Home | Databases | WorldLII | Search | Feedback Court of Appeal of Vanuatu

Etmat Bay Estate Ltd v Kalsal [2011] VUCA 4; Civil Appeal 01 of 2011 (8 April 2011)

IN THE COURT OF APPEAL OF THE REPUBLIC OF VANUATU
(Appellate Jurisdiction)

CIVIL APPEAL CASE NO.01 OF 2011

BETWEEN:

ETMAT BAY ESTATE LIMITED
Appellant

AND:

PAUL EMILE KALSAL of Erakor Village, Efate in the Republic of Vanuatu
First Respondent

AND:

TOUREN KALSAL of Erakor Village, Efate, in the Republic of Vanuatu
Second Respondent

AND:

MAIBEL KALSAL of Erakor Village, Efate, in the Republic of Vanuatu
Third Respondent

AND:

VALENTINE KALSAL of Erakor Village, Efate, in the Republic of Vanuatu
Fourth Respondent

AND:

STEPHEN MACKLEEN KALSAL of Erakor Village, Efate, in the Republic of Vanuatu
Fifth Respondent

AND:

ROBERT HERD of Port Vila, Efate in the Republic of Vanuatu
Sixth Respondent

AND:

LEVEL THREE LIMITED of Port Vila, In the Republic of Vanuatu
Seventh Respondent

AND:

MINISTER OF LANDS PMB 9007, Port Vila, in the Republic of Vanuatu
Eighth Respondent

AND:

DIRECTOR, DEPARTMENT OF LANDS, PMB 9090, Port Vila in the Republic of Vanuatu
Ninth Respondent

AND:

THE REPUBLIC OF VANUATU, of Port Vila, Efate in the Republic of Vanuatu
Tenth Respondent

AND:

BILLIAM JEIOCK of Port Vila, Efate, in the Republic of Vanuatu
Eleventh Respondent

AND:

RENO EMlLE of Erakor Village, Efate, in the Republic of Vanuatu
Twelfth Respondent

AND:

FELIX LAUMAE of Port Vila, Efate in the Republic of Vanuatu
Thirteenth Respondent

AND:

RAYMOND GEORGE WINSLETT of Port Vila in the Republic of Vanuatu
Fourteenth Respondent

Coram: Hon. Chief Justice Lunabek
Hon. Justice Mansfield
Hon. Justice Asher
Hon. Justice Saksak
Hon. Justice Spear

Counsel: Robert Sugden for the Appellant
Saling Stephens for the Fourteenth Respondent

Date of hearing: 29th March 2011
Date of judgment: 08th April 2011

JUDGMENT

Introduction

1. Etmat Bay Estate Limited ("Etmat") has brought proceedings against a number of defendants, claiming approximately A$30,000,000 for losses arising from a failed land development. The counsel acting for it is Robert Sugden. One of the defendants is Raymond George Winslett.
   
2. In the Supreme Court, Mr Winslett applied to the Court for an order disqualifying Mr Sugden from acting for Etmat against him on the basis that Mr Sugden had previously acted for him, that he was in a conflict of interest position, and was privy to confidential information. He was successful in this application. Fatiaki J issued a decision on 20 December 2010 restraining Mr Sugden from continuing to act further as counsel. This is an appeal against that decision.
   
3. The initial appellants were both Etmat and Mr Sugden in his personal capacity. An issue arose, at the outset of the appeal, whether Mr Sugden could appear in this Court in support. Mr Sugden had not been a party in the Supreme Court. After some discussion with the Bench he accepted that he should be struck out as the second appellant. The first appellant Etmat wished to continue with the appeal and instructed Mr Sugden accordingly. So the appeal proceeded with Etmat as sole appellant.
   
4. After some discussion, we accepted that Mr Sugden could appear for Etmat. Mr Stephens for Mr Winslett had opposed Mr Sugden appearing at all, but we did not consider that there was anything to prevent him from doing so. The alleged conflict of interest was not relevant to this appeal hearing as, given the appeal's narrow ambit, it could not involve the use of confidential information by Mr Sugden. The Supreme Court order, while preventing him from appearing further in the Supreme Court proceedings, did not prevent him from appearing in this Appellate Court to argue against that same order any more than a strike out order could stop the party who contested that order from appealing. The Supreme Court order only related to those substantive Supreme Court proceedings.
   
5. If we had thought it necessary to do so, we would have given Mr Sugden leave to appear in support of the appeal in any event. The Court will not lightly put a party to the expense and inconvenience of briefing new counsel and any knowledge of Mr Sugden about Mr Winslett's affairs is irrelevant to the narrow issue that arises on this appeal.
   

Mr Sugden's involvement with Mr Winslett

6. It is necessary to set out the detail that is available of Mr Sugden's work as counsel for Mr Winslett.
   
7. In 2002 Mr Winslett who had moved to Vanuatu was facing charges with his son Sean Winslett, relating to an application for residency. The charges were Making a False Declaration, Providing False Information and Making a False Statement. The two had not disclosed Australian convictions for which Mr Winslett had been sentenced to a minimum of two years imprisonment. Mr Sugden acted for both the Winsletts in relation to the Vanuatu charges. Ultimately, they both pleaded guilty. Mr Winslett was convicted and discharged and his son was sentenced to three months imprisonment. Mr Sugden had taken instructions from Mr Winslett, advised him and appeared for him and his son at the sentence hearing. He also acted for Mr Winslett in 2002-2003 on a land transaction, a separate matter.
   
8. Mr Winslett deposed that in the course of working on the criminal charges, he disclosed to Mr Sugden confidential information about his Australian affairs. He asserted that he gave him confidential information "... and very personal documents from the National Crime Authority (NCA) and Australian Government...".
   
9. Mr Sugden does not deny receiving such material but asserts that any confidential material that he received is now publicly available. A Mr Michael Jessop has deposed that when Mr Sugden was instructed by Etmat in 2006 it was known that he had acted for Mr Winslett, and that Mr Winslett's criminal past was by then well known.
   

The Courts' jurisdiction

10. Section 49(1) of the Constitution gives the Supreme Court unlimited jurisdiction to hear and determine any civil or criminal proceedings, and such other jurisdiction and powers as may be conferred on it by the Constitution or by law. Vanuatu Courts are able to draw freely on the common law, (Swanson v. the Public Prosecutor, Criminal Appeal Case No.6 of 1997 p.20). We have no doubt the Supreme Court has the unfettered ability shared by other Common Law Courts to control its own processes except as limited by specific legislation. It is within the inherent jurisdiction of superior Courts to deny the right of audience to counsel when the interests of parties so require it; Everingham v. Ontario [1993] 88 DLR (4th) 755, 761, Black v. Taylor [1993] 3 NZLR 403, 418. This can be seen as part of the jurisdiction to ensure that procedures are not abused. An associated concern that lies behind the jurisdiction to deny counsel audience is that justice should not only be done, but should manifestly and undoubtedly be seen to be done; R v. Sussex Justices, ex parte McCarthy [1923] EWHC KB 1; [1924] KB 256, 259, Black v. Taylor, p.408.
    
11. Before it exercises this jurisdiction, a Court must give due weight to the public interest that a litigant should not be deprived of his or her counsel without good cause. The right to the unfettered choice of counsel is important. The Court must be vigilant to ensure that the jurisdiction is not exploited by parties who, for tactical reasons, wish to expose opposing parties to the discouraging and expensive task of being forced to find new counsel. Any consideration of an application to discharge counsel must recognise the realities of legal practice. The Courts should not be too ready to prevent a party from being represented by counsel of its choice.
    
12. A number of cases have emphasized the importance of maintaining the appearance that parties are being subjected to a fair process. In D & J Construction Pty Ltd v. Head [1987] 9 NSWLR 118, 123, Bryson J observed:
    

"Cautious conduct by the Court is appropriate because the spectacle or the appearance that a lawyer can readily change sides is very subversive of the appearance of justice being done. The appearance which matters is the appearance presented to a reasonable observer who knows and is prepared to understand the facts."

13. A similar point was made in the criminal case Mallessons Stephen Jacques v. KPMG Peat Marwick [1990] 4 WAR 357. It was observed that there would be an incalculable and prejudicial effect on the state of mind and therefore the demeanour of the defendant in situations where the other legal advisors had previously advised him. In Australian Commercial Research and Development Ltd, McKenzie J accepted that the impression that a lawyer can change sides during a case is very subversive to the appearance of justice hearing done. There have been similar references to the need to maintain an appearance of even handed justice in MacDonald Estate v. Martin [1991] 77 DLR (412) 249, 267, Black v. Taylor p.411 and Mintel International Group Ltd v. Mintel (Australia) Pty Ltd (2001) 81 ALR 78, [36] – [42].
    
14. The issue may be approached on the narrow basis of preventing an officer of the Court from misusing confidential information. However, the Court in exercising the inherent jurisdiction is not obliged to require proof of the use of confidential information. That is a matter usually not susceptible of proof in the context of lawyer and client; MacDonald Estate v. Martin [1991] 77 DLR (412) 249, 267, Black v. Taylor p.4160. The jurisdiction is better seen not as part of the jurisdiction to restrain breaches of confidence, but rather as part of the Courts' inherent jurisdiction to control their own processes. The Court may act to stop counsel acting even without an application by a party.
    
15. This case, where there are only short affidavits from Messrs Winslett and Sugden, and which are expressed in generalities, illustrates the danger of a formalistic onus of proof approach. It is understandable that memories of past attendances can initially be faded, or that the parties may wish to limit the details given of adverse material. While the Court must be satisfied that there is the appearance of conflict, proof of the details of the former lawyer's knowledge cannot always be expected. In most cases, it is not practical to embark on a hearing to find the exact facts of the alleged conflict. We adopt the statement of Drummond J in Carindale Country Club Estate Pty Limited v. Astill [1993] FCA 218; [1993] 42 FCR 307, 312:
    

"In my opinion, a solicitor is liable to be restrained from acting for a new client against a former client if a reasonable observer, aware of the relevant facts, would think that there was a real, as opposed to a theoretical, possibility that confidential information given to the solicitor by the former client might be used by the solicitor to advance the interests of a new client to the detriment of the old client."

16. We think the jurisdiction must be approached from the objective basis of the reasonable observer, rather than on the basis of proven misuse of confidential information. This Court must be satisfied that a reasonable observer, aware of the facts, would conclude that there was a real risk of the lawyer using confidential information to the former client's detriment. Only then it will intervene.
    

Is there a real possibility of misuse of confidential information?

17. The possible confidential information is information about Mr Winslett's criminal convictions, personal documents from the NCA and the Australian Government, and such information about Mr Winslett's past, his personality, his strengths and weaknesses, that Mr Sugden is likely to have acquired. Neither Mr Winslett or Mr Sugden has given precise details of the nature of the attendances. However, we assume that the disclosures during those attendances were full and frank given the grave nature of the charges Mr Winslett faced, and the proposal to seek a discharge without penalty from the Vanuatu Supreme Court.
    
18. Mr Sugden has emphasized that the information about the Australian criminal convictions is now in the public domain. That is so in relation to the convictions, but Mr Sugden did not in his affidavit specifically address what had happened to the personal documents from the NCA and Australian Government, or his knowledge of them. We are left unsure whether he still has those or what he knows of them. To be fair to them both, memories will have faded. But memory can revive. The documents sent to Mr Sugden could well have contained confidential information about Mr Winslett's past activities. In the course of acting for Mr Winslett on such an important matter as a fraudulent statement prosecution, Mr Sugden is likely to have got to know his personality, his strengths and weaknesses, and his fears and reactions. Even if little is remembered now, much may be recalled as the stress of preparing for cross-examination focuses the mind.
    
19. We are informed by Mr Sugden that in this present litigation it will be alleged that in 2005 (two years after Mr Sugden ceased acting for him), Mr Winslett fraudulently conspired to defeat Etmat's interests in a land transaction. An all out assault on Mr Winslett's credibility is certain. Any knowledge of past errors and personality traits will be of use in the cross-examination process.
    
20. In these circumstances, we consider that a reasonable observer, aware of the relevant facts, would think that here was a real possibility that Mr Sugden's knowledge about Mr Winslett's Australian past, and his personality and performance in the stress of litigation, might be used to the advantage of Etmat. We emphasize that in drawing this conclusion we do not impugn Mr Sugden, who we accept does not consciously seek to take advantage of his former role. But justice must be seen to be done, and it will not be if he is allowed to continue to act.
    
21. We are aware that the number of experienced counsel in Vanuatu is limited. Indeed Mr Sugden has indicated that his client may discontinue against Mr Winslett rather than lose Mr Sugden's services in the main litigation. We can form no view on the sincerity of Mr Winslett's objection, but it is one which, in these circumstances, he is entitled to make. While not every past association will disqualify a former lawyer, the closeness and importance of the presumed knowledge here is impermissible. In a small jurisdiction such as this, there is no less a need to ensure that justice is seen to be done.
    

Summary

22. We agree therefore with the decision of Fatiaki J. It was necessary to invoke the inherent jurisdiction of the Court to maintain public confidence in the Court processes, and to intervene as he did. The appeal will be dismissed.
    
23. At the request of Mr Sugden we make this an interim judgment and do not at this stage uphold the order that he is restrained from acting as counsel. That order may be rescinded if Mr Winslett is removed as a party, and in those circumstances Mr Sugden could continue to act.
    

Costs

24. Costs must follow the event, and be awarded to Mr Winslett.
    
25. We would usually consider a costs' order directed against the lawyer personally in an application such as this. However, the principal of Etmat was in Court throughout, and put forward Etmat as the sole appellant after some discussion of the merits. We are satisfied that Etmat has instructed Mr Sugden to pursue the appeal with a full understanding of the issues.
    
26. In the circumstances we order that Mr Winslett's costs are to be paid by Etmat, to be taxed if not agreed.
    

DATED at Port-Vila, this 8th day of April 2011

BY THE COURT

Hon. Vincent LUNABEK CJ

Hon. John Mansfield J

Hon. Raynor Asher J

Hon. Oliver A. Saksak J

Hon. Robert L. Spear J