Case: Kallinicos v Hunt [2005] NSWSC 1181 ; (2005) 64 NSWLR 561
Outcome: considered
Moreover, Mr Cordato acted in these proceedings as solicitor for all the defendants in circumstances where no reasonable solicitor in his position could possibly have acted. He was precluded by the application of r 19 of the Solicitors Rules from acting, certainly by no later than 8 May 2006, but probably considerably earlier. But in any event, Mr Cordato's financial interest in the success of the defendants' case meant that he was unable to act with the independence which a solicitor on the record must have as part of the relationship between an officer of the court and the court in the presentation and conduct of litigation: Kallinicos v Hunt [2005] NSWSC 1181 ; (2005) 64 NSWLR 561 at 512 [76] , 584-585 [86], 586 [91] per Brereton J. As Brereton J said, a solicitor should not act where a fair minded and reasonable observer would think that his or her independence and objectivity as a solicitor would be compromised. The scrutiny which the solicitor's conduct would attract in litigation, his or her knowledge of the instructions in relation to the subject matter in which he or she might be a material witness are relevant factors in this regard. ( Kallinicos 64 NSWLR at 586 [91]). Mr Cordato was a material witness on important conversations; he charged BGR for the personal costs for which Triad and Cordato Partners Services were liable and he continued to act oblivious of the motion to enjoin him from doing so. He prepared Mr Gulson's affidavits including those parts dealing with disputed conversations, such as with Mr Lombardo, to which both Mr Cordato and Mr Gulson were party. That conduct put him in an impossible position. However much, by his own lights, he may have tried to put Mr Gulson's account objectively and uninfluenced by Mr Cordato's own recollection he could not do so in the way a person who was independent could have. And, of course, Mr Cordato's account is likely, even if only subconsciously, to have been influenced by what he had learned in taking Mr Gulson's affidavits. 255 The distribution in February 2006 did not recognise the need to make any payment to Mr Bax and Food Improvers for the work that he had been done during the periods in which consultancy fees had been refunded and later when they were either left unpaid or paid at a reduced rate. This was unfair prejudice to Food Improvers. Mr Cordato's legal firm was permitted by Mr Gulson to bill and be paid in January 2006 for all its unbilled work in progress throughout BGR's existence. Yet, Mr Cordato was not even working in the business of BGR to generate the asset that was ultimately realised on the sale of the Main Camp plantation business. 256 The affairs of BGR have been taken over by Mr Cordato and Mr Gulson and run in a way which favours their companies' interests and disadvantages Mr Bax's. Mr Cordato made no attempt to dissect from the fees he rendered to BGR those which were referable wholly to his own personal and his company's interests. Nor did he attempt to do so in respect of the personal interests of Mr Gulson and Triad. Instead, both Mr Cordato and Mr Gulson, deliberately, decided to use BGR's money to pay for the whole of the defence costs. I do not believe their evidence to the effect that the expenditure for the personal purposes of Mr Cordato or Cordato Partners Services was unintended. Mr Cordato kept no records to enable separate fees to be rendered because he did not need to do so. He considered he was entitled to use BGR's money to defend his own personal and his company's interests including his reputation, so far as it was attacked in the case. Mr Gulson had no reason to disapprove of Mr Cordato's fees being paid by BGR because Triad's fees were too. Likewise, Mr Gulson saw his interests as being those of BGR, which is why he caused the fees that Kemp Strang had rendered to Triad to be paid by BGR. Mr Cordato's lack of independence was one contributing factor which permitted that to occur. 263 After the hearing had concluded both sides and Mr Cordato made written submissions on the question of Mr Cordato's continuing to act. The plaintiffs apparently had insisted that counsel who appeared at the trial for the defendants be not permitted to make those submissions. Senior counsel was retained to make submissions on behalf of Mr Cordato and his firm. Senior counsel submitted that the attempt to remove Mr Cordato as solicitor for the defendants was made too late, was without substance and was inconsistent with the position taken by Haywards in their letter of 15 May 2006 that Mr Cordato's continuing to act was further evidence of oppression. Senior counsel pointed to Brereton J's statement in Kallinicos 64 NSWLR at 582 [76] that the jurisdiction is to be regarded as exceptional and is to be exercised with caution. 264 The fact that the plaintiffs only then insisted on someone other than those who had appeared hitherto in making these submissions, although the basis of such insistence is not clear to me, demonstrated a belated realisation on the plaintiffs' part of the inappropriateness of their motion. It was directed to restraining Cordato Partners, as opposed to restraining the defendants. Cordato Partners was not a party to the proceedings or to the motion. That firm had not been served formally and it was not separately represented at the hearing or on any other occasion save for the submissions made by senior counsel. Mr Cordato gave evidence as a witness, and as the controlling mind of Cordato Partners Services, the third defendant, but not as a party to the proceedings personally; nor did he appear for Cordato Partners. Had the motion sought to restrain the relevant defendants from engaging Cordato Partners, it may have been possible to hear and determine it, although, as a person affected by the order, Cordato Partners should have been joined and they could have applied to be joined. 265 I am not satisfied that the proceedings have been conducted appropriately as a vehicle for determining in the inherent jurisdiction of the court the disqualification of Cordato Partners from acting. I have expressed views about the inappropriateness of Mr Cordato's conduct, but having regard to the way in which the matter developed and the very late realisation by both sides as to the need for independent representation of Cordato Partners, I do not think it appropriate at this stage to make any orders against the firm or its principal Mr Cordato. For the reasons I have given it is inappropriate for Mr Cordato and his firm to continue to act for the defendants. That being so, I do not think it necessary for me to do anything further.