Holborow & Ors v Macdonald Rudder [2002] WASC 265

Holborow & Ors v Macdonald Rudder [2002] WASC 265 - WASC 2002 case summary — Zoe

[17]

9 For reasons which were recognised by Wheeler J in that earlier controversy, which include the fact that many of these disputed allegations appear to affect the entitlement of the plaintiffs to any final relief which they are seeking in the current proceedings and so will need to be addressed at any trial of this action, they cannot be dealt with now. It is important to note, however, that they include serious allegations of breach of duty to their clients by the defendant during the period when Macdonald Rudder was acting for the plaintiffs in the Federal Court proceedings. Equally, they include allegations by the defendant of serious breaches of professional duty by Mr Williams in relation to allegations which he has made and pursued on behalf of the plaintiffs both in the present proceedings and in connection with them. There is evidence that the defendant has complained to the Legal Practitioners Complaints Committee ("LPCC") about the alleged conduct of Mr Williams and I have been informed that Mr Williams has also complained to the LPCC about the alleged conduct of the defendant when acting for the plaintiffs. It is no part of this present application to hear or determine complaints which may or may not eventually reach the Legal Practitioners Disciplinary Tribunal and it is most important that the present proceedings should address only the issues which arise in this litigation. It is submitted by the defendant that the pendency of these complaints to the LPCC produces a situation which requires the court to prevent Mr Williams from becoming involved any further in the present proceedings because of the possibility that the eventual outcome of these proceedings may influence the determination of those complaints. It is only to the extent that the actual conduct of this litigation might, if at all, be influenced by such a factor that there may be any basis for restricting the conduct of Mr Williams. That is the issue which, ultimately, must be answered by this decision.

[22]

14 Of course, whether or not there has been an adequate accounting by the defendant for moneys received and disbursed on behalf of the plaintiffs still leaves, for consideration and decision, the issues in LPA 127/1999 over whether there should be an extension of time and orders for taxation of the former solicitor's costs. If that relief were granted, and taxations conducted which resulted in a disallowance of parts of the costs or disbursements charged by the defendant to the plaintiffs, there would be an obligation on the defendant to repay the amount of the costs disallowed and which had been appropriated to their benefit - s 70 and s 72 of the Act. If that were to happen, on an account between a solicitor and client which of course involves a fiduciary relationship, it would seem to provide a basis for re-opening any account previously taken or for the court to grant liberty to surcharge or falsify, even if the accounts had been settled - Hampton Goldmining Areas Ltd v Metals Exploration Ltd (1995) 17 WAR 30 per Malcolm CJ at 46 and Pritt v Clay [1843] EngR 936; (1843) 6 Beav 503; 49 ER 920. However, I take the position of the plaintiffs in the present litigation to be that they assert that there has never been a settled account between them and the defendant in relation to moneys received and paid by the defendant during the course of its retainer by them. Clearly, therefore, there remains the potential for the plaintiffs to obtain relief in the present proceedings for an account generally or on a restricted basis in the event that their associated claims for an extension of time for the taxation of costs succeed and if the costs charged to them are reduced as a result of that taxation. Relief of this kind, and in particular any claim for leave to surcharge or falsify any accounts which may have been given by the defendant, in the event of a disallowance of costs charged if those proceed to taxation, still appears to be within the scope of the relief which the court could grant in the present action, notwithstanding that it has not been specifically claimed; Wicks v Bennett [1921] HCA 57; (1921) 30 CLR 80 at 100; Cargill v Bower (1878) 10 Ch D 502 at 508 and T M Burke Estates Pty Ltd v P J Constructions (Vic) Pty Ltd (in Liq) [1991] VicRp 33; [1991] 1 VR 610 at 617.

[27]

19 This is a situation not uncommonly found in contested litigation as, for example, in cases where there are allegations of fraud, malicious conduct, wilful breach of trust or similar serious misconduct. Of course, were such a serious allegation to be made and maintained by a legal practitioner for a party to proceedings, in circumstances where there was no justification for that to be done, that may involve the individual practitioner in professional misconduct and expose him to professional discipline, the consequences of which might be very severe. However, the question of the evaluation of the professional conduct of a legal practitioner in the course of litigation is usually, but perhaps not invariably, left for examination after the principal proceedings have been concluded. There are very good reasons for this cautionary practice. As already indicated, it is usually neither possible nor desirable to make a determination of the rights of the parties, whether provisional or otherwise, when they are still joined in issue on the very matters that the court will eventually have to decide. Associated with this consideration is the expectation that it will usually prove very difficult, if not impossible, to undertake a dispassionate and objective consideration of the conduct of the parties while they continue to be embroiled in the very litigation which has generated their mutual hostility. Finally, and by no means the least significant consideration, is the need to ensure that one or both of the opposing parties to the litigation cannot gain some forensic advantage against the other by making attacks against the solicitors acting on the other side which may produce the effect, directly or indirectly, of handicapping the clients by depriving them of access to, or to representation by, a legal practitioner of their choice. Equally unacceptable would be a result which may inhibit or be likely to inhibit, the manner in which the practitioner may properly discharge his professional duties to his clients.

[28]

20 There may be cases where, while the litigation dividing the adversaries is still pending, or even perhaps is in a very early stage, where it will be sufficiently apparent that there exist circumstances which would preclude a particular legal practitioner from acting so that orders restraining him from doing so may then be made. The situation which arose in Grimwade v Meagher [1995] VicRp 28; [1995] 1 VR 446 is one example of where this unusual concurrence of circumstances existed. In that case the senior counsel restrained from acting had been proposing to act as counsel in certain civil proceedings against the applicant where he had already acted as counsel for the prosecution against the applicant at two trials. As a result an ultimate conviction had been quashed and no new trial ordered by a Court of Criminal Appeal which made criticisms of the conduct of the prosecution case at the second trial. That restraining order was prompted by the court acting to ensure the due administration of justice and to protect the integrity of the judicial process in order that justice should not only be done but should be seen to be done. In the present proceedings there is no suggestion that Mr Williams will be acting as counsel, or as solicitor on the record for the plaintiffs who are now represented by different solicitors. Therefore, the situation is that, for some time now, the prosecution of these actions has been in the hands of other solicitors, against whom no criticism or allegations are made by the defendant, who themselves owe duties not only to their clients but to the court to ensure that the litigation is conducted in conformity with the law, the applicable rules of procedure and the obligations of professional practice. That being so, there does not seem to be any basis upon which it can be suggested that, unless Mr Williams is restrained, these proceedings will, or might, be conducted in a manner which would involve the due and objective administration of justice being jeopardised by any action or omission of Mr Williams now or in the future.

[31]

23 The power of this Court to restrain a solicitor from acting in an action or other cause because of an alleged conflict of interest is not limited to those instances in which the future action of the solicitor concerned may imperil confidences of the client for whom the solicitor previously acted. It is an ample power to supervise the conduct of legal practitioners, as officers of the Court, to ensure that they do not act in any way contrary to their obligations to their former client. The broader scope of this power has frequently been referred to as ensuring "that the solicitor's duty of loyalty to the former client is respected, notwithstanding termination of the retainer, and to uphold as a matter of public policy the special relationship of solicitor and client" - McVeigh v Linen House Pty Ltd [1993] 3 VR 394 per Batt JA at 398 and Wan v McDonald [1992] FCA 4; (1992) 33 FCR 491 per Burchett J at 513. Examples of this are to be found in Clay v Karlson (1997) 17 WAR 493; Afkos Industries Pty Ltd v Pullinger Stewart [2001] WASCA 372 and Re LPO Transact Pty Ltd (In Liq); Williamson v Nylant [2002] WASC 225. In those cases legal practitioners were restrained from acting in various instances where: there was a potential that the legal practitioner might be a witness in the case; where the subject matter of the litigation was likely to involve an evaluation of the conduct of the solicitor concerned and the efficacy of documents prepared by his firm; and where a solicitor was acting for a liquidator in connection with the liquidator's investigations into the prior activities of an insolvent company where the solicitor had, prior to the insolvency, been acting for the company. In some of these cases it is obviously apposite to speak of the solicitor's duty of loyalty to the client which continues even after the termination of the period of his retainer. This seems to be a broad general recognition of the scope of the duties which a solicitor owes to a client, even a former client, arising from the fiduciary relationship between them. As was said by Gummow J in National Mutual Holdings Pty Ltd v Sentry Corporation (1989) 22 FCR 209 at 228 - 229:

[39]

"The performance by counsel of his paramount duty to the court will require him to act in a variety of ways to the possible disadvantage of his client. Counsel must not mislead the court, cast unjustifiable aspersions on any party or witness or withhold documents and authorities which detract from his client's case. And, if he notes an irregularity in the conduct of a criminal trial, he must take the point so that it can be remedied, instead of keeping the point up his sleeve and using it as a ground of appeal.

It is not that a barrister's duty to the court creates such a conflict with his duty to his client that the dividing line between the two is unclear. The duty to the court is paramount and must be performed, even if the client gives instructions to the contrary. Rather it is that a barrister's duty to the court epitomises the fact that the course of litigation depends on the exercise by counsel of an independent discretion or judgment in the conduct and management of a case in which he has an eye, not only to his client's success, but also to the speedy and efficient administration of justice. In selecting and limiting the number of witnesses to be called, and deciding what question will be asked in cross-examination, what topics will be covered in address and what points of law will be raised, counsel exercises an independent judgment so that the time of the court is not taken up unnecessarily, notwithstanding that the client may wish to chase every rabbit down its burrow. The administration of justice in our adversarial system depends in very large measure on the faithful exercise by barristers of this independent judgment in the conduct and management of the case. In such an adversarial system the mode of presentation of each party's case rests with counsel. The Judge is in no position to rule in advance on what witnesses will be called, what evidence should be led, what questions should be asked in cross-examination. Decisions on matters such as these, which necessarily influence the course of a trial and its duration, are made by counsel, not by the Judge. This is why our system of justice as administered by the courts has proceeded on the footing that, in general, the litigant will be represented by a lawyer who, not being a mere agent for the litigant, exercises an independent judgment in the interests of the court."

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Judgment (46 paragraphs)

Holborow & Ors v Macdonald Rudder [2002] WASC 265 (15 November 2002)

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Cases Cited (11)