Montague and Montague
[2017] FCCA 2747
•26 October 2017
FEDERAL CIRCUIT COURT OF AUSTRALIA
| MONTAGUE & MONTAGUE | [2017] FCCA 2747 |
| Catchwords: FAMILY LAW – Whether solicitor should be restrained from representing a party. |
| Cases cited: Osferatu & Osferatu (2015) FamCAFC 177 |
| Applicant: | MS MONTAGUE |
| Respondent: | MR MONTAGUE |
| File Number: | WOC 1118 of 2015 |
| Judgment of: | Judge Altobelli |
| Hearing date: | Written submissions |
| Date of Last Submission: | 24 August 2017 |
| Delivered at: | Wollongong |
| Delivered on: | 26 October 2017 |
REPRESENTATION
| Solicitors for the Applicant: | Ms Mitchell | |
Solicitors for the Respondent: | Mr Williamson | |
ORDERS
The Application in a Case filed 2 December 2016 be dismissed.
The matter be adjourned to 1 March 2018 at 9:30am for Mention.
By no later than 23 November 2017, the Wife file any submission in relation to costs and such submission shall not exceed 500 words. Where any party submits that his or her financial circumstances is relevant, a sworn Financial Statement must also be filed and served.
By no later than 21 December 2017, the Husband file any submission in relation to costs and such submission shall not exceed 500 words. Where any party submits that his or her financial circumstances is relevant, a sworn Financial Statement must also be filed and served.
THE COURT NOTES THAT:
(A)The purpose of the adjourned date is to make trial directions and to adjudicate on any costs application.
IT IS NOTED that publication of this judgment under the pseudonym Montague & Montague is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT WOLLONGONG |
WOC 1118 of 2015
| MS MONTAGUE |
Applicant
And
| MR MONTAGUE |
Respondent
REASONS FOR JUDGMENT
Introduction
By way of an Application in a Case filed 2 December 2016 filed by the Respondent Husband in the substantive proceedings (he is the Applicant in the Application in a Case) seeks orders the effect of which would be that the Wife be restrained from instructing or continuing to instruct Hansons Lawyers during the currency of the proceedings. The Wife opposes the said application and asks that it be dismissed.
Each application was supported by affidavits and written submissions as to the substantive issue, which was whether or not there was a conflict of interest and whether the Wife’s solicitors should cease to act.
The applicable law
The applicable law is found in the Full Court’s decision of Osferatu & Osferatu (2015) FamCAFC 177, with the relevant paragraphs being 20 to 41. The relevant passages which state the test to be applied in a case like the present one are found specifically at paragraphs 34 to 41:
34. We agree with Goldberg J in PhotoCure ASA v Queen’s University at Kingston [2002] FCA 905 where he said at [50] and [51]:
50. It is apparent from Lord Millett's judgment that there are three stages which need to be considered:
• whether the firm is in possession of information which is confidential to the former client;
• whether that information is, or may be, relevant to a matter in which the firm is proposing to act for another party with an interest adverse to the former client;
• whether there is any risk that the information will come into the possession of those persons in the firm working for the other party.
51. The burden of establishing the first two propositions is upon the former client but the burden of establishing the third proposition moves to the firm proposing to act once the first two propositions are satisfied…
35. A balancing of the nature of the information against a consideration of the person to whom the information was given, when the information was given, the relevance of that information to the current proceedings, the risk of disclosure and any proposed protective measures is required before any determination can be made as to whether any relief is required and, if so, what is the appropriate relief.
36. As an example of the application of such considerations we refer to Asia Pacific Telecommunications Ltd v Optus Networks Pty Limited [2007] NSWSC 350.
37. None of this conflicts with what was said in McMillan. At [93] their Honours said:
…We accept that the mere fact of access to confidential information is not the test. Rather the issue is whether the former client actually imparted confidential information to a solicitor (or clerk) who is now employed by the solicitors acting on the other side of the litigation.
38. The risk, and management of the risk, were not issues in McMillan, although the authorities quoted there deal with that aspect of the law in the manner we have described.
39. Before leaving this discussion we wish to refer to the statement in McMillan that even “a theoretical risk of the misuse of the confidential information” is sufficient to found relief. The phase “a theoretical risk” was echoed in Prince Jeffri in the passage quoted earlier. For our part, we find the word “theoretical” unhelpful. There is indeed a continuum of risk from obvious to remote. In Asia Pacific, Bergin J described the risk of disclosure or misuse as “probably real and not fanciful” (at [41]). In Billington Coleman J referred to “any real risk” (at [37]). That phrase was also used by Goldberg J in PhotoCure (at [78]). This is a more meaningful phrase. The consideration should be whether there is a real risk of misuse as opposed to one which is merely fanciful. To the extent that what we have said may be seen to represent a departure from McMillan (which we do not necessarily accept), it is to accord with more recent authority and provides a clearer test.
41. We return finally to Lord Millett in Prince Jefri:
Accordingly, it is incumbent on a plaintiff who seeks to restrain his former solicitor from acting in a matter for another client to establish (i) that the solicitor is in possession of information which is confidential to him and to the disclosure of which he has not consented and (ii) that the information is or may be relevant to the new matter in which the interest of the other client is or may be adverse to his own. Although the burden of proof is on the plaintiff, it is not a heavy one. The former may readily be inferred; the latter will often be obvious. I do not think that it is necessary to introduce any presumptions, rebuttable or otherwise, in relation to these two matters. But given the basis on which the jurisdiction is exercised, there is no cause to impute or attribute the knowledge of one partner to his fellow partners. Whether a particular individual is in possession of confidential information is a question of fact which must be proved or inferred from the circumstances of the case…
(Emphasis added)
The Court does not accept that this is an authority that can be distinguished by its facts, as is contended by Mr Williamson for the Husband. This is a clearly a case which sets out authoritatively and clearly the principles to be applied and the relevant law.
The test, therefore, is as follows:
a)Is the wife’s firm in possession of knowledge which is confidential to the Husband? The answer is clearly yes. Even this is conceded by the Wife.
b)Is that information relevant to the matter before the Court, that is, the dispute between the parties? Even if that is not conceded, the answer is, in this Court’s view, unequivocally yes. Given the allegations made by the Wife in these parenting proceedings, whatever confidential information might have been given in the criminal case is clearly relevant to the issues before the Court.
c)Is there a risk, that is, a real risk, not a theoretical risk, that the information will come into the possession of those persons now in the firm representing the wife?
The Court notes that the Full Court was at pains to explain, at paragraph 39, that the theoretical test no longer applies. The question is: is there a real risk of misuse of confidential information, as opposed to a risk that is merely fanciful. Moreover, the Full Court accepted at paragraph 40 that, just because a solicitor in the Wife’s firm had information, there is no cause to impute or attribute that knowledge to another member of that firm.
It is the third point that is the focal point of argument in this case. The evidence indicates that the Court is satisfied as follows:
a)Mr Frater had relevant information confidential to the Husband when he went to work for the firm representing the Wife;
b)There is no evidence to suggest that this confidential information was communicated to any other member of that firm. The Court notes that the parties proposed that this matter be dealt with on the papers without cross-examination. On that basis, the Court must accept the evidence of Mr Frater and Mr David at its highest; and
c)In any event, Mr Frater is no longer with the firm representing the Wife. The Court is comfortably satisfied, therefore, that there is no real risk of any confidential information Mr Frater once possessed being transmitted to any member of the firm representing the Wife, and it follows that the Application in a Case must be dismissed.
I would expect, in an application like this, that costs would follow the event, whether considered under the Family Law Act or otherwise, but I will give the parties leave to make short submissions about this.
I make this observation. In my opinion, the Full Court’s decision in Osferatu has swung the pendulum against restraining solicitors from acting in circumstances such as the present just because it might look bad or just because there is a theoretical risk that confidential information would come into the hands of those representing the Wife.
The Full Court, consistent with other authorities, has swung in favour of considering the consequences to the Wife of having to change solicitors in a case like this, in preference to the theoretical considerations of how the Husband or, indeed, the public, might perceive the situation.
Accordingly, the Application in a Case filed 2 December 2016 is dismissed.
I certify that the preceding eleven (11) paragraphs are a true copy of the reasons for judgment of Judge Altobelli
Date: 16 November 2017
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