Kissane Family v Laface [2013] NSWSC 905

Supreme Court New South Wales

Medium Neutral Citation: Kissane Family v Laface [2013] NSWSC 905 Hearing dates: 03/07/2013 Decision date: 03 July 2013 Jurisdiction: Equity Division Before: McDougall J Decision: Orders made by consent for transfer of solicitor's file. No order as to costs Catchwords: PRACTICE & PROCEDURE - production & inspection - application for delivery of solicitor's files

COSTS - costs orders - where both parties achieve substantial success - where matter should have been resolved without litigation - no order as to costs Category: Principal judgment Parties: Kissane Family Pty Ltd as trustee for the Kissane Family Trust (First Plaintiff) Felicity Anne Kissane (Second Plaintiff) Stefano Laface (First Defendant) AJL Legal Pty Ltd (Second Defendant) Representation: Counsel: V V Bedrossian (Plaintiff) J Bartos (Defendant) Solicitors: Etheringtons Solicitors (Plaintiffs) File Number(s): 2013/192516

Judgment (ex tempore - revised 3 july 2013) 1HIS HONOUR: The plaintiffs retained the defendants as their solicitors to act in litigation in this court. That retainer was terminated by the plaintiffs, who engaged new solicitors. The new solicitors required the defendants to deliver up their files relevant to the litigation. The defendants asserted that there were costs owing, and said that they would not deliver up the files until those costs had been paid. 2There is a dispute between the plaintiffs and the defendants as to whether the defendants were retained on a contingency basis, as the plaintiffs say, or on the basis that they would be paid from time to time for work done by them, as the defendants say. It is not possible to resolve that dispute. I observe only that there is some material in the evidence to support the position taken by each of the parties. 3As one might expect, the two firms of solicitors sought to resolve the issue. The new solicitors put a proposal that they, the client and the defendants, would enter into a tripartite deed in terms recommended by the Law Society. That was done on the basis that payment of costs would be made subject to assessment at the conclusion of the dispute and that the plaintiffs would: "...provide to our firm so that we can make that undertaking to you, security in respect of that future payment." 4That would appear to suggest that the security was to be given not to the defendants but to the new solicitors. Be that as it may, the terms of the tripartite deed that the plaintiffs and the new solicitors proposed included a term that the plaintiffs would give to the defendants an equitable charge over certain land at Brookvale and that the defendants should have a caveatable interest in that land. 5At this stage, I interpose to note that it appears to be common ground that the land is valued at about $1 million, is unencumbered, and that (excluding disbursements) the amounts of costs claimed by the defendants is of the order of $103,000. I should note also that there was an amount of about $14,000 owing to counsel who had been retained by the defendants for the plaintiffs. It appears also to be common ground that those fees should be paid and that the plaintiffs should either pay them themselves or put the defendants in funds to do so. 6The defendants took the view that they wanted more than the plaintiffs were prepared to offer. They said, in particular, that payment should be made within 18 months or at the conclusion of the substantive proceedings, whichever first occurred. That proved to be a sticking point. 7In addition, and to my mind quite irrationally, the defendants proposed a further condition: namely that the plaintiffs would consent to an Apprehended Violence Order preventing them from contacting the defendants, their family or employees or coming within 50 metres of the defendants' residence and office premises. That was said to be required on the basis of an alleged threat to stab the personal defendant. 8Not surprisingly, the new solicitors suggested that the Apprehended Violence Order was irrelevant to the question of security. Further, and more relevantly, they said that it was not appropriate to impose a time limit for payment of the fees, in circumstances where it might take longer than 18 months for the fruits of any litigious success to be recovered. 9Things went to and fro upon that basis. There does not appear to have been any concluded agreement until these proceedings were commenced, by filing of a summons (for delivery up at the files) on 24 June 2013. It is I think fair to say that by that time, the defendants had dropped their demand for an Apprehended Violence Order as a condition of agreeing to deliver their files. 10When the matter came on this morning, I suggested to counsel that an equitable charge could be seen as a somewhat cumbersome form of security, and that in circumstances where the subject property was said to be unencumbered, there could be little difficulty in providing a first registered mortgage. Counsel then discussed the matter and came to an agreement. One aspect of that agreement is that the defendants will be given a first registered mortgage. Another aspect, which goes well beyond anything canvassed in the correspondence, is that the defendants, after registration of their mortgage, will provide the Certificate of Title to the new solicitors so that the new solicitors can take a registered second mortgage to secure payments of their fees. 11The result that has been reached is a sensible one, and is in my view one that could have been concluded without the need for prompting from the Bench. However, the result that has been reached leaves at large the question of costs. In the usual way, the court has been taken to all the evidence that would have been relied upon at a substantive hearing on the question of costs. 12For the plaintiffs, Mr Bedrossian of counsel submits that in substance the matter had been resolved, on terms of the tripartite deed that had been presented, prior to the commencement of proceedings. Thus, he submits, his clients should have their costs. 13For the defendants, Mr Bartos points to the fact that no concluded agreement had been reached (because of the ongoing dispute as to when the costs should be payable). He refers also to a letter sent on 25 June 2013 (the day after the summons was filed) in which his solicitors proposed that they should have a first registered mortgage, and in which, it appears, the time limit was dropped. 14It seems to me that if the suggestion in the letter of 25 June 2013 had been followed up, then the result that was reached by negotiation today could have been reached (and should have been reached) without the need to trouble the court. 15Equally, it seems to me, the defendants have resiled from the position earlier taken by them, to the effect that an equitable charge creating a caveatable interest would be sufficient. 16Whether it could be said that the demand for a first registered mortgage, in place of an equitable charge creating a caveatable interest, is an adequate price to ask for giving up the "18 month" term is something on which minds may differ. To my mind, though, the position advanced in the letter of 25 June 2013 goes well beyond the totality (leaving out the Apprehended Violence Order) of what hitherto the defendants had said they would accept. 17Nonetheless, in my view, on and from 25 June 2013 (I say that because it appears to be uncontested that the letter of that date was sent by email), there was a basis on which, as has occurred today, the dispute could have been resolved. 18I do not know why it is that the parties did not resolve it. Nonetheless, it seems to me, their failure to come to the agreement that was in effect proposed then and has been consummated today is something which does little credit to the legal practitioners on each side of the dispute. In saying that, I exclude counsel because I have no idea when it was that counsel were retained to appear on the hearing of this application. Nonetheless, the new solicitors and the defendants between them should have been able to nut out the agreement that was in fact reached today. 19I do accept, as Mr Bedrossian submitted, that his clients have had substantial success on their application. Equally, I accept, as Mr Bartos submitted, that the defendants have achieved substantially what they sought by their letter of 25 June 2013. Finally, I note that the agreement that was reached contains a term, of significant benefit to the new solicitors, that had never before been proposed. 20In all those circumstances, it seems to me that the appropriate order is that costs should lie where they fall, so that there should be no order as to costs. I make that order and I order that the exhibits on the application be handed out. 21I make orders by consent in accordance with paragraphs 1, 2 and 3 as amended of the short minutes of order initialled by me and dated today's date. Those orders are made on the condition set out in paragraph 4 of that document. 22I make an order by consent in accordance with paragraph 5. 23I note the several agreements of the parties set out in paragraphs (A) to (F) of that document.