Hutchinson v Timmins; Estate of Kevin Henry Fox

Supreme Court of NSW|2017-12-12|Before: Slattery J

Judgment

HIS HONOUR: The plaintiffs move the Court for orders that the defendant's solicitors, Mason Lawyers Newcastle Pty Ltd (Mason Lawyers), be restrained from continuing to act for the defendant, the executor of their late step-father's estate. The plaintiffs' motion also seeks orders that Mason Lawyers comply with the terms of the plaintiffs' 17 February 2017 subpoena to produce documents.
The two plaintiffs, Gail Hutchinson and Karen Bermingham, are daughters of the late Joyce Merle Fox who died in 2014. Their step-father, Kevin Henry Fox, died in 2016. The plaintiffs claim final relief to set aside a release under Succession Act 2006, s 95 of their rights against the estate of Joyce Fox. They allege that their step-father procured the release of their rights by misleading and deceptive and unconscionable conduct, and non-disclosure of material facts ("the impugned conduct").
The solicitor who acted for the plaintiffs' late step-father, and who is said to be an active party in the impugned conduct, is now a casual employee of Mason Lawyers. The point at issue on the plaintiffs' motion is whether this is a basis to require the firm no longer to act.
Mr B. Skinner of counsel appeared with Ms L. Clarke of counsel, instructed by AMC Lawyers for the plaintiffs on the motion. Mr H. Stowe of counsel appeared with Mr N. Simpson of counsel, instructed by Mason Lawyers for the defendant.

The Plaintiffs' 17 February 2017 Subpoena

The subpoena issued by AMC Lawyers on behalf of the plaintiffs on 17 February 2017 was addressed to Mason Lawyers Newcastle Pty Limited and asked for the following documents to be produced in answer: "The complete will files including matters relating to Power of Attorney and Enduring Guardianship for Kevin Henry Fox and Joyce Merle Fox."
The history of the response to this subpoena is relevant both to what should now be done in relation to the subpoena and in relation to the continuation of Mason Lawyers in the proceedings. To this end, these reasons now give an account of that response and the correspondence between the parties that is relevant to it.
Mr Ross Mason first caused a number of searches to be carried out on the firm's information management systems to identify files and documents held by the firm described in the 17 February 2017 subpoena. He initially directed two employees, Ms Amiee Brown and Ms Tia Lobby, to retrieve the identified documents. He explains in his affidavit evidence there was some disorder in the document storage at Mason Lawyers due to a basement flood from a burst water pipe in 2016. He was thereafter involved in coordinating the work of Ms Sarah Young to search within the offices of Mason Lawyers for any further documents that might answer the subpoena. A detailed account of her searches follows.
Ms Sarah Young is an employed solicitor of Mason Lawyers. Ms Young commenced employment with Mason Lawyers on 27 February 2017, shortly after AMC Lawyer's subpoena of 17 February 2017. She took over the day-to-day carriage of the defence of this matter on about 1 March 2017. She deposes in two affidavits to taking steps to facilitate compliance by Mason Lawyers with the 17 February 2017 subpoena to produce. Her first affidavit was sworn on 6 October 2017. She then swore a second affidavit on 11 December 2017, showing additional searches she had undertaken since swearing her first affidavit. These are shown in mark-up mode in the second affidavit. I accept her evidence.
The first observation that is to be made about Ms Young's evidence is that it shows a detailed and serious response to the duty to search for documents in response to the subpoena in question. She indicates that after the initial production of the documents to the Court in answer to the subpoena, that she caused further searches to be undertaken by other employees of Mason Lawyers. She approached Ms Tahini Morton (an accounts administration officer in the firm's Newcastle office), Ms Helen Denton (the receptionist/safe custody officer at the Belmont office), and Ms Janelle Kelly (the secretary at the Belmont office), to carry out various searches to identify further files that may be held by the firm and subject to the subpoena. Searches took place at all three locations of the practice in Newcastle, Belmont and Mayfield.
She deposes to making the following searches. She searched Open Practice and Law Docs, the financial and document management programs maintained by Mason Lawyers, for all records or files relating to Kevin Fox or Joyce Fox. This, and all the other searches that she undertook, were the subject of instructions from her to find "all files" and not just to find "will files".
She also attempted to retrieve files from Mason Lawyers' archive storage in Newcastle and Belmont. She searched the books and records of Thomas Mitchell Solicitors and of Mr Paul Mitchell to identify any files held by those firms. She did this, in part, by specifically checking the old Thomas Mitchell Solicitors software system to find all files again, not just will files, that had ever been opened for Kevin Fox or Joyce Fox. These were extracted and sent to the Newcastle office for analysis.
She also carried out physical searches of the firm's archive storage in the Newcastle and Belmont offices to locate any files relating to Kevin Fox or Joyce Fox. She gave a very detailed account of what she did to search through these files and associated safe custody packets, including dealing with water damaged files due to a flood at the Mason Lawyers offices in 2016.
She also carried out physical searches at the firm's Newcastle, Belmont and Mayfield offices, and searched the index and card systems previously maintained by Thomas Mitchell Solicitors. The missing file, the absence of which is especially controversial, is Kevin Fox's file for instructions he gave on or about 7 April 2011 to make a will. Ms Young deposes that her enquiries reveal that Thomas Mitchell Solicitors had opened a file in 2011 and received instructions from Kevin Fox to prepare a will (which for convenience in these proceedings will be called the "the 2011 will file").
Ms Young's enquiries reveal that the 2011 will file had been retrieved from the Belmont office by Mr Ashley Windus, a solicitor who had been first employed by Mason Lawyers in June 2015. To further her searches in response to the subpoena, Ms Young spoke with Mr Windus concerning his recollection about the location of the 2011 will file. He informed her that it was his recollection that there was very little paperwork on the 2011 will file, and that the file that he had received would mostly have been archived with the file relating to the plaintiffs' family provision claim against Joyce's estate in 2015 and sent to the Newcastle office. This account sounds logical. But whether it is right or wrong is as of yet untested. But what it does tend to show is that whatever was in the April will file was available to those at Mason Lawyers who were involved in giving effect to the settlement of the family provision proceedings in September of that year.
Indeed, there is contemporaneous evidence which backs up Mr Windus' recollection and gives an explanation of the non-production of the April 2011 will file, which would tend to rebut a suggestion of recent invention to cover destruction or suppression of the contents of this file.
The receptionist of Mason Lawyers, Ms Helen Denton, looks as though she was probably asked in June 2015 if she could find the 2011 will file. This is reasonably evident from a June 2015 email that has been discovered. Its authenticity is not challenged. The email is from Ms Denton to Mr Windus with the subject "Re Kevin Fox". It says as follows: "Hi Ashley, I sent the whole file to you. I checked Thomas Mitchell D Packet 7599 which has wills etc in it and there are no instructions in packet. I'll asked (sic) Paul [Mitchell] and he said he has no recollection of the matter but agrees there should have been a copy of the Will and instructions in the file. Helen Denton receptionist."
Objectively, this email tends to confirm that Mr Windus and Mr Mitchell and Ms Denton all probably knew by June 2015 that the April 2011 will and instructions for it were already missing.
Ms Young's enquiries of the support staff at the Mayfield office did not locate any part of the 2011 will file there.
On 19 April 2017, Mr Olsen pointed out that certain material had not been produced to the Court in response to the 17 February 2017 subpoena: (1) Joyce Fox's 25 March 2002 will and related notes; (2) Kevin Fox's 7 April 2011 will and related notes; and (3) 25 May 2010 notes of a meeting at Mason Lawyers between Joyce Fox, the plaintiffs and Mr Mitchell. A request was made for production of the missing material.
After undertaking her searches, Ms Young replied to AMC Lawyers about a number of issues, including the alleged non-production of documents. As to the three issues of non-production raised by AMC Lawyers, Ms Young said the following. First, the failure to produce Joyce Fox's will of 25 March 2002 was an oversight but AMC Lawyers already had a copy. Otherwise, the file had been destroyed by Thomas Mitchell Solicitors prior to the merger of that firm with Mason Lawyers in October 2011. Second, Ms Young could not locate Kevin Fox's will of 7 April 2011 or the 2011 will file despite enquiries and searches. This statement was consistent with Ms Young's detailed explanation in her affidavit of her searches up to that time for this file. Third, Ms Young pointed out that neither Mrs Joyce Fox nor the plaintiffs were clients of Mason Lawyers in 2010 when the meeting is alleged to have taken place on 25 May of that year. Any meeting with Mr Paul Mitchell would presumably have taken place when they were clients of Paul Mitchell. That would appear to be correct as Mason Lawyers did not acquire Mr Mitchell's practice until 10 October 2011. Ms Young writes that no documents had been located up to that point of time that could identify such a meeting.
In my view, Ms Young's response to AMC Lawyers was as courteous and thorough as might be expected in the circumstances. And her affidavit evidence supports her assertions in correspondence that she has carried out the relevant searches.
Further correspondence took place between AMC Lawyers and Mason Lawyers in early May 2017.
After the exchanges of correspondence in May 2017, and to assist the preparation of Mr Timmins' Defence, Ms Young carried out further enquiries and searches to locate further files that might relate to the family provision file. They undertook an extensive check of all files in the firm's basement archive. This resulted in a further volume of the firm's family provision file being located in early July 2017, in the basement archive. Ms Young deposes that she does not know how that file became separated from the archive box containing the rest of the family provision file, which she had previously located. But previous checking of files had been, according to her evidence, quite thorough. Mr Mason says, and I accept, that there was some disorder in Mason Lawyers' files due to a flood.
Importantly, when Ms Young found this other box she says that inside it she found the 2011 will file, which was folded up and placed in the back pocket of the newly located volume of the family provision file. Ms Young's recollection is that she was by then already in possession of most of the file relating to the plaintiffs' family provision claim. But Ms Young recalled that she had not found the 2011 will file in the relevant archive box with the family provision file or within the family provision file.
But Ms Young says that when she found the 2011 will file, it was incomplete as it did not contain any instructions, notes or copies of any documents prepared for, or signed by, Kevin Fox. She annexes a copy of the 2011 will file to her affidavit. The annexure suggests that Kevin Fox did give instructions on 7 April 2011 for the making of a will, a Power of Attorney and an appointment of Enduring Guardian, and that those instructions were probably reduced to writing. Kevin Fox's will was recorded in the annexure as being executed on 4 June 2015.
With this additional recently discovered information, Ms Young telephoned Mr Paul Mitchell and spoke to him about what she had found. He then had the following conversation with her. Ms Young "I've got the file, but it's just the folder and a couple of documents relating to the accounts side of things. Do you remember taking instructions from Kevin to do a will in 2011? Mr Mitchell: Not really. I vaguely recall doing a will for him in 2011, but I don't remember anything about it." Ms Young: Do you normally keep file notes for all instructions you take on wills? Do you know why there is nothing on file? Mr Mitchell: I usually do. You've probably seen some of my file notes. They aren't always detailed, but there should be something there. If it's not on the file, I don't know where it would have gone."
As some realistic progress was being made to find these documents, Ms Young decided to widen her search to see if anything else could be found. During subsequent weeks, she spoke with a number of colleagues in the firm, including Ms Denton and Ms Kelly who had also previously worked for Thomas Mitchell Solicitors and again with Mr Paul Mitchell, to identify other possible avenues of search.
Ms Young then acted on her supplementary enquiries. Her general further searches from about July 2017 do not have to be recounted in full in these reasons. But the Court is satisfied that the explanation which she gives represents a thorough and logical sequence of searching. In short, she obtained further information from Ms Kelly and Ms Denton, used that information to undertake physical searches of the Belmont office, checked computer records, checked safe custody records and packets, checked closed files and checked archived file storage locations and also carried out a general search of the office.
But particular aspects of Ms Young's supplementary searches after July 2017 are important. They involved her in discovering, with the assistance of Ms Denton and Ms Kelly, that there were a number of miscellaneous files which had been carried over from Mr Mitchell's practice that might be a fertile source of further enquiry. Ms Young explains that she went through a filing cabinet of these miscellaneous files and in doing so happened to locate a 2010 file relating to Joyce Fox's instructions in relation to her Power of Attorney and appointment of Enduring Guardian.
Ms Young says that she also conducted a search of the entire Belmont office to identify any other possible locations that files may have been stored. I accept that her search was thorough. She even looked through empty offices and checked through all rooms in the office to make sure that there were no locations where files could have been placed but inadvertently overlooked. She says that despite these additional searches, she did not find any other material that might be produced in response to the notice to produce. Her computer searches at the Belmont office using the old Locus computer software that Thomas Mitchell Solicitors used in practice did not reveal to her anything more than what she already knew.
But Ms Young's search was sufficiently thorough that she was able to identify some further electronic documents relating to the instructions that Joyce Fox gave to Thomas Mitchell Solicitors in 2002 in relation to her Will, Power of Attorney and appointment of Enduring Guardian at that time, which had not previously been produced, but then which were produced to the Court in answer to the 17 February 2017 subpoena. She also found some electronic documents relating to the 2011 will file. But she ascertained that either file copies or signed copies of those documents were already in the 2011 will file or in Kevin Fox's safe custody packet and there was nothing else to be added to what had already been produced to AMC Lawyers in response to the subpoena.
But there is an entry of significance on the front of the safe custody packet: the words "written instructions 7.4.11" appear there. Ms Kelly informed Ms Young that this entry reflected a practice that Thomas Mitchell Solicitors had adopted of placing the firm's written instructions for a will into the safe custody packet with the original will, rather than archiving the instructions with the file. This apparently was to avoid the instructions being inadvertently destroyed. This will be some basis to infer at trial that some written record of Kevin Fox's will instructions was put with the April 2011 will.
Ms Young was confident overall that she had executed a reasonably complete search of the Thomas Mitchell Solicitors' records to show what may have been removed from safe custody packets. She had reasonable search capacity from an old card index system, despite the fact that the Locus software system from Thomas Mitchell Solicitors did not still work properly in 2017.
Ms Young's searches did turn up some diaries that had been maintained by Ms Denton in her role as the receptionist for Thomas Mitchell Solicitors before its sale to Mason Lawyers. That discovery led to two other lines of inquiry. First, it caused Ms Young to search through the files of another client of Mr Mitchell's with the surname of Fox, in case there had been a misfiling of documents relating to Kevin Fox in that man's file. But nothing was found there.
The other additional line of inquiry from Ms Young's searches concerns the meeting which AMC Lawyers alleged took place between Mr Mitchell, the plaintiffs and Joyce Fox on 25 May 2010. Ms Young was able to locate Mr Mitchell's diary for the week commencing Monday, 24 May 2010. The diary does not record that any such meeting took place. At trial, the accuracy of the diary may well be disputed by the plaintiffs. A meeting could have taken place but not have been recorded in the diary. The plaintiffs and Mr Mitchell will presumably give their own competing recollections of whether or not such a meeting took place. But some of the best available contemporary evidence that one would expect about the meeting has been located and produced.
In summary, Ms Young says that: (1) she cannot locate the contents of the 2011 will file relating to any instructions Kevin Fox gave for the preparation of his will; (2) she cannot identify whether those documents were ever in the possession custody or control of Mason Lawyers; and (3) she believes she has exhausted all possible avenues of searching for the documents requested under the subpoena, but she has not been able to identify what has become of them and she has otherwise produced to the Court all documents that are in the possession, custody or control of the firm in answer to the subpoena.

The Pleadings

The parties put submissions on aspects of the pleadings. It is convenient to set out the parts of the pleadings that were the subject of these submissions and that show the case the plaintiffs plead. These are paragraphs [21] to [44]: "21 On 30 July 2015 Ashley Windus of Masons Lawyers emailed to Greg Smith Of [sic] GHS Lawyers a copy of a draft Deed of Family Arrangement that contained terms that were not part of the original agreement. PARTICULARS (a) The Deed required a release to Kevin's estate. (b) The Deed required the approval of the release to Kevin's estate and Joyce's estate. (c) The Deed required a release of the promise made by Kevin to Joyce. 22 The Deed of Family Arrangement contained information in the Recitals and Acknowledgments that Kevin and Masons Lawyers knew to be false. PARTICULARS Recital F (a) Recital F of the deed states: "Kevin denies the alleged promise. He denies that he is bound for any reason to leave any portion of his estate to Karen or Gail". (b) Mr W P Mitchell of Mason's Lawyers was present when Kevin acknowledged that "he agreed to take care of Joyce's girls should anything happen". (c) Kevin and Joyce were clients of Mr W P Mitchell, Thomas, Mitchell & Co (subsequently Masons Lawyers) dating back to 1976 and he knew the family history. (d) Mr W P Mitchell knew, or ought to have known that the Deed contained false information. 23 On or before 4 June 2014 Mr W P Mitchell knew that Joyce had dementia and as such was unlikely to have capacity to execute a new will. 24 Between the period 30 May 2014 and 19 June 2014 Mr W P Mitchell obtained instructions from Kevin to draft a new will that did not include Joyce as a beneficiary. 25 Mr W P Mitchell knowingly conspired with Kevin to ensure that Joyce did not know, or was unable to be informed that he had changed his will by entering into an arrangement whereby Kevin's mail would not be posted to his home address. 26 Joyce died 10 days after the execution of Kevin's will dated 19 June 2014 that did not include her as a beneficiary. 27 Kevin and Mr W P Mitchell knew at the time of the Deed that Kevin had changed his will to remove Gail and Karen as beneficiaries. 28 As such, the false statement in the Deed was made by Kevin with the intent to induce Karen and Gail to sign a document that was against their interest and release Kevin from an agreement he had made with Joyce when she was alive and at a time she had capacity. 29 Clause 15 of the deed states: "All parties acknowledge that the recitals to this deed are correct to their best of their knowledge and belief. 30 Clause 14 of the deed states: "Kevin acknowledges that he has received and considered advice from his solicitor as to the meaning and effect of this deed and of the Short Minutes of Order and that he understands that advice". PARTICULARS (a) Helen Denton, receptionist for Masons Lawyers, witnessed Kevin's signature on the Deed. 31 There is no evidence to show that Kevin was provided with legal advice: (a) on the Deed or the Short Minutes of Order; (b) or advised of the serious nature of attesting to a document that contains information that is known to be false; (c) or advised of the serious nature of providing instructions to a legal professional to draft a document for the purpose of circumventing an agreement made when Joyce had capacity. 32 Masons Lawyers did not produce a copy of the Deed or files relating to the Deed in answer to the subpoena issued by the plaintiffs. 33 Kevin knowingly signed the Deed dated 4 August 2015 in full knowledge that Recital F was false. 34 The release from Joyce's estate and Kevin's estate was obtained in circumstances such that it could not be said that it was in the best interest of Gail and Karen to provide such a release. 35 The Deed contained information that was false. 36 The Deed was an instrument drafted to formalise an agreement that had been constructed on a background of deceit and misrepresentation. 37 The release from Karen and Gail was therefore obtained on the basis of fraud or constructive fraud. 38 At the time of the release Gail and Karen were not informed of the true nature of Joyce's estate. 39 At the time of the release Gail and Karen were not informed of the true nature of Kevin's assets. 40 At the time of the release Gail and Karen were not aware that Kevin had reneged on his promise to Joyce one week prior to her death, at a time when Joyce did not have capacity to change her will to reflect her intentions, was not aware that he had done so and had been prevented of being informed of the change because of collusion between Kevin and his legal professionals. 41 At the time of the release Gail and Karen were of the belief that they were the beneficiaries of Kevin's will. 42 The true nature of the estate meant that there was little or limited advantage to be gained by Karen and Gail in signing the Deed or providing the release. 43 Given the size of the estate a legal practitioner could not advise that the settlement sum was within an acceptable range. 44 Karen and Gail did not receive satisfactory or adequate independent legal advice in order to make a fully informed decision."
Based on these pleaded facts, the relief claimed was formulated on the following additional paragraphs, [50] to [59]: "Promissory estoppel by conduct 50 Kevin made a promise to Joyce that he would look after her girls. 51 The promise was made in front of Kevin and Joyce's legal representative. 52 The promise was acknowledged by Kevin after the death of Joyce to Michael Bermingham and was recorded with his approval. 53 Kevin changed his will to remove Gail and Karen as beneficiaries ten (10) days prior to Joyce's death and after Joyce was diagnosed with dementia in 2013. In doing so Kevin acted in an unconscionable manner that prevented Joyce from altering her will to reflect her intentions and at a time when she was unable to do so. 54 Masons Lawyers were in possession of information whereby they knew or ought to have known that the Deed was drafted to execute an agreement designed to subvert Joyce's testamentary intentions and contained a false statement. 55 Steps were taken by the legal representatives to assist Kevin to avoid a promise and subsequent obligation to Joyce and in doing so caused Joyce to suffer detriment by Kevin's failure to fulfil his promise. The s 95 releases 56 The s95 releases were obtained on the basis of a document that Kevin and his legal representatives knew to be false and misleading. 57 Further, the document was drafted by legal representatives in full knowledge that the agreement was in contradiction with an agreement made between Kevin and Joyce in 2011. 58 Karen and Gail could not give consent to an agreement that had, unbeknown to them at the time, been constructed on a series of falsehoods and breaches of promissory obligations. 59 That on any perspective, it could not be said that the releases provided by Gail and Karen were in their interest, prudent or adequately explained."
It was evident from the submissions at the hearing that the plaintiffs' pleadings may require a further degree of refinement. Some of the analysis below indicates that further refinement is certainly desirable for trial. Rather than hear the defendant's strike-out motion immediately, the better course may be for the parties to absorb the Court's reasons, for the plaintiffs to decide whether it wants to re-plead and for the defendant to decide whether it still wants to pursue the motion to strike-out the plaintiffs' claim. This is mentioned now before the analysis commences so that the parties can bear it in mind. The Court will invite the parties to mention the matter at a convenient time next week to see whether they wish to proceed with the defendant's motion.

The Subpoena Issue

The subpoena issue can be dealt with briefly first. In my view, having reviewed Ms Young's affidavit, she has deposed to having done all the searches that could reasonably be expected on behalf of the subpoena recipient to answer a subpoena of this kind before trial. Her affidavit evidence about her searches can be tested at trial.
In the course of argument, Mr Skinner quite rightly found it difficult to press upon the Court why Ms Young's subpoena should not be tested at trial, rather than before trial. If the plaintiffs continue to press a case at trial that there has been non-production on the 17 February 2017 subpoena, then the appropriate place to test that is at trial, where the trial judge can assess Ms Young's answers, along with all the other evidence as to what happened to the allegedly missing will instructions of 7 April 2011.
A simple order now for Mason Lawyers to comply with the subpoena is pointless: Quach v Vu [2009] NSWSC 131 at [7]. And the Court's discretion under Civil Procedure Act 2005, s 68 to test the sufficiency of an answer to a subpoena is best exercised in this case, in my view, by adjourning the matter to the hearing. One reason for this is that Ms Young's affidavit makes transparent in the search process that has been undertaken, sufficient to arm the plaintiffs to test the bona fides of the search adequately at trial. The plaintiffs are now not in any way left in the dark about how Mason Lawyers say the search was undertaken.

The Plaintiffs' Submissions

The plaintiffs submit that Mason Lawyers' present position must be considered as tainted. They say that several employees of Mason Lawyers will be material witnesses in the matter, including Mr Mitchell, Ms Helen Denton, Mr Ashley Windus and Ms Sarah Young. They submit that Mason Lawyers' position is therefore in conflict with the position of its client, and that, as their employees' conduct and integrity will be seriously challenged in the proceedings, they will need to defend their actions.
The plaintiffs adopt Brereton J's analysis in Kallinicos v Hunt (2005) 64 NSWLR 561; [2005] NSWSC 1181 at [76] ("Kallinicos"). They submit that a fair-minded, reasonably informed member of the public would conclude that the proper administration of justice requires that Mason Lawyers be prevented from continuing to act for Kevin Fox's estate in these proceedings, in the interests of the protection of the integrity of the judicial process and the due administration of justice, including the appearance of justice.
The plaintiffs accept that this is not a case which falls into the categories of restraint upon acting due to a breach of confidence or breach of fiduciary duty. Rather, they rely on the Court's inherent jurisdiction. Applying Kallinicos principles, the plaintiffs submit that evidence must almost certainly come from Mr Mitchell who, on their case, is the means by which the defendant knew, or ought to have known, at the time of the release that the plaintiffs were in a position of special disadvantage in relation to Kevin Fox. The plaintiffs argue Mr Mitchell knew that the plaintiffs were unlikely to know at the time of the settlement that Kevin Fox had changed his will. They submit this is to be inferred from the fact that Mr Mitchell knew that he and Mr Timmins had kept the change to the will a secret from the plaintiffs.
Mr Mitchell is no longer employed by Mason Lawyers. But the plaintiffs say that other persons were directly involved in what they characterise as deceitful conduct by Mr Mitchell. They point to probability evidence also coming from the receptionist, Ms Denton, as well as to Mr Windus and Ms Young. Ms Young commenced employment with Mason Lawyers on 27 February 2017.
The plaintiffs also maintain that the firm's non-production of the 2011 file by Mason Lawyers is, and will continue to be, a matter of embarrassment to the firm.
The plaintiffs referred to another decision of Brereton J, Mitchell v Burrell [2008] NSWSC 772 ("Burrell"). In that case, the defendants sought to restrain the plaintiff's solicitors (the firm's principals, a Mr Morey and Mr Jurd) from continuing to act for the plaintiff. The defendants contended in Burrell that Mr Morey was likely to be a material witness on a controversial matter whose conduct and credit may be in issue in the proceedings and that Mr Jurd would, as Mr Morey's partner, be unable to bring a proper professional and objective detachment to the proceedings. The plaintiffs refer to Burrell at [24], where Brereton J said: "The point is perhaps highlighted by asking the rhetorical question that was raised in the course of argument: if Mr Morey's evidence of what he was told by Mrs Mitchell about the September 2005 conversations did not coincide with Mrs Mitchell's own evidence, who would Mr Morey instruct counsel to submit should be believed - himself or his client? It seems to me that there is a substantial risk that a situation of embarrassment could arise and a reasonably informed lay observer would think it contrary to the interests of justice that Mr Morey act in those circumstances".
The plaintiffs say that there is a substantial prospect of a situation of embarrassment arising here about the loss of the 2011 file notes.
The plaintiffs also replied to the defendant's written submissions on the defendant's strike-out application. Their reply emphasises that the "central plank" of their pleading is that Kevin Fox was bound by a promise to look after the plaintiffs and executed the Deed containing Recital F, in the knowledge that he had changed his will contrary to an agreement that he would "look after the girls" and that he knew that they did not know he had done this. The plaintiffs say that Kevin Fox's conduct in procuring the releases was misleading and indeed fraudulently concealed the true state of affairs about Kevin Fox's conduct. The plaintiffs say that the essential fabric of the Statement of Claim will survive the matters the defendant has raised and that a strike-out application is likely to fail.

The Defendant's Submissions

The defendant submits that Kallinicos remains the applicable authority to resolve this dispute, and that the following principles articulated at [76] are relevant: • "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; • The jurisdiction is to be regarded as exceptional and is to be exercised with caution; • 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; • 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."
The defendant accepts that one of the categories of case in which the Court's inherent jurisdiction has been exercised to restrain a solicitor from acting is where the solicitor is potentially a material witness in the proceedings. But the defendant submits that the starting point for analysis is that the mere fact that a solicitor is potentially a material witness, even on a controversial matter, does not in itself support the restraint upon the solicitor from continuing to act. In support of this contention, the defendant refers to Brereton J's comments in Burrell at [20] that: "[T]he line is crossed only when the solicitor has a personal stake in the outcome of the proceedings or in their conduct beyond the recovery of proper fees for acting, albeit that the relevant stake may not necessarily be financial, but involves the personal or reputational interest of the solicitor, as will be the case if his conduct and integrity come under attack and review in the proceedings. The presence of such circumstances will be a strong indication that the interests of justice - which in this field involve clients being represented by independent and objective lawyers unfettered by concerns about their own interests - require the lawyer to be restrained from continuing to act."
The defendant submits it is to take a wider view. He submits it is necessary to consider the following matters: the probability of the solicitor being called as a witness; the prospect of the solicitor's conduct and integrity coming under attack; and the nature of any potential attack. The defendant refers to examples to indicate that the authorities do not prescribe inflexible tests, comparing the decision to restrain solicitors from acting in Kallinicos and Burrell with cases where the courts have declined so to restrain solicitors, including: Larne-Jones v Human Synergistics Australia Ltd [2012] FMCA 1209 (at [72]); Mark Fogerty-Young v Raymond Jason [2013] VSC 570 (at [38], [42]-[43]); and Westpac Banking Corporation v Newey [2013] NSWSC 533 (at [12], [17]-[18] ("Newey")).
The defendant notes that: the fact that the party retained by the solicitor in question does not perceive any conflict and has no concern that the firm's supposed self-interest will detract from the firm's ability to represent it faithfully, independently and objectively in the proceedings, weighs against the imposition of restraint in the exercise of the inherent jurisdiction, although it is not determinative: Newey at [13].
The defendant also maintains that the courts are slower to restrain the firm as a whole when the particular solicitor who would be disqualified in the exercise of the inherent jurisdiction is an employed solicitor rather than a partner: referring again to Burrell at [25] and to Bahonko v Nurses Board of Victoria (No 3) [2007] FCA 491 ("Bahonko") at [17].
The defendant submits that here, there is no basis for exercising the inherent jurisdiction and restraining Mason Lawyers from acting on his behalf. He submits that the need for caution in the exercise of the jurisdiction, its exceptional nature, the due weight to be given to the public interest in a litigant's choice of lawyer, and the strong expressed preference of the defendant that Mason Lawyers should continue to act, all militate against restraining Mason Lawyers from acting.
The defendant submits that Mr Mitchell has very limited involvement with Mason Lawyers at the present time. Moreover, the conduct of Mr Mitchell that is complained of concerns his dealings in relation to the 7 April 2011 will. All that conduct pre-dated his involvement with Mason Lawyers.
The defendant argues there is no basis for a finding that the circumstances surrounding compliance with the subpoena would trigger the exercise of the inherent jurisdiction to restrain Mason Lawyers from acting. The defendant accepts that certain documents sought on subpoena could not be found by Mason Lawyers. But he submits it is likely that solicitors from Mason Lawyers will give evidence in the substantive hearing as to the steps taken to comply with the subpoena. The defendant contends this does not support the exercise of the inherent jurisdiction to restrain Mason Lawyers from acting.
The defendant emphasises that comprehensive evidence has already been led in relation to the subpoena search strategy, which he submits, provides no foundation for any challenge to the integrity of the lawyers involved; that the mere inability to locate a document does not in itself provide a reasonable basis for a challenge to the integrity of those who undertook the search strategy; and that the proposition that potentially careless document management will come under "attack and review" is speculative, and is at most a minor subsidiary issue in the proceedings.
The defendant argues that for there to be issues about which Mason Lawyers would be embarrassed, there must be viable issues likely to be brought before the Court. The defendant contends that many of the claims made by the plaintiffs do not amount to viable pleadings. If those claims are struck out, then the defendant says the issues which involve Mason Lawyers, and the prospects of their solicitors being called to give evidence, disappear.
In effect, the defendant says that it is improbable that a solicitor from Mason Lawyers will be a material witness or that his or her conduct or integrity will come under attack in the proceedings, because the pleaded causes of action are manifestly embarrassing and liable to be struck out on multiple alternative grounds. The defendant says there will be no case for Mason Lawyers to meet and defend. The defendant deals with the foreshadowed and as yet unpleaded causes of action, including potential professional negligence claims against various lawyers. The defendant says such causes of action are opaque and merely speculative.

Consideration of the Restraint Issue

The parties thoroughly discussed the relevant authorities in the written submissions and they need not be further set out in these reasons. The Court applies the law as stated by Brereton J in Kallinicos at [76], together with the subsequent authorities such as Burrell.
In my view, even the way that these proceedings are currently pleaded, it is highly probable that Mr Mitchell's personal performance of various retainers is going to come under close scrutiny and criticism. He will be a highly material witness in these proceedings. He is still a casual employee of Mason Lawyers. Mr Stowe suggested that he would not be involved in the conduct of the proceedings except as a witness. But the Court is concerned about the extent of the criticism of his conduct that is likely to arise and that may ultimately flow over to the firm Mason Lawyers defending its own reputation, whilst he and the firm attempt to defend his reputation.
Mr Mitchell was critically involved in the events the subject of these proceedings at three major points of time: in April 2011, when Kevin Fox made the first will benefiting the plaintiffs; in June 2011, when Kevin Fox changed his will when Joyce Fox had dementia; and in July to September 2015, when the family provision proceedings were being settled. Only the first of these events took place before Mason Lawyers acquired the practice of Thomas Mitchell Solicitors. The latter two events occurred whilst Mr Mitchell was an employee of Mason Lawyers.
Serious allegations are made against Mr Mitchell in respect of his conduct while he was an employee of Mason Lawyers. He is said to have acted unconscionably in 2014 to assist Kevin Fox's unconscionable conduct in altering his will. He is said to have engaged in misleading and deceptive conduct in the negotiations for the Settlement Deed in September 2015.
In the course of argument the Court pointed out to Mr Skinner of counsel that there were clearly some weaknesses in the plaintiffs' case. For example, at the time that the Settlement Deed was made and then approved in September 2015, the plaintiffs were independently legally advised. It makes a case of unconscionable conduct difficult to maintain at that time. Although, there are cases where transactions have been set aside for unconsionability notwithstanding intervention of legal advice: Aboody v Ryan (2012) 17 BPR 32,359; [2012] NSWCA 395. And the plaintiffs are also critical of the legal advice they were given at that time.
But the plaintiffs also plead fraud and misleading and deceptive conduct to set aside the settlement, and in my view, there is on the facts set out in this judgment an arguable case that the defendant, as executor of the estate of Kevin Fox, would have a case to answer on such causes of action. It should be recorded that he clearly denies involvement any fraud or misleading and deceptive conduct at that time. But in my view, that would be a substantial issue at trial involving Mr Mitchell.
The allegations are supported by some objective evidence and are sufficiently serious that, in my view, it will be very hard to differentiate the reputation of Mason Lawyers from that of its employee, Mr Mitchell. Indeed, Mason Lawyers' supervision of its employee may be a matter put in issue and other employees of Mason Lawyers were involved in achieving the settlement of the family provision proceedings, such as Mr Windus.
I do not accept Mr Stowe's argument that this case is so weak that there will not be a seriously damaging contest involving Mr Mitchell's reputation at all. And Mr Stowe's argument that Mr Mitchell is not a full time employee somewhat misses the point. He may be a casual employee now, who has not worked since September 2016 with the firm. But he was a more regular employee as late as September 2015 and before when the events being questioned occurred.
Mr Stowe also submits that Joyce Fox was never a client of the firm and that the critical missing documents relate to the 2011 will, which was at a time before Mason Lawyers acquired the practice of Thomas Mitchell Solicitors. But in my view, this argument does not really grapple with the way the evidence has ultimately come out on this motion.
The issue about document management and the retention, or disposal, of the written instructions for Kevin Fox's 2011 will is not just an issue for Thomas Mitchell Solicitors. The evidence currently shows is that it is probable that the written will instructions were placed with the Thomas Mitchell Solicitors security packet in April 2011 and they were missing by June 2015. For most of this period, the security packet was under the management of Mason Lawyers, not Thomas Mitchell Solicitors. Thus, Mason Lawyers' security management of the packet and its overall care for the packet is likely to come into question.
But in my view, Mr Mitchell's dealings with Kevin Fox in June 2014 are likely to come under close scrutiny as well. The inferences available from the known facts are that although in 2014 Mr Mitchell did not have Joyce Fox as a client, he nevertheless had confidential information from her about her vulnerability to a change of will that he was aware of when he advised Kevin Fox about changing his will in June 2014. Mr Mitchell seems arguably to have been aware in June 2014 that Joyce Fox was expecting that Kevin Fox would not change his will, because Joyce Fox did not take his 2011 advice to sever the joint tenancy. When Kevin Fox changed his will in June 2014, contrary to Joyce Fox's expectation, he did so when being advised by a solicitor who knew of Joyce Fox's expectations and her vulnerability to unconscionable conduct. Exactly how that knowledge is going to be used by the plaintiffs is a matter that has not been as well pleaded as it should be in the present pleadings, but it is a matter which was clearly adverted to in argument and exchanges between the Court and Mr Stowe and may need further definition between the parties.
It may be arguable for instance that Mr Mitchell should not have accepted instructions on behalf of Mason Lawyers from Kevin Fox to change his will, in view of the knowledge from Joyce Fox that he already had. Doing so may also have disadvantaged Kevin Fox.
But once Mr Mitchell did act for Kevin Fox to change his will, he and Mason Lawyers retained all of Mr Mitchell's knowledge right through until the Settlement Deed in September 2015 as they acted for Kevin Fox. Whatever be the more finely tuned causes of action arising out of these fundamental facts, in my view, they are sufficient to thoroughly embroil Mason Lawyers' reputation through Mr Mitchell's relationship with the firm as an employee. In my view, his conduct and integrity and that of the firm are under attack and he and the firm have a personal stake in the proceedings. This in my view is one of those cases that cross the line.
Mr Stowe rightly points out that some of the causes of action being discussed by the plaintiffs actually belong to Joyce Fox's estate, rather than to the plaintiffs. But in my view, however this is put, and whether amendments to join Joyce Fox's estate or to sue the solicitors advising the plaintiffs are undertaken, Mr Mitchell and Mason Lawyers' conduct will be strongly criticised in the proceedings.
I should add as a footnote that nothing in Ms Young's evidence causes the Court to think that Mason Lawyers should no longer be able to act in these proceedings. Ms Young only became an active employee in February 2017 and has given a thorough account of herself as having been involved in matters unrelated to the primary allegations in these proceedings. Also, Ms Denton's involvement is reasonably peripheral and would not be a basis, on its own, to restrain the firm from continuing to act in the matter.
The possibility arises of trying to quarantine Mr Mitchell from the case. There are cases where such orders have been made. These are referred to below.

A Partial Restraint?

Another possibility is permitting the firm to continue acting but restrain the individual solicitor, Mr Mitchell, from any involvement in the matter. Authority suggests that this form of relief can be granted where the circumstances are suitable.
In Bahonko, to which the defendant referred, Middleton J restrained an employed solicitor (a Ms Saunders) from continuing to act in a matter, but held that the firm by which she was employed (Russell Kennedy) was still at liberty to act. Middleton J emphasised at the outset that the Court's jurisdiction to restrain a legal practitioner from acting in proceedings is exceptional and discretionary, to be exercised with appropriate caution, and that the Court must be "careful not to intervene unless it is absolutely required in the circumstances of the case" (at [2]-[3]). Having concluded that Ms Saunders should be restrained from continuing to act, his Honour went on to say, at [17]-[18]: "The position in relation to Russell Kennedy is different. Russell Kennedy is a firm of solicitors, and no allegation is made specifically against any of its partners. It may be said that Russell Kennedy has an interest in the litigation because of the allegations made against its employee, Ms Saunders. In this indirect way it could be said that Russell Kennedy in the course of the litigation may need to justify or defend Ms Saunders. In my view, such a possibility is remote. I do not consider that a fair-minded, reasonably informed member of the public would conclude that the proper administration of justice requires Russell Kennedy, as a firm of individual partners, be restrained from acting in this proceeding."
In Burrell, Brereton J noted (at [25]) that "[t]here are suggestions in some of the cases that where one solicitor in a firm is disqualified from acting, it need not invariably follow that the others [in that firm] are also disqualified" (referring by way of example to Bahonko). His Honour continued: "Against that, most cases point to the view that, in this respect, the law treats a firm of solicitors as a single entity, so that if one partner is disqualified, the firm should not act [Chapman v Rogers; ex parte Chapman [1984] 1 Qd R 542, 545; Bowen v Stott [2004] WASC 94, [66] (firm restrained from acting where one partner was likely to be a material witness); Kooky Garments Ltd v Charlton [1994] 1 NZLR 587, 590 (cited with approval in Afkos Industries Pty Ltd v Pullinger Stewart (a firm) [2001] WASC 69, [15])]. In principle, given the incidents of the relationship of partnership (involving utmost good faith and loyalty between the partners), and those of solicitor and client (requiring any partner in a firm to do all in his or her power and use all knowledge and information available to them, including to their partners, to assist the cause of the client), it is difficult to see how, where one partner is disqualified, it could be acceptable for another partner in the same firm to continue to act."
The defendant emphasises that his Honour was there concerned with the position of a partner, and distinguishes Mr Mitchell's role in this regard. In In the Matter of the Consortium Centre Pty Limited [2012] NSWSC 898, Black J referred to this distinction (and to Bahonko) at [39]: "The basis for relief, so far as it is directed to Mr Robinson's involvement with TCC, is also weakened in circumstances that Mr Robinson is a consultant to, not a partner in, Robinson Legal and Ms Briscoe and Ms Hudap are acting in the proceedings. There are several cases in which, although an employed solicitor has been restrained from continuing to act, the firm by which he or she was employed has been permitted to continue to act: Bahonko v Nurses Board of Victoria (No 3) [2007] FCA 491; Mitchell v Burell at [25]."
In the result, Black J dismissed the application entirely. But Black J's reasoning is consistent with approval of the position adopted in Bahonko. This reasoning in Bahonko and that in Burrell was also referred to with approval by Hallen AsJ (as his Honour then was) in Lake Burrendong State Park Trust v Thompson [2011] NSWSC 1554 ("Thompson") at [99]. Although again, in Thompson the application was ultimately dismissed entirely. But in my view, this is not the solution here.
Here the Court is conscious that the jurisdiction to restrain a firm from acting in these circumstances is exceptional and is to be exercised with caution. I have given due weight to the public interest in the defendant not being deprived of a lawyer of his choice without due cause. But it seems to me that the application has been made early, so as to minimise any disruption to the defendant and the relief granted should be given.
But the Court will not have the injunction operate before the defendant's current strike-out motion in relation to the pleadings is resolved. There seems to me to be little prejudice to the plaintiffs in the defendant being able to complete that motion, which has been started through Mason Lawyers.
There has been some success on both sides of the plaintiffs' motion. If agreement is not reached then the Court will hear argument in due course about the costs of the motion.

Conclusions and Orders

Accordingly, the Court makes the following orders and directions: 1. Adjourn further calls upon the plaintiffs' subpoena of 17 February 2017 to the trial of these proceedings. 2. Order that Mason Lawyers Newcastle Pty Limited be restrained from acting as the solicitors for the defendant on and from the conclusion of all issues relating to the defendant's strike-out motion filed on 7 September 2017. 3. Direct the parties to liaise with my Associate in relation to the setting down of any argument in relation to costs and in relation to the strike-out motions.

Amendments 30 July 2018 - [107] third line, after "the defendant" add ", as the executor of the estate of Kevin Fox" and last line delete "him" and add "Mr Mitchell" [114] last line, "crosses" to "cross" [115] third line, delete "there are" before "amendments" 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: 30 July 2018

At a glance

Court

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Judgment (11 paragraphs)

Parties

Cases Cited (13)