Re 99A Furlong Road Pty Ltd
[2019] VSC 528
•2 August 2019
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL COURT
CORPORATIONS LIST
S ECI 2019 01564
IN THE MATTER OF 99A FURLONG ROAD PTY LTD (ACN 615 255 402)
| 99A FURLONG ROAD PTY LTD (ACN 615 255 402) (AS TRUSTEE FOR THE AMORA ESTATE UNIT TRUST) & ORS (according to the Schedule attached) | Plaintiffs |
| v | |
| HUYONG PROPERTY INVESTMENTS PTY LTD (ACN 620 382 854) (AS TRUSTEE FOR THE GOLDEN OAKS PROPERTIES UNIT TRUST) & ORS (according to the Schedule attached) | Defendants |
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JUDGE: | McDonald J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 2 August 2019 |
DATE OF RULING: | 2 August 2019 |
CASE MAY BE CITED AS: | Re 99A Furlong Road Pty Ltd |
MEDIUM NEUTRAL CITATION: | [2019] VSC 528 |
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COSTS – Defendants filed summons seeking orders to restrain the plaintiffs’ solicitors from acting for plaintiffs on grounds of conflict of interest – Defendants abandoned application in respect of third, fourth and sixth plaintiffs immediately prior to the hearing – Application in respect of first, second and fifth plaintiffs maintained but not on grounds of conflict of interest – Defendants ordered to pay plaintiffs’ costs on an indemnity basis.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | Mr P G Cawthorn QC and Mr J D McKay | Stamford Lawyers Pty Ltd |
| For the Defendants | Mr P S Noonan | Madison Branson Lawyers |
HIS HONOUR:
On 17 July 2019, the defendants filed a summons seeking an order that the plaintiffs’ solicitors, Stamford Lawyers (‘Stamford’), be restrained from acting or representing the plaintiffs and that they file a notice of ceasing to act.
The summons was supported by an affidavit affirmed by the third defendant, Nhut Quang Dai Huynh (‘Mr Quang’), on 16 July 2019. Paragraph three of this affidavit identifies the ground upon which the application was brought:
[O]n the grounds of conflict of interest, insofar as [Stamford] had extensively acted, from time to time, on behalf of the Defendants or each of them, including in respect of matters germane to the issues in dispute in this proceeding.[1]
[1]Affidavit of Nhut Quang Dai Huynh affirmed 16 July 2019, [3].
Under the heading, ‘Circumstances Giving Rise to Conflict’, this affidavit refers to 13 matters in which Stamford is said to have provided legal services to one or more of the defendants.[2]
[2]Ibid [8]–[36] (emphasis omitted).
Written submissions were also filed by the defendants on 17 July 2019. These submissions identified three bases upon which Stamford should be restrained from acting for the plaintiffs:
(a) Confidential information having been obtained by Stamford from the plaintiffs and its possible disclosure;[3]
(b) Breach of a duty of loyalty owed by Stamford to the defendants;[4] and
(c) The inherent jurisdiction of the Court to ensure the proper administration of justice.[5]
[3]Defendants, ‘Submissions’, 17 July 2019, [3]–[7].
[4]Ibid [8]–[11].
[5]Ibid [12]–[24].
The interlocutory application filed by the plaintiffs on 11 July 2019 was listed for a mention hearing on 22 July 2019. In that application, the plaintiffs seek summary judgment in respect of the relief sought in paragraphs one and 1A [sic] of the originating process filed on 9 April 2019.[6]
[6]Plaintiffs, ‘Interlocutory Process’, 11 July 2019, [1].
On 22 July 2019, the Court listed the plaintiffs’ application for hearing on 14 August 2019.[7] The Court also listed the defendants’ summons seeking to restrain Stamford from acting for the plaintiffs for hearing on today’s date, 2 August 2019.[8] The proceeding was also referred to mediation.[9] That took place on 29 July 2019, and the matter was not resolved.[10]
[7]Order of McDonald J in In the matter of 99A Furlong Rd Pty Ltd (Supreme Court of Victoria, S ECI 2017 00038, 22 July 2019).
[8]Ibid.
[9]Ibid.
[10]Andrew Moffat, ‘Mediation Completion Report’, 30 July 2019.
On 31 July 2019, the plaintiffs filed a comprehensive affidavit of Patrick Chong, the principal of Stamford, which addressed the matters set out in Mr Quang’s affidavit affirmed 16 July 2019.[11] In particular, Mr Chong’s affidavit addressed the allegation that Stamford has a conflict of interest by reason of having previously acted for the defendants.
[11]Affidavit of Patrick Chong affirmed 31 July 2019.
On 1 August 2019, the plaintiffs filed written submissions which addressed each of the three grounds set out in the written submissions filed by the defendants on 17 July 2019. At 5.50pm on 1 August 2019, the defendants filed an affidavit of Nancie Hu.[12] Paragraphs 23 to 26 of that affidavit appear under the subheading, ‘Stamford Lawyers has no authority to act for the First, Second and Fifth Plaintiffs in this Proceeding’.[13]
[12]Affidavit of Nancie Hu affirmed 1 August 2019.
[13]Ibid 6.
At approximately 9.30am this morning, 2 August 2019, the defendants’ solicitors forwarded an outline of submissions to Chambers in which the defendants press their application to restrain Stamford from acting for the first, second and fifth plaintiffs[14] but, without concession, do not press the application to restrain Stamford from acting for the third, fourth and sixth plaintiffs.[15]
[14]Defendants, ‘Outline on summons’, attached to email from the solicitors for the defendants to Chambers on 2 August 2019, [2(a)].
[15]Ibid [2(b)].
Although the defendants press their application in respect of the first, second and fifth plaintiffs, they do not rely on the conflict of interest ground articulated in the affidavit of Mr Quang affirmed 16 July 2019 and the written submissions filed 17 July 2019; rather, the defendants rely upon a new ground.
As regards the first plaintiff, the defendants contend that the fourth plaintiff, Qiujin Wu (‘Ms Wu’), as a sole director of the first plaintiff, cannot lawfully instruct Stamford to conduct litigation with a view to obtaining relief which would be adverse to the interests of the 50 per cent shareholding controlled by Mr Quang.
As regards the second and fifth plaintiff, the defendants contend that Ms Wu, as a co-director, cannot lawfully instruct Stamford to conduct litigation with a view to obtaining relief which is prejudicial to her co-director and the interests associated with her co-director.
It was made plain during the course of submissions by Mr Noonan, who appeared for the defendants, that the defendants contend the first, second and fifth plaintiffs should not be represented in the current proceeding by any lawyer, not only Stamford.
The defendants accept that each of the entities which are currently the first, second and fifth plaintiffs should be a party to the proceeding because the relief sought, if granted, would require them to take steps in accordance with orders of the Court.
However, it appears that the defendants’ contention is that the parties which are presently the first, second and fifth plaintiffs should be joined as defendants in the proceeding and not be legally represented by any lawyer.
At the outset of today’s hearing, Mr Noonan made clear that the defendants abandon any reliance upon the conflict of interest ground in aid of the orders sought to restrain Stamford from acting for the first, second and fifth plaintiffs. The defendants no longer seek to restrain Stamford from acting for the third, fourth and sixth plaintiffs.
The relief which is now sought by the defendants and the basis upon which that relief is sought is of a fundamentally different character from the relief sought by the summons filed on 17 July 2019. By that summons, the defendants sought to restrain Stamford from acting for any of the plaintiffs on the grounds of conflict of interest. The affidavit of Mr Quang affirmed 16 July 2019 and written submissions filed by the plaintiffs on 17 July 2019 address this issue.
The defendants now appear to contend that the entities, which are the first, second and fifth plaintiffs:
(a) Should be named as defendants in the proceeding; and
(b) Should not be legally represented by any lawyer.
The appropriate course is for the summons filed on 17 July 2019 to be dismissed. As to the question of costs, those should be paid by the defendants forthwith. Mr Noonan submitted that the defendants’ change of position, whereby it no longer objects to Stamford acting on behalf of the third, fourth and sixth plaintiffs, is explicable by reference to the listing of the plaintiffs’ summary judgment application for hearing on 14 August 2019. Mr Noonan submitted that the defendants wish the hearing to proceed and are concerned at the prospect of losing the hearing date if they were successful in obtaining orders restraining Stamford from acting for the third, fourth and sixth plaintiffs.
The defendants have known of the hearing on 14 August 2019 since the mention hearing on 22 July 2019. Immediately thereafter, they could have withdrawn their objection to Stamford acting for the third, fourth and sixth plaintiffs. Had they done so at any time during the course of the week commencing 22 July 2019, this would almost certainly have avoided the costs associated with the preparation of Mr Chong’s affidavit affirmed 31 July 2019 and the written submissions filed on 1 August 2019. Further, counsels’ fees which have been incurred by the plaintiffs would also have been avoided. Rather than adopting this course, the defendants waited until immediately prior to today’s hearing to give notice to the plaintiffs that they no longer press their objection to Stamford representing the third, fourth and sixth plaintiffs.
From the moment the plaintiffs’ summary judgment application was listed on 22 July 2019 for hearing on 14 August 2019, it should have been apparent to the defendants that successful pursuit of its summons to restrain Stamford from appearing for the plaintiffs would mean the loss of the hearing date on 14 August 2019. During the course of the hearing on 22 July 2019, the following exchange took place between myself and counsel for the defendants when the Court was pronouncing the orders made on 22 July 2019. In respect of the directions for the hearing on 14 August 2019, I stated:
And the plaintiff is to file an outline of submission in reply. That – and, of course, this is all assuming that the – that your – this will have to be modified, of course, if your summons is successful to remove … the plaintiffs’ solicitors, but on the assumption it’s not … this is being done provisionally on that assumption.
Counsel for the defendants replied ‘Yes’.
The defendants have acted unreasonably by waiting until this morning to advise the plaintiffs that they no longer press the application in respect of the third, fourth and sixth plaintiffs. An order for indemnity costs is not warranted simply because the defendants have abandoned their reliance on the conflict of interest ground.[16] To justify an order for indemnity costs, it is necessary to point to a special or unusual feature which warrants a departure from costs being ordered on a standard basis.[17] That feature is provided in the present case by the very late abandonment of the conflict of interest point in circumstances where the defendants had ample opportunity in the days immediately following the hearing on 22 July 2019 to have informed the plaintiffs’ solicitors of the withdrawal of the reliance of the conflict of interest ground.
[16]Rivex Crane Hire Pty Ltd v Armquip Pty Ltd (No. 2) [2019] VSC 208, [18] (Croft J).
[17]Ibid [19].
It is also appropriate to order that costs be payable forthwith. The application to remove the plaintiffs’ solicitors on grounds of conflict of interest is a discrete issue in the proceeding. There is no realistic prospect that the question of costs arising from the summons filed by the defendants on 17 July 2019 will be revisited by reason of any subsequent events in this litigation.
SCHEDULE OF PARTIES
S ECI 2019 01564
BETWEEN:
| 99A FURLONG ROAD PTY LTD (ACN 615 255 402) (AS TRUSTEE FOR THE AMORA ESTATE UNIT TRUST) | First Plaintiff |
| GOLDEN OAKS PROPERTIES PTY LTD (ACN 620 381 204) (AS TRUSTEE FOR THE GOLDEN OAKS PROPERTIES UNIT TRUST) | Second Plaintiff |
| JULIA WU PROPERTY INVESTMENTS PTY LTD (ACN 620 487 247) (AS TRUSTEE FOR THE WU DISCRETIONARY TRUST) | Third Plaintiff |
| QIUJIN WU | Fourth Plaintiff |
| VICTORIA ABBOTSFORD PTY LTD (ACN 622 395 635) (AS TRUSTEE FOR THE VICTORIA ABBOTSFORD UNIT TRUST) | Fifth Plaintiff |
| ELTHAM OAKS PTY LTD (ACN 622 395 635) (AS TRUSTEE FOR THE ELTHAM OAKS TRUST) | Sixth Plaintiff |
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| HUYONG PROPERTY INVESTMENTS PTY LTD (ACN 620 382 854) (AS TRUSTEE FOR THE HUYONG DISCRETIONARY TRUST) | First Defendant |
| TRUESOURCE PTY LTD (ACN 161 040 580) | Second Defendant |
| NHUT QUANG DAI HUYNH | Third defendant |
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