Wombat Securities Pty Limited

[2011] NSWSC 194

Supreme Court

New South Wales

Medium Neutral Citation:	Wombat Securities Pty Limited [2011] NSWSC 194
Hearing dates:	18 March 2011
Decision date:	18 March 2011
Before:	Justice Barrett
Decision:	Motion seeking to restrain solicitor from continuing to act dismissed
Catchwords:	LEGAL PRACTITIONERS - application by defendant to restrain plaintiff's solicitor from continuing to act - where solicitor is son of plaintiff's director and principal witness - whether proper administration of justice requires that solicitor not to act
Cases Cited:	Holborow v Rudder [2002] WASC 265 Mitchell v Burrell [2008] NSWSC 772
Category:	Interlocutory applications
Parties:	Wombat Securities Pty Limited - Plaintiff Richard Bobb - Defendant
Representation:	Counsel: Mr D L Williams SC/Mr A Korakis - Plaintiff Mr D L Raphael - Defendant Solicitors: In Curia Lawyers - Plaintiff Gells Lawyers - Defendant
File Number(s):	2009/290046

Judgment

1. These proceedings are listed for hearing over three days commencing on Thursday next, 24 March.

1. I have today heard a motion filed in court by the defendant by which he seeks an order restraining the plaintiff's solicitor, Mr Fleming, from continuing to act for the plaintiff.

1. The defendant's application is made by reference to the aspects of the court's inherent jurisdiction referred to by Heenan J in Holborow v Rudder [2002] WASC 265:

" The power of this Court to restrain a solicitor from acting in an action or other cause because of an alleged conflict of interest is not limited to those instances in which the future action of the solicitor concerned may imperil confidences of the client for whom the solicitor previously acted. It is an ample power to supervise the conduct of legal practitioners, as officers of the Court, to ensure that they do not act in any way contrary to their obligations to their former client. The broader scope of this power has frequently been referred to as ensuring 'that the solicitor's duty of loyalty to the former client is respected, notwithstanding termination of the retainer, and to uphold as a matter of public policy the special relationship of solicitor and client' - McVeigh v Linen House Pty Ltd [1993] 3 VR 394 at 398, per Batt JA and Wan v McDonald (1992) 33 FCR 491 at 513, per Burchett J. Examples of this are to be found in Clay v Karlson (1997) 17 WAR 493, Afkos Industries Pty Ltd v Pullinger Stewart [2001] WASCA 372 and LPO Transact Pty Ltd (In Liq); Re Williamson v Nilant [2002] WASC 225."

1. The principle was restated by Brereton J in Mitchell v Burrell [2008] NSWSC 772:

"The jurisdiction invoked is that discussed in Kallinicos v Hunt [2005] NSWSC 1181; (2005) 64 NSWLR 561. As was said in that case (at [76]) the Court has always had inherent jurisdiction to restrain solicitors from acting in a particular case as an incident of its inherent jurisdiction over its officers and to control its process in aid of the administration of justice. The test to be applied is whether a fair minded, reasonably informed member of the public - a concept substantially equivalent to the reasonably informed lay observer used in the context of applications for disqualification of judicial officers for apprehended bias - would conclude that the proper administration of justice requires that a legal practitioner should be prevented from acting, in order to protect the integrity of the judicial process and the due administration of justice, including the appearance of justice. The jurisdiction is an exceptional one and is to be exercised with caution, and due weight must be given to the public interest in a litigant not being deprived of the lawyer of his or her choice. Particularly in this respect, the timing of the application may be relevant, in that the cost, inconvenience or impracticability of requiring lawyers to cease to act when proceedings are well advanced may provide strong reason for refusing to grant relief."

1. Two matters are put forward in support of the application. Before referring to those matters, however, I should say something briefly about the proceedings.

1. The plaintiff company sues the defendant for alleged breach of duty as an officer in and about certain investment activities. The defendant is or was a director. Mr Fleming's father is a director of the plaintiff and will be the principal witness for the plaintiff in that his affidavit will be the main affidavit relied on by the plaintiff. Mr Fleming's father is also a shareholder in the plaintiff or at least shares in the company are held by the father's family trust from which it may be inferred that the father has some interest in the shareholding.

1. The first of the matters relied on by the defendant is the relationship between the plaintiff's principal witness and Mr Fleming. The argument is that if the plaintiff is successful it will recover money from the defendant and its financial resources will thereby be enhanced; that any such success will therefore work to the financial advantage of Mr Fleming's father (a beneficiary of the family trust which holds shares in the plaintiff company); and that what Mr Raphael of counsel called Mr Fleming's "ultimate patrimony" will therefore and thereby be enlarged, given an expectation that any father might well make provision for his son in his will.

1. In Mr Raphael's submission this causes Mr Fleming to have what Brereton J in Mitchell v Burrell described as "a personal stake in the outcome of the proceedings or in their conduct beyond the recovery of proper fees for acting".

1. I do not accept that submission. It is not shown at all that Mr Fleming will benefit from his involvement as solicitor beyond the proper fees the plaintiff pays him. It is true that his father has an indirect financial interest in the plaintiff, but it by no means at all follows that Mr Fleming thereby has a financial interest in the outcome of the proceedings. Indeed, the same would be the case even if the company and the family trust were not interposed.

1. Taken to its logical conclusion, the argument Mr Raphael puts would mean that a legal practitioner could never undertake contentious business for the practitioner's parent since to do so is to enter into the realms of attempting to increase one's "ultimate patrimony" or to prevent its depletion.

1. Many lawyers would prefer, as a matter of personal choice, not to act for a parent in court proceedings and to leave such cases in the hands of someone else. But it cannot be the case in any abstract sense that the integrity of the judicial process is automatically compromised if a lawyer chooses to act for the lawyer's parent in such circumstances.

1. In any event, and as I have said, this is not a case where the solicitor is acting in litigation for his parent. The parent has no more than an interest in a family trust which in turn has a shareholding interest in a company which is the plaintiff by which the solicitor is retained.

1. The second matter relied on by the defendant concerns evidence given by the father in certain Local Court proceedings on 10 February 2011.

1. The father swore for the purposes of that case an affidavit said to be in many areas similar to or the same as his affidavit in these proceedings. The father was closely cross-examined in the Local Court concerning the circumstances of the preparation of his affidavit and his recollection as he sat in the witness-box of matters deposed to in it. The Local Court transcript has been tendered to show these matters.

1. The cross-examination of the father in the Local Court is said by Mr Raphael to raise an apprehension that Mr Fleming prepared an affidavit for his father and had him swear to the veracity of it in all its details when at the time of preparation and swearing of the affidavit the father had little or no memory of the matter.

1. That is a serious allegation and it is on the material before me one that is not supportable. It is clear from his cross-examination in the Local Court that the father has memory problems. He referred to these problems in his cross-examination and mentioned an operation he had had a few years ago that had given rise to the problems. He also made it clear that Mr Fleming had prepared the affidavit which is unexceptional, given his role as a solicitor. Solicitors commonly prepare their clients' affidavits. There is also, however, reference to Mr Fleming and his father having together gone through contemporary documents relevant to the content of the affidavit.

1. There is no basis for any well-based suspicion that Mr Fleming prepared an affidavit the content of which was his own rather than that of the deponent.

1. The evidence before me does not raise the suggested apprehension that, if Mr Fleming continues to act, either the integrity of the judicial process or the due administration of justice will be jeopardised.

1. If the father's affidavit is read in the plaintiff's case, he will be available to be cross-examined. It will be open to the cross-examiner to take the line that was taken in the Local Court in an attempt to call into question the reliability of the father's evidence. But that will be part and parcel of the normal trial process in these proceedings, in no way calling into question Mr Fleming's ability to act professionally as the plaintiff's solicitor in the proceedings.

1. I would only add that the application comes at a very late stage, one week before the start of the scheduled hearing, and that the cost, inconvenience and impracticability of compelling the plaintiff to change solicitors in the week before the trial starts would in any event have been a powerful discretionary factor.

1. The defendant's notice of motion filed in court today is dismissed.

FOR SUBMISSIONS RE COSTS SEE TRANSCRIPT

1. It is submitted on behalf of the defendant that costs of the motion should be reserved until Mr Fleming senior has been seen in the witness-box. I see no point in such a course. The motion was dealt with on the material before the court. The outcome will not be changed by anything that happens ultimately if and when Mr Fleming goes into the witness-box. The defendant will pay the plaintiff's costs of the motion with which I have just dealt.

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Decision last updated: 28 March 2011