District Court New South Wales Medium Neutral Citation: Leila Chafei (as Executrix of the Estate of the late Sidney Chafei) v Tony Barakat, Russell Walter Keddie, Scott John Roulstone t/as Keddies Lawyers & Stephen Paul Firth [2011] NSWDC 153 Hearing dates: 27 & 28 July 2007 & 13 & 14 September 2011 16 & 26 September 2011 Decision date: 30 September 2011 Before: Ashford DCJ Decision: Judgment on Motion Catchwords: Power of the Court to set aside a judgment order that has been entered - Court is functus officio - power of the Court to join a party to proceedings - application to refer solicitors to the Legal Services Commissioner - appropriate costs orders Legislation Cited: UCPR - Legal Profession Act - Civil Procedure Act 2005 Cases Cited: Day v Perisher Blue Pty Ltd (No2) [2005] NSWCA 125 Category: Procedural and other rulings Parties: Leila Chafei (plaintiff) Tony Barakat, Russell Walter Keddie, Scott John Roulstone t/as Keddies Lawyers (1st defendant) Stephen Paul Firth (2nd defendant) Representation: Prominent Lawyers (plaintiff) Adams & Co Lawyers (1st defendant) Firths Lawyers (2nd defendant) File Number(s): 11691 of 2011 Judgment Introduction 1By way of background I note these proceedings were part heard before me on 27 and 28 July 2011 and were then stood over to 13 and 14 September 2011. 2I was advised by the Court Registry on 7 September 2011 that the matter had been removed from the list as terms of settlement had been filed. It appears from the JusticeLink website that an attempt to file the terms was made on 7 September 2011 but the Court Registry rejected them on that date raising a requisition relating to whether an order had been made for the executrix of the estate of Sidney Chafei to be substituted as the plaintiff. 3It now appears that the terms were accepted in the Registry on Friday, 8 September 2011 and entered on the JusticeLink website on that day. 4It appears that prior to filing those terms of settlement a Notice of Removal of Solicitor was filed on 7 September 2011 by the plaintiff thus terminating the authority of Stephen Paul Firth of Firth the Compensation Lawyers to act on her behalf in the proceedings. That Notice of Removal of Solicitor appears to have been signed by Leila Chafei on 5 September 2011. The document was actually filed by Tony Barakat, Russell Walter Keddie and Scott John Roulstone, trading as Keddies Lawyers and the legal representative for the filing party was noted to be Tony Barakat of Slater and Gordon Lawyers. 5Also on 7 September 2011 a second Notice of Removal of Solicitor was filed in the Registry. This Notice of Removal of Solicitor related to the removal of Robert Tassell of Verekers Lawyers to act on the defendants behalf in these proceedings. That document was signed by Tony Barakat on 5 September 2011 and filed by the defendants Tony Barakat, Russell Walter Keddie and Scott John Roulstone, trading as Keddies Lawyers. 6The sealed envelope containing the Terms of Settlement was retained on the Court file. 7On Tuesday, 13 September 2011 the matter was listed before me in relation to a Motion on Notice which was sought to be filed by the plaintiff's former solicitors Firths the Compensation Lawyers. 8That Motion sought orders that:- 1. Stephen Paul Firth be granted leave to appear in these proceedings. 2. That Mr Firth be granted leave to examine the file in these proceedings, in particular any terms of settlement filed between the plaintiff and the defendants. 3. That in respect of any agreement reached between the plaintiff and the defendants reflected in the Terms of Settlement (a) in the event that no orders have yet been made in respect of the Terms of Settlement direct that no orders be made entered pending further order of the Court. (b) alternatively, if orders have already been made and entered, then those orders be stayed pending further order of the Court. 9Mr G Watson of Senior Counsel sought leave to appear on behalf of Firths. Mr D Currie sought leave to appear for Mr Roulstone of Slater and Gordon in lieu of Ms Castle who had appeared for the defendants at the hearing of the substantive claim. I granted leave to both counsel. Mr Currie advised me of his difficulties in meeting the matters raised and the orders which were being sought and asked that time be given to allow his client to respond to the allegations which had been made. 10At that stage Mr Watson asked that a temporary stay of the orders be given and I acceded to that request. The matter was then stood over to 16 September 2011. 16 September 2011 11On 16 September 2011 t he matter came before me again. Again counsel sought leave to appear as before. A number of affidavits of Stephen Paul Firth were marked for Identification. Mr Watson SC made application to have Stephen Paul Firth joined as a party pursuant to UCPR Pt 6 r 27. At that time Mr Watson indicated to the Court that part of his reasons for seeking leave to appear were in an attempt to be helpful to the Court as amicus curiae and also, if necessary, to protect former clients from having their rights abused. As well, he submitted that there was the issue of costs of the substantive proceedings due to Stephen Firth. 12I granted leave to join Stephen Paul Firth as second defendant. 13The matter was then stood over to 26 September 2011. 14I made orders that any amended Notice of Motion was to be filed and served by 19 September 2011 and I made orders in relation to finalisation of service of evidence with the defendants to complete service of any affidavits by 22 September 2011. 26 September 2011 15The matter came before me again on 26 September 2011. On that occasion Mr Baran of Counsel appeared for Leila Chafei, as Executrix of the Estate of the late Sidney Chafei deceased, (hereinafter referred to as the plaintiff), Mr M Einfeld QC with Mr D Currie appeared for the defendants, Tony Barakat and Ors trading as Keddies Lawyers (hereinafter referred to as Keddies) and Mr Watson SC with Mr G O'Mahoney appeared for Stephen Paul Firth (hereinafter referred to as Firths). 16An Amended Notice of Motion had been filed by Firths on 19 September 2011. This sought the relief which had previously been sought in order (3) of the initial Motion, together with a referral based upon allegations of misconduct to the Office of the Legal Services Commissioner and to the Council of the Law Society of NSW to conduct an investigation into the conduct of various legal practitioners. 17A further order was sought in this Motion pursuant to s73 of the Civil Procedure Act 2005 (NSW) that Keddies reveal the true basis upon which they effected a settlement with the plaintiff. I was advised by counsel appearing for the plaintiff that she brings no application to have the terms of settlement set aside. She has obtained independent legal advice and I am advised that she wishes to divorce herself from any further involvement with any legal controversy arising out of the substantive claims which were made in the primary proceedings between her late husband and Keddies. I am advised she seeks no referral of any practitioner and does not want to engage herself in any of the investigative proceedings which would likely be undertaken by the Office of the Legal Services Commissioner or the Law Society should the matter be referred to them. 18I was advised by Mr Watson SC that he no longer seeks to set aside the orders made, advising that Firths have now received a copy of the Terms of Settlement and a Deed and now have formed the view that it would not be in their former client's interest to have them set aside. 19I have independently checked the records of the courts computerised record system, otherwise known as JusticeLink. Absent any other order the judgment or order is taken to be entered when it is recorded in that system in accordance with UCPR r 36.11. The only exception is to be found in r 36.16(3)(A) and (B). On the basis that no such application to set aside that consent judgment within 14 days has been made, that exception does not apply. 20It is clear that pursuant to r 36.16(3)(C) the court has no power to extend the time to set aside a judgment or order that has been entered either pursuant to an application made by a party or of the Courts own motion. I am thus satisfied that the Court is functus officio in relation to entry of that judgment order. The interests of Stephen Paul Firth. 21Mr Watson SC expressed his concerns eloquently in relation to his assessment of Keddies actions in withholding information relating to the terms of settlement from Firths. As he pointed out no information in relation to the Deed or Terms of Settlement was made available to Firths until 16 September 2011 despite strong attempts to ascertain the true position in relation to the terms of the agreement. He expressed concern as to whether the plaintiff had been properly protected, saying that costs were secondary to his application. 22He now appears to be reassured that she has been accorded her dues and repeated that he was not seeking to set aside orders which had been made. He did not press the application pursuant to s73 of the Civil Procedure Act 2005. The primary thrust of his submission is that the Court should refer the conduct of Keddies to the Office of the Legal Services Commissioner and to the NSW Law Society for their consideration. In support of his application Mr Watson refers me to Day v Perisher Blue Pty Ltd (No2) [2005] NSWCA 125. The Court of Appeal directed the Registrar of the Court of Appeal to refer to the Legal Services Commissioner that judgment as well as the judgment of the Court of 11 April 2005 and the appeal papers to investigate the conduct of certain solicitors acting for the defendant in those proceedings and whether a complaint should be initiated against those solicitors pursuant to the Legal Profession Act. 23That referral of course occurred following a full hearing of the matter. In the present proceedings there has not been a full and comprehensive trial. I am directed to no authority where a Court refers a solicitor in such circumstances without a full hearing. 24I have no doubt that some disquiet is occasioned by the approach of Mr Barakat to the plaintiff, Mrs Chafei, in circumstances where she clearly had legal representation by Firths prior to the Notice of Removal of Solicitor, and a direct approach was made to her in full knowledge of that representation and with no regard for it. Ethical standards appear to have been breached. 25However as at the time of the entry of judgment on 8 September 2011 I am satisfied the Court became functus officio, and thus there is no further evidence before me in relation to the allegations which Firths now wish to raise. I do not believe that it is appropriate in such circumstances for me to make such referral. 26Of course Stephen Paul Firth is a solicitor of the Supreme Court of NSW. He has a right to take whatever action he feels appropriate in relation to reporting what he believes to be matters criticising the ethical conduct of another practitioner. That is a matter which he must determine himself. Costs 27An application has been made by counsel for the plaintiff and for Keddies that Firths pay each of their costs on an indemnity basis of and incidental to the Motion dated 12 September 2011 and the Amended Motion filed 19 September 2011 as agreed or assessed. 28Firths resists that order, and in turn, seeks orders that their costs be paid by Keddies. 29I have considered all submissions in that regard. 30I am cognisant of the fact that the orders sought by Firths in the Amended Notice of Motion have not been granted. This would normally generate an adverse costs order. In the circumstances of the present matter I have come to the conclusion in the exercise of my discretion and in order to do justice between the parties that it would be an appropriate order for me to make that each party pay their own costs. 31In relation to the plaintiff, in one sense she is independent from what has occurred, however, it seems clear here that at one stage she dealt directly with Keddies and allowed them to represent her in circumstances where Keddies was in fact being sued by her and this was also during the currency of her retainer with Firths to act on her behalf. 32Firths were clearly in a position where their client, the plaintiff, during the currency of their retainer had been approached by Keddies in the clear knowledge that the plaintiff was in fact represented by Firths and there was then effected an agreement between Keddies and the plaintiff. 33I have particular regard to the Notices of Removal of Solicitor which were filed with the Court. As previously noted the solicitor named as one of the first defendants signed the Notice of Removal of Solicitor on behalf of Keddies. Equally clearly the Notice of Removal of the plaintiff's then solicitors (the present second defendant Firths) was also filed by the same solicitor. This is a breach of ethical behaviour. At that time there appeared the same solicitor on both sides of the record. The action of Keddies in approaching Firths client may well have created a conflict of interest between the plaintiff and Keddies. 34As at the time of first approach to the Court following the filing of the Terms of Settlement it seems clear that Firths had a legitimate reason to seek to clarify their position in relation to their costs of the action. That clarification was not achieved until they approached the Court and indeed it appears no detail was forthcoming from Keddies in relation to the Costs Agreement as set out in the Deed of Release until that documentation was belatedly provided to Mr Firth on about 16 September 2011. 35In such circumstances I am satisfied the appropriate order is that each party pay their own costs. Orders 1. I discharge Stephen Paul Firth as second defendant 2. I refuse the application to refer the matter to the Legal Services Commissioner of NSW. 3. I dismiss the Amended Notice of Motion filed 16 September 2011. 4. Each party to pay their own costs. Mr D Baran instructed by Prominent Lawyers appeared for the plaintiff Mr M Einfeld QC with Mr D Currie instructed by Adams & Co Lawyers appeared for the first defendant Mr G Watson SC with Mr G O'Mahoney instructed by Firths appeared for the second defendant 36I return to Firths the affidavit material which is on file and which has been marked provisionally for identification. The material was not thus tendered in evidence before me. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 06 October 2011