Kekatos Lawyers Pty Ltd v Rahme

Issues

1. There was no issue, finally, that Hoskings LCM had misunderstood what the Court of Appeal had decided. Still this appeal was resisted.
2. What remained in issue thus included whether the course which Mrs Rahme had pursued in the Local Court involved an impermissible abuse of process, resulting in conflicting judgments of the Court of Appeal and the Local Court about the same matter and an impermissible windfall. Further, whether the 2014 Act had precluded Kekatos from bringing the Local Court proceedings, despite what the Court of Appeal had earlier decided about the costs which Mrs Rahme owed Kekatos.

Conclusion

1. For reasons which follow I am satisfied that: 1. in so far as the appeal raises any question of fact which requires a grant of leave under s 40 of the Local Court Act, that leave must be granted; and 2. the appeal must be upheld and orders for the disputed costs made in favour of Kekatos.

The grounds of appeal

1. They were: "1. Her Honour erred on a question of law, or alternatively on a question of mixed law and fact, in failing to determine that the defence of the proceedings raised by the First Defendant was an abuse of process in so far as the matters raised in the defence of the First Defendant had been the subject of a claim by the First Defendant and/or had been determined favourably to the First Defendant in earlier proceedings as herein particularised. Particulars Rahme v Benjamin & Khoury Pty Ltd [2019] NSWCA 211 2. Her Honour erred in finding that the cost assessment procedure for solicitors, pursuant to the Legal Professions Uniform Law, was applicable in respect to the claim for fees by the Plaintiff in circumstances whereby said fees were relied upon by the Defendants for a claim for damages in the Supreme Court and Court of Appeal in earlier proceedings. 3. In the premises her Honour erred in: (i) dismissing the claim by the Plaintiff; alternatively (ii) in failing to strike out the defence of the proceedings by the First Defendant as an abuse of process."

The parties' cases

1. On Mrs Rahme's approach, despite Hosking LCM's errors, the appeal could not be upheld, given the requirements of the 2014 Act by which Kekatos was bound, irrespective of what the Court of Appeal had earlier decided.
2. On Kekatos' case Mrs Rahme's successful defence of its claim in the Local Court involved an abuse of process on which she ought not to have been allowed to proceed, given the judgment of the Court of Appeal by which she was bound.
3. There she had successfully claimed that the debt she owed Kekatos should be included in the monetary judgment given in her favour against her former solicitors, she having established on the evidence that she had incurred those costs as the result of Benjamin & Khoury's breach of its fiduciary duty towards her. She had recovered those costs by the Court's final orders, which had been complied with.
4. Despite this Kekatos' costs were not paid. In the Local Court Mrs Rahme initially denied any liability for those costs. Later the pleadings were amended to rely on a claim that Mrs Rahme had not received a costs agreement, disclosure and invoices from Mr Kekatos.
5. The result of Hosking LCM's conclusions was that despite having recovered the disputed costs as part of the damages she was awarded against her former solicitors, she has not had to pay Kekatos for the work it was common ground it had performed, which she had earlier successfully established she owed it as a result.
6. This had undoubtedly involved an abuse of process: Tomlinson v Ramsey Food Processing Pty Ltd (2015) 256 CLR 507; [2015] HCA 28 at [24]-[26]. Mrs Rahme's purported defence had also resulted in an impermissible windfall, by permitting her to retain the costs she had successfully pursued in the Court of Appeal, but not being obliged to pay Kekatos what she owed it. Had Kekatos been a party to the Equity proceedings, rather than her legal representative, a litigation estoppel would have arisen.
7. Given that as the 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. She was rather bound by what the Court of Appeal had earlier decided.
8. The resulting abuse of process involved in her defence of the Local Court proceedings had brought the administration of justice into disrepute, having permitted Mrs Rahme to engage in wrongdoing: Gnych v Polish Club Ltd (2015) 255 CLR 414; [2015] HCA 23 at [45].
9. Having successfully claimed before the Court of Appeal that she had suffered damages as the result of the costs she had to pay Kekatos, which she later refused to pay, in the Local Court she was not entitled to pursue a case contradictory to the one she had earlier successfully pursued.
10. This result of the Local Court's decision was also inimical to the indemnity principle, which confines costs paid by an unsuccessful party, in this case Mrs Rahme's former solicitors Benjamin & Khoury, to the amount the receiving party, Mrs Rahme, is obliged to pay his or her legal representatives: Wentworth v Rogers (2006) 66 NSWLR 474; [2006] NSWCA 145 at [46]-[48].
11. The case Mrs Rahme had pursued also offended the principle of finality, what she owed Kekatos having been in issue and finally resolved by the Court of Appeal: D'Orta-Ekenaike v Victoria Legal Aid (2005) 223 CLR 1; [2005] HCA 12 at [34]-[35].
12. It was thus not open to her both to recover costs she claimed she owed Kekatos of $35,009.50 and later to claim that she did not owe them those costs, because that involved an attempt to relitigate the same question, which had already been finally determined: Rippon v Chilcotin (2001) 53 NSWLR 198; [2001] NSWCA 142. That result was not altered by the provisions of the 2014 Act.
13. Mrs Rahme's case was advanced on the basis of eight identified issues: 1. Whether, having regard to Hosking LCM's ratio findings the appeal must be dismissed, even if the three grounds of appeal pleaded in the further amended summons are upheld, on the ground that they only challenge Hosking LCM's obiter dicta findings? 2. Whether, even if Kekatos challenged Hosking LCM's ratio findings, the challenge will fail on the ground that it relies on an adverse finding of credit against Mr Kekatos, as the principal witness for Kekatos in the Local Court? 3. Whether Hosking LCM erred in law by failing to determine Mrs Rahme's defence of the proceeding was an abuse of process on the ground that her grounds of defence raised matters which are the subject of the decision of the Court of Appeal in Rahme v Benjamin & Khoury Pty Ltd in a proceeding by Mrs Rahme against Benjamin & Khoury making a claim for damages? 4. Whether, firstly, Hosking LCM erred in point of fact by failing to determine that Mrs Rahme's defence of the proceeding was an abuse of process on the ground that her grounds of defence raised matters which are the subject of the decision of the Court of Appeal in Rahme v Benjamin & Khoury Pty Ltd, and if so, secondly, whether leave should be granted to Kekatos to raise that ground of appeal? 5. Whether Hosking LCM erred in law by finding that the costs assessment procedures in the 2014 Act applied in respect of the claim for fees made by Kekatos notwithstanding that those fees were relied upon by Mrs Rahme in quantifying her claim for damages in the Supreme Court and the Court of Appeal in her proceedings against Benjamin & Khoury? 6. Whether, firstly, Hosking LCM erred in point of fact by finding that the costs assessment procedures under the 2014 Act applied to the claim for fees by Kekatos notwithstanding that the fees were relied upon by Mrs Rahme in quantifying her claim for damages in the Supreme Court and the Court of Appeal in her proceeding against Benjamin & Khoury, and, if so, whether leave should be granted to Kekatos to raise that ground of appeal? 7. Whether Hosking LCM erred in law by finding that the statement of claim filed by Kekatos, seeking the recovery of its fees in reliance upon its alleged costs agreement with Mrs Rahme, should be dismissed? 8. Whether Hosking LCM erred in law by finding that the Defence filed by Mrs Rahme to the Statement of Claim filed by Kekatos, seeking the recovery of its fees in reliance upon its alleged costs agreement with Mrs Rahme, should not be struck out as an abuse of process?
14. For Mrs Rahme it was finally accepted, aspects of the written submissions filed not being pressed, that the Court of Appeal had undertaken an exercise of quantifying of her damages and that she had succeeded on the quantum of the damages she had claimed, including in relation to the costs which Kekatos pursued in the Local Court, which she had not paid, despite the damages she had sought and recovered.
15. Still, it was contended that despite the Court of Appeal's judgments, Kekatos, having failed to comply with the requirements of the 2014 Act, could not deny Mrs Rahme the benefits of that scheme and its consumer protections. Accordingly, the common law concept of abuse of process could not have the outcome for which it contended.
16. In any event Hosking LCM's reasoning was correct, because Kekatos had no standing to enforce the finding that resulted in the award of its costs as damages in favour of Mrs Rahme. Only she and Benjamin & Khoury were bound by the res judicata and issue estoppels created by the various findings made by the Court of Appeal in the proceedings to which Kekatos was not a party.
17. Further, her Honour was correct in finding that Mr Kekatos, as solicitor-director of Kekatos, was alone responsible for the conduct of his incorporated legal practice; that he had placed himself in a gross conflict of interest by claiming, as damages against Benjamin & Khoury, the costs he had billed by statutorily non-compliant tax invoices based on a non-existent costs agreement; and that he did so without informing Mrs Rahme, the trial judge or the Court of Appeal of that fact.
18. Her Honour had thus correctly found on the evidence that no costs agreement had ever been entered. In the result there was no basis for any order in contract, in Kekatos' favour.

The Local Court decision

1. Her Honour rejected Kekatos' case that a written costs agreement had come into existence between it and Mrs Rahme. That flowed from the resolution of the credit issues arising about the evidence which she and Mr Kekatos gave about the receipt and acceptance of the costs agreement and invoices on which Kekatos' case was advanced, in her favour.
2. Her Honour also observed that Mr Kekatos had conceded that his costs precedent had not been updated to refer to the 2014 Act and thus the claimed agreement referred to the wrong Act, as did all but one of the invoices pursued. The result was, her Honour concluded: "To recover its costs, the plaintiff would have proceed to assessment. As pointed out by the defendant, this process has become more complicated given the failure to comply with the 12 month time period provided by s 198. I am not required to comment on the process now available and I will not. Now the next question is the Court of Appeal decision and what impact that has on the defendant's ability to challenge the plaintiff's claim for costs. It is the plaintiff's case that not withstanding the above, they are entitled to recover their fees as claimed because they were allowed for in the Court of Appeal, and the defendant cannot now challenge the amount claimed. This argument is problematic on a number of fronts. The first and strongest argument against the plaintiffs proposition is in the legislation itself. The Uniform Law acts both to regulate how legal fees are to be charged and to protect clients. Mr Kekatos or Kekatos Lawyers failed in this instance to comply with their obligations under the Uniform Law. The defendant is entitled to the protections afforded to them under the Act. The Court of Appeal case was run by the plaintiffs. It could not be the case that he can rectify his own errors in disclosures by submitting them to the Court of Appeal as evidence of the defendant's liability to pay costs. If you are able to do so, it is arguable that he was in conflict and pursuing his own interests in the Court of Appeal. This is not the case where a determination by a Court has been made. Judgment was entered for a global amount based on short minutes tendered by the parties. There is no evidence before me that there was any consideration given by the Court to quantification of the loss. There can be many reasons parties agree on components of damages or compensation. One includes as a costs reduction exercise by reducing issues in dispute. There is no evidence that at the time of the Court of Appeal decision Ms Rahme even knew that the costs disclosures made were inadequate. She was still instructing the plaintiff. It is not in dispute that there was a liability owed by Ms Rahme to the plaintiff. That liability was estimated based on the invoices which have been issued to the plaintiff. The award obtained by the plaintiff in the Court of Appeal has been described as equitable compensation or damages. In both cases the claims are at large. Evidence is tendered and estimates are made. I use the example of gratuitous domestic assistance. It is an entitlement at law, but an award does not entitle the person that provided the assistance to be paid. It is the same in this case. Another example may be where there is an estimate for the cost of future surgery. A doctor may write a letter saying, "Hip replacement is going to cost $15,000 in five years' time." An award may be made for that $15,000. It does not mean that if the cost of surgery is reduced between now and when the surgery takes place, the original doctor is entitled to the $15,000 that was awarded. The outcome of the Court of Appeal cannot give rise to an entitlement in favour of the plaintiff. The test is whether or not the conduct is abuse. It cannot be an abuse of process that Ms Rahme now properly advised, seeks to challenge a claim for costs which has not been formulated in accordance with the relevant legislation. I will comment on the caselaw tendered by both parties. Pavey & Matthews supports the contention that the plaintiff is entitled to pursue his costs on a quantum meruit basis. That is not disputed and the Uniform Law dictates how that process is to be undertaken. Port of Melbourne Authority v Anshun is of little benefit given the plaintiff did not couch their claim on an Anshun estoppel basis. Blair v Curran and Wardle v Agriculture (as said) were tendered on the basis that they distinguish between collateral matters and facts which are fundamental to the decision. The submission follows that the Supreme Court reference to the amount allocated to the plaintiff's fees on the caveat matter was one that which is collateral and not fundamental. These cases are supportive of the defendant's submissions, but not determinative of the issue at hand. Muriniti v Lawcover, this case involves allegations of fraud and a vexatious litigant. In the present case the plaintiff is seeking to pursue his costs, or the plaintiff I should say, not Mr Kekatos, personally, is seeking to pursue their costs, in circumstances where they have been found to not have compiled with their obligations in respect of disclosure. Rippon v Chilcotin identifies that there are circumstances where a situation akin to issue estoppel may arise where the proponent was not a party to proceedings. However, in this case I find that the threshold is not met in terms of the evidence or findings in the Court of Appeal, or the plaintiff's ability to overcome their obligations under the Uniform Law. Similarly, in Reichel v McGrath, the House of Lords determined that it would be a scandal to the administration of justice if the same question having been disclosed of in one case, the litigant were to be permitted by changing the form of the proceedings, to set up the same case again. This does go to the crux of the case in this instance, but what was the question asked? The Court of Appeal gave no commentary on what entitlement, if any the defendant had. Sorry, what liability, if any the defendant had to the plaintiff. What it did do is determine a matter according to law and invite the parties to submit an agreed judgment sum reflecting its findings. Given the above I make the following orders: JUDGMENT FOR THE FIRST DEFENDANT AND JUDGMENT FOR THE SECOND DEFENDANT."
3. It was conceded on this appeal, however, that her Honour fell into error in relation to what the Court of Appeal had decided, by which Mrs Rahme was undoubtedly bound, despite what the parties had advanced below.
4. Still Kekatos' appeal was resisted, Mrs Rahme's case being that it had been statute barred from bringing the proceedings it had pursued in the Local Court, the 2014 Act overriding common law concepts such as abuse of process, on which Kekatos relied.

The orders sought must be made

1. For the following reasons I am satisfied that the appeal must succeed.

Her Honour's error as to what the Court of Appeal decided

1. As Mrs Rahme accepted, her Honour was wrong in concluding that the Court of Appeal "gave no commentary" on what liability she had to Kekatos. It had rather concluded that Mrs Rahme was entitled "to obtain from B&K equitable compensation for the amount she paid to third parties in consequence of B&K's breaches of fiduciary duty. If she incurred liabilities to third parties in such circumstances, she is entitled to compensation in respect of the liabilities also even if she has not yet satisfied them": Rahme v Benjamin & Khoury Pty Ltd at [138].
2. One of these identified liabilities was the costs which Mrs Rahme owed Kekatos and successfully pursued against Benjamin & Khoury. The amount of those costs was also resolved by the Court of Appeal on the basis that she recovered all of Kekatos' costs as damages. This was why Kekatos contended that the case which she advanced in the Local Court had resulted in an impermissible windfall, given that Benjamin & Khoury had paid those costs and Mrs Rahme had there claimed for the first time, that she had no legal obligation to pay Kekatos.
3. The Court of Appeal also concluded that Mrs Rahme should recover all of the costs she had been invoiced by Kekatos, calculated on a full indemnity basis, they having been incurred by her in the proceedings for the removal of the caveat improperly lodged by Benjamin & Khoury; Mrs Rahme being entitled to take proceedings to have it removed as she did; and the legal costs she had incurred in doing so therefore being consequential on the breach of Benjamin & Khoury's fiduciary duty; and thus those costs were all recoverable from Benjamin & Khoury: Rahme v Benjamin & Khoury Pty Ltd (No 2) at [4].
4. Neither Mrs Rahme nor Benjamin & Khoury had suggested in those proceedings that there was any available basis on which she could successfully refuse to pay Kekatos its costs.
5. This must be understood in a context where the 2014 Act required that the costs agreement be evidenced in writing: s 180(2). Further, that even if the costs disclosure required by s 178 had not been made, the Legal Profession Uniform General Rules 2015 (NSW) permitted orders to be made in favour of a law practice, in specified circumstances: r 72A(2)(c).
6. Consistent with this, since the Court of Appeal gave its decisions, neither Mrs Rahme nor Kekatos has sought to have those costs assessed: s 198 of the 2014 Act. Instead, it sought to recover them by enforcing its contract, after Mrs Rahme was paid its costs as damages, in the Local Court. That was expressly permitted by s 184.
7. The result of her Honour's misunderstanding of these matters was that Mrs Rahme's evidence was wrongly preferred, despite it being entirely inconsistent with both her claim in the Equity proceedings and the Court of Appeal's decision in her favour. That was not appreciated, as it needed to be.
8. Given the consequences of this error, I am satisfied that it warrants the appeal being upheld.

The credit findings

1. Her Honour did not accept Mr Kekatos' evidence. But the competing evidence about the critical issues lying between he and Mrs Rahme necessarily had to be resolved by the Local Court in light of what the Court of Appeal had already decided, given that Mrs Rahme had there successfully pursued the payment of the disputed costs by Benjamin & Khoury, as damages. This did not occur.
2. Because of her Honour's misunderstanding of the Court of Appeal's judgment, she did not appreciate that the case which Mrs Rahme had successfully pursued in those proceedings, was inconsistent with the evidence in the Local Court and the case she there advanced, that she had not had any binding costs agreement with Kekatos and was not obliged to pay the disputed invoices. That was only claimed for the first time in the Local Court.
3. Had that been revealed to the Court of Appeal, Mrs Rahme could not have recovered the disputed costs as damages from Benjamin & Khoury, as she did. But that was neither appreciated, nor considered by her Honour, as it had to be, in resolving the credit issues which arose. This also establishes relevant error.

The requirements of the 2014 Act

1. Whether there was any binding agreement between Kekatos and Mrs Rahme depended both on the provisions of the 2014 Act and the parties' dealings with each other.
2. The 2014 Act includes as part of the objectives specified in Pt 4.3 legal costs, that clients are able to make informed choices about their legal options and the costs associated with their pursuit and that law practices must not charge more than fair and reasonable amounts for legal costs: s 169.
3. In the Local Court Mrs Rahme put in issue Kekatos' compliance with its costs disclosure obligations under s 174(1), which include that a law practice must, when or as soon as practicable after instructions are initially given in a matter, provide the client with information disclosing the basis on which legal costs will be calculated in the matter and an estimate of the total legal costs. That provision also required Kekatos to ensure that it took reasonable steps to satisfy itself that Mrs Rahme had understood and given consent to the course it proposed to take for the conduct of the matter: s 174(3).
4. Given the case Mrs Rahme had already successfully advanced in the Court of Appeal against Benjamin & Khoury, about what she was bound to pay Kekatos, there could later logically be no suggestion that these obligations had not been met, as the 2014 Act required. What her Honour did not appreciate, however, was that Mrs Rahme's case in the Local Court was entirely contrary to the case she had earlier successfully pursued, which was premised on there being a binding agreement between her and Kekatos.
5. Necessarily, the case which Mrs Rahme had already successfully pursued and which Benjamin & Khoury did not challenge, as it could have, also accepted that the costs Kekatos had invoiced for the work it had performed in relation to the disputed caveat, were fair and reasonable: s 172.
6. What had been put in issue in the Equity proceedings was whether the costs Mrs Rahme owed Kekatos should be calculated on a full indemnity basis in the monetary judgment made in her favour. She succeeded on appeal.
7. Despite this earlier success in relation to the entirety of the costs Kekatos sought to have paid in the Local Court, there Mrs Rahme denied having received the document on which it relied to claim that the statutorily required costs disclosure had been made. There is no issue that this document did not refer to the 2014 Act, but rather to the predecessor legislation.
8. That it otherwise evidenced what had been agreed between the parties necessarily, however, also followed from what Mrs Rahme had earlier successfully claimed in the Court of Appeal. Consistently with the obligations imposed on the parties by s 56 of the Civil Procedure Act 2005 (NSW) in relation to the facilitation of the real issues in the proceedings, there was no suggestion in the Equity proceedings that there were any adverse consequences of this mistaken reference for Mrs Rahme's pursuit of the costs she owed Kekatos.
9. Under the 2014 Act it is costs agreements that contravene or are entered in contravention of Div 4 which are void: s 185. But in all these circumstances, the mistaken reference to the applicable statutory scheme could simply not have had the result that no binding costs agreement came into effect, that being directly contrary to the Court of Appeal's conclusions.
10. Mrs Rahme's successful pursuit of her costs agreement with Kekatos, which not even Benjamin & Khoury suggested was void, inevitably meant that it was not open to her in the Local Court to claim that it was.
11. The legislative scheme did not preclude Mrs Rahme's acceptance that she was legally bound to pay Kekatos the damages she claimed Benjamin & Khoury were liable to pay her, despite those costs not having been assessed. She was bound by the course she successfully pursued. The result was that the contract on which her case depended could also be enforced by Kekatos. While s 194 precluded it from commencing proceedings to recover its costs, unless a bill had been given which complied with the 2014 Act and the Uniform Rules, necessarily the case Mrs Rahme had successfully advanced accepted such compliance.
12. The result of the Court of Appeal's decision in Mrs Rahme's favour and by which she was bound was thus that Kekatos was not later precluded from pursuing payment of its outstanding costs in the Local Court as it did, after Mrs Rahme refused to pay them. To the contrary, the 2014 Act expressly permitted their recovery: s 184.
13. Kekatos not having been a party to the Equity Division proceedings did mean that the question of any orders being made in its favour in relation to its costs, could not arise. It thus did not lead evidence in those proceedings, contrary to some of her Honour's observations. Nor was it in any position of conflict when it acted for Mrs Rahme in those proceedings, or on the appeal. There was then no dispute between it and her about the costs agreement on which the case she advanced rested, or about the invoices she then claimed she was liable to pay Kekatos for the work it had performed.
14. To the contrary, it was Mrs Rahme who successfully pursued and obtained orders in respect of the damage she had suffered when she incurred the legal costs which she was bound to pay Kekatos, having retained it to act for her as she did in relation to her caveat dispute with Benjamin & Khoury. Her successful claim necessarily depended on her having a legal obligation to pay Kekatos its invoiced costs for that work, under a valid agreement regulated by the 2014 Act, as I have explained.
15. Given the case Benjamin & Khoury advanced, the details of that agreement did not need to be examined by the Court of Appeal. But the result, which was accepted by the Court, was that Mrs Rahme was bound to pay Kekatos the invoices it later pursued in the Local Court. That was an outcome from which she could not later resile.
16. It follows that what her Honour also failed to recognise, given her errors about what the Court of Appeal had decided, was that the cost agreement on which Mrs Rahme's successful recovery of the disputed costs had rested, was not void. The case she had successfully advanced necessarily admitted her binding legal obligation to pay Kekatos' invoices for the work it had performed, with the result that she could not later resile from the Court of Appeal's conclusions.
17. Even if not so bound, Mrs Rahme had to make any application for costs assessment within 12 months of the provision of the invoices: s 198. She had not done so. While there is a discretion to extend the time, even now, given her success in the Court of Appeal, that she could establish that it would be just and fair for an application for assessment to be dealt with, cannot be accepted. That is because this would also risk impermissibly inconsistent decisions about those costs by the Court of Appeal and an assessor.

There was an abuse of process

1. 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.
2. Justice could not permit her to depart from the result she had earlier achieved, in order that she could avoid paying the costs which she had established that she had a legal obligation to pay to Kekatos, by the evidence which she had led in the first instance Equity proceedings, about the damages she had suffered.
3. That she was successful in resiling from those successful claims in the Local Court is, in the circumstances, inexplicable.
4. Her Honour accepted that despite the evidence which established Kekatos' failure to comply with the requirements of the then applicable statutory scheme which regulated solicitors' costs agreements, it was entitled to recover its costs from Mrs Rahme. But still no order was made in its favour.
5. But the Court of Appeal had already accepted Mrs Rahme's case, that she had incurred the claimed $35,009.50 costs and was thus entitled to recover them as damages. Her Honour's conclusion that this did not preclude her resistance of the payment of those disputed costs to Kekatos, was not available.
6. Nor was the result.
7. Namely, that Mrs Rahme, having had the benefit of the Court of Appeal's orders and also having been paid the damages she had established she had suffered in relation to Kekatos' costs by Benjamin & Khoury, that Kekatos still could not obtain an order in the Local Court requiring her to pay it those admitted costs. There was no issue about the work which had been performed, on which her earlier acceptance of the costs she had incurred rested, or her successful pursuit of what she owed Kekatos as a result, in the damages claim on which the Court of Appeal acted.
8. For the Local Court later to permit Mrs Rahme to resile from the case she had so successfully pursued in relation to those damages, had the undoubtedly unjust result that she gained a considerable windfall, which the Court of Appeal cannot have intended or envisaged. The judgments of the two courts about the same matters were thus impermissibly in conflict with each other.
9. If Mrs Rahme did have any basis for disputing Kekatos' costs, that should have been disclosed so that the Court of Appeal could have considered and resolved that issue, after Benjamin & Khoury was given an opportunity to be heard. But that was not suggested by the case she advanced, because she then accepted what she owed. Nor was that put in issue by Benjamin & Khoury.
10. That this windfall was at the considerable expense of not only Kekatos, but also Benjamin & Khoury, is also relevant. Mrs Rahme having persuaded the Court of Appeal, as she did, on the basis of what she then undoubtedly knew about her agreement with Kekatos and what it had charged her for its services, she could not justly be permitted later to resile from what she had thereby admitted she owed Kekatos, when it pursued her payment of those same costs in the Local Court.
11. The outcome of the Local Court's judgment, that Mrs Rahme having received by way of damages $35,009.50 costs for which she was not required to pay anything, was unjust, and quite contrary to the indemnity principle. It required that Benjamin & Khoury not be required to pay Mrs Rahme more than the costs which she was liable to pay Kekatos: Potter v Minaham (1908) 7 CLR 277; [1908] HCA 82 at 304.
12. The result of her Honour's conclusions, impermissibly inconsistent judgments given by the Court of Appeal and the Local Court about the same costs, was clearly the result of wrongdoing on Mrs Rahme's part. That was established by her pursuit of the considerable advantage which she had gained from denying that she owed Kekatos the costs she had already recovered as damages, despite Benjamin & Khoury having provided her with the funds to pay those outstanding costs, in compliance with the Court of Appeal's orders.
13. In all the circumstances it follows that justice demands that the appeal be upheld and that orders be made in favour of Kekatos in respect of its unpaid costs, payment of which will be funded by the damages Benjamin & Khoury have already paid.

The disbursement of money out of trust

1. Both in the Local Court and on this appeal, submissions were also advanced about payments made out of trust by Kekatos without necessary instructions from Mrs Rahme, which turn on the proper construction of other provisions of the 2014 Act. This was not dealt with in the Local Court judgment, I consider correctly, because it was contended that what had been so paid did not include the disputed $35,009.50 pursued on this appeal.
2. That being so and Mrs Rahme resisting the appeal, claiming that she had no obligation to pay those costs, nothing can turn on this and so it is unnecessary to deal with these submissions.

Costs

1. The usual costs order under the Uniform Civil Procedure Rules 2005 (NSW) is that costs follow the event. In this case that is an order that Mrs Rahme pay Kekatos' costs: r 42.1.

Orders

1. For the reasons given judgment must entered in favour of Kekatos. The parties should confer and file orders reflecting the conclusions which I have reached within 14 days.
2. In the event of any disagreement the parties should approach to be heard. In that event they should also provide short written submissions within 14 days.

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: 18 May 2023