IN THE SUPREME COURT OF SAMOA
HELD IN APIA

BETWEEN:

APIA QUALITY MEATS LIMITED
a duly incorporated company having its registered office at AQM House, Saleufi, Apia.
Plaintiff

AND:

WESTFIELD HOLDINGS LIMITED
a duly incorporated company having its registered office at Level 2, Chandra House, Convent Street, Apia.
Defendant

Counsel: H A Cull QC and K L Ertel (both the New Zealand Bar) for plaintiff
M Ring QC (of the New Zealand Bar) and R Drake for defendant

Hearing: 19, 20 October 2006
Conclusion: 30 November 2006
Judgement: 15 December 2006

JUDGMENT OF SAPOLU CJ

On 30 November 2006 I delivered my conclusion in this matter denying the interlocutory motion by the plaintiff, Apia Quality Meats Limited (AQM), for an order to remove the law firm of Drake and Co from acting as solicitors for the defendant Westfield Holdings Limited (WHL) in this proceeding. I indicated to counsel then that my judgment in this matter together with reasons will be made available to them in due course. This is that judgment.

Background

The background circumstances to this proceeding as they may be gathered from the submissions of counsel for the plaintiff and more particularly from the submissions of counsel for the defendant may be stated as follows.

The defendant Westfield Holdings Ltd (WHL) has since March 1997 been the owner of property at Saleufi which is a commercial site. The property is approximately one and a quarter acre in area with five or six buildings on it in varying states of repair and occupation. The law firm of Drake and Co have been solicitors for WHL. By letter dated 17 August 1998, another client of Drake and Co offered on behalf of his company Anroco Ltd (Anroco) to lease the whole of the Saleufi property from WHL. Negotiations followed and a lease was agreed to between the two companies. About 15 July 1999, Anroco entered into occupation of the Saleufi property with the consent of WHL. The owner of Anroco then incorporated another company called Maja Holdings Ltd (Maja). Drake and Co acted as solicitors in the formation of Maja. The intention behind the formation of Maja was that it would enter into a lease of the Saleufi property with WHL and also enter into sub-lease arrangements with any prospective tenants. Maja was to handle the affairs of the leasehold. It appears that a lease was concluded between WHL and Anroco/Maja and Maja then entered into sub-leases with certain tenants as sub-lessees. Drake and Co were the solicitors for Maja and they prepared the sub-leases between Maja and its sub-lessees. So what we had here was a head lease of the Saleufi property between WHL as lessee and Anroco/Maja as lessee and sub-leases between Maja as lessee and its tenants as sub-lessees.

In about December 2000, the managing director of AQM approached the owner of Maja, about sub-leasing part of the Saleufi property. In about February 2001, Maja gave AQM a draft lease but neither Maja nor AQM signed that draft lease in spite of negotiations they had through a series of letters and meetings. According to WHL, the question of whether these negotiations culminated in a binding agreement to sub-lease between Maja and AQM is the central issue in the substantive proceedings between WHL as lessor/owner of the Saleufi property and AQM.

Between June 2001 and October 2001, AQM spent about $1.8 million in outfitting part of the Saleufi premises which it started to occupy in October 2001 pursuant to arrangements with Maja. In the meantime, Maja was getting into serious default on payment of rent to WHL so that on 27 May 2002 WHL rescinded its head lease arrangement with Maja. At the same time, WHL issued a notice to the then occupants of the Saleufi property, including AQM, advising of the rescission of the head lease with Maja and the consequential automatic termination of any sub-lease arrangements with Maja. The occupants were also advised in the same notice that any continued occupation of the property would be as a monthly tenant of WHL pending any new arrangements which WHL may consider. Within a relatively short time after termination, WHL was able to enter into lease arrangements containing a demolition clause with all the occupants of the property except AQM which proved to be recalcitrant. According to WHL, the reason for AQM’s attitude is because of the $1.8 million that AQM had spent between June 2001 and October 2001 in outfitting the premises even though it was still at negotiations with Maja for a sub-lease. At the time WHL rescinded the head lease with Maja on 27 May 2002, there were only incomplete and inconclusive negotiations for a sub-lease between AQM and Maja.

On 29 May 2002, the managing director of AQM met with Mr Patrick Chan Mow as representative of WHL and Mr Murray Drake of Drake and Co as local representative of Westfield Investments Ltd, a Hong Kong registered company, which is the sole shareholder of WHL to discuss AQM’s situation. This meeting was at the request of the managing director of AQM. The concern of AQM was that it had expended a considerable amount in outfitting the premises it was occupying against a promise from Maja to offset that expenditure against the rent. Protracted and inconclusive negotiations then followed over the terms of a lease directly between WHL and AQM. Then on 30 April 2004, in the absence of any final agreement, Mr Chan Mow on behalf of WHL issued a one month’s notice on AQM to quit. AQM did not quit. In the meantime it was not paying any rent to WHL as it claims that in the circumstances it was entitled to set off rent owing to WHL against amounts for which it had claimed reimbursement from Maja in respect of capital works it had done to the premises. On 9 July 2004 WHL issued another one month’s notice on AQM to quit. Up to now AQM is still in occupation of the premises. 

While negotiations were already underway since 29 May 2002 between the managing director of AQM, Mr Patrick Chan Mow as representative of WHL and Mr Murray Drake of Drake and Co as local representative of Westfield Investments Ltd, the sole shareholder of WHL to discuss AQM’s situation, AQM instructed Drake and Co in respect of a dispute between AQM and the New Zealand supplier of electrical equipment to AQM’s premises at the Saleufi property. AQM was complaining that some electrical equipment had not been supplied and what was supplied was not as ordered or defective. WHL says that the involvement of Drake and Co in that dispute was limited to writing a single letter to the New Zealand supplier to forestall a threat of legal proceedings against AQM. That letter does not contain any information which is relevant to the present proceedings between AQM and WHL.

Then in March 2003, Westpac Bank Ltd instructed Drake and Co, while negotiations were still ongoing between the managing director of AQM, Mr Chan Mow and Mr Drake, to explain to Ms Reardon as a director of AQM the effects and implications of a guarantee required by Westpac of the directors of AQM over the business at the Saleufi property.

On 16 July 2004, AQM issued proceedings by filling a statement of claim pleading various causes of action against WHL. On 18 December 2004 the hearing of AQM’s proceedings was set for the beginning of August 2005. At the call over on 28 July 2005, the local solicitor for AQM advised the Court that AQM could not proceed with the hearing scheduled for the beginning of August 2005 because of a change in its overseas counsel. The application by AQM for an adjournment of the hearing was granted by Vaai J and the hearing was rescheduled for 20 and 21 February 2006.

On 15 February 2006, AQM filed an interlocutory motion for removal of Drake and Co from continuing to act as solicitors on the record for WHL and for particular discovery against Drake and Co. I am only concerned in this proceeding with AQM’s motion for removal of Drake and Co. I turn now to that motion by AQM and the opposition to it by WHL. 

AQM’s motion and opposition by WHL

The grounds of the interlocutory motion by AQM for Drake and Co to be removed from continuing to act as solicitors on the record for WHL may be stated as follows:

1.	Drake and Co is acting in a conflict of interest as solicitors for WHL in these proceedings as:

(a)	they have acted for the head lessee, Maja Holdings Ltd (Maja), in the preparation of a lease or leases for the sub-lessees of the Saleufi property;

(b)	they have acted for WHL prior to the commencement of these proceedings including issuing notices to the sub-lessees to vacate their premises; and

(c)	they have acted for AQM in October 2002 in respect of electrical equipment from a New Zealand supplier to the premises of the Saleufi property occupied by AQM.

2.	Conflicts of interest have arisen as a result of Drake and Co acting as solicitors for adverse parties in these proceedings in the following way:

(a)	Drake and Co has gained knowledge as a result of acting for the owner WHL, head lessee Maja, and the sub-lessees of the Saleufi property which is relevant to these proceedings as well to each of the respective parties interests but the conflicting duties of confidentiality have led to non-disclosure of relevant documents which compromises the integrity of these proceedings;

(b)	by reason of Drake and Co acting for various parties in differing capacities at different times, relevant documents have not been disclosed so that Drake and Co cannot discharge their duties because their interests owed to various clients are in opposition to their interests to other clients; and

(c)	as a result of the conflict of interest, neither the Court nor AQM has received relevant documents to identify the correct position with regard to the facts surrounding the negotiations for the head lease, the head lease arrangements entered into between the defendant WHL and head lessee Maja, or details known to Drake and Co in respect of the sub-leases of the Saleufi property.

3.	The solicitor for AQM has received correspondence from Drake and Co stating that considerable difficulty was encountered in ascertaining the existence of any sub-leases when AQM has now discovered that Drake and Co acted on the sub-leases on behalf of the head lessee Maja.

4.	The removal of Drake and Co as solicitors on the record for WHL will enable the Court to make an order for particular discovery against Drake and Co to ensure that relevant documentation which has been received by Drake and Co in its capacity as solicitors for each of WHL, the head lessee Maja, and AQM is before the Court and the pleadings by both AQM as plaintiff and WHL as defendant reflect the accurate factual position.

The interlocutory motion by AQM to remove Drake and Co from acting as solicitors on the record for WHL was strongly opposed by WHL on the following grounds.

1.	An order for removal of a party’s solicitors:

(a)	requires the most extraordinary circumstances;
(b)	is not a retrospective sanction for past misconduct;
(c)	is a prospective measure to safeguard the future conduct of the proceeding.

2.	The stated grounds and allegations in support of AQM’s motion, even if proven would not justify the order sought:

(a)	there is no relevant conflict of interest and/or risk of disclosure of confidential information between WHL and Maja Holdings Ltd (Maja) in that:

(i)	Maja is not a current client of Drake and Co nor a party to this proceeding,

(ii)	Maja has made no complaint about Drake and Co acting for WHL in this proceeding and AQM has no standing to even raise this as an issue;

(b)	there is no relevant conflict of interest and/or risk of disclosure of confidential information between WHL and AQM:

(i)	AQM is not a current client of Drake and Co;

(ii)	AQM instructed Drake and Co to write one letter dated 5 October 2002 in relation to a dispute between AQM and a New Zealand supplier of equipment for the premises – after the dispute between WHL and AQM arose, and after AQM was aware that Drake and Co was acting for WHL; 

(iii)	until a week or so before the trial date, AQM had made no application about Drake and Co acting for WHL.

3.	The proper remedy for alleged inadequate discovery by WHL is an application for particular discovery against it.

4.	The alleged error and/or inconsistency in correspondence from Drake and Co is a matter for evidence at trial.

5.	If it is appropriate to make an order for particular discovery against Drake and Co this does require the firm to cease acting for WHL but such an order is not justified. A number of grounds is then set out by WHL to show why an order for particular discovery against Drake and Co would not be justified.

After AQM had filed its interlocutory motion for removal of Drake and Co, AQM received from Drake and Co four documents which AQM claims as critical. One of these documents is an agreement for a long term lease between WHL and Anroco/Maja hereinafter referred to as "the head lease". AQM claims that Drake and Co had initially denied the existence of such head lease until it filed its motion for removal of Drake and Co as solicitors for WHL. Perhaps, it should also be mentioned here that Drake and Co was not forthcoming with copies of any sub-leases between Maja and its sub-lessees. AQM had to obtain a copy of one such sub-lease from a former sub-lessee of Maja.

Relevant law

I turn now to the relevant law to be considered and applied in dealing with the present motion by AQM to remove Drake and Co from continuing to act as solicitors on the record for WHL.

It was not in dispute that the Court has inherent jurisdiction to control the conduct of its own proceedings and those who appear before it: Russell McVeagh McKenzie Bartleet & Co v Tower Corporation [1998] 3 NZLR 641; Black v Taylor [1993] 3 NZLR 403; at p.408. Those who appear in proceedings before the Court would, of course, include barristers and solicitors. In the New Zealand text of Ethics, Professional Responsibility and the Lawyer (2006) 2nd ed by D Webb, the learned author says in para 5.3.4 at p.172:

"A further source of duties owed by lawyers to their clients and to the "Court is the inherent jurisdiction of the Court over lawyers. The "Court’s ability to supervise and control the conduct of lawyers as its "officers exists concurrently with the Law Society’s disciplinary "jurisdiction. This supervisory jurisdiction extends to enforcing duties "owed to clients and is apparent in the Court’s power to enforce "practitioners’ undertakings, and the power to discipline counsel who "misconduct themselves in the course of litigation. Further they have "the power to prohibit counsel from acting in a case where a risk exists "that a former client’s confidence would be breached. The focus of "the Court’s inherent jurisdiction over lawyers is the efficacy of its "own proceeding and the efficient administration of justice. To ensure "this, it needs to have the ability to intervene in a proceeding, and "ensure the proper conduct of a barrister or solicitor. The existence of "the power to prevent its process being used for collateral or as an "instrument of injustice has long been recognised. The power is one "that is derived ‘from the very nature of the Court as a superior Court "of law’ to ensure they are indeed instruments of justice rather than "oppression."

The inherent jurisdiction of the Court to control the conduct of its own proceedings and those who appear before it may be invoked where a barrister or solicitor appears in proceedings where he or she has an actual or potential conflict of interest or where there is a risk of disclosure of a client’s confidential information. The underlying purpose of the jurisdiction is to maintain and uphold the lawyer’s fiduciary duty of undivided loyalty to a client and thus ensuring that the client’s trust and confidence in the lawyer are not misused or abused.

In the decision of the New Zealand Court of Appeal in Farrington v Rowe McBride & Partners [1985] 1 NZLR 83, Richardson J said at p. 89:

"The general principles are well settled. A solicitor has a duty in "equity to his client. The relationship between solicitor and client "carries with it obligations on the solicitor’s part to act with absolute "fairness and openness towards his client. Like any other agent, but "to a higher degree because of his position as an officer of the Court "and the privileges which the law attaches to legal professional "confidence, he is bound to observe the utmost good faith towards his "client (Rakusen v Ellis, Mundy & Clarke [1912] 1 Ch 83; 44 "Halsbury’s Laws of England (4th ed) paras 131 and 133)." 

Richardson J then went on to refer to the two principal fiduciary duties owed by a solicitor to a client. The first duty may be described as the conflict of duty and interest rule. This prohibits a solicitor from acting for a client where his duty to the client conflicts with his own personal interest. The second duty may be described as the conflict of duty and duty rule. This prohibits a solicitor from acting for two clients in the same transaction where his duty to one client may conflict with his duty to the other client. This duty reflects the biblical notion that one cannot serve two masters (God and Caesar) at the same time. Richardson J said at p.89:

"There are two aspects or elements of that paramount obligation which "are relevant in this case: (1) the question of conflict between a "solicitor’s duty to his client and his personal interest; and (2) the "question of conflict between his separate duty to each client when he "attempts to serve two masters at the same time in the same "transaction." 

Richardson J went on to explain the duty of a solicitor not to act where there is a conflict between his duty to the client and his own personal interest by saying:

"The classic statement of the first rule is that of Lord Herschell in Brayv Ford [1896] AC44, 51:

‘It is an inflexible rule of a Court of Equity that a person in a fiduciary position, such as the respondent’s, is not, unless otherwise expressly provided, entitled to make a profit; he is not allowed to put himself in a position where his interest and duty conflict.’

And as Lord Upjohn observed in Phipps v Boardman [1967] 2 AC 46, 123, the rule that a person in a fiduciary capacity must not make a profit out of his trust is part of the wider rule that he must not place himself in a position where his duty and his interest may conflict. Lord Herschell went on in Bray v Ford to explain the foundation of the rule in this way:

‘It does not appear to me that this rule is, as has been said, founded upon principles of morality. I regard it rather as based on the consideration that, human nature being what it is, there is danger, in such circumstances, of the person holding a fiduciary position being swayed by interest rather than by duty, and thus prejudicing those whom he was bound to protect. It has, therefore, been deemed expedient to lay down this positive rule’

"It follows that a solicitor must not without the informed consent of his client stand to make any profit or receive any benefit other than his professional remuneration from the transaction which he is retained to carry through. It is no defence that his interest is indirect."

In respect of the solicitor’s duty not to act for two clients at the same time in the same transaction where his duty to one client is in conflict with his duty to the other client, Richardson J explained this by saying at p.90:

"A solicitor’s loyalty to his client must be undivided. He cannot properly discharge his duties to one whose interests are in opposition to those of another client. If there is a conflict in his responsibilities to one or both he must ensure that he fully discloses the material facts to both clients and obtains their informed consent to his so acting:

‘No agent who has accepted an employment from one principal can in law accept an engagement inconsistent with his duty to the first principal from a second principal, unless he makes the fullest disclosure to each principal of his interest, and obtains the consent of each principal to the double employment’ (Fullwood v Hurley [1928] 1 KB 498, 502 per Scrutton LJ)’

And there will be some circumstances in which it is impossible, notwithstanding such disclosure, for any solicitor to act fairly and adequately for both."

I turn now to the solicitor’s duty of confidence, sometimes expressed as the solicitor’s duty not to disclose confidential information which has been received from a former client during their solicitor-client relationship. This duty was dealt with by the House of Lords in the recent case of Prince Jefri Bolkiah v KPMG [1999] 2 AC 222. At p.227, Lord Hope of Craighead says:

"A solicitor is under a duty not to communicate to others any information in his possession which is confidential to the former client. But the duty extends well beyond that of refraining from deliberate disclosure. It is the solicitor’s duty to ensure that the former client is not put at risk that confidential information which the solicitor has obtained from that relationship may be used against him in any circumstances"

In a judgment with which the other presiding Law Lords concurred, Lord Millet at pp 234-235 explains the distinction between the basis of the Court’s jurisdiction to intervene for the protection of confidential information obtained from a former client and the basis of the Courts’ jurisdiction to intervene to prevent a conflict of interest. His Lordship says:

"On this footing the Court’s intervention is founded not on the avoidance of any perception of possible impropriety but on the protection of confidential information.

My Lords, I would affirm this as the basis of the Courts’ jurisdiction to intervene on behalf of a former client. It is otherwise where the Court’s intervention is sought by an existing client, for a fiduciary cannot act at the same time both for and against the same client, and his firm is in no better position. A man cannot without the consent of both clients act for one client while his partner is acting for another in the opposite interest. His disqualification has nothing to do with the confidentiality of client information. It is based on the conflict of interest which is inherent in the situation…

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 interests of his former client. The only duty to the former client which survives the termination of the client relationship is a continuing duty to preserve the confidentiality of information imparted during its subsistence.

Accordingly, it is incumbent on a plaintiff who seeks to restrain his former solicitor from acting in a matter for another client 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."

Lord Millet then goes on to explain the extent of the solicitor’s duty of confidence or duty of protecting confidential information by saying at pp 235-236:

"Whether founded on contract or equity, the duty to preserve confidentiality is unqualified. It is a duty to keep the information confidential, not merely to take all reasonable steps to do so. Moreover, it is not merely a duty not to communicate the information to a third party. It is a duty not to misuse it, that is to say, without the consent of the former client to make any use of it or to cause any use to be made of it by others otherwise than for his benefit. The former client cannot be protected completely from accidental or inadvertent disclosure. But he is entitled to prevent his former solicitor from exposing him to any avoidable risk; and this includes the increased risk of the use of the information to his prejudice arising from the acceptance of instructions to act for another client with an adverse interest in a matter to which the information is or may be relevant.

It follows that in the case of a former client there is no basis for granting relief if there is no risk of the disclosure or misuse of confidential information."

On the question of what degree of risk should there be to justify the Court in not intervening to protect the confidentiality of information, Lord Millet says at pp. 236-237:

"It is of overriding importance for the proper administration of justice that a client should be able to have complete confidence that what he tells his lawyer will remain secret. This is a matter of perception as well as substance. It is of the highest importance to the administration of justice that a solicitor or other person in possession of confidential or privileged information should not act in a way that might appear to put that information at risk of coming into the hands of someone with an adverse interest.

Many different tests have been proposed in the authorities. These include the avoidance of ‘appreciable risk’ or ‘an acceptable risk’. I regard such expressions as unhelpful; the former because it is ambiguous, the latter because it is uninformative. I prefer simply to say that the Court should intervene unless it is satisfied that there is no risk of disclosure. It goes without saying that the risk must be a real one and not merely fanciful or theoretical. But it need not be substantial. This is in effect the test formulated by Lightman J in In re A Firm of Solicitors [1997] Ch1, 9." (emphasis mine).

Apart from conflict of interest and the protection of confidential information as the two basis for invoking the Court’s jurisdiction to intervene to control the conduct of its own proceedings and those who appear before it as barristers or solicitors, another basis for invoking the same jurisdiction is professional misconduct. Mr Ring for the defendant WHL submitted that where the application for removal of a solicitor is based on misconduct, the misconduct must be sufficiently serious and, even then, an order for removal is not available as a punishment for past misconduct. Removal of the solicitor must be the only way for the Court to safeguard the future integrity of the proceedings. Mr Ring further submitted that removal of a lawyer from continuing to act as solicitor in a proceeding is an extraordinary and drastic remedy which should be contemplated in only the most extraordinary of circumstances.

In the unreported decision of the High Court of New Zealand in Clear Communications Ltd v Telecom Corporation of New Zealand Ltd (High Court, Auckland: CL 51/96: 5 August 1999) which is the only case cited by counsel on both sides for an application for removal of a solicitor from proceedings under the heading of misconduct, Fisher J provided a summary of the present position by way of stated paragraphs. I need not refer to the whole summary; it will suffice to refer to only the relevant parts of it. His Honour says:

"(c) Removal of a lawyer is not a retrospective sanction for past misconduct but a prospective measure to safeguard the future conduct of the particular proceedings: Black v Taylor at p.412.

(d) Where removal has been ordered, it has usually been for conflict of interest (eg Black v Taylor) but there is no limitation upon the conduct which might jeopardise the future conduct of proceedings…

(e) A litigant should not be deprived of his or her choice of counsel without good reason: Black v Taylor supra, at p.409. In particular, the Courts should guard against allowing removal applications to be used as a tactical weapon to disadvantage the opposing party; Black v Taylor, supra, at 420…

 …
(h) The prima facie sanction for discovery inadequacies is an order under RR 293-317A of the High Court Rules, with particular reference to RR 300 (order for particular discovery) and 317A (contempt of Court for non-compliance). The alternative of removing a party’s lawyer for discovery deficiencies could be contemplated in only the most extraordinary of circumstances. 

 …
(j) Although the jurisdiction is not to be emasculated by setting the threshold so high that it could never be attained, there must be something truly extraordinary before removal could be contemplated. It could be justified only in case of ‘truly egregious misconduct likely to infect future proceedings’: Koller v Richardson-Merrel Inc, supra, at 1056."

In Clear Communications Ltd v Telecom Corporation of New Zealand Ltd (supra) what was in issue was an interlocutory application by Clear Communications for removal of Telecom’s solicitors for alleged misconduct. The alleged misconduct consisted essentially of: (a) misrepresentation by Telecom’s solicitors of the status of Clear Communications documents; (b) misleading the Court over the relevance of a discoverable document; and (c) procuring discovery delays and non-disclosures. That case involved a major exercise in discovery of documents. In dismissing the application by Clear Communications for removal of Telecom’s solicitors, Fisher J said that the tests, he had summarised, for removing lawyers acting in proceedings "required conduct which is sufficiently serious and a situation in which removal is the only way to protect the future integrity of the proceedings." However, His Honour held that the allegations of misconduct made by Clear Communications against the solicitors for Telecom did not satisfy those tests. The application by Clear Communications was therefore dismissed.

Discussion

The interlocutory motion by AQM for an order to remove Drake and Co from continuing to act as solicitors for WHL in these proceedings must be considered under the legal principles which are relevant to the exercise by the Court of its inherent jurisdiction to control the conduct of its own proceedings and those who appear before it as counsel or solicitors. In the exercise of this jurisdiction, the Court may intervene to remove a counsel or solicitor from continuing to act in a proceeding on the basis of conflict of interest, actual or potential breach of the duty to protect confidential information, or misconduct.

In these proceedings, it cannot be said that there is any conflict of interest which justifies intervention by the Court to remove Drake and Co from continuing to act as solicitors for WHL. In the first place the conflict of duty and interest rule does not apply to AQM’s motion. The reason is that this rule only applies to prohibit a solicitor from acting for a client where his duty to the client is in conflict with his own personal interest. Drake and Co are not acting for AQM in these proceedings so that AQM is not a client of Drake and Co. So there is no possibility that a conflict will arise between a duty owed by Drake and Co to AQM as client and any personal interest on the part of Drake and Co. Secondly, the conflict of duty and duty rule also does not apply to AQM’s motion. The reason is that this rule prohibits a solicitor from acting for two clients in the same transaction or proceeding where his duty to one client would be in conflict with his duty to the other client. Here Drake and Co is not acting as solicitors for both WHL and AQM as clients in these proceedings. Drake and Co is acting as solicitors only for WHL and not for AQM. So it cannot be said that there could be any conflict of duty and duty on the part of Drake and Co by acting as solicitors for two clients in the same proceedings where its duty to one client may conflict with its duty to the other client.

In respect of the solicitor’s duty of confidence sometimes expressed as the solicitor’s duty not to disclose confidential information or to preserve the confidentiality of information obtained from a client, there are again real difficulties with AQM’s motion. The reason is that for AQM to successfully invoke the Court’s jurisdiction to intervene on this basis, it must establish (a) that Drake and Co are in possession of information confidential to it and to the disclosure of which it had not consented, and (b) that the information is or may be relevant to the present proceedings between WHL and AQM in which the interest of WHL is adverse to AQM’s own interest. The burden of establishing these two requirements is on AQM which is invoking the jurisdiction of the Court to intervene.

Strictly, AQM is a former client of Drake and Co. As earlier mentioned, in October 2002, AQM instructed Drake and Co in relation to a dispute between AQM and a New Zealand company which supplied electrical equipment to the Saleufi premises occupied by AQM. The complaint by AQM was that some of the equipment ordered had not been supplied and what was supplied was not as ordered or defective. The involvement of Drake and Co in that dispute was limited to writing a single letter to the New Zealand supplier to forestall a threat of legal proceedings against AQM.

The difficulties here with AQM’s motion are: (a) AQM has not identified what is the confidential information obtained by Drake and Co from AQM during their past solicitor-client relationship which AQM wants to be protected, and (b) AQM has not shown what is or may be the relevance of such information (if any) to the present proceedings against WHL. One would have thought that the brief involvement of Drake and Co for AQM in a dispute with a New Zealand company that supplied electrical equipment to AQM would have no relevance to these proceedings. The contents of the single letter written by Drake and Co on behalf of AQM to the New Zealand supplier of electrical equipment are not relevant to these proceedings. AQM’s motion cannot, therefore, succeed on this basis.

Furthermore, the involvement of Drake and Co in March 2003 on instruction of Westpac Bank Ltd to explain to Ms Reardon, a director of AQM, a guarantee required by Westpac of the directors of AQM over the business at the Saleufi property, does not assist AQM’s motion. The reason is that Drake and Co were not then acting for AQM; they were acting for Westpac. In other words, in March 2003 Drake and Co were acting as solicitors for Westpac as client. AQM was not then a client of Drake and Co. So the basis on which the Court may intervene for the protection of confidential information obtained by a solicitor from a former client during their solicitor-client relationship did not exist on this occasion between Drake and Co and AQM as Drake and Co were not acting as solicitors for AQM as client.

As to whether the Court’s jurisdiction to intervene can be successfully invoked by AQM on the basis of alleged misconduct on the part of Drake and Co, I am again of the view that the answer must be no. The alleged misconduct is the initial denials by Mr Drake of the existence of any head lease agreement between WHL as owner/lessor of the Saleufi property and Maja as lessee. The position has been rectified with the admission by Drake and Co of the existence of a head lease agreement between WHL and Maja so that the existence or otherwise of a head lease is no longer an issue in these proceedings. In terms of the motion by AQM, the question here is whether Drake and Co should still be removed as solicitors for WHL due to the previous denials of a head lease by Mr Drake.

Even though the reason for the earlier denials of a head lease is still not entirely clear, removal of a lawyer from continuing to act as a solicitor to a party in proceedings is an extraordinary and drastic remedy which should be contemplated in only the most extraordinary of circumstances to protect the future integrity of the proceedings. As also pointed out by Fisher J in Clear Communications Ltd v Telecom New Zealand Ltd (supra) the tests for removal of lawyers from appearing as solicitors in proceedings require misconduct which is sufficiently serious and a situation in which the extraordinary and drastic remedy of removal is the only way to safeguard the future integrity of the proceedings. There is no evidence to satisfy the Court that the misconduct alleged against Drake and Co is sufficiently serious that their removal from the present proceedings is the only way to protect the future integrity of these proceedings. Perhaps, it should also be mentioned that the alleged misconduct in Clear Communications Ltd v Telecom New Zealand Ltd (supra) appears to be more serious compared to the alleged misconduct in this case. However, Fisher J held in Clear Communications that the alleged misconduct against the solicitors in that case was not sufficiently serious to justify their removal in order to protect the future integrity of proceedings.

Finally, I have decided to accept the submissions for WHL that the primary purpose of the interlocutory motion by AQM to have Drake and Co removed appears to be to facilitate AQM’s application for particular discovery against Drake and Co. With respect, I have also decided to accept the submissions for WHL that the discovery inadequacies that AQM is complaining about would not justify an order for the removal of Drake and Co. If discovery by WHL has been inadequate, the proper remedy for AQM is to apply for particular discovery against WHL. However, I am satisfied from the submissions by WHL that an order for particular discovery against Drake and Co would not be justified in the circumstances.

Conclusion

For the foregoing reasons, I have come to the conclusion that the interlocutory motion by AQM for an order to remove Drake and Co from continuing to act as solicitors for WHL in these proceedings should be dismissed. It is accordingly dismissed.

Costs are reserved.

Before leaving this judgment I wish to thank senior counsel for AQM and WHL for their submissions and citations of authorities which I have found very helpful in the preparation of this judgment.

CHIEF JUSTICE

Solicitors
Leung Wai Law Firm for plaintiff
Drake & Co for defendant