NSW’s latest spin on Spincode’s duty of loyalty

In Cleveland Investments Global Ltd v Evans [2010] NSWSC 567, Justice Ward reviewed the authorities spinning off Spincode Pty Ltd v Look Software Pty Ltd [2001] VSCA 248; (2001) 4 VR 501, in which Justice of Appeal Brooking set out his views in relation to the ‘duty of loyalty’ as a grounds for restraining solicitors from acting.  Her Honour reviewed the authorities in considerable detail (so that the judgment is a useful repository of the state of the law up there in NSW), and concluded: Continue reading “NSW’s latest spin on Spincode’s duty of loyalty”

Commissioner’s obligation to charge dishonesty if he intends to allege it

Relatively recently, I posted on the question of whether a Bureau de Spank desiring to rely on a practitioner’s dishonesty or other form of conscious wrongdoing must expressly allege it in the charge, and discussed Walter v Council of Queensland Law Society Incorporated (1988) 77 ALR 228 at 234; [1988] HCA 8.  Now, in Legal Services Commissioner v Madden (No 2) [2008] QCA 301 the Queensland Court of Appeal has had a go, and reversed a decision of the Court’s Chief Justice sitting on the Legal Practice Tribunal.  The solicitor had previously been disciplined in relation to his trust account.  He was charged with gross delay in litigation which resulted in applications by the other side to compel the achievement of various interlocutory steps.  He dealt with those applications without advising his client, agreed on his client’s behalf to pay costs, withdrew money to pay those costs from monies held in trust on account of fees and disbursements, and then charged the client fees for his work in fixing up his own mistake.  He also acted for both husband and wife in the preparation of a pre-nup, apparently stuffing it up, and then later acted in a matrimonial dispute for the husband alone, described as a particularly obvious conflict of duties.

The Chief Justice made findings of dishonesty in the absence of any allegation of dishonesty in the charge.  One might say, in fact, that he went out of his way to do so.  First he sought comment in relation to whether on the agreed facts, the Tribunal was free to draw inferences that dishonesty actuated the solicitor’s conduct, and invited the Commissioner to amend the charge so as to allow exploration of that issue.  His Honour adjourned the hearing to give the Commissioner time to think about that. On the return of the hearing, the Commissioner declined the invitation to amend.  So the Tribunal put out a document specifying, as a matter of procedural fairness, the inferences it was considering drawing, and invited argument.  The solicitor swore an affidavit responding to the Tribunal’s document.  The Commissioner’s counsel cross-examined the solicitor, but did not put it to him that he had acted dishonestly. The Tribunal then concluded that the solicitor had acted dishonestly, and decided to strike him off rather than go with the fine and reprimand recommended by the Commissioner.  Ooffa!

‘Wrong way. Go back!’ said the Court of Appeal.  It started with a general proposition:

’54 It is … a well recognised rule of practice in civil proceedings that, although the word “dishonesty” is not necessarily required, any charge of dishonesty must be made in clear terms.  In a well known passage in Belmont Finance Corporation Ltd v Williams Furniture Ltd & Ors [1979] Ch 250 at 268  Buckley LJ said: Continue reading “Commissioner’s obligation to charge dishonesty if he intends to allege it”

Conflict applications to restrain opposing solicitors from acting not interlocutory

In Legal Practice Board v Lashanky [2008] WASC 294, the Supreme Court of Western Australia’s Justice Chambers said that applications to restrain solicitors from acting are not interlocutory applications, so that affidavit evidence may not be given from information and belief (i.e. the hearsay prohibition is not relaxed as it is for interlocutory applications):

’29    Under O 37 r 6(2) of the Rules of the Supreme Court 1971 (WA), an affidavit used for the purposes of interlocutory proceedings may contain statements of information and belief. However, an application to restrain a solicitor from acting is not an interlocutory proceeding. Continue reading “Conflict applications to restrain opposing solicitors from acting not interlocutory”

Latest Family Court lawyer’s conflict case

Bracewell & Southall [2008] FamCA 687, a 13 August 2008 decision of Justice Bennett of the Family Court sitting in Melbourne is the latest on lawyers’ conflicts of duties in the context of family law — a whole relatively separate sphere of analysis of lawyers’ conflicts.  It seems to me that injunctions restraining lawyers from acting on the third ‘administration of justice’ limb are becoming more common.  This is an example of the trend.  Solicitors who acted for the Department of Human Services in a child protection application against a woman were restrained from subsequently acting for her husband in matrimonial proceedings involving issues in relation to a different child borne not to the husband but to another man. The conclusion read: Continue reading “Latest Family Court lawyer’s conflict case”

Both sides apply to restrain the other’s lawyers from acting

I prepared an application to restrain a firm of solicitors from acting in a Corporations List matter in the Supreme Court recently, and so have been reading the latest cases about conflict injunctions. The very latest is TJ Board & Sons Pty Ltd v Castello [2008] VSC 91, where the plaintiff applied unsuccessfully to restrain the defendants’ solicitors from acting, and the defendants applied to restrain the plaintiff’s solicitors from acting. Neither succeeded in convincing Justice Hollingworth. The first application is interesting in making some comment on:

  • the materiality of the evidence which a solicitor must be likely to give; and
  • the extent of a personal interest in the outcome of the litigation as a result of participation in the controversial events which a solicitor must have

before he or she will be enjoined from acting because of a conflict of duty and interest.

The second application is a relatively unremarkable application of the law relating to confidential information based conflicts which allegedly arose out of a pre-retainer 20 minute ‘meet and greet’ which did not lead on to a retainer. Continue reading “Both sides apply to restrain the other’s lawyers from acting”

The US take on past client / current client duty conflicts based on the ‘getting to know you factors’

America’s Legal Profession Blog had posted yesterday on a conflicts case about what we in Australia would call “the getting to know you factors”. The case was Hurley v Hurley, decided on 22 May 2007 by a 5 judge bench of the Maine Supreme Judicial Court. The background is that a lawyer may be prevented from acting against a former client even in a matter unrelated to the earlier retainer and where no specific confidential information was obtained in the earlier retainer which could be put to use against the former client in the new retainer. A lawyer may be prevented from acting in those circumstances where the earlier retainer or retainers was or were of such an intimate character that the lawyer came to know so much about the former client in a general way that it would be unjust to let them loose on a former client’s opponent.

The seminal case is probably Yunghanns v Elfic Ltd, a 3 July 1998 decision of Victoria’s Supreme Court’s Justice Gillard. (The rule does not apply, in general, to barristers acting against institutional litigants such as insurance companies and banks for whom they have acted in the past: Mintel International Group Ltd v Mintel (Australia) Pty Ltd [2000] FCA 1410 at [43] to [44]). In the American case, one personal injury retainer, in which the lawyer gained insights into the former client’s ‘ability to testify under oath, her reactions to her adversary, her patience with the protracted process, her ability to accept compromise, her ability to handle stress, and the way in which she relates to her attorney’ was sufficient to disentitle him from acting against her in a contested divorce. Now, that post in full: Continue reading “The US take on past client / current client duty conflicts based on the ‘getting to know you factors’”

Updates: big words, Texan legal writing, conflicts of duties

In my post “Judge uses big word”, I commented on President Mason’s use of “tergiversation”. Now David Starkoff at Inchoate has noted another’s analysis of the odds of each of the High Court judges other than Justice Kirby being responsible for the appearance of “epexegetical” (which seems to mean “explanatory in a way supplementary to the principal or original explanation”) in a decision on migration. (10/1 odds: Justice Gummow.) Love how the judiciary tends to save up these little diamonds of language for those least likely to have the resources to look them up.

And, by way of update to my post “Finally, some scholarship on Australian lawyers’ conflict of duties”, here is a long article on conflicts of duties in America, “I’m All Verklempt!” by Kendall M. Gray et. al., including a long analysis of the Yanks’ position on Chinese walls. The relationship between establishing a conflict of duties and the entitlement to compensation of one of the people to whom the conflicting duties is owed is a bit complicated in Australia. It certainly does not follow that every breach of fiduciary duty gives rise to a right to money in the victim from the lawyer. But in Texas, there is a principle of fee forfeiture which applies in cases of clear and serious breaches of fiduciary duty, a remedy born in Burrow v. Arce 997 S.W.2d 229 (Tex. 1999). Where an attorney was found to have grossly overcharged, fee forfeiture was imposed so that the attorney lost all his fees rather than just those which exceeded a reasonable fee: In re Allied Physicians Group, P.A., No. 397-31267-BJH-11, Civ. A.3:04-CV-0765-G, 2004 WL 2965001, at *5 (N.D. Tex. Dec. 15, 2004) (unpublished), aff’d, 166 F. App’x 745 (5th Cir. 2006).

Mr Gray’s style cannot be described as stuffy, and exemplifies what is good about Texas, namely plain talking: Continue reading “Updates: big words, Texan legal writing, conflicts of duties”