Wotton and Wotton (No 2)

[2009] FamCA 1127

FAMILY COURT OF AUSTRALIA

WOTTON & WOTTON (NO. 2) [2009] FamCA 1127

FAMILY LAW – COSTS – Between solicitor and client - appeal of decision by Judicial Registrar

APPLICANT: Mr Wotton

RESPONDENT: Ms Wotton

FILE NUMBER: SYC 3621 of 2008

DATE DELIVERED: 12 November 2009

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Cohen J

HEARING DATE: 12 November 2009

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Beasley

COUNSEL FOR THE RESPONDENT: Ms Shevket

SOLICITOR FOR THE RESPONDENT: Fox & Staniland

Orders

1. The costs issue relating to the adjourned date on 17 August 2009 be adjourned for hearing before a Judge after judgment in the final property proceedings has been made and all rights to appeal from it have been exhausted.

2. The costs of today are reserved.

IT IS NOTED that publication of this judgment under the pseudonym Wotton & Wotton is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER:  SYC 3261 of 2008

MR WOTTON

Applicant

And

MS WOTTON

Respondent

REASONS FOR JUDGMENT

1. In these proceedings the husband has appealed from orders made by a judicial registrar on 17 August 2009.  The orders were that the husband pay the wife’s costs thrown away from 6 June 2009 to date on a solicitor/client basis as agreed or assessed by a taxing officer.  The wife has cross-claimed, so to speak, for an order enforcing the order of the Judicial Registrar.  As the husband has a right to appeal from the Judicial Registrar’s Order, even though there was no stay, it seems to me that any enforcement application is premature. 

2. The facts are not really very complicated.  The matter was due to be heard on 17 August 2009.  On that day the wife’s solicitors sought an adjournment on the ground that the husband had failed to disclose and that it was necessary as a result of a very late disclosure to join a third party.  What had really happened is that the husband had paid moneys from a bank account in England.  The moneys were paid to his sister.  When the wife’s solicitors originally sought particulars, or originally issued what amounts to interrogatories or questions to be answered about the husband’s funds, nothing was said about the moneys paid to his sister. Subsequently, the husband must have been asked by his solicitor to answer certain questions and by the email, which is now Exhibit A, which he sent to the solicitors on 6 July 2009 the husband informed his solicitors that ₤88,000 had been paid to his sister by way of a gift to assist her in her business, as otherwise it was feared the business would fail.  The solicitors neither informed the wife’s solicitors of this, nor was any affidavit disclosing this ever filed as it should have been.  The wife discovered the fact only a few days before the hearing and sought an adjournment on the ground that the sister would need to be joined.

3. It appears to me that there was no real need to join the sister, because there was adequate moneys otherwise available to meet an order that might reasonably be made in favour of the wife and the ₤88,000 could have been regarded as an advance to the husband on his entitlement and counted in the assets that were available for distribution and regarded as part of what he had already received as his share.  However, the wife sought an adjournment on the ground that the sister was to be joined and the judicial registrar granted that adjournment.

4. The costs that were made against the husband only ran for costs incurred after 6 June 2009.  That, at first blush, seems very peculiar, however it is easily explained.  The wife had already obtained an order for costs against the husband in relation to the period up to 5 June and, therefore, would not be entitled to further costs before 6 June.  There is nothing illogical or wrong with the idea of making the liability for costs to run from 6 June 2009.  The costs were ordered to be paid on a solicitor/client basis rather than a party/party basis on the ground that the husband had created the problem by a failure to disclose.

5. The truth is it was not a problem created by the husband.  It was a problem, to a large degree, created by his solicitor who failed to follow his client’s instructions or act on them after 6 July, although that was a very late stage in the preparation.  Because of that, one might think that, ultimately, the solicitor who failed to fully disclose the husband’s situation despite the husband’s proper instructions on 6 July might be the one who should meet the costs that the husband has been ordered to pay or the losses of the wife. 

6. It would be a dramatic step to order the solicitor personally to pay the costs. One does not know, and this court cannot and probably should not know, at this stage what instructions passed between the husband and his then solicitor.  If the solicitor really should be liable for any costs that the husband has been ordered to pay, that is a matter which should be determined after permitting that solicitor to be heard.  In proceedings like this, at this stage it is inappropriate and dangerous for that to occur.  The husband is still entitled to the privilege that attaches to the solicitor/client relationship.  The solicitor is entitled to defend himself, if there is a defence, by overcoming that privilege but here the effect of such a situation would be to breach the privilege in favour of the wife; that is, in favour of her because the hearing of the principal issue has not taken place. That should not be allowed to occur. 

7. In all of the circumstances, it seems to me that if costs are to be paid to the wife as a result of this adjournment the issue of whether the order should be against the husband or against the solicitor should not be heard until the final proceedings between the husband and wife have been determined.  The question then arises as to whether or not, in the meantime, the husband should be ordered to pay the costs and later make a claim against his solicitor or whether the issue of costs should be adjourned.  In my view, the safest and most appropriate course is to adjourn the issue of costs.  The reason is very simple.  If I was to find that the husband ought to pay the costs, because he could then claim those costs from the solicitor who acted for him, the court would only have two alternatives; to enforce such an order or to suspend it.

8. The effect of suspending an order would be the same as adjourning the hearing on the issue of costs.  The effect of enforcing the order in the circumstances seems to me to involve putting the husband to hardship which he should not be put to in circumstances where that hardship is likely to be greater than the hardship that the wife will suffer by being liable for her solicitor’s costs which have been thrown away by the hearing or being adjourned. 

9. The other reason why I prefer the option of adjourning the proceedings in relation to costs is because I hold a very firm view that it was not necessary to make the adjournment application. I prefer the adjournment option. All of the funds of the parties were on-shore or in a practical sense were and it was no more realistic to make a costs order in order to bring particular funds on-shore as it would be to wait until a final order was made to bring particular funds off-shore.  Both orders could have been enforced against the husband in a practical way and I do not think it was necessary to join his sister to ensure that funds were brought on-shore. 

10. In those circumstances, I shall not proceed to continue hearing this appeal. I think it is much more appropriate to adjourn the costs issue relating to the adjournment which occurred on 17 August for hearing after judgment in the final property proceedings has been made and all rights to appeal from it have been exhausted.  And that is the order I shall make.

11. Naturally it follows that I am not in favour of enforcing the costs order that the judicial registrar made, and reserve those costs and the costs of today.

I certify that the preceding eleven (11) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cohen

Associate:

Date: 25 November 2009