Marshall v Prescott

[2015] NSWCA 110

Court of Appeal

Supreme Court

New South Wales

• Amendment notes

Medium Neutral Citation:	Marshall v Prescott [2015] NSWCA 110
Hearing dates:	18 and 19 March 2015
Decision date:	28 April 2015
Before:	Beazley P at [1]; Macfarlan JA at [98]; Emmett JA at [99]
Decision:	Appeal dismissed with costs.
Catchwords:	EQUITY – confidential information – where alleged confidential information was obtained as a result of retainer to act as solicitor – effect of concurrent retainers for different clients in the same matter EQUITY – confidential information – whether information was confidential – whether information alleged to be confidential was in the public domain – whether information alleged to be confidential was shared information as between different clients involved in the same matter CONTRACT – construction of terms of retainer to act as solicitor – content of retainer where client has no standing to bring claim
Legislation Cited:	Family Provision Act 1982 (NSW)
Cases Cited:	ABC v Lenah Game Meats Pty Ltd [2001] HCA 63; 208 CLR 199 Beach Petroleum NL v Kennedy [1999] NSWCA 408; 48 NSWLR 1 Bradshaw v McEwans Pty Ltd (1951) 217 ALR 1 Bristol and West Building Society v Mothew [1998] Ch 1 Coco v A N Clark (Engineers) Ltd [1969] 65 RPC 41 Commonwealth v John Fairfax [1980] HCA 44; 147 CLR 39 Holloway v McFeeters [1956] HCA 25; 94 CLR 470 Jones v Dunkel [1959] HCA 8; 101 CLR 298 Luxton v Vines [1952] HCA 19; 85 CLR 352 Maguire v Makaronis [1997] HCA 23; 188 CLR 449 Marshall v Carruthers [2002] NSWCA 47 Seager v Copydex Ltd [1967] 2 All ER 415 Smith Kline & French Laboratories (Aust) Ltd v Secretary, Department of Community Services and Health (1991) 22 FCR 73 Streetscape Projects (Australia) Pty Ltd v City of Sydney [2013] NSWCA 2
Texts Cited:	JD Heydon, MJ Leeming, PG Turner, Meagher, Gummow & Lehane’s Equity: Doctrines and Remedies, (LexisNexis Butterworths, 5th ed, 2014)
Category:	Principal judgment
Parties:	Margaret Lesley Marshall (Appellant) Kim Neil Marshall (Second Appellant) Michael Prescott (Respondent)
Representation:	Counsel: C Bevan; E Young (Appellants) J Kelly SC; Mr B McManus (Respondent) Solicitors: Turner Freeman (Appellants) Colin Biggers & Paisley (Respondent)
File Number(s):	CA 2014/14663
Decision under appeal	Court or tribunal: Supreme Court Jurisdiction: Common Law Division Citation: Marshall v Prescott (No 3) [2013] NSWSC 1949 Date of Decision: 20 December 2013 Before: Beech-Jones J File Number(s): 2009/297404

HEADNOTE

[This headnote is not to be read as part of the judgment]

The appellants, Margaret Marshall and her son Kim Marshall (the Marshalls), claimed damages against the respondent, Michael Prescott, a solicitor, for his disclosure of information which they alleged was confidential to them and which he had an obligation not to disclose.

Mr Prescott was retained by the appellants to coordinate proceedings in the United States for recovery of damages in respect of the death of Neil Marshall, Kim’s father and Mrs Marshall’s husband, in a plane crash in South Australia on 31 May 2000. At the time of his death, Mr Marshall was separated from Mrs Marshall and was in a de facto relationship with Linda Carruthers. Mr Prescott also acted for Ms Carruthers in the US proceedings.

The US proceedings were settled and the net amount payable in respect of the claim relating to the death of Mr Marshall was AUD$420,111.57. That sum was released to the appellants’ solicitors, Turner Freeman, on the condition that it only be disbursed pursuant to a court order. To satisfy that requirement, on 30 April 2004 Mrs Marshall, as executor of the estate of Mr Marshall, initiated proceedings in the Supreme Court against Ms Carruthers in which she claimed to be entitled to the whole of the settlement sum. Ms Carruthers in turn claimed she was entitled to the whole of the settlement monies. Mrs Carruthers subsequently amended her cross-claim to claim an entitlement to half of the settlement monies. Half the settlement monies were then paid out to the Marshalls. In 2008 final consent orders were made whereby the balance of the settlement monies were paid to Mrs Marshall and Ms Carruthers agreed to pay Mrs Marshall’s costs of the proceedings on a party/party basis.

In the claim against Mr Prescott, the Marshalls sought to recover the solicitor/client component of their costs in the Supreme Court proceedings brought against Ms Carruthers. They alleged that these costs were incurred by reason of the respondent’s breaches of confidence, which, they contended, encouraged her litigation funder, GIO Workers Compensation (NSW) Ltd, to continue to support her defence of the proceedings. It appears, but was not entirely clear, that the allegation may have extended to the encouragement of Ms Carruthers’ solicitors, Teece Hodgson & Ward, to continue the proceedings.

The appeal raised the following matters for determination:

1.       The terms upon which Mr Prescott was retained by the Marshalls and by Ms Carruthers respectively.

2.        Whether the information alleged to be confidential was in fact confidential.

3.        Whether the Marshalls had sustained any loss from the use of the information if, as alleged, it was confidential.

Per Beazley P, Macfarlan and Emmett JJA agreeing

(1)       The retainer

(a) Mr Prescott was retained by the Marshalls to act for them in the US proceedings in a co-ordinating capacity only. [37].

(b) Mr Prescott was retained by Ms Carruthers in the US proceedings to act for her, both in a co-ordinating role and in substantively assisting her to bring any claim that she might have in the US arising out of the death of Mr Marshall. [49].

(c) It did not follow from the circumstance that, in the result, Ms Carruthers had no standing to claim damages in the US proceedings, that Mr Prescott’s retainer from her lacked ‘practical content’. [48].

(d)     The Marshalls gave a fully informed consent to Mr Prescott acting for Ms Carruthers. [45]-[46]; [56]-[57].

Maguire v Makaronis [1997] HCA 23; 188 CLR 449; Bristol and West Guilding Society v Mothew [1998] Ch 1; Beach Petroleum NL v Kennedy [1999] NSWCA 408; 48 NSWLR 1; Meagher, Gummow & Lehane’s Equity: Doctrines and Remedies, 5th ed.

(2)       None of the information that the appellants contended to be confidential to them was confidential. It was either not, of its nature, confidential, or was shared information as a result of the concurrent retainers held by Mr Prescott, or was in the public domain or could be deduced from information in the public domain as a result of earlier proceedings. [50]-[55]; [66]-[74].

Seager v Copydex Ltd [1967] 2 All ER 415; Smith Kline & French Laboratories (Aust) Ltd v Secretary, Department of Community Services and Health (1991) 22 FCR 73; Coco v A N Clark (Engineers) Ltd [1969] 65 RPC 41; Commonwealth v John Fairfax [1980] HCA 44; 147 CLR 39; ABC v Lenah Game Meats Pty Ltd [2001] HCA 63; 208 CLR 199; Streetscape Projects (Australia) Pty Ltd v City of Sydney [2013] NSWCA 2.

(3) Even if a breach of confidence did occur, the appellants did not demonstrate that any loss flowed from the disclosures made by the respondent. No evidence was available from which to infer that the Supreme Court proceedings were continued as a result of the disclosures. [80]-[89].

Luxton v Vines [1952] HCA 19; 85 CLR 352; Bradshaw v McEwans Pty Ltd (1951) 217 ALR 1; Holloway v McFeeters [1956] HCA 25: 94 CLR 470; Jones v Dunkel [1959] HCA 8; 101 CLR 298.

Judgment

1. BEAZLEY P: This is an appeal from the dismissal by Beech-Jones J on 20 December 2013 of proceedings brought by the appellants, Margaret Marshall, and her son, Kim Marshall (the Marshalls), against the respondent, Michael Prescott, for his disclosure of information which the Marshalls alleged was confidential to them and which Mr Prescott had an obligation not to disclose.

2. Mr Prescott was retained by the Marshalls to act as their solicitor in relation to proceedings in the United States of America arising out of the death of Neil Marshall, the husband and father of Margaret and Kim Marshall respectively (the US litigation). Mr Prescott also acted for Mr Marshall’s de facto wife, Linda Carruthers, in respect of those proceedings. The US litigation settled before trial.

3. Subsequent to the settlement of the litigation in the United States, the Marshalls brought proceedings against Ms Carruthers in the Supreme Court of New South Wales to establish their entitlement to the settlement monies. The alleged confidential information was disclosed by Mr Prescott in correspondence he wrote to the solicitors acting for Ms Carruthers’ litigation funder in the Supreme Court proceedings and to the solicitors acting for her in those proceedings.

4. The essential issues on the appeal are whether the information was confidential and, if so, whether the appellants suffered loss from its disclosure.

5. Mr Prescott contended that the information, of its nature, was not confidential. Alternatively, he argued that he had obtained that information as part of the shared information he had received in acting for both the Marshalls and Ms Carruthers in respect of the litigation in the United States. Whether this was so depended upon the terms of the respective retainers he had from the Marshalls and Ms Carruthers. Mr Prescott further argued that, in any event, most, if not all of the information alleged to be confidential was part of the record in the Supreme Court proceedings or was otherwise in the public domain. He also argued that the Marshalls had not sustained any loss from the disclosure of the information, even if it was confidential.

6. The essential issues raised by the appeal thus require the determination of the following matters:

1. the terms of Mr Prescott’s retainer as the Marshalls’ solicitor (the Marshall retainer);

2. the terms of Mr Prescott’s retainer as Ms Carruthers’ solicitor (the Carruthers retainer). This question raised two sub-issues:

1. whether the Marshalls gave informed consent to Mr Prescott acting for Ms Carruthers; and

2. whether Mr Prescott’s retainer from Ms Caruthers had any ‘content’;

3. whether Mr Prescott breached his obligation of confidence by disclosing the information that he had obtained during and arising out of his retainer as the Marshalls’ solicitor to the solicitors acting for the litigation funder in the Supreme Court proceedings; and

4. whether the Marshalls suffered any loss caused by the disclosure of the information.

Background

The plane crash

7. Mr Marshall died in a plane crash in the Spencer Gulf, South Australia, on 31 May 2000. Mrs Marshall was the executor of Mr Marshall’s will and was the sole named beneficiary under the terms of his will.

8. At the time of Mr Marshall’s death, he and Mrs Marshall had been separated for a period of five years, but had not divorced. From about the time of the separation, Mr Marshall had been in a relationship with Ms Carruthers.

9. Mr Prescott had been retained by a number of the families and dependants of persons who had died in the plane crash to act for them in relation to proceedings that might be brought against the manufacturer of the aircraft. It was proposed that any legal proceedings would be brought in the United States. As indicated above, Ms Carruthers was one of the persons who had retained Mr Prescott.

10. In early 2001, Mr Prescott contacted Mrs Marshall to ascertain if Kim was interested in bringing a claim in the proceedings. Both Mrs Marshall and Kim retained Mr Prescott to bring proceedings on their behalf in the United States. However, Mr Prescott’s retainer from the Marshalls was limited in scope. Stated in general terms, it extended only to a coordinating role of the litigation process in the United States. Mrs Marshall and Kim retained their own solicitor, Mr Goldberg of Turner Freeman, to act for them in relation to the damages aspect of their claim.

The US litigation

11. Litigation was commenced in Pennsylvania, with separate claims being brought in relation to each of the deceased persons by their families and/or dependents. The US litigation was conducted in America by the law firm Kreindler & Kreindler. The claim arising out of Mr Marshall’s death was brought in the names of Mrs Marshall and Kim “individually and as Executors and Personal Representatives of the Estate of Mr Marshall” (the Marshall claim). There were two aspects of the Marshall claim: a survivorship claim in respect of which any damages recovered were payable to Mr Marshall’s estate; and a dependency claim in respect of which any entitlement to damages required proof of dependency on the deceased. Ms Carruthers was not a named party to the proceedings in the US, although the trial judge considered that the pleadings were framed widely enough to include her claim should she be entitled to damages arising out of Mr Marshall’s death.

12. The Marshalls each entered into a funding agreement with Insolvency Litigation Fund Pty Ltd (ILF) for the purposes of funding their claim in the US litigation. Ms Carruthers also entered into the identical agreement with ILF to fund her claim in the US litigation.

13. The US litigation was settled for a total sum of US$5.5 million of which those claiming through Mr Marshall were entitled to 8.75 per cent. The net amount payable in respect of the Marshall claim, after payment of legal fees, was AUD$420,111.57.

14. Save to the extent that the proceedings were settled for a total lump sum in respect of the claims brought by all the families and/or dependants, this matter is only concerned with the claim brought in respect of Mr Marshall’s death.

The Supreme Court proceedings

15. Following settlement of the US litigation, Mr Goldberg of Turner Freeman insisted that the settlement monies payable in respect of the Marshall claim (the settlement monies) be paid to him. Before they would agree to disbursing the monies to Mr Goldberg, Kreindler & Kreindler, the US attorneys who had conducted the US litigation, required an undertaking that the monies would not be paid out other than in accordance with a court order.

16. To satisfy that requirement, on 30 April 2004, Mrs Marshall commenced proceedings against Ms Carruthers in the Supreme Court of New South Wales (the Supreme Court proceedings).

17. Ms Carruthers initially retained Mr Prescott to act for her in the Supreme Court proceedings. Mr Prescott appointed Teece Hodgson & Ward as Sydney agents for the purpose of the proceedings. Ms Carruthers filed a defence and a cross-claim on 15 October 2004. In the cross-claim, Ms Carruthers claimed to be entitled to the entire settlement sum.

18. On 9 June 2005, Ms Carruthers entered into a funding agreement with GIO Workers Compensation (NSW) Ltd (GIO) for the funding of the Supreme Court proceedings (the GIO funding agreement). Pursuant to the GIO funding agreement, GIO agreed to pay Ms Carruthers’ legal costs incurred in the Supreme Court proceedings: cl 3. Pursuant to cl 7 of the agreement, Ms Carruthers was required to obtain GIO’s consent to the settlement of the proceedings.

19. The evidence revealed that Mr Prescott had been attempting to persuade GIO to assist Ms Carruthers with funding from at least 30 July 2004 when he wrote to Turks Legal, the solicitors for GIO, insisting that they show some interest in the proceedings given that GIO was seeking to be indemnified out of any of the settlement monies that might be payable to Ms Carruthers for workers compensation payments GIO had paid to her. This is discussed further below at [25]-[26].

20. On 20 June 2005, Mr Prescott withdrew his appearance as solicitor for Ms Carruthers and thereafter Teece Hodgson & Ward acted directly for her. However, as the alleged confidential communications revealed, Mr Prescott remained involved with Ms Carruthers’ defence of the Supreme Court proceedings. Mr Prescott wrote to Turks Legal, the solicitors for GIO on 2 and 15 August 2005 and to Teece Hodgson & Ward, copied to Turks Legal, on 11 August 2005, emphasising the importance of gaining access to documentation that was in the possession of Kreindler & Kreindler. The information alleged to be confidential is contained in this correspondence and is set out below at [65]-[74].

21. Mr Prescott’s continued involvement in the Supreme Court proceedings led to Mrs Marshall obtaining, on 16 November 2005, an interim order against Mr Prescott restraining him from, among other things, communicating her confidential information to others. A final order in relevantly similar terms was made on 16 May 2007.

22. In September 2006, Ms Carruthers amended her pleadings to claim only half of the settlement monies. At that time 50 per cent of the retained monies was released to the Marshalls.

23. The Supreme Court proceedings were settled by way of declarations and orders made on 27 June 2008 whereby Mrs Marshall was declared to be beneficially entitled to the balance of the funds held by Turner Freeman in her capacity as sole surviving spouse of the deceased. The Court ordered that Ms Carruthers pay Mrs Marshall’s costs of the proceedings.

24. The costs consequences to Mrs Marshall in having to bring the Supreme Court proceedings are at the heart of this appeal. It was agreed as part of the settlement of the Supreme Court proceedings that the quantum of costs payable pursuant to the costs order, together with another potential cost liability of Ms Carruthers in associated proceedings, was $150,000.00. The loss claimed in the present proceedings is the solicitor/client component of the costs in the Supreme Court proceedings owed by the Marshalls to Turner Freeman.

Earlier proceedings

25. The US litigation was the third set of proceedings, and the Supreme Court proceedings the fourth, arising out of the death of Mr Marshall in which Mrs Marshall, Kim and Ms Carruthers were involved. The first were workers compensation proceedings in the Compensation Court of New South Wales against Mr Marshall’s employer, in which Kim and Ms Carruthers both claimed dependency on Mr Marshall. GIO was Mr Marshall’s workers compensation insurer for the purposes of those proceedings. Ms Carruthers was successful to the exclusion of Kim and was paid a sum of just over $200,000 (the workers compensation payment). The workers compensation payment was recoverable from Ms Carruthers by GIO pursuant to the Workers Compensation Act 1987 (NSW), s 151Z, should she be successful in obtaining compensation out of the settlement of the Marshall claim in the US litigation.

26. The outcome of the workers compensation proceedings provided the essential backdrop to the breach of confidence claim subject of the present appeal. It was because of GIO’s interest in the recovery of the workers compensation payment should Ms  Carruthers be successful in obtaining any of the US settlement monies that Mr Prescott wrote in such insistent terms to GIO seeking that it assist with funding Ms Carruthers in the Supreme Court proceedings.

27. The second proceedings were Family Provision Act 1982 (NSW) proceedings brought by Ms Carruthers against Mrs Marshall as executrix of Mr Marshall’s estate in which she claimed that she had been left without adequate provision for her maintenance and support. On appeal in those proceedings, it was held that Ms Carruthers had not established an entitlement to provision and that Mrs Marshall held the entire estate on a testamentary trust for Kim: Marshall v Carruthers [2002] NSWCA 47.

First issue on the appeal: the terms of Mr Prescott’s retainer as the Marshalls’ solicitor

28. There was no dispute that Mrs Marshall and Kim retained Mr Prescott to act for them in relation to the US litigation. Mr Prescott had contacted Mrs Marshall in May 2001 advising that he was acting for families of persons who had been killed in the plane crash and that they were looking to bring an action that day or the following day in the United States against the aircraft manufacturer. He enquired whether Kim was interested in participating. Mrs Marshall responded that she was the deceased’s wife and Kim’s mother. Mr Prescott responded “I don’t know anything about you”. Mrs Marshall then referred Mr Prescott to her solicitor, Mr Goldberg at Turner Freeman.

28. In their further amended statement of claim, the Marshalls pleaded that the terms of the retainer were contained in correspondence between Mr Prescott and Turner Freeman on 29 May 2001 and 14 June 2001, together with the terms of a funding agreement with ILF on 21 March 2002. For the purposes of context, it is also convenient to set out Mr Prescott’s reply letter to the letter of 29 May.

29. On 29 May 2001, Mr Goldberg of Turner Freeman wrote to Mr Prescott as follows:

“We refer to our telephone conversation of this morning.

We confirm that we act for the above persons and advise that they instruct you to arrange for Roger Clark, lawyer in the USA to issue a complaint/court process in California (or Florida or anywhere else he sees fit) to preserve their rights arising out of the crash in which Neil Marshall died.”

31. The letter also set out the full names, addresses, occupations and dates of birth of Mrs Marshall, Kim and Mr Marshall.

32. Mr Prescott responded by letter dated 31 May 2001, addressed to the attention of Mr Goldberg. In that letter, Mr Prescott confirmed that he had been liaising with American aviation law specialists as to whether an action could be pursued in the United States, the prospects of such an action, and the US forum in which the action was best pursued. The letter also set out the details of each of the deceased and the potential parties and their representation, “in order that everyone [was] aware” of that information (Blue 36). The details set out in respect of Mr Marshall referred to Kim and to Ms Carruthers, who was identified as “de facto”, and stated that they were represented by Mr Prescott. Reference was then made to Mrs Marshall, who was identified as “wife”. Her legal representation was stated to be Turner Freeman.

33. Mr Goldberg responded to this letter on 14 June 2001, advising that Turner Freeman acted for both Mrs Marshall and Kim. The letter continued:

“We obviously have no difficulty with you acting as overall representative in terms of liaising with [the US attorney] on behalf of our clients.”

ILF funding agreement

34. The ILF funding agreement was made on 21 March 2002 between Mrs Marshall as “the Appointor” and ILF. Kim entered into an identical agreement. Counsel for the Marshalls identified the following parts of the agreement as being relevant to the terms of Mr Prescott’s retainer.

“G.   The Appointor wishes to appoint ILF to assist in the investigation of the facts and circumstances surrounding the Loss and the Accident and to assist and facilitate receipt of all money agreed and or adjudged to be due to the Appointor from Textron Lycoming and others (the ‘Respondents’) in Proceedings contemplated in the United States of America (the ‘USA’) as the forum conveniens or, if not convenient, in South Australia (the ‘Proceedings’) in relation to the Loss and the Accident.

…

1.   Definitions and Interpretation

1.1   In this Agreement, unless the contrary intention appears:

‘the Lawyers’ means … Michael Prescott.

‘Legal Services’ means legal services requested by [Kreindler & Kreindler] and ILF to be provided by the Lawyers.

…

5.2   ILF has paid $150,506.76 for the Lawyers fees to date and shall bear subject to clauses 5.4 and pay the Lawyers’ fees payable by the Appointor to the Lawyers in relation to Legal Services aimed at the recovery of the Loss from the Respondents and any such work done by the Lawyers in relation to the payment of any settlement debt, or judgment debt arising out of the Loss and/or the Accident first agreed to in writing by ILF (‘the Funding Costs’).

5.3   The Lawyers will be retained by the Appointor but will be paid directly by ILF upon invoices being rendered by the Lawyers prior to the 20th day of each month at the rate of $300 per hour and $400 per hour and, except by agreement to a maximum of 10 hours per day for Michael Prescott and David Greenwell, respectively.

…

7.   By execution of this Agreement the Appointor instructs [Kreindler & Kreindler] and the Lawyers to observe the rights of ILF under this Agreement and acknowledges that production of this Agreement to [Kreindler & Kreindler] and the Lawyers shall constitute sufficient evidence of those instructions.

8.   The Appointor shall ensure that ILF’s rights under this Agreement are observed but, in exercising such rights or providing services under this Agreement ILF will not interfere with the conduct of the Proceedings or the terms of any settlement thereof which shall remain at the discretion of the Appointor and the Lawyers.

…

10.1   If the Appointor wishes to settle the Proceeding then:

…

(d)   if the ILF Notice disputes the adequacy of the offer, then unless the Appointor accepts the ILF Notice, Michael Prescott will appoint a QC of their choice to determine whether the settlement offer is adequate.”

35. On the basis of the letters of 29 May 2001 and 14 June 2001 and the terms of the ILF funding agreement, the Marshalls pleaded that the terms of Mr Prescott’s retainer were as follows:

“On 29 May 2001 and also on 14 June 2001 the legal firm of Prescotts, Barristers and Solicitors, of Eastwood, South Australia (Prescotts) were retained as the legal firm to coordinate the conduct of certain proposed proceedings in the US for wrongful death and survival actions in respect of the Whyalla Airlines accident on behalf of the families of the victims of the accident, including [the appellants], and to locate and to liaise with the US attorneys retained to conduct the litigation and the victims’ families’ Australian attorneys, including Turner Freeman, all of whom were retained to act on behalf of [the appellants] as their attorneys in those proceedings (the Prescotts’ retainer).

PARTICULARS

(a)   Letter from Prescotts to Turner Freeman dated 31 May 2001;

(b)   Letters from Turner Freeman to Prescotts dated 29 May 2001 (the first retainer letter) and 14 June 2001 (the second retainer letter);

(c)   Litigation funding agreements between [the appellants] and Insolvency Litigation Fund Pty Limited (ILF) (the plaintiffs’ ILF agreements) dated 21 March 2002 which were sent to [the respondent] under cover of a letter from Turner Freeman to Prescotts dated 22 March 2002 (the 22 March letter) (the third Prescotts’ retainer letter);

(collectively referred to as ‘the Prescotts’ retainer’).”

36. As pressed in argument, the Marshalls submitted that the ILF funding agreement varied the terms of the retainer. The variation was said to have arisen by implication because Mr Goldberg sent the ILF funding agreement to Mr Prescott with a request that he forward it to ILF. The variation was said to be in respect of the fees that Mr Prescott was to be paid, which had not previously been agreed. Counsel for the Marshalls also contended that the ILF funding agreement contained a statement as to Mr Prescott’s role in conducting the Marshall claim in the US litigation and to that extent varied what had already been agreed.

37. Although the appellants, in oral argument, placed considerable emphasis upon the ILF funding agreement as having varied the terms of Mr Prescott’s retainer, the terms of the funding agreement, other than in relation to Mr Prescott’s remuneration, did not introduce any variation to the scope of the agreement reached in the correspondence in May and June 2001. In my opinion, the pleaded retainer in the further amended statement of claim reflected the terms of the correspondence, and insofar as it included the retainer to act in respect of the Marshall claim in the US litigation, correctly stated the terms of Mr Prescott’s retainer to act for Mrs Marshall and Kim. In short, the terms of his retainer from the Marshalls provided that he act for them in a coordinating capacity only.

38. That this was the position was made clear in an email written on 25 July 2002 by Mr Goldberg to Mr Green at Kreindler & Kreindler, copied to Mr Prescott, as follows:

“I act for Margaret Marshall and Kim Marshall, and Michael Prescott acts for Ms Carruthers in the action relating to the death of Neil Marshall in the Whyalla Airlines crash.

I now understand that you would like us to provide you with more information as to the assessment of damages. I can only do that in respect of Kim and [Mrs Marshall], but not [Ms Carruthers]. Michael Prescott and I have an agreement that I will send material to you directly. By way of background, I advise that my clients and [Ms Carruthers] have been involved as opposing parties in various actions in Court here over the estate of Neil Marshall, and their relationship is not good.”

Second issue on the appeal: the terms of Mr Prescott’s retainer as Ms Carruthers’ solicitor

39. An important aspect of the Marshalls’ argument on the appeal was that there was no ‘shared information’, that is, there was no information common to Mr Prescott’s retainer from the Marshalls and his retainer from Ms Carruthers. The principal argument underpinning this aspect of the case was that the Marshalls had not given informed consent to Mr Prescott acting for Ms Carruthers. It followed that their consent to his acting for her was not valid so that there could be no ‘shared information’ arising from the respective retainers.

40. There was no pleading of the terms of the Carruthers retainer in the Marshalls’ further amended statement of claim, except to the extent that it was contained within the generalised terms of the retainer pleaded in respect of the Marshalls. It appeared from the oral argument on the appeal that the Marshalls contended that Mr Prescott bore the onus of establishing the terms of his retainer from Ms Carruthers.

41. That, of course, is incorrect. It was the Marshalls’ onus to establish those aspects of the case that were relevant to their cause of action. As it was an essential aspect of the Marshalls’ case that they had not given informed consent to Mr Prescott acting for Ms Carruthers, it was for them to prove the fact and terms of that retainer.

42. There was some movement in the way the argument as to informed consent was put at various times throughout the appeal. The Marshalls accepted that Mr Prescott was retained by Ms Carruthers to act for her in relation to a claim in the United States. In this regard, there was evidence of the retainer in the funding agreement that Ms Carruthers entered into with ILF. In any event, the Marshalls had been advised of the existence of the Carruthers retainer in Mr Prescott’s letter of 31 May 2001 to Mr Goldberg, which listed Ms Carruthers as a potential party to the US proceedings and Mr Prescott as her representative. The Marshalls contended, however, that their consent to Mr Prescott acting for Ms Carruthers was not fully informed, as Mr Prescott had an obligation to advise them as to whether Ms Carruthers had standing to bring a claim in the US proceedings. They submitted that to the extent that Mr Prescott held retainers from various persons, it was on the basis that he was only pursuing proceedings in America for those who had standing to bring them.

43. The question as to whether Ms Carruthers had standing to recover monies arising out of the death of Mr Marshall in the United States proceedings was the subject of expert evidence in the court below. The Marshalls retained a practising US attorney, Ms Evans, to advise on this issue. Her evidence was that Ms Carruthers had no such entitlement. The trial judge, at [107], found Ms Evans’ evidence unconvincing. The Marshalls abandoned their ground of appeal in which they challenged this aspect of his Honour’s reasons. His Honour considered that in any event, having regard to the issues in the case below, her evidence was irrelevant. His Honour also observed that advices provided by Mr Green to Mr Goldberg during 2002 and 2003 demonstrated that Mr Green “considered it at least arguable that Ms Carruthers may have had some entitlement”.

44. It remained, however, a central aspect of the Marshalls’ argument that they had retained Mr Prescott to sue for them in Pennsylvania not to bring a claim in the United States that required them to bring a further claim to prove their entitlement to any monies recovered in those proceedings.

45. The interrelationship between the question of informed consent and the breach of confidence claim is touched on briefly at [56]-[57] below. It is sufficient to observe at this stage that whether there has been a fully informed consent is a question of fact: Maguire v Makaronis [1997] HCA 23; 188 CLR 449 at 466. In this case, Mr Goldberg clearly understood that the claim in the US litigation was being brought on behalf of Ms Carruthers as well as on behalf of the Marshalls. By email dated 22 March 2002, Mr Goldberg wrote to Mr Prescott enclosing the Kreindler & Kreindler retainer agreement signed by Mrs Marshall. He added, “As we understand it, this agreement is signed on behalf of Kim Marshall and Linda Carruthers, correct us if we are wrong”. There was no such contrary advice received from Mr Prescott.

46. The Marshalls’ submission that there was no informed consent to Mr Prescott acting for Ms Carruthers must therefore be rejected. The Marshalls knew from the outset that Mr Prescott was so acting. The correspondence between the Marshalls’ solicitors, Turner Freeman, and Mr Prescott was clear both as to the extent of his retainer from the Marshalls and from Ms Carruthers, and the fact that the claim brought in the US was also being brought on behalf of Ms Carruthers. Mrs Marshall’s evidence that she was unaware that was so is not to the point. Mr Goldberg was her agent in the proceedings and in accordance with ordinary principles of agency, his knowledge was imputed to her.

47. Either as an aspect of this argument, or perhaps as a separate argument, the Marshalls contended that Mr Prescott’s retainer from Ms Carruthers had no practical content. Although the Marshalls did not deny the existence of the retainer as such, their insistence as to its lacking content was based upon the contention that Ms Carruthers did not have standing to make a claim in the United States. Reference has already been made to this above.

48. A lawyer may be retained by a person whose standing to bring a particular claim may be contentious, either legally or factually. The mere fact that the person is ultimately found not to have standing does not deprive the legal representatives’ retainer of ‘content’ or ‘practical content’, as was submitted here. This is so regardless whether the matter is determined judicially or as a result of legal advice that is accepted by the person claiming to be entitled to bring the claim.

49. In the present case, Mr Prescott’s retainer from Ms Carruthers was to act for her in respect of bringing a claim in the US arising out of the death of Mr Marshall. Mr Prescott also had a coordinating role in respect of the claims being brought by other persons arising out of the air crash. As with Mr Prescott’s retainers with those other claimants, it was within the scope of the retainer from Ms Carruthers that he arrange for US lawyers to be retained to advise her as to whether she had a claim and to act in respect of any claim brought in the United States. As noted above, at [43], the view had been taken by the lawyers in the United States that Ms Carruthers might have such a claim.

Third issue on the appeal: whether Mr Prescott disclosed confidential information

Legal principles

50. The question whether Mr Prescott disclosed confidential information raises at its inception questions regarding when information is confidential, what the obligations are of a person who holds confidential information and what the requirements are for an action in breach of confidence.

51. It is a well-established principle that a person who “receives information in confidence shall not take unfair advantage of it”: Seager v Copydex Ltd [1967] 2 All ER 415 at 417 per Lord Denning MR. The prohibition is on disclosure, because that would destroy the information’s confidentiality, as well as on use of the confidential information. As Lord Denning MR added, at 417, ‘use’ must not be made of information “to the prejudice of him who gave it without obtaining his consent”.

52. A party to whom the duty of confidence is owed may authorise disclosure for a particular purpose without waiving the obligation of confidentiality for all purposes. This was explained in Smith Kline & French Laboratories (Aust) Ltd v Secretary, Department of Community Services and Health (1991) 22 FCR 73, where Gummow J observed, at 94, that:

“In many situations, where a plaintiff establishes a case of disclosure of confidential information for a sole purpose, then any use of it for any other purpose including disclosure to any other party will be a breach of confidence…”

53. In Coco v A N Clark (Engineers) Ltd [1969] 65 RPC 41, Megarry J listed three requirements for an action in breach of confidence: the information had to have the necessary quality of confidence about it; the information must have been imparted in circumstances importing an obligation of confidence; and there must be an unauthorised use of the information. This formulation was cited in Commonwealth v John Fairfax [1980] HCA 44; 147 CLR 39 at 51 and ABC v Lenah Game Meats Pty Ltd [2001] HCA 63; 208 CLR 199 per Gleeson CJ at [30].

54. In Streetscape Projects (Australia) Pty Ltd v City of Sydney [2013] NSWCA 2, at [158] ff, Barrett JA noted that implicit in the Coco formulation were requirements of specificity and confidentiality, as follows:

“158   Implicit in the statement of principle are two propositions of particular relevance to this appeal: first, that particular information is specifically identified; and, second, that the confidential nature of the identified information is established.

159   The need for specificity in the identification of the information said to be confidential in respect of which relief is sought comes from the fact that the court must make an assessment of the quality of that information, that is, whether it is in truth of a confidential nature. An aspect of that inquiry may turn on whether the whole or some part has become the subject of general disclosure or notoriety. Precise delineation of the subject matter is accordingly essential. The task of a plaintiff, in this respect, is, in the words of Gummow J in Smith Kline & French Laboratories (Australia) Ltd v Department of Community Services and Health … at 87, ‘to identify with specificity, and not merely in global terms, that which is said to be the information in question’.

160   The confidential quality of information does not depend on its being in the nature of a trade secret. As Campbell JA pointed out in Del Casale v Artedomus (Aust) Pty Ltd at [103], referring to what was said by Megarry J in Coco v A N Clark (Engineers) Ltd … at 47:

‘On Megarry J's account, the information is ‘of a confidential nature' if it is not 'public property and public knowledge’, or if it is ‘constructed solely from materials in the public domain’, to which ‘the skill and ingenuity of the human brain’ has been applied (47). This is a fairly undemanding test.’”

55. Barrett JA also observed, at [162], that confidentiality may be lost if the information enters the public domain:

“The fact that information that was confidential when obtained has later entered the public domain means that its confidential quality is lost. In Attorney-General v Guardian Newspapers Ltd (No 2), Lord Goff explained (at 282) that ‘public domain’, for these purposes, means ‘no more than that the information in question is so generally accessible that, in all the circumstances, it cannot be regarded as confidential’.”

56. The final matter to which reference should be made is the legal implications of the Marshall’s informed consent argument. Although this has been resolved factually above it is to be noted that the question of informed consent usually arises in cases relating to breach of fiduciary obligations. The Marshalls unsuccessfully advanced such a case below. They did not pursue that claim on the appeal. In the area of breach of fiduciary duty it is established that a fiduciary who acts for two principals whose interests potentially conflict “without the informed consent of each is in breach of the fiduciary’s obligation of undivided loyalty [and this] automatically constitutes a breach of fiduciary duty”: Bristol and West Building Society v Mothew [1998] Ch 1 per Millet LJ at 18-19, cited in Beach Petroleum NL v Kennedy [1999] NSWCA 408; 48 NSWLR 1 at [466]. However, where the person to whom the obligation is owed knows all the relevant facts, a decision to engage the fiduciary is a fully informed decision: Bristol and West Building Society v Mothew at 19; Beach Petroleum NL v Kennedy at [467]. In other words, “the existence of an informed consent ... negate[s] what otherwise [would be] a breach of duty”: Maguire v Makaronis at 467.

56. It would seem that the same principle applies to breach of confidence: see Meagher, Gummow & Lehane’s Equity: Doctrines and Remedies, 5th ed, at [42-070].

Was the information confidential?

58. The alleged confidential information was contained in three letters from Mr Prescott to Turks Legal and Teece Hodgson & Ward written in August 2005 (the August letters). At the time the letters were written, the Supreme Court proceedings had been commenced and Ms Carruthers had filed her defence and cross-claim and had entered into the funding agreement with GIO. The alleged confidential content of these letters is analysed below.

59. Mr Prescott submitted that none of the information in the correspondence was confidential. He further submitted that even if the information had been confidential at an earlier time, it had lost its confidential status because it was either in the pleadings in the Supreme Court proceedings or was already or readily deduced from information in the public domain at the time the letters were written. Alternatively, it was information that Mr Prescott held on a shared basis as between the Marshalls and Ms Carruthers having regard to the terms and extent of the retainer he held from each.

The Supreme Court pleadings

60. The pleadings in the Supreme Court proceedings, which were brought to establish the Marshalls’ entitlement to the settlement monies over Ms Carruthers, contained allegations as to the basis upon which Mrs Marshall and Ms Carruthers each claimed to be entitled to the monies. Mr Prescott submitted that much of the information in the August letters was referred to in those pleadings. He referred to the information and allegations contained, in particular, in the following paragraphs of the statement of claim filed by the Marshalls on 30 April 2004 (the paragraph numbers set out below refer to the paragraphs of the statement of claim).

1. Ms Carruthers’ status as Mr Marshall’s de facto wife of five years: para (5).

2. The retainer agreement between Mrs Marshall and Kreindler & Kreindler in respect of the US litigation. Mrs Marshall alleged that Kreindler & Kreindler were retained to act for her in respect of “all the claims in the United States of America arising out of the wrongful death and survival (estate) claims of plaintiffs and [deceaseds’ dependants]”: para (6).

3. The allegation that Mrs Marshall and Kim were Mr Marshall’s only relatives and Kim was the only dependant of the deceased: paras (7)-(8).

4. The fact that Mrs Marshall and Kim had each entered into a funding agreement with ILF in respect of the funding of the US litigation: para (11).

5. The allegation that the US litigation, insofar as it related to the death of the deceased, was brought for the benefit of Mrs Marshall and Kim to the exclusion of all other persons: para (13).

6. That the US litigation had been compromised, as particularised in correspondence between Kreindler & Kreindler and Turner Freeman between April and May 2003: para (14).

7. That Kreindler & Kreindler had refused to account to Mrs Marshall or her solicitors for the settlement sum unless Turner Freeman gave a written undertaking to hold that amount in their trust account until a court of competent jurisdiction made a determination as to who had the beneficial entitlement to receive the net amount. The letter from Kreindler & Kreindler to Turner Freeman dated 8 April 2003 was particularised: para (17).

61. Mr Prescott submitted that this information, containing both facts and pleaded allegations, clearly put any interested party on notice that the Marshalls asserted that their claim in the US litigation was brought only on behalf of Mrs Marshall and Kim, that there was a dispute as to the persons who were beneficially entitled to the settlement monies and that for her part, Mrs Marshall was alleging that Kim was the only person eligible to receive those monies.

62. Mr Prescott further submitted that the correspondence between Turner Freeman and Kreindler & Kreindler relating to the US litigation, including the settlement, would be discoverable to Ms Carruthers in the Supreme Court proceedings. He pointed out that it was clear from the whole of the correspondence relating to the US litigation that it was known that the relationship between Mrs Marshall and Ms Carruthers was not good. This had been adverted to by Mr Goldberg in his email dated 25 July 2002 to Mr Green at Kreindler & Kreindler, a clear warning that any proceedings between them would be aggressively pursued and contested. He also submitted that the correspondence between the solicitors after the settlement indicated that Mrs Marshall had at all times been aggressively pursuing the entitlement to the funds to the exclusion of Ms Carruthers.

63. Mr Prescott submitted that, in addition to the information provided in or available to Ms Carruthers arising out of the Supreme Court proceedings, including by way of discovery, it was apparent from the pleadings, evidence and judgment in the Compensation Court that there were competing claims as to dependency. Ms Carruthers had been represented by Teece Hodgson & Ward in those proceedings. Teece Hodgson & Ward were also Ms Carruthers’ solicitors in the Supreme Court proceedings, initially as agent for Mr Prescott and subsequently in their own right. Mr Prescott also submitted that the pleadings, evidence and judgments in the Family Provision Act claim brought by Ms Carruthers were also in the public domain and disclosed information relating to Kim’s dependency on Mr Marshall.

Shared information

64. Mr Prescott also submitted that there was shared information as between the Marshalls and Ms Carruthers resulting from the concurrent retainers. He referred particularly to an email dated 15 February 2003, from Mr Green at Kreindler & Kreindler to the various legal representatives of the persons for whom claims were being made, including Mr Prescott and Mr Goldberg. In that email, Mr Green asked that all parties send to him, without delay, documents that had been previously requested. Mr Green stated in the email that the documents that Kreindler & Kreindler required had been itemised in the damages questionnaire that had been forwarded almost a year previously. Mr Green pointed out that “we need all documents that tend to support the economic and non-economic loss claims that we have brought on your behalf”. Mr Green requested that the information be provided on one spreadsheet. Mr Green also made general observations in the email as to how economic and non-economic damages were assessed and what private international law rules were likely to apply. He also made observations about the settlement sum that was being discussed.

Consideration of allegedly confidential statements

65. Against this background, it is necessary to consider the information in each of the August letters to ascertain whether there was a disclosure of confidential information. Because there were different bases advanced as to the alleged confidentiality and as Mr Prescott’s response varied as between different parts of the correspondence I have found it convenient to separate out the various parts of the correspondence as follows:

Letter from Prescotts to Turks Legal, dated 2 August 2005

1. “… there is a lot of very powerful documentation located in the files of [Kreindler & Kreindler].”

2. “… there is a great deal of correspondence between Turner Freeman and [Kreindler & Kreindler].”

3. “It is important to note that at all times Turner Freeman refused to allow the writer to have any involvement in the quantum aspects.”

4. “I am equally aware that they wrote to [Kreindler & Kreindler] seeking full details as to precisely how American law worked in relation to the assessment of damages.”

5. “… there is some correspondence between them in respect of a refusal of Turner Freeman to pay the funds to Mrs Carruthers pursuant to their recommendation.”

66. During the course of oral argument, the Marshalls disavowed any reliance on (a) and (b) as containing confidential information. Nonetheless, Mr Prescott responded by pointing to para (14) of the statement of claim in the Supreme Court proceedings in which in which the settlement of the US litigation was pleaded and there was particularised:

“Various letters and emails passing between [Kreindler & Kreindler] and Turner Freeman between April and May 2003 to be included in the plaintiff’s exhibit of documents”.

Mr Prescott submitted that this particular disclosed to the reader the existence of the documentation referred to in (a) and (b) of the letter. The Marshalls responded, stating that the particularised correspondence did not concern the entitlement of the parties to the settlement monies or legal advice for the purposes of determining the legal dispute.

67. In my opinion, the Marshalls’ initial concession that the information in (a) and (b) was not confidential was correctly made. Turks Legal knew that Turner Freeman acted for the Marshalls and that Kreindler & Kreindler were the US lawyers retained in the US litigation. Any competent solicitor would know that there was correspondence between the attorneys and that such correspondence would include advices and expressions of opinion as to prospects of success and the quantum of recoverable damages.

68. The information referred to in both (c) and (d) was information that Mr Prescott had because of the retainer he had with each of the Marshalls and Ms Carruthers. It was contained in the email of 25 July 2002 sent by Mr Goldberg to Mr Green and copied to Mr Prescott: see at [38] above.

69. As to the information in (e), this was not confidential information. It was not information that the Marshalls had confided to Kreindler & Kreindler. It does not say anything more than that there was correspondence in existence on a particular subject matter. In any event, as Mr Prescott knew of its existence, he could only have been so informed by Kreindler & Kreindler in his capacity as Ms Carruthers’ solicitor. Accordingly, it was either shared information or information properly in his possession on behalf of Ms Carruthers and was thus not confidential to the Marshalls.

Letter from Prescotts to Teece Hodgson & Ward, copied to Turks Legal, dated 11 August 2005

1. “… there is correspondence between [Kreindler & Kreindler] and Turner Freeman which directly relates to the issue of the dispensation of the settlement funds.”

2. “… that correspondence was to the effect that the monies gained through the deceased Marshall did not flow from the information and dependency of Mrs Marshall except possibly to a very small degree.”

3. “As such they [Kreindler & Kreindler] did not believe that the funds should be dispensed to Mrs Marshall but should have been dispensed in accordance with their entitlements.”

4. “It is evident that they did their very best to prevent the funds being moved to the Turner Freeman Trust Account as they felt there was the potential to deprive Ms Carruthers of her just entitlements.”

70. The information in (a), (c) and (d) was shared as between the two retainers. It formed the basis of the Supreme Court proceedings which arose out of Mr Goldberg’s insistence on the funds being paid to him, over Kreindler & Kreindler’s initial refusal, and of the arrangement ultimately entered into that the funds be paid over, subject to the requirement that there be no disbursement without a court order as to entitlement. This arrangement was also described in Mrs Marshall’s pleadings in the Supreme Court proceedings. Further, Mr Prescott’s comments in paras (c) and (d) are no more than commentary on the matters contained in the previous two paragraphs.

71. It is possible that the information in para (b) is confidential information. It went beyond simply referring to a category of information that would be expected to be in the file of the US attorneys by specifically disclosing that according to the the US attorneys, the settlement monies had not been based on Mrs Marshall’s dependency, or at least not significantly so. As such it is possible that it was not common to both retainers. However, there were significant negotiations involving all claimants in the US litigation, including those for whom Mr Prescott acted, in relation to the apportionment of the settlement monies amongst the claimants. It is difficult to conceive that Mr Prescott did not know this information as a result of his retainer with Ms Carruthers because it was clearly relevant to the settlement proceedings and was therefore likely to have been central to the sum negotiated and the percentage allocated to each group of dependents. He was thus entitled to use the information on Ms Carruthers’ behalf in proceedings involving the Marshalls.

72. In any event, the extent of Mrs Marshall’s dependency or lack thereof was known. She had made no claim as a dependent in the workers compensation proceedings. In those proceedings, Mrs Marshall explicitly accepted that she was not financially dependent upon Mr Marshall at the time of his death. Nor did Mrs Marshall make any claim that she was financially dependent upon the deceased in the Family Provision Act proceedings. Her only active involvement in those proceedings was as executor of the estate and as the nominal beneficiary under the deceased’s will and trustee of the testamentary trust that she claimed in favour of Kim.

Letter from Prescotts to Turks Legal, dated 15 August 2005

1. “… I have already gained a disc dealing with the emails between Mr Greenwell and [Kreindler & Kreindler].”

2. “I have to say that there are an awful lot of them and it will take some time to go through them.”

73. The Marshalls said that the disc referred to in this letter contained emails passing between Mr Greenwell, Australian counsel acting for the various plaintiffs, and Mr Green, in respect of the conduct of the US litigation. They submitted that this included correspondence relating exclusively to the Marshalls’ claim being the only category which had any forensic value to Ms Carruthers. However, the disc was not available in the Supreme Court proceedings and it is not known what was on it. Although ordered to produce his file by Barrett J on 16 November 2005, Mr Prescott did not produce the disc. Apparently, Mr Prescott had accidentally deleted the information some time earlier. However, any relevant information on it would have been the subject of discovery and other production processes in the Supreme Court proceedings.

74. In any case, Mr Prescott, who acted for most of the claimants, would have known that Mr Greenwell had corresponded with Kreindler & Kreindler and, given the complexity of the US litigation, that there would have been an “awful lot” of communication. This information was not confidential or at the least was shared information.

Fourth issue: was any loss caused by the disclosure?

75. Even if it be assumed that there was some disclosure of confidential information in this material, it was still necessary for the Marshalls to prove that they suffered loss caused by the disclosure of the alleged confidential information. Mr Prescott submitted that they had failed to do so.

76. The Marshalls’ initial argument relating to loss was based upon a wider range of alleged confidential information than that said to be disclosed by the August letters. They contended that the disclosure of that information to GIO had been the cause of GIO entering into the GIO funding agreement, which in turn enabled Ms Carruthers to defend the Supreme Court proceedings. The argument was that if the information had not been disclosed, it was unlikely the funding agreement would have been entered into.

77. However, during the course of argument, the Marshalls refined their claim to allege that only the August letters contained confidential information. The consequence was that their initial argument had to be abandoned, as the August letters post-dated the entry into the funding agreement by many months. This occurred on the second day of the hearing of the appeal.

78. The submission then advanced was that the disclosure of the alleged confidential information in the August letters encouraged GIO to continue to allow the proceedings to be conducted on the basis that Ms Carruthers had a strong claim that she was entitled to the settlement monies. The correspondence, which the Marshalls accepted contained information as to the subject matter, rather than the content, of information that was in the hands of Kreindler & Kreindler, put Turks Legal on inquiry that enabled it to obtain further information to bolster Ms Carruthers’ claim. The consequence for the Marshalls was that the proceedings were prolonged. Mr Bevan, counsel for the Marshalls, submitted that the proceedings would have concluded much earlier, and probably by way of summary judgment, but for the disclosure of the alleged confidential information. This argument may have extended to Teece Hodgson & Ward being similarly encouraged, although whether this was so was never clearly articulated.

79. Mr Bevan accepted that there was no evidence that Turks Legal sought or obtained any further information as a result of the matters disclosed to them by Mr Prescott in the three letters. He did, however, make reference to the provision of confidential information to Ms Person, an expert in Pennsylvania law, who provided an opinion to Teece Hodgson & Ward on 21 October 2005 that stated that Ms Carruthers had a right to half the settlement proceeds. Ms Person’s report was prepared on the erroneous basis that Mrs Marshall was Mr Marshall’s ex-wife. Ms Person’s report was tendered against the Marshalls in an application brought by them to strike out the defence and cross-claim, although Macready AsJ, who heard the notice of motion, held, at 12, that it was “of no help” (Supreme Court of New South Wales, 8 August 2006, unreported).

80. Nonetheless, Mr Bevan submitted that Ms Person’s erroneous report resulted from the disclosure of confidential information to GIO. The contention appeared to be that GIO, or perhaps US attorneys retained to provide an expert opinion, provided to Ms Person confidential information relating to Mrs Marshall’s marital status. However, Mrs Marshall’s marital status was common knowledge. It had been disclosed in all previous legal proceedings and in the letter of 31 May 2001 from Mr Prescott to all parties in the US litigation. But in any event, an erroneous understanding of non-confidential facts by the expert, Ms Person, cannot be sourced to any conduct on the part of Mr Prescott.

81. There were other problems with the Marshall’s argument in relation to the disclosure of confidential information. Insofar as the Marshalls’ submission was directed to encouragement of GIO in continuing the proceedings, the submission overlooked that GIO did not have conduct of the Supreme Court proceedings on behalf of Ms Carruthers. There was no evidence as to the extent to which, having entered into the funding agreement, GIO were involved in the proceedings, save as the funding agreement provided. In this regard, the only relevant provisions of the Deed related to the actual funding and any proposed settlement of the agreement: see cls 3 and 7 respectively, above at [18]. It is, therefore, not at all apparent that GIO was entitled to withdraw the funding, or that it otherwise had any say in how the proceedings were conducted or whether they should be kept on foot.

82. It must also have been apparent to anyone who had had any connection with Ms Carruthers’ claim that the Supreme Court proceedings were likely to be defended by Ms Carruthers. This is so notwithstanding Mr Prescott’s letter to Turks Legal in 2004 in which Mr Prescott indicated that Ms Carruthers would not do so absent litigation funding. Her filing a defence and cross-claim many months prior to entry into the funding agreement is evidence to the contrary.

83. Further, there was no evidence as to what steps GIO took, if any, relying on the information contained in the August letters. The Marshalls asked the Court to infer that GIO used the information in assessing the strength of Ms Carruthers’ claim. However, an inference cannot be drawn in the absence of evidence. In Luxton v Vines [1952] HCA 19; 85 CLR 352, the plurality, Dixon, Fullagar and Kitto JJ, at 358, approved the explanation of the principle of the High Court in the then unreported decision of Bradshaw v McEwans Pty Ltd (1951) 217 ALR 1 as follows:

“… where direct proof is not available, it is enough if the circumstances appearing in evidence give rise to a reasonable and definite inference: they must do more than give rise to conflicting inferences of equal degrees of probability so that the choice between them is mere matter of conjecture ... But if circumstances are proved in which it is reasonable to find a balance of probabilities in favour of the conclusion sought then, though the conclusion may fall short of certainty, it is not to be regarded as a mere conjecture or surmise.” (emphasis added) (citations omitted)

84. In Holloway v McFeeters [1956] HCA 25; 94 CLR 470, the plurality, Williams, Webb and Taylor JJ, observed, at 480, that:

“Inferences from actual facts that are proved are just as much part of the evidence as those facts themselves. In a civil cause ‘you need only circumstances raising a more probable inference in favour of what is alleged … where direct proof is not available it is enough if the circumstances appearing in evidence give rise to a reasonable and definite inference …” (emphasis added)

Their Honours, referring to Bradshaw v McEwans Pty Ltd, emphasised that an inference could be drawn “from the circumstances that sufficiently appear by evidence or admission” provided that the circumstances were left unexplained (emphasis added).

85. The same point was made by Dixon CJ in Jones v Dunkel [1959] HCA 8; 101 CLR 298. That case involved a collision between two trucks. The question in issue was whether there was evidence from which an inference could be drawn that the plaintiff’s death was caused by the negligence of the driver of the other vehicle in the collision. In that context, Dixon CJ observed, at 304, that “the all important question of the cause of the vehicles hitting one another is left unresolved by the circumstantial evidence”. His Honour continued:

“It is possible of course to say that if you have an empty diesel truck coming down a winding road on the outside at thirty-five miles per hour and an International truck going up the road on the inside at twenty-five miles per hour, the former is more likely than the latter to be over the centre line of the road on its wrong side. But that is only to say that of two guesses one is more probable than another. It may be remarked that these are not the only two guesses open as to the cause of the accident. But in any case we are not concerned with a choice among rival conjectures. In an action of negligence for death or personal injuries the plaintiff must fail unless he offers evidence supporting some positive inference implying negligence and it must be an inference which arises as an affirmative conclusion from the circumstances proved in evidence and one which they establish to the reasonable satisfaction of a judicial mind.” (emphases added)

86. This approach to the drawing of inferences applies to any issue on which a party bears a legal onus of proof. The Marshalls in this case bore the onus of proving that the disclosures in the August letters caused loss. They did not do so. All that is known is that Ms Carruthers filed a defence and cross-claim in the Supreme Court proceedings prior to any funding by GIO being in place; that thereafter, apparently at the urging of Mr Prescott, GIO agreed to fund the proceedings and to that end entered into a funding agreement with Ms Carruthers; subsequently, Mr Prescott wrote the August letters; and that, approximately three and a half years later, the proceedings were settled almost entirely in Mrs Marshall’s favour.

87. The suggestion that GIO was encouraged by the receipt of the information in the August letters to continue to fund the proceedings does not satisfy the principles as to drawing inferences to which I have referred. As was pointed out to Mr Bevan on more than one occasion during the course of argument, the submission that GIO were so encouraged did not arise above speculation. The same must be said in respect of Teece Hodgson & Ward.

88. The information contained in the August letters, albeit written in emphatic language, was either not confidential or conveyed nothing more than what was contained in the pleading in the Supreme Court proceedings, what was known as a matter of public information or could be deduced from such information, or was shared information. It urged GIO, who in any event had no role in the conduct of the proceedings, to take steps that are routine steps in any litigation. To the extent that it similarly urged Teece Hodgson & Ward to do so, the same comment applies. More fundamentally there was no evidence from Turks Legal, GIO or Teece Hodgson & Ward that they acted on the information or that the information played any part in the maintenance of the funding of the Supreme Court proceedings, their continuation, or the manner in which they were conducted on Ms Carruthers’ behalf.

89. In my opinion, Mr Prescott’s submission that there was no evidence of any loss caused by his disclosures of allegedly confidential information must be accepted. The result is that the appeal must fail.

90. Mr Prescott also advanced an additional submission on causation. He submitted that his Honour’s finding at [210], which was not challenged by the Marshalls, was fatal to the entirety of the Marshalls’ claim. In brief, the argument was that the Marshalls were required to bring proceedings to prove their entitlement as against Ms Carruthers so that the August letters had no causative effect on the bringing of the Supreme Court proceedings.

91. His Honour’s finding at [210] was as follows:

“… irrespective of any intervention on the part of Mr Prescott (or Mr Greenwell), unless Ms Carruthers abandoned her claim entirely Kreindlers would either not have released the funds to Turner Freeman without the undertakings that it sought, or would have retained the funds itself. Mr Goldberg launched his pre-emptive strike in his letter of 8 April 2003 ... Kreindlers’ response was quick and emphatic. Its letter was sent back the same day and concluded with the statement ‘[u]nless an agreement can be reached, we will have to hold the settlement until a court of competent jurisdiction’ decided the issue ... The only subsequent change from that position was that it eventually released the funds subject to an undertaking they would not be distributed by Turner Freeman without an appropriate court order, and that proceedings of the kind it envisaged would be commenced. In context that change was immaterial.”

92. This finding was made in the context of his Honour having found at [203] that there was “no substance” in the pleaded assertion in para (34)(a) of the further amended statement of claim that there was some secret arrangement between Mr Prescott and Kreindler & Kreindler not to disclose that Ms Carruthers was making a claim until after the Marshalls had agreed that the funds would only be disbursed in accordance with a court order. As his Honour observed, at [204], Mr Greenwell and Mr Prescott had informed Mr Allen from Turner Freeman’s Adelaide office of Ms Carruthers’ claim in late February 2003 and Mr Goldberg was expressly informed of the claim when, on 16 May 2003, Teece Hodgson & Ward, on behalf of Ms Carruthers, requested Kreindler & Kreindler not to disburse the settlement monies to the Marshalls. Mrs Marshall was not sent the Deed of Release until a week later, on or about 23 May 2003.

93. It followed on Mr Prescott’s argument, correctly in my opinion, that Mrs Marshall would have incurred the legal expenses in the Supreme Court proceedings because she was required to commence those proceedings as a condition of the settlement monies being transferred to Turner Freeman.

Conclusion

94. There were various other arguments advanced by the Marshalls, both in written and oral submissions. The arguments were prolix and not always easy to follow. The essential points on the appeal were as I have indicated. It follows from my reasons that the appeal should be dismissed with costs.

95. I would wish to make the following further comments. The appeal to this Court narrowed significantly from the wide ranging proceedings brought at first instance. The narrowing of issues on an appeal is to be encouraged so that only those that have an arguable prospect of success are brought in the appellate court. Unfortunately, the one issue that was pressed in this Court had no prospect of success. There was simply no evidence from which it could be inferred that the proceedings were continued because Mr Prescott wrote the three letters in August 2005 even if there were some available basis upon which information in them could be characterised as confidential. Nor is it apparent why Kim was a party to these proceedings as he was not a party to the Supreme Court proceedings.

96. I also wish to record my concern at the level of preparation that appears to have been undertaken in the case and the over-estimation of time required for the oral hearing of the appeal. This concern relates in particular to the application to file 60 pages of written submissions that had already been prepared at the time the application was made, the Court’s direction that 30 pages only be filed, a breach of that direction, the insistence by Mrs Marshalls’ solicitors that the appeal would take three days and the filing of an unnecessary affidavit of Mr Hanley-Jones on 16 March 2015, referring, inter alia, to communications with the respondent’s solicitors as to the division of the hearing time as between the parties. As the letter of 10 March 2015 reveals, even at that late stage, the appellants’ legal representatives were maintaining their significant over-estimation of the time to be taken for the hearing. Whilst time estimation can never be precise, the view taken by the appellants’ legal representatives reflected an attitude to the preparation and conduct of the appeal that was unwarranted, having regard to the limited basis upon which it proceeded. As these reasons indicate, the issues on the appeal were straightforward and readily resolvable.

Proposed orders

97. I propose, therefore, that the appeal be dismissed with costs.

98. MACFARLAN JA: I agree with Beazley P.

99. EMMETT JA: The question in this appeal is whether the appellants, Ms Margaret Marshall, and her son, Mr Kim Marshall, are entitled to recover damages from the respondent, Mr Michael Prescott, a solicitor, by reason of alleged breach of confidence on the part of Mr Prescott by making use of confidential information acquired by him when acting for Ms Marshall and Mr Marshall. The damages in issue consist of the excess of solicitor and client costs incurred by the Marshalls in proceedings against Ms Linda Carruthers (the Carruthers Proceedings). The loss claimed is the extent to which their solicitor-client costs exceeded party-party costs ordered in their favour and which have been paid.

100. The fons et origo of the dispute in issue in the appeal was a fatal aircraft accident near Whyalla, South Australia, in May 2000 as a result of which Mr Neil Marshall died. At the time of Mr Marshall’s death, he was still married to Ms Marshall. Kim Marshall is their son. However, for some time prior to his death, Mr Marshall had been living with Ms Carruthers in a de facto relationship.

101. Mr Prescott practised as a solicitor in South Australia and was retained on behalf of Ms Carruthers and the Marshalls and other families of victims of the aircraft accident to co-ordinate the conduct of proposed proceedings in the United States for recovery of damages from the manufacturer of the engine in the aircraft as a consequence of the death of the pilot and passengers in the aircraft. Ultimately, a sum of money was recovered from the engine manufacturers and part of that was allocated for the benefit of those who suffered loss as a consequence of the death of Mr Marshall. The relevant funds were received by Turner Freeman, the solicitors for the Marshalls. The Marshalls then, in 2004, commenced the Carruthers Proceedings against Ms Carruthers seeking a declaration that they were entitled to the whole of the funds received by Turner Freeman. Those proceedings were defended by Ms Carruthers and, for part of that defence, Ms Carruthers was represented by Mr Prescott. The Marshalls obtained the relief they were seeking to the effect that they were entitled to the whole of the funds. Ms Carruthers was ordered to pay the Marshalls’ costs of those proceedings on a party/party basis.

102. It is common ground that Mr Prescott was retained by both the Marshalls and Ms Carruthers to co-ordinate the proceedings in the United States. However, there is a dispute as to terms of those retainers and the extent to which the Marshalls consented to Mr Prescott’s acting for both them and Ms Carruthers in relation to the proceedings in the United States. If the Marshalls gave an informed consent to Mr Prescott’s acting for both them and Ms Carruthers, then they accept that most of the so-called confidential information about the disclosure of which they complain was not confidential so far as Ms Carruthers was concerned, because the information was part of what might be characterised as a common enterprise.

103. Even if there was a breach of confidence on the part of Mr Prescott, there is a further question as to whether or not the Marshalls are able to demonstrate a relevant causal connection between the use of the relevant information and the incurring of the costs in question. Thus, it is necessary for them to demonstrate that, but for the use of the confidential information, the Carruthers Proceedings would not have been resisted by Ms Carruthers and the Marshalls’ legal costs would not thereby have been incurred.

104. I have had the advantage of reading in draft form the proposed reasons of the President. I agree with the President, for the reasons proposed by her Honour, that the appeal should be dismissed with costs. I also agree with her Honour’s further comments at [95]-[96].

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Amendments

01 May 2015 - Headnote reformatting.

01 May 2015 - Headnote reformatted.

Decision last updated: 01 May 2015