Mihova & Mihova
[2025] FedCFamC1F 113
•3 March 2025
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Mihova & Mihova [2025] FedCFamC1F 113
File number(s): SYC 10253 of 2024 Judgment of: BEHRENS J Date of judgment: 3 March 2025 Catchwords: FAMILY LAW – LEGAL PRACTITIONERS –Application in a proceeding – Property proceedings – Where the Wife sought a restraint on the Husband’s solicitors continuing to act for him – Where Wife had an initial consultation with those solicitors before she commenced proceedings – Where Application presents novel factual circumstances – Where it was argued that the Husband’s solicitors and the Husband should be restrained because of the risk of breach of duty of confidence – Where it was argued that the restraint is necessary to protect the appearance of justice –Where it is found that confidential information was given by the Wife to the solicitor with whom she had the consultation –Where there is an information barrier in place – Where undertakings have been given – Where it is found there is no real risk of the Wife’s confidential information being disclosed to the solicitors who now work for the Husband –Where there is no issue of time or delay telling against the restraint – Where the risk of a litigant having appointments with multiple solicitors for the purpose of conflicting them out for the other party considered – Where protection of the administration of justice does not require a restraint against the Husband and his solicitors – Where the Application in a Proceeding is dismissed Legislation: Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)
Legal Profession Uniform Law Australian Solicitors’ Conduct Rules 2015 (NSW)
Cases cited: Billington & Billington (No 2) [2008] FamCA 409
Charisteas & Charisteas (2022) FLC 94-109; [2022] FedCFamC1A 160
Cleveland Investments Global Ltd v Evans [2010] NSWSC 567
Dyer v Chrysanthou (No 2) (Injunction) [2021] FCA 641
Kallinicos v Hunt (2005) 64 NSWLR 561; [2005] NSWSC 1181
Li v Jin Lian Group [2018] NSWSC 479
McMillan& McMillan (2000) FLC 93-048; [2000] FamCA 1046
Mumbin v Northern Territory of Australia (No 1) [2020] FCA 475
Osferatu & Osferatu (2015) FLC 93-666; [2015] FamCAFC 177
Porter v Dyer (2022) 402 ALR 659
Division: Division 1 First Instance Number of paragraphs: 42 Date of last submission/s: 20 February 2025 Date of hearing: 20 February 2025 Place: Sydney Counsel for the Applicant: Mr Jones SC Solicitor for the Applicant: Juris Cor Legal Counsel for the Respondents: Mr Sirtes SC Solicitor for the Respondents: Longton Legal ORDERS
SYC 10253 of 2024 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS MIHOVA
Applicant
AND: MR MIHOVA
First Respondent
B PTY LTD
Second Respondent
C PTY LTD
Third Respondent
ORDER MADE BY:
BEHRENS J
DATE OF ORDER:
3 MARCH 2025
THE COURT ORDERS THAT:
1.The Application in a Proceeding filed 13 February 2025 is dismissed.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Part XIVB of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish an account of proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under a pseudonym has been approved pursuant to subsection 114Q(2) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
BEHRENS J
These Reasons deal with an Application in a Proceeding (“the Application”) filed on 13 February 2025 by the wife in property proceedings which she commenced by way of Initiating Application filed on 24 December 2024. The husband filed a Response to Initiating Application on 13 February 2025, and a Response on 17 February 2025 seeking the dismissal of the Application in a Proceeding.
Pursuant to Order 11 of the orders of Campton J dated 17 February 2025, the matter has been included in the Major Complex Financial Proceedings List. At this stage, the contested net asset pool is estimated to be between $50 million and $70 million.
The Application seeks a restraint on the husband’s lawyers, Longton Legal Pty Ltd (“Longton Legal”), from continuing to act, perform work for, aid or otherwise assist him in relation to these proceedings, and various related orders.
Longton Legal filed a Notice of Address for Service on behalf of the husband on 20 January 2025 and have been “on the record” since that time. It is not contested that, on 27 September 2024, the wife attended the office of Longton Legal and had a consultation with Ms Guo Xiao Gang, also known as Grace Guo, (“Ms Guo”), a lawyer employed by Longton Legal, in respect of the family law matter. The wife did not subsequently retain Longton Legal, and her lawyers on the record in the proceedings are Juris Cor Legal.
The Application was listed urgently for hearing before me in circumstances where there is a substantial interim hearing listed on 26 March 2025.
I received into evidence in the applicant’s case the following:
(1)Affidavit of the wife, filed 13 February 2025.
I received into evidence in the respondent’s case the following:
(1)Affidavit of Jason Neo, filed 17 February 2025;
(2)Affidavit of Yiyang Miao, filed 17 February 2025;
(3)Affidavit of Ms G, filed 18 February 2025;
(4)Affidavit of Jingyi Li, filed 18 February 2025
(5)Undertaking of Ms Guo, filed 18 February 2025;
(6)Undertaking of Paul Charles Sant, filed 18 February 2025;
(7)Consent to Waiver of Duty of the husband dated 18 February 2025, emailed to my Associate at 6.51pm on 19 February 2025.
I received the affidavits into evidence with their annexures.
The Undertaking of Ms Guo was in the following terms:
1. I will not, during the existence of these proceedings, have any involvement with the first respondent or any personnel involved with these proceedings for the purpose of these proceedings;
2. I have not disclosed and will not disclose any confidential information (if any was disclosed to me) about the applicant or the consultation that the said applicant had with me on 27 September 2024 to any person other than to a person in accordance with the instructions or consent of the applicant or to Mr Paul Sant of my office capacity [sic] as the managing partner and compliance officer;
3. I will, immediately upon becoming aware of any breach, or possible breach of this undertaking, report it to Mr Sant and where necessary, take such actions as may be needed to prevent a possible breach from materialising.
The Undertaking of Mr Paul Charles Sant, managing partner of Longton Legal was in the following terms;
In my capacity as the managing partner of the law practice, Longton Legal, that Ms Grace Guo who is an employed solicitor of Longton Legal has given to the law practice an undertaking and that I will ensure:
1.Ms Guo will not have, during the existence of these proceedings, any involvement with the client or any personnel involved with these proceedings for the purpose of these proceedings;
2. Ms Guo has not disclosed and will not disclose any confidential information (if any was disclosed to her) about [Ms Mihova] or the consultation that the said [Ms Mihova] had with her on 27 September 2024 to any person other than to a person in accordance with the instructions or consent of [Ms Mihova] or to me in my capacity as the managing partner and compliance officer;
3.Ms Guo will, immediately upon becoming aware of any breach, or possible breach of this undertaking, report it to me; and
4.I will, immediately upon becoming aware of any breach or possible breach of this undertaking, take appropriate actions to address such breaches.
The ‘Consent to Waiver of Duty’ of the respondent was in the following terms (English sections reproduced only):
I, [Mr Mihova], of [D Street, Suburb E], in the State of New South Wales, hereby acknowledges [sic] that:
1.I am aware that my estranged wife, [Ms Mihova], and the applicant wife in proceedings SYC 10253/2024 in Division 1 of the Federal Circuit and Family Court of Australia, in which I am the first respondent to [sic], has previously engaged Longton Legal Pty Ltd to provide her with legal advice on matters not known to me.
2.I am informed by Longton Legal Pty Ltd that the law practice’s duty of disclosure to me does not extend to confidential information which may be held by the law practice (if any was ever disclosed to them) as a result of the matters stated in paragraph 1 herein.
3.I have been informed that I ought to obtain independent legal and financial advice on my rights and obligations in relation to my retainer of Longton Legal Pty Ltd to act for me in the proceedings referred to in paragraph 1 in circumstances referred to therein and in relation to the execution of this consent and acknowledgement.
Both parties filed Outlines of Case on 19 February 2025 (the respondent’s was revised by email), and those outlines included a summary of written submissions. Those written submissions were supplemented by oral submissions – including oral submissions in reply – at the hearing.
At the commencement of the hearing, counsel for the applicant indicated that Order 4 as contained in the Application (being a suppression and non-publication order) was no longer sought.
Submissions on behalf of both parties acknowledged that orders restraining a solicitor from acting for a party are rare. The authorities are clear that the jurisdiction to grant relief of the kind sought by the wife “‘is to be exercised with caution’” (Billington & Billington (No 2) [2008] FamCA 409 (“Billington”), per Coleman J at [43]). This is, in part, because of the “public interest in a litigant not being deprived of the lawyer of his or her choice without due cause” (Billington at [43]).
Neither counsel nor the Court was able to identify any authority which was “on all fours” with the situation with which the Application deals – namely, where: a lawyer from a firm of solicitors (“the first firm”) has conferenced with one party (“the first party”) in relation to the subject matter of the current substantive proceedings but prior to commencing those proceedings; the first party does not retain the first firm, and then commences the proceedings represented by another firm of solicitors; and the first firm (but not the particular lawyer who conferenced with the first party) then acts for the other party in the proceedings. In the family law context, the relevant authorities generally deal with a situation where a solicitor who has worked at a firm which represents one party, then moves to work at another firm, which represents the other party (see, for example, Osferatu & Osferatu (2015) FLC 93-666 (“Osferatu”)). Both counsel agreed that the situation here is novel- in the sense that they could identify no authority in which an application had been made to restrain solicitors in these circumstances.
In Osferatu at [20], the Full Court set out the “three established categories on the basis of which solicitors may be restrained from acting against their client or former client”:
They are: breach of confidence, breach of fiduciary duty and the inherent jurisdiction of a court over its officers and to control its process. Each category has its own principles which guide its operation. The third category may be involved in conjunction with either of the first two so there is clearly an overlap; nonetheless, the basis for the exercise of the jurisdiction in each is different (Kallinicos v Hunt [2005] NSWSC 1181).
The Application was argued on two alternate bases. First, it was said that Longton Legal (and the husband) should be restrained on the basis that there was a risk of a breach of Longton Legal’s duty of confidence to the wife. Second, it was said that Longton Legal (and the husband) should be restrained on the basis that such restraint is necessary to protect the appearance of justice. A reference was made by counsel for the applicant to a duty of loyalty, but, in circumstances where there was no ongoing retainer, the issue is not one of loyalty, but more broadly of the appearance of justice.
BREACH OF CONFIDENCE
It is convenient to deal with the alleged risk of breach of confidence first, because this issue is also relevant to the question of the appearance of justice.
To establish such a risk, it must first be shown that relevant confidential communications were made by the wife to Longton Legal, and the wife bears the onus in this regard (Osferatu). It must then be established that that there is a real risk that the information will come into the possession of the Longton Legal employees who are working for the husband. Longton Legal bears the onus of satisfying the Court that there is no real risk (Osferatu).
The only evidence which could go to establish that relevant confidential communications were made by the wife to Longton Legal was as follows (affidavit of the wife, paragraphs 6-7):
During the consultation, I disclosed confidential information to Ms Guo, who subsequently provided me with legal advice. I saw Ms Guo taking notes in that conference. I will seek a suppression order in respect of those notes before tendering them.
I do not propose to disclose the details of what I said to Ms Guo, as I do not consent to legal professional privilege being waived on this application. Again, I propose to seek a suppression order. In broad terms I sought and obtained legal advice concerning claims against my husband and the steps I may take to protect my interests.
The question of what kind of evidence will satisfy a Court as to the provision of confidential information was explored in Osferatu. At [25], the Court made reference to the Full Court decision of McMillan& McMillan (2000) FLC 93-048 (“McMillan”) where it was stated at [87] (citations omitted):
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. 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”.
The Full Court in Osferatu distinguished the facts of McMillan from those in the matter before it, and explained at [26] that:
Because the applicants in those cases had given instructions to the solicitor about the very matter in issue, it follows easily that there would be a finding that the solicitor who had moved was in possession of confidential information which is or may be relevant to that matter.
In Osferatu, a solicitor of the firm representing the husband had previously worked for the firm representing the wife. That solicitor had had no dealings with the wife in his previous employment. The solicitor had left the firm from which the wife was receiving legal representation in 2012, and the restraint was sought in 2015. As noted at [48], in those circumstances, while:
… the wife need not, for obvious reasons, divulge in her evidence the confidential information she asserts is held by the solicitor she is trying to restrain…for evidence to be persuasive and cogent she should have identified the nature of the information received or likely to have been received by [the solicitor]
It was significant for the Court that “three years had passed since [the solicitor] could have received any information and both sets of substantive proceedings…had resolved” (Osferatu at [48]).
Unlike in Osferatu, in this case the individual lawyer with whom the wife had a conference, Ms Guo, and the lawyers who are now retained by the husband, work at the same firm. Accordingly, the inquiry starts with asking whether I can be satisfied that Ms Guo received confidential information from the wife. The wife says she provided such information to Ms Guo. Understandably, she does not detail what that confidential information was. Whilst the wife could have addressed the topics in a general way without revealing any details, it is understandable that she did not give any further evidence, because giving such evidence always carries a risk that the very confidence sought to be protected is – in some way or in some aspect – revealed.
Ms Guo was not on affidavit. That was presumably because giving evidence in these proceedings would have been inconsistent with her duties to the wife. There was no other evidence to counter the evidence of the wife. The wife’s evidence that she gave Ms Guo confidential information is conclusionary, and of little weight. However, taken together with the evidence that there was a 45-minute consultation in relation to the family law matter for which an invoice was issued, I am satisfied that confidential information was provided to Longton Legal. It is unlikely that the wife would have attended a 45-minute consultation about her family law matter and done nothing more than provide instructions as to factual matters which were not, or are no longer, confidential. It is unlikely that no advice at all was given – particularly in circumstances where the wife paid an invoice for the conference. It is unlikely that matters such as the wife’s appetite for litigation were not canvassed.
The next question is whether I can be satisfied that there is no real risk of confidential information being disclosed to the lawyers who now work for the husband. A preliminary question is whether confidential information has already been disclosed to the lawyers who now work for the husband. I am satisfied based on the evidence of Ms Li, Mr Neo, Ms Miao and Ms G, and the undertaking of Ms Guo, that this has not occurred.
There was evidence about the various steps which have been put in place to ensure that the disclosure of confidential information does not occur in the future. Those steps constitute an information barrier as contemplated by the Legal Profession Uniform Law Australian Solicitors’ Conduct Rules 2015 (NSW), r 10, which provides:
10 Conflicts concerning former clients
10.1 A solicitor and law practice must avoid conflicts between the duties owed to current and former clients.
10.2 A solicitor or law practice who or which is in possession of information which is confidential to a former client where that information might reasonably be concluded to be material to the matter of another client and detrimental to the interests of the former client if disclosed, must not act for the current client in that matter UNLESS—
…
10.2.2 an effective information barrier has been established.
The question is whether the information barrier is effective. The evidence filed on behalf of the husband is to the effect that:
(1)Ms Guo and the managing partner of Longton Legal have each given an undertaking to prevent any possibility of any confidential information disclosed by the wife to Ms Guo coming into the possession of the lawyers working on behalf of the husband.
(2)The husband has waived his right to receive any confidential information from the firm.
(3)Notes from initial appointments where the client does not engage the firm to act beyond that initial appointment are kept by way of photocopies and/or handwritten notes and not stored electronically (affidavit of Jason Neo, paragraph 15);
(4)That note storage method appears to have occurred here, as entry of the wife’s details into the practice management system did not reveal that the wife had engaged with the firm (affidavit of Jason Neo, paragraph 22);
(5)No other lawyer has access to notes taken during initial consultations (affidavit of Jason Neo, paragraphs 14-17);
(6)With respect to the husband’s file on the firm’s electronic storage system, Mr Neo instructed Longton Legal’s accounts department on 23 January 2025 to restrict access so that only he, Ms Li, Ms Miao and Ms G are able to access the information contained therein (affidavit of Jason Neo, paragraph 23).
(7)Ms Guo has been told not to discuss anything in relation to a conference with the wife with any other practitioner in the firm (affidavit of Jason Neo, paragraph 24).
In the written outline of submissions (appropriately, not repeated in oral submissions), the respondent also referred to the fact that the partner with primary responsibility for the file works at a different physical location from Ms Guo. That was a somewhat troubling submission in circumstances where the lawyer who has “day to day carriage of these proceedings” (Mr Neo) and who was the main deponent on behalf of the husband works at the same physical location as Ms Guo- a fact which was only clear from the address on his affidavit.
I am satisfied based on the evidence summarised at paragraph 27 that there is no real risk of confidential information being disclosed to those who now work for the husband, particularly given the undertakings filed by Ms Guo and Mr Paul Charles Sant. The husband has discharged his onus.
THE APPEARANCE OF JUSTICE
It was submitted on behalf of the wife that, even if I am satisfied that there is no issue in relation to breach of confidence, I should make the restraints sought on the basis that it is necessary to do so to protect the integrity of the judicial process and the appearance of justice.
In Charisteas & Charisteas (2022) FLC 94-109, the Full Court at [37] adopted the test applied by the Federal Court in Porter v Dyer (2022) 402 ALR 659, and originally articulated by Griffiths J in Mumbin v Northern Territory of Australia (No 1) [2020] FCA 475 (emphasis in original):
The test to be applied is whether a fair-minded, reasonably informed member of the public might conclude that the proper administration of justice requires that a solicitor be prevented from acting in the interests of the protection of the integrity of the judicial process and the appearance of justice.
As Brereton J made clear in Kallinicos v Hunt (2005) 64 NSWLR 561 at [76] (“Kallinicos”), this is a jurisdiction which is exceptional and must be exercised with caution. The “proper administration of justice” ground can overlap with the issue of breach of confidence because the matters about which a reasonably informed member of the public would relevantly be informed would include whether confidential information had been provided, and whether there is a real risk that confidential information might be disclosed (per Thawley J in Dyer v Chrysanthou (No 2) (Injunction) [2021] FCA 641 (“Dyer v Chrysanthou (No 2) (Injunction)”) at [2]). Other matters need to be balanced, including the consideration that due weight must be given to the public interest in a litigant not being deprived of the lawyer of his or her choice without due cause. Cost and delay are also relevant. The Court should be alert to the risk that such applications may be “misused” or “inappropriately pursued” (per Gleeson JA in Li v Jin Lian Group [2018] NSWSC 479 (“Li v Jin Lian Group”) at [8]).
The submission on behalf of the applicant was put in summary form this way (Outline of Case filed on behalf of the applicant on 19 February 2025, paragraph 9):
The proposition that a fair-minded member of the public would consider it consistent with the “appearance of justice” that a firm of solicitors to whom they disclosed confidential information, and from whom they received legal advice, could turn around and act for the opposite party in the dispute to which that very disclosure and advice related, is not credible.
I was referred to several cases in which restraints have been made on the basis of protection of the integrity of the judicial process and the appearance of justice, rather than on the basis of risk of breach of confidence. There are apparently none which have the same kind of factual scenario as here, and so the use of the jurisdiction in this particular context is without precedent. That does not mean it should not be used on the facts of this case. It may be, in fact, that most firms would regard themselves as “conflicted out” in these circumstances, and that such applications have therefore not been necessary.
In Dyer v Chrysanthou (No 2) (Injunction), a restraining order was made on the basis of protection of the judicial process and the appearance of justice, but that was in circumstances where the same barrister had given advice to a potential witness in defamation proceedings and was then acting for the defendant in those same proceedings. In addition, in that case, the Court was satisfied that there was a real risk of breach of confidence.
Restraining orders have been made in matters where there is a risk of solicitors or former solicitors for a party being a material witness and having a perceived interest in the outcome (see, for example, Kallinicos and Li v Jin Lian Group). Neither of those circumstances arise here.
A restraining order was also made in Cleveland Investments Global Ltd v Evans [2010] NSWSC 567, but the circumstances in that matter were quite unusual, as the following summary from the judgment of Ward CJ at [52] makes clear (emphasis added):
It seems to me that the fair-minded reasonably informed member of the public would have an expectation that a legal practitioner who has been retained by a company, and received instructions from a company director on the retainer of the company and for the benefit of the company, in relation to a claim made against the company (being a claim which related in part to what the company director himself was said to have done) should not be seen thereafter to act for that company director in prosecuting that very same claim against the company in the same set of proceedings. To the extent that such a member of the public were to be informed that the solicitor in question has resisted (or maintains a right to resist) the provision to the company of documents or information obtained from the company director while he was acting for the company, I think this would only strengthen the perception that justice was not being seen to be done if the retainer of that solicitor were to continue.
This case falls well short of those examples. There was only one relatively brief conference, and that occurred well before these proceedings were commenced. There was no retainer beyond the one initial appointment. The solicitor with whom the conference occurred works in a different team from the employees who have carriage of and work on the husband’s file, and those who supervise the employees working on the file. There are in place the information barriers and undertakings to which I have referred above.
There are no issues of costs or delay which tell against the restraint. As at 14 February 2025, the husband has incurred costs of approximately $65,000 with his current solicitors, with this amount excluding counsel’s fees (affidavit of Jingyi Li, paragraph 13). However, the proceedings involve a pool of tens of millions of dollars, and no issue of affordability can arise. The Application has been filed and progressed in a timely way – particularly having regard to the fact that the proceedings were commenced just before the Christmas break. The proceedings are still at a very early stage.
I am not satisfied that a fair-minded member of the public equipped with the facts to which I refer in paragraph 38 might conclude that the proper administration of justice requires the restraint. Apart from the matters referred to there, a fair-minded member of the public would also be alert to the risk that restraining legal representatives in these kinds of circumstances might jeopardise the interests of justice, because it might encourage parties to have initial, brief appointments with multiple legal representatives with a view to conflicting them out of acting for the other party. There was a suggestion in the evidence that this had occurred here. Several counsel had apparently been retained by the wife. Ms Li deposed that she had been informed by the husband that he had made an earlier attempt to engage a different law firm, but had been advised by the solicitor he had consulted that, as the firm had previously been engaged by the wife, they could not act for him (affidavit of Jingyi Li, paragraph 14). There had been no response to the husband’s request for the names of family law practitioners who the applicant had contacted (affidavit of Jason Neo, paragraph 10). I was invited to draw an inference adverse to the applicant. I do not need to do so, but, as I have indicated, the risk of such behaviour is relevant to how a fair-minded member of the public would view the matter.
Each case falls to be determined on its own facts. In another case, it might be that the initial engagement was lengthier or in some other way more substantial, a costs agreement was signed, and/or further steps were taken beyond an initial engagement. In this case, and for the reasons set out above, I am not satisfied that I should exercise my jurisdiction to restrain the husband or his lawyers. I therefore dismiss the Application in a Proceeding filed 13 February 2025.
Any application for costs must be made in accordance with the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
I certify that the preceding forty-two (42) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Behrens. Associate:
Dated: 3 March 2025
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