Abbco Builders Ltd v Fineland Investments Ltd [2012] FJHC 952; HBC76.2011S (16 March 2012)

IN THE HIGH COURT OF FIJI AT SUVA
CIVIL JURISDICTION

HBC NO. 76 OF 2011S

BETWEEN

ABBCO BUILDERS LIMITED
a limited liability company having its registered office at Nadi Back Road, Nadi.
PLAINTIFF

AND

FINELAND INVESTMENTS LIMITED
a limited liability company
having its registered office at Level 2 Mid City, Cnr Cumming
Street/Waimanu Road, Suva.
1ST DEFENDANT

AND

SATISH PARSHOTAM and SUBHAS PARSHOTAM
both of Suva, Barristers and Solicitors;

VINOD TAPPOO
of Suva, Barrister and Solicitor and Businessman and

VASANTIKA PATEL
of Nadi, Barrister and Solicitor.
2ND DEFENDANT

Appearances: Mr C.B. Young for the plaintiff
Mr R. Newton for the defendants

Date of hearing: 19th September, 2011

JUDGMENT

1. The question in these proceedings is whether Mr B.C. Patel and the firm of Young & Associates are precluded as acting as counsel and solicitors respectively, for the plaintiff against Vinod Tappoo, one of the 2nd defendants and a director of the 1st defendant company, on the ground of conflict of interest.
   

The objection was at the outset, referred to by another director of the 1st defendant company, Satish Parshotam, in his affidavit, by which he sought to stay the proceedings and refer the substantive dispute between the plaintiff and the 1st defendant to arbitration.
The Managing Director of the plaintiff company filed affidavits in reply. The defendants, in the submissions filed on its behalf,object to the concluding paragraph of the first affidavit filed by the Managing Director of the plaintiff company. The reason adduced was that it contains hearsay evidence as regards Mr Patel and Young & Associates and opinion content.

Vinod Tappoo, in his affidavit in reply, details his grounds of objection to Mr Patel and Young & Associates acting for the plaintiff. He claims Mr Patel has a "deep knowledge of the finances and affairs of the Tappoo Group from his many years of advising the Tappoo Group and its directors". He asserts that he would suffer prejudice if Mr Patel and Young & Associates represent the plaintiff, as " virtually the entirety of my income is derived from the Tappoo Group and my personal finances and assets are closely associated with the Tappoo Group", of which he is a director.

The plaintiff then filed summons, in terms of which the question whether conflict of interest precluded Mr Patel from acting as counsel for the plaintiff, was sought to be determined. This was followed by the defendants' summons to determine the issue whether both Mr Patel and Young & Associates were excluded from acting for the plaintiff in these proceedings.
It is these two summonses which now come before me.

2. The determination

It is common ground that Mr Patel and the firm of Young & Associates have been regularly retained and instructed by the Tappoo Group.

2.1 Locus standi
I will first consider the contention advanced by Mr Young, counsel for the plaintiff, that Vinod Tappoo does not have locus standi to raise the objection under review, for the reason that he is neither an existing nor a former client of Mr Patel. It is asserted that Mr Patel's former client was Tappoo Group.

In support, the judgment of the Supreme Court of South Australia in Re Westgate Wool Com. Pty Ltd (in liq)[2006] SASC 372; , (2006) 206 FLR 190 at p.202 is relied on, where Debelle J citing Kallinicos v Hunt, ([2005] NSWSC 1181; 2005) 64 NSWLR 561 at 571,stated:

"As it is the former client who has imparted confidential information to the solicitor, it is the former client only who has standing to seek to prevent disclosure of that confidential information." (emphasis added)

Mr Young, in his submissions filed in court, has quoted extensively from the judgment of Lord Millet in Prince Jefri Bolkiah v KPMG,[1998] UKHL 52; (1999) 2 AC 222 at pages 234 to 235.The principle to be derived from these excerpts is as follows: "where the court's intervention is sought by an existing client....,the inescapable conflict of interest... is inherent", but in the case of a former client, since the fiduciary relationship had come to an end, the "only surviving duty was one to preserve the confidentiality of information imparted during the subsistence of the relationship". His Lordship stated in that instance, the restraint is for the protection of confidential information and "not on the avoidance of any perception of possible impropriety".

Mr Newton, counsel for the defendants, in his submissions, contends that Mr Young's "argument is artificial and ingenuous" and that it is not entirely satisfactory to rely on the existence of a corporate veil.

This argument is untenable. The Tappoo Group of companies and its directors are distinct and separate legal persons. Furthermore, Vinod Tappoo, in his affidavit, expressly states that:

• He has "never formally instructed Mr Patel or Young & Associates to act for (him) personally" .
  
• The 1st defendant company "is anything other than a private investment of my own and certainly it does not form part of the Tappoo Group.
  

It is also undisputed that Patel and Young & Associates have discontinued acting for Tappoo Limited . Vinod Tappoo, in his affidavit, refers to a conversation he had with Mr Patel to that effect.
In my judgment, it is evident that Vinod Tappoo is neither a former nor an existing client of Mr Patel and Young & Associates. Accordingly, the question of conflict of interest or the duty to preserve confidential information does not arise.

2.2. While the above finding is sufficient to dispose of the objection raised by Vinod Tappoo, I proceed to determine the other arguments advanced by both counsel and the helpful array of authorities submitted.

Mr Newton, in his submissions, founds his case on the "Rules of Professional Conduct and Practice" as set out in the Schedule to the Legal Practitioners Decree 2009, which provides:

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

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

(a) advise all clients involved in the matter of the situation;

(b) continue acting for all clients only with the consent of all clients and if no actual conflict has occurred;

(c) decline to act further for any party where so acting would disadvantage any one or more of the clients.

1.4 Information received by a practitioner from and on behalf of a client is confidential and shall not be communicated to others save with the client's consent or where so required by law.

1.5 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 practitioner's receipt of such information may result in detriment to the first mentioned client". (emphasis added)

Mr Young advanced two propositions before me. The first was that Vinod Tappoo has not identified the specific information of his finances in the Tappoo Group, which is claimed to be in the possession of Mr Patel . The second proposition was that the information was not relevant to the present proceedings.

In support of the first proposition, Mason J in O'Brien v Komersaroff[1982] HCA 33; , (1982) 150 CLR 310, at page 326 was cited as follows:

" It is at this point that the respondent has consistently failed to indentify the particular contents of the documents which he asserts constitute information the confidentiality of which he is entitled to protect. The consequence is that he has failed to formulate a basis on which the court could grant him relief on the assumption that some part or parts of the documents constitute confidential information." (emphasis added)

In support of the second proposition, Mr Young referred to R C Manubhai & Co Herbert Construction Company, (2009) FJHC 219 .In that case, Inoke J quoted Lord Millett in Prince Jefri Bolkiah v KPMG,(supra) at page 235 as follows:

"a plaintiff who seeks to restrain his former solicitor from acting in a matter for another client has to establish (i) that the solicitor is in possession of information which is confidential to him and to the disclosure of which he has not consented and (ii) that the information is or may be relevant to the new matter in which the interest of the other client is or may be adverse to his own. Although the burden of proof is on the plaintiff, it is not a heavy one. The former may readily be inferred; the latter will often be obvious".(emphasis added)

This passage from the speech of Lord Millett was referred to by Justice Mr Calanchini(as he then was) in Bano v Rashid, (2010) FJHC 273.

The submissions filed on behalf of the defendants, reproduces a passage to the same effect from the judgment of Lord Millett in Prince Jefri Bolkiah v KPMG, (supra, at page 237).

Turning to the present case, Vinod Tapoo has failed to identify or establish the contents of the documents, which he claims constitutes confidential information of his personal finances in the Tappoo Group.

In my judgment, in any event, information relating to personal finances is irrelevant in the present case and does not give rise to a conflict of interest, since the cause of action arises under a building contract, in terms of which the 1st defendant company engaged the plaintiff to construct a residential block of flats.

The defendant's submissions rely on the decision of Connors J in Aleem's Investment Ltd v Danford,, (2006) FJHC 91.The facts are not comparable. In that case,it was found that the affairs of counsel for the defendant and the plaintiff "have been interwoven that (it was) impossible to conclude that counsel for the defendant is not appraised of information obtained on a solicitor-client basis".

The following dictum of Heerey J in Mintel International Group Ltd v Mintel (Australia) Pty Ltd & Another, [2000] FCA 1410; (2000) 181 ALR 78 at page 88 resonates with the court, as it exemplifies the general proposition that a solicitor or barrister, who has acted professionally for a particular client cannot be prevented in perpetuity from opposing that client in subsequent litigation.

"There are many bodies .. which are constantly engaged in litigation. Counsel retained to act on behalf of such bodies inevitably acquire information, not confidential information in the strict sense, but experience as to the corporate culture of the clients, their internal policies, the way they deal with litigation, tactics, the personalities of important decision makers and so forth. I do not accept that general experience of that kind would impose what presumably on the respondent's argument would be lifetime restraints on counsel from acting against such a body. Indeed it is a feature of an independent bar that counsel might appear one day on behalf of such a body and the next day against it... this freedom enhances the independence of counsel and their capacity to give objective and sometimes unwelcome advice". (emphasis added)

For the reasons I have given, the objection of Vinod Tappoo fails and must be dismissed.

3. Orders
   

1. I hold there is no conflict of interest which precludes Mr Patel and Young & Associates from acting for the plaintiff.
   
2. The defendants shall pay the plaintiff costs in a sum of $ 1500 summarily assessed.
   

A.L.B. Brito Mutunayagam
Judge
16 th March, 2012