RESTRAINING SOLICITORS FROM ACTING

PRACTICE AND PROCEDURE – Inherent jurisdiction – Court’s control of its processes in aid of the administration of justice – Restraining solicitors from acting – Applicant seeking injunction preventing opponent’s solicitors from continuing to act – Relevant considerations – Kallinicos and anor v Hunt and ors [2005] NSWSC 1181; (2005) 64 NSWLR 561, Grimwade v Meagher and ors [1995] VicRp 28; [1995] 1 VR 446, Director of Public Prosecutions for Western Australia v Bennett & Co [2005] WASC 1; (2005) 151 A Crim R 516 followed – Circumstances of case not exceptional – No ‘real and sensible’ risk identified – Potential for prejudice to defendant substantial – Application dismissed

Just Group Ltd v Peck [2016] VSC 375 (1 July 2016)

The plaintiff employed the defendant as Chief Financial Officer and company secretary by way of agreement and the role was taken up in January 2016. Notice of the termination of employment was given on 2 May 2016 and the defendant sought to take up employment with a rival of the plaintiff, Cotton On. The plaintiff commenced proceedings against the defendant alleging breach of a restraint clause and breach of a confidential information clause.

In seeking to impose a restraint, the plaintiff relied upon the inherent jurisdiction of the court in the administration of justice for the protection of the judicial process: Kallinicos & Anor v Hunt & Ors [2005] NSWSC 1181. In Grimwade v Meagher & Ors [1995] VicRp 28, it was stated that there would have to be identified “unique, extraordinary and exceptional circumstances’ leading to the making of an application to prevent a member of counsel appearing for a particular party.” Exceptional circumstances were also considered in Director of Public Prosecutions for Western Australia v Bennett & Co (A Firm) [2005] WASC 1 (“Bennett”).

The judge considered all the submissions made by counsel for the plaintiff and the respondents to the application. The submissions of the respondents to the application were largely accepted. The judge distinguished between this case and Bennett and noted that:

· Ashurst does not currently act for Cotton On and has no current retainer from Cotton On;

· There was no evidence as to when Ashurst last acted for Cotton On;

· There was no evidence to establish the probability that Ashurst will in future act for Cotton On or

that any confidential information obtained by Ashurst in the conduct of the current proceeding will

be directly relevant to a future retainer with Cotton On;

· In relation to any future retainer with Cotton On, Ashurst is in no different position to any other

solicitor the defendant might engage if she and Ashurst are restrained in the way sought by the

plaintiff.

The judge noted that “To the extent that commercially sensitive and confidential information is required to be divulged by the plaintiff in the prosecution of the proceeding, orders can be sought to appropriately protect that information to deal with the risk of disclosure. The defendant has clearly indicated a willingness to cooperate with that process, and will instruct Ashurst accordingly.”(at [17])

It was found that the circumstances of the case were not exceptional and there was no ‘real and sensible’ risk arising as a consequence of the circumstances and if any risk did exist, it was clearly outweighed by the prejudice which the defendant would suffer if she were restrained from continuing to retain Ashurst as her solicitor. It was ordered that the plaintiff’s summons be dismissed and the subpoena directed to Ashurst Australia be set aside.