Intervention by lawyers for non-participant party for payment of legal fees
- K Lawyers (“the intervenor”) seeks the payment of $31,499.97 from the wife’s settlement proceeds. In the circumstances it seems reasonable that the wife’s solicitor be paid. The wife is aware of the intervenor’s claim but did not appear and did not seek to challenge either the quantum or that the said sum be paid into Court by the husband.
- Consideration was given to whether an order could or should be made for the judgment sum to be paid directly to the intervenor rather than a payment into Court pending an assessment of costs.
- The success of the intervenors application requires that there be a causal link established between the solicitor having acted for the client and the resulting payment to the client, that is, the litigation needs to “bear fruit” (exparte Patience; Makinson v The Minister (1940) SR (NSW) 96; Jackson & Richards  NSWSC 630).
- Sheller JA in Grogan & Orr  NSWCA 114 at  in the context of Family Court proceedings said that:-
…the whole of the parties’ property is under consideration and the orders the court makes are the fruits of the cause produced by the industry of the solicitor…
- In Jackson v Richards (supra) White J said at :-
… [t]he fact that the court has power to make orders to adjust the whole of a party’s property is irrelevant unless one or other of the parties invokes the power by asking the court to determine its rights by reference to all of the parties’ property.
…once it is clear and beyond doubt that a debt is owing to a third person and that all the probabilities are that it will be enforced unless it is discharged by payment, then the Court is not precluded from ordering its discharge by the parties or one of them as a condition or as part of the overall readjustment of the parties financial rights, if such a course is convenient or just…
- The judgment sum in favour of the intervenor is not to be considered a joint matrimonial debt. It is a debt incurred by the wife and remains her responsibility.
- Unlike the position of the wife’s solicitors in Martin & Martin  FamCA 260 it could not be said that the conduct of the husband resulted in there being:-
…a sufficient nexus between the rights of [the solicitors] and both the husband and the wife and their specific interests in the property… [that the solicitors had] the property rights to enforce.
- The intervenor has an equitable lien over that proportion of the settlement sum to which the wife is entitled.
- The outcome in the proceedings is not such that the wife’s entitlement is insufficient to satisfy the intervenor’s claim.
- In Martin & Martin (supra) Cronin J spoke of the power to order payment from one party to a creditor at :-
…[t]he power lies in s 79 (see Deputy Commission of Taxation v Kliman & Kliman  FamCA 629;(2002) FLC 93-113). A similar position was adopted by the Full Court in Zdravkovic and Zdravkovic  FamCA 23; (1982) FLC 91-220 where the Full Court held that once it was clear and beyond doubt that a debt was owing to a third person, and that it would in all probability be enforced, there are clearly appropriate cases where as part of the adjustment of the financial rights of the parties, the order could be made for the payment direct to the creditor…
- I consider there is merit in the intervenor’s claim. There are “legal proceedings” and there is now a judgment debt. The solicitors were clearly instructed by the wife to assist her in the proceedings and I am satisfied that the entirety of their fees were incurred in fulfilling the wife’s instructions in the litigation.
- In Scammell & Co v WorkCover Corporation & Anor  SASC 258Layton J said at :-
…before a court would enforce a particular lien for the specific amount of costs to be paid as distinct from securing the amount of those costs, such costs would have to be relevantly agreed by the Worker as being a debt, or assessment by a court or taxed.
- In the current circumstances the intervenors have secured a judgment debt. I am not asked to order direct payment but rather, for the money to be secured pending an assessment of costs being undertaken.
Read more here
Queensland/New South Wales/Victoria