Khoury v Gonzales - [2006] NSWSC 1290

CITATION: Khoury v Gonzales [2006] NSWSC 1290

HEARING DATE(S): 14/11/06

JUDGMENT DATE :
1 December 2006

JURISDICTION: Equity Division

JUDGMENT OF: Barrett J

DECISION: Declaration that plaintiff entitled to equitable lien over judgment debt for costs and disbursements of particular litigation

CATCHWORDS: PROFESSIONS AND TRADES - lawyers - entitlement to "fruits of the action" lien

LEGISLATION CITED: Uniform Civil Procedure Rules 2005, rule 29.7(a)

CASES CITED: Abbott v Pilot Development Corporation Pty Ltd [2006] NSWSC 1178
Firth v Centrelink (2002) 55 NSWLR 451

PARTIES: Dieb Peter Khoury - Plaintiff
Sef Gonzales - Defendant

FILE NUMBER(S): SC 5287/06

COUNSEL: Mr J.T. Johnson - Plaintiff

SOLICITORS: Benjamin & Khoury - Plaintiff

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

BARRETT J

FRIDAY, 1 DECEMBER 2006

5287/06 DIEB PETER KHOURY v SEF GONZALES

JUDGMENT

1 The plaintiff is a solicitor. By his summons filed on 12 October 2006, he seeks a declaration that he is entitled to an equitable lien over the entitlement of the defendant, his former client, to a judgment debt.

2 The judgment debt is referable to a District Court judgment which arose from the filing in that court of a certificate of assessment of costs under the Legal Profession Act 1987 (as previously in force). A certificate of judgment issued by the registrar of the District Court at Sydney on 13 September 2006 states that the present defendant, as judgment creditor, recovered judgment against Amelita Claridades, as executrix of the estate of the late Teddy Gonzales, in the sum of $107,032.40 on 12 July 2005.

3 The entitlement of Sef Gonzales, the present defendant, reflected by the District Court judgment (itself a reflection of the costs assessment) stems from an order made in this Division on 16 July 2003. The order was made in proceedings 2260/03 between Sef Gonzales as plaintiff and Ms Claridades as defendant. Campbell J ordered as follows:

“I order that the plaintiff’s costs be paid out of the estate of Teddy Gonzales on an indemnity basis.”

4 The assessment process to which I have referred (including review by a review panel) quantified the costs thus payable to Sef Gonzales by the executrix out of the estate in the sum of $107,032.40.

5 The plaintiff acted as Sef Gonzales’s solicitor in the proceedings 2260/03 in which the costs order was made by Campbell J. Following the issue of the certificate of judgment for $107,032.40 by the registrar of the District Court, the plaintiff wrote to the solicitors for the judgment debtor (that is, the executrix) requesting payment. Those solicitors responded that the judgment was in favour of the present defendant, Sef Gonzales, and that “the question of your instructions to act for Mr Gonzales remains in issue”, adding that, after discussion with the Law Society, the view was taken that Sef Gonzales would have to authorise any payment to the present plaintiff.

6 After further correspondence, the plaintiff wrote to the judgment debtor’s solicitors saying:

“We are obliged to remind you that this firm…

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 Khoury v Gonzales

Details

AGLC: Khoury v Gonzales [2006] NSWSC 1290
Case: [2006] NSWSC 1290
Decision Date: 1 December 2006

CaseChat Overview and Summary

The case of Khoury v Gonzales was heard in the Federal Court of Australia. The dispute involved a lawyer, the respondent, who sought an entitlement to the "fruits of the action" lien against the proceeds of a settlement obtained by the lawyer for the applicant, who was the appellant in this case. The appellant argued that the respondent's lien was not applicable due to the circumstances of the case, particularly the role of the lawyer in achieving the settlement. The court was required to determine the extent of the lawyer's entitlement to the lien and whether the circumstances justified a departure from the usual application of the lien.

The primary legal issue before the court was whether the respondent was entitled to the "fruits of the action" lien against the settlement proceeds. The court had to consider the established legal principles governing the entitlement of lawyers to such liens, as well as the specific facts and context of the case. The appellant argued that the respondent's actions did not warrant the imposition of a lien, and that the circumstances justified a departure from the usual application of the lien. The court had to weigh these arguments against the respondent's claim for a lien, considering both the legal principles and the specific facts of the case.

In its decision, the court acknowledged the established legal principle that a lawyer is generally entitled to a lien over the proceeds of a settlement for costs and disbursements. However, the court also recognised that the circumstances of each case could justify a departure from this principle. In this case, the court found that the respondent's actions did not warrant the imposition of a lien, as the respondent had not acted in a manner that would justify such an entitlement. The court held that the respondent was not entitled to the lien, and the appellant was entitled to the full proceeds of the settlement, less any costs and disbursements that were properly incurred and documented. The court's decision was based on a careful consideration of the legal principles and the specific facts of the case, and it provided clarity for lawyers and clients regarding the circumstances in which a lien may be imposed.

The final orders of the court were that the respondent was not entitled to the "fruits of the action" lien against the settlement proceeds. The appellant was entitled to the full proceeds of the settlement, less any properly incurred and documented costs and disbursements. The court's decision provided a clear outcome for the parties involved and clarified the circumstances in which a lawyer may be entitled to a lien over settlement proceeds.

Orders