Bradney & Suwan
[2021] FamCA 165
•26 March 2021
FAMILY COURT OF AUSTRALIA
Bradney & Suwan [2021] FamCA 165
File number(s): SYC 3357 of 2020 Judgment of: GILL J Date of judgment: 26 March 2021 Catchwords: FAMILY LAW – APPLICATION FOR INJUNCTION – restraint of lawyer from acting in proceedings – Legal Profession Uniform Law Australian Solicitors’ Conduct Rules 2015 (NSW) – inadvertent disclosure – equitable obligation of confidentiality – applicable law in Australia – whether documents or information have necessary quality of confidence – circumstances of acquisition – legal principles relating to restraint Legislation: Convention for the Protection of Human Rights and Fundamental Freedoms
Human Rights Act 1998 (UK)
Legal Profession Uniform Law Australian Solicitors’ Conduct Rules 2015 (NSW) r 31
Cases cited: Attorney-General v Guardian Newspapers [No 2] [1990] 1 AC 109
Black v Taylor [1993] 3 NZLR 403
Bowen v Stott [2004] WASC 94
Dalton & Dalton (2017) FLC 93-773
Grimwade v Meagher [1995] 1 VR 446
Imerman v Tchenguiz [2011] 2 WLR 592
Johns v Australian Securities Commission (1993) 178 CLR 408
Kallinicos v Hunt (2005) 64 NSWLR 561
Moorgate Tobacco Co Ltd v Philip Morris Ltd [No 2] (1984) 156 CLR 414
Newman v Phillips Fox (1999) 21 WAR 309
Oceanic Life Ltd v HIH Casualty and General Insurance Ltd (1999) 10 ANZ Insurance Cases 61–438
Optus Networks Pty Ltd (ACN 008 570 330) v Telstra Corporation Ltd (ACN 051 775 556) [2010] FCAFC 21
Oram & Lambert and Ors (No 2) [2018] FAMCAFC 161
Osferatu & Osferatu (2015) FLC 93-666
Prince Jefri Bolkiah v KPMG [1999] 2 AC 222
Smith Kline & French Laboratories (Aust) Ltd v Secretary, Dept of Community Services and Health (1990) 22 FCR 73
Spincode Pty Ltd v Look Software Pty Ltd (2001) 4 VR 501
Williamson v Metaxas & Vernon [2004] WASCA 248
Williamson v Nilant [2002] WASC 225
Number of paragraphs: 97 Date of last submission/s: 25 February 2021 Date of hearing: 19 February 2021 Place: Canberra Counsel for the Applicant: Mr Hand Solicitor for the Applicant: Tiyce and Lawyers Counsel for the First Respondent: Mr Kelly Solicitor for the First Respondent: Paddingtons Lawyers and Attorneys Counsel for the Second Respondent: Mr Coulsen Solicitor for the Second Respondent: Twomey Dispute Lawyers ORDERS
SYC 3357 of 2020 BETWEEN: MR BRADNEY
Applicant
AND: MS SUWAN
First Respondent
B PTY LTD
Second Respondent
ORDER MADE BY:
GILL J
DATE OF ORDER:
26 MARCH 2021
THE COURT ORDERS THAT:
1.The application, filed on 16 November 2020, by the wife and second respondent for an injunction to restrain the applicant husband’s current solicitors from continuing to act in the proceedings is dismissed.
IT IS NOTED THAT:
2.Orders were made on 15 February 2021 in relation to file SYC5642/2020 and SYC3357/2020, with file SYC5642/2020 to be consolidated with and become part of SYC3357/2020. On 17 February 2021 and 18 February 2021, the wife and Mr B responded to the court’s request to identify active applications. The husband has not.
3.Accordingly, the following active applications filed under SYC5642/2020 are to be consolidated into SYC3357/2020:
(a)Application in a Case filed 27 July 2020 by C Pty Ltd;
(b)Application in a Case filed 6 August 2020 by B Pty Ltd;
(c)Application in a Case filed 17 November 2020 by the applicant husband.
4.The following applications remain active under SYC3357/2020:
(a)Application in a Case filed 28 May 2020 by the applicant husband;
(b)Application in a Case filed 2 July 2020 by the applicant husband;
(c)Objection to Subpoena filed 31 July 2020 by the respondent wife;
(d)Application in a Case of 16 November 2020 (filed 30 October 2020) by the respondent wife;
(e)Application in a Case filed 13 January 2021 by the respondent wife;
(f)Amended Initiating Application filed 19 January 2021 by the applicant husband;
(g)Amended Response to Initiating Application filed 11 February 2021 by the respondent wife;
(h)Application in a Case filed 15 February 2021 by the applicant husband.
5.The Application in a Case filed 5 August 2020 by the wife in SYC5642/2020 is finalised, having been amended on 14 September 2020. The 14 September 2020 application was then consolidated into the wife’s Application in a Case of 16 November 2020.
6.In relation to the wife’s Application in a Case of 16 November 2020, the remaining issue on foot relates to the request for disclosure contained in Order Sought 9. Order Sought 3, relating to the restraint of the husband’s solicitors, has been refused in this judgment.
IT IS ORDERED THAT:
7.In the event that a party identifies either that an active application has not been identified in these notations, or that an application identified in the directions is no longer pressed, then that party is to advise the Registrar at the Canberra Registry of the Family Court of Australia and each other party of that fact in writing within seven days of these orders.
8.The following applications are transferred to a date to be advised for directions before a Senior Registrar of the Family Court of Australia in Canberra:
(a)Application in a Case filed 28 May 2020 by the applicant husband;
(b)Application in a Case filed 2 July 2020 by the applicant husband;
(c)Objection to Subpoena filed 31 July 2020 by the respondent wife;
(d)Application in a Case filed 6 August 2020 by B Pty Ltd;
(e)Application in a Case of 16 November 2020 (filed 30 October 2020) by the respondent wife (see [6] above);
(f)Application in a Case filed 17 November 2020 by the applicant husband;
(g)Application in a Case filed 13 January 2021 by the respondent wife;
(h)Application in a Case filed 15 February 2021 by the applicant husband.
9.The following applications for interim orders in child-related matters are transferred to a date to be advised for directions before a Senior Registrar of the Family Court of Australia in Canberra:
(a)Amended Initiating Application filed 19 January 2021 by the applicant husband;
(b)Amended Response to Initiating Application filed 11 February 2021 by the respondent wife.
10.The proceedings in relation to the Application in a Case filed 27 July 2020 by C Pty Ltd are to be listed before me for further directions on 27 April 2021 at 11:00 am by Microsoft Teams.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to 17.02 Family Law Rules 2004 (Cth).
IT IS NOTED that publication of this judgment by this Court under the pseudonym Bradney & Suwan has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
GILL J
This aspect of the proceedings involves an application by the wife and second respondent, Mr B, to restrain the husband’s current solicitors (Tiyce) from continuing to act in the proceedings. The proceedings involve property adjustment between the husband and wife, including relief sought by the husband in relation to transactions involving B Pty Ltd, trading as Company B.
The wife first applied to remove Tiyce on 20 July 2020, repeating the application on 14 September 2020, consolidated in her 16 November 2020 application. Mr B, the second respondent, joined with the application.
The issues raised by the wife and Mr B covered the previous relationship of Michael Tiyce with the husband and wife, and Tiyce’s use of documents provided by the husband. The wife and Mr B claim that the husband should not have had those documents and that Tiyce should not have used them once they were provided by the husband.
Background
The husband and wife together operated a business, referred to in the proceedings as Company D. The wife became involved in another business, B Pty Ltd, trading as Company B, that involves the second respondent, Mr B. Until recently Company B was owned by the wife, Mr B and a third party.
The husband makes two claims regarding Company B relevant to the property proceedings. The first is that Company B is the vehicle by which the pool of property of the parties has been wrongly depleted by the wife and that Company B should be subject to s 106B orders to undo this effect. He says that this claim arises by virtue of the wife’s conversion of the business of Company D into the business of Company B, followed by the wife’s loss of shareholding in Company B. That loss of shareholding also leads to a dispute as to the acquisition of that shareholding by Mr B, being an acquisition claimed to be justified by operation of the shareholders’ agreement between Mr B and the wife.
The second claim in relation to Company B is the husband’s contention that by virtue of his involvement in and funding of Company B, he holds an equitable beneficial interest in Company B. The husband claims he was involved in the day-to-day operation of both Company D and Company B. He pointed to various documents in which, in relation to the wife’s conduct of business, he was described as the “rock” or “glue” of the business operations. He points to being involved regarding the obtaining of an ABN for B Pty Ltd and other active involvement in the development of the business. The husband says that he set up IT systems for Company B, along with the website for Company B. The husband says that such involvement has resulted in him holding an equitable beneficial interest.
The documents
It is uncontroversial that the husband has had access to a number of documents relating to Company B, and relating to Mr B.
The material the subject of the dispute was disclosed by the husband to the wife on 21 August 2020 and further on 3 and 4 September 2020, following a Notice to Produce issued by the wife on 20 August 2020. It is described as comprising six volumes of documents, and a further 900 contracts, contained on a USB drive. A schedule appears at annexure A1 of the husband’s affidavit of 12 February 2021 sorting the produced documents into variously described classes, along with associated correspondence enclosing the production of documents. Mr B observes that there appears to be a mismatch between the schedule and the lists contained in the correspondence, indicating that there should be some uncertainty about what is held by the husband and what is produced.
The wife’s claim
The wife produced a subset of the documents at Exhibit W2. She asserts that the produced documents are the property of Company B.
Denying that the husband had authority to possess the documents, the wife relies upon the nature of some portion of the documents as demonstrating that the documents fall within the inadvertent disclosure provisions at Rule 31 of the Uniform Conduct Rules.
Firstly, the wife observes that a number of the documents are apparently correspondence between the wife and her lawyers. Secondly, without identifying the documents with precision, she observes that there are a number of documents contained on the USB that specifically relate to the business of Company B, such as contracts with clients. The husband did not appear to dispute that some of the documents fell within these descriptions made by the wife.
The wife submits that the husband must have obtained the documents inadvertently or unlawfully, that such should have been apparent to Tiyce on the face of the documents, and that Tiyce should have complied with the inadvertent disclosure provisions contained in the Solicitors Conduct Rules (discussed further below).
It appeared to be uncontroversial that a number of documents have been used by the husband and his lawyers in the sense that they have led to the issue of subpoenas directed to the conduct of business by Company B, including subpoenas directed to clients of Company B, apparently as revealed by the contracts that were in the husband’s possession.
The wife then seeks the restraint of Tiyce based on the incidental or implied supervisory jurisdiction of the Court in relation to legal practitioners, the application of which will be discussed following consideration of the documents.
Mr B’s claim
Although Mr B also relies on the supervisory jurisdiction, he relies on a different but related basis to justify the restraint.
In circumstances where Mr B says he is unaware of the full extent of documents held by the husband, Mr B complains that a number of the documents are by their nature confidential, attracting an equitable obligation of confidentiality imposed upon the husband in dealing with them. That is, his complaint rested not on a mere absence of authority on the husband’s part to hold or to use the documents, but also on an obligation of confidence derived from the nature of the documents held by the husband.
Consideration of obligations in respect of the documents
A commonality in the wife’s and Mr B’s claims arises in their reliance on the nature of the documents to found their claims that Tiyce should be restrained because of their use of documents provided to them by the husband. In the wife’s case, the nature of the documents is relied upon to found the inference that they were inadvertently disclosed to, or improperly obtained by the husband, leading to a breach of the Conduct Rules by Tiyce. In Mr B’s case, the nature of the documents is relied upon in order to establish an obligation of confidentiality on the part of the husband, breached in his provision of the documents to Tiyce.
Mr B focussed his submissions in relation to a number of the classes of documents produced by the husband as identified by the husband in his affidavit filed 12 February 2021.
In particular, he identified categories that raise issues of confidentiality. Class 8 of A1 lists correspondence between Company B and E Lawyers. The email of 21 August 2020 at A3 lists “documents in relation to B Pty Ltd trading as Company B”, and at item 40 of A3, describes documents produced as “personal.” It is noteworthy that in his submissions of 25 February 2021 Mr B conceded at [3]:
1.This is not a matter concerning commercial confidential information or where such a duty arises out of contractual or fiduciary relationship.
Mr B then relied upon a decision of the England and Wales Court of Appeal, Imerman v Tchenguiz [2011] 2 WLR 592 (“Imerman”) to identify an obligation of confidentiality in relation to the documents.
In brief summary, that case concerned documents of the husband obtained by the husband's brother-in-law to assist the wife in family law property division proceedings, out of concern that the husband had threatened to conceal his property from the wife in their proceedings. The brother-in-law was able to access the documents as he and the husband shared business computer facilities. The brother-in-law’s access yielded somewhere between 250,000 and 2.5 million pages.
The suggested application of Imerman was of an obligation of confidence arising such as to give Mr B the relief that he seeks of the restraint of Tiyce. Consideration is required of the applicability of Imerman in Australia and in this case.
Imerman carefully stepped between the law of privacy in the United Kingdom, as derived from article 8 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”), and the Human Rights Act 1998 (UK) (“the Human Rights Act”), as opposed to the law of confidentiality which is rooted in equity. The court, however, adopted a common touchstone between the two areas, being whether the claimant has a “reasonable expectation of privacy”, and observed that the law in the two areas should be developed and applied consistently and coherently.
The observation of the need for consistency and coherence in the development of equitable principles in the UK with the Convention and the Human Rights Act emphasises the need for caution in seeking to apply Imerman in an Australian context.
The relevant wrong giving rise to a remedy was ultimately identified in Imerman at [69] as a breach of confidence where a defendant:
without the authority of the Claimant, to examine, or to make, retain, or supply copies to a third party of, a document whose contents are, and were (or ought to have been) appreciated by the Defendant to be, confidential to the Claimant. It is of the essence of the Claimant's right to confidentiality that he can choose whether, and, if so, to whom and in what circumstances and on what terms, to reveal the information which has the protection of the confidence. It seems to us, as a matter of principle, that, again in the absence of any defence on the particular facts, a Claimant who establishes a right of confidence in certain information contained in a document should be able to restrain any threat by an unauthorised Defendant to look at, copy, distribute any copies of, or to communicate, or utilise the contents of the document (or any copy), and also be able to enforce the return (or destruction) of any such document or copy. Without the court having the power to grant such relief, the information will, through the unauthorised act of the Defendant, either lose its confidential character, or will at least be at risk of doing so. The Claimant should not be at risk, through the unauthorised act of the Defendant, of having the confidentiality of the information lost, or even potentially lost.
As was said at [79] of Imerman, “[c]onfidentiality is not dependent upon locks and keys or their electronic equivalents.” Rather, as indicated at [77], it is reliant upon whether the claimant had an expectation of privacy.
As an equitable claim, the remedy was recognised in Imerman as discretionary.
The question then arises as to the applicability of the obligation of confidentiality in Imerman in an Australian context.
In Moorgate Tobacco Co Ltd v Philip Morris Ltd [No 2] (1984) 156 CLR 414 (“Moorgate”), Deane J, with whom the court agreed, said at 437–8 (footnotes omitted):
It is unnecessary, for the purposes of the present appeal, to attempt to define the precise scope of the equitable jurisdiction to grant relief against an actual or threatened abuse of confidential information not involving any tort or any breach of some express or implied contractual provision, some wider fiduciary duty or some copyright or trade mark right. A general equitable jurisdiction to grant such relief has long been asserted and should, in my view, now be accepted: see Commonwealth v John Fairfax & Sons Ltd. Like most heads of exclusive equitable jurisdiction, its rational basis does not lie in proprietary right. It lies in the notion of an obligation of conscience arising from the circumstances in or through which the information was communicated or obtained. Relief under the jurisdiction is not available, however, unless it appears that the information in question has “the necessary quality of confidence about it” (per Lord Greene M.R., Saltman) and that it is significant, not necessarily in the sense of commercially valuable (see Argyll v Argyll), but in the sense that the preservation of its confidentiality or secrecy is of substantial concern to the plaintiff. That being so, the starting point of the alternative argument must be the identification of the relevant confidential information.
Although dealing with enforcement of a statutory duty, Deane J’s formulation was cited with approval by the Court in Johns v Australian Securities Commission (1993) 178 CLR 408 (“Johns”), Brennan J also approving Bingham LJ as follows:
It is a well-settled principle of law that where one party ('the confidant') acquires confidential information from or during his service with, or by virtue of his relationship with, another ('the confider'), in circumstances importing a duty of confidence, the confidant is not ordinarily at liberty to divulge that information to a third party without the consent or against the wishes of the confider.[1]
[1] Attorney-General v Guardian Newspapers [No 2] [1990] 1 AC 109, 214 (Bingham LJ), quoted in Johns v Australian Securities Commission (1993) 178 CLR 408, 426 (Brennan J).
Although in a case where the confidentiality was created by contractual obligation, the four elements identified by the Full Court of the Federal Court at [39] in Optus Networks Pty Ltd (ACN 008 570 330) v Telstra Corporation Ltd (ACN 051 775 556) [2010] FCAFC 21 (“Optus”) are applicable to determining relief in a claim for breach of confidence at equity:
[39] There are four elements:
(a) the information in question must be identified with specificity;
(b) it must have the necessary quality of confidence;
(c) it must have been received by Telstra in circumstances importing an obligation of confidence, and
(d) there must be an actual or threatened misuse of the information without Optus’ consent.
See Smith Kline & French Laboratories (Aust) Ltd v Secretary, Dept of Community Services and Health (1990) 22 FCR 73 at 87.Moorgate, Johns and Optus should be understood as the relevant Australian law in relation to seeking relief for the breach of an obligation of confidentiality whether arising under statute, pursuant to contract, or otherwise.
Application of the Optus elements
As to the first of the Optus elements, in this case, there is limited identification of the information by Mr B. As best as can be gleaned, in circumstances where Mr B complains that he does not hold a full understanding of the information and documents retained by the husband, that specificity is derived from Exhibit W2. As those examples are the ones specifically identified, it should be inferred that the examples contained at W2 constitute the strongest examples of documents asserted to attract an obligation of confidentiality.
Exhibit W2 is a selection of the documents disclosed by the husband in the USB drive, along with documents disclosed by the husband under cover of letters of 3 and 4 September 2020. In the absence of the provision of a close analysis of the documents, a general summary of the documents contained therein is as follows:
a.Visa application and appointment Mr B for 4.10.18;
b.Employment cessation clearance form for Mr B 2.4.19;
c.Wills of Mr B 6.12.13 and Ms B 6.12.13;
d.Enduring powers of attorney of Mr and Ms B 6.12.13;
e.Order form for corporate hospitality tickets for the K Event, 2018;
f.Application by Mr B for a security access card 8.7.19;
g.Contract Company B – K Event – no date;
h.Deed of standing offer and associated documents – Company J – Company B 15.10.18;
i.Deed of standing offer Company F – Company B - 26.04.2018;
j.Company B marketing material - no date;
k.Various emails re Company B (some incorporating the husband in the chain) - between April 2017 and November 2019;
l.Company B marketing material - no date; and
m.Consulting agreement Company B – Company G – Government - no date.
Troublingly, other categories set out at A1 were also suggestive of confidentiality, but were not included in Exhibit W2. For example, Class 8, being correspondence between Company B and E Lawyers. However, without further clarity as to what was contained in that category, I am unable to engage in consideration of whether those documents were confidential.
The second element identified by Optus is as to whether the documents or information have a quality of confidence. That quality of confidence, in the absence of a specific contractual obligation of confidence, falls to be derived on assessment, as set out by Deane J in Moorgate, of whether the circumstances, including the nature of the information, are such as to lead to an expectation of confidentiality or, in other words, an obligation of conscience arising.
Three factors arise in assessing this question. The first relates to the nature of the documents, the second as to the authority of the husband to access the documents, and the third as to the manner in which the husband obtained access to the documents, a matter which is also relevant to the third of the Optus elements.
As to the nature of the documents, again in the absence of close analysis, four broad categories can be discerned. Firstly, there are documents personal to Mr B, comprising categories a, b, c, d and f above. Secondly, there are documents relating to work undertaken by Company B, comprising categories g, h, i and m above. Thirdly there are documents of a more public nature, incorporating marketing material for Company B, comprised in j and l above. Fourthly, there are email strings and other documents that at some points include the husband and some points do not, generally in relation to the administration of Company B, at e and k.
As to the issue of authority, both the wife and Mr B denied that the husband has ever had authority to read or access Company B emails.
However, the husband asserted an authority to access the documents, in the absence of an employee or office holder relationship. He initially claimed that he has ownership of the documents that he now retains as a result of his claimed equitable interest in Company B. The husband later withdrew this assertion, accepting that ownership of a company did not equate to ownership of the assets of the company including the documents. Ultimately, the husband identified no proprietary right to the documents relating to Company B, or to Mr B.
The husband could not point to any contractual authority held by him and ultimately said that his claim to authority to hold the documents rose no higher than being an incident of his involvement in the business, he being no stranger to the business. He claimed that he had an authority derived from the intimacy of his involvement in the day-to-day operation of the business. He said he was involved in the management, had access to data retained on a home computer, and pointed to a history of dealings with the company which formed part of the performance of his functions within the company. Those dealings included registration of a domain name. A number of the dealings can be seen in the email strings at Exhibit W2 which show the husband engaging in administrative tasks in relation to the business.
Even if the husband was neither an employee nor an office holder, to some unidentified degree he was privy to the workings of Company B, and participated in the administration of Company B. The ad hoc involvement leaves considerable ambiguity about the basis on which the husband had access to Company B documents. This is particularly the case where the documents do little to suggest confidentiality, such as where the husband is part of an innocuous chain of emails, or the material held by him appears to be marketing material for Company B, such as e, k, j and l. In these instances it was neither apparent, nor specifically explained, why an inference as to confidentiality should be drawn. Such ad hoc involvement may be expected to have ended around the time of the end of the marriage in early 2020. The ad hoc involvement is suggestive of an authority commensurate with the nature of these documents, particularly those that are addressed to him or public in nature.
While the ad hoc involvement appeared to continue during the period of the contracts, deeds and marketing agreement (at g, h , i and m), those documents, unlike the emails that included the husband (at e and k), do not appear connected to the administration of the company, but rather the work undertaken by Company B. While it might be thought that such documents carry a stronger implication of confidentiality, more is required to establish the obligation in this instance. The mere fact that a document is a contract or deed does not make it confidential. In this case Mr B specifically submitted that his claim was not derived from the notion that the material is “commercial confidential” information. Further, I was taken to no particular aspect of the deeds, contracts or marketing agreements that pointed to a conclusion of confidentiality. Absent the identification of an aspect of the documents that sustained the claim of confidentiality then, with or without the concession as to commercial in confidence, the relevant obligation is not established.
However, an implication is apparent in relation to the documents personal to Mr B (at a, b, c, d and f). Each is highly personal in nature, and obviously so to a person encountering them. No involvement or relationship between the husband and Mr B was suggested or identified to justify access to those categories of documents or information, or to undermine their confidentiality.
As to the question of manner of access, as best as could be understood from the husband,[2] his access to the documents came from the process of accessing and/or backing up all computer systems in the household. It was unclear what this meant. In his affidavit of 15 January 2021, the husband at [182] described his access to the documents as follows:
As the sole director of Company D I became solely responsible for the entire company including but not limited to all backup files of all emails and computers that were owned by Company D and this included email history of Company B as Ms Suwan used the computer that she left at the family home for both companies.
[2] Husband’s outline of submissions filed 17 February 2021, paragraph 8(j) and (k).
In submissions, he described that the email records in relation to Company D were contaminated by documents from Company B and Mr B.
The wife complains that, to the extent that documents may have been held on a computer or hard drive within the family home, such computer was hers, was protected by a password that was not provided to the husband, and to the extent that the material was held on a hard drive, she previously requested that such be returned to her.
The husband also asserted that various documents (unidentified save as to one on 19 April 2018) were obtained from emails sent to the wife at her Company D email address by Mr B.
It may be observed that there was a lack of clarity as to how the husband came by the various documents. He asserted that, given the interim nature of the proceedings, the Court would be unable to determine how the documents were obtained. It was, however, in his hands to describe with precision how the documents were obtained, yet he failed to do so. His failure to fully describe, under the circumstance where he possessed the documents, is not a veil he is able to hide behind in the context of interim proceedings. Where the other circumstances point to confidentiality, an inference of the implication of confidentiality in the acquisition of the documents may be more readily drawn where the husband has left unclear the manner of his acquisition of the particular documents.
Accordingly, as to the second and third element of Optus, the nature of the documents that were personal to Mr B carry an implication of confidentiality. The husband has not shown any authority to access the documents of those descriptions. Nor should it be inferred that the manner of access to the documents supports a finding that the documents were not confidential. Given the highly personal nature of the documents and, (aside from the application for a government security pass) their lack of any connection to the business, an inference is available that the circumstances of acquisition would have carried an obligation of confidence. While a more fulsome description of the circumstances by the husband may have meant that such an inference, while available, should not be drawn, his failure to fully describe the circumstances of the acquisition leaves such an inference safely drawn.
As to the fourth aspect of Optus, it may be observed that material held by the husband appears to have been used to determine targets of subpoenas, such currently being the subject of objection, to be resolved after the resolution of the question of whether Tiyse is to be restrained. However, that use does not appear to have included the use of the documents personal to Mr B that do attract an obligation of confidentiality.
Conclusion as to confidentiality
The documents personal to Mr B attracted an equitable obligation of confidentiality on the part of the husband owed to Mr B and Company B, when they entered his possession.
Conclusion as to inadvertent disclosure
The foregoing analysis is also of assistance in relation to a number of the categories set out in Exhibit W2 in considering the claim as to inadvertent disclosure made by the wife.
Solicitor’s Rule 31 of the Uniform Conduct Rules governs a solicitor dealing with a document obtained by inadvertent disclosure. The rule, as set out in the Legal Profession Uniform Law Australian Solicitors’ Conduct Rules 2015 (NSW) is in the following terms:
31 Inadvertent disclosure
31.1 Unless otherwise permitted or compelled by law, a solicitor to whom material known or reasonably suspected to be confidential is disclosed by another solicitor, or by some other person and who is aware that the disclosure was inadvertent must not use the material and must:
31.1.1 return, destroy or delete the material (as appropriate) immediately upon becoming aware that disclosure was inadvertent, and
31.1.2 notify the other solicitor or the other person of the disclosure and the steps taken to prevent inappropriate misuse of the material.
31.2 A solicitor who reads part or all of the confidential material before becoming aware of its confidential status must:
31.2.1 notify the opposing solicitor or the other person immediately, and
31.3.2not read any more of the material.
31.3 If a solicitor is instructed by a client to read confidential material received in error, the solicitor must refuse to do so.
The rule requires two elements. The first is either actual knowledge or the harbouring of a reasonable suspicion by the solicitor as to confidentiality. Each of these requirements is subjective in nature, speaking to the state of mind of the solicitor.
The second element, which is additional to the first, requires an awareness that the disclosure was inadvertent. Again, this requirement is subjective in nature, and speaks to the state of mind of the solicitor.
The wife claims that the material disclosed by the husband includes material subject to legal professional privilege.[3] Class 8 of A1 references correspondence between Company B and E Lawyers, with the date of disclosure listed as 21 August, 3 September and 4 September 2020. However, no correspondence falling within this category was specifically identified by the parties. Similarly, as pointed out by counsel for Mr B, Class 15 of A1 refers to emails between the wife and the wife’s solicitors disclosed on the same dates. An inspection of W2 did not reveal correspondence that clearly fell within either Class 8 or 15. Although correspondence with lawyers is suggestive of confidentiality, and suggestive of inadvertent disclosure, not all correspondence from lawyers is necessarily so. The failure to identify the documents means that an assessment as to whether the documents are subject to privilege or otherwise confidential, or inadvertently disclosed is not available.
[3] Updated Wife Case Outline filed 16 February 2021, paragraphs 35–39.
It may be observed that the material personal to Mr B is objectively suggestive of confidentiality in a manner likely to attract a subjective reasonable suspicion. That is not the same as establishing that it did attract such a suspicion, although it may aid on the proof of such.
It has not been established that such suspicion was entertained by the solicitor.
As to the second element, the test is not one of ‘should have been aware’, but one of actual awareness. While there is reason to consider that the solicitors should have been aware, in the absence of further evidence I am not prepared to infer, on the balance of probabilities, that they were so aware.
Hence it has not been established that there was a breach of the conduct rules.
The next question that arises is whether the circumstances justify a restraint in respect of Tiyce.
Legal principles in relation to restraint
The only remedy to be considered at this stage is whether Tiyce should be restrained. Other remedies may be available to deal with circumstances such as those alleged in this case, such as the return of, or other protection of the documents, as seen in Imerman. The pursuit of the return of the documents is a lower order remedy than the restraint of the lawyers. However, the only remedy pursued or suggested, at least until written submissions were produced by Mr B, was the restraint of the lawyers.
Although in his written submissions, Mr B asserted that documents should be produced to the Court, returned to Mr B, and may result in an amendment of his submissions, this remedy was not permitted to be pressed at the late stage that it was first raised, due to the unfairness that would flow from the late change, given that until then restraint had been the sole issue.
There are three established bases for granting an injunction sought to restrain a solicitor from acting against their client or former client, as confirmed by the Full Court of this Court in Osferatu & Osferatu (2015) FLC 93-666, which was subsequently approved in Dalton & Dalton (2017) FLC 93-773 and Oram & Lambert and Ors (No 2) [2018] FAMCAFC 161. Those bases were accepted by the court as set out by Brereton J in Kallinicos v Hunt (2005) 64 NSWLR 561 (“Kallinicos”).
In Kallinicos, Brereton J analysed the law in relation to the restraint of lawyers from acting, observing that in NSW, the principles in Prince Jefri Bolkiah v KPMG [1999] 2 AC 222 (“Prince Jefri”) had been adopted, such that in the case of a former client seeking to restrain a lawyer no longer retained, restraint was based solely on preservation of “the confidentiality of information imparted during the subsistence of the relationship”, as opposed to the case of a client seeking to restrain a lawyer with a current retainer, where the restraint is based upon a current fiduciary duty, and on the “inescapable conflict of interest (to use Lord Millett’s word, but perhaps “duty” is more pertinent) inherent in the situation of acting both for and against the same person.”[4] He noted that in Victoria, the position differs, insofar as restraining a lawyer no longer retained may also be justified on the basis of breach of loyalty.[5] It is not necessary to resolve this divergence here.
[4] Kallinicos v Hunt (2005) 64 NSWLR 561, 571 [35] (“Kallinicos”).
[5] See Spincode Pty Ltd v Look Software Pty Ltd (2001) 4 VR 501.
His Honour moved then to consider a third category (apart from confidentiality of information or fiduciary duty) justifying restraint, arising in the Court’s inherent supervisory jurisdiction over lawyers, a matter that was not dealt with in Prince Jefri. This is the jurisdiction relied upon in this case by the wife and by Mr B.
Justice Brereton identified that the supervisory jurisdiction has been variously described as exercised:
“to ensure that the administration of justice is not brought into disrepute by the conduct of those members,”[6]
“from the court’s concern that it should have the assistance of independent legal representation for the litigating parties ... preserving confidence in the administration of justice, and therefore in the appearance as well as the reality of independence;”[7]
Where “a fair minded, reasonably informed member of the public would conclude that the proper administration of justice required that counsel be prevented from acting”.[8]
[6] Newman v Phillips Fox (1999) 21 WAR 309, 315 [22] (Statler J).
[7] Oceanic Life Ltd v HIH Casualty and General Insurance Ltd (1999) 10 ANZ Insurance Cases 61–438 [48] (Austin J).
[8] Kallinicos v Hunt (2005) 64 NSWLR 561, 577 [62], discussing Williamson v Nilant [2002] WASC 225 (McKechnie J). See Williamson v Metaxas & Vernon [2004] WASCA 248.
Justice Brereton identified particular examples of this third category having arisen where a lawyer has a direct pecuniary interest in the outcome, or a personal conflict of interest arising out of the evidence to be given in the proceedings, or where a practitioner is likely to be called as a witness in relation to matters that are other than formal or non-contentious issues. In the last of these examples, where a practitioner’s credibility may be at issue as a witness, and hence integrity at stake, this may “constitute a personal interest inconsistent with the practitioner's duty to the court or to the client.”[9]
[9] Kallinicos v Hunt (2005) 64 NSWLR 561, 581 [72].
Justice Brereton emphasised that the exercise of the jurisdiction to restrain a lawyer should be regarded as exceptional and undertaken with some circumspection, noting the observations made in the Supreme Courts of both NSW and Victoria of the seriousness of depriving a litigant of “the legal representative of its choice, particularly upon the application not of a former client but of an adverse party.”[10]
[10] Kallinicos v Hunt (2005) 64 NSWLR 561, 576 [55].
The issue that arises here is whether the provision of the documents and information to Tiyce, and the use of those, or a number of those documents by Tiyce, in combination with the nature of the pre-existing relationships between Michael Tiyce, the husband and the wife, warrant restraint under the supervisory jurisdiction.
Consideration as to restraint
As noted earlier, the only remedy in play in this application is a restraint to prevent Tiyce from appearing for the husband, a relief that may be secured by means of orders directed to either the father or to the firm of solicitors.
The issue of restraint falls to be considered in the context that although Tiyce was not a party to the application, Tiyce appeared for the husband throughout this application.
In terms of the knowledge of Tiyce, it was reasonably submitted that the court should infer that the instructions to Tiyce mirror the husband’s evidence on his acquisition of the documents.
Each of the parties submitted as to additional matters in support of their positions.
The husband claims that there is a collateral purpose to the remedy sought by the wife and Mr B, being a purpose to disadvantage the husband by causing him to change lawyers in circumstances where he has already spent the somewhat breath-taking figure of $300,000 on legal representation prior to his first appearance in this matter before a Judge of the Court. Perhaps there was reason for such expenditure, but such is not yet readily apparent. It may be inferred that the change of lawyers would impose a heavy burden on the father at this point.
However, at this stage I am unable to determine that there is a collateral purpose to cause the husband disadvantage.
The wife points to the underlying relationship between the parties and Michael Tiyce, Tiyce being a friend of the husband and previously of the wife. The wife submitted that this relationship has led to a relevant loss of objectivity on the part of Tiyce justifying restraint.
The wife accepted that this aspect, by itself, would not be sufficient to restrain Tiyce but asserted that it should carry weight in conjunction with the second issue. At present a lack of objectivity in not apparent.
The wife has claimed that the husband's use of material that he has obtained was an act of intimidation on his part, communicating to her, in the context of a family violence order, that he had access to her documents.
It is not, at this stage of the proceedings, apparent that there was a purpose of intimidation.
The wife also says use of the documents, including by the issuing of subpoenas based on the documents that were retained, has resulted in her loss of shareholding by virtue of the operation of the shareholders agreement.
This is a matter likely to be the subject of the substantive proceedings and both unnecessary and unable to be resolved for the purpose of this application.
Mr B complains that in the conduct of this litigation the husband now has an improper advantage in the proceedings, particularly in respect of any mediation that might take place, in his holding of documents indicating the financial position of Mr B. On the documents focussed upon, it is not apparent that this is the case.
Accepting that some inferences may be able to be drawn from the will of Mr B, it is unclear the extent to which the documents as a whole speak to his financial position.
Mr B, correctly, notes that the disclosure rules do not apply to him in the same manner that they apply to a party to the marriage, meaning that he may never have been under an obligation to produce the documents now in the hands of the husband.
Mr B also asserts that the retention of documents gives the husband an improper advantage in relation to disclosure as he is able to identify documents which have not been provided subject to the disclosure rules. Despite reference to this aspect in Imerman it is unclear how this is a matter of significance in this case.
The issue is whether, as a matter of discretion, the remedy of restraint ought to be given.
As concluded above, it has not been established that there has been a relevant breach of the inadvertent disclosure rule such as to found a restraint. As accepted by the wife, the pre-existing relationship between Michael Tiyce and the parties is insufficient on its own to found the restraint. In any event, it has not at this stage been established that there is such a loss of objectivity as to justify restraint.
The circumstances asserted by the husband which gave rise to the obligation of confidence were submitted by the husband to be inferred as the knowledge of Tiyce, on the basis that the instructions to Tiyce should be inferred to be consistent with the evidence put by the husband. Accordingly, Tiyce could be taken to be on notice as to the obligation of conscience by which the husband was bound.
Under such circumstances, Tiyce should not have made any use of such documents. However, it has not been established that any use has been made of the documents personal to Mr B.
Mr B and the wife raise an issue in relation to Tiyce continuing to act as flowing from a perceived inability to Tiyce to un-know what has been learnt from the use of the material obtained in breach of the confidentiality obligation. However, despite Mr B’s submissions, it is not apparent that any significant advantage or significant use is available for the documents the subject of the obligation of confidence.
In summary, in this case there has been no demonstrated breach of the inadvertent disclosure rules, no significant demonstration of a lack of objectivity on the part of Tiyce, no demonstrated use of the documents to which an obligation of confidentiality attaches, and limited identification of potential use of the confidential documents.
The circumstances are insufficient to justify the serious step of depriving the husband of his chosen legal representation. Weight should be given not only to the interest of the husband in retaining his representation of choice, but also to the public interest in a litigant not being deprived of the lawyer of his or her choice without due cause.[11]
[11] Kallinicos v Hunt (2005) 64 NSWLR 561, 582 [76], citing Black v Taylor [1993] 3 NZLR 403; Grimwade v Meagher [1995] 1 VR 446; Williamson v Nilant [2002] WASC 225; Bowen v Stott [2004] WASC 94.
It should also be observed that even if there was some breach of the inadvertent disclosure rules, or the demonstration of some lack of objectivity on Tiyce’s part, or some use of the confidential documents, such findings would not automatically result in restraint. Restraint is a heavy-handed remedy reserved to those occasions when, as a matter of discretion, it has been determined to be the necessary step to be taken to ensure that the administration of justice is not brought into disrepute.
The more appropriate remedy in relation to the confidential documents would involve the return of such documents, either on terms for their safe keeping or otherwise. This is a matter that should be dealt with by the parties without the requirement of the further intervention of the court.
The application to restrain Tiyce will be dismissed, and the matter will be listed for further directions.
I certify that the preceding ninety-seven (97) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Gill. Associate:
Dated: 26 March 2021
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