Phoenician Holdings Pty Ltd t/as Cadmus Lawyers v Rahme

The defendants, Mr and Mrs Rahme, sought to have a portion of funds held in a controlled monies account by the plaintiff, Phoenician Holdings Pty Ltd trading as Cadmus Lawyers, be withdrawn to fund their defence in another legal proceeding. The plaintiff had acted as the Rahmes' solicitor and had executed a deed of charge to secure payment of costs and disbursements payable to it. The defendants subsequently executed a mortgage under the Real Property Act 1900 (NSW) in favour of the plaintiff as mortgagees in respect of those costs. The property was sold and the Court ordered that the defendants pay an amount into a controlled monies account. The defendants sought to have a portion of the controlled monies be withdrawn for the purpose of defending their other unrelated legal proceeding. The plaintiff opposed this on the basis that its right to security under the deed could be jeopardised if paid out to the defendants. The plaintiff also submitted that it cannot be excluded that it may be able to substantiate its costs claims against the defendants. The court had to decide whether the defendants had established that they were unable to fund their defence from other sources. The court noted that it was difficult in interlocutory proceedings to reduce the value of the security. The court found that the defendants had not sufficiently established that they were unable to fund their defence from other sources. The court was not satisfied that the defendants had provided sufficient evidence to demonstrate their inability to fund the defence from other sources. The court found that it was difficult in interlocutory proceedings to reduce the value of the security and that the plaintiff’s right to security under the deed could be jeopardised if paid out to the defendants. The court found that the defendants had not established that they were unable to fund their defence from other sources. The court refused the defendants’ application.