Aleem's Investment Limited v Danford [2006] FJHC 91; HBC 009.2006L (22 February 2006)

IN THE HIGH COURT OF FIJI
AT LAUTOKA

CIVIL JURISDICTION

CIVIL ACTION NO. HBC 009 OF 2006L

NO. 23/2006

BETWEEN

ALEEM'S INVESTMENT LIMITED
Plaintiff

AND

ELAINE ROSALINE DANFORD of Lautoka as the
Executrix and Trustee of the ESTATE OF THOMAS
DANFORD of Lautoka, Deceased
Defendant

Mr. F. Koya for the plaintiff
Dr. M.S. Sahu Khan for the defendant

Date of Hearing: 22 February 2006
Date of Ruling: 22 February 2006

EXTEMPORE RULING ON CONFLICT OF INTEREST

[1] This matter is before the Court today for inter-partes hearing of a Notice of Motion filed on the 19^th January 2006 on behalf of the plaintiff. That Notice of Motion seeks to restrain the defendant from instituting or advertising a winding up petition with respect to the plaintiff and also to restrain the defendant from exercising rights pursuant to a mortgagee sale with respect to a mortgage held over Certificate of Title No. 12662 being lands owned by the plaintiff and mortgaged to the defendant.

[2] Prior to the matter proceeding, counsel for the plaintiff raised as a preliminary issue that counsel for the defendant had a conflict of interest and should be disqualified from acting in the proceedings.

[3] I think it is necessary to look back in time to give proper consideration to the issue that is now before the Court. I say that because it appears that the proceedings before the Court arise as a result of alleged default on a mortgage. A mortgage which was entered into as part of the settlement of earlier proceedings.

[4] In Proceedings 10 of 2005, counsel for the defendant in the matter now before the Court sought to wind up the plaintiff on the basis of monies owning by the plaintiff to him. Those proceedings were followed by Matter No. 115 of 2005 where the plaintiff in the above proceedings sued counsel for the defendant in the current proceedings claiming the sum of $1,228,870.00 on various bases which might be summarized as issues arising from business and other financial transactions between counsel for the defendant and the plaintiff. In those proceedings, a defence and cross-claim was filed by counsel for the defendant.

[5] Annexure MAK-4 to the affidavit of Mohammed Aleem Khan sworn on the 18^th January 2006 in the current proceedings is titled 'Terms of Settlement'. That document is filed in the winding Up Proceedings No. 10 of 2005 to which I earlier referred. It says that the respondent, that is the plaintiff in the current proceedings, has paid the petitioner that is the counsel for the defendant in the current proceedings the sum of $220,359.34 being the amount claimed in the petition together with interest at the rate of 10% from the 31^st January 2005 until the 15^th August 2005. It then recites that the petition is discontinued. It further recites that the respondent, that is the plaintiff in the present proceedings, shall discontinue Action No. HBC 115 of 2005, that is the proceedings that I referred to earlier being the proceedings by the plaintiff in the current proceedings against counsel for the defendant in the current proceedings.

[6] It further says that he undertakes not to proceed further with any matter or claim made in the said action and he acknowledges that upon the filing of the discontinuance of the winding up petition the respondent shall have no further claim, demand, rights or action against the petitioner and/or Dr. M.S. Sahu Khan as regards any of the claims made in the said action.

[7] Annexure MAK-6 to the affidavit of Mohammed Aleem Khan dated the 18^th January 2006 is a copy of mortgage wherein Aleem's Investments Limited mortgages the land in Certificate of Title No. 12662 to the defendant in the above proceedings for the consideration of $232,294.47. This is the same amount as that referred to in the terms of settlement filed with respect to Winding up Case No. 10 of 2005.

[8] It is clear that the mortgage which leads to the current proceedings was entered to facilitate payment by the plaintiff in the current proceedings to counsel for the defendant in the current proceedings of the sum of $232,295.40.

[9] It is with that history that I am being urged by counsel for the plaintiff to rule that counsel for the defendant has a conflict of interest and should be disqualified from acting for the defendant in the present proceedings.

[10] I have been referred to the Schedule to the Legal Practitioners Act which Schedule is titled 'The Rules of Professional Conduct and Practice' and I have been more specifically referred to Chapter 1.

Clause 1.01 says:

"A practitioner shall not abuse the relationship of confidence and trust with the client" and

Clause 1.05 says:

"Where a practitioner has received information from or on behalf of a client a practitioner shall not thereafter act for another client in circumstances where the practitioners receipt of such information may result in detriment to the first mentioned client".

[11] Clause 1.06 is also most relevant in the circumstances that have been described in submissions this morning but perhaps is not relevant to the ruling that I am required to make.

[12] I should also have indicated when going through the history of this matter that the plaintiff in the current action had as its registered office, the office of counsel for the defendant up to at least some date in 2005.

[13] Annexure MAK-2 to the affidavit of Mohammed Aleem Khan of the 18^th January 2005 which is the petition to wind up the plaintiff which is dated the 17^th March 2005 recites that the registered office of Aleem's Investment Limited is 17 Ganga Singh Street, Ba which counsel for the defendant acknowledges is his office.

[14] Documents dated subsequently in 2005 also refer to the registered officer being at Ba without being more specific.

[15] Clearly, the registered office of the company is the place at which the records of the company might be maintained and the place of which any documents for serve on that company are obliged to be served which leaves a situation where the registered office of the plaintiff in the above proceedings which the office of counsel for the defendant in the current proceedings up to at least some date in 2005.

[16] It has been said it would be a remarkable lawyer that could feel assured of holding the scales evenly between him and the client and it was said by Megarry J in Spector v Ageda [1973]1 Ch. 30 at 47:

"Not only must his duty be discharged, but it must manifestly and undoubtedly be seen to have been discharged."

His Lordship said that after earlier saying:

"That even in fact the lawyer can and does hold the scales evenly

that to demonstrate that fact will usually be impossible if the client

ends up in fact being disadvantaged.

[17] In Bolkiah v KPMG [1999] 2 A.C. 227 at 237 Lord Millet said:

“In my view no solicitor should without the consent of his former client except instructions unless viewed objectively his doing so will not increase the risk the information which is confidential to the former client may come into the possession of a party with an adverse interest.”

[18] The affairs of counsel for the defendant and the plaintiff company have on the material placed before the Court been so interwoven that it is in my opinion impossible to conclude that counsel for the defendant is not appraised of information obtained on a solicitor-client basis that may and I emphasis the test is may be detrimental to the plaintiff in these proceedings.

[19] I am therefore of the opinion that I have no choice but to uphold the objection that has been raised on behalf of the plaintiff that counsel for the defendant cease acting for the defendant in these proceedings.

JOHN CONNORS
JUDGE

At Lautoka
22 February 2006