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Ethics Committee rulings

Every Issue

Cite as: Cite as: March 2012 86 (03) LIJ, p.72

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

Commercial

Conflict of interest
(R4717 – September 2011)
Practitioners should be mindful when acting for multiple parties in a proceeding, especially when the interests of one party impact directly on the interests of another party, as the practitioners may find themselves in a position of conflict.

A legal service acted for a lot owner in relation to a complaint against an owners corporation manager. Another firm (Firm A) acted for the owners corporation and the manager.

The lot owner had a dispute with the corporation which led to him commencing proceedings in VCAT as an unrepresented litigant. He was unsuccessful at VCAT and VCAT ordered that the parties bear their own costs. The corporation incurred substantial legal fees in defending the proceedings commenced by the lot owner, which the corporation paid. Each lot owner (including the litigant) was then sent a bill for their portion of the legal fees. Firm A acted for the corporation in the VCAT matter.

The lot owner stated that he was advised to commence the VCAT proceedings by the manager. The legal service alleged that the manager had breached its duty to the corporation to act with due care and diligence by erroneously advising the lot owner that he was required to commence VCAT proceedings to resolve his dispute, rather than engaging in more cost-effective internal dispute resolution processes. Had he not been so advised, the substantial legal fees of the VCAT proceeding would not have been incurred.

Firm A stated in correspondence that it acted for both the corporation and the manager, but that it currently did not act for either party as no current retainer existed.

The legal service alleged that Firm A might be in a position of conflict of interest if the manager was found guilty of breaching its duty to act with due care and diligence in the performance of its functions. If the manager was found to have acted in breach of its duties, it might be held liable to compensate the corporation. This would then place the corporation’s interests and the manager’s interests in conflict and accordingly place Firm A in a position of conflict.

Ruling

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

If the lot owner pursues the claim against the owners corporation manager, and Firm A continues to act for the owners corporation manager, Firm A will be in a conflict of interest situation due to the unique relationship between the owners corporation and the owners corporation manager, and it would be prudent for Firm A to cease acting.

Similarly, if the owners corporation pursues the claim against the owners corporation manager for breach of duty, Firm A should not act for the owners corporation manager as it had previously acted for the owners corporation in a related matter.

Family

Conflict of interest
(R4720 – September 2011)
In relation to an independent children’s lawyer (ICL), the appearance of bias may be tested by whether a fair-minded lay observer might reasonably apprehend that the ICL might not bring an impartial or unprejudiced mind to the task of independently representing a child (per O’Reilly J in Kingley & Arndale (No 2) [2010] FamCA 968 (8 October 2010) at [33]).

A practitioner acted as an ICL in current family law proceedings involving a father and a mother.

After the family law proceedings had commenced, the father began a relationship with another woman with whom he intended to cohabit.

The ICL had formerly acted in family law proceedings in which she had represented the former partner of the woman. The ICL had been the opposing solicitor to the woman in these other proceedings.

The solicitor for the father suggested that the ICL’s independence might have been compromised in continuing to act in the current family law proceedings between the father and the mother.

Ruling

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

Having regard to the “Guidelines for Independent Children’s Lawyers” (endorsed by the Chief Justice of the Family Court of Australia dated 6 February 2007) and the case law, the information before the Ethics Committee indicates a perceived conflict of interest and the practitioner appointed as ICL should cease to act.

Although the Ethics Committee is mindful that mere allegations of impartiality are insufficient to prevent an Independent Children’s Lawyer from continuing to act, in this case the Independent Children’s Lawyer has previously acted against a potential partner of one of the parties to the proceeding.




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 ph 9607 9336.

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