AG Australia Holdings Ltd v Burton

[2002] NSWSC 170

Reported Decision: (2004) 58 IPR 268
58 NSWLR 464

New South Wales

Supreme Court

CITATION:	AG Australia Holdings Limited v Burton & Anor [2002] NSWSC 170
CURRENT JURISDICTION:	Equity
FILE NUMBER(S):	SC 1640/02
HEARING DATE(S):	7 March 2002
JUDGMENT DATE:	3 May 2002
PARTIES :	AG Australia Holdings Limited (Plaintiff) Nigel Victor Burton (1st Defendant) John Roderick Edward Price & Ors t/as Maurice Blackburn Cashman (2nd Defendant)
JUDGMENT OF:	Campbell J

COUNSEL :	B Walker SC; IM Jackson; M Tyson (Plaintiff) I E Davidson (1st Defendant) J Burnside QC; A Leopold (2nd Defendant)
SOLICITORS:	Ebsworth & Ebsworth (Plaintiff) Geoffrey Edwards & Co (1st Defendant) Maurice Blackburn Cashman (2nd Defendant)
CATCHWORDS:	CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES - illegal and void contracts - contract affecting the administration of justice - whether former employee's express obligation of confidentiality void to the extent it prohibits making confidential information available, out of court, for the purpose of use in litigation - CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES - llegal and void contracts - methodology for finding public policy - CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES - illegal and void contracts - when express obligation of confidentiality is unenforceable by reason of nature of the confidential information - INJUNCTIONS - availability against recipient of confidential information when discloser of confidential information is in breach of contract
LEGISLATION CITED:	Federal Court of Australia Act 1976 (Cth) Trade Practices Act 1974 (Cth) Australian Securities and Investments Commission Act 1989 (Cth) Fair Trading Act 1987 (NSW) Crimes (Classification of Offences) Act 1981 (Vic) Crimes Act 1900 Crimes Act 1914 (Cth) Insolvent Debtors Act Corporations Act 2001 (Cth) Evidence Act 1995(Cth) Protected Disclosures Act 1994 Public Service Act 1999 (Cth) Parliamentary Service Act 1999 (Cth) Whistleblowers Protection Act 1993 (South Australia) Whistleblowers Protection Act 1994 (QLD) Public Interests Disclosure Act 1994 (ACT) Restrictive Trade Practices Act 1956
CASES CITED:	Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337 A v Hayden (1984) 156 CLR 532 Egerton v Brownlow (1853) 4 HLC 1 10 ER 359 R v Young (1999) 46 NSWLR 681 R v Edelsten (1990) 21 NSWLR 542 R v Murphy (1985) 4 NSWLR 42 R v Freeman (1985) 3 NSWLR 303 Hatty v Pilkinton (1992) 35 FCR 433 Meissner v R (1995) 184 CLR 132 R v Rowell [1978] 1 WLR 132 Collins v Blantern (1767) 2 Wils. KB 347 R v Vreones [1891] 1 QB 360 R v Kellett [1976] 1 QB 372 Lound v Grimwade (1888) 39 Ch D 605 Hall v Dyson (1852) 17 A & E 785 Hills v Mitson (1853) 8 Ex 751 Elliott v Richardson (1870) LR 5 CP 744 Kien Nam Quach v Huntof Pty Ltd [2000] NSWSC 932 Giles v Thompson [1993] 3 All ER 321 NAB Ltd v Market Holdings Pty Ltd (in Liq) [2001] NSWSC 253 Hogarth v Gye [2002] NSWSC 32 Cadwallader v Bajco [2001] NSWSC 1193 Grove v Flavel (1986) 4 ACLC 654 Rosetex Co Pty Ltd v Licata (1994) 12 AC LC 269 R v Byrnes (1995) 183 CLR 501 D v National Society for the Prevention to Children [1978] AC 171 Re Cordova v Philips Roxane Laboratories Inc [1984] 2 NSWLR 327 Mobil Oil Australia Ltd v Guina Developments Pty Ltd [1996] 2 VR 34 National Employers' Mutual General Association Ltd v Waind and Hill [1978] 1 NSWLR 372 Ainsworth v Hanrahan (1991) 25 NSWLR 155 Central Queensland Cement Pty Ltd v Hardy [1989] 2 Qd R 509 Rakusen v Ellis Munday & Clarke [1912] 1 Ch 831 D & J Constructions Pty Ltd v Head (1987) 9 NSWLR 118 In Re a Firm of Solicitors [1992] 1 QB 959 Prince Jefri Bolkiah v KPMG (1999) 2 WLR 215 Wan v McDonald (1992) 33 FCR 491 Carindale Country Club Estate v Astill (1993) 42 FCR 307 Malleson Stephen Jaques v KPMG Peat Marwick (1990) 4 WAR 357 Lord Ashburton v Pape [1913] 2 Ch 469 Calcraft v Guest [1898] 1 QB 759 Goddard v Nationwide Building Society [1987] 1 QB 670 Guiness Peat Properties Ltd v Fitzroy Robinson Partnership [1987] 1 WLR 1027 Hooker Corporation Ltd v Darling Harbour Authority (1987) 9 NSWLR 538 Webster v James Chapman & Co [1989] 3 All ER 939 Derby & Co Ltd v Weldon [1991] 1 WLR 73 Director of Public Prosecutions (Cth) v Kane (1997) 140 FLR 468 Deputy Commissioner of Taxation v Rettke (1995) 31 IPR 457 Sullivan v Sclanders (2000) 77 SASR 419 Commonwealth of Australia v John Fairfax & Sons Ltd (1980) 147 CLR 39 Minister for Mineral Resources v Newcastle Newspapers Pty Ltd (1997) 40 IPR 403 Corrs Pavey Whiting & Byrne v Collector of Customs (VIC) (1987) 14 FCR 434 Gartside v Outram (1856) 26 LJ Ch (NS) 113 Smith Kline & French Laboratories (Aust) Ltd v Secretary Department of Community Services and Health (1990) 22 FCR 73 Bacich v Australian Broadcasting Corporation (1992) 29 NSWLR 1 Castrol Australia Pty Ltd v Emtech Associates Pty Ltd (1980) 51 FLR 184 33 ALR 31 Weld-Blundell v Stephens [1920] AC 956 Bellof v Pressdram Ltd [1973] 1 All ER 241 Allied Mills Industries Pty Ltd v Trade Practices Commission (1981) 34 ALR 105 Butler v Board of Trade [1971] Ch 680 AG-NT v Kearney (1985) 158 CLR 500 Re Moage (1998) 26 ACSR 726 Grofam Pty Ltd v KPMG Peat Marwick (1993) 27 IPR 215 Initial Services Ltd v Putterill [1968] 1 QB 396 G v Day [1982] 1 NSWLR 24 Wheatley v Bell [1982] 2 NSWLR 544 Short v City Bank of Sydney (1912) 15 CLR 148 Fightvision Pty Ltd v Onisforou (1999) 27 NSWLR 473 Re Morris (deceased) (1943) 43 SR (NSW) 352 Kerridge v Simmonds (1906) 4 CLR 253 Baker v Campbell (1983) 153 CLR 52 R v Cox & Railton (1884) 14 QBD 153 English & American Insurance Co Ltd v Herbert Smith (1987) 14 FSR 232 Grocott v Aysom [1975] 2 NZLR 586 Tucker v News Media Ownership Ltd [1986] 2 NZLR 716 Science Research Council v Nassé [1980] AC 1028 Harman v Secretary of State for the Home Department [1983] 1 AC 280 David Syme & Co Ltd v General Motors-Holdens Ltd [1984] 2 NSWLR 294 Woodward v Hutchins [1977] 1 QLR 760 Westpac Banking Corporation v John Fairfax Group Pty Ltd (1991) 19 IPR 513 Moorgate Tobacco Co Ltd v Philip Morris Ltd [No.2] (1984) 156 CLR 414 Tournier v National Provincial and Union Bank of England [1924] 1 KB 461 Smorgen v Australia & New Zealand Banking Group Ltd (1976) 134 CLR 475 BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266 Liverpool City Council v Irwin [1977] AC 239 Byrne v Australian Airlines Ltd (1995) 185 CLR 410 Marcus Clarke (Vic) Ltd v Brown (1928) 40 CLR 540 Brambles Holdings Ltd v Bathurst City Council [2001] NSWCA 61 Wookey v Wookey [1991] Fam 121 Vincent v Peacock [1973] 1 NSWLR 466 In Re S (a minor) [1991] Fam 121
DECISION:	Injunctions made - see paragraph 235

70 MBC have provided examples of three confidentiality regimes which GIO has agreed to in connection with the representative proceedings. These are proffered as examples of how a confidentiality undertaking can be used to protect confidential information when it is used in litigation. They have the extra persuasive power of being regimes that GIO itself has agreed to, or put forward.

71 I have earlier mentioned that ASIC has on foot proceedings against three officers of GIO. In preparing to bring those proceedings, ASIC held examinations of numerous senior officers of GIO and GIO Re. MBC subpoenaed those transcripts in the Federal Court representative proceedings. On 8 November 2001 Justice Moore made an order, with the consent of all parties in the representative proceedings, including GIO, and of those examinees who were legally represented, which permitted access to the transcripts to counsel, solicitors, expert witnesses, lay witnesses, and officers of the insurers or reinsurers of the respondents with responsibility in relation to indemnification of any respondent and solicitors retained by any such officers, on the basis that each person to whom access was granted, signed a confidentiality undertaking, the form of which was set out in the court order, and each person to whom the transcript was shown destroyed all copies of the transcript or parts thereof, and any notes they might have made or received in relation to the transcript or any part, upon conclusion of the proceedings.

72 The second example of a confidentiality regime related to confidential documents, which had been produced by Mr King, including his tax return. The third example was of two rival confidentiality regimes which were proposed by the solicitors for GIO, and by MBC, in relation to the Burton documents which Justice Moore had just ordered be discovered.

Sources of Any Obligation of Confidentiality

73 The law recognises three different ways in which an obligation of confidentiality might arise. The first is by express provision in a contract. The second is by an implied term in a contract. The third is as an obligation recognised in the exclusive jurisdiction of equity.

74 In any litigation which seeks to enforce an obligation of confidentiality, it is important to recognise which of these three types of obligation is alleged. The considerations which enter into the validity, and means of enforcement, of an obligation of confidentiality can differ, between these three types.

75 In the present case, the obligation which is sought to be enforced is, primarily, an express contractual obligation, namely that arising under the confidentiality undertaking which Mr Burton executed on 31 May 1999 (see paragraph 18 above). It would only be to the extent that this express confidentiality agreement could not be enforced that GIO would need to fall back on an implied term in Mr Burton’s contract of employment, or an equitable obligation of confidence.

How the Defendants Say There is no Breach of Confidentiality Obligations

76 There was no argument put (nor could any argument have been put) that Mr Burton, by his communications with MBC, was not in breach of the literal words of that confidentiality undertaking. Rather Mr Burton and MBC put two related arguments. The first was that the confidentiality undertaken should not be read in accordance with its literal words, but rather should be “read down” so as to not prohibit the communication by Mr Burton, of the information which he communicated to MBC. If that argument fails, then MBC and Mr Burton submit that the confidentiality agreement is, in part, void, to the extent that it prohibits Mr Burton engaging in such communications.

77 The same consideration underlies both these arguments, namely, a matter of public policy, concerning the due administration of justice. They submit that the confidentiality agreement,

“… can sensibly be read so as not to prevent disclosure properly required for the due administration of justice. Plainly, it cannot operate to prevent the witness from giving evidence. By the same reasoning, it should not prevent disclosure for the purpose of preparing a witness statement. The alternative is to permit the evidence to be obtained, but to require it to be called “blind”. That achieves nothing by way of protecting confidentiality, and would substantially hinder the efficient conduct of the trial of the Federal Court proceedings.”

“Reading Down”?

78 Any attempt to construe is an attempt to expound the meaning of the words which the parties to that contract used, employing such extrinsic aids to construction as might be legitimate (Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337, at 348-352). Looking at the language of the confidentiality agreement which Mr Burton has signed, I see nothing in the words which suggests that they should be given the limited meaning for which MBC and Mr Burton contend. There is nothing in the situation that the contracting parties were in, at the time the document was entered, as known one to the other – namely, that there were respectively an insurance company conducting a substantial business, and a senior executive of that company who had had, and continued to have, access to commercially sensitive information – which would lead to treating the parties as having intended anything other than the literal meaning of the words they used. There is no suggestion that at that time there was any litigation against GIO, or that GIO would not continue a reinsurance business. I reject the suggestion that the wording of the confidentiality undertaking should be read down, as a matter of construction.

Voidness Through Public Policy?

79 MBC and Mr Burton submit that in the present case, the Federal Court litigation makes serious civil claims, on behalf of thousands of former shareholders of what was then a listed public company of misleading and deceptive conduct (which is alleged to be a breach of various norms of conduct established by statute), and of negligence. They submit that there is a very high public interest in the administration of justice, namely, the fair, efficient and just resolution of (in this instance) civil claims. They say that there would be a grave injustice if these former GIO shareholders were to be denied the ability to obtain factual information from a principal witness capable of establishing the allegations made against GIO and others in the Federal Court proceedings. They say that, as a matter of public policy, GIO should not be able to elevate its interest in the preservation of its private and confidential information above the public interest in the due administration of justice.

A v Hayden

80 MBC and Mr Burton rely on A v Hayden (1984) 156 CLR 532. That case concerned an application for an injunction by members of the Australian Secret Intelligence Service to prevent the Commonwealth from disclosing their identities to the Victorian State Commissioner of Police. The Victorian Police were investigating criminal conduct alleged to have been engaged in by ASIS members. The Victorian State Government, at the request of the Victorian Police, had asked the Commonwealth Government to disclose the identity of those ASIS agents. The ASIS agents had an express term in their contract of employment which bound the Commonwealth not to disclose their identity. The court held that that provision in their contracts of employment was contrary to public policy (Gibbs CJ dissenting on this issue – at 543-544). The basis on which Mason J found the term void was (at 553),

“… because the promise seeks to impose an obligation which is at variance with a fundamental head of public policy – the public interest in the enforcement of the criminal law and in the administration of justice.”

81 His Honour’s discussion of the case law, and subsequent application of it, at 553-561, retains a continuing flavour of focusing on contracts which interfere with the due administration of the criminal law. Thus, his Honour said:

“… that there is a powerful public interest in the enforcement of the criminal law is an important element in the administration of justice does not admit of debate. Indeed, its importance has been such that the common law has regarded as illegal “any contract or engagement having a tendency, however slight, to affect the administration of justice” to use the words of Lord Lyndhurst in Egerton v Brownlow (Earl) (1853) 4 HLC 1 at 163 [10 ER 359 at 424].”

“…the underlying thrust of the common law principle was directed as much against the detriment which would be caused to the administration of justice if agreements of the kind in question were to be enforced as against the evil of making knowledge of the commission of the crime a source of profit to the individual.” (at 554-555)

“… the effective enforcement of the criminal law and the administration of justice, which are central elements in a well ordered democratic society, depend for their efficacy on the unrestricted freedom of each and every citizen to assist and co-operate with the authorities in the investigation and prosecution of criminal offences. There is therefore a powerful public interest in promoting and preserving the citizen’s freedom to assist and co-operate with the authorities in the investigation and prosecution of crime.” (at 555)

“… the public interest in the enforcement of the criminal law is not diminished because it now depends, not on any duty or obligation on the part of the citizen to give information concerning the commission of an offence, but on his freedom to decide what action he will take.” (555-556)

“At first glance it might be thought that the making of a contract not to disclose information which may prove to be relevant to the investigation of a crime is no more than an exercise of the citizen’s freedom of action to which I have referred, but this is to ignore the element of public policy.” (556)

“It is obvious that the public interest in the enforcement of the criminal law as an element in the administration of justice would be seriously impaired if the citizen were at liberty to assume in return for a benefit an obligation not to disclose information concerning the commission of a criminal offence. The enforcement of the criminal law cannot be allowed to hinge on the willingness of the citizen to make a profit out of his silence, whether the contract be made before or after the commission of the offence.” (556)

82 It was on the basis of this discussion of principle, and in the context of a factual situation where the particular inference with the administration of justice which was at issue was the administration of criminal justice, that Mason J came to his conclusion, at 556-557.

“The foregoing discussion indicates that, subject to minor qualification only, Lord Lyndhurst was correct in Egerton v Brownlow (1853) 4 HLC at 163 (10 ER at 424) when he said that any contract having a tendency, however slight, to affect the administration of justice is illegal. He was of course speaking of a contract or engagement which has a tendency to affect the administration of justice adversely. …

Sometimes it is said that a contract to which the principle applies is void; at other times it is said that the contract is unenforceable or, … that the court will not lend its aid to the enforcement of the contract. The true position, as I see it, is that some contracts are void whereas others are valid, though the court will decline to enforce the particular provision in a valid contract in particular circumstances when enforcement of that provision would have an adverse effect on the administration of justice. Thus, a simple agreement not to disclose the existence of a serious criminal offence, which has been, or is about to be, committed in consideration of the payment of a sum of money may well be void because it is illegal. However, it will be otherwise with a contract which is in all respects lawful but nevertheless contains a provision which, if enforced according to its terms, will result in an interference with the administration of justice. Take a contract which contains a minor or subsidiary provision which, though not directed to non-disclosure of criminal offences, imposes an obligation of confidentiality in sweeping terms. If those terms are not susceptible of being read down, the court will refuse to lend its aid to the enforcement of the provision if enforcement would result in the non-disclosure of a criminal offence adversely affecting the administration of justice.”

83 Wilson and Dawson JJ concluded, at 574:

“… if the court was to grant the plaintiffs the permanent injunctions which they seek it would be elevating their private right to confidentiality above the interest of the community in the efficient investigation of alleged breaches of the law. The Commonwealth seeks to advance that interest, yet the injunctions would prevent it from doing so. The administration of justice, and in particular the enforcement of the criminal law, must always rank highly in any assessment of the public interest.”

84 Brennan J held that the term in the contract was void because the Crown could not bind itself, by contract, to give up a discretion of this type (at 586). It was in that context that his Honour said:

“The variety of circumstances comprehended by the promise and the unqualified obligation not to disclose in any circumstances (except for the purposes of ASIS) would preclude the executive government from furnishing information that might otherwise be available to assist the police to enforce the law. Such a promise has a tendency adversely to affect the administration of justice and is void: (Egerton v Brownlow (Earl) (1853) 4 HLC 1 at 163 [10 ER 359, at 424]; Horne v Barber (1920) 27 CLR 494, at 499-500.)

“… the ability of any citizen to assist in the detection and suppression of crime cannot be bargained away except where the crime is not a matter of public concern: cf Kerridge v Simmonds (1906) 4 CLR 253. That is not to say that obligations of confidence cannot be accepted by contract or imposed by law but such obligations cannot enjoin silence where disclosure is reasonably required by the police (or other law enforcement agency) to assist in the investigation of crimes reasonably suspected to have been committed and such disclosure is justified in the public interest: cf Initial Services Ltd v Putterill [1968] 1 QB 396, at 405. A term of a contract not to disclose confidential information though disclosure is reasonably so required to be made and though disclosure is in the public interest is void.”

85 Deane J said:

“… the courts of this country will not lend their aid to enforce a promise not to disclose information where the circumstances are such that the enforcement or insistence upon observance of the promise would obstruct the due administration of the criminal law of Australia, whether Commonwealth or State. The rationale of that proposition is that, apart from the exceptional case (such as that of a professional legal adviser) where the overall administration of the law itself requires that confidentiality be maintained, it would be contrary to public policy for the courts to enforce a right on the part of one person to insist that another fail or refuse to disclose relevant information to assist those entrusted with the ordinary administration of the criminal law in the proper investigation and prosecution of criminal activity: the enforcement by the courts of such a private right to insist that another fail or refuse to disclose relevant information would involve the courts in the obstruction of the due administration of the criminal law which is a mainstay both of the rule of law which they exist to serve and of the very existence of effective private rights. For the purposes of that proposition, the investigation of actual or reasonably apprehended criminal activity by a regular law enforcement agency of the Commonwealth or of a State is part of the administration of the criminal law.” (595)

86 It can be seen from this analysis of the decision in A v Hayden that the ground of the decision, that the term of contract there in question was void, was that it interfered with the administration of the criminal law.

87 Thus, if the confidentiality promise in the present case is to be struck down, or not enforced, on the grounds of public policy, some source other than the ratio decidendi of A v Hayden must be found for that statement of public policy.

How to Find Public Policy

88 In Egerton v Brownlow (1853) 4 HLC 1; 10 ER 359 the House of Lords was considering a settlement of property which settled land on Lord Alford for life, with successive interest to various of his descendents, but with a proviso that, “if Lord Alford shall die without having acquired the title of Duke or Marquis of Bridgewater to him and the heirs male of his body, then” certain of the gifts to his successors would not occur. The House of Lords held that the proviso was a condition subsequent, that it was void as being contrary to public policy, and hence did not take effect. Lord Lyndhurst, at 160 (423 of ER) said:

“It is a well established rule of law that a condition against the public good, or public policy, as it is usually called, is illegal and void. Sheppard’s Touchstone and Lord Coke are direct authorities on this point. In more modern times we find Lord Hardwicke, in a case already cited by the Lord Chief Baron, stating that, “political arguments in the fullest sense of the word, as they concern the government of a nation, must be, and always have been, of great weight in the consideration of the Court; and though there may be no dolus malus in contracts as to other persons, yet if the rest of mankind are concerned as well as the parties, it may properly be said that it regards the public utility.”

And in another case he says,

“These reasons of public benefit and utility weigh greatly with me, and are a principal ingredient in my present opinion.” …

The inquiry must, in each instance, where no former precedent has occurred, have been into the tendency of the act to interfere with the general interest. The rule, then, is clear. Whether the particular case comes within the rule, it is the province of the court in each instance, acting with due caution, to determine.”

89 His Lordship then went on to consider how, if a substantial gift of property was made dependent on attaining a peerage, and given that peerages were usually conferred on the advice of the ministry then in power, the person who so stood to gain might be swayed from the impartial performance of his duty as both legislator and judge. It was in that context that his Lordship made his oft quoted remark:

“It is admitted, that any contract or engagement having a tendency, however slight, to affect the administration of justice, is illegal and void.”

90 These days, the courts are more constrained than in Lord Lyndhurst’s day in deciding what counts as public policy. Courts do not now entertain or decide “political arguments in the fullest sense of the word, as they concern the government of the nation” when deciding whether a contract contravenes public policy. In Re Morris (deceased) (1943) 43 SR (NSW) 352, at 355-356 Jordan CJ said:

“… the phrase ‘public policy’ appears to mean the ideas which for the time being prevail in a community as to the conditions necessary to ensure its welfare; so that anything is treated as against public policy if it is generally regarded as injurious to the public interest. ‘The “public policy” which a court is entitled to apply as a test of validity to a contract is in relation to some definite and governing principle which the community as a whole has already adopted either formally by law or tacitly by its general course of corporate life, and which the courts of the country can therefore recognise and enforce. The court is not a legislator: it cannot initiate the principle; it can only state or formulate it if it already exists’: Wilkinson v Osborne (1915) 21 CLR 89 at 97. It is well settled that a contract is not enforceable if its enforcement would be opposed by public policy: Mogul Steamship Co v McGregor, Gow & Co [1892] AC 25 at 39, 51. Public policy is not, however, fixed and stable. From generation to generation ideas change as to what is necessary or injurious, so that ‘public policy is a variable thing. It must fluctuate with the circumstances of the time’: Naylor, Benzon & Co v Krainische Industie Gesellschaft [1918] 1 KB 331, at 342. New heads of public policy come into being, and old heads undergo modification.”

91 This passage has been quoted with approval by Mason J in A v Hayden (1984) 156 CLR 532 at 558, and by Spigelman CJ in R v Young (1999) 46 NSWLR 681 at 700. The quotation from Wilkinson v Osborne (1915) 21 CLR 89 contained in it, was cited by Wilson and Dawson JJ in A v Hayden at 571.

92 While the courts have no choice but to make findings about what public policy requires, and to revisit those findings from generation to generation, it is a task which is performed using the approach laid down in Wilkinson v Osborne and in Re Morris (deceased). Further it is a task which must be approached with extreme caution. As Mason J said in A v Hayden, at 559:

“The problem is one of formulating with any degree of precision the criteria or the circumstances which will justify a court in refusing to enforce a contract on the ground that there is a countervailing public interest amounting to public policy. The difficulties in ascertaining the existence and strength of an identifiable public interest to which the courts should give effect by refusing to enforce a contract are so formidable as to require that they “should use extreme reserve in holding such a contract to be void as against public policy, and only do so when the contract is incontestably and on any view inimical to the public interest”, to use the words of Asquith LJ in Monkland v Jack Barclay Ltd [1951] 2 KB 252, at 265.”

93 To find out whether public policy does not permit the entering, or enforcement, of the contractual arrangement on which GIO sues, it is necessary to look to various areas where the law has already expressed choices which might bear upon that question.

Criminal Law – Perverting the Course of Justice

94 Attempting to pervert the course of justice (sometimes also referred to as attempting to defeat or obstruct the course of justice) was an indictable common law misdemeanour. In Victoria (where the distinction between felonies and misdemeanours has been abolished by the Crimes (Classification of Offences) Act 1981 (Vic)) it is an indictable common law offence. (I mention the Victorian position because Mr Murphy conducts his practice in Melbourne, and it may be – the evidence does not establish – that at least some of the disclosures occurred in Melbourne.)

95 The common law has been abolished in New South Wales in this respect, by amendments to the Crimes Act 1900 in 1990 which inserted a new section 341, which abolished the offence of perverting the course of justice, and the offence of attempting or conspiring to pervert the course of justice. Now, Part 7 of the Crimes Act 1900 deals with various offences connected with interfering with the administration of justice.

96 Part 7 of the Crimes Act 1900 is divided into Division 1 (definitions), Division 2 (interference with the administration of justice – section 314 to 319 inclusive), and Division 3 (interference with judicial officers, witnesses, jurors etc – section 320 to 326 inclusive), and Division 4 (perjury, false statements etc – sections 327 to 339 – inclusive), and Division 5 (miscellaneous).

97 The 1990 amendments inserted the following new provisions in the Crimes Act 1900:

“312 A reference in this Part to perverting the course of justice is a reference to obstructing, preventing, perverting or defeating the course of justice or the administration of the law.

319 A person who does any act, or makes any omission, intending in any way to pervert the course of justice, is liable to imprisonment for 14 years.”

98 The Crimes Act 1900 contains, in section 314 and following, various prohibitions of conduct which are specific ways in which the administration of justice might be interfered with. Section 319 is a provision of much greater generality than those other sections. None of those other sections could possibly be infringed by enforcement, in the circumstances of the present case, of the confidentiality obligation.

99 The only other provisions of the Crimes Act 1900 which could even arguably bear on the present case are:

“322 A person who threatens to do or cause, or who does or causes, any injury or detriment to any person … intending to influence a person called or to be called as a witness in any judicial proceeding to give false evidence or withhold true evidence or to not attend as a witness or not produce anything in evidence pursuant to a summons or subpoena … is liable to imprisonment for 10 years.

323 A person who does any act … intending to procure, persuade, induce or otherwise cause any person called or to be called as a witness in any judicial proceeding to give false evidence or withhold true evidence or to not attend as a witness or not produce anything in evidence pursuant to a summons or subpoena … is liable to imprisonment for 7 years.

325 A person who without lawful excuse wilfully prevents, obstructs or dissuades a person called as a witness in any judicial proceeding from attending as a witness or from producing anything in evidence pursuant to a summons or subpoena is liable to imprisonment for 5 years

(1A) A person who without lawful excuse wilfully prevents, obstructs or dissuades another person who the person believes may be called as a witness in any judicial proceeding from attending the proceeding is liable to imprisonment for 5 years.”

100 None of these provisions deal with the case of someone using a contractual provision to prevent a potential witness in litigation from disclosing confidential information, out of court, to a solicitor who seeks to use that confidential information in the preparation of pending litigation. Thus, only section 319 remains a candidate for possibly articulating the sort of public policy which MBC and Mr Burton invoke in the present case.

101 The Crimes Act 1914 (Cth) contains in Part III a set of offences relating to the administration of justice.

102 The only sections which could even arguably have any bearing on the present case are:

“36A A person who:

(a) threatens intimidates or restrains; …

(d) causes or procures the punishment of

a person for or on account of his having appeared, or being about to appear, as a witness in a judicial proceeding shall be guilty of an indictable offence.

40 A person who intentionally prevents another person who has been summonsed to attend as a witness in a judicial proceeding from attending as a witness or from producing anything in evidence pursuant to the subpoena or summons shall be guilty of an offence.

43(1) Any person who attempts, in any way not specially defined in this Act to obstruct, prevent, pervert or defeat the cause of justice in relation to the judicial power of the Commonwealth, shall be guilty of an offence.

103 Sections 36A and 40 do not strike at the present situation, of GIO seeking to enforce a confidentiality obligation in relation to disclosures out of court of confidential information.

104 Section 319 of the Crimes Act 1900 (NSW), and section 43(1) of the Crimes Act 1914 (Cth) would be influenced, in their interpretation, by the previous common law on the subject. For help in construing those sections, and to ascertain the Victorian law concerning this topic, I now turn to consider the common law concerning perverting the course of justice.

105 The case law concerning the offence of perverting the course of justice is strongly weighted with cases concerning interference with the processes of the criminal law. They include a doctor giving a medical certificate which falsely states that an accused is unfit to stand his trial R v Edelsten (1990) 21 NSWLR 542; attempting to influence a judicial officer concerning the disposition of a case before him R v Murphy (1985) 4 NSWLR 42 (even if the case is a committal proceeding R v Murphy (1985) 158 CLR 596); an accused providing self bail R v Freeman (1985) 3 NSWLR 303 at 309; a solicitor representing a client in court when the client is charged under a name which the solicitor knows is not the client’s real name Hatty v Pilkinton (1992) 35 FCR 433; pressuring an accused to plead guilty Meissner v R (1995) 184 CLR 132; and making an accusation of crime one knows is false to the police, and planting items one intends to be taken to be evidence of the truth of the accusation R v Rowell [1978] 1 WLR 132.

106 From the multitude of reported cases concerning this offence, Mason J, in A v Hayden chose to refer to those cases which bore a close analogy to the facts of the case then before the High Court. Thus, his Honour said, at 553-554:

“In Howard v Odhams Press Ltd [1938] 1 KB 1, at 29 Slesser LJ pointed out that the perversion of justice may take place in many ways. One example was concealment or procuring the concealment of a felony amounting to the offence of misprision. Another example is an agreement not to prosecute or to stifle a prosecution which at common law is void or unenforceable: Williams v Bayley (1866) LR 1 HL at 220 per Lord Westbury.

Yet another example is an agreement between a prosecutor and persons indicted that a witness should not give evidence at a trial for reward.”

107 Similarly, Wilson and Dawson JJ at 571 referred to Collins v Blantern (1767) 2 Wils. KB 347 at 350; 95 ER 850 at 852, a case concerning a contract to stifle a prosecution for perjury. That it was these cases that were referred to by Mason J, and by Wilson and Dawson JJ, demonstrates how their Honours were carrying through the methodology for recognition of public policy laid down in Wilkinson v Osborne, searching for cases which had articulated, in another sphere of law, the public policy which was then to be applied to decide whether a contract is enforceable.

108 Notwithstanding the preponderance of cases concerning perverting the course of justice being ones which related to interfering with criminal proceedings, there are some cases concerning the offence of perverting the course of justice, which relate to interference with civil proceedings. R v Vreones [1891] 1 QB 360 held that the offence was established when the accused had tampered with samples of goods, the quality of which was disputed, with intent to deceive arbitrators. R v Kellett [1976] 1 QB 372 held that the offence was committed where a respondent to a divorce case threatened to sue a potential witness in that case for slander for a statement which that person had made to an enquiry agent, with the intent of causing that potential witness not to give evidence in the case. The ratio decidendi of that case was that:

“… a threat (or promise) made to a witness is, like an assault on a witness, an attempt to pervert the course of justice, if made with the intention of persuading him to alter or withhold his evidence, whether or not what he threatens (or promises) is a lawful act, such as the exercise of a legal right, and whether or not he has any other intention or intends to do the act if the evidence is not altered, or withheld.” (at 393)

109 However, I had not been referred to any case, and my own researches have not revealed any case, which suggests that any offence connected with interfering with the course of justice is committed if an employer seeks to enforce a confidentiality clause in an agreement with his employee (or former employee), by preventing the employee from disclosing, to a solicitor, out of court, confidential information of the employer.

Interfering with the Course of Justice – Application in Civil Law

110 The notion of interfering with the administration of justice has been recognised, in connection with certain civil proceedings, outside the context of a criminal charge. I have already mentioned Egerton v Brownlow, where the concept was applied to strike down a condition subsequent in a settlement. When that was the context in which Lord Lyndhurst made the remark, “It is admitted, that any contract or engagement having a tendency, however slight, to affect the administration of justice, is illegal and void”, some caution is called for in applying that remark to a widely different context.

111 In Lound v Grimwade (1888) 39 Ch D 605 Stirling J dealt with an action to set aside a bond under which the plaintiff promised to pay money. The action succeeded, because part of the consideration for giving the bond was a promise that no criminal proceedings would be begun against the plaintiff, and that certain other criminal proceedings would be conducted in such a way that the plaintiff’s name would not be mentioned, or if it was mentioned the plaintiff would be exonerated from all blame in connection with the transactions there in question. This consideration was clearly one which would amount to the offence of interfering with the administration of justice. However, in coming to that conclusion Stirling J made some remarks which could potentially mislead. His Lordship quotes Lord Lyndhurst’s famous sentence from Egerton v Earl Brownlow, and continues (at 612-3):

“Upon this principle it has been repeatedly held that agreements tending to affect the course of legal proceedings are illegal, even though those proceedings may not be strictly criminal in their nature. Thus an agreement to pay money in consideration of the withdrawal of opposition to the discharge of an insolvent has been held to be illegal: Hall v Dyson (17 QB 785); Hills v Mitson (8 Ex 751). In Elliott v Richardson (Law Rep 5 Cp 744) an agreement by a shareholder in a company which was being compulsorily wound up that he would endeavour to postpone the making of a call was held to be illegal on the ground that it amounted to an interference with public justice; see especially the judgment of Mr Justice Willes (Law Rep 5 CP 748) with which the other judges (Keating J and M Smith J) agreed. A fortiori, must an agreement which tends to interfere with the course of criminal proceedings be illegal.”

112 It is the last sentence in this passage just quoted which is the ratio of the decision. The first sentence of the passage quoted is, in my view, too widely stated, and not borne out by the cases relied on.

113 Hall v Dyson (1852) 17 A & E 785 and Hills v Mitson (1853) 8 Ex 751 were each cases where an insolvent debtor had applied for his discharge from custody, the plaintiff had set about opposing that discharge, but dropped his opposition in return for money. The report of Hall v Dyson does not mention Egerton v Lord Brownlow. The reasoning of Lord Campbell CJ (at 791) was:

“In the present case, the creditor is, as it were, bought off; and he was under a moral obligation to continue his opposition, in as much as, by giving notice of it, he had led the other creditors to believe that he really intended to oppose. The consequence of his withdrawing is that justice is disappointed, because the adjudication is made without the proper investigation having taken place. It seems to me that the consideration for receiving the money, which is, to withdraw his opposition, and that after having given notice of it, is clearly immoral.

Patterson J held that the agreement sued on was illegal:

“… in as much as it is contrary to the policy of the Insolvent Debtors’ Act, and amounts moreover to a fraud on the creditors. The duty of opposition on the part of the creditor may be a duty only of imperfect obligation: but, if he has the option of pursuing one course or the other, it is an immoral act, against the policy of the law, and a fraud upon the other creditors, to take money for exercising that option (at 792).

Colleridge J agreed.

114 Thus, in Hall v Dyson it was the specific type of interference with the administration of justice which led to the conclusion that the agreement was contrary to public policy – that the opposing creditor had taken on a role in the litigation, that other creditors were likely to rely on his continuing to perform, so that the opposing creditor was not free to consult only his own private interests in deciding to withdraw his opposition. As well, for any creditor to receive a personal benefit in this way was contrary to the policy of the Insolvent Debtors Act, which required creditors to be treated equally.

115 Hills v Mitson did no more than apply Hall v Dyson (at 758). Elliott v Richardson (1870) LR 5 CP 744 concerned an agreement between A (a shareholder in a company in the course of winding up) and B (a shareholder in and creditor of that company) that A would seek to postpone the making of a call on shares in the company, and support the admission to proof of B’s claimed debt, in return for which B would pay the calls due on A’s shares. Willes J’s preferred ground of decision was that the agreement was unenforceable because it amounted to maintenance. He went on to give a view on another point that had been raised, holding that the agreement amounted to an interference with the course of public justice. However, he then went on: “In order to explain my view on that point, we must look at the nature of the Winding-Up Acts”, and gave a summary of the way those Acts had substituted a court-controlled process for the previous cumbersome procedures. He concluded, at 749:

“It seems to me that this an essential part of the intentions of the legislature, that the proceedings should be taken with reasonable speed; and that being so, any secret agreement by which persons who are given a locus standi, as representing their own interests, should, for money, undertake to delay proceedings to the prejudice of the other shareholders and creditors, is void, not only as being against public policy, but as being against the clear intention of the legislature under the Winding-Up Acts.”

116 Both Keating J and Montague Smith J, gave separate judgments, based solely on the agreement being contrary to the policy of the Winding-Up Acts. Holding the agreement to be contrary to public policy because it was contrary to the policy of a specific statute is, with respect to Stirling J, a long way from holding that “agreements tending to affect the course of legal proceedings are illegal.”

117 A moment’s consideration will show that there are many agreements which “tend to affect the course of legal proceedings” in one sense of that expression, but which are not illegal.

· Legal practitioners are paid for their services, and sometimes have a provision in their retainers whereby, if funds are not provided in advance, they are entitled not to appear at litigation. That type of contract could have a significant effect on the course of legal proceedings, if it resulted in the lawyer ceasing to act close to the hearing date, yet it would not seriously be suggested that it was illegal or unenforceable as contrary to public policy.

· An agreement settling legal proceedings has a profound effect on the course of those legal proceedings, but is not contrary to public policy. Even a claim for private injury resulting from an act which amounts to an indictable offence can be compromised, provided that it is not a matter of public concern, Kerridge v Simmonds (1906) 4 CLR 253, at 258-260 per Griffiths CJ.

· Many agreements to fund the bringing of litigation are now regarded as not amounting to maintenance. In Kien Nam Quach v Huntof Pty Ltd [2000] NSWSC 932 Dunford J quoted, at [10] from Steyn LJ in Giles v Thompson [1993] 3 All ER 321 at 328, “Nevertheless the offences and torts of maintenance and champerty lingered on in atrophied form for more than a century after any public interest in maintaining them had disappeared”. Dunford J continued, at [11] and [12]:

“Since then the offences and torts of maintenance and champerty have been abolished in England and in a number of the Australian states. In New South Wales, the relevant statute is the Maintenance and Champerty Abolition Act 1993 No. 88. However, s 6 provides that the Act does not affect any rule of law as to cases in which a contract is to be treated as contrary to public policy or as otherwise illegal whether the contract was made before or after the commencement of the Act.

In recent times the courts have taken a more liberal attitude to what constitutes an interest in the litigation or other motive recognised as justifying maintenance of litigation by a stranger to it: Stevens v Keogh (1946) 72 CLR 1, Trendtex Trading Corporation v Credit Suisse [1982] AC 679, Magic Menu Systems v AFA Facilitation Ltd (1997) 72 FCR 261 at 267, Roux v Australian Broadcasting Commission [1992] 2 VR 577 at 607, Martell v Consett Iron Co Limited supra, so that the provision of legal assistance by trade organisations, trade unions and employers or where the maintainer has a "genuine commercial interest" in the outcome of the litigation are no longer regarded as offending the rules against maintenance of other persons' litigation. It appears that there is a further exception in relation to bankruptcy and company administration cases, e.g. Re Tosich Constructions Pty Limited, Re William Felton Co Pty Ltd (1998) 28 ACSR 228 at 232.”

See also NAB Ltd v Market Holdings Pty Ltd (in Liq) [2001] NSWSC 253; (2001) 37 ACSR 629 at [221]-[223] per Young CJ in Eq; Hogarth v Gye [2002] NSWSC 32 at [8] per Bryson J; Cadwallader v Bajco [2001] NSWSC 1193 at [151] per Austin J.

Officer’s Statutory Duties – Corporations Act

118 On the other hand, there are several indictors that it is in accord with public policy that a confidentiality agreement, like the one on which GIO sues in the present case, should be enforceable.

119 Section 183 of the Corporations Act 2001 (Cth) says;

(1) a person who obtains information because they are, or have been, a director or other officer or employee of a corporation must not improperly use the information to:

(a) gain an advantage for themselves or someone else; or

(b) cause detriment to the corporation.

Note 1: This duty continues after the person stops being an officer or employee of the corporation.

Note 2: This subsection is a civil penalty provision (see section 1317E).

120 The definition of “officer”, in section 9 of the Corporations Act 2001 (Cth), includes:

“… a person … who makes, or participates in making, decisions that effect the whole, or a substantial part, of the business of the corporation.”

121 In Grove v Flavel (1986) 4 ACLC 654, at 659 Jacobs J (with whom Matheson and Olsson JJ agreed) noted the wide variety of roles in a company which fell within the definition of “officer”, and said:

“It seems to me, therefore, that what is “improper” for the purposes of sec 124(2) cannot be determined by reference to some common uniform or inflexible standard which applies equally to every person who is an officer, but rather must be determined by reference to the particular duties and responsibilities of the particular officer whose conduct is impugned.”

122 That observation would also apply to section 183 of the Corporations Act 2001 (Cth).

123 While section 183 is contravened only if the employee, etc improperly uses the information, concerning the predecessor of that section (section 232(5) of the Corporations Law) Young J said, in Rosetex Co Pty Ltd v Licata (1994) 12 AC LC 269, at 273:

“… “information” in s232(5) means the sort of information which equity would protect by injunction if a director used it in breach of his fiduciary duties. “Improper” use of that information is in much the same plight as a breach of fiduciary duty under the general law.”

124 In R v Byrnes (1995) 183 CLR 501, at 514-515 Brennan, Dean, Toohey and Gaudron JJ said, concerning the proscription, in section 229(4) of the Companies (South Australia) Code, of an officer or employee making, “improper use of his position as such an officer or employee, to gain, directly or indirectly, and advantage for himself or for any other person or to cause detriment to the corporation”:

“Impropriety does not depend on an alleged offender’s consciousness of impropriety. Impropriety consists in a breach of the standards of conduct that would be expected of a person in the position of the alleged offender by reasonable persons with knowledge of the duties, powers and authorities of the position and the circumstances of the case. When impropriety is said to consist in an abuse of power, the state of mind of the alleged offender is important (Hindle v John Cotton Ltd (1919) 56 SLR 625 at 630-631): the alleged offender’s knowledge or means of knowledge of the circumstances in which the power is exercised and his purpose or intention in exercising the power are important factors in determining the question whether the power has been abused. But impropriety is not restricted to abuse of power. It may consist in the doing of an act which the director or officer knows or ought to know that he has no authority to do.”

See also per McHugh J at 521-522.

125 That construction can, it seems to me, properly apply to section 183 Corporations Act 2001 (Cth).

126 The existence of section 183 suggests that the maintenance of confidences by a former corporate officer is something which public policy requires – at least in those circumstances where there is not a countervailing obligation.

127 But MBC and Mr Burton do not assert that there is any obligation on someone who is the repository of confidential information, which could possibly be of use in litigation, to assist a legal practitioner in the preparation of that litigation. In this respect there is a fundamental difference between the position Mr Burton has been in when he has been freely disclosing information in the privacy of MBC’s offices, to the situation he would be in when he was answering questions, pursuant to a subpoena, in a courtroom.

128 What MBC and Mr Burton say is that public policy requires that, if a person who has such information wishes to assist a lawyer in preparation of litigation, public policy requires that he be free to do so, notwithstanding any contractual obligations he might have undertaken. It does not seem consistent with section 183 that a former corporate officer have that freedom, except perhaps if the nature of the information sought to be disclosed was such that the former employee was not acting “improperly” in disclosing it. I shall return to this topic later (see paragraph 210 below).

Confidentiality and the Availability of Evidence in Court Proceedings

129 There are well established limitations on obligations of confidentiality, being limitations which are established for the purpose of enabling the system of administration of justice to operate. Thus, at common law, a witness who is called to give evidence in court is not entitled, on the ground of owing an obligation of confidence alone, to decline to answer any relevant question which is permitted to be put (D v National Society for the Prevention to Children [1978] AC 171, at 218, 230, 237). If the confidential information also is the subject of a privilege recognised in the law of evidence which applies in the court before whom the person is called, it is that privilege, not the confidentiality, which provides a ground on which that person need not give the evidence.

130 However, the rules of court state the extent of the obligation in this respect. The rules of court standardly provide for the issue of subpoenas to give evidence and subpoenas for production. They standardly provide for the form of the subpoena which may be issued, though allowing for the court to authorise the subpoena to issue in some other form (eg Supreme Court Rules Part 37 Rule 2, Federal Court Rules Order 27 Rule 2). The obligation under the subpoena is, typically, an order that the recipient shall attend for the purpose of giving evidence before the court, at a nominated time and place and until the recipient is excused by the court from further attending. The rules of court which create this obligation to attend, say nothing about the recipient of a subpoena having any obligation to say a single word to the party who issues the subpoena, outside the context of answering questions in court.

131 While the administration of justice is a very important matter of social policy, it is not one which overrides all other matters of public importance. There are many constraints under which litigation operates, where, as a matter of public policy, information is not able to be used at all in litigation. In the Federal Court (which is probably the relevant court to consider for present purposes) the Evidence Act 1995(Cth) applies. It denies the court evidence when it is the subject of client legal privilege (section 117-126), religious confession privilege (section 127), self incrimination privilege (section 128), evidence relating to the reasoning process of a judicial officer (section 129), various public interest privileges (section 130), or evidence of settlement negotiations (section 131). As well, the court has a discretion to exclude evidence in the circumstances where section 135 applies, to limit the use of evidence under section 136, and to not receive evidence which was obtained improperly or in contravention of a law, or in consequence of an impropriety or contravention of a law under section 138. A subpoena to give evidence will usually not be enforced against an expert who has had no connection with the facts of the case (Application of Forsyth; Re Cordova v Philips Roxane Laboratories Inc [1984] 2 NSWLR 327). When there are these limitations on the court actually receiving evidence in litigation, it ought not come as a surprise if more extensive limitations can be imposed, consistently with public policy, on a lawyer’s receipt of information and documents, in the privacy of his own office, for the purpose of eventually being used in litigation.

132 As well, when a case is in the course of preparation, limits are imposed on the ability of a litigant to compel the production of information which is relevant to the case. While there are procedures of discovery, and interrogatories, whereby a litigant can compulsorily obtain documents, and information, from an opposite party, those procedures are always subject to the control of the court. In the course of controlling those procedures, one of the factors which the court takes into account, is whether information is confidential. Confidentiality can be taken into account in deciding whether to order discovery at all, and if so to what extent, Science Research Council v Nassé [1980] AC 1028 at 1065-1066, 1071-1072, 1073, 1077, 1085, 1089-1090. Further, the court can, in appropriate cases such as when the opposite party is a trade rival, allow inspection of a discovered document which is confidential on the basis that it is disclosed only to counsel, solicitors and nominated experts, not to the client: Mobil Oil Australia Ltd v Guina Developments Pty Ltd [1996] 2 VR 34.

133 If documents are obtained from a third party on subpoena, and the third party objects to those documents being inspected, the court decides whether, when, and subject to what, if any, limitations, inspection can occur: National Employers’ Mutual General Association Ltd v Waind and Hill [1978] 1 NSWLR 372.

134 If the court requires the disclosure of information, or documents, for the purpose of one piece of litigation, the court ensures that (unless leave of the court is obtained) the information, or document, is not used for any other piece of litigation – Harman v Secretary of State for the Home Department [1983] 1 AC 280 (document obtained on discovery) Ainsworth v Hanrahan (1991) 25 NSWLR 155 (answer to interrogatories); Central Queensland Cement Pty Ltd v Hardy [1989] 2 Qd R 509 (witness statement).

135 It is already established that there are circumstances where the law will prevent a repository of confidential information from making that information available to someone else, for the purpose of litigation. The obligation of confidentiality which is imposed on legal practitioners, is a familiar example of this restraint. In Rakusen v Ellis, Munday & Clarke [1912] 1 Ch 831, at 835 Cozens-Hardy MR said:

“A solicitor can be restrained as a matter of absolute obligation and as a general principle from disclosing any secrets which are confidentially reposed in him. In that respect it does not very much differ from the position of any confidential agent who is employed by a principal.”

136 Concerning the responsibility of a solicitor entrusted with confidential information, who is called on to use that confidential information for another client, in another case, Cozens-Hardy said, at 835-6:

“… and if this had been a case of Mr Munday having obtained from the plaintiff, who said that he had been wrongfully dismissed, confidential information bearing upon the circumstances or the alleged justification of the wrongful dismissal, and if it had been a case of Mr Munday afterwards appearing in the action for the defendants, speaking for myself, I should have said that was a case in which he was putting himself in a position in which he could not as an honest man discharge his duty to the defendants without consciously or unconsciously availing himself of information which he had obtained while acting for Mr Rakusen. That would be a typical case in which a person ought not to be allowed to put himself in a position in which he could not clear his mind from the knowledge he had obtained. I cannot bring myself to doubt that any respectable solicitor would in those circumstances have said at once, “I am very sorry I cannot act for you because I am familiar with the circumstances alleged by the other side, which circumstances have been communicated to me confidentially””.

137 Fletcher-Moulten LJ said at 839:

“In almost all business there must be persons in such a confidential relationship to the employers or to the people who are employed by them for purposes connected with the business, that the knowledge which they acquire is not knowledge at their own disposal but consists substantially of the secrets of the employer. Such employments come to an end sometimes at the choice of the master, sometimes at the choice of the servant, and thereupon difficulties necessarily arise, because the person who is no longer in employment still has in his breast secrets which are the property of his past employer. The view that the law takes of the rights of the parties in that position is too clear to be disputed. The employee is quite free to go into the service of people who may be rivals or the opponents of his former master. The law does not say that the possession of those secrets shall cripple his work, or sterilise it. He may go into employment quite inconsistent with the employment which he had in the past. All that the law says is: you shall not disclose or put at the service of your new employer the secrets that belong to your old employer.”

Last Modified: 13/05/2002