Annor v Howard

Supreme Court of NSW|2023-08-11|Before: Robb J, Ward J

JUDGMENT

The defendant in these proceedings is Charlton Kenneth Jeffrey Howard, who is a musical artist who performs under the name "The Kid Laroi". By notice of motion filed on 23 November 2022, Mr Howard seeks an order that the solicitors for the plaintiff/cross defendant, who practice as the incorporated legal practice Media Arts Lawyers Pty Ltd (MAL), be restrained from acting for the plaintiff/cross defendant in these proceedings. The respondents to the notice of motion are MAL and David Vodicka, one of its solicitors. The plaintiff/cross defendant in the proceedings is Daniel Annor, who was appointed as Mr Howard's manager under a management agreement made on 11 January 2018.
In Cleveland Investments Global Ltd v Evans [2010] NSWSC 567 (Cleveland Investments), Ward J (as her Honour then was) identified the three possible bases upon which a solicitor may be restrained from acting against a former client, at [37] as follows: [37] The authorities in this area have explored three possible bases upon which a solicitor may be restrained from acting against a former client: First, that of ensuring the protection of confidential information that has been provided by the client to the lawyer in the course of the lawyer/client relationship: see, for example, Rakusen v Ellis Munday & Clarke [1912] 1 Ch 831; D & J Constructions; Carindale Country Club Estate Pty Ltd v Astill (1993) 42 FCR 307; (1993) 115 ALR 112. Secondly, where the court, acting under its inherent supervisory jurisdiction, considers that it is necessary to do so in order to ensure the due administration of justice: see, for example, Black v Taylor; Grimwade v Meagher; Newman v Phillips Fox (a firm) [1999] WASC 171; (1999) 21 WAR 309; Kallinicos v Hunt. Thirdly (and the most controversial), that of preventing a breach of an asserted fiduciary duty of loyalty owed by the lawyer to the former client notwithstanding the termination of the retainer: see, for example, Wan v McDonald (1992) 33 FCR 491; (1992) 105 ALR 473; [1992] ANZ ConvR 385; Fordham v Legal Practitioners' Complaints Committee (1997) 18 WAR 467; McVeigh v Linen House Pty Ltd [1999] VSCA 138; [1999] 3 VR 394.

The statement of claim

Mr Annor commenced these proceedings by statement of claim filed on 27 May 2022. Mr Howard's mother, Sloane Marie Howard, is named as the second defendant. That was because, at the date of the management agreement, Mr Howard was a minor and his mother became a party to relevant agreements as a person with parental responsibility for Mr Howard. It will not be necessary to refer further to Ms Howard for the purposes of these reasons.
Mr Annor's legal representative, as stated in the statement of claim, is Marcus Walkom of MAL. It is clear from the correspondence that is in evidence, however, that Mr Vodicka has participated in the representation of Mr Annor on behalf of MAL and in conjunction with Mr Walkom.
In essence, by his statement of claim, Mr Annor seeks damages against Mr Howard for breach of the management agreement. It is not necessary to consider the claim made by Mr Annor in detail, as the grounds for the application in the notice of motion arise substantially out of the amended defence. Mr Annor alleges that, on 23 March 2019, Mr Howard caused a New York law firm to send a letter to Mr Annor purporting to terminate the management agreement, and that on 25 March 2019, Mr Howard entered into a record agreement with an organisation called "Sony Music Entertainment" without notice to, or the consent of, Mr Annor. Mr Annor claims that Mr Howard repudiated the management agreement, and that he accepted that repudiation on 10 December 2019, in consequence whereof the management agreement was brought to an end. Mr Annor claims damages for breach of a term of the management agreement that contained a formula setting out the percentage of various forms of income received from Mr Howard to which Mr Annor was entitled.

The management agreement

It will be convenient to set out the relevant terms of the management agreement before considering the allegations in the amended defence that are the basis of the present application.
Clause 2 governed the term of the agreement. As I understand it, there is no issue about the management agreement being in effect at the time of its alleged repudiation by Mr Howard.
Clause 3.1 provided for the appointment of Mr Annor in the following terms: 3.1 The Artist hereby appoints the Manager as the Artist's sole and exclusive manager during the Term throughout the Territory in respect of the Artist's Activities. The Artist shall not appoint, or engage any other manager, agent or representative to fulfil the usual functions of a manager, nor will it carry out such functions on its own behalf, or to do anything which would detract from the Manager's rights to act as the Manager of the Artist under the terms of this Agreement.
"Artist's Activities" were defined in clause 1.1(a). By clause 1.1(j), the "Territory" was defined as meaning "the World".
By clause 3.2, Mr Annor's services as manager were not exclusive to Mr Howard.
Clause 3.4 provided: 3.4 If the Manager becomes aware of a potential conflict of interest between it and the Artist it will promptly and fully disclose such conflict to the Artist, with a view to resolving it in good faith.
Clause 4 set out the manager's functions and obligations. Most relevantly, it provided: 4.1 The Manager agrees during the Term to use best endeavours to: … (b) develop, promote and advance the Artist's career within the Artist's Activities, and to confer with, counsel and advise the Artist and represent the Artist in matters and things relating to the Artist's Activities; … (d) negotiate and liaise with record companies, publishers, distributors, sponsors, merchandisers or other similar entities, as the case may be; (e) keep the Artist informed of all matters which arise for consideration in relation to the Artist's Activities, and to be reasonably available to consult with the Artist on such matters; and … 4.3 The Manager shall supervise the promotion and publicity of the Artist in full consultation with the Artist. 4.4. The manager shall at all times act in the best interests of the Artist…
The manager's authority was dealt with in clause 5. Mr Annor was given limited authority by clause 5.1 to act exclusively on behalf of Mr Howard in relation to certain matters, sometimes with his prior written approval. However, clause 5.2(a) had the effect that Mr Annor did not have authority to enter into any arrangement or contract obliging Mr Howard to undertake any live performance without his prior written authority, and clause 5.3 provided: 5.3. The Manager shall not execute for or on behalf of the Artist, or in the Artist's name, any recording or licence agreements, song writing or publishing agreements, sponsorship, or endorsement agreement, unless validly appointed under a separate power of attorney deed executed by the Artist or with the Artist's express written consent.
Clause 8.2(b) was a warranty by Mr Annor that he would act in the best interest of Mr Howard at all times.
Clause 10.1 had the effect that, subject to express exceptions, Mr Annor was responsible for the payment of all Overhead Expenses incurred by him under the management agreement. Clause 10.2 provided that "the Artist shall be responsible for the reimbursement of the following expenses incurred by the Manager relating to the Artist's Activities which are not Overhead Expenses, upon presentation to the Artist of all relevant supporting receipts". It then listed various types of expenses largely but not exclusively related to the personal expenses that might be incurred by Mr Annor in performing his duties as manager, although advertising costs such as posters, brochures, media advertisements and courier charges were also specified. However, clause 10.2(f) contained a general and catch-all entitlement in the terms: "Any other expenses reasonably incurred by the Manager on the Artist's behalf."
Overhead Expenses were defined in clause 1.1(h) in the following terms: (h) Overhead Expenses means all expenses normally referred to as such in a business, including support staff, rent, stationery, communication expenses (other than international telephone calls made specifically in respect of the Artist) and other general expenses not directly expended on behalf of the Artist.
These terms appear to distinguish between Overhead Expenses that were to be met by Mr Annor and Management Expenses for which Mr Annor was entitled to be reimbursed by Mr Howard. The purpose of clause 10.2 appears to have been to identify some expenses that may otherwise have fallen within Overhead Expenses, but which were to be treated as Management Expenses to be reimbursed by Mr Howard. However, the effect of clause 10.2(f) had the consequence that the division between the two types of expenses was blurred.
This may have been significant because one of the principal issues on this application was whether Mr Vodicka was implicitly retained by, and acted for, Mr Howard in relation to the conduct engaged in by Mr Annor that is the foundation for Mr Howard's claims in his amended defence. It is clear that, in respect of those activities, MAL was formally retained by Mr Annor. However, Mr Howard made a number of submissions to the effect that Mr Vodicka had in fact acted "on behalf of" Mr Howard. There was no evidence that Mr Annor submitted MAL's tax invoices for reimbursement by Mr Howard or that Mr Howard paid MAL's fees. In the absence of such evidence, I will infer that not only did Mr Annor formally retain MAL, but that Mr Annor paid MAL's fees as an Overhead Expense. I note, however, as will be seen below when I set out relevant parts of Mr Howard's amended defence, that he alleged in par 9(e)(viii)(P) that Mr Annor "intended to seek reimbursement for the legal expenses of" MAL.
Clause 15.1 of the management agreement had the effect that a breach of the agreement was not to be a material breach unless a notice was given, specifying the nature of the breach and requiring the breach to be remedied within 30 days of receipt of the notice. No such notice was given by Mr Howard in this case, which is a matter pleaded in the statement of claim. However, I understand that it was accepted by the parties that the operation of clause 15 is immaterial to the determination of the present application.
Clause 19.1 provided: 19.1 This Agreement does not constitute a partnership agreement between the parties, nor any type of employment relationship. The Manager is acting as an independent contractor…
Mr Howard submitted that the only purpose of this term was to exclude the relationship of employer and employee, and that it is not relevant to a determination of the essential obligations of Mr Annor to Mr Howard under the management agreement. Mr Annor did not contest that submission.

Relevant allegations in the amended defence

I will now turn to a consideration of the relevant allegations in the amended defence. That consideration will be limited to the allegations that are relevant to the involvement of Mr Vodicka in the events that have given rise to the proceedings that might justify Mr Howard's claim for an order that MAL and Mr Vodicka cease to act for Mr Annor.
By par 9 of the amended defence, Mr Howard seeks to justify his termination of the management agreement by establishing that he was entitled to do so because of a prior "renunciation" of the management agreement by Mr Annor. Relevantly, the amended defence alleges in par 9: 9. In respect of paragraph 9 of the Statement of Claim, the Defendants: … (e) say that the Defendants accepted the renunciation of the Management Agreement by the Plaintiff on 23 March 2019; Particulars … (ii) The conduct amounting to renunciation included the failure of the Plaintiff to keep the First Defendant informed (or, alternatively, the failure to use best endeavours to keep the First Defendant informed) of matters relating to the activities of the First Defendant (including the failure to inform the First Defendant of negotiations by the Plaintiff with Def Jam Recordings at a time between 11 January 2018 and 23 March 2019) contrary to clause 4.1(e) of the Management Agreement. … (viii) The conduct amounting to renunciation included the Plaintiff seeking to negotiate a packaged arrangement with Def Jam Recordings at a time between 11 January 2018 and 23 March 2019, from which the Plaintiff would benefit professionally and financially, without notifying the First Defendant of Def Jam Recordings' interest, contrary to clauses 4.1(e) and 4.4 of the Management Agreement. (A) The Plaintiff arranged for Media Arts Lawyers (a law firm) to negotiate the packaged arrangement with Def Jam Recordings. (B) Media Arts Lawyers (through Mr Vodicka, a partner of the law firm) communicated directly (by telephone and by email) with representatives of Def Jam Recordings in the negotiations for the packaged arrangement. (C) Media Arts Lawyers (through Mr Vodicka) represented and acted for (or purported to represent and purported to act for) the First Defendant in the negotiations for the packaged arrangement. (D) The Plaintiff determined with Media Arts Lawyers (through Mr Vodicka) the benefits to be sought to be provided to the First Defendant under the packaged arrangement and the positions to be adopted by the First Defendant in the negotiations for the packaged arrangement. (E) The Plaintiff and Media Arts Lawyers did not consult with, or obtain the consent of, the Defendants on the benefits to be sought to be provided to the First Defendant under the packaged arrangement and the positions to be adopted by the First Defendant in the negotiations for the packaged arrangement. (F) Media Arts Lawyers (through Mr Vodicka) communicated to representatives of Def Jam Recordings the benefits sought to be provided to the First Defendant under the packaged arrangement and the positions to be adopted by the First Defendant in the negotiations for the packaged arrangement. (G) The Plaintiff arranged for Media Arts Lawyers (through Mr Vodicka) to provide legal advice on the terms of the proposed agreement between Def Jam Recording (or a related entity of Def Jam Recordings) and the First Defendant to reflect the packaged arrangement. (H) Media Arts Lawyers (through Mr Vodicka) provided legal advice to the Plaintiff (on behalf of the First Defendant) on the terms of the proposed agreement. (I) Media Arts Lawyers (through Mr Vodicka) provided legal advice for the benefit of the First Defendant on the terms of the proposed agreement. (J) The Plaintiff and Media Arts Lawyers did not consult with, or obtain the consent of, the Defendants on the matters the subject of the legal advice on the terms of the proposed agreement. (K) The Plaintiff arranged for Media Arts Lawyers (through Mr Vodicka) to perform legal work on the terms of the proposed agreement. (L) Media Arts Lawyers (through Mr Vodicka) performed legal work on the terms of the proposed agreement (including by drafting changes to the terms of the proposed agreement and by communicating the changes to the representatives of Def Jam Recordings). (M) Media Arts Lawyers (through Mr Vodicka) performed legal work for the benefit of the First Defendant on the terms of the proposed agreement (including by drafting changes for the benefit of the First Defendant to the terms of the proposed agreement and by communicating the changes to the representatives of Def Jam Recordings). (N) The Plaintiff and Media Arts Lawyers did not consult with, or obtain the consent of, the Defendants on the terms of the proposed agreement. (O) The Plaintiff stood to earn commission on all payments made to the First Defendant under the proposed agreement. (P) The Plaintiff intended to seek reimbursement for the legal expenses of Media Arts Lawyers in negotiating the packaged arrangement, providing legal advice on the proposed agreement and performing legal work on the proposed agreement. (ix) The conduct amounting to renunciation included the failure of the Plaintiff to act (or alternatively, a failure to use best endeavours to act) in the best interests of the First Defendant, including the Plaintiff's conduct in seeking to use financial support provided by Sony Australia for the First Defendant's development with a view to obtaining agreements with other labels at a time between 11 January 2018 and 23 March 2019, with the effect of potentially jeopardising the First Defendant's relationship with Sony Australia, contrary to clause 4.4 of the Management Agreement. …
Insofar as these allegations may be relevant to the claim made by Mr Howard in his notice of motion, they may be summarised as follows: 1. Although clause 4.1(d) of the management agreement obliged Mr Annor to use his best endeavours to negotiate and liaise with record companies, clause 4.1(e) obliged Mr Annor to use his best endeavours to keep Mr Howard informed of all matters which arose for consideration in relation to the Artist's Activities. The amended defence claims that the negotiations undertaken by Mr Annor with Def Jam Recordings were done in secret, and in breach of Mr Annor's obligation under clause 4.1 (e). 2. By par 9(e)(viii)(O) of the amended defence, the defendants claim that Mr Annor sought to gain a benefit for himself, which, as I understand the defendants' case, involved Mr Annor having an undisclosed conflict of interest, contrary to clause 3.4 of the management agreement. 3. Par 9(e)(ix) of the amended defence is a claim that, by seeking to use financial support provided by Sony Australia (to which further reference will be made below) to negotiate an agreement with Def Jam Recordings, Mr Annor's conduct potentially jeopardised Mr Howard's relationship with Sony Australia, which was conduct not in Mr Howard's best interest, and which might impact on his integrity and reputation, contrary to clause 4.4 of the management agreement.
It will be appropriate to make the following observations before I consider the arrangement between Mr Howard and Sony Australia.
The Court was informed that, during the course of these proceedings, the defendants have issued subpoenas against MAL and Universal Music Australia Pty Ltd (Universal Music Australia), which is a related company to Def Jam Recordings. Those subpoenas have been answered, and are apparently the source of a number of the documents that were put in evidence by the defendants and, I would infer, the detail in the particulars of the amended defence in par 9(e)(viii). Although it is not the function of the Court on this application to make any findings of fact on the merits of the claims made by the parties, in broad terms, the documents obtained on subpoena establish the facts that underlie the claims in par 9(e)(ii) and (viii) of the amended defence, at least in respect of the communications between Mr Vodicka on behalf of Mr Annor with Universal Music Australia and Def Jam Recordings. The Court was not given any detailed explanation by Mr Howard as to the adequacy of the production in response to the subpoenas. Mr Howard did not submit that he had any reason to believe that additional documents exist that ought to have been produced to the Court, but have not been produced.
This is relevant to the Court's consideration of the submissions made by Mr Howard, based upon the repeated refusal by MAL to provide its complete file to Mr Howard's solicitors. Mr Howard's claim on the application is based upon the mere fact that demands have been made for the production by MAL of its complete file and those claims have been refused. Mr Howard has not apparently required the file to be produced in answer to a subpoena, with the consequence that MAL would have been required to produce all documents on the file for which it could not maintain a claim of legal professional privilege, on the basis that at relevant times it was retained as the solicitor for Mr Annor. Given that MAL's file will have contained many communications between Mr Vodicka on behalf of Mr Annor with Universal Music Australia and Def Jam Recordings, MAL could not have resisted producing those documents to the Court on subpoena. The Court has been given no reason to understand that MAL has not produced all documents that it was obliged to produce to the Court. The Court has been given no reason to believe that the production of documents by MAL and Universal Music Australia in answer to the subpoenas has led to a deficiency in the evidence required by the defendants to establish the conduct upon which they have based their claims in the amended defence.
The second subject for observation is that, as will be considered in more detail below, the defendants have available considerable documentary evidence to establish Mr Vodicka's involvement in the negotiations with Universal Music Australia and Def Jam Recordings. Counsel for Mr Howard accepted at the hearing that the evidence on the application did not include evidence specifically relevant to the defendants' claim that Mr Annor attempted to secure a benefit for himself from the negotiations with Universal Music Australia and Def Jam Recording in excess of the commission he would have become entitled to under the management agreement. Nor was there evidence to support the claim that Mr Annor had sought to use financial support provided to Mr Howard by Sony Australia in a manner that potentially jeopardised Mr Howard's relationship with Sony Australia.
As I understand it, at least on the basis of the evidence that was before the Court on the present application, these last two allegations could only be supported in a general way based upon the evidence of the negotiations conducted by Mr Vodicka.
This is of significance to the determination of the present application, even though this is not an occasion for the Court to consider the merits of any of the claims made by the defendants in the amended defence. That is because one of the submissions made by the defendants is that MAL should be restrained from acting for Mr Annor because of the probability that Mr Vodicka's earlier involvement in the negotiations with Universal Music Australia and Def Jam Recordings will give Mr Annor a forensic advantage in the proceedings of which the defendants will be denied, and also that it is probable that Mr Vodicka will be called to give evidence in the proceedings. The absence of any evidence on this application, even of a prima facie nature, in support of the defendants' conflict of interest claim and the failure to act in the best interests claim will make it harder for the defendants to persuade the Court that the alleged advantage to Mr Annor from MAL's continuing to act for him, or that the likelihood that Mr Vodicka will be called as a witness, is real and substantial, rather than merely speculative.
At the time of the events the subject of the dispute between the parties, Mr Howard was party to an agreement entered into on about 22 May 2017 with Sony Australia under which Sony Australia agreed to provide development funding to Mr Howard in return for Sony Australia having priority negotiation rights when Mr Howard was ready to enter into a recorded music agreement. Under the agreement, in return for Sony Australia providing the development support, Mr Howard agreed that, at any time in the two years following 22 May 2017 when he was ready to enter into an agreement with respect to his recording or performance services as a musical artist, he would grant to Sony Australia an exclusive period of first negotiation of 3 months prior to holding any discussions with other record labels in relation to those rights, and, if no agreement was reached during the exclusive period of first negotiations, Sony Australia would have a last matching right against any third party offer that Mr Howard wished to accept, to apply for 30 days after Sony Australia's receipt of the offer to be matched, a right which would only be effective if Sony Australia could match certain specified terms in the competing offer
MAL made a submission that the existence of the agreement between Mr Howard and Sony Australia had the effect that the negotiations that Mr Vodicka conducted with Universal Music Australia and Def Jam Recordings would not necessarily lead to the making of an agreement between those parties and Mr Howard, because of Sony Australia's last matching right contained in the agreement dated 22 May 2017. That may well be, but it is also possible that the negotiations would put Mr Howard in breach of the grant of the exclusive period of first negotiation in the Sony Australia agreement. The Court is not required to consider these issues for the purpose of determining whether Mr Howard is entitled to the relief that he claims in the notice of motion that is before the Court.
The primary focus of Mr Howard's submissions was an analysis of the communications involving Mr Annor, Mr Vodicka and representatives of Universal Music Australia and Def Jam Recordings. This analysis was directed at persuading the Court that Mr Vodicka, who was the primary participant in the communications, implicitly acted as Mr Howard's solicitor. As I understand it, Mr Howard accepted that MAL and Mr Vodicka were not formally retained by him. He submitted that Mr Vodicka's conduct was engaged in for Mr Howard's benefit, with the result that, for the purpose of an application that he be disqualified from acting as the solicitor for Mr Annor in the proceedings, he should be treated as if he had acted as Mr Howard's solicitor. This argument was made in support a submission that the fair-minded, reasonably informed member of the public would perceive that justice was not being done if MAL and Mr Vodicka were permitted to continue to act in the proceedings on behalf of Mr Annor, because Mr Vodicka would be seen to have switched sides from Mr Howard to Mr Annor.
Mr Howard's counsel informed the Court that it was Mr Howard's position that he had no knowledge of the communications that were engaged in by Mr Vodicka with the authority of Mr Annor on his behalf. While that is a matter to be proved at a final hearing, I accept that there is no indication in the evidence that was tendered at the hearing of the notice of motion that Mr Howard was aware of the communications until the end of the process.
I also accept Mr Howard's submission that an analysis of the communications shows that Mr Brett Oaten, a solicitor who acted for Mr Howard personally from time to time, was not engaged in or included in the correspondence. Consequently, I reject the submission made by MAL and Mr Vodicka that, at all material times, Mr Howard was relevantly represented by his own solicitor.
I understand that Mr Howard did not challenge Mr Vodicka's evidence that Mr Vodicka did not understand that he was acting for Mr Howard, and that Mr Vodicka had only met Mr Howard in a fleeting way.
The evidence on the hearing of the notice of motion established on a prima facie basis at least the following relevant matters: 1. On 5 June 2018, Mr Annor provided Mr Vodicka with a copy of the agreement between Mr Howard and Sony Australia. 2. From no later than 9 August 2018, Mr Vodicka began negotiating a "Singles Deal" with Universal Music Australia for Mr Howard. 3. Universal Music Australia sent a draft singles agreement to Mr Annor on 21 August 2018 and to Mr Vodicka on 22 August 2018. This would suggest that Universal Music Australia also understood that Mr Vodicka was acting for Mr Howard's manager. 4. On 23 August 2018, Mr Vodicka advised Mr Annor: "Offer in from Universal for Laroi that came in whilst I was in transit yesterday - money is ok, not a fan of the broad rights they are asking for - does give us a good platform to push Sony however." 5. Thereafter, Mr Vodicka prepared a revised draft singles agreement between Mr Howard and Universal Music Australia containing terms that Mr Vodicka thought were more beneficial to Mr Howard than had been offered. Mr Vodicka apparently prepared a number of versions of the revised draft agreement. 6. On 16 October 2018, a representative of Universal Music Australia sent an email to both Mr Vodicka and the general manager of Def Jam Recordings in which he said: … Rich, please meet David, who is the attorney acting for The Kid Laroi - I've included his details below as well. I have let David know that we are looking to make an offer for The Kid Laroi originating from Def Jam USA. … 1. Mr Annor advised Mr Vodicka on 18 October 2018 that he had contacted a representative of Def Jam Recordings and suggested that Mr Vodicka call the representative. This would suggest that Def Jam Recordings was aware of Mr Annor's involvement which was likely to cause it to understand that Mr Vodicka was acting for Mr Howard's manager and not solely for Mr Howard. 2. On 18 October 2018, Mr Vodicka advised Mr Annor: "Given the level of interest now I think we start getting down our proposed terms, rather than reacting to what is offered." He suggested: "we get together to sketch out some wishlist terms." 3. Mr Vodicka advised Universal Music Australia on 14 November 2018 that Mr Howard's development deal with Sony Australia concluded on 22 May 2019. 4. On 24 October 2018, Mr Vodicka sent an email to a representative of Universal Music Australia summarising a conversation the previous day by identifying a number of important commercial issues that would need to be considered for inclusion in a long-term contract with Mr Howard. 5. On 6 December 2018, Mr Annor sent an email to Mr Vodicka, Mr Howard's father and the second defendant, suggesting that the parties have a phone discussion the next day: "to talk strategy and so forth so we can get on the same page." As part of the same email chain, Mr Vodicka responded by reply on 7 December 2018 in which he referred to discussions with Def Jam Recording "to get an indicative sketch of the offer that they were going to propose". It is probable that Mr Howard became aware of the discussions that had occurred on his behalf with Universal Music Australia and Def Jam Recordings from at least this time. 6. In an email from Mr Vodicka to Mr Annor dated 24 January 2019, he said that it would be good for him to meet Mr Howard's parents in person, and that he had no objection to Mr Oaten handling Mr Howard's personal work, but gave reasons why it would be in Mr Howard's interests for Mr Vodicka to act for Mr Howard in relation to local and international recording deals. 7. This was the final communication in the evidence that concerned negotiations for any recording agreement involving Mr Howard. It will be recalled that the statement of claim contains an allegation that, on 23 March 2019, Mr Howard purported to terminate the management agreement.
Mr Howard summarised his submissions in support of the relief claimed in his notice of motion in par 13 of his written submissions, as follows: A fair-minded reasonably informed member of the public would readily perceive that justice was not being seen to be done if Media Arts Lawyers (or, alternatively, Mr Vodicka) was allowed to continue to act for the Plaintiff in these proceedings: 13.1 First, Mr Vodicka gained documents and information relating to the Negotiations from his role in the Negotiations; 13.2. Secondly, Media Arts Lawyers and Mr Vodicka has refused (or alternatively failed) to provide the documents and information relating to the Negotiations (including information on the file relating to the Negotiations) to the First Defendant; 13.3 Thirdly, Mr Vodicka obtained a forensic advantage from his role in the Negotiations, including his knowledge of positions adopted during the Negotiations (in circumstances where the First Defendant and the Plaintiff were not involved in the Negotiations and where such knowledge may be relevant to issues in the proceedings, including causation and loss); 13.4. Fourthly, Mr Vodicka (and his role, his communications and his records) will become the centre of controversy in relation to the issues surrounding the Negotiations in the proceedings; and 13.5 Fifthly, there is the appearance and reality that Mr Vodicka has changed sides (from acting for, or in the interests, of the First Defendant in respect of the Negotiations to acting against the First Defendant in relation to the issues surrounding the Negotiations in the proceedings).

Relevant Principles

The parties accepted, as do I, that the relevant principles are as stated by Brereton J (as his Honour then was) in Kallinicos v Hunt (2005) 64 NSWLR 561; [2005] NSWSC 1181 at [76], as follows: [76] The foregoing authorities establish the following: During the subsistence of a retainer, where the court's intervention to restrain a solicitor from acting for another is sought by an existing client of the solicitor, the foundation of the court's jurisdiction is the fiduciary obligation of a solicitor, and the inescapable conflict of duty which is inherent in the situation of acting for clients with competing interests [Prince Jefri]. Once the retainer is at an end, however, the court's jurisdiction is not based on any conflict of duty or interest, but on the protection of the confidences of the former client (unless there is no real risk of disclosure) [Prince Jefri]. After termination of the retainer, there is no continuing (equitable or contractual) duty of loyalty to provide a basis for the court's intervention, such duty having come to an end with the retainer [Prince Jefri; Belan v Casey; Photocure; British American Tobacco; Asia Pacific Telecommunications; contra Spincode; McVeigh; Sent]. However, the court always has 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 [Everingham v Ontario; Black v Taylor; Grimwade v Meagher; Newman v Phillips Fox; Mitchell v Pattern Holdings; Spincode; Holborow; Williamson v Nilant; Bowen v Stott; Law Society v Holt]. Prince Jefri does not address this jurisdiction at all. Belan v Casey and British American Tobacco are not to be read as supposing that Prince Jefri excludes it. Asia Pacific Telecommunications appears to acknowledge its continued existence. The test to be applied in this inherent jurisdiction is whether a fair-minded, reasonably informed member of the public would conclude that the proper administration of justice requires that a legal practitioner should be prevented from acting, in the interests of the protection of the integrity of the judicial process and the due administration of justice, including the appearance of justice [Everingham v Ontario; Black v Taylor; Grimwade v Meagher; Holborow; Bowen v Stott; Asia Pacific Telecommunications]. The jurisdiction is to be regarded as exceptional and is to be exercised with caution [Black v Taylor; Grimwade v Meagher; Bowen v Stott]. Due weight should be given to the public interest in a litigant not being deprived of the lawyer of his or her choice without due cause [Black v Taylor; Grimwade v Meagher; Williamson v Nilant; Bowen v Stott]. The timing of the application may be relevant, in that the cost, inconvenience or impracticality of requiring lawyers to cease to act may provide a reason for refusing to grant relief [Black v Taylor; Bowen v Stott].
See also Cleveland Investments at [5]: Ausmedic Australia Pty Ltd v Whiteley Medical Supplies Pty Ltd [2012] NSWSC 1270 (Ausmedic) at [134] and Michael Smith Real Estate Pty Ltd t/as Raine & Horne Marrickville v Chmait [2021] NSWSC 1160 (Michael Smith) at [57].
I respectfully follow the observations of Ward CJ in Eq (as her Honour then was) in Michael Smith concerning whether the Court must be satisfied before it makes an order restraining a former solicitor that the fair-minded reasonably informed member of the public either "would," or "may" perceive that justice was not being seen to be done if the legal practitioner was allowed to continue [62]-[63]: [62] In Dyer v Chrysanthou (No 2) (Injunction) [2021] FCA 641 (Dyer v Chrysanthou ), Thawley J considered, in the context of an application to restrain a barrister from acting in defamation proceedings, the summary of principles in Kallinicos v Hunt and observed (at [138]) that there was a difference between the expression of the test by Brereton J as being whether a reasonably informed member of the public "would" conclude that the proper administration of justice required that a legal practitioner be prevented from acting and the formulation of the test by Griffiths J in Mumbin v Northern Territory of Australia (No 1) [2020] FCA 475 as being whether such a member of the public "might" so conclude (observing that the latter formulation of the test conforms or coheres more closely with the test for apprehended bias). [63] Nettle J, then sitting in the Victorian Supreme Court and Beach J considered the test in Sent v John Fairfax Publication Pty Ltd [2002] VSC 429 (Sent v John Fairfax ) at [113] and Dealer Support Services Pty Ltd v Motor Trades Association of Australia Ltd (2014) 228 FCR 252; [2014] FCA 1065 at [94], respectively. Their Honours each adopted the formulation "would conclude"; and I consider with respect that the weight of authority requires an assessment that in all the circumstances a fair-minded, reasonably informed member of the public would reach the requisite conclusion.
By par 10 of his written submissions, Mr Howard accepted the formulation of the principle using the expression "would".
In his submissions, Mr Howard relied upon the following reasoning by Ward J in Cleveland Investments at [52]: [52] It seems to me that the fair-minded reasonably informed member of the public would have an expectation that a legal practitioner who has been retained by a company, and received instructions from a company director on the retainer of the company and for the benefit of the company, in relation to a claim made against the company (being a claim which related in part to what the company director himself was said to have done) should not be seen thereafter to act for that company director in prosecuting that very same claim against the company in the same set of proceedings. To the extent that such a member of the public were to be informed that the solicitor in question has resisted (or maintains a right to resist) the provision to the company of documents or information obtained from the company director while he was acting for the company, I think this would only strengthen the perception that justice was not being seen to be done if the retainer of that solicitor were to continue.
He also relied upon Michael Smith at [59], where her Honour reiterated these reasons.
Finally, Mr Howard relied upon the reasoning of Lindsay J in Ausmedic at [141]-[149], as to why it was appropriate in that case for the Court to restrain the solicitor from acting, as follows: [141] Each of these factors, for and against a grant of injunctive relief, needs to be taken into account upon a consideration whether a fair minded, reasonably informed member of the public would reach the conclusion that the proper administration of justice requires that the respondents should be restrained from acting for the defendants in these proceedings so as to protect the integrity of the judicial process and the due administration of justice. [142] The task at hand is not one simply of striking a balance between competing factors. It is one of evaluation, taking into account all the circumstances of the case. [143] In making that evaluation, I find that a fair minded, reasonably informed member of the public would conclude that the proper administration of justice requires a grant of the injunctive relief the plaintiff has sought. That is because, in my assessment, a fair minded, reasonably informed member of the public would appreciate that the respondents were uniquely placed (as solicitors for both the plaintiff and interests associated with Mr Williams) to witness controversial events as they unfolded in the year before Mr Williams' departure from high office with the plaintiff and that, were the respondents to continue to act for the defendants in these proceedings, two things could reasonably be expected to follow. First, the plaintiff would be placed at a forensic disadvantage, vis á vis the defendants, by reason of being deprived of access it might otherwise have expected of its former solicitors and their records. Secondly, the conduct and records of the respondents (and access to both) would be likely to become a centre of controversy in themselves, diverting attention away from other issues in preparation of the substantive proceedings for trial. [144] In my assessment, a fair minded, reasonably informed member of the public would also appreciate, more particularly, the following matters. [145] First, in both appearance and reality there is a substantial foundation for regarding the respondents as having changed sides, initially representing the plaintiff and then acting against the plaintiff in relation to business connected in time, and arguably, in other respects as well. [146] Secondly, because Mr Somerville had a close working relationship with Mr Williams, and records of Somerville Legal relating to work done for Mr Williams' interests and the plaintiff may be of critical significance to the collation of evidence in the principal proceedings, the respondents bear the character of witnesses to central events, not merely the character of lawyers providing legal services for one side of the record. [147] Thirdly, the proper administration of justice, in the particular context of these proceedings, might be compromised if the respondents were to continue to occupy a position in which they would be obliged, by an ongoing retainer for the defendants, to deny the provision of assistance to the plaintiff as their former client. [148] Fourthly, the integrity of the judicial process might, more specifically, be compromised if the respondents were to occupy the position of witnesses of fact able, or obliged, to aid the preparation of evidence in support of the defendants, to the exclusion of the plaintiff, under the cloak of legal professional privilege claimed by the defendants and unable effectively to be challenged by the plaintiff because of the defendants' coordinated collective departure and their appropriation of the plaintiff's relationship with the respondents. [149] Fifthly, a conclusion that the proper administration of justice requires a grant of injunctive relief is not dependent upon the availability of a finding of impropriety on the part of the lawyers to be injuncted.
The observation made by Lindsay J at [142] is important. There are many issues that arise for determination that are sensitive to the facts of the individual case, but that is essentially so where the Court must make an evaluative judgment on the basis of a holistic appreciation of the circumstances. In such cases, a comparison between the integers in the reasoning that have persuaded judges in other cases to form a particular view with the same integers that appear to emerge from the circumstances of the instant case is likely to be misleading. That is because the reasoning of courts in other cases on the interlocutory question of whether a solicitor should be restrained from acting for a party are unlikely to disclose all of the nuances that arise from a consideration of the forensic issues in the particular case before the court.

Determination

In the present case, Mr Howard made submissions that this case substantially conforms with the case decided by Lindsay J in Ausmedic. However, I consider that the comparison between the two cases is remote, and the present case is not a case in which it would be warranted for the Court to issue the restraint sought by Mr Howard in his notice of motion.
First, this is not a case in which MAL or Mr Vodicka has formally been retained by Mr Howard to provide legal services in circumstances that are relevantly related to the facts underlying the present proceedings.
I do not accept that MAL or Mr Vodicka were implicitly retained by Mr Howard, if by implicitly it is meant that substantially the same legal and equitable relationships were created between MAL and Mr Vodicka on the one hand and Mr Howard on the other hand, as if the latter had formally retained the former.
I accept that MAL and Mr Vodicka were retained by Mr Annor, and perceived that they were retained by Mr Annor, for the purpose of acting for him in the negotiations that he was conducting in the exercise of his authority in clause 4.1(b) and (d) of the management agreement.
There is no doubt that MAL and Mr Vodicka were acting for the benefit of Mr Howard in a practical sense, because that was inherent in formally performing their retainer from Mr Annor for the purpose of Mr Annor performing his obligations as the manager of Mr Howard. Mr Annor's contractual obligation under clause 4.4 of the management agreement to act in the best interest of Mr Howard would naturally extend to the activities of MAL and Mr Vodicka.
As MAL and Mr Vodicka had essentially no personal connection with Mr Howard, and did not receive any instructions or information from him, there is insufficient evidence to conclude that either MAL or Mr Vodicka owed any duty of loyalty to Mr Howard, even during the tenure of their retainer from Mr Annor, that would colour the thinking of a fair-minded reasonably informed member of the public to conclude that, in continuing to act for Mr Annor in the proceedings, they were in any real way switching sides.
It is true that MAL has repeatedly declined to comply with requests made on behalf of Mr Howard to deliver its whole file to Mr Howard, and, in that respect, Mr Howard has been denied the forensic benefit of access to MAL's file.
However, as I have explained above, Mr Howard has prosecuted his notice of motion based upon the bare refusals of MAL to deliver its file to his solicitors, in circumstances where Mr Howard has apparently served subpoenas on MAL and Universal Music Australia, and those subpoenas have been answered in a way that has permitted Mr Howard to tender into evidence the documents upon which he has relied to support his notice of motion. The Court has been given no sense at all of the likelihood that documents may remain on MAL's file that are forensically significant to Mr Howard's case. It is not yet clear whether MAL may be entitled to deny Mr Howard access to documents on its file on the ground that they are protected by legal professional privilege residing in Mr Annor.
This is a significant matter because the documents that were tendered into evidence by Mr Howard at the hearing of the notice of motion at least go a long way to proving what the substance and detail of the negotiations with Universal Music Australia and Def Jam Recordings involved. While it is always possible that there may be further relevant documents, Mr Howard's submissions did not propound a persuasive case that there are likely to be additional documents that cannot be accessed by Mr Howard unless MAL hands over its entire file. Although the documents that are in evidence refer to telephone conversations between Mr Vodicka and representatives of Universal Music Australia and Def Jam Recordings, it is probable that, if Mr Vodicka made file notes, MAL could be compelled to produce the file notes in answer to a subpoena.
It is true that, so long as MAL and Mr Vodicka act for Mr Annor in these proceedings, their duty of loyalty to Mr Annor will prevent them from cooperating with Mr Howard for the purpose of assisting in the preparation of his case against Mr Annor. However, as MAL and Mr Vodicka were never retained by Mr Howard, there is no basis upon which they could be compelled to assist him in the preparation of his case, even if the Court restrained them from continuing to act for Mr Annor in these proceedings.
Mr Howard submitted that Mr Vodicka should be restrained from continuing to act for Mr Annor because he is likely to become a witness in these proceedings. Mr Howard did not present a convincing case as to why that suggestion is any more than a speculation. So far as Mr Annor's case is concerned, his involvement in negotiations on behalf of Mr Howard with Universal Music Australia and Def Jam Recordings through Mr Vodicka is likely to be proved by the objective evidence provided by the documents. Mr Howard was unable to suggest how oral evidence given by Mr Vodicka of his memory of conversations will influence the outcome of the proceedings. There was no suggestion that Mr Vodicka could give evidence in Mr Annor's case that he provided information to Mr Howard in compliance with Mr Annor's obligations in clause 4.1(e) of the management agreement. At this stage, it remains a professional issue for Mr Vodicka as to whether he considers that he is sufficiently likely to be a witness in the proceedings that he should cease to act for Mr Annor.
I agree with the following observations made by Pembroke J in Westpac Banking Corporation v Newey [2013] NSWSC 533: [22] 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.
I am not satisfied at this stage that Mr Howard has satisfied the Court that a fair-minded reasonably informed member of the public would perceive that justice was not being seen to be done if MAL and Mr Vodicka are allowed to continue to act for Mr Annor in the proceedings. Whether or not that situation continues is a matter for the future.
The orders of the Court are: 1. Order that the notice of motion filed by the first defendant on 23 November 2022 be dismissed. 2. Order the first defendant to pay the plaintiff's costs of the notice of motion.

Amendments 08 September 2023 - Amended to insert missing subheadings. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 08 September 2023

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