Pakefx Pty Ltd v Dickson

The court has before it two notices of motion filed by the defendants. By the first the defendants seek orders striking out parts of the plaintiff’s further amended statement of claim. By the second they seek an order restraining the incorporated legal practice that acts for the plaintiff from continuing to do so.

The proceedings were commenced by the plaintiff, Pakefx Pty Ltd, by statement of claim filed on 14 August 2014, against the first defendant, Mr David F Dickson, and the second defendant, Villa 33 Pty Ltd. A draft statement of claim was served on the defendants’ solicitors in November 2011.

The principal of the plaintiff is Mr Philip McPherson.

The second defendant has been joined in respect of relief claimed by the plaintiff under ss 232 and 233 of the Corporations Act 2001 (Cth).

The plaintiff filed an amended statement of claim on 26 February 2013, to which the defendant filed a defence on 4 December 2013. The allegations of the plaintiff in the amended statement of claim are, relevantly, substantially similar to the equivalent allegations in the further amended statement of claim, which are now attacked by the defendant.

The plaintiff’s claim arises in relation to a property that has been constructed on Hamilton Island in Queensland called “Villa 33”. Initially, it was proposed, that the plaintiff, the first defendant, and others, would as a consortium personally enter into a contract to purchase Villa 33, for settlement after completion of its construction. Subsequently, after two of the consortium members, who were apparently intended jointly to hold a one fifth interest in Villa 33, as well as an additional one fifth consortium member, withdrew from the proposal, it was decided by the remaining consortium members that the property should be purchased by the second defendant, as the trustee of a unit trust, in which the remaining consortium members would acquire units.

In outline, the plaintiff alleges that it entered into the contract under which the consortium members initially proposed to acquire the title to Villa 33 personally, and ultimately acquired units in the unit trust with the remaining consortium members, , in reliance upon representations made by Mr Dickson to Mr McPherson on behalf of the plaintiff. The plaintiff alleges that the representations were misleading and deceptive, and it seeks relief against the defendant under various provisions of the Trade Practices Act 1974 (Cth) and the Fair Trading Act 1987 (NSW).

The plaintiff relies upon substantially the same allegations of fact to make out a case in tort against Mr Dickson for negligent misstatement.

Finally, as mentioned, the plaintiff pleads an ‘oppression’ case concerning the affairs of the second defendant, and the unit trust of which it is trustee. The plaintiff makes an additional claim for recovery of a small debt against the second defendant, which does not require any further consideration.

I will deal first with the strike out application made by the defendants concerning the plaintiff’s further amended statement of claim. The defendants move under UCPR r 14.28(1)(a) and (b), which provide:

The amended statement of claim is a carefully drawn and detailed pleading. It is not self-evidently defective, and it does not appear on its face to be a likely cause of unnecessary prejudice, expense or delay in the preparation of the defendants’ evidence, or the conduct of the hearing.

The defendants have pleaded fully to the plaintiff’s amended statement of claim, which in broad terms makes the same allegations as are to be found in the further amended statement of claim, and the application has been brought after the plaintiff has served its evidence in the proceedings. The defendants have not yet served their evidence.

The defendants have not put evidence before the court to establish any prejudice or embarrassment concerning their ability to plead to the allegations in the further amended statement of claim. On the contrary, it appears from the terms of the defence to the amended statement of claim that the defendants did not suffer any embarrassment in responding to the allegations made against them.

As counsel for the plaintiff pointed out, Practice Note SC 11 has been followed in the present case, and as the defendants have not served their evidence, the effect of par 4 is that the court has not yet made an order for disclosure of documents. He submitted that, given the advanced state of preparation of the matter for hearing, some allowance should be made in favour of the plaintiff in relation to possible marginal deficiencies in the pleading, because the plaintiff has not had the advantage of access to the defendants’ documents for the purpose of refining its allegations.

Although UCPR r 14.28 authorises the court to strike out the whole or any part of the pleading at any stage of the proceedings, it is the modern practice that defendants are not encouraged to apply to strike out statements of claim at this late stage of the proceedings. Strike out applications may serve a purpose that is consistent with the operation of Div 1 of Pt 6 of the Civil Procedure Act 2005 (NSW), particularly s 56, if there is good cause to make the application, and it is brought before the defendant is required to file its defence, or at least early in the proceedings. If there is a defect in the way the statement of claim is pleaded that is sufficiently serious to justify a strike out application, it will usually be obvious at the time the statement of claim is served on the defendant. Defendants should exercise restraint in moving to strike out statements of claim. Although each case must depend upon its own facts, it will usually only be appropriate for the court to be asked to entertain a strike out application where the defect in the pleading is relatively obvious and easily explained. The willingness of the court to deal with intricate and obscure pleading points will ordinarily be proportional to the magnitude of the apparent benefit to the parties and the administration of justice, if such points are resolved by the court as a matter of pleading.

Restraint in making strike out applications is all the more necessary in cases such as the present where the application is not made until after the plaintiff has served all of its evidence. Although UCPR r 14.28(2) authorises the court to receive evidence on the hearing of an application for a strike out order, that provision does not generally invite the defendant to subject the statement of claim to a detailed analysis through the prism of an examination of the evidence filed by the plaintiff, to support submissions that seek to establish the inadequacy of aspects of the pleading by reference to the effect of the whole of the evidence. As a matter of case management it is not likely to be a useful or proper application of the court’s time and resources to be required to determine the adequacy of a pleading, which itself is complex, having regard to the even more complex contents of the evidence. When this point in the preparation of the case is reached, it will ordinarily be preferable for the matter to go to trial.

There may, of course, be exceptional cases where, after the plaintiff’s evidence is served, it emerges that considerable time and expense may be saved, if some arguably defective aspect of the pleading, which was initially allowed to pass without challenge in conformity with the modern approach whereby the taking of pleading points is discouraged, is struck out, perhaps even if the only consequence is that the allegation will be re-pleaded with greater clarity. However, the likelihood is that even in this circumstance the making of a strike out application will not commend itself to the court, unless the defect is clear, and the benefits are readily apparent.

It will be convenient to begin by addressing the structure of that part of the plaintiff’s further amended statement of claim that pleads its misleading and deceptive conduct case, without addressing the substance of the individual representations. The plaintiff pleads:

For the sake of brevity I have paraphrased the allegations pleaded in the further amended statement of claim. I have omitted many allegations necessary to establish the entitlement to relief under the relevant statutes.

The most significant relevant feature of the structure of the further amended statement of claim that is considered above is that the plaintiff pleads that it entered into the contract in reliance upon the pre-contract representations; and then, after contract, further representations were made to it, upon which it also relied to take various steps notwithstanding that “in any event” the plaintiff was bound to complete the contract. I will return to this issue when I consider the defendants’ submissions concerning the need for an order to strike out parts of the plaintiff’s further amended statement of claim.

When the hearing began, the court did not have the benefit of an outline of the plaintiff’s submissions in response to the defendants’ comprehensive attack on the plaintiff’s pleading. That situation reflected no fault on the plaintiff’s part. It became necessary for the court to determine what the precise position of the parties was concerning what aspects of the pleading would be attacked, and what would be defended. During discussion between the court and counsel for the parties, each party refined their position.

The plaintiff advised the court that it would abandon pars 65 and 66 of the further amended statement of claim (part of the ‘oppression’ claim).

The defendants indicated that they would not pursue all of the attacks on the further amended statement of claim that are contained in their outline written submissions. The defendants confined their attack on the pleading to parts of par 7, parts of par 13, and the paragraphs in the further amended statement of claim that plead a cause of action based upon representations allegedly made to the plaintiff after it entered into the contract to purchase Villa 33.

As the defendants’ claim that parts of pars 7 and 13 should be struck out depend upon equivalent arguments, it will be convenient to deal with both of those paragraphs together.

Paragraph 7 alleges:

The defendants argue that the paragraph should be struck out except for sub-pars (e), (f), (m), (n), (p), (q) and (s).

Paragraph 13 alleges:

The defendants submit that sub-pars (d), (e), (g), (m) and (o) should be struck out. For separate reasons the defendants submit that sub-par (a) should also be struck out, and in consequence par 21 (a) as well as (i) should also be struck out.

Putting aside the attack on par 13(a) for the moment, the defendants make essentially the following submissions as to why the identified sub-paragraphs of pars 7 and 13 should be struck out. First, the defendants say, by reference to the allegations made in the balance of the further amended statement of claim, that there are no allegations that those representations were misleading or deceptive, and in some cases the representations were clearly true. The defendants support that submission by referring to the entirety of the evidence served by the plaintiff, and submitting that nothing in the plaintiff’s evidence falsifies these allegations. The allegations are therefore irrelevant; the defendants then say that the allegations under attack are embarrassing by reason of the “rolled up” manner in which the plaintiff attempts to plead that the representations were misleading or deceptive in par 18. Paragraph 18 does not plead seriatim how each of the representations in pars 7 and 8 are misleading or deceptive. It addresses some of the individual representations directly, but otherwise treats them globally and makes assertions as to why they were inaccurate and misleading or deceptive on that basis. The defendants also complain that par 18(c) pleads that “none of the represented matters crystallised or came to pass as represented”, which appears to mean that all of the representations were false, even though, as noted, many have not individually been pleaded to be false, and the plaintiff’s evidence does not attempt to prove that many are false.

In effect, the defendants have singled out those representations in pars 7 and 13 that they recognise as being significant, and the subject of allegations that the representations were false or misleading and deceptive, and submitted that the remainder should be struck out. In short, the defendants submit that “the real complaint is the alleged representations about the value of Villa 33 and its future rental and occupation rates”.

In response, the plaintiff acknowledges that some of the individual representations pleaded in pars 7 and 13 are not separately alleged to have been false and misleading or deceptive. However, the plaintiff relies upon the following observation by Hasluck J in Archer v Channel 7 Perth Pty Ltd [2002] WASC 160 at [39]:

The plaintiff submits, in effect, that the representations under attack were made, and are relevant in so far as they qualify the circumstances in which the primary representations, which the plaintiff alleges were false and misleading or deceptive, were made. The plaintiff also submits that each of pars 7 and 13 plead, in a comprehensive way, the circumstances in which the first defendant made representations at different times to the plaintiff, in a way that gives proper context to the events. The allegations are not embarrassing, submits the plaintiff, because they are virtually identical to the equivalent paragraphs in the amended statement of claim, and the defendants have, in pars 8 and 14 respectively of their defence to that pleading, apparently experienced no difficulty or embarrassment in pleading a detailed response, in the nature of an alternative set of circumstances, to those pleaded by the plaintiff. Given the stage that the proceedings have reached, it is not conducive to the just, quick and cheap resolution of the real issues in the proceedings for the court to entertain the defendants’ application that the challenged sub-paragraphs should be struck out.

I accept the plaintiff’s submissions, and will decline to strike out the sub-paragraphs in pars 7 and 13 that have been attacked by the defendants.

The defendants have not demonstrated any good reason why the sub-paragraphs should be struck out. Their existence in the further amended statement of claim has not, and will not, cause any prejudice, embarrassment or delay in the proceedings. The fact that the sub-paragraphs may only provide context and background to the allegations of operative representations does not have the effect that the further amended statement of claim, taken as a whole, does not disclose a reasonable cause of action. While there is some basis for criticising the inclusion in pars 7 and 13, without distinction, of operative and background representations, in my view the criticism borders on quibbling, at least at this stage of the proceedings. If there are any latent difficulties in the pleading approach taken by the plaintiff, which become apparent, I see no reason why those difficulties cannot conveniently be dealt with at the trial.

The attack that the defendants have made on the pleading of par 13(a) is based upon the argument that it is “mischievous”, because it is clear that the defendant was in fact the design engineer for the Hamilton Island development, and the precise difference between an inside and an outside consultant is unclear, so the plaintiff is not entitled to make a case that the defendant misrepresented that he was an inside consultant.

I do not accept this argument, primarily on the basis that, at this stage of the proceedings, it is of no moment. It is not appropriate that the court entertain quibbling arguments of this nature in the context of a strike out application brought after the close of the pleadings and the service of the plaintiff’s evidence.

The final aspect of the defendants’ remaining strike out application is their challenge to the whole of the plaintiff’s case based upon representations that were made after the plaintiff entered into the contract to purchase Villa 33.

It will not be convenient to set out the whole of the parts of the further amended statement of claim in which the plaintiff’s case based on post-contract representations is pleaded. The parts of the pleading that the defendants claim ought to be struck out are identified in par 69 of their outline written submissions.

The defendants rely upon the observation of Weinberg J in McKellar v Container Terminal Management Services Ltd [1999] FCA 1101; (1999) 165 ALR 409 at [26], where his Honour said:

The defendants’ argument can be put simply. First, the plaintiff alleges that it entered into the contract in reliance upon representations, which it alleges were false and misleading or deceptive. Once the plaintiff entered into the contract, it was legally bound to complete it. Furthermore, in each case where the plaintiff alleges that it took further steps in reliance upon representations made after the contract, it alleges that it did so “at all events being bound to complete [the contract]”. The defendant submits that the pleading does not make clear how, if the plaintiff was already bound to complete the contract, and intended to comply with its contractual obligation, the post-contract representations could have caused the plaintiff to act in a manner that caused it to suffer additional, or different damage, which it would not have suffered in any event.

In fairness to counsel for the plaintiff, whose response to the defendants’ submissions was candid, the plaintiff did not put a submission that met this argument, as a matter of principle.

In my view it is always likely to be the case that, when a plaintiff is induced to enter into a valid contract on the basis of the misleading or deceptive conduct of the defendant, subsequent misleading and deceptive representations made by the defendant are unlikely to cause the plaintiff to suffer any additional or different damage, at least in so far as the damage is the consequence of the plaintiff completing the contract.

It does not follow that post-contract representations will never be capable, if relied upon by the plaintiff, of causing the plaintiff to suffer additional, or different, damage, than the plaintiff would have suffered if only the pre-contract representations had been made and relied upon. Whether a proper case can be pleaded based upon post-contract representations will depend precisely upon the facts of the case. However, this is an area where, in my view, it will be particularly important for the plaintiff to comply with the observations made by Weinberg J, and plead clearly the material facts that cause the plaintiff to suffer additional, or different, damage from its reliance upon post-contract representations, which it would not have suffered in any event by reason of its having entered into the contract in reliance upon pre-contract representations.

In the present case it is to be noted that some events are pleaded as having occurred after the date of the contract, which may have been material to the actions of the parties. Before completion it became apparent that there was no market interest that would allow Villa 33 to be sold prior to completion for a profit, which is the subject of one of the alleged pre-contract representations (par 25). That suggests that the plaintiff became aware that one of the representations upon which it relied was false, before completion of the contract occurred. Further, members constituting one fifth of the consortium withdrew due to financial distress and would no longer be parties to the contract (par 26(a)). It also appears from par 34(b) that the plaintiff alleges that it was forced to increase its interest in the consortium from 20% to 29.09% because consortium members representing 2/5 of the consortium withdrew.

It may be that, upon the plaintiff gaining knowledge of these matters, it could have acted differently than increasing its share in the consortium and going ahead with the completion of the contract via the establishment of the unit trust of which the second defendant was trustee. This issue is at large because the plaintiff may have been obliged both legally and practically to complete in any event, because it was at risk of incurring a substantial loss by reason of the loss of its share of the deposit, and its liability to pay damages for breach of contract. However, there may have been alternative courses of action that may have led to the plaintiff suffering a lesser loss than it will now suffer.

In par 31(c) the plaintiff alleges, in a passing way, that it “took no active steps to extricate itself from the consortium (eg, by attempting to sell its interest)”, but the plaintiff has not in any detailed or complete way pleaded what it would, and could have done differently from completing the contract (one way or the other) and how that alternative action would have saved it from the loss that it suffered, or reduced that loss.

The problem with the further amended statement of claim in its present form is that the pleading does not grapple with the necessity to be clear and precise as to how relying upon the post-contract representations caused it to suffer additional, or different, damage that it would not have suffered in any event. In a sense the pleading repeatedly fudges the issue by pleading in the one breath that the plaintiff took additional steps on the faith of the post-contract representations, when at the same time it was in any event bound to complete the contract.

I accept the defendants’ argument that this approach to the pleading has a tendency to cause prejudice and embarrassment to the defendant. It is not possible to discern from the further amended statement of claim exactly how it is alleged by the plaintiff that, notwithstanding that it was bound to complete the contract in any event, additional conduct on its part in reliance upon post-contract representations caused it to suffer additional, or different, damage.

Even though the issue has been raised at a late stage in the proceedings, the next step is for the defendants to put on their evidence. A broad consideration of the further amended statement of claim suggests that the evidentiary burden of dealing with the post-contract representations will be relatively equivalent to that of dealing with the pre-contract representations. The just quick and cheap approach to the further management of this case is likely to be facilitated by requiring that the plaintiff remedy the defects in its post-contract representation case, if it can, or alternatively that its post-contract representation case be struck out.

It is important that the plaintiff grapple with this problem realistically. If the reality is that Mr McPherson will concede in cross examination that the plaintiff was bound to complete the contract, and could not have taken any course other than it did take, whether or not the post-contract representations were made, it will be in no parties’ interest for the post-contract representation case to be pursued. If it be assumed that the plaintiff can establish that the post-contract representations were made to it, the plaintiff must identify the alternative courses of action in relation to changes in circumstances, given that it was contractually committed to complete the contract; it must assess the relative advantages and disadvantages of doing anything other than simply completing the contract; it must determine objectively what, if anything, it would have done other than what it actually did; it must quantify in money terms the difference between the consequences of alternative courses of action, and simply completing the contract; and then it must plead in a transparent way how reliance upon the post-contract representations entitle it to a different outcome in the proceedings to its claim based upon the pre-contract representations.

As I have already noted, the defendants have moved to strike out the plaintiff’s post-contract representation claim after the plaintiff has put on all of its evidence in support of that claim. I have not been taken to that evidence, and I do not know whether the evidence will constrain how the plaintiff will be able to respond to a requirement that, if it wishes to maintain its post-contract representation claim, it will have to re-plead the claim in a proper way. However, at this late stage the plaintiff should be given an opportunity to re-plead, if it is able to do so. I have already invited the plaintiff to advise the court whether or not it wants to be given the opportunity to re-plead. In the interim I have decided that appropriate parts of the pleading of the post-contract claim should be struck out. I have not heard specific argument from counsel for the plaintiff as to whether the court should make the precise strike out order sought by the defendants in par 69 of their outline written submissions.

I will give the plaintiff the opportunity to re-plead its post-contract representation case, and make directions for it to serve any draft second further amended statement of claim on the defendants. The directions will provide an opportunity to the defendants to contest whether or not the plaintiff should be given leave to file the new pleading. Alternatively, if the plaintiff decides not to re-plead, I will give it an opportunity to make submissions as to which parts of the further amended statement of claim the court should strike out.

The second notice of motion filed by the defendants seeks an order restraining the plaintiff’s solicitor from continuing to act for the plaintiff.

The evidence establishes that the principal of the incorporated legal practice that acts for the plaintiff, Mr Mark Ryckmans, has been a personal friend of Mr McPherson for about 10 years. While Mr Ryckmans is the solicitor on the record, an employed solicitor, Mr Louis Ryckmans, has the day-to-day carriage of the matter. As I have noted above, a draft statement of claim was served on the defendants’ solicitors in November 2011. The defendants have filed their notice of motion to restrain the plaintiff’s solicitor continuing to act for it almost 3 years after it became aware that the solicitor was acting for the plaintiff. Mr Ryckmans has given evidence that the fees charged by his firm to date to the plaintiff, excluding disbursements and counsel’s fees, exceed $100,000.

Mr Dickson gave evidence that Mr Ryckmans’ involvement in the transaction involving the purchase of Villa 33 began in October 2009, when Mr McPherson suggested that the remaining members of the consortium should change their lawyer. That was after the date when the plaintiff alleges Mr Dickson made the Pre-Completion Representations (par 27), and about the same time as the alleged Further Pre-Completion Representations were made (par 28). The particulars to par 28 allege that the Further Pre-Completion Representations were made in emails from Mr Dickson to Mr McPherson dated 1 and 9 November 2009, as well as orally at a meeting of members of the consortium on about 8 October 2009. The plaintiff has not alleged that Mr Ryckmans was a party to, or present when, those communications occurred.

Following October 2009 according to Mr Dickson, Mr Ryckmans provided his advice and services to the remaining members of the consortium, which led to the creation of the unit trust, and the purchase of Villa 33 being completed by the second defendant rather than by the consortium members personally. There is some evidence that the consortium engaged Mr Ryckmans’ firm to set up the trust, trustee and shareholders agreement in relation to the purchase of Villa 33. A Queensland-based solicitor with local experience with Hamilton Island was retained to deal with the conveyancing aspects of the transaction.

In response to an objection from the plaintiff I rejected evidence in Mr Dickson‘s affidavit of Mr Ryckmans’ involvement in negotiations between the Millers and the remaining consortium members in relation to their withdrawal from the consortium, on the ground that the effect of s 131 of the Evidence Act 1995 (NSW) was that the evidence could not be adduced. As I understand it, the plaintiff did not contest that Mr Ryckmans had some involvement with those negotiations. There was, however, no evidence that Mr Ryckmans’ firm was formally retained to advise the remaining consortium members in relation to the withdrawal of the Millers. The absence of evidence that the issue fell strictly within Mr Ryckmans’ retainer may be of little significance. More importantly, there is no evidence at all, whether in relation to the withdrawal of the Millers, or otherwise, that Mr Ryckmans’ involvement in the transaction has led to the present proceedings caused him to learn anything about Mr Dickson having allegedly made representations to the plaintiff, or the plaintiff acting in reliance upon those representations for any particular purpose. It appears from par 36(b) of the further amended statement of claim that the contract for the purchase of Villa 33 was completed on 16 April 2010 (after, according to Mr Dickson, it was novated in favour of the second defendant on about 23 December 2009). It is not clear from the evidence when the plaintiff first retained Mr Ryckmans’ firm to act for it on its claim against the defendants, although as has been noted above the draft statement of claim was delivered to the defendants’ solicitors in November 2011.

The defendants have provided no evidence of any particular prior involvement of Mr Ryckmans in the transaction that would give rise to a positive concern that Mr Ryckmans may have gained any knowledge that could give the plaintiff any advantage in the proceedings, or which might be misused against the interests of the defendants. There has been no suggestion that whatever involvement Mr Ryckmans had in the withdrawal of the Millers from the consortium, was in any way connected with the basis of the dispute the subject of the present proceedings...

As I have mentioned, the plaintiff has served its evidence. That evidence does not include any affidavit of Mr Ryckmans.

The defendants relied upon the statement of principle made by Brereton J in the fifth bullet point in the following extract from his Honour’s decision in Kallinicos v Hunt [2005] NSWSC 1181; (2005) 64 NSWLR 561 at [76]:

The plaintiff accepted that these principles are applicable. The Court of Appeal approved of Brereton J’s formulation in Cooper v Winter [2013] NSWCA 261 at [1], [2] and [96] and Maxwell-Smith v S & E Hall Pty Ltd [2014] NSWCA 146; (2014) 308 ALR 149 at [1], [2] and [24].

The defendants expressly disavowed any claim that the injunction that they seek is justified by the need to protect the defendants from misuse of any information that they provided confidentiality to Mr Ryckmans or his firm.

The defendants submitted that the knowledge and understanding of the plaintiff, both through Mr McPherson, and as imputed from the consortium’s solicitors, will be a central issue for the court to determine at trial, and Mr Ryckmans will be a material and important witness on controversial issues of substance in the proceedings. This is a case, the defendants submitted in which the conduct of Mr Ryckmans will inevitably come under scrutiny. Further, Mr Ryckmans is in a position of inherent conflict between the interests of the firm, the plaintiff, the defendants, and his obligations to the court.

I reject the defendants’ argument. In fact, I cannot see how it genuinely arises on the evidence. Nothing establishes that Mr Ryckmans had, or has, any relevant knowledge that might be imputed to the plaintiff. The defendants have not even identified that knowledge, let alone provided any evidence of it. It is completely obscure how any such knowledge will be an issue in the proceedings, let alone a central one. As I have said, the plaintiff has not served any affidavit evidence of Mr Ryckmans. In the circumstances, the defendants’ claim that he will be a material and important witness is inconsistent with the facts as they now stand, and is a bare assertion. At present there is no substance in the claim that Mr Ryckmans’ conduct will come under scrutiny. There is no inherent reason to suspect from the evidence given concerning Mr Ryckmans’ involvement that there may be substance in the defendants’ claim.

As a result of the rejection of part of the defendants’ evidence, to which I have referred above, the defendants have abandoned the arguments that they sought to make based upon that evidence. However, I note that the defendants had intended to submit that there was an apparent inconsistency between the present position of the plaintiff, as represented by its solicitor, and the position taken in respect of the Millers and generally in 2009, so that the credit of Mr Ryckmans will be in issue; and further, that the defendant may have claims against Mr Ryckmans for negligence, and his firm might well be made subject of a pleaded claim by the defendant that it is a concurrent wrongdoer.

I have mentioned the submissions that the defendants intended to make, but have withdrawn, because I also cannot see in any event how those matters arise, or have substance. I do not see how the rejection of the evidence upon which the defendants wished to rely will have any material effect on the outcome of his notice of motion. The defendants’ submissions give no content to the assertion that there is any inconsistency of position. The defendants have not commenced any claim against Mr Ryckmans’ firm for negligence. The defendants have already filed their defence, but they have not raised any issue of concurrent liability.

The defendants have submitted that this case is analogous to that dealt with by Brereton J in Kallinicos. I disagree. In that case, as his honour said:

Those findings were justified based upon the nature of the plaintiff’s claim in that case, and appear to have been supported by evidence that was before the court. They were not mere assertions.

While, in this context, little useful guidance is likely to flow from an examination of other cases that have applied the principle upon which the determination of the present issue depends, I note that in Cleveland Investments Global Ltd v Evans [2010] NSWSC 567 Ward J (as her Honour then was) made an order restraining a solicitor from continuing to act for the defendant. Before the solicitor filed a notice of appearance for the defendant, he had acted for another party to the proceedings, being a cross defendant at the suit of the defendant. The defendant was the director of the cross defendant, who had been responsible for giving that party’s instructions to the solicitor. The cross defendant was not in a position to know what information the defendant had given to the solicitor when retained by that company. The solicitor had declined to provide information to the cross defendant for the purpose of the proceedings, on the ground that he had no duty to inform it of the information he received from the defendant in his capacity as the director of the cross defendant. As her Honour noted, by reference to the observation by Bryson J (as his Honour then was) in D & J Constructions Pty Ltd v Head t/as Clayton Utz (1987) 9 NSWLR 118 at 123, cautious conduct is appropriate “because the spectacle or the appearance that a lawyer can readily change sides is very subversive of the appearance that justice is being done”. The lawyer had actually changed sides as between parties for whom he acted in the proceedings.

I can readily understand how the circumstances in Kallinicos and Cleveland Investments caused their Honours to decide that a fair-minded, reasonably informed member of the public would conclude that the proper administration of justice required that the legal practitioner in those cases should be prevented from acting, in the interests of the protection of the integrity of the judicial process and the due administration of justice. However, the circumstances of the present case present a very pale shadow of those that their Honours had to consider.

If content is to be given to the qualification that the jurisdiction is to be regarded as exceptional and is to be exercised with caution, and due weight should be given to the public interest in a litigant not being deprived of the lawyer of its choice without due cause, the defendants’ application in this case should be rejected.

It must also be remembered that in Kallinicos at [92] – [93] Brereton J observed:

I have not accepted that the defendants have made out their claim that Mr Ryckmans’ firm should be restrained from continuing to act for the plaintiff, but if I am wrong in that conclusion, I would in any event, in the exercise of my discretion, decline to grant the relief sought, because the delay in seeking it has been entirely too great; Mr Ryckmans’ firm has been allowed to act for the plaintiff to the point where all of its evidence has been served; and there would be an unwarranted waste of the legal fees paid to date by the plaintiff, and undue inconvenience, if at this late stage it was required to retain entirely new solicitors.

I will therefore make the following orders and directions: