Legal practitioners - Conflict of interest - Application for injunction restraining defendant law firm from representing client - Whether District Court judge has jurisdiction to order solicitors to cease acting - Supervisory and disciplinary jurisdiction considered - District Court judge's power to grant injunction considered - Turns on own facts

District Court of Western Australia Act 1969, s 52, s 53(1), s 55, s 57(2)

Supreme Court Act 1935 (WA)

Aiden Shipping Co Ltd v Interbulk Ltd [1986] AC 965

Burns Philp & Co Ltd v Bhagat [1993] VicRp 13; [1993] 1 VR 203

Coal & Allied Operations Pty Ltd v Australian Industrial Relations Commission [2000] HCA 47; (2000) 74 ALJR 1348

House v The King [1936] HCA 40; (1936) 55 CLR 499

Idoport Pty Ltd v National Australia Bank Ltd [2000] NSWSC 338; (2000) 49 NSWLR 51

Knight v FP Special Assets Limited [1992] HCA 28; (1992) 174 CLR 178

McKewins Hairdressing & Beauty Supplies Pty Ltd v Deputy Commissioner of Taxation (2000) 74 ALJR 1000

Norbis v Norbis [1986] HCA 17; (1986) 161 CLR 513

Wentworth v Wentworth [1999] NSWSC 317

Whyte v Brosch (1998) 45 NSWLR 354

1 PIDGEON J: The facts are set out in the reasons of Steytler J.

2 I am satisfied that her Honour Judge Deane had the jurisdiction to make the order she did. She was asked to refuse to permit a solicitor to continue to represent a party in an action before her on the ground that there was a conflict of interest. I do not consider she was exercising any equitable jurisdiction, but was exercising an incidental power she had to ensure that the matter before her was properly heard and determined.

3 There is no question that the main action she was called upon to judge was a matter within the jurisdiction of the District Court. When a matter is within the court's jurisdiction then sections of the District Court Act give the Judge trying the matter the powers of a Judge of the Supreme Court. These are contained in s 55 and s 57(2). They are set out in the reasons of Steytler J. They are expressed in the widest of terms. If a situation arises where a District Court Judge considers that he or she cannot properly determine the matter before the court on the basis that counsel representing one of the parties might have a conflict of interest, then it would be a necessary and incidental power within the provisions of the Act for the Judge to make an order to enable the matter to be properly heard. The reasons for judgment of Sir Lancelot Shadwell VC in Davies v Clough (1837) 8 Sim 262 at 267; 59 ER 105 at 106 - 107 shows that this was a question that often arose at the time he was deciding a matter. His Lordship's reasons are contained in the reasons of Steytler J. They indicate that the question as to whether a person should be permitted to continue to act as a solicitor in a particular matter is a question that often came before various courts and it was never suggested that the courts did not have jurisdiction. His Lordship based his jurisdiction in that case on the basis that the courts may exercise an authority over their own officers as to the propriety of their behaviour. He did not suggest that this was the only ground and the reasons were expressed in wide terms as to the power of all courts. The earlier position of courts having jurisdictions over its officers was set out by Lord Denning MR in R v Smith (Martin) [1975] 1 QB 531 at 50 where his Lordship said:

"Mr Slynn was good enough to take us through the history of the jurisdiction of the courts over solicitors. It does appear that each of the superior courts of record exercised jurisdiction over the attorneys on the roll of its court: and that the Master of the Rolls, by keeping the roll of solicitors, exercised jurisdiction over solicitors generally. But the inferior courts, such as county courts, had no such jurisdiction. Nowadays under the Judicature Acts 1873 and 1925, the old superior courts of record are combined into one High Court. There is a Supreme Court which consists of the High Court and the Court of Appeal. Every person who is duly admitted as a solicitor of the Supreme Court, is an officer of that court. The Supreme Court and any judge thereof has jurisdiction over the solicitors admitted to practise therein. He has jurisdiction to the same extent as the superior courts in the old days. But this jurisdiction is never exercised so as to strike a solicitor off the roll or to suspend him. That is always left to the Disciplinary Committee of The Law Society. The principal cases in which jurisdiction is now exercised are the power to order a solicitor to honour an undertaking which he has given (see Geoffrey Silver & Drake v Baines [1971] 1 QB 396) or to pay the costs personally if he has been guilty of serious neglect of duty: see Myers v Elman [1940] AC 282 and Edwards v Edwards [1958] p 235."

4 Section 87 of the Judicature Act 1873 (Eng) specifically provided that solicitors were officers of the court. This is now replaced by s 55 of the Solicitors' Act 1974 (Eng). This is the first section under the heading "Disciplinary Proceedings before Supreme Court". The section commences by saying that "any person duly admitted as a solicitor shall be an officer of the Supreme Court."

5 The term "officer of the court" does not appear in the Supreme Court Act 1935 (WA) or the Legal Practitioners Act. However, there is no question that the disciplinary proceedings are exercised by the Supreme Court and they are exercised in the manner set out in the Legal Practitioners Act ((WA).

6 An example as to how powers of this type must be contained in a Statute in the case of County Courts in England is the power to order a solicitor to pay costs personally. In England it was held that the County Courts did not have a general jurisdiction to order a solicitor to pay costs personally (see Gain v Provincial Advertising (1904) 117 LTJO 222 when Bucknill J granted an order of prohibition setting aside an order made in the County Court ordering the solicitor to pay costs personally). It would be necessary for that power to be given by statute. In England a specific power was given in the Country Court's Act 1959 by s 193 empowering a County Court Judge to enforce undertakings given by solicitors in the same way that they can be enforced in the High Court. It is clear that powers of this type must be contained in the statute. In my

view powers of this type have been given in this State to District Court Judges by s 55. There would be no basis to give this section a restricted meaning. It would, in my view, be contrary to the purpose and intent of the Act to suggest that parties who commence an action within the jurisdiction of the District Court are required to come to the Supreme Court to obtain orders of the type sought in this case.

7 Her Honour gave careful consideration as to whether she had jurisdiction and reached the view that she did have jurisdiction by reason of the supervisory powers. I do not consider that this was the correct way to express the jurisdiction she was exercising. It was a power conferred upon her by s 55 of the Act as it was a power required to be exercised to ensure the proper disposition of a matter within her jurisdiction.

8 As it is the majority view that there was no power, there would be no point expressing a view on the issues raised by the ground of appeal.

9 WALLWORK J: I agree with the reasons for judgment of Steytler J. There is nothing I wish to add.

10 STEYTLER J: The proceedings giving rise to this appeal arose in the context of an action between the first respondents and the second respondents. The first respondents issued a writ in the District Court against the second respondents whereby they claimed from the second respondents money due under, alternatively damages for breach of, an agreement for the sale to the second respondents of their shares in a company. The second respondents denied that they owed any money to the first respondents under the agreement and also denied that they had breached the agreement. They lodged a counterclaim alleging that the first respondents had breached the agreement and claimed damages accordingly.

11 The appellant, a firm of solicitors, was not a party to those proceedings. Rather, it represented the second respondents in the proceedings. The first respondents objected to it doing so upon the basis of an alleged conflict of interest. They asked the appellant to withdraw. When the appellant refused to do so the first respondents issued a chamber summons seeking an order that the appellants "cease representing or advising the ... [second respondents]" in the action. The Judge below upheld the first respondents' contentions and made the order sought in the chamber summons. She also ordered the appellant to pay the costs of the application, that being the order against which the appellant appeals.

12 The chamber summons was taken out against the second respondents and not against the appellant who was, as I have said, not a party to the proceedings. Counsel for the appellant, who appeared as counsel for the second respondents in the proceedings below, when asked, on the hearing of the appeal, for whom he had then appeared, said that he then appeared only on behalf of the second respondents but added that he had, while acting in that capacity, opposed the making of an order for costs against the appellant. No point was taken then, or since, as regards the fact that the appellant was not separately represented or, indeed, that it was never a party to the proceedings.

13 Leaving all of this to one side, the principal relief which was granted by the Judge below took the form of an injunction against the appellant firm which was ordered in the exercise of what her Honour took to be her supervisory jurisdiction over it. She ordered the firm to cease representing or advising the second respondents. In my opinion she lacked the jurisdiction to do so.

14 While it is true, as counsel for the first respondents has pointed out, that the appellant has not, either here or below, taken any jurisdictional point and, indeed, originally submitted that no quarrel was taken with the order, made by the judge below, that the appellant should cease representing the second respondents, this cannot alter the fact that, to the extent that the court below lacked jurisdiction, the proceedings were a nullity. There was simply no statutory authorisation for them. Consent does not operate to waive a nullity, or to create jurisdiction (see Mason v Ryan (1884) 10 VLR 335 at 339) and it was the duty of the Judge below to satisfy herself that she had jurisdiction. (See R v Blakeley; Ex parte The Association of Architects, Engineers, Surveyors and Draughtsmen of Australia [1950] HCA 40; (1950) 82 CLR 54 at 90 - 91 and Danae Investment Trust Plc v MacIntosh Nominees Pty Ltd (1993) 10 ACSR 1 and 5). That being so, it seems to me, this Court is obliged itself to take notice of the fact of that absence of jurisdiction. (See also, in this respect, O 63 r 10(2) of the Rules of the Supreme Court 1971.)

15 The Judge below relied, in making the orders made by her, upon the proposition that the court has a general jurisdiction to exercise authority over those who are officers of the court and to monitor the propriety of their behaviour. It has, in this respect, long been assumed that the Supreme Court has an inherent power to discipline lawyers as an adjunct to its powers in respect of their admission (see In re Davis [1947] HCA 53; (1947) 75 CLR 409). Solicitors are officers of that court and it has an inherent jurisdiction over them in disciplinary matters. In Sittingbourne and Sheerness Railway Co v Lawson (1886) 2 TLR 605 Lord Esher MR said that "the summary jurisdiction of the Courts over solicitors [exists] for the maintenance of their character ... and integrity". Similarly, in Myers v Elman [1940] AC 282 at 319 Lord Wright said that "the Court has a right and a duty to supervise the conduct of its solicitors, and visit with penalties any conduct of a solicitor which is of such a nature as to tend to defeat justice in the very cause in which he is engaged professionally ... ". In Walsh v Law Society of New South Wales [1999] HCA 33; (1999) 198 CLR 73 at 96 McHugh, Kirby and Callinan JJ referred to the "ancient functions" of the Supreme Court which "include the maintenance of standards and enforcement of discipline in relation to legal practitioners whom such courts admit to legal practice". In Clay v Karlson (1997) 17 WAR 493, Templeman J held that the court has, as part of its jurisdiction to supervise the conduct of legal practitioners, power to restrain a solicitor from continuing to act. Similarly, in Davies v Clough (1837) 8 Sim 262 at 267; 59 ER 105 at 106 - 107, to which I referred in Newman v Phillips Fox (1999) 21 WAR 309 at 315, Sir Lancelot Shadwell VC said:

"The cases ... appear to afford this general principle, namely, that all courts may exercise an authority over their own officers as to the propriety of their behaviour: for applications have been repeatedly made to restrain solicitors who had acted on one side, from acting on the other, and those applications have failed or succeeded upon their own particular grounds, but never because the court had no jurisdiction."

16 However the supervisory or disciplinary jurisdiction referred to in these cases is that which is part of the inherent jurisdiction of the Supreme Court and it is to that court that solicitors are appointed as officers upon their admission to practice. The District Court does not have a like jurisdiction, although it does have incidental powers which are necessary for the exercise of such jurisdiction as is conferred upon it (see the definition of "jurisdiction" in s 6 of the District Court of Western Australia Act 1969 and Grassby v The Queen [1989] HCA 45; (1989) 168 CLR 1 at 16), and those powers are sufficient, at least, to enable it to correct irregularities in, and frauds upon, its own procedure and rules and to prevent abuses of its process (see Mason v Ryan, above, at 340 and Duncan v Lowenthal [1969] VicRp 21; [1969] VR 180 at 182). It is unnecessary, for present purposes, to explore the full limits of those powers.

17 I have already said that the principal relief granted by the Judge below took the form of an injunction. There appear to me to be only three possible sources of power for the making, by the District Court, of an order of this kind (and it is, in my opinion, important to bear in mind, in this context, the distinction between jurisdiction and power).

18 The first is provided by s 55 of the District Court Act. That section reads as follows:

"The Court or a District Court Judge has, as regards any action or matter within its or his jurisdiction for the time being, power -

(a) to grant, and shall grant, in the action or matter such relief, redress or remedy, or combination of remedies, either absolute or conditional; and

(b) to make any order that could be made in regard to any action or matter, and shall in each such action or matter give such and the like effect to every ground of defence or counterclaim equitable or legal,

in a full and ample manner as might and ought to be done in the like case by the Supreme Court or a Judge thereof."

19 It is plain, from the terms of the section, that the power there referred to is given only in respect of an action or matter within the court's jurisdiction. The power is consequently an ancillary or auxiliary power to be exercised in the determination of claims otherwise within the jurisdiction of the court. (See Commercial Developments Pty Ltd v Mercantile Mutual Insurance (Workers' Compensation) Ltd (1991) 5 WAR 208 at 217 and 221.) As Seaman: Civil Procedure Western Australia, par 13,540 points out:

"The purpose of this grant of power is to make complete and more effective any jurisdiction the court may otherwise have (Smith v Smith [1925] 2 KB 144 at 147) and therefore the main relief must be otherwise within the jurisdiction of the court (R v Cheshire County Court Judge and United Society of Boilermakers; ex parte Malone [1921] 2 KB 694 at 700, 704, 707, 708), and if the equitable relief is really the principal relief sought it cannot be granted; Thompson v White [1970] 1 WLR 1434 at 1439."

20 Here the equitable relief which was sought against the appellant firm was, albeit no separate proceedings were commenced against it, in reality the principal relief sought. It was not in any relevant sense ancillary to the relief sought in the money claim between the first and second respondents. Nor could the mere fact that it was sought by way of a chamber summons taken out in the money claim proceedings make it so. The power was consequently not exercised in aid of any principal relief sought in a matter within jurisdiction and s 55 had, in my opinion, no application.

21 The second possible head of power is provided by the provisions of s 57(2) of the District Court Act when read with s 25 of the Supreme Court Act 1935. The former provision provides that:

" ... subject to the express provisions of any other Act, in every action or matter commenced in the Court, law and equity shall be administered according to the provisions of section 25 of the Supreme Court Act 1935 as though that section were enacted in this Act and in terms made applicable to the Court."

The latter provision empowers the Supreme Court to grant an interlocutory injunction.

22 These sections were considered in Hondros v Chesson [1981] WAR 146 (applied in Matthews v Bayview Holiday Village Pty Ltd (1989) 2 WAR 167) in which Burt CJ said (at 147) that it followed from them that the District Court has power to grant an interlocutory injunction as to a matter within its jurisdiction. His Honour referred, in this respect, to what had been said by Atkin LJ (as he then was) in De Vries v Smallridge [1928] 1 KB 482 at 488 with reference to the jurisdiction of a County Court under the County Courts Act of 1888:

"If there is a money claim within the jurisdiction of the court, then no doubt the court can give ancillary relief by way of declaration or injunction, but if there is no money claim within the jurisdiction of the court, or if there is no money claim at all, then the court has no jurisdiction to give that relief."

23 I agree with all that was said by Burt CJ. It seems to me, once again, to follow from the statutory provisions to which I have referred that the District Court can only grant such an injunction in a matter which is within its jurisdiction (cf Pelechowski v Registrar, Court of Appeal (NSW) [1999] HCA 19; (1999) 198 CLR 435 at 449).

24 In this case, as I have already pointed out, a final injunction was sought and given in proceedings which were in substance, if not in form, brought against the appellant firm of solicitors in the exercise of a supervisory jurisdiction which the court did not have. While there was a money claim within the jurisdiction of the District Court, the proceedings for an injunction were not, as I have said, ancillary to that claim. Nor, as I have also said, could they be made so merely by permitting the parties to adopt the procedure used by them. Section 57(2) consequently had, in my opinion, no application.

25 The third possible head of power is provided by one or both of s 52 and s 53(1) of the District Court Act. The former section provides that in all respects, except as expressly provided by or under the District Court Act, the practice and procedure of the District Court as a court of civil jurisdiction is to be the same as that of the Supreme Court in like matters. The latter section provides, inter alia, that "in all actions, matters and causes within the jurisdiction of the Court, a District Court Judge has for the purposes of this Act, ... all the powers and authorities of a Judge of the Supreme Court" (cf the similar wording in the more specific provisions of s 50(1) of the Act). However neither provision confers any additional jurisdiction upon a District Court Judge. Section 52 merely regulates that Court's practice and procedure in respect of matters falling within its civil jurisdiction. Section 53(1) supplements the powers and authorities of a District Court Judge in respect of actions, matters and causes already within her jurisdiction. Consequently, for the reasons already given, these provisions cannot, in my opinion, provide any basis for the grant of the injunctive relief ordered against the appellant in this case (cf Pelechowski, above, at 449).

26 I should add that the Judge below placed some reliance, in this respect, upon a decision of the District Court in the case of Robb v Thorpe (1999) 21 SR (WA) 300. That was a rather unusual case. Proceedings had been brought against a solicitor alleging negligence and breach of a retainer. A solicitor employed by the defendant who had had the conduct of the matters in respect of which complaint was made then left the employ of the defendant, set up his own practice and sought to represent the plaintiffs in the action against his former employer. The defendant took out a chamber summons seeking an order that he be restrained from doing so. In granting the order the District Court Judge relied upon s 53(1) as conferring upon the Court a "supervisory power over those who appear before it". However it seems to me, with respect, that this confuses jurisdiction and power. There is no "supervisory power" as such. Rather, there is a "supervisory jurisdiction" which, as I have said, forms part of the inherent jurisdiction of the Supreme Court in the course of which that Court exercises its powers. As I have said, s 53(1) confers powers and authorities on the District Court in matters within that Court's jurisdiction. It does not confer any additional jurisdiction on that Court.

27 It follows in my opinion that, the court having lacked the requisite jurisdiction, the proceedings in question were a nullity and the order for costs should not be allowed to stand.