Taylor v Hobson

Case [2016] QSC 226

SUPREME COURT OF QUEENSLAND

CITATION:

Taylor & Anor v Hobson & Ors [2016] QSC 226

PARTIES:

ALAN JOHN JEFFREY TAYLOR

(first plaintiff/first respondent)
WANDANI PTY LTD
(second plaintiff/second respondent)

v
RICHARD HOBSON

(first defendant/first applicant)
HOBSON INVESTMENTS (NQ) PTY LTD
(ACN 102 617 050)
(second defendant/second applicant)
ROBERTS NEHMER McKEE
(third defendant)
MALCOLM FISHER
(fourth defendant)

FILE NO/S:

Mackay SC No 15 of 2014

DIVISION:

Trial Division

PROCEEDING:

Interlocutory Application

ORIGINATING COURT:

Supreme Court of Queensland at Brisbane

DELIVERED ON:

06 October 2016

DELIVERED AT:

Brisbane

HEARING DATE:

09 September 2016

JUDGE:

Boddice J

ORDER:

I shall hear the parties as to the form of orders and costs.

CATCHWORDS:

PROCEDURE – STATE AND TERRITORY COURTS: JURISDICTION, POWERS AND GENERALLY – INHERENT AND GENERAL STATUTORY POWERS – TO PREVENT ABUSE OF PROCESS – GENERALLY – where the plaintiffs commenced the present proceedings concerning a sale of business agreement they entered into with the first and second defendants – where the plaintiffs also commenced proceedings against the first and second defendants’ solicitors, the third and fourth defendants – where the plaintiffs alleged the first and second defendants and their solicitors made misrepresentations to the plaintiffs, which induced the plaintiffs to enter into the business agreement – where the proceeding between the plaintiffs and the third and fourth defendants were settled by Deed – where the Deed provided for the third and fourth defendants’ insurer to pay to the plaintiffs a sum of money – where the Deed also provided for the third and fourth defendants’ insurer to appoint its solicitors to undertake the proceedings on behalf of the plaintiffs – where the Deed also provided for the insurer to direct the plaintiffs to conduct the proceedings as directed by the insurer – where the first and second defendants seek an order for strike out or a stay of the proceedings on the basis the Deed provides for the insurer to direct the Court’s processes, leaving those processes open to abuse – whether a continuation of the proceedings would constitute an abuse of process

PROFESSIONS AND TRADES – LAWYERS – DUTIES AND LIABILITIES – SOLICITOR AND CLIENT – GENERALLY – where the proceedings between the plaintiffs and the third and fourth defendants were settled by Deed – where the Deed provided for the third and fourth defendants’ insurer to appoint its solicitors to undertake the proceedings on behalf of the plaintiffs – where the first and second defendants seek an order restraining the plaintiffs’ current solicitors, appointed by the insurer, from acting – where the first and second defendants submit there is a potential for use of confidential information by the plaintiffs’ current solicitors – where the plaintiffs submits its solicitors have not previously acted for any party in the proceeding and not had access to confidential information – where the plaintiffs also submit appropriate undertakings can be given to ensure they do not in the future have access to or misuse any confidential information – whether the plaintiffs’ current solicitors should be…

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Taylor v Hobson [2016] QSC 226
Case
[2016] QSC 226
Decision Date

CaseChat Overview and Summary

The case of Taylor v Hobson concerns a dispute arising from a sale of business agreement entered into in 2010. The plaintiffs commenced proceedings against the first and second defendants, as well as the third and fourth defendants, who were the solicitors of the first and second defendants at the time of the transaction. The plaintiffs alleged that the sale agreement was induced by misrepresentations made by the first and second defendants and their solicitors. The proceedings against the third and fourth defendants were settled by a Deed of Settlement, which provided for the insurer of the third and fourth defendants to pay a sum of money to the plaintiffs and to appoint its solicitors to continue the proceedings against the first and second defendants. The first and second defendants sought to strike out or stay the proceedings, arguing that the Deed allowed for an abuse of process by enabling the insurer to direct the Court's processes and that the plaintiffs' current solicitors, appointed by the insurer, should be restrained from acting due to potential access to confidential information.

The court considered whether the continuation of the proceedings under the direction of the insurer amounted to an abuse of process, given that the insurer had a financial interest in the outcome of the proceedings. The court also evaluated whether the plaintiffs' current solicitors, appointed by the insurer, should be restrained from acting on the grounds of potential misuse of confidential information. The court concluded that the Deed of Settlement, which allowed the insurer to direct the Court's processes, resulted in an impermissible intermeddling in the proceedings. The court found that this intermeddling gave rise to an abuse of process and therefore ordered a stay of the proceedings until the intermeddling was resolved.

The court further held that there was no evidence to support the contention that the plaintiffs' current solicitors had access to confidential information or would misuse any such information in the future. The court found that appropriate undertakings could adequately address any concerns about the use of confidential information. Consequently, the court declined to restrain the plaintiffs' current solicitors from acting. The court indicated that it would hear from the parties regarding the form of orders and costs.

The final orders of the court will be determined after further submissions from the parties regarding the form of orders and costs.

Orders

Orders of the court

I shall hear the parties as to the form of orders and costs.

Background

Background to the litigation

At issue is the effect of certain terms in a Deed of Settlement entered into between the plaintiffs, the third and fourth defendants and the insurer of those defendants, Lexon. Background The plaintiffs commenced the present proceedings in 2015. The claim concerned a written sale of business agreement entered into between the plaintiffs and the first and second defendants in February 2010. In addition to the first and second defendants, the plaintiffs instituted proceedings against the first and second defendants’ solicitors at the time of the transaction, the third and four defendants. The statement of claim alleged the sale of business agreement had been entered into as a consequence of various representations, made in contravention of sections 52 and 53A of the Trade Practices Act 1974. Representations were also said to have been made subsequent to the entering into of the sale of business agreement and before the plaintiffs paid monies pursuant to its terms. . The representations were alleged to have been made by the first and second defendants, on occasions in the presence of the third and fourth defendants, and by the third and fourth defendants. It was alleged the third and fourth defendants were knowingly concerned in the representations made by the first and second defendants. The defendants defended the plaintiffs’ claim on the basis the representations were not made. The first and second defendants also counterclaimed for the outstanding sale proceeds, alleging the plaintiffs induced the first and second defendants to believe they had the financial capacity to complete the transaction as a consequence of which the first and second defendants committed themselves to a further project. Earlier this year, the proceeding between the plaintiffs and the third and fourth defendants was settled by Deed. The Deed provided for the payment of a sum of money to the plaintiffs by the third and fourth defendant’s insurer, Lexon, on behalf of those defendants. The Deed also provided for Lexon to appoint its solicitors to undertake the further carriage of the proceeding for the plaintiffs against the first and second defendants. After concerns were raised as to the potential access to confidential information by the solicitors appointed by Lexon, the present solicitors were appointed by Lexon to represent the plaintiffs. They had not previously acted for any party in the proceeding. The application The first and second defendants seek an order for strike out or a stay of the proceedings on the basis the Deed provides for Lexon to direct the Court’s processes, leaving those processes open to abuse and the proceedings being continued against the first and second defendants in circumstances which are contrary to public policy. The first and second defendants also seek an order restraining solicitors from acting for the plaintiffs on the basis any fair minded reasonably informed member of the public would conclude, having regard to the terms of the Deed, that the proper administration of justice requires that any solicitor appointed by Lexon be restrained from acting for the plaintiffs in that proceeding. The Deed

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Similarly, the material does not support a conclusion the current solicitors have had access to confidential information or would in the future impermissibly use confidential information. The giving of appropriate undertakings would in the future adequately address any such concern. Conclusions The continuation by the plaintiffs of the present proceedings against the first and second defendants, under the direction and authority of the insurer for the third and fourth defendants pursuant to the Deed of Settlement, gives rise to an impermissible intermeddling in the proceeding. The proceedings should be stayed for abuse of process whilst that intermeddling remains. I shall hear the parties as to the form of orders and costs.

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.