Kekatos Lawyers Pty Ltd v Rahme (No 2)

Case •

[2023] NSWSC 651

•

16 June 2023

No judgment structure available for this case.

Supreme Court


New South Wales

Medium Neutral Citation: Kekatos Lawyers Pty Ltd v Rahme (No 2) [2023] NSWSC 651
Hearing dates: 20 April 2023
Date of orders: 16 June 2023
Decision date: 16 June 2023
Jurisdiction:Common Law
Before: Schmidt AJ
Decision:

1. Appeal allowed.

2. The application to recall the judgment is refused.

3. Mrs Rahme pay Kekatos Lawyers:

a. $35,009.50;

b. $3,916 (being $3,298 for filing fee of the Summons and $618 for the Statement of Claim);

c. $13,228.96 (pre-judgment interest);

d. its costs at first instance and on the appeal on the indemnity cost basis; and.

e. post-judgment interest in accordance with s 101 of the Civil Procedure Act 2005 (NSW).

Catchwords:

COSTS — Exceptions to general rule that costs follow the event — Misconduct of a party — abuse of process unsuccessfully defended on appeal — indemnity costs order made

JUDGMENTS AND ORDERS — Amending, varying and setting aside — For alleged errors in judgment— no error found — order recalling judgment not made

Legislation Cited:

Civil Procedure Act2005 (NSW), ss 56, 57, 58, 101

Legal Profession Uniform Law (NSW), s 169

Local Court Act 2007 (NSW), s 39

Uniform Civil Procedure Rules 2005 (NSW)

Cases Cited:

Autodesk Inc v Dyason(No 2) (1993) 176 CLR 300; [1993] HCA 6

Baillieu Knight Frank (NSW) Pty Ltd v Ted Manny Real Estate PtyLtd (1992) 30 NSWLR 359

Kekatos Lawyers Pty Ltd v Rahme [2023] NSWSC 528

Oschlack v Richmond River Council (1998) 195 CLR 72; [1998] HCA 11

Roach v R [2019] NSWCCA 160

Rose v Tunstall [2018] NSWCA 241

Category:Costs
Parties: Kekatos Lawyers Pty Ltd (Plaintiff)
Dana Rahme (Defendant)
Representation:

Counsel:
Mr Q Rares (Plaintiff)
Mr C Bevan (Defendant)

Solicitors:
Kekatos Lawyers (Plaintiff)
Solon Lawyers (Defendant)
File Number(s): 2022/118726
 Decision under appeal 
Court or tribunal:
Local Court
Jurisdiction:
Civil
Date of Decision:
29 March 2022
Before:
Hosking LCM
File Number(s):
2022/349473

JUDGMENT

  1. In Kekatos Lawyers Pty Ltd v Rahme [2023] NSWSC 528 I concluded that judgment had to be entered for Kekatos in relation to its appeal from a judgment of the Local Court given orally on 29 March 2022, dismissing its claim for payment of outstanding legal costs of some $35,009.50, that having resulted from an impermissible abuse of process, given an earlier conflicting judgment given by the Court of Appeal about the same costs.

  2. Left outstanding was the question of the orders to be made to reflect the conclusions reached and costs.

  3. Kekatos sought an indemnity costs order and Mrs Rahme, that the judgment be recalled and set aside with orders made in her favour on the appeal.

The competing orders

  1. The orders which Kekatos sought were:

“1. Appeal allowed.

2. To the extent that an application is made after judgment, that application be dismissed.

3. Mrs Rahme to pay Kekatos Lawyers:

a. $35,009.50; and

b. $3,916 (being $3,298 for filing fee of the Summons and $618 for the Statement of Claim); and

c. $13,228.96 (pre-judgment interest).

d. Mrs Rahme pay the costs of Kekatos Lawyers at first instance on the indemnity cost basis.

e. Mrs Rahme pay the costs of Kekatos Lawyers on appeal on the indemnity cost basis.

f. Mrs Rahme to pay Kekatos Lawyers post-judgment interest in accordance with section 101 of the Civil Procedure Act 2005 (NSW).”

  1. Those which Mrs Rahme sought were:

“1. The Judgment given on 18 May 2023 and published as Kekatos Lawyers Pty Ltd v Rahme [2023] NSWSC 528 be recalled and set aside.

2. The Further Amended Summons bringing an appeal to this Court from the Local Court of New South Wales filed on 1 August 2022 be dismissed.

3. The plaintiff’s Caveat Retainer costs (as defined in the revised reasons for judgment in the appeal) totalling the sum of $35,009.50, which are the subject of the plaintiff’s Statement of Claim in the Local Court of New South Wales, be deemed to have been paid in full out of the damages awarded to the defendant against Benjamin & Khoury Pty Ltd which have already been paid into the trust account of the plaintiff.

4. The plaintiff has the authority of this Court to now treat its Caveat Retainer costs in the sum of $35,009.50 as having been paid in full out of the damages already received by it from Benjamin & Khoury Pty Ltd into its trust account for the purposes of the plaintiff’s belated compliance with the trust account regulatory regime in the Legal Profession Uniform Law 2014 and the Legal Profession Uniform General Rules 2015.

5. The plaintiff pay the costs of this proceeding of the defendant on the ordinary basis.”

The application to recall the first judgment must be refused

  1. On the submissions advanced for Mrs Rahme there were errors in paragraphs [4] and [5] of the first judgment, which had fundamentally infected the reasoning which followed. In the result it had to be recalled so that judgment could be given in her favour, there being a duty to correct error before final orders were made, when a judgment had miscarried and without fault of the applicant, he or she had not been heard: Autodesk Inc v Dyason(No 2) (1993) 176 CLR 300; [1993] HCA 6. That was claimed to be supported by s 169 of the Legal Profession Uniform Law (NSW) and ss 56-58 of the Civil Procedure Act2005 (NSW).

  2. That was disputed. Kekatos’ case being that there had been no error and that the Court was functus officio, but for costs, there having been no application for leave to reopen the appeal: Roach v R [2019] NSWCCA 160.

  3. I am satisfied that the judgment cannot be recalled, nor orders made in favour of Mrs Rahme on the appeal.

  4. At [4] of the first judgment I observed:

“But Mrs Rahme’s case was, nevertheless, that Kekatos had been statute barred from bringing the Local Court proceedings and so no question of abuse of process on her part could arise for consideration. To the contrary, Kekatos bringing the Local Court proceedings had involved an abuse. In the Local Court, a motion seeking to have the proceedings struck out as an abuse of process had thus been correctly dismissed and Kekatos’ claim heard on its merits.”

  1. No doubt I could have more clearly expressed myself when describing the parties’ respective cases in the Local Court when I said that Mrs Rahme’s case included that “a motion seeking to have the proceedings struck out as an abuse of process had thus been correctly dismissed and Kekatos’ claim heard on its merits”. That is because the motion had sought to have her defence struck out.

  2. But there was no issue between the parties about the cases which they had respectively advanced in the Local Court in relation to Kekatos’ strike out motion, or that it had been dismissed, having been successfully resisted by Mrs Rahme. The result was that Kekatos’ claim was heard on the merits by the Local Court and as also explained in the first judgment, dismissed because Mrs Rahme’s evidence about the disputed costs was preferred over that of Mr Kekatos.

  3. Contrary to the submissions advanced for Mrs Rahme, the expression of paragraph [4] cannot provide a basis for recalling and setting the first judgment aside. Neither that paragraph nor paragraph [5] established a fundamental flaw which infected the reasoning later explained in that judgment.

  4. At [5] of the first judgment I said:

“It was accepted that in the Local Court there had been no issue about Kekatos’ retainer; the work which it had performed for Mrs Rahme, to which the disputed costs and invoices related; Mrs Rahme’s successful claim on her appeal from the judgment given in her Equity Division proceedings against her former solicitors, Benjamin & Khoury, in relation to a caveat which she had applied to have removed; that the costs invoices she there successfully pursued as damages were the same as those relied on by Kekatos in the Local Court; that it was those costs which had been the subject of the orders Mrs Rahme had obtained in her favour in the Court of Appeal; that she had been paid those damages; but still she had neither paid Kekatos, nor sought to have the disputed costs assessed under the Legal Profession Uniform Law (NSW) 2014.”

  1. On Mrs Rahme’s case this was also incorrect because she had paid the costs. That was because without her instructions and contrary to applicable requirements of the Legal Profession Uniform Law, Kekatos had improperly taken money which it held in trust, that having satisfied any obligation which she had to pay the disputed costs.

  2. I am satisfied that there was no error in paragraph [5] of the judgment. Mrs Rahme had not sought to have the disputed costs assessed, nor had she taken any steps to pay them before the Local Court proceedings were brought. As was explained in the submissions advanced for Mrs Rahme on the appeal, her case in the Local Court included that the disputed costs had been satisfied by funds impermissibly withdrawn by Kekatos from its trust account and used for other purposes without her instructions. But that was disputed.

  3. This claim was not determined in Mrs Rahme’s favour in the Local Court. But she did not, as she could have, either appeal the Local Court’s decision or file a notice of contention raising these issues on Kekatos’ appeal. Instead, over objection, she was permitted to explain in her submissions the case she had advanced in the Local Court about the withdrawal from trust. It was those submissions on which her application to have the first judgment set aside rested.

  4. Mrs Rahme’s case for withdrawal of the judgment and orders being made in her favour on the appeal thus depend on factual findings which have not been made in her favour, as well as on a disputed construction of the legislative scheme, which was not determined by the Local Court.

  5. Even if either had arisen to be determined on Kekatos’ appeal, under s 39 of the Local Court Act 2007 (NSW), when an error of law has been established, the Supreme Court does not have the power to make findings of primary fact: Rose v Tunstall [2018] NSWCA 241 at [31]. Without such findings, no orders can be made in favour of Mrs Rahme.

  6. In the result, the judgment cannot be recalled, nor can orders be made in favour of Mrs Rahme on the appeal, as she seeks.

Should there be a departure from the usual costs order?

  1. There was no issue about the Court’s power to make the orders sought by Kekatos.

  2. A departure from the usual costs order under the Uniform Civil Procedure Rules 2005 (NSW), in favour of the successful party on a party/party basis, will be made when there has been relevant misconduct in the proceedings: Oschlack v Richmond River Council (1998) 195 CLR 72; [1998] HCA 11.

  3. Kekatos contended that given the course which Mrs Rahme had pursued, her case in the Local Court having involved an abuse of process as it did, which she defended unsuccessfully on the appeal, a departure from the usual costs order was warranted, she having pursued frivolous and unjustified defences: Baillieu Knight Frank (NSW) Pty Ltd v Ted Manny Real Estate PtyLtd (1992) 30 NSWLR 359 at 362B.

  4. The arguments advanced in favour of having the judgment recalled were also submitted to be plainly wrong, amounting to no more than a disagreement with the Court’s conclusions about the parties’ cases on the appeal, as well as an impermissible elaboration of the reasons for that disagreement.

  5. Given the conclusions which I reached about the abuse of process Mrs Rahme pursued successfully in the Local Court and unsuccessfully defended on this appeal, I am satisfied that justice does require that there be an indemnity costs order made in Kekatos’ favour. Nothing advanced for Mrs Rahme provides a basis on which the contrary view can justly rest.

Orders

  1. For these reasons I order that:

  1. Appeal allowed.

  2. The application to recall the judgment is refused.

  3. Mrs Rahme pay Kekatos Lawyers:

  1. $35,009.50;

  2. $3,916 (being $3,298 for filing fee of the Summons and $618 for the Statement of Claim);

  3. $13,228.96 (pre-judgment interest);

  4. its costs at first instance and on the appeal on an indemnity cost basis; and

  5. post-judgment interest in accordance with s 101 of the Civil Procedure Act.

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Decision last updated: 16 June 2023

Cases Citing This Decision

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