherwise.
There is an additional mandatory requirement created by s 68(4) of the FCFCOA Act which requires the Court to take into account any failure to comply with the duty imposed by ss 68(1) or (2), which require the parties and the lawyers for the parties to conduct the proceedings in a way that is consistent with the overarching purpose of the family law practice and procedures provisions of the FCFCOA Act. The overarching purpose is set out in s 67 and requires, among other things, for the proceedings to be conducted as “quickly, inexpensively and efficiently as possible”. The objectives of the overarching purpose include “the efficient use of the judicial and administrative resources”, “the efficient disposal of the Court’s overall caseload”, “the disposal of all proceedings in a timely manner” and “the resolution of disputes at a cost that is proportionate to the importance and complexity of the matters in dispute”.
An applicant for costs bears no “additional or special onus” other than the establishment of “justifying circumstances”.[6]
[6] Penfold v Penfold (1980) 144 CLR 311 at 315.
As to the identification of such circumstances by the Court, the High Court of Australia in Penfold v Penfold[7] said the following:
Sub-section (2) [of s 117] does not in our view as a matter of law require the judge to specify the circumstances which justify the making of an order. It does not expressly say so, and in the context of the making of an order for costs there is no sufficient basis for making an implication. Judges very frequently make orders for costs without giving reasons or making findings, even when costs are in issue. The absence of reasons or findings does not in itself indicate that a judge has erroneously exercised his discretion to award costs, though it will place an appellate court in the position of examining the circumstances and of determining for itself whether the circumstances show that the discretion was erroneously exercised. Accordingly, in the absence of some positive legislative indication we should not attribute to Parliament the requirement that a judge must make particular findings in relation to an order for costs.
(Citation omitted)
[7] Ibid at 315–316.
Rule 12.15(1) of the Rules sets out circumstances in which the Court may make an order for costs against a lawyer, namely, if the lawyer has caused costs to be incurred by a party to be thrown away because of:
(a)a failure to comply with the Rules or an order;
(b)a failure to comply with a pre-action procedure;
(c)improper or unreasonable conduct; and
(d)undue delay or default.
A lawyer may be in default if a hearing may not proceed conveniently because the lawyer has, among other things, failed to do any act necessary for the hearing to proceed (r 12.15(2)).
In Cassidy v Murray,[8] the Full Court considered several authorities in various jurisdictions relating to the circumstances in which a court might order costs against a lawyer and identified the following principles:
(a)The discretion to order costs against a lawyer should be exercised with caution;
(b)There is a need to balance the competing public interests involved, namely, the concern that lawyers should not be deterred from pursuing their clients’ interests for fear of being made personally subject to orders for costs, and the principle that innocent parties should not be occasioned costs, for which they would not otherwise be liable, as a result of the inappropriate conduct of lawyers;
(c)The Court may make an order for costs against a lawyer without the necessity to establish that the lawyer has been guilty of serious professional misconduct;
(d)The lawyer has a duty to the Court to promote the interests of justice whilst at the same time attending to the needs of the lawyer’s client;
(e)A mistake or error of judgement would not justify an order for costs against a lawyer. 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; and
(f)The jurisdiction is compensatory not punitive.
[8] Cassidy & Murray (fn 5) at 82,359 and 82,365.
In Z (A Solicitor) & Limousin,[9] the Full Court dismissed a solicitor’s appeal against a personal costs order. The case provides a comprehensive overview of the jurisprudence in this and other jurisdictions and considers the substantial amendments made to the Rules in 2004 including the addition of objects, principles, and responsibilities imposed on parties to litigation as well as their lawyers. The Full Court noted that the amended Rules included a ‘main purpose’, namely, “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”. The same observations are equally applicable to the 2021 Rules and the ‘overarching purpose’ set out in the FCFCOA Act. The Full Court adopted the principles extracted from several cases by French J (as his Honour then was) in Ex Christmas Islanders Association Inc and Others v Attorney-General (Cth) (No 2)[10] including the following:[11]
(a)The need for caution when legal professional privilege has not been waived and the Court does not know the details and circumstances of a client’s instructions;
(b)While no comprehensive definition of ‘unreasonable’ conduct is possible it must be more than acting for a client who has little or no prospect of success. There must be something akin to an abuse of process e.g., having an ulterior motive for the proceedings or commencing or pursuing proceedings without any, or any proper, consideration of the prospects of success;
(c)Lawyers have a duty to their client and to the Court to be “competent in their conduct of legal business”.
[9] Z (a solicitor) & Limousin (fn 5).
[10] (2006) 233 ALR 97.
[11] Z (a solicitor) & Limousin (fn 5) at 84,704.
The Full Court also adopted the following further observations of French J at [30]:
A solicitor or counsel may conceive of himself or herself as advancing the public interest or some moral cause in pursuing particular proceedings. Whether acting in the public interest or to advance a moral purpose, whether charging the highest fees or acting pro bono and whether counsel or solicitor, legal practitioners have a duty to the client and to the court to be competent in their conduct of legal business.
In Dura (Australia) Constructions Pty Ltd v Hue Boutique Living Pty Ltd (No 5),[12] Dixon J in the Supreme Court of Victoria provides a helpful summary of the matters to be considered where costs have been wasted as a result of the alleged conduct of a lawyer:
[12] (2014) 48 VR 1.
57.… the following matters need to be considered in the exercise of the wasted costs jurisdiction:
(a) The court's jurisdiction to make a wasted costs order against a solicitor is founded on breach of the duty owed by the legal practitioner to the court to perform his duty as an officer of the court in promoting, within his own sphere, the cause of justice.
(b) ‘Negligent’ should be understood in an untechnical way to denote failure to act in a way no reasonably well-informed and competent ordinary member of the profession would have done.
(c) The jurisdiction to order a legal practitioner to pay the costs of legal proceedings in respect of which he or she provided legal services must be exercised with care and discretion and only in clear cases.
(d) The wasted costs jurisdiction discloses a tension between two important public interests, one that the wasted costs orders should not become a back-door means of recovering costs not otherwise recoverable against a legally-aided or impoverished litigant, and that the remedy should not grow unchecked to become more damaging than the disease and, two, that litigants should not be financially prejudiced by the unjustifiable conduct of litigation by their or their opponents' lawyers.
(e) A legal representative is not to be held to have acted improperly, unreasonably or negligently simply because he or she acts for a party who pursues a claim or a defence that is plainly doomed to fail.
(f) The legal practitioner is not the judge of the credibility of the witnesses or the validity of the argument.
(g) A judge considering making a wasted costs order arising out of an advocate’s conduct of court proceedings must make full allowance for the exigencies of acting in that environment; only when, with all allowances made, an advocate’s conduct of court proceedings is quite plainly unjustifiable can it be appropriate to make a wasted costs order.
(h) A legal practitioner against whom a claim for a costs order is made must have full and sufficient notice of the complaint and full and sufficient opportunity of answering it, and a legal practitioner should not be called on to reply unless an apparently strong prima facie case has been made.
(i) Where a legal practitioner’s ability to rebut the complaint is hampered because the client maintains client legal privilege, full allowance must be given for the practitioner’s inability to tell the full story and he or she should be given the benefit of the doubt. In such circumstances, the court should not make an order against a practitioner without satisfying itself that it is in all the circumstances fair to do so, or, put the other way, it is only when, with all allowances made, a practitioner's conduct of proceedings is quite plainly unjustifiable that it can be appropriate to make a wasted costs order.
(j) The procedure to be followed in determining applications for wasted costs must be fair and as simple and summary as fairness permits.
A court will not lightly make an order for costs to be paid on an indemnity basis. There needs to be some circumstance of an exceptional kind to justify that course.[13]
[13] Kohan and Kohan (1993) FLC 92-340 at 79,614; Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 at 233 (“Colgate-Palmolive”).
Rule 12.13(4) requires the terms of any costs agreement to be disclosed when indemnity costs are sought. If costs are to be awarded on an indemnity basis, regard must be had to the reasonableness of the costs incurred (see for example r 12.47).
When considering the factors set out in s 117(2A) of the Act, it is sufficient for one factor to be present.[14]
Impecuniosity, of itself, is not a bar to making a costs order.[15]
[15] Nada & Nettle (Costs) (2014) FLC 93–612 at 79,589, [11]. See also Lenova & Lenova (Costs) [2011] FamCAFC 141 at 3, [12].
If a costs order is made, the Court may set a time for payment.[16]
[16] Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) r 12.13(5).
Part 12.6 of the Rules deals with ‘calculation of costs’ and provides as follows:
12.17 Method of calculation of costs
(1) The court may order that a party is entitled to costs:
(a) of a specific amount; or
(b)as assessed on a particular basis (for example, party and party, solicitor and client or indemnity); or
(c) to be calculated in accordance with the method stated in the order; or
(d)for part of the proceeding, or part of an amount, assessed in accordance with Schedule 3.
(2)If costs are payable under the Family Law Act or these Rules, or the court orders that costs be paid and does not specify the method for their calculation, the costs are to be assessed on a party and party basis.
(3) In making an order under subrule (1), the court may consider the following:
(a) the importance, complexity or difficulty of the issues;
(b)the reasonableness of each party’s behaviour in the proceeding including by having regard to the matters set out in subrule 12.08(2);
(c) the rates ordinarily payable to lawyers in comparable proceedings;
(d)whether a lawyer’s conduct has been improper, unfair, unreasonable or disproportionate;
(e)the time properly spent on the proceeding, or in complying with pre‑action procedures;
(f)whether expenses (paid or payable) are fair, reasonable and proportionate.
(Emphasis in original)
Rule 12.08(2) (referred to in r 12.17(3)(b)) provides as follows:
(2)In considering whether a party’s legal costs have been fairly, reasonably and proportionately incurred, regard must be had to all relevant matters including, but not limited to, whether a lawyer representing the party, a lawyer representing any other party, or any self‑represented litigant has:
(a)complied with all relevant rules and orders of the court, including requirements that documents be filed or provided to other parties by a given date; and
(b)acted reasonably in raising, pursuing or contesting a particular allegation or issue; and
(c)made reasonable efforts, subject to the client’s instructions, to resolve the dispute through negotiation, mediation or arbitration; and
(d) made reasonable efforts to narrow the issues in dispute; and
(e)filed no more interlocutory applications than are reasonably necessary in the circumstances of the proceeding; and
(f)filed no more affidavits or other documents than are reasonably necessary in the circumstances of the proceeding.
The tensions created by the differing objectives sought to be addressed by a costs order awarded on a party and party basis as opposed to an indemnity basis were discussed in Re Wilcox, Ex parte Venture Industries Pty Ltd,[17] where the Full Court of the Federal Court of Australia said at 156:
The issue whether costs should be ordered on a party and party basis or on an indemnity basis has acquired increasingly greater significance as the gap between the two bases appears to have grown.
The gap has highlighted the conflict between two seemingly irreconcilable objectives. The first is protecting access to justice by only exposing an unsuccessful litigant in the usual course to an order for scale costs on a party and party basis. The second is relieving a successful litigant from the burden of costs which that litigant should not have been required to incur. These and other policy factors have been considered by the courts over a very long period in order to arrive at the principles which govern the undoubted discretion of courts to depart from ordering costs on a party and party basis and ordering costs on an indemnity basis. The principles were stated by Sheppard J in Colgate-Palmolive Co v Cussons Pty Ltd [1993] FCA 536; (1993) 46 FCR 225.
[17] (1996) 72 FCR 151 at 156 (“Re Wilcox”).
The Full Court went on to restate the principles from Colgate-Palmolive[18] in the following terms:
(a)the Court ought not to depart from the rule that costs be ordered on a party and party basis unless the circumstances of the case warrant the Court in departing from the usual course;
(b)the circumstances which may warrant departure from the usual course arise as and when the justice of the case so requires or where there may be some special or unusual feature in the case to justify the Court in departing from the usual course;
(c)whilst the circumstances in cases in which indemnity costs have been ordered offer a guide, the question must always be whether the particular facts and circumstances of the case in question warrant the making of an order for costs other than on a party and party basis. [19]
[18] Colgate-Palmolive (fn 13).
[19] Re Wilcox (fn 17) at 156–157.
While there is no exhaustive list of what circumstances may warrant an order for costs to be paid on an indemnity basis, some circumstances that have been found to justify such an order were identified by Sheppard J in Colgate-Palmolive as follows:
(a)Making allegations of fraud knowing them to be false;
(b)Making irrelevant allegations of fraud;
(c)Evidence of particular misconduct that causes loss of time to the Court and to the other parties;
(d)Commencing or continuing proceedings for some ulterior motive or in wilful disregard of known facts or clearly established law;
(e)Making allegations which ought never to have been made or the undue prolongation of a case by groundless contentions; and
(f)An imprudent refusal of an offer to compromise.[20]
[20] Colgate-Palmolive (fn 13) at 233.
In Parke & the Estate of the Late A Parke,[21] Murphy J quoted with approval the observations made by Einstein J in Idoport Pty Ltd v National Australia Bank Limited, Idoport Pty Ltd v Donald Robert Argus[22] when that court was considering an analogous provision to that contained in r 12.17(1)(a) of the Rules:
130.If the court is to fix a sum it should be “fixed broadly having regard to the information before the Court” (Beach Petroleum NL v Johnson (No 2) (1995) 57 FCR 119, at [24]cited in Idaport [sic] at [9]). The process does not “by its very nature ... envisage that a process similar to that involved in a traditional taxation or assessment of costs should take place”. (Idaport [sic] at [9](v), citing Harrison v Schipp(2002) 54 NSWLR 738).
131.Obviously enough, the court must act judicially in fixing or specifying a sum of costs, but:
...the requirement that the power to award a gross sum should be exercised judicially does not mean that it must be exercised in any scientific or formulaic manner; At the heart of the judicial function is the responsibility to weigh up competing factors and considerations, many of which might conflict, to reach a determination. Acting judicially carries with it an obligation to apply the rules of natural justice, to act impartially and to apply the law to the facts. ...
[21] (2016) FLC 93-748 at 81,943–81,944, [122]–[134].
[22] [2007] NSWSC 23 at [9].
Not only does this Court have the power to order a specific amount for costs,[23] it is generally the preferred approach for a specific amount to be ordered rather than requiring an assessment of costs.[24] This is because the latter approach will inevitably involve the parties in yet further conflict, delay, and cost.[25] In finding it appropriate to make an order that costs be paid in a fixed sum, the Full Court in Warbrick & Warbrick (No 2)[26] said that it did “not intend to permit the costs question to become, in effect, satellite litigation”.
[23] Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) r 12.17(1)(a).
[24] Stopford Malloy & Malloy (Costs) [2018] FamCAFC 6 at [10]–[12].
[25] Ibid. See also Mineralogy Pty Ltd v Sino Iron Pty Ltd (No 7) [2018] FCA 1217.
[26] (2021) FLC 94-030 at 80,536.
ORAL EVIDENCE
On the first day of the costs hearing, the husband and other respondents were granted leave to adduce evidence from a former solicitor of the wife’s, Mr AK from MM Lawyers.
Mr P, and Ms AL, a partner with GG Lawyers, were cross-examined.
MR AK’S EVIDENCE
Mr AK is a former solicitor of the wife’s and appeared in answer to a subpoena issued at the request of the husband. Mr AK gave evidence on the first day and his evidence was not challenged by Mr P or GG Lawyers.
Mr AK was admitted to practice as a legal practitioner in 2009 and commenced working in litigation in 2011. He had the carriage of the wife’s case from early 2021 until MM Lawyers ceased to act for the wife in about early March 2023.
Mr AK received a letter from the husband’s lawyers dated 13 August 2024 which set out the topics of questions that he would be asked about at the costs hearing to assist him in his preparation.
I am satisfied that Mr AK did his best to prepare for the hearing as requested by the husband’s lawyers.
In early 2021, the wife gave three hard drives to Mr AK. During the time Mr AK acted for the wife he extracted 146 emails from the blue hard drive and stored them in what has been referred to in the case as Folder 1. These are the emails, that by their descriptors indicate that Mr AK or someone under his direction had made an assessment that they would be helpful to the wife’s case. (It remains unclear to me what other documents were reviewed by MM Lawyers in circumstances where the blue hard drive was a back-up of the two silver hard drives).
On 15 March 2023, Mr AK provided the wife’s file to GG Lawyers, including the emails in Folder 1 and six recordings. To the best of Mr AK’s recollection, he told Ms AL at that time that documents relevant to the proceedings had not been disclosed to the husband and other respondents.
Mr AK conceded that a recording that was identified by the descriptor “[Mr UU] and barrister” should have triggered in his mind the very real possibility that the recording was privileged.
Mr AK made several admissions against interest. In the context of the process of disclosure in litigation, he was candid in admitting his ignorance of his obligations as an officer of the Court, and in particular, of the need to guard against reviewing material that may be subject to legal professional privilege inhering in someone other than his client. It seemed to cause him some surprise that appropriate systems needed to be in place to manage such matters. Mr AK conceded that at the time of giving evidence he “now” considered that his failure to turn his mind to whether a document may be privileged was a dereliction of his professional duties.
Mr AK said there were about 30 emails exchanged between himself and Mr P in October 2021. In particular, he confirmed that he had sent emails to Mr P attaching documents which he or other members of his firm at his direction had identified as being relevant to the proceedings on 5 October 2021 and 11 October 2021.
Mr AK admitted that he had failed to disclose relevant documents to the husband and the other respondents. Mr AK said that he failed to disclose the documents on the advice of Mr P. The documents were not only relevant but assessed to be beneficial to the wife’s case. Mr AK said that he received advice from Mr P on more than one occasion not to disclose relevant documents.[27]
[27] Transcript 15 August 2024, p. 53 lines 36–37.
There was no challenge to Mr AK’s evidence.
MR P’S OPEN OFFER
Late in the afternoon of day one of the costs hearing, and after Mr AK’s evidence had concluded, Mr P made an open offer in the following terms:
(a)That Mr P pay the costs of and incidental to the Application in a Proceeding filed on 1 August 2023 (the restraint application) on an indemnity basis to be assessed;
(b)That Mr P pay the costs of the costs applications currently before the Court, filed 27 and 28 March 2024, i.e., the husband’s and other respondents’ costs on an indemnity basis to be assessed;
(c)That Mr P pay the costs thrown away by reason of the adjournment of the trial last year as agreed and failing agreement to be assessed.
GG Lawyers placed on record that they understood the offer to mean that it would preclude any costs being sought by the husband and the other respondents against them and would dispose of the costs applications in their entirety.
It was argued by Mr P and GG Lawyers that on this basis there was no utility for Mr P or Ms AL to be cross-examined as sought by the other respondents.
After consideration overnight, the offer was not accepted by the husband or the other respondents.
I ruled that the open offer did not resolve the costs dispute and provided reasons. In summary, the husband sought a fixed sum rather than assessment; the husband and other respondents sought an order that Mr P and GG Lawyers be jointly and severally liable; and that in determining the reasonableness of any claimed costs sought on an indemnity basis, whether fixed or assessed, findings as to conduct may be highly relevant. The husband and other respondents were not privy to Mr P’s personal financial circumstances nor to the terms of any professional indemnity insurance.
The costs hearing continued.
In making my determination on whether a costs order against the lawyers is justified, I place no weight on the fact that the open offer was made.
MR P’S EVIDENCE
Mr P relies upon two affidavits in these costs’ proceedings. The first affidavit was filed on 13 December 2023 and a second affidavit was filed on 3 July 2024. The first affidavit was annexed to his second affidavit.
By way of context, it is common ground that Mr AK sent an email to Mr P dated 11 October 2021 with 29 attachments in which certain documents had been identified as being helpful to the wife’s case. The documents were not disclosed to the husband and other respondents until 19 July 2023.
Mr P contended that he had no recollection of receiving the email from Mr AK dated 11 October 2021 until searching for it in November 2023, in response to a letter from the husband’s lawyers. This is despite the controversy erupting during the trial about late disclosure and in particular surrounding one of the attachments to that email, a document relied upon by the wife in her case, being an email chain dated 14, 21 and 23 December 2012 (“the December 2012 email chain”). In Venter (No 6), I accepted that Mr P did not recall reading the 11 October 2021 email and attachments (other than the December 2012 email chain) but found that it was inconceivable that he did not do so.
In restraining the wife from continuing to retain, among others, Mr P and GG Lawyers, I found that some of the attachments were protected by legal professional privilege and should have been returned, unread, to the owners of those documents being variously, the husband and the other respondents or others.
Mr P purportedly forwarded Mr AK’s original 11 October 2021 email to two other barristers who were retained in the case for the wife at the time. Neither of those barristers provided an affidavit in the costs’ proceedings, but according to Mr P the two other barristers could not recall reading Mr AK’s 11 October 2021 email and its 29 attachments save for one attachment, namely the December 2012 email chain, which they read and which I later found to be protected by legal professional privilege; and therefore, should not have been read by the wife’s legal representatives.
Mr P holds, among other qualifications, a Bachelor of Laws, and a postgraduate qualification. Mr P was called to the Bar in 2011.
The cross-examination of Mr P focussed on several particular topics which I will set out in detail.
Annexure P-9 to Mr P’s 13 December 2023 affidavit – email chain: 11 October 2021 email; 27 February 2023 email; 4 April 2023 email
At [35]-[36] of his 13 December 2023 affidavit, Mr P deposes to the following:
35. I was on leave from 20 November 2023 to 22 November 2023. At the time I received this email I had access to my personal laptop. I searched my inbox’s archives to establish whether or not I had, in fact, received the documents referred to in the above letter. I located an email from [Mr AK] of [MM Lawyers] that was sent to me on 11 October 2021 with 29 attachments. I do not recall receiving that email nor do I recall reviewing the attachments to it.
36. I informed my instructing solicitors of the email in the preceding paragraph. In addition to confirming that I received the email and that no other person was copied to it, I have since conducted a further achieve [sic] search on 4 December 2023 of my sent folder and confirm that I:
i. Forwarded the email of 11 October 2021 to [Ms OO] of Counsel on 27 February 2023; and
ii. Forwarded the same email referred to in the preceding sub-paragraph to [Ms OO] and [Ms XX] of Counsel on 4 April 2023.
Attached hereto and marked “[P]-9” is a true copy of the email (without attachments) sent from me to [Ms OO] on 27 February 2023 and [Ms OO] and [Ms XX] on 4 April 2023.
(Emphasis in original)
When cross-examined, Mr P said that [35] of his 13 December 2023 affidavit was intended to convey that “to the best of my recollection, I didn’t recall receiving that email [i.e. the 11 October 2021 email] until I checked it in November 2023” and that [36] was intended to convey that on 4 December 2023 he conducted a further search of his email ‘sent’ folder and found that he had forwarded the 11 October 2021 email to Ms OO on 27 February 2023 and that he had forwarded the same email received from Mr AK that had previously been forwarded to Ms OO, to both Ms OO and Ms XX on 4 April 2023.
The following exchange occurred between Mr P and Mr Kelly KC, counsel for the husband:[28]
[28] Transcript 16 August 2024, p. 21 lines 1–45.
COUNSEL FOR THE HUSBAND: On 27 February. You see that?
[MR P]: Yes.
COUNSEL FOR THE HUSBAND: And then you say you also forwarded the same email to [Ms OO] [sic] and [Ms XX] of counsel on 4 April 2023. You see that?
[MR P]: Yes.
COUNSEL FOR THE HUSBAND: So should her Honour understand that what you’re saying is you forwarded, on 4 April–what you forwarded on 4 April 2023 was the same original email received from [Mr AK], and also the same email that had been previously forwarded by you to [Ms OO] [sic] on 27 February 2023?
[MR P]: Yes.
COUNSEL FOR THE HUSBAND: Now, did you then print that document from your sent folder?
[MR P]: I believe so, yes.
COUNSEL FOR THE HUSBAND: And you exhibited it to your affidavit?
[MR P]: Yes.
COUNSEL FOR THE HUSBAND: So what you printed from your sent folder then contains the original email of 11 October 2021 from [Mr AK]; the first forwarded email of 27 February 2023; and then the email that was forwarded on 4 April 2023. Is that correct?
[MR P]: It appears to be, yes.
COUNSEL FOR THE HUSBAND: It’s not–I’m not asking you whether it appears to be. You’ve sworn to this?
[MR P]: Yes.
COUNSEL FOR THE HUSBAND: Is that correct? Is that correct?
[MR P]: Yes.
COUNSEL FOR THE HUSBAND: Now, that’s what–that document that you’ve printed from your sent folder, that’s what you’ve exhibited at [P]9. Now, could I ask you to look at–under paragraph 36, see the bold words there. Do you see that?
[MR P]: Yes.
COUNSEL FOR THE HUSBAND: It says:
Attached hereto and marked [P]9 is a true copy of the email without attachments–
[MR P]: Yes.
sent from me to [Ms OO] [sic] on 27 February 2023, and [Ms OO] [sic] and [Ms XX] on 4 April 2023–
COUNSEL FOR THE HUSBAND: Now, again, is that true?
[MR P]: I believe so, yes.
COUNSEL FOR THE HUSBAND: That–when you say you believe so, you would have no doubt about that, would you? This is a recent affidavit from late 2023, and you have exhibited this affidavit to an affidavit of July 2024?
[MR P]: Yes.
COUNSEL FOR THE HUSBAND: And you’ve said it’s true. So you’re not here to say you believe it’s true. You’re saying this is true, aren’t you?
[MR P]: Yes.
Exhibit P-9 to Mr P’s 13 December 2023 affidavit is the email chain that Mr P contends he printed from his ‘sent’ folder on his computer (annexed at page 55 of the 3 July 2024 affidavit) comprising the email from Mr AK to Mr P and the emails from Mr P to the two junior barristers. The email chain is printed over two A4 pages.
Mr P maintained during cross-examination that P-9 is a true copy of the same email that was sent to him by Mr AK and then forwarded twice by him to his junior/s. Mr P denied tampering with the document at all and denied making any changes to the email received from Mr AK. Mr P denied altering the subject line of the email from Mr AK.
The email chain in P-9, commencing in chronological order with the email from Mr AK to Mr P and has the following header:
From: [Mr AK] | [MM Lawyers] ˂[…@...]˃
Date: Monday, 11 October 2021 at 11:45 am
To: [Mr P] ˂[…@…]˃
Subject: [Ms Venter] – more good email evidence regarding [Mr CC]’s control(Underlining added)
The email header from Mr P to Ms OO is as follows:
From: [Mr P] <[…@…]>
Date: Monday, 27 February 2023 at 4:07 pm
To: [Ms OO] <[…@…]>
Subject: FW: [Ms Venter] - more good email evidence regarding [Mr CC]’s control(Underlining added)
The email header from Mr P to Ms OO and Ms XX is as follows:
From: [Mr P] <[…@...]>
To: [Ms OO]; [Ms XX]
Subject: FW: [Ms Venter] - more good email evidence regarding [Mr CC]”s control(Underlining added)
Mr P was cross-examined about the differences in the “headers” in the email chain, namely, the subject heading in the email from Mr AK to Mr P has one apostrophe in the word “[Mr CC]’s” and Mr P’s email to Ms OO also has one apostrophe, but in the email to Ms OO and Ms XX the word “[Mr CC]”s” has two apostrophes. Mr P was unable to explain the inconsistency but maintained P-9 was a true copy of the email chain.
Given the seriousness of what is alleged against Mr P, I set out the following exchange between Mr P and Mr Kelly KC, counsel for the husband:[29]
[29] Transcript 16 August 2024, p. 25 line 24 to p. 26 line 34.
COUNSEL FOR THE HUSBAND: Right, can we turn to the next page?
[MR P]: Yes.
COUNSEL FOR THE HUSBAND: And you will see the email of 27 February 2023. You see that?
[MR P]: Yes.
COUNSEL FOR THE HUSBAND: Thank you. Look at the subject line there?
[MR P]: Yes.
COUNSEL FOR THE HUSBAND: Do you see the words ‘[Mr CC]’s Control’?
[MR P]: Yes.
COUNSEL FOR THE HUSBAND: You see there’s one apostrophe?
[MR P]: One apostrophe?
COUNSEL FOR THE HUSBAND: In [Mr CC]’s?
[MR P]: Yes.
COUNSEL FOR THE HUSBAND: Go back to the previous page I took you to?
[MR P]: Yes......
COUNSEL FOR THE HUSBAND: see there’s one apostrophe?
[MR P]: Yes.
COUNSEL FOR THE HUSBAND: Now look at the document you say you forwarded on 4 April at the top of the page, the [P]9. Can you see there’s two apostrophes in [Mr CC]’s control?
[MR P]: It looks like a quotation mark, yes.
COUNSEL FOR THE HUSBAND: Now, did you–did you alter the document that put the apostrophe–second apostrophe there? You’re smiling again, but---?
[MR P]: No, no, I, I–no.
COUNSEL FOR THE HUSBAND: Can you explain to Her Honour why---?
[MR P]:I cannot. I have no idea why there’s a second apostrophe there, your Honour.
COUNSEL FOR THE HUSBAND: Can I suggest there’s no possible way that you’ve printed this document out of your sent folder as one document and it could have a second apostrophe in the 4 April email?
[MR P]: I–I–I don’t know how that has happened. I---
COUNSEL FOR THE HUSBAND: You’ve got no idea?
[MR P]: No.
COUNSEL FOR THE HUSBAND: One thing you would accept though, wouldn’t you, is that this document is not a true copy of the email that you forwarded on 4 April 2023?
[MR P]: Well, it is.
COUNSEL FOR THE HUSBAND: How could it be?
[MR P]:I don’t know why there’s a second apostrophe, I–I can’t answer that, I don’t know. It could be a quirk with the computer or the software, I’m not sure, I–I don’t know.
COUNSEL FOR THE HUSBAND: So are you running with the quirk with the computer theory?
[MR P]:No, my answer is I don’t know why there is a second apostrophe or one apostrophe in the others and---
COUNSEL FOR THE HUSBAND: Can I suggest that you’ve constructed this document and then you’ve exhibited it to your affidavit?
[MR P]: I constructed this document? In what sense?
COUNSEL FOR THE HUSBAND: You’ve made up a document, you’ve not printed a document from your Send folder, you’ve made up a document, and you’ve exhibited it as exhibit 9, but you’ve overlooked the fact that there’s two apostrophes in the---?
[MR P]:No, I would have just printed off the email chain and promoted it as annexure to my affidavits.
COUNSEL FOR THE HUSBAND: All right. Now, I think I’ve been very careful to–because you have–the transcript won’t show, but you have smiled and chuckled a bit in your answers, but it is a very serious thing I’m putting to you?
[MR P]: I appreciate that, Mr Kelly. I do.
COUNSEL FOR THE HUSBAND: All right?
[MR P]:But I honestly cannot explain why there’s a change in the apostrophes to [Mr CC]’s.
Mr P was also unable to explain why the date line was missing from the email that Mr P contends he sent to the junior barristers on 4 April 2023. The following further exchange occurred between Mr P and Mr Kelly KC, counsel for the husband:[30]
[30] Transcript 16 August 2024, p. 26 line 35 to p. 27 line 29.
COUNSEL FOR THE HUSBAND: Right, and can I ask you this too that exhibit [P]9?
[MR P]: Yes.
COUNSEL FOR THE HUSBAND: Did you delete the date from that email?
[MR P]:You mean the header? No, that might have just been the way it printed off.
COUNSEL FOR THE HUSBAND: No, it’s–can I put to you, [Mr P], that there’s no way that you can print that document out of your send folder and it could be missing a date?
[MR P]: I don’t know the answer to that, Mr Kelly. On page 57, 58 of the affidavit, it shows the original header. Page 56–and page 56 has one apostrophe as well, I’ve just noticed, and I–and that’s from [Mr AK]. I–no. I don’t know.
COUNSEL FOR THE HUSBAND: Can I suggest that you deleted the date from the email of 4 April 2023?
[MR P]: I deleted the–sorry? Can you repeat the question?
COUNSEL FOR THE HUSBAND: The date. You tell us in your affidavit that you sent it on 4 April 2023. What I’m putting to you is that you deleted the date from this document?
[MR P]: If I did, it was inadvertent, but I can’t---
COUNSEL FOR THE HUSBAND: That’s not–sorry?
[MR P]: I can’t–well, I can’t---
COUNSEL FOR THE HUSBAND: If you did–sorry. If you did, it was inadvertent? That’s not something you do inadvertently, is it, [Mr P]?
[MR P]:No. I–well, no. I–all I can say is the process to provide this annexure was going into my emails and printing it off. It might have been on another page and that wasn’t part of it, but---
COUNSEL FOR THE HUSBAND: Well, the date appears under the “from”, and the from line is on [P-9] at the top---?
[MR P]:I see that.
COUNSEL FOR THE HUSBAND: ---so the date would appear under the “from”?
[MR P]:I see that, yes.
COUNSEL FOR THE HUSBAND: Now, is there a reason that you wanted to hide from the court what date you sent this email?
[MR P]:Not at all. No.
COUNSEL FOR THE HUSBAND: And could a reason be that when you constructed this document, where it says “FYI”---?
[MR P]:Yes.
COUNSEL FOR THE HUSBAND: ..... what you say is a 4 April 2023 document---?
[MR P]:Yes.
COUNSEL FOR THE HUSBAND: ---could it be that you didn’t write “FYI”; there was another message that you sent to your juniors?
[MR P]:No.
COUNSEL FOR THE HUSBAND: All right?
[MR P]: No.
Mr P did not correct the misleading statement contained in his former solicitor’s letter, sent on his instructions on 6 December 2023, that only one email was sent by Mr AK to Mr P on 5 October 2021. He failed to make the correction despite having been aware of it for some time. It was not until he was cross-examined about it, that he conceded it was incorrect.
GG Lawyers – costs thrown away by adjournment of part-heard trial
GG Lawyers submit that the part-heard trial could not have been saved even if the disclosure deficiencies had been brought to the attention of the Court after they received the hard drive links from the wife on 13 July 2023. While that may be so in relation to the hard drives, the trial could have been adjourned on 24 July 2023 and not 3 August 2023 thus saving the significant wastage of costs and loss of Court time. The submission overlooks the failure of GG Lawyers to cause the Court to be informed at the earliest possible time that they did not have the capacity to review the wife’s solicitor’s previous file and as such could not assure the Court that the matter was ready to be set down for trial. The same can be said for the failure to correct Mr P’s advice to the registrar on 11 July 2023 that the wife had completed disclosure.
It is perhaps apposite in the particular circumstances of this case to restate a solicitor’s obligations when acting for a party to litigation and to observe that those obligations were not met in this case by GG Lawyers.
In EI Du Pont De Nemours & Co v Commissioner of Patents,[37] the Full Court of the Federal Court of Australia (Sheppard J with Beaumont, Burchett JJ agreeing) said at 426:
There is another side to the coin. Just as it is important for solicitors to make sure that there is full disclosure of documents on discovery, so it is their obligation also to ensure that documents which bear no relevance whatsoever to the issues in question are not produced. If they are, the task of those inspecting them becomes a very difficult one. It is understandable that a party obliged to discover may err on the side of caution and there can be no question but there will be cases where different minds will take different views about whether a document is relevant or not. In those cases it is no doubt wise to take the cautious approach of including the document in the list. But in the light of the number of documents which there must be in this case, a solicitor concerned to determine which documents should be produced and which not, must be careful to ensure that he does not take the easy course of listing everything available and leaving to others the problem of working out what is relevant. If he produces too much, his sin of commission will not be as great as his sin of omission where he fails to produce a relevant document, but nevertheless his inclusion of irrelevant material is not conducive to the proper administration of justice.
[37] (1987) 16 FCR 423.
And at page 425:
It is well established that solicitors advising a party on the question of discovery carry a heavy obligation. This has been emphasised on a number of occasions. In Woods v Martins Bank Ltd [1959] 1 QB 55, Salmon J (as he was) said (at 60):
"No doubt the defendants' solicitors explained to their clients that they must disclose all relevant documents which were or had been in their possession. The solicitors' duty, however, does not stop there. It cannot be too clearly understood that solicitors owe a duty to the court, as officers of the court, carefully to go through the documents disclosed by their clients to make sure, as far as possible, that no relevant documents have been omitted from their clients' affidavit. In this case I am regretfully driven to the conclusion that this duty was not performed by the defendants' solicitors."
Once GG Lawyers accepted instructions to act for the wife, they were required to meet their professional obligations to their client and the Court, and in particular to ensure that the wife had complied with her obligations of disclosure.
Having regard to the frank admission made by Ms AL in her affidavit filed 4 July 2024 that:
12. Given the voluminous nature of the Court Documents and other matters that [GG Lawyers] had to undertake to prepare the matter for trial, [GG Lawyers] did not have the capacity to undertake a wholesale review of the electronic file provided by [MM Lawyers] on 15 March 2023, nor did it have capacity to undertake a wholesale review of each of the documents in Folders 2 and Folder 3 prior to providing them to the Respondents on 19 July 2023.
GG Lawyers had an obligation to inform the Court on 27 March 2023, 11 July 2023, and/or on 24 July 2023 that they were unable to assure the Court that the wife’s disclosure had been completed until they had reviewed the entirety of her file and documents recently received from the wife. They had an obligation to inform the Court that the matter was not ready for trial. Instead, once the trial started, the matter limped on over days as further revelations were made regarding the shambolic process of disclosure.
The six affidavits filed by Ms AL and her oral evidence unfortunately demonstrate a surprising ignorance about the disclosure process, its purpose, and solicitors’ obligations in litigation.
GG Lawyers were generally uncooperative when reasonable requests for information were made by the respondents. If GG Lawyers had responded professionally and candidly and in a timely fashion, the enormity of the disclosure issues may have become apparent to the respondents and the Court much earlier and enabled an earlier adjournment of the trial.
Further, and notwithstanding that advice was received from Mr P that the December 2012 email chain was not privileged or if it were privileged, privilege had been waived, GG Lawyers had an independent obligation to ensure that they exercised their own professional judgment.
In Boland v Yates Property Corporation Pty Ltd,[38] the High Court observed at 240:
142. Ordinarily in a divided legal profession it is responsible conduct for a solicitor (particularly if he or she has no disclosed specialist experience in a field of legal practice) to rely upon a competent barrister's advice. Doing so makes proper use of the specialised Bar. However, the solicitor must not accept the barrister's advice blindly. He or she retains a legal duty to the client, separate, independent and personal, both by reason of the general law of negligence and the contract of retainer. The solicitor must exercise independent judgment to the extent that it is reasonable to demand this having regard to the solicitor's reputed knowledge and experience, the complexity of the case and the skill and experience of the barrister who has been retained. If the solicitor reasonably considers that the barrister's advice is obviously wrong, it is the solicitor's duty to reject that advice and to advise the client independently, including as to the wisdom of retaining a fresh barrister. In a divided profession, the immunity enjoyed by an advocate does not automatically extend to a non-advocate solicitor. The answer which such a solicitor, who has retained a barrister may give to a client's later allegation of negligence is not that the solicitor is immune from suit. It is that, although liable to suit, the solicitor is not negligent because reliance on the advice of the barrister was proper and reasonable in the circumstances and no occasion arose for that advice to be rejected.
(Citations omitted)
[38] (1999) 74 ALJR 209.
In this case, GG Lawyers did not turn their minds to the December 2012 email chain at all.
GG Lawyers facilitated the wife providing an undertaking to the Court on 23 July 2023 that she had complied with her obligations to make full and frank disclosure in a timely manner. At the time Ms AV certified that the required advice had been given to the wife, GG Lawyers knew, at the very least that they had in their possession links to Folders 2 and 3 that they had not reviewed. GG Lawyers also knew that there were notebooks (referred to in the wife’s reply affidavit) that had not been disclosed. There were audio recordings that had been partially listened to that may have been subject to legal professional privilege (and ultimately were found to be so) about which the respondents had not been alerted. GG Lawyers should have advised the wife against providing the undertaking and if she rejected the advice, they should have sought leave to withdraw.
GG Lawyers did not correct the record when Mr P assured the Court on 25 July 2023, that no document subject to privilege or a potential claim for privilege, had been accessed by any of the wife’s legal representatives other than the December 2012 email chain when they knew or ought to have known that that was not correct. At the very least, GG Lawyers had accessed the audio recording, titled “[Mr UU] and barrister”, a recording that had not even been disclosed to the respondents at that stage.
Conclusion – costs thrown away
A failure to comply with obligations both as a litigant and as a legal practitioner in relation to disclosure is intended to have serious consequences.
As I noted in my reasons for judgment in Venter (No 5) at [56]:
56.The Explanatory Statement to the 2004 Family Law Rules refers to the “major reform in the concept of discovery” introduced by those rules. Rule 13.14 (which is in the same terms as r 6.17 of the current rules) was introduced to “send a clear message that the Court will take a serious view of non-compliance with the duty of disclosure and the Rules”. It is apparent from the Explanatory Statement to the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 that the current Rules are intended to continue the clear message introduced by the previous Rules.
It is also apposite to set out the quote at [60] of those reasons, from the decision of the Full Court of the Federal Court of Australia Clifton (Liquidator) v Kerry J Investment Pty Ltd trading as Clenergy:[39]
[39] [2020] FCAFC 5.
60. …
[137]The importance of parties providing proper discovery in accordance with orders made by the Court is well recognised in the authorities. In Brookfield v Yevad Products Pty Ltd [2004] FCA 1164 (Brookfield) Lander J referred to the origins of discovery and at [366]–[368] explained that:
The process enables the parties to obtain documents from their opponents which support their own case, and which destroy their opponent’s case. It enables the parties to assess their own prospects of success before trial and to ensure that they are not ambushed at trial.
…
The integrity of the discovery process must be maintained. The discovery process in many ways depends upon the honesty of the parties and their legal advisers.
[138]At [392]–[394] his Honour said:
… A trial has not been regularly conducted where a party to the litigation has not discovered documents which are relevant to the issues in the trial. That party has not complied with its obligations in the interlocutory processes and by failing to make full discovery that party has withheld evidence from its opponent.
Moreover, another aspect of the administration of justice must be considered. Because it serves the administration of justice, it is also in the public interest that the integrity of the court’s processes are preserved.
For the reasons already given the discovery process is very important in ensuring that the parties are accorded a fair trial. Litigants will lose confidence in the court’s processes and decisions if they think that a party might avoid giving proper discovery and not be later held to account.
Finally, it is perhaps worth reproducing [50] of Venter (No 6):
50. In undertaking the process of disclosure, it is worth emphasising that solicitors have duties to the Court and to their clients to ensure that their clients understand their obligations and that the process of disclosure is undertaken in a way that meets the requirements of disclosure. In Myers v Elman [[1940] AC 282 at 282], the duty of solicitors was discussed in the context of an order for discovery, but the observations are equally applicable more generally to the duty of disclosure:
… as a client cannot be expected to realize the whole scope of that obligation without the aid and advice of his solicitor, the latter has a peculiar duty as an officer of the Court carefully to investigate the position, and, as far as possible, see that the order is complied with. The solicitor cannot simply allow the client to make whatever affidavit of document he thinks fit, nor can he escape the responsibility of careful investigation or supervision. If the client will not give him the information which he is entitled to require, or if the client insists on swearing an affidavit which the solicitor knows to be imperfect, the solicitor's duty is to withdraw from the case. A solicitor who has innocently put upon the file an affidavit by his client which he subsequently discovers to be false, owes a duty to the Court to put the matter right at the earliest moment if he continues to act as solicitor on the record.
I find Mr P’s conduct to have been improper and unreasonable in many respects. His conduct caused delay and considerable disruption to the orderly conduct of the Court’s own processes.
I find GG Lawyers’ conduct to have been improper and unreasonable in many respects. Their conduct caused delay and considerable disruption to the orderly conduct of the Court’s own processes.
I conclude that the circumstances do justify a costs order against Mr P and GG Lawyers and that the circumstances are extraordinary such as to warrant indemnity costs for the costs thrown away by the adjournment of the part-heard trial. Mr P and GG Lawyers should be liable for the wasted costs jointly and severally.
Mr P – resisting withdrawal as the wife’s counsel
Mr P resisted the application to restrain the wife from continuing to retain him until 13 December 2023, only days before the hearing on 15 December 2023, and after the matter had been adjourned on 23 November 2023. The reason for the adjournment was that the other respondents had discovered the possibility of more documents having been sent to Mr P than first realised. They sought further information on 22 November 2023 from GG Lawyers who provided a perfunctory response which included a statement that:
There was no other person copied into the email dated 11 October 2021 [from Mr AK to Mr P]
This information was provided to GG Lawyers by Mr P and while that statement was literally correct, it was grossly misleading. In fact, as already noted elsewhere in these reasons, Mr P had forwarded the 11 October 2021 with attachments to two junior barristers. The other respondents’ specific enquiry – “Were the emails … provided to anyone else, and if so when and by whom?” – went unanswered. Further, the request for a copy of the 11 October 2021 email went unanswered until 1 December 2023.
The conduct of Mr P including advising Mr AK not to disclose relevant documents, misleading the Court on various occasions, withholding relevant information and documentation, or at least making no reasonable attempt to ensure that he had been frank and open about the documents he had accessed that may have been subject to a privilege claim, made his continuing position as counsel for the wife untenable. Mr P ultimately made the correct decision to withdraw but it was a decision that should have been made well before 13 December 2023.
GG Lawyers – resisting withdrawal as wife’s solicitors
GG Lawyers resisted the application to restrain the wife from continuing to retain them as her solicitors. If the sole basis for the attack on them continuing to act related to a dispute about whether documents accessed by them were subject to privilege, it could not be said that their resistance was unreasonable. It may be accepted that minds may differ about whether privilege attaches or has been waived. Ultimately, it is a matter for the Court to rule on, as happened in Venter (No 6).
However, the unsatisfactory evidence provided by GG Lawyers in relation to their handling of potentially privileged documents, their failure to follow their own protocols, their involvement in the shambolic disclosure process, their less than cooperative approach to answering (or not answering as the case may be) reasonable requests for information from the respondents, made their continuing position as solicitors for the wife untenable.
Conclusion – restraint application
I find Mr P’s conduct to have been improper and unreasonable in many respects. Mr P’s failure to withdraw in a timely manner caused delay and unnecessary costs to be incurred by the respondents.
I find GG Lawyers’ conduct to have been improper and unreasonable in many respects. GG Lawyers’ failure to withdraw in a timely manner caused delay and unnecessary costs to be incurred by the respondents.
Mr P and GG Lawyers should bear the costs of the restraint application and the circumstances warrant costs on an indemnity basis. Mr P and GG Lawyers should be liable on a joint and several basis.
DISPOSITION
I have found that the conduct of Mr P and GG Lawyers was at times improper and unreasonable. The conduct caused significant costs to be incurred unnecessarily and caused delay in the proceedings and a waste of Court resources. The conduct warrants an order for costs thrown away as a result of the adjournment of the part-heard trial on an indemnity basis and an order for costs in relation to the restraint application on an indemnity basis. The costs will be awarded against Mr P and GG Lawyers on a joint and several basis.
As the respondents have succeeded in their costs applications, they should have the costs of that application on an indemnity basis given the findings made.
QUANTUM
Mr P’s submissions on quantum
The husband seeks a fixed sum of $560,119 for costs thrown away by the adjournment of the part-heard trial last year, $189,154 for the costs of the application to restrain the wife from retaining Mr P and GG Lawyers, $449,917 for the costs of the costs application itself, and $783,839 for the balance of the husband’s costs in the proceedings to date.
The other respondents seek a fixed sum of $840,178 for costs thrown away by the adjournment of the part-heard trial last year, $283,731 for the costs of the restraint application, and $454,814 for the costs of the costs application.
Mr P resists the quantum of costs submitting that:
It is not accurate to describe the costs incurred in the 10 day trial as “thrown away” in circumstances where the parties attended to, and the Court determined, objections to the applicant’s evidence, commenced the examination in chief of a subpoenaed witness ([Mr CC]), attended two mediations with the Honourable [Mr AZ] KC and prepared, heard and determined an interlocutory application brought by the then eighth respondent wherein costs were reserved. Furthermore, the discovery of what has been termed the “Side Agreement” in these proceedings caused the solicitors and barristers for the respondents to seek further adjournments for the balance of the hearing in order to consider their ethical obligations and time to put on “correcting evidence”.
(Citations omitted)
Mr P further submits that until findings are made at trial about the husband’s knowledge of the “side agreement” and his subsequent “correcting evidence”, noting the observation at [40] in Venter (No 6) that “[t]here are certainly concerning features about the evidence as it currently stands”, the causes for the adjournment of the part-heard trial cannot really be known.
It is further submitted by Mr P, that the hearing on 15 December 2023 was not limited to the application to restrain the wife from retaining her lawyers but also to a wholly unsuccessful application by the other respondents to have the case against them summarily dismissed. Mr P submits that “it is difficult to see any basis for the respondents seeking any costs, let alone costs against the Non Party”.
In response to the quantum claimed by the husband, Mr P submits that at best 50 percent of the costs associated with the final hearing were wasted not 100 percent, being a sum of $280,059.50 in respect of the husband’s costs. Other than submitting the costs associated with the restraint application, are on the high side, no other submission is made. The costs sought in relation to the application for costs is submitted to be “extraordinarily high” and at best 50 percent should be allowed being a sum of $224,958.50.
As to the costs claimed for the first time in the husband’s submissions relating to the balance of the proceedings, it is submitted by Mr P that as no application for those costs have in fact been made it should not be entertained.
On that basis, it is submitted by Mr P that if any costs order is to be made in the husband’s favour it should be limited to $639,071 in total.
In relation to the costs claimed by the other respondents, Mr P additionally submits that “[n]o justification is advanced by the [other respondents] as to why their claimed costs are “110% to 140% greater than the Husband’s costs” and no justification is then advanced on behalf of the [other respondents] as to why an additional 10% should be added to approximate that [other respondents’] costs thrown away”. Mr P further submits that if the husband’s estimate for costs thrown away are accepted as a reasonable approximation for costs thrown away and for the restraint application, then at most the quantum should be $749,273.
As to the costs for the application for costs, it is submitted that the quantum claimed is “extravagant” and that at most, $150,000 should be awarded.
Finally, Mr P submits that if costs are to be awarded, they should be awarded against himself and GG Lawyers jointly and severally.
GG Lawyers’ submissions on quantum
GG Lawyers resist costs on an indemnity basis in part because “they have a tendency to encourage extravagance and put the quantum of legal fees beyond the effective scrutiny of the courts and their taxing officers” (at [24] of GG Lawyers written submissions filed 9 August 2024 (footnote omitted)).
Generally, GG Lawyers submit that any failings on their part were not causative of loss, as the trial dates could not have been saved and the matter would have been adjourned in any event.
In relation the costs of the restraint application, it is submitted by GG Lawyers those costs would have been incurred in any event given the application by the other respondents to have the claim against them dismissed, in which they were wholly unsuccessful.
As to the husband’s claim for additional costs in relation to the proceedings generally, GG Lawyers submit that they were not foreshadowed previously and there is no proper basis on which the husband could claim such costs from GG Lawyers.
GG Lawyers submit that if indemnity costs are to be awarded at all against GG Lawyers, it should only be in relation to the restraint application and any costs in relation to the adjournment of the trial and the costs applications should be on a standard basis.
In relation to the fixing of a sum GG Lawyers submit that the material before the Court does not permit the fixing of a sum “on proper material” and that “[a] schedule of costs from the Husband is not evidence of the reasonableness of the costs”. As to the other respondents’ quantum, it is submitted by GG Lawyers that they “do not even produce an itemised schedule of costs in relation to parts of the costs claims. Rather, they identify the extent to which their fees exceeded those of the Husband and assume a ratio of exceeding the Husband’s fees can be extrapolated out”. GG Lawyers suggest further material would need to be filed.
GG Lawyers submit that “[t]o award 100 % of costs incurred by any of the Respondents would be extraordinary, even if very serious findings were made against [GG Lawyers] …”, and “… [i]ndemnity costs have never been full dollar-for-dollar recovery”, and “[t]he rule of thumb of recovery of 80% to 90% of costs reflects the reality that lawyers providing proper client service would routinely have meetings or attendances or perform work which is legitimately chargeable to the client, but which falls outside what is reasonable or necessary for the progression of the matter, for an indemnity basis assessment”.
GG Lawyers submit that any costs should be apportioned based on the relative culpability of each of Mr P, the wife, MM Lawyers, or GG Lawyers and on that basis the starting point for costs against GG Lawyers should be no more than 25 percent and then adjusted to 15 percent.
Conclusion - quantum
I find that not all costs claimed can be categorised as costs thrown away. While I accept that much of the preparation undertaken for the trial will have been wasted, I do not accept that all of it will have been wasted. Further, the first day was occupied with objections to evidence and on the second day, one witness commenced his evidence in chief.
I consider an appropriate fixed sum for the husband’s costs thrown away to be $400,000 and for the other respondent’s costs thrown away to be a fixed sum of $550,000.
I consider an appropriate fixed sum for the husband’s costs of the restraint application to be $150,000.
The other respondents were unsuccessful in their application to have the wife’s case against them dismissed. Their alternative application was to restrain the wife from retaining her lawyers. In those circumstances, I consider an appropriate fixed sum for their costs of the restraint application to be $150,000.
The costs claimed for the costs application while it occupied more time than the restraint application and the summary dismissal application, is an extraordinarily higher sum claimed in relation to the latter applications. It is not apparent to me why that would be the case.
I consider an appropriate fixed sum for the husband’s costs of the costs application to be $200,000 and for the other respondents a fixed sum of $250,000.
The total costs payable to the husband will $750,000 and the total costs payable to the other respondents will be $950,000.
As the husband first raised a claim for costs for the balance of the proceedings in his written submissions no application for those costs will be considered. As the costs sought against the wife were only if costs were not awarded against the legal practitioners, the balance of the applications will be dismissed.
Wife’s application for costs
The wife seeks her costs of and incidental to the application for costs against her made only in the alternative and not seriously pressed. She claims $45,000. I regard the wife’s application for costs to be audacious. The fact remains that the wife did not comply with her obligations to make full and frank disclosure of all documents in her possession or control in a timely manner and even produced the black tub and suitcase of documents during the trial.
The wife’s application for costs will be dismissed.
SUMMARY
I have found that Mr P and GG Lawyers engaged in improper and unreasonable conduct which caused significant costs to the husband and other respondents for which they should be liable jointly and severally. The conduct also caused significant waste of Court time and resources. Ironically, the conduct has also delayed the wife’s application from finalisation and the possibility of an award in her favour.
It is most troubling that several of the lawyers who have acted for the wife have such a muddled and incorrect understanding of the fundamental legal concepts of disclosure in litigation and legal professional privilege. It is even more troubling that the lawyers concerned have considerable experience in the law, either as a senior junior barrister, a partner or special counsel in a law firm. One can only ponder how it is that lawyers can advance so far into their careers with such a misapprehension of the fundamentals of litigation practice.
The administration of our justice system depends upon the integrity of legal practitioners and an understanding of basic principles in the litigation process. Lawyers have obligations to the courts, to their clients and to their opponents, to ensure that their clients understand and comply with their obligations to disclose information and documentation that is relevant to an issue in the proceedings in a timely manner. If the client rejects advice to do so, then the legal practitioner has no option but to withdraw.
If a document on its face appears to be protected by legal professional privilege, then it should not be read, it should be returned to the owner of the document immediately, all copies destroyed, and an enquiry should be made of other side if the document is relevant to an issue in the proceedings and if so whether privilege is claimed or waived. When claiming privilege, it is imperative that the description of the document provides sufficient detail to identify that the claim has a proper basis.
Despite my reasons for judgment in Venter (No 6), which I assume were read by Mr P and Ms AL, their evidence continued to demonstrate an extraordinary misapprehension of their obligations as lawyers.
REFERRAL
I consider it appropriate to refer Mr P, GG Lawyers, Mr AK, and the legal practitioners listed in the order made on 28 February 2024, to the appropriate professional regulatory bodies for consideration of what, if any, investigations or disciplinary or educational process should be undertaken for those legal practitioners.
While Mr AK failed to fulfil his professional obligations when acting for the wife, he at least appeared to have learnt something from the experience that will hopefully stand him in good stead in the future. Mr AK was diligent in his preparation for giving evidence by reviewing the documents he was asked to by the husband’s lawyers. Mr P did not. That is regrettable. I do not accept his evidence that he did not have time to do so in circumstances where he was requested to review the documents in a letter from the husband’s lawyers dated 19 July 2024.
I certify that the preceding two hundred and fifty (250) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Carew. Associate:
Dated: 13 December 2024
SCHEDULE OF PARTIES
BRC 7462 of 2024 Respondents
Fourth Respondent:
MS GLYNN
Fifth Respondent:
D GROUP HOLDINGS FAMILY PTY LTD AS TRUSTEE FOR THE D GROUP HOLDING DISCRETIONARY TRUST
Sixth Respondent:
R PTY LTD
- AGLC
- Venter & Venter (No 2) [2024] FedCFamC1F 862
- Case
- [2024] FedCFamC1F 862
- Decision Date
CaseChat Overview and Summary
The court's reasoning was grounded in the importance of maintaining the integrity of the discovery process and the obligations of legal practitioners to comply with court-ordered disclosure. The court emphasized that non-compliance with these obligations has serious consequences, as it undermines the fairness of the trial process and public confidence in the court system. The court's decision was influenced by the need to uphold the principles of honesty and fairness in litigation and to serve the administration of justice. The court's final orders included specific amounts for costs to be paid by the former legal representatives within a specified timeframe and referred the matter to the Legal Services Commissioners for potential disciplinary action against the implicated legal practitioners.
Orders
Orders of the court
1. The first respondent’s costs thrown away by the adjournment of the trial listed to commence on 24 July 2023 and adjourned on 3 August 2023 be paid by Mr P and GG Lawyers Pty Ltd jointly and severally in the fixed sum of $400,000.
2. The first respondent’s costs of and incidental to his Application in a Proceeding filed 1 August 2023 be paid by Mr P and GG Lawyers Pty Ltd jointly and severally in the fixed sum of $150,000.
3. The first respondent’s costs of and incidental to his Application in a Proceeding filed 28 March 2024 be paid by Mr P and GG Lawyers Pty Ltd jointly and severally in the fixed sum of $200,000.
4. The second, third, fifth and seventh respondents’ costs thrown away by the adjournment of the trial listed to commence on 24 July 2023 and adjourned on 3 August 2023 be paid by Mr P and GG Lawyers Pty Ltd jointly and severally in the fixed sum of $550,000.
5. The second, third, fifth and seventh respondents’ costs of and incidental to the Application in a Proceeding filed on 2 August 2023 be paid by Mr P and GG Lawyers Pty Ltd jointly and severally in the fixed sum of $150,000.
6. The second, third, fifth and seventh respondents’ costs of and incidental to the Application in a Proceeding filed on 28 March 2024 be paid by Mr P and GG Lawyers Pty Ltd jointly and severally in the fixed sum of $250,000.
7. The costs be paid within 60 days.
8. The Applications in a Proceeding filed 28 March 2024 by the first respondent and second, third, fifth and seventh respondents be otherwise dismissed.
IT IS FURTHER ORDERED THAT:
9. The Principal Registrar of the Federal Circuit and Family Court of Australia (Division 1) send a copy of the following documents to the Victorian Legal Services Commissioner for consideration of what, if any, investigation, disciplinary action, or educative process might be undertaken into the professional conduct of any of the legal practitioners referred to in paragraph 2(a) and 2(c) of the order made by this Honourable Court on 28 February 2024:
(a) The Order made on 28 February 2024 and the Order made on 13 December 2024;
(b) The reasons for judgment in Venter & Venter (No 5) [2023] FedCFamC1F 635;
(c) The reasons for judgment in Venter & Venter (No 6) [2024] FedCFamC1F 94;
(d) The reasons for judgment delivered on 13 December 2024; and
(e) The transcript of proceedings on 15 and 16 August 2024.
10. The Principal Registrar of the Federal Circuit and Family Court of Australia (Division 1) send a copy of the following documents to the Queensland Legal Services Commission for consideration of what, if any, investigation, disciplinary action, or educative process might be undertaken into the professional conduct of Mr AK and MM Lawyers:
(a) The Order made on 28 February 2024 and the Order made on 13 December 2024;
(b) The reasons for judgment in Venter & Venter (No 5) [2023] FedCFamC1F 635;
(c) The reasons for judgment in Venter & Venter (No 6) [2024] FedCFamC1F 94;
(d) The reasons for judgment delivered on 13 December 2024; and
(e) The transcript of proceedings on 15 and 16 August 2024.
NOTATION
A. The covering letter sent by the Principal Registrar of the Federal Circuit and Family Court of Australia (Division 1) to the Victorian Legal Services Commissioner and the Queensland Legal Services Commission should state only the following:
At the direction of the Honourable Justice Carew please find a copy of the following documents:
(a) The Order made by the Honourable Justice Carew dated 13 December 2024;
(b) The reasons for judgment of the Honourable Justice Carew delivered on 13 December 2024;
(c) The Order made by the Honourable Justice Carew on 28 February 2024;
(d) The reasons for judgment in Venter & Venter (No 5) [2023] FedCFamC1F 635;
(e) The reasons for judgment in Venter & Venter (No 6) [2024] FedCFamC1F 94; and
(f) The transcript of proceedings on 15 and 16 August 2024.
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 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Part XIVB of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish an account of proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
Background
Background to the litigation
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Evidence
Evidence Before The Court
Decision
Reasons for decision
Ratio Decidendi
Legal Principle Established
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