A v Law Society of Tasmania
[2001] TASSC 55
•15 May 2001
[2001] TASSC 55
CITATION: A and B, Legal Practitioners v Disciplinary Tribunal [2001] TASSC 55
PARTIES: A and B, LEGAL PRACTITIONERS
v
DISCIPLINARY TRIBUNAL
TITLE OF COURT: SUPREME COURT OF TASMANIA
JURISDICTION: APPELLATE
FILE NO/S: LCA 18/1999
DELIVERED ON: 15 May 2001
DELIVERED AT: Hobart
HEARING DATES: 9 April 2001
JUDGMENT OF: Underwood J
CATCHWORDS:
Professions and Trades - Lawyers - Misconduct, unfitness and discipline - Other acts and omissions - Acting against former client - No fiduciary relationship - No professional misconduct as no confidential information received from former client.
Prince Jefri Bolkiah v KPMG [1999] 2 AC 222, applied.
Rakusen v Ellis Munday & Clarke [1912] 1 Ch 831; Carindale Country Club Estate Pty Ltd v Astill (1993) 115 ALR 112; Wan v McDonald (1991) 33 FCR 491, discussed.
Fordham v Legal Practitioners Complaints Committee (1997) 18 WAR 467, not followed.
Aust Dig Professions and Trades [118]
Appeal and New Trial - In general and right of appeal - Appeals stricto sensu and appeals by way of rehearing - Nature of an appeal from the Legal Practitioners' Disciplinary Tribunal - By way of rehearing - Meaning of "rehearing".
Legal Profession Act 1993 (Tas), s78(a).
Rules of Court, rr693(3) and 709.
Victorian Stevedoring and General Contracting Co Pty Ltd v Dignan (1931) 46 CLR 73; Commissioner for Railways (NSW) v Cavanough (1935) 53 CLR 220, applied.
In re the Medical Act 1959 [1966] Tas SR 61; In re the Medical Act 1959 [1973] Tas SR 43, discussed.
Aust Dig Appeal and New Trial [3]
REPRESENTATION:
Counsel:
Appellants: K B Proctor
Respondent: R A Hart
Solicitors:
Appellants: Murdoch Clarke
Respondent: Rae & Partners Lawyers
Judgment Number: [2001] TASSC 55
Number of Paragraphs: 59
Serial No 55/2001
File No LCA 18/1999
A and B, LEGAL PRACTITIONERS v DISCIPLINARY TRIBUNAL
REASONS FOR JUDGMENT UNDERWOOD J
15 May 2001
The appeal
The Legal Profession Act 1993 ("the Act"), s66, creates a body called the Disciplinary Tribunal ("the Tribunal"). It consists of seven legal practitioners appointed by the judges of this Court. Its functions are prescribed by the Act, s69. They include the duty to hear and determine any matter relating to professional misconduct. Professional misconduct is defined by the Act, s56.
Pursuant to the power conferred by the Act, s72, the Executive Director of the Law Society made an application to the Tribunal that it hear and determine a complaint against two legal practitioners, A and B. The Tribunal held a hearing in accordance with the relevant provisions of the Act. At its conclusion, the Tribunal exercised two of the powers conferred upon it by the Act, s76(1) and ordered that A and B:
· be admonished; and
· pay 80 per cent of the costs of and incidental to the application to the Tribunal and 80 per cent of the costs of the investigation into the matters of complaint that led to the application.
From those orders this appeal is brought pursuant to the Act, s78(a).
At this stage, it is appropriate to note that the Act, s77, requires the Tribunal to cause a copy of the record of its order to be published in any publication that is published by the Law Society to the legal profession in this State. That obligation is conditioned by s77(2) which provides:
"The name of a party to a complaint to which the record of an order relates must not be published but may be substituted by such other form as the Tribunal considers appropriate."
By virtue of the Rules of Court, r303(1), an appeal from an order of the Tribunal is to be heard in Chambers. It would defeat the legislative intention, evident by the enactment of the Act, s77(2), if the names of the parties to the complaint which is the subject matter of an appeal were revealed by the reasons for judgment given upon the determination of that appeal. I make that observation in case it might be thought by some that the suppression of the identity of the legal practitioners in these reasons for judgment amounted to a privilege not available to the ordinary litigants who come to this Court.
The nature of the appeal
The Act, s79(1), provides:
"An appeal under section 78 is to be made in accordance with the Rules of the Supreme Court 1965 and dealt with by way of rehearing."
Although the subsection was enacted in 1993, the Rules referred to are the Rules of the Supreme Court 2000 by virtue of the Acts Interpretation Act 1931, s13. Mr Procter, who appeared as counsel for the appellants, submitted that an appeal pursuant to the Act, s79(1) was akin to an appeal to a judge from a decision of the Master. It is now well established by a series of cases that in the case of such an appeal, the appellate discretion is exercised afresh upon the materials before the Master but with a power to admit further evidence if the justice of the case demands it. See Evans v Bartlam [1937] AC 473 at 478; In re K R Wood & Co [1962] Tas SR 227; Butler v EZ Co of Australasia Ltd [1975] Tas SR 9. However, although Mr Hart, who appeared as counsel for the respondent on the hearing of the appeal, made no contrary submissions, I have real doubts as to whether Mr Procter's analogy is correct, having regard to:
· the difference between the words of the section conferring an appeal to this Court from the Tribunal and the provisions of the Rules of Court, r965 which confers the right of appeal from the Master; and
· the significance of the provisions of the Charter of Justice and the relationship between a judge and a Master of this Court as illuminated by the speeches in Evans v Bartlam (supra).
It is trite law that an appeal is not a common law proceeding. Its existence, nature and scope are all dependent upon the terms of the statute that confers the right of appeal. See Victorian Stevedoring and General Contracting Co Pty Ltd v Dignan (1931) 46 CLR 73 at 108; Commissioner for Railways (NSW) v Cavanough (1935) 53 CLR 220 at 225. Commonly, an appeal will take one of three forms:
· An appeal stricto sensu in which case appellate jurisdiction is limited to a consideration of whether the order was right, at the time it was made, upon the material before the court or tribunal at first instance. See Ponnamma v Arumogam & Ors [1905] AC 383 at 388.
· An appeal by way of rehearing in which case the appellate court redetermines the issues raised upon the hearing of the appeal as at the date of the rehearing but upon the material before the court or tribunal at first instance, although there is often a discretionary power to receive fresh material.
· An appeal by way of rehearing de novo in which case all of the evidence is heard afresh and the matter is determined by the appellate court unfettered by the proceedings and determination in the court or tribunal at first instance.
The nature of an appeal is to be ascertained from the intention of Parliament by the application of the ordinary rules of statutory construction. It has been argued by some that Ex parteAustralian Sporting Club Ltd; Re Dash (1947) 47 SR(NSW) 283 is authority for the general proposition that where the appeal is from one judicial body to another it is to be regarded as an appeal stricto sensu, but where it is an appeal from an administrative order, it will be an appeal by way of rehearing de novo. (Cf Motor Accidents Insurance Board v Korajzl 111/1993 at 6.) However, as Mason J (as he then was) said in Builders' Licensing Board v Sperway Constructions (Sydney) Pty Ltd and Anor (1976) 135 CLR 616 at 621, there is no absolute rule to that effect.
The nature of this appeal is to be ascertained by determining the intention of Parliament from the statutory provisions concerning the constitution, functions, procedures and powers of the Tribunal and the words used to create the right of appeal to this Court and in particular, the expression, "in accordance with the Rules of the Supreme Court 1965 and dealt with by way of rehearing".
The Act, s74, provides that parties to an application may be represented by a legal practitioner, may give evidence and examine any witness and make written submissions to the Tribunal. These matters, together with the fact that the members of the Tribunal are legal practitioners chosen by the judges of this Court, plainly indicate to me that it was unlikely that the Parliament intended the reference to a rehearing to mean a rehearing de novo.
This conclusion is reinforced by the reference to the relevant Rules of Court which provide that upon the hearing of an appeal from a tribunal, the court shall have regard to the evidence and proceedings in the Tribunal (r709) and that the court may draw any inference of fact that may have been drawn by the Tribunal (r693(3)).
Prior to 1966, the Medical Act 1959, s26, conferred a right of appeal to this Court from a decision by the Medical Council of Tasmania. This right was expressed by the statute to be "in accordance with the Rules of Court". The statute also provided that the court "shall hear the appeal by way of rehearing". In In re the Medical Act 1959 [1966] Tas SR 61, Gibson J held that the appeal was not in the nature of a rehearing de novo, but an appeal in "the strict sense".
Shortly after that decision was handed down, the Medical Act, s26, was repealed and replaced with a new s26 which simply referred to a right of appeal to the Supreme Court. Neasey J considered the nature and scope of such an appeal in In re the Medical Act 1959 [1973] Tas SR 43. He rightly observed that having regard to the provisions of the Supreme Court Civil Procedure Act 1932 and the Rules of Court, the statutory reference in the repealed section considered by Gibson J, to an appeal being made in accordance with the Rules of Court, was entirely otiose because the latter Act and Rules already so provided. Presumably, this is a matter that was overlooked by the draftsperson of the Act, s79(1).
With respect to the nature of an appeal by rehearing, Neasey J traced its history at 50 - 51. It appears that an appeal by way of rehearing has its origins in the Chancery jurisdiction prior to the enactment of the Judicature Acts. At that time, in the Court of Chancery there was no appeal as such, but instead, there was a right to have the petition or motion reheard. Accordingly, on a rehearing before the enactment of the Judicature Acts, the Court of Chancery had regard to the material given upon the first hearing, and gave such judgment, not as ought to have been given upon the first hearing, but as ought to be given at the time of the rehearing. See Quilter v Mapleson (1882) 9 QBD 672 at 675 - 676. After the enactment of the Judicature Acts, the right of appeal was uniform regardless of the jurisdiction exercised at first instance. The statutory expression, "appeal by way of rehearing", which originates from the Court of Chancery, has been described in Powell v Streatham Manor Nursing Home [1935] AC 243 at 249, as follows:
"It is perfectly true that an appeal is by way of rehearing, but it must not be forgotten that the Court of Appeal does not rehear the witnesses. It only reads the evidence and rehears the counsel. Neither is it a reseeing Court. There are different meanings attached to the word 'rehearing'." [His Lordship then referred to a rehearing de novo.]
In Jones v Chennell (1878) 8 Ch D 492 Jessell MR said at 505, with respect to an appeal by way of rehearing, that:
"All appeals are by way of rehearing, that is by trial over again, on the evidence used in the Court below; but there is special power to receive further evidence."
That special power was to be found in the Rules of Court (UK), O58, r5. In Quilter v Malpleson (supra), Jessel MR referred to this rule and said, at 676:
"Then the 5th rule of the same order gives the Court of Appeal power to admit further evidence, and says, that 'The Court of Appeal shall have power to give any judgment and make any order which ought to have been made, and to make such further or other order as the case may require."
In the United Kingdom, the power to receive evidence upon the hearing of an appeal lodged after the passage of the Judicature Acts is to be found in the Rules of Court. The power of the Full Court of this State to receive evidence upon the hearing of appeal is to be found in like terms, in the Supreme Court Civil Procedure Act, s48(1). Although, the Rules of Court, r693, confer a right to draw all inferences of fact upon an appeal from a tribunal, those Rules do not confer a right to receive evidence upon the hearing of such an appeal. It was perhaps this circumstance that led Gibson J to observe in In re the Medical Act (supra), at 64:
"Rule 74 [now partly enacted in r709] does not, in my opinion, authorise me to hear evidence which was not before the [Medical] Council. My jurisdiction is limited to considering what the council should have done on the materials before it and rule 74 seems designed merely to enable the appellate court to ascertain from any source that it thinks proper what those materials were."
In the subsequent case of the same name, Neasey J expressed (obiter dicta) doubt about the correctness of this view with respect to the reception of evidence on the hearing of an appeal from a tribunal. After reference to the origins of an appeal by way of rehearing in the Court of Chancery, and after holding that the appeal was not, as Gibson J had concluded, an appeal stricto sensu, his Honour said at 54:
"I also doubt the correctness of his Honour's further views that r 74 does not permit the judge to receive further evidence, and that he is restricted to considering what the Council should have done on the materials before it. If the appeal were one stricto sensu and not a rehearing, that would be so. But since it is in my opinion a rehearing it follows that evidence at least of any relevant changes which occur between the date of the Council's hearing and the date of the appeal would be receivable in the judge's discretion. It may be also that other fresh evidence is receivable in the judge's discretion, but it is not necessary in this case to express a decided view on these points.
However, with great respect to his Honour's opinion, the position is not, I think, perhaps as clear as that. Whether or not the Court of Chancery received evidence upon the hearing of an appeal appears to have depended upon the nature of the appeal. Appeals were instituted by petition or motion. According to Daniell's Chancery Practice (1867) 4 ed at 1367, "Upon a rehearing it is not, in general, competent to either party to enter into any new evidence, but evidence taken before the original hearing, though not made use of may be read;". In Whitworth v Whyddon (1850) 2 Mac & G 52: 42 ER 21, the Lord Chancellor ruled at 56:22, that evidence could only be received if the matter were treated as a motion on new grounds. He said:
"If, however, it is to be treated strictly as an appeal motion, the case must be dealt with on the evidence used before the Vice-Chancellor."
I am far from convinced that, absent statutory authorisation, evidence may be adduced upon an appeal by way of rehearing other than one that is a rehearing de novo. However, the question does not arise upon this appeal as neither side sought to adduce any material in addition to that which was before the Tribunal. Accordingly, I am obliged to consider the correctness of the orders which are the subject matter of the appeal as at this date but on the material before the Tribunal.
The facts
There was little dispute about the facts at the hearing before the Tribunal.
By letter dated 20 May 1996, X made a complaint to the Law Society with respect to the conduct of A and B concerning litigation between X and his father.
X and his father are farmers and together with other family members, they carried on business in a partnership. In 1978, A was asked to act for both X and his father in relation to the dissolution of that partnership. The uncontested finding of the Tribunal was that A's instructions for the dissolution of the partnership came from neither X nor his father, but from an agent who, it seemed, had an intimate knowledge of the business affairs of the partnership and was authorised by both X and his father to give joint instructions to A.
In accordance with those instructions, A prepared a deed of dissolution of partnership. It provided for the retirement of X from the partnership on 30 June 1978 and (inter alia) for the transfer of a property ("the property") to X. With respect to the trees on the property, the agreement for dissolution acknowledged that a sawmilling company which, I assume, was owned or controlled by X's father, had purchased all the saw logs and that X had no entitlement to that timber. The agreement was silent about the rights to other timber on the property. It appears that the agreement was never signed, but the transfer of the property was duly effected.
A significant and unchallenged finding of the Tribunal was that A received no confidential information from either X or his father with respect to the dissolution of the partnership.
B, who was admitted as a legal practitioner in 1981, became a partner of A and others, "sometime before March 1986". About that time, a dispute arose between X and his father with respect to the rights to the timber on the property other than saw logs. On 27 March 1986, A wrote to X in his capacity as solicitor for X's father. He sent a copy of his letter to another firm of solicitors whom the Tribunal inferred was then acting for X. In effect, the letter claimed that X's father was entitled to harvest both saw logs and pulp logs and intended to enter onto the property to do just that. The letter claimed that the right to do this was retained when X's father "gave the property to [him]".
By his complaint, X alleged that the writing of the letter amounted to unprofessional conduct on the part of A and B. The Tribunal dismissed this complaint. It found that at the time the letter was written, B knew nothing of this matter and that A had not previously been given any confidential information by X.
B became involved in the dispute over the right to harvest pulp logs when he received instructions from X's father. In accordance with those instructions, B arranged for one of his partners, not A, who was then overseas, to lodge a caveat over the property. By his complaint, X alleged that B's acceptance of instructions from his father to lodge the caveat, and the lodging of the caveat, constituted unprofessional conduct because "the validity of the caveat required either A or B to prefer the instructions concerning the dissolution of the partnership and given to A by X's father, over those given to A by X". The Tribunal dismissed this complaint upon the basis that at the relevant time, A was unaware of the instructions for the lodgment of a caveat, and unaware that a caveat had been lodged, and that B did not then know of A's earlier involvement with respect to the dissolution of the partnership.
The dispute between X and his father escalated. Upon instructions from X's father, B instituted two proceedings against X in this Court, one in July 1989 and the other in December 1989. By his complaint, X alleged that the acceptance of instructions by B to institute proceedings, and by the institution of those proceedings, A and B were guilty of unprofessional conduct. The basis for this allegation was that A might have to give evidence against X. The Tribunal dismissed this complaint upon the basis that at the relevant time, A was unaware of the instructions and unaware of the institution of the proceedings, and that B was still unaware of A's prior involvement in the dissolution of the partnership between X and his father and other family members.
Further, X alleged that A and B were guilty of unprofessional conduct by failing to advise X's father that B could not accept his instructions to institute proceedings because A had previously received instructions from X relating to the same matter. This complaint was dismissed on the same basis as the previous complaint.
Next, X alleged that A and B were guilty of unprofessional conduct because they accepted instructions to institute legal proceedings against him in circumstances whereby confidential information given by X to A might be employed in the conduct of those proceedings to the detriment of X. In reliance upon its earlier findings that no confidential information had been given by X to A, the Tribunal dismissed this matter of complaint as well.
The last matter of complaint made by X to the Law Society was that A's conduct was unprofessional in that he failed to tell B that, as he had acted for both X and his father with respect to the dissolution of the partnership, B could not accept instructions from X's father to institute the two actions. This matter of complaint was also dismissed. The basis of dismissal was that A did not know of the instructions, nor that the actions had been instituted until well after the events had occurred.
Some time after it was made to the Law Society, the complaint was amended to add a new matter, namely that upon B becoming aware that A had acted for X and his father with respect to a matter relating to the issues raised by the litigation, B's failure to cease acting for X's father constituted unprofessional conduct. During the closing address of counsel for the appellants, on the second day of the hearing before the Tribunal, the Tribunal drew the attention of counsel for the respondent to the fact that the amended ground only alleged misconduct on the part of B. After a short adjournment, and over opposition, the Tribunal allowed a further amendment. It alleged that A was guilty of unprofessional conduct in that he owed a "duty of loyalty" to X, and pursuant to that duty had failed to require B to cease acting for X's father in the litigation.
By a majority, the Tribunal found both these matters of complaint proved and accordingly made the orders which are the subject of this appeal. The principal issue now is whether the Tribunal erred in law in finding that A and B were guilty of unprofessional conduct as alleged by the two amended grounds.
The Tribunal said that it was not clear when B learnt that A had acted for X and his father with respect to the dissolution of the partnership, nor was it clear when A learnt that B had instituted proceedings in this Court on behalf of X's father. The Tribunal found that B learnt of A's prior instructions by, at least, 8 January 1991 when the solicitor who was then acting for X in the conduct of the two actions, told B that he wished to interview A in relation to what had occurred around the time of the dissolution of the partnership. This solicitor also said that he wanted to inspect the file kept with respect to that matter.
The Tribunal made no precise finding as to when A learnt of the existence of the litigation. In his evidence, A agreed that he learnt of its existence at some time, but was unable to say when it was. The Tribunal noted that there was no evidence that A ever knew that X's solicitor in 1991 wanted to interview him, nor that he ever knew, as the evidence showed, that in 1995, another solicitor, who was then acting for X, said to B that he also might want to interview A.
With respect to B, the following critical paragraphs are extracted from the reasons of the majority of the Tribunal at 7 - 8:
"In the view of the majority, [B] was in a position of conflict from the time [X's solicitor in 1991] told him on the 8th January 1991 that he wanted to interview [A], if not earlier. Once [that solicitor] said that, the partners in the firm of [A and B and others] had two duties:
1 They owed a duty to [X's father] to do all that they could for him in connection with the litigation. If a partner in a firm acting for a litigant is a potential witness in the proceedings, or is not a potential witness but someone whom the opposing solicitor wishes to interview, that duty requires that partner not to submit to an interview unless he or she can be confident that nothing he or she can tell the opposing solicitor will disadvantage the firm's client.
2 The firm had a duty to [X] as their former client not to keep secret from him and his new solicitors any information that they had obtained as his solicitors. If a solicitor acts for a client in relation to the client's property or affairs, and the client becomes involved in litigation concerning the transactions in which the solicitor acted, and engages a second solicitor to act for him in the litigation, it would be most unprofessional for the original solicitor to refuse to provide information to the second solicitor in relation to the transactions in which he or she acted. This duty thus obliged [A] to submit to an interview by [X's solicitor in 1991], and to provide information to him to the extent that he reasonably could.
Those two duties were plainly in conflict."
Mr Procter submitted with respect to the proviso stated at the end of par1 set out above, that the evidence clearly showed, and the finding of the Tribunal was, that A received no confidential information and consequently the only conclusion open was that A could be confident that nothing he could tell the opposing solicitor would disadvantage his firm's client because:
· all A's instructions came from the agent acting for both X and his father so nothing was said in confidence to him by, or on behalf of, either; and
· A's uncontested evidence was that he had very little memory of the instructions received from the agent, apart from those apparent from a perusal of the file.
With respect to A, the majority of the Tribunal said at 10 of its reasons for judgment:
"However we think it can be said that [A] owed [X] a duty of loyalty in the sense that he owed him, as a former client, that duty to provide his new solicitors with information, and a duty not to allow his firm to continue to act in such circumstances that he and his partners owed a current client a conflicting duty."
The law
Unprofessional conduct is defined by the Act, s56, to mean:
"Professional conduct that falls short of a standard of conduct that a member of the public is entitled to expect of a practitioner of good repute and competency."
The Tribunal relied upon this definition in reaching the conclusion it did. However ¾ at least in the case of B ¾the conduct which the Tribunal found to have been unprofessional occurred before the enactment of the Act. Fortunately, there is no need to examine the applicability of the statutory definition to conduct before the definition was enacted, for the statutory definition is virtually on all fours with the common law applicable before the enactment of the Act. At common law, unprofessional conduct is conduct which may reasonably be held to violate, or fall short of, to a substantial degree, the standard of professional conduct observed, or approved of, by members of the profession of good repute and competency. See Fordham v Legal Practitioners' Complaints Committee (1997) 18 WAR 467 at 476; Re a Practitioner of the Supreme Court [1927] SASR 58 at 61.
Virtually all of the cases cited by counsel during argument concerned the issue of whether the Court would restrain a solicitor from acting against a former client in the same, or a related matter. Only two cases involved disciplinary proceedings for unprofessional conduct, namely Fordham (supra) and Zaicos v Law Institute of Victoria, Victorian Supreme Court, unreported, Nathan J, 19 July 1995.
The traditional starting point upon a consideration of the issue of whether a solicitor will be restrained from acting against a former client in the same or a related matter is Rakusen v Ellis Munday & Clarke [1912] 1 Ch 831. In that case, Cozens-Hardy MR said at 835, that before the Court would restrain a solicitor from acting against a former client in the same or an related matter it must be shown that "real mischief and real prejudice will in all human probability result if the solicitor is allowed to act …". Fletcher-Moulton LJ referred at 841, to "mischief rightly anticipated" and "probability of mischief". Buckley LJ at 845, spoke of a danger of the breach of confidentiality which "may be reasonably anticipated to exist …". These slightly conflicting tests to determine whether a solicitor should be restrained from acting against a former client in the same or related matter remained unchallenged until the 1980s. Thereafter, the courts began to develop more stringent tests. In In the marriage of Thevenaz (1986) 84 FLR 10, reference was made at 13, to "a risk which may well be merely theoretical but still exists, that justice might not appear to be done". The various tests propounded in Rakusen were explored by Bryson J in D & J Constructions Pty Ltd v Head (1987) 9 NSWLR 118. His Honour followed the basic thrust of all the judgments in Rakusen and said it was up to the court to weigh the risks of confidential information being disclosed in a real way, ignoring theoretical risks. In Mallesons Stephen Jaques v KPMG Peat Marwick (1990) 4 WAR 357, Ipp J referred to the obligations of a fiduciary and considered whether the test was the probability of the misuse of confidential information or the possibility of such misuse. He concluded at 362 - 363:
"Accordingly I conclude that if, by a solicitor acting for a new client, there is a real and sensible possibility that his interest in advancing the case of the new client might conflict with his duty to keep information given to him by the former client confidential, or to refrain from using that information to the detriment of the former client, then an injunction will lie."
For the purposes of this appeal, there is no need to examine the different approaches taken by the Australian Courts since Rakusen, for all the authorities dealing with inter partes applications are united that:
· there is no general prohibition against a solicitor acting for a former client in the same or a related matter;
· injunctive relief will be granted only for the purpose of protecting confidential information.
Rakusen was recently considered by the House of Lords in Prince Jefri Bolkiah v KPMG [1999] 2 AC 222. With respect to the basis of the jurisdiction to restrain a solicitor from acting against a former client in the same or a related matter, Lord Millett, with whose speech the other Law Lords concurred, said at 234, that the possession of confidential information determined whether the matter was the same or related for "the court's intervention is founded not on the avoidance of any perception of possible impropriety but on the protection of confidential information". The basis for intervention was different in the case of an application for injunctive relief by an existing client. In such a case, Lord Millett said that a conflict of interest arose out of the existing fiduciary relationship, not the existence of any confidential information. With respect to a solicitor acting against a former client his Lordship said, at 235:
"Where the court's intervention is sought by a former client, however, the position is entirely different. The court's jurisdiction cannot be based on any conflict of interest, real or perceived, for there is none. The fiduciary relationship which subsists between solicitor and client comes to an end with the termination of the retainer. Thereafter the solicitor has no obligation to defend and advance the interests of his former client. The only duty to the former client which survives the termination of the client relationship is a continuing duty to preserve the confidentiality of information imparted during its subsistence.
Accordingly, it is incumbent on a plaintiff who seeks to restrain his former solicitor from acting in a matter for another client to establish (i) that the solicitor is in possession of information which is confidential to him and to the disclosure of which he has not consented and (ii) that the information is or may be relevant to the new matter in which the interest of the other client is or may be adverse to his own."
With respect to the test to be applied, his Lordship said at 236, that if there is no risk of disclosure of confidential information, no injunction will issue. At 236 - 237, he said:
"Many different tests have been proposed in the authorities. These include the avoidance of 'an appreciable risk' or 'an acceptable risk.' I regard such expressions as unhelpful: the former because it is ambiguous, the latter because it is uninformative. I prefer simply to say that the court should intervene unless it is satisfied that there is no risk of disclosure. It goes without saying that the risk must be a real one, and not merely fanciful or theoretical. But it need not be substantial. This is in effect the test formulated by Lightman J in In re a Firm of Solicitors [1997] Ch 1, (possibly derived from the judgment of Drummond J in Carindale Country Club Estate Pty Ltd v Astill (1993) 115 ALR 112 and adopted by Pumfrey J in the present case."
Lord Millett expressly rejected as appropriate, the "reasonable probability of mischief" test that has generally been attributed to Rakusen. He said that it imposed a burden too onerous upon the plaintiff.
The decision of Bolkiah was considered by the Full Court of South Australia in Pradham v East Side Day Surgery Pty Ltd, unreported, delivered on 18 June 1999. In that case, the court held that the principles stated by Lord Millett should be applied in South Australia. In Newman as Trustee for the Estates of Littlejohn v Phillips Fox (a firm), unreported, delivered on 15 September 1999, Steytler J, in the Supreme Court of Western Australia, helpfully discussed all the authorities and also concluded that the test laid down by the House of Lords should be applied in Western Australia. The same approach was taken in Victoria by Gillard J in World Medical Manufacturing Corporation v Phillips Ormonde & Fitzpatrick Lawyers & Anor [2000] VSC 196. I see no reason why this Court should not do likewise.
It follows from the Tribunal's finding that A was not in possession of confidential information, that X would have failed had he applied for an injunction to restrain A and/or B from acting for his father in the litigation between them. Mr Hart conceded that, on the authorities, this proposition was correct, but submitted that this case is distinguishable from Bolkiah and the other cases, because it is a disciplinary matter and not an inter partes matter, or a matter involving a claim of right between two parties. He submitted that in an inter partes matter the issue is the risk of disclosure of confidential information, but in a disciplinary matter such as this one, the issue is whether the conduct discloses a public perception of a risk of breach of confidentiality.
In Wan v McDonald (1991) 33 FCR 491 Burchett J, at 513, raised the issue of a solicitor's "duty of loyalty" which he said was not extinguished by mere termination of the period of retainer. He referred to "… the important consideration of public policy which gives a special quality to the relationship of solicitor and client that the law will not generally permit to be stained by the appearance of disloyalty". The remarks were made in the context of a case quite different from the present matter. In Wan, the principal issue was whether the applicant was entitled to damages for breach of a fiduciary duty existing when the solicitor acted for both parties. Burchett J found that the solicitor had acted deceitfully whilst acting for both parties. Upon this basis he held, at 512, that the solicitor had been in breach of his fiduciary duty in several respects. The solicitor continued to act for one of the parties after the applicant terminated the relationship. When so acting, Burchett J found that he acted dishonestly in that he misrepresented a state of affairs in a letter to the Recorder of Titles. In this context, Burchett J discussed a submission that had been made to him with respect to Rakusen and in so doing, made observations with respect to what he described as a solicitor's duty of loyalty. However, it seems to me that what his Honour said about Rakusen must now be read in the light of Bolkiah.
These observations about a "duty of loyalty" were referred to by Malcolm CJ, with whose reasons for judgment the other members of the Court concurred in Fordham v Legal Practitioners' Complaints Committee (supra). Although that case was a disciplinary matter, it concerned facts far removed from the facts of the present case. In that case, a solicitor acted for a client with respect to a charge of unlawful possession of a firearm. His claim was that he had the pistol to protect himself because, some time earlier, he had been abducted by four men. The solicitor represented the man upon a plea of guilty. Subsequently, the solicitor, or an employee of hers, acted for the man and his company with respect to certain financial matters. The retainer came to an end. The solicitor later acted for one of the men accused of abducting her former client. This time, the plea was not guilty. The solicitor cross-examined her former client upon the trial about all sorts of matters surrounding the abduction and his financial affairs. She put to her former client that, in effect, he was a dishonest witness. The solicitor claimed that in so acting she breached no rule of confidentiality because all the matters that she put to her former client were apparent from the Crown papers and/or made public in newspaper reports and in a television interview that her client gave about his abduction. Malcolm CJ referred to Wan and said, at 478, that it was authority for the proposition that only in rare and special cases would a solicitor be permitted to act against a former client "whether or not any real question of the use of confidential information could arise". With very great respect to his Honour, I think that that wide proposition does not represent the common law, at least not since Bolkiah, which of course, was decided after Fordham.Malcolm CJ referred to a decision of Drummond J in Carindale Country Club Estate Pty Limited v Astill (1993) 42 FCR 307, an inter partes case and not a disciplinary matter. Drummond J considered Rakusen and the later authorities, including Wan. His Honour accepted that the disclosure of confidential information lay at the heart of the issue, and considered the tests propounded by the members of the court in Rakusen and in later cases to determine whether a solicitor should be restrained from acting against a former client in the same or a related matter. Drummond J said, at 312:
"In recognition of the special position of the solicitor as a fiduciary and of the importance now placed on the need for the appearance of integrity on the part of solicitors, as repositories of confidences, in the role they play in the administration of justice, I think that the stringent approach to when a solicitor will be free to act adverse to the interests of a former client that has been taken in recent cases is preferable to the more lenient approach that was generally, but by no means invariably, adopted in past times. In my opinion, a solicitor is liable to be restrained from acting for a new client against a former client if a reasonable observer, aware of the relevant facts, would think that there was a real, as opposed to a theoretical possibility that confidential information given to the solicitor by the former client might be used by the solicitor to advance the interests of a new client to the detriment of the old client."
In Fordham, Malcolm CJ referred to this passage in Drummond J's judgment and to some other cases and concluded, at 485, that a more stringent approach was justified upon the basis of the special fiduciary role occupied by a solicitor. Malcolm CJ said that "the duty of loyalty of solicitors did not end with the termination of their retainer" and spoke of the need to protect "actual or apparent conflicts of interest". In so saying, his Honour appears to have relied in part on Drummond J's judgment in Carindale, but in that case, after expressing the view in the passage I have just set out, Drummond J said, at 312 - 313:
"The better view may be that the mere threat of disclosure of information given in confidence will ordinarily be enough to enliven the jurisdiction to restrain the disclosure and that it is not necessary to prove that disclosure would result in a detriment to the source of the information. See Equity Doctrines and Remedies, Meagher, Gummow and Lehane, (3rd Ed, 1992) par4110; PD Finn (ed) Essays in Equity, (1985), at p 112; F Gurry Breach of Confidence, (1994) pp 407-408 and R Dean, Law of Trade Secrets, (1990) pp 177-178. However, the cases all indicate that before a solicitor will be restrained from acting for a new client at the behest of an old client, not only must there be a threat of disclosure of information given in confidence, but there must be evidence that such disclosure will be to the former client's disadvantage. The requirement of proof of detriment is at the core of the ruling in Rakusen." [Emphasis added.]
However, Malcolm CJ held at 488, that the correct test was whether "a reasonable observer, aware of the facts, would consider that confidential information given to the solicitor by the former client was being used by the solicitor to advance the interests of the new client to the detriment of the former client". It respectfully seems to me that although Drummond J did observe that such a test might be a better view, it was not the test that he applied in Carindale as can be seen from the passages that I have set out. However, whether it is right or not, the test propounded by Malcolm CJ does not survive the later decision of Bolkiah. Even if it did, its application to the facts of this case would not result in a finding of unprofessional conduct because the informed reasonable observer would know that no confidential information was given to A. With respect to the notion that a solicitor had some duty of loyalty, Malcolm CJ said, at 490:
"To put it another way, it is the existence of the former relationship which has the potential to create in the mind not only of the former client but also of the reasonable bystander a reasonable apprehension that use will be made of information provided in the course of the former relationship to the detriment of the former client, as by cross-examination for the purpose of destroying his or her credit."
It may be that in a factual situation such as that in Fordham, the solicitor acquires confidential information by getting to know his or her former client's personality and his or her strengths and weaknesses; knowledge that the solicitor would not have had but for the solicitor/client relationship. To cross-examine that person after the solicitor/client relationship has ended would necessarily risk the disclosure of confidential information. However, for the reasons I have already given, if any notion of "loyalty" as described by Malcolm CJ has survived Bolkiah, it did not arise in the present case.
There is nothing in Zaicos v Law Institute of Victoria (supra) that assists in the determination of the present appeal. Although it is a disciplinary matter the facts and principles are far removed from the present matter.
The following propositions emerge from an application of the law to the Tribunal's uncontested findings:
(1)after the termination of the solicitor relationship between A and X, no fiduciary duty was owed by A to X; and
(2)during the subsistence of the fiduciary relationship between A and X, no confidential information was received by A from X.
There is no general prohibition against acting against a former client. A former client is entitled to be protected against the use or disclosure of confidential information given during the subsistence of the fiduciary relationship. As there was no such information, neither A nor B were guilty of professional misconduct. The matter can be tested in this manner. Assume B said to X's father that he felt that as his partner had formerly acted for him and his son, he was considering ceasing to act. Assume that X's father told B that he wanted him to continue to act and he would only agree to permitting B to give up the case if compelled by law to do so. Had B then consulted the authorities, he would have properly advised X's father that no order would be made restraining him from continuing to act and that there was no basis for terminating the contract of retainer. In those circumstances, it could not be said that B's failure to cease acting, and A's failure to ask B to cease acting, amounted to professional misconduct. Obviously, unprofessional conduct can take many forms and, equally obviously, unprofessional conduct does not necessarily mean unlawful conduct, but, in the circumstances of this case, I do not see how doing something that would not be restrained by the common law on an application by X, could possibly amount to professional misconduct.
For these reasons, I conclude that error attended the reasoning of the majority of the Tribunal and the orders it made. The appeal is allowed. The orders of the Tribunal are quashed and in lieu thereof it is ordered that the respondent's application to the Tribunal be dismissed.
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