By Louise Cantrill, Partner, Tamara James, Associate and Isabella Gerardi, Lawyer
On 10 November 2025, Walton J handed down the latest decision in the lengthy and contentious dispute between Dana Rahme and her former solicitors in the Supreme Court of NSW. The Court determined that the pleadings contained in a cross claim brought by Ms Rahme amounted to an abuse of process because the pleadings were inconsistent with evidence she relied upon and determinations of the Court in prior related proceedings.
Kekatos Lawyers were retained by Ms Rahme and her husband to bring proceedings against her former solicitors Benjamin & Khoury (the substantive proceedings). Ms Rahme was successful in these proceedings and Benjamin & Khoury were ordered to pay Ms Rahme’s costs on an ordinary basis.
The proceedings before Walton J were brought by Kekatos Lawyers against Ms Rahme seeking to secure the payment of legal costs owed by Ms Rahme by claiming a lien over the money paid into the court by Benjamin & Khoury in the substantive proceedings.
The subject of Walton J’s judgment was a cross claim filed by Ms Rhame which sought damages for breach of contract, duty of care, fiduciary duty and statutory consumer protections by Kekatos Lawyers.
In addition to these claims, Ms Rahme claimed that the written costs agreements between her and Kekatos Lawyers had been superseded by an oral retainer which was on a no-win-no-pay and pay-if-paid basis, whereby Kekatos Lawyers were alleged to have agreed to accept, as the costs for the performance of its retainer, the net amount recovered by the Rahmes as ordered costs (but not damages) in the event they were successful in the proceedings.
Kekatos Lawyers sought a motion to strike out the cross claim on the basis that it was an abuse of process.
Kekatos Lawyer’s claim that the cross claim amounted to an abuse of process was made on the basis that the pleadings contained in the cross claim were contrary to previous positions which Ms Rahme had taken and contrary to previous judgments of the Court.
Walton J accepted that the terms of the written costs agreement were entirely inconsistent with what was pleaded by Ms Rahme in the cross claim and held that irrespective of whether the written costs agreement was signed by Ms Rahme and returned to Kekatos Lawyers, acceptance of its terms would have been satisfied by the fact that Kekatos Layers continued to be instructed by Ms Rahme.
Separately, Ms Rahme had provided a copy of the written costs agreement and invoices issued by Kekatos Lawyers under the written costs agreement when having her costs assessed for the purposes of the costs assessment undertaken in respect of the costs order in her favour in the substantive proceedings. In addition, the costs assessor explicitly referenced the written costs agreement in the determination of the value of Ms Rahme’s costs of the substantive proceedings.
Walton J determined that given Ms Rahme’s reliance on the written costs agreement in prior proceedings before the Court, Ms Rahme was not permitted to raise matters, including the existence of the written costs agreement, which had already been considered by the Court. For the Court to allow such pleadings to be submitted into the Court would be contrary to the principles of finality and fairness which underpin the law of abuse of process.
Kekatos lawyers sought to rely on the doctrine of issue estoppel to argue that the cross claim should not be considered by the Court.
As cited by Walton J, the High Court in Tomlinson v Ramsey Food Processing Pty Limited (2015) 256 CLR 507 at [22] described issue estoppel as estoppel which ‘operates to preclude the raising in a subsequent proceeding of an ultimate issue of fact or law which was necessarily resolved as a step in reaching the determination made in the judgment.’
Ms Rahme argued that the statutory provisions of the Uniform Law and Uniform Law Application Act prevented the doctrine of issue estoppel from being applied in her matter on the basis that a costs assessment is an administrative process that does not determine liability and therefore, the written costs agreement was not a matter that had previously been considered by the Court.
Walton J did not accept this argument and held that a costs assessor may determine a non-anterior or non-incidental question of fact or law, which may have the effect of establishing an issue estoppel for that question. Accordingly, the costs assessor in the substantive proceedings determined the existence of the written costs agreement (and had obviously relied on the terms of the costs agreement when undertaking his assessment). As such the existence of the written costs agreement had already been considered by the Court.
In summary, Ms Rahme’s inconsistent pleadings constituted an abuse of process which gave rise to an issue estoppel which prevented her from making those pleadings before the Court.
Kekatos Lawyers v Dana Rahme highlights the seriousness of ensuring the continuity of arguments and evidence presented before the court in related or subsequent proceedings. The matter confirms that this concern can extend to underlying facts relied upon to prove a case formulation previously relied upon.
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