Grattan and Grattan and Anor (No. 3) - [2014] FamCA 839

FAMILY COURT OF AUSTRALIA

GRATTAN & GRATTAN AND ANOR (NO. 3)

[2014] FamCA 839

FAMILY LAW – INJUNCTIONS – Injunction application against solicitor acting for company under husband’s control – Wife slept on her rights – Solicitor’s evidence that he understood his obligations – Injunction refused.

Family Law Act 1975 (Cth)

Billington & Billington (No. 2) [2008] FamCA 409
Grimwade v Meagher [1995] 1 VR 446
Kallinicos and Anor v Hunt and Ors [2005] NSW SC 1181; [2005] 64 NSWLR 561
Koncz & Koncz [2013] FamCA 444
Macmillan & Macmillan [2000] FamCA 1046
McGillivray & Mitchell [1998] FamCA 96
Naczek & Dowler [2011] FamCAFC 179
Spincode Pty v Look Software [2001] VSCA 248
Thevenaz (1986) FLC 91-748; 11 FamLR 95

APPLICANT:

Mr Grattan

RESPONDENT:

Ms Grattan

INTERVENOR:

B Pty Ltd

FILE NUMBER:

MLC

4259

2013

DATE DELIVERED:

3 October 2014

PLACE DELIVERED:

Melbourne

PLACE HEARD:

Melbourne

JUDGMENT OF:

Cronin J

HEARING DATE:

29 September; 3 October 2014

REPRESENTATION

COUNSEL FOR THE APPLICANT:

Mr Ackman QC with Mr Werner

SOLICITOR FOR THE APPLICANT:

Taussig Cherrie Fildes

COUNSEL FOR THE RESPONDENT:

Mr Glick QC with Mr Strum

SOLICITOR FOR THE RESPONDENT:

Kainelaw Australian Lawyers

COUNSEL FOR THE INTERVENOR:

Ms Ben-Simon

SOLICITOR FOR THE INTERVENOR:

C Law Firm

Orders

That paragraph 3 of the application in a case filed by the wife on 11 August 2014 is dismissed.
That to the extent that paragraph 1 of the response to the application in a case filed 29 September 2014 seeks costs against the wife, that application is adjourned to Friday 3 October 2014 for determination.
That the application in a case filed 11 August 2014 and the response thereto filed 29 September 2014 are otherwise dismissed.

IT IS CERTIFIED:

That pursuant to Order 19.50 of the Family Law Rules 2004 it was reasonable to engage counsel to attend.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Grattan & Grattan and Anor (No. 3) has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLC 4259 of 2013

Mr Grattan

Applicant

And

Ms Grattan

Respondent

REASONS FOR JUDGMENT

By application in a case filed 11 August 2014, Ms Grattan sought (inter alia) two specific injunctive orders. The orders were very similar. The first related to restraining the husband by himself, his servants and/or his agents, from
instructing or briefing, or in any manner engaging or taking advice from or otherwise discussing matters arising from the breakdown of the parties’ marriage
with a solicitor Mr C, his firm or any counsel engaged by them.
The second order was couched in similar terms but this time, the injunction related to B Proprietary Limited doing the same things as sought against the husband but from the same lawyers.
At a hearing on 29 September 2014, Mr Ackman QC on behalf of the husband advised the Court that his client had signed an undertaking in words similar to the proposed order sought by the wife but with an added notation that the undertaking did not preclude him from seeking information and documents to assist with the forthcoming property trial. No similar offer of an undertaking was made by or on behalf of B Proprietary Limited. With Mr Ackman’s agreement, I sought and obtained the undertaking personally from the husband who gave it.
The live issue in these proceedings therefore related to the wife’s application to seek the injunction against B Proprietary Limited and that application was opposed by the company. Both the wife and the company were represented by counsel. By a response filed on behalf of the company at the hearing, it was sought that the wife’s application be dismissed. The matter was then argued comprehensively by counsel.
The substantive proceedings relate to property settlement between the husband and wife. B Proprietary Limited was joined as a party some time ago. It has always been represented in this Court by Mr C’s firm. The final hearing of the proceeding is listed for several days in December.
One controversial issue which was a distraction but it seems to me does not alter the position related to just who was B Proprietary Limited. It seems that the company holds significant assets which are relevant to the property dispute between the husband and the wife. Mr Ackman QC on behalf of the husband told the Court that the husband controlled the company and indeed, a further statement was made that the company was the “alter ego” of the husband. In earlier interlocutory proceedings, different counsel for the husband made a similar concession. In the hearing of this application, counsel for the company said that she had been instructed that the husband’s sister was B Proprietary Limited but she conceded that the husband controlled it. In my view, it is the role of the husband that is relevant because, as will be seen from what I have earlier mentioned, the injunction sought relates to the person giving instructions to and obtaining advice from, the solicitor. In each case, if the husband is the controller of the company, it must follow that he is the person who will be giving instructions for and seeking advice from Mr C in relation to the company.
During the discussion, I used the analogy of the husband wearing two hats. In respect of his personal position vis-à-vis the wife, his undertaking precluded him from giving instructions or pursuing advice but if the injunction was not so granted against the company, he would be sitting before Mr C and be restricted to matters pertinent to the company’s involvement in the same legal proceedings.
The solicitor filed an affidavit in response to that filed by the wife and in general terms, acknowledged his obligations as an officer of the court. Counsel for the wife pointed out that the solicitor had had access to the wife’s material for some six weeks yet he chose on the morning of the court to respond by this affidavit. The affidavit did not take issue with a number of factual matters. I turn to those in a moment.
One of the difficulties with the affidavit of the wife was that it was specifically directed to the husband’s involvement with Mr C as distinct from the company and the question needed to be asked whether the same common facts supporting the application for the injunction applied to both respondents.
Counsel for the wife took the Court through not only the facts but the relevant test and authorities. In reply, counsel for the company was difficult to pin down as to whether or not she conceded that there was a primary basis for an order taking into account the tests. Be that as it may, she persisted in maintaining the major objection of the company was that the wife had equivocated, that is, she had agreed that the company could have Mr C but then as late as July 2014, changed her mind to seek the restriction now sought.
In my view, for the reasons that follow, this is not a case where the injunction should be granted particularly having regard to the fact that the husband’s undertaking severely limits that which he can talk to Mr C about and there is no sufficient evidence for me to find that Mr C would not honour his obligations as an officer of the court bearing in mind the focus on the administration of justice. Before dealing with the tests and their application, I turn to the nature of the proceedings.
The background of the relationship between the husband, the wife, the company and Mr C is not complicated.
During the marriage of the husband and the wife, it was said that Mr C drafted the will of the wife. Mr C indicated that he had no recollection and he found no indication in his administration that that was so. The wife said that Mr C undertook work on behalf of the various entities which included the company. Mr C also acted for the wife’s parents and siblings including obtaining the probate of the estate of her late father. It was the wife’s evidence that Mr C attended the husband’s 40^th and 50^th birthday parties and a variety of other social events which included Mr C’s late wife and three young children. One of the children of the husband and wife worked for Mr C.
Upon the separation of the husband and the wife, a discussion took place between Mr C and the wife instigated by her. The wife suggested and it was not denied by Mr C that he agreed that if he represented the husband, he would be able to get her an arrangement for settlement because he could “guide” the husband.
In December 2012, the wife’s lawyers wrote to the solicitors then acting for the husband indicating:
Whilst [the wife] has no objection to Mr [C] assisting [the husband] with respect to non-litigious issues including settlement discussions [the wife] reserves the right to object to Mr [C] or his firm representing [the husband] or otherwise becoming involved in any proceedings including but not limited to appearing as amicus curiae.
Later in December 2012, Mr C was involved in the settlement of a conveyancing matter associated with the son of the husband and wife. Mr C wrote to the solicitors for the wife indicating that the husband wanted any money contributed towards the purchase of the son’s property to be “deemed by agreement to be treated as a general reduction of the joint asset pool”. It was the wife’s evidence that unless she had agreed to that arrangement, the husband would not have settled the property.
In December 2012, there were proceedings brought by the wife in the Melbourne Magistrates’ Court for an intervention order. Mr C attended the hearing and instructed counsel to appear on behalf of the husband. The wife, through her counsel that day, requested that Mr C cease acting for the husband. The wife asserted and it was not denied by Mr C that he refused.
There were subsequent transactions involving Mr C and the husband. Those were set out in some detail by the wife in her affidavit. Whilst they are part of the evidentiary basis for the wife’s injunction application relating to the husband, they could equally apply in relation to the company. However, in my view, little turns on those matters because the wife did not at that time bring any proceeding against the husband, the company or Mr C in relation to his continued involvement.
There can be little doubt from the evidence of the wife that in 2013, Mr C had a significant role in assisting the husband in a variety of proceedings associated with the dispute between husband and wife.
In May 2013, the wife instituted proceedings in the Supreme Court of Victoria and Mr C filed an appearance on behalf of a number of companies who were named as respondents in which the wife had an interest. Mr C did not file an appearance on behalf of the husband but the wife said that he conferred with the husband throughout the hearing.
Just prior to the Supreme Court proceedings, the wife had invited Mr C to a family dinner. Although the wife set out in her affidavit details of what she was told by another person that had been said about her involvement in the proceedings, in my view nothing turns on that. Counsel for the company indicated that it was hearsay but as this was an interlocutory hearing and the source of the hearsay was nominated, nothing turns on that. In my view, the comments, if made, reflect on Mr C’s professionalism rather than his obligations to the Court.
In January 2014, the husband sought information about a number of entities in which the wife’s mother and/or brothers were involved. The wife asked the Court to infer that the complexity of the husband’s request must have had something to do with Mr C because he had acted for the wife’s siblings and mother. In my view, that is an inference I would not be prepared to draw on the untested evidence. I am not in a position to make a finding of fact about untested evidence. The affidavit of Mr C, late as it was, remained silent on the issue. I do not draw an adverse inference based on that silence.
In February 2014, Mr C filed a Notice of Address for Service on behalf of the company. There was a strong argument put by counsel for the wife that C Law Firm’s file reference on the documentation was the same as that associated with the Supreme Court proceedings in which Mr C had acted. Again without that being the subject of the testing of evidence, I do not consider that I can draw any adverse inference at all against Mr C, the husband or indeed the company. It may have something to do with his filing system but not much more. The significance however of the February date is that Mr C was openly acting for the company at a time when only months before, the wife had indicated her concern about his continued involvement.
There was considerable evidence about conduct and behaviour as between the husband and Mr C but in my view, it would be inappropriate for the Court to draw any adverse inference on the untested evidence. Mr C and the husband (like the wife) had known each other for many years and just what inference could be drawn, I am unsure.
On 3 July 2014, a new solicitor appeared on behalf of the husband and the wife noted that Mr C was giving instructions to this new solicitor. Whether that was out of professional courtesy or indeed because he was formally instructing the solicitor is a matter of conjecture. Importantly however, on 4 July 2014, the solicitors for the wife wrote to Mr C expressing concern about his involvement in matters (arising from the breakdown of the marriage, of the parties). The letter set out the various events all of which had caused consternation to the wife. Those included the attendance at the Melbourne Magistrates’ Court in January 2013 and the subsequent proceedings in the Supreme Court. However, the letter ended with the following statement:
YOU ARE ON NOTICE that if you continue to assist, advice or otherwise discuss matters arising from the breakdown of the parties’ marriage with [the husband] (other than for the sole purpose of representing [B] Proprietary Limited whose involvement in the Family Law Proceedings is peripheral) this matter will be referred to the Ethics Committee of the Law Institute of Victoria and/or the Legal Services Commissioner and/or application made to the court to restrain you from so doing (my emphasis).
Whatever the litany of complaints may have been in relation to Mr C’s involvement with the husband, the statement just highlighed above of the wife’s position, was unequivocal.
On 10 July 2014, the parties were back before this Court. Counsel for the wife expressed concern that the husband was giving instructions to Mr C. Counsel referred to the fact that Mr C had been put on notice “several times” including by a letter sent the previous week drawing to Mr C’s attention the wife’s objection to his continued involvement. I find that the statement of counsel for the wife must really be viewed in the context of her objection to Mr C acting for the husband but at the same time in the context of her unequivocal statement about his acting for the company.
The statement in the courtroom on 10 July 2014 seems to have provoked some conduct between the husband and Mr C in which it was asserted that Mr C acted unprofessionally. Without that evidence being tested, despite the absence of an unequivocal denial in the affidavit of Mr C, I am not sure that it affects the outcome of the immediate determination for the same reasons as I mentioned earlier. Questions of personal behaviour of legal practitioners, even at Court, are matters more appropriate for the Legal Services Commissioner or indeed, the profession’s own body.
At the end of her affidavit, the wife indicated her “regret” in not making an application to this Court or a complaint to the Legal Services Commissioner at an earlier stage. She said that Mr C was no longer a friend or trusted advisor but because of that relationship, she was “reluctant” to take any action against him. She said she hoped he would abide by his undertaking in a letter dated 14 January 2013. That letter was written by Mr C in response to the solicitors for the wife. Mr C wrote:
In response to your stated requirements therein we confirm that we will respect our ethical responsibilities towards your client and maintain the confidentiality of your client at all times.
The wife asserted that Mr C had not abided by that undertaking and she was concerned that her confidences in him would be abused to the benefit of the husband. I pause again to have a look at the words used by Mr C. As much as they may relate to the issue about which the undertaking was given to the Court on 29 September 2014, they are also to be seen as an unequivocal statement that Mr C understood his obligations to the wife having regard to the nature of the fiduciary obligation he owed her.
From a factual perspective, the conclusion I have drawn is that despite all that had happened, up until 10 July 2014, the wife was not concerned about Mr C’s involvement with the husband (as distinct from taking instructions and giving advice) but that his personal conduct towards her subsequent to that time has caused her angst. It is in the light of those matters that I turn to the relevant legal issues.
There are two issues to be considered as to whether the Court should intervene. Those matters arise out of authorities that this Court has considered over recent years.
Coleman J in Billington & Billington (No. 2) [2008] FamCA 409 considered a number of authorities set out by Brereton J in Kallinicos and Anor v Hunt and Ors [2005] NSW SC 1181; [2005] 64 NSWLR 561 and his Honour distilled the following points:
·   During the subsistence of a retainer, where the court’s intervention to restrain a solicitor from acting for another is sought by an existing client of the solicitor, the foundation of the court’s jurisdiction is the fiduciary obligation of a solicitor and the inescapable conflict of duty which is inherent in the situation of acting for clients with competing interests;
·   Once the retainer is at an end, however, the court’s jurisdiction is not based on any conflict of duty or interest, but on the protection of the confidences of the former client (unless there is no real risk of disclosure);
·   After termination of the retainer there is no continuing (equitable or contractual) duty of loyalty to provide a basis for the court’s intervention, such duty having come to an end with a retainer;
·   The court always has inherent jurisdiction to restrain solicitors from acting in a particular case, as an incident of its inherent jurisdiction over its officers and to control its processes in aid of the administration of justice.
Coleman J cited numerous authorities which I have omitted but they are a very careful examination of the history of various courts both in Australia and in England. Those authorities were followed by Brereton J in Kallinicos.
The Full Court of this Court in Naczek & Dowler [2011] FamCAFC 179 at 60 approved what Brereton J said in Kallinicos as follows:
In Kallinicos and Anor v Hunt & Ors Brereton J discussed all the relevant authorities and set out the circumstances in which the court would intervene to restrain a solicitor from acting for a client. His Honour nominated four. We not deal with the first three, as they do not apply in this case. It is only the last of the four matters identified by Brereton J at [76] which has relevance in this case, namely, that the court always has inherent jurisdiction to restrain solicitors from acting in a particular case, as an incident of its inherent jurisdiction over its officers and to control its process in aid of the administration of justice.
It will therefore be seen that there is no dispute about the jurisdiction of the Court to intervene if it is in aid of the administration of justice. In addition, this case is really about the fourth dot point as well. That said, it is also about whether there is a prospect of Mr C breaching his fiduciary duty to wife in the peculiar circumstances where he is only acting for a company albeit one over which the husband has control.

The power of the Court will be exercised where a fair-minded, reasonably informed member of the public would conclude that the proper administration of justice requires that the legal practitioner be prevented from acting for a client (see Spincode Pty v Look Software [2001] VSCA 248 and Grimwade v Meagher [1995] 1 VR 446).
The test involving the fictional member of the public is an objective test based on what the general public could expect of the administration of justice (op cit Grimwade v Meagher).
Whilst litigants should not be deprived of their choice of representation without good cause and the power of the Court should be exercised very cautiously, the public’s interest in the administration of justice must override that right of legal representation. It is not just the administration of justice but also the public’s confidence in the legal profession and, if that is seen to be undermined, the Court should intervene.
In this particular case it will be seen that there are two bases upon which the wife argued her case. First, she said that there had been the imparting of information by virtue of Mr C acting for her giving rise to the fiduciary obligation of Mr C and that his continued involvement might give rise to a difficulty it he was acting for a client with a competing interest such as the company. In Thevenaz (1986) FLC 91-748; 11 FamLR 95, Frederico J took the view that restraint was justified where the risk might be more theoretical than practical. That theme was supported by the Full Court of this Court in Macmillan & Macmillan [2000] FamCA 1046. As the Full Court there noted, all that was necessary was for the wife to swear that she had conveyed confidential information to the solicitor and she believed that that information might be used, not unreasonably, against her or at least to her disadvantage. As Aldridge J in Koncz & Koncz [2013] FamCA 444 said, the evidence needed to establish the test was evidence or a not unreasonable belief that the information may be used. In this case, the wife pointed to the fact that inquiries were being made about her family history and whilst counsel for the company indicated that that came out of discovery, that was not necessarily the wife’s belief.
In my view, a fair minded, reasonably informed member of the public would be concerned about a legal practitioner continuing to act on the one hand for the company in circumstances where the husband had given a very clear undertaking in respect of his personal case that he would not give instructions to or seek advice from, that same solicitor. That goes to the question of the administration of justice.
The reasonably informed member of the public however would also understand what was said by the Full Court in McGillivray & Mitchell [1998] FamCA 96 where their Honours observed that the failure to protest or to take steps to restrain the other practitioner at or very close to the point in time when the client became aware of the practitioner’s involvement was the most relevant consideration which would have to be taken into account adversely to the person who was later complaining. Thus, whilst the wife may have had cause for concern up to and including the start of July 2014, and was vociferously complaining about Mr C in relation to the husband, I can and do distinguish that role from that of acting for the company. The wife not only allowed Mr C to continue to act in various forms but unequivocally indicated she had no concerns about his role as acting for the company. The fair-minded, reasonably informed member of the public would be advised that one cannot sleep on one’s rights.
It would seem to me that the wife’s concern about Mr C’s continued involvement with the husband in his personal capacity has now been resolved by the husband’s undertaking and therefore her position as articulated in the early July 2014 letter that she had no concern about Mr C’s role because the company’s position in the proceedings was peripheral, should still stand. The very purpose of bringing the proceedings expeditiously to restrain a solicitor applies in this case. Senior counsel for the husband observed before he left the precincts of the Court that an order of the injunctive nature sought by the wife had the capacity to derail the proceedings in December. Whilst I am not in a position to say that that is correct, it must be obvious that at this late stage, with the timetable looming, that must be a real prospect. As the wife observed in July that the company’s role was peripheral, and I have the assurance of the solicitor that as he will be diligent in his consciousness about the role that he fulfils as an officer of the court in relation to the husband, it would not be proper for the Court to make an injunction against the company from continuing to brief Mr C. Accordingly, the application for the injunctive relief of the wife must be denied.
The company’s application also sought orders for costs on an indemnity basis against the wife. That was not argued nor should it be until this determination. To the extent that the company wishes to seeks costs, I will deal with that application bearing in mind that this is a discretionary judgment and the hearing was part of another proceeding on the one day. There will be orders accordingly.

I certify that the preceding Forty Three (43) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin delivered on 3 October 2014.

Associate:

Date: 3 October 2014