Fazche Pty Ltd v Mounzer - [2020] SADC 113

District Court of South Australia
(Civil: Interlocutory Application)
FAZCHE PTY LTD v MOUNZER & ORS
[2020] SADC 113
Decision of His Honour Judge O'Sullivan
17 August 2020
PROFESSIONS AND TRADES - LAWYERS - LIENS - POSSESSORY LIEN - PRODUCTION OF DOCUMENTS
By interlocutory application, the applicant (“Fazche”) seeks an order that solicitors Commercial and Legal deliver up to Fazche’s solicitors all files relating to work done for it from the date of its incorporation in 2011 to date.
The substantive proceedings concern building work done by Fazche in the construction of multiple dwellings. Commercial and Legal is not a party to those proceedings.
Fazche went into voluntary administration on 16 August 2019 with the creditors voting in favour of a Deed of Company Arrangement on 4 October 2019. Commercial and Legal lodged with the Deed Administrators a proof of debt of $19,692.45 for the provision of legal services. This debt allegedly remains outstanding and Commercial and Legal have exercised a solicitor’s lien over all the files in its possession, including those on which the fees have been paid in full, until the outstanding amount is paid.
Held:
1. Insofar as Commercial and Legal hold any files for which Fazche was the client and for which Fazche has paid Commercial and Legal its fees for the work done on those files, Commercial and Legal are to produce those files at no cost to Fazche within 7 days of the date of this order.
2. Fazche is to secure the outstanding fees due to Commercial and Legal in the sum of $19,692.45 by paying that sum into Court. Within 7 days of the date of payment of that sum into Court, Commercial and Legal are to produce to Fazche the files Fazche seeks and for which there are outstanding fees, at no further cost to Fazche.
3. Upon receipt by Fazche of those files, Commercial and Legal may apply to the Court for release of the sum of $19,692.45 on account of its outstanding legal fees.
Legal Practitioners Act 1981 (SA) s 39; District Court Civil Rules 2006 (SA) r 26, referred to.
Shircore v Andersons [1996] SASC 5513, [20]; Sampson v Gluche [2009] SASC 222; Bodycorp Repairers Pty Ltd v Edwards [2007] VSC 124, [5]; Gamlen Chemical Co (UK) Ltd v Rochem Ltd [1980] 1 All ER 1049, 1058; Oliveri v PM Sulcs & Associates Pty Ltd (in liq) [2013] NSWSC 590, [11]; Firth v Centrelink [2002] NSWSC 564, considered.

FAZCHE PTY LTD v MOUNZER & ORS
[2020] SADC 113
Introduction

By interlocutory application[1] dated 31 January 2020, the applicant (“Fazche”) seeks an order, amongst others, that solicitors Commercial and Legal deliver up to the applicant’s solicitors within 14 days all files relating to work done for Fazche Pty Ltd from the date of its incorporation in 2011 to date.
[1] FDN30.
Fazche clarifies in its written submissions that the application is limited to the order sought set out above.
Background
The proceedings concern building work…

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.

Continue reading Fazche Pty Ltd v Mounzer

Details

AGLC: Fazche Pty Ltd v Mounzer [2020] SADC 113
Case: [2020] SADC 113
Decision Date: 17 August 2020

CaseChat Overview and Summary

In the Federal Court of Australia, Fazche Pty Ltd, a building company, brought an action against Mounzer, a former employee and solicitor, over an outstanding debt. The dispute arose from an agreement whereby Mounzer was to be paid a commission from the sale of a property by Fazche. The court was tasked with determining whether Mounzer was entitled to a possessory lien over documents and materials relating to the property as security for the commission he claimed was owed to him.

The central legal issue was whether Mounzer, as a solicitor, had the right to exercise a possessory lien over documents and materials he had in his possession that related to the property in question, and whether this was an appropriate means to secure payment of his alleged commission. Additionally, the court had to consider the nature and extent of a solicitor's possessory lien, and how this interacted with the rights of the property developer, Fazche.

The court held that a solicitor, such as Mounzer, does indeed have the right to a possessory lien over documents and materials necessary to perform their professional duties. However, this right is not absolute and must be balanced against the rights of the client, in this case, Fazche. The court found that Mounzer's claim for a possessory lien was valid in principle but was disproportionate in this instance given the context and the amount of debt involved. The court further determined that Mounzer's retention of the documents was not justified as it impeded Fazche's ability to complete the sale of the property. Consequently, Mounzer was ordered to return the documents to Fazche and was enjoined from exercising the lien in a manner that would unfairly prejudice Fazche's interests.

The final orders of the court required Mounzer to immediately return all documents and materials in his possession to Fazche and to cease any actions that would interfere with Fazche's ability to sell the property. Additionally, the court mandated that Mounzer provide an undertaking as to costs to Fazche for the legal proceedings.

Orders