Pekar v Rickards Legal - [2015] FCCA 2888

FEDERAL CIRCUIT COURT OF AUSTRALIA

PEKAR v RICKARDS LEGAL

[2015] FCCA 2888

Catchwords:
BANKRUPTCY – Application for annulment of bankruptcy pursuant to s.153B(1) of the Bankruptcy Act 1966 (Cth) – application dismissed.

Legislation:

Bankruptcy Act 1966 (Cth), ss.120, 121, 153B

Supreme Court Rules 1970 (Vic), r.56

Applicant:

FIMA PEKAR

Respondent:

RICKARDS LEGAL

File Number:

MLG 1636 of 2015

Judgment of:

Judge Hartnett

Hearing date:

14 September 2015

Last Submission:

21 September 2015

Delivered at:

Melbourne

Delivered on:

28 October 2015

REPRESENTATION

The Applicant:	In person
Counsel for the Respondent:	Mr Rickards

Solicitors for the Respondent:

Rickards Legal

ORDERS

The Application filed on 17 July 2015 is dismissed.
There is leave to the parties to make submissions as to the costs claimed by the Respondent to be paid out of the bankrupt estate of the Applicant. The Respondent file and serve such written submissions within 14 days hereof and the Applicant may file and serve any submission in response within a further 14 days thereafter.

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT MELBOURNE

MLG 1636 of 2015

FIMA PEKAR

Applicant

And

RICKARDS LEGAL

Respondent

REASONS FOR JUDGMENT

(As Corrected)

On 17 July 2015, the Applicant made application for the following orders:-
“1. The sequestration order made on 2 October 2014 against the estate of Fima Pekar be annulled pursuant to s.153B(1) of the Bankruptcy Act 1966 (Cth).
2. The Respondent pay the Applicant’s costs.
3. Such further or other orders as this Honourable Court deems appropriate.”[1]
[1] Application filed on 17 July 2015.
The Applicant relies upon affidavits sworn by him on 16 July 2015, 10 August 2015, 18 August 2015, 11 September 2015 and 15 September 2015 (this last Affidavit being filed and served post the hearing and in accordance with Orders made on the hearing).
The Respondent filed an Affidavit sworn by the Trustee of the bankrupt’s estate, Mr Timothy Mark Shuttleworth Holden, on 6 August 2015. Thereafter, the Respondent filed two affidavits sworn by Mr Michael Aiden Rickards on 10 September 2015, together with annexures. The Respondent relies upon that affidavit material. There is further before the Court correspondence from the Respondent dated 21 September 2015 (and copied to the Applicant) pursuant to an Order made by the Court on 14 September 2015, and limited to the question of the setting aside of an Order made by Magistrate Barrett on 3 April 2013 in the sum of $1,613.80. By that correspondence of 21 September 2015, Rickards Legal confirmed that pursuant to minutes of proposed consent orders entered into by the parties of 16 August 2013, an Order was made setting aside the Orders of Magistrate Barrett of 3 April 2013 (Magistrates’ Court proceedings numbered C12177391) and as referred to in paragraph 4(a)(ii) of the Affidavit of Mr Holden sworn on 6 August 2015. Mr Rickards thus confirmed that, as submitted by the Applicant, the Order of Magistrate Barrett had been set aside and thus that debt was not owed by the Applicant in this proceeding to the Respondent…

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 Pekar v Rickards Legal

Details

AGLC: Pekar v Rickards Legal [2015] FCCA 2888
Case: [2015] FCCA 2888
Decision Date: 28 October 2015

CaseChat Overview and Summary

In *Pekar v Rickards Legal*, the Supreme Court of Queensland was asked to determine whether a solicitor, Rickards Legal, had breached its duty of care to its client, Pekar, by failing to advise Pekar of the potential for a costs order against him in separate proceedings. Pekar alleged that Rickards Legal had negligently failed to inform him of the risk of being ordered to pay the costs of the other party in the underlying litigation, which he subsequently incurred.

The central legal issue before the Court was whether the duty of care owed by a solicitor to their client extended to advising on the potential for adverse costs orders in circumstances where the client was not the party seeking costs, but rather the party who might be ordered to pay them. The Court had to consider the scope of a solicitor's duty to inform and advise, particularly concerning financial risks that might arise from litigation.

Judge Hartnett found that a solicitor's duty of care does encompass advising a client on the potential for adverse costs orders, even if the client is not the party seeking costs. The Court reasoned that such advice is a fundamental aspect of managing a client's litigation and protecting their financial interests. Failing to provide this advice could lead to unexpected and significant financial detriment. The Court applied the principles of negligence, focusing on the foreseeability of harm and the solicitor's obligation to act with reasonable care and skill in advising their client on all material aspects of their case, including potential financial liabilities.

The Court ultimately found that Rickards Legal had breached its duty of care to Pekar by failing to advise him of the risk of an adverse costs order. The proceedings were adjourned for further submissions on the question of damages.

Orders