The Law Society of the Australian Capital Territory v Davey (No 2)

[2019] ACTSC 216

SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY

Case Title:

The Law Society of the Australian Capital Territory v Davey (No 2)

Citation:

[2019] ACTSC 216

Hearing Date:

12 August 2019

DecisionDate:

13 August 2019

Before:

Elkaim J

Decision:

See [31]

Catchwords:

LEGAL PRACTITIONERS – Application in proceeding – Application to restrain plaintiff’s solicitor from further acting – conflicts of interest – duties owed to current and former clients

EVIDENCE – Witnesses – Witness required for cross-examination – Application to dispense with the attendance of witness for cross-examination – witness overseas

Legislation Cited:

Court Procedures Rules 2006 (ACT) r 6721(1)(b)

Cases Cited:

Australian Conservation Services v Liladel Holdings Pty Ltd [2017] ACTSC 170

Birkett Investments Pty Ltd v Streatfield Investments Pty Ltd [2016] ACTSC 323
Carindale Country Club Estate Pty Ltd v Astill (1993) 42 FCR 307
Romanin v University Co-operative Bookshop Ltd [2001] NSWIRComm 171
The Law Society of the Australian Capital Territory v Davey  [2019] ACTSC 206

Village Roadshow Ltd v Blake Dawson Waldron [2003] VSC 505

Parties:

The Law Society of the Australian Capital Territory (Plaintiff)

John Davey (Defendant)

Representation:

Counsel

K Binstock (Plaintiff)

In Person (Defendant)

Solicitors

McInnes Wilson Lawyers (Plaintiff)

Herm Legal & Migration Services (Defendant)

File Number:

SC 366 of 2018

ELKAIM J:

1. The substantive matter is listed for hearing before the Full Court on 14 August 2019. The plaintiff is seeking the removal of the defendant from the local roll of legal practitioners.

1. On 6 August 2019, an application in relation to this matter was before me (The Law Society of the Australian Capital Territory v Davey [2019] ACTSC 206). During the hearing two additional matters arose in discussion with the parties. I briefly described these at [17]:

The defendant pointed out that he had concerns that the solicitors acting for the plaintiff were in a position of conflict as a result of some previous, although unconnected, proceedings in which they had acted for him. The plaintiff raised this issue; the proceedings in the Full Court are supported by an affidavit of a Mr Reis. He has been required for cross examination by the defendant. Unfortunately Mr Reis is currently overseas and will be unavailable on 14 August.

1. Given the impending hearing date I made orders allowing a return date of 12 August 2019 for any additional applications to be made by the parties. As foreshadowed, two applications were filed.

1. The first is an application filed by the defendant seeking to restrain the plaintiff’s solicitor, McInnes Wilson Lawyers, from further acting in these proceedings. The grounds for the application are essentially that, in 2017, McInnes Wilson Lawyers acted in unrelated proceedings in which the defendant provided confidential information to the solicitors.

1. He says that because of this, as outlined in his application,  McInnes Wilson Lawyers are privy to “significant quantities of personal and business information and documents” and “confidential matters”, and he argues that he may be prejudiced in these proceedings should McInnes Wilson Lawyers continue to act for the defendant.

1. Further the defendant has pointed out, as “disturbing”, that the wife of the plaintiff’s Director of Professional Standards, is a secretary who assists the solicitor who had carriage of the unrelated matter.

1. The plaintiff’s Director of Professional Standards is Mr Robert Reis. His wife is Ms Kathy Reis. One of the affidavits relied upon by the defendant (Ms Bertha Franklin affirmed on 11 August 2019) annexes a photograph of Mr & Mrs Reis and Ms Binstock, the  plaintiff’s current solicitor, apparently enjoying a Law Society function earlier this year.

1. The second application was filed by the defendant. It seeks an order under r 6721(1)(b) of the Court Procedure Rules 2006 (ACT) (the Rules) excusing the deponent of an affidavit from being cross-examined. The deponent is the same Mr Reis mentioned above. He provided two affidavits (sworn 7 August 2018 and 22 July 2019) respectively in support of the application to remove the defendant from the local roll. The defendant has given notice that he wishes to cross-examine Mr Reis on his affidavits.

1. Mr Reis is currently overseas and is unavailable for cross-examination. That is the reason behind the plaintiff’s application.

The defendant’s conflict application

1. In April 2017, Mossop J handed down a decision in Australian Conservation Services v Liladel Holdings Pty Ltd [2017] ACTSC 170. It is not necessary to go into the detail of this decision; suffice to say that Liladel Holdings Pty Ltd was the corporate trustee of a further trust, known as the Teddington Trust, of which the defendant was a beneficiary.

1. In short the defendant asserts that he gave confidential information to the solicitors who now act for the plaintiff, when those same solicitors acted for Liladel Holdings Pty Ltd.

1. I was referred to a number of authorities on conflicts between solicitors and their clients. The defendant drew support from Village Roadshow Ltd v Blake Dawson Waldron [2003] VSC 505 where, according to the defendant, Byrne J said:

for a firm of solicitors to take money from a client for erecting a legal edifice, it should not then take a fee from some other to dismantle it.

1. On inspection of the actual judgment it is apparent that Byrne J was repeating a submission made to him. The whole sentence, at [42], reads:

It was said that for a firm of solicitors to take money from a client for erecting a legal edifice, it should not then take a fee from some other to dismantle it.

1. It is apparent from the decision of Byrne J that the asserted conflict concerned a representation that had a later relevance to the retainer of the solicitors. That is not the case here and the decision is plainly distinguishable.

1. In Romanin v University Co-operative Bookshop Ltd [2001] NSWIRComm 171, Marks J referred, in conflict cases, for the court to be satisfied of a ‘mischief’ resulting from the solicitor acting against a former client. As to the relevant principles more generally these were concisely set out, through a review of the authorities, by Mossop AsJ (as he then was) in Birkett Investments Pty Ltd v Streatfield Investments Pty Ltd [2016] ACTSC 323, from [23].

1. The difficulty in this case is to identify, with even moderate precision, what exactly the mischief is. I note the following:

(a)The defendant was never the client of the solicitors.

(b)The solicitors acted for Liladel Holdings Pty Ltd on instructions from Ms Suzanne Davey. Ms Davey is the defendant’s sister.

(c)The solicitor having carriage of that matter, Ms Mulherin, is not involved in the current proceedings.

(d)There is absolutely no evidence to substantiate an assertion that Ms Reis disclosed any confidential information to her husband.

(e)Ms Binstock, who is involved in the current proceedings, did have some involvement in the previous matter, but only to the extent of assisting Ms Mulherin with research on a trust issue. She did not, and has not, had access to the relevant file.

(f)The proceedings for the removal of the defendant have no connection, either in fact or in law, to the Liladel Holdings Pty Ltd proceedings.

(g)The current proceedings are derived essentially from consent orders made in ACAT. These orders are self-explanatory as are the significant admissions and concessions made by the defendant.

1. I cannot see any basis upon which the Liladel Holdings Pty Ltd proceedings give rise to a mischief, or a conflict, which might impact on the current proceedings. I am also firmly of the view that a “reasonable observer, aware of the relevant facts” would not think “that there was a real, as opposed to a theoretical possibility that confidential information given to the solicitor by the former client might be used by the solicitor to advance the interests of a new client to the detriment of the old client”. (Carindale Country Club Estate Pty Ltd v Astill (1993) 42 FCR 307; [1993] FCA 218 at 312). Moreover the defendant was not even the former client.

1. It follows that the defendant’s application for a restraining order against the plaintiff’s solicitors must be dismissed.

The cross-examination application

1. It is trite to say that any material relied upon by a party must be relevant. Assuming that the material is relevant, it then follows that if the material is presented by way of affidavit, then the deponent of the affidavit should be available to be cross-examined in order to test the strength of the material.

1. As noted above, Mr Reis has filed two affidavits. One is fairly short (affirmed on 7 August 2018) and annexes the consent orders that form the basis of the application to the Full Court. There is also some formal information, such as when the defendant became a solicitor.

1. The other affidavit (affirmed on 22 July 2019) contains much more voluminous attachments and matters of history. The plaintiff says the material is relevant because of the obligation that will be upon the Court to satisfy itself, notwithstanding the recommendation made by ACAT, whether or not the defendant should be removed from the roll.

1. Notwithstanding its volume, the material in the larger affidavit is also not contentious. More importantly when I asked the defendant what in particular he wished to cross examine Mr Reis about, he did not provide me with any specific answer. I also note that the repeated request from the plaintiff’s solicitors for the defendant to answer this question was met with no response.

1. There is another element to this issue. On 12 August 2019 the defendant filed an application seeking orders in the nature of certiorari. This application is returnable before the Full Court on 14 August 2019. The defendant has also said that he wishes to cross-examine Mr Reis in his pursuit of this application.

1. I listed the matter on 13 August 2019 to confirm with the defendant that he wished to cross-examine Mr Reis in regard to his application. He said that he did. I then asked the plaintiff’s solicitor whether she anticipated any affidavit material being relied upon by the plaintiff in this application. She said she did but going only to the extent of placing before the court the various judgments that have been handed down in the course of the dispute between the parties. These judgments are all matters of public record and do not need to be referred to through any affidavit.

1. However following the short hearing this morning an email was received from the plaintiff’s solicitor indicating that reliance would be placed on the whole of Exhibit RAR-1 which is annexed to one of the above affidavits of Mr Reis.

1. It was also indicated that the plaintiff would be opposing the defendant’s application being heard. If the opposition is successful the plaintiff will not need to rely on Mr Reis’ affidavit.

1. Accordingly the only appropriate approach is to stand over the r 6721 application to the hearing before the Full Court. If the defendant is permitted to pursue his application then the cross-examination question will be revisited. If the application does not proceed then Mr Reis will be excused from cross-examination.

1. The effect of my conclusions is that there is no reason why the matter should not proceed before the Full Court on 14 August 2019. I accordingly confirm the hearing date.

Costs

1. It was agreed by the parties that my decision in the conflict application would dictate both the costs orders in that application and also in the application heard by me on 6 August 2019. It was further agreed that the victor of the conflict application would be entitled to the costs of both applications.

1. In respect of the cross-examination application the costs will be reserved.

Orders

1. I make the following orders:

(i)The r 6721 application is stood over to 14 August 2019.

(ii)The costs of the r 6721 application are reserved.

(iii)The plaintiff’s application filed on 6 August 2019 seeking that McInnes Wilson Lawyers be restrained from acting in the proceedings is dismissed.

(iv)The defendant is to pay the plaintiff’s costs of the application referred to in order (iii) above.

(v)The defendant is to pay the plaintiff’s costs of the defendant’s application filed on 25 July 2019, to set aside a Notice to Produce filed by the defendant.

I certify that the preceding thirty one [31] numbered paragraphs are a true copy of the Reasons for judgment of his Honour Justice Elkaim.

Associate:

Date: 13 August 2019