Introduction

In this article I propose to address the not uncommon situation of where a party to legal proceedings in the NSW Civil and Administrative Tribunal objects to another party being legally represented by a particular lawyer or a particular law firm on the grounds of a conflict of interest or the possession of confidential information.

A classic example of a conflict of interest arising is when a strata lawyer (e.g. Strata Lawyer X) has given legal advice to a lot owner in a strata scheme (e.g. lot owner Y) in relation to certain matters involving the lot owner (e.g. breaches of a bylaw by lot owner X) and the owners corporation subsequently wishes to retain Strata Lawyer X to sue lot owner Y in NCAT. Fortunately, the law is clear that Strata Lawyer X is prevented from acting against their former client, lot owner Y.

However, where things can get a bit tricky is if a strata lawyer has acted for an owners corporation over a number of years and becomes possessed with confidential information relating to one or more lot owners which may give that strata lawyer and their client an unfair advantage against their opposing party lot owner in the NCAT proceedings.

Restraining a lawyer from representing a party – What are the legal principles? 

In the Supreme Court of NSW decision of Kallinicos & anor v Hunt & ors (2005) NSWSC 1181, Brereton J reviewed the authorities relevant to whether or not a court would restrain a lawyer from acting for a different party, including the decision of Prince Jefri Bolkiak v KPMG [1999] 2 AC 222 and summarised the principles as follows:

76    The foregoing authorities establish the following:· During the subsistence of a retainer, where the court’s intervention to restrain a solicitor from acting for another is sought by an existing client of the solicitor, the foundation of the court’s jurisdiction is the fiduciary obligation of a solicitor, and the inescapable conflict of duty which is inherent in the situation of acting for clients with competing interests [Prince Jefri].

 

  • Once the retainer is at an end, however, the court’s jurisdiction is not based on any conflict of duty or interest, but on the protection of the confidences of the former client (unless there is no real risk of disclosure) [Prince Jefri].

 

  • After termination of the retainer, there is no continuing (equitable or contractual) duty of loyalty to provide a basis for the court’s intervention, such duty having come to an end with the retainer [Prince Jefri; Belan v Casey; Photocure; British American Tobacco;  Asia Pacific Telecommunications; contra Spincode; McVeigh; Sent].

 

  • However, the court always has inherent jurisdiction to restrain solicitors from acting in a particular case, as an incident of its inherent jurisdiction over its officers and to control its process in aid of the administration of justice [Everingham v Ontario; Black v Taylor; Grimwade v Meagher; Newman v Phillips Fox; Mitchell v Pattern Holdings; Spincode; Holborow; Williamson v Nilant; Bowen v Stott; Law Society v Holt]. Prince Jefri does not address this jurisdiction at all. Belan v Casey and British American Tobacco are not to be read as supposing that Prince Jefri excludes it. Asia Pacific Telecommunications appears to acknowledge its continued existence.

 

  • The test to be applied in this inherent jurisdiction is whether a fair-minded, reasonably informed member of the public would conclude that the proper administration of justice requires that a legal practitioner should be prevented from acting, in the interests of the protection of the integrity of the judicial process and the due administration of justice, including the appearance of justice [Everingham v Ontario; Black v Taylor;  Grimwade v Meagher; Holborow; Bowen v Stott; Asia Pacific Telecommunications].

 

  • The jurisdiction is to be regarded as exceptional and is to be exercised with caution [Black v Taylor; Grimwade v Meagher; Bowen v Stott].

 

  • Due weight should be given to the public interest in a litigant not being deprived of the lawyer of his or her choice without due cause [Black v Taylor; Grimwade v Meagher; Williamson v Nilant; Bowen v Stott].

 

  • The timing of the application may be relevant, in that the cost, inconvenience or impracticality of requiring lawyers to cease to act may provide a reason for refusing to grant relief [Black v Taylor; Bowen v Stott].”

 

More recently, the NCAT Appeal Panel in Rodny v Stricke [2018] NSWCATAP 136 held, amongst other things, that:

  1. While it is correct that the Tribunal (including the Appeal Panel) has no general power to restrain an Australian legal practitioner from acting for a particular party, and has no inherent jurisdiction to regulate the conduct of an Australian legal practitioner, nonetheless the Tribunal is entitled to have regard to these factors in considering whether, in all the circumstances, a particular Australian legal practitioner should be permitted to represent a party. This is because it is required to ensure the just, quick and cheap resolution of the real issues in dispute and in doing so is entitled to ensure that its processes are not used in a manner which deprives a particular party of the lawful entitlements in the conduct of the case or protection of their legal rights in so far as they might be adversely affected in an inappropriate way by what occurs in Tribunal proceedings. Again, this was not a matter in dispute in this appeal.

 

  1. While we are certainly not suggesting that … would act otherwise than honestly and in accordance with his duties as an Australian legal practitioner, it seems to us in the present circumstances that the fair-minded, reasonably informed member of the public would conclude that the proper administration of justice requires that the legal practitioner should be prevented from acting on the dispute brought by a lot owner in relation to the scope of the duties of the strata committee in implementing orders made against the Owners Corporation, where he had previously acted for the Owners Corporation (by appointment of the strata committee) in the proceedings in which those orders were made. A fair-minded observer would conclude that it is in the interests of the protection of the integrity of the judicial process and the due administration of justice, including the appearance of justice, to restrain the practitioner from ‘switching sides’.

 

  1. Even though the jurisdiction is exceptional and to be exercised with caution, the “appearance that a lawyer can readily change sides is very subversive of the appearance that justice is being done” (D & J Construction Pty Ltd v Head(1987) 9 NSWLR 118, 123; Cleveland at [8]).

 

  1. It follows that the appeal in connection with the condition imposed preventing … and his firm from acting on behalf of the appellants should be dismissed.”

 

Conclusion

While NCAT’s jurisdiction to restrain lawyers from acting for their clients in NCAT proceedings is exceptional and is to be exercised by the Tribunal with caution, lawyers and their clients should be aware of some of the issues which could give rise to an objection to a particular lawyer being retained.

Disclaimer

Please note that the information contained in this article is for information purposes only. It is not legal advice and should not be relied upon. You should obtain legal advice before you take any action or otherwise rely upon the contents of this article.

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