Runge v Dentakos - [2007] FMCA 997

FEDERAL MAGISTRATES COURT OF AUSTRALIA

RUNGE v DENTAKOS

[2007] FMCA 997

PRACTICE & PROCEDURE – BANKRUPTCY – Failure of solicitor to appear – costs thrown away.

Federal Magistrates Court Rules2001 rr.9.03, 21.07

Applicant:

RAINER RUNGE

Respondent:

ANASA ANGELIQUE DENTAKOS

File number:

MLG 261 of 2007

Judgment of:

Riethmuller FM

Hearing date:

29 May 2007

Date of last submission:

29 May 2007

Delivered at:

Melbourne

Delivered on:

29 May 2007

REPRESENTATION

Counsel for the Applicant:

Mr J.P. Foster

Solicitors for the Applicant:

Patrick Cannon Coburn & Associates

No appearance for the Respondent

Solicitors for the Respondent

Starnet Legal Pty Ltd

ORDERS

Starnet Legal and Kimani Boden pay the costs thrown away of 28 May 2007 fixed at $1650.
The estate of the bankrupt pay the balance of the petitioning creditors' costs as taxed.
That the Registrar provide a copy of these reasons for judgment and the orders in this matter to the Law Institute of Victoria and the appropriate disciplinary body with respect to the conduct of Starnet Legal and the two solicitors involved.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
MELBOURNE

MLG 261 of 2007

RAINER RUNGE

Applicant

And

ANASA ANGELIQUE DENTAKOS

Respondent

REASONS FOR JUDGMENT

(As revised from Transcript)

This is a creditors' petition pending against Anasa Angelique Dentakos. The matter has had a lengthy history, both in this court and in the state courts. The matter came before me yesterday for determination of the creditors' petition with affidavit material having been filed by the creditor and an affidavit and response having been filed by Ms Dentakos.
Ms Dentakos filed her notice of opposition on 18 May 2007, together with a supporting affidavit on the same date. Both those documents were prepared by Mr Kimani Boden of Starnet Legal Pty Ltd of East Brunswick.
The matter was called on yesterday morning at which time no-one appeared on behalf of the respondent or Starnet Legal. Ms Rajasekaram attended earlier in the morning and advised Counsel for the applicant that Starnet Legal were no longer acting for the respondent and that they did not intend to appear.
At the suggestion of counsel for the applicant, Ms Rajasekaram wrote out a note to the court with the court heading, stating:
Starnet Legal Pty Ltd no longer act for the respondent. Starnet Legal do not have any instructions from the respondent, Starnet Legal -
The words ‘signed by Starnet Legal’ appear above the heading Starnet Legal PL, under which her name appears.
No notice of withdrawal was filed in accordance with r.9.03 of the Federal Magistrates Court Rules, nor did the solicitor appear to seek leave to withdraw despite the noncompliance with the rule.
I adjourned the matter until 2.30pm that day and directed my Associate and Counsel for the applicant to both contact the solicitor who had arrived at the court in the morning and advise her that her appearance was required. She appeared and stated that she had no instructions, she had no copy of the file, she did not have the file with her, she believed the client was overseas but was unable to give any information as to what contact the firm had had with the client, nor any information as to the state of knowledge of the client with respect to these proceedings in which Starnet Legal Pty Ltd had filed a notice of conditional appearance, a notice of opposition and an affidavit.
The solicitor appearing did not bring a copy of the rules and seemed entirely unaware of the requirements in the rules that a solicitor either file a notice of withdrawal in accordance with the rules or appear and seek leave to withdraw from the court. As a result, I made orders yesterday adjourning the matter to 9.30am today and directing that the solicitor with the conduct of the matter on behalf of the respondent appear personally this morning at 9.30am.
I note that yesterday I also made directions that the court would consider ordering the solicitor for the debtor to pay the costs thrown away of yesterday at $1650 so that there was no question that the solicitors would have notice of this issue for today.
It was stated yesterday by the solicitor appearing that the solicitor with the conduct of the matter was Mr Kimani Boden. There has been no appearance this morning by Mr Kimani Boden, no appearance on behalf of Starnet Legal Pty Ltd and no appearance by Ms Rajasekaram. There has been no notice of withdrawal filed in accordance with r.9.03. There has been no formal application filed seeking leave to withdraw. There has been no communication with my Associate seeking to have the matter set at a different time or other orders made.
Mr Foster, nor surprisingly, wished to proceed with the creditors' petition, seeing the conduct of the respondent and Starnet Legal as impeding the proper progression of the matter and his client's rights.
I note that the effect of r.9.03, is to ensure that a litigant has not less than seven days' notice that their lawyer may cease to act for them. This ensures that they have a proper opportunity to either appear personally or engage another lawyer should they wish to do so, so as to ensure that the court's business can proceed in the usual fashion and that the litigant does have actual notice of the fact that the lawyer does not intend to continue to act. The formal notice of intention to withdraw and notice of withdrawal provide notice to the client lest there be any doubt of the forthcoming court date. This ensures that a solicitor ceasing to act on behalf of a client does not become a cause of a client being unaware of the date that a matter is proceeding or being unaware that there would be no appearance before the court on behalf of the client and thus ensures that procedural fairness is effected in an appropriate manner for the business of the court in this country.
It appears to me that:
a)the conduct of Starnet Legal in sending a junior solicitor, Ms Rajasekaram, without any details of the file to the court yesterday was a breach of the solicitor's obligations to the court;
b)for any solicitor to attend the court and fail to appear and then later to appear without any knowledge of the file or even perusing the rules, as Ms Rajasekaram did in the afternoon, also appears to me to be a significant lapse in her professional obligations;
c)the failure of Mr Kimani Boden or Ms Rajasekaram or someone else on behalf of Starnet Legal to appear this morning before the court when the matter was called on or indeed at all is a significant breach of the solicitor's obligations to the court in a matter of this type.
I have considered these circumstances, together with the rights of the applicant in these proceedings and determined that the most appropriate course with respect to the applicant is to allow the applicant to proceed. The respondent was called yesterday and did not answer. I had my Associate call the respondent again today outside court and she did not answer. Starnet Legal was called again today and did not answer. Whilst it is a difficult question as to whether or not the matter should proceed, ultimately it appears to me to be appropriate to allow the applicant to proceed on the assumption that the respondent must have been aware of these proceedings, as she did, at the very least, file a notice of opposition and affidavit.
In the absence of any other evidence, I therefore proceed to make the sequestration order, the other matters relevant to the sequestration order being proved this morning by the various affidavits.
With respect to the question of costs, I have regard to r.21.07 which allows the court to make an order for costs against a lawyer, if the lawyer or an employee or agent of the lawyer has caused costs to be incurred by a party or another person or to be thrown away because of undue delay, negligence, improper conduct or other misconduct or default. In this case, the lawyers, Starnet Legal Pty Ltd, in particular, Mr Kimani Boden, had been in default of appearing before the court and complying with Part IX of the rules with respect to ceasing to act. As a result of the conduct of the lawyers for the respondent, the matter was adjourned to today in order to allow them to appear and put some proper information before the court and obtain leave to withdraw before orders were made if they failed to appear today.
The costs of yesterday were entirely wasted. Those costs were a brief fee for counsel which was $1650. I note that the scale fee for an appearance for counsel in this court under the costs scale in schedule 1 of the rules provides for a hearing fee for a full day of $1500, together with an advocacy loading of 50 per cent.
In the circumstances, I am satisfied that the brief fee for Mr Foster thrown away yesterday is a reasonable fee, it being less than the scale daily fee. I therefore find that the reasonable costs thrown away yesterday are $1650.
As a result of the conduct of the lawyers for the respondent, I am of the view that it is appropriate that they pay those costs thrown away. Despite this, the solicitor has not appeared this morning.
Having regard to the conduct of the lawyers for the respondent in this matter, I propose to direct that the registrar provide a copy of these reasons for judgment and the orders in this matter to the Law Institute of Victoria and the appropriate disciplinary body with respect to the conduct of Starnet Legal and the two solicitors involved.

I certify that the preceding nineteen (19) paragraphs are a true copy of the reasons for judgment of Riethmuller FM

Deputy Associate: Averil Tan

Date: 31 July 2007