procedural. The order requiring $100,000 to be held in the Langenberg Law trust account was varied so that $40,000 would be held pending final hearing or agreement. The plaintiff was given until 25 January...
Key principles
When deciding whether to continue interlocutory restraint over sale proceeds as security for a solicitor's disputed fees, the Court may take account of a costs assessor's...
The appropriate amount of restrained funds should reflect the balance of convenience and fairness to both parties, including the assessed amount and the possibility that review...
A costs assessor's determination did not, on the submissions made, establish that the solicitor's claim should be dismissed summarily. The pleaded equitable charge disclosed a...
Issues before the court
Whether the costs assessment warranted reducing the amount retained in trust as security.
Whether the proceedings should be dismissed or summarily determined in light of the costs assessment.
Whether the proceedings should be stayed until completion of the costs review.
Plain English Summary
The Court did not decide who ultimately owed what for the solicitor's work. It treated the costs assessment as an important change in circumstances, even though a review was pending, and reduced the amount held back from the property-sale proceeds from $100,000 to $40,000. It did not dismiss the solicitor's case because the claim raised issues that needed fuller consideration at a final hearing. The solicitor was directed to amend the claim.
AI-generated legal information, not legal advice. Zoe can make mistakes. Check the cited source, and for advice about your situation consult a qualified Australian lawyer.
Deep Dive
2,014 words · generated 28/09/2026
What happened
Thomas Baena, trading as Baena Legal, had acted for Zuhair Habeebeh in family law property proceedings. The solicitor-client relationship ended after the client retained another lawyer. A dispute then remained about the solicitor's fees and whether the solicitor had an equitable interest in property proceeds as security for those fees.
Cited legislation
No linked legislation citations have been extracted yet.
The costs agreement made on 1 July 2019 contained clause 17, which said the client charged the former matrimonial property with amounts payable to the solicitor and that the solicitor could lodge a caveat restricting transactions until the costs were paid. The agreement also created a solicitor's lien over specified documents and materials. On 21 February 2020, the solicitor lodged a caveat, asserting unpaid fees of $96,239. The asserted caveatable interest was based on clause 17.
The family law proceedings continued separately. On 29 April 2020, the Federal Circuit Court ordered the former matrimonial home sold and the proceeds paid into the trust account of Langenberg Law pending settlement or final resolution of those proceedings. The client served a caveat lapsing notice. The solicitor then commenced this Supreme Court proceeding to protect the claimed interest.
On 9 July 2020, Darke J permitted the caveat to lapse so the property sale could proceed, provided $100,000 from the client's share of the proceeds was retained in the Langenberg Law trust account. The sum was intended as substitute security for the claimed fees, with an additional margin for interest and recovery costs.
A costs assessor issued a determination on 5 November 2020. The assessor reduced the solicitor's claim from $96,239 to $13,860 and ordered the solicitor to pay the assessor's costs. The judgment describes the net amount potentially payable to the solicitor under that determination as a little under $5,000, after accounting for the assessor's costs. The assessor also criticised the quality of the supporting evidence and the extent of some charges, and referred the solicitor to the Office of the Legal Services Commissioner under Legal Profession Uniform Law 2014, s 202.
The solicitor applied for a review of the assessment on 2 December 2020. Section 86 suspended the determination pending that review. The solicitor sought a stay of the Supreme Court proceedings and continuation of the $100,000 restraint. The client sought dismissal of the proceeding and release of the money. Slattery J heard the contest on 16 December 2020. The Court reduced the held sum to $40,000, ordered an Amended Statement of Claim by 25 January 2021, made costs of the motion each party's costs in the proceedings, and adjourned the matter to the Registrar's list.
Why the court decided this way
The Court treated the applications by both parties as seeking too much. A stay of the whole proceeding was broader than required: s 86 already suspended the costs assessor's determination while review was pending. The Court's task was not to decide the review or predict its result. It was to consider what interim restraint was fair pending final determination of the dispute.
The central changed circumstance was the costs assessment. The earlier $100,000 security had been ordered when the solicitor was asserting $96,239 in fees. The later assessment reduced that figure to $13,860. The Court said it was not readily justifiable to continue restraining $100,000 where the assessment identified a substantially smaller amount as probably claimable (para 12). At the same time, the review had not been determined. The Court therefore considered it fair to preserve some security in case the review resulted in a higher assessed amount.
The judge expressly framed the exercise as assessing the balance of convenience pending final hearing, not predicting the review's outcome (para 13). The Court had the assessor's reasons and the review application before it. It considered the assessment appeared well reasoned and the review grounds highly contestable, but emphasised that it was not making a prediction. The operative question was how to adjust the existing interlocutory order in light of the new assessment.
The Court also rejected the client's attempt to obtain dismissal on the motion. In substance, the application sought either a final determination against the solicitor or a strike-out under UCPR r 13.4. The Court considered that a final hearing had not been properly prepared for: there had been no prior notice that the client would seek that relief, and it was unclear whether all suitable evidence was available. The possible effect of the administrative assessment on a final hearing had not been argued.
Further, the Statement of Claim pleaded an equitable charge based on the costs agreement. The Court said that the claim disclosed a reasonable cause of action and could not be described as frivolous merely by reference to the agreement's text. Whether the assessor's reasoning could be used to avoid the agreement was a matter for final hearing (para 8). The Court also identified a possible, but unresolved, alternative equitable claim in the form of a fruits-of-the-action lien over the sale fund (paras 9-10). That observation helped explain why a final determination or strike-out was premature; it did not establish that such a lien existed.
The practical result was a compromise. The amount held was reduced from $100,000 to $40,000, a sum the judge described as balanced in the circumstances (para 15). The decision preserved some security while releasing the larger part of the disputed restraint from the earlier order.
Before and after state of the law
The judgment is an interlocutory decision applying existing procedural and equitable concepts to a particular dispute. It does not announce a general change to the law governing solicitor-client costs, caveats, equitable charges, or fruits-of-the-action liens.
Before this decision, Darke J's July order required $100,000 to remain in trust as substitute security while the solicitor's claim proceeded. That order reflected the circumstances then presented, including the solicitor's asserted $96,239 debt. The costs assessment changed the evidential and practical setting. Slattery J treated it as relevant to the ongoing restraint, even though the statutory review process suspended the determination's operation under s 86.
After this decision, the interim security was $40,000, pending final hearing or agreement. The underlying dispute remained open. The Court did not rule on the validity of the costs agreement, whether the solicitor had a subsisting equitable interest, whether the assessment would bind or affect the eventual hearing, or the final amount recoverable. Nor did the Court decide whether the possible fruits-of-the-action lien applied.
The judgment cites Firth v Centrelink and Abbott t/as Piper Alderman v Pilot Development Corporation Pty Ltd as authorities concerning the possible fruits-of-the-action equitable lien. It does not set out a full test for that doctrine, nor does it finally apply it to these facts. The citations support the possibility of pleading or arguing such an interest, not a final conclusion that one existed here.
Key passages with plain-English translation
At para 12, the Court observed that the circumstances were different from those before Darke J because the costs assessment had reduced the amount claimed. In plain English, the original security amount could not simply be treated as fixed after the assessed amount changed substantially.
At para 13, the Court said its task was to assess the balance of convenience pending final hearing and not to predict the outcome of the review. That distinction matters: the interim order was adjusted for practical fairness, not because the Court decided that the costs assessor was right or that the review would fail.
At para 15, the Court considered it unjust to restrain $100,000 when the assessment was $13,860, but also considered it fair to the solicitor to retain some security if the review increased the figure. The reduction to $40,000 was the Court's assessment of a balanced interim amount on the material available.
At para 8, the Court said the pleaded equitable charge was not frivolous and disclosed a reasonable cause of action. In plain English, the claim was sufficiently arguable to proceed, even though the client disputed the agreement's validity and the assessor had criticised the solicitor's costs claim. That was not a ruling that the agreement was valid or that the charge would ultimately succeed.
At paras 9-10, the Court said it was at least theoretically possible to argue for a fruits-of-the-action lien over the fund. The cautious wording is significant. The judge identified a possible issue to be developed at final hearing, rather than deciding that the solicitor held that lien.
What fact patterns trigger this precedent
The decision is most relevant to an interlocutory dispute where funds are being held as substitute security for a solicitor's disputed fees, and a later costs assessment substantially changes the amount in dispute. It illustrates that a court considering continuation of an interim restraint may account for such an assessment even when a statutory review has suspended it.
The factual features that mattered included the substantial difference between the original claim and assessed amount, the pending review, the existence of an earlier security order, and the practical prospect that the client's share of the sale proceeds would otherwise be available. The Court considered both the risk of over-restraining the client's funds and the solicitor's interest in retaining some security if the review increased the assessed figure.
The decision also concerns circumstances where a party seeks summary dismissal based on a costs assessment, but the pleadings disclose a potentially arguable equitable claim and material issues remain unresolved. Here, the Court considered that the proper final hearing had not been prepared for and that the relationship between the assessment, the costs agreement and the asserted equitable interest required fuller consideration.
It should not be read as establishing that every costs assessment requires a reduction in security, that the assessed amount determines the final debt, or that a solicitor will have a lien over sale proceeds generated in litigation. The judge's order was expressly tied to the facts and the balance of convenience at that point in the proceeding.
How later courts have treated it
The supplied judgment contains no information about later judicial treatment of this decision. It does not identify any later case that applied, followed, distinguished, or criticised Slattery J's ruling. Accordingly, no conclusion about its subsequent treatment can be drawn from this source.
Within the judgment itself, Firth and Abbott are referred to in connection with the possible fruits-of-the-action lien. The judgment does not discuss later treatment of either authority. It also does not suggest that its $40,000 figure is a formula or precedent amount for other disputes. The figure was selected as a practical balance on the evidence and submissions before the Court.
Still-open questions
The final hearing was left to resolve whether the costs agreement complied with the Legal Profession Uniform Law disclosure requirements and what effect any non-compliance might have on the claimed charge. The judgment records the client's submission that the agreement was void, but does not decide that question. It also leaves open whether the solicitor has any equitable interest in the fund independent of clause 17.
The costs review remained unresolved. The Court did not determine whether the review would change the assessment or what the final assessed amount would be. It expressly avoided predicting that outcome. Nor did the Court decide whether the costs assessor's administrative determination would bind the parties or foreclose arguments at the final hearing; that point had not been argued.
The possible fruits-of-the-action lien was also left open. The judgment said the sale appeared arguably to have resulted in part from the solicitor's actions, but the issue had not been ventilated. The solicitor was ordered to file an Amended Statement of Claim, which the Court considered necessary in part because the existing pleading sought caveat-related relief without adequately claiming final equitable relief.
Finally, the proceeding's ultimate disposition, the final amount of any costs liability, and the appropriate treatment of the trust funds remained for later determination or agreement. The December 2020 order resolved only the interim security question and related procedural steps.
This is general legal information, not legal advice. Zoe can make mistakes. Before acting on or relying on this information, have it checked by a qualified Australian lawyer.
Judgment (4 paragraphs)
[1]
EX TEMPORE Judgment
The plaintiff, Baena Legal, acted until recently as the solicitor for the defendant, Zuhair Habeebeh, in certain family law property settlement proceedings between Mr Habeebeh and his former wife.
For convenience, the plaintiff will be referred to in these reasons as "the solicitor", and the defendant will be referred to as "the client". The solicitor no longer acts for the client, who appears to have lost confidence in the solicitor, and retained another legal advisor to represent him in the balance of his family law proceedings, namely, Ms Carmeline van Langenberg.
There is a residual dispute between the solicitor and the client concerning the costs charged by the solicitor to the client in the family law proceedings. That dispute has evolved into a contest about whether or not the solicitor has a subsisting equitable interest in the matrimonial real property to which the client is entitled, and which has just been sold.
The proceedings between the client and his former wife are not yet fully resolved. But the whole of the net proceeds from the sale of the matrimonial property are now held in Ms van Langenberg's trust account. But it is anticipated in early 2021, that the family law proceedings will resolve and the client will become entitled to a portion of that money, which the Court is told is in excess of $400,000.
The existing orders of this Court Darke J made on 9 July 2020 require a sum of $100,000 to be retained in Ms van Langenberg's trust account pending the resolution of the costs dispute between the solicitor and the client. In the contest today, the solicitor seeks by motion to maintain the existing injunction keeping the sum of $100,000 in Ms van Langenberg's trust account, until the final resolution of the costs assessment.
In answer to this application, the client seeks the dismissal of these proceedings and the payment out to him of the whole $100,000 as soon as the family law proceedings are resolved.
Some further background is required in order to set the scene for this contest. Mr Thomas Baena appeared for the plaintiff firm himself, and Mr J. Moshides of counsel appeared on behalf of the client.
[2]
The Solicitor and the Client's Family Law Proceedings - 2018 to 2020
Initially, Jessie Icao Solicitors represented the client in the client's matrimonial dispute in the Federal Circuit Court. The solicitor was at the time an employee of that firm. But the solicitor subsequently formed his own firm and took on the client as one of the clients of his new law firm. The client made a first costs agreement on 27 August 2018 with Jessie Icao Solicitors and a second costs agreement on 1 July 2019 with the solicitor.
Clause 17 of the costs agreement between the solicitor and the client on 1 July 2019 provided for the imposition of a caveat on the matrimonial property in the following terms:
"17. Charge securing costs
In order to secure our costs, you hereby charge the property known as [property address omitted] with the payment of all amounts that may become due and payable to us. This entitles us to lodge a caveat on the title of the property restricting transactions with the property until our costs are paid."
The costs agreement also created a solicitor's lien over documents, records, papers and other material created in the performance of the costs agreement.
On 21 February 2020, the solicitor placed a caveat on the title to the matrimonial property on account of $96,239 in alleged unpaid legal fees claimed to be owed to the solicitor for legal work in the family law proceedings. The caveatable interest claimed was said to arise by virtue of clause 17 of the costs agreement. By early this year, the solicitor and the client were in dispute about the amount of costs that were owing by the client to the solicitor.
This dispute between the solicitor and the client about the quantum of costs was referred to a Supreme Court costs assessor by the Manager, Costs Assessment.
In the meantime, the family law proceedings were progressing. On 29 April 2020, the Federal Circuit Court made orders requiring the client and his former wife to sell the former matrimonial home and pay the proceeds of sale into the trust account of Langenberg Law, pending settlement or final resolution of the family law proceedings.
To effect settlement of the sale in compliance with the Family Court's orders, the client served a caveat lapsing notice on the solicitor. In response, the solicitor commenced these proceedings by Statement of Claim and sought interim orders preventing the lapsing of the caveat.
[3]
Conclusion and Orders
Accordingly, the Court makes the following orders and directions:
1. Order (varying the orders made on 9 July 2020 by Darke J) that pending the resolution of these proceedings at final hearing or by agreement that the sum of $40,000 from the net proceeds of sale of the matrimonial home be kept in the Langenberg Law trust account as security for the plaintiff's claim against the defendant for the payment of legal fees.
2. Extend the time for the plaintiff solicitor to file an Amended Statement of Claim to 25 January 2021.
3. Order that the costs of the plaintiff's motion and today's hearing shall be each party's costs in the proceedings.
4. Adjourn these proceedings in the Registrar's list at 9.30am on Thursday, 15 February 2021.
[4]
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 December 2020
The order requiring $100,000 to be held in the Langenberg Law trust account was varied so that $40,000 would be held pending final hearing or agreement. The plaintiff was given until 25 January 2021 to file an Amended Statement of Claim. The costs of the motion and hearing were each party's costs in the proceedings, and the matter was adjourned to the Registrar's list.
The matter came before Darke J on 9 July 2020. As it was in the interests of both parties, and in conformity with the orders of the Federal Circuit Court, for the former matrimonial property to be sold, Darke J allowed the caveat to lapse upon the client's undertaking to hold $100,000 out of the client's share of the property sale proceeds in the Langenberg Law trust account. This sum was said to be a substitute security for the solicitor's billed costs of $96,239, plus some margin for interest and costs recovery.
There the matter stood for four months, while the costs assessment took place. The costs assessor published her costs assessment determination on 5 November 2020. The costs assessor dramatically discounted the solicitor's claim for costs from $96,239 to $13,860. The costs assessor ordered that the solicitor should pay the costs of the costs assessor, those costs amounting to the sum of $8,889.17. That means that, in substance, of all the costs that the solicitor claimed, the current costs assessment determination would result in the solicitor receiving a little under $5,000. That is the amount of $13,860 less the amount of $8,898.17 that was ordered to be paid to the costs assessor.
The costs assessor was highly critical of the solicitor's conduct of the proceedings. She commented upon the poor quality of evidence supporting the claim for costs and the excessive nature of some of the claims for costs. The costs assessor's criticism of the solicitor does not need to be covered in any detail in these reasons. But the costs assessor referred the solicitor to the Office of the Legal Services Commissioner pursuant to Legal Profession Uniform Law 2014, s 202.
The costs assessor's determination represented a significant change in the circumstances that existed at the time that Darke J fixed the amount to be held in the Langenberg Law practice trust account at $100,000.
On 20 November 2020, Ward CJ in Eq removed these proceedings from the Real Property List into the Equity General List and ordered the solicitor to file and serve an Amended Statement of Claim. At least one good reason for the filing and service of an Amended Statement of Claim is that the present Statement of Claim is deficient in form in that it only claims relief for the removal of a caveat and does not seek final equitable relief. Order 1 of the relief claimed in the Statement of Claim is:
"Order that until further order by the Court caveat number (number not published) be extended pursuant to the Real Property Act 1900, s 74K. Apart from that order the statement of claim claims costs of these proceedings on an indemnity basis of the money claimed of costs."
The Statement of Claim does not seek a declaration as to the equitable interest that lies behind the caveat, which would justify this matter remaining in the Supreme Court Equity Division. A money claim for less than $100,000 would ordinarily be remitted to the Local Court for determination.
The solicitor's submissions in this case put that the Amended Statement of Claim need not be filed. I disagree. In my view, an Amended Statement of Claim should be filed. The Court will require the solicitor to amend the Statement of Claim.
Notwithstanding a lack of service of an Amended Statement of Claim, on 3 December 2020, the solicitor served the present motion on the client, seeking the following relief:
"1. Pursuant to Rule 36.1 order that the proceedings be stayed until after all the costs assessment processes of the plaintiff's legal bill are completed or until further order of the Court.
2. Order that the order made by the court on 9 March 2020 is not disturbed".
The thrust of the solicitor's present submissions is that the solicitor has now made an application to the Review Panel to review the costs assessor's determination, and Legal Profession Uniform Law, s 86 now suspends that determination.
The solicitor filed the application for the review of the determination of the costs assessor on 2 December 2020. That review is yet to take place. It can be accepted that the costs assessor's determination is thereby suspended under Legal Profession Uniform Law, s 86 pending the determination. But notwithstanding that suspension, the costs assessor's determination is nevertheless a relevant new development for the Court to take into account when addressing what orders should be framed for the continuation of any restraint upon the client's moneys in the Langenberg Law trust account.
The present contest therefore maybe shortly summarised. The solicitor's motion seeks to affirm the suspension of the costs assessor's determination, during the review under Legal Profession Uniform Law, s 86, by staying the proceedings until the review is complete.
The client on the other hand seeks under Uniform Civil Procedure Rules 2005 ("UCPR"), r 18.6 orders based upon the costs assessor's determination. He seeks orders dismissing the proceedings on the basis that the whole purpose for the caveat has now been undermined by the costs assessor's reasons to the conclusion that the costs agreement between the solicitor and the client is void due to non-compliance by the solicitor with the costs disclosure provisions of the Legal Profession Uniform Law. Mr Moshides submits for the client that the costs agreement is void and that voidness would, if established, extinguish any charge created under the agreement.
But it seems to the Court that the solicitor's motion and the client's application are each asking for too much. The solicitor's motion is too widely framed in seeking a stay of the whole proceedings. All the solicitor really needs is a stay upon the use of the costs assessor's determination until the review is completed. This is a stay which Legal Profession Uniform Law, s 86 effects in any event.
The client's claim is also too widely framed as well. In substance, the client is seeking summary judgment in these proceedings. The client's application to dismiss the proceedings really seeks one of two things: (a) an application for a final hearing of the proceedings leading to a determination against the solicitor; or, (b) a claim to strike out the solicitor's proceedings under UCPR, r 13.4 on the grounds that they are frivolous and vexatious, or because they disclose no reasonable cause of action, in light of the determination of the costs assessor.
But such relief is not available to the client on this motion for several reasons. First, apart from the client's written submissions, which were only served shortly before this hearing, there has been no prior notice to the Court or to the solicitor that the client was seeking a final hearing today. And it is not clear that all the evidence suitable for a final hearing is on from either side. It was not argued that the administrative determination of the costs assessor binds the Court and forecloses argument at a final hearing. That is unlikely but whether or not it does has not been the subject of submissions.
As to UCPR, r 13.4, the denial of a final hearing to a plaintiff is a serious matter and should not lightly be undertaken. Moreover, the solicitor's Statement of Claim does disclose a reasonable cause of action. The Statement of Claim, although not felicitously expressed, certainly claims an equitable charge based upon the costs agreement. It could not be said, based upon the text of the costs agreement, that this is a frivolous claim. At a prima facie level it may be established. Whether or not reasoning such as that of the costs assessor is available to avoid the agreement is clearly a matter for final hearing.
But there may also be other ways that the solicitor could claim an equitable interest in the fund by amending the Statement of Claim. It does seem at least, at the prima facie level, that the solicitor, notwithstanding the issues raised against the validity of the written costs agreement, may possibly have an equitable charge, known as a "fruits of the action" equitable lien, over the funds which have been brought into the solicitor's hands as the result of the sale of the matrimonial property.
The sale of the matrimonial property does appear to have arguably resulted in part from the actions of the solicitor which led to the sale of the matrimonial property. It is at least theoretically possible for the solicitor to argue that he has a fruits of litigation lien over that fund: Firth v Centrelink (formerly known as the Department of Social Security) and Another (2002) 55 NSWLR 451; [2002] NSWSC 564 (Campbell J) and Abbott t/as Piper Alderman v Pilot Development Corporation Pty Ltd [2006] NSWSC 1178 (Bergin J).
These issues are all yet to be ventilated and can be at final hearing. This is not a case appropriate for the application of UCPR, Part 13, r 4.
But what is to happen from here? The picture presented to the Court now is very different to that which applied when Darke J made his orders. Unless the solicitor improves his position on the review, his claim for $96,239 may end up being a debt claim for a little less than $5,000. It does not seem readily justifiable to maintain a restraint over $100,000 when the judgment of the costs assessor is that only $13,860 is probably claimable.
The Court has been provided with both the reasons for decision of the costs assessor and the application for review. It is not the function of the Court on an application such as this to try to predict the outcome of the review. But a reasonable starting point is the costs determination, which appears to the Court to be well reasoned. The grounds for review appear to be highly contestable. But the Court is not making a prediction about the outcome of the review. All that the Court needs to do now is to assess the balance of convenience, looking ahead pending final hearing of the proceedings.
The Court should take into account the change of circumstances introduced by the costs assessment. The solicitor urged the Court not to publish a judgment which would vary the amount being kept under a restraint. The argument was that publication would influence the review. The Court is not inclined to withhold publication. The Court is not intending to influence the review and is unlikely, by what is merely an interlocutory judgment, to do so. All the Court is seeking to do is to adjust the existing interlocutory orders in light of the costs assessment.
It would, in the Court's view, work an injustice to the client for the client to have his funds constrained to the extent of $100,000 when the costs assessment has come in at $13,860. On the other hand, some allowance needs to be made for fairness to the solicitor, so that if the review results in a determination of a higher amount, there is some security for that. Doing the best it can, the Court will vary the orders for the retention of moneys in the Langenberg Law trust account from $100,000 down to $40,000, which seems to be as balanced as the Court can be.
Rather than accept further undertakings, the Court will order that pending the resolution of these proceedings, the sum of $40,000 from the proceeds of sale of the matrimonial home shall be held in the van Langenberg Law practice trust account on account of the solicitor's claim for fees in these proceedings. And I will extend the time for the solicitor to file an Amended Statement of Claim to Monday, 25 January 2021.
The costs of this application will be each party's costs in the proceedings. If either of the parties are successful in the proceedings, they will recover the costs.