Edgecombe and Edgecombe
[2010] FMCAfam 894
•19 August 2010
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| EDGECOMBE & EDGECOMBE | [2010] FMCAfam 894 |
| FAMILY LAW – Legal practitioners – conflict of interest. |
| Gitane & Velacruz (No.2) [2007] FamCA 635 McMillan and McMillan (2000) FLC ¶93-048 |
| Applicant: | MR EDGECOMBE |
| Respondent: | MS EDGECOMBE |
| File Number: | DGC 2073 of 2010 |
| Judgment of: | McGuire FM |
| Hearing date: | 10 August 2010 |
| Date of Last Submission: | 10 August 2010 |
| Delivered at: | Dandenong |
| Delivered on: | 19 August 2010 |
REPRESENTATION
| Counsel for the Applicant: | Ms Carter |
| Solicitors for the Applicant: | Michael Benjamin & Associates |
| Counsel for the Respondent: | Mr Hutchings |
| Solicitors for the Respondent: | Jim McCarthy Lawyers |
ORDERS
The application that the husband’s solicitors be restrained from acting for him in family law matters be dismissed.
IT IS NOTED that publication of this judgment under the pseudonym Edgecombe & Edgecombe is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT DANDENONG |
DGC 2073 of 2010
| MR EDGECOMBE |
Applicant
And
| MS EDGECOMBE |
Respondent
REASONS FOR JUDGMENT
The substantive issues between the parties concern financial matters. The discrete application now before me is one by the wife seeking
an order restraining the husband’s solicitors, Michael Benjamin
& Associates, from further acting for the husband in these proceedings because of an alleged conflict of interest. That application is made
in the wife’s response filed 9 August 2010. The proceedings were commenced by the husband’s initiating application filed 22 June 2010 with a first return date of 10 August 2010. The application is opposed. It is conceded, that the husband had taken issue recently with the wife’s solicitors continuing to act in that they had acted previously for the husband in prior family law matters. The wife’s solicitors
will voluntarily cease to act.
Counsel for the wife argued the potential conflict on two counts. Firstly, that the husband is a Director of a company (omitted). In 2008 that company performed some work for a Sydney company. A commercial dispute has arisen. Michael Benjamin & Associates continue to act for the husband in respect of that commercial dispute. The quantum claimed is apparently $60,000.00. The litigation remains unresolved. The dispute arose during the parties’ relationship. The wife argues that the subject matter of that litigation is a part of the property pool in the family law proceedings and hence Michael Benjamin & Associates can be seen to be acting in the wife’s interests generally as she has some claim in respect of that litigation.
Further, there is a suggestion by the wife that she has had dealings with Michael Benjamin & Associates and perhaps in respect of that civil litigation. At paragraph 38 of the wife’s affidavit filed 9 August 2010 she says:
In mid to late 2008 the Husband went out on his own, leaving his previous place of work, and established the Business. As a part of this change I said that I would take on more paid work so the Husband could build the Business up. I attended the meetings with the Business’s accountant and with the lawyer to the Business, Mr Michael Benjamin of Michael Benjamin & Associates.
Whilst the nature and extent of the wife’s involvement with Michael Benjamin & Associates is disputed by the husband, I am unable
to determine those issues of disputed fact and credit at this stage given the argument takes place on the face of the affidavit material
and reliant on submissions from Counsel rather than cross-examination. In summary, therefore, the wife argues that Michael Benjamin & Associates have or may be acting for her, even
in a vicarious fashion, in respect of the commercial litigation as she has an interest in that litigation. She also argues that she has had direct dealings with Michael Benjamin & Associates albeit not in respect
of family law matters directly.
The second limb of the wife’s argument is that Michael Benjamin & Associates should not continue to act for the husband because they are compromised in respect of his family law matters because of their involvement in the commercial litigation. As I understand the argument, the wife does not contend that she is directly affected by any conflict, rather that the solicitors may have a difficulty or a perceived difficulty in acting for the husband in both suits. Counsel for the wife argues that the solicitors may be privy to information in respect of the commercial litigation that is relevant to the family law matters. I do not consider this to be a situation which would exclude them from acting. The subject matter of the commercial litigation and the source of this file would ordinarily be disclosed and would not be prejudiced for the family law proceedings. A more sinister possibility was raised by Counsel for the wife in that the husband may give contrary instructions to those solicitors in respect of each suit. If so, then the solicitors themselves would have clear and unambiguous ethical obligations but which would be raised at their initiative in the event of such an occurrence.
The husband opposes the application on two grounds being:
a)that, even accepting the broadest interpretation of “conflict”, there needs to be some objective reasonableness in that kind of conflict and that, in this case the wife does not adduce the facts that would reasonably lead to a perception that information may be used against her in the family law proceedings; and
b)
the wife has acquiesced to the husband’s solicitors acting
for some time and should therefore be precluded now from bringing up objection.
The law
The authorities make it clear that there is a discretion in the Court to grant the relief sought by the wife in this case.
Historically there have been two different approaches by courts in respect of the issue of conflict of interest of legal representatives. Her Honour Justice Dessau summarised the two approaches in Gitane & Velacruz (No.2)[1] as follows:
Traditionally, there were two lines of authority in cases about a solicitor’s conflict of interest, one following Rakusen v Ellis, Munday & Clarke (1912) 1 CH 831, the other following the Thevenaz and Thevenaz (1986) FLC 91-748. Rakusen provided for a narrow approach, whereby the Court would only intervene to restrain a solicitor if convinced that real mischief and real prejudice would follow if the solicitor were allowed to continue to act. Frederico J’s decision in Thevenaz encapsulated the broader approach, with a restraint where the risks were “more theoretical than practical”, emphasising that it was of utmost importance that justice should not only be done but should also appear to be done.
[1] [2007] FamCA 635
The Full Court considered the two approaches in McMillan and McMillan[2] and preferred the broader approach of Justice Frederico in Thevenaz and Thevenaz[3] with their Honours’ view summarised in the headnote as follows:
It is sufficient if a party swears that he or she has conveyed confidential information to his/her solicitors and he or she believes that information may be used to his/her disadvantage in the proceedings; there only needs to be a theoretical risk of prejudice, there need not be proof of prejudice…
[2] (2000) FLC 93-048.
[3] (1986) FLC 91-748.
The Full Court in McMillan[4] also approved a minority judgment from Justice Cory in a Canadian Supreme Court decision of Martin v MacDonald Estate[5] where His Honour made general but relevant comments as to the lawyer’s role:
Lawyers are an integral and vitally important part of our system of justice. It is they who prepare and put their clients’ cases before Tribunals. In preparing for the hearing of a contentious matter, a client will often be required to reveal to the lawyer retained highly confidential information. The client’s most secret devices and desires, the client’s most frightening fears will often, of necessity, be revealed. The client must be secure in the knowledge that the lawyer will neither disclose nor take advantage of these revelations.
Our judicial system could not operate if this was not the case. It cannot function properly if doubt and suspicion exists in the mind of the public that the confidential information disclosed by a client to a lawyer might be revealed.
[4] At [87,736].
[5] [1990] 3 S.C.R 1235.
Nevertheless, the authorities recognise the need for some objectivity and limits on even the broader approach to this issue and specifically the notion of “reasonableness”. In McMillan at [87,735] their Honours, after reviewing the case law, cited Justice Lindenmayer from the unreported decision of Stewart[6] thus:
All that is necessary is that the wife swears that she has conveyed confidential information to the solicitors and that she believes, not unreasonably, that the information may be used against her, or at least to her disadvantage, in these current proceedings.
[6] Stewart (Lindenmayer J, 17 April 1997, unreported)
The husband also raises the issue of delay in the wife making a complaint. It is agreed that negotiations between solicitors have continued since January 2010. The husband argues the bona fides of the wife now bringing a complaint of conflict and implies that it is simply a “tit for tat” response to his own issue with the wife’s solicitors. Counsel for the husband argues that whether the Court accepts the strict or broader approach to the issue of conflict, the wife’s application should fail because of the delay and implied acquiescence by her in Michael Benjamin & Associates acting for the husband. In the McGillivray v Mitchell[7] the Full Court said:
…We consider that the husband’s failure to make any protest to the other side regarding Mr Dowding’s involvement or to take steps to have Mr Dowding restrained from acting for the wife, at or very close to the point in time when he became aware of Mr Dowding’s involvement is a most relevant consideration which would have to be taken into account adversely to the husband on whichever approach was adopted…
It is our opinion that if a family law litigant has a genuine concern about a former legal advisor acting against him or her in later family law litigation, the litigant must take the point at least in correspondence with the other side at the earliest possible opportunity. If he or she does not do so, then he or she is possessed of a weapon which can later be used as a delaying tactic at some point in the proceedings convenient to his or her position. Furthermore, a failure to take the point initially made must also cast doubt on the bona fides of any later complaint concerning the existence of confidential information in the practitioner in question, and on the bona fides of any alleged apprehension regarding the possible mis-use of such confidential information.
[7] (1998) FLC 92 - 818
The wife was unable to give any explanation or reasonable explanation for not bringing a complaint as to conflict during the preceding eight months since negotiations have continued. The factual platform such as it is, leading to her alleged apprehension must have been apparent to her from January 2010 when negotiations commenced.
The onus is on the wife as the applicant to show that she has, on reasonable grounds an apprehension that information is available to the husband’s solicitors which could be used in the proceedings to her detriment. She filed her application on 9 August 2010 supported by an affidavit. The contents of that affidavit together with the abovementioned paragraph 38 of another affidavit filed 9 August 2010 by the wife is the totality of the evidence. Those affidavits disclose the following:
a)that Michael Benjamin & Associates acted for the wife in a conveyance of a townhouse in 1999/2000 and around the time of the commencement of her relationship with the husband; and
b)the wife met with Michael Benjamin & Associates in respect of the husband’s business.
No particulars of the wife’s alleged apprehension are set out in her affidavit material over and above the bland statement that Michael Benjamin & Associates acted for her in a conveyancing transaction. In my view it is incumbent on the application to sufficiently particularise her complaint to show her apprehension to be “reasonable”. She has not done so.
I do not accept the submission that Michael Benjamin & Associates acting for the husband in respect of the commercial litigation precludes them then from acting for him in relation to the family law matters.
Consequently, I must balance the wife’s apprehension limited to her affidavit material in respect of the matters set out in her affidavit material against the delay that has occurred.
I am of the view that if the wife had genuinely been of the view that Michael Benjamin & Associates were privy to information about her from a conveyancing transaction in 1999 or had gained some insight into her personality or demeanour which could be used against her in family law litigation then she would and should have raised such an objection in or close to January 2010. It was at this time that the solicitors became involved in negotiations. The time of filing an application is not material to this point. The apprehension should be the same in respect of negotiation and litigation. There is no suggestion that the wife did not recollect or was not aware of the fact that Michael Benjamin & Associates had acted in her conveyancing matters. The failure to raise the matter at an early date raises questions in my mind as to the bona fides of the wife’s application. With emphasis on this delay and acquiescence but with also concerns as to the reasonableness of the wife’s alleged apprehension in respect of prior involvement in a conveyancing matter some years ago, I am of the view that the application should be dismissed and that the solicitors be permitted to continue acting for the husband.
I certify that the preceding eighteen (18) paragraphs are a true copy of the reasons for judgment of McGuire FM
Associate:
Date: 19 August 2010
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