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Court considers bid to stop firm acting for client

In Lal Lal Wind Farms Nom Co. Pty Ltd v Vestas – Australian Wind Technology Pty Ltd & Ors (No.2) [2021] VSC 733, the Supreme Court of Victoria considered an application to restrain a law firm from acting for a party in a contract dispute.

Background

Lal Lal Wind Farms Nom Co. Pty Ltd (Lal Lal Wind Farms, the principal) engaged Vestas – Australian Wind Technology Pty Ltd (Vestas, the contractor) to engineer, procure and construct wind turbine generators.

Under the contract, Vestas was required to submit claims and disputes to the ‘Principal’s Representative’. Where the Principal’s Representative was undertaking a ‘Certification Role’ (as defined in the contract), it was required to act honestly, reasonably and make fair determinations.

Vestas made a number of extension of time claims to the Principal’s Representative, none of which were granted. Vestas alleged that Lal Lal Wind Farm’s solicitors, Herbert Smith Freehills (HSF), privately provided comments and advice to the Principal’s Representative on the claims. Vestas submitted that the effect of the interaction was that the Principal’s Representative was influenced by Lal Lal Wind Farms, and accordingly, the Principal’s Representative failed to act reasonably or make fair determinations.

Vestas sought an order for preliminary discovery and an injunction to restrain Lal Lal Wind Farms from communicating privately with the Principal’s Representative. Vestas also sought to have HSF restrained from acting for or giving advice to Lal Lal Wind Farms in relation to the proceedings.

Issue

In relation to the injunction to restrain HSF from acting for Lal Lal Wind Farms, the question was whether a fair-minded, reasonably informed member of the public would conclude that the proper administration of justice required that HSF be prevented from acting for Lal Lal Wind Farms.

Issue considered

The parties agreed on the principles to be applied by the court in exercising its inherent jurisdiction to restrain solicitors from acting. These principles are:

  • 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 processes in aid of the administration of justice.
  • The test is whether a fair-minded, reasonably informed member of the public would conclude that the proper administration of justice requires that a lawyer should be prevented from acting, in the interest of the protection of the integrity of the judicial process and the due administration of justice, including the appearance of justice.
  • The jurisdiction is exceptional and is to be exercised with caution.
  • Due weight should be given to the public interest in a litigant not being deprived of the lawyer of his or her choice without good cause.
  • The timing of the application may be relevant, in that the cost, inconvenience and impracticality of requiring lawyers to cease to act may provide a reason for refusing to grant relief.1

The mere prospect of a solicitor being called to give evidence as a material witness, even on controversial matters, is not enough to invoke the jurisdiction of the court to restrain the solicitor from acting.2 In exercising its discretion, the court must take into account the right of a party to be represented by the lawyer of their choice, the inconvenience, cost and disruption which might be caused in requiring a party to change lawyers, and the exceptional nature of the court’s jurisdiction.3

There may be circumstances where a fair-minded reasonably informed member of the public may conclude that it would be prudent that a solicitor not act in a proceeding. However, the test is whether the administration of justice requires that the solicitor be prevented from continuing to act.4

The court concluded that there was not a ‘real and substantial risk’ that a solicitor from HSF may be a material witness and that their evidence may be controversial, nor was it a case where HSF had a significant stake in the outcome of the proceedings.5

Further, the court noted that while statements in the correspondence prepared by HSF were not appropriate, in the context of the heated nature of the dispute between parties, it would not cause a fair-minded and reasonably informed member of the public to conclude that the proper administration of justice required HSF to be restrained from acting.6

The court said:

“As Brereton J observed in Kallinicos, fair-minded, reasonably informed members of the public do not conceive that legal representatives are entirely impartial. Most see legal representatives as aligned with the parties whom they represent. On occasion, that alignment may cause or contribute to the extravagant use of language in correspondence. When it does occur, as I consider was the case in June 2020, it reflects interests of legal practitioner and client closely aligned. It does not provide evidence of substance in support of the relief sought in the summons. It is insufficient of itself to support a finding of lack of objectivity, or independence on the part of HSF, such that they should be restrained from acting.”7

The court dismissed the application, holding that no proper basis had been established to exercise the court’s exceptional jurisdiction to restrain HSF. Even if a proper basis had been established, the court noted that it would nevertheless be appropriate to decline to make an order restraining HSF from acting because of the cost, inconvenience and impracticality of requiring HSF to cease to act at this relatively late stage of litigation.8

Irene Gallagher is a Law Graduate Intern at Queensland Law Society Ethics and Practice Centre. This article has been approved by Grace van Baarle, Solicitor and Manager, QLS Ethics and Practice Centre.

Footnotes
1 Lal Lal Wind Farms Nom Co. Pty Ltd v Vestas – Australian Wind Technology Pty Ltd & Ors (No.2) [2021] VSC 733, [41], citing Dugan v Process Holdings Pty Ltd [2021] VSC 555, [61]-[64].
2 Ibid.
3 Ibid.
4 Ibid.
5 Ibid, [119].
6 Ibid, [135]
7 Ibid.
8 Ibid, [145].

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