Holborow v MacDonald Rudder
[2002] WASC 265
HOLBOROW & ORS -v- MACDONALD RUDDER [2002] WASC 265
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2002] WASC 265 | |
| Case No: | CIV:2271/1999 | 7 OCTOBER 2002 | |
| Coram: | EM HEENAN J | 15/11/02 | |
| 20 | Judgment Part: | 1 of 1 | |
| Result: | Application dismissed | ||
| A | |||
| PDF Version |
| Parties: | VALERIE HOLBOROW ROBERT BOONA COLIN COSMOS KEVIN COSMOS JANICE COSMOS MARY COSMOS SUSAN MOWARIN LINDA DELOWER AUDREY COSMOS DANNY COOPER DORENE WESCOMBE MARGARET BOONA BARBARA SINCLAIR GAIL SINCLAIR DORRIE WALLY MACDONALD RUDDER PAUL THOMAS WILLIAMS |
Catchwords: | Legal practitioners Application to restrain former solicitor acting other than as a witness Alleged breach of duty to court Injunction refused |
Legislation: | Rules of the Supreme Court, O 18 r 6(2)(b) |
Case References: | Afkos Industries Pty Ltd v Pullinger Stewart [2001] WASCA 372 Cargill v Bower (1878) 10 Ch D 502 Clay v Karlson (1997) 17 WAR 493 Fordham v Legal Practitioners' Complaints Committee (1997) 18 WAR 467 Fox v Bannister, King and Rigbeys [1988] QB 925 Fraser v Evans [1969] 1 QB 349 Giannarelli v Wraith (1988) 165 CLR 543 Grimwade v Meagher [1995] 1 VR 446 Gugiatti v City of Stirling (2002) 25 WAR 349 Hampton Goldmining Areas Ltd v Metals Exploration Ltd (1995) 17 WAR 30 Holborrow & Ors v MacDonald Rudder (A Firm) [2001] WASCA 91 Johns v Law Society of New South Wales [1982] 2 NSWLR 1 Maguire v Makaronis (1997) 188 CLR 449 Mallesons Stephen Jacques v KPMG Peat Marwick (1991) 4 WAR 357 McVeigh v Linen House Pty Ltd [1993] 3 VR 394 National Mutual Holdings Pty Ltd v Sentry Corporation (1989) 22 FCR 209 Newman v Phillips Fox (1999) 21 WAR 309 Pritt v Clay (1843) 6 Beav 503; 49 ER 920 Re Bolster [1973] Qd R 467 Re LPO Transact Pty Ltd (In Liq); Williamson v Nylant [2002] WASC 225 Re Strong (1886) 32 Ch D 342 Stewart v Strevens [1976] 2 NSWLR 321 Swinfen v Lord Chelmsford (1860) 5 H & M 890 T M Burke Estates Pty Ltd v P J Constructions (Vic) Pty Ltd (in Liq) [1991] 1 VR 610 Tito v Waddell (No 2) [1977] Ch 106 Wan v McDonald (1992) 33 FCR 491 Wicks v Bennett (1921) 30 CLR 80 Abse v Smith [1986] QB 536 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- ROBERT BOONA
COLIN COSMOS
KEVIN COSMOS
JANICE COSMOS
MARY COSMOS
SUSAN MOWARIN
LINDA DELOWER
AUDREY COSMOS
DANNY COOPER
DORENE WESCOMBE
MARGARET BOONA
BARBARA SINCLAIR
GAIL SINCLAIR
DORRIE WALLY
Plaintiffs
AND
MACDONALD RUDDER
Defendant
AND
PAUL THOMAS WILLIAMS
Third Party
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Catchwords:
Legal practitioners - Application to restrain former solicitor acting other than as a witness - Alleged breach of duty to court - Injunction refused
Legislation:
Rules of the Supreme Court, O 18 r 6(2)(b)
Result:
Application dismissed
Category: A
Representation:
Counsel:
Plaintiffs : Ms J M Hill
Defendant : Mr G D Cobby
Third Party : Mr M J Hawkins
Solicitors:
Plaintiffs : Bennett & Co
Defendant : Tottle Christensen
Third Party : Williams & Co
Case(s) referred to in judgment(s):
Afkos Industries Pty Ltd v Pullinger Stewart [2001] WASCA 372
Cargill v Bower (1878) 10 Ch D 502
Clay v Karlson (1997) 17 WAR 493
Fordham v Legal Practitioners' Complaints Committee (1997) 18 WAR 467
Fox v Bannister, King and Rigbeys [1988] QB 925
Fraser v Evans [1969] 1 QB 349
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Giannarelli v Wraith (1988) 165 CLR 543
Grimwade v Meagher [1995] 1 VR 446
Gugiatti v City of Stirling (2002) 25 WAR 349
Hampton Goldmining Areas Ltd v Metals Exploration Ltd (1995) 17 WAR 30
Holborrow & Ors v MacDonald Rudder (A Firm) [2001] WASCA 91
Johns v Law Society of New South Wales [1982] 2 NSWLR 1
Maguire v Makaronis (1997) 188 CLR 449
Mallesons Stephen Jacques v KPMG Peat Marwick (1991) 4 WAR 357
McVeigh v Linen House Pty Ltd [1993] 3 VR 394
National Mutual Holdings Pty Ltd v Sentry Corporation (1989) 22 FCR 209
Newman v Phillips Fox (1999) 21 WAR 309
Pritt v Clay (1843) 6 Beav 503; 49 ER 920
Re Bolster [1973] Qd R 467
Re LPO Transact Pty Ltd (In Liq); Williamson v Nylant [2002] WASC 225
Re Strong (1886) 32 Ch D 342
Stewart v Strevens [1976] 2 NSWLR 321
Swinfen v Lord Chelmsford (1860) 5 H & M 890
T M Burke Estates Pty Ltd v P J Constructions (Vic) Pty Ltd (in Liq) [1991] 1 VR 610
Tito v Waddell (No 2) [1977] Ch 106
Wan v McDonald (1992) 33 FCR 491
Wicks v Bennett (1921) 30 CLR 80
Case(s) also cited:
Abse v Smith [1986] QB 536
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1 EM HEENAN J: By a chamber summons dated 23 May 2002 the defendant seeks an order that Paul Thomas Williams, a practitioner of this Court, by himself his servants, agents or otherwise, be restrained from being the solicitor on the record in this action or in any other cause or matter of the plaintiffs or any of them against the defendant or from being otherwise involved directly or indirectly in any such cause or matter other than as a witness. Additional orders were sought by the summons which were not pressed at the hearing. The solicitor, Mr Paul Williams, was not a party to these proceedings but he has, previously, acted for the plaintiffs and had been the solicitor on the record for them in this and associated proceedings. But he has not been the solicitor on the record since 26 June 2002 when the present solicitors for the plaintiffs went on the record. They are continuing to act for the plaintiffs and there is no suggestion of any imminent change in the plaintiffs' representation.
2 Consequently, the present application seeks an injunction and other orders against a person who is not a party to the action nor is he the solicitor for any of the parties on the record. Counsel for the defendant sought to overcome this obvious difficulty by submitting that the court nevertheless had jurisdiction over Mr Williams by reason of the fact that he was an officer of the court and would be bound by any order - Clay v Karlson (1997) 17 WAR 493 per Templeman J at 498. However, I do not consider that Clay v Karlson is authority for the proposition that a practitioner who is neither a party to proceedings nor is acting for any of the parties either as counsel or solicitor on the record, can be bound by any order in proceedings unless added as a party. The joinder of a party who is sought to be bound or affected by any order of the court made in the proceedings is a fundamental requirement of the law of procedure. The joinder is necessary in order to ensure that the issues affecting that party are properly identified, either by pleadings or otherwise, to establish the rights of audience and representation for that party, and to determine what evidence in the proceedings is relevant and admissible on the issues involving that person. Not only these factors, but the existence of rights of appeal, questions of res judicata and issue estoppel are all dependent upon the manner and degree to which the person concerned is a party to, and bound by, the decision or orders made by the court. I informed counsel that, in view of the relief being sought by the defendant, it appeared to me that Mr Williams was a person who ought to have been joined and whose presence before the court is necessary to ensure that all matters in dispute in the cause may be effectually and completely determined and adjudicated upon - Rules of the Supreme Court, O 18 r 6(2)(b).
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3 At this point counsel for the defendant submitted that the situation could be adequately addressed if his client were to undertake to commence fresh proceedings, by way of originating summons or originating motion in which Macdonald Rudder, as plaintiff, sought an injunction against Mr Williams, as defendant, in the terms sought by this chamber summons. While such a procedure may, in certain cases, be appropriate where a person seeks to restrain a firm of solicitors acting for another party from continuing to act in collateral proceedings, that will not always be the case. It may well be that the client or former clients of the solicitor have an interest in supporting his ability to continue to act on their behalf, or at least to prevent him from being restrained in a manner which might cause prejudice to them in the principal proceedings. In my view this would be a sufficient interest to require the presence of those clients or former clients as parties in the proceedings in which the restraint is being sought. In the present instance this means that the plaintiffs in this action should be parties to any proceedings sought to restrain Mr Williams from acting in a manner complained about by the defendant. Therefore, while a fresh set of proceedings in which Macdonald Rudder would be plaintiff, and Mr Williams and the present plaintiffs would be defendants, may be a solution which would meet the procedural requirements it seems to me to be an unnecessary duplication of process.
4 In the end, this problem was solved by the defendant (applicant) Macdonald Rudder seeking and obtaining leave from me to issue a third party notice against Mr Williams seeking the relief which it was claiming in its chamber summons of 23 May. All parties, including counsel for Mr Williams, agreed to proceed upon the undertaking of the defendant to proceed in this fashion, and in the absence of service of the proposed third party notice. Undertakings were given by the defendant to issue the third party notice, and on behalf of Mr Williams, to enter an appearance and file a defence to a statement of claim in the third party proceedings and those steps should all be taken as soon as possible. I proceed, therefore, on the basis that Mr Williams is before the court as a third party brought in by the defendant who is seeking injunctive relief against him as indicated. This ensures that, as a third party, Mr Williams will appear in the action, may be represented by counsel and has all the rights of a party arising from that joinder including, if it ever becomes important, a right of appeal.
5 The application to restrain Mr Williams, not merely from acting as solicitor on the record for the plaintiffs in these and related proceedings, but to prevent him from being involved in any way, other than as a witness, seeks to invoke the power of the court to control the conduct of
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- its own officers in order to protect the due administration of justice and the integrity of the judicial process. It is submitted by the defendant that Mr Williams should not be permitted to act for, advise or in any way counsel the plaintiffs because:
(a) he has a personal interest in the outcome of the proceedings the determination of which is likely to involve the makings of findings of fact relevant to a number of complaints of professional misconduct made against him;
(b) he is likely to be a material witness in the proceedings; and
(c) it is contrary to the due administration of justice and the integrity of the judicial process that he have any further participation in the proceedings.
7 The plaintiffs were applicants in proceedings in the Federal Court of Australia in which they were advancing claims against the State of Western Australia and others pursuant to the provisions of the Native Title Act (1993) (Cth). The present defendant, Macdonald Rudder, was the firm of solicitors for the plaintiffs as applicants in these Federal Court proceedings from about August 1996 until about 30 August 1999. On the latter date the plaintiffs appointed the firm of Williams & Co, of which Mr Williams was and is the principal, as its solicitors and Mr Williams notified the defendant firm of this change. Mr Williams' firm then became the solicitors on the record for the applicants in the Federal Court native title proceedings.
8 This change of solicitors and the accompanying handover of files and documents to the newly appointed solicitors was, regrettably, anything but smooth. Many allegations have been made on behalf of the plaintiffs, and denied by the defendant, complaining about the adequacy and timeliness of the handover of files and relevant papers. There are also issues raised about the extent of the authority of the newly appointed solicitors to receive certain materials prepared for the plaintiffs in respect of which privilege was claimed and other matters. These allegations and denials are dilated upon at great length in the affidavits which have been filed in support of the present application by the defendant and in opposition to it by Mr Williams and elsewhere in these proceedings. They have been briefly described in the reasons for decision of Wheeler J published on 29 May 2000 when dismissing an application by the plaintiffs for a
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- summary order that the defendant should account to the plaintiffs and in dismissing an application by the defendant for summary judgment to dismiss the plaintiffs' claims and in the subsequent decision of the Full Court ([2001] WASCA 91) when dismissing an appeal from that decision.
9 For reasons which were recognised by Wheeler J in that earlier controversy, which include the fact that many of these disputed allegations appear to affect the entitlement of the plaintiffs to any final relief which they are seeking in the current proceedings and so will need to be addressed at any trial of this action, they cannot be dealt with now. It is important to note, however, that they include serious allegations of breach of duty to their clients by the defendant during the period when Macdonald Rudder was acting for the plaintiffs in the Federal Court proceedings. Equally, they include allegations by the defendant of serious breaches of professional duty by Mr Williams in relation to allegations which he has made and pursued on behalf of the plaintiffs both in the present proceedings and in connection with them. There is evidence that the defendant has complained to the Legal Practitioners Complaints Committee ("LPCC") about the alleged conduct of Mr Williams and I have been informed that Mr Williams has also complained to the LPCC about the alleged conduct of the defendant when acting for the plaintiffs. It is no part of this present application to hear or determine complaints which may or may not eventually reach the Legal Practitioners Disciplinary Tribunal and it is most important that the present proceedings should address only the issues which arise in this litigation. It is submitted by the defendant that the pendency of these complaints to the LPCC produces a situation which requires the court to prevent Mr Williams from becoming involved any further in the present proceedings because of the possibility that the eventual outcome of these proceedings may influence the determination of those complaints. It is only to the extent that the actual conduct of this litigation might, if at all, be influenced by such a factor that there may be any basis for restricting the conduct of Mr Williams. That is the issue which, ultimately, must be answered by this decision.
10 McDonald Rudder commenced to act for the plaintiffs in the Federal Court proceedings and generally. The firm of Williams & Co eventually obtained possession of, or access to, most, if perhaps not all, of the papers, files and process relating to that litigation. As a result of the examination of the files and in the light of instructions provided by the plaintiffs, the firm of Williams & Co became aware that, during the period when Macdonald Rudder had been acting for the plaintiffs, substantial sums of money had been paid to the firm in connection with the proceedings and
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- for the benefit of the plaintiffs. As one might expect, the firm of Macdonald Rudder had progressively rendered fees for professional services to the plaintiffs, or some of them. It also became apparent that, to an extent which still appears to be in dispute, Macdonald Rudder had appropriated some of the moneys received by them on behalf of the plaintiffs towards the satisfaction of the bills for professional services which had been rendered to the plaintiffs. Again, there is nothing unusual in this course so long as the solicitors acting have the authority of their clients to make such appropriations from moneys held on behalf of the clients for those purposes and prior notice of the fees rendered and the associated opportunity to question, dispute or require taxation of the solicitors' bills, has been afforded to the clients - Legal Practitioners Act s 65, s 73 and s 59, or if the procedure followed is in accordance with an agreement for costs made between the solicitors and the clients under the provisions of s 59 of that Act.
11 However, by their newly appointed solicitors, Williams & Co, the plaintiffs contended that their former solicitors, Macdonald Rudder, had failed adequately to account for moneys which they had received on behalf of the plaintiffs and partially disbursed for purposes connected with the litigation, including the payment of their own fees. The plaintiffs also asserted that fees charged by the defendant were unjustified and should be taxed. So it was that the plaintiffs commenced the present action against the defendant seeking an account of all moneys received on their behalf and disbursed by the defendant during the period while the defendant was acting as their solicitors. Also, by their newly appointed solicitors, Williams & Co, the plaintiffs commenced proceedings (LPA 127 of 1999) in this Court pursuant to s 68A(d) of the Legal Practitioners Act seeking an extension of time to apply to seek review of any agreement for costs between them and the defendant and to tax the defendant's various bills of costs.
12 Although there are still some areas of dispute between the parties it is important to note that the defendant has constantly maintained that it has fully accounted to the plaintiffs for all moneys received and disbursed on their account and has rendered, progressively, detailed bills of costs for all charges which were made to the plaintiffs and which were satisfied out of funds of the plaintiffs held on their behalf by the defendant firm. Whether or not there has been a full or adequate account given to the plaintiffs by the defendant as their former solicitors and whether or not there should be any extension of time to allow the plaintiffs to have taxed the various bills of costs rendered to them by the defendant for periods stretching back to 1996 are, of course, the major issues in this action and in the associated
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- proceedings LPA 127/1999. They cannot be resolved, nor is there any basis to attempt to resolve them, on the present application. It has already been decided by Wheeler J, in her Honour's decision of 29 May 2000, that there was no evidence presented before her which would establish that the defendant has failed in any duty to keep proper accounts, to produce them to the plaintiffs as required, or to provide the plaintiffs with information relating to trust property such as would warrant a summary order for accounting by the defendant to be made without a trial. That decision also revealed that, on the evidence as it then stood, the defendant, as the plaintiffs' former solicitors, had made available its trust account records to the plaintiffs and offered to make available its general account statements to show all moneys received and disbursed on the plaintiffs' behalf and, further, that most, if not all, of the itemised bills of costs which had been progressively rendered by the defendant to the plaintiffs have been disclosed.
13 It seems that there was, at least for a time, some difficulty for the firm of Williams & Co in obtaining the originals or copies of these bills of costs but that this was, to a significant degree, attributable to the plaintiffs themselves. Quite whether there has been a complete accounting and a complete disclosure of all bills of costs rendered by the defendant as the plaintiffs' former solicitors will remain to be seen. What the litigation has demonstrated so far is that the probabilities are that there has been, at least, a sufficiently substantial accounting and delivery of bills of costs to deny any summary orders for accounts or other summary relief in favour of the plaintiffs.
14 Of course, whether or not there has been an adequate accounting by the defendant for moneys received and disbursed on behalf of the plaintiffs still leaves, for consideration and decision, the issues in LPA 127/1999 over whether there should be an extension of time and orders for taxation of the former solicitor's costs. If that relief were granted, and taxations conducted which resulted in a disallowance of parts of the costs or disbursements charged by the defendant to the plaintiffs, there would be an obligation on the defendant to repay the amount of the costs disallowed and which had been appropriated to their benefit - s 70 and s 72 of the Act. If that were to happen, on an account between a solicitor and client which of course involves a fiduciary relationship, it would seem to provide a basis for re-opening any account previously taken or for the court to grant liberty to surcharge or falsify, even if the accounts had been settled - Hampton Goldmining Areas Ltd v Metals Exploration Ltd (1995) 17 WAR 30 per Malcolm CJ at 46 and Pritt v Clay (1843) 6 Beav 503; 49 ER 920. However, I take the position of the
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- plaintiffs in the present litigation to be that they assert that there has never been a settled account between them and the defendant in relation to moneys received and paid by the defendant during the course of its retainer by them. Clearly, therefore, there remains the potential for the plaintiffs to obtain relief in the present proceedings for an account generally or on a restricted basis in the event that their associated claims for an extension of time for the taxation of costs succeed and if the costs charged to them are reduced as a result of that taxation. Relief of this kind, and in particular any claim for leave to surcharge or falsify any accounts which may have been given by the defendant, in the event of a disallowance of costs charged if those proceed to taxation, still appears to be within the scope of the relief which the court could grant in the present action, notwithstanding that it has not been specifically claimed; Wicks v Bennett (1921) 30 CLR 80 at 100; Cargill v Bower (1878) 10 Ch D 502 at 508 and T M Burke Estates Pty Ltd v P J Constructions (Vic) Pty Ltd (in Liq) [1991] 1 VR 610 at 617.
15 Obviously, therefore, the continuing focus of this action and of the related proceedings in LPA 127/1999 should be on the questions of whether or not orders should be made extending the time for the plaintiffs to seek taxation of their former solicitor's accounts and, either with or without such taxations, whether there has been a full account given by the defendant of all moneys received and paid by them on behalf of the plaintiffs. Quite apart from the jurisdiction which a court possesses, whether at common law or in equity to take accounts - see per Megarry J in Tito v Waddell (No 2) [1977] Ch 106 at 250, this Court has an inherent jurisdiction over legal practitioners in respect of accounting for moneys held by the practitioner for a client or former client; Re Strong (1886) 32 Ch D 342; Fox v Bannister, King and Rigbeys [1988] QB 925 and Johns v Law Society of New South Wales [1982] 2 NSWLR 1. There are also comprehensive statutory provisions specifying the obligations of a legal practitioner to account for money received on behalf of clients - Legal Practitioners Act, Pts V and VA. How these obligations interact with the inherent jurisdiction of the court in respect of accountability by practitioners in respect of clients' money has been addressed in Stewart v Strevens [1976] 2 NSWLR 321; Adams v Bank of New South Wales [1984] 1 NSWLR 285 and Re Bolster [1973] Qd R 467.
16 This breadth of power of a court to ensure that issues involving accounting by legal practitioners are effectively and expeditiously resolved stands in marked contrast to the limited progress which has been achieved in this present litigation, and in the associated proceedings LPA 127/1999 for the resolution of the issues between the plaintiffs and
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- their former solicitors. It is undoubtedly a matter of concern that issues of this kind remain unresolved in proceedings which have been pending in this Court for over three years already. Part of the explanation appears to be that a disproportionate amount of time and activity has been devoted to the unfortunate recriminations which have arisen between the defendant and the plaintiffs' former solicitors Messrs Williams & Co. This present application and the responses which it has evoked have all the appearances of prolonging this unproductive preoccupation with collateral issues at the expense of achieving substantial progress in resolving the real issues between the parties.
17 There can be no doubt that the allegations made by Mr Williams on behalf of the plaintiffs when these present proceedings were instituted and while he continued to act would, if made out, involve serious breaches of duty by the defendant. Similarly, the allegations which the defendant has made against Mr Williams, both during the time when he was acting for the plaintiffs and since, would if proved amount to serious breaches of duty or unprofessional conduct by him. Whether any of the allegations which have been made on either side will eventually be established, or if not, will reflect seriously against the person or persons who advanced that allegation, will largely depend upon the eventual outcome of this action and of the related proceedings LPA 127/1999.
18 It is quite premature to embark upon an examination or scrutiny of those allegations or any evaluation of their justification at this stage of the proceedings. The situation is that serious and far reaching allegations have been made on both sides of this litigation. At present, I consider that the court should proceed on the footing that the allegations which are being pursued are considered by the parties or their representatives to be necessary and justified in their respective interests and that it will not be until after the principal issues in the proceedings have been finally decided that it will be possible to determine whether or not those allegations have been made out, or if not, what are the consequences of them being advanced.
19 This is a situation not uncommonly found in contested litigation as, for example, in cases where there are allegations of fraud, malicious conduct, wilful breach of trust or similar serious misconduct. Of course, were such a serious allegation to be made and maintained by a legal practitioner for a party to proceedings, in circumstances where there was no justification for that to be done, that may involve the individual practitioner in professional misconduct and expose him to professional discipline, the consequences of which might be very severe. However,
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- the question of the evaluation of the professional conduct of a legal practitioner in the course of litigation is usually, but perhaps not invariably, left for examination after the principal proceedings have been concluded. There are very good reasons for this cautionary practice. As already indicated, it is usually neither possible nor desirable to make a determination of the rights of the parties, whether provisional or otherwise, when they are still joined in issue on the very matters that the court will eventually have to decide. Associated with this consideration is the expectation that it will usually prove very difficult, if not impossible, to undertake a dispassionate and objective consideration of the conduct of the parties while they continue to be embroiled in the very litigation which has generated their mutual hostility. Finally, and by no means the least significant consideration, is the need to ensure that one or both of the opposing parties to the litigation cannot gain some forensic advantage against the other by making attacks against the solicitors acting on the other side which may produce the effect, directly or indirectly, of handicapping the clients by depriving them of access to, or to representation by, a legal practitioner of their choice. Equally unacceptable would be a result which may inhibit or be likely to inhibit, the manner in which the practitioner may properly discharge his professional duties to his clients.
20 There may be cases where, while the litigation dividing the adversaries is still pending, or even perhaps is in a very early stage, where it will be sufficiently apparent that there exist circumstances which would preclude a particular legal practitioner from acting so that orders restraining him from doing so may then be made. The situation which arose in Grimwade v Meagher [1995] 1 VR 446 is one example of where this unusual concurrence of circumstances existed. In that case the senior counsel restrained from acting had been proposing to act as counsel in certain civil proceedings against the applicant where he had already acted as counsel for the prosecution against the applicant at two trials. As a result an ultimate conviction had been quashed and no new trial ordered by a Court of Criminal Appeal which made criticisms of the conduct of the prosecution case at the second trial. That restraining order was prompted by the court acting to ensure the due administration of justice and to protect the integrity of the judicial process in order that justice should not only be done but should be seen to be done. In the present proceedings there is no suggestion that Mr Williams will be acting as counsel, or as solicitor on the record for the plaintiffs who are now represented by different solicitors. Therefore, the situation is that, for some time now, the prosecution of these actions has been in the hands of
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- other solicitors, against whom no criticism or allegations are made by the defendant, who themselves owe duties not only to their clients but to the court to ensure that the litigation is conducted in conformity with the law, the applicable rules of procedure and the obligations of professional practice. That being so, there does not seem to be any basis upon which it can be suggested that, unless Mr Williams is restrained, these proceedings will, or might, be conducted in a manner which would involve the due and objective administration of justice being jeopardised by any action or omission of Mr Williams now or in the future.
21 No case has been cited on behalf of the defendant firm nor any other authority advanced to support the proposition that this inherent jurisdiction of the court to protect its own proceedings and to control its own officers should be exercised against a legal practitioner who is not acting or proposing to act as counsel or solicitor on the record in the proceedings. Nor is this a case where it is suggested, or could be suggested, that because of some prior confidential or fiduciary relationship between Mr Williams and a former client, he is possessed of confidential information or owes a continuing duty to a former client, which would be inconsistent with him acting for the plaintiffs or communicating with them or their solicitors. There is simply no basis at all for a restraint in the present case based on considerations such as gave rise to the relief granted in Mallesons Stephen Jacques v KPMG Peat Marwick (1991) 4 WAR 357 or Newman v Phillips Fox (1999) 21 WAR 309 or which resulted in adverse disciplinary findings against a solicitor in Fordham v Legal Practitioners' Complaints Committee (1997) 18 WAR 467. This is sufficient to necessitate the dismissal of the claim to restrain Mr Williams as sought by the defendant where he is not acting or proposing to act for the plaintiffs and the control of the claims lie in the hands of the new solicitors.
22 However, in view of the submissions put on behalf of the defendant, it is perhaps necessary to examine them more fully. In Newman v Phillips Fox (supra) Steytler J described how an order restraining a solicitor from acting for a party in a cause may be warranted because of an actual or threatened breach of confidence which would occur if he were to be permitted to do so. His Honour also explained other bases which might lead to the conduct of a solicitor being restrained or controlled, namely if it were to produce a breach of the terms of an actual or implied contract between the solicitor and the former client; or if the conduct were to involve a breach of trust or a breach of fiduciary obligation owed by the solicitor to the former client.
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23 The power of this Court to restrain a solicitor from acting in an action or other cause because of an alleged conflict of interest is not limited to those instances in which the future action of the solicitor concerned may imperil confidences of the client for whom the solicitor previously acted. It is an ample power to supervise the conduct of legal practitioners, as officers of the Court, to ensure that they do not act in any way contrary to their obligations to their former client. The broader scope of this power has frequently been referred to as ensuring "that the solicitor's duty of loyalty to the former client is respected, notwithstanding termination of the retainer, and to uphold as a matter of public policy the special relationship of solicitor and client" - McVeigh v Linen House Pty Ltd [1993] 3 VR 394 per Batt JA at 398 and Wan v McDonald (1992) 33 FCR 491 per Burchett J at 513. Examples of this are to be found in Clay v Karlson (1997) 17 WAR 493; Afkos Industries Pty Ltd v Pullinger Stewart [2001] WASCA 372 and Re LPO Transact Pty Ltd (In Liq); Williamson v Nylant [2002] WASC 225. In those cases legal practitioners were restrained from acting in various instances where: there was a potential that the legal practitioner might be a witness in the case; where the subject matter of the litigation was likely to involve an evaluation of the conduct of the solicitor concerned and the efficacy of documents prepared by his firm; and where a solicitor was acting for a liquidator in connection with the liquidator's investigations into the prior activities of an insolvent company where the solicitor had, prior to the insolvency, been acting for the company. In some of these cases it is obviously apposite to speak of the solicitor's duty of loyalty to the client which continues even after the termination of the period of his retainer. This seems to be a broad general recognition of the scope of the duties which a solicitor owes to a client, even a former client, arising from the fiduciary relationship between them. As was said by Gummow J in National Mutual Holdings Pty Ltd v Sentry Corporation (1989) 22 FCR 209 at 228 - 229:
"Even among fiduciaries, solicitors stand in a special position."
24 This seems to be consistent with the analysis undertaken in Fraser v Evans [1969] 1 QB 349, a case involving an application to restrain the publication of alleged confidential information (not involving a solicitor) where, at 361 Denning MR said:
"Mr Fraser says that the report was a confidential document and the publication of it should be restrained on the principles enunciated in the cases from Prince Albert v Strange (1849) 1 Mac. & G 25 to Argyll (Duchess) v Argyll (Duke) [1967] Ch.
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- 307. Those cases showed that the Court will in a proper case restrain the publication of confidential information. The jurisdiction is based not so much on property or on contract as on the duty to be of good faith."
25 It is the existence of the compendious obligations of a fiduciary to act always in good faith towards the person to whom those duties are owed, to avoid conflicts of interest or of duty, as well as to provide the fullest of disclosure, which controls the situations which may arise when a solicitor may be asked to act against a former client. This approach fully accommodates the position that a solicitor must not adopt a "hostile" position to his former client as explained by Malcolm CJ in Fordham v Legal Practitioners' Complaints Committee (1997) 18 WAR 467 at 489, but it also serves to show that the "duty of loyalty" does not involve any connotation of partisanship or sympathy with the former client or any right of the former client to prevent the solicitor from acting against him in some other cause not involving any encroachment on the solicitor's duty of good faith. In other words, the so-called "duty of loyalty" does not mean that, through retaining a legal practitioner at one time or for a particular cause, the client can thereby achieve a position which would forever prevent that practitioner acting against him no matter what the circumstances might be. By acting for the client a legal practitioner does not thereby oblige himself to be a permanent ally and supporter of the client but, rather, as a fiduciary he accepts and must always perform all the duties of a fiduciary even after the relationship has terminated. This recognises, as Templeman J pointed out in Gugiatti v City of Stirling (2002) 25 WAR 349:
"It has been settled law for nearly a century that the mere fact that a solicitor has acted for a client in a particular matter does not of itself entitle the client to restrain the solicitor from acting against him in the same matter: see Rakusen v Ellis Munday & Clarke [1912] 1 Ch. 831. However, if a solicitor is possessed of information which is confidential to his client, the solicitor cannot be permitted to act against his client unless there is no risk of disclosure. The risk must be real, and not merely fanciful or theoretical: but it need not be substantial. That is the test established by the House of Lords in Prince Jefri Bolkiah v KPMG (A Firm) [1999] 2 A.C. 222 at 236 - 237 per Lord Millett. The test was adopted by Steytler J in Newman v Phillips Fox (A Firm) (1999) 21 WAR 309 at 322."
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26 Consequently, when an application is made to restrain a legal practitioner from acting in a cause for reasons other than the risk of disclosure or misuse of information provided to the practitioner in confidence by the former client, it is of importance to identify precisely what obligation towards the former client or to the court may be breached or imperilled by the practitioner acting in the cause or against the former client. This approach is important because, otherwise, there may imperceptibly develop an expectation that the freedom of a client to engage a legal practitioner of his or her own preference, and the freedom of a legal practitioner to act even against a former client, where such a course does not involve any breach of his fiduciary obligations arising from the earlier retainer, is open to adventitious challenge as a means of harassing an opponent in a cause.
27 It is well established that the relationship between a legal practitioner and the client is a fiduciary one, although it may also take on conditional dimensions - Maguire v Makaronis (1997) 188 CLR 449. Concurrently with the obligations to the client will be the practitioner's obligations to the court which have been described as "an overriding duty" - per Mason J in Giannarelli v Wraith (1988) 165 CLR 543 at 555, where the Chief Justice cited a passage from the judgment of Pollock CB in Swinfen v Lord Chelmsford (1860) 5 H & M 890 at 921; 157 ER 1436 at 1449. Mason CJ went on to expound the nature of counsel's obligation to the court in a manner which is germane in the present case, not only because it identifies the duties owed by a legal practitioner conducting litigation but because it also emphasises how the forensic conduct of litigation must necessarily be left to the discretion of the legal practitioners representing them largely, if not completely, free of simultaneous supervision by the court itself. Mason CJ said, at 556:
"The performance by counsel of his paramount duty to the court will require him to act in a variety of ways to the possible disadvantage of his client. Counsel must not mislead the court, cast unjustifiable aspersions on any party or witness or withhold documents and authorities which detract from his client's case. And, if he notes an irregularity in the conduct of a criminal trial, he must take the point so that it can be remedied, instead of keeping the point up his sleeve and using it as a ground of appeal.
It is not that a barrister's duty to the court creates such a conflict with his duty to his client that the dividing line between the two is unclear. The duty to the court is paramount and must be
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- performed, even if the client gives instructions to the contrary. Rather it is that a barrister's duty to the court epitomises the fact that the course of litigation depends on the exercise by counsel of an independent discretion or judgment in the conduct and management of a case in which he has an eye, not only to his client's success, but also to the speedy and efficient administration of justice. In selecting and limiting the number of witnesses to be called, and deciding what question will be asked in cross-examination, what topics will be covered in address and what points of law will be raised, counsel exercises an independent judgment so that the time of the court is not taken up unnecessarily, notwithstanding that the client may wish to chase every rabbit down its burrow. The administration of justice in our adversarial system depends in very large measure on the faithful exercise by barristers of this independent judgment in the conduct and management of the case. In such an adversarial system the mode of presentation of each party's case rests with counsel. The Judge is in no position to rule in advance on what witnesses will be called, what evidence should be led, what questions should be asked in cross-examination. Decisions on matters such as these, which necessarily influence the course of a trial and its duration, are made by counsel, not by the Judge. This is why our system of justice as administered by the courts has proceeded on the footing that, in general, the litigant will be represented by a lawyer who, not being a mere agent for the litigant, exercises an independent judgment in the interests of the court."
28 If there are circumstances which are likely to imperil the discharge of these duties to a court by a legal practitioner acting in a cause, whether because of some prior association with one or more of the parties against whom the practitioner is then to act, or because of some conduct by the practitioner, whether arising from associations with the client or a close interest which gives rise to the fair and reasonable perception that the practitioner may not exercise the necessary independent judgment, a court may conclude that the lawyer should be restrained from acting, even for a client who desires to continue his service - Clay v Karlson (supra); Wan v McDonald (1992) 33 FCR 491 ; National Mutual Holdings Pty Ltd v Sentry Corporation (1989) 22 FCR 209 and Afkos Industries Pty Ltd v Pullinger Stewart [2001] WASCA 372.
29 From the wider viewpoint, including the perspective of the legal practitioner's duty to the court, it can readily be perceived that this
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- situation justifies intervention by the court because of an actual or sufficiently material threatened conflict of interest by the practitioner, as an officer bearing fiduciary obligations, between his obligations to the court, and his obligations to the client or to some other interest. So it has long been accepted that a legal practitioner, who is likely to be a witness in a case should not act as counsel, or continue to act as counsel if a situation arises where he is unexpectedly required to give evidence. The reason being is that the personal integrity of the practitioner may be put in issue if his credibility is at stake as a witness, and that this will, or may, constitute a personal interest inconsistent with the practitioner's duty to the court or to the client. Other similar conflicts of interest can arise if, for example, the counsel or solicitor had a substantial personal stake in the litigation such as, for example, if he or she were to be a partner in a firm which was a party to the litigation, or a substantial shareholder in a corporation which was a party.
30 A feature which emerges from the decision of this Court in Afkos Industries Pty Ltd v Pullinger Stewart (supra), is that while a properly informed and advised client, not under any disability, may waive or ratify any breach of duty due to it by the legal practitioner, the practitioner's duty to the court cannot be waived, so that if the particular disqualifying feature involves a conflict between the interests of the practitioner and his duty to the court which could give rise to a situation where the independent administration of justice may be put in jeopardy, the court will restrain the practitioner notwithstanding the wishes or interests of the client. However, it by no means follows that every conflict of interest between the legal practitioner and a client will give rise to a concurrent conflict of interest between the legal practitioner and his duty to the court, or, even where it does, that there is a risk that the practitioner will disregard his overriding duty to the court in favour of his client's interest. It seems to me that if it can be demonstrated that there is a risk that a practitioner will disregard his overriding duty to the court that this will usually, if not always, require action by the court to avoid such a risk by preventing the practitioner from acting even if the relief is sought by an opposing party in the litigation. But these principles do not render counsel or solicitors generally examinable at the suit of their client's opponents. The duty of the legal practitioner is not to his client's opponent and he is not answerable to his client's opponent. His duty is to the court and he is certainly answerable to the court and to his or her professional and disciplinary bodies.
31 Consequently, if an opposing party asserts that a legal practitioner should be restrained from acting for his opponent it is necessary for a
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- clear case to be made that the practitioner concerned is in a position where he is fixed with an interest which conflicts with his duty to the court and that that interest is one of such a nature that the solicitor or counsel may fail in his overriding duty to the court. Animosity between the lawyers on opposing sides of the litigation, even animosity which may cause a practitioner in an unguarded moment to commit some act of professional misconduct, will not, of necessity, require such an intervention. There is ample jurisdiction within the contempt power and in the disciplinary jurisdictions exercised by the court or to which it might refer such a matter, to deal with such indiscretions or misconduct. However, the insidious threat imposed by a practitioner who, wittingly or unwittingly, does have a conflict between his personal interests and the duties which he owes to the court is another matter. As the passage cited from Giannarelli v Wraith (supra) reveals, it is inevitable that a practitioner in a cause will be obliged to advance his client's interest but he must only do so while simultaneously observing his duties to the court and preferring that overriding duty to any other. That this is, and for ages has been, done regularly by counsel and solicitors in litigious proceedings is testimony to the professional traditions which should be the mantle of all practitioners. Consequently, although a court will always be alert to consider whether or not these are in jeopardy, in my view it would usually take an unequivocal situation to justify restraining a practitioner from acting on these grounds.
32 In the present case it is alleged against Mr Williams, by his former clients' former solicitors, that he has a personal stake in this litigation in that, if the plaintiffs' claim fails, or some of the allegations which have been advanced on behalf of the plaintiffs are not made out, he is likely to be revealed as having committed serious professional misconduct in the past and to be susceptible to professional discipline. It is also alleged against him that, in the past, he has negotiated with the defendant or its solicitors for terms advantageous to his client in relation to other interlocutory proceedings in this and related litigation, which include a readiness to cease acting on their behalf in face of demands that, if he did not do so, an application such as the present would be brought to restrain him from acting. To my mind these are quite inconclusive considerations depending, as they do, upon an assessment of the overall rights and obligations of the contending parties which, as I have already explained, cannot be reached until this litigation has been completed.
33 What is sought by the application against Mr Williams in the present circumstances is to prevent him from having any communications with his former clients, advising them in any way or taking any part in the proceedings except as a witness. If that application were to be granted it
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- would, for all practical purposes, quarantine Mr Williams from any communication with his former clients in respect of this litigation and would deny the plaintiffs' present solicitors such recourse, as in their discretion they might consider desirable, to liaise with, consult or seek information from Mr Williams about the history of the litigation or his opinions and advice which prompted its initiation. Such a consequence appears to me to be so extreme as to amount to an interference with the due prosecution of the plaintiffs' litigation by those who now have the professional responsibility of pursuing it. There is an implication in the defendant's submissions that any help or encouragement which Mr Williams might provide the plaintiffs or their solicitors must of necessity be pernicious and would taint the integrity of the judicial process involved in the determination of this litigation. I simply do not accept such a contention. Even if it were to be supposed, and I hasten to add that at this stage it should not be supposed, that Mr Williams was unduly zealous in encouraging and advising the plaintiffs to commence and prosecute this litigation and that he may, for a variety of reasons, be disposed to continue to act in that fashion, the simple answer is that the control of the plaintiffs' litigation now rests, and has rested for some time, in other hands who have undoubted and unquestioned duties to their clients and to the court.
34 In my view, the application by the defendant against the newly appointed third party, Paul Williams, to restrain him from any involvement with the plaintiffs other than as a witness in these proceedings, should be dismissed.
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