Understanding When a Lawyer Can Be Prevented from Acting in a Case

Legal professionals are bound by a set of ethical rules that guide their conduct in various scenarios. A situation that often presents a challenge is determining the circumstances under which a lawyer can be restrained from acting in a particular case.

This blog post sheds light on this subject using references from precedent cases and legislation.

A fundamental concept to understand is the duty of confidentiality. This principle, as outlined in the case of Prince Jefri Bolkiah v KPMG [1999] 2 AC 222, stipulates that a lawyer is obliged to protect any confidential information provided by a client.

A lack of recollection about an earlier matter does not exempt a lawyer from this duty. It has been suggested, as in Yunghanns v Elfic Ltd (Unreported, VSC, 3 July 1998), that this confidential information could even extend to the general knowledge a lawyer gains about a client during their professional relationship, although this is rare.

The courts also possess inherent jurisdiction to prevent a solicitor from acting in a case if doing so could undermine the administration of justice. This principle, illustrated in cases like D & J Constructions and Mallesons, is rooted in the concern that public confidence in the justice system could be damaged if a lawyer is perceived to switch sides easily.

Another factor is the fiduciary duty of loyalty a lawyer owes to a former client, even after the end of their professional relationship. However, there is conflicting legal opinion on whether this duty persists after the termination of the retainer. The primary concern here is to avoid any real risk of a breach of confidence or any action that could jeopardize the judicial process.

The 1882 case Mills v Day Dawn Block Gold Mining Co Ltd dealt with the issue of proving the existence of confidence. The court decided that if a dispute arises between a solicitor and a former client over whether confidential information was shared, it's inappropriate to demand to know what the confidence was, as it could expose the client to the very harm they're trying to avoid.

In summary, a court may prevent a lawyer from acting in a case if there's a risk of breaching confidentiality, undermining the administration of justice, or violating a potential continuing duty of loyalty. The nature of the relationship between the lawyer and the client, the type and scope of the confidential information, and the potential for misuse of such information are all factors that the court will consider.

Consolidation of Cases: A Closer Look

Multiple cases with overlapping subjects and shared parties are not rare in the legal field.

The court system addresses such instances through the consolidation of cases.

Consolidation involves combining two or more separate legal actions into one proceeding.

This process is nuanced, and not all cases are suitable for consolidation.

To understand this topic better, let's review the case of Newbey v Smoothy [2023] WADC 45, where the plaintiff sought to consolidate two actions.

In Newbey v Smoothy, the plaintiff, Mrs Helen Newbey, attempted to consolidate action CIV 4983 of 2022 with CIV 1954 of 2020, under Rule O 83 r 1 of the Rules of the Supreme Court 1971 (WA). She also requested that CIV 1954 of 2020 be designated as the lead action. The defendants opposed this application.

In this case, the court decided against the consolidation of actions but allowed for the two actions to be heard together. The court emphasized the difference between consolidation and joint determination of actions, a case management technique referenced by Justice Lundberg in Walthamstow Pty Ltd v Caratti.

The decision to consolidate cases or hear them together depends on the circumstances of each case. It’s influenced by several key considerations, as described in cases such as Lois Nominees Pty Ltd v QBE Insurance (Australia) Ltd and A Goninan & Co Ltd v Atlas Steels (Aust) Pty Ltd.

The primary factor is whether consolidation would promote convenience, avoid multiple actions, and save time and expense.

Other considerations include the presence of common questions of law or fact, potential prejudice or unfairness to any of the parties, and if consolidation would facilitate a just resolution of the issues. Practical matters that may make consolidation inexpedient are also considered.

The court also highlighted the importance of promoting a just determination of litigation, efficiently disposing of the court's business, and making effective use of judicial and administrative resources, as outlined in Order 1 r 4B RSC, referencing Sino Iron Pty Ltd v Mineralogy Pty Ltd.

In Newbey, the court found common parties and similar transactions in both actions. There were likely overlapping issues of fact and law across both actions, based on the summary of the pleaded cases. However, the court concluded that consolidation could potentially be unfair to the defendants. Therefore, it decided to hear the cases together but not formally consolidate them.

Here are some of the key factors that courts often consider when deciding whether to consolidate cases, citing specific cases and paragraph numbers:

1. Promotion of Convenience and Efficiency: The court assesses whether consolidation would promote convenience, save time, and avoid multiple actions. This principle is derived from the cases Lois Nominees Pty Ltd v QBE Insurance (Australia) Ltd [1995] 2 VR 513, 518 (Ormiston J) and A Goninan & Co Ltd v Atlas Steels (Aust) Pty Ltd [2002] NSWSC 585, [12] (Palmer J).

2. Common Questions of Law or Fact: The presence of common questions of law or fact in the actions under consideration is a strong argument for consolidation. This was discussed in A Goninan & Co Ltd v Atlas Steels (Aust) Pty Ltd [2002] NSWSC 585, [12] (Palmer J).

3. Potential Prejudice or Unfairness: The court weighs whether consolidation would create potential prejudice or unfairness to any of the parties involved. This factor is referenced in A Goninan & Co Ltd v Atlas Steels (Aust) Pty Ltd [2002] NSWSC 585, [12] (Palmer J).

4. Just Resolution of Issues: The court considers whether consolidation would facilitate a just resolution of the issues at hand. This is referenced in Walthamstow Pty Ltd v Caratti [2018] WASC 321, [10] (Lundberg J).

5. Practical Impediments to Consolidation: The court assesses any practical matters that may make consolidation inexpedient. This is derived from the case A Goninan & Co Ltd v Atlas Steels (Aust) Pty Ltd [2002] NSWSC 585, [12] (Palmer J).

6. Effective Use of Judicial and Administrative Resources: The court also evaluates whether consolidation would enable more efficient use of judicial and administrative resources, as outlined in Order 1 r 4B RSC, referencing Sino Iron Pty Ltd v Mineralogy Pty Ltd [2018] WASC 51, [8] (Mitchell J).

7. Fair and Efficient Administration of Justice: The overarching goal is to promote a just determination of litigation and efficiently dispose of the court's business, as highlighted in Sino Iron Pty Ltd v Mineralogy Pty Ltd [2018] WASC 51, [8] (Mitchell J).

These factors are not exhaustive, and the court's decision ultimately depends on the specific circumstances of each case.

When do Court's Grant Leave to Commence an Action Against a Company Under External Administration?

The insolvency landscape is fraught with complexity, especially when one seeks to initiate a lawsuit against a company in external voluntary administration.

In this blog post, I explain the circumstances under which courts grant leave to commence an action against such a company.

The analysis hinges upon a recent Western Australian Supreme Court decision, "Hartland -v- Firm Construction Pty Ltd (IN LIQ) [2023] WASC 147", and several other relevant cases and legislative references.

Corporations Act 2001 (Cth) - Section 500(2)

Section 500(2) of the Corporations Act 2001 (Cth) stipulates that after the resolution for voluntary winding up, no civil proceeding can be commenced or continued against the company without the court's leave.

This measure aims to prevent a company in liquidation from being overwhelmed by multiple time-consuming and expensive actions (Re Gordon Grant and Grant Pty Ltd [1983] 2 Qd R 314; Vagrand Pty Ltd (in liq) v Fielding (1993) 41 FCR 550).

The Court's Discretion

The discretion to grant or refuse leave under these circumstances is broad, and it is not feasible to outline all relevant considerations exhaustively.

However, the amount, seriousness, and nature of the claim, the degree of complexity of legal and factual issues, and the stage at which the proceedings have reached all play crucial roles (Re Gordon Grant; Viscariello v Bernsteen Pty Ltd (in liq) [2004] SASC 266).

Prejudice to Creditors

A critical principle is that the action should not prejudice the creditors or hamper the orderly winding up of the company. It is often said that there must be no such prejudice before the action is allowed to proceed (Re Gordon Grant and Grant Pty Ltd (in liq) (1982) 6 ACLR 727; Re Sydney Formworks Pty Ltd (in liq) [1965] NSWR 646).

Insurance and Asset Considerations

The court is less likely to grant leave if there is no prospect of surplus assets in the company and no question of insurance (Re AJ Benjamin Ltd (in liq) [1969] 2 NSWR 374). However, if an insurer stands behind the company in liquidation and is prepared to pay the amount of any judgment awarded, that factor strongly favours the grant of leave (Lawless v Mackendrick [No 2] [2008] WASC 15).

Demonstrating a Serious Question

A claimant seeking leave only needs to demonstrate a serious question to be tried (Vagrand Pty Ltd v Fielding).

Hartland -v- Firm Construction Pty Ltd (IN LIQ) [2023] WASC 147

In "Hartland -v- Firm Construction Pty Ltd (IN LIQ) [2023] WASC 147", the court was satisfied that there was a serious question to be tried, considering the nature and seriousness of the plaintiff's claim, the defendant's status as a company under external administration, and the existence of a relevant insurance policy.

Cases mentioned in this blog post:

• Hartland -v- Firm Construction Pty Ltd (IN LIQ) [2023] WASC 147

• Lawless v Mackendrick [No 2] [2008] WASC 15

• Viscariello v Bernsteen Pty Ltd (in liq) [2004] SASC 266

• Vagrand Pty Ltd (in liq) v Fielding (1993) 41 FCR 550

• Re Gordon Grant and Grant Pty Ltd [1983] 2 Qd R 314

• Re Gordon Grant and Grant Pty Ltd (in liq) (1982) 6 ACLR 727

• Re AJ Benjamin Ltd (in liq) [1969] 2 NSWR 374

• Re Sydney Formworks Pty Ltd (in liq) [1965] NSWR 646

Dealing with Procedural Irregularities under the Rules of the Supreme Court in Western Australia

Procedural irregularities occur commonly, and the courts are often called upon to remedy or address these issues.

In this blog post, I discuss how the Rules of the Supreme Court of Western Australia allow the Supreme and District Courts to handle procedural irregularities, with a focus on a recent decision, Hartland -v- Firm Construction Pty Ltd (IN LIQ) [2023] WASC 147.

The Rules of the Supreme Court

The Rules of the Supreme Court (WA) provide a framework for the conduct of civil proceedings in the Supreme Court and District Court.

Addressing Procedural Irregularities

In Hartland -v- Firm Construction Pty Ltd (IN LIQ) [2023] WASC 147, the court was faced with a procedural irregularity relating to the filing of an originating summons.

The plaintiff sought leave to commence civil proceedings against a company in liquidation under section 500(2) of the Corporations Act 2001 (Cth). However, the plaintiff had not filed an originating process under Rule 2.2 of the Corporations Rules, as required.

The court exercised its discretion under Rule 2.10 of the Rules of the Supreme Court to treat the originating summons as if it were an originating process filed under Rule 2.2 of the Corporations Rules.

This allowed the plaintiff to continue the proceedings without the need to re-file the documents and start afresh.

This demonstrates the court's willingness to use its discretion to address procedural irregularities where it is appropriate and just to do so.

Factors Influencing the Court's Decision

In deciding whether to exercise its discretion, the court may consider several factors.

These include whether the procedural irregularity caused any prejudice or injustice to the other party, whether the irregularity can be easily remedied, and the overall interests of justice.

In Hartland -v- Firm Construction Pty Ltd (IN LIQ) [2023] WASC 147, the court determined that there was no prejudice to the defendant in treating the originating summons as if it were an originating process and that doing so would further the interests of justice.

The Lifespan of Settlement Offers: A Closer Look

In the context of legal proceedings, the offer of compromise is an indispensable tool. It not only hastens the resolution of disputes but also mitigates the potential financial and emotional toll of litigation on all parties involved.

One critical aspect of these offers, however, often stokes debate: the time in which an offer should remain open.

This question has been addressed through several judicial decisions, one of them being Tonkin -v- Heilongjiang Feng Ao Agricultural & Animal Husbandry Group Co Pty Ltd [2015] WASC 378 (S).

This case concerned a Calderbank offer, a specific type of settlement offer, based on the English case Calderbank v Calderbank [1975] 3 All ER 333.

In the Tonkin case, the court underscored the pivotal role of the Calderbank offer in facilitating dispute resolution. The defendant's offer, a Calderbank offer, was open for seven days until a specified date. However, the court had to determine whether the plaintiffs' rejection of this offer was unreasonable. This evaluation involved a holistic view of the circumstances surrounding the offer.

The court's approach towards Calderbank offers has been shaped by various decisions, both within Western Australia and across the Commonwealth. In the case of Ford Motor Company of Australia Ltd v Lo Presti [2009] WASCA 115, the court held that the test for awarding indemnity costs against a party who rejected a Calderbank offer was whether the rejection was unreasonable under the circumstances. The burden of proof falls on the offeree to establish unreasonableness.

A similar sentiment was echoed in the New South Wales Court of Appeal in Miwa Pty Ltd v Siantan Properties Pte Ltd [No 2] [2011] NSWCA 334. The court posited that a reasonable offer could alter the court's perspective on the costs award, particularly when the party rejecting the offer fails to obtain a better result in the judgment.

When assessing the reasonableness of rejection, several factors come into play. These were elucidated in Lo Presti and further elaborated by Beech J in McKay v Commissioner of Main Roads [No 7] [2011] WASC 223 (S). These include:

• the stage of proceedings at which the offer was received;

• the time allowed to the offeree to consider the offer;

• the extent of the compromise offered;

• the offeree's prospects of success, assessed at the date of the offer;

• the clarity with which the terms of the offer were made; and

• whether the offer foreshadowed an application for indemnity costs in the event of the offeree's rejection.

In Tonkin, the court examined these factors to determine the reasonableness of the rejection.

The offer was made within six months of the commencement of proceedings, which was considered marginally in favour of the defendant. However, the court viewed the seven-day timeframe as potentially too short for careful consideration and perhaps expert advice, suggesting 28 days might have been more appropriate.

Key Take-Aways

• The time in which offers need to remain open is a nuanced issue and depends on various considerations.

• It requires a careful balance between hastening dispute resolution and allowing enough time for the parties to make informed decisions.

How to deal with opposing lawyers who use “Conferral as a Weapon”

In legal disputes within Western Australia, you often need to confer with the opposing party before initiating a case or making an application in court.

Conferral is intended to encourage cooperation and communication between parties, helping to narrow the disputed issues and facilitate settlement.

However, conferral is not always a smooth and productive process. Occasionally, one party (often the defendant) might use conferral as a weapon to delay proceedings, increase your legal costs, or frustrate your legitimate claims. This behaviour contradicts the underlying objectives of conferral.

As a lawyer specialising in defamation, guardianship, and legal costs disputes, I have seen many instances of conferral being used as a weapon by parties and their legal advisors.

Some common tactics include:

• Refusing to confer or respond to reasonable requests for conferral;

• Making unreasonable or excessive demands for information or documents;

• Raising new or irrelevant issues during conferral;

• Making false or misleading statements or allegations;

• Engaging in disrespectful or aggressive behaviour towards the other party or their legal representative;

• Withdrawing from conferral without notice or explanation;

• Failing to comply with agreed outcomes or timetables;

• Deliberately delaying the process to increase the opposing party's legal costs or cause frustration.

To address the issue of conferral misuse and counteract the use of conferral as a weapon, consider these tips:

1. Be prepared: Before conferring with the other side, make sure you have a clear understanding of your case, your legal rights and obligations, and your desired outcomes. Gather all the relevant information and documents that support your position and be ready to share them with the other side if appropriate. Also, have a realistic assessment of the strengths and weaknesses of your case and the other side's case, and be prepared to negotiate in good faith.

2. Be proactive: Don't wait for the other side to initiate conferral. Contact them as soon as possible after becoming aware of the dispute and propose a suitable time and method for conferral. This shows that you are serious about resolving the matter and puts pressure on them to respond. If they refuse to confer or ignore your requests, document their lack of cooperation and inform them of the potential consequences, such as sanctions from the court or adverse costs orders.

3. Be respectful: Even if the other side is using conferral as a weapon, maintain a respectful and professional tone during conferral. Avoid personal attacks, insults, or accusations that may escalate the conflict or damage your reputation. Focus on the facts and the law, not on emotions or personalities. Remember that conferral is not a trial or a debate, but a constructive dialogue aimed at finding a mutually acceptable solution.

4. Be assertive: While being respectful, don't let the other side push you into agreeing to something that is unfair or unreasonable. Stand up for your rights and interests, and don't be afraid to challenge any false or misleading statements or allegations made by the other side. If they make unreasonable or excessive demands for information or documents, ask them to justify their relevance and necessity. If they raise new or irrelevant issues during conferral, remind them of the scope and purpose of conferral and ask them to focus on the main issues in dispute.

5. Be flexible: Conferral is not a one-way street. You have to be willing to listen to the other side's perspective and consider their proposals. You may have to compromise on some points or make some concessions to reach an agreement. However, this does not mean that you have to give up your core principles or accept an outcome that is detrimental to your interests. You have to balance flexibility with firmness, and know when to accept an offer and when to walk away. Being open to negotiation does not mean allowing the other side to exploit the process or use conferral as a weapon.

6. Be aware of delay tactics: Recognise when the other side is using delay as a weapon and address it head-on. Keep track of the timeline and document any deliberate delays or stalling tactics used by the opposing party. If the other side consistently prolongs the conferral process without good reason, consider discussing the issue with them, or if necessary, inform the court or seek appropriate remedies.

7. Set clear boundaries and deadlines: Establish a clear agenda and reasonable timeframes for the conferral process to prevent unnecessary delays or diversions. Make sure both parties are aware of these boundaries and deadlines, and hold the other side accountable if they fail to adhere to them.

8. Stay focused on the primary issues: Keep the conferral process centred on the main issues in dispute and avoid getting sidetracked by irrelevant matters. If the other side attempts to introduce unrelated or trivial topics, gently steer the conversation back to the primary concerns.

9. Know your options: If the conferral process is being misused and you have exhausted all efforts to address the issue, be prepared to move on to the next step in the litigation process. Do not allow conferral to drag on indefinitely or become an obstacle to resolving the dispute. Understand the available alternatives, such as mediation, arbitration, or ultimately, litigation, and be ready to pursue these options if necessary.

By being prepared, proactive, respectful, assertive, and flexible, you can more effectively navigate the challenges posed by the misuse of conferral and minimise the impact of conferral being used as a weapon in lawyer-on-lawyer disputes.

Stay focused on your goals, and be willing to adapt your approach when necessary to achieve a fair and satisfactory resolution.

Relying on "Information and Belief" in Affidavits

Affidavits play a crucial role in presenting evidence to the court.

These sworn statements are used in various legal proceedings to establish facts and provide testimony.

One of the key aspects of affidavits is the reliance on information and belief.

Reliance on Information and Belief in Affidavits

In some instances, a deponent may not have direct knowledge of certain facts but can still provide evidence in an affidavit based on information received from other sources or their belief in the truth of such information. This is known as relying on information and belief in affidavits.

This concept is particularly important when dealing with interlocutory proceedings, where there may be limited time and access to direct evidence.

A Western Australian Case: An Illustration

The Western Australian decision of Blythe v the State of Western Australia [2008] WASCA 10 offers insights into the practical application of reliance on information and belief in affidavits.

In this case, the affidavit contained hearsay evidence from a former student, but the deponent, Ms. Jorden, failed to identify the student or state that she believed the information provided by the student was true.

The appeal court found that this lack of compliance with the requirements of reliance on information and belief rendered the hearsay evidence inadmissible.

Rule Governing Reliance on Information and Belief in Affidavits

In Western Australia, the reliance on information and belief in affidavits is governed by Order 37 Rule 6 of the Rules of the Supreme Court 1971 (WA).

According to this rule, an affidavit used for interlocutory proceedings may contain statements of information or belief, provided the source of the information is disclosed and the deponent believes the information to be true.

Compliance with the requirements of Order 37 Rule 6 is crucial for several reasons:

1. Ensuring Admissibility: Properly drafted affidavits that adhere to the requirements of reliance on information and belief increase the likelihood of the evidence being admissible in court.

2. Countering or Challenging Evidence: Disclosing the source of the information allows the opposing party to counter or challenge the evidence presented in the affidavit.

3. Potential Prosecution for Perjury: Accurate and complete affidavits are necessary to hold deponents accountable for the veracity of their statements, enabling prosecution for perjury if required.

Lewkowski v Bergalin Pty Ltd

In the case of Lewkowski v Bergalin Pty Ltd (Unreported, WASCA, Library No 7675, 26 May 1989), the court emphasized the importance of following the proper form for statements of information or belief in affidavits. This form is essential not because of a desire for ritualized behavior but because it clearly indicates the source of the information, states the information, and expresses the deponent's belief that what was said is true. If this form is not followed, there is a risk that drafters of affidavits may produce inadmissible evidence under the relevant rules, as seen in In re J L Young Manufacturing Co Ltd [1900] 2 Ch 753.

The court stated, “Preferably statements of information or belief in affidavits should follow the form 'I have been informed by X and verily believe'.”

Following the proper form and complying with procedural rules ensures that evidence presented is admissible, allowing parties to effectively challenge or counter it and preventing potential miscarriages of justice.

In Blythe v the State of Western Australia [2008] WASCA 10, the primary court did not rule on the appellant's objection to paragraphs 18 and 19 of Ms. Jorden's affidavit. These paragraphs contained hearsay evidence that should have been deemed inadmissible. The appellant's objection should have been upheld, as the affidavit did not comply with the required form for statements of information or belief under the relevant rules (O 37 r 6). The affidavit failed to disclose the identity of the former student and did not state that Ms. Jorden believed what the student said was true.

As Wheeler JA noted in Westpoint Management Pty Ltd v Goakes [2002] WASCA 317, [14], the requirements of O 37 r 6 are essential because they reveal the original source of the hearsay information, provide an opportunity for an opponent to counter or challenge it, and enable prosecution for perjury if necessary.