Edgley and Edgley - [2013] FCCA 2024

FEDERAL CIRCUIT COURT OF AUSTRALIA

EDGLEY & EDGLEY

[2013] FCCA 2024

Catchwords:
FAMILY LAW – Practice and Procedure – application to restrain a solicitor from acting for the other party in de facto property settlement proceedings – the solicitor and the party seeking the restraint formerly in a solicitor client relationship during which the solicitor received confidential information from that party – the solicitor now acting for the opposing party – whether the information provided by the former client to the solicitor was confidential from the opposing party – where the former client is bound by the duty of full and frank disclosure in the property settlement proceedings – whether the former client delayed in objecting to the solicitor acting for the opposing party such as to warrant refusing to grant the relief the former client seeks – whether mala fides in the former client’s application such as to warrant refusing to grant the relief the former client seeks – whether prejudice to the opposing party if the solicitor is restrained from continuing to act such as to warrant refusing to grant the relief the former client seeks.

Legislation:

Family Law Act 1975, Part VIIIB, Division 3, s.114(3)

McMillan & McMillan [2000] FamCA 1046, (2000) 26 Fam LR 653; (2000) FLC 93-048
Mills v Day Dawn Block Gold Mining Co Ltd (1882) QLD 62
Griffis & Griffis (1991) FLC 92-233; (1991) 14 Fam LR 782
Stewart & Stewart, Lindenmayer J, 17 April 1997, unreported
Rakusen v Ellis Munday and Clarke (1912) 1 Ch 831
Prince Jefri Bolkiah v KPMG [1999] 2 WLR 215
Wake & Foda, Nicholson CJ, Lindenmayer & Jordan JJ, 9 February, 1998, unreported
McGillivray & Mitchell (1998) 23 Fam LR 238
Fowler & Liddle & Anor [2012] FamCA 450
Sogelease v MacDougall, Wood J (NSW Supreme Court), 17 July 1986, unreported
D & J Constructions Pty Limited v Head (1987) 9 NSWLR 118
A & B (1989) 13 Fam LR 789
National Mutual Holdings Pty Ltd v Sentry Corp (1989) 22 FCR 209, 87 ALR 539

Applicant:

MR EDGLEY

Respondent:

MS EDGLEY

File Number:

PAC 5090 of 2011

Judgment of:

Judge Halligan

Hearing dates:

25 & 26 November 2013

Date of Last Submission:

26 November 2013

Delivered at:

Parramatta

Delivered on:

29 November 2013

REPRESENTATION

Counsel for the Applicant:

(X)

Solicitors for the Applicant:

(X)

Counsel for the Respondent:

Ms McIntosh

Solicitors for the Respondent:

Peter Cornock & Associates

ORDERS

Mr P, solicitor, and (X) Solicitors are each hereby restrained from continuing to act in these proceedings on behalf of the applicant, Mr Edgley.

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

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT PARRAMATTA

PAC 5090 of 2011

MR EDGLEY

Applicant

And

MS EDGLEY

Respondent

REASONS FOR JUDGMENT

Introduction

This is the hearing of an application by the former de facto wife (who I will refer to as the wife) for an order restraining the solicitor for the former de facto husband (the husband) from continuing to act for the husband in pending property settlement proceedings between the husband and the wife, because there was formerly a solicitor client relationship between the wife and the solicitor during which the wife asserts she provided confidential information to the solicitor that may be used to her disadvantage in the property settlement proceedings.
The husband opposes the wife's application.
There was no appearance by or on behalf of the husband's solicitor, who is personally the subject of the orders the wife seeks and thus had a right to be heard if he wished. However, he swore an affidavit in the husband's case and was cross-examined, and is clearly aware of the orders sought against him and the evidence on which they are sought.
The solicitor and the husband are brothers.

The facts

As mentioned, there are property settlement proceedings pending between the parties in which the solicitor acts for the husband. The proceedings arise from a de facto relationship that existed between the parties.
There is no issue that there was a solicitor client relationship between the wife and the husband's solicitor during the parties’ romantic relationship. The solicitor admitted in cross-examination that there were communications between him and the wife in his capacity as her solicitor both in his office and away from his office by telephone and email. The solicitor agreed in cross-examination that he received confidential information from the wife in the course of the solicitor client relationship he had with her.
However, in re-examination the solicitor said that the husband was always present on occasions he received confidential information from the wife. When I asked him if the husband was present during the phone conversations and email exchanges he said he had with the wife in his capacity as her solicitor, he resiled from his earlier evidence that he had any communications with the wife in his capacity as her solicitor other than in his office, and said his earlier evidence that what he did was wrong, and that such communications related to work for

(business omitted) where the company, not the wife, was his client.
I was greatly troubled by this and other aspects of the evidence of the solicitor.
In an exchange of correspondence between the parties’ solicitors in 2012 in which the issue of the solicitor continuing to act was canvassed, and the solicitor put a detailed response to a detailed argument why he should not continue to act, after referring to a history of social contact between him and the wife, the solicitor wrote-
“It is true to say that since the parties formed a relationship, this firm acted for (business omitted) in relation to the purchase of the business at (omitted).”
Elsewhere in his evidence, the solicitor infers that the wife has or had an interest in (business omitted).
Nowhere in that letter did the solicitor refer to or acknowledge the solicitor client relationship he had with the wife. When asked why he did not do so, he responded that it was “past, finalised, and was not a current matter”. He then conceded that the work he had done for

(business omitted) was “past, finalised, and was not a current matter”. When asked again why he did not acknowledge the solicitor client relationship he had with the wife, he said he did not think it was relevant.
With all due respect to the solicitor, his suggestion he did not think the fact he had previously acted for the wife was relevant when she was objecting to him acting for the husband is risible.
While I do not find that the solicitor deliberately lied in his evidence – I was not asked to do so on behalf of the wife – I have a real concern that the solicitor failed to show the degree of candour, and the commitment to telling the truth, the whole truth and nothing but the truth, that is required of solicitors and barristers as officers of the court above all other witnesses. I was left with real concerns about the reliability of the solicitor’s evidence.
Apparently early in the parties’ romantic relationship, the solicitor relevantly for present purposes prepared wills, powers of attorney and deeds of enduring guardianship for both parties. There is no issue that a relationship of solicitor and client arose between the wife and the solicitor in relation to the preparation of each of those documents for her.
The solicitor said that the preparation of these three documents for the wife involved one conference with the wife where she gave him instructions concerning her will, power of attorney and deed of enduring guardianship. He did not suggest in his evidence in chief that the husband also attended the conference during which the wife gave these instructions. However, as already mentioned, in re-examination he asserted that the husband was always present whenever he spoke to the wife in his capacity as her solicitor. The husband did not say he was present whenever the wife gave instructions for the wife's will, power of attorney and deed of enduring guardianship. In fact, he said he alone gave his brother the instructions for these documents for the wife. There was thus a direct conflict between the evidence in chief of the husband and the solicitor on this point. The husband was not cross-examined, and it was not put to the wife during her cross-examination that the husband was present when she instructed the solicitor in relation to her will, power of attorney and deed of enduring guardianship.
I was not satisfied with the solicitor’s evidence on this issue, and due to the direct conflict between the evidence in chief of the two witnesses in the husband’s case on this issue, I prefer the wife's evidence that the husband was not present when she gave instructions to the solicitor for these three documents.
Contemporaneously with preparation of those documents, a trust deed was prepared, naming the husband as trustee and the wife as beneficiary. The wife said she believed that the solicitor was acting for her in relation to the trust deed.
The trust deed, dated 8 April 2008, was executed by both parties, the husband’s signature being witnessed by the solicitor and the wife’s by an employee of the solicitor’s practice. The husband declared in the deed that he held one half a specified property “in trust for the beneficiary in fee simple from the date of transfer of the (specified) property”.
The recitals of the deed indicate that-
a)the husband and wife “recently” formed a de facto relationship;
b)the husband “will soon become” the registered proprietor of the specified property;
c)the equity in the property is $400,000;
d)the wife advanced a total of $200,000 in two instalments to the husband’s former de facto partner at the husband's direction;
e)both parties intend to advance further funds from time to time for improvements to the specified property; and
f)$200,000 represents 50% of the equity in the specified property.
On 8 April 2008, the same date as the trust deed, the solicitor wrote to the wife a letter as follows-
“Re:Your Will, Power of Attorney and Deed of Enduring Guardianship
We refer to the instructions you have given us concerning your Will, Power of Attorney and Deed of Enduring Guardianship.
We act for you in relation to the above matters, however we do not act for you in relation to the attached Declaration of Trust. You may consider obtaining independent legal advice in relation to that document.
In any event, we look forward to the return of the document duly executed.”
The solicitor said he handed this letter to the wife personally. The wife was vague in her evidence about this letter but seemed to accept that she received it. I am satisfied she did.
The solicitor said he did not understand that the wife sought independent legal advice about the trust deed before signing it. Indeed, it would have been difficult for the wife to do so, as the letter and the trust deed bear the same date.
As mentioned, the Will, Power of Attorney, Deed of Enduring Guardianship and trust deed were all prepared by the solicitor contemporaneously. In relation to the first three documents, the solicitor was acting for the wife. I infer that in discussing with the husband and the wife their affairs at that stage, and the proposed method of the husband paying out his former de facto partner using money from his new de facto partner, the solicitor saw that it would have been prudent for the wife's interests consequent on her advancing $200,000 to or on behalf of the husband for him to acquire an interest in realty to be protected in some way.
At that point, I accept that the solicitor would have had conflicting duties to the husband and to the wife, and should not have continued to act for both. It was the solicitor’s position that in fact he did not do so. In cross-examination, the solicitor said it was “nonsense” to suggest he gave the wife detailed legal advice about the trust deed. He said he considered the letter advising the wife he was not acting for her was enough.
However, to get to the point of having a drafted and settled trust deed ready for the parties’ signature, which was the point at which the solicitor wrote to the wife telling her he did not act for her and suggesting she “may consider” obtaining independent legal advice, the solicitor must have received instructions from someone about the matters included in the recitals, that the wife's interests in relation to the $200,000 advance were to be protected, and that the mechanism to protect her interests was to be a trust deed rather than some other mechanism.
Thus, this aspect of the matters being handled by the solicitor had proceeded significantly, with there being an ongoing solicitor client relationship between the solicitor and the wife, before the solicitor wrote to the wife telling her he did not act for her in relation to a transaction that was complete but for the parties’ signatures. Those signatures were appended to the trust deed on the same day he advised the wife he did not act for her, and in circumstances where the solicitor knew the wife had not sought independent legal advice.
In the circumstances, I accept the wife's evidence that she did not appreciate that the solicitor was not acting for her in relation to the securing of her interests consequent on the advance by her of $200,000 to or at the direction of the husband. I am not satisfied that the solicitor advised the wife he did not act for her until after a decision had been taken as to the way the wife's interests consequent on that advance were to be secured, and the trust deed to protect those interests had been drafted and settled. The solicitor said as much in asserting that he considered the letter to the wife of 8 April 2008 was enough. I am therefore satisfied that the solicitor was acting for the wife up until he gave her a letter advising her to the contrary on 8 April 2008, the same day the deed was executed.
In January 2009, the solicitor prepared new wills for both parties. The solicitor said he took instructions from the wife to amend her will. The wife ultimately did not proceed with this will prepared by the solicitor. For reasons already given, I do not accept that the husband was present when the wife gave the solicitor the instructions for this will.
After their relationship broke down, each of the parties retained solicitors in relation to issues concerning the division of their property. On 29 June 2011, the solicitors for the wife wrote to the solicitor for the husband objecting to him acting for the husband because “you have acted on behalf of the parties in relation to financial matters and property purchases”.
On 29 August 2011, the wife's solicitors emailed the husband's solicitor referring to their letter of 29 June 2011 and asking whether the husband had instructed other solicitors, and stating that they had instructions to “file an application”, and that if a satisfactory response was not received within seven days, “we shall attend to service on

Mr Edgley personally”. It is unclear what application and which Mr Edgley the letter refers to.
On 31 October 2011 the wife's solicitors again emailed the husband's solicitors objecting to the solicitor acting for the husband asserting-
“There is a conflict of interest. Your firm acted for both parties in financial matters.”
On the same day, the solicitor filed a property settlement application on behalf of the husband.
On 2 November 2011, the husband's solicitor wrote to the wife's solicitors stating that-
a)the husband had instituted proceedings;
b)the wife was free to bring whatever application she wished;
c)until the husband's solicitor saw an application, it was difficult to understand the precise reasons why the wife believed the solicitor could not continue to act for the husband;
d)“pending receipt of your application or detailed submission, we are still considering the situation”;
e)the wife's solicitors had “not put to us any cases which suggest we cannot continue to act for” the husband, but if after considering further material from the wife's solicitors they were of the view “that there is a conflict”, then the husband's solicitor would “reconsider our position and may withdraw”;
f)the solicitor had conferred with counsel and had “reviewed some cases which indicate that we are still able to act”; and
g)“our decision to withdraw will be heavily influenced by the case law that you can put to us and in this respect we await your reply”.
On 25 November 2011, the husband's solicitor wrote to the wife's solicitor inter alia referring to a recent phone conversation between the parties’ solicitors during which the husband's solicitor requested the wife's solicitor to refer him to a particular case he sought to rely on in relation to the asserted “conflict of interest” in relation to the husband's solicitor continuing to act, and requesting that authority within seven days.
On 2 December 2011, the wife's solicitors replied in relation to this issue that-
“(W)e do not propose reciting the cases. They are obvious on any cursory research of the law.”
The wife's response and supporting affidavit was filed on 21 December 2011. The wife's response as originally prepared stated under Interim or Procedural Orders Sought “Refer to Annexure attached and marked ‘B’.” The annexure marked B sought an order that the husband immediately cease instructing his solicitor and cause his solicitor to file a Notice of Withdrawal as lawyer. A copy of the Response in that form was served on the husband's solicitors. However, the original Response on the court file has the words “Refer to Annexure attached and marked ‘B’” lined through in pen, and there is no attachment B to that document.
In the affidavit accompanying her response, the wife said, inter alia, that she objected to the husband's solicitor acting for him. The paragraph of the affidavit in which the objection was stated referred only to past social interactions between the husband and wife and the husband's solicitor and his wife during the parties’ relationship.
The proceedings came before the court on 14 December 2011 and 14 May 2012. No application to prevent the husband's solicitor continuing to act for the husband was pressed or referred to. On the latter date, orders were made to set the proceedings down for final hearing.
While awaiting the allocation of final hearing dates by the court, the matter returned to court on 24 September 2012, when consent interlocutory orders were made in relation to the parties’ property interests. No issue was raised about the husband's solicitor continuing to act for him.
On 14 November 2012, the wife's application to prevent the husband's solicitor continuing to act for him was filed, and was listed for

25 February 2013.
In December 2012 the parties’ solicitors were advised by the court that the final hearing had been listed on 11 and 12 April 2013.
On 25 February 2013, further consent interlocutory orders were made in relation to the parties’ property, and otherwise all outstanding interlocutory applications were adjourned to the final hearing. The adjournment of all outstanding interlocutory applications to the final hearing included the application to prevent the husband's solicitor continuing to act, but it is unclear whether the court was advised on

25 February 2013 that there was such an application on foot.
It became necessary for the court to alter the final hearing dates at short notice, and on or about 8 April 2013 the parties’ solicitors were advised of new final hearing dates of 29 and 30 July 2013.
On 29 July 2013, the matter could not be reached, and the application to prevent the husband solicitor continuing to act was listed for hearing.

Relevant legal principles

The test to be applied when an application is made to prevent a solicitor, who has received confidences while previously acting for one party to family law proceedings, acting for the other party to those proceedings is now well settled. The Full Court of the Family Court of Australia in McMillan & McMillan [2000] FamCA 1046 at [54], (2000) 26 Fam LR 653; (2000) FLC 93-048 unanimously approved the broad test adopted in a line of single judge decisions in the Family Court of Australia, relying on the decision in Mills v Day Dawn Block Gold Mining Co Ltd (1882) QLD 62, that the former client need only prove “a prima facie case as to confidential material, the disclosure or use of which by the solicitors in the course of the conduct of the current proceedings for the present client would be prejudicial to the applicant” (quoting the words of Mullane J in Griffis & Griffis (1991) FLC 92-233; (1991) 14 Fam LR 782). All that is required is that there be at least a theoretical possibility that confidential information could be used against the former client if the solicitor continued to act (McMillan, at [42]).
The Full Court said in McMillan (at [87])-
“87. … the client need only give evidence that he has provided confidential information to the solicitor (or in this case, the law clerk/secretary). The client does not have to divulge the content of that information.”
The Full Court cited with approval (at [56]) comments by Lindenmayer J in Stewart & Stewart, 17 April 1997, unreported, as follows-
“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 that information may be used against her, or at least to her disadvantage, in these current proceedings.”
However, that is not to say that if the wife does not swear the facts in the specific terms used by Lindenmayer J she is not entitled to the relief she seeks. This is not a statement of the test to be applied, but a statement delineating the extent of detail required in the evidence of the former client necessary when seeking relief. The proper context of this statement is indicated by what immediately precedes it in his Honour’s judgment-
“(A)lthough the essential facts …”
that is, as to the fact of the former client conveying confidences to the solicitor, Ms DeDonatis, and the nature of those confidences-
“… are denied by Ms DeDonatis, on the basis and the decision and the dicta of the Full Court of Queensland in the Mills case, adopted by Mullane J in Griffis, I am of the opinion that it is not appropriate for me, at this point, to enter into any examination of where the truth lies or to attempt to try an issue of fact about those matters.”
On two other issues relevant to this matter, the Full Court in McMillan said (at [88] and [97] respectively)-
“88. As to the question of “prejudice”, it is true that the husband never alleged actual “prejudice” in the sense of using that word in his affidavit. However, he did state that the information could be “used against” him in the proceedings. That must be prejudice. In any event, a careful reading of the relevant passage from Mills (see paragraph 42 above) shows that the Court should not require proof of prejudice. (Again see Lindenmayer J. in Stewart).”
“97. As to the issue of the husband’s motives in applying for the restraining order, we consider, having regard particularly to the emotions which are generally involved in family law proceedings, that it would only be in a case where there was the most cogent evidence as to mala fides on the part of the applicant, that such a consideration should influence the exercise of the discretion as to whether or not to grant the restraining order.”
The Full Court decision in McMillan authoritatively resolved for family law proceedings in Australia a conflict between various Australian and English authorities about the rigour of the test to be applied, preferring a wider test than that previously applied in England. It is interesting to note that the relevant English authority for the narrower test, Rakusen v Ellis Munday and Clarke (1912) 1 Ch 831, was overruled by the House of Lords the year before the decision in McMillan in Prince Jefri Bolkiah v KPMG [1999] 2 WLR 215, so that when the Full Court in McMillan chose between the narrow test under Rakusen and the broad test under authorities traced from Mills, the test in England was no longer the narrow test applied in Rakusen. In Prince Jefri Bolkiah, Lord Millett said (at 227):
“Once the former client has established that the defendant firm is in possession of information which was imparted in confidence and that the firm is proposing to act for another party with an interest adverse to his in a matter to which the information is or may be relevant, the evidential burden shifts to the defendant firm to show that even so there is no risk that the information will come into the possession of those now acting for the other party.”
In Wake & Foda, (Full Court, unreported, 9 February, 1998), Nicholson CJ, Lindenmayer & Jordan JJ said in a joint judgment-
“.... the case of Griffiths and Griffiths (sic) (1991) FLC 92-233 .... does not, in my view, lead to the conclusion that merely because a solicitor has acted in the past for a company of which the two parties to the proceedings were directors and shareholders, that it automatically follows, or that there is any inference available to be drawn from that fact only, that the solicitor holds some information confidential to the applying party, in the position of the wife in this case, such as may be prejudicial to her in the proceedings.”
The wife’s appeal in Wake against the dismissal of her application to restrain the solicitor from continuing to act was dismissed, the Full Court saying there was no evidence the solicitor held confidential information relating to the wife. Nonetheless, it is noteworthy in my view that the Full Court refused to make a costs order against the wife, Nicholson CJ, with whom Lindenmayer J agreed, and Jordan J both expressing concern about the solicitor continuing to act for the husband and saying for that reason alone they would refuse costs.
The Full Court (Ellis, Baker & Finn JJ) in McGillivray & Mitchell (1998) 23 Fam LR 238, dealt with a case where the application to prevent the solicitor from continuing to act was made after the proceedings had continued for some time and there had been several interlocutory hearings. Their Honours said (at 245):
“It is our opinion that if a family law litigant has a genuine concern about a former legal adviser 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 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 misuse of such confidential information.”
in Fowler & Liddle & Anor [2012] FamCA 450, Collier J considered an application to prevent a solicitor continuing to act in proceedings where the proceedings had six court events over a period of nine months before any objection was taken to the solicitor acting. On that occasion the objection was not further pressed, and there were a further two court events and a delay of a further three months before the solicitor for the party objecting to the other party’s solicitor acting wrote to that solicitor making his client’s position clear.
On the question of whether in the exercise of discretion the relief should be refused because of the former client’s delay in taking the objection, his Honour said (at [53])-
“53. On the authority of McGillivray (supra), delay may be a reason for not making an order restraining the solicitor. However, to my mind, it is not of itself an absolute bar to success in obtaining a restraining order.”
Ultimately, Collier J found that in all the circumstances of that case, including that the solicitor should have realised at various times before the formal application to restrain him acting was filed, from first taking instructions from the wife to the initial objection taken to him acting on the sixth court event and the letter from the husband's solicitors clearly objecting to him acting sent 12 months after the first court event, that his previously having acted for the husband meant he could not now act for the wife, and despite the delay and cost to the wife that requiring her to change solicitors at that stage of the proceedings would cause, the delay was not sufficient as to sway the exercise of his discretion against granting the relief that was otherwise warranted.

Discussion

In her affidavit evidence in support of her application to restrain the solicitor continuing to act for the husband, the wife said (affidavit sworn 13 November 2012, para 49)-
“I am extremely concerned that I will not receive a fair hearing in this matter while (the solicitor) acts for (the husband). (The solicitor) has a joint interest in matrimonial property (the estate of (the husband’s) late Mother), (the solicitor) has detailed knowledge of my personal life given the communications over time and (the solicitor) has acted for me in relation to business dealings. These examples are no exhaustive.”
I make the following observations about these assertions-
a)The wife's expressed concern she may not receive a fair hearing if the solicitor continues to act for the husband touches on a relevant matter, that is the need to ensure not only that justice is done, but that it is seen to be done (see comments by Wood J in Sogelease v MacDougall, NSW Supreme Court, 17 July 1986, unreported, and by Bryson J in D & J Constructions Pty Limited v Head, (1987) 9 NSWLR 118, quoted by Mullane J in Griffis, above, at 789).
b)The wife's expressed concern about a fair hearing is in my view a clear expression by the wife of a concern that she may be prejudiced by the solicitor continuing to act for the husband (cf McMillan, above, at [88]).
c)As property settlement proceedings concern the property of the parties, not the property of third parties, “matrimonial property” does not include the property of third parties, which is irrelevant (unless an application is also made for an order under Division 3 of Part VIIIAB of the Family Law Act 1975 affecting the third party’s interest in that property). Even reading this as a suggestion that the husband has an interest in property, which interest is relevant to or the subject of the property settlement orders the wife seeks, and that the solicitor also has an interest in that property, this is not a consideration relevant to the wife's application.
d)There was extensive social interaction of the husband and wife with the solicitor and his wife during the parties’ relationship, as would be expected as the solicitor and the husband are brothers. Confidences conveyed purely socially and not in the context of a solicitor client relationship between the wife and the solicitor are irrelevant to the current application.
e)
The only evidence of the solicitor acting for the wife “in relation to business dealings” relates to the purchase of a brothel by

(business omitted), a company in which at least the wife, and perhaps the husband, had an interest. The solicitor acted on the purchase of that business. I am satisfied that the solicitor’s client in that transaction was the company, not either or both of the parties in their personal capacities, albeit the parties provided the instructions to the solicitor for this transaction. In providing those instructions, the parties acted as the agents of the client company. This alone does not prove the wife gave the solicitor personal confidences relevant to her application (Wake & Foda, above), and there is otherwise no evidence to suggest that in the course of giving the solicitor instructions for this transaction the wife disclosed personal confidences to the solicitor.
The matters referred to in this paragraph of the wife's affidavit are indeed not exhaustive of relevant matters. As mentioned, the solicitor acted for the wife in the preparation of two wills, and in the preparation of a Power of Attorney and a Deed of Enduring Guardianship. The solicitor agreed that when acting for the wife, he received confidential information from her, and that in the course of taking instructions for her wills, he sought information about the wife's financial affairs. These are property settlement proceedings.
It was submitted on behalf of the husband that as the solicitor prepared virtually mutual wills for both parties contemporaneously on both occasions he prepared a will for the wife, that any information the wife may have provided to the solicitor was not confidential as between the parties. However, for reasons already stated, I am satisfied that the wife provided information to the solicitor for the preparation of her will in the absence of the husband. And the will, which was sent by the solicitor to the wife via the husband, is unlikely to contain all the confidential information given to the solicitor by the wife to enable the solicitor to draft the will.
It was submitted on behalf of the husband that as these are property settlement proceedings in which the wife has a duty of full and frank financial disclosure, any matters disclosed to the solicitor about her financial affairs would have to be disclosed by her. I infer the point of this submission was to suggest there could be no prejudice to the wife if the husband's solicitor used confidential information provided by the wife to him as her solicitor.
I do not accept this submission. The potential scope of matters concerning the wife's financial affairs in early 2008 and again in early 2009, when the two wills were prepared, may be far broader than matters disclosure of which is required in property settlement proceedings. And the potential mischief in this argument is that it tends towards an examination of what confidences were in fact disclosed, the very matter Mills and McMillan say must be avoided to lest it cause the mischief the remedy is designed to prevent. Further, the duty of financial disclosure is the wife’s, not her former solicitor’s. The inference from this submission illustrates the potential for confidential information provided by the wife to her former solicitor to be used against her in these proceedings by the former wife's solicitor now acting for the husband. I am satisfied that the potential for that to occur would risk disadvantaging the wife in these proceedings.
I am satisfied that at least in relation to the preparation of the wife's wills, the wife has established a prima facie case that she provided the solicitor with confidential information about her financial affairs, the disclosure or use of which by the solicitors in the course of the conduct of the current proceedings for the husband may be prejudicial to her or to her disadvantage. I am satisfied that there is a risk of that information being so used if the solicitor continues to act for the husband. In my view, that is sufficient to satisfy the test to enliven the relief the wife seeks, subject to the consideration of matters going to the exercise of discretion to grant or refuse that relief.
But as previously indicated, I am also satisfied that the solicitor acted for the wife in relation to the preparation of the trust deed up to 8 April 2008, while also acting for the husband, a situation that the solicitor himself acknowledged involved a conflict between the interests of the husband and the wife, and in relation to which he acknowledged he could not properly act for both parties. I am satisfied the solicitor took instructions from the wife as to how her interests were to be protected consequent on her advance of the $200,000 at the husband's direction, and the content of the trust deed. In doing so, I am satisfied the solicitor again received confidential information from the wife that might be used in these proceedings to her detriment.
But if I am wrong in finding that the solicitor acted for the wife in protecting her interests in relation to the $200,000 advance, and I proceed on the basis that the solicitor, on learning of the proposed advance of the $200,000 without there being any protection of the wife's interests, suggested she should seek to protect her interests and he could not act for her in relation to doing so, I am satisfied that in the course of acting for the wife in connection with her will, power of attorney and deed of enduring guardianship, the wife disclosed to the solicitor confidential information about her financial affairs that was not only relevant to the preparation of her will but was also relevant to the proposed advance of the $200,000. That must be so for the solicitor to advise the wife it was in her interests to protect herself in relation to the advance and to form the view that there was a conflict in him continuing to act for both the husband and the wife in relation to the $200,000 advance.
I am therefore satisfied that even on the solicitor’s version of events about the $200,000 advance, the wife conveyed to the solicitor confidential information about that advance in the context of a subsisting solicitor client relationship between her and the solicitor, that disclosure or use of that confidential information in these proceedings may prejudice her, and that if the solicitor continues to act for the husband, there is a risk of that confidential information being used to the wife's disadvantage.
It was submitted on behalf of the husband that there is no potential disadvantage to the wife in relation to the trust deed because, it was submitted, the trust deed was to her advantage. I am not at this stage in a position to determine whether in all the circumstances the trust deed was to the wife’s advantage vis-a-vis the husband. In any event, there is no confidentiality in the trust deed or its contents. Both parties signed it and are aware of its terms. But the trust deed and its recitals do not necessarily contain all the confidential information provided by either party to the solicitor for the purpose of him providing advice and receiving instructions about the deed and the transactions to which it refers. And it is confidential information provided by the wife to the solicitor in the course of a solicitor client relationship between them with which I am concerned, not the public documents prepared by the solicitor following receipt by the solicitor of that confidential information, the provision of advice by the solicitor to the wife, and the receipt of instructions by the solicitor from the wife consequent on that advice.
It was submitted on behalf of the husband that because of the wife’s delay in applying to restrain the solicitor from acting, and given the advanced stage of the litigation, the costs the husband had already incurred, and the delay and added expense the husband would endure if he had to retain new solicitors, the court in the exercise of its discretion should refuse the wife's application.
However, there was no delay whatever in the wife objecting to the solicitor acting for the husband. She did so through her solicitors in June 2011, four months before the solicitor commenced these proceedings on behalf of the husband. There is no evidence that the solicitor replied to that letter. The evidence before me suggests the solicitor did not respond to the by then three written communications from the wife's solicitors objecting to him acting for the husband until after he had instituted the proceedings. While the circumstances in which the wife's response as filed differed to the response served on the husband's solicitor remain unclear, based on the response received by the husband's solicitors two months after the institution of the proceedings, the husband and the solicitor would have believed that the wife was seeking an order that the solicitor cease to represent the husband.

This may be contrasted to the situation in both McGillivray (above) and Fowler (above), where the objection to the solicitor acting was not taken at all until the proceedings had been on foot for a significant period. Unlike the facts in McGillivray, the wife in this case did not remain mute in the face of the solicitor who had previously acted for her now acting for her former husband, keeping the right to object as a tactical weapon to be used at the time of her choosing to cause the husband delay and expense. She objected before any proceedings in which she could use such a weapon were instituted.
It is obvious that the husband will suffer prejudice if the orders the wife seeks are made. He will be denied the lawyer of his (first) choice, and I am satisfied he will incur additional costs in instructing new solicitors. There will also be added delay before the matter can be heard. However, this situation would never have arisen if the solicitor had heeded the objection to him acting that was taken in June 2011, four months before these proceedings commenced. As Collier J said in Fowler, above at [55]-
“55. To my mind, one of the matters to which that may be relevant is the issue of whether or not the solicitor should or ought to have accepted instructions from the wife at the commencement of the proceedings. I am prepared to find that he must have known that he had previously represented the husband. He should have known, at the time he took instructions from the wife, the type or kind of matters in which he had previously acted for the husband. It appears to me that if he had given the matter thought at the time of his first interview with the wife, he would have come to the conclusion that, having regard to his previous relationship with the husband, i.e., that of solicitor and client, he should not undertake the task of acting for the wife.”
In my view, the solicitor ought to have withdrawn when the wife first objected to him acting for the husband, assuming that it was appropriate for him to have accepted instructions from the husband in the first place. In those circumstances, the delay in the wife formally applying for an order to restrain the solicitor acting and in pressing for a hearing of that application are not such as to persuade me against granting the orders the wife seeks.
It was also submitted on behalf of the husband that the wife was not acting bona fides in her application. He referred to the fact that large parts of the wife's affidavit evidence had been disallowed as being irrelevant, and submitted that the matters deposed to within the excluded material showed that the wife was driven by deep animosity towards the solicitor and was seeking to harm him professionally.
One difficulty with this submission is that the evidence to support it was disallowed on the objection of the husband's counsel. He submitted, successfully, that it is not relevant. He cannot now seek to rely on irrelevant evidence that I have disallowed on his objection.
However, the husband's counsel can rely on the wife's demeanour in cross-examination and can rely on the way in which the wife consistently and persistently, despite my admonitions to cease doing so, sought to avoid answering questions she was asked by giving evidence unconnected or only peripherally connected with the question in an obvious attempt to criticise and impugn the solicitor. Based on the wife's performance in the witness box, I am satisfied she has a very poor opinion of the solicitor and considers his behaviour quite improper. I hasten to add that her opinion to that effect does not prove the fact.
However, where in my view the solicitor ought to have withdrawn when the objection to him acting was first raised, and has resisted all attempts on behalf of the wife to have him cease to act for the husband, and having regard to what the Full Court said in McMillan (above, at [97]), I am not satisfied that for this reason I should refuse the wife's application.

Decision

I am therefore satisfied that the husband's solicitor should cease to act for him immediately.
The wife sought orders that I restrain the solicitor continuing to act, or in the alternative that I restrain the husband from continuing to instruct the solicitor to act for him. There was no issue raised on behalf of the husband about this court’s power to make an order restraining the solicitor from acting in the same way the Family Court may make such an order. However, the source of the power the court was called on to exercise to make either order the wife sought was not addressed on behalf of either party. I was not taken to any authorities that explicitly address the source of power to restrain a solicitor acting for a party in proceedings under the Family Law Act.
In McMillan (above), the Full Court said ([38])-
“38. It has been accepted in this Court, at least since the decision in June 1986 of Frederico J. in Thevenaz (1986) FLC 91-748, that the Court “has power to make orders restraining a firm of solicitors from continuing to act for one of the parties to proceedings in this Court, if it is of the view that it would be likely that those solicitors may have confidential information relating to the other party to the proceedings arising out of a former relationship of solicitor and client with that party which may be used to the advantage of the present client or to the disadvantage of the former client in the current proceedings” (per Lindenmayer J. in the unreported decision of Stewart (17 April 1997)).”
The power to make such an order may arguably be found in section 114(3) of the Family Law Act, or in the power of a court to control its own procedure, or in the court’s accrued jurisdiction. Frederico J in Thevenaz (above, at 98) appeared to rely on the court’s power to control its own procedure, as apparently did Smithers J in A & B (1989) 13 Fam LR 789 at 802, relying on Thevenaz. Mullane J in Griffis (above, at 786) proceeded on the basis that he was dealing with a form of injunctive relief, without it seems specifically addressing the source of power to issue such an injunction as was involved in the matter before him. In McMillan (above, at [75]), the Full Court cited a passage from the judgment of Gummow J in National Mutual Holdings Pty Ltd v Sentry Corp (1989) 22 FCR 209, 87 ALR 539 at 563, in which his Honour said, in the context of the Federal Court’s power to restrain a solicitor from acting, that the proceedings to restrain the solicitor acting in proceedings before the court “whether founded in contract or apprehended breach of fiduciary duty, no doubt would arise in the course of and form part of the matter which attracted the jurisdiction of the court”.
While I express no concluded view on the source or sources of power to make such an order, I am satisfied this court has the power to restrain the solicitor from acting in proceedings pending before it, and that is the order I am satisfied I should make.
Otherwise, the proceedings will need to be adjourned for a directions hearing when the husband has retained new solicitors and they are able to participate in that directions hearing, so that the matter can be listed for final hearing of the substantive issues between the parties.

I certify that the preceding eighty-two (82) paragraphs are a true copy of the reasons for judgment of Judge Halligan

Date: 29 November 2013