Tsutomo Yamaji v Westpac Banking Corporation

[1993] FCA 425

TSUTOMO YAMAJI and CAYSAND No. 137 PTY. LTD. v. WESTPAC BANKING CORPORATION;
CAYSAND No. 138 PTY. LTD. and ISAMU YUTANI
No. QG136 of 1992
FED No. 425
Number of pages - 8
Legal Practitioners
(1993) 115 ALR 235
(1993) 42 FCR 431

COURT

IN THE FEDERAL COURT OF AUSTRALIA

QUEENSLAND DISTRICT REGISTRY
GENERAL DIVISION
Drummond J(1)

CATCHWORDS

Legal Practitioners - solicitor acted for one party in relation to purchase of property - purchase of property a relevant issue in action - solicitor likely to be required to give evidence at trial on an important contentious issue - solicitor later retained by another party to the action - first party sought injunction to restrain solicitor from acting solely on the basis that the solicitor likely to be an important witness - no foundation for injunction established.

Chapman v Rogers; Ex parte Chapman (1984) 1 QdR 542

Murray v Macquarie Bank (1991) 33 FCR 46

National Mutual Holdings Pty. Ltd. v Sentry Corp. (1989) 22 FCR 209

HEARING

BRISBANE, 31 May 1993

#DATE 31:5:1993

Counsel for the applicants: P.D. McMurdo, QC and

R.M. Derrington

Solicitors for the applicants: Carter Newell

Counsel for the first R.N. Chesterman, QC
respondent: and J.K. Bond

Solicitors for the first
respondent: Feez Ruthning

Counsel for the second and
third respondents: N. Samios

Solicitors for the second and
third respondents: Collas Moro

ORDER

UPON the applicants by their counsel undertaking to do all things necessary forthwith to discontinue the District Court proceedings referred to in Exhibit "PC-1" to the affidavit of Mr. Cosgrove filed 10 May, 1993 AND UPON the applicants undertaking by their counsel not to make any application in the present proceedings to join Glow Pac Inc. as a party in these proceedings AND UPON the solicitors for the applicants undertaking to file an affidavit in this court deposing to the service of a notice of action no. 1992 of 1991 pending in the Supreme Court of Queensland by 10 June, 1993 THE COURT ORDERS THAT the notice of motion filed by the second and third respondents on 7 May, 1993 is dismissed.

The Court orders that:

1. The applicants pay half of the second and third respondents' costs of the second and third respondents' notice of motion filed on 7 May, 1993.

2. The applicants' notice of motion filed on 7 May, 1993 is dismissed.

3. The applicants pay Messrs. Collas Moro's costs of and incidental to the applicants' notice of motion filed 7 May, 1993, to be taxed.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

JUDGE1

DRUMMOND J By notice of motion filed in the action, the applicants sought orders that the members of a firm of solicitors, Messrs. Collas Moro, who are the solicitors on the record for the second and third respondents, be restrained from acting for those parties in the action.

1. Paragraphs 1, 2 and 3 of the notice of motion seek such restraints, generally speaking, on the basis of a threatened breach of fiduciary duty or a misuse of confidential information. The foundation for those paragraphs appears from the affidavit of Mr. Aspromourgos, the solicitor for the applicants. Messrs. Collas Moro in fact acted for the applicants in connection with the purchase of the property which I will call the "Bayview Unit", a transaction which will feature in the evidence in the main action.

2. Paragraph 4 of the notice of motion differs from the preceding three paragraphs in that, in contrast to the earlier paragraphs which, as I say, found the claim for relief upon threatened or apprehended breach of fiduciary duty or misuse of confidential information, paragraph 4 is quite unspecific in identifying the grounds upon which the injunction is there sought.

3. Almost all of the material relied on by the applicants, apart from one paragraph in Mr. Aspromourgos's affidavit and some passages in the fairly extensive correspondence exhibited to that affidavit, is directed to making out the claims for relief raised by paragraphs 1, 2 and 3 of the notice of motion. Those particular claims have, however, been abandoned and it is only the open-ended claim for an injunction in paragraph 4 that is being pursued.

4. I have mentioned the circumstances in which the applicants have become concerned at the solicitors continuing to act for the second and third respondents. The point is perhaps most strongly made in the letter from the applicants' then solicitors, Messrs. Bottom English, to Messrs. Collas Moro, as solicitors for the second and third respondents, dated 22 October, 1992, in particular, the first complete paragraph on page 2 of that letter. I should mention that the assertions that there is a real conflict of interest are disputed by Messrs. Collas Moro as respondents to this notice of motion. However, I am prepared to proceed on the basis that Mr. Moro, and perhaps another member of that firm, may be called as a witness by the applicants in the proceedings or may have to go into the witness box as a solicitor for the respondents; and that their evidence may turn out to be directly relevant to important, contentious issues in the case.

5. I was referred to some comments by the then Chief Justice of the Queensland Supreme Court, Campbell CJ, in Chapman v Rogers; Ex parte Chapman (1984) 1 QdR 542, in particular, at 545 where his Honour, after disposing of the points raised on the appeal, saw fit to make some comments about the circumstances that had arisen in the proceedings at trial where the solicitor on the record for the defendant gave evidence as a witness for the defence. His Honour there said:
   

"(F)or the reason that it is desirable to avoid any suggestion of real or apparent conflict between the duty to the court and the obligation to the client, I consider that it is generally unwise for a solicitor, who is not himself appearing as advocate or as instructing solicitor in court but who is aware that it is likely that he will be called as a material witness (other than in relation to formal or non-contentious issues), to continue, either personally or through his firm, to represent the client if this can be reasonably avoided."

1. I would, for myself, respectfully adopt those comments as words that need to be heeded by legal practitioners. But I find nothing in this decision in Chapman v Rogers to suggest that there is jurisdiction to restrain a solicitor for a party from continuing to act for that party on the basis that it is apparent that he is going to be required as a witness for one side or the other on contentious issues, even though, by so acting, the solicitor may fall short of meeting a proper standard of professional conduct.

2. I note that the Supreme Court has disciplinary jurisdiction over practitioners, a jurisdiction over federal practitioners that is possessed, so far as I understand the position, only by the High Court. It is unnecessary for me to examine whether a court with appropriate disciplinary jurisdiction over practitioners may for that reason be in a position to issue a restraint in circumstances like the present against a solicitor on the record for one of the parties. Senior counsel for the applicants disclaimed any reliance upon such a basis for the exercise of the jurisdiction which he seeks to invoke. He puts his claim in this way: a court in proper circumstances would have power to enjoin the solicitor on the record for one party continuing to act in the action where it is likely that he will be a witness for one side or the other on contentious matters in the litigation. He went on to submit that the power to issue such a restraint against the solicitor in those circumstances arises out of the authority of the court to prevent the undesirable situation arising of a solicitor being in a position of apparent conflict between his duty to the court to give impartial evidence and his duty to advance the interests of his client and that there is ground for apprehension that Mr. Moro, who will be an important witness, will not be or at least will not appear to be impartial. But bias does not make any witness incompetent to give evidence.

3. Senior counsel relied upon the statements by Gummow J in National Mutual Holdings Pty. Ltd. v Sentry Corporation (1989) 22 FCR 209, particularly at 233. His Honour there, after referring to the disciplinary jurisdiction of the Supreme Court and of the High Court over practitioners, went on to say:
   

"No specific provision is made (in the Federal Court Rules) whereby, on the application of one party, the Court may enjoin his former solicitor from continuing to act as solicitor for the other party to current proceedings on the footing of breach of contract or fiduciary obligation. However, such proceedings, whether founded in contract or apprehended breach of fiduciary duty, no doubt would arise in the course of and form part of the matter which attracted the jurisdiction of the Court. ... Whether such an application would succeed obviously would depend not only upon the content of the law, but upon the state of the evidence; in particular, if interlocutory injunctive relief was sought, the balance of convenience would require consideration."

1. I accept that as a perfectly accurate statement of the law, but it seems to me to provide no assurance to the question as to whether, for the reasons advanced by the applicants, this is a proper case for the court to intervene in the way it has been invited to do by them.

2. I am not satisfied that there is any factual foundation shown for this court to grant the injunction on the basis sought, where there is now no suggestion that if Messrs. Collas Moro are allowed to continue to act for the second and third respondents there is any likelihood of an infringement of any legal or equitable right or claim of the applicants and where, moreover, there is no suggestion of the existence of any other circumstance that would, on established principles, attract the equitable intervention of this court by way of injunction.

3. In the Sentry Corporation case, the question at issue was whether the Federal Court had power to, and should, in the exercise of any such power, act to restrain proceedings brought in New York and designed to prevent the solicitor on the record for a party in the Federal Court from continuing to act in the proceedings before the Federal Court for that particular party. The basis upon which Gummow J held he had jurisdiction appears in the long passage at 230-232. At 230 his Honour said:
   

"What is sought on the motions of the first respondent and Stephen Jaques Stone James ... is the exercise of the power of the Court, as a court of equity, to enjoin resort to vexatious and oppressive foreign suits."

And then at page 231:

"As their Lordships observed in the Aerospatiale case at 892 the law relating to injunctions restraining a party from commencing or pursuing legal proceedings in a foreign jurisdiction has a long history."

And then, most pertinently, at page 232 his Honour said:

"Where an injunction was sought in Chancery to restrain proceedings outside the forum, the question is whether the plaintiff had an equity sufficient to attract the intervention of the court, and thereby to interfere with the legal rights of the defendant to institute or continue proceedings in the courts of another part of the United Kingdom, in the courts of a colony, or in the courts of a foreign country. In this sense, the modern jurisdiction retains an affinity to that pursuant to which in earlier times common injunctions restrained defendants from pursuing proceedings in common law courts and other domestic courts in which there was unconscionable or otherwise improper exercise of legal rights. ... The modern jurisdiction, like much of the equity jurisdiction, thus operates upon legal entitlement and to prevent unconscientious assertion or exercise of that entitlement".

1. Here there is no suggestion that either the second or third respondent is attempting, in any way, to exercise unconscionably any legal rights they have. That would, of course, within the statement of principle by Gummow J in the Sentry Corporation case, be sufficient to attract the equitable jurisdiction to intervene by way of injunction. But that is, as I have said, not the case sought to be made out here. Rather is the case directed to the conduct of their solicitor, and then only to prevent him being in a position of likely apparent conflict of interest between his duty to his client and his duty to the court. It is for those reasons that it seems to me this case falls far short of one in which a sufficient foundation for equitable intervention of the kind sought has been made out.

2. I should also mention that I was referred to a decision of Spender J in Murray v Macquarie Bank Ltd. (1991) 33 FCR 46. It is apparent from what his Honour had to say at 49 and, in particular, at 52, that that was a case in which the intervention of the court to restrain a solicitor from continuing to act in the matter was based wholly and solely upon the apprehension of a misuse of confidential information. I find nothing in Macquarie which assists the applicants on the notice of motion to make out the claim for the relief they seek. I therefore propose to dismiss the notice of motion.

3. In this case, I am not prepared to order that the costs which the respondents to the notice of motion, Messrs. Collas Moro, can recover from the applicants are to be taxed on anything other than the party and party basis. I say that it is most unfortunate that Mr. Moro was required to remain in attendance until well into this afternoon in circumstances where the requirement for his attendance has turned out to be wholly unnecessary and I fully accept that Mr. Moro has incurred a very considerable loss by being unnecessarily required to attend at court for cross-examination. However, regrettably, he is in the position of very many witnesses who become involved in litigation. I do not regard this case as one in which any improper tactic has been used by the applicants in requiring Mr. Moro to remain in attendance in the course of the afternoon. If I thought that this was such a case, it would very probably be one in which a more generous basis of taxation would be ordered. But for the reasons I have given, I think a party and party taxation is the appropriate order.