Sivritas v Sivritas

IN THE SUPREME COURT OF VICTORIA	Not Restricted
AT MELBOURNE COMMERCIAL AND EQUITY DIVISION PRACTICE COURT

No. 7788 of 2006

MUHARREM (“HARRY”) SIVRITAS	Plaintiff
v
ALI SIVRITAS AND OTHERS	Defendants

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JUDGE:	HABERSBERGER J
WHERE HELD:	MELBOURNE
DATE OF HEARING:	9 AND 17 DECEMBER 2009
DATE OF JUDGMENT:	17 DECEMBER 2009
CASE MAY BE CITED AS:	SIVRITAS v SIVRITAS
MEDIUM NEUTRAL CITATION:	[2009] VSC 644

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PRACTICE AND PROCEDURE – Money held in solicitor’s trust account pursuant to Court order – Application for payment to the plaintiff’s former lawyers pursuant to the Court order – Whether dependent on plaintiff’s complaints to the Legal Services Commissioner being resolved – Construction of Court order.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr Sivritas in person
For the Plaintiff’s Former	Mr J R Dixon SC	FLA Partners
Lawyers

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HIS HONOUR:

On 15 May 2009, Kyrou J pronounced judgment in this proceeding. His Honour made an order that there be a sale of a particular piece of real estate by public auction to be conducted by the Prothonotary. The judgment went on to give directions about how the sale was to be conducted and what was to happen to the proceeds of sale. The judgment provided that the Prothonotary was to engage a law firm to prepare contracts and other documents and perform all conveyancing and legal work associated with the auction and the sale under the direction of the Prothonotary.
The Victorian Government Solicitor was engaged by the Prothonotary and pursuant to the judgment, the proceeds of sale were paid into that solicitor's trust account. Paragraph 18 of the judgment sets out how the proceeds of sale were to be applied. Relevantly sub-paragraph (e) provided that:
fifthly, 73.61% of the balance be paid as follows:
(i) $81,781 shall be retained in the Law Firm's trust account until either the Plaintiff and the Plaintiff's former lawyers reach agreement on the disposition of this amount and jointly direct the Law Firm in writing accordingly or until further order;
(ii) the balance shall be paid to the plaintiff.
In paragraph 7 of the Other Matters part of the judgment made on 15 May 2009, the following was stated:
The plaintiff has agreed to the amount of $81,781 being retained in trust and being dealt with in accordance with paragraph 18(e) of this Judgment on the basis that this does not affect his legal rights against the Plaintiff's former lawyers and his rights in relation to that amount. He has informed the Court that he has lodged a complaint with the Legal Services Commissioner against the Plaintiff's former lawyers and wants that complaint and other disputes he has with them to be resolved before an order is made regarding who is entitled to the amount of $81,781 or any part of that amount.
The sum of $81,781 was the amount of the final bill rendered by the plaintiff's former solicitors, FLA Partners, on 23 December 2008. By a summons dated 26 October 2009 the plaintiff's former lawyers, which term has been understood to mean FLA Partners as the instructing solicitors and Mr Cawthorn SC and Mr Sedal of counsel as his barristers.
The summons issued on behalf of the plaintiff's former lawyers sought an order:
That the Victorian Government Solicitor be authorised to disperse the sum of $81,781 presently held in his trust account to Peter Finkelstein of FLA Partners, Australian lawyers, upon service of a sealed copy of this order by ordinary post upon the Victorian Government Solicitor’s Office located at Level 25, 121 Exhibition Street, Melbourne, as a series of cheques made payable as follows:
(a)         To “Peter Cawthorn” SC, the sum of: $58,740;
(b)         To “Tristan Sedal” of counsel, the sum of: $13,450;
(c)          To “Victorian Transcript Services Pty Ltd”, the sum of: $3711.63;
(d)         To FLA Partners the balance of: $5,879.37.
The summons also sought an order that the plaintiff pay the costs of the plaintiff's former lawyers of the application.
It is important to note at the outset that the order or the judgment that I have referred to did not make the application for an order for the payment out of those funds to the plaintiff's former lawyers dependent on the resolution of the plaintiff's complaint to the Legal Services Commissioner. As I have set above, what was said in Other Matters was that the plaintiff had agreed to the amount being retained in trust on the basis that this did not affect his legal rights against the plaintiff's former lawyers and his rights in relation to that amount and he agreed to that being retained in trust and dealt with in accordance with paragraph 18(e) of the judgment on that basis. And secondly, it recorded that he had informed the Court that it was his wish that his complaint to the Legal Services Commissioner be resolved before an order was made regarding who was entitled to the amount.
The parties, that is, the plaintiff and the plaintiff's former lawyers, were not able to reach agreement on the disposition of the sum of money sitting in the Victorian Government Solicitor's trust account.
It turns out that rather than one complaint to the Legal Services Commissioner by the plaintiff against the plaintiff's former lawyers there were, in fact, two complaints lodged.
By a letter dated 21 September 2009 the Legal Services Commissioner advised Mr Finkelstein of FLA Lawyers that she had concluded that there was no reasonable likelihood that the Tribunal would find him guilty of professional misconduct or unsatisfactory professional conduct and the complaint was dismissed and the file was closed. Careful reading of that letter would have revealed that there was a specific reference to the complaint at the top of the letter, LSC/09/1197 and the solicitor handling the matter was named.
Mr Finkelstein apparently understood that letter as resolving the complaints made against him by Mr Sivritas to the Legal Services Commissioner. However, there was a second complaint which had been given the reference LSC/09/92 with a different solicitor handling the matter and the fact is that, as at the date of issuing the summons, that second complaint was still not resolved. I call it the second complaint although it probably was the first in time to be made.
When the matter came on for hearing before me on 16 November 2009, a solicitor, Mr Denning of Baker & Armstrong was appearing for the plaintiff. The matter had been referred by the Associate Justice. Affidavits subsequently filed reveal that agreement had been reached between Mr Denning and Mr Madder of counsel who then appeared for the plaintiff's former lawyers that an order would be made for the payment out of the funds, by consent, on the basis that no costs would be sought against Mr Sivritas. However, as the matter was about to be mentioned before me, it appears that Mr Sivritas terminated Mr Denning's services or, at least, Mr Denning felt unable to continue because Mr Sivritas was no longer willing to settle the matter on the basis that I have outlined.
In his affidavit sworn on 25 November 2009, Mr Sivritas does not deny that agreement was reached. What he said was:
At the hearing of the summons on 16 November 2009, I had discussions with my lawyer, Phillip Denning, about settling this matter. He had only recently become involved in the case and I was not sure whether he understood the issues. It appeared to me that he was very insistent that I agree to allow the moneys held in trust to be paid to FLA Partners and there be no order as to costs. I became quite flustered and confused as this was not the result that I wanted. During the lunch break when I was able to compose myself, I realised that I had been pressured into agreeing to something I did not wish to occur. I told Mr Denning that I did not agree to the moneys being paid to FLA Partners before the outcome of my complaint to the Legal Services Commissioner.
That indicates to me, as Mr Madder deposes in his affidavit, that agreement had been reached between Mr Denning and Mr Madder to the effect outlined. Normally, parties are bound by agreements made by their legal representatives and one basis for making the order sought would be that the matter had, indeed, been settled. However, because of the issues that Mr Sivritas indicated he wanted to raise with me in the Practice Court, which I felt needed to be put on affidavit, I adjourned the matter over to be heard subsequently by me.
In all the circumstances, I do not consider it appropriate to hold Mr Sivritas to the agreement made on his behalf, although the consequences will be that if the order is subsequently made, there will be a detriment to him in terms of costs which he would have avoided if he had abided by the agreement reached prior to the matter being mentioned to me on 16 November 2009. This was discussed in the argument on 9 December with Mr Dixon, senior counsel, now representing the plaintiff's former lawyers and he agreed with my observation that if the matter were dealt with by way of settlement, the plaintiffs could not seek any costs of the appearance on 16 November. Mr Sivritas has continued to resist any order being made.
I turn then to the substantive matter as to whether or not it is appropriate for an order to be made. Mr Sivritas has put before the Court as exhibits to his affidavit, a letter dated 28 October 2009 from the acting Legal Services Commissioner to him which advised that his complaint against Mr Finkelstein of FLA Partners was still being investigated, that is the second complaint that I referred to earlier. He also put in evidence a letter which he gave to Mr Finkelstein on 28 October in which he pointed out that part of his complaint:
held with the Legal Services Commissioner has not concluded, in particular Reference No.LSC/09/92. Thus, I am awaiting for the completion of this review, and for the Commissioner to give notice of any decision. As a result I believe it is unnecessary at this stage with inconclusive findings by the Commissioner for FLA to file a summons for further proceedings.
I am not resisting any financial obligation as set out by the Orders of Justice Kyrou. However if FLA Partners wishes to continue with this Summons I require reasonable time to prepare my defence relating to this claim before me.
He added in handwriting at the foot: "Please take above into consideration any out of pocket expenses will be objected in Court".
Mr Finkelstein filed a further affidavit sworn on 4 December 2009 in which he deposed to a conversation that he had with a staff member at the Legal Services Commissioner's office on that day following him sending a letter to the Legal Services Commissioner dated 1 December 2009 enquiring as to whether or not the outstanding complaint was still current. Mr Finkelstein deposed that he was informed, of the following by the staff member:
That although the remaining complaint (concerning the Buller McLeod caveat) has not in fact been dismissed, it is expected that this will occur as the Office has formed the view the dismissal is warranted. However, as a matter of procedure the approval of Michael McGarvie as acting Legal Services Commissioner must first be obtained before an appropriate letter can be written to me confirming that this is the position.
It is quite clear from Mr Sivritas' submissions on his own behalf that he has the genuine belief that there should be no dealing with the funds held by the Victorian Government Solicitor until his complaints to the Legal Services Commissioner have been resolved. As I pointed out to him during the course of argument, the judgment does not make the payment out of those funds dependent on the resolution of the complaints. Paragraph 7 of the other matters which I set out above, merely notes Mr Sivritas' wish that that be the situation. Some five months had elapsed between the judgment on 15 May 2009 and the issuing of the summons of 26 October 2009. During that time the plaintiff's former lawyers, and Victorian Transcript Services Pty Ltd, were out of pocket in respect of fees or charges rendered by them to the plaintiff.
Payment of a solicitor's bill does not prevent the client from subsequently challenging that quantum and having the bill taxed. Indeed, I was informed by Mr Sivritas that he has now lodged an application for a taxation of FLA Partners' account. Obviously, if lawyers have been paid and a bill is subsequently taxed and amounts are taxed off the lawyers have to reimburse the client. There is no suggestion in this case that any of the lawyers would be unable to reimburse Mr Sivritas with funds if that situation were to occur.
Equally, Mr Sivritas has remedies in respect of his complaint about the alleged negligent advice that was given to him by the lawyers concerning the caveat lodged by Buller McLeod. Again payment out of these funds does not prevent Mr Sivritas taking whatever course he wishes in respect of that advice. Further, as I have indicated it is noted in Other Matters at paragraph 7 that however the amount of $81,781 was dealt with under paragraph 18(e) of the judgment, it did not affect his legal rights against the plaintiff's former lawyers, and his rights in relation to that amount. In an ideal world the two complaints made by Mr Sivritas to the Legal Services Commissioner would have been dealt with speedily and been resolved well before 26 October 2009, or failing that would have been resolved by now. The Commissioner, or those working on the file have apparently reached the conclusion that the complaint will have to be dismissed, but that final step has not yet been taken formally.
Mr Sivritas explained to me that if the Commissioner had yesterday dismissed his remaining complaint then he would have had no opposition to the amount in question being paid out to the plaintiff's former lawyers, because no doubt, as I have said, he saw the payment being dependent on resolution of those complaints. That is not what the order said, and agreement not having been reached, the question for me is whether application having been made by the plaintiff's former lawyers it is appropriate to make an order that the funds now be paid out to them.
Perhaps the plaintiff's former lawyers could have waited however many more weeks it would take for the final resolution of the complaint to the Legal Services Commissioner, but in my opinion the judgment of Kyrou J did not require them to do so. It seems to me that there being no prejudice that I can see to Mr Sivritas in these funds being dispersed in the manner sought by the plaintiff's former lawyers, and very real benefit to the plaintiff's former lawyers in being paid for work that they have done, there seems absolutely no point in the money continuing to sit in the Victorian Government Solicitor's trust account.
It seems to me that what was contemplated by the order was that either the complaints would be quickly resolved and agreement would then be reached between the plaintiff and his former lawyers, or if that were not the case and an appropriate time had elapsed the plaintiff's former lawyers could take the step that they have now taken.
Mr Sivritas submitted that the arguments put forward by Mr Dixon on behalf of the plaintiff's former lawyers could have been made to Kyrou J. That is no doubt correct, but that would only have had an effect if his Honour had been persuaded to have the money paid, there and then to the plaintiff's former lawyers. It seems to me that the order made to some extent tried to hold the status quo pending resolution of the complaints, but five months having elapsed it does not seem to me to be unreasonable that the plaintiff's former lawyers sought to be paid. Admittedly they may have commenced the application under a misunderstanding that in fact the complaints had been resolved. That was not the case, but in my opinion and in my reading of the order that is not a decisive consideration. In the circumstances I will make the order sought by the applicants in their summons of 26 October 2009. The settlement having been repudiated by the plaintiff and not been insisted on by the plaintiff's former lawyers, there should be an order that the plaintiff pay the costs of the plaintiff's former lawyers of the application.

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[2009] VSC 644

17 DECEMBER 2009