O'Loughlin v Arnott
[2014] VSC 416
•3 September 2014
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
PRACTICE COURT
S CI 2013 5210
IN THE MATTER of Part IV of the Administration and Probate Act 1958
and
IN THE MATTER of the Estate of Geoffrey Vernon Arnott deceased
BETWEEN
| ANNETTE O’LOUGHLIN | Plaintiff |
| and | |
| KATE MICHELLE ARNOTT AND MATTHEW GEOFFREY ARNOTT (who are sued as the executors of the Will) | Defendants |
---
JUDGE: | SIFRIS J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 28 August 2014 |
DATE OF JUDGMENT: | 3 September 2014 |
CASE MAY BE CITED AS: | O’Loughlin v Arnott & Anor |
MEDIUM NEUTRAL CITATION: | [2014] VSC 416 |
---
LEGAL PRACTITIONERS – Claim by plaintiff under Part IV of the Administration and Probate Act 1958 – Plaintiff’s solicitor drew prior will of deceased – Possible misuse of confidential information – Solicitor-client privilege – Duty of loyalty – Restraining solicitor as officer of the court from acting for the plaintiff.
---
APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr M Seelig | Brendan Hardiman & Associates |
| For the Defendants | Mr J D Catlin | Armstrong Legal |
HIS HONOUR:
Introduction and background
The defendants are the executors of the Will of the late Geoffrey Vernon Arnott (‘the deceased’). They are also the children of the deceased.
The plaintiff was the de facto partner of the deceased.
The deceased died on 17 March 2013 leaving a Will.
The plaintiff has brought a claim against the estate of the deceased pursuant to Part IV Administration and Probate Act 1958 (‘the Act’) alleging that the deceased did not properly provide for her in his Will.
Factual matters
Brendan Hardiman (‘Hardiman’) first acted for the deceased when he drew a Will for him in July 1997.
In February 2011, the deceased and the plaintiff (who were domestic partners at the time) consulted Hardiman in relation to their respective Wills.
In September 2012, the deceased (without the plaintiff) instructed Hardiman to draw a new Will for him. The deceased signed this Will which had been drawn by Hardiman on 4 October 2012 (‘the Penultimate Will’).
In February 2013, the deceased instructed Mahons Lawyers (who acted for the defendants in this Part IV proceeding up until about 7 months ago) to draw another Will which the deceased signed on 19 February 2013 (‘the Final Will’). The Final Will and the Penultimate Will are different. Relevantly, the Penultimate Will provides for a transfer to the plaintiff of a property situated at Unit 2/25 Victoria Street, Ringwood East (‘the Property’). The final Will gives the plaintiff a life interest or estate in the Property.
The defendants were granted probate of the Final Will on or about 15 May 2013.
There has been and is no challenge to the validity of the Final Will.
The plaintiff has retained Hardiman as her solicitor in this proceeding.
The defendants by summons dated 23 July 2014, in effect seek a permanent injunction restraining Hardiman from acting for the plaintiff.
The defendants’ application is supported by the affidavit of Mr Matthew Geoffrey Arnott affirmed 11 July 2014 (‘Arnott’s Affidavit’).
The plaintiff relies upon Hardiman’s affidavit of 27 August 2014 (‘Hardiman’s Affidavit’).
Defendants’ submissions
The uncontroversial background is that Hardiman was the deceased’s solicitor, at least for the purposes of the Penultimate Will dated 4 October 2012. The Penultimate Will bequeathed the deceased’s half share in the Property (the deceased’s residence) to the plaintiff absolutely. The estate is largely comprised, by value, of the Property. The other asset, a pension from the deceased’s super fund, passes to the plaintiff.
So far as may be relevant, the deceased was made aware that the plaintiff had been to see the deceased’s then solicitor, Hardiman, secretly on 22 January 2013. Soon after learning this he decided to change the Penultimate Will and did so.
The deceased then made the Final Will, dated 19 February 2013, using a new solicitor at Mahons Lawyers. That Will changed the bequest to the plaintiff from an absolute bequest to a life interest in the deceased’s share of the Property, to pass on death to the defendants, the deceased’s children.
Central to this application, as submitted by the defendants, are the following facts:
(a)the plaintiff’s claim is identical to that originally drafted into the Penultimate Will by Hardiman;
(b)the plaintiff is using Hardiman to do so; and
(c)this conduct is contrary to the deceased’s final statement of testamentary intent.
The defendants submitted that a reasonable inference arises that the deceased made a deliberate choice of new lawyer because he perceived Hardiman had not shown loyalty to him in secretly seeing his de facto partner. Matthew Arnott deposes to the deceased believing the plaintiff was “shopping” when she was in fact seeing Hardiman.
Hardiman is, it was submitted, in possession of the very kind of information which might support the plaintiff’s Part IV claim namely:
(a)facts including financial affairs, strength of the de facto relationship, contributions between the parties to it;
(b)the deceased’s intentions;
(c)the deceased’s beliefs;
(d)the deceased’s strategies;
(e)whether there was ever a reciprocal Will arrangement;
(f)with regard to the deceased’s half share of the Property, that having obtained instructions for a testamentary strategy which the deceased chose subsequently to change, Hardiman made himself available to provide advice to in effect thwart that change.
The defendants submitted further that Hardiman was not just providing advice to thwart his former client’s instructions. He was advising on enforcing or achieving an outcome that he has intimate knowledge of because he advised on exactly that outcome; an absolute bequest of the half share of the Property.
Plaintiff’s submissions
The plaintiff submitted that the only issue in dispute in this case is whether or not the deceased provided adequately for her in the Final Will and as such, the plaintiff is asking the Court to make a maintenance order in her favour pursuant to s 91 of the Act.
Hardiman acts for the plaintiff and has never acted for either of the defendants nor does he have any confidential information from or about the defendants.
Relevant authorities
In Peter Nicholas Yunghanns & Ors v Elfic Ltd (formerly known as Elders Finance and Investment Co Ltd & Ors)[1] Gillard J enumerated three bases for exercising the jurisdiction to restrain a solicitor from acting for a party:
(a) The protection of confidential information;
(b)The requirement of the fiduciary relationship and the obligation of trust, integrity and confidence;
(c)The public interest in the administration of justice and the need to protect the public trust in dealing with solicitors.
[1]Yunghanns & Ors v Elfic Ltd (formerly known as Elders Finance and Investment Co Ltd & Ors) (unreported, Supreme Court of Victoria, Gillard J, 1-2 June 1998, 3 July 1998) 5 (‘Yunghanns’).
The test in relation to (a) was expounded by Hayne J in Farrow Mortgage Services Pty Ltd (In liq) v Mendall Properties Pty Ltd and Others[2] to the effect that there must be a ‘real and sensible possibility of misuse of confidential information’.[3]
[2](1995) 1 VR 1.
[3]Ibid 5.
Confidential information includes general knowledge about a client. In Yunghanns Gillard J said:
reposed within this firm is a substantial body of information concerning Mr Yunghanns and his group, some of which is confidential and concerned his business activities, his thoughts and strategies with respect to business activities, facts which are relevant to the proceeding in question, his attitude to litigation and importantly, assessments and opinions formed by persons within the firm of the type of person he is. In other words, personnel of the firm have got to know Mr Yunghanns very well over some 34 years and got to know a lot about him.[4]
[4]Yunghanns 25.
In Spincode Pty Ltd v Look Software Pty Ltd & Ors[5] Brooking J (Ormiston and Chernov JJA concurring) said:
[5][2001] VSCA 248 [38].
There is a good deal of authority for the view that a solicitor, as an officer of the court, may be prevented from acting against a former client even though a likelihood of danger of misuse of confidential information is not shown.
And that:
Three possible sources of a relevant duty suggest themselves. The first is that there is an equitable obligation of “loyalty”, which forbids not only the concurrent holding of two inconsistent engagements by different clients in the same matter but also the holding of two successive inconsistent engagements.[6]
After rejecting the narrow British view Brooking J said:
But why should we not say that “loyalty” imposes an abiding negative obligation not to act against the former client in the same matter? The wider view, and the one which commends itself to me as fair and just, is that the equitable obligation of “loyalty” is not observed by a solicitor who acts against a former client in the same matter.[7]
[6]Ibid [53]. (Citation omitted.)
[7]Ibid.
Brooking J went further arguing that fiduciary duties did not end after the termination of the fiduciary relationship and that the relationship between solicitor and client is fiduciary. His Honour elaborated further on the proposition that, in essence, solicitors are not allowed to change sides and to do so
… is so offensive to common notions of fairness and justice that they should, as officers of the Court, be brought to heel notwithstanding that they have not (on this hypothesis) infringed any legal or equitable right.[8]
[8]Ibid [58].
In Adam 12 Holdings P/L v Eat & Drink Holdings P/L,[9] Whelan J referred to Kallinicos v Hunt[10] and continued:
37In Kallinicos itself, an order was made restraining a solicitor from continuing to act, not because he held confidential information, which he did not, or because he had previously acted for the opposite party, which he had not, but because his personal involvement in the transactions which were the subject of the proceeding had been such as to render it likely that he would be a material witness, and that his conduct would be challenged. In the circumstances there, the court held that an informed member of the public would conclude that the solicitor’s independent objectivity had been compromised by conflicts between loyalty to his client on the one hand, and his role as a witness and his personal interest in the outcome referable to the possible challenge to his own conduct on the other.
[9][2006] VSC 152 [37] (‘Adam 12’).
[10][2005] NSWLR 561.
In Kallinicos v Hunt,[11] Brereton J undertook a comprehensive examination of the authorities concerning the court’s supervisory jurisdiction over lawyers. In relation to the inherent jurisdiction, his Honour helpfully summarised the following principles from the authorities:
(a)The test to be applied in the inherent jurisdiction is whether a fair-minded, reasonably informed member of the public would conclude that the proper administration of justice requires that a lawyer should be prevented from acting, in the interests of the protection of the integrity of the judicial process and the due administration of justice, including the appearance of justice;
(b)The jurisdiction is exceptional and is to be exercised with caution;
(c)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
(d)The timing of the application may be relevant, in that the cost, inconvenience and impracticality of requiring lawyers to cease to act may provide a reason for refusing to grant relief.
[11]Ibid 582-3 [76].
The Adam 12 decision refers to Nettle J’s (as his Honour then was) judgment in Sent and Primelife Corporation Ltd v John Fairfax Publishing Pty Ltd and Hills,[12] where his Honour held:
Authority establishes that the court will restrain a legal practitioner continuing to act for a party to litigation if a reasonable person informed of the facts might reasonably anticipate a danger of misuse of confidential information of a former client and that there is a real and sensible possibility that the interest of the practitioner in advancing the case in the litigation might conflict with [the] practitioner's duty to keep the information confidential, and to refrain from using that information to the detriment of the former client.[13]
[12][2002] VSC 429.
[13]Ibid [33]. (Citation omitted.)
In TJ Board & Sons Pty Ltd v Samuel Casetllo & Ors[14] which was a matter similar to this in which a party was seeking to restrain a solicitor from acting because of the risk of misuse of confidential information and because the solicitor may be a material witness, Hollingworth J said:[15]
In Carindale Country Club Estate Pty Ltd v Astill [(1993) 42 FCR at 314-315], Drummond J defined the degree of precision demanded in an application such as this in the following terms:
It is a basic requirement that before material will be recognised as having the character of confidential information, the information in question must be identified with precision and not merely in global terms … . The requirement is insisted upon even though it may necessitate disclosing to the court the very information the confidentiality of which it is sought to preserve by the action. This requirement has its foundation in the need for the court to be able to frame a clear injunction, should relief against misuse of confidential information be granted.
[14][2008] VSC 91.
[15]Ibid [51].
Consideration
I propose to accede to the defendants’ application. There is much force in the submissions made on behalf of the defendants. It is neither appropriate nor desirable for Hardiman to continue acting for the plaintiff given the peculiar circumstances of this case. There is clearly a sense of unease in Hardiman acting for the plaintiff against the estate of his former client. The position is exacerbated by the fact that the relief claimed by the plaintiff accords with the Penultimate Will, prepared by Hardiman, but is not in accord with the Final Will prepared by other solicitors.
Hardiman is clearly privy to the basis of the original testamentary arrangements recorded in the Penultimate Will, which the plaintiff in effect now seeks to uphold. Further, he is in effect acting against a former client.
In my opinion, Hardiman is in a real conflict situation and there is a real and sensible possibility of the misuse of confidential information. In preparing the Penultimate Will, the solicitor-client relationship was fully engaged. The plaintiff was not privy to such relationship, despite the fact that she was a beneficiary. During the course of this relationship, matters were discussed and decisions made. These discussions and deliberations, prior to the preparation and execution of a Will are confidential, private and presumably sensitive. They are protected by solicitor-client privilege and there is an expectation by the client that unless so authorised such discussions and deliberations and information in relation thereto will remain confidential. It is indeed this very information that there is a real risk of Hardiman using against the executors and by extension his former client, the deceased. The nature and character of this usually protected information and knowledge are very much at the heart of the matters that may be relevant to resolving the Part IV proceeding. Hardiman is in an untenable position and must cease acting.
I will, hear from the parties as to the precise form of order and costs.
0
2
0