El-Hanania v Vella (No.3)

In the District Court of New South Wales, Mr El-Hanania sought to set aside a bankruptcy notice issued by Mr Vella. The bankruptcy notice was based on a judgment of $212,765.37, representing the difference between the amount Mr El-Hanania retained on account of his legal costs and the amount ultimately assessed as fair costs for his services. Mr El-Hanania contended that this judgment was not a "final judgment or order" for the purposes of the *Bankruptcy Act 1966* (Cth) because it was void, as it was not authorised by the relevant provisions of the *Legal Profession Act 2004* (NSW). Mr Vella argued that the judgment was regularly entered and therefore not a nullity.

The court was required to determine whether the judgment obtained by Mr Vella against Mr El-Hanania constituted a "final judgment or a final order" within the meaning of s.40(1)(g) of the *Bankruptcy Act 1966* (Cth), or if it was deemed to be a final judgment under s.40(3)(b) of the Act. This involved examining the circumstances under which the judgment was entered, specifically whether it was authorised by the *Legal Profession Act 2004* (NSW).

The court found that the judgment was not a "final judgment or order" nor a deemed final judgment under the *Bankruptcy Act 1966* (Cth). The reasoning was that the judgment entered was not authorised by the *Legal Profession Act 2004* (NSW), rendering it a nullity. The judgment was based on a costs certificate that recorded the difference between the amount Mr El-Hanania retained and the fair costs as determined by a costs assessor. However, the court determined that the specific provision of the *Legal Profession Act 2004* (NSW) under which the costs certificate was purportedly issued did not authorise the entry of a judgment for this difference. Although the judgment was later set aside by consent and a judgment for a lesser amount entered, the initial judgment, which formed the basis of the bankruptcy notice, was found to be void.