POWELL & POWELL

[2015] FCCA 1010

FEDERAL CIRCUIT COURT OF AUSTRALIA

POWELL & POWELL [2015] FCCA 1010

Catchwords:
FAMILY LAW – Application to restrain wife’s solicitor for acting in s.79 proceedings – conflict of interest – balance of right to legal Counsel of choice and integrity of the process – “broader” approach – reasonableness – application dismissed.

Legislation:

Family Law Act 1975

McGillivray v Mitchell (1998) FLC-92-818
McMillan v McMillan (2000) FLC 93-048
Rakusen v Ellis, Munday and Clarke [1912] 1 Ch 831
Thevenaz & Thevenaz (1986) FLC 91-748

Applicant: MS POWELL

Respondent: MR POWELL

File Number: MLC 434 of 2015

Judgment of: Judge McGuire

Hearing date: 20 April 2015

Date of Last Submission: 20 April 2015

Delivered at: Melbourne

Delivered on: 24 April 2015

REPRESENTATION

Counsel for the Applicant: Mr Howe

Solicitors for the Applicant: Matthew William Harper

Counsel for the Respondent: Ms Colla

Solicitors for the Respondent: Williams Winter

ORDERS

1. The applicant wife’s application to restrain the husband’s solicitors on the record in acting for him be dismissed.

IT IS NOTED that publication of this judgment under the pseudonym Powell & Powell is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT MELBOURNE

MLC 434 of 2015

MS POWELL

Applicant

And

MR POWELL

Respondent

REASONS FOR JUDGMENT

1. This is the wife’s application to restrain the husband’s solicitors on the record, Williams Winter Solicitors, from acting for him in family law property proceedings. She claims a conflict of interest. The application is opposed by the husband.

2. The parties separated on 20 June 2014. These proceedings were commenced by the wife’s application filed 22 January 2015. The husband’s response was filed 2 April 2015. The issue now before me is raised in the wife’s initiating application.

3. This application proceeded on the papers and without cross-examination. The wife relied on her affidavit filed 22 January 2015 and, in particular, paragraphs [225-230]. The husband swore an affidavit on 2 April 2015 and also adduced evidence on affidavit from his solicitor, Adam Brutovic, sworn 31 March 2015.

4. At [226] the wife says “Williams Winter Solicitors have been our solicitors for several years” and at [227] that “Williams Winter Solicitors hold confidential information about me.” She deposes to being a beneficiary of a Family Trust to which the solicitors “hold confidential information”[1].

   [1] Affidavit of Ms Powell sworn 21 April 2015 at 227(b)

5. The wife says that she has received “legal advice” with regard to a variety of legal matters including business debt recovery issues, mortgage refinancing, and removal of a company director.

6. The wife at [228] deposes to knowing Mr Brutovic on a personal level as well as socially.

7. The wife does not claim any legal interest in the subject matter of the solicitor’s instructions save as to being a beneficiary of a Family Trust.

8. The husband denies that the wife has been a client of Williams Winter Solicitors or that the firm hold any confidential information about her or, indeed, his business or trust entities such that would not ordinarily be required to be disclosed in proceedings under s.79 of the Family Law Act 1975 (“the Act”). He says that the wife has attended the solicitors’ offices only to sign documents as a guarantor on a loan. He denies any close personal relationship between him, his family and Mr Brutovic and says that any social meetings have been few and coincidental.

9. Mr Brutovic, in his affidavit, deposes to acting for a number of companies in which the husband has an interest and for him personally only in respect of his directorship of a company and in an insurance claim. He denies ever acting for the wife or taking instructions from her. He says that the wife holds no official capacity in any of the entities to which the firm acts. He says that his professional contact with the wife was only to obtain company documents in her role as bookkeeper. He says that he has met the wife in person on three occasions only.

10. Mr Brutovic says that his firm has never acted for the wife and holds no confidential information in relation to her.

11. Mr Brutovic says that any social contact with the wife has been limited, fleeting and coincidental.

12. Issues such as that now before me often involve a fine balance between the right of a party to legal Counsel of their choice as against maintain the integrity of the legal system where justice must both be done and perceived to be done.

13. Whilst this issue undoubtedly involves an exercise of the Courts discretion the Full Court has provided some guidance in McMillan v McMillan[2] in preferring in family law matters that there be a “broader” approach to the issue of solicitor’s conflict of interest. The Court noted the narrow or English approach where a Court might only exercise its discretion to restrain a legal representative from acting for a party when it is satisfied that real prejudice or “real mischief” will follow unless that solicitor be restrained and usually by reason of actual knowledge of confidential information.[3]

    [2] (2000) FLC 93-048

    [3] Rakusen v Ellis, Munday and Clarke [1912] 1 Ch 831

14. The broader approach, however, contemplates a situation where the risk is theoretical or reasonably perceived rather than necessarily actual. This approach is akin to actual as opposed to perceived bias and where the Courts have taken a more cautious or conservative approach.[4]

    [4] Thevenaz & Thevenaz (1986) FLC 91-748

15. The test in McMillan remains an evidentiary test but one on the broader base. If the legal representative is theoretically in possession of confidential information in respect of the other party then if that other party is not unreasonably of the view that such information could be utilised against them then the Court should intervene to restrain that solicitor from continuing to act. It follows, therefore, that there must be an element of objectivity or reasonableness.

16. The husband here amounts two defences. Firstly, he argues that the wife did not immediately protest upon the solicitors acting for or assisting the husband in negotiations following the parties’ separation. The strong suggestion in the authorities is that any protest should be registered at or very close to the time at which the party becomes aware of the solicitor’s involvement.[5]

    [5] McGillivray v Mitchell (1998) FLC-92-818

17. Noting again the Court’s discretion in such matters, I do not accept the husband’s defence in this respect. The parties separated only in late 2014. The wife’s application (including seeking Orders in respect of this issue) was filed 22 January 2015. It is not disputed that the wife gave written notice of her complaint and protest in November 2014. I do not have particulars as to the frequency or content of the solicitor’s involvement in any preliminary negotiations on behalf of the husband during the latter half of 2014. I cannot be satisfied, therefore, that the wife acquiesced to these solicitors acting for the husband or that there was undue delay in registering her protest.

18. The wife’s primary argument, however, is more problematic. On consideration, I am not satisfied that she does or should reasonably be of the view that the solicitors hold confidential information that might be used against her to her disadvantage in the family law proceedings.

19. It is clear that there was no solicitor/client or fiduciary relationship between the wife and the solicitors.

20. The wife’s involvement has been at arm’s length in respect of information regarding the husband’s company or trust entities. The wife’s involvement, in any event, appears to be relatively minimal and limited. Certainly, the wife does not particularise any transmitting of information to the husband’s solicitors which impart in them sensitive or confidential material that could be utilised to the disadvantage of the wife. Rather, her affidavit is mostly general, generic and particularised and very much so as seen against the denials and greater particularisation in the affidavit of Mr Brutovic.

21. Similarly, the fact of the wife being a beneficiary of a Trust does not, in my view, and without going into the finites of trust law, compromise the solicitor by any obligation to the wife. Certainly, there is no indication that the wife, in her position as beneficiary, has imparted any sensitive information to the solicitor as such that could be used against her in the family law proceedings.

22. Thirdly, on the evidence, or be it untested, I am not satisfied that there exists, or existed, between the wife or the solicitors any social relationship that could give even a perception of conflict of interest. Again the wife’s affidavit in this respect suffers from lack of particularisation against that of the solicitor, Mr Brutovic.

Conclusion

1. In summary, there is no prior or existing solicitor/client relationship between the solicitor and the wife. There is no evidence of any fiduciary relationship between them. There is no detailed or particularisation of the imparting of any detailed or sensitive material from the wife to the solicitors such as could be used against her. I am mindful of the conundrum in matters such as these where the issue is the holding of “confidential” information by the solicitor. There is an obvious difficulty in particularising such information as to do so would immediately lose the adjective “confidential” and defeat the purpose of the exercise. I am also mindful of the authorities suggesting that the conundrum is addressed within the broader approach by an applicant needing only to depose that he or she has imparted information of a confidential nature to a solicitor (McMillan supra at [42]). Nevertheless, and despite these evidentiary constraints and the less onerous broader approach, there must still be some nexus of “reasonableness”. It follows that I am not satisfied on a balance of the competing considerations of any reasonable perception of any conflict of interest in the solicitor such that the husband should be deprived of the solicitor of his choice. The application will be dismissed.

I certify that the preceding twenty-three (23) paragraphs are a true copy of the reasons for judgment of Judge McGuire

Date:  24 April 2015