Sacca v El Saafin

Background 6 The factual background to this matter can be conveniently summarised as follows. 7 Between 2011 and 2018, NOH Legal and Mr El-Hissi were retained from time to time by Mr El Saafin's family company, Saafin Constructions Pty Ltd, by Mr El Saafin's brothers, and on occasion by Mr El Saafin himself. The matters in which Mr El-Hissi acted for Mr El Saafin directly were in respect of a draft joint venture deed regarding a potential development in Brighton and, it appears, a debt recovery matter in the Magistrates' Court in which Mr El Saafin was a named defendant. 8 Mr El-Hissi deposed to the fact that he was not the 'lawyer of choice' for Mr El Saafin or Saafin Constructions and never received any confidential information from either during the course of his limited engagements. Mr El-Hissi also maintained that he did not have any relevant knowledge about the financial position or strategic interests of Mr El Saafin or Saafin Constructions. 9 In May 2018, a proceeding was commenced by Mr El Saafin's brothers (Hassan and Mohamed) on behalf of Saafin Constructions in the Supreme Court in relation to a property development at 65-67 Arden Street, North Melbourne (the Supreme Court Proceeding). George Sacca, the First Plaintiff in this proceeding, is a defendant in that proceeding and NOH Legal were originally retained to act in the matter on behalf of some of the defendants (including Mr Sacca). The Supreme Court Proceeding concerns different entities and different issues, such that there is in substance no commonality of facts between the matters being agitated in the Supreme Court Proceeding and the present proceeding. 10 On 24 May 2018, Mr El Saafin and his brother, Hassan, complained to the Legal Services Commissioner (LSC) regarding Mr El-Hissi's involvement in the Supreme Court Proceeding. Mr Mazaris of the LSC notified Mr El-Hissi of the complaint on 29 May 2018. On 31 May 2018, Mr Mazaris wrote to Mr El-Hissi with a proposal that Mr El Saafin and his brother had put forward to resolve the complaint. Mr El-Hissi accepted the proposal on the following day, 1 June 2018, agreeing to cease to act against Mr El Saafin, his brothers and Saafin Constructions on the basis that the complaint would be withdrawn. 11 In the course of agreeing to cease acting in the Supreme Court Proceeding, Mr El-Hissi did not make any admission of wrongdoing nor did he provide any undertaking to the LSC. Indeed, the complaint was expressly resolved on the basis that if Mr El-Hissi started to act against either of them again at some point in the future, they could renew their complaint or file a new one. 12 Following these events, NOH Legal was replaced as the solicitor on the record by Mark Halse in the Supreme Court Proceeding. It appears that Mr El-Hissi continued to provide some limited assistance to Mr Halse. Indeed, in an email dated 4 September 2018, Mr El-Hissi acknowledged that he had assisted Mr Halse with the drafting of documents from June 2018 to August 2018 but maintained that neither he nor NOH Legal had acted as solicitor for any of the parties to the Supreme Court Proceeding after the complaint was resolved on 1 June 2018. 13 On 10 September 2018, an interim injunction was granted, by consent, to restrain Mr El-Hissi from acting. A further order was made on 17 September 2018 to the same effect. This injunction remains in place because, for reasons that are not presently relevant, the hearing of an application to restrain Mr El-Hissi from acting in the Supreme Court Proceeding was adjourned until late 2020, by which time Mr El-Hissi formed the view that it was impractical to have the restraint application heard and determined prior to the trial scheduled to commence in February 2021. At no time has there been an adjudication on the merits of the restraint application nor any findings made in relation to a potential conflict of interest in the Supreme Court Proceeding. 14 The present proceeding was filed on 12 November 2018. Before filing the proceeding, Mr El-Hissi contacted Mr El Saafin on 24 September 2018 stating, amongst other things, "[s]o as to ensure our client is not disadvantaged by a delay tactic of referring a potential conflict to the Legal Services Commissioner's office at a later stage in the proceeding, we ask that you advise whether you intend to raise an issue in respect of our engagement." On 26 September 2018, Mr Nair replied, confirming that he acted on behalf of Mr El Saafin and objected to Mr El-Hissi and NOH Legal acting in this proceeding. After some further correspondence, Mr Nair wrote to Mr El-Hissi on 2 October 2018 indicating that if Mr El-Hissi or NOH Legal continued to act in relation to the present dispute, they would bring an application seeking orders to restrain Mr El-Hissi from acting. 15 On 23 November 2018, a first case management hearing was held before Justice Moshinsky. At that hearing, Mr El Saafin was represented by Mr Nair of Hicks Oakley Chessell Williams and Joseph Carney of counsel. Mr El-Hissi appeared for the Plaintiffs. Counsel for Mr El Saafin foreshadowed, at that time, bringing an application to restrain Mr El-Hissi. Accordingly, orders were made requiring such an application to be filed by 6 December 2018. It is significant that, on 12 December 2018, Hicks Oakley Chessell Williams filed written submissions in this matter, settled by Mr Carney, which stated that, having considered the issue "no point is to be taken." As will become apparent, this was the first of many opportunities that Mr El Saafin had to bring the present application. 16 At a hearing before me on 17 October 2019, Mr El Saafin (then self-represented) raised the question of Mr El-Hissi acting in the matter, at which time I informed him that he was entitled to bring an application to restrain Mr El-Hissi from acting if so advised. At a further hearing before me on 30 October 2019, Mr El Saafin again raised the issue of seeking to restrain Mr El-Hissi from acting. In response, I said: "I made this clear, I think, on the last occasion, if you want to…make an application to this [C]ourt to restrain Mr El-Hissi from acting in this proceeding, you will have to make that formally as a separate application." 17 Notwithstanding my direction at the time, Mr El Saafin did not make any application to restrain Mr El-Hissi from acting for the Plaintiffs in this proceeding at or about that time. Instead, on 19 December 2019, Mr El Saafin made a complaint to the LSC regarding Mr El-Hissi's continued involvement in the proceeding. Mr Nair deposes to the fact that this complaint was only made in relation to Nadia El-Hissi, a solicitor employed by NOH Legal. There is contrary evidence from Mr El-Hissi, who indicates that his communications with Mr Mazaris at that time related to the involvement of NOH Legal generally. 18 In any event, it is clear that Mr El-Hissi wrote to Mr Mazaris at the LSC on 21 February 2021, setting out the matters I have referred to above and submitting that the complaint "is frivolous and vexatious" and ought to be dismissed as an abuse of process. On 24 February 2020, Mr El-Hissi received an email from Mr Mazaris confirming that Mr El Saafin had withdrawn the complaint lodged with the LSC. This was yet a further election by Mr El Saafin not to bring an application to restrain Mr El-Hissi and / or NOH Legal from acting against him in the present proceeding. 19 On 14 August 2020, I made orders listing the matter for trial (on an estimate of three days) commencing on 1 March 2021. I also made consequential orders extending the time for compliance with my orders made on 5 December 2019 in relation to pre-trial discovery, witness outlines, expert reports, and the preparation and filing of a court book. As at mid-February 2021, the Plaintiffs had complied with the pre-trial directions and it appeared that they were in a position to proceed with the trial on 1 March 2021. Mr El Saafin, on the other hand, had effectively ceased communicating with NOH Legal and had not complied with pre-trial directions. 20 On 8 February 2021, Mr El Saafin wrote to the Court asking for an extension of time to comply with pre-trial orders and, as a corollary of this, an adjournment of the trial fixed for 1 March 2021. Accordingly, I listed the matter for a case management hearing on 15 February 2021, at which time Mr El Saafin referred, in a general way, to ongoing settlement discussions and requested an adjournment. I adjourned the case management hearing until 23 February 2021 and informed Mr El Saafin that he either needed to comply with pre-trial directions or make a formal application, supported by affidavit material, for an adjournment of the hearing fixed for 1 March 2021. 21 On 23 February 2021, approximately two hours before the case management hearing was scheduled to commence, and without prior notice, Mr El Saafin filed the present application to restrain Mr El-Hissi. Despite my reluctance to do so, I decided to vacate the hearing and list the present application for determination on 3 March 2021. I did so because the lateness of the application made it effectively impossible in my view to determine a matter of such seriousness without allowing both parties to file affidavit material and submissions, and without having an opportunity to hear full argument. 22 It is apparent from the context set out above that: (1) in November and December 2018, Mr El Saafin elected not to bring any restraint application against Mr El-Hissi, despite being legally represented and assisted by counsel; (2) on several occasions thereafter, and as early as October 2019, I informed Mr El Saafin that he may bring an application to restrain Mr El-Hissi but must do so formally and promptly; and (3) it was not until a few days before the hearing was scheduled to commence that Mr El Saafin made the present application. 23 I pause to add that Mr Sacca is an elderly man of 77 years of age having been born on 17 January 1944. At the core of this proceeding is a transaction in which Mr Sacca obtained a loan to finance the purchase of a property at Unit 3, 357 Barry Road, Campbellfield and the LBC Radio Station from the Commonwealth Bank for a total sum of $1 million. The facility is guaranteed by Mr Sacca and his wife, who continue to be liable for the finance facility, at an average cost of $2,000-$3,000 per month. 24 There can be no doubt that the delay in bringing this application, which resulted in an adjournment of the hearing scheduled to commence on 1 March 2021, had the potential to cause financial loss and additional stress to Mr Sacca. The delay in bringing this application, and the prejudice caused to the Plaintiffs by the delay in hearing the proceeding if Mr El-Hissi was to be restrained from acting, are significant matters which inform my decision to dismiss the present application.

Consideration 25 The authorities recognise three potential bases that might justify the exercise of the Court's jurisdiction to restrain a solicitor from acting against a former client.

Misuse of confidential information 26 The first, and usual, basis to restrain a solicitor from acting is that there is a 'real and sensible possibility of the misuse of confidential information': Farrow Mortgages Services Pty Ltd (in liquidation) v Mendall Properties Pty Ltd [1995] 1 VR 1 at 5 (Hayne J); Prince Jefri Bolkiah v KPMG (a firm) [1999] 2 AC 222 at 235 (Lord Millett). In the present application, there was no submission seeking to restrain Mr El-Hissi from acting due to the potential misuse of confidential information. Indeed, there could not be, as Mr El Saafin did not identify any specific confidential information in the possession of Mr El-Hissi or NOH Legal that might be misused. 27 Further, and relatedly, Mr El Saafin did not suggest that any of the "getting to know you" factors - being confidential information about a client such as the client's personality, character, honesty, strengths, weaknesses and attitudes to litigation - might amount to confidential information that could be used against him in the present proceeding: Yunghanns v Elfic Ltd (formerly known as Elders Finance & Investment Co Ltd) (unreported, Supreme Court of Victoria, Gillard J, 3 July 1998) at 10-11. As above, there was no evidence of Mr El-Hissi being privy to information about Mr El Saafin's personality, character or strategic interests, which might constitute confidential information capable of being misused.

Duty of loyalty 28 The second potential basis, which has not been unanimously adopted in the authorities, is said to arise from a duty of loyalty owed by a solicitor to their former client even after the solicitor's retainer has been terminated or completed: Spincode Pty Ltd v Look Software Pty Ltd [2001] VSCA 248; 4 VR 501 at [59]-[60] (Brooking JA); see also at [63] (Chernov JA) remarking that there was a "compelling case" for such a duty. Importantly, if accepted, the duty of loyalty only arises where the solicitor is sought to be restrained "in the same or a closely related matter": Spincode at [52] (Brooking JA); see also at [63] (Chernov JA), referring to the "same or substantially the same proceeding". 29 Counsel for Mr El Saafin submitted that the duty of loyalty should be accepted as a matter of principle and relied upon that duty in support of the present application. Conversely, the Plaintiffs relied upon decision of Beach J in this Court in Dealer Support Services Pty Ltd v Motor Trades Association Australia Limited [2014] FCA 1065; 228 FCR 252 at [40]-[91] (Beach J), in which his Honour expressly declined to adopt the duty of loyalty. See also Nash v Timbercorp Finance Pty Ltd (in liq), in the matter of the bankrupt estate of Nash [2019] FCA 957; 137 ACSR 189 at [122] (Anderson J) and the criticism of Riordan J in ACN 092 675 164 Pty Ltd (in liq) v Suckling [2018] VSC 620; 56 VR 448 at [56]-[66]. 30 It is unnecessary for me to decide in the present application whether the duty of loyalty should be recognised as a further distinct, but necessarily related, ground upon which to restrain a solicitor from acting. This is because there is no apparent basis, nor was one articulated, as to why the matters in which Mr El-Hissi has acted for Mr El Saafin (being the review of a joint venture deed and the recovery of a debt in the Magistrates' Court) are closely related to the present proceeding. Further, I do not accept that the Supreme Court Proceeding and the present proceeding are closely related. So much so was suggested by Justice Riordan in the Supreme Court Proceeding, when he said he "seriously doubted" whether the issues in this proceeding had any relevance to that matter. In any event, it is inapt to make that comparison as Mr El-Hissi did not act for, but rather against, Mr El Saafin in the Supreme Court Proceeding. 31 If the duty of loyalty had arisen on the facts of the present application, I would have been required to consider whether it should be adopted as a separate principle, having regard to whether the above single instance decisions of this Court were "plainly wrong", a conclusion which I could not arrive at lightly: see, eg, Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22; 230 CLR 89 at [135] (Gleeson CJ, Gummow, Callinan, Heydon and Crennan JJ). However, as it is unnecessary to decide that question in the present application, I decline to offer any opinion concerning the correctness of the duty of loyalty in the absence of a Full Court authority of this Court.

Proper administration of justice 32 The third basis arises from the Court's inherent jurisdiction to ensure the due administration of justice, to protect the integrity of the judicial process and to restrain solicitors from acting in a particular case as part of its supervisory jurisdiction. The test to be applied is whether a fair-minded, reasonably informed member of the public would conclude that the proper administration of justice required that the solicitor in question be so restrained, at all times giving due weight to the public interest that a litigant should not be deprived of his or her choice of solicitor without good cause: Grimwade v Meagher [1995] 1 VR 446, 452 (Mandie J); see also Spincode at [32]-[44], [48] and [60] (Brooking JA). 33 The Court's inherent jurisdiction has been variously described as "exceptional" or "extraordinary": see, eg, Dealer Support Services at [97] (Beach J); Kallinicos v Hunt [2005] NSWSC 1181; 64 NSWLR 561 at [76] (Brereton J) and the cases cited therein. It is a discretionary jurisdiction which requires the Court to consider whether a lawyer changing sides might subvert the appearance of justice being done. This consideration is to be balanced with the cost, inconvenience and impracticality of requiring lawyers to cease acting, particularly at a late stage of the proceeding: Re IPM Group Pty [2015] NSWSC 240 at [51] (Black J). 34 The authorities emphasise that the timeliness of the application to restrain a solicitor, and any delay in that process, is a significant matter which tends against an order restraining the solicitor from continuing to act: Colonial Portfolio Services Ltd v Nissen [2000] NSWSC 1047; 35 ACSR 673 at [174] (Rolfe J); Re IPM Group at [63]-[66] (Black J); Turner v Turner [2018] NSWSC 1140 at [91] (Sackar J). Indeed, it has been observed that "this is an area in which a litigant should act promptly" (H Stanke & Sons Pty Ltd v Von Stanke [2006] SASC 308; 95 SASR 425 at [81] (White J)) and that a party "must take the point at the earliest opportunity" (Frigger v Kitay (No 10) [2016] WASC 63 at [31] (Le Miere J). 35 While delay on its own is not necessarily fatal or determinative of the question as to whether the Court should exercise its inherent jurisdiction, it is a highly relevant factor. In the circumstances of this case, I do not accept that a reasonably informed member of the public would conclude that the proper administration of justice requires Mr El-Hissi to be restrained. To the contrary, in my view a reasonably informed member of the public would regard it as an unfair burden on the Plaintiffs if they were unduly put to the expense, inconvenience and possible tactical disadvantage of retaining new solicitors. 36 I do not accept Mr El Saafin's submission that the proper administration of justice requires Mr El-Hissi to comply with an "undertaking" or "agreement" he purportedly proffered to the LSC. Having regard to the contemporaneous communications between Mr El-Hissi and the LSC, I find that Mr El-Hissi gave full and frank disclosure regarding his involvement in this proceeding and complied with his professional ethical obligations. I also do not accept the characterisation of Mr El-Hissi's correspondence with the LSC as an "undertaking" not to act against Mr El Saafin, his brothers or Saafin Constructions generally. Properly understood, Mr El-Hissi provided an assurance that he would cease to act against Mr El Saafin, his brothers and Saafin Constructions in relation to the matters the subject of the complaint and, if Mr El-Hissi subsequently acted against them in the future, they could either renew their complaint, file a new complaint or bring an application to restrain Mr El-Hissi. 37 Further, I do not accept Mr El Saafin's evidence that he did not understand his right to bring an application to restrain Mr El-Hissi or the manner in which such an application should be made. Mr El Saafin made repeated elections - either with the assistance of counsel or in his own capacity - not to bring the present application, despite several opportunities to do so. If nothing else, what was required should have been apparent to Mr El Saafin given that a like application had been brought against Mr El-Hissi in the Supreme Court Proceeding and Mr El Saafin, through his solicitors, foreshadowed bringing a restraint application in relation to this proceeding when Mr El-Hissi gave him notice that it would be filed in due course. 38 It is difficult to conceive of a more striking example in which a party has not acted promptly and has not taken the earliest opportunity to bring an application to restrain a solicitor. The late timing of the application, the lack of notice and the request for an adjournment only days before the application was brought raises a reasonable inference that the application to restrain Mr El-Hissi from continuing to act was not bona fide but calculated to lead to the hearing of the proceeding being adjourned effectively on the eve of the hearing. 39 However, it is unnecessary for the purpose of determining this application to consider whether Mr El Saafin's application was motivated by a collateral purpose and thus constitutes an abuse of process. If an application is made for indemnity costs in relation to the present application, which in turn brought about the adjournment of the hearing, such an application would require proof on the highest civil standard to succeed: Briginshaw v Briginshaw [1938] HCA 34; 60 CLR 336 at 362 (Dixon J). Further, the question would likely require the Court to make findings concerning Mr El Saafin's credit. 40 I decline to determine any such matter at this time for several reasons. First, the efficient and cost effective determination of proceedings is generally impeded by satellite applications collateral to the main proceeding and should be discouraged in all but exceptional circumstances. Second, while there is a reasonable argument that the present application is an example of such an exceptional case, any determination by me as the trial judge of questions concerning Mr El Saafin's credit may foreseeably lead to an application that I recuse myself from hearing the proceeding and, if successful, potentially lead to further delay in hearing the proceeding. If such a course of events were to ensue, that would serve only to aggravate the prejudice already suffered by the Plaintiffs. For these reasons, I have decided to reserve all questions of costs until after the hearing of the proceeding.

Disposition 41 Accordingly, the application must be dismissed. I also make orders requiring the parties to attend a case management hearing, so that the matter can be fixed for hearing and other consequential timetabling orders can be made. I certify that the preceding forty-one (41) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Anastassiou.