Kitson and Michael
[2016] FCCA 3308
•21 December 2016
FEDERAL CIRCUIT COURT OF AUSTRALIA
| KITSON & MICHAEL | [2016] FCCA 3308 |
| Catchwords: FAMILY LAW – Property proceedings – application to restrain solicitor from acting for one party – parties jointly consulted former solicitor of firm seeking advice about preparation of consent order to finalise property proceedings – subsequently another member of the same firm instituted property proceeding on behalf of the husband – wife seeks to restrain firm from acting – did wife provide information in confidence to first solicitor – inherent jurisdiction of the court to manage its processes – interests of the administration of justice – matters to be considered – costs. |
| Legislation: Family Law Act 1975, s.114(1) Federal Circuit Court Rules 2001, rr.1.05(2); 21.02; 24.03 |
| Cases cited: McVeigh v Linen House Pty Ltd [1999] 3 VR 394 |
| Applicant: | MS KITSON |
| Respondent: | MR MICHAEL |
| File Number: | PAC 1337 of 2015 |
| Judgment of: | Judge Brown |
| Hearing date: | 23 September 2016 |
| Date of Last Submission: | 23 September 2016 |
| Delivered at: | Adelaide |
| Delivered on: | 21 December 2016 |
REPRESENTATION
| Counsel for the Applicant: | Mr Livingstone |
| Solicitors for the Applicant: | Eaves Legal |
| Counsel for the Respondent: | Ms Mahony |
| Solicitors for the Respondent: | Napier Keen |
ORDERS
That Wayne Gregory Keen solicitor of Keen Lawyers and any other member of that firm be restrained from acting on behalf of the husband in these proceedings and an injunction issue to this effect.
The husband pay the wife’s costs fixed in the sum of $2,000.00.
The parties are to attend a Conciliation Conference with a Registrar of this Court at 2:15pm on 17 March 2017 in Parramatta.
Unless otherwise exempted from payment the Applicant must pay the Conciliation Conference fee in accordance with the Family Law (Fees) Regulation 2012 prior to the Conciliation Conference.
No later than 17 February 2017 the parties exchange informal discovery of all relevant documents as specified in Order 24 Rule 4 of the Federal Circuit Court Rules 2001.
Further consideration of the matter is adjourned to 20 April 2017 at 11:30am before Judge Dunkley.
The interim proceedings be otherwise dismissed.
IT IS NOTED that publication of this judgment under the pseudonym Kitson & Michael is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT PARRAMATTA |
PAC 1337 of 2015
| MS KITSON |
Applicant
And
| MR MICHAEL |
Respondent
REASONS FOR JUDGMENT
Introduction
The parties to these proceedings are Ms Kitson “the wife” and Mr Michael “the husband”. The parties married, in (omitted), New South Wales, on (omitted) 2011. They had earlier shared accommodation and lived as a couple since 2004/2005.
The parties finally separated on 20 January 2014 and were divorced on 16 July 2015. The marriage produced no children, although each party has children from earlier relationships. Significant issues arise between them regarding their respective levels of contribution, both in a direct financial sense and in other ways, during the course of their relationship and subsequent marriage.
On 2 September 2015, the husband commenced proceedings in this court at its Parramatta Registry seeking orders for settlement of matrimonial property, specifically that two real properties located at Property H and Property P respectively be sold and the net proceeds divided equally between the parties.
The application in question indicated that it was prepared by Wayne Greg Keen of the law firm Napier Keen. The salient issue to which these reasons for judgment are directed concerns the involvement of Napier Keen (now known as Keen Lawyers), particularly one of its previous solicitors, Mr Charles Barton, in the affairs of each of the parties prior to the commencement of the proceedings.
In her amended response filed on 25 November 2015, the wife seeks the dismissal of the husband’s application. Significantly, in the context of these reasons for judgment she seeks the following procedural orders:
·Mr Keen be restrained from taking any further part in these proceedings;
·Any solicitor, including but not limited to Mr Keen, employed by or acting as agents for Napier Keen Lawyers be restrained from further participation in these proceedings;
·Costs.
Mr Michael opposes this application. It is his position that he is entitled to be represented by the solicitor of his choice and that solicitor is Mr Keen. As such, he asserts that Ms Kitson’s application has no merit and she should pay his costs of the proceedings.
Statutory regime applicable
The practice and procedure of this court are principally governed by the Federal Circuit Court Rules 2001. Pursuant to Rule 1.05(2), if those rules are insufficient the court is authorised to apply the Family Law Rules2004, as necessary in any matter coming before it.
In the context of these proceedings, it is appropriate that this court apply rule 8.03 of the Family Law Rules 2004, which reads as follows:
“A lawyer acting for a party in a case must not act in the case for any other party who has a conflicting interest.”
Pursuant to section 114(1) of the Family Law Act 1975, the court is authorised to make any injunction which it considers proper in respect of proceedings before it which relate to a matrimonial cause. An application for matrimonial property settlement falls within the rubric of matrimonial cause.
Accordingly, it is clear that the court has jurisdiction to grant an injunction of the kind sought by Ms Kitson. In general terms, the authority to make such an injunction arises in any one of the following situations:
·a solicitor acting for one party holds confidential information, relating to the other party, creating competing fiduciary obligations in the solicitor which are irreconcilable;
·the court has jurisdiction to protect the confidences of a former client of a solicitor provided prior to the termination of the solicitor’s retainer in circumstances where the solicitor concerned has been retained, by another person for subsequent litigation involving the former client;
·the court has authority to restrain a solicitor from acting in a particular case as an incident of its inherent jurisdiction to control its processes and provide oversight of its officers in aid of the administration of justice.[1]
[1] See Kalinicos v Hunt (2005) 64 NSWLR 561 at 582 [76] per Brereton J
At relevant times Mr Barton was an employed solicitor of Napier Keen. On 5 May 2014, following discussions between them regarding a possible settlement of matrimonial property issues, the husband and wife attended jointly upon Mr Barton with a view to having him draft a consent order to formalise a mooted agreement between them.
No such consent order was ever drafted. It is Ms Kitson’s position that she provided confidential information to Mr Barton during a conference at the premises of Napier Keen in (omitted), a suburb of Sydney which was attended by her, Mr Michael and Mr Barton in the context of Mr Barton preparing a consent property order. It is on this basis that Ms Kitson seeks the injunction to restrain Mr Keen from acting for Mr Michael.
It is Mr Keen’s evidence that Mr Barton left the employ of Napier Keen in late 2014 and the two did not discuss the conference which occurred between Mr Barton and the parties in May of 2014 and, as a consequence, he (Mr Keen) has no knowledge of what was discussed and accordingly he is not privy to any confidences pertaining to Ms Kitson. Mr Keen is currently the principal of Keen Lawyers, formerly known as Napier Keen. He was Mr Barton’s employer in May of 2014.
It is further Mr Keen’s evidence that Mr Michael consulted him on 25 February 2015 and thereafter Mr Michael instructed him to commence these proceedings which he did on 2 September 2015. As such, Mr Keen refutes any suggestion that he is the recipient of any confidential information concerning Ms Kitson which she conveyed to Mr Barton in the course of the conference of 5 May 2014. It is further his position that he has never acted for Ms Kitson.
Mr Keen denies that he discussed the matter involving both Mr Michael and Ms Kitson with Mr Barton, in any way whatsoever prior to Mr Barton’s retirement from the firm. Mr Keen does however concede that he took over all of Mr Barton’s existing matters at the firm including taking effective possession of a hand-written note compiled by Mr Barton during his conference with the parties on 5 May 2014.[2]
[2] See exhibit A
In the event that the court finds that Ms Kitson did not provide any confidential material to Mr Barton which Mr Keen could potentially access, causing him to breach his fiduciary duties owed to her, it is the wife’s alternative position that it is not in the interests of the administration of justice for Mr Keen to continue to act for Mr Michael.
In these circumstances, she invokes the inherent jurisdiction of the court to control the overall integrity of all proceedings coming before it. Essentially, it is her position that it is not in the interests of justice that any perception should arrive that a solicitor has previously acted for one party but is now acting for another party against a former client.
The authorities indicate that this inherent jurisdiction is to be regarded as exceptional and [as such is] to be exercised with caution. In particular, the court should not overlook the public interest arising from litigants being able to choose the lawyer of their choice without influence from external factors.[3] The freedom to select a lawyer without fear of favour being inherent in the principle of justice being not only done but be seen to be done.
[3] See Kalinicos v Hunt (supra)
The test to be applied in the application of the inherent jurisdiction concerned is whether a fair-minded, reasonably informed member of the public would conclude that the proper administration of justice would require 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.
The evidence
The wife is the applicant in the proceedings to restrain Mr Keen from acting. She relies on the following documents:
i)The affidavit of the wife filed on 25 November 2015;
ii)Affidavit of the wife filed on 9 March 2016; and
iii)Further affidavit of the wife filed on 17 August 2016;
The husband relies on the following documents:
i)Affidavit of the husband filed 5 April 2016; and
ii)Affidavit of Wayne Gregory Keen filed 9 March 2016.
Each party was represented by well prepared and competent counsel at the hearing. Counsel for the husband, Ms Mahony elected not to cross-examine the wife. Mr Livingstone, counsel for the wife elected to cross-examine both the husband and Mr Keen.
Mr Barton the solicitor who held the relevant conference has been described by Mr Keen as being elderly. Mr Keen also indicated that his health had been compromised of late leading to his retirement from the firm. Mr Barton did not provide an affidavit in the proceedings and was not made available for cross examination.
The wife’s evidence
The wife is employed as the (occupation omitted) of her brother’s (business omitted). She acknowledges that in February 2009, her brother transferred the (business omitted) to her and her daughter, Ms N. The wife estimates the value of this (business omitted) at the time as being $375,000.00.
It is the wife’s evidence that she purchased Property H in August 2009, for $350,000.00. The sum was advanced by the (omitted) Bank, by way of a mortgage secured against the (business omitted). It is her case that Mr Michael made no contributions whatsoever towards the acquisition of this property. It is also her case that Mr Michael made limited home-making contributions both before and after the parties moved into the Property H property.
It is Ms Kitson’s evidence that the parties met in 2004, when Mr Michael came to her rented premises to do maintenance work. Thereafter, prior to the purchase of the Property H property, the parties lived in various rented premises between 2005 and August 2009. She asserts that in 2005, Mr Michael had few assets apart from a motor vehicle.
It is common ground between the parties that the husband had employment as a (occupation omitted) as well as a period of self-employment in a (employer omitted) until June 2010, when he suffered a brain aneurysm. He was unable to work for approximately eighteen months.
Ms Kitson deposes that in May of 2013, she and the husband purchased a vacant piece of land in Property P, intending to build a family home on it. The purchase price was $290,000.00. It is the wife’s case that she paid a deposit of $24,000.00, with the remainder being borrowed by way of mortgage secured against the land.
The parties separated in January 2014. Thereafter, Mr Michael transferred his interest in the Property P property to Ms Kitson in exchange for $5,000.00. It is Ms Kitson’s evidence that she has subsequently sold this property to her daughter, Ms N. She retains the Property H property.
Overall, it is the wife’s case that she paid the vast majority of expenses for the parties’ household during their relationship. In addition, it is her position that she performed the vast majority of the necessary household duties. It is clear from the husband’s affidavit evidence that he does not accept that this was the case.
In early 2014, Ms Kitson deposes that she and Mr Michael engaged in discussions with one another to see if they could resolve the property issues between them. It is her case that she and Mr Michael agreed that she would pay him the sum of $50,000.00 in full and final settlement of all property matters between the two. This would include her retaining ownership of the Property H property.
It was with a view to formalising this agreement that she and Mr Michael attended upon Mr Barton on 5 May 2014. The parties mutual intention being that some form of consent order which could be filed with the court would be prepared by an appropriately qualified professional person. Mr Michael made the necessary appointment. He was familiar with the firm of Napier Keen as this firm had earlier prepared a will on his behalf.
The parties drove together to the office premises of Napier Keen, which were located up-stairs at a shopping centre in (omitted). Mr Barton greeted the parties and ushered them into an office together which contained a desk. He sat on one side of the desk, Ms Kitson and Mr Michael sat on the other side.
Mr Barton had on the desk before him an A4 writing pad and a pen. He asked of the parties jointly words to the effect of “what can I do for you?” It is Ms Kitson’s evidence that Mr Michael answered in words to the effect of: “we’re going through a divorce and have come to a mutual agreement about settlement and want something in writing to make it legally binding.”
Thereafter, Ms Kitson asserts that Mr Barton began asking her and Mr Michael “a lot of questions” particularly about whether she and Mr Michael were separated and for how long. Ms Kitson said she asked Mr Barton in words which had the effect of “why do you need to know that. We have come to have our agreement formalised not anything else. We are both happy with what we have agreed.”
In this context, Ms Kitson deposes as follows:
“To my surprise and annoyance the solicitor ignored my inquiry and continued asking questions about such issues as the length of our marriage, whether there were any children, what contributions to the marriage we had each made, what property we owned and the equity held in the property, what credit cards we held, whether we had any loans or other debts and what assets we owned.
During this time I felt constrained to provide what answers I could as, despite my suspicions about the behaviour of the solicitor and his questions, I believed that these issues might be required for him to prepare the application for consent orders.”[4]
[4] See wife’s affidavit filed 9 March 2016 at paragraphs 15 - 16
It is in this context that the wife asserts that she provided confidential information to Mr Barton. It is her case that Mr Barton recorded some of this information in his handwriting on the A4 pad. Ms Kitson deposes that she tried not to answer the questions put to her as she had come to the view that the meeting was not proceeding as she had anticipated.
It is Ms Kitson’s evidence that Mr Michael urged her to answer Mr Barton’s questions which included questions directed towards the value of her interest in the (business omitted). During the conference, Ms Kitson deposes that Mr Barton took out a calculator and thereafter directed a statement to the following effect to Mr Michael:
“You are settling far [sic] much less than you are entitled to. $50,000 in not even ten percent. You can get much, much more than that. This proposal is not a fair settlement.”[5]
[5] Ibid at paragraph 20
Ms Kitson indicates that she disputed this assertion and indicated to Mr Barton her view that she and Mr Michael had come to see him to have their agreement formalised. However, it is her evidence that she was ignored which caused her to speak to Mr Michael in (language omitted) words to the effect that she was concerned Mr Barton was attempting to sow seeds of discord between them.
Towards the end of the meeting which she estimates took about an hour, Ms Kitson deposes that Mr Barton said words to the effect of:
“I should not be talking to both of you.”
Thereafter, he spoke to Mr Michael words to the effect of:
I can take your case and get you much more as a settlement from the court. The costs would be $40,000 to $50,000. Contact me if you wish to proceed.”[6]
[6] Ibid at paragraph 23
At this stage, it is Ms Kitson’s evidence that she felt compelled to end the meeting. She describes her response to the meeting in the following terms:
“At this point I became even more concerned as I had attended the conference on the belief that the solicitor was acting for both of us and only imparted confidential information on that basis. Information included the discussions concerning the contributions made by each of us, the sum for which I was prepared to settle the case, my assets, income and my personal financial circumstances.”[7]
[7] Ibid at paragraph 24
At the end of the meeting in the reception area outside the office, Ms Kitson asked how she should pay Mr Barton’s his fee. To which he replied to the effect that there was no need to pay. On the drive away, she indicated to Mr Michael her view that it was inappropriate for Mr Barton to take one party’s side when she and Mr Michael had gone to see him because they had wanted to settle.
It is Ms Kitson’s evidence that she would not have attended the conference with Mr Michael if she had known that the firm associated with Mr Barton would later act on behalf of her former husband. In particular, she asserts that she would not have provided Mr Barton with “private and confidential matters… in respect of [her] assets, and liabilities and other financial and business information.”
The husband’s evidence
It is Mr Michael’s evidence that he and Ms Kitson went to see Mr Barton together “for an opinion’ following Ms Kitson “putting a figure to him.” In this context, he asserts that it was his understanding of the rationale of the meeting that Mr Barton was to provide “advice to both of us.”
Mr Michael agrees that the three sat together in Mr Barton’s office with the door open and Mr Barton asked questions noting the answers down on a pad. Mr Michael asserts that the consultation in question lasted about twenty minutes and was free of charge.
During the meeting, Mr Michael asserts that Ms Kitson largely sat silently observing the proceedings. He does concede that she was asked questions by Mr Barton which required a “yes or no” answer. Mr Michael denies that Mr Barton said words to the effect of “I should not be talking to both of you.” He agrees that the parties left together and did have some conversation in (language omitted) regarding the meeting being a waste of their time.
It is the tenor of Mr Michael’s evidence that he regarded the meeting with Mr Barton to constitute a preliminary discussion regarding what he should do vis-à-vis his matrimonial affairs with Ms Kitson. At this stage, he was averse to incurring significant legal fees if it could be avoided. Following the meeting, it is his position that further discussions eventuated between him and Ms Kitson which failed to result in a concluded agreement.
Thereafter Mr Michael chose to consult solicitors other than Napier Keen in respect of his matrimonial affairs but was dissatisfied with their services therefore he elected to return to see Mr Barton in mid-2014. He saw Mr Barton alone on another occasion in the second half of 2014. It is his position that it was only at this stage that he provided Mr Barton with detailed instructions regarding his financial circumstances which led Mr Barton to write to Ms Kitson.
In December of 2014, Mr Michael deposes that he was advised by Mr Barton that he would shortly be retiring from Napier Keen. At this stage, Mr Michael had moved to live in (country omitted). It is his evidence that Mr Barton suggested that he should consult Mr Keen about his matter.
As a consequence of this advice, Mr Michael arranged to come to Sydney and met with Mr Keen, for the first time on 25 February 2015, at which stage it is Mr Michael’s evidence that he provided Mr Keen with a comprehensive financial history of his relationship with Ms Kitson over a meeting which occupied one hour and fifteen minutes. Since this meeting, Mr Michael has continued to engage Mr Keen, whom he instructed to correspond with Ms Kitson and later to institute proceedings in court.
In his affidavit, Mr Michael deposes as follows in respect of the meeting attended by him and Ms Kitson, with Mr Barton:
“During the course of the appointment Mr Barton discussed with me the Court processes and legal costs associated with Court proceedings. I was with my wife at that stage who was present at the interview. Mr Barton asked some preliminary questions of me such as what assets or business were currently owned by wide (sic) and I and whether we had any children together. There was very limited discussion as to the history of our marriage or the value of assets. I explained to Mr Barton that my wife had made an offer of settlement and Mr Barton gave me advice as to whether that was an offer that was in my interests. He did not give my wife advice on whether it was in her interest.”[8]
[8] See husband’s affidavit filed 5 April 2015 at paragraph 6
On this basis, Mr Michael refutes any suggestion that Ms Kitson revealed any confidential information to Mr Barton. As such, it is his position that he should not be compelled to terminate the services of Mr Keen as his solicitor given that he is happy with Mr Keen.
Mr Keen’s evidence
Mr Keen is an experienced legal practitioner who has been in practice for over thirty years and the principal of his firm for over twenty. He regarded Mr Barton as a “very experience and competent practitioner, who was getting to the end of his working life.” He had been with Mr Keen’s firm for many years. If Mr Keen had any criticisms of him it was that his record keeping was at time “inadequate”. Mr Barton retired from the firm due to ill health following Mr Keen’s request that he do so.
Mr Barton was retained to handle a case load of family law and criminal matters. He worked on a part-time basis. Mr Barton’s own area of expertise does not generally extend to family law and overall his firm does not practice a great deal in the area.
Mr Keen deposed that he never went out to lunch with Mr Barton and the two did not socialise together. As such, the two had cursory conversations together, if any, whilst they were occupying the same office premises and, as such, did not routinely discuss clients or the daily incidents of their work life or legal practice together. The picture of everyday life at the firm painted by Mr Keen was one in which he and Mr Barton were largely cocooned from one another in their respective offices, not even stopping for a shared cup of tea.
Mr Keen’s evidence in this regard is perhaps open to some question given that his description of office life at Napier Keen appears to be somewhat hyperbolically austere, with minimal interaction between colleagues who had known each other for many years.
However, on balance, it does not seem to me to be improbable that Mr Barton would not have discussed meeting Mr Michael and Ms Kitson together with Mr Keen even if it was generally unusual for a solicitor to see both the husband and wife in the context of matrimonial issues.
Mr Keen confirmed that Mr Barton had a practice of waiving his fee at a first consultation particularly if the conference concerned resulted in the provision of general or non-specific legal advice. Mr Keen accepted that he was legally responsible for the oversight of Mr Barton’s work. However, it was his evidence that he was not aware of the content of Mr Barton’s case work and did not routinely view his files or correspondence. In a formal sense the firm did not have procedures to screen clients for potential areas of conflict.
Mr Barton did open some form of file in respect of his attendance on Mr Michael and Ms Kitson on 5 May 2014. Mr Keen confirms that he had access to Mr Barton’s notes of this meeting. He deposes as follows:
“The first record of Mr Michael attending our offices is recorded on a hand written file note of Mr Barton dated 5 May 2014. A further consultation appears to have occurred on 25 June 2014 with further hand written notes. On 25 June 2014 correspondence was forwarded to Ms Kitson which set out that we acted for Mr Michael.”[9]
[9] See Mr Keen’s affidavit filed 9 March 2015 at paragraph 7
Mr Barton did not provide an affidavit in these proceedings and did not attend at court for oral examination. There is no controversy that he did compile a file note of his engagement with Mr Michael and Ms Kitson on 5 May 2014. The note in question is not extensive in nature. It does not directly record who was present at the meeting and when it began and concluded. It refers to the parties by their given names.
The note makes reference to the wife as being the (occupation omitted) but not a (occupation omitted) of (business omitted) which is owned by Ms Kitson & her daughter. The notes record the wife’s telephone number. Under the heading Mr Michael – the husband’s given name – is recorded (business omitted) chair costs $100k installed old chair $50k Guess $200k. The only person who is likely to be able to accurately interpret this note or to use it to prompt memory is Mr Barton.
In these circumstances, it is Mr Keen’s evidence that he has no knowledge of or access to confidential information pertaining to Ms Kitson as a consequence of her attendance upon Mr Barton in May of 2014. It is his evidence, which does not seem improbable that he has never formally met Ms Kitson and the only knowledge of her financial affairs was that conveyed to him by Mr Michael when he first met him in February of 2015.
In this context, Mr Keen deposes as follows:
“I first met with Mr Michael on 25 February when he attended my (omitted) office. I had looked at the file previously, but there was very limited information in the file. The information in the file gave me no clear understanding of the history of the marriage from a financial or property point of view. When I first saw Mr Michael I basically had to start from the beginning to obtain the full history. Our initial conference took 1 hour and 15 minutes. During that conference I elicited information from Mr Michael dealing with the history of the marriage, the acquisition of assets, the involvement of the parties in terms of employment, medical conditions and so on and a lot of the general information one would need to consider in a property matter.”[10]
[10] Ibid at paragraph 6
I have no reason to disbelieve this evidence. I accept that Mr Keen did not derive any knowledge of the personal financial circumstances of Ms Kitson, either from the file note compiled by Mr Barton or from information conveyed to him by Mr Barton. I also accept that he was unaware that Mr Michael and Ms Kitson had attended at his offices together for the purpose of consulting Mr Barton.
Resolution
The court must consider two discrete but inter-related issues in resolving the parties’ competing applications. Firstly, did Ms Kitson release confidential information to Mr Barton which was available to Mr Keen and which may in turn lead to the firm of Napier Keen to possibly breaching its fiduciary duty to Ms Kitson, who is a former client of the firm.
Secondly, does the previous involvement of Napier Keen with both the applicant and respondent in the current proceedings before the court, invoke the application of the court’s inherent supervisory jurisdiction over its officers and require the restraint of Mr Keen from acting in the overall interests of justice.
These considerations are discrete and I will approach them as such. However, depending on the circumstances of the case concerned, they have the potential to become interconnected. The first ground has been characterised as being narrow or technical in nature, depending upon the aggrieved person establishing actual prejudice being accorded to him or her, in any subsequent litigation ensuing, involving the legal practitioner sought to be removed.
As such, it is likely to be more amenable to circumstances involving large corporations which have the potential to be involved in commercially based litigation with a broad range of opponents on perhaps a constant basis. Such entities are therefore likely to access a broad range of legal services as will the entities opposed to them.
Necessarily, this has the potential to lead to solicitors and barristers acting for or against entities with which they have previously been involved in earlier litigation. In these circumstances, it has been held that it is necessary to establish a risk of real mischief or prejudice to justify the court’s intervention before a legal practitioner is restrained.[11]
[11] See Mintel International v Mintel (Aust) (2000) 181 ALR 78 at 88 per Heerey J at [44]
The second ground is broader in nature and is likely to be more amenable to family law proceedings which are extremely sensitive in nature and, as a consequence, have the potential to elicit powerful emotional responses from those involved in them. In addition, family law is an area, which invariably involves individuals, who have no or little personal experience of litigation.
In these circumstances, matters of public perception are likely to be more significant in the exercise of a discretionary remedy. As such considerations relating to the appearance of how justice is seen to be done are likely to be germane are relevant to the exercise of the discretion.
a)Confidential Information
The relationship between client and solicitor is “one of the most important fiduciary relationships known to the law.”[12] Disclosures made to solicitors, by their clients, are subject to legal professional privilege. It is in the public interest that communications between clients and their solicitor be kept secret, as this encourages clients to “make a full and frank disclosure of the relevant circumstances to the solicitor and, in turn, this has the consequence of “assisting and enhancing the administration of justice”.[13]
[12] See Mallesons Stephen Jacques v KPMG Peat Marwick (1990) 4 WAR 357 at 361
[13] See Grant v Downs (1976) 135 CLR 674 at 685
Deane J in Baker v Campbell[14] identified the principle underlying legal professional privilege as being “that a person should be entitled to seek legal advice without the apprehension of being prejudiced by subsequent disclosures of confidential communications”.
[14] Baker v Campbell (1983) 153 CLR 52 at 115 -116
In Carindale Country Club Estate v Astill[15] Drummond J, in summarising these authorities, said as follows:
“It would be inconsistent for the law to encourage a client to repose confidential information in a solicitor by making those confidences privileged from disclosure without the client’s consent, if the law, on the other hand, were to readily allow the solicitor to act for a new client in a matter adverse to the interests of the old client…”
[15] Carindale Country Club Estate v Astill (1993) 42 FCR 307 at 312
However, there is no general principle that a solicitor is to be forever restrained from acting against a former client, notwithstanding the understandable criticism of lawyers who “change sides”.[16] It is also in the public interest that individuals should be free to retain the solicitor of their preference.
[16] See Mintel International v Mintel (Aust) (2000) 181 ALR 78 at 88 per Heerey J [43]
The issue in this case therefore turns on whether Ms Kitson provided confidential information to Mr Barton and, if so, what will be the consequences of that disclosure particularly in the context of actual prejudice being accorded to her.
In this context, Ms Mahony, counsel for Mr Michael submits firstly that there is no evidence to establish that Ms Kitson, who bears the onus was in any event, a client of Napier Keen and, secondly, she has not established that she disclosed any such confidential information to Mr Barton which has subsequently become available to Mr Keen.
Although Ms Kitson did not pay Mr Barton any fee and he chose not to render a bill to her, Ms Kitson’s attendance at Mr Barton’s office was for a professional purpose relating to the end of her marriage to Mr Michael. In these circumstances, it seems to me that she must be regarded as a client of Mr Barton.
In Carindale Country Club Drummond J expressed the test to be applied as to whether a solicitor should be restrained from acting against a former client as a consequence of the possible disclosure of information given in confidence in the following terms:
“… the cases all indicate that before a solicitor will be restrained from acting for a new client at the behest of an old client, not only must there be a threat of disclosure of evidence given in confidence, but there must be evidence that such disclosure will be to the former client’s disadvantage.”[17]
[17] See Carindale Country Club Estate v Astill (supra) at 312 - 313
As such, there must be proof of detriment to the initial client concerned before the solicitor in question is restrained from acting. In Carindale Country Club it was determined that no such restraint would be applied if the confidential information was remote from the fresh retainer for the new client concerned.
In Mintel Heerey J accepted that it was necessary for an applicant seeking to restrain a former solicitor from acting to identify and establish the nature of the confidential information provided. He also accepted that this issue was likely to turn upon the circumstances prevailing which could include the following:
·the information could not be specified because that of itself would represent a detrimental disclosure;
·the solicitor concerned may have made notes and observations which the client concerned had subsequently forgotten;
·during the course of the retainer, the solicitor concerned may have either directly or even subconsciously, learnt a great deal about the client concerned particularly in terms of tactics, overall veracity and other potential strengths and weaknesses of his/her character, which may be useful or open to exploitation in subsequent litigation;
·These factors were summarised under the rubric of “getting to know you factors”.
In this context, Ms Mahony contends that Ms Kitson has not established that she disclosed confidential information to Mr Barton which is available now to Mr Keen to be utilised to her detriment in the subsequent litigation. Ms Mahony submits that, at best, Ms Kitson disclosed the existence of items of property and their value to Mr Barton which she is in any event obliged to disclose in matrimonial property proceedings. [18]
[18] See Federal Circuit Court Rules 2001 at Rule 24.03 and Briese & Briese (1986) FLC 91-713
It is common ground between the parties that the conference with Mr Barton was not a long one. As such, it cannot be said that Mr Barton is likely to have been able to derive any salient getting to know you factors in respect of Ms Kitson which he firstly communicated to Mr Keen and which are therefore, secondly, available to Mr Keen.
In Magro & Magro, Rourke J was prepared to restrain a firm of solicitor from acting against a former client because there had previously been a lengthy retainer and therefore it was reasonable to infer that the solicitor in question would be:
“…in possession of some privileged material belonging to the wife which could be put to good use by the husband. This might only consist of impressions of the wife’s personality gained after many hours of confidence, which could be exploited by a skilful advocate presented with those impressions.” [19]
[19] See Magro & Magro (1989) FLC 92-005 at 77,191
There is no such lengthy retainer in the current matter. In addition, I accept Mr Keen’s evidence that he had not previously discussed the matter in question with Mr Barton who has since left his employ. The file note compiled by Mr Barton is brief with only cursory references to Ms Kitson. As such, Mr Keen does not have available to him any unfairly obtained insights into Ms Kitson’s personality or of the tactic which she is likely to adopt in subsequent litigation.
As such, I do not consider that there is any reasonable risk that an advocate, no matter how skilful, would have information available to him or her as a consequence of any confidence existing between Ms Kitson and Mr Barton arising from the meeting of 5 May 2014. In these circumstances, I do not accept that Ms Kitson has established any breach of the first limb relating to confidential information or the breach of any fiduciary duty residing in Mr Keen to her.
b)Inherent Jurisdiction of the Court
There is no dispute between the parties that the court has an inherent jurisdiction to restrain Mr Keen from acting if it considers that it is appropriate to do so in the interests of justice. The jurisdiction is discretionary in nature. The discretion arises as an incident of the court’s inherent jurisdiction to restrain solicitors from acting in a particular case as a consequence of its inherent jurisdiction over its officers and to control its process in aid of the administration of justice.
In Naczek & Dowler the Full Court of the Family Court described the basis of the duty of legal practitioners to the court which founds the discretion in the following terms:
“The duty to the court arises from the court’s concern that it should have the assistance of independent legal representation for the litigating parties. Preserving the integrity of the administration of justice, and in the appearance as well as the reality of independence, the duty underpins the court’s practical approach to its supervisory discretion.”[20]
[20] Naczek & Dowler [2011] FamCA 179 at [61]
In Naczek 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.”[21]
[21] Ibid at [62]
As previously indicated, the jurisdiction is to be regarded as exceptional and, as such, to be exercised with due caution. This is because there is also a significant public interest in litigants being able to have the lawyer of their choice and it has the potential to lead to the perception of unfairness if this choice is abrogated.[22]
[22] Ibid at [63] – [64]
In Thevenaz & Thevenaz, Frederico J restrained a solicitor from acting for a party concerned in family law proceedings where the solicitor’s firm had acted for both parties in several conveyancing transactions, including the purchase of the former matrimonial home, although the solicitor in question had not actually handled the transactions in question. His Honour said as follows:
“It is of the upmost importance that justice should not only be done but be seen to be done. In the circumstances of the present case, there is a risk which may well be theoretical but still exists, that justice might not appear to be done.”[23]
[23] Thevenaz & Thevenaz (1986) FLC 91-749 at 75,447
This is the nub of the submissions of Mr Livingstone, counsel for the wife. He contends as follows:
“In matrimonial litigation as opposed to commercial or other matters the need to impart highly sensitive personal information as well as the nature of the subject matter results in ‘the bar being set high’ or to put it another way, for practitioners to be closely scrutinised in cases such as the present when they confer with both parties.”[24]
[24] Husband’s written submissions at pages 5 - 6
In this context, Mr Livingstone places particular weight on what was said by Bryson J in D & J Constructions Pty Ltd v Head & Ors trading as Clayton Utz.[25]In the case reference was made to Thevenaz following which His Honour said as follows:
“That Court took the view that restraint was justified if there is a risk that confidential communications on relevant matters have been made by the party for whom the solicitor has ceased to act, even if the risk is more theoretical than practical. It seems natural that a particularly careful view would be taken in family law business, as such litigation tends to be about highly confidential facts and a very wide range and circumstances can conceivably be relevant; the sensitivity which even the most reasonable of people feel about such litigation when they are engaged in it calls for careful measures to secure that not only justice is done but also that it is apparent that it is done, an appearance which not survive any general impression that lawyers can readily change sides.”
[25] D & J Constructions Pty Ltd v Head & Ors trading as Clayton Utz (1987) 9 NSWLR 119 at 123
It is Ms Kitson’s evidence, which has not been directly challenged through cross examination that she believes that she provided confidential information to Mr Barton which she felt uncomfortable and annoyed about providing in the context of what she thought the conference with him was directed towards, namely the drafting of a consent minute to memorialise the sum which she proposed to pay to Mr Michael in settlement of his claim against her.
I agree that Ms Kitson’s concerns to utilise the terminology of Bryson J, can be regarded as being more theoretical than practical given that Mr Barton took only cursory notes and has subsequently left Mr Keen’s employ. In this context, the central question for the court is whether in objective terms this scenario has the potential to leads to a concern that justice may not be transparently conducted in the case, if Mr Keen continues to act.
This concern can only arise if Ms Kitson’s perception that it would be unfair to allow a firm to continue to act against her after she purportedly gave one of its former members confidential information about her at an earlier stage would offend the sensibilities of a reasonable and fully informed member of the public.
In Kossatz & Kossatz[26] Mullane J referred to an English authority of the Court of Appeal In re A firm of Solicitors in which the relevant test was expressed as follows:
“… where a reasonable man with knowledge of all the facts would say ‘If I were in the positon of the objector I would be concerned that, however unwittingly of innocently, information gained whilst the solicitor was acting for me, might be used against me’, the court should intervene.”[27]
[26] Kossatz & Kossatz (1993) FLC 92,386 at 79,988
[27] In re A firm of Solicitors [1991] 1 QB 959
This is a broad test which Mr Livingstone submits is likely to be particularly amenable to family law proceedings. Ms Kitson has not delineated with any specific detail the information which she fears Mr Keen may either unwittingly or innocently access for use against her as a consequence of his employment relationship with Mr Barton.
Rather she makes a broad assertion that she did provide information of a confidential nature to Mr Barton and, given the sensitivity of the proceedings in question – matrimonial property proceedings – it is likely to offend an objective perception of legal proprieties that his firm should now act against her.
In this case, it is the submission of Ms Mahony that Ms Kitson has not demonstrated that the fact of Mr Keen continuing to act in the matter will cause her any real mischief or real prejudice, given the limited nature of her interaction with Mr Barton and when considered at its absolute highest, the possibility of Mr Keen having access to information imparted to his firm, in confidence by Ms Kitson via Mr Barton can only be regarded as extremely remote.
As a consequence of this, Ms Mahony contends that no fair-minded and reasonably informed member of the public could possibly conclude otherwise and therefore there is no warrant for the restraint of Mr Keen from acting, particularly given the equal importance of her client being accorded the right to have his first choice of lawyer.
In Magro Rourke J approved D & J Constructions in making reference to the peculiar quality of family law litigation. In the case, which I would regard as having a significantly different factual matrix to the current matter, Rourke J was concerned with bitterly contested property proceedings. The proceedings before me have the potential to be extremely hard fought but at present that potential remains nascent.
The applicant wife, in Magro, had conferred with the solicitor sought to be restrained in considerable depth, in other contexts, prior to the property proceedings in question being instituted. That solicitor was, at relevant times, in the employ of the solicitors retained by the husband in the current proceedings but was not directly acting for the husband. In her oral evidence to the court, which was characterised as being emotional in nature, the wife had said of this solicitor “he knows my whole life and my past history.”
The injunction sought was granted. Rourke J said as follows:
“…it is the appearance of justice being done which is the determinant, and not the probability. If this be the correct principle the injunctive relief sought in the present proceedings is prima facie irresistible.”[28]
[28] Magro & Magro (supra) at 77,188
The authorities of Thevenaz, D & J Constructions and Magro, as well as several others, were considered and approved by the Full Court in McMillan & McMillan.[29] In the case, the Full Court dismissed an appeal from the wife, against a decision resulting in her solicitor being restrained from acting on her behalf because an unqualified law clerk, who had previously worked for the husband’s solicitor, had moved to work for her firm of solicitors.
[29] McMillan & McMillan (2000) FLC 93,048 at 87,736 [64]
The Full Court said as follows:
“…when regard is had to that authority concerning the confidential position of a solicitor’s clerk, and to principles relevant to restraint of solicitors acting against former clients in the family law area, to the particular sensitivities in that area of the law (as recognised by Bryson J. in D & J Constructions and by Rourke J. in Magro), and to the need to maintain public confidence in the legal system, we have little hesitation in concluding that it was open to Wilczek J. to restrain the wife’s solicitors from acting in the matter on the basis of their employment of Mr Pitts.”
It is Mr Livingstone’s submission that the court should adopt a strict approach in this matter because of the sensitive nature of the family law jurisdiction and the perception likely to be held by members of the general public that solicitors, in this area of practice, should not readily change sides.
In Naczek & Dowler the Full Court considered that the timing of the application to restrain a solicitor from acting might also be relevant as to whether or not to grant such application as, if made at late stage, the cost, inconvenience or impracticality of requiring lawyers to cease to act may provide a reason for refusing to grant relief.
The proceedings in the current matter have been on foot for about a year. Ms Kitson has quickly voiced her concerns about Mr Keen’s firm continuing to act. This has occurred prior to any process of conciliation and certainly prior to the matter being listed for trial and the need for the preparation of extensive affidavits of evidence to be prepared.
In these circumstances, there does not seem to me to be any great financial prejudice which is likely to be incurred by Mr Michael if Mr Keen is restrained from acting for him. The prejudice to him is that he wishes to retain Mr Keen and has confidence in his professional abilities. In these circumstances, the court has been warned to beware of adventitious challenges to an opponent’s legal representation as a means of harassing that opponent.[30]
[30] See Holborrow v McDonald Rudder [2002] WASC 265
I do not consider that Ms Kitson has sought to restrain Mr Keen from acting for any adventitious motivation or is seeking to do so to gain a strategic advantage over Mr Michael or otherwise to harass him. Rather, I accept that she is genuinely affronted that the firm she and Mr Michael attended upon in good faith, in order to seek mutual advice, in respect of a possible settlement of matrimonial property issues, is now acting for her former husband against her.
It is not open to challenge that Ms Kitson provided at least some information in confidence to Mr Barton. I accept that, on balance that information was limited in nature and it is now only of theoretical relevance as to whether he discussed this information with Mr Keen in any professional or strategic context. In my view, the case turns on what would be the reasonable perceptions of members of the community of these various circumstances.
In my assessment, the case is an extremely finely balance one. In such cases as Thenevez, Magro and McMillan the Full Court has recognised the delicacy and care which must be taken by family law practitioners in respect of being perceived to act for one party in family law cases and then of having gone to act for the opposing side. In these cases, the Full Court has spoken of the need to maintain public confidence in the legal system.
Ms Kitson’s unchallenged subjective view of her professional relationship with Mr Barton (and necessarily the firm which he represented) was that she, in conjunction with her husband, consulted Mr Barton to ascertain whether the sum she had offered to settle her matrimonial affairs with Mr Michael could be formalised through a consent order which Mr Barton would prepare.
In this context, in response to questions posed to her, she provided financial information to Mr Barton. At the conclusion of this process, in her presence, Mr Barton indicated to Mr Michael that the offer of settlement was insufficient and that he was entitled to a greater sum. Thereupon, Mr Barton offered his service to Mr Michael exclusively and discussed the possible costs with him.
It is Ms Kitson’s personal view that this was something of an affront to her sensibilities. She had gone to consult Mr Barton for one particular purpose and after she had provided information to him regarding the apparent rationale of her offer, he had urged Mr Michael to reject it and take her to court, utilising his services.
I can understand why Ms Kitson would have such an emotional reaction to the circumstances. In her presence, after receiving information from her in the context of a consultation in which she was seeking some form of advice from Mr Barton he offered to act against her.
The central question is whether Ms Kitson’s views are likely to accord with those of an average, informed and fair minded person. In my estimation the transaction would offend the sensibilities of most reasonable individuals in the sense that what occurred did not have the appearance of being fair play or of being above board or of legal practice strictly according to Hoyle.[31]In my view, what occurred would offend those sensibilities particularly given that it arose within the sensitive context of a possible settlement of a matrimonial property matter.
[31] Edmond Hoyle (1672?-1769) British writer on games who compiled the rules of many card and indoor games.
In my view such matters of possible public perception are crucial to exercise of the jurisdiction arising in the case. In my view what was said by Batt JA in McVeigh v Linen House Pty Ltd[32] is apposite to the circumstances of the case:
“…authorities establish that a court will restrain a solicitor from acting for a litigant not only in order to prevent disclosure of confidences of a client or former client, but also to ensure that the solicitor’s duty of loyalty to the former client is respected, notwithstanding the termination of the retainer, and to uphold as a matter of public policy the special relationship of solicitor and client.”
[32] McVeigh v Linen House Pty Ltd [1999] 3 VR 394 at 398 referred to by Heerey J in Mintel International v Mintel (Aust) (supra) at 87
In my view, this is a case which attracts such matters of overall public policy regarding confidence in the administration of justice. At the end of the day, as Bryson J noted in D & J Constructions “the spectacle or appearance that a lawyer can readily change sides is very subversive of the appearance that justice is being done.”[33] For these reasons, I propose to make the injunction sought by the wife.
[33] D & J Constructions Pty Ltd v Head & Ors trading as Clayton Utz (supra) at 123
Costs
Pursuant to section 117(1) of the Family Law Act 1975, the ordinary rule in family law proceedings is that each party should bear his or her own costs. However, pursuant to section 117(2), if the court is of the opinion that there are circumstances that justify it in so doing, the court may make an order for costs as it considers just.
The power to make an order for costs arising under section 117(2), is subject to a number of considerations which are delineated in section 117(2A). They include the following:
·the financial circumstances of each of the parties concerned;
·whether any of the parties to the proceedings was in receipt of a grant of legal aid;
·the conduct of the parties to the proceedings generally and in respect of procedural matters specifically;
·whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the court;
·whether any party to the proceedings has been wholly unsuccessful in the relevant matter;
·whether an offer has made to settle the proceedings, in writing;
·any other matter the court considers relevant.
These proceedings have, from their instigation, been vigorously contested. From the perspective of both parties, they have involved matters of high principle. As such, neither has been willing to compromise or draw back. Necessarily, there are perils in pushing these types of issues to their ultimate denouement. Brinkmanship is risky.
Ms Kitson raised her concerns about Napier, Keen acting from an early stage in the proceedings and certainly prior to any process of court mandated conciliation. As such, it seems probable that the costs of determining this threshold issue have been contained as much as was possible and before the principle litigation moved into top gear. The delay in resolution of the issue of whether Mr Keen should act seems to be largely attributable to pressures arising from the court’s workload at (omitted).
It seems to me to be unlikely that the substantive matter would have been easily resolvable at the conciliation conference stage if Mr Keen had remained involved, given Mr Kitson’s undoubted and abiding suspicions of him. In this sense, it seems to me to be a good thing that the issue is now determined. The parties should now able to concentrate on seeing if their case is amenable to a consensual resolution.
I do not know a great deal about the parties’ financial circumstances, other than that neither seems to be a particularly wealthy person. Certainly, neither of the parties has indicated any item of property which can be regarded as having an extraordinary level of value. The parties are not legally aided.
The principled stance adopted by Ms Kitson has ultimately been vindicated by the court but not in any resounding way. That is not to say Mr Michael’s position can be described as being without principles. In my view the case remained a finely balanced one with competing consideration both ways, not the least of which was Mr Michael’s entitlement to instruct the lawyer of his choice. However, the fact remains that Ms Kitson has been successful. In my view, this outcome justifies a modest award of costs in her favour.
The court has a wide discretion as to the calculation of costs. Pursuant to Rule 21.02(2) of the Federal Circuit Court Rules 2001:
“In making an order for costs in a proceeding, the Court may:
a) set the amount in costs; or
b) set the method by which the costs are to be calculated; or
c) refer the costs for taxation under Part 40 of the Federal Court Rules or under Chapter 19 of the Family Law Rules; or
d) set a time for payment of costs, which maybe before the proceeding is concluded.”
I propose to allow the wife the sum of $2000.00 by way of costs.
For all these reasons, the orders of the court will be as set out at the commencement of these reasons for judgment.
I certify that the preceding one hundred and twenty nine (129) paragraphs are a true copy of the reasons for judgment of Judge Brown
Date: 21 December 2016
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