Khoury v Gonzales [2006] NSWSC 1290

New South Wales Supreme Court

CITATION : Khoury v Gonzales [2006] NSWSC 1290

HEARING DATE(S) : 14/11/06

JUDGMENT DATE : 1 December 2006

JURISDICTION : Equity Division

JUDGMENT OF : Barrett J

DECISION : Declaration that plaintiff entitled to equitable lien over judgment debt for costs and disbursements of particular litigation

CATCHWORDS : PROFESSIONS AND TRADES - lawyers - entitlement to "fruits of the action" lien

LEGISLATION CITED : Uniform Civil Procedure Rules 2005, rule 29.7(a)

CASES CITED : Abbott v Pilot Development Corporation Pty Ltd [2006] NSWSC 1178 Firth v Centrelink (2002) 55 NSWLR 451

PARTIES : Dieb Peter Khoury - Plaintiff Sef Gonzales - Defendant

FILE NUMBER(S) : SC 5287/06

COUNSEL : Mr J.T. Johnson - Plaintiff

SOLICITORS : Benjamin & Khoury - Plaintiff

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

BARRETT J

FRIDAY, 1 DECEMBER 2006

5287/06 DIEB PETER KHOURY v SEF GONZALES JUDGMENT 1 The plaintiff is a solicitor. By his summons filed on 12 October 2006, he seeks a declaration that he is entitled to an equitable lien over the entitlement of the defendant, his former client, to a judgment debt. 2 The judgment debt is referable to a District Court judgment which arose from the filing in that court of a certificate of assessment of costs under the Legal Profession Act 1987 (as previously in force). A certificate of judgment issued by the registrar of the District Court at Sydney on 13 September 2006 states that the present defendant, as judgment creditor, recovered judgment against Amelita Claridades, as executrix of the estate of the late Teddy Gonzales, in the sum of $107,032.40 on 12 July 2005. 3 The entitlement of Sef Gonzales, the present defendant, reflected by the District Court judgment (itself a reflection of the costs assessment) stems from an order made in this Division on 16 July 2003. The order was made in proceedings 2260/03 between Sef Gonzales as plaintiff and Ms Claridades as defendant. Campbell J ordered as follows: "I order that the plaintiff's costs be paid out of the estate of Teddy Gonzales on an indemnity basis." 4 The assessment process to which I have referred (including review by a review panel) quantified the costs thus payable to Sef Gonzales by the executrix out of the estate in the sum of $107,032.40. 5 The plaintiff acted as Sef Gonzales's solicitor in the proceedings 2260/03 in which the costs order was made by Campbell J. Following the issue of the certificate of judgment for $107,032.40 by the registrar of the District Court, the plaintiff wrote to the solicitors for the judgment debtor (that is, the executrix) requesting payment. Those solicitors responded that the judgment was in favour of the present defendant, Sef Gonzales, and that "the question of your instructions to act for Mr Gonzales remains in issue", adding that, after discussion with the Law Society, the view was taken that Sef Gonzales would have to authorise any payment to the present plaintiff. 6 After further correspondence, the plaintiff wrote to the judgment debtor's solicitors saying: "We are obliged to remind you that this firm enjoys an equitable lien over the Cost Order made in Mr Sef Gonzales' favour, which may be enforced by us by Supreme Court proceedings if Mr Gonzales declines to authorise us to claim payment from the Estate. Such proceedings will be necessary if Mr Gonzales' written authority is not received by 14 July 2006." 7 Attempts to obtain an appropriate written authority from Sef Gonzales continued but no authority has been forthcoming. The plaintiff has therefore applied for the declaratory relief to which I have referred. 8 The defendant, Sef Gonzales, did not appear on the hearing of the plaintiff's summons. I am satisfied that he was served personally with the summons and that it showed, in the space for "Hearing Details", reference to a listing before the Registrar's Court on Level 7 at 9.30 am on 14 November 2006. I was informed by counsel that there was no appearance by or for Sef Gonzales before the Registrar when the matter was called on in the Registrar's Court on 14 November 2006 before being transferred by the Registrar to me as Duty Judge on that same morning. I proceeded to hear the plaintiff's application in the absence of the defendant: see rule 29.7(a) of the Uniform Civil Procedure Rules 2005. 9 The sum produced by the costs assessment process ($107,296.32) represents costs payable to Sef Gonzales and required by the order of Campbell J to be borne by the executrix. The question for decision is whether the plaintiff has, as security for costs and disbursements due by Sef Gonzales, a lien over Sef Gonzales' judgment debt owing by the executrix. 10 The lien asserted by the plaintiff is a "fruits of the action" lien of the kind comprehensively discussed by Campbell J in Firth v Centrelink (2002) 55 NSWLR 451. The essence of that decision, as well as other pertinent observations, appears from the following passage in the recent judgment of Bergin J in Abbott v Pilot Development Corporation Pty Ltd [2006] NSWSC 1178: