Gitane and Velacruz (No. 2)

[2007] FamCA 635

FAMILY COURT OF AUSTRALIA

GITANE & VELACRUZ (NO. 2) [2007] FamCA 635

FAMILY LAW - LEGAL PRACTITIONERS - Conflict of interest

Family Law Act 1975 (Cth)
Legal Profession Act 1993 (Tas)

McGillivray V Mitchell (1998)FLC92-818
Rakusen V Ellis Munday and Clarke (1912) 1 CH 831
Thevenaz and Thevanaz (1986) FLC 91-748
McMillan and McMillan (2000) FLC 93-048
Marsland (1882) 1QLJ 62

APPLICANT: MR GITANE

RESPONDENT: MS VELACRUZ

FILE NUMBER: HBF 851 of 1997

DATE DELIVERED: 14 JUNE 2007

PLACE DELIVERED: Melbourne

JUDGMENT OF: DESSAU J

HEARING DATE: 29 MAY 2007

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Williams

SOLICITOR FOR THE APPLICANT: Cann Legal

COUNSEL FOR THE RESPONDENT: Mr McVeity

SOLICITOR FOR THE RESPONDENT: McVeity & Associates

Orders

1. That the firm TEMPLE-SMITH PARTNERS of …  and TERRENCE JOHN MCGUIRE a partner of the said firm shall be and are hereby restrained from representing the respondent wife in these proceedings being the Enforcement Application filed by the respondent wife on 17 August 2005 and the Application by the respondent husband filed on 31 March 2006.

2. That the wife shall pay the husband’s costs of this application fixed at $2,800 within 28 days.

3. That the husband’s Form 2 application filed 10 may 2007 shall be otherwise dismissed.

4. That the case shall be referred to the Registrar in the Hobart Registry to fix for hearing the substantive proceedings.

IT IS NOTED IN CONNECTION WITH THESE ORDERS that the judgment of the Honourable Justice Dessau delivered this day will for all publication and reporting purposes be referred to as GITANE & VELACRUZ

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: HBF 851  of 1997

MR GITANE

Applicant

And

MS VELACRUZ

Respondent

REASONS FOR JUDGMENT

INTRODUCTION

1. The husband is applying for injunctions to restrain Messrs Temple-Smith Partners and Terrence John McGuire from acting for the wife in family law proceedings. In those proceedings the wife seeks enforcement of consent property orders and the husband seeks to vary the orders pursuant to s 79A of the Family Law Act 1975, or alternatively a stay of the wife’s enforcement proceedings. 

2. That case was listed before Mushin J in his Hobart sittings starting 14 May 2007.  Leading up to that date it became clear that the wife’s solicitor Mr McVeity would be required to be cross-examined in the course of the hearing.  Mr McVeity then briefed Mr McGuire, a principal of the firm Messrs Temple-Smith Partners, to appear for the wife. 

3. On 8 May 2007 the husband’s solicitor Mr Cann was advised that Mr McGuire would appear “as counsel” for the wife.  Mr Cann immediately raised the question of a conflict of interest, and on 10 May 2007 the husband filed this application seeking an order restraining the firm and Mr McGuire from representing the wife.  In the alternative he seeks an order restraining the wife from appointing them to act on her behalf.  He also seeks costs.  His application is supported by his affidavit filed on 10 May 2007 and an affidavit by his solicitor Roger Cann, filed on 11 May 2007. 

4. The wife has filed a Form 2A Response seeking that the husband’s application be dismissed.  Her response is supported by her affidavit sworn 24 May 2007.

5. Both sides have filed written submissions.

6. Briefly stated, the husband's concern is that his former solicitor, Miss Linda Connelly, is now employed as a solicitor at Messrs Temple-Smith Partners.  In her previous employment at Messrs Walsh Day Williams, until March 2006, she acted for the husband in the substantive proceedings that are about to be heard.  She took instructions from him, attended conferences with his current counsel, and prepared his application and affidavit.  The husband argues that Mr McGuire and Messrs Temple-Smith Partners have a conflict of interest because of Miss Connelly’s previous professional association with him. 

7. The wife’s response, also briefly stated, was set out when her solicitor Mr McVeity wrote to the husband’s solicitors:

   I have not briefed Temple-Smith Partners nor will they be briefed.  I have briefed Mr McGuire as Counsel.  He is admitted as a Barrister in this State.

8. It is submitted for the wife that there is no conflict of interest as the firm employing Miss Connelly is not retained by the wife.

THE POWER TO MAKE A RESTRAINING ORDER

1. It is agreed that the court has the power to make a restraining order as sought.  It is also agreed that it is a discretionary matter, depending on the particular circumstances in every case (see the Full Court’s decision in McGillivray v Mitchell (1998) FLC 92-818).

2. Traditionally, there were two lines of authority in cases about a solicitor’s conflict of interest, one following Rakusen v Ellis Munday and Clarke (1912) 1 CH 831, the other following Thevenaz and Thevanaz (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 the utmost importance that justice should not only be done but should also appear to be done.

3. There are cases in this court and elsewhere in which Rakusen and Thevenaz are discussed.  I need not traverse the detail here.  Some are decisions of single judges, and the Full Court has closely considered the question and the various authorities in McMillan and McMillan (2000) FLC 93-048. And some are cases outside family law, but in McMillan (at para 64) the “particular sensitivities” of confidentiality in family law was emphasised.

4. In McMillan the wife appealed orders whereby her solicitors were restrained from acting on her behalf.  The trial Judge imposed the restraint because a non-legally qualified law clerk, previously employed by solicitors acting for the husband, who had in the course of that employment worked on the husband’s case, had moved to work as secretary to the wife's solicitor.  The Full Court rejected the approach adopted in Rakusen, preferring the approach in Thevenaz, in which Frederico J followed the reasoning of the Full Court of the Supreme Court of Queensland in Mills v Day Dawn Block Gold Mining Co Ltd; In re Marsland (1882) 1 QLJ 62. The approach was summarised in the head-note to McMillan 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…

THE ROLE OF MR MCGUIRE AND MESSRS TEMPLE-SMITH PARTNERS

1. The starting-point in the argument for the wife is that the firm of Messrs Temple-Smith Partners is not briefed in the case, and the application against the firm should be summarily dismissed.  Further, there is no basis to restrain Mr McGuire from acting.  He is briefed as an independent barrister, so the issue of his employee solicitor having previously acted for the other party is simply of no moment in this case.  Miss Connelly does have a duty to protect the husband’s confidential information, but as her new firm does not act for the wife, there is no conflict between that duty and the firm’s duty to use all relevant knowledge in their possession on behalf of a client.

2. Neither Mr McVeity, Mr McGuire or Miss Connelly have sworn an affidavit.  I have only the wife’s scant affidavit in which she swears that Mr McGuire was instructed “as my proposed barrister” and she refers to him having appeared previously “as counsel at a conciliation conference” on her behalf.  I am not satisfied that the wife is able to assist me with a true understanding of Mr McGuire’s role, the structure of the legal profession, or the differences between independent barristers, solicitor advocates, legal firms, principals, employee solicitors, and so on.  It is curious that there is no other affidavit material.

3. Mr Cann for the husband has sworn that Mr McGuire is not listed as an independent barrister in Tasmania.  The submissions for the husband set out the relevant provisions of the Legal Profession Act 1993 (Tas).  Under s 51 of the Act, a person admitted to practise as a legal practitioner in Tasmania may apply to the Law Society for a practising certificate to practise as a barrister and solicitor, or as a barrister.  “Barrister” is defined in s 3 of the Act as a person who is admitted as a barrister under s 28 of the Act, or a legal practitioner who elects to practise solely as a barrister under the Rules of Practice. 

4. Section 28 of the Act deals with a person who has been admitted as a barrister in another State or Territory of the Commonwealth, New Zealand or the United Kingdom.  In the absence of material from Mr McGuire that it is the case here, I infer it is not. 

5. The Rules of Practice provide that a person who elects to practise solely as a barrister must cause his or her name to be placed on the list of persons admitted and electing to practise solely as barristers.  No issue was taken with Mr Cann’s sworn evidence that Mr McGuire’s name is not on the requisite list.  I infer that Mr McGuire has not elected to practise solely as a barrister. 

6. I am satisfied that although Mr McGuire has been retained as counsel for the wife, it is not correct to maintain that he is an independent barrister rather than the principal of a legal firm and briefed to appear as advocate or counsel for the wife.  The distinction is fundamental.  The latter lacks the independence of the former.  In the absence of evidence from him or on his behalf I cannot be satisfied that when retained in that capacity, he is physically or legally separate from and/or independent of the firm of which he is a principal, that he cannot or would not use the facilities and resources of his office and staff as required, and that any fees would not be directed to his firm rather than to him in a personal capacity.

7. It is no answer to claim, as it was claimed in submissions for the wife, that in any event Mr McGuire was briefed for an “imminent hearing”, where all evidence-in-chief and pre-trial procedures have been completed.  The submission – in part – was as follows (page 6):

   It is submitted that the Court standing beside a reasonable bystander might develop this perspective:

   ‘Hold on a minute.  The case is prepared.  The barrister is briefed.  He has worked for his client before.  The State is a small one.  There are no more negotiations, there is not likely to be any more investigation, forensic or otherwise.  The evidence-in-chief is “in”.  This matter will be heard in the near future.’

8. The submission is flawed.  Whether or not all the pre-trial work is completed is not really an answer to the alleged conflict of interest.  In any event, the fact of an imminent hearing does not preclude the possibility of additional work or information coming to light, before or in the course of the hearing.  It does not preclude negotiations, unexpected or otherwise, before and/or during the trial.  Cases often take unexpected turns that require unforseen investigations, documents or compromises.

9. It is also no answer for the wife to argue in the submissions that her short affidavit establishes:

   …the non-arbitrary basis of Mr McGuire’s intended appointment.  Mr McGuire is a senior Family Law practitioner who regularly acts as counsel on behalf of other firms.

10. With respect, the wife’s brief comments cannot establish that fact.  In any event I note that the wife swears that Mr McGuire is known to her as the only “other lawyer” (presumably besides Mr Cann) who has assisted her in the long history of her matrimonial litigation.  According to the submissions for the husband, granted not on oath, the wife was represented by Mr McGuire only once in these proceedings as agent for the wife’s solicitors.  In a previous Full Court hearing she was in fact represented by Ms Barbara Baker, a member of the independent Bar in Hobart. 

11. I note that the waters are muddied as to who acts in what capacity in this case even by the way in which an appearance and submissions have been handled on behalf of the wife.  At the mention before me on 29 May 2007, Mr McVeity announced that he appeared for the wife and Messrs Temple-Smith Partners.  But his subsequent written submissions were on behalf of the wife alone.  Moreover, those submissions and an earlier summary of argument are both signed off “McVeity & Associates”, followed by “Philip B McVeity Counsel for the respondent wife”.  That highlights the lack of clarity around the wife’s legal representation.  I cannot conclude that Mr McVeity is acting independently of his firm even though he signs off “as Counsel” in these submissions.

12. For all of these reasons, I cannot be satisfied that Mr McGuire’s involvement can be as other than a principal of his legal firm, even though he is asked to apply his legal skills particularly to advocacy on behalf of the wife.

MISS CONNELLY’S ROLE

1. Mr McVeity’s submissions for the wife argue that for there to be a conflict of interest, the duty to protect a client’s confidential information, and the duty to put all relevant knowledge in the advocate’s possession to use on behalf of a client, must co-exist and reside in the proposed injunctee.  It is submitted that in this case Miss Connelly has the duty to maintain the previous confidences residing in her, but as her firm is not retained, she does not have the duty to do anything for the wife.  I have already dealt with that in my findings as to the reality of Mr McGuire’s position. 

2. In the submissions for the wife it is said that “the applicant asserts a completely unparticularised claim that [Miss Connelly] is possessed of confidential information” and that it does not satisfy even the minimal need to establish the prima facie existence of such information.  I do not agree.  The husband is on oath as to the work conducted on his behalf by Miss Connelly.  He deposed:

   3.When these proceedings were commenced by the respondent wife on 17 August 2005 I was represented by LINDA CONNELLY formerly of Walsh Day Williams in Ulverstone.  I sought advice from Ms Connelly as to the merits of the wife’s case and of my own case and I gave her my full instructions.  Ms Connelly arranged and participated in conferences with my Counsel GLYNN WILLIAMS during which we discussed these issues, the evidence I needed to provide in support of my case and other matters relevant to the conduct of my case.  I have relied on Ms Connelly and provided her with confidential details concerning my case.  I say that she is very familiar with all aspects of my case.

   4.Ms Connelly prepared an application for a stay of the enforcement of property orders and the application was filed on 9 January 2006.  She also took instructions for and prepared my affidavit sworn on 6 January 2006.  She continued to have the care and conduct of my case until early March 2006 when Ms Connelly left the firm of Walsh Day Williams and joined the firm of Temple-Smith Partners as an employee solicitor.

3. The husband’s account is in no way negated.  There is no sworn account to the contrary by Miss Connelly or anyone else.

4. As I have already noted, according to McMillan it is sufficient if a party swears that he or she has conveyed confidential information to his or her solicitors and believes that the information may be used to his or her disadvantage.  Here, the extent of legal work undertaken by Miss Connelly, specifically in relation to the proceedings about to be heard, in which she was the architect of the husband’s case, justifies his belief in that regard.  And the “particular sensitivities” of family law referred to in the authorities are important.  The relationship between solicitor and client in family law easily incorporates not only the giving of precise and confidential instructions, but frequently more wide-ranging explicit and implicit communications in relation to the emotional and behavioural sensibilities of the party giving instructions. 

5. The wife’s submissions analyse the line of authorities that consider “actual possession” or “constructive possession” of confidential information by the proposed injunctee.  In furthering the argument about “the reasonable bystander’s perspective”, referred to in part above, the submission continued:

   …Sure, there is no obligation on an applicant for injunctive relief to provide a prima facie case but neither is it easy to imagine that relevant confidential information even resides in the mind of Miss Connelly and certainly none resides either constructively or actually in the mind of Mr McGuire.

6. The submission continues:

   …it is difficult to see how Mr McGuire could stumble upon any confidential information from Miss Connelly, his tight-lipped and ethical employee. 

7. The thrust of the submission is that there is neither a real risk of confidential information being passed to Mr McGuire, nor a theoretical risk, but only an “academic risk” that does not actually exist at all.

8. First, the reference to Miss Connelly as Mr McGuire’s tight-lipped and ethical “employee” underlines the fact that she now works for the person who it is proposed will represent the wife. 

9. The contemporary approach to the question of a conflict of interest is not based on a legal representative’s actual possession or constructive possession of confidential information.  McMillan is an example where a firm of solicitors was restrained from acting for a party even though the actual solicitor acting for that party was not the practitioner who had previously acted for and received the confidential information from the other party.  It was a law clerk who had previously acted for the husband and who was now secretary to the wife’s solicitor.  The Full Court emphasised the theoretical risk that the confidential information given by the husband to the clerk may be disclosed, even inadvertently.

10. In McMillan, the Full Court emphasised “the preservation of the integrity of our system of justice” as a “most important and compelling” factor.  It referred to the role of lawyers as follows (para 65):

    …Lawyers are an integral and vitally important part of our system of justice.  It is they who prepare and put their clients’ cases before courts and 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.

11. The Full Court continued as to the importance of confidentiality to the judicial system:

    Our judicial system could not operate if this were not the case.  It cannot function properly if doubt or suspicion exists in the mind of the public that the confidential information disclosed by a client to a lawyer might be revealed.

12. The concept of a “Chinese wall” within Messrs Temple-Smith Partners would not provide any answer.  I bear in mind Ipp J’s description of a Chinese wall in Mallesons Stephen Jaques V KPMG Peat Marwick (1990) 4 WAR 357 as “potentially porous”, and there was no evidence before me from Mr McGuire or Messrs Temple-Smith Partners as to any procedures they have in their firm that are akin to those said to constitute a Chinese wall of any kind. The submission for the husband refers to “the small size of the firm of Mr McGuire”. I am not assisted with any other reference to the size of the firm. It seems that it is a firm in provincial Tasmania and most unlikely to be on a scale comparable to the organisations considered by Ipp J.

CONCLUSION

1. Ultimately, the most pressing aspect for me in the exercise of my discretion is the need for the community’s confidence in the legal system.  I am satisfied in this case that it would be contrary to the appearance of justice for Mr McGuire or Messrs Temple-Smith Partners to act for the wife in light of Miss Connelly, an employee solicitor at Messrs Temple-Smith Partners, having acted previously in these very proceedings for the husband.  Through his solicitors the husband responded immediately, raising this conflict, as soon as Mr McVeity advised that he briefed Mr McGuire to represent the wife.  There was no delay so as to dissuade me from exercising my discretion in favour of the husband and the restraints that he seeks.

2. In the submissions for the wife, it is made clear that I will not need to make a formal restraining order against Mr McGuire, as he will cease to act based on my finding that it is not appropriate for him to do so.  I welcome submissions as to the form of the orders that I should now make, and any other matters, including costs and case management.

I certify that the preceding thirty-eight (38) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Dessau

Associate: 

Date:  14 June 2007