R.C Manubhai & Co. Ltd v Herbert Construction Company (Fiji) Ltd [2014] FJCA 175; ABU0002.2010 (29 May 2014)

IN THE COURT OF APPEAL
ON APPEAL FROM THE HIGH COURT

CIVIL APPEAL NO. ABU 0002 of 2010
[High Court Civil Action Nos': HBC 75 of 2009, 76 of 2009 and 90 of 2009L]

BETWEEN:

1. R. C MANUBHAI & CO. LTD
2. A-TEAM ELECTRICAL ENGINEERS LIMITED
3. ELISHA ENGINEERING COMPANY LIMITED
Appellants

AND:

HERBERT CONSTRUCTION COMPANY (FIJI) LIMITED
Respondent

CORAM : Chandra JA
Almeida Guneratne JA
Malalgoda JA

Counsel : Ms. N. Khan and Mr. Ali for the Appellants
Ms. L. Tabuakuro for the Respondent

Date of Hearing : 21 May 2014
Date of Judgment : 29 May 2014

JUDGMENT

Suresh Chandra JA

I agree with the conclusions and reasons in this judgment of Almeida Guneratne JA.

Almeida Guneratne JA

The Judgment in Appeal

[1] This is an appeal (after the grant of leave) against the Interlocutory Judgment of the Honorable High Court wherein a Solicitor and Barrister, Mr. Samuel Ram (hereafter referred to as Mr. Ram) who had entered an appearance for the Plaintiffs/Appellants (hereafter referred to as the Appellants) in three separate actions was held to be disqualified from continuing to do so against the Defendant/Respondent (hereafter referred to as the Respondent) which had been a former client of his. The said judgment was in consequence of an application made by the Respondent purportedly in pursuance of provisions of the Legal Practitioners Decree of 2009 and the inherent jurisdiction of the High Court.

Basis for the Judgment of the High Court
[2] The Learned High Court Judge restraining Mr. Ram from appearing in the said actions held that, in as much as Mr. Ram had been doing work for the Respondent in the past, there was a breach of confidentiality in regard to confidential or privileged information relating to the company's affairs. The learned Judge inter-alia also held that, Mr. Ram owed a fiduciary duty to one of the Directors of the Respondent Company on account of Mr. Ram holding a power of attorney on her behalf. He also found that, the provisions of the Legal Practitioners Decree covered the matter in question and that there was the possibility of Mr. Ram being called as a witness.

[3] All these factors prevented him from continuing to appear on behalf of the Plaintiffs/Appellants.

[4] The aforesaid aspects contained in the judgment may be examined seriatim as follows:

Relevant Facts and Deductions to be Drawn Therefrom
Solicitor/Client Relationship in the Past

[5] There is no doubt that Mr. Ram had commenced doing work for the Respondent Company in 2003. He had in fact filed the Articles of Association. But thereafter it was only in the year 2007 that he had handled work for the company. The range of matters attended to by him is contained in the supplementary affidavit dated 30th September 2007 filed by Mr. Ram's Firm's Legal Clerk, Sushila Sen. (pp 228 – 230 – Vol 2 Record of the High Court). Respondent Company's Director Anthony James Herbert's affidavit dated 16th June, 2009, letters dated 14th February 2007 (Vol 2 Record of the High Court), 7th March, 2007 (pp 822 – 823) sent by Mr. Ram's firm to Messrs Muaror & Co. (pp 817 – 818), (Vol 2 Record of the High Court) letter dated 20th February sent to Matapo Ltd. (Vol 2, pp. 819 – 812), among other correspondence between the parties involved make that fact clear. But all that had stopped in or around the year 2008.

[6] Mr. Ram had also acted for the Respondent Company in respect of work completed on the Marriott Resort Development at Momi, Nadi.

[7] The Respondent company took up the position that, as a result, Mr. Ram was in receipt of information that may result in detriment to it.

[8] Apart from that, the letter of 20/3/2009 sent by Elvidge Partners (Solicitors) on behalf of the Respondent Company to Dinesh Patel (Managing Director for R. C Manubhai & Co. Ltd. – the 1st Appellant) claims that Manubhai & Co. may have wrongly received payments from Matapo Ltd which is supposed to have received funds under a syndicated loan agreement to be paid to the Respondent Company. It was contended that this was on the basis of certified completed work done by the Respondent Company which Matapo Ltd held in trust for it.

[9] Application for liquidation of Matapo Ltd was also pending and assets of Matapo Ltd. Frozen in the interim by the High Court of Lautoka in Application No. 03 of 2008.

[10] Mr. Ram had been involved with all this at various stages.

[11] Given the nature of the work Mr. Ram had been performing on behalf of the Respondent company, a presumption may be reasonably drawn that, Mr. Ram would have been in possession of information pertaining to the affairs of the Respondent company including its financial status.

[12] However, the question to be asked is, was that fact per se sufficient to restrain Mr. Ram from continuing to plead his cause for his new clients the Plaintiffs /Appellants?

[13] It is to be borne in mind that, as the evidence reveals, Mr. Ram is on a permanent retainer given by the Plaintiffs/Appellants as opposed to the ad-hoc work he had been doing for the Respondent Company.

[14] The Statement of Claim of the Plaintiffs/Appellants prays for a settlement of a debt owed by the Respondent company to them, part of which as originally owed by the Respondent company, has been paid already.

[15] This has not been refuted by the Respondent Company in its correspondence with Mr. Ram.

[16] Even that had been brought about through the initiatives taken by Mr. Ram by an agreement dated 8/5/2008 between the Appellants and the Respondent, which leads to the inference that, Mr. Ram had been striving to act in the best interests of both his current client as well as his former client.

[17] This is evidenced from a communication dated 30th April, 2007 by Mr. Ram to Mr. Malcolm Herbert (a Director of the Respondent Company) by which he had advised the latter to enter into an agreement with Rajesh Patel (Managing Director of R.C. Manubhai to pay the financial debt owed by the Respondent Company. The communication stated inter-alia thus:

"Elisha Engineering are also my clients and they asked me to collect sums owed to them. I put them on hold saying you were my client and that we were doing our best......."

[18] Apart from that, there is no Statement of Defence filed as at date by the Respondent company for the High Court to have ascertained, and now this Court to ascertain and determine, that, there exists a nexus between confidential information Mr. Ram may well have come to be in possession and the claim of the Plaintiffs/Appellants that the Respondent company owes them a debt which the Respondent Company through their lawyer has denied.

[19] The application was to restrain what was perceived to be a threatened breach of confidence regarding information.

[20] But, how could any information gathered have any bearing on the liability or otherwise of the Respondent Company to pay the debt claimed by the Plaintiffs/Appellants?

[21] Even assuming that Mr. Ram is in possession of knowledge regarding the financial status of the Respondent Company how could it prejudice the Respondent Company?

[22] The Respondent Company's task at the trial would have been to show that it was not liable to pay the debt claimed by the Plaintiffs/ Appellants.

[23] Had the Respondent in the said letter or through its lawyer in any other communication addressed to Mr. Ram at least mentioned that, Mr. Ram was in possession of information gathered from their earlier lawyer – client confidential relationship that showed the Respondent was either liable or not liable to satisfy the Plaintiff's/Appellant's claim, or some other connection between the claim and the alleged confidential information the issue may have assumed a different complexion.

[24] It is true that Mr. Ram in fact had even acted for the Defendant company in respect of work completed on the Marriott Resort Development at Momi, Nadi, which no doubt would have resulted in him coming into possession of information with respect to the Defendant Company.

Did These Facts Lead to a Conflict of Interests?

[25] I think not. Mr. Ram, as earlier noted, was acting for his current client as well as in the interests of the Defendant Company. While his work with the Defendant Company was on an ad-hoc basis, he was on a retainer from R.C Manubhai. He was endeavoring to do the best by his current client as well as one of his former clients.

[26] Perhaps, because of his connection with the Defendant company it might have been prudent on his part not to have appeared against it, but, does his conduct as revealed from the facts recapped hereinbefore amount to a conflict of interests or as being a breach of a fiduciary duty or conduct offending the provisions of the Legal Practitioners Decree of 2009 to have restrained him and disqualify him from appearing for R.C Manubhai and in the other two actions?

[27] A mere allegation that, a lawyer/client relationship existed in the past per se cannot disqualify a lawyer from appearing for a subsequent client.

The Test for Conflict of Interests

[28] First, the conflict must arise out of the cause of action pleaded by the new client and any information pertaining to the former client a lawyer reasonably could be said to have been in possession.

Secondly, such information must impact on the cause of action so pleaded.

[29] There is no material to show that, any information gathered on account of Mr. Ram having acted on behalf of the Defendant Company has been used by him in the Statement of Claim filed on behalf of the Plaintiffs/Appellants including the Momi Bay project.

[30] Viewed from that perspective, I do not think a situation smacking of a conflict of interests arose.

Possibility of Mr. Ram being called as a Witness

[31] There is nothing in the Civil Procedure Code Decree or any other enactment, Rule or Decree that prevents Mr. Ram being called as a witness should proceedings in the normal course of the trial had proceeded in order to establish that he was in possession of confidential information that carried the potential of prejudicing the Defendant Company's defence.

[32] For the aforesaid reasons I am of the view that, the application to disqualify Mr. Ram at the stage it was made was in any event pre-mature.

Applicable Principles of Law

[33] The general rule is that a lawyer who is likely to be a witness in legal proceedings will have a conflict of interest with his role as a legal adviser.

[34] Such an interest would exist where a solicitor is aware that he may be called as a material witness in the proceedings. (see: Clay v Karlson [1996] 17WAR 493).

[35] Thus, the decisive criterion would be whether, if called he would be a "material witness".

[36] To do that, the trial must begin and whether or not he would be a "material witness" cannot be left to surmise.

[37] An interest also exists where, because of allegations made in the pleadings, the solicitor would be required to defend his professional conduct.

[38] In the instant case, the Respondent had not even filed Statements of Defence.

[39] Thus, the general rule is subject to exceptions.

[40] The general rule stands qualified further, as held in an Australian Case, that, a solicitor may be called in support of some matter concerning instructions given see: R v Birks [1990] 19 NSWLR 677.

[41] In the instant case, Mr Ram was acting as both Solicitor and Barrister. Apart from that fact, what could have been the instructions given to him other than to file a Statement of Claim and recover the debt, part of which had been paid to the appellants?

[42] It is true that, when a lawyer opposes a former client as in the instant case there could be situations where the use of confidential material obtained during an earlier matter will be detrimental to the former client's interests if used directly or indirectly against the former client in the later proceedings.

[43] In the instant case, other than the work done by Mr. Ram in 2003 when incorporating the Respondent Company his work done on behalf of the Respondent Company was piece-meal, all of which had ended in or around 2008.

[44] Even if one goes to the extreme, the only confidential information Mr. Ram may have come to be in possession is the financial viability of the Respondent Company to pay his current client's debt. He had never appeared for the Respondent Company.

[45] I am not inclined therefore to be guided by the test applied in the Australian case that, the matter depends rather upon the existence of the contract of retainer that was made in the first place, than upon the existence of confidences disclosed and meriting protection against misuse. (vide: McVeigh v Linen House Pty. Ltd [1999] VSCA 138; [1999] 3 VR 394 at page 399 per Batt, JA).

[46] I have no hesitation in leaning in favour of the more liberal tests applied in earlier cases viz: "the real risk of prejudice or mischief" test. (vide: D & J 9 NSWLR 118 per Bryson, J); "the possibility of an unwitting disclosure" test adopted in Wan v Mc Donald [1992] FCA 4; [1992] 33 FCR 491; 105 ALR 473.

[47] I have already expressed my views on the approach adapted by the House of Lords in the Prince Jefri Bolkiah decision (supra). If that decision is constrained in perspective the test emerging there is the test of "No real (although it need not be substantial) risk of disclosure."

[48] That approach appears to have been widely accepted in Australia (see: Zalfen v Gates [2006] WASC 296; Pott v Jones Mitchell [2004] QSC 48; Style v O'Brien [2007] TASSC13].

[49] I also had occasion to reflect on the Judicial thinking reflected in World Medical Manufacturing Corp v. Phillips Ormonde and Fitz Patrick Lawyers (a firm) [2000] VSC 196.

[50] In that case Gillard J had suggested that, when a court is determining whether a lawyer should be able to act against a former client, the following questions should be asked:

[i] Is the former supplier of services whether it be a solicitor, accountant or a patent attorney or some other person providing services, in possession of information provided by the former client which is confidential and which the former client has not consented to disclosure?

[ii] Is or may the information be relevant to the new matter in which the interest of the other client is or may be adverse to his own?

[iii] If the answers to the first two issues are yes, then is there a risk which is real and not merely fanciful nor theoretical that there will be disclosure?

[iv] If there is that risk then the evidential burden which is heavy, rests upon the provider of the services to establish that there is no risk of disclosure and this may be established in exceptional cases by the provision of a 'Chinese wall' but this is rarely of sufficient protection.

[v] Should a permanent injunction be granted?

[51] I would suggest for the Fijian approach a further question to be asked, viz:

"Is there a nexus between the cause of action together with the claim contained in the Statement of Claim of the new client and the confidential information he might be said to be in possession through his relationship with the former client that could be regarded as material and might be detrimental to the former client?"

[52] Applying these tests, I am driven to the conclusion respectfully, that, the approach adapted by the Learned Trial Judge was wrong and Mr. Ram could not have been restrained at least at the stage he was so restrained and declared to be disqualified from continuing to act and appear on behalf of the Appellants.

[53] Had the learned Judge viewed the matter of restraining a lawyer from acting and appearing for a new client as against a former client in the facts and circumstances of this case, I am convinced he might have arrived at a different conclusion.

Alleged Breach of a Fiduciary Duty - Re: The Power of Attorney in Question

[54] I now proceed to examine as to whether the holding of a power of attorney by Mr. Ram on behalf of Ms Herbert (51% shareholder –Director of the Defendant Company) could throw a different complexion on the matter.

[55] The clauses of the said Power of Attorney no doubt are in very wide terms. It includes an undertaking by Mr. Ram to defend any action or proceedings taken against Ms Herbert.

[56] It is apt to note the following in this context:

[i] There is nothing to show in the Power of Attorney that extends Mr. Ram's duty to Ms Herbert to a duty owed to the company of which she is a shareholder Director. There is no mention of the company at all.

[ii] Ms. Herbert has not complained against Mr. Ram continuing to appear in the three actions. She did not take steps to revoke the Power of Attorney either.

[iii] It is Malcolm Herbert (another Director) who has sworn an affidavit complaining of a breach of a fiduciary duty.

[iv] The Respondent being a corporate and separate entity from itself shareholders had the right to appoint an Attorney.

[57] Adverting to these factors Ms Khan submitted that, the Learned High Court Judge misdirected himself and erred in law when he lifted the corporate veil to see a connection between Mr. Ram and the Respondent company through the Power of Attorney given by Ms Herbert (shareholder) to Mr. Ram whereas, in Ms Khan's submission, the Power of Attorney in question was personal to her.

[58] The issue this court is obliged to consider is whether the acts Mr. Ram had undertaken to perform on Ms Herbert's behalf and the information he may have come to be in possession could have been used in the three cases against the Defendant Company.

[59] But the only relevant information Mr. Ram may have come to be in possession (if at all) would have been as to the Company's credit worthiness or financial viability to pay the debt claimed by the Appellants should the Appellants were to succeed in the said actions.

[60] Assuming Mr. Ram was possessed of such knowledge, by what stretch of imagination could such knowledge be connected to any conflict of interest or professional misconduct or a breach of a fiduciary duty?

[61] Had Mr. Ram advised the Appellants when he was retained by them that he is aware that, if the Appellants succeeded in the action the Defendant Company is in a position to satisfy the debt claimed, could that amount to misconduct or a malpractice or constituting conduct tantamount to a conflict of interest or a breach of a fiduciary duty owed to the Defendant company? I think not.

[62] Even if Mr. Ram was to be called as a witness by the Defendant Company what more could have been elicited from him as being linked to whatever information he might be in possession on account of his earlier connection with the Company?

[63] Looked at from that perspective I do not think the affidavits relied upon by the Defendant (Respondent) company could alter the position.

[64] Consequently, I do not consider it necessary to go into the matter of the learned High Court Judge admitting the said affidavits.

Lifting of the Corporate Veil

[65] The Learned High Court Judge thought that, the terms of the Power of Attorney are wide enough to prohibit Mr. Ram acting against Ms Herbert's interests in the Defendant Company whatever the extent of her interest in the Company is.

[66] The principle of the independent corporate existence of a company was explained and emphasized in Saloman v Saloman Co. Ltd [1897] AC 22, by the House of Lords.

[67] While Ms. Khan for the Appellants stressed on this, Ms. Tabuakuro for the Respondent contended that this was a fit case to lift the corporate veil.

[68] She premised her argument on the wide powers given to Mr. Ram in the Power of Attorney and the fact that Ms Herbert had left for New Zealand leaving her interests entirely in the hands of Mr. Ram.

[69] She also raised the point that, Ms Herbert owns 51% of the shares in the Company and even the other Directors were also in one family.

[70] In other words, looking behind the company as legal persona it was apparent that should the Company through litigation suffer detriment her interest too would ipso facto be adversely affected.

[71] Ms. Tabuakuro submitted when the Power of Attorney specifically contemplated that Mr. Ram shall represent Ms. Herbert in any action, prosecution, proceeding how could he have appeared against the company of which she was a 51% share holder, and even obtained ex-parte judgments against it?

[72] However, Ms Tabuakuro's contention is a far cry from obvious and natural limitations to the independent legal persona principle which had been pointed out poignantly by counsel in the days of James II when asking "Can you hang its common seal?" in R v City of London [1632] 8 St. Fr 1087, 1138 (cited in Palmer's Company Law, 21st Edition. 1968.)

[73] On an intervention by Court, Ms Tabuakuro was not able to show any clause in the Power of Attorney that made any reference to her interests in the company.

[74] In the absence of that link, I am inclined to agree with Ms Khan's contention that, the said Power of Attorney was personal to Ms Herbert.

[75] Ms Herbert may own 51% of the shares. Based on that fact, even if the argument that she had a predominant or controlling interest is to be accepted, only in certain matters pertaining to the law of taxes, death duties and stamps (see: S Brendsen Ltd v I.R.C [1958] 1 Ch. 1 (CA)), matters relating to exchange control, where there has been trading with the enemy, (vide: Daimler Co. v Continental Tyre, etc., Co. [1916] 2A.C 307) formation of a new company by the majority share holders in an existing company for the sole purpose of expropriating the shares of the minority shareholders in the existing company (see: Re Bugle Press Ltd [1961] Ch. 270) that, the controlling interest" concept has been used to lift the corporate veil.

[76] Besides these specific areas, it is common knowledge that, the Courts generally show willingness to "lift the veil" where the device of incorporation is used for some illegal or improper purpose. (see for example, Merchandise Transport Ltd. v British Transport Commission [1962] 2QB173 and Jones v Lipman [1962] 1WLR. 483.)

[77] I am yet to come across an instance where a fiduciary duty owed by a lawyer on account of holding a Power of Attorney on behalf of a major shareholder of a company has been extended to the company through the device of "lifting the veil".

Rights of Lawyers and Clients

[78] The professional right of a lawyer as well as a client's right to retain a lawyer of his or her choice ought not to be interfered with lightly unless there are compelling reasons to do so.

[79] Otherwise there would result applications on the flimsiest of grounds merely because a lawyer appearing on behalf of a new client had in the past done work for the adverse party in the new litigation.

[80] Accordingly if one seeks to find a principle applicable in the present context, I venture to expound as a proposition in the context of lawyer/client relationships that, in order to restrain or disqualify a lawyer from appearing for a new client in an action against a former client on whatever ground, whether it be an alleged breach of confidentiality, a fiduciary duty, conflict of interest or potential to be called as a witness, there must be shown to exist either in the pleadings or in the evidence, a direct nexus between the cause of action pleaded in an ongoing action and the work the lawyer is said to have performed for the former client.

[81] In my view, such a nexus is not established in the pleadings. The Statements of Claim of the Appellants in the three actions in question have not been met by Statements of Defences, or by the leading of evidence, the reason why I have earlier stated that, the present application was in any event pre-mature.

Could the Appellants Maintain this Appeal?

[82] The proceedings in question before the High Court were prima facie interlocutory in nature.

[83] However, in so far as a lawyer's right to appear on behalf of his client is concerned, the ensuing judgment of the Learned High Court Judge is final in nature.

[84] And, so is the Appellants right to continue with the lawyer's services.

[85] Two of the default judgments which had been entered out of the three actions were also set aside.

[86] Therefore, I have no hesitation in holding that, the present appeal is properly constituted.

[87] New situations demand proper judicial intervention as long as such intervention does not make inroads into the legislative sphere which could be considered as being obnoxious to the doctrine of separation of powers. Otherwise there would not be any development of the law.

The Impact of the Legal Practitioners Decree of 2009

[88] There is one last matter to be considered and that is the impact of the Legal Practitioners Decree on the matter under consideration.

[89] I have gone through the several provisions of the said Decree relevant to the conduct of a solicitor (I may add, a counsel) as an officer of court.

[90] Sections 52 to 56 in Part 6 and Sections 81 to 83(1) specifically define the terms "unsatisfactory professional conduct," "professional misconduct" and "conduct capable of constituting unsatisfactory professional misconduct" or "professional misconduct".

Does Mr. Ram's alleged Conduct Fall into any of these Categories?

[91] The allegation of the Defendant (Respondent) company was that, Mr. Ram, (the lawyer) had instructed it earlier and he is holding a Power of Attorney on behalf of one of its Director/Shareholders and as a result was in possession of financial information regarding the Company.

[92] As for me, I cannot see how those allegations could fall into any of the provisions envisaged and Decreed by the Decree of 2009.

[93] Section 83 (2) defines professional misconduct to include "malpractice" and "unsatisfactory professional misconduct."

[94] None of the precedents and other authorities cited by the Respondent's counsel has regarded the matters urged on behalf of the Defendant (Respondent) company, contained in the Written Submissions and referred to in the Oral Submissions, as constituting such conduct contemplated by Section 83(2).

[95] I could see nothing even in Rule 2.1 (5) of the said Decree, which could throw new light on the matter and alter the line of approach I have adopted and pursued.

[96] I could see nothing to change my view even on the basis of the exhaustive work contained in Professor Sino Dal Pont's "Lawyers Professional Responsibility" (4th Edition, 2010).

[97] The Respondent's counsel made submissions on the concept of disclosure of information and obligation on the part of Mr. Ram to make such disclosure.

[98] Even assuming that there was an obligation what could have been such obligation?

[99] It could only have been to disclose to a person who already knew what was to be demanded by such disclosure viz: that (Mr. Ram) was aware of the financial standing of the Respondent Company to meet his new client's claim to pay off a debt.

Impact of the Legal Practitioners Decree, 2009 – The Rules

[100] Rule 1.2 States that, a party shall not act for more than one party in the same matter without the prior consent of all parties.

Rule 1.3 On becoming aware of a conflict of interest between clients a practitioner shall forthwith:

[i] Advise all clients involved in the matter of the situation;

[ii] Continue acting for all clients only with the consent of all clients and only if no actual conflict has occurred;

[iii] Decline to act further for any party where so acting would disadvantage any one or more of the clients.

[101] The e-mail of 30th April 2007 written by Mr. Ram to Malcolm Robert (Director/Respondent company) shows that Mr. Ram was acting in the interests of both R.C Manubhai (1st Plaintiff/Appellant), and Elisha Engineering (3rd Plaintiff/Appellant) as well as the Respondent Company.

[102] On a reading of the terms of the said communication at that stage it is not difficult to deduce that Mr. Ram was doing so with the implied consent of all parties followed by further acquiescence on the part of all parties by reason of the agreement signed on 8th May, 2008 in pursuance of which the Respondent had even made a part payment (vide: letter dated 24th May 2009 by Mr. Ram to Messrs Elvidge & Partners, Respondent's lawyers at page 113 of Vol 1 of the Record of the high Court) This has not been denied by the Respondent. The Agreement itself had been settled not by Mr. Ram.

[103] Consequently, I cannot see how Rule 1.2 or Rule 1.3 (i) could be said to have been breached.

[104] Mr. Ram was seeking to have the conflict between the Respondents and the Plaintiffs resolved to secure the balance of the debts owed to the Plaintiffs.

[105] In those circumstances I cannot see how Rule 1.3(ii) and (iii) could be said to have been breached either.

[106] The Chronology of events referred to in the Written Submissions by the Respondent dated 24 September 2009 (vide: page 175 of Vol 1 of the Record of the High Court) reveals that while the aforesaid e-mail dated 30th March 2007 was never opposed or refuted, the next notable event was as distanced as 10th June 2008 when the Respondent had filed an application to appoint an interim liquidator for Matapo Ltd which had been opposed by Mr. Ram. Respondent's request to Mr. Ram to withdraw on the basis that he was conflicted was rejected by Mr. Ram.

[107] The facts do not reveal such a conflict.

[108] In the result the only basis for Mr. Ram to be restrained from appearing for the Appellants would have been if he was acting to have the Respondent Company wound-up.

[109] That appear to be the genesis of the present dispute which had culminated in Elvidges letter to Mr. Ram dated 20th March 2009.

[110] It was by letter dated 3rd April 2009 that Messrs Elvidges had raised Mr. Ram's conflict of interest on the Manubhai claim resulting in Mr. Ram's reply dated 13th May 2009 which I think was a perfectly valid reply.

[111] In the result I hold that Mr. Ram's conduct did not in any way offend the rules of the Legal Practitioners Decree of 2009.

My Conclusion Re: Mr. Ram's right to Continue to appear for the Respective Appellants in the Three Actions

[112] For the reasons stated above, I hold that, there was no basis to restrain or disqualify Mr. Ram from acting on behalf of or appearing for the Appellants at the stage at which the application was made by the Respondent company.

[113] In so holding I have endeavored to go through the Written Submissions filed on behalf of the parties and the several authorities referred to therein including Aleem Investment Ltd v Danford [2006] FJHC 91 and the House of Lords decision in Prince Jefrin Bolkiah v KPMG [1999] 1All ER 517. In fact, as counsel for the Appellants pointed out, in Bolkiah's case it was stated thus:

"where the Court's intervention is sought by a former client, however, the position is entirely different. The court's jurisdiction cannot be based on any conflict of interest, real or perceived, for there is none. The fiduciary relationship which subsists between solicitor and client comes to an end with the termination of the retainer. Thereafter the solicitor has no obligation to defend and advance the interest of his former client. The only duty to the former client relationship is a continuing duty to preserve the confidentiality on information imparted during its substance."

[114] I am inclined to agree with the judicial thinking reflected in the said proposition.

[115] The function of the law is to resolve what is perceived as conflicting interests. The means by which such resolution is achieved is through the intervention of courts.

[116] The approach reflected in the above noted proposition in Bolkiah's case (supra) represents that essential resolution between the rights of a counsel or solicitor to plead the cause of a new client against a former client who may harbor a grievance, apart from that new client's right to retain a lawyer of his or her choice.

[117] Consequently once retained by a new client against a former client, the only limitation visiting a solicitor or a counsel is the duty to preserve the confidentiality on information imparted during the substance of that former relationship.

[118] To that extent, that part of the Learned Trial Judge's Order that Mr. Ram shall not divulge or disclose to any person without the consent of the Respondent Company any confidential or privileged information acquired by him during any time that he acted as solicitor and barrister must stand.

[119] Subject to that aspect in the trial judge's order I could not see in the said submissions or in the principles expounded in the said authorities that offend the view I have taken in this matter and the approach I have adapted.

[120] Thus, even assuming that, the trial judge could have entertained an interlocutory application on the basis of the decision in Gazley v Lord Cook of Thorkdon [1992] 2 NZLR 668 (CA) which the Respondent has relied on, for the reasons stated above, I hold that, the learned trial judge misdirected himself when he disqualified and restrained Mr. Ram from acting on behalf of the Appellants.

Re: The Default Judgments issued in Two of the Three Actions

[121] The Learned Trial Judge in his order Decreed that "All default judgments issued in these actions if any, (the emphasis is mine) are set aside..."

[122] The learned counsel for the Appellants submitted that, the Appellants were not even heard before the said orders setting aside the default Judgments. She complained that, there was a breach of the fundamental rule of natural justice. viz: audialteram partem.

[123] Counsel Ms. Khan was pleading the cause of her clients the Appellants and although she was, as indeed she was obliged to do, was defending Mr. Ram's conduct, the gravaman of her submission was, in any event, that is, even if Mr. Ram was to be regarded as being disqualified from continuing to appear for the Appellants in the High Court actions, the said default judgments could not have been set aside in as much as there is a procedure laid down by the law for setting aside default judgments. That procedure was not followed by the trial judge. The Respondent had not taken any steps to have its default purged and therefore, in any event, the setting aside of the said default judgments cannot be allowed to stand.

[124] In view of my determination that, the Learned Trial Judge was in error in disqualifying Mr. Ram from continuing to appear and act for the Appellants, strictly speaking it may not be necessary to go into that aspect for the default judgments will now stand restored.

[125] However, I would like to express my thoughts briefly on that aspect of the matter.

Principles in Setting aside a Default Judgment

[126] A court ought to treat an earlier order as invalid only if the right remedy is sought by the right person against the right person in the right proceedings.

[127] One need not labour to find that, the criterion of "right proceedings" was not satisfied in the case under consideration and there was the need to have complied with natural justice as very succinctly urged by counsel for the Appellants.

[128] The Learned High Court Judge appears to have thought that, once he found that, Mr. Ram who had procured orders for default and because he was disqualified to have done so, the default judgments ipso facto had to be set aside as if that mater was collateral to him being disqualified.

[129] That deduction on the part of the trial judge is non sequitur in my view and constitutes an error and/or misdirection in law.

[130] Without prejudice to what I have said hereinbefore I proceed to hold as follows:

"The Statement of Claim of Manubhai & Co. Ltd in Case No. 75 of 2009 (the 1st Appellant) is dated 15th May, 2009 and the Writ of Summons appears to have been issued on the same date. Like in the other two cases by motion dated 16th June 2009 the Respondent filed the present application and sought leave to file Statement of Defence beyond the time set by the High Court Rule of 1988 No default judgment bas been entered in that case. Parties may advise themselves as to the future steps in the action.

[131] Default judgments in favour of the 2nd Appellant and 3rd Appellant in case No. 76 of 2009 and 90 of 2009 were entered on 29th September 2009 which were set aside by the learned High Court Judge.

[132] I make order that the said default judgments be restored. Parties may advise themselves as to further steps.

Conclusion

[133] The Learned Trial Judge held that Mr. Ram holds financial information confidential to the Respondent Company and the claim by the 1st Appellant is interwoven with the Respondent's claim against Matapo Ltd.

[134] This finding by the trial judges was largely based on the Respondent's contention which learned counsel has succinctly recapped in the submissions in reply which I reproduce below for convenience.

[135] The Respondent Contends thus:

"The Respondent's case is that any monies claimed by R.C Manubhai (1st Appellant) and Elisha Engineering (3rd Appellant) must be set off against any drawdown wrongly paid by the developer, Matapo Ltd to R. C Manubhai and Elisha Engineering. Mr. Ram will be required to give evidence on the payments made." (emphasis is mine).

[136] The Respondent continues in the said submissions thus:

"During the hearing the respondent explained that Matapo Limited had used payment recommendations to draw down monies from a syndicated loan facility. The payment recommendations were provided in respect of work done by the respondent on the Momi Development. Monies drawn down by Matapo from the syndicated loan were never paid to the Defendant and could have been paid to R.C Manubhai and Elisha Engineering by mistake.

[137] To begin with, I cannot see any link between Matapo Ltd wrongly paying R.C Manubhai and Elisha Engineering on a contract and the alleged debts owed by the Respondent to R.C. Manubhai and Elisha Engineering on some other contract.

[138] The same holds good in regard to the Respondent's explanation that, Matapo Ltd had used payment recommendation to draw down monies from the said syndicated loan facility.

[139] On the Respondent's own showing, the payment recommendations were provided in respect of work done by the Respondent on the Momi Development.

[140] The Respondent consequently argues that:

"Monies drawn down by Matapo from the syndicated loan were never paid to the Defendant and could have been paid to R.C Manubhai and Elisha Engineering by mistake.

[141] The Learned Trial Judge quite correctly accepted that a tracing exercise must be done to determine where the funds have gone. True, it will require an examination of payments made to R.C Manubhai and Elisha Engineering by Matapo.

[142] This may even require Mr. Ram being called as a witness and as I have noted earlier there is nothing in the Procedural law or the Legal Practitioners' Decree or even in the Common Law that prevents the Respondent from doing so.

[143] It may very well be true that, monies drawn down by Matapo Ltd from the said syndicated loan were never paid to the Respondent.

[144] But, whether the monies "could have been paid to R.C Manubhai and Elisha Engineering" would take the matter to an area of conjecture.

[145] Even before determining the outcome of the desired tracing exercise, would it be fair to disqualify Mr. Ram on the basis that he is in possession of confidential financial information that may be disadvantageous to the Respondent?

[146] It may well be that, Mr. Ram advised the Respondent to pay sub-contractors for work done on the Momi Development. What did this have to do with the Appellants' claims?

[147] It was further contended on behalf of the Respondent that, Mr. Ram is aware of the Respondent's case and that it was discussed with him when he was the Respondent's lawyer and he had provided legal advice. Mr. Ram is supposed to have advised the Respondent not to pay the claims brought by R.C Manubhai.

[148] Assuming that contention is to be accepted on its face value, the letter of 30/4/2009 (Exhibit 'B') is self explanatory in that, it shows how Mr. Ram had been striving to bring about a resolution between his former client and the current client which had even led to an agreement resulting in the Respondent paying part of the debt owed to Manubhai Ltd.

[149] Leaving aside all that, what have all these matters to do with the claims of the Appellants? The defence would be the Respondent's non-liability to pay the debt claimed by the Appellants whether or not on account of the Momi Bay Decree. The Respondent is provided with a further defence to the Appellant's claims based on legal arguments of impossibility and/or frustration.

[150] In my view, if Mr. Ram was sought to be disqualified then, at least, the Respondent ought to have moved to have Matapo Ltd added as a party on the basis of the connection between Matapo Ltd, R.C Manubhai and Elisha Engineering on account of the alleged syndicated loan.

[151] Finally, the learned trial judge held that, by disqualifying Mr. Ram, Manubhai or Elisha's interests will not be jeorpadised. But the issue at hand is whether in the facts and circumstances of this case Mr. Ram ought to have been disqualified from appearing for all the Appellants when the Respondent in any event has not even attempted to show any cause why he should be disqualified from appearing and acting for A-Team Electrical Engineers Ltd. (the 2nd Appellant).

[152] I have already expressed my views on the Respondent's reliance on the House of Lords decision in Prince Jefri Bolkiah v LPMG (a firm) (supra).

[153] Suffice it to say that the facts of Aleems Investment Ltd v Danford [2006] FJHC 91, which the Respondent has relied on, are distinguishable from the instant cases.

[154] I have also examined the other authorities tendered and the submissions made on behalf of the parties. This court is grateful for the valuable assistance rendered by counsel.

[155] In conclusion I hold that, the Learned High Court Judge misdirected himself both in law and fact and/or erred in disqualifying the Appellants' lawyer (Solicitor/Barrister) from appearing for them.

[156] In any event, I cannot see even a remote reason why the Learned Trial Judge disqualified and restrained Mr. Ram from acting or appearing for A-Team Electrical Engineers Limited (the 2nd Plaintiff/Appellant).

[157] However, Mr. Ram shall not divulge or disclose to any person including the Appellants without the consent of the Respondent any confidential or privileged information (if any) acquired by him as Solicitor and Barrister pertaining to the Statement of Claim of the Plaintiffs/Appellants in the three actions in question.

[158] That part of the judgment of the Learned High Court Judge will therefore stand subject to the modification aforestated.

Vijith Malalgoda JA

I agree with the conclusions and reasons in this judgment of Almeida Guneratne JA.

The Orders of the Court are:

1. The judgment dated 7th October 2009 of the High Court is set aside and the Appeals allowed.

2. Mr. Samuel K. Ram shall be entitled to act as Solicitor and Barrister for the respective Plaintiffs in the three actions, namely HBC 75 of 2009, HBC 76 of 2009 and HBC 90 of 2009 as the said actions presently stand.

3. Mr. Samuel K. Ram shall not divulge or disclose to any person including the Plaintiffs/Appellants without the consent of the Respondent company's confidential or privileged information (if any) acquired by him pertaining to the Statements of Claim of the Plaintiffs in the aforesaid actions.

4. The Respondent shall pay to each of the Appellants as costs $1,500.00.

Hon Justice Suresh Chandra
JUSTICE OF APPEAL

Hon. Justice Almeida Guneratne
JUSTICE OF APPEAL

Hon. Justice Vijith Malalgoda
JUSTICE OF APPEAL