British American Tobacco Australia Services Ltd v Blanch

[2004] NSWSC 70

CITATION:	British American Tobacco Australia Services Ltd v Blanch [2004] NSWSC 70
HEARING DATE(S):	11, 12 and 15 December 2003
JUDGMENT DATE:	20 February 2004
JURISDICTION:	Equity Division
JUDGMENT OF:	Young CJ in Eq
DECISION:	Injunction granted to prevent solicitors from acting further against plaintiff.
CATCHWORDS:	PROFESSIONS & TRADES [96]- Lawyers- Duty to former client- Prince Jefri principle- Whether sole basis for Court's intervention.
CASES CITED:	Beach Petroleum NL v Kennedy (1999) 48 NSWLR 1 Belan v Casey [2002] NSWSC 58 Chan v Zacharia (1984) 154 CLR 178 Clark Boyce v Mouat [1994] 1 AC 428 Colonial Portfolio Services Pty Ltd v Nissen (2000) 35 ACSR 673 Dalby v Wallaby Grip Ltd [2002] NSW DDT 15 Fordham v Legal Practitioners' Complaints Committee (1997) 18 WAR 467 Green & Clara Pty Ltd v Bestobell Industries Pty Ltd [1982] WAR 1 Groom v Crocker [1939] 1 KB 194 Home Office v Harman [1983] AC 280 Mancini v Mancini [1999] NSWSC 800 McDonald v State Rail Authority of NSW [1998] NSW DDT 4 McKenzie v Director-General of Conservation and Natural Resources [2001] VSC 220 National Mutual Holdings Pty Ltd v Sentry Corporation (1989) 22 FCR 209 Oceanic Life Ltd v HIH Casualty & General Insurance Ltd (1999) 10 ANZ Ins Cas 61-438 Orr v Ford (1989) 167 CLR 316 Parry-Jones v Law Society [1969] 1 Ch 1 PhotoCure ASA v Qeen's University at Kingston (2002) 56 IPR 86 Pradhan v Eastside Day Surgery Pty Ltd [1999] SASC 256 Prince Jefri Bolkiah v KPMG [1999] 2 AC 222 Rakusen v Ellis, Munday & Clarke [1912] 1 Ch 831 Sent v Fairfax Publication J Pty Ltd [2002] VSC 429 Spincode Pty Ltd v Look Software Pty Ltd (2002) 4 VR 501 Tournier v National Provincial and Union Bank of England [1924] 1 KB 461 Westgold Resources NL v St Barbara Mines Ltd [2002] WASC 264
PARTIES :	British American Tobacco Australia Services Limited (P) Alan William Blanch, Roderick Stuart Cameron, Stewart William Cameron, Glenn Douglas Capel, Robert Geoffrey Horton, Cameron Leslie Leaver, Julius John Markos, Alan Sydney Osburg, Kathryn Margaret Ireland, Peter Wayne Gowers and David Francis Allen trading as Hicksons Lawyers (D)
FILE NUMBER(S):	SC 1753/03
COUNSEL:	J T Gleeson SC, R Sofroniou and M Leeming (P) R Burbidge QC and M T McCulloch (D)
SOLICITORS:	Corrs Chambers Westgarth (P) Hicksons (D)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

YOUNG CJ in EQ

Friday 20 February 2004

1753/03 – BRITISH AMERICAN TOBACCO AUSTRALIA SERVICES LTD v ALAN WILLIAM BLANCH & ORS t/as HICKSONS LAWYERS

JUDGMENT

1 HIS HONOUR: The plaintiff, a former client of the defendants, a firm of solicitors, seeks an injunction to prevent those solicitors from acting against it on the hearing of a cross claim for contribution before the Dust Diseases Tribunal of NSW (hereafter called "DDT").

2 I will first set out a brief summary of the case and then look at the facts and law in detail.

3 The plaintiff may be loosely described as a cigarette company.

4 The litigation before the DDT involves a claim brought by a former worker, Allan Mowbray against his former employer Brambles Holdings Ltd. Brambles, insured by Allianz Australia Limited, consented to an award in favour of Mr Mowbray of $200,000.

5 Mr Mowbray was a smoker. Allianz/Brambles wishes to claim that the synergy between the work conditions at Brambles and smoking combined to cause Mr Mowbray’s damage. It has thus cross claimed against the present plaintiff for contribution.

6 The defendants, who practise under the name “Hicksons Lawyers” currently act for Allianz/Brambles in the Mowbray litigation. The plaintiff objects to this as it says in previous litigation in which Hicksons were instructed via Allianz as insurers of the plaintiff, Hicksons became privy to a whole host of confidential information as to what knowledge the plaintiff had at the relevant time of such synergy.

7 The proceedings came on for hearing before me on 11, 12 and 15 December 2003. Mr J T Gleeson SC, Ms R Sofroniou and Mr M Leeming appeared for the plaintiff and Mr R Burbidge QC and Mr M T McCulloch appeared for the defendants.

8 The present case only raises an issue over litigation involving about $100,000. However, the point is bound to occur again and again. I thus considered appropriate to consider the matter deeply. I thus reserved my decision over the vacation.

9 The plaintiff’s case was a purely documentary one. However, there was extensive cross-examination of the defendants’ principal witness, Mr Blanch.

10 In accordance with pre-trial directions the plaintiff provided a document headed “Statement of Contentions of Facts and Law by the Plaintiff”.

11 I will set out in the following twenty-one paragraphs the plaintiff’s contentions of fact, none of which were in any material way contradicted by the defendants. The plaintiff is described in these paragraphs as "BATAS" for obvious reasons.

12 Hicksons acted either directly for BATAS as its solicitors, or indirectly as the solicitors for the insurer of BATAS in proceedings in the DDT as follows:

(a) in proceedings brought by Frieda Stelzer, Mallesons were the solicitors on the record for BATAS. Hicksons acted from 5 December 1994 on instructions from Allianz Australia Limited, the workers' compensation insurer of BATAS. The claim was resolved in the middle of 1995 with Allianz paying the settlement moneys;

(b) in proceedings brought in the DDT by Jakob Stelzer, from 1994 Mallesons were solicitors on the record for BATAS. Between 5 December 1994 and about 9 August 2000, Hicksons acted on instructions from Allianz, the workers' compensation insurer. Hicksons took over conduct of the matter from Mallesons on behalf of BATAS on about 9 August 2000. The matter proceeded to a final hearing on 9 July 2001. An agreement to settle the proceedings was reached on 12 July 2001. Allianz made the settlement payment in early August 2001;

(c) in proceedings brought by Lance Nash in the DDT on 1 June 2001 Hicksons became the solicitors on the record for BATAS. Allianz was the designated insurer. The Nash claim was settled by agreement on 28 June 2001 on the eve of the hearing and payment was made by Allianz on about 5 July 2001 and receipt acknowledged on 9 July 2001.

13 The relationship between Hicksons and BATAS while Hicksons was the solicitor on the record for BATAS in the Jakob Stelzer and Lance Nash proceedings, was a relationship of solicitor and client. BATAS reposed trust and confidence in Hicksons. BATAS expected, and was entitled to expect, loyalty from Hicksons. The relationship was a fiduciary one.

14 That relationship afforded Hicksons the opportunity to gain skill, knowledge and experience in the affairs of BATAS and to present itself as a firm of solicitors experienced in the legal affairs of BATAS.

15 During the period when Hicksons was acting as solicitor for Allianz but without taking over the conduct of the relevant proceedings, the relationship between BATAS and its insurer Allianz, and consequently Allianz’s solicitor Hicksons, was a relationship of good faith. BATAS expected, and was entitled to expect, that Allianz and its solicitor Hicksons would act in good faith in respect to the claim and would respect the confidence of information acquired by them from BATAS in respect to the claim.

16 Thus, a close three way relationship of trust and confidence was established between BATAS (client/insured), Allianz (client/insurer) and Hicksons (solicitor for one and in some cases both).

17 During the course of the Frieda Stelzer proceedings, BATAS, via its solicitors on the record Mallesons, imparted in confidence to Hicksons as solicitor for Allianz, the following information:

(a) by letter dated 2 May 1995, Mallesons provided to Hicksons medical reports from Dr Lee of 23 December 1994, Dr Gandevia of 14 and 15 November 1994 and Dr Khan of 14 November 1994, which reports disclosed histories taken from Frieda Stelzer which included information about the nature of her employment with BATAS, and work activities of BATAS, between 1973 and 1988;

(b) by letter dated 1 February 1995, Mallesons made a disclosure to Hicksons of the nature of the employment which Frieda Stelzer had with BATAS, and work activities of BATAS, during the period 1973—1998;

(c) by letters dated 2 May 1995, 28 June and 29 June 1995 Mallesons disclosed to Hicksons information concerning the settlement strategies of BATAS and the organization, location and number of documents which BATAS held potentially relevant to the claim.

18 After Hicksons became the solicitor on the record for BATAS in the Jakob Stelzer proceedings, the following information was imparted by BATAS to Hicksons under confidence:

(a) by letter dated 29 May 2000, Mallesons as the former solicitors for BATAS provided Hicksons with the BATAS’ list of documents filed in the proceedings on 29 May 2000 together with copies of those documents. Mallesons advised that the originals of those documents were retained at BATAS’ premises and all documents should be returned to BATAS at the conclusion of the proceedings. The list of documents contained numerous publications. Those publications contained statements concerning the links between asbestos and lung cancer, smoking and lung cancer, and the synergistic effects between asbestos, smoking and lung cancer;

(b) Hicksons obtained from BATAS sworn answers to the notice of interrogatories issued on behalf of Jakob Stelzer. The answers included admissions as to when prior to 1990 BATAS became aware that a person could receive an injury through the inhalation of asbestos dust and fibres; when and how BATAS issued information or warnings to employees concerning the possibility of damage to the respiratory system arising from the inhalation of asbestos dust and fibres; matters concerning the internal organization and structure of the defendant’s operations; whether and when BATAS had a particular publication from the Medical Journal of Australia in its possession; and the names of numerous publications which had been discovered by the defendants in the proceedings. Those documents contained information of the type referred to in (a) above;

(c) Hicksons obtained from investigators which they appointed on behalf of BATAS the results of interviews with former employees of BATAS (and thereby potential witnesses). They thereby learnt the name and address of a key employee and the nature of the employment which he carried out with BATAS between the 1960s and the 1990s and other information concerning potential witnesses;

(d) Hicksons participated in discussions about settling the claim.

19 While acting as the solicitors for BATAS in the Nash proceedings, the following information was imparted by BATAS to Hicksons under confidence:

(a) shortly after 1 June 2001, Hicksons obtained from Connery and Partners, the former solicitors for BATAS, a copy of BATAS’ list of documents in the proceeding. That list of documents disclosed numerous publications still in the possession of BATAS and further publications which were no longer in its possession as at 19 April 2001. Those publications included information of the type referred to in paragraph 18(a) above;

(b) on 21 June 2001 Hicksons obtained from BATAS proposed answers to interrogatories administered on behalf of Nash. After communicating with counsel on 27 June 2001 Hicksons provided revised answers to BATAS on the same day. The matter settled that day. On 28 June 2001 Hicksons requested BATAS to return the completed interrogatories for the purpose of Hicksons retaining that material to ensure a build up of knowledge and to assist in completing future interrogatories;

(c) Hicksons participated in discussions about settling the claim.

20 At this point counsel noted that the description of the information in the preceding three paragraphs was deliberately left general to protect the confidence in the communications. More detail was provided during the hearing.

21 The plaintiff contends that by reason of this specific information, and the overall ongoing relationship in which it was imparted, Hicksons formed an overall opinion about BATAS, its strengths and weaknesses, its attitude to litigation and settling cases and tactics which was itself confidential. That opinion was formed directly from communications with BATAS and indirectly in communications with Allianz, in turn based on communications with BATAS. Unfortunately, the attitude of Hicksons when later challenged by BATAS, was to deny it received any information in confidence, and indeed, largely to deny Hicksons even acted for BATAS. Hicksons instead asserted Allianz was its effective client.

22 The Mowbray proceedings were commenced on 8 May 2001 against Brambles. Mowbray sought damages for lung cancer allegedly sustained as a result of exposure to asbestos dust and fibre and diesel dust and fumes during the course of his employment by Brambles. Hicksons became aware of the proceedings in about June 2001 and, on the instructions of Allianz, took over the conduct of Brambles’ defence on 23 August 2001.

23 The final hearing in relation to Mowbray’s claim commenced on 3 September 2001 with his evidence being taken at his residence. Mowbray’s smoking of cigarettes and tobacco allegedly supplied by BATAS was in issue. Hicksons did not seek the consent of BATAS to act in the Mowbray claim.

24 On 30 October 2001 Brambles agreed to settle Mowbray’s claim for a payment of $200,000.

25 On 30 October 2001, Judge Johns noted the settlement and directed Mowbray’s evidence be perpetuated for a cross claim and granted leave to Brambles to issue a cross-claim by 15 December 2001. By that stage, and probably much earlier, Hicksons were actively considering suing BATAS. Such a course would be in the interests of Allianz, but against the interests of BATAS.

26 On 26 November 2001 Hicksons sought and obtained an order extending the time for filing cross claims to 28 February 2002.

27 On 22 February 2002 Hicksons, on behalf of Brambles, filed the cross claim against BATAS seeking contribution or indemnity for the settlement amount paid to Mowbray. Presumably Allianz gave instructions for it.

28 The Brambles cross claim contained allegations, including the following:

(a) from at least 1946 BATAS knew, or ought to have known, that smoking tobacco and cigarettes would cause carcinoma of the lung, and would be addictive, in each case in some percentage of those exposed to them;

(b) BATAS manufactured and supplied tobacco and cigarettes in deliberate and conscious disregard of the health of consumers, including Mr Mowbray, intending that consumers or some of them would become addicted to nicotine;

(c) Brambles settlement payment of $200,000 on Mowbray’s claim included that proportion of the liability of BATAS to Mowbray.

29 Hicksons provided particulars of the cross-claim on 15 August 2002 making allegations inter alia, about the internal organization of BATAS and its subscription to major medical and scientific publications.

30 On 10 December 2002 Corrs, on behalf of BATAS, wrote to Hicksons expressing concern that Hicksons was acting for Brambles in the Mowbray proceedings having previously acted for BATAS in the Stelzer and Nash matters. On 20 December 2002 Corrs, on behalf of BATAS, required Hicksons to withdraw from the action.

31 Hicksons, by letter dated 24 December 2002, declined to withdraw from the action but sought further particulars of the BATAS claim. After further correspondence, the summons was filed on 6 March 2003.

32 Hicksons administered interrogatories in the Mowbray action on 10 November 2003 indicating that links between smoking, asbestos and lung cancer are an issue in the Mowbray action. The same is clear from Brambles’ Notice to Admit Facts dated 2 September 1993 and the transcript of hearing of 3 September 2001.

33 In these circumstances, the plaintiff puts that it is entitled to succeed.

34 Mr Gleeson SC made it plain that the plaintiff was putting the case on three bases. First he put it squarely under the principle (as "properly understood") enunciated in Prince Jefri Bolkiah v KPMG [1999] 2 AC 222 (Prince Jefri). He said that properly understood, the basis of Prince Jefri is vindication of the fiduciary obligations owed by solicitors. Secondly on the basis of the contractual duty of loyalty which survives the end of the provision of legal services. Thirdly he put the case on the basis of the Court's supervisory jurisdiction over solicitors.

35 Mr Gleeson invited me to reconsider my reasoning in Belan v Casey [2002] NSWSC 58 insofar as I held that only the first of these is available.

36 On the first basis, Mr Gleeson put the present as a stark case clearly within the Prince Jefri holding and a case where the defendants had not discharged the onus on them to show that there was no risk to the plaintiff.

37 As will appear later, I am able to decide this case on the first basis.

38 Again it is appropriate to set out, more or less verbatim, the plaintiff's submissions on the law on which this ultimate submission is based. I will do so in the following 19 paragraphs.

39 The plaintiff puts that it is entitled to protection of confidential information.

40 While the solicitor/client relationship continued between Hicksons and BATAS in respect to the Jakob Stelzer and Lance Nash proceedings, Hicksons owed a duty to BATAS to protect the confidence and privilege in information which was imparted in confidence pursuant to the solicitor/client relationship.

41 The duty thus referred to continued after the termination of the solicitor/client relationship.

42 In addition, any information which Hicksons acquired acting as solicitor for Allianz, the insurer for BATAS, from BATAS was subject to a similar obligation of confidence.

43 The obligations to protect information imparted in confidence arose in equity and as an implied term of the contract of retainer.

44 The Court should conclude, based upon the nature of the information referred to in [17]–[19] above, and after drawing all proper inferences, that the information imparted to Hicksons was confidential in character.

45 The information imparted to Hicksons is relevant to the Brambles cross claim brought in the Mowbray proceedings. The essential issue in those proceedings is whether BATAS as a manufacturer and supplier of cigarettes owed a duty of care to a class of persons, including Mr Mowbray; whether it breached that duty in a manner causing carcinoma of the lung to Mr Mowbray; and if it did, how responsibility should be apportioned between BATAS as the cigarette supplier and Brambles as the employer who exposed Mr Mowbray to asbestos. In determining those questions, information is relevant if it goes to establish:

(a) the identity of any publications held by BATAS which disclosed information concerning possible links between asbestos and lung cancer, smoking and lung cancer, and synergies;

(b) the date upon which BATAS became aware of a link between asbestos and lung cancer;

(c) matters of the internal structure and organization of BATAS relevant to the allegations;

(d) the name and address of potential witnesses being former employees of BATAS and the types of evidence they might be able to give.

46 The onus rests on Hicksons to demonstrate that there is no risk that the information imparted in confidence will be used by Hicksons in advancing the Brambles cross claim.

47 Hicksons cannot discharge that onus, especially in circumstances where the same partner, Mr Blanch, both acted for BATAS in the two previous proceedings and now acts against it. There is no attempt by Hicksons to erect a Chinese wall within Mr Blanch’s mind, nor would such be feasible. It is Mr Blanch’s duty to Brambles and Allianz to make available to them all knowledge and information he has about BATAS which might assist in the case: Clark Boyce v Mouat [1994] 1 AC 428.

48 The propositions in the preceding nine paragraphs are sufficient to entitle BATAS to an injunction in accordance with Prince Jefri.

49 Any defence of laches should fail:

(a) it is not available in answer to the injunction sought to prevent the breach of an obligation at law (ie the contract claim);

(b) as to the injunction sought on the equitable claim, the conduct of BATAS did not amount to acquiescence and has not caused proven serious and unfair prejudice to Hicksons.

50 The plaintiff should also succeed because of the defendants’ breach of negative contractual or equitable obligation.

51 In addition, BATAS contends that the Mowbray proceedings are properly classified as proceedings closely related to the three earlier proceedings in which Hicksons either acted for BATAS or received information in confidence as the solicitors for its insurer.

52 Further, by acting for Brambles against BATAS, Hicksons is pursuing an opportunity derived while acting for BATAS.

53 Moreover, Hicksons acts to benefit Allianz, Brambles and itself but to the detriment of BATAS. Hicksons treats Allianz as if it has been its only effective client all along.

54 BATAS contends that it is an implied term of the retainer, and a principle in equity, that a solicitor is prohibited from acting against a former client:

(a) in a matter closely related to the former matter; or

(b) so as to pursue an opportunity derived while acting for the former client; or

(c) so as to benefit one of two former joint clients to the detriment of the other.

55 Australian law is no less strict than New York law in this respect; cf National Mutual Holdings Pty Ltd v Sentry Corporation (1989) 22 FCR 209 at 230. New York law prohibits an attorney from accepting or continuing employment if interests of another client may impair his independent professional judgment. New York law also forbids the use of a confidence or secret of any client to the disadvantage of that client. When circumstances are appropriate, there is a presumption running against the law firm.

56 That Australian law is much the same is borne out by cases such as Green & Clara Pty Ltd v Bestobell Industries Pty Ltd [1982] WAR 1; Chan v Zacharia (1984) 154 CLR 178 and Spincode Pty Ltd v Look Software Pty Ltd (2002) 4 VR 501.

57 Finally, BATAS contends that the Court should, in the exercise of its jurisdiction over its own officers, restrain Hicksons from acting on the Brambles cross claim against BATAS by reason of the combination of the following circumstances:

(a) the close relationship between the issues in the Mowbray proceedings with the Stelzer and Nash proceedings;

(b) the extended period of time in which Hicksons either acted as solicitor for BATAS in the earlier proceedings or as solicitor for its insurer and the consequential measure of trust and confidence reposed in Hicksons;

(c) the nature of the information imparted in confidence by BATAS to Hicksons in the course of that matter;

(d) the fact that it is the same solicitor from the firm who acted in the earlier cases for, and now against, BATAS;

(e) the closeness in time (if there is any gap at all) between the termination of two of the former retainers and the taking on of the present retainer against BATAS;

(f) the lending of Hicksons of itself to the interests of its insurer client Allianz to the detriment of its insured client BATAS;

(g) the perception of disloyalty of a solicitor which a fair-minded observer would have properly knowing the above facts;

(h) the damage which would be done to the solicitor client relationship if a solicitor were permitted to act against a former client in these circumstances: see Oceanic Life Ltd v HIH Casualty & General Insurance Ltd (1999) 10 ANZ Ins Cas 61-438 at 74,978.

58 The defendants' answer was not to query the basic propositions of law put forward by the plaintiff, but to rely on the special circumstances of the present case. They say that the present case depends on facts.

59 First, they say that they never received any information from the plaintiff which was confidential. They further say that even if such information had been received, it would have no relevance to the Mowbray proceedings.

60 The defendants say that it is not everything that is learned within the framework of a relationship which is confidential information or information received in confidence. There must be something about the information which makes it worthy of protection in equity.

61 Information loses its confidential character in various circumstances, some of which have occurred in the instant case. These circumstances include situations where it is read out in a public place.

62 In the Stelzer case, Miss Katzmann SC when making her opening speech mentioned certain parts of the material that the plaintiff wants to protect.

63 In any event, the knowledge that the plaintiff had in its possession particular publications which are in the public domain is not confidential information.

64 There is no evidence that Mr Blanch ever read any of the material in question. The mere fact that you know that a person has certain volumes on his or her shelves is no evidence that the person has any knowledge of what is in those volumes.

65 The defendants have persistently been asking the plaintiff for identification of the alleged confidential information. Even though there has been some identification during the hearing, the defendants are still not clear. It behoves a plaintiff in this type of case to specify precisely the information sought to be protected: Mancini v Mancini [1999] NSWSC 800 and Belan v Casey (supra).

66 Further, the defendants say that it is significant that the present litigation is being heard in the DDT. In that Tribunal there is a sharing of relevant information and, indeed, it is not uncommon for orders to be made that facts established in one case are to be taken as established in every subsequent case unless cause for taking some other course is shown (see Dust Diseases Tribunal Act 1989, ss 25(3) and 25B).

67 The plaintiff notes, however, that it is clear that the DDT may give leave to receive further material on foreseeability issues.

68 Again, every experienced legal practitioner in the DDT was aware that there were thousands of pages written on the relevant topics and all the information was in the giant ambit of knowledge of people who work in the area.

69 The defendants also say that, even if otherwise the Court might be moved to issue an injunction, it should not grant it as by now the defendants have progressed so far in the Mowbray action that it would be unjust to do so.

70 It is clear that, in accordance with authority, particularly the decision in Prince Jefri that in the present circumstances there is an onus on the solicitors to show that there is no risk that they will utilise information imparted in confidence in advancing the cross claim.

71 Before dealing with the core issues in this case, it is necessary to consider the side issue that Hicksons’ relationship with the plaintiff was brought about by the intermediary, Allianz.

72 In Groom v Crocker [1939] 1 KB 194, the English Court of Appeal held that where a solicitor is retained by an insurer on behalf of an insured, the solicitor owes the same duty to the insured as if the insured had retained the solicitor save that the insured cannot complain if the solicitor acts in accordance with the insurer’s instructions within the insurer’s rights under the policy. See also McKenzie v Director-General of Conservation and Natural Resources [2001] VSC 220 at [47]–[50].

73 Accordingly, it makes no difference to Hicksons' duty to BATAS that they were retained through the intermediary of Allianz.

74 However, the same matter comes up in another context. Hicksons appears to consider that its client is Allianz and that they have consistently acted in the interests of Allianz in all matters. It was merely incidental that, in some cases, BATAS was the insured and in others the opponent.

75 This view is of no assistance to the solicitors. If a solicitor acts for two or more persons in the one matter and the solicitor comes to have confidential information relevant to one of them, that solicitor cannot use that information against that client either in favour of the solicitor’s other client or for a stranger.

76 I now pass to the core issue.

77 Mr Gleeson took me to a learned article by professor Paul Finn, as his Honour then was, entitled "Fiduciary Law and the Modern Commercial World in Commercial Aspects of Trusts and Fiduciary Obligations" (Clarendon Press, Oxford, 1992). This article pays particular attention to what is called “former client conflict” and “separate matter conflict”.

78 Of course, this article was written before Prince Jefri and that must be taken into account when considering the weight of the thinking, but I have found the general analysis extremely useful.

79 “Former client conflict” is where a law firm acts for A in a matter and later acts against A in the same or a related matter. Here, the public interest in maintaining an environment in which uninhibited and secure communication can take place between lawyer and client and other factors mean that the right of the second client to the lawyer of his or her choice will take low priority.

80 “Separate matter conflict” occurs where a lawyer obtains information in the course of acting for client A which is relevant to another matter arising later in which the lawyer acts for client B.

81 Separate matter conflict may involve information received directly from the client, but may also cover information received from third parties while acting for the client.

82 The question was discussed by the English Court of Appeal in Tournier v National Provincial and Union Bank of England [1924] 1 KB 461 and the conclusion reached that the duty of confidentiality extended to material ascertained from sources other than the customer whilst the relation of banker and customer was current.

83 Finn J says at p 33 that “Confidential information obtained in and for the purpose of rendering a particular client service can lawfully be used only for the purposes of that service unless the client consents to the contrary.”

84 However, as Finn J also notes at p 33 the core difficulty is working out what information is covered by confidentiality.

85 To take some examples, the fact that the client is accustomed to catch the 5:15 train to Newcastle does not of itself indicate confidential information. However, if the solicitor is told that there are many process servers seeking out the client, the information will attain a confidential character.

86 A distinction needs to be drawn between information that comes to a solicitor by way of know how when retained by a client and information that belongs to the client. Thus, if a lawyer in the course of work for a client ascertains the most efficient system for locating people by working through the electoral roll, that knowledge ordinarily becomes part of the lawyer’s know how and may be used by the lawyer on any subsequent occasion.

87 The law has for many years been that a lawyer is not prevented from taking as a subsequent client a person who is a competitor of a previous client; see eg Rakusen v Ellis, Munday & Clarke [1912] 1 Ch 831. In order to obtain an injunction something much more must be shown.

88 At this point it is appropriate to analyse Prince Jefri.

89 The basal facts were that in 1996 the plaintiff retained accountants KPMG to provide forensic accounting advice and litigation support in major litigation relating to his financial affairs. For that purpose, KPMG were given access to confidential information.

90 After that litigation was settled, the Government of Brunei retained KPMG to investigate the affairs of an agency of which the plaintiff had been chairman. The plaintiff sought an injunction against KPMG from so acting and was successful in his case in the House of Lords.

91 The leading judgment was delivered by Lord Millett with whom Lords Browne-Wilkinson, Hope, Clyde and Hutton agreed.

92 At p 234, Lord Millett affirmed the proposition that where the plaintiff is a former client, the court’s intervention is founded not on the perception of any possible impropriety, but on the protection of confidential information.

93 Where the court’s protection is sought by a former client, the plaintiff must show that “(i) the solicitor is in possession of information which is confidential to him and the disclosure of which he has not consented to and (ii) that the information is or may be relevant to the new matter in which the interest of the other client is or may be adverse to his own.” (p235).

94 “Whether founded on contract or equity, the duty to preserve confidentiality is unqualified. It is a duty to keep the information confidential, not merely to take all reasonable steps to do so. Moreover , it is not merely a duty not to communicate the information to a third party. It is a duty not to misuse it, that is to say, without the consent of the former client to make any use of it or to cause any use to be made of it by others otherwise than for his benefit. The former client cannot be protected completely from accidental or inadvertent disclosure. But he is entitled to prevent his former solicitor from exposing him to any avoidable risk; and this includes the increased risk of the use of the information to his prejudice arising from the acceptance of instructions to act for another client with an adverse interest in a matter to which the information is or may be relevant." (pp 235-6).

95 “… the court should intervene unless it is satisfied that there is no risk of disclosure. It goes without saying that the risk must be a real one, and not merely fanciful or theoretical. But it need not be substantial.” (p 237).

96 Mr Gleeson also relied on the short judgement of Lord Hope on p 227 which underlines what Lord Millett said.

97 The basic propositions enunciated in Prince Jefri have been adopted in Australia; see eg Beach Petroleum NL v Kennedy (1999) 48 NSWLR 1, 48. See also Colonial Portfolio Services Pty Ltd v Nissen (2000) 35 ACSR 673 and Pradhan v Eastside Day Surgery Pty Ltd [1999] SASC 256 [51] a decision of the South Australian Full Court (Bleby J with whom Doyle CJ and Prior J agreed).

98 However, in one respect, there has been some substantial disagreement with Prince Jefri. In Spincode Pty Ltd v Look Software Pty Ltd (2001) 4 VR 501, Brooking JA thoroughly examined the authorities and reached the conclusion at pp 521-2 that:

“…it must be accepted that Australian law has diverged from that of England and that the danger of misuse of confidential information is not the sole touchstone for intervention where a solicitor acts against a former client.”

99 Brooking JA was a member of the Victorian Court of Appeal with Ormiston and Chernov JJA. The former said that he thought that Brooking JA was correct in his analysis, but had not had time to consider the question deeply and noted that there had been little argument on the point. Chernov JA seemed to agree on the confidential information part of the case and remarked that Brooking JA appeared to make a compelling case for his view.

100 Brooking JA’s view has been adopted by later cases in Victoria; see eg Sent v Fairfax Publication J Pty Ltd [2002] VSC 429 per Nettle J.

101 I briefly examined the position in Belan v Casey (supra). I there said that, except in Victoria, it seemed to me that there had been full acceptance of Prince Jefri in Australia and that Brooking JA’s view was obiter.

102 Mr Gleeson submitted that I should re-examine that view. He suggests that cases such as Parry-Jones v Law Society [1969] 1 Ch 1 and Westgold Resources NL v St Barbara Mines Ltd [2002] WASC 264 show that much more emphasis must be placed on the former solicitor’s contractual duty of loyalty, a contractual duty which survives the termination of the retainer, than was done in Prince Jefri.

103 Mr Gleeson further suggests that the cases on corrupt retirement by fiduciaries or corrupt termination of retainers by solicitors clearly show that the propositions put by Lord Millett in Prince Jefri were not intended to be exhaustive.

104 I have done as Mr Gleeson requested. However, I remain of the view I took in Belan v Casey.

105 It may be that there are some exceptional cases where equity will give relief in favour of a former client where there is no confidential information present. However, almost every judge who has recently given a judgment on the matter has recognized that there is still no rule forbidding a lawyer acting against a former client. As Chernov JA points out in Spincode, such a rule would come into play if one adopted a too liberal view as to the basis of the jurisdiction.

106 In PhotoCure ASA v Queen’s University at Kingston (2002) 56 IPR 86, Goldberg J in the Federal Court declined to follow Spincode and followed Prince Jefri and Belan v Casey.

107 Few reputable textbooks in equity/confidential information deal with Prince Jefri. The only one that does, Parkinson, states the Prince Jefri rule (see [1026]) and makes no mention of Spincode.

108 I consider that until the NSW Court of Appeal or High Court of Australia decide otherwise, I should continue to adhere to what I said in Belan v Casey subject to the riders in the next two paragraphs.

109 However, for completeness, I should note what was said in argument presented to the High Court (Gaudron and Kirby JJ) on 22 October 1998 on the special leave application from the decision of the Western Australian Full Supreme Court in Fordham v Legal Practititioners’ Complaints Committee (1997) 18 WAR 467. That was a disciplinary matter where a solicitor had acted for P and then, later, when she was acting for T who had allegedly kidnapped P, cross examined P on his character from information P had given her.

110 Fordham was argued before Prince Jefri was decided.

111 Kirby J said that whilst counsel was approaching the problem in a context of confidential information, “the heart of the professional wrong is the act of disloyalty”.

112 I take the view that there may be some exceptional case where equity might consider in conscience that relief should be given to an ex client against a solicitor who seeks to act against him or her where the plaintiff cannot demonstrate potential misuse of confidential information.

113 It also must be remembered that “confidential information” in this sort of case is not limited to what might be confidential information in a case between ex-employer and ex-employee. As Goldberg J said in PhotoCure at p 91, matters involving a client’s forensic tactics and strategies come under this head. Thus, if it be the case, the fact that a motor vehicle property insurer told its solicitor that it would always accept 75% of its claim for instant cash would come within the category of confidential information.

114 Has the plaintiff demonstrated a real and not merely fanciful or theoretical risk that it may be prejudiced by the defendants continuing to act in the cross claim brought in the Mowbray matter?

115 I do not consider that I need delve deeply into the facts. Indeed, the approach in Prince Jefri is not to examine the facts too fully, but to make a broad assessment of the case and then see if the lawyers can demonstrate no real risk. Furthermore, if there were to be too close a delving into the facts the whole purpose of confidentiality might be destroyed.

116 Mr Blanch gave evidence for the defendants. He said that in his view there was no confidential information of BATAS currently in his possession. He also said that anything that might once have qualified as confidential information was by now in the public domain.

117 Mr Blanch was closely cross examined by Mr Gleeson.

118 Mr Blanch admitted that whilst acting for BATAS he did receive confidential information. However he said, most if not all of that was now in the public domain.

119 Mr Gleeson put that there were seven categories of confidential information which came into his hands:

(a) The nature of BATAS’ internal operations as deposed to by Frieda Stelzer;

(b) The litigation strategy adopted by BATAS in the Frieda Stelzer matter;

(c) Information as to how BATAS kept its records;

(d) Information about 30 documents in the possession or former possession of BATAS which might appear to be relevant to lung cancer;

(e) Information as to the names and addresses of employees of BATAS and their internal operations;

(f) Information from interrogatories as to when BATAS learnt of the problems with asbestos;

(g) Generally the strategy of BATADS in dealing with litigation.

120 Mr Gleeson put that the only part of the material referred to in the preceding paragraph was the identification of nine of the documents mentioned in (d) by Miss Katzmann SC in her opening in the Stelzer matter.

121 Mr Blanch said that he thought that much of the material entered into the public domain as a result of the judgments in Victoria in the McCabe litigation. However, when it was pointed out to him that the relevant judgment was only on 22 March 2002, he agreed that that could not have been public domain material when he accepted the Brambles retainer.

122 In his final submissions, Mr McCulloch of junior counsel for the defendants put that significant material as to the synergy of asbestos and smoking as a cause of lung cancer was already in the public domain. He referred to McDonald v State Rail Authority of NSW [1998] NSW DDT 4 and 10 and Dalby v Wallaby Grip Ltd [2002] NSW DDT 15.

123 I am not sure that it is an answer to a claim for injunction to prevent disclosure of confidential information that the material is in the public domain, see Finn (1992) 14 Syd Law Rev 317, 322 and cf Home Office v Harman [1983] AC 280. In addition to this matter of principle, there may also be the practical consideration where, whilst information is publicly recorded somewhere, it can only be accessed with difficulty and there is still some reason for holding the lawyer to his or her promise of secrecy.

124 However, disregarding the proposition in the previous paragraph, I am not satisfied that the whole of the material given to the solicitors in confidence is in the public domain. I am also of the view that some of the material in the hands of an adversary poses a risk to the plaintiff.

125 I also consider that the answer given to the plaintiff’s claim that much of the material received in confidence has no relevance to the cross claim is based on some misassumptions.

126 A cross claimant for contribution in the DDT has to establish that the cross defendant would, if it had been sued by Mowbray, have been found liable to Mowbray.

127 Thus the cross claimant will have to prove that BATAS was liable to Mowbray presumably because Mowbray’s smoking together with Brambles asbestos produced a synergy that caused the disease.

128 It would seem to be that a considerable portion of the material would be relevant to this issue.

129 Thus, this is a case where confidential information was given to solicitors by their client, a material part of that information appears relevant to later proceedings between the plaintiff and the solicitors' present client and the solicitors have not shown that there is no risk within the relevant sense that the plaintiff will be prejudiced.

130 Accordingly, apart from the discretionary defences and one other matter, the injunction should be made.

131 A defence of laches and acquiescence was raised.

132 Mr Burbidge said that Allianz has expended large sums of money and effort on legal fees to Hicksons and counsel and preparation of material for them in respect of the Mowbray claim. He submits that is a clear case of the defences of laches and acquiescence.

133 Mr Gleeson put that such a defence would not lie in a case for final injunction in support of a legal right; cf Orr v Ford (1989) 167 CLR 316, 340. Mr Burbidge disputed that proposition, but said that, in any event, laches was always relevant to an injunction to protect an equitable right.

134 I do not consider much is to be gained by entering into this debate as laches is clearly relevant to a claim for an equitable remedy, whether or not that is said to flow from a legal or equitable right.

135 Mr Burbidge cited the second edition of Spry. This was, with respect, of little assistance. It was published prior to Orr v Ford. I have checked the 6th edition but there is nothing therein to which I need call attention.

136 Mr Gleeson says that, in any event, the investment of time and money in retaining Hicksons was Allianz’s own choice and Hicksons accepted the retainer and continued to act knowing of the confidential information that they held from BATAS. It was not a case of any action on the part of BATAS lulling Hicksons into any false position. Furthermore, it would appear that a great deal of the costly work may well have been done after the plaintiff had flagged its objection.

137 I do not consider that the defences of laches and acquiescence have been made out. I do not consider that it is necessary to protect the defendants against any injustice that might flow from granting the equitable remedies to which the plaintiff is otherwise entitled because of any delay of the plaintiff or associated factor.

138 What I have called above “one other matter” is raised by the defendants’ submissions arising from the evidence of Mr Lippiatt that in the view of Allianz there are only two firms of solicitors who have the high level of legal expertise in this area of the law which Allianz reasonably requires.

139 The proposition is that it is against the public interest to grant an injunction which has the practical effect that a litigant is denied adequate legal representation before a court or tribunal.

140 I consider that this raises a problem as to whether the court should limit the applicability of Prince Jefri in situations where there are only a very small number of expert lawyers.

141 This sort of problem has occurred on other occasions, though not, as far as I am aware, in any reported case. There have been situations where large corporations have given general retainers to the best silk to protect them from those silk appearing against the corporation. There have been situations with the liquor bar where there are, say four expert barristers in the field and the large players in the industry send them all briefs to advise containing confidential documents.

142 However, these problems have never been seen as sufficiently serious as impeding justice for action to be taken. Moreover, lawyers generally are a pretty able lot and it usually does not take long for someone to develop the skills and experience which places him or her among the major league in particular fields of little competition.

143 Again the law has already made a choice with regard to conflicting interests when enunciating the Prince Jefri principle and has preferred the interest of first client confidentiality over the right of the second client to choose its own lawyer.

144 I have given this proposition considerable thought. My conclusion is that the principle may in some extreme case mean that no injunction will be granted, but in this and most cases, it is not sufficiently strong to prevent the order being made.

145 Accordingly, the plaintiff is entitled to the order sought with costs.

146 I will stand the proceedings over until 4 March 2004 for short minutes to be brought in. However, if this date is unsuitable to counsel or more than ten minutes will be required to speak to the draft minutes, counsel should contact my Associate before the end of February to arrange a substitute time.

147 The short minutes must give attention to the custody of the confidential material presently held in my chambers. My thinking is that it should merely be handed back to the plaintiff’s solicitors on an undertaking to provide it to the Court of Appeal if any appeal is filed.

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Last Modified: 02/27/2004