GOLDING & GOLDING

[2017] FCCA 1856

FEDERAL CIRCUIT COURT OF AUSTRALIA

GOLDING & GOLDING [2017] FCCA 1856

Catchwords:
FAMILY LAW – Application to restrain solicitor from acting – wife’s former solicitor commences employment with the law firm employing the solicitor with the carriage of the matter on behalf of the husband – whether there is a serious risk of misuse of confidential information – undertakings incorporating declarations given – application dismissed.

Legislation:

Legal Profession Uniform Law, r.10

Dalton & Dalton (2017) FLC 93-773

Applicant: MR GOLDING

Respondent: MS GOLDING

File Number: MLC 11080 of 2015

Judgment of: Judge McNab

Hearing dates: 31 July 2017 & 1 August 2017

Delivered at: Melbourne

Delivered on: 31 July 2017 & 1 August 2017

REPRESENTATION

Counsel for the Applicant: Mr Tatarka

Solicitors for the Applicant: Berry Family Law

Counsel for the Respondent: Mr Matta

Solicitors for the Respondent: Mitchell Family Law

ORDERS – upon the undertakings proffered to the Court by Mr Tartaka of counsel (in the form of the undertaking attached hereto and marked ‘A’).

1. The Respondent’s response to an application in a case filed 21 July 2017 be dismissed.

2. The Applicant’s amended application in a case filed 26 July 2017 be adjourned to Federal Circuit Court of Australia on 10 August 2017 at 9.30am for Mention.

3. In the event that an appeal in respect of this order is filed, the stay application be heard on 10 August 2017.

4. Costs be reserved to 10 August 2017.

EXHIBIT A

BERRY FAMILY LAW

INFORMATION BARRIER GUIDELINES

1. These are guidelines prepared by Berry Family Law (herein after referred to as “BFL”) and are in compliance with the Law Institute of Victoria’s Information Barrier Guidelines adopted by the Council on 20 April 2007.

2. In our guidelines:

“Screened person” means a person who possesses confidential information from one retainer which is relevant to another, current retainer. The screened person may be a partner or employee of the law practice.
“Earlier matter” means the retainer in which the confidential information was obtained, access to which the client and those acting on his behalf in the current matter is not entitled.

IRREVOCABLE UNDERTAKING OF COMPLIANCE OFFICER

Earlier Matter: Ms Golding (Wife)
Current Matter: Mr Golding (Husband)
The Screened Persons: Ms B & Ms E

I, Mr J, an experienced practitioner of more than 7 years post admission experience irrevocably undertake and declare:

1. That I will take appropriate steps to monitor compliance and deal with any breach or possible breach of an information barrier so as to ensure that no confidential information relating to the conduct of Ms Golding’s matter by Ms B and Ms E prior to their joining Berry Family Law is disclosed or divulged to any person employed by or associated with this firm.

1. I have not and will not seek or receive any confidential information regarding the earlier matter from the screened persons.

1. That I am satisfied that no person working on the current matter or any other person employed by or associated with Berry Family Law has received any confidential information from the screened person.

1. That I will ensure that any person who will be assigned to work on the current matter will not have received any confidential information from the screened persons before being so assigned and will provide an irrevocable undertaking in the form already provided by the solicitor charged with the carriage of this matter.

1. That I have obtained irrevocable undertakings from the solicitor charged with carriage of this matter and the screened persons to ensure compliance with the information barrier protocols.

1. That I have obtained a Limitation of Retainer and Irrevocable Undertaking from the client of the current matter.

On this    day of   2017 .

.............................................
Mr J
Compliance Officer

IRREVOCABLE UNDERTAKING BY SOLICTOR WITH CARRIAGE
Earlier Matter: Ms Golding (Wife)
Current Matter: Mr Golding (Husband)
The Screened Persons: Ms B & Ms E

I, Ms S, irrevocably undertake:

1. That no confidential information about the earlier matter has been disclosed to me.

1. That I will not have, during the existence of the current matter any involvement with the screened persons for the purpose of the current matter.

2. That I will not seek or receive any confidential information about the earlier matter from the screened persons in any way.

3. That I will, immediately upon becoming aware of any breach, or possible breach of this undertaking, report it to the compliance officer who will take appropriate action.

Dated        2017.

.............................................
Ms S
Solicitor

IRREVOCABLE UNDERTAKING BY A SCREENED PERSON
Earlier Matter: Ms Golding (Wife)
Current Matter: Mr Golding (Husband)
The Screened Persons: Ms B and Ms E

I, Ms B irrevocably undertakes and declare:-

1. That I have not spoken to any person in Berry Family Law in relation to the substance of the earlier matter and have not conveyed any document or confidential information to any person working for or associated with Berry Family Law.

1. That I will not disclose any confidential information I was privy to during the earlier matter to any person working for or associated with Berry Family Law.

1. That I will not have, during the continuation of the current matter, any involvement with the client or persons involved with the current matter for the purposes of that current matter.

1. That I will immediately, upon becoming aware of any breach, or possible breach of this undertaking, report to the compliance officer who will undertake appropriate action.

On the      , 2017.

……………………………………….
Ms B
Solicitor

IRREVOCABLE UNDERTAKING BY A SCREENED PERSON
Earlier Matter: Ms Golding (Wife)
Current Matter: Mr Golding (Husband)
The Screened Persons: Ms B and Ms E

I, Ms E irrevocably undertake and declare:-

1. That I have not spoken to any person in Berry Family Law in relation to the substance of the earlier matter and have not conveyed any document or confidential information to any person working for or associated with Berry Family Law.

1. That I will not disclose any confidential information I was privy to whilst involved in the earlier matter to any person working for or associated with Berry Family Law.

1. That I will not have, during the continuation of the current matter, any involvement with the client or persons involved with the current matter for the purposes of that current matter.

1. That I will immediately, upon becoming aware of any breach, or possible breach of this undertaking, report to the compliance officer who will undertake appropriate action.

On the      , 2017.

……………………………………….
Ms E
Solicitor

IRREVOCABLE UNDERTAKING OF AND LIMITATION OF RETAINER BY CLIENT
Earlier Matter: Ms Golding (Wife)
Current Matter: Mr Golding (Husband)
The Screened Persons: Ms B and Ms E

I, Mr Golding:

1. Acknowledge that I am aware that the screened persons may have information from which is relevant to my case with him.

1. Irrevocably undertake:

   a.   To waive my retainer with Berry Family Law so as not to require my solicitor(s) to seek confidential information of the screened persons ;

   b.   To instruct and authorise Berry Family Law to continue acting on my behalf notwithstanding any alleged conflict of interest problem that has arisen as a result of the screened persons commencing practice with Berry Family Law;

   c.   To instruct and authorise Berry Family Law to give an undertaking that no member of Berry Family Law  will discuss  with the screened persons, or obtain from them in any other way, any confidential information relating to the earlier matter.

Dated  2017

………………………………………
Mr Golding

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

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT MELBOURNE

MLC 11080 of 2015

MR GOLDING

Applicant

And

MS GOLDING

Respondent

REASONS FOR JUDGMENT

(Delivered Ex-Tempore and Revised from Transcript)

1. By a response to an application in a case filed on 21 July 2017, the respondent wife seeks orders inter alia that:

   a)Ms S, solicitor of Berry Family Law  be restrained from continuing to represent the applicant (incorrectly referred to as the respondent in the response) in these proceedings;

   b)The applicant be restrained from retaining the said Ms S or any partner or employee of Berry Family Law in these proceedings.

2. The respondent relied on an affidavit affirmed 18 July 2017. The respondent deposed that:

   a)When proceedings commenced on 25 November 2015 she was represented by a solicitor Mr S, of the firm Taussig Cherrie Fildes. When that solicitor left that firm to join the bar, she engaged Ms B of Johnston Family Law to represent her in about late 2016.

   b)Ms B was the primary point of contact for the respondent; she met and spoke with her on numerous occasions, prepared the respondent’s trial affidavit and was otherwise intimately involved in the matter.

   c)On 26 April 2017, Ms B verbally advised the respondent that she been approached by Berry Family Law (the firm representing the applicant husband) to join their firm but otherwise did not provide further details. The respondent was not told that Ms B had accepted this offer and it was the respondent’s understanding that she had not.

   d)On 5 May 2017, the respondent received an email from Ms B which advised that she was closing the firm as at 12 May 2017. The respondent deduced from the email that Ms B had accepted the offer of a position from Berry Family Law as she had advised that she could not have any outstanding amounts owed on a file linked with Berry Family Law.

   e)Ms B filed a notice of address for service on the respondent’s behalf on 8 May 2017 indicating that the respondent was representing herself. On the same day the applicant collected her file and subsequently engaged Mitchell Family Law, her current lawyers on 20 June 2017 to act on her behalf.

   f)On 27 June 2017, Mitchell Family Law wrote to the applicant husband’s solicitor advising of concerns that the respondent had in relation to Berry Family Law acting in the proceeding. The letter provided relevantly:

   Ms B has been intimately involved in these proceedings and is aware of personal and confidential information relating to our client. It is therefore reasonable to infer that Ms B is aware of privileged information belonging to our client which could be used by your firm.

   In these circumstances, our client considers there to be a clear conflict of interest and objects to your firm acting in this matter.

   We await service of your Notice of Withdrawal as Lawyer within 14 days of the date of this letter.

3. On 12 July 2017, Berry Family Law responded by letter of that date referring to rule 10 of the Legal Profession Uniform Law and enclosing undertakings which were said to establish an information barrier protocol as recommended by the Law Institute of Victoria. The letter made specific reference to rule 10 of the Legal Profession Uniform Law which provides:

   Rule 10

   A solicitor or law practice who or which is in possession of confidential information of a former client where that information might reasonably be concluded to be material to the matter of another client and detrimental to the interests of the former client if disclosed, must not act for the current client in that matter UNLESS:

   10.2.1 the former client has given informed written consent to the solicitor or law practice so acting; or

   10.2.2 an effective information barrier has been established.

4. The letter from Berry Family Law was exhibit TW-2 to the affidavit of the respondent.

5. The undertakings provided were:

   a)an irrevocable undertaking of compliance officer, Mr J, a partner of Berry Family Law

   b)an irrevocable undertaking by solicitor with carriage executed by Ms S;

   c)an irrevocable undertaking signed by screened person – Ms B;

   d)an irrevocable undertaking signed by screened person – Ms E (as an assistant to Ms B); and

   e)an irrevocable undertaking of and limitation of retainer executed by the client of Berry Family Law – Mr Golding, the applicant.

6. The respondent took issue with the terms of the undertaking. It was noted that the undertaking given by Ms B and Ms E that “no confidential information” about the matter had had been disclosed to those people was accepted at the hearing to be self-evidently incorrect. Concern was raised that Ms E was listed as a screen person and that was the first occasion on which the applicant was aware that there was a second person at Berry Family Law who also held confidential information. There was also a concern that the undertaking only applied to particular people at Berry Family Law rather than all firm members. The respondent stated she was concerned that there may be other firm members who may discuss her file.

7. The respondent also stated at [15] of her affidavit that she had no confidence that confidentiality would be maintained, notwithstanding the undertakings as a result of how she was told that Ms B would no longer be representing her and because she was given inadequate notice and no assurance of confidentiality at that time.

8. Counsel for the respondent referred to the decision of Dalton & Dalton (2017) FLC 93-773 and in particular referred to the judgment of the majority (Ainslie-Wallace and Ryan JJ) at [54] – [56]. The facts in that case are set out in [1] – [14] of the decision. To a significant extent the findings of the majority are fact dependent. The relevant facts are set out in [2]–[7]:

   2 The husband and wife married 20 years ago and separated under one roof in December 2014. In the couple of years leading up to the separation and unbeknownst to the wife, the husband retained Paton Hooke Lawyers (“Paton Hooke”) to advise in relation to his financial affairs and succession planning. He sought advice regarding a new will, the establishment of a new trust structure for his financial affairs and making inter vivos gifts to the wife and other third parties. Although the husband predominantly consulted with Mr M of that firm, he and his accountant also consulted Mr L. At some stage, Mr M left Paton Hooke and established the eponymous Marshall Law.

   3 Without letting the husband know, in March 2015 the wife sought advice from Paton Hooke in relation to a financial settlement with him. Mr L accepted the wife's instructions and she became a client of the firm. Acting for the wife, on 17 July 2015, Paton Hooke filed an application in the Family Court of Australia for interim and final orders as to costs, spousal maintenance, property settlement and injunctions.

   4 Because the wife failed to comply with the Court's pre-action procedures (r 1.05 of the Family Law Rules 2004 (Cth) (‘the Rules’)), the first the husband knew that Paton Hooke acted for her was when he was served with the wife's documents on 22 July 2015. He, in turn, retained Mr M.

   5 On 3 August 2015, Mr M wrote to Paton Hooke asking they cease to act for the wife. In this initial letter, it was asserted that Paton Hooke had “a conflict of interest” because the “ … firm is privy to confidential information provided by [the husband] to your firm”.

   6 Under the hand of Mr L, on 5 August 2015, Paton Hooke denied there was a conflict of interest in continuing to represent the wife and sought particulars of the husband's claim that there was. It is appropriate to record at this stage that on 9 October 2015 Mr L affixed his signature to correspondence about the matter from Paton Hooke to Marshall Law. Otherwise, it is sufficient to observe that in the months that followed correspondence in relation to the conflict issue and significant steps in the substantive proceedings took place and it was not until 10 December 2015 that the husband filed an application seeking that the wife's solicitors be restrained from acting on her behalf in the proceedings. The husband's application was resisted by the wife and listed for hearing before the primary judge on 11 March 2016. His Honour delivered oral reasons for judgment on 14 March 2016 and the application was dismissed.

   7 It can be seen that the primary judge applied the principles that emerge from Osferatu & Osferatu (2015) FLC 93-666, a recent case concerned with the risk of the misuse of confidential information, and which the parties agreed (as do we), apply in this case. Consistent with Osferatu at [34] (where the court agreed with Goldburg J in PhotoCure ASA v Queen's University at Kingston  [2002] FCA 905 at [50]), the primary judge can be seen to consider that the questions to be answered were:

   “• whether the firm is in possession of information which is confidential to the former client;

   • whether that information is, or may be, relevant to a matter in which the firm is proposing to act for another party with an interest adverse to the former client;

   • whether there is any risk that the information will come into the possession of those persons in the firm working for the other party.”

9. The undertaking proffered by Mr L in that case is set out at [53] of the majority’s decision:

   53 Before we address grounds 3 and 4 it is helpful to set out the undertaking:

   “Undertaking to the Court

   I MR L of Paton Hooke Lawyers … undertake to the Family Court of Australia and to Marshall Law and their client, [Mr Dalton], that I will not disclose any information that I may be aware of concerning either [Mr Dalton] or the proceedings before the Family Court of Australia between [Ms Dalton] and [Mr Dalton] to any other person. In that regard, I undertake not to:

   1. Speak with [Ms Dalton] or any person at Paton Hooke Lawyers concerning any information I may have concerning [Mr Dalton] or her [ [sic] ] proceedings;

   2. Disclose directly or indirectly any information that I may have in my possession or control concerning [Mr Dalton] and his proceedings;

   3. Have any involvement with the proceedings;

   4. View any correspondence files, tax invoices, briefs or emails either sent to Paton Hooke Lawyers or received by them, nor be involved in the matter in any manner whatsoever in the future;

   6. Convey to any person any information about the affairs of [Mr Dalton] which I may have as a result of my employment with Paton Hooke Lawyers.

   Signed:

   …

   Mr L

   Dated: 10 March 2016”

   (Undertaking of Mr L, Exhibit W3)

10. At [54] the majority held that the undertaking proffered by Mr L did no more than attempt to provide an information barrier which protected the husband’s information reposed in Mr L and was silent about information received by the firm during the period the husband was a client. The majority stated “for the undertaking to be effective it needed to be comprehensive and to demonstrate that there were systems in place which established an effective barrier.”

11. At [58] the Court did not accept the trial judge’s finding that Mr L’s involvement in the wife’s case as evidenced by signature on the letter of 9 October 2015 was ‘transient and tangential’. The Court held at [58]:

    …we are satisfied that by affixing his signature it should be inferred that Mr L knew that the wife had given instructions to his partner in relation to the matters contained in the correspondence. While this is at the lower end of the spectrum of involvement in the proceedings, the subject matter of the correspondence was of considerable importance.

12. The court concluded at [59]:

    In our view, the fictional bystander would understand that when Mr L affixed his signature, he understood that the husband had raised the issue of his confidential information and asserted that the firm should cease to act. Although the fictional bystander would understand that Mr L's involvement was not substantial, in our view the bystander would not have any confidence that Mr L or the firm had acted to protect the husband's confidential information.

13. The circumstances of this case are quite different. There is no evidence that any solicitor other than Ms B received instructions and gave legal advice to the respondent. The respondent by her affidavit does not depose that she disclosed confidential information to Ms E although she does say that she spoke to her about her file. Both Ms B and Ms E have proffered undertakings by counsel in the form attached to the orders.

1. I am of the view that the regime proposed by Berry Family Law to deal with the situation of the employment of Ms B adequately deals with the concerns in relation to misuse of confidential information.  As was noted in Dalton & Dalton (2017) FLC 93-773 at [45]: ‘the question is not whether “there is any risk” but whether the risk is real’.

2. No submission has been put that the information barrier protocols which are set in place by reason of the undertakings proffered to the Court have not been established in accordance with the barrier protocols recommended by the Law Institute of Victoria.  They provide for an undertaking being given by Ms B; Ms B’s personal assistant when she was conducting her own practice and may have been in receipt of confidential information; an irrevocable undertaking provided by Ms S, who is the solicitor with the carriage of the matter; an undertaking by Mr J who is supervising the undertaking; and an irrevocable undertaking and limitation of retainer executed by Mr Golding. Mr J has undertaken to take appropriate steps to monitor the compliance and deal with any breach or possible breach of the information barrier. 

3. The undertaking is in a different form to that which was before the Full Court in Dalton & Dalton (2017) FLC 93-773. Further as set out above, the factual setting in which the court findings are given is quite different. I accept that the adoption on the Law Institute Information Barrier Guideline will not in all cases provide an answer to an application that a solicitor cease to act, however in this case I am satisfied on the evidence before me that the undertaking do provide sufficient safeguards to prevent a real risk that the husband will have access to the wife’s confidential information.

4. In Dalton, there was no declaration made as part of the undertaking that Mr L had not in the past conveyed confidential information to other members of the relevant firm. Further, there was no evidence in relation to the maintenance of the undertaking by the firm.  In the present case, Ms B and Ms E have declared that they have not conveyed any document or confidential information to any person working for or associated with Berry Family Law. That declaration was not made in Dalton.

5. The concerns raised by the respondent at [15] do not establish evidence of a “real risk of disclosure” and it was not explained either in evidence or from the bar table why the circumstances (which are not clear as the respondent did not wish to waive privilege) of being told that Ms B would no longer be representing the respondent constituted grounds a finding that there was a real risk of disclosure.

6. The focus of the undertakings and declarations contain sufficient evidence of the barrier system put in place by Berry Family Law to persuade the Court that there is no real risk of a misuse of confidential information.

7. The Court is satisfied that there is clear and convincing evidence that effective measures exist to protect against any real risk of disclosure. I am not satisfied that it is an appropriate matter to disqualify Berry Family Law from continuing to act – subject to the undertakings which were proffered by the applicant’s counsel.

I certify that the preceding twenty (20) paragraphs are a true copy of the reasons for judgment of Judge McNab

Date:  7 August 2017