Nardo and Nardo

[2013] FamCA 60

FAMILY COURT OF AUSTRALIA

NARDO & NARDO [2013] FamCA 60

FAMILY LAW - INJUNCTION – Application on behalf of wife to restrain husband continuing to instruct his present solicitor to act in the substantive proceedings – Husband’s solicitor previously acted on various financial matters relating to the parties’ businesses and property – No issue of delay on behalf of the wife in raising objection to the husband’s solicitor acting – Husband’s solicitor relied on cost and inconvenience to husband engaging a new solicitor as main basis for opposing the application – Finding of real risk of disclosure by solicitor in relation to confidential information imparted by wife during the period the husband’s solicitor acted for the parties in respect of their business affairs - Application upheld and orders made restraining solicitor from continuing to act for the husband in the proceedings

Family Law Act 1975 (Cth)

Billington & Billington (No. 2) [2008] FamCA 409
Gagliano (1989) FLC 92-012
Grieves & Tully [2011] FamCA 617
Griffis (1991) FLC 92-233
Kallinicos v Hunt (2005) 64 NSWLR 561
Kossatz (1993) FLC 92-386
In the marriage of Magro (1989) FLC 92-005
McGillivray v Mitchell (1998) FLC 92-818
McMillan & McMillan (2000) FLC 93-048, 26 Fam LR 653, [2000] FamCA 1046
Mills v Day Dawn Block Gold Mining Company Limited; In re Marsland (1882) QLJ 62
Pond & Thurga (No. 2) [2007] FamCA 587
Rakusen v Ellis, Munday & Clarke [1912] 1 Ch 831
Stewart [2000] FamCA 1039
Thevenaz (1986) FLC 91-748

APPLICANT: Ms Nardo

RESPONDENT: Mr Nardo

FILE NUMBER: PAC 5293 of 2011

DATE DELIVERED: 8 February 2013

PLACE DELIVERED: Parramatta

PLACE HEARD: Parramatta

JUDGMENT OF: Collier J

HEARING DATE: 6 February 2013

REPRESENTATION

COUNSEL FOR THE APPLICANT: Ms Druitt

SOLICITOR FOR THE APPLICANT:

Ms Shedden

Shedden & Associates

SOLICITOR FOR THE RESPONDENT:

Mr El-Hanania

Saba El-Hanania Lawyers

Orders

1. That Mr El-Hanania and any legal firm or corporation with which he is involved be restrained from continuing to act for the husband in these proceedings.

2. That the costs of the wife are hereby reserved.  Those costs may be dealt with when the husband’s prospective stay application comes before me.

3. That I vary Order 12 of 6 February 2013, which required the wife’s solicitor to do certain things within seven (7) days of that date, to provide that those things be done within fourteen (14) days of today’s date.

4. That I vary Order 5 of 6 February 2013, which provided for the parties’ solicitors to send a joint letter to the President for the time being of the Institute of Chartered Accountants within seventy-two (72) hours of that date, to provide that this be done within fourteen (14) days of today’s date.

5. That I vary Order 7 of 6 February 2013, which provided for the husband’s solicitor to provide tax returns in respect of the transport industry business within seventy-two (72) hours of that date, to provide that this be done within fourteen (14) days of today’s date.

6. That I vary Order 9 of 6 February 2013, which provided for the husband to produce to the wife valuations of the motor vehicles detailed therein within seventy-two (72) hours of that date, to provide that this be done within fourteen (14) days of today’s date.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Nardo & Nardo has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT PARRAMATTA

FILE NUMBER: PAC 5293 of 2011

Ms Nardo

Applicant

And

Ms Nardo

Respondent

And

Independent Children’s Lawyer

REASONS FOR JUDGMENT

Introduction

1. The matter in which I am about to give Judgment was conducted on 6 February 2013 in a somewhat unusual fashion.  When the matter came before me at 10.00 am on that day, the wife’s counsel made it clear that the wife’s application to restrain the husband from continuing to instruct his present solicitor, Saba El-Hanania, should be dealt with first.  That, indeed, was done.

2. I heard short evidence from the wife and thereafter submissions from the legal representatives of both parties on that issue.  At the conclusion of those submissions, and particularly the husband’s solicitor’s submissions in reply, I was asked to reserve my Judgment.  I was then asked to deal with a series of further matters that required determination.  With the exception of issues of parenting, those further matters were the subject of Orders that I made on the afternoon of 6 February 2013.

3. I have subsequently dealt with the parenting issues in a separate Judgment, which I delivered yesterday, 7 February 2013.  It seemed to me a somewhat unusual course in that, having sought to restrain the husband from continuing to instruct his solicitor to act, the matter then proceeded and I dealt with those other issues.  Whilst this was not raised as an issue before me by either of the parties, I am of the view that this course of action, that is the making of the application to restrain the husband from continuing to instruct his present solicitor and then proceeding without objection to that solicitor continuing to act in relation to those other matters before the Court, in no way acts so as to constitute any waiver by the wife in respect of her application for the restraint sought.

The wife’s material

1. I turn, then, to the application of the wife to restrain the husband from continuing to instruct Mr El-Hanania in these proceedings.  The wife moved on her Response to an Application in a Case filed on 5 February 2013.  However, it must be made abundantly clear that the issue of Mr El-Hanania continuing to act was raised with some force by counsel appearing for the wife when the matter was before me on 30 November 2012 for the first day of the Less Adversarial Trial.

2. At that time, although nothing particularly turns on it, there was some argument as to when the wife, and those acting for her, had been made aware that the husband’s solicitor had come onto the record in place of the third previous solicitor who had represented the husband.  There was some discussion about when a Notice of Address for Service had or had not been served.  In any event, on the morning of the 30^th of November, and with the knowledge that Mr El-Hanania now acted, the wife’s counsel made it very clear that that course was opposed by the wife.

3. The wife relied upon an affidavit sworn and filed on 5 February 2013.  In that affidavit at paragraphs 4 to 16 (that is paragraph 16 on page 4, noting that there has been an error in the paragraph numbering in that document), she set out the grounds upon which she sought orders restraining the husband from continuing to instruct his solicitor.  She said that the solicitor had previously acted for the husband’s parents in these very proceedings.  Further, and in my mind more significantly, she asserts, and I accept, that the solicitor acted for the parties in matters to which she makes specific reference in her affidavit.  There were tendered as exhibits, folders, a binder and a document setting out phone calls, by means of a bundle of phone records.

4. The folders and the binder establish the relationship of solicitor and client between the wife and the solicitor.  The matters in which they were involved together were of a financial nature.  The phone records establish a significant number of telephone calls and text messages, passing between the wife, the solicitor and members of the solicitor’s staff.

The hearing before me

1. The wife was cross‑examined by the solicitor for the husband, who sought to have the wife expand upon her assertion that the solicitor had intimate knowledge of her business affairs.  I then heard submissions from the parties’ legal representatives.  Ms Druitt for the wife submitted that the evidence was more than sufficient, having regards to the decided authorities, to have the solicitor no longer act.

2. The husband’s solicitor argued that as the wife had not clearly articulated the intimate knowledge she alleged or referred to in her affidavit, her application should fail.  Further, he asserted that the requirement of the husband to have to engage further solicitors, should I restrain him (the solicitor) from continuing to act, would be a severe impost upon the husband, such that I should refuse the application.  Indeed, on at least two occasions the solicitor for the husband indicated that this was the strongest point within his argument.

The law to be applied

1. I turn then to the law to be applied.  There is an extensive body of case authority, both in this Court and elsewhere, in relation to preventing solicitors from continuing to act for one party against another party.  The husband’s solicitor referred me to the single Judge decision of Young J (not the Full Court as he had indicated to me) in the matter of Grieves & Tully[1].  In that matter, the learned trial Judge reviewed the authorities, both in this jurisdiction and in other jurisdictions.  His Honour made reference to a discussion by Brereton J of the Supreme Court of New South Wales in the matter of Kallinicos v Hunt[2] as to what appeared to be the appropriate test.

   [1] [2011] FamCA 617

   [2] (2005) 64 NSWLR 561

2. At paragraph 72 of his Judgment, Young J made reference to McGillivray v Mitchell[3].  His Honour then set out, with approval, the matters to which Brereton J had made reference to in Kallinicos v Hunt (supra).  The three bases so identified were:-

   ·a breach of confidence arising from the law of contract and equity;

   ·a solicitor’s fiduciary duties in accordance with equitable principles; and

   ·a superior court’s inherent supervisory jurisdiction over its officers.

   With respect, I agree with that.

   [3] (1998) FLC 92-818

3. Notwithstanding Grieves & Tully (supra) is a recent decision, I am satisfied the leading authority in this Court must still be seen to be the decision of their Honours of the Full Court in McMillan & McMillan[4].  In that case, their Honours examined a large body of case law, both in this Court and what might be called at common law. 

   [4] (2000) FLC 93-048, 26 Fam LR 653, [2000] FamCA 1046

4. From paragraph 41 to paragraph 56 of the Judgment in McMillan (supra), their Honours carefully considered the authorities in this Court in relation to an application such as this.  Their Honours made direct reference to the cases of Thevenaz[5], Magro[6], Gagliano[7], Griffis[8], Kossatz[9] and an unreported decision of Lindenmayer J of Stewart[10] as to cases determined in this Court.

   [5] (1986) FLC 91-748

   [6] (1989) FLC 92-005

   [7] (1989) FLC 92-012

   [8] (1991) FLC 92-233

   [9] (1993) FLC 92-386

   [10] [2000] FamCA 1039

5. Their Honours contrasted those authorities with a line of authority that appeared to apply in common law jurisdictions, and which has been described as the more narrow approach.  In that regard, their Honours of the Full Court made reference to cases such as Rakusen v Ellis, Munday & Clarke[11].  Their Honours of the Full Court commented that in those other jurisdictions where the narrow approach is adopted the Court only intervenes to restrain a solicitor if it is convinced that real mischief and real prejudice would follow if the solicitor were allowed to continue to act. 

   [11] [1912] 1 Ch 831

6. Their Honours found that this test was not appropriate for proceedings in the Family Court.  Their Honours made reference then to a test proposed in Mills v Day Dawn Block Gold Mining Company Limited; In re Marsland[12].  That case appears to be authority for the statement that the duty of a solicitor is not to place themself in such a relationship as might lead to there being even an unwitting breach of duty.

   [12] (1882) QLJ 62

7. Their Honours of the Full Court in McMillan (supra) made reference with approval to the decision of Lindenmayer J, as he then was, in Stewart (supra).  At paragraph 56 of their Judgment, their Honours of the Full Court cited with approval the following passage:-

   All that is necessary is that the wife swears that she has conveyed confidential information to the solicitors and that she believes, not unreasonably, that the information may be used against her, or at least to her disadvantage, in these current proceedings.

   In Grieves & Tully (supra), the following passage appears at paragraph 103:-

   I am of the view that a fair-minded, reasonably informed lay observer would conclude that the proper administration of justice, the integrity of the judicial process, and most relevantly in this matter, the appearance of justice, requires that [Mr D] and the firm of [Law Firm 1] be restrained from acting for the husband in these proceedings.

8. The final case to which I will make specific reference is the decision of Coleman J of Billington& Billington (No. 2)[13].  In that case, his Honour at paragraph 35 adopted and summarised comments made by O’Ryan J in the matter of Pond & Thurga (No. 2)[14], which included the following points (in summary):-

   i. the Court’s jurisdiction is not based on any conflict of duty or interest, but on the protection of the confidences of the former client (unless there is not real risk of disclosure);

   ii.that the exercise of the Court’s jurisdiction to restrain its officers from acting in matters is to be regarded as exceptional and is to be exercised with caution;

   iii.due weight should be given to the public interest in a litigant not being deprived of the lawyer of his or her choice without due cause; and

   iv. the timing of the application may be relevant, in that the cost, inconvenience or impracticality of requiring lawyers to cease to act may provide a reason for refusing to grant relief.

[13] [2008] FamCA 409

[14] [2007] FamCA 587

Discussion & Conclusion

1. To my mind, these cases set out a proper and accurate statement of the law as it presently applies in cases such as this.

2. As to the matters that were the subject of discussions between the wife and the solicitor now acting for the husband, it is not possible for me to be persuaded that there is no real risk of disclosure of matters conveyed in confidence (see Billington (supra)).  I am satisfied that the test set out in paragraph 16 above, taken from McMillan (supra), is the appropriate test.

3. The husband’s solicitor made the issue of the cost, inconvenience or impracticality of requiring him to cease acting for the husband the cornerstone of his submissions to me.

4. In this matter, I am satisfied that I can accept the evidence of the solicitor that work has been done by him to advance the husband’s case.  I am satisfied that such work has indeed advanced the husband’s case.  Whilst any incoming solicitor will need to acquaint themself with the work that has been done (for which he or she will have to be paid), I am not satisfied that that of itself should be a sufficient reason to refuse the wife’s application. 

5. Further, the husband’s solicitor argues that he has incurred very considerable cost in the work that he has done on behalf of the husband to date.  It would appear that at least a part of that work – and I am unable to determine this in an proportionate or mathematical sense – was done after the husband and his solicitor were made aware that the wife was objecting to the solicitor acting on the morning of 30 November 2012.

6. I am satisfied that there was no delay in the making of this application on behalf of the wife.  I am satisfied that the wife’s opposition was made known on the morning of 30 November 2012 when they say they became aware of the solicitor having come onto the record for the husband.  The fact that the wife did not object to the solicitor acting for the husband’s parents at an earlier stage in these proceedings is not, in my mind, a factor that I need take into account.

7. I am aware that the husband objected to a previous solicitor of the wife.  The relevance of this fact, to my mind, is that the husband and his solicitor must be seen to have some knowledge of the matters to be taken into account in an application to restrain a solicitor from acting further for a party, which is precisely the issue in this present case. 

8. I am satisfied, particularly having regard to the matters set out in McMillan (supra), Billington (supra) and Grieves & Tully (supra), that a fair-minded person, such as referred to in paragraph 103 of Grieves & Tully (supra), would be satisfied that in all the circumstances of this case it would not be proper for the husband’s present solicitor to continue to act.

9. I am, therefore, comfortably satisfied that Mr El-Hanania should not continue to act for the husband in these proceedings. 

10. I have given some thought to the form of order that I should make.  The wife seeks an order that I restrain the husband from instructing Mr El-Hanania to continue.  The authorities seem to favour, if the matter is concluded with a view that the solicitor should no longer continue to act, which is the decision I have reached in this present case, that the restraint should be against the solicitor themself and I am satisfied that this is a proper and appropriate form of order in this case.

11. I therefore make the orders set out at the forefront of these reasons for Judgment, which include variations in respect of financial Orders I made on 6 February 2013 which involved the husband’s solicitor, now restrained from continuing to act, to do certain things on the husband’s behalf within certain timeframes.

I certify that the preceding twenty-eight (28) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Collier delivered on 8 February 2013.

Legal Associate:      

Date:    12 February 2013