Emerald Resources (WA) Pty Ltd v Mullan

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FEDERAL COURT OF AUSTRALIA

Emerald Resources (WA) Pty Ltd v Mullan [2025] FCA 1049

File number: WAD 229 of 2024
Judgment of: VANDONGEN J
Date of judgment: 29 August 2025
Catchwords: PRACTICE AND PROCEDURE - application for injunction to restrain solicitors and counsel from acting for applicant - where first respondent is former client - whether real and sensible possibility of misuse of confidential information - whether breach of a duty of loyalty to former client that survives termination of retainer - whether proper administration of justice requires restraint - application dismissed
Legislation:

Competition and Consumer Act 2010 (Cth) s 18, Schedule 2

Corporations Act 2001 (Cth) ss 181, 182, 233

Evidence Act 1995 (Cth) ss 59, 75

Federal Court of Australia Act 1976 (Cth) s 23
Cases cited:

Babcock & Brown DIF III Global v Babcock & Brown International Pty Ltd [2015] VSC 453

Barnes v Addy (1874) LR 9 Ch App 244

Dealer Support Services Pty Ltd v Motor Trades Association of Australia Ltd [2014] FCA 1065; (2014) 228 FCR 252

Dyer v Chrysanthou (No 2) (Injunction) [2021] FCA 641

Farrell v Super Retail Group Limited (Cross-claim) [2024] FCA 1189

Finch v The Heat Group Pty Ltd (No 2) [2016] FCA 791

Fordham v Legal Practitioners' Complaints Committee (1997) 18 WAR 467

Gesellschaft Fur Drahtlose Telegraphie MBH v Brown (1935) 78 F 2d 410

Groupline Constructions Pty Ltd v CDI Lawyers Pty Ltd [2024] QSC 209

In re a Firm of Solicitors [1992] QB 959

Ismail-Zai v State of Western Australia [2007] WASCA 150; (2007) 34 WAR 379

Kallinicos v Hunt [2005] NSWSC 1181; (2005) 64 NSWLR 561

Macquarie Bank Ltd v Myer [1994] 1 VR 350

Makfam Pty Ltd v CV Australia Pty Ltd [2020] VSC 296

Mumbin v Northern Territory of Australia (No 1) [2020] FCA 475

Nash v Timbercorp Finance Pty Ltd (in liq), in the matter of the bankrupt estate of Nash [2019] FCA 957

Porter v Dyer [2022] FCAFC 116

Sargent v ASL Developments Ltd (1974) 131 CLR 634

Schmidt v AHRKalimpa Pty Ltd [2020] VSCA 193

Sent v John Fairfax Publication Pty Ltd [2002] VSC 429

Spincode Pty Ltd v Look Software Pty Ltd [2001] VSCA 248; (2001) 4 VR 501

World Medical Manufacturing Corporation v Phillips Ormonde & Fitzpatrick Lawyers (a firm) [2000] VSC 196

Yunghanns v Elfic Ltd (Unreported, VSC, 3 July 1998)
Division: General Division
Registry: Western Australia
National Practice Area: Commercial and Corporations
Sub-area: Commercial Contracts, Banking, Finance and Insurance
Number of paragraphs: 124
Date of hearing: 15 May 2025
Counsel for the Applicant: Ms JK Taylor SC with Mr LR Nicholls
Solicitor for the Applicant: Murcia Pestell Hillard
Counsel for the Respondents: Mr ML Bennett with Mr AJ Tharby
Solicitor for the Respondents: Bennett

ORDERS

WAD 229 of 2024
BETWEEN:

EMERALD RESOURCES (WA) PTY LTD (ACN 118 341 736) (FORMERLY BULLSEYE MINING LIMITED)

Applicant
AND:

DARIENA CATHERINE ANN MULLAN

First Respondent

BERNARD DOMINIC CONWAY

Second Respondent

JOHN JOSEPH MCKENNA

Third Respondent

DESMOND…

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Details
Case
[2025] FCA 1049
Decision Date

CaseChat Overview and Summary

The respondents, including Ms Mullan, sought an injunction to prevent the applicant, Emerald Resources (WA) Pty Ltd, from continuing to be represented by MPH Lawyers and Martin Goldblatt, who were previously retained by Bullseye, a company in which Ms Mullan was a director. The dispute arose from the respondents' assertion that there was a real and sensible possibility that confidential information obtained by MPH and Mr Goldblatt while acting for Bullseye would be misused in the current proceedings against Emerald. The legal issues before the court were whether there was a duty of loyalty owed by MPH and Mr Goldblatt to Ms Mullan that survived the termination of their retainer, and whether the proper administration of justice required the restraint of MPH and Mr Goldblatt from acting for Emerald.

The court held that even if a duty of loyalty to a former client survives the termination of the retainer, there were no grounds for concluding that MPH or Mr Goldblatt would breach any such duty by acting for Emerald. The court noted that the duty of loyalty would only be breached if they were 'taking up the cudgels' against Ms Mullan in the same or a closely related matter. Given that the current proceedings were unrelated to the Supreme Court proceedings, the court found no breach of any duty of loyalty. Furthermore, the court applied the test for whether the proper administration of justice required the restraint of legal practitioners, which is whether a fair-minded, reasonably informed member of the public would conclude that such restraint is necessary for the protection of the integrity of the judicial process and the appearance of justice. The court found that the respondents had not satisfied this test, and thus dismissed the application.

The court made orders dismissing the respondents' application for interlocutory relief, ordering the respondents to pay the costs of the application, and granting liberty to apply to vary or set aside the costs order within 14 days of the judgment.

Orders

Orders of the court

1. The respondents' interlocutory application for orders that:

(a) the applicant be restrained, and an injunction be granted restraining the applicant, from retaining MPH Lawyers and Mr Martin Goldblatt of counsel to act in relation to these proceedings; and

(b) MPH Lawyers be restrained, and an injunction be granted restraining MPH Lawyers, from acting for the applicant in relation to these proceedings,

is dismissed.

2. The respondents are to pay the costs of the interlocutory application, to the extent that the application sought the orders referred to in order 1, to be taxed if not agreed.

3. The parties have liberty to apply within 14 days of these orders to vary or set aside order 2.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

Having summarised Emerald's pleaded case, it is necessary to provide some more background to properly understand the respondent's interlocutory application for orders to restrain Emerald's current legal representatives from acting further in these proceedings.Some further background In support of their application for interlocutory orders, the respondents rely on affidavits affirmed by Alexander Tharby on 11 March 2025 and 28 May 2025. Mr Tharby is a solicitor employed by Bennett, the firm retained to act on behalf of the respondents in these proceedings. Emerald relies on affidavits sworn on 7 April 2025 and 4 June 2025 by Nigel Pakes, a director of MPH, who is authorised to make an affidavit on behalf of Emerald. The deponents of the affidavits assert that the contents of their respective affidavits are based on their own knowledge, and that where what they have said is not based on that knowledge, the source of the information in their affidavits has been identified. The following description of the relevant background to this application is based on those affidavits.MPH's and Mr Goldblatt's initial involvement with Bullseye and Ms Mullan According to Mr Pakes and based on what he has been told by the managing director of MPH, Mr Grant Pestell, MPH began acting for Bullseye in late March 2020 in relation to issues Bullseye was experiencing with various shareholders and their associates. Mr Pakes says that Mr Goldblatt was retained as counsel for Bullseye in mid-June 2020 to advise in relation to those issues. In his affidavit of 11 March 2025, Mr Tharby says that Ms Mullan has informed him that while she was a director, Mr Pestell and Mr Mark Burchnall (both directors of MPH) provided corporate and day-to-day legal advice to Bullseye, including in relation to statutory reports, services agreements, investment paperwork, meetings, dealings with a mining services contractor and dealings with the Australian Securities and Investments Commission (ASIC).Supreme Court proceedings involving Bullseye and Ms Mullan On 3 July 2020, one of Bullseye's shareholders, HongKong Xinhe International Investment Co Ltd (Xinhe), commenced proceedings against Bullseye and three of its directors (including Ms Mullan), in the Supreme Court of Western Australia (Supreme Court proceedings). In those proceedings, which were served on Bullseye on or about 7 July 2020, Xinhe claimed relief for oppressive conduct under s 233 of the Corporations Act. On 7 July 2020, Xinhe sought various interlocutory orders in the Supreme Court proceedings, including orders to inspect Bullseye's books and that it be provided with a copy of Bullseye's register of members. Bullseye formally engaged MPH to assist in relation to the Supreme Court proceedings in July 2020, and Mr Goldblatt was retained as Bullseye's counsel shortly thereafter. According to MPH's letter of engagement dated 10 July 2020, which was signed by one of Bullseye's directors on 11 July 2020, MPH was asked to act for 'Bullseye Mining Ltd and its directors' in relation to the Supreme Court proceedings, including the application for interlocutory orders. Further, according to Mr Pakes, MPH filed an appearance on behalf of Bullseye and the director defendants in the Supreme Court proceedings.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

The respondents have failed to satisfy me that a fair-minded, reasonably informed member of the public would conclude that the proper administration of justice requires that MPH, including Mr Pestell and Mr Burchnall, or Mr Goldblatt, should be prevented from acting for Emerald in these proceedings, in the interests of the protection of the integrity of the judicial process and the appearance of justice.Conclusion The respondents' application is dismissed, with costs.

Ratio Decidendi

Legal Principle Established

Even if I were to conclude that lawyers may be bound by a duty of loyalty to a former client that survives the termination of a retainer, there are no grounds for concluding that either MPH or Mr Goldblatt would be in breach of any such duty because they are '[taking] up the cudgels' against Ms Mullan in the same or a closely related matter. It follows that the respondents have failed to establish that MPH and Mr Goldblatt should be restrained from acting for Emerald in these proceedings on that basis.Would a fair minded, reasonably informed member of the public conclude that the proper administration of justice requires that MPH and Mr Goldblatt be prevented from acting? This Court has implied (not 'inherent') powers to ensure the due administration of justice, to protect the integrity of the judicial process and to restrain legal practitioners from acting in a particular case: Porter v Dyer at [113] (Lee J), [1] (Besanko and Abraham JJ), citing Kallinicos at [76] and referring with approval to a summary of the relevant principles by Griffiths J in Mumbin v Northern Territory of Australia (No 1) [2020] FCA 475 at [39]. See also Farrell v Super Retail Group Limited (Cross-claim) [2024] FCA 1189 at [6], where Lee J discussed the source of this Court's powers by reference to s 23 of the Federal Court of Australia Act 1976 (Cth), and to an implied power to control its own proceedings. The test to be applied in this context is whether a fair-minded, reasonably informed member of the public would conclude that the proper administration of justice requires that a legal practitioner be prevented from acting in the interests of the protection of the integrity of the judicial process and the appearance of justice: Porter v Dyer at [113]-[114] (Lee J), [1] (Besanko and Abraham JJ). In Porter v Dyer at [114], Lee J observed, there have been differences in the cases in the way in which this test has been expressed. In that regard, his Honour referred to the test adopted by Griffiths J in Mumbin, which asked whether a reasonably informed member of the public might conclude that the proper administration of justice requires that a legal practitioner be prevented from acting. However, as the Full Court in Porter v Dyer appeared to favour the 'would' formulation of the test, being a test that was said to have been favoured by the weight of authority, I will apply that test. The power to restrain a legal practitioner from acting is an exceptional one, which should be exercised with caution. In Finch v The Heat Group Pty Ltd (No 2) [2016] FCA 791 at [9], Pagone J explained that:It is a high test with a heavy burden imposed upon a party making the application. The jurisdiction has been described as 'extraordinary and protective' (Woodgate v Leonard [2007] NSWSC 495 (Woodgate v Leonard) at [37]), of an 'exceptional nature' (TJ Board & Sons Pty Ltd v Castello [2008] VSC 91 at [30]) and to be applied only in a 'clear' case (Bransdon v Davis & Gilbert (2007) 37 Fam LR 555; [(2007)] 212 FLR 28; [2007] FamCA 579 at [70]): see also GE Dal Pont, Lawyers' Professional Responsibility (Thomson Reuters, 5th Edition) [17.20], p538. There are many reasons for a heavy burden to be satisfied by the party making such an application. One reason is that a court should not make an order that interferes with the relation between the opposing party and that party's chosen and trusted legal practitioners. Public confidence in the administration of justice depends in part upon litigants being able to choose who they have to represent them and in whom they place their trust and confidence. The proper administration of justice is assisted by trust and confidence existing between litigants and their legal representatives. The legal practitioner plays a crucial role in conveying the client's case to a court for adjudication and the confidence and trust of the client in the chosen legal practitioner is an essential aspect of that role. An order restraining a legal practitioner from acting for a client interferes with that role, adversely affects the client and may unjustifiably interfere with the proper conduct of the client's case. It may also have the effect of causing irreparable harm to the client's case and is apt to undermine the proper administration of justice in all but the clearest cases. To restrain the legal practitioners from acting for a party in continuing proceedings may also confer an unjustifiable forensic advantage upon the party seeking the restraint.