Bufalo Corporation Pty Ltd v Lendlease Primelife Ltd

[2010] VSC 672

IN THE SUPREME COURT OF VICTORIA Not Restricted

AT MELBOURNE

COMMERCIAL AND EQUITY DIVISION

No. 6668 of 1999

BUFALO CORPORATION PTY LTD (ACN 007 122 296) (RECEIVER AND MANAGER APPOINTED) (IN LIQUIDATION)	Plaintiff
- and -
LENDLEASE PRIMELIFE LTD (FORMERLY PRIMELIFE CORPORATION LIMITED) (ACN 010 662 901) and others	Defendants

JUDGE:	JUDD J
WHERE HELD:	Melbourne
DATE OF HEARING:	26 October 2010
DATE OF JUDGMENT:	28 October 2010
CASE MAY BE CITED AS:	Bufalo Corporation Pty Ltd v Lendlease Primelife Ltd
MEDIUM NEUTRAL CITATION:	[2010] VSC 672

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INJUNCTIONS — restraining legal practitioners from acting — ensuring due administration of justice — injunction not granted.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr P G Cawthorn SC with Mr M A Robins and Mr C G K Madder	Tresscox
For the First and Fourth Defendants	Mr S K Wilson QC Mr P J Marzella	Russell Kennedy
For the Fifth Defendant	Mr J P Gorton	Minter Ellison
For the Sixth Defendant	Mr S M Anderson S C with Mr G W Moffat	Holding Redlich

HIS HONOUR:

1. The plaintiff has made application for an injunction restraining Leonard Adrian Warren, a member of the firm of solicitors Russell Kennedy, from continuing to act on behalf of the first and fourth defendants in this proceeding, Lend Lease Primelife Ltd and Edward Sent respectively.  I will refer to them as the Primelife defendants.  If that application is unsuccessful, the plaintiff opposes the exclusion of Mr Warren from an order for witnesses out of court.  Mr Warren is to be called as a witness on behalf of the Primelife defendants. 

1. The evidence proposed to be given by Mr Warren relates to central issues in the proceeding and is very likely to be contentious.  The first issue is whether the plaintiff should be estopped from challenging the validity of security documents under which the sixth defendant, Mr Gideon Rathner, was appointed receiver of the assets of the plaintiff.  The first and fourth defendants contend that it was not until well after Mr Rathner was appointed that the plaintiff challenged the validity of the debenture.  Mr Warren says that, had he believed that the plaintiff challenged the validity of the security documents before Mr Rathner’s appointment he would have taken steps to have the issue resolved before Primelife appointed a receiver.  There is a significant body of evidence relating to that issue, and there will be a challenge by the plaintiff to Mr Warren’s asserted position.

1. Of more importance is the evidence to be given by Mr Warren in connection with allegations that Primelife, through him, unlawfully interfered in the receivership by directing or persuading Mr Rathner not to sell shares held by the plaintiff in Primelife, the value of which shares exceeded an amount advanced by Primelife to assist in the purchase of shares in Confalo Pty Ltd and Newpark Pty Ltd, and by directing or persuading Mr Rathner to accept and assert that the scope of the debenture extended to secure counterclaims by Primelife against the plaintiff in respect of joint venture projects.

1. The significance of the allegations in the case and to Mr Warren should not be underestimated.  They are an important part of the plaintiff’s case.  When coupled with Mr Warren’s involvement in the issues relating to the plaintiff’s challenge to the validity of the security documents, Mr Warren finds himself as a central witness with the real likelihood, if not inevitability, that he will be subjected to serious allegations about the propriety of his conduct and challenges to his credit.

1. In the circumstances, it is surprising that Mr Warren did not himself conclude that he should not continue to act as a solicitor for the Primelife.  He must have known that his conduct would be the subject of a challenge by the plaintiff.  The allegations against Mr Warren are serious and, if made out, will reflect adversely upon his  professional reputation.

1. The test to be applied upon an application such as this has been restated in a number of recent decisions.  In Garde-Wilson v Corrs Chambers Westgarth Bell J said,[1]

The test is objective and whether a fair-minded reasonably informed member of the public would reasonably conclude that the proper administration of justice required the lawyer to be restrained from acting.[2] 

Proper weight must be given to the fundamental principle that, in the public interest, a party to litigation in a court and, I would add, proceedings in an administrative tribunal, should not be deprived of the lawyer of their choice without good cause.[3]

One aspect of this principle is that, quite apart from clients, the courts and, again I would add, tribunals, are entitled to receive the assistance of solicitors and counsel who are observably independent.[4] 

[1][2007] VSC 235, 41-3.

[2]Grimwade v Meagher [1995] 1 VR 446, 452.

[3]Ibid; see also R v Khazaal [2006] NSWSC 1353, [90].

[4]Grimwade v Meagher [1995] 1 VR 446, 452 citing Kooky Garments Ltd v Charlton [1994] I NZLR 587, 590.

1. In Grimwade v Meagher Mandie J, having reviewed the authorities, said, [5]

In my view it cannot be doubted that this court likewise has an inherent jurisdiction to ensure the due administration of justice and to protect the integrity of the judicial process and as part of that jurisdiction, in an appropriate case, to prevent a member of counsel appearing for a particular party in order that justice should not only be done but manifestly and undoubtedly be seen to be done. The objective test to be applied in the context of this case is whether a fair-minded reasonably informed member of the public would conclude that the proper administration of justice required that counsel be so prevented from acting, at all times giving due weight to the public interest that a litigant should not be deprived of his or her choice of counsel without good cause.

[5][1995] 1 VR 446, 452.

1. That principle applies with equal force to a solicitor.  In Geelong School Supplies Pty Ltd v Dean, Young J said,[6]

The crucial question, therefore, is whether on the evidence before me a fair-minded, reasonably informed member of the public would conclude that the proper administration of justice requires that Vogrig and WVL be restrained from acting for GSS in these proceedings. In answering this question it must be borne in mind that this is an application for a permanent injunction: Yunghanns v Elfic Ltd (VSCA, Gilliard J, 3 July 1998, unreported, BC9803031). It must also be borne in mind that the court’s jurisdiction is an exceptional one; it is to be exercised with appropriate caution and due weight must be given to the public interest in a litigant not being deprived of the solicitor of its choice without due cause.

[6](2006) 237 ALR 612, 35.

1. In Kallinicos v Hunt, Brereton J summarised the authorities as follows: [7]

   [7](2005) 64 NSWLR 561, 76. See also Adam 12 Holdings Pty Ltd v Eat & Drink Holdings Pty Ltd [2006] VSC 152, 38 per Whelan J; Clay v Karlson unreported WASC, Templeman J, 28 August 1997, BC9704219;  Chapman v Rogers [1984] 1 QdR 542; Corporate Affairs Commission v Harvey (1980) VR 669, 762; Holborow v Macdonald Rudder [2002] WASC 265, 27-8 per Heenan J.

The foregoing authorities establish the following:

·During the subsistence of a retainer, where the court’s intervention to restrain a solicitor from acting for another is sought by an existing client of the solicitor, the foundation of the court’s jurisdiction is the fiduciary obligation of a solicitor, and the inescapable conflict of duty which is inherent in the situation of acting for clients with competing interests [Prince Jefri].

·Once the retainer is at an end, however, the court’s jurisdiction is not based on any conflict of duty or interest, but on the protection of the confidences of the former client (unless there is no real risk of disclosure) [Prince Jefri].

·After termination of the retainer, there is no continuing (equitable or contractual) duty of loyalty to provide a basis for the court’s intervention, such duty having come to an end with the retainer [Prince Jefri; Belan v Casey; Photocure; British American Tobacco; Asia Pacific Telecommunications; contra Spincode; McVeigh; Sent].

·However, the court always has inherent jurisdiction to restrain solicitors from acting in a particular case, as an incident of its inherent jurisdiction over its officers and to control its process in aid of the administration of justice [Everingham v Ontario; Black v Taylor; Grimwade v Meagher; Newman v Phillips Fox; Mitchell v Pattern Holdings; Spincode; Holborow; Williamson v Nilant; Bowen v Stott; Law Society v Holt]. Prince Jefri does not address this jurisdiction at all. Belan v Casey and British American Tobacco are not to be read as supposing that Prince Jefri excludes it. Asia Pacific Telecommunications appears to acknowledge its continued existence.

·The test to be applied in this inherent jurisdiction is whether a fair-minded, reasonably informed member of the public would conclude that the proper administration of justice requires that a legal practitioner should be prevented from acting, in the interests of the protection of the integrity of the judicial process and the due administration of justice, including the appearance of justice [Everingham v Ontario; Black v Taylor; Grimwade v Meagher; Holborow; Bowen v Stott; Asia Pacific Telecommunications].

·The jurisdiction is to be regarded as exceptional and is to be exercised with caution [Black v Taylor; Grimwade v Meagher; Bowen v Stott].

·Due weight should be given to the public interest in a litigant not being deprived of the lawyer of his or her choice without due cause [Black v Taylor; Grimwade v Meagher; Williamson v Nilant; Bowen v Stott].

·The timing of the application may be relevant, in that the cost, inconvenience or impracticality of requiring lawyers to cease to act may provide a reason for refusing to grant relief [Black v Taylor ; Bowen v Stott].

1. The involvement of Mr Warren in the events at the heart of the plaintiff’s case, his proposed evidence and the inevitable attacks to the propriety of his conduct and his credit compel a conclusion that a fair minded, reasonably informed member of the public would conclude that the proper administration of justice in this proceeding is compromised if Mr Warren continues to act for the Primelife defendants.  He has a very real interest in the outcome of the proceeding on certain issues.  It will be difficult, if not impossible, for Mr Warren to bring to bear an objective and dispassionate mind in discharging his duties to his clients and to the court.  For so long as Mr Warren continues to participate in this proceeding as the solicitor representing the Primelife defendants, the appearance of a fair trial is compromised. 

1. Counsel for the Primelife defendants submitted that the plaintiff has known since about June 2009 that Mr Warren would be giving evidence and the general nature of the evidence.  Counsel accepted, however, that the scope of the evidence and the significance of the attack upon him had changed following the reformulation of the plaintiff’s case and the amendments recently made in which the plaintiff sought to attribute liability to Primelife for Mr Warren’s alleged wrongful interference in the receivership.

1. The Primelife defendants submitted that the plaintiff had delayed so long in making its application for an injunction that, even if grounds were otherwise made out, an injunction should be refused.  They submitted that, had an application been made much earlier, alternate arrangements might have been put in place avoiding an inevitable adjournment and need to instruct new solicitors.

1. That argument seemed, however, to overlook the risk that the Primelife defendants took when continuing to engage Mr Warren in circumstances where they must have anticipated the very real likelihood of an application for an order for witnesses out of court.  Surely they did not assume that Mr Warren would be excused from such a matter as a matter of course.  The authorities upon which they relied to seek his exclusion from the order bear little relationship to the facts in the present case.[8]

   [8]Everett v Lowdham (1831) 172 ER 91; Pomeroy v Baddeley (1826) 171 ER 1073; Holland v Evans [1959] VR 54; Tran v Magistrates’ Court of Victoria (1998) 4 VR 294.

1. In my opinion, there are strong grounds to support an injunction restraining Mr Warren from continuing to act on behalf of the Primelife defendants in this proceeding.  There are also strong grounds as to why he should not be excused from an order for witnesses out of court, notwithstanding his role as solicitor for the Primelife defendants.  The plaintiff has, however, left its application until after the commencement of the trial.  This proceeding, commenced in 1999 and was fixed for trial on in November 2009.  It is imperative that the trial be concluded as soon as possible. 

1. The administration of justice will be compromised if the trial, which commenced on 11 October 2010, is now aborted because the Primelife defendants will be required to engage a new solicitor.  I do not regard the replacement of Mr Warren with a junior member of his staff at Russell Kennedy as a satisfactory response to an injunction.  Such an outcome would unfairly disadvantage the Primelife defendants and cause potential embarrassment to Mr Warren’s firm because of its continuing presence as solicitors for the Primelife defendants.

1. The administration of justice sometimes requires a balancing of competing interests.  There is the public interest in the orderly disposition of this proceeding without undue delay and the waste of public resources;  there is the public interest in a fair and apparently fair trial process;  there is the interest of the plaintiff in a fair trial process;  the interest of the Primelife defendants in representation of their choice; and the need for the court to be assisted by legal practitioners.  I do not overlook the interests of the other defendants my considerations.

1. The balancing of those interests is difficult, and particularly so in this case.  In the end, the public interest in having this trial proceed to conclusion without interruption should, in my view, prevail.  Regrettably, that means other interests must yield.  I refuse the application for an injunction.  That does not, however, wholly dispose of the matter.

1. A further difficulty attending Mr Warren’s position is his application to be excused from an order for witnesses out of court.  Mr Warren is not merely a formal witness whose evidence is not contentious.  To excuse Mr Warren from the operation of such an order would cause the reasonable bystander to ask why he is excused when other witnesses, except for parties, are not.

1. Counsel for the Primelife defendants argued that Mr Warren ought to be excused because of the importance of his position as the solicitor for the Primelife defendants in a very complex matter and, in particular, having regard to his depth of knowledge and experience in the matter.

1. It is clear that if Mr Warren is not excused he will be effectively disabled from fully participating as the solicitor for the Primelife defendants until such time as his evidence has been given.  That may cause serious prejudice to the Primelife defendants which may not be capable of remedy without an adjournment.  I am not prepared to adjourn the trial for that reason.

1. I propose to excuse Mr Warren from the operation of the order for witnesses out of court for the time being.  That does not mean, however, that he will be indefinitely excused.  It will be necessary to review the position from time to time depending upon the evidence to be given by a particular witness.