Naro Investments Pty Ltd v Benjamin and Khoury Pty Ltd

Naro Investments Pty Ltd, the plaintiff, filed proceedings against Benjamin and Khoury Pty Ltd, the defendant, seeking to set aside a settlement deed that had been entered into between the parties. The former solicitors, acting on retainer between October 2016 and July 2017, found themselves in dispute with their former clients over the quantum of fees charged for their legal services. After the termination of the retainer, the former clients engaged new solicitors to conduct the costs dispute, which culminated in a settlement deed in December 2018. The present proceedings were initiated by the former clients in November 2019, seeking to set aside the settlement deed on various grounds. They alleged that the settlement deed was procured by the former solicitors in breach of their fiduciary duty, as a result of a relationship of undue influence, or due to the former solicitors’ unconscionable conduct and economic duress. The former solicitors, in turn, brought a cross-claim for judgment and interest due under the settlement deed and sought summary dismissal of the plaintiff’s claim and summary judgment on their cross-claim.

The legal issues that the court was required to decide included whether the former solicitors breached their fiduciary duty, whether a relationship of undue influence existed between the parties, and whether the former solicitors engaged in unconscionable conduct or economic duress. Additionally, the court had to determine whether the plaintiff's claim was sufficient to withstand a motion for summary dismissal and whether the defendants were entitled to summary judgment on their cross-claim.

In dismissing the plaintiff's claim and granting summary judgment in favour of the defendant on their cross-claim, the court found that the plaintiff had not made out a prima facie case against the defendant on any of the grounds alleged. The court concluded that the plaintiff's claims of breach of fiduciary duty, undue influence, unconscionable conduct, and economic duress were not substantiated by the evidence. The court further found that the settlement deed was a product of arm’s length negotiations and that there was no evidence of any improper conduct by the former solicitors. The court ordered that the plaintiff's claim be dismissed with costs to the defendant. Furthermore, the court ordered that judgment be entered in favour of the defendant on their cross-claim, with interest to be calculated from the date of the settlement deed.