House and Altimas

[2012] FamCA 625

FAMILY COURT OF AUSTRALIA

HOUSE & ALTIMAS [2012] FamCA 625

FAMILY LAW – LEGAL PRACTITIONERS – Whether a solicitor should be restrained from representing a party – Where 14 years previously the solicitor acted for the parties in relation a road accident – Where in relation to the applicant the only extant duty is to preserve the confidentiality of information imparted during the relationship - Whether the applicant communicated confidential material to the respondent’s solicitor – Australian Securities & Investment Commission v Reid [2005] FCA 1274 followed - Where applicant did not establish communication of confidential material to the respondent’s solicitor – Application dismissed.

Family Law Act 1975 (Cth)

Australian Securities & Investment Commission v Reid [2005] FCA 1274
Bakarich v Commonwealth Bank of Australia [2010] NSW CA 43
Concrete Pty Ltd v Parramatta Design & Developments Pty Ltd (2006) 229 CLR 577
Johnson v Johnson (2000) 201 CLR 488
Kallinicos and Anor v Hunt and Others [2005] NSWSC 1181
Laws v Australian Broadcasting Tribunal (1990) 170 CLR 70
McMillan & McMillan (2000) 26 Fam LR 653
Neczek v Dowler (2011) FamCAFC
Prince Jefri Bolkiah v KPMG (a firm) [1999] 1 All ER 527
Strahan & Strahan (Disqualification) (2009) FLC 93-414
Thevenaz & Thevenaz (1986) FLC 91-748

APPLICANT: Mr House

RESPONDENT: Ms Altimas

FILE NUMBER: SYC 7807 of 2011

DATE DELIVERED: 3 August 2012

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Ryan J

HEARING DATE: 16 July 2012

REPRESENTATION

SOLICITOR FOR THE APPLICANT: Watts McCray Lawyers

SOLICITOR FOR THE RESPONDENT: Herbert Weller

Orders

1. That the application by Mr House for Order 2 and 3 contained in Part B of his Response filed 12 March 2012 is dismissed.

IT IS NOTED that publication of this judgment by this Court under the pseudonym House & Altimas 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 SYDNEY

FILE NUMBER: SYC 7807 of 2011

Mr House

Applicant

And

Ms Altimas

Respondent

REASONS FOR JUDGMENT

1. In the context of defended property settlement proceedings Mr House who is the applicant in this particular application (“the applicant”) applies for an order to restrain his former partner, Ms Altimas’ (“the respondent”) solicitor from continuing to represent her.  Although it was initially contentious, there is now no doubt that 14 years ago the respondent’s solicitor represented the applicant in relation to matters arising from a road accident.  So that it is clear, there is also no dispute that the respondent’s solicitor also represented the respondent in relation to matters arising out of that accident.  It is the respondent’s position that the application should be dismissed.

Background Facts to the Application

1. In December 1997 the applicant and respondent were involved in a road accident in which the applicant was the driver and the respondent was the passenger.  Both were conveyed to hospital where they received treatment for their injuries.  The applicant suffered a shoulder injury and the respondent a pelvic injury.

2. As a result of the accident, the applicant was charged with the offence of “drive contrary to traffic stop/give way sign” and required to answer that matter at the Local Court.  The applicant retained the respondent’s present solicitor in relation to the traffic offence.  Together, the applicant and respondent retained the same solicitor to advise them in relation to possible claims upon insurance for personal injuries. 

3. In the Local Court, the applicant was convicted following which he lodged an all grounds appeal to the District Court.  The respondent’s solicitor represented the applicant in the District Court appeal.  Although the offence was established no conviction was recorded.

4. It would appear that after numerous periods of cohabitation and separation, in January 2011, the applicant and respondent finally separated.  Once it became clear that they were unable to agree in relation to the adjustment of property, the applicant’s former solicitors reasonably promptly informed the respondent’s solicitor that in the applicant’s view, having previously been retained by him, he should no longer act on the respondent’s behalf.

5. The respondent’s solicitor responded promptly to the effect that he had no recollection of acting for the respondent.  A short time later proceedings under the Family Law Act 1975 (Cth) (“the Act”) were commenced, following which there were further exchanges about the applicant’s concern that the respondent’s solicitor continued to represent her.

6. On 12 March 2012, the applicant filed a Response in the substantive proceedings in which he sought an order restraining the respondent’s solicitor from continuing to act for her.

Applicable law

1. It is undisputed that the Court has an inherent jurisdiction to restrain a solicitor from acting for a client.  The applicable test was identified by the Full Court in Neczek v Dowler (2011) FamCAFC per Bryant CJ, Thackray and Bennett JJ as being that stated by Brereton J in Kallinicos and Anor v Hunt and Others [2005] NSWSC 1181 at 76:

   The test 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: Asia Pacific Telecommunications Limited v Optus Networks Pty Limited [2005] NSWSC 550.

2. In Prince Jefri Bolkiah v KPMG (a firm) [1999] 1 All ER 527 Lord Millett distinguished between an existing and a former client. In the latter, intervention cannot be based upon a conflict of interest as this evaporates once the fiduciary relationship is terminated with the retainer. In that scenario, the only extant duty is to preserve the confidentiality of information imparted during the relationship. It is therefore necessary, in seeking to restrain a former practitioner, that the applicant establish that the solicitor possesses confidential information. The otherwise narrow interpretation by the English courts reflected in Prince Jefri Bolkiah v KPMG (a firm) that intervention to restrain a solicitor ensues only when real prejudice followed from their continuing to act, has not been followed in this jurisdiction.  McMillan & McMillan (2000) 26 Fam LR 653.

3. Albeit in the context of consideration of the circumstances in which a judge would disqualify himself or herself, in Strahan & Strahan (Disqualification) (2009) FLC 93-414 the Full Court, per May, Boland and Thackray JJ, considered the level of knowledge imputed to the hypothetical fair minded lay observer. Their Honours, in Strahan, incorporated into their reasons par 13 of Johnson v Johnson (2000) 201 CLR 488 where Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ [at 492-493] said:

   Whilst the fictional observer, by reference to whom the test is formulated, is not to be assumed to have a detailed knowledge of the law, or of the character or ability of a particular judge, the reasonableness of any suggested apprehension of bias is to be considered in the context of ordinary judicial practice. The rules and conventions governing such practice are not frozen in time. They develop to take account of the exigencies of modern litigation…

4. This level of knowledge would include, as was made plain in Laws v Australian Broadcasting Tribunal (1990) 170 CLR 70, per Mason CJ and Brennan J, the imputation that the fair minded lay observer would have knowledge of the actual circumstances of the case. See also Bakarich v Commonwealth Bank of Australia [2010] NSW CA 43.  In Concrete Pty Ltd v Parramatta Design & Developments Pty Ltd (2006) 229 CLR 577, Callinan J [at 177] said:

   It is axiomatic that the perception of a lay observer will not be as informed as the perception of a lawyer, particularly a litigation lawyer. But the notional lay person should not be taken to be completely unaware of the way in which cases are brought to trial and tried…

5. In a similar vein, Lander J in Australian Securities & Investment Commission v Reid [2005] FCA 1274 reviewed authorities concerned with the level of knowledge and characteristics imputed to the fair minded lay observer. After he completed his review, Lander J [at 110] described such a person as one:

   … who is reasonable and fair-minded, who has a general understanding of the facts and circumstances surrounding the case, who is not a lawyer but is not wholly uninformed and uninstructed about the law in general…

Application of the law to the facts

1. The gravamen of the applicant’s objection to the respondent’s solicitor continuing to represent her is set out at paragraph 9 of his affidavit filed 12 March 2012.  There, the applicant said:

   [The solicitor] of [the solicitor’s firm] acts for [the respondent] in relation to these proceedings.  I object to [the solicitor] continuing to act for [the respondent] in these proceedings in circumstances where:

   9.1I provided to [the solicitor] detailed instructions on all aspects of the […] accident, and I received advices of a privileged and confidential matter;

   9.2I am concerned that sensitive, confidential and otherwise privileged information has been conveyed to [the solicitor] which may be, or may become, available to [the respondent].  I am concerned that such information, should it be available, would assist [the respondent] in the preparation and prosecution of her case to my disadvantage;

   9.3[The respondent] asserts (at paragraph 43 of her affidavit sworn 21 December 2011) that she made certain financial contributions throughout our relationship, some of which [the respondent] asserts were lump sum in nature.  The source of those funds that [the respondent] allegedly contributed is not currently particularised by [the respondent] in her affidavit.  I am concerned that [the respondent] will assert, as part of these proceedings, that the monies she received in satisfaction of the personal injury claim she made arising from the […] accident were contributed to assets owned by me, or on joint expenses during our relationship.  I deny those assertions, should they be made by [the respondent].  That is likely to mean that [the solicitor] is called upon to give evidence and/ or produce documents in relation to [the respondent’s] assertions, which creates a further level of conflict;

   9.4I am concerned at the attitude that [the solicitor] have taken to the issues surrounding the conflict of interest that I raised, as deposed to further and in more detail below;

   9.5In all respects, I say that I would have no confidence in the legal process, or that justice would be done, if [the solicitor] were permitted by this Honourable Court to continue acting on behalf of [the respondent].

2. In essence, two critical points are made by the applicant; namely:

   ·that he imparted “sensitive, confidential and otherwise privileged information” to the respondent’s solicitor “which may be, or may  become, available to [the respondent]; and

   ·he is concerned about the manner in which the respondent’s solicitor has responded to his request that he ceases to act.

3. This latter point would appear to concern the respondent’s solicitor claim that he had “absolutely no recollection of having acted for your client”.  Having heard the respondent’s solicitor’s evidence, I am satisfied that this statement is correct and that it would not be reasonable for the applicant to be troubled perse about this disavowal.  So that it is clear, that the respondent’s solicitor disavows any recollection of being previously retained by the applicant, is irrelevant to the determination of the application that he be restrained from continuing to act for the respondent.

4. However, because there was a clear issue about whether the applicant had previously engaged the respondent’s solicitor I took the unusual step of permitting cross-examination which was limited to that issue.  As was indicated earlier, this established that there is no doubt that the applicant retained the respondent’s solicitor in relation to the traffic matter and in relation to a possible “claim on insurance for the personal injuries [the applicant and respondent] both suffered as a result of the accident.  [The respondent’s solicitor] acted for [the applicant and respondent] in respect of the personal injuries claim” (applicant’s affidavit filed 12 March 2012, par 8.2).

5. A question which arises is whether the respondent’s solicitor, consistent with the approach adopted by the Full Court in McMillan [at 56] established “a prima facie case as to confidential material, the disclosure or use of which by the solicitors in the course of the conduct of the current proceedings for the present client would be prejudicial to the applicant”.  Ordinarily, all that is required of an applicant is that he or she “swears that [the applicant] has conveyed confidential information to the solicitors and that [the applicant] believes, not unreasonably, that the information may be used against [the applicant], or at least to [the applicant’s] disadvantage in these current proceedings” (my emphasis).

6. I am not satisfied that the applicant communicated confidential (qua the wife) material to the respondent’s solicitor.  It is clear the parties jointly retained the solicitor in relation to matters arising from the accident.  The circumstances of the accident were central to the parties’ respective claims for personal injuries and, I infer, were fully disclosed to each other in the context of their retainer granted to the respondent’s solicitor.  As was the solicitor’s advice and steps taken by him pursuant to their retainer.  I am far from satisfied that the respondent’s solicitor is the repository of “confidential material” the disclosure of which might even theoretically be disadvantageous to the applicant.  While I accept that the respondent’s solicitor provided the applicant with advice in relation to the accident of a privileged nature, the joint retainer by the applicant and the respondent means that in relation to the respondent the applicant waived privilege and the information and advice was and is not confidential.

7. Reference was made by the applicant’s solicitor to the approach adopted in Thevenaz & Thevenaz (1986) FLC 91-748. That case, which has received wide-spread appellate support, concerned a successful application by a husband to restrain a solicitor from continuing to represent the husband’s former wife. The solicitor had previously acted on conveyances for both parties. As I understood the gravamen of the submission, it was to the effect that Thevenaz is authority for the proposition that the solicitor will be restrained even when he or she was retained by the parties jointly.  Whilst it is accepted that a joint retainer may not be not a complete answer to the issue of privilege and the giving of confidential information, the facts in Thevenaz show that there was more to the case than joint retainer of a conveyancing lawyer.  It is clear [at 75,447] that the solicitor also retained confidential information that “would embarrass the husband”.  That situation does not arise here.

8. Nor am I satisfied that there exists a reasonable basis for the applicant’s assertion that the respondent’s solicitor may be required to give evidence as alleged in par 9.3 of his affidavit filed 12 March 2012.  Simply put, this would appear to be no more than an argument of convenience designed to assist an otherwise weak case.

9. On balance, I am not satisfied that a fair minded, reasonably informed member of the public in the position of the applicant would conclude that the proper administration of justice requires that the respondent’s solicitor be restrained from continuing to represent her in these proceedings.

I certify that the preceding twenty one (21) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Ryan delivered on 3 August 2012.

Associate:     

Date:              3 August 2012