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Ethics Committee Rulings

Every Issue

Cite as: April 2012 86 (04) LIJ, p.75

Ethical dilemmas are part of everyday practice for solicitors. The LIV Ethics Committee is available to help.

Family

Alleged conflict of interest
(R4721 – October 2011)
A threshold test for finding a conflict in relation to r4 of the Professional Conduct and Practice Rules 2005 requires an analysis of whether the practitioner is acting against a former client while being in possession of confidential information relevant to the current proceedings.

A firm acted for the wife in a family law matter. Another firm acted for the husband.

The husband’s firm contended that the wife’s firm had a conflict in acting for the wife because the wife’s firm had previously acted for the husband’s brother in his family law matter.

The husband’s firm alleged that the wife’s firm had confidential information about the husband’s family as a result of its previous retainer with the husband’s brother but was unable to point to any specific confidential information that the wife would not have already been able to provide to her firm as part of her instructions.

Ruling

In the opinion of the Ethics Committee and on the information presented:

The wife’s firm is not in a position of conflict in continuing to act for the wife in the family law matter based on a solicitor- client relationship with the husband as he was never a client of the wife’s firm.

There appears to be no relevant confidential information by reason of the fact that the wife would be able to provide the same information about the family (relating to their reputation) as the husband or brother.

Commercial

Conflict of interest
(R4728 – November 2011)
A solicitor must not, unless exceptional circumstances exist, continue to act for a client when it is known, or becomes apparent, that the solicitor may be called as a material witness to the client’s proceedings (r13.4 of the Professional Conduct and Practice Rules 2005).

A firm acted for a purchaser under a contract of sale. Another firm acted for the vendor.

The purchaser alleged that the vendor defaulted on the contract of sale and initiated proceedings in the Supreme Court of Victoria for specific performance and damages for breach of contract.

The purchaser’s firm alleged that the vendor’s firm was in a position of conflict. It argued that the vendor’s firm drafted and prepared documents in relation to the contract of sale which would ultimately raise issues regarding the conduct of the vendor’s firm.

The purchaser’s firm argued that the vendor’s firm should cease acting for the vendor on the basis that it had previously acted for the purchaser in various other unrelated matters several years ago (commercial and personal), that its interests would conflict with those of the vendor and that it may be called as a material witness to the current proceedings.

The vendor’s firm argued that it was not conflicted as it was not in possession of any confidential information regarding the purchaser relating to the current matter. It argued that the previous matters were unrelated and not material to the current dispute.

Ruling

In the opinion of the Ethics Committee and on the information presented:

There is insufficient information provided for the Ethics Committee to find any conflict at this early stage. As such, the vendor’s firm does not appear to be presently conflicted and may continue to act for the vendor in the present Supreme Court proceeding.

However, if it becomes apparent that the vendor’s firm’s conduct in the conveyance will become a material issue in dispute in the Supreme Court proceeding, such that the vendor’s firm may be called to give evidence, or defend its own conduct, then there would appear to be a potential conflict and it would be prudent for the vendor’s firm to cease to act.




The ETHICS COMMITTEE is drawn from experienced past and present LIV Council members, who serve in an honorary capacity. Ethics Committee rulings are non-binding. However, as the considered view of a respected group of experienced practitioners, the rulings carry substantial weight. It is considered prudent to follow them.

The LIV Ethics website, www.liv.asn.au/Practising-in-Victoria/Ethics, offers a searchable database of the rulings, a “common ethical dilemmas” section and information about the Ethics Committee and Ethics Liaison Group. For further information, contact the ethics solicitor on ph 9607 9336.

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