Reliance Financial Services v Lemery Holdings [2006] NSWSC 1417

New South Wales Supreme Court

CITATION : Reliance Financial Services v Lemery Holdings [2006] NSWSC 1417

HEARING DATE(S) : 13 December 2006

JUDGMENT DATE : 13 December 2006

JURISDICTION : Equity

JUDGMENT OF : Campbell J

EX TEMPORE JUDGMENT DATE : 12/13/2006

DECISION : Re-opening of argument not permitted

CATCHWORDS : PROCEDURE – Supreme Court procedure – funds in court – effect of order directing Registrar to pay out a particular sum of money – circumstances in which a trial judge can review his or her own order or decision – permitting re-opening of argument after judgment delivered

LEGISLATION CITED : Uniform Civil Procedure Rules 2005

CASES CITED : DJL v Central Authority (2000) 201 CLR 226 Reliance Financial Services v Lemery Holdings [2006] NSWSC 1079

Lemery Holdings Pty Ltd - First Defendant PARTIES : Tzovaras Legal - Applicant Ted Tzovaras - Applicant John Tomaras - Applicant

FILE NUMBER(S) : SC 3696/05

COUNSEL : P Lowe - First Defendant T Hall, solicitor - Applicant

SOLICITORS : Aitken McLachlan Thorpe - First Defendant HAL Lawyers - Applicant

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION EQUITY LIST

CAMPBELL J

WEDNESDAY 13 DECEMBER 2006

3696/05 RELIANCE FINANCIAL SERVICES PTY LTD & ANOR v LEMERY HOLDINGS PTY LTD & ORS JUDGMENT – Ex Tempore (revised 18 December 2006) 1 HIS HONOUR: On 30 October 2006 I delivered a judgment in this matter: Reliance Financial Services v Lemery Holdings [2006] NSWSC 1079. In that judgment I dealt with a Notice of Motion, that sought to vacate an order that I had made on 13 July 2006 for the payment out to Tzovaras Legal of certain funds in Court. The Notice of Motion that I determined on 30 October also sought a specific order that Tzovaras Legal should forthwith return to the Registrar the funds that had been released to it. 2 The principal basis on which the applicant in that Notice of Motion sought the orders was a contention that Tzovaras Legal had not been authorised to obtain the orders that were made on 13 July 2006. In my judgment, I rejected that contention. However, the evidence in the case explored in considerable detail the circumstances right up to the time of payment out of the money. There was evidence from the solicitors who had been involved at Tzovaras Legal about what had happened after the orders had been obtained, and some submissions were made relating to the effect of what had thereafter happened. 3 The Notice of Motion was argued following the setting of a pre-trial timetable, that gave directions for an orderly filing of affidavits, and lodgement of written outlines of submissions. The applicant on the Notice of Motion lodged its submissions first. A section of those submissions, beginning at paragraph [8], appeared under the heading "Authorisation for release of funds from Court". In support of the contentions on that topic, paragraph [11] specifically submitted: "The conduct of Lemery and Ghandi Sobbi after the terms of judgment or order was entered on 13 July 2006 is indicative of the scope of the authorisation actually given to Tzovaras Legal to seek the release of funds from Court. Even on the costs respondent's own evidence a meeting was held on 14 July 2006 where it is recorded that a meeting was held between Ghandi Sobbi [GS] Allan Sobbi, Ted Tzovaras, Rosa Djuricin at Tzovaras Legal [TL] where the following is noted: "In relation to agreement → he says that he went beyond the agreement", and further "GS wants to stop money going to TL". 4 There were specific submissions made to the effect that Mr Tomaras was aware, that at least from midday on 12 July 2006, that "Alan Sobbi disputed the form of the orders which had been made. Specifically, he was aware that Alan Sobbi disputed the release of the funds in the form which they were ultimately released." 5 The submissions that were filed on behalf of Tzovaras Legal specifically stated, in paragraph [3], that Tzovaras Legal did not propose to respond to each and every allegation made in the applicant's submissions. 6 One theme of the applicant's submissions had been that the terms of a letter that both parties signed on 2 February 2006 rigidly fixed thereafter the basis on which it was possible for Tzovaras Legal to ever recover any amount by way of costs. Written submissions of Tzovaras Legal contested that recovery of costs could only occur within such a rigid frame. Reference was made to various events that occurred after 2 February 2006 and, in substance, submission was made that those events provided authorisation for the seeking of the orders. In broad terms, my judgment accepted that submission. The conclusion to those written submissions repeated that the proposition that the 2 February 2006 letter was an exclusive basis as to the in manner which Tzovaras Legal could recover its fees was mistaken. 7 As well, those submissions specifically dealt with events after the obtaining of the orders. Paragraph [25] of those written submissions said: "It is also submitted that no criticism can be levelled at Tzovaras Legal for continuing to seek the release of funds from Court after such a date as they became aware of the objection on the part of Lemery to that course. Tzovaras Legal was simply abiding the orders of the Court which entitled it to be paid its costs and disbursements as to the quantum of the order." 8 Today, Tzovaras Legal has filed in Court a Notice of Motion that seeks leave to re-open the address to the Court and for the making of written submissions and eventual oral argument as to the matters in my judgment that Tzovaras Legal submits have been inadequately dealt with. 9 Mr Hall, for Tzovaras Legal, makes the general submission that Tzovaras Legal did not have the opportunity to address the Court about the significance of the change in instructions, after the orders had been obtained on 13 July 2006. He submits that there are three specific matters in relation to which Tzovaras Legal would seek the opportunity to provide further submissions to the Court. The first is a submission that the conduct of Lemery and the Sobbis, in giving instructions, and Tzovaras Legal in acting on them, was itself a contract, a term of which was that it was not open, thenceforth, to Lemery to deny the authority of Tzovaras Legal to act on an order for release of funds, once obtained. 10 In my view, the question of the effect of the change in instructions after the judgment had been obtained was well and truly part of the area of debate at the hearing of the Notice of Motion. The case was not put in a way that submitted that there was a contract that contained the term that is now alleged, rather than that there was a bare authority. When the case was not put in that way, I do not think it is appropriate to allow it to be put that way now. 11 In saying that, I bear in mind that the reasons for judgment did not even make a final determination of the amount of money that Tzovaras Legal was entitled to (see paragraph [107]). No judgment or order has been entered pursuant to those reasons for judgment. I accept that a trial judge has the power to review a case until the judgment has been drawn up, passed and entered: DJL v Central Authority (2000) 201 CLR 226. Further, the time when the judgment has been passed, drawn up and entered has not yet arrived. Thus, there is no jurisdictional problem about my permitting the re-opening that is sought. It is as a matter of discretion, concerning procedural fairness and orderly conduct of proceedings, that it seems to me it would not be right to permit the recasting of the case in the way that I have outlined. 12 A second argument that Mr Hall seeks to put is that, once the instructions were given, and application was made for the release of the funds, in circumstances where Tzovaras Legal were acting in accordance with orders of the Court, they did not require the consent of their client. That argument is no different in substance to the argument in paragraph [25] of the written submissions of Tzovaras Legal on the earlier hearing, that I have quoted above. Thus, not only was there an opportunity to put it, it was actually put. 13 I accept that the judgment did not deal with that argument, in those precise terms. However, it was implicit in the judgment that that submission was rejected. The term of the order that had been made was one, directing or ordering the Registrar to pay to Tzovaras Legal, from the funds in Court, the amount of $194,264.72. There is a requirement, in Part 41 Rule 3 Uniform Civil Procedure Rules, that deposited funds may not be withdrawn or paid out except by the authority of the Rules or of a judgment or order. The order, in the form it was made, was a necessary prerequisite to the Registrar paying the funds out. 14 However, such an order is not one that is self-acting. Even when such an order is made, the Registrar will not pay money out, unless someone asks for it to be paid out, and presents the appropriate authority for the payment to be made. The order in the present case did not oblige Tzovaras Legal to do anything. If, for example, the entire case had settled, immediately after I had pronounced the orders, on a basis that did not involve any money being paid out from court to Tzovaras Legal, there would be no illegality or impropriety in Tzovaras Legal doing nothing to carry the order into effect. My judgment proceeded on the basis that, in applying for the payment out of the money, Tzovaras Legal was doing more than they were then authorised by their client to do, and were doing more than the order itself had already authorised them to do. Whether I was right in taking that view will, I gather, be decided by the Court of Appeal. Thus, the second basis upon which Mr Hall relies does not provide a reason for permitting the argument to be re-opened. 15 The third argument that Mr Hall seeks to put is that, by the time the Notice of Motion that I dealt with on 30 October 2006 came to be filed, Lemery had engaged new solicitors, and thus Tzovaras Legal did not continue to have duties to it. 16 As I have earlier found in my earlier judgment, at paragraph [77], it was on 18 July 2006 that the money which had been ordered to be paid out of Court was deposited into the general account of Tzovaras Legal. 17 I accept that, once Lemery had ceased to engage Tzovaras Legal as its solicitors, Tzovaras Legal owed no duty to Lemery, to carry out any new instructions that might be given to it. However, solicitors frequently have obligations to clients, that continue to attach after the client has given instructions to other solicitors. Such obligations exist concerning maintenance of client confidentiality, and the use that can be made of information obtained in the course of retainer, to name just two. Further, in the present case, it seems to me that we are not so much concerned with any duty that was owed by Tzovaras Legal, as with authority that Tzovaras Legal had. If Tzovaras Legal did not have authority from its clients to seek the payment out of the money, and if the order that I have made was such that ongoing authority on the part of Tzovaras Legal to seek a payment out needed to exist before they were authorised to seek the payment out, then in my view, when they did not have that authority, the fact that Lemery had gone to other solicitors does not confer the authority on them. Thus, I would reject this third basis on which any re-opening is sought. 18 The problem about the amount of money that Tzovaras Legal was entitled to retain, that I have referred to in paragraph [107] of my judgment of 30 October 2006, has now been resolved between the parties, and the figure that the solicitors are entitled to retain has been agreed at $87,043.38. 19 That raises a question of whether, in circumstances where Tzovaras Legal intends to appeal against my judgment, it would suffice to merely make a declaration of the legal conclusion I have arrived at, or whether there ought be an order for payment back into Court of the balance of the funds. 20 Counsel for Lemery submits that I ought not only make a declaration, but also order the payment back into Court of the balance of the funds, that Tzovaras Legal is not entitled to. Mr Hall, for Tzovaras Legal, submits that, when the order has not been set aside, pursuant to which the funds were paid out, and when his client proffers an undertaking to the Court to advance the appeal with expedition and to pay back into Court any amount that the Court of Appeal holds ought be paid, the position would be adequately covered by a declaration. 21 In my view, when the parties are not agreeing, and when an appeal appears inevitable, the preferable course is to make all of those declarations and orders that would be appropriate, to give effect to my decision. In those circumstances I: