Selen and Selen and Anor

[2009] FamCA 309

FAMILY COURT OF AUSTRALIA

SELEN & SELEN AND ANOR [2009] FamCA 309

FAMILY LAW – INJUNCTIONS – Restrain solicitor from acting

Family Law Act 1975 (Cth)

Kallinicos & Anor v Hunt & Ors (2005) NSWSC 1181
McMillan and McMillan (2000) FLC 93-048
Griffis and Griffis (1991) FLC 92-233
Stewart & Stewart (unreported, Family Court of Australia, 17 April 1997, Lindenmayer J)
Mitchell v Burell (2008) NSW SC 772
McGillivray v Mitchell (1998) FLC 92-818
Garrey and Crosby [2007] FamCA 696
Pond v Thurga (No 2) [2007] FamCA 587
Thevenaz and Thevenaz (1986) FLC 91-748
D & J Constructions Pty Limited v Head (1987) 9 NSW LR 118
Holborow & Ors v Macdonald Rudder [2002] WASC 265

APPLICANT: Ms Selen

RESPONDENT: Mr Selen

INTERVENER: C Selen

FILE NUMBER: NCC 2454 of 2007

DATE DELIVERED: 20 March 2009

PLACE DELIVERED: Newcastle

PLACE HEARD: Newcastle

JUDGMENT OF: Johnston JR

HEARING DATE: 28 November 2008

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr O’Gorman

SOLICITOR FOR THE APPLICANT: McCabe Partners

COUNSEL FOR THE RESPONDENT: Mr H

SOLICITOR FOR THE RESPONDENT: M Solicitors

SOLICITOR FOR THE INTERVENER: Everingham Solomons (no appearance)

Orders

1. That M Solicitors be restrained from acting or continuing to act on behalf of the husband in these proceedings.

2. That Mr H of Counsel have leave to withdraw from these proceedings.

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

FAMILY COURT OF AUSTRALIA AT NEWCASTLE

FILE NUMBER: NCC 2454  of 2007

MS SELEN

Applicant

And

MR SELEN

Respondent

And

C SELEN

Intervener

REASONS FOR JUDGMENT

Introduction and applications

1. Mr Selen and Ms Selen are parties to substantive property proceedings.  For convenience I shall refer to them as “the husband” and “the wife” respectively.  One of their children, C Selen, is also a party to these proceedings.

2. A preliminary or interlocutory issue has arisen.  This is that the wife has asked the Court to make an order restraining the husband’s solicitors M Solicitors, and any counsel briefed by them on behalf of the husband in these proceedings, from acting or continuing to act on his behalf in the proceedings.

3. The husband has asked the Court to dismiss this preliminary application.

Background

1. The husband was born in 1942 and he is therefore 67 years of age.  The wife was born in 1942 and she is therefore 66 years of age.  The parties married in August 1963 and they separated on 14 February 2007.  There are three children of the marriage, all adults, namely G Selen born in 1963, C Selen born in 1965 and N Selen born in 1969.

2. Throughout their marriage the husband and wife have been involved in farming their property known as P property.

3. A few years before they separated, the law firm M Solicitors acted for the husband and wife in preparing wills for them.  This was in November 2004.  The solicitors also acted for them in the preparation of a draft intergenerational property transfer agreement between them and their sons C and N.  This draft agreement and deed of family arrangement was signed by the husband and the wife and later by their sons in approximately March 2005.

4. In May 2005 the husband and wife sold part of their rural property, P property, to their son N.

5. There is an issue between the parties and at least one of their sons C about the status of the intergenerational agreement.  It is asserted by the wife that the agreement was only in draft form and that in May 2005 the word “Draft” was deleted from the agreement by their solicitor Mr M.  The husband agreed that at the time the agreement was signed there were still unresolved issues about it between the parties.

6. Early in 2007 C Selen lodged a caveat against the titles of some of the parcels of the land comprising the P property, apparently in an endeavour to enforce the agreement.

7. As indicated above, the husband and wife separated on 14 February 2007.  The wife instructed McCabe Partners, lawyers to act for her in the property proceedings.  The wife’s lawyers wrote to M Solicitors on 22 February 2007 raising the fact that the latter firm had previously acted for both the husband and wife in previous business transactions and asked whether in such circumstances they considered themselves in a position to act for the husband in the property proceedings.

8. There was further correspondence about this matter between the solicitors until 5 June 2007 and it is clear that the wife continued to inform the husband’s solicitors that she maintained her objection to them acting for the husband.

9. On 5 June 2007 the husband’s solicitor wrote to the wife’s solicitor and informed her that he had lodged a lapsing notice in relation to the caveat lodged by C Selen and that the caveat had been removed.  The letter included the following:

   It may ease your client’s mind in relation to the intergenerational transfer matter to know that I have lodged and served a lapsing notice in relation to the caveat over property in my client’s name and the caveat lodged by [C] has now been removed.  [C] has informed me that he does not wish to proceed with any action in relation to the caveat or the intergenerational transfer and it appears that that matter may be at an end.

10. The solicitor also urged the wife’s solicitor to identify to him any particular information of the slightest confidential nature that he might have received from the wife and that if there was such a matter he would immediately withdraw.

11. The husband and wife continued to communicate and negotiate by letters between their respective solicitors.

12. The wife no longer raised her objection in any of the further correspondence on her behalf with the husband’s solicitor until May 2008.  This was because the wife had taken the view, following receipt of the letter from the husband’s solicitor dated 5 June 2007, that the issue of the intergenerational transfer agreement and the dispute with C was at an end.  The wife instructed her solicitor not to pursue the matter further.

13. But in March 2008, just before the parties attended a financial conciliation conference, the wife received a letter from the husband’s solicitor indicating that C’s solicitor had informed him that C might be making a claim which could involve re-visiting the intergenerational transfer agreement or otherwise involve an equitable claim.  On 5 March 2008 the parties attended the financial conciliation conference.  The wife became aware that the husband proposed to amend his substantive application to seek orders that part of the P property be transferred to C. 

14. This was formalised by the filing by the husband of an Amended Initiating Application seeking orders to this effect and joining C as a party on 7 April 2008. 

15. From approximately this time the wife again became concerned about Mr M continuing to act for the husband because it was clear that matters relating to the intergenerational transfer agreement had again become in issue.

16. There was further correspondence between the solicitors the details of which I shall refer to below.  Suffice it to say that the wife continued to communicate to the husband’s solicitors that she was opposed to Mr M continuing to act for the husband on the basis that she regarded him as having a conflict of interest.

The wife’s case

1. It was submitted on behalf of the wife that this case falls within the principles upon which courts can restrain legal practitioners from acting in proceedings as set out in Kallinicos & Anor v Hunt & Ors (2005) NSWSC 1181. These include the following circumstances:

   -where a solicitor was previously acting for a client and there is a risk of disclosure or misuse of material which is confidential to that former client and

   -the Court’s inherent jurisdiction to maintain authority in respect of legal practitioners and to control its process in the aid of the administration of justice.

2. It was also submitted that the Court should adopt the “broader” or “family law” approach approved by the Full Court of this Court in McMillan and McMillan (2000) FLC 93-048. Under this approach the Court will intervene if there is “a reasonable apprehension that confidential information has been given to a lawyer by a former client and that there is at least a theoretical possibility that this information might be used to the disadvantage of that client”.

3. In relation to the degree of proof of the passage of confidential information, the Full Court accepted views expressed by Mullane J in the case of Griffis and Griffis (1991) FLC 92-233 that:

   … the client need only prove a prima facie case as to confidential material, the disclosure or use of which by the solicitors in the course of the conduct of the current proceedings for the present client would be prejudicial to the applicant.

4. It was further submitted that the Full Court in McMillan (above) went on to observe that Lindenmayer J in the unreported decision of Stewart (17 April 1997) had accepted Mullane J’s exposition of the law… .

5. Learned counsel for the wife submitted that there was a further basis to support the granting of the injunction to restrain Mr M.  This was because Mr M was likely to become a witness in the proceedings and the Court should use its inherent jurisdiction to supervise solicitors for the purpose of preventing a conflict of interest which would almost certainly arise if Mr M became a witness and at the same time continued to act for the husband.

6. In relation to any alleged delay by the wife in communicating her objection about Mr M continuing to act for the husband it was submitted that the wife raised her objection to this from the outset.  It was submitted that the wife only relaxed her objection in circumstances in which she was informed by the husband’s solicitor that it appeared that C Selen had decided not to continue to press matters of intergenerational transfer.  When this issue became enlivened the wife lost no time in re-stating her objection about Mr M continuing to act for the husband.  It was submitted that in these circumstances it could not be found that the wife had delayed in making clear her objection to the husband.

The husband’s case

1. There was broad agreement about the applicable law and, in particular, reference was made to the principles in McMillan (above).

2. It was submitted that despite the husband’s solicitor seeking from the wife particulars of alleged confidential information in the hands of the solicitor which would prejudice her, the wife refused to provide any particulars.

3. In any event, it was submitted that there was no suggestion by the wife that she ever spoke to Mr M without the husband being present at the time.  Accordingly, it was submitted that the husband would be privy to any conversations between the wife and Mr M.  The husband would also be privy to any conversation the wife had with the husband before the husband conveyed instructions to Mr M.  Therefore, the husband would be able to adduce evidence of any discussions either in the presence of the solicitor or not in the presence of the solicitor.

4. It was submitted that in these circumstances it could not be said that there was the potential or theoretical ability for confidential information to be conveyed.  In this regard learned counsel for the husband referred to the following passage by Mullane J in Griffis (above) at page 68,601:

   It is doubtful that the solicitor/client duty of confidentiality applies as regards disclosure to the wife in respect of information which the husband gave orally to the solicitor in her presence.  (See Baker v Campbell (1983) 153 CLR 52)

5. Therefore it was said that there was no potential for confidentiality established even on a prima facie basis by the wife and no evidence of any prejudice.

6. In relation to the suggestion that there may be a conflict caused by the possibility that the solicitor might become a witness in the proceedings learned counsel for the husband submitted as follows.  Brereton J observed in Mitchell v Burell (2008) NSW SC 772 at paragraphs 20 and 21 that merely because a solicitor will be a material witness in proceedings does not justify restraining the solicitor from continuing to act. It was submitted that his Honour went on to observe that the line is only crossed when the solicitor has a personal stake in the outcome of the proceedings or in their conduct, such as the personal or reputational interest of the solicitor.

7. It was also submitted that there was some delay by the wife in making her complaint that Mr M should discontinue acting for the husband and that on the principles in McGillivray v Mitchell (1998) FLC 92-818 this might be sufficient for the Court to refuse the injunction.

8. Finally it was submitted on behalf of the husband that there were matters which would persuade the Court in its discretion not to grant the wife’s application.  These were as follows.  Mr M has been acting for the husband in the proceedings now for a couple of years.  The same counsel has been involved since shortly after the institution of the proceedings.  The husband has a prima facie right to instruct lawyers of this choice.  He has confidence in his lawyers.  It is said that the husband is in ill health.  It would take the husband considerable time to become appraised of the issues which would not only cause him additional cost but also considerable stress.

Discussion

Risk of disclosure of confidential material

1. In Garrey and Crosby [2007] FamCA 696 I accepted that there are three bases upon which a court can restrain solicitors from acting in proceedings. The first is what is described as the fiduciary basis where a solicitor is acting for the client currently and there is essentially a conflict of interest. The second is where a solicitor was previously acting for a client and there is a risk of disclosure or misuse of material which is confidential to that former client. The third is what is described as the Court’s jurisdictional basis, that is that there is an inherent jurisdiction in courts to maintain authority in respect of legal practitioners. As indicated by both learned counsel in the present case these principles emerge from the judgment of Brereton J in the New South Wales Supreme Court case of Kallinicos & Anor v Hunt & Ors (above) and as adopted by O’Ryan J in Pond v Thurga (No 2) [2007] FamCA 587.

2. As was submitted by learned counsel for the wife, the facts of the present case fall for determination within the principles of the second and third of those bases.

3. As was observed by both learned counsel in the proceedings, it is clear from the decision of the Full Court of this Court in the case of McMillan and McMillan (above) that two approaches have developed in this area concerning restraints on legal practitioners.  These were described by the trial judge in that case, Wilczek J, as the “narrow” or “English” approach and the “broader” or “family law” approach.  These were described as follows at pages 87,718 and 87,719:

   The first approach was described as being either the ‘narrow’ or ‘English approach’ with numerous authorities referred to, with a suggestion that a court would only intervene when it is convinced both that a confidence has been reposed in a lawyer by a former client, and that it is probable that this confidence will be used in the subsequent proceedings to the disadvantage of the former client.  On that approach the court would ignore theoretical risks.

   The second approach was referred to as being a ‘broader’ or ‘Family Law’ approach where it was said that the court will intervene if there is ‘a reasonable apprehension that confidential information has been given to a lawyer by a former client and that there is at least a theoretical possibility that this information might be used to the disadvantage of that client’.  To that end earlier decisions were referred to such as that of Justice Frederico in Thevenaz (1986) FLC 91-748, Rourke J in Magro (1989) FLC 92-005; Smithers J in A and B (1990) FLC 92-126; Mullane J in both Griffiths (sic) (1999) (sic) FLC 92-233 and Kozatz (sic) (1993) FLC 92-386.

4. In McMillan (above) the Full Court undertook a quite detailed review of numerous authorities both in this Court and other Courts concerning restraint of legal practitioners. Ultimately, the Full Court endorsed the “broader approach”.  It said at page 87,733 as follows:

   To the extent that it is necessary in this case for us to express a concluded view … we would support the application in this jurisdiction of the approach of Frederico J in Thevenaz (following Mills) which was adopted by Mullane J in Griffis and in Kossatz (and also by Lindenmayer J in the unreported case of Stewart to which we will shortly refer).  We would do so for the reasons related to the sensitive nature of the jurisdiction which were referred to by Bryson J in D & J Constructions and by Rourke J in Magro, and indeed also by Wilczek J in the present case.

5. Earlier in the judgment (at page 87,725) the Full Court had set out the essence of Frederico J’s approach in Thevenaz (1986) FLC 91-748 in the following passage:

   41. In Thevenaz, Frederico J was prepared (if required) to restrain a solicitor, Mr Dezarnaulds, from acting on behalf of the wife in property settlement proceedings against the husband where that solicitor had previously been in partnership with another solicitor, Mr Halliday, who had handled conveyancing matters for the husband and the wife.  In the course of his reasons for judgment, Frederico J said …

   “The problem, however, is that it is the practitioner's duty to put at his client's disposal, not only his skill but also his relevant knowledge, and if he is not prepared to make that knowledge available, he should not act.  (See Spector v Ageda (1973) 1 Ch 30.) Mr Dezarnaulds is thus under a duty to make available to his client such information as may appear from the files of the parties formerly kept by Mr Halliday which are in Mr Dezarnaulds’ possession or power.”

   In the Full Court of Queensland in Mills v Day Dawn Block Gold Mining Company Ltd; In re Marsland (1882) QLJ 62 at p 63 Lilley CJ said:

   “It was the duty of the attorney not to place himself in such a relation as might lead to there being even an unwitting breach of duty.  Here they found a man retained by a party who was in direct opposition to the interest of his client, an interest upon which he had previously actually advised, and Mr Mills was therefore entitled to the protection of the court.  Upon the main question, whether any confidence had in fact been imparted to Mr Marsland by Mr Mills, there was a conflict of testimony.  If they (the judges) were to insist upon actual proof of the existence of such confidence, and to insist upon knowing what it was, and whether it was likely to prejudice a client's interests, they would compel him to strip himself of the protection which the court usually afforded, and the whole mischief he wished to avoid might arise.”

   Thus ‘a practitioner who wishes to cease acting for one party and to continue to act for the other party will be restrained from doing so by the court if there is any evidence that confidential communications have been made to him by the party for whom he is ceasing to act. In such a case the court will not weigh conflicting evidence as to confidence. It will act upon the evidence of the client who swears that he has made the confidential communication’. (See Legal Profession Law and Practice in Victoria (Gifford) 1980 ed. at p 356.)

   I must say that at first sight it appeared to me that in a case of this nature the matter should be resolved by the relevant Law Society.  However, although Mr Dezarnaulds is entitled to practise in the Family Court of Australia pursuant to the provisions of Pt VIIIA of the Judiciary Act 1903, he has not sought to argue that the Court lacks power to restrain a solicitor from acting on behalf of a client.  Every court has control of its own procedure and it is apparent from the decision in Mills’ case to which I have referred, and from other cases arising in somewhat differing circumstances, that the Court has the power to restrain.

   It is my view that in this case Mr Dezarnaulds should not continue to act on behalf of Mrs Thevenaz.  It may well be that the risks were he to do so are more theoretical than practical.  However, it is asserted and not contradicted that material in the files does relate to confidences exchanged in the course of the former firm previously acting on behalf of both parties and would embarrass the husband.  It is of the utmost importance that justice should not only be done but should appear to be done.  In the circumstances of the present case, there is a risk which may well be merely theoretical but still exists, that justice might not appear to be done.”

1. In my respectful view, the following passage in McMillan (at page 87,734) is also instructive:

   56. Finally in this review of the cases decided to date, we draw attention to the fact that in the unreported decision of Stewart (17 April 1997), Lindenmayer J quoted at length from the decisions of Mullane J in Griffis and Kossatz, and went on to accept Mullane J’s exposition of the law.  Lindenmayer J was also prepared to follow Mills, as this extract from his judgment shows (underlining added):

   “I generally agree with and adopt the analysis of the law which fell from Mullane J in those two cases, and I propose to follow it.  In the circumstances of this case, it seems to me that the wife does raise a prima facie case that the solicitors have received from her, during the previous retention of them by the husband and wife, confidential information which may, even quite inadvertently, be used to the advantage of the husband or to the disadvantage of the wife in these current proceedings.

   As I have said, she claims to have conveyed confidential information to Ms Maria DeDonatis in relation to a number of matters including, it would seem, her marriage difficulties with the husband, and some allegations by him of infidelity by her and, of course, there was also an involvement by the solicitors at that time in the business affairs of the parties, in the sense that they must have received some information about their general business operations and they may well have received information about the sort of work which each of the parties claimed to do in the business.

   Now, all of those matters may be of some relevance, ultimately, to the proceedings in this jurisdiction.  As I have said, although the essential facts are denied by Ms DeDonatis, on the basis and the decision and the dicta of the Full Court of Queensland in the Mills case, adopted by Mullane J in Griffis, I am of the opinion that it is not appropriate for me, at this point, to enter into any examination of where the truth lies or to attempt to try an issue of fact about those matters.  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 that information may be used against her, or at least to her disadvantage, in these current proceedings.  Accordingly, I propose to accede to the application of the wife.”

2. In the present case it is clear that the wife has sworn that she conveyed confidential information to the solicitor and that she believes that such information may be used to her disadvantage in the substantive proceedings.

3. There is no question that the wife has conveyed information to Mr M in the course of instructing him about the preparation of her will and the intergenerational transfer agreement.  But as indicated above, it is submitted on behalf of the husband that there was no confidentiality in this material so far as the husband is concerned because at all times when the wife imparted such information to Mr M as her solicitor, the husband was present.

4. As indicated above, in support of this submission, learned counsel for the husband referred to the comments made by Mullane J in Griffis (above) as referred to above.  These were to the effect that it was doubtful that the solicitor/client duty of confidentiality applies as regards disclosure to a person in respect of information given orally to the solicitor in the presence of that person.

5. One might think that such a proposition would be difficult to take issue with.  Yet, as indicated above, learned counsel for the wife offered the somewhat ingenious submission that such would not necessarily be the case because the husband in the present case might have forgotten the confidential information or misunderstood it, in which case provided that the solicitor had not forgotten or misunderstood the information, there would be at least the theoretical possibility that such could be used by the solicitor to the prejudice of the wife.

6. Despite the reservations expressed by Mullane J in Griffis (above), I am prepared to adopt the admittedly somewhat broad test posed by Lindenmayer J in Stewart namely:

   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 that information may be used against her, or at least to her disadvantage, in these current proceedings.

7. I am fortified in this view by the following observations by Bryson J in the New South Wales Supreme Court case of D & J Constructions Pty Limited v Head (1987) 9 NSW LR 118 in the course of considering the decision in Thevenaz:

   It seems natural that a particularly careful view would be taken in family law business, as such litigation tends to be about highly confidential facts and a very wide range of facts and circumstances can conceivably be relevant; the sensitivity which even the most reasonable people feel about such litigation when they are engaged in it calls for careful measures to secure not only that justice is done but also that it is apparent that it is done, an appearance which would not survive any general impression that lawyers can readily change sides.

8. But even if I am wrong in this view there is another basis which in my view would support the granting of the injunction sought by the wife.  This is the likelihood that such has been the involvement of Mr M in the business of the parties that he will be a witness in the proceedings.

The solicitor as witness

1. At the heart of the wife’s concerns about Mr M continuing to act for the husband are the circumstances surrounding instructions for, preparation of and the aftermath of the intergenerational transfer agreement.  As indicated above, it is clear that the wife regards these matters as being significant in the substantive proceedings.  As also indicated above, when the wife received the information from the husband’s solicitor that C Selen was unlikely to pursue this issue the wife instructed her solicitor not to continue to object about Mr M acting for the husband.  As also indicated above, the wife renewed her objection to this when it became clear that C would again pursue the transfer of land issue.

2. In these circumstances, it is almost inconceivable that these matters would not be of relevance in the substantive proceedings.  Mr M, as a central figure in the relevant fact situation is almost certain to be involved as a witness in relation to these matters.

3. Ipp J in his most interesting article “Lawyers’ Duties To The Court” (1998) 114 L.Q.R. 63 said at pages 92 and 93 as follows:

   It is undesirable for a lawyer to appear as a witness in the same case as he is instructing solicitor (and, a fortiori, counsel) – Chapman v. Rogers; ex p. Chapman [1984] 1 Qd R. 542 at p.545. Similarly, it is undesirable that, where an affidavit has been filed by a lawyer in support of an application by a client, the lawyer appear as solicitor or counsel – R. v. B (SH) 1993 89 Man R (2d) 267; R. v. Deslaurier [1993] 2 W.W.R. (Man. C.A.).  The reason for this is that the lawyer would be in a position of apparent conflict between the duty to advance the interests of the client and the duty to the court to give impartial evidence.

   In Australia it has been held that such a conflict would not be sufficient to justify an injunction restraining the lawyer from continuing to act for the client – Yamaji v. Westpac (No 1) (1993) 42 F.C.R. 431. This is to be contrasted with Canada, where the courts have restrained lawyers from acting in cases where they, or members of their firm, are to testify as witnesses – Northway Chevrolet Oldsmobile Ltd v. EAM Management Ltd (1993) 110 DLR (4^th) 440; Dana-West Hotels Ltd v. Royal Bank of Canada (1984) 37 Sask. R. 81. The test laid down is that the court must be satisfied that mischief would probably result if the lawyer who appears as the advocate will or will likely testify at the trial – Northway Chevrolet (above) and Dana-West Hotels (above).  It is submitted that the Canadian approach is to be preferred.  After all, the improper exercise of legal rights is a foundation for the modern jurisdiction of injunction – National Mutual Holdings Pty Ltd v. Sentry Corporation (1989) 22 F.C.R. 209 at p. 232 per Gummow J.; see also Davies v. Clough (1837) 8 Sim 262, (1836) 42 R.R. 171 at p. 174. Where the circumstances establish a material degree of impropriety, the court should be entitled to protect its integrity by granting an injunction.

4. In the case of Holborow & Ors v Macdonald Rudder [2002] WASC 265 in the Supreme Court of Western Australia Heenan J. was considering the duties of legal practitioners. At pages 9 and 10 his Honour said as follows:

   Concurrently with the obligations to the client will be the practitioner’s obligations to the court which have been described as “an overriding duty” – per Mason J in Giannarelli v Wraith (1988) 165 CLR 543 at 555 … .

   …

   If there are circumstances which are likely to imperil the discharge of these duties to a court by a legal practitioner acting in a cause, whether because of some prior association with one or more of the parties against whom the practitioner is then to act, or because of some conduct by the practitioner, whether arising from associations with the client or a close interest which gives rise to the fair and reasonable perception that the practitioner may not exercise the necessary independent judgment, a court may conclude that the lawyer should be restrained from acting, even for a client who desires to continue his service – (Clay v Karlson (1997) 17 WAR 493); Wan v McDonald (1992) 33 FCR 491; National Mutual Holdings Pty Ltd v Sentry Corporation (1989) 22 FCR 209 and Afkos Industries Pty Ltd v Pullinger Stewart [2001] WASCA 372.

   From the wider viewpoint, including the perspective of the legal practitioner’s duty to the court, it can readily be perceived that this situation justifies intervention by the court because of an actual or sufficiently material threatened conflict of interest by the practitioner, as an officer bearing fiduciary obligations, between his obligations to the court, and his obligations to the client or to some other interest.  So it has long been accepted that a legal practitioner, who is likely to be a witness in a case should not act as counsel, or continue to act as counsel if a situation arises where he is unexpectedly required to give evidence.  The reason being is that the personal integrity of the practitioner may be put in issue if his credibility is at stake as a witness, and that this will, or may, constitute a personal interest inconsistent with the practitioner’s duty to the court or to the client.

   …

   However, it by no means follows that every conflict of interest between the legal practitioner and a client will give rise to a concurrent conflict of interest between the legal practitioner and his duty to the court, or, even where it does, that there is a risk that the practitioner will disregard his overriding duty to the court in favour of his client’s interest.  It seems to me that if it can be demonstrated that there is a risk that a practitioner will disregard his overriding duty to the court that this will usually, if not always, require action by the court to avoid such a risk by preventing the practitioner from acting even if the relief is sought by an opposing party in the litigation.  But these principles do not render counsel or solicitors generally examinable at the suit of their client’s opponents.  The duty of the legal practitioner is not to his client’s opponent and he is not answerable to his client’s opponent.  His duty is to the court and he is certainly answerable to the court and to his or her professional and disciplinary bodies.

   Consequently, if an opposing party asserts that a legal practitioner should be restrained from acting for his opponent it is necessary for a clear case to be made that the practitioner concerned is in a position where he is fixed with an interest which conflicts with his duty to the court and that that interest is one of such a nature that the solicitor or counsel may fail in his overriding duty to the court.  Animosity between the lawyers on opposing sides of the litigation, even animosity which may cause a practitioner in an unguarded moment to commit some act of professional misconduct, will not, of necessity, require such an intervention.  There is ample jurisdiction within the contempt power and in the disciplinary jurisdictions exercised by the court or to which it might refer such a matter, to deal with such indiscretions or misconduct.  However, the insidious threat imposed by a practitioner who, wittingly or unwittingly, does have a conflict between his personal interests and the duties which he owes to the court is another matter.

5. The approach set out in Holborow was adopted by Brereton J in Kallinicos (above). In that case his Honour determined (at page 20) that it was likely that the solicitor against whom an injunction had been sought in this context would be “a material witness on issues of substance which appear to be controversial and in respect of which questions of credibility and integrity (not necessarily his own) are likely to arise.” His Honour formed the view that the propriety of the solicitor’s conduct would be likely to be examined and his evidence likely to be material. He would be in a position in which his client’s interest, his own interest and his obligation to the Court may well be in conflict. The solicitor would owe obligations of loyalty to his client, he would have an interest in presenting the facts in a manner which would exonerate him and he would have a duty to the court to be frank. His own position and conduct might come under scrutiny.

6. His Honour said (also at page 20) as follows:

   It is generally undesirable for a practitioner who is aware that he is likely to be called as a witness, other than in relation to formal or non-contentious issues, to continue to act.

7. His Honour also said (at page 18) as follows:

   The test to be applied in this inherent jurisdiction is whether a fair-minded, reasonably informed member of the public would conclude that the proper administration of justice requires that a legal practitioner 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 (Everingham v Ontario (1992) 88 DLR (4^th) 755; Black and Taylor [1993] 3 NZLR 403; Grimwade v Meagher [1995] 1 VR 446; Holborow (above); Bowen v Stott [2004] WASC 94; Asia Pacific Telecommunications Limited v Optus Networks Pty Limited [2005] NSW SC 550).

   The jurisdiction is to be regarded as exceptional and is to be exercised with caution (Black v Taylor (above); Grimwade v Meagher (above); Bowen v Stott (above)).

   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 (Black and Taylor (above); Grimwade v Meagher (above); Williamson v Nilant (2002) WASC 225; Bowen v Stott (above)).

   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 (Black v Taylor (above); Bowen v Stott (above)).

8. In the present case, the substantive hearing will almost certainly include an examination of the circumstances relating to the preparation of the intergenerational transfer agreement and the endeavours to enforce it including action taken in relation to the caveat.  As indicated above, the solicitor involved in these matters Mr M will almost certainly be a witness in the substantive proceedings.  One would expect his evidence would be important on these matters.  It is clear that there will be matters of controversy because the wife has indicated that she takes exception to the manner in which the intergenerational transfer agreement came into operation. Questions of credibility and integrity are likely to arise.

9. But it would also be likely to be the case that at the same time as Mr M is likely to be a witness, his professional conduct in relation to the intergenerational transfer matter is likely to be scrutinised.  At this point clearly he would have a personal interest in the matter.  In my view, this would place him in a similar position to that of the solicitor in Kallinicos (above) namely, his client’s interest, his own interest and his duty to the Court might well be in conflict.

10. Such a position would be untenable.

11. I am mindful of the exceptional nature of the Court’s inherent jurisdiction.

12. I am also mindful of the importance of not lightly depriving the husband of his lawyers of choice.  In this regard I note that Mr M has been acting in these proceedings for the husband for approximately two years.  The husband has given extensive instructions to Mr M about detailed matters relating to his marriage of over 40 years duration as well as the circumstances of inheriting a large part of the P property from his family.  Mr M has also acted for the husband in various assault proceedings involving the husband, the wife and the parties’ two sons in the Local Court. Mr M’s files relating to the proceedings comprise nine large ring folders.  The husband does not have the funds to finance the litigation at this time and he has arranged with his solicitors and counsel for them to carry his costs until conclusion of the proceedings.  In these circumstances the husband expects that it will be difficult to arrange for new legal representation to assist him.  I also note that the husband is not in good health.

13. I turn to consider the matter of timing and alleged delay.

14. It was submitted on behalf of the husband that the wife has delayed in notifying him about her objection to his solicitors continuing to act for him.  It was submitted that the wife should not be assisted by the Court on the basis of the principle enunciated in the case of McGillivray v Mitchell (1998) FLC 92-818.

15. As indicated above, from the outset the wife conveyed her objection to the husband’s solicitors.  This was originally set out in her solicitor’s letter dated 22 February 2007 and it became a continuing item of protest until June 2007 when the wife learned from the husband’s solicitor that C did not propose to proceed with action in relation to the caveat or the intergenerational transfer.  As indicated above, in these circumstances the wife instructed her solicitor not to pursue this matter further.

16. But as also indicated above this changed in April 2008 when the wife was served with the husband’s Amended Initiating Application in early April 2008.  This was because this application joined the parties’ son C as a party to the proceedings and specifically sought orders that certain of the parcels of land comprising the P property be transferred to C.  The effect of this was to re-introduce the question of intergenerational transfer of property into the litigation.  From the wife’s point of view, this enlivened the matters about which she had originally expressed concern, particularly the involvement of Mr M as her former solicitor in the circumstances of preparation of the intergenerational transfer agreement.

17. The wife’s solicitor wrote to the husband’s solicitor within days challenging the joining of C Selen as a party.  On 23 April 2008 the husband’s solicitors responded that they had forwarded this matter for consideration by C Selen’s solicitors.  By letter dated 16 May 2008 the wife’s solicitors informed the husband’s solicitors that the wife was again raising her concern that there was a conflict of interest in Mr M acting for the husband on the basis that it was clear that the events relating to the “aborted intergenerational transfer” were going to be relevant to the substantive proceedings.  This letter also indicated that following receipt of Mr M’s June 2007 letter informing the wife that C had indicated that he did not wish to proceed with the intergenerational transfer and that it appeared that that matter may be at an end, the wife had decided not to continue her objection to Mr M representing the husband based on conflict of interest. 

1. The husband’s solicitor, in his letter dated 20 May 2008, raised the matter of the wife’s delay in again suggesting that he discontinue acting for the husband.

2. There was further correspondence between solicitors including requests for details of occasions on which the wife attended at the office of Mr M in relation to relevant matters.  It is clear that the wife maintained her objection and the husband’s solicitors maintained his refusal to discontinue acting for the husband.

3. On 19 May 2008 directions were made including a direction that any application in a case be filed and served within 14 days.

4. Although the wife was outside the time specified in the directions she filed her application in a case on 1 August 2008.

5. Can it be said in these circumstances that she has not acted diligently in informing the husband about her objection to his solicitors continuing to act for him?

6. Learned counsel for the husband referred to the decision of the Full Court of this Court in the case of McGillivray v Mitchell (above).  In that case the husband had sought an order restraining the wife and her solicitor from instructing a certain practitioner from representing the wife in circumstances where the practitioner had previously acted for the husband.  The Full Court upheld the trial judge’s refusal to make the order.  But this was clearly on the basis that in the exercise of the Court’s discretion, the Court decided that the husband had delayed in taking steps to have the practitioner restrained.

7. At page 85,304 the Full Court said as follows:

   34.  In the present case we consider that the husband’s failure to make any protest to the other side regarding Mr Dowding’s involvement, or to take steps to have Mr Dowding restrained from acting for the wife, at or very close to the point in time when he became aware of Mr Dowding’s involvement, is a most relevant consideration which would have to be taken into account adversely to the husband on whichever approach was adopted.

   …

   36.  It is our opinion that if a family law litigant has a genuine concern about a former legal adviser acting against him or her in later family law litigation, the litigant must take the point at least in correspondence with the other side at the earliest possible opportunity.  If he or she does not do so, then he or she is possessed of a weapon which can later be used as a delaying tactic at some point in the proceedings convenient to his or her position.  Furthermore a failure to take the point initially must also cast doubt on the bona fides of any later complaint concerning the existence of confidential information in the practitioner in question, and on the bona fides of any alleged apprehension regarding the possible mis-use of such confidential information.

8. In my view there is no substance in this submission.  Although clearly there has been considerable delay in the wife bringing her application, she has provided a reasonable explanation for this.

Conclusion

1. On the basis of the legal principles contained within the above authorities to which I have referred, in my view it is appropriate for this Court to exercise its jurisdiction to restrain Mr M from further acting for the husband.

2. As I have said, the above relevant authorities indicate that the test is as follows.  Would a fair-minded, reasonably informed member of the public conclude that the proper administration of justice requires that Mr M 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?  In my view, this would be answered in the affirmative.

3. I appreciate that the husband has incurred considerable legal costs to date and that there might be some difficulty in him engaging new solicitors.  No doubt there will be considerable inconvenience in instructing new solicitors.  But, in my view, such difficulties are not likely to be insurmountable.  In my view these difficulties must give way to the higher consideration of serving the requirements of the proper administration of justice as described above.

4. There remains one further matter for consideration.  This is whether having arrived at the position of determining that the injunction should issue in the case of Mr M, whether the husband’s counsel Mr H should be similarly restrained.  To his credit Mr H has spared me further deliberation about this matter.  Another interlocutory application, but one relating to a different aspect of the proceedings, was listed before me on 17 March 2009.  On that occasion I informed Mr H and the wife’s agent solicitor Mr Guyder that I proposed putting the injunction in place on 20 March 2009 upon publishing this judgment that day.  Mr H informed me that on the basis of the Court’s determination that it was appropriate to restrain his instructing solicitor as sought by the wife, Mr H would not regard it as proper to continue to act as the husband’s counsel and that he would withdraw.

5. But this created a practical difficulty because it would have left the husband unrepresented and facing an urgent interlocutory application without any legal representation.  To obviate any embarrassment to Mr H and to assist the husband I gave leave to Mr H to continue to appear for the husband until 20 March 2009 to enable me to hand down judgment and make the formal orders.

6. I conclude by noting the following excerpt again from the article by Ipp J. referred to above at page 103:

   The lawyer’s highest loyalty is at the same time the most intangible.  It is a loyalty that runs, not to persons, but to procedures and institutions.  The lawyer’s role imposes on him a trusteeship for the integrity of those fundamental processes of government and self-government upon which the successful functioning of our society depends (Fuller and Randall, Professional Responsibility:  Report of the Joint Conference (1958) 44 A.B.A. J. 1159 at p.1162).

I certify that the preceding seventy-seven (77) paragraphs are a true copy of the Reasons for Judgment of Judicial Registrar Johnston.

Associate: 

Date:              20 March 2009