Supreme Court New South Wales Medium Neutral Citation: Zamattia v Zamattia [2019] NSWSC 1769 Hearing dates: 10 December 2019 Decision date: 10 December 2019 Jurisdiction: Equity Before: Leeming JA Decision: The proceedings be stayed until such time as Mr Luitingh ceases to act for any of the parties. Catchwords: LEGAL PRACTITIONERS – stay of proceedings – two brothers were directors of a company and also trustees of a trust – company commenced proceedings against Sydney Water – security for costs ordered and provided – proceedings ultimately dismissed –separate proceedings brought by one brother against other for breach of trust – cross-summons seeking removal of plaintiff brother as trustee – counsel retained by company in Sydney Water proceedings took instructions from both directors in relation to security for costs and financial circumstances of company and the brothers – security for costs ultimately satisfied by funds lent by brothers' parents – distribution to repay parents challenged in pending proceedings – circumstances in which company provided other amounts to trustees in issue in pending proceedings – counsel formerly retained by company appeared for plaintiff brother – evidence unclear as to extent of his involvement in the litigation – whether counsel had received confidential information from defendant brother – whether proceedings should be stayed in exercise of inherent jurisdiction – whether any or all of counsel and solicitors for plaintiff could continue to act – evidence did not establish confidential information imparted to counsel – proceedings stayed pending counsel ceasing to act – no basis presently established for preventing other counsel and solicitors from acting for plaintiff Cases Cited: Kallinicos v Hunt (2005) 64 NSWLR 561; [2005] NSWSC 1181 Prince Jefri Bolkiah v KPMG (A Firm) [1999] 2 AC 222 Spincode Pty Ltd v Look Software Pty Ltd (2001) 4 VR 501; [2001] VSCA 248 Zamtech Truck Service Pty Ltd v Sydney Water Corporation [2017] NSWSC 768 Category: Procedural and other rulings Parties: Anthony Zamattia as trustee for the Zamattia Family Trust (Plaintiff, one of the cross-defendants) David Zamattia (First defendant/First cross-claimant) Samuel Zamattia (Second defendant/Second cross-claimant) Bruno Zamattia (Third defendant/Third cross-claimant) Carolina Zamattia (Fourth cross-claimant) Anita Zamattia (Cross-defendant) Anthony John Ciancio (Cross-defendant) Representation: Counsel: J Thomson and M Luitingh (Plaintiff/Cross-defendants) N Simpson (Defendants/Cross-claimants) Solicitors: Grace and Grace Plus (Plaintiff) Southern Waters Legal Pty Ltd (Defendants/Cross-claimants) Button Associates (Cross-defendants) File Number(s): 2017/335334 Publication restriction: Nil EX TEMPORE Judgment 1. HIS HONOUR: By oral application which was foreshadowed by solicitor's letter supplied between the solicitors last night, Mr Samuel Zamattia, one of the defendants in proceedings set down for final hearing before me for three days commencing today, applies for orders that each of counsel retained by the plaintiff and their instructing solicitors, and a further firm retained by the cross-defendants who have filed a submitting appearance, which is assisting the plaintiff, be enjoined from further acting in the proceedings. 2. The catalyst for the application was the disclosure yesterday that Mr Martin Luitingh of counsel was to appear, led by Mr Thomson, for the plaintiff. Mr Luitingh had not appeared at any of the 15 directions hearings that this matter has enjoyed over the two years since it was filed, nor does his name appear on the written submissions dated last Friday. The evidence does not disclose when he first commenced assisting the plaintiff. His name was first disclosed in an email sent at about 10.22 yesterday morning by Mr Thomson. 3. Mr Luitingh had formerly been retained to appear for Zamtech Truck Service Pty Ltd in proceedings against Sydney Water. Those proceedings were dismissed some five or six months ago. Before then, on 9 June 2017, this Court, constituted by McDougall J, ordered that Zamtech provide some $95,000 of security for costs in three tranches: Zamtech Truck Service Pty Ltd v Sydney Water Corporation [2017] NSWSC 768. 4. Mr Luitingh, although he is not recorded as appearing on that application, was involved in its preparation with Mr Anthony Zamattia and the present applicant, Mr Samuel Zamattia, and subsequently, as recently as August of this year, there have been direct SMS communications between the two men, Mr Samuel Zamattia and Mr Luitingh. 5. The application is made on two bases: (a) a risk of a disclosure of confidential information, in accordance with Prince Jefri Bolkiah v KPMG (A Firm) [1999] 2 AC 222; and (b) in this Court's inherent jurisdiction. It is accepted that the retainer has ended. No reliance is placed, consistently with the weight of authority, on any ongoing duty of loyalty; cf Spincode Pty Ltd v Look Software Pty Ltd (2001) 4 VR 501; [2001] VSCA 248. 6. Mr Simpson of counsel read and supported the application and affidavit of Mr Samuel Zamattia of 10 December 2019, which established that Mr Luitingh's involvement in the present proceedings only became known yesterday, and parts of an earlier affidavit which dealt with Mr Luitingh's involvement in the 2017 order for security for costs, which ultimately was satisfied, it is common ground, by loans made by Anthony and Samuel's parents in the amount of $100,000. 7. There was no evidence from the plaintiff in opposition to the application. 8. I can deal with breach of confidence concisely. Unsurprisingly, the evidence discloses that instructions to Mr Luitingh on behalf of Zamtech Truck Service came from its directors Messrs Samuel and Anthony Zamattia. It may or may not be the case that information confidential to Mr Samuel Zamattia was provided to Mr Luitingh, although on the evidence, so far as I can see, the high point is a reference in para 8 of his affidavit of today that he disclosed "my financial difficulties." 9. If there was anything confidential there that has any conceivable relevance to the proceedings before me today, the short answer is that it, together with the totality of the material disclosed in that paragraph, is said to have been disclosed in the presence of his brother Anthony, the plaintiff. I do not see how a claim based on a risk of misuse of confidential information by counsel now retained by Anthony can be made in circumstances where the basis of the alleged confidential information is information provided by Mr Samuel Zamattia to the counsel in the presence of Anthony. 10. The only communications of which there is any evidence between Mr Samuel Zamattia and Mr Luitingh one on one – that is to say, without the presence of Anthony – are three text messages of 24 August 2017. Although repeatedly these were described as obtaining advice, in their totality they are as follows, "Can can please confirm the guarantee has been paid and confirm the amount please?" [sic] Response, "San 35 K in July, next one in Sept." [sic] Next line, "Thanks, Martin." 11. Even if there was once some confidentiality in that communication, it is long since gone. There is no controversy nor can there be any secret in the fact that the $35,000, which refers to the first tranche of security ordered by McDougall J to be paid by 7 July 2017, was in fact paid. 12. I do not accept there is a basis for the orders sought based on confidence. I should add that in submissions made in support of the application insofar as it was based on a breach of confidence, no suggestion was made that there was any direct communication of any confidential information to anyone other than Mr Luitingh. 13. It is common ground before me that there is a separate basis on which a legal practitioner can be ordered to cease to act for a client, namely, in the inherent jurisdiction of the Court. It is common ground that the test to be applied is that stated by Brereton J in Kallinicos v Hunt (2005) 64 NSWLR 561; [2005] NSWSC 1181 at [76]: "[W]hether a fair-minded, reasonably informed member of the public would conclude that the proper administration of justice requires that a legal practitioner should be prevented from acting, in the interests of the protection of the integrity of the judicial process, and the due administration of justice, including the appearance of justice." 1. It is also common ground that the jurisdiction is regarded as exceptional and is to be exercised with caution. 2. The only submission that is made in support of this basis of the application that is directed to either Mr Thomson, or Grace & Grace Plus is that "the well has been poisoned" by Mr Liutingh's involvement. I did understand some further submission to be made in relation to Jane Button & Associates. I should address this immediately. That firm appeared, as I understand it, for the cross-defendants who have filed a submitting appearance. The further submission was based on an email which recorded that due to a technological issue within the office of Grace & Grace, Ms Button had been assisting. It has been said from the Bar table, and I accept that Ms Button has been sitting at the solicitor's desk behind the plaintiff's counsel this morning. I mention this only for completeness. That was the totality of the further submission that was made in relation to that firm. 3. What is not known from the evidence is when Mr Luitingh first was retained by the plaintiff, or what if anything his contribution has been. He did not appear in any of the directions hearings, and his name did not appear on the written submissions filed by the plaintiff in this Court. The onus rests upon the applicant to take the serious step of depriving a litigant of his chosen solicitor and barrister in final proceedings. 4. Mr Samuel Zamattia very properly accepts that the jurisdiction he seeks to invoke is exceptional, and is to be exercised with caution. Like him I have some concern (to which I shall return) about Mr Luitingh's previous involvement, seemingly on a direct access basis, or in any event involving direct communications, with Mr Samuel Zamattia. But I do not think that it is appropriate to exercise the exceptional and cautiously exercised jurisdiction to prevent Mr Anthony Zamattia employing the services of Grace & Grace Plus, Mr Thomson, and Jane Button & Associates merely on the basis that somehow "the well has been poisoned". I do not accept that if for some reason the integrity of the judicial process and the due administration of justice require that Mr Luitingh cease to act, it follows without more that for that reason the entirety of the plaintiff's lawyers must also cease to act. 5. It is possible, of course, that further matters may come to light, and a further application may be made. But on the basis of the material presently to hand, I do not think this is an appropriate case to order that those practitioners cease to act. Mr Luitingh's position is in a different category. 6. It is as well to identify the issues to be litigated in this trial, as best I can presently see them based on a review of the court book, and the helpful exchange of the parties' commendably detailed submissions, in order to assess the claimed link between these proceedings and Mr Luitingh's earlier involvement. 7. On the summons, the issue that arises is the lawfulness of the distribution made by two of the trustees to themselves, and to their parents. There seems to be no dispute that the distribution was made. There seems to be no dispute that it was made without the express concurrence of the plaintiff, who is the third trustee. 8. There is a lively question as to whether the distribution accorded with wishes, understandings, and instructions which the plaintiff had previously communicated to them. True it is that as to part, that distribution is directed to a repayment of $100,000 which had been provided by the parents in order to permit Zamtech to satisfy security for costs obligations incurred some two and a half years ago. But it seems to me that that is a considerable way removed from the legal issue, which is whether the trustees were permitted to make the distributions they did on 17 October. 9. On the cross-summons the issues are more factual, and more wide-ranging. There is an application that Mr Anthony Zamattia be removed as trustee. There is also an application that the certain property held in Queensland is held by the trustees on a trust which includes as beneficiaries the parents. 10. There is a lively issue as to the circumstances in which two companies, one of which is Zamtech Truck Services, came, so it is said by Anthony Zamattia, to lend funds to the trustees. His brothers say that was a gift. 11. It is difficult at this stage to accurately foresee the scope of cross-examination. Since in part one of the issues includes the removal of Mr Anthony Zamattia as trustee and the reappointment of Mr Samuel Zamattia as a trustee, it is not impossible that that may be relatively wide-ranging. 12. It is also on the cards that the circumstances pertaining to what Mr Anthony Zamattia contend were loans between the trustees and Zamtech will be examined in some detail. At this stage I do not have a clear understanding of the extent to which, if any, any of the parties will be cross-examined as to their credit. 13. It is an unusual thing for a barrister to be involved in cross-examining a former client, as I observed early on when the application was first made. That is not precisely the present case. Mr Luitingh, as presently advised, will not be conducting the cross-examination, and Mr Samuel Zamattia is not a former client; rather he, is a director of a former client. In the present litigation, he is a main – probably the main – deponent for the defendants. 14. However, submissions have been made, and I am prepared to proceed on the basis, that for all intents and purposes Mr Samuel Zamattia was one of two instructors on behalf of the client in the Sydney Water proceedings. The evidence does disclose that, at least in 2017, Mr Samuel Zamattia disclosed to Mr Luitingh his own (as opposed to his company's) financial circumstances. Not only is it unclear to me what Mr Luitingh knows and what his involvement in the earlier Sydney Water Proceedings has been, it is also unclear to me when he has been involved the current proceedings. It is therefore left to me to make an assessment of what a fair-minded reasonably informed member of the public would conclude about counsel being retained including to assist in the cross-examination of a director of a company for which he formerly acted, in relation to transactions which go directly to the issues at stake before me today, based on an incomplete understanding of counsel's involvement. 15. I think I should also bear in mind the fact that so far as the record is concerned, until yesterday there was no suggestion of Mr Luitingh being involved at all. This is relevant not merely to the absence of any delay on behalf of Mr Samuel Zamattia in bringing this application, but also the extent to which the plaintiff would be prejudiced by my acceding to the application in so far as it concerns Mr Luitingh. To be blunt about it, there is no suggestion that any aspect of the plaintiff's case cannot adequately be litigated without the assistance of Mr Luitingh. 16. That bears squarely upon a matter which is of concern to me, namely that, prima facie, clients are entitled to retain counsel of their choice, and counsel are required, subject to quite limited exceptions in the Bar rules, to accept briefs to appear. The cab rank rule is a fundamental aspect of professional practice at the Bar. (No submissions have been made before me about the role of the Bar rules in in their application to Mr Luitingh.) 17. It is plain, from financial information provided to me dated from May 2019 that not inconsiderable payments (there was reference in the evidence to a retainer of $5,000 per month, and there is evidence before me of one direct payment of $5,000 from Zamtech Truck Services to Mr Luitingh on 9 May 2019) have been made directly, rather than through the solicitor's trust account. The submission that is made in this respect by Mr Samuel Zamattia is that: "SIMPSON: The effect of all of that together is such that there is an issue of the integrity of the process being compromised by a practitioner having given advice and formerly acted for someone in their capacity as a director and now being in the position where he can inform his side of intimate discussions or discussion - I withdraw the 'intimate' - the discussions that he may have had with my client on issues that do, indeed, attack and address matters in contention in these proceedings." 1. Ultimately, the question for me is an objective one. I think that a fair-minded reasonably informed member of the public would be concerned about a barrister cross-examining a man who was in substance one of his former clients and sources of instructions, in litigation which has now been resolved, but which is squarely relevant to an issue that comes before me today. I am conscious that the jurisdiction is exceptional and should be exercised with caution. But, as presently advised, my view is that the appropriate course is to accede to the application in part, namely, only insofar as it concerns Mr Luitingh. 2. I am conscious that, to that extent my assessment is based upon speculation based on incomplete evidence. However, it would have been open – while accepting completely that this application has been brought only within the last 24 hours – for the matters which necessarily were left to speculation as to Mr Luitingh's role (its nature, its extent, and its timing) to have been explained, either formally or informally, and that has not occurred. 3. There are two ways this can be done. On the third basis really it's a question of a stay. You're in inherent jurisdiction, so one approach would be to stay the proceedings for such time as Mr Luitingh continues. I'm inclined to think, but I'll hear from both of you, that's the more appropriate way of dealing with it rather than a personal injunction. 4. SIMPSON: Your Honour, I'm on the same page as you. 5. THOMSON: Yes, I agree with that your Honour. 6. HIS HONOUR: I'm grateful for the assistance of counsel. I propose to order that the proceedings be stayed until such time as Mr Luitingh ceases to act for any of the parties. That's the order. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 11 December 2019