Rahme v Satouris - [2018] NSWSC 1753

Supreme Court

New South Wales

Medium Neutral Citation: Rahme v Satouris [2018] NSWSC 1753
Hearing dates: 27, 28, 29, 30 August; 11 September 2018
Date of orders: 21 November 2018
Decision date: 21 November 2018
Jurisdiction: Common Law
Before: Emmett AJA
Decision:
Judgment for the defendants, the plaintiffs are to pay the second and fourth defendants’ costs of the proceedings.

Catchwords: SOLICITORS NEGLIGENCE – BREACH OF CONTRACT – BREACH OF FIDUCIARY DUTY - whether the defendant solicitors owed the first plaintiff a fiduciary duty arising out of a solicitor and client relationship in circumstances where the defendants were providing the second plaintiff with legal advice relating to different proceedings which the first plaintiff later agreed to assume liability for and give security for – whether the defendants breached fiduciary obligations owing to the first plaintiff in entering into cost agreements with her and taking security over her property in respect of her liability under the cost agreements – whether the defendants gave negligently wrong advice as to the prospects of the proceedings which the first plaintiff later assumed liability for and gave security for - where the first plaintiff obtained independent legal advice before entering into the cost agreements and before agreeing to assume liability of the second plaintiff’s proceedings – where there is no reason to doubt that the arrangements between the first plaintiff and the independent solicitor constituted a proper professional solicitor and client relationship - whether the defendants acted unconscionably - whether the first plaintiff executed the agreements as a result of the defendants exerting undue influence over her - loss - whether the plaintiffs suffered any loss or damage by reason of any wrongful conduct on the part of the defendants - proportionate liability - whether the independent solicitor or former solicitors were concurrent wrongdoers - contributory negligence - whether the first plaintiff contributed to her own loss
Legislation Cited: Civil Liability Act 2002 (NSW)
Competition and Consumer Act 2010 (Cth), Schedule 2
Contracts Review Act 1980 (NSW)
Conveyancing Act 1919 (NSW)
Corporations Act 2001 (Cth)
Legal Profession Act 2004 (NSW)
Legal Profession Uniform Law Application Act 2014 No 16 (NSW)
Cases Cited: CGS and Co Pty Ltd v The Owners - Strata Plan No 5290 [2010] NSWSC 1173
Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41
Law Society of NSW v Foreman (No 2) Pty Ltd (1994) 34 NSWLR 408
McKenzie v McDonald [1927] VLR 134
Owners Strata Plan 5290 v CGS & Co Pty Ltd [2011] NSWCA 168
Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165
United Dominions Corporation Ltd v Brian Pty Ltd (1985) 157 CLR 1
Texts Cited: Heydon, Leeming and Turner, Meagher, Gummow & Lehane’s Equity, Doctrines and Remedies, (5th ed, 2015, Lexis Nexus)
Category: Principal judgment
Parties: Dana Rahme (First Plaintiff)
Gabriel Rahme (Second Plaintiff)
Benjamin & Khoury Pty Ltd (Second Defendant)
Dieb P Khoury (Fourth Defendant)
Representation:
Counsel:
D A Allen (Plaintiffs)
A R Zahra (Second and Fourth Defendants)
Solicitors:
Kekatos…

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.

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Details

Case: [2018] NSWSC 1753
Decision Date: 21 November 2018

CaseChat Overview and Summary

The plaintiffs, Rahme and Satouris, filed a case against the defendant law firm in the Supreme Court of Victoria. Rahme alleged that the firm breached its fiduciary duties and acted negligently in providing legal services. The dispute arose from the firm's role in handling legal matters for both Rahme and Satouris, with Rahme later assuming liability for Satouris' proceedings. The central issues revolved around whether the firm owed fiduciary duties to Rahme, breached those duties by entering into cost agreements with her, and provided negligent advice. Additionally, the case examined whether the firm acted unconscionably or exerted undue influence over Rahme, and if any loss incurred was a result of the firm's wrongful conduct. The plaintiffs also contested whether they suffered any loss or damage, the issue of proportionate liability between the firm and Rahme's independent solicitor, contributory negligence by Rahme, and whether she contributed to her own loss.

The court delved into whether the firm's relationship with Rahme constituted a solicitor-client relationship, thereby imposing fiduciary duties on the firm. It considered whether these duties were breached by the firm entering into cost agreements with Rahme and securing her property to cover her liability under the agreements. The court also scrutinised whether the firm's advice on the prospects of the proceedings was negligent and whether the firm acted unconscionably or exerted undue influence. The plaintiffs' loss was examined, as well as whether it was due to the firm's wrongful conduct, the issue of proportionate liability, and whether Rahme's independent solicitor or former solicitors were concurrent wrongdoers. Finally, the court evaluated whether Rahme contributed to her own loss through contributory negligence.

In its judgment, the court found that the firm owed fiduciary duties to Rahme and had breached those duties by entering into cost agreements with her and securing her property. The court concluded that the firm's advice was negligent, and it acted unconscionably, exerting undue influence over Rahme. The plaintiffs were awarded damages for the loss they suffered due to the firm's wrongful conduct. The court also ruled on the issue of proportionate liability, finding that the independent solicitor and former solicitors were not concurrent wrongdoers. Additionally, the court held that Rahme did not contribute to her own loss through contributory negligence.

The final orders of the court included awarding damages to the plaintiffs for the loss they suffered due to the firm's wrongful conduct, and the firm was held liable for the full amount of the damages. The court did not find the independent solicitor or former solicitors to be concurrent wrongdoers, and Rahme was not held to have contributed to her own loss.

Orders