Delonzo and Ogden

[2014] FCCA 80

FEDERAL CIRCUIT COURT OF AUSTRALIA

DELONZO & OGDEN [2014] FCCA 80

Catchwords:
PRACTICE & PROCEDURE – Application that the Court restrain the defacto wife’s solicitors from acting for her – the defacto wife’s solicitors had been consulted by the defacto husband’s now partner –held the defacto husband’s partner had not revealed any confidential information relevant to the proceedings between the parties – held the defacto wife should be entitled to be represented by the lawyer of her choice – application dismissed.

Legislation:

Family Law Act 1975

D & J Constructions Pty Ltd v Head (1987) 9 NSWLR 118
McMillan v McMillan (2000) FLC 93-048
Naczek v Dowler [2011] FamCAFC 179

Applicant: MS DELONZO

Respondent: MR OGDEN

File Number: MLC 9469 of 2013

Judgment of: Judge Bender

Hearing date: 18 December 2013

Date of Last Submission: 18 December 2013

Delivered at: Melbourne

Delivered on: 22 January 2014

REPRESENTATION

Counsel for the Applicant: Mr M

Solicitors for the Applicant: (omitted)

Counsel for the Respondent: Mr D

Solicitors for the Respondent: (omitted)

ORDERS

1. The defacto husband’s Application in a Case filed 12 December 2013 seeking an order that the defacto wife’s solicitors be restrained from acting for her in these proceedings is dismissed.

IT IS NOTED that publication of this judgment under the pseudonym Delonzo & Ogden is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT MELBOURNE

MLC 9469 of 2013

MS DELONZO

Applicant

And

MR OGDEN

Respondent

REASONS FOR JUDGMENT

1. This is the application of the defacto husband that the defacto wife’s current solicitors, (omitted) Barristers & Solicitors be restrained from acting for the defacto wife in the family law proceedings currently before this Court.

2. It is the defacto husband’s evidence that his now partner, Ms B consulted Ms A, an employee of the defacto wife’s solicitors on 13 September 2013 in relation to her matrimonial matters arising from the breakdown of her marriage.

3. It is argued on behalf of the defacto husband that the defacto wife’s solicitors are now conflicted from acting on behalf of the defacto wife as his partner Ms B may become a witness in the proceedings before this Court and she may have discussed matters with Ms A that are relevant to these proceedings.

1. It is further argued on behalf of the defacto husband that this conflict is also apparent in that in the Initiating Application commencing the proceedings filed by the defacto wife on 1 November 2013, she seeks an interim or procedural order:

   “that Ms B be restrained from conducting any day to day transactions of the assets of the applicant and the respondent and  their respective corporate and trust interests.”

   As such it is argued that the defacto wife has sought to include Ms B in these proceedings.

2. I note Ms B is employed as an (occupation omitted) by (employer omitted), the business conducted by the defacto husband.

3. As a result of a number of alleged incidences between the defacto wife and Ms B in October and November 2013, Ms B made an application to the Bendigo Magistrates Court for an Intervention Order against the defacto wife on 2 December 2013 (“the Intervention Order proceedings”). The intervention proceedings are being defended by the defacto wife.

4. As Ms B had consulted Ms A, the defacto wife’s solicitors have declined to act for her in relation to the intervention proceedings commenced by Ms B and have referred the defacto wife to alternate solicitors for those proceedings.

5. Ms B, who has filed an affidavit in support of the defacto husband’s application that the defacto wife’s solicitors be restrained from acting for the defacto wife argues in that affidavit that irrespective of the defacto wife’s solicitors not representing the defacto wife in the Intervention Order proceedings, the defacto wife’s solicitors have personal information about her that could be used in the Intervention Order proceedings and in Ms B’s matrimonial matters.

1. It is submitted on behalf of the defacto husband that whilst Ms B is not a party to these proceedings, the defacto wife has sought to have Ms B joined to these proceedings and to have injunctive orders made against her in the Initiating Application filed by her on 1 November 2013. It was submitted on behalf of the defacto husband that in so doing the defacto wife placed Ms B “front and centre” in these proceedings and as Ms B has consulted the wife’s solicitors and disclosed sensitive and personal information to them, there is a clear conflict of interest.

2. It is also submitted in behalf of the defacto husband that in addition to the defacto wife’s solicitors being conflicted from acting for the defacto wife in these proceedings, they have also breached Ms B’s professional privilege by advising the defacto wife that Ms B has not signed the costs agreements provided to her when she saw Ms A.

3. Paragraph 16.6 of the defacto wife’s affidavit sworn on 16 December 2013 states as follows:

   “I am advised and verily believe that the Costs Agreement and Disclosure Statement has not been returned to my solicitor (see reference to this fact in my solicitor’s letter dated 3 December 2013).”

4. It is submitted on behalf of the defacto wife that whilst this Court has the jurisdiction to make orders restraining a solicitor from acting for a party to ensure that the integrity of the judicial process is protected, this is not a matter where such an order is required.

5. It is the defacto wife’s submission that at best, Ms B may be a witness in these proceedings and that the inherent jurisdiction of this Court to restrain solicitors from acting for a party is for the protection of the parties to the proceedings and not for the protection of potential witnesses.

6. It is further submitted on behalf of the wife that the defacto wife at no time sought to join Ms B to these proceedings but rather sought injunctive relief to protect the parties’ property interests.

1. When the matter was before the Court on 27 November 2013, interim orders were made by consent which included the following notation:

   A.That Ms B is an employee of (employer omitted) and as an (occupation omitted), but does not and will not have authority to write cheques or sign cheques on behalf of the business, or to deal with the bank with regard to the finances of the business or enter onto the houseboat.

2. On 27 November 2013 the defacto wife’s interim application was otherwise finalised and the matter listed for Final Hearing at the circuit at Bendigo commencing 28 January 2014.

3. It was argued on behalf of the defacto wife that at no time did the defacto wife seek to join Ms B to these proceedings. Further her interim application has been finalised and her concerns in relation to Ms B were addressed in the notation to the orders made 27 November 2013.

4. It is therefore submitted on behalf of the defacto wife that, at best, Ms B is a potential witness to these proceedings and that the law relating to “conflict of interest” relates to solicitors acting for a party to the proceedings and was never intended to protect a potential witness.

5. In relation to the defacto husband’s submission that the defacto wife’s solicitors have breached their duty of professional privilege in advising the defacto wife that Ms B had not signed a costs agreement, it is argued Ms B in her own material puts this as a fact in issue before the court as she raised the existence, and signing of this agreement in her affidavit sworn 10 December 2013. At paragraph 6, Ms B deposes:

   “On 19 September 2013, I received the firm’s costs agreement and disclosure statement dated 16 September 2013. I signed and returned the documents to the firm on that day. I was also requested to collate certain information and provide further details in relations to this issue.”

6. It is therefore argued on behalf of the defacto wife that in responding to this issue of fact raised on behalf of the defacto husband, the defacto wife’s response is not and cannot be a breach of professional privilege.

The Law

1. As submitted by Counsel for both parties, there is no dispute this Court has the discretion to exercise its jurisdiction to restrain a solicitor from acting for a party in appropriate cases.

2. Counsel for the defacto husband referred the Court to the Full Court decision of McMillan v McMillan (2000) FLC 93-048 at paragraphs 41-49 where the Full Court reviewed the then decisions made in relation to restraints on legal practitioners. At paragraph 43, the Full Court cited with approval the comments of Bryson J in the equity decision of the Supreme Court of NSW in the case of

   
   D & J Constructions Pty Ltd v Head

   (1987) 9 NSWLR 118 as follows:

   “There was recent consideration of the circumstances in which a solicitor would be restrained from acting for a former client by the Family Court of Australia (Frederico J) in In the Marriage of Thevenaz (1986) 11 Fam LR 95 ; FLC 91-748. That Court took the view that restraint is justified if there is a risk that confidential communications on relevant matters have been made by the party for whom the solicitor has ceased to act, even if the risk may be more theoretical than practical. It seems natural that a particularly careful view would be taken in family law business, as such litigation tends to be about highly confidential facts and a very wide range of facts and circumstances can conceivably be relevant; the sensitivity which even the most reasonable people feel about such litigation when they are engaged in it calls for careful measures to secure not only that justice is done but also that it is apparent that it is done, an appearance which would not survive any general impression that lawyers can readily change sides.”

1. In the matter of Naczek v Dowler [2011] FamCAFC 179 at paragraphs 61 to 64 the Full Court under the heading “Summary of the Relevant Principles” set out the factors relevant to the Court’s inherent jurisdiction to restrain solicitors from acting in a particular case as follows:

   “[61] The duty to the court arises from the court's concern that it should have the assistance of independent legal representation for the litigating parties. Preserving the integrity of the administration of justice, and in the appearance as well as the reality of independence, the duty underpins the court's practical approach to its supervisory discretion: Kallinicos & Anor v Hunt & ors (above) Fruehauf Finance Corp Pty Ltd v Feez Ruthning [1991] 1 QdR 558; Murray v Macquarie Bank Ltd (1991) 33 FCR 46; Carindale Country Club Estate Pty Ltd v Astill (1993) 42 FCR 307; Macquarie Bank Ltd v Myer [1994] VR 350; Kooky Garments Ltd v Charlton [1994] 1 NZLR 587; Oceanic Life Ltd v HIH Casualty and General Insurance Ltd [1999] NSWSC 272. The authorities however also caution concern in the exercise of this discretion where the discretion being exercised is that in the court's inherent jurisdiction to control its process in the aid of the administration of justice.

   [62] 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: Grimwade v Meagher [1995] 1 VR 446; Holborow v MacDonald Rudder [2002] WASC 265; Bowen v Stott [2004] WASC 94; Asia Pacific Telecommunications Ltd v Optus Networks Pty Ltd [2005] NSWSC 550.

   [63] The jurisdiction is to be regarded as exceptional and is to be exercised with caution: Kallinicos & Anor v Hunt & ors (above) Black v Taylor [1993] 3 NZLR 403; Grimwade v Meagher (above); Bowen v Stott (above).

   [64] 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: Kallinicos & Anor v Hunt & ors (above); Black v Taylor (above); Grimwade v Meagher (above) Williamson v Nilant [2002] WASC 225; Bowen v Stott (above).

Conclusion

1. It is the defacto husband’s submission that the confidential information provided by his now partner to a solicitor in the employ of the defacto wife’s solicitors creates a conflict of interest for the defacto wife’s solicitors in circumstance where she and the wife could potentially be witnesses in the Family Law Act proceedings and the intervention proceedings in the State Court.

2. It is the defacto wife’s submission that in relation to the intervention proceedings, Mr I has quite properly referred the defacto wife to alternative solicitors.

3. In relation to the Family Law Act proceedings it is submitted on behalf of the defacto wife that the inherent jurisdiction of this Court to control the administration of justice by injuncting a solicitor from representing a party to proceedings before it not intended to protect potential witnesses to these proceedings.

4. It is further submitted on behalf of the defacto wife that “it stretched the bounds of credulity” to suggest that the defacto husband’s girlfriend, in consulting the defacto wife’s solicitors in relation to her own matrimonial matters could have disclosed confidential information that could have any relevance to the proceedings between the defacto wife and the defacto husband.

5. It is therefore submitted on behalf of the defacto wife that in this matter the defacto wife should not be deprived of the lawyer of her choice, a lawyer she first consulted in 2010 when the parties had previously separated, as no fair minded or reasonable person could conclude that a conflict arose because that solicitors firm had one initial consultation with a person who, at best may be a witness in these proceedings.

6. There is no doubt there will be matters in which a solicitor who acts for a party to proceedings who has previously acted for a material witness for the other party will be injuncted from acting in the proceedings. This is not such a matter.

1. At best, Ms B may be a witness to the proceedings before this Court. Any information she disclosed to Ms A in relation to her own matrimonial matters cannot, in my opinion be seen to have any relevance to the matters for determination in the proceedings between the parties.

2. The incidents that have given rise to the intervention proceedings between the defacto wife and Ms B occurred some months after

   
   

   Ms B consulted Ms A. If these matters have any relevance to the proceedings in this Court, Ms B could not have discussed it with Ms A or disclosed to her any confidential information as to those matters.

3. Accordingly I am of the view that in this matter, in the words of the Full Court, no “fair minded, reasonably informed member of the public would conclude that the proper administration of justice” would require the defacto wife be deprived of the lawyer of her choice because a “potential” witness for the defacto husband consulted a solicitor employed by the defacto wife’s solicitor in relation to matters unrelated to these proceedings.

4. Accordingly, the application that the defacto wife’s solicitors

   
   

   (omitted) Barristers & Solicitors be restrained from acting for her in these proceedings will be dismissed.

I certify that the preceding thirty-three (33) paragraphs are a true copy of the reasons for judgment of Judge Bender

Date: 22 January 2014