Goldus Pty Ltd (Subject to a Deed of Company Arrangement) v Cummins

1. The interlocutory application by the plaintiff dated 6 July 2020 be dismissed. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

COLVIN J: 1 Goldus Pty Ltd is the holder of certain mining tenements in South Australia. It is subject to a deed of company arrangement. Its sole director is Mr John Hillam who describes himself as the managing director of the company. 2 Goldus and Australian Mining Pty Ltd are parties to a joint venture agreement in respect of the exploitation of some or all of the tenements. They are also parties to a cross security deed. 3 Claims have been made by various parties that, by reason of certain events, Goldus is in default under the cross security deed and the security rights of Australian Mining can be enforced at the behest of those parties. A further claim is made that the security rights alleged extend to an interest in the tenements. 4 On 20 April 2020 an application was commenced in this Court by Goldus against various parties involved in making the claims to a security interest in the tenements. The application sought declaratory relief to the effect that there was no security interest in the tenements. 5 The Court was informed that there was some urgency because the issues raised on the application are affecting the progress of activities preparatory to the commencement of mining on the tenements. Orders were made programming the matter for a hearing on 9 July 2020 in the expectation that the parties would be able to agree most of the relevant facts. 6 On 3 July 2020, the solicitors for Goldus filed a notice of ceasing to act dated 2 July 2020. On 6 July 2020 a notice of address for service for Goldus was filed by Mr Hillam personally. Mr Hillam also filed an application for orders in the following terms. 1. The court refuses to allow the Plaintiff's solicitors … to resign in this matter on or before 9 July 2020. 2. The court instructs [the] solicitors … that they must continue and satisfy all outstanding orders and represent the plaintiff case on and at the hearing set down for 9 July 2020. 7 The application concerning the solicitors was listed at short notice together with a case management hearing. 8 Mr Hillam appeared in person. He sought to speak on behalf of Goldus. No objection was taken to that course on the application. The solicitors appeared and relied upon an affidavit as to the circumstances relating to the termination of the retainer. 9 The Federal Court Rules 2011 (Cth) provide for what must occur if a party's lawyer terminates the client's retainer. Rule 4.05 provides: (1) If a party's lawyer terminates the retainer, the lawyer must: (a) serve on the party a notice of intention of ceasing to act, in accordance with Form 7; and (b) at least 7 days after serving the notice - file a notice of ceasing to act, in accordance with Form 8. (2) A party whose lawyer has filed a notice under paragraph (1)(b) must file a notice of address for service within 5 days after the notice is filed. 10 The solicitors have filed an affidavit which shows that those steps have been followed. 11 In other jurisdictions, there are rules of procedure that require a solicitor to seek leave before ceasing to act. A rule of that character in the High Court Rules was considered in Plenty v Gladwin [1986] HCA 55 where the Court considered an argument to the effect that good cause had to be shown for solicitors to cease to act and therefore the Court should consider incidents that generally pertain to the relationship of solicitor and client in deciding whether to grant leave. In rejecting that contention, the Court said at [5]: The purpose of the rule is quite different. Its concern is with the record of the Court and with the service of documents. It comes into play when, rightly or wrongly, a solicitor has ceased to act and the party has not given notice of change of solicitor or notice of intention to act in person. The solicitor may then take steps to have his name removed from the record. The first step is by applying to the Court or a Justice for an order declaring that the solicitor has ceased to be the solicitor acting for the party in the proceeding. As we have noted the Court has a discretion whether or not to make the order, but unless there are special circumstances which render it expedient to retain the solicitor on the record the order will generally be made as a matter of course upon proof that the solicitor has in fact ceased to act for the party and that no steps have been taken to take the solicitor's name off the record. Order 7 Rule 7(4) makes it plain that an order made under the rule does not affect the rights or liabilities of a solicitor and a party as between themselves. 12 Therefore, even where leave is required for a solicitor to cease to act, the Court does not inquire into whether the solicitors have conformed to the terms of their retainer or performed their duties in deciding whether to grant leave. Leave will be refused only if there are special circumstances which render it expedient to refuse leave. Those special circumstances must pertain to the purpose of the rule which concerns the record of the Court and the service of documents. 13 In considering an application by solicitors for leave to cease to act in Farrell v Royal Kings Park Tennis Club (Inc) (No 2) [2007] WASCA 193, Buss JA (as the President then was) said that leave should ordinarily be granted if the lawyer has, in fact, ceased to act for the relevant party: at [16]. It was neither appropriate nor possible to make any decision in the context of such an application as to the terms and conditions of the solicitors' retainer, the circumstances in which the solicitors ceased to act or the rights and liabilities as between the solicitors and the party concerned: at [20]. 14 Likewise, in Thundelarra Ltd v Richmond [2013] WASC 370, Edelman J said at [13]: The approach taken by the High Court in Plenty emphasised the concern of the order as being with the record of the Court rather than, for example, to compel the maintenance of a relationship which has ended. There may be doubt whether, absent any breach of ethical duty by a solicitor, the proximity to trial could ever be a sufficient reason to refuse to make the order as a means to attempt to compel a solicitor to act at trial despite the irretrievable breakdown in a relationship. 15 The kind of circumstances that may be special circumstances were indicated by Wilson J in Commonwealth Bank of Australia v Davies [2002] QSC 241; [2004] 1 Qd R 363 at 365 where his Honour said: The question, then, is whether there are special circumstances justifying keeping these solicitors on the record. The trial date is very close and there may be documents or other communications to be received from the plaintiff. However, the solicitors have indicated that, as a matter of courtesy, they are prepared to receive same and pass them on. 16 In this Court such concerns are addressed by requiring the notice of ceasing to act to be preceded by a notice to the party in the following terms (Form 7): 1 After 7 days from the date of service of this notice, I [name of lawyer] will file in the Registry a notice that I have ceased to act as your lawyer in the proceeding. 2 You must, within 5 days after that notice has been filed, file in the Registry a notice of address for service 17 Further, when the notice of ceasing to act is filed it must specify the last known residential or business address of the party. 18 Therefore, the Rules themselves deal with the concerns behind the requirement for leave in other jurisdictions. 19 For those reasons, I was not persuaded that the Rules of this Court contemplate an inquiry into the circumstances of the kind that Mr Hillam invited the Court to make on his application. It was not for the Court to investigate what may have led to the solicitors to cease to act for Goldus or to seek to adjudicate the underlying nature of the dispute between Goldus, Mr Hillam as its sole director and the solicitors. Far less was it the occasion to investigate whether there was a basis for orders that would operate, in effect, as a mandatory injunction requiring the solicitors to continue to act for Goldus. 20 To the extent that the application invited some free standing consideration as to whether the solicitors should be required by Court order to continue to act, the affidavit material showed that there was, at least, a dispute as to payment of the solicitors' fees. Mr Hillam characterised the dispute with the solicitors in those terms. The adjournment of the hearing scheduled for 9 July 2020 was not opposed by counsel for the third and fifth defendants so there was no prospect of Goldus being required to proceed with its application the following day. Absent some imminent and irreversible consequence for Goldus that would flow from the solicitors ceasing to act, there was no evident basis upon which the Court might consider taking the extraordinary step of requiring solicitors who maintained that their retainer was at an end to nevertheless continue to act. There was no suggestion that any provision for the fees of the solicitors in doing so might be made by Goldus. Further, the relationship between solicitors and their clients is one that depends upon mutual trust and confidence. In those circumstances, even assuming that there may be circumstances in which it may be appropriate for the Court to require solicitors to act notwithstanding the existence of a dispute as to payment of fees and that the dispute in this case was confined to payment of fees, an arguable basis for any mandatory injunctive relief had not been demonstrated. 21 For those reasons, as I was satisfied that the procedure set out in the Rules had been followed and the notice of ceasing to act had taken effect, I dismissed the application by Goldus. I certify that the preceding twenty-one (21) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Colvin.