Walters and Walters

[2009] FMCAfam 828

FEDERAL MAGISTRATES COURT OF AUSTRALIA

WALTERS & WALTERS [2009] FMCAfam 828

FAMILY LAW – Application by the wife to restrain the husband’s solicitor from continuing to represent him – wife consulted the solicitor in 2007 about termination of employment – whether the solicitor received confidential information from the wife – whether the wife delayed too long in bringing her application.

Mills v Day Dawn Block Gold Mining Co Ltd; In re Marsland (1882) 1QLJ 62
Thevanez & Thevanez (1986) FLC91-748
McGillivray v Mitchell (1998) FLC 91-818
McMillan & McMillan (2000) FLC93-048
Garrey & Crosby [2007] FamCA 696

Applicant: MS WALTERS

Respondent: MR WALTERS

File Number: NCC440 of 2009

Judgment of: Terry FM

Hearing date: 9 July 2009

Date of Last Submission: 9 July 2009

Delivered at: Darwin

Delivered on: 11 August 2009

REPRESENTATION

Counsel for the Applicant: Mr Bateman

Solicitors for the Applicant: The Charlestown Law Firm

Counsel for the Respondent: Mr Hamilton

Solicitors for the Respondent: Bromhead Legal

Solicitors for Independent Children’s Lawyer Legal Aid NSW

Counsel for Independent Children’s Lawyer Mr Squires

ORDERS

(1)That Stephen Bromhead, and Bromhead Legal, are restrained from acting further for the husband in these proceedings.

(2)That the wife’s applications for sole occupancy of the former matrimonial home and spousal maintenance are adjourned to 9.30am on 17 August 2009 for mention with a view to the applications being listed for hearing in the week commencing 31 August 2009 provided that the husband is able to instruct new solicitors time to prepare for a hearing in that week.

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

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
NEWCASTLE

NCC440 of 2009

MS WALTERS

Applicant

And

MR WALTERS

Respondent

REASONS FOR JUDGMENT

Introduction

1.Mr Walters and Ms Walters separated on 1 January 2009.

2.The husband is represented in family law matters by Stephen Bromhead of Bromhead Legal. On 27 February 2009 Mr Bromhead filed an application for parenting and property orders on the husband’s behalf.

3.On 22 May 2009 the wife filed a response. She applied among other things for an order that Mr Bromhead be restrained from acting further for the husband. That application was before me for hearing on 9 July 2009.

4.Mr Bromhead acted for the wife in 2007 in respect of a termination of employment matter. The wife alleged that she had provided confidential information to Mr Bromhead which might be used to her disadvantage in the family law proceedings if Mr Bromhead continued to represent the husband.  

5.The husband opposed the wife’s application. He argued that:

·until her 6 July 2009 affidavit, the wife did not complain as such in an affidavit that she had provided confidential information to Mr Bromhead;

·

the wife saw Mr Bromhead in relation to a discrete matter unrelated to family law. Any information she provided to

Mr Bromhead would have little or no relevance in the family law proceedings;

·

the wife had disclosed the information she provided to

Mr Bromhead in her affidavits in the family law proceedings in any event;

·the wife had delayed too long in complaining, and this alone should result in the court dismissing her application.

Background

6.The husband is 51 and the wife 48. They commenced living together in 1983, married in 1991 and separated under one roof on 1 January 2009.

7.There are two children of the marriage, [X], almost 17, who recently became a parent herself and [Y], 14, who has Down Syndrome.

8.The parties lived in a number of different locations during their long relationship but for many years prior to separation they lived in [F] New South Wales. In 2005 the wife commenced employment with a local [business], [S], as a [administration employee]. In 2007 she was dismissed from that employment.

9.The wife sought advice from Mr Bromhead about her dismissal. He saw her on two occasions and sent a letter to [S] on her behalf. Ultimately the wife did not pursue any claim against [S] in relation to her dismissal.

10.The wife did not find another job. It was effectively the husband’s case that by the time of separation eighteen months later the wife was an alcoholic.

11.

After separation the husband engaged Mr Bromhead to represent him in respect of family law matters and the wife engaged Michael Jones of Barraclough Jones to represent her.  Mr Bromhead sent a letter to

Mr Jones on 29 January 2009. Mr Jones did not reply.

12.The situation for the wife, the husband and the children after separation was difficult.

13.In January 2009 the wife applied for an Apprehended Violence Order against the husband. The husband consented without admissions to a non-violence order being made.

14.On 6 February 2009 the husband called the police to complain that the wife was driving with [Y] in the car while intoxicated.

15.On 13 February 2009 the wife left the home with [Y]. The husband contacted the police. Two days later the wife and [Y] were located at a woman’s refuge.

16.On 16 February 2009 Mr Bromhead wrote to Mr Jones again.

17.On 20 February 2009 the wife gained entry to the former matrimonial home by smashing a window. She removed some belongings. The husband called the police who located the wife later that day at a motel. The husband applied for an Apprehended Violence Order against the wife.

18.On 24 February Mr Jones responded to Mr Bromhead’s letter. He did not make any complaint about Mr Bromhead representing the husband.

19.On 27 February 2009 the husband filed an application in the Federal Magistrates Court at Newcastle seeking property orders and final and interim parenting orders.

20.In the affidavit the husband filed in support of his application for interim parenting orders he referred to the wife’s dismissal from [S] several times.

21.At paragraph 13 he said that “The [wife] used to work until 2007 when she was terminated from her employment as a [administration employee] at [S] for unknown reasons.” 

22.At paragraph 14 he said that “Prior to 2007 when the [wife] was terminated from her employment she was a good mother and housekeeper. She used to look after the household finances and shared general household expenses. She had a good relationship with both of the children. However, for the past two years the [wife] began drinking alcohol heavily and the relationship between her and the children became worse.”

23.At paragraph 16 he said that “Since [the wife] was terminated from her employment in 2007 I have provided financial support to properly care for the household. The [wife] did not contribute any income whatsoever.”

24.The husband’s documents were served on the wife on 3 March 2009. The matter was listed for mention in court that very day and after being served the wife appeared by telephone. Proceedings were adjourned to 6 March 2009.

25.

Barraclough Jones filed a Notice of Address for Service on behalf of the wife and at the mention on 6 March 2009 the wife was represented by Mr Bateman of counsel. The proceedings were further adjourned to 16 March 2009. On 13 March 2009 however Barraclough Jones filed a Notice of Ceasing to Act. The wife did not appear at the mention on

16 March 2009

and the matter was further adjourned to 4 May 2009.

26.On 21 March 2009 the wife left Australia and went to Ireland to stay with her family. Her current solicitors filed a Notice of Address for Service on 28 April 2009 and appeared for the wife on 4 May 2009. The wife herself did not return to Australia until 7 May 2009.

27.After she returned to Australia the wife had a conference with her new solicitors. On 22 May 2009 she filed a Response in which she sought among other thing an order that Mr Bromhead be restrained from continuing to represent the husband.

28.

On 26 May 2009 the wife’s new solicitors sent a letter to

Mr Bromhead. Reference was made to the wife’s consultations with

Mr Bromhead in 2007 and the letter went on to say:

“Our client came to you on the basis that the information she gave you would remain confidential.

We ask that you and your firm cease acting in this matter and that the issue of your conflict does not have to come before the court.”

The wife’s retainer of Stephen Bromhead in 2007

29.Soon after her dismissal from [S] in mid 2007 the wife sought advice from Mr Bromhead, who was then employed by Walker Smith Solicitors.

30.The wife’s evidence was that she saw Mr Bromhead on two occasions. She said that on the first occasion she was accompanied by the husband and the conference was fairly brief. She said that on the second occasion she saw Mr Bromhead on her own and spent one to one and half hours with him.

31.The wife’s evidence was that Mr Bromhead asked questions about her conduct at [S] which could have been grounds for her dismissal. She said as follows:

“… I recall giving information to Mr Bromhead about all the possible causes which I thought could have lead to me being dismissed. These included issues with regard to my care of [Y] which caused me to be late for work. It also included me requesting my employer that I work only part of the day due to my care of the children.

I recall that I spoke to Mr Bromhead about my routine as a mother which impacted on my work. I also spoke to Mr Bromhead and gave him information which I thought was confidential in respect to reasons why I may have been dismissed from my employment.”[1]

[1] Affidavit of Ms Walters filed 6 July 2009

32.Mr Bromhead swore two affidavits in which he gave his version of the events in 2007. He agreed that he saw the wife twice and agreed that on the first occasion she was accompanied by the husband. He said that the first consultation lasted about thirty minutes. Following that consultation Mr Bromhead wrote a letter to [S] on the wife’s behalf.

33.Mr Bromhead agreed that he saw the wife again on her own after a response was received from [S]. He said that on the second occasion he and the wife had a “short conference.”

34.Mr Bromhead’s evidence was that the wife told him that she was not aware of the reason for her dismissal. He maintained that no discussion took place with the wife about her children or her parenting activities.

35.Mr Bromhead’s evidence was that:

“At no time did [the wife] provide any confidential information to me. At the time it was known to the husband that her employment had been terminated. She provided no information to me which would be prejudicial to her or prejudicial to my continuing to act against her in these proceedings. She did not advise me as to the reasons for her dismissal. I was not given any information by her which was prejudicial to her or could be used in these proceedings.”[2]

[2] Affidavit of Stephen Bromhead filed 23 June 2009 paragraph 26

36.

Mr Bromhead said that he did not open a file and did not render a Memorandum of Fees. However for the purposes of these proceedings he was able to access on his computer a copy of the letter he sent to [S] on 11 July 2007 and a copy of the letter he sent to the wife on 17 July 2007 enclosing the response from [S]. In the 11 July 2007 letter

Mr Bromhead demanded payment on the wife’s behalf of $5,234.10 being 8.75 weeks wages.

The applicable law

37.There is no doubt that courts have the power to restrain a solicitor from continuing to act for a party in certain circumstances. In McMillan & McMillan[3]  the Full Court of the Family Court said as follows:

“It has been accepted in this Court, at least since the decision in June 1986 of Frederico J. in Thevenaz (1986) FLC 91-748, that the Court “has power to make orders restraining a firm of solicitors from continuing to act for one of the parties to proceedings in this Court, if it is of the view that it would be likely that those solicitors may have confidential information relating to the other party to the proceedings arising out of a former relationship of solicitor and client with that party which may be used to the advantage of the present client or to the disadvantage of the former client in the current proceedings” (per Lindenmayer J. in the unreported decision of Stewart (17 April 1997)).”

[3] McMillan & McMillan (2000) FLC93-048

38.In Thevanez Justice Frederico was dealing with an application by the husband to restrain a solicitor employed by a firm who had acted for both the husband and the wife in conveyancing matters during their marriage from acting for the wife in family law proceedings. The husband contended that knowledge or information in the possession of the solicitors, which he had provided in confidence when giving instructions about the conveyancing matters, might be used to his detriment during the family law proceedings. Justice Frederico said as follows:

“It is my view that in this case Mr Dezarnaulds should not continue to act for Mrs Thevanez. 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 on 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.”

39.In reaching his decision Justice Frederico relied on the 1882 case of Mills v Day Dawn Block Gold Mining Co Limited; In re Marsland.[4]  In McMillan[5]  the Full Court said as follows:

[4] Mills v Day Dawn Block Gold Mining Co Ltd; In re Marsland (1882) 1QLJ 62

[5] McMillan & McMillan (supra)

“Before referring to the decisions of this Court made subsequent to the decision in Thevenaz, there is probably value in our quoting at greater length (than did Frederico J. in Thevenaz) from the main judgment of the Full Court of the Supreme Court of Queensland in Mills v. Day Dawn Block Gold Mining Company Limited; In re Marsland (1882) QLJ 62, being the judgment of Lilley CJ. This is because of the reliance which this Court has placed on the decision in Mills in the development of this Court’s approach to the question of when a solicitor will be restrained from acting against a former client (or a former client of his or her partner or employee). The significant feature of this approach is that for the client to succeed, he or she need only give evidence that he or she has imparted information of a confidential nature to the practitioner in question and that there is at least a theoretical possibility that it could be used against him or her.[my emphasis] The relevant passages from the decision of Lilley CJ are (at 62-63):

“…  It appeared that Mr. Marsland had been acting as the town agent of the country attorney who had been retained by Mr. Mills, the plaintiff in this case.  He was not merely town agent, but seemed to have been active in the investigation of the plaintiff's claim, and proceeded so far in the matter as to give an opinion on it.

…….

His Honour did not think for a moment that Mr Marsland would conscientiously do any wrong, but it might happen that in an unguarded moment he might let fall something which would injure the interest of Mr. Mills, and which would amount to a breach, although an unwitting breach of his duty.  It was needless, after the numerous cases cited, to review the authorities for the purpose of showing jurisdiction.  It rested on this, the court kept a firm control over all its officers, and would restrain them from doing anything inconsistent with their duty to their clients.  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. [my emphasis]. As it seemed to him, on the one side the client insisted on oath that he had imparted confidence to Mr. Marsland; and, on the other side, the solicitor said, “I have no confidence.”  How could the court decide it?  If they took the oath of the attorney against the oath of the client, and refused the protection which the client sought, why, then, the matter might proceed, and the mischief which the client feared might arise, and the court could afford no remedy.  In cases of this kind less mischief would accrue through granting the protection sought than in accepting the oath of the attorney against the client. [my emphasis]  The client's interest should prevail, and the judge should refuse to determine the matter on the conflicting testimony of affidavits.”

1. Prior to the decision in McMillan, it was often argued in applications to restrain solicitors from acting in family law proceedings that the court should adopt what was described as a “narrow” or “English” approach and require positive proof of a prima facie case of prejudice before restraining a solicitor from  acting. In McMillan the Full Court said that:

   ……We have concluded that to the extent that it is necessary for us to determine that matter in this case, the broader approach based on Mills is to be preferred.[6]

   [6] McMillan & McMillan (supra) paragraph 83

   41.In the proceedings before me the wife’s counsel argued that the broader approach should be adopted, and the husband’s counsel did not argue against this.

   Discussion

   42.The wife filed three affidavits in support of her application for a restraint. It was not until her third affidavit filed on 6 July 2009 that she used the phrase “confidential information” to describe the information she provided to Mr Bromhead.

   43.The husband’s counsel was aggrieved that I allowed the wife to rely on her affidavit filed on 6 July 2009. It had been one of his arguments in the written submissions he prepared that the wife’s case must fail because she did not in her earlier affidavits swear that she had provided “confidential information” to Mr Bromhead.

   44.I am not persuaded that the wife’s case would have automatically failed had she not filed the additional affidavit on 6 July 2009. In my view it would be unduly technical to insist that unless the precise phrase “confidential information” was used by the applicant in an affidavit, an application for a restraint must fail.

   45.In my view if it can be reasonably inferred that the information conveyed to the solicitor was confidential information then that is sufficient.

   46.

   The wife had two conferences with Mr Bromhead and he sent a letter to [S] on her behalf. The wife must have provided information to

   
   

   Mr Bromhead and it is entirely reasonable to infer that the wife expected that any information she provided would be kept confidential.

   47.

   I am fortified in my view that the failure by the wife to use the words “confidential information” to describe what she conveyed to

   
   

   Mr Bromhead would not necessarily be fatal to her application by the following statement in McMillan:

   “In the present case, we consider it sufficient, as we said earlier, that the husband has sworn that he had given instructions to Mr Pitts as to how he wished his “matter to be conducted and the position to be put to the wife”.  It is obvious that such matters would come within the description of “confidential information.”[7]

   [7] McMillan & McMillan (supra) paragraph 87

   48.

   In addition, the husband’s counsel was well aware, from the letter sent by the wife’s solicitor to Mr Bromhead on 26 May 2009, that it was the wife’s case that confidential information had been provided to

   
   

   Mr Bromhead.

   49.The next argument by the husband’s counsel was that there was not even a theoretical risk that information the wife gave Mr Bromhead might be used to her disadvantage in the family law proceedings because information given in respect of the termination proceedings would have little or no relevance in the family law proceedings.

   50.However the decisions in family law cases from Thevanez onwards have consistently followed the approach in Mills. In Mills it was very clearly stated that:

   “…..for the client to succeed, he or she need only give evidence that he or she has imparted information of a confidential nature to the practitioner in question and that there is at least a theoretical possibility that it could be used against him or her.”

   51.Just because it is difficult to foresee how confidential information provided in respect of a previous matter might be used to the disadvantage of a party in subsequent family law proceedings does not mean that the court can conclude that no there is no theoretical possibility of the information being misused. In Garrey & Crosby,[8]  a decision of Judicial Registrar Johnstone, the wife sought have the husband’s solicitor restrained from acting for him because she had previously provided that solicitor with confidential information. Judicial Registrar Johnstone, who ultimately granted the restraint sought by the wife, observed as follows:

   “What the significance of the information might be in negotiations between the parties, or, indeed, if it became evidence in the proceedings, is far from clear at this point.”

   [8] Garrey & Crosby [2007]FamCA696

   I would echo that sentiment in the case before me.

   52.In my view there is at least a theoretical possibility that information the wife gave Mr Bromhead when speaking to him about the termination might become relevant in the family law proceedings and might be used against the wife. It is clear from the husband’s parenting affidavit that the termination of the wife’s employment in 2007 was a significant event in the marriage. Another aspect of the matter is that the husband gave conflicting evidence in that affidavit about the time at which he alleged the wife’s alcohol problem became apparent. On the one hand he related it to the dismissal, which occurred eighteen months prior to separation. He also said however that the wife began consuming alcohol heavily two years prior to the separation.

   53.

   It is in my view entirely reasonable for the wife to be concerned that there is at least a theoretical possibility that information she gave

   
   

   Mr Bromhead in 2007 when discussing her termination with him might be used in a manner prejudicial to her in the current proceedings.

   54.

   Further, while I accept that Mr Bromhead is genuine in his belief that the information provided to him by the wife during their conversations in 2007 was minimal and not relevant in the current family law proceedings, Mr Bromhead did not keep any file notes of his conversations with the wife. An awkward situation would arise if something about his conversations with the wife came back to

   
   

   Mr Bromhead during the course of the family law proceedings. He might “in an unguarded moment […] let fall something which would injure the interest of [the wife], and which would amount to a breach, although an unwitting breach of his duty.”  He would also then be in a difficult situation because he would not be able to put that information at the disposal of the husband, and as Justice Frederico observed in Thevanez:

   “…it is the practitioner’s duty to put at his client’s disposal, not only his skill but his knowledge, and if he is not prepared to make that knowledge available he should not act.”

   55.The husband’s counsel argued that it was relevant to the exercise of the court’s discretion that wife had disclosed the information she had given Mr Bromhead in affidavits filed in these proceedings. He argued that as the wife had now made the information known to the husband she had effectively waived any right to complain about Mr Bromhead’s continued involvement in the matter.

   56.I do not accept this argument. The wife’s evidence was that she had a broad ranging discussion with Mr Bromhead about all the possible causes for her dismissal. She provided some examples only of the matters which she said were discussed. In my view the wife has not rendered any claim for protection of confidential information void by disclosing some of that information in her affidavits.  

   57.The husband’s counsel next argued that the court should dismiss the wife’s application in the exercise of its discretion because the wife had not objected to Mr Bromhead’s involvement at the earliest opportunity.

   58.The wife knew in January 2009 that Mr Bromhead was acting for the husband.  She was legally represented from the outset and had many opportunities, both in the course of replying to correspondence and during court events, to object to Mr Bromhead’s involvement. She did not once do so. She did not mention the matter until she filed her response on 22 May 2009 and subsequently sent a letter to the husband’s solicitor on 26 May 2009.

   59.The husband’s counsel suggested that the wife might have raised the objection at this stage of the proceedings in order to cause the husband financial difficulties.

   60.The relevance of delay in an application of this nature was considered by the Full Court in McGillivray v Mitchell.[9] In that case the wife’s solicitor instituted family law proceedings on her behalf in November 1996. It was not until August 2007 that the husband filed an application seeking to restrain the solicitor from acting. The Full Court of the Family Court said as follows:

   “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 misuse of such confidential information.”

   [9] McGillivray v Mitchell (2000) FLC93-048

   61.The Full Court upheld the trial Judge’s decision to dismiss the husband’s application.

   62.Each case turns on its own facts however. The wife’s explanation in the present case for her failure to object earlier to Mr Bromhead’s involvement revolved around her own circumstances in the immediate aftermath of separation. Referring to the period after the court proceedings were commenced she said that:

   “At this time I had no proper accommodation little money and I was worried about my health as I felt that I could no longer cope not knowing if I could properly house myself and buy food from day to day.”[10]

   [10] Mother’s affidavit filed 25 June 2009 paragraph 5

   63.The husband’s affidavit filed on 27 February 2009 provides ample evidence that the wife’s circumstances were difficult after separation. The husband referred to the fact that the wife had unsuccessfully attempted to obtain Centrelink benefits, had gone to a women’s refuge and had apparently been assaulted there and had spent time in a motel. There is no dispute that the wife went to Ireland on 21 March 2009 and remained there until 7 May 2009.

   64.In the circumstances of this case I do not consider that the delay of four months between the wife first becoming aware of Mr Bromhead’s involvement and her raising an objection to his continuing to act should result in the court dismissing her application.

   65.The prospect of the proceedings being delayed is a matter which I must take into account. However while there has been a good deal of activity on this file since February 2009 the matter has not progressed very far through the court system. The wife’s interim applications for sole occupancy of the home and for spousal maintenance have not been heard, and no conciliation conference has been held. Requiring the husband to change solicitors at this stage is not likely to cause a significant delay for the parties in the overall resolution of the matter.

   66.The husband’s right to be represented by the solicitor of his choice, and the expense to which the husband will be put if forced to change solicitors, are also factors which I must taken into account.

   67.I accept that the husband will feel unhappy if he is required to terminate the services of a solicitor in whom he has confidence. However the husband’s counsel conceded that the cost to the husband of changing solicitors at this stage would likely be the cost of a few hours time for a new solicitor to familiarise himself or herself with the file. The husband would face much greater expense if Mr Bromhead found himself obliged to cease to act for the husband at a later stage in the proceedings because he suddenly remembered something about his conversations with the wife which was relevant to the family law proceedings.

   68.In my view it is appropriate to make an order restraining Mr Bromhead from continuing to represent the husband.

   69.The wife’s spousal maintenance and sole occupancy applications still need to be dealt with. I intend to list the matter for mention 17 August 2009 so that consideration can be given to an appropriate hearing date for these applications.

   70.For all of the above reasons the orders shall be as set out at the beginning of this judgment.

   I certify that the preceding seventy (70) paragraphs are a true copy of the reasons for judgment of Terry FM

   Associate:    Barbara Cameron

   Date:           11 August 2009