By David Sachs -
Snapshot
- Conflict is not limited to obtaining pieces or categories of confidential information. It can include familiarity with a party’s strengths and vulnerabilities – its ‘litigious character’.
- Acting to defend an application to have a solicitor removed may lead to a further conflict and, potentially, a costs order.
The recent NSW Supreme Court judgment of Stevenson J in In the matter of Edgecliff Car Rentals Pty Ltd (Deregistered) [2017] NSWSC 244 serves as a reminder to practitioners to very carefully consider their position before taking instructions to act against former clients, or the directors or employees of those companies.
Facts
The plaintiffs commenced proceedings in late January 2017 against four corporate defendants, the director of those companies and the director’s wife. The proceedings sought various orders including the reregistration of two companies and declarations regarding the manner in which the director had conducted the business of the companies.
The defendants immediately expressed concern that the solicitor for the plaintiffs (Solicitor) was acting in the proceedings. It was common ground between the parties that the Solicitor had:
- acted for the first defendant on several hundred debt recovery matters and an unfair dismissal case. In most of those matters, the Solicitor took instructions from the director’s wife, who was an employee of the first defendant;
- advised entities owned and operated by the director in respect of various property development ventures; and
- drafted several documents which would likely be of critical importance in the proceedings.
At a very early stage of the proceedings, the solicitors for the defendants wrote to the Solicitor detailing the defendants’ concerns regarding the conflict and requested the Solicitor to cease acting. This request, and subsequent requests, were not taken up by the Solicitor. In early March 2017 the defendants filed a notice of motion seeking orders that the Court exercise its inherent jurisdiction to supervise its processes and restrain the Solicitor from acting. Stevenson J delivered his judgment on 15 March 2017.
