Chen & Ors v Chan & Ors
[2008] VSCA 2
•24 January 2008
SUPREME COURT OF VICTORIA
COURT OF APPEAL
No 7446 of 2003
| CHEN & ORS |
| v |
| CHAN & ORS |
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JUDGES: | MAXWELL P and REDLICH JA |
WHERE HELD: | MELBOURNE |
DATE OF HEARING: | 24 January 2008 |
DATE OF JUDGMENT: | 24 January 2008 |
MEDIUM NEUTRAL CITATION: | [2008] VSCA 2 |
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Legal practitioners – Misconduct – Allegations by appellants of misconduct at trial by respondents’ solicitor and barrister – Whether appeal court should investigate allegations – Whether misconduct alleged to have affected trial outcome – Whether lawyers should be restrained from acting for respondents on appeal.
Appeal – Stay – Enforcement of costs order made at first instance – Bankruptcy proceedings against appellants – Whether exceptional circumstances – Whether court should investigate dispute as to appellants’ financial position – Stay granted.
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| APPEARANCES: | Counsel | Solicitors |
| The First and Second Appellants in person | ||
| For the Third Appellant | Mr D Leggatt (Solicitor) | Phillips Fox |
| For the Respondents | Dr RJ Sadler | Chadwicks |
MAXWELL P
REDLICH JA:
There are before the Court two applications by the first two appellants, one for an extension of the stay granted in December 2007, the other for an order to restrain the barrister and solicitor hitherto acting for the respondents from acting in the appeal. For reasons which follow, it is our view that the stay should be extended and the application to restrain the participation of the lawyers should be refused.
We deal first with the stay. In reasons which Maxwell P and Dodds-Streeton JA gave on 21 December 2007 on the application made on that day for a stay, reference was made to the circumstances in which bankruptcy notices were served on each of the first two appellants. It is unnecessary to repeat anything said then about the chronology of events.
An interim stay was granted for the reasons there set out. Specifically, the Court was satisfied that there was a sufficient risk that, if the respondents were to proceed with the enforcement of the order for costs made in their favour, Mr Chen and Ms Lu would be unable to satisfy those orders, would commit an act of bankruptcy and would be declared bankrupt, that having, obviously, very significant consequences for them and practical consequences for the conduct of the litigation.
The respondents signified in today’s submissions only formal opposition to the stay. Somewhat to our surprise, that flowered into substantive opposition in the course of argument. Nevertheless, points were properly made on behalf of the respondents to the effect that there were questions remaining unanswered by the material filed by the first two appellants about their financial circumstances. Counsel for the respondents argued, as their counsel had in December, that the affidavit of the second appellant, filed in May 2007, did not explain the fate of the $190,000 which Kaye J found belonged to the first and second appellants.
Mr Chen states in Court this morning, as he did in December, that the affidavit of his wife is now, as it was then, an accurate, comprehensive statement of their financial position and that there is, he assures us, no concealment and no deception. Mr Chen contends that we should proceed on that basis in assessing the implications of the continuation of enforcement proceedings. As we indicated in the course of argument, we would, if necessary, investigate a disputed matter of that kind but only in circumstances where there was something so compelling about the reasons for taking enforcement action that the issue of staying that action had real implications for the judgment creditor.
There is nothing to indicate – and counsel for the respondents properly conceded this – that there is any urgency from his clients’ point of view about enforcement of the costs order. It is said, "We simply want the orders complied with". Why that view is confined to the costs order has not been explained. At all events, there is no pressing necessity for enforcement.
On the other side, the sworn and restated financial position of the appellants means that there is a real risk that they would be bankrupted if enforcement went ahead. Because the overwhelmingly important thing from the Court's point of view is the proper and prompt conduct of the appeal, we do not stay to investigate the dispute about whether the financial position is or is not truthfully stated. To do so would obviously require production of documents and cross‑examination of the deponent, and there would be a question of whether Mr Chen himself would give evidence about the financial position. To have a trial of that kind on an interlocutory application could only be justified in quite exceptional circumstances.
For reasons similar to those given in Orrong Strategies Pty Ltd & Ors v Village Roadshow Ltd,[1] we regard the circumstances – that is to say, the prospect of the appellants’ bankruptcy – as constituting exceptional circumstances justifying the continuation of the stay, which extends to any enforcement action in respect of either judgment and any part of those orders until the hearing and determination of the appeal or further order.
[1](Unreported, Supreme Court of Victoria, Court of Appeal, Maxwell P and Ashley JA, 23 November 2007).
In relation to the application to restrain the solicitor and barrister from continuing to be involved, we indicated early in the hearing our joint view that it was neither necessary nor appropriate for this Court to investigate the allegations which the first two appellants make. The allegations concern the conduct of the respondents’ barrister and solicitor, both in the proceedings in the Trial Division and subsequently in and in connection with the proceedings in this Court. The complaints, so far as they relate to the conduct of the trial proceedings, can and will be addressed by this Court in the appeal insofar as the appellants say that the alleged misconduct resulted in either trial Judge not having before him all the necessary evidence, or having wrong evidence or having had false statements made to him.
We wish to stress that, if the appellants are intending to argue in the appeal that there were matters of evidence not before either trial Judge which should have been there, or that statements of fact were made which were not true, such that the Court was acting on a false basis, each of those matters will need to be quite specifically identified as part of their preparation for the appeal. At the directions hearing which the President will conduct within a few weeks, the appellants will be expected to have set out in writing any respect in which they say that conduct of the lawyers on the other side affected the outcome of the trial or trials.
Assuming for the purposes of these reasons that there are points of that kind, they supply no reason for preventing those lawyers from being involved in the appeal. On the contrary, as we pointed out in argument, it will very much assist the appeal court in considering those matters to have present the lawyers in respect of whom those contentions will be made. For example, if it is said that a particular piece of evidence was withheld, then the Court can ask counsel for the respondents whether that is so and, if it is so, why it occurred. The significance or correctness of the appellants’ contention can be examined. The position would be altogether more difficult for everyone concerned if the respondents were represented by counsel who had not been present when these events allegedly occurred. Any other matters of alleged misconduct relating to the trial proceedings are not matters for investigation by this Court, but for investigation by the regulatory authorities – the Bar, the Law Institute and the Legal Services Commissioner.
The only circumstance in which this Court would take the quite exceptional step of entertaining an application to remove a lawyer from, or prevent a lawyer from participating in, an appeal proceeding would be where it could be demonstrated there was a real risk that the lawyer's participation would prevent the applicant party from having a fair hearing of the appeal.[2] Mr Chen, his wife and his daughter have made a number of complaints about dealings between the parties since the appeal was commenced, including complaints about late or non‑service of documents and alleged withholding of materials until the last minute. We note those allegations but express no view about them.
[2]See, for example, Grimwade v Meagher [1995] 1 VR 446; Kallinicos v Hunt (2005) 64 NSWLR 561.
Because our earnest desire is to have the appeal heard and determined as soon as practicable, we regard it as unnecessary to hear from the lawyers in respect of each of those allegations. We would, of course, need to hear from them, and they would be entitled to be heard, in respect of each such allegation before any conclusion could be made about whether the allegation was well-founded and, if it was true, about the consequences of it. We are mindful of the importance of marshalling the resources of this Court and directing them to where the need is greatest, that is, in the conduct of the appeal proceedings themselves.
Nothing has been put forward which suggests the participation of the respondents’ solicitor and barrister might prevent the appeal from being fairly conducted and decided. The appeal court of course controls its own proceedings. Both practitioners know – as every practitioner in the Supreme Court knows – that the Court expects every lawyer, as an officer of the Court, to conduct himself or herself in a manner which is beyond reproach. We have every confidence that the lawyers representing the respondents will conduct themselves in accordance with that high standard in this proceeding.
If the first two appellants wish to say that their preparation of their appeal is being or has been improperly impeded, obstructed or interfered with, they will be able to raise that matter with the Court. In particular, we would expect them to identify any such obstruction or interference at the forthcoming directions hearing. Proper notice must be given to the respondents’ lawyers of any such complaint or alleged obstruction, so that they can respond. It can then be decided whether in fact there is any obstruction of the appeal and, if so, what remedial steps should be ordered.
To repeat, it is our earnest desire to ensure a fair hearing of the appeal for all parties. In declining to investigate these allegations we do not wish to be taken as treating complaints about the conduct of lawyers as unimportant. As we have said, we expect the highest standards of professional conduct in this Court. But the Court is not equipped to investigate such matters and does not do so unless compelling necessity has been demonstrated – and it has not been demonstrated today.
Since it was necessary for the first and second appellants to make, and today to renew, their stay application in the face of the enforcement action quite deliberately embarked on by the respondents late last year, we will order that the costs of the application be costs in the appeal.
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