Speakers: Jeffrey Goldberger, Special Counsel, Norton Rose Fulbright, David Vilensky, Managing Director, Bowen Buchbinder Vilensky, Perth, WA
- Audio file
- Case Notes / Answers - Scenarios
- Scenarios x 4
- Video - Delivered on USB Stick
Delivered at the Property & Commercial Law Conference 2018 - Hobart
23 March 2018
CPD Guide: 1 E
Video approximately 1 hour
Topics including: ethics in contractual negotiations; ethics for inhouse lawyers, walking the ethical tightrope; political interference; inadvertent disclosure; and obvious mistake.
- Jeffrey Goldberger, Special Counsel, Norton Rose Fulbright
- David Vilensky, Managing Director, Bowen Buchbinder Vilensky, Perth, WA
Moderator/panellist: Michael Dolan, Director, ethics4lawyers
COMMERCIAL IN CONFIDENCE
Scenario 1: Political Interference
By deed the Commonwealth granted a shooters’ association a licence to use a rifle range for sporting purposes. The terminating date of the licence was the later of 30 June or the date being 14 days after the Commonwealth gave them a Relocation Notice. Further, under the deed, the Commonwealth was entitled to terminate the licence where the association failed to remedy a breach within 14 days.
For political reasons the Minister wanted to terminate the licence having given an electoral assurance that the land on which the range was situated would be used as a public park. The relevant department’s in-house solicitors prepared and served a Notice to Remedy. The Notice required the association to remedy certain breaches of the licence within 14 days.
The department well knew at the time of service of the Notice that it was impossible to remedy the breaches within the specified period.
What was the ethical position of the in-house solicitors when given those instructions?
Scenario 2: Obvious Mistake
A land sale contract incorporated Standard Conditions of Sale which enabled a party to serve a 10 business day Notice to Complete. It further provided that, if the buyer failed to complete in accordance with such a Notice, the seller would be entitled to terminate the contract.
The purchaser was unable to secure finance. The vendor’s solicitor served a 10 day Notice to Complete. However, the solicitor confused calendar days with business days, and the Notice to Complete did not comply with the contract in relation to time. The mistake in the Notice was obvious to the purchaser’s solicitor.
The question arose whether the vendor had repudiated the contract thereby allowing the purchaser to terminate and escape from the contract which was the commercial outcome desired by the purchaser.
What was the ethical position of the purchaser’s solicitor?
Scenario 3: Use of Confidential Information or Inadvertent Disclosure or Obvious Mistake or None of the above
A lawyer acted for the Applicant in an arbitration.
The Respondent in the arbitration proceedings was an international oil company and they were represented by a large and prominent firm of lawyers in Perth.
The Applicant’s claim was circa $300k and it was hard a fought arbitration with no quarter asked or given from either side. All attempts to settle the matter by negotiation had failed and it was clear that the Respondent was prepared to take its chances at the arbitration hearing.
In the weeks leading up to the arbitration hearing the Applicant’s lawyer had sought further and better discovery of documents from the Respondent’s solicitors. About 4 or 5 days prior to the hearing date the Respondent’s solicitors wrote to the Applicant’s lawyer to advise that their client had located the documents that had been sought by way of further and better discovery and were available for inspection at the offices of the Respondent’s solicitors at a suitably convenient time. The Applicant’s lawyer contacted the solicitor acting for the Respondent to arrange a suitable time to attend at the offices of his firm to inspect the documents.
At the designated time and date the Applicant’s lawyer attended at the offices of the Respondent’s solicitors to inspect the documents. The Applicant’s lawyer was shown into a small room by the receptionist. On a table in the middle of the room was an archive box and the Applicant’s lawyer was told the discovered documents were in the archive box. The receptionist then left the room and closed the door behind her. That left the Applicant’s lawyer alone in the room with the archive box. The Applicant’s lawyer sat down at the table, removed the lid of the archive box and started inspecting the documents.
After about 5 minutes the Applicant’s lawyer looked up and noticed on a white board on the wall of the room what was clearly the ‘battle plan’ of the Respondent in the arbitration. The white board also contained lists of witnesses and settlement options available to the Respondent. It was clear that the room in which the Applicant’s lawyer had been shown was used by the Respondent’s solicitors as their ‘war room’ for the arbitration in question.
The ethical dilemma of the Applicant’s lawyer was obvious. His options were:
- Ask to be put into another room – however, he had seen what had been written on the white board so that was clearly not an option;
- Disclose to the lawyer acting for the Respondent what he had seen – however this would be obvious to the Respondent’s solicitors after he left.
- Be wary of the information on the white board as it could have been put up there deliberately to mislead the Applicant’s lawyer i.e. a double bluff;
- Consider himself lucky and utilise the information available.
What would YOU do?
Scenario 4: The Duty of a Solicitor Beyond the Retainer
Mrs P borrowed money from a financier for the purpose of assisting her son in the operation of a gymnasium business. The financial position of the business was, to say the least, precarious. Her solicitor, a Mr C, provided independent legal advice on the loan documents.
These were the relevant facts known by Mr C:
- Mrs P was a mature lady who owned a property in Leichhardt where she resided on her own and from which she conducted a small business.
- Her only other asset was a car.
- She was proposing to borrow $700,000 to assist her son with a gymnasium business and to repay an earlier debt.
- The loan was to be used in part to buy "some flashy new equipment from the States".
- She did not have any involvement in the gymnasium business but, would be acquiring such an interest.
- Her son would be making the repayments of the loan out of the income of the gymnasium business.
- The previous year Mr C had acted for Hock-A-Car in relation to a loan to the son at an interest rate of eight per cent per calendar month.
- In early 2007 Mr C wrote a letter on behalf of the son to the landlord of the gymnasium seeking an extension of time for payment of the rental bond.
- As the loan by the financier was a "Low Doc" loan, the lender did not require identification or verification of the means of repayment of the loan and payment of interest.
- Whilst Mr C claimed that he did not know that the business had been in administration, he did know that the business was a new acquisition by the son.
What were Mr C’s ethical obligations to Mrs P (if any)?
Scenario 5: Inadvertent Disclosure
A motor car insurer A entered into an agreement with a panel beating franchisor B under which B’s franchised panel beaters would become Recommended Repairers under A’s panel of repairers. The agreement contained a restraint on A such that, if any franchisee terminated its relationship with B within a period of 2 years from the agreement, A would not use that panel beater for a period of 6 months. B alleged that A breached the restraint, but unsuccessfully sought recovery of damages from A.
Subsequently B brought proceedings against its former solicitors X for damages for negligent advice in the preparation of the unenforceable restraint. However, before commencing those proceedings against X, B commenced proceedings seeking to set aside the judgment in favour of A on the basis of fraud (the fraud proceedings).
In relation to the fraud proceedings B’s senior counsel was unable to act. As a result, a director of B had a meeting with a QC Y who recommended Z SC as an alternative. During that consultation Y phoned Z and matters confidential to B were discussed. B’s director overheard the conversation.
In the subsequent action X sought summary judgment dismissing B’s action. Importantly, Z acted for X in that application.
B issued a summons to restrain X’s legal practitioners from continuing to act based on Z’s access to confidential information concerning B acquired during the conversation with X.
In support of its summons B relied upon the ASCRs 2015.
What was Z’s ethical position?