Lawyer and law firm lose ability to act against former client in partnership dispute

14 June 2023

Associate Justice Holt of the Supreme Court of Tasmania asked 'will a fair minded, and reasonably informed member of the public accept a lawyer representing a party where his conduct is central to the proceedings?' and answered this question 'No'.

His Honour held the respondent’s lawyer and law firm must cease to act for the respondents involved in a partnership dispute where the lawyer may be required as a witness to explain his own conduct.

In issue

  • Can a lawyer, who previously acted for the applicant and respondent in their partnership endeavors, act for the respondents and against the applicant in proceedings related to the dissolution of the partnership, where they may be called as a witness?

The background

Two respondents and one applicant embarked on obtaining, building on and selling a block of land in Sandy Bay. The first respondent is an architect and is married to the second respondent. The applicant was wishing to purchase his first home.

In 2010 the parties orally agreed to purchase a block of land, 50% of the purchase price was covered by the applicant and the other half covered by the respondents. The purpose of the acquirement was to build houses on the land.

The legal firm was first engaged to undertake conveyancing work and handled the file from then on. After some time, Mr Griggs (now the respondent’s solicitor in these proceedings) commenced at the firm that was engaged and took over the file to assist with re-financing. After some work on the file, Mr Griggs closed it, despite a complaint made by the applicant to the firm regarding the distribution of surplus funds by Mr Griggs to the respondents.

The applicant brought proceedings to challenge the transfer of surplus funds. The central issue was narrowed down to whether a building contract made in 2014 subsists or whether an alleged partnership agreement supersedes it, and, if so, what are the relevant terms?

Before that question could be answered the applicant filed a restraint order that would see the respondent’s solicitors cease representation. Therefore, the question to be answered in this hearing was whether the legal firm and consequently, Mr Griggs, can act for the respondents where he may be called as a witness and will be seeking to justify his conduct.

The decision at trial

Holt AsJ considered meetings between the applicant and Mr Griggs and whether the information divulged might be used against him in these proceedings. He found that there was no relevant confidential information in the meetings that have any substance to these proceedings.

His Honour then went on to consider the possibility of Mr Griggs being called as a witness in these proceedings. To make such a determination, Kallinicos v Hunt was applied. This case was factually similar to the facts of this dispute and there the Court found the solicitor should not act where his own conduct will be examined, because his obligation to the court, his client and his own personal interest may be in conflict.

It was on this basis that his Honour determined that Mr Griggs’ and the legal firm’s objectivity has been compromised.

His Honour said the following at [32]: 'I conclude that fair minded, and reasonably informed members of the public would expect that lawyers will conduct litigation free of and unaffected by the impact of personal interest'

Mr Griggs’ behavior is likely to be assessed as a part of the proceedings and as a consequence, he may be required to give evidence. If he were to continue to act, he would need to balance his own personal interest to exonerate himself, his client’s interests and uphold his obligation to the Court. This satisfied his Honour that a conflict is present and that Mr Griggs is no longer objective and independent.

An order was made for Mr Griggs and the law firm to cease to act for the respondents in the proceedings.

Implications for you

Acting for more than one client related to the same matter can be tricky, and virtually impossible when the relationship between clients breaks down. This decision should encourage solicitors to critically assess their ability to act and turn their minds to whether they will be called as a witness in circumstances where their own conduct will be a topic in the proceedings.

Stevenson v Hall and Anor [2023] TASSC 11

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