AJH Lawyers Pty Ltd v Hamo - [2010] VSCA 222

SUPREME COURT OF VICTORIA

COURT OF APPEAL

AJH LAWYERS PTY LTD	S APCI 2010 0082
AJH LAWYERS PTY LTD	Appellant
v
BASIM HAMO	Respondent

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JUDGES:	MAXWELL P and NETTLE JA
WHERE HELD:	MELBOURNE
DATE OF HEARING:	30 August 2010
DATE OF JUDGMENT:	30 August 2010
MEDIUM NEUTRAL CITATION:	[2010] VSCA 222

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APPEAL – Magistrate’s decision appealed to trial division – Recovery of outstanding legal fees – Whether advice given negligent – Whether company was insolvent – Whether obligation to advise on commercial utility of defending winding up application – Duty to give ‘holistic advice’ – Dependent on assumption of responsibility – Magistrate’s error in determining solicitors had a duty to advise on futility of defending winding up application – Appeal allowed – Magistrate’s order quashed.

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APPEARANCES:	Counsel	Solicitors
For the Appellant	Mr I W Upjohn	AJH Lawyers
The Respondent appeared in person

MAXWELL P:

In this matter I shall ask Nettle JA to deliver the first judgment.

NETTLE JA:

This is an appeal from a judgment given in the Common Law Division dismissing an appeal pursuant to s 109 of the Magistrates’ Court Act 1989 (Vic).

The facts

The appellant’s (‘AJH’) claim in the Magistrates’ Court was for professional fees alleged to be due in respect of four separate matters, one of which was described as ‘the Furnace matter’. The Magistrate held that AJH was entitled to recover the fees claimed in respect of three of the matters but dismissed AJH’s claim in respect of the Furnace matter.

The Furnace matter concerned an application by Melbourne Furnace Pty Ltd to wind up Mr Hamo’s company, OTCO Global Pty Ltd. Mr Hamo’s initial instructions to AJH in the matter were in the form of an email of 12 March 2001 to Mr Alex Di Blasi of AJH, as follows:

Dear Alex,
Please find attached the settlement that we reached with Furnace.
They have put on OTCO’s registration at ASIC that they files to wipe up the company [sic].
Please advise as I want to remove that ASAP.
Regards,
Bas Hamo
Managing Director.

Mr Di Blasi responded with an email of advice later the same day, as follows:

Dear Bas,
Thank you for your email below. We note your comments in regard to the Melbourne Furnace giving notice to ASIC of its application to wind up your company. This is a requirement to be followed by applicants in accordance with the Supreme Court (Corporations) Rules 2003, although having regard to the particular circumstances of this case, the lodging of this Notice with ASIC and equally the winding up application are clearly misfounded.
We have reviewed the application filed by the Melbourne Furnace and note that it is misconceived and is not likely to succeed.
You will recall that the parties entered into terms of settlement (as attached) prior to the expiry of the 21-day period for compliance by your company with the statutory demand. It is specifically stated in the Recitals to the terms of settlement (at paragraph C therein ) that “

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2010] VSCA 222
Decision Date: 30 August 2010

CaseChat Overview and Summary

AJH Lawyers Pty Ltd, acting as legal representatives, sought recovery of outstanding fees from Hamo, a company that had entered into a retainer agreement. The matter was initially decided by the Magistrates Court of New South Wales, which was appealed to the Supreme Court of New South Wales. The appeal revolved around whether the solicitors had provided negligent advice and whether the company was insolvent at the relevant time. Additionally, the court had to determine whether the solicitors had an obligation to advise on the commercial utility of defending a winding-up application and if there was a duty to provide holistic advice, which would depend on whether the solicitors had assumed responsibility for such advice.

The key issue before the court was whether the solicitors owed a duty of care to advise the client on the futility of defending a winding-up application and whether this duty was contingent upon the solicitors assuming responsibility for providing holistic advice. The court examined the retainer agreement, the nature of the legal services provided, and the circumstances under which the advice was given. The court needed to determine if the solicitors' failure to advise on the futility of defending the winding-up application constituted a breach of their duty of care.

The court found that the Magistrate had erred in determining that the solicitors had a duty to advise on the futility of defending the winding-up application. The court held that such a duty only arose if the solicitors had assumed responsibility for providing holistic advice, which was not the case here. The court quashed the Magistrate's order and allowed the appeal. The court found that the solicitors did not owe a duty to advise on the futility of defending the winding-up application and, therefore, had not acted negligently. As a result, the solicitors were entitled to recover the outstanding fees from the company.

Orders