Cleveland Investments Global Ltd v Evans

[2010] NSWSC 567

CITATION:	Cleveland Investments Global Ltd v Evans [2010] NSWSC 567
HEARING DATE(S):	14 and 25 May 2010
JUDGMENT DATE :	1 June 2010
JURISDICTION:	Equity
JUDGMENT OF:	Ward J
DECISION:	Defendant solicitor be restrained from acting in proceedings
CATCHWORDS:	LEGAL PRACTITIONERS - application to restrain solicitor from acting against former client based on court’s inherent jurisdiction over solicitors - principles upon which a solicitor will be restrained from acting against a former client - solicitor previously acted for company and received instructions from sole director - director removed from company and solicitor’s retainer terminated - solicitor then commenced to act for former director against company in respect of same claim as that to which solicitor had previously acted for company - HELD - a fair-minded, reasonably informed member of the public would conclude that the proper administration of justice required that the solicitor be prevented from so acting - solicitor restrained from acting against former client
LEGISLATION CITED:	Revised Professional Conduct and Practice Rules 1995 (NSW)
CASES CITED:	A v The Law Society of Tasmania [2001] TASSC 55; (2001) 10 Tas R 152 Asia Pacific Telecommunications Ltd v Optus Networks Pty Ltd [2005] NSWSC 550 Beach Petroleum NL v Kennedy [1999] NSWCA 408; (1999) 48 NSWLR 1 Belan v Casey [2002] NSWSC 58 Black v Taylor [1993] 3 NZLR 403 Bowen v Stott [2004] WASC 94 British American Tobacco Australia Services Ltd v Blanch [2004] NSWSC 70 Carindale Country Club Estate Pty Ltd v Astill (1993) 42 FCR 307; (1993) 115 ALR 112 D & J Constructions Pty Ltd v Head & Ors t/as Clayton Utz (1987) 9 NSWLR 118 Everingham v Ontario (1992) 88 DLR (4th) 755 Fordham v Legal Practitioners' Complaints Committee (1997) 18 WAR 467 Geelong School Supplies Pty Ltd v Dean [2006] FCA 1404 Grimwade v Meagher [1995] 1 VR 446 Holborrow v Macdonald Rudder [2002] WASC 265 Ismail-Zai v the State of Western Australia [2007] WASCA 150 Kallinicos v Hunt [2005] NSWSC 1181; (2005) 64 NSWLR 561 McVeigh v Linen House Pty Ltd [1999] VSCA 138; [1999] 3 VR 394 Newman v Phillips Fox (a firm) [1999] WASC 171; (1999) 21 WAR 309 PhotoCure ASA v Queen's University at Kingston [2002] FCA 905; (2002) 56 IPR 86 Pinnacle Living Pty Ltd v Elusive Image Pty Ltd [2006] VSC 202 Prince Jefri Bolkiah v KPMG (a firm) [1999] 2 AC 222; [1999] 1 All ER 517 Rakusen v Ellis Munday & Clarke [1912] 1 Ch 831 Sent v John Fairfax Publications Pty Ltd [2002] VSC 429 Spincode Pty Ltd v Look Software Pty Ltd [2001] VSCA 248; (2001) 4 VR 501 Wan v McDonald (1992) 33 FCR 491
PARTIES:	Cleveland Investment Global Ltd (Plaintiff) Peter Evans (Defendant)
FILE NUMBER(S):	SC 2009/288926
COUNSEL:	T D Anderson (Plaintiff) A R Lang (Defendant)
SOLICITORS:	Laurence & Laurence Lawyers (Plaintiff) Oliveri Attorneys (Defendant)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
DUTY LIST

WARD J

1 June 2010

2009/288926 CLEVELAND INVESTMENT GLOBAL LTD V PETER EVANS

JUDGMENT

1 HER HONOUR: This matter came before me in the duty judge list on 14 May 2010 for the hearing of the plaintiff’s application, by notice of motion filed on 19 April 2010, to restrain the defendant’s solicitor (Mr Dominic Oliveri) and his firm (Oliveri Attorneys) from acting for the defendant (Mr Peter Evans) in these proceedings. Prior to filing a notice of appearance on behalf of Mr Evans in these proceedings, Mr Oliveri and his firm had represented the cross-defendant (Ficaro Pty Limited) in the proceedings. Mr Evans was, at that time, the sole director of Ficaro and had given Mr Oliveri instructions on behalf of Ficaro in relation to the claims made against Ficaro by Cleveland in the proceedings.

2 Cleveland’s application is put on three bases: first on the need to prevent disclosure of confidences of a former client; secondly, on the basis of a duty of loyalty to the former client, notwithstanding termination of the solicitor’s retainer by that client; and, thirdly, as a matter of public policy. For Mr Evans, it is submitted that the motion must fail because there is no claim of confidentiality on the part of Ficaro as against Mr Evans. For the reasons set out below, I find for Cleveland on the third of the bases articulated by it. I do not accept that the only basis on which a solicitor may be restrained from acting against a former client is if there is a breach of confidence claim. There remains the court’s inherent jurisdiction in this regard.

Summary

3 The authorities in this area were comprehensively reviewed by Brereton J in Kallinicos v Hunt [2005] NSWSC 1181; (2005) 64 NSWLR 561. As summarised by his Honour, the weight of authority seems to be that, after termination of a solicitor’s retainer, there is no continuing duty of loyalty which would of itself provide a basis for the court’s intervention, but that the court retains both the jurisdiction to protect confidences of the former client (where there is a real risk of disclosure) and the inherent jurisdiction to restrain solicitors from acting in a particular case (as an incident of its inherent jurisdiction over officers of the court and to control its process in aid of the administration of justice) (at [76]).

4 In the case of a restraint for the purpose of protection against breach of confidence, the confidential information must be identified. Here, it is conceded by Cleveland that it is unable to identify particular information to which the obligation of confidence attaches. (In effect, that is the very forensic disadvantage on which it relies for this application – that the former client does not know what passed between its then sole director and its former solicitor at a time when the latter was representing the company in the present proceedings.) While that would pose a difficulty for Cleveland if the sole consideration were to be the risk of breach of an obligation of confidentiality to which the former solicitor was subject, it does not take into account the court’s inherent jurisdiction to restrain its own officers from acting in proceedings.

5 The test to be applied in the exercise of the court’s inherent jurisdiction, as articulated by Brereton J in Kallinicos v Hunt is whether a fair-minded, reasonably informed member of the public would conclude that the proper administration of justice requires that a legal practitioner should be prevented from acting for his or her former client, in the interests of the protection of the integrity of the judicial process and the due administration of justice, including the appearance of justice (at [76]).

6 The jurisdiction is regarded as exceptional and is to be exercised with caution. Nevertheless, as observed by Bryson J (as his Honour then was) in D & J Constructions Pty Ltd v Head & Ors t/as Clayton Utz (1987) 9 NSWLR 118, at 123, when noting that cautious conduct by the court is appropriate, this is:

because the spectacle or the appearance that a lawyer can readily change sides is very subversive of the appearance that justice is being done . (my emphasis)

7 His Honour went on to note that the appearance which matters is the appearance presented to a reasonable observer who knows and is prepared to understand the facts (at 123). In the present case, it is in my view appropriate that Ficaro’s former solicitor be restrained from continuing to act for Mr Evans in these proceedings in circumstances where: Mr Evans was the sole director in charge of the cross-defendant, Ficaro, at the time Mr Oliveri was instructed to act for the company and throughout the period in which Mr Oliveri so acted; Mr Oliveri was instructed to act for Ficaro after a cross-claim had been served on Ficaro by Mr Evans (and acknowledged that this caused him difficulties in taking any step for Ficaro not only in relation to the cross-claim but also in relation to the preparation of a defence in the main proceedings); in his capacity as sole director of Ficaro (and while there was on foot a cross-claim by him against Ficaro), Mr Evans gave instructions to Mr Oliveri in relation to the proceedings (the precise content of which instructions not being known by Ficaro and attempts to ascertain this, by way of a notice to produce issued to Mr Evans, having been opposed by Mr Oliveri in his capacity as solicitor for Mr Evans); there is some evidence to suggest that, while acting for Ficaro, Mr Oliveri corresponded with the plaintiff’s solicitors in accordance with instructions given by Mr Evans in relation to Mr Evans’ own personal position (at least in responding to a notice to produce served on him); Mr Oliveri has refused to disclose to a costs assessor the purpose of a conference for which a particular charge was rendered to Ficaro, on the basis that there are still proceedings on foot between Ficaro/Cleveland and Mr Evans; Mr Oliveri considers that he has no duty to appraise his former client of the content of instructions given to him by its sole director in relation to the matter at a time when Mr Oliveri was acting for the company (and not for Mr Evans); and Mr Oliveri is now in a position to use the knowledge gained from Mr Evans during that period to the forensic advantage of Mr Evans in prosecuting the cross-claim against Ficaro and/or defending the claim by Cleveland against Mr Evans. Ficaro, by reason of the above, is largely in the dark as to what Mr Oliveri’s knowledge derived from its former director might be.

8 In my opinion, to adopt the words of Bryson J in D & J Constructions, the readiness with which Mr Oliveri has changed sides on the very same claim in the very same proceedings is something very subversive of the appearance to a reasonable and fair-minded observer that justice is being done. Given that the present application has been brought promptly after the change of instructions was effected, and the proceedings are at a relatively early stage, so that the prejudice to Mr Evans of being required to retain new solicitors is relatively minor, I consider it to be in the interests of the due administration of justice (and the appearance of justice) that Mr Oliveri (and his firm) be restrained from continuing to act for Mr Evans.

9 I also note that whilst Mr Oliveri is not named as a party to this application or to the proceedings generally, it is still possible for this Court to make orders restraining Mr Oliveri in these circumstances (Spincode Pty Ltd v Look Software Pty Ltd [2001] VSCA 248; (2001) 4 VR 501, at 512; Belan v Casey [2002] NSWSC 58, at [14]).

Background Facts

10 Cleveland is a corporation incorporated in the British Virgin Islands and based in Hong Kong. Ficaro is an Australian investment entity established by the Fletcher family interests who are associated with Cleveland. Mr Evans was the sole director, company secretary and accountant of Ficaro at all relevant times until he was removed, at the instance of Cleveland, in December 2009.

11 Cleveland commenced these proceedings by way of summons on 15 May 2009 against Ficaro, Mr Evans and another company (Ficaro No 1 Pty Ltd), seeking freezing orders, among other things, to restrain Ficaro from dealing with moneys held in an identified bank account and to restrain Mr Evans and Ficaro No 1 from withdrawing or dealing with moneys held in any bank or financial institution. The relief sought by Cleveland related to claims made by Cleveland in relation to a sum of $700,000 it had forwarded to a bank account controlled by Ficaro and Mr Evans for the purposes of acquisition of property in the Eastern Suburbs. Cleveland believed that part or all of those moneys had been dealt with by Mr Evans contrary to the purposes for which the moneys had been provided. (I was informed by Counsel for Cleveland, Mr Anderson, during the course of the present application that it is now alleged that Mr Evans has misappropriated the sum of $200,000 from the funds so transferred by Cleveland.)

12 Mr Evans was represented in the proceedings initially by Mr Bruce Hall of BPH Legal. There was no appearance at the outset for Ficaro. The proceedings continued by way of pleadings (no doubt having regard to the serious nature of the allegations made therein) and, on 11 September 2009, Mr Evans filed a cross-claim against Ficaro for payment of accounting and directors’ fees. (At that stage no defence had yet been filed for Ficaro on the claim brought against it by Cleveland.) At this point, Mr Oliveri was instructed (by Mr Evans) to act for Ficaro. He filed a notice of appearance on behalf of Ficaro on 7 October 2009.

13 Mr Oliveri has deposed that it was Mr Evans who provided all instructions and information to Oliveri Attorneys on behalf of Ficaro in relation to the matter during the period in which he acted for Ficaro. According to Mr Oliveri, no steps were taken by Ficaro in relation to the cross-claim which had been filed against it by Mr Evans, while he was acting for Ficaro, because “Plainly it [Ficaro] could not do so for so long as Mr Evans remained the sole director”. (This rather begs the question as to how Mr Oliveri considered he could discharge his duties to Ficaro in relation to the cross-claim at that time.)

14 Mr Oliveri has further deposed that he considered the claim by Cleveland as against Ficaro to be misconceived. A notice of motion seeking the dismissal of the Statement of Claim was filed on behalf of Ficaro by Mr Oliveri on 20 November 2009. (On that day consent orders were filed providing for the dismissal of the proceedings against Ficaro No 1.) I understand that the motion for summary dismissal was not ultimately heard.

15 By letter dated 22 December 2009, Mr Oliveri was advised by a Mr Andrew Stylis (the plaintiff in separate proceedings which are also before the court involving Mr Evans) that Mr Stylis had been appointed as director of Ficaro to replace Mr Evans and that Mr Oliveri’s instructions to act for Ficaro were withdrawn, effective immediately. Mr Stylis directed Mr Oliveri not to return to Mr Evans any company records, not to accept any further instructions from Mr Evans in connection with Ficaro and not to disclose any information to Mr Evans regarding Ficaro. (From this, if nothing else, it must have been apparent to Mr Oliveri that (its now former client) Ficaro was very concerned to bring to an end the communication of information and instructions as between Mr Evans and Mr Oliveri in relation to Ficaro.)

16 On 8 February 2010, Mr Stylis, as authorised officer of Ficaro, filed a Notice of Removal of Solicitor on behalf of the company in these proceedings. On 17 February 2010, a notice of discontinuance was filed by Cleveland in respect of its claim against Ficaro. Since then, Ficaro has remained an active party to the proceedings only as the cross-defendant on Mr Evans’ cross-claim. Ficaro has, since February 2010, been represented by the solicitors acting for Cleveland in the proceedings. On 18 February 2010, Ficaro filed its defence to Mr Evans’ cross-claim.

17 On 12 March 2010, a notice of change of solicitor was filed on behalf of Mr Evans by Mr Oliveri, in which Mr Oliveri was appointed as Mr Evans’ solicitor in the proceedings.

18 Accordingly, the position now is that the solicitor formerly acting for Ficaro (on the sole instructions of Mr Evans) in these proceedings (and on the cross-claim brought against it by Mr Evans) no longer acts for Ficaro but now acts (on the opposite side of the litigious fence) as the solicitor on the record for Mr Evans in these same proceedings and intends to prosecute on behalf of Mr Evans the very cross-claim on which he was formerly representing Ficaro.

19 Not surprisingly, in the circumstances, Ficaro (through its lawyers) immediately objected to the appointment of Mr Oliveri as Mr Evans’ solicitor in these proceedings. Reference was made, among other things, to the Law Society Rules, including Rule 3 of the Revised Professional Conduct and Practice Rules 1995 (NSW), which provides that:

Consistently with the duty which a practitioner has to preserve the confidentiality of a client’s affairs, a practitioner must not accept a retainer to act for another person in any action or proceedings against, or in opposition to, the interest of a person:

(a) for whom the practitioner or the firm, of which the practitioner was a partner, has acted previously;

(b) from whom the practitioner or the practitioner’s firm has thereby acquired information confidential to that person and material to the action or proceedings;


and [where] that person might reasonably conclude that there is a real possibility the information will be used to the person’s detriment.

20 I note that the above Rule, in terms noted as being consistent with the solicitor’s duty of confidentiality, contemplates an assessment as to whether the former client might reasonably conclude that there is a real possibility that the information will be used to its detriment. Such an assessment must be difficult (if not impossible) to make in the absence of knowledge as to what information it was which was acquired by the solicitor in relation to the proceedings in question (as seems to be the case here, where the only persons who know precisely what information passed between them are the solicitor and the very party for whom he now acts).

21 Ficaro took the matter seriously enough to lodge a formal complaint with the Law Society, whose ethics officer referred Ficaro to the conflicts rules and adverted to the possibility that court proceedings might be necessary.

22 Ficaro’s objection having been met with a refusal by Mr Oliveri to cease acting, this application has now been brought before the court. Although filed by Cleveland, the interests of Cleveland and Ficaro are now, as I apprehend it, aligned for all material purposes.

23 On the application before me, Mr Anderson says, quite candidly, that his clients cannot point to any information that Mr Evans himself would have given to Mr Oliveri that would be confidential material (or, as I understand it, that Mr Evans would not himself be able to impart to Mr Oliveri or any other solicitor as a client of Mr Oliveri or that other solicitor in his own right). However, he submits that Cleveland’s concern is as to the documents Mr Oliveri may have seen in his capacity as solicitor for Ficaro. The fact that Mr Oliveri has reviewed some documents is indicated in the invoice his firm rendered to Ficaro in due course. It is submitted by Mr Anderson that at the heart of the matter is the difficulty that Ficaro has encountered in seeking access to documents in relation to the company (which has been under the control of Mr Evans for some time). In that regard I note that there was a dispute as to a notice to produce, which at least in part was before me on 14 May 2010 though I did not deal with it at that stage. Production of documents in relation to the company and the steps taken in relation to the conduct of the litigation had, as I understand it been sought from (and resisted by Mr Evans). (That said, it is submitted by Mr Lang, Counsel appearing for Mr Evans, that there has been no request for production by Mr Oliveri or his firm of documents for which Ficaro (as their client) may be entitled to call and that Mr Evans has now produced all documents he has in answer to the notice to produce, as ordered by the court to do.)

24 I was taken to an invoice generated by Mr Oliveri’s firm in respect of the work carried out under its retainer for Ficaro, which makes reference to work undertaken on 17 and 21 October 2009 in the review of documents and the compilation of an affidavit. Mr Anderson says it is a matter of concern to his clients that, when the matter comes on for hearing in due course, there may be cross-examination of the plaintiff’s witnesses based on documents not previously seen by the plaintiff (but of which Mr Oliveri may potentially be aware through his previous retainer by Ficaro on Mr Evans’ instructions). Mr Anderson submits that what was sought as part of the contested notice to produce was to obtain the documents so as to ascertain what it is that Mr Oliveri knows about the case (on the basis of instructions he received from Mr Evans) in Mr Oliveri’s capacity as solicitor for Ficaro.

25 It is also noted by Mr Anderson that during the five months that Mr Oliveri had the conduct of the proceedings for Ficaro no defence was filed in relation to Mr Evans’ cross-claim. Concern was expressed on the part of Cleveland/Ficaro that Mr Oliveri may have been acting for Mr Evans ‘all along’. (That concern seems to have been prompted at least in part by the fact that the correspondence in December 2009 in relation to the notice to produce, issued at a time when Mr Oliveri was acting for Ficaro, seemed to raise objections on the part of Mr Evans for whom Mr Oliveri was not then acting.) More recently, it would seem that Mr Oliveri has acknowledged that at least one of the time entries on the memorandum of fees his firm rendered to Ficaro related to time spent on a personal matter for Mr Evans.

26 Mr Lang, however, relies upon the very fact of inactivity on the part of Oliveri Attorneys in defending the cross-claim (a matter to which Ficaro/Cleveland point as demonstrating the relationship between Mr Oliveri and Mr Evans) as instead indicating that there can be no substance to any allegation that Mr Oliveri has undertaken steps or received information that could possibly involve a breach of confidence on the part of Mr Oliveri.

27 Mr Lang did accept, however, the possibility that Mr Oliveri may have been privy to instructions from Mr Evans (in his then capacity as sole director of Ficaro) in relation to the matters the subject of the claim by Cleveland against Mr Evans (and the cross-claim by Mr Evans against Ficaro).

28 That must, in my view, of itself give rise to the apprehension by a fair-minded and reasonably informed observer (and certainly seems to have given rise to the concern expressed in this application on behalf of both Cleveland and Ficaro) that Mr Oliveri is in a position to make use, for the benefit of Mr Evans against Ficaro in these proceedings, of information given to him by Mr Evans on behalf of Ficaro. But for the change in legal representation for Mr Evans, that forensic advantage would seemingly be lost to Mr Evans. Certainly, he could pass on the same information to a new solicitor, assuming he retains access to the same documents (which may or may not be the case, depending on the relevance to these proceedings of all of the company documents to which he formerly had access as a director), but the tactical import of matters discussed with Mr Oliveri, in the latter’s capacity as solicitor for Ficaro, may or may not be within Mr Evans’ recall. However, there would not be the corresponding forensic disadvantage to Ficaro in not knowing what information (conveyed by Mr Evans as a director of the company) still reposes in the mind of its former lawyers.

29 Perhaps more relevantly, but for the change in legal representation for Mr Evans, there seems no reason to think that Mr Oliveri would not have been prepared to accede to a request from his former client, Ficaro, for an account of what instructions had been given to him by Mr Evans in these proceedings at a time when Mr Evans was the sole director of Ficaro; and yet this is precisely what Mr Oliveri tells me he is under no obligation to Ficaro to provide (and from the thrust of the submission made to me on 25 May 2010, I would infer he has no intention to provide).

30 Mr Lang submits that there is no difficulty arising out of the above scenario, on the basis that any new solicitor who might be instructed by Mr Evans would be able to receive the very same instructions from Mr Evans that Mr Oliveri has done, such that Mr Lang submits that it cannot be said that Mr Oliveri is in any different position from any fresh solicitor who might be instructed in the matter. Even if that is in fact the case, it seems to me that the question (other than in relation to a claim for breach of a duty of confidentiality) is not so much what Mr Evans may be in a position, without any breach of confidence or duty to Ficaro, to tell new lawyers acting for him, but rather it is what Ficaro’s former lawyers (now acting for Mr Evans) apparently will not disclose to Ficaro about the instructions and information obtained from, and advice or discussions given to, Mr Evans in his capacity as a director of Ficaro and while Mr Oliveri was acting for Ficaro, that gives rise to the perception that justice will not be seen to be done if Mr Oliveri is permitted to continue to act for Mr Evans in these proceedings.

31 In the course of submissions, I postulated the scenario that Ficaro might seek not only the production of its client files from Mr Oliveri but might also wish to know what instructions had been orally given to Mr Oliveri on its behalf by Mr Evans, its former director. Mr Lang’s response was that Mr Evans has now produced all the documents in his possession custody or control relating to Ficaro and that those documents are therefore now available for use by both sides in the litigation. As to information which might be in Mr Oliveri’s head (deriving from instructions given to him by Mr Evans), Mr Lang seemed to accept in the abstract that there might arise a conflict if Mr Oliveri’s former client demanded to know certain information and his current client did not wish him to disgorge that information, but submitted that no such confidential information had been identified (and said that the real point was that there could not be a real sensible possibility of any conflict in this regard, since there could be no confidential information of Ficaro that Mr Evans would not already be in a position to divulge to a new solicitor). It did not seem to me that that addressed my concern as to the difficulty inherent in such a situation; a difficulty thrown into even sharper focus by the position taken by Mr Oliveri that he is under no duty to respond to any request for such information from a former client, since it indicates the unlikelihood of Ficaro being able to satisfy itself as to what Mr Evans in fact passed on to Mr Oliveri in relation to the company’s affairs.

32 After the hearing of the motion, a not wholly dissimilar situation to the scenario I had postulated in fact arose (which was the subject of an application for further evidence to be tendered on 25 May 2010), when Mr Oliveri responded to a costs assessor’s request for information as to the purpose of a particular conference itemised on the bill he had rendered to Ficaro, by refusing to divulge the relevant information on the stated basis that “The purpose of this conference [16 November 2009] was to canvass issues with the appropriateness or otherwise Ficaro’s defence to Evan’s [sic] cross-claim and which way to proceed given that Evans was the sole director of Ficaro. As this matter is still on foot and Ficaro is now represented by Laurence & Laurence, it would not be appropriate to go into further detail” (my emphasis). Mr Oliveri, who appeared for Mr Evans on this second occasion when the correspondence in question was tendered, submitted that this was of no relevance as it related to communications with a third party. However, the very sensitivity of disclosing to a costs assessor (on an assessment of the costs contained in the invoice rendered to Ficaro) information (apparently reasonably required for the purpose of the costs assessment) as to the purpose of a conference for which Ficaro was being billed (seemingly on the basis that this information might thereby come to the knowledge of Ficaro and be of use in the ongoing litigation) illustrates the problem with Mr Oliveri continuing to act for Mr Evans against Ficaro.

33 If I understood Mr Oliveri’s submissions correctly, his position is that no conflict could arise (between his duties to his former client in relation to confidences divulged during the course of that retainer and his duties to his new client) because he had no ongoing duties to Ficaro (as it was no longer instructing him) and thus Ficaro could not require him to disclose any information as to any discussion he may have had with Mr Evans (even if this related to a time when the latter was giving instructions in relation to the proceedings purportedly on behalf of Ficaro). Mr Oliveri said that his understanding of his obligation as a solicitor to his former client in that situation was simply to hand over the file and ‘anything to do with the file’. (Conversely, he said that Mr Evans could not require him not to disclose anything to Ficaro, since Mr Evans no longer instructed him in relation to Ficaro.) While I accept, as discussed below, that there is no ongoing duty of loyalty once the solicitor/client relationship is at an end, and hence there may be no duty to assist a former client to understand what instructions had previously been given to the solicitor purportedly on the client’s own behalf (the client in that event being limited to what might be recorded on the solicitor’s file, and hence at the mercy in some respects of the efficacy of the solicitor’s note-taking ability/practices), a refusal to entertain such a request (while at the same time being in a position where that information might be used for the purposes of the solicitor’s new client against the solicitor’s former client) highlights the invidious position in which the ongoing retainer for the new client inevitably places the old client.

34 Mr Anderson submits that Mr Oliveri, having had the advantage of seeing Ficaro’s documents and working through them with Mr Evans while acting for Ficaro, has an advantage in acting for Mr Evans which a new solicitor coming into the matter would not have (to the potential disadvantage of Mr Oliveri’s former client). Mr Anderson also drew my attention to correspondence which had emanated from Mr Oliveri at the time he was acting for Ficaro (on 17 December 2009) but apparently responding on behalf of Mr Evans, to suggest that there was a basis for perceiving that whatever relationship there was between Mr Evans and Mr Oliveri might lead to some breach of confidence (advertent or otherwise).

35 For completeness I note that, in defending this application, Mr Lang submits that there has been a swapping of representation on the part of Ficaro as well (insofar as the plaintiff’s solicitor who formerly acted against Ficaro now represents it in these proceedings), though Mr Lang said that no point was taken about that issue. I have difficulty seeing how any point could be taken about the fact that Ficaro, formerly having been sued by Cleveland, has now settled its dispute with it and is now being represented by Cleveland’s solicitors on the remaining aspects of the matter – involving claims made against Ficaro by Mr Evans.

Reasons

36 In essence, although the application was put on the three bases outlined above, it seem to me that the facts giving rise to this application are such as principally to invoke the inherent jurisdiction of the court to restrain solicitors from acting against a former client in a particular case as an incident of the court’s inherent jurisdiction over its own officers and to control its own process in the aid of the due administration of justice. The nub of the debate between Mr Anderson and Mr Lang on this application seemed to be whether, when an application of this kind is made by a former client, the sole question for the court is whether there is a real risk of disclosure of confidential information (as Mr Lang contends and as suggested by Young CJ in Eq in Belan v Casey, at [21]-[23]), and, if so, whether that test is here satisfied, or whether it is sufficient that the situation is one in which a fair-minded, reasonably informed member of the public would conclude that the proper administration of justice requires that a solicitor should be prevented from acting, in the interests of the protection of the integrity of the judicial process and the due administration of justice, including the appearance of justice (as Mr Anderson contends and as is suggested by cases such as Everingham v Ontario (1992) 88 DLR (4th) 755; Black v Taylor [1993] 3 NZLR 403; Grimwade v Meagher [1995] 1 VR 446; Holborrow v Macdonald Rudder [2002] WASC 265; Bowen v Stott [2004] WASC 94; Asia Pacific Telecommunications Ltd v Optus Networks Pty Ltd [2005] NSWSC 550; Kallinicos v Hunt) and, if so, whether this is such a case.

37 The authorities in this area have explored three possible bases upon which a solicitor may be restrained from acting against a former client:

First, that of ensuring the protection of confidential information that has been provided by the client to the lawyer in the course of the lawyer/client relationship: see, for example, Rakusen v Ellis Munday & Clarke [1912] 1 Ch 831; D & J Constructions ; Carindale Country Club Estate Pty Ltd v Astill (1993) 42 FCR 307; (1993) 115 ALR 112.

Secondly, where the court, acting under its inherent supervisory jurisdiction, considers that it is necessary to do so in order to ensure the due administration of justice: see, for example, Black v Taylor ; Grimwade v Meagher ; Newman v Phillips Fox (a firm) [1999] WASC 171; (1999) 21 WAR 309; Kallinicos v Hunt .

Thirdly (and the most controversial), that of preventing a breach of an asserted fiduciary duty of loyalty owed by the lawyer to the former client notwithstanding the termination of the retainer: see, for example, Wan v McDonald (1992) 33 FCR 491; (1992) 105 ALR 473; [1992] ANZ ConvR 385; Fordham v Legal Practitioners' Complaints Committee (1997) 18 WAR 467; McVeigh v Linen House Pty Ltd [1999] VSCA 138; [1999] 3 VR 394.

38 The area where there is some divergence (and perhaps uncertainty) in the authorities relates to whether the decision of the House of Lords in Prince Jefri Bolkiah v KPMG (a firm) [1999] 2 AC 222; [1999] 1 All ER 517 (where, in considering whether an accountant could be restrained from acting against a former client on the basis of either a breach of confidentiality or breach of loyalty, the House of Lords referred to the position in relation to restraint of solicitors and suggested that the only available basis was a breach of confidentiality, without expressly considering or excluding the availability of the inherent jurisdiction basis) should be read as excluding the availability of the inherent jurisdiction of the court as a basis for restraint in cases where (unlike Bolkiah) such a jurisdiction might otherwise apply. In my opinion, it does not.

39 In Bolkiah, at 526, Lord Millett expressed the view that the jurisdiction to restrain a lawyer from acting against a former client has its basis only in the protection of confidences imparted during the subsistence of the retainer, considering that this was the only duty that survived the retainer, the fiduciary relationship having ended with it. Lord Millet stated (at 527):

Where the court's intervention is sought by a former client, however, the position is entirely different. The court's jurisdiction cannot be based on any conflict of interest, real or perceived, for there is none. The fiduciary relationship which subsists between solicitor and client comes to an end with the termination of the retainer. Thereafter the solicitor has no obligation to defend and advance the interests of his former client. The only duty to the former client which survives the termination of the client relationship is a continuing duty to preserve the confidentiality of information imparted during its subsistence.

Accordingly, it is incumbent on a plaintiff who seeks to restrain his former solicitor from acting in a matter for another client to establish (i) that the solicitor is in possession of information which is confidential to him and to the disclosure of which he has not consented 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. Although the burden of proof is on the plaintiff, it is not a heavy one. The former may readily be inferred; the latter will often be obvious. I do not think that it is necessary to introduce any presumptions, rebuttable or otherwise, in relation to these two matters. But given the basis on which the jurisdiction is exercised, there is no cause to impute or attribute the knowledge of one partner to his fellow partners. Whether a particular individual is in possession of confidential information is a question of fact which must be proved or inferred from the circumstances of the case.

40 Since Bolkiah, the weight of authority suggests that it will not be open to a court to restrain a solicitor acting against a former client simply on the basis of a breach of loyalty (Beach Petroleum NL v Kennedy [1999] NSWCA 408; (1999) 48 NSWLR 1, at [204]–[205]; Belan v Casey, at [21]; PhotoCure ASA v Queen's University at Kingston [2002] FCA 905; (2002) 56 IPR 86; British American Tobacco Australia Services Ltd v Blanch [2004] NSWSC 70; Asia Pacific Telecommunications Ltd, at [54]–[55]; Kallinicos v Hunt, at [76]; and A v The Law Society of Tasmania [2001] TASSC 55; (2001) 10 Tas R 152).

41 In the Victorian Supreme Court there has been a departure from Bolkiah in that regard - Spincode v Look Software, at [52]–[53], [55]–[57] per Brooking JA; Sent v John Fairfax Publications Pty Ltd [2002] VSC 429, at [98]–[104] per Nettle J; Pinnacle Living Pty Ltd v Elusive Image Pty Ltd [2006] VSC 202, at [13]–[14] per Whelan J.

42 In Ismail-Zai v the State of Western Australia [2007] WASCA 150, Steytler P conveniently summarised the current divergence of authorities in relation to the basis for restraint of breach of loyalty, there stating from [20]-[24]:

There is conflicting authority concerning the question whether a duty of loyalty survives the termination of the retainer. In Prince Jefri Bolkiah v KPMG (a firm) [1999] 2 AC 222 at 234–235 Lord Millett concluded that it does not. …

Since then, cases in which the duty of loyalty has been said to survive termination of the retainer include McVeigh (in which Bolkiah was not cited); Spincode Pty Ltd v Look Software Pty Ltd [2001] VSCA 248; (2001) 4 VR 501 at [52]–[53], [55]–[57] per Brooking JA ( obiter ); Sent v John Fairfax Publications Pty Ltd [2002] VSC 429 at [98]–[104] per Nettle J ( obiter ); Pinnacle Living Pty Ltd v Elusive Image Pty Ltd [2006] VSC 202 at [13]–[14] per Whelan J; Gugiatti v City of Stirling [2002] WASC 33 ; (2002) 25 WAR 349 at [8]–[13] per Templeman J; Holborow v Macdonald Rudder [2002] WASC 265 at [23], [25] per EM Heenan J and Wagdy Hanna & Associates Pty Ltd v National Library of Australia [2004] ACTSC 75; (2004) 155 ACTR 39 at [55] per Higgins CJ.

Cases in which the duty has been held not to survive the retainer include Beach Petroleum NL v Kennedy [1999] NSWCA 408; (1999) 48 NSWLR 1 at [204]–[205]; Belan v Casey [2002] NSWSC 58 at [21]; PhotoCure ASA v Queen's University at Kingston [2002] FCA 905; (2002) 56 IPR 86; British American Tobacco Australia Services Ltd v Blanch [2004] NSWSC 70; Asia Pacific Telecommunications Ltd v Optus Networks Pty Ltd [2005] NSWSC 550 at [54]–[55]; Kallinicos at [76] per Brereton J and A v The Law Society of Tasmania [2001] TASSC 55 ; (2001) 10 Tas R 152.

In my opinion, the weight of authority currently supports the proposition that the duty of loyalty does not survive the termination of the retainer. Moreover, some of the cases which support the existence of a continuing duty of loyalty seem, in my respectful opinion, to draw no clear distinction between a fiduciary obligation of that kind, on the one hand, and the court's inherent supervisory jurisdiction to protect the integrity of the judicial process, on the other. In Wagdy Hanna (at [55]) Higgins CJ referred to conduct which "would or would appear to be a breach of an obligation of loyalty which breach would be regarded as reprehensible conduct by the … reasonable impartial observer". In Gugiatti (at [12]) Templeman J said that "a solicitor may assume a hostile relationship against a former client if such conduct would not give rise to an apprehension of impropriety in the mind of a reasonable bystander". (my emphasis)

In any event it seems to me that there may be little distinction, for any practical purpose, between the question whether there is a breach of a continuing duty of loyalty, on the one hand, and the questions whether there is a real risk of a breach of confidence and whether there is or will be other impropriety of a kind that is likely to undermine the integrity of the judicial process and the due administration of justice (which comprehends the appearance of justice), on the other hand. The cases suggest that there will be a breach of a continuing duty of loyalty if a solicitor acts against a former client in the same or a closely related matter: Fordham at 489–490; Spincode at [53] per Brooking JA. I find it difficult to envisage circumstances in which a lawyer who acts in the same or a closely-related matter against a former client will neither be in a position in which there is a real risk of a breach of a duty of confidence nor be acting in such a way as to undermine the integrity of the judicial process or the due administration of justice . (again, my emphases)

43 In Belan v Casey, at [15]–[21], Young CJ in Eq (as his Honour then was) while of the view that the overwhelming weight of authority was to the effect that, where the applicant to restrain a solicitor is a former client, the sole consideration is whether there is a real risk of disclosure of confidential information and said that one does not there delve into matters of conflict of interest or conflict of duty, nevertheless contemplated that such delving may in other situations well be material (at [21]).

44 His Honour was invited to, and did, reconsider his view as to the question whether the solicitor’s duty of loyalty survived termination of the retainer in British American Tobacco Australia Services Ltd v Blanch, there confirming that he remained of the view previously expressed, though again confining his consideration to the issue of the duty of loyalty and not addressing the operation of the court’s inherent jurisdiction in this area, if any, at [104].

45 Noting that, before Bolkiah, the court’s inherent jurisdiction to supervise its officers was a well established basis upon which the court would intervene to restrain a solicitor from acting against a former client and that Bolkiah itself was a case relating only to the ground of breach of loyalty (since the restraint was sought against accountants, not lawyers, in respect of whom the court’s inherent jurisdiction did not apply), Brereton J addressed the question whether Bolkiah denies the availability of the court’s supervisory jurisdiction to restrain a solicitor from acting against a former client other than where confidences are put in jeopardy (at [37]; [48]-[49]). His Honour concluded that it had not and that (at [49]):

In limiting the basis on which a former client could have a solicitor restrained from acting for another to the protection of confidential information, the House of Lords should be taken as having done so to the exclusion of enforcement of any supposed duty of loyalty. However, their Lordships should not be taken as having excluded the court’s inherent supervisory jurisdiction over solicitors.

46 In relation to the comments made by Young CJ in Eq (as his Honour then was) in Belan v Casey and British American Tobacco, Brereton J stated (at [66]):

I take his Honour to have held that Prince Jefri excludes from consideration, in a “former client” case, any question of a breach of a duty of loyalty, and to have declined to follow Spincode insofar as Brooking JA suggested that in Australia an equitable obligation of loyalty (or even arguably a contractual obligation of loyalty, which Brooking JA contemplated) survived termination of the retainer. But I do not take his Honour to have held that the court’s well-established inherent jurisdiction over solicitors no longer extends to restraining a solicitor from acting in a particular case on ground other than threatened breach of confidence. His Honour was applying, but not extending, Prince Jefri .
… I do not read his Honour’s judgment [in British American Tobacco ] as intending to deny that the court retained inherent jurisdiction in an appropriate case, as an incident of its control of its process and officers, to restrain a solicitor from acting in a particular case. Once again, his Honour was applying, but not extending, PrinceJefri .

47 The solicitor’s duty of loyalty was considered by Bergin J (as her Honour then was) in Asia Pacific Telecommunications Ltd v Optus Networks Pty Ltd at [51]–[55], her Honour there stating;

The delivery of legal services by legal practitioners and the arena in which they operate has changed markedly since the days of Cholmondeley v Lord Clinton [1815] EngR 511; (1815) 19 Ves 261; 34 ER 515. There is a statutory regime including statutory rules relating to conduct of legal practitioners with which the practitioners must comply: Legal Profession Act 1987 (NSW). There is the statutory complaints authority in New South Wales, the Office of the Legal Services Commissioner, and layer upon layer of conduct committees within the professional organisations, that enforces, or assist in the enforcement of, the statutory rules of conduct. It is a very different environment from that in which the Court was the only “regulator” prior to the establishment of these bureaucracies.
Brooking JA was understandably appalled by the conduct of the solicitors in Spincode in trying to suggest in correspondence, and later in evidence, that the company had not retained them. The trial judge found that the solicitors had been retained and that they were in possession of confidential and relevant information, thus satisfying the pre-requisites in Prince Jefri for the Court’s intervention. It seems to me that it was the rather unsatisfactory professional conduct, or misconduct, of those solicitors that featured heavily in Brooking JA reaching the conclusion that the Court must have jurisdiction, irrespective of the possession of such confidential and relevant information, to bring those solicitors “to heel”, as his Honour put it.
The Court’s jurisdiction over its officers is of course accepted both as to its existence and its breadth. It is not surprising that Brooking JA took such a dim view of the conduct of the solicitors in Spincode . It has to be remembered that the facts of that case were that the solicitors were acting in relation to the very same circumstances and disputes in which they had already given advice to the company, and refusing to acknowledge that the company had retained them. This is not such a case. It is also not a case in which the solicitors discharged themselves for the purpose of acting against a former client. The plaintiff chose not to instruct Clayton Utz. It has been proved that there is no real risk of the information, said to be confidential, being provided to or accessed by the defendant’s solicitors. (my emphasis)
In Belan v Casey, the Chief Judge referred to the confusion that existed prior to the decision in Prince Jefri . I apprehend that some of that confusion stemmed from the blurring of the line between the courts’ supervision of its officers and the entitlement to have the courts intervene to protect an equitable right – the right to protection of confidential information. It seems to me that in respect of solicitors acting against former clients, the line between disciplinary supervision and consideration of the entitlement to injunctive relief for the protection of confidential information and/or for breach of duty is best accommodated by the approach taken in Prince Jefri and adopted in Beach Petroleum NL v Kennedy and by the Chief Judge in Equity in Belan v Casey and British American Tobacco Australia Services Ltd v Blanch, and in the cases referred to therein.
Applying this approach to the facts in Spincode would result in the evidence of the solicitor’s conduct supporting findings that there could be no confidence that the confidential information provided to him by the company would not be misused or quarantined from access by the other solicitor within the firm who accepted instructions from Spincode and the director. The delivery of legal services in this modern environment permits a firm of solicitors to act against a former client so long as confidential information that “might be relevant” to a subsequent client in proceedings against the former client can be quarantined from access by solicitors who act against the former client, and there is no real risk of access to it or misuse of it. If that is not possible then there are good grounds to restrain the solicitors from acting against the former client. There are no such good grounds in this case.

48 The comments there made by her Honour, as to the manner in which the court’s disciplinary jurisdiction should be approached, were addressed by Brereton J in his review of the authorities in this area in Kallinicos v Hunt (at [74]-[75]) and Brereton J noted her Honour’s observation that “The court’s jurisdiction over its officers is of course accepted both as to its existence and its breadth” and went on to state ([75]):

Accordingly, I take her Honour’s preference for Belan v Casey and British American Tobacco over the Victorian cases to be addressed to the supposed duty of loyalty, rather than to the supervisory jurisdiction. This is reinforced by the circumstance that her Honour then proceeded separately to examine the public policy question, with reference inter alia to Grimwade v Meagher (and without any hint of disapproval), applying the objective test mentioned repeatedly above by concluding that, in that case, a fair-minded, reasonably informed member of the public would conclude that the administration of justice was not adversely affected in the circumstances.

49 Brereton J concluded, and with respect I adopt his conclusions, that the foregoing authorities establish the following (at [76]):

During the subsistence of a retainer, where the court’s intervention to restrain a solicitor from acting for another is sought by an existing client of the solicitor, the foundation of the court’s jurisdiction is the fiduciary obligation of a solicitor, and the inescapable conflict of duty which is inherent in the situation of acting for clients with competing interests [ Prince Jefri ].

Once the retainer is at an end, however, the court’s jurisdiction is not based on any conflict of duty or interest, but on the protection of the confidences of the former client (unless there is no real risk of disclosure) [ Prince Jefri ].

After termination of the retainer, there is no continuing (equitable or contractual) duty of loyalty to provide a basis for the court’s intervention, such duty having come to an end with the retainer [ Prince Jefri ; Belan v Casey ; Photocure ; British American Tobacco ; Asia Pacific Telecommunications ; contra Spincode ; McVeigh ; Sent ].

However, the court always has inherent jurisdiction to restrain solicitors from acting in a particular case, as an incident of its inherent jurisdiction over its officers and to control its process in aid of the administration of justice [ Everingham v Ontario; Black v Taylor ; Grimwade v Meagher ; Newman v Phillips Fox ; Mitchell v Pattern Holdings ; Spincode ; Holborow ; Williamson v Nilant ; Bowen v Stott ; Law Society v Holt ]. Prince Jefri does not address this jurisdiction at all. Belan v Casey and British American Tobacco are not to be read as supposing that Prince Jefri excludes it. Asia Pacific Telecommunications appears to acknowledge its continued existence.

The test to be applied in this inherent jurisdiction is whether a fair-minded, reasonably informed member of the public would conclude that the proper administration of justice requires that a legal practitioner should be prevented from acting, in the interests of the protection of the integrity of the judicial process and the due administration of justice, including the appearance of justice [ Everingham v Ontario ; Black v Taylor ; Grimwade v Meagher ; Holborow ; Bowen v Stott ; Asia Pacific Telecommunications ].

The jurisdiction is to be regarded as exceptional and is to be exercised with caution [ Black v Taylor; Grimwade v Meagher; Bowen v Stott ].
Due weight should be given to the public interest in a litigant not being deprived of the lawyer of his or her choice without due cause [ Black v Taylor; Grimwade v Meagher; Williamson v Nilant; Bowen v Stott ].
The timing of the application may be relevant, in that the cost, inconvenience or impracticality of requiring lawyers to cease to act may provide a reason for refusing to grant relief [ Black v Taylor; Bowen v Stott ].

50 Similarly, in Geelong School Supplies Pty Ltd v Dean [2006] FCA 1404, Young J reviewed the above authorities and concluded (at [26]) that:

Although the Supreme Court of New South Wales has declined to follow Spincode , insofar as Brooking JA held that the equitable obligation of loyalty owed by a solicitor to his or her client survives the termination of the retainer, the decisions in New South Wales do not cast any doubt upon the court’s inherent power to restrain solicitors from acting in a particular case having regard to the interests of the administration of justice. Similarly, the court’s inherent supervisory jurisdiction over solicitors and counsel was not relevant to the House of Lords decision in Bolkiah.

and said from [33]:

… In this Court, there is unambiguous authority that the Federal Court has the inherent power to restrain solicitors or counsel acting in a particular matter for a particular client where such a course is required by the interests of justice. In the Full Court’s decision in Western Australia v Ward (1997) 76 FCR 492, Hill and Sundberg JJ said at 498:

Enough has been said to show that the requirements of natural justice do not involve an absolute right to the legal adviser of a party's choice. The instances in which courts have prevented chosen counsel or solicitors from acting have involved misconduct, potential use of confidential information and a real risk of lack of objectivity and of conflict of interest and duty: Grimwade v Meagher. The present case is only another example of situations in which the “integrity of the judicial process”, the “interests of justice”, and the “need to preserve confidence in the judicial system”, to use some of the notions that lie behind the inherent jurisdiction to exclude counsel or solicitors, may override the public interest that a litigant be able to be represented by the lawyer of its choice. That public interest is “an important value”: Black v Taylor at 408.

In Lincoln , Goldberg J referred to this passage with approval and applied the test stated by Mandie J in Grimwade : at [10]. His Honour did not doubt that this Court has inherent jurisdiction in an appropriate case to prevent practitioners appearing for a particular party in order that justice should not only be done but should be seen to be done.

The crucial question, therefore, is whether on the evidence before me a fair-minded, reasonably informed member of the public would conclude that the proper administration of justice requires that Vogrig and WVL be restrained from acting for GSS in these proceedings. In answering this question it must be borne in mind that this is an application for a permanent injunction: Yunghanns v Elfic Ltd (unreported, Supreme Court of Victoria, Gillard J, 3 July 1998). It must also be borne in mind that the Court’s jurisdiction is an exceptional one; it is to be exercised with appropriate caution and due weight must be given to the public interest in a litigant not being deprived of the solicitor of its choice without due cause. (my emphasis)

Conclusion

51 Here, the applicant for an order restraining a solicitor from continuing to act against his former client is unable to identify any particular confidential information of which there is a danger of misuse in the current situation. However, there is a reasonable basis for the apprehension by Ficaro that it is not aware of all that has relevantly passed between Mr Evans and Mr Oliveri (or his firm) during the period in which Mr Oliveri was the solicitor on the record for Ficaro.

52 It seems to me that the fair-minded reasonably informed member of the public would have an expectation that a legal practitioner who has been retained by a company, and received instructions from a company director on the retainer of the company and for the benefit of the company, in relation to a claim made against the company (being a claim which related in part to what the company director himself was said to have done) should not be seen thereafter to act for that company director in prosecuting that very same claim against the company in the same set of proceedings. To the extent that such a member of the public were to be informed that the solicitor in question has resisted (or maintains a right to resist) the provision to the company of documents or information obtained from the company director while he was acting for the company, I think this would only strengthen the perception that justice was not being seen to be done if the retainer of that solicitor were to continue.

53 In the exercise of the court’s inherent jurisdiction over its officers and in the due administration of justice, I am persuaded that Mr Oliveri and his firm should be restrained from continuing to act for the defendant in these proceedings.

54 Accordingly, I order that Mr Dominic Oliveri and his firm (Oliveri Attorneys) be restrained from continuing to act as solicitor for the defendant in these proceedings. I order that the defendant pay the plaintiff’s costs of this application.

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