The solicitors behind a complex dispute involving three different law firms were criticised for their conduct before a Supreme Court judge.
Sydney law firm Kekatos Lawyers was successful in having a cross-claim filed by former client, Dana Rahme, tossed out on the grounds that it was an abuse of process that gave rise to an estoppel.
The firm was retained by Rahme in 2015 to bring proceedings against boutique firms Benjamin & Khoury (B&K) and Solon Lawyers. While the claim against the former failed at first, Rahme was successful on appeal, and judgment in the sum of $302,040 was entered.
The claim against Solon Lawyers was settled with no costs orders.
Kekatos Lawyers has since filed a summons to secure payment of its legal costs by claiming a lien over money paid by B&K into the court.
In her cross-claim, Rahme alleged Kekatos Lawyers breached its duty of care and fiduciary duty, the terms of an oral “no-win-no-fee” retainer, and a number of statutory provisions on solicitors’ conduct.
In what Justice Michael Walton said were “unusual circumstances”, Solon Lawyers was instructing Rahme on the cross-claim.
The judge said there appeared to be some conflicts of interest “at least at first glance”, but was unable to “pass upon that topic any further”, given that none of the parties raised it as an issue.
However, Justice Walton said this arrangement “may explain the significant level of animosity between the instructing solicitors in this matter, which the court was, unfortunately, witness to”.
“I note that such conduct is far from the conduct which is expected of officers of this court,” Justice Walton noted in his written reasons.
Rahme’s cross-claim denied the existence of a written costs agreement as having legal effect, asserted it was only oral, and was conditional on a no-win-no-pay and pay-if-paid terms.
Kekatos Lawyers argued the denial of liability for costs and the quantum of those costs was “contrary to previous positions” Rahme has taken in the past and contrary to judgments of the court.
The firm added that the cross-claim was “unintelligible, ambiguous, vague or too general so as to embarrass the plaintiff who does not know what it is alleged against them”.
Justice Walton agreed it was “clearly an abuse of process”, and these circumstances were sufficient to raise an estoppel, “such that the defendant should not be permitted to raise matters … which have already been raised and determined by this court”.
“The defendant cannot now deny a liability for costs, or deny the quantum and substance of that liability, when that position is directly contrary to the position she has taken, and contrary to determinations made on the basis of that position, previously in this court,” Justice Walton said.
“To allow that course would be contrary to the principles of finality and fairness which underpin the law of abuse of process and would ‘bring the administration of justice into disrepute’.”
Naomi Neilson is a senior journalist with a focus on court reporting for Lawyers Weekly.
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