Billington & Billington (No 2)
[2008] FamCA 409
•6 June 2008
FAMILY COURT OF AUSTRALIA
| BILLINGTON & BILLINGTON (NO. 2) | [2008] FamCA 409 |
| FAMILY LAW – SUCCESSIVE CLIENT CONFLICTS – Application of husband to restrain the firm of solicitors retained by the wife from acting for her in the husband’s appeal to the Full Court dismissed – A particular solicitor in the firm retained by the wife had previously been employed by the firm of solicitors retained by the husband and had appeared in a directions hearing on behalf of the husband – Not found that the solicitor would have come into possession of confidential evidence relating to the husband through appearing at such directions hearing – Even if she had, not shown that such information was actually or potentially relevant to the husband’s appeal – Rule 8.03 Family Law Rules 2004 (Cth); Durban Roodepoort Deep Limited v Mark David Reilly and Ors [2004] WASC 269; Qihua Zhoa v Sheng Yu Zhand and Anor [2007] NSWSC 891; Pond & Thurga (No 2) [2007] FamCA 587; Kallinocos & Anor v Hunt & Ors (2005) 64 NSWLR 561 and S & S (17 April 1997, unreported) cited – McMillan & McMillan (2000) FLC 93-048 followed – Distinction between trial and appeal proceedings in this context discussed. FAMILY LAW – EVIDENCE – FURTHER EVIDENCE – The applications to adduce further evidence in the appeal do not appear to pertain to evidence capable of being in any way dependent upon anything the solicitor may have come to know – The application arises only after substantive judgment and the issue was not raised at trial – There has been no participation of the solicitor since delivery of judgment. FAMILY LAW – EVIDENCE – FAILURE TO GIVE EVIDENCE – No Jones v Dunkel (1959) 101 CLR 298 inferences arise by the failure of the solicitor to give evidence as there was a reasonable explanation for not doing so – Further, the solicitor did not come into possession of confidential information not shown to be actually or potentially relevant to the husband’s pending appeal to the Full Court. |
| Family Law Rules 2004 (Cth) R 8.03 Allesch v Maunz (2000) 203 CLR 172 |
| APPLICANT: | MR BILLINGTON |
| RESPONDENT: | MS BILLINGTON |
| FILE NUMBER: | SYF | 3567 | of | 2005 |
| DATE DELIVERED: | 6 June 2008 |
| PLACE DELIVERED: | SYDNEY |
| JUDGMENT OF: | COLEMAN J |
| HEARING DATE: | 27 May 2008 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Foster |
| SOLICITOR FOR THE APPLICANT: | Watts McCray Lawyers |
| COUNSEL FOR THE RESPONDENT: | Mr Richardson SC |
| SOLICITOR FOR THE RESPONDENT: | Barkus Edwards Doolan |
Orders
That the application of the husband filed 7 May 2008 be dismissed.
That the husband pay the wife’s costs of and incidental to such application as agreed or assessed on a party and party basis.
IT IS NOTED that publication of this judgment under the pseudonym Billington & Billington is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)
| FAMILY COURT OF AUSTRALIA AT PARRAMATTA |
FILE NUMBER: SYF3567 OF 2005
| MR BILLINGTON |
Applicant
And
| MS BILLINGTON |
Respondent
REASONS FOR JUDGMENT
By application filed 7 May 2008 the husband sought orders restraining the wife from instructing a firm of solicitors, B E D (“the solicitors”) “from continuing to represent the Wife in these proceedings” and “from providing the Wife with advice or other legal services in respect of matrimonial issues arising from the breakdown of her marriage with” the husband. The husband’s application sought that the wife pay the husband’s costs of the application. (Application in a Case, page 3).
On 22 May 2008 the solicitors filed an application seeking the dismissal of the husband’s application of 7 May 2008. The costs of resisting the application were also sought.
As is common ground, the husband and wife have been engaged in disputation with respect to financial matters for some time. A first instance judgment in relation to their dispute was delivered on 14 December 2007. By Notice of Appeal filed 10 January 2008, that judgment was challenged by the husband. There has not been any Notice of Cross Appeal filed on behalf of the wife in relation to the judgment of 14 December 2007. The husband’s appeal is listed to be heard by a Full Court on 3 December 2008.
The solicitors currently acting for each of the parties have done so at all material times. The change of employment of a solicitor, Ms S, from the employ of the firm of solicitors which represents the husband (W M) to the firm of solicitors which represents the wife (B E D) gives rise to the current application.
Material Facts
It is appropriate to refer to the history of the litigation as emerges uncontroversially, and to the particular events which give rise to the current application as they emerge from the evidence before this Court after a number of objections to portions of the affidavits relied upon by each party were upheld.
In July 2003 the husband retained the firm of W M to act on his behalf. Those solicitors have continued to be engaged as the husband’s solicitors since that time.
In January 2005 the wife retained the firm of B E D to act on her behalf. Those solicitors have continued to act on behalf of the wife since that time.
On 22 July 2005 the wife commenced proceedings for settlement of property pursuant to Part VIII of the Family Law Act 1975 (Cth) (“the Act”) in the Family Court at Sydney.
On 22 March 2007 Ms S, then employed by W M, appeared on behalf of the husband at a directions hearing before Le Poer Trench J. The trial of the contested Part VIII proceedings commenced on 9 July 2007 before Cronin J and concluded with the delivery of his Honour’s judgment on 14 December 2007. Evidence in the trial concluded in late October 2007.
On 10 January 2008 the husband filed a Notice of Appeal with respect to Cronin J’s orders.
On 13 February 2008 B E D advised W M of their intention to seek to adduce further evidence as to the value of the wife’s share portfolio if the Full Court determined that the husband’s appeal should be allowed and that a re-exercise of the discretion of the trial Judge was an appropriate course for the Full Court to adopt pursuant to Allesch v Maunz (2000) 203 CLR 172.
On 20 May 2008 W M advised B E D of their intention to seek to adduce further evidence on behalf of the husband in the appeal, and inferentially for the purpose of any re-exercise of the trial Judge’s discretion in the event of such re-exercise eventuating. The further evidence which was foreshadowed related to the husband’s taxable income for the 2006/2007 financial year, and the value of “the [P] Group” in which the husband had an interest.
On 1 May 2008 apparently with knowledge of Ms S’s impending employment by B E D, W M wrote to B E D requesting that B E D withdraw from further involvement in the proceedings.
On 6 May 2008, B E D wrote to W M proffering an undertaking as to the conduct of B E D and Ms S in relation to the litigation. The undertaking was in the following terms:-
I, K S, undertake to the Family Court of Australia and to W M and their client, [the husband], that I will not disclose any information that I may be aware of concerning either [the husband] or the pending proceedings before the Family Court of Australia and the Full Court of the Family Court of Australia between [the husband] and [the wife] to any other person. In that regard, I undertake not to:
1.speak with any person at B E D concerning any information I may have concerning [the husband] or his proceedings;
2.disclose directly or indirectly any information that I may have in my possession or control concerning [the husband] and his proceedings;
3. have any involvement with the proceedings;
4.view any correspondence files, tax invoices, briefs or emails either sent to B E D or received by them, nor be involved in the matter in any manner whatsoever in the future;
5.convey to any person any information about the husband’s affairs which I may have as a result of my employment with W M. (Affidavit of Ms K, filed 22 May 2008, Annexure A).
On 7 May 2008 Ms S commenced employment with B E D. On that same day an undertaking in the terms referred to above was supplied to W M.
Before this Court, the husband relied upon an affidavit sworn by him in which, after objections, the factual matters of potential relevance related only to his intention to seek to adduce further evidence in the appeal (see paragraph 9). (Affidavit of the husband, filed 8 May 2008, par 9). The husband did not in his affidavit assert that he had ever met, conferred with or by any means communicated instructions or confidential information to Ms S during the time that she was employed by W M.
The affidavit of the husband’s solicitor, Ms E, revealed that since “about October 2006” Ms E has been “the principal solicitor at W M acting for the husband in these proceedings”. (Affidavit of Ms E, filed 7 May 2008, par 3). It also emerged from Ms E’s affidavit that, following the judgment and orders of Cronin J on 14 December 2007, Ms E received instructions to lodge an appeal which she did on 10 January 2008 (Affidavit of Ms E, filed 7 May 2008, par 7), that the case was a “complex property settlement and financial matter which has occupied a large part of time” on the part of Ms E, and had been “a large proportion” of Ms E’s practice throughout the period subsequent to her commencing employment at W M in October 2006. (Affidavit of Ms E, filed 7 May 2008, par 11).
Also emerging from the affidavit was that “[a]ll staff at W M Lawyers have access to the files of documents comprising this matter, and have done so since the commencement of the retainer” with the husband. (Affidavit of Ms E, filed 7 May 2008, par 13). Ms E did not depose to having ever seen Ms S access any such documents by way of computer, or “hard” or “soft” copies of such documents. Ms E fairly deposed to her “knowledge and belief” that Ms S “has not to date had any direct dealings” with the husband himself during her employment at W M. (Affidavit of Ms E, filed 7 May 2008, par 16).
It is apparent, albeit from other evidence, that Ms S appeared on behalf of the husband at a directions hearing before Le Poer Trench J on 22 March 2007 and that “for the purposes of that directions hearing” Ms E “briefed Ms S about the issues in the matter and she reviewed various aspects of the file in preparation for the event”. What those “issues” and “aspects” were was not indicated. (Affidavit of Ms E, filed 7 May 2008, par 16). The affidavit otherwise deposed to correspondence annexed to the affidavit to which reference has earlier been made and which does not advance the issue which the Court must decide.
On behalf of the wife, Ms K, a partner in the firm of B E D swore an affidavit which was read in the proceedings. As did Ms S, Ms K also appeared before Le Poer Trench J on 22 March 2007. She deposed in that regard:-
I recall only one occasion when I have spoken to Ms S concerning the matter of [Billington] at all. On that occasion, Ms S appeared in the matter on behalf of the husband. The proceedings were listed before His Honour Justice Le Poer Trench on 22 March 2007. The matter was listed for a call over. It was anticipated that at that listing, hearing dates would be able to [be] allocated and it was only after the matter had been called before His Honour that His Honour indicated that he required that the parties provide to him at Court a Balance Sheet. I recall having some discussions with Ms S at Court concerning the preparation of that Balance Sheet prior to His Honour ultimately making directions in listing the matter for Trial. (Affidavit of Ms K, filed 22 May 2008, par 15).
Other than by indicating the bases upon which the partners of B E D would require Ms S to act if the present application were to be rejected, and Ms S’s undertaking accepted by the Court, the affidavit of Ms K does not advance the present dispute. Ms S did not swear an affidavit or otherwise give evidence in the proceedings, a matter upon which learned counsel for the husband placed some reliance.
Neither party sought to adduce further evidence in the present application or to cross examine the deponent of any affidavit.
As learned counsel for both parties sensibly acknowledged, the fact that this application arises after the delivery of judgment at first instance, and in the context where the only proceedings currently awaiting agitation involve an appeal to the Full Court, may have significance.
It is not seriously in contest that requiring the wife to instruct new solicitors in order to be appropriately represented before the Full Court would involve considerable expense. The matters articulated in the Notice of Appeal filed 10 January 2008 abundantly support the proposition of learned senior counsel for the wife that very considerable preparation will be required from both parties to present and resist the appeal.
Further evidence in the appeal
Whatever might ultimately transpire in relation to further evidence before the Full Court in the appeal, the matters foreshadowed in this application do not appear capable of involving any confidential knowledge which Ms S may have gained with respect to the financial or other circumstances of the husband. The only admissible evidence of any opportunity Ms S may have had to acquire knowledge of the husband’s circumstances relates to Ms S’s appearance on his behalf on 22 March 2007. As learned senior counsel for the wife submitted, to the extent any knowledge might thus have been acquired, and considered advantageous to the husband, it would no doubt have been traversed in the course of the evidence which concluded before Cronin J in October 2007. The evidence does not reveal any occasion subsequent to 22 March 2007, much less subsequent to the delivery of judgment in December 2007, upon which Ms S had the opportunity to acquire any confidential knowledge of the husband’s financial or other circumstances.
The affidavit of the husband’s solicitor referred to the intention to seek leave to adduce further evidence in the appeal regarding the husband’s “taxable earnings in 2007 being significantly less than that relied upon by Justice Cronin in his Judgment, with its consequential impact on adjustments made pursuant to section 75(2)”. (Affidavit of Ms E, filed 7 May 2008, Annexure A2). The affidavit also attached schedules of changes to the asserted diminution in the value of the wife’s shareholding in various listed securities.
To the extent that the appeal turns solely on the trial Judge’s reasons for judgment and the evidence before him, it is difficult to see how any confidential information which Ms S may have about the husband could impact on the outcome of the appeal, either to the husband’s advantage or detriment. The further evidence does not appear capable of being in any way dependent upon anything which Ms S may have come to know during the course of her employment at W M.
The present application is thus not potentially advanced by reference to the proposed further evidence in the appeal.
Discussion
Rule 8.03 of the Family Law Rules 2004 (Cth) provides that “[a] lawyer acting for a party in a case must not act in the case for any other party who has a conflicting interest”. A note to the rule adds “this rule does not purport to set out all the situations in which a lawyer may not act for a party”. This rule is uncontroversial. The more difficult question, as this case illustrates, is how to apply it in practice.
Learned counsel for both parties, each of whom provided the Court with comprehensively researched summaries of argument, did not refer the Court to any decision, reported or unreported, in which an application of this kind was made subsequent to the delivery of judgment at first instance and whilst the only proceedings pending were an appeal to an intermediate Appeal Court. Learned counsel for neither party disputed the proposition that each application must be considered on the facts as found in such an application.
Learned senior counsel for the wife relied upon Durban Roodepoort Deep Limited v Mark David Reilly and Ors [2004] WASC 269 in which Le Miere J, after referring to a number of English and Australian authorities said that (at par 80):-
80 Before a court will grant an injunction to protect a client’s confidential information by restraining his former solicitor from acting against him, the former client must establish that the solicitor possesses confidential information and must identify the confidential information with precision and not merely in global terms. The client must identify the confidential information with some particularity. The degree of particularity required must depend upon the facts of the particular case. The confidential information must be identified with sufficient particularity to enable the court to determine whether the information is truly confidential, whether the confidential information which once existed, if it did, continues to be confidential and whether the confidential information is relevant to any issue in the current proceedings and might be used in those proceedings.
Reliance was also placed on the unreported decision of Nicholas J of the Supreme Court of New South Wales in Qihua Zhoa v Sheng Yu Zhand and Anor [2007] NSWSC 891. In that case, under the heading “the principles”, Nicholas J summarised the principles governing an application such as the present application in the following terms (at pars 26 – 30):-
It is well recognised that there is no rule forbidding a lawyer acting in litigation against the former client. …
[T]hat the court’s jurisdiction to intervene on behalf of the former client required satisfaction of two conditions: (i) that the solicitor was in possession of information which was confidential to the former client and (ii) that such information was or might be relevant to the matter on which he was instructed by the second client. …
[That] the applicant must demonstrate that the risk is a real one, not merely fanciful or theoretical. …
[That] an applicant must also identify with some specificity the confidential information to be protected [it being necessary to show] that the information was confidential to the [former client] when it was communicated, involving the [former client] in the necessity of showing facts and circumstances which show that it should then have been kept confidential or secret, and necessarily as part of that, what information was communicated.
Nicholas J referred to a number of decisions of the Family Court to which he was referred which were submitted to establish “that restraint is justified where only a theoretical risk of misuse of the confidential information is shown to exist” and that an applicant “need only give evidence that he has provided confidential information to the solicitor, and does not have to divulge the content of that information” (Qihua Zhoa [supra], par 32). Nicholas J distinguished those authorities having regard to the facts and circumstances disclosed by the evidence in the proceedings before him. Learned counsel for the husband placed considerable reliance upon Nicholas J having thus declined to follow decisions of the Family Court to which reference will shortly be made, submitting that different principles governed applications in Family Law proceedings to those which governed applications in other proceedings. Such submission was understandable given that, in broad terms, the principles which the Family Court has developed in relation to applications such as the present appear more favourable to applicants such as the husband in this case than do the principles which the Supreme Court of New South Wales has adopted.
On the evidence before this Court, if the husband must satisfy the two conditions to which Nicholas J referred in Qihou Zhoa (supra), his application would be dismissed, as it fails to satisfy either of the conditions to which his Honour referred. On the evidence before this Court, it has not been established that Ms S, and thus B E D vicariously was and/or were “in possession of information which was confidential” to the husband or that “such information was or might be relevant to the matter” on which the solicitor[s] was and/or were instructed by the wife. In fairness to the husband, it is appropriate however, to consider the application on the broader basis discussed in other cases to which this Court has been referred.
In Pond & Thurga (No 2) [2007] FamCA 587 O’Ryan J adopted the principles emerging from the authorities which Brereton J reviewed in Kallinocos & Anor v Hunt & Ors (2005) 64 NSWLR 561. His Honour is instructive for present purposes (at 582 – 583, quoted at par 210 of O’Ryan J’s judgment), and suggests that:-
·During the subsistence of a retainer, where the court's intervention to restrain a solicitor from acting for another is sought by an existing client of the solicitor, the foundation of the court's jurisdiction is the fiduciary obligation of a solicitor, and the inescapable conflict of duty which is inherent in the situation of acting for clients with competing interests (Prince Jefri Bolkiah [v KPMG (a firm) [1992] 1 All ER 517]).
·Once the retainer is at an end, however, the court's jurisdiction is not based on any conflict of duty or interest, but on the protection of the confidences of the former client (unless there is no real risk of disclosure) (Prince Jefri Bolkiah [supra]).
·After termination of the retainer, there is no continuing (equitable or contractual) duty of loyalty to provide a basis for the court's intervention, such duty having come to an end with the retainer (Prince Jefri Bolkiah [supra]; Belan v Casey [[2002] NSWSC 58]; Photocure [ASA v Queens University at Kingston (2002) 56 IPR 86]; British American Tobacco Australia Services Ltd [v Blanch [2004] NSWSC 70]; Asia Pacific Telecommunications Ltd [v Optus Networks Pty Limited [2005] NSWSC 550] contra Spincode Pty Ltd [v Look Software Pty Ltd [2001] VSCA 248]; McVeigh [v Linen House Pty Ltd [1999] VSCA 138]; Sent [v John Fairfax Publications Pty Limited [2002] VSC 429]).
·However, the court always has inherent jurisdiction to restrain solicitors from acting in a particular case, as an incident of its inherent jurisdiction over its officers and to control its process in aid of the administration of justice (Everingham v Ontario [(1992) 88 DLR (4th) 755]; Black v Taylor [[1993] 3 NZLR 403]; Grimwade v Meagher [[1995] 1 VR 446]; NeW Man v Phillips Fox [[1999] WASC 171]; Mitchell v Pattern Holdings [Pty Ltd [2000] NSWSC 1015]; Spincode Pty Ltd [supra]; Holborow [v Rudder [2002] WASC 265]; Williamson v Nilant [[2002] WASC 225]; Bowen v Stott [[2004] WASC 94]; Law Society v Holt [[2003] NSWSC 629]). Prince Jefri Bolkiah [supra] does not address this jurisdiction at all. Belan v Casey [supra] and British American Tobacco Australia Services Ltd [supra] are not to be read as supposing Prince Jefri Bolkiah excludes it. Asian Pacific Telecommunications Ltd [supra] appears to acknowledge its continued existence.
·The test to be applied in this inherent jurisdiction is whether a fair-minded, reasonably informed member of the public would conclude that the proper administration of justice requires that a legal practitioner should be prevented from acting, in the interests of the protection of the integrity of the judicial process and the due administration of justice, including the appearance of justice (Everingham v Ontario [supra]; Black v Taylor [supra]; Grimwade v Meagher [supra]; Holborow [supra]; Bowen v Stott [supra]; Asian Pacific Telecommunications Ltd [supra]).
·The jurisdiction is to be regarded as exceptional and is to be exercised with caution (Black v Taylor [supra]; Grimwade v Meagher [supra]; Bowen v Stott [supra]).
·Due weight should be given to the public interest in a litigant not being deprived of the lawyer of his or her choice without due cause (Black v Taylor [supra]; Grimwade v Meagher [supra]; Williamson v Nilant [supra]; Bowen v Stott [supra]).
·The timing of the application may be relevant, in that the cost, inconvenience or impracticality of requiring lawyers to cease to act may provide a reason for refusing to grant relief (Black v Taylor [supra]; Bowen v Stott [supra]).
The decisions of the Supreme Court of New South Wales suggest that an integral part of the Court’s jurisdiction to grant applications such as that of the husband in this case turns on the “protection of the confidences of the former client (unless there is no real risk of disclosure)”. As the Court is not persuaded that the solicitor acquired confidential information, or was likely to have acquired confidential information of the client in this case, there can be no real suggestion of a need for the relevant “protection”.
None of the authorities to which the Court has been referred suggests that any relevant presumption arises by virtue of Ms S having been employed by W M during the course of their retainer by the husband. Given the Court’s rulings with respect to the affidavit evidence of Ms E, the husband having given no admissible evidence that such was the case, there is no basis upon which this Court could find that, viz a viz Ms S and thus B E D, any “confidences” of the husband could require “protection”. Even if, despite the absence of evidence establishing that the possibility that Ms S acquired confidential information relating to the husband, the terms of her undertaking, and those of her employers alleviate any real risk of those confidences being disclosed.
As the New South Wales authorities, and the decision of the Full Court of this Court in McMillan (2000) FLC 93-048, to which reference will shortly be made, recognise, an important aspect of the jurisdiction to restrain solicitors from acting in a particular case relates to the administration of justice, and the perception of litigants, and the public, that a client’s confidential information remains protected notwithstanding that a solicitor changes his or her employment. Objectively, where there is a risk that confidential information of a client is likely to be communicated to the opposing party, or otherwise misused, it is important that the Court intervene to prevent that happening in order to preserve the integrity of court processes and the perception that this is occurring.
On the other hand, as the authorities to which Brereton & O’Ryan JJ referred also recognise, regard has to be had to the impact on a litigant such as the wife in this case, who is entirely innocent in terms of the current dispute but potentially very significantly adversely impacted in financial and other ways if the application is granted.
The “test”, discussed by Brereton J in (Kallinicos [supra] at 582), to which O’Ryan J referred in Pond & Thurga (supra), whilst logically cogent, is not necessarily easily applied to the facts of a particular case. Translating the “test” to the current circumstances, it is difficult to see how the “reasonably informed member of the public would conclude that the proper administration of justice requires” that B E D should be prevented from acting in the pending appeal “in the interests of the protection of the integrity of the judicial process and the due administration of justice, including the appearance of justice”.
The evidence establishes that Ms S was involved on one occasion only in the litigation between the husband and wife, that being for the purpose of appearing at a procedural hearing on 22 March 2007, for which purpose, albeit in ways that were not specified, Ms S was instructed by the solicitor with the conduct of the husband’s case. As is not in doubt, the only proceedings currently pending in this Court are by way of appeal to the Full Court. In those circumstances, rather than acting in the interests of protecting the integrity of the judicial process and due administration of justice, and the appearance of justice, granting the present application would appear an over zealous and needless protection against a risk which, on the evidence relied upon by the parties seeking such relief, could at its best be regarded as extremely remote.
That is not to say that the fair-minded reasonably informed member of the public would reach the same conclusion if this application were made during the pendency of trial or first instance proceedings, but that is not the factual context in which this application has to be considered.
As the authorities make clear, the jurisdiction to grant relief of this kind “is to be exercised with caution”. The Court understands caution to be exercisable in relation to the totality of the evidence, and the matters relevant to the exercise of the jurisdiction, and not to be referrable only to the interests of the party seeking the relief. Relevant in that context is the need to give appropriate weight to the public interest in a litigant not being deprived of the lawyer of his or her choice without due cause. Also relevant in this context is the cost and inconvenience of requiring the wife to retain new lawyers. Quite apart from the work required to be undertaken by solicitors familiar with the case to adequately represent the wife’s interests before the Full Court, realistically, were new solicitors now to be instructed, a far greater level of reading and preparation would be required, and at greatly increased expense to the wife.
Applying the principles which the Supreme Court of New South Wales appears to have accepted and which O’Ryan J adopted, the Court would not be persuaded that this application should be granted. The reasons why that is so have largely been dealt with.
Unsurprisingly, learned counsel for the wife urged this Court to approach the present application by reference to the decisions of the Full Court of this Court, and particularly the Full Court’s decision in McMillan (supra). Although not expressly stated, inferentially counsel for the wife submitted that this Court was, or should regard itself, as bound by the decision in McMillan (supra). The Court accepts that, to the extent that “principles” established by decisions of the Supreme Court of New South Wales and those emerging from decisions of the Full Court differ, as a single judge, this Court should follow the decisions of the Full Court, notwithstanding that, on the findings of fact made by this Court, and the nature of the proceedings with which this application is concerned, McMillan (supra) is distinguishable.
In McMillan& McMillan (supra) (at 87,727 – 87,728) the Full Court said:-
43. Shortly after it was given, the decision in Thevenaz [(1986) FLC 91-748] was the subject of consideration by Bryson J in the Equity Division of the Supreme Court of New South Wales in the case of D & J Constructions Pty Ltd v Head (1987) 9 NSWLR 118. The facts of that case are not important for present purposes. However, the following passages from his Honour’s judgment, where he preferred the approach of the English Court of Appeal in Rakusen v Ellis, Munday & Clarke [1912] 1 Ch 831 over the approach of the Queensland Full Court in Mills [v Day Dawn Block Gold Mining Co Ltd; In re Marsland (1882) 1 QLJ 62] (which Frederico J had of course followed in Thevenaz [supra]), but where he explained the decision of Thevenaz [supra] in the context of the circumstances of family law litigation, are important to an understanding of the issues which arise in this area (at 122-123):
“In my view the legal basis on which the court should act in restraining solicitors from acting for the opposite side after acting for one party before or during litigation appears from statements in the Court of Appeal of England in Rakusen v Ellis, Munday & Clarke [1912] 1 Ch 831. Cozens- Hardy MR said (at 835):
‘... we must treat each of these cases, not as a matter of form, not as a matter to be decided on the mere proof of a former acting for a client, but as a matter of substance, before we allow the special jurisdiction over solicitors to be invoked, we must be satisfied that real mischief and real prejudice will in all human probability result if the solicitor is allowed to act.’
Fletcher Moulton LJ clearly stated the need to look at the facts of each case to discern what protection for confidential information is appropriate (see at 839-841). He said (at 841):
‘As a general rule the Court will not interfere unless there be a case where mischief is rightly anticipated.’
Buckley LJ also showed the need to refer to the particular circumstances (at 842). It was submitted that I should not follow this decision because it does not, as the submission was, give sufficient weight to the fact that the knowledge of one partner is available to and should be attributed to all partners. I think that Rakusen’s case [supra] points the way I should go, although there was in that case the important element of identity of the former client with the later opponent. The existence of a proved risk of misuse of confidential information appears to me to be very important if the plaintiff is to succeed.
Where confidential information has been communicated by a client to a solicitor and is relevant to litigation in which that client is now engaged and is still available to the solicitor, the court should take a cautious approach to any proposal that it should allow the solicitor to act against that client: the considerations are much the same whether the information was communicated in the course of the litigation itself or in earlier business and whether or not the solicitor is a sole practitioner or is one of a number of partners or was employed by a principal. I would think that the court would not usually undertake attempts to build walls around information in the office of a partnership, even a very large partnership, by accepting undertakings or imposing injunctions as to who should be concerned in the conduct of litigation or as to whether communications should be made among partners or their employees. The new client would have to join in such an arrangement and give up his right to the information held by such parties and staff as held it. Enforcement by the court would be extremely difficult and it is not realistic to place reliance on such arrangements in relation to people with opportunities for daily contact over long periods, as wordless communication can take place inadvertently and without explicit expression, by attitudes, facial expression or even by avoiding people one is accustomed to see, even by people who sincerely intend to conform to control. Here in Sydney and now there is a thriving diverse and talented legal profession and the court need not fear that a litigant who is deprived of the services of one firm will not be able to retain adequate representation.
Cautious conduct by the court is appropriate because the spectacle or the appearance that a lawyer can readily change sides is very subversive of the appearance that justice is being done. The appearance which matters is the appearance presented to a reasonable observer who knows and is prepared to understand the facts. The court should weigh the facts and assess the risks in the eye of reality, theoretical risks should be disregarded and when as here there is no confidential information available and there never was a relationship of solicitor and client with any partner the appearance of the matter is not a basis for the court to assume control over the retainer.
…
There was recent consideration of the circumstances in which a solicitor would be restrained from acting for a former client by the Family Court of Australia (Frederico J) in In the Marriage of Thevenaz (1986) FLC ¶ 91-748; 11 Fam LR 95. That Court took the view that restraint is justified if there is a risk that confidential communications on relevant matters have been made by the party for whom the solicitor has ceased to act, even if the risk may be more theoretical than practical. It seems natural that a particularly careful view would be taken in family law business, as such litigation tends to be about highly confidential facts and a very wide range of facts and circumstances can conceivably be relevant; the sensitivity which even the most reasonable people feel about such litigation when they are engaged in it calls for careful measures to secure not only that justice is done but also that it is apparent that it is done, an appearance which would not survive any general impression that lawyers can readily change sides.”
The Full Court in McMillan (supra) further said (at 87,736):-
65. Particularly in relation to the need to maintain public confidence in the legal system, we would adopt, with respect, the following passage from the minority judgment of the Supreme Court of Canada in Martinv MacDonald Estate (Gray) [1991] 1 WWR 705, which was a decision arising out of an employed solicitor changing firms, although not in the family law jurisdiction (at 728-729):
“... Neither the merger of law firms nor the mobility of lawyers can be permitted to adversely affect the public's confidence in the judicial system. At this time, when the work of the courts is having a very significant impact upon the lives and affairs of all Canadians, it is fundamentally important that justice not only be done but appear to be done in the eyes of the public.
My colleague stated that this appeal called for the balancing of three competing values, namely: the maintenance and integrity of our system of justice; the right of litigants not to be lightly deprived of their chosen counsel; and the desirability of permitting reasonable mobility in the legal profession.
Of these factors, the most important and compelling is the preservation of the integrity of our system of justice. The necessity of selecting new counsel will certainly be inconvenient, unsettling and worrisome to clients. Reasonable mobility may well be important to lawyers. However, the integrity of the judicial system is of such fundamental importance to our country, and indeed to all free and democratic societies, that it must be the predominant consideration in any balancing of these three factors.
Lawyers are an integral and vitally important part of our system of justice. It is they who prepare and put their clients’ cases before courts and tribunals. In preparing for the hearing of a contentious matter, a client will often be required to reveal to the lawyer retained highly confidential information. The client's most secret devices and desires, the client's most frightening fears, will often, of necessity, be revealed. The client must be secure in the knowledge that the lawyer will neither disclose nor take advantage of these revelations.
Our judicial system could not operate if this were not the case. It cannot function properly if doubt or suspicion exists in the mind of the public that the confidential information disclosed by a client to a lawyer might be revealed.”
What might be considered the “policy considerations” discussed in McMillan (supra) and those discussed in the authorities to which reference has earlier made do not differ significantly for present purposes.
The passage most potentially helpful to the husband’s application before this Court arises from the Full Court’s acceptance in McMillan (supra) of the judgment of Lindenmayer J in the case of S & S (17 April 1997, unreported) in which his Honour said:-
All that is necessary is that the wife swears that she has conveyed confidential information to the solicitors and that she believes, not unreasonably, that that information may be used against her, or at least to her disadvantage, in these current proceedings.
Clearly, the test, which the Full Court accepted in McMillan (supra) can more readily be satisfied than the test adopted by the New South Wales decisions to which reference has earlier been made.
As noted earlier, the husband did not give evidence that he had ever met or communicated confidential information to Ms S by any direct or indirect means. To the extent that the husband “believes” that Ms S gained such information a reasonable basis for such belief was not advanced. Ms E did not give evidence that she had ever conveyed confidential information about the husband to Ms S. The prospect of a theoretical misuse of confidential information relating to the husband thus has not been established given the absence of admissible evidence establishing that Ms S received, or might have received confidential information about the husband.
Notwithstanding these conclusions, for more abundant caution, it is appropriate to consider Ms S’s appearance on 22 March 2007 and the inferences which should be drawn from such appearance. As is not in contest, the appearance on 22 March 2007 was a directions hearing at which procedural orders were made. Ms E did not in her affidavit depose to having conveyed any confidential information in relation to the husband to Ms S for the purposes of Ms S’s appearance on 22 March 2008. There were sound reasons for Ms E not communicating confidential information about the husband to Ms S for the purpose of her appearance at a procedural hearing in lieu of Ms E.
Ms E deposed to having “briefed Ms S about the issues in the matter”. What that briefing involved was not detailed by Ms E. Ms E does not suggest that so doing involved communicating any confidential information about the husband, other than as it presumably emerged from the pleadings and affidavits which had by that time been filed. Ms E further deposed to Ms S having “reviewed various aspects of the file in preparation for the event”. What aspects of what documentation Ms S viewed was not described. (Affidavit of Ms E, filed 7 May 2008, par 16). In the context of a directions hearing at which procedural orders were made, in the absence of any evidence of these matters, it would not be reasonable to infer that Ms S came into possession of confidential information relating to the husband. Objectively, in the absence of other admissible evidence, it is difficult to see what Ms S would have gleaned about the husband other than as that emerged from pleadings and affidavits. To the extent that Ms E “briefed” Ms S in relation to confidential matters relating to the husband, Ms E could have given evidence about the nature of those matters without thereby breaching any legal professional privilege or confidence of the husband.
Objectively, having regard to the Court’s rulings with respect to the affidavits relied upon by the husband, his case must be that, in the circumstances detailed by Ms E in her affidavit, the possibility of Ms S having come into possession of confidential information relating to the husband must be accepted. That however is not the only hypothesis reasonably emerging from the circumstantial evidence. Save for the appearance before Le Poer Trench J on 22 March 2007, there is no evidence connecting Ms S with the husband’s case. Accepting the statement of principle emerging from McMillan (supra) at its highest, it cannot be successfully asserted that a presumption of the kind necessarily relied upon by the husband in this case arises. To the extent that such conclusion requires underpinning, a balanced reading of the judgment of the Full Court in McMillan (supra) suggests that such an approach would fail to constitute an appropriate weighing of the competing considerations which arise in an application of this kind.
Learned counsel for the husband submitted that the failure of Ms S to give evidence was supportive of the inferences sought to be drawn in support of the husband’s case. In essence, it was submitted that it would have been a simple matter for Ms S to swear an affidavit deposing to her having never received, by any means, any information, confidential or otherwise, about the husband. Learned counsel for the husband relied upon the decision of the High Court in Jones v Dunkel (1959) 101 CLR 298 of his contentions in relation to the failure of Ms S to give evidence.
In Jones v Dunkel (supra, at page 312) Menzies J, with whom Kitto and Windeyer JJ agreed, Dixon CJ and Taylor J expressing no opinion, observed that the absence of the defendant in that case as a witness could not “be used to make up any deficiency of evidence”, that “evidence which might have been contradicted by the defendant can be accepted the more readily if the defendant fails to give evidence” and that “where an inference is open from facts proved by direct evidence and the question is whether it should be drawn, the circumstance that the defendant disputing it might have proved the contrary had he chosen to give evidence is properly to be taken into account as a circumstance in favour of drawing the inference”.
Learned senior counsel for the wife submitted that the Court could not draw such an inference as a reasonable explanation for the failure to have Ms S give evidence had been provided by Ms K in her affidavit. It was submitted, with considerable force in logic, that for Ms K to have conferred about such matters with Ms S would have been to do the very thing about which complaint is made and that, a reasonable explanation having been given, a Jones v Dunkel (supra) inference ought not be drawn.
The Court accepts the submission on behalf of the husband that Ms S could possibly have given evidence in this application that she had never acquired confidential information about the husband. On the evidence before this Court, Ms S could not have given evidence that she had never gained “information” about the husband given her appearance at the directions hearing on 22 March 2007 and the need to have gained some information about the proceedings involving the husband for that purpose. Ms S would then have been liable to be cross examined with respect to the kinds of things the potential for which is significantly relied upon in this application. In the circumstances, the Court accepts that there is a reasonable explanation for Ms S’s failure to give evidence. Even if the Court is wrong in this regard and there has not been an adequate explanation for Ms S’s failure to give evidence, that would not change matters given the absence of any evidence that Ms S was ever in possession of confidential information relating to the husband. The absence of evidence from Ms S cannot in this Court’s view cure the deficiency in the evidence relied upon by the husband although, had the husband given any relevant and admissible evidence, his assertions could be more readily accepted in the absence of any evidence from Ms S. In circumstances where there is no evidence from the husband upon which the inferences sought to be drawn on his behalf could be drawn, the absence of evidence from Ms S cannot assist the husband’s case.
It was submitted on behalf of the husband that:-
The imminent Appeal does not preclude the possibility (sic) further work or information coming to light especially in the context of foreshadowed applications by both parties to seek leave (sic) adduce fresh evidence on the Appeal. It does not preclude negotiations, unexpected or otherwise, before or during the Appeal. Cases often take unexpected turns that require unforeseen investigations, documents or compromise. (Case Summary on behalf of Applicant Husband, page 9).
With respect to the ingenuity of this submission, it overlooks the absence of any evidence suggesting how any such developments might be influenced by anything known to Ms S, and particularly overlooks the absence of any evidence that Ms S ever came into possession of any confidential information in relation to the husband. It also overlooks the terms of the undertaking given by Ms S. Accepting that Ms S would comply with her undertaking, failing to do so being a course which may well have implications far beyond the civil proceedings between the husband and wife, Ms S would never be in a position to be privy to any of the possible developments upon which learned counsel for the husband relied.
The Court is thus satisfied that even if Ms S might be in possession of confidential information relating to the husband, such information has not been shown to be actually or potentially relevant to the husband’s pending appeal to the Full Court.
Conclusion
Applying the test most favourable to the husband’s application, the application should be rejected. The evidence fails to establish that the husband, or anyone on his behalf, conveyed confidential information to Ms S. The evidence fails to establish that the husband reasonably believes that he or anyone on his behalf conveyed confidential information to Ms S. The evidence fails to establish, notwithstanding the absence of the necessary findings of fact with respect to confidential information, that there is the possibility of any such information being used against the husband or to his disadvantage in the appeal proceedings. The application will thus be dismissed.
Costs
It was sensibly agreed by Counsel for both parties that costs should follow the event. There will accordingly be an order for costs on a party and party basis as agreed or assessed in favour of the wife.
I certify that the preceding sixty three (63) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Coleman.
Associate:
Date: 6 June 2008
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