Federal Magistrates Court of Australia|2010-10-14

The application to restrain Mr Shaun Temby and Norton Rose Australia from acting is put on the basis of general principle, and also a specific claim by reference to the amended statement of claim, namely paragraph 17(d)(ii) referred to above,[51] which is said to be an example of why, or how, it is that Mr Shaun Temby has not given independent and fearless advice in relation to this matter.
In the Court's view the assertion that Mr Shaun Temby and Norton Rose Australia ought to be restrained because they have not advised Mr and Mrs Temby as to the improbability of the alleged representations in paragraph 17(d)(ii) of the amended statement of claim being true, and therefore it being improbable that they were made, cannot succeed. Ultimately, the question of whether a representation was made or not is a question of fact for the Court to determine. In misleading and deceptive conduct cases under s.52 of the TP Act, even "remarkable imprudence"[52] may not break the chain of causation. As one very learned author has observed:
- "Thus the chain of causation is not broken by a failure by the victim to take reasonable care of his own interests in failing to make proper inquiry (for example in failing to examine carefully the accounting records of a motel sold), anymore than it is broken when the plaintiff in deceit could have discovered the falsity by the exercise of care."[53]
It is part of the underlying rationale of the misleading and deceptive conduct laws that they are intended to afford protection to both gullible and unsuspecting persons.[54] The Court is therefore not prepared to find that Mr Shaun Temby ought to have advised Mr and Mrs Temby that their version of the facts contained in the amended statement of claim is improbable, as that is a matter which must be determined at hearing. Even then it may not affect the Respondents' liability, in the event that they are to be found liable for a contravention of s.52 of the . There is therefore no basis on this account to restrain Mr Shaun Temby from acting for Mr and Mrs Temby.

Mr Shaun Temby has a personal interest of the closest kind in the client, namely the familial blood relationship between parent and child, and Counsel for Mr and Mrs Temby conceded that such matters entailed "...prospective danger, that a legal representative in that familial relationship may not have the objectivity and independence in respect of advising their clients independently...";[56] 2. a personal interest may be pivotal when a lawyer comes to advise of: 1. the risks of litigation; or 2. the desirability or otherwise of a settlement; or 3. the exercise of discretion in relation to certain aspects of the case (such as what evidence is or is not included in an affidavit sent to Counsel or filed in the Court, or what information is relayed to Counsel in the heat of forensic battle);[57]

although the cases concerning familial relationships cited by Professor Dal Pont appear to arise from transactions relating to real estate or loan sureties, the principles apply equally as strongly, and if not more so, to litigation, and in particular the discretionary judgments that must be made by a lawyer in the course of litigation; and

although independent Counsel has apparently been retained, that retainer is "subject to availability". Therefore, it may be the case that Mr Shaun Temby, and others in Norton Rose Australia, will be required to make decisions in relation to the litigation without the assistance of independent Counsel. In any event, independent Counsel will only be able to act in accordance with his retainer and brief, and Counsel's role would not ordinarily displace the usual solicitor/client relationship. Although the primary conduct of the matter appears as if it will fall to others within Norton Rose Australia there is no evidence of steps taken to isolate Mr Shaun Temby, or of undertakings given by him or other partners of Norton Rose Australia, or by Mr and Mrs Temby, as to the future conduct of the matter, and, in those circumstances, the Court cannot be sure that action will be taken, and decisions made, by Mr Shaun Temby and Norton Rose Australia which are in the objective best interests of Mr and Mrs Temby.
The Court has reached the view that a fair-minded, reasonably informed member of the public would consider it appropriate in the interests of justice to restrain Mr Shaun Temby from acting as a lawyer because of the actual or likely conflict of interest arising from him acting for his parents, Mr and Mrs Temby. The Court is therefore of the view that Mr Shaun Temby ought to be restrained from acting in this matter. The application seeks to restrain Norton Rose Australia from acting as well, and in accordance with ordinary principles,[58] it follows that Norton Rose Australia ought to also be restrained from acting for Mr and Mrs Temby. There will be an order, in the nature of an injunction, restraining both Mr Shaun Temby and Norton Rose Australia from acting for Mr and Mrs Temby.

The Court has concluded that:
1. Mr Metaxas ought to be restrained from acting as Counsel for the Respondents; and.
2. Mr Shaun Temby and Norton Rose Australia ought to be restrained from acting as lawyers for Mr and Mrs Temby.
There will be orders, in the nature of injunctions, to give effect to the above conclusions.
The matter is otherwise adjourned to a directions hearing at 9.00am on 8 November 2010.
The Court will hear the parties as to costs.

I certify that the preceding 33Error! Style not defined.!Syntax Error, !Error! Style not defined.Error! Style not defined.!Syntax Error, !thirty-threethirty-three (33) paragraphs are a true copy of the reasons for judgment of Lucev FM

[8] No issue was raised in these proceedings as to any possible effect of s.51AF of the TP Act, but as to which, see Cass v Kingston Capital Limited [2010] FMCA 762.

[9] Affidavit of Arthur Metaxas, sworn 16 June 2010, para.15 ("Mr Metaxas' Affidavit"); Affidavit of Carolyn May Dearing, affirmed 24 May 2010, para.5 ("Ms Dearing's Affidavit").

[10] Ms Dearing's Affidavit, para.6; Amended Statement of Claim, paras.1-10, 26, 29, 30 and 33.

[22] Mr Metaxas' Affidavit, paras.25 and 27.

[31] Affidavit of Luke Hager, sworn 21 May 2010, annexure LH3.

[33] Affidavit of Shaun Michael Temby, sworn 11 June 2010 ("Mr Shaun Temby's Affidavit").

[34] Mr Shaun Temby's Affidavit, para.2.

[35] Mr Shaun Temby's Affidavit, para.3.

[36] Mr Shaun Temby's Affidavit, para.4.

[37] Canberra Residential Developments Pty Ltd v Brendas [2009] FCA 1484 at para.16 per Stone J ("Canberra Residential Developments").

[38] Bahonko v Nurses Board of Victoria (No 3) [2007] FCA 491 at para.4 per Middleton J ("Bahonko"), summarising principles identified in Geelong School Supplies Pty Ltd v Dean [2006] FCA 1404; (2006) 237 ALR 612 at 617-620 per Young J; [2006] FCA 1404 at paras.24-35 per Young J ("Geelong School Supplies"), both cases cited in Canberra Residential Developments at para.16 per Stone J.

[39] Canberra Residential Developments at para.20 per Stone J.

[40] Skipworth v State of Western Australia & Ors (No. 2) [2008] FMCA 544; (2008) 218 FLR 16 at 27 per Lucev FM; [2008] FMCA 544 at para.34 per Lucev FM ("Skipworth (No. 2"), where it is also pointed out that the Federal Court and Family Court have no inherent jurisdiction, but an implied incidental power to make orders necessarily incidental to express power, for the reasons set out in detail in Skipworth (No. 2) FLR at 24-27 per Lucev FM; FMCA at paras.29-34 per Lucev FM, citing DJL v Central Authority (2000) 201 CLR 226; [2000] HCA 17, VTAG v Minister for Immigration and Multicultural and Indigenous Affairs (2005) 141 FCR 291; [2005] FCAFC 91, and Re Read (2007) 164 FCR 237; [2007] FCA 1985. See also J Tarrant, Amending Final Judgments And Orders (Sydney: Federation Press 2010) pages 6-7.

[42] Woolley v Ritchie [1999] ANZ Conv R 385 at 388.

[43] G E Dal Pont, Lawyers' Professional Responsibility (4th Edn) (Sydney: Thomson Reuters (Professional) Australia Limited, 2010) pages 147-148 ("Lawyers' Professional Responsibility"). The two preceding footnotes reproduce the footnotes to the quoted text. See also page 377 which provides as follows: "Lawyers should also be wary of the dangers of representing friends or relatives. In addition to the issues of independence and objectivity, lawyers who do so may be tempted to cut corners, accept work beyond their competence, or be less exact with issues of professional responsibility (for instance, the duty of confidentiality)".

[44] Geelong School Supplies ALR at 622-623 per Young J; FCA at paras.44-45 per Young J; and, see generally, Holborow v Macdonald Rudder [2002] WASC 265, and Y Ross, Ethics in Law: Lawyers' Responsibility and Accountability in Australia (5th Edn) (Sydney: LexisNexis Butterworths, 2010), page 463 ("Ethics in Law").

[47] FM Act, ss.3 and 42; FMCA Rules, r.1.03.

[48] The "proscription against conflict between interest and duty serves a prophylactic function ...[and] is directed at avoiding a position where a lawyer may even be tempted to favour self-interest, thus avoiding even the appearance of conflict": Lawyers' Professional Responsibility, page 144. See also Spector v Ageda [1973] Ch 30 at 47 per Megarry J; Black v Taylor [1993] 3 NZLR 403 at 406 per Cooke P; 408 per Richardson J; and 418 per McKay J; Ethics in Law, page 441: "The appearance of impropriety has still played a role in stopping legal representation."

[50] FM Act, s.15(a) provides power for the Court to make such orders, including interlocutory orders, as the Court thinks appropriate, which includes the power to grant injunctions: Kelair Holdings Pty Ltd v Archer Consolidated Equities Pty Ltd [2009] FMCA 1127 at para.19 per Lucev FM; Mather v Luttrell Limited & Ors [2003] FMCA 62 at para.26 per McInnis FM.

[52] Nella v Kingia Pty Ltd (1989) ATPR (Digest) 46-046 at 53,140 per French J.

[53] J D Heydon, Trade Practices Law, Vol. 2A (Thomson Reuters: Sydney) para.18.1738.6.

[54] Taco Company of Australia Inc v Taco Bell Pty Ltd [1982] FCA 136; (1982) 42 ALR 177 at 202 per Deane and Fitzgerald JJ.

[55] Swevenings Pty Ltd v Ferguson Consolidated Holdings Pty Ltd & Anor (No. 5) [2010] FMCA 63 at para.96 per Lucev FM

[57] See, for example, Guss v Law Institute of Victoria Ltd [2006] VSCA 88 (solicitor acting for spouse in Supreme Court of Victoria knowingly and deliberately failing to discover a relevant document).

[58] Lawyers' Professional Responsibility at page 144.

Securities and Investments Commission Act 2001

Magistrates Act 1999

Magistrates Court Rules 2001

Temby & Anor v Chambers Investment Planners Pty Ltd & Anor [2010] FMCA 783 (14 October 2010)

Bahonko v Nurses Board of Victoria (No 3) [2007] FCA 491

Canberra Residential Developments Pty Ltd v Brendas [2009] FCA 1484

Cass v Kingston Capital Limited [2010] FMCA 762

DJL v Central Authority (2000) 201 CLR 226; [2000] HCA 17

Geelong School Supplies Pty Ltd v Dean (2006) 237 ALR 612; [2006] FCA 1404

Guss v Law Institute of Victoria Ltd [2006] VSCA 88

Holborow v Macdonald Rudder [2002] WASC 265

Kelair Holdings Pty Ltd v Archer Consolidated Equities Pty Ltd [2009] FMCA 1127

Mather v Luttrell Limited & Ors [2003] FMCA 62

Skipworth v State of Western Australia & Ors (No. 2) (2008) 218 FLR 16; [2008] FMCA 544

Swevenings Pty Ltd v Ferguson Consolidated Holdings Pty Ltd & Anor (No. 5) [2010] FMCA 63

Taco Company of Australia Inc v Taco Bell Pty Ltd [1982] FCA 136; (1982) 42 ALR 177

VTAG v Minister for Immigration and Multicultural and Indigenous Affairs (2005) 141 FCR 291; [2005] FCAFC 91

the inherent jurisdiction of the Court to control the conduct of legal practitioners as officers of the Court.[38]
In Canberra Residential Developments the Federal Court, having referred to the above grounds, went on to observe as follows:
- 20. Finally, the inherent jurisdiction of the Court to control its processes in aid of the administration of justice would only be evoked to restrain a legal practitioner from acting for its client if "a fair-minded, reasonably informed member of the public would conclude that the proper administration of justice" warrants such restraint; Geelong School Supplies at [35]. It is a jurisdiction that "is to be regarded as exceptional and is to be exercised with caution"; Kallinicos v Hunt [2005] NSWSC 1181; (2005) 64 NSWLR 561 at 582. In this case the emphasis must be on "reasonably informed".[39]
Accepting that this Court has no inherent jurisdiction, but rather an implied incidental power to make orders necessarily incidental to express powers,[40] and substituting the concept of implied incidental power for inherent jurisdiction in the above summary and quotation, the grounds set out in Bahonko, Geelong School Supplies and Canberra Residential Developments are the grounds on which the Court might restrain a lawyer from acting for a party. In this case the Court deals with the matter on the basis of its power to control the conduct of legal practitioners as officers of the Court.
In relation to lawyers acting for relatives there is a comparative dearth of authority. One reason for this, at least in modern times, might be that the potential conflict of interest is so obvious that modern lawyers refer matters involving their relatives to independent solicitors. Professor Dal Pont, however, puts the position as follows:
- "Especial care should be taken where a lawyer proposes to act in a transaction for herself or himself and a family member or associate. In addition to potentially compromising a lawyer's independent judgment, such a situation is fraught with potential for conflict of interest. The point is well illustrated by Woolley v Ritchie_, where a solicitor acted on his own behalf and for his de facto spouse in real estate transactions. Upon inquiring, the de facto spouse was told by the solicitor that it was unnecessary for her to seek independent legal advice. Salmon J held that the spouse was not fully informed as to the implications of the transactions, which included the transfer of property and a mortgage in her name to a trust. His Honour held that the solicitor was under a duty to ensure that his de facto spouse was fully informed and freely consented, and the solicitor's conflict stemming from his interest in the transactions requiring securing for the spouse independent legal advice._

Temby & Anor v Chambers Investment Planners Pty Ltd & Anor [2010] FMCA 783

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Temby & Anor v Chambers Investment Planners Pty Ltd & Anor [2010] FMCA 783 (14 October 2010)