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Sydney firm owed $35k for former client’s ‘abuse of process’
A Sydney law firm challenged a former client and a Local Court judge’s orders to recover more than $35,000 in legal costs.
Naomi Neilson
The Supreme Court of NSW awarded Kekatos Lawyers $35,009.50 in legal costs, plus at least another $13,000 in pre-and post-judgment interest, after finding former client Dana Rahme abused court process by attempting to get out of paying for the firms’ services.
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The decision was handed down in May, and Mrs Rahme unsuccessfully sought to have the judgment recalled this month.
The matter began in the Court of Appeal in 2019, where Mrs Rahme successfully obtained damages against her former firm, Benjamin & Khoury, for its breach of fiduciary duty.
As part of the judgment, B&K were ordered to compensate Mrs Rahme for third-party costs, including Kekatos’ legal fees.
Mrs Rahme had argued the money she owed to Kekatos should be included in the monetary judgment the Court of Appeal made in her favour, but she never paid this money to the law firm.
Despite relying on this argument in the Court of Appeal, Mrs Rahme submitted to the Local Court that she did not have to pay.
Her Honour, magistrate Rebecca Hosking preferred Mrs Rahme’s evidence over Kekatos’ “on the basis of credit” and found the costs agreement was void because the firm had referenced the 2004 Legal Profession Act in its invoices rather than the updated 2014 act.
Kekatos successfully appealed this decision in the Supreme Court.
“Given that as a result of the Court of Appeal’s orders, Mrs Rahme had received a full indemnity for the costs she successfully claimed she owed Kekatos, it was not open to her in the Local Court to run a case diametrically opposed to that claim, as she had done.
“Rather, she was bound to what the Court of Appeal had decided,” the Supreme Court was told in submissions.
Kekatos Lawyers also submitted Mrs Rahme’s case offended the principle of finality, and it was not open for her to recover the legal costs from B&K, only to then refuse to pay Kekatos Lawyers.
While Ms Hosking was correct to find no costs agreement had been entered and the costs precedent had not been updated to refer to the 2014 act, it was conceded in the appeal before the Supreme Court that she fell into error in relation to what the Court of Appeal decided.
“It thus follows that Mrs Rahme, having succeeded as she did in respect of Kekatos’ costs on her appeal, resiling in the Local Court from the case which she had successfully pursued before the Court of Appeal, involved an impermissible abuse of process, about which the 2014 act has nothing to say,” Associate Justice Monika Schmidt said.
“That she was successful in resiling from those successful claims in the Local Court was, in the circumstances, inexplicable.”
This matter is Kekatos Lawyers v Rahme.
