Phoenician Holdings Pty Limited t/as Cadmus Lawyers v George Maroun Rahme
[2016] NSWSC 435
•7 April 2016
|
New South Wales |
Case Name: | Phoenician Holdings Pty Limited t/as Cadmus Lawyers v George Maroun Rahme & Anor |
Medium Neutral Citation: | [2016] NSWSC 435 |
Hearing Date(s): | 7 April 2016 |
Decision Date: | 7 April 2016 |
Jurisdiction: | Common Law |
Before: | Sackar J |
Decision: | See Para [22] |
Category: | Principal judgment |
Parties: | Phoenician Holdings Pty Ltd t/as Cadmus Lawyers (plaintiff) |
Representation: | Counsel: |
File Number(s): | 2012/273084 |
Publication Restriction: | n/a |
Judgment – Ex tempore
HIS HONOUR: By their notice of motion, the defendants seek to amend their defence and their cross-claim.
Both of the proposed amended pleadings are to be found in exhibit BH2 to an affidavit of Mr Benjamin James Hemsworth sworn 17 November 2015. The plaintiff opposes the proposed amendments on a number of grounds.
The proceedings have had a somewhat long and chequered history. They involve essentially a claim by the plaintiff, a law firm, against its former clients, the defendants for what is alleged to be outstanding fees. The amount of those fees outstanding and the basis upon which they are said to be owed are and have always been in issue between the parties. The plaintiff alleges that the fees are secured by a mortgage and a charge.
The proceedings were originally commenced by way of summons. Gzell J who was to hear the matter for three days in late February 2013 ordered earlier in that month that a statement of claim and defence should be filed.
However prior to that hearing the defendants exercised their right to require costs assessments to be undertaken so as to determine the precise basis and quantum of fees allegedly owed by the defendants. That process, along with other complaints from time to time made by the defendants to both the Law Society and the Legal Services Commissioner, occupied the parties for the best part of the next three years. All of those matters were ultimately finalised some time late in 2015.
When the matter came on for hearing, in late February 2013, the plaintiff was forced to accept that the trial could not proceed and that the defendants were entitled to proceed with the cost assessment process.
As at that point, the defence essentially denied the validity, and enforceability of the mortgage and charge which had been executed by Mr and Mrs Rahme.
In addition the defendants had filed a cross-claim. The cross-claim as it then stood asserted that through a series of false representations the solicitor, Mr Elias, from the plaintiff's law firm, had induced Mr and Mrs Rahme to enter the mortgage and the deed of charge on the basis that by doing so they would create an advantageous position forensically and legally for themselves in relation to other proceedings which had been brought by Arab Bank against the defendants. Mr Elias denied the falsity of any such representations he made.
As at late 2012 the parties had filed their evidence purporting to deal with the various factual assertions and counter assertions, made by each of Mr Elias and/or Mr and Mrs Rahme. That evidence has not been supplemented since that time and remains part of the court book which was provided to Gzell J for the purpose of the hearing in February 2013.
The matter then came before Bergin CJ in Eq in March of 2013 for directions. Again it seems the plaintiff was forced to accept that the proceedings would have to be stayed given the status of the process of costs assessment.
Discussion took place before Bergin CJ in Eq which lead to leave being granted to the defendants to amend their defence and cross-claim. That leave was not at the time exercised. Indeed it was not until late 2015 that the actual form of the proposed amendments which the defendants sought were provided to the plaintiff. However from October or November 2015 it seems to me the defendants have actively sought to agitate the amendments. This followed the finalisation of the costs assessment process and the other matters to which I have made reference.
The bases for the opposition to the proposed amendments are numerous but in summary include that it would be antithetical to the quick, cheap and efficient resolution of litigation to enable the amendments to occur at this stage. That is further amplified by counsel for the plaintiff in a number of ways. It was said in written submissions that there are new factual assertions raised by the proposed pleading and it was now a different case of a much wider ambit to that which had originally been pleaded.
It is true that the legal basis for the case proposed has changed. The proposed allegations involve whether given the factual circumstances, the solicitor, Mr Elias, either breached his fiduciary obligations in procuring the mortgage and charge, and/or whether he breached the solicitor's rules by doing so, and/or whether he took advantage of Mr and Mrs Rahme preferring his own commercial interests in circumstances where it was not in their interest to enter the transactions. In addition it is asserted Mr and Mrs Rahme entered the transactions without having the benefit of independent legal advice.
Whilst it is true that the legal issues are more elegantly and differently framed, and it is also true that they are wider, than the original cross claim, Senior Counsel for the defendants said, and I accept that his clients do not seek to amplify the factual basis upon which their case is brought. In other words the affidavits already filed by the defendants will not be supplemented notwithstanding the change to the legal issues.
It seems to me that cases such as Aon do not really have application in the present circumstances. The parties presently do not have a hearing date and one is unlikely to be given, much before the middle to the end of this year. The defendants do not seek to amplify their case factually. That is an important discretionary consideration in my mind because it goes to questions of fairness, interests of justice and of course very much to the question of prejudice.
The case has been delayed, through no real fault of either side. It has simply been delayed because the defendants undertook a costs assessment process which has assisted in quantifying the costs with some precision. That exercise would at some point have to be done in any event.
Mr Tregenza, who appears for the plaintiff, has indicated if the amendments were granted his clients would need to consider whether they wish to place additional documentary material before the court pertaining to other mortgages and the like executed by Mr and Mrs Rahme.
Obviously if that were to occur the defendants would be given a proper opportunity to meet, if appropriate, any additional material filed for the plaintiff. However given the fact there is no hearing date and no hearing date is likely before some time later this year, it does not seem to me where the factual material is already on affidavit before the Court, that any real prejudice could flow to the plaintiff which could not be amply addressed by an appropriate costs order if required.
However those considerations to one side, the essential reason why I consider the amendments are appropriate, is that the fundamental allegation of the validity and enforceability of the mortgage and charge has been at the centre of this litigation from day one. That has not changed. The legal basis for the defendants avoiding the mortgage and/or charge has changed but is limited to the same facts. As I have said all of the evidence (especially from the defendants) has been filed since about 2012. It may theoretically be amplified, it is true, but I suspect it will not be amplified in any substantial way. At least that is the way I see it at the moment.
Consequently it seems to me in order that the real issues be determined between the parties it would be fair, appropriate and in the interests of justice to allow the proposed amendments.
For those reasons I consider it appropriate that I grant leave to the defendants to file the amended defence and cross-claim in the form proposed which is annexed as part of exhibit BH2 at pages 168 and following.
I will however in all the circumstances reserve all questions of costs. That issue is in my view best left until the parties respective cases are fully and finally exposed.
**********
0
0
0