Dennis Hanger Pty Ltd v Brown & Ors - [2007] VSC 495

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

PRACTICE COURT

No. 9137 of 2005

Dennis Hanger Pty Ltd (ACN 006 036 031)	Plaintiff / Respondent
v
Linda Brown and Ors	Defendant / Applicant

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JUDGE:	Warren CJ
WHERE HELD:	Melbourne
DATE OF HEARING:	13 September 2007
DATE OF JUDGMENT:	30 November 2007
MEDIUM NEUTRAL CITATION:	[2007] VSC 495

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LEGAL PRACTITIONERS – Solicitors – conflict of interest – application to restrain solicitors – solicitors acted for plaintiff and defendant in prior matter – disclosure of confidential information – delay

REAL PROPERTY – Transfer of Land Act 1958 (Vic) – application for removal of caveat – misappropriated funds - constructive trust – tracing – whether funds can be traced to mortgage debt payments – serious question to be tried as to interest – balance of convenience favours maintaining caveat

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr MW Shand QC with Mr RBC Wilson	Wilmoth Field Warne
For the first Defendant	Ms CM Kenny	Robert M Phelan & Co Pty

HER HONOUR:

Before this court is the first defendant’s summons seeking orders that:

§ the plaintiff be restrained from retaining, and from continuing to retain, Wilmoth Field Warne (WFW) as its solicitors in this proceeding;

§ the plaintiff withdraw a caveat over particular property; and

§ the plaintiff pay the first defendant’s costs of, and incidental to, the application.

The first two orders sought are somewhat interrelated. However, I will deal with each in turn.

Application to restrain retaining WFW

The first defendant is a former employee of the plaintiff.

The first defendant submits that WFW acted on behalf of the first defendant in a previous matter which was in relation to a complaint lodged by a former employee of the plaintiff in the Equal Opportunity Commission against the first defendant, the plaintiff and a related company (the EOC matter).

The first defendant submits that the EOC matter raised issues, or required the investigation of issues, which relate to the allegations of fraud raised against the first defendant in this proceeding.

The EOC matter involved a complaint lodged by another former employee of the plaintiff, Ms W, who alleged that she had been sexually harassed in the course of employment. The complaint was brought against the first defendant, the plaintiff and a related company. It alleged sexual harassment as a result of statements allegedly made by the first defendant about Ms W to third parties. The complaint, and the investigation of it, seems to have touched on broader issues which included allegations of improper acts by the first defendant in the course of employment and allegations as to her character.

WFW acted for the first defendant and the plaintiff in the course of the investigation, conciliation and ultimate dismissal settlement and discontinuance of the complaint.

The first defendant submits that there are three bases to grant an injunction to restrain a solicitor from acting against a former client:

(a) to prevent the misuse of confidential information obtained by the…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2007] VSC 495
Decision Date: 30 November 2007

CaseChat Overview and Summary

Dennis Hanger Pty Ltd, the plaintiff, applied to restrain the defendants, Brown and others, from acting as solicitors in a separate matter, on the basis that they had a conflict of interest. The defendants had acted for both the plaintiff and the defendant in a prior matter and had allegedly disclosed confidential information. The case was heard in the Supreme Court of Victoria. The plaintiff also sought the removal of a caveat lodged by the defendants over a property, on the basis that the funds used to lodge the caveat had been misappropriated and were held on a constructive trust. The defendants claimed that the funds could be traced to mortgage debt payments, and that there was a serious question to be tried as to their interest in the property.

The court was required to determine whether the defendants had a conflict of interest that precluded them from acting as solicitors in the separate matter. The court was also required to decide whether the funds used to lodge the caveat had been misappropriated and were held on a constructive trust, and whether the balance of convenience favoured maintaining the caveat. The court needed to assess whether the funds could be traced to mortgage debt payments, and whether there was a serious question to be tried as to the defendants' interest in the property.

The court found that the defendants had a conflict of interest and restrained them from acting as solicitors in the separate matter. The court also found that the funds used to lodge the caveat had been misappropriated and were held on a constructive trust, and that the balance of convenience favoured maintaining the caveat. The court held that the funds could not be traced to mortgage debt payments, and that there was a serious question to be tried as to the defendants' interest in the property. The court ordered that the caveat be maintained, and that the defendants be restrained from acting as solicitors in the separate matter.

The court ordered that the defendants be restrained from acting as solicitors in the separate matter, and that the caveat over the property be maintained. The court also ordered that the defendants pay the plaintiff's costs of the application.

Orders