Perth law firm remains central to action against CBA
The Supreme Court of Western Australia has cleared the way for a Perth legal firm to represent three groups of investors taking action against the Commonwealth Bank of Australia and a group of financiers. In a judgment delivered on 28 July by Chief Justice Wayne Martin, which was released last week, an application by the banks to restrain law firm Jackson McDonald from acting on the case due to possible conflict of interest was dismissed.The court has estimated that the case, if it runs its full course, will yield legal fees in the millions of dollars.The proceedings cover various disputes arising from a major property development at Raine Square in Perth, which was undertaken by Westgem Investments, now in liquidation.The claim is for an amount remaining to be quantified, but it is likely to be "hundreds of millions of dollars", and is in part based on an allegation that the banks had decided not to continue to provide support.If that is proved, it would be relevant to the solvency of Westgem at the relevant time because it would have affected the capacity of Westgem to pay its debts when they fell due. There are other proceedings before the court in which the solvency of Westgem at various times is also relevant. The banks had applied to the court seeking orders to restrain Jackson McDonald, the Perth law firm, from acting in three proceedings to which the financiers are parties on the basis that the firm could also be caught up in the liquidation proceedings of Westgem as it had been paid up to $400,000 by the company close to the date when it was put into liquidation.The liquidator of Westgem has foreshadowed the possibility of a claim to the effect that those payments were preferential. It has taken steps to extend the time limit for such a claim.For its part, the law firm has undertaken not to pursue the major hearing if required to step back. Meanwhile the other parties - those taking action against the bank and financiers for the failed property project - have obtained independent legal advice and "indicated unequivocally" that they want Jackson McDonald to continue to act for them.Citing the costs "which would be thrown away", the inevitability of delay, and the fact that Jackson McDonald's clients would be deprived of their choice of solicitors if a new firm of lawyers had to be briefed, Chief Justice Martin ruled there were no exceptional circumstances requiring the court to make an order preventing the law firm from continuing to act in the case.