Trade Practices Act 1974 (Cth)

Family Law Rules 2004 (Cth) r 8.03

G E Dal Pont, Riley Solicitors Manual (Law Society of New South Wales, College of Law, LexisNexis: Sydney, 2005)

Barnes v Addy (1874) LR 9 Ch App 244

Commonwealth of Australia v Davis Samuel Pty Ltd and Ors (No 1) [2008] ACTSC 59

Nangus Pty Ltd v Charles Donovan Pty Ltd [1989] VicRp 17; [1989] VR 184

Bransdon and Ors v Gilbert [2007] FamCA 579; (2007) 212 FLR 28

Trade Practices Commission v CC (New South Wales) Pty Ltd and Ors (1994) 125 ALR 94

Williamson v Nilant [2002] WASC 225

Clark Boyce v Mouat [1994] 1 AC 28

Maguire v Makaronis [1997] HCA 23; (1997) 188 CLR 449

Farrington v Rowe McBride & Partners [1985] 1 NZLR 83

Beach Petroleum NL v Kennedy and Ors [1999] NSWCA 408; (1999) 48 NSWLR 1

Archer v Howell (No 2) (1992) 10 WAR 33

Simon v Janesland Holdings Pty Ltd [1999] FCA 1550

Waimond Pty Ltd and Anor v Byrne (1989) 18 NSWLR 642

Galladin Pty Ltd v Aimnorth Pty Ltd [1993] SASC 3914; (1993) 60 SASR 145

Damjanov v Maley [2002] NSWCA 230; (2002) 55 NSWLR 149

Abse v Smith [1986] QB 536

Black v Taylor [1993] 3 NZLR 403

Grimwade v Meagher [1995] VicRp 28; [1995] 1 VR 446

Clay v Karlson and Anor (1996) 17 WAR 493

Newman v Phillips Fox (1999) 21 WAR 309

Re Wainter Pty Ltd [2006] FCA 656

Oceanic Life Ltd v HIH Casualty and General Insurance Ltd (1999) 10 ANZ Insurance Cases 74,968

Thompson v Mikkelsen (SC(NSW), 30 October 1974, unreported)

Wan v McDonald [1992] FCA 4; (1991) 33 FCR 491 at 511

Unioil International Pty Ltd v Deloitte Touche Tohmatsu (1997) 17 WAR 98

Jovanovic v The Law Society of Tasmania [2003] TASSC 11

Myers v Elman [1940] AC 282

Locke v Camberwell Health Authority [1990] NLJR 205

Blackwell v Barroile Pty Ltd and Ors (1994) 51 FCR 347

Keppie v Law Society of the ACT (1985) 65 FLR 147

Alexander (trading as Minter Ellison) v Perpetual Trustees WA Ltd [2001] NSWC 240

Watkins T/as Watkins Tapsell v De Varda [2003] NSWCA 242

R v Neil (2003) 218 DLR (4th) 671

1. In these proceedings the Commonwealth of Australia as the plaintiff seeks the recovery of moneys the result of two payments, one of $6m to the 6th defendant and one of $2.725m to the 1st defendant which were misappropriated by the 2nd defendant, who has since been convicted of these misappropriations.

2. The plaintiff has settled its claim with a number of the defendants but there remain still a number of individuals and corporations against whom the plaintiff seeks to recover funds either paid to them or which they used to acquire assets to which the plaintiff claims an entitlement.

3. In one sense, the claim is a straightforward one - money has been misappropriated and the victim of the misappropriation requires it to be paid back. The causes of action, however, are complex. The plaintiff has pleaded claims in reach of fiduciary duty, claiming that the defendants or some of them are liable so far as they have received funds (the "first limb" of Barnes v Addy (1874) LR 9 Ch App 244 at 251) or as accessories (within the "second limb" of Barnes v Addy (supra)), as participants in the breach of confidence by the 2nd defendant when he misappropriated the funds, ultra vires payments from the revenue (see Auckland Harbour Board v The King (1924) AC 3181), mistake and for misleading and deceptive conduct under the Trade Practices Act 1974 (Cth).

4. At the commencement of these proceedings I permitted Mr Allan Endresz, the 5th defendant, ("Allan Endresz") to appear for, inter alia, his father, Mr Jozsef Endresz, the 7th defendant, ("Jozsef Endresz"), and his mother, Mrs Dawn May Endresz, the 8th defendant, ("Dawn Endresz") on a basis briefly set out in Commonwealth of Australia v Davis Samuel Pty Ltd and Ors (No 1) [2008] ACTSC 59 at [2] and [3].

5. The plaintiff did not oppose that application at that time.

6. On 12 June 2008, while Mr M Slattery QC, who appears with Mr J Hogan-Doran for the plaintiff, was opening the plaintiff's case, I gave the plaintiff leave to file in court an Application in Proceedings together with an affidavit in support sworn by Karina Elizabeth Harvey on 12 June 2008. The Application sought "directions be made about the representation of the 7th and 8th defendants". At issue, Mr M Slattery QC told me, was whether there was a conflict of interest between those defendants and Allan Endresz which might require me to revisit the original grant of leave for Allan Endresz to represent them. Mr M Slattery QC did not proceed with the Application at that time. He indicated that I would be better able to assess the situation about representation after he had proceeded further with his opening.

7. During the course of the hearing of this action, it became clear that Allan Endresz wished to file a further affidavit. On 14 March 2008, I had directed the defendants to file and serve on the plaintiff any affidavits on which they intended to rely in defence to the 6th Further Amended Statement of Claim. The only affidavit thereafter filed by the defendants was an affidavit of Allan Endresz sworn on 12 May 2008 in support of an application to vacate the hearing date, an application which I dismissed on 23 May 2008.

8. In the event, Mr M Slattery QC indicated that he did not propose to proceed with the Application of 12 June 2008 until any such affidavit was filed as it might throw light on the issues of possible conflicts between the parties I have mentioned.

9. Ultimately, on 18 June 2008 I gave Allan Endresz leave to file in court an affidavit he made on that date.

10. Later that day, Mr M Slattery QC, moved on the Application and I heard his submissions. Because of some issues and what I considered might be some misunderstanding by Allan Endresz of the nature of the Application, I adjourned the further hearing of it until 12 June 2008 and arranged for Allan Endresz to be provided with a copy of the transcript containing the oral submissions of Mr M Slattery QC so that he could consider his position and be better prepared to make submissions.

11. In summary - and I can only summarise briefly because of time constraints - the question of whether there may be conflicts of interest between Allan Endresz on the one hand and Jozsef Endresz and Dawn Endresz on the other.

12. In relation to lawyers, the general rule is that counsel should not appear for two clients whose interests may conflict: Nangus Pty Ltd v Charles Donovan Pty Ltd [1989] VicRp 17; [1989] VR 184 at 185. In that case, Young CJ emphasised the need for the court to have the assistance of independent counsel for parties whose interests are not identical.

13. In some jurisdictions, lawyers are prohibited from acting for more than one party where there is a conflict of interest. See, for example, r 8.03 of the Family Law Rules 2004 (Cth): Bransdon and Ors v Gilbert [2007] FamCA 579; (2007) 212 FLR 28.

14. Even where such representation is not prohibited, the court may still refuse such representation as Hill J noted in respect of the case before him in Trade Practices Commission v CC (New South Wales) Pty Ltd and Ors (1994) 125 ALR 94 at 105

The conflict is so acute that mere disclosure to the parties of the conflict and authorisation that the conflict continue even where the parties are given the opportunity to seek independent legal advice on the question of authorisation, cannot solve the problem. Mere consent of the parties to the continuation of a conflict is not enough. There must be informed consent in the real sense of those words: Cf Commonwealth Bank of Australia v Smith [1991] FCA 375; (1991) 42 FCR 390; 102 ALR 453. That is not the case here. Whatever may be the situation where different persons in one firm act for clients of competing interest (the so-called Chinese-Walls case) it is obvious that a solicitor cannot place himself in a position where he or she has a duty to parties with conflicting interests where one party is under financial duress to accede to that course and no independent legal advice is obtained from an adviser fully informed of all the material facts and circumstances of the case.

In Smith a full court, constituted by Davies, Sheppard and Gummow JJ commented (at ALR 478):

(We pause to say that various courts in a number of jurisdictions have decried the practice of the one solicitor acting for both vendor and purchaser ... It is an undesirable practice and it ought not to be permitted.)

Their Honours' remarks are, clearly, even more pertinent in the circumstances of the present case where the conflict is more critical and acute. The present is clearly a case where Mr McCann, to use the language of Lord Cozens-Hardy MR in Moody v Cox [1917] 2 Ch 71 at 81, should have said: "I cannot accept this business."

15. Thus in Williamson v Nilant [2002] WASC 225, McKechnie J restrained a solicitor from acting for the liquidator of a company in liquidation where he had acted and continued to act for the applicant creditor. His Honour held that the interests of justice required it because of the conflicts which might arise between the interests of the applicant creditor, which the solicitor had legitimately to advance, and the necessity to give impartial advice and representation to the liquidator.

16. Nevertheless, that is not an invariable rule. As Lord Jauncey of Tullichettle, delivering the judgment of the Privy Council pointed out in Clark Boyce v Mouat [1994] 1 AC 28 at 435

There is no general rule of law to the effect that a solicitor should never act for both parties in a transaction where their interests may conflict. Rather is the position that he may act provided that he has obtained the informed consent of both to his acting. Informed consent means consent given in the knowledge that there is a conflict between the parties and that as a result the solicitor may be disabled from disclosing to each party the full knowledge which he possessed as to the transaction or may be disabled from giving advice to one party which conflicts with the interests of the other. If the parties are content to proceed upon this basis the solicitor may property act. In Boulting v Association of Cinematography, Television and Allied Technicians [1963] 2 QB 606, 646, Upjohn L J said:

the client is entitled to the services of his solicitor who may not charge more than he is legally entitled to, and must not put himself into a position where he may owe conflicting duties to different clients (see, for example, In re Haslam and Hier-Evans [1902] 1 Ch 765). But the person entitled to the benefit of the rule may relax it, provided he is of full age and sui juris and fully understands not only what he is doing but also what his legal rights are, and that he is in part surrendering them.

17. In Maguire v Makaronis [1997] HCA 23; (1997) 188 CLR 449, the High Court referred at 465 with approval to the formulation to the same effect by Richardson J in Farrington v Rowe McBride & Partners [1985] 1 NZLR 83 where his Honour held at 90:

A solicitor's loyalty to his client must be undivided. He cannot property discharge his duties to one whose interests are in opposition to those of another client. If there is a conflict in his responsibilities to one or both he must ensure that he fully discloses the material facts to both clients and obtains their informed consent to his so acting ...

And there will be some circumstances in which it is impossible, notwithstanding such disclosure for any solicitor to act fairly and adequately for both.

But the acceptance of multiple engagements is not necessarily fatal. There may be an identity of interests or the separate clients may have unrelated interests. Such cases seem straightforward so long as it is apparent that there is no actual conflict between duties owed in each relationship.

See also Beach Petroleum NL v Kennedy and Ors [1999] NSWCA 408; (1999) 48 NSWLR 1.

18. As was put by Rowland J in Archer v Howell (No 2) (1992) 10 WAR 33 at 49

It seems to me that the whole of the case has been run on the basis that there is an absolute rule of professional conduct that a practitioner cannot act for two persons where there is a prospect of conflict. It is no doubt a sensible rule of practice but the authorities are clear that there is no breach in law or in propriety for a practitioner to so act if he has the informed consent of each client. See also Simon v Janesland Holdings Pty Ltd [1999] FCA 1550 at [3].

19. The obtaining of informed consent was addressed in part by Lord Jauncey of Tullichettle in Clark Boyce v Mouat (supra), but may amount to more. As Kirby P (as his Honour then was) said in Waimond Pty Ltd and Anor v Byrne (1989) 18 NSWLR 642 at 643

This appeal ... illustrates once again the dangers which exist when a solicitor acts for more than one client, where the interests of the several clients do not exactly coincide. The only safe course in such circumstances, where pursuit of one client's interest might result in foreseeable damage to another, is to send the other to another solicitor for independent advice or, at the least, to obtain with scrupulous care the specific instructions of the other in order to ensure the discharge of the duty separately owed to it.

20. This must be even more important where the person whose interests may conflict are being represented not by a lawyer but by a lay person with leave. The opportunity to get independent legal advice must be even more important, for the lay person otherwise representing these parties is not under the same professional duties or obligations as an admitted lawyer, who, for example, owes duties to the Court and is bound by professional obligations which are regulated and enforced by statute, professional associations and professional disciplinary processes.

21. In one of the leading cases about representation by lay persons, Galladin Pty Ltd v Aimnorth Pty Ltd [1993] SASC 3914; (1993) 60 SASR 145, Perry J expressly noted that the party whom he permitted to represent the other parties had no conflict of interest with them. His Honour said at 147

Certainly the exercise of the discretion must be carefully controlled and the court must be jealous to ensure that the safeguards which follow from proper legal representation are not eroded by allowing for representation by unqualified persons who do not have responsibilities and duties of counsel.

22. Similarly, in Damjanov v Maley [2002] NSWCA 230; (2002) 55 NSWLR 149, Stein J observed at 163 "... the overall duty of a barrister and solicitor to the court is an important consideration".

23. It is now well settled that the Court has, in its inherent jurisdiction, power to restrain a lawyer from acting in a particular case: Abse v Smith [1986] QB 536; Black v Taylor [1993] 3 NZLR 403; Grimwade v Meagher [1995] VicRp 28; [1995] 1 VR 446. In the latter case, Mundie J said at 452

In my view it cannot be doubted that this court ... has an inherent jurisdiction to ensure the due administration of justice and to protect the integrity of the judicial process and as part of that jurisdiction, in an appropriate case, to prevent a member of counsel appearing for a particular party in order that justice should not only be done but manifestly and undoubtedly be seen to be done. 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.

See also Clay v Karlson and Anor (1996) 17 WAR 493; Newman v Phillips Fox (1999) 21 WAR 309 at 315.

24. So far as lay persons who are given leave to appear for other parties are concerned, I can find no authority which addresses the issue. Of course, such persons require leave and that step is the obverse of the restraint of a lawyer from acting. Whilst the question of leave for a lay person to appear for other parties involves a number of other considerations, it must at least include, however, the same considerations that might move a court to restrain a lawyer from acting.

25. In relation to lawyers, the precise circumstances cannot be enumerated. As was said by Nicholson J in Re Wainter Pty Ltd [2006] FCA 656 at [5]

Consequently, the Court can grant an injunction restraining solicitors acting for a party in circumstances where those solicitors lack the requisite qualities of independence and objectivity. "There can sensibly be no closed list of circumstances which would justify the exercise of what, on any view, must be regarded as an exceptional jurisdiction or power": Tottle Christensen v Westgold Resources NL [2003] WASCA 224 at [4] per Malcolm CJ, Murray and Anderson JJ. It is no answer that the solicitors' interests coincide with the client's interests: Clay v Karlson at 496. This Court has implied power to regulate the conduct of legal practitioners appearing before it to the extent necessary to ensure observance of their duties to the Court and the integrity of its procedures: De Pardo v Legal Practitioners Complaints Committee [2000] FCA 335, 97 FCR 575 at 595 [53] per French J, with whom Whitlam J agreed at 598 [60].'

26. Such restraints are common where there is a risk that confidential information has been provided by a client which should not be disclosed to another client. The cases on that ground have been carefully and helpfully collected and analysed by Austin J in Oceanic Life Ltd v HIH Casualty and General Insurance Ltd (1999) 10 ANZ Insurance Cases 74,968.

27. This is, however, by no means the only circumstances where there are conflicts of interest or duty. As was said by Wootten J in Thompson v Mikkelsen (SC(NSW), 30 October 1974, unreported)

[A client] is entitled to assume that [his solicitor] will be in a position to approach the matter concerned with nothing [in mind] but the protection of his client's interests against [those] of the other party. He should not have to depend on a person who has conflicting allegiances and who may be tempted either consciously or unconsciously to favour the other client, or simply to seek a resolution of the matter in a way which is least embarrassing to himself.

This passage has been quoted with approval a number of times. See Wan v McDonald [1992] FCA 4; (1991) 33 FCR 491 at 511 and Unioil International Pty Ltd v Deloitte Touche Tohmatsu (1997) 17 WAR 98 at 105.

28. Even where a lawyer appears for parties, courts have pointed to the problems where the lawyer is a member of a firm which is one of the parties for whom the lawyer acts. As Slicer J noted in Jovanovic v The Law Society of Tasmania [2003] TASSC 11, at [6], there are

risks inherent in counsel appearing in circumstances where he could become a witness and/or perceive a conflict of interest in the course of a hearing on the merits of the action, especially as between defendants. It does not always follow that interests remain identical or that factual divergence might not arise.

29. A lawyer acting for a client in litigation has a duty to ensure that the client is not only provided with skill in the supervision of and advice on all technical aspects of the process of court proceedings, but is fully informed of the strength and weaknesses of the case: Myers v Elman [1940] AC 282 at 302; Locke v Camberwell Health Authority [1990] NLJR 205; Blackwell v Barroile Pty Ltd and Ors (1994) 51 FCR 347 at 359, 371.

30. This duty may be compromised where the lawyer has an interest in the outcome of the proceedings. Thus, in Keppie v Law Society of the ACT (1985) 65 FLR 147, the Full Court of the Federal Court of Australia expressed concern at the representation of a solicitor in disciplinary proceedings for failure to comply with an undertaking. The solicitor was represented by his employer and, at 161, the Court noted

The case provides an excellent example of how a solicitor is likely to be hindered in the proper conduct of a matter by the fact that he has a personal interest in it.

31. As these authorities make clear, conflicts of interest are significantly problematic. It is clear that his has always been of concern in the law. It has been well summed up by Davies JA in Alexander (trading as Minter Ellison) v Perpetual Trustees WA Ltd [2001] NSWC 240 where his Honour sounded the following warning about conflicts of interest at [125]:

A conflict of interest is an insidious thing. Aspects of a duty of care, which ought to be seen clearly and distinctly, are seen in a hazy light when a solicitor seeks to reconcile the interests of two clients who each have interests which differ from those of the other. Over many years, in judgments which I have written or in which I have joined, the point has been made that solicitors should never allow themselves to have a conflict of interest. Those judgments appear to have had no impact. Too many solicitors continue to act for two or more clients who have conflicting interests. Year after year, cases come before the courts because a solicitor, in such a position, has failed to fulfil his duty to one or more of his or her clients.

This passage has been expressly approved unanimously by the NSW Court of Appeal in Watkins T/as Watkins Tapsell v De Varda [2003] NSWCA 242 at [1], [172] and [213]. See, in relation to litigation, R v Neil (2003) 218 DLR (4th) 671 at [12], [13].

32. Hence, lawyers have in their professional regulation quite detailed rules and guidelines about identifying and managing conflicts of interests between clients. See G E Dal Pont, Riley Solicitors Manual (Law Society of New South Wales, College of Law, LexisNexis: Sydney, 2005) at 19,001-19,447.

33. Similarly, as the authorities referred to above show, the courts are sensitive to the need to protect parties appearing before them from prejudice as a result of such conflicts, balancing that with the need to respect the right to choose their own representatives.

34. Accordingly, I find that when a court is considering whether to permit an unqualified person to represent a party in proceedings, an important matter that it must consider is whether there is a likely conflict of interest between the unqualified person and the party and whether it is likely that one will arise. I refer to unqualified person, but I consider that it is quite unlikely that in a superior court, such a person would be permitted to appear unless he or she were a party or, for example, a director or other officer of a corporation.

35. I also find that when a conflict of interest appears likely to arise between an unqualified person representing a party and that party, the Court should consider whether to revoke the permission. An important factor in such consideration, though not determinative, is whether the party has given informed consent to the representation in the light of the likely conflict. Informed consent means consent given in the knowledge that there is a likely conflict between them and it is highly desirable that the party obtains independent legal advice as to the consequences and implications of the conflict.

36. Mr M Slattery QC detailed a number of areas in which there could well be a possible conflict of interest between Allan Endresz on the one hand and Jozsef Endresz and Dawn Endresz on the other. They are referred to in the transcript (between pages 733 and 741) and also in a document which is Annexure A to the affidavit of Karina Elizabeth Harvey sworn on 20 June 2008.

37. Jozsef Endresz and Dawn Endresz were directors of the 6th defendant to whom the $6m was initially paid. They have indicated, through Allan Endresz, that they intend not to read their affidavits filed in the proceedings. That may leave the claims by the plaintiff unanswered and render them liable to a verdict. That may be of advantage to Allan Endresz who may thereby be able to minimise his role with the 6th defendant which will be relevant to claims of accessory to the breach of fiduciary duty.

38. Similarly, the liability of Jozsef Endresz and Dawn Endresz would potentially provide a contribution to any liability of Allan Endresz to the plaintiff.

39. This liability may depend on the nature and extent of contact that Jozsef Endresz and Dawn Endresz had with the 2nd defendant. If they do not give evidence, that may not be made clear and there is a risk that a finding on the balance of probability will be made against them. As noted, this may affect any liability of Allan Endresz and require them to contribute to any such liability. This would clearly be in the interests of Allan Endresz but, depending on the facts to which they could attest, would not necessarily be in their interests.

40. Mr M Slattery QC advanced a number of other examples but the essence of them in that

(a) if Jozsef Endresz and Dawn Endresz do not give evidence or adduce evidence on their behalf, that might prejudice their defence and might strengthen the defence of Allan Endresz; and

(b) if Jozsef Endresz and Dawn Endresz are found liable that might reduce the liability of Allan Endresz for they will thereby likely be required to make a contribution to the verdict payable to the plaintiff.

41. Thus, decisions about whether to read their affidavits, whether to give oral evidence, whether to call other evidence, whether to cross-examine Allan Endresz are all decisions which may be affected by a potential conflict between their interests and those of Allan Endresz.

42. Needless to say, but I do emphasise it, these surmises are based on the allegations made by the plaintiff and on what the plaintiff says are the facts that I should find or on inferences I should draw from those facts. I stress that to date I have made no findings about what the facts are or what inferences are or could be drawn. That is yet a good distance away.

43. Nevertheless, I have an obligation to ensure that the trial is fair and, in this context, that includes an obligation to ensure that each party suffers no remediable prejudice from any decision I make about their representation.

44. I am satisfied on the basis of the matters mentioned above and the submissions of Mr M Slattery QC and after hearing Allan Endresz on the application that there is a real risk that Jozsef Endresz and Dawn Endresz may have interests in the particular conduct of this case that may conflict with the interests of Allan Endresz. That may not necessarily require that they be separately represented, but I cannot ignore that risk and must respond to it.

45. The first step then is for me to be satisfied that Jozsef Endresz and Dawn Endresz are aware of the precise issues that have been raised and the conflicts that are said might arise. I note in this context that neither of them have been present during any part of the hearing and so far as I can tell, neither have been provided with any transcript of the proceedings. I note also that another Defendant, William Arthur Forge, the 9th defendant, was originally represented by Allan Endresz. He had, however, been sitting in court and ultimately decided to appear for himself. He has participated in the proceedings and cross-examined some witnesses.

46. Initially, Mr M Slattery QC sought to have Jozsef Endresz and Dawn Endresz brought to court so that I could urge them to consider their position. Mr M Slattery QC also relied on information, contained in the affidavit of Karina Elizabeth Harvey sworn on 12 June 2008, about the availability of pro-bono legal assistance from members of the ACT Bar Association, a welcome and generous facility where litigants in person who may be otherwise disadvantaged can, in the interests of justice and to the benefit of the community, have any such prejudice ameliorated.

47. The nub of the matter is that I should be satisfied that Jozsef Endresz and Dawn Endresz have received, or at the very least had access to, independent legal advice which can enable them to make an informed choice about the protection of their interests as parties to this litigation (Clarke Boyce v Mouat, (supra), Warmoind Pty Ltd and Anor v Byrne (supra)).

48. The easiest way for this to be achieved would be for them to come - or to be brought by order or subpoena - to court and for me to ascertain by questioning them, that they have had enough information and advice, and to satisfy myself thereby that they are making an informed choice about the level of their participation in these proceedings.

49. The difficulty is that Jozsef Endresz and Dawn Endresz reside in Albury, are not in particularly good health and will, of course, be put to a financial burden in travelling to court in Canberra.

50. Allan Endresz has, however, suggested that Jozsef Endresz and Dawn Endresz may be able to obtain the necessary independent advice from a solicitor in Albury or elsewhere and indicated that there may be funds available between now and 21 July 2008 for that advice to be secured. I am prepared to accept that this may resolve the problem.

51. This would, however, have to be carefully done. It would, for example, be important that the lawyer advising them was not retained by Allan Endresz. The lawyer must be independent.

52. What I require, then, is for Jozsef Endresz and Dawn Endresz to consider seeking advice from an independent lawyer who will apprise himself or herself of the relevant issues, so far as can reasonably be done, and to provide advice to Jozsef Endresz and Dawn Endresz as to the nature and consequences of the conflicts that may arise in the conduct of these proceedings. He or she should be satisfied that they understand the advice that he or she has provided and that any decision they make is informed and voluntary. This is not a task that is unknown to lawyers and, indeed, as a skill that could be expected they would have regularly to exercise.

53. It is important that this is done soon as practical. Mr M Slattery QC submitted that it needed to be completed before he commenced his cross-examination of Allan Endresz. He wished to commence that cross-examination before the completion of this first sitting of the hearing (10 June 2008 to 1 July 2008). He expressed concern that the present affidavit material filed by Allan Endresz was vague and not particularised so that what was adduced in cross-examination might require further investigation by the plaintiff and this could require an adjournment of the resumed proceedings (26 August to 26 September 2008) if not commenced till then. That is reasonable but cannot override the need to provide a fair trial for the defendants.

54. If that is done, I will then require that Jozsef Endresz and Dawn Endresz and the independent lawyer to assert to me in person or by affidavit that such advice has been given and understood and that, as a result, Jozsef Endresz and Dawn Endresz

(ii) they wish to be otherwise represented, and by whom; or

(iii) they do not wish to be represented nor participate further in these proceedings; or

(iv) they wish Allan Endresz to represent them, notwithstanding the possible conflicts of interest.

I will, of course, still have to consider in the light of that information what, if any, step I should take in relation to their representation.

55. If this is not forthcoming, I will have to consider revoking the permission I gave Allan Endresz to represent Jozsef Endresz and Dawn Endresz.

56. Accordingly, I made the following orders on 20 June 2008 for the reasons set out above:

2. Request that Dawn Endresz and Jozsef Endresz attend in person or by lawyers in that day to advise what steps they have made or propose to make about receiving advice as to their representation in these proceedings.

3. Note that in the event that Dawn Endresz and Jozsef Endresz fail to appear on 30 June 2008 as requested, I will consider revocation of the leave granted to Allan Endresz to represent them and consider giving leave to the Commonwealth to issue subpoenas to them returnable on 21 July 2008.

4. Request the Registrar to notify the terms of this order to Dawn Endresz and Jozsef Endresz by letter forwarded by facsimile transmission to (02) 6021 0037 and by e-mail to admin@ezybonds.com.

5. Direct the plaintiff to effect personal service of this order and my reasons for judgment on Dawn Endresz and Jozsef Endresz as soon as practicable after the reasons are delivered.

6. Direct the plaintiff to provide the Registrar by Monday 23 June 2008 electronically with the 6th Further Amended Statement of Claim, the opening submissions of the plaintiff, the Amended Application in Proceedings dated 12 June 2008, the Application in Proceedings dated 20 June 2008 and the two several Affidavits of Karina Elizabeth Harvey of 12 June 2008 and 20 June 2008.

7. Request the Registrar to make those documents and also the transcript of the submissions of the parties on the applications in proceedings on 18 June 2008 available to any lawyer advising Dawn Endresz and Jozsef Endresz.

I certify that the preceding fifty-six (56) numbered paragraphs are a true copy of the Reasons for Judgment herein of his Honour, Justice Refshauge.

Counsel for the plaintiff: Mr M Slattery QC and Mr J Hogan-Doran

Solicitor for the plaintiff: Australian Government Solicitor

Counsel for the 27th Defendant Mr N Hutley QC and Mr J Giles

Solicitors for the 27th Defendant Snedden Hall & Gallop