Huda and Huda & Anor

[2017] FamCAFC 17

FAMILY COURT OF AUSTRALIA

HUDA & HUDA AND ANOR [2017] FamCAFC 17

FAMILY LAW – APPLICATION IN AN APPEAL – LEGAL PRACTITIONERS –Where an employee of the solicitors for the respondent to an appeal resigned and commenced employment with the solicitors for the appellant – Where the respondent in the appeal seeks orders restraining the solicitors from continuing to act – Where the employee in question did have access to the file during employment with the solicitors – Where there was no evidence that the employee received confidential information from the client – Where the applicant has failed to identify the nature of the information received or likely to have been received – Where mere access to a file does not meet the evidential threshold – Application dismissed.

APPEAL – COSTS – Where the respondent foreshadowed filing an application for costs against the solicitors of the applicant personally – Where such application must be filed within the timetable prescribed in the orders.

Griffis & Griffis (1991) FLC 92-233
McMillan and McMillan (2000) FLC 93-048
Osferatu & Osferatu (2015) FLC 93-666
Stewart (unreported, Family Court of Australia, Lindenmayer J, 17 April 1997)
Thevenaz and Thevenaz (1986) FLC 91-748

APPLICANT: Ms Huda

FIRST RESPONDENT: Mr Huda

SECOND RESPONDENT: Mr Laham

FILE NUMBER: BRC 1238 of 2015

APPEAL NUMBER: NA 47 of 2016

NA 49 of 2016

DATE DELIVERED: 16 February 2017

PLACE DELIVERED: Brisbane

PLACE HEARD: Brisbane

JUDGMENT OF: May J

HEARING DATE: 15 November 2016

LOWER COURT JURISDICTION: Federal Circuit Court of Australia

LOWER COURT JUDGMENT DATE: 17 June 2016

LOWER COURT MNC: [2016] FCCA 1256

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Shoebridge

SOLICITOR FOR THE APPLICANT: Firm X

COUNSEL FOR THE FIRST RESPONDENT: Mr Hackett

SOLICITOR FOR THE RESPONDENT: Firm Y

FOR SECOND RESPONDENT: No appearance

Orders

1. The Application in an Appeal filed 14 September 2016 is dismissed.

2. The respondent file and serve an application seeking costs together with written submissions in support of the application for costs on or before 4.00pm 10 March 2017.

3. The applicant (and her solicitors should an application be filed seeking costs against the solicitors) file and serve written submissions in relation to costs on or before 4.00pm 31 March 2017.       

Note: The form of the order is subject to the entry of the order in the Court’s records.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Huda & Huda and Anor has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).

IN THE APPELLATE JURISDICTION OF THE FAMILY COURT OF AUSTRALIA AT BRISBANE

Appeal Number: NA47 of 2016 and NA49 of 2016
File Number: BRC 1238 of 2015

Ms Huda

Applicant

And

Mr Huda

First Respondent

And

Mr Laham

Second Respondent

REASONS FOR JUDGMENT

Introduction

1. On 15 July 2016 Mr Huda (“the husband”) filed a Notice of Appeal from final property orders made by Judge Vasta on 17 June 2016. On 14 September 2016 Ms Huda (“the wife”) filed an Application in an Appeal seeking Mr Y personally and in his capacity as sole trader of his firm of solicitors (“the solicitor/s”) be restrained from acting for the husband in his appeal, and that the husband or the solicitor pay the wife’s costs of and incidental to the application, on an indemnity basis.

2. The unusual features of this application are that it involves the restraint of a solicitor from acting for a client (the husband) because a secretary formerly employed by the wife’s solicitors is now working in the office of the husband’s solicitors. Further, it is of significance that the litigation has reached the stage of an appeal, where it is unlikely that further evidence will be placed before the court. Certainly there was no reference in the submissions of the wife or the husband’s solicitors to an intended affidavit of further evidence in the appeal.

3. In order to consider this application, it is necessary to have regard to the history and background of the matter.

Background

1. The husband and wife married in 2003 and separated in January 2015. In February 2015, the husband commenced property and parenting proceedings. The parenting component of the proceedings settled. Judge Vasta determined the property proceedings between the parties, delivering the reasons and orders on 17 June 2016.

2. As part of those reasons, his Honour made a number of very critical findings against the husband and Mr Laham who was also a party to the proceedings. The husband claimed in the trial proceedings that Mr Laham made a number of loans to him totalling $555,000 and the husband’s case was that the wife was jointly responsible for the liability. The judge rejected this claim. On 15 July 2016, Mr Laham also filed a Notice of Appeal from the orders of Judge Vasta. Mr Laham took no part in this application.

3. The Notice of Appeal filed by the husband contains grounds asserting procedural unfairness on the part of the judge, that the findings in relation to the loan from Mr Laham were in error and that the exercise of discretion was erroneous. It is asked that there be a re-hearing should the appeal succeed.

4. The grounds of appeal as contained in Mr Laham’s Notice of Appeal are in similar terms.

The Application

1. In an affidavit filed on 14 September 2016 in support of the application, the wife sets out the reasons for seeking to restrain the husband’s solicitors. A secretary, Ms M, formerly employed by the wife’s solicitors, Firm X, recently changed employment and commenced employment with the husband’s solicitors. It is essential to set out in full what the wife says in her affidavit in this respect:

   3.[Ms B], a solicitor employed by [Firm X], has had the primary conduct of my matter on my behalf but I have had other administrative staff including a secretary [Ms M], work on my file.

   4.During the months of April and May, leading up to the trial in our matter which commenced on 16 May 2016, I received numerous correspondence from [Ms M] as [Ms B]’s assistant.

   5.I am informed by my solicitor [Ms B] and verily believe that [Ms M] was employed by [Firm X]. I am further informed by my Solicitor that [Ms M] worked as an assistant to [Ms B] during the period from about 20 April to 3 June 2016 and that she assisted [Ms B] with the administrative and secretarial tasks associated with the work that [Ms B] undertook on my behalf and in particular with the work that [Ms B] undertook in preparing my matter for trial.

   …

   19.I have provided confidential information relevant to the matters, the subject of these proceedings and [Ms M] has had access to my files whilst in her employ of [Firm X] and has directly worked with my solicitor [Ms B] as set out above.

   (Emphasis added)

2. The wife notes that her solicitors have been retained by her since 21 August 2015.

3. Upon the wife’s solicitor discovering that Ms M was employed by the husband’s solicitors, they wrote and asked for confirmation that they would cease to act in the circumstances. The husband’s solicitors were put on notice that an application would be filed in the event they ceased to act. To this letter, the husband’s solicitors responded:

   7.        …

   I advise that at no stage has [Ms M] been involved in any aspect of the conduct of Mr [Huda’s] matter nor has [Ms M] imparted any information or knowledge that may have come to her whilst with [Firm X]. I was aware that [Ms M] had been involved in this matter whilst with your firm and advised that [Ms M] commenced here after the trial was concluded. [Ms M] is aware of her obligations to maintain client confidentiality and I have the highest regard for her ethical integrity. Further, I know that [Ms Huda] has engaged at least three law firms to represent her during the life of this matter. I am seeking the client’s instructions in regard to the matter.

4. On 11 November 2016, Ms B, the solicitor for whom Ms M worked at Firm X, filed an affidavit in support of the application. This affidavit suggests that Ms M accessed material within the Commonwealth Courts Portal – an electronic filing system. Further, the affidavit appears to argue that if the husband’s solicitors were a large firm where Ms M could work for other lawyers during the time the appeal is being heard, the problem would not be so acute, but instead Mr Y operates as a sole practitioner. The affidavit of the Ms B states:

   3.[Ms M], a former employee of [Firm X], worked at [Firm X] from about November 2015 to 3 June 2016. [Ms M] worked as my personal assistant during the period from about 20 April to 3 June 2016 and she assisted me with the administrative and secretarial tasks associated with the work that I undertook in the substantive proceedings of this matter and in particular with the work that I undertook in preparing the matter for trial.

5. On 14 November 2016, counsel for the wife filed a summary of argument. The wife submits that there “can be no doubt” that Ms M received confidential information from the wife in the course of her employment.

6. As is apparent from the reference to the evidence above, it is not said by the wife or her solicitors that Ms M ever had a conversation with the wife, nor is there any specific reference to matters which may be confidential, for example, that Ms M was privy to the instructions from the client.

The husband’s response

1. On 9 November 2016 the husband filed a Response, seeking that the wife’s application be dismissed and that the wife pay his costs of and incidental to the application. Accompanying this Response is an affidavit, of Mr Y. In this affidavit, the solicitor explains he has acted for the husband for 10 years. He also explains in detail the circumstances of Ms M commencing employment with his firm.

2. The position of legal secretary was advertised on 19 May 2016, and due to a sudden resignation, it was filled by Ms M on 6 June 2016. Mr Y states:

   6.By the time [Mr M] had been engaged by us and by the time she commenced working at [Firm Y], the [Huda] Trial had concluded. However, the decision was reserved.

   7.[Ms M] commenced working for our firm on Monday 6 June 2016. The main reasons of her appointment to work for the firm was to undertake conveyancing work as the previous employee had occupied that position, exclusively. I was aware that [Ms M] worked on the [Huda] file for [Firm X] as I had observed various emails and correspondence from that firm regarding the matter.

   8.Several weeks after [Ms M] commenced we were informed that the decision would be delivered and the Judgment was delivered on Friday, 17 June 2016.

   9.Insofar as the allegation that I concealed the fact from [Firm X] that [Ms M] worked for us, all I can say is that by the time that [Ms M] had commenced working for us the [Huda] trial was concluded after several years and I did not consider that there was any need for me to contact [Ms M’s] former employer to advise them that their former staff member now working for my firm. I believe this was a confidential matter between [Ms M] and our firm and it was not disclosable to anyone else.

   10.Subsequently, there was correspondence between myself and [Firm X] regarding the matter and I sought the advice of the Ethics Centre of the Queensland Law Society. I was assisted by a person in that centre who had experience and knowledge of various ethical matters relating to these types of issues. I informed the officer at the Queensland Law Society of the situation… 

   11.I was also aware of my obligations not to seek any information from [Ms M] in relation to the [Huda] matter and I have not done so.

   12. I have directed staff working on the [Huda] appeal at [Firm Y] not to discuss the matter with [Ms M] and I have also instructed [Ms M] that she is not to discuss her previous involvement with the [Huda] matter with any staff at [Firm Y].

3. In a further affidavit filed by Mr Y on 14 November 2016, he confirms there are six people working in his office. Ms M’s work is mostly conveyancing. Additionally, in response to the affidavit of the wife’s solicitor, Mr Y explains that Ms M accessed the Commonwealth Courts Portal in connection with other matters and not the file relating to this proceeding.

Applicable Principles

1. It is a well-known principle that lawyers must avoid conflicts between duties owed to current and former clients. This principle is enshrined in the overriding duty of confidentiality, which was summarised among other duties by the Full Court (Finn, Ainslie-Wallace & Aldridge JJ) in Osferatu & Osferatu (2015) FLC 93-666 (“Osferatu”) at 80,411:

   20.There are three established categories on the basis of which solicitors may be restrained from acting against their client or former client. They are: breach of confidence, breach of fiduciary duty and the inherent jurisdiction of a court over its officers and to control its process. Each category has its own principles which guide its operation. The third category may be involved in conjunction with either of the first two so there is clearly an overlap; nonetheless, the basis for the exercise of the jurisdiction in each is different (Kallinicos v Hunt [2005] NSWSC 1181).

2. I am concerned here with a contention that a secretary in the office of the solicitor for the husband may have confidential information, obtained when employed by the wife’s solicitors. The Full Court in Osferatu made reference to another well-known decision, McMillan and McMillan (2000) FLC 93-048 (“McMillan”), which discussed the protection that should be afforded to a client’s confidential information.

3. As noted in the summary of argument filed by the wife, McMillan explains that an order for restraint is not limited to solicitors, and may be instigated in the case of law clerks or, as the wife contends, legal secretaries.

4. The Full Court in McMillan confirmed (referring to the older decisions of Thevenaz and Thevenaz (1986) FLC 91-748 (“Thevenaz”) and the unreported decision of Stewart (unreported, Family Court of Australia, Lindenmayer J, 17 April 1997) (“Stewart”)) that there was no doubt that the Court has the power to restrain solicitors:

   38.It has been accepted in this Court, at least since the decision in June 1986 of Frederico J. in Thevenaz (1986) FLC 91-748, that the Court “has power to make orders restraining a firm of solicitors from continuing to act for one of the parties to proceedings in this Court, if it is of the view that it would be likely that those solicitors may have confidential information relating to the other party to the proceedings arising out of a former relationship of solicitor and client with that party which may be used to the advantage of the present client or to the disadvantage of the former client in the current proceedings” (per Lindenmayer J. in the unreported decision of Stewart (17 April 1997)).

5. In McMillan the wife appealed against a decision which restrained her solicitors, because a “non-legally qualified law clerk” who was employed by the solicitors for the husband, moved employment to work as a secretary for the solicitors for the wife. The Full Court dismissed the wife’s appeal, and upheld the restraint. It should be noted that in McMillan the husband gave evidence that he had directly given instructions to the clerk on the telephone who also provided him with advice.

6. The McMillan judgment reviewed relevant authorities in significant detail (see 87,725 – 87,735). Both McMillan and Oserferatu make reference to the test articulated by Frederico J in Thevenaz in the following passage at 75,447:

   Thus “a practitioner who wishes to cease acting for one party and to continue to act for the other party will be restrained from doing so by the court if there is any evidence that confidential communications have been made to him by the party for whom he is ceasing to act. In such a case the court will not weigh conflicting evidence as to confidence. It will act upon the evidence of the client who swears that he has made the confidential communication.” (See Legal Profession Law and Practice in Victoria (Gifford) 1980 ed. at p. 356.)

   (Emphasis added)

7. At 87,733 of their Reasons, the Full Court in McMillan confirmed that as the relevant test, stating the following:

   …To the extent that it is necessary in this case for us to express a concluded view … we would support the application in this jurisdiction of the approach of Frederico J. in Thevenaz (following Mills) which was adopted by Mullane J. in Griffis and in Kossatz (and also by Lindenmayer J. in the unreported case of Stewart to which we will shortly refer).  We would do so for the reasons related to the sensitive nature of the jurisdiction which were referred to by Bryson J. in D & J Constructions and by Rourke J. in Magro, and indeed also by Wilczek J. in the present case.

8. In terms of the degree of proof required to demonstrate confidential information may have been communicated, their Honours referred to views expressed by Mullane J in Griffis & Griffis (1991) FLC 92-233, where his Honour said at 78,601 “[that] the former client be required only to prove a prima facie case as to the confidential material, the disclosure or use of which by the solicitor in the course of the conduct of the current proceedings for the present client would be prejudicial…”. Followed and reformulated another way, the Full Court in McMillan also made reference to the unreported decision in Stewart, and quoted the following passage:

   56.…

   “… 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.  Accordingly, I propose to accede to the application of the wife.”

   (Original emphasis)

9. It is helpful to consider the evidence put forward in McMillan, which can be summarised as follows:

   a)The husband’s affidavit specifically stated he communicated instructions directly to the law clerk/secretary (“the clerk”) in question;

   b)The husband’s affidavit stated that he believed the clerk “could make those instructions or information available for the use by the Wife against me…” (at [8]); and

   c)The above was corroborated by the solicitor instructed by the husband, and who in turn instructed the clerk.

10. The Court concluded, based on this evidence, that they considered it “…sufficient…that the husband has sworn that he had given instructions to [the clerk] as to how he wished his ‘matter to be conducted and the position to be put to the wife’.” (at 87]).

11. Particularly relevant to this case, the Court considered whether “access to information” was sufficient to demonstrate a prima facie case of prejudice. The Full Court determined that it was not enough to simply allege access to information:

    93.It is true that in a number of places in his reasons, Wilczek J. referred to the fact that [the clerk] “had access to information of a confidential nature from the husband”.  We accept that the mere fact of access to confidential information is not the test.  Rather the issue is whether the former client actually imparted confidential information to a solicitor (or clerk) who is now employed by the solicitors acting on the other side of the litigation.  The husband has sworn that he did convey directly to [the clerk] information which we have accepted comes within the category of confidential information.  Accordingly this error on the part of his Honour would make no difference to the outcome of this appeal in the sense that were we to consider that we should re-exercise the discretion vested in his Honour because of this mistake on the part of his Honour, we would also grant the restraining order.

1. In Osferatu, the facts of the case were slightly different. The husband appealed against orders which restrained his solicitors from continuing to act for him in proceedings with his wife. A partner of the firm acting for the wife commenced employment with the firm acting for the husband. It is worth noting that it was “common ground that [the partner] did not have any direct dealings with the wife whilst he was a member of the firm instructed by her" (at [2]).

2. In circumstances where the wife “gave evidence that she had never spoken to or provided instructions to [the partner]” (at [45]), the Full Court made the following findings at 80,412:

   26.It is, however, important to recognise that McMillan, as were Thevanez and Stewart, was a case where the applicant was seeking to restrain a solicitor or a clerk to whom they had recently, and directly, given instructions from acting, or the firm to which they had moved, from acting, in those proceedings. Because the applicants in those cases had given instructions to the solicitor about the very matter in issue, it follows easily that there would be a finding that the solicitor who had moved was in possession of confidential information which is or may be relevant to that matter. It is for that very reason that the passage of Lindenmayer J in Stewart commenced with the words “All that is necessary is that …”. His Honour was simply saying that, in such circumstances, the burden borne by the applicant was discharged by such evidence. Nothing that appears in Stewart, Thevanez or McMillan obviates the need for an applicant seeking such relief from discharging his/her burden of proof by adducing cogent and persuasive evidence. This is particularly so where, as here, the circumstances differ from McMillan. In this case Mr F had never taken instructions from the wife.

   27.In Mancini v Mancini [1999] NSWSC 800 Bryson J said at [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.

   (Original emphasis)

3. The Court concluded that the appeal should be dismissed, on the basis that the wife failed to meet the evidential threshold. The Court noted at 80,416: 

   48.Mr F left Watts McCray in February 2012 (the reference to 2013 in the trial judgment was agreed by the parties to be an error). It is clear that the wife need not, for obvious reasons, divulge in her evidence the confidential information she asserts is held by the solicitor she is trying to restrain. However, for evidence to be persuasive and cogent she should have identified the nature of the information received or likely to have been received by Mr F between 24 June 2011 and February 2012 that was now, or could now be, relevant to the current proceedings. She did not do so. It is not sufficient to say that, as family law proceedings cover a range of matters, any information at all received by Mr F could have been relevant. This was especially so given that three years had passed since he could have received any information and both sets of substantive proceedings (parenting and property) had resolved.

Conclusion

1. Returning to the evidence of the wife set out at [8] of these Reasons, there is no evidence that relevant confidential information had been given to Ms M. It must be recalled that in McMillan, the husband’s evidence was that he given instructions directly to the relevant employee the subject of the restraint. Here, it is not enough that she had access to the wife’s file; direct evidence is required to demonstrate the likelihood of the provision of confidential information to Ms M.

2. The evidential threshold required to be met by the wife in this application is set out at [30] of these Reasons. The wife was required to “identify the nature of the information received or likely to have been received” by Ms M between November 2015 and June 2016. The wife did not provide evidence of such relevant matters.

3. The written submissions for the husband submit that it is difficult “…to fathom how confidential information, even if were imparted during the course of an appeal to the opposing practitioner, could have any impact upon the appeal such that the recipient practitioner ought to be restrained from continuing to act in the appeal.” There is force in this submission, but I am mindful of the comments in McMillan where the Full Court noted at [47] the “particular difficulties and sensitivities which arise in the family law area”.

4. In the absence of evidence it should not be inferred that the secretary has confidential information. The wife’s application in relation to the husband’s appeal must fail. 

Costs

1. Counsel for the wife at the hearing of this Application indicated a preference for the issue of costs to be determined after the hearing of the appeal. In my view there is not sufficient connection between the merits of the appeal and this application to warrant such postponement. It is not an issue which should be dealt with by the Full Court.

2. Counsel for the husband indicated that an order on an indemnity basis against the wife was not sought, but should the application fail an order for costs against the wife’s solicitors would be the subject of an application.

3. Should either of the parties seek costs, it is appropriate for them to file submissions. I will order that the husband file and serve an application seeking costs against the wife’s (and her solicitors should an application be filed against them personally), together with written submissions, on or before 4.00pm on 10 March 2017.

4. The wife’s (and her solicitors should an application be filed seeking costs against them) should then file and serve written submissions in relation to costs on or before 4.00pm 31 March 2017.

I certify that the preceding thirty-eight (38) paragraphs are a true copy of the reasons for judgment of the Honourable Justice May delivered on 16 February 2017.

Associate: 

Date:  16 February 2017