NSW Court of Appeal warning about acting in a case where legal practitioner is a material witness

lawyer witness

The NSW Court of Appeal has issued a warning about legal practitioners acting in cases where the practitioner is or is likely to be a material witness.  The case is Barrak Corporation Pty Ltd v The Kara Group of Companies Pty Ltd [2014] NSWCA 395 (delivered 19 November 2014).

Facts

Mr Barrak, a legal practitioner, was the sole director and shareholder of the appellant (the plaintiff below) for which he was the solicitor on the record in a proceeding against the respondent for negligence. Mr Barrak was also the principal witness for the appellant.

During the proceeding below Mr Barrak was cross-examined about the effect of (then) Rule 19 of the NSW Professional Conduct and Practice Rules 1995 which relevantly provided:

Unless there are exceptional circumstances justifying the practitioner’s continuing retainer by the practitioner’s client, the practitioner must not act or continue to act in any case in which it is known or becomes apparent that the practitioner will be required to give evidence material to the determination of the contested issues before the court.”

The cross-examination proceeded as follows:

“Q.  Are you familiar with that rule [rule 19]?

A.  Well, not specifically, but you’ve read it out to me.

Q.  This is coming as news to you this —

A.  No, no, I consider what you have just read out to be a normal vicissitude of practice in law, and I don’t think that what you’re saying applies to this particular case, because if it did a solicitor could never, ever act for any matter in which he has an interest, and that’s simply – I reject that.

Q.  You don’t accept that that’s the position?

A.  No I don’t.

Q.  Or the effect of the rule?

A.  No, well I can assure you I’ve acted in, for my own company every single time it has been involved in any litigation, and I’ve never encountered any objection of the kind that you’re now raising

Q.  Mr Barrak, did it not concern you that you might be breaching the professional rules by which you are bound as a solicitor?

A.  It would always concern me if I thought that I was breaching any professional rule as a solicitor. I do not consider that my conduct breaches any professional rule as a solicitor.

Q.  Did it not concern you at any point that there was a risk that your personal interest in the outcome of this case might conflict with your duties as an officer of the court?

A.  No, certainly not.

Q.  You have prepared the affidavits of the other witnesses in the case?

A.  Yes I have.

Q.  Did it not concern you that the objectivity and independence required in performing those tasks might be jeopardised by the fact that you have a personal interest in the outcome of the case?

A.  No, it did not concern me. The affidavits which I drafted are in accordance with the versions of events as described to me by each particular witness, and I followed those instructions.

[Original emphasis]

Of this exchange Adamson JA said:

[46] Mr Barrak’s answers set out above indicate not only that he was ignorant of Rule 19 but also that it was his invariable practice to be the solicitor on the record in matters in which the appellant was a party. He also appeared to be unperturbed by the general prohibition on witnesses conferring about matters the subject of evidence, which necessarily occurred when he conferred with witnesses to prepare their statements. The significance of that prohibition was greater in the present case, given that Mr Sarikaya [one of the other defendants] swore an affidavit after the proceedings against him were settled on the basis that he agreed to sign affidavits as reasonably requested by the appellant … That affidavit was read in the appellant’s case.

[47] It is necessary to emphasise the risk posed to the administration of justice in New South Wales by solicitors remaining on the record when they are, or may be, witnesses in proceedings. This risk is heightened when they have a personal interest in the outcome of litigation beyond recovery of their fees. Courts rely on legal practitioners to discharge their duties to remain objective and professional in the preparation and presentation of proceedings. Such duties are susceptible to compromise where a practitioner is also a witness and even more so when he or she has a financial interest in the outcome: see, for example the observations made by Brereton J in Mitchell v Burell [2008] NSWSC 772 at [20].”

Barrett and Sackville JJA agreed with Adamson JA’s comments concerning Mr Barrak’s conduct.

The present Rule in NSW (which came into force after the trial in this matter had been determined) is rule 27.2 of the NSW Professional Conduct and Practice Rules 2013:

In a case in which it is known, or becomes apparent, that a solicitor will be required to give evidence material to the determination of contested issues before the court the solicitor, an associate of the solicitor or a law practice of which the solicitor is a member may act or continue to act for the client unless doing so would prejudice the administration of justice.”

Adamson JA observed:

The effect of the amendment is to change the rule from a prohibition qualified where there are “exceptional circumstances justifying the practitioner’s continuing retainer by the … client” (Rule 19) with a qualified permission that allows a solicitor to continue to act for the client unless doing so would prejudice the administration of justice (Rule 27.2). I do not discern any change in the purpose of the provision, which is to protect the administration of justice by circumscribing the circumstances in which a solicitor who is, or may be, required to give evidence in proceedings is permitted to act.” [emphasis added]

A copy of the appeal judgment was forwarded to the Legal Services Commissioner for consideration as to whether a complaint should be made in relation to Mr Barrak’s conduct (at [50]).

Comment

Whilst the facts of this case appear exceptional it does serve as a reminder of the importance of protecting the administration of justice by, as Barratt JA put it:

eliminating a particular form of influence or interest that, of its nature, might compromise the practitioner’s ability to discharge [his/her primary duty to the Court]” (at [2]).

To posit another scenario which sometimes occurs, imagine that a document drafted by a firm is litigated, in which case the question arises as to whether and in what circumstances the firm’s litigators can act for the client where the contract drafter may be a material witness in the proceeding.  This not entirely straightforward scenario appears to be addressed by rule 42(2) of the Legal Profession Conduct Rules 2010 (WA):

42.       Practitioner as material witness in client’s case

(1)       A practitioner must not act for a client in the hearing of a case in which it is known, or becomes apparent, that the practitioner will be required to give evidence centrally material to the determination of contested issues before the court.

(2)     In the circumstances provided for in subrule (1) an associate of the practitioner’s law practice may act for the client if:

(a)      in the practitioner’s reasonable opinion there are exceptional circumstances that justify the associate acting; and

(b)      the client, having been given an opportunity to obtain independent legal advice concerning the issue, consents to the associate acting.

Two other Rules are set out below, by way of example and contrast:

Vic Professional Conduct and Practice Rules 2005 (Vic)

13.4  A practitioner must not unless exceptional circumstances warrant otherwise in the practitioner’s considered opinion:

13.4.1  appear for a client at any hearing, or

13.4.2  continue to act for a client,

in a case in which it is known, or becomes apparent, that the practitioner will be required to give evidence material to the determination of contested issues before the court.

Australian Solicitors Conduct Rules 2012

27.  Solicitor as material witness in client’s case

27.1  In a case in which it is known, or becomes apparent, that a solicitor will be required to give evidence material to the determination of contested issues before the court, the solicitor may not appear as advocate for the client in the hearing.

27.2  In a case in which it is known, or becomes apparent, that a solicitor will be required to give evidence material to the determination of contested issues before the court the solicitor, an associate of the solicitor or a law practice of which the solicitor is a member may act or continue to act for the client unless doing so would prejudice the administration of justice.