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Ethics Committee Rulings

Every Issue

Cite as: December 2012 86 (12) LIJ, p.72

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

Commercial

Material witness
(R4754 – May 2012) It may be prudent for a practitioner to cease acting if there is some prospect that he or she may be called as a witness. However rule 13.4 does not require that a practitioner cease to act until it becomes known or is apparent that the practitioner will be required to give evidence in relation to the contested issues.

The client of Firm A was sued in Supreme Court proceedings by the client of Firm B. The proceedings related to the sale of a subdivision of land. Firm A’s client had terminated a put and call option agreement and a dispute ensued in relation to the meaning of certain clauses of the agreement.

Firm A asserted that Firm B should cease to act for its client on the basis that Firm B had negotiated and drafted the put and call option agreement. Firm A also asserted that one of the solicitors from Firm B would be a “necessary and proper witness in the proceeding particularly with respect to the matrix of fact in which the put and call option agreement was made.” Firm A asserted that it would seek to call the solicitor from Firm B as a witness to explain the intention of the parties at the time the agreement was drafted as he was involved in the negotiation of the agreement between the parties.

Firm B responded that the assertion of Firm A “should be viewed with a high degree of male fides” because of the delay in raising the issue as the court proceeding had commenced two years earlier. Firm B said that it was “ludicrous” to suggest that the solicitor would be a necessary and critical witness. The solicitor would be unable to give evidence relevant to the issues raised as they related both to the interpretation of the clauses (which was a matter for the court) and to private views of his client about which he could not give evidence without breaching client legal privilege. Firm B also asserted that this was a litigation tactic by Firm A.

Ruling

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

It may be prudent that Firm B cease acting because there is some prospect that Firm B may be called as a witness. In our view, rule 13.4 does not require that Firm B cease to act until it becomes known or is apparent that Firm B will be required to give evidence in relation to contested issues.

Family law

Conflict of interest
(R4755 – April 2012) A practitioner may not continue to act in a family law matter when the practitioner has acted for both parties in a prior conveyancing matter if it is established that there is a perception of a conflict of interest (reasonable observer test), there is a duty of loyalty to the client, and the practitioner has obtained confidential information in terms of the “getting to know you” factors.

A firm acted for the husband over a number of years. The husband’s first wife had died. Subsequent to her death, the husband married his second wife from whom he then separated.

Prior to their separation, the husband and the second wife purchased vacant land. The same firm acted for both the husband and the second wife in the purchase. The second wife asserted that she had attended the firm on numerous occasions during the marriage to discuss property matters and for investment advice.

When the husband and the second wife separated approximately two years later, the firm advised the second wife that it was acting for the husband in the family law matter.

The second wife instructed another firm to act for her in the family law matter. The wife’s firm requested that the husband’s firm cease acting for the husband “in order for the matter to be just and equitable and at arm’s length”.

Ruling

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

The firm should cease acting for the husband in the family law matter based on the reasonable observer test, a consideration of the duty of loyalty as well as a consideration of confidential information held in terms of the “getting to know you” factors.



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, is regularly updated and, among other services, 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 9607 9336.

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