Hamdan & Alzahrani
[2022] FedCFamC1F 720
•21 September 2022
Federal Circuit and Family Court of Australia
(DIVISION 1)
Hamdan & Alzahrani [2022] FedCFamC1F 720
File number(s): SYC 5897 of 2021 Judgment of: SCHONELL J Date of judgment: 21 September 2022 Catchwords: FAMILY LAW – PRACTICE AND PROCEDURE – Where the husband sought to restrain the wife’s lawyers from acting on her behalf – Where the bases for the husband’s application was a breach of confidence, a breach of fiduciary duty and/or the inherent jurisdiction of the Court over its officers and processes – Where the husband did not discharge the onus to satisfy restraining the wife’s lawyers – Husband’s application dismissed. Cases cited: Billington & Billington (No. 2) [2008] FamCA 409
Blackwell v Barroile Pty Ltd and Others (1994) 123 ALR 81; [1994] FCA 414
Kallinicos & Anor v Hunt (2005) 64 NSWLR 561; [2005] NSWSC 1181
Mancini v Mancini [1999] NSWSC 800
Oceanic Life Ltd v HiH Casualty & General Insurance [1999] NSWSC 292
Osferatu & Osferatu (2015) FLC 93-666; [2015] FamCAFC 177
Sellers v Burns and Another (2019) 59 Fam LR 593; [2019] FamCAFC 113
Volker and Anor & Dunwell and Anor (2013) FLC 93-558; [2013] FamCAFC 169
Westpac Banking Corporation v Newey [2013] NSWSC 533
Division: Division 1 First Instance Number of paragraphs: 55 Date of hearing: 14 September 2022 Place: Sydney The Applicant: Litigant in Person Solicitor for the Respondent: L Lawyers ORDERS
SYC 5897 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MR ALZAHRANI
Applicant
AND: MS HAMDAN
Respondent
order made by:
SCHONELL J
DATE OF ORDER:
21 SEPTEMBER 2022
THE COURT ORDERS THAT:
1.The Application in a Proceeding filed 16 December 2021 is dismissed.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Hamdan & Alzahrani has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
SCHONELL J:
By Application in a Proceeding filed 16 December 2021, the applicant husband (“the husband”) seeks an order in the following terms:
1.That the solicitors representing the Applicant, [L Lawyers], be dismissed due to a significant conflict of interest.
The husband appeared for himself and, upon enquiries made by the Court, identified that what he was seeking was to restrain the respondent wife’s (“the wife’s”) solicitors, L Lawyers, from acting on behalf of the wife. The wife opposed the husband’s application. The husband outlined that it was his contention that the relief he sought was said to arise either from a breach of confidence by L Lawyers, a breach of their fiduciary duty, or the inherent jurisdiction of the Court to have control over its officers and processes.
For the reasons which will become apparent, I am not satisfied that the husband has discharged the onus that rested upon him and accordingly, I will dismiss his application.
The husband relied upon the following documents:
(1)Application in a Proceeding filed 16 December 2021;
(2)Affidavit of husband filed 14 September 2022; and
(3)Case Outline document.
The wife relied upon the following documents:
(1)Response filed 7 February 2021;
(2)Affidavit of wife’s solicitor filed 14 March 2022; and
(3)Case Outline document.
Following enquiries made by the Court with each of the husband and the wife’s solicitor, neither party indicated they wished to cross-examine the other. Accordingly, the matter proceeded upon the papers and with submissions.
Background
The husband and wife are currently involved in proceedings before this Court, where the wife is the applicant. The proceedings commenced on 15 August 2021.
The wife is represented by L Lawyers and her solicitor at that firm is Ms B. Ms B was the solicitor who acted for the wife upon the commencement of the proceedings and has remained the wife’s solicitor but for a period of time between late 2021 and early 2022. Ms B in her affidavit identifies that in that period of time the wife was represented by the principal of the firm, Mr L. The proceedings before the Court principally relate to financial matters. No hearing date has been allocated.
The extent of the parties’ assets is unclear but includes their jointly owned home at Suburb C subject to a mortgage to the bank. The wife’s solicitor indicated that the home is worth somewhere between $3,000,000 and $3,500,000 but is subject to a debt to a bank of approximately $2,300,000. There are also a number of other creditors who have caveats secured over the home or who claim some security interest. The wife has sought to join many of those creditors to the proceedings. It seems that on one view, there may be little, if any, equity in the home subject to the determination of the issues in relation to the other creditors.
It also appears that the husband also owned or owns a number of restaurants. One particular restaurant featured prominently in this application. The husband says that through a company D Pty Ltd (“D Pty Ltd”), the husband held a 50% interest in a restaurant called P Restaurant. The other 50% interest was said to be held by his then business partner Mr E.
The husband says that the start-up costs to establish the restaurant was approximately $1.4 million. Whilst each of the respective partners were to contribute equally to that cost, he says that Mr E only put in approximately $250,000 with the husband providing the balance of the funds by way of various unsecured loans. The husband says that he and Mr E fell out and following a mediation he and Mr E came to an agreement where Mr E would buy out the husband's interest in the restaurant for $800,000. He said that the agreement provided for a payment plan but that all that was paid was approximately $330,000.
The husband said that he thereafter commenced proceedings against Mr E in the District Court of New South Wales and obtained a judgment in mid-2020. He says that Mr E lodged an appeal but filed no documents in prosecution of the appeal and the appeal was eventually dismissed. The husband identifies that attempts to satisfy his judgment have been unsuccessful.
The husband gives evidence that following entry of judgment, whilst he was overseas, he was advised by the wife that apparently someone was operating the restaurant. The husband says that upon his return from overseas he entered into discussions with this person and was advised that they had in fact purchased the restaurant.
The husband says that he ultimately discovered that his former business partner, Mr E, had forged his signature and transferred the lease for the restaurant to a company called F Pty Ltd (“F Pty Ltd”), a company that was said to be owned and controlled by Mr E’s wife. He subsequently discovered that F Pty Ltd then sold the restaurant to a company called G Pty Ltd (“G Pty Ltd”).
The husband is currently engaged in proceedings in the Supreme Court of New South Wales to recover ownership of the restaurant. The first two defendants, Mr E and F Pty Ltd, have not entered an appearance and have taken no part in the litigation. As I understand the husband’s case, he does not know where they are. The third defendant is G Pty Ltd and the fourth defendant is the landlord of the restaurant premises. G Pty Ltd is represented in the Supreme Court proceedings by L Lawyers, the same lawyers who act for the wife in the Federal Circuit and Family Court of Australia proceedings (“the Family Court proceedings”).
The Supreme Court proceedings are listed for hearing in 2023.
Husband’s submissions
The husband submitted that L Lawyers have a clear conflict of interest in that they are acting for the wife in the Family Court proceedings while at the same time acting for G Pty Ltd in the Supreme Court proceedings. He said that they are in a sense acting for two clients with opposing interests. In acting for the wife, they are seeking to increase the pool of assets whilst in the Supreme Court proceedings, if successful, the pool of assets could be depleted. The husband contends that this gives rise to a conflict of interest.
The husband also contends that there has been a sharing of the husband’s confidential information by L Lawyers. In that respect, the husband asserted in his affidavit:
12.The conflict of interest lies in that [L Lawyers] is privy to my financial affairs as a result of the Family Court proceedings and that this information has been used against me in the Supreme Court proceedings. [Mr H] from [J Solicitors] stated after a particular hearing “They know your dire financial situation and it seems they are trying to bleed you dry”. This was in response to the delaying tactics of [L Lawyers] who were trying to delay the process.
…
14.[L Lawyers] denies the sharing of information and have stated that the solicitors work independently in their offices and there is no sharing of information or discussion of the cases.
When specifically asked, the husband conceded that he was not contending that the wife was acting in concert with G Pty Ltd and he also conceded that he did not have any direct evidence of the sharing of confidential information.
The husband submitted that G Pty Ltd has been delaying and prolonging the Supreme Court proceedings because they know he has some financial difficulties. He submits that they could only know this by having access to information disclosed in the Family Court proceedings.
In further support of the assertion of the sharing of confidential information, the husband says the following in his affidavit:
15.According to the [L] Lawyers website there are 8 lawyers who work in the firm. Seven lawyers bear the [same name] and are related. See Annexure 4
16.The only lawyer that is not [of that name] is [Ms B] who has carriage of this matter. However [Ms B] left the firm between [late 2021] and [early 2022], and in her absence [Mr Q] (principal) had carriage of the matter. [Mr Q] was also my point of contact in this matter from [mid to late 2021]. See Annexure 5
17.The solicitor representing [G Pty Ltd] is [Mr R]. One would expect that [Mr Q] as principal would have knowledge of all the cases that are been handled by his firm, especially that of his son. His two brothers [Mr M] and [Mr N] are senior solicitors at the firm yet we are expected to believe that this family run legal firm in [Suburb K] does not discuss the various cases they are representing. In fact [most] of the […] employees of [L Lawyers] all bear the family name […]. See Annexure 4
The husband submitted as evidence supportive of the inappropriate sharing of confidential information that whilst the wife has sought to join a number of creditors to the Family Court proceedings, she has not sought to join the Supreme Court litigation over the restaurant. In support of this submission, the husband made reference to proceedings involving Mr O, which the wife sought to join to the Family Court proceedings.
The husband also referenced a Notice of Motion signed by another solicitor at L Lawyers other than Mr Q and the wife’s solicitor, suggesting that more solicitors are involved than as asserted by the wife.
The husband also submitted in support of the contention about the sharing of confidential information that the wife’s solicitors have never asked for any documents or information in relation to the Supreme Court proceedings, the inference being that the information has been already inappropriately shared. He says in his affidavit:
29. [L Lawyers] has an obvious conflict of interest by acting for the Applicant in these proceedings, and also acting for [G Pty Ltd]. They have not taken any action to join the proceedings to these proceedings. They have also not requested any documentation from me about the proceedings suggesting that [Ms B] the solicitor for the applicant in these proceedings already has all the information she needs a s she works for the same firm representing [G Pty Ltd] or that perhaps [L Lawyers] is turning a blind eye, and is profiting from earning legal fees from both cases when the cases oppose each other.
…
31.[L Lawyers] have placed their own interest in earning legal fees ahead of the interests of [Ms Hamdan]. In this instance [Ms Hamdan] was an existing client, yet [L Lawyers] took on a new client whose aim was to take a n asset away from [Ms Hamdan] marriage pool.
32.There is no justification in the construction of ·”Chinese Walls” that permit a firm of solicitors to act for more than one client where their interests are inherently opposed.
Wife’s submissions
The wife opposes the husband’s application. The wife seeks to continue to retain L Lawyers as her lawyers in the proceedings with the full knowledge that the same firm is acting for one of the defendants in the Supreme Court proceedings.
The wife’s solicitor submitted that the solicitor who acts in the Supreme Court proceedings is Mr R. It is submitted that he has had no involvement with the Family Court proceedings. The wife’s solicitor submitted that there is no evidence that Mr R is the son of the principal of the firm and said that he is not.
The wife through her solicitor submitted that the husband has provided documents in relation to the Supreme Court proceedings by way of disclosure and thus there has been no request for information as it has all been provided. In relation to the Notice of Motion, she contends that Mr M signed the Notice of Motion as the wife’s solicitor does not have unrestricted practising certificate, that the Notice of Motion has been dealt with, and that there is no further litigation in the Supreme Court in which Mr M is the solicitor on the record.
She submitted that there is no evidence that L Lawyers are pursuing their own interests in the litigation contrary to the interests of their clients.
The wife’s solicitor admitted that a number of parties have been joined to the proceedings as they have claimed a security interest over the former matrimonial home, including the proceedings involving Mr O.
The wife’s solicitor gives evidence as follows:
7.The Applicant in these proceedings claims that the solicitor with carriage is one in the same as the principal of the firm. I confirm that there are two solicitors by the [same name] at the firm - one being [Mr Q] and [Mr R] (herein [“Mr R]”).
8.The Applicant is claiming a conflict of interest on the basis that the firm will acquire information with respect to [Mr Alzahrani’s] financial assets, being information that ought to be divulged to the Court in all circumstances in compliance with his obligations for full and frank disclosure.
9.There is no overlap with the practitioners, or the work being carried out. The office is segregated with each solicitor of the practice within their own office which can be closed and locked, with no travel of sound.
10.[Mr R] and I are not employed within the same department with my practice area being family law and [Mr R’s] being criminal and civil practice.
11.[L Lawyers] utilises the legal software LEAP and have set up a firewall/Chinese walls which prevents my access to any and all files that are not in my name. The same is applicable for [Mr R], thus any and all information in the respective proceedings are confidential and cannot be accessed by the other.
12.The system only provides me with visibility and access into files that have been allocated to my licence and vice versa. In the very way that I am unable to access the files of other departments and solicitors within the firm, the same is applicable for [Mr R].
13.With respect to the online court files, I do not have access to the registry and thus cannot access the online court system. Similarly, I have my own username and password allowing access to the present file on the commonwealth courts portal – [Mr R] does not have access to this.
14.The work carried out by [Mr R] and I, albeit in the same firm is wholly separate.
15.The information available to me with respect to the proceedings is information that has been disclosed by [Mr Alzahrani] in the current proceedings on foot.
The wife’s solicitor submitted that the husband’s application was vexatious and designed to harass and annoy the wife and that it should be dismissed with costs.
Applicable law
In Osferatu & Osferatu (2015) FLC 93-666 (“Osferatu”), the Full Court identified that there are three bases upon which a solicitor may be restrained by injunction from acting. They are where it is established that there has been a breach of confidence, a breach of fiduciary duty or where the inherent jurisdiction of the court to control its own processes and officers is invoked.
An application based upon a breach of confidence must be based upon some evidence establishing the alleged breach. In Osferatu, their honours cited with approval Bryson J’s statement in Mancini v Mancini [1999] NSWSC 800:
7.It is of importance to observe that information generally is not protected; the protection available relates to confidential information, and is available to the person entitled to the confidence. No circumstances were put forward in which Mrs Mancini herself is entitled to the protection of the law against the use of any particular information by Mr Mancini or by the lawyers whom he has chosen to retain. It is not possible to address in any clear way and to come to a decision on protection of any alleged confidential information without identifying what the confidential information is in a sufficiently specific way to enable it to be identified. Without doing that it is not possible to come to a conclusion on whether the information truly is confidential, to consider and appraise the circumstances in which it came into existence and was communicated, to come to any conclusion about whether protection is appropriate, or to make any enforceable order. A case about confidential information cannot be nebulous. Confidential information which once existed may no longer be confidential; it may no longer be available although it was communicated in the past; it may not be material to any use which might now be proposed to be made of information. Without specificity a claim to protection cannot be defended or decided on any fair procedural basis, and a general allegation of the kind put forward here to the effect that from the nature of the past legal business confidential information must have been communicated should not in my opinion be upheld.
(Emphasis added)
Their Honours stated that the need for proof was obvious, citing with approval Coleman J in Billington & Billington (No. 2) [2008] FamCA 409:
43.As the authorities make clear, the jurisdiction to grant relief of this kind “is to be exercised with caution”. The Court understands caution to be exercisable in relation to the totality of the evidence, and the matters relevant to the exercise of the jurisdiction, and not to be referrable only to the interests of the party seeking the relief. Relevant in that context is the need to give appropriate weight to the public interest in a litigant not being deprived of the lawyer of his or her choice without due cause. Also relevant in this context is the cost and inconvenience of requiring the wife to retain new lawyers. Quite apart from the work required to be undertaken by solicitors familiar with the case to adequately represent the wife’s interests before the Full Court, realistically, were new solicitors now to be instructed, a far greater level of reading and preparation would be required, and at greatly increased expense to the wife.
His Honour’s observations are apposite to the circumstances that exist here.
It is also important to consider whether there is a risk that confidential information may be provided. Their Honours in Osferatu observed:
31.This conveniently leads to the next point. Once the client has discharged the onus of proving that the solicitor is in possession of confidential information which is, or may be relevant to the new matter, that is not the end of the case.
32.The next step involves a consideration of the risk that the relevant confidential information will be disclosed. The risk of disclosure “must be a real one, and not merely fanciful or theoretical. But it need not be substantial”: Prince Jefri at 237.
33.How is this to be determined? It is by the consideration of the risk and of any protective measures taken or proposed by the solicitor or his or her new firm. The evidentiary burden on this issue falls squarely on the lawyer or the firm to which he or she has moved. As Lord Millett said in Prince Jefri at 237-238:
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. There is no rule of law that Chinese walls or other arrangements of a similar kind are insufficient to eliminate the risk. But the starting point must be that, unless special measures are taken, information moves within a firm. In MacDonald Estate v. Martin, 77 D.L.R. (4th) 249, 269 Sopinka J. said that the court should restrain the firm from acting for the second client “unless satisfied on the basis of clear and convincing evidence that all reasonable measures have been taken to ensure that no disclosure will occur.” With the substitution of the word “effective” for the words “all reasonable” I would respectfully adopt that formulation.
…
41.It follows from the above discussion that the law requires that an applicant seeking to restrain a solicitor from acting must adduce evidence that establishes the confidential information and the risk of the misuse of that information in the circumstances. The weight and persuasiveness of any evidence adduced depends, of course, on the precision of the evidence called, the nature of the confidential information and the nature of the risk of disclosure.
The husband also contended as an alternative ground of relief that there was some breach of the fiduciary duty owed by the solicitors to the wife that warranted their restraint. In Oceanic Life Ltd v HiH Casualty & General Insurance [1999] NSWSC 292, Austin J observed :
40.One consequence of the solicitor/client relationship being fiduciary is that a solicitor has a duty not to misuse his or her position to gain a profit without the client's fully informed consent: Boardman v Phipps [1967] 2 AC 46. That duty is not in issue here. Another consequence, more germane to the present facts, is that the solicitor must avoid
•any real sensible possibility of conflict between the duty to serve the interests of the client and personal interest: Mallesons case, at 362, and
•any actual conflict between the duty to serve the interests of one client, and the duty to serve the interests of another client: Farrington v Rowe McBride & Partners [1985] 1 NZLR 83,
unless the solicitor obtains the unfettered consent of all relevant clients after fully disclosing all of the material facts, or the duty is attenuated by contract, with the relevant client’s fully informed consent.
The third basis upon which the husband contended that the solicitors should be restrained arises in the context of the Court’s inherent jurisdiction. The husband’s basis for this contention seems to include that the solicitors are acting in their own interests rather than in the interests of their respective clients.
In Kallinicos & Anor v Hunt (2005) 64 NSWLR 561, Brereton J summarised the relevant principles as follows:
76. The foregoing authorities establish the following:
•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 (Prince Jefri Bolkiah).
•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) (Prince Jefri Bolkiah).
•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 the retainer (Prince Jefri Bolkiah; Belan v Casey; PhotoCure ASA; British American Tobacco Australia Services Ltd; Asia Pacific Telecommunications Ltd; contra Spincode Pty Ltd; McVeigh; Sent).
•However, 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 (Everingham v Ontario; Black v Taylor; Grimwade v Meagher; Newman v Phillips Fox; Mitchell v Pattern Holdings; Spincode Pty Ltd; Holborow; Williamson v Nilant; Bowen v Stott; Law Society v Holt). Prince Jefri Bolkiah does not address this jurisdiction at all. Belan v Casey and British American Tobacco Australia Services Ltd are not to be read as supposing that Prince Jefri Bolkiah excludes it. Asia Pacific Telecommunications Ltd appears to acknowledge its continued existence.
•The test to be applied in this inherent jurisdiction is whether a fair minded, reasonably informed member of the public would conclude that the proper administration of justice requires that a legal practitioner should be prevented from acting, in the interests of the protection of the integrity of the judicial process and the due administration of justice, including the appearance of justice (Everingham v Ontario; Black v Taylor; Grimwade v Meagher; Holborow; Bowen v Stott; Asia Pacific Telecommunications Ltd).
•The jurisdiction is to be regarded as exceptional and is to be exercised with caution (Black v Taylor; Grimwade v Meagher; Bowen v Stott).
•Due weight should be given to the public interest in a litigant not being deprived of the lawyer of his or her choice without due cause (Black v Taylor; Grimwade v Meagher; Williamson v Nilant; Bowen v Stott).
•The timing of the application may be relevant, in that the cost, inconvenience or impracticality of requiring lawyers to cease to act may provide a reason for refusing to grant relief (Black v Taylor; Bowen v Stott).
In Sellers v Burns and Another (2019) 59 Fam LR 593, the Full Court observed as follows:
98. It is important too to here note what was said by Heenan J in Holborow v Rudder [2002] WASC 265:
26. Consequently, when an application is made to restrain a legal practitioner from acting in a cause for reasons other than the risk of disclosure or misuse of information provided to the practitioner in confidence by the former client, it is of importance to identify precisely what obligation towards the former client or to the court may be breached or imperilled by the practitioner acting in the cause or against the former client. This approach is important because, otherwise, there may imperceptibly develop an expectation that the freedom of a client to engage a legal practitioner of his or her own preference, and the freedom of a legal practitioner to act even against a former client, where such a course does not involve any breach of his fiduciary obligations arising from the earlier retainer, is open to adventitious challenge as a means of harassing an opponent in a cause.
Discussion
It is to be observed that the husband carries the onus of establishing that there has been a breach of confidence by lawyers within the firm of L Lawyers. The highest the husband’s assertion got was to assemble a series of random contentions that was said then to lead to some inference. They do not.
In the context of this application, the observations of Pembroke J in Westpac Banking Corporation v Newey [2013] NSWSC 533 at [22] (cited with approval by the Full Court in Volker and Anor & Dunwell and Anor (2013) FLC 93-558) are apposite.
His Honour observed:
22.The law and lawyers would be held in disrepute if judges acceded too readily and too often to such applications. Before doing so, there must be some realistic sense of impropriety about the circumstances; something that sensibly justifies the conclusion that unless an injunction were granted, the integrity of the judicial process would be impaired. The basis for the second defendant's application existed only in the clouds, at an abstract theoretical level. The facts on which it relied were thin and the speculation on which it depended was unconvincing. On the other hand, the grant of an injunction must be grounded in pragmatism, reflecting the practical commercial reality, paying due regard to established legal principle and acknowledging norms of acceptable behaviour.
The husband agreed that he assumed that Mr R is the son of Mr Q but that he was not sure. I accept the submission of the wife’s solicitor that he is not his son.
The husband accepts that Mr R is the solicitor who is acting in the Supreme Court proceedings and concedes that he has no evidence that Mr R has undertaken any work in the Family Court proceedings.
The assertion by the husband’s previous solicitor referenced in the husband’s submissions does not establish the proposition for which it was advanced.
There is no evidence that the lawyers in L Lawyers have shared any confidential information. The husband conceded that he had no direct evidence. I find he has no evidence direct or indirect.
I accept the wife’s solicitor’s submission that the solicitor in the firm who has the carriage of the Supreme Court proceedings has had no involvement in the Family Court proceedings. I accept her submission that there has been no sharing of information.
I accept her submission that the husband has provided documents referrable to the Supreme Court proceedings as an explanation for why there was no need to seek documents from the husband where he has complied with his obligations of disclosure. I accept the wife’s solicitor’s submission that the only parties that the wife has sought to join to the proceedings are those who are creditors that imperil the wife’s application to retain the home. In relation to the submission that Mr O is not a creditor, the explanation provided by the wife’s solicitor was that Mr O had obtained an injunction in the Supreme Court restraining the husband from dealing with his property, part of which is his interest in the former matrimonial home, which the wife seeks to retain. The husband was given an opportunity to respond to this proposition and declined to do so.
The husband bears the onus to establish these assertions. Such assertions cannot just be bandied around. I am satisfied that the husband has failed to discharge the onus that existed upon him to establish that there has been a passing of confidential information from one solicitor in the firm of L Lawyers to the other.
I am further satisfied on the evidence advanced by the wife’s solicitor that there are in place in the firm of L Lawyers sufficient protections to prevent a disclosure of information from one part of the firm to the other. The husband in his affidvait sought to contend as follows:
32.There is no justification in the construction of “Chinese Walls” that permit a firm of solicitors to act for more than one client where their interests are inherently opposed.
33.A firm is no better position than a sole practitioner if it purports to act for separate clients are in contention. Blackwell v Barroille (1993) 42FCR151 Davie and Lee JJ.
(As per the original)
The decision relied upon by the husband must be seen against the background of a very different factual circumstances that exist here. In the case of Blackwell v Barroile Pty Ltd and Others (1994) 123 ALR 81, the firm of solicitors acted on behalf of both parties to the transaction. As their Honours in the majority identified at 93:
This was not a case of reliance upon a so-called “Chinese wall” to avoid a possibility of conflict arising out of instructions received to act against a former client, or out of circumstances associated with a solicitor moving from one partnership to another. Even in those cases Australian law in recent times has developed and applied a more stringent test than that laid down in Rakusen v Ellis, Munday and Clarke (1912) 1 Ch 831; see National Mutual Holdings Ply Ltd v Sentry Corp (1989) 19 FCR 155; Mallesons Stephen Jaques v KPMG Peat Marwick (1990) 4 WAR 357; Equiticorp Holdings Ltd v Hawkins (1993) 2 NZLR 737; Re a firm of solicitors (1992) 1 QB 959; MacDonald Estate v Martin (1991) 77 DLR (4th) 249 (SCC); L Aitken, “ ‘Chinese Walls' and Conflicts of Interest", Monash University Law Review, 25 Vol 18, No 1, (1992), p 91; P Finn, “Conflicts of Interest and Professionals”, Seminar on Professional Responsibility, University of Auckland, 28-29 May 1987, p 9; FM B Reynolds, “Solicitors and Conflict of Duties” (1991) 107 LQR 536.
A firm is in no better position than a sole practitioner if it purports to act for separate clients whose interests are in contention. If it purports to continue to act for both clients by imposing a qualification on the duties of partnership it thereby denies the respective clients the services the clients have sought from the firm, namely the delivery of such professional skill and advice as the partnership is able to provide. In such a circumstance the appearance provided to the public is that the interests of the solicitors as partners are in conflict with, and may be preferred to, the interests of one or both clients.
That is not the situation here. The parties the firm acts for are not in the same action. The wife is fully appraised of all the relevant issues and seeks to retain her chosen lawyers. As stated earlier, the husband conceded that he was not contending that the wife was acting in concert with G Pty Ltd. I am satisfied that there are sufficient protections in place as set out in the solicitor’s affidavit. It was not submitted that the identified protections were inadequate or deficient in a particular way.
It is not immediately apparent to me, nor I assisted by submissions, as to how it was contended there had been a breach of the fiduciary obligation that the solicitors owed the wife or, for that matter, that the solicitors for G Pty Ltd owed to their client that was somehow in conflict. In the absence of clear articulation, I make no such finding.
Nor am I satisfied that it has been established that the Court should restrain the solicitors in the exercise of its inherent power to protect its own processes. It is not established before me that a fair-minded, reasonably informed member of the public would conclude that the proper administration of justice requires the solicitors be restrained from acting. The cases make it clear that the circumstances in which the Court would exercise that power should be exceptionable and should be exercised with caution and due weight should be given to the public interest of a litigant not to be deprived of their lawyer. This is not an exceptional case and I give due weight to the wife’s right to retain the lawyer of her choice in circumstances where I am satisfied that she is appraised of all of the issues.
Conclusion
Consistent with my reasons, I will dismiss the husband’s application.
I certify that the preceding fifty-five (55) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Schonell. Associate:
Dated: 21 September 2022
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