Sacca v El Saafin

Case [2021] FCA 383

FEDERAL COURT OF AUSTRALIA

Sacca v El Saafin [2021] FCA 383

File number: VID 1439 of 2018
Judgment of: ANASTASSIOU J
Date of judgment: 20 April 2021
Catchwords: LEGAL PRACTITIONERS – application to restrain solicitor from acting against former client – whether duty of loyalty owed by solicitor to former client – whether proper administration of justice requires solicitor be restrained –where there were several opportunities to bring restraint application but application only filed in days before trial scheduled to commence – application dismissed
Cases cited:

ACN 092 675 164 Pty Ltd (in liq) v Suckling [2018] VSC 620; 56 VR 448

Briginshaw v Briginshaw [1938] HCA 34; 60 CLR 336

Colonial Portfolio Services Ltd v Nissen [2000] NSWSC 1047; 35 ACSR 673

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

Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22; 230 CLR 89

Farrow Mortgages Services Pty Ltd (in liquidation) v Mendall Properties Pty Ltd [1995] 1 VR 1

Frigger v Kitay (No 10) [2016] WASC 63

Grimwade v Meagher [1995] 1 VR 446

H Stanke & Sons Pty Ltd v Von Stanke [2006] SASC 308; 95 SASR 425

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

Nash v Timbercorp Finance Pty Ltd (in liq), in the matter of the bankrupt estate of Nash [2019] FCA 957; 137 ACSR 189

Prince Jefri Bolkiah v KPMG (a firm) [1999] 2 AC 222

Re IPM Group Pty [2015] NSWSC 240

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

Turner v Turner [2018] NSWSC 1140

Yunghanns v Elfic Ltd (formerly known as Elders Finance & Investment Co Ltd) (unreported, Supreme Court of Victoria, Gillard J, 3 July 1998)
Division: General Division
Registry: Victoria
National Practice Area: Commercial and Corporations
Sub-area: Corporations and Corporate Insolvency
Number of paragraphs: 41
Date of hearing: 3 March 2021
Counsel for the Plaintiffs: Mr J. Evans QC with Mr T. Mullen
Solicitor for the Plaintiffs: NOH Legal
Counsel for the First Defendant: Mr I. Upjohn QC with Mr B. Mason
Solicitor for the First Defendant: Hicks Oakley Chessell Williams
Solicitor for the Second Defendant: Toorak Law

ORDERS

VID 1439 of 2018
BETWEEN:

GEORGE SACCA

First Plaintiff

AAM AUSTRALIAN ARAB MEDIA PTY LTD (ACN 611 134 064)

Second Plaintiff

AIR TIME AUSTRALIA PTY LTD (ACN 611 197 203)

Third Plaintiff
AND:

MR WAEL EL SAAFIN

First Defendant

BARAKA MEDIA PTY LTD (ACN 628 791 284)

Second Defendant

ORDER MADE BY:

ANASTASSIOU J

DATE OF ORDER:

20 APRIL 2021

THE COURT ORDERS THAT:

1.The interlocutory application filed on 23 February 2021 is dismissed.

2.The matter is listed for a case management hearing at 11:00am on 12 May 2021 for further directions.

3.The costs of the application are reserved.

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


REASONS FOR JUDGMENT

ANASTASSIOU J:

INTRODUCTION

  1. By an…

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AGLC
Sacca v El Saafin [2021] FCA 383
Case
[2021] FCA 383
Decision Date

CaseChat Overview and Summary

In the Federal Court, the applicant, Mr El Saafin, sought an order to restrain Mr El-Hissi, a solicitor, from acting against him in a proceeding filed by the respondents, including Mr Sacca. The application arose from Mr El-Hissi’s involvement in a separate proceeding on behalf of some of the respondents, including Mr Sacca. The case concerned whether there was a duty of loyalty owed by a solicitor to a former client and whether the proper administration of justice required the restraint of the solicitor from acting. The application was dismissed because of the lateness of the application and the lack of any real and sensible possibility of the misuse of confidential information or a duty of loyalty.
The court considered whether the duty of loyalty owed by a solicitor to a former client could be a basis to restrain the solicitor from acting. The court noted that the duty of loyalty was not unanimously accepted in the authorities and that it only arose in the same or a closely related matter. The court also noted that the duty of loyalty had not been adopted by several judges in the authorities. The court held that the duty of loyalty should not be accepted as a matter of principle and that there was no real and sensible possibility of the misuse of confidential information. The court further held that the delay in bringing the application had the potential to cause financial loss and additional stress to Mr Sacca and that the prejudice caused by the delay in hearing the proceeding if Mr El-Hissi was to be restrained from acting were significant matters which informed the decision to dismiss the present application.
The court dismissed the interlocutory application filed on 23 February 2021 and listed the matter for a case management hearing at 11:00am on 12 May 2021 for further directions. The costs of the application were reserved. The court noted that entry of orders was dealt with in Rule 39.32 of the Federal Court Rules 2011.

Orders

Orders of the court

1. The interlocutory application filed on 23 February 2021 is dismissed.

2. The matter is listed for a case management hearing at 11:00am on 12 May 2021 for further directions.

3. The costs of the application are reserved.

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

Background

Background to the litigation

For the reasons that follow, I have concluded that the application should be dismissed. The principal, but not only, reason for this conclusion is the lateness of the application. As will become apparent, Mr El Saafin was informed on several occasions, including when he first raised with me the issue of Mr El-Hissi acting for the Plaintiffs in October 2019, that if he wished to make an application to restrain Mr El-Hissi he should make such application formally and promptly. BACKGROUND The factual background to this matter can be conveniently summarised as follows. Between 2011 and 2018, NOH Legal and Mr El-Hissi were retained from time to time by Mr El Saafin’s family company, Saafin Constructions Pty Ltd, by Mr El Saafin’s brothers, and on occasion by Mr El Saafin himself. The matters in which Mr El-Hissi acted for Mr El Saafin directly were in respect of a draft joint venture deed regarding a potential development in Brighton and, it appears, a debt recovery matter in the Magistrates’ Court in which Mr El Saafin was a named defendant. Mr El-Hissi deposed to the fact that he was not the ‘lawyer of choice’ for Mr El Saafin or Saafin Constructions and never received any confidential information from either during the course of his limited engagements. Mr El-Hissi also maintained that he did not have any relevant knowledge about the financial position or strategic interests of Mr El Saafin or Saafin Constructions. In May 2018, a proceeding was commenced by Mr El Saafin’s brothers (Hassan and Mohamed) on behalf of Saafin Constructions in the Supreme Court in relation to a property development at 65-67 Arden Street, North Melbourne (the Supreme Court Proceeding). George Sacca, the First Plaintiff in this proceeding, is a defendant in that proceeding and NOH Legal were originally retained to act in the matter on behalf of some of the defendants (including Mr Sacca). The Supreme Court Proceeding concerns different entities and different issues, such that there is in substance no commonality of facts between the matters being agitated in the Supreme Court Proceeding and the present proceeding. On 24 May 2018, Mr El Saafin and his brother, Hassan, complained to the Legal Services Commissioner (LSC) regarding Mr El-Hissi’s involvement in the Supreme Court Proceeding. Mr Mazaris of the LSC notified Mr El-Hissi of the complaint on 29 May 2018. On 31 May 2018, Mr Mazaris wrote to Mr El-Hissi with a proposal that Mr El Saafin and his brother had put forward to resolve the complaint. Mr El-Hissi accepted the proposal on the following day, 1 June 2018, agreeing to cease to act against Mr El Saafin, his brothers and Saafin Constructions on the basis that the complaint would be withdrawn. In the course of agreeing to cease acting in the Supreme Court Proceeding, Mr El-Hissi did not make any admission of wrongdoing nor did he provide any undertaking to the LSC. Indeed, the complaint was expressly resolved on the basis that if Mr El-Hissi started to act against either of them again at some point in the future, they could renew their complaint or file a new one.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

There can be no doubt that the delay in bringing this application, which resulted in an adjournment of the hearing scheduled to commence on 1 March 2021, had the potential to cause financial loss and additional stress to Mr Sacca. The delay in bringing this application, and the prejudice caused to the Plaintiffs by the delay in hearing the proceeding if Mr El-Hissi was to be restrained from acting, are significant matters which inform my decision to dismiss the present application.CONSIDERATION The authorities recognise three potential bases that might justify the exercise of the Court’s jurisdiction to restrain a solicitor from acting against a former client.Misuse of confidential information The first, and usual, basis to restrain a solicitor from acting is that there is a ‘real and sensible possibility of the misuse of confidential information’: Farrow Mortgages Services Pty Ltd (in liquidation) v Mendall Properties Pty Ltd [1995] 1 VR 1 at 5 (Hayne J); Prince Jefri Bolkiah v KPMG (a firm) [1999] 2 AC 222 at 235 (Lord Millett). In the present application, there was no submission seeking to restrain Mr El-Hissi from acting due to the potential misuse of confidential information. Indeed, there could not be, as Mr El Saafin did not identify any specific confidential information in the possession of Mr El-Hissi or NOH Legal that might be misused. Further, and relatedly, Mr El Saafin did not suggest that any of the “getting to know you” factors – being confidential information about a client such as the client’s personality, character, honesty, strengths, weaknesses and attitudes to litigation – might amount to confidential information that could be used against him in the present proceeding: Yunghanns v Elfic Ltd (formerly known as Elders Finance & Investment Co Ltd) (unreported, Supreme Court of Victoria, Gillard J, 3 July 1998) at 10-11. As above, there was no evidence of Mr El-Hissi being privy to information about Mr El Saafin’s personality, character or strategic interests, which might constitute confidential information capable of being misused.Duty of loyalty The second potential basis, which has not been unanimously adopted in the authorities, is said to arise from a duty of loyalty owed by a solicitor to their former client even after the solicitor’s retainer has been terminated or completed: Spincode Pty Ltd v Look Software Pty Ltd [2001] VSCA 248; 4 VR 501 at [59]-[60] (Brooking JA); see also at [63] (Chernov JA) remarking that there was a “compelling case” for such a duty. Importantly, if accepted, the duty of loyalty only arises where the solicitor is sought to be restrained “in the same or a closely related matter”: Spincode at [52] (Brooking JA); see also at [63] (Chernov JA), referring to the “same or substantially the same proceeding”. Counsel for Mr El Saafin submitted that the duty of loyalty should be accepted as a matter of principle and relied upon that duty in support of the present application. Conversely, the Plaintiffs relied upon decision of Beach J in this Court in Dealer Support Services Pty Ltd v Motor Trades Association Australia Limited [2014] FCA 1065; 228 FCR 252 at [40]-[91] (Beach J), in which his Honour expressly declined to adopt the duty of loyalty. See also Nash v Timbercorp Finance Pty Ltd (in liq), in the matter of the bankrupt estate of Nash [2019] FCA 957; 137 ACSR 189 at [122] (Anderson J) and the criticism of Riordan J in ACN 092 675 164 Pty Ltd (in liq) v Suckling [2018] VSC 620; 56 VR 448 at [56]-[66].