Bradney & Suwan

Case [2021] FamCA 165

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…

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Bradney & Suwan [2021] FamCA 165
Case
[2021] FamCA 165
Decision Date

CaseChat Overview and Summary

In SYC 3357 of 2020, Gill J of the Family Court of Australia considered an application by the wife and second respondent, Mr B, for an injunction to restrain the applicant husband’s solicitors from continuing to act in property proceedings. The dispute centred on documents relating to a company, Company B, which the husband had obtained and subsequently disclosed to his solicitors. The wife and Mr B contended that the husband should not have possessed these documents and that their use by the husband's legal representatives constituted a breach of confidentiality and professional conduct rules.

The court was required to determine whether the documents disclosed by the husband were subject to an equitable obligation of confidentiality, and if so, whether this obligation extended to restraining the husband's solicitors from acting in the proceedings. A related issue was whether the disclosure of certain documents constituted an inadvertent disclosure that would trigger the application of the Legal Profession Uniform Law Australian Solicitors’ Conduct Rules 2015 (NSW). The wife and Mr B relied on the nature of the documents to found their claims, arguing that their use by the husband's solicitors was improper.

Gill J dismissed the application for an injunction. The court found that while certain documents personal to Mr B did attract an equitable obligation of confidentiality owed to Mr B and Company B upon their entry into the husband's possession, this did not warrant the requested restraint. Regarding the claim of inadvertent disclosure under the Solicitors’ Conduct Rules, the court noted that the rules require a solicitor to have actual knowledge or a reasonable suspicion of confidentiality and an awareness that the disclosure was inadvertent. However, the wife and Mr B failed to identify specific documents that clearly fell within categories suggestive of privilege or inadvertent disclosure, such as correspondence with lawyers. Without this specific identification, the court could not assess whether the documents were privileged, confidential, or inadvertently disclosed, thus preventing the application of the rule.

Orders

Orders of the court

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.

Background

Background to the litigation

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

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

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 disclosure31.1 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, and31.1.2 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, and31.3.2not 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.

Ratio Decidendi

Legal Principle Established

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.