Swarming creditors have transformed property proceedings in Division 1 of the Federal Circuit and Family Court into a 16-way contest between the wife (Ms Pirani), husband (Mr Pirani) and 14 other respondents.
Four of these respondents are lawyers or law firms which had previously acted for the wife, and who were pursuing claims and security for claims against her. However, they were all largely unsuccessful due to faulty costs agreements.
Of particular interest is a lawyer anonymised as Ms OO, who claimed that she was a former lawyer of the applicant, Ms Pirani. To recover payment, Ms OO sought a declaration of lien over Ms Pirani’s jewellery, which she had come to hold.
However, a point of unusual contention in this case was whether Ms OO was, in fact, Ms Pirani’s lawyer. Instead, Ms Pirani argued that Ms OO acted as a friend.
The purported fee agreement, dated November 2016, was of no assistance. Ms OO had mailed the agreement to the husband’s property development company, at a time when Ms Pirani was not in the country. Ms Pirani had not executed the document and denied having ever received it.
There were other issues, including lack of clarity about the scope of purported work, and that the purported agreement did not contain an estimate of costs.
Although this means that under s.178(1) of the Legal Profession Uniform Law Ms OO is restricted from commencing or maintaining proceedings for the recovery of costs, HH held that the relief sought here, insofar as it was limited to the identification of a lien, did not fall foul of that restriction.
Ms OO was otherwise limited in documents that she could adduce to prove the solicitor-client relationship because her laptop had reportedly crashed, meaning that she lost access to her previous emails.
Despite having claimed to have acted for Ms Pirani from November 2016 to April 2023, Ms OO issued only one invoice – in April 2023.
The invoice identifies a total fee of $495,000. However, it contains numerous entries related to work not yet undertaken, and a false contention that a particular counsel, Mr Foster, appeared at trial for Ms OO.
Many of the other documents that Ms OO attempted to tender were refused. If her assertion of a solicitor-client relationship was correct, the documents would be protected by privilege. Her repeated attempts to adduce these led Justice Shane Gill to refer her to the NSW Legal Services Commissioner for investigation.
Claiming that Ms OO acted as a friend, Ms Pirani described how, before the relationship breakdown, OO would socialise regularly with the Piranis, attending the family home for “dinner and sheesha”.
She added that after the breakdown, Ms OO would say, “I was the ambassador of peace, I am helping a friend”.
Parts of Ms OO’s assistance appeared to be non-legal in nature, which further confused the relationship.
For example, she liaised with clergy to assist in the resolution of a dispute, which was not incorporated into the 2023 invoice.
The circumstances in which Ms OO came to hold Ms Pirani’s jewellery, which she asserts is worth $702,000, also seem unusual.
Ms Pirani claims that Ms OO recommended that the jewellery be placed with her in a safe deposit box to prevent Mr Pirani taking it – for a second time.
Although Ms Pirani was given the only keys to the lockbox, Ms OO later caused the box to be opened by a locksmith and had the jewellery transferred to a third party.
Ms Pirani alleges that Ms OO then refused to return the jewellery when asked.
Ms OO’s story is different. She claims that Ms Pirani told her that the jewellery was deposited with her to secure her legal costs.
Justice Gill ultimately did not accept Ms OO’s account, especially given Ms Pirani’s subsequent surprise that the jewellery was to be held for Ms OO’s fees.
Moreover, HH found that these instances did not necessarily negate the finding of a solicitor-client relationship. Rather, he found such a relationship did exist, although its precise extent was unclear.
This was because Ms Pirani had made representations that Ms OO was her lawyer and had relied on her as such. At times she had also acted as a lawyer, for example by retaining counsel.
Nonetheless, HH refused to grant a lien over the jewellery.
The remaining lawyers, anonymised as AF Pty Ltd and ZZ Pty Ltd, were also largely unsuccessful in their claims.
AF in particular sought declaratory relief regarding security over an anonymised property in Suburb J. The amount was not quantified, however seven tax invoices were issued to Ms Pirani for work done between April and October 2023, which totalled the eye-watering sum of $854,111.15.
The fatal flaw, however, was that they were slow to provide a costs agreement, as the firm waited until two weeks after the initial consult.
This meant that s.174 of the Uniform Law was not complied with, and that under s.178 the costs agreement was void. No exemption under rule 72A of the Legal Profession Uniform General Rules was established.
ZZ Pty Ltd claimed $466,168.95 and interest, secured by an equitable charge over the Suburb J property. Their costs agreement was similarly faulty, in that the lawyers did not provide estimates of legal costs as required by s.192 of the Uniform Law, meaning that the restriction in s.194 is engaged.
However, Gill J held that this did not limit applications regarding security, and a charge over the property in Suburb J was granted.
Divorce is never happy, but this particularly sorry state of affairs should serve as a strong reminder to practitioners to get their costs agreements in order.