McMillan & McMillan

Case [2000] FamCA 1046

[2000] FamCA 1046

FAMILY LAW ACT 1975

IN THE FULL COURT
OF THE FAMILY COURT OF AUSTRALIA
AT MELBOURNE  

Appeal No.     SA 53 of 1999
  SA 59L of 1999
  File No.    DG 3491 of 1998

IN THE MATTER OF:

LINDA PATRICIA McMILLAN

Appellant Wife

- and -

KEVIN DOUGLAS McMILLAN

Respondent Husband

REASONS FOR JUDGMENT

BEFORE:                Finn, Kay and Moore JJ
HEARD:                  6th day of October 1999
JUDGMENT:          6th day of September 2000

APPEARANCES:

Mr. G Hammet of Counsel (instructed by Simon Parsons & Co., Solicitors, 165 Princes Highway, MORWELL, VIC, 3840) appeared on behalf of the Appellant Wife.

Mr. R Weil of Counsel (instructed by Newmans, Solicitors, 136 Commercial Road, MORWELL, VIC, 3840) appeared on behalf of the Respondent Husband.

APPEAL SUMMARY

MATTER:  McMILLAN
NUMBER:  SA 53 of 1999, SA 59L of 1999 (DG 3491 of 1998)
CORAM:  Finn, Kay and Moore JJ.
DATE OF HEARING:        6 October 1999
DATE OF JUDGMENT:     6 September 2000

CATCHWORDS:               Restraining order against solicitors - Clerk of one party's solicitors now employed by other party's solicitor - confidential information - O.37 rr.1 and 2, O.4 r.4 Family Law Rules  -  

McGillivray v Mitchell (1998) FLC 92-818,
Thevenaz (1986) FLC 91-748,
Mills v. Day Dawn Block Gold Mining Company Limited; In re Marsland (1882) QLJ 62,
Stewart (Lindenmayer J.,17 April 1997, unreported),
D & J Constructions Pty Ltd v Head (1987) 9 NSWLR 118, Rakusen v Ellis, Munday & Clarke [1912] 1 Ch 831,
Magro (1989) FLC 92-005,
Sogelease Aust. Ltd. v MacDougall and Ors (Wood J., NSW Supreme Court, 17 July 1986, unreported),
Gagliano (1989) FLC 92-012, Griffis (1991) FLC 92-233, Kossatz (1993) FLC 92-386,
Farrow Mortgage Services Pty Ltd (in liq) v Mendall Properties Pty Ltd and Others [1995] 1 VR 1,
Lord Ashburton v Pape [1913] 2 Ch 469.

This was an appeal by the wife against orders made by Wilczek J. on 18 June 1999 whereby his Honour restrained the wife's solicitors from acting on behalf of the wife in property and parenting proceedings in the Family Court between the wife and the husband.  His Honour imposed the restraint because a non-legally qualified law clerk who had previously been employed by the solicitors acting in the proceedings for the husband, and who had in the course of that employment worked on the husband’s case, had moved to work as a secretary to the wife’s solicitor.

The wife appealed on a number of grounds which can be summarised into the following categories:

  1. Adequate reasons for his Honour’s decision.

  2. Jurisdiction to restrain a solicitor from acting for a party.

  3. The test to be applied in determining whether or not conflict of interest exists.

  4. Evidence of a prima facie case of prejudice.

  5. Matters relevant to the determination of prejudice to the husband.

  6. The failure to permit cross-examination of deponents.

  7. Estoppel or delay.

  8. Matters relating to his Honour’s discretion.

Held dismissing the appeal and ordering the wife to pay the husband's costs fixed in the sum of $2000:

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McMillan & McMillan [2000] FamCA 1046
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[2000] FamCA 1046
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CaseChat Overview and Summary

The parties to this appeal were the husband and wife, and the dispute concerned an application by the husband to restrain the wife's solicitors, Messrs. Simon Parsons & Co., from acting in family law proceedings. The husband alleged that a former employee of his solicitors, Mr. Pitts, who was now employed by Messrs. Simon Parsons & Co., possessed confidential information that could be used against him. The primary court, presided over by Wilczek J., had granted the restraining order sought by the husband.

The legal issues before the Full Court were whether the husband had established a prima facie case of prejudice arising from the potential disclosure or use of confidential information by Mr. Pitts, and whether the lower court had adequately provided reasons for its decision to restrain the wife's solicitors. Specifically, the court considered the standard of proof required to demonstrate prejudice and the relevance of the duty of full and frank disclosure in family law proceedings.

The Full Court adopted the principle that a client need only prove a prima facie case as to confidential material, the disclosure or use of which by a solicitor in current proceedings would be prejudicial. The client is not required to divulge the content of the confidential information. The court found that the husband's sworn statement that he had provided instructions to his former solicitor regarding the conduct of his "matter" and the "position to be put to the wife" was sufficient evidence of confidential information. The court also determined that the husband's assertion that this information could be "used against" him constituted prejudice. Furthermore, the court held that the duty of full and frank disclosure in family law proceedings could not override a solicitor's duty of confidence to their client, and that these duties must be able to co-exist.

The Full Court dismissed the appeal, finding that Wilczek J. had not erred in granting the restraining order. The court concluded that the husband had established a sufficient case to warrant the order, and that the reasons provided by Wilczek J., while perhaps brief, were adequate in the circumstances.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

In a similar vein, but under the heading Evidence of a prima facie case of prejudice, it was submitted:“1.That there needs to be positive proof of a prima facie case of prejudice.2.In this matter there was no proof of evidence to support a prima facie case. The evidence before the court consisted of broad allegations giving rise to speculation only. No prejudice could be found on the material.” Again, as earlier indicated, we adopt what was said by Mullane J. in Griffis, in reliance on Mills and Thevenaz, that the client 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 the applicant”. In other words, the client need only give evidence that he has provided confidential information to the solicitor (or in this case, the law clerk/secretary). The client does not have to divulge the content of that information. (See Mills and also Lindenmayer J. in Stewart). In the present case, we consider it sufficient, as we said earlier, that the husband has sworn that he had given instructions to Mr Pitts as to how he wished his “matter to be conducted and the position to be put to the wife”. It is obvious that such matters would come within the description of “confidential information”. As to the question of “prejudice”, it is true that the husband never alleged actual “prejudice” in the sense of using that word in his affidavit. However, he did state that the information could be “used against” him in the proceedings. That must be prejudice. In any event, a careful reading of the relevant passage from Mills (see paragraph 42 above) shows that the Court should not require proof of prejudice. (Again see Lindenmayer J. in Stewart). It was, however, asserted in the submissions of Counsel for the wife that matters relevant to the determination of prejudice to the husband would include the following matters:“1.The actual evidence in support of a prima facie case of prejudice.2.The doctrine of full and frank disclosure.3.The individual facts of a particular case.4A combination of the doctrine of full and frank disclosure and the simplistic nature of the facts of this case result in there not being a prejudice to the husband in this case.” It is unnecessary for us to say very much more about these matters, given the doubts that we have expressed, in the light of the decisions in Mills and Stewart, about the necessity to establish actual prejudice, and given also what we have said about the application of important legal principles regardless of the value of the property which is the subject of the proceedings. As to the relevance of the duty of full and frank disclosure, we cannot see how that duty on the part of a party to family law proceedings can be relied upon to override the duty of confidence which lawyers and their employees have to their clients. The two duties must be able to co-exist.

Decision

Reasons for decision

In his affidavit, the husband continued (underlining added):“9. That during the course of providing instructions to Newmans Solicitors I had occasion to speak directly with Mr Pitts by telephone and did provide instructions to him as to how I wished my matter to be conducted and the position to be put to the wife. That I am informed and verily believe that Mr Pitts typed letters of advice to me in relation to my property and financial settlement. I believe that Mr Pitts had a working knowledge of information and instructions provided by me during his employment with Newmans Solicitors. I believe Mr Pitts was also aware of the advice provided by Messrs Newmans to me as to the likely outcome of these proceedings. I believe Mr Pitts could make those instructions or information available for the use by the Wife against me in the course of these proceedings.10. That when Mr Pitts commenced employment with Messrs Simon Parsons & Co., I instructed my solicitors to object to Messrs Simon Parsons & Co. continuing to act on behalf of the wife as I believed that Mr Pitts held information concerning my file and its conduct which could be used against me by the Wife or her practitioners. …11. That Messrs Simon Parsons & Co refused to cease acting on behalf of the Wife …”9. On 15 June 1999, the wife through her solicitors, Messrs. Simon Parsons & Co., filed a response in which she sought that the husband’s application seeking the restraining order be dismissed (with costs). Various other orders which were relevant to the property settlement proceedings between the parties were also sought in the wife’s response.10. In support of the wife’s application that the husband’s application for the restraining order be dismissed, Mr Pitts filed an affidavit in which he confirmed that prior to 13 October 1998 he had been employed as a clerk at Newmans Solicitors. He described his duties as involving “typing correspondence, attending to the running of the computers and precedents and software upgrades, collecting and delivering the mail and DX, banking, collating of correspondence, answering telephone calls, both for Ms Newman and for Terry Hill… At no time during my employment with Newmans did I have the sole or joint care and control of my own files…”.11. Specifically in relation to the husband’s allegations concerning his involvement in the husband’s case, Mr Pitts stated (at Appeal Book pp.82-83):“6. THAT I have not discussed the McMillan file with anyone at Simon Parsons save and except as it relates to the conflict issue.7. THAT my involvement with Mr. McMillan was minimal. I did not have any appointments or conferences with him nor do I recall taking any instructions from [him] in relation to any contentious issues.8. THAT I am very concerned as to the outcome of this matter as if there is found to be a conflict of interest I would be unable to obtain work in any other Solicitors firm in Morwell or for that matter in the Latrobe Valley and the surrounding areas. Secretary and Support Staff move regularly between law firms and to my knowledge this is the first occasion an issue has been made of the same.”12. When the husband’s application for the restraining order was heard by Wilczek J. on 15 and 17 June 1999, his Honour also had before him affidavits from Ms Norma Elizabeth Newman, who is the principal of the firm Newmans and who has “the care and conduct of the file” on behalf of the husband, and from Ms Jennifer Anne Bowman, the solicitor working with Messrs Simon Parsons & Co., who has “the care and conduct” of the wife’s matter and for whom Mr Pitts has worked as a secretary since 19 October 1998.13. In her affidavit, Ms Newman said as follows in relation to Mr Pitts’ involvement with the husband’s matter while he was employed by Ms Newman’s firm (at Appeal Book pp.111-112):“5.That during the conduct of this file, Mr Pitts took telephone instructions from Mr McMillan on 2nd September, 1997 in relation to correspondence forwarded to Mr McMillan and draft proposed correspondence to be forwarded to the Wife’s solicitors. Mr Pitts again took telephone instructions from Mr McMillan on 6th February, 1998. To the best of my knowledge and belief Mr Pitts was responsible for audio-typing correspondence to the Husband and draft correspondence to be forwarded to the Wife’s practitioners in July 1998, although the database reference had not been changed. It is and was the practice in my office for draft correspondence to be typed from audio tape and for me then to check it and print it from my computer screen. Mr Pitts subsequently spoke with Mr McMillan by telephone in relation to the draft correspondence and was authorised by Mr McMillan to forward same to the Wife’s practitioners. Mr Pitts also spoke with Messrs Simon Parsons & Co on 31st August, 1998 and 14th September, 1998 and 22nd September, 1998 seeking a response to the correspondence. Mr Pitts drafted correspondence [to] Mr McMillan’s superannuation fund on 5th August, 1998, and forwarded a copy of the superannuation fund response to Mr McMillan on 14th August, 1998. Mr Pitts drafted correspondence to Mr McMillan on 1st September, 1998 and on 22nd September, 1998. He also drafted correspondence to Messrs Simon Parsons & Co seeking further responses from that firm on 13th August, 1998 and 22nd September, 1998.6.That the file for Mr McMillan includes handwritten notes of instructions received and advice given, including financial calculations as to the effect of various offers to be made to the Wife. During his employment with Messrs Newmans, Mr Pitts had access to the file, and I believe would have perused the file when following up correspondence in respect of the matter or discussing issues with Mr McMillan.7.That on 14th October, 1998 I sought instructions from Mr McMillan as to the conflict of interest situation given that Mr Pitts was now employed with Messrs Simon Parsons & Co, the solicitors acting for the Wife. I received instructions from Mr McMillan to object to Messrs Simon Parsons & Co continuing to act on behalf of his Wife. …”14. In her affidavit (sworn 15 June 1999) the solicitor for the wife, Ms Bowden, said in relation to Mr Pitts (at Appeal Book pp. 85-87):“2.… He commenced work on or about 19th October 1998 as my Secretary. He currently works in the Family Law Department and the Computer Department. I have not discussed the McMillan file with him save and except in relation to the conflict allegations raised by Newmans.3.I have checked the McMillan file for correspondence from Newmans prior to Mr. Pitts commencing work at Simon Parsons & Co. Now produced and shown to me and marked with the letters “JAB 1” are the following letters received from Newmans:-(a)Letter dated 21 August 1997 reference MLP:BM 211751;(b)Letter dated 24 July 1998 reference MLP:BM 211751;(c)Letter dated 13 August 1998 reference NEN:FCP 211751;(d)Letter dated 22 September 1998 reference NEN:FCP 211751.The letters with Mr. Pitts’ reference did not require any legal skills or knowledge of the file. The only letter involving instructions was the letter of 24th July 1998.4.There was a further letter now produced and shown to me and marked with the letter “JAB 2” dated 23rd October 1998 with Mr. Pitts’ reference. Mr. Pitts had in fact left Newmans at that time.5.To the best of my knowledge and belief Mr. Pitts has not touched, handled or involved himself in any of the files where Newmans acted on the other side before he left their employ. Now produced and shown to me and marked with the letter “JAB 3” is a copy letter dated 27th October 1998 advising Newmans of this situation.6.That Mrs. McMillan first came to Simon Parsons & Co. in December 1996. She had therefore been a client of Simon Parsons & Co. for almost two years before Mr. Pitts came to work here.…8.There have been other matters which have been before this Honourable Court which were commenced when Mr. Pitts was employed by Newmans and are still current or have been concluded since Mr. Pitts has been employed by Simon Parsons & Co. There has never been objection made by Newmans to the Court to this firm continuing to act in the matters. We refer in particular to the matter of Wawrzik and Robinson Court No. DG 1668 of 1995 and Kearney and Sweeney Court No. 4250 of 1993.…10.THAT I have worked with Mr. Pitts for six months and do not consider he would have been competent to advise Mr. McMillan in relation to his property matter.…14.THAT from the letters referred to in paragraph 3 hereof the Court will note minimal progress had been made on the file as of October 1998 and substantial work has been done on the matter since that time. To the best of my knowledge there was nothing to prevent Mr. McMillan bringing this Application in October 1998 rather than waiting the seven months.”The decision of Wilczek J.15. As already mentioned, the husband’s application was heard by Wilczek J. on 15 and 17 June 1999. On 18 June 1999, his Honour delivered judgment in which he granted the restraining order sought by the husband against the wife’s solicitors, Messrs. Simon Parsons & Co. He also ordered that the wife pay the costs of and incidental to that application.16. Because one of the wife’s complaints in this appeal is lack of, or inadequacy, of reasons on the part of his Honour for his decision to restrain the wife’s solicitors, it is necessary for us to undertake a full analysis of his reasons, and it is convenient to do this at this early point in our reasons.17. His Honour commenced his reasons for judgment by outlining the factual background to this case and by referring to the material in the affidavits of the husband, Mr Pitts and Ms Bowden (which we have set out above).18. His Honour then referred to the decision of the Full Court in McGillivray v Mitchell (1998) FLC 92-818, which he described (correctly it would seem) as “the first decision of the Full Court involving this topic of restraining solicitors from acting”, and to the analysis provided in that decision of the two approaches to the question of when a Court will intervene to prevent a solicitor acting against a former client, being the “narrow” or “English” approach, as against the “broader” or “family law” approach. His Honour described these two approaches in the following way (at Appeal Book p.15):

Ratio Decidendi

Legal Principle Established

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