ZHOU & ZONG
[2018] FCCA 3393
•23 November 2018
FEDERAL CIRCUIT COURT OF AUSTRALIA
| ZHOU & ZONG | [2018] FCCA 3393 |
| Catchwords: COSTS – Where applicant’s solicitor failed to file an outline of case, failed to arrange an interpreter for his client and failed to confer with respondent’s counsel in relation to the conduct of the trial – trial unable to proceed – respondent incurred costs thrown away – costs awarded against applicant’s solicitor personally. |
| Legislation: Family Law Act 1975, s.117(2A) Federal Circuit Court of Australia Act 1999, s. 79 |
| Aon Risk Services Australia Limited & Australian National University (2009) 239 CLR 175 Attorney-General v Logan [1891] 2 QB 100 Burns Philp & Co Ltd v Bhagat [1993] 1 VR 203 Hatch v Searles (1854) 2 Sm & G 147 |
| Other materials: His Honour Judge Josh Wilson QC, ‘Modern case management in commercial litigation in the Federal Circuit Court of Australia’ (Speech delivered to the International Commercial Law Conference, Hong Kong, 21 September 2018) < |
| Applicant: | MS ZHOU |
| Respondent: | MR ZONG |
| Interested Person: | MR ZHOU |
| File Number: | MLC 4634 of 2018 |
| Judgment of: | His Honour Judge Wilson |
| Hearing date: | 9 November 2018 |
| Date of Last Submission: | 13 November 2018 |
| Delivered at: | Melbourne |
| Delivered on: | 23 November 2018 |
REPRESENTATION
| Solicitors for the Applicant: | GR Lawyers |
| Counsel for the Respondent: | Mr R Hoult |
| Solicitors for the Respondent: | Waters Lawyers |
ORDERS
The trial of this proceeding is fixed for one day on 14 March 2019 at 10:15am.
By 4pm on 2 February 2019 the applicant is to file and serve her outline of case.
If the applicant wishes to make allegations of any matter raised in paragraph 1 of the applicant’s written submissions on costs filed on 13 November 2018, then by 4pm on 21 December 2018 the applicant is to file and serve a statement of claim containing those allegations with proper particulars;
If and only if the applicant files and serves a statement of claim in the manner set out in order 3 hereof, then this proceeding will be listed for mention on 5 February 2019 at 10:15am for debate about whether leave should be granted and for consequential orders including costs.
On or before 23 December 2018 the applicant’s solicitors pay $5 000 in respect of the respondent’s costs thrown away concerning the appearance on 9 November 2018.
IT IS NOTED that publication of this judgment under the pseudonym Zhou & Zong is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLC 4634 of 2018
| MS ZHOU |
Applicant
And
| MR ZONG |
Respondent
And
| MR ZHOU |
Interested Person
REASONS FOR JUDGMENT
Introduction
This case is very far from being an exemplar of good conduct by a solicitor in the running of litigation before the Federal Circuit Court of Australia. By reason of the conduct of the applicant’s solicitor, the trial of this proceeding could not commence as ordered by me on 6 August 2018. Counsel for the respondent recognised that the case could not proceed on the date fixed for its trial. However, the respondent’s counsel sought orders for his client’s costs to be paid by the solicitor for the applicant.
Synopsis
For the reasons that follow, in my judgment the applicant’s solicitor personally must pay the respondent’s costs of and incidental to the aborted trial fixed in the sum of $5 000.
Relevant factual setting
By application filed in this court on 1 May 2018, the applicant sought orders for the sale of certain land and for the payment to the applicant of the net proceeds of sale. The respondent and applicant commenced living together in 2004. They married in 2006 and finally separated in January 2017. Their daughter was born in 2012 and currently lives with the applicant.
The applicant indicated on her initiating application to commence this proceeding that she did not need an interpreter. Conversely, in respect of the respondent, indicated that he needed an interpreter to interpret in both English and in Mandarin.
In his response to the initiating application, the respondent sought an order that the proceeds of sale of the relevant parcel of land be applied to repay a loan to the respondent’s father and that any surplus be paid into an interest bearing account. In a subsequent amended response, the respondent sought orders for the proceeds of sale of the real estate to be applied by way of repayment of the loan from the respondent’s father and the surplus to be divided as this court considered to be just and equitable.
In the applicant’s financial statement made 29 April 2018 (neither sworn nor affirmed), the applicant asserted that the total value of property owned by her was $465 955 and that the total of her liabilities was $331 818. On those numbers, her net asset position was $134 137. According to the respondent’s financial statement sworn 2 July 2018, the total value of property owned by him was $225 196, the gross value of his superannuation fund being $21 908. He stated that his liabilities were $165 500. Applying the arithmetic he used, his net asset position was $81 604.
The applicant made a document purporting to be an affidavit on 29 April 2018. It was neither sworn nor affirmed. That is unacceptable. Unless attested to in a manner authorised by the Evidence Act, by the Family Law Act, by the Federal Circuit Court of Australia Act or by subordinate legislation made in pursuance of one of those enactments, a document in that form was but a bundle of papers having no evidentiary status. The applicant’s solicitor who put his name to the document should have ensured the document was formally complete and in accordance with relevant statutory requirements.
At all events, in it the applicant made certain statements about property matters. Relevantly paraphrased, she said –
a)the applicant and the respondent had one main asset of the marriage, namely a jointly owned piece of real estate;
b)the applicant and the respondent jointly purchased that land in July 2009 for $302 000 and both the applicant and the respondent contributed equally to the deposit;
c)in 2011, upon refinancing their security in respect to the property, the sum of $100 000 was applied towards an investment in China thereby increasing the applicant’s and the respondent’s liability under a mortgage in respect of the property to $350,000;
d)between July 2009 and February 2013, the applicant and the respondent jointly paid sums in reduction of the mortgage debt at the rate of $1 400 per month;
e)between March 2013 and November 2016, the respondent solely paid the mortgage debt at the rate of $1 400 per month;
f)since December 2016, the applicant alone has paid the mortgage debt at the increased rate of $1 900 per month;
g)the mortgage debt stood at $331 818 on 29 April 2018; and
h)the property was sold in April 2018 for $450 000, settlement of which was scheduled for 15 June 2018.
The respondent swore an affidavit on 2 July 2018. In it, he deposed to his father providing $60 000 to enable the parties to purchase the real estate. The respondent exhibited a loan agreement entered into on 10 January 2009. The applicant asserted in a document purporting to be an affidavit that the loan agreement was a fake. She also said she was the beneficiary of some trust, the details of which she was not able to give. She said she believed (although she did not give the basis for her belief) that the deposit for the real estate came from a family trust.
The respondent’s father swore an affidavit in August 2018. He deposed to the existence and validity of the loan for $60 000.
On 5 June 2018, this case was first mentioned to me. When the parties told me of the very small amount involved, I ordered the proceeding to be listed at once before a registrar of this court for the holding of a conciliation conference. That conference was convened on 3 August 2018 at which the applicant’s solicitor represented the applicant and the respondent’s solicitor represented the respondent. Despite –
a)the extraordinarily small amount involved in the dispute between the parties;
b)the disproportionate expense involved in further litigation in this case; and
c)the fact that the case cried out for resolution thereby enabling the parties to take the modest amount involved and use it to get on with their lives,
no settlement was achieved.
In accordance with my usual practice where a mediation or conciliation conference is unsuccessful, I list the case the very next day for further directions. On 6 August 2018 I listed this case for directions and fixed it for trial on 16 October 2018. On 6 August 2018 the solicitors for the parties appeared before me and told me the issues in the case were of narrow compass. I decided that those issues could be adequately explored in two hours so I fixed the case on a duration of two hours. I told the parties to be efficient in their presentation of the case as the costs involved had the tendency to be disproportionate to the value of the assets in dispute in the case.
As a result of the respondent’s request for an interpreter, one was arranged by the court as long ago as 28 May 2018. There being no equivalent request on behalf of the applicant, the court did not arrange for an interpreter on behalf of the applicant.
On 5 October 2018 my associate notified the solicitors for the parties that the trial listed for 16 October 2018 had to be vacated by reason of my unavailability while representing the court on court business overseas. My associates informed the parties’ solicitors that they would be told of a new date the following week. On the same day, that is to say on 5 October 2018, the applicant’s solicitor emailed my associate requesting a trial date after 1 November 2018. On 8 October 2018 the respondent’s solicitor emailed my associate inquiring whether the trial of this proceeding on 16 October 2018 was still fixed. In response, my associate informed the respondent’s solicitor that there was no need to appear on 16 October 2018 as a new trial date had to be allocated. The applicant’s solicitor was copied into that email.
On 12 October 2018 my associate informed the solicitors for the parties of the new trial date, namely, 10:15am on 9 November 2018. The email stated that the trial was to be of no more than two hours duration. Also on 12 October 2018 my associate notified the relevant court staff involved in the arranging of interpreters confirming that the respondent in this case required a Mandarin speaking interpreter for the newly fixed trial date of 9 November 2018. Hard copy letters were dispatched on 12 October 2018 to the solicitors for both parties confirming 9 November 2018 as the trial date on a duration of no more than two hours.
On 8 November 2018 the respondent’s solicitor filed his client’s version of a compliance checklist. The applicant’s solicitor did not file an equivalent document on behalf of the applicant. In the document filed by the respondent, the only point in issue between the parties was a loan of $77 280 between the respondent and his father in respect of which the applicant indicated that no such loan existed.
Beyond the emails and letters confirming the trial date of 9 November 2018, neither solicitor contacted my chambers to alert me to any impediment to the expected two hour trial on 9 November 2018.
Also on 8 November 2018 the respondent’s solicitor filed the respondent’s outline of case. The applicant’s solicitor did not file an equivalent document despite being ordered to do so. Precisely why he failed to file that case outline went unexplained.
The trial
At 10:28am on 9 November 2018 this case was called on for hearing. Between 10:15am when the court was opened and 10:28am, I dealt with directions in other cases. Mr Rohan Hoult of counsel announced his appearance for the respondent. Mr Ziran Guo, the applicant’s solicitor, announced that he appeared for the applicant for the trial. Mr Guo appeared unrobed. In the same sentence that he announced his appearance, he expressed an apology as (so he said) he had “forgotten to be gowned”. I told Mr Guo that he needed to be robed, whether solicitor or barrister, in accordance with the court’s practice direction number 1 of 2010. Mr Guo told me the case was proceeding on all issues. I asked whether there was a revised duration. I asked that because the pool of assets that fell for division was very small, the parties had spent significant sums already on legal fees, they had negotiated already at a conciliation conference, they knew in detail the strengths and weaknesses of one another’s case and I had hoped that, having undertaken all those steps, the case would be even shorter than the two hours allocated to it. The point in issue was very confined.
To my surprise, the solicitor for the applicant told me that there was a revised estimate. He said the case would now not take the two hours allocated. Instead, he said the case would take two days to try. The exchange was as follows –
HIS HONOUR: How long is your – do you have any revised estimate?
MR GUO: I believe the case is – to run it properly probably two days, but I understand that your Honour has given two hours, but you would be longer – much longer.
HIS HONOUR: No, it’s not. That’s why I fixed it for the time that I did. You will be confined strictly to that.
Having heard that alarming revelation from Mr Guo, I asked Mr Hoult for his assessment of the way the trial would unfold. He said several things –
a)the case in all would take one and a half hours;
b)the total assets to be divided stood at $110 000, an amount he described as “embarrassing” for the court;
c)the applicant was seeking orders for the assets to be divided as to 100 per cent in favour of the applicant; and
d)the respondent’s version of the evidence should be accepted that he made a monetary contribution involving an adjustment in the respondent’s favour.
The applicant’s contention that she was entitled to a 100 per cent division of the assets troubled me so I asked Mr Guo whether he persisted in that contention. He said he did. In response, Mr Guo provided what he said was his client’s position. I found it difficult to follow. He said that –
a)the applicant “was made to believe” (later explained to mean that the respondent husband’s father told her) that a family trust existed in respect of which she was a beneficiary;
b)they (he did not say who) convinced the applicant to work for her father (I assume Mr Guo meant the respondent’s father) for $5.50 per hour;
c)the respondent invested close to $100 000 in 2014 in a business in China pursuant to an arrangement between the applicant and the respondent by which he could apply funds to that extent in that investment and in return, irrespective of the success or otherwise of that investment, the applicant could have the house in the parties’ property litigation;
d)that investment in China was a failure; and
e)all facts were in dispute.
Mr Guo then told me his client needed an interpreter and an interpreter was not present for his client. He said his client’s understanding was not at its optimum. The exchange was as follows –
MR GUO: Your Honour, there’s one other issue, is that there does not appear to be an interpreter for my client, as I see. I thought that this lady was an interpreter for our client, but she is now sitting next to the husband.
HIS HONOUR: So where does that leave us?
MR GUO: I’m not sure, your Honour. I will ‑ ‑ ‑
HIS HONOUR: You must have the answer to that question, Mr Guo. Do you say that you are unable to proceed today because of the absence of an interpreter?
MR GUO: I have spoken to my client and she
HIS HONOUR: What’s the answer to my question?
MR GUO: If your Honour will accept that my client may understand 60 per cent of what is said then we are happy to proceed.
HIS HONOUR: No. I’m not going to accept that. That is contrary to every principle of natural justice and fairness that these courts administer. Your client has to understand 100 per cent of what’s being said. If you don’t have an interpreter to deal with that we need to find a date when you do have an interpreter to deal with that, and then we will have a discussion about the costs of today.
Mr Guo then told me that he had requested an interpreter. If he had done so, he had not requested an interpreter to assist his client through facilities arranged by the court. The respondent’s solicitor had done that. The exchange was as follows –
MR GUO: We have requested an interpreter, your Honour.
HIS HONOUR: Well, no one is here.
MR GUO: If your Honour were to request an interpreter.
HIS HONOUR: Mr Guo, we don’t have an interpreter here right now, and that has got a direct bearing on your ability to proceed in this case right now. As you can tell, there are other people ‑ ‑ ‑
MR GUO: As I understand, that that interpreter was our interpreter.
THE INTERPRETER: No. I’m sorry, your Honour. I was booked to – for Mr Zhou. I double-checked with your associate.
HIS HONOUR: So what’s the position with interpreters?
MR HOULT: I’ve got one.
HIS HONOUR: Is there someone here?
MR HOULT: Your Honour, I’ve got mine.
HIS HONOUR: Right. Well, do you have yours?
MR GUO: I believe – as I understand it, it’s – we – they are booked through the court.
HIS HONOUR: Do you have your interpreter here? I’m going to stand this matter down. Mr Hoult, could you take control of this and see if you can ‑ ‑ ‑
MR HOULT: I will try to, your Honour.
HIS HONOUR: ‑ ‑ ‑ find an answer to what’s really going on here. Thank you.
At 10:39am on 9 November 2018, the case was stood down. At 11:56am on 9 November 2018, Mr Guo mentioned the case again. By nearly noon on the day allocated for a two hour trial, Mr Guo appeared, robed, and apparently with an interpreter for his client. I say apparently as his client’s interpreter was outside the courtroom. Mr Guo then told me he was not aware of the number of witnesses being called in the case. As the advocate for a party, it was an extraordinary position to adopt in telling the trial judge that his client was ready to commence the case yet he was unaware of the number of witnesses that were to be called. That indicated to me he had not discussed the matter with Mr Hoult, that he did not know which witnesses he was to be cross-examining or, if the witnesses were in his camp, he had not ascertained on whose evidence his client relied. That caused me to say the following –
HIS HONOUR: Mr Guo, you’re a solicitor. You will be given only certain latitude because you’re not a member of counsel. You – if you wear the robes, you are expected to understand how to run a case. You are ‑ ‑ ‑
MR GUO: We’re ready to run now.
HIS HONOUR: No. You must listen to me. You personally as the advocate are expected to be in no less degree of competence than any comparable member of the bar. Now, if you – it’s – I don’t regard it as an acceptable position for this case to have presented itself in the way that it has today. We’ve heard about difficulties with an interpreter. It was your job to get an interpreter, not the court’s. You didn’t do that. Well, that has delayed the start. You are already unable to comply with the duration that this case has been fixed for hearing and, you know, it was meant to go for two hours. And even if we start now, it being 12 noon, we’re not going to finish it by 1 pm. So what do you have to say about the further conduct of this case?
After pointing out to Mr Guo that at noon, using a two hour duration, the case would not conclude by 1pm if it was started at noon, Mr Guo told me he was ready to proceed. However, he told me he intended to take about 20 minutes in cross-examining each of Mr Hoult’s witnesses. I asked Mr Guo how long Mr Hoult had told Mr Guo that Mr Hoult would be cross-examining Mr Guo’s client. Mr Guo told me he had not asked Mr Hoult that question. That response troubled me as it was self-evident from the whole of the exchanges with Mr Guo to that point that I was endeavouring to get answers from Mr Guo that assisted me in case managing this case in the context of a busy court.
While principles of case management are not considerations of uppermost importance in the conduct of litigation as the High Court held in Aon Risk Services Australia Limited & Australian National University,[1] nevertheless legal representatives are expected – dare I say, required – to act cooperatively to assist the court (especially a busy court as is the Federal Circuit Court of Australia) in efficiently and fairly dispatching its business. That concept is not new. I have spoken extra‑judicially about it.[2]
[1] (2009) 239 CLR 175
[2] See His Honour Judge Josh Wilson QC, ‘Modern case management in commercial litigation in the Federal Circuit Court of Australia’ (Speech delivered to the International Commercial Law Conference, Hong Kong, 21 September 2018) available at <>
Mr Hoult asked for a suggested way forward. He said the following –
MR HOULT: I – well, I don’t know, your Honour. I’m – I reckon I will be 10 or 15 minutes with the wife. I might not be calling my client’s father, depending on the wife’s evidence because it might make concession. But I have to tell your Honour the way this matter has been dealt with this morning, I’m reluctant to think it will finish in an hour. I’ve got no reason – you know, and it’s 12 o’clock now. I’ve waited two hours.
HIS HONOUR: And we waited largely for an interpreter that should have been organised by Mr Guo to have been here at 10.15.
MR HOULT: And on top of that, your Honour, it’s a hundred – and I just want to say this, your Honour – it’s $100,000 case.
HIS HONOUR: Well, of course ‑ ‑ ‑
MR HOULT: It’s outrageous.
Mr Hoult’s characterisation of the situation as “outrageous” was entirely apt. The case had been fixed for a two hour trial because a short point was in issue. Properly managed, the point could have been addressed in the two hours allocated to it for its resolution. In saying “properly managed” I proceed on the supposition that –
a)a case outline had been filed by the applicant ahead of trial (not done in this case);
b)an interpreter had been arranged by the applicant’s solicitor, not by the court, prior to the trial date (not done in this case);
c)legal representatives appearing at the trial had read and complied with applicable practice notes including practice note 1 of 2010 (not done in this case);
d)prior to the time and date fixed for trial, the legal representatives having the conduct of the trial had conferred about the conduct of the trial especially the number of witnesses to be called, their sequence and the duration of cross-examination of each (not done in this case); and
e)most importantly, the legal representatives would have had a searching discussion in this case about proportionality between the expenses associated with litigation when measured against the value of the assets over which they were fighting.
In this case, the asset pool was extremely small. The legal expenses just to get the case to trial were significant. If the case had been allowed to proceed in the manner first mooted by Mr Guo, for two days, the legal costs would have outstripped the value of the assets in issue. In published figures about court efficiencies in the Federal Circuit Court of Australia, on a mean average, legal costs generally run at $30 000 to litigants per case. On that arithmetic, that represented one third of the value of the assets in issue in this case. In some cases, a rule of thumb applies to the effect that the daily cost associated with running a case is approximately $20 000.
Using Mr Guo’s initial estimate of a two day trial, each party would incur trial costs (those being in addition to the parties’ sunk costs in getting to the trial) of $40 000. All those costs were to be incurred in fighting over assets valued at less than $100 000 where 100 per cent division in favour of the applicant was sought but which was likely to be hard fought. Mr Hoult was entitled to say the position that his client faced was outrageous. It was.
Returning to events at noon on the day fixed for the hearing of the two hour trial, I canvassed with the parties the prospect of salvaging whatever time remained to usefully devote to the case. Mr Hoult pointed out that even if the case commenced it would be adjourned part-heard. He said he would be seeking costs against the applicant’s solicitor.
In hearing Mr Guo’s submissions on how he suggested I should deal with the case, Mr Guo’s mobile telephone began ringing. The exchange unfolded in the following way –
HIS HONOUR: All right. Thank you. Mr Guo, I hope you understand what has just happened. Did you also not read the sign on the door that said mobile phones are to be turned off?
MR GUO: Yes, your Honour. I did see that.
HIS HONOUR: Did you read that?
MR GUO: I’m aware of that. I apologise.
HIS HONOUR: Did you read it?
MR GUO: As I walked into the court.
HIS HONOUR: And is there some reason why you didn’t turn your phone off?
MR GUO: Yes. There was a gas leak at my house and ‑ ‑ ‑
HIS HONOUR: And that explains why you’ve come into court with a phone that’s operative, is it?
MR GUO: No, that’s why I was using it outside and I forgot to ‑ ‑ ‑
HIS HONOUR: Okay. Mr Guo, this is quite a serious position that you’re in at the moment because the case that I previously fixed for trial today on a two hour duration, in which you appeared last time, is not going to start largely because of complications of your making. Mr Hoult says that aside from the fact that you didn’t appear properly, you didn’t arrange an interpreter at the time that you should have and, as a result, we lost almost two hours in the morning session of this case. He then says you personally – that is to say, you as the individual – should pay his client’s costs of today, and I must say I’m rather attracted to that, subject to you telling me to the contrary. So what do you have to say?
In response, Mr Guo endeavoured to persuade me that the court was somehow in error in not providing his client with an interpreter. At the risk of repetition, on the initiating application, Mr Guo did not indicate that his client needed an interpreter. Yet, knowing over the life of this litigation that his client’s command of the English language was no greater than 60 per cent, he omitted to arrange for his client to have an interpreter. His client’s need for an interpreter was glaringly obvious. Precisely why he had not arranged one went unexplained. That is not to say Mr Guo did not offer an explanation. It was this –
MR GUO: I believe that the court costs should be reserved.
HIS HONOUR: Why?
MR GUO: I, myself, may not have the capacity.
HIS HONOUR: What do you mean by that?
MR GUO: Look, what – your Honour, one reason why, that it’s – I failed to organise an interpreter was because I have been ill. I have had an eye infection and ‑ ‑ ‑
HIS HONOUR: Yes.
MR GUO: ‑ ‑ ‑ and which just healed recently. I can provide evidence about that next time if you want.
Precisely how Mr Guo’s eye infection bore upon his failure to arrange an interpreter, even when the case was first fixed for trial, was a mystery to me.
In response to Mr Hoult’s urging to fix a new date for the trial, I asked Mr Hoult and Mr Guo whether either wanted to qualify, alter or say anything about the duration of the new hearing date. Mr Guo said he requested a full day but that depended on how I (the judge) wanted to run this case. After pointing out to Mr Guo that as the judge, I judge the case and I did not run it, Mr Guo was unable to answer my direct question whether the case was to take two days, one day or two hours. Mr Hoult persisted in this case taking no more than two hours. In the end, not being at all safe in the prediction that the case will be efficiently managed as a trial of two hours duration or possibly because the case, despite certain good management, might go out of control, I fixed a trial for 14 March 2019 for one day.
Both parties were given leave to file written submissions on the question of costs. Submissions were duly filed by Mr Guo and Mr Hoult. On behalf of the respondent, Mr Hoult’s written submissions were made in 11 numbered paragraphs on a single sheet of A4 paper. Conversely, Mr Guo’s submissions were made in 40 numbered paragraphs over eight A4 sheets of paper. As with the applicant’s approach to the trial, in those written submissions on costs, concepts referable to brevity, precision of thought, clarity of delivery, structure, logic and consideration were not a hallmark. Conversely, Mr Hoult’s submissions were as follows (with errors in the original) –
1.This matter was listed for a final hearing on the 9th November 2018.
2.Orders were made on the 6th August 2018 fixing the proceedings for the above date with an estimated duration of 2 hours. Mr Guo appeared on that date
3.Both parties required interpreters.
4.The dispute is limited. The asset pool is about $120,000 and the question is whether a $56,000 agreed contribution from the father should be treated as a loan and otherwise what weight should be given to it. Otherwise the matter was limited to percentage split.
5.The Respondent was ready to commence the matter at 10.15am and expressed such to the court.
6.The Applicant was not ready because Mr Guo appearing for the applicant had not made arrangements for an interpreter to attend.
7.At 12.15pm or thereabouts Mr Guo indicated that he was ready to proceed. By this time 2 hours had been wasted and the matter could not be accommodated by virtue of time.
8.The difficulties facing the Court were compounded by Mr Guo giving various estimates as to the length of the matter form 2 days to 1 days, 2 hours to 1 hour, 45 minutes or perhaps on submission.
9.The Respondent has had costs thrown away as a result of Mr Guo’s lack of preparation in securing an interpreter and his inability to estimate the effective time of the trial.
10.The Respondent seeks costs on scale but is prepared to accept a lesser sum of $5,000 being $3,500 for counsel and $1500 for the instructing solicitor..
11.It is submitted that the question of costs should not be visited upon the wife but upon Mr Gao personally.
Mr Guo resisted the making of a costs order against him personally. He said there should be no order as to costs or, alternatively, that costs should be reserved. Embedded in Mr Guo’s contentions was the notion that on either position he advanced (no costs or reserved costs) the question of costs should not involve Mr Guo and his conduct of the case. Let me say at the outset that I reject his position. I do accept his position that the court’s “jurisdiction to order a legal practitioner to pay costs personally must be exercised with care and discretion and only in a clear case” (his words). This was a clear case for ordering Mr Guo to pay costs personally. I take that view for the reasons that now follow.
First, I agree with Mr Hoult’s contentions in paragraphs 1, 2 and 3 of his written submissions. On my reading of the amended application and the applicant’s affidavit material, the issue in this case is very confined. Mr Guo’s characterisation of the issues in the case as matters involving fraud in the creation of the loan documentation, whether “there was an expectation that money was held on behalf of the applicant”, disputes over the interpretation of some family trust, disputes over whether the respondent had intentionally become unemployed so as to avoid paying child support and so on are ambitious in view of the current court documentation. If Mr Guo intends to pursue those matters, he must file a statement of claim (in the common law sense, it being a pleading, properly structured with particulars, as if prepared for use in a trial in the Supreme Court of Victoria) within 28 days. If he fails to file such a pleading, I will not permit Mr Guo or his client to advance in this trial allegations relating to –
a)fraud;
b)the operation of any family trust;
c)the respondent intentionally becoming unemployed so as to avoid child support; and
d)wanton and negligent conduct (whatever those allegations concerned).
Further, irrespective of the applicant filing a statement of claim, by 4pm on 2 February 2019, the applicant must file an outline of her case. It is unacceptable that she has failed to do so at all. Little wonder Mr Hoult had no idea about the case the applicant now says she wishes to advance.
The propositions advanced in paragraphs 5, 6, 7, 8 and 9 in Mr Hoult’s written submissions on costs were also correct.
It is wrong to lay at the applicant’s feet the financial burden of this trial faltering on 9 November 2018. So far as I can see, the trial did not proceed because of reasons solely associated with Mr Guo’s conduct.
It therefore became necessary to consider the ramifications of s 117(2A) of the Family Law Act as a statutory basis for the making of a costs order and also whether the law permits a costs order to be made against a party’s solicitor.
As to s 117(2A), I am empowered to order costs in circumstances relating to the conduct of the proceeding. Here, the applicant’s conduct of the trial fell far short of standards that should be exhibited in the running of a trial. It is no excuse for a solicitor who chooses to appear in lieu of a barrister to adopt behaviour that is any less than the standards expected of a competent barrister in the running of a case. Here, Mr Guo failed to arrange an interpreter for his own client, knowing that her command of the English language was at 60 per cent. He was not ready to proceed until noon on the day fixed for a two hour trial. He then told me he wanted to allege fraud, intentional avoiding of child support payments and wanton and negligent conduct, none of which had been particularised nor even remotely adequately raised so far. Parties are not permitted to conduct trial by ambush. I do not accept the proposition urged by Mr Guo where he said the following –
Both the Court and the practitioners have a dilemma and difficulty in balancing how much time is required to test the witnesses for credibility and finding of fact amid extensive factual disputes and proportionality. This difficult decision ultimately lies with the Court.
Barristers routinely test witness credibility. They usually do so by getting to the heart of the issue quickly. Meandering, discursive, ill‑considered, indulgent, corpulent or wasteful cross-examination can never be permitted. Clients are entitled to expect that their advocate has given careful consideration when preparing the case at trial to efficient cross‑examination, to anticipating ways to meet witnesses’ answers to the cross-examiner’s questions. Barristers routinely structure their cross‑examination in careful ways, especially in cases involving extensive disputed facts. In cases where the value of the assets are modest, as is this case, good professional conduct commands – dare I say, demands – that the indulgences involved in lengthy cross-examination yield to the proportionately responsible need to get to the heart of the issue in a timely and efficient way. I expect nothing less in this case.
In this case, there has been a wholesale abandonment of proper preparation for trial on behalf of the applicant. That was not of the applicant’s making. Section 117(2A) permits a remedy in that situation.
So far as the answer to the question who should compensate the respondent for his costs thrown away is concerned, it must be Mr Guo. I do not accept that I should not insist on proper standards in the conduct of a case merely because, as Mr Guo says he is, a sole practitioner, the sole income earner in his own family and a father of three children. Equally, it is erroneous for Mr Guo to argue in the way he did as follows –
The Court may only make a personal cost order against a practitioner if costs have been incurred by serious neglect, serious incompetence or serious misconduct of a practitioner or improper or without reasonable cause, in circumstances which a legal practitioner is responsible.
Costs are always in the discretion of the court. Not only may a court make no order as to costs but a court can order a party to pay costs, it can order the basis on which those costs are to be paid and a court can even make an order that a person who is not even a party to the litigation pays costs, as was ordered in Burns Philp & Co Ltd v Bhagat.[3] Costs orders against solicitors are far from extraordinary and orders against them are not confined to the instances urged above by Mr Guo.
[3] [1993] 1 VR 203
This court derives its power to award costs primarily from statute. The Federal Circuit Court of Australia Act provides the court with jurisdiction to award costs in all proceedings before it except where another Act provides that costs must not be awarded.[4] However, that Act does not enliven the court’s costs jurisdiction with respect to family law or child support proceedings.[5] Section 117(2A) of the Family Law Act has been canvassed above.
[4] Federal Circuit Court of Australia Act 1999 s 79(2)
[5] Ibid s 79(1)
The Supreme Court of Victoria in the case of Burns Philp & Co Ltd & Anor v Bhagat[6] considered the power of courts to award costs against non‑parties to a proceeding and held inter alia that [7] –
·even persons who are not parties to a proceeding in the strict sense may be the subject of a costs order by a court;[8]
·it is one thing to say that a person not connected with a proceeding may not be ordered to pay costs of the proceeding but it is another thing to say that an order for costs cannot be made against a stranger to the proceeding in the sense of someone who is not on the record as a party;[9]
·as a general rule a court has no power to order a party to one action to pay the costs of another action to which they are not party especially if they have no connection with the action to which they are not a party;[10]
·a court’s power to award costs against solicitors is explicable by reason of the jurisdiction the court has over its officers;[11]
·a court may make an order for costs against a relator to a proceeding, who is not, strictly speaking, a party to the proceeding;[12]
·where a person is put forward as a relator to a case the court still has power to award costs against the person who put that other person there (in that case an attorney);[13]
·a court has power to make costs orders against persons who are not strictly speaking parties to a proceeding but who make affidavits in a case, especially against attorneys considered to be before the court and, as the court’s officers, bringing cases to the court’s notice;[14] and
·a creditor may be ordered to pay the costs occasioned by their claim against a deceased estate notwithstanding that that the creditor was not a party to the administration suit.[15]
[6] [1993] 1 VR 203
[7] Ibid, 212-216
[8] Re Appleton French & Scrafton Ltd [1905] 1 Ch 749 per Warrington J; Re Sturmer & Town of Beaverton [1911] 2 DLR 501, 509
[9] Burns Philp & Co Ltd v Bhagat [1993] 1 VR 203, 214
[10] Ibid, 216
[11] Ibid, 213
[12] Attorney-General v Logan [1891] 2 QB 100, 106 (per Vaughan Williams J)
[13] R v Greene (1842) 4 QB 646
[14] Ibid, 649-50
[15] Hatch v Searles (1854) 2 Sm & G 147; Huon v Dougharty (1894) 16 ALT 33
The court’s discretion on costs is very wide indeed.
In my view, it is appropriate to order Mr Guo to pay costs of the aborted trial on 9 November 2018. Mr Hoult sought a sum less than scale. He asked for costs in the sum of $5 000. That amount is appropriate.
I certify that the preceding fifty-two (52) paragraphs are a true copy of the reasons for judgment of his Honour Judge Wilson
Date: 23 November 2018
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