El-Hanania v Vella (No.4) - [2020] FCCA 265

FEDERAL CIRCUIT COURT OF AUSTRALIA

EL-HANANIA v VELLA (No.4)

[2020] FCCA 265

Catchwords:
BANKRUPTCY – COURTS AND JUDICIAL SYSTEM – Federal jurisdiction – a lawyer commenced a proceeding in the Federal Circuit Court of Australia (Court) for an order to set aside a bankruptcy notice issued against him on the basis of a purported judgment of the District Court of New South Wales entered in favour of the lawyer’s former client – the purported judgment in turn was substantially based on the registration of a costs certificate issued under the Legal Profession Act 2004 (NSW) (2004 LP Act) recording the difference between the amount the lawyer retained purportedly on account of his legal costs of providing legal services to the client and the amount for which those legal costs had been determined as recorded in the costs certificate (overpayment) – the Court held that the purported judgment on the basis of which the bankruptcy notice issued was not a “judgment” to which s.40(1)(g) of the Bankruptcy Act 1966 (Cth) applied and, for that reason, the bankruptcy notice is liable to be set aside – whether in the proceedings the Court held the bankruptcy notice is liable to be set aside the Court has jurisdiction to entertain a claim under s.368(4) of the 2004 LP Act by the client against the lawyer for the recovery of the overpayment as a debt – Court has jurisdiction.

LEGAL PRACTITIONERS – COSTS – Lawyer of client retained money purportedly on account of the costs of providing legal services to the client that exceeded the amount for which those legal costs had been determined as recorded in a costs certificate (overpayment) issued under Legal Profession Act 2004 (NSW) (2004 LP Act) – whether the preconditions for recovering the overpayment as a debt under s.368(4) of the 2004 LP Act satisfied – preconditions satisfied – judgment for the client against the lawyer granted in the amount of the overpayment together with interest on that amount.

Legislation:

Bankruptcy Act 1966 (Cth), ss.30(1)(b), 40(1)(g), 41, 41(6A)
Constitution, ss.76(ii), 77(i)
Federal Circuit Court Act 1999 (Cth), ss.14, 76(2), 76(3)
Federal Circuit Court Rules 2001 (Cth), r.16.01
Legal Profession Act 2004 (NSW) ss.368(1) 368(4)

Judiciary Act 1903 (Cth), s.79(1)

Cases cited:

Baxter v Obacelo Pty Ltd [2001] HCA 66; (2001) 205 CLR 635

El-Hanania v Vella [2019] FCCA 1555

El-Hanania v Vella (No.2) [2019] FCCA 2907

El-Hanania v Vella (No.3) [2019] FCCA 3287

Haines v Welch (1868) L.R., 4, C.P., 91

Oliveri v Stafford (1989) 24 FCR 413

Philip Morris Inc v Adam P Brown Male Fashions Pty Ltd (1981) 148 CLR 457

Rana v Google Inc [2017] FCAFC 156

Re Wakim [1999] HCA 27; (1999) 198 CLR 511

Taylor v Vivacity Engineering Pty Ltd [2019] FCCA 1751

Applicant:

SABA EL-HANANIA

Respondent:

ALON JOSEPH VELLA

File Number:

SYG 2258 of 2018

Judgment of:

Judge Manousaridis

Hearing date:

6 February 2020

Date of Last Submission:

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: [2020] FCCA 265
Decision Date: 14 February 2020

CaseChat Overview and Summary

In the Federal Circuit Court of Australia, Mr El-Hanania sought to set aside a bankruptcy notice issued against him. The notice was based on a purported judgment of the District Court of New South Wales, which in turn was founded on the registration of a costs certificate issued under the *Legal Profession Act 2004* (NSW). This certificate recorded an overpayment by Mr El-Hanania's former client, representing the difference between the amount the lawyer retained for his costs and the amount ultimately determined by the certificate.

The primary legal issue before the Court was whether the purported District Court judgment qualified as a "judgment" for the purposes of s 40(1)(g) of the *Bankruptcy Act 1966* (Cth), which governs the setting aside of bankruptcy notices. A secondary issue was whether the Court had jurisdiction to entertain a claim by the former client against Mr El-Hanania for the recovery of the overpayment as a debt under s 368(4) of the *Legal Profession Act 2004* (NSW) within these proceedings.

Judge Manousaridis determined that the purported District Court judgment was not a judgment to which s 40(1)(g) of the *Bankruptcy Act 1966* applied, and consequently, the bankruptcy notice was liable to be set aside. The Court reasoned that the registration of the costs certificate did not create a judgment in the traditional sense for the purposes of bankruptcy proceedings. Furthermore, the Court found that it did possess jurisdiction to hear the client's claim for the overpayment under s 368(4) of the *Legal Profession Act 2004* (NSW), as the preconditions for such a claim were satisfied.

Accordingly, the Court ordered that the bankruptcy notice be set aside and entered judgment for the client against Mr El-Hanania in the amount of the overpayment, plus interest.

Orders