Markham and Markham

[2009] FamCA 754

FAMILY COURT OF AUSTRALIA

MARKHAM & MARKHAM & ORS [2009] FamCA 754

FAMILY LAW – CONFLICT – Application by the wife to restrain the husband’s solicitor from continuing to act for the husband in property settlement proceedings - Wife’s application is dismissed
FAMILY LAW – COSTS - Husband sought an order for costs against the wife if the wife’s application is dismissed - Costs order made

McMillan and McMillan (2000) FLC 93-048
McGillvray v Mitchell (1998) FLC 92-888
Mills v Day Dawn Block Gold Mining Co Limited: In re Marsland (1882) 1 QLJ 62

Family Law Act 1975 (Cth) ss 117(2A), (4), (5)
Family Law Rules2004

APPLICANT: Ms Markham

FIRST RESPONDENT: Mr Markham

SECOND RESPONDENT: Mr Wight

THIRD RESPONDENT: Ms Jones

FOURTH RESPONDENT: Ms Elder

FILE NUMBER: (P)NCC 2156 of 2007

DATE DELIVERED: 19 August 2009

PLACE DELIVERED: Parramatta

PLACE HEARD: Newcastle

JUDGMENT OF: The Hon. Justice Ryan

HEARING DATE: 12 August 2009

REPRESENTATION

APPLICANT: In person

COUNSEL FOR THE FIRST RESPONDENT: Ms Nash

SOLICITOR FOR THE FIRST RESPONDENT: X & Associates

SECOND RESPONDENT: In person

THIRD RESPONDENT: Hills Solicitors

FOURTH RESPONDENT: Hills Solicitors

Orders

1. That the wife’s Application in a Case filed 20 July 2009 is dismissed.

2. Within 42 days the wife shall pay the husband’s costs in the sum of $3,300.

3. In the event the wife fails to comply with Order 2, from the date of default interest on the amount outstanding calculated in accordance with the Family Law Rules 2004 shall accrue.

IT IS NOTED that publication of this judgment under the pseudonym Markham & Markham and Ors is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)

FAMILY COURT OF AUSTRALIA AT NEWCASTLE

FILE NUMBER: (P)NCC2156 OF 2007

MS MARKHAM

Applicant

And

MR MARKHAM

Respondent

And

MR WIGHT

Respondent

And

MS JONES

Respondent

And

MS ELDER

Respondent

REASONS FOR JUDGMENT

1. This is an application by Ms Markham (“the wife”) to restrain the husband’s solicitor, Ms X, from continuing to act on his behalf in property settlement proceedings. The application engages the Court’s inherent jurisdiction to supervise the conduct of practitioners appearing before it.  The three other parties, from whom the husband seeks to retrieve matrimonial assets he says the wife wrongly distributed, support the wife’s application. 

2. In order to succeed the wife need only prove “a prima facie case as to 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” to her.  McMillan and  McMillan (2000) FLC 93-048. Concerning the nature of the evidence required to engage the relief sought an applicant “need only give evidence that he or she has imparted information of a confidential nature to the practitioner in question and that there is at least a theoretical possibility that it could be used against him or her.” McMillan (supra) at par 42.  Reference to “prejudice” and the possibility information could be used against an applicant for restraint indicates that the confidential information conveyed must be potentially relevant to matters in issue in the substantive proceedings. 

3. As the authorities demonstrate an applicant is not required to disclose the confidential information conveyed as it is self evident disclosure would deprive the applicant of the privilege afforded by the legal professional/client relationship.  In my view, where the relevance of the communication is an issue, this is to be determined by reference to the surrounding circumstances, using a cautious approach and in a manner which protects the confidential communication. 

4. The applicant has never conveyed confidential communication to the husband’s solicitor.  The confidential communication about which she is concerned occurred in 1994 between her and her then counsel, Mr Hamilton.  Mr Hamilton represented the wife when another husband sought a stay of their property settlement orders pending determination of his appeal. 

5. In July 2008 the husband in these proceedings, through Ms X, sought and obtained an advice from Mr Hamilton.  It is the wife’s contention that as a consequence of the 1994 communication between her and Mr Hamilton in, she says related proceedings, she has established a nexus between Mr Hamilton and Ms X sufficient to raise at least a theoretical possibility that confidential information may be used against her by either of them.

6. Neither party was able to refer me to other cases with a similar factual matrix.  Although the facts are not identical, there is a useful analogy to those under consideration in Mills v Day Dawn Block Gold Mining Co Limited:  In re Marsland (1882) 1 QLJ 62. Essentially, the facts were that a solicitor town agent had been retained by Mr Mills. In that capacity, the solicitor was actively involved in the investigation of Mr Mills’ claim and provided an opinion on it. The solicitor joined the firm of solicitors retained by the defendant to Mr Mills’ action. Apart from Mills providing the jurisprudential foundations for the principles subsequently adopted by this Court, its significance here is, as the facts demonstrate, that an injunction may be made restraining not only the person to whom confidential information was conveyed, but also others in the same legal practice and by analogy those practitioners to whom confidential information may be theoretically conveyed, for example, by counsel previously engaged by an applicant.

Background facts

1. In July 1994 Renaud J made property settlement orders following a defended hearing in proceedings referred to as “Wight & Wight”.  The wife in these proceedings was the wife, then known as Mrs Wight, in those proceedings.  Mr Wight appealed Renaud J’s orders and applied for a stay.  For the stay application the wife retained Mr Hamilton.  During the two day period of his retainer the wife conveyed confidential information to Mr Hamilton in relation to the proceedings with her former husband and her planned acquisition of a property at B. 

2. On 17 October 1994 the wife purchased the B property.  The wife has previously given sworn affidavit evidence in these proceedings concerning its acquisition.  The wife advanced the entire purchase price from funds she received by way of property settlement from Mr Wight.  There is no issue in these proceedings concerning the means by which and facts of the wife’s acquisition of this property.  Concerning B property there is an issue concerning the extent of the contributions the husband says he made after the parties married. 

3. Some years after the wife consulted Mr Hamilton and acquired B property the wife and husband met. 

4. The husband and wife married and commenced cohabitation in October 1998.

5. The husband and wife separated on 15 November 2006.

6. On 16 March 2007 the husband instructed Ms X in relation to property settlement matters. 

7. On 10 July 2007 the husband filed a property settlement application. 

8. On 4 July 2008 Ms X delivered a brief to advise to Mr Hamilton.

9. On 7 July 2008 Ms X spoke with Mr John Hollier, the wife’s former solicitor, during which conversation she informed him she had delivered a brief to Mr Hamilton.

10. On 14 July 2008 Mr Hamilton delivered his advice to Ms X. 

11. Although there had been further communication between the lawyers during the month, the wife’s solicitor, Mr Hollier, formally enquired of Ms X concerning Mr Hamilton, in his letter to her dated 28 July 2008.  Ms X replied on 31 July 2008 and confirmed Mr Hamilton was briefed.  The wife said neither she nor her solicitor received Ms X’s 31 July 2008 letter.  The wife’s solicitor did not give evidence.  Whilst I accept the wife’s evidence she did not receive it, for reasons discussed later, I am satisfied that her solicitor, who was her authorised agent, did. 

12. On 1 August 2008 Ms Monnox spoke to Mr Hamilton and asked him whether he had represented the wife in Wight & Wight.  Unsurprisingly, Mr Hamilton’s records did not extend back to 1994.  As best he could Mr Hamilton thought he may have had an involvement in Wight & Wight but was unable to recall in what manner.

13. The property settlement proceedings came before Mullane J on 11 August 2008.  Ms X appeared for the husband and the wife was represented by Mr Tregilgas of counsel.  Ms X said she asked Mr Tregilgas if the wife objected to Mr Hamilton acting for the husband.  Ms X said, having observed Mr Tregilgas confer with the wife he informed her that the wife had no objection to Mr Hamilton acting for the husband.  Ms X made a contemporaneous file note which corroborates her evidence.

14. The wife said she did not discuss with Mr Tregilgas that day whether she opposed Mr Hamilton appearing for the husband.  In support of her position the wife produced a letter from Mr Tregilgas dated 25 March 2009 which is addressed to her former solicitors.  In this letter Mr Tregilgas wrote: 

    I have no recollection of discussions with [Ms X] as to Hamilton.

    However as I understand it the wife’s position as to Hamilton is that whilst the wife does not formally object to Hamilton being retained and appearing, the wife’s concern is that at the trial Hamilton will not be able to cross examine the wife, a former client, and hence the trial with be ‘aborted’.

15. There is a distinction between having no recollection and denying that the conversation took place.  There is no conflict between Ms X’s evidence and Mr Tregilgas’ position reported in his 25 March 2009 letter.  On balance I am satisfied that the conversation as deposed to by Ms X occurred.  It is also clear, from a document tendered in the wife’s case, whether that day or subsequently, the wife informed Mr Tregilgas that she did not object to the husband retaining Mr Hamilton.

16. Thereafter the parties’ lawyers continued to communicate and appeared in court on a number of occasions.  Notably, on 27 January 2009, Mr Hamilton appeared on the husband’s behalf.  Mr Tregilgas appeared for the wife.  The two counsel discussed Mr Hamilton’s prior involvement in Wight & Wight for the wife after which Mr Hamilton reported to Ms X he understood that the wife did not object to him continuing to appear for the husband.

17. In the following months the parties’ lawyers continued to communicate.  In a letter dated 9 March 2009 the wife’s solicitors referred to a conversation between Messrs Tregilgas and Hamilton, presumably the conversation which occurred on 27 January 2009.  They said they were seeking instructions from the wife about whether she considered that Mr Hamilton and Ms X ought to continue to represent the husband.

18. The parties appeared before me on 11 March 2009.  There was no reference by the wife’s solicitors that there existed an issue about Mr Hamilton or Ms X representing the husband.

19. That day the wife’s solicitor enquired of Ms X whether Mr Hamilton would continue representing the husband.  The following day Ms X responded and, without directly answering the wife’s enquiry, referred to the matter having been previously raised and said that she understood the wife had no objection to Mr Hamilton acting for the husband.  The parties’ lawyers continued to communicate and, although it is fair to say the wife did not formally object to Mr Hamilton acting for the husband, whether he should do so and risk aborting the trial because he was unable to cross examine a former client without breaching the Bar rules, was discussed.

20. The parties appeared before me on 21 April 2009.  On that occasion the wife’s solicitor informed me there may be an issue about whether the husband could continue to retain Mr Hamilton. I recommended the parties discuss and attempt to resolve the matter without the Court becoming involved.  No issue was raised about Ms X.

21. On that day the husband’s solicitors wrote to the wife’s solicitors, enclosing a copy of their letter dated 31 July 2008 and said:  “Mr Hamilton does not intend to remain in the matter if your client objects”. 

22. The wife’s solicitors responded on 27 April 2009.  They wrote:  “We refer to your letter of 21 April 2009.  In relation to Mr Hamilton we confirm our advice to the Court last Tuesday that our client objects to him remaining in the matter in any way, and we confirm your advice to the Court last Tuesday that he would not do so”. The wife’s solicitors did not object to Ms X continuing to represent the husband, or indicate that they had not received her 31 July 2008 letter.  This bolsters my satisfaction that the wife’s former solicitors received the original letter approximate to its date.

23. Throughout May and June 2009 the parties’ solicitors continued to communicate without their being reference by the wife’s solicitor that the wife had an issue with Ms X representing the husband. 

24. On 1 July 2009 the wife appeared before me on her own behalf.  That day she raised an objection to Ms X continuing to act for the husband.  In accordance with my direction, the wife subsequently filed an Application in a Case seeking to restrain Ms X from acting for the husband. 

Conclusion

1. The wife has not established that Mr Hamilton was in possession of confidential information relevant to the matters at issue in these proceedings.  I am also satisfied that the wife was afforded an early opportunity to raise any concerns she may hold about Mr Hamilton’s involvement in the matter for the husband.  To the extent that she raised any concern early on it related to her position that she would not be cross-examined in contravention of the Bar rules and was unrelated to having provided confidential information to Mr Hamilton.

2. It is clear that on a number of occasions those appearing for the wife advised the husband’s solicitor that the wife did not object to Mr Hamilton acting for the husband.  When the wife’s stance changed Mr Hamilton withdrew.  Throughout the period there was only passing reference to the wife possibly having an objection about Ms X’s position.

3. Counsel for the husband submitted that he would be prejudiced if the wife’s application were granted.  He is a person of limited means who cannot reasonably afford the costs which would be incurred if, after two years, Ms X could no longer represent him and he lost the benefit of his solicitor’s knowledge.  In response the wife pointed out that she is now unrepresented.  She left me with the strong sense that she considered it would be fair if she and the husband were both unrepresented.  On this issue I accept the husband’s submission.

4. In McGillvray v Mitchell (1998) FLC 92-888 the Full Court observed that the issue of delay in challenging a solicitor’s involvement can be a relevant matter. In this case I consider the wife’s delay following upon from the 31 July 2008 letter in not pressing Ms X to cease acting on the husband’s behalf is a relevant and significant factor.

5. When regard is had to the totality of the evidence I am satisfied that the wife initially acquiesced to Mr Hamilton being retained by the husband and thereafter, at least by implication, until recently Ms X continuing to act for him.   

6. The combined effect of the lack of revenant confidential communication to Mr Hamilton, the wife’s delay concerning Ms X and the prejudice to the husband persuades me that the wife’s application should be dismissed.

7. In the event the wife’s application failed the husband applied for an order that she pays his costs. These were quantified in the amount of $3,300. The wife did not challenge the quantum of costs but opposed an order being made against her. Prima facie each party pays their own costs. However in this case the husband’s legal representatives had tried to address the potential conflict issue early and have at all times responded appropriately. The difficulties which have arisen are those for which the wife must bear responsibility; that is her failure to respond to the 31 July 2008 letter and instructing her counsel she had no objection to Mr Hamilton and, having belatedly once mentioned a possible concern about Ms X’s involvement, she failed to progress the issue. These are all circumstances which justify the Court, subject to s 117(2A),(4) and (5) making an order for costs. Of those matters I proceed upon the basis that the parties are of modest means. The wife has been totally unsuccessful. I take into account without restating them the factors which justify an order for costs in the husband’s favour. I will order the wife to pay costs in the amount sought. She will have six weeks within which to do so following which interest will accrue in accordance with the Family Law Rules 2004. This affords the wife a reasonable opportunity to rearrange her financial circumstances to enable compliance.

8. For these reasons I make the orders identified at the start of this judgment.

I certify that the preceding thirty-eight (38) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Ryan

Associate: 

Date:  19 August 2009