Carrafa and Micheletto as Trustees, and Receivers and Managers of the PDJ Crew Unit Trust v Patrick & Associates
[2025] VSC 426
•15 July 2025
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL COURT
COMMERCIAL LIST
S ECI 2025 01967
| MICHAEL CARRAFA and FABIAN KANE MICHELETTO as trustees, and receivers and managers, of the PDJ CREW UNIT TRUST | Plaintiff |
| v | |
| PATRICK & ASSOCIATES PTY LTD (ACN609 259 145) t/as PATRICK & ASSOCIATES & ORS (according to the attached Schedule) | Defendants |
S ECI 2023 00636
| JASON BRANDI & ORS (according to the attached Schedule) | Applicants |
| v | |
| PATRICK & ASSOCIATES PTY LTD (ACN609 259 145) t/as PATRICK & ASSOCIATES | Respondent |
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JUDGE: | Delany J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 4 June 2025 |
DATE OF RULING: | 15 July 2025 |
CASE MAY BE CITED AS: | Carrafa and Micheletto as Trustees, and Receivers and Managers of the PDJ Crew Unit Trust v Patrick & Associates & Ors |
MEDIUM NEUTRAL CITATION: | [2025] VSC 426 |
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EQUITY – Whether solicitors have equitable lien in trust fund – Client denied the existence of the trust fund – Fund not obtained as a result of a judgement or award or compromise –Solicitors failed to show they had played at least a significant part in the conduct of litigation leading to the creation of the fund – Ex parte Patience; Makinson v The Minister (1940) 40 SR (NSW) 96, applied.
CONTRACT – Deed not executed by corporation in its capacity as trustee – Deed not effective to create a solicitor’s lien over trust fund where no lien over trust property previously existed – Re Interwest Hotels Pty Ltd (in liq) (1993) 12 ACSR 78, applied.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr M Black | Aitken Partners |
| For the First Defendant | Ms S Cherry | Mills Oakley |
| For the Second and Fourth Defendants | Jason Brandi (self-represented) |
HIS HONOUR:
These reasons respond to the following question referred for determination by the Costs Court:
Does the First Defendant, Patrick & Associates Pty Ltd have an equitable lien over, or any other interest in, the ‘Sinisgalli Foster Fund’ (as that fund is defined in the Deed dated 4 August 2022)?
The plaintiffs, Michael Carrafa and Fabian Kane Micheletto, are trustees, and receivers and managers of the PDJ Crew Unit Trust established on 1 July 2007 (‘PDJ Crew Unit Trust’) (‘trustees’). The trustees hold that position pursuant to an Order made on 27 October 2023 in proceeding S ECI 2019 04430 (‘Timeless Sunrise proceeding’).
The first defendant, Patrick & Associates Pty Ltd trading as Patrick & Associates (‘PA’), is a firm of solicitors who between 17 April 2019 and 28 April 2022 provided legal services to the second defendant, Jason Brandi, and companies associated with him. Those services were relevantly provided in acting for Jason Brandi and the companies controlled by him, PDJ Crew Pty Ltd (‘PDJ Crew’) and Big J Enterprises Pty Ltd (‘Big J’) (together, the ‘Jason Brandi parties’) in the Timeless Sunrise proceeding.
On 28 April 2022 PA filed a notice of ceasing to act for the Jason Brandi parties in the Timeless Sunrise proceeding and in related proceedings.
During the period 31 May 2019 to 9 June 2022, PA rendered 62 invoices in the total sum of $2,758,791.69. In April 2022 PA claimed to be owed over $1.35 million for unpaid legal costs across five files. As at July 2022 the sum of $1,341,779.89 was alleged to be outstanding. This primarily involved costs in acting for the Jason Brandi parties together with $35,681.30 incurred in acting for Tania Brandi in a related matter for which Jason Brandi was liable as associated third party payer.
On 4 August 2022, PA, the Jason Brandi parties and Tania Brandi entered into a deed (‘deed’). Pursuant to the deed PA handed over its files to new solicitors engaged by the Jason Brandi parties to act on their behalf in the Timeless Sunrise proceeding and related proceedings.
Following a lengthy trial, on 4 September 2023 I gave judgment in the Timeless Sunrise proceeding and related proceedings (‘trial reasons’).[1] On 20 September 2024 I delivered my decision in relation to costs (‘costs decision’).[2]
[1][2023] VSC 524.
[2][2024] VSC 588.
In these reasons I adopt the same definitions as I adopted in the trial reasons and in the costs decision. These reasons assume a familiarity with both of those decisions.
In accordance with the trial reasons, I made an Order on 27 October 2023 in the Timeless Sunrise proceeding that the proceeds of sale of 9 Newsom Street, Ascot Vale (‘Newsom Street’) and the monies in the Sinisgalli Foster Fund (‘the retained monies’), are assets of the PDJ Crew Unit Trust.
The trustees contend that PA has no interest in the retained monies and that the retained monies were never in PA’s possession. Jason Brandi, who appeared on his own behalf at the hearing, adopts the same position as the trustees. PA on the other hand contends that it has:
(a) an equitable lien over the Sinisgalli Foster Fund and therefore over the retained monies to the extent of their total unpaid costs, which the Court should intervene to protect;
(b) an equitable lien over any additional funds that may be owing to or come into the hands of either Jason Brandi, Big J, PDJ Crew or the trustees by way of inter partes costs recovery, which the Court should intervene to protect; and
(c) a contractual right to preservation of $1.35 million of the fund, pending quantification and payment of their unpaid costs.
For the reasons that follow I do not accept the proposition that PA has an equitable lien or other interest in the retained monies.
Issues argued but not arising for determination
The question set out in paragraph 1 was referred by the Costs Court by an Order made in proceeding S ECI 2023 00636 on 7 April 2025. Proceeding S ECI 2023 00636 is a proceeding for the taxation of the whole of PA’s legal costs, initiated by the Jason Brandi parties.
Before turning to the reasons why the question in paragraph 1 is to be answered in the negative, in light of the submissions advanced by PA it is important to identify the limited scope of the question that has been referred.
Submissions were made by PA directed to other sources of funds beyond the retained monies in the Sinisgalli Foster Fund to which it was submitted the asserted equitable lien extends. It is no part of the determination of the referred question to deal with or to determine such arguments.
The extraneous arguments concerned the following:
(a) first, a submission was made on behalf of PA that the lien in favour of PA extends to $202,097.35 representing the proceeds of sale of 48 Holmes Road, Moonee Ponds (‘Holmes Road’) paid to Strongman & Crouch as Jason Brandi’s solicitors pursuant to an Order made on 20 October 2023. A subpoena was issued to that firm in relation to that asserted claim. As I said during the hearing, the proceeds of sale of Holmes Road is not a matter relevant to the question that I have been asked to determine;
(b) second, a submission was made to the effect that because Big J holds 50% of the units in the PDJ Crew Unit Trust, that I should determine that the asserted lien in favour of PA extends to any funds distributed to Big J by the trustees. First, no such issue is raised by the question referred for determination. Second, the trustees stated in open court that before any distribution of retained monies, including to Big J, they would put the relevant persons on notice of their intention to do so, including PA; and
(c) third, arguments were advanced on behalf of PA that the fruits of litigation lien extends to costs orders made in favour of the Jason Brandi parties. Whether or not that is the case is a matter outside the scope of the referred question and I do not propose to answer it.
The claim by PA: Principles
Central to PA’ s claim to be entitled to an equitable lien is the following passage from Ex Parte Patience; Makinson v The Minister where Jordan CJ said:[3]
A solicitor is at common law entitled to a general possessory lien for all professional costs due to him by his client, which entitles him to keep in his possession all property of the client, which is in the solicitor’s possession and has come into his possession in the course of his professional employment, until his costs have been paid.
A solicitor has no lien for his costs over any property which has not come into his possession. If, however, as the result of legal proceedings in which the solicitor has acted for the client, the client obtains a judgment [sic] or award or compromise for the payment of money, although the solicitor acquires no common law title to his client’s right to receive the money or to any part of that right, he acquires a right to have his costs paid out of the money…
[3](1940) 40 SR (NSW) 96; (1940) 57 WN (NSW) 65, 99 – 100 (‘Makinson’).
In Doyle’s Constructions Lawyers v Alick D’Jamirze and Nickolai D’Jamirze t/as Plasterboard Professionals Grove J observed:[4]
15.It has been convenient to speak of a lien but it should be observed that what is involved is not a lien in the strict sense strict sense: Barker v St. Quintin (1844) 12 M & W 441 cited in Ex Parte Patience (supra) in this State. The description of Cockburn CJ in Mercer v Graves 1872 LR 7 QB 499 is frequently cited and I apply it. What is involved is a claim or right of a solicitor to “ask for the intervention of the Court for his protection, when, having obtained a judgment for his client he finds there is a probability of his client depriving him of his costs”.
16.Is such a probability demonstrated in this case? I accept that in this context the level of probability can be equated simply with significant risk: cf Johns (supra). In Johns Hodgson J held that where the defendant did not “admit that anything is due, would not give an undertaking, and has no other significant assets to satisfy the plaintiff’s demand” there was at least an appreciable risk.
[4][2004] NSWSC 507 [15]-[16] (‘Doyle’s Construction Lawyers’).
In its submissions PA identified certain principles derived from earlier cases, principles which were not in contest and which it is convenient to reproduce:
14. …a solicitor acting for a trustee has been found to have a retaining lien over documents prepared on the instructions of a trustee, which can also be asserted against the beneficiaries, on the basis that the cestui que trust cannot have any higher title to the documents that the trustee.[5]
15. …The fact costs have not yet been quantified is no bar to a lien…
20.An equitable lien attaches to ‘property that [has] been in some definable way part of the subject matter of the action that can be said to have been recovered or preserved by the work done in the action by the solicitor”.[6] There must be a causal connection between the fruits and the work, but the threshold is low. It is ‘not necessary to demonstrate that a judgment or settlement came about as a result of specific efforts’.[7] Equity will enforce the lien in favour of “any solicitor who played at least a significant part in the conduct of the litigation which led to the verdict being recovered’.[8] As Dal Pont puts it, it is “clear that solicitors who have been actively involved over a considerable period in acting for a party to successful litigation are likely to fulfil this criterion”.[9]…
21.As for timing, the assistance of the court is invoked not to create the right, but to enforce it:
… the particular lien arises when the solicitors undertake the work for the client in the course of the litigation. The equitable interest, whether pursued or not, exists from that time. What the client may or may not subsequently do in seeking to deprive the solicitors of their costs makes no difference to the effect of that interest. Nor can it inhibit the right of the solicitors to seek the court’s intervention to protect that pre-existing interest.[10]
[5]Re Dee Estates Ltd [1911] 2 Ch 85 (and upheld on appeal).
[6]Jackson v Richards [2005] NSWSC 630.
[7]Jackson v Richards [2005] NSWSC 630.
[8]Kelso v McCulloch (SC (NSW), Young J, 24 October 1994, unreported) BC9403180 [11].
[9]G.E. Dal Pont, Law of Costs (LexisNexis Butterworths, 4th ed, 2018) [27.15].
[10]Re H & W Wallace Ltd (in liq) [1994] 1 NZLR 235, 238 (Thomas J) emphasis added.
Agreed facts
The parties filed a statement of agreed facts.
Amongst other things, the parties agree that on 26 September 2019, David Brandi and his associated entities initiated the Timeless Sunrise proceeding.
The parties agree about the issues that formed part of the pleadings in the Timeless Sunrise proceeding and about how the case was conducted concerning issues relevant to this application.
The statement of agreed facts includes the following pleaded issues in the Timeless Sunrise proceeding:
5. By their Statement of Claim dated 25 October 2019, the plaintiffs plead:
“5. PDJ Crew is and was at all relevant times:
(a)since 27 October 2004, a company duly incorporated under the Corporations Act.
(b) owned and controlled by Jason, save as referred to in paragraph 2(c) below.
(c)since about 1 July 2007, the trustee of the PDJ Crew Unit Trust.”
6.On 19 November 2019, Patrick & Associates filed a Defence in which the first to third defendants plead:
5. As to paragraph 5:
(a) admit paragraph 5(a);
(b) admit paragraph 5(b); and
(c) deny paragraph 5(c).
As the statement of agreed facts accurately records, in the Timeless Sunrise proceeding the Jason Brandi parties maintained that PDJ Crew was Jason Brandi’s own company, that there was no PDJ Crew Unit Trust, and that Newsom Street was solely an asset of PDJ Crew in its own right.
The statement of agreed facts also accurately records that throughout the Timeless Sunrise Proceeding, David Brandi and his associated entities asserted that PDJ Crew was the trustee of the PDJ Crew Unit Trust.
The 4 August 2022 deed
The deed includes the following recitals:
(G)In the VSC Proceeding [Supreme Court Proceeding No SECI 2019 04430], among other things:
(1)The plaintiffs to the VSC Proceeding allege that a trust known as the “PDJ Crew Unit Trust” was established, with PDJ Crew Pty Ltd as trustee, in or about 2007 or 2008, with Big J and a company controlled by David Brandi as equal unitholders (Plaintiffs’ Trust Allegations);
(2)Big J, PDJ Crew and Jason Brandi deny the Plaintiffs’ Trust Allegations and say, inter alia, that the “PDJ Crew Unit Trust” was never established and PDJ Crew did not agree to act as trustee of the trust as alleged by the plaintiffs;
…
(K)Patrick & Associates claims it is owed $1,376,589 (plus interest) in relation to acting for Big J, PDJ Crew and Jason Brandi, and $35,681.30 (plus interest) in relation to acting for Tania Brandi (collectively, the Claimed Costs).
(L)The Brandi Parties seek delivery of the Files to their new solicitors, Strongman &Crouch.
(M)Patrick & Associates has to date refused to do so, claiming it has a possessory lien (or solicitor’s lien) until all the costs owed by the Brandi Parties as a result of Patrick & Associates acting for them have been paid. Patrick & Associates also claims an equitable lien over the “fruits of litigation” in the VSC Proceeding, with respect to their outstanding legal fees in acting for Jason Brandi, PDJ Crew and Big J in the VSC Proceeding (Outstanding Fees).
(N)Without admission by any of the Brandi Parties in relation to their liability to pay the Claimed Costs, the Parties to this Deed have agreed to resolve the issue of delivery up of the Files on the terms set out in this Deed.
Definitions include the following:
“PDJ Crew” means PDJ Crew Pty Ltd:
(i) in its own capacity; and
(ii)as trustee of the PDJ Crew Unit Trust — only if, at the time of entry into this Deed, such a trust as alleged by the plaintiffs in the VSC Proceeding exists and PDJ Crew agreed to act as trustee of the trust.
The operative parts of the deed include:
2.1 Big J, PDJ Crew and Jason Brandi acknowledge and agree that:
(a)Patrick & Associates has a “fruits of litigation” lien over the Sinisgalli Foster Fund and the Funds in Court but only up to a total of $1,350,000.
(b)In any application to the Court to access the Funds in Court and/or the Sinisigalli Foster Fund, they will treat $1,350,000 of those Funds in Court and the Sinisigalli Foster Fund as subject to the equitable lien claimed by Patrick & Associates, as set out in the letter dated 3 May 2022 from Patrick & Associates to the Sinisgalli Foster and Supreme Court of Victoria Funds In Court.
…
2.3 The parties acknowledge and agree that:
…
(c) Nothing in this Deed affects:
(i)any rights the Brandi Parties (or any one of them) have or may have in relation to their purported liability (or otherwise) to pay the Claimed Costs, including, without limitation, their respective rights to seek a taxation of the Claimed Costs;
(ii)any Claims the Brandi Parties (or any one of them) have, or may have, against Patrick & Associates in relation to or howsoever connected with Patrick & Associates’ legal services, including any Claims that may operate to set-off any amounts owed (or alleged to be owed) by the Brandi Parties to Patrick & Associates;
(iii)any Claim Patrick & Associates has or may have to an amount more than the Claimed Costs.
The Competing Submissions
The trustees submitted that PA has no interest in the retained monies and that the referred question should be answered in the negative. They submitted:
(a) PDJ Crew, the relevant entity which engaged PA, did not engage PA in its capacity as trustee, therefore PDJ Crew is not entitled to an indemnity over the assets of the PDJ Crew Unit Trust for PA’s legal bills;
(b) PA has no possessory lien, or solicitor’s lien, over the retained monies; and
(c) PA does not have a fruits of litigation lien over the retained monies.
The trustees submitted it cannot be said that:
(a) there is a causal link between PA’s assertions and the recovery of the retained monies;
(b) PA was instrumental in obtaining the retained monies; or
(c) that the retained monies have come about by reason of PA’s exertions.
Concerning the proper construction of the deed, the trustees drew attention to the decision of Eames J Re Interwest Hotels Pty Ltd (in liq) of which the headnote records:[11]
(ii)The question of the capacity in which the company executed the deed of guarantee and indemnity is a matter to be determined objectively and not on the basis of the subjective intentions of the parties; and is a matter of construction to be decided with reference to all the circumstances of the case.
[11](1993) 12 ACSR 78, headnote (ii) (‘Interwest’).
In Interwest Eames J stated:[12]
While the task before me is to determine the meaning, as to capacity, of the words used to identify the party executing the Deed, and whilst that, as Mahoney JA observed in Helvetic Investment Corporation Pty Ltd v Knight, supra, at 776 , ``depends upon what the parties are to be taken to have meant by them'’ it does not follow that the question is to be resolved in accordance with the subjective intentions of the parties. Therefore, an objective conclusion as to the capacity in which a contract was entered may be reached notwithstanding the fact that the result is not one that accords with the subjective intention of one of the parties at the time of execution.
…
In Muir v City of Glasgow Bank (1879) 4 App Cas 337 at 335-6, Earl Cairns LC said that the question of whether a trustee contracted to be personally bound or whether he only bound the assets of a particular trust was one of construction to be decided with reference to all the circumstances of the case, including the nature of the contract, the subject matter on which it was to operate, and the capacity and duties of the parties to make the contract in one form or another. His Lordship held that there was no reason why a person, free to make a contract in any form he pleased, should not ``by apt words'’ stipulate that he was doing so in one capacity or another.
His Lordship added the cautionary words which stressed the objective nature of the exercise which the court was conducting:
But the first question, whether in Scotland or in England, must be, What is the contract into which the parties have entered? and that must be accompanied by another question, What is the contract into which the parties were competent to enter? For if words have been used of any ambiguity, or if the object of which may be open to any doubt, that construction must, according to the well known rules of law, be given which will make the contract a legitimate and valid one, and not that construction by which the contract will be destroyed.
[12](1993) 12 ACSR 78, 119.
The trustees submitted the Court should make a declaration that PA has no interest in the Sinisgalli Foster Fund.
Jason Brandi supported the position adopted by the trustees. He submitted that during the time PA acted on his behalf and on behalf of the Jason Brandi parties, the basis of their engagement and of his case was that PDJ Crew was not trustee of the PDJ Crew Unit Trust and that the PDJ Crew Unit Trust did not exist. That is, as contended in the defence filed in the Timeless Sunrise proceeding. He submitted that to permit PA to claim an equitable lien over the Sinisgalli Foster Fund would be to permit ‘a backflip’ which would be unfair.
PA put submissions and advanced arguments to the contrary. In written submissions PA relevantly contended for the following orders:
(a) that the referred question is answered ‘yes’; and
(b) an order preserving $1.35 million of the Sinisgalli Foster Fund in an interest-bearing account until PA’s costs are quantified.
PA submitted that it was engaged by PDJ Crew in its capacity as trustee of the PDJ Crew Unit Trust.
The primary claim by PA relied on the existence in its favour of a fruits of litigation lien over the retained monies. It contended that it was instrumental in obtaining the retained monies and as a result, applying the low threshold required by the cases, it held a fruits of litigation lien over the retained monies at the time of entry into the deed. It submitted the legal work performed by PA concerning the removal of the forged and therefore fraudulent mortgage over Newsom Street led to the withdrawal of that mortgage. The removal of the mortgage constituted ‘fruits of the litigation’.
Relying on Fifteenth Eestin Nominees Pty Ltd & Ors v Rosenberg & Anor (No 2),[13] PA submitted that work performed by it in relation to the removal of the mortgage over Newsom Street and work performed on behalf of the Jason Brandi parties were one matter rather than two separate matters, and that when assessing whether or not the fund represented the fruits of the litigation the Court should proceed on that basis.
[13][2009] VSCA 178; (2009) 24 VR 155 [9] (Maxwell P, Neave JA and Redlich JA).
PA submitted that as at 4 August 2022, the date of the deed, it had a valid and enforceable general (retaining) lien over the files.
PA submitted that that in entering into the deed the Jason Brandi parties provided a written acknowledgement that PA had a ‘fruits of litigation’ lien up to a value of $1.35 million, and agreed that $1.35 million of the Sinisgalli Foster Fund would be preserved for that purpose. PA submitted that it was in reliance on that acknowledgement and agreement as security for its unpaid costs that PA handed over its files.
Consideration
I proceed on the basis as discussed in Doyle’s Constructions Lawyers[14] that there is at least an appreciable risk that if the Court does not intervene to protect the claim by PA to be entitled to a lien, or otherwise pursuant to the deed to have an interest in the retained monies, that there will be no other significant assets to satisfy its demand.
[14][2004] NSWSC 507.
To whom did PA provide legal services?
I accept the submission on behalf of the trustees that the legal work performed by PA prior to 28 April 2022 was legal work performed for the Jason Brandi parties. It was not legal work performed for PDJ Crew in its capacity as trustee of the PDJ Crew Unit Trust.
I accept the submission that PA could not have been performing legal work for the PDJ Crew Unit Trust because their clients, the Jason Brandi parties, denied the trust existed. As appears from paragraph 5C of the defence, the Jason Brandi parties, including PDJ Crew, denied that PDJ Crew was trustee of the PDJ Crew Unit Trust.
Jason Brandi is right in his submission that throughout the time that PA acted on his behalf and on behalf of the companies associated with him, that it was his and their case on his behalf in accordance with his instructions that there was no PDJ Crew Unit Trust.
The legal costs that were incurred by Jason Brandi parties were incurred based on a denial by the Jason Brandi parties of the existence of the PDJ Crew Unit Trust. The work was performed and the costs were incurred based on the proposition that PDJ Crew in its own right was the registered proprietor of Newsom Street, the source of the retained monies in the Sinisgalli Foster Fund, and Newsom Street was not trust property. In the course of the trial reasons I rejected each of those propositions. I made findings to the contrary including as summarised at paragraph 53 (a) – (c) of the trial reasons.
Is PA entitled to the ‘fruits of litigation?’
Leaving aside the provisions of the deed, PA’s submission that it is entitled to the benefit of the ‘fruits of the litigation’ in accordance with the decision in Makinson and the other authorities referred to must be rejected.
I do not accept the proposition that the two matters, the removal of the fraudulent mortgage and the work performed in the Timeless Sunrise proceeding constituted one matter. The fraudulent mortgage over Newsom Street was removed on 12 September 2019. It was removed prior to commencement of the proceeding S ECI 2019 04346 between Jason Brandi and PDJ Crew against Atida Pty Ltd (ACN 166 407 898) and others on 23 September 2019. It was a short time later, on 26 September 2019, after the fraudulent mortgage had been removed, that the David Brandi parties commenced the Timeless Sunrise proceeding in which the Jason Brandi parties were defendants. At the time the sale of Newsom Street occurred in June 2020, the fraudulent mortgage had long since been removed.
Even if the work performed by PA as solicitors on behalf of the Jason Brandi parties and the two matters are correctly viewed as one matter, accepting that there is a low threshold for the required causal connection between, in this case, the retained monies and the work performed by the solicitors, the required causal connection is not made out.
Picking up the language of Jordan CJ in Makinson, the client did not obtain ‘a judgement or award or compromise for the payment of money’[15] in respect of either the sale of Newsom Street or for the retained monies representing the proceeds of sale of that property. The retained monies did not come into the possession of the Jason Brandi parties or any of them ‘as a result’ of legal proceedings in which PA acted for those clients. They came about following, and as a result of, settlement of the contract of sale relating to the property.
[15](1940) 40 SR (NSW) 96; (1940) 57 WN (NSW) 65, 99 – 100 (‘Makinson’).
As submitted by the trustees, PA cannot claim a fruits of litigation lien when its client’s defence did not bear any fruit. The Jason Brandi parties did not recover anything in respect of Newsom Street in their own right and PA was not in any way ‘instrumental’ in recovering the retained monies. Nor is there a sufficient causal link between PA’s exertions and retained monies.[16]
[16]Firth v Centrelink & Anor [2002] NSWSC 564; (2002) 55 NSWLR 451 (Campbell J).
I do not accept the proposition that PA played at least ‘a significant part in the conduct of the litigation which led to the verdict being recovered’.[17] The verdict that the retained monies are the property of the PDJ Crew Unit Trust was a verdict that was not contended for by the Jason Brandi parties at the time that PA was acting on behalf of the Jason Brandi parties. It was contrary to the pleaded case throughout the time that PA acted on behalf of the Jason Brandi parties, it was not in any sense the product of the conduct of litigation by PA. It was not until 2 September 2022, following a change of solicitors and counsel, that for the first time the Jason Brandi parties sought any relief in relation to the validity of the PDJ Crew Trust Deed and the question of whether Newsom Street was an asset of that trust. [18]
[17]Kelso v McCulloch (SC (NSW), Young J, 24 October 1994, unreported) 11.
[18]Timeless Sunrise Pty Ltd v BigJ Enterprises Pty Ltd (No 12) [2024] VSC 588 [119(D)].
The ‘result’ was that their clients lost the case that was advanced on their behalf, as detailed in their defence filed in accordance with instructions given by Jason Brandi when PA were acting for the Jason Brandi parties.
As a separate matter, the retained monies came about due to the sale of Newsom Street and not as a result of the proceeding. There was no order in the proceeding that brought about the sale of Newsom Street. On 7 October 2019 an Order was made that prevented entry into a contract for the sale of Newsom Street without notice. On 18 June 2020 a contract of sale was entered into by Jason Brandi on behalf of PDJ Crew for the sale of Newsom Street for $10.5 million. On 7 August 2020 the Court made an Order that until the hearing and determination of the proceeding or further order, the proceeds of sale of Newsom Street were to be paid into the Sinisgalli Foster Fund.
I am not satisfied that the legal work performed by PA led to the creation of the Sinisgalli Foster Fund or materially contributed to the creation of the fund.
I agree with the submission on behalf of the trustees that at its highest, the product of work relating to the mortgage was the judgment of $61,831 in favour of PDJ Crew and the order for an account of profits.
Is PA entitled to a lien based on the deed
For the reasons discussed I do not accept that at the time the parties entered into the deed PA held a fruits of litigation lien that extended to property that was property of the PDJ Crew Unit Trust.
I find that PDJ Crew entered into the deed in its personal capacity.
I make that finding applying the decision in Interwest to which reference has previously been made. At the time the deed was entered into it was totally contrary to the position adopted by the Jason Brandi parties and PA who acted on their behalf, that PDJ Crew was trustee of the PDJ Crew Unit Trust. The objective facts make it clear that the capacity in which PDJ Crew executed the deed was in its personal capacity alone.
PDJ Crew entered into the deed after PA had completed its legal work. Even if an equitable lien were acknowledged by clause 2.1 of the deed, it would secure nothing.
I accept the proposition submitted on behalf of the trustees that by executing the deed PDJ Crew could not, consistent with its role as trustee of the PDJ Crew Unit Trust, agree to a lien, charge or other interest in favour of PA in respect of legal costs which were not incurred by PDJ Crew in its capacity as trustee of the trust. An acknowledgement of a lien by PDJ Crew in its capacity as trustee at the time of execution of the deed would be a breach of its fiduciary obligations as a trustee to act in the best interests of the beneficiaries of the PDJ Crew Unit Trust, and to ensure its interests in its personal capacity were not in conflict with the interests of that Trust.
I also accept the submission by the trustees that was not possible under the deed for the parties to grant a fruits of litigation lien to PA in circumstances where there was no previously existing entitlement. There were no ‘earmarked funds’ in favour of PA. Clause 2.1 of the deed does not purport to create a new or fresh lien in favour of PA and nor, if that were to be the case, could such an outcome be achieved by entry into a deed.
It is significant that clause 2.3(c)(i) refers to the ‘purported’ liability of the trust. PDJ Crew is defined as one of the Brandi Parties in the deed. The deed acknowledges that the liability of the trustee of the PDJ Crew Unit Trust is not affected by the deed. As a consequence, as submitted by the trustees, the deed cannot create an equitable lien.
PA pointed to the conduct of the Jason Brandi parties in the Timeless Sunrise proceeding to say that they should not be rewarded for such conduct and nor should PA be penalised for the conduct of its former clients. However the conduct of Jason Brandi and his related parties during the Timeless Sunrise proceeding does not bear on the answer to the question referred by the Costs Court.
Disposition
For the reasons discussed above, the answer to the question referred by the Costs Court for determination is ‘no’.
As requested by the trustees, I declare that PA do not have an equitable lien over the retained monies or any other interest in the Sinisgalli Foster Fund.
I will make orders in the following terms being the orders sought by the trustees in paragraph 6 of the originating motion, pursuant to rr 39.06 and 39.09 and/or 54.02 of the Supreme Court (General Civil Procedure) Rules 2015 (Vic) and/or the inherent jurisdiction of the Court and/or s 66 of the Trustee Act 1958 (Vic), the plaintiffs are entitled to pay from the assets and property of the PDJ Crew Unit Trust as PDJ Receivers and Managers and PDJ Replacement Trustees:
(a) expenses and disbursements incurred in their capacity as PDJ Receivers and Managers and/or PDJ Replacement Trustees, including their legal costs of these proceedings; and
(b) themselves remuneration to be determined.
I will order the unsuccessful party, PA, pay the trustees’ costs of the proceeding.
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SCHEDULE OF PARTIES
| S ECI 2025 01967 | |
| MICHAEL CARRAFA AND FABIAN KANE MICHELETTO AS TRUSTEES, AND RECEIVERS AND MANAGERS, OF THE PDJ CREW UNIT TRUST | Plaintiff |
| - and - | |
| PATRICK & ASSOCIATES PTY LTD (ACN 609 259 145) T/AS PATRICK & ASSOCIATES | First defendant |
| JASON BRANDI | Second defendant |
| PDJ CREW PTY LTD | Third defendant |
| BIGJ ENTERPRISES PTY LTD | Fourth defendant |
SCHEDULE OF PARTIES
| S ECI 2023 00636 | |
| JASON BRANDI | First Applicant |
| PDJ CREW PTY LTD | Second Applicant |
| BIGJ ENTERPRISES PTY LTD | Third Applicant |
| - and - | |
| PATRICK & ASSOCIATES PTY LTD (ACN 609 259 145) T/AS PATRICK & ASSOCIATES | Respondent |
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