Karafili v Li - [2006] VSC 174

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMON LAW DIVISION

No. 6436 of 2005

MITCH MITAT KARAFILI	Appellant
v
SHUN KING LI	Firstnamed Respondent
ANGELINA LI	Secondnamed Respondent
JAMIE KHENG LOONG LI	Thirdnamed Respondent
KARLIN ALESSANDRA LI	Fourthnamed Respondent
PELIN ANDRIA LI	Fifthnamed Respondent
SEALANE (VIC) PTY LTD	Sixthnamed Respondent
IREKAWA PTY LTD	Seventhnamed Respondent
LISKING PTY LTD	Eightnamed Respondent
MANISSA PTY LTD	Ninthnamed Respondent
RAVENHOLME PTY LTD	Tenthnamed Respondent
RHINAN PTY LTD	Eleventhnamed Respondent
TODD PTY LTD	Twelthnamed Respondent

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JUDGE:	OSBORN J
WHERE HELD:	MELBOURNE
DATE OF HEARING:	1 MAY 2006
DATE OF JUDGMENT:	4 MAY 2006
CASE MAY BE CITED AS:	KARAFILI v LI AND ORS
MEDIUM NEUTRAL CITATION:	[2006] VSC 174	2^nd Revision: 15 September 2006

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Termination by Appellant of retainer for accountancy services – Appellant claims fees – Respondents counter-claim for loss resulting from termination of retainer – No right to assert lien over working papers in circumstances where incorrect amount of fees insisted upon - Whether total failure of consideration – Appeal allowed in part as incorrect party named in counterclaim.

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APPEARANCES:	Counsel	Solicitors
For the Appellant	Mr. L.M.F. Watts	Andma Legal Pty Ltd
For the Respondents	Mr. M.A. Black	Scanlan Carroll

HIS HONOUR:

This is an appeal by the appellant Karafili against an order made upon a counterclaim in the Magistrates' Court. The appeal is brought upon questions of law pursuant to s.109 of the Magistrates Court Act 1989.

The appellant is an accountant who was retained first in 1997 by the first respondent ("Li") to prepare accounts for himself and the companies associated with Li.

The retainer was evidenced in part by copy letters from Karafili to Li of 30 November 1998 and 11 August 1999. The second letter states in part:

"I, Mitch Karafili have agreed with Mr Li and his associated companies, to perform all accounting work or accountancy related work for a period of 12 months effective as at 1 July 1999 and to continue to 31 June 2000 at the rate of $18,000 per annum or $15,000 per month.
The preparation of all income tax returns relating to the period to end 31 June 2000 are included in this agreement even if those returns are prepared after 30 June 2000. However, Out of Pocket Costs are to be paid upon presentation of invoice." (sic)

The relationship between the parties broke down and was terminated by Karafili in April 2001.

Thereafter Karafili sued Li for outstanding fees in the sum of $27,401. After the commencement of proceedings this claim was reduced to $20,899 in accordance with a reconciliation of accounts produced by Karafili. When the matter came on for hearing it was further reduced and judgment was given by Magistrate Smith on the claim in the sum of $12,146.76 plus interest plus costs in February 2004. This judgment comprised fees for services owing in respect of accounts for what were agreed to be "non-Li entities". These entities were companies in which persons other…

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 Karafili v Li

Details

AGLC: Karafili v Li [2006] VSC 174
Case: [2006] VSC 174
Decision Date: 4 May 2006

CaseChat Overview and Summary

Karafili v Li was a case heard by the Supreme Court of Victoria where the appellant, Karafili, terminated their retainer with Li, an accountancy firm, and subsequently claimed fees for services rendered. Li counter-claimed for losses resulting from the termination of the retainer, including a claim for a lien over working papers. The court had to determine whether Karafili had a right to assert a lien over the working papers given the circumstances of the termination and the insistence on an incorrect amount of fees. Additionally, the court needed to decide if there was a total failure of consideration.

The court held that Karafili did not have the right to assert a lien over the working papers as the insistence on an incorrect amount of fees constituted a breach of contract. The court found that there was no total failure of consideration as some services were provided, albeit with an incorrect fee structure. The appeal was allowed in part due to an error in the naming of the party in the counter-claim, which was deemed a procedural defect. The decision highlighted the importance of correctly identifying parties in legal documents to avoid potential dismissals or amendments.

The court ordered that the appeal be allowed in part, correcting the naming error in the counter-claim, and directed the parties to negotiate the fees owed based on the services actually rendered. The court also ruled that Li could not assert a lien over the working papers due to the incorrect fee demand by Karafili. This decision serves as a reminder of the importance of clear contractual terms and the consequences of procedural errors in legal proceedings.

Orders