DELANY & DELANY
[2014] FCCA 2042
•22 September 2014
FEDERAL CIRCUIT COURT OF AUSTRALIA
| DELANY & DELANY | [2014] FCCA 2042 |
| Catchwords: FAMILY LAW – Application to restrain solicitor from acting. |
| Legislation: Evidence Act 1995, s.122(2) |
| Balsienev Penhall [2008] NSWSC 1414 Bureau Interprofessional Des Vins De Bourgogne v Red Earth Nominees Pty Ltd (t/as Taltarni Vineyards) [2002] FCA 588 (9 May 2002) Carindale Country Club Estate Pty Limited v Astill (1993) 42 FCR 307 Corrs Pavey Whiting & Byrne v Collector of Customs (Vic) [1987] FCA 266 D & J Constructions Pty Ltd v Head (t/as Clayton Utz) (1987) 9 NSWLR 118 Kallinicos and Anor v Hunt and Ors [2005] NSWSC 1181 Magro [1989] FLC 92-005 Mallesons Stephen Jacques v KPMG Peat Marwick (1991) 4 WAR 357 PhotoCure ASA v Queens University at Kingston [2002] FCA 905 (22 July 2002) Prince Jeffri Bolkiah v KPMG [1998] UKHL 52: [1999] 2 AC 222 Re a Firm of Solicitors [1997] Ch 1 Sent v Fairfax [2002] VSC 429 (Unreported, Nettle J, 7 October 2002) Thevenas [1986] FLC 91-748 Village v BDW [2004] Aust Torts Reports 81-726 |
| Applicant: | MS DELANY |
| Respondent: | MR DELANY |
| File Number: | SYC 3157 of 2008 |
| Judgment of: | Judge Altobelli |
| Hearing date: | 1 August 2014 |
| Date of Last Submission: | 1 August 2014 |
| Delivered at: | Wollongong |
| Delivered on: | 22 September 2014 |
REPRESENTATION
| Counsel for the Applicant: | Ms D |
| Solicitors for the Applicant: | [R] Lawyers |
| Solicitors for the Respondent: | Johnson Horsley Lawyers |
ORDERS
That the Husband’s Application in a Case filed 26 July 2014 be dismissed.
That any application for costs arising out of these Orders must be filed and served within 14 days and shall not exceed 500 words.
That any response to an application for costs must likewise be filed and served within a further 14 days and shall not exceed 500 words.
IT IS NOTED that publication of this judgment under the pseudonym Delany & Delany is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT WOLLONGONG |
SYC 3157 of 2008
| MS DELANY |
Applicant
And
| MR DELANY |
Respondent
REASONS FOR JUDGMENT
Introduction
By way of an Application in a Case filed 26 June 2014 the Husband, who is the respondent in substantive parenting and property proceedings before the Court, seeks to restrain the solicitor currently acting for the Wife from continuing to do so. The Wife opposes this.
Background facts
The Husband’s case outline document contains the following useful short chronology:
| Date | Event | Reference |
| [omitted] 1973 | Father was born (now aged 40) | |
| [omitted] 1977 | Mother was born (now aged 37) | |
| Mid 2002 | Parties commence cohabitation | F’s affd filed 23.10.13 para 4 |
| [omitted] 2003 | Parties marry | F’s affd filed 23.10.13 para 4 |
| [omitted] 2004 | Child [X] was born (now aged 10) | F’s affd filed 23.10.13 para 5 |
| [omitted] 2012 | Child [Y] was born (now aged 2) | F’s affd filed 23.10.13 para 5 |
| 23.09.2012 | Parties separate on final basis | F’s affd filed 23.10.13 para 5 |
| October 2012 | Father referred directly to Ms R from [R] Lawyers | F’s affd filed 26.06.14 para 4 |
| 30.10.2012 | Father telephones [R] Lawyers and speaks directly with Ms R for 6.5 minutes | F’s affd filed 26.06.14 para 5-6 |
| November 2012 | Father again telephones [R] Lawyers and speak with another staff member who conveys messages to and from Ms R | F’s affd filed 26.06.14 para 7-8 |
| 20.05.2013 | Mother telephones [R] Lawyers to make enquiry | M’s affd filed 28.07.14 para 4 |
| 28.08.2013 | Mother files Initiating Application prepared by Verekers Lawyers | |
| 23.10.2013 | Father files Response, prepared by Johnson Horsley Lawyers | |
| 11.04.2014 | Mother attends appointment with Ms R | M’s affd filed 28.07.14 para 9 |
| 22.04.2014 | Father’s solicitors receive correspondence from [R] Lawyers on behalf of the mother | F’s affd filed 26.06.14 para 10 |
| 12.05.2014 | Father’s solicitors respond raising conflict of interest [R] Lawyers respond denying conflict of interest | F’s affd filed 26.06.14 para 11 F’s affd filed 26.06.14 para 11 |
| 21.05.2014 | Father’s solicitors respond setting out basis of conflict and enclosing mobile telephone records [R] Lawyers respond rejecting father’s assertions and advising they would not engage further | F’s affd filed 26.06.14 para 12 F’s affd filed 26.06.14 para 12 |
| 02.06.2014 | Father’s solicitors give notice to [R] Lawyers that he would be filing an Application to restrain them from acting | F’s affd filed 26.06.14 para 13 |
| 03.06.2014 | [R] Lawyers respond advising they would defend Application | F’s affd filed 26.06.14 para 13 |
| 23.06.2014 | Father successfully applies to vacate Conciliation Conference relying upon conflict of interest | |
| 26.06.2014 | Father files Application in a Case seeking to restrain the mother from instructing [R] Lawyers | |
| 25.07.2014 | Mother files Response seeking to dismiss father’s Application in a Case | |
| 01.08.2014 | Interim Hearing |
Some of the asserted facts are in contention, particularly those dated 30 October 2012 and November 2012. Suffice it to say that evidence in the Wife’s case puts in contention whether the Husband contacted [R] Lawyers at all and, if so, what confidential information was communicated. The parties adopted a pragmatic approach to the determination of factual issues, recognising that the testing of the evidence would necessitate an unacceptable delay in progressing the case. In particular the Husband, who recognised he bore the onus of proof and had the most to lose by not having the evidence tested, accepted that a pragmatic approach had to be adopted. As it turns out, and in order to be scrupulously fair to him, the Court has proceeded in its determination by accepting his version of the facts in broad terms. For the reasons that will be set out below, his application still fails.
Material relied upon
In his case, the Husband relied upon the following documents:
a)Application in a Case, filed 26 June 2014;
b)Affidavit of Mr Delany, filed 26 June 2014;
c)Affidavit of Mr Delany, filed 28 July 2014.
In her case, the Wife relied upon the following documents:
a)Response, filed 25 July 2014;
b)Affidavit of Ms R, filed 25 July 2014;
c)Affidavit of Ms S, filed 25 July 2014;
d)Affidavit of Ms B, filed 25 July 2014;
e)Affidavit of Ms W, filed 25 July 2014;
f)Affidavit of Ms M, filed 25 July 2014;
g)Affidavit of Ms Delany, filed 28 July 2014;
h)Affidavit of Ms P, filed 29 July 2014.
The Court records its appreciation to Mr Horsley, the solicitor for the Husband, and Ms D, Counsel for the Wife, for their helpful case outlines, written and oral submissions.
Husband’s case at its highest
Before setting out what the Court considers to be the Applicable Law, it is necessary to understand the relevant issues to be determined, and this of course involves understanding the Husband’s case at its highest. The evidence is contained in his two affidavits. On 30 October 2012 he asserts that he spoke to Ms R:
for approximately six and a half minutes. During this time I discussed various aspects of the proceedings and disclosed information about parenting issues and various concerns I had. Ms R gave me legal and procedural advice about these issues and encouraged me to make an appointment to come in and see her.
[Affidavit 26 June 2014, para 6]
He then asserts that “approximately 1-2 weeks later” he again telephoned [R] Lawyers, was not able to speak to Ms R again, but “then provided the secretary or solicitor with an update of the situation and the concerns I had about my children.” He says that the second telephone call lasted “at least 12-15 minutes, including time that I was left on hold”, and indeed that “the person I was speaking with put the phone on hold several occasions” as the person in question, according to the Husband, asked Ms R for advice about what to do. The Husband asserts that the person he spoke to “…gave me some further procedural and legal advice” and again invited him to make an appointment [Affidavit 26 June 2014, paras 7-8].
As indicated before, for the purpose of the present exercise, the Court is prepared to accept these asserted facts.
It is clear that the Husband subsequently engaged his present lawyers, and did not become aware that [R] now represented his wife until April 2014.
Issues raised
On the Husband’s case he is a former client of [R] Lawyers. He asserts that he provided confidential information to them in the course of two specific telephone calls. He now seeks to restrain them from potentially misusing the confidential information he provided to them, in the case against him.
Applicable law
The general legal principles that apply in a case where a former client seeks to restrain their previous lawyer from acting are set out comprehensively in the judgment of Brereton J in Kallinicos and Anor v Hunt and Ors [2005] NSWSC 1181 (22 November 2005) at [76]:
The foregoing authorities establish the following:-
· 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].
The present case is one where the retainer has ended. The Court’s jurisdiction is based on the protection of the confidences of the former client. As the retainer has ended, the lawyer had no continuing duty of loyalty to the former client. Nonetheless the Court always has an inherent jurisdiction to restrain lawyers from acting in a particular case. Thus, even if the Husband in this case is unable to establish that he communicated confidential information to the lawyer, the Court might still be persuaded to exercise its inherent jurisdiction to restrain the lawyer from acting against the Husband.
Protection of the confidences of the former client
In order to succeed in his case, the Husband has to establish that he communicated to the lawyers what Brereton J described as “confidences”, and which other cases have described as “confidential information”. The Husband’s evidence does not establish this, except in the most general ways. His solicitor’s submissions in this regard are set out at paras.9 and 10 of the Case Outline Document:
9. Although there is a principle in Australian law that information “must be identified with precision and not merely in global terms”[1] before the information will be recognised as confidential, it is submitted that the need for precision is a principle of law that should be applied flexibly.[2] In Village v BDW, Byrne J held that:-
“Given the relationship of lawyer and client and the ambit of professional confidence of which professional privilege is a manifestation, the Court should … not be slow to accept the existence of confidential information.”[3]
10. However, the degree of particularity of the confidential information must depend on all of the circumstances of the case. In Re a Firm of Solicitors[4], Lightman J held that the degree of particularity would depend on the facts. Often the information cannot be described in great detail for fear of disclosure, as is obviously the case in the current proceedings. In Village v BDW, Byrne J held that:-
“It may be that such a requirement would defeat the very purpose of the duty of confidentiality by disclosing to the Court and to the other party the information in question and its significance.”
It is understandable that the father does not wish to disclose the communications he had with Ms R in great detail, for fear of waiving his legal professional privilege in doing so.
[1] Carindale Country Club Estate Pty Ltd v Astill (1993) 42 FCR 307, 314
[2] Sent v Fairfax [2002] VSC 429 (Unreported, Nettle J, 7 October 2002) [67]
[3] [2004] Aust Torts Reports 81-726, 65 338
[4] [1997] Ch 1, 9–10
Drummond J in Carindale Country Club Estate Pty Limited v Astill (1993) 42 FCR 307 stated the principle in the following terms at [314]:
It is a basic requirement that before material will be recognised as having the character of confidential information, the information in question must be identified with precision and not merely in global terms: Corrs Pavey Whiting & Byrne v Collector of Customs (Vic) [1987] FCA 266; (1987) 14 FCR 434, 443; [1987] FCA 266; 74 ALR 428 and cf O'Brien v Komesaroff [1982] HCA 33; (1982) 150 CLR 310 at 327; [1982] HCA 33; 41 ALR 255. The requirement is insisted upon even though it may necessitate disclosing to the court the very information the confidentiality of which it is sought to preserve by the action. This requirement has its foundation in the need for the court to be able to frame a clear injunction, should relief against misuse of confidential information be granted.
The House of Lords has also considered this issue in Prince Jeffri Bolkiah v KPMG [1998] UKHL 52: [1999] 2 AC 222. Lord Millett, with whom the other Law Lords agreed, said at 235:
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. In this respect also we ought not in my opinion to follow the jurisprudence of the United States.
Before turning to the Husband’s submissions, two things become apparent from these authorities. The Husband must demonstrate that [R] possesses information confidential to him. The Husband must further demonstrate that the information in question is relevant to the matter where the lawyer is sought to be restrained.
On the first point, the Husband submits that the existence of confidential information may be inferred because disclosure might defeat the purpose of confidentiality, and amount to a waiver of privilege. The Court does not accept this and, indeed, the argument does not survive close scrutiny. The Husband’s case is that he has already disclosed confidential information to [R] Lawyers. His complaint is that they might use this confidential information against him now. If they already have this confidential information, where is the prejudice to him in deposing to it “with precision and not merely in global terms”? Even if this was not the case, and the aforementioned is certainly not the only basis on which the Husband’s claim is rejected, the suggestion that disclosure may amount to waiver of legal professional privilege in doing so is simplistic. It is hard to imagine how, on the facts of this case, disclosing the confidential information for the discreet purpose of this application, the Husband can be found to have “acted in a way that is inconsistent” with the maintenance of privilege for the purposes of s.122(2) of the Evidence Act 1995 (Cth). In any event the Husband could have deposed to the confidential information in a separate affidavit, and sought to limit access to the affidavit to the Court and Counsel for the Wife only. This is a procedure consistent with that used in other cases where the exhibit is treated as confidential (e.g. Bureau Interprofessional Des Vins De Bourgogne v Red Earth Nominees Pty Ltd (t/as Taltarni Vineyards) [2002] FCA 588 (9 May 2002); PhotoCure ASA v Queens University at Kingston [2002] FCA 905 (22 July 2002); Balsienev Penhall [2008] NSWSC 1414).
The second point is that the Husband must demonstrate is that the information in question is relevant to the matter where the lawyer is sought to be restrained. The Court has a number of concerns in this regard. Firstly, the Husband himself draws the distinction in his evidence between legal and procedural advice he was given. Given his failure to properly set out the confidential information he communicated, it is not clear what he meant by this distinction. The distinction may be significant. Whilst not impossible, it is nonetheless hard to see how routine advice about procedure (e.g. to seek interim orders) would be relevantly confidential in the present context. Nextly, the factual matrix established by the Husband’s own evidence raises plausibility issues as to the relevance of the information communicated. The Husband’s case at its highest is that he made just two telephone calls to [R] Lawyers. The first was for 6.5 minutes and, he asserts, involves speaking to Ms R. The second one is estimated to have lasted at least 12-15 minutes, including time on hold, and it was “with someone at the firm, or Ms S” [Affidavit 28 May 2015, para.5]. Indeed his evidence is that he was put on hold several times [Affidavit 28 May 2015, para.8]. Given the very short time frame within which the Husband established his retainer with the lawyers (giving him the benefit of the doubt on this point) it is all the more incumbent on him to demonstrate not just that he communicated confidential information, but also that it was relevant to the matter at hand, and not just general information that lacks the essential attribute of information that requires the Court’s intervention to protect, i.e. the confidences of which Brereton J spoke.
The Court accepts that, as a general proposition, the onus of proof on the Husband is not a heavy one. The Court accepts that the need to identify the confidential information is a requirement to sometimes be applied flexibly. Moreover, the Court accepts that it should not be slow to accept the existence of confidential information. But these general propositions need to be sensibly applied to the facts of this case. The Husband’s case, at its highest, is that his oral retainer with the lawyers involved communication not exceeding a duration of 30 non-consecutive minutes, over two telephone calls, with some part of that involving non-professional staff. One and a half years later the lawyers formerly retained in what can only be described as tenuous circumstances, represent the Wife in family law proceedings. These facts call for a much higher level of disclosure by the Husband. He has failed in this regard.
Court’s inherent jurisdiction to restrain
Notwithstanding the above, should the Court nevertheless restrain the lawyers from continuing the act for the Wife? The Husband’s argument in this regard focuses on the importance of the appearance of justice. He submits that the Court should conclude that the continued representation by the solicitors would be subversive to the appearance of loyalty, and therefore detrimental to public confidence in the legal system: Magro [1989] FLC 92-005; Thevenas [1986] FLC 91-748.
Adopting the formulation of the test by Brereton J in Kallinicos, the test 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. Notwithstanding this, the jurisdiction is to be regarded as exceptional and is to be exercised with caution. Due weight should be given to the public interest in a litigant not being deprived of the lawyer of her choice without due course.
In D & J Constructions Pty Ltd v Head (t/as Clayton Utz) (1987) 9 NSWLR 118, Bryson J said at 123:
Cautious conduct by the court is appropriate because the spectacle or the appearance that a lawyer can readily change sides is very subversive of the appearance that justice is being done. The appearance which matters is the appearance presented to a reasonable observer who knows and is prepared to understand the facts. The court should weigh the facts and assess the risks in the eye of reality, theoretical risks should be disregarded and when as here there is no confidential information available and there never was a relationship of solicitor and client with any partner the appearance of the matter is not a basis for the court to assume control over the retainer.
This passage has been adopted in other cases including Mallesons Stephen Jacques v KPMG Peat Marwick (1991) 4 WAR 357 at [373] and Carindale Country Club Estate Pty Ltd v Astill [1993] FCA 218 at [117]. On the facts of this case, as in the D & J Construction Case, “the appearance of the matter is not a basis for the Court to assume control over the retainer”. It could not reasonably be said that on the facts of this case, viewed realistically, and in the absence of any evidence of the confidential information communicated, that a fair minded member of the public would have any concerns about the proper administration of justice. It is possible that the test used in Thevenaz is stricter, focussing more on the theoretical risk, as compared to D & J Constructions. It is this Court’s view that even on a stricter application of the test, the Husband fails.
Conclusion
It follows from the above that the Husband’s Application in a Case filed 26 July 2014 must be dismissed. It is likely that a costs application will follow. If this is the case, in order to minimise the cost to the parties it should proceed by way of short written submissions not exceeding 500 words, with any applicant to file and serve the same within 14 days, and any respondent within a further 14 days. Submissions should quantify the costs sought by reference to the Federal Circuit Court Rules by way of a separate schedule to the submissions.
I certify that the preceding twenty-five (25) paragraphs are a true copy of the reasons for judgment of Judge Altobelli
Associate:
Date: 22 September 2014
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