WORTH & WORTH

[2016] FamCA 4

FAMILY COURT OF AUSTRALIA

WORTH & WORTH [2016] FamCA 4

FAMILY LAW – LEGAL PRACTITIONERS – Conflict of interest – Where the father seeks an order that the mother be restrained from continuing to instruct her solicitor and her solicitor’s firm to represent her in the proceedings – application dismissed.

FAMILY LAW – COSTS – Circumstances justifying order – Where the father’s application to restrain the mother’s lawyer from acting was wholly unsuccessful.

FAMILY LAW – COSTS – Circumstances justifying order – Where the mother made an application for a stay of an order and that application was dismissed – Where the mother made an application for review but withdrew the application before it was heard – Where the costs of those applications were reserved to this hearing – Where the father seeks costs on an indemnity basis – Circumstances do not justify a costs order on an indemnity basis.

Family Law Act 1975 (Cth)
Family Law Rules 2004 (Cth)

Kallinicos & Anor v Hunt & Ors (2005) 64 NSWLR 561
Kohan & Kohan (1993) FLC 92-340
Millhouse & Mullens [2015] FamCA 754
Millhouse & Mullens (No 2) [2015] FamCA 1015
Naczek & Dowler [2011] FamCAFC 179
Romano & June [2013] FamCA 901

APPLICANT: Ms Worth

RESPONDENT: Mr Worth

FILE NUMBER: BRC 1771 of 2014

DATE DELIVERED: 14 January 2016

PLACE DELIVERED: Brisbane

PLACE HEARD: Brisbane

JUDGMENT OF: Forrest J

HEARING DATE: 12 January 2016

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Hanlon

SOLICITOR FOR THE APPLICANT: Rosen Lawyers

SOLICITOR FOR THE RESPONDENT:

Mr Laws

David R.L. Laws Solicitor

Orders

1. That the father’s Application in a Case filed 26 October 2016 seeking to restrain the mother’s solicitor from continuing to act for her in these proceedings is dismissed.

2. That the father pay the mother’s costs of and incidental to his Application in a Case seeking to restrain the mother’s solicitor from continuing to act for her in these proceedings that was dismissed, such costs to be as agreed or as assessed on a party and party basis in accordance with the Family Law Rules 2004 (Cth).

3. That any Application in a Case filed by the father in which he seeks orders against the mother in respect of the issue of disclosure by her of the identity of the K Contact Centre staff member with whom she asserts she spoke (by reference to the factual assertion contained in paragraph 3 of her affidavit filed in these proceedings on 31 August, 2015) be listed before Justice Forrest for hearing, in so far as that is practicable.

4. That the mother pay the father’s costs of and incidental to her Application in a Case seeking a stay that was filed on 31 August 2015 and dismissed on 15 September 2015 and also the father’s costs of and incidental to her Application in a Case filed 31 August 2015 seeking a review of the Principal Registrar’s decision of 20 August 2015 that she discontinued on 6 November 2015 and also the father’s costs of and incidental to the hearing before me on 12 January 2016 in so far as they were referable to prosecuting this costs application, such costs to be as agreed or as assessed on a party and party basis in accordance with the Family Law Rules 2004 (Cth).

IT IS NOTED that publication of this judgment by this Court under the pseudonym Worth & Worth has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT BRISBANE

FILE NUMBER: BRC 1771 of 2014

Ms Worth

Applicant

And

Mr Worth

Respondent

REASONS FOR JUDGMENT

1. On Tuesday 12 January 2016, I had listed before me for hearing an Application in a Case filed by the father seeking an order that Warren Lance Rosen and Rosen Lawyers be “disqualified” from acting further in this matter on behalf of the mother.

1. I understood the application for disqualification to actually be an application for an order restraining Mr Rosen, and his firm, from acting for the mother any further in this matter.

1. I also had listed the father’s application for the mother to pay his costs of and incidental to certain applications already determined or finalised in the proceedings last year. 

1. At the commencement of the hearing, Mr Hanlon, counsel for the mother, made an oral application for the review of a Registrar’s decision not to list an Application in a Case filed by the mother on 15 December 2015 for hearing at the same time as the other applications being heard on Tuesday 12 January 2016. Effectively, by that oral application, the mother sought that I hear and determine that Application in a Case that same day and not leave it to be determined on 14 March 2016, the day on which it had been listed.

1. I heard argument about that matter and, for the reasons given at that time, I heard and determined the mother’s oral application and her Application in a Case filed 15 December 2015. I also vacated the 14 March hearing date for that matter.

The restraint application

1. Despite oral submissions being made by Mr Laws to the effect that it was not the Court’s inherent supervisory jurisdiction that the father was seeking to invoke in seeking that Mr Rosen be restrained from continuing to act for the mother, there can, in my judgment, be little doubt, particularly in the absence of reference by Mr Laws to any other source of power for the restraining order sought, that it is the Court’s inherent jurisdiction over its officers and to control its processes in aid of the administration of justice that the father does seek to invoke by this application for restraint.

1. That the Court has such inherent jurisdiction is not in doubt. See Kallinicos & Anor v Hunt & Ors (2005) 64 NSWLR 561 per Brereton J and Naczek & Dowler [2011] FamCAFC 179 per Bryant CJ, Thackray and Bennett JJ at paras 60 and 61.

1. In Naczek, the Full Court clearly identified the test to be applied in the exercise of this inherent jurisdiction. It is:

   Whether a fair-minded, reasonably informed member of the public would conclude that the proper administration of justice requires that a legal practitioner should be prevented from acting, in the interests of the protection of the integrity of the judicial process and the due administration of justice, including the appearance of justice.

2. Relevantly, the Full Court went on after setting out that test to make some other observations in respect of the exercise of this inherent jurisdiction.  The points noted were as follows:

   a)the jurisdiction is to be regarded as exceptional and is to be exercised with caution;

   b)due weight should be given to the public interest in a litigant not being deprived of the lawyer of his or her choice without due cause;

   c)the timing of the application may be relevant, in that the cost, inconvenience or impracticality of requiring lawyers to cease to act may provide a reason for refusing to grant relief;

   d)it is important to identify precisely the obligation towards the former client or towards the court that may be breached or imperilled by the practitioner acting in the cause;

   e)a practitioner’s duty to the Court cannot be waived, so if the particular disqualifying feature involves a conflict between the interests of the practitioner and his duty to the Court such that could give rise to a situation where the independent administration of justice could be put in jeopardy, the Court would restrain the practitioner notwithstanding the wishes or interests of the client.

The factual background to the restraint application

1. The parents are in high conflict about the appropriate co-parenting of their two children. On 20 August 2015, the Principal Registrar of this Court made interim parenting orders providing for the children to spend time with the father. The mother, unhappy with those orders, immediately filed an application for a review of the Principal Registrar’s decision and an application for a stay of those orders. Mr Rosen wrote to the father’s solicitor informing him that the mother would not be complying with the Principal Registrar’s orders.

1. The Principal Registrar’s orders of 20 August 2015 provided for the child, Y, to spend unsupervised time with the father.

1. In support of the mother’s application for a review of the Principal Registrar’s decision, an affidavit sworn by the mother was filed on 31 August 2015 that was prepared by Mr Rosen. At paragraph 3 of that affidavit, the mother deposed as follows:

… I have spoken with [K Contact Centre] and they have informed me and I verily do believe that they would not recommend that Mr [Worth] have unsupervised time with the child [Y].

1. The Independent Children’s Lawyer then obtained a report from the owner/manager of K Contact Centre, a private and commercial children’s contact centre, in which that owner/manager responded to the following question from the ICL:

Have you or any staff members made any recommendations to either parent about whether or not the time [with [Y]] should be supervised? 

1. The owner/manager’s answer was a simple “no”. Having regard to the deposition of the mother quoted in paragraph 12 above, that answer excited the interest and attention of the father and his solicitor.

1. On 15 September 2015, the Principal Registrar dismissed the mother’s application for a stay of her orders of 20 August 2015 and reserved questions of the father’s costs and the ICL’s costs to the Judge who would be hearing the application for review of the Principal Registrar’s decision of 20 August 2015. That application was listed for hearing before me on 16 November 2015.

1. In the meantime, Mr Laws for the father requested that Mr Rosen provide him with particulars of the discussion that the mother asserted she had with someone at K Contact Centre that she had deposed to in her affidavit of 31 August.

1. Mr Rosen wrote to Mr Laws on 2 October 2015 saying:

Our client has provided to us the identity of the person from [K Contact Centre] who provided to her the information contained in paragraph 3 of her Affidavit dated 31 August, 2015. However we are at this stage instructed not to provide that information to you as our client is extremely concerned your client … attempting to intimidate and harass that person as he has already previously done with other health professionals involved with the children.

1. Mr Laws then offered his own undertaking to Mr Rosen not to disclose the identity of the K Contact Centre staff member, with whom the mother said she spoke, to his client when he asked Mr Rosen again if he would provide the particulars that had been requested. Again, Mr Rosen did not provide them.

1. Mr Laws then informed Mr Rosen that if he did not supply the requested particulars by the end of the day on 6 October 2015 that a “disqualification” application would be made against Mr Rosen without further notice.

1. Mr Rosen did not provide the information of the identity of the staff member and the application for restraint was commenced.

1. Mr Laws conceded that at no point before the hearing of the application for restraint has the father served a request to answer specific questions on the mother pursuant to Part 13.3 of the Rules, in which he asks her to tell him in affidavit the identity of the staff member with whom she spoke. He conceded that the father had brought no application for an order that the mother disclose the identity of the person with whom she spoke, either on affidavit or otherwise, and he conceded that the Court had never directed or ordered Mr Rosen to reveal to the Court, or the father, the identity of the person with whom his client had instructed him she spoke. Of course, that last observation raises other questions as to whether or not Mr Rosen could be required by Court order to reveal such information given to him by his client in the course of the solicitor-client relationship which I do not consider need to be answered in the immediate context. 

The Submissions for the Father and my Conclusions

1. Mr Laws submitted that it was a simple case of Mr Rosen breaching the Family Law Rules 2004 (Cth) (“Family Law Rules”), thus putting himself in a position of conflict in respect of his overriding duty to the Court and his duty to his client.

1. Mr Laws referred to Rule 1.05(1) which provides:

Before starting a case, each prospective party to the case must comply with the pre-action procedures, the text of which is set out in Schedule 1.

1. The Court was then referred to Schedule 1 Part 2 – Parenting Cases 6(1) (under the heading “Lawyers’ Obligations”) (b) and 6(4). Those provide:

6(1)Lawyers must, as early as practicable:

(b) advise clients of their duty to make full and frank disclosure, and of the possible consequences of breaching that duty;

and

(6)(4) If a client wishes not to disclose a fact or document that is relevant to the case, a lawyer has an obligation to take the appropriate action, that is, cease to act for the client.

1. Mr Laws also referred to Rule 1.08(1)(b) and 1.08(2). They provide:

1.08(1) Each party has a responsibility to promote and achieve the main purpose, including:

(b) complying with the duty of disclosure (see rule 13.01);

and

1.08(2) A lawyer for a party has a responsibility to comply, as far as possible, with subrule (1).

1. Mr Laws submitted that the requirements of the “Pre-action Procedures” and the Rules are clear in the way they apply to Mr Rosen’s position in this matter.  He submitted that as Mr Rosen had drawn the mother’s affidavit of 31 August 2015 in respect of which paragraph 3 contained a “half-truth”, in that the mother deposed to speaking with “K Contact Centre” and did not identify the person with whom she spoke, and as Mr Rosen’s client was later said to have instructed Mr Rosen not to disclose the identity of the staff member to the father’s solicitor,  Mr Rosen was in breach of the obligations imposed on him by the Rules and was bound to “cease to act for the client” or, in default of himself ceasing to act, must be restrained from so acting.

1. Mr Laws submitted that the “obligation” set out in Schedule 1 Part 2 – Parenting Cases 6(4) of the Pre-action Procedures clearly applies notwithstanding the fact that the proceedings are now before the Court and have been for many months.

1. With respect, I do not accept that submission. I do not consider that the “obligation” set out in paragraph 6(4) of Schedule 1 Part 2 of the Family Law Rules imposes an ongoing, inflexible obligation on a solicitor to cease to act if his or her client instructs him or her during the conduct of proceedings in the Court that he or she is not to disclose to the other party the identity of a person with whom the client has spoken and obtained information that is relevant to the proceedings where the client gives the solicitor some reasonable explanation for not wanting to disclose that identity at that particular stage of the proceedings. That is far different from a client telling a solicitor before proceedings have been commenced that they do not intend to honour the obligation to make full and frank disclosure during any subsequent proceedings that might be commenced.

1. I said in Millhouse & Mullens [2015] FamCA 754 at [38]:

   … tensions may sometimes emerge between duties a practitioner owes to the client and those owed to the Court in the cut and thrust of the solicitor-client relationship. I also accept that the authorities make it clear that in any conflict of fulfilment of the duties owed by a practitioner, the practitioner’s duty to the Court takes priority. However, consistent with the requirement for cautious exercise of this supervisory jurisdiction, absent a finding such as the solicitor having a clear and direct financial interest in the fruits of the litigation (other than an expectation of being paid), or a finding that a particular piece of advice or a particular action of the practitioner demonstrates a prioritising of the duty to the client over the duty to the Court, restraint should not, in my opinion, be imposed on a solicitor on purely speculative grounds.  In this respect, I add that I reject the submission of counsel for the wife that a solicitor, consistent with his or duties to the Court, including those that arise pursuant to the Rules, must cease acting for a litigant simply because that litigant refuses to follow the solicitor’s advice … [my emphasis for the purposes of these reasons]

2. In this particular case, the burden of proof is on the father who seeks an order restraining Mr Rosen from continuing to act for the mother. It is for him to adduce the evidence that persuades the Court that the solicitor he seeks to have restrained is clearly prioritising his duty to his client over his duty to the Court.  In the absence of evidence of the confidential conversations between Mr Rosen and his client, the Court would be engaging in pure speculation in this case to attribute or not attribute certain actions or advice to Mr Rosen consistent or inconsistent with the discharge of his duty to the Court. For example, the Court cannot simply make a finding, without evidence, that Mr Rosen advised his client that she will not have to disclose the information at any time, or that he did not advise her that if ordered to by the Court she will have to disclose the information and that she might face cost consequences if she has to be ordered to as opposed to just instructing Mr Rosen to disclose the information by correspondence as he has been asked to do.

1. That Mr Rosen did not adduce any evidence in support of the opposition to the application for restraint is no answer to this evidentiary dilemma the father faces. It is his application and he carries the evidentiary burden of proof.  In my judgment, he has fallen short of meeting it as required to be successful in this application.

1. Finally, on the point, I am not satisfied that the drawing of the mother’s affidavit of 31 August 2015, particularly paragraph 3 thereof, by Mr Rosen, evidences a prioritising of his duty to his client over his duty to the Court that necessitates restraining him from continuing to act.  The wording of the subject paragraph could well have been better, but again, absent evidence of what he asked the client and what advice he gave to her in and around that task of preparing that affidavit, the Court cannot speculatively impute some professional misconduct or subversion of his duty to the Court that justifies restraint.

1. I am satisfied, on the facts of this case, that the “fair minded, reasonably informed member of the public” might very well ask the same question that I did of the father’s solicitor at the hearing, namely as to why the procedure provided for in the Rules for requesting answers to specific questions or an application for an order that the mother disclose the identity of the staff member in an affidavit had not been pursued in lieu of the application for restraint of the mother’s solicitor.  I do not consider that same “member of the public” would conclude that the proper administration of justice requires Mr Rosen to be now restrained from acting for the mother in the interests of the protection of the judicial process.

1. I will dismiss the application, but as I informed the parties at the hearing, I will direct that any further applications of the father in which he seeks orders against the mother in respect of the disclosure of the information about the identity of the K Contact Centre staff member with whom she asserts she spoke, are to be listed before me for hearing, in so far as that is practicable. I consider that entirely appropriate given I am now cognisant of the relevant facts surrounding the matter.

Costs of the restraint application

1. Mr Hanlon, for the mother, asked for a costs order against the father in respect of the application for restraint if it was dismissed.

2. Pursuant to s 117(1) & (2) of the Family Law Act 1975 (Cth) (“the Act”) each party to proceedings under this Act bears his or her own costs unless the Court is of the opinion “that there are circumstances that justify it in” making an order as to costs “as the Court considers just”.

1. Matters the Court must consider in determining “what order (if any) should be made” are set out in s 117(2A) of the Act. The breadth of the discretionary exercise is clear considering one of the matters set out in s 117(2A) is “such other matters as the Court considers relevant.”

2. Earlier in these reasons, I acknowledged that the inherent supervisory jurisdiction of the Court to restrain a solicitor from acting in a particular case is “to be regarded as exceptional and exercised with caution” with “due weight [to] be given to the public interest in a litigant not being deprived of the lawyer of his or her choice without due cause”.

3. It follows, at least in my judgment, that a party ought only seek to invoke the jurisdiction in circumstances where she or he can readily “identify precisely the obligation towards the former client or towards the court that may be breached or imperilled by the practitioner acting in the cause”.  I have said in previous judgments in determining such applications (see Romano & June [2013] FamCA 901 and Millhouse & Mullens (No 2) [2015] FamCA 1015) that in my view, at least, invocation of the jurisdiction in speculative circumstances is not something to be encouraged.

4. After the mother deposed to having been told by K Contact Centre that they would not recommend that the father have unsupervised time with the child, Y, and the ICL produced the report that included the K Contact Centre owner/manager’s assertion that no one had provided advice such as that to the mother or father, the father’s solicitor quite appropriately requested, of the mother’s solicitors, particulars of the mother’s asserted conversation, including the identity of the staff member with whom she asserted she spoke.

5. When the mother’s solicitors informed the father’s solicitor that they were instructed not to provide that information to the father’s solicitors as requested, rather than going about seeking the desired information from the mother by way of the appropriate Court processes, the father and his legal representatives chose the uncommon path of an application to restrain the mother’s solicitors from acting.

6. The mother’s solicitors resisted, asserting to the father’s solicitors that there was no grounds for them to cease to act or to consent to restraint. Nevertheless, the action was commenced.

7. Indeed, when the matter was before me on 16 November 2015, the day the review application was listed to be heard, I expressed some cautious preliminary views about the prospects of the application and referred the father’s solicitor to my previous judgments in restraint applications such as this.

8. Apparently convinced of the merits of the application, the father maintained the application. However, I was not persuaded of the merits of the application and have determined to dismiss it.

9. The father was, by any measure, wholly unsuccessful in an application that clearly requires very careful consideration before it is brought and before the other party incurs their own legal costs. That weighs heavily in my determination that an order as to costs is justified in this matter.

10. I know little of the parties’ comparative financial circumstances, but I do know each is receiving $50,000 from the sale proceeds of their former matrimonial home as a consequence of an order I made on Tuesday 12 January 2016. I expect the father can therefore pay an order for costs. In any event, another costs order I intend to make in these proceedings as against the mother will likely assist the father.

11. I will order the father to pay the mother’s costs of and incidental to his Application in a Case filed 26 October 2015, to restrain her from instructing her solicitors, that I am also dismissing. Such costs are to be agreed or assessed on a party and party basis in accordance with the Family Law Rules.

The Father’s application for Costs against the Mother

1. In respect of the father’s application for an order that the mother pay his costs of and incidental to the application for stay of the order that was dismissed by the Principal Registrar on 15 September 2015 and also his costs of and incidental to the application for review that she filed but withdrew before it was heard, counsel for the mother made no submissions that a party and party costs order should not be made against his client.

2. Mr Laws for the father, in his comprehensive written submissions, submitted that the father’s costs of and incidental to the hearing before the Principal Registrar on 20 August 2015 should also be paid by the mother as the costs incurred by the parties that day were “thrown away” as well.

3. When I asked Mr Laws to expand on that point, having regard to the fact that extensive parenting orders were made by the Principal Registrar that day providing for the children to spend time with the father, he could not. Accordingly, I am not satisfied that any order in respect of those costs of that day should be made.

4. Quite satisfied that the mother should pay the father’s costs of and incidental to her stay application that was dismissed because she was wholly unsuccessful in that application, and then subsequently chose to discontinue the application for a review of the very same orders she was seeking to stay pending the review, I am left considering the father’s application that his costs be paid on an indemnity basis.

5. Mr Laws, for the father, submitted that counsel for the mother had told the Court on 15 September 2015 that the application for a stay was “plainly misconceived” and withdrew the application. There was no evidence in the form of a transcript of the hearing before the Principal Registrar adduced before me as proof of that submission. Mr Hanlon, for the mother, objected to Mr Laws giving evidence of that in his written submissions. In any event, withdrawal of the application is not consistent with the Principal Registrar’s order of that day actually dismissing it.

6. I do not have evidence of the Principal Registrar’s reasons for dismissing the application. As a result, I cannot be sufficiently satisfied to find that “properly advised” the mother should have known that she had no chance of success, as the solicitor for the father submitted in support of the application for indemnity costs.

7. On the morning of the hearing, Tuesday 12 January 2016, Mr Laws sought the Court’s indulgence to stand the matter down whilst he prepared an affidavit going to this question of costs. When the matter was called on later in the morning, he sought leave to file and read the affidavit that he had just finalised. He handed a copy to counsel for the mother at the same time. Unsurprisingly, it drew objection in the circumstances. It was a relatively lengthy affidavit albeit only having a few paragraphs of depositions, but with many pages of exhibits attached, including a costs agreement between Mr Laws and his client. I determined not to grant leave for it to be filed where the mother’s legal representatives were just given a copy at short notice when the father’s application for costs had been on foot since September 2015.

8. After reading Mr Laws’ written submissions it became clear to me that Mr Laws had sought to adduce this evidence to support the application for indemnity costs because of the Full Court’s decision in Kohan & Kohan (1993) FLC 92-340 in which the Full Court said that before a Judge orders indemnity costs be paid where those costs have been incurred under a costs agreement, the Judge should have an understanding of the costs agreement and the degree to which it departs from the normal scale of costs.

9. As I had not given leave for that affidavit to be filed, I did not have that evidence before me. I was not otherwise satisfied that an indemnity costs order should be made.

10. I will order that the mother pay the father’s costs of and incidental to the application for the stay that was dismissed by the Principal Registrar on 15 September 2015 and of and incidental to the application for review that was discontinued, as well as those costs of and incidental to the appearance before me on Tuesday, 12 January 2016 referable to this costs argument. Those costs are to be paid on a party and party basis to be agreed or assessed as provided for in the Rules.

I certify that the preceding fifty-seven (57) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Forrest delivered on 14 January 2016.

Associate: 

Date:  14 January 2016