Nasr v Vihervaara

Case [2005] SASC 83

SUPREME COURT OF SOUTH AUSTRALIA

(Full Court)

NASR v VIHERVAARA

Judgment of The Full Court

(The Honourable Chief Justice Doyle, The Honourable Justice Vanstone and The Honourable Justice White)

15 March 2005

EQUITY - EQUITABLE REMEDIES - INJUNCTIONS - INJUNCTIONS FOR PARTICULAR PURPOSES - TO RESTRAIN BREACH OF FIDUCIARY DUTY

EQUITY - EQUITABLE REMEDIES - INJUNCTIONS - INJUNCTIONS FOR PARTICULAR PURPOSES - TO RESTRAIN BREACH OF CONFIDENCE

Appeal from an order of a Judge of the District Court restraining the solicitors of the appellant from acting in a District Court matter against the respondent - the appellant's solicitors had previously acted for the respondent - possession of confidential information - relevance of confidential information - risk of use of confidential information - disclosure of confidential information to client's detriment - conflict of fiduciary duties - competing values in the administration of justice - whether appropriate to grant an injunction in particular circumstances - appeal allowed.

De Facto Relationships Act 1996 (SA) s 9, referred to.
Carindale Country Club Estate Pty Ltd v Astill (1993) 115 ALR 112, applied.
Spincode Pty Ltd v Look Software Pty Ltd (2001) 4 VR 501, discussed.
Martin v Gray (1990) 77 DLR (4th) 249; D & J Constructions Pty Ltd v Head (1987) 9 NSWLR 118; Thevenaz v Thevenaz (1986) 84 FLR 10; (1986) 11 Fam LR 95; McMillan v McMillan [2000] Fam CA 1046; [2000] FLC 93-048; Mintel International Group Ltd v Mintel (Australia) Pty Ltd (2001) 181 ALR 78, considered.

NASR v VIHERVAARA
[2005] SASC 83

Full Court:  Doyle CJ, Vanstone and White JJ

  1. DOYLE CJ:          On 21 October 2004 Ms Vihervaara instituted proceedings against Mr Nasr in the District Court.  She alleged that she had cohabited with Mr Nasr “as husband and wife in a de facto relationship” for a number of years.  On that basis she applied for an order for division of property under s 9 of the De Facto Relationships Act 1996 (SA) (“the Act”).

  2. On the same day she issued an application for an order restraining Von Doussas, a firm of solicitors, from acting for Mr Nasr. 

  3. Affidavits were filed in support of the application and in opposition.  Mr Nasr has not yet filed a Defence.

  4. On 2 November 2004 a Judge of the District Court heard the application.  The Judge ordered that Von Doussas and Mr Carabelas, a member of the firm, be restrained from acting for Mr Nasr in the proceedings.

  5. Mr Nasr has appealed against that order.

    The injunction application

  6. Ms Vihervaara swore an affidavit in support of her application.  Correspondence exhibited to her affidavit indicates that before the proceedings were instituted Von Doussas were acting for Mr Nasr in connection with the claim that Ms Vihervaara proposed to make.  In response to a letter from Ms Vihervaara’s solicitors to Mr Nasr, formulating a claim, Mr Carabelas wrote on 19 July 2004.  He stated that he acted for Mr Nasr.  He added that he had acted for Ms Vihervaara…

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AGLC
Nasr v Vihervaara [2005] SASC 83
Case
[2005] SASC 83
Decision Date

CaseChat Overview and Summary

In the case of Nasr v Vihervaara, the appellant, Mr. Nasr, sought to appeal against an order from a District Court judge, which restrained his solicitors from acting against the respondent, Ms. Vihervaara, in a District Court matter. The appellant's solicitors had previously acted for Ms. Vihervaara, and the central issue of the case revolved around the potential breach of fiduciary duty and misuse of confidential information. The case raised important questions concerning equitable remedies and injunctions, specifically in relation to restraining breaches of fiduciary duty and confidentiality.

The primary legal issues before the court were whether the District Court judge was correct in granting an injunction to prevent the appellant's solicitors from acting against the respondent and if there were sufficient grounds for the judge to find that the solicitors possessed confidential information that could be used to the advantage of the appellant and to the disadvantage of the respondent. The court had to consider the relevance of confidential information in the context of the solicitors' proposed new role against the respondent and the potential for conflict of interest and breach of fiduciary duty.

The court found that the District Court judge had erred in granting the injunction. The reasoning was that there was insufficient evidence before the judge to support a finding that the appellant's solicitors had acquired confidential information from the respondent that could be used to the advantage of the appellant and to the disadvantage of the respondent. The court highlighted the importance of factual findings regarding the possession of relevant confidential information before intervening. The appeal was allowed, and the injunction was set aside, as there were no reasonable grounds to believe that the solicitors would be in breach of their duty of loyalty to the respondent by acting for the appellant.

The final orders of the court were to allow the appeal and to set aside the injunction made by the District Court judge on 2 November 2004. The judges agreed with the reasons provided by the Chief Justice and concurred with the decision to overturn the injunction.

Orders

Orders of the court

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Background

Background to the litigation

As I have said, it appears to me that the approach taken by Drummond J is supported by authority, and is the approach that should be taken by this Court. The wider bases for intervention by the Court suggested by Brooking JA have not yet received authoritative support, as far as I am aware. I am also of the view, with all respect to the Family Court, that the approach taken by Drummond J is preferable to the approach taken in that Court. However, in the end there might be little difference between the two approaches. If a solicitor is in possession of confidential information provided by a former client, being information relevant to a matter in which the solicitor now proposes to act against that client, and which might be used to the advantage of the proposed new client and to the disadvantage of the former client, then I consider that an injunction should be granted, on the basis of the risk that the information might be misused as a result of the conflicting duties now imposed on the solicitor. In that sense it might be said that the Court acts on the basis of a theoretical risk, because it does not concern itself with what the solicitor will actually do. But I do not agree that the Court should intervene on the basis of a theoretical risk that the solicitor has confidential information from the former client that might be used to the disadvantage of that client. My view is that there must first be a finding of fact about the imparting of relevant confidential information, before the Court can intervene.Application of principles to the facts The nature of the claim made by Ms Vihervaara against Mr Nasr is far removed from the nature of the matters in which Mr Carabelas previously acted for her. On the one hand, there are the personal injury claim and the building or boundary dispute with neighbours, and on the other hand a claim based on the relationship between Ms Vihervaara and Mr Nasr. There appears to be little prospect of any common factual ground between the first two matters and the matter currently before the Court. Even one of the wider bases for intervention identified by Brooking JA was limited to inconsistent engagements, by which he meant a continuing engagement in the same matter or in a closely related matter: Spincode at [53]. The matters in which Mr Carabelas acted for Ms Vihervaara do not appear to me to be closely related to the current matter. In her affidavit Ms Vihervaara says only that she instructed Mr Carabelas in the two claims referred to. She does not identify or allude to confidential information imparted to him that might be relevant to the proceedings presently before the District Court, and which could potentially be used to advance the interests of Mr Nasr and to disadvantage her interests. A letter from her solicitor to Mr Carabelas asserts that Mr Carabelas “had the opportunity of becoming acquainted with a number of matters relating to my client’s circumstances and presentation”, but does not identify the nature of those matters. My view is that this bald assertion is not a sufficient basis for the Court to conclude that Mr Carabelas is in possession of relevant confidential information. The same applies to an assertion in another letter that “information” in Mr Carabelas’s possession, and “the acquaintance” that he made of her, means that she will be prejudiced if Mr Carabelas were to continue to act.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

In Mintel International Group Ltd v Mintel (Australia) Pty Ltd [2000] FCA 1410; (2001) 181 ALR 78 Heerey J adopted the view expressed by Gillard J in an unreported case to the effect that confidential information can embrace knowledge that a solicitor learns about a client, the client’s strengths and weaknesses, how the client reacts to situations and in particular the client’s approach to litigation: Mintel at [39]. But he also accepted that this approach cannot be accepted “too literally”. There was nothing before the District Court Judge to provide a basis for a finding that Mr Carabelas had that sort of confidential information about Ms Vihervaara.Conclusion In my respectful opinion the District Court Judge erred. The material before him did not support a finding that Mr Carabelas had acquired confidential information as a result of acting for Ms Vihervaara that might be used to the advantage of Mr Nasr and to the disadvantage of Ms Vihervaara. There were no reasonable grounds for thinking that Mr Carabelas would be in breach of a duty of loyalty owed to Ms Vihervaara were he to act for Mr Nasr. It might be said that there was a theoretical possibility of the use of confidential information to the advantage of Mr Nasr and the disadvantage of Ms Vihervaara, but that could be said only in the sense that there is a theoretical possibility (although not a real possibility on the information before the Court) that Mr Carabelas had acquired some confidential information which might be used to the advantage of Mr Nasr and to the disadvantage of Ms Vihervaara. That theoretical possibility is not a sufficient basis for the making of the order made by the District Court Judge. I would allow the appeal, and set aside the order made by the District Court Judge on 2 November 2004. VANSTONE J: I agree. WHITE J: I agree with the order proposed by the Chief Justice and with his reasons.[k1][k2]

Ratio Decidendi

Legal Principle Established

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