Leeton Palms Pty Limited v Zirtele Pty Limited

[2017] NSWSC 1819

Supreme Court

New South Wales

Medium Neutral Citation:

Leeton Palms Pty Limited v Zirtele Pty Limited [2017] NSWSC 1819

Hearing dates:

21 December 2017

Date of orders:

21 December 2017

Decision date:

21 December 2017

Before:

Ball J

Decision:

The fifth defendant’s motion is dismissed with costs

Catchwords:

CIVIL PROCEDURE – Representation – Application to restrain plaintiffs’ solicitors from acting

Cases Cited:

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

Category:

Procedural and other rulings

Parties:

Frank Patrick Zirilli (Applicant | Fifth Defendant)
Grant Robert Gayler (Respondent)

Representation:

Counsel:

 

A Gruzman (Applicant | Fifth Defendant)
P Tierney (Respondent)

  Solicitors:
Cappello Rowe Lawyers (Applicant | Fifth Defendant)
Farrell Lusher Solicitors (Respondent)

File Number(s):

2015/156425

Publication restriction:

Nil

EX TEMPORE Judgment

1. By a notice of motion filed on 8 December 2017, the applicant on the motion, who is the fifth defendant in the substantive proceedings, seeks orders the effect of which would be to restrain the respondent to the motion, who is the solicitor for the plaintiffs, from continuing to act for the plaintiffs.

2. The substantive proceedings concern a claim for damages for repudiation of a lease of premises used as a supermarket by the first defendant.

3. In the proceedings, the first plaintiff claims damages from the first defendant for lost rent and the second plaintiff makes a claim under a goods security agreement which was entered into in connection with the lease of the supermarket. Claims are brought against the second to sixth defendants in the proceedings as guarantors of the obligations of the first defendant. The fifth defendant is the sole director of the first defendant.

4. From the period 14 August 2013 to approximately 14 January 2014, the respondent’s firm acted for the fifth defendant in Family Law proceedings. There is a dispute concerning the precise issues that arose in the Family Law proceedings, but there is at least some evidence that those issues concerned both matters of custody and also property settlement.

5. The fifth defendant maintains that in circumstances where the respondent’s firm acted for him in 2013 and early 2014, the respondent should be restrained from acting for the plaintiffs in the current case.

6. It is relevant to observe that the fifth defendant must have been on notice since the time these proceedings were commenced that the respondent to the motion, or his firm, was acting for the plaintiffs.

7. It is also relevant to observe that the case has been set down for a final hearing with an estimate of six days commencing on 12 March 2018.

8. The principles concerning when a Court will restrain a solicitor from continuing to act in proceedings were usefully summarised by Brereton J in Kallinicos v Hunt (2005) 64 NSWLR 561; [2005] NSWSC 1181 at [76].

9. Relevantly, it will be appropriate for the Court to restrain solicitors from acting against a former client where those solicitors have obtained confidential information from the former client which may be of assistance to the new client. It will also be appropriate for the Court in the exercise of its inherent jurisdiction to restrain a solicitor from acting where a fair-minded and reasonably informed member of the public would conclude that the proper administration of justice requires that a legal practitioner should be prevented from acting. As Brereton J explained, that second jurisdiction is to be regarded as exceptional and is to be exercised with caution and must be weighed against the public interest in a litigant not being deprived of the lawyer of his or her choice without due cause.

10. In the current proceedings, the case in support of the motion is put largely on the basis that the respondent, or his firm, while acting for the fifth defendant, had access to confidential information concerning the fifth defendant's financial affairs which may be of assistance to the plaintiffs in the current proceedings.

11. I do not accept that that forms an adequate basis for granting the relief sought by the fifth defendant in this case.

12. One difficulty is that the fifth defendant has not identified with any specificity the confidential information he says he supplied to the respondent’s firm which would be of assistance to the plaintiffs in this case. That is so even though the fifth defendant has had access to the respondent's firm’s file relating to him and was in a position to identify from that file or from his own knowledge precisely the information that he maintains is confidential and that was provided to the respondent or his firm.

13. Another difficulty, however, is that it is far from clear how the relevant financial information, whatever it was, could be used by the plaintiffs in the present case.

14. Mr Gruzman, who appeared for the fifth defendant, suggested in submissions that the plaintiffs had used that information in deciding whether to join the fifth defendant as a defendant to the proceedings. In my opinion there was no basis for that submission. It is plain that the fifth defendant was joined to the current proceedings because he was a guarantor of the obligations of the first defendant. There is no evidence that the plaintiffs used information concerning the fifth defendant's financial position in deciding to join the fifth defendant.

15. Moreover, such a suggestion seems to be inconsistent with the circumstances which led to the filing of the current motion. Those circumstances were that the respondent had issued a subpoena in the proceedings seeking production of the Family Law file because the fifth defendant had referred to the Family Law proceedings in his affidavit evidence. What happened suggests that the respondent was unaware of the fact that his firm had acted in the Family Law proceedings before the subpoena was issued.

16. Mr Gruzman suggests that other uses could be made of the information concerning the fifth defendant's financial position, such as in cross-examination going to the fifth defendant's credit or in proceedings seeking to enforce any judgment in the event that the plaintiffs are successful in obtaining judgment against the fifth defendant.

17. It is difficult to make an assessment of that submission without knowing precisely what the confidential information is said to be. However, it seems to me that at most there is only a remote possibility that the financial information of the fifth defendant could be of any assistance to the plaintiffs in this case and, if it were of assistance, the likelihood is that the plaintiffs would be in a position to obtain that information through the issue of subpoenas or notices to produce.

18. Having regard to the closeness of the trial and the likely substantial difficulties that would be caused to the plaintiffs if they were required to find new solicitors now, in my opinion, there are strong discretionary reasons for refusing the relief sought by the fifth defendant.

19. For those reasons the fifth defendant’s notice of motion is dismissed with costs.

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Decision last updated: 22 December 2017