Federal Court of Australia

Farrell v Super Retail Group Limited (Cross-claim) [2024] FCA 1189

ORDERS

THE COURT ORDERS THAT:

1.    The cross-claim by which the cross-claimants seek an order or orders that the first and second cross-respondents be restrained from retaining the third and fourth cross-respondents from representing them in, or in relation to, this proceeding; and/or that the third and fourth cross-respondents be restrained from representing either of the first or second cross-respondents in, or in relation to, this proceeding be dismissed.

2.    The parties file and serve any submissions in relation to the costs of and incidental to the cross-claim on or by 9 December 2024.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

(Delivered ex tempore, revised from the transcript)

LEE J:

A    INTRODUCTION

1    The nature of the substantive dispute between the parties and its procedural progress was described in general terms in Farrell v Super Retail Group Limited (Confidentiality Applications) [2024] FCA 954 (CJ). These reasons assume a familiarity with those reasons.

2    The present separate hearing relates to relief sought in a cross-claim filed by the cross-claimants (being a public company, Super Retail Group Limited (SRG), its Chairman, its Chief Executive Officer, and a director and an employee (collectively, SRG Parties)) whereby they seek to enjoin: (1) the third cross-respondent, Mr Harmer, and fourth cross-respondent, Harmers Workplace Lawyers LP (Harmers), from representing, in this proceeding, the first cross-respondent, Ms Farrell, and second cross-respondent, Ms Berczelly; and (2) Ms Farrell and Ms Berczelly from retaining Mr Harmer and Harmers from representing them in this proceeding.

3    As the matter proceeded, there was some refinement to the relief sought by SRG: first, the restraint of Ms Berczelly was now directed to the solicitors acting in a separate proceeding recently commenced by her; and secondly, during the course of oral submissions in reply, the SRG Parties raised the prospect of what was described as a “middle course” of a more limited injunction, which could be revisited depending upon events.

4    The SRG Parties contend that the relief they seek “engages the Court’s inherent jurisdiction to ensure the due administration of justice, to protect the integrity of the judicial process and to restrain legal practitioners from acting in a particular case as part of its supervisory jurisdiction”.

5    Before proceeding further, it is worth making a preliminary point. As I explained in CPB Contractors Pty Limited v Celsus Pty Limited (formerly known as SA Health Partnership Nominees Pty Ltd) [2017] FCA 1620; (2017) 353 ALR 84 (at 94 [52]–[53]), it is well established that only superior courts of record with unlimited jurisdiction are said to possess “inherent” powers. This Court, together with the High Court and the Federal Circuit and Family Court of Australia, possess defined jurisdiction granted either by the Constitution or a law of the Commonwealth. As Wilson and Dawson JJ observed in Jackson v Sterling Industries Ltd (1987) 162 CLR 612 (at 618):

federal courts differ from the supreme courts of the States which, although of statutory origin, are truly designated superior courts because they are invested with general jurisdiction by reference to the jurisdiction of the courts at Westminster.

6    Although federal courts possess similar powers, they are not best referred to as “inherent” powers. In the same judgment, their Honours held that a declaration by the Federal Court as a superior court of record was to be given effect as far as it could be and that the “vesting of judicial power in the specific matters permitted by the Constitution (see ss 75, 76, 77) carries with it such implied power as is necessarily inherent in the nature of the judicial power itself” (at 619). Accordingly, although it is less than accurate to say that the Court has an inherent power to grant the relief sought by the SRG Parties, the Court has ample power under s 23 of the Federal Court of Australia Act 1976 (Cth) (FCA Act), and by reason of its implied power to control its own proceedings, to grant the relief sought, if appropriate.

7    I will divide the balance of these reasons into the following four sections: first, I will set out additional aspects of the background and make relevant findings; secondly, explain the relevant legal principles; thirdly, detail the submissions advanced in favour of the relief sought; and fourthly, I will set out my conclusions.

B    RELEVANT BACKGROUND AND FINDINGS

B.1    General Background and Findings

8    Ms Farrell advances two cases as pure alternatives. Her primary contention is that the controversy between her, Ms Berczelly and the SRG Parties has resolved, and she seeks specific performance of a settlement agreement (Settlement Case). Her secondary case is that if the dispute does remain unresolved, she seeks substantive relief against the SRG Parties arising out of Ms Farrell’s former employment by one of the SRG Parties (which is alleged to have been terminated for a reason that included a prohibited reason under s 340(1) of the Fair Work Act 2009 (Cth) (FWA) (or under Pt 9.4AAA of the Corporations Act 2001 (Cth) (Corporations Act)) (Substantive Case).

9    Ms Berczelly is a respondent to Ms Farrell’s proceeding (being a proper party to the Settlement Case) and has filed a submitting appearance. As noted above, on 20 September 2024, Ms Berczelly commenced her own similar employment case against the SRG Parties (Berczelly Case). Again, the Berczelly Case, which has been filed now to preserve limitation periods, will not proceed if specific performance of a settlement agreement is granted.

10    From approximately August or September 2023, Ms Farrell contends an employment dispute arose between her and SRG. She retained Harmers at this time. Shortly thereafter, on 11 December 2023, SRG became aware that Harmers acted for Ms Farrell, and Ms Farrell commenced a period of leave from her employment. Ms Berczelly retained Harmers in December 2023 and, in February 2024, SRG became aware that Harmers also acted for her.

11    SRG engaged solicitors (Allens) and, from February 2024 onwards, Allens engaged in various “without prejudice” communications with Harmers. A mediation was conducted on 17 April 2024, which was attended by representatives of SRG, Ms Farrell and (part way through and by telephone) Ms Berczelly. Legal representatives were also present.

12    Following the unsuccessful mediation, SRG released an announcement to the Australian Securities Exchange (ASX) about expected workplace litigation. The announcement (ASX Announcement) was as follows:    

26 April 2024

ASX Announcement

EXPECTED WORKPLACE LITIGATION

The Board of Super Retail Group Limited (ASX: SUL) today announces that the Group expects two employees, represented by Harmers Workplace Lawyers, will shortly commence court proceedings against the Group. The Group expects the employees to jointly claim loss and damage in the range of $30 million to $50 million.

The Group expects that the allegations in the proceedings will include: the non-disclosure of a relationship between Anthony Heraghty, the Group Managing Director & Chief Executive Officer, and the former Chief Human Resources Officer (who is not one of the two employees making the claim); inappropriate company travel; bullying, victimisation and adverse treatment; particular employees in the corporate team having unreasonable workloads, insufficient resources and restricted access to information; and unsatisfactory company record management.

The Board has conducted a review and investigations into these allegations. The Board was supported by independent external advisers. The Board's review and investigations concluded that none of the allegations are substantiated.

Super Retail Group will defend any court proceedings in relation to the allegations. Allens is acting for the Group.

As these matters are expected to be the subject of litigation, the Group does not intend to make any further comment at this time. The Group will update the market on this matter as appropriate.

The release of this announcement has been authorised by the Board of Super Retail Group.

13    By reason of being a listed entity, SRG has obligations under the Corporations Act and ASX Listing Rule 3.1 to disclose immediately information concerning SRG that was not generally available and that a reasonable person would expect, if generally available, to have a material effect on the price or value of SRG’s securities (subject to exceptions I am not required to detail for present purposes). A reasonable person is taken to expect information to have a material effect on the price or value of securities where the information would or would be likely to influence persons who commonly invest in securities in deciding whether to acquire or dispose of those securities. No evidence was adduced as to why the officers of SRG formed the view that the information of which it was aware (and referred to in the ASX Announcement) was considered by them to have (or be likely to have) a material effect on the price or value of SRG’s securities and it is presently unnecessary for this issue to be explored.

14    As can be seen, neither Ms Farrell nor Ms Berczelly was named in the ASX Announcement. The announcement occasioned widespread media interest and publicity. Focussing on the subjective response to the ASX Announcement and the ensuing media reports, Ms Farrell and Ms Berczelly were (to put it mildly) perturbed and both formed the view that the announcement was misleading and disclosed the substance of without prejudice communications. Moreover, they considered that “backgrounding” that led to some media reports constituted an attack on them and jeopardised their health and safety. In circumstances discussed in great detail below, they determined they wished to respond.

15    After Ms Farrell and Ms Berczelly had already decided to respond by their solicitors making a public statement, Harmers raised with Ms Berczelly the possibility of the then draft statement, when issued, being a public interest disclosure under s 1317AAD(1) of the Corporations Act. Ms Farrell says that, at about the same time, she independently considered whether the statement could be issued by her as an emergency disclosure under s 1317AAD(2). This was of importance because if the statement by them was made as a public interest or an emergency disclosure, then it would attract protection from civil and criminal liability and no contractual or other remedy could be enforced against them based on the disclosure under s 1317AB.

16    The day after the ASX Announcement, and upon instructions from both Ms Farrell and Ms Berczelly, Harmers separately notified both Allens and another firm of solicitors then acting for SRG that Ms Farrell and Ms Berczelly intended to make what was alleged to be “an emergency disclosure in accordance with section 1317AAD of the [Corporations Act]”. It is now common ground that the letters of 29 April 2024 were not notices for the purposes of s 1317AAD(2)(c), but Mr Harmer and Harmers assert the letters “refer to disclosures that qualify for protection under s 1317AA(2) of the [Corporations Act]”.

17    Again, in circumstances to which I will return in detail, Harmers took the course of releasing a media statement in the following terms:

Harmers Statement Super Retail Group

Monday, 29 April 2024

Prior to Friday’s ASX announcement by Super Retail Group Limited (“SRG”), Harmers Workplace Lawyers (“Harmers”) had been approached by a number of present SRG employees very concerned about crucial governance issues at the company.

To date, Harmers currently acts for four clients who are whistleblowers against SRG within the meaning of the Corporations Act 2001 (Cth) (“Corporations Act”). Since Friday’s announcement, we have been approached by a further number of current and ex employees with similar concerns.

We are confident that other current and former SRG staff will support our clients' claims.

A third party, not associated with SRG, has now also come forward to us with key evidence about the previously undisclosed personal relationship between SRG’s CEO, Anthony Heraghty and his former direct report, and SRG’s former CHRO, Jane Kelly.

Our two clients, who we assume Friday’s ASX announcement was aimed at, have each made Protected Disclosures within the meaning of the Corporations Act, within recent months, to the non-conflicted members of the SRG Board and, in one case, to SRG’s external auditor at the time, PricewaterhouseCoopers.

Friday’s ASX announcement, and subsequent media coverage initiated by SRG, amounts to the victimisation of these whistleblowers, and is causing them additional damage.

One of our clients has supplied SRG with a draft of a proposed Statement of Claim. That document raises a range of serious governance and conduct issues within SRG. The document has been selectively misrepresented in Friday’s ASX announcement by SRG. Only one aspect of the governance issues raised in the draft statement of claim relates to the personal relationship referred to within SRG’s announcement. However, SRG seems exclusively focused on this issue.

For clarity, SRG as recently as this month denied the existence of any such relationship of any kind.

When Harmers pointed out that it had clear proof of an intimate relationship, and thus a significant unreported conflict of interest, SRG’s position immediately shifted.

As of last Friday, SRG revealed to certain of its staff that a relationship does now exist between Mr Heraghty and Ms Kelly – but SRG now alleges only from January 2024. However, even from that date, such a relationship carried significant conflicts of interest.

One of our clients made a whistleblower complaint in November 2023, via the internal whistleblower platform Whispli, concerning the longer term existence of the relationship and its impact on governance issues - but that complaint was removed from the Integrity Officer and the Head of Risk and given to HR management answering directly to Ms Kelly.

The whistleblower who has served the draft Statement of Claim has provided a medical report and detailed calculations, relating to loss of potential income, justifying the quantum of the claim. Also, our clients offered to confidentially settle this matter for sums less than one third of the dollar amounts in the SRG announcement.

SRG is well aware that this is not a “shakedown", but a justifiable legal claim for damages, being deliberately misrepresented.

Friday’s announcement had a material impact on SRG’s share price throughout the day. SRG has been well aware for over a week of the information it released last Friday, yet it waited.

The Board of SRG has allegedly known of the relationship since December 2023 – despite SRG’s strident denials of that very relationship until as recently as this month.

The SRG announcement also did not reveal that the litigation will extend to Mr Heraghty personally as CEO. That information appears to have been separately provided to the media and not the ASX, and appears only in more recent articles. That does not coincide with our understanding of continuous disclosure obligations under the ASX Listing Rules and the Corporations Act.

The deliberate misrepresentations by SRG, and an internal campaign of suppression via fear, is threatening the safety of the whistleblowers concerned and a number of SRG staff.

For this reason, two of the whistleblowers have today given notice to the company of the need for Emergency Disclosure under the Corporations Act in the interests of their safety. This is designed to offer a higher level of protection to these whistleblowers now that the matter is public.

Harmers Workplace Lawyers

Media Contact

Anthony McClellan

AMC Media

…

(Emphasis added).

18    Although it is not in dispute the media release was not an emergency disclosure, Ms Farrell and Ms Berczelly both gave unchallenged evidence, which I accept, that they both would have authorised the media statement regardless of whether it qualified for protection as an emergency disclosure because they felt it was necessary to mitigate the damage being done to their reputations, mental health and physical and psychological safety by the publication of the ASX Announcement and what they considered was “backgrounding” of the media by persons acting or purporting to act on behalf of the SRG Parties. It is unnecessary for me at present to make any finding as to whether such “backgrounding” was taking place.

19    In any event, Allens responded by asserting that SRG had “serious concerns” that the media statement “does not constitute an emergency disclosure within the meaning of the [Corporations Act], contains defamatory imputations in respect of various individuals and includes confidential information that was provided to your client on a without prejudice basis during mediation on 17 April 2024”. SRG further asserted that there was “broad public dissemination of the [media statement], including its republication in major media publications such as the Australian Financial Review (AFR), The Australian and the Age”.

20    On 3 May 2024, and purportedly because of the authorisation by Ms Farrell and Ms Berczelly of the media statement published by Harmers, SRG terminated both Ms Farrell’s and Ms Berczelly’s employment. A fact in issue in the Employment Case and the Berczelly Case is whether SRG was entitled to treat the authorisation of the publication of the media release as a repudiation of those employment agreements.

21    Settlement discussions then ensued as detailed in the CJ, including “without prejudice” discussions which took place over 4 and 5 May 2024. On 4 May, the topic of Harmers ceasing to act in relation to disputes against SRG generally was canvassed. It is evident (unsurprisingly) that SRG wanted to resolve all relevant disputes if it could. There is no need to make a finding as to how the topic of Harmers acting for others against SRG was introduced (and the only documentary record is not pellucid): what matters is that Mr Harmer stated that Harmers would agree to cease acting for other individuals who had been in contact with Harmers and not to take on the representation of anyone else who approached Harmers in the future to act against SRG for a period of time, accepting that it would represent “a conflict”. This was confirmed in an email the following day where Harmers represented it was prepared not to act against SRG for a period of six years as part of a settlement package, stating that Ms Farrell and Ms Berczelly requested that the SRG Parties “not underestimate the value of this arrangement”.

22    At the same time, SRG was demanding the media statement be retracted as part of any settlement framework, although Mr Harmer indicated his clients would not agree. In this regard, it is worth recalling that the representations made in the media statement extend beyond the claims of Ms Farrell and Ms Berczelly.

23    In any event, Ms Millen conveyed a without prejudice offer from SRG and, as was explained in the CJ, Mr Harmer sent her an email on 6 May 2024 in which he stated that he was instructed to accept SRG’s offer, “subject to deed”, and a text message to the same effect. It is now said by Ms Farrell and Ms Berczelly that a binding agreement to resolve the disputes with SRG came into being upon conveyance of the first of these alleged communications of “acceptance” by Mr Harmer on 6 May.

24    A dispute has now arisen about whether what was exchanged on 6 May amounted to a consensus that fell into either the second or third category explained in Masters v Cameron (1953) 91 CLR 353, and this controversy constitutes the ambit of the dispute in the Settlement Case.

25    Returning to the narrative, on 9 May, Allens sent two draft deeds to Harmers – one between SRG and Ms Farrell and Ms Berczelly, and another between SRG and Harmers. The draft deed with Harmers included an obligation on the part of Harmers to retract the media statement and a promise by it not to act against SRG. Six days later, Harmers responded with a single draft deed, to which Harmers was proposed to be a party. That draft deed had several features that merit remark:

(1)    Harmers promised to remove the media statement from its website and to publish a “Retraction Statement” on its website (cl 4.3(a));

(2)    Harmers promised not to republish the content of the media statement, except in certain circumstances, including for the purpose of making a claim against any SRG-related person who did not provide Harmers with a release (cll 4.3(b); 9(c)(i), (ii); 12.2(e));

(3)    Harmers agreed not to act against SRG for a period of six years from the date of the deed (cl 5);

(4)    Harmers sought to be the beneficiary of a release and a covenant not to sue by SRG and related companies from all claims connected with or arising from the media statement (cl 7.3(c); cl 8(c));

(5)    Harmers was sought to be the beneficiary of a promise by SRG that SRG would keep confidential “any allegations raised by” SRG against Harmers (cl 12.1(d)).

26    SRG did not agree to the terms of Harmers’ draft deed and, on 22 May, sent Harmers a “final offer” on the terms contained in the original two deeds Allens had sent to Harmers on 9 May with some minor amendments. One must proceed on the basis that by use of the expression “final offer”, those acting for the SRG Parties meant what they said and were representing the true then position of their clients: see J Sher, “My Final Offer!”: The Ethics of Negotiation”, Brief (Law Society of Western Australia, August 2015) (at 4).

27    This final offer was refused and, on 23 May, Allens communicated SRG’s concern that the apparent conflict between Harmers’ own interests and those of its clients “is preventing the resolution of the dispute between our clients on agreed terms [or] otherwise expeditiously and without recourse to litigation”. The letter stated that “it appears to our client that it is highly likely that this conflict will operate as an ongoing barrier to the resolution of this dispute given the underlying circumstances that appear to have created it [i.e. the publication of the [media statement]]”. I presume this comment was directed to a failure to be able to give disinterested advice on the “final offer” which had already been rejected, given the instructions given by the SRG Parties as to the finality of their position as to settlement just days before. It was not explained how or why the conflict was then perceived to be an “ongoing barrier” to a settlement on different terms (although there may be a reason for the apparent shift of position by 23 May and nothing presently turns on this point).

28    Harmers provided Allens’ letter to both Ms Farrell and Ms Berczelly and a principal of Harmers, Ms Emma Pritchard, told Ms Farrell that if defamation proceedings were commenced against Ms Farrell and Ms Berczelly, then Ms Farrell would have a potential cross-claim against Harmers (as it had published the Harmers Statement and Ms Farrell could not rely on any protection that would have applied if that statement was an emergency disclosure). As I note below, I am satisfied that Ms Farrell and Ms Berczelly were also made aware of this aspect of the “asserted conflict” by counsel. Having said this, on 24 May, Harmers wrote to Allens rejecting the suggestion that there was a conflict between its interests and the interests of its clients (which, although expressed in terms of denying the existence of any conflict, I would infer amounted to a contention that fully informed consent had been given by Ms Berczelly and Ms Farrell that they were prepared to waive the issue of conflict that had then been identified).

29    This is where the matter apparently rested until 12 June, when the members of the SRG board (through specialist defamation solicitors) sent Ms Farrell and Ms Berczelly what is said to be a “concerns notice” under Pt 3, Div 1 of the Defamation Act 2005 (NSW). That notice complained of various defamatory imputations conveyed by the media statement. It threatened the commencement of defamation proceedings.

30    At around this time, Ms Farrell participated in a conference with senior and junior counsel and her solicitors. Junior counsel referred to a conflict or potential conflict with Harmers as “crystallising” and Ms Farrell recognised the potential for a claim against Harmers in relation to any loss suffered by her because of the publication of the alleged defamatory publications and the resulting termination of her employment.

31    On 28 August, a further “concerns notice” was sent to Mr Harmer in his personal capacity.

B.2    Particular Findings Concerning Ms Farrell and Ms Berczelly

32    As I explained in Section B of the CJ, Ms Farrell was employed as the Chief Legal Officer and as a company secretary of SRG, while Ms Berczelly was the General Manager, Group Secretariat and Corporate Legal.

33    Ms Farrell has been admitted as a solicitor for well over a quarter of a century and worked, among other places, at Mallesons Stephen Jaques and Freehills in their respective corporate (mergers and acquisitions) teams. At Freehills, she was also a member of the head office advisory teams, which specialised in providing corporate governance and related advice to listed entities. From late 2009 until late 2011, she was the Group Company Secretary at Westpac. She then joined Amcor Limited as their Vice President & General Counsel for Corporate and later was appointed the Deputy Group General Counsel & Company Secretary for IAG Limited (and in late 2017, became the Acting Group General Counsel & Company Secretary).

34    Ms Berczelly has the distinction of holding a Bachelor of Laws with first class honours from the University of Sydney, which she obtained in 2006. In 2007, she was admitted as a solicitor in New South Wales, and was admitted to the New York Bar in March 2015. Prior to joining SRG, she worked predominantly in the corporate teams of large national and international law firms gaining extensive experience across a broad range of industries in both public and private mergers and acquisitions, equity capital markets transactions, corporate restructures, securities law and corporate governance.

35    Ms Farrell and Ms Berczelly are both highly accomplished, experienced, and sophisticated commercial solicitors who each held, at relevant times, an unrestricted practising certificate pursuant to s 44(4) of the Legal Profession Uniform Law (NSW) (although Ms Berczelly’s certificate has now expired). Appropriately, the SRG Parties accept in their submissions that “each of Ms Farrell and Ms Berczelly are plainly well-qualified to understand issues of conflict in the ordinary course of legal practice”. Although this may be somewhat of an understatement as their professional experience demonstrates they have acquired a sophisticated and practical understanding of conflicts of interests and would, by reason of this experience (and subject to being properly informed), be well-equipped to make decisions as to waiver of any conflict between their interests and the interests of their representatives.

36    In the affidavit material filed before the hearing it was apparent that neither woman received independent legal advice, although advice was given to them that they ought to receive such advice. It was also apparent that well before the hearing they each had the benefit of advice from counsel. In relation to the initial advice received from counsel, there was a suggestion the evidence was incomplete because it did not detail the communications made by counsel and that the failure by Ms Farrell, Ms Berczelly and the solicitors to adduce such evidence in-chief, should lead to an inference being drawn that they feared to do so: Commercial Union Assurance Co of Australia Ltd v Ferrcom Pty Ltd (1991) 22 NSWLR 389 (at 418–419 per Handley JA, with whom Kirby P agreed). It is trite that whether such an inference is to be drawn depends upon all the circumstances. Although the precise advice given is not detailed and the three barristers are briefed by Harmers (and particularly given advice was given by a member of the inner bar), there is no reason to suppose the clients would not have received appropriate legal advice as to the existence of the conflict (as it was then perceived) and as to their legal position. I refer to the conflict as it was then perceived because if one goes to the letter from Allens of 23 May, and the response the next day, the ordinary meaning of the conflict identified appears to relate to the civil liability of Harmers as a publisher of defamatory material and the attempt to procure releases for such liability.

37    On the present state of the evidence, however, I was satisfied Ms Farrell and Ms Berczelly have received complete and thorough advice in relation to the full extent of all conflicts that have arisen in relation to any failure of Harmers to advise them that the media statement was not, as was apparently intended, an emergency disclosure (including as a consequence of the authorisation given by Ms Farrell and Ms Berczelly of publication of the media statement being characterised by SRG as repudiatory conduct).

38    Although it was done at the eleventh hour, advice which cannot be critiqued as lacking in independence has been belatedly but sensibly obtained. Whatever shortcomings may have existed at an earlier time to appreciate and articulate the full extent of the conflicts, Ms Farrell gave oral evidence that she had prepared a brief and thereafter obtained advice from senior counsel, Mr Jeremy Giles SC (retained by independent solicitors) the day before the hearing. Ms Berczelly also obtained advice from Mr Giles. It suffices to find that after having been apprised of the conflicts that had arisen (as now fully articulated by the SRG Parties) and the scope of their potential rights, they both steadfastly wish to retain their current solicitors. It is worth stressing that have both reached this considered view in the light of properly informed advice by experienced and independent senior counsel. In this regard, I have no doubt the advice from Mr Giles would have thoroughly canvassed their rights in relation to all potential liabilities arising from the media statement.

39    Apart from Ms Farrell and Ms Berczelly reposing trust and confidence in their solicitors , they believe they will not be able to establish any similar connexion with other solicitors. Despite submissions of their senior counsel to the contrary, there is evidently an emotional dimension to the relationship which is regarded by them as important given the extent of the stress they are experiencing. Both ladies have been unemployed since May 2024 without the capacity to work, and although they place some value in the deferred fee arrangement they have struck with Harmers, I do not consider that their belief they will not be able to access any similar arrangement with other solicitors is sufficiently based on objective facts proven in the evidence.

40    The proliferation of adjectival disputation in this matter, including an interlocutory application relating to suppression orders; the ordering of two separate preliminary questions and an application for leave to appeal have already occasioned significant expense, a proportion of which would be thrown away in the event they were required to retain new solicitors (although this prejudice would be significantly ameliorated in the event the same barristers were briefed). Similarly, there would be some disruption to the orderly preparation of the matter occasioned by new solicitors having to become involved but again this could be minimised (but far from eliminated) by a continuity of counsel.

41    Although I am not satisfied on the evidence that if an injunction ran it would cause each of Ms Farrell and Ms Berczelly to suffer “serious mental harm and prevent them from being involved in these proceedings and, for Ms Berczelly, in pursuing the Berczelly [Case] as well”, I do accept the unchallenged evidence that the proceedings have caused, and are causing, real vexation and stress and I further accept that being deprived of their solicitors of choice is likely to exacerbate this vexation and stress materially.

C    THE RELEVANT LAW

C.1    The Test

42    Save as to one (as it turns out immaterial) matter, the applicable principles are clear and were not in dispute.

43    As I explained as part of the Full Court in Porter v Dyer [2022] FCAFC 116; (2022) 402 ALR 659 (at 679–680 [113]) (in observations with which Besanko and Abraham JJ agreed):

(1)    the Court has an implied jurisdiction to ensure the due administration of justice, to protect the integrity of the judicial process and to restrain legal representatives from acting in a particular case, as an aspect of its supervisory jurisdiction;

(2)    the relevant test is whether a fair-minded, reasonably informed member of the public would conclude that the proper administration of justice requires that a representative be prevented from acting in the interests of the protection of the integrity of the judicial process and the appearance of justice; and

(3)    the power to restrain is an exceptional one and should be exercised with caution.

44    As to the third point, as Pagone J noted in Finch v Heat Group Pty Ltd (No 2) [2016] FCA 791; (2016) 353 ALR 193 (at 198 [9]):

It is a high test with a heavy burden imposed upon a party making the application. The jurisdiction has been described as “extraordinary and protective” (Woodgate v Leonard [2007] NSWSC 495… at [37]), of an “exceptional nature” (TJ Board & Sons Pty Ltd v Castello [2008] VSC 91 at [30]) and to be applied only in a “clear” case (Bransdon v Davis & Gilbert (2007) 37 Fam LR 555; 212 FLR 28; [2007] FamCA 579 at [70]): see also GE Dal Pont, Lawyers’ Professional Responsibility (Thomson Reuters, 5th Edition) [17.20], p538.  There are many reasons for a heavy burden to be satisfied by the party making such an application.  One reason is that a court should not make an order that interferes with the relation between the opposing party and that party’s chosen and trusted legal practitioners.  Public confidence in the administration of justice depends in part upon litigants being able to choose who they have to represent them and in whom they place their trust and confidence.  The proper administration of justice is assisted by trust and confidence existing between litigants and their legal representatives.  The legal practitioner plays a crucial role in conveying the client’s case to a court for adjudication and the confidence and trust of the client in the chosen legal practitioner is an essential aspect of that role. An order restraining a legal practitioner from acting for a client interferes with that role, adversely affects the client and may unjustifiably interfere with the proper conduct of the client's case. It may also have the effect of causing irreparable harm to the client’s case and is apt to undermine the proper administration of justice in all but the clearest cases. To restrain the legal practitioners from acting for a party in continuing proceedings may also confer an unjustifiable forensic advantage upon the party seeking the restraint.

45    As to the second point, the only possible issue of confusion in the case is whether the test to be applied is whether it is sufficient for relief that the hypothetical referee “might conclude” what the proper administration of justice requires or rather it is necessary that the hypothetical referee “would conclude” what the proper administration of justice requires. Apart from the fact that the Full Court explained the “would conclude” test is favoured by the weight of authority, the test expressed in this way also better reflects and gives effect to the exceptional nature of the power. A test requiring a high degree of satisfaction is apposite when one considers the rationale for the caution in exercising the power explained, with respect, clearly in Premier Capital (China) Ltd v Sandhurst Trustees [2012] VSC 611 (at [2] per Pagone J):

Applications by opposing parties for the removal of their opponent’s lawyers should not be made lightly and need scrutiny. The applicant who has no personal interest to protect (such as in the preservation of confidential information from a previous retainer) needs to show that the removal is necessary. A party seeking the removal of an opponent’s legal practitioner is not seeking to exercise a right but moving the Court to exercise its power over its own officers but doing so against the wishes of the opponent in adversarial proceedings and in a context in which a successful application may cause inconvenience to the opponent and a forensic advantage to the moving party. An applicant may have obligations to the Court when making such applications to satisfy the Court that the application is necessary and not made for collateral advantage. Care must be taken to ensure that applications for removal of practitioners do not become a means by which opposing parties obtain forensic advantages which detract from, rather than advance, the policy for which the jurisdiction is properly to be exercised. It is, therefore, essential that an injunction to restrain a practitioner from acting on behalf of a client be firmly based upon the need for that to occur in the administration of justice.

C.2    The Attributes of the Fair-Minded, Reasonably Informed Member of the Public

46    As has been remarked more than once in the different context of apprehended bias, a powerful criticism of the relevant test is that it requires consideration through the attribution of knowledge of matters to a hypothetical lay observer notwithstanding this amounts to a fiction used to connote a degree of detachment or objectivity to a process which inevitably involves the application of normative standards of behaviour determined by the Court itself: Commonwealth Bank of Australia v Jackson McDonald (a firm) [2014] WASC 301 (at [24] per Martin CJ); McKenzie v Cash Converters International Ltd (No 3) [2019] FCA 10 (at [28]–[29] per Lee J)

47    As Professor Young notes in his article “The Evolution of Bias: Spectrums, Species and the Weary Lay Observer” (2017) 41 Melbourne University Law Review 928 (at 929):

We may be nearing (or perhaps returning to) the point of admission that in many circumstances the ‘lay observer’ test, despite the deliberate terminology, is in truth the law’s own sophisticated assessment of what the system can bear.

48    It is not in dispute that the fair-minded observer in this case knows all the circumstances of the case and is neither complacent, nor suspicious but, like with apprehended bias, the hypothetical observer must also be attributed with a knowledge and understanding of the culture and norms regulating the legal profession and what the administration of justice requires in the circumstances of the case. In this regard, the construct required to be applied is open to the criticism of attributing to the fair-minded observer a detailed knowledge of the workings of the legal profession an outsider may not have: for a discussion of these matters see Australian Law Reform Commission, Judicial Impartiality: The Fair-Minded Observer and its Critics (Background Paper J17, April 2021).

49    In any event, the law is to be applied as stated in the authorities and I am required to examine the matter through the lens of the hypothetical referee armed with the necessary knowledge to make a reasonable assessment.

C.3    A Discretionary Decision?

50    I was taken to two decisions suggesting that the “inherent” jurisdiction to retain a solicitor from acting is “discretionary”. In reliance on what was said by Brereton J in Kallinicos v Hunt [2005] NSWSC 1181; (2005) 64 NSWLR 561 (at 586 [92]), Lyons J in Dugan Process Holdings Pty Ltd [2021] VSC 555 (at [63]) said:

Further, the Court’s inherent jurisdiction to restrain a solicitor from acting is discretionary. In exercising that discretion, the Court must take into account the prima facie right of a party to be represented by the lawyer of his or her choice, the inconvenience, cost and disruption which might be caused in requiring a party to change lawyers, and the exceptional nature of the Court’s jurisdiction.

51    Although it is unnecessary to decide for present purposes, I confess that I have some misgivings as to whether this characterisation of the nature of the decision required is correct. The exercise of a judicial discretion generally allows a judge to make a choice between lawful, but different courses of action and the concept necessarily implies choice: R&B Investments Pty Ltd (Trustee) v Blue Sky (Reserved Question) [2024] FCAFC 89 (at [3] per Murphy, Beach, Lee JJ).  

52    The process upon which I am presently engaged seems to me better characterised as an evaluative normative assessment, albeit conducted by reference to the hypothetical construct of the reasonable observer. If I am satisfied based on the evidence that a fair-minded, reasonably informed member of the public would conclude that the proper administration of justice requires a solicitor be prevented from acting to protect the integrity of the judicial process, it does not seem to me that there is any discretion then involved as to whether relief should follow. If the Court is satisfied that the step is required, then the only option is to make an order providing the solicitor not act. Hence, any review of the decision whether to grant such an order would be subject to review by reference to the correctness standard. The analogy to the nature of a determination as to the actual or apprehended bias of a judicial officer is far from perfect but illustrates the point: the disqualification is required to ensure justice is done or is seen to be done.

53    The expressions in the cases that the power to restrain is an exceptional one and should be exercised cautiously are, it seems to me, not admonitions as to how the discretion must or should be exercised, but rather reflect that such an application is a serious matter and the reasons advanced in support of it need scrutiny given that if an order is to be made one is required to reach the level of satisfaction the hypothetical referee would conclude that the proper administration of justice requires that a representative be prevented from acting in the interests of the protection of the integrity of the judicial process and the appearance of justice.

54    For reasons that will become evident, it is unnecessary to express a concluded view in relation to this issue.

D     SUBMISSIONS OF THE SRG PARTIES

D.1    Particular Factors Affecting the Exercise of the Court’s Discretion

55    The legal principles explained in Section C.1 above, were expressed at relatively high level of generality. In their written submissions, the SRG Parties placed non-exhaustive emphasis on six matters (or relevant factors):

(1)    The weight which is to be given to the public interest in a litigant not being deprived of their choice of legal representative without due cause, recognising, however, that the right to one’s choice of a lawyer is not absolute as the wish of a client to retain a lawyer and the lawyer’s wish to continue to act will not generally be sufficient to persuade a court not to restrain by injunction, where otherwise it may be thought necessary to do so.

(2)    The timing of an application to restrain a legal practitioner from acting and, relatedly, the cost, inconvenience or impracticality of requiring lawyers to cease to act.

(3)    The possibility of a claim for contribution by a client against the lawyer, which weighs in favour of restraining that lawyer from continuing to act.

(4)    The provision of independent advice to a client in relation to potential conflicts between that client’s interests and her lawyer’s duties will not necessarily cure the public concern for the proper administration of justice, the need to protect the integrity of the judicial process and the appearance of justice.

(5)    The content of applicable professional conduct rules including the fundamental ethical obligation of a solicitor to avoid any compromise to their integrity and professional independence (Legal Profession Uniform Law Australian Solicitors’ Conduct Rules 2015 (SCR), r 4.1.4) and the prohibition on public comment by a solicitor in respect of current proceedings which prevents a solicitor publishing any material concerning current proceedings which may prejudice a fair trial or the administration of justice (SCR 28.1) (which is an obligation distinct from, but coherent with, the law of contempt concerning the protection of litigants from improper interference with the litigant’s freedom to choose whether or not to initiate, continue or discontinue legal proceedings).

(6)    Whether the solicitors’ ongoing involvement in a case in circumstances where independence is lacking may adversely impact upon the parties’ ability to compromise a proceeding.

D.2    Why it is Asserted an Injunction Should Run

56    In the end, the SRG Parties placed primary emphasis on the assertion that the Court would readily conclude that Mr Harmer and Harmers have a financial and reputational interest in the proceeding and its outcome, beyond their ordinary financial interest in the payment of their fees and would “be required to defend their professional conduct”, particularly where “their conduct [is] integrally identified with an issue put against” their client(s).

57    This is said to be apparent because: (a) the media statement is made by Harmers and is published on a website controlled by it; (b) the failure to warn Ms Farrell and Ms Berczelly that the media statement would not be a protected disclosure; (c) the impact of the media statement on Ms Farrell’s and Ms Berczelly’s employment relationship with SRG; (d) “the obfuscation” which attended Harmers’ engagement with Allens as to whether the media statement was intended to be an emergency disclosure; (e) the attempt by Harmers to obtain its own protections in respect of claims which may arise from the making of the media statement; (f) the bargaining of Harmers in relation to the other foreshadowed claims alluded to in the media statement; (g) the concerns notice issued to Mr Harmer which raises the possibility of an extant defamation claim against him; (h) from the risk the media statement may constitute a contempt, in exerting improper pressure on one or more of the SRG Parties or it may otherwise contravene SCR 28.1; (i) from the failure of Harmers to ensure that Ms Farrell and Ms Berczelly were offered independent legal advice; and (j) from Harmers’ retainer of the counsel briefed to represent Ms Farrell and Ms Berczelly also to represent Harmers’ interests on the cross-claim.

58    By the end of oral submissions, however, it is fair to say the real focus of the SRG Parties became: (a) what was contended as being the failure by Harmers to give advice about the potential for defamatory imputations to be conveyed by the publication of the media statement and the consequent exposure of their client to compensatory damages; and (b) the failure to advise their clients that the publication would not amount to an emergency disclosure and hence could not only be relied upon as a defamatory matter, but also the authorisation of the publication by Ms Farrell and Ms Berczelly might be relied upon by the SRG Parties as evincing an intention not to be bound by their contractual duties owed to SRG. As it happens, no oral submissions were advanced relating to issues of contempt and no findings were urged to suggest that the solicitors acted contrary to any professional conduct rules.

59    In any event, the concerns of the SRG Parties are said to be heightened by the denial by Mr Harmer and Harmers in their defence as to the existence of any financial and reputational interest in this litigation, being a denial certified by Mr Harmer on behalf of all of the cross-respondents, in the absence of Ms Farrell and Ms Berczelly obtaining separate representation (which may be a basis for cross-examination as to credit in any trial of the substantive issues). Mr Harmer, it is said, would necessarily be expected to give evidence on the Settlement Case and on the Employment Case. In this last respect, it is said further he will be able to give important evidence as to the reasons why Ms Farrell authorised the publication of parts of the media statement.

60    The Court’s adjudication of the parties’ competing positions in relation to whether the authorisation of the media statement amounted to a repudiation of Ms Farrell’s and Ms Berczelly’s employment contracts will require it to consider the event of publication, why it arose, and was authorised. This is said to place Mr Harmer in the invidious position of defending the propriety and lawfulness of the media statement “relative to Ms Farrell’s and Ms Berczelly’s employment obligations”, a fortiori where it is now accepted the media statement was not a protected disclosure, meaning that the SRG Parties were not prevented, under Pt 9.4AAA of the Corporations Act, from enforcing contractual rights against Ms Farrell and Ms Berczelly in connexion with the media statement. This difficulty is said to be emphasised rather than diminished by Ms Farrell’s and Ms Berczelly’s retrospective, hypothetical evidence that each of them would have approved the statement irrespective as to whether they believed it was protected.

61    Further, it is submitted that the Settlement Case will also necessarily require the Court to interrogate and scrutinise the role of the solicitors in the settlement negotiations where Harmers has a further pecuniary interest in the outcome of the case (including because the Court will be adjudicating upon the precise contents of any contractual terms of which the Harmer Parties are beneficiaries) and where the propriety and lawfulness of the solicitors’ conduct in publishing the media statement will arise.

62    Again, during the course of oral submissions, these submissions were not repeated in terms of lawfulness. Further, as was again developed during the course of oral submissions, the terms of the settlement agreement pleaded in the Settlement Case involved a contention that Harmers was not a party to the agreement notwithstanding: (a) Harmers was providing an apparently enforceable promise that it would not conduct litigation on behalf of third parties for a period for the benefit of SRG; and (b) the documents passing between the parties after the settlement was apparently struck emanated from both Allens and Harmers contemplating that Harmers would be a party to an instrument recording or constituting the agreement.

63    The SRG Parties submitted it was decidedly odd in these circumstances that the agreement pleaded was one which did not bring into focus that Harmers was a necessary and proper party to the relief sought by the Settlement Case.

64    As to the weight to be afforded to Ms Farrell’s and Ms Berczelly’s desire to maintain their current legal representation, Ms Farrell’s and Ms Berczelly’s evidence as to their dependence upon the solicitors; their decision to eschew taking independent advice; and their personal desire to retain the solicitors may be accepted. But this, it is said, is an insufficient basis to put to one side the troubling circumstances that the Court is charged with – namely, the determination of litigation, in which the solicitors for Ms Farrell and Ms Berczelly propose “to conduct a highly sensitive and complex case on their clients’ behalf, without even recognising their own personal interests in the outcome of that litigation”.

65    The SRG Parties urge the Court to find the solicitors’ “pecuniary and reputational interests in this litigation are obstacles to the provision of legal services accompanied by the requisite degree of independence”.

E    CONSIDERATION

66    It is well to commence by reference to an important matter of context. As noted above, I fully accept that Ms Farrell and Ms Berczelly rationally formed the view that persons acting or purporting to act to promote the interests of SRG have suggested to at least one journalist that SRG believes that Ms Farrell and Ms Berczelly were engaged in some form of “shakedown” of a public company.

67    The basis of this subjective belief is well illustrated by having reference to two articles in evidence.

68    The first is an article published in The Australian on 27 April 2024, authored by that newspaper’s Senior Business Reporter. That article includes the following:

Shopping giant Super Retail has launched an astonishing pre-emptive attack on a $30m-$50m legal claim from two executives it believes is designed to “shake down” the company, with accusations chief executive Anthony Heraghty had a secret affair with his human resources chief.

…

The company said an external investigation launched in December had cleared Mr Heraghty and Ms Kelly of having an affair and any claims of bullying. Ahead of a snap meeting with the company’s lawyers, sources close to Super Retail on Friday accused the employees behind the legal action of using “shake down” tactics.

…

Internally, Super Retail believes it is the victim of baseless allegations dressed up as potent legal threats and wielded to trigger a payday for the law firm and its clients.

Rather than wait for court documents to land, it made the decision to alert the stock exchange. “It’s like blackmail or shake down,” a source close to Super Retail management said. The offensive strategy adopted by the company is reflective of Mr Heraghty’s management style.

69    A further “exclusive” article was published by the same writer the following day which included:

Shopping giant Super Retail Group offered to settle a legal claim from at least two rogue executives over an alleged secret affair between its chief executive and its HR manager, but it was rejected after the offer fell well short of a $50m payday they expected.

Harmers Workplace Lawyers, a specialist workplace firm that over the past decade has carved out a niche in certain areas of industrial relations including around sexual harassment, engaged in mediation talks with Super Retail earlier this year as it sought losses and damages on behalf of its clients that could be worth $30m to $50m.

Those mediation talks later failed, The Australian can reveal, with offers of a settlement raised by the company but not accepted.

The failure of mediation to find a workable solution and growing fears it was being held to ransom on baseless allegations led Super Retail on Friday go on the offensive by revealing to the Australian Stock Exchange that it was being pursued by lawyers acting for two current, female Super Retail executives making a number of scandalous claims and potentially chasing as much as a $50m payout.

70    It was against the background of these highly publicised suggestions of a “shakedown” and “ransom” that Harmers sent the letters of 29 April referring to a purported “emergency disclosure” under s 1317AAD of the Corporations Act and the media statement was released.

71    As noted above, it is not my job, for present purposes, to form judgments in relation to whether anyone associated with SRG was involved in the backgrounding of a journalist or journalists. Nor is it my role to judge whether the approach taken by Harmers on the instruction of their clients to seek to change the media narrative by publishing the media statement was wise or prudent. Indeed, making detailed findings in relation to these matters may well be unsafe on the basis of the limited material I currently have before me in relation to these issues.

72    What is presently relevant is that that there are two quite distinct aspects of the case primarily advanced on behalf of the SRG Parties connected to conflicts which have their origin in the publication of the media statement.

73    The first is a conflict arising from the possibility that defamation proceedings would be commenced by parties other than SRG against Ms Farrell, Ms Berczelly, and/or Mr Harmer (and the solicitors’ interests in avoiding any such direct liability of Mr Harmer as a publisher, or a liability of Harmers to their clients in contribution or indemnity). The second is that authorisation of the media statement will, given it was relied upon as repudiatory conduct, have real significance in the Employment Case as it was the basis upon which SRG terminated the employment of Ms Farrell and Ms Berczelly (when an alleged failure to advise may expose the solicitors to a claim in negligence).

74    It is worth dealing with each of these matters separately.

E.1    The Potential Claims of Third Parties

75    It is unnecessary for present purposes for me to reach a view one way or the other as to whether the imputations identified in the concerns notices were meanings conveyed by the media statement, whether serious harm ensued by their publication, or as to whether there are any defences apparently available to the publication of any defamatory meanings conveyed by the media statement.

76    In this regard, during the course of oral submissions, a substantial truth or justification defence was foreshadowed in the event that defamation proceedings were commenced. I noted that there was no reason to form a view, even a preliminary one, as to whether defamation proceedings would actually be commenced, or, if commenced, as to their prospects of success, or, as to whether (to defray any perceived possible liability arising from a successful defamation claim), a further defamation case against persons or persons backgrounding the media suggesting Ms Farrell, Ms Berczelly and Mr Harmer were engaged in a “shakedown” might conceivably ensue. All defamation related matters remain in the realms of speculation, except in one respect.

77    The SRG Parties submit, in my view correctly, the approach to any conflict must be applied realistically to a state of affairs in assessing whether it discloses a real conflict of duty and interest and not to something theoretical or a rhetorical conflict (referring to Boros v Pages Property Investments Pty Ltd [2021] NSWCA 288 (at [75] per Basten J, with whom Bell P and Meagher JJA agreed). I am satisfied the possibility of defamation proceedings giving rise to a claim for compensatory damages against Ms Farrell and Ms Berczelly as publishers of defamatory matter, which was published in circumstances where they were apparently advised no civil liability would result, sufficiently exposes Harmers to a claim by Ms Farrell and Ms Berczelly for contribution or indemnity such that it rises beyond some theoretical or rhetorical conflict. It is sufficient (as well as appropriate in the circumstances) to put this aspect of the conflict no higher than this expression of non-fanciful possibility. No party submitted to the contrary.

E.2    The Conflict and the Employment Case

78    To my mind, and this was reflected in the oral submissions, a presently more obvious conflict arises given that on 3 May 2024, SRG asserted to Ms Farrell and Ms Berczelly:

… [Y]our conduct in authorising the publication of the [media statement] (and the contents of it) evinces an intention to no longer be bound by your employment contract… and constitutes a repudiation of your Employment Contract.

In our previous letter, we gave you the opportunity to provide an explanation as to why you have not repudiated your Employment Contract. The Harmers letter confirms that you authorised the publication of the Harmers Statement and does not assert that the Harmers Statement was an emergency disclosure or otherwise provide any explanation as to why you have not repudiated your Employment Contract.

In these circumstances, SRG has decided to accept your repudiation and bring your employment to an immediate end, with effect from 5pm today, 3 May 2024.

79    As noted above, it is now common ground that despite advice given by Harmers to the contrary, the media statement was expressly not a protected disclosure, meaning that SRG was not prevented, under Pt 9.4AAA of the Corporations Act, from enforcing contractual rights against Ms Farrell and Ms Berczelly in connexion with the media statement.

80    Here, the chronology relating to the so called “emergency disclosure” assumes some significance.

E.3    The Chronology Relating to the Media Statement

81    It will be recalled that the ASX Announcement was made on 26 April. Although as I have already noted, Ms Farrell and Ms Berczelly were not named, they were identified by a journalist from the AFR who contacted Ms Farrell that morning to note that it was the journalist’s “… understanding you are one of the two staff” making the relevant claims. Shortly thereafter, Ms Farrell sent a communication to her solicitors, copied to Ms Berczelly, setting out in considerable detail what she contended were inaccuracies in the ASX Announcement.

82    The same day as the ASX announcement, Harmers “Workplace Lawyers” put out a statement noting that “[w]e can confirm that we are acting for several [SRG] employees. In response to the ASX Statement issued by [SRG] today, we believe it contains major inaccuracies. We have no further comment at this stage”.

83    What then occurred included publication of the two articles from The Australian to which I have already made reference. It appears that immediately after the online publication of the second article (which appears to occur at 6:25pm on 28 April 2024), Mr Harmer about an hour or so later, prepared a handwritten draft statement which he photographed and sent to his colleague, Ms Pritchard, and to Ms Farrell and Ms Berczelly. This handwritten document was then converted into a Word document and constituted a first draft of a proposed response. Later that evening, Ms Farrell and then Ms Berczelly made detailed markups to the draft, showing their active and considered participation in the preparation of the draft media statement. Notably, those changes went well beyond the superficial. Ms Pritchard also made suggested changes, and at 10:22pm that evening, Ms Berczelly sent an email to Ms Pritchard in the following terms:

Hi Emma,

Looks good to me. I only have two further thoughts:

1. Where we refer to the November whistleblower complaint, do we want to [include] to that report being a relationship that had been going on for a considerable period of time (and undisclosed) ... will perhaps then alert media to odd arrangement with agreeing the cute story around subsequently agreeing the relationship start date with the Board in December. Will just depend on what that whistleblower stated though on the length of the relationship.

2. If we add the words in green, probably need to change “its Board” to “the other Board members”?

Time is now needed to incorporate these latest developments into the claim against SRG, Mr Heraghty and its Board.

84    Mr Harmer was again involved in the process and made various comments. At 11:05pm that evening, Mr Harmer made comments about certain revisions and the evidence discloses that he sent it to “… Anthony on the understanding that we will need to further consider it overnight”. “Anthony” was clearly a reference to Mr Anthony McClellan who was engaged as a “Media Advisor”. Further communications occurred that evening, but the next relevant event occurred the following morning, at 7:01am on 29 April 2024, when Mr Harmer sent an email in the following terms:

Hi all - please consider whether you wish to seek the protection of a public interest disclosure under section 1317AAD of the Corporations Act - we would have to give Allens / HL notice for SRG that we are doing so due to lack of proper activity in response to our original PDs ( if more than 90 days old ) - query however whether SRG would use that notice to run interference - there are also questions as to whether we would strictly qualify with a short notice at this stage? (spirit and intent issue ?) - on balance , I am not sure that it is worth it but raise it for your consideration as it potentially adds an additional layer of protection and may more readily free up more information for the coming rounds - all the best - thanks - Michael.

85    Both the contemporaneous record and Ms Farrell and Ms Berczelly’s unchallenged evidence are consistent with the notion that they were intent on seeking to correct what they viewed as misinformation that had been communicated to the public via the ASX Announcement and the subsequent publicity, which they perceived had been part of a strategy engaged in by SRG to shape the public narrative. I am satisfied that the prospect of that communication amounting to an emergency disclosure came after they had reached their view that it was necessary for them to make public comment.

86    This conclusion fortifies the finding I have made above that I am satisfied they would have authorised a form of release made by Harmers on their behalf, settled with the assistance of the chosen “Media Advisor”, irrespective of whether or not it could be characterised as an emergency disclosure. Ms Farrell’s immediate response to the email extracted above, a few minutes after its receipt, was to indicate that “[w]e will now turn to look at the very good question [raised by Mr Harmer]”.

87    As noted above, Ms Berczelly and Ms Farrell did turn their minds to the question of whether or not the statutory provisions allowing for emergency disclosure were activated. By 7:26am on the same morning, Ms Farrell sent an email to Mr Harmer in the following terms:

Michael

We think that we seek protection under s 1317AAD(2) as an ‘emergency’ disclosure because Amelia has not yet reached 90 days for her disclosure to fall under ss (1). In addition to that, we both believe that there is firmly a substantial and imminent danger to the health and safety of us both – with the information they are leaking, we are all frightened of what they will do next. …

Interestingly, while we have to give them notice, it does not state how long before we release the information that we have to give that notice. While we can assume a court might imply a reasonable time period, in circumstances where the company is briefing the media in the background and journalists are changing their published stories every few hours to incorporate new information, we would argue that a reasonable time period is very, very short.

Is there something to be said for sending it to Allens, setting out we seek the protection and releasing 30 minutes later?

88    In response approximately ten minutes later, Mr Harmer said:

Thanks - yes - that all makes sense - query whether we wait 30 minutes as we have no realistic expectation that they will effect any redress or use the notice for other than to run interference ... thanks - Michael.

89    I can then pass over matters, including further proposed amendments, until 10:54am that morning. At that time, a solicitor for Harmers distributed a copy of what was described as “the third draft with Anthony McClellan’s comments in mark-up”. As senior counsel for SRG appropriately put it, this document incorporated a number of more serious and inflammatory contentions. For example, it was Mr McClellan that inserted the following:

(1)    “[S]ubsequent media coverage initiated by SRG, amounts to victimisation of these whistleblowers, and further breaches of the Protected Disclosures”.

(2)    A reference to “significant unreported conflict of interest”.

(3)    Two references to deliberate misrepresentations being made by SRG.

90    As can be seen from the final version reproduced above, the comments of Mr McClellan were incorporated in the final draft.

91    At 1:20pm, a letter was sent from Harmers to Allens providing notice that Ms Farrell intended to make an emergency disclosure, and immediately thereafter, a letter was sent to another firm of solicitors providing notice that Ms Berczelly intended to make an emergency disclosure. A little over 20 minutes later, the “Harmers Statement Super Retail Group” release, being the media statement as set out earlier in these reasons, was published on the website of the solicitors. About half an hour later, an email was sent from Allens to Harmers stating that it was not apparent that Ms Farrell had met the requirements for an emergency disclosure, and a similar communication was sent later that day by the other firm’s solicitors relating to Ms Berczelly.

92    On 1 May 2024, a further letter was sent by Allens to Harmers which, inter alia, asserted that SRG had serious concerns that the media statement did not constitute an emergency disclosure, contained defamatory imputations in respect of various individuals, and included confidential information. The letter sought clarification from Ms Farrell by 5pm that day as to whether matters relevant to the question of whether the Harmers statement would be a protected disclosure. Harmers responded to the letter sent by Allens that day, notifying that Ms Farrell and Ms Berczelly “have made a protected disclosure to ASIC” and that Ms Farrell and Ms Berczelly had instructed Harmers that it was “… not their current intention to make an Emergency Disclosure”.

93    Various communications then took place between the solicitors whereby SRG sought clarification as to whether the position of Ms Farrell and Ms Berczelly was that an emergency disclosure had been made.

94    At 11am on 2 May, an email was sent from Harmers to Allens stating that “our clients are not inclined to provide any further information given your clients’ propensity for victimising whistleblowers”.

95    The following day, separate letters were sent to Ms Farrell and Ms Berczelly by SRG stating, among other things, that the authorisation of the media statement evinced an intention for them no longer to be bound by their respective employment contracts, seeking an immediate response by 4pm that day.

96    Following the receipt of the letters and various other communications, a conference took place on 3 May where at least Ms Berczelly was in attendance. Unfortunately, I have only been provided with a redacted copy of the file note in evidence, so it is unclear whether Ms Farrell was also present, although the subject line of the email is “Farrell/Berczelly – file note”. In any event, the following representations are recorded (note that EGP refers to Ms Pritchard, and AB refers to Ms Berczelly):

EGP:

- Counsel concerned about a conflict of interest

- By reason of the fact that one of the reasons we indicated as to why we don’t want to be fully concessional about the issue about the ED is for many reasons, but also including the insurance aspect. May have to notify the insurer.

- Then issue of conflict with clients – arguably not acting in best interests.

- I said I know that AB said concerned about omission because of defamation reasons.

- I feel duty bound to raise that as something counsel raised.

- May be a conflict now.

AB:

- For fucks sake Emma seriously [crying]

EGP

- Not saying we are going to act on it.

- Just raising it.

- Still propose to write a letter in the way we said.

- Have a draft to you.

- Think we just dead bat.

- As long as you are both comfortable.

AB

- I am

EGP:

- Don’t mean to alarm you.

Good news – think they are clever in lobbing the bomb.

AB:

- Just bullies.

97    Later that day, Harmers responded to the letters rejecting the notion that their clients had repudiated their employment agreements and further stating that:

…[O]ur clients took steps to authorise the [media statement] in order to combat the adverse narrative which SRG had fed to the media and to mitigate the serious harm that our clients were continuing to suffer. The steps taken by our clients in that respect were an entirely reasonable attempt to protect their own health and safety and their reputations. The attempt by your clients to now utilise that to treat our clients’ authorisation of the [media statement] as a repudiation is disingenuous and opportunistic, and transparently amounts to further victimisation of, and adverse action against, our clients.

E.4    Nature and Relevance of Intention to Publish to Conflicts

98    It was not suggested to any of the witnesses called on behalf of Ms Farrell and Ms Berczelly that the letter from Harmers to which I have just made reference, was not an accurate representation of the matters that had activated Ms Farrell and Ms Berczelly to authorise the publication of the media statement in its final form.

99    As I noted above, letters from SRG were sent to each of Ms Farrell and Ms Berczelly stating SRG was terminating each of their employment on the basis that their conduct in authorising the media statement evinced an intention that neither would be bound by their employment contracts.

100    I have gone into the chronology at (perhaps unnecessary) length in order to do justice to the SRG Parties’ two broad assertions of conflict.

101    As to the failures on behalf of Harmers to give advice as to the potential for defamation proceedings, although the SRG Parties recognise that there was an evident determination on behalf of Ms Farrell and Ms Berczelly to publish a response, it submits that it was only in the context of the misapprehension arising as to it being an emergency disclosure that the media statement was made more inflammatory by Mr McClellan.

102    It seems to me, however, that if the SRG Parties were proposing to contend that there would have been a material difference in the approach that Ms Farrell and Ms Berczelly would have taken to the publication of the final draft of the media statement caused by the misapprehension it was an emergency disclosure (such as, for example, to reject Mr McClellan’s changes) that this is precisely the sort of matter that ought to have been put to them in cross-examination. The evidence as it stands is plain and is consistent with the contemporaneous record. Whether prudently or imprudently, they were fixed upon the media statement being released, including in its final form as settled by all concerned, in order to combat what they subjectively regarded as a misleading narrative that had been created by and on behalf of the SRG Parties.

103    As to the issue of repudiation, although it is said on behalf of Ms Farrell, Ms Berczelly and the solicitors in the written submissions that the question of whether there was a right to terminate will be assessed objectively by reference to the terms of the employment contracts, this is only partly correct.

104    I accept the submission made by the SRG Parties that it is evident that a “mere” honest misapprehension, especially if open to correction, will not justify a charge of repudiation: R & A Can Co Pty Ltd v Kotzman [2008] VSCA 68 (at [49] per Ashley and Kellam JJA, and Osborn AJA). Although this notion has typically fallen for consideration where the party allegedly repudiating has acted in reliance upon a misapprehension of the rights and obligations required by the contract, as the Court of Appeal in R & A Can noted, the state of the mind of the defaulting party can be a relevant factor and in Australia, as in England, it has been suggested that an aggrieved party should take steps to persuade a mistaken party of that party’s error if the counterparty wishes to rely upon that other party’s conduct as a repudiation of the contract: see DTR Nominees Pty Ltd v Mona Homes Pty Ltd (1978) 138 CLR 423 (at 432–433 per Stephen, Mason and Jacobs JJ).

105    Although all this may be accepted, it is not really to the point. Here, although there may have been a misapprehension as to the applicability of the emergency disclosure provisions, what Ms Farrell and Ms Berczelly were doing was taking a deliberate step that they thought was necessary to protect their interests, and they were determined to take that step. Although it is now accepted that the belated “thought bubble” of Mr Harmer, embraced by the clients, that the media statement would amount to an emergency disclosure was misconceived, the evidence of Ms Farrell and Ms Berczelly, which again I stress was unchallenged, is that they would have gone ahead irrespective of that misapprehension having arisen. More particularly, what Ms Farrell and Ms Berczelly were doing was giving express instructions and authorisation for the media statement to be sent out on their behalf to the extent that they could give such authority. Obviously enough, the media statement referred to other clients, and it was not within their power to disclose information which may be relevant to others, but no doubt they were entitled to act on the basis that Harmers had received appropriate authorisation from any other clients.

106    Against this background, given the way that Ms Farrell and Ms Berczelly have indicated they intend to confront the allegation that they engaged in repudiatory conduct, the SRG Parties put the matter too highly in saying that there will be a necessity for Mr Harmer and/or Ms Pritchard to give evidence in relation to the Employment Case. Ms Farrell and Ms Berczelly will run the case as they see fit and that approach has been outlined by their senior counsel. What is apparent is, after receiving independent advice, it appears they do not presently embrace the notion that it is necessary to call the solicitors, and no-one can force them to do so. To the extent it is necessary to form some sort of preliminary view as to the likelihood that the solicitors be called, what happened and what Ms Farrell and Ms Berczelly allege happened seems clear from both their sworn evidence and the documentary record. If, at the end of the Employment Case, and with a better understanding of that case, I am invited to draw inferences from the absence of any witnesses I will have to deal with those submissions on the merits, but it is far from presently clear to me why the solicitors would inevitably be called.

107    Although I accept there is a reputational interest in Harmers’ conduct relating to its advice concerning the risks of the media statement not being scrutinised, given what we already know about what happened and as to the contemporaneous intentions of the clients, I am far from convinced that this will cause any practical difficulty in the conduct of the Employment Case or in relation to forensic decisions being made as to who is to be called.

E.5    The Settlement Case

108    Having dealt with the two conflicts that received the most attention, it is then appropriate to next turn to the difficulties that have arisen in relation to the Settlement Case.

109    There is a current pleading that Harmers, who were providing a presumably enforceable promise by which it was bound, were not to be a party to the agreement now sought to be specifically enforced. Following this matter initially being raised by senior counsel for the SRG Parties, I pressed senior counsel for Ms Farrell and Ms Berczelly and the solicitors as to whether a specific performance suit could be properly constituted in the absence of all the parties to the agreement, and it struck me as intuitively strange, given the nature of the promise made by Harmers, that it was not a party to the agreement which was the subject of proposed equitable relief.

110    This did cause me some concern as it would, at least conceivably, be open for me to make a finding that relief ought not be granted because the suit was inappropriately constituted. In any event, I was informed today that an amendment is proposed by which Harmers is to become a respondent in the specific performance suit and that the solicitors, upon being joined, will file a consenting or submitting appearance. With respect, that seems to me both necessary and proper for the suit to be properly constituted, and such a course is not opposed by SRG.

111    But SRG submits this is not a complete answer to the difficulty. Apart from the tardiness of recognising the appropriateness of joining Harmers (which points to a want of independence), there are two further issues. The first is that Harmers will have a direct financial and reputational interest in the successful prosecution of the Settlement Case, in that if the case is settled on the terms proposed, it will be spared the scrutiny of its actions in relation to the Employment Case. The second is that it is inevitable, given the nature of the settlement agreement pleaded, that Mr Harmer will need to give evidence as a material witness.

112    As to the first of these issues, it may be accepted that Harmers has an interest in the Settlement Case being resolved, which would mean that any potential liability that arose in relation to advice they had given as to emergency disclosure preventing reliance by SRG on the media statement as a repudiation would not arise. As to the second, it may also be accepted that it is difficult to conceive how the Settlement Case could be run successfully without Mr Harmer being called.

113    Notwithstanding this, a reasonable observer would consider the concerns arising from these realities to be somewhat overstated when apprised of all relevant circumstances. This is because first, I have already set out the circumstances in which Ms Farrell and Ms Berczelly authorised the media statement, irrespective of whether it was an emergency disclosure, and in these circumstances, there are, at least, prima facie doubts it could ever be alleged they relied on any incorrect advice (and indeed they deny doing so and expressly disavow such an argument after obtaining independent advice). Secondly, the mere fact that a solicitor is a witness in a case does not prevent a firm from acting in litigation, although if a solicitor becomes a witness, close examination is required in assessing whether the solicitor (or a firm of which the solicitor is a partner or employee) can maintain the requisite independence to continue to act.

114    The reality is that specific performance suits seeking to enforce settlement agreements commonly involve firms of solicitors continuing to act when one of their solicitors is to be called, although sometimes, at least in my experience, new solicitors are retained to act. There is certainly no invariable rule of practice or convention, one way or the other. Of course, Allens continue to act even though the SRG Parties will call, in their case in chief, one of their solicitors to give evidence (and there is no reason why they should not act given there is no suggestion they have no conflict with the interests of their client). The fact Harmers are a party (who will file a submitting appearance) is admittedly unusual, but given the informed consent that has been given by persons with the legal knowledge and sophistication of Ms Farrell and Ms Berczelly, I do not consider the independent observer understanding all the circumstances would conclude that the proper administration of justice requires that Harmers be prevented from acting in the interests of the protection of the integrity of the judicial process.

E.6    The Six Factors

115    Turning back to the six factors which were identified in the submissions as being of particular importance (at [55]), it is worth making the following comments.

I     Weight of Being Deprived of Choice of Legal Representation

116    This is a factor the importance of which should not be diminished. This is hard-fought and, regrettably, somewhat acrimonious litigation. It would be a far from insignificant thing, on the evidence before me, to deprive the applicants from retaining the solicitors of their choice, particularly given the high personal stakes in this litigation. As Pagone J has noted (see above (at [45])), the SRG Parties are not seeking to exercise their rights but rather moving the Court to exercise its power over its own officers but doing so against the wishes of its opponents in adversarial proceedings and where a successful application would cause inconvenience to Ms Farrell and Ms Berczelly and confer a forensic advantage on the SRG Parties. Although it is not suggested the application is being made to seek a collateral advantage, I would not grant relief unless I had a belief it was required in the administration of justice.

117    Although I have some hesitation in being reasonably satisfied of some of the extraordinary consequences that Ms Farrell and Ms Berczelly allege would flow in the event that the injunction was granted, I am fully cognisant of the extent of the desire of Ms Farrell and Ms Berczelly to continue to retain Harmers following receipt of independent advice.

II    Timing of the Application

118    I accept the submission of the SRG Parties that the application was both foreshadowed and made at the earliest available opportunity and that although there would be not insignificant cost, inconvenience and impracticality of requiring lawyers to cease to act in circumstances where the Settlement Case is listed for hearing in the second week of December this year, there has been no relevant tardiness on behalf of the SRG Parties.

III    The Possibility of a Claim for Contribution

119    I have dealt with this factor above. There is a non-fanciful possibility of a claim for contribution, and although this points to the existence of a pecuniary and representational interest in the litigation over and above obtaining legal fees, this factor must be judged in the context of all the circumstances.

IV    The Provision of Independent Advice

120    As I have noted above, whatever shortcomings previously existed as to a want of independent advice (following the refusal of Ms Farrell and Ms Berczelly to heed the advice to obtain independent advice), it has now been obtained, albeit belatedly. At the risk of repetition, an independent reasonable observer would take comfort in the fact that the administration of justice will take in place in a context where, after having been being fully informed of their rights by an experienced silk, Ms Farrell and Ms Berczelly very much wish Harmers to act. The reasonable observer should also be taken to be aware of the unusual level of sophistication, legal knowledge and understanding of conflicts of Ms Farrell and Ms Berczelly. I accept that independent advice will not always “cure” public concern for the proper administration of justice, but, again, its existence is a matter to be assessed contextually.

V    The Content of Applicable Professional Conduct Rules

121    Although, as I have noted earlier (at [58]), this factor was not developed by the SRG Parties in their submissions, there is nothing in the material before me which would demonstrate that there would be a firm foundation for reaching a conclusion that the media statement constituted public comment which prejudiced a fair trial or was necessarily prejudicial to the administration of justice (and, I repeat, I am not urged to make such a finding). Although it is undesirable that a solicitor give material evidence in proceedings when the firm acts (and indeed is a submitting party), that does not amount, in and of itself, to a breach of any conduct rule.

VI    Lack of Independence

122    I have already dealt with the existence of conflicts. One thing that has concerned me is the occasions (both in correspondence and also in pleading) where Harmers has not accepted the fact that conflicts have arisen, rather than taking the more appropriate course of recognising the existence of conflicts and only then going on to assert their clients have given fully informed consent.

123    I am satisfied, however, following my exchanges with senior counsel that there is, at least now, a recognition of the existence of non-fanciful conflicts. This is of comfort and I consider a reasonable observer would conclude the lawyers can act with appropriate independence in circumstances where the clients are fully aware of the nature of the conflicts that have arisen (such as they are), and now after having taken proper advice, are not only are prepared to have Harmers act, but are insistent that this is the course they believe ought to occur.

F    CONCLUSIONS AND ORDERS

124    These reasons have been delivered in an ex tempore fashion and have necessarily been prepared in some haste. I considered it was important that this course be adopted because there needs to be certainty about the position, given the pending Settlement Case which is to start very shortly. In reaching my decision, I have had close regard to all the written and oral submissions made by the parties, and have attempted, by these reasons, to focus on the principal points that were made and were developed orally.

125    In the end, as the case reveals, the relief sought is of an exceptional nature, and there must be a satisfaction that the hypothetical referee would form a view that the proper administration of justice requires that the relevant representative be prevented from acting. Whether, as I have indicated, the test is expressed in terms of what the reasonably informed member of the public would conclude, or what he might conclude, the answer is the same. I am not prepared to make an order restraining either the clients or the solicitors as sought.

126    In reaching this conclusion, I have also had regard to the alternative relief developed in oral submissions in reply. It was suggested, in effect, that I might restrain the solicitors from acting in the specific performance suit and stand over the application for relief in relation to the balance of the case. It was said that there might be a number of developments that may take place. In this regard, reference was made to the possibility that defamation proceedings could be commenced against Mr Harmer. No doubt the question of whether it is appropriate to commence defamation proceedings will be considered carefully by those advising the SRG Parties, and nothing I have said in this judgment or during the course of submissions should be taken to express a view one way or the other as to the merits or prudence of commencing such a proceeding.

127    What is common ground, however, is that if such a defamation action was commenced, it is likely inevitable, given the foreshadowed truth defence, that it would involve the determination of issues which also necessarily fall for determination in the Employment Case (if this aspect of the proceeding was to proceed). The possible risk of inconsistent findings and economy of judicial and private resources brings into focus the question as to whether, if such a defamation proceeding was commenced, it would be necessary or desirable, in order to facilitate the overarching purpose, for (at least) common issues spanning both cases to be determined at the same time, at the same hearing, by the same judicial officer.

128    Nothing in this judgment should be taken as expressing a definitive view as to whether or not such a development would amount to a material change of circumstances or allow any relitigating of issues of representation. Again, I am not expressing any view as to whether or not any further application would be appropriate nor whether relief would be granted. It is merely to note that the consequences of this matter, if it ever eventuates, would need to be considered in the context of concrete facts.

129    Accordingly, I dismiss the cross-claim.

[THE PARTIES ADDRESSED]

130    Following the dismissal of the cross-claim, Ms Hillman, counsel for the SRG Parties, made reference to s 570 of the FWA, which, as is well known, conditions an order for costs being made in relation to Fair Work proceedings. Given that any order for costs would not be able to be taxed prior to the determination of the Employment Case in any event, I will direct the parties, prior to the commencement of the Employment Case, to put on any short submissions (limited to no more than three pages) in relation to any issues as to costs relating to this aspect of the matter, and I will determine it when the matter is next before the Court at some convenient time.

131    Accordingly, I will make the following orders:

1.    The cross-claim by which the cross-claimants seek an order or orders that the first and second cross-respondents be restrained from retaining the third and fourth cross-respondents from representing them in, or in relation to, this proceeding; and/or that the third and fourth cross-respondents be restrained from representing either of the first or second cross-respondents in, or in relation to, this proceeding be dismissed.

2.    The parties file and serve any submissions in relation to the costs of and incidental to the cross-claim on or by 9 December 2024.

Associate:

Dated: 14 October 2024

Schedule

No: NSD1009/2024

Federal Court of Australia

District Registry: New South Wales

Division: Fair Work

CROSS CLAIM