GOLIAS & NASSO

[2015] FCCA 1069

FEDERAL CIRCUIT COURT OF AUSTRALIA

GOLIAS & NASSO [2015] FCCA 1069

Catchwords:
FAMILY LAW – Application to restrain solicitors from acting for wife – solicitors imparted with confidential information from a third party who is likely to be a witness – nexus established that such confidential information might be used to the disadvantage of the husband.

Brandston v Gilbert (2007) FLC 93-328

Grimwade v Meagher [1995] 1VR 446

McMillan v McMillan (2000) FLC 93-048
Mills v Day Dawn Black Gold Mining co Ltd [1882] 1QLJ 62

Rakusen v Ellis, Munday & Clarke (1912) 1 Ch. 831

Thevenaz & Thevanaz (1986) FLC 91-748

Applicant: MR GOLIAS

Respondent: MS NASSO

File Number: MLC 753 of 2015

Judgment of: Judge McGuire

Hearing date: 22 April 2015

Date of Last Submission: 22 April 2015

Delivered at: Melbourne

Delivered on: 30 April 2015

REPRESENTATION

Counsel for the Applicant: Mr Sweeney

Solicitors for the Applicant: Davidson Family Lawyers

Counsel for the Respondent: Ms Smallwood

Solicitors for the Respondent: Berger Kordos Solicitors

ORDERS

1. The solicitors for the wife, Berger Kordos Solicitors, be and are hereby restrained from continuing to act on the wife’s behalf in these proceedings.

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

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT MELBOURNE

MLC 753 of 2015

MR GOLIAS

Applicant

And

MS NASSO

Respondent

REASONS FOR JUDGMENT

1. The husband seeks an Order that the wife’s solicitors, Berger Kordos Solicitors, be restrained from further acting for her in family law proceedings. Those solicitors placed themselves on the record as acting for the wife in her Response filed 16 April 2015. The husband’s application was filed 4 February 2015 and amended by an application filed 14 April 2015.

2. The application is opposed.

3. Interestingly, the husband’s initiating application raised the issue now before me but otherwise sought Orders only in respect of children. The thrust of the husband’s protest, however, relates to financial information imparted by his father to the wife’s solicitors.

4. The parties commenced cohabitation and were married on [date omitted] 2002. They separated on 14 December 2014. There are two children aged ten and five years.

5. The husband relies on his affidavit sworn 3 February 2015 in respect of this issue. His father, Mr G, has also sworn an affidavit on 15 April 2015. The husband’s financial statement sworn 14 April 2015 is also read into evidence.

6. The husband alleges that the wife’s solicitors’ conflict arises from them having acted for his own father, Mr G, in matrimonial matters. The issue was first raised and protest taken in a letter from the husband’s solicitors to the wife’s solicitors of 22 January 2015 and in response to initial correspondence from the wife’s solicitors dated the previous day. There is no issue of delay in registering the protest in this matter.

7. It is not in dispute that Mr G instructed the wife’s solicitors in his own matrimonial matters in 2013 and 2014. The thrust of the husband’s complaint appears at [9] of his affidavit where he deposes:

   …As soon as I ascertained this, in accordance with my instructions, my solicitors wrote to Berger Kordos indicating there was an obvious conflict of insofar as their firm acting on behalf of the Wife. That letter clearly stated that in circumstances where it was highly likely that my father, for whom they had also acted, could be involved in my family law matter and provide evidence on my behalf, it was inappropriate for their firm to act for the wife.

8. The husband’s affidavit is otherwise unparticularised as to any or any potential involvement of his father in the substantive proceedings. It is unparticularised as to any actual conflictual or perceived conflictual information allegedly held by the wife’s solicitors on behalf of Mr G that could be used to the disadvantage of his son. The affidavit otherwise references children’s issues between the parties save some presumptive comment and superlative at [15] which I choose to ignore.

9. Mr G confirms that he instructed Berger Kordos Solicitors. His affidavit is brief but says at [4-9]:

   [4] As a result of the advice I received, our financial affairs have now been arranged in a manner that reflects the advice I received and reflects the negotiations that Berger Kordos were involved in on my behalf.

   [5] In the context of my own matrimonial matters, all of my financial affairs were disclosed to Berger Kordos. Berger Kordos were provided with advice about various investments held by me in my name. Berger Kordos were also provided with detailed instructions about financial investments that my son [Mr Golias] has held on my behalf in the past.

   [6] Ownership of certain investments in my name may be a real issue in proceedings between [Mr Golias] and his former wife [Ms Nasso].

   [7] In the context of my own matrimonial matter, I disclosed confidential information to Berger Kordos that wouldn’t otherwise be available or made known to third parties.

   [8] I have advanced significant sums of money to [Mr Golias] during the period of his marriage to [Ms Nasso]. Those advances total in excess of six figure sums. Details of the amounts and circumstances surrounding the holding of investments on trust were provided by me to Berger Kordos as part of the detailed instructions given in my own “matrimonial matter”. I propose to provide an affidavit in support of [Mr Golias] in his matter.

   [9] I am concerned that confidential information provided by me to Berger Kordos could be used against either me or against [Mr Golias] in his proceedings. I am concerned that Berger Kordos have access to all of the instructions I have given them and that they will be cross-examining me as a witness for [Mr Golias].

10. The husband’s sworn financial statement does not particularise any fiduciary relationship with his father save as to paragraph [50] where he lists a liability as a debt owing to Mr G of an unknown quantum. I pause to comment only that in a sworn document of such import it seems odd that the husband would depose to a loan but not be able to state its quantum. Certainly, a reading of the husband’s financial statement does nothing to corroborate the implications in his father’s affidavit as to their financial relationship.

11. The wife swore a financial statement on 16 April 2015. She does not reference any liability to the husband’s father or any fiduciary relationship.

12. Similarly, in her affidavit the wife says at [65] that she has been provided with no information of any conflict in her solicitors continuing to act for her. Her Counsel’s submissions before me argue that no particulars have been provided of any conflict arising in those solicitors’ continuing to represent the wife. The wife emphasises that she has a prima facie right to legal representation of her choice. Counsel for the wife asks the Court to note that initial protest was made in an application seeking only children orders. Further, Counsel argue that the lack of particularisation of any nexus with the husband’s finances plus the husband’s affidavit being limited to vague, and equivocal references combined should not satisfy this Court on the balance of probabilities that Berger Kordos Solicitors hold confidential information that could be used to the husband disadvantage.

13. There is no affidavit from Berger Kordos Solicitors although I accept that the onus is on the husband to satisfy the Court on the balance of probabilities of the assertion that he makes.

14. The issue before me involves a fine balance of considerations between the right of a party to choose a legal representative of their choice as against maintaining the integrity of the legal system where justice must both be done and be seen to be done.

15. The determination of the Court here is an exercise of its discretion. The superior Courts have, however, given guidance as to the approach to be taken by Courts at first instance. English Courts have traditionally taken a narrow approach where “real mischief”, real prejudice or actual conflict must be shown in order to restrain a solicitor from acting.[1]

    [1] Rakusen v Ellis, Munday & Clarke (1912) 1 Ch. 831.

16. The Australian Courts, however, have taken a “broader” approach which contemplates a situation where the risk may be theoretical or reasonably perceived rather than necessarily actual. The adjective “reasonably” serves to provide some objectivity to an otherwise subjective perception of the factual platform.[2]

    [2] McMillan v McMillan (2000) FLC 93-048

17. There is here, of course, an evidentiary consideration permitted by the adoption of the broader approach. The issue is the imparting of confidential information that could be used against the other party. Obviously, if such information is fully particularised within this argument then it is no longer confidential and the debate becomes futile. However, the objective requirement of some “reasonableness” must obligate some factual nexus as opposed to mere speculation. The protest should be capable of challenge. To allow otherwise would be to open the gate to all types of agenda and improper tactics.

18. The conundrum was understood by the Full Court in McMillan (supra) where their Honours at [42] said when considering a decision of the Full Court of the Supreme Court of Queensland in Mills v Day Dawn Black Gold Mining co Ltd[3] and an often cited decision of Frederico J in Thevenaz & Thevanaz[4]:

    The significant feature of this approach is that for the client to succeed, he or she need only give evidence that he or she has imparted information of a confidential nature to the practitioner in question and that there is at least a theoretical possibility that it could be used against him or her.

    [3] [1882] 1QLJ 62.

    [4] (1986) FLC 91-748

19. The Court in McMillan (supra) also referred to a decision of Lindemeyaer J in an unreported decision of Stewart (17 April 1997) where his Honour was also considering Mills (supra). His Honour seems to have added the requirement of “not unreasonably” to the subjective belief that confidential information may be used to a disadvantage. His Honour says:

    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.

20. Nevertheless, should it be thought that mere speculation or even more sinister motivation be enough to restrain the other party’s solicitors, the Full Court in Brandston v Gilbert[5] recognised the evidentiary test and perhaps the onus where at [70] the Court said:

    The Court should only retrain the appearance of a legal representative in a clear case where the practitioner concerned is in a position where he or she is fixed with an interest which conflicts with his or her duty to the Court and that that interest is one of such a nature that the legal practitioner may fail in his or her overriding duty to the Court.

    [5] (2007) FLC 93-328

21. The unusual aspect of this matter is that the information alleged to be held by the solicitors does not emanate from the protesting party himself but from a third party, namely his father. It is however, the fact of reasonable perception of the holding of confidential information that is relevant for establishing of the nexus and that it is used to the disadvantage of a party. The potential use of information in respect of the third party is not relevant. The husband suggests that his father will be a witness and his father connects the information with his son. These are the relevant considerations and the fact that the material emanates from a third party is not fatal to the argument here.

22. There is clearly no fiduciary relationship between the husband and Berger Kordos Solicitors. Similarly there is no continuing financial relationship between the solicitors and Mr G. There is no potential breach of confidence arising from any contractual duties. The issue of conflict here, therefore arises within the Court’s inherent jurisdiction over its officers and to control its process and the proper administration of justice.[6]

    [6] Grimwade v Meagher [1995] 1VR 446

23. The evidence of the husband himself is flimsy at best. It is equivocal, unparticularised and it is speculative. On his evidence alone I would not be satisfied that the husband, or any reasonably informed person, could conclude that the solicitors should be restrained from acting in the interests of integrity of justice on the basis of holding confidential information that could be used against the husband.

24. I am satisfied, however, that the evidence of Mr G does provide that nexus. He deposes at [7] of his affidavit to disclosing confidential information to the solicitors which would not otherwise be available to third parties. This, of course, is not the test in that it is not to the disadvantage of Mr G himself which is at issue here but rather that of his son. As such, the affidavit is to be read in context and it is the revelation at [5-6] that is most relevant where Mr G says:

    Berger Kordos were also provided with detailed instructions about financial investments that my son [Mr Golias] has held on my behalf in the past.

    Ownership of certain investments in my name may be a real issue in proceedings between [Mr Golias] and his former wife [Ms Nasso].

25. At [8] Mr G deposes to advancing “significant sums of money to [Mr Golias]” during the marriage. He says that he has provided details of those advancements and the “holding of investments on Trust” to Berger Kordos. Those solicitors have obvious duties of disclosure to their own client, the wife. It follows, in my view, that a reasonable observer would perceive a potential conflict in those solicitors being imparted with such confidential information when acting for the wife and that such information could be used to the disadvantage of the husband.

Conclusion

1. Consequently, on balance, I am satisfied that the wife’s right to solicitor of her choice should give way to the integrity of the system in that justice should be perceived to be done and that Berger Kordos Solicitors be restrained from further acting for the wife in these proceedings.

I certify that the preceding twenty-six (26) paragraphs are a true copy of the reasons for judgment of Judge McGuire

Date:  30 April 2015