Williamson v Nilant

Case [2002] WASC 225

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

IN CHAMBERS

CITATION:   WILLIAMSON & ANOR -v- NILANT [2002] WASC 225

CORAM:   McKECHNIE J

HEARD:   30 AUGUST 2002

DELIVERED          :   18 SEPTEMBER 2002

FILE NO/S:   COR 313 of 2000

MATTER                :LPO TRANSACT PTY LTD (ACN 072 999 716) (IN LIQ)

BETWEEN:   IAN EDWARD WILLIAMSON

First Plaintiff

YOGAN SOOBIAH NAIDOO
Second Plaintiff

AND

CHARLES PHILIPPE LOUIS NILANT
Defendant

Catchwords:

Corporations - Company in liquidation on grounds of oppression - Lawyers acting for liquidator and a party to the winding up

Legal practitioners - Conflict of interest - Duty to advise liquidator - Solicitor also acting for party interested in litigation - Conflict of roles

Court's practice and procedure - Inherent power to control legal practitioners to protect administration of justice

Legislation:

Nil

Result:

Plaintiff's claim to prevent legal practitioner acting for liquidator
successful

Category:    A

Representation:

Counsel:

First Plaintiff                :     Mr K C Staffa

Second Plaintiff            :     Mr K C Staffa

Defendant:     Mr A Metaxas

Solicitors:

First Plaintiff                :     Kevin Staffa

Second Plaintiff            :     Kevin Staffa

Defendant:     Metaxas & Vernon

Case(s) referred to in judgment(s):

Abse v Smith [1986] QB 536

Afkos Industries Pty Ltd v Pullinger Stewart (A Firm) [2001] WASCA 372

Black v Taylor [1993] 3 NZLR 403

Contract Corporation, In re Gooch's Case (1871) LR 7 Ch App 207

Grimwade v Meagher (1995) 1 VR 446

Newman v Phillips Fox (1999) 21 WAR 309

Case(s) also cited:

A Solicitor [1987] 131 SJ 1063

Aboriginal & Torres Strait Island Commission v Jurnkurakurr Aboriginal Resource Centre Aboriginal Corporation (In Liq) (1993) 11 ACLC 319

Advance Housing v Newcastle Classic Developments (1994) 12 ACLC 701

Carindale Country Club Estate Pty Ltd v Astill (1993) 42 FCR 307

David Lee & Co (Lincoln) Ltd v Coward Chance (a firm) [1991] Ch 259

Davies v Clough (1837) 8 Sim 262; 59 ER 105

Domino Hire Pty Ltd v Pioneer Park Pty Ltd (2000) 18 ACLC 13

Equiticorp Holdings Ltd v Hawkins [1993] 2 NZLR 737

Freuhauf Finance Corporation Pty Ltd v Feez Ruthning [1991] Qd R 558

In re A Firm of Solicitors [1992] QB 959

Intercontinental Properties Pty Ltd (1977) 2 ACLR 488

Kooky Garments Ltd v Charlton [1994] 1 NZLR 587

Lubin, Rosen & Associates Ltd [1975] 1 WCR 122

Macquarie Bank Ltd v Myer [1994] 1 VR 350

Murray v Macquarie Bank Ltd (1991) 33 FCR 46

Oceanic Life Ltd v HIH Casualty and General Insurance Ltd [1999] NSWSC 292

Prince Jefri Bolkiah v KPMG (A Firm) [1999] 2 WLR 215

Rakusen v Ellis, Munday & Clarke [1912] 1 Ch 831

Re A Firm of Solicitors [1997] Ch 1

Re Biposo; Condon v Rodgers (1995) 13 ACLC 1,271

Re Club Superstores Australia Pty Ltd (In Liq) (1993) 10 ACSR 730

Tracker Software International Inc v Smith (1997) 15 ACLC 1,407

Watson v Watson, unreported; SCt of NSW (Santow J); 25 May 1998; [1999] NSWSC 800

Wood & Wood v Targett (1997) 15 ACLC 756

Yunghanns v Elfic Ltd, unreported; SCt of Vic…

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AGLC
Williamson v Nilant [2002] WASC 225
Case
[2002] WASC 225
Decision Date

CaseChat Overview and Summary

Williamson brought an application against Nilant, seeking to remove Metaxas & Vernon as liquidators due to a perceived conflict of interest. The liquidators were also acting as solicitors for Rama, a party interested in the liquidation, which raised concerns about their ability to act impartially for all stakeholders in the liquidation process. The matter was heard in the Supreme Court of Western Australia.

The court had to determine whether the conflict of interest was sufficient to warrant the removal of Metaxas & Vernon as solicitors for the liquidator. This involved assessing whether the liquidators could maintain impartiality between the interests of all parties involved in the liquidation, especially given their concurrent role as solicitors for Rama. The court had to balance the inherent jurisdiction to control its processes and those of its officers against the right of parties to choose their legal representation.

The court concluded that the inherent jurisdiction of the court extended to restraining legal practitioners from acting in situations where a conflict of interest might compromise the administration of justice. The court adopted a test that considered whether a fair-minded, reasonably informed member of the public would conclude that the proper administration of justice required the solicitor to be restrained from acting. Given the evidence, the court found that the conflict between the interests of Rama and the liquidator's duty to act impartially was significant enough to warrant the removal of Metaxas & Vernon as solicitors for the liquidator.

The court ordered that Metaxas & Vernon be removed as solicitors for the liquidator to prevent any potential conflict of interest from compromising the impartiality of the liquidation process.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

Cases will differ. In not every case where a solicitor acts for a liquidator and a party interested in the liquidation will there be a conflict. However, in the present case it seems to me there is sufficient reason to cause Metaxas & Vernon to be removed as solicitors for the liquidator. A liquidator's duty was long ago stated to be:"… it is of the utmost importance that the liquidator should … maintain an even and impartial hand between all the individuals whose interests are involved in the winding‑up. He should have no leaning for or against any individual whatever." (Contract Corporation, In re Gooch's Case (1871) LR 7 Ch App 207 at 211). This is not a case where the solicitor has come into possession of confidential information while acting for one client and there is a risk that confidential information may be disclosed when acting for another client; Newman v Phillips Fox (1999) 21 WAR 309. Nor is it a case where the solicitor has some form of stake in the outcome such as to raise a query as to the independence of the solicitor from the cause of action: Afkos Industries Pty Ltd v Pullinger Stewart(A Firm) [2001] WASCA 372, Rather, this is a case which falls within the inherent jurisdiction of the Court and particularly in the necessity for the Court to control its processes and those of its officers, including liquidators. It is well settled that the Court's inherent jurisdiction to preserve the proper administration of justice extends to restraining a legal practitioner from acting in a particular case: Abse v Smith [1986] QB 536; Black v Taylor [1993] 3 NZLR 403; Grimwade v Meagher (1995) 1 VR 446. In the latter case Mandie J stated the relevant test at 452 in terms I accept and adopt:"The objective test to be applied in the context of this case is whether a fair minded reasonably informed member of the public would conclude that the proper administration of justice required that counsel be so prevented from acting, at all times giving due weight to the public interest that a litigant should not be deprived of his or her choice of counsel without good cause." Applying that test to the evidence, I am satisfied that the conflict which may arise between the interests of Rama, which the solicitor must legitimately advance, and the necessity to give impartial advice and representation to the liquidator of LPO Transact Pty Ltd is such that the interests of justice require the solicitor be restrained from acting for the liquidator and I so order.