Westpac Banking Corporation v Newey

[2013] NSWSC 533

Supreme Court

New South Wales

Medium Neutral Citation:	Westpac Banking Corporation v Newey [2013] NSWSC 533
Hearing dates:	8 May 2013
Decision date:	10 May 2013
Jurisdiction:	Equity Division - Expedition List
Before:	Pembroke J
Decision:	Application dismissed with costs
Catchwords:	INJUNCTION - to restrain solicitor acting for client - rectification suit arising from solicitor's alleged drafting mistake - whether solicitor in a position of conflict - whether integrity of judicial process impaired
Cases Cited:	Kallinicos v Hunt [2005] NSWSC 1181 Gamgemi Pty Ltd v Luppino Pty Ltd [2012] VSC 168
Category:	Interlocutory applications
Parties:	Westpac Banking Corporation - plaintiff David Newey - first defendant David Collinge - second defendant Michael Gillis - third defendant Michael Hayter - fourth defendant Marcus McCarthy - fifth defendant Nicholas Dale - sixth defendant Amanda Bond - seventh defendant John Hall - eighth defendant Raymond Perkes - ninth defendant Alan Brown - tenth defendant
Representation:	Counsel: I M Jackman SC with T O Prince - for the plaintiff D Pritchard SC - for the defendants Solicitors: Allens - for the plaintiff Gillis Delaney Lawyers - for the defendants
File Number(s):	2013/118661

Judgment

Introduction

1. This is an application by the second defendant for an injunction to restrain the firm known as 'Allens' from acting for the plaintiff in these proceedings. The partners of Allens are not parties to the proceedings and the second defendant's notice of motion does not name them as respondents, but the parties were content for me to ignore this patent irregularity. Mr Jackman SC appeared for the plaintiff as well as for the partners of Allens.

The Proceedings

1. The plaintiff is Westpac Banking Corporation. By its Amended Summons, it seeks orders against the partners of the firm known as 'Gillis Delaney Lawyers' that two deeds be rectified. It also seeks a declaration as to the proper construction of one clause in each of the deeds. The ambit of the dispute is narrow. Clause 1(d) of each deed refers to 'Westpac'. The plaintiff contends that, when properly construed, the word 'Westpac' should be taken to mean 'Westpac and any of its related bodies corporate'. If not so construed, it seeks an order that Clause 1(d) be rectified to achieve the same result.

1. The context in which the plaintiff's claim arises is as follows. The two deeds were entered into in April 2011 and on 11 May 2011. The parties proceeded on the basis that the April deed was representative and was a convenient vehicle for the exposition of the competing contentions.

1. The parties to the April deed were Westpac, the partners of Gillis Delaney and a consultant to that firm. Clause 1(d) relevantly provided that Gillis Delaney will not bring, assist or procure the bringing of:

any claim against Westpac or any of its related bodies corporate (within the meaning of Section 50 of the Corporations Act, 2001) on behalf of:

(d) any former employee of St George whose employment was or is terminated by Westpac at any time up to the date on which the last of the claims brought by an Applicant or Prospective Applicant is resolved by settlement or final judgment (including in respect of any appeal).

1. The plaintiff contends that 'Westpac' where it appears in paragraph (d) should be read consistently with the reference to Westpac where it appears earlier in the clause, namely as if it were intended to say 'Westpac or any of its related bodies corporate'.

Commercial Background

1. The commercial background which explains the apparent significance of the dispute may be shortly stated. On 1 December 2008, the plaintiff acquired the shares in St George. Between December 2008 and February 2010, St George terminated the employment of 25 persons in its employ. One of those employees was 'Lucky Poulos'. On 1 March 2010, the whole of the business of St George was transferred to the plaintiff and St George ceased to exist as a separate legal entity. In May and August 2010, the plaintiff (not St George) terminated the employment of two further persons who had been employed at St George. One of those persons was 'Elvio Bechelli'.

1. The 'Applicant' and 'Prospective Applicant' referred to in Clause 1(d) are represented by some or all of those 27 former St George employees - 25 terminated by St George and two terminated by Westpac. By the deeds, Westpac obtained the agreement of Gillis Delaney that it would not bring or assist any claim against Westpac or any of its related bodies corporate by any former employee of St George 'whose employment was or is terminated by Westpac' - at any time 'up to the date on which the last of the claims brought by an Applicant or Prospective Applicant is resolved'.

1. Although on this application the elucidation of the facts was only sparse, the reason for the plaintiff requiring, and Gillis Delaney agreeing to, this restraint is reasonably obvious. The efficacy of the restraint would be reduced however if it were limited only to claims by former employees of St George whose employment was or is terminated by Westpac. No commercial justification for so limiting the scope of Clause 1(d) was advanced on behalf of the defendants.

1. Indeed, although I have not of course heard full argument on the issues of construction and rectification, the evidence before me suggested that it was not the common intention that the scope of Clause 1(d) be so limited:

(a)   In the correspondence leading to the finalisation of the deeds, the plaintiff's solicitors made clear, by the use of a defined term, that they were using the term 'Westpac' to mean 'Westpac Group', viz including St George. And on 17 February 2011, Gillis Delaney responded to the then latest offer by stating that they were prepared to agree to the proposed restraint subject to four further employees being included in addition to the claimants listed in an earlier letter;

(b)   The additional employees included Elvio Bechelli, who was terminated by Westpac in August 2010 and Lucky Poulos, who was terminated by St George in September 2009. Gillis Delaney's request seems inconsistent with the contention that it now advances that Clause 1(d) should be confined to former employees of St George whose employment was or is terminated by Westpac - and not by St George.

The Injunction

1. That leads me to the grounds relied upon for the injunction restraining Allens from acting for the plaintiff in these proceedings. The basis for such intrusive relief was said to be the requirements of the 'proper administration of justice'. Counsel for the second defendant referred me to many general statements of principle but the issue is essentially pragmatic and the relief is discretionary. This is particularly so having regard to the fact that the jurisdiction to restrain a solicitor acting for his or her client is exceptional and must be exercised with caution: Kallinicos v Hunt [2005] NSWSC 1181 at [76].

1. This is not a case where the plaintiff's solicitors have any confidential information about or belonging to the defendants. Nor is it a case in which the plaintiff's solicitors have a direct pecuniary interest in the outcome. Nor is it possible to see that the defendants will suffer any prejudice at all if Allens continue to act for the plaintiff. None was identified. And although it was initially contended that a member of the firm of Allens would be a material witness, senior counsel for the plaintiff categorically disclaimed any need or intention to call the relevant member of the firm - except in the unlikely event of evidence from the defendants of a conversation with him that required a response.

1. The factual basis for the second defendant's application was more nebulous. It was submitted that Allens must have an interest in justifying its own conduct; that Allens might theoretically be exposed to a claim by the plaintiff for loss suffered by it if this suit fails; that the proceedings will involve an evaluation of Allens' conduct; and that, in some way, an invisible line had been crossed. The plaintiff, on the other hand, submits that there is no real and sensible possibility of conflict between itself and its solicitors.

1. I do not think that the second defendant's submissions sufficiently grasp the practical commercial reality. To start with, although it is obviously not determinative, the plaintiff itself does not perceive any conflict with Allens. In the circumstances of this case, it has no concern that Allens' supposed self-interest will detract from the firm's ability to faithfully, independently and objectively represent it in the proceedings. It is therefore a little difficult to understand why a fair-minded, reasonably informed member of the public would conclude that Allens should be restrained from acting for the plaintiff 'in the interests of the protection of the integrity of the judicial process'.

1. An appreciation of the limited ambit of the rectification dispute and an understanding of the anticipated conduct of the hearing, serve to reinforce this perspective. I have already adverted to some of the documents and correspondence which preceded the finalisation of the deeds. Prima facie, they appear to indicate that the parties were unlikely to have intended that the agreed restraint should be limited to claims against Westpac by former employees of St George whose employment was or is terminated by Westpac, and not also by St George.

1. All that has happened to give rise to the dispute is that the drafter did not explicitly import into the deeds the definition of 'Westpac' that appeared in the prior correspondence. As I have observed, it is arguable whether it was necessary to do so - as the cause of action for a declaration as to the proper construction of Clause 1(d) presupposes. But the supposed 'mistake' by the drafter, if it were a mistake, is of a very low order. And a rectification suit such as this does not involve any attribution of fault. The court is only interested in whether the words used accorded with the proved actual intentions of the parties. No question of blame arises. It may be that in some other cases, such considerations may possibly be relevant. But this case is straightforward.

1. Not only is there no need for evidence from the solicitor at Allens who drafted the deeds, but there is nothing in his conduct to 'defend'. He drafted what he drafted. At the hearing, the words he utilised in the deeds he drafted will be compared with the evidence of the parties' actual intentions. The most reliable evidence of those intentions is contained in the contemporaneous communications between the parties. The plaintiff currently proposes to elicit evidence of its intention from a Mr Johnston, its Head of Employee Relations, something that may or may not be necessary. But what is significant is that this is not a case which requires a detailed examination of the drafter's conduct. There is no need for any rumination over his instructions or his advice, if any. The plaintiff's intention appears to be reasonably clear, with or without the evidence of Mr Johnston. The real issues for dispute are whether Gillis Delaney shared that intention and, if so, whether the words in Clause 1(d) of each deed reflected it.

1. The submissions for the second defendant heaped speculation on speculation, none of which I found convincing. Apart from the false contention that the solicitor would be placed in the predicament of having to defend himself, which I have already addressed, it was said that Allens must have an indirect financial interest in the outcome of the litigation and 'might' be exposed to suit. That was said to be because, if the plaintiff's claim failed, Allens 'could be expected' to face a claim from the plaintiff for the costs of the proceedings, and possibly for some indistinct and unquantifiable loss arising from the fact that the Clause 1(d) restraint against Gillis Delaney only operated in relation to claimants whose employment is or was terminated by Westpac, and not by St George.

1. The submissions were not assisted by the repeated mantra that everything was 'manifestly obvious'. In fact, most of it was opaque. Quite how, for example, the plaintiff would suffer loss if Gillis Delaney were not restrained from acting for certain claimants, was a mystery, which counsel was unable rationally to explain. And the prospect of the plaintiff holding Allens liable for the costs of these proceedings in the event that they failed, was too hypothetical to warrant serious consideration. Naturally, there was no evidence to support such an inference.

1. Even if such an inference were available, the question remains whether, given the nature of the issues and the ambit of the dispute, it should make any difference to the reasonable man's perception of the integrity of the judicial process. I do not think so. It is not unusual for solicitors, for a variety of reasons, to have a financial investment in litigation, knowing that if the case fails, they will not recover their fees and may even be held liable by their client for the successful party's costs. There is no threat to the integrity of the judicial process when this occurs.

1. As I have said, the 'propriety' of the drafter's conduct will not come under scrutiny. And it is extravagant - indeed inaccurate - to suggest that his interest, his client's interest and his obligation to the court will be in conflict. Allens is not in a 'difficult' or even an embarrassing position. Mistakes happen. They are an every day aspect of commercial practice. And if there were any mistake here, it was minor. From the perspective of an informed and reasonable observer, there could be no serious reputational risk to Allens; no reason to think that they could not bring an objective and dispassionate mind to the case; and no reason to think that the proper administration of justice would be, or be seen to be, affected: cf Gamgemi Pty Ltd v Luppino Pty Ltd [2012] VSC 168 at [20] - [26].

Discretionary Considerations

1. The due administration of justice is not necessarily advanced by claims by litigants who espouse the lofty ideal of protecting the integrity of the judicial process, while seeking to obtain a position of advantage in the litigation. In an appropriate case, a party to proceedings such as Gillis Delaney can of course bring such an application as this. But it does not follow that just because a plaintiff seeks an order for rectification as a result of a supposed mistake by its own solicitor, then that solicitor, let alone his firm, cannot continue to act in the proceedings. There will be cases and cases.

1. The law and lawyers would be held in disrepute if judges acceded too readily and too often to such applications. Before doing so, there must be some realistic sense of impropriety about the circumstances; something that sensibly justifies the conclusion that unless an injunction were granted, the integrity of the judicial process would be impaired. The basis for the second defendant's application existed only in the clouds, at an abstract theoretical level. The facts on which it relied were thin and the speculation on which it depended was unconvincing. On the other hand, the grant of an injunction must be grounded in pragmatism, reflecting the practical commercial reality, paying due regard to established legal principle and acknowledging norms of acceptable behaviour.

1. I am unwilling to exercise my discretion in this case. I am not satisfied that the circumstances of this case justify the invocation of the exceptional jurisdiction, which is, as is so often stated, to be exercised with caution. The conduct of commercial litigation is frequently riddled with conflicts, of all types and of different degrees of seriousness. Justice is not served by false sensitivities and undue preciousness. There is, in my view, in this case, no real sensible possibility of conflict that could justify restraining Allens from acting for the plaintiff. I dismiss the application with costs.

Decision last updated: 13 May 2013