Kelly Partners (Western Sydney) Pty Ltd v Ms Shakespeare (A Pseudonym) [2022] NSWSC 575

Supreme Court New South Wales

Medium Neutral Citation: Kelly Partners (Western Sydney) Pty Ltd v Ms Shakespeare (A Pseudonym) [2022] NSWSC 575 Hearing dates: 14 April 2022 Date of orders: 14 April 2022 Decision date: 14 April 2022 Jurisdiction: Common Law Before: Garling J Decision: See [28] Catchwords: CIVIL PROCEDURE — preliminary discovery — to identify potential cause of action COSTS — party/party — exceptions to general rule that costs follow the event — consent orders made without merits hearing Legislation Cited: Uniform Civil Procedure Rules 2005 r 5.3 Cases Cited: Nichols v NFS Agribusiness Pty Ltd (2018) 97 NSWLR 681; [2018] NSWCA 84 Re Minister for Immigration & Ethnic Affairs of The Commonwealth of Australia; Ex Parte Lai Qin (1997) 186 CLR 622; [1997] HCA 6 Texts Cited: Not applicable Category: Principal judgment Parties: Kelly Partners (Western Sydney) Pty Ltd (Plaintiff) Ms Shakespeare (A Pseudonym) (Defendant) Representation: Counsel: Robert Pietriche (Plaintiff) David Robertson (Defendant)

Solicitors: Corrs Chambers Westgarth (Plaintiff) Shand Taylor Lawyers (Defendant) File Number(s): 2021/178338 Publication restriction: Not applicable

EX TEMPORE Judgment

Factual Background 1. On or about 17 July 2020, Kelly Partners (Western Sydney) Pty Ltd ("Kelly Partners") entered into an agreement with Ms Shakespeare (a pseudonym) for the provision of services with respect to a dispute about matrimonial property which was then taking place between Ms Shakespeare and her former husband in the Family Court of Australia (now the Federal Circuit and Family Court of Australia. 2. On 23 February 2021, Kelly Partners issued an invoice dated that day to Ms Shakespeare for their "fee as agreed in our engagement letter dated 17 July 2020", being $500,000 calculated as 5% of a $10 million increase in a nominated business valuation (calculated as $28 million less $18 million). After GST was added, the total invoiced amount was $550,000. 3. That invoice was issued attached to an email of the same date in which the relevant partner of Kelly Partners said, amongst other things, of the difference between $18 and $28 million, "[t]he difference is a well earned $10m". He concluded that email with this request: "If you could provide a copy of the final signed off settlement for our records so we can ensure that we have accurately invoiced, it would be much appreciated." 1. It was apparent from an email sent about two hours later by Ms Shakespeare to Kelly Partners that she disputed that the settlement in the Family Court had finalised, saying that she had until to 31 December 2021 to complete the terms of settlement, that is to say, to undertake training at McDonald's in the hope of taking over and operating one of the McDonald's stores in dispute between the parties. She then set out her understanding of the terms of the retainer of Kelly Partners, and she pointed out this: "[My former husband] and I decided to negotiate with our lawyers and settled the matter ourselves. I appreciate the work that was done and believe you have both been paid for [your] work in full. There was not a court settlement nor was there a negotiated settlement done by Kelly Partners. I hope this is the end of any confusion." 1. She invited contact to be made with her if Kelly Partners wished to discuss the matter. It was clear at this stage, at least to my observation, that a claim was being made by Kelly Partners for a fee based on the engagement letter, the terms of which required some interpretation and a dispute was being raised by Ms Shakespeare as to whether the sum claimed was payable. 2. A short time later that day a letter was sent by email by the solicitors for Kelly Partners to Ms Shakespeare. It was signed by the partner responsible for the file. That letter first suggests that the email from Ms Shakespeare contains statements that are internally inconsistent. It asserts that she well knows that Kelly Partners is entitled to the success fee, which is: "payable irrespective of whether that value is determined judicially or arises as a matter of implication from any settlement of the Proceeding." 1. It then informs Ms Shakespeare that she has no legitimate basis to commercially dispute the claim by Kelly Partners saying that it ought be inferred that: "you wish to avoid paying Kelly Partners the money that is legitimately due to it with respect to its success fee and have with that purpose in mind sent your email of today." 1. It accuses Ms Shakespeare of obfuscation of the terms of any settlement of the proceedings, that she has made a serious series of "contrived and artificial complaints", and asserts that the fact that those complaints are contrived is consistent with the deliberate intention to avoid paying amounts legitimately owing. 2. The terms of that letter were surprising. There was, as counsel for Kelly Partners accepted in the course of argument, room for legitimate dispute about the terms of the engagement letter. Counsel submitted that it would be necessary for implications to be made into the engagement letter or inferences to be drawn from it and the surrounding circumstances as to when the payment obligation arose. That is self-evident from the terms of the engagement letter. 3. What was in place as at February 2021 was, to my way of thinking, obviously, a legitimate commercial dispute. That is not a dispute into the merits of which I can or else would embark in determining the issues presently before me. However, I have not the slightest doubt of the legitimacy of the dispute, in which circumstances the terms of the letter 23 February 2021 were, to put it at the lowest, unfortunate. I certainly, as I have been asked to do, would not be prepared to find that the response to that letter demonstrated any unreasonable conduct on the part of Ms Shakespeare.