Rumsley v Clifford - [2019] WASC 447

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL

CITATION:   RUMSLEY -v- CLIFFORD [2019] WASC 447
CORAM:   CURTHOYS J
HEARD:   26 NOVEMBER 2019
DELIVERED          :   6 DECEMBER 2019
FILE NO/S:   CIV 1702 of 2019
BETWEEN:   ALAN PHILLIP RUMSLEY
Plaintiff
AND
MICHAEL JOHN CLIFFORD
First Defendant
SHERAZ PTY LTD
Second Defendant

Catchwords:

Legal practitioner - Conflict - Personal interest in outcome - Potential witness - Injunction

Legislation:

Nil

Result:

Injunction granted

Representation:

Counsel:

Plaintiff	:	J Schoombee
First Defendant	:	P Lafferty
Second Defendant	:	P Lafferty

Solicitors:

Plaintiff	:	Western Legal
First Defendant	:	Clifford Chambers
Second Defendant	:	Clifford Chambers

Case(s) referred to in decision(s):

Clifford v Vegas Enterprises [2011] FCAC 135.
Clifford v Vegas Enterprises Pty Ltd [2010] FCA 916.
Sheraz Pty Ltd v Vegas Enterprises Pty Ltd [2013] WASC 45.
Sheraz Pty Ltd v Vegas Enterprises Pty Ltd [2015] WASCA 4.

CURTHOYS J:

On 18 April 2019 Mr Rumsley issued a Supreme Court Writ against Michael John Clifford and Sheraz Pty Ltd seeking the recovery of fees and associated matters.
Michael John Clifford, the first defendant, is a director of Sheraz Pty Ltd, the second defendant. He is the brother of Phillip Clifford - the other director of Sheraz Pty Ltd.
The total amount sought by Mr Rumsley for legal services in about $750,000.
Mr Rumsley further alleges that Sheraz Pty Ltd engaged Phillip Clifford to provide legal services to clients.
Mr Rumsely alleges a 2009 agreement between he and Phillip Clifford whereby Mr Rumsley would act on Mr Clifford's behalf in proceedings against Vegas Enterprises Pty Ltd (WAD 28 of 2009). Mr Clifford's claim was dismissed.[1]
[1] Clifford v Vegas Enterprises Pty Ltd [2010] FCA 916.
Mr Rumsley alleges that in August 2010 Phillip Clifford instructed him to commence an appeal. On 3 November 2011 Phillip Clifford's appeal was dismissed.[2]
[2] Clifford v Vegas Enterprises [2011] FCAC 135.
Mr Rumsely alleges that in February 2012 Phillip Clifford instructed him to commence proceedings for Sheraz Pty Ltd in the Supreme Court of Western Australia against Vegas Enterprises Pty Ltd. Mr Rumsely alleges a fee agreement with Phillip Clifford relating to the costs of those proceedings. Sheraz Pty Ltd's claim was dismissed.[3]
[3] Sheraz Pty Ltd v Vegas Enterprises Pty Ltd [2013] WASC 45.
Mr Rumsley alleges a further fee agreement with Phillip Clifford in February 2013. Mr Rumsely agreed to act in an appeal against the Supreme Court decision. The appeal was dismissed by the Court of Appeal.[4]
[4] Sheraz Pty Ltd v Vegas Enterprises Pty Ltd [2015] WASCA 4.
Mr Rumsley alleges a further agreement in May 2013 between he and Phillip Clifford relating to proceedings in the State Administrative Tribunal concerning Phillip Clifford's practice certificate.
Mr Rumsley alleges that in February 2015 Phillip Clifford instructed Mr Rumsley to file an application for special leave against the Court of Appeal's decision. The application for special leave was dismissed. ([2015] HCASL 172)
Mr Rumsley makes a number of…

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.

Continue reading Rumsley v Clifford

Details

AGLC: Rumsley v Clifford [2019] WASC 447
Case: [2019] WASC 447
Decision Date: 6 DECEMBER 2019

CaseChat Overview and Summary

In the case of Rumsley v Clifford, the plaintiff, Mr Rumsley, applied to the court to restrain Mr Philip Clifford from acting as a lawyer for the defendants in the ongoing proceedings. Mr Rumsley argued that Mr Clifford would inevitably be a material witness and had a personal and professional interest in the outcome of the case. The dispute involved claims for payment of legal fees and recovery of fees paid to Sheraz, which was found to be the alter ego of Mr Clifford. The court had to decide whether Mr Clifford's potential role as a witness and his personal interest in the proceedings constituted a conflict of interest that would prevent him from effectively representing the defendants.

The primary legal issue before the court was whether Mr Clifford's dual role as a potential witness and his personal involvement in the subject matter of the case created an impermissible conflict of interest that would disqualify him from acting as legal counsel for the defendants. The court had to consider the principle that lawyers must maintain professional independence and objectivity, particularly when their personal interests could potentially influence their representation of the client. The court also needed to balance the rights of the parties involved against the broader public interest in maintaining the integrity of the legal profession.

The court found that Mr Clifford's potential role as a material witness and his personal stake in the proceedings created a significant conflict of interest. The court relied on established legal principles that a lawyer must not act if their personal interests conflict with their duty to the client and the court. The court emphasised the importance of maintaining the purity of interest in litigation to uphold the credibility of the legal system. Based on previous judicial findings and the inherent jurisdiction of the court to supervise legal practitioners, the court concluded that Mr Clifford could not continue to act as legal counsel for the defendants.

The court granted the application, restraining Mr Clifford from acting as a lawyer for the defendants in the proceedings. The decision underscored the necessity of upholding professional standards and ensuring that lawyers do not act in situations where their personal interests could compromise their independence and objectivity. The court's ruling aimed to protect the integrity of the legal process and the rights of all parties involved in the litigation.

Orders

Orders of the court

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Background

Background to the litigation

Mr Rumsely filed submissions in support of his application on 29 August 2019 which read:1.The plaintiff seeks orders under the inherent jurisdiction of the Court to restrain Mr Philip Clifford (Clifford) from acting as lawyer for the defendants, or either of them in these proceedings.2.The grounds are that Philip Clifford will invariably or at least very likely be a material witness in these proceedings. He also has a personal and professional interest in the proceedings by reason of the scrutiny to which his conduct in a professional context will be subjected. This is notably so in relation to invoices issued under his direction claiming payment by Sheraz Pty Ltd (Sheraz), for legal services he had performed, and receipt of payment for the same by Sheraz, in circumstances where Sheraz was not an incorporated legal practice or otherwise entitled to claim payment for any legal services.Relevant Background3.There are two aspects to the substantive proceedings.4.First the proceedings seek payment for legal fees in matters where the plaintiff (Rumsley) acted as solicitor of record for Sheraz Pty Ltd (Sheraz), in the Supreme Court, Court of Appeal and High Court, and for Clifford in the Federal Court and State Administrative Tribunal. Fees are claimed in all these instances on the basis that Clifford agreed with the Rumsley, when acting on behalf of Clifford and Sheraz, that Sheraz would pay the legal fees due to Rumsley.5.Secondly, the proceedings involve the recovery of legal fees paid from the trust account of Rumsley, on behalf of a number of clients, to Sheraz. The payments were made in circumstances where Sheraz was not an incorporated legal practice for the purposes of the Legal Professions Act 2008 and not on any basis entitled to receive remuneration for legal services.6.In previous proceedings involving Sheraz and Clifford, Sheraz was held to be no more than the alter ego of Clifford. 7.In respect of the legal proceedings where Mr Rumsley acted for Sheraz or Philip Clifford, and the payments for legal services were made to Sheraz, all of the relevant dealings of Mr Rumsley were with Philip Clifford.8.Clifford and Sheraz made arrangements in 2011, for Sheraz to employ Clifford to provide legal services. The background is set out in the report of the trustee of the bankrupt estate of Clifford, attached to the affidavit of Mr Rumsley sworn 29 July 2019.9.As pointed out above, Clifford will invariably or at least very likely be a material witness in these proceedings. He also has a personal and professional stake in these proceedings by reason of the scrutiny to which his conduct in a professional context will be subjected.Jurisdiction10.It has been accepted for a very long time that "all courts may exercise an authority over their own officers as to the propriety of their behaviour: for applications have been repeatedly made to restrain solicitors who had acted on one side, from acting on the other, and those applications have failed or succeeded upon their own particular grounds, but never because the court had no jurisdiction." 11.It is "a supervisory power which is of considerable importance for the maintenance of standards and enforcement of discipline in relation to legal practitioners". The function of the Supreme Court in supervising practitioners pursuant to its inherent jurisdiction is, in each case, to ensure the protection of the public. 12.As pointed out above, the basis for the exercise of the jurisdiction is that the conduct of Clifford is at the heart of the matters now in issue in these proceedings, where he is likely to be required to give evidence, such that Clifford cannot continue to act as he has an interest in these proceedings of the type referred to in Clay v Karlson (1997) 17 WAR 493, 495-496 and Afkos Industries Pty Ltd v Pullinger Stewart [2001] WASCA 372, [32].Applicable Principles13.What the WA Court of Appeal has decided in this context, should be noted – emphasis supplied:where the acts or omissions of the law firm, including situations where the actions of the client are based on advice given by the solicitors, are at the heart of the question in issue, the firm is, in a real sense, 'defending' its actions or advice. There is, in such circumstances, a danger that the client will not be represented with the objectivity and independence which the client is entitled to and which the Court demands. There is no sound reason to presume or accept that the solicitors must first have the opportunity to clarify whether their client is liable as a result of their actions or of acting on their advice before confronting the conflict; andSolicitors not only owe a duty to their clients to do their best for them but also owe an overriding duty to the Court. The same overriding duty is owed by counsel who have been granted a right of audience to appear in this Court. As part of their professional responsibility, therefore, solicitors and counsel must ensure that they do not appear in a matter in which they have an actual or potential conflict of interest or where, by reason of their relationship with their client, their professional independence can be called in question.14.The mandatory language used by the Court in the extracted passages should be noted. 15.As Templeman J, with the agreement of Parker, Wheeler and Pullin JJ held: It is the purity of interest in the adversaries before the court that gives what fundamental utility and credence there is in the system. But where, as in this case, the solicitor has a personal interest in the outcome of the 'action that 'purity of interest' is absent; and in dealing with legal practitioners and the conduct of litigation, the courts can speak with authority in saying that it is "incontestably and on any view inimical to the public interest" to permit a solicitor to act in any case in which his interest conflicts with his client's interest.Previous Instances of Clifford acting for Sheraz and relevant judicial findings16.In Sheraz Pty Ltd v Vegas Enterprises Pty Ltd [2015] WASCA 4; 48 WAR 93, Chaney J, with the agreement of Buss and Murphy JJA , held that where Clifford appeared as barrister on the appeal of Sheraz; 'there is at least a serious risk that he could not bring to the Court the independence expected of counsel.' In that case no objection had been taken by the other party to Clifford appearing as counsel for Sheraz. At [191], Chaney J identified the interests of Clifford in that case as:16.1Barker J found he controlled Sheraz at the time the relevant events took place, and he was described by Master Sanderson as the alter ego of Sheraz;16.2Sheraz was the trustee of a discretionary trust of which he was a beneficiary; and16.3Clifford would have been a key witness for Sheraz and it was highly likely that significant parts of his evidence would have been challenged.17.In 20 July 2018, Birmingham DCJ, in the matter of Clifford v Rumsley action BUN CIV 4 of 2017, referred to the Court of Appeal findings, set out above and concluded that someone other than Philip Clifford must file an appearance and appear for Sheraz. That matter concerns claims by Clifford or Sheraz for payment by Rumsley of fees claimed in relation to clients Rumsley and Clifford acted for.18.In proceedings in the Federal Court, in March 2019, the issue of Philip Clifford acting for Sheraz was raised by Mr Rumsley. This matter was an application by Sheraz to set aside a statutory demand. The docket judge, her Honour Justice Banks-Smith raised, through her associate, this issue with the parties and requested it be addressed at the case management hearing. 19.In the District Court and Federal Court proceedings referred to in the preceding two paragraphs, Armeli Molony Lawyers replaced Clifford as the lawyers for Sheraz. 20.The current proceedings will place in issue the professional conduct of Clifford in arranging the affairs of Sheraz and thereby advising Sheraz in respect of engaging Clifford as an employee initially and then as a consultant to provide legal services, for which Sheraz was paid.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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