SLM and SWE - [2003] FMCAfam 575

FEDERAL MAGISTRATES COURT OF AUSTRALIA

SLM & SWE

[2003] FMCAfam 575

FAMILY LAW – PRACTICE & PROCEDURE – Whether conflict of interest of solicitors acting for the husband – application dismissed.

Bolkiah v KPMG (1999) 1 All ER 517
Rakusen v Ellis, Munday and Clarke (1912) 1 Cth. 831
Farrow Mortgage Services v Mendall Properties (1995) 1 VR1

Applicant:

SLM

Respondent:

SWE

File No:

DGM 1926 of 2003

Delivered on:

24 December 2003

Delivered at:

Melbourne

Hearing date:

23 September 2003

Post hearing submissions
of wife:

29 September 2003

Post hearing submissions
of husband:

15 October 2003

Judgment of:

Hartnett FM

REPRESENTATION

Counsel for the Applicant:

Mr Pannifex

Solicitors for the Applicant:

Robert Daniels & Associates

Counsel for the Respondent:

Mr Mort

Solicitors for the Respondent:

McCarthy Partners Pty

ORDER

The application is dismissed
No order as to costs.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
MELBOURNE

(P)DGM 1926 of 2003

SLM

Applicant

And

SWE

Respondent

REASONS FOR JUDGMENT

History

Proceedings commenced on the 2 September 2003 the wife seeking final orders for property adjustment between the parties and the payment by the husband to her of spousal maintenance. In addition, she sought interim orders as set out in that application and which included the following:
7. The firm of M Partners Pty Ltd and each principal, and employee thereof be restrained from acting for the husband in proceeding or from disclosing to any other practitioner acting for the husband any information gained by such firm or person whist acting for the husband, the wife or either of them, during the course of their marriage.
It is that matter to which this judgment is addressed.
By response filed the 22 September 2003 the husband opposed the making of the order sought as referred to in paragraph 1 herein and sought final orders as to property adjustment between the parties. The property of the parties is the former matrimonial home at 8 W St, M in the State of Victoria; superannuation entitlements of each of the husband and wife and the furniture and contents in the home. In addition the husband sought the wife relinquish any claims she may have to the husband’s company BS & Associates Pty Ltd.
The husband is a self-employed real estate agent. His business is BS RE in S. The wife in engaged in home duties and both she and her daughter I born February 1996 continue to occupy the former matrimonial home. The husband vacated this home on the 28 April 2003.
The husband and wife were married on the 29 May 1999 and separated on 28 April 2003 – almost 4 years later. Following this separation the parties have become embroiled in litigation. The husband has instructed and retains M Partners Pty of R. The solicitor in the firm who has the conduct of the file of the husband is Miss W. Ms W has sworn an affidavit in these proceedings filed the 22 September 2003. She deposes and I accept the following:
I have never met the wife nor performed any legal work on her behalf. I have no knowledge of her financial situation, other than instructions which I have received from Mr S during the course of acting for him in this proceeding.
SM has also sworn an affidavit in these proceedings filed the

22 September 2003. He is the principal of the firm M Partners Pty. In paragraph 5 of that affidavit Mr M says:
My firm has acted for the husband, a local Real Estate Agent for over 20 years and has carried out the following work on behalf of both the husband and the wife:
5.1
Conveyancing for the purchase of a property situated at

8 W St, M in September 1999, which included a minor dispute relating to adjustments of outgoings following the settlement. This involved the writing of a few letters. My instructions for this conveyance were obtained primarily from the husband.
5.2Preparation of wills for the husband and the wife in August 1999.
5.3Preparation of a Vendor’s 32 Statement, in relation to the proposed sale of 8 W St, M, in December 2002. This matter did not proceed. All instructions for this matter were obtained from the husband.
Mr M further says that he has not obtained any information about the financial position of either the husband or wife from the work carried out above, by his firm. These files have been made available for inspection by the wife. At the time of hearing the wife has not taken up this offer. Although the wife claims to have mixed socially from time to time with him Mr My denies this other than a chance meeting on a local beach prior to the parties marriage. Likewise the husband in his affidavit sworn 17 September 2003 denies any social interaction between the parties and Mr M. The wife provides no particulars of her allegation.
The wife’s affidavit filed the 2 September 2003 asserts that it would be inappropriate for the husband’s solicitors to continue to act for the husband either directly, or indirectly, by providing advice, assistance or information to any other legal practitioner who may act for the husband. She states her belief that it is possible that M and/or other members of his firm may have to give evidence in the proceedings given their involvement in the work referred to in paragraph 5 of these reasons. No further particulars as to the alleged inappropriateness or conflict of interest or matter upon which Mr M or any other member of his firm would be required to give evidence in the proceedings are provided. It is conceded by the parties and the husband’s solicitors that they have performed the work stated by Mr M and no other work.
The real issue to be determined is whether any confidential information supplied by the wife to the husband’s solicitors could be used adversely to the interests of the wife in these proceedings by the disclosure or misuse by them of such information.
The solicitors for the husband argue the wife’s application is presumptive and premature. Whilst it is conceded the wife need only establish a prima facie case for her protection it is said that she has failed to avail herself of requisite evidence to establish such a case one way or the other.
The evidence before the court is that the wife had little contact with the husband’s solicitors in the work handled by them on behalf of the parties.
The husband’s right to retain a solicitor of his choice and the right of the solicitors to act for any client must also be considered and weighed on an application of this type.
Courts in a number of Australian jurisdictions have expressly held that in relation to former client conflicts, the principles set out in the decision of the House of Lords in Bolkiah v KPMG (1999) 1 All ER 517 in this area apply. This case criticised the test put forward in the earlier English Court of Appeal decision in Rakusen v Ellis, Munday and Clarke (1912) 1 Cth. 831. Hayne J in Farrow Mortgage Services v Mendall Properties (1995) 1 VR1 likewise had earlier declined to adopt the test as set out in Rakusen’s case saying,
Although it is necessary to be acutely conscious of the fact that the court is asked to interfere with the right of a litigant to be represented by the solicitor of the litigant’s choice, it is not necessary to conclude that harm is inevitable (or well nigh inevitable) before acting to restrain a possible breach of the duty that a solicitor owes to clients and former clients to keep confidential information given to the solicitor in confidence and not use that information against the interests of the client who gave it to the solicitor… it is enough to say that I consider that injunction should go if there is a real and sensible possibility of the misuse of confidential information.
In summary his Honour applied an objective test to the issue in terms of deciding whether “a reasonable person, informed of the facts, might reasonably anticipate a danger” of the misuse of confidential information and a real and sensible possibility of conflict between duties owed to former and present clients.
In Bolkiah the test articulated is less strict than that stated by Hayne J in Farrow Mortgage but there is a common requirement to identify the relevant information. The extent of the duty and the circumstances in which a court will intervene to grant protection were discussed by the House of Lords in Bolkiah v KPMG 1999 2 AC 222. Lord Hope said (page 227):
It is the solicitor’s duty to ensure that the former client is not put at risk that confidential information which the solicitor has obtained from that relationship may be used against him in any circumstances…
… the former client is entitled to the protection of the court if he can show that his solicitor was in receipt of confidential information which is relevant to a matter for which the solicitor is acting, against the former client’s interest, for a new client.
Lord Millet said (page 237):
… the court should intervene unless it is satisfied that there is no risk of disclosure. It goes without saying that the risk must be a real one, and not merely fanciful or theoretical. But it need not be substantial.
I turn to the arguments as stated above of the husband in resistance to the orders sought. Only general claims are made by the wife without more and without the identification of any definable relevant information I cannot be satisfied that a reasonable person would anticipate a real and sensible possibility of the misuse of confidential information.
I cannot be satisfied on the affidavit material before the court that there is a real risk of the misuse of confidential information nor a real and sensible possibility of that misuse. The wife’s application is currently unsupported but she may, upon inspection of the relevant files or upon an elaboration of her claims, provide evidence to the court upon which it shall restrain the husband’s solicitors from acting.
I do not propose at the present time to make the order sought by the wife. I do not propose to make a costs order in favour of either party on this application.

I certify that the preceding sixteen (16) paragraphs are a true copy of the reasons for judgment of Harnett FM

Associate: T. Jones

Date: 24 December 2003